Suncoke Energy, Inc. · NYSE:SXC
Suncoke Energy — Investor Day (December 2015)
98 slides from Suncoke Energy's investor day presentation, Dec 17, 2015
Slide 1: SunCoke Energy Investor Day 2015
Slide 2: Agenda
Agenda 1:30 pm Welcome & Opening Remarks Fritz Henderson – Chairman, President & Chief Executive Officer 1:50 pm Role of BF Steelmaking & SunCoke’s Cokemaking Competitive Advantage Jonathan Lock – Vice President, Strategy Becky Hites – President, Steel-Insights, LLC 2:30 pm Indiana Harbor Progress F
Slide 3: Today's Speakers (in order of appearance)
Today’s Speakers (in order of appearance) Frederick “Fritz” A. Henderson Chairman, President and CEO Fritz is Chairman, President and CEO of SunCoke Energy, Inc. and SunCoke Energy Partners, L.P. He was instrumental in leading the company through its IPO and separation from Sunoco. Under his leaders
Slide 4: Today's Speakers (in order of appearance)
Today’s Speakers (in order of appearance) Dovie Majors Vice President, Domestic Coke Operations Dovie is Vice President of Domestic Coke Operations, overseeing the operations and performance of SunCoke’s five domestic Coke plants. Dovie joined SunCoke in 2010 as an operations manager at the Middleto
Slide 5: Investor Relations Team
Investor Relations Team Lisa Ciota Director, Corporate and Investor Relations Lisa leads the development and execution of SunCoke’s investor, media, industry/trade and community relations initiatives. Prior to joining SunCoke in 2011, she worked at McDonald’s Corporation, where she held a variety of
Slide 6: Slide 6
Slide 7: Forward-Looking Statements
Forward-Looking Statements Some of the information included in this presentation constitutes “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. All statements in this presentation that e
Slide 8: Welcome & Opening Remarks
Welcome & Opening Remarks Fritz Henderson Chairman, President and Chief Executive Officer 7
Slide 9: 2015 Actions & Results
2015 Actions & Results Operating Excellence • Achieved solid safety, environmental and operating performance across coke & coal logistics fleet (excl. IHO) • Disappointed in Indiana Harbor (“IHO”) results in 2015; taking additional corrective actions Driving Growth at SXCP • Significantly expanded c
Slide 10: Current Metals & Mining Environment
Current Metals & Mining Environment Macro steel and coal industry environment deteriorated in 2015; no near-term change in outlook expected Steel customers challenged by lower pricing power and unfairly traded imports • Customers navigating landscape via aggressive cost cutting and plant idlings ─ B
Slide 11: Today's News – SXC & SXCP
Today’s News – SXC & SXCP In light of current environment, taking decisive actions to position SunCoke for long-term success • Reaffirm ‘15 Consol. Adj. EBITDA • Reaffirm ‘15 Adj. EBITDA attrib. to Overview Financial guidance of $180M – $190M SXCP guidance of $185M – $190M • 2016 Consol. Adj. EBITDA
Slide 12: Navigating the Current Environment
Navigating the Current Environment Shifting SXCP capital allocation priorities towards de-levering while continuing to return cash to unitholders Today’s actions reflect prolonged macro and industry-specific headwinds impacting our customers • Reprioritization towards de-levering balance sheet and b
Slide 13: Sustaining through the Downside
Sustaining through the Downside Confident in ability to manage through downside given strong fundamentals and insulated market position Ability to generate significant free 2016 FCF Outlook(1) cash flow of ~$115 million in 2016(1) Mid-point of Consol. Adj. EBITDA $223M Flexible capital structure wit
Slide 14: Asset Value Proposition
Asset Value Proposition Cokemaking & Coal Logistics assets offer unique value proposition Cokemaking Coal Logistics Value Proposition Value Proposition Long-term, Take-or-Pay Contracts Long-term, Take-or-Pay Contracts at CMT Direct Rail Access and Multi-Category Competitive Source of Coke Vessel Loa
Slide 15: 2016 Priorities
2016 Priorities Managing Through Challenging Market Conditions • Remain responsive to industry backdrop while leveraging unique value proposition Stabilize Indiana Harbor Cokemaking Operations • Improve profitability by executing oven rebuilds and reducing O&M costs Deliver Operations Excellence • D
Slide 16: Role of BF Steelmaking & SunCoke's Cokemaking Competitive Advantages
Role of BF Steelmaking & SunCoke’s Cokemaking Competitive Advantages Jonathan Lock Vice President, Strategy Becky Hites President, Steel Insights, LLC
Slide 17: SunCoke's Cokemaking Competitive Advantages
SunCoke’s Cokemaking Competitive Advantages Jonathan Lock Vice President, Strategy 16
Slide 18: SunCoke's Core Cokemaking Business
SUNCOKE’S CORE COKEMAKING BUSINESS
Slide 19: SunCoke's Cokemaking Business
SunCoke’s Cokemaking Business SunCoke is the largest independent coke supplier in North America SunCoke is the primary coke supply source at our Total US & Canada Coke Capacity(1) customers’ most strategic blast furnace assets 8% 5% • Total US cokemaking capacity of 4.2M tons • Account for ~23% of t
Slide 20: Industry Leading Network of Assets
Industry Leading Network of Assets Portfolio of assets provide flexibility to efficiently meet customers BF coke needs Middletown Network of strategically located cokemaking assets IA Haverhill I & II • Provides flexibility in transporting coke to multiple customer Indiana Harbor OH blast furnace fa
Slide 21: SunCoke's Leading Technology
SunCoke’s Leading Technology Our industry-leading cokemaking technology sets U.S. EPA MACT standards and makes larger, stronger coke Industry-leading environmental signature • Leverage negative pressure to substantially reduce emissions • Convert waste heat into steam and electrical power • Generate
Slide 22: Long-term take-or-pay contracts
SunCoke’s Leading Technology Long-term, take-or-pay contracts generate stable cash flow and insulate business from industry cyclicality Key Contract Provisions/Terms Contract Value Propositions • Customers required to take all coke we produce up to contract max. Fixed Fee • Long-term, take-or-pay
Slide 23: Domestic Coke Market vs. Imports
Domestic Coke Market vs. Imports Lower cost coke imports remain impractical for replacing reliable, high quality domestic coke which is integral to BF production Imported Chinese Coke vs. SunCoke Domestic Production Imports not a viable $233 source of US coke supply $221 15 • Consistent Quality 35 ─
Slide 24: Cokemaking Competitive Advantages
Cokemaking Competitive Advantages Positioned as primary source of coke supply at customers’ strategic blast furnace assets 9 Years Average 4.2Mt of US 100% Coal Cost on Remaining Capacity Pass-Through ToP Contracts Largest North EPA Replacement American Coke MACT Standard Cost of ~$650/t Producer Te
Slide 25: Recent Trends in Domestic Steel
RECENT TRENDS IN DOMESTIC STEEL
Slide 26: Domestic Steel Market
Domestic Steel Market The domestic steel industry is cyclical, and producers have pursued aggressive actions to competitively position themselves Steel & Iron Capacity Utilization Domestic steel producers have survived previous downturns & are taking significant 110% actions to be competitive long-t
Slide 27: End Market Demand
End Market Demand Key end markets for steel stable entering 2016 • US auto sales growth accelerating recently; sales hit 14-year high in November 2015 • Recently passed $305B highway bill may spur extensive growth in auto-sector & thus steel demand • Construction spending has recovered significantly
Slide 28: Fight Against Imports
Fight Against Imports Concerted global actions have been taken to mitigate harmful impact of unfairly traded imports Steel Related AD/CVD Petitions Filed in United States 150 AD/CVD filings are cyclical; 125 rising and falling with import levels 100 75 50 25 0 1980 1983 1986 1989 1992 1995 1998 2001
Slide 29: Summary & Key Takeaways
Summary & Key Takeaways 1 SunCoke is largest independent cokemaker, with a network of operating assets that provide a flexible & durable business model 2 Supply high quality coke to integrated BF producers that is competitive with imports, even as Chinese production sold below cost 3 Constructive ou
Slide 30: Fueling the Furnace: What's Next for USA Integrated Steelmakers
Fueling the Furnace: What’s Next for USA Integrated Steelmakers Becky Hites President, Steel Insights, LLC 29
Slide 31: Fueling the Furnace: What's Next for USA Integrated Steelmakers
Fueling the Furnace: What’s Next for USA Integrated Steelmakers Presentation at: Investor Day NYSE, New York by: Becky E. Hites, President December 17, 2015
Slide 32: USA Steel Consumption / Shipment Outlook
USA Steel Consumption / Shipment Outlook (Million Net Tons) Less Shipments Plus Imported Less Apparent Q1 Q2 Q3 Q4 Total % Chg Imports Semis Exports Consumption % Chg 2004 28.2 28.0 27.9 26.8 111.0 6.1% 35.8 7.2 7.9 131.6 14.8% 2005 26.7 25.2 25.3 26.0 103.2 -7.0% 31.8 6.9 9.4 118.8 -9.7% 2006 27.7
Slide 33: USA Top Steel Producer Shipments, Capacity & Utilization
USA Top 5 Steel Producer Shipments, Capacity & Utilization (Thousand Tons) Annual Estimated Q1 2015 Q2 2015 Q3 2015 Q4 2015e 2015e Capacity Utilization Integrated Mills AK Steel 1,751 1,812 1,871 1,998 7,431 11,507 65% ArcelorMittal USA 4,272 4,058 4,011 3,959 16,300 22,100 74% US Steel 4,101 3,895
Slide 34: USA Integrated Mills Idled in the Second Half of 2015
USA Integrated Mills Idled in the Second Half of 2015 (Thousand Tons) Adjusted Estimated Company Mill Capacity Comment Utilization (1) AK Steel Ashland, KY 2,000 Provides slab to Middletown. Dependent on overall 78% company demand. New furnace bottom planned for 2020. ArcelorMittal USA Indiana Harbo
Slide 35: The blast furnace route is one of the most productive ways to make steel
• The blast furnace route is one of the most productive ways to make steel, but they need to operate at a consistent, and preferably relatively full, rate – historically above 80%. • It’s a “big” number because integrated liquid steel production, which runs continuously, increases or decreases in bi
Slide 36: EAF steelmakers have the flexibility of a quick ramp-up
EAF steelmakers have the flexibility of a quick ramp-up when the market firms and in 2009 took market share from the integrated mills who require more committed volume to restart furnaces. How will the BF operators regain their markets if they take their capacity off-line? • For sure, EAF steelmakin
Slide 37: USA hot rolled mill capacity split
• USA hot rolled mill capacity is split 44 million tons at integrated mills and 24 million tons at mini-mills. • USA galvanized capacity is split 13 million tons at integrated mills and 5 million tons at mini-mills. Flat Rolled Sheet Shipments by Key Products, 2014 (Million Tons) Hot Rolled 22.7 Col
Slide 38: Half of the steel grades produced today weren't in existence a decade ago
• Half of the steel grades produced today weren’t in existence a decade ago. • Integrated mill targeted steel applications such as automotive exposed and appliances require significant customer support, teams of metallurgists, multiple verifications and dedicated product development resources. – AK
Slide 39: Big River Steel's capital cost
• Big River Steel’s capital cost will be $1.3 billion for 1.6 million tons of production including galvanizing and electrical products. Broke Ground: September 2014. Expected Production: Late Summer/Early Fall 2016. Construction Time: 24 Months. Qualification Time: 18 Months. • Steel Dynamics’ capit
Slide 40: Raw materials purchased under yearly or longer contracts
• Raw materials are purchased under yearly, or longer, contracts with market-based price adjustments. • Because of the importance of a consistently high volume through the blast furnace, historically 50%, or more, of the integrated mills products have been sold under annual, or longer, contracts. •
Slide 41: Integrated metallics mix for sheet products
• The integrated metallics mix for sheet products is: – 75% pig iron (can range from 70%-85%), – 10% mill scrap and – 15% purchased scrap (bundles which is the purest scrap you can buy). • The metallics mix for a sheet mini-mill will fluctuate depending on market pricing, and varies by company, but
Slide 42: The cash cost advantage depends on raw material costs
• The cash cost advantage is highly dependent on current raw material costs and the assumed metallics mix. • Cash cost to produce doesn’t include overhead or retirement expenses which are higher at integrated producers. 41
Slide 43: Mill process costs versus HRB spot price
Neither Mill Process Costs Have Been Low Enough to Remain . Profitable In*The Falling Price Market Driven By Surging Imports Most: USA Mills Announced Price Increases This. Week USA Hot-Rolled Band Cash Production Costs Versus USA HRB Spot Price Integrated Mill o==EAF Mill ——HRB Prices $ Per Ton a 3
Slide 44: Ingot Casting Continuous Casting
Ingot Casting Continuous Casting Integrated steelmaking has not become obsolete and is evolving to incorporate technological innovation. EAF steelmaking Coke Plant has volume flexibility, but blast furnace steelmaking remains competitive. SunCoke Plant 43
Slide 45: Integrated mills may not recover 100% of prior market share
• While the integrated mills may not recover 100% of their prior years’ market share, they’ve invested heavily over the past decade to remain relevant and competitive. • On a cash basis for the “Plain Jane” hot-rolled band product, the potential integrated mill $50 cost disadvantage to EAFs isn’t si
Slide 46: In WWII, American submarine commanders endured
In WWII, American submarine commanders endured despite being outclassed by superior equipment and outgunned (fully functioning torpedoes weren’t available to them for the first 21 months of the Pacific War). In the fog of war, as often is the case in business, decisions with long impacting outcomes
Slide 47: Steel-Insights disclaimer
This document and all content hereof are intended for informational purposes only and none of the information contained herein or opinions expressed herein should be viewed as an offer or solicitation to buy, sell or otherwise trade futures, options-on-futures, commodities, options, securities or an
Slide 48: Steel-Insights contact details
becky.hites@steel-insights.com joe.poveromo@rawmaterialsiron.com www.steel-insights.com Raw Materials & Ironmaking Global Consulting 47
Slide 49: Indiana Harbor Progress
Indiana Harbor Progress Fritz Henderson Chairman, President and Chief Executive Officer 48
Slide 50: Indiana Harbor Journey
Indiana Harbor Journey TM Original refurbishment improved overall plant condition, but further work remains to stabilize plant performance • Determined refurbishment objectives • New PCM commissioning delayed • Continue stabilization of plant operations ─ Enhance reliability • Experienced improvemen
Slide 51: Original Refurbishment Effort
Original Refurbishment Effort TM Executed necessary, one-of-a-kind restoration initiatives at Indiana Harbor, but oven challenges persisted Initiative Objective Status & Commentary • Replace/repair doors, • Restore integrity of oven • Completed oven exoskeleton repairs Oven lintels and buckstays str
Slide 52: Oven Externals
Oven Externals TM Original Oven Exoskeleton New Oven Exoskeleton • Reduced production resulting from sub- • Rebuilt oven externals to restore structural optimal oven conditions (e.g., temperature) integrity SunCoke Energy 2015 Investor Day 51
Slide 53: Pusher Charger Machinery
New Pusher Charger Machinery Original Pusher Charger TM • Outdated machinery contributed to Machinery equipment failures & operational delays • Increased spending required to maintain functionality New Pusher Charger • Improved reliability Machinery & effectiveness • Anticipate lower ongoing O&M cos
Slide 54: Common Tunnel Refurbishment
Common Tunnel Refurbishment TM Original Common Tunnel New Common Tunnel • Blockage of common tunnel impacted • Improved oven draft to optimize charge oven drafts & coking cycles weights SunCoke Energy 2015 Investor Day 53
Slide 55: Oven Internals – Original Refurbishment
Oven Internals – Original Refurbishment TM Original refurbishment improved overall plant condition, but operational stability remains elusive Historical Ovens Pushed/Day as % of Target Indiana Harbor Daily Ovens Pushed/Day 100% 150 140 95% 130 90% 120 110 85% 100 80% 90 80 75% 70 70% 60 Jan Mar May
Slide 56: Changes at Indiana Harbor
CHANGES AT INDIANA HARBOR SunCoke Energy”
Slide 57: Revised Indiana Harbor Approach
Revised Indiana Harbor Approach TM Additional steps taken to strengthen improvement efforts and address significant underperformance at Indiana Harbor Piloted test rebuild of 34-oven block in Sept. & additional 14 ovens in Nov. • ~$330K per oven rebuild (CapEx and expense) Emphasis on stabilizing da
Slide 58: Oven Internals – Rebuild Pilot Program
Oven Internals – Rebuild Pilot Program TM Demolition in Progress Rebuilt Oven Interiors • Took oven block entirely out of service • Increasing charge weights & production • Replaced floors/flues & re-bricked walls • More stable coking rates provide benefits across entire facility SunCoke Energy 2015
Slide 59: Charge Weights and Coking Times
Oven Internals – Rebuild Pilot Program TM Improvement in charge weights and coking times driving greater stability in rebuilt ovens Before Rebuilds Executed After Rebuilds Completed 44 44 Charge Weights 42 Better Worse 40 • Improved charge 38 weights benefiting 36 coke production 34 34 Rebuilt Ovens
Slide 60: Indiana Harbor Guidance
Indiana Harbor Guidance TM Substantially improved Indiana Harbor outlook reflects greater operational stability and disciplined cost management Targeting $10M – $20M Adjusted EBITDA 2016 Indiana Harbor Outlook improvement in 2016 Actual As-Reported Post-O&M reset • Emphasis on reducing O&M $16 $3 –
Slide 61: Summary & Key Takeaways
Summary & Key Takeaways TM 1 Original refurbishment improved overall plant condition, but results did not meet expectations 2 Tactically revising operating priorities, with major emphasis on improving plant stability 3 Anticipate $10M – $20M year-over-year improvement at IHO SunCoke Energy 2015 Inve
Slide 62: Operating Performance
Operating Performance Dovie Majors Vice President, Domestic Coke Operations Mike Hardesty Sr. Vice President, Commercial Operations, Business Development, Terminals and International Coke 61
Slide 63: Domestic Coke
Domestic Coke Dovie Majors Vice President, Domestic Coke Operations 62
Slide 64: Focus on Operations Excellence
Focus on Operations Excellence Focus of Financial Performance The SunCoke Way • Leverage technology and operating know-how to Productivity continuously improve performance & cost mgmt. • Rigorous discipline around Execution systems and processes of coke and coal logistics operations Safety & • Susta
Slide 65: Gas Sharing Project Update
Gas Sharing Project Update Successfully executed gas sharing project at Haverhill 2, resulting in significantly improved environmental performance Launched project to reduce venting at Haverhill and Granite City • Sets new EPA emission standard for cokemaking Haverhill 2 CD project recently complete
Slide 66: Domestic Coke Production & Yield
Domestic Coke Production & Yield Solid, consistent operating performance across Domestic Coke fleet (excl. IHO) Domestic Coke Production & Yield (excl. IHO) Operational (thousands of tons) 105.1% 106.1% 104.9% ~104% ~102% performance remains 100.0% 99.5% consistent across fleet 68.8% 69.4% 70.2% 70.
Slide 67: Domestic Coke Profitability
Domestic Coke Profitability 2016 outlook for lower Domestic Coke (excl. IHO) Adjusted EBITDA driven primarily by macroeconomic factors Slightly lower coke sales volumes • Anticipate volumes at contract maximum and no incremental spot sales Reduced benefit from yield gains • Declining coal prices dim
Slide 68: Int'l Coke, Coal Mining and Coal Logistics
Int’l Coke, Coal Mining and Coal Logistics Mike Hardesty Sr. Vice President, Commercial Operations, Business Development, Terminals and International Coke 67
Slide 69: International Coke Overview
International Coke Overview TM Brazil Coke Brazil Coke • Strong operational performance to date • Anticipate 2015 Adj. EBITDA of ~$20M on coke production of ~1.7 million tons • Expect 2016 Adj. EBITDA slightly lower than 2015 due to lower volume VISA SunCoke VISA SunCoke • Merchant market remains ch
Slide 70: Coal Mining Outlook
Coal Mining Outlook TM Continued focus on reducing ongoing Coal Mining impact Anticipate 2016 Adjusted EBITDA essentially flat at ~($20M) • Further deterioration in price differential between Haverhill 1 price(1) & Jewell Coke delivered coal price • Ongoing mining ownership & supervisory costs despi
Slide 71: Coal Logistics Outlook
Coal Logistics Outlook Coal Logistics assets positioned to withstand coal downturn; 2016 performance to benefit from full year CMT contribution Domestic – KRT & Lake Terminal Export – Convent Marine Terminal • Despite industry pressures, shipments • Take-or-pay contracts provide annual remain in-lin
Slide 72: Export Coal Market Netback
Export Coal Market Netback Despite prolonged decline in API 2 benchmark prices, CMT customers have vested interest in maintaining viable export platform $50 $3 ($3) Domestic Coal Producers ($9) • Exports augment domestic sales volume ($4) ─ Low cost mines operating at peak utilization & optimum cost
Slide 73: Summary & Key Takeaways
Summary & Key Takeaways 1 Anticipate stable operating performance across Coke fleet despite challenging industry dynamics 2 Evaluating Coal Mining plan, including potential idling or closure of remaining operating mines 3 Domestic & export Coal Logistics assets remain positioned to deliver ~$70M of
Slide 74: 2016 Financial Outlook & Capital Allocation Priorities
2016 Financial Outlook & Capital Allocation Priorities Fay West Senior Vice President and Chief Financial Officer 73
Slide 75: 2015 Year in Review
2015 Year in Review Maintained solid liquidity and financial position while returning cash to investors SXC • Reaffirm 2015 Consolidated Adjusted EBITDA guidance of $180M – $190M • Returned ~$64M to investors in 2015 via dividend & share repurchases SXCP • Reaffirm 2015 Adjusted EBITDA attributable
Slide 76: 2016 Guidance Overview
2016 Guidance Overview FY 2016 Consolidated Adjusted EBITDA of $210M – $235M reflects various operational factors in light of current environment Indiana Harbor • ~75Kt production improvement in 2016 • Anticipate ~$5M nominal O&M savings Other Domestic Coke • Production at contract maximums & no inc
Slide 77: Expected 2016 Adjusted EBITDA
(1) Expected 2016 Adjusted EBITDA FY 2016 Consolidated Adjusted EBITDA outlook primarily reflects IHO improvement, CMT benefit and reduced Corporate costs ($ in millions) $210 – $235 ~$10 (2) ~$0 $30 – $35 $180 – $190 • Lower retained Corporate spending ($5) – $5 • Lapping of 2015 non-cash pension t
Slide 78: Corporate Cash Costs
Corporate Cash Costs Significant reduction in Corporate expenses, driven by continued cost discipline and recent organizational rightsizing 2013 2014 2015E 2016E Total Salaries & Compensation $44.0M $41.1M ~$39M ~$32M Other Controllable Corporate Expense(1) $40.5M $36.5M ~$38M ~$32M Total Corporate
Slide 79: 2016 Capital Expenditures
2016 Capital Expenditures Reduced CapEx outlook reflects lower expenditures for IHO oven rebuilds and gas sharing 2015 Expected CapEx (As provided October 2015) ($ in millions) SXC SXCP Consolidated Ongoing(1) $32 $20 $52 Other 5 0 5 Environmental Project 0 20 20 Total CapEx (excl. pre-funded Ship l
Slide 80: Consolidated 2016 Guidance
Consolidated 2016 Guidance FY 2016 Adjusted EBITDA growth and reduced capital expenditures expected to drive increased cash flow 2015 Guidance Metric (As provided October 2015) 2016 Guidance Adjusted EBITDA(1) Consolidated $180 – $190 million $210 – $235 million Attributable to SXC $102 – $110 milli
Slide 81: Expected 2016 Adjusted EBITDA (SXCP)
(1) Expected 2016 Adjusted EBITDA 2016 Adjusted EBITDA outlook reflects CMT benefit, partially offset by lower volumes and higher plant expenses ($ in millions) $207 – $217 $185 – $190 $30 – $35 ~($0) ~($10) • Benefit of Convent Marine Terminal • No coke spot sales in 2016 • Increased coke plant out
Slide 82: IDR Giveback & Corporate Cost Holiday
IDR Giveback & Corporate Cost Holiday Emphasis on actively de-levering SXCP; in lieu of distribution cut, implementing IDR giveback & cost reimbursement holiday Cokemaking and Coal Logistics contracts remain fully in place, with operations continuing as expected • Despite challenging environment, cu
Slide 83: SXCP 2016 Outlook
SXCP 2016 Outlook 2016 outlook reflects growth in distributable cash flow and revised capital allocation strategy 2015 Outlook 2016 Outlook As Reported Pro-Forma(1) As Reported ($ in millions, except per unit data) Low High Low High Low High(2) Adjusted EBITDA attributable to SXCP $185 $190 $197 $20
Slide 84: Revised Capital Allocation Strategy
Revised Capital Allocation Strategy Revised SXCP capital allocation outlook prioritizes de-levering 2016 2015E(1) 2016 Outlook Status Quo Distributable Cash Flow(2) $122M $137M $165M Distributions(3) $109M $118M $112M Expect to generate >$60M Cash Coverage Ratio 1.12x 1.16x 1.47x of cash coverage(6)
Slide 85: Debt Maturity Schedule
Debt Maturity Schedule Maintain sufficient liquidity position, with no near-term debt maturities ($ in millions; Estimated as of December 31, 2015) SXCP unsecured bonds: $557M SXC Maturities SXCP Maturities • SXCP secured revolver: $182M • SXCP secured term loan: $50M • SXC unsecured bonds: $45M $55
Slide 86: Summary & Key Takeaways
Summary & Key Takeaways 1 Anticipate growth in FY 2016 Consolidated Adjusted EBITDA, driven by IHO improvement, CMT benefit and lower Corporate costs 2 In response to current market conditions, revised SXCP and SXC capital allocation policies to position companies for long-term success 3 Expect to m
Slide 87: Concluding Remarks
Concluding Remarks Fritz Henderson Chairman, President and Chief Executive Officer 86
Slide 88: 2016 Priorities
2016 Priorities Managing Through Challenging Market Conditions • Remain responsive to industry backdrop while leveraging unique value proposition Stabilize Indiana Harbor Cokemaking Operations • Improve profitability by executing oven rebuilds and reducing O&M costs Deliver Operations Excellence • D
Slide 89: Appendix
APPENDIX SunCoke Energy™ xC
Slide 90: Definitions
Definitions Adjusted EBITDA represents earnings before interest, taxes, depreciation, depletion and amortization (“EBITDA”) adjusted for impairments, coal rationalization costs, sales discounts, Coal Logistics deferred revenue and interest, taxes, depreciation and amortization attributable to our eq
Slide 91: Definitions
Definitions • Distributable Cash Flow represents Adjusted EBITDA less net cash paid for interest expense, ongoing capital expenditures, accruals for replacement capital expenditures and cash distributions to noncontrolling interests; plus amounts received under the Omnibus Agreement and acquisition
Slide 92: Balance Sheet & Debt Metrics
Balance Sheet & Debt Metrics Expected as of 12/31/2015 Balance SXC Attributable Attributable Consolidated to SXCP ($ in millions) to SXC Cash $ 120 $ 50 $ 70 Available Revolver Capacity 155 68 87 Total Liquidity 275 118 157 Total Debt (Long and Short-term) 1,009 904 105 Net Debt (Total Debt less Cas
Slide 93: SXCP Guidance and Reconciliations
SXCP GUIDANCE AND RECONCILIATIONS
Slide 94: Expected 2015 EBITDA Reconciliation
Expected 2015 EBITDA Reconciliation 2015E 2015E ($ in millions) Low High Net Cash Provided by Operating Activities $140 $150 Depreciation and amortization expense (65) (65) Loss on debt extinguishment (9) (9) Changes in working capital and other 5 - Coal Logistics deferred revenue(1) 3 3 Income tax
Slide 95: Expected 2016 EBITDA Reconciliation
Expected 2016 EBITDA Reconciliation 2016E 2016E ($ in millions) Low High Net Cash Provided by Operating Activities $149 $163 Depreciation and amortization expense (74) (74) Loss on debt extinguishment - - Changes in working capital and other 2 2 Coal Logistics deferred revenue(1) - - Income tax expe
Slide 96: SXC Guidance and Reconciliations
SXC GUIDANCE AND RECONCILIATIONS
Slide 97: Expected 2015 EBITDA Reconciliation
Expected 2015 EBITDA Reconciliation TM 2015E 2015E ($ in millions) Low High Net cash provided by Operating activities $125 $145 Depreciation, depletion and amortization expense (103) (103) Loss on extinguishment of debt (9) (9) Asset and goodwill impairment - - Coal Logistics deferred revenue(1) 3 3
Slide 98: Expected 2016 EBITDA Reconciliation
Expected 2016 EBITDA Reconciliation TM 2016E 2016E ($ in millions) Low High Net cash provided by Operating activities $150 $170 Depreciation, depletion and amortization expense (104) (104) Gain on extinguishment of debt - - Asset and goodwill impairment - - Coal Logistics deferred revenue(1) - - Cha