Net Income Per Unit and Cash Distributions | 3 Months Ended |
Mar. 31, 2014 |
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 three months ended March 31, 2014 and 2013 including a summary of net income disaggregated between the Predecessor and the Partnership three months ended March 31, 2013: |
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| | Three Months Ended March 31, | | | SunCoke Energy Partners, L.P. | | SunCoke Energy Partners, L.P. |
Predecessor |
| | | | | Period from January 1, 2013 to January 23, 2013 | | Period from January 24, 2013 to March 31, 2013 |
| | 2014 | | 2013 | | | |
Revenues | | (Dollars in millions) |
Sales and other operating revenue | | $ | 161.4 | | | $ | 184.9 | | | | $ | 47.6 | | | $ | 137.3 | |
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Costs and operating expenses | | | | | | | | | |
Cost of products sold and operating expenses | | 120.5 | | | 138.4 | | | | 36.8 | | | 101.6 | |
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Selling, general and administrative expenses | | 4.9 | | | 4.4 | | | | 1.1 | | | 3.3 | |
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Depreciation expense | | 9.7 | | | 7.6 | | | | 1.9 | | | 5.7 | |
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Total costs and operating expenses | | 135.1 | | | 150.4 | | | | 39.8 | | | 110.6 | |
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Operating income | | 26.3 | | | 34.5 | | | | 7.8 | | | 26.7 | |
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Interest expense, net | | 2.9 | | | 6.7 | | | | 0.6 | | | 6.1 | |
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Income before income tax expense | | 23.4 | | | 27.8 | | | | 7.2 | | | 20.6 | |
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Income tax expense | | 0.3 | | | 3.9 | | | | 3.7 | | | 0.2 | |
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Net income | | 23.1 | | | 23.9 | | | | $ | 3.5 | | | $ | 20.4 | |
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Less: Net income attributable to noncontrolling interests | | 9.9 | | | 8.6 | | | | | | |
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Net income attributable to SunCoke Energy Partners, L.P./Predecessor | | 13.2 | | | 15.3 | | | | | | |
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Less: Predecessor net income prior to initial public offering on January 24, 2013 | | — | | | 3.5 | | | | | | |
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Net income attributable to SunCoke Energy Partners, L.P. subsequent to initial public offering | | $ | 13.2 | | | $ | 11.8 | | | | | | |
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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 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 March 31, 2014, the weighted-average number of common and subordinated units outstanding was 15,713,822 units and 15,709,697 units, respectively. |
In addition to the common and subordinated units, we have also identified the general partner interest and incentive distribution rights 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 March 31, | | | | | | | | | |
| | 2014 | | 2013 | | | | | | | | | |
| (Dollars and units in millions, except per unit amounts) | | | | | | | | | |
Net income attributable to SunCoke Energy Partners, L.P. subsequent to initial public offering | | $ | 13.2 | | | $ | 11.8 | | | | | | | | | | |
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Less: General partner's interest in net income subsequent to initial public offering | | 0.4 | | | 0.2 | | | | | | | | | | |
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Limited partners' interest in net income subsequent to initial public offering | | $ | 12.8 | | | $ | 11.6 | | | | | | | | | | |
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Net income per limited partner unit: | | | | | | | | | | | | | |
Common - Public and SunCoke | | $ | 0.41 | | | $ | 0.37 | | | | | | | | | | |
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Subordinated - SunCoke | | $ | 0.41 | | | $ | 0.37 | | | | | | | | | | |
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Weighted average 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 $0.412500 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 $0.412500; 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 $0.474375. | | | | | | | | | | | | | | | | |
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: |
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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 $0.618750 | | 50 | % | | 50 | % | | | | | | | | |
In accordance with our partnership agreement, on April 21, 2014, we declared a quarterly cash distribution of $0.50 per unit. This distribution will be paid on May 30, 2014 to unitholders of record on May 15, 2014. |
The allocation of total quarterly cash distributions to general and limited partners based on the number of units as of March 31, 2014 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, | | | | | | | | | |
| | 2014 | | 2013 | | | | | | | | | |
| | (Dollars and units in millions, except per unit amounts) | | | | | | | | | |
General partner's interest | | $ | 0.3 | | | $ | 0.2 | | | | | | | | | | |
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General partner's incentive distribution | | 0.1 | | | — | | | | | | | | | | |
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Total general partner's distribution | | $ | 0.4 | | | $ | 0.2 | | | | | | | | | | |
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Limited partners' distribution: | | | | | | | | | | | | | |
Common | | $ | 7.9 | | | $ | 4.8 | | | | | | | | | | |
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Subordinated | | 7.9 | | | 4.8 | | | | | | | | | | |
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Total cash distributions | | $ | 16.2 | | | $ | 9.8 | | | | | | | | | | |
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Cash distributions per unit applicable to limited partners | | $ | 0.5 | | | $ | 0.3071 | | | | | | | | | | |
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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 March 31, | | | | | | | | | |
| | 2014 | | 2013 | | | | | | | | | |
| | (Dollars in millions) | | | | | | | | | |
Net income attributable to common unitholders: | | | | | | | | | | | | | |
Distributions | | $ | 7.9 | | | $ | 4.8 | | | | | | | | | | |
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Undistributed earnings | | (1.5 | ) | | 1 | | | | | | | | | | |
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Common unitholders' interest in net income subsequent to initial public offering | | $ | 6.4 | | | $ | 5.8 | | | | | | | | | | |
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Net income attributable to subordinated unitholders: | | | | | | | | | | | | | |
Distributions | | $ | 7.9 | | | $ | 4.8 | | | | | | | | | | |
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Undistributed earnings | | (1.5 | ) | | 1 | | | | | | | | | | |
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Subordinated unitholders' interest in net income subsequent to initial public offering | | $ | 6.4 | | | $ | 5.8 | | | | | | | | | | |
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