SunCoke Energy (SXC) Beats On Q1 Earnings, Revenues Miss

Coke producer, SunCoke Energy (NYSE:SXC) reported earnings of 2 cents per share in the first quarter of 2017, compared with the Zacks Consensus Estimate of a loss of 10 cents.

Revenue

SunCoke Energy’s quarterly revenue was $309.7 million, lagging the Zacks Consensus Estimate of $407 million by 23.9%.

Revenues during the first quarter of 2017 declined $1.4 million compared with the year ago period, reflecting lower sales volumes in its Domestic Coke segment.

Segment Performance

Domestic Coke

Revenues decreased $10.3 million year over year to $278.7 million, reflecting a decrease in sales volume of 54 thousand tons. This was primarily attributable to lower production at Indiana Harbor because of oven rebuilds as well as lower sales to AK Steel at Haverhill.

Coal Logistics

Revenue was up $7.2 million year over year to $20.2 million, driven by higher sales volumes at its Convent Marine Terminal and Kanawha River Terminals, LLC.

Brazil Coke

Brazil Coke consists of a coke making facility in Vitória, Brazil, operated by the company for an affiliate of ArcelorMittal. ArcelorMittal Brazil redeemed SunCoke's indirectly held preferred and common equity interest in Sol Coqueria Tubarão S.A for a consideration of $41.0 million. Half of the consideration was received in the fourth quarter of 2016 and the other half was received in the first quarter of 2017.

Corporate and Other

Corporate and other expenses, which include costs related to SunCoke Energy’s legacy coal mining business, were $11.6 million in first-quarter 2017, an improvement of $7.1 million from last year’s comparable period.

Highlight of the Release

During the quarter, the Company also announced the termination of discussions with the Conflicts Committee of the Board of Directors of SunCoke Energy Partners, L.P. (NYSE:SXC) regarding the proposed Simplification Transaction. The announcement came on October 31, 2016.

Total costs and expenses in the reported quarter were $287.4 million, down 4.7% from $301.6 million in the year-ago quarter.

Operating income was $22.3 million compared with $9.5 million in the year-ago quarter.

Interest expenses in the reported quarter were $13.7 million, marginally lower than $14 million registered in the year-ago quarter.

Financial Update

As of Mar 31, 2017, the company’s cash and cash equivalents were $157.2 million, up from $134.0 million as of Dec 31, 2016.

As of Mar 31, 2017, long term debt and financing obligation was $847.0 million, lower than $849.2 million as of Dec 31, 2016.

Cash provided by operating activities in the first quarter of 2017 was $29.5 million compared with $29.4 million in first quarter of 2016.

Capital expenditure in the first quarter of 2017 was $12.7 million, lower than the year-ago level of $13.8 million.

Guidance

Domestic coke production is expected to be 3.9 million tons.

Capital expenditures for the full year are expected to be in the range of $8–$15 million.

The company reaffirmed 2017 Consolidated Adjusted EBITDA guidance in the range of $220 million–$235 million.

Upcoming Peer Releases

CONSOL Energy (NYSE:CNX) is expected to release its first-quarter earnings on May 2, 2017. The Zacks Consensus Estimate is pegged at 13 cents.

Arch Coal Inc. (NYSE:ARCH) is expected to release its first-quarter earnings on May 2, 2017. The Zacks Consensus Estimate is pegged at $2.18.

Zacks Rank

SunCoke Energy Inc. currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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