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8-K - FORM 8-K - SunCoke Energy Partners, L.P. | d477188d8k.htm |
EX-99.1 - PRESS RELEASE - SunCoke Energy Partners, L.P. | d477188dex991.htm |
Q4 2012
Earnings Conference Call
February 5, 2013
Exhibit 99.2 |
Forward-Looking Statements
SXC and SXCP Q4 2012 Earnings Conference Call
1
FORWARD-LOOKING STATEMENTS This slide
presentation should be reviewed in conjunction with the Fourth Quarter 2012 earnings releases of SunCoke Energy, Inc. (SunCoke) and
SunCoke Energy Partners, L.P. (Partnership) and the conference call held on February 5 at
10:00 a.m. ET. 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 express
opinions, expectations, beliefs, plans, objectives, assumptions or projections with respect to
anticipated future performance of SunCoke or the Partnership, in contrast with
statements of historical facts, are forward-looking statements. Such forward-looking statements are based on
managements beliefs and assumptions and on information currently available.
Forward-looking statements include information concerning possible or assumed
future results of operations, business strategies, financing plans, competitive position, potential growth opportunities,
potential operating performance improvements, the effects of competition and the effects of
future legislation or regulations. Forward-looking statements include all
statements that are not historical facts and may be identified by the use of forward-looking terminology such as the
words believe, expect, plan, intend,
anticipate, estimate, predict, potential, continue, may, will, should or the negative
of these terms or similar expressions. Although management believes that its plans, intentions and expectations reflected in or
suggested by the forward-looking statements made in this presentation are
reasonable, no assurance can be given that these plans, intentions or expectations will be achieved when anticipated or at
all. Moreover, such statements are subject to a number of assumptions, risks and
uncertainties. Many of these risks are beyond the control of SunCoke and the
Partnership, and may cause actual results to differ materially from those implied or expressed by the forward-looking
statements. Each of SunCoke and the Partnership has included in its filings with the
Securities and Exchange Commission (including, in the case of the Partnership, its Form
S-1) cautionary language identifying important factors (but not necessarily all the important factors) that could cause
actual results to differ materially from those expressed in any forward-looking statement.
For more information concerning these factors, see the Securities and Exchange
Commission filings of SunCoke and the Partnership. All forward-looking statements included in this presentation
are expressly qualified in their entirety by such cautionary statements. Although
forward-looking statements are based on current beliefs and expectations, caution
should be taken not to place undue reliance on any such forward-looking statements because such statements speak only
as of the date hereof. SunCoke and the Partnership do not have any intention or
obligation to update publicly any forward-looking statement (or its associated
cautionary language) whether as a result of new information or future events or after the date of this presentation, except as
required by applicable law. This presentation includes certain non-GAAP financial measures intended to supplement, not
substitute for, comparable GAAP measures. Reconciliations of non-GAAP financial
measures to GAAP financial measures are provided in the Appendix at the end of the presentation.
Investors are urged to consider carefully the comparable GAAP measures and the reconciliations
to those measures provided in the Appendix. |
SUNCOKE ENERGY,
INC. RESULTS 2
SXC and SXCP Q4 2012 Earnings Conference Call |
3
Q4 & FY 2012 Earnings Overview
Near-flawless Middletown startup and better
results at Indiana Harbor drove performance
for both periods
Sustained solid performance across
cokemaking fleet
Achieved domestic coke Adjusted EBITDA
(1)
per ton of $58 for Q4 12 and $57 for FY 12
Delivered slightly improved Q4 12 coal
results; FY 12 reflects continued challenges
Generated $120 million of free cash flow
(2)
YE 2012 cash balance of nearly $240 million
and virtually undrawn revolver
Adjusted EBITDA
(1)
, EPS, free cash flow
(2)
, and
coke and coal production met or exceeded
2012 guidance
(1)
For a definition and reconciliation of Adjusted EBITDA, please see appendix.
(2)
For a definition and reconciliation of free cash flow, please see appendix
SXC and SXCP Q4 2012 Earnings Conference Call
$0.12
$0.87
$0.39
$1.40
Q4 2011 Q4 2012
FY 2011 FY 2012
Earnings Per Share
(diluted)
$30.9
$138.8
$69.7
$265.7
Q4 2011 Q4 2012
FY 2011 FY 2012
Adjusted EBITDA
(1)
(in millions)
Q4 and FY 2012 EPS up significantly
Strengthened liquidity position
Delivered on our 2012 guidance |
2012
Accomplishments 4
SXC and SXCP Q4 2012 Earnings Conference Call
Proved our
Proved our
cokemaking
cokemaking
expertise
expertise
Took action to
Took action to
optimize coal
optimize coal
business
business
Built financial
Built financial
strength and
strength and
flexibility
flexibility
Positioned
Positioned
for
for
future growth
future growth
Executed successful Middletown startup
Improved Indiana Harbor results
Achieved solid operations across entire coke fleet
Delivered positive coal Adjusted EBITDA and cash flow neutral
results
Implemented action plan to reduce costs and improve productivity
Achieved 2012 financial targets
Increased liquidity and generated free cash flow
Initiated India entry strategy via VISA SunCoke JV; expect closing in
Q1 2013
Submitted permit application for potential new U.S. coke plant
Executed SunCoke Energy Partners IPO in January 2013 |
Q4 & FY
2012 Financial Results 5
(1) Coke Adjusted EBITDA includes Jewell Coke, Other Domestic Coke and International
segments. (2) Coal Adjusted EBITDA includes Coal Mining segment. In Q1 12,
internal coal transfer price mechanism changed to reflect Jewell Coke contract price;
prior year periods adjusted to reflect this change. (3) For a definition and
reconciliation of Adjusted EBITDA and Adjusted EBITDA per ton, please see
appendix.
SXC and SXCP Q4 2012 Earnings Conference Call
Revenue up 16% and 25% for
Q412 and FY12, respectively
Middletown added $43.1
million and $260.3 million
to Qtr and FY, respectively
Adjusted EBITDA
(1)
up 126%
and 91% for Q412 and FY12,
respectively
Middletown contributed
$17.9 million and $60.2
million to the increase,
respectively
Favorable prior year
comparison at Indiana
Harbor helped results in
both periods
Delivered EPS of $0.39 for
Q412 and $1.40 for FY12
($ in millions)
Q4'12
Q4'11
FY 2012
FY 2011
Q4 2012
vs.
Q4 2011
FY 2012
vs.
FY 2011
Domestic Coke Sales Volumes
1,077
1,003
4,345
3,770
75
575
Coal Sales Volumes
371
363
1,500
1,454
8
46
Revenue
$491.4
$424.1
$1,914.1
$1,538.9
$67.3
$375.2
Operating Income
$44.3
$11.7
$173.7
$67.5
$32.6
$106.2
Net Income Attributable to
Shareholders
$27.6
$8.0
$98.8
$60.6
$19.6
$38.2
Earnings Per Share
$0.39
$0.12
$1.40
$0.87
$0.27
$0.53
Coke Adjusted EBITDA
(1)
$72.7
$41.6
$261.3
$147.6
$31.0
$113.8
Coal Adjusted EBITDA
(2)
$6.0
$2.5
$33.4
$35.5
$3.5
($2.1)
Corporate/Other
($8.9)
($13.2)
($29.0)
($44.2)
$4.2
$15.2
Adjusted EBITDA
(3)
$69.7
$30.9
$265.7
$138.8
$38.8
$126.9 |
Adjusted
EBITDA (1)
Bridge
Q4 11 to Q4 12
6
Fourth quarters performance benefited from
Middletown and better Indiana Harbor results
($ in millions)
SXC and SXCP Q4 2012 Earnings Conference Call
Favorable net
impact from
finalization of 2011
billing review and
prior year
adjustments
Neutral operating
performance
Higher costs
related to
planned HRSG
outages at
Granite City and
Haverhill
Lower Black
Lung charge
($2.6 million)
Lower Black
Lung charge
and
Middletown
startup costs
Lower
relocation and
consulting plus
higher segment
allocations
Q4 2011
Adjusted
EBITDA (1)
Middletown
Indiana Harbor (2)
Coke Business
(excludes Middletown
and Indiana Harbor)
Coal Mining
Corporate
Q4 2012
Adjusted
EBITDA (1)
(1)
For a definition and reconciliation of Adjusted EBITDA, please see the appendix. (2)
Includes a contract billing adjustment of $7.0 million and an inventory adjustment of
$7.3 million in Q4 2011 and a $4.2 million favorable adjustment due to finalization of 2011
billing review in Q4 2012. |
SXC
and SXCP Q4 2012 Earnings Conference Call 7
Adjusted EBITDA
(1)
Bridge
FY 11 to FY 12
Middletown, Indiana Harbor, solid cokemaking operations and
lower corporate costs drove the years performance
($ in millions)
Primarily
driven by
strong results
at Granite
City
Lower
relocation, no
Middletown
G&A costs
and lower
allocations
$138.8
$265.7
$60.2
$7.4
$32.7
$13.5
$15.2
($2.1)
FY 2011
Adjusted
EBITDA (1)
Middletown
Indiana Harbor
(excl. non-
recurring items)(2)
Indiana Harbor
(non-recurring
items) (2)
Coke
Business
(excl. Middletown
& Indiana Harbor)
Coal
Business
Corporate
Costs
FY 2012
Adjusted
EBITDA (1)
Improvement of $40.1 million
Favorable comparisons due to
2011 operating challenges and
billing and inventory
adjustments
Improved yields and operating
expense recovery in 2012
Higher cash
production
costs on coal
production
mix
(1)
For a definition and reconciliation of Adjusted EBITDA, please see the appendix.
(2)
Non-recurring items at Indiana Harbor include: $18.5 million of coke cover costs in
Q1 2011; a contract billing adjustment of $7.0 million and an inventory adjustment of $7.3 million in Q4
2011; $2.8 million coke inventory reduction and $1.5 million
lower cost or market pad coal adjustment in Q1 2012; and a $4.2 million favorable adjustment due to finalization of 2011 billing
review in Q4 2012. |
Diluted EPS
Bridge 8
EPS benefited from strong coke business results and
lower corporate costs offset by standalone capital structure
Q4 2011 to Q4 2012
FY 2011 to FY 2012
(1)
For a definition and reconciliation of Adjusted EBITDA, please see the appendix.
SXC and SXCP Q4 2012 Earnings Conference Call
Q4 2011 EPS
(Diluted)
Adjusted
EBITDA(1)and
noncontroling
interest income
Depreciation,
Depletion
& Amortization
Financing Costs
Taxes
Q4 2012 EPS
(Diluted)
2011 EPS
(Diluted)
Adjusted
EBITDA(1) and
noncontrolling
interest income
Depreciation,
Depletion
& Amortization
Financing Costs
Taxes
2012 EPS
(Diluted) |
Domestic Coke
Business Summary (Jewell Coke & Other Domestic Coke)
9
Domestic
Coke
Production
Domestic Coke Adjusted EBITDA
(1)
Per Ton
(Tons in thousands)
($ in millions, except per ton amounts)
Achieved Adjusted EBITDA per ton of $58 in Q4 12 and $57 for FY 12,
solidly within our targeted $55 to $60 per ton range
SXC and SXCP Q4 2012 Earnings Conference Call
(1)
For a definition of Adjusted EBITDA and Adjusted EBITDA/Ton and reconciliations, see
appendix. (2) Includes Indiana Harbor billing adjustment of $7.0 million and
inventory adjustment of $7.3 million. (3) Includes a $2.8 million charge related to coke inventory
reduction and a $1.5 million lower cost or market adjustment on pad coal inventory at
Indiana Harbor and $4.0 million of non-recurring startup costs at Middletown. (4)
Includes $4.2 million favorable adjustment at Indiana
Harbor due to finalization of 2011 billing review. Q4
'11 Q1 '12
Q2 '12
Q3 '12
Q4 '12
Jewell
Indiana Harbor
Haverhill
Granite City
Middletown
Q4 '11
Q1 '12
Q2 '12
Q3 '12
Q4 '12
Jewell
Coke
Segment
Other
Domestic
Coke
Segment
Adjusted EBITDA/ton |
Coal Mining
Financial Summary Q4 2012 Adjusted EBITDA up
$3.5 million vs. Q4 2011
Benefited from higher average prices
Lower Black Lung liability Q4 2012 vs. Q4 2011
Cash production cost per ton
Decrease in mix of lower cost hi-vol coal
production resulted in increased cash
production costs vs.. 4Q 2011
Jewell underground costs flat to Q3 2012 and
down from Q4 2011 on higher volumes
$149
(4)
in
Q4
2012;
$149
in
Q3
2012;
$151
(3)
in
Q4
2011
Coal action plan targeting decrease at both
Jewell underground (~$5/ton) and overall
operations (~$15/ton) in 2013 vs. Q4 2012
Approximately cash flow neutral with FY
2012 Adjusted EBITDA of $33.4 million
and cap ex of $34.3 million
10
Coal Mining Adjusted EBITDA
(1)
and Avg. Sales
Price/Ton
(2)
($ in millions, except per ton amounts)
Coal Sales, Production and Purchases
SXC and SXCP Q4 2012 Earnings Conference Call
$159
$171
$167
$165
$166
$20
$20
$25
$27
$16
$138
$151
$137
$143
$144
-$50
$0
$50
$100
$150
$200
Q4 '11
Q1 '12
Q2 '12
Q3 '12
Q4 '12
Coal Adjusted EBITDA
Average Sales Price
Coal Adj EBITDA / ton
Coal Cash Cost / ton
(3)
(4)
(1)
For a definition and a reconciliation of Adjusted EBITDA, please see the appendix.
(2)
Average Sales Price is weighted avg. price for all sales, including to affiliates and to
Jewell Coke.
(3)
Excludes Black Lung liability charge of $3.4 million and OPEB expense allocation of $1.8
million.
(4)
Excludes Black Lung liability charge of $0.8 million and accrued potential fines and penalties
of $1.5 million.
Q4 '11
Q1 '12
Q2 '12
Q3 '12
Q4 '12
Coal Sales
363
373
365
392
371
Coal Producton
349
375
401
349
351
Purchased Coal
20
19
4
10
9
Reject Rate (%)
65
68
66
67
66 |
Liquidity
Position 11
Ended 2012 with strong cash balance and virtually undrawn revolver,
providing foundation for future growth
($ in millions)
Accts Receivable: $21.1m*
Inventories: $29.1m
Accts Payable: $11.9m
Accrued liabilities: $3.5m
* Reflects timing of payment of a $23.7 million receivable due Sunday, September
30, 2012 but paid on Monday, October 1, 2012 SXC and SXCP Q4 2012
Earnings Conference Call $157.8
$29.0
$23.3
$1.3
$71.2
$239.2
($40.0)
($3.4)
Q3 2012
Cash
Balance
Q4 2012
Net Income
Depreciation,
Depletion &
Amortization
Deferred
Taxes &
Taxes Payable
Changes in
Working
Capital
(excl. Taxes Payable)
Capital
Expenditures
Cash Used
In Financing
Activities
Q4 2012
Cash
Balance
Primary Changes vs.. Q3 2012 |
SUNCOKE ENERGY
PARTNERS, LP RESULTS 12
SXC and SXCP Q4 2012 Earnings Conference Call |
Post-IPO
Organizational Structure SXC and SXCP Q4 2012 Earnings Conference Call
13
SunCoke Energy, Inc.
(NYSE: SXC)
Public Unitholders
Common Units
Haverhill
Middletown
35.0%
42.1%
partnership
interest
(1)
65.0%
65.0%
35.0%
What Remains at the Parent?
What is in SXCP?
SunCoke
Energy
Partners,
L.P.
(NYSE: SXCP)
2.0% general partner interest /
incentive distribution rights
+
55.9% partnership interest
(1)
(1)
Excludes underwriters over-allotment as option will not be exercised. (2) Based on SXC and SXCPs ownership interest in Haverhill and
Middletown, respectively.
(3)
2013E Adjusted EBITDA equals SXCPs 65% interest in Haverhill and Middletowns
Adjusted EBITDA (i.e., 65% of 2013E net income attributable to the controlling and
noncontrolling interests plus depreciation expense, interest expense, incremental public partnership expenses, and incremental corporate expenses allocated
to the MLP) less incremental corporate expenses allocated to the MLP. 3 U.S.
coking facilities with ~2.6 million tons of annual capacity
35% interest in Haverhill and Middletown
with ~0.6 million tons
(2)
of annual
capacity
Operation of 1 Brazil coking facility with
~1.7 million tons of annual capacity and
international holdings
~114 million tons of high-quality
metallurgical coal reserves
General partner with 2% GP interest and
owner of a 56% interest in the SXCP
65% interest in Haverhill and
Middletown with ~1.1 million tons
(2)
of annual capacity
$88.3 million in 2013E EBITDA
(3)
$61.4 million in 2013E Distributable
Cash Flow |
Strategic
Roles of SXC and SXCP 14
Grow U.S. & Canada
cokemaking business
Steel facing MLP with
advantaged cost of capital
SXC and SXCP Q4 2012 Earnings Conference Call
Develop
new
coke
projects
Grow
international
business
Optimize coal
GP & limited partner
investor in SXCP |
SXCP
Strengths SXC and SXCP Q4 2012 Earnings Conference Call
15
Modern, High
Quality Asset
Base
Stable Cash Flow
from Long-Term
Take-or-Pay
Contracts and
Cost Pass-Thru
Provisions
Strong Sponsor
and Experienced
Management
Team
Contractual
Support from
Sponsor
(Omnibus
Agreement)
Growth
Opportunities
Financial
Flexibility to
Facilitate Growth
SXCP
SXCP
Strengths
Strengths |
ProForma
Liquidity & Debt Metrics SXC and SXCP Q4 2012 Earnings Conference Call
16
(in millions)
SunCoke
SXCP
Consolidated
Cash Position at 12/31/12
239
$
-
$
239
$
Cash Retained From SXCP Offerings
(1)
73
79
152
Total ProForma Cash Position
312
$
79
$
391
$
Revolver Capacity
150
100
250
Total Liquidity
462
$
179
$
641
$
Total Debt
(2)
495
$
150
$
645
$
Total Debt
(2)
/2013E Adjusted EBITDA
(3)
2.8x
1.7x
nm
Net Debt
(2)
183
$
150
$
333
$
Net Debt
(2)
/2013E Adjusted EBITDA
(3)
1.0x
1.7x
nm
(1)
SunCoke cash retained includes $33M of capital expenditures reimbursement from SXCP and $40M
of accounts receivable retained from Haverhill and Middletown entities prior to
contribution to SXCP; SXCP cash retained includes $67M and $12M for pre-funding of environmental
remediation and sales discounts obligations and assumes $40M of cash retained is used to fund
replenishment of working capital.
(2)
SunCoke total debt equal to $720 million balance outstanding at 12/31/12 less $225 million
term loan repayment completed in conjunction with SXCP IPO. SXCP total debt
equal to $150 million from senior notes offering completed in conjunction with IPO. Net Debt is equal to Total Debt
less Total ProForma cash (excluding cash retained for prefunding of obligations at
SXCP).
(3)
SunCoke 2013E Adjusted EBITDA based on mid-point of 2013E guidance range of $165 to $190
million ($177.5 million for Adjusted EBITDA attributable to SXC). SXCP 2013E
Adjusted EBITDA based on $88.3 million forecast.
nm Not meaningful
For a definition and a reconciliation of Adjusted EBITDA, please see the appendix. |
SXCP Q4
2012 Financial Results 17
Q4 2012 Adjusted EBITDA and Distribution Coverage
in-line with 2013E forecast
SXC and SXCP Q4 2012 Earnings Conference Call
Q412 annualized
performance $87.2m exceeds
2013E forecast of $85.8m
($88.3m less $2.5m in public
partnership expenses) in SXCP
prospectus
Q412 ongoing cap ex higher
than expected run rate due to
timing ($5.4m vs. $3.5m run
rate)
Normalizing for 2013E, run
rate ongoing cap ex:
Proforma DCF = $16.1m
Proforma Distribution
Coverage: 1.22x
($ in millions except where noted)
Q4 2012
Coke Production (in '000s of tons)
443
Coke Sales Volumes (in '000s of tons)
440
Financial Results:
Revenues
186.2
$
Operating Income
24.8
Net Income
15.3
Profitability Measures:
ProForma* Adjusted EBITDA attributable to SXCP
(1)
21.8
$
ProForma* Adjusted EBITDA per ton attributable to SXCP
(1)
76.31
$
Distributable Cash Flow
ProForma* Distributable Cash Flow
(1)
14.9
$
Minimum Quarterly Cash Distribution
13.2
$
ProForma* Distribution Coverage Ratio
1.13x
(1)
For a definition of SXCPs Adjusted EBITDA and SXCPs Adjusted EBITDA/Ton and
Distributable Cash Flow and related
reconciliations, see
appendix.
* ProForma for SXCP IPO including changes to capital structure , corporate
overhead allocations and public partnership expenses. |
Pro Forma
Common Unit Coverage 18
SXC and SXCP Q4 2012 Earnings Conference Call
12 Months Ending
($ and units in millions, except per unit data)
December 31, 2013
Adjusted EBITDA attributable to SXCP
(1)
$88.3
Less:
Cash interest ($150 million senior notes @ 7.375% plus $0.5 million revolver commitment
fee) 11.6
Accrual for replacement capital expenditures
3.7
Ongoing capital expenditures (65% share of Haverhill and Middletown attributable to
SXCP) 9.1
Public partnership expense
2.5
Estimated Distributable Cash Flow
$61.4
Excess distributable cash flow available for distribution
8.5
Total estimated annual distributions
$52.9
Minimum annual distribution per unit
$1.65
Units
Percentage
Total
Annual distributions to
Public common units
13.5
42.1%
$22.3
Parent's common units
2.2
6.9%
3.6
Subordinated units
15.7
49.0%
25.9
General partner units
0.6
2.0%
1.1
Total
32.1
100.0%
$52.9
Total unit coverage ratio
(2)
1.16x
Common unit coverage ratio
(3)
2.32x
(1)
Adjusted EBITDA equals SXCPs 65% interest in Haverhill and Middletowns Adjusted
EBITDA (i.e., 65% net income attributable to the controlling and noncontrolling interests plus
depreciation expense, interest expense, incremental public partnership expenses, and
incremental corporate expenses allocated to the MLP) less the $2.4 million of incremental
corporate expenses allocated to the MLP. (2) Total unit coverage ratio calculated as cash available for
distribution of $61.4 million divided by total distributions at the minimum distribution rate of $52.9 million.
(3)
Common unit coverage ratio calculated as cash available for distribution of $61.4 million
divided by the sum of the total distributions at the minimum distribution rate to public
common units of $22.3 million, Parents common units of $3.6 million, and 50% of general
partner units, or $0.5 million. |
2013
GUIDANCE 19
SXC and SXCP Q4 2012 Earnings Conference Call |
$266
$205-$230
$0-$10
$0 -
$10
($35-$50)
($5-$10)
FY 2012
Adjusted
EBITDA (1)
Domestic
Coke Business
(Jewell & Other
Domestic Coke)
International Coke
Coal Mining
Corporate
Costs
2013E Adjusted
EBITDA (1)
SXC: 2013 Adjusted EBITDA
(1)
Outlook
20
Estimated 2013 results to be impacted by weak coal business, partly
offset by continued solid coke operations and VISA SunCoke JV
($ in millions)
(1)
For a definition and reconciliation of Adjusted EBITDA, please see the appendix.
SXC and SXCP Q4 2012 Earnings Conference Call |
21
EPS outlook reflects lower 2013E Adjusted EBITDA
(1),
accelerated
depreciation due to refurbishments and public ownership of SXCP
$1.40
$0.60-
$0.85
$0.30-
$0.55
$0.09-
$0.20
~$0.10
($0.45-
$0.80)
~($0.07)
~($0.14)
~($0.08)
~($0.30)
FY 2012 EPS
(Diluted)
2013E EBITDA
2013E
Depreciation,
Depletion &
Amortization
2013E Indiana
Harbor
Accelerated
Depreciation
2013E
Income Taxes
2013E EPS
(Consolidated)
2013E
Incremental
Interest
Expense
2013E EPS
Impact of
SXCP Public
Unitholders
(before tax)
2013E Income
Tax Impact of
SXCP
Public
Unitholders
2013E EPS
Attributable
to SXC
(Diluted)
(1)
For a definition and reconciliation of Adjusted EBITDA, please see the appendix.
SXC and SXCP Q4 2012 Earnings Conference Call
SXC: 2013 Diluted Earnings Per Share Outlook |
SXC: 2013
Guidance Summary Metric
Original 2013
Guidance
Revised Guidance:
2013 Post SXCP IPO
Adjusted EBITDA
(1)
Consolidated
Attributable to SXC Shareholders
$205
$230 million
N/A
$205
$230 million
$165
$190 million
EPS Attributable to SXC Shareholders
(diluted)
$0.60 -
$0.85
$0.30
$0.55
Cash Flow from Operations
~$140 million
~$140 million
(3)
Capital Expenditures and
Investments
(2)
~ $200 million
~ $200 million
Effective Tax Rate
17% -
22%
7%
14%
Cash Tax Rate
17% -
22%
12%
20%
Domestic Coke Production
4.3+ million tons
4.3+ million tons
Coal Production
~ 1.4 million tons
~ 1.4 million tons
22
(1)
For a reconciliation of 2013E Adjusted EBITDA, please see reconciliation on slide 31.
(2)
See appendix for details
(3)
Includes ~$39 million of sales discounts payable to customers of which ~$12million is
pre-funded at SXCP with IPO proceeds SXC and SXCP Q4 2012 Earnings
Conference Call |
2013
Priorities 23
SXC and SXCP Q4 2012 Earnings Conference Call
Operational Excellence
Operational Excellence
Grow The Coke
Grow The Coke
Business
Business
Strategically Optimize
Strategically Optimize
Assets
Assets
Sustain momentum at coke
facilities
Execute Indiana Harbor Plan
Execute refurbishment
Resolve NOV
Renew coke contract
with return on
refurbishment capital
Implement environmental
project at Haverhill and
Granite City
Execute coal mining action
plan to decrease cash cost
Maintain top quartile safety
performance
Domestic
Obtain permit for next
potential U.S. facility
Identify and pursue
strategic acquisition
opportunities in the U.S.
and Canada
Evaluate adjacent business
lines to extend growth
opportunities
International
Close VISA SunCoke joint
venture transaction
Identify potential follow-on
opportunities in India
SXCP
Achieve smooth launch,
governance and
operation of SXCP
Coal
Reposition mining
operations for near-term
weakness and long-term
strategic flexibility
Efficient Capital Allocation
Put SXC & SXCP balance
sheets to work |
QUESTIONS
24
SXC and SXCP Q4 2012 Earnings Conference Call |
www.suncoke.com
Investor Relations:
630-824-1907 |
APPENDIX
26
SXC and SXCP Q4 2012 Earnings Conference Call |
Adjusted
EBITDA
represents
earnings
before
interest,
taxes,
depreciation,
depletion
and
amortization
(EBITDA)
adjusted
for
sales
discounts
and
the
interest,
taxes,
depreciation,
depletion
and
amortization
attributable
to
equity
earnings
in
our
unconsolidated
affiliates.
EBITDA
reflects
sales
discounts
included
as
a
reduction
in
sales
and
other
operating
revenue.
The
sales
discounts represent the sharing with customers of a portion of nonconventional fuel
tax credits, which reduce our income tax expense.
However, we believe our Adjusted EBITDA would be inappropriately penalized if
these discounts were treated as a reduction
of
EBITDA
since
they
represent
sharing
of
a
tax
benefit
that
is
not
included
in
EBITDA.
Accordingly,
in
computing
Adjusted
EBITDA,
we
have
added
back
these
sales
discounts.
Our
Adjusted
EBITDA
also
includes
EBITDA
attributable
to
our
unconsolidated affiliates. EBITDA and Adjusted EBITDA do not represent and
should not be considered alternatives to net income or operating income
under GAAP and may not be comparable to other similarly titled measures in other businesses. Adjusted
EBITDA does not represent and should not be considered as an alternative to net
income as determined by GAAP, and calculations thereof may not be comparable
to those reported by other companies. We believe Adjusted EBITDA is an important measure of
operating performance and provides useful information to investors because it
highlights trends in our business that may not otherwise be apparent when
relying solely on GAAP measures and because it eliminates items that have less bearing on our
operating
performance.
Adjusted
EBITDA
is
a
measure
of
operating
performance
that
is
not
defined
by
GAAP
and
should
not
be
considered a substitute for net (loss) income as determined in accordance with
GAAP.
Adjusted EBITDA attributable to SXC/SXCP
equals
Adjusted
EBITDA
less
Adjusted
EBITDA
attributable
to
noncontrolling
interests.
Adjusted
EBITDA/Ton
represents
Adjusted
EBITDA
divided
by
tons
sold.
When
applicable
to
Adjusted
EBITDA
attributable
to
SXC or SXCP, tons sold are prorated according to the respective ownership interest
of SXC or SXCP as applicable.
Free Cash Flow
equals cash from operations less cash used in investing activities less cash
distributions to non-controlling interests.
Management
believes
Free
Cash
Flow
information
enhances
an
investors
understanding
of
a
business
ability
to
generate
cash.
Free
Cash
Flow
does
not
represent
and
should
not
be
considered
an
alternative
to
net
income
or
cash
flows
from
operating activities as determined under GAAP and may not be comparable to other
similarly titled measures of other businesses. Definitions
SXC and SXCP Q4 2012 Earnings Conference Call
27 |
Distributable
Cash
Flow
equals
Adjusted
EBITDA
less
net
cash
paid
for
interest
expense,
on-going
capital
expenditures,
accruals
for replacement capital expenditures, and cash distributions to noncontrolling
interests. Distributable Cash Flow is a non-GAAP supplemental
financial measure that management and external users of the Partnership's financial statements, such as industry
analysts, investors, lenders, and rating agencies, use to assess:
the Partnership's operating performance as compared to other publicly traded
partnerships, without regard to historical cost basis;
the ability of the Partnership's assets to generate sufficient cash flow to make
distributions to the Partnership's unitholders;
the Partnership's ability to incur and service debt and fund capital expenditures;
and
the viability of acquisitions and other capital expenditure projects and the
returns on investment of various investment opportunities.
The Partnership believes that Distributable Cash Flow provides useful information
to investors in assessing the Partnership's financial condition and results
of operations. Distributable Cash Flow should not be considered an alternative to net income, operating income,
cash flows from operating activities, or any other measure of financial performance
or liquidity presented in accordance with generally accepted accounting
principles (GAAP). Distributable Cash Flow has important limitations as an analytical tool because it excludes
some, but not all, items that affect net income and net cash provided by operating
activities and used in investing activities. Additionally, because
Distributable Cash Flow may be defined differently by other companies in the industry, the Partnership's
definition
of
Distributable
Cash
Flow
may
not
be
comparable
to
similarly
titled
measures
of
other
companies,
thereby
diminishing
their
utility.
Definitions
SXC and SXCP Q4 2012 Earnings Conference Call
28 |
Reconciliations
29
SXC and SXCP Q4 2012 Earnings Conference Call
$ in millions
FY 2012
Q4 2012
Q3 2012
Q2 2012
Q1 2012
FY 2011
Q4 2011
Q3 2011
Q2 2011
Q1 2011
Net Income
102.5
29.0
32.9
24.0
16.6
58.9
7.5
21.6
24.1
5.7
Subtract: Depreciation, depletion
and amortization
(80.8)
(23.3)
(18.9)
(20.2)
(18.4)
(58.4)
(16.0)
(14.7)
(14.7)
(13.0)
Subtract: Financing expense, net
(47.8)
(11.8)
(12.2)
(11.8)
(12.0)
(1.4)
(7.1)
(3.3)
4.5
4.5
Subtract: Income Tax
(23.4)
(3.5)
(7.6)
(7.0)
(5.3)
(7.2)
2.9
(5.1)
(1.9)
(3.1)
EBITDA
254.5
67.6
71.6
63.0
52.3
125.9
27.7
44.7
36.2
17.3
Add: Sales Discount
11.2
2.1
2.1
3.8
3.2
12.9
3.2
3.5
3.1
3.1
Add: Adjustment to
unconsolidated affiliate earnings
-
-
-
-
-
-
-
-
-
-
Adjusted EBITDA
265.7
69.7
73.7
66.8
55.5
138.8
30.9
48.2
39.3
20.4
Adjusted EBITDA attributable to
non controlling interests
(3.0)
(1.5)
(1.1)
(0.9)
0.5
4.0
0.8
(2.7)
(0.9)
6.8
Adjusted EBITDA attributable to
SXC
262.7
68.2
72.6
65.9
56.0
142.8
31.7
45.5
38.4
27.2
Reconciliations from Net Income to Adjusted EBITDA |
$ in millions, except per
ton data Jewell
Coke
Other
Domestic
Coke
International
Coke
Jewell
Coal
Corporate
Combined
Domestic
Coke
FY 2012
Adjusted EBITDA
50.5
198.9
11.9
33.4
(29.0)
265.7
249.4
Sales Volume (thousands of tons)
710
3,635
1,209
1,500
4,345
Adjusted EBITDA per Ton
71.1
54.7
9.8
22.3
57.4
Q4 2012
Adjusted EBITDA
9.4
53.0
10.2
6.0
(8.9)
69.7
62.4
Sales Volume (thousands of tons)
170
907
239
370
1,077
Adjusted EBITDA per Ton
55.3
58.4
42.7
16.2
57.9
Q3 2012
Adjusted EBITDA
13.6
56.2
0.9
10.7
(7.7)
73.7
69.8
Sales Volume (thousands of tons)
183
933
310
392
1,116
Adjusted EBITDA per Ton
74.3
60.2
2.9
27.3
62.5
Q2 2012
Adjusted EBITDA
12.5
49.9
0.7
9.3
(5.6)
66.8
62.4
Sales Volume (thousands of tons)
170
904
302
365
1,074
Adjusted EBITDA per Ton
73.5
55.2
2.3
25.5
58.1
Q1 2012
Adjusted EBITDA
15.0
39.8
0.1
7.4
(6.8)
55.5
54.8
Sales Volume (thousands of tons)
186
892
358
373
1,078
Adjusted EBITDA per Ton
80.6
44.6
0.3
19.8
50.8
Reconciliation of Segment Adjusted EBITDA and Adjusted EBITDA per Ton
Reconciliations
30
SXC and SXCP Q4 2012 Earnings Conference Call |
Reconciliations
31
SXC and SXCP Q4 2012 Earnings Conference Call
$ in millions, except per ton data
Jewell
Coke
Other
Domestic
Coke
International
Coke
Jewell
Coal
Corporate
Combined
Domestic
Coke
FY 2011
Adjusted EBITDA
46.1
87.7
13.7
35.5
(44.2)
138.8
133.8
Sales Volume (thousands of tons)
702
3,068
1,442
1,454
3,770
Adjusted EBITDA per Ton
65.7
28.6
9.5
24.4
35.5
Q4 2011
Adjusted EBITDA
10.6
20.8
10.2
2.5
(13.2)
30.9
31.4
Sales Volume (thousands of tons)
166
837
295
363
1,003
Adjusted EBITDA per Ton
63.9
24.9
34.6
6.9
31.3
Q3 2011
Adjusted EBITDA
13.9
37.7
1.7
9.2
(14.3)
48.2
51.6
Sales Volume (thousands of tons)
191
777
373
371
968
Adjusted EBITDA per Ton
72.8
48.5
4.6
24.8
53.3
Q2 2011
Adjusted EBITDA
10.6
26.9
0.8
11.5
(10.5)
39.3
37.5
Sales Volume (thousands of tons)
170
757
412
334
927
Adjusted EBITDA per Ton
62.4
35.5
1.9
34.4
40.5
Q1 2011
Adjusted EBITDA
11.0
2.3
1.0
12.3
(6.2)
20.4
13.3
Sales Volume (thousands of tons)
175
697
362
386
872
Adjusted EBITDA per Ton
62.9
3.3
2.8
31.9
15.3
Reconciliation of Segment Adjusted EBITDA and Adjusted EBITDA per Ton
|
2012 Guidance
and Results Metric
Initial 2012
Guidance
(as of February 2, 2012)
2012 Actual
Adjusted EBITDA
(1)
$250
$280 million
$265.7 million
EPS (assuming a 22% tax rate)
$1.30
$1.65
$1.40
Capital Expenditures
& Investments
~ $150 million
$84.1 million
Free Cash Flow
(2)
$50+ million
$120 million
Cash Tax Rate
10%
15%
5.0%
Effective Tax Rate
20%
24%
18.6%
Corporate Costs
$30 -
$35 million
$29 million
Coke Production
4.0 -
4.2 million tons
4.34 million tons
Coal Production
~ 1.8 million tons
1.48 million tons
32
(1) For a definition and reconciliation of Adjusted EBITDA, please see the
appendix. (2) For a definition of Free Cash Flow and reconciliation, please
see the appendix. |
2012 Free Cash
Flow Reconciliation 33
(in millions)
FY 2012
Cash from operations
$206.1
Less cash used for investing activities
(84.1)
Less payments to non controlling interest
(2.3)
Free Cash Flow
$119.7
2012 Free Cash Flow Reconciliation
SXC and SXCP Q4 2012 Earnings Conference Call |
(in
millions) 2013E
Low
2013E
High
Net Income
$43
$60
Depreciation, Depletion and Amortization
97
95
Total financing costs, net
55
55
Income tax expense
3
10
EBITDA
$198
$220
Sales discounts
7
7
Adjustment to unconsolidated affiliate earnings
3
Adjusted EBITDA
$205
$230
EBITDA attributable to noncontrolling interests
(40)
(40)
Adjusted EBITDA attributable to SXC
$165
$190
2013E Net Income to Adjusted EBITDA Reconciliation
Expected 2013E EBITDA Reconciliation
34
SXC and SXCP Q4 2012 Earnings Conference Call
(1)
Represents SXC share of India JV interest, taxes and depreciation expense
(2)
Represents Adjusted EBITDA attributable to SXCP public unitholders and to DTEs interest
in Indiana Harbor (1)
(2) |
2013E Capital
Expenditures and Investments SXC and SXCP Q4 2012 Earnings Conference Call
35
($ in millions)
SXC
SXCP
Consolidated
On-Going
Approx.
$49
$9
$58
Environmental
Remediation
Approx.
-
$15
$15
Expansion
Approx.
60
-
60
Total CapEx
Approx.
$109
$24
$133
Investments
Approx.
$67
-
$67
Total CapEx &
Investments
Approx.
$176
$24
$200
For Year Ended December 31, 2013
Expansion includes approx.
$60m for Indiana Harbor
Refurbishment
SXCP expenditures prefunded
from IPO proceeds
To fund investment in
India JV (Visa SunCoke)
SXC includes approximately
$25m coke and $24m coal
SXCP includes 65% of $14m
expected at Haverhill and
Middletown |
SXCP
Adjusted EBITDA and Distributable Cash Flow
Reconciliations, ProForma for SXCP IPO
SXC and SXCP Q4 2012 Earnings Conference Call
36
($ in Millions)
2012
Net Income
15.3
$
Add: Income Taxes
7.0
Add: Interest
Expense (1) 2.5
Add:
Depreciation, depletion and amortization 8.8
Add: Sales
discounts -
Add: ProForma
adjustment for allocated corporate and public partnership expenses (2) 0.6
Adjusted
EBITDA 34.2
$
Subtract: ProForma cash interest (3)
(2.9)
Subtract: On-going
capital expenditures (5.4)
Subtract: ProForma accrual
for replacement capital expenditures (4) (0.9)
Subtract: ProForma cash
distribution to Sponsor (5) (10.1)
ProForma Distributable Cash Flow
14.9
$
Minimum Quarterly Cash Distribution
13.2
ProForma Distribution Coverage
Ratio 1.13x
Adjusted EBITDA
34.2
$
Subtract: ProForma Adjusted EBITDA
attributable to Sponsor (6) (12.4)
ProForma Adjusted EBITDA attributable to
SXCP 21.8
$
For the three
months ended
December 31,
(1)
Reflects Predecessor entity accounting and includes $225 million of Term B debt assumed from
parent at ~4.0 percent interest
(2)
Reflects $1.8 million reduction in SG&A due to discontinuation of Predecessor
carve-out accounting allocations, less $0.6 million quarterly proration of expected
allocated corporate expenses from parent (~$2.4 million annually), less $0.6 million quarterly
proration of expected public partnership expenses (~$2.5 million annually)
(3)
ProForma cash interest for $150 million senior notes at 7.375% and revolver commitment fee in
conjunction with SXCP IPO.
(4)
Reflects accrual to fund SXCP share of estimated cost to replace or rebuild its
facilities at the end of their working lives.
(5)
Represents distributions from Haverhill and Middletown to SXC for its 35% direct interest in
those entities. The distribution is determined prior to certain costs incurred by SXCP
and not by Haverhill and Middletown, including cash interest expense, accrual for replacement capital and SG&A incurred by or allocated directly to the
Partnership.
(6)
Represents Adjusted EBITDA attributable to SXCs 35% interest in Haverhill and Middletown
and is calculated before the quarterly portion of incremental allocated corporate
expenses ($2.4 million per year) and incremental public partnership expenses ($2.5 million per year) SXCP expects to incur in 2013. |