Form 8-K SunCoke Energy, Inc. For: Jul 28

 

 

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): July 28, 2016

 

 

SUNCOKE ENERGY, INC.

(Exact name of registrant as specified in its charter)

 

 

 

Delaware		001-35243		90-0640593
(State of Incorporation)		(Commission File Number)		(IRS Employer Identification No.)
1011 Warrenville Road, Suite 600 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))

 

 

 

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Item 2.02.

Results of Operations and Financial Condition.

On July 28, 2016, SunCoke Energy, Inc. (the “Company”) issued a press release announcing its financial results for the second quarter of 2016. 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 July 28, 2016, the Company issued a press release announcing its financial results for the second quarter of 2016. Additional information concerning the Company’s financial results for the second quarter of 2016 will be presented in a slide presentation to investors during a previously announced teleconference on July 28, 2016. 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.

Safe Harbor Statement

Statements contained in the exhibit 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.

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Item 9.01

Financial Statements and Exhibits.

(d) Exhibits

 

Exhibit No.		Description
99.1		SunCoke Energy, Inc. Press Release, announcing earnings (July 28, 2016).
99.2		SunCoke Energy, Inc. Slide Presentation regarding earnings (July 28, 2016).

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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.

 

Date: July 28, 2016

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EXHIBIT INDEX

 

Exhibit No.		Exhibit
99.1		SunCoke Energy, Inc. Press Release, announcing earnings (July 28, 2016).
99.2		SunCoke Energy, Inc. Slide Presentation regarding earnings (July 28, 2016).

Exhibit 99.1

 

Investors:

Kyle Bland: 630-824-1907

Media:

Steve Carlson: 630-824-1783

SUNCOKE ENERGY, INC. ANNOUNCES SECOND QUARTER 2016 RESULTS

 

•

Net loss attributable to SXC was $4.6 million, or $0.07 per share, in the current period compared to a loss of $13.5 million, or $0.21 per share, in the prior year period

 

•

Adjusted EBITDA was $46.5 million, up $13.1 million versus the prior year period

 

•

Reduced consolidated debt outstanding by $57.5 million, including SXCP’s repurchase of $17.1 million of face value bonds during the quarter

 

•

Reaffirmed full-year guidance for 2016 Consolidated Adjusted EBITDA of $210 million to $235 million

LISLE, Ill. (July 28, 2016) - SunCoke Energy, Inc. (NYSE: SXC) today reported results for the second quarter 2016, which reflect the absence of a non-cash pension plan termination charge in the prior year period and comparable year-over-year operating results after considering several offsetting factors described below.

“In the second quarter, we delivered results in line with expectations for our cokemaking business, but continue to experience production shortfalls at Indiana Harbor and saw low volumes across our Coal Logistics franchise,” said Fritz Henderson, Chairman, President and Chief Executive Officer of SunCoke Energy, Inc. “Despite these challenges, our take-or-pay contracts continue to underpin our steady results and we remain committed to optimizing asset performance across the business.”

SunCoke continued to de-lever its balance sheet by reducing total debt outstanding by more than $57 million in the quarter. The Company also reaffirmed its full-year outlook for 2016 Consolidated Adjusted EBITDA of $210 million to $235 million.

Henderson added, “With the first half of the year behind us, we are in position to deliver on our commitments to shareholders and remain flexible and responsive to the evolving industry landscape.”

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SECOND QUARTER CONSOLIDATED RESULTS⁽¹⁾

 

		Three Months Ended June 30,
(Dollars in millions)		2016				2015				Increase/ (Decrease)
Revenues		$	292.7			$	348.2			$	(55.5	)
Net loss attributable to SXC		$	(4.6	)		$	(13.5	)		$	8.9
Adjusted EBITDA(2)		$	46.5			$	33.4			$	13.1

 

(1)	The current and prior year periods are not comparable due to the contribution of Convent Marine Terminal, which was acquired on August 12, 2015.

(2)	See definition of Adjusted EBITDA and reconciliation elsewhere in this release.

Revenues declined $55.5 million to $292.7 million in second quarter 2016 compared with the same prior year period, primarily reflecting the pass-through of lower coal costs as well as lower coke sales volumes.

Net loss attributable to SXC was $4.6 million, or $0.07 per share, in the current period compared to a loss of $13.5 million, or $0.21 per share, in the prior year period. The current period was impacted by a $3.5 million gain on the extinguishment of debt, a $5.1 million loss on the divestiture of the coal mining business, as well as the items discussed below.

Adjusted EBITDA increased $13.1 million to $46.5 million, primarily due to lower operational costs at Indiana Harbor and our divested coal mining business, the contribution from the Convent Marine Terminal (“CMT”) acquisition and the lapping of a second quarter 2015 pension termination charge of $12.6 million. These items were partly offset by lower sales volumes as mentioned above.

SECOND 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 June 30,
(Dollars in millions, except per ton amounts)		2016				2015				Increase/ (Decrease)
Revenues		$	274.0			$	326.5			$	(52.5	)
Adjusted EBITDA(1)		$	51.0			$	56.2			$	(5.2	)
Sales volumes (thousands of tons)			992				1,110				(118	)
Adjusted EBITDA per ton(2)		$	51.41			$	50.63			$	0.78

 

(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 were affected by both the pass-through of lower coal prices and a decrease in sales volume of 118 thousand tons, primarily due to the timing of shipments at Jewell, lower production at Indiana Harbor and the impact of customer volume accommodations at Haverhill.

 

•

Adjusted EBITDA decreased $5.2 million, reflecting lower sales volumes, the complete write-off of a $1.4 million receivable related to 2015 spot coke sales to Essar Algoma and $1.3 million of coal transportation charges, which were transferred to our Domestic Coke segment as a result of the divestiture of our coal mining business. These decreases were partly offset by lower operating and maintenance spending at Indiana Harbor of $4.6 million as compared to the same prior year period.

 

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Coal Logistics

Coal Logistics consists of the coal handling and mixing services operated by SXCP at CMT located on the Mississippi river in Louisiana, Lake Terminal in East Chicago, Indiana, Kanawha River Terminals, LLC (“KRT”), which has terminals along the Ohio and Kanawha rivers in West Virginia, and Dismal River Terminal (“DRT”), located in Virginia adjacent to our Jewell Cokemaking facility. DRT was constructed to accommodate Jewell in its direct procurement of third-party coal, beginning in 2016. The current and prior year periods are not comparable due to the contribution of CMT, which was acquired on August 12, 2015.

 

		Three Months Ended June 30,
(Dollars in millions, except per ton amounts)		2016				2015				Increase/ (Decrease)
Revenues		$	11.2			$	8.6			$	2.6
Intersegment sales		$	5.2			$	4.9			$	0.3
Adjusted EBITDA(1)		$	5.4			$	5.0			$	0.4
Tons handled, excluding CMT (thousands of tons)(2)			3,232				4,366				(1,134	)
Tons handled by CMT (thousands of tons)(2)			976				—				976

 

(1)	See definition of Adjusted EBITDA and reconciliation elsewhere in this release.

(2)	Reflects inbound tons handled during the period.

 

•

Revenues were up $2.6 million, driven by a $7.0 million contribution from CMT, partly offset by lower volumes at KRT and Lake Terminal.

 

•

Adjusted EBITDA was up $0.4 million, driven by a $4.2 million contribution from CMT, partly offset by lower volumes at KRT and Lake Terminal. Below-target throughput in the quarter was driven by demand-side challenges in both the thermal and metallurgical coal markets.

Brazil Coke

Brazil Coke consists of a cokemaking facility in Vitória, Brazil, which we operate for an affiliate of ArcelorMittal. Brazil Coke earns operating and technology licensing fees based on production and recognizes a dividend on a preferred stock investment assuming certain minimum production levels are achieved.

 

•

Adjusted EBITDA of $2.4 million was comparable to the prior year period

Coal Mining

In April 2016, the Company divested substantially all of its coal mining business to Revelation Energy, LLC, which resulted in a total loss of $14.7 million, of which $9.6 million and $5.1 million were recorded in the first and second quarters of 2016, respectively.

 

•

Adjusted EBITDA, which excludes the $5.1 million loss on divestiture discussed above, was a loss of $0.9 million in the current year period compared to a loss of $5.4 million in the prior year period. The improved results reflect a shift of $1.3 million of coal transportation to our Domestic Coke segment and lower operating costs due to the divestiture of our coal mining business, which was completed in the quarter.

Corporate and Other

Corporate and other expenses, including legacy costs, were $11.4 million in second quarter 2016, an improvement of $13.6 million versus second quarter 2015, driven by a $12.6 million non-cash pension plan termination charge in the second quarter 2015. Current period savings from lower headcount also contributed to lower corporate costs.

 

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2016 OUTLOOK

Our 2016 guidance is as follows:

 

•

Domestic coke production is expected to be between 4.0 million and 4.1 million tons

 

•

Consolidated Adjusted EBITDA is expected to be between $210 million and $235 million

 

•

Adjusted EBITDA attributable to SXC is expected to be between $105 million and $124 million, reflecting the impact of public ownership in SXCP

 

•

Capital expenditures are projected to be approximately $45 million

 

•

Cash generated by operations is estimated to be between $150 million and $170 million

 

•

Cash taxes are projected to be between $4 million and $9 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 may participate in this call by dialing 1-866-393-4306 in the U.S. or 1-617-826-1698 if outside the U.S., confirmation code 43197747.

UPCOMING EVENTS

Additionally, we plan to participate in the following events:

 

•

Citi MLP/Midstream Infrastructure Conference, August 17, 2016, Las Vegas, Nevada

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. We are the sponsor of SunCoke Energy Partners, L.P. (“Partnership”) (NYSE: SXCP), a publicly traded master limited partnership. At June 30, 2016, we owned the general partner of the Partnership, which consists of a 2.0 percent ownership interest and incentive distribution rights, and owned a 53.9 percent limited partner interest in the Partnership. Our cokemaking facilities are located in Illinois, Indiana, Ohio, Virginia, Brazil and India. To learn more about SunCoke Energy, Inc., visit our website at www.suncoke.com.

DEFINITIONS

 

•

Adjusted EBITDA represents earnings before interest, (gain) loss on extinguishment of debt, taxes, depreciation and amortization (“EBITDA”), adjusted for impairments, coal rationalization costs, changes to our contingent consideration liability related to our acquisition of CMT, and interest, taxes, depreciation and amortization and impairments attributable to our equity method investment. 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 of the operating performance and liquidity of the Company’s net assets and its ability to incur and service debt, fund capital expenditures and make distributions. 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 and liquidity. EBITDA and Adjusted EBITDA are not measures calculated in accordance with GAAP, and they should not be considered a substitute for net income, operating cash flow 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 noncontrolling interests.

 

•

Legacy Costs include costs associated with former mining employee-related liabilities net of certain royalty revenues.

 

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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.

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

(Unaudited)

 

		Three Months Ended June 30,								Six Months Ended June 30,
		2016				2015				2016				2015
		(Dollars and shares in millions, except per share amounts)
Revenues
Sales and other operating revenue		$	292.6			$	347.6			$	603.1			$	671.5
Other income, net			0.1				0.6				0.7				0.7
Total revenues			292.7				348.2				603.8				672.2
Costs and operating expenses
Cost of products sold and operating expenses			224.4				296.0				464.9				558.1
Selling, general and administrative expenses			23.7				19.4				47.0				32.0
Depreciation and amortization expense			28.6				26.4				56.8				50.2
Loss on divestiture of business			5.1				—				14.7				—
Total costs and operating expenses			281.8				341.8				583.4				640.3
Operating income			10.9				6.4				20.4				31.9
Interest expense, net			13.4				13.0				27.4				26.9
(Gain) loss on extinguishment of debt			(3.5	)			—				(23.9	)			9.4
Income (loss) before income tax expense and loss from equity method investment			1.0				(6.6	)			16.9				(4.4	)
Income tax (benefit) expense			—				(0.8	)			3.3				0.3
Loss from equity method investment			—				0.7				—				1.4
Net income (loss)			1.0				(6.5	)			13.6				(6.1	)
Less: Net income attributable to noncontrolling interests			5.6				7.0				22.3				11.4
Net loss attributable to SunCoke Energy, Inc.		$	(4.6	)		$	(13.5	)		$	(8.7	)		$	(17.5	)
Loss attributable to SunCoke Energy, Inc. per common share:
Basic		$	(0.07	)		$	(0.21	)		$	(0.14	)		$	(0.27	)
Diluted		$	(0.07	)		$	(0.21	)		$	(0.14	)		$	(0.27	)
Weighted average number of common shares outstanding:
Basic			64.2				65.2				64.1				65.7
Diluted			64.2				65.2				64.1				65.7

 

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SunCoke Energy, Inc.

Consolidated Balance Sheets

(Unaudited)

 

		June 30, 2016				December 31, 2015
		(Dollars in millions, except par value amounts)
Assets
Cash and cash equivalents		$	108.0			$	123.4
Receivables			48.2				64.6
Inventories			106.4				121.8
Income tax receivable			9.7				11.6
Other current assets			7.2				3.9
Assets held for sale			—				0.9
Total current assets			279.5				326.2
Restricted cash			2.3				18.2
Investment in Brazilian cokemaking operations			41.0				41.0
Properties, plants and equipment (net of accumulated depreciation of $637.2 million and $656.4 million at June 30, 2016 and December 31, 2015, respectively)			1,558.3				1,582.0
Goodwill			70.5				71.1
Other intangible assets, net			184.6				190.2
Deferred charges and other assets			5.8				15.4
Long-term assets held for sale			—				11.4
Total assets		$	2,142.0			$	2,255.5
Liabilities and Equity
Accounts payable		$	91.7			$	99.8
Accrued liabilities			50.3				42.9
Deferred revenue			20.3				2.1
Current portion of long-term debt			1.1				1.1
Interest payable			16.8				18.9
Liabilities held for sale			—				0.9
Total current liabilities			180.2				165.7
Long-term debt			887.3				997.7
Accrual for black lung benefits			45.1				44.7
Retirement benefit liabilities			30.1				31.3
Deferred income taxes			352.9				349.0
Asset retirement obligations			13.8				16.3
Other deferred credits and liabilities			16.9				22.1
Long-term liabilities held for sale			—				5.9
Total liabilities			1,526.3				1,632.7
Equity
Preferred stock, $0.01 par value. Authorized 50,000,000 shares; no issued shares at June 30, 2016 and December 31, 2015			—				—
Common stock, $0.01 par value. Authorized 300,000,000 shares; issued 71,657,185 and 71,489,448 shares at June 30, 2016 and December 31, 2015, respectively			0.7				0.7
Treasury stock, 7,477,657 shares at June 30, 2016 and December 31, 2015, respectively			(140.7	)			(140.7	)
Additional paid-in capital			489.0				486.1
Accumulated other comprehensive loss			(18.7	)			(19.8	)
Retained deficit			(45.1	)			(36.4	)
Total SunCoke Energy, Inc. stockholders’ equity			285.2				289.9
Noncontrolling interests			330.5				332.9
Total equity			615.7				622.8
Total liabilities and equity		$	2,142.0			$	2,255.5

 

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SunCoke Energy, Inc.

Consolidated Statements of Cash Flows

(Unaudited)

 

		Six Months Ended June 30,
		2016				2015
		(Dollars in millions)
Cash Flows from Operating Activities:
Net income (loss)		$	13.6			$	(6.1	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Loss on divestiture of business			14.7				—
Depreciation and amortization expense			56.8				50.2
Deferred income tax expense			3.6				(1.1	)
Settlement loss and expense for pension plan			—				13.1
Gain on curtailment and payments in excess of expense for postretirement plan benefits			(1.2	)			(5.5	)
Share-based compensation expense			3.4				4.2
Loss from equity method investment			—				1.4
(Gain) loss on extinguishment of debt			(23.9	)			9.4
Changes in working capital pertaining to operating activities (net of the effects of divestiture):
Receivables			16.2				21.5
Inventories			15.5				36.0
Accounts payable			(5.5	)			(25.4	)
Accrued liabilities			7.0				(18.9	)
Deferred revenue			18.2				—
Interest payable			(2.1	)			1.9
Income taxes			1.9				(0.9	)
Other			3.3				(3.2	)
Net cash provided by operating activities			121.5				76.6
Cash Flows from Investing Activities:
Capital expenditures			(30.2	)			(22.5	)
Decrease in restricted cash			15.9				—
Divestiture of coal business			(12.1	)			—
Other investing activities			2.1				—
Net cash used in investing activities			(24.3	)			(22.5	)
Cash Flows from Financing Activities:
Proceeds from issuance of long-term debt			—				210.8
Repayment of long-term debt			(47.0	)			(149.5	)
Debt issuance costs			—				(4.8	)
Proceeds from revolving credit facility			20.0				—
Repayment of revolving credit facility			(60.4	)			—
Cash distribution to noncontrolling interests			(24.7	)			(18.7	)
Shares repurchased			—				(20.0	)
Proceeds from exercise of stock options, net of shares withheld for taxes			(0.5	)			(0.4	)
Dividends paid			—				(8.8	)
Net cash (used in) provided by financing activities			(112.6	)			8.6
Net (decrease) increase in cash and cash equivalents			(15.4	)			62.7
Cash and cash equivalents at beginning of period			123.4				139.0
Cash and cash equivalents at end of period		$	108.0			$	201.7
Supplemental Disclosure of Cash Flow Information
Interest paid		$	30.8			$	25.0
Income taxes paid, net of refunds of $4.0 million in 2016 and no refunds in 2015		$	(2.2	)		$	2.2

 

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SunCoke Energy, Inc.

Segment Financial and Operating Data

The following tables set forth financial and operating data for the three and six months ended June 30, 2016 and 2015:

 

		Three Months Ended June 30,								Six Months Ended June 30,
		2016				2015				2016				2015
		(Dollars in millions, except per ton amounts)
Sales and other operating revenues:
Domestic Coke		$	274.0			$	326.5			$	563.0			$	629.6
Brazil Coke			7.4				8.5				15.1				18.4
Coal Logistics			11.2				8.6				24.2				15.9
Coal Logistics intersegment sales			5.2				4.9				10.4				9.6
Coal Mining			—				4.0				0.8				7.6
Coal Mining intersegment sales			0.7				24.8				22.0				49.0
Elimination of intersegment sales			(5.9	)			(29.7	)			(32.4	)			(58.6	)
Total sales and other operating revenue		$	292.6			$	347.6			$	603.1			$	671.5
Adjusted EBITDA(1):
Domestic Coke		$	51.0			$	56.2			$	105.3			$	108.9
Brazil Coke			2.4				2.6				4.7				6.7
Coal Logistics			5.4				5.0				11.3				7.6
Coal Mining			(0.9	)			(5.4	)			(5.0	)			(8.5	)
Corporate and Other, including legacy costs, net(2)			(11.4	)			(25.0	)			(26.0	)			(33.4	)
Total Adjusted EBITDA		$	46.5			$	33.4			$	90.3			$	81.3
Coke Operating Data:
Domestic Coke capacity utilization (%)			95				99				94				97
Domestic Coke production volumes (thousands of tons)			998				1,047				1,989				2,045
Domestic Coke sales volumes (thousands of tons)			992				1,110				1,992				2,059
Domestic Coke Adjusted EBITDA per ton(3)		$	51.41			$	50.63			$	52.86			$	52.89
Brazilian Coke production—operated facility (thousands of tons)			431				437				845				876
Coal Logistics Operating Data:
Tons handled, excluding CMT (thousands of tons)(4)			3,232				4,366				6,602				8,160
Tons handled by CMT (thousands of tons)(4)			976				—				1,921				—

 

(1)	See definition of Adjusted EBITDA and reconciliation to GAAP elsewhere in this release.

(2)	Legacy costs, net include costs associated with former mining employee-related liabilities net of certain royalty revenues. See details of these legacy items below.

(3)	Reflects Domestic Coke Adjusted EBITDA divided by Domestic Coke sales volumes.

(4)	Reflects inbound tons handled during the period.

 

		Three Months Ended June 30,								Six Months Ended June 30,
		2016				2015				2016				2015
		(Dollars in millions)
Black lung charges		$	(1.8	)		$	(1.0	)		$	(3.5	)		$	(1.9	)
Postretirement benefit plan (expense) benefit			(0.2	)			(0.1	)			(0.4	)			3.8
Defined benefit plan expense, including termination charges			—				(12.9	)			—				(13.1	)
Workers’ compensation expense			(0.1	)			(0.5	)			(0.4	)			(1.4	)
Other			—				(0.7	)			—				(0.7	)
Total legacy (costs) income, net		$	(2.1	)		$	(15.2	)		$	(4.3	)		$	(13.3	)

 

9

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SunCoke Energy, Inc.

Reconciliations of Non-GAAP Information

Adjusted EBITDA to Net (Loss) Income and Net Cash Provided by Operating Activities

 

		Three Months Ended June 30,								Six Months Ended June 30,
		2016				2015				2016(1)				2015
		(Dollars in millions)
Net cash provided by operating activities		$	92.1			$	65.5			$	121.5			$	76.6
Subtract:
Loss on divestiture of business			5.1				—				14.7				—
Depreciation and amortization expense			28.6				26.4				56.8				50.2
Deferred income tax expense (benefit)			0.4				(4.2	)			3.6				(1.1	)
(Gain) loss on extinguishment of debt			(3.5	)			—				(23.9	)			9.4
Changes in working capital and other			60.5				49.8				56.7				24.2
Net Income		$	1.0			$	(6.5	)		$	13.6			$	(6.1	)
Add:
Adjustment to unconsolidated affiliate earnings(2)		$	—			$	0.7			$	—			$	1.0
Coal rationalization costs (income)(3)			—				0.6				0.2				(0.4	)
Depreciation and amortization expense			28.6				26.4				56.8				50.2
Interest expense, net			13.4				13.0				27.4				26.9
(Gain) loss on extinguishment of debt			(3.5	)			—				(23.9	)			9.4
Income tax (benefit) expense			—				(0.8	)			3.3				0.3
Loss on divestiture of business			5.1				—				14.7				—
Reduction of contingent consideration(4)			—				—				(3.7	)			—
Expiration of land deposits(5)			1.9				—				1.9				—
Adjusted EBITDA		$	46.5			$	33.4			$	90.3			$	81.3
Subtract: Adjusted EBITDA attributable to noncontrolling interest(6)			18.6				18.1				38.9				36.2
Adjusted EBITDA attributable to SunCoke Energy, Inc.			27.9				15.3				51.4				45.1

 

(1)	In response to the Securities & Exchange Commission’s May 2016 update of its guidance of the appropriate use of non-GAAP financial measures, first quarter of 2016 Adjusted EBITDA has been recast to no longer include Coal Logistics deferred revenue until it is recognized as GAAP revenue.

(2)	Reflects share of interest, taxes, depreciation and amortization related to our equity method investment in VISA SunCoke.

(3)	Coal rationalization costs (income) includes employee severance, contract termination costs and other costs to idle mines incurred during the execution of our coal rationalization plan. The six months ended June 30, 2015, included $2.2 million of income related to a severance accrual adjustment.

(4)	The Partnership amended its contingent consideration terms with The Cline Group, which reduced the fair value of the contingent consideration liability, resulting in a $3.7 million gain recorded during the six months ended June 30, 2016, which was excluded from Adjusted EBITDA.

(5)	Reflects the expiration of land deposits in connection with the Company’s potential new cokemaking facility to be constructed in Kentucky.

(6)	Reflects noncontrolling interest in Indiana Harbor and the portion of the Partnership owned by public unitholders.

 

10

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SunCoke Energy, Inc

Reconciliation of Non-GAAP Information

Estimated 2016 Consolidated Adjusted EBITDA to Estimated Net Income

and Net Cash Provided by Operating Activities

 

		2016
		Low				High
Net cash provided by operating activities		$	150.0			$	170.0
Subtract:
Depreciation and amortization expense			106.0				106.0
Gain on extinguishment of debt			(20.0	)			(27.0	)
Loss on divestiture of business			14.0				14.0
Changes in working capital and other			6.0				7.0
Net Income		$	44.0			$	70.0
Add:
Coal rationalization costs(1)			2.0				1.0
Depreciation and amortization expense			106.0				106.0
Interest expense, net			62.0				58.0
Gain on extinguishment of debt			(20.0	)			(27.0	)
Income tax expense			6.0				17.0
Loss on divestiture of business			14.0				14.0
Reduction of contingent consideration(2)			(4.0	)			(4.0	)
Adjusted EBITDA		$	210.0			$	235.0
Subtract:
Adjusted EBITDA attributable to noncontrolling interests(3)			105.0				111.0
Adjusted EBITDA attributable to SunCoke Energy, Inc.		$	105.0			$	124.0

 

(1)	Coal rationalization costs includes employee severance, contract termination costs and other costs to idle mines incurred during the execution of our coal rationalization plan.

(2)	The Partnership amended its contingent consideration terms with The Cline Group, which reduced the fair value of the contingent consideration liability, resulting in a $3.7 million gain recorded during the six months ended June 30, 2016, which was excluded from Adjusted EBITDA.

(3)	Reflects noncontrolling interest in Indiana Harbor and the portion of the Partnership owned by public unitholders.

 

11

Exhibit 99.2

 

Exhibit 99.2

SunCoke Energy, Inc.

Q2 2016 Earnings

Conference Call

July 28, 2016

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Forward-Looking Statements TM

This slide presentation should be reviewed in conjunction with the Second Quarter 2016 earnings release of SunCoke Energy, Inc. (SXC) and conference call held on July 28, 2016 at 11:00 a.m. ET.

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 SXC or SunCoke Energy Partners, L.P. (SXCP), in contrast with statements of historical facts, are forward-looking statements. Such forward-looking statements are based on management’s 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 SXC and SXCP, and may cause actual results to differ materially from those implied or expressed by the forward-looking statements. Each of SXC and SXCP 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. For more information concerning these factors, see the Securities and Exchange Commission filings of SXC and SXCP. 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. SXC and SXCP 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.

SXC Q2 2016 Earnings Call 1

---

 

Management Perspective TM

Achieved solid safety, environmental and operating

performance across cokemaking fleet

Realized strong cost improvement at Indiana Harbor;

expanding scope of oven rebuild initiative in Q4 ‘16

Handled below-target logistics volumes due to coal

market challenges; fundamentals improving as of late

Completed Coal Mining divestiture, contributing to year-

over-year Adj. EBITDA improvement

Reduced consolidated debt outstanding by >$57M,

including >$17M bond repurchases at SXCP

Reaffirmed FY 2016 Consolidated Adjusted EBITDA(1)

guidance of $210M – $235M

(1)

For a definition and reconciliation of Adjusted EBITDA, please see appendix.

SXC Q2 2016 Earnings Call 2

---

 

Navigating Current Market Conditions TM

Encouraged by recent improvement in steel and coal market conditions, and will remain flexible and responsive to industry landscape

Reached resolution on several previously uncertain items in 1H 2016 Continued improvement in steel industry outlook

Improving customer balance sheets

Favorable AD and CVD rulings against unfairly traded steel imports

Strong recovery in HRC prices & utilization rates

Stabilizing coal industry fundamentals

API2 prices have rebounded sharply; exports near economic breakeven

Higher natural gas prices, warmer summer weather, restocking

Continue to closely follow CMT customer developments

Progress on FELP bondholder negotiations

Monitoring Murray’s progress with its creditors and labor union

Will remain flexible & responsive to industry backdrop

SXC Q2 2016 Earnings Call 3

---

 

Q2 2016 Overview

Q2 2016 Earnings Overview

($/share)($ in millions)

Earnings per Share Consolidated

(diluted) Adj. EBITDA(1)

($0.07)

($0.21)

5.46$

4.33$

Q2 ‘15 Q2 ‘16 Q2 ‘15 Q2 ‘16

Q2’16 vs.

($ in millions, except volumes) Q2’16 Q2’15 Q2’15

Domestic Coke Sales Volumes 992 1,110(118)

Coal Logistics Volumes(2) 4,208 4,366(158)

Coke Adj. EBITDA(3) $53.4 $58.8($5.4)

Coal Logistics Adj. EBITDA $5.4 $5.0 $0.4

Coal Mining Adj. EBITDA($0.9)($5.4) $4.5

Corporate and Other, including

Legacy Costs(4)($11.4)($25.0) $13.6

Adjusted EBITDA (Consolidated)(1) $46.5 $33.4 $13.1

Q2 ‘16 EPS of ($0.07) includes

$5.1M loss associated with divestiture of Coal Mining business

$3.5M gain on debt extinguishment

Other items described below

(1)

Consolidated Adj. EBITDA up $13.1M vs. Q2 ‘15 primarily due to

Contribution from CMT and improved cost performance at Indiana Harbor

Lapping of $12.6M pension termination charge incurred during Q2 2015

Partially offset by lower coal logistics volumes at KRT and items impacting Domestic Coke comparability

(1) For a definition and reconciliation of Adjusted EBITDA, please see appendix. (2) Coal Logistics volumes during Q2 2016 include volumes from CMT. (3) Coke Adjusted EBITDA includes Domestic Coke and Brazil Coke.

(4)

Q2 2015 Legacy Costs included a $12.6M pension termination charge.

SXC Q2 2016 Earnings Call

4

(1)

---

 

Adjusted EBITDA – Q2 ‘15 to Q2 ‘16 TM

Second quarter performance benefited from strong IHO cost savings,

contribution of CMT and lapping of Q2 ‘15 pension termination charge

($ in millions)

$46.5

$4.5

$0.4

$33.4

$1.1 $13.6

($6.5)

$4.2M – CMT

($3.8M)

– KRT and

Lake Terminal

$4.6M

– O&M recovery

($3.8M)

– Lower volumes $12.6M – Lapping of pension

and yield termination charge in Q2 ‘15 • $3.2M – Lower

operational costs

due to divestiture

($2.8M)

– Timing of Jewell Coke sales vs. Q2 ’15 $1.3M – Shift of coal

($1.4M)

– Write-off of Essar Algoma receivable transportation costs

($1.3M)

– Jewell Coke coal transportation costs to Jewell Coke

(shifted from Coal Mining beginning Q1 ‘16)

Q2 2015 Indiana Harbor Domestic & Brazil Coke Corporate, Coal Logistics Coal Mining Q2 2016

Adj. EBITDA(excl. IHO) Legacy & Other(incl. CMT) (2) Adj. EBITDA

(Consolidated) (1)(Consolidated) (1)

---

 

Domestic Coke Business Summary TM

Solid quarter performance in line with expectations despite items impacting Q2 comparability

Domestic Cokemaking Performance

(Production, Kt)

$54/ton $54/ton

$51/ton $51/ton

$45/ton

1,047 1,049 1,028 991 998

151 158 157 155 157

166 172 155 154 161

288 290 284 267 265

257 243 249 239 236

185 186 184 176 179

Q2 ‘15 Q3 ‘15 Q4 ‘15 Q1 ‘16 Q2 ‘16

Sales 1,110K 1,043K 1,013K 1,000K 992K

Tons

Adjusted EBITDA/ton Granite City Indiana Harbor

Middletown Haverhill Jewell

Stable Q2 coke production, excluding Indiana Harbor

As expected, production lower due to customer volume accommodations(1)

Solid Adj. EBITDA/ton despite Q2 impacts

Shift of coal transportation cost to Jewell Coke from Coal Mining

Essar Algoma A/R write-off

(1) As discussed on Q1 ’16 earnings call, agreed to back-load 2016 coke production at Granite City. Also reduced FY 2016 production at Haverhill 2 by ~75K tons, resulting in a higher fixed fee per ton (no change in contract economics).

SXC Q2 2016 Earnings Call

---

 

Coal Logistics Business Summary TM

Continue to see below-target throughput across Coal Logistics fleet

Coal Logistics Performance

(Tons Handled, Kt) $21.1

$9.3 $5.9

$5.0 5,555 $5.4 5,149

4,315 4,208

4,160 4,332

3,370 3,232 4,366

1,395

817 945 976

(1)

Q2 ‘15 Q3 ‘15 Q4 ‘15 Q1 ‘16 Q2 ‘16

CMT Adj.

(2)

- $4.3M $16.3M $3.8M $4.2M EBITDA ($M)

(2)

Total Coal Logistics Adj. EBITDA ($M) CMT (coal & liquids) Coal Logistics (ex. CMT)

(1)

The Convent Marine Terminal acquisition closed August 12, 2015.

(2) Adjusted EBITDA will no longer include Coal Logistics deferred revenue until it is recognized as GAAP revenue, typically at the end of the annual contract period or December 31.

SXC Q2 2016 Earnings Call

Domestic Coal Logistics down $3.8M due to lower than expected throughput

Lower met. and thermal shipments driven by coal industry challenges

Convent contributed $4.2M to

Adj. EBITDA in Q2 ‘16

Excludes $9.1M deferred revenue

(2)

related to ToP volume shortfall

---

 

Liquidity Position TM

Maintain solid combined liquidity of ~$275M

SXCP revolver

availability: $67M

($8.4)

SXC revolver

Attributable availability: $100M

to SXCP $ 62.4($54.5)

($12.1)

$30.2($12.4) $108.0

$101.8

$1.0

$13.5M – Lower A/R

$9.5M

– Brazil coke annual dividend

$33.7

$9.5M – Timing of interest payments $54.1

$9.2M

– Collection of CMT Q1 deferred revenue

$28.6M

– D&A($ 3.0M) – Ongoing

$68.1

$5.1M – Loss on Coal Mining divestiture($ 5.4M) – Environmental & expansion

($3.5M)

– Gain on debt extinguishment $53.9

($40.4M)

– Repayment of SXC Revolver

($13.8M)

– SXCP Sr. Notes repurchase(3)

Q1 2016 Net Income Add-backs to Disposal of Working Capex(2) Net Debt Distributions Q2 2016

Cash Balance Net Income Coal Mining(1) Capital & Other Repayments to SXCP Public Cash Balance

Unitholders

(1) Represents $12.1M paid to Revelation Energy, LLC to assume ownership of a substantial portion of Coal Mining assets and liabilities.

(2)

Capex excludes $8.0M spent during Q2 for pre-funded shiploader project.

(3) Average bond repurchase price of $0.8067 per $1.00 face value, resulting in >$17M of face value debt repurchased during Q2 2016.

SXC Q2 2016 Earnings Call 8

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IHO Q2 Performance TM

Strong cost management & sustained performance at rebuilt ovens,

but continued operational challenges across non-rebuilt ovens

Disciplined cost management resulting in $4.6M benefit vs. Q2 ‘15

YTD 2016 incremental O&M savings of ~$10M

Continued stability from 48 rebuilt ovens

Encouraged by sustained performance in charge weights and coking times

– Averaged ~39.8 tons per oven in 1H ‘16 vs. 39.0 tons per oven target, resulting in improved production

– Averaged ~45.1 hours average coking time in 1H ‘16 vs. 46.5 hr. target, resulting in increased consistency

Working to optimize design/scope and develop scalable approach for future rebuilds

Operational challenges driving below-target production and yield

Mechanical reliability & operational disruptions

Accelerated oven health degradation across non-rebuilt ovens

SXC Q2 2016 Earnings Call 9

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Areas of Focus at Indiana Harbor TM

Remain committed to execution of methodical approach to

improving plant operations

Areas of Focus Implementing Solutions

Oven health degradation of non-rebuilt As discussed during Q1 earnings call,

ovens outpacing expectations expanding scope of rebuilds in 2016

Oven internals deteriorating more rapidly Anticipate completing ~40 total rebuilds

than empirical data had predicted(within original consolidated CapEx guidance)

– Greater prevalence and severity of internal Expect additional rebuilds to occur in Q4

wall & floor cracks and sole flue blockage

Delayed timing to ensure full understanding

Leads to longer and inconsistent coking of degradation

times and production shortfalls Implement lessons-learned into future ovens

Mechanical reliability and other Using systematic maintenance window to

operational disruptions

increase mechanical reliability

Underperformance vs. other facilities

Pursuing labor contract at IHO to better

align USW and SunCoke goals

SXC Q2 2016 Earnings Call

10

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Revised IHO Outlook TM

IHO Adjusted EBITDA guidance revised to reflect operating challenges and cost of additional oven rebuilds

Expect IHO will generate near break- Areas of Focus even Adj. EBITDA in 2016, impacted by

Implementing systematic maintenance

Lower production arising from window to improve mechanical reliability operational challenges & oven Rebuilding ovens to overcome degradation

degradation

Incremental O&M from increased Driving Operational Improvements number of 2016 oven rebuilds

Increase in & consistency of charge weights

Absence of expected production pick-up • Lower & more consistent coking times in 2H 2016 driven by delayed timing of rebuilds

Formulating plan to pull-forward Increasing Plant Performance additional rebuilds in 2017 to further • Improvement in yield

Increase in total production

address degradation

Continued optimization of O&M spend

7

---

 

2016 Priorities TM

Manage Through Challenging Market Conditions

Remain flexible & responsive to industry backdrop while leveraging unique value proposition

Stabilize Indiana Harbor Cokemaking Operations

Improve profitability by executing oven rebuilds and reducing O&M costs

Deliver Operations Excellence

Drive strong operational & safety performance across our fleet

Achieve Financial Objectives & Strengthen Balance Sheet

Deliver $210M – $235M Consol. Adj. EBITDA guidance & execute de-levering strategy

SXC Q2 2016 Earnings Call 12

---

 

QUESTIONS

SXC Q2 2016 Earnings Call 13

---

 

Investor Relations 630-824-1907 www.suncoke.com

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APPENDIX

---

 

Definitions TM

Adjusted EBITDA represents earnings before interest, (gain) loss on extinguishment of debt, taxes, depreciation and amortization (“EBITDA”), adjusted for impairments, coal rationalization costs, changes to our contingent consideration liability related to our acquisition of CMT, and interest, taxes, depreciation and amortization and impairments attributable to our equity method investment. 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 of the operating performance and liquidity of the Company’s net assets and its ability to incur and service debt, fund capital expenditures and make distributions. 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 and liquidity. EBITDA and Adjusted EBITDA are not measures calculated in accordance with GAAP, and they should not be considered a substitute for net income, operating cash flow 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/SXCP represents Adjusted EBITDA less Adjusted EBITDA attributable to noncontrolling interests.

Adjusted EBITDA/Ton represents Adjusted EBITDA divided by tons sold/handled.

Coal Rationalization expense / (income) includes employee severance, contract termination costs and other costs to idle mines incurred during the execution of our coal rationalization plan. The six months ended June 30, 2015, included $2.2 million of income related to a severance accrual adjustment.

Legacy Costs include costs associated with former mining employee-related liabilities net of certain royalty revenues.

---

 

Reconciliation to Adjusted EBITDA

($ in millions) Q2 ‘16 Q1 ‘16 FY ‘15 Q4 ‘15 Q3 ‘15 Q2 ‘15 Q1 ‘15

Net cash provided by Operating activities $92.1 $29.4 $141.1 $58.1 $6.4 $65.5 $11.1

Depreciation, depletion and amortization expense 28.6 28.2 109.1 33.3 25.6 26.4 23.8

(Gain) / loss on extinguishment of debt(3.5)(20.4) 0.5(8.9) - - 9.4

Loss on divestiture of business 5.1 9.6 - - - - -

Deferred income tax expense / (benefit) 0.4 3.2(5.6)(12.5) 8.0(4.2) 3.1

Changes in working capital and other 60.5(3.8) 26.8 13.3(10.7) 49.8(25.6)

Net Income / (Loss) $1.0 $12.6 $10.3 $32.9($16.5)($6.5) $0.4

Depreciation, depletion and amortization expense 28.6 28.2 109.1 33.3 25.6 26.4 23.8

Interest expense, net 13.4 14.0 56.2 14.7 14.6 13.0 13.9

(Gain) / loss on extinguishment of debt(3.5)(20.4) 0.5(8.9) - - 9.4

Income tax expense / (benefit) - 3.3(8.8)(13.9) 4.8(0.8) 1.1

Loss on divestiture of business 5.1 9.6 - - - - -

Coal rationalization expense / (income)(1) - 0.2 0.6 0.2 0.8 0.6(1.0)

Coal Logistics deferred revenue(2) - -(3.3)(3.3) - -

Reduction of contingent consideration (3) -(3.7) - - - - -

Expiration of land deposits(4) 1.9 - - - - - -

Adjustment to unconsolidated affiliate earnings (5) - - 20.8 - 19.8 0.7 0.3

Adjusted EBITDA (Consolidated) $46.5 $43.8 $185.4 $55.0 $49.1 $33.4 $47.9

Adjusted EBITDA attributable to noncontrolling interests (6)(18.6)(20.3)(81.2)(24.9)(20.1)(18.1)(18.1)

Adjusted EBITDA attributable to SXC $27.9 $23.5 $104.2 $30.1 $29.0 $15.3 $29.8

(1)

Coal rationalization expense/(income) includes employee severance, contract termination costs and other costs to idle mines incurred during the execution of our coal

rationalization plan. The six months ended June 30, of 2015 included $2.2 million of income related to an adjustment in the coal severance accrual.

(2) In response to the Securities & Exchange Commission’s May 2016 update to its guidance on the appropriate use of non-GAAP financial measures (specifically regarding revenue recognition), SXC’s Adjusted EBITDA definition will no longer include Coal Logistics deferred revenue until it is recognized as GAAP income.

(3) During the first quarter of 2016, the Partnership amended the threshold to the contingent consideration arrangement with the Cline Group, which reduced the fair value of

the contingent consideration from $7.9 million at December 31, 2015 to $4.2 million at March 31, 2016. Consequently, a $3.7 million gain was recognized as a reduction to

costs of products sold and operating expenses on the Consolidated Statements of Operations during the three months ended March 31, 2016.

(4) Land deposits were in connection with the Company’s potential new cokemaking facility to be constructed in Kentucky.

(5) Represents SunCoke’s share of India JV interest, taxes and depreciation expense.

(6) Represents Adjusted EBITDA attributable to SXCP public unitholders and DTE Energy’s interest in Indiana Harbor.

SXC Q2 2016 Earnings Call

17

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Reconciliation of Segment Adjusted EBITDA and

Adjusted EBITDA per ton TM

Reconciliation of Segment Adjusted EBITDA and Adjusted EBITDA per Ton

Corporate, Domestic India Coal Legacy Costs

(1)

(2)

($ in millions, except per ton data) Coke Brazil Coke Coke Coal Mining Logistics and Other Consolidated

Q2 2016

Adjusted EBITDA $51.0 $2.4 ($0.9) $5.4 ($11.4) $46.5

Sales Volume (thousands of tons) 992 431 4,208

Adjusted EBITDA per Ton $51.41 $5.57 $1.28 Q1 2016

Adjusted EBITDA $54.3 $2.3 ($4.1) $5.9 ($14.6) $43.8

Sales Volume (thousands of tons) 1,000 415 4,315

Adjusted EBITDA per Ton $54.30 $5.54 $1.37 FY 2015

Adjusted EBITDA $210.1 $22.4 ($1.9) ($18.9) $38.0 ($64.3) $185.4

Sales Volume (thousands of tons) 4,115 1,760 124 18,864

Adjusted EBITDA per Ton $51.06 $12.73 ($15.32) $2.01 Q4 2015

Adjusted EBITDA $45.3 $12.3 ($5.5) $21.1 ($18.2) $55.0

Sales Volume (thousands of tons) 1,013 436 5,555

Adjusted EBITDA per Ton $44.72 $28.19 $3.80 Q3 2015

Adjusted EBITDA $55.9 $3.4 ($0.8) ($4.9) $9.3 ($13.8) $49.1

Sales Volume (thousands of tons) 1,043 449 35 5,149

Adjusted EBITDA per Ton $53.60 $7.58 ($22.90) $1.81 Q2 2015

Adjusted EBITDA $56.2 $2.6 ($0.4) ($5.4) $5.0 ($24.6) $33.4

Sales Volume (thousands of tons) 1,110 437 43 4,366

Adjusted EBITDA per Ton $50.63 $5.95 ($9.38) $1.15

(1)

Represents SunCoke’s share of India JV interest, taxes and depreciation expense.

(2) In response to the Securities & Exchange Commission’s May 2016 update to its guidance on the appropriate use of non-GAAP financial measures (specifically regarding revenue recognition), SXC’s Adjusted EBITDA definition will no longer include Coal Logistics deferred revenue until it is recognized as GAAP income.

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Balance Sheet & Debt Metrics TM

As of 06/30/2016

Balance

SXC Attributable

Attributable

Consolidated to SXCP

($ in millions) to SXC

Cash $ 108 $ 54 $ 54

Available Revolver Capacity 167 67 100

Total Liquidity 275 121 154

Total Debt (Long and Short-term) 893 828 2016 Outlook TM

2016 Guidance remains unchanged from prior quarter

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2016 Outlook TM

2016 Guidance remains unchanged from prior quarter

2015 2016

Metric Results Guidance

Adjusted EBITDA(1)

Consolidated $185.8M $210M – $235M

Attrib. to SXC $104.6M(1) $105M – $124M

Capital Expenditures(2) $76M ~$45M

Domestic Coke Production 4.1 Mt 4.0 Mt – 4.1 Mt

Dom. Coke Adj. EBITDA/ton $51 / ton $48 – $53 / ton

Operating Cash Flow $141.1M $150M – $170M

Cash Taxes(3) $2M $4M – $9M

(1)

For a definition and reconciliation of 2015 and 2016E Adjusted EBITDA, please see appendix.

(2)

2016 Guidance excludes capitalized interest.

(3)

Included in Operating Cash Flow.

SXC Q2 2016 Earnings Call 20

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2016E Guidance Reconciliation

2016E 2016E

($ in millions) Low High

Net cash provided by Operating activities $150 $170

Depreciation and amortization expense 106 106

(Gain) / loss on extinguishment of debt (20) (27)

Loss on divestiture of business 14 14

Changes in working capital and other 6 7

Net Income $44 $70

Depreciation and amortization expense 106 106

Interest expense, net 62 58

(Gain) / loss on extinguishment of debt (20) (27)

Income tax expense / (benefit) 6 17

Loss on divestiture of business 14 14

Coal rationalization costs(1) 2 1

Coal Logistics deferred revenue(2) - -

Reduction of contingent consideration (4) (4)

Adjusted EBITDA (Consolidated) $210 $235

Adjusted EBITDA attributable to noncontrolling interests(3) (105) (111)

Adjusted EBITDA attributable to SXC $105 $124

Coal rationalization costs includes employee severance, contract termination costs and other costs to idle mines incurred during the execution of our coal rationalization plan.

In response to the Securities & Exchange Commission’s May 2016 update to its guidance on the appropriate use of non-GAAP financial measures (specifically regarding revenue recognition), SXC’s Adjusted EBITDA definition will no longer include Coal Logistics deferred revenue until it is recognized as GAAP income.

Represents Adjusted EBITDA attributable DTE Energy’s interest in Indiana Harbor, as well as to SXCP public unitholders. Adjusted EBITDA attributable to SXCP includes a special deduction for the general partner in an amount equal to the corporate cost reimbursement holiday, in this case assuming a $28 million deduction in 2016. Actual capital allocation decisions to be made quarterly.

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Capital Expenditures TM

2015 CapEx

($ in millions) SXC SXCP Consolidated

Ongoing(1) $30 $21 $51

Other 4 0 4

Environmental Project 0 21 21

Total CapEx (excl. pre-funded Ship loader) $34 $42 $76

Coal Logistics: Ship loader (pre-funded) $0 $5 $5

2016 Expected CapEx

($ in millions) SXC SXCP Consolidated

Ongoing(2) $26 $12 $38

Other 2 0 2

Environmental Project 0 5 5

Total CapEx (excl. pre-funded Ship loader) $28 $17 $45

Coal Logistics: Ship loader (pre-funded) $0 $12 $12

(1) 2015 consolidated includes approximately $ 50M in ongoing Coke CapEx and $1M ongoing Coal Logistics.

(2) 2016 consolidated includes approximately $ 34M in ongoing Coke CapEx and $4M ongoing Coal Logistics.

SXC Q2 2016 Earnings Call 22

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