0001514705-25-000019
SEC filingLower Domestic Coke pricing and volumes drove a decline in Q2 2025 net income and Adjusted EBITDA.
For the three months ended June 30, 2025, SunCoke Energy reported a significant decline in financial performance compared to the same period in 2024. Total revenues decreased by $36.8 million (7.8%) to $434.1 million, driven primarily by lower pricing in the Domestic Coke segment, unfavorable coal-to-coke yields, and the impact of the Granite City contract extension. Operating income fell sharply by $24.9 million (71.8%) to $9.8 million, reflecting the revenue decline and higher selling, general and administrative expenses related to the Phoenix Global acquisition. Net income dropped by $19.8 million (85.0%) to $3.5 million. Adjusted EBITDA, a key non-GAAP metric, decreased by $19.9 million (31.3%) to $43.6 million. The decline in profitability was primarily attributed to lower pricing on non-contracted blast coke sales and lower volumes due to unfavorable coal-to-coke yields, partially offset by lower planned maintenance outage costs.
Domestic Coke: This segment experienced the most significant impact, with revenues falling by $31.2 million (7.1%) to $410.4 million and Adjusted EBITDA declining by $17.4 million (30.1%) to $40.5 million. The decrease was driven by lower pricing on non-contracted blast coke sales, the pass-through of lower coal prices, and lower volumes due to unfavorable coal-to-coke yields and the Granite City contract extension. Capacity utilization decreased to 95% from 99% in the prior year quarter.
Logistics: Segment revenues (excluding intersegment sales) decreased by $5.1 million (25.2%) to $15.1 million, and Adjusted EBITDA fell by $4.5 million (36.9%) to $7.7 million. The decline was attributed to lower transloading volumes and lower pricing at the Convent Marine Terminal (CMT), driven by the absence of an index price adjustment benefit.
Brazil Coke: Results were reasonably consistent with the prior year, with revenues of $8.6 million and Adjusted EBITDA of $2.6 million.
Corporate and Other: Adjusted EBITDA loss improved by $1.9 million to a loss of $7.2 million, benefiting from lower employee-related expenses and lower expenses related to the legacy coal mining business.
Management's outlook is shaped by several key developments. The company announced the acquisition of Phoenix Global for $325 million in cash, expected to close in Q3 2025, which will be funded with existing cash and availability under the Revolving Facility. The Granite City contract with U.S. Steel was extended through September 30, 2025, with an option for a further three-month extension. The enactment of the One Big Beautiful Bill Act is expected to favorably impact future cash taxes. The company also amended its Revolving Facility, extending the maturity to July 2030 and reducing capacity by $25 million to $325 million. Management believes current resources are sufficient to meet working capital requirements for at least the next 12 months.
As of June 30, 2025, SunCoke's Notes disclose total debt of $493.4 million (net of $6.6 million issuance costs) and inventory of $215.3 million. Cash and equivalents are not provided in the Notes. The debt is comprised solely of $500 million 4.875% senior notes due 2029, with a $350 million undrawn revolving facility maturing 2026 (amended to $325M and extended to 2030 in July 2025). Inventory increased $34.5 million from year-end 2024, mainly due to higher coal stockpiles (Note 2).
Note 11 reveals significant unsatisfied performance obligations: coke sales agreements have 17.8 million tons remaining, deliverable over a weighted average remaining term of approximately nine years. Logistics contracts have an estimated $47.5 million in take-or-pay revenue to be recognized over the next three years. These are customer commitments, not purchase commitments by SunCoke. No other material purchase commitments are disclosed in the Notes.
Capital expenditures for the six months ended June 30, 2025 totaled $17.5 million, with $6.6 million in Domestic Coke, $10.7 million in Logistics, and $0.1 million in Brazil Coke (Note 12). Debt activity was limited to a $1.1 million increase in net debt due to amortization of debt issuance costs. No share buybacks or dividend information appears in the Notes (dividends are disclosed only in the financial statements).
Note 12 provides detailed segment data. Domestic Coke generated $816.2 million in revenue for H1 2025 (down 9.4% from $901.1M in H1 2024), with Adjusted EBITDA of $90.4 million (down from $119.3M). Brazil Coke contributed $16.4 million in revenue (from licensing/operating fees) and $4.9 million Adjusted EBITDA. Logistics revenue was $37.5 million (down from $40.8M) with $21.4 million Adjusted EBITDA. Segment assets total $1,480.1 million, led by Domestic Coke at $1,306.8 million.
Net income of $22.9M was well covered by operating cash flow of $43.3M, reflecting strong cash conversion. The primary driver was a significant release of working capital, notably a $23.2M decrease in receivables, partially offset by a $34.4M inventory build. Depreciation and amortization of $57.4M provided a large non-cash add-back, while deferred tax benefits of $2.5M and share-based compensation of $1.8M were modest. Capital expenditures of $17.5M were roughly 40% of operating cash flow, indicating moderate reinvestment intensity. With dividends ($21.1M) and distributions to noncontrolling interests ($5.2M) totaling $26.3M, the company's operating cash flow of $43.3M was sufficient to cover both capex and capital returns, leaving a small surplus. However, the prior period had near-zero operating cash flow ($0.7M) due to heavy working capital outflows, making the year-over-year swing dramatic. No free cash flow was explicitly reported; an approximate calculation would be $43.3M - $17.5M = $25.8M. The financing section shows no net borrowing activity, with all capital returns funded internally.