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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 ended June 30,

Six months ended 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 millionin 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 millionletters 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 Cumberlandmine, 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
[email protected]

Alex Rotonen, CFA
423.573.0396

MEDIA CONTACTS
[email protected]

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 receivable, net of allowance for doubtful accounts of $0 as of June 30, 2018 and December 31, 2017

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 intangibles, net of accumulated amortization of $3,851 and $28,662 as of June 30, 2018 and December 31, 2017

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 – par value $0.01, 20.0 million shares authorized, 10.8 million issued and 9.9 million outstanding at June 30, 2018 and 10.7 million issued and 9.9 million outstanding at December 31, 2017

108

108

Additional paid-in capital

47,273

40,616

Accumulated other comprehensive loss

(1,998)

(1,948)

Treasury stock, at cost: 0.9 million shares at June 30, 2018 and 0.8 million shares
at December 31, 2017

(54,930)

(50,092)

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
Logistics

All Other

Consolidated

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
Logistics

All Other

Consolidated

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
Logistics

All Other

Consolidated

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
Logistics

All Other

Consolidated

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
Logistics

All Other

Consolidated

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
Logistics

All Other

Consolidated

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
Logistics

All Other

Consolidated

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
Logistics

All Other

Consolidated

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.

 

SOURCE Contura Energy, Inc.

RELATED LINKS
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