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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Suncoke Energy Partners, L.P. Common Units Representing Limited Partner Interests | NYSE:SXCP | NYSE | Ordinary Share |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 12.41 | 0.00 | 01:00:00 |
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ý
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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35-2451470
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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Item 1.
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Consolidated Financial Statements
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Three Months Ended June 30,
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Six Months Ended June 30,
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||||||||||||
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2017
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2016
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2017
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2016
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||||||||
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||||||||
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(Dollars and units in millions, except per unit amounts)
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||||||||||||||
Revenues
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||||||||
Sales and other operating revenue
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$
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200.6
|
|
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$
|
181.4
|
|
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$
|
396.2
|
|
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$
|
375.9
|
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Costs and operating expenses
|
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||||||||
Cost of products sold and operating expenses
|
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149.4
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128.6
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284.8
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262.8
|
|
||||
Selling, general and administrative expenses
|
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8.5
|
|
|
11.1
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|
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17.0
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|
|
19.5
|
|
||||
Depreciation and amortization expense
|
|
21.5
|
|
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20.5
|
|
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43.1
|
|
|
39.2
|
|
||||
Total costs and operating expenses
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|
179.4
|
|
|
160.2
|
|
|
344.9
|
|
|
321.5
|
|
||||
Operating income
|
|
21.2
|
|
|
21.2
|
|
|
51.3
|
|
|
54.4
|
|
||||
Interest expense, net
|
|
14.0
|
|
|
11.7
|
|
|
26.6
|
|
|
24.2
|
|
||||
Loss (gain) on extinguishment of debt
|
|
19.9
|
|
|
(3.5
|
)
|
|
19.9
|
|
|
(23.9
|
)
|
||||
(Loss) income before income tax (benefit) expense
|
|
(12.7
|
)
|
|
13.0
|
|
|
4.8
|
|
|
54.1
|
|
||||
Income tax (benefit) expense
|
|
(0.2
|
)
|
|
0.4
|
|
|
149.0
|
|
|
1.0
|
|
||||
Net (loss) income
|
|
(12.5
|
)
|
|
12.6
|
|
|
(144.2
|
)
|
|
53.1
|
|
||||
Less: Net income (loss) attributable to noncontrolling interests
|
|
0.4
|
|
|
0.5
|
|
|
(2.0
|
)
|
|
1.2
|
|
||||
Net (loss) income attributable to SunCoke Energy Partners, L.P.
|
|
$
|
(12.9
|
)
|
|
$
|
12.1
|
|
|
$
|
(142.2
|
)
|
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$
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51.9
|
|
|
|
|
|
|
|
|
|
|
||||||||
General partner's interest in net income (loss)
|
|
$
|
1.2
|
|
|
$
|
1.7
|
|
|
$
|
(0.1
|
)
|
|
$
|
11.8
|
|
Limited partners' interest in net (loss) income
|
|
$
|
(14.1
|
)
|
|
$
|
10.4
|
|
|
$
|
(142.1
|
)
|
|
$
|
40.1
|
|
Net (loss) income per common unit (basic and diluted)
|
|
$
|
(0.30
|
)
|
|
$
|
0.23
|
|
|
$
|
(3.08
|
)
|
|
$
|
0.86
|
|
Weighted average common units outstanding (basic and diluted)
|
|
46.2
|
|
|
46.2
|
|
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46.2
|
|
|
46.2
|
|
|
|
June 30, 2017
|
|
December 31, 2016
|
||||
|
|
(Unaudited)
|
|
|
||||
|
|
(Dollars in millions)
|
||||||
Assets
|
|
|
||||||
Cash and cash equivalents
|
|
$
|
23.5
|
|
|
$
|
41.8
|
|
Receivables
|
|
45.9
|
|
|
39.7
|
|
||
Receivables from affiliate, net
|
|
2.1
|
|
|
—
|
|
||
Inventories
|
|
82.5
|
|
|
66.9
|
|
||
Other current assets
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3.5
|
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1.6
|
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||
Total current assets
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157.5
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150.0
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|
||
Properties, plants and equipment (net of accumulated depreciation of $390.1 million and $352.6 million at June 30, 2017 and December 31, 2016, respectively)
|
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1,273.8
|
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1,294.9
|
|
||
Goodwill
|
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73.5
|
|
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73.5
|
|
||
Other intangible assets, net
|
|
171.5
|
|
|
176.7
|
|
||
Deferred charges and other assets
|
|
0.7
|
|
|
0.9
|
|
||
Total assets
|
|
$
|
1,677.0
|
|
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$
|
1,696.0
|
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Liabilities and Equity
|
|
|
|
|
||||
Accounts payable
|
|
$
|
66.8
|
|
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$
|
47.0
|
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Accrued liabilities
|
|
11.5
|
|
|
11.7
|
|
||
Deferred revenue
|
|
12.0
|
|
|
2.5
|
|
||
Current portion of long-term debt and financing obligation
|
|
3.7
|
|
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4.9
|
|
||
Interest payable
|
|
5.2
|
|
|
14.7
|
|
||
Payable to affiliate, net
|
|
—
|
|
|
4.7
|
|
||
Total current liabilities
|
|
99.2
|
|
|
85.5
|
|
||
Long-term debt and financing obligation
|
|
827.8
|
|
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805.7
|
|
||
Deferred income taxes
|
|
186.7
|
|
|
37.9
|
|
||
Other deferred credits and liabilities
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13.7
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|
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13.2
|
|
||
Total liabilities
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1,127.4
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942.3
|
|
||
Equity
|
|
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|
||||
Held by public:
|
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|
||||
Common units
(issued 19,347,604 and 20,800,181 units at June 30, 2017 and December 31, 2016, respectively)
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193.2
|
|
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296.9
|
|
||
Held by parent:
|
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|
|
|
||||
Common units (issued 26,876,100 and 25,415,696 units at June 30, 2017 and December 31, 2016, respectively)
|
|
317.1
|
|
|
410.3
|
|
||
General partner interest
|
|
28.0
|
|
|
32.1
|
|
||
Partners' capital attributable to SunCoke Energy Partners, L.P.
|
|
538.3
|
|
|
739.3
|
|
||
Noncontrolling interest
|
|
11.3
|
|
|
14.4
|
|
||
Total equity
|
|
549.6
|
|
|
753.7
|
|
||
Total liabilities and equity
|
|
$
|
1,677.0
|
|
|
$
|
1,696.0
|
|
|
|
Six Months Ended June 30,
|
||||||
|
|
2017
|
|
2016
|
||||
|
|
|
|
|
||||
|
|
(Dollars in millions)
|
||||||
Cash Flows from Operating Activities:
|
|
|
|
|
||||
Net (loss) income
|
|
$
|
(144.2
|
)
|
|
$
|
53.1
|
|
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
|
|
|
|
|
||||
Depreciation and amortization expense
|
|
43.1
|
|
|
39.2
|
|
||
Deferred income tax expense
|
|
148.8
|
|
|
0.4
|
|
||
Loss (gain) on extinguishment of debt
|
|
19.9
|
|
|
(23.9
|
)
|
||
Changes in working capital pertaining to operating activities:
|
|
|
|
|
||||
Receivables
|
|
(6.2
|
)
|
|
5.3
|
|
||
Receivables (payables) from affiliate, net
|
|
(5.4
|
)
|
|
9.4
|
|
||
Inventories
|
|
(15.6
|
)
|
|
4.3
|
|
||
Accounts payable
|
|
12.0
|
|
|
5.3
|
|
||
Accrued liabilities
|
|
(0.2
|
)
|
|
2.5
|
|
||
Deferred revenue
|
|
9.5
|
|
|
18.2
|
|
||
Interest payable
|
|
(9.5
|
)
|
|
(2.2
|
)
|
||
Other
|
|
(0.6
|
)
|
|
(3.5
|
)
|
||
Net cash provided by operating activities
|
|
51.6
|
|
|
108.1
|
|
||
Cash Flows from Investing Activities:
|
|
|
|
|
||||
Capital expenditures
|
|
(9.9
|
)
|
|
(22.1
|
)
|
||
Decrease in restricted cash
|
|
0.1
|
|
|
15.4
|
|
||
Other investing activities
|
|
—
|
|
|
2.1
|
|
||
Net cash used in investing activities
|
|
(9.8
|
)
|
|
(4.6
|
)
|
||
Cash Flows from Financing Activities:
|
|
|
|
|
||||
Proceeds from issuance of long-term debt
|
|
620.6
|
|
|
—
|
|
||
Repayment of long-term debt
|
|
(532.2
|
)
|
|
(47.0
|
)
|
||
Repayment of financing obligation
|
|
(1.2
|
)
|
|
—
|
|
||
Proceeds from revolving credit facility
|
|
128.0
|
|
|
20.0
|
|
||
Repayment of revolving credit facility
|
|
(200.0
|
)
|
|
(20.0
|
)
|
||
Debt issuance costs
|
|
(13.9
|
)
|
|
—
|
|
||
Distributions to unitholders (public and parent)
|
|
(60.3
|
)
|
|
(57.5
|
)
|
||
Distributions to noncontrolling interest (SunCoke Energy, Inc.)
|
|
(1.1
|
)
|
|
(1.9
|
)
|
||
Capital contributions from SunCoke
|
|
—
|
|
|
8.4
|
|
||
Net cash used in financing activities
|
|
(60.1
|
)
|
|
(98.0
|
)
|
||
Net (decrease) increase in cash and cash equivalents
|
|
(18.3
|
)
|
|
5.5
|
|
||
Cash and cash equivalents at beginning of period
|
|
41.8
|
|
|
48.6
|
|
||
Cash and cash equivalents at end of period
|
|
$
|
23.5
|
|
|
$
|
54.1
|
|
Supplemental Disclosure of Cash Flow Information
|
|
|
|
|
||||
Interest paid
|
|
$
|
35.5
|
|
|
$
|
28.3
|
|
|
|
Common
- Public |
|
Common
- SunCoke |
|
General Partner
- SunCoke |
|
Noncontrolling Interest
|
|
Total
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
(Dollars in millions)
|
|||||||||||||||||||
At December 31, 2016
|
|
$
|
296.9
|
|
|
$
|
410.3
|
|
|
$
|
32.1
|
|
|
$
|
14.4
|
|
|
$
|
753.7
|
|
Partnership net loss
|
|
(63.8
|
)
|
|
(78.3
|
)
|
|
(0.1
|
)
|
|
(2.0
|
)
|
|
(144.2
|
)
|
|||||
Distribution to unitholders, net of unit issuances
|
|
(24.5
|
)
|
|
(30.3
|
)
|
|
(4.0
|
)
|
|
—
|
|
|
(58.8
|
)
|
|||||
Distributions to noncontrolling interest
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1.1
|
)
|
|
(1.1
|
)
|
|||||
Public units acquired by SunCoke
|
|
(15.4
|
)
|
|
15.4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
At June 30, 2017
|
|
$
|
193.2
|
|
|
$
|
317.1
|
|
|
$
|
28.0
|
|
|
$
|
11.3
|
|
|
$
|
549.6
|
|
•
|
first
,
98 percent
to the holders of common units and
2 percent
to our general partner, until each common unit has received the minimum quarterly distribution of
$0.412500
plus any arrearages from prior quarters and
|
•
|
second,
98 percent
to all unitholders, pro rata, and
2 percent
to our general partner, until each unit has received a distribution of
$0.474375
.
|
|
Total Quarterly Distribution Per Unit Target Amount
|
|
Marginal Percentage
Interest in Distributions
|
||||
|
Unitholders
|
|
General Partner
|
||||
Minimum Quarterly Distribution
|
$0.412500
|
|
98%
|
|
2%
|
||
First Target Distribution
|
above $0.412500
|
|
up to $0.474375
|
|
98%
|
|
2%
|
Second Target Distribution
|
above $0.474375
|
|
up to $0.515625
|
|
85%
|
|
15%
|
Third Target Distribution
|
above $0.515625
|
|
up to $0.618750
|
|
75%
|
|
25%
|
Thereafter
|
above $0.618750
|
|
50%
|
|
50%
|
Earned in Quarter Ended
|
|
Total Quarterly Distribution Per Unit
|
|
Total Cash Distribution including general partners IDRs
|
|
Date of Distribution
|
|
Unitholders Record Date
|
||||
|
|
|
|
(Dollars in millions)
|
|
|
|
|
||||
March 31, 2016
|
|
$
|
0.5940
|
|
|
$
|
29.5
|
|
|
June 1, 2016
|
|
May 16, 2016
|
June 30, 2016
|
|
$
|
0.5940
|
|
|
$
|
29.5
|
|
|
September 1, 2016
|
|
August 15, 2016
|
September 30, 2016
|
|
$
|
0.5940
|
|
|
$
|
29.5
|
|
|
December 1, 2016
|
|
November 15, 2016
|
December 31, 2016
|
|
$
|
0.5940
|
|
|
$
|
29.5
|
|
|
March 1, 2017
|
|
February 15, 2017
|
March 31, 2017
|
|
$
|
0.5940
|
|
|
$
|
29.5
|
|
|
June 1, 2017
|
|
May 15, 2017
|
June 30, 2017
(1)
|
|
$
|
0.5940
|
|
|
$
|
29.5
|
|
|
September 1, 2017
|
|
August 15, 2017
|
(1)
|
On
July 17, 2017
, our Board of Directors declared a cash distribution of
$0.5940
per unit, which will be paid on
September 1, 2017
, to unitholders of record on
August 15, 2017
.
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
|
|
(Dollars in millions)
|
||||||||||||||
Net (loss) income attributable to SunCoke Energy L.P.
|
|
$
|
(12.9
|
)
|
|
$
|
12.1
|
|
|
$
|
(142.2
|
)
|
|
$
|
51.9
|
|
Less: Expenses allocated to Common - SunCoke
(1)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(7.0
|
)
|
||||
Net (loss) income attributable to all partners
|
|
(12.9
|
)
|
|
12.1
|
|
|
(142.2
|
)
|
|
58.9
|
|
||||
General partner's incentive distribution rights
|
|
1.4
|
|
|
1.4
|
|
|
2.8
|
|
|
10.8
|
|
||||
Net (loss) income attributable to partners, excluding incentive distribution rights
|
|
(14.3
|
)
|
|
10.7
|
|
|
(145.0
|
)
|
|
48.1
|
|
||||
General partner's ownership interest:
|
|
2.0
|
%
|
|
2.0
|
%
|
|
2.0
|
%
|
|
2.0
|
%
|
||||
General partner's allocated interest in net (loss) income
|
|
(0.2
|
)
|
|
0.3
|
|
|
(2.9
|
)
|
|
1.0
|
|
||||
General partner's incentive distribution rights
|
|
1.4
|
|
|
1.4
|
|
|
2.8
|
|
|
10.8
|
|
||||
Total general partner's interest in net income (loss)
|
|
$
|
1.2
|
|
|
$
|
1.7
|
|
|
$
|
(0.1
|
)
|
|
$
|
11.8
|
|
Common - public unitholder's interest in net (loss) income
|
|
$
|
(6.2
|
)
|
|
$
|
4.6
|
|
|
$
|
(63.8
|
)
|
|
$
|
21.1
|
|
Common - SunCoke interest in net (loss) income:
|
|
|
|
|
|
|
|
|
||||||||
Common - SunCoke interest in net (loss) income
|
|
(7.9
|
)
|
|
5.8
|
|
|
(78.3
|
)
|
|
26.0
|
|
||||
Expenses allocated to Common - SunCoke
(1)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(7.0
|
)
|
||||
Total common - SunCoke interest in net (loss) income
|
|
(7.9
|
)
|
|
5.8
|
|
|
(78.3
|
)
|
|
19.0
|
|
||||
Total limited partners' interest in net (loss) income
|
|
$
|
(14.1
|
)
|
|
$
|
10.4
|
|
|
$
|
(142.1
|
)
|
|
$
|
40.1
|
|
(1)
|
Per the amended Partnership agreement, expenses paid on behalf of the Partnership are to be allocated entirely to the partner who paid them. During the first quarter of 2016, SunCoke paid
$7.0 million
of allocated corporate costs on behalf of the Partnership and will not seek reimbursement for those costs. These expenses are recorded as a direct reduction to SunCoke's interest in net income for the six months ended June 30, 2016.
|
|
|
Three Months Ended June 30,
|
|
Six months ended June 30,
|
||||||||||||
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
|
|
(Dollars and units in millions, except per unit amounts)
|
||||||||||||||
Net (loss) income attributable to SunCoke Energy L.P.
|
|
$
|
(12.9
|
)
|
|
$
|
12.1
|
|
|
$
|
(142.2
|
)
|
|
$
|
51.9
|
|
Less: Expenses allocated to Common - SunCoke
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(7.0
|
)
|
||||
Net (loss) income attributable to all partners
|
|
(12.9
|
)
|
|
12.1
|
|
|
(142.2
|
)
|
|
58.9
|
|
||||
General partner's distributions (including $1.4 million, $1.4 million, $2.8 million and $2.8 million of cash incentive distribution rights declared, respectively)
|
|
2.0
|
|
|
2.0
|
|
|
4.0
|
|
|
4.0
|
|
||||
Limited partners' distributions on common units
|
|
27.5
|
|
|
27.5
|
|
|
55.0
|
|
|
54.9
|
|
||||
Distributions (greater than) less than loss/earnings
|
|
(42.4
|
)
|
|
(17.4
|
)
|
|
(201.2
|
)
|
|
—
|
|
||||
General partner's earnings (loss):
|
|
|
|
|
|
|
|
|
||||||||
Distributions (including $1.4 million, $1.4 million, $2.8 million and $2.8 million of cash incentive distribution rights declared, respectively)
|
|
2.0
|
|
|
2.0
|
|
|
4.0
|
|
|
4.0
|
|
||||
Allocation of distributions (greater than) less than loss/earnings
|
|
(0.8
|
)
|
|
(0.3
|
)
|
|
(4.1
|
)
|
|
7.8
|
|
||||
Total general partner's earnings (loss)
|
|
1.2
|
|
|
1.7
|
|
|
(0.1
|
)
|
|
11.8
|
|
||||
Limited partners' (loss) earnings on common units:
|
|
|
|
|
|
|
|
|
||||||||
Distributions
|
|
27.5
|
|
|
27.5
|
|
|
55.0
|
|
|
54.9
|
|
||||
Expenses allocated to Common - SunCoke
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(7.0
|
)
|
||||
Allocation of distributions (greater than) less than loss/earnings
|
|
(41.6
|
)
|
|
(17.1
|
)
|
|
(197.1
|
)
|
|
(7.8
|
)
|
||||
Total limited partners' (loss) earnings on common units
|
|
(14.1
|
)
|
|
10.4
|
|
|
(142.1
|
)
|
|
40.1
|
|
||||
Limited partners' earnings on subordinated units:
|
|
|
|
|
|
|
|
|
||||||||
Weighted average limited partner units outstanding:
|
|
|
|
|
|
|
|
|
||||||||
Common - basic and diluted
|
|
46.2
|
|
|
46.2
|
|
|
46.2
|
|
|
46.2
|
|
||||
Net (loss) income per limited partner unit:
|
|
|
|
|
|
|
|
|
||||||||
Common - basic and diluted
|
|
$
|
(0.30
|
)
|
|
$
|
0.23
|
|
|
$
|
(3.08
|
)
|
|
$
|
0.86
|
|
|
|
Common - Public
|
|
Common - SunCoke
|
|
Total Common
|
|||
At December 31, 2016
|
|
20,800,181
|
|
|
25,415,696
|
|
|
46,215,877
|
|
Units issued to directors
|
|
7,827
|
|
|
—
|
|
|
7,827
|
|
Public units acquired by SunCoke
|
|
(1,460,404
|
)
|
|
1,460,404
|
|
|
—
|
|
At June 30, 2017
|
|
19,347,604
|
|
|
26,876,100
|
|
|
46,223,704
|
|
|
|
June 30, 2017
|
|
December 31, 2016
|
||||
|
|
|
|
|
||||
|
|
(Dollars in millions)
|
||||||
Coal
|
|
$
|
49.2
|
|
|
$
|
34.5
|
|
Coke
|
|
5.0
|
|
|
4.7
|
|
||
Materials, supplies, and other
|
|
28.3
|
|
|
27.7
|
|
||
Total inventories
|
|
$
|
82.5
|
|
|
$
|
66.9
|
|
|
|
|
June 30, 2017
|
|
December 31, 2016
|
||||||||||||||||||||
|
Weighted - Average Remaining Amortization Years
|
|
Gross Carrying Amount
|
|
Accumulated Amortization
|
|
Net
|
|
Gross Carrying Amount
|
|
Accumulated Amortization
|
|
Net
|
||||||||||||
|
|
|
(Dollars in millions)
|
||||||||||||||||||||||
Customer contracts
|
5
|
|
$
|
24.0
|
|
|
$
|
6.1
|
|
|
$
|
17.9
|
|
|
$
|
24.0
|
|
|
$
|
4.5
|
|
|
$
|
19.5
|
|
Customer relationships
|
14
|
|
28.7
|
|
|
4.8
|
|
|
23.9
|
|
|
28.7
|
|
|
3.8
|
|
|
24.9
|
|
||||||
Permits
|
25
|
|
139.0
|
|
|
9.6
|
|
|
129.4
|
|
|
139.0
|
|
|
7.1
|
|
|
131.9
|
|
||||||
Trade name
|
1
|
|
1.2
|
|
|
0.9
|
|
|
0.3
|
|
|
1.2
|
|
|
0.8
|
|
|
0.4
|
|
||||||
Total
|
|
|
$
|
192.9
|
|
|
$
|
21.4
|
|
|
$
|
171.5
|
|
|
$
|
192.9
|
|
|
$
|
16.2
|
|
|
$
|
176.7
|
|
|
|
June 30, 2017
|
|
December 31, 2016
|
||||
|
|
|
|
|
||||
|
|
(Dollars in millions)
|
||||||
7.500 percent senior notes, due 2025 ("2025 Partnership Notes")
|
|
$
|
630.0
|
|
|
$
|
—
|
|
7.375 percent senior notes, due 2020 ("2020 Partnership Notes")
|
|
—
|
|
|
463.0
|
|
||
Partnership term loan, due 2019 ("Partnership Term Loan")
|
|
—
|
|
|
50.0
|
|
||
Revolving credit facility, due 2022 and 2019, respectively ("Partnership Revolver")
|
|
100.0
|
|
|
172.0
|
|
||
Partnership promissory note payable, due 2021 ("Promissory Note")
|
|
112.6
|
|
|
113.2
|
|
||
5.82 percent financing obligation, due 2021 ("Financing Obligation")
|
|
14.0
|
|
|
15.2
|
|
||
Total borrowings
|
|
856.6
|
|
|
813.4
|
|
||
Original issue (discount) premium
|
|
(9.3
|
)
|
|
7.5
|
|
||
Debt issuance cost
|
|
(15.8
|
)
|
|
(10.3
|
)
|
||
Total debt and financing obligation
|
|
831.5
|
|
|
810.6
|
|
||
Less: current portion of long-term debt and financing obligation
|
|
3.7
|
|
|
4.9
|
|
||
Total long-term debt and financing obligation
|
|
$
|
827.8
|
|
|
$
|
805.7
|
|
•
|
Level 1—inputs to the valuation methodology are quoted prices (unadjusted) for an identical asset or liability in an active market.
|
•
|
Level 2—inputs to the valuation methodology include quoted prices for a similar asset or liability in an active market or model-derived valuations in which all significant inputs are observable for substantially the full term of the asset or liability.
|
•
|
Level 3—inputs to the valuation methodology are unobservable and significant to the fair value measurement of the asset or liability.
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
|
|
(Dollars in millions)
|
||||||||||||||
Sales and other operating revenue:
|
|
|
|
|
|
|
|
|
||||||||
Domestic Coke
|
|
$
|
182.0
|
|
|
$
|
167.5
|
|
|
$
|
355.2
|
|
|
$
|
346.4
|
|
Coal Logistics
|
|
18.6
|
|
|
13.9
|
|
|
41.0
|
|
|
29.5
|
|
||||
Coal Logistics intersegment sales
|
|
1.5
|
|
|
1.7
|
|
|
3.3
|
|
|
3.2
|
|
||||
Elimination of intersegment sales
|
|
(1.5
|
)
|
|
(1.7
|
)
|
|
(3.3
|
)
|
|
(3.2
|
)
|
||||
Total sales and other operating revenue
|
|
$
|
200.6
|
|
|
$
|
181.4
|
|
|
$
|
396.2
|
|
|
$
|
375.9
|
|
Adjusted EBITDA:
|
|
|
|
|
|
|
|
|
||||||||
Domestic Coke
|
|
$
|
37.5
|
|
|
$
|
41.1
|
|
|
$
|
80.0
|
|
|
$
|
87.4
|
|
Coal Logistics
|
|
9.6
|
|
|
5.3
|
|
|
22.6
|
|
|
11.2
|
|
||||
Corporate and Other
|
|
(4.1
|
)
|
|
(4.7
|
)
|
|
(7.9
|
)
|
|
(8.7
|
)
|
||||
Total Adjusted EBITDA
|
|
$
|
43.0
|
|
|
$
|
41.7
|
|
|
$
|
94.7
|
|
|
$
|
89.9
|
|
Depreciation and amortization expense:
|
|
|
|
|
|
|
|
|
||||||||
Domestic Coke
|
|
$
|
15.6
|
|
|
$
|
12.7
|
|
|
$
|
31.3
|
|
|
$
|
26.0
|
|
Coal Logistics
|
|
5.9
|
|
|
7.8
|
|
|
11.8
|
|
|
13.2
|
|
||||
Total depreciation and amortization expense
|
|
$
|
21.5
|
|
|
$
|
20.5
|
|
|
$
|
43.1
|
|
|
$
|
39.2
|
|
Capital expenditures:
|
|
|
|
|
|
|
|
|
||||||||
Domestic Coke
|
|
$
|
5.2
|
|
|
$
|
5.5
|
|
|
$
|
8.8
|
|
|
$
|
11.4
|
|
Coal Logistics
|
|
0.5
|
|
|
8.6
|
|
|
1.1
|
|
|
10.7
|
|
||||
Total capital expenditures
|
|
$
|
5.7
|
|
|
$
|
14.1
|
|
|
$
|
9.9
|
|
|
$
|
22.1
|
|
|
|
June 30, 2017
|
|
December 31, 2016
|
||||
|
|
|
|
|
||||
|
|
(Dollars in millions)
|
||||||
Segment assets:
|
|
|
|
|
||||
Domestic Coke
|
|
$
|
1,171.3
|
|
|
$
|
1,184.2
|
|
Coal Logistics
|
|
499.3
|
|
|
510.6
|
|
||
Corporate and Other
|
|
6.4
|
|
|
1.2
|
|
||
Total assets
|
|
$
|
1,677.0
|
|
|
$
|
1,696.0
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
|
|
(Dollars in millions)
|
||||||||||||||
Sales and other operating revenue:
|
|
|
|
|
|
|
|
|
||||||||
Cokemaking revenues
|
|
$
|
170.6
|
|
|
$
|
152.2
|
|
|
$
|
329.5
|
|
|
$
|
315.5
|
|
Energy revenues
|
|
10.7
|
|
|
14.2
|
|
|
24.3
|
|
|
28.6
|
|
||||
Coal logistics revenues
|
|
16.7
|
|
|
13.6
|
|
|
37.0
|
|
|
28.9
|
|
||||
Other revenues
|
|
2.6
|
|
|
1.4
|
|
|
5.4
|
|
|
2.9
|
|
||||
Total revenues
|
|
$
|
200.6
|
|
|
$
|
181.4
|
|
|
$
|
396.2
|
|
|
$
|
375.9
|
|
•
|
does not reflect our cash expenditures, or future requirements, for capital expenditures or contractual commitments;
|
•
|
does not reflect items such as depreciation and amortization;
|
•
|
does not reflect changes in, or cash requirements for, working capital needs;
|
•
|
does not reflect our interest expense, or the cash requirements necessary to service interest on or principal payments of our debt;
|
•
|
does not reflect certain other non-cash income and expenses;
|
•
|
excludes income taxes that may represent a reduction in available cash; and
|
•
|
includes net income attributable to noncontrolling interests.
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
|
|
(Dollars in millions)
|
||||||||||||||
Net cash provided by operating activities
|
|
$
|
12.2
|
|
|
$
|
67.7
|
|
|
$
|
51.6
|
|
|
$
|
108.1
|
|
Subtract:
|
|
|
|
|
|
|
|
|
||||||||
Depreciation and amortization expense
|
|
21.5
|
|
|
20.5
|
|
|
43.1
|
|
|
39.2
|
|
||||
Loss (gain) on extinguishment of debt
|
|
19.9
|
|
|
(3.5
|
)
|
|
19.9
|
|
|
(23.9
|
)
|
||||
Deferred income tax (benefit) expense
|
|
(0.4
|
)
|
|
0.1
|
|
|
148.8
|
|
|
0.4
|
|
||||
Changes in working capital and other
|
|
(16.3
|
)
|
|
38.0
|
|
|
(16.0
|
)
|
|
39.3
|
|
||||
Net (loss) income
|
|
$
|
(12.5
|
)
|
|
$
|
12.6
|
|
|
$
|
(144.2
|
)
|
|
$
|
53.1
|
|
Add:
|
|
|
|
|
|
|
|
|
||||||||
Depreciation and amortization expense
|
|
$
|
21.5
|
|
|
$
|
20.5
|
|
|
$
|
43.1
|
|
|
$
|
39.2
|
|
Interest expense, net
|
|
14.0
|
|
|
11.7
|
|
|
26.6
|
|
|
24.2
|
|
||||
Loss (gain) on extinguishment of debt
|
|
19.9
|
|
|
(3.5
|
)
|
|
19.9
|
|
|
(23.9
|
)
|
||||
Income tax (benefit) expense, net
|
|
(0.2
|
)
|
|
0.4
|
|
|
149.0
|
|
|
1.0
|
|
||||
Contingent consideration adjustments
(1)
|
|
0.3
|
|
|
—
|
|
|
0.3
|
|
|
(3.7
|
)
|
||||
Adjusted EBITDA
(2)
|
|
$
|
43.0
|
|
|
$
|
41.7
|
|
|
$
|
94.7
|
|
|
$
|
89.9
|
|
Subtract:
|
|
|
|
|
|
|
|
|
||||||||
Adjusted EBITDA attributable to noncontrolling interest
(3)
|
|
0.8
|
|
|
0.8
|
|
|
1.6
|
|
|
1.7
|
|
||||
Adjusted EBITDA attributable to SunCoke Energy Partners, L.P.
|
|
$
|
42.2
|
|
|
$
|
40.9
|
|
|
$
|
93.1
|
|
|
$
|
88.2
|
|
(1)
|
As a result of the increase in fair value of the contingent consideration liability during the second quarter of 2017, the Partnership recognized expense of
$0.3 million
during the three and six months ended June 30, 2017. The Partnership amended its contingent consideration terms with The Cline Group during the first quarter of 2016. This amendment resulted in a gain of
$3.7 million
recorded during the six months ended June 30, 2016.
|
(2)
|
In accordance with the SEC’s May 2016 update to its guidance on the appropriate use of non-GAAP financial measures, Adjusted EBITDA does not include Coal Logistics deferred revenue until it is recognized as GAAP revenue.
|
(3)
|
Reflects net income attributable to noncontrolling interest adjusted for noncontrolling interest's share of interest, taxes, income, and depreciation and amortization.
|
Item 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
Facility
|
|
Location
|
|
Coke
Customer
|
|
Year of
Start Up
|
|
Contract
Expiration
|
|
Number of
Coke Ovens
|
|
Annual Cokemaking
Capacity
(thousands of tons)
|
|
Use of Waste Heat
|
||
Granite City
|
|
Granite City, Illinois
|
|
U.S. Steel
|
|
2009
|
|
2025
|
|
120
|
|
|
650
|
|
|
Steam for power generation
|
Haverhill I
|
|
Franklin Furnace, Ohio
|
|
ArcelorMittal
|
|
2005
|
|
2020
|
|
100
|
|
|
550
|
|
|
Process steam
|
Haverhill II
|
|
Franklin Furnace, Ohio
|
|
AK Steel
|
|
2008
|
|
2022
|
|
100
|
|
|
550
|
|
|
Power generation
|
Middletown
(1)
|
|
Middletown, Ohio
|
|
AK Steel
|
|
2011
|
|
2032
|
|
100
|
|
|
550
|
|
|
Power generation
|
Total
|
|
|
|
|
|
|
|
|
|
420
|
|
|
2,300
|
|
|
|
(1)
|
Cokemaking capacity represents stated capacity for the production of blast furnace coke. The Middletown coke sales agreement provides for coke sales on a “run of oven” basis, which includes both blast furnace coke and small coke. Middletown nameplate capacity on a “run of oven” basis is
578 thousand
tons per year.
|
•
|
Termination of Proposed Simplification Transaction
|
•
|
Partnership's Debt Refinancing
|
|
Three Months Ended June 30,
|
|
|
|
Six Months Ended June 30,
|
|
|
||||||||||||||||
|
2017
|
|
2016
|
|
Increase (Decrease)
|
|
2017
|
|
2016
|
|
Increase (Decrease)
|
||||||||||||
|
(Dollars in millions)
|
||||||||||||||||||||||
Sales and other operating revenue
(1)
|
$
|
200.6
|
|
|
$
|
181.4
|
|
|
$
|
19.2
|
|
|
$
|
396.2
|
|
|
$
|
375.9
|
|
|
$
|
20.3
|
|
Net cash provided by operating activities
(2)
|
$
|
12.2
|
|
|
$
|
67.7
|
|
|
$
|
(55.5
|
)
|
|
$
|
51.6
|
|
|
$
|
108.1
|
|
|
$
|
(56.5
|
)
|
Adjusted EBITDA
(1)
|
$
|
43.0
|
|
|
$
|
41.7
|
|
|
$
|
1.3
|
|
|
$
|
94.7
|
|
|
$
|
89.9
|
|
|
$
|
4.8
|
|
(1)
|
See analysis of changes described in "Analysis of Segment Results."
|
(2)
|
See analysis of changes described in "Liquidity and Capital Resources."
|
•
|
Debt Activities.
During the second quarter of 2017, the Partnership refinanced its debt obligations. The Partnership received
$620.6 million
of proceeds, net of an original issue discount of
$9.4 million
, from the issuance of the 7.5 percent 2025 Partnership Notes and
$100.0 million
of proceeds from borrowings under the Partnership's amended and restated credit facility. The Partnership used these proceeds to purchase and redeem all of its 7.375 percent 2020 Partnership Notes
, including principal of
$463.0 million
and a premium of
$18.7 million
, to repay the
$50.0 million
outstanding on the Partnership Term Loan and to repay
$172.0 million
on the Partnership Revolver. In connection with the debt issuance, the Partnership incurred debt issuance costs of
$14.8 million
, which were included in long-term debt and financing obligation on the Consolidated Balance Sheets as of June 30, 2017.
|
•
|
IRS Final Regulations on Qualifying Income.
In January 2017, the Internal Revenue Service ("IRS") announced its decision to exclude cokemaking as a qualifying income generating activity in its final regulations (the "Final Regulations") issued under section 7704(d)(1)(E) of the Internal Revenue Code relating to the qualifying income exception for publicly traded partnerships. However, the Final Regulations include a transition period for activities that were reasonably interpreted to be qualifying income and carried on by publicly traded partnerships prior to the Final Regulations. The Partnership previously received a will-level opinion from its counsel, Vinson
|
•
|
Pass Through Coal Cost Under-Recovery
.
During the fourth quarter of 2016, as part of our ordinary course coal sourcing activities, Haverhill, Middletown and AK Steel each entered into arrangements with a coal supplier for 2017 fulfillment. As a result of unfulfilled coal supply commitments by this coal supplier, substitute coal suppliers are currently meeting the shortfall, resulting in a higher price. Presently, we are aggressively pursuing the coal supplier and sharing a portion of the increased coal cost differential with AK Steel, resulting in a negative impact to revenue and Adjusted EBITDA of $1.4 million and $2.8 million during the three and six months ended June 30, 2017, respectively. We expect this impact to lower revenue and Adjusted EBITDA by approximately
$6 million
for the year ended December 31, 2017.
|
•
|
Contingent Consideration.
In connection with the CMT acquisition, the Partnership entered into a contingent consideration arrangement that requires the Partnership to make future payments to The Cline Group based on future volumes over a specified threshold, price, and contract renewals. During the first quarter of 2016, the Partnership amended the contingent consideration terms with The Cline Group, which resulted in a
$3.7 million
gain recognized as a reduction to costs of products sold and operating expenses on the Consolidated Statements of Operations during the six months ended June 30, 2016.
|
|
|
Three Months Ended June 30,
|
|
|
|
Six Months Ended June 30,
|
|
|
||||||||||||||||
|
|
2017
|
|
2016
|
|
Increase (Decrease)
|
|
2017
|
|
2016
|
|
Increase (Decrease)
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
|
(Dollars in millions)
|
||||||||||||||||||||||
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Sales and other operating revenue
|
|
$
|
200.6
|
|
|
$
|
181.4
|
|
|
$
|
19.2
|
|
|
$
|
396.2
|
|
|
$
|
375.9
|
|
|
$
|
20.3
|
|
Costs and operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Cost of products sold and operating expenses
|
|
149.4
|
|
|
128.6
|
|
|
20.8
|
|
|
284.8
|
|
|
262.8
|
|
|
22.0
|
|
||||||
Selling, general and administrative expenses
|
|
8.5
|
|
|
11.1
|
|
|
(2.6
|
)
|
|
17.0
|
|
|
19.5
|
|
|
(2.5
|
)
|
||||||
Depreciation and amortization expense
|
|
21.5
|
|
|
20.5
|
|
|
1.0
|
|
|
43.1
|
|
|
39.2
|
|
|
3.9
|
|
||||||
Total costs and operating expenses
|
|
179.4
|
|
|
160.2
|
|
|
19.2
|
|
|
344.9
|
|
|
321.5
|
|
|
23.4
|
|
||||||
Operating income
|
|
21.2
|
|
|
21.2
|
|
|
—
|
|
|
51.3
|
|
|
54.4
|
|
|
(3.1
|
)
|
||||||
Interest expense, net
|
|
14.0
|
|
|
11.7
|
|
|
2.3
|
|
|
26.6
|
|
|
24.2
|
|
|
2.4
|
|
||||||
Loss (gain) on extinguishment of debt
(1)
|
|
19.9
|
|
|
(3.5
|
)
|
|
23.4
|
|
|
19.9
|
|
|
(23.9
|
)
|
|
43.8
|
|
||||||
(Loss) income before income tax (benefit) expense
|
|
(12.7
|
)
|
|
13.0
|
|
|
(25.7
|
)
|
|
4.8
|
|
|
54.1
|
|
|
(49.3
|
)
|
||||||
Income tax (benefit) expense
|
|
(0.2
|
)
|
|
0.4
|
|
|
(0.6
|
)
|
|
149.0
|
|
|
1.0
|
|
|
148.0
|
|
||||||
Net (loss) income
|
|
(12.5
|
)
|
|
12.6
|
|
|
(25.1
|
)
|
|
(144.2
|
)
|
|
53.1
|
|
|
(197.3
|
)
|
||||||
Less: Net income (loss) attributable to noncontrolling interests
|
|
0.4
|
|
|
0.5
|
|
|
(0.1
|
)
|
|
(2.0
|
)
|
|
1.2
|
|
|
(3.2
|
)
|
||||||
Net (loss) income attributable to SunCoke Energy Partners, L.P.
|
|
$
|
(12.9
|
)
|
|
$
|
12.1
|
|
|
$
|
(25.0
|
)
|
|
$
|
(142.2
|
)
|
|
$
|
51.9
|
|
|
$
|
(194.1
|
)
|
(1)
|
See year-over-year changes described in "Items Impacting Comparability."
|
•
|
Domestic Coke consists of our Haverhill, Middletown and Granite City cokemaking and heat recovery operations located in Franklin Furnace, Ohio; Middletown, Ohio; and Granite City, Illinois, respectively.
|
•
|
Coal Logistics consists of our coal handling and/or mixing services in East Chicago, Indiana; Ceredo, West Virginia; Belle, West Virginia; and Convent, Louisiana.
|
|
Three Months Ended June 30,
|
|
|
|
Six Months Ended June 30,
|
|
|
||||||||||||||||
|
2017
|
|
2016
|
|
Increase (Decrease)
|
|
2017
|
|
2016
|
|
Increase (Decrease)
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
(Dollars in millions)
|
||||||||||||||||||||||
Sales and other operating revenues:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Domestic Coke
|
$
|
182.0
|
|
|
$
|
167.5
|
|
|
$
|
14.5
|
|
|
$
|
355.2
|
|
|
$
|
346.4
|
|
|
$
|
8.8
|
|
Coal Logistics
|
18.6
|
|
|
13.9
|
|
|
4.7
|
|
|
41.0
|
|
|
29.5
|
|
|
11.5
|
|
||||||
Coal Logistics intersegment sales
|
1.5
|
|
|
1.7
|
|
|
(0.2
|
)
|
|
3.3
|
|
|
3.2
|
|
|
0.1
|
|
||||||
Elimination of intersegment sales
|
(1.5
|
)
|
|
(1.7
|
)
|
|
0.2
|
|
|
(3.3
|
)
|
|
(3.2
|
)
|
|
(0.1
|
)
|
||||||
Total Sales and other operating revenues
|
$
|
200.6
|
|
|
$
|
181.4
|
|
|
$
|
19.2
|
|
|
$
|
396.2
|
|
|
$
|
375.9
|
|
|
$
|
20.3
|
|
Adjusted EBITDA
(1)
:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Domestic Coke
|
$
|
37.5
|
|
|
$
|
41.1
|
|
|
$
|
(3.6
|
)
|
|
$
|
80.0
|
|
|
$
|
87.4
|
|
|
(7.4
|
)
|
|
Coal Logistics
|
9.6
|
|
|
5.3
|
|
|
4.3
|
|
|
22.6
|
|
|
11.2
|
|
|
11.4
|
|
||||||
Corporate and Other
|
(4.1
|
)
|
|
(4.7
|
)
|
|
0.6
|
|
|
(7.9
|
)
|
|
(8.7
|
)
|
|
0.8
|
|
||||||
Total Adjusted EBITDA
|
$
|
43.0
|
|
|
$
|
41.7
|
|
|
$
|
1.3
|
|
|
$
|
94.7
|
|
|
$
|
89.9
|
|
|
$
|
4.8
|
|
Coke Operating Data:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Domestic Coke capacity utilization (%)
|
98
|
|
|
101
|
|
|
(3
|
)
|
|
99
|
|
|
102
|
|
|
(3
|
)
|
||||||
Domestic Coke production volumes (thousands of tons)
|
565
|
|
|
583
|
|
|
(18
|
)
|
|
1,132
|
|
|
1,158
|
|
|
(26
|
)
|
||||||
Domestic Coke sales volumes (thousands of tons)
|
569
|
|
|
579
|
|
|
(10
|
)
|
|
1,133
|
|
|
1,160
|
|
|
(27
|
)
|
||||||
Domestic Coke Adjusted EBITDA per ton
(2)
|
$
|
65.91
|
|
|
$
|
70.98
|
|
|
$
|
(5.07
|
)
|
|
$
|
70.61
|
|
|
$
|
75.34
|
|
|
$
|
(4.73
|
)
|
Coal Logistics Operating Data:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Tons handled (thousands of tons)
(3)
|
4,909
|
|
|
3,938
|
|
|
971
|
|
|
10,358
|
|
|
7,973
|
|
|
2,385
|
|
||||||
CMT take-or-pay shortfall tons (thousands of tons)
(4)
|
956
|
|
|
1,616
|
|
|
(660
|
)
|
|
1,500
|
|
|
3,254
|
|
|
(1,754
|
)
|
(1)
|
See
Note 10
in our consolidated financial statements for both the definition of Adjusted EBITDA and the reconciliations from GAAP to the non-GAAP measurement for the
three and six months ended June 30, 2017
and
2016
, respectively.
|
(2)
|
Reflects Domestic Coke Adjusted EBITDA divided by Domestic Coke sales volumes.
|
(3)
|
Reflects inbound tons handled during the period.
|
(4)
|
Reflects tons billed under take-or-pay contracts where services have not yet been performed.
|
|
Three months ended June 30, 2017 vs. 2016
|
|
Six months ended June 30, 2017 vs. 2016
|
||||||||||||
|
Sales and other operating revenue
|
|
Adjusted EBITDA
|
|
Sales and other operating revenue
|
|
Adjusted EBITDA
|
||||||||
|
(Dollars in millions)
|
||||||||||||||
Prior year period
|
$
|
167.5
|
|
|
$
|
41.1
|
|
|
$
|
346.4
|
|
|
$
|
87.4
|
|
Volumes
(1)
|
(1.2
|
)
|
|
0.8
|
|
|
(3.7
|
)
|
|
1.4
|
|
||||
Coal cost recovery and yields
(2)
|
17.1
|
|
|
(0.8
|
)
|
|
14.9
|
|
|
(3.4
|
)
|
||||
Operating and maintenance costs
|
0.7
|
|
|
(2.2
|
)
|
|
0.4
|
|
|
(3.0
|
)
|
||||
Energy and other
(3)
|
(2.1
|
)
|
|
(1.4
|
)
|
|
(2.8
|
)
|
|
(2.4
|
)
|
||||
Current year period
|
$
|
182.0
|
|
|
$
|
37.5
|
|
|
$
|
355.2
|
|
|
$
|
80.0
|
|
(1)
|
We delivered lower volumes to AK Steel in 2017 compared to 2016, but received make-whole payments based on the terms of our long-term, take-or-pay contract. As such this reduction in volumes did not impact the period-over-period change in Adjusted EBITDA.
|
(2)
|
The increase in revenues was primarily driven by the pass-through of higher coal prices. Additionally, as a result of unfulfilled coal supply commitments by our coal supplier, substitute coal suppliers are currently meeting the shortfall, resulting in higher coal prices as previously discussed in "Items Impacting Comparability." These higher coal prices decreased both revenues and Adjusted EBITDA by $1.4 million for the three months ended June 30, 2017 and $2.8 million for the six months ended June 30, 2017.
|
(3)
|
The decrease in Adjusted EBITDA was due to slightly higher costs across the fleet, including costs of $0.6 million associated with the planned outage at the Granite City facility in the second quarter.
|
(4)
|
The decrease in both revenues and Adjusted EBITDA was driven by lower energy sales as a result of the planned outage as discussed above. Adjusted EBITDA was favorably impacted by the absence of the second quarter 2016 write-off of a $1.4 million receivable related to 2015 spot coke sales to Essar Algoma.
|
|
Three months ended June 30, 2017 vs. 2016
|
|
Six months ended June 30, 2017 vs. 2016
|
||||||||||||
|
Sales and other operating revenue, inclusive of intersegment sales
|
|
Adjusted EBITDA
|
|
Sales and other operating revenue, inclusive of intersegment sales
|
|
Adjusted EBITDA
|
||||||||
|
(Dollars in millions)
|
||||||||||||||
Prior year period
|
$
|
15.6
|
|
|
$
|
5.3
|
|
|
$
|
32.7
|
|
|
$
|
11.2
|
|
Transloading volumes
(1)
|
4.6
|
|
|
4.3
|
|
|
11.7
|
|
|
11.3
|
|
||||
Price/margin impact of mix in transloading services
|
(0.5
|
)
|
|
(0.5
|
)
|
|
(0.4
|
)
|
|
(0.4
|
)
|
||||
Operating and maintenance costs and other
|
0.4
|
|
|
0.5
|
|
|
0.3
|
|
|
0.5
|
|
||||
Current year period
|
$
|
20.1
|
|
|
$
|
9.6
|
|
|
$
|
44.3
|
|
|
$
|
22.6
|
|
(1)
|
The increase in revenues and Adjusted EBITDA during the three and six months ended June 30, 2017 was the result of
971 thousand
and
2,385 thousand
of higher tons handled as compared to the prior year periods, respectively, primarily at CMT.
|
|
|
Six Months Ended June 30,
|
||||||
|
|
2017
|
|
2016
|
||||
|
|
|
|
|
||||
|
|
(Dollars in millions)
|
||||||
Net cash provided by operating activities
|
|
$
|
51.6
|
|
|
$
|
108.1
|
|
Net cash used in investing activities
|
|
(9.8
|
)
|
|
(4.6
|
)
|
||
Net cash used in financing activities
|
|
(60.1
|
)
|
|
(98.0
|
)
|
||
Net (decrease) increase in cash and cash equivalents
|
|
$
|
(18.3
|
)
|
|
$
|
5.5
|
|
•
|
Ongoing capital expenditures required to maintain equipment reliability, ensure the integrity and safety of our coke ovens and steam generators and to comply with environmental regulations. Ongoing capital expenditures are made to replace partially or fully depreciated assets in order to maintain the existing operating capacity of the assets and/or to extend their useful lives and also include new equipment that improves the efficiency, reliability or effectiveness of existing assets. Ongoing capital expenditures do not include normal repairs and maintenance expenses, which are expensed as incurred;
|
•
|
Environmental remediation project expenditures required to implement design changes to ensure that our existing facilities operate in accordance with existing environmental permits; and
|
•
|
Expansion capital expenditures to acquire and/or construct complementary assets to grow our business and to expand existing facilities as well as capital expenditures made to enable the renewal of a coke sales agreement and on which we expect to earn a reasonable return.
|
|
|
Six Months Ended June 30,
|
||||||
|
|
2017
|
|
2016
|
||||
|
|
|
|
|
||||
|
|
(Dollars in millions)
|
||||||
Ongoing capital
|
|
$
|
1.2
|
|
|
$
|
6.3
|
|
Environmental remediation capital
(1)
|
|
8.4
|
|
|
5.1
|
|
||
Expansion capital - CMT
(2)
|
|
0.3
|
|
|
10.7
|
|
||
Total
|
|
$
|
9.9
|
|
|
$
|
22.1
|
|
(1)
|
Includes
$0.3 million
and
$1.4 million
of capitalized interest, in connection with the environmental remediation projects, during the
six months ended June 30, 2017
and
2016
, respectively.
|
(2)
|
Represents capital expenditures of $9.5 million for the ship loader expansion project funded with cash withheld in conjunction with the acquisition of CMT and $1.2 million of capitalized interest for the six months ended June 30, 2016.
|
•
|
Total ongoing capital expenditures of approximately
$17 million
;
|
•
|
Total capital expenditures on environmental remediation projects of approximately
$25 million
; and
|
•
|
Total expansion capital of approximately
$3 million
in our Coal Logistics segment.
|
|
|
2017
|
||||||
|
|
Low
|
|
High
|
||||
Net Cash Provided by Operating Activities
|
|
$
|
130
|
|
|
$
|
150
|
|
Subtract:
|
|
|
|
|
||||
Depreciation and amortization expense
|
|
86
|
|
|
86
|
|
||
Deferred income tax expense
|
|
149
|
|
|
149
|
|
||
Changes in working capital and other
|
|
(23
|
)
|
|
(14
|
)
|
||
Loss on extinguishment of debt
|
|
20
|
|
|
20
|
|
||
Net loss
|
|
$
|
(102
|
)
|
|
$
|
(91
|
)
|
Add:
|
|
|
|
|
||||
Depreciation and amortization expense
|
|
86
|
|
|
86
|
|
||
Interest expense, net
|
|
58
|
|
|
57
|
|
||
Loss on extinguishment of debt
|
|
20
|
|
|
20
|
|
||
Income tax expense
|
|
151
|
|
|
151
|
|
||
Adjusted EBITDA
|
|
$
|
213
|
|
|
$
|
223
|
|
Subtract: Adjusted EBITDA attributable to noncontrolling interest
(1)
|
|
3
|
|
|
3
|
|
||
Adjusted EBITDA attributable to SunCoke Energy Partners, L.P.
|
|
$
|
210
|
|
|
$
|
220
|
|
(1)
|
Reflects net income attributable to noncontrolling interest adjusted for noncontrolling interest's share of interest, taxes, income, and depreciation and amortization.
|
•
|
changes in levels of production, production capacity, pricing and/or margins for coal and coke;
|
•
|
variation in availability, quality and supply of metallurgical coal used in the cokemaking process, including as a result of non-performance by our suppliers;
|
•
|
changes in the marketplace that may affect our coal logistics business, including the supply and demand for thermal and metallurgical coals;
|
•
|
changes in the marketplace that may affect our cokemaking business, including the supply and demand for our coke, as well as increased imports of coke from foreign producers;
|
•
|
competition from alternative steelmaking and other technologies that have the potential to reduce or eliminate the use of coke;
|
•
|
our dependence on, relationships with, and other conditions affecting, our customers;
|
•
|
severe financial hardship or bankruptcy of one or more of our major customers, or the occurrence of a customer default or other event affecting our ability to collect payments from our customers;
|
•
|
volatility and cyclical downturns in the coal market, in the carbon steel industry, and other industries in which our customers and/or suppliers operate;
|
•
|
our ability to enter into new, or renew existing, long-term agreements upon favorable terms for the sale of coke, steam, or electric power, or for coal handling services (including transportation, storage and mixing);
|
•
|
our ability to identify acquisitions, execute them under favorable terms and integrate them into our existing business operations;
|
•
|
our ability to realize expected benefits from investments and acquisitions;
|
•
|
our ability to consummate investments under favorable terms, including with respect to existing cokemaking facilities, which may utilize by-product technology, and integrate them into our existing businesses and have them perform at anticipated levels;
|
•
|
our ability to develop, design, permit, construct, start up or operate new cokemaking facilities in the U.S.;
|
•
|
our ability to successfully implement our growth strategy;
|
•
|
age of, and changes in the reliability, efficiency and capacity of the various equipment and operating facilities used in our cokemaking and/or coal logistics operations, and in the operations of our major customers, business partners and/or suppliers;
|
•
|
changes in the expected operating levels of our assets;
|
•
|
our ability to meet minimum volume requirements, coal-to-coke yield standards and coke quality standards in our coke sales agreements;
|
•
|
changes in the level of capital expenditures or operating expenses, including any changes in the level of environmental capital, operating or remediation expenditures;
|
•
|
our ability to service our outstanding indebtedness;
|
•
|
our ability to comply with the restrictions imposed by our financing arrangements;
|
•
|
our ability to comply with federal or state environmental statutes, rules or regulations;
|
•
|
nonperformance or force majeure by, or disputes with, or changes in contract terms with, major customers, suppliers, dealers, distributors or other business partners;
|
•
|
availability of skilled employees for our cokemaking and/or coal logistics operations, and other workplace factors;
|
•
|
effects of railroad, barge, truck and other transportation performance and costs, including any transportation disruptions;
|
•
|
effects of adverse events relating to the operation of our facilities and to the transportation and storage of hazardous materials (including equipment malfunction, explosions, fires, spills, and the effects of severe weather conditions);
|
•
|
effects of adverse events relating to the business or commercial operations of our customers and/or suppliers;
|
•
|
disruption in our information technology infrastructure and/or loss of our ability to securely store, maintain, or transmit data due to security breach by hackers, employee error or malfeasance, terrorist attack, power loss, telecommunications failure or other events;
|
•
|
our ability to enter into joint ventures and other similar arrangements under favorable terms;
|
•
|
our ability to consummate assets sales, other divestitures and strategic restructuring in a timely manner upon favorable terms, and/or realize the anticipated benefits from such actions;
|
•
|
changes in the availability and cost of equity and debt financing;
|
•
|
impacts on our liquidity and ability to raise capital as a result of changes in the credit ratings assigned to our indebtedness;
|
•
|
changes in credit terms required by our suppliers;
|
•
|
risks related to labor relations and workplace safety;
|
•
|
proposed or final changes in existing, or new, statutes, regulations, rules, governmental policies and taxes, or their interpretations, including those relating to environmental matters and taxes;
|
•
|
the existence of hazardous substances or other environmental contamination on property owned or used by us;
|
•
|
receipt of required permits and other regulatory approvals and compliance with contractual obligations in connection with our cokemaking and/or coal logistics operations;
|
•
|
claims of noncompliance with any statutory and regulatory requirements;
|
•
|
the accuracy of our estimates of any necessary reclamation and/or remediation activities;
|
•
|
proposed or final changes in accounting and/or tax methodologies, laws, regulations, rules, or policies, or their interpretations, including those affecting inventories, leases, post-employment benefit income, and/or other items;
|
•
|
historical consolidated financial data may not be reliable indicator of future results;
|
•
|
public company costs;
|
•
|
our indebtedness and certain covenants in our debt documents;
|
•
|
changes in product specifications for the coke that we produce or the coals that we mix, store and transport;
|
•
|
changes in insurance markets impacting costs and the level and types of coverage available, and the financial ability of our insurers to meet their obligations;
|
•
|
changes in financial markets impacting pension expense and funding requirements;
|
•
|
inadequate protection of our intellectual property rights; and
|
•
|
effects of geologic conditions, weather, natural disasters and other inherent risks beyond our control.
|
Item 3.
|
Quantitative and Qualitative Disclosures About Market Risk
|
Item 4.
|
Controls and Procedures
|
Item 1.
|
Legal Proceedings
|
Item 1A.
|
Risk Factors
|
Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
Item 6.
|
Exhibits
|
Exhibit
Number
|
|
|
|
Description
|
|
|
|
|
|
4.1
|
|
|
|
Indenture, dated May 24, 2017, among SunCoke Energy Partners, L.P., SunCoke Energy Partners Finance Corp., the Guarantors named therein, and The Bank of New York Mellon, as trustee (incorporated by reference to Exhibit 4.1 to the Partnership’s Current Report on Form 8-K, filed on May 25, 2017, File No.: 001-35782).
|
|
|
|
|
|
10.1
|
|
|
|
Amended and Restated Credit Agreement, dated May 24, 2017, among the SunCoke Energy Partners, L.P., Haverhill Coke Company LLC, Middletown Coke Company, LLC, Gateway Energy & Coke Company, LLC, and certain other subsidiaries of SunCoke Energy Partners, L.P., as joint and several borrowers, the several lenders party thereto from time to time and Bank of America, N.A., as administrative agent (incorporated by reference to Exhibit 10.2 to the Partnership’s Current Report on Form 8-K, filed on May 25, 2017, File No.: 001-35782).
|
|
|
|
|
|
10.2
|
|
|
|
Note Purchase Agreement, dated May 19, 2017 (incorporated by reference to Exhibit 10.1 to the Partnership’s Current Report on Form 8-K, filed on May 25, 2017, File No.: 001-35782).
|
|
|
|
|
|
31.1*
|
|
|
|
Chief Executive Officer Certification Pursuant to Exchange Act Rule 13a-14(a) or Rule 15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
|
|
||
31.2*
|
|
|
|
Chief Financial Officer Certification Pursuant to Exchange Act Rule 13a-14(a) or Rule 15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
|
|
|
|
32.1*
|
|
|
|
Chief Executive Officer Certification Pursuant to Exchange Act Rule 13a-14(b) or Rule 15d-14(b) and Section 1350 of Chapter 63 of Title 18 of the United States Code, as Adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
|
|
|
|
|
32.2*
|
|
|
|
Chief Financial Officer Certification Pursuant to Exchange Act Rule 13a-14(b) or Rule 15d-14(b) and Section 1350 of Chapter 63 of Title 18 of the United States Code, as Adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
|
|
|
|
|
95.1*
|
|
|
|
Mine Safety Disclosures
|
|
|
|
|
|
101*
|
|
|
|
The following financial statements from SunCoke Energy Partners L.P.'s Quarterly Report on Form 10-Q for the three months ended June 30, 2017, filed with the Securities and Exchange Commission on July 27, 2017, formatted in XBRL (eXtensible Business Reporting Language is attached to this report): (i) the Consolidated Statements of Operations; (ii) the Consolidated Balance Sheets; (iii) the Consolidated Statements of Cash Flows; (iv) the Consolidated Statement of Equity; and, (v) the Notes to Consolidated Financial Statements.
|
*
|
Filed herewith.
|
SunCoke Energy Partners, L.P.
|
||
|
|
|
By:
|
|
SunCoke Energy Partners GP LLC, its general partner
|
|
|
|
By:
|
|
/s/ Fay West
|
|
|
Fay West
|
|
|
Senior Vice President and Chief Financial Officer
(As Principal Financial Officer and Duly Authorized Officer of SunCoke Energy Partners GP LLC)
|
1 Year Suncoke Energy Partners, L.P. Common Units Representing Limited Partner Interests Chart |
1 Month Suncoke Energy Partners, L.P. Common Units Representing Limited Partner Interests Chart |
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