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
October 31, 2022
Date of Report (date of earliest event reported)
___________________________________
SunCoke Energy, Inc.
(Exact name of registrant as specified in its charter)
___________________________________
| Delaware<br><br>(State of Incorporation) | 001-35243<br><br>(Commission File Number) | 90-0640593<br><br>(IRS Employer Identification Number) |
|---|---|---|
| 1011 Warrenville Road, Suite 600 | ||
| Lisle, | IL | 60532 |
| (Address of principal executive offices and zip code) | ||
| (630) | 824-1000 | |
| (Registrant's telephone number, including area code) |
___________________________________
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 Symbol | Name of each exchange on which registered | |||
| Common stock, par value $0.01 | 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 October 31, 2022, SunCoke Energy, Inc. (the “Company”) issued a press release announcing its financial results for the third quarter of 2022. 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 October 31, 2022, the Company issued a press release announcing its financial results for the third quarter of 2022. Additional information concerning the Company’s financial results for the third quarter of 2022 will be presented in a slide presentation to investors during a previously announced teleconference on October 31, 2022. 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 October 31, 2022, 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): The following exhibits are being filed herewith:
| Exhibit No. | Description |
|---|---|
| 99.1 | SunCoke Energy, Inc. Press Release, announcing earnings (October 31, 2022) |
| 99.2 | SunCoke Energy, Inc. Slide Presentation regarding earnings (October 31, 2022) |
| 99.3 | SunCoke Energy, Inc. Press Release, announcing cash dividend (October 31, 2022) |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized on this 31th day of October, 2022.
| SUNCOKE ENERGY, INC. | |
|---|---|
| By: | /s/ Bonnie M. Edeus |
| Name: | Bonnie M. Edeus |
| Title: | Vice President and Controller |
Document
Investors and Media:
Shantanu Agrawal
(630) 824-1907
SUNCOKE ENERGY, INC. REPORTS RECORD THIRD QUARTER 2022 RESULTS
•Third quarter 2022 net income attributable to SXC was $41.4 million, or $0.49 per share; Year-to-date net income attributable to SXC was $88.9 million, or $1.05 per share
•Adjusted EBITDA(1) for the quarter was a record $83.7 million, an increase of $9.8 million versus the prior year period; Year-to-date 2022 Adjusted EBITDA was $238.8 million
•SunCoke's Board of Directors approved a capital project that will enable our Jewell facility to produce 100% foundry coke, while maintaining flexibility to shift between blast and foundry coke production
•Expect to surpass our full year 2022 Adjusted EBITDA guidance high end of $285 million, mainly driven by higher margins on export coke sales
LISLE, Ill. (October 31, 2022) - SunCoke Energy, Inc. (NYSE: SXC) today reported record third quarter 2022 results, reflecting continued strong financial performance in our Domestic Coke and Logistics segments.
"Our Domestic Coke business performed at exceptionally high levels during the quarter which allowed the company to fully realize the benefits of a strong export coke market. Our Logistics segment continued to deliver solid results, with higher volumes and favorable pricing. Additionally, we are excited to announce the foundry expansion project at our Jewell facility which will enable us to further build upon our success in the foundry markets," said Mike Rippey, President and Chief Executive Officer of SunCoke Energy, Inc. "Recognizing our record year-to-date financial performance, we now expect to surpass the full year Adjusted EBITDA guidance high end of $285 million."
THIRD QUARTER CONSOLIDATED RESULTS
| Three Months Ended September 30, | |||
|---|---|---|---|
| (Dollars in millions) | 2022 | 2021 | Increase |
| Revenues | $ 516.8 | $ 366.5 | $ 150.3 |
| Net (loss) income attributable to SXC | $ 41.4 | $ 23.0 | $ 18.4 |
| Adjusted EBITDA(1) | $ 83.7 | $ 73.9 | $ 9.8 |
(1)See definition of Adjusted EBITDA and reconciliation elsewhere in this release.
Revenues in the third quarter of 2022 increased $150.3 million as compared to the same prior year period, primarily reflecting the pass-through of higher coal prices and favorable export coke pricing.
Net income attributable to SXC increased $18.4 million from the same prior year period as a result of favorable operating results discussed below. Additionally, during the third quarter of 2022 the Company recorded deferred tax benefits of $15.9 million as a result of the release of a valuation allowance established on the deferred tax assets attributable to existing foreign tax credit carryforwards and the recognition of research and development credits.
Adjusted EBITDA increased $9.8 million as compared to the same prior year period, primarily as a result of higher margins on export sales.
THIRD 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.
| Three Months Ended September 30, | |||
|---|---|---|---|
| (Dollars in millions, except per ton amounts) | 2022 | 2021 | Increase<br><br>(decrease) |
| Revenues | $ 487.7 | $ 340.3 | $ 147.4 |
| Adjusted EBITDA(1) | $ 76.6 | $ 65.1 | $ 11.5 |
| Sales volumes (thousands of tons) | 1,022 | 1,056 | (34) |
| Adjusted EBITDA per ton(2) | $ 74.95 | $ 61.65 | $ 13.30 |
(1)See definition of Adjusted EBITDA and reconciliation elsewhere in this release.
(2)Reflects Domestic Coke Adjusted EBITDA divided by Domestic Coke sales volumes.
Revenues increased $147.4 million as compared to the same prior year period primarily reflecting the pass-through of higher coal prices and favorable export coke pricing.
Adjusted EBITDA increased $11.5 million as compared to the same prior year period largely due to higher margins on export sales.
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 Ended September 30, | |||
|---|---|---|---|
| (Dollars in millions, except per ton amounts) | 2022 | 2021 | Increase<br><br>(decrease) |
| Revenues | $ 20.2 | $ 17.0 | $ 3.2 |
| Intersegment sales | $ 7.4 | $ 6.3 | $ 1.1 |
| Adjusted EBITDA(1) | $ 12.9 | $ 11.6 | $ 1.3 |
| Tons handled (thousands of tons) | 5,721 | 4,940 | 781 |
(1)See definition of Adjusted EBITDA and reconciliation elsewhere in this release.
Revenues and Adjusted EBITDA increased by $3.2 million and $1.3 million, respectively, as compared to the same prior year period driven by higher transloading volumes across the terminals and favorable pricing.
Brazil Coke
Brazil Coke consists of a cokemaking facility in Vitória, Brazil, which we operate for an affiliate of ArcelorMittal.
Revenues were $8.9 million during the third quarter 2022, which was comparable to revenues of $9.2 million in the third quarter 2021.
Adjusted EBITDA was $3.3 million during the third quarter 2022, which was $1.2 million lower than adjusted EBITDA of $4.5 million in the third quarter 2021, primarily due to the absence of production bonuses for meeting certain volume targets.
Corporate and Other
Corporate and other expenses, which include activity from our legacy coal mining business, was $9.1 million during third quarter 2022, $1.8 million higher than expense of $7.3 million during third quarter 2021 driven primarily by higher employee related expenses and higher professional services.
2022 OUTLOOK
Our 2022 guidance (revised in August 2022) is based on higher export margins in our Domestic Coke plants and the API2 price adjustment benefit at CMT.
Our 2022 revised guidance is as follows:
•Domestic Coke total production is expected to be approximately 4.1 million tons
•Consolidated Adjusted EBITDA is expected to surpass the guidance high end of $285 million
•Capital expenditures are projected to be approximately $80 million
•Cash generated by operations is estimated to be between $200 million to $215 million
•Cash taxes are projected to be $12 million to $14 million
RELATED COMMUNICATIONS
We will host our quarterly earnings call at 11:00 a.m. Eastern Time (10:00 a.m. Central Time) today. The conference call will be webcast live and archived for replay in the Investors section of www.suncoke.com. Investors and analysts may participate in this call by dialing 1-888-660-6347 in the U.S. or 1-929-201-6594 if outside the U.S., confirmation code 36382.
SUNCOKE ENERGY, INC.
SunCoke Energy, Inc. (NYSE: SXC) supplies high-quality coke to domestic and international customers. Our coke is used in the blast furnace production of steel as well as the foundry production of casted iron, with the majority of sales under long-term, take-or-pay contracts. We also export coke to overseas customers seeking high-quality product for their blast furnaces. Our process utilizes an innovative heat-recovery technology that captures excess heat for steam or electrical power generation and draws upon more than 60 years of cokemaking experience to operate our facilities in Illinois, Indiana, Ohio, Virginia and Brazil. Our logistics business provides export and domestic material handling services to coke, coal, steel, power and other bulk customers. The 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.
SunCoke routinely announces material information to investors and the marketplace using press releases, Securities and Exchange Commission filings, public conference calls, webcasts and SunCoke's website at http://www.suncoke.com/English/investors/sxc. The information that SunCoke posts to its website may be deemed to be material. Accordingly, SunCoke encourages investors and others interested in SunCoke to routinely monitor and review the information that SunCoke posts on its website, in addition to following SunCoke's press releases, Securities and Exchange Commission filings and public conference calls and webcasts.
DEFINITIONS
•Adjusted EBITDA represents earnings before interest, taxes, depreciation and amortization (“EBITDA”), adjusted for any impairments, restructuring costs, gains or losses on extinguishment of debt and transaction costs ("Adjusted EBITDA"). 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. Additionally, other companies may calculate Adjusted EBITDA differently than we do, limiting its usefulness as a comparative measure.
•Adjusted EBITDA attributable to SXC represents Adjusted EBITDA less Adjusted EBITDA attributable to noncontrolling interests.
FORWARD-LOOKING STATEMENTS
This press release and related conference call contain “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 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. However, the absence of these words or similar expressions does not mean that a statement is not forward-looking. Forward-looking statements are not historical facts, but instead represent only our beliefs regarding future events, many of which are inherently uncertain and involve significant known and unknown risks and uncertainties (many of which are beyond the control of SunCoke) that could cause our actual results and financial condition to differ materially from the anticipated results and financial condition indicated in such forward-looking statements. These risks and uncertainties include, but are not limited to, the risks and uncertainties described in Item 1A (“Risk Factors”) of our Annual Report on Form 10-K for the most recently completed fiscal year, as well as those described from time to time in our other reports and filings with the Securities and Exchange Commission.
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 and other important information regarding the matters discussed in this presentation, see SunCoke's Securities and Exchange Commission filings, copies of which are available free of charge on SunCoke's website at www.suncoke.com. All forward-looking statements included in this presentation are expressly qualified in their entirety by such cautionary statements. Unpredictable or unknown factors not discussed in this presentation also could have material adverse effects on forward-looking statements.
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. You 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 the earnings release except as required by applicable law.
In addition, this press release contains certain non-GAAP financial measures. These non-GAAP financial measures should not be considered as alternatives to the measures derived in accordance with U.S. GAAP. Non-GAAP financial measures have important limitations as analytical tools, and you should not consider them in isolation or as substitutes for results as reported under U.S. GAAP. Reconciliations to the most comparable GAAP financial measures are included following the presentation of financial and operating results included at the end of this press release.
SunCoke Energy, Inc.
Consolidated Statements of Income
(Unaudited)
| Three Months Ended September 30, | Nine Months Ended September 30, | |||
|---|---|---|---|---|
| 2022 | 2021 | 2022 | 2021 | |
| (Dollars and shares in millions, except per share amounts) | ||||
| Revenues | ||||
| Sales and other operating revenue | $ 516.8 | $ 366.5 | $ 1,458.5 | $ 1,090.7 |
| Costs and operating expenses | ||||
| Cost of products sold and operating expenses | 413.4 | 277.3 | 1,163.2 | 829.9 |
| Selling, general and administrative expenses | 20.1 | 15.3 | 57.9 | 48.3 |
| Depreciation and amortization expense | 35.7 | 32.5 | 106.7 | 99.0 |
| Total costs and operating expenses | 469.2 | 325.1 | 1,327.8 | 977.2 |
| Operating income | 47.6 | 41.4 | 130.7 | 113.5 |
| Interest expense, net | 8.0 | 7.9 | 24.3 | 34.8 |
| Loss on extinguishment of debt | — | — | — | 31.9 |
| Income before income tax (benefit) expense | 39.6 | 33.5 | 106.4 | 46.8 |
| Income tax (benefit) expense | (2.9) | 9.4 | 14.3 | 12.0 |
| Net income | 42.5 | 24.1 | 92.1 | 34.8 |
| Less: Net income attributable to noncontrolling interests | 1.1 | 1.1 | 3.2 | 4.1 |
| Net income attributable to SunCoke Energy, Inc. | $ 41.4 | $ 23.0 | $ 88.9 | $ 30.7 |
| Earnings attributable to SunCoke Energy, Inc. per common share: | ||||
| Basic | $ 0.49 | $ 0.28 | $ 1.06 | $ 0.37 |
| Diluted | $ 0.49 | $ 0.27 | $ 1.05 | $ 0.37 |
| Weighted average number of common shares outstanding: | ||||
| Basic | 83.9 | 83.0 | 83.8 | 83.0 |
| Diluted | 84.7 | 83.8 | 84.5 | 83.6 |
SunCoke Energy, Inc.
Consolidated Balance Sheets
| September 30, 2022 | December 31, 2021 | |
|---|---|---|
| (Unaudited) | ||
| (Dollars in millions, except<br><br>par value amounts) | ||
| Assets | ||
| Cash and cash equivalents | $ 59.3 | $ 63.8 |
| Receivables, net | 118.7 | 77.6 |
| Inventories | 204.9 | 127.0 |
| Other current assets | 6.4 | 3.5 |
| Total current assets | 389.3 | 271.9 |
| Properties, plants and equipment (net of accumulated depreciation of $1,248.9 million and $1,160.1 million at September 30, 2022 and December 31, 2021, respectively) | 1,238.9 | 1,287.9 |
| Intangible assets, net | 33.7 | 35.2 |
| Deferred charges and other assets | 17.9 | 20.4 |
| Total assets | $ 1,679.8 | $ 1,615.4 |
| Liabilities and Equity | ||
| Accounts payable | $ 153.0 | $ 126.0 |
| Accrued liabilities | 55.0 | 52.4 |
| Current portion of financing obligation | 3.3 | 3.2 |
| Interest payable | 6.2 | — |
| Income tax payable | 2.4 | 0.6 |
| Total current liabilities | 219.9 | 182.2 |
| Long-term debt and financing obligation | 561.2 | 610.4 |
| Accrual for black lung benefits | 60.3 | 57.9 |
| Retirement benefit liabilities | 20.5 | 21.8 |
| Deferred income taxes | 170.8 | 169.0 |
| Asset retirement obligations | 12.4 | 11.6 |
| Other deferred credits and liabilities | 23.1 | 27.1 |
| Total liabilities | 1,068.2 | 1,080.0 |
| Equity | ||
| Preferred stock, $0.01 par value. Authorized 50,000,000 shares; no issued shares at both September 30, 2022 and December 31, 2021 | — | — |
| Common stock, $0.01 par value. Authorized 300,000,000 shares; issued 98,806,795 and 98,496,809 shares at September 30, 2022 and December 31, 2021, respectively | 1.0 | 1.0 |
| Treasury stock, 15,404,482 shares at both September 30, 2022 and December 31, 2021 | (184.0) | (184.0) |
| Additional paid-in capital | 726.4 | 721.2 |
| Accumulated other comprehensive loss | (16.4) | (16.7) |
| Retained earnings (deficit) | 48.5 | (23.4) |
| Total SunCoke Energy, Inc. stockholders’ equity | 575.5 | 498.1 |
| Noncontrolling interest | 36.1 | 37.3 |
| Total equity | 611.6 | 535.4 |
| Total liabilities and equity | $ 1,679.8 | $ 1,615.4 |
SunCoke Energy, Inc.
Consolidated Statements of Cash Flows
(Unaudited)
| Nine Months Ended September 30, | ||
|---|---|---|
| 2022 | 2021 | |
| (Dollars in millions) | ||
| Cash Flows from Operating Activities | ||
| Net income | $ 92.1 | $ 34.8 |
| Adjustments to reconcile net income to net cash provided by operating activities: | ||
| Depreciation and amortization expense | 106.7 | 99.0 |
| Deferred income tax expense | 1.8 | 5.8 |
| Share-based compensation expense | 5.0 | 4.3 |
| Loss on extinguishment of debt | — | 31.9 |
| Changes in working capital pertaining to operating activities: | ||
| Receivables, net | (44.7) | (13.8) |
| Inventories | (77.8) | (3.4) |
| Accounts payable | 26.5 | 13.3 |
| Accrued liabilities | 2.4 | 0.2 |
| Interest payable | 6.2 | 4.7 |
| Income taxes | 1.8 | 5.0 |
| Other | 0.6 | 2.2 |
| Net cash provided by operating activities | 120.6 | 184.0 |
| Cash Flows from Investing Activities | ||
| Capital expenditures | (55.7) | (52.1) |
| Other investing activities | 3.6 | — |
| Net cash used in investing activities | (52.1) | (52.1) |
| Cash Flows from Financing Activities | ||
| Proceeds from issuance of long-term debt | — | 500.0 |
| Repayment of long-term debt | — | (609.3) |
| Proceeds from revolving facility | 450.0 | 581.1 |
| Repayment of revolving facility | (498.0) | (567.4) |
| Repayment of financing obligation | (2.4) | (2.2) |
| Debt issuance costs | — | (12.0) |
| Dividends paid | (16.9) | (15.1) |
| Cash distribution to noncontrolling interests | (4.4) | — |
| Other financing activities | (1.3) | (0.8) |
| Net cash used in financing activities | (73.0) | (125.7) |
| Net (decrease) increase in cash and cash equivalents | (4.5) | 6.2 |
| Cash and cash equivalents at beginning of period | 63.8 | 48.4 |
| Cash and cash equivalents at end of period | $ 59.3 | $ 54.6 |
| Supplemental Disclosure of Cash Flow Information | ||
| Interest paid, net of capitalized interest of zero and $0.4 million, respectively | $ 15.4 | $ 26.6 |
| Income taxes paid, net of refunds of zero and $2.9 million, respectively | $ 10.8 | $ 1.3 |
SunCoke Energy, Inc.
Segment Financial and Operating Data
The following tables set forth financial and operating data for the three and nine months ended September 30, 2022 and 2021, respectively:
| Three Months Ended September 30, | Nine Months Ended September 30, | |||
|---|---|---|---|---|
| 2022 | 2021 | 2022 | 2021 | |
| (Dollars in millions, except per ton amounts) | ||||
| Sales and other operating revenues: | ||||
| Domestic Coke | $ 487.7 | $ 340.3 | $ 1,371.8 | $ 1,014.2 |
| Brazil Coke | 8.9 | 9.2 | 27.9 | 26.7 |
| Logistics | 20.2 | 17.0 | 58.8 | 49.8 |
| Logistics intersegment sales | 7.4 | 6.3 | 22.2 | 20.3 |
| Elimination of intersegment sales | (7.4) | (6.3) | (22.2) | (20.3) |
| Total sales and other operating revenues | $ 516.8 | $ 366.5 | $ 1,458.5 | $ 1,090.7 |
| Adjusted EBITDA(1): | ||||
| Domestic Coke | $ 76.6 | $ 65.1 | $ 216.9 | $ 190.0 |
| Brazil Coke | 3.3 | 4.5 | 11.4 | 13.0 |
| Logistics | 12.9 | 11.6 | 38.0 | 33.9 |
| Corporate and Other, net | (9.1) | (7.3) | (27.5) | (24.4) |
| Total Adjusted EBITDA | $ 83.7 | $ 73.9 | $ 238.8 | $ 212.5 |
| Coke Operating Data: | ||||
| Domestic Coke capacity utilization(2) | 101 % | 100 % | 100 % | 101 % |
| Domestic Coke production volumes (thousands of tons) | 1,028 | 1,041 | 3,000 | 3,131 |
| Domestic Coke sales volumes (thousands of tons) | 1,022 | 1,056 | 2,991 | 3,157 |
| Domestic Coke Adjusted EBITDA per ton(3) | $ 74.95 | $ 61.65 | $ 72.52 | $ 60.18 |
| Brazilian Coke production—operated facility (thousands of tons) | 383 | 426 | 1,208 | 1,268 |
| Logistics Operating Data: | ||||
| Tons handled (thousands of tons) | 5,721 | 4,940 | 16,766 | 15,344 |
(1)See definition of Adjusted EBITDA and reconciliation to GAAP elsewhere in this release.
(2)The production of foundry coke tons does not replace blast furnace coke tons on a ton for ton basis, as foundry coke requires longer coking time. The Domestic Coke capacity utilization is calculated assuming a single ton of foundry coke replaces approximately two tons of blast furnace coke.
(3)Reflects Domestic Coke Adjusted EBITDA divided by Domestic Coke sales volumes.
SunCoke Energy, Inc.
Reconciliation of Non-GAAP Information
Net Income to Adjusted EBITDA
| Three Months Ended September 30, | Nine Months Ended September 30, | |||
|---|---|---|---|---|
| 2022 | 2021 | 2022 | 2021 | |
| (Dollars in millions) | ||||
| Net income attributable to SunCoke Energy, Inc. | $ 41.4 | $ 23.0 | $ 88.9 | $ 30.7 |
| Add: Net income attributable to noncontrolling interests | 1.1 | 1.1 | 3.2 | 4.1 |
| Net income | $ 42.5 | $ 24.1 | $ 92.1 | $ 34.8 |
| Add: | ||||
| Depreciation and amortization expense | 35.7 | 32.5 | 106.7 | 99.0 |
| Interest expense, net | 8.0 | 7.9 | 24.3 | 34.8 |
| Loss on extinguishment of debt | — | — | — | 31.9 |
| Income tax (benefit) expense | (2.9) | 9.4 | 14.3 | 12.0 |
| Transaction costs(1) | 0.4 | — | 1.4 | — |
| Adjusted EBITDA | $ 83.7 | $ 73.9 | $ 238.8 | $ 212.5 |
| Subtract: Adjusted EBITDA attributable to noncontrolling interests(2) | 2.1 | 2.1 | 6.2 | 7.0 |
| Adjusted EBITDA attributable to SunCoke Energy, Inc. | $ 81.6 | $ 71.8 | $ 232.6 | $ 205.5 |
(1)Costs incurred as part of the granulated pig iron project with U.S. Steel.
(2)Reflects noncontrolling interest in Indiana Harbor.
SunCoke Energy, Inc.
Reconciliation of Non-GAAP Information
Estimated 2022 Net Income
to Estimated Consolidated Adjusted EBITDA
| 2022 | ||
|---|---|---|
| Low | High | |
| (Dollars in millions) | ||
| Net income | $ 73 | $ 92 |
| Add: | ||
| Depreciation and amortization expense | 145 | 140 |
| Interest expense, net | 33 | 31 |
| Income tax expense | 16 | 20 |
| Transaction costs(1) | 3 | 2 |
| Adjusted EBITDA | $ 270 | $ 285 |
| Subtract: Adjusted EBITDA attributable to noncontrolling interest(1) | 9 | 9 |
| Adjusted EBITDA attributable to SunCoke Energy, Inc. | $ 261 | $ 276 |
(1)Costs incurred as part of the granulated pig iron project with U.S. Steel.
(2)Reflects noncontrolling interest in Indiana Harbor.
11
q3_2022sxcearningsdeckxv
SunCoke Energy, Inc. Q3 2022 Earnings Conference Call
2 This slide presentation should be reviewed in conjunction with the Third Quarter 2022 earnings release of SunCoke Energy, Inc. (SunCoke) and conference call held on October 31, 2022 at 11:00 a.m. ET. This presentation 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). 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. However, the absence of these words or similar expressions does not mean that a statement is not forward-looking. Forward-looking statements are not historical facts, but instead represent only our beliefs regarding future events, many of which are inherently uncertain and involve significant known and unknown risks and uncertainties (many of which are beyond the control of SunCoke) that could cause our actual results and financial condition to differ materially from the anticipated results and financial condition indicated in such forward-looking statements. These risks and uncertainties include, but are not limited to, the risks and uncertainties described in Item 1A (“Risk Factors”) of our Annual Report on Form 10-K for the most recently completed fiscal year, as well as those described from time to time in our other reports and filings with the Securities and Exchange Commission. 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 and other important information regarding the matters discussed in this presentation, see SunCoke's Securities and Exchange Commission filings, copies of which are available free of charge on SunCoke's website at www.suncoke.com. All forward-looking statements included in this presentation are expressly qualified in their entirety by such cautionary statements. Unpredictable or unknown factors not discussed in this presentation also could have material adverse effects on forward-looking statements. 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. You 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 the earnings release except as required by applicable law. In addition, throughout this presentation, we will use non-GAAP financial measures. Non-GAAP financial measures should not be considered as alternatives to the measures derived in accordance with U.S. GAAP. Non-GAAP financial measures have important limitations as analytical tools, and you should not consider them in isolation or as substitutes for results as reported under U.S. GAAP. Reconciliations to the most comparable GAAP financial measures can be found in the Appendix to this presentation. Forward-Looking Statements
3Q3 2022 Highlights Delivered Q3 ‘22 Adjusted EBITDA(1) of $83.7M, representing record third quarter performance • Continued strong performance across our coke and logistics operations along with high margin on export coke sales Export and foundry coke businesses continued to perform well in Q3 • Experiencing softening in export coke markets driven by global economic uncertainty SunCoke’s Board of Directors approved a capital project that will enable our Jewell facility to produce 100% foundry, while maintaining flexibility to shift between blast and foundry production • Enables SunCoke to continue to grow in the foundry coke market • Expect to complete the project in Q3 2023 Gross leverage at 1.9x on a trailing 12 month Adjusted EBITDA basis Well positioned to surpass the FY 2022 Adjusted EBITDA guidance high end of $285M (1) See appendix for a definition and reconciliation of Adjusted EBITDA
4Q3 2022 Financial Performance (1) See appendix for a definition and reconciliation of Adjusted EBITDA (2) Coke Adjusted EBITDA includes Domestic Coke and Brazil Coke (3) Q3 ’22 Corporate and Other Adj. EBITDA includes activity from our legacy coal mining business ($/share) ($ in millions) Adj. EBITDA(1) $83.7 $73.9 Q3 ’21Q3 ’22 +$9.8 M Q3 2022 Earnings Review • Q3 ‘22 EPS of $0.49, up $0.22 from the prior year quarter Primarily driven by higher margins on export coke sales and income tax benefits from foreign and R&D tax credits recorded in Q3 ’22 • Adjusted EBITDA(1) of $83.7M, an increase of $9.8M from the prior year quarter Coke operations up $10.3M, driven by higher margins on export coke sales Logistics segment up $1.3M driven by higher volumes and pricing $0.49 $0.27 Q3 ’22 Q3 ’21 +$0.22 Diluted EPS ($ in millions, except volumes) Q3 '22 Q3 '21 Q3 '22 vs Q3 '21 Domestic Coke Sales Volumes 1,022 1,056 (34) Logistics Volumes 5,721 4,940 781 Coke Adj. EBITDA(2) $79.9 $69.6 $10.3 Logistics Adj. EBITDA $12.9 $11.6 $1.3 Corporate and Other Adj. EBITDA (3) ($9.1) ($7.3) ($1.8) Consolidated Adjusted EBITDA (1) $83.7 $73.9 $9.8
5 $63.4 $59.3 $54.4 Net Change in DebtCash @ Q2 2022 Dividends ($33.8) Net Cash Provided by Ops. Activities ($21.7) ($6.6) CapEx $3.6 Other Cash @ Q3 2022 Revolver Availability: $283.0M (Consolidated) Q3 ’22 Total Debt $577M Gross Leverage(1) 1.91x Net Leverage(1) 1.71x (1) Gross leverage and Net leverage for Q3 2022 calculated using Last Twelve Month(LTM) Adjusted EBITDA Q3 2022 Liquidity Maintained strong liquidity position of ~$342M; continued focus on strengthening the balance sheet ($ in millions) Dividend of $0.08 per share
6 Domestic Coke Performance Domestic Coke Business Summary 147 136 111 132 122 298 309 296 295 306 280 275 258 270 277 174 169 158 170 172 142 142 152 131 151 1,028 $65.1M Q3 ’21 $53.4M Q2 ’22Q4 ’21 997 $76.0M Q1 ’22 $64.3M $76.6M Q3 ’22 1,041 1,031 975 Adjusted EBITDA Middletown Granite City Haverhill Indiana Harbor Jewell Sales Tons (Coke Production, Kt) • Delivered Adj. EBITDA of $76.6M in Q3 ‘22 vs $65.1M in Q3 ‘21 Record Domestic Coke Adj. EBITDA driven by higher margins on export sales Higher energy sales pricing also favorably impacted results • All coke sales committed for 2022 • Expect to surpass FY 2022 Domestic Coke Adjusted EBITDA guidance high end of $255M Estimate FY 2022 coke sales volume of ~4.1M tons (1) See appendix for a definition and reconciliation of Adjusted EBITDA (1) 1,007K1,056K 1,022K962K Higher margins on export sales driving favorable Domestic Coke results 1,026K
7Logistics Business Summary (Tons Handled, Kt) • Logistics segment contributed $12.9M to Q3 ‘22 Adj. EBITDA Higher volumes and pricing vs Q3 ‘21 • Expect strong performance to continue through remainder of the year • Logistics Full Year 2022 Adjusted EBITDA guidance of $48M - $52M remains unchanged (1) (1) See appendix for a definition and reconciliation of Adjusted EBITDA. Strong thermal coal market and sustained customer demand continue to drive healthy Logistics performance Logistics Performance 2,353 1,965 2,261 2,619 2,563 2,587 2,625 2,974 3,190 3,158 5,809 5,236 $12.6M $11.6M Q3 ’21 $12.5M $9.6M Q4 ’21 Q1 ’22 Q2 ’22 $12.9M Q3 ’22 4,940 4,590 5,721 CMT (coal, bulk products, iron ore)Total Logistics Adj. EBITDA Logistics (ex. CMT)
8 • Execute Foundry coke expansion project and grow market participation for long-term success • Support full capacity utilization of cokemaking assets Build on the Commercial Success of Foundry/Export Business 2022 Key Initiatives • Surpass Adjusted EBITDA guidance high end of $285M Achieve 2022 Financial Objectives Deliver Safety/Operational Excellence and Offset Inflationary Pressures • Continue to deliver strong safety and operational excellence • Continued focus on developing projects to minimize inflationary impacts • Continue work on further diversifying CMT with new product and customer mix Pursue New Customers for Logistics Business • Continue to execute against our well-established capital allocation priorities of deleveraging, exploring Granite City GPI opportunity, and returning capital to shareholders via increased dividends Pursue Balanced Capital Allocation
APPENDIX
10 Adjusted EBITDA represents earnings before interest, taxes, depreciation and amortization (“EBITDA”), adjusted for any impairments, restructuring costs, gains or losses on extinguishment of debt and transaction costs (“Adjusted EBITDA”). 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. Additionally, other companies may calculate Adjusted EBITDA differently than we do, limiting its usefulness as a comparative measure. EBITDA represents earnings before interest, taxes, depreciation and amortization. Adjusted EBITDA attributable to SXC represents Adjusted EBITDA less Adjusted EBITDA attributable to non-controlling interests. Adjusted EBITDA/Ton represents Adjusted EBITDA divided by tons sold/handled. Free Cash Flow (FCF) represents operating cash flow adjusted for capital expenditures. Management believes FCF is an important measure of liquidity. FCF is not a measure calculated in accordance with GAAP, and it should not be considered a substitute for operating cash flow or any other measure of financial performance presented in accordance with GAAP. Definitions
112022 Revised Guidance Summary Well positioned to surpass Adjusted EBITDA guidance due to higher margins on export coke sales and API2 coal price benefit at CMT (1) See appendix for a definition and reconciliation of Adjusted EBITDA (2) Domestic coke sales for 2022 estimate includes production for foundry and export sales (3) Domestic Coke Adj. EBITDA/ton calculated as Domestic Coke EBITDA/Domestic Coke Sales (4) Capital expenditure guidance excludes the impact of capitalized interest (5) See appendix for a definition and reconciliation of Free Cash Flow (FCF) ($ in millions except per share amounts) Low End High End Adjusted EBITDA (1) $270 $285 Cash interest ($30) ($28) Cash taxes ($12) ($14) Total capex ($80) ($80) Transaction Costs ($3) ($2) Working Capital changes ($25) ($26) Free Cash Flow (FCF) (2) $120 $135 SXC Shares Outstanding on 9/30/22 83.4 83.4 FCF/Share $1.44 $1.62 Adjusted EBITDA to FCF Walk 2022E (1) See appendix for a definition and reconciliation of Adjusted EBITDA (2) See appendix for definition and reconciliation of Free Cash Flow (FCF) 2022 Original 2022 Revised Guidance Guidance Adjusted EBITDA Consolidated(1) $240M - $255M $270M - $285M Domestic Coke EBITDA $229M - $235M $247M - $255M Logistics EBITDA $34M - $40M $48M - $52M Domestic Coke Sales(2) ~4.1M tons ~4.1M tons Dom. Coke Adj. EBITDA/ton (3) $56 - $57/ton $60 - $62/ton Total Capital Expenditures ~$80M(4) ~$80M(4) Free Cash Flow (5) $110M - $125M $120M - $135M Cash Taxes $8M - $12M $12M - $14M Metric
12Coke Facility Capacity and Contract Duration/Volume (1) Capacity represents blast furnace equivalent production capacity (2) Represents production capacity for blast-furnace sized coke, however, customer takes all on a “run of oven” basis, which represents >600k tons per year. Facility Capacity (1) Customer Contract Expiry Contract Volume Middletown 550 Kt (2) Cliffs Steel Dec. 2032 Capacity Haverhill II 550 Kt Cliffs Steel June 2025 Capacity Granite City 650 Kt US Steel Dec. 2024 Capacity Indiana Harbor 1,220 Kt Cliffs Steel Oct. 2023 Capacity Haverhill I/JWO 1,270Kt Cliffs Steel Algoma Steel Dec. 2025 Dec. 2026 400 Kt 150 Kt
13Balance Sheet & Debt Metrics 2022 2023 2024 2025 2026 2027 2028 2029 Consolidated Total Sr. Notes -$ -$ -$ -$ -$ -$ -$ 500.0$ 500.0$ Sale Leaseback 0.8 3.3 5.5 - - - - - 9.6 Revolver - - - - 67.0 - - - 67.0 Total 0.8$ 3.3$ 5.5$ -$ 67.0$ -$ -$ 500.0$ 576.6$ As of 9/30/2022 ($ in millions) As of 9/30/2022 As of 12/31/2021 Cash 59$ 64$ Available Revolver Capacity 283$ 229$ Total Liquidity 342$ 293$ Gross Debt (Long and Short-term) 577$ 627$ Net Debt (Total Debt less Cash) 517$ 563$ LTM Adj. EBITDA 302$ 275$ Gross Debt / LTM Adj. EBITDA 1.91x 2.28x Net Debt / LTM Adj. EBITDA 1.71x 2.04x Adj. EBITDA (Guidance) Gross Leverage (Guidance) Net Leverage (Guidance) $270M - $285M 2.02x - 2.14x 1.82x - 1.92x
142022 Guidance Reconciliation (1) Reflects non-controlling interest in Indiana Harbor (2) Costs incurred as part of the granulated pig iron project with U.S. Steel Free Cash Flow Reconciliation ($ in millions) Low High Operating Cash Flow $200 $215 Capital Expenditures (80) (80) Free Cash Flow (FCF) $120 $135 2022E ($ in millions) Low High Net Income $73 $92 Depreciation and amortization expense 145 140 Interest expense, net 33 31 Income tax expense 16 20 Transaction Costs (2) 3 2 Adjusted EBITDA (Consolidated) $270 $285 Adjusted EBITDA attributable to noncontrolling interest(1) (9) (9) Adjusted EBITDA attributable to SXC $261 $276
15SXC FCF/Share Reconciliation (1) Costs incurred as part of the granulated pig iron project with U.S. Steel Low End High End Net Income $73 $92 Depreciation and amortization expense 145 140 Interest expense, net 33 31 Income tax expense 16 20 Transaction Costs (1) 3 2 Adjusted EBITDA $270 $285 Cash interest (30) (28) Cash taxes (12) (14) Total capex (80) (80) Transaction Costs (1) (3) (2) Working capital changes (25) (26) Free Cash Flow (FCF) $120 $135 SXC Shares Outstanding on 9/30/2022 83.4 83.4 FCF/Share $1.44 $1.62 ($ in millions except per share amounts) 2022E
16Reconciliation to Adjusted EBITDA and Adjusted EBITDA attributable to SXC (1) 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 (2) Costs incurred as part of the granulated pig iron project with U.S. Steel ($ in millions) Q1 '21 Q2 '21 Q3 '21 Q4 '21 FY '21 Q1 '22 Q2 '22 Q3 '22 Net income (loss) attributable to SunCoke Energy, Inc. 16.5$ (8.8)$ 23.0$ 12.7$ 43.4$ 29.5$ 18.0$ 41.4$ Net income attributable to noncontrolling interests 1.7 1.3 1.1 1.3 5.4 1.1 1.0 1.1 Net Income (loss) 18.2$ (7.5)$ 24.1$ 14.0$ 48.8$ 30.6$ 19.0$ 42.5$ Depreciation and amortization expense 32.4 34.1 32.5 34.9 133.9 35.2 35.8 35.7 (Gain) Loss on extinguishment of debt, net - 31.9 - - 31.9 - - - Interest expense, net 12.7 14.2 7.9 7.7 42.5 8.0 8.3 8.0 Income tax expense (benefit) 7.3 (4.7) 9.4 6.3 18.3 10.0 7.2 (2.9) Transaction costs (2) - - - - - - 1.0 0.4 Adjusted EBITDA 70.6$ 68.0$ 73.9$ 62.9$ 275.4$ 83.8$ 71.3$ 83.7$ Adjusted EBITDA attributable to noncontrolling interest(1) (2.6) (2.3) (2.1) (2.3) (9.3) (2.1) (2.0) (2.1) Adjusted EBITDA attributable to SXC 68.0$ 65.7$ 71.8$ 60.6$ 266.1$ 81.7$ 69.3$ 81.6$
17Adjusted EBITDA and Adjusted EBITDA per ton (1) Corporate and Other includes the results of our legacy coal mining business. Reconciliation of Segment Adjusted EBITDA and Adjusted EBITDA per Ton ($ in millions, except per ton data) Domestic Coke Brazil Coke Logistics Corporate and Other(1) Consolidated Q3 2022 Adjusted EBITDA $76.6 $3.3 $12.9 ($9.1) $83.7 Sales Volume (thousands of tons) 1,022 382 5,721 Adjusted EBITDA per Ton $74.95 $8.60 $2.26 Q2 2022 Adjusted EBITDA $64.3 $3.9 $12.5 ($9.4) $71.3 Sales Volume (thousands of tons) 1,007 406 5,809 Adjusted EBITDA per Ton $63.85 $9.59 $2.15 Q1 2022 Adjusted EBITDA $76.0 $4.2 $12.6 ($9.0) $83.8 Sales Volume (thousands of tons) 962 419 5,236 Adjusted EBITDA per Ton $79.00 $10.12 $2.41 FY 2021 Adjusted EBITDA $243.4 $17.2 $43.5 ($28.7) $275.4 Sales Volume (thousands of tons) 4,183 1,685 19,933 Adjusted EBITDA per Ton $58.19 $10.21 $2.18 Q4 2021 Adjusted EBITDA $53.4 $4.2 $9.6 ($4.3) $62.9 Sales Volume (thousands of tons) 1,026 417 4,589 Adjusted EBITDA per Ton $52.05 $10.07 $2.09 Q3 2021 Adjusted EBITDA $65.1 $4.5 $11.6 ($7.3) $73.9 Sales Volume (thousands of tons) 1,056 426 4,940 Adjusted EBITDA per Ton $61.65 $10.56 $2.35 Q2 2021 Adjusted EBITDA $61.4 $4.0 $11.4 ($8.8) $68.0 Sales Volume (thousands of tons) 1,063 425 5,104 Adjusted EBITDA per Ton $57.76 $9.41 $2.23 Q1 2021 Adjusted EBITDA $63.5 $4.5 $10.9 ($8.3) $70.6 Sales Volume (thousands of tons) 1,038 417 5,300 Adjusted EBITDA per Ton $61.18 $10.79 $2.06
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Investors and Media:
Shantanu Agrawal
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SUNCOKE ENERGY, INC. DECLARES CASH DIVIDEND
Lisle, IL (October 31, 2022) – Today, SunCoke Energy, Inc. (NYSE: SXC) announced that its Board of Directors declared a cash dividend of $0.08 per share of the Company’s common stock to be paid on December 1, 2022 to stockholders of record at the close of business on November 18, 2022.
ABOUT SUNCOKE ENERGY, INC.
SunCoke Energy, Inc. (NYSE: SXC) supplies high-quality coke to domestic and international customers. Our coke is used in the blast furnace production of steel as well as the foundry production of casted iron, with the majority of sales under long-term, take-or-pay contracts. We also export coke to overseas customers seeking high-quality product for their blast furnaces. Our process utilizes an innovative heat-recovery technology that captures excess heat for steam or electrical power generation and draws upon more than 60 years of cokemaking experience to operate our facilities in Illinois, Indiana, Ohio, Virginia and Brazil. Our logistics business provides export and domestic material handling services to coke, coal, steel, power and other bulk customers. The 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.