ý | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 35-2451470 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
Large accelerated filer | ¨ | Accelerated filer | ý | ||||
Non-accelerated filer | ¨ | (Do not check if a smaller reporting company) | Smaller reporting company | ¨ | |||
Emerging growth company | ý | ||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. | ¨ |
Item 1. | Consolidated Financial Statements |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
(Dollars and units in millions, except per unit amounts) | ||||||||||||||||
Revenues | ||||||||||||||||
Sales and other operating revenue | $ | 200.6 | $ | 181.4 | $ | 396.2 | $ | 375.9 | ||||||||
Costs and operating expenses | ||||||||||||||||
Cost of products sold and operating expenses | 149.4 | 128.6 | 284.8 | 262.8 | ||||||||||||
Selling, general and administrative expenses | 8.5 | 11.1 | 17.0 | 19.5 | ||||||||||||
Depreciation and amortization expense | 21.5 | 20.5 | 43.1 | 39.2 | ||||||||||||
Total costs and operating expenses | 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 | ) | $ | 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 | 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 | 3.5 | 1.6 | ||||||
Total current assets | 157.5 | 150.0 | ||||||
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) | 1,273.8 | 1,294.9 | ||||||
Goodwill | 73.5 | 73.5 | ||||||
Other intangible assets, net | 171.5 | 176.7 | ||||||
Deferred charges and other assets | 0.7 | 0.9 | ||||||
Total assets | $ | 1,677.0 | $ | 1,696.0 | ||||
Liabilities and Equity | ||||||||
Accounts payable | $ | 66.8 | $ | 47.0 | ||||
Accrued liabilities | 11.5 | 11.7 | ||||||
Deferred revenue | 12.0 | 2.5 | ||||||
Current portion of long-term debt and financing obligation | 3.7 | 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 | 805.7 | ||||||
Deferred income taxes | 186.7 | 37.9 | ||||||
Other deferred credits and liabilities | 13.7 | 13.2 | ||||||
Total liabilities | 1,127.4 | 942.3 | ||||||
Equity | ||||||||
Held by public: | ||||||||
Common units (issued 19,347,604 and 20,800,181 units at June 30, 2017 and December 31, 2016, respectively) | 193.2 | 296.9 | ||||||
Held by parent: | ||||||||
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. | I have reviewed this Quarterly Report on Form 10-Q for the quarter ended June 30, 2017 of SunCoke Energy Partners, L.P. (the “registrant”); |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(c) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Frederick A. Henderson | |
Chairman, President and Chief Executive Officer | |
July 27, 2017 |
1. | I have reviewed this Quarterly Report on Form 10-Q for the quarter ended June 30, 2017 of SunCoke Energy Partners, L.P. (the “registrant”); |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(c) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Fay West | |
Senior Vice President and Chief Financial Officer | |
July 27, 2017 |
1. | This Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2017 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
2. | The information contained in this Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2017 fairly presents, in all material respects, the financial condition and results of operations of SunCoke Energy Partners, L.P. for the periods presented therein. |
1. | This Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2017 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
2. | The information contained in this Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2017 fairly presents, in all material respects, the financial condition and results of operations of SunCoke Energy Partners, L.P. for the periods presented therein. |
Mine or Operating Name/MSHA Identification Number | Section 104 S&S Citations (#)(2) | Section 104(b) Orders (#)(3) | Section 104(d) Citations and Orders (#)(4) | Section 110(b)(2) Violations (#)(5) | Section 107(a) Orders (#)(6) | Total Dollar Value of MSHA Assessments Proposed ($)(7) | Total Number of Mining Related Fatalities (#) | Received Notice of Pattern of Violations Under Section 104(e) (yes/no)(8) | Received Notice of Potential to Have Pattern Under Section 104(e) (yes/no)(9) | Legal Actions Pending as of Last Day of Period (#)(10)(11) | Legal Actions Initiated During Period (#)(12) | Legal Actions Resolved During Period (#)(13) | |
Ceredo Dock/46-09051 | — | — | — | — | — | $568.00 | — | — | No | No | — | — | |
Quincy Dock/46-07736 | 2 | — | — | — | — | — | — | — | No | No | — | — | |
Colona Synfuel (Belfry #5)/15-10789 | — | — | — | — | — | — | — | — | No | No | — | — | |
Total | 2 | — | — | — | — | $568.00 | — | — | — | — | — | — |
(1) | The table does not include the following: (i) facilities which have been idle or closed unless they received a citation or order issued by MSHA, (ii) permitted mining sites where we have not begun operations or (iii) mines that are operated on our behalf by contractors who hold the MSHA numbers and have the MSHA liabilities. |
(2) | Alleged violations of mandatory health or safety standards that could significantly and substantially contribute to the cause and effect of a coal or other mine safety or health hazard. |
(3) | Alleged failures to totally abate a citation within the period of time specified in the citation. |
(4) | Alleged unwarrantable failure (i.e., aggravated conduct constituting more than ordinary negligence) to comply with a mining safety standard or regulation. |
(5) | Alleged flagrant violations issued. |
(6) | Alleged conditions or practices which could reasonably be expected to cause death or serious physical harm before such condition or practice can be abated. |
(7) | Amounts shown include assessments proposed during the quarter ended June 30, 2017 and do not necessarily relate to the citations or orders reflected in this table. Assessments for citations or orders reflected in this table may be proposed by MSHA after June 30, 2017. |
(8) | Alleged pattern of violations of mandatory health or safety standards that are of such nature as could have significantly and substantially contributed to the cause and effect of coal or other mine health or safety hazards. |
(9) | Alleged potential to have a pattern of violations of mandatory health or safety standards that are of such nature as could have significantly and substantially contributed to the cause and effect of coal or other mine health or safety hazards. |
(10) | This number reflects legal proceedings which remain pending before the Federal Mine Safety and Health Review Commission (the “FMSHRC”) as of June 30, 2017. The pending legal actions may relate to the citations or orders issued by MSHA during the reporting period or to citations or orders issued in prior periods. The FMSHRC has jurisdiction to hear not only challenges to citations, orders, and penalties but also certain complaints by miners. The number of “pending legal actions” reported here reflects the number of contested citations, orders, penalties or complaints which remain pending as of June 30, 2017. |
(11) | The legal proceedings which remain pending before the FMSHRC as of June 30, 2017 are categorized as follows in accordance with the categories established in the Procedural Rules of the FMSHRC: |
Mine or Operating Name/MSHA Identification Number | Contests of Citations and Orders (#) | Contests of Proposed Penalties (#) | Complaints for Compensation (#) | Complaints for Discharge, Discrimination or Interference Under Section 105 (#) | Applications for Temporary Relief (#) | Appeals of Judges’ Decisions or Orders (#) |
Ceredo Dock/46-09051 | — | — | — | — | — | — |
Quincy Dock/46-07736 | — | — | — | — | — | — |
Colona Synfuel (Belfry #5)/15-10789 | — | — | — | — | — | — |
Total | — | — | — | — | — | — |
(12) | This number reflects legal proceedings initiated before the FMSHRC during the quarter ended June 30, 2017. The number of “initiated legal actions” reported here may not have remained pending as of June 30, 2017. |
(13) | This number reflects legal proceedings before the FMSHRC that were resolved during the quarter ended June 30, 2017. |
Document and Entity Information - shares |
6 Months Ended | |
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Jun. 30, 2017 |
Jul. 21, 2017 |
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Document and Entity Information [Abstract] | ||
Entity Registrant Name | SunCoke Energy Partners, L.P. | |
Entity Central Index Key | 0001555538 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2017 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2017 | |
Document Fiscal Period Focus | Q2 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Common Unit Outstanding | 46,223,704 |
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Millions |
Jun. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Accumulated depreciation | $ 390.1 | $ 352.6 |
Common Units - Public | ||
Limited partners' capital account units issued (in units) | 19,347,604 | 20,800,181 |
Common Units - Parent | ||
Limited partners' capital account units issued (in units) | 26,876,100 | 25,415,696 |
Consolidated Statements of Equity (Unaudited) - 6 months ended Jun. 30, 2017 - USD ($) $ in Millions |
Total |
Common
Limited Partner
|
Common
Limited Partner
SunCoke Energy Inc
|
General Partner
General Partner
SunCoke Energy Inc
|
Noncontrolling Interest |
---|---|---|---|---|---|
Balance at beginning of period at Dec. 31, 2016 | $ 753.7 | $ 296.9 | $ 410.3 | $ 32.1 | $ 14.4 |
Increase (Decrease) in Stockholders' Equity | |||||
Partnership net loss | (144.2) | (63.8) | (78.3) | (0.1) | (2.0) |
Distribution to unitholders, net of unit issuances | (58.8) | (24.5) | (30.3) | (4.0) | |
Distributions to noncontrolling interest | (1.1) | (1.1) | |||
Public units acquired by SunCoke | 0.0 | (15.4) | 15.4 | 0.0 | |
Balance at end of period at Jun. 30, 2017 | $ 549.6 | $ 193.2 | $ 317.1 | $ 28.0 | $ 11.3 |
General |
6 Months Ended |
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Jun. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
General | 1. General Description of Business SunCoke Energy Partners, L.P., (the "Partnership", "we", "our", and "us"), is a Delaware limited partnership formed in July 2012, which primarily produces coke used in the blast furnace production of steel. At June 30, 2017, we owned a 98 percent interest in Haverhill Coke Company LLC ("Haverhill"), Middletown Coke Company, LLC ("Middletown") and Gateway Energy and Coke Company, LLC ("Granite City"). The remaining 2 percent ownership interest in our three cokemaking facilities was owned by SunCoke Energy, Inc. ("SunCoke"). We also own a coal logistics business, which provides coal handling and/or mixing services to third-party customers as well as to our own cokemaking facilities and other SunCoke cokemaking facilities. Our coal logistics business consists of Convent Marine Terminal ("CMT"), Kanawha River Terminals, LLC ("KRT") and SunCoke Lake Terminal, LLC ("Lake Terminal"). At June 30, 2017, SunCoke, through a subsidiary, owned a 57 percent limited partnership interest in us and indirectly owned and controlled our general partner, which holds a 2.0 percent general partner interest in us and all of our incentive distribution rights ("IDR"). Organized in Delaware in 2012 and headquartered in Lisle, Illinois, we became a publicly-traded partnership in 2013 and our stock is listed on the New York Stock Exchange (“NYSE”) under the symbol “SXCP.” Basis of Presentation The accompanying unaudited consolidated financial statements included herein have been prepared in conformity with accounting principles generally accepted in the United States ("GAAP") for interim reporting. Certain information and disclosures normally included in financial statements have been omitted pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC"). In management’s opinion, the financial statements reflect all adjustments, which are of a normal recurring nature, necessary for a fair presentation of the results of operations, financial position and cash flows for the periods presented. The results of operations for the periods ended June 30, 2017 are not necessarily indicative of the operating results for the full year. These unaudited interim consolidated financial statements and notes should be read in conjunction with the audited consolidated financial statements and notes included in our Annual Report on Form 10-K for the year ended December 31, 2016. New Accounting Pronouncements In May 2014, Financial Accounting Standards Board ("FASB") Accounting Standards Update ("ASU") 2014-09, “Revenue from Contracts with Customers (Topic 606),” which supersedes the revenue recognition requirements in “Revenue Recognition (Topic 605),” and requires entities to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Subsequently, the FASB has issued various ASUs to provide further clarification around certain aspects of ASC 606. This standard will be effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period, and early adoption is permitted on a limited basis. Our implementation team has gained an understanding of the standard’s revenue recognition model and is completing the analysis and documentation of our contract details for impacts under the new revenue recognition model. While we are currently evaluating the impact of the standard, we expect the timing of our revenue recognition to generally remain the same under the new standard on an annual basis. Deferred revenue at CMT may be recognized on a more accelerated basis during quarterly periods within the year based on facts and circumstances considered at each quarter under the new guidance. The Partnership expects to adopt this standard on January 1, 2018 using the modified retrospective method. In February 2016, the FASB issued ASU 2016-02, "Leases (Topic 842)." ASU 2016-02 requires lessees to recognize assets and liabilities on the balance sheet for the rights and obligations created by all leases with terms of more than 12 months. It is effective for annual and interim periods in fiscal years beginning after December 15, 2018, with early adoption permitted. The standard requires the use of a modified retrospective transition method. A multi-disciplined implementation team has gained an understanding of the accounting and disclosure provisions of the standard and is in the process of analyzing the impacts to our business, including the development of new accounting processes to account for our leases and support the required disclosures. While we are still evaluating the impact of adopting this standard, we expect upon adoption the right-of-use assets and lease liabilities, such as various plant equipment rentals and the lease of our corporate office space, will increase the reported assets and liabilities on our Consolidated Balance Sheets. The Partnership expects to adopt this standard on January 1, 2019. |
Related Party Transactions and Agreements |
6 Months Ended |
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Jun. 30, 2017 | |
Related Party Transactions [Abstract] | |
Related Party Transactions and Agreements | 2. Related Party Transactions and Agreements Transactions with Affiliate Our coal logistics business provides coal handling and mixing services to certain SunCoke cokemaking operations. Coal Logistics recorded revenues derived from services provided to SunCoke’s cokemaking operations of $2.4 million and $4.6 million for the three and six months ended June 30, 2017, respectively, and $2.7 million and $5.3 million for the three and six months ended June 30, 2016, respectively. Allocated Expenses SunCoke charges us for all direct costs and expenses incurred on our behalf and allocated costs associated with support services provided to our operations. Allocated expenses from SunCoke for general corporate and operations support costs totaled $7.0 million and $13.9 million for the three and six months ended June 30, 2017, respectively, and $6.9 million and $13.9 million for three and six months ended June 30, 2016, respectively, and were included in selling, general and administrative expenses on the Consolidated Statements of Operations. These costs include legal, accounting, tax, treasury, engineering, information technology, insurance, employee benefit costs, communications, human resources, and procurement. Corporate allocations are recorded in accordance with the terms of our omnibus agreement with SunCoke and our general partner. During the second quarter of 2017, the Partnership reimbursed SunCoke $7.0 million and $1.4 million for previously deferred corporate allocated costs and IDR cash distributions, respectively. These amounts were included in payable to affiliate, net on the Consolidated Balance Sheets as of December 31, 2016. Omnibus Agreement In connection with the closing of our initial public offering on January 24, 2013 ("IPO"), we entered into an omnibus agreement with SunCoke and our general partner that addresses certain aspects of our relationship with them, including: Business Opportunities. We have preferential rights to invest in, acquire and construct cokemaking facilities in the United States ("U.S.") and Canada. SunCoke has preferential rights to all other business opportunities. Potential Defaults by Coke Agreement Counterparties. For a period of five years from the closing date of the IPO, SunCoke has agreed to make us whole (including an obligation to pay for coke) to the extent (i) AK Steel Steel Holding Corporation ("AK Steel") exercises the early termination right provided in its Haverhill coke sales agreement, (ii) any customer fails to purchase coke or defaults in payment under its coke sales agreement (other than by reason of force majeure or our default) or (iii) we amend a coke sales agreement's terms to reduce a customer's purchase obligation as a result of the customer's financial distress. We and SunCoke will share in any damages and other amounts recovered from third-parties arising from such events in proportion to our relative losses. Environmental Indemnity. SunCoke will indemnify us to the full extent of any remediation losses at the Haverhill and Middletown cokemaking facilities arising from any environmental matter discovered and identified as requiring remediation prior to the closing of the IPO. In addition, SunCoke will indemnify us for remediation losses at the Granite City cokemaking facility arising from any environmental matter discovered and identified as requiring remediation prior to the closing of the January 2015 dropdown of a 75 percent interest in Granite City ("Granite City Dropdown"). SunCoke contributed $67.0 million in partial satisfaction of this obligation from the proceeds of the IPO, and an additional $52.0 million in connection with subsequent dropdowns. If, prior to the fifth anniversary of the closing of the IPO, a pre-existing environmental matter is identified as requiring remediation, SunCoke will indemnify us for up to $50.0 million of any such remediation costs (we will bear the first $5.0 million of any such costs). Other Indemnification. SunCoke will fully indemnify us with respect to any additional tax liability related to periods prior to or in connection with the closing of the IPO or the Granite City Dropdown to the extent not currently presented on the Consolidated Balance Sheets. Additionally, SunCoke will either cure or fully indemnify us for losses resulting from any material title defects at the properties owned by the entities acquired in connection with the closing of the IPO or the Granite City Dropdown to the extent that those defects interfere with or could reasonably be expected to interfere with the operations of the related cokemaking facilities. We will indemnify SunCoke for events relating to our operations except to the extent that we are entitled to indemnification by SunCoke. License. SunCoke has granted us a royalty-free license to use the name “SunCoke” and related marks. Additionally, SunCoke has granted us a non-exclusive right to use all of SunCoke's current and future cokemaking and related technology. We have not paid and will not pay a separate license fee for the rights we receive under the license. Expenses and Reimbursement. SunCoke will continue to provide us with certain corporate and other services, and we will reimburse SunCoke for all direct costs and expenses incurred on our behalf and a portion of corporate and other costs and expenses attributable to our operations. So long as SunCoke controls our general partner, the omnibus agreement will remain in full force and effect unless mutually terminated by the parties. If SunCoke ceases to control our general partner, the omnibus agreement will terminate, but our rights to indemnification and use of SunCoke's existing cokemaking and related technology will survive. The omnibus agreement can be amended by written agreement of all parties to the agreement, but we may not agree to any amendment that would, in the reasonable discretion of our general partner, be adverse in any material respect to the holders of our common units without prior approval of the conflicts committee. |
Cash Distributions and Net Income Per Unit |
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Cash Distributions and Net Income Per Unit | 3. Cash Distributions and Net Income Per Unit Cash Distributions Our partnership agreement generally provides that we will make cash distributions, if any, each quarter in the following manner:
If cash distributions to our unitholders exceed $0.474375 per unit in any quarter, our unitholders and our general partner will receive distributions according to the following percentage allocations:
Our distributions are declared subsequent to quarter end. The table below represents total cash distributions applicable to the period in which the distributions were earned:
Allocation of Net Income Our partnership agreement contains provisions for the allocation of net income to the unitholders and the general partner. For purposes of maintaining partner capital accounts, the partnership agreement specifies that items of income and loss shall be allocated among the partners in accordance with their respective percentage interest. Normal allocations according to percentage interests are made after giving effect, if any, to priority income allocations in an amount equal to incentive cash distributions allocated 100 percent to the general partner. The calculation of net income allocated to the general and limited partners was as follows:
Earnings Per Unit Our net income is allocated to the general partner and limited partners in accordance with their respective partnership percentages, after giving effect to priority income allocations for incentive distributions, if any, to our general partner, pursuant to our partnership agreement. Distributions less than or greater than earnings are allocated in accordance with our partnership agreement. Payments made to our unitholders are determined in relation to actual distributions declared and are not based on the net income allocations used in the calculation of net income per unit. In addition to the common, we also have identified the general partner interest and IDRs as participating securities and we use the two-class method when calculating the net income per unit applicable to limited partners, which is based on the weighted-average number of common units outstanding during the period. Basic and diluted net income per unit applicable to limited partners are the same because we do not have any potentially dilutive units outstanding. The calculation of earnings per unit is as follows:
Unit Activity Unit activity for the six months ended June 30, 2017:
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Inventories |
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Inventory Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventories | 4. Inventories The components of inventories were as follows:
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Goodwill and Other Intangible Assets |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Other Intangible Assets | 5. Goodwill and Other Intangible Assets Goodwill, which represents the excess of the purchase price over the fair value of net assets acquired, is tested for impairment as of October 1 of each year, or when events occur or circumstances change that would, more likely than not, reduce the fair value of a reporting unit to below its carrying value. Goodwill allocated to our Coal Logistics segment was $73.5 million at both June 30, 2017 and December 31, 2016. The components of intangible assets were as follows:
The permits above represent the environmental and operational permits required to operate a coal export terminal in accordance with the United States Environmental Protection Agency and other regulatory bodies. Intangible assets are amortized over their useful lives in a manner that reflects the pattern in which the economic benefit of the asset is consumed. The permits’ useful lives were estimated to be 27 years at acquisition based on the expected useful life of the significant operating equipment at the facility. These permits have an average remaining renewal term of approximately 3.9 years. The permits were renewed regularly prior to our acquisition of CMT. We also have historical experience of renewing and extending similar arrangements at our other facilities and intend to continue to renew our permits as they come up for renewal for the foreseeable future. Total amortization expense for intangible assets subject to amortization was $2.6 million and $5.2 million for the three and six months ended June 30, 2017, respectively, and $2.8 million and $5.4 million for three and six months ended June 30, 2016, respectively. |
Income Taxes |
6 Months Ended |
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Jun. 30, 2017 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 6. Income Taxes At the end of each interim period, we make our best estimate of the effective tax rate expected to be applicable for the full fiscal year and the impact of discrete items, if any, and adjust the rate as necessary. 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 & Elkins LLP, that the Partnership's cokemaking operations generated qualifying income prior to the Final Regulations. Therefore, the Partnership believes it had a reasonable basis to conclude its cokemaking operations were considered qualifying income before the issuance of the new regulations and as such expects to maintain its treatment as a partnership through the transition period. Cokemaking entities in the Partnership will become taxable as corporations on January 1, 2028, after the transition period ends. As a result of the Final Regulations, the Partnership recorded deferred income tax expense of $148.6 million to set up its initial deferred income tax liability during the first quarter of 2017, primarily related to differences in the book and tax basis of fixed assets, which are expected to exist at the end of the 10-year transition period when the cokemaking operations become taxable. The Partnership reassessed these deferred tax liabilities during the second quarter of 2017, resulting in an immaterial impact to deferred income tax expense. A portion of this deferred tax liability, $3.0 million, was attributable to SunCoke's retained ownership interest in the cokemaking facilities and, therefore, was also reflected as a reduction in noncontrolling interest during the six months ended June 30, 2017. |
Debt and Financing Obligation |
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Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt and Financing Obligation | 7. Debt and Financing Obligation Total debt and financing obligation, including the current portion of long-term debt and financing obligation, consisted of the following:
Issuance of 2025 Partnership Senior Notes In May 2017, the Partnership issued $630.0 million aggregate principal amount of senior notes with an interest rate of 7.5 percent due in May 2025. The Partnership received proceeds of $620.6 million, net of an original issue discount of $9.4 million. The Partnership incurred debt issuance costs related to this transaction of $11.8 million, which were included in long-term debt and financing obligation on the Consolidated Balance Sheets as of June 30, 2017. The 2025 Partnership Senior Notes are the senior unsecured obligations of the Partnership, and are guaranteed on a senior unsecured basis by each of the Partnership’s existing and certain future subsidiaries (other than SunCoke Energy Partners Finance Corp.). Interest on the 2025 Partnership Senior Notes is payable semi-annually in cash in arrears on June 15 and December 15 of each year, commencing on December 15, 2017. The Partnership may redeem some or all of the 2025 Partnership Senior Notes at any time on or after June 15, 2020 at specified redemption prices plus accrued and unpaid interest, if any, to the redemption date. Before June 15, 2020, and following certain equity offerings, the Partnership also may redeem up to 35% of the 2025 Partnership Senior Notes at a price equal to 107.50% of the principal amount, plus accrued and unpaid interest, if any, to the redemption date. In addition, at any time prior to June 15, 2020, the Partnership may redeem some or all of the 2025 Partnership Senior Notes at a price equal to 100% of the principal amount, plus accrued and unpaid interest, if any, to the redemption date, plus a “make-whole” premium. The Partnership is obligated to offer to purchase all or a portion of the 2025 Partnership Senior Notes at a price of (a) 101% of their principal amount, together with accrued and unpaid interest, if any, to the date of purchase, upon the occurrence of certain change of control events and (b) 100% of their principal amount, together with accrued and unpaid interest, if any, to the date of purchase, upon the occurrence of certain asset dispositions. These restrictions and prohibitions are subject to certain qualifications and exceptions set forth in the Indenture, including without limitation, reinvestment rights with respect to the proceeds of asset dispositions. The Indenture contains covenants that, among other things, limit the Partnership’s ability and the ability of certain of the Partnership’s subsidiaries to (i) incur indebtedness, (ii) pay dividends or make other distributions, (ii) prepay, redeem or repurchase certain subordinated debt, (iv) make loans and investments, (v) sell assets, (vi) incur liens, (vii) enter into transactions with affiliates, (viii) enter into agreements restricting the ability of subsidiaries to pay dividends and (ix) consolidate or merge. Purchase and Redemption of 2020 Partnership Senior Notes and Repayment of Partnership Term Loan During the second quarter of 2017, the Partnership used the proceeds from the 2025 Partnership Notes to purchase and redeem its 2020 Partnership Notes, including principal of $463.0 million and a premium of $18.7 million, and to repay the $50.0 million outstanding on the Partnership Term Loan. As a result, during the three and six months ended June 30, 2017, the Partnership recorded a loss on extinguishment of debt on the Consolidated Statement of Operations of $19.1 million, which included the premium paid and a write-off of unamortized debt issuance costs of $7.0 million partly offset by a write-off of unamortized premiums of $6.6 million. Partnership Revolver In May 2017, the Partnership amended and restated the Partnership Revolver, which increased the Partnership's capacity from $250.0 million to $285.0 million and extended the maturity to May 2022, resulting in additional debt issuance costs of $3.0 million, which were included in long-term debt and financing obligation on the Consolidated Balance Sheets as of June 30, 2017. Additionally, the Partnership recorded a loss on extinguishment of debt on the Consolidated Statement of Operations of $0.8 million, representing a write-off of unamortized debt issuance costs, during the three and six months ended June 30, 2017. The Partnership repaid the outstanding revolver balance of $172.0 million and borrowed $100.0 million under the amended and restated credit facility during the second quarter of 2017. As of June 30, 2017, the Partnership had $1.9 million of letters of credit outstanding and an outstanding balance of $100.0 million, leaving $183.1 million available. Partnership's Promissory Note During the three and six months ended June 30, 2017, the Partnership repaid $0.3 million and $0.6 million, respectively, of principal on the Partnership's Promissory Note. The Partnership intends to repay the outstanding balance on the Partnership's Promissory Note of $112.6 million in August 2017, primarily using available borrowing capacity under the Partnership Revolver. Covenants Under the terms of the Partnership credit agreement, the Partnership is subject to a maximum leverage ratio of 4.5:1.0 prior to June 30, 2020 and 4.0:1.0 after June 30, 2020, and a minimum consolidated interest coverage ratio of 2.5:1.0. The Partnership's credit agreement contains other covenants and events of default that are customary for similar agreements and may limit our ability to take various actions including our ability to pay a dividend or repurchase our stock. Under the terms of the Promissory Note, Raven Energy LLC, a wholly-owned subsidiary of the Partnership, is subject to a maximum leverage ratio of 5.0:1.0 for any fiscal quarter ending prior to August 12, 2018. For any fiscal quarter ending on or after August 12, 2018, the maximum leverage ratio is 4.5:1.0. Additionally in order to make restricted payments, Raven Energy LLC is subject to a fixed charge ratio of 1.0:1.0. If we fail to perform our obligations under these and other covenants, the lenders' credit commitment could be terminated and any outstanding borrowings, together with accrued interest, under the Partnership Revolver and Promissory Note could be declared immediately due and payable. The Partnership has a cross-default provision that applies to our indebtedness having a principal amount in excess of $35 million. As of June 30, 2017, the Partnership was in compliance with all applicable debt covenants. We do not anticipate violation of these covenants nor do we anticipate that any of these covenants will restrict our operations or our ability to obtain additional financing. |
Commitments and Contingent Liabilities |
6 Months Ended |
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Jun. 30, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingent Liabilities | 8. Commitments and Contingent Liabilities The United States Environmental Protection Agency ("EPA") has issued Notices of Violations (“NOVs”) for the Haverhill and Granite City cokemaking facilities which stemmed from alleged violations of air operating permits for these facilities. We are working in a cooperative manner with the EPA, the Ohio Environmental Protection Agency and the Illinois Environmental Protection Agency to address the allegations, and have entered into a consent degree in federal district court with these parties. The consent decree includes a $2.2 million civil penalty payment that was paid by SunCoke in 2014, as well as capital projects underway to improve the reliability of the energy recovery systems and enhance environmental performance at the Haverhill and Granite City cokemaking facilities. We retained an aggregate of $119 million in proceeds from the Partnership's initial public offering and subsequent dropdowns to fund these environmental remediation projects at the Haverhill and Granite City cokemaking facilities. Pursuant to the omnibus agreement, any amounts that we spend on these projects in excess of the $119 million will be reimbursed by SunCoke. SunCoke spent $7 million related to these projects. We have spent approximately $94 million to date and the remaining capital is expected to be spent through the first quarter of 2019. The Partnership is a party to certain other pending and threatened claims, including matters related to commercial and tax disputes, product liability, employment claims, personal injury claims, premises-liability claims, allegations of exposures to toxic substances and general environmental claims. Although the ultimate outcome of these claims cannot be ascertained at this time, it is reasonably possible that some portion of these claims could be resolved unfavorably to the Partnership. Management of the Partnership believes that any liability which may arise from claims would not have a material adverse impact on our consolidated financial statements. |
Fair Value Measurements |
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Fair Value Disclosures [Abstract] | |||||||||||||
Fair Value Measurements | 9. Fair Value Measurements The Partnership measures certain financial and non-financial assets and liabilities at fair value on a recurring basis. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market in an orderly transaction between market participants on the measurement date. Fair value disclosures are reflected in a three-level hierarchy, maximizing the use of observable inputs and minimizing the use of unobservable inputs. The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability on the measurement date. The three levels are defined as follows:
Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis Certain assets and liabilities are measured at fair value on a recurring basis. The Partnership’s cash equivalents are measured at fair value based on quoted prices in active markets for identical assets. These inputs are classified as Level 1 within the valuation hierarchy. The Partnership did not have material cash equivalents at June 30, 2017 or December 31, 2016. Convent Marine Terminal Contingent Consideration In connection with the CMT acquisition, the Partnership entered into a contingent consideration arrangement that requires us to make future payments to The Cline Group based on future volume over a specified threshold, price and contract renewals. The fair value of the contingent consideration was estimated based on a probability-weighted analysis using significant inputs that are not observable in the market, or Level 3 inputs. Key assumptions included probability adjusted levels of coal handling services provided by CMT, anticipated price per ton on future sales and probability of contract renewal, including length of future contracts, volume commitment, and anticipated price per ton. The fair value of the contingent consideration at June 30, 2017 and December 31, 2016 was $4.5 million and $4.2 million, respectively, and was included in other deferred charges and liabilities on the Consolidated Balance Sheets. As a result of the increase in fair value, the Partnership recognized $0.3 million of additional expense in costs of products sold and operating expenses on the Consolidated Statements of Operations during the three and six months ended June 30, 2017. 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. Certain Financial Assets and Liabilities not Measured at Fair Value At June 30, 2017 and December 31, 2016, the estimated fair value of the Partnership's total debt was $851.1 million and $810.4 million, respectively, compared to a carrying amount of $856.6 million and $813.4 million, respectively. The fair value was estimated by management based upon estimates of debt pricing provided by financial institutions which are considered Level 2 inputs. |
Business Segment Disclosures |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Segment Disclosures | 10. Business Segment Disclosures The Partnership derives its revenues from the Domestic Coke and Coal Logistics reportable segments. Domestic Coke operations are comprised of the Haverhill and Middletown cokemaking facilities located in Ohio and the Granite City cokemaking facility located in Illinois. These facilities use similar production processes to produce coke and to recover waste heat that is converted to steam or electricity. Steam is provided to third-party customers primarily pursuant to steam supply and purchase agreements. Electricity is sold into the regional power market or to AK Steel Holding Corporation ("AK Steel") pursuant to energy sales agreements. Coke sales at the Partnership's cokemaking facilities are made pursuant to long-term, take-or-pay agreements with ArcelorMittal S.A., AK Steel and United States Steel Corporation. Each of the coke sales agreements contain pass-through provisions for costs incurred in the cokemaking process, including coal procurement costs (subject to meeting contractual coal-to-coke yields), operating and maintenance expenses, costs related to the transportation of coke to the customers, taxes (other than income taxes) and costs associated with changes in regulation, in addition to containing a fixed fee. Coal Logistics operations are comprised of CMT located in Louisiana, Lake Terminal located in Indiana and KRT located in West Virginia. Our coal logistics operations have a collective capacity to mix and transload approximately 40 million tons of coal annually and provide coal handling and/or mixing services to its customers, which include our own cokemaking facilities and other SunCoke cokemaking facilities. Coal handling and mixing results are presented in the Coal Logistics segment. Corporate and other expenses that can be identified with a segment have been included in determining segment results. The remainder is included in Corporate and Other. The following table includes Adjusted EBITDA, which is the measure of segment profit or loss and liquidity reported to the chief operating decision maker for purposes of allocating resources to the segments and assessing their performance:
The following table sets forth the Partnership's segment assets:
The following table sets forth the Partnership’s total sales and other operating revenue by product or service, excluding intersegment revenues:
The Partnership evaluates the performance of its segments based on segment Adjusted EBITDA, which represents earnings before interest, loss (gain) on extinguishment of debt, taxes, depreciation and amortization, adjusted for changes to our contingent consideration liability related to our acquisition of CMT and the expiration of certain acquired contractual obligations. 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. Set forth below is additional discussion of the limitations of Adjusted EBITDA as an analytical tool. Limitations. Other companies may calculate Adjusted EBITDA differently than we do, limiting its usefulness as a comparative measure. Adjusted EBITDA also has limitations as an analytical tool and should not be considered in isolation or as a substitute for an analysis of our results as reported under GAAP. Some of these limitations include that Adjusted EBITDA:
Below is a reconciliation of Adjusted EBITDA (unaudited) to net income and net cash provided by operating activities, which are its most directly comparable financial measures calculated and presented in accordance with GAAP:
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General (Policies) |
6 Months Ended |
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Jun. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
New Accounting Pronouncements | New Accounting Pronouncements In May 2014, Financial Accounting Standards Board ("FASB") Accounting Standards Update ("ASU") 2014-09, “Revenue from Contracts with Customers (Topic 606),” which supersedes the revenue recognition requirements in “Revenue Recognition (Topic 605),” and requires entities to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Subsequently, the FASB has issued various ASUs to provide further clarification around certain aspects of ASC 606. This standard will be effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period, and early adoption is permitted on a limited basis. Our implementation team has gained an understanding of the standard’s revenue recognition model and is completing the analysis and documentation of our contract details for impacts under the new revenue recognition model. While we are currently evaluating the impact of the standard, we expect the timing of our revenue recognition to generally remain the same under the new standard on an annual basis. Deferred revenue at CMT may be recognized on a more accelerated basis during quarterly periods within the year based on facts and circumstances considered at each quarter under the new guidance. The Partnership expects to adopt this standard on January 1, 2018 using the modified retrospective method. In February 2016, the FASB issued ASU 2016-02, "Leases (Topic 842)." ASU 2016-02 requires lessees to recognize assets and liabilities on the balance sheet for the rights and obligations created by all leases with terms of more than 12 months. It is effective for annual and interim periods in fiscal years beginning after December 15, 2018, with early adoption permitted. The standard requires the use of a modified retrospective transition method. A multi-disciplined implementation team has gained an understanding of the accounting and disclosure provisions of the standard and is in the process of analyzing the impacts to our business, including the development of new accounting processes to account for our leases and support the required disclosures. While we are still evaluating the impact of adopting this standard, we expect upon adoption the right-of-use assets and lease liabilities, such as various plant equipment rentals and the lease of our corporate office space, will increase the reported assets and liabilities on our Consolidated Balance Sheets. The Partnership expects to adopt this standard on January 1, 2019. |
Cash Distributions and Net Income Per Unit (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Distributions Made to Limited Partner, by Distribution | If cash distributions to our unitholders exceed $0.474375 per unit in any quarter, our unitholders and our general partner will receive distributions according to the following percentage allocations:
Our distributions are declared subsequent to quarter end. The table below represents total cash distributions applicable to the period in which the distributions were earned:
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Schedule of Calculation of Numerator and Denominator in Earnings Per Share | The calculation of net income allocated to the general and limited partners was as follows:
The calculation of earnings per unit is as follows:
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Schedule of Limited Partners' Capital Account by Class | Unit activity for the six months ended June 30, 2017:
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Inventories (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Inventory, Current | The components of inventories were as follows:
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Goodwill and Other Intangible Assets (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Finite-Lived Intangible Assets | The components of intangible assets were as follows:
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Debt and Financing Obligation (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Long-term Debt Instruments | Total debt and financing obligation, including the current portion of long-term debt and financing obligation, consisted of the following:
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Business Segment Disclosures (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Segment Reporting [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Segment Reporting Information, by Segment | The following table includes Adjusted EBITDA, which is the measure of segment profit or loss and liquidity reported to the chief operating decision maker for purposes of allocating resources to the segments and assessing their performance:
The following table sets forth the Partnership's segment assets:
The following table sets forth the Partnership’s total sales and other operating revenue by product or service, excluding intersegment revenues:
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Reconciliation of Operating Profit (Loss) from Segments to Consolidated | Below is a reconciliation of Adjusted EBITDA (unaudited) to net income and net cash provided by operating activities, which are its most directly comparable financial measures calculated and presented in accordance with GAAP:
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Cash Distributions and Net Income Per Unit - Allocation of Total Quarterly cash Distributions to General and Limited Partners (Details) - USD ($) $ / shares in Units, $ in Millions |
3 Months Ended | ||||||
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Jul. 17, 2017 |
Jun. 30, 2017 |
Mar. 31, 2017 |
Dec. 31, 2016 |
Sep. 30, 2016 |
Jun. 30, 2016 |
Mar. 31, 2016 |
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Dividends Payable [Line Items] | |||||||
Cash distributions per unit (in dollar per unit) | $ 0.5940 | $ 0.5940 | $ 0.5940 | $ 0.5940 | $ 0.5940 | ||
Cash distributions paid | $ 29.5 | $ 29.5 | $ 29.5 | $ 29.5 | $ 29.5 | ||
Distribution declared per unit (in dollar per unit) | $ 0.5940 | ||||||
Distributions declared | $ 29.5 | ||||||
Subsequent Event | |||||||
Dividends Payable [Line Items] | |||||||
Distribution declared per unit (in dollar per unit) | $ 0.5940 |
Cash Distributions and Net Income Per Unit - Allocation of Net Income (Details) |
6 Months Ended |
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Jun. 30, 2017 | |
Earnings Per Share [Abstract] | |
Allocation to general partner (as a percent) | 100.00% |
Inventories (Details) - USD ($) $ in Millions |
Jun. 30, 2017 |
Dec. 31, 2016 |
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Inventory Disclosure [Abstract] | ||
Coal | $ 49.2 | $ 34.5 |
Coke | 5.0 | 4.7 |
Materials, supplies, and other | 28.3 | 27.7 |
Total inventories | $ 82.5 | $ 66.9 |
Goodwill and Other Intangible Assets (Details Textual) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | |||
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Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2017 |
Jun. 30, 2016 |
Dec. 31, 2016 |
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Goodwill [Line Items] | |||||
Goodwill | $ 73.5 | $ 73.5 | $ 73.5 | ||
Total amortization expense | 2.6 | $ 2.8 | $ 5.2 | $ 5.4 | |
Permits | |||||
Goodwill [Line Items] | |||||
Useful lives (in years) | 25 years | ||||
Convent Marine Terminal | Permits | |||||
Goodwill [Line Items] | |||||
Useful lives (in years) | 27 years | ||||
Weighted average period before next renewal or extension | 3 years 11 months | ||||
Coal Logistics | |||||
Goodwill [Line Items] | |||||
Goodwill | $ 73.5 | $ 73.5 | $ 73.5 |
Income Taxes (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2017 |
Mar. 31, 2017 |
Jun. 30, 2016 |
Jun. 30, 2017 |
Jun. 30, 2016 |
|
Income Tax Contingency [Line Items] | |||||
Deferred income tax expense | $ (0.4) | $ 0.1 | $ 148.8 | $ 0.4 | |
IRS | |||||
Income Tax Contingency [Line Items] | |||||
Deferred income tax expense | $ 148.6 | ||||
IRS | SunCoke Energy Inc | |||||
Income Tax Contingency [Line Items] | |||||
Deferred tax liability | $ 3.0 | $ 3.0 |
Commitments and Contingent Liabilities (Details) - USD ($) $ in Millions |
6 Months Ended | 12 Months Ended |
---|---|---|
Jun. 30, 2017 |
Dec. 31, 2014 |
|
Loss Contingencies [Line Items] | ||
Cost of capital projects | $ 94.0 | |
Haverhill Coke Company LLC and Middletown Coke Company LLC | IPO | ||
Loss Contingencies [Line Items] | ||
Environmental capital expenditures retained | 119.0 | |
Haverhill and Granite City | ||
Loss Contingencies [Line Items] | ||
Payments for legal settlements | $ 2.2 | |
Haverhill and Granite City | Predecessor | ||
Loss Contingencies [Line Items] | ||
Cost of capital projects | $ 7.0 |
Fair Value Measurements (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2017 |
Jun. 30, 2016 |
Dec. 31, 2016 |
|
Business Acquisition [Line Items] | |||||
Contingent consideration adjustments | $ 0.3 | $ 0.0 | $ 0.3 | $ (3.7) | |
Estimated fair value of the Partnership's long-term debt | 851.1 | 851.1 | $ 810.4 | ||
Carrying value of Partnership's long-term debt | 856.6 | 856.6 | 813.4 | ||
Cost of Products Sold and Operating Expenses | |||||
Business Acquisition [Line Items] | |||||
Contingent consideration adjustments | 0.3 | 0.3 | $ (3.7) | ||
Other Deferred Charges and Liabilities | Fair Value, Inputs, Level 3 | Convent Marine Terminal | |||||
Business Acquisition [Line Items] | |||||
Business combination, contingent consideration | $ 4.5 | $ 4.5 | $ 4.2 |
Business Segment Disclosures - Segment Assets (Details) - USD ($) $ in Millions |
Jun. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Segment Reporting Information [Line Items] | ||
Total assets | $ 1,677.0 | $ 1,696.0 |
Operating Segments | Domestic Coke | ||
Segment Reporting Information [Line Items] | ||
Total assets | 1,171.3 | 1,184.2 |
Operating Segments | Coal Logistics | ||
Segment Reporting Information [Line Items] | ||
Total assets | 499.3 | 510.6 |
Corporate and Other | ||
Segment Reporting Information [Line Items] | ||
Total assets | $ 6.4 | $ 1.2 |
Business Segment Disclosures - Revenues by Operating Segment (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2017 |
Jun. 30, 2016 |
|
Segment Reporting Information [Line Items] | ||||
Revenue | $ 200.6 | $ 181.4 | $ 396.2 | $ 375.9 |
Cokemaking revenues | ||||
Segment Reporting Information [Line Items] | ||||
Revenue | 170.6 | 152.2 | 329.5 | 315.5 |
Energy revenues | ||||
Segment Reporting Information [Line Items] | ||||
Revenue | 10.7 | 14.2 | 24.3 | 28.6 |
Coal logistics revenues | ||||
Segment Reporting Information [Line Items] | ||||
Revenue | 16.7 | 13.6 | 37.0 | 28.9 |
Other revenues | ||||
Segment Reporting Information [Line Items] | ||||
Revenue | $ 2.6 | $ 1.4 | $ 5.4 | $ 2.9 |
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