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
- See appendix for a definition and reconciliation of Adjusted EBITDA
- Coke Adjusted EBITDA includes Domestic Coke Adjusted EBITDA and Brazil Coke Adjusted EBITDA, combined
- 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.
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SunCoke Energy Inc. published this content on 30 October 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 01 November 2023 13:04:47 UTC.