Suncoke energy partners, l.p. announces strong first quarter 2016
results
Lisle, ill.--(business wire)--suncoke energy partners, l.p. (nyse: sxcp) today reported first quarter 2016 net income attributable to sxcp of $39.8 million as compared to $12.6 million in the same prior year period. the quarter's results are primarily driven by the benefit of the convent marine terminal acquisition and a gain on the extinguishment of debt we recognized from our de-levering activities. "our cokemaking and coal logistics assets posted another strong performance in the first quarter, and continue to perform in line with expectations," said fritz henderson, chairman, president and chief executive officer of suncoke energy partners, l.p. "as we demonstrated this quarter, we will continue to remain flexible and responsive to the evolving industry landscape while working to optimize asset performance." henderson added, “we are also pleased with our continued progress towards strengthening sxcp's balance sheet as we deploy the steady cash flows generated from our take-or-pay contracts towards repurchasing debt, and expect to continue meaningfully de-levering throughout the balance of the year.” the company reaffirmed its full year outlook for 2016 adjusted ebitda attributable to suncoke energy partners of $207 million to $217 million. sxcp also reaffirmed its 2016 distributable cash flow guidance of $158 million to $172 million, which includes the assumed benefit of a full year of sponsor support. first quarter results(1) (dollars in millions) increase/(decrease) revenues were $194.5 million in first quarter 2016, a decline of $8.8 million from the same prior year period. the decline was primarily due to the pass-through of lower coal costs in our domestic coke segment, partially offset by $7.7 million of revenue generated by our convent marine terminal ("cmt"), which was acquired in august of 2015. operating income decreased $0.5 million while adjusted ebitda increased $9.1 million, respectively. first quarter 2016 results were positively impacted by contributions from cmt, which increased adjusted ebitda by $13.0 million. this increase was partially offset by lower steam revenue as a result of the reorganization of haverhill chemicals llc, whom we previously supplied steam. net income attributable to sxcp was $39.8 million, an increase of $27.2 million from the same prior year period, primarily driven by $20.4 million of gains on extinguishment of debt recognized during the first quarter 2016, as well as the items discussed above. first quarter segment information domestic coke domestic coke segment consists of our 98 percent interest in the haverhill, middletown and granite city cokemaking facilities, located in franklin furnace and middletown, ohio; and granite city, illinois, respectively. increase/(decrease) revenues were affected by the pass-through of lower coal prices. adjusted ebitda declined $2.2 million to $46.3 million in first quarter 2016, primarily due lower steam revenue as a result of the reorganization of haverhill chemicals llc, whom we previously supplied steam. 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, in and kanawha river terminals, llc, which has terminals along the ohio, big sandy and kanawha rivers in west virginia and kentucky. the current and prior year periods are not comparable due to the contribution of cmt, which was acquired on august 12, 2015. (dollars in millions, except per ton amounts) increase/(decrease) revenues were up $5.3 million, driven by a $7.7 million contribution from cmt, partially offset by lower volumes at kanawha river terminals, llc. adjusted ebitda was up $12.5 million, driven by a $13.0 million contribution from cmt. cmt handled 945 thousand tons during the period. corporate and other corporate and other costs increased $1.2 million primarily due to a higher allocation of costs from suncoke. interest expense, net interest expense, net, increased slightly to $12.5 million in first quarter 2016, resulting from $3.3 million of interest on higher debt balances, offset by interest savings resulting from our debt repurchase activities. related communications we will host an investor conference call at 10:00 a.m. eastern time (9:00 a.m. central time) today. this 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 82968629. upcoming events additionally, we plan to participate in the following events: clarksons platou securities mining and shipping roundtable, may 13, 2016, new york city, ny suncoke energy partners, l.p. suncoke energy partners, l.p. (nyse: sxcp) is a publicly traded master limited partnership that manufactures high-quality coke used in the blast furnace production of steel and provides export and domestic coal handling services to the coke, coal, steel and power industries. in our cokemaking business, we utilize an innovative heat-recovery technology that captures excess heat for steam or electrical power generation and have long-term, take-or-pay coke contracts that pass through commodity and certain operating costs. our coal handling terminals have the collective capacity to blend and transload more than 45 million tons of coal each year and are strategically located to reach gulf coast, east coast, great lakes and international ports. sxcp’s general partner is a wholly owned subsidiary of suncoke energy, inc. (nyse: sxc), which has more than 50 years of cokemaking experience serving the integrated steel industry. to learn more about suncoke energy partners, l.p., visit our website at www.suncoke.com. definitions adjusted ebitda represents earnings before interest, (gain) loss on extinguishment of debt, taxes, depreciation and amortization, adjusted for coal logistics deferred revenue and changes to our contingent consideration liability related to our acquisition of the cmt. coal logistics deferred revenue adjusts for coal and liquid tons the partnership did not handle, but are included in adjusted ebitda as the associated take-or-pay fees are billed to the customer. deferred revenue on take-or-pay contracts is recognized into gaap income annually based on the terms of the contract. adjusted ebitda does not represent and should not be considered an alternative 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 partnership'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 an alternative to net income, operating cash flow or any other measure of financial performance presented in accordance with gaap. adjusted ebitda attributable to 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 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 and includes capital expenditures included in working capital at the end of the period. 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.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 months ended march 31, 2016 and 2015:
