SunCoke Energy, Inc. Announces Strongest Quarterly Operating Performance In Three Years With Third Quarter 2017 Results
LISLE, Ill., Oct. 26, 2017 /PRNewswire/ -- SunCoke Energy, Inc. (NYSE: SXC) today reported results for the third quarter 2017, which reflect strong operating results across the Company's coke and logistics businesses. The third quarter also benefited from the timing of scheduled outages at our cokemaking facilities.
"Our third quarter operating performance was the best we have had in three years after adjusting for the timing impact related to Convent's deferred revenue in the fourth quarter of each year," said Fritz Henderson, Chairman, President and Chief Executive Officer of SunCoke Energy, Inc. "This outstanding quarter, coupled with our solid performance in the first half of the year, has positioned us to deliver full-year results at the top end of our 2017 guidance range."
The Company also continued to execute its Indiana Harbor oven rebuild initiative during the third quarter in line with expectations. To-date, we have completed 47 of the 58 oven rebuilds within the 2017 campaign, with the remaining 11 rebuilds expected to be completed by the end of November. Henderson commented, "We are encouraged with IHO's progress to-date on this multi-year turnaround effort. The plant is on track to report full-year results in line with our 2017 expectations, and we believe that it is well positioned to deliver improved performance in 2018 and beyond."
During the quarter, SunCoke's Convent Marine Terminal received its first shipment of crushed stone (aggregates) under a multi-year contract with firm use commitments. In addition, the terminal also successfully handled its first trial shipments of rail-borne petcoke for two refinery customers in early-October.
Henderson continued, "Our team has aggressively pursued new opportunities for diversifying our product and customer mix since acquiring Convent in mid-2015, and we are pleased with the progress we have made over the last few quarters. Going forward, we believe that we can leverage the terminal's capabilities to enter new vertical markets, expand existing products and grow Adjusted EBITDA by $5 million to $10 million over the next two years."
SXC continued executing against its capital allocation strategy to purchase SXCP units in the open market and repurchased approximately 520 thousand units during the quarter. Year-to-date the Company has repurchased approximately 2.1 million total units, which are expected to generate more than $5 million in additional cash flow annually under SXCP's existing distribution policy.
Henderson concluded, "In addition to maximizing the performance of our cokemaking and logistics assets, we remain focused on allocating capital in the most efficient manner for SXC shareholders. We continue to be pleased with the value created with our SXCP unit purchases through the third quarter."
THIRD QUARTER CONSOLIDATED RESULTS
Three Months Ended September 30,
(Dollars
in
millions) 2017 2016 Increase/(
Decrease)
--- --------
Revenues $339.0 $293.9 $45.1
Adjusted
EBITDA(1) $62.1 $49.4 $12.7
Net
income
attributable
to SXC $11.6 $6.1 $5.5
------------- ----- ---- ----
(1) See definition of Adjusted EBITDA
and reconciliation elsewhere in
this release.
Revenues during the third quarter 2017 increased $45.1 million compared to the same prior year period, reflecting the pass-through of higher coal prices in our Domestic Coke segment as well as higher sales volumes in our Coal Logistics segment.
Adjusted EBITDA during the third quarter 2017 increased $12.7 million to $62.1 million, primarily due to higher sales volumes in our Coal Logistics segment, improved Domestic Coke performance, lower corporate spending and higher technology and licensing fees earned in our Brazil Coke segment.
Net income attributable to SXC was $11.6 million, or $0.18 per share, for the third quarter 2017, which is $5.5 million favorable to third quarter 2016 income of $6.1 million, or $0.10 per share, driven primarily by the improved operating results described above. This improvement was partially offset by a $4.3 million unfavorable impact of higher interest expense and the absence of extinguishment gains in the current year period associated with our debt activities in both years as well as higher depreciation expense, primarily as a result of the change in expected useful lives of the Indiana Harbor ovens.
THIRD 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 September 30,
(Dollars
in
millions,
except
per
ton
amounts) 2017 2016 Increase/(
Decrease)
--- --------
Revenues $309.7 $273.2 $36.5
Adjusted
EBITDA(1) $55.6 $52.1 $3.5
Sales
volumes
(thousands
of
tons) 975 1,000 (25)
Adjusted
EBITDA
per
ton(2) $57.03 $52.10 $4.93
-------- ------ ------ -----
(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 increased $36.5 million, primarily reflecting the pass-through
of higher coal prices.
-- Adjusted EBITDA increased $3.5 million, reflecting an improvement in
operating performance, excluding Indiana Harbor, driven by favorable
coal-to-coke yields, which increased Adjusted EBITDA $2.5 million, the
favorable benefit of a portion of our 2017 outage costs falling outside
of the third quarter and a lower allocation of central costs.
Coal Logistics
Coal Logistics consists of the coal handling and mixing services operated by SXCP at Convent Marine Terminal ("CMT") located on the Mississippi river in Louisiana, Lake Terminal in East Chicago, Indiana and Kanawha River Terminals, LLC ("KRT"), which has terminals along the Ohio and Kanawha rivers in West Virginia. Additionally, Dismal River Terminal ("DRT"), located in Virginia adjacent to our Jewell Cokemaking facility, is operated by SXC.
Three Months Ended September 30,
(Dollars in millions) 2017 2016 Increase/(
Decrease)
--- --------
Revenues $18.4 $12.2 $6.2
Intersegment sales $4.8 $4.9 $(0.1)
Adjusted EBITDA(1) $12.6 $7.3 $5.3
Tons handled (thousands of tons)(2) 5,134 4,334 800
CMT take-or-pay shortfall tons (thousands of tons)(3) 1,005 1,748 (743)
--------------------------------- ----- ----- ----
(1) See definition of Adjusted EBITDA
and reconciliation elsewhere in
this release.
(2) Reflects inbound tons handled
during the period.
(3) Reflects tons billed under take-
or-pay contracts where services
have not yet been performed.
-- Revenues and Adjusted EBITDA were up $6.2 million and $5.3 million,
respectively, driven by higher sales volumes at our CMT terminal in the
current year period, which included a nominal amount of business from
new customers.
Brazil Coke
Brazil Coke consists of a cokemaking facility in Vitória, Brazil, which we operate for an affiliate of ArcelorMittal.
-- Adjusted EBITDA increased $1.4 million to $4.6 million, driven primarily
by incremental technology and licensing fees related to the addition of
certain patents to our existing intellectual property licensing
agreement in the fourth quarter of 2016. In 2016, the full year benefit
of $5.1 million for these patents was recognized at the time of the
agreement in the fourth quarter but has been recognized ratably each
quarter throughout 2017.
Corporate and Other
Corporate and other expenses, which include costs related to our legacy coal mining business, were $10.7 million in third quarter 2017, an improvement of $2.5 million versus third quarter 2016. This improvement includes lower employee-related and other costs of $1.1 million as well as favorable period-over-period, mark-to-market adjustments in deferred and stock compensation caused by changes in certain performance metrics as well as the Company's share price and the Partnership's unit price.
2017 OUTLOOK
Our 2017 guidance is as follows:
-- Domestic coke production is expected to be approximately 3.9 million
tons
-- Consolidated Adjusted EBITDA is expected to be within the top end of
$220 million and $235 million
-- Adjusted EBITDA attributable to SXC is expected to be between $130
million and $141 million, reflecting the impact of public ownership in
SXCP
-- Capital expenditures are projected to be approximately $80 million
-- Cash flow from operations is estimated to be between $128 million and
$143 million
-- Cash taxes are projected to be between $6 million and $10 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 1-833-236-5757 in the U.S. or 1-647-689-4185 if outside the U.S., confirmation code 89451724.
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 September 30, 2017, we owned the general partner of the Partnership, which consists of a 2.0 percent ownership interest and incentive distribution rights, and owned a 58.1 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, loss (gain) 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
the expiration of certain acquired contractual obligations. 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.
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.
SunCoke Energy, Inc.
Consolidated Statements of Operations
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2017 2016 2017 2016
---- ---- ---- ----
(Dollars and shares in millions, except per share amounts)
Revenues
Sales and other operating
revenue $339.0 $293.9 $971.9 $897.7
------ ------ ------ ------
Costs and operating expenses
Cost of products sold and
operating expenses 257.2 217.6 748.8 682.5
Selling, general and
administrative expenses 17.7 21.8 61.5 68.8
Depreciation and amortization
expense 30.6 25.6 97.2 82.4
Loss on divestiture of business - - - 14.7
Total costs and operating
expenses 305.5 265.0 907.5 848.4
----- ----- ----- -----
Operating income 33.5 28.9 64.4 49.3
Interest expense, net 16.1 12.9 45.0 40.3
Loss (gain) on extinguishment
of debt(1) 0.1 (1.0) 20.4 (24.9)
Income (loss) before income tax
(benefit) expense 17.3 17.0 (1.0) 33.9
Income tax (benefit) expense(2) (1.5) 2.6 69.4 5.9
----
Net income (loss) 18.8 14.4 (70.4) 28.0
Less: Net income (loss)
attributable to noncontrolling
interests(2) 7.2 8.3 (58.8) 30.6
--- --- ----- ----
Net income (loss) attributable
to SunCoke Energy, Inc. $11.6 $6.1 $(11.6) $(2.6)
===== ==== ====== =====
Earnings (loss) attributable to
SunCoke Energy, Inc. per
common share:
Basic $0.18 $0.10 $(0.18) $(0.04)
Diluted $0.18 $0.10 $(0.18) $(0.04)
Weighted average number of
common shares outstanding:
Basic 64.3 64.2 64.3 64.1
Diluted 65.2 64.5 64.3 64.1
(1) The Partnership recorded a loss on
extinguishment of debt as a result
of its debt refinancing activities
during the second and third quarters
of 2017. The Partnership recorded a
gain on extinguishment of debt as a
result of senior note repurchases in
2016.
(2) In January 2017, the Internal Revenue
Service ("IRS") announced its
decision to exclude cokemaking as a
qualifying income generating
activity in its final regulations
(the "Final Regulations") issued
under section 7704(d)(1)(E) of the
Internal Revenue Code relating to
the qualifying income exception for
publicly traded partnerships.
However, the Final Regulations
include a transition period for
activities that were reasonably
interpreted to be qualifying income
and carried on by publicly traded
partnerships prior to the Final
Regulations. The Partnership
previously received a will-level
opinion from its counsel, Vinson &
Elkins LLP, that the Partnership's
cokemaking operations generated
qualifying income prior to the Final
Regulations. Therefore, the
Partnership believes it had a
reasonable basis to conclude its
cokemaking operations were
considered qualifying income before
the issuance of the new regulations
and as such expects to maintain its
treatment as a partnership through
the transition period. Cokemaking
entities in the Partnership will
become taxable as corporations on
January 1, 2028, after the
transition period ends.
As a result of the Final Regulations,
the Partnership recorded deferred
income tax expense of $148.6 million
to set up its initial deferred
income tax liability during the
first quarter of 2017, primarily
related to differences in the book
and tax basis of fixed assets, which
are expected to exist at the end of
the 10-year transition period when
the cokemaking operations become
taxable. As the Company
consolidates the Partnership, the
entire deferred income tax expense
was recognized during the first
quarter of 2017. However, the
Company had already recorded $84.4
million of the deferred income tax
liability in its financial
statements related to the Company's
share of the deferred tax liability
for the book and tax differences in
its investment in the Partnership.
Therefore, the net impact to the
Company's deferred tax expense was
$64.2 million during the nine months
ended September 30, 2017. This
incremental tax impact is solely
attributable to the Partnership's
public unitholders. As such, an
equal reduction to noncontrolling
interest was recorded. As a result,
the Final Regulations have no impact
to net income attributable to the
Company.
SunCoke Energy, Inc.
Consolidated Balance Sheets
September 30, 2017 December 31, 2016
------------------ -----------------
(Unaudited)
(Dollars in millions, except
par value amounts)
Assets
Cash and cash equivalents $148.7 $134.0
Receivables 70.2 60.7
Receivable from redemption of
Brazilian investment - 20.5
Inventories 121.7 92.5
Income tax receivable 9.0 4.6
Other current assets 7.1 3.8
Total current assets 356.7 316.1
----- -----
Properties, plants and equipment
(net of accumulated
depreciation of $705.2 and
$625.9 million at September 30,
2017 and December 31, 2016,
respectively) 1,505.4 1,542.6
Goodwill 76.9 76.9
Other intangible assets, net 170.7 179.0
Deferred charges and other
assets 5.2 6.3
---
Total assets $2,114.9 $2,120.9
======== ========
Liabilities and Equity
Accounts payable $138.1 $98.6
Accrued liabilities 51.1 49.8
Deferred revenue 16.6 2.5
Current portion of long-term
debt and financing obligation 2.6 4.9
Interest payable 17.6 16.2
Total current liabilities 226.0 172.0
----- -----
Long-term debt and financing
obligation 859.0 849.2
Accrual for black lung benefits 45.8 45.4
Retirement benefit liabilities 27.4 29.0
Deferred income taxes 417.9 352.5
Asset retirement obligations 14.1 13.9
Other deferred credits and
liabilities 16.0 19.0
Total liabilities 1,606.2 1,481.0
------- -------
Equity
Preferred stock, $0.01 par
value. Authorized 50,000,000
shares; no issued shares at
September 30, 2017 and December
31, 2016 - -
Common stock, $0.01 par value.
Authorized 300,000,000 shares;
issued 71,819,720 and
71,707,304 shares at September
30, 2017 and December 31, 2016,
respectively 0.7 0.7
Treasury stock, 7,477,657 shares
at September 30, 2017 and
December 31, 2016, respectively (140.7) (140.7)
Additional paid-in capital 487.9 492.1
Accumulated other comprehensive
loss (18.8) (19.0)
Retained deficit (33.9) (22.0)
----- -----
Total SunCoke Energy, Inc.
stockholders' equity 295.2 311.1
Noncontrolling interests 213.5 328.8
----- -----
Total equity 508.7 639.9
----- -----
Total liabilities and equity $2,114.9 $2,120.9
======== ========
SunCoke Energy, Inc.
Consolidated Statements of Cash Flows
(Unaudited)
Nine Months Ended September 30,
2017 2016
---- ----
(Dollars in millions)
Cash Flows from Operating Activities:
Net (loss) income $(70.4) $28.0
Adjustments to reconcile net (loss) income
to net cash provided by operating
activities:
Loss on divestiture of business - 14.7
Depreciation and amortization expense 97.2 82.4
Deferred income tax expense 70.4 4.5
Payments in excess of expense for
postretirement plan benefits (1.6) (2.0)
Share-based compensation expense 4.1 5.0
Loss (gain) loss on extinguishment of debt 20.4 (24.9)
Changes in working capital pertaining to
operating activities (net of the effects of
divestiture):
Receivables (9.5) 10.3
Inventories (29.2) 24.1
Accounts payable 32.9 (3.5)
Accrued liabilities 1.3 6.7
Deferred revenue 14.1 25.5
Interest payable 1.4 (12.1)
Income taxes (4.4) 4.4
Other 1.6 3.0
Net cash provided by operating activities 128.3 166.1
----- -----
Cash Flows from Investing Activities:
Capital expenditures (49.6) (42.9)
Decrease in restricted cash 0.1 17.5
Return of Brazilian investment 20.5 -
Divestiture of coal business - (12.8)
Other investing activities - 2.1
Net cash used in investing activities (29.0) (36.1)
----- -----
Cash Flows from Financing Activities:
Proceeds from issuance of long-term debt 620.6 -
Repayment of long-term debt (644.9) (60.8)
Proceeds from financing obligation - 16.2
Repayment of financing obligation (1.8) (0.5)
Proceeds from revolving credit facility 268.0 20.0
Repayment of revolving credit facility (240.0) (85.4)
Debt issuance costs (16.6) (0.2)
Acquisition of additional interest in the
Partnership (33.6) -
Cash distribution to noncontrolling
interests (36.0) (36.9)
Other financing activities (0.3) (0.5)
Net cash used in financing activities (84.6) (148.1)
----- ------
Net increase (decrease) in cash and cash
equivalents 14.7 (18.1)
Cash and cash equivalents at beginning of
period 134.0 123.4
----- -----
Cash and cash equivalents at end of period $148.7 $105.3
====== ======
Supplemental Disclosure of Cash Flow
Information
Interest paid $41.7 $54.2
Income taxes paid, net of refunds of $1.0
and $6.3 million in 2017 and 2016,
respectively. $3.5 $(3.1)
SunCoke Energy, Inc.
Segment Financial and Operating Data
The following tables set forth financial and operating data for the three and nine months ended September 30, 2017
and 2016:
Three Months Ended Nine Months Ended
September 30, September 30,
2017 2016 2017 2016
---- ---- ---- ----
(Dollars in millions, except per ton amounts)
Sales and other operating revenues:
Domestic Coke $309.7 $273.2 $884.9 $836.2
Brazil Coke 10.9 8.5 32.2 23.5
Coal Logistics 18.4 12.2 54.8 36.5
Coal Logistics intersegment sales 4.8 4.9 15.0 15.3
Corporate and Other(1) - - - 1.5
Corporate and Other intersegment sales(1) - - - 22.0
Elimination of intersegment sales (4.8) (4.9) (15.0) (37.3)
---- ---- ----- -----
Total sales and other operating revenues $339.0 $293.9 $971.9 $897.7
====== ====== ====== ======
Adjusted EBITDA(2):
Domestic Coke $55.6 $52.1 $149.3 $157.4
Brazil Coke 4.6 3.2 13.5 7.9
Coal Logistics 12.6 7.3 35.7 18.6
Corporate and Other(3) (10.7) (13.2) (33.3) (44.2)
----- ----- ----- -----
Total Adjusted EBITDA $62.1 $49.4 $165.2 $139.7
===== ===== ====== ======
Coke Operating Data:
Domestic Coke capacity utilization (%) 92 94 91 94
Domestic Coke production volumes
(thousands of tons) 981 1,001 2,879 2,990
Domestic Coke sales volumes (thousands of
tons) 975 1,000 2,874 2,992
Domestic Coke Adjusted EBITDA per ton(4) $57.03 $52.10 $51.95 $52.61
Brazilian Coke production-operated
facility (thousands of tons) 444 449 1,316 1,294
Coal Logistics Operating Data:
Tons handled (thousands of tons)(5) 5,134 4,334 16,026 12,857
CMT take-or-pay shortfall tons
(thousands of tons)(6) 1,005 1,748 2,505 5,002
(1) Corporate and Other revenues are
related to our legacy coal
mining business.
(2) See definition of Adjusted EBITDA
and reconciliation to GAAP
elsewhere in this release.
(3) Corporate and Other includes the
activity from our legacy coal
mining business, which incurred
Adjusted EBITDA losses of $2.0
million and $8.2 million during
the three and nine months ended
September 30, 2017,
respectively, as well as losses
of $2.5 million and $11.8
million during the three and
nine months ended September 30,
2016, respectively.
(4) Reflects Domestic Coke Adjusted
EBITDA divided by Domestic Coke
sales volumes.
(5) Reflects inbound tons handled
during the period.
(6) Reflects tons billed under take-
or-pay contracts where services
have not yet been performed.
SunCoke Energy, Inc.
Reconciliations of Non-GAAP Information
Net Cash Provided by Operating Activities
to Net Income (Loss) and Adjusted EBITDA
Three Months Ended Nine Months Ended
September 30, September 30,
2017 2016 2017 2016
---- ---- ---- ----
(Dollars in millions)
Net cash provided by operating
activities $73.9 $44.6 $128.3 $166.1
Subtract:
Loss on divestiture of business - - - 14.7
Depreciation and amortization
expense 30.6 25.6 97.2 82.4
Deferred income tax expense (9.4) 0.9 70.4 4.5
Loss (gain) on extinguishment of
debt 0.1 (1.0) 20.4 (24.9)
Changes in working capital and other 33.8 4.7 10.7 61.4
Net income (loss) $18.8 $14.4 $(70.4) $28.0
----- ----- ------ -----
Add:
Coal rationalization costs(1) $ - $0.2 $ - $0.4
Depreciation and amortization
expense 30.6 25.6 97.2 82.4
Interest expense, net 16.1 12.9 45.0 40.3
Loss (gain) on extinguishment of
debt 0.1 (1.0) 20.4 (24.9)
Income tax (benefit) expense (1.5) 2.6 69.4 5.9
Contingent consideration
adjustments(2) (2.0) (4.6) (1.7) (8.3)
Expiration of land deposits and
write-off of costs related to
potential new cokemaking
facility(3) - - 5.3 1.9
Loss on divestiture of business - - - 14.7
Non-cash reversal of acquired
contractual obligation(4) - (0.7) - (0.7)
Adjusted EBITDA(5) 62.1 49.4 165.2 139.7
---- ---- ----- -----
Subtract: Adjusted EBITDA
attributable to noncontrolling
interest(6) 21.9 18.9 61.0 57.8
Adjusted EBITDA attributable to
SunCoke Energy, Inc. $40.2 $30.5 $104.2 $81.9
===== ===== ====== =====
(1) Prior to the divestiture of our
coal mining business, the Company
incurred coal rationalization
costs including employee
severance, contract termination
costs and other costs to idle
mines incurred during the
execution of our coal
rationalization plan.
(2) As a result of changes in the fair
value of the contingent
consideration liability, the
Partnership recognized a benefit
of $2.0 million and $1.7 million
during the three and nine months
ended September 30, 2017,
respectively. The Partnership
amended its contingent
consideration terms with The Cline
Group during the first quarter of
2016. This amendment and
subsequent fair value adjustments
resulted in a gain of $4.6 million
and $8.3 million recorded during
the three and nine months ended
September 30, 2016, respectively.
(3) In 2014, we finalized the required
permitting and engineering plan
for a potential new cokemaking
facility to be constructed in
Kentucky. However, in June 2017,
due to our focus on renewing our
existing customer contracts and
the lack of any long-term
customer commitment for a majority
of the facility's capacity, we
decided to terminate the project.
As a result, during the nine
months ended September 30, 2017,
the Company wrote-off previously
capitalized engineering and land
deposit costs of $5.3 million.
During the nine months ended
September 30, 2016, the Company
wrote-off expiring land deposits
related to the project of $1.9
million.
(4) In association with the acquisition
of CMT, we assumed certain
performance obligations under
existing contracts and recorded
liabilities related to such
obligations. In the third quarter
of 2016, the final acquired
contractual performance obligation
expired without the customer
requiring performance. Therefore,
the Partnership reversed the
liability as we no longer have any
obligations under the contract.
(5) In accordance with the SEC's May
2016 update of its guidance on the
appropriate use of non-GAAP
financial measures, Adjusted
EBITDA does not include Coal
Logistics deferred revenue until
it is recognized as GAAP revenue.
(6) Reflects noncontrolling interest in
Indiana Harbor and the portion of
the Partnership owned by public
unitholders.
SunCoke Energy, Inc
Reconciliation of Non-GAAP Information
Estimated 2017 Net Cash Provided by Operating Activities to Estimated Net Loss
and Estimated Consolidated Adjusted EBITDA
2017
Low High
--- ----
Net cash provided by operating
activities $128 $143
Subtract:
Depreciation and amortization
expense 131 131
Deferred income tax expense 65 70
Changes in working capital and other (27) (28)
Loss on extinguishment of debt 20 20
--- ---
Net loss $(61) $(50)
---- ----
Add:
Depreciation and amortization
expense 131 131
Interest expense, net 63 62
Loss on extinguishment of debt 20 20
Income tax expense 67 72
Adjusted EBITDA $220 $235
---- ----
Subtract:
Adjusted EBITDA attributable to
noncontrolling interests(1) 90 94
Adjusted EBITDA attributable to
SunCoke Energy, Inc. $130 $141
==== ====
(1) Reflects non-controlling
interest in Indiana Harbor
and the portion of the
Partnership owned by public
unitholders.
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SOURCE SunCoke Energy, Inc.
