Exhibit 99.1
Exhibit 99.1
Jefferies
Steel Summit
April 10, 2013
Mike Thomson
President &
Chief Operating Officer
Forward Looking Statements TM
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 management’s 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.
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ABOUT SUNCOKE
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About SunCokeLargest independent producer of metallurgical coke in the Americas Coke is an essential ingredient in blast furnace production of steelCokemaking business generates 89% of Adjusted EBITDA(1) 5.9 million tons of capacity in six facilities2012 U.S. coke production = 4.3m tonsGeneral Partner and 58% owner of SunCoke Energy Partners LP (SXCP)Coal mining operations represents ~11% of Adjusted EBITDA(1) High quality mid vol. metallurgical coal reserves in Virginia and West Virginia~1.5 million tons mined in 2012 (1)For a definition and reconciliation of Adjusted EBITDA, please see appendix.Jefferies Steel Summit April 2013
The Leading Independent Cokemaker
More than doubled capacity since 2006 with four new plants
• Only company to design, build and operate new greenfield developments in U.S. in more than a decade
• Supply nearly 20% of U.S. and Canada coke needs(1)
Secure, long term take or pay contracts with leading steelmakers
• Customers include ArcelorMittal, U.S. Steel and AK Steel
Cokemaking operations are strategically located in proximity to customers’ facilities
(1) Source: Company estimates
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SunCoke Cokemaking Capacity
(In thousands of tons)
2,490 4,190 4,740 5,390 5,390
5,940
5,940
2006200720082009201020112012
Jewell Coke Indiana Harbor Haverhill I Vitória (Virginia) (Indiana) (Ohio) (Brazil) Haverhill II Granite City Middletown (Ohio) (Illinois) (Ohio)
2012 Earnings Overview
Results driven by strong Coke business performance
Middletown startup has been a success
Entire U.S. cokemaking fleet delivering strong results
2012 cokemakeing Adjusted EBITDA per ton was $57, solidly within targeted $55 to $60 per ton range
Coal remains a challenge
Higher than expected cash costs
Expect continued difficult demand/price environment
Implementing aggressive coal action plan
Strong liquidity position
Cash balance of nearly $240 million and virtually undrawn revolver of $150 million
FY 2012 free cash flow(2) of nearly $120 million 7
(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
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2012 Accomplishments
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Proved our cokemaking expertise
Took action to optimize coal business
Built financial strength and flexibility
Positioned for 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
Submitted permit application for potential new U.S. coke plant Executed SunCoke Energy Partners IPO in January 2013 Initiated India entry strategy via VISA SunCoke JV, which closed in Q1 2013
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Post SXCP IPO Organizational Structure
2% GP interest 56% LP interest 100% IDR
3 U.S. coking facilities with ~2.6 million tons of capacity 35% interest in 2 cokemaking facilities (Haverhill & Middletown) with ~0.6 million tons(1) of capacity
Vitoria, Brazil with 1.7 million tons of capacity VISA SunCoke JV
~113 million ton coal reserves of primarily mid vol coal 2013E production of 1.4 million tons
65% interest in 2 cokemaking facilities (Haverhill & Middletown) with ~1.1 million tons(1) of capacity Represents ~25% of consolidated domestic cokemaking capacity at SXC
(1) Net to SXC and SXCP’s ownership interest in Haverhill and Middletown, respectively.
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Strategic Roles of SXC and SXCP
Develop new coke projects
Grow international business
Optimize coal
GP & limited partner investor in SXCP
Grow U.S. & Canada cokemaking business
Steel facing MLP with advantaged cost of capital
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India Entry: VISA SunCoke
VISA SunCoke JV positions us to capture coke demand growth in India, which is expected to more than double to 62 million mt by 2020
VISA SunCoke
Invested $67 million for 49% interest
Approx. 1/3rd of coke and all steam production sold to VISA Steel
Balance sold in merchant market, to customers such as SAIL and Tata
Expect Adjusted EBITDA per ton to be similar to what we achieve in U.S.
Near term focus on execution in operations and management systems
Long term growth through development of new plants or acquisition of existing facilities
Chinese Heat Recovery Coke: 400K tpy Steam: 20 Mwhe Built: 2007 Odisha, India
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SUNCOKE’S COKEMAKING TECHNOLOGY & COKE IN THE BLAST FURNACE
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SunCoke’s Cokemaking Technology
Our industry leading cokemaking technology meets U.S. EPA Maximum Achievable Control Technology (MACT) Standards
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SunCoke’s Heat Recovery vs. By Product Oven
SunCoke Heat Recovery
SunCoke Heat Recovery
Pressurization Air Emissions Power Generation Hazardous Inputs
Volatile Organic Compounds
Solid Wastes
Negative pressure
MACT standard for new batteries Cogenerates power None Complete combustion No toxic solid wastes
Positive pressure
Potential for emission of hazardous compounds Power consuming process
Yes – sulfuric acid
No combustion
Process produces toxic waste streams
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Blast Furnaces and Coke
Most efficient blast furnaces require 800 900 lbs/NTHM of fuel to produce a ton of hot metal
Blast furnaces are the most efficient and proven method of reducing iron oxides into liquid iron
Coke is a vital material to blast furnace steel making
We believe stronger, larger coke is becoming more important as blast furnaces seek to optimize fuel needs
Top Gas
1 short ton of hot metal (NTHM)
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SUNCOKE’S VALUE PROPOSITION & CONTRACT PROVISIONS
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SunCoke’s Value Proposition
High Quality
& Reliable Coke Supply
Turndown Flexibility
Coal Flexibility
Capital Efficiency
& Flexibility
Environment /Economic Trade offs
Provide an assured supply of coke to steelmakers
Larger, stronger coke for improved blast furnace performance
Demonstrated sustained 15% 20% turndown capability
High quality coke with cheaper coal blends
Capital preservation and lower capacity cost per ton; particularly relative to greenfield investment
Stringent U.S. regulatory environment
Power prices and reliability versus value of coke oven gas and by product “credits”
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Key Contract Provisions
Take or Pay Fixed Fee Coal Cost
Operating Costs
Transportation
& Taxes
Customers must take all our production up to a maximum or pay contract price for amount not taken
-We are obligated to deliver a minimum quantity of coke annually
Represents profit and return on capital
-Fixed fee is fixed for life of contract
Cost of coal is passed through subject to achieving a contracted coal to coke yield standard
Operating costs are passed through based on annually negotiated budget or a fixed budget adjusted for inflation
These costs are passed through
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OUR MARKET OPPORTUNITY
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U.S. and Canada Opportunity
Replace aging coke batteries operated by integrated steel producers
Total 2011 Coke Demand: 19.5 million tons
Source: CRU, The Annual Outlook for Metallurgical Coke 2012. Jefferies Steel Summit April 2013
Source: CRU, The Annual Outlook for Metallurgical Coke 2012
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Coke Industry Fundamentals
We estimate nearly 4 million tons of capacity will be retired/replaced in coming years & another 4 million tons is potentially acquisition worthy
SXC Market Analysis
Evaluation of all existing batteries in US & Canada
• Customer quality
• Blast furnace competitiveness
• Battery condition
Facilities with Potential for Replacement
19 batteries 4.0 million tons
Facilities with Potential for Acquisition
6 batteries 4.1 million tons
Source: CRU, Metallurgical Coke Market Outlook 2012; Company analysis Jefferies Steel Summit April 2013
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Coke Price Comparison
SunCoke’s coke is competitive on price, quality and reliability, providing us the opportunity to displace imported coke
Representative Delivered Coke Prices $/ton
Based on February 2013 prices
$325 $317 $384 $300 $317 $384
Other Domestic Coke Ukrainian Chinese
Coke (1) Coke (2)
Chinese 40% Export Tax Premium (Tariff)
Chinese Coke Price
Ukrainian Coke Price
SunCoke Price—Contracted Coal Price Differential
SunCoke Coke Price @ Spot Coal Price
1 Includes approx. $65/ton freight and approx. $30/ton handling loss for shipping to Great Lakes region
2 Includes approx. $70/ton freight and approx. $35/ton handling loss for shipping to Great Lakes region
U.S. and Canada Coke Imports
4.5 4.9 5.1 3.3 0.8 2.0 1.9 1.7 1.8 1.6
2005 2006 2007 2008 2009 2010 2011 2012 2013E 2014E
Imports SunCoke sales volumes
Source: World Price (DTC), Coke Market Report, CRU and company estimates Source: CRU and Resource Net
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The India Growth Opportunity
India offers attractive coke market fundamentals driven by growing steel demand
India Steel/Coke Market
Growing Steel Market
Coke Supply Deficit
Active Merchant Market
Electric Power Deficit
Per Capital Steel Demand (kg/yr)
India Brazil China
2011 57 123 460
India Metallurgical Coke Demand
Millions of Metric Tones
70 60 50 40 30 20 10 0
28 62
2012E 2020E
Sources: CRU, Metallurgical Coke Outlook 2012, World Steel Association, Company estimates
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2013 PRIORITIES & OUTLOOK
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2013 Priorities
Grow The Coke Strategically Optimize Operational Excellence Business 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 costs
Maintain top quartile safety performance
Domestic
Obtain permit for next potential U.S. facility
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
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
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SXC: 2013 Adjusted EBITDA(1) Outlook
Estimated 2013 results to be impacted by weak coal business, partly offset by continued solid coke operations and VISA SunCoke JV
($ in millions)
$0 $10 $0 $10
($35 $50) ($5 $10)
$266 $205 $230
FY 2012 Domestic International Coke Coal Mining Corporate 2013E Adjusted Adjusted Coke Business Costs EBITDA (1) EBITDA (1) (Jewell & Other Domestic Coke)
(1) For a definition and reconciliation of Adjusted EBITDA, please see the appendix. Jefferies Steel Summit April 2013
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SXC: 2013 Guidance Summary
Metric 2013 Guidance
Adjusted EBITDA (1)
Consolidated $205 – $230 million Attributable to SXC Shareholders $165 – $190 million
EPS Attributable to SXC Shareholders (diluted) $0.30 – $0.55
Cash Flow from Operations ~$140 million (3) Capital Expenditures and Investments(2) $200 million Effective Tax Rate 7% – 14% Cash Tax Rate 12% – 20% Domestic Coke Production 4.3+ million tons Coal Production ~ 1.4 million tons
(1) For a reconciliation of 2013E Adjusted EBITDA, please see reconciliation on slide 34. (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
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QUESTIONS
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APPENDIX
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Definitions
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 investor’s 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.
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Reconciliations
Reconciliations from Net Income to
Adjusted EBITDA
$ in millions
FY 2012 FY 2011
Net Income 102.5 58.9
Subtract: Depreciation, depletion
and amortization (80.8) (58.4)
Subtract: Financing expense, net (47.8) (1.4)
Subtract: Income Tax (23.4) (7.2)
EBITDA 254.5 125.9
Add: Sales Discount 11.2 12.9
Add: Adjustment to
unconsolidated affiliate earnings
Adjusted EBITDA 265.7 138.8
Adjusted EBITDA attributable to
non controlling interests (3.0) 4.0
Adjusted EBITDA attributable to
SXC 262.7 142.8
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Free Cash Flow Reconciliation
(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
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Expected 2013E EBITDA Reconciliation
2013E 2013E
(in millions) Low 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(1) – 3
Adjusted EBITDA $205 $230
EBITDA attributable to noncontrolling interests(2) (40) (40)
Adjusted EBITDA attributable to SXC $165 $190
(1) Represents SXC share of India JV interest, taxes and depreciation expense
(2) Represents Adjusted EBITDA attributable to SXCP public unitholders and to DTE’s interest in Indiana Harbor
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2013E Capital Expenditures and Investments
($ in millions) SXC SXCP Consolidated
On Going Approx. $49 $9 $58
Environmental Approx.
$15 $15 Remediation Expansion Approx. 60 60
Total CapEx Approx. $109 $24 $133
Investments Approx. $67 $67
Total CapEx & Approx. $176 $24 $200 Investments
SXC includes approximately $25m coke and $24m coal SXCP includes 65% of $14m expected at Haverhill and Middletown
Expansion includes approx. $60m for Indiana Harbor Refurbishment
To fund investment in India JV (Visa SunCoke)
SXCP expenditures prefunded from IPO proceeds
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ProForma Liquidity & Debt Metrics
(IN MILLIONS) SunCoke SXCP
Cash Position at 12/31/12 $239 $79
Cash Retained From SXCP Offerings (1) 73 79
Total Performa Cash Position $312 $79
Revolver Capacity 150 100
Total Liquidity $462 $179
Total Debt (2) $495 $150
Total Debt (2)/2013E Adjusted EBITDA (3) 2.8x 1.7x
Net Debt (2) $183 $150
Net Debt (2)/2013E Adjusted EBITDA (3) 1.0x 1.7x
(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 con
junction 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.
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