Table of Contents


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 
FORM 10-Q
 
 

ýQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 20162017
or
¨TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                      to                     
Commission File Number 001-35782
 
 
SUNCOKE ENERGY PARTNERS, L.P.
(Exact name of Registrant as specified in its charter)
 
 
Delaware 35-2451470
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer
Identification No.)
1011 Warrenville Road, Suite 600
Lisle, Illinois 60532
(630) 824-1000
(Registrant’s telephone number, including area code)
 
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    ý  Yes    ¨  No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).     ý  Yes    ¨  No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ¨  Accelerated filer ý
Non-accelerated filer ¨(Do not check if a smaller reporting company) Smaller reporting company ¨
Emerging growth company¨
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.¨

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Act).    Yes  ¨    No  ý

The registrant had 46,206,16846,220,573 common units outstanding at April 22, 2016.21, 2017.
 


SUNCOKE ENERGY PARTNERS, L.P.
TABLE OF CONTENTS
 
PART I - FINANCIAL INFORMATION
  
Item 1. Combined and Consolidated Financial Statements
1
  
Combined and Consolidated Statements of IncomeOperations (Unaudited) For the Three Months Ended March 31, 20162017 and 20152016
1
  
Consolidated Balance Sheets Atat March 31, 20162017 (Unaudited) and December 31, 20152016
2
  
Combined and Consolidated Statements of Cash Flows (Unaudited) For the Three Months Ended March 31, 20162017 and 20152016
3
  
Consolidated Statement of Equity (Unaudited) For the Three Monthsmonths Ended March 31, 20162017
4
  
Notes to the Combined and Consolidated Financial Statements
5
  
1. General
5
  
2. Related Party TransactionTransactions and Agreements
6
  
3. Cash Distributions and Net Income Per Unit
7
  
4. Inventories
119
  
5. Goodwill and Other Intangible Assets
1110
  
6. Income Taxes
1210
  
7. Debt and Financing Obligation
11
8. Commitments and Contingent Liabilities
11
9. Fair Value Measurements
12
  
8. Supplemental Cash Flow Information
13
9. Commitments and Contingent Liabilities
13
10. Fair Value Measurements
14
11. Business Segment Disclosures
1513
  
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
1816
  
Item 3. Quantitative and Qualitative Disclosures About Market Risk
3228
  
Item 4. Controls and Procedures
3228
 
PART II - OTHER INFORMATION
  
Item 1. Legal Proceedings
3329
  
Item 1A. Risk Factors
3329
  
Item 2. Unregistered Sale of Equity Securities and Use of Proceeds
3329
Item 4. Mine Safety Disclosures
29
  
Item 6. Exhibits
3430
  
Signature
3531

PART I - FINANCIAL INFORMATION
Item 1.Combined and Consolidated Financial Statements

SunCoke Energy Partners, L.P.
Combined and Consolidated Statements of IncomeOperations
(Unaudited)
  Three Months Ended March 31,
  2016 2015
     
  (Dollars and units in millions, except per unit amounts)
Revenues    
Sales and other operating revenue $194.5
 $203.3
Costs and operating expenses    
Cost of products sold and operating expenses 134.2
 147.4
Selling, general and administrative expenses 8.4
 7.6
Depreciation and amortization expense 18.7
 14.6
Total costs and operating expenses 161.3
 169.6
Operating income 33.2
 33.7
Interest expense, net 12.5
 11.2
(Gain) loss on extinguishment of debt (20.4) 9.4
Income before income tax expense 41.1
 13.1
Income tax expense (benefit) 0.6
 (3.3)
Net income 40.5
 16.4
Less: Net income attributable to noncontrolling interests 0.7
 3.2
Net income attributable to SunCoke Energy Partners, L.P./Previous Owner $39.8
 $13.2
Less: Net income attributable to Previous Owner —
 0.6
Net income attributable to SunCoke Energy Partners, L.P. $39.8
 $12.6
     
General partner's interest in net income $10.1
 $1.8
Limited partners' interest in net income $29.7
 $11.4
Net income per common unit (basic and diluted) $0.64
 $0.29
Net income per subordinated unit (basic and diluted) $—
 $0.29
Weighted average common units outstanding (basic and diluted) 46.2
 23.3
Weighted average subordinated units outstanding (basic and diluted) —
 15.7
  Three Months Ended March 31,
  2017 2016
     
  (Dollars and units in millions, except per unit amounts)
Revenues    
Sales and other operating revenue $195.6
 $194.5
Costs and operating expenses    
Cost of products sold and operating expenses 135.4
 134.2
Selling, general and administrative expenses 8.5
 8.4
Depreciation and amortization expense 21.6
 18.7
Total costs and operating expenses 165.5
 161.3
Operating income 30.1
 33.2
Interest expense, net 12.6
 12.5
Gain on extinguishment of debt —
 (20.4)
Income before income tax expense 17.5
 41.1
Income tax expense 149.2
 0.6
Net (loss) income (131.7) 40.5
Less: Net (loss) income attributable to noncontrolling interests (2.4) 0.7
Net (loss) income attributable to SunCoke Energy Partners, L.P. $(129.3) $39.8
     
General partner's interest in net (loss) income $(1.3) $10.1
Limited partners' interest in net (loss) income $(128.0) $29.7
Net (loss) income per common unit (basic and diluted) $(2.77) $0.64
Weighted average common units outstanding (basic and diluted) 46.2
 46.2

SunCoke Energy Partners, L.P.
Consolidated Balance Sheets
 March 31, 2016 December 31, 2015 March 31, 2017 December 31, 2016
 (Unaudited)   (Unaudited)  
 (Dollars in millions) (Dollars in millions)
Assets    
Cash and cash equivalents $33.7
 $48.6
 $46.2
 $41.8
Receivables 44.9
 40.0
 40.1
 39.7
Receivables from affiliates, net —
 1.4
Inventories 73.3
 77.1
 78.3
 66.9
Other current assets 4.3
 2.0
 4.2
 1.6
Total current assets 156.2
 169.1
 168.8
 150.0
Restricted cash 10.3
 17.7
Properties, plants and equipment (net of accumulated depreciation of $307.2 million and $291.1 million at March 31, 2016 and December 31, 2015, respectively) 1,317.2
 1,326.5
Properties, plants and equipment (net of accumulated depreciation of $371.4 million and $352.6 million at March 31, 2017 and December 31, 2016, respectively) 1,281.8
 1,294.9
Goodwill 67.1
 67.7
 73.5
 73.5
Other intangible assets, net 184.8
 187.4
 174.1
 176.7
Deferred charges and other assets 0.5
 0.5
 0.8
 0.9
Total assets $1,736.1
 $1,768.9
 $1,699.0
 $1,696.0
Liabilities and Equity        
Accounts payable $50.7
 $45.3
 $67.9
 $47.0
Accrued liabilities 22.7
 12.9
 11.1
 11.7
Deferred revenue 5.6
 2.5
Current portion of long-term debt and financing obligation 6.1
 4.9
Interest payable 6.2
 14.7
Payable to affiliate, net 0.8
 —
 6.0
 4.7
Current portion of long-term debt 1.1
 1.1
Interest payable 6.6
 17.5
Total current liabilities 81.9
 76.8
 102.9
 85.5
Long-term debt 841.5
 894.5
Long-term debt and financing obligation 803.7
 805.7
Deferred income taxes 38.3
 38.0
 187.1
 37.9
Asset retirement obligations 5.7
 5.6
Other deferred credits and liabilities 5.6
 9.0
 13.2
 13.2
Total liabilities 973.0
 1,023.9
 1,106.9
 942.3
Equity        
Held by public:        
Common units (issued 20,790,472 and 20,787,744 units at March 31, 2016 and December 31, 2015, respectively)
 304.2
 300.0
Common units (issued 20,804,877 and 20,800,181 units at March 31, 2017 and December 31, 2016, respectively)
 227.0
 296.9
Held by parent: 

 

    
Common units (issued 25,415,696 and 9,705,999 units at March 31, 2016 and December 31, 2015, respectively) 419.3
 211.0
Subordinated units (issued zero units at March 31, 2016 and 15,709,697 units at December 31, 2015) —
 203.3
Common units (issued 25,415,696 units at March 31, 2017 and December 31, 2016) 324.8
 410.3
General partner interest 24.6
 15.1
 28.8
 32.1
Partners' capital attributable to SunCoke Energy Partners, L.P. 748.1
 729.4
 580.6
 739.3
Noncontrolling interest 15.0
 15.6
 11.5
 14.4
Total equity 763.1
 745.0
 592.1
 753.7
Total liabilities and equity $1,736.1
 $1,768.9
 $1,699.0
 $1,696.0

SunCoke Energy Partners, L.P.
Combined and Consolidated Statements of Cash Flows
(Unaudited)
 Three Months Ended March 31, Three Months Ended March 31,
 2016 2015 2017 2016
   
   
 (Dollars in millions) (Dollars in millions)
Cash Flows from Operating Activities:        
Net income $40.5
 $16.4
Adjustments to reconcile net income to net cash provided by operating activities:    
Net (loss) income $(131.7) $40.5
Adjustments to reconcile net (loss) income to net cash provided by operating activities:    
Depreciation and amortization expense 18.7
 14.6
 21.6
 18.7
Deferred income tax expense (benefit) 0.3
 (3.3)
(Gain) loss on extinguishment of debt (20.4) 9.4
Deferred income tax expense 149.2
 0.3
Gain on extinguishment of debt —
 (20.4)
Changes in working capital pertaining to operating activities:        
Receivables (4.9) (4.5) (0.4) (4.9)
Receivables from affiliate, net 2.2
 4.7
Payables to affiliate, net 1.3
 2.2
Inventories 3.8
 6.3
 (11.4) 3.8
Accounts payable 7.6
 (2.4) 19.3
 7.6
Accrued liabilities 8.9
 (0.9) (0.6) (0.3)
Deferred revenue 3.1
 9.2
Interest payable (10.9) (9.5) (8.5) (10.9)
Other (5.4) (1.1) (2.5) (5.4)
Net cash provided by operating activities 40.4
 29.7
 39.4
 40.4
Cash Flows from Investing Activities:        
Capital expenditures (8.0) (5.5) (4.2) (8.0)
Restricted cash 7.4
 —
Decrease in restricted cash 0.1
 7.4
Other investing activities 0.6
 —
 —
 0.6
Net cash used in investing activities —
 (5.5) (4.1) —
Cash Flows from Financing Activities:        
Proceeds from issuance of long-term debt —
 210.8
Repayment of long-term debt, including market premium (32.9) (149.5)
Debt issuance costs —
 (4.2)
Repayment of long-term debt (0.3) (32.9)
Repayment of financing obligation (0.6) —
Proceeds from revolving credit facility 20.0
 —
 10.0
 20.0
Repayment of revolving credit facility (20.0) —
 (10.0) (20.0)
Distributions to unitholders (public and parent) (29.5) (22.2) (29.5) (29.5)
Distributions to noncontrolling interest (SunCoke Energy, Inc.) (1.3) (0.6) (0.5) (1.3)
Capital contributions from SunCoke 8.4
 —
 —
 8.4
Net cash (used in) provided by financing activities (55.3) 34.3
Net (decrease) increase in cash and cash equivalents (14.9) 58.5
Net cash used in financing activities (30.9) (55.3)
Net increase (decrease) in cash and cash equivalents 4.4
 (14.9)
Cash and cash equivalents at beginning of period 48.6
 33.3
 41.8
 48.6
Cash and cash equivalents at end of period $33.7
 $91.8
 $46.2
 $33.7
Supplemental Disclosure of Cash Flow Information        
Interest paid $24.3
 $21.0
 $20.9
 $24.3

SunCoke Energy Partners, L.P.
Consolidated Statement of Equity
(Unaudited)

  Common
- Public		 Common
- SunCoke		 Subordinated
- SunCoke		 General Partner
- SunCoke		 Noncontrolling Interest Total
             
 (Dollars in millions)
At December 31, 2015 $300.0
 $211.0
 $203.3
 $15.1
 $15.6
 $745.0
Conversion of subordinated units to common units —
 203.3
 (203.3) —
 —
 —
Partnership net income 16.5
 13.2
 —
 10.1
 0.7
 40.5
Distribution to unitholders (12.3) (15.2) —
 (2.0) —
 (29.5)
Distributions to noncontrolling interest —
 —
 —
 —
 (1.3) (1.3)
Capital contribution from SunCoke —
 7.0
 —
 1.4
 —
 8.4
At March 31, 2016 $304.2
 $419.3
 $—
 $24.6
 $15.0
 $763.1
  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 (57.6) (70.4) (1.3) (2.4) (131.7)
Distribution to unitholders, net of unit issuances (12.3) (15.1) (2.0) —
 (29.4)
Distributions to noncontrolling interest —
 —
 —
 (0.5) (0.5)
At March 31, 2017 $227.0
 $324.8
 $28.8
 $11.5
 $592.1


SunCoke Energy Partners, L.P.
Notes to the Combined and Consolidated Financial Statements
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 March 31, 2016,2017, 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"). At March 31, 2016, SunCoke, through a subsidiary, owned a 53.9 percent partnership interest in us and all of our incentive distribution rights ("IDR") and indirectly owned and controlled our general partner, which holds a 2.0 percent general partner interest in us. We also own a Coal Logisticscoal 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 Logisticscoal logistics business consists of Convent Marine Terminal ("CMT"), Kanawha River Terminals, LLC ("KRT") and SunCoke Lake Terminal, LLC ("Lake Terminal"). At March 31, 2017, SunCoke, through a subsidiary, owned a 53.9 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").
IncorporatedOrganized 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 combined and 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 period ended March 31, 20162017 are not necessarily indicative of the operating results for the full year. These unaudited interim combined and consolidated financial statements and notes should be read in conjunction with the audited combined and consolidated financial statements and notes included in our Annual Report on Form 10-K for the year ended December 31, 2015.
The combined and consolidated financial statements for the periods presented pertain to the operations of the Partnership and give retrospective effect to include the results of operations and cash flows of Granite City (the "Previous Owner"), as a result of the January 2015 dropdown of a 75 percent interest in Granite City ("Granite City Dropdown").2016.
New Accounting Pronouncements
In April 2016, theMay 2014, Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2016-10, "Revenue From2014-09, “Revenue from Contracts Withwith Customers (Topic 606): Identifying Performance Obligations and Licensing." ASU 2016-10 clarifies guidance related to identifying performance obligations and licensing implementation guidance contained in,” which supersedes the new revenue recognition standard. It isrequirements 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 permits 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 Convent Marine Terminal 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 is currently evaluatingexpects to adopt this ASU to determine its potential impactstandard on January 1, 2018 using the Partnership's financial condition, results of operations, or cash flows.
In March 2016, the FASB issued ASU 2016-08, "Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net)." ASU 2016-08 clarifies the implementation guidance on principal versus agent considerations. It is effective for fiscal years beginning after December 15, 2017, and interim periods within fiscal years beginning after December 15, 2018, with early adoption permitted. The Partnership is currently evaluating this ASU to determine its potential impact on the Partnership's financial condition, results of operations, and cash flows.modified retrospective method.
In February 2016, the FASB issued ASU 2016-02, "Leases"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, 2019, and interim periods within fiscal years beginning after December 15, 2020,2018, with early adoption permitted. The Partnershipstandard 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 currently evaluating this ASU to determine its potential impact on the Partnership's financial condition, results of operations, and cash flows.    
Reclassifications
Certain amounts in the prior period combinedprocess of analyzing the impacts to our business, including the development of new accounting processes to account for our leases and consolidated financial statements have been reclassifiedsupport 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 conform to the current year presentation.adopt this standard on January 1, 2019.    


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2. Related Party Transactions and Agreements
The related party transactions with SunCoke and its affiliates are described below.
Transactions with Affiliate
Our Coal Logisticscoal logistics business provides coal handling and/orand mixing services to certain SunCoke cokemaking operations. During three months ended March 31, 2016 and 2015, Coal Logistics recorded revenues derived from services provided to SunCoke’s cokemaking operations of $2.6$2.2 million and $3.0$2.6 million respectively. The Partnership also purchased coal and other services from SunCoke and its affiliates totaling $0.1 million and $1.5 million during the three months ended March 31, 2016 and 2015, respectively. At March 31, 2016,net payables to SunCoke and affiliates were $0.8 million, which was recorded in payable to affiliates, net on the Consolidated Balance Sheets.
Transactions with Related Parties
Our Coal Logistics business provides coal handling and storage services to Murray Energy Corporation ("Murray") and Foresight Energy LP ("Foresight"), who are related parties with The Cline Group. The Cline Group currently owns a 10.3 percent interest in the Partnership as part of the CMT acquisition. Additionally, Murray also holds a significant interest in Foresight. Sales to Murray and Foresight accounted for $5.1 million, or 2.6 percent, of the Partnership's sales and other operating revenue and were recorded in the Coal Logistics segment for the three months ended March 31, 2016. At March 31,2017, and 2016, receivables from Murray and Foresight were $13.5 million, which was recorded in receivables on the Consolidated Balance Sheets, and deferred revenue for minimum volume payments was $8.7 million, which was recorded in accrued liabilities on the Consolidated Balance Sheets. Deferred revenue on take-or-pay contracts is recognized into GAAP income annually based on the terms of the contract. respectively.
As part of the CMT acquisition, the Partnership withheld $21.5 million in cash to fund the completion of capital improvements at CMT. The cash withheld was recorded as restricted cash on the Consolidated Balance Sheet. During the first quarter of 2016, the Partnership amended an agreement with The Cline Group, which unrestricted $6.0 million of the restricted cash and relieved any obligation of the Partnership to repay these amounts to The Cline Group. The remaining restricted cash balance as of March 31, 2016 of $10.3 million is primarily related to the new state-of-the-art ship loader, which will allow for faster coal loading onto larger ships.
Additionally, the Partnership amended the contingent consideration terms with The Cline Group, which reduced the fair value of the contingent consideration liability from $7.9 million at December 31, 2015 to $4.2 million at March 31, 2016, with the resulting $3.7 million gain recognized as a reduction to costs of products sold and operating expenses on the Combined and Consolidated Statements of Income during the three months ended March 31, 2016. See Note 10.
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 are included in selling, general and administrative expenses and totaled $7.0$6.9 million and $6.6$7.0 million for the three months ended March 31, 2017 and 2016, respectively, and 2015, respectively.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. These allocations were increased in
During the firstsecond quarter of 2016, for additional support provided to the CMT operations.
In an effort to increase the Partnership's liquidity position for continued de-levering of its balance sheet, SunCoke provided a "reimbursement holiday" during the first quarter of 2016Partnership with deferred payment terms until April 2017 on the reimbursement of $6.9 million of allocated corporate cost allocationcosts to the Partnership resulting in a capital contribution of $7.0 million. SunCoke also returned itsand the $1.4 million IDR cash distribution, resulting in an outstanding payable to SunCoke of $1.4$8.3 million included in payable to affiliate, net on the Partnership ("IDR giveback")Consolidated Balance Sheets as a capital contribution. of March 31, 2017 and 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 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.


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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 initialJanuary 2015 dropdown of a 75 percent interest in Granite City Dropdown.("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. SunCoke may consider providing additional support to the Partnership in the future by providing a corporate cost reimbursement holiday, whereby the Partnership would not be required to reimburse SunCoke for costs or a deferral, whereby the Partnership would be granted extended payment terms. Additionally, we have agreed to pay all


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fees in connection with any future financing arrangement entered into for the purpose of replacing the credit facility or the senior notes.
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.
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:
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;quarters and
second,98 percent to the holders of subordinated units and 2 percent to our general partner, until each subordinated unit has received the minimum quarterly distribution of $0.412500; and
third, 98 percent to all unitholders, pro rata, and 2 percent to our general partner, until each unit has received a distribution of $0.474375.


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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:
 Total Quarterly Distribution Per Unit Target Amount 
Marginal Percentage
Interest in Distributions
 Unitholders General Partner
Minimum Quarterly Distribution$0.412500 98% 2%
First Target Distributionabove $0.412500 up to $0.474375 98% 2%
Second Target Distributionabove $0.474375 up to $0.515625 85% 15%
Third Target Distributionabove $0.515625 up to $0.618750 75% 25%
Thereafterabove $0.618750 50% 50%
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:
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, 2015 $0.5715
 $23.8
 May 29, 2015 May 15, 2015
June 30, 2015 $0.5825
 $29.0
 August 31, 2015 August 14, 2015
September 30, 2015 $0.5940
 $29.6
 December 1, 2015 November 13, 2015
December 31, 2015 $0.5940
 $29.5
 March 1, 2016 February 15, 2016
March 31, 2016(1)
 $0.5940
 $29.5
 June 1, 2016 May 16, 2016
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(1)
 $0.5940
 $29.5
 June 1, 2017 May 15, 2017
(1) On April 18, 2016, our Board of Directors declared a cash distribution of $0.5940 per unit, which will be paid on June 1, 2016, to unitholders of record on May 16, 2016. SunCoke has elected to provide the Partnership with deferred payment terms on the IDR cash distributions in the second quarter of 2016.
(1)On April 17, 2017, our Board of Directors declared a cash distribution of $0.5940 per unit, which will be paid on June 1, 2017, to unitholders of record on May 15, 2017.
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. Net income from Granite City’s operations prior to the Granite City Dropdown is allocated to the general partner.
Upon payment of the cash distribution for the fourth quarter of 2015, the financial requirements for the conversion of all subordinated units were satisfied. As a result, the 15,709,697 subordinated units converted into common units on a one-for-one basis. For purpose of calculating net income per unit, the conversion of the subordinated units is deemed to have occurred on January 1, 2016. The conversion did not impact the amount of the cash distribution paid or the total number of the Partnership's outstanding units representing limited partner interest.


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The calculation of net income allocated to the general and limited partners was as follows:
  Three Months Ended March 31,
  2016 2015
     
  (Dollars in millions)
Net income attributable to SunCoke Energy L.P./Previous Owner $39.8
 $13.2
Less: Expenses allocated to Common - SunCoke (1)
 (7.0) —
Less: Allocation of net income attributable to the Previous Owner to the general partner —
 0.6
Net income attributable to all partners 46.8
 12.6
General partner's incentive distribution rights 9.4
 0.9
Net income attributable to partners, excluding incentive distribution rights 37.4
 11.7
General partner's ownership interest: 2.0% 2.0%
General partner's allocated interest in net income 0.7
 0.3
General partner's incentive distribution rights 9.4
 0.9
Net income attributable to the Previous Owner —
 0.6
Total general partner's interest in net income $10.1
 $1.8
Common - public unitholder's interest in net income $16.5
 $4.9
Common - SunCoke interest in net income:    
Common - SunCoke interest in net income 20.2
 1.9
Expenses allocated to Common - SunCoke (1)
 (7.0) —
Total common - SunCoke interest in net income 13.2
 1.9
Subordinated - SunCoke interest in net income —
 4.6
Total limited partners' interest in net income $29.7
 $11.4
  Three Months Ended March 31,
  2017 2016
     
  (Dollars in millions)
Net (loss) income attributable to SunCoke Energy L.P. $(129.3) $39.8
Less: Expenses allocated to Common - SunCoke(1)
 —
 (7.0)
Net (loss) income attributable to all partners (129.3) 46.8
General partner's incentive distribution rights 1.4
 9.4
Net (loss) income attributable to partners, excluding incentive distribution rights (130.7) 37.4
General partner's ownership interest: 2.0% 2.0%
General partner's allocated interest in net (loss) income (2.7) 0.7
General partner's incentive distribution rights 1.4
 9.4
Total general partner's interest in net (loss) income $(1.3) $10.1
Common - public unitholder's interest in net (loss) income $(57.6) $16.5
Common - SunCoke interest in net (loss) income:    
Common - SunCoke interest in net (loss) income (70.4) 20.2
Expenses allocated to Common - SunCoke(1)
 —
 (7.0)
Total common - SunCoke interest in net (loss) income (70.4) 13.2
Total limited partners' interest in net (loss) income $(128.0) $29.7
(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 three months ended March 31, 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 three months ended March 31, 2016.
(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 three months ended March 31, 2017.
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 and subordinated units, 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. In 2015, the Partnership early adopted ASU 2015-06, "Earnings Per Share (Topic 260): Effects on Historical Earnings per Unit of Master Limited Partnership Dropdown Transactions (a consensus of the Emerging Issues Task Force)." Therefore, the Granite City Dropdown does not impact historical earnings per unit as the earnings of Granite City prior to the Granite City Dropdown were allocated entirely to our general partner.


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The calculation of earnings per unit is as follows:
  Three Months Ended March 31,
  2016 2015
     
  (Dollars and units in millions, except per unit amounts)
Net income attributable to SunCoke Energy L.P./Previous Owner $39.8
 $13.2
Less: Expenses allocated to Common - SunCoke (7.0) —
Less: Allocation of net income attributable to the Previous Owner to the general partner —
 0.6
Net income attributable to all partners 46.8
 12.6
General partner's distributions (including, $1.4 and $0.9 million of incentive distribution rights, respectively) 2.0
 1.4
Limited partners' distributions on common units 27.5
 13.4
Limited partners' distributions on subordinated units —
 9.0
Distributions less than (greater than) earnings 17.3
 (11.2)
General partner's earnings:    
Distributions (including $1.4 and $0.9 million of cash incentive distribution rights, respectively) 2.0
 1.4
Allocation of distributions less than (greater than) earnings 8.1
 (0.2)
Net income attributable to Previous Owner —
 0.6
Total general partner's earnings 10.1
 1.8
Limited partners' earnings on common units:    
Distributions 27.5
 13.4
Expenses allocated to Common - SunCoke (7.0) —
Allocation of distributions less than (greater than) earnings 9.2
 (6.6)
Total limited partners' earnings on common units 29.7
 6.8
Limited partners' earnings on subordinated units:    
Distributions —
 9.0
Allocation of distributions greater than earnings —
 (4.4)
Total limited partners' earnings on subordinated units —
 4.6
Weighted average limited partner units outstanding:    
Common - basic and diluted 46.2
 23.3
Subordinated - basic and diluted —
 15.7
Net income per limited partner unit:    
Common - basic and diluted $0.64
 $0.29
Subordinated - basic and diluted $—
 $0.29
  Three Months Ended March 31,
  2017 2016
     
  (Dollars and units in millions, except per unit amounts)
Net (loss) income attributable to SunCoke Energy L.P. $(129.3) $39.8
Less: Expenses allocated to Common - SunCoke —
 (7.0)
Net (loss) income attributable to all partners (129.3) 46.8
General partner's distributions (including $1.4 million of cash incentive distribution rights in both periods) 2.0
 2.0
Limited partners' distributions on common units 27.5
 27.5
Distributions less than (greater than) loss/earnings (158.8) 17.3
General partner's (loss) earnings:    
Distributions (including $1.4 million of cash incentive distribution rights in both periods) 2.0
 2.0
Allocation of distributions less than (greater than) loss/earnings (3.3) 8.1
Total general partner's (loss) earnings (1.3) 10.1
Limited partners' (loss) earnings on common units:    
Distributions 27.5
 27.5
Expenses allocated to Common - SunCoke —
 (7.0)
Allocation of distributions less than (greater than) loss/earnings (155.5) 9.2
Total limited partners' (loss) earnings on common units (128.0) 29.7
Limited partners' earnings on subordinated units:    
Weighted average limited partner units outstanding:    
Common - basic and diluted 46.2
 46.2
Net income per limited partner unit:    
Common - basic and diluted $(2.77) $0.64
Unit Activity
Unit activity for the three months ended March 31, 2016:2017:
  Common - Public Common - SunCoke Total Common Subordinated - SunCoke
At December 31, 2015 20,787,744
 9,705,999
 30,493,743
 15,709,697
Units issued to directors 2,728
 —
 2,728
 —
Conversion of subordinate units to common units —
 15,709,697
 15,709,697
 (15,709,697)
At March 31, 2016 20,790,472
 25,415,696
 46,206,168
 —
  Common - Public Common - SunCoke Total Common
At December 31, 2016 20,800,181
 25,415,696
 46,215,877
Units issued to directors 4,696
 —
 4,696
At March 31, 2017 20,804,877
 25,415,696
 46,220,573


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4. Inventories
The components of inventories were as follows:
 March 31, 2016 December 31, 2015 March 31, 2017 December 31, 2016
        
 (Dollars in millions) (Dollars in millions)
Coal $40.4
 $42.5
 $44.4
 $34.5
Coke 3.8
 5.6
 5.8
 4.7
Materials, supplies, and other 29.1
 29.0
 28.1
 27.7
Total inventories $73.3
 $77.1
 $78.3
 $66.9


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5. Goodwill and Other Intangible Assets
Goodwill allocated to the Partnership's reportable segments as of March 31, 2016 and changes in the carrying amount of goodwill during the three months ended March 31, 2016 were as follows:
 Coal Logistics
  
 (Dollars in millions)
Net balance at December 31, 2015$67.7
Adjustments(1)
(0.6)
Net balance at March 31, 2016$67.1
(1)
In the first quarter of 2016, a working capital adjustment to the acquisition date fair value of the acquired net assets decreased the amount of the purchase price allocated to goodwill by $0.6 million.
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. There were no events or circumstances in the first quarter of 2016 that would, more likely than not, reduce the fair value of a reporting unitGoodwill allocated to below its carrying value.our Coal Logistics segment was $73.5 million at both March 31, 2017 and December 31, 2016.
The components of gross and net intangible assets were as follows:
 March 31, 2016 December 31, 2015 March 31, 2017 December 31, 2016
Weighted - Average Remaining Amortization Years Gross Carrying Amount Accumulated Amortization Net Gross Carrying Amount Accumulated Amortization NetWeighted - Average Remaining Amortization Years Gross Carrying Amount Accumulated Amortization Net Gross Carrying Amount Accumulated Amortization Net
 (Dollars in millions) (Dollars in millions)
Customer contracts6 $24.0
 $2.0
 $22.0
 $24.0
 $1.2
 $22.8
6 $24.0
 $5.3
 $18.7
 $24.0
 $4.5
 $19.5
Customer relationships14 28.7
 2.3
 26.4
 28.7
 1.8
 26.9
14 28.7
 4.3
 24.4
 28.7
 3.8
 24.9
Permits26 139.0
 3.2
 135.8
 139.0
 1.9
 137.1
25 139.0
 8.3
 130.7
 139.0
 7.1
 131.9
Trade name3 1.2
 0.6
 0.6
 1.2
 0.6
 0.6
2 1.2
 0.9
 0.3
 1.2
 0.8
 0.4
Total $192.9
 $8.1
 $184.8
 $192.9
 $5.5
 $187.4
 $192.9
 $18.8
 $174.1
 $192.9
 $16.2
 $176.7


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TableThe 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 Contents

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 4.2 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 $0.2 million for both the three months ended March 31, 20162017 and 2015, respectively. Based on2016.
6. Income Taxes
At the carrying valueend of each interim period, we make our best estimate of the finite-lived intangible assetseffective tax rate expected to be applicable for the full fiscal year and the impact of discrete items, if any, and adjust the rate as of March 31, 2016, we estimate amortization expense for eachnecessary.
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 next five yearsInternal 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 follows: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.
 Amount
  
 (Dollars in millions)
2016(1)
$7.9
201710.5
201810.5
201910.3
202010.3
2021-Thereafter135.3
Total$184.8
(1) Excludes amortizationAs a result of the Final Regulations, the Partnership recorded deferred income tax expense recordedof $148.6 million during the three months ended March 31, 2016.
6. Income Taxes
The Partnership is a limited partnership2017, primarily related to differences in the book and generally is not subjecttax basis of fixed assets, which are expected to federal income taxes. However, as partexist at the end of the Granite City Dropdown10-year transition period when the cokemaking operations become taxable. A portion of this deferred tax liability, $3.0 million, was attributable to SunCoke's retained ownership interest in the first quarter of 2015, the Partnership acquired an interest in Gateway Cogeneration Company, LLC, which is subject to income taxes for federalcokemaking facilities and, state purposes. Additionally,therefore, was also reflected as a result of the Granite City Dropdown, the Partnership is subject to state income tax. Earnings from our Middletown operations are subject to a local income tax.
The Partnership recorded income tax expense of $0.6 million forreduction in noncontrolling interest during the three months ended March 31, 2016 compared to an income tax benefit of $3.3 million for the three months ended March 31, 2015. The three months ended March 31, 2015 include an income tax benefit of $4.0 million related to the tax impacts of the Granite City Dropdown. Earnings from our Granite City operations include federal and state income taxes calculated on a theoretical separate-return basis until the date of the Granite City Dropdown on January 13, 2015.2017.



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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:
 March 31, 2016 December 31, 2015 March 31, 2017 December 31, 2016
        
 (Dollars in millions) (Dollars in millions)
7.375% senior notes, due 2020 ("Partnership Notes")
 $499.7
 $552.5
7.375 percent senior notes, due 2020 ("Partnership Notes") $463.0
 $463.0
Revolving credit facility, due 2019 ("Partnership Revolver") 182.0
 182.0
 172.0
 172.0
Promissory note payable, due 2021 ("Promissory Note") 114.0
 114.3
Partnership promissory note payable, due 2021 ("Promissory Note") 112.9
 113.2
Partnership's term loan, due 2019 ("Partnership Term Loan") 50.0
 50.0
 50.0
 50.0
5.82 percent financing obligation, due 2021 ("Financing Obligation") 14.6
 15.2
Total borrowings $845.7
 $898.8
 812.5
 813.4
Original issue premium 10.2
 12.1
 6.9
 7.5
Debt issuance cost (13.3) (15.3) (9.6) (10.3)
Total debt $842.6
 $895.6
Less: current portion of long-term debt 1.1
 1.1
Total long-term debt $841.5
 $894.5
Total debt and financing obligation 809.8
 810.6
Less: current portion of long-term debt and financing obligation 6.1
 4.9
Total long-term debt and financing obligation $803.7
 $805.7
In the first quarterPartnership Revolver
As of 2016,March 31, 2017, the Partnership continued de-levering its balance sheet and repurchased $52.8 million face value of outstanding Partnership Notes for $32.6 million in the open market. This resulted in a $20.4 million gain on extinguishment of debt, which included a write-off of $0.2 million of unamortized original issue premium, net of unamortized debt issuance costs.
During the first quarter of 2016, the Partnership issued $1.5 million of letters of credit as collateral to its surety providers in connection with workers' compensation, general liability and other financial guarantee obligations. These letters of credit lower the Partnership's borrowing availability under the Partnership Revolver. At March 31, 2016, the Partnership Revolver had $1.5$1.4 million of letters of credit outstanding and an outstanding balance of $182.0$172.0 million, leaving $66.5$76.6 million available.


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The Partnership repaid $0.3 million of the Promissory Note on March 31, 2016, in accordance with the Promissory Note repayment schedule.
Covenants
The Partnership is subject to certain debt 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, (iii) prepay, redeem or repurchase certain debt, (iv) make loans and investments, (v) sell assets, (vi) incur liens, (vii) enter into transactions with affiliates and (viii) consolidate or merge. These covenants are subject to a number of exceptions and qualifications set forth in the respective agreements governing the Partnership's debt.
Under the terms of the Partnership Revolver,credit agreement, the Partnership is subject to a maximum consolidated leverage ratio of 4.50:1.00, (and, if applicable, 5.00:1.00 during the remainder of any fiscal quarter and the two immediately succeeding fiscal quarters following our acquisition of additional assets having a fair market value greater than $50 million), calculated by dividing total debt by EBITDA as defined by the Partnership Revolver, and a minimum consolidated interest coverage ratio of 2.50:1.00, calculated by dividing EBITDA by interest expense as defined by the Partnership Revolver.1.00. 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 agreement,Promissory Note, Raven Energy LLC, a wholly-owned subsidiary of the Partnership, is subject to a maximum leverage ratio of 5.00:1.00 for any fiscal quarter ending prior to August 12, 2018, calculated by dividing total debt by EBITDA as defined by the promissory agreement.2018. For any fiscal quarter ending on or after August 12, 2018, the maximum leverage ratio is 4.50:1.00. Additionally in order to make restricted payments, Raven Energy LLC is subject to a fixed charge ratio of greater than 1.00:1.00, calculated by dividing EBITDA by fixed charges as defined by the promissory agreement.1.00.
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, Partnership Term Loan 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 $20 million.
As of March 31, 2016,2017, the Partnership was in compliance with all applicable debt covenants contained in the Partnership Revolver and promissory agreement.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.
8. Supplemental Cash Flow Information
Significant non-cash activities were as follows:
  Three Months Ended March 31,
  2016 2015
     
  (Dollars in millions)
Debt assumed by SunCoke Energy Partners, L.P. $—
 $135.0
Net assets of the Previous Owner not assumed by SunCoke Energy Partners, L.P.    
Receivables —
 9.1
Property, plants and equipment —
 7.0
Deferred taxes, net —
 62.8
9. Commitments and Contingent Liabilities
The United States Environmental Protection Agency (the "EPA") has issued Notices of Violations (“NOVs”) for the Haverhill and Granite City cokemaking facilities which stemstemmed 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 December 2014, as well as capital projects already 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 offering the dropdown of Haverhill and Middletown and the Granite City Dropdownsubsequent 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


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million will be reimbursed by SunCoke. Prior to our formation, SunCoke spent $7 million related to these projects. We have spent approximately $83$89 million to date and the remaining capital is expected to be spent through the first quarter of 2019.


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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.
10.9. 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:
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.
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 had nodid not have material cash equivalents at March 31, 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. During the first quarter of 2016, the Partnership amended the contingent consideration terms with The Cline Group, which reduced the fair value of the contingent consideration liability to $4.2 million at March 31, 2016. The contingent consideration liability is included in other deferred credits and liabilities on the Consolidated Balance Sheet.
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.
Non-Financial AssetsThe fair value of the contingent consideration at both March 31, 2017 and Liabilities Measured at Fair Value on a Nonrecurring Basis
Certain assetsDecember 31, 2016 was $4.2 million and was included in other deferred charges and liabilities are measured at fair value on a nonrecurring basis; that is, the assets and liabilities are not measured at fair value on an ongoing basis, but are subject to fair value adjustments in certain circumstances (e.g., when there is evidence of impairment).Consolidated Balance Sheets.
Certain Financial Assets and Liabilities not Measured at Fair Value
At March 31, 20162017, and December 31, 2016, the estimated fair value of the Partnership's total debt was $695.8$816.7 million and $810.4 million compared to a carrying amount of $845.7 million.$812.5 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.


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11.10. 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 soldprovided to third-party customers primarily pursuant to steam supply and purchase agreements. Electricity is sold into the regional power market or to 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, AK Steel and U.S. Steel. 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 Kentucky and West Virginia. This businessOur coal logistics operations have a collective capacity to mix and transload approximately 40 million tons of coal annually and provides coal handling and/or mixing services to third-partyits customers, as well as SunCokewhich include our own cokemaking facilities and has a collective capacity to mix and transload more than 40 million tons of coal annually.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. Interest expense, net and (gain) loss on extinguishment of debt are also excluded from segment results. Segment assets are those assets that are utilized within a specific 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:
 Three Months Ended March 31, Three Months Ended March 31,
 2016 2015 2017 2016
        
 (Dollars in millions) (Dollars in millions)
Sales and other operating revenue:        
Domestic Coke $178.9
 $193.0
 $173.2
 $178.9
Coal Logistics 15.6
 10.3
 22.4
 15.6
Coal Logistics intersegment sales 1.5
 1.7
 1.8
 1.5
Elimination of intersegment sales (1.5) (1.7) (1.8) (1.5)
Total sales and other operating revenue $194.5
 $203.3
 $195.6
 $194.5
Adjusted EBITDA:        
Domestic Coke $46.3
 $48.5
 $42.5
 $46.3
Coal Logistics 15.1
 2.6
 13.0
 5.9
Corporate and Other (4.0) (2.8) (3.8) (4.0)
Total Adjusted EBITDA $57.4
 $48.3
 $51.7
 $48.2
Depreciation and amortization expense:        
Domestic Coke $13.3
 $12.8
 $15.7
 $13.3
Coal Logistics 5.4
 1.8
 5.9
 5.4
Total depreciation and amortization expense $18.7
 $14.6
 $21.6
 $18.7
Capital expenditures:        
Domestic Coke $5.9
 $5.3
 $3.6
 $5.9
Coal Logistics 2.1
 0.2
 0.6
 2.1
Total capital expenditures $8.0
 $5.5
 $4.2
 $8.0





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The following table sets forth the Partnership's segment assets:
  March 31, 2017 December 31, 2016
     
  (Dollars in millions)
Segment assets:    
Domestic Coke $1,191.6
 $1,184.2
Coal Logistics 506.5
 510.6
Corporate and Other 0.9
 1.2
Total assets $1,699.0
 $1,696.0
The following table sets forth the Partnership’s total sales and other operating revenue by product or service, excluding intersegment revenues:
  Three Months Ended March 31,
  2016 2015
     
  (Dollars in millions)
Sales and other operating revenue:    
Cokemaking revenues $163.4
 $176.5
Energy revenues 14.7
 16.5
Coal logistics revenues 15.3
 10.0
Other revenues 1.1
 0.3
Total revenues $194.5
 $203.3
The following table sets forth the Partnership's segment assets:
  March 31, 2016 December 31, 2015
     
  (Dollars in millions)
Segment assets:    
Domestic Coke $1,206.3
 $1,233.1
Coal Logistics 524.9
 534.6
Corporate and Other 4.9
 1.2
Total assets $1,736.1
 $1,768.9
  Three Months Ended March 31,
  2017 2016
     
  (Dollars in millions)
Sales and other operating revenue:    
Cokemaking revenues $158.9
 $163.4
Energy revenues 13.6
 14.7
Coal logistics revenues 20.3
 15.3
Other revenues 2.8
 1.1
Total revenues $195.6
 $194.5
The Partnership evaluates the performance of its segments based on segment Adjusted EBITDA, which represents earnings before interest, (gain) loss on extinguishment of debt, taxes, depreciation and amortization, adjusted for Coal Logistics deferred revenue and changes to our contingent consideration liability related to our acquisition of CMT and the CMT. Coal Logistics deferred revenue adjusts for coal and liquid tons the Partnership did not handle, but are included in Adjusted EBITDA as the associated take-or-pay fees are billed to the customer. Deferred revenue on take-or-pay contracts is recognized into GAAP income annually based on the termsexpiration of the contract.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:
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.


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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:
 Three Months Ended March 31, Three Months Ended March 31,
 2016 2015 2017 
2016(1)
     (Dollars in millions)
 (Dollars in millions)
Adjusted EBITDA attributable to SunCoke Energy Partners, L.P. $56.5
 $43.8
Add: Adjusted EBITDA attributable to Previous Owner(1)
 —
 1.5
Add: Adjusted EBITDA attributable to noncontrolling interest(2)
 0.9
 3.0
Net cash provided by operating activities $39.4
 $40.4
Subtract:    
Depreciation and amortization expense 21.6
 18.7
Gain on extinguishment of debt —
 (20.4)
Deferred income tax expense 149.2
 0.3
Changes in working capital and other 0.3
 1.3
Net (loss) income $(131.7) $40.5
Add:    
Depreciation and amortization expense $21.6
 $18.7
Interest expense, net 12.6
 12.5
Gain on extinguishment of debt —
 (20.4)
Income tax expense, net 149.2
 0.6
Contingent consideration adjustments(2)
 —
 (3.7)
Adjusted EBITDA $57.4
 $48.3
 $51.7
 $48.2
Subtract:        
Depreciation and amortization expense $18.7
 $14.6
Interest expense, net 12.5
 11.2
(Gain) loss on extinguishment of debt (20.4) 9.4
Income tax expense (benefit) 0.6
 (3.3)
Coal Logistics deferred revenue(3)
 9.2
 —
Reduction in contingent consideration(4)
 (3.7) —
Net income $40.5
 $16.4
Add:    
Depreciation and amortization expense $18.7
 $14.6
(Gain) loss on extinguishment of debt (20.4) 9.4
Changes in working capital and other 1.6
 (10.7)
Net cash provided by operating activities $40.4
 $29.7
Adjusted EBITDA attributable to noncontrolling interest (3)
 0.8
 0.9
Adjusted EBITDA attributable to SunCoke Energy Partners, L.P. $50.9
 $47.3
(1)
Reflects net income attributable to our Granite City facility priorIn response to the Granite City DropdownSEC’s May 2016 update to its guidance on January 13, 2015 adjustedthe appropriate use of non-GAAP financial measures, Adjusted EBITDA no longer includes Coal Logistics deferred revenue until it is recognized as GAAP revenue. As such, Adjusted EBITDA for Granite City's share of interest, taxes, depreciation and amortization during the same period.three months ended March 31, 2016 has been recast from previously reported results to exclude coal logistics deferred revenue.
(2)The Partnership amended its contingent consideration terms with The Cline Group during the first quarter of 2016. These amendments resulted in a gain of $3.7 million recorded during the three months ended March 31, 2016, which was excluded from Adjusted EBITDA.
(3)
Reflects net income attributable to noncontrolling interest adjusted for noncontrolling interest's share of interest, taxes, income, and depreciation and amortization.
(3)
Coal Logistics deferred revenue adjusts for coal and liquid tons the Partnership did not handle, but are included in Adjusted EBITDA as the associated take-or-pay fees are billed to the customer. Deferred revenue on take-or-pay contracts is recognized into GAAP income annually based on the terms of the contract.
(4)The Partnership amended the contingent consideration terms with The Cline Group, which reduced the fair value of the contingent consideration liability from $7.9 million at December 31, 2015 to $4.2 million at March 31, 2016, resulting in a $3.7 million gain, which was excluded from Adjusted EBITDA.


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Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations
This Quarterly Report on Form 10-Q contains certain forward-looking statements of expected future developments, as defined in the Private Securities Litigation Reform Act of 1995. This discussion contains forward-looking statements about our business, operations and industry that involve risks and uncertainties, such as statements regarding our plans, objectives, expectations and intentions. Our future results and financial condition may differ materially from those we currently anticipate as a result of the factors we describe under “Cautionary Statement Concerning Forward-Looking Statements.”
This “Management’sManagement’s Discussion and Analysis of Financial Condition and Results of Operations”Operations ("MD&A") is based on financial data derived from the financial statements prepared in accordance with United States ("U.S.") generally accepted accounting principles (“GAAP”) and certain other financial data that is prepared using non-GAAP measures. For a reconciliation of these non-GAAP measures to the most comparable GAAP components, see “Non-GAAP Financial Measures” at the end of this Item.Item, and Note 10 to our consolidated financial statements.
These statements reflect significant assumptions and allocations and include all expenses allocable to our business, but may not be indicative of those that would have been achieved had we operated as a separate public entity for all periods presented or of future results.
Our MD&A is provided in addition to the accompanying consolidated financial statements and notes to assist readers in understanding our results of operations, financial condition and cash flow.
Overview
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 March 31, 2016,2017, 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"). At March 31, 2016, SunCoke, through a subsidiary, owned a 53.9 percent partnership interest in us and all of our incentive distribution rights ("IDR") and indirectly owned and controlled our general partner, which holds a 2.0 percent general partner interest in us. We also own a Coal Logisticscoal 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 Logisticscoal logistics business consists of Convent Marine Terminal ("CMT"), Kanawha River Terminals, LLC ("KRT") and SunCoke Lake Terminal, LLC ("Lake Terminal").
Our cokemaking ovens utilize efficient, modern heat recovery technology designed to combust the coal’s volatile components liberated during the cokemaking processAt March 31, 2017, SunCoke, through a subsidiary, owned a 53.9 percent limited partnership interest in us and use the resulting heat to create steam or electricity for sale. This differs from by-product cokemaking,indirectly owned and controlled our general partner, which re-purposes the coal’s liberated volatile components for other uses. We have constructed the only greenfield cokemaking facilitiesholds a 2.0 percent general partner interest in the U.S. in the last 25 yearsus and are the only North American coke producer that utilizes heat recovery technology in the cokemaking process. We believe that heat recovery technology has several advantages over the alternative by-product cokemaking process, including producing higher quality coke, using waste heat to generate steam or electricity for sale and reducing the environmental impact.all of our incentive distribution rights ("IDR").
All of our coke sales are made pursuant to long-term, take-or-pay agreements. These coke sales agreements have an average remaining term of approximately nine years and contain pass-through provisions for costs we incur 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 our customers, taxes (other than income taxes) and costs associated with changes in regulation. The coke sales agreement and energy sales agreement with AK Steel Holding Corporation ("AK Steel") at our Haverhill facility are subject to early termination by AK Steel under limited circumstances and provided that AK Steel has given at least two years prior notice of its intention to terminate the agreements and certain other conditions are met. No other coke sales contract has an early termination clause. For a five-year period following our initial public offering on January 24, 2013 ("IPO"), SunCoke has agreed to make us whole or purchase all of our coke production not taken by our customers in the event of a customer's default or exercise of certain termination rights, under the same terms as those provided for in the coke sales agreements with our customers.
Our core business model is predicated on providing steelmakers an alternative to investing capital in their own captive coke production facilities. We direct our marketing efforts principally towards steelmaking customers that require coke for use in their blast furnaces. OurWhile our steelmaking customers are currently operating in an environment that is challenged by global overcapacity, and lower demand. The combination of a strong U.S. dollar, continued high import activity and reduced drilling activity caused by low oil and gas prices has served to depress both spot and contract prices for steel, which has driven market deterioration for flat rolled and tubular steel. Several steel producers, including certain of our customers have filed petitions withcontinued to see increases in steel pricing and positive signals on trade and infrastructure during the Departmentfirst quarter of Commerce2017. Despite the improved market trends over the last year, AK Steel and United States Steel Corporation ("DOC"U.S. Steel") and the International Trade Commission ("ITC") alleging that unfairly traded imports are causing material injury to the domestic steel industry in the U.S. and that foreign steel producers benefit from significant subsidies provided by the governmentshave kept portions of their respective countries. While steel pricing has rebounded in early 2016, aided by favorable preliminary rulings from the DOCAshland Kentucky Works facility and ITC as well as improved global supply and demand dynamics,


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our customers have kept certain facilitiesGranite City Works facility idled as they await further signs of market stability. Despite theseWhile market challenges remain, our customers continue to comply with the terms of their long-term, take-or-pay contracts with us.
Our Granite City facility and the first phase of our Haverhill facility, or Haverhill 1,I, have steam generation facilities, which use hot flue gas from the cokemaking process to produce steam for sale to customers pursuant to steam supply and purchase agreements. Granite City sells steam to United States Steel Corporation ("U.S. SteelSteel") and Haverhill 1I provides steam, at minimal cost, to Altivia Petrochemicals, LLC ("Altivia"). Our Middletown facility and the second phase of our Haverhill facility, or Haverhill 2,II, have cogeneration plants that use the hot flue gas created by the cokemaking process to generate electricity, which either is either sold into the regional power market or to AK Steel Holding Corporation ("AK Steel") pursuant to energy sales agreements.


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The following table sets forth information about our cokemaking facilities and our coke, steam and energy sales agreements:
Facility Location 
Coke
Customer
 
Year of
Start Up
 
Contract
Expiration
 
Number of
Coke Ovens
 
Annual Cokemaking
Capacity
(thousands of tons)
 Use of Waste Heat 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 Granite City, Illinois U.S. Steel 2009 2025 120
 650
 Steam for power generation
Haverhill 1 Franklin Furnace, Ohio ArcelorMittal 2005 2020 100
 550
 Process steam
Haverhill 2 Franklin Furnace, Ohio AK Steel 2008 2022 100
 550
 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 Middletown, Ohio AK Steel 2011 2032 100
 550
 Power generation
Total 420
 2,300
  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 capacity on a “run of oven” basis is 578 thousand tons per year.
We also provide coal handling and/or mixing services with our Coal Logisticscoal logistics business, which has collective capacity to mix and/or transload more thanapproximately 40 million tons of coal annually and store up toapproximately 3 million tons. CMT is one of the largest export terminals on the U.S. gulf coast and has direct rail access and the capability to transload 10approximately 15 million tons of coal annually through its operations in Convent, Louisiana. The facility is supported by long-term, take-or-pay contracts with volume commitments covering 10 million tons of its current capacity. KRT is a leading metallurgical and thermal coal mixing and handling terminal service provider with collective capacity to mix and transload approximately 25 million tons of coal annually through its operations in West Virginia. Our terminal located in East Chicago, Indiana, Lake Terminal, provides coal handling and mixing services to SunCoke's Indiana Harbor cokemaking operations. KRT is a leading metallurgical and thermal coal mixing and handling terminal service provider with collective capacity to mix and transload 30 million tons of coal annually through its operations in West Virginia and Kentucky. Coal is transported from the mine site in numerous ways, including rail, truck, barge or ship. Our coal terminals act as intermediaries between coal producers and coal end users by providing transloading, storage and mixing services. We do not take possession of coal in our Coal Logisticscoal logistics business, but instead earn revenue by providing coal handling and/or mixing services to our customers on a fee per ton basis. We provide mixing and handling services to steel, coke (including some of our and SunCoke's domestic cokemaking facilities), electric utility and coal producing customers.
Our Coal LogisticsThe financial performance of our coal mining customers are currently faced withlogistics business is substantially dependent upon a market depressed by oversupply and declining coal prices.limited number of customers. Our CMT customers are also impacted by seaborne export market dynamics. Fluctuations in the benchmark price for coal delivery into northwest Europe, as referenced in the Argus/McCloskey's Coal Price Index report ("API2 index price, influenceprice"), contribute to our customers' decisions to place tons into the export market and thus impact transloading volumes through our terminal facility. DespiteOur KRT terminals are primarily impacted by the current challengingdomestic coal miningmarkets in which its customers operate and coal export markets, ourgenerally benefit from extreme weather conditions.
Our Coal Logistics customers have continued their recovery into the first quarter of 2017, resulting in increased volumes and improved financial performance for our Coal Logistics segment. Coal prices, both API2 and domestic thermal, have been relatively stable during the first quarter of 2017 and remain significantly higher than the lows in early 2016. While metallurgical coal prices have retreated during the first quarter of 2017, they remain much higher as compared to perform on their contracts with us.the same prior year period. Recently metallurgical coal prices have spiked in response to logistics disruptions in Australia as a result of adverse weather events.
Organized in Delaware in July 2012, and headquartered in Lisle, Illinois, we are a master limited partnership whose common units, representing limited partnership interests, were first listed for trading on the New York Stock Exchange (“NYSE”) in January 2013 under the symbol “SXCP.”


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Recent Developments
•AK Steel Make-WholeTermination of Proposed Simplification Transaction
Our Haverhill 2 cokemaking facility supplies cokeIn April 2017, SunCoke announced the termination of discussions with the Conflicts Committee of our Board of Directors regarding its proposal to AK Steel under a long-term, take-or-pay contract until 2022. Duringacquire all of the first quarter of 2016, AK Steel electedPartnership’s common units not already owned by SunCoke ("Simplification Transaction"), announced on October 31, 2016. The Conflicts Committee and its independent advisors reviewed the proposal made by SunCoke and had several discussions with SunCoke over the last few months regarding the potential transaction. At this time, the parties have determined that they will not be able to reduce 2016 production by 75,000 tons at our Haverhill 2 facility. As a result, duringreach an agreement and have therefore terminated discussions regarding the first quarter of 2016, Domestic Coke sales tons were approximately 10,000 tons lower than our previous volume targets. Based on our long-term, take-or-pay contract, AK Steel will provide us with make-whole payments. We do not expect this arrangement to impact Adjusted EBITDA targets.proposed Simplification Transaction.
First Quarter Key Financial Results
Total revenues decreased $8.8Our consolidated results of operations were as follows:
 Three Months Ended March 31,  
 2017 2016 Increase (Decrease)
 (Dollars in millions)
Sales and other operating revenue(1)
$195.6
 $194.5
 $1.1
Net cash provided by operating activities(2)
39.4
 40.4
 (1.0)
Adjusted EBITDA(1)
51.7
 48.2
 3.5
(1)See analysis of changes described in "Analysis of Segment Results."
(2)See analysis of changes described in "Liquidity and Capital Resources."
Items Impacting Comparability
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 & 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 or 4.3 percent,during the three months ended March 31, 2017, primarily related to $194.5differences 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. 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 three months ended March 31, 2017.
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 during the three months ended March 31, 2017. We expect this impact to lower revenue and Adjusted EBITDA by approximately $6 million for the year ended December 31, 2017.
Debt Activities. During the three months ended March 31, 2016, due primarily to the pass-through of lower coal prices in our Domestic Coke segment as well as the absence of energy sales to Haverhill Chemicals LLC ("Haverhill Chemicals") as discussed in "Items Impacting Comparability." These decreases were partially offset by $7.7Partnership repurchased $52.8 million of revenue generated by CMT,notes, which was acquiredresulted in August 2015.
Adjusted EBITDA increased $9.1 million to $57.4 million in the three months ended March 31, 2016 compared to $48.3 million for the same period in 2015. Adjusted EBITDA contributed by CMT of $13.0 million was partially offset by the absence of energy sales as described above.
Net income attributable to unitholders increased $27.2 million to $39.8 million for the three months ended March 31, 2016, primarily driven by $20.4 million of gainsa gain on extinguishment of debt recognized during the first quarter 2016, as well as the items discussed above.
Cash distributions paid per unit were $0.5940 and $0.5408 for the three months ended March 31, 2016 and 2015, respectively.
Items Impacting Comparability
Convent Marine Terminal. Comparability between periods was impacted by the timing of the acquisition of CMT during the third quarter of 2015, which contributed revenues of $7.7 million and Adjusted EBITDA of $13.0 million during the first quarter of 2016.$20.4 million.
Contingent consideration.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 reduced the fair value of


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the contingent consideration liability from $7.9 million at December 31, 2015 to $4.2 million at March 31, 2016, with the resultingand resulted in a $3.7 million gain recognized as a reduction to costs of products sold and operating expenses on the Combined and Consolidated Statements of IncomeOperations during the three months ended March 31, 2016.
Energy Sales. Until the second quarter of 2015, Haverhill 1 sold steam to Haverhill Chemicals, which filed for relief under Chapter 11 of the U.S. Bankruptcy Code during 2015. Beginning in the fourth quarter of 2015, Haverhill 1 provided steam, at no cost, to Altivia. In the current arrangement, the Partnership is not currently generating revenues from providing steam to Altivia, which may be renegotiated beginning in 2018. The current arrangement mitigates costs associated with disposing of steam as well as potential compliance issues. Both revenues and Adjusted EBITDA decreased $2.0 million in the first quarter of 2016 compared to the corresponding period of 2015 as a result of these arrangements.
(Gain) Loss on extinguishment of debt. In the first quarter of 2016, the Partnership continued de-levering its balance sheet and repurchased $52.8 million of outstanding Partnership Notes for $32.6 million in the open market, resulting in a gain on extinguishment of debt of $20.4 million.
In connection with the dropdown of Granite City during the first quarter of 2015, the Partnership assumed and repaid $135.0 million of SunCoke's outstanding notes. As a result of the redemption, a loss on extinguishment of debt was recorded in the prior year of $9.4 million, which included a $7.7 million redemption premium and a $1.4 million write-off of unamortized debt issuance costs.
Income Taxes. Income tax expense was $0.6 million for the three months ended March 31, 2016 compared to an income tax benefit of $3.3 million for the three months ended March 31, 2015, respectively. The periods presented are not comparable, as earnings from the three months ended March 31, 2015 includes an income tax benefit of $4.0 million related to the tax impacts of the Granite City Dropdown.



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Results of Operations
The following table sets forth amounts from the Combined and Consolidated Statements of IncomeOperations for the three months ended March 31, 20162017 and 20152016: 
 Three Months Ended March 31, Three Months Ended March 31,  
 2016 2015 2017 2016 Increase (Decrease)
          
 (Dollars in millions) (Dollars in millions)
Revenues          
Sales and other operating revenue $194.5
 $203.3
 $195.6
 $194.5
 $1.1
Costs and operating expenses          
Cost of products sold and operating expenses 134.2
 147.4
 135.4
 134.2
 1.2
Selling, general and administrative expenses 8.4
 7.6
 8.5
 8.4
 0.1
Depreciation and amortization expense 18.7
 14.6
 21.6
 18.7
 2.9
Total costs and operating expenses 161.3
 169.6
 165.5
 161.3
 4.2
Operating income 33.2
 33.7
 30.1
 33.2
 (3.1)
Interest expense, net 12.5
 11.2
 12.6
 12.5
 0.1
(Gain) loss on extinguishment of debt (20.4) 9.4
Gain on extinguishment of debt —
 (20.4) 20.4
Income before income tax expense 41.1
 13.1
 17.5
 41.1
 (23.6)
Income tax expense (benefit) 0.6
 (3.3)
Net income $40.5
 $16.4
Less: Net income attributable to noncontrolling interests 0.7
 3.2
Net income attributable to SunCoke Energy Partners, L.P./Previous Owner 39.8
 13.2
Less: Net income attributable to Previous Owner —
 0.6
Net income attributable to SunCoke Energy Partners, L.P. $39.8
 $12.6
Income tax expense 149.2
 0.6
 148.6
Net (loss) income (131.7) 40.5
 (172.2)
Less: Net (loss) income attributable to noncontrolling interests (2.4) 0.7
 (3.1)
Net (loss) income attributable to SunCoke Energy Partners, L.P. $(129.3) $39.8
 $(169.1)
Total Revenues. Total revenues were $194.5 millionThe increase in sales and $203.3 million for the three months ended March 31, 2016other operating revenue was primarily driven by higher sales volumes in our Coal Logistics segment, offset by lower volumes in our Domestic Coke segment.
Costs of Products Sold and 2015, respectively. These decreases wereOperating Expenses. The increase in cost of products sold and operating expenses was primarily due to the pass-throughabsence of the $3.7 million gain from the contingent consideration adjustment recorded in the first quarter of 2016 previously discussed in "Items Impacting Comparability." This increase was partially offset by lower coal pricescosts related to lower sales volumes in our Domestic Coke segment, as well as the absence of energy sales to Haverhill Chemicals as previously discussed in "Items Impacting Comparability." These decreases were partially offset by additional revenues of $7.7 million generated by our CMT business.above.
CostsDepreciation and Operating Expenses.Amortization Expense. Total operating expenses were $161.3 millionThe increase in depreciation and $169.6 million for the three months ended March 31, 2016 and 2015, respectively. For the three months ended March 31, 2016, the decrease in costs and operating expensesamortization expense was primarily driven by reduced coal coststhe result of new assets placed in our Domestic Coke segment, partially offset byservice, including the new ship loader at CMT costs and operating expensesplaced in service during the fourth quarter of $3.9 million.2016.
Interest Expense, net. Interest expense, net was $12.5 million and $11.2 million for the three months ended March 31, 2016 and 2015, respectively. The increase in interest expense, net from increased borrowings was $3.3 million, which was partiallyprimarily due to lower capitalized interest mostly offset by interest expense, net savings from the repurchase of more than $100 million oflower outstanding Partnership senior notes.
Income Taxes. Income tax expense was $0.6 million forincreased significantly in the three months ended March 31, 2016 compared to an income tax benefitcurrent year period as a result of $3.3 million for the three months ended March 31, 2015, respectively. Comparability between periods was impacted byimpact of the Granite City DropdownIRS Final Regulations previously discussed in "Items Impacting Comparability."Recent Developments."
Noncontrolling Interest. IncomeNet (loss) income attributable to noncontrolling interest represents SunCoke's retained ownership interest in our cokemaking facilities. IncomeThe decrease in net (loss) income attributable to noncontrolling interest was $0.7 million and $3.2 million fordriven by the three months ended March 31, 2016 and 2015, respectively. The decrease is primarily due to SunCoke's decreaseimpact of the IRS Final Regulations previously described in ownership interest in Granite City from a 25 percent interest to a 2 percent interest in August of 2015.
Net Income Attributable to Previous Owner. Net income attributable to Previous Owner reflects Granite City net income for periods prior to the Granite City Dropdown that occurred in January 2015."Recent Developments."


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Results of Reportable Business Segments
We report our business results through two segments:
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; Catlettsburg, Kentucky; and Convent, Louisiana.
The operations of each of our segments are described at the beginning of the MD&A.
Corporate expenses that can be identified with a segment have been included in determining segment results. The remainder is included in Corporate and Other.
Management believes Adjusted EBITDA is an important measure of operating performance and liquidity and it is used as the primary basis for the Chief Operating Decision Maker ("CODM")chief operating decision maker to evaluate the performance of each of our reportable segments. Adjusted EBITDA should not be considered a substitute for the reported results prepared in accordance with GAAP. See "Non-GAAP Financial Measures" near the end of this Item.
Segment Operating Data
The following tables set forth financial and operating data for the three months ended March 31, 20162017 and 2015:2016:
Three Months Ended March 31,Three Months Ended March 31,  
2016 20152017 2016 Increase (Decrease)
        
(Dollars in millions)(Dollars in millions)
Sales and other operating revenues:        
Domestic Coke$178.9
 $193.0
$173.2
 $178.9
 $(5.7)
Coal Logistics15.6
 10.3
22.4
 15.6
 6.8
Coal Logistics intersegment sales1.5
 1.7
1.8
 1.5
 0.3
Elimination of intersegment sales(1.5) (1.7)(1.8) (1.5) (0.3)
Total$194.5
 $203.3
$195.6
 $194.5
 $1.1
Adjusted EBITDA(1):
        
Domestic Coke$46.3
 $48.5
$42.5
 $46.3
 $(3.8)
Coal Logistics15.1
 2.6
13.0
 5.9
 7.1
Corporate and Other(4.0) (2.8)(3.8) (4.0) 0.2
Total$57.4
 $48.3
$51.7
 $48.2
 $3.5
Coke Operating Data:        
Domestic Coke capacity utilization (%)101
 106
100
 101
 (1)
Domestic Coke production volumes (thousands of tons)576
 604
567
 576
 (9)
Domestic Coke sales volumes (thousands of tons)581
 577
564
 581
 (17)
Domestic Coke Adjusted EBITDA per ton(2)
$79.69
 $84.06
$75.35
 $79.69
 $(4.34)
Coal Logistics Operating Data:        
Tons handled, excluding CMT (thousands of tons)(3)
3,090
 3,794
Tons handled by CMT (thousands of tons)(3)
945
 —
Pay tons (thousands of tons)(4)
1,638
 —
Tons handled (thousands of tons)(3)
5,449
 4,035
 1,414
CMT take-or-pay shortfall tons (thousands of tons)(4)
544
 1,638
 (1,094)
(1)
See Note 10 in our consolidated financial statements for both the definition of Adjusted EBITDA and reconciliationthe reconciliations from GAAP to GAAP at the end of this Item.
non-GAAP measurement for the three months ended March 31, 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)
Coal Logistics deferred revenue adjusts for coal and liquidReflects tons the Partnership did not handle, but are included in Adjusted EBITDA as the associated take-or-pay fees are billed to the customer. Deferred revenue onunder take-or-pay contracts is recognized into GAAP income annually based on the terms of the contract. where services have not yet been performed.


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Analysis of Segment Results
Three Months Ended March 31, 2016 compared to Three Months Ended March 31, 2015
Domestic Coke
Sales and Other Operating Revenue
SalesThe following table explains year-over-year changes in our Domestic Coke segment's sales and other operating revenue decreased $14.1 million, or 7.3 percent, to $178.9revenues and Adjusted EBITDA results:
 Three months ended March 31, 2017 vs. 2016
 Sales and other operating revenue Adjusted EBITDA
 (Dollars in millions)
Prior year period$178.9
 $46.3
Volumes(1)
(2.5) 0.6
Coal cost recovery and yields(2)
(2.2) (2.6)
Operating and maintenance costs(0.3) (0.8)
Energy and other(0.7) (1.0)
Current year period$173.2
 $42.5
(1)Lower sales volumes to AK Steel at Haverhill, for which AK Steel made make-whole payments, decreased revenues $4.6 million and $1.7 million during the three months ended March 31, 2017 and 2016, respectively.
(2)Coal cost under-recovery previously discussed in "Items Impacting Comparability" decreased both revenues and Adjusted EBITDA by $1.4 million.
Coal Logistics
The following table explains year-over-year changes in our Coal Logistics segment's sales and other operating revenues and Adjusted EBITDA results:
 Three months ended March 31, 2017 vs. 2016
 Sales and other operating revenue, inclusive of intersegment sales Adjusted EBITDA
 (Dollars in millions)
Prior year period$17.1
 $5.9
Transloading volumes(1)
7.0
 6.9
Operating and maintenance costs and other0.1
 0.2
Current year period$24.2
 $13.0
(1)The increase in revenues and Adjusted EBITDA during the three months ended March 31, 2017 was the result of 1,414 thousand of higher tons handled as compared to the prior year period, primarily at CMT.
Corporate and Other
Corporate expenses were $3.8 million for the three months ended March 31, 2016 compared to $193.0 million for the corresponding period of 2015. The decrease was mainly attributable to the pass-through of lower coal prices, which lowered revenues by $14.1 million. Revenues further decreased by $2.0 million due to the absence of energy sales to Haverhill Chemicals as previously discussed in "Items Impacting Comparability." These decreases were partially offset by increases of $2.0 million primarily associated2017, reasonably consistent with higher sales volumes of 4 thousand tons and a slightly higher reimbursement of operating and maintenance costs.
Adjusted EBITDA
Domestic Coke Adjusted EBITDA decreased $2.2 million, or 4.5 percent, to $46.3 million for the three months ended March 31, 2016 compared to $48.5 million in the corresponding period of 2015 primarily due to the absence of energy sales discussed above.
Depreciation expense, which was not included in segment profitability, was $13.3 million for the three months ended March 31, 2016 compared to $12.8 million in the prior year period. This increase was primarily the result of depreciation expense in the current year period on certain environmental remediation assets placed in service at our Haverhill cokemaking facility.
Coal Logistics
Sales and Other Operating Revenue
Inclusive of intersegment sales, sales and other operating revenue were $17.1 million for the three months ended March 31, 2016 compared to $12.0 million for the corresponding period of 2015. This increase was primarily due to revenue from CMT of $7.7 million in the current year period, which was partially offset by lower volumes at KRT driven by warmer weather conditions in the current year period.
Adjusted EBITDA
Coal Logistics Adjusted EBITDA was $15.1 million for the three months ended March 31, 2016 compared to $2.6 million in the prior year period. The acquisition of CMT provided Adjusted EBITDA of $13.0 million in the current year period. This increase was partially offset by lower volumes at KRT driven by warmer weather conditions in the current year period.
Depreciation and amortization expense, which was not included in segment profitability, was $5.4 million during the three months ended March 31, 2016 compared to $1.8 million during the same prior year period, primarily due to $3.5 million of depreciation and amortization expense associated with CMT.
Corporate and Other
Corporate and other expenses increased $1.2 million to $4.0 million for the three months ended March 31, 2016 compared to $2.8 million in the same period of 2015, primarily due to a higher allocation of costs from SunCoke.
Liquidity and Capital Resources
Our primary liquidity needs are to finance the replacement of partially or fully depreciated assets and other capital expenditures, service our debt, fund investments, fund working capital, maintain cash reserves, and pay distributions. We are prudently managing liquidity in light of our customers' ongoing labor negotiations. We believe our current resources, including the potential borrowings under our revolving credit facility, are sufficient to meet our working capital requirements for our current business for the foreseeable future. Our sources of liquidity include cash generated from operations, borrowings under our revolving credit facility and, from time to time, debt and equity offerings. We believe our current resources are sufficient to meet our working capital requirements for our current business for the foreseeable future. We may be required to access the capital markets for funding related to the maturities of our long-term borrowings beginning in 2019. In addition, we are actively seeking to retire or repurchase a portion of our outstanding debt. Such repurchases will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. The amounts involved may be material. As of March 31, 2016,2017, we had $33.7$46.2 million of cash and cash equivalents and $66.5$76.6 million of borrowing availability under the Partnership Revolver.


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Distributions
On April 18, 2016,17, 2017, our Board of Directors declared a quarterly cash distribution of $0.5940 per unit. This distribution will be paid on June 1, 20162017 to unitholders of record on May 16, 2016. The Board of Director's decision to hold quarterly unitholder distributions flat at $0.5940 per unit is part of our capital allocation strategy to shift excess cash flow towards


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repurchasing the Partnership's debt. The Partnership and its Board of Directors will continue to evaluate its capital allocation and distribution priorities on a quarterly basis.
In an effort to increase the Partnership's liquidity position for continued de-levering of its balance sheet, SunCoke provided a "reimbursement holiday" during the first quarter of 2016 on the corporate cost allocation to the Partnership, resulting in a capital contribution of $7.0 million. SunCoke also returned its IDR cash distribution of $1.4 million to the Partnership ("IDR giveback") as a capital contribution.15, 2017.
For the second quarter of 2016, SunCoke has elected to provide the Partnership with one year deferred payment terms on the reimbursement of the corporate cost allocation and IDR cash distribution rather than a reimbursement holiday and IDR giveback. SunCoke will continue to evaluate alternatives for providing sponsor support on a quarterly basis.
In the first quarter of 2016, the Partnership continued de-levering its balance sheet and repurchased $52.8 million face value of outstanding Partnership Notes for $32.6 million in the open market.
During the first quarter of 2016, the Partnership issued $1.5 million of letters of credit as collateral to its surety providers in connection with workers' compensation, general liability and other financial guarantee obligations. These letters of credit lower the Partnership's borrowing availability under the Partnership Revolver.
The Partnership is subject to certain debt 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, (iii) prepay, redeem or repurchase certain debt, (iv) make loans and investments, (v) sell assets, (vi) incur liens, (vii) enter into transactions with affiliates and (viii) consolidate or merge. These covenants are subject to a number of exceptions and qualifications set forth in the respective agreements governing the Partnership's debt.
Under the terms of the Partnership Revolver, the Partnership is subject to a maximum consolidated leverage ratio of 4.50:1.00 (and, if applicable, 5.00:1.00 during the remainder of any fiscal quarter and the two immediately succeeding fiscal quarters following our acquisition of additional assets having a fair market value greater than $50 million), calculated by dividing total debt by EBITDA as defined by the Partnership Revolver, and a minimum consolidated interest coverage ratio of 2.50:1.00, calculated by dividing EBITDA by interest expense as defined by the Partnership Revolver.
Under the terms of the promissory agreement, Raven Energy LLC, a wholly-owned subsidiary of the Partnership, is subject to a maximum leverage ratio of 5.00:1.00 for any fiscal quarter ending prior to August 12, 2018, calculated by dividing total debt by EBITDA as defined by the promissory agreement. For any fiscal quarter ending on or after August 12, 2018, the maximum leverage ratio is 4.50:1.00. Additionally in order to make restricted payments, Raven Energy LLC is subject to a fixed charge ratio of greater than 1.00:1.00, calculated by dividing EBITDA by fixed charges as defined by the promissory agreement.
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 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 $20 million.Covenants
As of March 31, 2016,2017, the Partnership was in compliance with all applicable debt covenants contained in the Partnership Revolver and promissory agreement.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. See Note 7 to the consolidated financial statements for details on debt covenants.
Cash Flow Summary
The following table sets forth a summary of the net cash provided by (used in) operating, investing and financing activities for the three months ended March 31, 20162017 and 2015:2016:
  Three Months Ended March 31,
  2016 2015
     
  (Dollars in millions)
Net cash provided by operating activities $40.4
 $29.7
Net cash used in investing activities —
 (5.5)
Net cash (used in) provided by financing activities (55.3) 34.3
Net (decrease) increase in cash and cash equivalents $(14.9) $58.5


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  Three Months Ended March 31,
  2017 2016
     
  (Dollars in millions)
Net cash provided by operating activities $39.4
 $40.4
Net cash used in investing activities (4.1) —
Net cash used in financing activities (30.9) (55.3)
Net increase (decrease) in cash and cash equivalents $4.4
 $(14.9)
Cash Provided by Operating Activities
Net cash provided by operating activities increaseddecreased by $10.7$1.0 million to $40.4$39.4 million for the three months ended March 31, 20162017 as compared to $29.7$40.4 million in the corresponding period of 2015.2016. The increasedecrease was the result of working capital changes primarily reflects the contributiondue to increased inventory purchases of CMT's net cash provided$15.2 million driven by operating activitieshigher coal prices and inventory levels, mostly offset by higher coal purchase payables of $7.4$11.7 million in the first quarter of 2016, as well as timing oflower interest payments on inventory purchases.during the three months ended March 31, 2017 as compared to the same prior year period.
Cash Used in Investing Activities
Net cash used in investing activities decreased $5.5increased $4.1 million to zero for the three months ended March 31, 20162017 as compared to $5.5 million in the corresponding period in 2015.2016. The decrease is primarilyincrease was due to thean amendment ofin an agreement with The Cline Group during the first quarter of 2016, which unrestricted $6.0 million of previously restricted cash and relieved the Partnership of any obligation to repay these amounts to The Cline Group. This cash inflow offset capital expenditures in 2016. The year-over-year increase was partially offset by lower capital expenditure spending during the first quarter of 2017 as compared to the same prior year period.
Cash Used in Financing Activities
Net cash used in financing activities was $30.9 million for the three months ended March 31, 2017. In the first quarter of 2017, the Partnership repaid $0.9 million of long-term debt and paid distributions of $30.0 million to its unitholders and SunCoke.
Net cash used in financing activities was $55.3 million for the three months ended March 31, 2016. In the first quarter of 2016, as compared to net cash provided by financing activitiesthe Partnership repaid $32.9 million of $34.3 million for the corresponding period of 2015. In 2016, we repurchased $52.8 million face value of outstandinglong-term debt, primarily Partnership Notes, for $32.6 millionand paid distributions of cash in the open market.$30.8 million. The Partnership also repaid $0.3 millionrepayments of the face value Promissory Note on March 31, 2016. Additionally, we made distributions to our unitholders of $29.5 milliondebt and distributions to SunCoke of $1.3 million. The distributions were partially offset by capital contributions from SunCoke of $8.4 million from the "reimbursement holiday"reimbursement holiday and IDR giveback.
In the three months ended March 31, 2015, we received gross proceeds of $210.8 million from the issuance of Partnership Notes. These cash inflows were partially offset by debt issuance costs of $4.2 million, distributions to our unitholders of $22.2 million, distributions to SunCoke of $0.6 million and the repayment of debt assumed from SunCoke and other liabilities of $149.5 million.
Capital Requirements and Expenditures
Our cokemaking operations are capital intensive, requiring significant investment to upgrade or enhance existing operations and to meet environmental and operational regulations. The level of future capital expenditures will depend on various factors, including market conditions and customer requirements, and may differ from current or anticipated levels. Material changes in capital expenditure levels may impact financial results, including but not limited to the amount of depreciation, interest expense and repair and maintenance expense.


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Our capital requirements have consisted, and are expected to consist, primarily of:
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; and
Environmental remediation project expenditures required to implement design changes to ensure that our existing facilities operate in accordance with existing environmental permits.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.


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The following table summarizes ongoing, environmental remediation projects and expansion capital expenditures for the three months ended March 31, 20162017 and 2015:2016:
 Three Months Ended March 31, Three Months Ended March 31,
 2016 2015 2017 2016
        
 (Dollars in millions) (Dollars in millions)
Ongoing capital $4.6
 $2.7
 $1.0
 $4.6
Environmental remediation capital(1)
 1.4
 2.8
 3.1
 1.4
Expansion capital - CMT(2)
 2.0
 —
 0.1
 2.0
Total $8.0
 $5.5
 $4.2
 $8.0
(1)Includes $0.1 million and $0.6 million of capitalized interest, of $0.6 million and $0.7 million in connection with the environmental remediation projects, during the three months ended March 31, 20162017 and 2015,2016, respectively.
(2)IncludesRepresents capital expenditures of $1.4 million onfor the ship loader expansion project paid forfunded with pre-funded cash which was restrictedwithheld in conjunction with the acquisition of CMT andCMT. Additionally, this includes capitalized interest of $0.6 million of interest capitalized in connection withfor the project.three months ended March 31, 2016.
In 2016, we expect lower ongoing capital spending across the entire fleet and will focus our efforts on projects that are geared toward asset care and increasing workforce safety. Additionally, we have shifted the timing of the environmental remediation project at Granite City and will begin the work in 2017.
In 2016, excluding capitalized interest and pre-funded capital projects at CMT,2017, we expect our capital expenditures to be approximately $18$45 million, which includesis comprised of the following:
Total ongoing capital expenditures of approximately $15 million. $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.
We expect that capital expenditures will remain at this level in 2017 and 2018.2018, including capital expenditures of approximately $25 million to complete the remediation project.
We retained $119 million in proceeds from the Partnership Offering,our initial public offering and subsequent dropdowns to fund our environmental remediation projects to comply with the expected terms of a consent decree at the Haverhill and Granite City cokemaking operations. Pursuant to the omnibus agreement, any amounts that we spend on these projects in excess of the $119 million will be reimbursed by SunCoke. Prior to our formation, SunCoke spent approximately $7 million related to these projects. The Partnership has spent approximately $83$89 million to date and the remaining capital is expected to be spent through the first quarter of 2019.
Off-Balance Sheet Arrangements
We dohave letters of credit, operating leases and outstanding surety bonds to secure reclamation and other performance commitments. There have been no significant changes to these arrangements during the three months ended March 31, 2017. Please refer to our Annual Report on Form 10-K dated February 16, 2017 for further disclosure of these arrangements. Other than these arrangements, the Partnership has not haveentered into any transactions, agreements or other contractual arrangements that would result in material off-balance sheet arrangements.liabilities.


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Critical Accounting Policies
There have been no significant changes to our accounting policies during the three months ended March 31, 20162017. Please refer to our Annual Report on Form 10-K dated February 18, 201616, 2017 for a summary of these policies.
Recent Accounting Standards
See Note 1 to our consolidated financial statements.


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Non-GAAP Financial Measures
In addition to the GAAP results provided in the QuarterlyAnnual Report on Form 10-Q,10-K, we have provided a non-GAAP financial measure, Adjusted EBITDA. Reconciliation from GAAP to the non-GAAP measurement is presented below.
Our management, as well as certain investors, useuses this non-GAAP measure to analyze our current and expected future financial performance.performance and liquidity. This measure is not in accordance with, or a substitute for, GAAP and may be different from, or inconsistent with, non-GAAP financial measures used by other companies.
Adjusted EBITDA represents earnings before interest, (gain) loss on extinguishment of debt, taxes, depreciation and amortization, adjusted for Coal Logistics deferred revenue and changes to our contingent consideration liability related to our acquisition of the CMT. Coal Logistics deferred revenue adjusts for coal and liquid tons the Partnership did not handle, but are included in Adjusted EBITDA as the associated take-or-pay fees are billed to the customer. Deferred revenue on take-or-pay contracts is recognized into GAAP income annually based on the terms of the contract. 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 See Note 10 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 ofconsolidated financial performance presented in accordance with GAAP. Set forth below is additional discussion ofstatements for both the limitationsdefinition 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 substitutethe reconciliations from GAAP to the non-GAAP measurement for an analysis of our results as reported under GAAP. Some of these limitations include that Adjusted EBITDA:
does not reflect our cash expenditures, or future requirements, for capital expenditures or contractual commitments;
does not reflect items such as depreciationthe three months ended March 31, 2017 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.


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2016, respectively.
Below is a reconciliation of 2017 estimated 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:
  Three Months Ended March 31,
  2016 2015
     
  (Dollars in millions)
Adjusted EBITDA attributable to SunCoke Energy Partners, L.P. $56.5
 $43.8
Add: Adjusted EBITDA attributable to Previous Owner(1)
 —
 1.5
Add: Adjusted EBITDA attributable to noncontrolling interest(2)
 0.9
 3.0
Adjusted EBITDA $57.4

$48.3
Subtract:    
Depreciation and amortization expense $18.7
 $14.6
Interest expense, net 12.5
 11.2
(Gain) loss on extinguishment of debt (20.4) 9.4
Income tax expense (benefit) 0.6
 (3.3)
Coal Logistics deferred revenue(3)
 9.2
 —
Reduction of contingent consideration(4)
 (3.7) —
Net income $40.5

$16.4
Add:    
Depreciation and amortization expense $18.7
 $14.6
(Gain) loss on extinguishment of debt (20.4) 9.4
Changes in working capital and other 1.6
 (10.7)
Net cash provided by operating activities $40.4

$29.7
(1)
Reflects net income attributable to our Granite City facility prior to the Granite City Dropdown on January 13, 2015 adjusted for Granite City's share of interest, taxes, depreciation and amortization during the same period.
(2)
Reflects net income attributable to noncontrolling interest adjusted for noncontrolling interest's share of interest, taxes, income, and depreciation and amortization.
(3)
Coal Logistics deferred revenue adjusts for coal and liquid tons the Partnership did not handle, but are included in Adjusted EBITDA as the associated take-or-pay fees are billed to the customer. Deferred revenue on take-or-pay contracts is recognized into GAAP income annually based on the terms of the contract.
(4)The Partnership amended the contingent consideration terms with The Cline Group, which reduced the fair value of the contingent consideration liability from $7.9 million at December 31, 2015 to $4.2 million at March 31, 2016, resulting in a $3.7 million gain, which was excluded from Adjusted EBITDA.



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Below is a reconciliation of 2016 Estimated Adjusted EBITDA to its closest GAAP measures:
 2016 2017
 Low High Low High
Adjusted EBITDA attributable to SunCoke Energy Partners, L.P. $207
 $217
Add: Adjusted EBITDA attributable to noncontrolling interest(1)
 3
 3
Adjusted EBITDA $210
 $220
Net Cash Provided by Operating Activities $142
 $162
Subtract:        
Depreciation and amortization expense 74
 74
 86
 86
Interest expense, net 57
 53
(Gain) loss on extinguishment of debt (20) (27)
Income tax expense 1
 1
Reduction of contingent consideration(2)
 (4) (4)
Net income $102
 $123
Deferred income tax expense 149
 149
Changes in working capital and other (17) (11)
Net loss $(76) $(62)
Add:        
Depreciation and amortization expense 74
 74
 86
 86
Gain on extinguishment of debt (20) (27)
Changes in working capital and other (7) (7)
Net cash provided by operating activities $149
 $163
Interest expense, net 52
 48
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.
(2)The Partnership amended the contingent consideration terms with The Cline Group, which reduced the fair value of the contingent consideration liability from $7.9 million at December 31, 2015 to $4.2 million at March 31, 2016, resulting in a $3.7 million gain, which was excluded from Adjusted EBITDA.



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CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS
    
We have made forward-looking statements in this Quarterly Report on Form 10-Q, including, among others, in the sections entitled “Risk Factors,” “Quantitative and Qualitative Disclosures aboutAbout Market Risk” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Such forward-looking statements are based on management’s beliefs and assumptions and on information currently available. Forward-looking statements include the information concerning our possible or assumed future results of operations, business strategies, financing plans, competitive position, potential growth opportunities, potential operating performance, and the effects of competition and the effects of future legislation or regulations. Forward-looking statements include all statements that are not historical facts and may be identified by the use of forward-looking terminology such as the words “believe,” “expect,” “plan,” “intend,” “anticipate,” “estimate,” “predict,” “potential,” “continue,” “may,” “will,” “should” or the negative of these terms or similar expressions. In particular, statements in this Quarterly Report on Form 10-Q concerning future distributions are subject to approval by our Board of Directors and will be based upon circumstances then existing.
Forward-looking statements involve risks, uncertainties and assumptions. Actual results may differ materially from those expressed in these forward-looking statements. You should not put undue reliance on any forward-looking statements. We do not have any intention or obligation to update any forward-looking statement (or its associated cautionary language), whether as a result of new information or future events, after the date of this Quarterly Report on Form 10-Q, except as required by applicable law.
The risk factors discussed in “Risk Factors” could cause our results to differ materially from those expressed in thesethe forward-looking statements.statements made in this Quarterly 10-Q. There also may be other risks that we are unable to predict at this time. Such risks and uncertainties include, without limitation:
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/orand 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 logistics services;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, in the U.S. and Canada, 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;


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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 allour customers and/or supplies;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;
impactimpacts 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 required 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, pensions,post-employment benefit income, or income;other matters;
historical combined and 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 accounting rules and/or tax laws or their interpretations, including the method of accounting for inventories, leases, post employment benefit and/or pensions;other items;


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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.
The factors identified above are believed to be important factors, but not necessarily all of the important factors, that could cause actual results to differ materially from those expressed in any forward-looking statement made by us. Other factors not discussed herein could also have material adverse effects on us. All forward-looking statements included in this Quarterly Report on Form 10-Q are expressly qualified in their entirety by the foregoing cautionary statements.


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Item 3.Quantitative and Qualitative Disclosures About Market Risk
There have been no material changes to the Partnership's exposure to market risk sincedisclosed in our Annual Report on Form 10-K for the year ended December 31, 2015.2016.
Item 4.Controls and Procedures
Management’s Evaluation of Disclosure Controls and Procedures
As required by Rule 13a-15(b) under the Exchange Act, theThe Partnership carried out an evaluation of the effectiveness of the design and operation of the Partnership'smaintains disclosure controls and procedures, (as defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act)Act of 1934), as of March 31, 2016. This evaluation was carried out under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer.
Our disclosure controls and proceduresamended (the “Exchange Act”) that are designed to provide reasonable assuranceensure that the information required to be disclosed in Partnershipits reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms. Disclosure controlsforms, and procedures include, without limitation, controls and procedures designed to ensure that such information required to be disclosed in the Partnership reports filed or submitted under the Exchange Act is accumulated and communicated to the Partnership’s management, including the Partnership'sits Chief Executive Officer and Chief Financial Officer as appropriate, to allow timely decisions regarding required disclosure.
In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.
The Partnership carried out an evaluation, under the supervision and with the participation of management, including its Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Partnership’s disclosure controls and procedures as of the end of the period covered by this report. Based upon thaton this evaluation, ourthe Partnership’s Chief Executive Officer and Chief Financial Officer concluded that as of March 31, 2016, the Partnership's disclosure controls and procedures were effective atas of the reasonable assurance level.end of the period covered by this report.
Changes in Internal Control over Financial Reporting
On August 12, 2015 we acquired Raven Energy LLC including Convent Marine Terminal and consider the transaction material to our results of operations, cash flows and financial position from the date of the acquisition. In conducting our evaluation of the effectiveness of our internal control over financial reporting, weThere have elected to exclude Raven from our evaluation in the year from acquisition as permitted by the Securities and Exchange Commission. Raven represents $421.1 million of total assets and $7.7 million of total revenue in the combined and consolidated financial statements of the Partnership as of and for the three months ended March 31, 2016. We are currently in the process of evaluating and integrating Raven’s internal controls over financial reporting and expect to complete the integration of Raven’s internal controls in 2016. There werebeen no changes in ourthe Partnership’s internal control over financial reporting that occurred during the most recently completed fiscal quarter ended March 31, 2016, that hashave materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.




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PART II - OTHER INFORMAITON
Item 1.Legal Proceedings
The information presented in Note 98 to our combined and consolidated financial statements within this Quarterly Report on Form 10-Q is incorporated herein by reference.
Many legal and administrative proceedings are pending or may be brought against us arising out of our current and past operations, 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 proceedings cannot be ascertained at this time, it is reasonably possible that some of them could be resolved unfavorably to us. Our management believes that any liabilities that may arise from such matters would not be material in relation to our business or our combined and consolidated financial position, results of operations or cash flows at March 31, 2016.2017.
Item 1A.Risk Factors
There have been no material changes with respect to the risk factors disclosed in our Annual Report on Form 10-K for the year ended December 31, 2015.2016.
Item 2.Unregistered Sales of Equity Securities and Use of Proceeds
Market Repurchases
On July 20, 2015,There has been no activity with respect to the Partnership's Board of Directors authorized a program for the Partnership to repurchase up to $50.0 million of its common units. Atoutstanding units during the three months ended March 31, 2016, there was $37.2 million available under2017. Please refer to SunCoke Energy Partners' Annual Report on Form 10-K dated February 16, 2017 for further information on the authorized unit repurchase program. There were no unit repurchases during
Item 4. Mine Safety Disclosures
Certain coal logistics assets are subject to Mine Safety and Health Administration regulatory purview. The information concerning mine safety violations and other regulatory matters that we are required to report in accordance with Section 1503(a) of the first quarterDodd-Frank Wall Street Reform and Consumer Protection Act and Item 104 of 2016.

Regulation S-K (17 CFR 229.014) is included in Exhibit 95.1 to this Annual Report on Form 10-K.


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Item 6.Exhibits
The following exhibits are filed as part of, or incorporated by reference into, this Form 10-Q.
Exhibit
Number
   Description
     
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 March 31, 2016,2017, filed with the Securities and Exchange Commission on April 27, 2016,25, 2017, formatted in XBRL (eXtensible Business Reporting Language is attached to this report): (i) the Combined and Consolidated Statements of Income;Operations; (ii) the Consolidated Balance Sheets; (iii) the Combined and Consolidated Statements of Cash Flows; (iv) the Consolidated Statement of Equity; and, (v) the Notes to Combined and Consolidated Financial Statements.
*Filed herewith.



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SIGNATURE
Pursuant to the requirements of Section 13 or 15(a) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Lisle, State of Illinois, on April 27, 2016.25, 2017.
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)


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