SunCoke (SXC) Q2 Revenue Beats by 25%

Key Points

• Revenue for the quarter was $434.1 million, beating estimates by 24.7%, but falling 7.8% year-over-year.

• Earnings per share (GAAP) dropped to $0.02, missing GAAP EPS expectations by 88.6% and declining 92.0% year-over-year.

• Full-year 2025 adjusted EBITDA guidance was reaffirmed at $210 million to $225 million, despite margin pressures and weaker segment performance.

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SunCoke Energy (NYSE:SXC), a leading independent producer of coke for the steel industry, reported its second quarter results on July 30, 2025, for the period ending June 30. The company’s revenue (GAAP) came in higher than expected, but GAAP earnings per share and profitability missed Wall Street forecasts by a wide margin. Reported earnings per share (EPS) (GAAP) were $0.02, missing the $0.17 estimate, while revenue (GAAP) reached $434.1 million compared to the $348.05 million GAAP consensus. Segment profits and margins declined sharply compared to last year, and net income (GAAP) fell steeply. While the period saw meaningful progress on strategic moves, such as the Phoenix Global acquisition and an extension of its credit facility, the overall assessment is a mixed quarter with persistent headwinds in core operating results.

Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.

Business Overview and Core Focus Areas

SunCoke Energy operates mainly as a producer of coke, a critical fuel and reactant used in steelmaking. It also runs a logistics segment handling the movement of raw materials and finished coke for both export and domestic markets.

The bulk of SunCoke’s earnings and stability relies on long-term, take-or-pay contracts with major steel producers. These agreements guarantee fixed volumes and offer robust cash flow. Heat recovery technology, regulatory compliance, and safe workplace operations are vital for keeping its licenses and competitive edge. Recent years have seen the company concentrate on optimizing its logistics network and introducing operational improvements at its terminals.

Quarter in Review: Key Results and Developments

The quarter’s headline data shows revenue (GAAP) beat expectations by $86.05 million, but GAAP earnings fell well short of analyst targets, and profitability eroded compared to the same quarter a year ago. The weak bottom line was caused by lower margins in its Domestic Coke and Logistics segments, a trend highlighted by management in the company’s official release.

In the Domestic Coke segment, revenue declined by 7% compared to the prior year period, with adjusted EBITDA down 30% compared to the prior year period. Sales volumes dropped to 943,000 tons and per-ton profitability fell to $42.95 from $59.51. Management pointed to timing and mix of contract and spot coke sales, as well as continued drag from less favorable contract economics at Granite City. The spot coke market remained “highly challenged,” impacting profit margins and sales mix. Capacity utilization was 95%, down slightly, while production volumes and adjusted EBITDA per ton also decreased.

The Logistics segment experienced a 25.2% drop in revenue compared to the prior year period as transloading volumes at the Convent Marine Terminal declined. Adjusted EBITDA for the Logistics business fell 36.9% compared to the prior year period, with tons handled decreasing by over one million.

Brazil Coke operations remained stable, showing little year-over-year change in revenue, adjusted EBITDA, and production. On the cost side, corporate and other expenses decreased as legacy black lung liabilities were reduced. Transaction costs for the Phoenix Global acquisition weighed on net income, adding to the downward pressure on profits for the period.

Strategic Moves, Segment Details, and Key Themes

SunCoke continues to depend heavily on its long-term take-or-pay contracts. These deals require customers to pay for committed coke volumes, even if unused, stabilizing revenue but leaving earnings open to risk when contracts expire or are renegotiated. The extension of the Granite City contract proved to be a headwind, with less favorable economics compared to prior arrangements. Spot market sales—a smaller, more volatile part of the business—also remain a source of volatility, which management acknowledged in recent calls and disclosures.

On the regulatory and technology front, the company made no new announcements but continues to meet or surpass features set by environmental standards. Its heat-recovery technology both reduces environmental liability and supports operational efficiency. Management remains focused on workforce training and reducing legacy liabilities, as seen in lower health-related provisions this period.

From a logistics perspective, the period was defined by lower volumes at key terminals, directly impacting revenue and profits in that segment. A new take-or-pay coal handling agreement at the Kanawha River Terminal is expected to add earnings in the second half of the year. This business offers vital services to mining and steelmaking partners, and while challenged in the period, provides long-term value due to its capacity and strategic location.

One of the standout initiatives was the announced acquisition of Phoenix Global. The $325 million deal received regulatory approval and is set to close August 1, 2025. Management expects this acquisition to immediately add to the company’s earnings, broaden its customer base, and provide greater access to industrial services in the steel industry. However, upfront transaction costs impacted the quarter. The company also secured a longer liquidity runway by extending its revolving credit facility to July 2030.

Looking Forward: Guidance and Investor Considerations

Management reaffirmed its full-year 2025 outlook for Adjusted EBITDA (non-GAAP) at $210 million to $225 million, consistent with prior commentary. Domestic Coke production is expected to reach approximately 4.0 million tons in 2025. Operating cash flow is projected at $165 million to $180 million for 2025. Capital expenditures are projected at $60 million for 2025. Guidance for cash taxes is set at $5 million to $9 million for 2025. The company expects higher adjusted EBITDA in the second half of 2025, boosted by a more favorable coke sales mix and the new Kanawha coal handling contract.

Key risks include continued weakness in spot coke and logistics volumes, the potential expiration of major contracts, and any unexpected costs from the recent acquisition. The company’s combination of stable long-term contracts and proactive investments in technology and assets are designed to offset these pressures, but close monitoring of profitability, segment margins, and contract renewals remains warranted in coming periods.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.

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