SunCoke Energy Partners, L.P. Announces Third Quarter 2018 Results
LISLE, Ill., Oct. 25, 2018 /PRNewswire/ -- SunCoke Energy Partners, L.P. (NYSE: SXCP) today reported results for the third quarter 2018, which reflect strong throughput volumes at the company's Convent Marine Terminal and solid performance from Middletown and Haverhill coke facilities, offset by the timing and scope of an outage and unrelated machinery fire at Granite City.
Mike Rippey, President and Chief Executive Officer of SunCoke Energy Partners, L.P. commented, "We continue to be pleased with strong operating performance at CMT as our customers continue to leverage our unique capabilities to capitalize on the attractive export market and our Middletown and Haverhill coke facilities continue to perform in line with our expectations."
Granite City began a planned outage during the quarter, in which the scope and duration increased materially versus original estimates. Our analysis revealed that additional improvements would benefit the facility and it was prudent to accelerate the timing of this work. Additionally, as discussed on the company's second quarter earnings call, Granite City experienced a fire on a major piece of equipment which resulted in lost production and lower revenues during the third quarter. The incremental impact of these two events, which was not factored into the company's full-year guidance, is approximately $9 million. As a result, full year 2018 Adjusted EBITDA attributable to SXCP guidance has been adjusted to range between $210 million to $215 million.
Rippey continued, "While we are disappointed to revise our full-year 2018 guidance as a result of incremental expense and lower revenue at Granite City, our focus has been, and always will be, on driving operational excellence and maximizing long-term performance at our facilities. Based on the expertise we have built across our fleet, it became a clear decision to increase the scope of the work at Granite City in order to improve the long-term reliability and operational performance of those assets."
THIRD QUARTER RESULTS
Three Months Ended September 30,
(Dollars in
millions) 2018 2017 Increase
(Decrease)
---
Revenues $
224.1 $
214.0 $
10.1
Adjusted
EBITDA(1) $
54.6 $
58.4 $
(3.8)
Net income
attributable
to SXCP $
15.3 $
22.6 $
(7.3)
---
(1) See definition of Adjusted
EBITDA and reconciliation
elsewhere in this release.
Revenues in third quarter 2018 increased $10.1 million from the prior year period, primarily reflecting the higher sales volumes at CMT.
Adjusted EBITDA in the quarter decreased $3.8 million, driven primarily by the incremental operating and maintenance costs and lower revenues related to a planned outage and an unrelated machinery fire at our Granite City cokemaking facility offset by higher sales volumes at CMT.
Net income attributable to SXCP in the third quarter 2018 was $15.3 million, down $7.3 million versus the prior period. The decrease in the current year period was driven by the operating results discussed above and higher depreciation expense due to revisions in estimated useful lives of certain assets in our Domestic Coke segment.
THIRD QUARTER SEGMENT INFORMATION
Domestic Coke
Domestic Coke consists of cokemaking facilities and heat recovery operations at our Haverhill, Middletown and Granite City cokemaking facilities, located in Franklin Furnace and Middletown, Ohio, and Granite City, Illinois, respectively.
Three Months Ended September 30,
(Dollars in
millions,
except per
ton amounts) 2018 2017 Increase
(Decrease)
---
Revenues $
193.1 $
193.4 $
(0.3)
Adjusted
EBITDA(1) $
37.4 $
50.0 $
(12.6)
Sales Volume
(thousands of
tons) 589 585 4
Adjusted
EBITDA per
ton(2) $
63.50 $
85.47 $
(21.97)
---
(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 decreased $0.3 million primarily driven by the increased scope and duration of the planned outage at Granite City as well as a machinery fire that occurred at Granite City in July 2018, which lowered volume and energy revenues compared to the prior period. These decreases were offset by the pass-through of higher coal prices of $4.4 million compared to the prior period.
Adjusted EBITDA decreased $12.6 million driven by higher operating and maintenance costs and lower revenues from the outage and the machinery fire discussed above, which negatively impacted results by $8.2 million and $2.6 million, respectively, as compared to the prior period. We anticipate the Granite City outage will be completed by late-November and will decrease fourth quarter Adjusted EBITDA results by approximately $4 million. The incremental impact of these two events, which was not factored into the company's full-year guidance, is approximately $9 million.
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 September 30,
(Dollars in
millions, except
per ton amounts) 2018 2017 Increase
(Decrease)
---
Revenues $
31.0 $
20.6 $
10.4
Intersegment sales $
1.7 $
1.6 $
0.1
Adjusted EBITDA(1) $
20.9 $
12.3 $
8.6
Tons handled
(thousands of
tons)(2) 6,697 4,862 1,835
CMT take-or-pay
shortfall tons
(thousands of
tons)(3) 42 1,005 (963)
---
(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. Our
two largest coal export
customers did not have any
shortfall tons as of September
30, 2018.
Revenues and Adjusted EBITDA increased $10.4 million and $8.6 million, respectively, driven by 1.8 million of incremental tons primarily at CMT. At the end of third quarter, we do not have any shortfall tons related to our coal export customers as they have shipped over their annual contractual obligations to date. Given throughput volumes year-to-date and unlike previous fourth quarters, we will not recognize deferred revenue in the fourth quarter 2018.
Corporate and Other
Corporate and other expenses were $3.7 million in the third quarter 2018 and were comparable to prior period.
2018 OUTLOOK
Our revised 2018 guidance is as follows:
-- Adjusted EBITDA attributable to SXCP is expected to be between $210 to
$215 million
-- Distributable Cash Flow expect to be between $110 to $115 million
-- Capital expenditures are projected to be approximately $61 million,
including approximately $30 million related to our Granite City gas
sharing project
RELATED COMMUNICATIONS
We will host our quarterly earnings call at 8:30 a.m. Eastern Time (7:30 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 8991756.
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 approximately 55 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, taxes, depreciation
and amortization ("EBITDA"), adjusted for any loss (gain) on
extinguishment of debt, and/or changes to our contingent consideration
liability related to our acquisition of CMT. 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
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.
Consolidated Statements of Operations
(Unaudited)
Three Months Ended September 30, Nine Months Ended September 30,
2018 2017 2018 2017
(Dollars and units in millions, except per unit amounts)
Revenues
Sales and other operating
revenue $
224.1 $
214.0 $
667.5 $
610.2
Costs and operating expenses
Cost of products sold and
operating expenses 162.2 146.2 484.3 431.0
Selling, general and
administrative expenses 7.8 7.4 24.7 24.4
Depreciation and amortization
expense 23.1 20.2 64.8 63.3
Total costs and operating
expenses 193.1 173.8 573.8 518.7
Operating income 31.0 40.2 93.7 91.5
Interest expense, net 14.9 15.1 44.9 41.7
Loss on extinguishment of debt 0.1 20.0
Income before income tax
expense 16.1 25.0 48.8 29.8
Income tax expense 0.4 1.7 1.0 150.7
Net income (loss) 15.7 23.3 47.8 (120.9)
Less: Net income (loss)
attributable to noncontrolling
interests 0.4 0.7 1.5 (1.3)
Net income (loss) attributable
to SunCoke Energy Partners,
L.P. $
15.3 $
22.6 $
46.3 $
(119.6)
General partner's interest in
net income $
0.4 $
1.9 $
1.0 $
1.8
Limited partners' interest in
net income (loss) $
14.9 $
20.7 $
45.3 $
(121.4)
Net income (loss) per common
unit (basic and diluted) $
0.32 $
0.45 $
0.98 $
(2.63)
Weighted average common units
outstanding (basic and
diluted) 46.2 46.2 46.2 46.2
SunCoke Energy Partners, L.P.
Consolidated Balance Sheets
September 30, 2018 December 31, 2017
(Unaudited)
(Dollars in millions)
Assets
Cash and cash equivalents $
24.2 $
6.6
Receivables 53.2 42.2
Receivables from affiliate,
net 0.6 5.7
Inventories 82.1 79.4
Other current assets 3.7 1.9
Total current assets 163.8 135.8
Properties, plants and
equipment (net of
accumulated depreciation
of $479.1 million and
$423.1 million at
September 30, 2018 and
December 31, 2017,
respectively) 1,258.2 1,265.6
Goodwill 73.5 73.5
Other intangible assets,
net 158.4 166.2
Deferred charges and other
assets 0.2 0.3
Total assets $
1,654.1 $
1,641.4
Liabilities and Equity
Accounts payable $
90.5 $
54.9
Accrued liabilities 13.0 14.6
Deferred revenue 2.6 1.7
Current portion of long-
term debt and financing
obligation 2.7 2.6
Interest payable 16.3 4.0
Total current liabilities 125.1 77.8
Long-term debt and
financing obligation 793.3 818.4
Deferred income taxes 120.3 119.2
Other deferred credits and
liabilities 10.8 10.1
Total liabilities 1,049.5 1,025.5
Equity
Held by public:
Common units (issued
17,727,249 and 17,958,420
units at September 30,
2018 and December 31,
2017, respectively) 196.9 207.0
Held by parent:
Common units (issued
28,499,899 and 28,268,728
units at September 30,
2018 and December 31,
2017, respectively) 356.3 365.4
General partner's interest 39.5 31.2
Partners' capital
attributable to SunCoke
Energy Partners, L.P. 592.7 603.6
Noncontrolling interest 11.9 12.3
Total equity 604.6 615.9
Total liabilities and
equity $
1,654.1 $
1,641.4
SunCoke Energy Partners, L.P.
Consolidated Statements of Cash Flows
(Unaudited)
Nine Months Ended September 30,
2018 2017
(Dollars in millions)
Cash Flows from Operating Activities:
Net income (loss) $
47.8 $
(120.9)
Adjustments to reconcile net income (loss) to net cash provided
by operating activities:
Depreciation and amortization expense 64.8 63.3
Deferred income tax expense 1.1 150.4
Loss on extinguishment of debt 20.0
Changes in working capital pertaining to operating activities:
Receivables (11.0) (6.3)
Receivables/payables from affiliate, net 5.1 (5.9)
Inventories (2.7) (18.4)
Accounts payable 30.3 16.6
Accrued liabilities (1.4) 2.8
Deferred revenue 0.9 14.1
Interest payable 12.3 2.3
Other 0.8 (5.3)
Net cash provided by operating activities 148.0 112.7
Cash Flows from Investing Activities:
Capital expenditures (44.4) (23.3)
Net cash used in investing activities (44.4) (23.3)
Cash Flows from Financing Activities:
Proceeds from issuance of long-term debt 620.6
Repayment of long-term debt (644.9)
Repayment of financing obligation (1.9) (1.8)
Proceeds from revolving credit facility 127.2 268.0
Repayment of revolving credit facility (152.2) (240.0)
Debt issuance costs (14.9)
Distributions to unitholders (public and parent) (67.2) (89.7)
Distributions to noncontrolling interest (SunCoke Energy, Inc.) (1.9) (1.7)
Capital contributions from SunCoke 10.0
Net cash used in financing activities (86.0) (104.4)
Net increase (decrease) in cash and cash equivalents and
restricted cash 17.6 (15.0)
Cash, cash equivalents and restricted cash at beginning of
period 6.6 42.3
Cash, cash equivalents and restricted cash at end of period $
24.2 $
27.3
Supplemental Disclosure of Cash Flow Information
Interest paid $
32.3 $
38.3
Income taxes paid $
2.9 $
0.6
SunCoke Energy Partners, L.P.
Segment Financial and Operating Data
The following tables set forth financial and operating data for the three and nine months ended September 30, 2018 and 2017:
Three Months Ended September 30, Nine Months Ended September 30,
2018 2017 2018 2017
---
(Dollars in millions, except per ton amounts)
Sales and other operating revenues:
Domestic Coke $
193.1 $
193.4 $
581.1 $
548.6
Logistics 31.0 20.6 86.4 61.6
Logistics intersegment
sales 1.7 1.6 5.2 4.9
Elimination of
intersegment sales (1.7) (1.6) (5.2) (4.9)
Total sales and other
operating revenues $
224.1 $
214.0 $
667.5 $
610.2
Adjusted EBITDA(1):
Domestic Coke $
37.4 $
50.0 $
118.7 $
130.0
Logistics 20.9 12.3 53.5 34.9
Corporate and Other (3.7) (3.9) (12.6) (11.8)
Total Adjusted EBITDA $
54.6 $
58.4 $
159.6 $
153.1
Coke Operating Data:
Domestic Coke capacity 102 103 101 100
utilization % % % %
Domestic Coke
production volumes
(thousands of tons) 588 595 1,731 1,727
Domestic Coke sales
volumes (thousands of
tons) 589 585 1,746 1,718
Domestic Coke Adjusted
EBITDA per ton(2) $
63.50 $
85.47 $
67.98 $
75.67
Logistics Operating Data:
Tons handled (thousands
of tons)(3) 6,697 4,862 18,915 15,220
CMT take-or-pay
shortfall tons
(thousands of tons)(4) 42 1,005 147 2,505
(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.
(3) Reflects inbound tons handled
during the period.
(4) Reflects tons billed under take-
or-pay contracts where services
have not yet been performed. Our
two largest coal export
customers did not have any
shortfall tons as of September
30, 2018.
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 September 30, Nine Months Ended September 30,
2018 2017 2018 2017
(Dollars in millions)
Net income (loss) $
15.7 $
23.3 $
47.8 $
(120.9)
Add:
Depreciation and amortization
expense 23.1 20.2 64.8 63.3
Interest expense, net 14.9 15.1 44.9 41.7
Loss on extinguishment of debt 0.1 20.0
Income tax expense 0.4 1.7 1.0 150.7
Contingent consideration adjustments 0.5 (2.0) 1.1 (1.7)
Adjusted EBITDA $
54.6 $
58.4 $
159.6 $
153.1
Subtract:
Adjusted EBITDA attributable to
noncontrolling interest(1) 0.8 1.0 2.4 2.6
Adjusted EBITDA attributable to
SunCoke Energy Partners, L.P. $
53.8 $
57.4 $
157.2 $
150.5
Three Months Ended September 30, Nine Months Ended September 30,
2018 2017 2018 2017
(Dollars in millions)
Net cash provided by operating
activities $
72.6 $
61.1 $
148.0 $
112.7
Add:
Cash interest paid 2.4 2.8 32.3 38.3
Cash income tax paid 0.4 2.9 0.6
Changes in working capital(2) (18.8) (8.8) (21.2) (2.9)
Contingent consideration adjustments 0.5 (2.0) 1.1 (1.7)
Other adjustments to reconcile cash
provided by operating activities to
Adjusted EBITDA (2.5) 5.3 (3.5) 6.1
Adjusted EBITDA $
54.6 $
58.4 $
159.6 $
153.1
Subtract:
Adjusted EBITDA attributable to
noncontrolling 0.8 1.0 2.4 2.6
interest(1)
Adjusted EBITDA attributable to
SunCoke Energy Partners, L.P. $
53.8 $
57.4 $
157.2 $
150.5
(1) Reflects net income attributable to
noncontrolling interest adjusted
for noncontrolling interest's
share of interest, taxes, income,
and depreciation and amortization.
(2) 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 September 30, Nine Months Ended September 30,
2018 2017 2018 2017
(Dollars in millions)
Net Income (loss) $
15.7 $
23.3 $
47.8 $
(120.9)
Add:
Depreciation and amortization expense 23.1 20.2 64.8 63.3
Interest expense, net 14.9 15.1 44.9 41.7
Loss on extinguishment of debt 0.1 20.0
Income tax expense (benefit) 0.4 1.7 1.0 150.7
Contingent consideration adjustments 0.5 (2.0) 1.1 (1.7)
Logistics volume shortfall
billings(1) (0.8) 4.2 0.3 12.9
Repayment of corporate cost holiday
deferral (8.4)
Subtract
Ongoing capex (SXCP Share) 13.0 4.7 24.0 12.5
Replacement capex accrual 1.9 1.9 5.8 5.7
Cash interest accrual 15.1 14.7 45.1 40.2
Cash income tax accrual(2) 0.6 0.6 1.7 1.8
Adjusted EBITDA attributable to
noncontrolling interest(3) 0.8 1.0 2.4 2.6
Distributable cash flow $
22.4 $
39.7 80.9 $
94.8
Three Months Ended September 30, Nine Months Ended September 30,
2018 2017 2018 2017
(Dollars in millions)
Net cash provided by operating
activities $
72.6 $
61.1 $
148.0 $
112.7
Add:
Cash interest paid 2.4 2.8 32.3 38.3
Cash income tax paid 0.4 2.9 0.6
Changes in working capital(4) (18.8) (8.8) (21.2) (2.9)
Logistics volume shortfall
billings(1) (0.8) 4.2 0.3 12.9
Repayment of corporate cost holiday/
deferral (8.4)
Contingent consideration adjustment 0.5 (2.0) 1.1 (1.7)
Other adjustments to reconcile cash
provided by operating activities to
Adjusted EBITDA (2.5) 5.3 (3.5) 6.1
Subtract:
Ongoing capex (SXCP share) 13.0 4.7 24.0 12.5
Replacement capex accrual 1.9 1.9 5.8 5.7
Cash interest accrual 15.1 14.7 45.1 40.2
Cash income tax accrual(2) 0.6 0.6 1.7 1.8
Adjusted EBITDA attributable to
noncontrolling interest(3) 0.8 1.0 2.4 2.6
Distributable cash flow $
22.4 $
39.7 $
80.9 $
94.8
Quarterly cash distribution declared
in the period $
18.9 $
29.5 $
56.7 $
88.5
Operating cash flow coverage ratio(5) 3.84 2.07 2.61 1.27
Distribution coverage ratio(6) 1.19 1.35 1.43 1.07
(1) 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.
(2) Cash tax impact from the operations
of Gateway Cogeneration Company
LLC, which is an entity subject to
income taxes for federal and state
purposes at the corporate level.
(3) Reflects net income attributable to
noncontrolling interest adjusted
for noncontrolling interest's
share of interest, taxes, income,
and depreciation and amortization.
(4) Changes in working capital exclude
those items not impacting Adjusted
EBITDA, such as changes in
interest payable and income taxes
payable.
(5) 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.
(6) 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
The Partnership has revised its full year 2018 Adjusted EBITDA guidance range as a result of the
higher than expected outage costs and a machinery fire at our Granite City facility. Below is a
reconciliation of revised 2018 estimated Adjusted EBITDA from its closest GAAP measures:
2018
Low High
(Dollars in millions)
Net Income $
54 $
64
Add:
Depreciation and amortization
expense(1) 97 92
Interest expense 60 60
Income tax expense 2 3
Adjusted EBITDA $
213 $
219
Subtract:
Adjusted EBITDA attributable to
noncontrolling interest(2) 3 4
Adjusted EBITDA attributable to
SunCoke Energy Partners, L.P. $
210 $
215
2018
Low High
(Dollars in millions)
Net cash provided by operating
activities $
140 $
150
Add:
Cash interest paid 60 60
Cash income tax paid 2 3
Changes in working capital and
other(3) 11 6
Adjusted EBITDA $
213 $
219
Subtract:
Adjusted EBITDA attributable to
noncontrolling interest(2) 3 4
Adjusted EBITDA attributable to
SunCoke Energy Partners, L.P. $
210 $
215
(1) Reflects revisions in estimated
useful lives of certain assets in
our Domestic Coke segment made in
the third quarter.
(2) Reflects net income attributable to
noncontrolling interest adjusted
for noncontrolling interest's
share of interest, taxes, income,
and depreciation and amortization.
(3) 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
Estimated Net Income and Net Cash Provided by Operating Activities
to Estimated 2018 Distributable Cash Flow
The Partnership has revised its full year 2018 Distributable Cash Flow guidance range as a result of
the higher than expected outage costs and a machinery fire at our Granite City facility. Below is a
reconciliation of revised 2018 estimated Distributable Cash Flow from its closest GAAP measures:
2018
Low High
Net Income $
54 $
64
Add:
Depreciation and amortization
expense(1) 97 92
Interest expense 60 60
Income tax expense 2 3
Subtract:
Ongoing capex (SXCP share)(2) 30 30
Replacement capex accrual 8 8
Cash interest accrual(3) 60 60
Cash tax accrual(4) 2 2
Adjusted EBITDA attributable to
noncontrolling interest(5) 3 4
Distributable Cash Flow $
110 $
115
2018
Low High
Net cash provided by operating
activities $
140 $
150
Add:
Cash Interest paid 60 60
Cash Income tax paid 2 3
Changes in working capital(6) 11 6
Subtract:
Ongoing capex (SXCP share)(2) 30 30
Replacement capex accrual 8 8
Cash interest accrual(4) 60 60
Cash tax accrual(5) 2 2
Adjusted EBITDA attributable to
noncontrolling interest(5) 3 4
Distributable Cash Flow $
110 $
115
Estimated distributions(7) $
76 $
76
Operating cash flow coverage
ratio(8) 1.85x 1.99x
Distribution cash coverage
ratio(9) 1.46x 1.52x
(1) Reflects revisions in estimated
useful lives of certain assets in
our Domestic Coke segment made in
the third quarter.
(2) Increased from $25M to $30M as a
result of additional ongoing capex
from increased scope to the
Granite City outage.
(3) Revised cash interest accrual from
$57M to $60M as a result of higher
interest rates.
(4) Cash tax impact from the operations
of Gateway Cogeneration Company
LLC, which is an entity subject to
income taxes for federal and state
purposes at the corporate level.
(5) Reflects net income attributable to
noncontrolling interest adjusted
for noncontrolling interest's
share of interest, taxes, income,
and depreciation and amortization.
(6) Changes in working capital exclude
those items not impacting Adjusted
EBITDA, such as changes in
interest payable and income taxes
payable.
(7) Estimated distributions assumes
distributions are held constant at
$0.40 per unit each quarter.
(8) 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.
(9) 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.
