Suncoke Energy, Inc. · NYSE:SXC
Suncoke Energy — KeyBanc Capital Markets 2011 Basic Materials & Packaging Conference
31 slides from Suncoke Energy's conference presentation, Sep 13, 2011
Slide 1: KeyBanc Capital Markets 2011 Basic Materials & Packaging Conference
KeyBanc Capital Markets 2011 Basic Materials & Packaging Conference September 13, 2011
Slide 2: Safe Harbor Statement
Safe Harbor Statement Some of the information included in this presentation contains “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). Such forward-looking statements are based on man
Slide 3: SunCoke at a Glance
SunCoke at a Glance Largest independent producer of high-quality Business Mix metallurgical coke in the Americas − Over 45 years of production experience Sales and Other Operating Revenue Pro Forma Adjusted EBITDA (2010) (2010)* 2010 total revenue and adjusted EBITDA of International International $
Slide 4: Strategically-Located Cokemaking Facilities and Mines
Strategically-Located Cokemaking Facilities and Mines Our U.S. facilities are located in close proximity to all U.S. integrated steelmaking facilities Domestic Operations International Operations Middletown(1) (AK Steel) Indiana Harbor Capacity: 550kt (ArcelorMittal) Capacity: 1,220kt Haverhill Braz
Slide 5: Delivering Coke and Energy to Customers
Delivering Coke and Energy to Customers Coke Energy Breeze Blast Furnace Coke and or Steam and/or Electric Power Nut Coke Key raw material in Small-sized coke Heat recovery steam HRSGs produce high- blast furnace iron- fines screened from generators (“HRSG”) pressure, superheated making process the
Slide 6: Our Industry-Leading Heat Recovery Coke Oven Technology
Our Industry-Leading Heat Recovery Coke Oven Technology 5
Slide 7: SunCoke's Oven vs. By-Product Ovens
SunCoke’s Oven vs. By-Product Ovens SunCoke’s technology is the industry’s environmental standard and provides many advantages over the traditional cokemaking process SunCoke Heat Recovery Traditional By-Product Pressurization Negative pressure Positive pressure Potential for emission of hazar
Slide 8: Strong Industry Fundamentals
Strong Industry Fundamentals World Crude Steel Production We expect significant infrastructure investment in (Tons in millions) emerging markets to drive steel demand growth 2,319 Coke/blast furnace iron production is expected to 1,562 remain the dominant process 1,248 − China: ~90% − World: ~70% 20
Slide 9: SunCoke's North American Industry Position
SunCoke's North American Industry Position SunCoke has the opportunity to displace higher cost coke imports Chinese Coke Price vs. Representative SunCoke Price North American Coke Imports (US$ / ton) (Tons in millions) SunCoke Chinese Q2 2011 Average: $359 $440 $700 2010 Average: $336 $414 2008-2010
Slide 10: SunCoke's Value Proposition
SunCoke’s Value Proposition A competitive turnkey coke solution which produces a consistent stream of earnings Typical Key Coke Sales Agreement What SunCoke Offers Provisions Capital Funding and Ownership Take-Or-Pay Fixed Fee Permits and Approvals (Profit and Return on Capital) SunCoke Coke fee Cus
Slide 11: Focused Growth Strategy
Focused Growth Strategy Growth Initiatives Continue to grow our North American cokemaking businesses; with portion of future coke capacity reserved for market sales Grow our international footprint with a focus on key growth markets We believe Expand our domestic coal production from current reserve
Slide 12: Coke Development
Coke Development Coke Expansion Focused on 4 Key Markets Market Drivers Our Focus / Activities Import displacement Early stages of permitting an anticipated 1.1 million tons of coke North Battery replacements per year potential new cokemaking facility in Kentucky America New blast furnace MOU for mi
Slide 13: Coal Development
Coal Development Current Operations Planned Growth Doubling Our Production 106 million tons of proven Expected 500,000 tons per 1.2 million tons and probable reserves year expansion of Jewell Coal current production capacity Underground − Mid-2013 completion + Reserve life of 50+ years Mining expect
Slide 14: Historical Financial Summary
Historical Financial Summary Strong growth in earnings and cash flow driven by coke expansion Total Revenues Adjusted EBITDA ($ in millions) ($ in millions) $1,327 $230 $227 $1,145 $840 $157 $184 $159 $117 2008 2009 2010 2008 2009 2010 Note: See Appendix for reconciliation. Grey colored bars represe
Slide 15: Domestic Coke Financial Summary
Domestic Coke Financial Summary (Jewell Coke & Other Domestic Coke) Domestic Coke Pro Forma Adjusted EBITDA(1) for ArcelorMittal Domestic Coke Production Settlement and Coal Transfer Price Impacts (Tons in thousands) ($ in millions, except per ton amounts) 922 3,593 $44/ton 635 168 2,868 $39/ton 62
Slide 16: Coal Mining Financial Summary
Coal Mining Financial Summary Coal Mining Pro Forma Adjusted EBITDA(5) for Coal Transfer Price Coal Sales, Production and Purchases Impact (Tons in thousands) ($ in millions, except per ton amounts) 1,233 1,179 1,214 1,277 1,134 1,104 $56/ton 334 340 $69 73 149 $34/ton 54 24 $25/ton $19/ton 2008 200
Slide 17: Second Quarter Overview
Second Quarter Overview Q2 ‘11 vs. Q2 ’10 • Year-over-year quarterly results reflect unfavorable impact of ArcelorMittal settlement, and relocation and public company readiness costs • Net Income Attributable to Net Parent Investment of $22.4 million in Q2 „11 vs. $44.3 million in Q2 ‟10 • Adjusted
Slide 18: Capital Expenditures
Capital Expenditures • Expect 2011 Capital Expenditures of $231 million, up $15 million vs. 2010 • Middletown and coal expansion represents expansion capital • First Half 2011 capital expenditures totaled $128 million Capital Expenditures In Millions $304 $16 $231 $215 $216 $28 $50 $46 $289 $187 $18
Slide 19: Cash Flows and Financial Position
Cash Flows and Financial Position • Issued $700M in debt in the form of $300M Term Capital Structure Loan and $400M Senior Notes • Repaid intercompany payable to Sunoco of $575 million with balance of the net proceeds retained for general corporate purposes • Sufficient liquidity (cash and undrawn r
Slide 20: Near-term Growth Drivers (2012/2013)
Near-term Growth Drivers (2012/2013) Middletown • On track for start-up in Q4 Indiana Harbor • No anticipated contractual production shortfall in 2012/2013 • $50M – $100M estimated spending to support contract extension • Contract renewal negotiations in process Coal Expansion • Addressing tight lab
Slide 21: Long-term Growth Drivers (2013 and Beyond)
Long-term Growth Drivers (2013 and Beyond) International – Brazil, China and India • Steel is growing in emerging economies, led by China and India • India is attractive for us given expected growth in primary coke demand and coke supply/demand balance • Memorandum of Understanding with Global Coke
Slide 22: Appendix
a SunCoke Energy o ae Appendix 21
Slide 23: Management Team
Management Team SunCoke’s management team represents a combination of deep industry knowledge, international experience and broad management/technical skills Years of Name Position experience Previous experience Fritz Henderson Chief Executive Officer 26 General Motors Michael Thomson President and
Slide 24: Board of Directors
Board of Directors Name Affiliation Employment History Board affiliations Fritz Henderson SunCoke Energy SunCoke Energy, Inc; General Motors Compuware Corp. Alvin Bledsoe Independent PricewaterhouseCoopers LLP Crestwood Midstream Partners Robert Darnall Independent Inland Steel Industries; Ispat Nor
Slide 25: Definitions
Definitions • Adjusted EBITDA represents earnings before interest, taxes, depreciation, depletion and amortization (“EBITDA”) adjusted for sales discounts and the deduction of income attributable to non-controlling interests in our Indiana Harbor cokemaking operations. EBITDA reflects sales discount
Slide 26: Reconciliations
Reconciliations ($ in million, except where indicated) Fiscal year ended December 31, 2010 Jewell Other International Coal Corporate Total Coke Domestic Coke Coke Mining and Other Net Income $146 Add: Depreciation, Depletion and Amortization 48 Subtract: Interest Income (Primarily from Affiliates) (
Slide 27: Reconciliations (Cont'd)
Reconciliations (Cont’d) ($ in million, except where indicated) Fiscal year ended December 31, 2009 Jewell Other International Coal Corporate Total Coke Domestic Coke Coke Mining and Other Net Income $211 Add: Depreciation, Depletion and Amortization 32 Subtract: Interest Income (Primarily from Affi
Slide 28: Reconciliations (Cont'd)
Reconciliations (Cont’d) ($ in million, except where indicated) Fiscal year ended December 31, 2008 Jewell Other International Coal Corporate Total Coke Domestic Coke Coke Mining and Other Net Income $133 Add: Depreciation, Depletion and Amortization 25 Subtract: Interest Income (Primarily from Affi
Slide 29: Reconciliations (Cont'd)
Reconciliations (Cont’d) ($ in million, except where indicated) For the Three Months Ended June 30, 2011 (Unaudited) Other International Corporate Jewell Coke Domestic Coke Coke Coal Mining and Other Total Net Income $23,993 Add: depreciation, depletion and amortization 14,605 Subtract: interest inc
Slide 30: Reconciliations (Cont'd)
Reconciliations (Cont’d) ($ in million, except where indicated) For the Three Months Ended June 30, 2010 (Unaudited) Other International Corporate Jewell Coke Domestic Coke Coke Coal Mining and Other Total Net Income $47,550 Add: depreciation, depletion and amortization 11,107 Subtract: interest inc
Slide 31: Reconciliations (Cont'd)
Reconciliations (Cont’d) ($ in million, except where indicated) For the Three Months Ended March 31, 2011 (Unaudited) Other International Corporate Jewell Coke Domestic Coke Coke Coal Mining and Other Total Net Income $5,655 Add: depreciation, depletion and amortization 13,020 Subtract: interest inc
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