SunCoke Energy, Inc. (SXC): Business Model Canvas [10-2024 Updated]
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SunCoke Energy, Inc. (SXC) Bundle
SunCoke Energy, Inc. (SXC) operates at the intersection of energy and steel manufacturing, leveraging a robust business model that ensures high-quality coke production and efficient logistics. This blog post explores the intricacies of SXC's Business Model Canvas, highlighting their key partnerships, activities, resources, and value propositions that drive success in a competitive market. Discover how SXC maintains strong customer relationships and generates revenue through diverse streams.
SunCoke Energy, Inc. (SXC) - Business Model: Key Partnerships
Collaborations with Major Steel Manufacturers
SunCoke Energy has established strong collaborations with major steel manufacturers, which are critical for its business model. The company primarily sells its coke production under long-term, take-or-pay contracts. For instance, during the nine months ended September 30, 2024, sales to Cliffs Steel amounted to $915.7 million, while sales to U.S. Steel reached $214.1 million.
| Steel Manufacturer | Sales (9M 2024, in millions) | Sales (9M 2023, in millions) |
|---|---|---|
| Cliffs Steel | $915.7 | $1,000.8 |
| U.S. Steel | $214.1 | $230.4 |
These partnerships allow SunCoke to stabilize its revenue streams and ensure consistent demand for its products. The company’s long-term agreement with U.S. Steel at the Granite City facility has recently been extended through June 30, 2025, which involves supplying 295 thousand tons of coke.
Long-term Agreements with Coal Suppliers
SunCoke Energy relies heavily on long-term agreements with coal suppliers to secure the raw materials necessary for its coke production. These agreements help mitigate the risks associated with price volatility in the coal market. The company has reported that the pass-through of lower coal prices impacted its sales and other operating revenues during the recent quarters.
For the nine months ended September 30, 2024, SunCoke's total revenues from operations were approximately $1.45 billion, reflecting the effects of these long-term agreements.
Partnerships with Logistics Service Providers
Logistics is a crucial component of SunCoke's business model, facilitating the transport of coke to its customers. The company's logistics operations, which include the Convent Marine Terminal, Kanawha River Terminal, and Lake Terminal, generated sales of $62.2 million for the nine months ended September 30, 2024, compared to $56.4 million in the same period the previous year.
Additionally, SunCoke has estimated future take-or-pay revenue of approximately $32.5 million from its multi-year logistics contracts, which are expected to be recognized over the next four years.
| Logistics Segment Revenue | Q3 2024 (in millions) | Q3 2023 (in millions) |
|---|---|---|
| Logistics Revenue | $21.4 | $15.6 |
| Total Revenue (9M) | $62.2 | $56.4 |
These logistics partnerships enhance SunCoke's operational efficiency and ensure timely delivery of products, which is essential for maintaining strong relationships with its steel manufacturing partners. The growth in logistics revenue indicates a positive trend in this area, further solidifying the importance of these partnerships within SunCoke's business model.
SunCoke Energy, Inc. (SXC) - Business Model: Key Activities
Cokemaking operations across multiple facilities
SunCoke Energy operates several cokemaking facilities across the United States, including the Jewell facility in Virginia, the Indiana Harbor facility in Indiana, the Haverhill facility in Ohio, the Granite City facility in Illinois, and the Middletown facility in Ohio. As of September 30, 2024, the Domestic Coke segment generated sales and other operating revenue of $459.9 million for the three months ended September 30, 2024, down from $495.7 million in the same period of 2023. For the nine months ended September 30, 2024, revenue was $1.361 billion, compared to $1.460 billion in 2023.
The total production volume of domestic coke for the three months ended September 30, 2024, was 1,031,000 tons, slightly down from 1,032,000 tons in the prior year. The production volumes for the nine months ended September 30, 2024, were 3,009,000 tons, compared to 3,024,000 tons for the same period in 2023.
Logistics and material handling services
SunCoke provides logistics and material handling services through its terminals, which include Convent Marine Terminal (CMT), Kanawha River Terminal (KRT), and Lake Terminal. During the three months ended September 30, 2024, the Logistics segment reported sales and other operating revenue of $21.4 million, up from $15.6 million in the prior year. For the nine months ended September 30, 2024, this segment generated $62.2 million, compared to $56.4 million in 2023.
The Logistics operations handled 5,843,000 tons during the three months ended September 30, 2024, versus 4,961,000 tons in the same period of 2023. For the nine months ended September 30, 2024, the total tons handled reached 17,277,000 tons, compared to 15,461,000 tons in the prior year.
Maintenance and repair of production equipment
SunCoke Energy places a strong emphasis on the maintenance and repair of its production equipment to ensure operational efficiency. As of the three months ended September 30, 2024, the operating and maintenance costs decreased to $442.9 million from $490.7 million in the same period of 2023. For the nine-month period, costs were $1.333 billion, down from $1.443 billion.
The adjusted EBITDA for the Domestic Coke segment for the three months ended September 30, 2024, was $58.1 million, compared to $64.0 million in 2023. For the nine months, adjusted EBITDA was $177.4 million, down from $192.6 million.
| Key Activity | Three Months Ended September 30, 2024 | Three Months Ended September 30, 2023 | Nine Months Ended September 30, 2024 | Nine Months Ended September 30, 2023 |
|---|---|---|---|---|
| Domestic Coke Revenue | $459.9 million | $495.7 million | $1.361 billion | $1.460 billion |
| Logistics Revenue | $21.4 million | $15.6 million | $62.2 million | $56.4 million |
| Operating and Maintenance Costs | $442.9 million | $490.7 million | $1.333 billion | $1.443 billion |
| Adjusted EBITDA (Domestic Coke) | $58.1 million | $64.0 million | $177.4 million | $192.6 million |
SunCoke Energy, Inc. (SXC) - Business Model: Key Resources
Cokemaking facilities with significant production capacity
SunCoke Energy operates five cokemaking facilities in the United States with a collective nameplate capacity to produce approximately 4.2 million tons of blast furnace coke per year. Additionally, the company manages one cokemaking facility in Brazil with an annual capacity of about 1.7 million tons.
| Facility | Location | Annual Capacity (Million Tons) |
|---|---|---|
| Jewell | Virginia, USA | 1.0 |
| Indiana Harbor | Indiana, USA | 1.4 |
| Haverhill | Ohio, USA | 1.0 |
| Granite City | Illinois, USA | 0.5 |
| Middletown | Ohio, USA | 0.3 |
| Vitória | Brazil | 1.7 |
Skilled workforce in cokemaking and logistics
SunCoke Energy employs a skilled workforce specialized in cokemaking and logistics. The company places a strong emphasis on training and retaining skilled workers to maintain operational efficiency and safety standards. The workforce is essential for managing complex processes involved in cokemaking and the logistics of transporting materials.
Strong customer relationships with major steel producers
SunCoke Energy has established strong customer relationships with major steel producers such as Cleveland-Cliffs and U.S. Steel. As of September 30, 2024, sales and other operating revenue from these customers are detailed below:
| Customer | Sales Revenue (Q3 2024 - Millions) | Sales Revenue (Q3 2023 - Millions) |
|---|---|---|
| Cleveland-Cliffs | 311.5 | 338.7 |
| U.S. Steel | 72.0 | 79.2 |
| Other | 106.6 | 102.5 |
The company generates a significant portion of its revenue through long-term, take-or-pay agreements, which require customers to purchase specified volumes of coke or pay for any tonnage not purchased. As of September 30, 2024, SunCoke's coke sales agreements had approximately 19.9 million tons of unsatisfied or partially unsatisfied performance obligations, expected to be delivered over a weighted average remaining contract term of approximately nine years .
SunCoke Energy, Inc. (SXC) - Business Model: Value Propositions
High-quality coke production for steelmaking
SunCoke Energy is recognized as the largest independent producer of high-quality coke in the Americas, with a production capacity of approximately 4.2 million tons of blast furnace coke per year from its five facilities in the United States. Additionally, it operates a facility in Brazil with a capacity of 1.7 million tons per year, primarily serving clients in the steelmaking industry.
Reliable supply through long-term agreements
The company maintains a strong position in the market through long-term, take-or-pay agreements with significant customers such as Cliffs Steel and U.S. Steel. For instance, during the three months ended September 30, 2024, sales to Cliffs Steel amounted to $311.5 million, while sales to U.S. Steel reached $72.0 million. These agreements ensure a steady revenue stream and mitigate risks associated with market fluctuations.
Advanced technology in cokemaking and logistics
SunCoke employs advanced technology in its cokemaking process, utilizing modern heat recovery systems that enhance efficiency and sustainability. The company reported an Adjusted EBITDA of $75.3 million for the third quarter of 2024, reflecting effective cost management and operational efficiencies. Furthermore, its logistics segment has demonstrated growth, with revenues of $21.4 million for the third quarter of 2024, up from $15.6 million in the same period of the previous year.
| Financial Metrics | Q3 2024 | Q3 2023 | Change |
|---|---|---|---|
| Net Income | $33.3 million | $8.5 million | $24.8 million |
| Adjusted EBITDA | $75.3 million | $65.4 million | $9.9 million |
| Domestic Coke Sales | $459.9 million | $495.7 million | ($35.8 million) |
| Logistics Revenue | $21.4 million | $15.6 million | $5.8 million |
| Brazil Coke Revenue | $8.8 million | $9.1 million | ($0.3 million) |
As of September 30, 2024, SunCoke reported total assets of $1.654 billion and total liabilities of $963.8 million, indicating a solid financial position.
SunCoke Energy, Inc. (SXC) - Business Model: Customer Relationships
Long-term contracts with key customers
SunCoke Energy, Inc. primarily operates under long-term, take-or-pay contracts with major clients, including Cleveland-Cliffs Steel and U.S. Steel. As of September 30, 2024, the company had approximately 19.9 million tons of unsatisfied or partially unsatisfied performance obligations under these agreements, with a weighted average remaining contract term of about nine years. The revenue from these contracts is relatively stable, as it is less affected by fluctuations in global coke prices.
| Customer | Sales Revenue (Q3 2024) | Sales Revenue (Q3 2023) | Sales Revenue (9M 2024) | Sales Revenue (9M 2023) |
|---|---|---|---|---|
| Cliffs Steel | $311.5 million | $338.7 million | $915.7 million | $1,000.8 million |
| U.S. Steel | $72.0 million | $79.2 million | $214.1 million | $230.4 million |
| Other Customers | $106.6 million | $102.5 million | $319.6 million | $311.4 million |
| Total Sales | $490.1 million | $520.4 million | $1,449.4 million | $1,542.6 million |
Focus on customer service and support
SunCoke emphasizes strong customer service and support to maintain its competitive edge. The company’s operations are designed to meet the specific needs of its clients, ensuring timely delivery and product quality. Adjusted EBITDA for the Domestic Coke segment was $58.1 million for Q3 2024, down from $64.0 million in Q3 2023, indicating attention to cost management amidst fluctuating prices. Customer satisfaction is further bolstered by the company’s logistics capabilities, which enhance delivery efficiency.
Engagement in sustainability initiatives
SunCoke is actively engaged in sustainability initiatives, recognizing the increasing importance of environmental responsibility among its customer base. The company has invested in modern heat recovery technologies that not only improve efficiency but also reduce emissions from its cokemaking facilities. This commitment is reflected in the estimated take-or-pay revenue of approximately $32.5 million from its multi-year logistics contracts, which are also designed with sustainability in mind. Additionally, SunCoke’s cokemaking facilities recover waste heat to create steam or electricity, contributing to a lower carbon footprint.
SunCoke Energy, Inc. (SXC) - Business Model: Channels
Direct sales to steel producers
SunCoke Energy, Inc. primarily serves the steel manufacturing industry through direct sales of coke. In the third quarter of 2024, the company reported domestic coke sales of $459.9 million, compared to $495.7 million in the same quarter of 2023. For the nine months ended September 30, 2024, domestic coke sales totaled $1,361.0 million, down from $1,460.4 million in the prior year period. The main customers for coke include Cliffs Steel and U.S. Steel, with sales to Cliffs Steel at $311.5 million for Q3 2024, down from $338.7 million in Q3 2023.
Logistics services via terminals and transloading facilities
SunCoke operates logistics services including handling and transloading at its terminals. In Q3 2024, logistics revenue was $21.4 million, an increase from $15.6 million in Q3 2023. For the nine-month period, logistics revenue reached $62.2 million, compared to $56.4 million in the same period of 2023. The growth in logistics revenue is attributed to higher transloading volumes and pricing. The company manages several terminals, including Convent Marine Terminal and Kanawha River Terminal, enhancing its capabilities to serve steel producers effectively.
Online platforms for operational updates
SunCoke utilizes online platforms for operational updates and communication with its customers. This digital approach allows for real-time sharing of information regarding production, logistics, and operational performance, which is crucial for coordinating with steel producers and managing supply chain logistics efficiently. Although specific financial data related to online platform operations is not disclosed, the integration of technology plays a vital role in maintaining customer relationships and ensuring transparency.
| Channel | Q3 2024 Revenue (in millions) | Q3 2023 Revenue (in millions) | Change (%) | 9M 2024 Revenue (in millions) | 9M 2023 Revenue (in millions) | Change (%) |
|---|---|---|---|---|---|---|
| Domestic Coke Sales | $459.9 | $495.7 | -7.5% | $1,361.0 | $1,460.4 | -6.8% |
| Logistics Services | $21.4 | $15.6 | 37.2% | $62.2 | $56.4 | 10.3% |
SunCoke Energy, Inc. (SXC) - Business Model: Customer Segments
Major steel manufacturers in North America
SunCoke Energy's primary customer segment consists of major steel manufacturers in North America. The company derives a significant portion of its revenue from long-term, take-or-pay agreements with these manufacturers, primarily for blast furnace coke. For instance, in the third quarter of 2024, SunCoke reported sales and other operating revenue of $459.9 million from its Domestic Coke segment, compared to $495.7 million in the same period in 2023.
Key customers in this segment include:
- Cliffs Steel: $311.5 million in sales for Q3 2024
- U.S. Steel: $72.0 million in sales for Q3 2024
- Other customers: $106.6 million in sales for Q3 2024
| Customer | Q3 2024 Sales ($ million) | Q3 2023 Sales ($ million) |
|---|---|---|
| Cliffs Steel | 311.5 | 338.7 |
| U.S. Steel | 72.0 | 79.2 |
| Other | 106.6 | 102.5 |
International markets for coke exports
SunCoke Energy also targets international markets for its coke exports. The Brazil Coke segment, which operates a facility under a long-term contract with ArcelorMittal Brazil, contributed $8.8 million in sales in Q3 2024, slightly down from $9.1 million in Q3 2023. This segment is crucial for diversifying revenue sources beyond the U.S. market.
International customers value SunCoke's high-quality coke for use in their steel production processes. The company is positioned to capitalize on global demand for coke as steel manufacturing continues to grow, particularly in emerging markets.
| Market | Q3 2024 Revenue ($ million) | Q3 2023 Revenue ($ million) |
|---|---|---|
| Brazil Coke | 8.8 | 9.1 |
Companies requiring logistics and material handling services
Another significant customer segment for SunCoke Energy is companies that require logistics and material handling services. This segment includes services provided at the Convent Marine Terminal, Kanawha River Terminal, and Lake Terminal. In Q3 2024, the logistics segment generated $21.4 million in sales, up from $15.6 million in Q3 2023.
The logistics services encompass transloading, handling, and mixing of materials for steel and coke manufacturers, among others. The increase in revenues indicates a growing demand for these services, reflecting SunCoke's strategic focus on expanding its logistics capabilities.
| Logistics Segment | Q3 2024 Revenue ($ million) | Q3 2023 Revenue ($ million) |
|---|---|---|
| Logistics | 21.4 | 15.6 |
SunCoke Energy, Inc. (SXC) - Business Model: Cost Structure
Operational costs of cokemaking facilities
SunCoke Energy, Inc. incurs significant operational costs associated with its cokemaking facilities. For the three months ended September 30, 2024, the total operational costs for these facilities amounted to approximately $405.2 million, compared to $436.1 million in the same period for 2023. For the nine months ending September 30, 2024, these costs were reported at $1.197 billion, down from $1.281 billion in the prior year period.
Labor and maintenance expenses
Labor and maintenance expenses represent a substantial part of SunCoke's cost structure. During the three months ended September 30, 2024, the company reported $28.1 million in depreciation and amortization expenses, reflecting ongoing maintenance and capital expenditures. Additionally, the total selling, general, and administrative expenses for the same period were $9.6 million, which includes costs related to labor.
Transportation and logistics costs
Transportation and logistics costs have also been a critical component of the cost structure for SunCoke Energy. The logistics segment reported sales and other operating revenues of $21.4 million for the three months ended September 30, 2024, reflecting an increase from $15.6 million in the prior year. The total logistics costs for the nine months ended September 30, 2024, were approximately $62.2 million, up from $56.4 million for the same period in 2023.
| Cost Category | Q3 2024 ($ million) | Q3 2023 ($ million) | 9M 2024 ($ million) | 9M 2023 ($ million) |
|---|---|---|---|---|
| Operational Costs | 405.2 | 436.1 | 1,197.1 | 1,281.2 |
| Labor & Maintenance Expenses | 28.1 (Depreciation) | 35.5 (Depreciation) | 90.1 (Depreciation) | 107.2 (Depreciation) |
| Logistics Costs | 21.4 (Logistics Revenue) | 15.6 (Logistics Revenue) | 62.2 (Logistics Revenue) | 56.4 (Logistics Revenue) |
SunCoke Energy, Inc. (SXC) - Business Model: Revenue Streams
Sales from cokemaking under long-term contracts
SunCoke Energy generates significant revenue through cokemaking operations, primarily under long-term contracts. For the third quarter of 2024, the sales and other operating revenue from the Domestic Coke segment was approximately $459.9 million, down from $495.7 million in the same period in 2023. For the nine months ended September 30, 2024, revenues from Domestic Coke totaled $1,361.0 million, compared to $1,460.4 million in 2023. The revenue decrease is attributed to the pass-through of lower coal prices on long-term, take-or-pay agreements.
Revenue from logistics and material handling services
The logistics segment of SunCoke Energy has shown growth, with revenues from logistics services amounting to $21.4 million for the three months ended September 30, 2024, an increase from $15.6 million in 2023. For the nine-month period, logistics revenue reached $62.2 million, compared to $56.4 million in the prior year.
| Period | Logistics Revenue (in millions) | Change from Previous Year |
|---|---|---|
| Q3 2024 | $21.4 | +$5.8 |
| Q3 2023 | $15.6 | N/A |
| 9M 2024 | $62.2 | +$5.8 |
| 9M 2023 | $56.4 | N/A |
Earnings from energy sales generated through cokemaking operations
In addition to cokemaking and logistics, SunCoke Energy also earns revenue from energy sales generated through its cokemaking operations. For the third quarter of 2024, energy revenue was reported at $12.7 million, slightly up from $12.5 million in 2023. For the nine months ended September 30, 2024, energy revenues totaled $36.1 million, compared to $36.5 million in the same period of 2023.
| Period | Energy Revenue (in millions) | Change from Previous Year |
|---|---|---|
| Q3 2024 | $12.7 | +$0.2 |
| Q3 2023 | $12.5 | N/A |
| 9M 2024 | $36.1 | -$.4 |
| 9M 2023 | $36.5 | N/A |
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.