Suncoke Energy, Inc. · NYSE:SXC
Suncoke Energy — Non-Deal Roadshow (March 2016)
35 slides from Suncoke Energy's roadshow presentation, March 2016
Slide 1: Investor Meetings
Investor Meetings March 2016
Slide 2: Forward-Looking Statements
Forward-Looking Statements 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 that e
Slide 3: SXC and SXCP
SXC and SXCP Investor Meetings - March 2016 2
Slide 4: About SXC and SXCP
About SXC and SXCP Leading raw materials processing and handling company with existing operations in cokemaking & coal logistics Current Business Future Platforms Cokemaking Coal Logistics Industrial Materials • Largest independent coke • Strategically located coal • MLP-qualifying industrial produc
Slide 5: SXC & SXCP Organizational Structure
SXC & SXCP Organizational Structure C-Corp / MLP relationship provides flexible capital structure and remains well situated with >$275M of combined liquidity SXC owns: 2% GP interest 54% LP interest 100% IDRs International Domestic Coal Mining Coke Coke (~110M reserves) Middletown SXC provides via (
Slide 6: Asset Value Proposition
Asset Value Proposition Cokemaking & Coal Logistics assets offer unique value proposition Cokemaking Coal Logistics Value Proposition Value Proposition Long-term, Take-or-Pay Contracts Long-term, Take-or-Pay Contracts at CMT Direct Rail Access and Multi-Category Competitive Source of Coke Vessel Loa
Slide 7: Cokemaking Business
COKEMAKING BUSINESS Investor Meetings - March 2016 6
Slide 8: SunCoke's Cokemaking Business
SunCoke’s Cokemaking Business SunCoke is the largest independent coke supplier in North America SunCoke is the primary coke supply source at our Total US & Canada Coke Capacity(1) customers’ most strategic blast furnace assets 8% 5% • Total US cokemaking capacity of 4.2M tons • Account for ~23% of t
Slide 9: Industry Leading Network of Assets
Industry Leading Network of Assets Portfolio of assets provide flexibility to efficiently meet customers blast furnace coke needs Network of strategically located cokemaking Middletown assets IA Haverhill I & II • Provides flexibility in transporting coke to multiple OH Indiana Harbor customer blast
Slide 10: The Cokemaking Opportunity
The Cokemaking Opportunity Expect aging by-product battery closures will continue, allowing SunCoke’s heat-recovery technology to take additional market share Aging Cokemaking Facilities Recent Coke Battery Rationalization % of U.S. & Canada • AK Ashland closed (2010) and resulted in long- Average A
Slide 11: SunCoke's Leading Technology
SunCoke’s Leading Technology Our industry-leading cokemaking technology sets U.S. EPA MACT standards and makes larger, stronger coke Industry-leading SunCoke’s Heat Recovery Cokemaking Technology environmental signature Negative Pressure Ovens • Leverage negative pressure to • Minimal fugitive emiss
Slide 12: Strategic Customer Relationships
Strategic Customer Relationships Customer Asset Supported Primary Product Line Comments • Encouraged by improvement in Middletown Auto recent results • Despite recent temporary BF idling at Ashland, continue to perform Ashland Auto under contract & divert coke to Dearborn facility • Continuing to in
Slide 13: Take-or-Pay Contract Structure
Take-or-Pay Contract Structure Long-term, take-or-pay contracts generate stable cash flow and insulate business from industry cyclicality Key Contract Provisions/Terms Contract Value Propositions • Customers required to take all coke we produce up to contract max. Fixed Fee • Long-term, take-or-pa
Slide 14: Domestic Coke Production & Yield
Domestic Coke Production & Yield Steady production and yield performance across Domestic Coke assets; expect continued stability in 2016 Domestic Coke Production, Yield and Utilization Operational (thousands of tons) 102% 101% performance remains 97% 100% 98% 97% ~100% consistent across fleet 67% 67
Slide 15: Coal Logistics Business
COAL LOGISTICS BUSINESS Investor Meetings - March 2016 14
Slide 16: Coal Logistics
Coal Logistics Coal Logistics business represents a natural vertical integration platform which broadens our customers base Platform for Growth Strategically located assets with access to barge, rail and truck Experienced management team capable of driving growth SXCP’s Coal Logistics Portfolio • Ce
Slide 17: KRT and Lake Terminals
KRT and Lake Terminals Despite industry pressures, 2016 outlook remains stable at $15 – $20 million combined Adjusted EBITDA Kanawha River Terminal (KRT) Lake Terminal • Locations on Ohio River system well • Coal unloading, storage and blending positioned to serve coal miners, power facility adjacen
Slide 18: Convent Marine Terminal (CMT)
Convent Marine Terminal (CMT) Provides excellent fit with long-term growth strategy and aligns with existing SXCP core competencies Asset Overview Lowest Cost ILB Coal Producer Base • Large, efficient, well-capitalized Gulf Coast Foresight Energy, LLC export terminal in Convent, Louisiana • Among lo
Slide 19: CMT Outlook
CMT Outlook CMT positioned to withstand coal downturn as take-or-pay contract structure supports stable 2016 outlook 2016 Outlook • Take-or-pay contracts provide annual Adjusted EBITDA floor of ~$50M • 2016 guidance of $50M – $55M ─ Estimated throughput of 6.5Mt ─ Expect lower ancillary revenue per
Slide 20: Export Coal Market Netback
Export Coal Market Netback Despite prolonged decline in API 2 benchmark prices, CMT customers have vested interest in maintaining viable export platform $50 $3 ($3) Domestic Coal Producers ($9) • Exports augment domestic sales volume ($4) ─ Low cost mines operating at peak utilization & optimum cost
Slide 21: SXCP Financials and Capital Allocation Priorities
SXCP FINANCIALS AND CAPITAL ALLOCATION PRIORITIES Investor Meetings - March 2016 20
Slide 22: SXCP At a Glance
SXCP At a Glance Delivered FY 2015 Adj. EBITDA attributable to SXCP of ~$192M(1) and DCF of ~$117M(1), within guidance(2) Returned ~$56M to public unitholders in 2015 through distributions and unit repurchases Paid twelfth consecutive quarterly distribution (Feb. ‘16) Repurchased ~$48M face
Slide 23: Q4 and Full Year 2015 Overview
Q4 and Full Year 2015 Overview (1,2) Adjusted EBITDA Q4 2015 Adj. EBITDA up $10.5M, ($ in millions) $56.9 $201.7 driven by benefit of CMT acquisition $46.4 $0.8 $188.9 $1.5 $6.7 $8.3 $0.8 $38.3 $19.7 FY 2015 Adj. EBITDA up ~$13M $56.1 $191.9 $38.9 $130.9 • $21M benefit of CMT and $3.1M increase in d
Slide 24: Q4 and Full Year 2015 Overview
Q4 and Full Year 2015 Overview (1) Distributable Cash Flow Q4 and FY 2015 DCF of $32.2M and ($ in millions) $32.2 $117.1 $117.1M, respectively $27.2 $87.9 • Benefit of Granite City dropdown and CMT acquisition Q4 ‘14 Q4 ‘15 FY ‘14 FY ‘15 FY 2015 coverage ratio of 1.06x; (1) (1) Proforma ratio of 1.1
Slide 25: Capital Priorities
Capital Priorities SXCP capital allocation outlook prioritizes de-levering while maintaining distributions to unitholders SXCP Distribution Growth Declared quarterly cash distribution of $0.5940 +44% per unit Distributed ~$43M to public unitholders in 2015 (1) $0.4125 MQD Intend to use excess cash $
Slide 26: FY 2015 and 2016 Outlook
FY 2015 and 2016 Outlook Delivered 2015 Adj. EBITDA and DCF results above revised guidance; 2016 outlook reflects FY benefit of CMT and SXC sponsor support Revised 2015 Guidance 2015 Results 2016 Outlook 2016 objective to de-lever As Reported As Reported with ≥$60M excess cash (1) ($ in millions, ex
Slide 27: Revised Capital Allocation Strategy
Revised Capital Allocation Strategy Revised SXCP capital allocation outlook prioritizes de-levering 2016 2015 2016 Outlook Status Quo Distributable Cash Flow(1,2) $117.1M $137M $165M Distributions(1,3) $110.2M $118M $112M Expect to Cash Coverage Ratio 1.06x 1.16x 1.47x generate >$60M of cash coverag
Slide 28: 2016 Priorities
2016 Priorities Managing Through Challenging Market Conditions • Remain flexible & responsive to industry backdrop while leveraging unique value proposition Optimize Cokemaking and Coal Logistics Asset Base • Continue to seek opportunities to drive incremental coke & coal logistics volumes Deliver O
Slide 29: Appendix
APPENDIX Investor Meetings - March 2016 28
Slide 30: Basis of Presentation & Definitions
Basis of Presentation & Definitions BASIS OF PRESENTATION • On January 13, 2015, we acquired a 75 percent interest in the Granite City cokemaking operation from SXC. Because this was a transfer between entities under common control, all historical financial results of Granite City prior to the dropd
Slide 31: Basis of Presentation & Definitions
Basis of Presentation & Definitions • Distributable Cash Flow equals Adjusted EBITDA less net cash paid for interest expense, ongoing capital expenditures, accruals for replacement capital expenditures, and cash distributions to noncontrolling interests; plus amounts received under the Omnibus Agree
Slide 32: Adjusted EBITDA and Distributable Cash Flow Reconciliations
Adjusted EBITDA and Distributable Cash Flow Reconciliations As As As As As As As As As As Reported Reported Reported Reported Reported Reported Reported Reported Reported Reported Proforma Proforma Proforma Proforma Proforma ($ in millions) Q1 ‘14 Q2 ‘14 Q3 ‘14 Q4 ‘14 FY ‘14 Q1 ‘15 Q2 ‘15 Q3 ‘15 Q4
Slide 33: Expected 2016E EBITDA Reconciliation
Expected 2016E EBITDA Reconciliation 2016E 2016E ($ in millions) Low High Net Cash Provided by Operating Activities $149 $163 Depreciation and amortization expense (74) (74) Loss on debt extinguishment - - Changes in working capital and other 2 2 Coal Logistics deferred revenue(1) - - Income tax exp
Slide 34: 2015 and 2016E CapEx
2015 and 2016E CapEx 100% Basis ($ in millions) 2015 2016E Ongoing $21 $15 Environmental Project(1) 21 $3 Total CapEx $42 $18 Coal Logistics: Ship loader (pre-funded) $5 $12 (1) 2015 Environmental Remediation cost at Haverhill (~$18 million) and Granite City (~$3 million). These amounts have been pr
Slide 35: Debt Maturity Schedule
Debt Maturity Schedule Maintain sufficient liquidity position, with no near-term debt maturities ($ in millions; as of December 31, 2015) SXCP unsecured bonds: $552M SXC Maturities SXCP Maturities • SXCP secured revolver: $182M • SXCP secured term loan: $50M • SXC unsecured bonds: $45M $45 $552 SXCP