SXC SunCoke Energy Inc

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of Earliest Event Reported): April 23, 2015

 

 

SUNCOKE ENERGY, INC.

(Exact name of registrant as specified in its charter)

 

 

 

Delaware		001-35243		90-0640593
(State of Incorporation)		(Commission File Number)		(IRS Employer Identification No.)

 

1011 Warrenville Road, Suite 600
Lisle, Illinois		60532
(Address of principal executive offices)		(Zip code)

Registrant’s telephone number, including area code: (630) 824-1000

Not Applicable

(Former name or former address, if changed since last report)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

¨	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 

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Item 2.02.

Results of Operations and Financial Condition.

On April 23, 2015, SunCoke Energy, Inc. (the “Company”) issued a press release announcing its financial results for the first quarter of 2015. A copy of this press release is attached as Exhibit 99.1 and is incorporated herein by reference.

 

Item 7.01.

Regulation FD Disclosure.

As noted above, on April 23, 2015, the Company issued a press release announcing its financial results for the first quarter of 2015. Additional information concerning the Company’s financial results for the first quarter of 2015 will be presented in a slide presentation to investors during a previously announced teleconference on April 23, 2015. A copy of the slide presentation is attached as Exhibit 99.2 and is incorporated herein by reference.

The information in this report, being furnished pursuant to Items 2.02, 7.01 and 9.01 of Form 8-K, shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that Section, and is not incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such filing.

Safe Harbor Statement

Statements contained in the exhibit to this report that state the Company’s or management’s expectations or predictions of the future are forward-looking statements intended to be covered by the safe harbor provisions of the Securities Act of 1933 and the Securities Exchange Act of 1934. The Company’s actual results could differ materially from those projected in such forward-looking statements. Factors that could affect those results include those mentioned in the documents that the Company has filed with the Securities and Exchange Commission.

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Item 9.01

Financial Statements and Exhibits.

(d) Exhibits

 

Exhibit No.		Description
99.1		SunCoke Energy, Inc. Press Release, announcing earnings (April 23, 2015).
99.2		SunCoke Energy, Inc. Slide Presentation regarding earnings (April 23, 2015).

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SIGNATURES

Pursuant to the requirements of the Exchange Act, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

Date: April 23, 2015

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EXHIBIT INDEX

 

Exhibit No.		Exhibit
99.1		SunCoke Energy, Inc. Press Release, announcing earnings (April 23, 2015).
99.2		SunCoke Energy, Inc. Slide Presentation regarding earnings (April 23, 2015).

Exhibit 99.1

 

Investors:

Lisa Ciota: 630-824-1907

Media:

Steve Carlson: 630-824-1783

SUNCOKE ENERGY, INC. ANNOUNCES FIRST QUARTER 2015 RESULTS AND

REAFFIRMS FULL YEAR GUIDANCE

 

•

Loss from continuing operations attributable to SXC was $2.0 million, or $0.03 per share, in first quarter 2015 reflecting transaction and financing costs associated with the dropdown of Granite City of $0.09 per share, partially offset by improved operating performance

 

•

Adjusted EBITDA from continuing operations increased $9.6 million to $49.1 million, resulting from improved coke and coal logistics performance and lower corporate costs

 

•

Domestic Coke achieved improved yields to deliver first quarter Adjusted EBITDA of $52.7 million, or $56 per ton, up $5.9 million from prior year

 

•

Increased dividend 28 percent to $0.075 per share of common stock

LISLE, Ill. (April 23, 2015)—SunCoke Energy, Inc. (NYSE: SXC) today reported a first quarter 2015 loss from continuing operations attributable to shareholders of $2.0 million, or $0.03 per share, as compared to a loss of $1.8 million, or $0.02 per share, in the same prior year period, as improvement in our cokemaking operations was offset by Granite City dropdown transaction and financing costs.

“Anchored by our focus on operations, we delivered nearly a $10 million improvement in Adjusted EBITDA from continuing operations in the first quarter despite challenging winter weather,” said Fritz Henderson, Chairman and Chief Executive Officer of SunCoke Energy, Inc. “Our continued commitment to delivering strong operating performance across our business, underpinned by our long-term, take-or-pay coke contracts, supports our outlook to achieve our previously disclosed 2015 financial guidance. It also underscores our ability to continue to prudently return capital to shareholders as we recently did with the 28 percent increase to our quarterly cash dividend and through additional capital allocation initiatives we intend to pursue.”

FIRST QUARTER CONSOLIDATED RESULTS

 

		Three Months Ended March 31,
(Dollars in millions)		2015				2014				Increase/ (Decrease)
Total revenues from continuing operations		$	320.4			$	352.5			$	(32.1	)
Operating income from continuing operations			27.6				13.7				13.9
Adjusted EBITDA from continuing operations(1)			49.1				39.5				9.6
Loss from continuing operations attributable to SXC			(2.0	)			(1.8	)			(0.2	)
Adjusted EBITDA from discontinued operations			(3.1	)			(4.4	)			1.3
Loss from discontinued operations, net of tax			(2.0	)			(6.0	)			4.0
Net loss attributable to SXC			(4.0	)			(7.8	)			3.8

 

(1)	See definition of Adjusted EBITDA and reconciliation elsewhere in this release.

 

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Total revenues from continuing operations declined $32.1 million to $320.4 million in first quarter 2015 compared with the same prior year period, reflecting the pass-through of lower coal costs in our Domestic Coke segment on relatively flat sales volumes.

Operating income from continuing operations and Adjusted EBITDA from continuing operations rose $13.9 million and $9.6 million, respectively, primarily due to better Domestic Coke coal-to-coke yields this winter and higher Brazil volumes as compared to the same prior year period. In addition, lower corporate costs contributed to the increase in operating income and Adjusted EBITDA.

Loss from continuing operations attributable to SXC of $2.0 million in first quarter 2015 reflects the improvements noted above, offset by Granite City dropdown transaction and financing costs.

Loss from discontinued operations, net of tax, and Adjusted EBITDA loss from discontinued operations was $2.0 million and $3.1 million in first quarter 2015, respectively. Discontinued operations consists of our Coal Mining business. While we continue to pursue a strategic exit from our Coal Mining business, we are executing on our previously announced coal rationalization plan by implementing a contract mining model, eliminating positions and purchasing coal from third-party providers.

FIRST QUARTER SEGMENT RESULTS

Domestic Coke

Domestic Coke consists of cokemaking facilities and heat recovery operations at our Jewell, Indiana Harbor, Haverhill, Granite City and Middletown plants.

 

Domestic Coke Results		Three Months Ended March 31,
(in millions, except per ton amounts)		2015				2014				Increase/ (Decrease)
Revenues		$	303.1			$	333.5			$	(30.4	)
Adjusted EBITDA(1)		$	52.7			$	46.8				5.9
Sales Volume (thousands of tons)			950				948				2
Adjusted EBITDA per ton(1)		$	55.63			$	49.37			$	6.26

 

(1)	See definitions of Adjusted EBITDA and Adjusted EBITDA per Ton and reconciliation elsewhere in this release.

 

•

Segment revenues were affected by the pass-through of lower coal costs

 

•

Adjusted EBITDA rose $5.9 million to $52.7 million due to improved coal-to-coke yields on relatively flat sales volumes

Brazil Coke

Brazil Coke consists of a cokemaking facility in Vitória, Brazil, which we operate for an affiliate of ArcelorMittal. Brazil Coke earns operating and technology licensing fees based on production and recognizes a dividend on a preferred stock investment assuming certain minimum production levels are achieved.

 

•

Segment Adjusted EBITDA increased $2.4 million to $4.1 million driven by higher production

India Coke

India Coke consists of our 49 percent interest in our VISA SunCoke joint venture, which owns a 440 thousand ton cokemaking facility and associated steam generation unit in Odisha, India. Financial results for VISA SunCoke are recorded on a one-month lag and represent our 49 percent share of the joint venture’s results.

 

•

Adjusted EBITDA decreased $0.8 million to a loss of $0.7 million in first quarter 2015. Import competition from China continues to depress coke pricing in India, resulting in weak margins

 

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Coal Logistics

Coal Logistics consists of the coal handling and blending services operated by SXCP at Lake Terminal in East Chicago, IN, and Kanawha River Terminals, LLC (KRT), which has terminals along the Ohio, Big Sandy, and Kanawha rivers in West Virginia and Kentucky.

 

Coal Logistics Results		Three Months Ended March 31,
(in millions, except per ton amounts)		2015				2014				Increase/ (Decrease)
Revenues			7.3				8.7			$	(1.4	)
Adjusted EBITDA(1)			2.6				2.1				0.5
Tons handled (thousands of tons)			3,794				4,359				(565	)
Adjusted EBITDA per ton(1)		$	0.69				0.48			$	0.21

 

(1)	See definitions of Adjusted EBITDA and Adjusted EBITDA per ton and reconciliation elsewhere in this release.

 

•

Adjusted EBITDA increased $0.5 million reflecting higher margins caused by a shift in sales mix, partly offset by lower volume

Corporate and Other

Corporate and other expenses in first quarter 2015 were $9.6 million, down $1.6 million versus first quarter 2014 primarily due to lower employee costs of $3.4 million as first quarter 2014 included higher overall headcount and corporate restructuring costs. Lower employee costs in 2015 were partly offset by higher legal expenses.

Interest Expense, Net

Interest expense, net, increased $11.2 million to $23.3 million in first quarter 2015. Of the $11.2 million increase, $9.4 million related to debt financing costs, which included a $7.7 million redemption premium and $1.7 million of debt extinguishment costs in connection with the Granite City Dropdown.

Cash Flow

Cash provided by continuing operating activities was $26.6 million for first quarter 2015 compared to cash used in continuing operating activities of $4.7 million in the same respective period of 2014. The change primarily reflects working capital changes associated with lower receivables in the current period and the settlement of $13.1 million in sales discounts in first quarter 2014.

Cash used in continuing investing activities was $8.3 million for first quarter 2015 versus $37.5 million in the same respective period of 2014, which included refurbishment work at Indiana Harbor and higher environmental remediation capital expenditures.

Discontinued Operations

In July 2014, SXC’s Board of Directors authorized the sale and/or disposition of our coal mining business. As a result, our coal mining operations are reflected as discontinued operations. Prior periods have been reclassified to reflect discontinued operations and held-for-sale presentation.

In first quarter 2015, discontinued operations recorded an after-tax loss of $2.0 million, or $0.03 per share, compared with an after-tax loss of $6.0 million, or $0.09 per share, in first quarter 2014. The improvement was driven by the absence of depreciation expense in the current year period as we ceased depreciation of coal mining assets in third quarter of 2014 in accordance with the presentation of discontinued operations. Depreciation expense of $4.4 million was recorded in first quarter of 2014.

 

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Dividends Declared

On April 20, 2015, our Board of Directors declared a quarterly cash dividend of $0.075 per share, up 28.2 percent versus the previous quarterly rate. This dividend will be paid on June 10, 2015 to stockholders of record at the close of business on May 5, 2015.

2015 OUTLOOK

We reaffirm our 2015 guidance:

 

•

Domestic coke production is expected to be approximately 4.3 million tons

 

•

Domestic coke Adjusted EBITDA per ton is expected to be between $55 per ton and $60 per ton

 

•

Adjusted EBITDA from continuing operations is expected to be between $225 million and $245 million

 

•

Consolidated Adjusted EBITDA including discontinued operations and legacy costs is expected to be between $190 million to $210 million

 

•

Adjusted EBITDA attributable to SXC is expected to be between $115 million and $130 million, reflecting the impact of public ownership in SXCP

 

•

Capital expenditures are projected to be approximately $90 million

 

•

Cash generated by operations is estimated to be between $125 million and $145 million

 

•

Cash taxes are projected to be between $10 million and $15 million

RELATED COMMUNICATIONS

Today, we will host an investor conference call at 11:30 a.m. Eastern Time (10:30 a.m. Central Time). Investors may participate in this call by dialing 1-800-446-2782 in the U.S. or 1-847-413-3235 if outside the U.S.; confirmation code 39310605. This conference call will be webcast live and archived for replay in the Investor Relations section of www.suncoke.com.

UPCOMING EVENTS

We plan to participate in the following conferences:

 

•

Sanford C. Bernstein & Co.’s Industrials and Basic Materials Summit, May 8, in New York City

 

•

2015 MLP Investor Conference held by the National Association of Publicly Traded Partnerships (NAPTP), May 21-22, in Orlando, Fla.

SUNCOKE ENERGY, INC.

SunCoke Energy, Inc. (NYSE: SXC) supplies high-quality coke to the integrated steel industry under long-term take-or-pay coke contracts that pass through commodity and certain operating costs to customers. We utilize an innovative heat-recovery cokemaking technology that captures excess heat for steam or electrical power generation. Our cokemaking facilities are located in Illinois, Indiana, Ohio, Virginia, Brazil and India. We are the sponsor of SunCoke Energy Partners, L.P. (NYSE: SXCP), a publicly traded master limited partnership, holding a 2 percent general partner interest, 56 percent limited partnership interest and all of the incentive distribution rights. In addition, we own approximately 110 million tons of proven and probable coal reserves in Virginia and West Virginia. To learn more about SunCoke Energy, Inc., visit our website at www.suncoke.com.

DEFINITIONS

 

•

Adjusted EBITDA represents earnings before interest, taxes, depreciation, depletion and amortization (“EBITDA”) adjusted for impairments, costs related to exiting our Coal business, interest, taxes, depreciation and amortization attributable to our equity method investment. Prior to the expiration of our nonconventional fuel tax credits in 2013, Adjusted EBITDA included an add-back of sales discounts related to the sharing of these credits with customers. Any adjustments to these amounts subsequent to 2013 have been included in Adjusted EBITDA. Our Adjusted EBITDA also includes EBITDA attributable to our equity method investment. EBITDA and Adjusted EBITDA do not represent and should not be considered

 

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alternatives to net income or operating income under generally accepted accounting principles (“GAAP”) and may not be comparable to other similarly titled measures in other businesses. Management believes Adjusted EBITDA is an important measure of the operating performance of the SXC’s net assets 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, does not represent and should not be considered a substitute for net income as determined in accordance with GAAP. Calculations of Adjusted EBITDA may not be comparable to those reported by other companies.

 

•

Adjusted EBITDA attributable to SXC/SXCP equals consolidated Adjusted EBITDA less Adjusted EBITDA attributable to noncontrolling interests.

 

•

Adjusted EBITDA per ton represents Adjusted EBITDA divided by tons sold/handled.

 

•

Adjusted EBITDA from continuing operations equals consolidated Adjusted EBITDA less Adjusted EBITDA from discontinued operations less Legacy costs.

 

•

Adjusted EBITDA from discontinued operations equals coal business Adjusted EBITDA excluding corporate cost allocation attributable to coal, costs related to exiting our coal business and certain retained coal-related costs reclassified as Legacy costs.

 

•

Legacy costs equals royalty revenues, coal pension/other post-employment benefits, coal workers’ compensation, black lung, prep. plant and certain other coal-related costs that we expect to retain after the sale of the coal business.

FORWARD-LOOKING STATEMENTS

Some of the statements included in this press release constitute “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). Forward-looking statements include all statements that are not historical facts and may be identified by the use of such words as “believe,” “expect,” “plan,” “project,” “intend,” “anticipate,” “estimate,” “predict,” “potential,” “continue,” “may,” “will,” “should” or the negative of these terms or similar expressions. Forward-looking statements are inherently uncertain and involve significant known and unknown risks and uncertainties (many of which are beyond the control of SXC) that could cause actual results to differ materially.

Such risks and uncertainties include, but are not limited to domestic and international economic, political, business, operational, competitive, regulatory and/or market factors affecting SXC, as well as uncertainties related to: pending or future litigation, legislation or regulatory actions; liability for remedial actions or assessments under existing or future environmental regulations; gains and losses related to acquisition, disposition or impairment of assets; recapitalizations; access to, and costs of, capital; the effects of changes in accounting rules applicable to SXC; and changes in tax, environmental and other laws and regulations applicable to SXC’s businesses.

Forward-looking statements are not guarantees of future performance, but are based upon the current knowledge, beliefs and expectations of SXC management, and upon assumptions by SXC concerning future conditions, any or all of which ultimately may prove to be inaccurate. The reader should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. SXC does not intend, and expressly disclaims any obligation, to update or alter its forward-looking statements (or associated cautionary language), whether as a result of new information, future events or otherwise after the date of this press release except as required by applicable law.

In accordance with the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, SXC has included in its filings with the Securities and Exchange Commission 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 made by SXC. For information concerning these factors, see

 

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SXC’s Securities and Exchange Commission filings such as its annual and quarterly reports and current reports on Form 8-K, copies of which are available free of charge on SXC’s website at www.suncoke.com. All forward-looking statements included in this press release are expressly qualified in their entirety by such cautionary statements. Unpredictable or unknown factors not discussed in this release also could have material adverse effects on forward-looking statements.

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SunCoke Energy, Inc.

Consolidated Statements of Operations

(Unaudited)

 

		Three Months Ended March 31,
		2015				2014
		(Dollars and shares in millions, except per share amounts)
Revenues
Sales and other operating revenue		$	320.3			$	351.5
Other income			0.1				1.0
Total revenues			320.4				352.5
Costs and operating expenses
Cost of products sold and operating expenses			254.5				293.4
Selling, general and administrative expenses			14.5				21.0
Depreciation and amortization expense			23.8				24.4
Total costs and operating expenses			292.8				338.8
Operating income			27.6				13.7
Interest expense, net			23.3				12.1
Income before income tax expense (benefit) and loss from equity method investment			4.3				1.6
Income tax expense (benefit)			1.2				(1.2	)
Loss from equity method investment			0.7				0.6
Income from continuing operations			2.4				2.2
Loss from discontinued operations, net of income tax benefit of $0.1 million and $3.0 million, for the three months ended March 31, 2015 and 2014, respectively			(2.0	)			(6.0	)
Net income (loss)			0.4				(3.8	)
Less: Net income attributable to noncontrolling interests			4.4				4.0
Net loss attributable to SunCoke Energy, Inc.		$	(4.0	)		$	(7.8	)
Loss attributable to SunCoke Energy, Inc. per common share:
Basic:
Continuing operations		$	(0.03	)		$	(0.02	)
Discontinued operations		$	(0.03	)		$	(0.09	)
Diluted:
Continuing operations		$	(0.03	)		$	(0.02	)
Discontinued operations		$	(0.03	)		$	(0.09	)
Weighted average number of common shares outstanding:
Basic			66.2				69.7
Diluted			66.2				69.7

 

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SunCoke Energy, Inc.

Consolidated Balance Sheets

(Unaudited)

 

		March 31, 2015				December 31, 2014
		(Dollars in millions, except per share amounts)
Assets
Cash and cash equivalents		$	165.4			$	139.0
Receivables			59.0				75.4
Inventories			128.5				139.1
Income tax receivable			8.8				6.0
Deferred income taxes			18.4				26.4
Other current assets			6.9				3.6
Current assets held for sale			19.2				19.3
Total current assets			406.2				408.8
Investment in Brazilian cokemaking operations			41.0				41.0
Equity method investment in VISA SunCoke Limited			21.7				22.3
Properties, plants and equipment, net			1,451.8				1,466.6
Goodwill and other intangible assets, net			21.6				22.0
Deferred charges and other assets			19.7				19.4
Total assets		$	1,962.0			$	1,980.1
Liabilities and Equity
Accounts payable		$	100.2			$	110.9
Accrued liabilities			35.3				41.6
Interest payable			8.7				19.9
Current liabilities held for sale			24.1				37.4
Total current liabilities			168.3				209.8
Long-term debt			699.3				633.5
Accrual for black lung benefits			43.9				43.9
Retirement benefit liabilities			32.9				33.6
Deferred income taxes			315.6				321.9
Asset retirement obligations			15.3				15.1
Other deferred credits and liabilities			16.4				16.9
Total liabilities			1,291.7				1,274.7
Equity
Preferred stock, $0.01 par value. Authorized 50,000,000 shares; no issued and outstanding shares at March 31, 2015 and December 31, 2014			—				—
Common stock, $0.01 par value. Authorized 300,000,000 shares; issued 71,389,447 and 71,251,529 shares at March 31, 2015 and December 31, 2014, respectively			0.7				0.7
Treasury stock, 6,161,395 and 4,977,115 shares at March 31, 2015 and December 31, 2014, respectively			(125.0	)			(105.0	)
Additional paid-in capital			538.4				543.6
Accumulated other comprehensive loss			(25.0	)			(21.5	)
Retained earnings			6.0				13.9
Total SunCoke Energy, Inc. stockholders’ equity			395.1				431.7
Noncontrolling interests			275.2				273.7
Total equity			670.3				705.4
Total liabilities and equity		$	1,962.0			$	1,980.1

 

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SunCoke Energy, Inc.

Consolidated Statements of Cash Flows

(Unaudited)

 

		Three Months Ended March 31,
		2015				2014
		(Dollars in millions)
Cash Flows from Continuing Operating Activities:
Net income (loss)		$	0.4			$	(3.8	)
Adjustments to reconcile net income (loss) to net cash provided by continuing operating activities:
Loss from discontinued operations, net of tax			2.0				6.0
Depreciation and amortization expense			23.8				24.4
Deferred income tax expense (benefit)			3.1				(1.8	)
Payments in excess of expense for retirement plans and gain on curtailment			(4.7	)			(0.9	)
Share-based compensation expense			1.5				2.3
Excess tax benefit from share-based awards			—				(0.2	)
Loss from equity method investment			0.7				0.6
Loss on extinguishment of debt			9.4				—
Changes in working capital pertaining to operating activities:
Receivables			16.4				7.3
Inventories			10.6				10.9
Accounts payable			(10.7	)			(13.6	)
Accrued liabilities			(6.3	)			(20.0	)
Interest payable			(11.2	)			(10.4	)
Income taxes			(2.8	)			1.2
Other			(5.6	)			(6.7	)
Net cash provided by (used in) continuing operating activities			26.6				(4.7	)
Cash Flows from Continuing Investing Activities:
Capital expenditures			(8.3	)			(37.5	)
Net cash used in continuing investing activities			(8.3	)			(37.5	)
Cash Flows from Continuing Financing Activities:
Proceeds from issuance of long-term debt			210.8				—
Repayment of long-term debt			(149.5	)			—
Debt issuance costs			(4.2	)			—
Proceeds from revolving facility			—				16.0
Repayment of revolving facility			—				(16.0	)
Cash distribution to noncontrolling interests			(9.1	)			(6.4	)
Shares repurchased			(20.0	)			—
Proceeds from exercise of stock options, net of shares withheld for taxes			(0.5	)			0.2
Excess tax benefit from share-based awards			—				0.2
Dividends paid			(3.9	)			—
Net cash provided by (used in) continuing financing activities			23.6				(6.0	)
Net increase (decrease) in cash and cash equivalents from continuing operations			41.9				(48.2	)
Cash Flows from Discontinued Operations:
Cash flows from discontinued operations—operating activities			(15.5	)			(6.6	)
Cash flows from discontinued operations—investing activities			—				(0.6	)
Net decrease in cash and cash equivalents from discontinued operations			(15.5	)			(7.2	)
Net increase (decrease) in cash and cash equivalents			26.4				(55.4	)
Cash and cash equivalents at beginning of period			139.0				233.6
Cash and cash equivalents at end of period		$	165.4			$	178.2

 

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SunCoke Energy, Inc.

Segment Financial and Operating Data

The following tables set forth financial and operating data for the three months ended March 31, 2015 and 2014:

 

		Three Months Ended March 31,
		2015				2014
		(Dollars in millions)
Sales and other operating revenues:
Domestic Coke		$	303.1			$	333.5
Brazil Coke			9.9				9.3
Coal Logistics			7.3				8.7
Coal Logistics intersegment sales			4.7				4.2
Corporate and other intersegment sales			2.5				5.0
Elimination of intersegment sales			(7.2	)			(9.2	)
Total sales and other operating revenue		$	320.3			$	351.5
Adjusted EBITDA(1):
Adjusted EBITDA from continuing operations:
Domestic Coke		$	52.7			$	46.8
Brazil Coke			4.1				1.7
India Coke			(0.7	)			0.1
Coal Logistics			2.6				2.1
Corporate and Other			(9.6	)			(11.2	)
Total Adjusted EBITDA from continuing operations		$	49.1			$	39.5
Legacy income (costs), net(2)			1.9				(1.5	)
Adjusted EBITDA from discontinued operations			(3.1	)			(4.4	)
Adjusted EBITDA		$	47.9			$	33.6
Coke Operating Data:
Domestic Coke capacity utilization (%)			95				90
Domestic Coke production volumes (thousands of tons)			998				944
Domestic Coke sales volumes (thousands of tons)			950				948
Domestic Coke Adjusted EBITDA per ton(3)		$	55.63			$	49.37
Brazilian Coke production—operated facility (thousands of tons)			439				252
Indian Coke sales (thousands of tons)(4)			95				122
Coal Logistics Operating Data:
Tons handled (thousands of tons)			3,794				4,359
Coal Logistics Adjusted EBITDA per ton handled(5)		$	0.69			$	0.48

 

(1)	See definition of Adjusted EBITDA and reconciliation elsewhere in this release.

(2)	Legacy (income) costs, net, includes royalty revenues and costs related to coal mining assets and liabilities expected to be retained by SXC, which are not part of the disposal group. See details of these legacy costs in the table below.

(3)	Reflects Domestic Coke Adjusted EBITDA divided by Domestic Coke sales volumes.

(4)	Represents 100% of VISA SunCoke sales volumes.

(5)	Reflects Coal Logistics Adjusted EBITDA divided by Coal Logistics tons handled.

 

10

---

SunCoke Energy, Inc.

Reconciliations of Non-GAAP Information

Adjusted EBITDA to Net Income (Loss)

 

		Three Months Ended March 31,
		2015				2014
		(Dollars in millions)
Adjusted EBITDA attributable to SunCoke Energy, Inc.		$	29.8			$	24.3
Add: Adjusted EBITDA attributable to noncontrolling interests (1)			18.1				9.3
Adjusted EBITDA		$	47.9			$	33.6
Subtract:
Adjusted EBITDA from discontinued operations(2)			(3.1	)			(4.4	)
Legacy income (costs), net(3)			1.9				(1.5	)
Adjusted EBITDA from continuing operations		$	49.1			$	39.5
Subtract:
Adjustment to unconsolidated affiliate earnings(4)			0.3				1.0
Depreciation and amortization expense			23.8				24.4
Interest expense, net			23.3				12.1
Income tax expense (benefit)			1.2				(1.2	)
Sales discounts provided to customers due to sharing of nonconventional fuel tax credits(5)			—				(0.5	)
Legacy (income) costs, net(3)			(1.9	)			1.5
Income from continuing operations		$	2.4			$	2.2
Loss from discontinued operations, net of tax			(2.0	)			(6.0	)
Net income (loss)		$	0.4			$	(3.8	)

 

(1)	Reflects noncontrolling interest in Indiana Harbor and the portion of SXCP owned by public unitholders.

(2)	See reconciliation of Adjusted EBITDA from discontinued operations below.

(3)	Legacy (income) costs, net, includes royalty revenues and costs related to coal mining assets and liabilities expected to be retained by SXC, which are not part of the disposal group. See details of these legacy costs in the table below.

(4)	Reflects share of interest, taxes, depreciation and amortization related to VISA SunCoke.

(5)

At December 31, 2013, we had $13.6 million accrued related to sales discounts to be paid to our Granite City customer. During the first quarter of 2014, we settled this obligation for $13.1 million which resulted in a gain of $0.5 million. This gain is recorded in sales and other operating revenue on our Consolidated Statement of Operations.

 

11

---

Below is a reconciliation of Adjusted EBITDA from discontinued operations (unaudited) to its closest GAAP measure:

 

		Three Months Ended March 31,
		2015				2014
		(Dollars in millions)
Adjusted EBITDA from discontinued operations		$	(3.1	)		$	(4.4	)
Subtract:
Depreciation and depletion from discontinued operations			—				4.4
Income tax benefit from discontinued operations			(0.1	)			(3.0	)
Exit costs(1)			(1.0	)			0.2
Loss from discontinued operations, net of tax		$	(2.0	)		$	(6.0	)

 

(1)	Exit costs include severance, contract termination and other one time costs to idle mines. 2015 exit costs reflect a $2.2 million reduction of severance accrual.

The components of legacy (income) costs, net, were as follows:

 

		Three Months Ended March 31,
		2015				2014
		(Dollars in millions)
Black lung charges		$	0.9			$	0.5
Postretirement benefit plan benefit(1)			(3.9	)			(0.2	)
Defined benefit plan expense			0.2				—
Workers compensation expense			0.9				1.2
Total legacy (income) costs, net		$	(1.9	)		$	1.5

 

(1)	Includes a postretirement benefit plan curtailment gain of $4.0 million, which represented accelerated amortization of prior service credits previously recorded in accumulated other comprehensive income related to the termination of coal mining employees during the first quarter of 2015.

 

12

---

Estimated 2015 Consolidated Adjusted EBITDA to Estimated Net Income

 

		2015
		Low				High
Net income		$	21			$	38
Subtract: Net loss from discontinued operations			(16	)			(13	)
Net income from continuing operations			37				51
Depreciation and amortization expense			89				89
Interest expense, net			68				66
Income tax expense			12				20
Legacy costs, net			15				15
Adjustment to unconsolidated affiliate earnings(1)			4				4
Adjusted EBITDA from continuing operations		$	225			$	245
Legacy costs, net			(15	)			(15	)
Adjusted EBITDA from discontinued operations			(20	)			(20	)
Adjusted EBITDA		$	190			$	210
EBITDA attributable to noncontrolling interests(2)			(75	)			(80	)
Adjusted EBITDA attributable to SXC		$	115			$	130

 

(1)	Represents SunCoke’s share of India JV interest, taxes and depreciation expense.

(2)	Represents Adjusted EBITDA attributable to SXCP public unitholders and to DTE Energy’s interest in Indiana Harbor.

 

13

Exhibit 99.2

 

 

SunCoke Energy, Inc.

Q1 2015 Earnings

Conference Call

April 23, 2015

---

 

Forward-Looking Statements

This slide presentation should be reviewed in conjunction with the First Quarter 2015 earnings release of SunCoke Energy, Inc. (SXC) and the conference call held on April 23, 2015 at 11:30 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 SXC or SunCoke Energy Partners, L.P. (SXCP), 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 SXC and SXCP, and may cause actual results to differ materially from those implied or expressed by the forward-looking statements. Each of SXC and SXCP has included in its filings with the Securities and Exchange Commission 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 SXC and SXCP. 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. SXC and SXCP 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.

SXC Q1 2015 Earnings Call

---

 

Management Perspective

Delivered solid Q1 operating & safety performance

Increased quarterly dividend by 28%

Maintained financial flexibility to support growth and return additional capital to shareholders

Continued developing pipeline of long-term growth opportunities in several new industrial-facing verticals

Reaffirm FY 2015E Consolidated Adj. EBITDA(1) reflecting strength of long-term, take-or-pay cokemaking contracts

(1) For a definition and reconciliation of Adjusted EBITDA (Consolidated), please see appendix.

SXC Q1 2015 Earnings Call

---

 

Q1 ‘15 Overview

Q1 2015 Earnings Overview

($ in millions)

Adj. EBITDA from Cont. Ops.(1)

($/share)

EPS from Cont. Ops. (diluted)

$49.1

$39.5

Q1 ‘14 Q1 ‘15

($0.02) ($0.03)

Q1 ‘14 Q1 ‘15

Q1’15 vs.

($ in millions, except volumes) Q1’15 Q1’14 Q1’14

Domestic Coke Sales Volumes 950 948 2 Coal Transloading Volumes 3,794 4,359 (565) Coke Adj. EBITDA (1) $56.1 $48.6 $7.5 Coal Logistics Adj. EBITDA $2.6 $2.1 $0.5 Corporate and Other ($9.6) ($11.2) $1.6 Adj. EBITDA from Cont. Ops. (2) $49.1 $39.5 $9.6

(1) Coke Adjusted EBITDA includes Domestic Coke, Brazil Coke and India Coke segments.

(2) For a definition and reconciliation of Adjusted EBITDA from Continuing Operations, please see appendix.

Adj. EBITDA from Cont. Ops. up $9.6M

Domestic coke fleet delivered solid operating results despite below target improvement at Indiana Harbor

Benefited from improvement in Brazil & Coal Logistics and lower Corporate costs

Q1 ‘15 Loss from Continuing Operations of $0.03 per share

Reflects impacts of $10.3M Granite City dropdown transaction and financing costs

Reaffirm 2015 Guidance

Consolidated Adjusted EBITDA(1) of $190 million to $210 million

SXC Q1 2015 Earnings Call

---

 

Adjusted EBITDA(1) – Q1 ‘14 to Q1 ‘15

Solid Domestic Coke performance, lower Corporate Costs and better Brazil results contributed to Adjusted EBITDA increase

($ in millions)

$2.7M – Yield improvements

$1.9M – Lower O&M expense

($1.1M) – Timing of sales

$2.4

$2.4M – Brazil

$3.5 • ($0.8M) – India

$39.5 • $2.2M – Higher volume

$3.0M – Higher yield

($2.8M) – Lower O&M cost recovery

$1.6

$1.9 ($3.1)

$0.5 $1.6

$4.0M – OPEB

curtailment gain

Impacts of Q1 ‘14 $49.1 Rationalization

restructuring plan on track $47.9

Q1 2014

Domestic Coke

Indiana

International

Coal

Corporate

Q1 2015

Q1 2015 Legacy

Q1 2015

Q1 2015

Adj. EBITDA

(excl. Indiana

Harbor

Coke (2)

Logistics

Costs

Adj. EBITDA

Income, net

Adj. EBITDA

Adj. EBITDA

from Cont. Ops.(1) Harbor)

from Cont. Ops.(1)

from Disc. Ops.(1) (Consolidated) (1)

(1) Q1 2014 Adj. EBITDA (Consolidated) was $33.6 million. For a definition and reconciliation of Adjusted EBITDA from Continuing Operations, Adjusted EBITDA from Discontinued Operations and Adjusted EBITDA (Consolidated), please see appendix.

(2) Includes Brazil Coke and India Coke.

SXC Q1 2015 Earnings Call

---

 

Domestic Coke Business Summary

Continued to deliver stable results across Domestic Coke fleet

Domestic Coke Production and Adjusted EBITDA Per Ton(1)

(Production in thousands of tons, $ in per ton amounts)

$67/ton $59/ton $61/ton $58/ton $58/ton $57/ton $56/ton $54/ton $49/ton 1,051 1,081 1,081 1,056 1,059 1,090 1,083 998

152 158 153 154 944 155 155 156

149 171 176 150 182 177 167 172 177 153 171 290 297 295 291 279 292 296 264 284 264 276 273 255 264 275 270 223 199 178 179 184 184 178 184 185 185 171

Q1 ‘13 Q2 ‘13 Q3 ‘13 Q4 ‘13 Q1 ‘14 Q2 ‘14 Q3 ‘14 Q4 ‘14 Q1 ‘15

Adjusted EBITDA/ton Middletown Granite City Haverhill Indiana Harbor Jewell

(1) For a definition and reconciliation of Adjusted EBITDA/Ton, see appendix.

SXC Q1 2015 Earnings Call

---

 

Liquidity Position

Solid cash position and revolver capacity provide significant financial flexibility

$57.1

Attributable $165.4 to SXCP

$23.8 ($9.1) $139.0 $2.4

($0.1) ($8.3)

$33.3 ($15.5) $91.8

($23.9)

SXCP revolver

($5.3M) – Ongoing availability: $250M

($3.0M) – Environmental & Expansion

($20.0M) – Repurchase of 1.2M shares SXC revolver $105.7 ($3.9M) – Dividend availability: $148.5M

$73.6

$45.0M – Pre-funded Environmental CapEx

$12.1M – Net debt proceeds at SXCP

Q4 2014 Net Income Working Cash Used D&A Capex Return of Impact of Distr. to Public Q1 2015

Cash Balance from Capital in Disc. Ops. Capital Dropdown(1) Unitholders Cash Balance

Cont. Ops. & Other

(1) Includes proceeds of $210.8M from SXCP 7.375% senior notes, offset by repayment of $149.5M of SXC’s 7.625% senior notes and debt issuance costs of $4.2M.

SXC Q1 2015 Earnings Call

---

 

STRATEGIC UPDATES

SXC Q1 2015 Earnings Call

---

 

SXC Investment Thesis

Well positioned to deliver long-term shareholder returns

Stable, Long-term Business Model

Secure, take-or-pay contracts insulate business from steel cyclicality

Minimal commodity risk

Strong Balance Sheet

Conservatively levered with considerable liquidity

Maintain financial flexibility to support growth and return capital to shareholders

Growth Opportunities

Anticipate executing at least one additional dropdown in 2015

Building robust pipeline of long-term growth targets

Growing Return of Capital to Shareholders

Returned ~$110M to shareholders in last twelve months

Anticipate continued quarterly dividend growth irrespective of future dropdowns

Significant Shareholder Value Proposition

SXC Q1 2015 Earnings Call

---

 

Stable Cokemaking Business Model

Long-term, take-or-pay contracts generate stable cash flow and insulate business from industry cyclicality

Key Contract Provisions/Terms

Fixed Fee

Take-or-Pay

Termination Provisions

(1)

Contract Duration

15 – 20

years

Avg. Remaining Contract Life

9 years

Pass-through provisions:

Cost of Coal

Coal Blending & Transport

Operating & Maintenance Costs

Taxes (ex. Income Taxes)

Changes in Regulation

Contract Value Propositions

Customers required to take all the coke we produce up to contract maximum

Long-term, take-or-pay nature provides stability during market & industry downturns

Commodity risk minimized by passing through coal, transportation & certain operating costs to customer

No early termination without default, except one contract under limited circumstances(1)

Counterparty risk mitigated by contracting with customers’ respective parent companies

Positioned as primary source of coke supply at customers’ strategic blast furnace assets

(1) AK Steel contract at Haverhill 2 has termination right only with permanent closure of blast furnace steelmaking at their Ashland, KY facility and no replacement production elsewhere. AK must also provide 2-year notice and pay significant fee if termination right exercised prior to 2018.

SXC Q1 2015 Earnings Call

---

 

Flexibility to Fund Growth

Multiple levers at SXC & SXCP provide flexibility to fund dropdowns and growth opportunities

Ability to Leverage Both

SXC & SXCP Balance Sheets

Structuring and

Financing Flexibility

Executed amendment to increase SXCP leverage covenant from 4.0x to 4.5x

Amended SXCP shelf to enable preferred equity issuance

Potential for SXC & SXCP to co-invest in projects

Approximately $165M of combined cash

Approximately $400M combined revolver capacity

Accumulating excess cash at SXCP via coverage and replacement CapEx accrual

Ability to compete for and execute transformative M&A or bolt-on transactions

SXC Q1 2015 Earnings Call

---

 

Platforms for Growth

Actively developing pipeline of long-term growth opportunities across several new material handling verticals

M&A Guardrails

Growth Opportunities

Disciplined pursuit of long-term growth opportunities

Strategic Fit

Financial Fit

Actionability

Leverage core competencies

Provide platform for additional growth

Stable cash flow outlook

Limited commodity risk

Qualifying income generating

Ability to compete financially

Appropriately sized

Several industrial verticals can benefit from MLP structure

Activated Carbon Carbon Black Industrial Clays Limestone

Salt Calcined Coke Wood Pellets Soda Ash/Bicarb

Continued pursuit of coal handling/logistics bolt-on acquisitions and development of steel-facing greenfield projects

SXC Q1 2015 Earnings Call

---

 

Balanced Capital Allocation Strategy

Deploying balanced capital allocation strategy to support long-term growth and return capital to shareholders

Support Growth

Maintain leverage capacity to support long-term growth

Maintain leverage capacity to support long-term growth

Return Capital to Shareholders

Plan to increase quarterly dividend to return significant portion of free cash flow

Intend to return excess cash via share repurchase and/or special dividend

Expect to increase per unit distributions as distributable cash flow grows

Adjusted cash coverage ratio in light of asset performance

Drive Long-Term Shareholder Value

SXC Q1 2015 Earnings Call

---

 

Clear Pathway for Capital Return

Continuing to return capital to shareholders

Completed In Process Expected

Initiatives

Q2 ‘15 2H ‘15 & Beyond To-Date

Asset Drops

Completed two dropdowns since expiration of SXC tax sharing agreement

Anticipate dropdown of 23% of Granite City

Complete remaining dropdowns

Jewell & Brazil Coke – Ready 2H 2015E

Indiana Harbor – After two consecutive quarters of stable ops.

Initiated quarterly dividend in Q4 2014

Increased Q2 ‘15 dividend 28%

Returned ~$110M to shareholders in last twelve months, including $105M via share repurchases

Amended SXC credit facility to enhance flexibility

Begin executing against remaining $55M share repurchase authorization

Call remaining SXC bonds with next dropdown

Seek additional share repurchase authorization

Intend to increase dividend to distribute significant portion of free cash flow (irrespective of future dropdowns)

Evaluate accretive uses for estimated $350M – $400M dropdown proceeds

Strategy for Future Dropdowns

1 Market conditions continue to govern timing of future dropdowns 2 • Remain ready to execute

SXC Q1 2015 Earnings Call

---

 

SXC Investment Thesis

Well positioned to deliver long-term shareholder returns

Stable, Long-term Business Model

Strong Balance Sheet

Growth Opportunities

Growing Return of Capital to Shareholders

Significant Shareholder Value Proposition

SXC Q1 2015 Earnings Call

---

 

QUESTIONS

SXC Q1 2015 Earnings Call

---

 

Investor Relations 630-824-1907 www.suncoke.com

SXC Q1 2015 Earnings Call

---

 

APPENDIX

SXC Q1 2015 Earnings Call

---

 

Definitions TM

Adjusted EBITDA represents earnings before interest, taxes, depreciation, depletion and amortization (“EBITDA”) adjusted for impairments, costs related to exiting our Coal business, interest, taxes, depreciation and amortization attributable to our equity method investment. Prior to the expiration of our nonconventional fuel tax credits in 2013, Adjusted EBITDA included an add-back of sales discounts related to the sharing of these credits with customers. Any adjustments to these amounts subsequent to 2013 have been included in Adjusted EBITDA. Our Adjusted EBITDA also includes EBITDA attributable to our equity method investment. EBITDA and Adjusted EBITDA do not represent and should not be considered alternatives to net income or operating income under generally accepted accounting principles (GAAP) and may not be comparable to other similarly titled measures in other businesses. Management believes Adjusted EBITDA is an important measure of the operating performance of the SXC’s net assets 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, does not represent and should not be considered a substitute for net income as determined in accordance with GAAP. Calculations of Adjusted EBITDA may not be comparable to those reported by other companies.

EBITDA represents earnings before interest, taxes, depreciation, depletion and amortization.

Adjusted EBITDA attributable to SXC/SXCP equals consolidated Adjusted EBITDA less Adjusted EBITDA attributable to noncontrolling interests.

Adjusted EBITDA/Ton represents Adjusted EBITDA divided by tons sold/handled.

Adjusted EBITDA from Continuing Operations equals Consolidated Adjusted EBITDA less Adjusted EBITDA from Discontinued Operations less Legacy Costs.

Adjusted EBITDA from Discontinued Operations equals Coal business Adjusted EBITDA excluding Corporate cost allocation attributable to Coal, costs related to exiting our Coal business and certain retained Coal-related costs reclassified as Legacy Costs.

Legacy Costs equals royalty revenues, Coal pension/OPEB, Coal workers’ compensation, black lung, prep. plant and certain other Coal-related costs that we expect to retain after sale of the Coal business.

SXC Q1 2015 Earnings Call

---

 

Consolidated Guidance Summary

Reaffirm Full Year 2015 Guidance

Metric

2014 Actual

2015 Guidance

Adjusted EBITDA(1)

Continuing Operations

$237.8

million

$225

–

$

245

million

Consolidated

$210.7

million

$190

–

$

210

million

Attributable to SXC

$150.0

million

$115

–

$

130

million

Capital Expenditures

~$125 million

~$90 million

Domestic Coke Production

~4.2 million tons

~4.3 million tons

Dom. Coke Adj. EBITDA / ton

$59 / ton

$55 – $

60 / ton

Operating Cash Flow

$112.3

million

$125

–

$

145

million

Cash Taxes(2)

$7.0 million

$10

–

$

15 million

(1) Please see appendix for a definition and reconciliation of 2014 and 2015E Adjusted EBITDA. (2) Included in Operating Cash Flow.

SXC Q1 2015 Earnings Call

---

 

Reconciliation of Net Income to Adjusted EBITDA

($ in millions)

Q1 ‘15

FY ‘14

Q4 ‘14

Q3 ‘14

Q2 ‘14

Q1 ‘14

FY ‘13

Q4 ‘13

Q3 ‘13

Q2 ‘13

Q1 ‘13

Net Income/(Loss)

$0.4

($101.8)

($55.8)

$6.4

($48.6)

($3.8)

$50.1

$18.7

$

12.3

$12.7

$6.4

Subtract: Net Loss from Discontinued Operations

(2.0)

(106.0)

(40.1)

(18.5)

(41.4)

(6.0)

(15.5)

(4.4)

(3.6)

(2.8)

(4.7)

Net Income/(Loss) from Continuing Operations

$2.4

$4.2

($15.7)

$24.9

($7.2)

$2.2

$65.6

$23.1

$

15.9

$15.5

$11.1

Depreciation and amortization

23.8

96.1

25.1

22.5

24.1

24.4

77.1

19.5

18.8

19.0

19.8

Interest expense, net

23.3

63.2

12.1

11.9

27.1

12.1

52.3

12.3

12.1

12.1

15.8

Income tax expense/(benefit)

1.2

7.4

2.4

7.5

(1.3)

(1.2)

16.4

6.4

1.5

2.7

5.8

Legacy costs, net

(1.9)

17.1

13.3

0.9

1.4

1.5

0.4

(1.5)

0.3

0.7

0.9

Asset impairment(1)

-

16.8

1.7

-

15.1

-

-

-

-

-

-

Sales discounts

-

(0.5)

-

-

-

(0.5)

6.8

1.1

2.2

2.1

1.4

Adjustment to unconsolidated affiliate earnings(2)

0.3

33.5

31.1

0.3

1.1

1.0

3.2

1.9

0.3

1.0

-

Adjusted EBITDA from Continuing Operations

$49.1

$237.8

$70.0

$68.0

$60.3

$39.5

$221.8

$62.8

$

51.1

$53.1

$54.8

Legacy costs, net

1.9

(17.1)

(13.3)

(0.9)

(1.4)

(1.5)

(0.4)

1.5

(0.3)

(0.7)

(0.9)

Adjusted EBITDA from Discontinued Operations

(3.1)

(10.0)

(4.9)

(2.8)

2.1

(4.4)

(6.3)

(4.6)

(0.1)

-

(1.6)

Adjusted EBITDA (Consolidated)

$47.9

$210.7

$51.8

$64.3

$61.0

$33.6

$215.1

$59.7

$

50.7

$52.4

$52.3

Adjusted EBITDA attributable to noncontrolling

interests(3)

(18.1)

(60.7)

(18.7)

(18.2)

(14.5)

(9.3)

(41.2)

(12.2)

(9.9)

(10.7)

(8.4)

Adjusted EBITDA attributable to SXC

$29.8

$150.0

$33.1

$46.1

$46.5

$24.3

$173.9

$47.5

$

40.8

$41.7

$43.9

(1) Includes portion of coal impairment attributable to Continuing Operations.

(2) Represents SunCoke’s share of India JV interest, taxes and depreciation expense. Includes $30.5M impairment of our equity method investment in India in Q4 and FY 2014. (3) Represents Adjusted EBITDA attributable to SXCP public unitholders and DTE Energy’s interest in Indiana Harbor.

SXC Q1 2015 Earnings Call

---

 

Reconciliation of Net Income to Adjusted EBITDA from Discontinued Operations

($ in millions)

Q1 ‘15

FY ‘14

Q4 ‘14

Q3 ‘14

Q2 ‘14

Q1 ‘14

FY ‘13

Q4 ‘13

Q3 ‘13

Q2 ‘13

Q1 ‘13

Net Loss from Discontinued Operations

($2.0)

($106.0)

($40.1)

($18.5)

($41.4)

($6.0)

($15.5)

($4.4)

($3.6)

($2.8)

($4.7)

Depreciation, depletion and amortization

-

10.2

0.8

0.3

4.7

4.4

18.9

6.0

4.4

4.4

4.1

Interest expense, net

-

-

-

-

-

-

-

-

Income tax benefit

(0.1)

(66.2)

(12.3)

(1.4)

(49.5)

(3.0)

(9.7)

(6.2)

(0.9)

(1.6)

(1.0)

Asset impairment

-

133.5

29.1

16.4

88.0

-

-

-

-

-

-

Exit Costs

(1.0)

18.5

17.6

0.4

0.3

0.2

-

-

-

-

-

Adjusted EBITDA from Discontinued Operations

($3.1)

($10.0)

($4.9)

($2.8)

$2.1

($4.4)

($6.3)

($4.6)

($0.1)

$0.0

($1.6)

SXC Q1 2015 Earnings Call

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Reconciliation of Segment Adjusted EBITDA and Adjusted EBITDA per ton

Reconciliation of Segment Adjusted EBITDA and Adjusted EBITDA per Ton

Domestic

India

Coal

Corporate /

Continuing

Dicontinued

($ in millions, except per ton data)

Coke

Brazil Coke

Coke (1)

Logistics

Other

Operations

Operations

Legacy Costs

Combined

Q1 2015

Adjusted EBITDA

$52.7

$4.1

($0.7)

$2.6

($9.6)

$49.1

($3.1)

$1.9

$47.9

Sales Volume (thousands of tons)

950

439

46

3,794

Adjusted EBITDA per Ton

$55.63

$9.34

($15.07)

$0.69

FY 2014

Adjusted EBITDA

$247.9

$18.9

($3.1)

$14.3

($40.2)

$237.8

($10.0)

($17.1)

$210.7

Sales Volume (thousands of tons)

4,184

1,516

177

19,037

Adjusted EBITDA per Ton

$59.25

$12.47

($17.51)

$0.75

Q4 2014

Adjusted EBITDA

$64.4

$12.2

($1.4)

$3.4

($8.6)

$70.0

($4.9)

($13.3)

$51.8

Sales Volume (thousands of tons)

1,103

419

38

4,301

Adjusted EBITDA per Ton

$58.39

$29.12

($36.84)

$0.79

Q3 2014

Adjusted EBITDA

$72.3

$2.5

($1.3)

$3.8

($9.3)

$68.0

($2.8)

($0.9)

$64.3

Sales Volume (thousands of tons)

1,074

431

38

4,772

Adjusted EBITDA per Ton

$67.32

$5.80

($34.21)

$0.80

Q2 2014

Adjusted EBITDA

$64.4

$2.5

($0.5)

$5.0

($11.1)

$60.3

$2.1

($1.4)

$61.0

Sales Volume (thousands of tons)

1,059

413

42

5,605

Adjusted EBITDA per Ton

$60.81

$6.05

($11.90)

$0.89

Q1 2014

Adjusted EBITDA

$46.8

$1.7

$0.1

$2.1

($11.2)

$39.5

($4.4)

($1.5)

$33.6

Sales Volume (thousands of tons)

948

252

60

4,359

Adjusted EBITDA per Ton

$49.37

$6.75

$1.67

$0.48

FY 2013

Adjusted EBITDA

$243.2

$16.1

$0.9

$4.7

($43.1)

$221.8

($6.3)

($0.4)

$215.1

Sales Volume (thousands of tons)

4,263

876

126

3,785

Adjusted EBITDA per Ton

$57.05

$18.38

$7.14

$1.24

Q4 2013

Adjusted EBITDA

$56.4

$11.4

$2.2

$4.0

($11.2)

$62.8

($4.6)

$1.5

$59.7

Sales Volume (thousands of tons)

1,047

222

53

3,649

Adjusted EBITDA per Ton

$53.87

$51.35

$41.51

$1.10

Q3 2013

Adjusted EBITDA

$64.4

$1.5

($2.1)

$0.7

($13.4)

$51.1

($0.3)

($0.1)

$50.7

Sales Volume (thousands of tons)

1,084

221

48

136

Adjusted EBITDA per Ton

$59.41

$6.79

($43.75)

$5.15

Q2 2013

Adjusted EBITDA

$61.3

$1.6

$0.8

N/A

($10.6)

$53.1

($0.7)

$0.0

$52.4

Sales Volume (thousands of tons)

1,074

217

26

N/A

Adjusted EBITDA per Ton

$57.08

$7.37

$30.77

N/A

Q1 2013

Adjusted EBITDA

$61.1

$1.6

N/A

N/A

($7.9)

$54.8

($0.9)

($1.6)

$52.3

Sales Volume (thousands of tons)

1,058

216

N/A

N/A

Adjusted EBITDA per Ton

$57.75

$7.41

N/A

N/A

(1) Represents SunCoke’s share of India JV interest, taxes and depreciation expense.

SXC Q1 2015 Earnings Call

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2015E Guidance Reconciliation

2015E

2015E

($ in millions)

Low

High

Net Income

$21

$38

Subtract: Net Loss from Discontinued Operations

(16)

(13)

Net Income from Continuing Operations

$37

$51

Depreciation, depletion and amortization

89

89

Interest expense, net

68

66

Income tax expense

12

20

Legacy costs, net

15

15

Adjustment to unconsolidated affiliate earnings(1)

4

4

Adjusted EBITDA from Continuing Operations

$225

$245

Legacy costs, net

(15)

(15)

Adjusted EBITDA from Discontinued Operations

(20)

(20)

Adjusted EBITDA

$190

$210

Adjusted EBITDA attributable to noncontrolling interests(2)

(75)

(80)

Adjusted EBITDA attributable to SXC

$115

$130

(1)

Represents SunCoke’s share of India JV interest, taxes and depreciation expense.

(2)

Represents Adjusted EBITDA attributable to SXCP public unitholders and DTE Energy’s interest in Indiana Harbor.

SXC Q1 2015 Earnings Call

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Balance Sheet & Debt Metrics

As of 3/31/2015

SXC

Attributable

Balance

Consolidated

to SXCP

Attributable

($ in millions)

to SXC

Cash

$

165

$ 92

$ 74

Revolver Capacity

398

250

148

Total Liquidity

563

342

222

Total Debt (Long and Short-term)

699

597

102

Net Debt (Total Debt less Cash)

534

505

29

Full Year Adj. EBITDA from Cont. Ops.(1)

$

235

$ 174

$ 123

Total Debt/2015E Adj. EBITDA(1)

3.0x

3.4x

0.8x

Net Debt/2015E Adj. EBITDA(1)

2.3x

2.9x

0.2x

(1) Represents mid-point of FY 2015 guidance for Adjusted EBITDA (Consolidated), Adjusted EBITDA attributable to SXCP, and

Adjusted EBITDA attributable to SXC.

SXC Q1 2015 Earnings Call

---

 

Capital Expenditures

2014 CapEx

($ in millions)

SXC

SXCP(1)

Consolidated

Ongoing(2)

$

27

$

17

$44

Expansion

4

0

4

Environmental Project

1

45

46

Indiana Harbor Refurbishment

24

0

24

Total CapEx from Continuing Operations

$

56

$

62

118

Ongoing: Discontinued Operations(3)

7

0

7

Total CapEx (Consolidated)

$

63

$

62

125

2015 Expected CapEx

($ in millions)

SXC

SXCP(1)

Consolidated

Ongoing(4)

$

28

$

17

$45

Expansion

9

6

15

Environmental Project

0

30

30

Total CapEx from Continuing Operations

$

37

$

53

$90

(1)

Represents SXCP capex on 100% basis. Includes Granite City in 2015.

(2)

Includes $3M ongoing Coal Logistics, $1M ongoing Prep. Plant and $40M in ongoing Coke CapEx, including $13M related to Indiana Harbor oven floor

and sole flue replacement work.

(3)

Includes ongoing CapEx related to Coal business excluding $1M related to Prep. Plant.

(4)

Consolidated includes approximately $42M in ongoing Coke Capex and $3M ongoing Coal Logistics.

SXC Q1 2015 Earnings Call