Suncoke Energy, Inc. · NYSE:SXC
Suncoke Energy — Deutsche Bank Leveraged Finance Conference 2014
28 slides from Suncoke Energy's conference presentation, Sep 30, 2014
Slide 1: Deutsche Bank Leveraged Finance Conference
Deutsche Bank Leveraged Finance Conference September 30, 2014
Slide 2: Forward-Looking Statements
Forward-Looking Statements TM Some of the information included in this presentation constitutes “forward-looking statements” as defined in Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. All statements in this presentation tha
Slide 3: About SXC and SXCP
About SXC and SXCP TM Raw materials processing and handling company serving the steel and power industries • GP & 54% LP owner of SXCP, • Significant growth potential via with 100% of IDRs dropdowns and acquisitions • Transitioning toward “pure- • Access to debt and equity markets play” GP can fund
Slide 4: SXC/SXCP Organizational Structure
SXC/SXCP Organizational Structure TM SXC owns: 2% GP interest 54% LP interest 100% IDRs Domestic Coal Mining* Coke (~114M tons Int’l Coke SXC provides via Omnibus reserves) Agreement: • Commercial contract Middletown support; 5 yrs from IPO (2% interest) • Preferential rights to coke growth in U.S.
Slide 5: Our Operations
Our Operations Operations are strategically located to serve customers in the steel and power industries Lake Terminal Indiana (Coal Logistics) Harbor Middletown KRT – 3 Terminals (Coal Logistics) Haverhill 1 Haverhill 2 Vitoria, Brazil Jewell Coke Coal Mining* 114M tons of reserves Granite City Odi
Slide 6: SunCoke's Cokemaking Technology
SunCoke’s Cokemaking Technology Our industry-leading cokemaking technology meets U.S. EPA Maximum Achievable Control Technology (MACT) standards and makes larger, stronger coke Industry-leading environmental signature • Leverage negative pressure to substantially reduce emissions • Convert waste hea
Slide 7: Domestic Cokemaking Business Model
Domestic Cokemaking Business Model Deliver competitively priced coke via take-or-pay contracts with key pass-through provisions, producing a consistent stream of earnings Typical Key What SunCoke Offers Coke Contract Provisions Capital Funding and Ownership Take-Or-Pay SunCoke Fixed Fee Permits and
Slide 8: Coal Logistics
Coal Logistics Coal logistics complements existing cokemaking business, offers near-term growth opportunities and customer diversification Strategic Assets Platform for Growth • Strategically advantaged with access Strategically to barge, rail and truck Located Assets • Ohio River System locations w
Slide 9: Balance Sheet & Debt Metrics
Balance Sheet & Debt Metrics TM Financial flexibility to reinvest in growth opportunities and return cash to shareholders Balance SXC Attributable to SXC Debt ($ in millions - as of 6/30/14) Attributable to Consolidated SXCP SXC • $240M Cash $ 204 $ 59 $ 145 7.625% Senior Revolver Capacity 389 241 1
Slide 10: Growth Strategy
Growth Strategy TM Growth strategies prioritize industrial-facing MLP qualifying income opportunities Area of focus Cokemaking Coal Logistics Iron Ore Processing Greenfield development Acquisition or development Investment in ferrous side and/or acquisition of existing of selective coal handling & o
Slide 11: The Cokemaking Opportunity
The Cokemaking Opportunity TM Forecast U.S. & Canada coke shortage in excess of 1M tons by 2017 on asset retirements and evolving environmental standards U.S. & Canada Coke Supply Aging Cokemaking Facilities Estimated 2014 Coke Demand: ~17 million tons Average Age % of U.S. & Canada coke production
Slide 12: Coke – Prospective Economics
Coke – Prospective Economics TM Next Generation Coke Plant Economics Plant Specifications Total CAPEX: ~$375M-$440M 1 Total Capacity: 660Ktpa Final ~$375m- permit $440m Power Output: ~60MW received Capital Location: South Shore, KY May ‘14 Outlay Contracting Strategy 4 2 • Multi-customer plant deliv
Slide 13: Coal Logistics – Market Size
Coal Logistics – Market Size Rail Barge Truck Terminals (1) Tonnage 600M-800M tons 150M-350M tons 100M-200M tons 350M-550M tons Per Ton Rate(2) $16-$19/ton $5-$8/ton $4-$7/ton $3-$8/ton EBIT Margin(3) 25%-30% 15%-20% 5%-10% 20%-30% Profit Pool $2.4B-$4.6B $100M-$600M Up to $100M $200M-$1.3B (EBIT) C
Slide 14: Ferrous – DRI Near-Term Demand
Ferrous – DRI Near-Term Demand TM Logistics and access to competitively priced raw materials are key determinants of the DRI market opportunity Drivers of DRI Demand Size of Opportunity by Region Customer #1 1.5 Raw Material • DRI an alternative to pig Customer #2 0.9 Flexibility iron and premium sc
Slide 15: SXC and SXCP Questions?
SXC and SXCP TM QUESTIONS? DB Leveraged Finance Conference - September 2014 15
Slide 16: Appendix
APPENDIX DB Leveraged Finance Conference - September 2014 16
Slide 17: Definitions
Definitions TM • Adjusted EBITDA represents earnings before interest, taxes, depreciation, depletion and amortization (“EBITDA”) adjusted for asset and goodwill impairment, sales discounts and the interest, taxes, depreciation, depletion and amortization attributable to our equity method investment.
Slide 18: Definitions
Definitions TM • Distributable Cash Flow equals Adjusted EBITDA less net cash paid for interest expense, on-going capital expenditures, accruals for replacement capital expenditures, and cash distributions to noncontrolling interests; plus amounts received under the Omnibus Agreement and acquisition
Slide 19: SXCP Guidance and Reconciliations
SXCP GUIDANCE AND RECONCILIATIONS DB Leveraged Finance Conference - September 2014 19
Slide 20: SXCP Distribution Outlook
SXCP Distribution Outlook Expect dropdowns will support 8%-10% annual distribution growth through 2016 Distributable Cash Flow Growth Drivers Distribution Growth Implications • ~$130 million total Domestic • Expect dropdowns alone can support Dropdowns from SXC Coke Adj. EBITDA 8%-10% annual distrib
Slide 21: 2014 Outlook
2014 Outlook Proforma 2014 outlook supports continued solid cash coverage ratio (1,2) (1) (3) 2014 Outlook 2014 Proforma (1) ($ in millions, except per unit data) Low High Low High Adjusted EBITDA attributable to SXCP $126 $132 $142 $148 Less: Ongoing capital expenditures (SXCP share) $15 $15 $16 $1
Slide 22: Adjusted EBITDA and Distributable Cash Flow Reconciliations
Adjusted EBITDA and Distributable Cash Flow Reconciliations As (1) (1) As As (1) As As (2) (2) Reported Proforma Proforma Reported Reported Proforma Reported Reported Proforma Proforma ($ in Millions) Q1'13 Adj. Q1'13 Q2'13 FY'13 FY'13 Q1'14 Q2'14 Q1'14 Q2'14 Net cash provided by operating activitie
Slide 23: Expected 2014E EBITDA Reconciliation
Expected 2014E EBITDA Reconciliation 2014E 2014E (in millions) Low High Net Income $ 59 $ 70 Depreciation and amortization 43 41 Total financing costs, net 42 39 Income tax expense (benefit) 1 1 Adjusted EBITDA $ 145 $ 151 EBITDA attributable to noncontrolling interest (1) (19) (19) Adjusted EBITDA
Slide 24: Proforma 2014E EBITDA Reconciliation
Proforma(1) 2014E EBITDA Reconciliation 2014E 2014E (in millions) Low High Net Income $ 55 $ 66 Depreciation and amortization 43 41 Total financing costs, net 46 43 Income tax expense (benefit) 1 1 Adjusted EBITDA $ 145 $ 151 EBITDA attributable to noncontrolling interest (1) (3) (3) Adjusted EBITDA
Slide 25: SXC Guidance and Reconciliations
SXC GUIDANCE AND RECONCILIATIONS DB Leveraged Finance Conference - September 2014 25
Slide 26: 2014E Consolidated Adj. EBITDA Reconciliation
2014E Consolidated Adj. EBITDA Reconciliation TM 2014E 2014E (in millions) Low High Net Income ($30) ($10) Depreciation, depletion and amortization(1) 115 105 Interest expense, net 68 65 Income tax expense (benefit) (39) (29) EBITDA $114 $131 Sales discounts (1) (1) Adjustment to unconsolidated affi
Slide 27: 2014E Adj. EBITDA Reconciliation (Continuing Operations)
2014E Adj. EBITDA Reconciliation (Continuing Operations) TM Continuing Operations (excluding Coal Mining Segment) 2014E 2014E (in millions) Low High Net Income $49 $69 Depreciation, depletion and amortization(1) 100 95 Interest expense, net 68 65 Income tax expense (benefit) 15 20 EBITDA $232 $249 S
Slide 28: Capital Expenditures & Investments
Capital Expenditures & Investments TM 2014E Capex(1) ($ in millions) SXC SXCP Consolidated On-Going(2) $54 $17 $71 Environmental Project $4 $38 $42 Indiana Harbor Refurb. $25 - $25 Total CapEx $83 $55 $138 Investments - - - Total CapEx & $83 $55 $138 Investments (1) Does not include spending to init
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