Net financing expense was $12.2 million for third quarter 2012 as compared with financing expense of $3.3 million in third quarter 2011. The $8.9 million change is primarily a result of two factors: $4.6 million of capitalized interest related to projects at our Middletown facility in third quarter 2011 and $3.5 million of higher interest expense in the current period versus the same prior year period due to the timing of our 2011 debt issuance.
COMBINED CASH FLOWS AND FINANCIAL POSITION
Cash FlowsNet cash provided by operating activities rose $19.1 million to $77.8 million in the nine months ended September 30, 2012 due to strong business results driven by our new Middletown facility. Capital expenditures were $40.6 million in the nine months ended September 30, 2012, a decrease of $143.6 million. As a comparison, in the nine months ended September 30, 2011, capital expenditures of $184.2 million included $145.4 million related to the construction of our Middletown facility. 2012 OUTLOOK The following summarizes the Company’s 2012 guidance:
- Earnings per share (assuming a 22 percent tax rate) is expected to be between $1.30 and $1.40
- Full year 2012 Adjusted EBITDA is projected to be between $255 million and $270 million
- Capital expenditures and investments are anticipated to be approximately $75 million
- Corporate costs are expected to be between $29 million and $32 million
- Domestic coke production is expected to be in excess of 4.3 million tons
- Coal production is projected to be approximately 1.4 million tons
- Free cash flow is expected to be in excess of $100 million
- The effective tax rate for the full year 2012 is expected to be between 20 percent and 24 percent, and the cash tax rate is expected to be between 10 percent and 15 percent
- Adjusted EBITDA represents earnings before interest, taxes, depreciation, depletion and amortization (“EBITDA”) adjusted for sales discounts and the deduction of income attributable to noncontrolling interests in our Indiana Harbor cokemaking operations. EBITDA reflects sales discounts included as a reduction in sales and other operating revenue. The sales discounts represent the sharing with customers of a portion of nonconventional fuel tax credits, which reduce our income tax expense. However, we believe our Adjusted EBITDA would be inappropriately penalized if these discounts were treated as a reduction of EBITDA since they represent sharing of a tax benefit that is not included in EBITDA. Accordingly, in computing Adjusted EBITDA, we have added back these sales discounts. Our Adjusted EBITDA also reflects the deduction of income attributable to noncontrolling interests in our Indiana Harbor cokemaking operations. EBITDA and Adjusted EBITDA do not represent and should not be considered alternatives to net income or operating income under GAAP and may not be comparable to other similarly titled measures in other businesses. Adjusted EBITDA does not represent and should not be considered as an alternative to net income as determined by GAAP, and calculations thereof may not be comparable to those reported by other companies. We believe Adjusted EBITDA is an important measure of operating performance and 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. Adjusted EBITDA is a measure of operating performance that is not defined by GAAP and should not be considered a substitute for net (loss) income as determined in accordance with GAAP. See the tables (unaudited) at the end of this release for reconciliations of net income to Adjusted EBITDA.
- Adjusted EBITDA per Ton represents Adjusted EBITDA divided by tons sold.
- Free Cash Flow equals cash from operations less cash used in investing activities less cash distributions to noncontrolling interests. Management believes Free Cash Flow information enhances an investor’s understanding of a business’ ability to generate cash. Free Cash Flow does not represent and should not be considered an alternative to net income or cash flows from operating activities as determined under GAAP and may not be comparable to other similarly titled measures of other businesses.
- Dahlman Rose Global Metals, Mining & Materials Conference on November 13, 2012 in New York, NY