SunCoke Energy Partners LP (NYSE: SXCP) on Jan. 28 reported fourth quarter 2015 net income attributable to SXCP of $36.3 million, an increase of $14.9 million from fourth quarter 2014.
Full-year 2015 net income attributable to SXCP was $85.4 million, an increase of $29.4 million from full-year 2014. Both current year periods benefited from the Convent Marine Terminal acquisition and higher ownership interest in its cokemaking facilities. Convent is a coal transfer terminal on the Mississippi River.
“Despite the prolonged macro and industry-specific challenges impacting the steel and coal markets throughout 2015, we continued to generate consistent cash flows underpinned by a competitive coal logistics and cokemaking asset base and backed by our long-term, take-or-pay contract business model,” said Fritz Henderson, President, Chairman and Chief Executive Officer of SunCoke Energy Partners. “In the past year, we expanded our operating portfolio with the Convent Marine Terminal acquisition and the dropdown transactions for 98 percent interest in our Granite City cokemaking facility, and successfully delivered against our full-year Adjusted EBITDA and Distributable Cash Flow guidance.”
The fourth quarter and full-year revenues declined $6.5 million and $34.5 million, respectively, to $217.4 million and $838.5 million, respectively. While the company continues to achieve contract maximums, volumes in excess of maximums as well as spot sales have decreased in 2015 as compared to the prior year periods. Additionally, the declines in both the fourth quarter and full-year 2015 were due to the pass-through of lower coal costs and the impact of the reorganization of the Haverhill Chemicals LLC facility in Ohio. These decreases were partly offset by the contribution of Convent Marine Terminal, which was acquired in August 2015.
Operating income and Adjusted EBITDA increased to $40.5 million and $56.9 million, respectively, in fourth quarter 2015. Full-year 2015 operating income and Adjusted EBITDA were up $2.1 million and $12.8 million to $137.2 million and $201.7 million, respectively. The fourth quarter and full-year 2015 increases were primarily due to contributions from CMT, partly offset by lower sales volumes and the impact of the reorganization of the Haverhill Chemicals facility.
The Domestic Coke segment consists of a 98% interest in the Haverhill, Middletown and Granite City cokemaking facilities, located in Franklin Furnace and Middletown, Ohio; and Granite City, Illinois, respectively. This segment sold 613,000 tons of coke in the fourth quarter of 2015, against 648,000 tons in the same period in 2014.
The Coal Logistics segment consists of the coal handling and blending services operated by SXCP at CMT located on the Mississippi River in Louisiana, Lake Terminal in East Chicago, Indiana, 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 impact of CMT, which was acquired on August 12, 2015. That segment handled 5.555 million tons of coal in the fourth quarter of 2015, against 4.301 million tons in the year-ago quarter.
SunCoke Energy Partners 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. The 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.
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SunCoke Energy Inc. on Jan. 28 separately reported fourth quarter net income attributable to SXC of $19.0 million. Full-year 2015 net loss attributable to SXC was $22.0 million, an improvement of $104.1 million versus the same prior year period primarily due to impairment charges on the Coal Mining and India Coke segments taken during the second and fourth quarters of 2014.
“While 2015 was a challenging year across the steel and coal industries, we achieved our revised financial guidance and remain confident in our underlying business model and the value we provide to each of our customers,” said Fritz Henderson, President, Chairman and Chief Executive Officer of SunCoke Energy Inc. “In 2015, we expanded our Coal Logistics platform, implemented a more holistic approach to stabilizing Indiana Harbor, further streamlined our corporate overhead and executed our capital allocation strategy.”
Looking forward, the company expects 2016 Consolidated Adjusted EBITDA to be between $210 million and $235 million. This outlook reflects its view for sustained performance in the Domestic Coke and Coal Logistics businesses coupled with the full-year benefit of the Convent acquisition and improvement at the Indiana Harbor cokemaking facility.
Total revenues from operations were $353.6 million and $1,362.7 million in fourth quarter and full-year 2015, respectively, a decrease of $41.4 million and $141.1 million, respectively, compared with the same prior year periods. Excluding Indiana Harbor, the company continues to achieve contract maximums, but volumes in excess of maximums as well as spot sales were lower in 2015 as compared to the prior year periods. Also, these decreases in revenue reflect the pass-through of lower coal prices and lower coal-to-coke yields in the Domestic Coke business. These impacts were partly offset by extra revenue from the Convent Marine Terminal, which was acquired in August 2015 and contributed revenues of $22.9 million and $28.6 million to the fourth quarter and full-year 2015, respectively.
Operating income was $24.8 million and $79.8 million in the fourth quarter and full-year 2015, respectively, compared to an operating loss of $21.6 million and $62.4 million in the same prior year periods, which included non-cash impairment charges for the coal mining business of $30.8 million and $150.3 million, respectively. Additionally, the current year periods benefited from lower severance charges as compared to the same prior year periods, which included charges related to the coal mining operations.
The Coal Mining segment consists of metallurgical coal mining activities conducted in Virginia and West Virginia, currently mined by contractors. A majority of the metallurgical coal produced by the coal mining business is sold to SunCoke’s Jewell Coke facility for conversion into coke. The company in the last couple of years has been unable to sell the coal operations.
The company’s 2016 guidance is:
- Domestic coke production is expected to be approximately 4.1 million tons;
- Consolidated Adjusted EBITDA is expected to be between $210 million and $235 million;
- Adjusted EBITDA attributable to SXC is expected to be between $105 million and $124 million, reflecting the impact of public ownership in SXCP;
- Capital expenditures are projected to be approximately $45 million;
- Cash generated by operations is estimated to be between $150 million and $170 million; and
- Cash taxes are projected to be between $4 million and $9 million.
SunCoke Energy Inc. supplies high-quality coke to the integrated steel industry under long-term, take-or-pay contracts that pass through commodity and certain operating costs to customers. It is the sponsor of SunCoke Energy Partners, holding a 2% general partner interest, 53% limited partnership interest and all of the incentive distribution rights.