SunCoke Energy Partners reports solid results after IPO

SunCoke Energy Partners LP (NYSE: SXCP), which was spun off from SunCoke Energy, on Oct. 25 reported third quarter 2013 net income attributable to SXCP of $13.7m.

Prior year net income of $17.4m is not comparable as prior year results are before the initial public offering of a 65% interest in SunCoke Energy’s (NYSE: SXC) Haverhill and Middletown cokemaking facilities in Ohio.

“Our commitment to creating value for unit holders is most directly demonstrated through increases to our cash distributions per unit,” said Fritz Henderson, Chairman and CEO of SXCP. “Since our initial public offering in January of this year, we have increased our distributions per unit twice on the strength of our operating performance. In addition, we recently completed two coal logistics acquisitions that we expect will support future distribution growth. As a result, we intend to raise our fourth quarter 2013 distribution to $0.4750, nearly a 10 percent increase over third quarter and 15 percent increase over our minimum quarterly distribution.”

Third quarter 2013 results are inclusive of one-month of performance at SXCP’s new Coal Logistics segment, which was formed upon the closing of the Lakeshore Coal Handling Corp. acquisition on Aug. 30.

Revenues were $162m in third quarter 2013, a decline of $33.2m from same prior year period due to the pass-through of lower coal prices and slightly lower coke sales volumes. The Coal Logistics business handled 136,000 tons of coal, generating $1.1m of revenues in third quarter 2013.

The company had coke production of 447,000 tons in the third quarter, against 452,000 tons in the year-ago quarter (when the operations were under SXC). Its coke production for the first nine months of this year was 1.34 million tons, against 1.32 million tons in the same nine-month period of 2012 (again under SXC).

Operating income and Adjusted EBITDA were relatively flat in third quarter at $27.4m and $35.7m, respectively. Operating income and Adjusted EBITDA benefited from higher operating cost recovery at the Middletown coke facility, hosted by coke customer AK Steel, and the new Coal Logistics segment, which added $0.7m to Adjusted EBITDA and benefited from higher than expected volumes and lower operating costs at Lake Terminal. Partly offsetting this were higher corporate costs primarily related to acquisition expenses, including $1.8m paid to DTE Energy in consideration for assigning its share of the Lake Terminal buy out rights to SXCP.

Pursuant to an omnibus agreement with Suncoke Energy (SXC), which is SXCP’s general partner, SXCP anticipates receiving make-whole payments from SXC as a result of temporarily trimming coke production at Middletown to the nameplate capacity level in the second half 2013 due to the customer’s unplanned blast furnace outage in late June 2013. These make-whole payments will be remitted to SXCP on a quarterly basis in second half 2013 based on actual production.

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. Its 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.

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.