Suncoke Energy, Inc. · NYSE:SXC
Suncoke Energy — NAPTP 2015 MLP Investor Conference
32 slides from Suncoke Energy's conference presentation, May 21, 2015
Slide 1: NAPTP 2015 MLP Investor Conference
NAPTP 2015 MLP Investor Conference May 21, 2015
Slide 2: Forward-Looking Statements
Forward-Looking Statements TM Some of the information included in this presentation constitutes “forward-looking statements.” All statements in this presentation that express opinions, expectations, beliefs, plans, objectives, assumptions or projections with respect to anticipated future performance
Slide 3: About SXC and SXCP
About SXC and SXCP TM Raw materials processing and handling company with growth opportunities in cokemaking, coal logistics & other industrial verticals • General Partner & 56% LP owner of • Long-term, fee-based, take-or-pay SXCP, with 100% of IDRs contracts that generate stable cash flow with minim
Slide 4: SXCP Investment Thesis
SXCP Investment Thesis Well positioned to drive long-term value creation Strong Sponsor Support Stable, Long-term Business Model Significant Investor Value Visible Distribution Proposition Outlook Potential Growth Opportunities NAPTP 2015 MLP Investor Conference 3
Slide 5: SXC & SXCP Organizational Structure
SXC & SXCP Organizational Structure TM SXC owns: 2% GP interest 56% LP interest 100% IDRs Domestic Coal Mining* International Coke (~110M tons SXC provides via Omnibus Coke reserves) Agreement: • Commercial contract support; 5 yrs from IPO Middletown • Environmental indemnification (2% interest) for
Slide 6: Business Verticals
Business Verticals TM Raw materials processing and handling company with growth opportunities in cokemaking, coal logistics & other industrial verticals Current Business Future Platforms Cokemaking Coal Logistics Industrial Materials • 6.3M tons total global capacity; • Strategically located coal •
Slide 7: Coke Market Dynamics
Coke Market Dynamics TM Coke is an essential ingredient in blast furnace steel production Coke Market Overview US and Canada Coke Supply • U.S. BF/BOF steel production Integrated Coke outlook driven by automotive & construction 25% Other: Imports, Merchant & Foundry ─ Serve strategic customer blast
Slide 8: Stable Cokemaking Business Model
Stable Cokemaking Business Model TM Long-term, take-or-pay contracts coupled with commercial protection via Omnibus Agreement insulate business from industry cyclicality Key Contract Provisions/Terms Contract Value Propositions • Customers required to take all the coke we produce up to contract Fixe
Slide 9: Coal Logistics
Coal Logistics TM Coal Logistics complements our cokemaking business and broadens exposure to industrial customers Platform for Growth Strategically located assets with access to barge, rail and truck Experienced management team capable of driving growth Broadening customer base diversifies credit a
Slide 10: Distribution Performance
Distribution Performance Delivered 39% increase in cash distributions on strength and stability of existing business SXCP Distribution Growth 8th consecutive • Anticipate raising cash quarterly increase distributions per unit 6% in 2015 +39% $0.6055 ─ Projected Q4 2015 per unit rate $0.5715 of $0.60
Slide 11: Dropdown Outlook & Considerations
Dropdown Outlook & Considerations Expect future coke asset dropdowns will contribute ~$100M to Adj. EBITDA and support additional per unit cash distribution increases Strategy for Future Dropdowns Haverhill & Middletown (33%) and 1• Market conditions continue to govern Granite City (75%) timing of f
Slide 12: Flexibility to Fund Growth
Flexibility to Fund Growth Multiple levers at SXC & SXCP provide flexibility to fund dropdowns and growth opportunities • Executed amendment to increase SXCP leverage covenant Ability to Leverage Both from 4.0x to 4.5x SXC & SXCP Balance Sheets • Amended SXCP shelf to enable preferred equity issuanc
Slide 13: Platforms for Growth
Platforms for Growth Actively developing pipeline of long-term growth opportunities across several new material handling verticals Disciplined pursuit of long-term growth opportunities M&A Guardrails Strategic Fit Financial Fit Actionability • Leverage core competencies • Stable cash flow outlook •
Slide 14: SXCP Investment Thesis
SXCP Investment Thesis Well positioned to drive long-term value creation Strong Sponsor • Customer and environmental risk borne by Support SXC via Omnibus Agreement • Secure, take-or-pay contracts insulate Stable, Long-term business from steel cyclicality Business Model • Minimal commodity risk Sign
Slide 15: Investor Relations
Investor Relations 630-824-1987 www.sxcpartners.com
Slide 16: Appendix
APPENDIX NAPTP 2015 MLP Investor Conference 15
Slide 17: SunCoke's Cokemaking Technology and Coke Market Overview
SUNCOKE’S COKEMAKING TECHNOLOGY AND COKE MARKET OVERVIEW NAPTP 2015 MLP Investor Conference 16
Slide 18: Our Operations
Our Operations TM Operations located to serve customers’ most strategic assets Lake Terminal Indiana (Coal Logistics) Harbor Coke Plant Characteristics KRT – 3 Terminals (Coal Logistics) • Advantaged inbound and outbound logistics • Support strategic U.S. blast furnaces serving high value-add end ma
Slide 19: Strategic Customer Blast Furnace Assets
Strategic Customer Blast Furnace Assets TM Our cokemaking assets supply coke to our customers’ strategic blast furnaces Customer Asset Supported Primary Product Line Comment • One of the most productive BF in Middletown Auto the country • $19 million BF reline in 2014; now Ashland Auto operating at
Slide 20: SunCoke's Cokemaking Technology
SunCoke’s Cokemaking Technology TM Our industry-leading cokemaking technology meets U.S. EPA MACT standards and makes larger, stronger coke Industry-leading environmental signature • Leverage negative pressure to substantially reduce emissions • Convert waste heat into steam and electrical power • G
Slide 21: Blast Furnaces and Coke
Blast Furnaces and Coke TM Best in Class (lbs/st) Iron Iron Ore/Pellets 3,100 Burden Scrap 198 Flux Limestone 30 Fuel Coke 600 Top Gas Blast Furnace Steelmaking • BFs are most efficient and proven method of reducing iron oxides into Best in Class (lbs/st) liquid iron Natural Gas Up to 80-120 • Coke
Slide 22: Coke Market Dynamics
Coke Market Dynamics TM Expect stable coke demand on rebounding steel production Domestic Steel Production & Capacity Utilization Industry Outlook (Mt Production) 100 100% • Stable BF/BOF production outlook driven by automotive 80 80% & construction 59 • Forecast stable coke 51 57 60 50 50 51 52 55
Slide 23: Coke Market Dynamics
Coke Market Dynamics TM Macro thesis playing out with recent coke battery retirements U.S. & Canada Coke Battery Age Distribution Industry Outlook • By-product coke battery (Mtpa capacity) 4 Meter By-product 5.0 6 Meter By-product productivity falling as fleet ages 4.5 SunCoke Heat Recovery • Early
Slide 24: Definitions
DEFINITIONS NAPTP 2015 MLP Investor Conference 23
Slide 25: Definitions
Definitions • Adjusted EBITDA Adjusted EBITDA represents earnings before interest, taxes, depreciation and amortization (“EBITDA”). Prior to the expiration of our nonconventional fuel tax credits in 2013, Adjusted EBITDA included an add-back of sales discounts related to the sharing of these credits
Slide 26: Definitions
Definitions • Distributable Cash Flow equals Adjusted EBITDA less net cash paid for interest expense, ongoing capital expenditures, accruals for replacement capital expenditures and cash distributions to noncontrolling interests; plus amounts received under the Omnibus Agreement and acquisition expe
Slide 27: SXCP Guidance and Reconciliations
SXCP GUIDANCE AND RECONCILIATIONS NAPTP 2015 MLP Investor Conference 26
Slide 28: Adjusted EBITDA and Distributable Cash Flow Reconciliations
Adjusted EBITDA and Distributable Cash Flow Reconciliations BASIS OF PRESENTATION (SXCP) • On January 13, 2015, SunCoke Energy Partners, L.P. (“SXCP”) acquired a 75 percent interest in the Granite City cokemaking facility from SunCoke. Because this was a transfer between entities under common contro
Slide 29: 2015 Outlook
2015 Outlook Estimated 2015 cash distributions reflect prudent 1.10x target coverage 2014 2015 Outlook ($ in millions, except per unit data) As Reported Low High Adjusted EBITDA attributable to SXCP $131 $169 $179 Less: Ongoing capex (SXCP share) $15 $17 $16 Replacement capex accrual 5 7 7 Cash tax
Slide 30: Expected 2015E EBITDA Reconciliation
Expected 2015E EBITDA Reconciliation 2015E 2015E ($ in millions) Low High Net Income $69 $79 Depreciation and amortization 57 57 Interest expense, net 56 56 Income tax expense 1 1 Adjusted EBITDA $183 $193 EBITDA attributable to noncontrolling interest (1) (14) (14) Adjusted EBITDA attributable to S
Slide 31: 2015E Capital Expenditures
2015E Capital Expenditures 100% Basis ($ in millions) 2014 2015E Ongoing $17 $17 (1) Prefunded from dropdown Environmental Remediation 45 30 proceeds Expansion - 6 Total CapEx $62 $53 (1) 2015E Environmental Remediation cost at Haverhill (~$9 million) and Granite City (~$20 million). These amounts
Slide 32: Balance Sheet & Debt Metrics
Balance Sheet & Debt Metrics As of 3/31/2015 Balance SXC Attributable Attributable Consolidated to SXCP ($ in millions) to SXC Cash $ 165 $ 92 $ 74 Revolver Capacity 398 250 148 Total Liquidity 563 342 222 Total Debt (Long and Short-term) 699 597 102 Net Debt (Total Debt less Cash) 534 505 29 (1) Fu