Suncoke energy, inc. reports fourth quarter 2013 results
Lisle, ill.--(business wire)--suncoke energy, inc. (nyse: sxc) today reported fourth quarter 2013 net income attributable to shareholders of $11.0 million, or $0.16 per diluted share, down from $27.6 million, or $0.39 per diluted share, from fourth quarter 2012. full year 2013 net income attributable to shareholders of $25.0 million, or $0.36 per diluted share, is down $73.8 million, or $1.04 per share, from prior year. "despite a weak fourth quarter, we achieved our 2013 earnings targets during a year that was challenging on many fronts," said fritz henderson, chairman and chief executive officer of suncoke energy, inc. "the same factors affected fourth quarter as affected the full year, including the current weak coal price environment and lower than expected results at our indiana harbor cokemaking facility due to the ongoing refurbishment effort. while these factors pressured results, there were several positives in the fourth quarter that we believe will continue into 2014, including sustained solid results across the rest of our cokemaking fleet, significantly lower per ton production costs in our coal mining business, the contribution of our new coal logistics segment and the benefit of our renewed contract at indiana harbor." henderson continued, "looking ahead, we are currently evaluating the potential of dropping down our entire domestic coke business into sxcp over time and assessing strategic options for our coal business. we are in the early stages of this analysis and plan to provide an update on these initiatives in march.” consolidated results december 31, (1) see definition of adjusted ebitda and reconciliation elsewhere in this release. total revenues were down 18.7 percent to $399.6 million and 13.9 percent to $1,647.7 million in fourth quarter 2013 and full year 2013, respectively. the reduction in both periods reflects the pass-through of lower coal prices and lower coke sales volumes in our cokemaking business and declines in average coal sales price in our coal mining segment of $48 per ton in fourth quarter 2013 and $49 per ton in full year 2013, partly offset by higher sales volumes. operating income declined 30.2 percent to $30.9 million in fourth quarter 2013 and 35.9 percent to $111.3 million for full year 2013. adjusted ebitda declined 14.3 percent to $59.7 million in fourth quarter 2013 and 19.0 percent to $215.1 million for full year 2013. the operating income and adjusted ebitda declines in the quarter and year were primarily due to lower performance in our coal mining segment and indiana harbor cokemaking facility, which is undergoing a significant refurbishment. in addition, operating income was impacted by $0.5 million and $9.6 million of accelerated depreciation due to the refurbishment at indiana harbor for the quarter and year, respectively. net income attributable to shareholders was $11.0 million in fourth quarter 2013, a reduction of $16.6 million versus the same prior year period. for full year 2013, net income attributable to shareholders was $25.0 million, down $73.8 million versus full year 2012. factors impacting net income for both periods include weak coal mining segment performance, the attribution of income to sxcp's public unit holders and lower results at indiana harbor. 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. beginning in first quarter 2013, the company combined its jewell coke and other domestic coke segments into one segment called domestic coke due to the similarities of operations and contracts between the two segments. prior year periods have been adjusted to reflect this change. (1) see definitions of adjusted ebitda and adjusted ebitda per ton and reconciliations elsewhere in this release. segment revenues in the fourth quarter 2013 were affected by the pass-through of lower coal costs and lower coke sales volumes. the lower coke sales volumes primarily reflects lower production at indiana harbor due to the refurbishment effort currently underway. segment adjusted ebitda decline of $5.9 million was driven by $9.0 million of lower performance at indiana harbor and a $2.5 million accrual related to a customer coke quality claim, partly offset by $5.6 million improvement across the rest of our coke fleet. results at indiana harbor were impacted by higher costs and lower volumes due to the refurbishment project, which more than offset the higher fee per ton of coke sold we earned as a result of our 10 - year contract extension. in addition, indiana harbor suffered from an unfavorable comparison to prior year which benefited from a $4.2 million billing settlement. brazil coke formerly named international coke, our brazil coke segment consists of a cokemaking facility in vitÓria, brazil, which we operate for a brazilian affiliate of arcelormittal. brazil coke earns operating and technology licensing fees based on production and recognizes a dividend on its preferred stock investment assuming certain minimum production levels are achieved at the facility. segment adjusted ebitda increased $1.2 million to $11.4 million due to favorable comparison to prior year, which included a higher allocation of corporate costs. india coke india coke consists of our 49 percent interest in visa suncoke, a joint venture with visa steel launched on march 18, 2013. visa suncoke produces coke for the indian merchant market and owns a 440 thousand ton cokemaking facility and associated steam generation unit located 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 in fourth quarter was $2.2 million on total coke sales of approximately 53 thousand tons, representing our share of total coke sales of approximately 108 thousand tons. adjusted ebitda per ton was nearly $42 per ton and included a positive currency exchange impact of $17 per ton. india coke recognized $0.3 million of income from equity method investment reflecting our share of earnings, depreciation, interest expense and taxes attributable to the venture. coal mining coal mining consists of our metallurgical coal mining activities conducted in virginia and west virginia. a substantial portion of the metallurgical coal produced by our coal mining operations is sold to our jewell coke segment for conversion into coke. increase/(decrease) (1) includes sales to affiliates. (2) see definitions of adjusted ebitda, adjusted ebitda per ton and reconciliations elsewhere in this release. (3) includes production from company and contract-operated mines. total coal mining revenues (including sales to affiliates) was down as a result of a $48 per ton decline in average coal sales price, partly offset by higher volumes. excluding sales to affiliates, segment revenues were relatively flat on similar volumes. adjusted ebitda was negatively impacted by lower average coal sales price, a $2.3 million inventory mark-to-market impact and a $1.0 million increase in black lung liability costs. partly offsetting this was approximately a $10 per ton reduction in cash production costs. coal logistics the coal logistics segment consists of the coal handling and blending services operated by sxcp as result of its acquisition of lakeshore coal handling corporation (lake terminal) in third quarter 2013 and kanawha river terminals, llc (krt) in fourth quarter 2013. sxcp's coal handling and blending terminals are located in east chicago, indiana and along the ohio, big sandy and kanawha rivers in west virginia and kentucky. the coal logistics segment contributed $4.0 million to adjusted ebitda on 3,649 thousand tons of coal handled in fourth quarter 2013. corporate and other corporate expenses in fourth quarter 2013 were $5.5 million, down $3.4 million versus fourth quarter 2012, reflecting a favorable black lung liability adjustment and a payment related to a 2012 settlement of certain litigation, partly offset by sxcp public company costs and fair market adjustment on certain lease expense. financing expense, net net financing expense was relatively flat in fourth quarter 2013 at $12.3 million. cash flow net cash provided by operations was $151.3 million for the full year 2013, down $54.8 million versus 2012, reflecting lower net income. cash used in investing activities was $326.6 million for the full year 2013 as compared with $84.1 million in 2012. the increase in spending was driven by the acquisitions of lake terminal and krt, the refurbishment spending at indiana harbor and our investment in our visa suncoke joint venture. 2014 outlook our 2014 guidance is as follows: domestic coke production is expected to be approximately 4.3 million tons coal production is projected to be approximately 1.3 million tons adjusted ebitda is expected to be between $230 million and $255 million on a consolidated basis. adjusted ebitda attributable to sxc is expected to be between $183 million and $203 million, reflecting the impact of public ownership in sxcp earnings per diluted share attributable to sxc is expected to be between $0.35 and $0.60 per diluted share, reflecting the impact of public ownership in sxcp cash generated by operations is expected to be approximately $170 million capital expenditures are projected to be $117 million. approximately $36 million of the projected 2014 capital expenditures were pre-funded with the proceeds from sxcp's initial public offering in january 2013 the effective tax rate for the full year 2014 is expected to be between 20 percent and 26 percent, and the cash tax rate is expected to be between 10 percent and 18 percent related communications we will host a investor conference call today at 11:30 a.m. eastern time (10:30 a.m. central time). this conference call will be webcast live and archived for replay on the investor relations section of www.suncoke.com. participants can listen in by dialing 1-800-471-6718 (domestic) or 1-630-691-2735 (international) and referencing confirmation 36415304. please log in or dial in at least 10 minutes prior to the start time to ensure a connection. a replay of the call will be available for two weeks by calling 1-888-843-7419 (domestic) or 1-630-652-3042 (international) and referencing confirmation 3641 5304#. upcoming events our senior management team will host a joint investor day with sxcp on tuesday, march 11, 2014 at the new york stock exchange. registration for investor day will open the week of february 3, 2014. presentations will be webcast live and archived for replay for a limited time in the investor relations section of the company's website at www.suncoke.com. in addition, we will participate in the bb&t commercial and industrial conference in miami, fl on march 27, 2014. suncoke energy, inc. suncoke energy, inc. is the largest independent producer of coke in the americas, with 50 years of experience supplying coke to the integrated steel industry. our advanced, heat-recovery cokemaking process produces high-quality coke for use in steelmaking, typically captures waste heat for derivative energy resale and meets or exceeds environmental standards. our u.s. cokemaking facilities are located in virginia, indiana, ohio and illinois. outside the u.s., we have cokemaking operations in vitoria, brazil and odisha, india. our coal mining operations, which have more than 110 million tons of proven and probable reserves, are located in virginia and west virginia. in addition, through our 58 percent ownership of sxcp, we have an interest in sxcp's coal logistics business which have the collective capacity to blend and transload more than 30 million tons of coal annually. 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 sales discounts and the interest, taxes, depreciation, depletion and amortization attributable to our equity method investment. 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. 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 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 company'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 equals adjusted ebitda less adjusted ebitda attributable to noncontrolling interests. adjusted ebitda per ton represents adjusted ebitda divided by tons sold. 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 the company) 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 the company, 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 the company; and changes in tax, environmental and other laws and regulations applicable to the company’s businesses. forward-looking statements are not guarantees of future performance, but are based upon the current knowledge, beliefs and expectations of company management, and upon assumptions by the company 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. the company 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, the company 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 the company. for information concerning these factors, see the company’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 the company’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. three months endeddecember 31, december 31, income before income tax expense and income from equity method investment (dollars in millions, except per share amounts) preferred stock, $0.01 par value. authorized 50,000,000 shares; no issued and outstanding shares at december 31, 2013 and 2012 common stock, $0.01 par value. authorized 300,000,000 shares; issued and outstanding 69,636,785 shares and 69,988,728 shares at december 31, 2013 and december 31, 2012, respectively treasury stock, 1,255,355 shares and 603,528 shares at december 31, 2013 and 2012, respectively adjustments to reconcile net income to net cash provided by operating activities: changes in working capital pertaining to operating activities (net of acquisitions): proceeds from issuance of common units of suncoke energy partners, l.p. the following tables set forth the sales and other operating revenues and adjusted ebitda(1) of our segments and operating data for the three and twelve months ended december 31, 2013 and 2012: december 31, estimated 2014 adjusted ebitda to estimated net income
