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26.10.2017 12:45:00
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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/( | ||||||||
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/( | ||||||||
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/( | ||||||||
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 | |||||||||||||||
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 | ||||||||
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 | ||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
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 | |||||||||||||||
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 | ||||||||
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. |
View original content with multimedia:http://www.prnewswire.com/news-releases/suncoke-energy-inc-announces-strongest-quarterly-operating-performance-in-three-years-with-third-quarter-2017-results-300543690.html
SOURCE SunCoke Energy, Inc.
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