SunCoke Energy, Inc. Q2 FY2026 earnings call

• Overall Financial & Dividend Performance

  • Reported strong Q2 2026 consolidated adjusted EBITDA of $69.6 million, up from $43.6 million year-over-year; net income attributable to shareholders was 15 cents per share, up 13 cents year-over-year.
  • Announced a 12 cent per share quarterly dividend (payable September 2, 2026), marking the company's 28th consecutive quarterly dividend.
  • Ended Q2 with $207 million in total available liquidity ($42.7 million cash + $164.5 million revolver availability); Q2 operating cash flow was negatively impacted by timing of $65 million in receipts that arrived in July, with normalization expected for the rest of the year.

• Operational Updates

  • Domestic coke segment: improved coal-to-coke yields were achieved; the Middletown turbine was returned to service in May 2026, earlier than anticipated, resuming power production.
  • Industrial services segment: the acquisition of Phoenix has delivered strong results, with Q2 2026 adjusted EBITDA for the segment hitting the highest level since the Phoenix acquisition.
  • All long-term and spot coke sales for 2026 are finalized, and the company is operating at full capacity and sold out for the full year.

• Capital Allocation Strategy

  • Maintains a balanced, opportunistic approach to capital allocation, with core priorities including debt paydown on the revolver and continued quarterly capital return to shareholders via dividends.
  • Will continuously evaluate business capital needs, capital structure, and shareholder rewards to make appropriate allocation decisions, while focusing on efficient operation and investment of existing assets and assessing new growth opportunities.

• Safety & ESG

  • Safety remains the company's top priority, with strong safety and environmental performance as a core competitive differentiator central to reliable delivery of products and services.

1. Domestic Coke Segment: Adjusted EBITDA was $42.5 million in Q2 2026, compared to $40.5 million in the prior year period. Coke sales volumes reached 878,000 tons in Q2 2026, down from 943,000 tons year-over-year. Adjusted EBITDA for this segment contributes ~61% of consolidated Q2 2026 adjusted EBITDA. The EBITDA growth was driven by favorable coal-to-coke yields from improved operating conditions, partially offset by lower sales volumes from the Haverhill 1 shutdown.

2. Industrial Services Segment: Adjusted EBITDA was $34.4 million in Q2 2026, up sharply from $7.7 million in the prior year period. This segment contributes ~39% of consolidated Q2 2026 adjusted EBITDA. Total terminal handling volumes were 6.7 million tons, with 5.8 million tons of volumes servicing steel customers. The significant EBITDA increase was driven by the addition of Phoenix acquisition results and higher terminal handling volumes year-over-year.

• Full year 2026 consolidated adjusted EBITDA guidance was increased from prior levels to a new range of $250 to $265 million.
• Full year 2026 domestic coke adjusted EBITDA guidance was raised to a range of $172 to $178 million.
• Full year 2026 industrial services adjusted EBITDA guidance was increased to a range of $110 million to $115 million.
• Full year 2026 operating cash flow guidance was raised to a range of $240 to $260 million, after a temporary timing impact on Q2 operating cash flow.

No explicit material new risks or operational failures were discussed on the call beyond the previously noted Haverhill 1 outage and the earlier Middletown turbine outage that has already been resolved. Management noted that coal pricing and terminal volumes can shift quickly based on geopolitical events (including Middle East tensions) and global market conditions, which can lead to volatility in quarterly results.

Q: Domestic coke EBITDA per ton in Q2 came in below the full-year guidance range. What drivers will push this metric higher in the second half of 2026?

A: The Middletown turbine only came online in late May, so Q2 did not get the full benefit of its power generation, which will be fully reflected in the second half. Insurance recovery proceeds for the turbine outage in the first half of the year are also included in the second half guidance, lifting full-year adjusted EBITDA.

Q: What drove the large quarter-over-quarter increase in terminal handling volumes, and will this high growth continue in the second half?

A: A shift in global coal pricing (moving to higher international prices relative to domestic) and supply chain/energy concerns from Middle East tensions converged to push volumes through the Gulf, creating an extraordinary Q2. Management expects second half volumes to be strong but normalize to levels closer to Q1, rather than maintaining the exceptional Q2 peak, which aligns with the updated full-year guidance.

Q: The upward revision to industrial services guidance implies a lower quarterly run rate in the second half versus Q2. Is this due to built-in conservatism, or is there a fundamental reason for the pullback?

A: Q2 had extraordinary one-time factors, including outsized seasonal slag sales at Phoenix and very high temporary volumes that will not repeat. The implied second half run rate reflects an average between the strong Q1 and extraordinary Q2 volume levels. The Phoenix acquisition has already hit all targeted synergy targets this year, with full synergies coming in 2027, and is performing ahead of the original baseline set at acquisition close.

Q: What size of insurance proceeds from the Middletown outage are included in the second half guidance?

A: Management did not disclose an exact figure, but noted that the combined impact of the turbine outage and weather-related issues across coke operations in Q1 was around $10 million, and the outage extended well into Q2. Extrapolating from the five months of outage for the full first half gives a reasonable estimate of the proceeds baked into second half guidance.