Net Income Per Unit and Cash Distribution | 6. Net Income Per Unit and Cash Distribution Cash Distributions Our partnership agreement generally provides that we will make our distribution, 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; • second, 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: Total Quarterly Distribution Per Unit Amount Marginal Percentage Unitholders General Partner Minimum Quarterly Distribution $0.412500 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 % 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 partner's IDRs Date of Distribution Unitholders Record Date (Dollars in millions) March 31, 2016 $ 0.5940 $ 29.5 June 1, 2016 May 6, 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 13, 2015 December 31, 2016 (1) $ 0.5940 $ 29.5 March 1, 2017 February 15, 2017 (1) On January 23, 2017 , our Board of Directors declared a cash distribution of $0.5940 per unit. The distribution will be paid on March 1, 2017 , to unitholders of record on February 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. Prior to the Granite City Dropdown, the allocation of net income from Granite City’s operations 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. The calculation of net income allocated to the general and limited partners was as follows: Years Ended December 31, 2016 2015 2014 (Dollars in millions) Net income attributable to SunCoke Energy Partners L.P./Previous Owners $ 119.1 $ 86.0 71.8 Less: Expense allocated to Common - SunCoke (1) (7.0 ) — — Less: Allocation of net income attributable to Predecessors to the general partner — 0.6 15.8 Net income attributable to partners $ 126.1 $ 85.4 56.0 General partner's incentive distribution rights 21.0 6.4 1.3 Net income attributable to partners, excluding incentive distribution rights 105.1 79.0 54.7 General partner's ownership interest 2.0 % ` 2.0 % 2.0 % General partner's allocated interest in net income (2) 2.6 1.6 1.1 General partner's incentive distribution rights 21.0 6.4 1.3 Net income attributable to Previous Owners — 0.6 15.8 Total general partner's interest in net income $ 23.6 $ 8.6 $ 18.2 Common - public unitholder's interest in net income $ 46.1 $ 34.0 $ 23.8 Common - SunCoke interest in net income: — — — Common - SunCoke interest in net income 56.4 14.9 6.2 Expenses allocated to Common - SunCoke (1) (7.0 ) — — Total common - SunCoke interest in net income 49.4 14.9 6.2 Subordinated - SunCoke interest in net income — 28.5 23.6 Total limited partners' interest in net income $ 95.5 $ 77.4 $ 53.6 (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. See Note 4 . These expenses are recorded as a direct reduction to SunCoke's interest in net income for the year ended December 31, 2016 . (2) 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. The table above represents a simplified presentation of the calculation, and therefore, amounts may not recalculate precisely. 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 have also 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. 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 limited partner unit as earnings prior to the dropdown were allocated to our general partner. The calculation of earnings per unit is as follows: Years Ended December 31, 2016 2015 2014 (Dollars in millions, except per unit amounts) Net income attributable to SunCoke Energy Partners L.P./Previous Owner $ 119.1 $ 86.0 $ 71.8 Less: Expense allocated to Common - SunCoke (7.0 ) — — Less: Allocation of net income attributable to Previous Owner to the general partner — 0.6 15.8 Net income attributable to all partners $ 126.1 $ 85.4 $ 56.0 General partner's distributions (including $5.6 million, $4.7 million and $1.2 million of cash incentive distribution rights declared, respectively) 8.0 7.2 2.6 Limited partners' distributions on common units 109.8 67.7 45.3 Limited partners' distributions on subordinated units — 36.9 32.8 Distributions (greater than) less than earnings 8.3 (26.4 ) (24.7 ) General partner's earnings: Distributions (including $5.6 million, $4.7 million and $1.2 million of cash incentive distribution rights declared, respectively) 8.0 7.2 2.6 Allocation of distributions (greater than) less than earnings 15.6 0.8 (0.2 ) Net income attributable to Previous Owner — 0.6 15.8 Total general partner's earnings 23.6 8.6 18.2 Limited partners' earnings on common units: Distributions 109.8 67.7 45.3 Expenses allocated to Common - SunCoke (7.0 ) — — Allocation of distributions (greater than) less than earnings (7.3 ) (17.3 ) (14.2 ) Total limited partners' earnings on common units 95.5 50.4 31.1 Limited partners' earnings on subordinated units: Distributions — 36.9 32.8 Allocation of distributions (greater than) less than earnings — (9.9 ) (10.3 ) Total limited partners' earnings on subordinated units $ — $ 27.0 $ 22.5 Weighted average limited partner units outstanding: Common - basic and diluted 46.2 26.2 19.7 Subordinated - basic and diluted — 15.7 15.7 Net income per limited partner unit: Common - basic and diluted $ 2.07 $ 1.92 $ 1.58 Subordinated - basic and diluted $ — $ 1.71 $ 1.43 Unit Activity Unit activity for years ended December 31, 2016 , 2015 and 2014 as follows: Common - Public Common - SunCoke Total Common Subordinated - SunCoke At December 31, 2013 13,503,456 2,209,697 15,713,153 15,709,697 Units issued in conjunction with the acquisition of additional interest in Haverhill and Middletown 3,220,000 2,695,055 5,915,055 — Units issued to directors 2,752 — 2,752 — Units issued under the Equity Distribution Agreement (1) 62,956 — 62,956 — At December 31, 2014 16,789,164 4,904,752 21,693,916 15,709,697 Units issued in conjunction with the Granite City Dropdown — 1,877,697 1,877,697 — Units issued in conjunction with the Granite City Supplemental Dropdown — 1,158,760 1,158,760 — Units issued in conjunction with the acquisition of CMT 4,847,287 1,764,790 6,612,077 — Units issued to directors 7,293 — 7,293 — Unit repurchases (2) (856,000 ) — (856,000 ) — At December 31, 2015 20,787,744 9,705,999 30,493,743 15,709,697 Units issued to directors 12,437 — 12,437 — Conversion of subordinate units to common units (3) — 15,709,697 15,709,697 (15,709,697 ) At December 31, 2016 20,800,181 25,415,696 46,215,877 — (1) On August 5, 2014, the Partnership entered into an equity distribution agreement ("Equity Agreement") in which the Partnership may sell from time to time through Wells Fargo Securities, LLC, the Partnership’s common units representing limited partner interests having an aggregate offering price of up to $75.0 million . During 2014, the Partnership sold 62,956 common units under the Equity Agreement with an aggregate offering price of $1.8 million , leaving $73.2 million available under the Equity Agreement. The Equity Distribution Agreement was suspended during 2015. (2) On July 20, 2015, the Partnership's Board of Directors authorized a program for the Partnership to repurchase up to $50.0 million of its common units. During 2015, the Partnership repurchased 856,000 common units, in the open market, for $12.8 million at an average price of $14.91 per unit. As of December 31, 2016 , the Partnership had $37.2 million available under the authorized unit repurchase program. (3) 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. |