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8-K - 8-K - ARCH RESOURCES, INC.a18-5878_18k.htm

Exhibit 99.1

 

News from

Arch Coal, Inc.

 

FOR FURTHER INFORMATION:

Logan Bonacorsi
Investor Relations

314/994-2766

 

FOR IMMEDIATE RELEASE

 

Arch Coal, Inc. Reports Fourth Quarter and Full Year 2017 Results

Returns $326 million to shareholders in 2017
Repurchases 16 percent of total shares outstanding

Announces increase in quarterly dividend to $0.40 per share

 

ST. LOUIS, February 13, 2018 — Arch Coal, Inc. (NYSE: ARCH) today reported net income of $81.3 million, or $3.64 per diluted share, in the fourth quarter of 2017, compared with net income of  $33.4 million, or $1.31 per diluted share, in the prior-year period. The company reported adjusted earnings before interest, taxes, depreciation, depletion, amortization, reorganization items and early debt extinguishment charges (“adjusted EBITDAR”) (1) of $97.6 million in the fourth quarter of 2017, a slight increase versus a year ago. Fourth quarter revenues reached $560.2 million on 23.5 million tons of coal sales. Arch’s net tax benefit of $34.8 million results primarily from the benefit associated with the alternative minimum tax (AMT) credits that became refundable under the Tax Cuts and Jobs Act.

 

For the first full year since its public relisting, Arch reported net income of $238.5 million, or $9.84 per diluted share. Annual revenues topped $2.3 billion and the company reported $417.8 million of adjusted EBITDAR, reflecting Arch’s ability to leverage its diverse asset base to capitalize on strong coking and international thermal coal markets.

 

“We are proud of the financial results achieved in 2017 as well as the positive strides we have taken to reward our shareholders, bolster our financial foundation, streamline our operating portfolio and expand our global customer base,” said John W. Eaves, Arch’s chief executive officer. “Moreover, we are pleased with our solid fourth quarter performance, which benefitted from improved performance at our metallurgical mines, strong execution at our Other Thermal operations and positive momentum in international coking and thermal coal markets. While severe winter weather at year-end resulted in lower than anticipated metallurgical shipments, we expect to make up those tons in the first half of 2018.”

 


(1)  Adjusted EBITDAR is defined and reconciled in the “Reconciliation of Non-GAAP measures” in this release.

 

1



 

Capital Allocation Update and Financial Position

 

During the quarter, Arch continued to execute upon its share repurchase program, purchasing 1.1 million shares of common stock, representing 4.2 percent of shares outstanding, at a total cost of $84 million and an average price of $79.73 per share. The fourth quarter purchases include the previously announced stock purchase transaction with Monarch Alternative Capital in early December.

 

In total, over the course of 2017, Arch purchased approximately 4 million shares of common stock, representing nearly 16 percent of shares outstanding, at a total cost of $302 million. At year-end, the company had up to $198 million remaining for share repurchases under the existing authorization.

 

In addition, the company paid $7.6 million in cash dividends to shareholders during the fourth quarter of 2017, and $24.4 million during the course of 2017.

 

“Arch had a strong finish to 2017, completing a number of initiatives to enhance its financial position and increase shareholder value,” said John T. Drexler, Arch’s chief financial officer. “In addition to returning excess capital to our shareholders, we successfully refinanced and repriced our term loan during the year, trimmed our annual interest expense, and reduced both our collateral requirements and restricted cash balance.”

 

Today, Arch’s board of directors announced that it has approved an increase in the company’s quarterly dividend to $0.40 per share from $0.35 per share. The board believes this to be a sustainable level through all stages of the dynamic market cycle. The next quarterly cash dividend payment of $0.40 per common share is scheduled to be paid on March 15, 2018 to stockholders of record at the close of business on March 5, 2018.

 

In the short time period since the capital allocation program was introduced, Arch has provided more than $326 million to shareholders through share buybacks and dividends.

 

“Arch’s ongoing repurchase activity and the announced increase in our quarterly dividend is in alignment with our goal of consistently providing strong shareholder returns while maintaining sufficient liquidity,” said Drexler.

 

Future dividend declarations and share repurchases will be subject to ongoing board review and authorization and will be based on a number of factors, including business and market conditions, Arch’s future financial performance and other capital priorities.

 

The passage of the Tax Cuts and Jobs Act was a significant positive for Arch. The elimination of the corporate AMT will allow Arch to realize all of its remaining AMT credits, resulting in a tax benefit of $35 million in the fourth quarter. Arch filed carryback claims for a portion of those AMT credits in the fourth quarter and a $24.3 million refund was received in January. The remaining $10.7 million of credits will be refunded between 2018 and 2022.  Going forward, Arch believes that the reduction in the corporate tax rate, elimination of the AMT, and the company’s large net operating loss position should result in a cash tax rate of effectively zero for the foreseeable future.

 

2



 

Arch’s cash and short-term investments totaled $429 million at December 31, 2017. At quarter-end, Arch’s debt level totaled $333 million, inclusive of the term loan, equipment financing and other debt. The company generated $396 million in cash provided by operating activities for full year 2017, while capital expenditures totaled $59 million, resulting in $337 million of free cash flow(2).

 

Operational Results

 

“As expected, our Leer and Mountain Laurel mines rebounded well from the geologic challenges experienced in the third quarter of 2017, and each of Arch’s operating segments made a significant contribution in the quarter just ended,” said Paul A. Lang, Arch’s president and chief operating officer. “In particular, we were successful in achieving higher price realizations, good cost containment and expanded margins in our Metallurgical and Other Thermal segments.”

 

 

 

Metallurgical

 

 

 

4Q17

 

 

3Q17

 

 

4Q16

 

 

FY17

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tons sold (in millions)

 

1.8

 

 

2.2

 

 

2.4

 

 

8.2

 

Coking

 

1.5

 

 

1.8

 

 

1.7

 

 

6.4

 

PCI

 

 

 

0.1

 

 

0.2

 

 

0.5

 

Thermal

 

0.3

 

 

0.3

 

 

0.5

 

 

1.3

 

Coal sales per ton sold

 

$

90.82

 

 

$

88.60

 

 

$

65.61

 

 

$

90.17

 

Coking

 

$

101.76

 

 

$

99.21

 

 

$

75.36

 

 

$

102.36

 

PCI

 

 

 

$

69.01

 

 

$

54.78

 

 

$

69.41

 

Thermal

 

$

25.92

 

 

$

34.65

 

 

$

36.86

 

 

$

39.21

 

Cash cost per ton sold

 

$

59.50

 

 

$

64.46

 

 

$

52.98

 

 

$

60.76

 

Cash margin per ton

 

$

31.32

 

 

$

24.14

 

 

$

12.63

 

 

$

29.41

 

 

Coal sales per ton sold and cash cost per ton sold is defined and reconciled under “Reconciliation of non-GAAP measures”

Mining complexes included in this segment are Beckley, Leer, Lone Mountain, Mountain Laurel and Sentinel

Lone Mountain is included through September 14, 2017, the date of divestiture

 

In the Metallurgical segment, coking coal volumes declined 17 percent when compared with the third quarter due to severe weather in the country’s eastern half during December that affected rail service as well as unloading operations at East Coast export facilities. Despite this short-term interruption in the Metallurgical segment, Arch’s fourth quarter cash margin per ton expanded 30 percent to $31.32 compared to $24.14 for the prior-quarter period. Average coking coal realizations were lifted by stronger pricing on index-linked tons that priced during the period. Fourth quarter segment cash cost per ton sold declined 8 percent when compared to the third quarter of 2017, driven primarily by normalized mining operations at the company’s two longwall mines and good cost control at the other two operations in the segment. The decrease in segment cash cost per ton sold was offset to some degree by the decline in quarterly volumes.

 


(2)  Free Cash Flow is defined and reconciled in the “Reconciliation of Non-GAAP measures” in this release.

 

3



 

Excluding Lone Mountain, which was sold in the third quarter, full year cash cost per ton sold for the segment would have been $59.24.

 

 

 

Powder River Basin

 

 

 

4Q17

 

 

3Q17

 

 

4Q16

 

 

FY17

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tons sold (in millions)

 

19.5

 

 

21.7

 

 

21.8

 

 

80.6

 

Coal sales per ton sold

 

$

12.32

 

 

$

12.51

 

 

$

12.41

 

 

$

12.49

 

Cash cost per ton sold

 

$

10.78

 

 

$

10.27

 

 

$

9.88

 

 

$

10.53

 

Cash margin per ton

 

$

1.54

 

 

$

2.24

 

 

$

2.53

 

 

$

1.96

 

 

Coal sales per ton sold and cash cost per ton sold is defined and reconciled under “Reconciliation of non-GAAP measures”

Mining complexes included in this segment are Black Thunder and Coal Creek

 

In the Powder River Basin, fourth quarter 2017 sales volumes declined 2.2 million tons as a result of weak thermal demand driven by still-inflated utility stockpiles and a slow start to winter. Average sales price declined modestly when compared with the third quarter of 2017, reflecting lower pricing on market and index-priced tons and customer shipment mix, while segment cash cost per ton sold increased $0.51 over the same time period. Higher cash cost per ton sold was driven by reduced volumes as well as higher diesel fuel costs.

 

 

 

Other Thermal

 

 

 

4Q17

 

 

3Q17

 

 

4Q16

 

 

FY 17

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tons sold (in millions)

 

2.3

 

 

2.3

 

 

2.5

 

 

9.2

 

Coal sales per ton sold

 

$

35.43

 

 

$

35.08

 

 

$

34.01

 

 

$

34.85

 

Cash cost per ton sold

 

$

24.88

 

 

$

26.05

 

 

$

21.79

 

 

$

24.20

 

Cash margin per ton

 

$

10.55

 

 

$

9.03

 

 

$

12.22

 

 

$

10.65

 

 

Coal sales per ton sold and cash cost per ton sold are defined and reconciled under “Reconciliation of non-GAAP measures”

Mining complexes included in this segment are Coal-Mac, Viper and West Elk

 

In the Other Thermal segment, fourth quarter cash margins were $10.55 per ton, an increase of 17 percent versus the third quarter, primarily driven by the region’s strong cost performance.  Sales volumes were flat during the quarter over the same time period, as they continued to benefit from robust demand in global thermal markets coupled with steady shipments to Viper’s baseload customer. Average sales price increased modestly compared to the prior-quarter period, reflecting a favorable mix of customer shipments and attractive pricing on export business. Notably, West Elk and Coal-Mac exported approximately 2.6 million tons into the seaborne thermal market during the year — the highest volume to be shipped for export from those operations since 2013. Arch expects to capitalize on this seaborne opportunity in 2018 as well.

 

Key Market Developments

 

Coking Coal Markets

 

·      Metallurgical coal continues to trade in a very strong range. High-Vol A prices off the

 

4



 

U.S. East Coast, as assessed by Platts, currently stand at $214.50 per metric ton.

 

·                  Moreover, High-Vol A reclaimed its premium over Low-Vol coals in late December, with a $19 per metric ton advantage as currently assessed.  The spread between high-vol coals has widened as well, with High-Vol A commanding a $70 per metric ton premium over High-Vol B presently.

 

·                  Overall, Arch believes the global metallurgical market is in healthy balance. As seen repeatedly in recent months, even small supply disruptions or demand bumps continue to translate into significant price moves. Most recently, logistical challenges in Australia, continued supply pressures in China and buoyant steel markets have acted to support metallurgical pricing.

 

·                  Looking ahead, Arch expects metallurgical markets to remain in relative equilibrium throughout 2018.

 

Thermal Coal Markets

 

·                  International thermal markets remain strong on growing Asian demand, with prompt month Newcastle prices at just under $100 per metric ton — a favorable level for Arch’s West Elk operation.

 

·                  In the domestic markets, heating degree days year to date are up more than 15 percent over 2017 levels.

 

·                  Arch believes coal stockpiles declined by an estimated 5 million tons in January — and are down by a total of 65 million tons since the beginning of 2016. However, they are still 20 million to 30 million tons higher than target — at an estimated 130 million tons at the end of January.

 

·                  Powder River Basin prices have moved sideways in recent months, reflecting comfortable stockpile levels and limited buying activity. However, Arch continues to believe that U.S. generators have a significant amount of tonnage to buy for the remainder of 2018, and expects increased activity as we progress through the first half of the year.

 

2018 Outlook

 

The company is initiating full year sales volume guidance for 2018. Based on current expectations, Arch expects total sales of between 92 million and 99 million tons, a level in line with the company’s 2017 sales volumes. Included in this range are projected sales of between 6.4 million and 7.0 million tons of metallurgical coal.

 

On the metallurgical side, Arch has committed select volumes at strong pricing with its North American customer base. Arch also has a large percentage of its 2018 coking coal either committed and subject to market pricing or still available, which will allow it to capitalize on strong seaborne coking coal market dynamics. At the expected midpoint of its volume guidance level, Arch is nearly 65 percent committed on coking coal sales for the full year, with

 

5



 

approximately 60 percent of that committed volume exposed to market-based pricing. Arch expects that approximately 80 percent of its metallurgical production will be sold to international steelmakers.

 

Arch expects to sell between 86 million and 92 million tons of thermal coal in 2018. At the midpoint of guidance, Arch’s thermal sales are approximately 82 percent committed for full year 2018.

 

Arch currently anticipates that cash cost per ton sold in the Metallurgical and Powder River Basin segments will be similar to 2017 levels. The Other Thermal segment’s cash cost per ton sold is expected to be higher, adjusted for anticipated production mix between the mines in the segment.

 

“Looking ahead, given the company’s low-cost operational profile and leverage to the upside potential of coal markets, Arch is exceptionally positioned to capitalize on positive fundamentals in international coking and thermal coal markets and the eventual recovery in domestic thermal markets,” said Eaves. “We firmly believe Arch’s diversified asset base, strategic marketing plan, talented and experienced workforce and strong balance sheet should enable the company to create significant value for our shareholders, earn substantial returns and generate considerable free cash flow in the future.”

 

6



 

 

 

2018 (3)

 

 

 

Tons

 

$ per ton

 

Sales Volume (in millions of tons)

 

 

 

 

 

Coking

 

6.4

-

7.0

 

 

 

Thermal

 

86.0

-

92.0

 

 

 

Total

 

92.4

-

99.0

 

 

 

 

 

 

 

 

 

Metallurgical (in millions of tons)

 

 

 

 

 

Committed, Priced Coking

 

1.7

 

$103.96

 

Committed, Unpriced Coking

 

2.6

 

 

 

Total Committed Coking

 

4.3

 

 

 

 

 

 

 

 

 

Committed, Priced Thermal Byproduct

 

0.5

 

$30.43

 

Committed, Unpriced Thermal Byproduct

 

 

 

 

Total Committed Thermal Byproduct

 

0.5

 

 

 

 

 

 

 

 

 

Average Metallurgical Cash Cost

 

 

 

$55.50

-

$60.50

 

 

 

 

 

 

 

Powder River Basin (in millions of tons)

 

 

 

 

 

Committed, Priced

 

62.1

 

$11.95

 

Committed, Unpriced

 

2.3

 

 

 

Total Committed

 

64.4

 

 

 

Average Cash Cost

 

 

 

$10.45

-

$10.95

 

 

 

 

 

 

 

Other Thermal (in millions of tons)

 

 

 

 

 

Committed, Priced

 

7.7

 

$36.88

 

Committed, Unpriced

 

 

 

 

Total Committed

 

7.7

 

 

 

Average Cash Cost

 

 

 

$27.50

-

$31.50

 

 

 

 

 

 

 

 

 

Corporate (in $ millions)

 

 

 

 

 

 

 

D,D&A excluding Sales Contract Amortization

 

 

 

$115

-

$120

 

 

Sales Contract Amortization

 

 

 

$11

-

$12

 

 

ARO Accretion

 

 

 

$27

-

$29

 

 

S,G&A

 

 

 

$83

-

$90

 

 

Interest Expense

 

 

 

$17

-

$19

 

 

Capital Expenditures

 

 

 

$80

-

$90

 

 

Tax Provision (%)

 

Approximately 0%

 

 


(3)  The Company is unable to present a quantitative reconciliation of its forward-looking non-GAAP Segment cash cost per ton sold financial measures to the most directly comparable GAAP measures without unreasonable efforts due to the inherent difficulty in forecasting and quantifying with reasonable accuracy significant items required for the reconciliation. The most directly comparable GAAP measure, GAAP cost of sales, is not accessible without unreasonable efforts on a forward-looking basis. The reconciling items for this non-GAAP measure are transportation costs, which are a component of GAAP revenues and cost of sales; the impact of hedging activity related to commodity purchases that do not receive hedge accounting; and idle and administrative costs that are not included in a reportable segment. Management is unable to predict without unreasonable efforts transportation costs due to uncertainty as to the end market and FOB point for uncommitted sales volumes and the final shipping point for export shipments. Management is unable to predict without unreasonable efforts the impact of hedging activity related to commodity purchases that do not receive hedge accounting due to fluctuations in commodity prices, which are difficult to forecast due to their inherent volatility. These amounts have historically and may continue to vary significantly from quarter to quarter and material changes to these items could have a significant effect on our future GAAP results. Idle and administrative costs that are not included in a reportable segment are expected to be between $15 million and $20 million in 2018.

 

7



 

A conference call regarding Arch Coal’s fourth quarter and full year 2017 financial results will be webcast live today at 10 a.m. Eastern time. The conference call can be accessed via the “investor” section of the Arch Coal website (http://investor.archcoal.com).

 

Forward-Looking Statements: This press release contains “forward-looking statements” — that is, statements related to future, not past, events. In this context, forward-looking statements often address our expected future business and financial performance, and often contain words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” or “will.” Forward-looking statements by their nature address matters that are, to different degrees, uncertain. For us, particular uncertainties arise from changes in the demand for our coal by the domestic electric generation industry; from legislation and regulations relating to the Clean Air Act and other environmental initiatives; from operational, geological, permit, labor and weather-related factors, and the Tax Cuts and Jobs Act and other tax reforms; from fluctuations in the amount of cash we generate from operations; from future integration of acquired businesses; and from numerous other matters of national, regional and global scale, including those of a political, economic, business, competitive or regulatory nature. These uncertainties may cause our actual future results to be materially different than those expressed in our forward-looking statements. We do not undertake to update our forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by law. For a description of some of the risks and uncertainties that may affect our future results, you should see the risk factors described from time to time in the reports we file with the Securities and Exchange Commission.

 

# # #

 

8



 

Arch Coal, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

(In thousands, except per share data)

 

 

 

Successor

 

Successor

 

 

Predecessor

 

 

 

Three Months Ended
December 31, 2017

 

Twelve Months
Ended
December 31, 2017

 

October 2, 2016
through December
31, 2016

 

 

January 1, 2016
through October 1,
2016

 

 

 

(Unaudited)

 

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

$

560,244

 

$

2,324,623

 

$

575,688

 

 

$

1,398,709

 

 

 

 

 

 

 

 

 

 

 

 

Costs, expenses and other operating

 

 

 

 

 

 

 

 

 

 

Cost of sales

 

451,221

 

1,843,093

 

470,644

 

 

1,264,464

 

Depreciation, depletion and amortization

 

27,928

 

122,464

 

32,604

 

 

191,581

 

Accretion on asset retirement obligations

 

7,383

 

30,209

 

7,634

 

 

24,321

 

Amortization of sales contracts, net

 

11,082

 

53,985

 

796

 

 

(728

)

Change in fair value of coal derivatives and coal trading activities, net

 

4,477

 

7,222

 

396

 

 

2,856

 

Asset impairment and mine closure costs

 

 

 

 

 

129,267

 

Selling, general and administrative expenses

 

23,100

 

86,821

 

22,836

 

 

59,343

 

Gain on sale of Lone Mountain Processing, Inc.

 

277

 

(21,297

)

 

 

 

Other operating income, net

 

(16,175

)

(30,270

)

(5,340

)

 

(15,257

)

 

 

509,293

 

2,092,227

 

529,570

 

 

1,655,847

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from operations

 

50,951

 

232,396

 

46,118

 

 

(257,138

)

 

 

 

 

 

 

 

 

 

 

 

Interest expense, net

 

 

 

 

 

 

 

 

 

 

Interest expense

 

(5,505

)

(26,905

)

(11,241

)

 

(135,888

)

Interest and investment income

 

560

 

2,649

 

487

 

 

2,653

 

 

 

(4,945

)

(24,256

)

(10,754

)

 

(133,235

)

 

 

 

 

 

 

 

 

 

 

 

Income (loss) before nonoperating expenses

 

46,006

 

208,140

 

35,364

 

 

(390,373

)

 

 

 

 

 

 

 

 

 

 

 

Nonoperating income (loss)

 

 

 

 

 

 

 

 

 

 

Net loss resulting from early retirement of debt and debt restructuring

 

 

(2,547

)

 

 

(2,213

)

Reorganization items, net

 

494

 

(2,398

)

(759

)

 

1,630,041

 

 

 

494

 

(4,945

)

(759

)

 

1,627,828

 

 

 

 

 

 

 

 

 

 

 

 

Income before income taxes

 

46,500

 

203,195

 

34,605

 

 

1,237,455

 

Provision for (benefit from) income taxes

 

(34,771

)

(35,255

)

1,156

 

 

(4,626

)

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

81,271

 

$

238,450

 

$

33,449

 

 

$

1,242,081

 

 

 

 

 

 

 

 

 

 

 

 

Net income per common share

 

 

 

 

 

 

 

 

 

 

Basic EPS

 

$

3.75

 

$

10.05

 

$

1.34

 

 

N/A

 

Diluted EPS

 

$

3.64

 

$

9.84

 

$

1.31

 

 

N/A

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding

 

 

 

 

 

 

 

 

 

 

Basic weighted average shares outstanding

 

21,653

 

23,725

 

25,002

 

 

N/A

 

Diluted weighted average shares outstanding

 

22,333

 

24,240

 

25,469

 

 

N/A

 

 

 

 

 

 

 

 

 

 

 

 

Dividends declared per common share

 

$

0.35

 

$

1.05

 

$

 

 

$

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDAR (A) (Unaudited)

 

$

97,621

 

$

417,757

 

$

94,497

 

 

$

87,303

 

Adjusted diluted income per common share (A)

 

$

4.12

 

$

11.36

 

$

1.65

 

 

N/A

 

 


(A) Adjusted EBITDAR and Adjusted diluted income per common share are defined and reconciled under “Reconciliation of Non-GAAP Measures” later in this release.

 



 

Arch Coal, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(In thousands)

 

 

 

December 31,

 

December 31,

 

 

 

2017

 

2016

 

 

 

(Unaudited)

 

 

 

Assets

 

 

 

 

 

Current assets

 

 

 

 

 

Cash and cash equivalents

 

$

273,387

 

$

305,372

 

Short term investments

 

155,846

 

88,072

 

Restricted cash

 

 

71,050

 

Trade accounts receivable

 

172,604

 

184,483

 

Other receivables

 

29,771

 

19,877

 

Inventories

 

128,960

 

113,462

 

Other current assets

 

70,426

 

96,306

 

Total current assets

 

830,994

 

878,622

 

 

 

 

 

 

 

Property, plant and equipment, net

 

955,948

 

1,053,603

 

 

 

 

 

 

 

Other assets

 

 

 

 

 

Equity investments

 

106,107

 

96,074

 

Other noncurrent assets

 

86,583

 

108,298

 

Total other assets

 

192,690

 

204,372

 

Total assets

 

$

1,979,632

 

$

2,136,597

 

 

 

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

Current liabilities

 

 

 

 

 

Accounts payable

 

$

134,137

 

$

95,953

 

Accrued expenses and other current liabilities

 

184,161

 

205,240

 

Current maturities of debt

 

15,783

 

11,038

 

Total current liabilities

 

334,081

 

312,231

 

Long-term debt

 

310,134

 

351,841

 

Asset retirement obligations

 

308,855

 

337,227

 

Accrued pension benefits

 

14,036

 

38,884

 

Accrued postretirement benefits other than pension

 

102,369

 

101,445

 

Accrued workers’ compensation

 

184,835

 

184,568

 

Other noncurrent liabilities

 

59,457

 

63,824

 

Total liabilities

 

1,313,767

 

1,390,020

 

 

 

 

 

 

 

Stockholders’ equity

 

 

 

 

 

Common Stock

 

250

 

250

 

Paid-in capital

 

700,125

 

688,424

 

Retained earnings

 

247,232

 

33,449

 

Treasury stock, at cost

 

(302,109

)

 

Accumulated other comprehensive income

 

20,367

 

24,454

 

Total stockholders’ equity

 

665,865

 

746,577

 

Total liabilities and stockholders’ equity

 

$

1,979,632

 

$

2,136,597

 

 



 

Arch Coal, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(In thousands)

 

 

 

Successor

 

Successor

 

 

Predecessor

 

 

 

Twelve Months Ended
December 31, 2017

 

October 2, 2016
through December 31,
2016

 

 

January 1, 2016
through October 1,
2016

 

 

 

(Unaudited)

 

 

 

 

 

 

Operating activities

 

 

 

 

 

 

 

 

Net income

 

$

238,450

 

$

33,449

 

 

$

1,242,081

 

Adjustments to reconcile to cash provided by (used in) operating activities:

 

 

 

 

 

 

 

 

Depreciation, depletion and amortization

 

122,464

 

32,604

 

 

191,581

 

Accretion on asset retirement obligations

 

30,209

 

7,634

 

 

24,321

 

Amortization of sales contracts, net

 

53,985

 

796

 

 

(728

)

Prepaid royalties expensed

 

2,905

 

2,587

 

 

4,791

 

Deferred income taxes

 

(21,965

)

3

 

 

(419

)

Employee stock-based compensation expense

 

10,437

 

1,032

 

 

2,096

 

Gains on disposals and divestitures

 

(24,327

)

(485

)

 

(6,628

)

Asset impairment and noncash mine closure costs

 

 

 

 

119,194

 

Net loss resulting from early retirement of debt and debt restructuring

 

2,547

 

 

 

2,213

 

Non-cash bankruptcy reorganization items

 

 

 

 

(1,775,910

)

Amortization relating to financing activities

 

3,736

 

467

 

 

12,800

 

Changes in:

 

 

 

 

 

 

 

 

Receivables

 

8,370

 

(22,196

)

 

(42,786

)

Inventories

 

(19,626

)

24,870

 

 

34,440

 

Accounts payable, accrued expenses and other current liabilities

 

17,173

 

34,129

 

 

15,316

 

Income taxes, net

 

(6,834

)

1,371

 

 

(4,216

)

Other

 

(21,051

)

(32,069

)

 

(46,364

)

Cash provided by (used in) operating activities

 

396,473

 

84,192

 

 

(228,218

)

 

 

 

 

 

 

 

 

 

Investing activities

 

 

 

 

 

 

 

 

Capital expenditures

 

(59,205

)

(15,214

)

 

(82,434

)

Minimum royalty payments

 

(5,296

)

(63

)

 

(305

)

Proceeds from (consideration paid for) disposals and divestitures

 

12,920

 

572

 

 

(2,921

)

Purchases of short term investments

 

(258,948

)

 

 

(98,750

)

Proceeds from sales of short term investments

 

190,064

 

23,000

 

 

187,006

 

Investments in and advances to affiliates, net

 

(10,173

)

(823

)

 

(3,441

)

Withdrawals of restricted cash

 

70,836

 

10,512

 

 

15,979

 

Cash provided by (used in) investing activities

 

(59,802

)

17,984

 

 

15,134

 

 

 

 

 

 

 

 

 

 

Financing activities

 

 

 

 

 

 

 

 

Proceeds from issuance of term loan due 2024

 

298,500

 

 

 

 

Payments to extinguish term loan due 2021

 

(325,684

)

(816

)

 

 

Payments on term loan due 2024

 

(2,250

)

 

 

 

Net payments on other debt

 

(694

)

3,374

 

 

(11,986

)

Debt financing costs

 

(10,149

)

 

 

(23,011

)

Net loss resulting from early retirement of debt and debt restructuring

 

(2,360

)

 

 

(2,213

)

Dividends paid

 

(24,369

)

 

 

 

Purchases of treasury stock

 

(301,512

)

 

 

 

Other

 

(138

)

151

 

 

 

Cash provided by (used in) financing activities

 

(368,656

)

2,709

 

 

(37,210

)

 

 

 

 

 

 

 

 

 

Increase (decrease) in cash and cash equivalents

 

(31,985

)

104,885

 

 

(250,294

)

Cash and cash equivalents, beginning of period

 

305,372

 

200,487

 

 

450,781

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents, end of period

 

$

273,387

 

$

305,372

 

 

$

200,487

 

 



 

Arch Coal, Inc. and Subsidiaries

Schedule of Consolidated Debt

(In thousands)

 

 

 

December 31,

 

December 31,

 

 

 

2017

 

2016

 

 

 

(Unaudited)

 

 

 

 

 

 

 

 

 

Term loan due 2024 ($297.8 million face value)

 

$

296,435

 

$

 

Term loan due 2021 ($325.7 million face value)

 

 

325,684

 

Other

 

36,514

 

37,195

 

Debt issuance costs

 

(7,032

)

 

 

 

325,917

 

362,879

 

Less: current maturities of debt

 

15,783

 

11,038

 

Long-term debt

 

$

310,134

 

$

351,841

 

 

 

 

 

 

 

Calculation of net debt

 

 

 

 

 

Total debt (excluding debt issuance costs)

 

$

332,949

 

$

362,879

 

Less liquid assets:

 

 

 

 

 

Cash and cash equivalents

 

273,387

 

305,372

 

Short term investments

 

155,846

 

88,072

 

 

 

429,233

 

393,444

 

Net debt

 

$

(96,284

)

$

(30,565

)

 



 

Arch Coal, Inc. and Subsidiaries

Operational Performance

(In millions, except per ton data)

 

 

 

Three Months Ended
December 31, 2017

 

Three Months Ended
September 30, 2017

 

October 2, 2016 through
December 31, 2016

 

Twelve Months Ended
December 31, 2017

 

 

 

(Unaudited)

 

 

 

(Unaudited)

 

 

 

(Unaudited)

 

 

 

(Unaudited)

 

 

 

Powder River Basin

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tons Sold

 

19.5

 

 

 

21.7

 

 

 

21.8

 

 

 

80.6

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Segment Sales

 

$

239.9

 

$

12.32

 

$

271.7

 

$

12.51

 

$

270.9

 

$

12.41

 

$

1,006.8

 

$

12.49

 

Segment Cash Cost of Sales

 

209.9

 

10.78

 

223.1

 

10.27

 

215.5

 

9.88

 

849.0

 

10.53

 

Segment Cash Margin

 

30.0

 

1.54

 

48.6

 

2.24

 

55.4

 

2.53

 

157.7

 

1.96

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Metallurgical

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tons Sold

 

1.8

 

 

 

2.2

 

 

 

2.4

 

 

 

8.2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Segment Sales

 

$

164.1

 

$

90.82

 

$

196.8

 

$

88.60

 

$

160.2

 

$

65.61

 

$

738.6

 

$

90.17

 

Segment Cash Cost of Sales

 

107.5

 

59.50

 

143.2

 

64.46

 

129.4

 

52.98

 

497.7

 

60.76

 

Segment Cash Margin

 

56.6

 

31.32

 

53.6

 

24.14

 

30.8

 

12.63

 

240.9

 

29.41

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other Thermal

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tons Sold

 

2.3

 

 

 

2.3

 

 

 

2.5

 

 

 

9.2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Segment Sales

 

$

80.1

 

$

35.43

 

$

81.6

 

$

35.08

 

$

85.4

 

$

34.01

 

$

320.8

 

$

34.85

 

Segment Cash Cost of Sales

 

56.3

 

24.88

 

60.6

 

26.05

 

54.7

 

21.79

 

222.7

 

24.20

 

Segment Cash Margin

 

23.9

 

10.55

 

21.0

 

9.03

 

30.7

 

12.22

 

98.1

 

10.65

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Segment Cash Margin

 

$

110.4

 

 

 

$

123.3

 

 

 

$

116.9

 

 

 

$

496.7

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

(23.1

)

 

 

(21.1

)

 

 

(22.8

)

 

 

(86.8

)

 

 

Liquidated damages under export logistics contracts

 

 

 

 

 

 

 

 

 

 

 

 

 

Other

 

10.3

 

 

 

2.1

 

 

 

0.4

 

 

 

7.9

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDAR

 

$

97.6

 

 

 

$

104.3

 

 

 

$

94.5

 

 

 

$

417.8

 

 

 

 



 

Arch Coal, Inc. and Subsidiaries

Reconciliation of NON-GAAP Measures

(In millions, except per ton data)

 

Included in the accompanying release, we have disclosed certain non-GAAP measures as defined by Regulation G. The following reconciles these items to the most directly comparable GAAP measure.

 

Non-GAAP Segment coal sales per ton sold

 

Non-GAAP Segment coal sales per ton sold is calculated as segment coal sales revenues divided by segment tons sold. Segment coal sales revenues are adjusted for transportation costs, and may be adjusted for other items that, due to generally accepted accounting principles, are classified in “other income” on the statement of operations, but relate to price protection on the sale of coal. Segment coal sales per ton sold is not a measure of financial performance in accordance with generally accepted accounting principles. We believe segment coal sales per ton sold provides useful information to investors as it better reflects our revenue for the quality of coal sold and our operating results by including all income from coal sales. The adjustments made to arrive at these measures are significant in understanding and assessing our financial condition. Therefore, segment coal sales revenues should not be considered in isolation, nor as an alternative to coal sales revenues under generally accepted accounting principles.

 

Quarter ended December 31, 2017
(In thousands)

 

Powder River
Basin

 

Metallurgical

 

Other Thermal

 

Idle and Other

 

Consolidated

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP Revenues in the consolidated statements of operations

 

$

244,191

 

$

195,661

 

$

109,100

 

$

11,292

 

$

560,244

 

Other revenues

 

 

 

 

 

 

Coal Sales

 

$

244,191

 

$

195,661

 

$

109,100

 

$

11,292

 

$

560,244

 

Less: Adjustments to reconcile to Non-GAAP Segment coal sales revenue

 

 

 

 

 

 

 

 

 

 

 

Coal risk management derivative settlements classified in “other income”

 

 

 

182

 

 

$

182

 

Coal sales revenues from idled or otherwise disposed operations not included in segments

 

 

 

 

11,291

 

11,291

 

Transportation costs

 

4,306

 

31,545

 

$

28,771

 

1

 

64,623

 

Non-GAAP Segment coal sales revenues

 

$

239,885

 

$

164,116

 

$

80,147

 

$

 

$

484,149

 

Tons sold

 

19,473

 

1,807

 

2,262

 

 

 

 

 

Coal sales per ton sold

 

$

12.32

 

$

90.82

 

$

35.43

 

 

 

 

 

 

Quarter ended September 30, 2017
(In thousands)

 

Powder River
Basin

 

Metallurgical

 

Other Thermal

 

Idle and Other

 

Consolidated

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP Revenues in the consolidated statements of operations

 

$

275,999

 

$

238,946

 

$

93,859

 

$

4,734

 

$

613,539

 

Other revenues

 

 

 

 

 

 

Coal Sales

 

$

275,999

 

$

238,946

 

$

93,859

 

$

4,734

 

$

613,539

 

Less: Adjustments to reconcile to Non-GAAP Segment coal sales revenue

 

 

 

 

 

 

 

 

 

 

 

Coal risk management derivative settlements classified in “other income”

 

 

 

19

 

 

$

19

 

Coal sales revenues from idled or otherwise disposed operations not included in segments

 

 

 

 

3,720

 

3,720

 

Transportation costs

 

4,291

 

42,170

 

$

12,239

 

1,014

 

59,714

 

Non-GAAP Segment coal sales revenues

 

$

271,708

 

$

196,776

 

$

81,602

 

$

 

$

550,086

 

Tons sold

 

21,713

 

2,221

 

2,326

 

 

 

 

 

Coal sales per ton sold

 

$

12.51

 

$

88.60

 

$

35.08

 

 

 

 

 

 

October 2 through December 31, 2016
(In thousands)

 

Powder River
Basin

 

Metallurgical

 

Other Thermal

 

Idle and Other

 

Consolidated

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP Revenues in the consolidated statements of operations

 

$

275,702

 

$

200,378

 

$

97,382

 

$

2,226

 

$

575,688

 

Other revenues

 

 

 

 

 

 

Coal Sales

 

$

275,702

 

$

200,378

 

$

97,382

 

$

2,226

 

$

575,688

 

Less: Adjustments to reconcile to Non-GAAP Segment coal sales revenue

 

 

 

 

 

 

 

 

 

 

 

Coal risk management derivative settlements classified in “other income”

 

 

 

(112

)

 

$

(112

)

Coal sales revenues from idled or otherwise disposed operations not included in segments

 

 

 

 

2,181

 

2,181

 

Transportation costs

 

4,825

 

40,171

 

$

12,130

 

45

 

57,171

 

Non-GAAP Segment coal sales revenues

 

$

270,877

 

$

160,207

 

$

85,364

 

$

 

$

516,448

 

Tons sold

 

21,824

 

2,442

 

2,510

 

 

 

 

 

Coal sales per ton sold

 

$

12.41

 

$

65.61

 

$

34.01

 

 

 

 

 

 

Year ended December 31, 2017
(In thousands)

 

Powder River
Basin

 

Metallurgical

 

Other Thermal

 

Idle and Other

 

Consolidated

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP Revenues in the consolidated statements of operations

 

$

1,024,197

 

$

887,839

 

$

396,504

 

$

16,083

 

$

2,324,623

 

Other revenues

 

 

 

 

 

 

Coal Sales

 

$

1,024,197

 

$

887,839

 

$

396,504

 

$

16,083

 

$

2,324,623

 

Less: Adjustments to reconcile to Non-GAAP Segment coal sales revenue

 

 

 

 

 

 

 

 

 

 

 

Coal risk management derivative settlements classified in “other income”

 

 

 

200

 

 

$

200

 

Coal sales revenues from idled or otherwise disposed operations not included in segments

 

 

 

 

15,061

 

15,061

 

Transportation costs

 

17,437

 

149,212

 

$

75,491

 

1,022

 

243,162

 

Non-GAAP Segment coal sales revenues

 

$

1,006,760

 

$

738,627

 

$

320,813

 

$

 

$

2,066,200

 

Tons sold

 

80,604

 

8,192

 

9,205

 

 

 

 

 

Coal sales per ton sold

 

$

12.49

 

$

90.17

 

$

34.85

 

 

 

 

 

 



 

Arch Coal, Inc. and Subsidiaries

Reconciliation of NON-GAAP Measures

(In millions, except per ton data)

 

Non-GAAP Segment cash cost per ton sold

 

Non-GAAP Segment cash cost per ton sold is calculated as segment cash cost of coal sales divided by segment tons sold. Segment cash cost of coal sales is adjusted for transportation costs, and may be adjusted for other items that, due to generally accepted accounting principles, are classified in “other income” on the statement of operations, but relate directly to the costs incurred to produce coal. Segment cash cost per ton sold is not a measure of financial performance in accordance with generally accepted accounting principles. We believe segment cash cost per ton sold better reflects our controllable costs and our operating results by including all costs incurred to produce coal. The adjustments made to arrive at these measures are significant in understanding and assessing our financial condition. Therefore, segment cash cost of coal sales should not be considered in isolation, nor as an alternative to cost of sales under generally accepted accounting principles.

 

Quarter ended December 31, 2017
(In thousands)

 

Powder River
Basin

 

Metallurgical

 

Other Thermal

 

Idle and Other

 

Consolidated

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP Cost of sales in the consolidated statements of operations

 

$

214,006

 

$

139,059

 

$

85,038

 

$

13,119

 

$

451,221

 

Less: Adjustments to reconcile to Non-GAAP Segment cash cost of coal sales

 

 

 

 

 

 

 

 

 

 

 

Diesel fuel risk management derivative settlements classified in “other income”

 

(229

)

 

 

 

(229

)

Transportation costs

 

4,306

 

31,545

 

28,771

 

1

 

64,623

 

Cost of coal sales from idled or otherwise disposed operations not included in segments

 

 

 

 

11,405

 

11,405

 

Fresh start coal inventory fair value adjustment

 

 

 

 

 

 

Other (operating overhead, certain actuarial, etc.)

 

 

 

 

1,712

 

1,712

 

Non-GAAP Segment cash cost of coal sales

 

$

209,929

 

$

107,514

 

$

56,267

 

$

 

$

373,709

 

Tons sold

 

19,473

 

1,807

 

2,262

 

 

 

 

 

Cash cost per ton sold

 

$

10.78

 

$

59.50

 

$

24.88

 

 

 

 

 

 

Quarter ended September 30, 2017
(In thousands)

 

Powder River
Basin

 

Metallurgical

 

Other Thermal

 

Idle and Other

 

Consolidated

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP Cost of sales in the consolidated statements of operations

 

$

226,449

 

$

185,321

 

$

72,832

 

$

10,823

 

$

495,424

 

Less: Adjustments to reconcile to Non-GAAP Segment cash cost of coal sales

 

 

 

 

 

 

 

 

 

 

 

Diesel fuel risk management derivative settlements classified in “other income”

 

(921

)

 

 

 

(921

)

Transportation costs

 

4,291

 

42,170

 

12,239

 

1,014

 

59,714

 

Cost of coal sales from idled or otherwise disposed operations not included in segments

 

 

 

 

7,979

 

7,979

 

Fresh start coal inventory fair value adjustment

 

 

 

 

 

 

Other (operating overhead, certain actuarial, etc.)

 

 

 

 

1,829

 

1,829

 

Non-GAAP Segment cash cost of coal sales

 

$

223,079

 

$

143,151

 

$

60,593

 

$

 

$

426,822

 

Tons sold

 

21,713

 

2,221

 

2,326

 

 

 

 

 

Cash cost per ton sold

 

$

10.27

 

$

64.46

 

$

26.05

 

 

 

 

 

 

October 2 through December 31, 2016
(In thousands)

 

Powder River
Basin

 

Metallurgical

 

Other Thermal

 

Idle and Other

 

Consolidated

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of sales in the consolidated statements of operations

 

$

220,714

 

$

169,532

 

$

66,811

 

$

13,586

 

$

470,644

 

Less: Adjustments to reconcile to Non-GAAP Segment cash cost of coal sales

 

 

 

 

 

 

 

 

 

 

 

Diesel fuel risk management derivative settlements classified in “other income”

 

363

 

 

 

 

363

 

Transportation costs

 

4,825

 

40,171

 

12,130

 

45

 

57,171

 

Cost of coal sales from idled or otherwise disposed operations not included in segments

 

 

 

 

5,853

 

5,853

 

Fresh start coal inventory fair value adjustment

 

 

 

 

7,345

 

7,345

 

Other (operating overhead, certain actuarial, etc.)

 

 

 

 

344

 

344

 

Reported segment cost of coal sales

 

$

215,526

 

$

129,361

 

$

54,681

 

$

 

$

399,568

 

Tons sold

 

21,824

 

2,442

 

2,510

 

 

 

 

 

Cash cost per ton sold

 

$

9.88

 

$

52.98

 

$

21.79

 

 

 

 

 

 

Year ended December 31, 2017

 

Powder River
Basin

 

Metallurgical

 

Other Thermal

 

Idle and Other

 

Consolidated

 

(In thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of sales in the consolidated statements of operations

 

$

863,836

 

$

646,911

 

$

298,229

 

$

34,118

 

$

1,843,093

 

Less: Adjustments to reconcile to Non-GAAP Segment cash cost of coal sales

 

 

 

 

 

 

 

 

 

 

 

Diesel fuel risk management derivative settlements classified in “other income”

 

(2,645

)

 

 

 

(2,645

)

Transportation costs

 

17,437

 

149,212

 

75,491

 

1,022

 

243,162

 

Cost of coal sales from idled or otherwise disposed operations not included in segments

 

 

 

 

28,065

 

28,065

 

Fresh start coal inventory fair value adjustment

 

 

 

 

 

 

Other (operating overhead, certain actuarial, etc.)

 

 

 

 

5,031

 

5,031

 

Reported segment cost of coal sales

 

$

849,044

 

$

497,699

 

$

222,738

 

$

 

$

1,569,480

 

Tons sold

 

80,604

 

8,192

 

9,205

 

 

 

 

 

Cash cost per ton sold

 

$

10.53

 

$

60.76

 

$

24.20

 

 

 

 

 

 



 

Arch Coal, Inc. and Subsidiaries

Reconciliation of Non-GAAP Measures

(In thousands, except per share data)

 

Adjusted EBITDAR

 

Adjusted EBITDAR is defined as net income attributable to the Company before the effect of net interest expense, income taxes, depreciation, depletion and amortization, accretion on asset retirement obligations, amortization of sales contracts and reorganization items, net. Adjusted EBITDAR may also be adjusted for items that may not reflect the trend of future results by excluding transactions that are not indicative of the Company’s core operating performance.

 

Adjusted EBITDAR is not a measure of financial performance in accordance with generally accepted accounting principles, and items excluded from Adjusted EBITDAR are significant in understanding and assessing our financial condition. Therefore, Adjusted EBITDAR should not be considered in isolation, nor as an alternative to net income, income from operations, cash flows from operations or as a measure of our profitability, liquidity or performance under generally accepted accounting principles.  The Company uses adjusted EBITDAR to measure the operating performance of its segments and allocate resources to the segments.  Furthermore, analogous measures are used by industry analysts and investors to evaluate our operating performance. Investors should be aware that our presentation of Adjusted EBITDAR may not be comparable to similarly titled measures used by other companies. The table below shows how we calculate Adjusted EBITDAR.

 

 

 

Successor

 

Successor

 

 

Predecessor

 

 

 

Three Months
Ended December
31, 2017

 

Twelve Months
Ended December
31, 2017

 

October 2, 2016
through December
31, 2016

 

 

January 1, 2016
through October 1,
2016

 

 

 

(Unaudited)

 

(Unaudited)

 

(Unaudited)

 

 

(Unaudited)

 

Net income

 

$

81,271

 

$

238,450

 

$

33,449

 

 

$

1,242,081

 

Provision for (benefit from) income taxes

 

(34,771

)

(35,255

)

1,156

 

 

(4,626

)

Interest expense, net

 

4,945

 

24,256

 

10,754

 

 

133,235

 

Depreciation, depletion and amortization

 

27,928

 

122,464

 

32,604

 

 

191,581

 

Accretion on asset retirement obligations

 

7,383

 

30,209

 

7,634

 

 

24,321

 

Amortization of sales contracts, net

 

11,082

 

53,985

 

796

 

 

(728

)

Asset impairment and mine closure costs

 

 

 

 

 

129,267

 

Gain on sale of Lone Mountain Processing, Inc.

 

277

 

(21,297

)

 

 

 

Net loss resulting from early retirement of debt and debt restructuring

 

 

2,547

 

 

 

2,213

 

Reorganization items, net

 

(494

)

2,398

 

759

 

 

(1,630,041

)

Fresh start coal inventory adjustment

 

 

 

7,345

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDAR

 

$

97,621

 

$

417,757

 

$

94,497

 

 

$

87,303

 

 



 

Arch Coal, Inc. and Subsidiaries

Reconciliation of Non-GAAP Measures

(In thousands, except per share data)

 

Adjusted net income (loss) and adjusted diluted income (loss) per share

 

Adjusted net income (loss) and adjusted diluted income (loss) per common share are adjusted for the after-tax impact of reorganization items, net and are not measures of financial performance in accordance with generally accepted accounting principles.  Adjusted net income (loss) and adjusted diluted income (loss) per common share may also be adjusted for items that may not reflect the trend of future results.  We believe that adjusted net income (loss) and adjusted diluted income (loss) per common share better reflect the trend of our future results by excluding transactions that are not indicative of the Company’s core operating performance. The adjustments made to arrive at these measures are significant in understanding and assessing our financial condition.  Therefore, adjusted net income (loss) and adjusted diluted income (loss) per share should not be considered in isolation, nor as an alternative to net income (loss) or diluted income (loss) per common share under generally accepted accounting principles.

 

 

 

Successor

 

Successor

 

 

Predecessor

 

 

 

Three Months
Ended December
31, 2017

 

Twelve Months
Ended December
31, 2017

 

October 2, 2016
through December
31, 2016

 

 

January 1, 2016
through October 1,
2016

 

 

 

(Unaudited)

 

(Unaudited)

 

(Unaudited)

 

 

(Unaudited)

 

Net income

 

$

81,271

 

$

238,450

 

$

33,449

 

 

$

1,242,081

 

 

 

 

 

 

 

 

 

 

 

 

Amortization of sales contracts, net

 

11,082

 

53,985

 

796

 

 

(728

)

Asset impairment and mine closure costs

 

 

 

 

 

129,267

 

Gain on sale of Lone Mountain Processing, Inc.

 

277

 

(21,297

)

 

 

 

Net loss resulting from early retirement of debt and debt restructuring

 

 

2,547

 

 

 

2,213

 

Reorganization items, net

 

(494

)

2,398

 

759

 

 

(1,630,041

)

Fresh start coal inventory adjustment

 

 

 

7,345

 

 

 

Tax impact of adjustment

 

(217

)

(753

)

(287

)

 

262

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted net income (loss)

 

$

91,919

 

$

275,330

 

$

42,062

 

 

$

(256,946

)

 

 

 

 

 

 

 

 

 

 

 

Diluted weighted average shares outstanding

 

22,333

 

24,240

 

25,469

 

 

N/A

 

 

 

 

 

 

 

 

 

 

 

 

Diluted income per share

 

$

3.64

 

$

9.84

 

$

1.31

 

 

N/A

 

 

 

 

 

 

 

 

 

 

 

 

Amortization of sales contracts, net

 

0.50

 

2.23

 

0.03

 

 

N/A

 

Asset impairment and mine closure costs

 

 

 

 

 

N/A

 

Gain on sale of Lone Mountain Processing, Inc.

 

0.01

 

(0.88

)

 

 

N/A

 

Net loss resulting from early retirement of debt and debt restructuring

 

 

0.11

 

 

 

N/A

 

Reorganization items, net

 

(0.02

)

0.10

 

0.03

 

 

N/A

 

Fresh start coal inventory adjustment

 

 

 

0.29

 

 

 

 

Tax impact of adjustments

 

(0.01

)

(0.04

)

0.28

 

 

N/A

 

Adjusted diluted income per share

 

$

4.12

 

$

11.36

 

$

1.65

 

 

N/A

 

 

Free Cash Flow

 

Free cash flow is defined as cash provided by (used in) operating activities less cash used for capital expenditures.  Free cash flow is used by management as a measure of the Company’s ability to generate excess cash flow from our core business operations.  Free cash flow should not be considered in isolation or as an alternative to similar measures under generally accepted accounting principles.

 

 

 

Successor

 

Successor

 

 

Predecessor

 

 

 

Twelve Months
Ended December
31, 2017

 

October 2, 2016
through December
31, 2016

 

 

January 1, 2016
through October 1,
2016

 

 

 

(Unaudited)

 

(Unaudited)

 

 

(Unaudited)

 

Cash provided by (used in) operating activities

 

$

396,473

 

$

84,192

 

 

$

(228,218

)

Cash used for capital expenditures

 

(59,205

)

(15,214

)

 

(82,434

)

 

 

 

 

 

 

 

 

 

Free cash flow

 

$

337,268

 

$

68,978

 

 

$

(310,652

)