Slide 1: Q4 & FY 2017 Earnings and 2018 Guidance Conference Call
SunCoke Energy, Inc. Q4 & FY 2017 Earnings and 2018 Guidance Conference Call January 31, 2018
Slide 2: Forward-Looking Statements
Forward-Looking Statements This slide presentation should be reviewed in conjunction with the Fourth Quarter and Full-Year 2017 earnings and 2018 guidance release of SunCoke Energy, Inc. (SXC) and conference call held on January 31, 2018 at 11:00 a.m. ET. Except for statements of historical fact, in
Slide 3: 2017 Year In Review
2017 Year In Review Achieved top end of FY 2017 Consolidated Adj. EBITDA guidance and successfully delivered against majority of key 2017 objectives FY 2017 Objective 2017 Achievements Commentary • Delivered results at top end of FY 2017 Deliver FY 2017 Consolidated Achieved strong FY 2017 Consolida
Slide 4: Q4 & FY 2017 Financial Performance
Q4 & FY 2017 Financial Performance Q4 and FY 2017 Earnings Overview Q4 ‘17 EPS of $2.05 and FY ‘17 EPS of $1.88 • Revaluation of deferred tax items resulted in ($/share) ($ in millions) Earnings per Share Consolidated (diluted) Adj. EBITDA(1) income tax benefit attrib. to SXC of ~$125M • Partial off
Slide 5: Tax Reform Overview
Tax Reform Overview Anticipate significant medium to long-term benefit from recent tax reform, driven primarily by corporate rate cut to 21% Tax Reform Key Items Illustrative Value to SunCoke ($ in millions) Corp. rate cut from 35% to 21% Average Annual Cash Tax Benefit(1) (Pre-Tax Reform vs. Post-T
Slide 6: Earnings Per Share – 2016 to 2017
Earnings Per Share – 2016 to 2017 $2.05 ($0.01) ($0.05) Quarterly EPS $1.91 $0.26 $0.04 ($0.10) Q4 2016 Adj. EBITDA Logistics Tax Reform Interest Depreciation Q4 2017 EPS Performance Deferred Revenue Expense & Other EPS (excl. Def. Rev. Recognition recognition) ($0.29) $0.15 ($0.24) $1.88 ($0.04) Fu
Slide 7: Adjusted EBITDA – Q4 '16 to Q4 '17
Adjusted EBITDA – Q4 ‘16 to Q4 ‘17 Significantly higher operating performance in Q4 2017 offset by timing differences in logistics revenue recognition vs. Q4 2016 ($ in millions) Deferred Revenue Q4 2017 results +$7.3M vs. Q4 2016 Recognition $2.9 $77.3 $4.9 ($0.9) $0.4 ($15.1) $69.5 • $6.4M – Incre
Slide 8: Adjusted EBITDA – FY '16 to FY '17
Adjusted EBITDA – FY ‘16 to FY ‘17 FY 2017 Adj. EBITDA up $17.7M, or 8.2%, vs. FY 2016 driven primarily by reduced Corp. & Other spending and improved Logistics performance ($ in millions) $234.7 $217.0 $13.8 $6.9 ($15.4) $12.4 • $5.2M – Increased CMT • ($7.8M) – Higher O&M costs base volumes and ra
Slide 9: Domestic Coke Business Summary
Domestic Coke Business Summary Achieved solid Q4 2017 Domestic Coke results, and delivered FY 2017 Adjusted EBITDA and Adj. EBITDA/ton at top end of guidance Domestic Cokemaking Performance Q4 ‘17 Adjusted EBITDA of $39.6M (Production, Kt) $57/ton and Adjusted EBITDA/ton of $41/t $53/ton $46/ton $49
Slide 10: Logistics Business Summary
Logistics Business Summary Record CMT volumes driving strong logistics performance in Q4 2017; FY 2017 performance up $6.9M, or 10.8%, vs. FY 2016 Logistics Performance Delivered Q4 ‘17 Adjusted EBITDA $70.8M of $35.1M (Tons Handled, Kt) $63.9M $45.3M $35.1M • Solid CMT throughput due to sustained 2
Slide 11: Capital Allocation Priorities
Capital Allocation Priorities Successfully optimized balance sheet while continuing to deploy capital in efficient manner to maximize value for SXC shareholders Purchased ~2.9M SXCP units for $49M during FY 2017(1) • Includes ~870K SXCP units purchased for $15M total during Q4 2017 • Total SXCP unit
Slide 12: FY 2017 Capital Deployment
FY 2017 Capital Deployment Strong cash flow generation from coke and logistics operations deployed primarily for CapEx, unit purchases and SXCP distributions (Consolidated) Q4 ‘16 Q4 ‘17 $20.5 ($13.1) Total Debt $858M $887M Leverage 3.95x 3.78x ($75.6) Final half of total cash consideration of $41M
Slide 13: 2018 Guidance
2018 GUIDANCE SunCoke Energy”
Slide 14: Market 2018 Outlook
Market 2018 Outlook Steel and coal markets continue recovery to historical levels Steel markets continued to improve in 2017, despite challenging import dynamic • HRC benchmark averaged $620/st in 2017, up $100/st from 2015 – currently in low $700’s • Est. demand of ~120Mt on 75% utilization in 2017
Slide 15: Expected 2018 Adjusted EBITDA
Expected 2018 Adjusted EBITDA Expect FY 2018 Consolidated Adjusted EBITDA of $240M – $255M, driven primarily by improved Indiana Harbor performance ($ in millions) ($5) – ($9) $0 – $2 $240 – $255 $16 – $20 ~($2) $0 – $5 $234.7 • Higher O&M, due primarily to increased • Additional CMT new business ou
Slide 16: 2018 Domestic Coke Business Outlook
2018 Domestic Coke Business Outlook Continue to expect solid Domestic Coke (excl. IHO) operations in 2018; Domestic Coke Adj. EBITDA (excl. IHO) expected to be $198M – $202M Domestic Coke Performance (excl. IHO) Anticipate FY 2018 Dom. Coke (Coke Production, Kt) $207M (excl. IHO) performance in line
Slide 17: 2018 IHO Outlook
2018 IHO Outlook Remain focused on achieving significant IHO improvement in 2018 Expect IHO to deliver near-breakeven Adj. EBITDA on 870Kt – 900Kt production • Includes benefit of improved performance across rebuilt ovens as well as reset of O&M cost-sharing mechanism to annually budgeted reimbursem
Slide 18: 2018 Logistics Business Outlook
2018 Logistics Business Outlook Anticipate continued growth in Logistics volumes and earnings; FY 2018 Adjusted EBITDA guidance of $71M – $76M Logistics Performance Expect continued growth in logistics (Tons Handled, Kt) $70.8M $71M – $76M volumes in FY 2018 $63.9M • Anticipate CMT will handle ~6.5M
Slide 19: 2018 CapEx Overview
2018 CapEx Overview Anticipate increased 2018 CapEx due to GCO gas sharing project, IHO oven rebuild campaign and coke improvement projects 2017 CapEx ($ in millions) SXC SXCP Consolidated Ongoing (ex. IHO rebuilds) $6 $19 $25 IHO Oven Rebuild Initiative 30 0 30 Total Ongoing CapEx(1) $36 $19 $55 Ot
Slide 20: 2018 Guidance Summary
2018 Guidance Summary Expect improved FY 2018 Adjusted EBITDA of $240M to $255M 2016 2017 2017 2018 Metric Results Guidance Results Guidance Adjusted EBITDA(1) Consolidated $217.0M $220M – $235M $234.7M $240M – $255M Attrib. to SXC $130.4M $130M – $141M $148.3M $160M – $171M Total Capital Expenditur
Slide 21: 2018 Key Initiatives
2018 Key Initiatives Deliver Operations Excellence and Optimize Asset Base • Drive strong operational & safety performance while optimizing asset utilization Complete 2018 Indiana Harbor Oven Rebuild Campaign • Complete 67 planned A-battery oven rebuilds and deliver near-breakeven FY ‘18 Adj. EBITDA
Slide 22: Questions
QUESTIONS SunCoke Energy”
Slide 23: Investor Relations
Investor Relations 630-824-1907 www.suncoke.com
Slide 24: Appendix
APPENDIX SunCoke Energy”
Slide 25: Definitions
Definitions Adjusted EBITDA represents earnings before interest, loss (gain) on extinguishment of debt, taxes, depreciation and amortization (“EBITDA”), adjusted for impairments, coal rationalization costs, changes to our contingent consideration liability related to our acquisition of CMT and the e
Slide 26: Adjusted EBITDA Reconciliation
Adjusted EBITDA Reconciliation ($ in millions) FY '17 Q4 '17 Q3 '17 Q2 '17 Q1 '17 FY '16 Q4 '16 Q3 '16 Q2 '16 Q1 '16 Net cash provided by Operating activities $148.5 $20.2 $73.9 $24.9 $29.5 $219.1 $53.0 $44.6 $92.1 $29.4 Depreciation, depletion and amortization expense 128.2 31.0 30.6 33.3 33.3 114.
Slide 27: Reconciliation of Segment Adjusted EBITDA and Adjusted EBITDA per Ton
Reconciliation of Segment Adjusted EBITDA and Adjusted EBITDA per ton Reconciliation of Segment Adjusted EBITDA and Adjusted EBITDA per Ton Domestic Coal Corporate ($ in millions, except per ton data) Coke Brazil Coke Logistics (1) and Other(2) Consolidated FY 2017 Adjusted EBITDA $188.9 $18.2 $70.8
Slide 28: Balance Sheet & Debt Metrics
Balance Sheet & Debt Metrics As of 12/31/2017 Balance SXC Attributable Attributable Consolidated to SXCP ($ in millions) to SXC Cash $ 120 $7 $ 113 Available Revolver Capacity 227 153 74 Total Liquidity 347 160 187 Gross Debt (Long and Short-term) 887 843 45 Net Debt (Gross Debt less Cash) 767 836 (
Slide 29: 2018E Guidance Reconciliation
2018E Guidance Reconciliation 2018E 2018E ($ in millions) Low High Net cash provided by Operating activities $150 $165 Depreciation and amortization expense (137) (129) Changes in working capital and other 22 14 Net Loss $35 $50 Depreciation and amortization expense 137 129 Interest expense, net 63
Slide 30: Thermal Coal Export Profitability
Thermal Coal Export Profitability Solid API2 benchmark price should continue to support CMT ILB producers’ competitiveness in maintaining viable exports $93 $6 Believe ILB export ($18) thermal coal solidly ($17) profitable at current spot API2 benchmark pricing ($6) of ~$93/t ($20) $38 • Based on av