SunCoke Energy Inc. (NYSE:SXC) Q2 2017 Earnings Conference Call - Final Transcript

Jul 27, 2017 • 11:00 am ET

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SunCoke Energy Inc. (NYSE:SXC) Q2 2017 Earnings Conference Call - Final Transcript

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Executive
Frederick Henderson

in the year.

We are impacting production on almost 50% of the ovens in the plant in 2017 and a significant amount of that work has begun in earnest in the second quarter. We're encouraged, but it has had an effect and you'll see the effect once they go through the numbers and production relative to Indiana Harbor's production in the quarter.

Beyond Indiana Harbor and then looking at the Coal Logistics business, we see increased volume year-over-year in the Coal Logistics business primarily at Convent, which has delivered over 1.8 million tons of inbound volume throughout the quarter. We successfully completed the refinancing of our capital structure at SXCP by extending both the revolving credit facilities at SXCP and SXC in the quarter. And we priced a new eight-year senior note offering at the partnership. This provides the business with ample flexibility to execute our growth and capital allocation priorities prospectively.

From a capital allocation perspective, we have repurchased 1.6 million SXCP units or approximately $27 million to date and we will continue to prioritize our capital allocation decisions during the highest return for SXC shareholders. And lastly, with half of 2017 in the books, we are well-positioned to achieve our fiscal year 2017 adjusted EBITDA target of between $220 million and $235 million.

Turning to Slide 4. In the quarter, as I mentioned, we did successfully refinance the capital structure at the partnership. We completed an eight-year $360 million unsecured note offering and used the proceeds to reduce our revolver borrowings and repay all of the partnerships term loan and senior notes tranche due in 2020. Both revolving credit facilities at SXC and SXCP were restructured.

In total, $385 million of commitments from our banking group, $100 million at SXC and $285 million at SXCP. In total, we increased the weighted-average maturity of our debt structure by over four years to nearly seven years remaining on the new debt and importantly our new structure provides us with the flexibility to execute our growth, operating in capital allocation priorities going forward.

Now, I will turn it over to Fay to review our second quarter performance.

Executive
Fay West

Thank you, Fritz, and good morning, everyone. Turning to Slide 5, quarterly EPS loss of $0.38 per share was down $0.31 versus the prior year period. The year-over-year impact of debt extinguishment on EPS is $0.24. Last year we had a small gain from our buyback activities and this year we had a $20.2 million debt extinguishment costs related to the refinancing activities completed in the quarter.

From an adjusted EBITDA perspective, we finished the second quarter in line with expectations at $47.5 million up $1 million versus 2016 is higher Coal Logistics volumes were offset by the planned outage at Granite City and the impact of oven rebuilds at Indiana Harbor.

Turning to Slide 6, and taking a look at our adjusted EBITDA bridge. Indiana Harbor second quarter adjusted EBITDA loss of $2.7 million was down $4.7 million versus the prior year period,