Suncoke Energy, Inc. · NYSE:SXC
Suncoke Energy — Q3 2011 Earnings Presentation
33 slides from Suncoke Energy's earnings presentation, Nov 2, 2011
Slide 1: Q3 2011 Earnings Conference Call
Q3 2011 Earnings Conference Call November 2, 2011
Slide 2: Safe Harbor Statement
Safe Harbor Statement This slide presentation should be reviewed in conjunction with SunCoke’s Third Quarter 2011 earnings release conference call held on November 2, 2011 at 10:00 a.m. ET and SEC Form 10-Q for the quarter ended September 30, 2011. Statements in this presentation that are not histor
Slide 3: Overview
Overview • Q3 2011 Net Income attributable to SunCoke shareholders of $18.4 million 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 production wi
Slide 4: Overview (continued)
Overview (continued) • Coal operations improved Q3 2011 Adjusted EBITDA by $9.5 million on stronger metallurgical coal pricing • Jewell coal production flat year over year reflecting challenges to Jewell deep mining expansion • Corporate expense of $14.3 million reflects impact of standalone, reloca
Slide 5: Q3 '11 Financial Results
Q3 ‘11 Financial Results Q3 '11 vs. Q3 '11 vs. ($ in millions) Q3 '11 Q3 '10 Q2 '11 Q3 '10 Q2 '11 Revenue $403.5 $331.6 $378.0 $71.9 $25.5 • Achieved Q3 2011 EPS of $0.26 and Adjusted Operating Income $30.1 $48.4 $21.4 ($18.3) $8.7 EBITDA of $44.8 million Net Income Attributable to • Coke Adjusted E
Slide 6: Q3 2010 to Q3 2011 Adjusted EBITDA Bridge
Q3 2010 to Q3 2011 Adjusted EBITDA(1) Bridge Adjusted EBITDA reflects impact of ArcelorMittal settlement, higher corporate costs and favorable non- recurring Q3 2010 domestic Coke items, offset by improved Coal Mining results ($ in millions) $70 $60 ($7.9) $50 ($11.0) $1.1 $40 ($8.1) ($1.0) $9.5 $30
Slide 7: Q2 2011 to Q3 2011 Adjusted EBITDA Bridge
Q2 2011 to Q3 2011 Adjusted EBITDA(1) Bridge Adjusted EBITDA reflects continued improvement at Indiana Harbor, improved yields at Granite City and higher volumes at Jewell Coke, offset by Middletown start-up expenses and higher Coal Mining costs ($ in millions) $55 $50 $1.4 ($0.3) ($2.6) $45 $4.9 ($
Slide 8: Domestic Coke Financial Summary
Domestic Coke Financial Summary (Jewell Coke & Other Domestic Coke) Domestic Coke Pro Forma Adjusted EBITDA(1) , Pro Forma for Domestic Coke Production ArcelorMittal Settlement and Coal Transfer Price (Tons in thousands) ($ in millions, except per ton amounts) • Record domestic coke production on re
Slide 9: 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) Domestic Coke Pro Forma Adjusted EBITDA(1) , Pro Forma for ArcelorMittal Settlement and Coal Transfer Price ($ in mi
Slide 10: Coal Mining Financial Summary
Coal Mining Financial Summary Coal Sales, Production and Purchases (Tons in thousands) 386 • Sales and production increased Y-o-Y due to Harold Keene (HKCC) 371 335 334 340 340 314 49 48 270 66 26 84 68 337 256 323 acquisition 269 308 272 51 51 24 • Flat Y-o-Y Jewell production 22 Q3 '10 Q1 '11 Q2 '
Slide 11: Jewell Coal Mining Cost Summary
Jewell Coal Mining Cost Summary Coal Cash Production Cost Cash Production Cost Per Ton(1), Reject Rate(2) $150 70.0% 65.1% 63.5% $130 65.0% 60.1% $110 58.0% 60.0% $90 $133 55.0% $106 $70 $92 50.0% $80 $50 45.0% 2008 2009 2010 9 mos 2011 Cash production cost per ton (1) Reject rate (2) First Nine Mon
Slide 12: Coal Mining Financial Summary
Coal Mining Financial Summary Coal Mining Pro Forma Adjusted EBITDA (1) and Avg. Sales Price/Ton (2) Pro Forma for Coal Transfer Price Impact ($ in millions, except per ton amounts) $200• Q3 2011 Pro Forma Adjusted $152 $162 $155 EBITDA improved by $11 million $126 $132 $150 Y-o-Y on stronger coal p
Slide 13: Corporate Costs
Corporate Costs Q3 2011 Corporate costs reflect combination of Standalone, Relocation and Middletown start-up costs ($ in millions) $16.0 $14.0 $2.3 $12.0 $2.5 $10.0 $1.7 $8.0 $14.3 $6.0 $4.3 $4.0 $2.0 $3.5 – Q3 2010A Standalone Relocation Middletown Business Q3 2011A Costs Costs Start-up Costs Deve
Slide 14: Liquidity Update
Liquidity Update Summary Cash Flow For the Three For the Nine For the Nine Months Months Months Ended Ended Ended September September September ($ in millions, except where indicated) 30, 2011 30, 2011 30, 2010 Net Income $22 $51 $131 • SunCoke retained $110 million Loss on firm purchase commitment
Slide 15: Q4 2011 Outlook
Q4 2011 Outlook Indiana Harbor • Adjusted EBITDA to increase with increase in SunCoke ownership Ownership Increase International •Preferred dividend of $9M recognized in Q4; paid in Q2 2012 •Nine Month Effective Tax Rate: 16% Effective Tax Rate •Expect Q4 Effective Tax Rate: 7% - 10% •Expect Year En
Slide 16: Coke Business Update
Coke Business Update Indiana Harbor • Contract renewal negotiations in progress • Expect to spend approximately $50 million over next 3 years to refurbish facility in anticipation of contract renewal Middletown • Expect to reach full production levels by July 2012 Haverhill & Granite City • Discussi
Slide 17: Coke Business Update (continued)
Coke Business Update (continued) US Coke Plant Development • Near-term focus remains on obtaining permits for up to 1.1 million ton per year facility; anticipate permits in latter half of 2012 • Kentucky site remains preferred location (but not only location) for multi- customer facility • Will defe
Slide 18: Coal Mining Business Update
Coal Mining Business Update Jewell Coal Expansion • Based on results to date, anticipate 2011 production of approximately 1.05 million tons • Given production challenges, focus on improving productivity of existing mines in 2012 and defer opening new mines until 2013 • Expect production of approxima
Slide 19: Coal Mining Business Update (continued)
Coal Mining Business Update (continued) Production and Mining Costs • Expect total mining production of 1.8 million tons in 2012 (Jewell 1.15 million tons, Surface Mining 0.35 million tons, and HKCC 0.3 million tons) • Underground mining cash costs to remain at about $130/ton until productivity impr
Slide 20: Questions
Questions Third Quarter 2011 Earnings Conference Call 19
Slide 21: Summary
Summary • Continued sequential operational and financial improvements in the quarter 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 producti
Slide 22: Appendix
Appendix Third Quarter 2011 Earnings Conference Call 21
Slide 23: 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 24: 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 25: 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 26: 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 27: 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 28: 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 29: EBITDA Reconciliation, $MM
EBITDA Reconciliation, $MM For The Year Ended 2010 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 Sub
Slide 30: 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 S
Slide 31: 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 Su
Slide 32: 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, 2011 September 30, 2010 Net Cash Provided by Operating Activities $ 42 $ 16 $ 59 $ 254 Cash Flows from Investing A
Slide 33: Media releases and SEC filings are 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 Third Quarter 2011 Earnings Conference Call 32