SunCoke Completely On Its Own At Long Last

It was way back in June 2010, when Sunoco(SUN) first announced its intention to spin SunCoke(SXC) into a

SunCoke 011

Image by John Beagle via Flickr

separate company. One year later, in July 2011,  the company conducted an IPO of SunCoke shares. This week the company completed the process on January 17 by distributing the 80.9% of SunCoke shares it owned to shareholders at a rate of 0.53046456 shares of SunCoke for each share of Sunoco owned as of January 5. From the press release:

“Today marks the completion of the planned separation of SunCoke Energy from Sunoco,” said Frederick A. “Fritz” Henderson, Chairman and Chief Executive Officer of SunCoke Energy, Inc. “As an independent, publicly-owned company, we believe SunCoke has increased flexibility to pursue domestic and international growth strategies, meet the needs of our steelmaking customers and create opportunities for our employees and shareholders. We thank Sunoco’s leadership team led by Lynn L. Elsenhans and the Sunoco Board of Directors for their support and for working to ensure that our company has a solid foundation from which to grow our business over the long-term.”

On January 6, SunCoke released preliminary production numbers for 2011, showing healthy volume increases:

  •          Fourth quarter 2011 U.S. coke production is estimated to be 1,015 thousand tons, up 11 percent from fourth quarter 2010
  • Our new Middletown, Ohio cokemaking facility, which began operations in October 2011, produced an estimated 68 thousand tons in the fourth quarter
  • Full year 2011 U.S. coke production is estimated to be 3,762 thousand tons, up 5 percent versus full year 2010
  • Fourth quarter 2011 financial results are tentatively planned to be released on February 2, 2012

SunCoke Energy, Inc. (NYSE: SXCNews) reported preliminary fourth quarter and full year 2011 U.S. coke production today. Total U.S. coke production is estimated to be 1,015 thousand tons in the fourth quarter 2011, an increase of 100 thousand tons versus the same period in 2010. The increase in the fourth quarter reflects the startup of our new Middletown, Ohio facility and improvement in our Indiana Harbor operations. Excluding Middletown operations, our domestic cokemaking operations continued to run in excess of 100% of capacity.

For the full year 2011, total U.S. coke production is estimated to be 3,762 thousand tons. The full year increase was driven by the Middletown startup and strong performance at our Granite City and Indiana Harbor operations.

Preliminary U.S. Coke Production
Fourth Quarter
Full Year
In thousands of tons
Jewell Coke 177 179 707 715
Other Domestic Coke 838 736 3,055 2,878
Total 1,015 915 3,762 3,593

The U.S. Energy Information Administration(EIA) has a website filled with regularly-updated data on coke and coal.   The data shows that that average open market sales price per ton of Coke rose 30.5% from 2010 to the first 9 months of 2011. SunCoke has previously stated that they believe the company’s EBITDA will increase by $100 to $130 million in 2012 over to 2011, to $250 million to $280 million, driven by higher prices, increased production, and greater efficiency. They project this will yield $1.30 to $1.65 in earnings per share. At yesterday’s close of $12.79, the stock appears to be fairly priced, but should perform well if coke prices continue to rise and the company is able to pay off some of the debt that that Sunoco left it as a legacy.

Disclosure: The author holds no position in any stock mentioned


Disclosure: The author holds no position in any stock mentioned,