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Suncoke Energy Inc (SXC)
NYSE:SXC
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Suncoke Energy
(NYSE:SXC)
67Neutral
Positive Factors
Business Diversification
The investment would allow SXC to renew the long-term contract at Granite City and diversify its business by entering the EAF segment.
Financial Performance
SXC reported 4Q adj. EBITDA of $66M, topping the $63M consensus.
Liquidity
Liquidity improved sequentially to $540M from $515M in 3Q with the entire $350M revolver remaining available.
Negative Factors
Domestic Coke Business
The decline is largely driven by a lower expected contribution from the domestic coke business.
Domestic Coke Segment Performance
Domestic coke segment adj. EBITDA is forecast to decline by $43M-$50M y/y on reduced adj. EBITDA/ton.
Margins
Margins will be pressured due to the combination of reduced economics on the previously extended Granite City contract as well as more spot exposure at Haverhill.
Suncoke Energy (SXC) vs. S&P 500 (SPY)
Market Cap
$727.96M
Dividend Yield5.35%
Average Volume (3M)968.63K
Price to Earnings (P/E)7.6
Beta (1Y)0.85
Revenue Growth-6.19%
EPS Growth65.91%
CountryUS
Employees1,168
SectorBasic Materials
Sector Strength60
IndustryCoal
Share Statistics
EPS (TTM)1.12
Shares Outstanding84,646,200
10 Day Avg. Volume1,004,377
30 Day Avg. Volume968,629
Financial Highlights & Ratios
PEG Ratio0.12
Price to Book (P/B)N/A
Price to Sales (P/S)0.40
Price to Cash Flow (P/CF)3.20
P/FCF Ratio3.20
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$13.00Price Target Upside44.44% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering1
Suncoke Energy Business Overview & Revenue Model
Company DescriptionSunCoke Energy, Inc. operates as an independent producer of coke in the Americas and Brazil. The company operates through three segments: Domestic Coke, Brazil Coke, and Logistics. It offers metallurgical and thermal coal. The company also provides handling and/or mixing services to steel, coke, electric utility, coal producing, and other manufacturing based customers. In addition, it owns and operates five cokemaking facilities in the United States and one cokemaking facility in Brazil. SunCoke Energy, Inc. was founded in 1960 and is headquartered in Lisle, Illinois.
How the Company Makes MoneySunCoke Energy makes money through the production and sale of metallurgical coke, which is a critical component in steelmaking. The company's revenue streams are primarily derived from long-term, take-or-pay contracts with steel producers who purchase coke for their operations. Additionally, SunCoke Energy generates revenue from its logistics segment, which provides material handling and transportation services. The company's proprietary heat recovery technology also contributes to its earnings by generating steam and electricity, which are sold to power grids or used internally, enhancing operational efficiency and offering a secondary revenue stream. Strategic partnerships with major steel manufacturers and a focus on efficiency and sustainability further bolster the company's profitability.
Suncoke Energy Financial Statement Overview
Summary
Suncoke Energy shows strong operational efficiency and a healthy capital structure but faces challenges with declining revenue and free cash flow. Profitability is stable, but improvements are needed in profit margins and cash flow growth.Income Statement
Suncoke Energy has demonstrated a strong gross profit margin of 100% in 2024, indicating efficient cost management. However, the net profit margin of 4.96% suggests room for improvement in profitability. Revenue decreased by 6.18% from the previous year, indicating potential market challenges. The company maintains a solid EBIT margin of 7.85% and an EBITDA margin of 13.60%, showing stable operational efficiency.75
Positive
Balance Sheet
The company's debt-to-equity ratio improved to 0.72, reflecting a better balance between debt and equity financing. ROE increased to 14.09%, indicating effective use of equity to generate profits. The equity ratio of 40.78% suggests a healthy capital structure, but there is a need for cautious leverage management to mitigate financial risk.70
Positive
Cash Flow
Free cash flow decreased by 31.41% in 2024, indicating challenges in cash generation. However, the operating cash flow to net income ratio of 1.76 shows a solid cash operating efficiency. The free cash flow to net income ratio of 1.00 highlights the company's ability to convert net income into free cash flow, albeit with reduced growth.65
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 1.94B | 2.06B | 1.97B | 1.46B | 1.33B | Gross Profit |
| 332.00M | 338.60M | 367.60M | 337.20M | 284.80M | EBIT |
| 151.90M | 125.10M | 153.70M | 141.50M | 69.70M | EBITDA |
| 270.80M | 267.90M | 296.20M | 243.50M | 210.20M | Net Income Common Stockholders |
| 95.90M | 57.50M | 100.70M | 43.40M | 8.80M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 189.60M | 140.10M | 90.00M | 63.80M | 48.40M | Total Assets |
| 1.67B | 1.66B | 1.65B | 1.62B | 1.61B | Total Debt |
| 495.00M | 490.30M | 532.20M | 613.60M | 676.90M | Net Debt |
| 305.40M | 350.20M | 442.20M | 549.80M | 628.50M | Total Liabilities |
| 957.20M | 1.01B | 1.03B | 1.08B | 1.11B | Stockholders Equity |
| 680.20M | 614.20M | 585.60M | 498.10M | 469.00M |
| Cash Flow | Free Cash Flow | |||
| 95.90M | 139.80M | 133.40M | 134.50M | 83.90M | Operating Cash Flow |
| 168.80M | 249.00M | 208.90M | 233.10M | 157.80M | Investing Cash Flow |
| -72.30M | -109.20M | -70.20M | -99.30M | -75.30M | Financing Cash Flow |
| -47.00M | -89.70M | -112.50M | -118.40M | -131.20M |
Suncoke Energy Technical Analysis
Negative
9.00
Price Trends
9.21
Negative
10.15
Negative
9.65
Negative
Market Momentum
-0.04
Negative
49.64
Neutral
48.83
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SXC, the sentiment is Negative. The current price of 9 is below the 20-day moving average (MA) of 9.02, below the 50-day MA of 9.21, and below the 200-day MA of 9.65, indicating a bearish trend. The MACD of -0.04 indicates Negative momentum. The RSI at 49.64 is Neutral, neither overbought nor oversold. The STOCH value of 48.83 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for SXC.
Suncoke Energy Risk Analysis
Suncoke Energy disclosed 34 risk factors in its most recent earnings report. Suncoke Energy reported the most risks in the “Production” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Suncoke Energy Peers Comparison
Overall Rating
UnderperformOutperform
Sector (47)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
78 Outperform | $1.37B | 4.16 | 10.41% | 2.67% | -14.50% | -46.36% | |
74 Outperform | $1.18B | 7.93 | 32.48% | 3.33% | -16.56% | -24.95% | |
69 Neutral | $2.30B | 9.14 | 12.64% | 0.73% | -9.10% | -47.93% | |
67 Neutral | $727.96M | 7.65 | 14.82% | 5.35% | -6.19% | 65.91% | |
60 Neutral | $1.44B | 8.35 | 11.64% | 0.36% | -14.81% | -71.49% | |
47 Neutral | $2.43B | -3.06 | -22.76% | 3.59% | 4.02% | -29.07% | |
39 Underperform | $532.74M | ― | -121.29% | ― | -37.38% | -494.24% |
* Basic Materials Sector Average
Performance Comparison
SXC
Suncoke Energy
9.00
-1.14
-11.24%
HNRG
Hallador Energy Company
13.36
8.82
194.27%
NRP
Natural Resource PRN
94.60
8.08
9.34%
AMR
Alpha Metallurgical Resources
118.67
-206.13
-63.46%
HCC
Warrior Met Coal
47.37
-15.11
-24.18%
BTU
Peabody Energy Comm
12.73
-9.89
-43.72%
Suncoke Energy Earnings Call Summary
Earnings Call Date: Jan 30, 2025 | % Change Since: -8.54% | Next Earnings Date: Apr 30, 2025
Earnings Call Sentiment Neutral
While SunCoke Energy reported strong safety performance and exceeded financial expectations for 2024, challenges in the steel market and lower guidance for 2025 indicate a cautious outlook. The delay in the GPI project and contract uncertainties at Haverhill further contribute to these challenges.Highlights
Record Safety Performance
SunCoke Energy achieved a record-setting total recordable incident rate of 0.5, highlighting their strong commitment to safety.
Exceeding Financial Guidance
SunCoke delivered consolidated adjusted EBITDA of $272.8 million, surpassing the high end of their increased guidance range of $270 million. Free cash flow also exceeded expectations at $96 million, above the guidance range of $90 million.
Successful Contract Extensions
SunCoke extended the Granite City cokemaking contract through June 2025 with an option to extend through year-end.
Dividend Increase
The quarterly dividend was increased from $0.10 per share to $0.12 per share, returning approximately $38 million to shareholders.
Strong Liquidity Position
SunCoke ended the year with a cash balance of $189.6 million and full availability of a $350 million revolver, resulting in liquidity of approximately $540 million.
Lowlights
Lower 2025 EBITDA Guidance
SunCoke's 2025 consolidated adjusted EBITDA is expected to decrease to between $210 million and $225 million, driven by lower margins at Granite City and Haverhill.
Market Challenges
The steel industry faces broader challenges with lower pricing and demand, impacting SunCoke's business outlook.
Haverhill Contract Uncertainty
Currently, there is no agreement on the expiring contract at Haverhill, leading to assumptions of selling tons in the spot market at lower margins.
Delay in GPI Project
Ongoing delays in the U.S. Steel Nippon transaction have resulted in delays for the GPI project agreement.
Company Guidance
During the SunCoke Energy Fourth Quarter 2024 Earnings Conference Call, the company provided comprehensive guidance for 2025. SunCoke expects consolidated adjusted EBITDA between $210 million and $225 million, a decrease from the $272.8 million achieved in 2024. This reduction is primarily attributed to lower margins and economic terms at both the Granite City and Haverhill facilities. The domestic coke segment is anticipated to deliver adjusted EBITDA between $185 million and $192 million, with approximately 4 million tons of sales, including 3.3 million tons under long-term take-or-pay contracts and 875,000 tons in the spot market. The logistics segment is projected to achieve adjusted EBITDA between $45 million and $50 million. Operating cash flow is forecasted to be between $165 million and $180 million, while free cash flow is expected to range from $100 million to $115 million, supported by a lower capital expenditure of approximately $65 million. Despite market challenges, SunCoke Energy remains committed to maintaining strong safety performance and exploring new growth opportunities.Suncoke Energy Corporate Events
Business Operations and StrategyFinancial Disclosures
SunCoke Energy Reports Strong 2024 Financial Results
Positive
Jan 30, 2025
On January 30, 2025, SunCoke Energy announced its financial results for the fourth quarter and full-year 2024, highlighting record safety performance and strong operational metrics. The company achieved a net income of $95.9 million for 2024, driven by operational efficiencies and a one-time gain from liability eliminations. Despite a decrease in revenues due to lower coal costs, Adjusted EBITDA increased due to lower planned outage costs and improved logistics performance. Looking forward to 2025, SunCoke anticipates challenges due to a contract extension at reduced rates and lower coke sales margins due to market conditions. However, with a strong balance sheet and continued focus on safety and capital allocation, the company aims to deliver significant value to stakeholders.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.