SunCoke Energy (SXC) Q2 Earnings call transcript Jul 31, 2024
2min read SunCoke Energy's Second Quarter 2024 Results: Key Insights and Analysis
SunCoke Energy, a leading player in the coke and logistics sector, recently reported its second-quarter results for 2024. The company, under the leadership of Katherine Gates, President and CEO, and Mark Marinko, Senior Vice President and CFO, showcased a robust performance in the first half of the year, positioning the company well for achieving the high end of its full-year adjusted EBITDA guidance range.
Domestic Coke Business Performance
In the domestic coke segment, SunCoke Energy reported a strong performance, with consolidated adjusted EBITDA of $63.5 million for the second quarter of 2024. While domestic coke sales volumes were slightly lower than the prior year, the company maintained full capacity utilization. Lower blast coke sales volumes due to timing of spot sales in the prior year quarter, along with lower coal-to-coke yields on long-term contracts, impacted the adjusted EBITDA. Despite these challenges, SunCoke Energy remains optimistic about achieving its full-year domestic coke sales and adjusted EBITDA guidance of $238 million to $245 million.
Logistics Business Performance
The logistics segment showed remarkable growth, with adjusted EBITDA of $12.2 million in the second quarter of 2024, up from $11.7 million in the same period last year. The increase was driven by higher transloading volumes at domestic terminals, offset by lower pricing at CMT due to limited API2 price adjustment benefits during the quarter. SunCoke Energy anticipates some recovery of the API2 price adjustment benefit in the third quarter. With a total of 7.1 million tons handled in the first half of the year, the logistics segment is on track to exceed its full-year adjusted EBITDA and volume guidance.
Financial Highlights and Liquidity Position
SunCoke Energy reported a net income attributable to the company of $0.25 per share in the second quarter of 2024, up slightly from the prior year period. The company's gross leverage remained below 2x at approximately 1.93x on a trailing 12-month adjusted EBITDA basis at the end of the quarter. SunCoke Energy's liquidity position is strong, with a cash balance of $81.9 million and a fully undrawn revolver of $350 million. The company has reaffirmed its full-year operating cash flow guidance of $185 million to $200 million.
Dividend Increase and Growth Opportunities
SunCoke Energy's Board of Directors approved a 20% increase in the quarterly dividend from $0.10 to $0.12 per share, reflecting the confidence of the board and management team in the company's underlying core businesses. The company continues to focus on executing its key initiatives, including the Granite City GPI project, which is expected to be a significant growth opportunity for SunCoke Energy.
Investor Questions and Management's Responses
During the Q&A session, investors and analysts raised questions about the potential impact of Cliffs' acquisition of Stelco on SunCoke Energy's coke sales and the outlook for logistics volumes in the second half of the year. Management provided clear and concise responses, highlighting the company's focus on maintaining full capacity utilization and pursuing new business opportunities at its logistics terminals.
Conclusion
SunCoke Energy's second-quarter results for 2024 demonstrate the company's resilience and strategic focus on executing its growth initiatives. The company's strong performance in the first half of the year, coupled with its optimistic outlook for the remainder of 2024, positions SunCoke Energy well for continued success in the coke and logistics sector. Investors and stakeholders can look forward to further updates on the company's progress towards achieving its full-year adjusted EBITDA guidance and the anticipated benefits from the Granite City GPI project.