Suncoke Energy, Inc. · NYSE:SXC
Suncoke Energy — Q3 2017 Earnings Presentation
28 slides from Suncoke Energy's earnings presentation, Oct 26, 2017
Slide 1: SunCoke Energy, Inc. Q3 2017 Earnings Conference Call
SunCoke Energy, Inc. Q3 2017 Earnings Conference Call October 26, 2017
Slide 2: Forward-Looking Statements
Forward-Looking Statements This slide presentation should be reviewed in conjunction with the Third Quarter 2017 earnings release of SunCoke Energy, Inc. (SXC) and conference call held on October 26, 2017 at 11:00 a.m. ET. Some of the information included in this presentation constitutes “forward-lo
Slide 3: 2017 Key Initiatives
2017 Key Initiatives Deliver Operations Excellence and Optimize Asset Base • Drive strong operational & safety performance while optimizing asset utilization Execute Further Oven Rebuilds at IHO Cokemaking Operations • Complete oven rebuilds to drive further performance improvements Deploy Capital i
Slide 4: Q3 2017 Highlights
Q3 2017 Highlights ✓ Achieved strongest quarterly operating performance in three years across coke and logistics fleet ✓ Completed majority of 2017 IHO oven rebuild campaign; remain on target to report full-year results in line with 2017 guidance ✓ Expanded CMT’s product and customer mix during Q3;
Slide 5: Q3 2017 Financial Performance
Q3 2017 Financial Performance Q3 2017 Earnings Q3 ‘17 EPS of $0.18, up from $0.10 in ($/share) ($ in millions) the prior year quarter Earnings per Share Consolidated (diluted) Adj. EBITDA(1) • Strong cokemaking and logistics operating performance, partially offset by higher interest expense and abse
Slide 6: Adjusted EBITDA – Q3 '16 to Q3 '17
Adjusted EBITDA – Q3 ‘16 to Q3 ‘17 Q3 2017 Adjusted EBITDA up ~26% year-over-year, driven by strong performance in coke and logistics ($ in millions) $62.1 $2.5 $5.3 $49.4 • $1.3M – Mark-to-market $9.7 adjustments for BoD deferred ($4.8) comp. and stock comp. • $1.1M – Lower employee- related and ot
Slide 7: Domestic Coke Business Summary
Domestic Coke Business Summary Achieved solid Q3 2017 Domestic Coke results Domestic Cokemaking Performance Adj. EBITDA/ton of ~$57 on 981K (Production, Kt) $57/ton tons production $52/ton $53/ton • Strong yield performance $46/ton $38/ton • Higher energy and lower O&M 1,001 964 981 expenses, relate
Slide 8: IHO Q3 2017 Performance
IHO Q3 2017 Performance Significant progress made on 2017 rebuild campaign through Q3; Remain on track to report full-year results in line with FY 2017 guidance On track to report FY 2017 IHO Adj. EBITDA of ($13M)(1) on ~850Kt production To-date, have completed 47 of 58 planned ovens within 2017 cam
Slide 9: Coal Logistics Business Summary
Coal Logistics Business Summary Higher CMT volumes driving strong logistics performance in Q3 2017 Coal Logistics Performance Delivered Q3 ‘17 Adj. EBITDA (Tons Handled, Kt) $45.3M of $12.6M, up 73% vs. Q3 2016 • Solid throughput volumes due to $13.1M $12.6M $7.3M $10.0M sustained coal market improv
Slide 10: Q3 2017 Liquidity
Q3 2017 Liquidity Maintain strong consolidated liquidity of ~$300M, including >$190M of SXC standalone liquidity (Consolidated) Q2 ‘17 Q3 ‘17 Total Debt $901M $888M Gross Leverage(1) 3.96x 3.90x ($14.3) ($9.0) $73.9 ($27.2) Total Liquidity (incl. ($11.4) $148.7 revolver availability): $136.7 ~$304M
Slide 11: 2017 Guidance Summary
2017 Guidance Summary Expect to deliver FY 2017 Consolidated Adjusted EBITDA at top end of $220M to $235M guidance range 2016 2017 Metric Results Guidance Adjusted EBITDA(1) 2017 Quarterly Consolidated $217.0M $220M – $235M Consolidated Adjusted EBITDA Attrib. to SXC $130.4M $130M – $141M Q1 2017: $
Slide 12: Capital Allocation Priorities
Capital Allocation Priorities Continuing to deploy capital in most efficient manner to maximize value for SXC shareholders Purchased ~0.5M SXCP units for ~$9M total during Q3 2017 • Through October 25, 2017, SXC has purchased ~2.1M total units for ~$36M total • YTD unit purchases expected to generat
Slide 13: CMT New Business Wins
CMT New Business Wins Continue to diversify product and customer mix at CMT with recent aggregates and petcoke shipments in Q3 2017 Recent Wins • Developed new domestic thermal coal business in Q3 ‘16 – U.S. utility shipping thermal coal destined for Florida – Expect to handle volumes throughout 201
Slide 14: CMT New Business Opportunities
CMT New Business Opportunities Active pipeline of opportunities to grow EBITDA by $5M to $10M in next two years; new capabilities to provide platform for long-term growth Near-term Opportunities New Capabilities • Potential for additional coal export activity • Completed $120M modernization program
Slide 15: Indiana Harbor Outlook
INDIANA HARBOR OUTLOOK SunCoke Energy”
Slide 16: Indiana Harbor Project Overview
Indiana Harbor Project Overview Continue to make progress on Indiana Harbor’s multi-year rebuild effort Rebuilds to-date primarily 2015 2016 2017E 2018E focused on C & D batteries A Battery C Battery A Battery C Battery A Battery C Battery A Battery C Battery • Future rebuilds to focus on remaining
Slide 17: Indiana Harbor Rebuild Outlook
Indiana Harbor Rebuild Outlook Once 2018 campaign completed, >75% of facility rebuilt (211 total ovens) • Rebuilds completed across entirety of A, C and D batteries (67 ovens per battery) • Also rebuilt 10 of 67 B-battery ovens in 2016 and 2017 B-battery ovens among most operationally challenged at
Slide 18: Indiana Harbor Performance Outlook
Indiana Harbor Performance Outlook Expect our investments in IHO, combined with disciplined cost and investment control, to drive meaningful improvement in 2018 & beyond Anticipate IHO will return to Adj. EBITDA Indiana Harbor Performance Outlook profitability in FY 2018 • Expect FY 2018 production
Slide 19: Questions
QUESTIONS SunCoke Energy”
Slide 20: Investor Relations
Investor Relations 630-824-1907 www.suncoke.com
Slide 21: Appendix
APPENDIX SunCoke Energy”
Slide 22: Definitions
Definitions Adjusted EBITDA represents earnings before interest, loss (gain) on extinguishment of debt, taxes, depreciation and amortization (“EBITDA”), adjusted for impairments, coal rationalization costs, changes to our contingent consideration liability related to our acquisition of CMT and the e
Slide 23: Reconciliation to Adjusted EBITDA
Reconciliation to Adjusted EBITDA YTD YTD ($ in millions) Q3 '17 Q2 '17 Q1 '17 FY '16 Q4 '16 Q3 '16 Q2 '16 Q1 '16 Q3 '17 Q3 '16 Net cash provided by Operating activities $73.9 $24.9 $29.5 $219.1 $53.0 $44.6 $92.1 $29.4 $128.3 $166.1 Depreciation, depletion and amortization expense 30.6 33.3 33.3 114
Slide 24: Reconciliation of Segment Adjusted EBITDA and Adjusted EBITDA per ton
Reconciliation of Segment Adjusted EBITDA and Adjusted EBITDA per ton Reconciliation of Segment Adjusted EBITDA and Adjusted EBITDA per Ton Domestic Coal Corporate and ($ in millions, except per ton data) Coke Brazil Coke Logistics (1) Other(2) Consolidated Q3 2017 Adjusted EBITDA $55.6 $4.6 $12.6 (
Slide 25: Balance Sheet & Debt Metrics
Balance Sheet & Debt Metrics As of 09/30/2017 Balance SXC Attributable Attributable Consolidated to SXCP ($ in millions) to SXC Cash $ 149 $ 27 $ 122 Available Revolver Capacity 155 83 72 Total Liquidity 304 110 194 Gross Debt (Long and Short-term) 888 843 45 Net Debt (Gross Debt less Cash) 739 816
Slide 26: 2017 Capital Expenditures
2017 Capital Expenditures 2017 YTD CapEx ($ in millions) SXC SXCP Consolidated Ongoing (ex. IHO rebuilds) $7 $11 $18 IHO Oven Rebuild Initiative 20 0 20 Total Ongoing CapEx $27 $11 $38 Other / Expansion 0 1 1 Environmental Project (Gas Sharing) 0 11 11 Total CapEx $27 $23 $50 Full Year 2017 Expected
Slide 27: 2017E Guidance Reconciliation
2017E Guidance Reconciliation 2017E 2017E ($ in millions) Low High Net cash provided by Operating activities $128 $143 Depreciation and amortization expense (131) (131) Deferred income tax expense (65) (70) Changes in working capital and other 27 28 Loss on extinguishment of debt(1) (20) (20) Net Lo
Slide 28: Thermal Coal Export Profitability
Thermal Coal Export Profitability Solid API2 benchmark price should continue to support CMT ILB producers’ competitiveness in maintaining viable exports $90 $6 Believe ILB export ($15) thermal solidly profitable ($17) at current spot API2 ($6) benchmark pricing of ~$90/t ($20) $38 • Based on average