SunCoke Energy Inc.
11/04/2025 | Press release | Distributed by Public on 11/04/2025 12:01
Quarterly Report for Quarter Ending September 30, 2025 (Form 10-Q)
Management's Discussion and Analysis of Financial Condition and Results of Operations
This Quarterly Report on Form 10-Q for the quarter ended September 30, 2025 (this "Quarterly Report on Form 10-Q") contains certain forward-looking statements, as defined in the Private Securities Litigation Reform Act of 1995. This discussion contains forward-looking statements about our business, operations and industry that involve risks and uncertainties, such as statements regarding our plans, objectives, expected future developments, expectations and intentions, and they involve known and unknown risks that are difficult to predict. As a result, our future results and financial condition may differ materially from those we currently anticipate as a result of the factors we describe in our filings with the Securities and Exchange Commission (the "SEC"), including our Annual Report on Form 10-K for the year ended December 31, 2024 (the "Annual Report on Form 10-K"), and as updated in this Quarterly Report on Form 10-Q, and other quarterly and current reports, which are on file with the SEC and are available at the SEC's website (www.sec.gov). Additionally, please see our "Cautionary Statement Concerning Forward-Looking Statements" located elsewhere in this Quarterly Report on Form 10-Q.
This Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") is based on financial data derived from the financial statements prepared in accordance with the United States generally accepted accounting principles ("GAAP") and certain other financial data that is prepared using a non-GAAP measure. For a reconciliation of the non-GAAP measure to its most comparable GAAP component, see "Non-GAAP Financial Measures"in this Item 2.
Our MD&A is provided in addition to the accompanying consolidated financial statements and notes to assist readers in understanding our results of operations, financial condition and cash flow.
Overview
SunCoke Energy, Inc. ("SunCoke Energy," "SunCoke," "Company," "we," "our" and "us") is the largest independent producer of high-quality coke in the Americas, as measured by tons of coke produced each year, and has more than 60 years of coke production experience. Coke is produced by heating metallurgical coal in a refractory oven, which releases certain volatile components from the coal, thus transforming the coal into coke. Our coke is primarily used as a principal raw material in the blast furnace steelmaking process as well as in the foundry production of casted iron, and the majority of our sales are derived from blast furnace coke sales made under long-term, take-or-pay agreements. We also sell coke produced utilizing capacity in excess of that reserved for our long-term, take-or-pay agreements to customers in both the export and North American domestic coke markets seeking high-quality product for their blast furnaces. We have designed, developed and built, and we currently own and operate, five cokemaking facilities in the United States ("U.S.") with collective nameplate capacity to produce approximately 4.2 million tons of blast furnace coke per year. Additionally, we designed and currently operate one cokemaking facility in Brazil under licensing and operating agreements on behalf of ArcelorMittal Brasil S.A. ("ArcelorMittal Brazil"), which has approximately 1.7 million tons of annual cokemaking capacity. Our cokemaking ovens utilize efficient, modern heat recovery technology designed to combust the coal's volatile components liberated during the cokemaking process and use the resulting heat to create steam or electricity for sale.
We also own and operate an industrial services business that provides export and domestic material handling and/or mixing services to coke, coal, steel, power and other bulk customers, as well as mission-critical mill services to leading steel producers globally. Our logistics terminals have the collective capacity to mix and transload more than 40 million tons of coal and other products annually and have storage capacity of approximately 3 million tons. These terminals are strategically located to reach Gulf Coast, East Coast, Great Lakes and international ports. Industrial services also include the removal, handling, and processing of molten slag at customer sites, as well as preparation and transportation of metal scraps, raw materials, and finished products.
Market Discussion
Our long-term, take-or-pay Domestic Coke sales agreements, which largely consume our capacity, are not impacted by the fluctuations of global coke prices. Non-contracted blast furnace coke, which is produced utilizing capacity in excess of that reserved for long-term, take-or-pay Domestic Coke sales agreements, is sold in the global market and sales can be impacted by fluctuations in both global coke prices and demand.
Our Industrial Services business includes materials handling at our logistics terminals and our on-site scrap and slag handling and processing operating sites for steel manufacturing customers. Our Convent Marine Terminal ("CMT") serves certain customers impacted by seaborne export market dynamics. Volumes through CMT are impacted by fluctuations in global energy needs and benchmark pricing for coal exports out of the U.S. Gulf Coast, which can be impacted by weather conditions, natural gas prices, geopolitical issues, U.S. thermal coal supply and global thermal coal demand. Our Kanawha River Terminal ("KRT") serves two primary domestic markets, metallurgical coal trade and thermal coal trade. Metallurgical markets are primarily impacted by steel prices and blast furnace operating levels whereas thermal markets are impacted by natural gas prices and electricity demand. Additionally, our Industrial Services operations serves customers with scrap and slag handling services at approximately fifteen operating sites across the United States, Brazil, Slovakia and Spain. Our customer base includes large steel producers in the regions where we operate, serving a mix of integrated and mini-mill operations. In recent years, a significant portion of the service contracts were extended including periodic adjustments based on the changes in macroeconomic indicators, which mitigates certain financial risks, such as inflationary impacts.
Third Quarter Key Financial Results
Our consolidated results of operations were as follows:
| Three Months Ended September 30, | Decrease |
Nine Months Ended September 30, |
Decrease | ||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||||||||||||||
| (Dollars in millions) | |||||||||||||||||||||||||||||||||||
| Net income | $ | 23.8 | $ | 33.3 | $ | (9.5) | $ | 46.7 | $ | 77.7 | $ | (31.0) | |||||||||||||||||||||||
| Net cash provided by operating activities | $ | 9.2 | $ | 107.2 | $ | (98.0) | $ | 52.5 | $ | 107.9 | $ | (55.4) | |||||||||||||||||||||||
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Adjusted EBITDA(1)
|
$ | 59.1 | $ | 75.3 | $ | (16.2) | $ | 162.5 | $ | 206.7 | $ | (44.2) | |||||||||||||||||||||||
(1)See the "Non-GAAP Financial Measures" section for both the definition of Adjusted EBITDA and the reconciliation from GAAP to the non-GAAP measurement.
Operating results for the three and nine months ended September 30, 2025 reflect lower pricing in our Domestic Coke segment mainly driven by the mix of contracted and non-contracted blast coke sales in the current year period, lower volumes due to unfavorable coal-to-coke yields, the impact of the Granite City contract extension economics and lower volumes in our logistics business due to market conditions. Operating results for the three and nine months ended September 30, 2025 include two months of operating results associated with acquisition of Flame Aggregator, LLC ("Phoenix Global"). Operating cash flows during the current period primarily reflect payments to settle liabilities assumed as part of the acquisition of Phoenix Global, an increase in income tax receivables related to capital investment tax credits and the unfavorable operating results discussed above. See detailed analysis of the quarter's results throughout this MD&A.
Recent Developments
•Acquisition of Phoenix Global. On August 1, 2025, we completed the acquisition of Phoenix Global, a privately held provider of mission-critical mill services to major steel producing companies. We acquired Phoenix Global for preliminary purchase consideration of $295.8 million. See Note 3 to our consolidated financial statements for further detail.
•One Big Beautiful Bill Act. On July 4, 2025, the One Big Beautiful Bill Act ("OBBBA") was enacted into law. The OBBBA includes significant provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework and the restoration of favorable tax treatment for certain business provisions. The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. Following the enactment of the OBBBA, the Company recognized the tax effects of the legislation in the interim period that included the enactment date, as required under ASC 740, Income Taxes. The Company has evaluated the impact of the OBBBA on cash taxes, deferred tax assets and liabilities and has reflected these effects in the consolidated financial statements for the third quarter of 2025.
•Revolving Facility Extension.On July 25, 2025, we amended and extended the maturity of our revolving credit facility ("Revolving Facility") to July 2030 under substantially similar terms. The amendment also reduced the Revolving Facility capacity by $25.0 million to $325.0 million.
•Granite City Contract Extension. In April 2025, the Granite City long-term, take-or-pay agreement with United States Steel Corporation ("U.S. Steel") was extended through September 30, 2025, with an option for U.S. Steel to extend for an additional three months through December 31, 2025. In September 2025, U.S. Steel exercised the option to extend the contract through December 31, 2025. The provisions and economics of this extension remain unchanged from those included in the previous extensions executed in 2024 and 2025. See "Item 1A. Risk Factors" below for additional detail.
•Algoma Coke Supply Contract. At the end of the third quarter of 2025, we were notified of Algoma Steel Inc's refusal to accept any additional coke tons. We are actively pursuing all avenues to enforce the contract and recover any financial losses.
Results of Operations
The following table sets forth amounts from the Consolidated Statements of Income for the three and nine months ended September 30, 2025 and 2024, respectively:
|
|
Three Months Ended September 30, | Increase (Decrease) |
Nine Months Ended September 30, |
Increase (Decrease) | ||||||||||||||||||||||||||||||||||
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|
2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||||||||||||||||
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(Dollars in millions) | |||||||||||||||||||||||||||||||||||||
| Revenues | ||||||||||||||||||||||||||||||||||||||
| Sales and other operating revenue | $ | 487.0 | $ | 490.1 | $ | (3.1) | $ | 1,357.1 | $ | 1,449.4 | $ | (92.3) | ||||||||||||||||||||||||||
| Costs and operating expenses | ||||||||||||||||||||||||||||||||||||||
|
Cost of products sold and operating expenses
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407.9 | 405.2 | 2.7 | 1,145.3 | 1,197.1 | (51.8) | ||||||||||||||||||||||||||||||||
| Selling, general and administrative expenses | 28.3 | 9.6 | 18.7 | 63.6 | 45.8 | 17.8 | ||||||||||||||||||||||||||||||||
| Depreciation and amortization expense | 37.4 | 28.1 | 9.3 | 94.8 | 90.1 | 4.7 | ||||||||||||||||||||||||||||||||
| Total costs and operating expenses | 473.6 | 442.9 | 30.7 | 1,303.7 | 1,333.0 | (29.3) | ||||||||||||||||||||||||||||||||
| Operating income | 13.4 | 47.2 | (33.8) | 53.4 | 116.4 | (63.0) | ||||||||||||||||||||||||||||||||
| Interest expense, net | 8.4 | 5.7 | 2.7 | 19.0 | 17.8 | 1.2 | ||||||||||||||||||||||||||||||||
| Income before income tax (benefit) expense | 5.0 | 41.5 | (36.5) | 34.4 | 98.6 | (64.2) | ||||||||||||||||||||||||||||||||
| Income tax (benefit) expense | (18.8) | 8.2 | (27.0) | (12.3) | 20.9 | (33.2) | ||||||||||||||||||||||||||||||||
| Net income | 23.8 | 33.3 | (9.5) | 46.7 | 77.7 | (31.0) | ||||||||||||||||||||||||||||||||
| Less: Net income attributable to noncontrolling interests | 1.6 | 2.6 | (1.0) | 5.3 | 5.5 | (0.2) | ||||||||||||||||||||||||||||||||
| Net income attributable to SunCoke Energy, Inc. | $ | 22.2 | $ | 30.7 | $ | (8.5) | $ | 41.4 | $ | 72.2 | $ | (30.8) | ||||||||||||||||||||||||||
Sales and Other Operating Revenue and Costs of Products Sold and Operating Expenses.Sales and other operating revenue and costs of products sold and operating expenses decreased for the three and nine months ended September 30, 2025 compared to the same prior year periods, driven by lower pricing in our Domestic Coke segment mainly driven by the mix of contracted and non-contracted blast coke sales in the current year period, the impact of the Granite City contract extension economics and the impact of the pass-through of lower coal prices on our long-term, take-or-pay agreements. Additionally, sales and other operating revenue for the three and nine months ended September 30, 2025 were negatively impacted by lower volumes due to unfavorable coal-to-coke yields. The decreases in sales and other operating revenue discussed above were offset by the inclusion of Phoenix Global results for the three and nine months ended September 30, 2025. The decreases in costs of products sold and operating expenses discussed above were more than offset and partially offset for the three and nine months ended September 30, 2025, respectively, by the inclusion of Phoenix Global results.
Selling, General and Administrative Expenses. Selling, general and administrative expenses during the three and nine months ended September 30, 2025 reflect transaction costs incurred related to the acquisition of Phoenix Global as well as the absence of a $9.5 million gain, which was the result of the extinguishment of certain liabilities related to our legacy coal mining business in 2024. Additionally, selling, general and administrative expenses for the three and nine months ended September 30, 2025 further increased due to the inclusion of Phoenix Global's costs in the current year periods. These increased costs were partially offset during the three and nine months ended September 30, 2025 by lower employee related expenses and lower legal expenses.
Depreciation and Amortization Expense. The increase to depreciation and amortization expense for the three and nine months ended September 30, 2025 reflects the inclusion of Phoenix Global's expense in the current year periods. This increase was partially offset for the nine months ended September 30, 2025 by the expiration of the useful lives of assets in our Domestic Coke segment placed into service in prior periods.
Interest Expense, Net.Interest expense, net, during the three and nine months ended September 30, 2025 increased as a result of interest incurred on Revolving Facility borrowings related to the acquisition of Phoenix Global.
Income Tax (Benefit) Expense. Income tax expense during the three and nine months ended September 30, 2025 benefited from an analysis conducted as part of tax planning on the Company's capital investments under Section 48 of the Internal Revenue Code, which resulted in a net tax benefit of $20.7 million. This benefit was partially offset by nondeductible transaction costs in connection with the acquisition of Phoenix Global. See Note 6 to our consolidated financial statements for further detail.
Noncontrolling Interest. Net income attributable to noncontrolling interests represents a 14.8 percent third-party interest in our Indiana Harbor cokemaking facility and fluctuates with the financial performance of that facility.
Results of Reportable Business Segments
Following the acquisition of Phoenix Global and as discussed in Note 14 - Business Segment Information, we updated our reportable segments and have recasted all segment information for all prior periods presented herein to reflect this change.
We report our business results through two reportable segments:
•Domestic Coke consists of our Jewell facility, located in Virginia, our Indiana Harbor facility, located in Indiana, our Granite City facility located in Illinois, and our Middletown and Haverhill facilities located in Ohio.
•Industrial Services consists of logistics terminals including, CMT, located in Louisiana, KRT, located in West Virginia, and Lake Terminal, located in Indiana. Lake Terminal is located adjacent to our Indiana Harbor cokemaking facility. Additionally, Industrial Services includes fifteen molten slag removal, handling and processing operating sites across the United States, Brazil, Slovakia and Spain.
Corporate expenses that can be identified with a segment have been included in determining segment results. The remainder is included in Corporate and Other, including licensing and operating fees payable to us under long-term contracts with ArcelorMittal Brazil as well as the expenses related to those operations and activity from our legacy coal mining business, which is not considered a reportable segment and therefore, not included in our segment information in Note 14. However, we have included Corporate and Other within our operating data below.
Management believes Adjusted EBITDA is an important measure of operating performance, which is used by the chief operating decision maker as one of the measurements to help determine the allocation of costs and resources to our reportable segments. Adjusted EBITDA should not be considered a substitute for the reported results prepared in accordance with GAAP. See the "Non-GAAP Financial Measures" section for both the definition of Adjusted EBITDA and the reconciliation from GAAP to the non-GAAP measurement.
Segment Financial and Operating Data
The following tables set forth financial and operating data by segment:
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|
Three Months Ended September 30, | Increase (Decrease) |
Nine Months Ended September 30, |
Increase (Decrease) | ||||||||||||||||||||||||||||||||||
|
|
2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||||||||||||||||
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|
(Dollars in millions) | |||||||||||||||||||||||||||||||||||||
| Sales and Other Operating Revenues: | ||||||||||||||||||||||||||||||||||||||
| Domestic Coke | $ | 413.8 | $ | 459.9 | $ | (46.1) | $ | 1,230.0 | $ | 1,361.0 | $ | (131.0) | ||||||||||||||||||||||||||
| Industrial Services | 64.1 | 21.4 | 42.7 | 101.6 | 62.2 | 39.4 | ||||||||||||||||||||||||||||||||
| Industrial Services intersegment sales | 5.3 | 6.0 | (0.7) | 16.8 | 17.8 | (1.0) | ||||||||||||||||||||||||||||||||
| Elimination of intersegment sales | (5.3) | (6.0) | 0.7 | (16.8) | (17.8) | 1.0 | ||||||||||||||||||||||||||||||||
| Total sales and other operating revenue reportable segments | $ | 477.9 | $ | 481.3 | $ | (3.4) | $ | 1,331.6 | $ | 1,423.2 | $ | (91.6) | ||||||||||||||||||||||||||
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Corporate and Other, net(1)
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9.1 | 8.8 | 0.3 | 25.5 | 26.2 | (0.7) | ||||||||||||||||||||||||||||||||
| Total sales and other operating revenue | $ | 487.0 | $ | 490.1 | $ | (3.1) | $ | 1,357.1 | $ | 1,449.4 | $ | (92.3) | ||||||||||||||||||||||||||
| Adjusted EBITDA: | ||||||||||||||||||||||||||||||||||||||
| Domestic Coke | $ | 44.0 | $ | 58.1 | $ | (14.1) | $ | 134.4 | $ | 177.4 | $ | (43.0) | ||||||||||||||||||||||||||
| Industrial Services | 18.2 | 13.7 | 4.5 | 39.6 | 38.9 | 0.7 | ||||||||||||||||||||||||||||||||
|
Corporate and Other, net(1)
|
(3.1) | 3.5 | (6.6) | (11.5) | (9.6) | (1.9) | ||||||||||||||||||||||||||||||||
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Total Adjusted EBITDA(2)
|
$ | 59.1 | $ | 75.3 | $ | (16.2) | $ | 162.5 | $ | 206.7 | $ | (44.2) | ||||||||||||||||||||||||||
| Coke Operating Data: | ||||||||||||||||||||||||||||||||||||||
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Domestic Coke capacity utilization(3)
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97 | % | 102 | % | (5) | % | 94 | % | 100 | % | (6) | % | ||||||||||||||||||||||||||
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Domestic Coke production volumes (thousands of tons)
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982 | 1,031 | (49) | 2,834 | 3,009 | (175) | ||||||||||||||||||||||||||||||||
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Domestic Coke sales volumes (thousands of tons)
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951 | 1,027 | (76) | 2,792 | 2,996 | (204) | ||||||||||||||||||||||||||||||||
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Domestic Coke Adjusted EBITDA per ton(4)
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$ | 46.27 | $ | 56.57 | $ | (10.30) | $ | 48.14 | $ | 59.21 | $ | (11.07) | ||||||||||||||||||||||||||
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Industrial Services Operating Data:
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Logistics tons handled (thousands of tons)
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5,235 | 5,843 | (608) | 15,704 | 17,277 | (1,573) | ||||||||||||||||||||||||||||||||
| Customer volumes serviced (thousands of tons) | 3,825 | - | 3,825 | 3,825 | - | 3,825 | ||||||||||||||||||||||||||||||||
(1)Corporate and Other, net is not a reportable segment and includes the results of Brazil cokemaking operations.
(2)See the "Non-GAAP Financial Measures" section below for both the definition of Adjusted EBITDA and the reconciliation from GAAP to the non-GAAP measurement.
(3)The production of foundry coke tons does not replace blast furnace coke tons on a ton for ton basis, as foundry coke requires longer coking time. The Domestic Coke capacity utilization is calculated assuming a single ton of foundry coke replaces approximately two tons of blast furnace coke.
(4)Reflects Domestic Coke Adjusted EBITDA divided by Domestic Coke sales volumes.
Analysis of Segment Results
Domestic Coke
The following table sets forth year-over-year changes in the Domestic Coke segment's sales and other operating revenues and Adjusted EBITDA results:
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Three Months Ended September 30, 2025 vs. 2024 |
Nine Months Ended September 30, 2025 vs. 2024 |
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| Sales and other operating revenue | Adjusted EBITDA | Sales and other operating revenue | Adjusted EBITDA | ||||||||||||||||||||
| (Dollars in millions) | |||||||||||||||||||||||
| Prior year period | $ | 459.9 | $ | 58.1 | $ | 1,361.0 | $ | 177.4 | |||||||||||||||
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Volume(1)
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(31.1) | (9.0) | (87.5) | (28.7) | |||||||||||||||||||
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Price(2)
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(16.6) | (12.4) | (47.5) | (34.3) | |||||||||||||||||||
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Operating and maintenance costs(3)
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N/A | 3.3 | N/A | 11.3 | |||||||||||||||||||
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Energy and other(4)
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1.6 | 4.0 | 4.0 | 8.7 | |||||||||||||||||||
| Current year period | $ | 413.8 | $ | 44.0 | $ | 1,230.0 | $ | 134.4 | |||||||||||||||
(1)Volumes during the three and nine months ended September 30, 2025 were negatively impacted by lower coal-to-coke yields as well as the impact of the Granite City contract extension.
(2)The pass-through of lower coal prices decreased sales and other operating revenue during the three and nine months ended September 30, 2025. Sales and other operating revenue and Adjusted EBITDA decreased for the three and nine months ended September 30, 2025 as a result of lower pricing on our non-contracted blast coke sales and the impact of lower economics on the Granite City contract extension. Additionally, Adjusted EBITDA was negatively impacted by lower coal-to-coke yields on our long-term, take-or-pay agreements.
(3)Operating and maintenance costs during the three and nine months ended September 30, 2025 benefited from lower planned maintenance outage costs in the current year as well as the timing of other maintenance costs.
(4)Energy and other during the three and nine months ended September 30, 2025 increased due to favorable energy pricing and volumes.
Industrial Services
During the three and nine months ended September 30, 2025, sales and other operating revenues, exclusive of intersegment sales, were $64.1 million and $101.6 million, respectively, compared to $21.4 million and $62.2 million, respectively, in the corresponding prior year periods. Adjusted EBITDA, inclusive of the impact of intersegment transactions, during the three and nine months ended September 30, 2025 were $18.2 million and $39.6 million, respectively, compared to $13.7 million and $38.9 million, respectively, in the corresponding prior year periods. Industrial services results during the three and nine months ended September 30, 2025, as compared to the same prior year periods include the results of two months of Phoenix Global. The three and nine months ended September 30, 2025, as compared to the same prior year periods were negatively impacted by lower transloading volumes due to market conditions and lower transloading pricing at CMT driven by the absence of an index price adjustment benefit.
Corporate and Other
Corporate and Other Adjusted EBITDA represented a loss of $3.1 million and $11.5 million, respectively, for the three and nine months ended September 30, 2025, compared to income of $3.5 million and a loss of $9.6 million, respectively, in the corresponding prior year periods. The three and nine months ended September 30, 2025 reflect transaction costs incurred related to the acquisition of Phoenix Global as well as the absence of a $9.5 million gain, which was the result of the extinguishment of certain liabilities related to our legacy coal mining business in the prior year. These increases in costs were partially offset during the three and nine months ended September 30, 2025 by lower employee related expenses and lower legal expenses.
Non-GAAP Financial Measures
In addition to the GAAP results provided in this Quarterly Report on Form 10-Q, we have provided a non-GAAP financial measure, Adjusted EBITDA. Our management, as well as certain investors, use this non-GAAP measure to analyze our current and expected future financial performance. This measure is not in accordance with, or a substitute for, GAAP and may be different from, or inconsistent with, non-GAAP financial measures used by other companies.
The Company evaluates the performance of its segments based on segment Adjusted EBITDA, which is defined as earnings before interest, taxes, depreciation and amortization ("EBITDA"), adjusted for any impairments, restructuring costs, gains or losses on extinguishment of debt, gains or losses on derivative instruments, site closure costs and/or transaction costs ("Adjusted EBITDA"). EBITDA and Adjusted EBITDA do not represent and should not be considered alternatives to net income or operating income under GAAP and may not be comparable to other similarly titled measures in other businesses.
Management believes Adjusted EBITDA is an important measure in assessing operating performance. Adjusted EBITDA provides useful information to investors because it highlights trends in our business that may not otherwise be apparent when relying solely on GAAP measures and because it eliminates items that have less bearing on our operating performance. EBITDA and Adjusted EBITDA are not measures calculated in accordance with GAAP, and they should not be considered a substitute for net income, or any other measure of financial performance presented in accordance with GAAP. Additionally, other companies may calculate Adjusted EBITDA differently than we do, limiting its usefulness as a comparative measure.
Reconciliation of Non-GAAP Financial Measures
Below is a reconciliation of Adjusted EBITDA to net income, which is its most directly comparable financial measure calculated and presented in accordance with GAAP:
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||||||
| (Dollars in millions) | ||||||||||||||||||||||||||
| Net income | $ | 23.8 | $ | 33.3 | $ | 46.7 | $ | 77.7 | ||||||||||||||||||
| Add: | ||||||||||||||||||||||||||
| Depreciation and amortization expense | 37.4 | 28.1 | 94.8 | 90.1 | ||||||||||||||||||||||
| Interest expense, net | 8.4 | 5.7 | 19.0 | 17.8 | ||||||||||||||||||||||
| Income tax (benefit) expense | (18.8) | 8.2 | (12.3) | 20.9 | ||||||||||||||||||||||
| Loss on derivative forward contracts | 0.7 | - | 0.7 | - | ||||||||||||||||||||||
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Restructuring costs(1)
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3.0 | - | 3.5 | - | ||||||||||||||||||||||
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Transaction costs(2)
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4.6 | - | 10.1 | 0.2 | ||||||||||||||||||||||
| Adjusted EBITDA | $ | 59.1 | $ | 75.3 | $ | 162.5 | $ | 206.7 | ||||||||||||||||||
(1)Restructuring costs include severance and other related charges primarily associated with the acquisition of Phoenix Global.
(2)Reflects costs incurred related to the acquisition of Phoenix Global and the granulated pig iron project with U.S. Steel.
Liquidity and Capital Resources
Our primary liquidity needs are to fund working capital and investments, service our debt, maintain cash reserves and replace partially or fully depreciated assets and other capital expenditures. Our sources of liquidity include cash generated from operations, borrowings under our Revolving Facility and, from time to time, debt and equity offerings. We believe our current resources are sufficient to meet our working capital requirements for our current business for at least the next 12 months and thereafter for the foreseeable future. We funded the acquisition of Phoenix Global with existing cash and borrowing availability under our Revolving Facility. As of September 30, 2025, we had $80.4 million of cash and cash equivalents and $126.0 million of borrowing availability under our Revolving Facility.
We may, from time to time, seek to retire or purchase additional amounts of our outstanding equity and/or debt securities through cash purchases and/or exchanges for other securities, in open market purchases, privately negotiated transactions or otherwise. Such repurchases or exchanges, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. The amounts involved may be material. Refer to "Part II Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds."
Cash Flow Summary
The following table sets forth a summary of the net cash provided by (used in) operating, investing and financing activities for the nine months ended September 30, 2025 and 2024:
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|
Nine Months Ended September 30, | |||||||||||||
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2025 | 2024 | ||||||||||||
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(Dollars in millions) | |||||||||||||
| Net cash provided by operating activities | $ | 52.5 | $ | 107.9 | ||||||||||
| Net cash used in investing activities | (315.0) | (47.6) | ||||||||||||
| Net cash provided by (used in) financing activities | 152.9 | (35.7) | ||||||||||||
| Effect of translation changes on cash | 0.4 | - | ||||||||||||
| Net (decrease) increase in cash and cash equivalents | $ | (109.2) | $ | 24.6 | ||||||||||
Cash Flows from Operating Activities
Net cash provided by operating activities decreased by $55.4 million to $52.5 million for the nine months ended September 30, 2025 as compared to $107.9 million in the corresponding prior year period. The decrease primarily reflects payments to settle liabilities assumed as part of the acquisition of Phoenix Global, an increase in income tax receivables related to capital investment tax credits and unfavorable operating results for the current year period as compared to the same prior year period.
Cash Flows from Investing Activities
Net cash used in investing activities increased by $267.4 million to $315.0 million for the nine months ended September 30, 2025 as compared to $47.6 million in the corresponding prior year period. The increase was primarily driven by cash paid for the acquisition of Phoenix Global of $271.5 million, which consisted of the purchase consideration net of cash and cash equivalents assumed in the acquisition. See Note 3 to our consolidated financial statements for further detail. This increase was partially offset by higher capital spending in connection with certain upgrades to improve the long-term reliability and operational performance of our assets in the prior year period. Additionally, the timing of payments related to ongoing capital expenditures further contributed to the decrease in capital spending in the current year as compared to the same prior year period. Refer to "Capital Requirements and Expenditures" below for further detail.
Cash Flows from Financing Activities
Net cash provided by financing activities increased by $188.6 million to $152.9 million for the nine months ended September 30, 2025 as compared to net cash used in financing activities of $35.7 million in the corresponding prior year period. The increase in net cash provided by financing activities was primarily driven by higher net borrowings of $199.0 million on the Revolving Facility, related to funding the acquisition of Phoenix Global. This increase was partially offset by an increase in repayments of finance lease liabilities, consisting of $2.0 million on additional finance leases acquired in the acquisition as well as $1.8 million related to finance lease buyouts in the current year period. Additionally, the increase in the current year period was further offset by an increase to dividends paid of $3.7 million as compared to the prior year period, primarily as a result of an increase in the dividend per share amount, debt issuance costs of $2.0 million related to the amendment and extension of the Revolving Facility and higher cash distributions made to noncontrolling interests of $1.5 million.
Dividends
On July 30, 2025, SunCoke's Board of Directors declared a cash dividend of $0.12 per share of the Company's common stock. This dividend was paid on September 2, 2025, to stockholders of record on August 15, 2025.
Additionally, on October 30, 2025, SunCoke's Board of Directors declared a cash dividend of $0.12 per share of the Company's common stock. This dividend will be paid on December 1, 2025, to stockholders of record on November 17, 2025.
Covenants
As of September 30, 2025, we were in compliance with all applicable debt covenants. We do not anticipate a violation of these covenants nor do we anticipate that any of these covenants will restrict our operations or our ability to obtain additional financing. See Note 8 to the consolidated financial statements for details on debt covenants.
Capital Requirements and Expenditures
Our operations are capital intensive, requiring significant investment to upgrade or enhance existing operations and to meet environmental and operational regulations. The level of future capital expenditures will depend on various factors, including market conditions, regulatory requirements and customer requirements, and may differ from current or anticipated levels. Material changes in capital expenditure levels may impact financial results, including but not limited to the amount of depreciation, interest expense and repair and maintenance expense.
Our capital requirements have consisted, and are expected to consist, primarily of:
•Ongoing capital expenditures required to maintain equipment reliability, the integrity and safety of our coke ovens, steam generators and assets at our logistics terminals and operating sites and to comply with environmental regulations. Ongoing capital expenditures are made to replace partially or fully depreciated assets in order to maintain the existing operating capacity of the assets and/or to extend their useful lives and also include new equipment that improves the efficiency, reliability or effectiveness of existing assets. Ongoing capital expenditures do not include normal repairs and maintenance expenses, which are expensed as incurred;
•Expansion capital expenditures to acquire and/or construct complementary assets to grow our business and to expand existing facilities as well as capital expenditures made to grow our business through new markets or enable the renewal of a coke sales agreement and/or industrial services agreement and on which we expect to earn a reasonable return; and
•Environmental project expenditures to ensure that our existing facilities operate in accordance with changing regulations.
The following table summarizes our capital expenditures:
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Nine Months Ended September 30, | |||||||||||||
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2025 | 2024 | ||||||||||||
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(Dollars in millions) | |||||||||||||
| Ongoing capital | $ | 33.8 | $ | 44.1 | ||||||||||
| Expansion capital | 9.2 | 4.0 | ||||||||||||
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Total capital expenditures(1)
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$ | 43.0 | $ | 48.1 | ||||||||||
(1)Reflects actual cash payments during the periods presented for our capital requirements.
Critical Accounting Policies
An update to our summary of our significant accounting policies included in our fiscal 2024 Annual Report on Form 10-K is included in Note 2 to our consolidated financial statements. Our management believes that the application of these policies on a consistent basis enables us to provide the users of our financial statements with useful and reliable information about our operating results and financial condition. The preparation of our consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and the disclosures of assets and liabilities. The Company's valuation of tangible and intangible assets as part of business combinations is subject to such estimates and assumptions. Our management bases its estimates on various assumptions that are believed to be reasonable under the circumstances. Our management believes the "Management's Discussion and Analysis of Financial Condition and Results of Operations" and consolidated financial statements and footnotes provide a meaningful and fair perspective of our financial condition.
Business Combinations
We account for acquisitions using the acquisition method, under which, upon obtaining control, we recognize each identifiable asset acquired and liability assumed at its acquisition date fair value. The determination of those fair values requires significant judgment and the use of valuation techniques when observable market inputs are unavailable. We engage third-party valuation specialists to review these critical assumptions and prepare detailed fair value analyses for material acquisitions.
We value intangible assets using models such as the income approach, including the relief-from-royalty method and multi-period excess earnings method as well as other cost-based techniques. Key unobservable inputs include forecasted revenue growth rates, discount rates, royalty rates and estimated useful lives. We value acquired property, plant and equipment using a combination of the cost and market approaches. The market approach estimates fair value by analyzing recent actual market transactions for similar assets or liabilities. The cost approach estimates fair value based on the expected cost to replace or reproduce the asset or liability and relies on assumptions regarding the occurrence and extent of any physical, functional and/or economic obsolescence. Some of the more significant estimates and assumptions inherent in these approaches are the values of asset replacement costs, comparable assets and estimated remaining economic lives of the assets.
Any excess of the purchase price over the fair values of identifiable net assets is recorded as goodwill. During the measurement period, up to one year from the acquisition date, significant provisional amounts are adjusted with a corresponding offset to goodwill.
Recent Accounting Standards
There have been no new accounting standards material to the Company that have been adopted during the nine months ended September 30, 2025.
SunCoke Energy Inc. published this content on November 04, 2025, and is solely responsible for the information contained herein. Distributed via Edgar on November 04, 2025 at 18:01 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]