Net income of SunCoke Energy Partners dips in Q2 2014

SunCoke Energy Partners LP (NYSE: SXCP) on July 24 reported second quarter 2014 net income attributable to SXCP of $1.2m, down from $15.8m, primarily due to $18.9m of pre-tax costs incurred in connection with the acquisition of an additional 33% interest in the Haverhill and Middletown cokemaking facilities in Ohio.

“In second quarter, we grew our business and increased distributable cash flow with the acquisition of an additional 33 percent interest in our Haverhill and Middletown cokemaking facilities,” said Fritz Henderson, Chairman and Chief Executive Officer of SXCP. “This action supported our ability to raise our cash distribution per unit to $0.5150, which marks our sixth consecutive quarterly increase since our initial public offering in January 2013. Today, our per unit distribution is 25 percent higher than our minimum quarterly per unit rate.”

Henderson continued: “While we trimmed our 2014 Adjusted EBITDA attributable to SXCP and distributable cash flow outlooks due to lower yields and production and higher costs in the first half, we continue believe we can drive an additional 5 percent increase in cash distributions per unit in 2014 and maintain a comfortable cash coverage ratio.”

Revenues were $160.7m in second quarter 2014, a decline of $7m from the same prior year period due to the pass-through of lower coal prices and lower coke sales volumes, partly offset by $14.3m of revenue generated by the new Coal Logistics business.

Operating income and Adjusted EBITDA fell $3m and $0.4m in second quarter 2014 to $26.4m and $36.6m, respectively, compared to strong prior year performance. These declines reflect lower coal-to-coke yields and higher costs in the cokemaking business, partly offset by the contribution of the new Coal Logistics business.

The Domestic Coke segment consists of the company’s interest in sponsor SunCoke Energy‘s Haverhill and Middletown cokemaking facilities, located in Franklin Furnace and Middletown, Ohio, respectively. Effective May 9, it acquired an additional 33% interest in these facilities increasing its ownership interest from 65% to 98%.

The Coal Logistics segment was formed as a result of acquisitions of Lake Terminal in third quarter 2013 and Kanawha River Terminals in fourth quarter 2013. Coal Logistics handled 5,605 thousand tons of coal, contributing $5.0 million to Adjusted EBITDA, in the second quarter.

Its Domestic Coke segment produced 434,000 tons in the second quarter, against 455,000 tons in the year-ago quarter.

SunCoke Energy Partners 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. Its General Partner is a wholly owned subsidiary of SunCoke Energy (NYSE: SXC), the largest independent producer of coke in the Americas.

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.