Suncoke energy, inc. announces third quarter 2016 results
Lisle, ill.--(business wire)--suncoke energy, inc. (nyse: sxc) today reported results for the third quarter 2016, which reflect consistent consolidated operating results versus the prior year period. “our third quarter results are in line with expectations and we are most pleased with the continued cost discipline at indiana harbor as well as the sustained cost savings achieved following the divestiture of our former coal mining operation," said fritz henderson, chairman, president and chief executive officer of suncoke energy, inc. the company continues to navigate through market developments and execute its de-levering objectives. in the quarter, suncoke reduced total debt outstanding by approximately $25 million. furthermore, the company is pleased that both of its major convent marine terminal ("cmt") customers recently reached resolution with each of their respective lending groups. in addition, as announced earlier this week, convent is expanding into a new line of business by piloting domestic-facing thermal coal volumes through the terminal on a merchant basis. the company also reaffirms its full-year outlook for 2016 consolidated adjusted ebitda of $210 million to $235 million. henderson added, "through three quarters, we are in position to deliver on our commitments to shareholders and remain flexible and responsive to the changing steel and coal market industry conditions." third quarter consolidated results(1) (dollars in millions) increase/(decrease) revenues declined $43.0 million to $293.9 million in third quarter 2016 compared with the same prior year period, primarily reflecting the pass-through of lower coal costs as well as lower sales volumes. net income attributable to sxc was $6.1 million, or $0.10 per share, compared to the prior year period net loss attributable to sxc of $23.5 million, or $0.36 per share. the increase was primarily due to the absence of a $19.4 million, or $0.30 per share, impairment of our equity method investment in visa suncoke in the prior year period as well as fair value adjustments to our contingent consideration obligation in the current year period. adjusted ebitda increased $0.3 million to $49.4 million, primarily due to lower corporate costs as well as lower operational costs in our coal mining segment, resulting from the divestiture of the business, and at our indiana harbor cokemaking facility. these savings were mostly offset by the impact of scheduled outages in the current year period as well as lower sales volumes in both our cokemaking and logistics operations. as a reminder, adjusted ebitda results exclude coal logistics deferred revenue until it is recognized as gaap revenue, which is at the end of the annual contract period, or typically in the fourth quarter of each year. 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. (dollars in millions, except per ton amounts) increase/(decrease) revenues were affected by both the pass-through of lower coal prices and a decrease in sales volume of 43 thousand tons, primarily due to lower production at indiana harbor and the impact of customer volume accommodations at haverhill. the impact of customer volume accommodations on adjusted ebitda was mitigated by make-whole payments from ak steel. adjusted ebitda decreased $3.8 million, reflecting lower coke sales volumes and lower energy sales due to scheduled outages. additionally, the current year period included $1.0 million of coal transportation charges, which were transferred to our domestic coke segment as a result of the divestiture of our coal mining business. these impacts were partially offset by lower operating and maintenance spending at indiana harbor of $3.6 million as compared to the same prior year period. coal logistics coal logistics consists of the coal handling and mixing services operated by sxcp at 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. drt was formed to accommodate jewell in its direct procurement of third-party coal, beginning in 2016. the current and prior year periods are not comparable due to the contribution of cmt, which was acquired on august 12, 2015, and drt, which was constructed in early 2016. (dollars in millions, except per ton amounts) increase/(decrease) revenues were down $1.5 million, driven by lower volumes at krt and lake terminal, partly offset by a $1.0 million contribution of drt as well as a full quarter of cmt results, which contributed $1.3 million more revenues as compared to the prior year period. adjusted ebitda was down $2.0 million, primarily driven by a the lower volumes discussed above. despite a full quarter of operations, adjusted ebitda contributed by cmt was down slightly from the prior year, driven by a full quarter of operating costs on only slightly higher volumes. as a reminder, adjusted ebitda results exclude coal logistics deferred revenue until it is recognized as gaap revenue, which is at the end of the annual contract period, or typically in the fourth quarter of each year. brazil coke brazil coke consists of a cokemaking facility in vitÓria, brazil, which we operate for an affiliate of arcelormittal. brazil coke earns operating and technology licensing fees based on production and recognizes a dividend on a preferred stock investment assuming certain minimum production levels are achieved. adjusted ebitda of $3.2 million was comparable to the prior year period. coal mining in april 2016, the company divested substantially all of its coal mining business to revelation energy, llc. adjusted ebitda was a loss of $0.6 million in the current year period compared to a loss of $4.9 million in the prior year period. the improved results reflect lower operating costs due to the divestiture of the business, as well as a shift of $1.0 million of coal transportation costs to our domestic coke segment. corporate and other corporate and other expenses, including legacy costs, were $12.6 million in third quarter 2016, an improvement of $2.0 million versus third quarter 2015, driven by charges incurred in the prior year period of $2.2 million for severance costs and $2.2 million for acquisition and business development costs. these improvements were partially offset by current period mark-to-market adjustments in deferred compensation caused by increases in the company's share price and the partnership's unit price as well as costs to resolve certain legal matters in the current year period. 2016 outlook our 2016 guidance is as follows: domestic coke production is expected to be between 4.0 million and 4.1 million tons consolidated adjusted ebitda is expected to be between $210 million and $235 million adjusted ebitda attributable to sxc is expected to be between $105 million and $124 million, reflecting the impact of public ownership in sxcp capital expenditures are projected to be approximately $45 million cash generated by operations is estimated to be between $150 million and $170 million cash taxes are projected to be between $4 million and $9 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 1-877-201-0168 in the u.s. or 1-647-788-4901 if outside the u.s., confirmation code 89766307. 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, 2016, we owned the general partner of the partnership, which consists of a 2.0 percent ownership interest and incentive distribution rights, and owned a 53.9 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, (gain) loss 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, the expiration of certain acquired contractual obligations, and interest, taxes, depreciation and amortization and impairments attributable to our equity method investment. 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. legacy costs include costs associated with former mining employee-related liabilities net of certain royalty revenues. 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. the following tables set forth financial and operating data for the three and nine months ended september 30, 2016 and 2015: adjusted ebitda attributable to noncontrolling interests(4)
