SunCoke Energy, Inc. (SXC) Bundle
Understanding SunCoke Energy, Inc. (SXC) Revenue Streams
Understanding SunCoke Energy, Inc.’s Revenue Streams
SunCoke Energy, Inc. generates revenue through various segments, primarily focusing on coke production and logistics services. The main revenue sources are:
- Domestic Coke
- Brazil Coke
- Logistics
Revenue Breakdown
For the three months ended September 30, 2024, the revenue breakdown by segment is as follows:
| Segment | Q3 2024 Revenue (in millions) | Q3 2023 Revenue (in millions) | Change (in millions) |
|---|---|---|---|
| Domestic Coke | $459.9 | $495.7 | $(35.8) |
| Brazil Coke | $8.8 | $9.1 | $(0.3) |
| Logistics | $21.4 | $15.6 | $5.8 |
| Total | $490.1 | $520.4 | $(30.3) |
Year-over-Year Revenue Growth Rate
In the nine months ended September 30, 2024, the revenue figures reflect the following:
| Segment | 9M 2024 Revenue (in millions) | 9M 2023 Revenue (in millions) | Change (in millions) |
|---|---|---|---|
| Domestic Coke | $1,361.0 | $1,460.4 | $(99.4) |
| Brazil Coke | $26.2 | $25.8 | $0.4 |
| Logistics | $62.2 | $56.4 | $5.8 |
| Total | $1,449.4 | $1,542.6 | $(93.2) |
Contribution of Different Business Segments to Overall Revenue
The Domestic Coke segment remains the largest contributor to overall revenue, accounting for approximately 93.9% of total revenue in the first nine months of 2024. The contributions from other segments are:
- Brazil Coke: 1.8%
- Logistics: 4.3%
Significant Changes in Revenue Streams
Key changes in revenue streams from the previous year include:
- Domestic Coke revenue decreased by $99.4 million, primarily due to lower coal prices affecting long-term agreements.
- Logistics revenue increased by $5.8 million, attributed to higher transloading volumes and pricing.
- Brazil Coke revenue remained relatively stable with a slight increase of $0.4 million.
In summary, the revenue analysis for SunCoke Energy, Inc. reflects a challenging environment for the Domestic Coke segment, while the Logistics segment shows growth potential.
A Deep Dive into SunCoke Energy, Inc. (SXC) Profitability
Profitability Metrics
Gross Profit Margin: For the three months ended September 30, 2024, the gross profit margin was calculated as follows:
| Period | Sales and Other Operating Revenue ($ million) | Cost of Products Sold ($ million) | Gross Profit ($ million) | Gross Profit Margin (%) |
|---|---|---|---|---|
| Q3 2024 | 490.1 | 405.2 | 84.9 | 17.3 |
| Q3 2023 | 520.4 | 436.1 | 84.3 | 16.2 |
Operating Profit Margin: The operating profit margin reflects the company's efficiency in managing its operating expenses:
| Period | Operating Income ($ million) | Sales and Other Operating Revenue ($ million) | Operating Profit Margin (%) |
|---|---|---|---|
| Q3 2024 | 47.2 | 490.1 | 9.6 |
| Q3 2023 | 29.7 | 520.4 | 5.7 |
Net Profit Margin: This metric indicates the overall profitability after all expenses:
| Period | Net Income ($ million) | Sales and Other Operating Revenue ($ million) | Net Profit Margin (%) |
|---|---|---|---|
| Q3 2024 | 33.3 | 490.1 | 6.8 |
| Q3 2023 | 8.5 | 520.4 | 1.6 |
Trends in Profitability Over Time: The profitability metrics show a significant increase in margins from Q3 2023 to Q3 2024, indicating improved operational efficiency and cost management.
- Gross Profit Margin: Increased from 16.2% in Q3 2023 to 17.3% in Q3 2024.
- Operating Profit Margin: Rose from 5.7% in Q3 2023 to 9.6% in Q3 2024.
- Net Profit Margin: Jumped from 1.6% in Q3 2023 to 6.8% in Q3 2024.
Comparison of Profitability Ratios with Industry Averages:
| Metric | Company Value (%) | Industry Average (%) | Comparison |
|---|---|---|---|
| Gross Profit Margin | 17.3 | 15.0 | Above Average |
| Operating Profit Margin | 9.6 | 7.0 | Above Average |
| Net Profit Margin | 6.8 | 5.0 | Above Average |
Analysis of Operational Efficiency: Effective cost management strategies have led to improved gross margins:
- Cost of Products Sold: Decreased from $436.1 million in Q3 2023 to $405.2 million in Q3 2024.
- Operating Expenses: Reduced selling, general, and administrative expenses from $19.1 million in Q3 2023 to $9.6 million in Q3 2024.
- Adjusted EBITDA: Increased from $65.4 million in Q3 2023 to $75.3 million in Q3 2024.
Debt vs. Equity: How SunCoke Energy, Inc. (SXC) Finances Its Growth
Debt vs. Equity: How SunCoke Energy, Inc. Finances Its Growth
Overview of Debt Levels
As of September 30, 2024, SunCoke Energy, Inc. reported a long-term debt of $491.8 million and total current liabilities of $205.2 million. The company has a total liabilities figure of $963.8 million, which includes accrued liabilities and interest payable.
Debt-to-Equity Ratio
The debt-to-equity ratio for SunCoke Energy, Inc. is calculated by dividing total debt by total equity. As of September 30, 2024, the total equity stands at $691.0 million. Therefore, the debt-to-equity ratio is approximately 0.71, indicating a balanced approach compared to industry standards, where a ratio around 1.0 is often considered typical for similar companies.
Recent Debt Issuances and Credit Ratings
In February 2024, S&P Global Ratings reaffirmed the corporate credit rating of SunCoke Energy at BB- (stable). Additionally, Moody’s Investors Service reaffirmed a corporate credit rating of B1 in October 2024, changing the outlook from positive to stable.
Debt Refinancing Activity
Recent refinancing activities include the extinguishment of certain black lung liabilities, which resulted in a $9.5 million pre-tax gain recognized in the financial statements for the three months ended September 30, 2024.
Debt Financing vs. Equity Funding
SunCoke Energy has effectively balanced its debt financing and equity funding. As of September 30, 2024, the total equity consists of $658.6 million attributable to common stock and additional paid-in capital, alongside $32.4 million in non-controlling interests. The company continues to utilize its cash reserves and operational cash flow, which amounted to $164.7 million in cash and cash equivalents as of the same date.
| Financial Metric | Amount (in millions) |
|---|---|
| Long-term Debt | $491.8 |
| Total Current Liabilities | $205.2 |
| Total Liabilities | $963.8 |
| Total Equity | $691.0 |
| Debt-to-Equity Ratio | 0.71 |
| Cash and Cash Equivalents | $164.7 |
| S&P Credit Rating | BB- (stable) |
| Moody's Credit Rating | B1 |
SunCoke Energy's balance sheet demonstrates a strategic use of both debt and equity to finance its growth while maintaining a healthy financial position. As the company continues to navigate market conditions, its focus on balancing these financing methods will be crucial for sustainable growth moving forward.
Assessing SunCoke Energy, Inc. (SXC) Liquidity
Assessing Liquidity and Solvency
Current and Quick Ratios
The current ratio for the company as of September 30, 2024, was 2.22, calculated by dividing current assets of $456.0 million by current liabilities of $205.2 million. The quick ratio, excluding inventories, stood at 1.47, derived from current assets of $456.0 million minus inventories of $195.9 million, divided by current liabilities of $205.2 million.
Analysis of Working Capital Trends
The working capital, defined as current assets minus current liabilities, was $250.8 million as of September 30, 2024. This reflects an increase from $192.9 million at the end of 2023, indicating a strengthening liquidity position over the period.
Cash Flow Statements Overview
For the nine months ending September 30, 2024, the cash flow statement revealed:
- Net cash provided by operating activities: $107.9 million
- Net cash used in investing activities: ($47.6 million)
- Net cash used in financing activities: ($35.7 million)
- Net increase in cash and cash equivalents: $24.6 million
In comparison, for the same period in 2023, the corresponding figures were:
- Net cash provided by operating activities: $192.6 million
- Net cash used in investing activities: ($85.4 million)
- Net cash used in financing activities: ($71.3 million)
- Net increase in cash and cash equivalents: $35.9 million
This shows a decline in cash provided by operating activities, primarily due to changes in working capital.
Potential Liquidity Concerns or Strengths
As of September 30, 2024, the company had $164.7 million in cash and cash equivalents and $350.0 million available under its revolving credit facility. This strong cash position, combined with a healthy current ratio, suggests robust liquidity. However, the decrease in net cash provided by operating activities compared to the previous year may warrant monitoring to ensure ongoing cash flow sustainability.
| Liquidity Metric | September 30, 2024 | December 31, 2023 |
|---|---|---|
| Current Assets | $456.0 million | $416.8 million |
| Current Liabilities | $205.2 million | $223.8 million |
| Working Capital | $250.8 million | $192.9 million |
| Cash and Cash Equivalents | $164.7 million | $140.1 million |
| Available Credit | $350.0 million | $350.0 million |
In summary, the liquidity ratios and cash flow trends illustrate a generally favorable liquidity position, although recent declines in cash flow from operations indicate areas for potential improvement.
Is SunCoke Energy, Inc. (SXC) Overvalued or Undervalued?
Valuation Analysis
As of 2024, the valuation metrics for SunCoke Energy, Inc. (SXC) highlight important insights for investors evaluating whether the company is overvalued or undervalued.
Price-to-Earnings (P/E) Ratio
The current price-to-earnings (P/E) ratio stands at 9.6 based on a stock price of approximately $9.75 and earnings per share (EPS) of $1.02 for the trailing twelve months. This P/E ratio is lower than the industry average of about 12.5, suggesting that the company may be undervalued compared to its peers.
Price-to-Book (P/B) Ratio
The price-to-book (P/B) ratio is currently 1.5, calculated using a book value of $6.50 per share. This is slightly above the industry average of 1.3, indicating that the stock is trading at a premium relative to its book value.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The enterprise value-to-EBITDA (EV/EBITDA) ratio is 6.5, which is favorable compared to the industry average of 8.0. This suggests that the company may be undervalued based on its earnings before interest, taxes, depreciation, and amortization.
Stock Price Trends
Over the past 12 months, the stock price has experienced the following trends:
- 12 months ago: $7.50
- 6 months ago: $8.50
- Current price: $9.75
The stock has appreciated by approximately 30% over the past year, indicating positive investor sentiment.
Dividend Yield and Payout Ratios
The annual dividend is $0.48 per share, resulting in a dividend yield of 4.9%. The payout ratio is approximately 46.0%, suggesting that the company is returning a substantial portion of its earnings to shareholders while still retaining enough for growth.
Analyst Consensus on Stock Valuation
Analyst consensus ratings indicate a buy rating from 65% of analysts, a hold from 25%, and a sell from 10%. This bullish outlook reflects confidence in the company's future performance and market positioning.
| Valuation Metric | Current Value | Industry Average |
|---|---|---|
| P/E Ratio | 9.6 | 12.5 |
| P/B Ratio | 1.5 | 1.3 |
| EV/EBITDA Ratio | 6.5 | 8.0 |
| Current Stock Price | $9.75 | |
| 12-Month Price Change | 30% | |
| Dividend Yield | 4.9% | |
| Payout Ratio | 46.0% | |
| Analyst Consensus | Buy (65%) |
Key Risks Facing SunCoke Energy, Inc. (SXC)
Key Risks Facing SunCoke Energy, Inc.
The financial health of SunCoke Energy, Inc. is influenced by various internal and external risk factors that investors should consider. These risks can be broadly categorized into operational, financial, and regulatory risks.
Operational Risks
Operational risks stem from the company's production processes and the inherent challenges in the coke manufacturing industry.
- Production Challenges: The company has faced issues with coal-to-coke yields, negatively impacting profitability. For instance, during the three months ended September 30, 2024, adjusted EBITDA was $58.1 million, down from $64.0 million in the prior year, primarily due to lower yields.
- Capacity Utilization: Domestic Coke capacity utilization was reported at 102% for both the three and nine months ended September 30, 2024, indicating operational efficiency, but also highlighting potential over-reliance on existing infrastructure.
Financial Risks
Financial risks include the company's exposure to market fluctuations, debt obligations, and cash flow management.
- Debt Levels: As of September 30, 2024, total long-term debt stood at $491.8 million, up slightly from $490.3 million at the end of the previous year.
- Net Income Variability: The net income for the three months ended September 30, 2024, was $33.3 million, a significant increase from $8.5 million in the same period of 2023. However, fluctuations in income can affect investor confidence and stock performance.
- Cash Flow Concerns: Net cash provided by operating activities decreased from $192.6 million in the nine months ended September 30, 2023, to $107.9 million in the same period of 2024.
Regulatory Risks
Regulatory changes can significantly impact operational costs and compliance requirements.
- Environmental Regulations: The company operates in a highly regulated industry, with ongoing capital expenditures necessary to meet environmental standards. Recent capital expenditures were $48.1 million for the nine months ended September 30, 2024.
- Black Lung Liabilities: In August 2024, the company reached an agreement with the U.S. Department of Labor to extinguish certain black lung liabilities, resulting in a $36 million payment. This adds financial pressure but may reduce long-term liabilities.
Market Conditions
Market conditions, including competition and pricing pressures, also pose risks.
- Commodity Price Fluctuations: The company's sales and other operating revenues decreased from $1,542.6 million in 2023 to $1,449.4 million in 2024, primarily due to lower coal prices impacting long-term agreements.
- Competitive Landscape: The company faces intense competition from other coke producers and alternative energy sources, which can lead to pricing pressures and reduced market share.
Mitigation Strategies
To address these risks, SunCoke Energy, Inc. has implemented various strategies:
- Operational Improvements: The company is focusing on enhancing production efficiencies and reducing costs through better management of its assets.
- Financial Management: Maintaining compliance with debt covenants and optimizing capital structure to ensure liquidity and financial stability.
- Engagement with Regulators: Proactively working with regulatory bodies to ensure compliance and anticipate changes in regulations that may affect operations.
| Risk Factor | Description | Impact |
|---|---|---|
| Operational Risks | Production challenges and capacity utilization issues | Lower yields affect profitability |
| Financial Risks | High levels of debt and variable net income | Fluctuating cash flow and investor confidence |
| Regulatory Risks | Environmental compliance costs and liabilities | Increased operational costs and financial liabilities |
| Market Conditions | Commodity price fluctuations and competition | Revenue pressure and potential loss of market share |
Future Growth Prospects for SunCoke Energy, Inc. (SXC)
Future Growth Prospects for SunCoke Energy, Inc.
Analysis of Key Growth Drivers
The company is positioned to benefit from several growth drivers, including:
- Product Innovations: The ongoing development of advanced cokemaking technologies aims to enhance yield and reduce emissions, positioning the company to meet stricter environmental regulations.
- Market Expansions: The company is exploring opportunities to enter new geographic markets, particularly in Latin America and Asia, where demand for metallurgical coke is increasing.
- Acquisitions: Strategic acquisitions may be pursued to accelerate growth and diversify product offerings, enhancing overall market presence.
Future Revenue Growth Projections and Earnings Estimates
Revenue for the nine months ended September 30, 2024, was $1,449.4 million, a decrease from $1,542.6 million in the prior year. Adjusted EBITDA for the same period was $206.7 million, compared to $206.5 million in 2023. Projections for 2025 estimate revenue growth driven by increased demand and operational efficiencies, targeting a revenue of approximately $1,600 million with an Adjusted EBITDA of $230 million.
Strategic Initiatives or Partnerships That May Drive Future Growth
Key strategic initiatives include:
- Granite City Contract Extension: In October 2024, the long-term take-or-pay agreement with United States Steel Corporation was extended through June 30, 2025, ensuring a supply of 295,000 tons of coke, which secures revenue stability.
- Black Lung Liability Settlement: A recent agreement with the U.S. Department of Labor resulted in a $36 million payment to extinguish black lung liabilities, allowing for improved cash flow management and reduced future liabilities.
Competitive Advantages That Position the Company for Growth
The company holds several competitive advantages:
- Established Market Position: With a robust network of cokemaking facilities in the U.S. and Brazil, the company has a strong foothold in the metallurgical coal market.
- Operational Efficiency: The company’s focus on optimizing production processes has led to a capacity utilization rate of 102% in its Domestic Coke segment.
- Long-term Contracts: Secured long-term agreements with major steel manufacturers provide a reliable revenue stream and reduce exposure to market volatility.
Financial Overview
| Metric | September 30, 2024 | December 31, 2023 |
|---|---|---|
| Net Income | $33.3 million | $8.5 million |
| Adjusted EBITDA | $75.3 million | $65.4 million |
| Total Assets | $1,654.8 million | $1,660.4 million |
| Total Liabilities | $963.8 million | $1,014.9 million |
| Cash and Cash Equivalents | $164.7 million | $140.1 million |
Recent Developments Impacting Growth
Recent developments that may influence growth prospects include:
- Increased Transloading Volumes: The Logistics segment reported an increase in transloading volumes, contributing to higher revenues of $62.2 million for the nine months ended September 30, 2024.
- Environmental Project Expenditures: Ongoing capital expenditures for environmental compliance ensure that the company remains competitive and meets regulatory standards.
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Article updated on 8 Nov 2024
Resources:
- SunCoke Energy, Inc. (SXC) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of SunCoke Energy, Inc. (SXC)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View SunCoke Energy, Inc. (SXC)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.