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8-K - 8-K - SunCoke Energy, Inc. | d518931d8k.htm |
Exhibit 99.1
Exhibit 99.1
Investor Luncheon
April 9, 2013
Forward?Looking Statements
Some of the information included 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. All statements in this presentation that express opinions, expectations, beliefs, plans, objectives, assumptions or projections with respect to anticipated future performance of SunCoke or the Partnership, in contrast with statements of historical facts, are forward?looking statements. Such forward?looking statements are based on managements beliefs and assumptions and on information currently available. Forward?looking statements include information concerning possible or assumed future results of operations, business strategies, financing plans, competitive position, potential growth opportunities, potential operating performance improvements, the effects of competition and the effects of future legislation or regulations. Forward?looking statements include all statements that are not historical facts and may be identified by the use of forward?looking terminology such as the words believe, expect, plan, intend, anticipate, estimate, predict, potential, continue, may, will, should or the negative of these terms or similar expressions.
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. Moreover, such statements are subject to a number of assumptions, risks and uncertainties. Many of these risks are beyond the control of SunCoke and the Partnership, and may cause actual results to differ materially from those implied or expressed by the forward?looking statements. Each of SunCoke and the Partnership has included in its filings with the Securities and Exchange Commission (including, in the case of the Partnership, its Form S?1) 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. For more information concerning these factors, see the Securities and Exchange Commission filings of SunCoke and the Partnership. All forward?looking statements included in this presentation are expressly qualified in their entirety by such cautionary statements.
Although forward?looking statements are based on current beliefs and expectations, caution should be taken not to place undue reliance on any such forward?looking statements because such statements speak only as of the date hereof. SunCoke and the Partnership do not have any intention or obligation to update publicly any forward?looking statement (or its associated cautionary language) whether as a result of new information or future events or after the date of this presentation, except as required by applicable law.
This presentation includes certain non?GAAP financial measures intended to supplement, not substitute for, comparable GAAP measures. 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.
Goldman Sachs Investor Luncheon
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Agenda
11:00 am 11:45 pm Welcome & Lunch
Mark Newman, Chief Financial Officer
11:45 pm 12:15 pm Executing on 2013 Priorities: VISA SunCoke and Indiana Harbor
Mike Thomson, President & Chief Operating Officer
12:15 pm 12:45 pm Driving Improvement in our Coal Business
Mike Hardesty, Senior Vice President, Sales & Commercial Operations
12:45 pm 1:00 pm Break
1:00 pm 2:00 pm Q&A with Fritz Henderson
Fritz Henderson, Chairman & Chief Executive Officer
Goldman Sachs Investor Luncheon
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MARK NEWMAN
SENIOR VICE PRESIDENT & CHIEF FINANCIAL OFFICER
Goldman Sachs Investor Luncheon
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2013 Priorities
Operational Excellence
Sustain momentum at coke facilities
Execute Indiana Harbor Plan
Execute refurbishment
Resolve NOV
Renew coke contract with return on refurbishment capital
Implement environmental project at Haverhill and Granite City
Execute coal mining action plan to decrease cash costs
Maintain top quartile safety performance
Grow The Coke Business
Domestic
Obtain permit for next potential U.S. facility
Identify and pursue strategic acquisition opportunities in the U.S. and Canada
Evaluate adjacent business lines to extend growth opportunities
International
Close VISA SunCoke joint venture transaction
Identify potential follow?on opportunities in India
Strategically Optimize Assets
SXCP
Achieve smooth launch, governance and operation of SXCP
Coal
Reposition mining operations for near?term weakness and long?term strategic flexibility
Efficient Capital Allocation
Put SXC & SXCP balance sheets to work
Goldman Sachs Investor Luncheon
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MIKE THOMSON
PRESIDENT & CHIEF OPERATING OFFICER
Goldman Sachs Investor Luncheon
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India Entry: VISA SunCoke
VISA SunCoke JV positions us to capture coke demand growth in India, which is expected to more than double to 62 million mt by 2020
VISA SunCoke
Invested $67 million for 49% interest
Approx. 1/3rd of coke and all steam production sold to VISA Steel
Balance sold in merchant market, to customers such as SAIL and Tata
Expect adjusted EBITDA per ton to be similar to what we achieve in U.S.
Near?term focus on execution in operations and management systems
Long?term growth through development of new plants or acquisition of existing facilities
Chinese Heat Recovery Coke: 400K tpy Steam: 20 Mwhe Built: 2007 Odisha, India
Goldman Sachs Investor Luncheon
Photo courtesy of VISA Steel
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Our India Strategy
Initial Entry
Form VISA SunCoke joint venture
Evaluate & improve existing asset operations
Establish market presence
Near-Term Growth
Grow VISA SunCoke via follow-on opportunities
Reinvest free cash flow
Utilize debt capacity of VISA SunCoke
Develop emerging market plant design
Long-Term Vision
Continue to leverage JV and in-country presence
Pursue Build-Own-Operate model with leading integrated steelmakers
Goldman Sachs Investor Luncheon
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Indiana Harbor Focus
With 1.22 million tons of capacity, Indiana Harbor has the potential to drive Adjusted EBITDA growth with contract renewal and refurbishment
Renewal Status
Ongoing constructive dialogue
MT needs and wants maximum coke production
Renewal term likely to be 10 years
Expect to maintain current economics and earn a return on refurbishment capital
Anticipate finalizing contract this summer
EBITDA Impact
Return on Invested Capital
Improved Operations (production/yield)
Higher Operating Cost Recovery (vs. recent history)
Potential Incremental EBITDA Growth in 2014 +
Goldman Sachs Investor Luncheon
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Indiana Harbor Focus
Plan to invest up to $85 million in 2012?2014 to refurbish Indiana Harbor; expect to earn return on this investment and reduce operating costs
Scope Benefit
Oven repair
Improve oven condition,
Major repair of all 268 ovens increase charge weight,
(48 completed) reduce maintenance time
Coke shed repair
Reduce maintenance cost,
Replace roof and sidewall
sheets; replace or refurbish improve safety and
columns environmental compliance
Machinery replacement
2 pusher?charger machines Improve reliability, reduce
4 door machines maintenance cost
Stack & other
Improve environmental
Stack lid replacements and compliance refurbishment
Goldman Sachs Investor Luncheon
Before
After
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Indiana Harbor Focus
With approx. 20% of ovens complete, seeing early positive results from refurbishment efforts
Degraded oven conditions and equipment reliability challenged coke production capabilities
Resulted in lower than target charge weights and ovens pushed per day.
After refurbishment, coal charge weights improved by up to 10% Expect ovens pushed per day to improve as we progress with refurbishment
Pre- and Post-Refurbishment Charge Weights
Target Charge weight: 41 tons
38 35
Pre-rehab Current
Ovens Pushed Per Day
140
130
120
Daily Target: 130
110
100
Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 Jan-13 Feb-13 Mar-13
Goldman Sachs Investor Luncheon
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SunCoke Energy TM
MIKE HARDESTY
SENIOR VICE PRESIDENT, SALES & COMMERCIAL OPERATIONS
Goldman Sachs Investor Luncheon
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State of the U.S. Coal Market
Demand Supply Price
Restrained Chinese demand for HCC limiting price recovery Domestic steel capacity utilization has improved recently
Low natural gas prices continues to temper overall coal demand, although recent price improvements supporting thermal coal prices
Rising production costs in Australia appears to have set a floor for HCC Most U.S. miners have cut production in response to weak market conditions; Australian miners appear to be following suit Strict U.S. regulatory environment limits cost improvement measures
International benchmark pricing at $172/mt down $34/mt year?over?year for Q2 contracts but up $7.00 versus prior quarter Current FOB mine domestic prices near cash cost for many CAPP sources of premium met coals
Goldman Sachs Investor Luncheon
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Met Coal Pricing
Even as met coal prices appears to be stabilizing, our focus remains on reducing costs, improving efficiencies and long?term strategic flexibility.
Met Coal Pricing (Mid?Vol)
$350 $300 $250 $200 $150 $100 $50
$?
2010 2011 2012 2013F
FOB Vessel ($/Metric Ton) FOB Jewell ($/Net Ton)
Goldman Sachs Investor Luncheon
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Coal Action Plan Progress
Rationalize Mining Plans
Enhance Productivity
/ Lower Costs
Improve Prep Plant
Consolidated people, equipment and mines; idled 2 company?operated and 2 contract mines; nearly 20% headcount reduction Downsized mining footprint, revised section geometry and improved advance/retreat balance Obtain and maintain deep?cut plans and permits Early results are encouraging
Upgraded equipment new miners, shuttle cars, belts, etc. in place Enhanced mentor/training programs for hourly and supervisory staff Implemented a new maintenance planning tool to track and manage costs Improve regulatory compliance to reduce inspection related downtime
Installed new cyclone and fine circuit system
Improved screening implemented at several mines to reduce trucking cost
Goldman Sachs Investor Luncheon
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SunCoke Energy TM