Suncoke Energy, Inc. · NYSE:SXC
Suncoke Energy — Oppenheimer 2nd Annual London 1-1 Investor Conference (February 2012)
37 slides from Suncoke Energy's conference presentation, Feb 6, 2012
Slide 1: Investor Presentation
Exhibit 99.1 Investor Presentation February 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: SunCoke Introduction
SunCoke Introduction Largest independent producer of metallurgical coke in Americas with 2011 Adjusted EBITDA (1) nearly 50 years experience (excluding Corporate Segment) ~85% of Adjusted EBITDA (1) generated Int'l Coke Coal by cokemaking business 7% Mining 13% - Secure, long-term take-or-pay contra
Slide 4: 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
Slide 5: 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 Air Emissions MACT stand
Slide 6: 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 7: 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 8: 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 9: 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 Q4 2011 Average: $395 $422 6.0 2011 Average: $387 $431 5
Slide 10: SunCoke's U.S. and Canada Market Position
SunCoke's U.S. and Canada Market Position SunCoke Domestic Coke Pricing vs. Chinese Imports ($ per ton of coke) $500 $25 $50 40% Tariff $400 $130 $11 $300 $517 $442 $200 $395 $301 $100 $0 Chinese Coke Handling/ Average Export Chinese Coke Cost Transportation to Handling Losses Chinese Coke Price Q4
Slide 11: 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 12: 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 13: 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 14: 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 15: 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 1,050 966 912 855 900 792 • Steel market expected to grow 46% 732 750 626 691 over the next 10 years producing an 600 545 552 520 570 incr
Slide 16: 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 17: Q4 2011 and Full Year 2011 Earnings Overview
Q4 2011 and Full Year 2011 Earnings Overview • Q4 2011 and Full Year 2011 missed expectations due to unfavorable impact of $12.2 million (net of income attributable to noncontrolling interests) in accounting adjustments at Indiana Harbor • Q4 2011 Net Income attributable to shareholders of $8.0 mill
Slide 18: Q4 2010 to Q4 2011 Adjusted EBITDA Bridge
Q4 2010 to Q4 2011 Adjusted EBITDA (1) Bridge Adjusted EBITDA decrease reflects Indiana Harbor adjustments, higher corporate costs and Black Lung Liability charge, offset by improved performance in Coal Mining and the absence of ArcelorMittal legal/settlement costs ($ in millions) ($12.2) $12.9 ($6.
Slide 19: Full Year 2010 to 2011 Adjusted EBITDA Bridge
Full Year 2010 to 2011 Adjusted EBITDA(1) Bridge Adjusted EBITDA decrease reflects impact of ArcelorMittal settlement and higher corporate costs, offset by improved Coal Mining results ($ in millions) ($34.7) ($23.9) ($28.5) ($12.2) ($7.3) $31.0 $227.3 ($11.2) $140.5 2010 Net ArcelorMittal Corporate
Slide 20: Domestic Coke Financial Summary
Domestic Coke Financial Summary (Jewell Coke & Other Domestic Coke) DomesticCokeProFormaAdjustedEBITDA (1) , ProFormafor Domestic Coke Production ArcelorMittal Settlement and Coal Transfer Price (Tons in thousands) ($ in millions, except per ton amounts) • Q4 ‘11 increase over Q4 ‘10 reflects Middle
Slide 21: 2012 Priorities
2012 Priorities • Execute the ramp up of Middletown; expect to reach full production levels in Q2 2012 • Achieve targeted coke production volumes of 4.0 to 4.2 million tons • Continue permitting work for potential new U.S. plant in anticipation of a market recovery • Implement India entry strategy b
Slide 22: 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 23: 2012 Adjusted EBITDA Outlook
2012 Adjusted EBITDA (1) Outlook Estimated2012 AdjustedEBITDA(1) projectedto increaseby $109 to $139 versus 2011; expect80%- 85% of 2012 AdjustedEBITDA (1, 2) will be generatedby cokemaking business ($ in millions) $10 -$15 $25 -$40 $74 -$84 $250 -$280 $141 2011 Coke Coal Mining Corporate 2012E Adj.
Slide 24: 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 + Cash Tax Rate 10% –15% Effective Tax Rate 20% –24% Corporate Costs $30 million -$35 million Coke Production
Slide 25: Strategy for Shareholder Value Creation
Strategy for Shareholder Value Creation Potential Structuring Operational Excellence Grow The Coke Business Alternatives • Rigorous execution in • Domestic • Coke MLP existing operations • Secure permits for • Domestic assets well next potential facility suited and expected • Maintain focus on • Cap
Slide 26: Appendix
Appendix Oppenheimer 2nd Annual London 1-1 Investor Conference 25
Slide 27: 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 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 Oppenheimer 2nd Annual London 1-1 Inve
Slide 30: EBITDA Reconciliation, $MM
EBITDA Reconciliation, $MM For The Year Ended 2011 Jewell Other International Coal Corporate Coke Domestic Coke Coke Mining and Other Total Net Income $58.9 Add: Depreciation, depletion and amortization 58.4 Subtract: Interest Income (Primarily from Affiliates) (12.9) Add: Interest cost – Affiliate
Slide 31: EBITDA Reconciliation, $MM
EBITDA Reconciliation, $MM For The Three Months Ended December 31, 2011 Other International Coal Corporate Jewell CokeDomestic Coke Coke Mining and Other Total Net Income $7.5 Add: Depreciation, depletion and amortization 16.0 Subtract: Interest Income (0.1) Add: Interest cost - affiliates - Subtrac
Slide 32: EBITDA Reconciliation, $MM
EBITDA Reconciliation, $MM For The Three Months Ended September 30, 2011 Jewell Other International Coal Corporate Coke Domestic Coke Coke Mining and Other Total Net Income $21.7 Add: Depreciation, depletion and amortization 14.8 Subtract: Interest Income (1.3) Add:Interest cost - affiliates 0.3 Sub
Slide 33: EBITDA Reconciliation, $MM
EBITDA Reconciliation, $MM For The Three Months Ended June 30, 2011 Jewell Other International Coal Corporate Coke Domestic Coke Coke Mining and Other Total Net Income $24.0 Add: depreciation, depletion and amortization 14.6 Subtract: interest income (primarily from affiliates) (5.8) Add: interest c
Slide 34: EBITDA Reconciliation, $MM
EBITDA Reconciliation, $MM For The Three Months Ended March 31, 2011 Jewell Other International Coal Corporate Coke Domestic Coke Coke Mining and Other Total Net Income $5.7 Add: depreciation, depletion and amortization 13.0 Subtract: interest income (primarily from affiliates) (5.7) Add: interest c
Slide 35: EBITDA Reconciliation, $MM
EBITDA Reconciliation, $MM For The Year Ended 2010 Jewell Other International Coal Corporate Coke Domestic Coke Coke Mining and Other Total Net Income $146.3 Add: Depreciation, depletion and amortization $48.2 Subtract: Interest Income (Primarily from Affiliates) ($23.7) Add: interest cost - Affilia
Slide 36: EBITDA Reconciliation, $MM
EBITDA Reconciliation, $MM For The Three Months Ended December 31, 2010 Jewell Other Domestic International Coal Corporate and Coke Coke Coke Mining Other Total Net Income $15.1 Add: Depreciation, depletion and amortization 12.3 Subtract: Interest Income (5.7) Add: interest cost - affiliates 1.0 Sub
Slide 37: Contact Investor Relations
Media releases and SEC filings are available on our website at www.suncoke.com Contact Investor Relations for more information: 630-824-1907 Oppenheimer 2nd Annual London 1-1 Investor Conference 36
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