SunCoke Energy Partners L.P — Q1 2019 Earnings Presentation
26 slides from SunCoke Energy Partners L.P's earnings presentation, Apr 24, 2019
Slide 1: Q1 2019 Earnings Conference Call
SunCoke Energy, Inc. Q1 2019 Earnings Conference Call April 24, 2019
Slide 2: Important Notice to Investors
Important Notice to Investors This communication includes important information about the proposed and pending acquisition by SXC of all publicly held common units of SXCP. SXC has filed a registration statement on Form S-4 with the Securities and Exchange Commission (“SEC”) containing a draft joint
Slide 3: Introductory Information for Investors
Introductory Information for Investors This slide presentation should be reviewed in conjunction with the First Quarter 2019 earnings release of SunCoke Energy, Inc. (SXC) and conference call held on April 24, 2019 at 8:30 a.m. ET. Except for statements of historical fact, information contained in t
Slide 4: Q1 2019 Highlights
Q1 2019 Highlights Achieved solid operating performance across coke and logistics segments despite adverse weather conditions Delivered Q1 ‘19 Adj. EBITDA of $67.3M; represents record first quarter performance Strong performance in the coke segment; >40Kt increase in production compared to prior yea
Slide 5: Simplification Update: Key Milestones and Timing
File S-4 registration statement with SEC March 8, 2019 Record date for shareholder vote May 2019 SXC shareholder vote and special meeting June 2019 Close transaction Late Q2 / Early Q3 Simplification Update Key Milestones Timing ... which will position SunCoke Stakeholders for long-term success Tran
Slide 6: Q1 2019 Financial Performance
Coke Adjusted EBITDA includes Domestic Coke and Brazil Coke. See appendix for a definition and reconciliation of Adjusted EBITDA Q1 2019 Financial Performance Q1 ‘19 EPS of $0.15, up $0.02 from the prior year quarter Strong cokemaking performance, partially offset by higher depreciation expense Cons
Slide 7: Adjusted EBITDA – Q1 '18 to Q1 '19
Adjusted EBITDA(1) – Q1 ‘18 to Q1 ‘19 Q1 ‘19 performance driven by strong Domestic Coke operations, partially offset by lower CMT volumes See appendix for a definition and reconciliation of Adjusted EBITDA (1) (1) $2.6M – Higher volumes primary driven by rebuilt ovens at Indiana Harbor $1.0M – Benef
Slide 8: Domestic Coke Business Summary
Domestic Coke Business Summary Strong Q1 ‘19 cokemaking performance supports FY 2019 outlook Domestic Cokemaking Performance /ton /ton /ton /ton /ton Sales Tons (Production, Kt) Delivered Adj. EBITDA/ton(1) of ~$58 vs. ~$56 in Q1 ‘18 Increased volumes, absence of outage work, higher coal prices Rebu
Slide 9: Logistics Business Summary
Logistics Business Summary Solid increase to domestic terminal volumes offset by lower CMT throughput tons and increased high water costs M M M M M (Tons Handled, Kt) Delivered Q1 ‘19 Adj. EBITDA of $12.7M ~350Kt increase in KRT / Lake Terminal volumes as compared to prior year Convent contributed $
Slide 10: Q1 2019 Liquidity
Q1 2019 Liquidity Maintain strong consolidated liquidity of >$400M; continued objective to strengthen the balance sheet $5.0M – SXCP revolving credit facility Consolidated Revolver Availability: $261M (Consolidated) Q1 ’19 Q4 ‘18 Total Debt $853M $859M Gross Leverage(1) 3.16x 3.26x Gross leverage fo
Slide 11: 2019 Key Initiatives
2019 Key Initiatives Drive strong operational and safety performance while optimizing asset utilization Successfully execute on capital plan Deliver Operations Excellence and Optimize Asset Base Complete 57 planned B-battery oven rebuilds and deliver ~$22M of Adj. EBITDA Complete last phase of oven
Slide 12: Questions
QUESTIONS SunCoke Energy”
Slide 13: Appendix
APPENDIX SunCoke Energy”
Slide 14: 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 15: Reconciliation to Adjusted EBITDA
Reconciliation to Adjusted EBITDA In June 2018, the Company recorded a loss in connection with the disposal of our interest in VISA SunCoke Limited. Reflects non-controlling interests in Indiana Harbor and the portion of the Partnership owned by public unitholders.
Slide 16: Reconciliation of Segment Adjusted EBITDA and Adjusted EBITDA per ton
Reconciliation of Segment Adjusted EBITDA and Adjusted EBITDA per ton (1) Corporate and Other includes the results of our legacy coal mining business.
Slide 17: Balance Sheet & Debt Metrics
Balance Sheet & Debt Metrics Represents mid-point of FY 2019 guidance for Adj. EBITDA (Consolidated), Adj. EBITDA attributable to SXCP, and Adj. EBITDA attributable to SXC.
Slide 18: 2019 Guidance Summary
2019 Guidance Summary Reflects 2019 guidance if the merger of SXC and SXCP was completed on July 1, 2019. Exclude one-time Simplification Transaction costs of ~$5M that will be expensed. See appendix for a definition and reconciliation of Adjusted EBITDA. Capital expenditures exclude the impact of c
Slide 19: 2019 Capital Expenditures
2019 Capital Expenditures At the midpoint of the range 2019 ongoing CapEX includes approximately $104M in ongoing Coke CapEx and $5M ongoing Logistics. Expect the gas sharing project to be completed late in the second quarter Excludes ~$4M of cash payments expected to be made in 2019 for work perfor
Slide 20: 2019E Guidance Reconciliation
2019E Guidance Reconciliation Reflects non-controlling interest in Indiana Harbor and the portion of the Partnership owned by public unitholders.
Slide 21: Thermal Coal Export Profitability
Thermal Coal Export Profitability (in $ per metric tonne) (1) (2) Believe ILB export thermal profitable at Q1 ‘19 API2 benchmark pricing of ~$75/t Based on average ILB cash cost, netback calculation implies attractive margins CMT well-positioned to serve ILB thermal coal producers (in $ per short to
Slide 22: Multiple Benefits of Simplification
Multiple Benefits of Simplification Simplifies SunCoke’s Organizational and Capital Structure One public entity structure reduces complexity for investors and simplifies governance Aligns interests of SXC shareholders and SXCP unitholders Improves Financial Flexibility Consolidation of cash flow and
Slide 23: Immediately Cash Flow Accretive
Immediately Cash Flow Accretive Simplification drives significant free cash flow per share accretion for SXC Shareholders 27% increase in adjusted free cash flow (“FCF”)(1) per share driven by: Adjusted FCF calculated using 2019 guidance Acquisition of public unitholder distributions and access to u
Slide 24: Reconciliation to Illustrate SXC FCF/Share
Reconciliation to Illustrate SXC FCF/Share Based on mid-point of 2019E SXC Consolidated Adjusted EBITDA guidance Based on mid-point of 2019E Adjusted EBITDA attributable to SXCP guidance Anticipated 2019 interest payments associated with SXC term loan Based on mid-point of 2019E SXC cash tax guidanc
Slide 25: SXC Capital Allocation Priorities
SXC Capital Allocation Priorities Initiate a regular common dividend Dividend targeted for long-term sustainability Utilize cash to continue to delever to 3.0x gross Debt / EBITDA Enables further (and faster) de-levering While reducing leverage, pursue organic growth projects and M&A opportunities S
Slide 26: SXC Strategic Focus Post Simplification
SXC Strategic Focus Post Simplification SXC strategic focus post Simplification will be: Growing market share in the North American coke market Disciplined expansion and optimization of logistics assets Developing additional business lines within the domestic steel/carbon markets Leveraging technolo
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