ST. LOUIS, Feb. 6, 2020 /PRNewswire/ -- Arch Coal, Inc.
(NYSE: ARCH) today reported a net loss of $8.6 million, or $0.57 per diluted share, in the fourth quarter of
2019, compared with net income of $86.1
million, or $4.44 per diluted
share, in the prior-year period. Included in the company's
fourth quarter results was a loss of $9.0
million associated with the December sale of its Coal-Mac
thermal operations. Arch had adjusted earnings before
interest, taxes, depreciation, depletion, amortization, accretion
on asset retirement obligations, amortization of sales contracts,
and non-operating expenses ("adjusted EBITDA") 1 of
$43.7 million in the fourth quarter
of 2019, which includes a $1.3
million non-cash mark-to-market loss associated with the
company's coal-hedging activities. This compares to
$122.6 million of adjusted EBITDA
recorded in the fourth quarter of 2018, which included a
$13.0 million non-cash mark-to-market
gain associated with the company's coal-hedging activities.
Revenues totaled $549.5 million
for the three months ended December 31,
2019, versus $651.0 million in
the prior-year quarter.
"Arch wrapped up a strong 2019 financial performance with solid
fourth quarter results, even as it executed a major operational
transition at its Mountain Laurel metallurgical mine and despite
lower metallurgical pricing," said John W.
Eaves, Arch's chief executive officer. "Excluding
Mountain Laurel, Arch's metallurgical portfolio achieved costs
below $60 per ton for the quarter –
including another mid-$40 per-ton
cost performance at the Leer mine – and delivered cash margins from
its coking coal segment in excess of $30 per ton."
As previously announced, Mountain Laurel embarked upon a
transition from longwall to room-and-pillar mining during the
quarter, and brought that process to a successful conclusion in
January. This conversion to room-and-pillar mining should
translate into lower costs, enhanced product quality, and a more
consistent operating performance.
In addition, Arch bought back $10.5
million of stock and made dividend payments totaling
$8.0 million. In the past 11
quarters, Arch has bought back a total of 10.1 million shares, or
40 percent of its initial shares outstanding, and returned a total
of $913.3 million, including
dividends, to shareholders.
"We are proud of the great progress we've made in returning
capital to shareholders since initiating our capital return program
in May 2017," Eaves said. "With
the recent pullback in metallurgical prices, we expect to allocate
most of our excess cash in 2020 to the accelerated build-out of
Leer South, which promises to greatly enhance the long-term,
cash-generating capabilities of our metallurgical portfolio."
Arch expects to invest $220
million at Leer South during 2020 and expects longwall
mining to commence in the third quarter of 2021.
Financial and Liquidity Update
At year-end 2019, Arch had invested a total of $827.4 million since May
2017 to buy back 10.1 million shares while returning an
additional $85.9 million to
shareholders through its recurring quarterly dividend.
Arch ended the year with total liquidity of $412.1 million, including $288.7 million in cash.
"With our premier, high-margin metallurgical portfolio and
low-cost, legacy thermal assets, Arch is well-equipped to fund its
Leer South growth project with internal funding, even in a softer
market environment," said John T.
Drexler, Arch's chief financial officer.
In addition, Arch expects to monetize its recently announced
$39 million land settlement with the
federal government during the course of 2020.
Looking ahead, the board has approved an 11 percent increase in
its quarterly dividend, bringing the quarterly cash dividend
payment to $0.50 per share.
Since launching the capital return program, Arch has increased the
quarterly dividend rate three times, by a total of 43 percent.
The next quarterly cash dividend payment of $0.50 per share of common stock is scheduled to
be paid on March 13, 2020 to
stockholders of record at the close of business on March 3, 2020.
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.
Operational Results
"During 2019, Arch took significant strides to further enhance
the competitive position of its core metallurgical segment – moving
into thicker reserves at the Leer mine, transitioning Mountain
Laurel to a room-and-pillar operation, and launching the
development of Leer South," said Paul A.
Lang, Arch's president and chief operating officer.
"At the same time, we continued to exhibit strong cost control and
solid capital discipline in our thermal segments, which allowed us
to generate segment-level EBITDA from our thermal assets more than
$100 million in excess of capital
expenditures during 2019."
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Metallurgical
|
|
|
|
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4Q19
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3Q19
|
|
|
4Q18
|
|
|
|
|
|
|
|
|
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Tons sold (in
millions)
|
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2.0
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2.1
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|
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2.1
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Coking
|
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1.8
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1.9
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1.9
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Thermal
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0.2
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0.2
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0.2
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Coal sales per ton
sold
|
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$90.51
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|
$98.89
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$121.53
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Coking
|
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$97.39
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$105.71
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$130.49
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Thermal
|
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$33.25
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|
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$32.17
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$37.83
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Cash cost per ton
sold
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$70.02
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$64.89
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$74.84
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Cash margin per
ton
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$20.49
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$34.00
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$46.69
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Coal sales per ton
sold and cash cost per ton sold are defined and reconciled under
"Reconciliation of non-GAAP measures."
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Mining complexes
included in this segment are Beckley, Leer, Mountain Laurel and
Sentinel.
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During the fourth quarter, Arch's metallurgical segment
performed well even as it initiated an earlier-than-anticipated
transition to room-and-pillar mining at its Mountain Laurel
operation and despite weaker metallurgical market
conditions.
While the longwall removal process at Mountain Laurel proved
complex, the transition to room-and-pillar mining is off to a
strong start. Four continuous miners were operating
efficiently in room-and-pillar configuration at year-end, with the
fifth and final unit expected to start up in March.
As a result of geologic conditions in the final longwall panel,
Mountain Laurel was unable to recover 123 of the longwall system's
176 hydraulic shields. The company is finalizing a claim
under its insurance policy of $30 to
$35 million that will cover the
amount of capital required for the new shields, and expects to be
successful with that claim.
Arch expects to produce 6.8 to 7.2 million tons of coking coal
in 2020, with per-ton cash costs for the full year of between
$58.00 and $62.00. Metallurgical shipments are
expected to be lower-than-ratable in the first quarter of 2020 due
to seasonal dock closures on the Great Lakes that will act to
reduce North American volumes, as well as the projected timing of
certain other commitments.
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Powder River
Basin
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4Q19
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3Q19
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4Q18
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Tons sold (in
millions)
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18.1
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22.2
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19.5
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Coal sales per ton
sold
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$12.07
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$12.02
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$11.88
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Cash cost per ton
sold
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$10.70
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$9.77
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$10.66
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Cash margin per
ton
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$1.37
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$2.25
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$1.22
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Coal sales per ton
sold and cash cost per ton sold are defined and reconciled under
"Reconciliation of non-GAAP measures."
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Mining complexes
included in this segment are Black Thunder and Coal
Creek.
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In the Powder River Basin, sales volumes for the fourth quarter
of 2019 totaled 18.1 million tons compared to 22.2 million tons in
the third quarter of 2019, which benefited from strong seasonal
demand. Cash costs averaged $10.70 per ton sold compared to $9.77 per ton sold in the third quarter.
The segment's average cash margin for the quarter was $1.37 per ton.
Looking ahead, Arch expects cash costs of between $10.90 and $11.30
per ton in its PRB segment during 2020, which includes the impact
of recently enacted excise tax increases. Given the mild
start to winter and currently depressed natural gas prices, the
company expects its PRB segment to experience lower-than-ratable
volumes and higher-than-ratable costs in the first quarter of
2020.
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Other
Thermal
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4Q19
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3Q19
|
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4Q18
|
|
|
|
|
|
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|
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Tons sold (in
millions)
|
|
2.1
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2.0
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2.3
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Coal sales per ton
sold
|
|
$35.41
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|
|
$39.52
|
|
|
$34.89
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Cash cost per ton
sold
|
|
$31.81
|
|
|
$31.16
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|
|
$28.76
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Cash margin per
ton
|
|
$3.60
|
|
|
$8.36
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|
$6.13
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|
|
|
|
|
|
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Coal sales per ton
sold and cash cost per ton sold are defined and reconciled under
"Reconciliation of non-GAAP measures."
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Mining complexes
included in this segment are Coal-Mac, Viper and West
Elk.
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In the Other Thermal segment, the average cash margin declined
to $3.60 per ton in the fourth
quarter of 2019 versus $8.36 per ton
in the third quarter of 2019, due primarily to a shift in product
mix and lower export-related pricing at the West Elk
mine.
Arch is guiding to average operating costs of $25.00 to $29.00
per ton for full year 2020, which reflects the sale of Coal-Mac in
December 2019. At year-end, the Other Thermal segment had 3.5
million tons committed for delivery in 2020, including 3.1 million
tons committed at a fixed price of $33.65 per ton.
Progress at Leer South
During 2019, Arch invested $103
million in the build-out of Leer South, and expects to
invest another $220 million in
2020. Total capex for Leer South is projected at between
$360 million and $390 million.
"We continue to make excellent progress in developing Leer
South, which we consider to be the industry's premier growth
project," Lang said. "We are well on track for the
commencement of longwall operations at the new mine in the third
quarter of 2021. Even at today's weaker assessed High-Vol A
metallurgical prices, we would expect Leer South to generate
margins of approximately $45 per ton
if the longwall were online today."
With the addition of Leer South, Arch expects to expand its
High-Vol A output by an incremental 3 million tons; enhance its
already advantageous position on the U.S. cost curve; strengthen
its coking coal profit margins across a wide range of market
conditions; and cement its position as the leading supplier of
High-Vol A coking coal globally.
Market Developments
After a significant pullback in the back half of 2019,
metallurgical markets have rebounded modestly since the start of
the year, although ongoing concerns about the coronavirus and its
potential impact on the global economy remain significant,
near-term risks. The assessed price of the High-Vol A
metallurgical product – which comprises nearly 70 percent of Arch's
metallurgical product mix – has increased nearly 10 percent since
January 1, and other metallurgical
qualities have strengthened as well.
At year-end, Arch had committed to supply 1.8 million tons of
its metallurgical products to North American customers in 2020, at
a fixed price of approximately $107
per ton. In addition, Arch had committed to move 2.4 million
tons of its metallurgical products into the seaborne market, with
2.2 million tons of that total at a market-based pricing structure
and 200,000 tons of its lower-quality metallurgical products at a
fixed price of approximately $83 per
ton.
"We are pleased with the balance we have achieved to date in our
2020 metallurgical sales book," Lang said. "We have built a
strong foundation of fixed-price business in North America at advantageous prices given
current market conditions, and have complemented that with a solid
start to our contracting efforts in seaborne markets, where
market-based pricing structures provide us with exposure to
potential future strengthening in metallurgical markets," Lang
said.
In its thermal segments, Arch is more than 80 percent committed
at current volume guidance levels, with 58.1 million tons of PRB
coal committed at $12.22 per ton.
Outlook
"Heading into 2020, we are sharply focused on demonstrating
continued operational excellence across our entire mine portfolio
while advancing our well-defined strategy for long-term value
creation and growth," Eaves said. "We are driving forward
with our efforts to further reduce the cost structure of our
metallurgical segment; enhance our metallurgical portfolio's
already significant cash-generating capabilities through the
build-out of Leer South; generate significant levels of cash at our
low-cost thermal assets; prepare those assets for an increasingly
challenging market environment through the completion of the
synergistic joint venture with Peabody; and maintain our
industry-leading balance sheet strength. In short, we are
working aggressively to strengthen our performance across a range
of significant operational and financial metrics in our ongoing
efforts to maximize long-term value creation for our
shareholders."
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2020
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Tons
|
$ per ton
|
Sales Volume
(in millions of tons)
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Coking
|
|
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|
6.8
|
-
|
7.2
|
|
|
Thermal
|
|
|
|
76.0
|
-
|
80.0
|
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|
Total
|
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|
|
82.8
|
|
87.2
|
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Metallurgical
(in millions of tons)
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Committed, Priced
Coking North American
|
|
|
1.8
|
|
$107.11
|
Committed, Unpriced
Coking North American
|
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|
-
|
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Committed, Priced
Coking Seaborne
|
|
|
|
0.2
|
|
$83.44
|
Committed, Unpriced
Coking Seaborne
|
|
|
2.2
|
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|
Total Committed
Coking
|
|
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4.2
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Committed, Priced
Thermal Byproduct
|
|
|
0.1
|
|
$19.74
|
Committed, Unpriced
Thermal Byproduct
|
|
|
0.4
|
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Total Committed
Thermal Byproduct
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0.5
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Average Metallurgical
Cash Cost
|
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|
$58.00 -
$62.00
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Powder River Basin
(in millions of tons)
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Committed,
Priced
|
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58.1
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|
$12.22
|
Committed,
Unpriced
|
|
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|
1.8
|
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Total
Committed
|
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59.9
|
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Average Cash
Cost
|
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|
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|
$10.90 -
$11.30
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|
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|
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|
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Other Thermal
(in millions of tons)
|
|
|
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Committed,
Priced
|
|
|
|
|
|
3.1
|
|
$33.65
|
Committed,
Unpriced
|
|
|
|
|
0.4
|
|
|
Total
Committed
|
|
|
|
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|
3.5
|
|
|
Average Cash
Cost
|
|
|
|
|
|
$25.00 -
$29.00
|
|
|
|
|
|
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|
Corporate (in $
millions)
|
|
|
|
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|
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D,D&A
|
|
|
|
$120.0
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-
|
$125.0
|
|
|
ARO
Accretion
|
|
|
|
$18.0
|
-
|
$20.0
|
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|
S,G&A -
cash
|
|
|
|
$72.0
|
-
|
$76.0
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|
S,G&A -
non-cash
|
|
|
|
$18.0
|
-
|
$20.0
|
|
|
Net Interest
Expense
|
|
|
$8.0
|
-
|
$10.0
|
|
|
Capital
Expenditures
|
|
|
$300.0
|
-
|
$320.0
|
|
|
Tax Provision
(%)
|
|
|
|
Approximately
0%
|
|
|
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Note: 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 include
transportation costs, which are a component of GAAP cost of sales.
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. In addition, 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 are additional reconciling items for
Segment cash cost per ton sold. 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
varied 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
2020.
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A conference call regarding Arch Coal's fourth quarter and full
year 2019 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).
U.S.-based Arch Coal, Inc. is a top coal producer for the global
steel and power generation industries. Arch operates a
streamlined portfolio of large-scale, low-cost mining complexes
that produce high-quality metallurgical coals in Appalachia and
low-emitting thermal coals in the Powder River Basin and other
strategic supply regions. 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 "should," "appears,"
"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 and steel industries; from
legislation and regulations relating to the Clean Air Act and other
environmental initiatives; from competition within our industry and
with producers of competing energy sources; from our ability to
successfully acquire or develop coal reserves; from operational,
geological, permit, labor and weather-related factors; from the Tax
Cuts and Jobs Act and other tax reforms; from the effects of
foreign and domestic trade policies, actions or disputes; from
fluctuations in the amount of cash we generate from operations,
which could impact, among other things, our ability to pay
dividends or repurchase shares in accordance with our announced
capital allocation plan; from our ability to successfully integrate
the operations that we acquire; from our ability to complete the
joint venture transaction with Peabody Energy in a timely manner,
including obtaining regulatory approvals and satisfying other
closing conditions; from our ability to achieve expected synergies
from the joint venture; from our ability to successfully integrate
the operations of certain mines in the joint venture; 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.
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1
Adjusted EBITDA is defined and reconciled in the "Reconciliation
of Non-GAAP measures" in this release.
|
Arch Coal, Inc.
and Subsidiaries
|
Condensed
Consolidated Statements of Operations
|
(In thousands,
except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
December 31,
|
|
Twelve Months
Ended December 31,
|
|
2019
|
2018
|
|
2019
|
2018
|
|
(Unaudited)
|
|
(Unaudited)
|
|
|
|
|
|
|
|
Revenues
|
$
549,480
|
$650,963
|
|
$2,294,352
|
$2,451,787
|
|
|
|
|
|
|
Costs, expenses
and other operating
|
|
|
|
|
|
Cost of sales
(exclusive of items shown separately below)
|
492,454
|
514,005
|
|
1,873,017
|
1,925,202
|
Depreciation,
depletion and amortization
|
29,856
|
27,536
|
|
112,055
|
119,563
|
Accretion on asset
retirement obligations
|
5,137
|
6,993
|
|
20,548
|
27,970
|
Amortization of sales
contracts, net
|
(357)
|
1,567
|
|
(434)
|
11,107
|
Change in fair value
of coal derivatives and coal trading activities, net
|
1,250
|
(13,024)
|
|
(18,601)
|
9,118
|
Selling, general and
administrative expenses
|
21,917
|
26,687
|
|
95,781
|
100,300
|
Costs related to
proposed joint venture with Peabody Energy
|
7,044
|
-
|
|
13,816
|
-
|
Loss on sale of
Coal-Mac LLC
|
9,008
|
-
|
|
9,008
|
-
|
Loss on sale of Lone
Mountain Processing LLC
|
-
|
-
|
|
4,304
|
-
|
Preference Rights
Lease Application settlement income
|
-
|
-
|
|
(39,000)
|
-
|
Other operating
(income) expense, net
|
(9,869)
|
709
|
|
(19,012)
|
(20,611)
|
|
556,440
|
564,473
|
|
2,051,482
|
2,172,649
|
|
|
|
|
|
|
Income (loss) from
operations
|
(6,960)
|
86,490
|
|
242,870
|
279,138
|
|
|
|
|
|
|
Interest expense,
net
|
|
|
|
|
|
Interest
expense
|
(3,629)
|
(4,847)
|
|
(16,485)
|
(20,471)
|
Interest and
investment income
|
1,751
|
2,156
|
|
9,691
|
6,782
|
|
(1,878)
|
(2,691)
|
|
(6,794)
|
(13,689)
|
|
|
|
|
|
|
Income (loss) before
nonoperating expenses
|
(8,838)
|
83,799
|
|
236,076
|
265,449
|
|
|
|
|
|
|
Nonoperating
(expenses) income
|
|
|
|
|
|
Non-service related
pension and postretirement benefit (costs) credits
|
74
|
(996)
|
|
(2,053)
|
(3,202)
|
Net loss resulting
from early retirement of debt and debt restructuring
|
-
|
-
|
|
-
|
(485)
|
Reorganization items,
net
|
(47)
|
(60)
|
|
24
|
(1,661)
|
|
27
|
(1,056)
|
|
(2,029)
|
(5,348)
|
|
|
|
|
|
|
Income (loss) before
income taxes
|
(8,811)
|
82,743
|
|
234,047
|
260,101
|
Provision for
(benefit from) income taxes
|
(260)
|
(3,351)
|
|
248
|
(52,476)
|
|
|
|
|
|
|
Net income
(loss)
|
$
(8,551)
|
$
86,094
|
|
$
233,799
|
$
312,577
|
|
|
|
|
|
|
Net income (loss)
per common share
|
|
|
|
|
|
Basic
EPS
|
$
(0.57)
|
$
4.69
|
|
$
14.42
|
$
15.90
|
Diluted
EPS
|
$
(0.57)
|
$
4.44
|
|
$
13.52
|
$
15.15
|
|
|
|
|
|
|
Weighted average
shares outstanding
|
|
|
|
|
|
Basic weighted
average shares outstanding
|
15,097
|
18,344
|
|
16,218
|
19,663
|
Diluted weighted
average shares outstanding
|
15,097
|
19,396
|
|
17,298
|
20,629
|
|
|
|
|
|
|
Dividends declared
per common share
|
$
0.45
|
$
0.40
|
|
$
1.80
|
$
1.60
|
|
|
|
|
|
|
Adjusted EBITDA
(A)
|
$
43,728
|
$122,586
|
|
$
363,167
|
$
437,778
|
|
(A) Adjusted EBITDA
is 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,
|
|
2019
|
2018
|
|
(Unaudited)
|
|
Assets
|
|
|
Current
assets
|
|
|
Cash and cash
equivalents
|
$
153,020
|
$
264,937
|
Short-term
investments
|
135,667
|
162,797
|
Trade accounts
receivable
|
168,125
|
200,904
|
Other
receivables
|
21,143
|
48,926
|
Inventories
|
130,898
|
125,470
|
Other current
assets
|
97,894
|
75,749
|
Total current
assets
|
706,747
|
878,783
|
|
|
|
Property, plant
and equipment, net
|
984,509
|
834,828
|
|
|
|
Other
assets
|
|
|
Equity
investments
|
105,588
|
104,676
|
Other noncurrent
assets
|
70,912
|
68,773
|
Total other
assets
|
176,500
|
173,449
|
Total
assets
|
$
1,867,756
|
$
1,887,060
|
|
|
|
Liabilities and
Stockholders' Equity
|
|
|
Current
liabilities
|
|
|
Accounts
payable
|
$
133,060
|
$
128,024
|
Accrued expenses and
other current liabilities
|
157,167
|
183,514
|
Current maturities of
debt
|
20,753
|
17,797
|
Total current
liabilities
|
310,980
|
329,335
|
Long-term
debt
|
290,066
|
300,186
|
Asset retirement
obligations
|
242,432
|
230,304
|
Accrued pension
benefits
|
5,476
|
16,147
|
Accrued
postretirement benefits other than pension
|
80,567
|
83,163
|
Accrued workers'
compensation
|
215,599
|
174,303
|
Other noncurrent
liabilities
|
82,100
|
48,801
|
Total
liabilities
|
1,227,220
|
1,182,239
|
|
|
|
Stockholders'
equity
|
|
|
Common
Stock
|
252
|
250
|
Paid-in
capital
|
730,551
|
717,492
|
Retained
earnings
|
731,425
|
527,666
|
Treasury stock, at
cost
|
(827,381)
|
(583,883)
|
Accumulated other
comprehensive income
|
5,689
|
43,296
|
Total stockholders'
equity
|
640,536
|
704,821
|
Total liabilities and
stockholders' equity
|
$
1,867,756
|
$
1,887,060
|
Arch Coal, Inc.
and Subsidiaries
|
Condensed
Consolidated Statements of Cash Flows
|
(In
thousands)
|
|
|
|
|
|
|
|
Twelve Months
Ended December 31,
|
|
2019
|
2018
|
|
(Unaudited)
|
|
Operating
activities
|
|
|
Net
income
|
$233,799
|
$312,577
|
Adjustments to
reconcile to cash provided by operating activities:
|
|
|
Depreciation,
depletion and amortization
|
112,055
|
119,563
|
Accretion on asset
retirement obligations
|
20,548
|
27,970
|
Amortization of sales
contracts, net
|
(434)
|
11,107
|
Deferred income
taxes
|
13,501
|
18,701
|
Employee stock-based
compensation expense
|
21,989
|
17,519
|
Loss (Gain) on
disposals and divestitures
|
8,304
|
(625)
|
Amortization relating
to financing activities
|
3,691
|
4,179
|
Preference Rights
Lease Application settlement income
|
(39,000)
|
-
|
Changes
in:
|
|
|
Receivables
|
30,713
|
(22,903)
|
Inventories
|
(15,251)
|
3,490
|
Accounts payable,
accrued expenses and other current liabilities
|
(28,222)
|
(14,208)
|
Income taxes,
net
|
38,152
|
(46,970)
|
Other
|
19,869
|
(12,437)
|
Cash provided by
operating activities
|
419,714
|
417,963
|
|
|
|
Investing
activities
|
|
|
Capital
expenditures
|
(266,356)
|
(95,272)
|
Minimum royalty
payments
|
(1,249)
|
(584)
|
Proceeds from
disposals and divestitures
|
6,135
|
1,083
|
Purchases of short
term investments
|
(205,216)
|
(143,328)
|
Proceeds from sales
of short term investments
|
233,074
|
136,630
|
Investments in and
advances to affiliates, net
|
(5,499)
|
(2,481)
|
Cash used in
investing activities
|
(239,111)
|
(103,952)
|
|
|
|
Financing
activities
|
|
|
Payments on term loan
due 2024
|
(3,000)
|
(3,000)
|
Net payments on other
debt
|
(5,373)
|
(6,077)
|
Debt financing
costs
|
-
|
(1,257)
|
Dividends
paid
|
(30,220)
|
(31,269)
|
Purchases of treasury
stock
|
(244,998)
|
(280,871)
|
Payments for taxes
related to net share settlement of equity awards
|
(8,961)
|
-
|
Other
|
32
|
(202)
|
Cash used in
financing activities
|
(292,520)
|
(322,676)
|
|
|
|
Decrease in cash and
cash equivalents
|
(111,917)
|
(8,665)
|
Cash and cash
equivalents, beginning of period
|
264,937
|
273,602
|
|
|
|
Cash and cash
equivalents, end of period
|
$153,020
|
$264,937
|
|
|
|
Cash and cash
equivalents, including restricted cash, end of
period
|
|
|
Cash and cash
equivalents
|
$153,020
|
$264,937
|
Restricted
cash
|
-
|
-
|
|
|
|
|
$153,020
|
$264,937
|
Arch Coal, Inc.
and Subsidiaries
|
Schedule of
Consolidated Debt
|
(In
thousands)
|
|
|
|
|
|
|
December
31,
|
December
31,
|
|
|
2019
|
2018
|
|
|
(Unaudited)
|
|
|
|
|
|
Term loan due 2024
($291.8 million face value)
|
|
$
290,825
|
$
293,626
|
Other
|
|
25,007
|
30,449
|
Debt issuance
costs
|
|
(5,013)
|
(6,092)
|
|
|
310,819
|
317,983
|
Less: current
maturities of debt
|
20,753
|
17,797
|
Long-term
debt
|
|
$
290,066
|
$
300,186
|
|
|
|
|
Calculation of net
debt
|
|
|
|
Total debt (excluding
debt issuance costs)
|
|
$
315,832
|
$
324,075
|
Less liquid
assets:
|
|
|
|
Cash and cash
equivalents
|
|
153,020
|
264,937
|
Short term
investments
|
|
135,667
|
162,797
|
|
|
288,687
|
427,734
|
Net debt
|
|
$
27,145
|
$
(103,659)
|
Arch Coal, Inc.
and Subsidiaries
|
Operational
Performance
|
(In millions,
except per ton data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three
Months Ended
Decemnber 31, 2019
|
Three
Months Ended
September 30, 2019
|
Three
Months Ended
December 31, 2018
|
|
(Unaudited)
|
|
(Unaudited)
|
|
(Unaudited)
|
|
Powder River
Basin
|
|
|
|
|
|
|
Tons Sold
|
18.1
|
|
22.2
|
|
19.5
|
|
|
|
|
|
|
|
|
Segment
Sales
|
$
218.3
|
$12.07
|
$
266.4
|
$12.02
|
$
231.9
|
$
11.88
|
Segment Cash Cost of
Sales
|
193.6
|
10.70
|
216.4
|
9.77
|
208.1
|
10.66
|
Segment Cash
Margin
|
24.7
|
1.37
|
49.9
|
2.25
|
23.8
|
1.22
|
|
|
|
|
|
|
|
Metallurgical
|
|
|
|
|
|
|
Tons Sold
|
2.0
|
|
2.1
|
|
2.1
|
|
|
|
|
|
|
|
|
Segment
Sales
|
$
181.0
|
$90.51
|
$
206.1
|
$98.89
|
$
253.8
|
$121.53
|
Segment Cash Cost of
Sales
|
140.0
|
70.02
|
135.2
|
64.89
|
156.3
|
74.84
|
Segment Cash
Margin
|
41.0
|
20.49
|
70.9
|
34.00
|
97.5
|
46.69
|
|
|
|
|
|
|
|
Other
Thermal
|
|
|
|
|
|
|
Tons Sold
|
2.1
|
|
2.0
|
|
2.3
|
|
|
|
|
|
|
|
|
Segment
Sales
|
$
75.4
|
$35.41
|
$
78.5
|
$39.52
|
$
81.6
|
$
34.89
|
Segment Cash Cost of
Sales
|
67.7
|
31.81
|
61.9
|
31.16
|
67.3
|
28.76
|
Segment Cash
Margin
|
7.7
|
3.60
|
16.6
|
8.36
|
14.3
|
6.13
|
|
|
|
|
|
|
|
Total Segment Cash
Margin
|
$
73.4
|
|
$
137.4
|
|
$
135.6
|
|
|
|
|
|
|
|
|
Selling, general and
administrative expenses
|
(21.9)
|
|
(24.6)
|
|
(26.7)
|
|
Other
|
(7.8)
|
|
(6.2)
|
|
13.7
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
$
43.7
|
|
$
106.6
|
|
$
122.6
|
|
Arch Coal, Inc.
and Subsidiaries
|
Reconciliation of
NON-GAAP Measures
|
(In thousands,
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
consolidated income
statements, 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, 2019
|
Powder River
Basin
|
Metallurgical
|
Other
Thermal
|
Idle and
Other
|
Consolidated
|
(In
thousands)
|
|
|
|
|
|
GAAP Revenues in the
consolidated income statements
|
$
222,904
|
$
221,551
|
$
98,967
|
$
6,058
|
$
549,480
|
Less:
Adjustments to reconcile to Non-GAAP Segment coal sales
revenue
|
|
|
|
|
|
Coal risk management
derivative settlements classified in "other income"
|
-
|
(616)
|
(3,258)
|
-
|
(3,874)
|
Coal sales revenues
from idled or otherwise disposed operations not included in
segments
|
-
|
-
|
-
|
6,026
|
6,026
|
Transportation
costs
|
4,567
|
41,165
|
26,849
|
32
|
72,613
|
Non-GAAP Segment coal
sales revenues
|
$
218,337
|
$
181,002
|
$
75,376
|
$
-
|
$
474,715
|
Tons sold
|
18,086
|
2,000
|
2,129
|
|
|
Coal sales per ton
sold
|
$
12.07
|
$
90.51
|
$
35.41
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter ended
September 30, 2019
|
Powder River
Basin
|
Metallurgical
|
Other
Thermal
|
Idle and
Other
|
Consolidated
|
(In
thousands)
|
|
|
|
|
|
GAAP Revenues in the
consolidated income statements
|
$
269,968
|
$
254,493
|
$
94,052
|
$
954
|
$
619,467
|
Less:
Adjustments to reconcile to Non-GAAP Segment coal sales
revenue
|
|
|
|
|
|
Coal risk management
derivative settlements classified in "other income"
|
-
|
(506)
|
(4,533)
|
-
|
(5,039)
|
Coal sales revenues
from idled or otherwise disposed operations not included in
segments
|
-
|
-
|
-
|
954
|
954
|
Transportation
costs
|
3,581
|
48,925
|
20,080
|
-
|
72,586
|
Non-GAAP Segment coal
sales revenues
|
$
266,387
|
$
206,074
|
$
78,505
|
$
-
|
$
550,966
|
Tons sold
|
22,156
|
2,084
|
1,986
|
|
|
Coal sales per ton
sold
|
$
12.02
|
$
98.89
|
$
39.52
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter ended
December 31, 2018
|
Powder River
Basin
|
Metallurgical
|
Other
Thermal
|
Idle and
Other
|
Consolidated
|
(In
thousands)
|
|
|
|
|
|
GAAP Revenues in the
consolidated income statements
|
$
236,014
|
$
302,916
|
$
106,887
|
$
5,146
|
$
650,963
|
Less:
Adjustments to reconcile to Non-GAAP Segment coal sales
revenue
|
|
|
|
|
|
Coal risk management
derivative settlements classified in "other income"
|
-
|
-
|
3,516
|
-
|
3,516
|
Coal sales revenues
from idled or otherwise disposed operations not included in
segments
|
-
|
-
|
-
|
5,146
|
5,146
|
Transportation
costs
|
4,142
|
49,077
|
21,732
|
-
|
74,951
|
Non-GAAP Segment coal
sales revenues
|
$
231,872
|
$
253,839
|
$
81,639
|
$
-
|
$
567,350
|
Tons sold
|
19,521
|
2,089
|
2,340
|
|
|
Coal sales per ton
sold
|
$
11.88
|
$
121.53
|
$
34.89
|
|
|
Arch Coal, Inc.
and Subsidiaries
|
Reconciliation of
NON-GAAP Measures
|
(In thousands,
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 consolidated income statements, 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, 2019
|
Powder
River Basin
|
Metallurgical
|
Other
Thermal
|
Idle and
Other
|
Consolidated
|
(In
thousands)
|
|
|
|
|
|
GAAP Cost of sales in
the consolidated income statements
|
$
197,434
|
$
181,192
|
$
94,565
|
$
19,263
|
$
492,454
|
Less:
Adjustments to reconcile to Non-GAAP Segment cash cost of coal
sales
|
|
|
|
|
|
Diesel fuel risk
management derivative settlements classified in "other
income"
|
(728)
|
-
|
-
|
-
|
(728)
|
Transportation
costs
|
4,567
|
41,165
|
26,849
|
32
|
72,613
|
Cost of coal sales
from idled or otherwise disposed operations not included in
segments
|
-
|
-
|
-
|
16,023
|
16,023
|
Other (operating
overhead, certain actuarial, etc.)
|
-
|
-
|
-
|
3,208
|
3,208
|
Non-GAAP Segment cash
cost of coal sales
|
$
193,595
|
$
140,027
|
$
67,716
|
$
-
|
$
401,338
|
Tons sold
|
18,086
|
2,000
|
2,129
|
|
|
Cash cost per ton
sold
|
$
10.70
|
$
70.02
|
$
31.81
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter ended
September 30, 2019
|
Powder River
Basin
|
Metallurgical
|
Other
Thermal
|
Idle and
Other
|
Consolidated
|
(In
thousands)
|
|
|
|
|
|
GAAP Cost of sales in
the consolidated income statements
|
$
218,966
|
$
184,149
|
$
81,976
|
$
5,913
|
$
491,004
|
Less:
Adjustments to reconcile to Non-GAAP Segment cash cost of coal
sales
|
|
|
|
|
|
Diesel fuel risk
management derivative settlements classified in "other
income"
|
(1,057)
|
-
|
-
|
-
|
(1,057)
|
Transportation
costs
|
3,581
|
48,925
|
20,080
|
-
|
72,586
|
Cost of coal sales
from idled or otherwise disposed operations not included in
segments
|
-
|
-
|
-
|
3,871
|
3,871
|
Other (operating
overhead, certain actuarial, etc.)
|
-
|
-
|
-
|
2,042
|
2,042
|
Non-GAAP Segment cash
cost of coal sales
|
$
216,442
|
$
135,224
|
$
61,896
|
$
-
|
$
413,562
|
Tons sold
|
22,156
|
2,084
|
1,986
|
|
|
Cash cost per ton
sold
|
$
9.77
|
$
64.89
|
$
31.16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter ended
December 31, 2018
|
Powder River
Basin
|
Metallurgical
|
Other
Thermal
|
Idle and
Other
|
Consolidated
|
(In
thousands)
|
|
|
|
|
|
GAAP Cost of sales in
the consolidated income statements
|
$
212,434
|
$
205,390
|
$
89,040
|
$
7,141
|
$
514,005
|
Less:
Adjustments to reconcile to Non-GAAP Segment cash cost of coal
sales
|
|
|
|
|
|
Diesel fuel risk
management derivative settlements classified in "other
income"
|
120
|
-
|
-
|
-
|
120
|
Transportation
costs
|
4,142
|
49,077
|
21,732
|
-
|
74,951
|
Cost of coal sales
from idled or otherwise disposed operations not included in
segments
|
-
|
-
|
-
|
4,746
|
4,746
|
Other (operating
overhead, certain actuarial, etc.)
|
-
|
-
|
-
|
2,395
|
2,395
|
Non-GAAP Segment cash
cost of coal sales
|
$
208,172
|
$
156,313
|
$
67,308
|
$
-
|
$
431,793
|
Tons sold
|
19,521
|
2,089
|
2,340
|
|
|
Cash cost per ton
sold
|
$
10.66
|
$
74.84
|
$
28.76
|
|
|
Arch Coal, Inc.
and Subsidiaries
|
Reconciliation of
Non-GAAP Measures
|
(In
thousands)
|
|
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, accretion on asset retirement obligations,
amortization of sales contracts and nonoperating expenses.
Adjusted EBITDA 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 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. The Company uses adjusted EBITDA 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 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
December 31,
|
|
Twelve Months
Ended December 31,
|
|
2019
|
2018
|
|
2019
|
2018
|
|
(Unaudited)
|
|
(Unaudited)
|
Net income
(loss)
|
$ (8,551)
|
$
86,094
|
|
$233,799
|
$312,577
|
Provision for
(benefit from) income taxes
|
(260)
|
(3,351)
|
|
248
|
(52,476)
|
Interest expense,
net
|
1,878
|
2,691
|
|
6,794
|
13,689
|
Depreciation,
depletion and amortization
|
29,856
|
27,536
|
|
112,055
|
119,563
|
Accretion on asset
retirement obligations
|
5,137
|
6,993
|
|
20,548
|
27,970
|
Amortization of sales
contracts, net
|
(357)
|
1,567
|
|
(434)
|
11,107
|
Costs related to
proposed joint venture with Peabody Energy
|
7,044
|
-
|
|
13,816
|
-
|
Loss on sale of
Coal-Mac LLC
|
9,008
|
-
|
|
9,008
|
-
|
Loss on sale of Lone
Mountain Processing LLC
|
-
|
-
|
|
4,304
|
-
|
Preference Rights
Lease Application settlement income
|
-
|
-
|
|
(39,000)
|
-
|
Non-service related
pension and postretirement benefit costs
|
(74)
|
996
|
|
2,053
|
3,202
|
Net loss resulting
from early retirement of debt and debt restructuring
|
-
|
-
|
|
-
|
485
|
Reorganization items,
net
|
47
|
60
|
|
(24)
|
1,661
|
|
|
|
|
|
|
Adjusted
EBITDA
|
$43,728
|
$122,586
|
|
$363,167
|
$437,778
|
EBITDA from idled or
otherwise disposed operations
|
9,775
|
(1,527)
|
|
12,926
|
2,492
|
Selling, general and
administrative expenses
|
21,917
|
26,687
|
|
95,781
|
100,300
|
Other
|
(1,450)
|
(10,075)
|
|
(14,488)
|
4,099
|
|
|
|
|
|
|
Segment Adjusted
EBITDA from coal operations
|
$73,970
|
$137,671
|
|
$457,386
|
$544,669
|
|
|
|
|
|
|
Segment Adjusted
EBITDA
|
|
|
|
|
|
Powder River
Basin
|
$25,095
|
$
23,886
|
|
$110,528
|
$126,525
|
Metallurgical
|
41,079
|
97,875
|
|
305,363
|
349,524
|
Other
Thermal
|
7,796
|
15,910
|
|
41,495
|
68,620
|
|
|
|
|
|
|
Total Segment
Adjusted EBITDA
|
$73,970
|
$137,671
|
|
$457,386
|
$544,669
|
Arch Coal, Inc.
and Subsidiaries
|
Reconciliation of
NON-GAAP Measures
|
(In thousands,
except per ton data)
|
|
During the fourth
quarter 2019 earnings release, the Company discusses its'
Metallurgical coal segment performance for the quarter ended
December 31, 2019 excluding the
impact of its' Mountain Laurel operation. Management chose to
display this metric as Mountain Laurel executed a major operational
transition during the quarter from longwall mining to room-and-pillar mining.
Management believes this metric is more comparable to prior results
and indicative of future results. Below is the
reconciliation of those
amounts:
|
|
|
|
|
|
Non-GAAP
Segment coal sales per ton
sold
|
|
|
|
Quarter ended
December 31, 2019
|
Metallurgical
|
Mountain
Laurel
|
Metallurgical
excluding
Mountain Laurel
|
(In
thousands)
|
|
|
|
GAAP Revenues in the
consolidated income statements
|
$
221,551
|
$
28,568
|
$
192,983
|
Less:
Adjustments to reconcile to Non-GAAP Segment coal sales
revenue
|
|
|
|
Coal risk management
derivative settlements classified in "other income"
|
(616)
|
(616)
|
-
|
Coal sales revenues
from idled or otherwise disposed operations not included in
segments
|
-
|
-
|
-
|
Transportation
costs
|
41,165
|
4,850
|
36,315
|
Non-GAAP Segment coal
sales revenues
|
$
181,002
|
$
24,334
|
$
156,668
|
Tons sold
|
2,000
|
276
|
1,723
|
Coal sales per ton
sold (a)
|
$
90.51
|
$
88.08
|
$
90.90
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP
Segment cash cost per ton sold
|
|
|
|
Quarter ended
December 31, 2019
|
Metallurgical
|
Mountain
Laurel
|
Metallurgical
excluding
Mountain Laurel
|
(In
thousands)
|
|
|
|
GAAP Cost of sales in
the consolidated income statements
|
$
181,192
|
$
44,073
|
$
137,119
|
Less:
Adjustments to reconcile to Non-GAAP Segment cash cost of coal
sales
|
|
|
|
Diesel fuel risk
management derivative settlements classified in "other
income"
|
-
|
-
|
-
|
Transportation
costs
|
41,165
|
4,850
|
36,315
|
Cost of coal sales
from idled or otherwise disposed operations not included in
segments
|
-
|
-
|
-
|
Other (operating
overhead, certain actuarial, etc.)
|
-
|
-
|
-
|
Non-GAAP Segment cash
cost of coal sales
|
$
140,027
|
$
39,223
|
$
100,804
|
Tons sold
|
2,000
|
276
|
1,723
|
Cash cost per ton
sold (b)
|
$
70.02
|
$
141.97
|
$
58.49
|
|
|
|
|
Cash margin per ton
sold (a)-(b)
|
$
20.49
|
$
(53.89)
|
$
32.41
|
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SOURCE Arch Coal, Inc.