Suncoke Energy, Inc. · NYSE:SXC
Suncoke Energy — Conference Presentation (November 2011)
34 slides from Suncoke Energy's conference presentation, Nov 14, 2011
Slide 1: SunCoke Energy November 2011
a SunCoke Energy November 2011
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: SunCoke at a Glance
SunCoke at a Glance Largest independent producer of high-quality Business Mix metallurgical coke in the Americas - Over 45 years of production experience Sales and Other Operating Revenue Pro Forma Adjusted EBITDA (2010) (2010)* 2010 total revenue and adjusted EBITDA of International International $
Slide 4: Strategically-Located Cokemaking Facilities and Mines
Strategically-Located Cokemaking Facilities and Mines Our U.S. facilities are located in close proximity to all U.S. integrated steelmaking facilities Domestic Operations International Operations Middletown(1) (AK Steel) Indiana Harbor Capacity: 550kt (ArcelorMittal) Capacity: 1,220kt Haverhill Braz
Slide 5: Delivering Coke and Energy to Customers
Delivering Coke and Energy to Customers Coke Energy Breeze Blast Furnace Coke and or Steam and/or Electric Power Nut Coke Key raw material in Small-sized coke Heat recovery steam HRSGs produce high- blast furnace iron- fines screened from generators (“HRSG”) pressure, superheated making process the
Slide 6: Our Industry-Leading Heat Recovery Oven vs. By-Product Ovens
Our Industry-Leading Heat Recovery Oven vs. By-Product Ovens 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 fo
Slide 7: Industry Fundamentals
Industry Fundamentals World Crude Steel Production We expect significant infrastructure investment in (Tons in millions) emerging markets to drive steel demand growth 2,319 Coke/blast furnace iron production is expected to 1,562 remain the dominant process 1,248 - China: ~90% - World: ~70% 2005 2010
Slide 8: SunCoke's North American Industry Position
SunCoke's North American Industry Position SunCoke 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) $700 SunCoke Chinese Q3 2011 Average: $399 $440 $600 2010 Average: $336 $414 2008
Slide 9: SunCoke's Value Proposition
SunCoke’s Value Proposition A competitive turnkey coke 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 on Capital) SunCoke Coke fee Cus
Slide 10: Focused Growth Strategy
Focused Growth Strategy Growth Initiatives Continueto growNorthAmericancokemaking businesses;withportion of future coke capacity reserved for market sales Grow international footprint with a focus on key growth markets We believe Expand domestic coal production from current reserves and pursue SunCo
Slide 11: Coke Development
Coke Development Middletown • Expect to reach full production levels by July 2012 India Entry • Due diligence on Global Coke minority investment progressing well • Currently negotiating definitive agreements on estimated $30 million investment US Coke Plant Development • Near-term focus on obtaining
Slide 12: Coal Mining Development
Coal Mining Development Jewell Coal Expansion Anticipate 2011 production of approximately 1.05 million tons Current focus on improving existing mine productivity in 2012 and defer opening new mines until 2013 Expect production of approximately 1.15 million tons in 2012; increasing to 1.45 million to
Slide 13: Third Quarter Overview
Third Quarter Overview • Q32011Net Incomeattributableto SunCoke shareholders of $18.4million and EPS of $0.26 per share • Q3 2011 Adjusted EBITDA of $44.8 million reflects improved sequential performance over Q1 & Q2 2011 • Decreased from $62.2 million in Q3 2010 • Achieved record domestic coke prod
Slide 14: Third Quarter Overview (continued)
Third Quarter Overview (continued) • CoaloperationsimprovedQ32011AdjustedEBITDAby$9.5millionon stronger metallurgical coal pricing • Jewellcoalproductionflatyearoveryearreflectingchallenges to Jewell deep mining expansion • Q3 2011 corporate expense of $14.3 million reflects impact of standalone, re
Slide 15: Domestic Coke Financial Summary
Domestic Coke Financial Summary (Jewell Coke & Other Domestic Coke) DomesticCokeProFormaAdjustedEBITDA (1), ProFormafor Domestic Coke Production ArcelorMittal Settlement and Coal Transfer Price (Tons in thousands) ($ in millions, except per ton amounts) • Record domestic coke production on return to
Slide 16: Domestic Coke Profitability
Domestic Coke Profitability (Jewell Coke & Other Domestic Coke) Q3 2011 Adjusted EBITDA per ton representative of full potential of current domestic coke assets (excluding Middletown) DomesticCokeProFormaAdjustedEBITDA (1) , ProFormafor ArcelorMittal Settlement and Coal Transfer Price ($ in millions
Slide 17: Coal Mining Financial Summary
Coal Mining Financial Summary Coal Sales, Production and Purchases (Tons in thousands) • Sales and production increased Y-o-Y due to HKCC acquisition 386 371 49 335 334 340 340 314 48 270 66 26 84 68 337 256 323 51 269 51 308 272 • Flat Y-o-Y Jewell production reflective of geology, staffing and 24
Slide 18: Jewell Coal Mining Cost Summary
Jewell Coal Mining Cost Summary Coal Cash Production Cost CashProductionCostPerTon(1), RejectRate(2) $150 70.0% 65.1% $130 63.5% 65.0% 60.1% $110 58.0% 60.0% $90 $133 55.0% $106 $70 $92 50.0% $80 $50 45.0% 2008 2009 2010 9 mos 2011 Cash production cost per ton (1) Reject rate (2) First Nine Months (
Slide 19: Coal Mining Financial Summary
Coal Mining Financial Summary Coal Mining Pro Forma Adjusted EBITDA(1) and Avg. Sales Price/Ton(2) Pro Forma for Coal Transfer Price Impact ($ in millions, except per ton amounts) • Q3 2011 Pro Forma Adjusted $162 EBITDA improved by $11 million $152 $155 $132 Y-o-Y on stronger coal prices $126 $114
Slide 20: Liquidity Update
Liquidity Update Summary Cash Flow For the Three For the NineFor the Nine Months Months Months Ended Ended Ended September September September • SunCoke retained $110 million ($ in millions, except where indicated) 30, 2011 30, 2011 30, 2010 Net Income $22 $51 $131 Loss on firm purchase commitment D
Slide 21: Q4 2011 Outlook
Q4 2011 Outlook Indiana Harbor • Adjusted EBITDA to increase with increase in SunCoke ownership Ownership Increase • Currently evaluating impact of Patient Protection and Affordable Care Act, discount rate and other assumptions on expected Black Lung Costs Black Lung Liability • No conclusions to da
Slide 22: Summary
Summary • Continued sequential operational and financial improvements in Q3 2011 versus Q1 & Q2 2011 • Coke earnings growth on track with Indiana Harbor improvements/partnership purchase and start-up of Middletown facility • Significant Coal Mining earnings growth year over year despite production c
Slide 23: Appendix
% SunCoke Energy Appendix 22
Slide 24: 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 discount
Slide 25: EBITDA Reconciliation, $MM
EBITDA Reconciliation, $MM For The Three Months Ended September 30, 2011 Other Domestic International Corporate Jewell Coke Coke Coke Coal Mining and Other Total Net Income $22 Add: Depreciation, depletion and amortization 15 Subtract: Interest Income (1) Add: Interest cost - affiliates 0 Subtract:
Slide 26: EBITDA Reconciliation, $MM
EBITDA Reconciliation, $MM For The Three Months Ended June 30, 2011 Other Domestic International Corporate Jewell Coke Coke Coke Coal Mining and Other Total Net Income $24 Add: depreciation, depletion and amortization 15 Subtract: interest income (primarily from affiliates) (6) Add: interest cost -
Slide 27: EBITDA Reconciliation, $MM
EBITDA Reconciliation, $MM For The Three Months Ended March 31, 2011 For the Three Months Ended March 31, 2011 (Unaudited) Other Domestic International Corporate Jewell Coke Coke Coke Coal Mining and Other Total Net Income $6 Add: depreciation, depletion and amortization 13 Subtract: interest income
Slide 28: EBITDA Reconciliation, $MM
EBITDA Reconciliation, $MM For The Three Months Ended September 30, 2010 Other Domestic International Corporate Jewell Coke Coke Coke Coal Mining and Other Total Net Income $41 Add: Depreciation, depletion and amortization 14 Subtract: Interest Income (6) Add: Interest cost - affiliates 1 Subtract:
Slide 29: EBITDA Reconciliation, $MM
EBITDA Reconciliation, $MM For The Three Months Ended December 31, 2010 Other Domestic International Corporate and Jewell Coke Coke Coke Coal Mining Other Total Net Income $15 Add: Depreciation, depletion and amortization 12 Subtract: Interest Income (6) Add: Interest cost - affiliates 1 Subtract: C
Slide 30: EBITDA Reconciliation, $MM
EBITDA Reconciliation, $MM ForTheYearEnded2010 Other Jewell Domestic International Coal Corporate Coke Coke Coke Mining and Other Total Net Income $146 Add: Depreciation, depletion and amortization 48 Subtract: Interest Income (Primarily from Affiliates) (24) Add: Interest cost – Affiliate 5 Subtrac
Slide 31: EBITDA Reconciliation, $MM
EBITDA Reconciliation, $MM For The Year Ended 2009 Other Jewell Domestic International Coal Corporate Coke Coke Coke Mining and Other Total Net Income $211 Add: Depreciation, depletion and amortization $32 Subtract: Interest Income (Primarily from Affiliates) ($2) Add: Interest cost –Affiliate $6 Su
Slide 32: EBITDA Reconciliation, $MM
EBITDA Reconciliation, $MM For The Year Ended 2008 Other Jewell Domestic International Coal Corporate Coke Coke Coke Mining and Other Total Net Income $133 Add: Depreciation, depletion and amortization 25 Subtract: Interest Income (Primarily from Affiliates) (28) Add: Interest cost –Affiliate 11 Sub
Slide 33: Free Cash Flow Reconciliation, $MM
Free Cash Flow Reconciliation, $MM For the Three For the Six For the Nine For the Nine Months Ended Months Ended Months Ended Months Ended September 30, 2011 June 30, 2011 September 30, 2011September 30, 2010 Net Cash Provided by Operating Activities $ 42 $ 16 $ 59 $ 254 Cash Flows from Investing Ac
Slide 34: 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 33
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