Suncoke Energy, Inc. · NYSE:SXC
Suncoke Energy — Q4 2011 Earnings Presentation
34 slides from Suncoke Energy's earnings presentation, Feb 2, 2012
Slide 1: Q4 2011 Earnings Conference Call
Q4 2011 Earnings Conference Call February 2, 2012
Slide 2: Safe Harbor Statement
Safe Harbor Statement This slide presentation should be reviewed in conjunction with SunCoke’s Fourth Quarter 2011 earnings release and conference call held on February 2, 2012 at 4:30 p.m. ET. Some of the information included in this presentation contains “forward-looking statements” (as defined in
Slide 3: Overview
Overview • Q4 2011 and Full Year 2011 missed expectations due to unfavorable impact of $12.2 million (net of income attributable to noncontrolling interests) in accounting adjustments at Indiana Harbor • Q4 2011 Net Income attributable to shareholders of $8.0 million and EPS of $0.12 per share • Ful
Slide 4: Indiana Harbor Accounting Adjustments
Indiana Harbor Accounting Adjustments Contract Billing Resolution Inventory Adjustment • In late January 2012, • Adjustment for coal and coke customer questioned 2011 inventory accounting invoicing • Understated cost of goods • Accepted customer sold/overstated inventory in interpretation; will adju
Slide 5: Q4 2011 & Full Year 2011 Financial Results
Q4 2011 & Full Year 2011 Financial Results Q4 '11 vs. 2011 vs. • Q4 2011 Adjusted EBITDA ($ in millions) Q4 '11 Q4 '10 2011 2010 Q4 '10 2010 decreased YoY: Revenue $424.1 $317.2 $1,538.9 $1,326.5 $106.9 $212.4 Q4 2010 impact of Legal/Settlement costs Operating Income $11.7 $15.8 $67.5 $174.2 ($4.1)
Slide 6: Q4 2010 to Q4 2011 Adjusted EBITDA Bridge
Q4 2010 to Q4 2011 Adjusted EBITDA(1) Bridge Adjusted EBITDA decrease reflects Indiana Harbor adjustments, higher corporate costs and Black Lung Liability charge, offset by improved performance in Coal Mining and the absence of ArcelorMittal legal/settlement costs ($ in millions) ($12.2) $12.9 ($6.5
Slide 7: Q3 2011 to Q4 2011 Adjusted EBITDA Bridge
Q3 2011 to Q4 2011 Adjusted EBITDA(1) Bridge Adjusted EBITDA decrease reflects Indiana Harbor adjustments, Black Lung Liability charge, and higher Coal Mining costs, offset by lower corporate expenses and preferred dividend accrual in International segment ($ in millions) ($12.2) ($6.0) $8.5 ($3.8)
Slide 8: Full Year 2010 to 2011 Adjusted EBITDA Bridge
Full Year 2010 to 2011 Adjusted EBITDA(1) Bridge Adjusted EBITDA decrease reflects impact of ArcelorMittal settlement and higher corporate costs, offset by improved Coal Mining results ($ in millions) ($34.7) ($23.9) ($28.5) ($12.2) ($7.3) $31.0 $227.3 ($11.2) $140.5 2010 Net ArcelorMittal Corporate
Slide 9: Domestic Coke Financial Summary
Domestic Coke Financial Summary (Jewell Coke & Other Domestic Coke) Domestic Coke Pro Forma Adjusted EBITDA(1) , Pro Forma for Domestic Coke Production ArcelorMittal Settlement and Coal Transfer Price (Tons in thousands) ($ in millions, except per ton amounts) • Q4 ‘11 increase over Q4 ‘10 reflects
Slide 10: Coal Mining Financial Summary
Coal Mining Financial Summary Coal Sales, Production and Purchases (Tons in thousands) 386 335 334 340 371 340 363 349 • Q4 2011 Coal operations delivered 321 49 259 66 26 84 48 68 53 76 highest production levels of year on 337 269 256 323 272 310 273 increases at Jewell and HKCC 308 57 51 24 22 20
Slide 11: Coal Mining Financial Summary
Coal Mining Financial Summary Coal Mining Pro Forma Adjusted EBITDA (1) and Avg. Sales Price/Ton (2) Pro Forma for Coal Transfer Price Impact • Q4 2011 Pro Forma Adjusted EBITDA ($ in millions, except per ton amounts) $200 declined QoQ due to higher Coal Cash $162 Costs offset partially by higher av
Slide 12: Pretax Return on Invested Capital
Pretax Return on Invested Capital Pretax ROIC(1)(2): Domestic Coke, ex-Middletown 30.0% 25.0% 24% 20.0% 17% 15% (3) (3) 15.0% 12% 13% 10% 10.0% 5.0% 2% 0.0% 2009 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011 2011 Pretax ROIC, ex-Middletown (1)(2) 2009 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011 2011 Total Domestic
Slide 13: Full Year 2011 Corporate
Full Year 2011 Corporate (Adjusted EBITDA) 2011 corporate costs primarily reflect costs associated with becoming a standalone company and relocation costs; 2012 corporate costs expected to be between $30 - $35 million ($ in millions) $3.6 $4.4 $7.2 $14.9 $44.2 $30 - $35 $14.1 2010 Standalone Costs R
Slide 14: Liquidity Update
Liquidity Update Summary Cash Flow For the Three For the Twelve For the Twelve • Began decrease of 2011 working Months Months Months Ended December Ended December Ended December capital build in Q4 2011 ($ in millions, except where indicated) Net Income 31, 2011 $8 31, 2011 $59 31, 2010 $146 • Targe
Slide 15: Tax Overview
Tax Overview • Additional Q4 2011 reduction of deferred tax assets and equity of ~ $100M Tax Sharing Agreement Balance • SunCoke retains future NOLs/tax credits Sheet/ • Tax credits primary driver of lower • SunCoke entered tax Effective Tax effective rate (20-24% for 2012); sharing agreement with R
Slide 16: 2012 Priorities
2012 Priorities • Execute the ramp up of Middletown; expect to reach full production levels in Q2 2012 • Achieve targeted coke production volumes of 4.0 to 4.2 million tons • Continue permitting work for potential new U.S. plant in anticipation of a market recovery • Implement India entry strategy b
Slide 17: 2012 Outlook Summary
2012 Outlook Summary Metric Expected 2012 Outlook Adjusted EBITDA (1) $250 million – $280 million Capital Expenditures Approximately $150 million & Investments Free Cash Flow (2) $50 million + Cash Tax Rate 10% – 15% Effective Tax Rate 20% – 24% Corporate Costs $30 million - $35 million Coke Product
Slide 18: Strategy for Shareholder Value Creation
Strategy for Shareholder Value Creation Potential Structuring Operational Excellence Grow The Coke Business Alternatives • Rigorous execution in • Domestic • Coke MLP existing operations • Secure permits for • Domestic assets well next potential facility suited and expected • Maintain focus on • Cap
Slide 19: Questions
Questions Fourth Quarter 2011 Earnings Conference Call 18
Slide 20: Appendix
Appendix Fourth Quarter 2011 Earnings Conference Call 19
Slide 21: 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 22: 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 23: EBITDA and Pretax ROIC Reconciliation, $MM
EBITDA and Pretax ROIC Reconciliation, $MM For The Year Ended 2011 Jewell Other International Coal Corporate Coke Domestic Coke Coke Mining and Other Total Net Income $58.9 Add: Depreciation, depletion and amortization 58.4 Subtract: Interest Income (Primarily from Affiliates) (12.9) Add: Interest c
Slide 24: EBITDA and Pretax ROIC Reconciliation, $MM
EBITDA and Pretax ROIC Reconciliation, $MM For The Three Months Ended December 31, 2011 Other International Coal Corporate Jewell Coke Domestic Coke Coke Mining and Other Total Net Income $7.5 Add: Depreciation, depletion and amortization 16.0 Subtract: Interest Income (0.1) Add: Interest cost - aff
Slide 25: EBITDA and Pretax ROIC Reconciliation, $MM
EBITDA and Pretax ROIC Reconciliation, $MM For The Three Months Ended September 30, 2011 Jewell Other International Coal Corporate Coke Domestic Coke Coke Mining and Other Total Net Income $21.7 Add: Depreciation, depletion and amortization 14.8 Subtract: Interest Income (1.3) Add: Interest cost - a
Slide 26: EBITDA and Pretax ROIC Reconciliation, $MM
EBITDA and Pretax ROIC Reconciliation, $MM For The Three Months Ended June 30, 2011 Jewell Other International Coal Corporate Coke Domestic Coke Coke Mining and Other Total Net Income $24.0 Add: depreciation, depletion and amortization 14.6 Subtract: interest income (primarily from affiliates) (5.8)
Slide 27: EBITDA and Pretax ROIC Reconciliation, $MM
EBITDA and Pretax ROIC Reconciliation, $MM For The Three Months Ended March 31, 2011 Jewell Other International Coal Corporate Coke Domestic Coke Coke Mining and Other Total Net Income $5.7 Add: depreciation, depletion and amortization 13.0 Subtract: interest income (primarily from affiliates) (5.7)
Slide 28: EBITDA and Pretax ROIC Reconciliation, $MM
EBITDA and Pretax ROIC Reconciliation, $MM For The Year Ended 2010 Jewell Other International Coal Corporate Coke Domestic Coke Coke Mining and Other Total Net Income $146.3 Add: Depreciation, depletion and amortization $48.2 Subtract: Interest Income (Primarily from Affiliates) ($23.7) Add: Interes
Slide 29: EBITDA and Pretax ROIC Reconciliation, $MM
EBITDA and Pretax ROIC Reconciliation, $MM For The Three Months Ended December 31, 2010 Jewell Other Domestic International Coal Corporate and Coke Coke Coke Mining Other Total Net Income $15.1 Add: Depreciation, depletion and amortization 12.3 Subtract: Interest Income (5.7) Add: Interest cost - af
Slide 30: EBITDA and Pretax ROIC Reconciliation, $MM
EBITDA and Pretax ROIC Reconciliation, $MM For The Year Ended 2009 Jewell Other International Coal Corporate Coke Domestic Coke Coke Mining and Other Total Net Income $211.2 Add: Depreciation, depletion and amortization $32.3 Subtract: Interest Income (Primarily from Affiliates) ($24.5) Add: Interes
Slide 31: Free Cash Flow Reconciliation, $MM
Free Cash Flow Reconciliation, $MM For the Three For the Nine For the Twelve For the Twelve Months Ended Months Ended Months Ended Months Ended December 31, 2011 September 30, 2011 December 31, 2011 December 31, 2010 Net Cash Provided by Operating Activities $ 42 $ 59 $ 101 $ 297 Cash Flows from Inv
Slide 32: Pretax Return on Invested Capital Reconciliation, $MM
Pretax Return on Invested Capital Reconciliation, $MM For the period ended Consolidated Sun Coke Energy 2011 Q4 2011 Q3 2011 Q2 2011 Q1 2011 2010 2009 2008 Adjusted Pretax Operating Income (1) $80.4 $14.9 $33.4 $24.6 $7.4 $151.5 $148.4 $111.7 Invested Capital Q4 2011 Q3 2011 Q2 2011 Q1 2011 2010 200
Slide 33: Pretax Return on Invested Capital Reconciliation, $MM
Pretax Return on Invested Capital Reconciliation, $MM Other Period ended Jewell Domestic International Coal Corporate Coke Coke Coke Mining and Other Total Identifiable Assets for Allocating Invested Capital Q4 2011 $81.6 $991.8 $62.8 $182.1 $220.8 $1,539.0 Q3 2011 77.7 990.6 52.7 178.3 192.3 1,491.
Slide 34: 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 Fourth Quarter 2011 Earnings Conference Call 33