Suncoke energy, inc. announces first quarter 2015 results and
reaffirms full year guidance
Lisle, ill.--(business wire)--suncoke energy, inc. (nyse: sxc) today reported a first quarter 2015 loss from continuing operations attributable to shareholders of $2.0 million, or $0.03 per share, as compared to a loss of $1.8 million, or $0.02 per share, in the same prior year period, as improvement in our cokemaking operations was offset by granite city dropdown transaction and financing costs. “anchored by our focus on operations, we delivered nearly a $10 million improvement in adjusted ebitda from continuing operations in the first quarter despite challenging winter weather,” said fritz henderson, chairman and chief executive officer of suncoke energy, inc. “our continued commitment to delivering strong operating performance across our business, underpinned by our long-term, take-or-pay coke contracts, supports our outlook to achieve our previously disclosed 2015 financial guidance. it also underscores our ability to continue to prudently return capital to shareholders as we recently did with the 28 percent increase to our quarterly cash dividend and through additional capital allocation initiatives we intend to pursue.” first quarter consolidated results total revenues from continuing operations declined $32.1 million to $320.4 million in first quarter 2015 compared with the same prior year period, reflecting the pass-through of lower coal costs in our domestic coke segment on relatively flat sales volumes. operating income from continuing operations and adjusted ebitda from continuing operations rose $13.9 million and $9.6 million, respectively, primarily due to better domestic coke coal-to-coke yields this winter and higher brazil volumes as compared to the same prior year period. in addition, lower corporate costs contributed to the increase in operating income and adjusted ebitda. loss from continuing operations attributable to sxc of $2.0 million in first quarter 2015 reflects the improvements noted above, offset by granite city dropdown transaction and financing costs. loss from discontinued operations, net of tax, and adjusted ebitda loss from discontinued operations was $2.0 million and $3.1 million in first quarter 2015, respectively. discontinued operations consists of our coal mining business. while we continue to pursue a strategic exit from our coal mining business, we are executing on our previously announced coal rationalization plan by implementing a contract mining model, eliminating positions and purchasing coal from third-party providers. first 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. segment revenues were affected by the pass-through of lower coal costs adjusted ebitda rose $5.9 million to $52.7 million due to improved coal-to-coke yields on relatively flat sales volumes 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. segment adjusted ebitda increased $2.4 million to $4.1 million driven by higher production india coke india coke consists of our 49 percent interest in our visa suncoke joint venture, which owns a 440 thousand ton cokemaking facility and associated steam generation unit in odisha, india. financial results for visa suncoke are recorded on a one-month lag and represent our 49 percent share of the joint venture's results. adjusted ebitda decreased $0.8 million to a loss of $0.7 million in first quarter 2015. import competition from china continues to depress coke pricing in india, resulting in weak margins coal logistics coal logistics consists of the coal handling and blending services operated by sxcp at lake terminal in east chicago, in, and kanawha river terminals, llc (krt), which has terminals along the ohio, big sandy, and kanawha rivers in west virginia and kentucky. coal logistics results three months ended march 31, adjusted ebitda increased $0.5 million reflecting higher margins caused by a shift in sales mix, partly offset by lower volume corporate and other corporate and other expenses in first quarter 2015 were $9.6 million, down $1.6 million versus first quarter 2014 primarily due to lower employee costs of $3.4 million as first quarter 2014 included higher overall headcount and corporate restructuring costs. lower employee costs in 2015 were partly offset by higher legal expenses. interest expense, net interest expense, net, increased $11.2 million to $23.3 million in first quarter 2015. of the $11.2 million increase, $9.4 million related to debt financing costs, which included a $7.7 million redemption premium and $1.7 million of debt extinguishment costs in connection with the granite city dropdown. cash flow cash provided by continuing operating activities was $26.6 million for first quarter 2015 compared to cash used in continuing operating activities of $4.7 million in the same respective period of 2014. the change primarily reflects working capital changes associated with lower receivables in the current period and the settlement of $13.1 million in sales discounts in first quarter 2014. cash used in continuing investing activities was $8.3 million for first quarter 2015 versus $37.5 million in the same respective period of 2014, which included refurbishment work at indiana harbor and higher environmental remediation capital expenditures. discontinued operations in july 2014, sxc's board of directors authorized the sale and/or disposition of our coal mining business. as a result, our coal mining operations are reflected as discontinued operations. prior periods have been reclassified to reflect discontinued operations and held-for-sale presentation. in first quarter 2015, discontinued operations recorded an after-tax loss of $2.0 million, or $0.03 per share, compared with an after-tax loss of $6.0 million, or $0.09 per share, in first quarter 2014. the improvement was driven by the absence of depreciation expense in the current year period as we ceased depreciation of coal mining assets in third quarter of 2014 in accordance with the presentation of discontinued operations. depreciation expense of $4.4 million was recorded in first quarter of 2014. dividends declared on april 20, 2015, our board of directors declared a quarterly cash dividend of $0.075 per share, up 28.2 percent versus the previous quarterly rate. this dividend will be paid on june 10, 2015 to stockholders of record at the close of business on may 5, 2015. 2015 outlook we reaffirm our 2015 guidance: domestic coke production is expected to be approximately 4.3 million tons domestic coke adjusted ebitda per ton is expected to be between $55 per ton and $60 per ton adjusted ebitda from continuing operations is expected to be between $225 million and $245 million consolidated adjusted ebitda including discontinued operations and legacy costs is expected to be between $190 million to $210 million adjusted ebitda attributable to sxc is expected to be between $115 million and $130 million, reflecting the impact of public ownership in sxcp capital expenditures are projected to be approximately $90 million cash generated by operations is estimated to be between $125 million and $145 million cash taxes are projected to be between $10 million and $15 million related communications today, we will host an investor conference call at 11:30 a.m. eastern time (10:30 a.m. central time). investors may participate in this call by dialing 1-800-446-2782 in the u.s. or 1-847-413-3235 if outside the u.s.; confirmation code 39310605. this conference call will be webcast live and archived for replay in the investor relations section of www.suncoke.com. upcoming events we plan to participate in the following conferences: sanford c. bernstein & co.’s industrials and basic materials summit, may 8, in new york city 2015 mlp investor conference held by the national association of publicly traded partnerships (naptp), may 21-22, in orlando, fla. suncoke energy, inc. suncoke energy, inc. (nyse: sxc) supplies high-quality coke to the integrated steel industry under long-term take-or-pay coke 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. our cokemaking facilities are located in illinois, indiana, ohio, virginia, brazil and india. we are the sponsor of suncoke energy partners, l.p. (nyse: sxcp), a publicly traded master limited partnership, holding a 2 percent general partner interest, 56 percent limited partnership interest and all of the incentive distribution rights. in addition, we own approximately 110 million tons of proven and probable coal reserves in virginia and west virginia. to learn more about suncoke energy, inc., visit our website at www.suncoke.com. definitions adjusted ebitda represents earnings before interest, taxes, depreciation, depletion and amortization (“ebitda”) adjusted for impairments, costs related to exiting our coal business, interest, taxes, depreciation and amortization attributable to our equity method investment. prior to the expiration of our nonconventional fuel tax credits in 2013, adjusted ebitda included an add-back of sales discounts related to the sharing of these credits with customers. any adjustments to these amounts subsequent to 2013 have been included in adjusted ebitda. our adjusted ebitda also includes ebitda 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 generally accepted accounting principles ("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 of the sxc's net assets and 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. adjusted ebitda is a measure of operating performance that is not defined by gaap, does not represent and should not be considered a substitute for net income as determined in accordance with gaap. calculations of adjusted ebitda may not be comparable to those reported by other companies. adjusted ebitda attributable to sxc/sxcp equals consolidated adjusted ebitda less adjusted ebitda attributable to noncontrolling interests. adjusted ebitda per ton represents adjusted ebitda divided by tons sold/handled. adjusted ebitda from continuing operations equals consolidated adjusted ebitda less adjusted ebitda from discontinued operations less legacy costs. adjusted ebitda from discontinued operations equals coal business adjusted ebitda excluding corporate cost allocation attributable to coal, costs related to exiting our coal business and certain retained coal-related costs reclassified as legacy costs. legacy costs equals royalty revenues, coal pension/other post-employment benefits, coal workers' compensation, black lung, prep. plant and certain other coal-related costs that we expect to retain after the sale of the coal business. 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. loss from discontinued operations, net of income tax benefit of $0.1 million and $3.0 million, for the three months ended march 31, 2015 and 2014, respectively the following tables set forth financial and operating data for the three months ended march 31, 2015 and 2014: below is a reconciliation of adjusted ebitda from discontinued operations (unaudited) to its closest gaap measure: the components of legacy (income) costs, net, were as follows: estimated 2015 consolidated adjusted ebitda to estimated net income
