Suncoke Energy, Inc. · NYSE:SXC
Suncoke Energy — Q4 2014 Earnings Presentation
37 slides from Suncoke Energy's earnings presentation, Jan 29, 2015
Slide 1: SunCoke Energy, Inc. Q4 2014 Earnings & 2015 Guidance
Exhibit 99.2 SunCoke Energy, Inc. Q4 2014 Earnings & 2015 Guidance Conference Call January 29, 2015
Slide 2: Forward-Looking Statements
Forward-Looking Statements This slide presentation should be reviewed in conjunction with the Fourth Quarter 2014 earnings and 2015 guidance release of SunCoke Energy, Inc. (SXC) and the conference call held on January 29, 2015 at 11:30 a.m. ET. Some of the information included in this presentation
Slide 3: 2014 Overview
2014 Overview Accomplishments & Challenges Operating Performance • Sustained solid full year operating, safety and environmental performance in coke, logistics and coal despite weather-challenged Q1 • Completed Indiana Harbor refurbishment, but facility turnaround still in progress; delivered FY ‘14
Slide 4: Granite City Dropdown Transaction
Granite City Dropdown Transaction 75% dropdown of Granite City executed at ~9.9x total EBITDA multiple Potential Impact to Estimated Expected Impact from Dropdown SXC Equity Value EBITDA Multiple 1 Direct • ~$52M additional LP/GP units Transaction structured Transaction • $135M debt pay down to dele
Slide 5: Q4 & FY 2014 Earnings Overview
Q4 & FY 2014 Earnings Overview Adj. EBITDA from Cont. Ops. up $7.2M in Q4 ($ in millions) and $16.0M in FY • Improvement at Indiana Harbor, Jewell Coke $237.8 $221.8 and Brazil plus lower Corporate costs $62.8 $70.0 • FY benefited from Coal Logistics acquisitions • At low end of $235M -$255M guidanc
Slide 6: Q4 & FY 2014 Financial Results
Q4 & FY 2014 Financial Results ($ in millions, except volumes and per share) Q4 '14 Q4 '13 Q4 '14 vs. Q4 '13 FY '14 FY '13 FY '14 vs. FY '13 Continuing Ops. Adj. EBITDA Domestic Coke Sales Volumes 1,103 1,047 56 4,184 4,263 (79) up 11.5% in Q4 and 7.2% in FY Coal Transloading Volumes 4,301 3,649 652
Slide 7: Q4 '14 vs. Q4 '13 Adjusted EBITDA
Adjusted EBITDA (1) – Q4 ‘14 vs. Q4 ‘13 Improved Indiana Harbor results & lower Corporate costs benefited Q4 ($ in millions) (1) Q4 2013 Adj. EBITDA (Consolidated) totaled $59.7 million. For a definition and reconciliation of Adjusted EBITDA from Continuing Operations, Adjusted EBITDA from Discontin
Slide 8: FY '14 vs. FY '13 Adjusted EBITDA
Adjusted EBITDA (1) – FY ‘14 vs. FY ‘13 Indiana Harbor and Coal Logistics benefited FY results ($ in millions) (1) FY 2013 Adj. EBITDA (Consolidated) totaled $215.1 million. For a definition and reconciliation of Adjusted EBITDA from Continuing Operations, Adjusted EBITDA from Discontinued Operation
Slide 9: Q4 '14 vs. Q4 '13 Diluted EPS
Diluted EPS (1) – Q4 ‘14 vs. Q4 ‘13 India impairment and Legacy costs drove Q4 ‘14 EPS loss ($ per share) (1) Represents EPS from Continuing Operations attributable to SXC. SXC Q4/ FY 2014 Earnings & 2015 Guidance Call 8
Slide 10: FY '14 vs. FY '13 Diluted EPS
Diluted EPS (1) – FY ‘14 vs. FY ‘13 India and Prep. Plant impairment, depreciation and Legacy costs drove FY ‘14 EPS loss ($ per share) (1) Represents EPS from Continuing Operations attributable to SXC. SXC Q4/ FY 2014 Earnings & 2015 Guidance Call 9
Slide 11: Domestic Coke Business Summary
Domestic Coke Business Summary Q4 ‘14 Adjusted EBITDA per ton of $58 FY ‘14 Adj. EBITDA per ton of $59 impacted by Q1 weather Domestic Coke Production (1) Per Ton Domestic Coke Adjusted EBITDA (thousands of tons) ($ in millions, except per ton amounts) 1,059 1,090 1,083 $67/ton 1,056 154 944 155 155
Slide 12: Indiana Harbor Performance
Indiana Harbor Performance Q4 ‘14 production below guidance 2014 Coke Production (thousands of tons) • Exited year with solid yields Q4 ‘14 Guidance • Ovens pushed per day challenged 285K –295K tons 275 270 264 – Experienced two major equipment failures – Oven-push cycle and scheduling below target
Slide 13: Discontinued Operations
Discontinued Operations Q4 ‘14 Adj. EBITDA from Disc. Adj. EBITDA from Disc. Ops. Ops. loss of $4.9M vs. $4.6M in Q4 ‘13 Q4 ‘14 FY ‘14 • Average coal sales price down $17 per ton, largely offset by Loss on Disc. Ops., net of tax ($40.1M) ($106.0M) lower cash costs and volumes Exit Costs (contract te
Slide 14: Liquidity Position
Liquidity Position Ended quarter with solid cash position and significant revolver capacity (1) Includes ($0.1) million in working capital, $1.0 million in other financing activities and ($1.6) million of cash used in Discontinued Operations. SXC Q4/ FY 2014 Earnings & 2015 Guidance Call 13
Slide 15: Guidance
********** ********** ********** ********** ********** GUIDANCE SXC Q4/ FY 2014 Earnings & 2015 Guidance Call 14
Slide 16: 2015 Priorities
2015 Priorities 2015 priorities include sustained focus on operations excellence, growth initiatives and capital optimization to enhance valuation • Sustain high-level operating, safety & environmental performance Operations • Improve Indiana Harbor performance; return to name plate run-rate Excelle
Slide 17: 2015 Domestic Coke Business Outlook
2015 Domestic Coke Business Outlook 2015E Adj. EBITDA per ton of $55 $60– reflects Jewell Coke standalone impacts and outlook for Indiana Harbor (1) 2015 Domestic Coke Adj. EBITDA Domestic Coke Adjusted EBITDA Per Ton ($ in millions, except per ton amounts) outlook of $240M $255M - $59/ton $55 -$60/
Slide 18: 2015 Indiana Harbor Outlook
2015 Indiana Harbor Outlook Indiana Harbor expected 2015 Adj. EBITDA of $25M $35M– reflects Q1 production outlook and contract cost recovery economics Operating environment remains challenged • Steep learning curve on post-refurbishment oven performance and new equipment • Existing equipment reliabi
Slide 19: 2015 Coal Rationalization Plan
2015 Coal Rationalization Plan Plan preserves optionality to sell while balancing impact to Jewell Coke Dec. 2014 2015 Coal Long-term Announcement Rationalization Plan Coal Supply • Reduced coal production by • Implement contract mining model• Maintain optionality for >50%, idling mines, for ~0.6M t
Slide 20: Benefits of Coal Rationalization Plan
Benefits of Coal Rationalization Plan Expect rationalization plan to generate $20M run-rate difference vs. operating status quo FY 2013 FY 2014 FY 2015E (1) FY 2016E (1) Adjusted EBITDA ($6.3M) ($10.0M) ($31.5M) ($31.5M) from Disc. Ops. Capital Excludes ($20.1M) ($7.1M) ($9.0M) ($9.0M) $50M –$70M fo
Slide 21: Expected 2015 Adjusted EBITDA
Expected 2015 Adjusted EBITDA (1) 2015 Adj. EBITDA (1) outlook is flat, with Jewell Coke standalone cost impacts offset by Indiana Harbor improvement ($ in millions) (1) For a definition and reconciliation of Adjusted EBITDA from Continuing Operations, Adjusted EBITDA from Discontinued Operations an
Slide 22: Consolidated Guidance Summary
Consolidated Guidance Summary Metric 2014 Actual 2015 Guidance Adjusted EBITDA (1) Continuing Operations $237.8 million $225 –$245 million Consolidated $210.7 million $190 –$210 million Attributable to SXC $150.0 million $115 –$130 million Capital Expenditures ~$125 million ~$90 million Domestic Cok
Slide 23: Shareholder Value Creation
Shareholder Value Creation Shareholder value creation via organic and inorganic growth projects, backed by disciplined capital management Pursue organic growth projects that Acquire industrial-facing processing leverage our operational strengths and and handling assets to drive further greenfield de
Slide 24: Steel Industry
Steel Industry Recent capital markets sentiment & industry environment has shifted negatively for steelmakers US primary demand outlook reasonable • Resilient automotive demand • Continued non-residential construction recovery • Expect challenges within tubular/oil & gas segment Steel pricing under
Slide 25: SXC Share Price Correlation
SXC Share Price Correlation SunCoke Energy historical share price performance highly correlated to AK Steel and US Steel Historical Share Price Correlation to AK(1,2) Steel Historical Share Price Correlation to US(1,2) Steel 200% 200% Correlation Coefficient = 0.90 Correlation Coefficient = 0.82 175
Slide 26: Key Investment Considerations
Key Investment Considerations Strong investment thesis remains intact • Long-term, take-or-pay contracts at strategic customer assets Stable, Long-Term • Profit and return on capital generated via fixed-fee structure Cash Flows • Pass-through of coal and operating costs in addition to taxes, transpo
Slide 27: Questions
***** ***** ***** ***** ***** ***** QUESTIONS SXC Q4/ FY 2014 Earnings & 2015 Guidance Call 26
Slide 28: Investor Relations
Investor Relations 630-824-1907 www.suncoke.com
Slide 29: Appendix
******* ******* ******* ******* ******* ******* APPENDIX SXC Q4/ FY 2014 Earnings & 2015 Guidance Call 28
Slide 30: Definitions
Definitions Adjusted EBITDA represents earnings before interest, taxes, depreciation, depletion and amortization (“EBITDA”) adjusted for impairments, costs related to exiting our Coal business, sales discounts and the interest, taxes, depreciation, depletion and amortization attributable to our equi
Slide 31: Reconciliation of Net Income to Adjusted EBITDA
Reconciliation of Net Income to Adjusted EBITDA ($ in millions) FY 2014Q4 2014 Q3 2014 Q2 2014 Q1 2014 FY 2013Q4 2013 Q3 2013 Q2 2013 Q1 2013 Net Income/(Loss) ($101.8) ($55.8) $6.4 ($48.6) ($3.8) $50.1 $18.7 $12.3 $12.7 $6.4 Subtract: Net Loss from Discontinued Operations (106.0) (40.1) (18.5) (41.
Slide 32: Reconciliation of Net Income to Adjusted EBITDA from Discontinued Operations
Reconciliation of Net Income to Adjusted EBITDA from Discontinued Operations ($ in millions) FY 2014Q4 2014 Q3 2014 Q2 2014 Q1 2014 FY 2013Q4 2013 Q3 2013 Q2 2013 Q1 2013 Net Loss from Discontinued Operations ($106.0) ($40.1) ($18.5) ($41.2) ($6.2) ($15.5) ($4.4) ($3.6) ($2.8) ($4.7) Depreciation, d
Slide 33: Reconciliation of Segment Adjusted EBITDA and Adjusted EBITDA per ton
Reconciliation of Segment Adjusted EBITDA and Adjusted EBITDA per ton Reconciliation of Segment Adjusted EBITDA and Adjusted EBITDA per Ton Domestic India Corporate / Continuing Discontinued ($ in millions, except per ton data) Coke Brazil Coke Coke(1) Coal Logistics Other Operations Operations Lega
Slide 34: 2015E Guidance Reconciliation
2015E Guidance Reconciliation 2015E 2015E ($ in millions) Low High Net Income $21 $38 Subtract: Net Loss from Discontinued Operations (16) (13) Net Income from Continuing Operations $37 $51 Depreciation, depletion and amortization 89 89 Interest expense, net 68 66 Income tax expense 12 20 Legacy exp
Slide 35: Balance Sheet & Debt Metrics
Balance Sheet & Debt Metrics (1) As of 12/31/2014 Proforma Post-Granite City Transaction Balance Balance SXC Attributable SXC Attributable Attributable Attributable Consolidated to SXCP Consolidated to SXCP ($ in millions) to SXC to SXC Cash $139 $33 $106 $188 $82 $106 Revolver Capacity 398 250 148
Slide 36: Capital Expenditures
Capital Expenditures 2014 Capex SXC (1) Consolidated ($ in millions) SXCP Ongoing(2) $27 $17 $44 Expansion 4 0 4 Environmental Project 1 45 46 Indiana Harbor Refurbishment 24 0 24 Total CapEx from Continued Operations $56 $62 $118 Ongoing: Discontinued Operations (3) 7 0 7 Total CapEx (Consolidated)
Slide 37: Q4 and FY 2014 Charges
Q4 and FY 2014 Charges ($ in millions) Segment Financial Classification Q1 '14 Q2 '14 Q3 '14 Q4 '14 FY '14 Asset Impairment - Disc. Ops. Disc. Ops Net Income from Disc. Ops. - $88.0 $16.4 $29.1 $133.5 Asset Impairment - Cont. Ops. Cont. Ops. Net Income from Cont. Ops. - 15.1 - 1.7 16.8 Coal Exit Cos