Contura Announces Fourth Quarter and Formation to Year End(1) Results

BRISTOL, Tenn., March 31, 2017 – Contura Energy, Inc., a leading U.S. coal supplier, today reported results for the fourth quarter and the period from July 26, 2016 to December 31, 2016 (“formation to year end”).  These figures update the preliminary results announced on February 21, 2017 for the same reporting periods.

Highlights include:

  • Net Income of $35 million for the fourth quarter and Net Loss of $11 million formation to year end
  • Adjusted EBITDA of $104 million for the fourth quarter and $129 million formation to year end
  • The company successfully refinanced its debt after quarter end
  • Announced on March 7 a successful bid to increase its ownership stake in DTA terminal

 

(millions, except per share)

Fourth   Quarter 2016 Formation to Year End[1]
Coal revenues $399.3 $612.2
Net Income (Loss) $34.9 ($10.9)
Net Income (Loss) per diluted share $3.24 ($1.06)
Adjusted EBITDA[2] $103.7 $129.4
Operating cash flow $34.5 $68.2
Capital expenditures $21.7 $34.5
Tons of coal sold 12.7 22.5

 

[1] The “formation to year end” reporting period referred to in this document includes results from July 26, 2016 through December 31, 2016.

[2] These are non-GAAP financial measures.  A reconciliation of net loss to adjusted EBITDA is included in tables accompanying the financial schedules.

 

Financial Performance

Coal revenues in the fourth quarter were $399.3 million, with Central Appalachia (CAPP) accounting for $100.7 million and Trading and Logistics accounting for $110.3 million. On the thermal side, Northern Appalachia (NAPP) revenue totaled $87.7 million and the Powder River Basin (PRB) generated $100.6 million in coal sales.  Freight and handling revenues and other revenues were $40.6 million and $4.0 million, respectively, in the fourth quarter.

For the fourth quarter, CAPP metallurgical coal shipments were 0.8 million tons at an average per-ton realization of $120.08.  Contura shipped 9.2 million tons of PRB coal during the quarter at an average per-ton realization of $10.88, while NAPP shipments totaled 1.9 million tons at an average per-ton realization of $45.70.  NAPP volumes were slightly affected by a longwall move in October.  Within the Trading and Logistics segment, 0.7 million tons of coal were shipped at an average price of $153.68 per ton.

Formation to year end, CAPP metallurgical coal shipments were 1.4 million tons at an average per-ton realization of $99.41. Contura shipped 16.7 million tons of PRB coal at an average per-ton realization of $10.83 from formation to year end, while NAPP shipments totaled 2.9 million tons at an average per-ton realization of $45.00.  Within the Trading and Logistics segment, 1.5 million tons of coal were shipped at an average price of $106.96 per ton.

Total costs and expenses during the fourth quarter were $389.2 million and cost of coal sales was $288.6 million. The cost of coal sales in CAPP during for the quarter averaged $74.28 per ton.  NAPP cost averaged $34.70 per ton primarily due to a longwall move in October.  The estimated cost impact from the longwall move was approximately $4.00 per ton compared to expected fourth quarter production costs.  The cost of coal sales per ton for the PRB mines was $8.89 during the fourth quarter, benefiting from lower than normal overburden removal.

Total costs and expenses formation to year end were $654.9 million and cost of coal sales was $468.1 million.  The cost of coal sales in CAPP from formation to year end averaged $68.68 per ton.  NAPP costs averaged $36.97 per ton due to a rock intrusion in September and a longwall move in October.  The cost of coal sales per ton for the PRB mines formation to year end was $8.44, benefiting from a lower than normal overburden removal.

Selling, general and administrative (SG&A) expenses in the fourth quarter were $9.6 million, which includes approximately $0.5 million of non-recurring expenses associated with the formation of the company. Depreciation, depletion and amortization was $21.7 million during the fourth quarter and amortization of acquired intangibles was $37.7 million.  Other expenses include a mark-to-market change in value of warrants totaling $17.4 million, a non-cash charge to earnings.

SG&A expenses formation to year end were $19.1 million, including approximately $4.0 million of non-recurring expenses associated with the formation of the company.  Depreciation, depletion and amortization formation to year end was $44.0 million and amortization of acquired intangibles was $61.3 million.  Other expenses include a mark-to-market change in value of warrants totaling $34.0 million, which is a non-cash charge to earnings.

Contura recorded a net income of $34.9 million, or $3.24 per diluted share for the fourth quarter and a loss of $10.9 million, or $1.06 per basic share from formation to year end.

Adjusted EBITDA was $103.7 million for the quarter, excluding $17.4 million derivative charge related to warrants issued on July 26, 2016. Formation to year end, Adjusted EBITDA was $129.4 million, excluding a $34 million derivative charge related to the previously mentioned warrants and $10.6 million for mark-to-market adjustment for acquisition related obligations. 

 

Liquidity and Capital Resources

Cash provided by operating activities for the fourth quarter and formation to year end were $34.5 million and $68.2 million respectively.  Capital expenditures for the fourth quarter were $21.7 million and $34.5 million from formation to year end.

At year-end, Contura had $127.9 million in unrestricted cash.  Total long-term debt, including the current portion of long-term debt as of December 31, 2016, was approximately $349.2 million.

As announced on March 17, 2017, Contura successfully refinanced its debt through a $400 million term loan credit facility and will redeem all outstanding 10% senior secured First Lien Notes and discharge certain other long-term liabilities.  The new term loan matures in March 2024 and has an interest rate of LIBOR plus 5.0% with a LIBOR floor of 1.0%.

 

Strategic DTA Ownership Transaction

On March 7, 2017 Contura announced a successful joint bid with Arch Coal to significantly increase its ownership in the world-class Dominion Terminal Associates (DTA) coal export terminal in Newport News, Virginia.  As a result of the transaction, Contura holds a 65% majority stake in the facility.  DTA provides coal blending capabilities and transportation flexibility, serving as a strategic cornerstone of Contura’s Trading and Logistics business, as well the company’s coal export activities.

 

2017 Committed and Priced[3] Status (as of March 7, 2017)

(tons in millions) Committed tons Average price (FOB Mine)
CAPP 2.4 $124.98
NAPP 7.9 $42.80
PRB 29.3 $11.35

 

[3] Based upon contract terms, anticipated delivery schedules, and assumed freight expenses.

 

Additional Information

For additional financial information about Contura, including its audited condensed consolidated financial statements for formation to year end period, please visit www.conturaenergy.com/financials.

 

ABOUT CONTURA ENERGY

Contura Energy is a private, Tennessee-based company with affiliate mining operations across multiple major coal basins in Pennsylvania, Virginia, West Virginia and Wyoming.  With customers across the globe, high-quality reserves and significant port capacity, Contura Energy reliably supplies both metallurgical coal to produce steel and thermal coal to generate power.  For more information, visit www.conturaenergy.com.

 

FORWARD-LOOKING STATEMENTS

This news release includes forward-looking statements.  These forward-looking statements are based on Contura’s expectations and beliefs concerning future events and involve risks and uncertainties that may cause actual results to differ materially from current expectations.  These factors are difficult to predict accurately and may be beyond Contura’s control.  You should also review the uncertainties discussed in the Company’s condensed consolidated financial statements for the period ended December 31, 2016.  Forward-looking statements in this news release or elsewhere speak only as of the date made.  New uncertainties and risks arise from time to time, and it is impossible for Contura to predict these events or how they may affect the Company.  Contura has no duty to, and does not intend to, update or revise the forward-looking statements in this news release or elsewhere after the date this release is issued.  In light of these risks and uncertainties, investors should keep in mind that results, events or developments discussed in any forward-looking statement made in this news release may not occur.

 

FINANCIAL TABLES FOLLOW

Use of Non-GAAP Measures

In addition to the results prepared in accordance with generally accepted accounting principles in the United States (GAAP) provided throughout this press release, Contura has presented the following non-GAAP financial measures, which management uses to gauge operating performance: Adjusted EBITDA and cost of coal sales per ton.  These non-GAAP financial measures exclude various items detailed in the attached reconciliation tables.

The definition of these non-GAAP measures may be changed periodically by management to adjust for significant items important to an understanding of operating trends.  These measures are not intended to replace financial performance measures determined in accordance with GAAP.  Rather, they are presented as supplemental measures of the Company’s performance that management finds useful in assessing the company’s financial performance and believes are useful to securities analysts, investors and others in assessing the Company’s performance over time.  Moreover, these measures are not calculated identically by all companies and therefore may not be comparable to similarly titled measures used by other companies.

 

CONTURA ENERGY, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF OPERATIONS
(Amounts in thousands, except share and per share data)

CONTURA ENERGY, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET
(Amounts in thousands, except share and per share data)

CONTURA ENERGY, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CASH FLOWS
(Amounts in thousands)

CONTURA ENERGY, INC. AND SUBSIDIARIES ADJUSTED EBITDA RECONCILIATION
(Amounts in thousands)

CONTURA ENERGY, INC. AND SUBSIDIARIES RESULTS OF OPERATIONS
(Amounts in thousands, except for per ton data)