Suncoke Energy, Inc. · NYSE:SXC
Suncoke Energy — Q2 2013 Earnings Presentation
32 slides from Suncoke Energy's earnings presentation, Jul 25, 2013
Slide 1: Q2 2013 Earnings Conference Call
Q2 2013 Earnings Conference Call July 25, 2013
Slide 2: Forward-Looking Statements
Forward-Looking Statements This slide presentation should be reviewed in conjunction with the Second Quarter 2013 earnings releases of SunCoke Energy, Inc. (SunCoke) and SunCoke Energy Partners, L.P. (Partnership) and the conference call held on July 25, 2013 at 10:00 a.m. ET. Some of the informatio
Slide 3: SunCoke Energy, Inc. Results
SUNCOKE ENERGY, INC. RESULTS SXC & SXCP Q2 2013 Earnings Call 2
Slide 4: 2Q 2013 Key Milestones
2Q 2013 Key Milestones TM Operational Domestic Expand Our Excellence Strength Footprint Broaden SunCoke Way Build the Core Our Reach • Continued solid domestic • Furthered Indiana • Launched Visa SunCoke coke operating results Harbor refurbishment joint venture • Achieved additional − ~40% completed
Slide 5: Q2 2013 Earnings Overview
Q2 2013 Earnings Overview Earnings Per Share (diluted) Q2 2013 EPS of $0.08 reflects • Challenging coal price environment $0.32 • Accelerated depreciation expense at $0.24 Indiana Harbor $0.08 • Income attributable to SXCP public $0.03 holders in Q2 2013 2012 2013 Q1 Q2 Ended Q2 with $348 million ca
Slide 6: Q2 2013 Financial Results
Q2 2013 Financial Results Q2'13 Revenues lower by 12.4% ($ in millions) Q2'13 Q2'12 vs. Q2'12 • Reflects impact of lower coal prices in coke and coal segments Domestic Coke Sales Volumes 1,074 1,074 - Coal Sales Volumes 457 365 92 Adjusted EBITDA down 21.6% • Coal weakness driven by ~$53/ton yr/yr R
Slide 7: Adjusted EBITDA Bridge – Q2 '12 to Q2 '13
Adjusted EBITDA(1) Bridge – Q2 ‘12 to Q2 ‘13 Weak coal results more than offset stable coke business performance ($ in millions) $4.1 ($3.5) ($11.9) ($3.1) $66.8 $52.4 Q2 2012 Coke Business Indiana Harbor Coal Mining Corporate Costs Q2 2013 (1) (1) Adjusted EBITDA (excl. Indiana Adjusted EBITDA Harb
Slide 8: Diluted EPS Bridge – Q2 '12 to Q2 '13
Diluted EPS Bridge – Q2 ‘12 to Q2 ‘13 EPS impacted by weak coal results, higher depreciation costs and income attributable to SXCP, partly offset by lower taxes ($0.20) $0.32 $0.08 ($0.08) ($0.04) $0.08 Q2 2012 EBITDA Indiana Harbor Taxes Net Income/(Loss) Q2 2013 EPS Diluted EPS Accelerated Attribu
Slide 9: SXC Liquidity Position
SXC Liquidity Position Ended quarter with strong cash position and virtually undrawn revolvers ($ in millions) $40.1 ($30.9) ($4.3) $348.1 $307.1 $12.7 $23.4 • Includes SXCP $18.4M for Revolver Indiana $115.6 Availability: Includes: $100M $106.2 • Accts Receivable: $37.5M(1) Harbor • Accts Payable:
Slide 10: Domestic Coke Business Summary
Domestic Coke Business Summary Overall cokemaking business performed well, delivering Adjusted EBITDA per ton of $57 in second quarter Domestic Coke Production Domestic Coke Adjusted EBITDA(1) Per Ton (thousands of tons) ($ in millions, except per ton amounts) 1,095 1,097 1,097 $ 62 /ton $ 58/ton (2
Slide 11: Customer Update – AK Steel
Customer Update – AK Steel AK Steel blast furnace outage – Outage due to mechanical failure; offline June 22 to July 12 (20 days) – Outage and production ramp affected coke needs Actions taken • Haverhill 2 - Manage production to be consistent with annual contract maximums • Middletown - 2H 2013
Slide 12: India Coke
India Coke Achieved EBITDA per ton of ~$31 on sales volumes of 26 thousand tons in first 10 weeks of joint venture • Launched joint venture on March 18, 2013 – Board and key management in place – Report on a one-month lag; Q2 reflects period of March 18 - May 31 • Q2 affected by iron ore mining rest
Slide 13: Coal Mining Financial Summary
Coal Mining Financial Summary Coal Mining Adjusted EBITDA(1) and Avg. Sales Price/Ton(2) Q2 2013 Adjusted EBITDA down ($ in millions, except per ton amounts) $167 $165 $11.9 million from Q2 2012 $166 • Driven by $53 per ton decline in average price, $121 $118 (4) partially offset by $19 per ton redu
Slide 14: SXC: 2013 Guidance Summary
SXC: 2013 Guidance Summary Reaffirm coke production, EBITDA and EPS guidance; increasing capex and investments to reflect Lakeshore acquisition Metric 2013 Guidance Adjusted EBITDA (1) Consolidated $205 – $230 million Attributable to SXC Shareholders $165 – $190 million EPS Attributable to SXC Share
Slide 15: SunCoke Energy Partners, LP Results
SUNCOKE ENERGY PARTNERS, LP RESULTS SXC & SXCP Q2 2013 Earnings Call 14
Slide 16: SXCP Q2 2013 Financial Results
SXCP Q2 2013 Financial Results Adjusted EBITDA(1) • Sustained strong operations drove net ($ in millions) $41.5 income up to $15.8M, or $0.49 per $37.0 $11.4 unit $13.3 – Coke sales volumes up 28 thousand to $29.4 $29.7 $30.1 $23.7 458 thousand tons in Q2 – Adjusted EBITDA per ton was $81 in Q1 2012
Slide 17: SXCP Q2 2013 Distributable Cash Flow
SXCP Q2 2013 Distributable Cash Flow Distributable Cash Flow & Coverage Ratio • Q2 2013 distributable cash flow was ($ in millions, except ratios) $18.7 million – Supports expected cash payment of $22.0 (1) 1.66x (1) ~$13.5 million and coverage ratio of 1.38 $18.7 1.38x – Strong coverage ratio refle
Slide 18: SXCP Liquidity Position
SXCP Liquidity Position A solid cash balance and undrawn $100 million revolver provide SXCP the flexibility to seize potential new growth opportunities $3.8 ($4.8) $7.6 ($13.8) $26.4 • Ongoing ($9.8) $115.6 $106.2 CapEx: ($1.9M) • Pre-funded • $5.7M to SXC environmental • $4.1M to SXCP $43.7 remedia
Slide 19: SXCP 2013 Outlook
SXCP 2013 Outlook Current guidance below excludes expected benefit of Lakeshore acquisition Prospectus Proforma 2013 Outlook ($ and units in millions, except per unit data) 2013 Forecast Low High Adjusted EBITDA attributable to SXCP(1) $85.8 $85.8 $90.5 Less: Ongoing capital expenditures (65% share
Slide 20: 2013 Strategic Focus
2013 STRATEGIC FOCUS SXC & SXCP Q2 2013 Earnings Call 19
Slide 21: 2013 Priorities
2013 Priorities Operational Domestic Expand Our Excellence Strength Footprint Broaden SunCoke Way Build the Core Our Reach • Maintain top quartile safety • Revitalize Indiana Harbor • Build our presence performance − Complete refurbishment in India via VISA SunCoke JV • Sustain momentum − Resolve NO
Slide 22: North America M&A Growth Strategy
North America M&A Growth Strategy Opportunistic First priority for core Evaluation for future acquisitions of business value chain expansion adjacent assets Coal Handling/ Cokemaking Iron Ore Processing Processing FOCUS FOCUS FOCUS Acquisition of existing Selective acquisition of met coal Investment
Slide 23: Questions
QUESTIONS SXC & SXCP Q2 2013 Earnings Call 22
Slide 24: Investor Relations
Investor Relations: 630-824-1907 www.suncoke.com
Slide 25: Appendix
APPENDIX SXC & SXCP Q2 2013 Earnings Call 24
Slide 26: Definitions
Definitions • Adjusted EBITDA represents earnings before interest, taxes, depreciation, depletion and amortization (“EBITDA”) adjusted for sales discounts and the interest, taxes, depreciation, depletion and amortization attributable to our equity method investment. EBITDA reflects sales discounts i
Slide 27: Definitions
Definitions • Distributable Cash Flow equals Adjusted EBITDA less net cash paid for interest expense, on-going capital expenditures, accruals for replacement capital expenditures, and cash distributions to noncontrolling interests. Distributable Cash Flow is a non-GAAP supplemental financial measure
Slide 28: Reconciliation from Net Income to Adjusted EBITDA
Reconciliation from Net Income to Adjusted EBITDA $ in millions Q2 2013 Q1 2013 Q4 2012 Q3 2012 Q2 2012 Q1 2012 Net Income 12.7 6.4 29.0 32.9 24.0 16.6 Subtract: Depreciation, depletion and amortization (23.4) (23.9) (23.3) (18.9) (20.2) (18.4) Subtract: Interest expense, net (12.1) (15.8) (11.8) (1
Slide 29: Reconciliation of Segment Adjusted EBITDA and Adjusted EBITDA per ton
Reconciliation of Segment Adjusted EBITDA and Adjusted EBITDA per ton Domestic Brazil India $ in millions, except per ton data Coke Coke Coke Coal Mining Corporate Combined Q2 2013 Adjusted EBITDA 61.3 1.6 0.8 (2.6) (8.7) 52.4 Sales Volume (thousands of tons) 1,074 217 26 457 Adjusted EBITDA per Ton
Slide 30: SXC – Expected 2013 EBITDA Reconciliation
SXC – Expected 2013 EBITDA Reconciliation 2013E Net Income to Adjusted EBITDA Reconciliation - SXC 2013E 2013E (in millions) Low High Net Income $40 $57 Depreciation, depletion and amortization 97 95 Interest expense, net 55 55 Income tax expense 7 14 EBITDA $199 $221 Sales discounts 6 6 Adjustment
Slide 31: 2013 Estimated Capital Expenditures & Investments
2013 Estimated Capital Expenditures & Investments For Year Ended December 31, 2013 • SXC includes ~$25M coke ($ in millions) SXC SXCP Consolidated and ~$24M coal On-Going Approx. $36 $13 $49 • Reflects 100% of capital Environmental expenditures at Haverhill Approx. $3 $25 $28 Remediation and Middlet
Slide 32: SXCP – Adjusted EBITDA and Distributable Cash Flow Reconciliations
SXCP – Adjusted EBITDA and Distributable Cash Flow Reconciliations Full Year 2013 (1) Guidance As As As As (1)) (1)) Reported Proforma Proforma Reported Proforma Proforma Reported Reported ($ in Millions) Q1'13 Adj. Q1'13 Q2'13 Low High Low High Net cash (used in) provided by operating activities $