SunCoke Energy Partners L.P — FY2018 Earnings Presentation
37 slides from SunCoke Energy Partners L.P's earnings presentation, Feb 5, 2019
Slide 1: SXC and SXCP Simplification, Q4 & FY 2018 and 2019 Guidance Conference Call
SXC and SXCP Simplification, Q4 & FY 2018 and 2019 Guidance Conference Call February 5, 2019 Exhibit 99.2
Slide 2: Important Notice to Investors
Important Notice to Investors This communication includes important information about an agreement for the acquisition by SXC of all publicly held common units of SXCP. SXC expects to file a registration statement on Form S-4 with the Securities and Exchange Commission (“SEC”) containing a prospectu
Slide 3: Introductory Information for Investors
Introductory Information for Investors This slide presentation should be reviewed in conjunction with the Fourth Quarter 2018 and Full-Year 2018 earnings release of SunCoke Energy Partners, L.P. (SXCP) and conference call held on February 5, 2019 at 12:00 p.m. ET. Except for statements of historical
Slide 4: Transaction Positions SunCoke for Long-Term Success
Transaction Positions SunCoke for Long-Term Success Creates Immediate and Long-Term Value for SXCP and SXC Stakeholders Simplifies SunCoke’s organizational structure Improves financial flexibility and strengthens balance sheet Expands universe of strategic growth opportunities Lowers cost of capital
Slide 5: Transaction Overview
Transaction Overview SXCP unaffiliated common unitholders to receive 1.40 SXC shares for each SXCP common unit Implies a price of $15.30 per unit based on SXC’s closing price on February 4, 2019 Consideration represents a 12.7% premium based on SXC’s and SXCP’s 30-day VWAPs as of February 4, 2019 an
Slide 6: Financial Results
FINANCIAL RESULTS Ke SXCPartners
Slide 7: 2018 Highlights
Delivered FY ‘18 Adj. EBITDA attrib. to SXCP of $209.4M and generated significant cash flow; ended quarter with ample liquidity of >$190M CMT handled more than 12.2M throughput tons; record throughput volumes Successfully executed on CMT new business opportunities; increase in PetCoke and Aggregate
Slide 8: Q4 and FY 2018 Overview
Q4 and FY 2018 Overview ($ in millions) For a definition and reconciliation of Adjusted EBITDA and Adjusted EBITDA attributable to SXCP, please see appendix. ($ in millions) Attrib. to NCI Attrib. to SXCP Attrib. to NCI Attrib. to SXCP Q4 ‘18 NI attrib. to SXCP of $11.2M, down from Q4 ‘17 Absence of
Slide 9: Q4 and FY 2018 Overview
Q4 and FY 2018 Overview For a definition and reconciliation of Adjusted EBITDA, Distributable Cash Flow and Distribution Cash Coverage Ratio, please see appendix. FY 2017 Distributable Cash Flow and Distribution Cash Coverage Ratio includes repayment of $8.4M sponsor support. Q4 ’17 and FY ’17 distr
Slide 10: Adjusted EBITDA – Q4 '17 to Q4 '18
Adjusted EBITDA – Q4 ‘17 to Q4 ‘18 See appendix for a definition and reconciliation of Adjusted EBITDA. (1) (1) ($ in millions) (2) Lower Q4 ’18 Adjusted EBITDA driven primarily by timing differences in Logistics revenue recognition vs. Q4 2017 ($16.4M) – Timing of revenue recognition related to bas
Slide 11: Adjusted EBITDA – FY '17 to FY '18
Adjusted EBITDA – FY ‘17 to FY ‘18 See appendix for a definition and reconciliation of Adjusted EBITDA. (1) (1) ($ in millions) FY 2018 Adj. EBITDA results down due to higher outage costs and machinery fire at Granite City partially offset by strong CMT throughput volumes Higher CMT throughput volum
Slide 12: FY 2018 Capital Deployment
FY 2018 Capital Deployment Strong cash flow generation from operations deployed for CapEx, debt reduction, and unitholder distributions $25M – reduction of revolving credit facility $32.1M – Ongoing & other capex $26.6M – GCO gas sharing project(2) Gross leverage for Q4 ’18 calculated using actual 2
Slide 13: 2019 Guidance
2019 GUIDANCE Ke SXCPartners
Slide 14: Market: 2018 Recap and 2019 Outlook
Market: 2018 Recap and 2019 Outlook Expect stable steel and coal markets in 2019 Source: AISI, CRU, Platts, S&P Capital IQ, US Census Bureau Steel Coal Strong domestic steel market in 2018, despite global over capacity HRC benchmark averaged ~$830/st in 2018 – currently ~$700 Est. demand of ~125Mt o
Slide 15: Expected 2019 Adj. EBITDA Attrib. SXCP
Expected 2019 Adj. EBITDA Attrib. SXCP Adj. EBITDA attrib. SXCP $0 – $2 $5 – $11 $1 – $3 $215M – $225M ($ in millions) See appendix for a definition and reconciliation of Adjusted EBITDA. Does not reflect the transaction costs from the Simplification Transaction. (1) (1)(2) Improved performance at G
Slide 16: 2019 Domestic Coke Business Outlook
2019 Domestic Coke Business Outlook Domestic Coke Adj. EBITDA expected to be $163M – $169M Domestic Coke Performance (100% basis)(2) Kt Kt $M $M $163M – $169M ~Kt Anticipate a $5M to $11M increase in Domestic Coke Adj. EBITDA in 2019 due to Improved performance at Granite City resulting in higher pr
Slide 17: 2019 Logistics Business Outlook
2019 Logistics Business Outlook Expect tons handled in 2019 to be in line with 2018; Logistics Adjusted EBITDA guidance of $72M – $74M M $72M – $74M ~ ~ M ~ (Tons Handled, Kt) Expect strong Logistics performance in 2019 Anticipate CMT will handle ~10.5Mt for our coal export customers and ~1.0Mt busi
Slide 18: 2019 CapEx Overview
2019 CapEx Overview 2019 projects include completion of Granite City gas sharing project Expect the gas sharing project to be completed in Q2 2019. Excludes ~$4M of cash payments expected to be made in 2019 for work performed in 2018.
Slide 19: 2019 Guidance Summary
2019 Guidance Summary Cash tax impact from operations of Gateway Cogeneration Company LLC, which is an entity subject to income taxes for federal and state purposes at the corporate level. FY 2019 guidance assumes distributions held constant at $0.40 per quarter. Total distribution cash coverage rat
Slide 20: 2019 Key Initiatives
2019 Key Initiatives Drive strong operational & safety performance while optimizing asset utilization Successfully execute on capital plan Deliver Operations Excellence and Optimize Asset Base Reduce debt using excess cash flow Secure new business to further diversify customer and product mix Contin
Slide 21: Questions
QUESTIONS Ke SXCPartners
Slide 22: Investor Relations
Investor Relations 630-824-1907 www.suncoke.com
Slide 23: Appendix
APPENDIX Ke SXCPartners
Slide 24: Domestic Coke Business Summary
Domestic Coke Business Summary FY ’18 Domestic Coke results impacted by extended outage and machinery fire at Granite City; volumes in-line with FY ‘17 Domestic Cokemaking Performance /ton /ton /ton /ton /ton 580K 568K 589K Sales Tons (Production, Kt) 589K See appendix for a definition and reconcili
Slide 25: Logistics Business Summary
$29.5M Logistics Business Summary Record CMT results driven by strong logistics volumes; Total Logistics throughput volumes up ~5Mt (>4Mt at CMT) Logistics Performance Delivered Q4 ‘18 Adjusted EBITDA of $18.1M No deferred revenue recognized as coal export customers shipped over their 10Mt contractu
Slide 26: Definitions
Definitions Adjusted EBITDA represents earnings before interest, taxes, depreciation and amortization (“EBITDA”), adjusted for any loss (gain) on extinguishment of debt and/or changes to our contingent consideration liability related to our acquisition of the CMT. Adjusted EBITDA does not represent
Slide 27: Definitions
Definitions Distributable Cash Flow equals Adjusted EBITDA plus sponsor support and Logistics deferred revenue; less net cash paid for interest expense, ongoing capital expenditures, accruals for replacement capital expenditures and cash distributions to noncontrolling interests; plus amounts receiv
Slide 28: 2018 Adjusted EBITDA Reconciliation
2018 Adjusted EBITDA Reconciliation The Partnership recorded a loss on extinguishment of debt as a result of its debt refinancing activities which occurred during the second quarter of 2017. Represents costs incurred in connection with the Simplification. Reflects net income attributable to noncontr
Slide 29: 2018 Adjusted EBITDA Reconciliation
2018 Adjusted EBITDA Reconciliation Changes in working capital exclude those items not impacting Adjusted EBITDA, such as changes in interest payable and income taxes payable. Represents costs incurred in connection with the Simplification. Reflects net income attributable to noncontrolling interest
Slide 30: 2018 Distributable Cash Flow Reconciliation
2018 Distributable Cash Flow Reconciliation The Partnership recorded a loss on extinguishment of debt as a result of its debt refinancing activities which occurred during the second quarter of 2017. Represents costs incurred in connection with the Simplification. Logistics volume shortfall billings
Slide 31: 2018 Distributable Cash Flow Reconciliation
2018 Distributable Cash Flow Reconciliation Changes in working capital exclude those items not impacting Adjusted EBITDA, such as changes in interest payable and income taxes payable. Represents costs incurred in connection with the Simplification. Logistics volume shortfall billings adjusts to incl
Slide 32: Balance Sheet & Debt Metrics
Balance Sheet & Debt Metrics S:CP. Attributable (S$ in millions) to SXCP Available Revolver Capacity Total Liquidity $ 191 Gross Debt (Long and Short-term) $ 815 Net Debt (Total Debt less Cash) $s 802 FY 2018 Adj. EBITDA s 209 Gross Debt / FY 2018 Adj. EBITDA 3.89x] Net Debt / FY 2018 Adj. EBITDA 3.
Slide 33: 2019E Guidance Reconciliation
2019E Guidance Reconciliation Reflects net income attributable to noncontrolling interest adjusted for noncontrolling interest’s share of interest, taxes, income and depreciation and amortization.
Slide 34: 2019E Guidance Reconciliation
2019E Guidance Reconciliation Changes in working capital exclude those items not impacting Adjusted EBITDA, such as changes in interest payable and income taxes payable. Reflects net income attributable to noncontrolling interest adjusted for noncontrolling interest’s share of interest, taxes, incom
Slide 35: 2019E Guidance Reconciliation
2019E Guidance Reconciliation Cash tax impact from operations of Gateway Cogeneration Company LLC, which is an entity subject to income taxes for federal and state purposes at the corporate level. Reflects net income attributable to noncontrolling interest adjusted for noncontrolling interest’s shar
Slide 36: 2019E Guidance Reconciliation
2019E Guidance Reconciliation Changes in working capital exclude those items not impacting Adjusted EBITDA, such as changes in interest payable and income taxes payable. Cash tax impact from operations of Gateway Cogeneration Company LLC, which is an entity subject to income taxes for federal and st
Slide 37: Thermal Coal Export Profitability
Thermal Coal Export Profitability (in $ per metric tonne) (1) (2) Believe ILB export thermal solidly profitable at Q4 ‘18 API2 benchmark pricing of ~$92/t Based on average ILB cash cost, netback calculation implies attractive margins CMT well-positioned to serve ILB thermal coal producers (in $ per
SunCoke Energy Partners — FY2018 Earnings Presentation on 6ix