SUNCOKE ENERGY, INC. SunCoke Energy, Inc.
Q1 2020 Earnings
Conference Call
Forward‐Looking Statements | 2 |
This slide presentation should be reviewed in conjunction with the First Quarter 2020 earnings release of SunCoke Energy, Inc. (SunCoke) and conference call held on May 8, 2020.
This conference call contains "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). Such forward‐looking statements include statements that are not strictly historical facts, and include, among other things, statements regarding: our expectations of financial results, condition and outlook; anticipated effects of the COVID‐19 pandemic and responses thereto, including the pandemic's impact on general economic and market conditions, as well as on our business, our customers, our results of operations and financial condition; anticipated actions to be taken by management to sustain SunCoke during the economic uncertainty caused by the pandemic and related business actions; and anticipated actions by governments to contain the spread of COVID‐19 or mitigate the severity thereof.
Forward‐looking statements often 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 SunCoke) 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 SunCoke, 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 SunCoke; and changes in tax, environmental and other laws and regulations applicable to SunCoke's businesses.
Currently, such risks and uncertainties also include: SunCoke's ability to manage its business during and after the COVID‐19 pandemic; the impact of the COVID‐19 pandemic on SunCoke's results of operations, revenues, earnings and cash flows; SunCoke's ability to reduce costs and capital spending in response to the COVID‐19 pandemic; SunCoke's balance sheet and liquidity throughout and following the COVID‐19 pandemic; SunCoke's prospects for financial performance and achievement of strategic objectives following the COVID‐19 pandemic; capital allocation strategy following the COVID‐19‐related outbreak; and the general impact on our industry and on the U.S. and global economy resulting from COVID‐19, including actions by domestic and foreign governments and others to contain the spread, or mitigate the severity, thereof.
Forward‐looking statements are not guarantees of future performance, but are based upon the current knowledge, beliefs and expectations of SunCoke management, and upon assumptions by SunCoke 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 the earnings release. SunCoke 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, SunCoke 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 SunCoke. For information concerning these factors, see SunCoke'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 SunCoke'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.
COVID‐19 Response and Q1 2020 Highlights | 3 |
- SunCoke deemed essential business in every state where it operates and all facilities remain open
- Took proactive and enhanced measures to protect the health and safety of our employees and contractors:
- Screening process while entering at each site
- Revised work schedule and cleaning procedures
- Only essential employees allowed in work place
- COVID‐19 Internal task force
- Minimal COVID‐19 impact on Q1 2020 results; Delivered Q1 '20 Adjusted EBITDA of $62.1M
- Continued solid operating performance across the coke fleet; ~63Kt increase in production compared to prior year period, driven by Indiana Harbor rebuilt ovens
- Foresight Energy filed for Chapter 11 bankruptcy during the quarter; Currently shipping coal for Javelin in 2020 and negotiating a longer term contract at CMT
- Withdrawing 2020 guidance as we explore contract restructuring alternatives with our customers to address short‐term market challenges
Q1 2020 Financial Performance | 4 |
Q1 '20 vs. | |||
($ in millions, except volumes) | Q1 '20 | Q1 '19 | Q1 '19 |
Domestic Coke Sales Volumes | 1,064 | 1,004 | 60 |
Logistics Volumes | 4,214 | 5,784 | (1,570) |
Coke Adj. EBITDA(2) | $67.5 | $63.0 | $4.5 |
Logistics Adj. EBITDA | $3.3 | $12.7 | ($9.4) |
Corporate and Other Adj. EBITDA | ($8.7) | ($8.4) | ($0.3) |
Consolidated Adjusted EBITDA (1) | $62.1 | $67.3 | ($5.2) |
Q1 '20 EPS of $0.06 per share, down $0.09 per share from the prior year quarter
- Mainly driven by Logistics segment performance
Adjusted EBITDA(1)of $62.1M, down $5.2M from the prior year quarter
- Coke operations up $4.5M, continued strong performance across the coke segment
- Logistics segment down $9.4M driven by lower CMT throughput volumes
- See appendix for a definition and reconciliation of Adjusted EBITDA
- Coke Adjusted EBITDA includes Domestic Coke and Brazil Coke.
Adjusted EBITDA | (1) | - Q1 '19 to Q1 '20 | |
5 | |||
Q1 '20 performance driven by lower contribution from CMT partially offset by
strong performance in Domestic Coke segment
($ in millions)
$4.5 | ($9.4) | ||
$67.3 | |||
($0.3) | $62.1 | ||
• | Lower volumes and | ||
price at CMT | |||
• | Higher coke volumes |
Q1 2019 | Domestic & Brazil Coke | Logistics | Corporate and Other | Q1 2020 |
Adj. EBITDA(1) | Adj. EBITDA(1) |
(1) See appendix for a definition and reconciliation of Adjusted EBITDA
Domestic Coke Business Summary | |
6 |
Strong Q1 '20 cokemaking performance driven by higher production at IHO
Delivered Adj. EBITDA/ton(1)of ~$60 vs. ~$58 in Q1 '19
•Increased production across the fleet
•Lower coal‐to‐coke yield gains due to lower coal price offset by lower O&M costs
(1) See appendix for a definition and reconciliation of Adjusted EBITDA and Adjusted EBITDA per ton
Logistics Business Summary | ||
7 | ||
Lower throughput volumes and price at CMT driving Logistics results | ||
$12.7M | $11.8M | |
$9.6M | $8.5M | |
$3.3M |
- Logistics segment contributed $3.3M to Q1 '20 Adj. EBITDA
- CMT contributed $1.3M to Q1 '20 Adj. EBITDA driven by lower volumes and lower price
Total Logistics Adj. EBITDA ($M)
(1) See appendix for a definition and reconciliation of Adjusted EBITDA.
Q1 2020 Liquidity | 8 |
Maintain strong liquidity position of ~$324M; Revolver drawdown to increase
cash position and preserve financial flexibility
(Consolidated) | Q1 '20 | Revolver | ||||||||||||||||
Total Debt | $944.5M | |||||||||||||||||
Availability: | ||||||||||||||||||
Gross Leverage(1) | 3.89x | $88.2M | ||||||||||||||||
Net Leverage(1) | 2.92x | ($ in millions) | ||||||||||||||||
($8.9) | ($1.1) | $235.8 | ||||||||||||||||
($7.0) | ||||||||||||||||||
($5.0) | ||||||||||||||||||
$156.7 | •Repurchased | |||||||||||||||||
~1.6M shares (3) | ||||||||||||||||||
•$12M Face value | •Dividend of $0.06 | |||||||||||||||||
$26.8 | ($22.8) | of 2025 Senior | ||||||||||||||||
$97.1 | per share of SXC | |||||||||||||||||
Notes retired (2) | ||||||||||||||||||
Cash @ Q4 2019 Net Cash Provided | CapEx | Revolver | Debt Reduction Share Repurchases | Dividends | Other | Cash @ Q1 2020 |
by Ops. Activities | Borrowing |
- Gross leverage and Net leverage for Q1 2020 calculated using Last Twelve Month(LTM) Adjusted EBITDA
- Average bond repurchase price of $0.743 per $1.00 face value
- Average share repurchase price of $4.29 per share
2020 Revised Key Initiatives | |
9 |
Successfully Navigate through the Pandemic Crisis
- Protect the safety and well‐being of employees and contractors during this health crisis
Deliver Operational Excellence and Optimize Asset Base
- Continue to deliver strong operational performance and asset optimization while following safety guidelines
Support Customer Base and Successful Relief Negotiation
- Business model based on long‐term partnership with customers; Support our customers to help them navigate through current crisis while providing long‐term stability
Maintain Asset Integrity for Long‐Term Viability
- Ensure that assets are safeguarded during the current crisis to minimize any potential negative financial impact in the long‐term
APPENDIX
Definitions | 11 |
Adjusted EBITDArepresents earnings before interest, loss (gain) on extinguishment of debt, taxes, depreciation and amortization ("EBITDA"), adjusted for impairments, loss on extinguishment of debt, changes to our contingent consideration liability related to our acquisition of CMT, and/or transaction costs incurred as part of the Simplification Transaction. 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. Management believes Adjusted EBITDA is an important measure in assessing operating performance. Adjusted EBITDA 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. EBITDA and Adjusted EBITDA are not measures calculated in accordance with GAAP, and they should not be considered a substitute for net income or any other measure of financial performance presented in accordance with GAAP.
EBITDArepresents earnings before interest, taxes, depreciation and amortization.
Adjusted EBITDA attributable to SXCrepresents Adjusted EBITDA less Adjusted EBITDA attributable to noncontrolling interests.
Adjusted EBITDA/Tonrepresents Adjusted EBITDA divided by tons sold/handled.
Reconciliation to Adjusted EBITDA and Adjusted EBITDA
attributable to SXC
12
($ in millions) | Q1 '19 | Q2 '19 | Q3 '19 | Q4 '19 | FY '19 | Q1 '20 | |||||
Net income (loss) attributable to SunCoke Energy, Inc. | $ | 9.8 | $ | 2.3 | $(163.0) | $ | (1.4) | $(152.3) | $ | 4.9 | |
Net income (loss) attributable to noncontrolling interests | 2.4 | 1.0 | (0.1) | 0.6 | 3.9 | 1.0 | |||||
Net Income (loss) | $ | 12.2 | $ | 3.3 | $(163.1) | $ | (0.8) | $(148.4) | $ | 5.9 | |
Depreciation and amortization expense | 37.2 | 37.0 | 35.6 | 34.0 | 143.8 | 34.1 | |||||
Gain on extinguishment of debt, net | ‐ | ‐ | (1.5) | ‐ | (1.5) | (2.9) | |||||
Interest expense, net | 14.8 | 15.1 | 15.7 | 14.7 | 60.3 | 14.6 | |||||
Income tax expense (benefit) | 3.0 | 3.2 | (63.5) | 2.6 | (54.7) | 10.4 | |||||
Contingent consideration adjustments(1) | (0.4) | 0.1 | (3.9) | ‐ | (4.2) | ‐ | |||||
Simplification Transaction costs(2) | 0.5 | 4.4 | ‐ | 0.3 | 5.2 | ‐ | |||||
Long‐lived asset and goodwill impairment | ‐ | ‐ | 247.4 | 247.4 | ‐ | ||||||
Adjusted EBITDA | $ | 67.3 | $ | 63.1 | $ | 66.7 | $ | 50.8 | $ 247.9 | $ | 62.1 |
Adjusted EBITDA attributable to noncontrolling interest(3) | (18.9) | (18.6) | (1.6) | (1.6) | (40.7) | (2.0) | |||||
Adjusted EBITDA attributable to SXC | $ | 48.4 | $ | 44.5 | $ | 65.1 | $ | 49.2 | $ 207.2 | $ | 60.1 |
- In connection with the CMT acquisition, the Company entered into a contingent consideration arrangement that required the Company to make future payments to the seller based on future volume over a specified threshold, price and contract renewals. Contingent consideration adjustments were primarily the result of modifications to the volume forecast. Customer events during the third quarter of 2019 drove a decrease in our forecast such that the contingent consideration liability was reduced to zero.
- Costs expensed by the Partnership associated with the Simplification Transaction.
- Reflects non‐controlling interests in Indiana Harbor and the portion of the Partnership owned by public unitholders prior to the closing of the Simplification Transaction
Adjusted EBITDA and Adjusted EBITDA per ton | 13 |
Reconciliation of Segment Adjusted EBITDA and Adjusted EBITDA per Ton
Domestic | Corporate and | ||||
($ in millions, except per ton data) | Coke | Brazil Coke | Logistics | Other(1) | Consolidated |
Q1 2020 | |||||
Adjusted EBITDA | $63.4 | $4.1 | $3.3 | ($8.7) | $62.1 |
Sales Volume (thousands of tons) | 1,064 | 410 | 4,214 | ||
Adjusted EBITDA per Ton | $59.59 | $10.01 | $0.78 | ||
FY 2019 | |||||
Adjusted EBITDA | $226.7 | $16.0 | $42.6 | ($37.4) | $247.9 |
Sales Volume (thousands of tons) | 4,171 | 1,641 | 21,053 | ||
Adjusted EBITDA per Ton | $54.35 | $9.75 | $2.02 | ||
Q4 2019 | |||||
Adjusted EBITDA | $52.1 | $3.3 | $8.5 | ($13.1) | $50.8 |
Sales Volume (thousands of tons) | 1,080 | 371 | 4,971 | ||
Adjusted EBITDA per Ton | $48.24 | $8.89 | $1.71 | ||
Q3 2019 | |||||
Adjusted EBITDA | $59.8 | $3.9 | $9.6 | ($6.6) | $66.7 |
Sales Volume (thousands of tons) | 1,057 | 427 | 4,706 | ||
Adjusted EBITDA per Ton | $56.58 | $9.13 | $2.04 | ||
Q2 2019 | |||||
Adjusted EBITDA | $56.3 | $4.3 | $11.8 | ($9.3) | $63.1 |
Sales Volume (thousands of tons) | 1,030 | 424 | 5,592 | ||
Adjusted EBITDA per Ton | $54.66 | $10.14 | $2.11 | ||
Q1 2019 | |||||
Adjusted EBITDA | $58.5 | $4.5 | $12.7 | ($8.4) | $67.3 |
Sales Volume (thousands of tons) | 1,004 | 419 | 5,784 | ||
Adjusted EBITDA per Ton | $58.27 | $10.74 | $2.20 |
(1) Corporate and Other includes the results of our legacy coal mining business.
Balance Sheet & Debt Metrics | 14 |
As of 3/31/2020 | As of 12/31/2019 | |||||||||||||||
Cash | $ | 236 | $ | 97 | ||||||||||||
Available Revolver Capacity | 88 | 245 | ||||||||||||||
Total Liquidity | $ | 324 | $ | 342 | ||||||||||||
Gross Debt (Long and Short‐term) | $ | 945 | $ | 801 | ||||||||||||
Net Debt (Total Debt less Cash) | $ | 709 | $ | 704 | ||||||||||||
LTM Adj. EBITDA | $ | 243 | $ | 248 | ||||||||||||
Gross Debt / LTM Adj. EBITDA | 3.89x | 3.23x | ||||||||||||||
Net Debt / LTM Adj. EBITDA | 2.92x | 2.84x | ||||||||||||||
As of | ||||||||||||||||
3/31/2020 | Consolidated | |||||||||||||||
($ in millions) | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 | Total | |||||||||
Sr. Notes | $ | ‐ | $ | ‐ | $ | ‐ | $ | ‐ | $ | ‐ | $ | 638.0 | $ | 638.0 | ||
Sale Leaseback | 2.2 | 4.3 | ‐ | ‐ | ‐ | ‐ | 6.5 | |||||||||
Revolver | ‐ | ‐ | ‐ | ‐ | 300.0 | ‐ | 300.0 | |||||||||
Total | $ | 2.2 | $ | 4.3 | $ | ‐ | $ | ‐ | $ | 300.0 | $ | 638.0 | $ | 944.5 |
Attachments
- Original document
- Permalink
Disclaimer
SunCoke Energy Inc. published this content on 07 May 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 08 May 2020 10:53:02 UTC
