Suncoke Energy, Inc. · NYSE:SXC
Suncoke Energy — Q1 2019 Earnings Presentation
26 slides from Suncoke Energy's earnings presentation, Apr 24, 2019
Slide 1: Q1 2019 Earnings Conference Call
SunCoke Energy, Inc. Q1 2019 Earnings Conference Call April 24, 2019
Slide 2: Important Notice to Investors
Important Notice to Investors This communication includes important information about the proposed and pending acquisition by SXC of all publicly held common units of SXCP. SXC has filed a registration statement on Form S-4 with the Securities and Exchange Commission (“SEC”) containing a draft joint
Slide 3: Introductory Information for Investors
Introductory Information for Investors This slide presentation should be reviewed in conjunction with the First Quarter 2019 earnings release of SunCoke Energy, Inc. (SXC) and conference call held on April 24, 2019 at 8:30 a.m. ET. Except for statements of historical fact, information contained in t
Slide 4: Q1 2019 Highlights
Q1 2019 Highlights ✓ Achieved solid operating performance across coke and logistics segments despite adverse weather conditions ✓ Delivered Q1 ‘19 Adj. EBITDA of $67.3M; represents record first quarter performance ✓ Strong performance in the coke segment; >40Kt increase in production compared to pri
Slide 5: Simplification Update
Simplification Update Simplification creates immediate and long-term value for SunCoke stakeholders ... which will position SunCoke Stakeholders Transaction remains on track … for long-term success Key Milestones Timing Simplifies SunCoke’s organizational structure File S-4 registration March 8, 2
Slide 6: Q1 2019 Financial Performance
Q1 2019 Financial Performance Q1 2019 Earnings Q1 ‘19 EPS of $0.15, up $0.02 from the ($/share) ($ in millions) prior year quarter Earnings per Share Consolidated (diluted) Adj. EBITDA(1) • Strong cokemaking performance, partially offset by higher depreciation expense $0.15 $67.3 Consolidated Adj. E
Slide 7: Adjusted EBITDA – Q1 '18 to Q1 '19
(1) Adjusted EBITDA – Q1 ‘18 to Q1 ‘19 Q1 ‘19 performance driven by strong Domestic Coke operations, partially offset by lower CMT volumes ($ in millions) $4.0 ($0.9) $0.2 $67.3 $64.0 • $1.6M – Increased KRT and Lake • $2.6M – Higher volumes Terminal transloading revenue primary driven by rebuilt •
Slide 8: Domestic Coke Business Summary
Domestic Coke Business Summary Strong Q1 ‘19 cokemaking performance supports FY 2019 outlook Delivered Adj. EBITDA/ton(1) of ~$58 vs. Domestic Cokemaking Performance ~$56 in Q1 ‘18 (Production, Kt) $56/ton $58/ton • Increased volumes, absence of outage $53/ton $49/ton $50/ton work, higher coal price
Slide 9: Logistics Business Summary
Logistics Business Summary Solid increase to domestic terminal volumes offset by lower CMT throughput tons and increased high water costs Logistics Performance Delivered Q1 ‘19 Adj. EBITDA of $12.7M • ~350Kt increase in KRT / Lake Terminal volumes (Tons Handled, Kt) as compared to prior year $19.7M
Slide 10: Q1 2019 Liquidity
Q1 2019 Liquidity Maintain strong consolidated liquidity of >$400M; continued objective to strengthen the balance sheet (Consolidated) Q1 ’19 Q4 ‘18 Total Debt $853M $859M Gross Leverage(1) 3.16x 3.26x ($19.7) ($6.0) $35.3 ($7.1) $145.7 ($4.3) $143.9 Consolidated Revolver • $5.0M – SXCP • $4.8M – IH
Slide 11: 2019 Key Initiatives
2019 Key Initiatives Deliver Operations Excellence and Optimize Asset Base • Drive strong operational and safety performance while optimizing asset utilization • Successfully execute on capital plan Complete last phase of oven rebuilds at Indiana Harbor • Complete 57 planned B-battery oven rebuilds
Slide 12: Questions
QUESTIONS SunCoke Energy”
Slide 13: Appendix
APPENDIX SunCoke Energy”
Slide 14: Definitions
Definitions Adjusted EBITDA represents earnings before interest, loss (gain) on extinguishment of debt, taxes, depreciation and amortization (“EBITDA”), adjusted for impairments, coal rationalization costs, changes to our contingent consideration liability related to our acquisition of CMT and the e
Slide 15: Reconciliation to Adjusted EBITDA
Reconciliation to Adjusted EBITDA ($ in millions) Q1 '18 Q2 '18 Q3 '18 Q4 '18 FY '18 Q1 '19 Net cash provided by operating activities $ 57.3 $ 28.0 $ 85.3 $ 15.2 $ 185.8 $ 35.3 Depreciation and amortization expense 32.9 32.0 35.4 41.3 141.6 37.2 Loss on extinguishment of debt 0.3 - - - 0.3 - Loss fr
Slide 16: Reconciliation of Segment Adjusted EBITDA and Adjusted EBITDA per ton
Reconciliation of Segment Adjusted EBITDA and Adjusted EBITDA per ton Reconciliation of Segment Adjusted EBITDA and Adjusted EBITDA per Ton Domestic Corporate ($ in millions, except per ton data) Coke Brazil Coke Logistics and Other(1) Consolidated Q1 2019 Adjusted EBITDA $58.5 $4.5 $12.7 ($8.4) $67
Slide 17: Balance Sheet & Debt Metrics
Balance Sheet & Debt Metrics As of 3/31/2019 Balance SXC Attributable Attributable Consolidated to SXCP ($ in millions) to SXC Cash $ 144 $ 3 $ 141 Available Revolver Capacity 261 185 76 Total Liquidity $ 405 $ 188 $ 217 Gross Debt (Long and Short-term) $ 853 $ 809 $ 44 Net Debt (Total Debt less Cas
Slide 18: 2019 Guidance Summary
2019 Guidance Summary Guidance remains unchanged from February 2019 announcement 2019 Pro Forma Metric Guidance Guidance(1) (2)(3) Adjusted EBITDA Consolidated $265M – $275M $266M - $276M Attrib. to SXC $182M – $188M $226M - $232M (4) Total Capital Expenditures $110M - $120M IHO Oven Rebuilds $40 -
Slide 19: 2019 Capital Expenditures
2019 Capital Expenditures 2019 CapEx Overview ($ in millions) Low High Ongoing $64 $66 IHO Oven Rebuilds 40 48 Total Ongoing CapEx(1) $104 $114 Environmental Project (Gas Sharing)(2)(3) 6 6 Total CapEx $110 $120 1) At the midpoint of the range 2019 ongoing CapEX includes approximately $104M in ongoi
Slide 20: 2019E Guidance Reconciliation
2019E Guidance Reconciliation 2019E 2019E ($ in millions) Low High Net cash provided by Operating activities $180 $195 Depreciation and amortization expense (150) (145) Changes in working capital and other 14 1 Net Income $44 $51 Depreciation and amortization expense 150 145 Interest expense, net 65
Slide 21: Thermal Coal Export Profitability
Thermal Coal Export Profitability API2 benchmark price should continue to support CMT ILB producers’ competitiveness in maintaining viable exports $75 $1 $0 Believe ILB export thermal ($15) profitable at Q1 ‘19 API2 ($6) benchmark pricing of ~$75/t ($22) $34 • Based on average ILB cash cost, netback
Slide 22: Multiple Benefits of Simplification
Multiple Benefits of Simplification Simplifies SunCoke’s One public entity structure reduces complexity for investors and simplifies governance Organizational and Aligns interests of SXC shareholders and SXCP unitholders Capital Structure Consolidation of cash flow and elimination of MLP distr
Slide 23: Immediately Cash Flow Accretive
Immediately Cash Flow Accretive Simplification drives significant free cash flow per share accretion for SXC Shareholders Illustrative SXC adjusted free cash flow 27% increase in adjusted free cash flow per share(1) (“FCF”)(1) per share driven by: • Adjusted FCF calculated using 2019 guidance 27% $1
Slide 24: Reconciliation to Illustrate SXC FCF/Share
Reconciliation to Illustrate SXC FCF/Share ($ in millions, except per share amounts) Status Quo ($ in millions, except per share amounts) Pro Forma Net cash provided by Operating Activities $ 188 Net cash provided by Operating Activities $ 188 Depreciation and amoritization expense (148) Depreciatio
Slide 25: SXC Capital Allocation Priorities
SXC Capital Allocation Priorities Simplification creates significant financial flexibility to maximize shareholder value; results in ability to initiate common dividend, accelerate deleveraging, fund growth, and/or return capital to shareholders 1• Initiate a regular common dividend Pro-Forma Capita
Slide 26: SXC Strategic Focus Post Simplification
SXC Strategic Focus Post Simplification SXC strategic focus post Simplification will be: • Growing market share in the North American coke market • Disciplined expansion and optimization of logistics assets • Developing additional business lines within the domestic steel/carbon markets • Leveraging