SunCoke Energy Inc. (SXC) reported third-quarter 2014 earnings of 21 cents from continuing operations, comfortably surpassing the Zacks Consensus Estimate of 9 cents. Quarterly earnings also increased year over year primarily on the back of progress in operations at the Indiana Harbor cokemaking facility, favorable inputs from the company’s new Coal Logistics segment and decreased corporate costs.
Following favorable earnings, SunCoke Energy’s share prices increased 5% on Oct 24, 2014, finally closing at $22.19.
We note that the board of directors has authorized the sale and/or disposition of the company’s coal mining business. Hence, this business has been reported as discontinued operations.
Including the discontinued operations, net loss attributable to SunCoke Energy in the third quarter stood at 5 cents against earnings of 9 cents a year ago.
Quarterly Highlights
SunCoke Energy’s total revenues of $367.6 million were 1.6% lower than the prior-year figure of $373.4 million. This was primarily due to lower domestic coke sales volumes and reduced coal prices.
In the quarter under review, total costs and operating expenses of the company was $321.8 million. A 5.8% year-over-year decrease in total costs and operating expenses was mainly driven by lower cost of products sold and operating expenses as well as lower selling, general and administrative expenses.
The company’s operating income was $45.8 million in the third quarter, up 44% from $31.8 million a year ago.
The company reported total adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) from continuing operations of $68.0 million, up 33.1% a year ago.
SunCoke Energy’s interest expenses were $11.9 million compared with $12.1 million in the prior-year quarter.
The company’s domestic coke-production volume in the reported quarter was 1,090 thousand tons, up 0.8% from 1,081 thousand tons a year ago.
Financial Update
Cash and cash equivalents as of Sep 30, 2014 were $114.8 million versus $233.6 million as of Dec 31, 2013.
Long-term debt was $652.0 million as of Sep 30, 2014 compared with $648.1 million as of Dec 31, 2013.
In the first nine months of 2014, SunCoke Energy’s net cash provided by continuing operating activities was $74.1 million versus $100.8 million in the prior-year period.
The company’s capital expenditure was $102.5 million during the first three quarters of 2014 compared with $87.2 million a year ago.
Business Update
On Nov 28, 2014, SunCoke Energy will pay its first ever cash dividend of 5.85 cents per common share to shareholders of record as of Nov 14.
The company completed an Accelerated Share Repurchase Program, worth $75 million, and obtained the ownership of 3.2 million shares in Oct 2014.
Guidance
SunCoke expects adjusted EBITDA from continuing operations to be in the range of $235–$255 million.
The company reiterated its guidance for 2014 domestic coke production at around 4.2 million tons.
SunCoke reduced its 2014 capital expenditure guidance to $128 million from the previous estimate of $138 million, as a result of reduced expenses of coal operations.
Other Upcoming Releases
Arch Coal Inc. (ACI) is slated to release its third-quarter 2014 earnings on Oct 28. The Zacks Consensus Estimate is currently pegged at a loss of 41 cents.
Alpha Natural Resources, Inc. (ANR) is scheduled to release its third-quarter 2014 earnings on Oct 30. The Zacks Consensus Estimate is pegged at a loss of 69 cents.
Foresight Energy LP (FELP) is slated to release its third-quarter 2014 earnings on Nov 6. The Zacks Consensus Estimate is pegged at 27 cents.
Zacks Rank
SunCoke Energy currently carries a Zacks Rank #3 (Hold).
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