Suncoke Energy, Inc. · NYSE:SXC
Suncoke Energy — Non-Deal Roadshow (September 2016)
37 slides from Suncoke Energy's roadshow presentation, September 2016
Slide 1: SunCoke Energy Investor Meetings
SunCoke Energy Investor Meetings September 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: Who is SunCoke?
Who is SunCoke? 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 producer
Slide 4: SXC & SXCP Organizational Structure
SXC & SXCP Organizational Structure C-Corp / MLP relationship provides flexible capital structure (NYSE: SXC) SXC owns: • Cash: $54M • Available Revolver Capacity: $100M 2% GP interest • Leverage: 0.56x 56% LP interest 100% IDRs (NYSE: SXCP) International Domestic • Cash: $54M • Available Revolver C
Slide 5: Compelling Investment Thesis
Compelling Investment Thesis SunCoke remains well positioned to create long-term value for investors • Fee-based, take-or-pay coke contracts provide Stable, Long-term cash flow stability despite steel price volatility Business Model • Limited commodity risk • Newer, more modern facilities & equipmen
Slide 6: Cokemaking Business
COKEMAKING BUSINESS SunCoke Energy – September Investor Meetings 6
Slide 7: SunCoke's Cokemaking Business
SunCoke’s Cokemaking Business SunCoke is the largest independent coke supplier in North America Coke is a critical raw material input for the Total US & Canada Coke Capacity(1) production of virgin iron & steel 6% 8% • Acts as a fuel, provides structural support and allows gas to reduce iron in BOF
Slide 8: Strategic Customer Relationships
Strategic Customer Relationships Customer Asset Supported Primary Product Lines Comments • Encouraged by improvement in Middletown (OH) Auto recent results and actions to strengthen balance sheet • Temporary BF idling at Ashland, Ashland (KY) Auto diverting coke to Dearborn • Continuing to invest in
Slide 9: Attractive Take-or-Pay Contract Structure
Attractive 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,
Slide 10: 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 11: 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 12: Coal Logistics Business
COAL LOGISTICS BUSINESS SunCoke Energy – September Investor Meetings 12
Slide 13: Coal Logistics Overview
Coal Logistics Overview Coal Logistics business represents a natural vertical integration platform which broadens our customer 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 Portfo
Slide 14: KRT and Lake Terminal
KRT and Lake Terminal Coal Logistics assets well positioned to deliver stable, long-term results despite recent coal industry pressures Kanawha River Terminal (KRT) Lake Terminal • Locations on Ohio River system well • Coal unloading, storage and blending positioned to serve coal miners, power facil
Slide 15: Convent Marine Terminal (CMT)
Convent Marine Terminal (CMT) CMT positioned to withstand coal downturn as take-or-pay contract structure supports stable 2016 outlook Asset Overview Lowest Cost ILB Coal Producer Base • Large, efficient, well-capitalized Gulf Coast Foresight Energy, LLC export terminal in Convent, Louisiana • Among
Slide 16: Export Coal Market Netback
Export Coal Market Netback Anticipate recent rise in API2 benchmark price will further support CMT customers’ vested interest in maintaining viable export platform $60 $4 ($3) Domestic Coal Producers ($9) • Exports augment domestic ($5) sales volume ─ Low cost mines operating at peak utilization & o
Slide 17: 2016 Outlook & Capital Allocation Overview
2016 OUTLOOK & CAPITAL ALLOCATION OVERVIEW SunCoke Energy – September Investor Meetings 17
Slide 18: Navigating Current Market Conditions
Navigating Current Market Conditions Encouraged by recent coal customer developments in addition to broader improvements across the coal and steel industries Significant improvement in underlying industry and customer dynamics CMT customers recently reached resolution on previously uncertain items •
Slide 19: SXCP Capital Priorities
SXCP Capital Priorities SXCP capital allocation outlook prioritizes de-levering while maintaining distributions to unitholders SXCP Distribution Growth Declared second quarter cash distribution of $0.5940 per unit +44% Expect to continue de-levering for balance of 2016 $0.4125 MQD (1) • Year-to-date
Slide 20: SXCP 2016 Outlook
SXCP 2016 Outlook Adj. EBITDA attributable to SXCP guidance of $207M – $217M; DCF and Coverage reflect discontinued sponsor support 2016 Original Outlook 2016 Revised Outlook Adj. EBITDA guidance As Reported As Reported of $207M – $217M ($ in millions, except per unit data) Low High(1) Low High(1) A
Slide 21: SXC 2016 Outlook
SXC 2016 Outlook FY 2016 Consolidated Adj. EBITDA guidance of $210M – $235M 2015 2016 Metric Results Guidance (1) Adjusted EBITDA Consolidated $185.8M $210M – $235M (1) Attrib. to SXC $104.6M $105M – $124M (2) Capital Expenditures $76M ~$45M Domestic Coke Production 4.1 Mt 4.0 Mt – 4.1 Mt Dom. Coke
Slide 22: 2016 Priorities
2016 Priorities Manage 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 Ope
Slide 23: Compelling Investment Thesis
Compelling Investment Thesis SunCoke remains well positioned to create long-term value for investors • Fee-based, take-or-pay coke contracts provide Stable, Long-term cash flow stability despite steel price volatility Business Model • Limited commodity risk • Newer, more modern facilities & equipmen
Slide 24: Investor Relations
Investor Relations 630-824-1907 www.suncoke.com
Slide 25: Appendix
APPENDIX SunCoke Energy – September Investor Meetings 25
Slide 26: SXC Definitions
SXC Definitions • Adjusted EBITDA represents earnings before interest, (gain) loss on extinguishment of debt, taxes, depreciation and amortization (“EBITDA”), adjusted for impairments, coal rationalization costs, changes to our contingent consideration liability related to our acquisition of CMT, an
Slide 27: SXCP Definitions
SXCP Definitions • Adjusted EBITDA represents earnings before interest, (gain) loss on extinguishment of debt, taxes, depreciation and amortization, adjusted for Coal Logistics changes to our contingent consideration liability related to our acquisition of the CMT. Adjusted EBITDA does not represent
Slide 28: SXCP Definitions
SXCP Definitions • Distributable Cash Flow equals Adjusted EBITDA plus sponsor support and Coal Logistics deferred revenue; less net cash paid for interest expense, ongoing capital expenditures, accruals for replacement capital expenditures and cash distributions to noncontrolling interests; plus am
Slide 29: SXCP Guidance & Financial Reconciliations
SXCP GUIDANCE & FINANCIAL RECONCILIATIONS SunCoke Energy – September Investor Meetings 29
Slide 30: SXCP Q2 2016 Overview
SXCP Q2 2016 Overview (1,2) Net Income & Adjusted EBITDA Total net income attributable to ($ in millions) Net Income Adjusted EBITDA SXCP lower by $4.9M due largely to $18.1 $44.7 $41.7 $1.1 $2.6 $0.8 • Higher depreciation driven by CMT $12.6 $17.0 $0.5 $42.1 $40.9 • $3.5M gain on debt extinguishmen
Slide 31: Adjusted EBITDA and Distributable Cash Flow Reconciliations
Adjusted EBITDA and Distributable Cash Flow Reconciliations As As As As As As As Reported Reported Reported Reported Reported Proforma Proforma Proforma Proforma Proforma Reported Reported ($ in millions) Q1 ‘15 Q2 ‘15 Q3 ‘15 Q4 ‘15 FY ‘15 Q1 ‘15(1,2) Q2 ‘15(1,3) Q3 ‘15(1,4) Q4 ‘15(1) FY ‘15 Q1 ‘16
Slide 32: 2016E Guidance Reconciliation
2016E Guidance Reconciliation 2016E 2016E ($ in millions) Low High Net Cash Provided by Operating Activities $149 $163 Depreciation and amortization expense 74 74 (Gain) / Loss on debt extinguishment (20) (27) Changes in working capital and other (7) (7) Net Income $102 $123 Depreciation and amortiz
Slide 33: SXC Guidance & Financial Reconciliations
SXC GUIDANCE & FINANCIAL RECONCILIATIONS SunCoke Energy – September Investor Meetings 33
Slide 34: Reconciliation to Adjusted EBITDA
Reconciliation to Adjusted EBITDA ($ in millions) Q2 '16 Q1 '16 FY '15 Q4 '15 Q3 '15 Q2 '15 Q1 '15 Net cash provided by Operating activities $92.1 $29.4 $141.1 $58.1 $6.4 $65.5 $11.1 Depreciation, depletion and amortization expense 28.6 28.2 109.1 33.3 25.6 26.4 23.8 (Gain) / loss on extinguishment
Slide 35: 2016E Guidance Reconciliation
2016E Guidance Reconciliation 2016E 2016E ($ in millions) Low High Net cash provided by Operating activities $150 $170 Depreciation and amortization expense 106 106 (Gain) / loss on extinguishment of debt (20) (27) Loss on divestiture of business 14 14 Changes in working capital and other 6 7 Net In
Slide 36: 2015 and 2016E CapEx
2015 and 2016E CapEx 2015 CapEx ($ in millions) SXC SXCP Consolidated Ongoing(1) $30 $21 $51 Other 4 0 4 Environmental Project 0 21 21 Total CapEx (excl. pre-funded Ship loader) $34 $42 $76 Coal Logistics: Ship loader (pre-funded) $0 $5 $5 2016 Expected CapEx ($ in millions) SXC SXCP Consolidated On
Slide 37: Balance Sheet & Debt Metrics
Balance Sheet & Debt Metrics As of 06/30/2016 Balance SXC Attributable Attributable Consolidated to SXCP ($ in millions) to SXC Cash $ 108 $ 54 $ 54 Available Revolver Capacity 167 67 100 Total Liquidity 275 121 154 Total Debt (Long and Short-term) 893 828 65 Net Debt (Total Debt less Cash) 785 774