Suncoke Energy, Inc. · NYSE:SXC
Suncoke Energy — Q1 2012 Earnings Presentation
29 slides from Suncoke Energy's earnings presentation, May 1, 2012
Slide 1: Q1 2012 Earnings Conference Call
Q1 2012 Earnings Conference Call May 1, 2012
Slide 2: Safe Harbor Statement
Safe Harbor Statement This slide presentation should be reviewed in conjunction with SunCoke’s First Quarter 2012 earnings release and conference call held on May 1, 2012 at 10:00 a.m. ET. Some of the information included in this presentation contains “forward-looking statements” (as defined in Sect
Slide 3: Q1 2012 Earnings Overview
Q1 2012 Earnings Overview Earnings Per Share (diluted) Q1 2012 results driven by strong Coke $0.24 business performance • Successful Middletown startup $0.17 • Improvement at Indiana Harbor • Yield/cost improvement at other facilities Q1 '11 Q1 '12 Coal remains a challenge • Higher than expected cas
Slide 4: Q1 2012 Financial Results
Q1 2012 Financial Results Revenue up 44% 2 0 • Domestic coke production up 206 ($ in millions) Q1'12 Q1'11 Change 1 thousand tons Revenue $481.3 $333.4 $147.9 • Middletown produced 142 thousand tons; added $68.5 million to revenue Operating Income $33.9 $4.3 $29.6 • Higher average coal prices favora
Slide 5: Adjusted EBITDA Bridge – Q1 2011 to Q1 2012
Adjusted EBITDA(1) Bridge – Q1 2011 to Q1 2012 Quarter’s performance led by strong Coke business results ($ in millions) ($4.9) ($0.6) $10.3 $8.5 $4.4 $11.5 $55.8 Total improvement of $12.9 million $26.6 Q1 2011 Middletown Indiana Indiana Coke Business Coal Mining Corporate Q1 2012 Adjusted Harbor H
Slide 6: EPS Bridge – Q1 2011 to Q1 2012
EPS Bridge – Q1 2011 to Q1 2012 EPS growth reflects strength of cokemaking business offset by financing costs for standalone capital structure ($0.07) ($0.01) ($0.08) $0.50 ($0.24) ($0.03) Reflects: Q1 2012 interest expense: $12.1m Q1 2011 income from affiliate, net: $4.2m $0.24 $0.17 Q1 2011 EPS Ad
Slide 7: Domestic Coke Business Summary
Domestic Coke Business Summary (Jewell Coke & Other Domestic Coke) Domestic Coke Production Domestic Coke Adjusted EBITDA(1) Per Ton (Tons in thousands) ($ in millions, except per ton amounts) • Middletown primary driver of increased coke production • Quarter benefited from Indiana Harbor improvemen
Slide 8: Pretax Return on Invested Capital (ROIC)
Pretax Return on Invested Capital (ROIC) Pretax ROIC(1)(2) for Domestic Coke excluding Middletown prior to 2012 30.0% 25.0% 23% (4) 20.0% 18% 17% 15% (3) (3) 15.0% 12% 13% 10.0% 5.0% 2% 0.0% 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011 2011 Q1 2012 Pretax ROIC, ex-Middletown prior 2012 (1)(2) 2010 Q1 2011 Q
Slide 9: Domestic Coke Business – Adjusted EBITDA Outlook
Domestic Coke Business – Adjusted EBITDA(1) Outlook • With Middletown at its target run rate, expect domestic coke Adjusted EBITDA (1) per ton to be $55 - $60 • Expect annual domestic coke Adjusted EBITDA (1) less ongoing capital expenditures in excess of $200 million Estimated Estimated ($ in milli
Slide 10: Coal Mining Financial Summary
Coal Mining Financial Summary Coal Mining Adjusted EBITDA(1) and Avg. Sales Q1 2012 Adjusted EBITDA declined Price/Ton(2) ($ in millions, except per ton amounts) YoY to $7.4 million • Higher costs and lower sales volumes more $200 $171 $152 $162 $159 $155 $150 than offset higher prices $151 $138 $13
Slide 11: Coal Mining Action Plan
Coal Mining Action Plan Taking action intended to make coal mining business cash neutral in 2012 Focusing on our most productive mines to reduce costs • Idling high cost/low quality mines and deferring further expansion • Consolidating staff and equipment to more productive mines; reducing overtime
Slide 12: Q1 2012 Sources & Uses of Cash
Q1 2012 Sources & Uses of Cash Maintained solid liquidity position during quarter; revolver capacity remained at approximately $150 million ($ in millions) $1.7 $18.4 ($39.8) $16.6 ($9.5) ($1.3) Primarily reflects: Inventories: $18.9m Accounts payable: ($39.9m) Interest payable: ($8.1m) $127.5 $113.
Slide 13: Updated 2012 Outlook
Updated 2012 Outlook Domestic Coke International Coke Coal Mining • Middletown startup gives • Not pursuing investment • Focus on mining mid-vol. coal confidence in outlook opportunity with Global and meeting contracted • 2012 Coke production now Coke volumes expected to be in excess of • Remain com
Slide 14: 2012 Adjusted EBITDA Outlook
2012 Adjusted EBITDA(1) Outlook Reaffirming full year 2012 Adjusted EBITDA guidance, driven by expected strong U.S. coke performance ($ in millions) $9 - $14 $5 - $15 $95 - $110 $250 - $280 $141 2011 Coke Business Coal Mining Corporate 2012 Adjusted Adjusted Costs EBITDA EBITDA (1) For a definition
Slide 15: Updated 2012 Guidance
Updated 2012 Guidance Metric Expected 2012 Outlook Adjusted EBITDA (1) $250 million – $280 million EPS* (at 22% tax rate) $1.30 – $1.65 Capital Expenditures & Approximately $100 million Investments Free Cash Flow (2) $75 million + Cash Tax Rate 10% – 15% Effective Tax Rate 20% – 24% Corporate Costs
Slide 16: MLP Evaluation Update
MLP Evaluation Update We believe domestic coke assets could qualify for an MLP • Coal business not under consideration Engaged key advisors to assist in MLP evaluation Analysis underway to assess structuring alternatives Plan to provide update on Q2 earnings call First Quarter 2012 Earnings Conferen
Slide 17: Questions
a SunCoke Energy
Slide 18: Appendix
* SunCoke Energy Appendix
Slide 19: 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 20: Reconciliations
Reconciliations Reconciliations from Adjusted Operating Income and Adjusted EBITDA to Net Income $ in millions Q1 2012 FY 2011 Q4 2011 Q3 2011 Q2 2011 Q1 2011 FY 2010 Adjusted Pro Forma Operating Income 151.5 Add: Pro Forma impact of ArcelorMittal settlement 51.0 Subtract: Legal and settlement charg
Slide 21: Reconciliations
Reconciliations Reconciliations from Adjusted EBITDA to Adjusted Pre-Tax Operating Income Other Domestic International Domestic $ in millions, except per ton data Jewell Coke Coke Coke Jewell Coal Corporate Combined Coke Q1 2012 Adjusted EBITDA 15.0 40.1 0.1 7.4 (6.8) 55.8 55.1 Subtract: Depreciatio
Slide 22: Reconciliations
Reconciliations Reconciliations from Adjusted EBITDA to Adjusted Pre-Tax Operating Income Other Domestic International Domestic $ in millions, except per ton data Jewell Coke Coke Coke Jewell Coal Corporate Combined Coke Q4 2011 Adjusted EBITDA 10.6 21.3 10.2 2.5 (13.2) 31.4 31.9 Subtract: Depreciat
Slide 23: Reconciliations
Reconciliations Reconciliations from Adjusted EBITDA to Adjusted Pre-Tax Operating Income Other Domestic International Domestic $ in millions, except per ton data Jewell Coke Coke Coke Jewell Coal Corporate Combined Coke Q2 2011 Adjusted EBITDA 10.6 25.3 0.8 11.5 (10.5) 37.7 35.9 Subtract: Depreciat
Slide 24: Reconciliations
Reconciliations Reconciliations from Adjusted EBITDA to Adjusted Pre-Tax Operating Income Other Domestic International Domestic $ in millions, except per ton data Jewell Coke Coke Coke Jewell Coal Corporate Combined Coke FY 2010 Adjusted EBITDA 123.9 78.5 15.0 24.0 (14.1) 227.3 202.4 Add (Subtract):
Slide 25: Pretax Return on Invested Capital Reconciliation, $MM
Pretax Return on Invested Capital Reconciliation, $MM Consolidated Sun Coke Energy Q1 2012 2011 Q4 2011 Q3 2011 Q2 2011 Q1 2011 2010 2009 Adjusted Pre-Tax Operating Income (1) 37.1 80.4 14.9 33.5 24.6 7.4 151.5 Invested Capital Q1 2012(2) 2011 Q4 2011 Q3 2011 Q2 2011 Q1 2011 2010 2009 Debt $725.7 $7
Slide 26: Pretax Return on Invested Capital Reconciliation, $MM
Pretax Return on Invested Capital Reconciliation, $MM Other Jewell Domestic International Coal Corporate Period ended Coke Coke Coke Mining and Other Total Identifiable Assets for Allocating Invested Capital Q1 2012 83.9 1,440.2 64.6 189.1 141.1 1,918.9 Q4 2011, inc Middletown 81.6 1,440.8 62.7 182.
Slide 27: Estimated EBITDA Reconciliation, $MM
Estimated EBITDA Reconciliation, $MM 2012E Net Income to Adjusted EBITDA Reconciliation 2012E 2012E Low High Net Income $98 $122 Depreciation, Depletion and Amortization 74 72 Total financing costs, net 48 46 Income tax expense 25 37 EBITDA $245 $277 Sales discounts 11 10 Noncontrolling interests (6
Slide 28: Estimated Free Cash Flow Reconciliation, $MM
Estimated Free Cash Flow Reconciliation, $MM 2012E Estimated Free Cash Flow Reconciliation 2012 Cash from operations; In excess of $ 179 Less cash used for investing activities Approx. (100) Less payments to minority interest Approx. (4) Free Cash Flow In excess of $ 75 First Quarter 2012 Earnings C
Slide 29: Media releases and SEC filings are available on our website
Media releases and SEC filings are available on our website at www.suncoke.com Contact Investor Relations for more information: 630-824-1907