Suncoke Energy, Inc. · NYSE:SXC
Suncoke Energy — Investor Presentation (January 2012)
30 slides from Suncoke Energy's investor presentation, Jan 10, 2012
Slide 1: Investor Presentation
Exhibit 99.1 Investor Presentation January 2012
Slide 2: Safe Harbor Statement
Safe Harbor Statement Some of the information included in this presentation contains “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). Such forward-looking statements are based on man
Slide 3: Distribution Summary
Distribution Summary Distributing Company: Sunoco, Inc. Distributed Company: SunCoke Energy, Inc. Distributed Securities: NYSE / SXC Distribution Ratio: 0.53046456 share of SXC stock for each share of SUN held Issue: Special Stock Dividend to SUN Shareholders Shares Issued: 56,660,000 Total Shares O
Slide 4: Today's Presenters
Today’s Presenters Joined SunCoke in 2010 Executive at General Motors for over 26 years Fritz Henderson President and Chief Executive Officer Chairman & President and Chief Operating Officer Chief Executive Vice Chairman and Chief Financial Officer Officer Chairman of GM Europe President of GM Asia
Slide 5: SunCoke Introduction
SunCoke Introduction Largest independent producer of Pro Forma 2011 metallurgical coke in Americas with Adjusted EBITDA (1) Estimate nearly 50 years experience (excluding Corporate Segment) ~85% of Adjusted EBITDA (1) Int'l Coke Coal Mining generated by cokemaking business 9% 12% Secure, long-term t
Slide 6: The Leading Independent Cokemaker
The Leading Independent Cokemaker SunCoke 5.9 million tons of capacity with Cokemaking Capacity new Middletown, Ohio facility (Tons in thousands) 7,000 Six cokemaking facilities; five in 6,000 U.S. and one in Brazil 5,000 More than doubled capacity since 2005 4,000 3,000 Proven ability to permit, de
Slide 7: SunCoke's Heat Recovery Oven vs. By-Product Oven
SunCoke’s Heat Recovery Oven vs. By-Product Oven SunCoke’s technology is the industry’s environmental standard and provides many advantages over the traditional cokemaking process SunCoke Heat Recovery Traditional By-Product Pressurization Negative pressure Positive pressure Potential for emission o
Slide 8: SunCoke's Value Proposition
SunCoke‘s Value Proposition High Quality & Provide an assured supply of coke to steelmakers Reliable Coke Supply Larger, stronger coke for improved blast furnace performance Turndown Demonstrated sustained 30% turndown; higher turndown on temporary basis Flexibility High quality coke with cheaper co
Slide 9: SunCoke's Contract Proposition
SunCoke’s Contract Proposition Deliver coke to customers through a competitive turnkey solution, which produces a consistent stream of earnings Typical Key Coke Sales Agreement What SunCoke Offers Provisions Capital Funding and Ownership Take-Or-Pay Fixed Fee Permits and Approvals (Profit and Return
Slide 10: Focused Growth Strategy
Focused Growth Strategy Growth Initiatives Continue to grow our U.S. and Canada cokemaking businesses; reserving portion of future coke capacity for market sales We believe SunCoke Energy is uniquely Grow international footprint in key growth markets with positioned for immediate focus on India cont
Slide 11: SunCoke's U.S. and Canada Market Position
SunCoke's U.S. and Canada Market Position SunCoke believes it has the opportunity to displace higher cost coke imports Chinese Coke Price vs. Representative SunCoke Price North American Coke Imports (US$/ton) (Tons in millions) SunCoke Chinese 6.0 Q3 2011 Average: $399 $440 5.6 5.4 2010 Average: $33
Slide 12: SunCoke's U.S. and Canada Market Position
SunCoke's U.S. and Canada Market Position SunCoke Domestic Coke Pricing vs. Chinese Imports ($ per ton of coke) $500 $25 $50 40% Tariff $400 $130 $11 $300 $517 $442 $200 $399 $320 $100 $0 Chinese Coke Handling/Transportation Average Export Chinese Coke Cost FOB Transportation to U.S. Handling Losses
Slide 13: SunCoke's U.S. and Canada Market Position
SunCoke’s U.S. and Canada Market Position Replace aging coke batteries operated by integrated steel producers Aging Cokemaking Facilities 2010 U.S. & Canada Coke Supply Average Age % of U.S. & Canada coke production 41 SunCoke 18% DTE 28% 28% 5% Integrated Other Merchant & Steel Foundry Producers 7%
Slide 14: SunCoke's U.S. and Canada Market Position
SunCoke's U.S. and Canada Market Position BF/BOF Crude Steel Production Market Opportunity and Blast Furnace Coke Demand In million tons 5 million tons 60 51 48 50 2 Demand growth with 40 market recovery 40 2010 Coke Rate: 894 lbs/thm 30 27 2015E Coke Rate: 800 lbs/thm 22 19 20 19 19 18 18 19 20 17
Slide 15: India – Macro Outlook
India –Macro Outlook Significant ExpectedGDPGrowth Population growth • 1.2 billion people today • Projected 1.5 billion by 2030 • Growth equal to the entire U.S. population Urbanization • Less than 50% urban population • Vehicle production 3.6 MM (’11) vs. 13 MM in NAFTA • Lowest steel intensity of
Slide 16: India Opportunity for SunCoke
India Opportunity for SunCoke GROWING STEEL MARKET • Projected to be 3rd largest steel market by 2020 • Blast furnace to play a critical role in growth COKE SUPPLY DEFICIT • Importing between 2 and 5 million tons annually India • Coke capacity investment lags steel investment Strong market fundament
Slide 17: Why is China Important?
Why is China Important? Chinese Crude Steel Production and Coke Consumption In million tons • Chinese steel market represents 45% of 1,200 1,069 world production 1,050 966 912 855 900 732 792 • Steel market expected to grow 46% 750 626 691 over the next 10 years producing an 600 545 552 493 520 570
Slide 18: Coal Expansion
Coal Expansion Current Operations Planned Growth Projected 2012 Coal Production 106 million tons of proven Near term focus on increasing and probable reserves productivity at existing mines; 1.15 million tons Underground will defer opening new mines expected production from Jewell Mining Reserve lif
Slide 19: 2011 Summary
2011 Summary • Continued sequential quarterly operational and financial improvements, generatingfullyearestimated2011AdjustedEBITDAof $148- $153 million • Coke earnings growth on track with Indiana Harbor operating improvements and increased ownership interest plus Middletown startup • Took first st
Slide 20: 2012 Priorities
2012 Priorities • Execute the start up of Middletown; expect to reach full production levels no later than July 2012 • Achieve targeted coke production volumes of 4.0 to 4.2 million tons through ongoing focus on operational excellence, including safety and environmental stewardship, at all facilitie
Slide 21: Coal Expansion
Coal Expansion Coal prices offer attractive growth and return on capital in our coal mining business SunCoke’s Mid-Vol. Coal 2012 MV(2) HV Thermal Total Estimates Contract Prices ($ per ton) Sales Tons(1) 1,550k 150k 150k 1,850k $170 - $190 $165 % Committed 88% 27% 40% 79% $130 Price of Committed $1
Slide 22: 2012 Adjusted EBITDA Outlook
2012 Adjusted EBITDA (1) Outlook Estimated2012 AdjustedEBITDA(1) projected to increaseby$102millionto $123millionversusprojected2011; expect80%- 85% of 2012 AdjustedEBITDA (1, 2) willbegeneratedbycokemaking business ($ in millions) $0 -$5 $25 -$40 $72 -$82 $250 -$280 $148 -$153 2011E Coke Coal Minin
Slide 23: 2012 Outlook Summary
2012 Outlook Summary Metric Expected 2012 Outlook Adjusted EBITDA (1) $250 million –$280 million Capital Expenditures Approximately $150 million & Investments Free Cash Flow (2) $50 million + Effective Tax Rate 20% –24% Corporate Costs $30 million -$35 million Coke Production 4.0 -4.2 million tons C
Slide 24: SunCoke Summary
SunCoke Summary • Meaningful earnings growth potential expected from critical actions taken in 2011 to drive profitability and cash flow improvement Addressed operational issues Successful start-up of Middletown Framed coal expansion for current environment • Stable, repeatable growth from Coke expe
Slide 25: Appendix
* SunCoke Energy Appendix January 2012 24
Slide 26: Definitions
Definitions Adjusted EBITDA represents earnings before interest, taxes, depreciation, depletion and amortization (“EBITDA”) adjusted for sales discounts and the deduction of income attributable to non-controlling interests in our Indiana Harbor cokemaking operations. EBITDA reflects sales discounts
Slide 27: Estimated EBITDA Reconciliation, $MM
Estimated EBITDA Reconciliation, $MM 2011E Net Income to Adjusted EBITDA Reconciliation 2011 2011 Low High Net income $64 $70 Depreciation, depletion, and amortization 60 59 Total financing costs, net 2 1 Income tax expense (benefit) 9 11 EBITDA $135 $141 Sales discounts 13 13 Noncontrolling interes
Slide 28: Estimated EBITDA Reconciliation, $MM
Estimated EBITDA Reconciliation, $MM 2012E Net Income to Adjusted EBITDA Reconciliation 2012 2012 Low High Net Income $98 $122 Depreciation, Depletion and Amortization 74 72 Total financing costs, net 48 46 Income tax expense (benefit) 25 37 EBITDA $245 $277 Sales discounts 11 10 Noncontrolling inte
Slide 29: Estimated Free Cash Flow Reconciliation, $MM
Estimated Free Cash Flow Reconciliation, $MM 2012E Estimated Free Cash Flow Reconciliation 2012 Cash from (i) operations; In excess of $ 204 (ii) less investing; Approx. (150) (iii) less payments to minority interest Approx. (4) Free Cash Flow In excess of $ 50 January 2012 28
Slide 30: Media releases and SEC filings available on our website
Media releases and SEC filings are available on our website at www.suncoke.com Contact Investor Relations for more information: 630-824-1907 January 2012 29
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