SunCoke Energy(SXC) - 2024 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Consolidated adjusted EBITDA for Q3 2024 was $75.3 million, an increase from$65.4 million in the prior year period, primarily driven by a one-time gain of $9.5 million from the elimination of legacy black lung liabilities [8][15] - Net income attributable to SunCoke was$0.36 per share, up $0.28 compared to the prior year, mainly due to the aforementioned gain [13] - The company ended the quarter with a leverage ratio of 1.86 times on a trailing 12 months adjusted EBITDA basis [8] Business Line Data and Key Metrics Changes - Domestic Coke adjusted EBITDA for Q3 2024 was$58.1 million, with coke sales volumes at 1,027 tons; however, this was a decrease compared to the prior year due to lower coal-to-coke yields [16] - The Logistics business generated $13.7 million of adjusted EBITDA in Q3 2024, up from$8.4 million in Q3 2023, driven by higher transloading volumes and API2 price adjustments [18] - The company revised its full year domestic coke adjusted EBITDA guidance to $230 million to$235 million from a previous range of $238 million to$245 million [17] Market Data and Key Metrics Changes - Domestic terminals handled 3.8 million tons in Q3 2024, compared to 2.9 million tons in the same prior year period, indicating growth driven by new business [20] - Total logistics volume guidance for the full year was increased to approximately 22 million tons, with CMT handling about 8 million tons and domestic terminals about 14 million tons [20] Company Strategy and Development Direction - The company is focused on maintaining strong safety and environmental performance, which is central to its operations [23] - SunCoke is pursuing future opportunities to broaden its customer base in both domestic coke and logistics segments, with the GPI project remaining a top priority [25] - The company is taking a balanced approach to capital allocation, having strengthened its balance sheet by extinguishing the majority of legacy black lung liabilities [26] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the fundamentals of the GPI project despite delays due to government inaction, viewing the Granite City contract extension as a bridge during this period [30][31] - The company is dedicated to executing its operating and capital plans for full utilization of cokemaking assets while also evaluating capital needs and shareholder rewards [27] Other Important Information - The company ended Q3 with a cash balance of $164.7 million and a fully undrawn revolver of$350 million, indicating a strong liquidity position of $514.7 million [21] - A$12 million expansion project at the KRT Logistics facility will increase barge unloading capacity from 2 million tons to 5 million tons, expected to be completed by Q2 2025 [12] Q&A Session Summary Question: Where is the material from the Granite City supply agreement going? - The coke is being sold to U.S. Steel [29] Question: Is the Granite City contract extension related to the GPI project? - Yes, the extension is part of the GPI project and serves as a bridge during the delay in government approvals [30][31] Question: Can you expand on future opportunities related to the $12 million capital investment? - The investment will expand barge-to-rail unloading capacity, allowing for greater volume of business, with ongoing efforts to seek new business at logistics terminals and coke plants [32]