SunCoke Energy Partners, L.P. Announces Full-Year 2017 Results Above Guidance Range And Provides Guidance For Strong Full-Year 2018 Performance
LISLE, Ill., Jan. 31, 2018 /PRNewswire/ -- SunCoke Energy Partners, L.P. (NYSE: SXCP) today reported fourth quarter and full-year 2017 results, reflecting improved operating performance and the net impact of tax items discussed above.
"A solid fourth quarter contributed to SunCoke's success in delivering full-year Adjusted EBITDA above our guidance range, and again illustrated the strength of our coke and logistics businesses," said Mike Rippey, Chairman, President and Chief Executive Officer of SunCoke Energy Partners, L.P. "In 2017, our teams delivered strong operating results, which included the continued work on our Granite City gas sharing project as well as our successful efforts to diversify CMT's customer and product base, and also optimized SXCP's capital structure."
Looking forward, the Partnership expects 2018 Adjusted EBITDA attributable to SXCP to be between $215 million and $225 million. This outlook reflects higher logistics volumes, partially offset by our coke business returning to normalized performance as compared to the prior year period.
Rippey continued, "As we move into 2018, we will remain focused on operations excellence, including leveraging our unique capabilities at CMT to secure new business. In doing so, I am confident that we can again execute against our objectives and deliver value to SXCP unitholders."
CONSOLIDATED RESULTS
Three Months Ended Years Ended
December 31, December 31,
------------ ------------
(Dollars in
millions) 2017 2016 Increase/ 2017 2016 Increase/
(Decrease) (Decrease)
--- --------- ---------
Sales and
other
operating
revenue $235.4 $218.3 $17.1 $845.6 $779.7 $65.9
Net income
(loss)
attributable
to SXCP $101.5 $45.9 $55.6 $(18.1) $119.1 $(137.2)
Adjusted
EBITDA(1) $71.6 $77.4 $(5.8) $224.7 $213.0 $11.7
(1) See definition of Adjusted EBITDA
and reconciliation elsewhere in
this release.
Total revenues from operations increased $17.1 million and $65.9 million for the fourth quarter and full-year 2017, respectively, compared with the same prior year periods, primarily reflecting the pass-through of higher coal prices in our Domestic Coke segment. The increase in fourth quarter revenue was partially offset by lower deferred revenue recognized on Logistics take-or-pay contracts discussed in segment information below.
Adjusted EBITDA during the fourth quarter of 2017 decreased $5.8 million to $71.6 million compared to the same prior year periods, primarily driven by the timing of revenue recognized on our Logistics take-or-pay contracts discussed in the segment results below. Excluding this timing impact, fourth quarter 2017 results improved $9.3 million as compared to the prior year period.
Full-year Adjusted EBITDA increased $11.7 million to $224.7 million, primarily reflecting higher volumes in our Logistics segment, higher energy sales in our Domestic Coke segment and lower corporate spending.
Fourth quarter 2017 net income attributable to SXCP was $101.5 million, reflecting operating results discussed above as well as $67.4 million of income tax benefits associated with the recently passed tax legislation, which lowered corporate tax rates. Full-year 2017 net loss attributable to SXCP was $18.1 million, reflecting the impact of current year losses on extinguishment of debt and the absence of prior year gains on extinguishment of debt as well as $145.6 million of deferred income tax expense recorded in connection with the final qualifying income regulations issued by the Internal Revenue Service in the first quarter of 2017. The favorable operating results and income tax benefits of the new tax legislation partially offset these losses during 2017.
SEGMENT INFORMATION RESULTS
Domestic Coke
Domestic Coke segment consists of our 98 percent interest in the Haverhill, Middletown and Granite City cokemaking facilities.
Three Months Ended Years Ended
December 31, December 31,
------------ ------------
(Dollars in
millions) 2017 2016 Increase/ 2017 2016 Increase/
(Decrease) (Decrease)
--- --------- ---------
Sales and
other
operating
revenue $191.1 $164.6 $26.5 $739.7 $681.8 $57.9
Adjusted
EBITDA(1) $40.3 $36.7 $3.6 $170.3 $167.0 $3.3
Sales Volume
(in
thousands
of tons) 580 581 (1) 2,298 2,336 (38)
Adjusted
EBITDA per
ton(2) $69.48 $63.17 $6.31 $74.11 $71.49 $2.62
(1) See definition of Adjusted EBITDA
and reconciliation to GAAP
elsewhere in this release.
(2) Reflects Domestic Coke Adjusted
EBITDA divided by Domestic Coke
sales volumes.
-- Revenues increased $26.5 million and $57.9 million, for the fourth
quarter and full-year 2017, respectively, compared with the same prior
year periods, primarily as a result of the pass-through of higher coal
prices.
-- Adjusted EBITDA increased $3.6 million and $3.3 million, for the fourth
quarter and full-year 2017, respectively, compared with the same prior
year periods, primarily due to higher energy sales at our Haverhill
facility, which were negatively impacted in the prior year by a turbine
failure.
Logistics
Logistics consists of the handling and mixing services of coal and other aggregates operated by SXCP at our Convent Marine Terminal ("CMT"), Lake Terminal and Kanawha River Terminals ("KRT").
Three Months Ended Years Ended
December 31, December 31,
------------ ------------
(Dollars in
millions) 2017 2016 Decrease 2017 2016 Increase/
(Decrease)
--- ---------
Sales and
other
operating
revenue $44.3 $53.7 $(9.4) $105.9 $97.9 $8.0
Adjusted
EBITDA(1) $34.8 $45.0 $(10.2) $69.7 $63.2 $6.5
Tons handled
(thousands of
tons)(2) 5,326 5,441 (115) 20,546 17,469 3,077
CMT take-or-
pay shortfall
tons
(thousands of
tons)(3) 413 1,074 (661) 2,918 6,076 (3,158)
(1) See definitions 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
were not performed.
-- Revenues and Adjusted EBITDA decreased $9.4 million and $10.2 million
for the fourth quarter 2017 and increased $8.0 million and $6.5 million
for the full-year 2017, respectively, compared with the same prior year
periods. CMT achieved record volumes in 2017, including higher
throughput on take-or-pay contracts, which resulted in higher revenues
throughout 2017 and lowered the deferred revenue recognized in the
fourth quarter 2017 for take-or-pay volume shortfalls as compared to
same prior year period.
Corporate and Other
Corporate and other costs improved $0.8 million and $1.9 million, to $3.5 million and $15.3 million for the fourth quarter and full-year 2017, respectively, compared with the same prior year periods, primarily as a result of lower professional service costs as well as favorable period-over-period, mark-to-market adjustments in deferred compensation driven by changes in the Partnership's unit price. Additionally, the full-year 2017 was favorably impacted by lower costs incurred to resolve certain legal matters as compared to the prior year.
RELATED COMMUNICATIONS
Today, we will host an investor conference call at 10:00 a.m. Eastern Time (9:00 a.m. Central Time). Investors may participate on this call by dialing 1-833-236-5757 in the U.S. or 1-647-689-4185 if outside the U.S., confirmation code 1083698. This conference call will be webcast live and archived for replay in the Investor Relations section of www.suncoke.com.
ABOUT SUNCOKE ENERGY PARTNERS, L.P.
SunCoke Energy Partners, L.P. (NYSE: SXCP) is a publicly traded master limited partnership that manufactures high-quality coke used in the blast furnace production of steel and provides export and domestic material handling services to coke, coal, steel, power and other bulk and liquids customers. In our cokemaking business, we utilize an innovative heat-recovery technology that captures excess heat for steam or electrical power generation and have long-term, take-or-pay coke contracts that pass through commodity and certain operating costs. Our logistics terminals have the collective capacity to mix and transload more than 40 million tons of material each year and are strategically located to reach Gulf Coast, East Coast, Great Lakes and international ports. SXCP's General Partner is a wholly owned subsidiary of SunCoke Energy, Inc. (NYSE: SXC), which has more than 50 years of cokemaking experience serving the integrated steel industry. To learn more about SunCoke Energy Partners, L.P., 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 changes to our contingent consideration liability related
to our acquisition of CMT and the expiration of certain acquired
contractual obligations. Adjusted EBITDA does not represent and should
not be considered an alternative 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 Partnership'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 an alternative
to net income, operating cash flow or any other measure of financial
performance presented in accordance with GAAP.
-- Adjusted EBITDA attributable to SXCP equals Adjusted EBITDA less
Adjusted EBITDA attributable to noncontrolling interests.
-- Distributable Cash Flow equals Adjusted EBITDA plus sponsor support and
Coal Logistics deferred revenue, less net cash paid for interest
expense, ongoing capital expenditures, accruals for replacement capital
expenditures, and cash distributions to noncontrolling interests; plus
amounts received under the Omnibus Agreement and acquisition expenses
deemed to be Expansion Capital under our Partnership Agreement.
Distributable Cash Flow is a non-GAAP supplemental financial measure
that management and external users of SXCP's financial statements, such
as industry analysts, investors, lenders and rating agencies use to
assess:
-- SXCP's operating performance as compared to other publicly traded
partnerships, without regard to historical cost basis;
-- the ability of SXCP's assets to generate sufficient cash flow to
make distributions to SXCP's unitholders;
-- SXCP's ability to incur and service debt and fund capital
expenditures; and
-- the viability of acquisitions and other capital expenditure projects
and the returns on investment of various investment opportunities.
We believe that Distributable Cash Flow provides useful information to investors in assessing SXCP's financial condition and results of operations. Distributable Cash Flow should not be considered an alternative to net income, operating income, cash flows from operating activities, or any other measure of financial performance or liquidity presented in accordance with generally accepted accounting principles (GAAP). Distributable Cash Flow has important limitations as an analytical tool because it excludes some, but not all, items that affect net income and net cash provided by operating activities and used in investing activities. Additionally, because Distributable Cash Flow may be defined differently by other companies in the industry, our definition of Distributable Cash Flow may not be comparable to similarly titled measures of other companies, thereby diminishing its utility.
-- Distributable Cash Flow Coverage Ratio equals Distributable Cash Flow
divided by estimated distributions to the limited and general partners.
-- Operating Cash Flow Coverage Ratio equals net cash provided by operating
activities divided by total estimated distributions to the limited and
general partners. Operating cash flow is generally expected to be higher
than Distributable Cash Flow as Distributable Cash Flow is further
reduced by certain cash reserves including capital expenditures, an
investing cash flow item. Additionally, Distributable Cash Flow
represents only the Partnership's share of available cash by excluding
Adjusted EBITDA attributable to noncontrolling interest, while operating
cash flow is reported on a consolidated basis.
-- Ongoing capital expenditures ("capex") are capital expenditures made to
maintain the existing operating capacity of our assets and/or to extend
their useful lives. Ongoing capex also includes new equipment that
improves the efficiency, reliability or effectiveness of existing
assets. Ongoing capex does not include normal repairs and maintenance,
which are expensed as incurred, or significant capital expenditures. For
purposes of calculating distributable cash flow, the portion of ongoing
capex attributable to SXCP is used.
-- Replacement capital expenditures ("capex") represents an annual accrual
necessary to fund SXCP's share of the estimated costs to replace or
rebuild our facilities at the end of their working lives. This accrual
is estimated based on the average quarterly anticipated replacement
capital that we expect to incur over the long term to replace our major
capital assets at the end of their working lives. The replacement capex
accrual estimate will be subject to review and prospective change by
SXCP's general partner at least annually and whenever an event occurs
that causes a material adjustment of replacement capex, provided such
change is approved by our conflicts committee.
FORWARD-LOOKING STATEMENTS
Some of the statements included in this press release constitute "forward-looking statements." 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 SXCP) 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 SXCP, 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 SXCP; and changes in tax, environmental and other laws and regulations applicable to SXCP's businesses.
Forward-looking statements are not guarantees of future performance, but are based upon the current knowledge, beliefs and expectations of SXCP management, and upon assumptions by SXCP 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. SXCP 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.
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 made by SXCP. For information concerning these factors, see SXCP'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 SXCP'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 Partners, L.P.
Combined and Consolidated Statements of Operations
Three Months Ended Years Ended
December 31, December 31,
2017 2016 2017 2016
---- ---- ---- ----
(Unaudited) (Unaudited)
(Dollars and units in millions, except per unit amounts)
Revenues
Sales and other operating revenue $235.4 $218.3 $845.6 $779.7
------ ------ ------ ------
Costs and operating expenses
Cost of products sold and operating expenses 155.7 128.9 586.7 517.2
Selling, general and administrative expenses 8.1 10.2 32.5 38.7
Depreciation and amortization expense 20.3 20.4 83.6 77.7
---- ----
Total costs and operating expenses 184.1 159.5 702.8 633.6
----- ----- ----- -----
Operating income 51.3 58.8 142.8 146.1
Interest expense, net 14.7 12.0 56.4 47.7
(Gain) loss on extinguishment of debt - (0.1) 20.0 (25.0)
--- ---- ---- -----
Income before income tax (benefit) expense 36.6 46.9 66.4 123.4
Income tax (benefit) expense (66.8) 0.6 83.9 2.0
Net income (loss) $103.4 $46.3 $(17.5) $121.4
Less: Net income attributable to
noncontrolling interests 1.9 0.4 0.6 2.3
Net income (loss) attributable to SunCoke
Energy Partners, L.P. $101.5 $45.9 $(18.1) $119.1
------ ----- ------ ------
General partner's interest in net income (loss) $3.9 $10.0 $7.1 $23.6
Limited partners' interest in net income (loss) $30.2 $35.9 $(25.2) $95.5
Net income (loss) per common unit (basic and
diluted) $0.65 $0.78 $(0.54) $2.07
Weighted average common units outstanding
(basic and diluted) 46.2 46.2 46.2 46.2
SunCoke Energy Partners, L.P.
Consolidated Balance Sheets
December 31,
2017 2016
---- ----
(Unaudited)
(Dollars in millions)
Assets
Cash and cash
equivalents $6.6 $41.8
Receivables 42.2 39.7
Receivables
from
affiliates,
net 5.7 -
Inventories 79.4 66.9
Other current
assets 1.9 1.6
--- ---
Total current
assets 135.8 150.0
----- -----
Properties,
plants and respectively)
equipment (net
of accumulated
depreciation
of
$423.1million,
and $352.6
million at
December 31,
2017 and 2016, 1,265.6 1,294.9
Goodwill 73.5 73.5
Other
intangible
assets 166.2 176.7
Deferred
charges and
other assets 0.3 0.9
--- ---
Total assets $1,641.4 $1,696.0
======== ========
Liabilities and
Equity
Accounts
payable $54.9 $47.0
Accrued
liabilities 14.6 11.7
Deferred
revenue 1.7 2.5
Payable to
affiliate, net - 4.7
Current portion
of long-term
debt and
financing
obligation 2.6 4.9
Interest
payable 4.0 14.7
Total current
liabilities 77.8 85.5
---- ----
Long-term debt
and financing
obligation 818.4 805.7
Deferred income
taxes 119.2 37.9
Other deferred
credits and
liabilities 10.1 13.2
Total
liabilities 1,025.5 942.3
======= =====
Equity
Held by public:
Common units
17,958,420,
and 20,800,181
units issued
at December
31, 2017 and
2016,
respectively) 207.0 296.9
Held by parent:
Common units
28,268,728 and
25,415,696
units issued
at December
31, 2017 and
2016,
respectively) 365.4 410.3
General
partner's
interest 31.2 32.1
---- ----
Partners'
capital
attributable
to SunCoke
Energy
Partners, L.P. 603.6 739.3
Noncontrolling
interest 12.3 14.4
---- ----
Total equity 615.9 753.7
Total
liabilities
and equity $1,641.4 $1,696.0
======== ========
SunCoke Energy Partners, L.P.
Combined and Consolidated Statements of Cash Flows
Years Ended December 31,
2017 2016
(Dollars in millions)
Cash Flows from Operating Activities:
Net (loss) income $(17.5) $121.4
Adjustments to reconcile net (loss) income to net cash provided
by operating activities:
Depreciation and amortization expense 83.6 77.7
Deferred income tax benefit (expense) 81.3 (0.1)
Loss (gain) on extinguishment of debt 20.0 (25.0)
Changes in working capital pertaining to operating activities:
Receivables (2.5) 0.3
Receivables/payables from affiliate, net (9.0) 4.7
Inventories (12.5) 10.2
Accounts payable 3.1 2.3
Accrued liabilities 2.7 0.5
Deferred revenue (0.8) 0.4
Interest payable (10.7) (2.8)
Other (1.0) (6.0)
---- ----
Net cash provided by operating activities 136.7 183.6
----- -----
Cash Flows from Investing Activities:
Capital expenditures (39.0) (37.1)
Decrease in restricted cash 0.5 17.2
Other investing activities - 2.1
--- ---
Net cash used in investing activities (38.5) (17.8)
----- -----
Cash Flows from Financing Activities:
Proceeds from issuance of long-term debt 693.7 -
Repayment of long-term debt (644.9) (66.1)
Debt issuance costs (15.8) (0.2)
Proceeds from revolving credit facility 350.0 28.0
Repayment of revolving credit facility (392.0) (38.0)
Proceeds from financing obligation - 16.2
Repayment of financing obligation (2.5) (1.0)
Distributions to unitholders (public and parent) (119.2) (116.4)
Distributions to noncontrolling interest (SunCoke Energy, Inc.) (2.7) (3.5)
Capital contribution from SunCoke Energy Partners GP LLC - 8.4
---
Net cash used in financing activities (133.4) (172.6)
------ ------
Net decrease in cash and cash equivalents (35.2) (6.8)
Cash and cash equivalents at beginning of year 41.8 48.6
---- ----
Cash and cash equivalents at end of year $6.6 $41.8
==== =====
Supplemental Disclosure of Cash Flow Information
Interest paid $65.6 $54.0
Income taxes paid $1.4 $1.5
SunCoke Energy Partners, L.P.
Segment Operating Data
Three Months Ended Years Ended
December 31, December 31,
2017 2016 2017 2016
---- ---- ---- ----
(Dollars in millions)
Sales and other operating
revenue:
Domestic Coke $191.1 $164.6 $739.7 $681.8
Logistics 44.3 53.7 105.9 97.9
Logistics intersegment
sales 1.6 1.4 6.5 6.1
Elimination of intersegment
sales (1.6) (1.4) (6.5) (6.1)
---- ---- ----
Total $235.4 $218.3 $845.6 $779.7
====== ====== ====== ======
Adjusted EBITDA(1):
Domestic Coke $40.3 $36.7 $170.3 $167.0
Logistics 34.8 45.0 69.7 63.2
Corporate and Other (3.5) (4.3) (15.3) (17.2)
---- ----- -----
Total $71.6 $77.4 $224.7 $213.0
===== ===== ====== ======
Coke Operating Data:
Domestic Coke capacity
utilization (%) 101 101 101 101
Domestic Coke production
volumes (thousands of
tons) 586 583 2,313 2,334
Domestic Coke sales volumes
(thousands of tons) 580 581 2,298 2,336
Domestic Coke Adjusted
EBITDA per ton(2) $69.48 $63.17 $74.11 $71.49
Logistics Operating Data:
Tons handled (thousands of
tons)(3) 5,326 5,441 20,546 17,469
CMT take-or-pay shortfall
tons (thousands of
tons)(4) 413 1,074 2,918 6,076
(1) See definition of Adjusted EBITDA
and reconciliation elsewhere in
this release.
(2) Reflects Domestic Coke Adjusted
EBITDA divided by Domestic Coke
sales volumes.
(3) Reflects inbound tons handled
during the period.
(4) Reflects tons billed under take-
or-pay contracts where services
were not performed.
SunCoke Energy Partners, L.P.
Reconciliations of Non-GAAP Information
Net Income (loss) and Net Cash Provided by Operating Activities to Adjusted EBITDA
Three Months Ended Years Ended
December 31,
December 31,
2017 2016 2017 2016
---- ---- ---- ----
(Dollars in millions)
Net income (loss) $103.4 $46.3 $(17.5) $121.4
Add:
Depreciation and amortization
expense 20.3 20.4 83.6 77.7
Interest expense, net 14.7 12.0 56.4 47.7
(Gain) loss on extinguishment of
debt - (0.1) 20.0 (25.0)
Income tax (benefit) expense (66.8) 0.6 83.9 2.0
Contingent consideration
adjustments(1) - (1.8) (1.7) (10.1)
Non-cash reversal of acquired
contractual obligations(2) - - - (0.7)
Adjusted EBITDA(3) $71.6 $77.4 $224.7 $213.0
----- ----- ------ ------
Subtract:
Adjusted EBITDA attributable to
noncontrolling interest(4) 0.8 0.7 3.4 3.3
Adjusted EBITDA attributable to
SunCoke Energy Partners $70.8 $76.7 $221.3 $209.7
===== ===== ====== ======
Three Months Ended Years Ended
December 31,
December 31,
2017 2016 2017 2016
---- ---- ---- ----
(Dollars in millions)
Net cash provided by operating
activities $24.0 $43.6 $136.7 $183.6
Add:
Cash interest paid 27.3 4.2 65.6 54.0
Cash income taxes paid 0.8 1.5 1.4 1.5
Changes in working capital(5) 23.1 30.8 20.2 (17.8)
Contingent consideration
adjustments(1) - (1.8) (1.7) (10.1)
Non-cash reversal of acquired
contractual obligation(2) - - - (0.7)
Other adjustments to reconcile cash
provided by operating activities to
Adjusted EBITDA (3.6) (0.9) 2.5 2.5
---- ---- ---
Adjusted EBITDA(3) $71.6 $77.4 $224.7 $213.0
----- ----- ------ ------
Subtract:
Adjusted EBITDA attributable to
noncontrolling interest 0.8 0.7 3.4 3.3
Adjusted EBITDA attributable to
SunCoke Energy Partners $70.8 $76.7 $221.3 $209.7
===== ===== ====== ======
(1) As a result of changes in the fair
value of the contingent
consideration liability, the
Partnership recognized a benefit
of $1.7 million during 2017. The
Partnership amended its contingent
consideration terms with The Cline
Group during the first quarter of
2016. This amendment and
subsequent fair value adjustments
to the contingent consideration
liability, resulted in gains of
$1.8 million and $10.1 million
recorded during the three and
twelve months ended December 31,
2016, respectively, which were
excluded from Adjusted EBITDA.
(2) In association with the acquisition
of CMT, we assumed certain
performance obligations under
existing contracts and recorded
liabilities related to such
obligations. These contractual
performance obligations expired
without the customer requiring
performance. As such, the
Partnership reversed the
liabilities as we no longer have
any obligations under the
contract.
(3) In accordance with SEC's May 2016
update to its guidance on the
appropriate use of non-GAAP
financial measures, Adjusted
EBITDA does not include Logistics
deferred revenue until it is
recognized as GAPP revenue.
(4) Reflects net income attributable to
noncontrolling interest adjusted
for noncontrolling interest's
share of interest, taxes, income,
and depreciation and amortization.
(5) Changes in working capital exclude
those items not impacting Adjusted
EBITDA, such as changes in
interest payable and income taxes
payable.
SunCoke Energy Partners, L.P.
Reconciliations of Non-GAAP Information
Net Income (loss) and Operating Activities to Distributable Cash Flow
Three Months Ended Years Ended
December 31,
December 31,
2017 2016 2017 2016
---- ---- ---- ----
(Dollars in millions)
Net income (loss) $103.4 $46.3 $(17.5) $121.4
Add:
Depreciation and amortization expense 20.3 20.4 83.6 77.7
Interest expense, net 14.7 12.0 56.4 47.7
(Gain) loss on extinguishment of debt - (0.1) 20.0 (25.0)
Income tax (benefit) expense (66.8) 0.6 83.9 2.0
Contingent consideration
adjustments(1) - (1.8) (1.7) (10.1)
Non-cash reversal of acquired
contractual obligation(2) - - - (0.7)
Logistics volume shortfall
billings(3) (13.8) (25.4) (0.9) 1.5
Corporate cost holiday/deferral - - (8.4) 13.9
Subtract:
Ongoing capex (SXCP share) 6.9 4.8 19.4 14.4
Replacement capex accrual 2.0 1.9 7.7 7.6
Cash interest accrual 14.5 11.9 54.7 49.0
Cash income tax accrual 0.8 0.9 2.6 1.8
Adjusted EBITDA attributable to
noncontrolling interest(4) 0.8 0.7 3.4 3.3
Distributable cash flow $32.8 $31.8 $127.6 $152.3
===== ===== ====== ======
Three Months Ended Years Ended
December 31,
December 31,
2017 2016 2017 2016
---- ---- ---- ----
(Dollars in millions)
Net cash provided by operating
activities $24.0 $43.6 $136.7 $183.6
Add:
Cash interest paid 27.3 4.2 65.6 54.0
Cash taxes paid 0.8 1.5 1.4 1.5
Changes in working capital(5) 23.1 30.8 20.2 (17.8)
Contingent consideration
adjustments(1) - (1.8) (1.7) (10.1)
Non-cash reversal of acquired
contractual obligation(2) - - - (0.7)
Logistics volume shortfall
billings(3) (13.8) (25.4) (0.9) 1.5
Corporate cost holiday/deferral - - (8.4) 13.9
Other adjustments to reconcile cash
provided by operating activities to
Adjusted EBITDA (3.6) (0.9) 2.5 2.5
Subtract:
Ongoing capex (SXCP share) 6.9 4.8 19.4 14.4
Replacement capex accrual 2.0 1.9 7.7 7.6
Cash interest accrual 14.5 11.9 54.7 49.0
Cash tax accrual 0.8 0.9 2.6 1.8
Adjusted EBITDA attributable to
noncontrolling interest 0.8 0.7 3.4 3.3
Distributable cash flow $32.8 $31.8 $127.6 $152.3
===== ===== ====== ======
Quarterly cash distribution $29.5 $29.5 $118.0 $116.4
Operating cash flow coverage ratio(6) 0.82x 1.48x 1.16x 1.58x
Distribution coverage ratio(7) 1.11x 1.08x 1.08x 1.31x
(1) As a result of changes in the fair
value of the contingent
consideration liability, the
Partnership recognized a benefit
of $1.7 million during 2017. The
Partnership amended its contingent
consideration terms with The Cline
Group during the first quarter of
2016. This amendment and
subsequent fair value adjustments
to the contingent consideration
liability, resulted in gains of
$1.8 million and $10.1 million
recorded during the three and
twelve months ended December 31,
2016, respectively, which were
excluded from Adjusted EBITDA.
(2) In association with the acquisition
of CMT, we assumed certain
performance obligations under
existing contracts and recorded
liabilities related to such
obligations. These contractual
performance obligations expired
without the customer requiring
performance. As such, the
Partnership reversed the
liabilities as we no longer have
any obligations under the
contract.
(3) Logistics volume shortfall billings
adjusts to include ton minimums
billed throughout the year in
Distributable Cash Flow to better
align with cash collection. Volume
shortfall billings on take-or-
pay contracts are recorded as
deferred revenue and are
recognized into GAAP income based
on the terms of the contract, at
which time they will be excluded
from Distributable Cash Flow.
(4) Reflects net income attributable to
noncontrolling interest adjusted
for noncontrolling interest's
share of interest, taxes, income,
and depreciation and amortization.
(5) Changes in working capital exclude
those items not impacting Adjusted
EBITDA, such as changes in
interest payable and income taxes
payable.
(6) Operating cash flow coverage ratio
is net cash provided by operating
activities divided by total
estimated distributions to the
limited and general partners.
Operating cash flow is generally
expected to be higher than
Distributable Cash Flow as
Distributable Cash Flow is further
reduced by certain cash reserves
including capital expenditures, an
investing cash flow item.
Additionally, Distributable Cash
Flow represents only the
Partnership's share of available
cash by excluding Adjusted EBITDA
attributable to noncontrolling
interest, while operating cash
flow is reported on a consolidated
basis.
(7) Distribution cash coverage ratio is
distributable cash flow divided by
total estimated distributions to
the limited and general partners.
SunCoke Energy Partners, L.P.
Reconciliations of Non-GAAP Information
Estimated Net Income and Net Cash Provided by Operating Activities
to Estimated 2018 Consolidated Adjusted EBITDA
2018
Low High
--- ----
(Dollars in millions)
Net Income $68 $83
Add:
Depreciation and amortization expense 88 83
Interest expense 60 60
Income tax expense 2 3
Adjusted EBITDA $218 $229
---- ----
Subtract:
Adjusted EBITDA attributable to noncontrolling interest(1) 3 4
Adjusted EBITDA attributable to SunCoke Energy Partners, L.P. $215 $225
==== ====
2018
Low High
--- ----
(Dollars in millions)
Net cash provided by operating activities $145 $160
Add:
Cash interest paid 60 60
Cash income taxes paid 2 3
Changes in working capital and other 11 6
Adjusted EBITDA $218 $229
---- ----
Subtract:
Adjusted EBITDA attributable to noncontrolling interest(1) 3 4
Adjusted EBITDA attributable to SunCoke Energy Partners, L.P. $215 $225
==== ====
(1) Reflects net income attributable to
noncontrolling interest adjusted
for noncontrolling interest's
share of interest, taxes, income,
and depreciation and amortization.
SunCoke Energy Partners, L.P.
Reconciliations of Non-GAAP Information
Estimated Net Income and Net Cash Provided by Operating Activities
to Estimated 2018 Distributable Cash Flow
2018
Low High
--- ----
Net Income $68 $83
Add:
Depreciation and amortization expense 88 83
Interest expense 60 60
Income tax expense 2 3
Subtract:
Ongoing capex (SXCP share) 25 25
Replacement capex accrual 8 8
Cash interest accrual 57 57
Cash tax accrual(1) 3 3
Adjusted EBITDA attributable to noncontrolling interest(2) 3 4
Distributable Cash Flow $122 $132
==== ====
2018
Low High
--- ----
Net cash provided by operating activities $145 $160
Add:
Cash Interest paid 60 60
Cash Income tax paid 2 3
Changes in working capital 11 6
Subtract:
Ongoing capex (SXCP share) 25 25
Replacement capex accrual 8 8
Cash interest accrual 57 57
Cash tax accrual(1) 3 3
Adjusted EBITDA attributable to noncontrolling interest(2) 3 4
Adjusted EBITDA $122 $132
==== ====
Estimated distributions(3) $118 $118
Operating cash flow coverage ratio(4) 1.23x 1.36x
Distributable cash coverage ratio(5) 1.03x 1.12x
(1) Cash tax impact from operations of
Gateway Cogeneration Company LLC,
which is an entity subject to
income taxes for federal and state
purposes at the corporate level.
(2) Reflects net income attributable to
noncontrolling interest adjusted
for noncontrolling interest's
share of interest, taxes, income,
and depreciation and amortization.
(3) Estimated distributions assumes
distributions are held constant at
$0.5940 per unit each quarter.
(4) Operating cash flow coverage ratio
is net cash provided by operating
activities divided by total
estimated distributions to the
limited and general partners.
Operating cash flow is generally
expected to be higher than
Distributable Cash Flow as
Distributable Cash Flow is further
reduced by certain cash reserves
including capital expenditures, an
investing cash flow item.
Additionally, Distributable Cash
Flow represents only the
Partnership's share of available
cash by excluding Adjusted EBITDA
attributable to noncontrolling
interest, while operating cash
flow is reported on a consolidated
basis.
(5) Distribution cash coverage ratio is
distributable cash flow divided by
total estimated distributions to
the limited and general partners.
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SOURCE SunCoke Energy Partners, L.P.
