SunCoke Energy, Inc.

Q3 2023 Earnings Conference Call

Forward-Looking Statements

2

This presentation should be reviewed in conjunction with the third quarter 2023 earnings release of SunCoke Energy, Inc. (SunCoke) and conference call held on November 1, 2023 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. Any statements made in this presentation that are not statements of historical fact, including statements about our full-year 2023 guidance, including our 2023 segment guidance, and our ability to achieve the high end of the 2023 Consolidated Adjusted EBITDA guidance range, our ability to execute on our 2023 key initiatives, the amount and timing of our quarterly dividend, the expected headwinds and duration of such headwinds, the ability of our domestic coke plants to continue to operate at full capacity, future sales commitments, and our export coke market expectations, are forward-looking statements and should be evaluated as such. Forward-looking statements 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 (SEC).

In accordance with the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, SunCoke has included in its filings with the 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 made by SunCoke. For information concerning these factors and other important information regarding the matters discussed in this presentation, see SunCoke's SEC filings, copies of which are available free of charge on SunCoke's website at www.suncoke.com or on the SEC's website at www.sec.gov. 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.

Q3 2023 Highlights

3

  • Delivered Q3 '23 Consolidated Adjusted EBITDA(1) of $65.4M
  • Solid operating performance from our coke and logistics operations
  • Continue to successfully navigate through challenging market conditions
  • Declared cash dividend of $0.10 per share, payable on December 1, 2023
  • Ended Q3 with a strong liquidity position of $475.9 million
  • Gross leverage at 1.91x on a trailing 12 month Adjusted EBITDA(1) basis
  • Remain well positioned to achieve the high end of FY 2023 Consolidated Adjusted EBITDA(1) guidance range of $250M - $265M

(1) See appendix for a definition and reconciliation of Adjusted EBITDA

Q3 2023 Financial Performance

4

Q3 2023 Earnings Review

•

($/share)

($ in millions)

Diluted EPS

Adjusted EBITDA(1)

-$0.41

-$18.3M

$0.49

$83.7

$65.4

•

$0.08

Q3 '23

Q3 '22

Q3 '23

Q3 '22

Q3 '23 vs

($ in millions, except volumes)

Q3 '23

Q3 '22

Q3 '22

Domestic Coke Sales Volumes

1,016

1,022

(6)

Logistics Volumes

4,961

5,721

(760)

Coke Adjusted EBITDA(2)

$66.2

$79.9

($13.7)

Logistics Adjusted EBITDA

$8.4

$12.9

($4.5)

Corporate and Other Adjusted EBITDA (3)

($9.2)

($9.1)

($0.1)

Consolidated Adjusted EBITDA (1)

$65.4

$83.7

($18.3)

Q3 '23 EPS of $0.08, down $0.41 from the prior year quarter

  • Primarily due to tax law changes in the U.S. and Brazil in 2022 and 2023, the quarter-over- quarter impact on EPS was $0.29 per share
  • Excluding the impact of tax adjustments, EPS was down by $0.12 quarter-over-quarter, primarily driven by lower contribution margin on non-contracted blast coke sales, partially offset by favorable coal-to-coke yields

Consolidated Adjusted EBITDA(1) of $65.4M, a decrease of $18.3M from the prior year quarter

  • Coke segment down $13.7M, primarily driven by lower contribution margin on non- contracted blast coke sales, partially offset by favorable coal-to-coke yields
  • Logistics segment down $4.5M, driven by lower transloading volumes and pricing
  1. See appendix for a definition and reconciliation of Adjusted EBITDA
  2. Coke Adjusted EBITDA includes Domestic Coke Adjusted EBITDA and Brazil Coke Adjusted EBITDA, combined
  3. Q3 '23 Corporate and Other Adjusted EBITDA includes activity from our legacy coal mining business

Domestic Coke Business Summary

5

Domestic coke fleet delivered solid operational performance;

Challenging market conditions for non-contracted blast coke sales

Domestic Coke Performance

(Coke Production, Kt)

• Delivered Adjusted EBITDA of

$64.0M in Q3 '23 vs $76.6M in Q3

$76.6M

1,028

151

172

277

306

122

$46.5M

1,023

156

173

267

311

116

$60.4M

994

147

161

264

309

113

$68.2M

998

133

171

272

304

118

$64.0M

1,032

144

175

276

315

122

'22

Domestic Coke fleet continues to

operate at full capacity

Lower contribution margin on non-

contracted blast coke sales, partially

offset by favorable coal-to-coke

yields

• Well positioned to achieve the

high end of FY 2023 Domestic Coke

Adjusted EBITDA guidance range

of $234M - $242M

Q3 '22

Q4 '22

Q1 '23

Q2 '23

Q3 '23

Sales

1,022K

1,040K

950K

1,043K

1,016K

Tons

(1)

Total Domestic Coke Adjusted EBITDA

Granite City

Indiana Harbor

Middletown

Haverhill

Jewell

(1) See appendix for a definition and reconciliation of Adjusted EBITDA

Logistics Business Summary

6

Weaker commodity markets continue to drive lower volumes at CMT

Logistics Performance

•

(Tons Handled, Kt)

$12.9M

$11.7M

$13.5M

$11.7M

$8.4M

5,721

5,525

•

5,309

5,191

4,961

3,158

2,946

2,847

2,820

2,869

•

2,563

2,579

2,463

2,371

2,092

Q3 '22

Q4 '22

Q1 '23

Q2 '23

Q3 '23

Logistics segment contributed $8.4M to Q3 '23 Adjusted EBITDA

  • Lower volumes at CMT during Q3 due to weaker commodity markets

Continued volatility in thermal coal pricing (API2 index); CMT recognized limited API2 price adjustment benefit during Q3

  • Q4 2023 API2 price adjustment recovering

Expect to deliver FY 2023 Logistics Adjusted EBITDA at the low end of the guidance range of $47M - $50M

Total Logistics Adj. EBITDA(1) CMT (coal, bulk products, iron ore) Logistics (ex. CMT)

(1) See appendix for a definition and reconciliation of Adjusted EBITDA

Q3 2023 Liquidity

Maintained strong liquidity position of ~$476M

(Consolidated)

Q3 '23

Total Debt

$506M

Gross Leverage(1)

1.91x

Net Leverage(1)

1.43x

7

Revolver

Availability:

$350.0M

($ in millions)

($0.8)

($34.1)

($8.4)

($2.7)

$125.9

$93.7

Dividend of

$0.10 per share

$78.2

Release of ~$30M

in working capital

(timing)

Cash @ Q2 2023

Net Cash Provided

Net Change in Debt

CapEx

Dividends

Other

Cash @ Q3 2023

by Ops. Activities

(1) Gross leverage and Net leverage for Q3 2023 calculated using Last Twelve Month (LTM) Adjusted EBITDA

2023 Key Initiatives

8

Continued Safety and Environmental Excellence

  • Continue to deliver strong safety and environmental performance

Deliver Operational Excellence and Optimize Asset Utilization

  • Successfully execute on operational and capital plan
  • Support full capacity utilization of cokemaking assets

Build on the Commercial Success of Foundry Business

  • Execute on foundry expansion project
  • Continue to grow foundry market participation and strengthen customer relationships for long-term success

Execute on Well-Established Capital Allocation Priorities

  • Continue to pursue balanced capital allocation including growth opportunities, deleveraging, and returning capital to shareholders

Achieve 2023 Financial Objectives

  • $250M - $265M Adjusted EBITDA(1)

(1) See appendix for a definition and reconciliation of Adjusted EBITDA

APPENDIX

NON-GAAP FINANCIAL MEASURES

10

In order to assist readers in understanding the core operating results that our management uses to evaluate the business, we describe our non- GAAP measures referenced in this presentation below. In addition to U.S. GAAP measures, this presentation 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. Additionally, other companies may calculate non-GAAP metrics differently than we do, thereby limiting their usefulness as a comparative measure. Because of these and other limitations, you should consider our non-GAAP measures only as supplemental to other U.S. GAAP-based financial performance measures, including revenues and net income. Reconciliations to the most comparable GAAP financial measures are included at the end of this Appendix.

DEFINITIONS

Adjusted EBITDArepresents earnings before interest, taxes, depreciation and amortization ("EBITDA"), adjusted for any impairments, restructuring costs, gains or losses on extinguishment of debt, and/or 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.

EBITDArepresents earnings before interest, taxes, depreciation and amortization.

Adjusted EBITDA attributable to SXCrepresents Adjusted EBITDA less Adjusted EBITDA attributable to non-controlling interests.

Adjusted EBITDA/Tonrepresents 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.

Attachments

  • Original Link
  • Original Document
  • Permalink

Disclaimer

SunCoke Energy Inc. published this content on 01 November 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 01 November 2023 11:39:45 UTC.