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SunCoke Energy Reports Fourth Quarter and Full Year 2012 Results
02/05/2013 - SunCoke Energy, Inc. reported fourth quarter and full year 2012 results, noting strong performance was driven largely by three factors: the near-flawless startup of the company's Middletown operations, better results at Indiana Harbor and continued strong performance across its entire U.S. cokemaking fleet.
SunCoke Energy, Inc. reported fourth quarter and full year 2012 results.
“We delivered on our financial targets in 2012, achieving Adjusted EBITDA of $265.7 million, earnings per share of $1.40 and free cash flow of $120 million,” said Fritz Henderson, chairman and chief executive officer of SunCoke Energy, Inc. “This performance was driven largely by three factors: the near-flawless startup of our Middletown operations, better results at Indiana Harbor and continued strong performance across our entire U.S. cokemaking fleet. Our coal mining business did not meet our expectations in 2012, but still generated positive earnings and was essentially cash flow neutral. In response to the current weak coal market environment, we continue to take aggressive action to improve productivity and reduce costs to strategically position this segment for the long term.”
Henderson also said, “In 2012, we built a strong foundation to grow our coke business. We signed an agreement to form a coke making joint venture with VISA Steel in India, filed a permit to build a potential new U.S. coke making facility and, just a few weeks ago, we completed the initial public offering for units in SunCoke Energy Partners, L.P., our new master limited partnership. These efforts should help drive continued positive long term momentum in our business.”
Consolidated Results
In fourth quarter 2012, total revenues rose 15.9% to $491.4 million versus fourth quarter 2011. For the full year 2012, total revenues increased 24.4% to $1,914.1 million versus full year 2011. The increase for both periods was largely driven by sales at the new Middletown facility, which began operations in October 2011, along with the pass-through of higher coal prices.
In fourth quarter 2012, total revenues rose 15.9% to $491.4 million versus fourth quarter 2011. For the full year 2012, total revenues increased 24.4% to $1,914.1 million versus full year 2011. The increase for both periods was largely driven by sales at the new Middletown facility, which began operations in October 2011, along with the pass-through of higher coal prices.
Adjusted EBITDA increased 125.6% to $69.7 million in the fourth quarter 2012 and was up 91.4% for the year to $265.7 million as compared to the same prior year periods. Adjusted EBITDA benefited in both periods from the contribution of Middletown combined with better results at the Indiana Harbor facility, which experienced operating challenges throughout 2011 and billing and inventory adjustments in fourth quarter 2011.
Net income attributable to shareholders climbed by $19.6 million to $27.6 million for the fourth quarter and by $38.2 million to $98.8 million for the full year 2012. The quarter’s strong improvement was led by the contribution of Middletown and better results at Indiana Harbor. The same factors drove the full year increase, but were partly offset by financing costs related to the standalone corporate structure.
Segment Results
Jewell Coke
The Jewell Coke segment consists of the coke making operations in Vansant, Va. Substantially all of the metallurgical coal used at its Jewell coke making facility is supplied from its coal mining operations. Beginning in first quarter 2012, the intersegment coal costs charged to the Jewell Coke segment are reflective of the contract price Jewell Coke charges its customer. Prior year periods have been adjusted to reflect this change.
The Jewell Coke segment consists of the coke making operations in Vansant, Va. Substantially all of the metallurgical coal used at its Jewell coke making facility is supplied from its coal mining operations. Beginning in first quarter 2012, the intersegment coal costs charged to the Jewell Coke segment are reflective of the contract price Jewell Coke charges its customer. Prior year periods have been adjusted to reflect this change.
| Three Months Ended 31 December | |||
|
(In millions) |
2012 |
2011 |
Increase/ |
| Segment revenues |
$69.6 |
$60.5 |
$9.1 |
| Sales volumes (in thousands of tons) |
170 |
166 |
4 |
Other Domestic Coke
Other Domestic Coke consists of cokemaking facilities and heat recovery operations at our Indiana Harbor, Haverhill, Granite City and Middletown plants. The Middletown Fcokemaking facility commenced operations in October 2011. SunCoke holds an 85% interest in the partnership that owns the Indiana Harbor cokemaking facility, with the remaining 15% interest held by an unaffiliated third-party partner.
Other Domestic Coke consists of cokemaking facilities and heat recovery operations at our Indiana Harbor, Haverhill, Granite City and Middletown plants. The Middletown Fcokemaking facility commenced operations in October 2011. SunCoke holds an 85% interest in the partnership that owns the Indiana Harbor cokemaking facility, with the remaining 15% interest held by an unaffiliated third-party partner.
| Three Months Ended 31 December | |||
|
(In millions) |
2012 |
2011 |
Increase/ |
| Segment revenues |
$390.6 |
$330.2 |
$60.4 |
| Sales volumes (in thousands of tons) |
907 |
837 |
70 |
International Coke
International Coke consists of a cokemaking facility in Vitória, Brazil, which we operate for a Brazilian affiliate of ArcelorMittal. International Coke earns operating and technology licensing fees based on production, and recognizes a dividend on its preferred stock investment, generally in the fourth quarter, assuming certain minimum production levels are achieved at the facility.
International Coke consists of a cokemaking facility in Vitória, Brazil, which we operate for a Brazilian affiliate of ArcelorMittal. International Coke earns operating and technology licensing fees based on production, and recognizes a dividend on its preferred stock investment, generally in the fourth quarter, assuming certain minimum production levels are achieved at the facility.
Coal Mining
Coal Mining consists of metallurgical coal mining activities conducted in Virginia and West Virginia. A substantial portion of the metallurgical coal produced by its coal mining operations is sold to its Jewell Coke segment for conversion into coke. Beginning in first quarter 2012, intersegment coal revenues for sales to the Jewell Coke segment are reflective of the contract price Jewell Coke charges its customer. Prior year periods have been adjusted to reflect this change.
Coal Mining consists of metallurgical coal mining activities conducted in Virginia and West Virginia. A substantial portion of the metallurgical coal produced by its coal mining operations is sold to its Jewell Coke segment for conversion into coke. Beginning in first quarter 2012, intersegment coal revenues for sales to the Jewell Coke segment are reflective of the contract price Jewell Coke charges its customer. Prior year periods have been adjusted to reflect this change.
| Three Months Ended 31 December | |||
|
(In millions) |
2012 |
2011 |
Increase/ |
| Segment revenues |
$10.8 |
$14.3 |
($3.5) |
| Coal production (in thousands of tons) |
351 |
349 |
2 |
| Sales volumes (in thousands of tons) |
370 |
363 |
7 |
2013 Outlook
The following summarizes the Company’s 2013 guidance:
The following summarizes the Company’s 2013 guidance:
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Domestic coke production is expected to be in excess of 4.3 million tons
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Coal production is projected to be approximately 1.4 million tons
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Adjusted EBITDA is expected to be between $205 million and $230 million on a consolidated basis. Adjusted EBITDA attributable to SXC is expected to be between $165 million and $190 million, reflecting the impact of the public ownership in SunCoke Energy Partners, L.P.
-
Earnings per diluted share attributable to SXC is expected to be between $0.30 and $0.55 per diluted share, reflecting the impact of the public ownership in SunCoke Energy Partners, L.P.
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Cash generated by operations is expected to be approximately $140 million.
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Capital expenditures and investments are projected to be $200 million on a consolidated basis, including the expected $67 million investment in the VISA SunCoke JV. Approximately $15 million of the projected capital expenditures has been pre-funded from the proceeds from the initial public offering of SunCoke Energy Partners, L.P.
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The effective tax rate for the full year 2013 is expected to be between 7% and 14%, and the cash tax rate is expected to be between 12% and 20%.
SunCoke Energy, Inc. is the largest independent producer of coke in the Americas, with 50 years of experience supplying coke to the integrated steel industry. Its advanced, heat recovery cokemaking process produces high-quality coke for use in steelmaking, captures waste heat for derivative energy resale and meets or exceeds environmental standards. Its cokemaking facilities are located in Virginia, Indiana, Ohio, Illinois and Vitoria, Brazil, and its coal mining operations, which have more than 114 million tons of proven and probable reserves, are located in Virginia and West Virginia.
