Suncoke Energy announced full year 2018 results
SunCoke Energy, Inc reported fourth quarter and full-year 2018 results, reflecting strong operating performances from our coke and logistics businesses. Mr Mike Rippey, President and Chief Executive Officer of SunCoke Energy, Inc said that "Our fourth quarter results contributed to the Company's highest annual Adjusted EBITDA performance since 2012 and illustrate the strength of our businesses as well as the continued progress on our asset performance improvement initiatives. In 2018, we delivered strong operating results, which included exceptional operational improvement at Indiana Harbor driven by sound execution on our oven rebuild initiative as well as record volumes at Convent Marine Terminal."
Looking forward, the Company expects 2019 consolidated Adjusted EBITDA to be between USD 265 million and USD 275 million, reflecting continued improvement in our coke and logistics businesses.
In addition, the Company also announced it has entered into a definitive merger agreement with SunCoke Energy Partners, L.P. (NYSE: SXCP) whereby SXC will acquire all outstanding common units of SXCP not already owned by SXC in a stock-for-unit exchange transaction ("Simplification Transaction"). Pursuant to the terms of the merger agreement, SXCP unaffiliated common unitholders will receive 1.40 SXC common shares for each SXCP common unit.
Rippey continued, "As we move forward into 2019, we remain focused on operational excellence, including the execution of the final phase of the Indiana Harbor rebuild initiative, as well as successfully completing the Simplification Transaction, which we believe will unlock our full potential. We are confident that we can again execute against our objectives and deliver significant value to SunCoke shareholders."
Revenues increased USD 9.3 million and USD 119.4 million for the fourth quarter and full-year 2018, respectively, primarily reflecting the pass-through of higher coal prices and higher sales volumes in our Domestic Coke segment. The revenue increase in the fourth quarter from our Domestic Coke segment was partially offset by the absence of deferred revenue recognized in our Logistics segment.
Comparisons between quarterly results is impacted by the recognition of deferred revenue on throughput volumes for certain Logistics take-or-pay contracts. In the fourth quarter of 2017, we recognized USD 16.4 million of deferred revenue related to these contracts due to volume shortfalls during the year. Throughout most of 2018, our coal export customers provided volumes in excess of the take-or-pay contract minimums; therefore, we did not recognize any deferred revenue from these contracts in the fourth quarter of 2018. Rather, revenue was recognized throughout 2018 based on volumes handled. The timing and recognition of deferred revenue affects quarterly comparisons but does not have an impact on full-year results.
Fourth quarter 2018 Adjusted EBITDA decreased USD 3.6 million to USD 65.9 million, primarily driven by the timing of revenue recognized on our Logistics coal export take-or-pay contracts discussed above. Excluding this timing impact, fourth quarter 2018 results improved USD 12.8 million as compared to the prior year period due to improved performance in our Domestic Coke segment.
Full-year Adjusted EBITDA increased USD 28.5 million to USD 263.2 million, primarily due to improved operating performance at our Indiana Harbor facility.
Prior period net income attributable to SXC was impacted by a deferred income tax benefit of USD 125.0 million recorded in connection with the tax legislation passed in the fourth quarter 2017, which resulted in the remeasurement of U.S. deferred income tax liabilities and assets at the lower enacted corporate tax rates.
Excluding the impact of this 2017 tax event, net income attributable to SXC decreased USD 7.2 million for the fourth quarter 2018 and reflects higher depreciation expense, primarily due to the revisions in the estimated useful lives of certain assets in our Domestic Coke segment and the timing of deferred revenue recognition partly offset by improved operating results. Excluding the 2017 tax event, net income attributable to SXC increased USD 28.8 million for the full-year due to improved operating results and the absence of a loss recognized in 2017 in connection with debt refinancing activities partly offset by higher depreciation in our Domestic Coke segment.
2019 OUTLOOK
Our 2019 guidance, which does not include the benefit from the Simplification Transaction, is as follows:
Domestic coke production is expected to be approximately 4.1 million tons
Consolidated Adjusted EBITDA is expected to be between USD 265 to USD 275 million
Adjusted EBITDA attributable to SXC is expected to be between USD 182 to USD 188 million, reflecting the impact of public ownership in SXCP
Capital expenditures are projected to be between USD 110 to USD 120 million, including USD 40 million to USD 48 million related to our Indiana Harbor oven rebuild project and approximately USD 6 million related to completing our Granite City gas sharing project
Cash generated by operations is estimated to be between USD 180 million and USD 195 million
Cash taxes are projected to be between USD 4 to USD 8 million.
Source : Strategic Research Institute