Suncoke Energy, Inc. · NYSE:SXC
Suncoke Energy — Q1 2014 Earnings Presentation
24 slides from Suncoke Energy's earnings presentation, Apr 24, 2014
Slide 1: SunCoke Energy, Inc. Q1 2014 Earnings Conference Call
SunCoke Energy, Inc. Q1 2014 Earnings Conference Call April 24, 2014
Slide 2: Forward-Looking Statements
Forward-Looking Statements TM This slide presentation should be reviewed in conjunction with the First Quarter 2014 earnings release of SunCoke Energy, Inc. (SunCoke) and the conference call held on April 24, 2014 at 9:45 a.m. ET. Some of the information included in this presentation constitutes “fo
Slide 3: Q1 2014 Earnings Overview
Q1 2014 Earnings Overview Adjusted EBITDA(1) Challenging Q1 ($ in millions) • Weak Indiana Harbor performance due to weather and refurbishment impacts • Weather impacted yields, volumes and costs, $52.3 decreasing Adj. EBITDA ~$7M across rest of $33.6 fleet versus expectations 1Q13 1Q14 EPS loss of
Slide 4: Proposed Dropdown Transaction
Proposed Dropdown Transaction (1) Granite City International Indiana Domestic Coke Harbor Coke Coal Mining Jewell Coke Haverhill & Haverhill & Middletown Middletown (2% interest) (33% interest) • ~$271M assumption of SXC debt $365M total • ~$80M SXCP Common Units consideration, ~$44M Adj. or 8.3x EB
Slide 5: Q1 2014 Financial Results
Q1 2014 Financial Results Q1'14 vs. Adj. EBITDA down 36% Q1'14 Q1'13 Q1'13 • Domestic Coke impacted by ($ in millions, except volumes and per share) Domestic Coke Sales Volumes 948 1,058 (110) – Weak Indiana Harbor production Coal Sales Volumes 398 373 25 and higher costs drove loss of Revenue $358.
Slide 6: Adjusted EBITDA Bridge – Q1 '13 to Q1 '14
Adjusted EBITDA(1) Bridge – Q1 ‘13 to Q1 ‘14 Adjusted EBITDA impacted by severe weather and weak Indiana Harbor performance ($ in millions) ($3.9) • Restructuring costs ($1.4M) • Volume • India hedge gain ($5.8M) ($10.3) in Q1 ’13 • Higher ($0.9M) fee $2.1 $2.6M $0.1 ($3.4) $52.3 • Weather ($3.3 ) •
Slide 7: Diluted EPS Bridge – Q1 '13 to Q1 '14
Diluted EPS Bridge – Q1 ‘13 to Q1 ‘14 EPS impacted by lower earnings and higher depreciation costs, partly offset by lower financing costs and taxes $0.03 • Q1 ’13 impact of unfavorable tax ($0.11) items $0.05 ($0.27) • Indiana Harbor accelerated $0.02 • Q1 ’13 SXCP IPO depreciation related financin
Slide 8: Domestic Coke Business Summary
Domestic Coke Business Summary Achieved Adjusted EBITDA per ton of $49 in Q1 2014, reflective of loss at Indiana Harbor Domestic Coke Production Domestic Coke Adjusted EBITDA(1) Per Ton (thousands of tons) ($ in millions, except per ton amounts) 1,051 1,051 1,081 1,081 1,081 1,056 $ 58/ton $ 57/ton
Slide 9: Indiana Harbor Projects
Indiana Harbor Projects Refurbishment project completed New Oven Exterior (excluding PCM deliveries in Q3/Q4) – $104M capital cost includes replacement of doors, lentils, buckstays, tie rods, stacks and coke shed sections plus 2 new PCMs In Q1, identified need for oven floor and sole flue replacemen
Slide 10: Indiana Harbor Outlook
Indiana Harbor Outlook Early signs of improvement Monthly Average Tons Pushed per Day (through April 20) emerging 3,000 2,812 • Average tons pushed per day up 2,413 2,500 2,352 – Delivery of pusher/charger machines to further enable ramp-up in 2H 1,889 2,000 • Q2/early Q3 anticipated blast 1,500 fur
Slide 11: Coal Mining Financial Summary
Coal Mining Financial Summary Coal Mining Adjusted EBITDA(1) and Avg. Sales Price/Ton(2) ($ in millions, except per ton amounts) Q1 2014 Adjusted EBITDA down (4) $3.5 million YOY $133 $127 $118 (3) $123 $118 • Driven by ~$22 per ton decline in $121 $114 $120 $118 average price, partly offset by $9 $
Slide 12: SXC Liquidity Position
SXC Liquidity Position Despite weak quarter and working capital use, ended period with ample liquidity ($ in millions) $233.6 $29.0 ($36.5) ($3.8) $46.3 Attributable to • Accts payable ($17.6M) ($38.1) SXCP • Accrued liabilities ($22.5M) (1) • Interest payable ($10.4M) ($6.0) $178.2 SXCP • Receivabl
Slide 13: Consolidated Guidance Summary
Consolidated Guidance Summary Updating FY 2014 guidance for the Q1 weather impact; plan to update for dropdown transaction after expected May close Original 2014 Revised 2014 Metric Guidance Guidance Adjusted EBITDA (1) Consolidated $230 – $255 million $220 – $240 million Attributable to SXC $183 –
Slide 14: Diluted EPS Bridge – FY 2014 Guidance Change
Diluted EPS Bridge – FY 2014 Guidance Change Updating FY 2014 guidance for weak Q1 results; plan to update for dropdown transaction after expected May close ~($0.18) $0.35- $0.60 ~($0.26) ~$0.09 $0.08 - $0.33 ~$0.07 Original FY 2014 EBITDA Accelerated Interest Expense Taxes Current FY 2014 (1) (1) E
Slide 15: 2014 Priorities
2014 Priorities Operations Excellence • Maintain top quartile safety performance in all businesses • Get plants back on track after harsh winter and revitalize Indiana Harbor • Execute environmental remediation project Drive Growth • Obtain final permit for new coke plant and seek customer commitmen
Slide 16: Questions
QUESTIONS SXC Q1 2014 Earnings Call 15
Slide 17: Investor Relations
Investor Relations: 630-824-1907 www.suncoke.com
Slide 18: Appendix
APPENDIX SXC Q1 2014 Earnings Call 17
Slide 19: 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 20: India Coke
India Coke Visa SunCoke Q2'13 Q3'13 Q4'13 FY'13 Q1'14 • Despite strong operations, Coke Production Volumes (000s short tons) 69 93 107 269 113 EBITDA was $0.1M in Q1 ’14 Coke Sales Volumes (000s short tons) 52 97 108 257 122 • Weak margins driven by Capacity Utilization (%) 63% 84% 95% 79% 102% high
Slide 21: Reconciliation from Net Income to Adjusted EBITDA
Reconciliation from Net Income to Adjusted EBITDA $ in millions Q1 2014 FY 2013 Q4 2013 Q3 2013 Q2 2013 Q1 2013 Net Income (3.8) 50.1 18.7 12.3 12.7 6.4 Add: Depreciation, depletion and amortization 29.0 96.0 25.5 23.2 23.4 23.9 Add: Interest expense, net 12.1 52.3 12.3 12.1 12.1 15.8 Add: Income Ta
Slide 22: Reconciliation of Segment Adjusted EBITDA and Adjusted EBITDA per ton
Reconciliation of Segment Adjusted EBITDA and Adjusted EBITDA per ton Domestic Brazil India Coal Coal $ in millions, except per ton data Coke Coke Coke (1) Mining Logistics Corporate Combined Q1 2014 Adjusted EBITDA 46.8 1.7 0.1 (8.0) 2.1 (9.1) 33.6 Sales Volume (thousands of tons) 948 252 122 398 4
Slide 23: Expected 2014 EBITDA Reconciliation (Revised)
Expected 2014 EBITDA Reconciliation (Revised) TM 2014E 2014E (in millions) Low High Net Income $33 $51 Depreciation, depletion and amortization 125 120 Interest expense, net 50 47 Income tax expense 9 16 EBITDA $217 $234 Sales discounts (1) (1) Adjustment to unconsolidated affiliate earnings (1) 4 7
Slide 24: Capital Expenditures & Investments
Capital Expenditures & Investments Consolidated Capex ($ in millions) 2014E(1) On-Going (2) $65 Environmental Project $43 Indiana Harbor $24 Refurbishment Coal Logistics & Other $6 Total CapEx $138 Investments - Total CapEx & $138 Investments (1) Does not include spending to initiate construction of