Net Income Per Unit and Cash Distributions | 9 Months Ended |
Sep. 30, 2013 |
Net Income Per Unit [Abstract] | |
Net Income Per Unit and Cash Distributions | 4. Net Income Per Unit and Cash Distributions |
The following is a summary of net income for the nine months ended September 30, 2013 disaggregated between the Predecessor and the Partnership: |
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| | SunCoke Energy Partners, L.P. | | SunCoke Energy Partners, L.P. | | Nine Months Ended September 30, 2013 |
Predecessor |
| | Through | | From | | |
| | 23-Jan-13 | | 24-Jan-13 | | |
Revenues | | (Dollars in millions) |
Sales and other operating revenue | | $ | 47.6 | | | $ | 467 | | | $ | 514.6 | |
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Costs and operating expenses | | | | | | |
Cost of products sold and operating expenses | | 36.8 | | | 346.5 | | | 383.3 | |
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Selling, general and administrative expenses | | 1.1 | | | 15.4 | | | 16.5 | |
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Depreciation expense | | 1.9 | | | 21.6 | | | 23.5 | |
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Total costs and operating expenses | | 39.8 | | | 383.5 | | | 423.3 | |
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Operating income | | 7.8 | | | 83.5 | | | 91.3 | |
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Interest expense, net | | 0.6 | | | 11.7 | | | 12.3 | |
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Income before income tax expense | | 7.2 | | | 71.8 | | | 79 | |
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Income tax expense | | 3.7 | | | 0.5 | | | 4.2 | |
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Net income | | $ | 3.5 | | | $ | 71.3 | | | $ | 74.8 | |
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Net income per unit applicable to limited partners (including subordinated unitholders) is computed by dividing limited partners’ interest in net income, after deducting the general partner’s 2.0 percent interest and incentive distributions, by the weighted-average number of outstanding common and subordinated units. 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. Net income per unit is only calculated for the Partnership subsequent to the IPO as no units were outstanding prior to January 24, 2013. Earnings in excess of distributions are allocated to the general partner and limited partners based on their respective ownership interests. 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. For the three months ended September 30, 2013, the weighted-average number of common and subordinated units outstanding was 15,711,606 units and 15,709,697 units, respectively. |
In addition to the common and subordinated units, we have also identified the general partner interest and IDRs as participating securities and use the two-class method when calculating the net income per unit applicable to limited partners, which is based on the weighted-average number of common units outstanding during the period. Basic and diluted net income per unit applicable to limited partners are the same because we do not have any potentially dilutive units outstanding. |
The calculation of net income per unit is as follows: |
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| | Three Months Ended September 30, 2013 | | Nine Months Ended September 30, 2013 | | | | |
| | (Dollars and units in millions, except per unit amounts) | | | | |
Net income attributable to SunCoke Energy Partners, L.P. subsequent to initial public offering | | $ | 13.7 | | | $ | 41.3 | | | | | |
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Less: General partner's interest in net income subsequent to initial public offering | | 0.3 | | | 0.9 | | | | | |
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Limited partners' interest in net income subsequent to initial public offering | | $ | 13.4 | | | $ | 40.4 | | | | | |
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Net income per limited partner unit: | | | | | | | | |
Common - Public and SunCoke | | $ | 0.43 | | | $ | 1.29 | | | | | |
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Subordinated - SunCoke | | $ | 0.43 | | | $ | 1.29 | | | | | |
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Limited partner units outstanding: | | | | | | | | |
Common units - Public | | 13.5 | | | 13.5 | | | | | |
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Common units - SunCoke | | 2.2 | | | 2.2 | | | | | |
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Subordinated units - SunCoke | | 15.7 | | | 15.7 | | | | | |
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Cash Distributions |
Our partnership agreement generally provides that we will make our distribution, if any, each quarter in the following manner: |
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• | 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 $0.41250 plus any arrearages from prior quarters; | | | | | | | | | | | |
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• | 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 $0.41250; and | | | | | | | | | | | |
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• | third, 98 percent to all unitholders, pro rata, and 2 percent to our general partner, until each unit has received a distribution of $0.47440. | | | | | | | | | | | |
If cash distributions to our unitholders exceed $0.47440 per unit in any quarter, our unitholders and our general partner will receive distributions according to the following percentage allocations: |
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| Total Quarterly Distribution Per Unit Target Amount | | Marginal Percentage | | | |
Interest in Distributions | | | |
| Unitholders | | General Partner | | | |
Minimum Quarterly Distribution | $0.41 | | 98 | % | | 2 | % | | | |
First Target Distribution | above $0.412500 | | up to $0.474375 | | 98 | % | | 2 | % | | | |
Second Target Distribution | above $0.474375 | | up to $0.515625 | | 85 | % | | 15 | % | | | |
Third Target Distribution | above $0.515625 | | up to $0.618750 | | 75 | % | | 25 | % | | | |
Thereafter | above $0.681750 | | 50 | % | | 50 | % | | | |
In accordance with our partnership agreement, on April 23, 2013, we declared a quarterly cash distribution totaling $9.8 million, or $0.3071 per unit. In calculating this distribution, the minimum quarterly distribution was adjusted to reflect the period beginning on January 24, 2013, the closing date of the IPO, through March 31, 2013. This distribution was paid on May 31, 2013 to unitholders of record on May 15, 2013. There were no distributions declared or paid prior to this distribution. |
On July 23, 2013, the Partnership, in accordance with the partnership agreement, declared a quarterly cash distribution totaling $13.5 million, or $0.4225 per unit. The distribution was paid on August 30, 2013 to unitholders of record on August 15, 2013. |
On October 22, 2013, the Partnership, in accordance with the partnership agreement, declared a quarterly cash distribution totaling $13.9 million, or $0.4325 per unit. The distribution will be paid on November 29, 2013 to unitholders of record on November 15, 2013. |
The allocation of total quarterly cash distributions to general and limited partners is as follows. Our distributions are declared subsequent to quarter end; therefore, the table below represents total cash distributions applicable to the period in which the distributions were earned: |
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| | Three Months Ended March 31, 2013 | | Three Months Ended June 30, 2013 | | Three Months Ended September 30, 2013 |
| | (Dollars in millions, except per unit amounts) |
General partner's interest | | $ | 0.2 | | | $ | 0.3 | | | $ | 0.3 | |
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General partner's incentive distribution | | — | | | — | | | — | |
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Total General Partner's Distribution | | $ | 0.2 | | | $ | 0.3 | | | $ | 0.3 | |
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Limited partners' distribution: | | | | | | |
Common | | $ | 4.8 | | | $ | 6.6 | | | $ | 6.8 | |
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Subordinated | | 4.8 | | | 6.6 | | | 6.8 | |
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Total Cash Distributions | | $ | 9.8 | | | $ | 13.5 | | | $ | 13.9 | |
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Cash distributions per unit applicable to limited partners | | $ | 0.3071 | | | $ | 0.4225 | | | $ | 0.4325 | |
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Allocation of Net Income |
Our partnership agreement contains provisions for the allocation of net income to the unitholders and the general partner. For purposes of maintaining partner capital accounts, the partnership agreement specifies that items of income and loss shall be allocated among the partners in accordance with their respective percentage interest. Normal allocations according to percentage interests are made after giving effect, if any, to priority income allocations in an amount equal to incentive cash distributions allocated 100 percent to the general partner. |
The calculation of net income allocated to the limited partners was as follows: |
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| | Three Months Ended September 30, 2013 | | Nine Months Ended September 30, 2013 | | | | |
Net Income Attributable to Common Unitholders: | | (Dollars in millions) | | | | |
Distributions | | $ | 6.8 | | | $ | 18.2 | | | | | |
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Undistributed earnings (1) | | (0.1 | ) | | 2 | | | | | |
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Common unitholders' interest in net income subsequent to initial public offering | | $ | 6.7 | | | $ | 20.2 | | | | | |
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Net Income Attributable to Subordinated Unitholders: | | | | | | | | |
Distributions | | $ | 6.8 | | | $ | 18.2 | | | | | |
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Undistributed earnings (1) | | (0.1 | ) | | 2 | | | | | |
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Subordinated unitholders' interest in net income subsequent to initial public offering | | $ | 6.7 | | | $ | 20.2 | | | | | |
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Distributions declared per unit | | $ | 0.4325 | | | $ | 1.1621 | | | | | |
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(1) Distributions exceed unitholders' interest in net income during the three months ended September 30, 2013 as distributable cash flow excludes the $1.8 million payment to DTE Energy Company, the third party investor owning a 15 percent interest in the entity that owns Indiana Harbor. Distributable cash flow also included the $0.6 million capital contribution received under the omnibus agreement. |