8-K/A: SunCoke Finalizes Phoenix Global Acquisition

SunCoke Energy, Inc. completed its $325 million acquisition of Flame Aggregator, LLC, operating as Phoenix Global, and filed pro forma financial statements detailing the combined entity's financial outlook.

Summary

• SunCoke Energy, Inc. (SXC) completed the acquisition of Flame Aggregator, LLC (Phoenix Global) on August 1, 2025, for $325 million in cash paid to unitholders, subject to customary adjustments.
• The total purchase consideration for accounting purposes was estimated at $295.8 million, comprising $182.7 million in cash to unitholders and the settlement of $113.1 million of Flame Aggregator's outstanding debt.
• The acquisition was funded through SunCoke's cash on-hand and existing revolving credit facility borrowings, with $204.0 million drawn from the credit facility.
• Flame Aggregator's outstanding First Lien Exit Facility and Notes Payable were settled concurrently with the closing of the acquisition.
• Flame Aggregator's Equity Incentive Plan participants received $18.2 million in cash, settling all obligations and terminating the plan.
• Total transaction costs incurred by SunCoke in connection with the acquisition amounted to $11.1 million.
• The unaudited pro forma condensed combined financial information indicates a dilutive impact on SunCoke's net income per share, with pro forma basic EPS of $0.10 for the six months ended June 30, 2025, compared to SunCoke's historical $0.22.
• For the year ended December 31, 2024, pro forma basic EPS was $0.39, compared to SunCoke's historical $1.13.
• Flame Aggregator reported a net loss of $(11.9) million for the six months ended June 30, 2025, and a net loss of $(41.997) million for the year ended December 31, 2024.
• Flame Aggregator emerged from Chapter 11 bankruptcy on June 30, 2023, and applied fresh start accounting, making its financial statements after this date not directly comparable to prior periods.

Sentiment

Score: 4

Explanation: The acquisition is strategically significant for SunCoke, expanding its presence in mill services. However, the immediate financial impact, as shown by the pro forma statements, indicates a substantial dilution of SunCoke's earnings per share. Flame Aggregator's historical losses and impairment charges also present a cautious outlook, despite the potential for long-term synergies.

Positives

• SunCoke successfully completed a strategic acquisition of Phoenix Global, expanding its mill services operations.
• Flame Aggregator's net cash provided by operating activities significantly improved to $40,528k in 2024 from a negative $(633)k in the second half of 2023.
• Flame Aggregator was in compliance with all debt covenants, including maintaining at least $10M in cash and cash equivalents, as of December 31, 2024, and June 30, 2025.
• Flame Aggregator's Midwest Operating Engineers Pension Plan (MOEPP) was certified to be in the green zone for the plan years ended March 31, 2024, and March 31, 2025.

Negatives

• The acquisition is expected to be dilutive to SunCoke's net income per share, with pro forma basic EPS decreasing from $0.22 to $0.10 for H1 2025 and from $1.13 to $0.39 for FY 2024.
• Flame Aggregator reported a net loss of $(11,912)k for the six months ended June 30, 2025, and $(41,997)k for the year ended December 31, 2024.
• Flame Aggregator recognized an impairment loss of $2,309k in 2024 related to its Romania subsidiary due to business concerns with its sole customer, including a $790k goodwill impairment and $1,519k for machinery and equipment.
• An additional $6,000k bad debt expense was recorded in 2024 related to the Romanian customer's accounts receivable.
• Flame Aggregator's operating loss increased to $(10,798)k for H1 2025 from $(1,714)k for H1 2024.
• Flame Aggregator's total assets decreased from $328,762k at December 31, 2023, to $265,593k at December 31, 2024, and further to $259,753k at June 30, 2025.
• Flame Aggregator's total members' equity decreased from $140,488k at December 31, 2023, to $85,089k at December 31, 2024, and further to $76,953k at June 30, 2025.

Risks

• Customer Concentration: Flame Aggregator had significant customer concentration, with four customers accounting for 66% of accounts receivable as of June 30, 2025, and three customers accounting for 62% of consolidated net sales for H1 2025.
• Foreign Currency Exposure: Flame Aggregator has operations in multiple international locations (Brazil, South Africa, Slovakia, Spain, Romania) and is exposed to unfavorable changes in foreign currencies, principally the Brazilian real and South African rand.
• Collective Bargaining Agreements: Collective bargaining agreements covering 269 employees in Indiana and Illinois expired on July 31, 2025, and the Company is operating without an extension or renewal, posing potential labor relations risks.
• Regulatory Changes: The recently signed H.R. 1, known as the One Big Beautiful Bill Act (OBBB), includes significant changes to federal corporate tax provisions, which may impact the Company's tax assets and liabilities in future periods.
• International Business Risks: The impairment loss and bad debt expense related to the Romania subsidiary highlight the risks associated with international operations and reliance on specific customers in foreign markets.
• Integration Risk: As with any acquisition, there is a risk that the integration of Phoenix Global into SunCoke's operations may not achieve expected synergies or may incur unforeseen costs.

Future Outlook

The Company is evaluating the impact of the recently signed H.R. 1, the One Big Beautiful Bill Act (OBBB), on its tax assets and liabilities in future periods. Flame Aggregator's Brazilian corporate tax incentive program (SUDENE) is expected to expire after year-end December 31, 2026. The Company is also evaluating the impact of ASU 2024-03 on its income statement expense disclosures, effective for fiscal years beginning after December 15, 2026.

Management Comments

• Management believes the preliminary estimates and assumptions used in preparing the unaudited pro forma condensed combined financial information are reasonable based on currently available information.
• Management believes that the outcomes which are reasonably possible within the next 12 months may result in a reduction in the liability for unrecognized tax benefits in the range of $400 thousand to $430 thousand, including interest and penalties.

Industry Context

The acquisition of Phoenix Global by SunCoke Energy, Inc. positions SunCoke to expand its presence in the critical mill services sector of the steel industry. Phoenix Global's operations, including slag handling and metal recovery, are essential for steel manufacturers, both domestically and internationally. This move suggests SunCoke's strategic intent to diversify its revenue streams and leverage Phoenix Global's established customer relationships and operational footprint across the U.S., Europe, South Africa, and Brazil. The steel industry relies on efficient mill services for operational continuity and environmental compliance, making this acquisition a potentially synergistic fit for SunCoke.

Comparison to Industry Standards

• The filing does not provide specific comparable companies, projects, or results to assess the acquisition against global industry benchmarks.
• Flame Aggregator's historical financial performance, including net losses and an impairment charge related to its Romania subsidiary, suggests challenges in certain operational areas prior to the acquisition.
• The pro forma financial information indicates a dilutive effect on SunCoke's earnings per share, which is a key metric for evaluating acquisition success against industry expectations for accretive deals. However, strategic acquisitions may prioritize market expansion and operational synergies over immediate EPS accretion.

Management Changes

Corporate Governance

Legal Proceedings

• Flame Aggregator, LLC and its subsidiaries are not aware of any current legal proceedings or claims that management believes will result in a material adverse effect to its financial condition or results of operations.
• Phoenix Services Topco, LLC (Predecessor) operated under Chapter 11 bankruptcy from September 27, 2022, to June 30, 2023, and emerged through a Plan of Reorganization.

Related Party Transactions

• Certain Members of Flame Aggregator, LLC held approximately $60,871k of the outstanding amounts under the First Lien Exit Facility as of June 30, 2025, which included $928k of PIK interest for the six months ended June 30, 2025. This amount increased from $59,943k as of December 31, 2024, due to PIK interest.

Stakeholder Impact

• Shareholders (SunCoke): The acquisition is expected to be dilutive to SunCoke's earnings per share in the short term, which may negatively impact shareholder returns. However, the strategic expansion into mill services could offer long-term value creation.
• Employees (Phoenix Global): The acquisition by SunCoke Energy, Inc. provides stability following Phoenix Global's emergence from bankruptcy. However, collective bargaining agreements for 269 union employees expired on July 31, 2025, and are operating without renewal, which could lead to labor disputes or changes in employment terms.
• Customers (Phoenix Global): The acquisition by SunCoke could lead to enhanced service offerings or operational efficiencies for Phoenix Global's customers in the steel industry. However, high customer concentration remains a risk.
• Creditors (Phoenix Global): Flame Aggregator's outstanding debt, including the First Lien Exit Facility and Notes Payable, was settled upon the closing of the acquisition, providing repayment to its creditors.

Next Steps

• SunCoke Energy, Inc. will integrate Phoenix Global's operations into its existing business.
• The Company will continue to evaluate the impact of the One Big Beautiful Bill Act (OBBB) on its future tax assets and liabilities.
• SunCoke will need to address the expired collective bargaining agreements for Phoenix Global's union employees in Indiana and Illinois.
• The Company will adopt ASU 2023-09 for income tax disclosures for the fiscal year ending December 31, 2025.
• The Company will evaluate the impact of ASU 2024-03 on its income statement expense disclosures, effective for fiscal years beginning after December 15, 2026.

Key Dates

Recommendation

The acquisition of Phoenix Global by SunCoke Energy, Inc. is a significant strategic move to expand into the mill services sector, offering potential long-term synergies and diversification. However, the pro forma financial information indicates a notable dilutive impact on SunCoke's earnings per share in the near term, and Phoenix Global's historical financial performance shows recent losses and impairment charges. While the strategic rationale is sound, the immediate financial dilution and operational risks (e.g., labor agreements, customer concentration) warrant a cautious approach. Investors should hold to observe the integration process, realization of synergies, and the combined entity's future financial performance before making further investment decisions.

Keywords

SunCoke Energy, SXC, Flame Aggregator, Phoenix Global, Acquisition, Merger, SEC Filing, 8-K/A, Financial Statements, Pro Forma, Steel Industry Services, Mill Services, Corporate Governance, Risk Management, Financial Reporting, Chapter 11, Bankruptcy Reorganization, Goodwill Impairment, Debt Settlement, Collective Bargaining