Suncoke energy partners, l.p. reports solid fourth quarter 2014
results
Lisle, ill.--(business wire)--suncoke energy partners, l.p. (nyse: sxcp) today reported fourth quarter 2014 net income attributable to sxcp of $21.4 million, an increase of $4.1 million from fourth quarter 2013. full year 2014 net income attributable to sxcp/predecessor was $56.0 million, a decrease of $6.1 million from full year 2013. both current year periods benefited from higher ownership interest in the haverhill and middletown facilities. full year 2014 results included incremental financing costs associated with the may dropdown as well as the contribution of our coal logistics business. “in 2014, we significantly grew distributable cash flow largely as a result of our increased ownership interest in the haverhill and middletown cokemaking facilities and new coal logistics business,” said fritz henderson, chairman and chief executive officer of suncoke energy partners, l.p. “this drove a 14 percent increase in cash distributions per unit year-over-year - well above our 8 to 10 percent annual cash distribution growth target. looking ahead, the recent acquisition of a 75 percent interest in our sponsor’s granite city cokemaking facility is expected to benefit distributable cash flow by approximately $12 million in 2015 and support our goal to increase cash distributions per unit by 2 percent every quarter in 2015.” 2014 consolidated results three months ended december 31, years ended december 31, revenues declined 3.0 percent in fourth quarter 2014 to $167.6 million and 5.7 percent to $648.4 million for full year 2014 versus the same respective prior year periods. the decline in fourth quarter 2014 was due primarily to the pass-through of lower coal prices partly offset by higher volumes in coke. the decline for full year 2014 is attributable to the pass-through of lower coal prices and lower coke sales volumes, offset by the full year contribution of our coal logistics segment. operating income and adjusted ebitda declined to $29.2 million and $39.7 million, respectively, in fourth quarter 2014, due to higher operating expenses. for full year 2014, operating income and adjusted ebitda was down 10.5 percent and 3.0 percent to $110.0 million and $150.6 million, respectively. the full year 2014 decreases were primarily due to lower coal-to-coke yields and lower volumes at the haverhill facility. adjusted ebitda attributable to sxcp/predecessor increased to $38.9 million in fourth quarter 2014 and $130.9 million for full year 2014, reflecting our increased ownership interest in the haverhill and middletown cokemaking facilities as a result of the dropdown transaction in may 2014. fourth quarter 2014 net income attributable to sxcp/predecessor was $21.4 million versus $17.3 million in the prior year period, benefiting from increased ownership interest in our cokemaking facilities, offset by higher financing charges associated with the may 2014 dropdown transaction. full year 2014 net income attributable to sxcp/predecessor was $56.0 million, down from $62.1 million in full year 2013. the decline in net income was primarily driven by debt extinguishment costs and bond tender premium of $15.4 million as well as higher interest expense. additionally, depreciation and amortization expense increased to $7.6 million related to our new coal logistics business. these decreases were partially offset by additional income obtained as a result of the increased ownership interest. fourth quarter segment information domestic coke domestic coke segment consists of our interest in the haverhill and middletown cokemaking facilities, located in franklin furnace and middletown, ohio, respectively. effective may 9, 2014, we acquired an additional 33 percent interest in these facilities increasing our ownership interest from 65 percent to 98 percent. adjusted ebitda, which is reported on a 100 percent ownership basis, was $37.8 million, comparable with the same prior year period. coal logistics the coal logistics segment was formed as a result of our acquisitions of lake terminal in third quarter 2013 and kanawha river terminals, llc (krt) in fourth quarter 2013. coal logistics results three months ended december 31, coal logistics handled 4,301 thousand tons of coal, generating $3.4 million of adjusted ebitda in fourth quarter 2014. tons handled and adjusted ebitda in fourth quarter 2013 was 3,649 thousand and $4.0 million, respectively. corporate and other corporate and other costs of $1.5 million in fourth quarter 2014 were relatively consistent with the same prior year period. cash distributions on january 26, 2015, the board of directors of sxcp's general partner declared a quarterly cash distribution of $0.5408 per unit, up 2.5 percent versus the third quarter 2014 cash distribution and 14 percent versus the same prior year period. this distribution will be paid on february 27, 2015, to unitholders of record on february 13, 2015. related communications we will host an investor conference call today at 10:00 a.m. eastern time (9:00 a.m. central time). investors may participate on this call by dialing 1-800-446-2782 in the u.s. or 1-847-413-3235 if outside the u.s., confirmation code 38744444. this conference call will be webcast live and archived for replay in the investor relations section of www.sxcpartners.com. upcoming events we plan to participate in the following investor conferences: barclays select series 2015: mlp corporate access day on march 3-4, 2015 in new york, ny bb&t’s 9th annual commercial & industrial conference on march 25-26, 2015 in miami, fl notice this statement is intended to serve as qualified notice to nominees as provided for under treasury regulation section 1.1446-4(b)(4) and (d) given by a publicly traded partnership for the nominee to be treated as a withholding agent. please note that sxcp's quarterly cash distributions are treated as partnership distributions for federal income tax purposes and that 100 percent of these distributions to foreign investors are attributable to income that is effectively connected with a united states trade or business. accordingly, all of sxcp's distributions to a nominee on behalf of foreign investors are subject to federal income tax withholding at the highest marginal tax rate for individuals or corporations, as applicable. nominees, and not sxcp, are treated as the withholding agents responsible for withholding on the distributions received by them on behalf of foreign investors. about suncoke energy partners, l.p. suncoke energy partners, l.p. (nyse: sxcp) is a publicly-traded master limited partnership that manufactures coke used in the blast furnace production of steel and provides coal handling services to the coke, steel and power industries. our advanced, heat recovery cokemaking process produces consistently high-quality coke, captures waste heat to generate steam or electricity, and reduces environmental impacts. our coal handling terminals have the collective capacity to blend and transload more than 30 million tons of coal annually and are strategically located to enable material delivery to u.s. ports in the gulf coast, east coast and great lakes. our general partner is a wholly owned subsidiary of suncoke energy, inc. (nyse: sxc), the largest independent producer of coke in the americas, with 50 years of cokemaking experience and an international reputation for leadership, innovation and environmental stewardship in our industry. definitions adjusted ebitda represents earnings before interest, taxes, depreciation and amortization (“ebitda”) adjusted for sales discounts. prior the to expiration of our nonconventional fuel tax credits in june 2012, ebitda reflects sales discounts included as a reduction in sales and other operating revenue. the sales discounts represent the sharing with customers of a portion of nonconventional fuel tax credits, which reduce our income tax expense. however, we believe our adjusted ebitda would be inappropriately penalized if these discounts were treated as a reduction of ebitda since they represent sharing of a tax benefit that is not included in ebitda. accordingly, in computing adjusted ebitda, we have added back these sales discounts. 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 of sxcp'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 adjusted ebitda less adjusted ebitda attributable to noncontrolling interests. distributable cash flow equals adjusted ebitda 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. 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. 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.sxcpartners.com. all forward-looking statements included in this press release are expressly qualified in their entirety by such cautionary statements. unpredictable or unknown factors not discussed in this release also could have material adverse effects on forward-looking statements. suncoke energy partners, l.p. combined and consolidated statements of income suncoke energy partners, l.p. consolidated balance sheets suncoke energy partners, l.p. combined and consolidated statements of cash flows suncoke energy partners, l.p. segment operating data (unaudited) adjusted ebitda(1): suncoke energy partners, l.p. reconciliations of non-gaap information adjusted ebitda to net income suncoke energy partners, l.p. reconciliations of non-gaap information reconciliation of adjusted ebitda and distributable cash flow to net income december 31, 2014 (proforma adjustment)
