SunCoke Energy's (SXC) Q2 Coke Production Slips 1.1% Y/Y

SunCoke Energy Inc. SXC provided a preliminary guidance for second-quarter 2015 domestic coke production and domestic capacity utilization.

Domestic coke production in the second quarter is estimated at 1,047 thousand tons, down 1.1% year over year, primarily due to a planned maintenance outage at its Granite City facility. Coal production in the second quarter is expected to be 4.9% higher than the first. SunCoke Energy's domestic capacity utilization in the second quarter was 99%, down 100 basis points year over year.

Domestic coke operation at SunCoke Energy consists of coke making and heat recovery facilities at its Granite City, Haverhill, Indiana Harbor, Jewell and Middletown plants. SunCoke Energy's capital expenditure in 2015 is estimated at $90 million, which includes considerable spending on ongoing coke and coal logistics.

Other Developments

SunCoke Energy continues to exit its coal mining business. However, management admits that an outright sale is no longer possible at this moment as the prolonged market challenges and lower prices are impacting the metallurgical coal industry at large.

At present, the company is extensively rationalizing its mining operations to reduce costs. As a consequence, the Coal Mining segment will no longer be regarded as discontinued operations. The company has taken adequate steps to reflect this change in its historical and prospective financial statements beginning the second-quarter 2015.

SunCoke Energy indicated that the restated financial information will not have any impact on the prevailing guidance. The company reaffirmed its consolidated adjusted EBITDA for 2015 in the range of $190 million to $210 million provided during the first quarter release.

Preliminary Expectations of Peabody Energy

Peabody Energy Corporation BTU, a leading coal mining company, has also announced that its second-quarter 2015 adjusted EBITDA and adjusted EPS were adversely impacted by weather-related shipment issues in the Southern Powder River Basin and lower seaborne coal pricing (read: Peabody Energy Q2 Affected by Weather Issues, Weak Prices).

Peabody Energy was able to qualify for the self-bonding program of the Wyoming Department of Environmental Quality's Land Quality Division ("LQD"). Alpha Natural Resources ANR failed to qualify for the program that allows producers of coal to economically insure their clean-up costs in case of a bankruptcy.

Zacks Rank

SunCoke Energy currently has a Zacks Rank #3 (Hold). A better-ranked stock in the same space is Rhino Resource Partners LP RNO, sporting a Zacks Rank #1 (Strong Buy).

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