Contura Announces Second Quarter 2018 Results
BRISTOL, Tenn., Aug. 16, 2018 /PRNewswire/ -- Contura Energy, Inc., a leading U.S. coal supplier, today reported results for the second quarter and year-to-date through June 30, 2018.
Highlights include:
-- Net Income from continuing operations of $75 million for the second
quarter 2018 compared with $18 million in the same period last year((1))
-- Adjusted EBITDA of $86 million for the quarter compared with $73 million
in the same period last year((1))
-- Merger with Alpha progressing with important milestones achieved;
transaction expected to close before year-end, likely in early- to
mid-fourth quarter
-- Strong Trading and Logistics performance, increasing 2018 guidance to
5.6 million to 6.2 million tons
-- Cumberland soft clay issue mitigated ahead of schedule; mine back to
full operation
(millions, except per share)
Three months Six months ended
ended June 30, June 30,
2018(1) 2017(1) 2018(1) 2017(1)
------ ------ ------ ------
Net income(2) $74.6 $18.4 $132.9 $49.4
Net income(2) per diluted share $7.24 $1.69 $12.91 $4.57
Adjusted EBITDA(3) $86.1 $73.1 $185.1 $192.6
Operating cash flow(4) $145.9 $44.0 $115.6 $186.2
Capital expenditures $18.9 $18.6 $38.3 $30.5
Tons of coal sold 4.4 4.1 8.2 8.4
1. Excludes discontinued operations.
2. From continuing operations.
3. These are non-GAAP financial
measures. A reconciliation of Net
Income to Adjusted EBITDA is
included in tables accompanying the
financial schedules.
4. Includes discontinued operations.
"Between another robust result from our Trading and Logistics segment and the continued progress we are making toward consummating our transaction with Alpha, this past quarter was a very productive one for Contura Energy," said Kevin Crutchfield, chief executive officer. "I am proud of our teams across the organization for delivering an overall strong quarterly performance despite the headwinds we faced through the geologic challenges at Cumberland and a subpar rail performance that capped what could have been even greater returns from our export sales."
Financial Performance
Total revenues in the second quarter were $528.9 million. Coal revenues, excluding freight and handling fulfillment revenues, in the second quarter were $423.9 million, with Central Appalachia (CAPP) coal revenues accounting for $152.2 million, Trading and Logistics (T&L) accounting for $201.0 million, and Northern Appalachia (NAPP) coal revenues totaling $70.7 million. Comparatively, in the second quarter 2017, CAPP revenues were $111.2 million, T&L revenues were $179.3 million, and NAPP accounted for $77.3 million of the $367.9 million in total coal revenues.
CAPP coal shipments for the second quarter 2018 were 1.2 million tons at an average per-ton realization of $128.51, compared to 1.0 million tons at $112.37 per ton in the prior year second quarter. Contura shipped 1.6 million tons of NAPP coal during the quarter at an average per-ton realization of $44.98, down from 1.8 million tons at $42.08 per ton in the second quarter 2017. As previously announced, NAPP volumes in the quarter were impacted by geologic conditions including a reduced coal seam thickness and localized soft clay issues. In the T&L segment, coal volumes increased from 1.3 million tons in the prior year period to 1.6 million tons in the second quarter 2018, while the average T&L realization decreased from $138.97 per ton to $123.39 per ton during the same period.
Freight and handling fulfillment revenues and other revenues in the second quarter 2018 were $101.3 million and $3.8 million, respectively, compared with $69.7 million and $2.1 million, respectively, in the prior year period.
-- Total costs and expenses during the second quarter 2018 were $444.2
million and cost of coal sales was $331.6 million, compared with $406.6
million and $286.9 million, respectively, in the same period a year ago.
Total expenses were negatively impacted by approximately $5.8 million in
net demurrage costs due to poor rail service throughout the quarter,
affecting primarily export met shipments. The cost of coal sales in CAPP
for the quarter averaged $75.93 per ton, up from $73.13 in the prior
year period. The CAPP cost includes $1.12 per ton in idle costs. NAPP
costs at $40.95 per ton were impacted by the aforementioned geologic
conditions experienced during the quarter, which reduced production
volume. NAPP costs included idle costs of $0.96 per ton. In the year ago
period, NAPP cost of coal sales averaged $33.01 per ton. In the T&L
segment, the cost of coal sales during the second quarter 2018 was
$108.85 per ton versus $119.03 per ton in the second quarter 2017.
-- Selling, general and administrative (SG&A) expenses for the second
quarter 2018 were $12.0 million, down from $26.3 million in the year ago
period. The year ago period included approximately $12.0 million in
expenses related to the special dividend, business development expenses,
and costs related to the company's filing of a registration statement
with the SEC. Included in the SG&A costs for the second quarter 2018 are
approximately $1.8 million in non-cash stock compensation and accrued
expenses of $2.5 million related to incentive bonus plans. Depreciation,
depletion and amortization was $11.2 million during the second quarter
and amortization of acquired intangibles was $1.1 million, compared with
$8.9 million and $14.6 million respectively, in the same period last
year, excluding discontinued operations.
-- Contura reported net income from continuing operations of $74.6 million,
or $7.24 per diluted share, for the second quarter 2018. In the second
quarter 2017, the company had net income from continuing operations of
$18.4 million or $1.69 per diluted share.
-- Total Adjusted EBITDA was $86.1 million for the second quarter, compared
with $73.1 million in the prior year quarter, adjusted to remove the
impact of discontinued operations.
Liquidity and Capital Resources
Cash provided by operating activities, including discontinued operations, for the second quarter 2018 was $145.9 million and capital expenditures for the second quarter was $18.9 million. As expected, working capital provided significant cash in the second quarter, including $60.0 million from accounts receivable and $22.2 million from reduced inventories, offset by $15.6 million used in accounts payable. In the prior year period, the cash provided by operating activities was $44.0 million and capital expenditures were $18.6 million. Capital expenditures of $4.0 million from discontinued operations are excluded from the prior year total.
At the end of June 2018, Contura had $199.3 million in unrestricted cash. Total long-term debt, including the current portion of long-term debt as of June 30, 2018, was approximately $367.1 million. At the end of the quarter, the company had total liquidity of $314.4 million, including cash and cash equivalents of $199.3 million and $115.1 million of unused commitments available under the Asset-Based Revolving Credit Facility. As of June 30, 2018, the company had no borrowings and $9.9 million letters of credit outstanding under the Asset-Based Revolving Credit Facility.
Alpha Merger Update
On April 30, 2018, the company jointly announced a definitive merger agreement with ANR, Inc. and Alpha Natural Resources Holdings, Inc. (together, "Alpha"), which is expected to create the largest metallurgical coal supplier in the U.S. complemented by a cost-competitive thermal coal portfolio.
Since the merger announcement, several key milestones have been achieved. On July 2, 2018, Contura and Alpha received early termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR Act). The company also announced on July 16, 2018 that Contura had filed a confidential registration statement on form S-4 with the U.S. Securities and Exchange Commission (SEC).
The transaction is expected to close prior to year-end 2018, likely in early- to mid-fourth quarter. As previously indicated, the merger is expected to generate synergies in the range of $30 million to $50 million annually.
For additional information regarding the transaction, see the presentation titled "Contura + Alpha: Transformative Combination" at www.conturaenergy.com/financials.
Other Business Updates
On July 2, 2018, the company announced an updated 2018 production outlook for the Cumberland mine, its longwall thermal coal mine located in NAPP. Due to unforeseen geologic conditions including reduced coal seam thickness and localized soft clay influences within the coal seam, both production and processing were temporarily slowed. Full coal production resumed August 1, 2018 at the Cumberland mine as the previously announced challenges due to localized geologic conditions are no longer impacting production or processing.
On December 11, 2017, the company announced that its wholly-owned subsidiary, Contura Coal West, LLC, completed a transaction to sell the Eagle Butte and Belle Ayr mines in Wyoming, along with related coal reserves, equipment, infrastructure and other real properties, to Blackjewel L.L.C. The reclamation bonds required to effectuate the permit transfer for those properties have since been submitted to the state of Wyoming by Blackjewel L.L.C. and, along with the permit transfer applications, are under review by the Wyoming Attorney General and the Wyoming Department of Environmental Quality.
2018 Full-Year Guidance
None of the guidance ranges described herein include any potential effects of the transaction with Alpha, which is expected to close prior to year-end 2018.
The company expects total 2018 coal shipments to be in the range of 15.4 million to 16.8 million tons. CAPP metallurgical coal guidance remains at 3.7 million to 4.1 million tons and guidance for the T&L segment is increased to 5.6 million to 6.2 million tons from a range of 5.0 million to 5.6 million tons. As previously announced, NAPP shipments, sold primarily into thermal markets, are now anticipated to be between 6.1 million and 6.5 million tons in 2018.
As of July 31, 2018, 68% of the midpoint of anticipated 2018 CAPP coal shipments were committed and priced at an average expected per-ton realization of $131.48, with an additional 18% committed and either unpriced or priced based on various indices. Based on the midpoint of guidance, 100% of anticipated 2018 NAPP coal shipments were committed and priced at an average expected per-ton realization of $43.71.
Contura is maintaining its previously announced guidance for 2018 CAPP cost of coal sales per ton of $70.00 to $75.00. As recently updated, NAPP cost estimates are projected to be between $35.00 to $38.00 per ton due to unexpected geologic conditions that temporarily impacted both production and processing. Additionally, costs related to the company's idle operations are expected to be between $10 million and $12 million for the full-year 2018.
The margin from Contura's T&L platform is expected to average $9 to $15 per ton for the full-year 2018.
As previously announced, Contura's SG&A guidance is estimated at $32 million to $36 million, excluding one-time and non-recurring items, annual incentive bonuses and stock compensation. Capital expenditure guidance is increased to a range of $72 million to $82 million, due primarily to additional capitalization of development work in NAPP while the longwall was idled and the company's strategic decision to convert a CAPP mine from a third-party contract operation to a company-operated mine. Depreciation, depletion and amortization for 2018 is expected to be between $40 million and $50 million. The company expects 2018 cash interest expense to be between $25 million and $27 million.
in millions of tons Low High
--- ----
CAPP 3.7 4.1
NAPP 6.1 6.5
Total Production 9.8 10.6
Contura Trading & Logistics 5.6 6.2
Total Shipments 15.4 16.8
Committed/Priced1,2,3 Committed Average Price
--------- -------------
CAPP4 68% $131.48
NAPP 100% $43.71
Committed/Unpriced1,3 Committed
---------
CAPP4 18%
Costs per ton Low High
--- ----
CAPP $70.00 $75.00
NAPP $35.00 $38.00
Margin per ton Low High
--- ----
Contura Trading & Logistics $9 $15
In millions (except taxes) Low High
--- ----
SG&A5 $32 $36
Idle Operations Expense $10 $12
Cash Interest Expense $25 $27
DD&A $40 $50
Capital Expenditures $72 $82
Tax Rate 0% 5%
Notes:
1. Based on committed and priced coal
shipments as of July 31, 2018.
Committed percentage based on the
midpoint of shipment guidance
range.
2. Actual average per-ton realizations
on committed and priced tons
recognized in future periods may
vary based on actual freight
expense in future periods relative
to assumed freight expense embedded
in projected average per-ton
realizations.
3. Includes estimates of future coal
shipments based upon contract terms
and anticipated delivery schedules.
Actual coal shipments may vary from
these estimates.
4. CAPP committed tons and price
information represent captive
Contura production and does not
include Trading and Logistics.
5. Excludes expenses related to non-
cash stock compensation, accrual of
incentive bonus and non-recurring
business development expenses.
ABOUT CONTURA ENERGY
Contura Energy is a private, Tennessee-based coal supplier with affiliate mining operations across major coal basins in Pennsylvania, Virginia and West Virginia. With customers across the globe, high-quality reserves and significant port capacity, Contura Energy reliably supplies both metallurgical coal to produce steel and thermal coal to generate power. For more information, visit www.conturaenergy.com.
ADDITIONAL INFORMATION FOR INVESTORS
This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such jurisdiction. BEFORE MAKING ANY VOTING OR INVESTMENT DECISION, INVESTORS ARE URGED TO READ THE FORM S-4 AND THE JOINT PROXY STATEMENT AND PROSPECTUS REGARDING THE PROPOSED TRANSACTION AND ANY OTHER RELEVANT DOCUMENTS CAREFULLY IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION. The joint proxy statement and prospectus, as well as other filings containing information about Contura and Alpha will be available without charge at the SEC's Internet site (www.sec.gov). Copies of the joint proxy statement and prospectus can also be obtained, when available, without charge, from Contura's website at www.conturaenergy.com. Copies of the joint proxy statement can be obtained, when available, without charge, from Alpha's website at www.alphanr.com.
For additional financial information about Contura, please visit www.conturaenergy.com/financials.
FORWARD-LOOKING STATEMENTS
This news release includes forward-looking statements. These forward-looking statements are based on Contura's expectations and beliefs concerning future events and involve risks and uncertainties that may cause actual results to differ materially from current expectations. These factors are difficult to predict accurately and may be beyond Contura's control. Forward-looking statements in this news release or elsewhere speak only as of the date made. New uncertainties and risks arise from time to time, and it is impossible for Contura to predict these events or how they may affect Contura. Except as required by law, Contura has no duty to, and does not intend to, update or revise the forward-looking statements in this news release or elsewhere after the date this release is issued. In light of these risks and uncertainties, investors should keep in mind that results, events or developments discussed in any forward-looking statement made in this news release may not occur.
INVESTOR CONTACT
investorrelations@conturaenergy.com
Alex Rotonen, CFA
423.573.0396
MEDIA CONTACTS
corporatecommunications@conturaenergy.com
Rick Axthelm
423.573.0304
Emily O'Quinn
423.573.0369
FINANCIAL TABLES FOLLOW
Use of Non-GAAP Measures
In addition to the results prepared in accordance with generally accepted accounting principles in the United States (GAAP) provided throughout this press release, Contura has presented the following non-GAAP financial measure: Adjusted EBITDA. The company uses Adjusted EBITDA to measure the operating performance of its segments and allocate resources to the segments. This non-GAAP financial measure excludes various items detailed in the attached reconciliation tables.
The definition of this non-GAAP measure may be changed periodically by management to adjust for significant items important to an understanding of operating trends. This measure is not intended to replace financial performance measures determined in accordance with GAAP. Rather, it is presented as a supplemental measure of the company's performance that management finds useful in assessing the company's financial performance and believes is useful to securities analysts, investors and others in assessing the company's performance over time. Moreover, this measure is not calculated identically by all companies and therefore may not be comparable to similarly titled measures used by other companies.
CONTURA ENERGY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(Amounts in thousands, except share and per share data)
Three Months Ended June 30, Six Months Ended June 30,
2018 2017 2018 2017
---- ---- ---- ----
Revenues:
Coal revenues $525,168 $367,862 $1,003,533 $780,900
Freight and handling
revenues - 69,696 - 129,919
Other revenues 3,750 2,110 7,717 3,968
----- ----- ----- -----
Total revenues 528,918 439,668 1,011,250 914,787
------- ------- --------- -------
Costs and expenses:
Cost of coal sales
(exclusive of items shown
separately below) 331,590 286,915 629,128 571,320
Freight and handling costs 101,310 69,696 176,976 129,919
Depreciation, depletion and
amortization 11,222 8,939 22,810 17,788
Amortization of acquired
intangibles, net 1,104 14,585 11,310 34,243
Selling, general and
administrative expenses
(exclusive of
depreciation, depletion
and amortization shown
separately above) 11,951 26,319 31,108 40,148
Merger related costs 3,423 - 3,883 -
Secondary offering costs - 2,496 - 3,438
Total other operating (income) loss:
Gain on disposal of assets (16,502) - (16,502) -
Mark-to-market adjustment
for acquisition-related
obligations - 6,739 - 2,382
Gain on settlement of
acquisition-related
obligations - (9,200) (292) (9,200)
Other expenses 95 81 288 81
Total costs and expenses 444,193 406,570 858,709 790,119
------- ------- ------- -------
Income from operations 84,725 33,098 152,541 124,668
------ ------ ------- -------
Other income (expense):
Interest expense (8,779) (8,338) (17,984) (19,614)
Interest income 191 42 322 73
Loss on early
extinguishment of debt - - - (38,701)
Equity loss in affiliates (1,170) (496) (1,233) (1,709)
Bargain purchase gain - 642 - 642
Miscellaneous income, net (270) (219) (583) (192)
---- ---- ---- ----
Total other expense, net (10,028) (8,369) (19,478) (59,501)
------- ------ ------- -------
Income from continuing
operations before income
taxes 74,697 24,729 133,063 65,167
Income tax expense (55) (6,329) (121) (15,811)
Net income from continuing
operations 74,642 18,400 132,942 49,356
Discontinued operations:
Loss from discontinued
operations before income
taxes (854) (9,019) (2,213) (4,000)
Income tax benefit from
discontinued operations - 3,231 - 2,366
--- ----- --- -----
Loss from discontinued
operations (854) (5,788) (2,213) (1,634)
Net income $73,788 $12,612 $130,729 $47,722
======= ======= ======== =======
Basic income (loss) per common share:
Income from continuing
operations $7.75 $1.78 $13.87 $4.79
Loss from discontinued
operations (0.08) (0.56) (0.23) (0.16)
----- ----- ----- -----
Net income $7.67 $1.22 $13.64 $4.63
Diluted income (loss) per common share
Income from continuing
operations $7.24 $1.69 $12.91 $4.57
Loss from discontinued
operations (0.08) (0.53) (0.22) (0.15)
----- ----- ----- -----
Net income $7.16 $1.16 $12.69 $4.42
Weighted average shares -
basic 9,625,874 10,309,612 9,587,457 10,309,520
Weighted average shares -
diluted 10,306,043 10,874,175 10,299,539 10,801,228
CONTURA ENERGY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
(Amounts in thousands, except share and per share data)
June 30, 2018 December 31, 2017
------------- -----------------
Assets
Current assets:
Cash
and
cash
equivalents $199,252 $141,924
Trade
accounts June
receivable, 30,
net 2018
of and
allowance December
for 31,
doubtful 2017
accounts
of $0
as of 168,310 127,326
Inventories,
net 74,464 69,561
Assets
held
for
sale - 171
Short-
term
restricted
cash 11,680 11,615
Short-
term
deposits 6,619 12,366
Prepaid
expenses
and
other
current
assets 43,054 59,693
Current
assets
-
discontinued
operations 26,231 40,498
------ ------
Total
current
assets 529,610 463,154
Property,
plant,
and
equipment,
net 207,805 196,579
Other
acquired as of
intangibles, June
net 30,
of 2018
accumulated and
amortization December
of 31,
$3,851 2017
and
$28,662 7,149 18,458
Long-
term
restricted
cash 35,240 40,421
Long-
term
deposits 9,238 3,607
Deferred
income
taxes 78,744 78,744
Other
non-
current
assets 34,285 28,005
Non-
current
assets
-
discontinued
operations - 7,632
--- -----
Total
assets $902,071 $836,600
======== ========
Liabilities and
Stockholders' Equity
Current liabilities:
Current
portion
of
long-
term
debt $5,435 $10,730
Trade
accounts
payable 74,000 76,319
Acquisition-
related
obligations
-
current 13,788 15,080
Liabilities
held
for
sale 1,305 27,161
Accrued
expenses
and
other
current
liabilities 56,615 58,771
Current
liabilities
-
discontinued
operations 26,138 54,114
------ ------
Total
current
liabilities 177,281 242,175
Long-
term
debt 361,649 361,973
Acquisition-
related
obligations
-
long-
term 20,852 20,332
Asset
retirement
obligations 55,313 52,434
Other
non-
current
liabilities 61,748 59,276
Non-
current
liabilities
-
discontinued
operations 82 7,762
Total
liabilities 676,925 743,952
------- -------
Commitments and
Contingencies
Stockholders' Equity
Preferred
stock
-par
value
$0.01,
2.0
million
shares
authorized,
none
issued - -
Common
stock issued 10.7 2017
-par and million
value 9.9 issued
$0.01, million and
20.0 outstanding 9.9
million at million
shares June outstanding
authorized, 30, at
10.8 2018 December
million 108 108
Additional
paid-
in
capital 47,273 40,616
Accumulated
other
comprehensive
loss (1,998) (1,948)
Treasury
stock, and
at 0.8
cost: million
0.9 shares
million
shares
at
June
30,
2018 (54,930) (50,092)
at December 31, 2017
Retained
earnings 234,693 103,964
Total
stockholders'
equity 225,146 92,648
------- ------
Total
liabilities
and
stockholders'
equity $902,071 $836,600
======== ========
CONTURA ENERGY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(Amounts in thousands)
Six Months Ended June 30,
2018 2017
---- ----
Operating activities:
Net income $130,729 $47,722
Adjustments to reconcile net income to
net cash (used in) provided by operating
activities:
Depreciation, depletion
and amortization 22,810 34,277
Amortization of acquired
intangibles, net 11,310 34,243
Accretion of
acquisition-related
obligations discount 3,020 4,441
Amortization of debt
issuance costs and
accretion of debt
discount 1,499 1,206
Mark-to-market
adjustment for
acquisition-related
obligations - 2,382
Gain on settlement of
acquisition-related
obligations (292) (9,200)
Gain on disposal of
assets (16,502) (708)
Bargain purchase gain - (642)
Accretion of asset
retirement obligations 4,056 11,049
Employee benefit plans,
net 5,324 5,539
Loss on early
extinguishment of debt - 38,701
Stock-based compensation 7,125 6,598
Equity in loss of
affiliates 1,233 1,701
Changes in operating
assets and liabilities (54,706) 8,905
-------
Net cash provided by
operating activities 115,606 186,214
------- -------
Investing activities:
Capital expenditures (38,349) (35,508)
Payments on disposal of
assets (10,250) -
Proceeds on disposal of
assets 464 2,272
Capital contributions to
equity affiliates (525) (3,090)
Purchase of additional
ownership interest in
equity affiliate - (13,293)
Other, net (1,446) (408)
Net cash used in
investing activities (50,106) (50,027)
------- -------
Financing activities:
Proceeds from borrowings
on debt - 396,000
Principal repayments of
debt (5,323) (357,500)
Principal repayments of
capital lease
obligations (139) (504)
Debt issuance costs - (14,385)
Debt extinguishment
costs - (25,036)
Debt amendment costs - (4,520)
Common stock repurchases
and related expenses (4,838) -
Principal repayments of
notes payable (2,939) (726)
Other, net (49) 11
--- ---
Net cash used in
financing activities (13,288) (6,660)
------- ------
Net increase in cash and
cash equivalents and
restricted cash 52,212 129,527
Cash and cash
equivalents and
restricted cash at
beginning of period 193,960 171,289
Cash and cash
equivalents and
restricted cash at end
of period $246,172 $300,816
======== ========
Supplemental cash flow information:
Cash paid for interest 13,431 $27,738
====== =======
Cash paid for taxes $2 $13,110
=== =======
Cash received for income
tax refunds $13,457 $ -
======= === ===
Supplemental disclosure of non-cash
investing and financing activities:
Capital leases and
capital financing -
equipment $344 $283
==== ====
Accrued capital
expenditures $4,289 $13,132
====== =======
Dividend Declaration $ - $92,786
=== === =======
The following table provides a reconciliation of cash and cash equivalents and restricted cash reported within the Condensed Consolidated Balance Sheets that sum to the total of the same such amounts shown in the Condensed Consolidated Statements of Cash Flows.
Six Months Ended June 30,
2018 2017
---- ----
Cash and cash
equivalents $199,252 $244,019
Short-term restricted
cash 11,680 -
Long-term restricted
cash 35,240 56,797
Total cash and cash
equivalents and
restricted cash shown
in the Condensed
Consolidated
Statements of Cash
Flows $246,172 $300,816
======== ========
CONTURA ENERGY, INC. AND SUBSIDIARIES
ADJUSTED EBITDA RECONCILIATION
(Amounts in thousands)
Reconciliation of Non-GAAP measures:
Three Months Ended June 30, 2018
CAPP NAPP Trading and All Other Consolidated
Logistics
---
Net income (loss)
from continuing
operations $73,140 $3,090 $22,342 $(23,930) $74,642
Interest expense 3 (417) - 9,193 8,779
Interest income (6) (10) (18) (157) (191)
Income tax expense - - - 55 55
Depreciation,
depletion and
amortization 5,742 5,295 - 185 11,222
Merger related costs - - - 3,423 3,423
Non-cash stock
compensation
expense - - - 1,876 1,876
Gain on sale of
disposal group (1) (16,386) - - - (16,386)
Accretion expense 655 941 - - 1,596
Amortization of
acquired
intangibles, net - - 1,104 - 1,104
Adjusted EBITDA (2) $63,148 $8,899 $23,428 $(9,355) $86,120
======= ====== ======= ======= =======
(1) During the fourth quarter of
2017, the Company entered into
an asset purchase agreement to
sell a disposal group (comprised
of property, plant and equipment
and associated asset retirement
obligations) within our CAPP
segment. From the date the
Company entered into the asset
purchase agreement through the
transaction close date, the
property, plant and equipment
and associated asset retirement
obligations were classified as
held for sale in amounts
representing the fair value of
the disposal group. Upon permit
transfer, the transaction closed
on April 2, 2018. The Company
paid $10,000 in connection with
the transaction, which was paid
into escrow on March 27, 2018
and transferred to the buyer at
the transaction close date, and
expects to pay a series of
additional cash payments in the
aggregate amount of $1,500, per
the terms stated in the
agreement, and recorded a gain
on sale of $16,386 within gain
on disposal of assets within the
Condensed Consolidated
Statements of Operations.
(2) Pursuant to the PRB
divestiture and classification
as a discontinued operation, the
Company is no longer presenting
a PRB reporting segment. The
former PRB reporting segment had
Adjusted EBITDA of ($1,102) for
the three months ended June 30,
2018.
Segment Information:
Three Months Ended June 30, 2018
CAPP NAPP Trading and All Other Consolidated
Logistics
---------
Total revenues $152,707 $72,092 $303,226 $893 $528,918
Depreciation,
depletion, and
amortization $5,742 $5,295 $ - $185 $11,222
Amortization of
acquired
intangibles, net $ - $ - $1,104 $ - $1,104
Adjusted EBITDA $63,148 $8,899 $23,428 $(9,355) $86,120
Capital
expenditures $8,173 $10,572 $ - $163 $18,908
Reconciliation of Non-GAAP measures:
Six Months Ended June 30, 2018
CAPP NAPP Trading and All Other Consolidated
Logistics
---------
Net income (loss)
from continuing
operations $123,000 $6,205 $54,894 $(51,157) $132,942
Interest expense 312 (349) - 18,021 17,984
Interest income (10) (12) (18) (282) (322)
Income tax expense - - - 121 121
Depreciation,
depletion and
amortization 11,978 10,463 - 369 22,810
Merger related costs - - - 3,883 3,883
Management
restructuring costs
(1) - - - 2,659 2,659
Non-cash stock
compensation
expense - - - 6,355 6,355
Gain on settlement
of acquisition-
related obligations - - - (292) (292)
Gain on sale of
disposal group (2) (16,386) - - - (16,386)
Accretion expense 2,174 1,882 - - 4,056
Amortization of
acquired
intangibles, net - - 11,310 - 11,310
Adjusted EBITDA (3) $121,068 $18,189 $66,186 $(20,323) $185,120
======== ======= ======= ======== ========
(1) Management restructuring
costs are related to severance
expense associated with senior
management changes in the six
months ended June 30, 2018.
(2) During the fourth quarter of
2017, the Company entered into
an asset purchase agreement to
sell a disposal group (comprised
of property, plant and equipment
and associated asset retirement
obligations) within our CAPP
segment. From the date the
Company entered into the asset
purchase agreement through the
transaction close date, the
property, plant and equipment
and associated asset retirement
obligations were classified as
held for sale in amounts
representing the fair value of
the disposal group. Upon permit
transfer, the transaction closed
on April 2, 2018. The Company
paid $10,000 in connection with
the transaction, which was paid
into escrow on March 27, 2018
and transferred to the buyer at
the transaction close date, and
expects to pay a series of
additional cash payments in the
aggregate amount of $1,500, per
the terms stated in the
agreement, and recorded a gain
on sale of $16,386 within gain
on disposal of assets within the
Condensed Consolidated
Statements of Operations.
(3) Pursuant to the PRB
divestiture and classification
as a discontinued operation, the
Company is no longer presenting
a PRB reporting segment. The
former PRB reporting segment had
Adjusted EBITDA of ($2,368) for
the six months ended June 30,
2018.
Segment Information:
Six Months Ended June 30, 2018
CAPP NAPP Trading and All Other Consolidated
Logistics
---------
Total revenues $287,543 $135,229 $586,245 $2,233 $1,011,250
Depreciation,
depletion, and
amortization $11,978 $10,463 $ - $369 $22,810
Amortization of
acquired
intangibles, net $ - $ - $11,310 $ - $11,310
Adjusted EBITDA $121,068 $18,189 $66,186 $(20,323) $185,120
Capital
expenditures $15,845 $22,341 $ - $163 $38,349
Reconciliation of Non-GAAP measures:
Three Months Ended June 30, 2017
CAPP NAPP Trading and All Other Consolidated
Logistics
---------
Net income (loss)
from continuing
operations $33,979 $14,871 $10,921 $(41,371) $18,400
Interest expense (153) (420) - 8,911 8,338
Interest income (2) - - (40) (42)
Income tax expense - - - 6,329 6,329
Depreciation,
depletion and
amortization 5,206 3,506 - 227 8,939
Non-cash stock
compensation
expense - - 166 5,001 5,167
Mark-to-market
adjustment -
acquisition-
related obligations - - - 6,739 6,739
Gain on settlement
of acquisition-
related obligations - - - (9,200) (9,200)
Secondary offering
costs - - - 2,496 2,496
Bargain purchase
gain - - - (642) (642)
Accretion expense 1,461 1,041 - - 2,502
Amortization of
acquired
intangibles, net - - 14,585 - 14,585
Expenses related to
Special Dividend 377 57 - 9,102 9,536
Adjusted EBITDA (1)
(2) $40,868 $19,055 $25,672 $(12,448) $73,147
======= ======= ======= ======== =======
(1) The Company's Adjusted EBITDA
calculation has been modified to
add back non-cash stock
compensation expense to align with
industry peer group methodology.
(2) Pursuant to the PRB divestiture
and classification as a
discontinued operation, the
Company is no longer presenting a
PRB reporting segment. The former
PRB reporting segment had Adjusted
EBITDA of $2,446 for the three
months ended June 30, 2017.
Segment Information:
Three Months Ended June 30, 2017
CAPP NAPP Trading and All Other Consolidated
Logistics
---------
Total revenues $111,525 $78,668 $249,244 $231 $439,668
Depreciation,
depletion, and
amortization $5,206 $3,506 $ - $227 $8,939
Amortization of
acquired
intangibles, net $ - $ - $14,585 $ - $14,585
Adjusted EBITDA $40,868 $19,055 $25,672 $(12,448) $73,147
Capital
expenditures $5,140 $12,610 $ - $858 $18,608
Reconciliation of Non-GAAP measures:
Six Months Ended June 30, 2017
CAPP NAPP Trading and All Other Consolidated
Logistics
---------
Net income (loss) from
continuing operations $98,346 $45,155 $16,590 $(110,735) $49,356
Interest expense (93) (369) - 20,076 19,614
Interest income (5) - - (68) (73)
Income tax expense - - - 15,811 15,811
Depreciation,
depletion and
amortization 10,711 6,662 - 415 17,788
Non-cash stock
compensation expense - - 209 6,389 6,598
Mark-to-market
adjustment -
acquisition-related
obligations - - - 2,382 2,382
Gain on settlement of
acquisition-related
obligations - - - (9,200) (9,200)
Secondary offering
costs - - - 3,438 3,438
Loss on early
extinguishment of
debt - - - 38,701 38,701
Bargain purchase gain - - - (642) (642)
Accretion expense 2,923 2,082 - - 5,005
Amortization of
acquired intangibles,
net - - 34,243 - 34,243
Expenses related to
Special Dividend 377 57 - 9,102 9,536
Adjusted EBITDA (1)
(2) $112,259 $53,587 $51,042 $(24,331) $192,557
======== ======= ======= ======== ========
(1) The Company's Adjusted EBITDA
calculation has been modified to
add back non-cash stock
compensation expense to align with
industry peer group methodology.
(2) Pursuant to the PRB divestiture
and classification as a
discontinued operation, the
Company is no longer presenting a
PRB reporting segment. The former
PRB reporting segment had Adjusted
EBITDA of $18,761 for the six
months ended June 30, 2017.
Segment Information:
Six Months Ended June 30, 2017
CAPP NAPP Trading and All Other Consolidated
Logistics
---------
Total revenues $260,604 $176,980 $476,809 $394 $914,787
Depreciation,
depletion, and
amortization $10,711 $6,662 $ - $415 $17,788
Amortization of
acquired
intangibles, net $ - $ - $34,243 $ - $34,243
Adjusted EBITDA $112,259 $53,587 $51,042 $(24,331) $192,557
Capital
expenditures $7,189 $22,209 $ - $1,058 $30,456
CONTURA ENERGY, INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS
(Amounts in thousands, except per ton data)
Three Months Ended June 30, Increase (Decrease)
(In thousands, except for
per ton data) 2018 2017 $ or Tons %
---- ---- --------- ---
Revenues:
Coal revenues:
Steam $55,935 $74,459 $(18,524) (24.9)%
Met 367,923 293,403 74,520 25.4%
Freight and handling
fulfillment revenues 101,310 69,696 31,614 45.4%
Other revenues 3,750 2,110 1,640 77.7%
----- -----
Total revenues $528,918 $439,668 $89,250 20.3%
======== ======== =======
Tons sold:
Steam 1,343 1,802 (459) (25.5)%
Met 3,042 2,316 726 31.3%
----- -----
Total 4,385 4,118 267 6.5%
===== ===== ===
Coal sales realization per ton (1):
Steam $41.65 $41.32 $0.33 0.8%
Met $120.95 $126.69 $(5.74) (4.5)%
Average $96.66 $89.33 $7.33 8.2%
Three Months Ended June 30, Increase (Decrease)
(In thousands, except for
per ton data) 2018 2017 $ or Tons %
---- ---- --------- ---
Coal revenues (1):
CAPP Operations $152,154 $111,244 $40,910 36.8%
NAPP Operations 70,708 77,347 (6,639) (8.6)%
Trading and Logistics
Operations 200,996 179,271 21,725 12.1%
Total coal revenues $423,858 $367,862 $55,996 15.2%
Tons sold:
CAPP Operations 1,184 990 194 19.6%
NAPP Operations 1,572 1,838 (266) (14.5)%
Trading and Logistics
Operations 1,629 1,290 339 26.3%
Coal sales realization per ton (1):
CAPP Operations $128.51 $112.37 $16.14 14.4%
NAPP Operations $44.98 $42.08 $2.90 6.9%
Trading and Logistics
Operations $123.39 $138.97 $(15.58) (11.2)%
Average $96.66 $89.33 $7.33 8.2%
(1) Does not include $101.3 million of freight and handling fulfillment revenues for the three months ended June 30, 2018.
Three Months Ended June 30, Increase (Decrease)
(In thousands, except for
per ton data) 2018 2017 $ or Tons %
---- ---- --------- ---
Cost of coal sales
(exclusive of items shown
separately below) $331,590 $286,915 $44,675 15.6%
Freight and handling costs 101,310 69,696 31,614 45.4%
Depreciation, depletion and
amortization 11,222 8,939 2,283 25.5%
Amortization of acquired
intangibles, net 1,104 14,585 (13,481) (92.4)%
Selling, general and
administrative expenses
(exclusive of
depreciation, depletion
and amortization shown
separately above) 11,951 26,319 (14,368) (54.6)%
Merger related costs 3,423 - 3,423 100.0%
Secondary offering costs - 2,496 (2,496) (100.0)%
Total other operating (income) loss:
Gain on disposal of assets (16,502) - (16,502) (100.0)%
Mark-to-market adjustment
for acquisition-related
obligations - 6,739 (6,739) (100.0)%
Gain on settlement of
acquisition-related
obligations - (9,200) 9,200 100.0%
Other expenses 95 81 14 17.3%
--- ---
Total costs and expenses 444,193 406,570 37,623 9.3%
------- ------- ------
Other (expense) income:
Interest expense (8,779) (8,338) (441) (5.3)%
Interest income 191 42 149 354.8%
Equity loss in affiliates (1,170) (496) (674) (135.9)%
Bargain purchase gain - 642 (642) (100.0)%
Miscellaneous income, net (270) (219) (51) (23.3)%
---- ----
Total other expense, net (10,028) (8,369) (1,659) (19.8)%
------- ------ ------
Income tax expense (55) (6,329) 6,274 99.1%
Net income from continuing
operations $74,642 $18,400 $56,242 305.7%
------- ------- -------
Cost of coal sales:
CAPP Operations $89,903 $72,397 $17,506 24.2%
NAPP Operations $64,369 $60,668 $3,701 6.1%
Trading and Logistics
Operations $177,318 $153,554 $23,764 15.5%
Tons sold:
CAPP Operations 1,184 990 194 19.6%
NAPP Operations 1,572 1,838 (266) (14.5)%
Trading and Logistics
Operations 1,629 1,290 339 26.3%
Cost of coal sales per ton:
CAPP Operations $75.93 $73.13 $2.80 3.8%
NAPP Operations $40.95 $33.01 $7.94 24.1%
Trading and Logistics
Operations $108.85 $119.03 $(10.18) (8.6)%
Coal margin per ton (1):
CAPP Operations $52.58 $39.24 $13.34 34.0%
NAPP Operations $4.03 $9.07 $(5.04) (55.6)%
Trading and Logistics
Operations $14.54 $19.94 $(5.40) (27.1)%
(1) Coal margin per ton for our reportable segments is calculated as coal sales realization per ton for our reportable segments less cost of coal sales per ton for our reportable segments. Coal margin per ton is not shown
for our All Other category since it has no coal sales or coal production related to our continuing operations.
Six Months Ended June 30, Increase (Decrease)
(In thousands, except for
per ton data) 2018 2017 $ or Tons %
---- ---- --------- ---
Revenues:
Coal revenues:
Steam $111,984 $166,255 $(54,271) (32.6)%
Met 714,573 614,645 99,928 16.3%
Freight and handling
fulfillment revenues 176,976 129,919 47,057 36.2%
Other revenues 7,717 3,968 3,749 94.5%
----- -----
Total revenues $1,011,250 $914,787 $96,463 10.5%
========== ======== =======
Tons sold:
Steam 2,679 3,961 (1,282) (32.4)%
Met 5,523 4,466 1,057 23.7%
----- -----
Total 8,202 8,427 (225) (2.7)%
===== ===== ====
Coal sales realization per ton (1):
Steam $41.80 $41.97 $(0.17) (0.4)%
Met $129.38 $137.63 $(8.25) (6.0)%
Average $100.78 $92.67 $8.11 8.8%
Six Months Ended June 30, Increase (Decrease)
(In thousands, except for
per ton data) 2018 2017 $ or Tons %
---- ---- --------- ---
Coal revenues (1):
CAPP Operations $286,723 $259,975 $26,748 10.3%
NAPP Operations 132,166 175,001 (42,835) (24.5)%
Trading and Logistics
Operations 407,668 345,924 61,744 17.8%
Total coal revenues $826,557 $780,900 $45,657 5.8%
Tons sold:
CAPP Operations 2,138 2,048 90 4.4%
NAPP Operations 2,986 4,038 (1,052) (26.1)%
Trading and Logistics
Operations 3,078 2,341 737 31.5%
Coal sales realization per ton (1):
CAPP Operations $134.11 $126.94 $7.17 5.6%
NAPP Operations $44.26 $43.34 $0.92 2.1%
Trading and Logistics
Operations $132.45 $147.77 $(15.32) (10.4)%
Average $100.78 $92.67 $8.11 8.8%
(1) Does not include $177.0 million of freight and handling fulfillment revenues for the six months ended June 30, 2018.
Six Months Ended June 30, Increase (Decrease)
(In thousands, except for
per ton data) 2018 2017 $ or Tons %
---- ---- --------- ---
Cost of coal sales
(exclusive of items shown
separately below) $629,128 $571,320 $57,808 10.1%
Freight and handling costs 176,976 129,919 47,057 36.2%
Depreciation, depletion and
amortization 22,810 17,788 5,022 28.2%
Amortization of acquired
intangibles, net 11,310 34,243 (22,933) (67.0)%
Selling, general and
administrative expenses
(exclusive of
depreciation, depletion
and amortization shown
separately above) 31,108 40,148 (9,040) (22.5)%
Merger related costs 3,883 - 3,883 100.0%
Secondary offering costs - 3,438 (3,438) (100.0)%
Total other operating (income) loss:
Gain on disposal of assets (16,502) - (16,502) (100.0)%
Mark-to-market adjustment
for acquisition-related
obligations - 2,382 (2,382) (100.0)%
Gain on settlement of
acquisition-related
obligations (292) (9,200) 8,908 96.8%
Other expenses 288 81 207 255.6%
--- ---
Total costs and expenses 858,709 790,119 $68,590 8.7%
------- ------- -------
Other income (expense):
Interest expense (17,984) (19,614) 1,630 8.3%
Interest income 322 73 249 341.1%
Loss on early
extinguishment of debt - (38,701) 38,701 100.0%
Equity loss in affiliates (1,233) (1,709) 476 27.9%
Bargain purchase gain - 642 (642) (100.0)%
Miscellaneous income, net (583) (192) (391) (203.6)%
---- ----
Total other expense, net (19,478) (59,501) 40,023 67.3%
------- -------
Income tax expense (121) (15,811) 15,690 99.2%
Net income from continuing
operations $132,942 $49,356 $83,586 169.4%
-------- ------- -------
Cost of coal sales:
CAPP Operations $168,170 $151,484 $16,686 11.0%
NAPP Operations $119,116 $125,647 $(6,531) (5.2)%
Trading and Logistics
Operations $341,842 $294,381 $47,461 16.1%
Tons sold:
CAPP Operations 2,138 2,048 $90 4.4%
NAPP Operations 2,986 4,038 $(1,052) (26.1)%
Trading and Logistics
Operations 3,078 2,341 $737 31.5%
Cost of coal sales per ton:
CAPP Operations $78.66 $73.97 $4.69 6.3%
NAPP Operations $39.89 $31.12 $8.77 28.2%
Trading and Logistics
Operations $111.06 $125.75 $(14.69) (11.7)%
Coal margin per ton (1):
CAPP Operations $55.45 $52.97 $2.48 4.7%
NAPP Operations $4.37 $12.22 $(7.85) (64.2)%
Trading and Logistics
Operations $21.39 $22.02 $(0.63) (2.9)%
(1) Coal margin per ton for our reportable segments is calculated as coal sales realization per ton for our reportable segments less cost of coal sales per ton for our reportable segments. Coal margin per ton is not shown
for our All Other category since it has no coal sales or coal production related to our continuing operations.
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SOURCE Contura Energy, Inc.
