Slide 1: SunCoke Energy, Inc. Q4 2016 Earnings and 2017 Guidance
SunCoke Energy, Inc. Q4 2016 Earnings and 2017 Guidance Conference Call January 26, 2017
Slide 2: Forward-Looking Statements
Forward-Looking Statements This slide presentation should be reviewed in conjunction with the Fourth Quarter 2016 earnings and 2017 guidance release of SunCoke Energy, Inc. (SXC) and conference call held on January 26, 2017 at 11:00 a.m. ET. Some of the information included in this presentation cons
Slide 3: Simplification Transaction Update
Simplification Transaction Update Negotiations with SXCP Conflicts Committee ongoing; SXC is confident in merits of Simplification Transaction Progress towards proposed transaction remains on track to close by mid-2017 • Continuing negotiations/dialogue with Conflicts Committee and their advisors •
Slide 4: 2016 Accomplishments
2016 Accomplishments Achieved Financial Objectives • Delivered against key financial guidance targets • De-levered consolidated SunCoke by >$145M in FY 2016 via open market debt repurchases and revolver pay-downs Managed Through Challenging Market Conditions • Navigated through and remained responsi
Slide 5: Q4 and FY 2016 Overview
Q4 and FY 2016 Overview (1) Q4 and FY 2016 Earnings Overview Q4 ‘16 EPS of $0.26 down slightly vs. ($/share) ($ in millions) Earnings per Share Consolidated Q4 ‘15 due primarily to (diluted) Adj. EBITDA • Lower income tax and gain on debt $0.30 extinguishment in Q4 2015 $0.26 $0.22 $217.0 $185.4 FY
Slide 6: Adjusted EBITDA – Q4 '15 to Q4 '16
(1) Adjusted EBITDA – Q4 ‘15 to Q4 ‘16 Q4 ‘16 performance driven primarily by recognition of CMT deferred revenue ($ in millions) $77.3 • ($4.4M) – Elimination of Brazil dividend, net $5.1 (2) of increased technology & licensing fees $5.8 • ($3.5M) – Impact of HHO turbine failure • $4.6M – Lower ope
Slide 7: Adjusted EBITDA – FY '15 to FY '16
(1) Adjusted EBITDA – FY ‘15 to FY ‘16 Strong improvement in FY 2016 Adjusted EBITDA driven primarily by full-year contribution of CMT results ($ in millions) $217.0 $12.9 $185.4 $15.2 $4.2 ($26.6) $25.9 • $7.4M – Lower operational costs due primarily to • $13.2M – O&M improvement divestiture • $29.
Slide 8: Domestic Coke Business Summary
Domestic Coke Business Summary Managed through challenging industry backdrop to deliver FY Adjusted EBITDA/ton and coke production in line with guidance Domestic Cokemaking Performance FY 2016 Adjusted EBITDA/ton of (Production, Kt) $49 within guidance range of $54/ton $51/ton $52/ton $48/t – $53/t(
Slide 9: Coal Logistics Business Summary
Coal Logistics Business Summary Strong improvement in Q4 volumes across Coal Logistics fleet; CMT Adj. EBITDA of ~$51M within FY 2016 guidance range Coal Logistics Performance Higher Q4 ‘16 volumes driving (Tons Handled, Kt) $45.3M improved Adj. EBITDA • Significant increase in met. and $21.1M $7.3M
Slide 10: FY 2016 Capital Deployment
FY 2016 Capital Deployment Strong cash flow generation from coke and coal logistics operations deployed primarily for de-levering, CapEx and SXCP distributions $20.5 (Consolidated) Q4 ‘15 Q4 ‘16 $17.7 Total Debt $1,004M $858M ($12.8) ($63.7) Leverage(3) 4.63x 3.95x • Half of total cash ($49.4) • $16
Slide 11: 2016 In Review
2016 In Review Successfully delivered against majority of key 2016 objectives despite challenging industry conditions FY 2016 Objective 2016 Action Commentary Deliver FY 2016 Consolidated Delivered FY 2016 Consolidated • Adj. EBITDA up >$31M vs. FY 2015 due Adj. EBITDA of $210M – $235M Adjusted EBIT
Slide 12: 2017 Guidance
2017 GUIDANCE SunCoke Energy”
Slide 13: Expected 2017 Adjusted EBITDA
(1) Expected 2017 Adjusted EBITDA Expect FY 2017 Consolidated Adjusted EBITDA of $220M – $235M ($ in millions) $220 – $235 $10 – $15 $217.0 ($5) – ($10) $3 – $8 • Improved KRT & CMT volumes • Middletown set to annual run-rate performance • Full-year benefit of Coal Mining • Impact of Indiana Harbor
Slide 14: 2017 IHO Outlook
2017 IHO Outlook Focused on continuing to execute holistic oven rebuild initiative; Expect full-year results to be impacted by 2017 rebuilds Since launching initiative in mid-2015, have executed 86 oven rebuilds • Sustained performance in charge weights and coking times supports further rebuilds Ant
Slide 15: 2017 Domestic Coke Business Outlook
2017 Domestic Coke Business Outlook Continue to expect solid Domestic Coke (excl. IHO) operations in 2017; Domestic Coke Adj. EBITDA (excl. IHO) expected to be $197M – $202M Domestic Coke Production & Yield (excl. IHO) Expect operating performance (Coke Production, Kt) to remain consistent across fl
Slide 16: 2017 Coal Logistics Business Outlook
2017 Coal Logistics Business Outlook Anticipate continued growth in Coal Logistics from increased volumes; FY 2017 Adjusted EBITDA guidance of $67M to $72M Coal Logistics Performance Expect modest recovery in KRT (Tons Handled, Kt) volumes from 2016 levels $67M – $72M $63.9M Market dynamics driving
Slide 17: SunCoke Cost Rationalization
SunCoke Cost Rationalization Engaged third party to assist management’s review of all SunCoke operations Partnered with A.T. Kearney in early-2016 to champion project alongside SunCoke management and local leadership Management and Board review encompassed all facets of SunCoke business • Benchmarke
Slide 18: Corporate, Legacy and Other
(3) Corporate, Legacy and Other Expect $10M to $15M Adjusted EBITDA improvement in Corporate, Legacy and Other segment in 2017 ($ in millions) 2013 2014 2015 2016 2017E Salaries & Comp. (incl. stock comp.) $44.0M $41.1M $38.2M $32.8M ~$30M Other Corporate Expense(1) $40.5M $36.5M $38.9M $39.3M ~$30M
Slide 19: 2017 Capital Expenditures
2017 Capital Expenditures FY 2017 CapEx outlook reflects IHO oven rebuild initiative and environmental spending related to Granite City gas sharing project 2016 CapEx ($ in millions) SXC SXCP Consolidated Ongoing(1) $24 $16 $40 Other / Expansion 3 0 3 Environmental Project (Gas Sharing) 0 5 5 Total
Slide 20: 2017 Guidance Summary
2017 Guidance Summary Expect improved FY 2017 Adjusted EBITDA of $220M to $235M 2016 2016 2017 Metric Guidance Results Guidance (1) Adjusted EBITDA Consolidated $210M – $235M $217.0M $220M – $235M Attrib. to SXC $105M – $124M $130.4M $130M – $141M (2) Capital Expenditures ~$45M ~$48M ~$80M Domestic
Slide 21: Liquidity and Capital Allocation
Liquidity and Capital Allocation Anticipate solid cash flow generation throughout 2017; Capital allocation decisions pending Simplification Transaction Strong standalone SXC liquidity of >$210M at year-end 2016 Expect to generate solid cash flow in FY 2017 • FY 2017 Adjusted EBITDA improvement parti
Slide 22: 2017 Key Initiatives
2017 Key Initiatives Deliver Operations Excellence and Optimize Asset Base • Drive strong operational & safety performance while optimizing asset utilization Execute Further Oven Rebuilds at IHO Cokemaking Operations • Complete 53 oven rebuilds to drive further performance improvements Complete Prop
Slide 23: Questions
QUESTIONS SunCoke Energy”
Slide 24: Investor Relations
Investor Relations 630-824-1907 www.suncoke.com
Slide 25: Appendix
APPENDIX SunCoke Energy”
Slide 26: Definitions
Definitions Adjusted EBITDA represents earnings before interest, (gain) loss on extinguishment of debt, taxes, depreciation and amortization (“EBITDA”), adjusted for impairments, coal rationalization costs, changes to our contingent consideration liability related to our acquisition of CMT and the e
Slide 27: Reconciliation to Adjusted EBITDA
Reconciliation to Adjusted EBITDA ($ in millions) FY '16 Q4 '16 Q3 '16 Q2 '16 Q1 '16 FY '15 Q4 '15 Q3 '15 Q2 '15 Q1 '15 Net cash provided by Operating activities $219.1 $53.0 $44.6 $92.1 $29.4 $141.1 $58.1 $6.4 $65.5 $11.1 Depreciation, depletion and amortization expense 114.2 31.8 25.6 28.6 28.2 10
Slide 28: Reconciliation of Segment Adjusted EBITDA and Adjusted EBITDA per ton
Reconciliation of Segment Adjusted EBITDA and Adjusted EBITDA per ton Reconciliation of Segment Adjusted EBITDA and Adjusted EBITDA per Ton Corporate, Domestic Coal Legacy Costs ($ in millions, except per ton data) Coke Brazil Coke Coal Mining Logistics (1) and Other Consolidated FY 2016 Adjusted EB
Slide 29: Balance Sheet & Debt Metrics
Balance Sheet & Debt Metrics As of 12/31/2016 Balance SXC Attributable Attributable Consolidated to SXCP ($ in millions) to SXC Cash $ 134 $ 42 $ 92 Available Revolver Capacity 196 77 119 Total Liquidity 330 119 211 Gross Debt (Long and Short-term) 858 813 45 Net Debt (Total Debt less Cash) 724 771
Slide 30: 2017E Guidance Reconciliation
2017E Guidance Reconciliation 2017E 2017E ($ in millions) Low High Net cash provided by Operating activities $140 $155 Depreciation and amortization expense 131 131 (Gain) / loss on extinguishment of debt - - Changes in working capital and other (20) (18) Net Income $29 $42 Depreciation and amortiza
Slide 31: Brazil Coke Facility Transactions
Brazil Coke Facility Transactions Announced Brazil Coke Facility Transactions on November 29, 2016 – For more information visit www.suncoke.com Announced ArcelorMittal Brasil S.A. redemption of SunCoke equity interest in Brazil facility on November 29, 2016 for cash consideration of $41M • SXC recei
Slide 32: Thermal Coal Export Profitability
Thermal Coal Export Profitability Strengthening of API2 benchmark price should further support CMT ILB producers’ competitiveness in maintaining viable exports $90 $6 ($5) Believe ILB export ($13) thermal solidly profitable ($7) with recent API2 price ($20) surge to mid-$80s/t $51 • Based on average