0001514705-25-000036
SEC filingLower Domestic Coke pricing and volumes drove a decline in net income and Adjusted EBITDA, partially offset by the Phoenix Global acquisition.
For the three months ended September 30, 2025, SunCoke Energy reported a decline in key financial metrics compared to the same period in 2024. Total revenues decreased by $3.1 million to $487.0 million, a 0.6% drop. Operating income fell sharply by $33.8 million to $13.4 million, a 71.6% decrease. Net income declined by $9.5 million to $23.8 million, a 28.5% reduction. The primary drivers were lower pricing in the Domestic Coke segment, driven by the mix of contracted and non-contracted blast coke sales, and lower volumes due to unfavorable coal-to-coke yields. The impact of the Granite City contract extension also weighed on results. These headwinds were partially offset by the inclusion of two months of operating results from the acquisition of Phoenix Global, which contributed to the Industrial Services segment. Selling, general and administrative expenses increased by $18.7 million, reflecting transaction costs related to the Phoenix Global acquisition and the absence of a $9.5 million gain from the extinguishment of legacy coal mining liabilities in the prior year. Income tax expense benefited from a $20.7 million net tax benefit related to capital investment tax credits under the One Big Beautiful Bill Act.
Domestic Coke: Segment revenue decreased by $46.1 million to $413.8 million, and Adjusted EBITDA fell by $14.1 million to $44.0 million. The decline was driven by lower volumes (negatively impacting revenue by $31.1 million and Adjusted EBITDA by $9.0 million) and lower pricing (negatively impacting revenue by $16.6 million and Adjusted EBITDA by $12.4 million). The pass-through of lower coal prices and lower pricing on non-contracted blast coke sales were key factors. Operating and maintenance costs improved by $3.3 million due to lower planned maintenance outage costs. Energy and other benefits added $4.0 million to Adjusted EBITDA. Domestic Coke capacity utilization was 97%, down from 102% in the prior year, and sales volumes decreased by 76 thousand tons.
Industrial Services: Segment revenue (exclusive of intersegment sales) increased by $42.7 million to $64.1 million, and Adjusted EBITDA rose by $4.5 million to $18.2 million. The increase was primarily due to the inclusion of two months of Phoenix Global results, which added $3.8 million in customer volumes serviced. This was partially offset by lower transloading volumes due to market conditions and lower pricing at the Convent Marine Terminal, driven by the absence of an index price adjustment benefit.
Corporate and Other: Adjusted EBITDA was a loss of $3.1 million, compared to income of $3.5 million in the prior year, reflecting transaction costs related to the Phoenix Global acquisition and the absence of the prior year's $9.5 million gain from liability extinguishment.
The MD&A does not provide specific forward guidance on revenue or earnings. However, management notes that the Granite City contract has been extended through December 31, 2025, with unchanged economics. The Company is actively pursuing enforcement of the Algoma coke supply contract after the customer's refusal to accept additional tons. The acquisition of Phoenix Global is expected to contribute to future results. The Company believes its current liquidity, including $80.4 million in cash and $126.0 million in borrowing availability, is sufficient for working capital requirements for at least the next 12 months. Capital expenditures for the nine months ended September 30, 2025 were $43.0 million, down from $48.1 million in the prior year.
Operating cash flow (CFO) of $52.5 million significantly trailed net income of $46.7 million by a small margin, but the year-over-year decline from $107.9 million is notable. The primary drivers were adverse working capital changes: inventories used $24.9 million, accounts payable decreased $17.3 million, and accrued liabilities dropped $20.3 million. Additionally, income tax payments surged $20.6 million year-over-year to $24.8 million (net), heavily weighing on CFO. Depreciation and amortization remained stable at $94.8 million.
Capital expenditures (capex) of $43.0 million were down from $48.1 million, but the investing cash flow was dominated by a $271.5 million acquisition of Phoenix Global, net of cash acquired. This large outlay was funded by a $272.0 million draw on the revolving facility, resulting in a net financing cash inflow of $152.9 million.
Total capital returns to shareholders were $31.2 million in dividends, up from $27.5 million, but no share repurchases were made. Free cash flow is not explicitly stated, but if approximated as CFO minus capex, it would be $9.5 million, insufficient to cover the dividend. The heavy reliance on debt for the acquisition and the working capital drag highlight a strained cash position, with cash balances declining from $189.6 million to $80.4 million by period end.