Suncoke Energy, Inc. · NYSE:SXC
Suncoke Energy — Q2 2014 Earnings Presentation
23 slides from Suncoke Energy's earnings presentation, Jul 24, 2014
Slide 1: SunCoke Energy, Inc. Q2 2014 Earnings Conference Call
SunCoke Energy, Inc. Q2 2014 Earnings Conference Call July 24, 2014
Slide 2: Forward-Looking Statements
Forward-Looking Statements This slide presentation should be reviewed in conjunction with the Second Quarter 2014 earnings release of SunCoke Energy, Inc. (SXC) and the conference call held on July 24, 2014 at 11:30 a.m. ET. Some of the information included in this presentation constitutes “forward-
Slide 3: Q2 2014 Highlights
Q2 2014 Highlights Operating Highlights • Coke operations recovered from weather-challenged Q1 − Achieved Adjusted EBITDA of $61/ton • Coal Logistics key contributor to results • Maintained strong Coke and Coal safety performance Transitioning to Pure-Play GP • Completed first dropdown to SXCP − GP/
Slide 4: Q2 2014 Earnings Overview
Q2 2014 Earnings Overview Adjusted EBITDA(1,2,3) Excluding impairment, Adj. EBITDA ($ in millions) improved • Solid Domestic Coke performance on better Indiana Harbor results $60.5 $52.3 $52.4 $33.6 • Benefited from Coal Logistics • Favorable contingent consideration in 2013 2014 Coal mitigated wide
Slide 5: Q2 2014 Financial Results
Q2 2014 Financial Results TM Q2'14 vs. Excluding impairment charge, ($ in millions, except volumes and per share) Q2'14 Q2'13 Q2'13 Domestic Coke Sales Volumes 1,059 1,074 (15) Adj. EBITDA up 15% Coal Sales Volumes 419 457 (38) • Domestic Coke up slightly Coal Transloading Volumes 5,605 - 5,605 – In
Slide 6: Adjusted EBITDA Bridge – Q2 '13 to Q2 '14
Adjusted EBITDA(1,2) Bridge – Q2 ‘13 to Q2 ‘14 Adjusted EBITDA benefitted from Coal Logistics, better results at Indiana Harbor and favorable coal mining fair value adjustment ($ in millions) $1.4 ($0.9) • HKCC • ($1.7M) contingent dropdown $5.0 consideration related costs $4.3M • $0.8M lower ($0.4)
Slide 7: Diluted EPS Bridge – Q2 '13 to Q2 '14
Diluted EPS Bridge – Q2 ‘13 to Q2 ‘14 EPS reflects impact of impairment charge and dropdown financing costs partly offset by lower taxes and NCI • Indiana Harbor • Tender premium Accel. Depr: ($0.16) ($0.06) • Debt extinguishment ($0.07) ($0.06) $0.12 $0.08 ($0.22) ($0.71) ($0.74) $0.03 $0.09 Q2 201
Slide 8: Domestic Coke Business Summary
Domestic Coke Business Summary Achieved Adjusted EBITDA per ton $61; anticipate $60-$65 per ton average for balance of year Domestic Coke Production Domestic Coke Adjusted EBITDA(1) Per Ton (thousands of tons) ($ in millions, except per ton amounts) 1,081 1,081 1,081 1,081 $ 57/ton $ 59/ton $ 61/ton
Slide 9: Indiana Harbor Performance
Indiana Harbor Performance TM Demonstrated production 2014E Coke Production (thousands of tons) improvement at above 290-300 benchmark yield of 65% 270-280 264 • Ramp-up to continue in 2H14 – Focus on maintaining yield and 199 managing costs – Continuing to execute repair and replacement work • Blas
Slide 10: Coal Mining Financial Summary
Coal Mining Financial Summary Coal Mining Adjusted EBITDA(1) and Avg. Sales Price/Ton(2) Coal operation performed as ($ in millions, except per ton amounts) expected $133 (4) • Q2 up $1.4M versus last year (3) $123 $118 $118 $113 • $4 per ton improvement in cash cost per $120 $118 $114 $99 $99 ton o
Slide 11: SXC Liquidity Position
SXC Liquidity Position Ended quarter with strong cash position and revolver availability ($ in millions) $285.4 ($316.1) $178.2 $88.7 $204.4 ($66.8) $9.8 SXCP $19.2 ($39.7) ($18.2) Revolver $103.1 $28.6 $58.5 Availability: ($48.6) $241M Attributable SXC Revolver $159.0 $145.9 Availability: to SXCP $
Slide 12: Balance Sheet & Debt Metrics
Balance Sheet & Debt Metrics Strong financial position provides flexibility to reinvest in growth opportunities and return cash to shareholders Balance ($ in millions - as of 6/30/14) SXC Attributable to Attributable to Consolidated SXCP SXC Cash $ 204 $ 59 $ 145 Revolver Capacity 389 241 148 Total
Slide 13: SXC Capital Allocation
SXC Capital Allocation Modest leverage and expected future dropdown proceeds provides flexibility to pursue growth and return cash Significant “dry powder” retained for future dropdowns Capital Available Transition to pure-play GP will unlock for Deployment value to SXC shareholders − Share repu
Slide 14: Transitioning to Pure-Play GP
Transitioning to Pure-Play GP Executing Dropdown Plan • Expected proceeds and debt capacity provides flexibility to pursue growth and return capital • Anticipating GP/LP cash flow growth Exiting Coal • Sale highlights value of continuing operations Returning Cash to Shareholders • Approved share rep
Slide 15: Questions
QUESTIONS SXC Q2 2014 Earnings Call 14
Slide 16: Investor Relations: www.suncoke.com
Investor Relations: 630-824-1907 www.suncoke.com
Slide 17: Appendix
APPENDIX SXC Q2 2014 Earnings Call 16
Slide 18: Definitions
Definitions • Adjusted EBITDA represents earnings before interest, taxes, depreciation, depletion and amortization (“EBITDA”) adjusted for asset and goodwill impairment, sales discounts and the interest, taxes, depreciation, depletion and amortization attributable to our equity method investment. EB
Slide 19: Reconciliation from Net Income to Adjusted EBITDA
Reconciliation from Net Income to Adjusted EBITDA $ in millions Q2 2014 Q1 2014 FY 2013 Q4 2013 Q3 2013 Q2 2013 Q1 2013 Net Income (48.6) (3.8) 50.1 18.7 12.3 12.7 6.4 Add: Depreciation, depletion and amortization 28.6 29.0 96.0 25.5 23.2 23.4 23.9 Add: Interest expense, net 27.1 12.1 52.3 12.3 12.1
Slide 20: Reconciliation of Segment Adjusted EBITDA and Adjusted EBITDA per ton
Reconciliation of Segment Adjusted EBITDA and Adjusted EBITDA per ton Domestic Brazil India Coal Coal $ in millions, except per ton data Coke Coke Coke (1) Mining Logistics Corporate Combined Q2 2014 Adjusted EBITDA 64.3 2.5 (0.5) (1.2) 5.0 (9.6) 60.5 Sales Volume (thousands of tons) 1,059 413 42 41
Slide 21: 2014E Consolidated Adj. EBITDA Reconciliation
2014E Consolidated Adj. EBITDA Reconciliation TM 2014E 2014E (in millions) Low High Net Income ($30) ($10) Depreciation, depletion and amortization(1) 115 105 Interest expense, net 68 65 Income tax expense (benefit) (39) (29) EBITDA $114 $131 Sales discounts (1) (1) Adjustment to unconsolidated affi
Slide 22: 2014E Adj. EBITDA Reconciliation (Continuing Operations)
2014E Adj. EBITDA Reconciliation (Continuing Operations) TM Continuing Operations (excluding Coal Mining Segment) 2014E 2014E (in millions) Low High Net Income $49 $69 Depreciation, depletion and amortization(1) 100 95 Interest expense, net 68 65 Income tax expense (benefit) 15 20 EBITDA $232 $249 S
Slide 23: Capital Expenditures & Investments
Capital Expenditures & Investments Consolidated Capex ($ in millions) 2014E(1) On-Going (2) $71 Environmental Project $42 Indiana Harbor $25 Refurbishment Total CapEx $138 Investments - Total CapEx & $138 Investments (1) Does not include spending to initiate construction of potential new coke plant