Release Date: October 31, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- SunCoke Energy Inc (SXC, Financial) reported a consolidated adjusted EBITDA of $75.3 million for the third quarter, which includes a one-time gain of $9.5 million from a regulatory exemption.
- The company successfully reached an agreement with the U.S. Department of Labor to eliminate the majority of its legacy federal Black Lung liabilities, resulting in a significant reduction in future expenses and volatility.
- SunCoke Energy Inc (SXC) extended its Granite City Coke supply agreement with U.S. Steel, providing stability and continuity in its operations.
- The logistics segment showed strong performance, with adjusted EBITDA increasing to $13.7 million in the third quarter, driven by higher transloading volumes and favorable price adjustments.
- The company ended the quarter with a strong liquidity position, having a cash balance of $164.7 million and a fully undrawn revolver of $350 million.
Negative Points
- The domestic Coke segment experienced unfavorable performance due to lower coal to coke yields, impacting the overall financial results.
- The extension of the Granite City Coke supply agreement involves reduced tonnage and lower economics compared to the previous contract.
- The company is facing delays in the GP I project due to government inaction, affecting potential future agreements and operations.
- Adverse weather impacts from Hurricane Helene contributed to the revision of the full-year domestic Coke adjusted guidance range.
- The capital investment of $12 million for expansion at the KRT logistics facility indicates increased costs, although it aims to enhance future capacity.
Q & A Highlights
Q: Can you provide details on the extension of the Granite City Supply Agreement and its relation to the GP I project?
A: Katherine Gates, President and CEO, explained that the extension is part of the GP I project. It serves as a bridge during the delay caused by the government's inaction on approving the sale of US Steel to Nippon. This delay impacts all parties involved, including SunCoke, but the company remains committed to the project due to its strong fundamentals.
Q: What are the future opportunities related to the $12 million capital investment at the KRT logistics facility?
A: Katherine Gates, President and CEO, stated that the investment will expand the barge to rail unloading capacity from 2 million tons to 5 million tons. This expansion allows SunCoke to increase its business volume and build upon existing contracts and business seen this year.
Q: Where is the material from the Granite City Supply Agreement going?
A: Katherine Gates, President and CEO, mentioned that the coke is being sold to US Steel, and further details about the material's destination would be a question for US Steel.
Q: Are there any specific geographies or customer capacity expansions targeted with the logistics facility investment?
A: Katherine Gates, President and CEO, did not specify customer expansions but emphasized that SunCoke is always seeking new business opportunities at its logistics terminals and coke plants. The investment enhances their capacity to handle increased business volumes.
Q: How does the delay in the government's approval of the US Steel sale affect SunCoke's operations?
A: Katherine Gates, President and CEO, noted that the delay has consequences for all parties, including SunCoke, particularly affecting EBITDA at Granite City. However, the company remains optimistic about the GP I project's strong fundamentals and is willing to endure the delay.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
