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LISLE, Ill., Oct. 31, 2022 /PRNewswire/ -- SunCoke Energy, Inc. (NYSE: SXC) today reported record third quarter 2022 results, reflecting continued strong financial performance in our Domestic Coke and Logistics segments.
"Our Domestic Coke business performed at exceptionally high levels during the quarter which allowed the company to fully realize the benefits of a strong export coke market. Our Logistics segment continued to deliver solid results, with higher volumes and favorable pricing. Additionally, we are excited to announce the foundry expansion project at our Jewell facility which will enable us to further build upon our success in the foundry markets," said Mike Rippey, President and Chief Executive Officer of SunCoke Energy, Inc. "Recognizing our record year-to-date financial performance, we now expect to surpass the full year Adjusted EBITDA guidance high end of $285 million."
THIRD QUARTER CONSOLIDATED RESULTSThree Months Ended September 30, | |||||
(Dollars in millions) | 2022 | 2021 | Increase | ||
Revenues | $ 516.8 | $ 366.5 | $ 150.3 | ||
Net (loss) income attributable to SXC | $ 41.4 | $ 23.0 | $ 18.4 | ||
Adjusted EBITDA(1) | $ 83.7 | $ 73.9 | $ 9.8 |
(1) | See definition of Adjusted EBITDA and reconciliation elsewhere in this release. |
Revenues in the third quarter of 2022 increased $150.3 million as compared to the same prior year period, primarily reflecting the pass-through of higher coal prices and favorable export coke pricing.
Net income attributable to SXC increased $18.4 million from the same prior year period as a result of favorable operating results discussed below. Additionally, during the third quarter of 2022 the Company recorded deferred tax benefits of $15.9 million as a result of the release of a valuation allowance established on the deferred tax assets attributable to existing foreign tax credit carryforwards and the recognition of research and development credits.
Adjusted EBITDA increased $9.8 million as compared to the same prior year period, primarily as a result of higher margins on export sales.
THIRD QUARTER SEGMENT RESULTSDomestic CokeDomestic Coke consists of cokemaking facilities and heat recovery operations at our Jewell, Indiana Harbor, Haverhill, Granite City and Middletown plants.
Three Months Ended September 30, | |||||
(Dollars in millions, except per ton amounts) | 2022 | 2021 | Increase (decrease) | ||
Revenues | $ 487.7 | $ 340.3 | $ 147.4 | ||
Adjusted EBITDA(1) | $ 76.6 | $ 65.1 | $ 11.5 | ||
Sales volumes (thousands of tons) | 1,022 | 1,056 | (34) | ||
Adjusted EBITDA per ton(2) | $ 74.95 | $ 61.65 | $ 13.30 |
(1) | See definition of Adjusted EBITDA and reconciliation elsewhere in this release. |
(2) | Reflects Domestic Coke Adjusted EBITDA divided by Domestic Coke sales volumes. |
Revenues increased $147.4 million as compared to the same prior year period primarily reflecting the pass-through of higher coal prices and favorable export coke pricing.
Adjusted EBITDA increased $11.5 million as compared to the same prior year period largely due to higher margins on export sales.
LogisticsLogistics consists of the handling and mixing services of coal and other aggregates at our Convent Marine Terminal ("CMT"), Lake Terminal, Kanawha River Terminals ("KRT") and Dismal River Terminal ("DRT").
Three Months Ended September 30, | |||||
(Dollars in millions, except per ton amounts) | 2022 | 2021 | Increase (decrease) | ||
Revenues | $ 20.2 | $ 17.0 | $ 3.2 | ||
Intersegment sales | $ 7.4 | $ 6.3 | $ 1.1 | ||
Adjusted EBITDA(1) | $ 12.9 | $ 11.6 | $ 1.3 | ||
Tons handled (thousands of tons) | 5,721 | 4,940 | 781 |
(1) | See definition of Adjusted EBITDA and reconciliation elsewhere in this release. |
Revenues and Adjusted EBITDA increased by $3.2 million and $1.3 million, respectively, as compared to the same prior year period driven by higher transloading volumes across the terminals and favorable pricing.
Brazil CokeBrazil Coke consists of a cokemaking facility in Vitória, Brazil, which we operate for an affiliate of ArcelorMittal.
Revenues were $8.9 million during the third quarter 2022, which was comparable to revenues of $9.2 million in the third quarter 2021.
Adjusted EBITDA was $3.3 million during the third quarter 2022, which was $1.2 million lower than adjusted EBITDA of $4.5 million in the third quarter 2021, primarily due to the absence of production bonuses for meeting certain volume targets.
Corporate and OtherCorporate and other expenses, which include activity from our legacy coal mining business, was $9.1 million during third quarter 2022, $1.8 million higher than expense of $7.3 million during third quarter 2021 driven primarily by higher employee related expenses and higher professional services.
2022 OUTLOOKOur 2022 guidance (revised in August 2022) is based on higher export margins in our Domestic Coke plants and the API2 price adjustment benefit at CMT.
Our 2022 revised guidance is as follows:
We will host our quarterly earnings call at 11:00 a.m. Eastern Time (10:00 a.m. Central Time) today. The conference call will be webcast live and archived for replay in the Investors section of www.suncoke.com. Investors and analysts may participate in this call by dialing 1-888-660-6347 in the U.S. or 1-929-201-6594 if outside the U.S., confirmation code 36382.
SUNCOKE ENERGY, INC.SunCoke Energy, Inc. (NYSE: SXC) supplies high-quality coke to domestic and international customers. Our coke is used in the blast furnace production of steel as well as the foundry production of casted iron, with the majority of sales under long-term, take-or-pay contracts. We also export coke to overseas customers seeking high-quality product for their blast furnaces. Our process utilizes an innovative heat-recovery technology that captures excess heat for steam or electrical power generation and draws upon more than 60 years of cokemaking experience to operate our facilities in Illinois, Indiana, Ohio, Virginia and Brazil. Our logistics business provides export and domestic material handling services to coke, coal, steel, power and other bulk customers. The logistics terminals have the collective capacity to mix and transload more than 40 million tons of material each year and are strategically located to reach Gulf Coast, East Coast, Great Lakes and international ports. To learn more about SunCoke Energy, Inc., visit our website at www.suncoke.com.
SunCoke routinely announces material information to investors and the marketplace using press releases, Securities and Exchange Commission filings, public conference calls, webcasts and SunCoke's website at http://www.suncoke.com/English/investors/sxc. The information that SunCoke posts to its website may be deemed to be material. Accordingly, SunCoke encourages investors and others interested in SunCoke to routinely monitor and review the information that SunCoke posts on its website, in addition to following SunCoke's press releases, Securities and Exchange Commission filings and public conference calls and webcasts.
DEFINITIONSThis press release and related conference call contain "forward-looking statements" (as defined in Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended). Forward-looking statements often may be identified by the use of such words as "believe," "expect," "plan," "project," "intend," "anticipate," "estimate," "predict," "potential," "continue," "may," "will," "should," or the negative of these terms, or similar expressions. However, the absence of these words or similar expressions does not mean that a statement is not forward-looking. Forward-looking statements are not historical facts, but instead represent only our beliefs regarding future events, many of which are inherently uncertain and involve significant known and unknown risks and uncertainties (many of which are beyond the control of SunCoke) that could cause our actual results and financial condition to differ materially from the anticipated results and financial condition indicated in such forward-looking statements. These risks and uncertainties include, but are not limited to, the risks and uncertainties described in Item 1A ("Risk Factors") of our Annual Report on Form 10-K for the most recently completed fiscal year, as well as those described from time to time in our other reports and filings with the Securities and Exchange Commission.
In accordance with the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, SunCoke has included in its filings with the Securities and Exchange Commission cautionary language identifying important factors (but not necessarily all the important factors) that could cause actual results to differ materially from those expressed in any forward-looking statement made by SunCoke. For information concerning these factors and other important information regarding the matters discussed in this presentation, see SunCoke's Securities and Exchange Commission filings, copies of which are available free of charge on SunCoke's website at www.suncoke.com. All forward-looking statements included in this presentation are expressly qualified in their entirety by such cautionary statements. Unpredictable or unknown factors not discussed in this presentation also could have material adverse effects on forward-looking statements.
Forward-looking statements are not guarantees of future performance, but are based upon the current knowledge, beliefs and expectations of SunCoke management, and upon assumptions by SunCoke concerning future conditions, any or all of which ultimately may prove to be inaccurate. You should not place undue reliance on these forward-looking statements, which speak only as of the date of the earnings release. SunCoke does not intend, and expressly disclaims any obligation, to update or alter its forward-looking statements (or associated cautionary language), whether as a result of new information, future events, or otherwise, after the date of the earnings release except as required by applicable law.
In addition, this press release contains certain non-GAAP financial measures. These non-GAAP financial measures should not be considered as alternatives to the measures derived in accordance with U.S. GAAP. Non-GAAP financial measures have important limitations as analytical tools, and you should not consider them in isolation or as substitutes for results as reported under U.S. GAAP. Reconciliations to the most comparable GAAP financial measures are included following the presentation of financial and operating results included at the end of this press release.
SunCoke Energy, Inc. | ||||||||
Consolidated Statements of Income | ||||||||
(Unaudited) | ||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||
2022 | 2021 | 2022 | 2021 | |||||
(Dollars and shares in millions, except per share amounts) | ||||||||
Revenues | ||||||||
Sales and other operating revenue | $ 516.8 | $ 366.5 | $ 1,458.5 | $ 1,090.7 | ||||
Costs and operating expenses | ||||||||
Cost of products sold and operating expenses | 413.4 | 277.3 | 1,163.2 | 829.9 | ||||
Selling, general and administrative expenses | 20.1 | 15.3 | 57.9 | 48.3 | ||||
Depreciation and amortization expense | 35.7 | 32.5 | 106.7 | 99.0 | ||||
Total costs and operating expenses | 469.2 | 325.1 | 1,327.8 | 977.2 | ||||
Operating income | 47.6 | 41.4 | 130.7 | 113.5 | ||||
Interest expense, net | 8.0 | 7.9 | 24.3 | 34.8 | ||||
Loss on extinguishment of debt | — | — | — | 31.9 | ||||
Income before income tax (benefit) expense | 39.6 | 33.5 | 106.4 | 46.8 | ||||
Income tax (benefit) expense | (2.9) | 9.4 | 14.3 | 12.0 | ||||
Net income | 42.5 | 24.1 | 92.1 | 34.8 | ||||
Less: Net income attributable to noncontrolling | 1.1 | 1.1 | 3.2 | 4.1 | ||||
Net income attributable to SunCoke Energy, Inc. | $ 41.4 | $ 23.0 | $ 88.9 | $ 30.7 | ||||
Earnings attributable to SunCoke Energy, Inc. | ||||||||
Basic | $ 0.49 | $ 0.28 | $ 1.06 | $ 0.37 | ||||
Diluted | $ 0.49 | $ 0.27 | $ 1.05 | $ 0.37 | ||||
Weighted average number of common shares | ||||||||
Basic | 83.9 | 83.0 | 83.8 | 83.0 | ||||
Diluted | 84.7 | 83.8 | 84.5 | 83.6 |
SunCoke Energy, Inc. | ||||
Consolidated Balance Sheets | ||||
September 30, 2022 | December 31, 2021 | |||
(Unaudited) | ||||
(Dollars in millions, except par value amounts) | ||||
Assets | ||||
Cash and cash equivalents | $ 59.3 | $ 63.8 | ||
Receivables, net | 118.7 | 77.6 | ||
Inventories | 204.9 | 127.0 | ||
Other current assets | 6.4 | 3.5 | ||
Total current assets | 389.3 | 271.9 | ||
Properties, plants and equipment (net of accumulated depreciation of | 1,238.9 | 1,287.9 | ||
Intangible assets, net | 33.7 | 35.2 | ||
Deferred charges and other assets | 17.9 | 20.4 | ||
Total assets | $ 1,679.8 | $ 1,615.4 | ||
Liabilities and Equity | ||||
Accounts payable | $ 153.0 | $ 126.0 | ||
Accrued liabilities | 55.0 | 52.4 | ||
Current portion of financing obligation | 3.3 | 3.2 | ||
Interest payable | 6.2 | — | ||
Income tax payable | 2.4 | 0.6 | ||
Total current liabilities | 219.9 | 182.2 | ||
Long-term debt and financing obligation | 561.2 | 610.4 | ||
Accrual for black lung benefits | 60.3 | 57.9 | ||
Retirement benefit liabilities | 20.5 | 21.8 | ||
Deferred income taxes | 170.8 | 169.0 | ||
Asset retirement obligations | 12.4 | 11.6 | ||
Other deferred credits and liabilities | 23.1 | 27.1 | ||
Total liabilities | 1,068.2 | 1,080.0 | ||
Equity | ||||
Preferred stock, $0.01 par value. Authorized 50,000,000 shares; no issued | — | — | ||
Common stock, $0.01 par value. Authorized 300,000,000 shares; issued | 1.0 | 1.0 | ||
Treasury stock, 15,404,482 shares at both September 30, 2022 and | (184.0) | (184.0) | ||
Additional paid-in capital | 726.4 | 721.2 | ||
Accumulated other comprehensive loss | (16.4) | (16.7) | ||
Retained earnings (deficit) | 48.5 | (23.4) | ||
Total SunCoke Energy, Inc. stockholders' equity | 575.5 | 498.1 | ||
Noncontrolling interest | 36.1 | 37.3 | ||
Total equity | 611.6 | 535.4 | ||
Total liabilities and equity | $ 1,679.8 | $ 1,615.4 |
SunCoke Energy, Inc. | ||||
Consolidated Statements of Cash Flows | ||||
(Unaudited) | ||||
Nine Months Ended September 30, | ||||
2022 | 2021 | |||
(Dollars in millions) | ||||
Cash Flows from Operating Activities | ||||
Net income | $ 92.1 | $ 34.8 | ||
Adjustments to reconcile net income to net cash provided by operating | ||||
Depreciation and amortization expense | 106.7 | 99.0 | ||
Deferred income tax expense | 1.8 | 5.8 | ||
Share-based compensation expense | 5.0 | 4.3 | ||
Loss on extinguishment of debt | — | 31.9 | ||
Changes in working capital pertaining to operating activities: | ||||
Receivables, net | (44.7) | (13.8) | ||
Inventories | (77.8) | (3.4) | ||
Accounts payable | 26.5 | 13.3 | ||
Accrued liabilities | 2.4 | 0.2 | ||
Interest payable | 6.2 | 4.7 | ||
Income taxes | 1.8 | 5.0 | ||
Other | 0.6 | 2.2 | ||
Net cash provided by operating activities | 120.6 | 184.0 | ||
Cash Flows from Investing Activities | ||||
Capital expenditures | (55.7) | (52.1) | ||
Other investing activities | 3.6 | — | ||
Net cash used in investing activities | (52.1) | (52.1) | ||
Cash Flows from Financing Activities | ||||
Proceeds from issuance of long-term debt | — | 500.0 | ||
Repayment of long-term debt | — | (609.3) | ||
Proceeds from revolving facility | 450.0 | 581.1 | ||
Repayment of revolving facility | (498.0) | (567.4) | ||
Repayment of financing obligation | (2.4) | (2.2) | ||
Debt issuance costs | — | (12.0) | ||
Dividends paid | (16.9) | (15.1) | ||
Cash distribution to noncontrolling interests | (4.4) | — | ||
Other financing activities | (1.3) | (0.8) | ||
Net cash used in financing activities | (73.0) | (125.7) | ||
Net (decrease) increase in cash and cash equivalents | (4.5) | 6.2 | ||
Cash and cash equivalents at beginning of period | 63.8 | 48.4 | ||
Cash and cash equivalents at end of period | $ 59.3 | $ 54.6 | ||
Supplemental Disclosure of Cash Flow Information | ||||
Interest paid, net of capitalized interest of zero and $0.4 million, respectively | $ 15.4 | $ 26.6 | ||
Income taxes paid, net of refunds of zero and $2.9 million, respectively | $ 10.8 | $ 1.3 |
SunCoke Energy, Inc. | ||||||||
Segment Financial and Operating Data | ||||||||
The following tables set forth financial and operating data for the three and nine months ended September 30, 2022 and 2021, respectively: | ||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||
2022 | 2021 | 2022 | 2021 | |||||
(Dollars in millions, except per ton amounts) | ||||||||
Sales and other operating revenues: | ||||||||
Domestic Coke | $ 487.7 | $ 340.3 | $ 1,371.8 | $ 1,014.2 | ||||
Brazil Coke | 8.9 | 9.2 | 27.9 | 26.7 | ||||
Logistics | 20.2 | 17.0 | 58.8 | 49.8 | ||||
Logistics intersegment sales | 7.4 | 6.3 | 22.2 | 20.3 | ||||
Elimination of intersegment sales | (7.4) | (6.3) | (22.2) | (20.3) | ||||
Total sales and other operating revenues | $ 516.8 | $ 366.5 | $ 1,458.5 | $ 1,090.7 | ||||
Adjusted EBITDA(1): | ||||||||
Domestic Coke | $ 76.6 | $ 65.1 | $ 216.9 | $ 190.0 | ||||
Brazil Coke | 3.3 | 4.5 | 11.4 | 13.0 | ||||
Logistics | 12.9 | 11.6 | 38.0 | 33.9 | ||||
Corporate and Other, net | (9.1) | (7.3) | (27.5) | (24.4) | ||||
Total Adjusted EBITDA | $ 83.7 | $ 73.9 | $ 238.8 | $ 212.5 | ||||
Coke Operating Data: | ||||||||
Domestic Coke capacity utilization(2) | 101 % | 100 % | 100 % | 101 % | ||||
Domestic Coke production volumes | 1,028 | 1,041 | 3,000 | 3,131 | ||||
Domestic Coke sales volumes (thousands | 1,022 | 1,056 | 2,991 | 3,157 | ||||
Domestic Coke Adjusted EBITDA per ton(3) | $ 74.95 | $ 61.65 | $ 72.52 | $ 60.18 | ||||
Brazilian Coke production—operated facility | 383 | 426 | 1,208 | 1,268 | ||||
Logistics Operating Data: | ||||||||
Tons handled (thousands of tons) | 5,721 | 4,940 | 16,766 | 15,344 |
(1) | See definition of Adjusted EBITDA and reconciliation to GAAP elsewhere in this release. |
(2) | 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. |
(3) | Reflects Domestic Coke Adjusted EBITDA divided by Domestic Coke sales volumes. |
SunCoke Energy, Inc. | ||||||||
Reconciliation of Non-GAAP Information | ||||||||
Net Income to Adjusted EBITDA | ||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||
2022 | 2021 | 2022 | 2021 | |||||
(Dollars in millions) | ||||||||
Net income attributable to SunCoke Energy, Inc. | $ 41.4 | $ 23.0 | $ 88.9 | $ 30.7 | ||||
Add: Net income attributable to noncontrolling | 1.1 | 1.1 | 3.2 | 4.1 | ||||
Net income | $ 42.5 | $ 24.1 | $ 92.1 | $ 34.8 | ||||
Add: | ||||||||
Depreciation and amortization expense | 35.7 | 32.5 | 106.7 | 99.0 | ||||
Interest expense, net | 8.0 | 7.9 | 24.3 | 34.8 | ||||
Loss on extinguishment of debt | — | — | — | 31.9 | ||||
Income tax (benefit) expense | (2.9) | 9.4 | 14.3 | 12.0 | ||||
Transaction costs(1) | 0.4 | — | 1.4 | — | ||||
Adjusted EBITDA | $ 83.7 | $ 73.9 | $ 238.8 | $ 212.5 | ||||
Subtract: Adjusted EBITDA attributable to | 2.1 | 2.1 | 6.2 | 7.0 | ||||
Adjusted EBITDA attributable to SunCoke | $ 81.6 | $ 71.8 | $ 232.6 | $ 205.5 |
(1) | Costs incurred as part of the granulated pig iron project with U.S. Steel. |
(2) | Reflects noncontrolling interest in Indiana Harbor. |
SunCoke Energy, Inc. | ||||
Reconciliation of Non-GAAP Information | ||||
Estimated 2022 Net Income | ||||
to Estimated Consolidated Adjusted EBITDA | ||||
2022 | ||||
Low | High | |||
(Dollars in millions) | ||||
Net income | $ 73 | $ 92 | ||
Add: | ||||
Depreciation and amortization expense | 145 | 140 | ||
Interest expense, net | 33 | 31 | ||
Income tax expense | 16 | 20 | ||
Transaction costs(1) | 3 | 2 | ||
Adjusted EBITDA | $ 270 | $ 285 | ||
Subtract: Adjusted EBITDA attributable to noncontrolling interest(1) | 9 | 9 | ||
Adjusted EBITDA attributable to SunCoke Energy, Inc. | $ 261 | $ 276 |
(1) | Costs incurred as part of the granulated pig iron project with U.S. Steel. |
(2) | Reflects noncontrolling interest in Indiana Harbor. |
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SOURCE SunCoke Energy, Inc.