8-K
SunCoke Energy, Inc. (SXC)
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): January 29, 2020
SUNCOKE ENERGY, INC.
(Exact name of registrant as specified in its charter)
| Delaware | 001-35243 | 90-0640593 |
|---|---|---|
| (State of<br> <br>Incorporation) | (Commission<br> <br>File Number) | (IRS Employer<br> <br>Identification No.) |
| 1011 Warrenville Road, Suite 600<br> <br>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)) |
| --- | --- |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading<br> <br>Symbol(s) | Name of each exchange<br> <br>on which registered |
|---|---|---|
| Common Stock, $0.01 par value | SXC | New York Stock Exchange |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
| Item 2.02. | Results of Operations and Financial Condition. |
|---|
On January 29, 2020, SunCoke Energy, Inc. (the “Company”) issued a press release announcing its financial results for the fourth quarter and full year of 2019. 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 January 29, 2020, the Company issued a press release announcing its financial results for the fourth quarter and full year of 2019. Additional information concerning the Company’s financial results for the fourth quarter and full year of 2019 will be presented in a slide presentation to investors during a previously announced teleconference on January 29, 2020. 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.
| Item 8.01. | Other Events. |
|---|
On January 29, 2020, the Company issued a press release announcing the declaration of its quarterly cash dividend. A copy of this press release is attached hereto as Exhibit 99.3 and is incorporated herein by reference.
Safe Harbor Statement
Statements contained in the exhibits 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.
| Item 9.01 | Financial Statements and Exhibits. | |
|---|---|---|
| (d) | Exhibits | |
| --- | --- | |
| Exhibit<br> <br>No. | Description | |
| --- | --- | --- |
| 99.1 | SunCoke Energy, Inc. Press Release, announcing earnings (January 29, 2020). | |
| 99.2 | SunCoke Energy, Inc. Slide Presentation regarding earnings (January 20, 2020). | |
| 99.3 | SunCoke Energy, Inc. Press Release, announcing cash dividend (January 29, 2020) | |
| 104 | Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101) |
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.
| SUNCOKE ENERGY, INC. | |
|---|---|
| By: | /s/ Fay West |
| Fay West | |
| Senior Vice President and Chief Financial Officer |
Date: January 29, 2020
EX-99.1
Exhibit 99.1
Investors and Media:
Shantanu Agrawal
(630) 824-1907
SUNCOKE ENERGY, INC. ANNOUNCES FULL-YEAR 2019 RESULTS AND PROVIDES GUIDANCE FOR 2020
| • | Net loss attributable to SXC was $152.3 million, or $1.98 per share, for the full-year 2019, which included<br>previously announced non-cash impairment related charges at Logistics, net of taxes, of $174.4 million. Excluding these non-cash charges, Adjusted Net Income<br>Attributable to SXC was $22.1 million, or $0.29 per share; Net loss attributable to SXC was $1.4 million, or $0.02 per share in the fourth quarter 2019 |
|---|---|
| • | Full-year 2019 consolidated Adjusted EBITDA was $247.9 million which was within our revised guidance range<br>of $240 million to $250 million; fourth quarter Adjusted EBITDA was $50.8 million |
| --- | --- |
| • | Operating cash flow was $181.9 million for the full-year 2019, above our revised guidance of<br>$150 million to $160 million |
| --- | --- |
| • | Full-year 2020 consolidated Adjusted EBITDA is expected to be $235 million to $245 million<br> |
| --- | --- |
LISLE, Ill. (January 29, 2020) - SunCoke Energy, Inc. (NYSE: SXC) (the “Company”) today reported fourth quarter and full-year 2019 results, reflecting continued strong operating performance from our Domestic Coke business.
“In 2019, we simplified our corporate structure to build financial flexibility and made major strides in enhancing performance and efficiency within our core domestic cokemaking operations, leading to strong results for the year and a solid foundation from which to drive momentum into 2020,” said Mike Rippey, President and Chief Executive Officer of SunCoke Energy, Inc. “Despite the customer challenges within our Logistics segment, we delivered robust cash flows and aggressively pursued a balanced yet opportunistic approach to capital allocation in 2019 and set the stage for continued progress on our capital allocation priorities in 2020.”
Looking forward, the Company expects 2020 consolidated Adjusted EBITDA to be between $235 million and $245 million, driven by continued improvement in our cokemaking business, partially offset by the challenges faced by our coal export customers in our logistics business.
Rippey continued, “As we move forward in 2020, we will remain focused on executing against our objectives of improved safety performance and operational excellence. Additionally, we will work towards development of new business opportunities for our Logistics segment and navigating through the upcoming coke contract renewal negotiations. We are committed to positioning the Company for sustained success and delivering significant value to SunCoke stakeholders.”
CONSOLIDATED RESULTS
| Three Months EndedDecember 31, | Years Ended<br>December 31, | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (Dollars in millions) | 2019 | 2018 | Increase/(Decrease) | 2019 | 2018 | Increase/(Decrease) | ||||||||||
| Sales and other operating revenues | $ | 397.2 | $ | 368.9 | $ | 28.3 | $ | 1,600.3 | $ | 1,450.9 | $ | 149.4 | ||||
| Net (loss) income attributable to SXC | $ | (1.4 | ) | $ | 1.8 | $ | (3.2 | ) | $ | (152.3 | ) | $ | 26.2 | $ | (178.5 | ) |
| Adjusted EBITDA^(1)^ | $ | 50.8 | $ | 65.9 | $ | (15.1 | ) | $ | 247.9 | $ | 263.2 | $ | (15.3 | ) | ||
| (1) | See definition of Adjusted EBITDA and reconciliation elsewhere in this release. | |||||||||||||||
| --- | --- |
Revenues increased $28.3 million and $149.4 million for the fourth quarter and full-year 2019, respectively, primarily reflecting the pass-through of higher coal prices and higher sales volumes in our Domestic Coke segment, partially offset by lower transloading volumes in our Logistics segment.
Fourth quarter and full year 2019 Adjusted EBITDA decreased by $15.1 million and $15.3 million, respectively. The decrease reflects the impact of the previously announced bankruptcy of one of our coal export customers, which was partially offset by the improved performance in our Domestic Coke segment.
Net (loss) income attributable to SXC decreased $3.2 million for the fourth quarter 2019 reflecting lower operating results discussed above, partially offset by lower depreciation expense and lower income attributable to noncontrolling interest.
Net loss attributable to SXC was $152.3 million for the full-year 2019 and included non-cash impairment related charges at Logistics, net of taxes, of $174.8 million recorded in the third quarter. Excluding these impairment related charges, Adjusted net income attributable to SXC decreased $3.7 million for the full-year mainly due to lower operating results discussed above.
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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.
| Three Months EndedDecember 31, | Years Ended<br>December 31, | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (Dollars in millions, except per ton amounts) | 2019 | 2018 | Increase/(Decrease) | 2019 | 2018 | Increase | |||||||
| Sales and other operating revenues | $ | 373.3 | $ | 334.7 | $ | 38.6 | $ | 1,489.1 | $ | 1,308.3 | $ | 180.8 | |
| Adjusted EBITDA^(1)^ | $ | 52.1 | $ | 51.6 | $ | 0.5 | $ | 226.7 | $ | 207.9 | $ | 18.8 | |
| Sales Volume (in thousands of tons) | 1,080 | 1,040 | 40 | 4,171 | 4,033 | 138 | |||||||
| Adjusted EBITDA per ton^(2)^ | $ | 48.24 | $ | 49.62 | $ | (1.38 | ) | $ | 54.35 | $ | 51.55 | $ | 2.80 |
| (1) | See definitions of Adjusted EBITDA and reconciliation elsewhere in this release. | ||||||||||||
| --- | --- | ||||||||||||
| (2) | Reflects Domestic Coke Adjusted EBITDA divided by Domestic Coke sales volumes. | ||||||||||||
| --- | --- | ||||||||||||
| • | Revenues increased $38.6 million and $180.8 million, for the fourth quarter and full-year 2019,<br>respectively, compared with the same prior year periods, reflecting the pass-through of higher coal prices and higher sales volumes. | ||||||||||||
| --- | --- | ||||||||||||
| • | Adjusted EBITDA increased $0.5 million and $18.8 million for the fourth quarter and full-year 2019,<br>respectively, reflecting additional sales volume at Indiana Harbor and lower outage impact at Granite City. | ||||||||||||
| --- | --- |
Logistics
Logistics consists of the handling and mixing services of coal and other aggregates at our Convent Marine Terminal (“CMT”), Lake Terminal, Kanawha River Terminals (“KRT”) and Dismal River Terminal (“DRT”).
| Three Months EndedDecember 31, | Years Ended<br>December 31, | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (Dollars in millions) | 2019 | 2018 | Decrease | 2019 | 2018 | Increase/(Decrease) | ||||||||
| Sales and other operating revenues | $ | 14.8 | $ | 23.8 | $ | (9.0 | ) | $ | 72.8 | $ | 102.2 | $ | (29.4 | ) |
| Intersegment sales | $ | 7.0 | $ | 7.9 | $ | (0.9 | ) | $ | 26.3 | $ | 24.5 | $ | 1.8 | |
| Adjusted EBITDA^(1)^ | $ | 8.5 | $ | 18.3 | $ | (9.8 | ) | $ | 42.6 | $ | 72.6 | $ | (30.0 | ) |
| Tons handled (thousands of tons)^(2)^ | 4,971 | 6,861 | (1,890 | ) | 21,053 | 26,605 | (5,552 | ) | ||||||
| (1) | See definitions of Adjusted EBITDA and reconciliation elsewhere in this release. | |||||||||||||
| --- | --- | |||||||||||||
| (2) | Reflects inbound tons handled during the period. | |||||||||||||
| --- | --- | |||||||||||||
| • | Revenues decreased $9.0 million for the fourth quarter 2019 and $29.4 million for the full-year 2019.<br>Lower demand and depressed export pricing drove lower throughput volumes in the fourth quarter and full-year 2019. | |||||||||||||
| --- | --- | |||||||||||||
| • | Adjusted EBITDA decreased $9.8 million for the fourth quarter 2019 and $30.0 million for the full-year<br>2019 mainly due to lower throughput volumes as described above. Results in 2019 reflect the impact of bankruptcy of Murray Energy - one of our coal export customers. We do not expect any throughput volumes from Murray Energy in 2020.<br> | |||||||||||||
| --- | --- |
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Brazil Coke
Brazil Coke consists of a cokemaking facility in Vitória, Brazil, which we operate for an affiliate of ArcelorMittal.
| • | Revenues were $9.1 million and $38.4 million for the fourth quarter and full-year 2019, respectively, a<br>decrease of $1.3 million and $2.0 million, respectively, as compared to the same prior year periods. These decreases were the result of lower volumes and unfavorable foreign currency adjustments. |
|---|---|
| • | Adjusted EBITDA was $3.3 million and $16.0 million for the fourth quarter and full-year 2019,<br>respectively, a decrease of $1.1 million and $2.4 million, respectively, as compared with the same prior year periods, mainly due to lower volumes. |
| --- | --- |
Corporate and Other
Corporate and other expenses, which includes activity from our legacy coal mining business, increased $4.7 million and $1.7 million, for the fourth quarter and full-year 2019, respectively, compared to the same prior year periods. The fourth quarter increase was primarily due to the timing of employee related expenses as well as higher legacy costs. The impact of higher legacy costs on the full year period was mostly offset by lower legal costs.
2020 OUTLOOK
Our 2020 guidance assumes Indiana Harbor achieving full production of 1.2 million tons and run-rate EBITDA of approximately $50 million. It also assumes continued Logistics customer disruption, including an anticipated renegotiated contract with our CMT customer, Foresight Energy.
Our 2020 guidance is as follows:
| • | Domestic coke production is expected to be approximately 4.3 million tons |
|---|---|
| • | Consolidated Adjusted EBITDA is expected to be between $235 million to $245 million<br> |
| --- | --- |
| • | Capital expenditures are projected to be between $70 million to $80 million |
| --- | --- |
| • | Cash generated by operations is estimated to be between $170 million and $185 million<br> |
| --- | --- |
| • | Cash taxes are projected to be between $4 million to $8 million |
| --- | --- |
RELATED COMMUNICATIONS
Today, we will host an investor conference call at 10:00 a.m. Eastern Time (9:00 a.m. Central Time). Investors may participate in this call by dialing 1-833-236-5757 in the U.S. or 1-647-689-4185 if outside the U.S., confirmation code 6073206. This conference call will be webcast live and archived for replay in the Investor Relations section of www.suncoke.com.
SUNCOKE ENERGY, INC.
SunCoke Energy, Inc. (NYSE: SXC) supplies high-quality coke to the integrated steel industry under long-term, take-or-pay 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 and Brazil. We have more than 55 years of cokemaking experience serving the integrated steel industry. In addition, we provide export and domestic material handling services to coke, coal, steel, power and other bulk and liquids customers. Our logistics terminals have the collective capacity to mix and transload more than 40 million tons of material each year and are strategically located to reach Gulf Coast, East Coast, Great Lakes and international ports. To learn more about SunCoke Energy, Inc., visit our website at www.suncoke.com.
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DEFINITIONS
| • | Adjusted EBITDA represents earnings before interest, taxes, depreciation and amortization<br>(“EBITDA”), adjusted for any impairments, (gain) loss on extinguishment of debt, changes to our contingent consideration liability related to our acquisition of CMT, loss on the disposal of our interest in VISA SunCoke Limited, and/or<br>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 accounting principles generally accepted in the U.S.<br>(“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<br>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<br>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. |
|---|---|
| • | Adjusted EBITDA attributable to SXC represents Adjusted EBITDA less Adjusted EBITDA attributable to<br>noncontrolling interests. |
| --- | --- |
| • | Adjusted net income attributable to SXC represents net income (loss) attributable to SXC adjusted<br>for impairments, changes to our contingent consideration liability as a result of impairments and related tax impacts. Adjusted earnings per share is Adjusted net income attributable to SXC divided by the weighted average number of<br>diluted common shares outstanding. Management believes Adjusted net income attributable to SXC and Adjusted earnings per share provide useful information to investors because it eliminates non-cash impairment<br>related charges that are not representative of our ongoing business. These measures are not calculated in accordance with GAAP, and should not be considered a substitute for net income or any other measure of financial performance presented in<br>accordance with GAAP. |
| --- | --- |
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.
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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 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
| Three Months EndedDecember 31, | Years Ended<br>December 31, | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| 2019 | 2018 | 2019 | 2018 | |||||||
| (Unaudited) | (Unaudited) | (Unaudited) | (Audited) | |||||||
| (Dollars and shares in millions,except per share amounts) | ||||||||||
| Revenues | ||||||||||
| Sales and other operating revenue | $ | 397.2 | $ | 368.9 | $ | 1,600.3 | $ | 1,450.9 | ||
| Costs and operating expenses | ||||||||||
| Cost of products sold and operating expenses | 323.8 | 287.9 | 1,277.6 | 1,124.5 | ||||||
| Selling, general and administrative expenses | 22.9 | 16.9 | 75.8 | 66.1 | ||||||
| Depreciation and amortization expense | 34.0 | 41.3 | 143.8 | 141.6 | ||||||
| Long-lived asset and goodwill impairment | — | — | 247.4 | — | ||||||
| Total costs and operating expenses | 380.7 | 346.1 | 1,744.6 | 1,332.2 | ||||||
| Operating income (loss) | 16.5 | 22.8 | (144.3 | ) | 118.7 | |||||
| Interest expense, net | 14.7 | 14.5 | 60.3 | 61.4 | ||||||
| (Gain) loss on extinguishment of debt, net | — | — | (1.5 | ) | 0.3 | |||||
| Income (loss) before income tax expense (benefit) | 1.8 | 8.3 | (203.1 | ) | 57.0 | |||||
| Income tax expense (benefit) | 2.6 | 2.8 | (54.7 | ) | 4.6 | |||||
| Loss from equity method investment | — | — | — | 5.4 | ||||||
| Net (loss) income | (0.8 | ) | 5.5 | (148.4 | ) | 47.0 | ||||
| Less: Net income attributable to noncontrolling interests | 0.6 | 3.7 | 3.9 | 20.8 | ||||||
| Net (loss) income attributable to SunCoke Energy, Inc. | $ | (1.4 | ) | $ | 1.8 | $ | (152.3 | ) | $ | 26.2 |
| (Loss) earnings attributable to SunCoke Energy, Inc. per common share: | ||||||||||
| Basic | $ | (0.02 | ) | $ | 0.03 | $ | (1.98 | ) | $ | 0.40 |
| Diluted | $ | (0.02 | ) | $ | 0.03 | $ | (1.98 | ) | $ | 0.40 |
| Weighted average number of common shares outstanding: | ||||||||||
| Basic | 86.0 | 64.7 | 76.8 | 64.7 | ||||||
| Diluted | 86.0 | 65.4 | 76.8 | 65.5 |
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SunCoke Energy, Inc.
Consolidated Balance Sheets
| 2018 | |||||
| (Audited) | |||||
| Assets | |||||
| Cash and cash equivalents | 97.1 | $ | 145.7 | ||
| Receivables, net | 59.5 | 75.4 | |||
| Inventories | 147.0 | 110.4 | |||
| Income tax receivable | 2.2 | 0.7 | |||
| Other current assets | 2.5 | 2.8 | |||
| Total current assets | 308.3 | 335.0 | |||
| Properties, plants and equipment (net of accumulated depreciation of 903.7 million and<br>855.8 million at December 31, 2019 and 2018, respectively) | 1,390.2 | 1,471.1 | |||
| Goodwill | 3.4 | 76.9 | |||
| Other intangible assets, net | 34.7 | 156.8 | |||
| Deferred charges and other assets | 17.2 | 5.5 | |||
| Total assets | 1,753.8 | $ | 2,045.3 | ||
| Liabilities and Equity | |||||
| Accounts payable | 142.4 | $ | 115.0 | ||
| Accrued liabilities | 47.0 | 45.6 | |||
| Deferred revenue | 0.3 | 3.0 | |||
| Current portion of long-term debt and financing obligation | 2.9 | 3.9 | |||
| Interest payable | 2.2 | 3.6 | |||
| Total current liabilities | 194.8 | 171.1 | |||
| Long-term debt and financing obligation | 780.0 | 834.5 | |||
| Accrual for black lung benefits | 50.5 | 44.9 | |||
| Retirement benefit liabilities | 24.5 | 25.2 | |||
| Deferred income taxes | 147.6 | 254.7 | |||
| Asset retirement obligations | 14.4 | 14.6 | |||
| Other deferred credits and liabilities | 23.6 | 17.6 | |||
| Total liabilities | 1,235.4 | 1,362.6 | |||
| Equity | |||||
| Preferred stock, 0.01 par value. Authorized 50,000,000 shares; no issued shares at both<br>December 31, 2019 and 2018 | — | — | |||
| Common stock, 0.01 par value. Authorized 300,000,000 shares; issued 98,047,389 and 72,233,750<br>shares at December 31, 2019 and 2018, respectively | 1.0 | 0.7 | |||
| Treasury stock, 13,783,182 and 7,477,657 shares at December 31, 2019 and 2018,<br>respectively | (177.0 | ) | (140.7 | ) | |
| Additional paid-in capital | 712.1 | 488.8 | |||
| Accumulated other comprehensive loss | (14.4 | ) | (13.1 | ) | |
| Retained (deficit) earnings | (30.1 | ) | 127.4 | ||
| Total SunCoke Energy, Inc. stockholders’ equity | 491.6 | 463.1 | |||
| Noncontrolling interests | 26.8 | 219.6 | |||
| Total equity | 518.4 | 682.7 | |||
| Total liabilities and equity | 1,753.8 | $ | 2,045.3 |
All values are in US Dollars.
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SunCoke Energy, Inc.
Consolidated Statements of Cash Flows
| Years Ended December 31, | ||||||
|---|---|---|---|---|---|---|
| 2019 | 2018 | |||||
| (Unaudited) | (Audited) | |||||
| (Dollars in millions) | ||||||
| Cash Flows from Operating Activities: | ||||||
| Net (loss) income | $ | (148.4 | ) | $ | 47.0 | |
| Adjustments to reconcile net (loss) income to net cash provided by operating activities: | ||||||
| Long-lived asset and goodwill impairment | 247.4 | — | ||||
| Depreciation and amortization expense | 143.8 | 141.6 | ||||
| Deferred income tax benefit | (63.1 | ) | (3.4 | ) | ||
| Payments in excess of expense for postretirement plan benefits | (1.9 | ) | (2.4 | ) | ||
| Share-based compensation expense | 4.5 | 3.1 | ||||
| (Gain) loss on extinguishment of debt, net | (1.5 | ) | 0.3 | |||
| Loss from equity method investment | — | 5.4 | ||||
| Changes in working capital pertaining to operating activities: | ||||||
| Receivables, net | 15.9 | (6.9 | ) | |||
| Inventories | (36.6 | ) | 0.6 | |||
| Accounts payable | 23.5 | (0.7 | ) | |||
| Accrued liabilities | 0.3 | (7.3 | ) | |||
| Deferred revenue | (2.7 | ) | 1.3 | |||
| Interest payable | (1.4 | ) | (1.8 | ) | ||
| Income taxes | (1.5 | ) | 4.5 | |||
| Other | 3.6 | 4.5 | ||||
| Net cash provided by operating activities | 181.9 | 185.8 | ||||
| Cash Flows from Investing Activities: | ||||||
| Capital expenditures | (110.1 | ) | (100.3 | ) | ||
| Sale of equity method investment | — | 4.0 | ||||
| Other investing activities | 0.3 | 0.5 | ||||
| Net cash used in investing activities | (109.8 | ) | (95.8 | ) | ||
| Cash Flows from Financing Activities: | ||||||
| Proceeds from issuance of long-term debt | — | 45.0 | ||||
| Repayment of long-term debt | (90.5 | ) | (45.7 | ) | ||
| Debt issuance costs | (2.1 | ) | (0.5 | ) | ||
| Proceeds from revolving facility | 408.6 | 179.5 | ||||
| Repayment of revolving facility | (370.3 | ) | (204.5 | ) | ||
| Repayment of financing obligation | (2.9 | ) | (2.6 | ) | ||
| Cash distributions to noncontrolling interests | (14.2 | ) | (31.9 | ) | ||
| Acquisition of additional interest in the Partnership | — | (4.2 | ) | |||
| Shares repurchased | (36.3 | ) | — | |||
| Dividends paid | (5.1 | ) | — | |||
| Other financing activities | (7.9 | ) | 0.4 | |||
| Net cash used in financing activities | (120.7 | ) | (64.5 | ) | ||
| Net (decrease) increase in cash and cash equivalents | (48.6 | ) | 25.5 | |||
| Cash and cash equivalents at beginning of year | 145.7 | 120.2 | ||||
| Cash and cash equivalents at end of year | $ | 97.1 | $ | 145.7 | ||
| Supplemental Disclosure of Cash Flow Information | ||||||
| Interest paid, net of capitalized interest of $2.3 million and $3.2 million,<br>respectively | $ | 58.2 | $ | 59.6 | ||
| Income taxes paid, net of refunds of $0.3 million and $4.3 million,<br>respectively | $ | 9.5 | $ | 3.7 |
9
SunCoke Energy, Inc.
Segment Operating Data
| Three Months EndedDecember 31, | Years EndedDecember 31, | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2019 | 2018 | 2019 | 2018 | |||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | (Audited) | |||||||||
| (Dollars in millions) | ||||||||||||
| Sales and other operating revenues: | ||||||||||||
| Domestic Coke | $ | 373.3 | $ | 334.7 | $ | 1,489.1 | $ | 1,308.3 | ||||
| Brazil Coke | 9.1 | 10.4 | 38.4 | 40.4 | ||||||||
| Logistics | 14.8 | 23.8 | 72.8 | 102.2 | ||||||||
| Logistics intersegment sales | 7.0 | 7.9 | 26.3 | 24.5 | ||||||||
| Elimination of intersegment sales | (7.0 | ) | (7.9 | ) | (26.3 | ) | (24.5 | ) | ||||
| Total sales and other operating revenue | $ | 397.2 | $ | 368.9 | $ | 1,600.3 | $ | 1,450.9 | ||||
| Adjusted EBITDA^(1)^ | ||||||||||||
| Domestic Coke | $ | 52.1 | $ | 51.6 | $ | 226.7 | $ | 207.9 | ||||
| Brazil Coke | 3.3 | 4.4 | 16.0 | 18.4 | ||||||||
| Logistics | 8.5 | 18.3 | 42.6 | 72.6 | ||||||||
| Corporate and Other^(2)^ | (13.1 | ) | (8.4 | ) | (37.4 | ) | (35.7 | ) | ||||
| Total Adjusted EBITDA | $ | 50.8 | $ | 65.9 | $ | 247.9 | $ | 263.2 | ||||
| Coke Operating Data: | ||||||||||||
| Domestic Coke capacity utilization (%) | 100 | % | 98 | % | 98 | % | 95 | % | ||||
| Domestic Coke production volumes (thousands of tons) | 1,073 | 1,044 | 4,168 | 4,016 | ||||||||
| Domestic Coke sales volumes (thousands of tons) | 1,080 | 1,040 | 4,171 | 4,033 | ||||||||
| Domestic Coke Adjusted EBITDA per<br>ton^(3)^ | $ | 48.24 | $ | 49.62 | $ | 54.35 | $ | 51.55 | ||||
| Brazilian Coke production—operated facility (thousands of tons) | 371 | 442 | 1,641 | 1,768 | ||||||||
| Logistics Operating Data: | ||||||||||||
| Tons handled (thousands of tons)^(4)^ | 4,971 | 6,861 | 21,053 | 26,605 | ||||||||
| (1) | See definition of Adjusted EBITDA and reconciliation to GAAP elsewhere in this release. | |||||||||||
| --- | --- | |||||||||||
| (2) | Corporate and Other includes the activity from our legacy coal mining business, which incurred Adjusted EBITDA<br>losses of $5.4 million and $11.2 million during the three and twelve months ended December 31, 2019, respectively, as well as losses of $2.2 million and $9.8 million during the three and twelve months ended December 31,<br>2018, respectively. | |||||||||||
| --- | --- | |||||||||||
| (3) | Reflects Domestic Coke Adjusted EBITDA divided by Domestic Coke sales volumes. | |||||||||||
| --- | --- | |||||||||||
| (4) | Reflects inbound tons handled during the period. | |||||||||||
| --- | --- |
10
SunCoke Energy, Inc.
Reconciliation of Non-GAAP Information
Net Loss Attributable to SunCoke Energy, Inc. to
Adjusted Net Income Attributable to Suncoke Energy, Inc.
| Year Ended<br>December 31, 2019 | |||
|---|---|---|---|
| (Dollars in millions) | |||
| Net loss attributable to SunCoke Energy, Inc. | $ | (152.3 | ) |
| Add: | |||
| Long-lived asset and goodwill impairment | 247.4 | ||
| Contingent consideration<br>adjustments^(1)^ | (3.9 | ) | |
| Related income tax benefit^(2)^ | (69.1 | ) | |
| Adjusted net income attributable to SunCoke Energy, Inc. | $ | 22.1 | |
| Adjusted earnings attributable to SunCoke Energy, Inc. per common share: | |||
| Basic | $ | 0.29 | |
| Diluted | $ | 0.29 | |
| Weighted average number of common shares outstanding: | |||
| Basic | 76.8 | ||
| Diluted | 76.8 | ||
| (1) | In connection with the CMT acquisition, the Company entered into a contingent consideration arrangement that<br>requires the Company to make future payments to the seller based on future volume over a specified threshold, price and contract renewals. Customer events during the third quarter of 2019 reduced contingent consideration liability to zero.<br> | ||
| --- | --- | ||
| (2) | Reflects the tax impacts of long-lived asset and goodwill impairment and the contingent consideration<br>adjustment. | ||
| --- | --- |
11
SunCoke Energy, Inc.
Reconciliation of Non-GAAP Information
Adjusted EBITDA to Net (Loss) Income
| Three Months EndedDecember 31, | Years EndedDecember 31, | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| 2019 | 2018 | 2019 | 2018 | |||||||
| (Unaudited) | (Unaudited) | (Unaudited) | (Audited) | |||||||
| (Dollars in millions) | ||||||||||
| Net (loss) income | $ | (0.8 | ) | $ | 5.5 | $ | (148.4 | ) | $ | 47.0 |
| Add: | ||||||||||
| Long-lived asset and goodwill impairment | — | — | 247.4 | — | ||||||
| Depreciation and amortization expense | 34.0 | 41.3 | 143.8 | 141.6 | ||||||
| Interest expense, net | 14.7 | 14.5 | 60.3 | 61.4 | ||||||
| (Gain) loss on extinguishment of debt, net | — | — | (1.5 | ) | 0.3 | |||||
| Income tax expense (benefit) | 2.6 | 2.8 | (54.7 | ) | 4.6 | |||||
| Contingent consideration<br>adjustments^(1)^ | — | 1.4 | (4.2 | ) | 2.5 | |||||
| Loss from equity method<br>investment^(2)^ | — | — | — | 5.4 | ||||||
| Transaction costs^(3)^ | 0.3 | 0.4 | 5.2 | 0.4 | ||||||
| Adjusted EBITDA | $ | 50.8 | $ | 65.9 | $ | 247.9 | $ | 263.2 | ||
| Subtract: Adjusted EBITDA attributable to noncontrolling interest^(4)^ | 1.6 | 20.4 | 40.7 | 82.0 | ||||||
| Adjusted EBITDA attributable to SunCoke Energy, Inc. | $ | 49.2 | $ | 45.5 | $ | 207.2 | $ | 181.2 | ||
| (1) | In connection with the CMT acquisition, the Partnership entered into a contingent consideration arrangement<br>that requires the Partnership to make future payments to the seller based on future volume over a specified threshold, price and contract renewals. Adjustments to the fair value of the contingent consideration were primarily the result of<br>modifications to the volume forecast. Customer events during the third quarter of 2019 reduced contingent consideration liability to zero. | |||||||||
| --- | --- | |||||||||
| (2) | In June 2018, the Company recorded a loss in connection with the sale of our interest in VISA SunCoke Limited.<br> | |||||||||
| --- | --- | |||||||||
| (3) | Costs expensed by the Partnership associated with the Simplification Transaction. | |||||||||
| --- | --- | |||||||||
| (4) | Reflects noncontrolling interests in Indiana Harbor and the portion of the Partnership owned by public<br>unitholder prior to the closing of the Simplification Transaction. | |||||||||
| --- | --- |
SunCoke Energy, Inc
Reconciliation of Non-GAAP Information
Estimated 2020 Consolidated Adjusted EBITDA to Estimated Net Income
| 2020 | ||||
|---|---|---|---|---|
| Low | High | |||
| Net income | $ | 33 | $ | 43 |
| Add: | ||||
| Depreciation and amortization expense | 132 | 128 | ||
| Interest expense, net | 58 | 58 | ||
| Income tax expense | 12 | 16 | ||
| Adjusted EBITDA | $ | 235 | $ | 245 |
| Subtract: Adjusted EBITDA attributable to noncontrolling interest^(1)^ | 7 | 7 | ||
| Adjusted EBITDA attributable to SunCoke Energy, Inc. | $ | 228 | $ | 238 |
| (1) | Reflects non-controlling interest in Indiana Harbor.<br> | |||
| --- | --- |
12
EX-99.2
SunCoke Energy, Inc. Q4 & FY 2019 Earnings and 2020 Guidance Conference Call Exhibit 99.2
This slide presentation should be reviewed in conjunction with the Fourth Quarter 2019 earnings release of SunCoke Energy, Inc. (SunCoke) and conference call held on January 29, 2020 at 10:00 a.m. ET. Except for statements of historical fact, information contained 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. Such forward-looking statements are based upon information currently available, and express management’s opinions, expectations, beliefs, plans, objectives, assumptions or projections with respect to SunCoke’s anticipated future performance. These statements are not guarantees of future performance and undue reliance should not be placed on them. 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. Forward-looking statements often may be identified by the use of forward-looking terminology such as the words “believe,” “expect,” “plan,” “intend,” “anticipate,” “contemplate,” “estimate,” “predict,” “guidance,” “forecast,” “potential,” “continue,” “may,” “will,” “could,” “should,” or the negative of these terms or similar expressions, and include, but are not limited to, statements regarding: possible or assumed future results of operations, expected benefits and anticipated timing of proposed transactions; expected levels of distributions to shareholders; future credit ratings; financial condition; plans and objectives of management for future operations and growth; effects of competition; and the effects of future legislation or regulations. Such statements are subject to a number of known and unknown risks, and uncertainties, many of which are beyond control, or are difficult to predict, and may cause actual results to differ materially from those implied or expressed by the forward-looking statements. SunCoke has included in its filings with the Securities and Exchange Commission (SEC) 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. Such factors include, but are not limited to: changes in industry conditions; the ability to renew current customer, supplier and other material agreements; future liquidity, working capital and capital requirements; the ability to successfully implement business strategies and potential growth opportunities; the impact of indebtedness and financing plans, including sources and availability of third-party financing; possible or assumed future results of operations; the outcome of pending and future litigation; potential operating performance improvements and the ability to achieve anticipated cost savings from strategic revenue and efficiency initiatives. For more information concerning these factors, see SunCoke’s SEC filings. All forward-looking statements included in this presentation are expressly qualified in their entirety by the cautionary statements contained in such SEC filings. The forward-looking statements in this presentation speak only as of the date hereof. Except as required by applicable law, SunCoke does not have any intention or obligation to revise or update publicly any forward-looking statement (or associated cautionary language) made herein, whether as a result of new information, future events, or otherwise, after the date of this presentation. This presentation includes certain non-GAAP financial measures intended to supplement, not substitute for, comparable GAAP measures. Furthermore, the non-GAAP financial measures presented herein may not be consistent with similar measures provided by other companies. 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. These data should be read in conjunction with SunCoke’s periodic reports previously filed with the SEC. Due to rounding, numbers presented throughout this presentation may not add up precisely to the totals indicated and percentages may not precisely reflect the absolute figures for the same reason. Industry and market data used in this presentation have been obtained from industry publications and sources as well as from research reports prepared for other purposes. SunCoke has not independently verified the data obtained from these sources and cannot assure investors of either the accuracy or completeness of such data. Forward-Looking Statements
2019 Year In Review Delivered FY 2019 results within the revised guidance range despite continued challenges at Logistics; Domestic Coke Adj. EBITDA above guidance range FY 2019 Objective 2019 Achievements Commentary Deliver FY 2019 Consolidated Adj. EBITDA(1) of $240M – $250M Generate $150M – $160M Operating Cash Flow Finalize the Simplification Transaction Completed the final stage of Indiana Harbor oven rebuilds Generated $24.4M of Adj. EBITDA Pursue Balanced Capital Allocation Simplified corporate structure provides enhanced financial flexibility to pursue balanced approach to capital allocation Complete last phase of oven rebuilds at Indiana Harbor Extinguished ~$58.0M of debt; Gross leverage ratio at 3.23x (LTM basis) Paid $0.06/share quarterly dividend in Q4 Repurchased ~6.3 million shares or 7% of the float Ongoing Delivered FY 2019 Consolidated Adj. EBITDA of $247.9M Generated $181.9M of FY 2019 OCF Completed Simplification Transaction with overwhelmingly favorable support from SXC shareholders FY 2019 FCF of $75M Indiana Harbor expected to deliver ~$50M EBITDA on 1.2M tons in 2020 Domestic Coke delivered strong performance; continued headwinds in logistics Continue to target gross leverage ratio of 3.0x and will adjust debt levels accordingly Anticipate continuation of quarterly dividend Will remain disciplined and opportunistic on future share repurchases Continue to evaluate organic growth and M&A opportunities ó See appendix for a definition and reconciliation of Adjusted EBITDA
Q4 & FY 2019 Financial Performance Q4 ‘19 EPS of ($0.02) down 5 cents as compared to Q4 ‘18 FY ’19 EPS of ($1.98) includes impact of CMT long-lived asset and Logistics goodwill impairment related charges of ($2.27) per share Excluding the non-cash charges, FY ’19 Adjusted EPS(1) was $0.29 per share, down 11 cents mainly due to lower operating performance at Logistics segment Q4 ’19 Consol. Adj. EBITDA(1) of $50.8M Logistics segment down $9.8M, impacted by coal customer bankruptcy FY ’19 Consol. Adj. EBITDA(1) of $247.9M, down $15.3M as compared to FY’ 18 Coke operations up $16.4M, due to an increase in volumes at Indiana Harbor and decrease in the scope of outage work at Granite City Logistics segment down $30.0M due to coal customer bankruptcy ($/share) ($ in millions) Diluted EPS Adj. EBITDA(1) Q4 and FY 2019 Earnings Review See appendix for a definition and reconciliation of Adjusted EBITDA and Adjusted EPS. Reflects inbound tons handled during the period Coke Adjusted EBITDA includes Domestic Coke and Brazil Coke
Adjusted EBITDA(1) – Q4 ‘18 to Q4 ‘19 ($0.6) ($9.8) $65.9 $50.8 See appendix for a definition and reconciliation of Adjusted EBITDA (1) Impact of coal export customer bankruptcy Lower volumes at other logistics terminals ($ in millions) (1) Q4 ‘19 performance impacted by coal export customer bankruptcy Higher legacy costs and timing of employee related costs
Adjusted EBITDA(1) – FY ‘18 to FY ‘19 $16.4 ($30.0) $247.9 See appendix for a definition and reconciliation of Adjusted EBITDA (1) Higher volumes at IHO Shorter duration and scope of outage work at GCO Impact of coal export customer bankruptcy ($ in millions) (1) Strong domestic coke performance offset by coal export customer bankruptcy
Revolver Availability: $244.5M 12/31/2018 12/31/2019 Total Debt $859M $801M Gross Leverage(1) 3.26x 3.23x Gross leverage calculated using FY 2018 and FY 2019 Adjusted EBITDA respectively Average bond repurchase price of $0.934 per $1.00 face value (8.95% YTW), resulting in ~$50M of face value SXCP notes repurchased during Q3 2019 Repurchased approximately 6.3 million shares at an average price of $5.76/share for approximately $36.3M Paid a dividend of $0.06/share in Q4 2019 Repurchased ~6.3M shares in 2H 2019 FY 2019 Capital Deployment Strong cash flow generation deployed towards a well-balanced capital allocation strategy; Will continue to allocate capital strategically and opportunistically ($ in millions) $46.6M SXCP Notes repurchase ($50M face value) (2) $34.8M – IHO oven rebuilds (4) (3)
2020 GUIDANCE
Market: 2019 Recap and Future Outlook Expect more of the same for domestic steel and coal export markets in the short-term; Long-term coke demand outlook looks constructive Domestic steel markets struggled in 2019 despite tariffs and import duties “Price recession” caused HRC benchmark to dip to a low of ~$470/st before bouncing back to ~$600/st at the end of the year Demand and capacity utilization remained stable throughout the year but downward pressure on price impacted profitability ~0.5Mt active coke capacity idled, including foundry Shift in long-term outlook with CLF/AKS merger and US Steel “Best of Both” strategy Creates potential opportunity to produce pig iron in domestic blast furnaces for consumption in EAFs Steel production and HRC price looks stable in the near term Some BF capacity closures announced but expect higher utilization at other BFs in the portfolio resulting in no significant net impact Announced capacity additions do not impact short-term outlook Steel Coal/CMT Coal export market expected to remain challenged with API2 forward curve flat for 2020 CMT repositioning to be a multi-year undertaking Short-term goal to increase volumes with various products/customers Long-term alternatives include: Focus on being a coal export terminal servicing ILB customers; ~10Mt ILB coal exported in a challenging year like 2019 Reposition the terminal to handle a different product on a large scale Source: S&P Platts
Projected 2020 Adjusted EBITDA Guidance $247.9 $16-$20 $0 -($1) ($23)-($26) $0-($2) $235 - $245 See appendix for a definition and reconciliation of Adjusted EBITDA (1) ($ in millions) Expect 2020 Consolidated Adjusted EBITDA of $235M - $245M mainly driven by higher volumes at Indiana Harbor offset by anticipated revised economics at CMT Indiana Harbor higher volumes (~$25M) Lower coal-to-coke yield gains due to lower coal price (($5M) – ($7M)) Anticipated impact of Foresight renegotiation at CMT Lower volumes at KRT
2020 Domestic Coke Business Outlook Expect Strong Domestic Coke operations in 2020; Domestic Coke Adj. EBITDA expected to be $243M - $247M Domestic Coke Performance $243M - $247M ~4,300Kt Kt Kt $M $M Anticipate a $16M to $20M increase in Domestic Coke Adj. EBITDA in 2020 mainly due to: IHO expected to deliver ~$50M EBITDA at 1.2M coke production Lower yield benefit due to reduction in coal pricing Expect increased production of ~130K tons in 2020 primarily due to improved performance from rebuilt ovens at Indiana Harbor See appendix for a definition and reconciliation of Adjusted EBITDA (1)
2020 Logistics Business Outlook 2020 Logistics guidance assumes revised economics with Foresight Energy at CMT; Logistics Adjusted EBITDA guidance of $17M - $20M Logistics Performance $42.6M M ~ $17M - $20M ~13,200 2020 Plan assumes renegotiation of coal handling contract for coal export customer at CMT Anticipate CMT to handle ~3.6Mt coal for export and ~2.3Mt other products (e.g., aggregates, petcoke, etc.) Active pursuit of new business opportunities at CMT CMT Adj. EBITDA guidance of $7M - $9M KRT volumes driven by lower demand for thermal coal due to lower natural gas prices
2020 Guidance Summary See appendix for a definition and reconciliation of Adjusted EBITDA. Capital expenditures exclude the impact of capitalized interest. Included in Operating Cash Flow. Expect 2020 Adjusted EBITDA of $235M - $245M; 2020 Capex of $70M - $80M Based on 2019 results and mid-point of 2020E SXC cash tax guidance Based on 2019 results and mid-point of 2020E guidance Includes total capex; Excluding nonrecurring IHO refurb capital and opex as well as gas sharing project, 2019 Adjusted FCF would be $128M (3)
Capital Allocation Priorities Capital allocation tools deployed in 2019 demonstrate SXC’s financial flexibility; Will remain disciplined, opportunistic and nimble to maximize stakeholders value long-term Capital Allocation Priorities Organic Growth Projects, Capital Expenditures and M&A Return Additional Capital to Shareholders Establish Regular Dividend Reduce Long-Term Debt / Leverage Declared a dividend of $0.06/share in Q4 Extinguished ~$58M of debt in 2019 Ended 2019 with gross leverage ratio of 3.23x Continue to target gross leverage ratio of 3.0x and will adjust debt levels accordingly Share repurchase initiated in Aug 2019 Repurchased ~6.8 million shares through January 17, 2020 Will remain disciplined and opportunistic on future repurchases Continue to pursue organic growth and M&A opportunities utilizing our disciplined approach ü ü ü ü
Continued strong operational and safety performance while optimizing asset utilization Successfully execute on capital plan Deliver Operations Excellence and Optimize Asset Base Revitalize Convent Marine Terminal with new product and customer mix New Customer and Business Development at CMT Successfully navigate upcoming contract negotiations given existing market conditions Position Coke Business for Long-Term Success $235M – $245M Consol. Adj. EBITDA $170M – $185M Operating Cash Flow Achieve 2020 Financial Objectives Execute against our capital allocation priorities of reducing debt, returning capital to shareholders and exploring growth opportunities Pursue Balanced Capital Allocation 2020 Key Initiatives
APPENDIX
Domestic Coke Performance Domestic Coke Business Summary /ton /ton /ton $55/ton /ton Sales Tons (Coke Production, Kt) Q4 ’19 Adjusted EBITDA of $52.1M and Adjusted EBITDA/ton of ~$48/ton Delivered FY ’19 Domestic Coke Adj. EBITDA of $226.7M, above full-year guidance of $217M - $223M Increase of ~$19M vs FY ‘18 FY ’19 Domestic Coke Adj. EBITDA/ton of ~$54/ton Up from $52/ton for FY ‘18 2019 IHO B Battery rebuild campaign completed 57 rebuilt ovens returned to service See appendix for a definition and reconciliation of Adjusted EBITDA and Adjusted EBITDA per ton (1) 1,040K 1,004K 1,030K Achieved FY’ 19 Domestic Coke Adjusted EBITDA above guidance with strong performance from Indiana Harbor 1,057K 1,080K /ton /ton ~$56-$57/ton 4,033K 4,171K ~4,300K
Logistics Business Summary M M M M M (Tons Handled, Kt) Logistics segment contributed $8.5M to Q4’ 19 and $42.6M to FY Adj. EBITDA CMT contributed $5.2M to Q4 ‘19 and $31.1M to FY Adj. EBITDA Logistics year over year lower by ~$30M mainly due to coal export customer bankruptcy Depressed export pricing and lower demand impacted volumes throughout the year at CMT KRT volumes lower in FY ‘19 vs FY ‘18 due to lower demand of thermal coal $13.0M $10.0M CMT Adj. EBITDA (1) $7.4M (1) Adjusted EBITDA includes Logistics deferred revenue when it is recognized as GAAP revenue. See appendix for a definition and reconciliation of Adjusted EBITDA. Lower throughput volumes and coal customer bankruptcy at CMT impacted FY 2019 logistics results $8.5M Logistics Performance $5.2M M M M $59.6M $31.1M $9.3M
Adjusted EBITDA represents 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, loss on the disposal of our interest in VISA SunCoke, 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. EBITDA represents earnings before interest, taxes, depreciation and amortization. Adjusted EBITDA attributable to SXC represents Adjusted EBITDA less Adjusted EBITDA attributable to noncontrolling interests. Adjusted EBITDA/Ton represents Adjusted EBITDA divided by tons sold/handled. Adjusted net income attributable to SXC represents Net income (loss) attributable to SXC adjusted for impairments, changes to our contingent consideration liability as a result of impairments and related tax impacts. Adjusted earnings per share is Adjusted net income attributable to SXC divided by the weighted average number of diluted common shares outstanding. Management believes Adjusted net income attributable to SXC and Adjusted earnings per share provide useful information to investors because it eliminates non-cash impairment related charges that are not representative of our ongoing business. These measures are not calculated in accordance with GAAP, and should not be considered a substitute for net income or any other measure of financial performance presented in accordance with GAAP. Definitions
Reconciliation to Adjusted EBITDA, Adjusted net income attributable to SXC and Adjusted EPS In June 2018, the Company recorded a loss in connection with the disposal of our interest in VISA SunCoke Limited. In connection with the CMT acquisition, the Company entered into a contingent consideration arrangement that requires 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 In connection with the CMT acquisition, the Company entered into a contingent consideration arrangement that requires 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. Reflects the tax impacts of long-lived asset and goodwill impairment and the contingent consideration adjustment.
Adjusted EBITDA and Adjusted EBITDA per ton (1) Corporate and Other includes the results of our legacy coal mining business.
Balance Sheet & Debt Metrics
2020 Guidance Reconciliation Reflects non-controlling interest in Indiana Harbor.
SXC FCF/Share In connection with the CMT acquisition, the Partnership entered into a contingent consideration arrangement that requires the Partnership to make future payments to the seller based on future volume over a specified threshold, price and contract renewals. Adjustments to the fair value of the contingent consideration were primarily the result of modifications to the volume forecast. Customer events during the third quarter of 2019 reduced contingent consideration liability to zero. Costs expensed by the Partnership associated with the Simplification Transaction. Based on 2019 actuals and mid-point of 2020E SXC cash tax guidance Based on 2019 actuals and mid point of 2020E guidance
EX-99.3
Exhibit 99.3
Investors and Media:
Shantanu Agrawal: 630-824-1907
SUNCOKE ENERGY, INC. DECLARES CASH DIVIDEND
Lisle, IL (January 29, 2020) – Today, SunCoke Energy, Inc. (NYSE: SXC) announced that its Board of Directors declared a cash dividend of $0.06 per share of the Company’s common stock to be paid March 2, 2020 to stockholders of record at the close of business on February 18, 2020.
ABOUTSUNCOKE ENERGY, INC.
SunCoke Energy, Inc. (NYSE: SXC) supplies high-quality coke used in the blast furnace production of steel, under long-term, take-or-pay contracts that pass through commodity and certain operating costs to customers. We utilize an innovative heat-recovery technology that captures excess heat for steam or electrical power generation. Our cokemaking facilities are located in Illinois, Indiana, Ohio, Virginia and Brazil. We have more than 55 years of cokemaking experience serving the integrated steel industry. In addition, we provide export and domestic material handling services to coke, coal, steel, power and other bulk and liquids customers. Our logistics terminals have the collective capacity to mix and transload more than 40 million tons of material each year and are strategically located to reach Gulf Coast, East Coast, Great Lakes and international ports. To learn more about SunCoke Energy, Inc., visit our website at www.suncoke.com.