ST. LOUIS, July 30, 2015 /PRNewswire/ --
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Earnings
Highlights
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Quarter
Ended
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Six Months
Ended
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In $ millions,
except per share data
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6/30/15
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6/30/14
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6/30/15
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6/30/14
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Revenues
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$644.5
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$713.8
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$1,321.5
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$1,449.7
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Loss from
Operations
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($69.5)
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($35.8)
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($89.3)
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($108.9)
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Net
Loss
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($168.1)
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($96.9)
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($281.3)
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($221.0)
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Diluted
LPS
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($0.79)
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($0.46)
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($1.32)
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($1.04)
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Adjusted Diluted
LPS 1
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($0.73)
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($0.46)
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($1.27)
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($1.06)
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Adjusted EBITDA
1
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$45.3
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$64.9
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$127.1
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$92.5
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1/- Defined and
reconciled under "Reconciliation of non-GAAP
measures."
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Arch Coal, Inc. (NYSE: ACI) today reported a net loss of
$168 million, or $0.79 per diluted share, for the quarter ending
June 30, 2015. The company recorded a
$19.1 million impairment charge
during the quarter and incurred $4.0
million of expenses related to its exchange transaction.
Excluding asset impairments, expenses related to debt restructuring
and amortization of sales contracts, Arch's second quarter 2015
adjusted net loss was $0.73 per
diluted share compared with an adjusted net loss of $0.46 per diluted share in the prior-year
quarter. Revenues totaled $644
million in the second quarter of 2015, and adjusted earnings
before interest, taxes, depreciation, depletion and amortization
("EBITDA") was $45 million.
For the first half of 2015, Arch generated adjusted EBITDA of
$127 million compared with
$93 million in the prior-year period.
Total revenues declined to $1.3
billion for the six months ended June
30, 2015, largely due to lower metallurgical coal prices and
output versus the prior-year period.
"Arch continues to weather the significant market challenges
facing the industry," said John W.
Eaves, Arch's chairman and chief executive officer. "Even
with the lowest shipment level experienced by Arch in more than
five years and shipping challenges in the Powder River Basin, our
operations continued to do an outstanding job of managing costs in
this environment. In fact, all of our operating regions were cash
flow positive during the first half of this year, a position we
think sets us apart from our competitors."
"Our repositioned portfolio of large-scale, low-cost thermal
operations in the PRB and highly competitive metallurgical coal
operations in Appalachia is designed to help allow us to continue
to navigate this challenging market environment," added Eaves.
Financial Position
As of June 30, 2015, Arch had a
total liquidity position of approximately $812 million, with nearly $690 million of that liquidity in the form of
cash and short-term investments. The company had no borrowings
under its revolving credit facility at June
30, and has no long-term debt maturities due until
mid-2018.
"As expected, with both our $60
million LBA payment and our semi-annual interest payments on
the majority of our unsecured debt occurring during the second
quarter, we had our highest cash outflow quarter of the year," said
John T. Drexler, Arch's senior vice
president and chief financial officer. "With the LBA payment behind
us and other working capital improvements anticipated over the
course of the year, we expect a significant moderation in our cash
outflows in the second half of 2015." In addition, the company
continues to pursue private exchange offers to deleverage its
balance sheet and improve its liquidity profile.
"We continue to focus on controlling our costs and capital
spending through this downturn and have reduced our capital and
administrative spending expectations by an additional $27 million for full year 2015," said Drexler.
"These targeted savings align with our overall focus to prudently
manage production levels and costs in the face of one of the worst
coal market downturns in history."
Core Values
During the second quarter of 2015, Arch continued to deliver
solid safety and environmental performance with five operations
attaining A Perfect Zero – a dual achievement of operating
without a safety or environmental violation. Arch's total
incident rate for the first six months of 2015 was four times
better than the industry average. The company also made marked
improvements in its environmental compliance record during the
first half of 2015 when compared with the prior-year
period.
"These achievements reflect the hard work and continued focus of
our employees in the face of significant external distractions and
pressures," said Paul A. Lang,
president and chief operating officer. "Despite current
market challenges, we remain focused on our goal of operating the
world's safest and most environmentally responsible coal
mines."
Operational Results
"While the coal market remains incredibly challenging and
despite lower shipment levels than in the first quarter of 2015, we
continue to perform very well operationally," said Lang. "Per-ton
costs in the Powder River Basin were maintained even with lower
volumes and our Bituminous Thermal operations continued to drive
down costs, while our Appalachian mines experienced higher costs
primarily due to the two expected longwall moves during the
quarter."
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Arch Coal,
Inc.
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2Q15
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1Q15
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2Q14
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Tons sold (in
millions)
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30.6
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33.1
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32.7
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Average sales price
per ton
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$19.65
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$19.18
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$20.34
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Cash cost per
ton
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$16.83
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$15.43
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$17.43
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Cash margin per
ton
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$2.82
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$3.75
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$2.91
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Total operating cost
per ton
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$19.96
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$18.55
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$20.55
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Operating margin
per ton
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($0.31)
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$0.63
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($0.21)
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Consolidated
results may not tie to regional breakout due to exclusion of other
assets, rounding.
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Cash cost per ton
is defined and reconciled under "Reconciliation of non-GAAP
measures."
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Operating cost per
ton is the sum of cash costs and depreciation,
depletion and
amortization expense divided by tons sold.
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Arch's operations continued to generate healthy operational cash
flow margins during the second quarter. On a consolidated basis,
Arch earned $2.82 per ton in cash
margin during the second quarter of 2015 compared with $3.75 per ton in the first quarter of 2015,
reflecting the impact of lower volumes in the company's PRB segment
and two longwall moves in its Appalachian segment. The increase in
consolidated sales price per ton was more than offset by a nearly
eight percent increase in costs resulting from reduced shipment
levels from the PRB segment and the impact of the longwall moves in
Appalachia.
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Powder River
Basin
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2Q15
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1Q15
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2Q14
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Tons sold (in
millions)
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25.5
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28.5
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26.9
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Average sales price
per ton
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$13.24
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$13.48
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$12.79
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Cash cost per
ton
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$10.99
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$10.96
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$11.09
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Cash margin per
ton
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$2.25
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$2.52
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$1.70
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Total operating cost
per ton
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$12.66
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$12.52
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$12.61
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Operating margin
per ton
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$0.58
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$0.96
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$0.18
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Cash cost per ton
is defined and reconciled under "Reconciliation of non-GAAP
measures."
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Operating cost per
ton is the sum of cash costs and depreciation,
depletion and
amortization expense divided by tons sold.
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In the Powder River Basin, second quarter cash margin per ton
decreased 11 percent to $2.25 per ton
versus the first quarter. The decline was due to lower average
selling price per ton, reflecting lower contracted pricing,
particularly on indexed volumes, and a larger percentage of
lower-quality tons in our regional sales mix. Cash costs per ton
were flat, despite the decline in shipment volume, due to
significant reductions in maintenance and supplies costs.
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Appalachia
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2Q15
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1Q15
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2Q14
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Tons sold (in
millions)
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3.1
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3.0
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3.7
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Average sales price
per ton
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$65.83
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$65.23
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$69.36
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Cash cost per
ton
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$62.86
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$52.41
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$62.36
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Cash margin per
ton
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$2.97
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$12.82
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$7.00
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Total operating cost
per ton
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$76.46
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$68.55
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$76.25
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Operating margin
per ton
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($10.63)
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($3.32)
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($6.89)
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Cash cost per ton
is defined and reconciled under "Reconciliation of non-GAAP
measures."
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Operating cost per
ton is the sum of cash costs and depreciation,
depletion and
amortization expense divided by tons sold.
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In Appalachia, Arch's cash margin per ton declined to
$2.97 per ton from $12.82 per ton in the first quarter. Average
selling price per ton increased slightly due to an increase in the
percentage of metallurgical tons in the regional sales mix. The
expected increase in cash cost per ton reflects the lower output at
the two low-cost longwall operations due to the previously
discussed second quarter longwall moves and the start of the annual
miners' vacation period.
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Bituminous
Thermal
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2Q15
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1Q15
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2Q14
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Tons sold (in
millions)
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1.9
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1.6
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2.0
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Average sales price
per ton
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$30.37
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$33.42
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$31.34
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Cash cost per
ton
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$20.15
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$25.00
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$19.83
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Cash margin per
ton
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$10.22
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$8.42
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$11.51
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Total operating cost
per ton
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$25.77
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$31.21
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$24.51
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Operating margin
per ton
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$4.60
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$2.21
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$6.83
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Cash cost per ton
is defined and reconciled under "Reconciliation of non-GAAP
measures."
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Operating cost per
ton is the sum of cash costs and depreciation,
depletion and
amortization expense divided by tons sold.
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In the Bituminous Thermal region, second quarter cash margin per
ton increased 21 percent to $10.22
per ton, primarily due to a 19 percent decrease in cash cost per
ton. The improvement in cash cost per ton was driven by strong cost
control across the segment as well as increased volume levels at
the lower-cost West Elk mine. Average sales price per ton declined
9 percent to $30.37, reflecting lower
pricing on contracted tons.
Market Trends
Economic recovery and a return to normal temperatures are
boosting power demand. However, coal's share of generation has
eroded in the face of low natural gas prices and the impact of the
MATS regulations. According to the EIA, gas's share of generation
in April eclipsed that of coal for the first time on record, and
gas prices remain mired below $3 per
million Btus. As a result, Arch continues to expect a decrease in
domestic utility coal consumption of 80 million tons this
year.
However, while domestic coal demand is down, U.S. producers are
starting to respond. Based on preliminary MSHA data, stockpile
data, and various mine idling announcements, Arch now expects coal
production to fall by over 90 million tons in 2015 compared to
2014. While the company expects coal stockpiles to remain elevated
for some time, strong supply rationalization could lead to a better
domestic thermal market in the future.
Internationally, the seaborne market remains challenging. The
Australian dollar has weakened appreciably against the U.S. dollar,
and Australia's coking coal
benchmark recently settled at $93 per
metric ton, the lowest since 2004. Thermal prices remain under
considerable pressure as well.
"In the face of these challenges, Arch continues to adapt to
market conditions and to focus on those market segments where it
can capture the most value," Lang said.
Company Outlook
Given challenging market conditions, Arch has lowered the high
end of its thermal guidance and now expects thermal sales volumes
for 2015 to be in the range of 120 million to 124 million tons. In
addition, Arch has again lowered its SG&A and capex
guidance.
"We continue to take proactive steps to prudently manage through
these tough times, with the goal of emerging a stronger company as
markets recover," Eaves said. "Our cash-positive operating
profile, relentless focus on cost control and capex management
should enable us to continue to weather the ongoing
challenges."
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2015
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2016
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Tons
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$ per
ton
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Tons
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$ per
ton
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Sales Volume
(in millions tons)
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Thermal
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120.0
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-
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124.0
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Met
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6.0
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-
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6.8
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Total
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126.0
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-
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130.8
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Powder River
Basin
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Committed,
Priced
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105.5
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$13.32
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52.0
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$13.99
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Committed,
Unpriced
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1.6
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14.3
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Total
Committed
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107.1
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66.3
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Average Cash
Cost
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$10.60
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-
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$11.00
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Appalachia
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Committed, Priced
Thermal
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5.6
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$55.69
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2.0
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$58.04
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Committed, Unpriced
Thermal
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-
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-
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Committed, Priced
Metallurgical
|
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5.2
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$77.20
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0.7
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$82.45
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Committed, Unpriced
Metallurgical
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0.4
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0.6
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Total
Committed
|
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11.2
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3.3
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Average Cash
Cost
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$56.75
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-
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$59.75
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Bituminous
Thermal
|
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Committed,
Priced
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6.7
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$32.24
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3.0
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$34.85
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Committed,
Unpriced
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0.2
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-
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Total
Committed
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6.9
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3.0
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Average Cash
Cost
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$23.00
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-
|
$25.00
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Corporate
(in $ millions)
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D,D&A
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$400
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-
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$420
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S,G&A
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|
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|
$95
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-
|
$105
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Interest
Expense
|
|
|
|
|
|
$385
|
-
|
$395
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Capital
Expenditures
|
|
|
|
|
$130
|
-
|
$140
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Liquidated
Damages
|
|
|
|
|
$50
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-
|
$60
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A conference call regarding Arch Coal's second quarter 2015
financial results will be webcast live today at 11 a.m. Eastern time. The conference call can be
accessed via the "investor" section of the Arch Coal website
(http://investor.archcoal.com).
U.S.-based Arch Coal, Inc. is one of the world's top coal
producers for the global steel and power generation industries,
serving customers on five continents. Its network of mining
complexes is the most diversified in the
United States, spanning every major coal basin in the
nation. The company controls more than 5 billion tons of
high-quality metallurgical and thermal coal reserves, with access
to all major railroads, inland waterways and a growing number of
seaborne trade channels. For more information, visit
www.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; from fluctuations in the amount
of cash we generate from operations; from potential demands for
additional collateral for self-bonding; from our ability to
complete our potential exchange offers; 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.
Arch Coal, Inc.
and Subsidiaries
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Condensed
Consolidated Statements of Operations
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(In thousands,
except per share data)
|
|
|
|
|
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|
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
Revenues
|
$ 644,462
|
|
$713,776
|
|
$1,321,467
|
|
$1,449,747
|
|
|
|
|
|
|
|
|
Costs, expenses
and other operating
|
|
|
|
|
|
|
|
Cost of
sales
|
566,252
|
|
622,137
|
|
1,128,574
|
|
1,308,451
|
Depreciation,
depletion and amortization
|
97,372
|
|
102,464
|
|
202,246
|
|
206,887
|
Amortization of
acquired sales contracts, net
|
(1,644)
|
|
(3,239)
|
|
(5,034)
|
|
(6,935)
|
Change in fair value
of coal derivatives and coal trading activities, net
|
1,211
|
|
(2,992)
|
|
2,431
|
|
(2,078)
|
Asset impairment and
mine closure costs
|
19,146
|
|
1,512
|
|
19,146
|
|
1,512
|
Selling, general and
administrative expenses
|
24,268
|
|
29,931
|
|
46,873
|
|
59,067
|
Other operating
(income) expense, net
|
7,403
|
|
(232)
|
|
16,489
|
|
(8,230)
|
|
714,008
|
|
749,581
|
|
1,410,725
|
|
1,558,674
|
|
|
|
|
|
|
|
|
Loss from
operations
|
(69,546)
|
|
(35,805)
|
|
(89,258)
|
|
(108,927)
|
|
|
|
|
|
|
|
|
Interest expense,
net
|
|
|
|
|
|
|
|
Interest
expense
|
(99,574)
|
|
(97,960)
|
|
(198,826)
|
|
(194,431)
|
Interest and
investment income
|
962
|
|
2,036
|
|
3,335
|
|
3,879
|
|
(98,612)
|
|
(95,924)
|
|
(195,491)
|
|
(190,552)
|
|
|
|
|
|
|
|
|
Nonoperating
expense
|
|
|
|
|
|
|
|
Expenses related to
debt restructuring
|
(4,016)
|
|
-
|
|
(4,016)
|
|
-
|
|
|
|
|
|
|
|
|
Loss before income
taxes
|
(172,174)
|
|
(131,729)
|
|
(288,765)
|
|
(299,479)
|
Benefit from income
taxes
|
(4,071)
|
|
(34,869)
|
|
(7,467)
|
|
(78,480)
|
|
|
|
|
|
|
|
|
Net
loss
|
$(168,103)
|
|
$ (96,860)
|
|
$ (281,298)
|
|
$ (220,999)
|
|
|
|
|
|
|
|
|
Net loss per
common share
|
|
|
|
|
|
|
|
Basic and diluted LPS
- Net loss
|
$ (0.79)
|
|
$ (0.46)
|
|
$ (1.32)
|
|
$ (1.04)
|
|
|
|
|
|
|
|
|
Basic and diluted
weighted average shares outstanding
|
212,914
|
|
212,225
|
|
212,788
|
|
212,198
|
|
|
|
|
|
|
|
|
Dividends declared
per common share
|
$
-
|
|
$
-
|
|
$
-
|
|
$ 0.01
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
(A)
|
$ 45,328
|
|
$ 64,932
|
|
$ 127,100
|
|
$ 92,537
|
Adjusted diluted
Loss per common share (A)
|
$ (0.73)
|
|
$ (0.46)
|
|
$ (1.27)
|
|
$ (1.06)
|
|
(A) Adjusted EBITDA
and Adjusted diluted Loss 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)
|
|
|
|
|
|
June
30,
|
|
December
31,
|
|
2015
|
|
2014
|
|
(Unaudited)
|
Assets
|
|
|
|
Current
assets
|
|
|
|
Cash and cash
equivalents
|
$ 439,655
|
|
$ 734,231
|
Short term
investments
|
249,754
|
|
248,954
|
Restricted
cash
|
43,563
|
|
5,678
|
Trade accounts
receivable
|
204,593
|
|
211,506
|
Other
receivables
|
14,948
|
|
20,511
|
Inventories
|
223,929
|
|
190,253
|
Prepaid
royalties
|
9,006
|
|
11,118
|
Deferred income
taxes
|
47,277
|
|
52,728
|
Coal derivative
assets
|
13,358
|
|
13,257
|
Other current
assets
|
50,838
|
|
54,515
|
Total current
assets
|
1,296,921
|
|
1,542,751
|
|
|
|
|
Property, plant
and equipment, net
|
6,341,026
|
|
6,453,458
|
|
|
|
|
Other
assets
|
|
|
|
Prepaid
royalties
|
52,956
|
|
66,806
|
Equity
investments
|
227,788
|
|
235,842
|
Other noncurrent
assets
|
117,664
|
|
130,866
|
Total other
assets
|
398,408
|
|
433,514
|
Total
assets
|
$ 8,036,355
|
|
$ 8,429,723
|
|
|
|
|
Liabilities and
Stockholders' Equity
|
|
|
|
Current
liabilities
|
|
|
|
Accounts
payable
|
$ 156,725
|
|
$ 180,113
|
Accrued expenses and
other current liabilities
|
262,958
|
|
302,396
|
Current maturities of
debt
|
31,763
|
|
36,885
|
Total current
liabilities
|
451,446
|
|
519,394
|
Long-term
debt
|
5,114,581
|
|
5,123,485
|
Asset retirement
obligations
|
409,435
|
|
398,896
|
Accrued pension
benefits
|
13,580
|
|
16,260
|
Accrued
postretirement benefits other than pension
|
34,176
|
|
32,668
|
Accrued workers'
compensation
|
97,489
|
|
94,291
|
Deferred income
taxes
|
411,930
|
|
422,809
|
Other noncurrent
liabilities
|
109,693
|
|
153,766
|
Total
liabilities
|
6,642,330
|
|
6,761,569
|
|
|
|
|
Stockholders'
equity
|
|
|
|
Common
Stock
|
2,145
|
|
2,141
|
Paid-in
capital
|
3,051,805
|
|
3,048,460
|
Treasury stock, at
cost
|
(53,863)
|
|
(53,863)
|
Accumulated
deficit
|
(1,613,123)
|
|
(1,331,825)
|
Accumulated other
comprehensive income
|
7,061
|
|
3,241
|
Total
stockholders' equity
|
1,394,025
|
|
1,668,154
|
Total liabilities and
stockholders' equity
|
$ 8,036,355
|
|
$ 8,429,723
|
Arch Coal, Inc.
and Subsidiaries
|
Condensed
Consolidated Statements of Cash Flows
|
(In
thousands)
|
|
|
|
|
|
|
|
|
|
Six Months Ended
June 30,
|
|
2015
|
|
2014
|
|
(Unaudited)
|
Operating
activities
|
|
|
|
Net loss
|
$(281,298)
|
|
$(220,999)
|
Adjustments to
reconcile to cash provided by operating activities:
|
|
|
|
Depreciation,
depletion and amortization
|
202,246
|
|
206,887
|
Amortization of
acquired sales contracts, net
|
(5,034)
|
|
(6,935)
|
Prepaid royalties
expensed
|
3,939
|
|
3,575
|
Employee stock-based
compensation expense
|
3,354
|
|
5,469
|
Asset impairment and
non-cash mine closure costs
|
17,242
|
|
1,512
|
Expenses related to
debt restructuring
|
4,016
|
|
—
|
Gains on disposals
and divestitures
|
(1,325)
|
|
(18,506)
|
Amortization relating
to financing activities
|
12,539
|
|
7,757
|
Changes
in:
|
|
|
|
Receivables
|
12,433
|
|
267
|
Inventories
|
(33,743)
|
|
3,522
|
Accounts
payable, accrued expenses and other current liabilities
|
(56,419)
|
|
10,495
|
Income taxes,
net
|
(37)
|
|
(571)
|
Deferred
income taxes
|
(7,510)
|
|
(78,568)
|
Other
|
4,022
|
|
7,749
|
Cash used in
operating activities
|
(125,575)
|
|
(78,346)
|
|
|
|
|
Investing
activities
|
|
|
|
Capital
expenditures
|
(99,361)
|
|
(95,746)
|
Additions to prepaid
royalties
|
(409)
|
|
(3,341)
|
Proceeds from
disposals and dispositions
|
991
|
|
43,245
|
Purchases of short
term investments
|
(161,336)
|
|
(168,951)
|
Proceeds from sales
of short term investments
|
157,729
|
|
166,018
|
Investments in and
advances to affiliates, net
|
(5,138)
|
|
(9,501)
|
Cash used in
investing activities
|
(107,524)
|
|
(68,276)
|
|
|
|
|
Financing
activities
|
|
|
|
Payments on term
loan
|
(9,750)
|
|
(9,750)
|
Net payments on other
debt
|
(9,826)
|
|
(9,390)
|
Expenses related to
debt restructuring
|
(4,016)
|
|
—
|
Debt financing
costs
|
—
|
|
(1,957)
|
Dividends
paid
|
—
|
|
(2,123)
|
Withdrawals
(deposits) of restricted cash
|
(37,885)
|
|
(1,103)
|
Cash used in
financing activities
|
(61,477)
|
|
(24,323)
|
|
|
|
|
Decrease in cash and
cash equivalents
|
(294,576)
|
|
(170,945)
|
Cash and cash
equivalents, beginning of period
|
734,231
|
|
911,099
|
|
|
|
|
Cash and cash
equivalents, end of period
|
$ 439,655
|
|
$ 740,154
|
Arch Coal, Inc.
and Subsidiaries
|
Schedule of
Consolidated Debt
|
(In
thousands)
|
|
|
|
|
|
|
|
June
30,
|
|
December
31,
|
|
|
2015
|
|
2014
|
|
|
(Unaudited)
|
|
|
|
|
|
Term loan due 2018
($1.9 billion and $1.93 billion face value,
respectively)
|
|
$ 1,883,109
|
|
$ 1,890,846
|
7.00% senior notes
due 2019 at par
|
|
1,000,000
|
|
1,000,000
|
9.875% senior notes
($375.0 million face value) due 2019
|
|
364,517
|
|
363,493
|
8.00% senior secured
notes due 2019 at par
|
|
350,000
|
|
350,000
|
7.25% senior notes
due 2020 at par
|
|
500,000
|
|
500,000
|
7.25% senior notes
due 2021 at par
|
|
1,000,000
|
|
1,000,000
|
Other
|
|
48,718
|
|
56,031
|
|
|
5,146,344
|
|
5,160,370
|
Less: current
maturities of debt
|
31,763
|
|
36,885
|
Long-term
debt
|
|
$ 5,114,581
|
|
$ 5,123,485
|
|
|
|
|
|
Calculation of net
debt
|
|
|
|
|
Total debt
|
|
$ 5,146,344
|
|
$ 5,160,370
|
Less liquid
assets:
|
|
|
|
|
Cash and cash
equivalents
|
|
439,655
|
|
734,231
|
Short term
investments
|
|
249,754
|
|
248,954
|
|
|
689,409
|
|
983,185
|
Net debt
|
|
$ 4,456,935
|
|
$ 4,177,185
|
Arch Coal, Inc.
and Subsidiaries
|
Reconciliation of
Non-GAAP Measures
|
(In thousands,
except per share data)
|
|
Included in the
accompanying release, we have disclosed certain non-GAAP measures
as defined by Regulation G. The
following reconciles these items to net income and cash flows as
reported under GAAP.
|
|
Adjusted
EBITDA
|
|
Adjusted EBITDA is
defined as net income attributable to the Company before the effect
of net interest expense, income taxes, depreciation, depletion and amortization, and
the amortization of acquired sales contracts. Adjusted
EBITDA may also be adjusted for
items that may not reflect the trend of future results.
|
|
Adjusted EBITDA is
not a measure of financial performance in accordance with generally
accepted accounting principles,
and items excluded from Adjusted EBITDA are significant in
understanding and assessing our financial condition. Therefore, Adjusted EBITDA 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. We believe that
Adjusted EBITDA presents a useful measure of our ability to incur
and service debt based on ongoing
operations. Furthermore, analogous measures are used by industry
analysts to evaluate our operating
performance. In addition, acquisition related expenses are excluded
to make results more comparable between periods. Investors should be aware that
our presentation of Adjusted EBITDA may not be comparable to
similarly titled measures used by other
companies. The table below shows how we calculate Adjusted
EBITDA.
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
(Unaudited)
|
|
(Unaudited)
|
Net loss
|
$ (168,103)
|
|
$ (96,860)
|
|
$ (281,298)
|
|
$ (220,999)
|
Benefit from income
taxes
|
(4,071)
|
|
(34,869)
|
|
(7,467)
|
|
(78,480)
|
Interest expense,
net
|
98,612
|
|
95,924
|
|
195,491
|
|
190,552
|
Depreciation,
depletion and amortization
|
97,372
|
|
102,464
|
|
202,246
|
|
206,887
|
Amortization of
acquired sales contracts, net
|
(1,644)
|
|
(3,239)
|
|
(5,034)
|
|
(6,935)
|
Asset impairment and
mine closure costs
|
19,146
|
|
1,512
|
|
19,146
|
|
1,512
|
Expenses related to
debt restructuring
|
4,016
|
|
-
|
|
4,016
|
|
-
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
$ 45,328
|
|
$ 64,932
|
|
$ 127,100
|
|
$ 92,537
|
|
Adjusted net loss
and adjusted diluted loss per share
|
|
Adjusted net loss and
adjusted diluted loss per common share are adjusted for the
after-tax impact of asset impairments and items relating to significant transactions and are not
measures of financial performance in accordance with generally
accepted accounting principles. We believe that adjusted net loss
and adjusted diluted loss per common share better reflect the trend
of our future results. The
adjustments made to arrive at these measures are significant in
understanding and assessing our financial condition.
Therefore, adjusted net loss and adjusted
diluted loss per share should not be considered in isolation, nor
as an alternative to net loss or
diluted loss per common share under generally accepted accounting
principles.
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
(Unaudited)
|
|
(Unaudited)
|
Net
loss
|
$ (168,103)
|
|
$ (96,860)
|
|
$ (281,298)
|
|
$ (220,999)
|
|
|
|
|
|
|
|
|
Amortization of
acquired sales contracts, net
|
(1,644)
|
|
(3,239)
|
|
(5,034)
|
|
(6,935)
|
Asset impairment and
mine closure costs
|
19,146
|
|
1,512
|
|
19,146
|
|
1,512
|
Expenses related to
debt restructuring
|
4,016
|
|
-
|
|
4,016
|
|
-
|
Tax impact of
adjustment
|
(7,746)
|
|
622
|
|
(6,526)
|
|
1,952
|
|
|
|
|
|
|
|
|
Adjusted net
loss
|
$ (154,331)
|
|
$ (97,965)
|
|
$ (269,696)
|
|
$ (224,470)
|
|
|
|
|
|
|
|
|
Diluted weighted
average shares outstanding
|
212,914
|
|
212,225
|
|
212,788
|
|
212,198
|
|
|
|
|
|
|
|
|
Diluted loss per
share
|
$
(0.79)
|
|
$ (0.46)
|
|
$
(1.32)
|
|
$
(1.04)
|
|
|
|
|
|
|
|
|
Amortization of
acquired sales contracts, net
|
(0.01)
|
|
(0.02)
|
|
(0.02)
|
|
(0.03)
|
Asset impairment and
mine closure costs
|
0.09
|
|
0.01
|
|
0.09
|
|
0.01
|
Expenses related to
debt restructuring
|
0.02
|
|
-
|
|
0.02
|
|
-
|
Tax impact of
adjustments
|
(0.04)
|
|
0.01
|
|
(0.03)
|
|
0.01
|
Adjusted diluted loss
per share
|
$
(0.73)
|
|
$ (0.46)
|
|
$
(1.27)
|
|
$
(1.06)
|
|
Cash costs per
ton
|
Cash costs per ton
exclude the costs of depreciation, depletion and amortization and
pass-through transportation costs, and may be adjusted for other
items that, due to accounting rules, are classified in "Other
operating (income) expense, net" on the statement of operations,
but relate directly to the costs incurred to produce coal. Cash
costs per ton are not measures of financial performance in
accordance with generally accepted accounting principles. We
believe cash costs per ton better reflect our controllable costs
and our operating results by including all cash costs incurred to
produce coal. The adjustments made to arrive at these measures are
significant in understanding and assessing our financial
condition. Therefore, cash costs per ton should not be
considered in isolation, nor as an alternative to cost of sales per
ton under generally accepted accounting principles.
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
(Unaudited)
|
|
(Unaudited)
|
Cost of sales on
condensed consolidated statements of operations
|
$ 566,252
|
|
$ 622,137
|
|
$ 1,128,574
|
|
$ 1,308,451
|
Transportation costs
billed to customers
|
(44,256)
|
|
(50,613)
|
|
(87,329)
|
|
(157,573)
|
Settlements of
heating oil derivatives used to manage diesel fuel purchase price
risk
|
986
|
|
1,684
|
|
2,210
|
|
3,563
|
Other (other
operating segments, operating overhead, land management,
etc.)
|
(8,566)
|
|
(3,929)
|
|
(18,304)
|
|
(8,741)
|
|
|
|
|
|
|
|
|
Total cash
costs
|
$ 514,416
|
|
$ 569,279
|
|
$ 1,025,151
|
|
$ 1,145,700
|
Total tons
sold
|
30,573
|
|
32,663
|
|
63,681
|
|
64,020
|
Total cash cost per
ton
|
$ 16.83
|
|
$ 17.43
|
|
$ 16.10
|
|
$ 17.90
|
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SOURCE Arch Coal, Inc.