ARCH COAL INC ST. LOUIS, July 29, 2014 /PRNewswire/ -- Arch Coal, Inc. (NYSE: ACI) today reported a net loss of $97 million, or $0.46 per diluted share, in the second quarter of 2014 compared with a $72 million net loss, or $0.34 per diluted share, in the second quarter of 2013. Revenues totaled $714 million for the three months ended June 30, 2014, and adjusted earnings before interest, taxes, depreciation, depletion and amortization ("EBITDA") from continuing operations was $65 million.
Earnings Highlights
-------------------
Quarter Ended Six Months Ended
In $ millions, except per
share data 6/30/14 6/30/13 6/30/14 6/30/13
------------------------- ------- ------- ------- -------
Revenues (1) $713.8 $766.3 $1,449.7 $1,503.7
Loss from Operations (1) (35.8) (36.3) (108.9) (87.7)
Net Loss (96.9) (72.2) (221.0) (142.3)
Diluted LPS (0.46) (0.34) (1.04) (0.67)
----------- ----- ----- ----- -----
Adjusted Diluted LPS (2) (0.46) (0.29) (1.06) (0.62)
Adjusted EBITDA from
continuing operations (2) $64.9 $93.1 $92.5 $149.0
1/-Excludes discontinued
operations.
2/- Defined and reconciled under "Reconciliation of non-GAAP measures."
"During the second quarter of 2014, increased shipments, higher pricing and strong cost control drove margin expansion in each of our operating regions compared with the first quarter," said John W. Eaves, Arch's president and chief executive officer. "Our successful cost control efforts to date - underscored by strong operating performances at Leer in Appalachia and West Elk in Colorado - have allowed us to reduce our cost-per-ton expectations for those segments in 2014."
For the first half of 2014, Arch generated adjusted EBITDA from continuing operations of $93 million compared with $149 million recorded in the first half of 2013. Total revenues declined slightly to $1.4 billion during the first six months of 2014, largely due to lower metallurgical coal revenues versus the prior-year period.
"Recently, we've announced the idling of our Cumberland River complex in response to weak global metallurgical coal prices," said Eaves. "Although idling higher-cost coking coal capacity lowers our metallurgical coal volume expectations for 2014, it also shifts our mine portfolio toward higher-margin metallurgical coal operations and enhances our competitive cost position in that region."
Financial Position
As of June 30, 2014, Arch had a total liquidity position of roughly $1.25 billion, with nearly $1.0 billion 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, 2014, and has no long-term debt maturities due until mid-2018.
"Through this cyclical downturn, we have been focused on controlling our costs and capital spending, and we have further reduced our capital outlay and administrative spending expectations for full year 2014," said John T. Drexler, Arch's senior vice president and chief financial officer. "We remain confident that these ongoing initiatives - along with an expected strong operational performance in the second half - will help us maintain our solid financial footing going forward, and strategically position Arch to capitalize on a coal market recovery."
Core Values
During the second quarter of 2014, Arch's lost-time safety incident rate improved nearly 30 percent compared with the first quarter. In addition, both the Leer and the Mountain Laurel mines in Appalachia each reached new milestones of operating an entire year without a single lost-time safety incident. Furthermore, Arch recently earned three safety and environmental awards, including the state of Wyoming's top honor for reclamation excellence and wildlife habitat creation at the Black Thunder and Coal Creek mines.
"We're extremely proud of our employees for these achievements and recognize their continued dedication to advancing Arch's core values," said Paul A. Lang, Arch's executive vice president and chief operating officer. "We also congratulate the six operations that attained A Perfect Zero - the dual accomplishment of operating without an environmental violation or reportable safety incident - during the second quarter of 2014."
Operational Results
"Our mines turned in solid performances in the second quarter, supported by cost reductions that improved margins across our operating platform versus the first quarter," said Lang. "Looking ahead, we expect strong cost performances in our Appalachian and Bituminous Thermal segments to continue, and we plan to remain nimble in response to market conditions."
Arch Coal, Inc.
2Q14 1Q14 2Q13
---- ---- ----
Tons sold (in millions) 32.7 31.4 33.0
Average sales price per ton $20.34 $20.09 $21.37
Cash cost per ton $17.43 $18.39 $17.89
Cash margin per ton $2.91 $1.70 $3.48
Total operating cost per
ton $20.55 $21.70 $21.19
Operating margin per ton ($0.21) ($1.61) $0.18
Consolidated results may not tie to regional breakout due to exclusion of other assets, rounding.
Operating results exclude former Canyon Fuel subsidiary.
Cash cost per ton is defined and reconciled under "Reconciliation of non-GAAP measures".
Operating cost per ton is the sum of cash costs and depreciation, depletion
and amortization expense
divided by tons sold.
Second quarter 2014 consolidated cash margin per ton expanded 71 percent versus the first quarter, reflecting both higher prices and lower costs per ton in each operating segment. The improvement in consolidated sales price per ton was largely driven by higher-priced domestic thermal coal sales, slightly offset by lower pricing obtained on metallurgical coal shipments. Consolidated cash cost per ton declined 5 percent in the second quarter of 2014 versus the prior- quarter period, due to successful cost-containment efforts and the effect of higher shipment levels in the Powder River Basin.
Powder River Basin
2Q14 1Q14 2Q13
---- ---- ----
Tons sold (in millions) 26.9 25.7 27.1
Average sales price per
ton $12.79 $12.73 $12.56
Cash cost per ton $11.09 $11.45 $10.47
Cash margin per ton $1.70 $1.28 $2.09
Total operating cost
per ton $12.61 $12.98 $12.02
Operating margin per
ton $0.18 ($0.25) $0.54
Cash cost per ton is defined and reconciled under "Reconciliation of non-GAAP measures".
Operating cost per ton is the sum of cash costs and depreciation, depletion
and amortization expense divided by tons
sold.
----------------------------------------
Second quarter 2014 cash margin per ton increased 33 percent in the Powder River Basin, when compared to the first quarter. Average sales price per ton increased modestly over the same time period, while cash cost per ton declined 3 percent, benefitting from the effect of increased shipments and strong cost control.
Appalachia
2Q14 1Q14 2Q13
---- ---- ----
Tons sold (in millions) 3.7 3.6 4.0
Average sales price per
ton $69.36 $67.70 $74.18
Cash cost per ton $62.36 $65.48 $65.70
Cash margin per ton $7.00 $2.22 $8.48
Total operating cost
per ton $76.25 $80.80 $79.56
Operating margin per
ton ($6.89) ($13.10) ($5.38)
Cash cost per ton is defined and reconciled under "Reconciliation of non-GAAP measures".
Operating cost per ton is the sum of cash costs and depreciation, depletion
and amortization expense divided by tons sold.
--------------------------------------
In Appalachia, Arch earned a cash margin of $7.00 per ton in the second quarter of 2014 versus $2.22 per ton in the first quarter. Average sales price per ton increased 2 percent over the same time period, reflecting higher prices on thermal and industrial coal sales as well as a larger percentage of metallurgical coal in the company's regional volume mix. Cash cost per ton decreased 5 percent versus the first quarter, driven by a shift in production toward the company's lower-cost mines in the region and the Leer mine's successful ongoing ramp up to full production.
Bituminous Thermal
2Q14 1Q14 2Q13
---- ---- ----
Tons sold (in
millions) 2.0 2.1 1.8
Average sales price
per ton $31.34 $28.64 $35.69
Cash cost per ton $19.83 $22.64 $22.43
Cash margin per ton $11.51 $6.00 $13.26
Total operating cost
per ton $24.51 $27.17 $28.40
Operating margin per
ton $6.83 $1.47 $7.29
Operating results exclude former Canyon Fuel
subsidiary.
Cash cost per ton is defined and reconciled under "Reconciliation of non-GAAP measures".
Operating cost per ton is the sum of cash costs and depreciation, depletion
and amortization expense divided by tons
sold.
----------------------------------------
In the Bituminous Thermal segment, Arch's cash margin nearly doubled versus the first quarter to $11.51 per ton in the second quarter of 2014. Average sales price per ton increased 9 percent over the same time period, reflecting increased domestic demand and lower export volumes. Arch recorded a cash cost of $19.83 per ton in the second quarter of 2014, a 12 percent decline versus the first quarter, driven by strong operating performances at the mines in the segment.
Market Trends
Arch believes the current coal market downturn is unsustainable over the long term. While global metallurgical coal prices are expected to remain soft throughout 2014, global steel production, a driver of metallurgical coal demand, has increased by 2.5 percent year-to-date and appears poised for continued expansion. Announced closures of higher-cost metallurgical coal supply have accelerated as 2014 has progressed, and many capital growth projects have been delayed or cancelled as current prevailing prices do not justify incremental investment. Arch expects all of these factors to bring better balance to global metallurgical markets over time.
Adding to near-term pressures, prevailing soft seaborne thermal and metallurgical prices are likely to limit U.S. coal exports this year. Arch expects industry-wide coal exports from the United States to decline below 100 million tons for 2014 compared with 2013 export levels of 117 million tons.
In the domestic coal market, U.S. electric generation grew 2 percent through the first half of 2014, according to the Edison Electric Institute. Coal stockpiles at U.S. power generators have declined markedly this year, due to higher competing fuel prices and increased power load.
With prevailing mild summer temperatures to date, Arch now expects domestic coal consumption to increase by approximately 20 million tons in 2014 compared to last year. Even with the mild summer weather, however, coal stockpiles at power generators are likely to shrink - and could end the year at around 50 days of supply. Customer coal inventories in some regions, such as the Powder River Basin, could decline to below-normal levels.
Company Outlook
2014 2015
---- ----
Tons $ per ton Tons $ per ton
---- --------- ---- ---------
Sales Volume (in millions tons)
------------------------------
Thermal 124.0 - 130.0
Met 6.3 - 6.9
--- --- ---
Total 130.3 - 136.9
Powder River Basin
------------------
Committed, Priced 109.8 $13.00 74.9 $13.72
Committed, Unpriced 3.6 9.7
------------------- --- ---
Total Committed 113.4 84.6
Average Cash Cost $10.80 - $11.10
Appalachia
----------
Committed, Priced Thermal 7.3 $57.72 3.4 $56.71
Committed, Unpriced Thermal 0.2 -
Committed, Priced Metallurgical 6.0 $82.44 1.6 $85.53
Committed, Unpriced
Metallurgical 0.2 0.3
------------------- --- ---
Total Committed 13.7 5.3
Average Cash Cost $62.50 - $64.50
Bituminous Thermal
------------------
Committed, Priced 7.6 $31.00 3.3 $36.32
Committed, Unpriced 0.2 -
------------------- --- ---
Total Committed 7.8 3.3
Average Cash Cost $21.00 - $23.00
Corporate (in $ millions)
------------------------
D,D&A $410 - $430
S,G&A $118 - $124
Interest Expense $382 - $392
Capital Expenditures $170 - $180
-------------------- ---- --- ----
Based on current expectations, Arch is reducing its sales volume targets for 2014, reflecting the result of ongoing transportation bottlenecks affecting thermal coal deliveries and the impact of metallurgical production curtailments. Arch now expects thermal sales volumes for 2014 to be in the range of 124 million to 130 million tons. The company has lowered its metallurgical coal sales guidance, and now expects to ship between 6.3 million and 6.9 million tons for 2014.
Offsetting the volume reductions, Arch has reduced its annual cash-cost-per-ton guidance range for both its Appalachian and Bituminous Thermal segments. However, the company anticipates the timing of two longwall moves in West Virginia and the cost of idling Cumberland River to temporarily impact the Appalachian reported costs during the third quarter. Additionally, Arch is further reducing its capital expenditures for 2014, and now expects to spend $170 million to $180 million for capital programs, inclusive of land and reserve additions.
"Looking ahead, we remain focused on those factors within our control to position Arch for a future market rebound," said Eaves. "As coal markets turn, Arch can leverage its superior low-cost thermal and metallurgical asset base to create substantial value for our stakeholders."
A conference call regarding Arch Coal's second quarter 2014 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 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
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
Three Months Ended June 30, Six Months Ended June 30,
--------------------------- -------------------------
2014 2013 2014 2013
---- ---- ---- ----
(Unaudited)
Revenues $713,776 $766,332 $1,449,747 $1,503,702
Costs, expenses and other operating
Cost of sales 622,137 656,198 1,308,451 1,305,941
Depreciation, depletion
and amortization 102,464 111,085 206,887 221,278
Amortization of acquired
sales contracts, net (3,239) (2,209) (6,935) (5,019)
Change in fair value of
coal derivatives and
coal trading
activities, net (2,992) (9,008) (2,078) (7,700)
Asset impairment costs 1,512 20,482 1,512 20,482
Selling, general and
administrative expenses 29,931 34,302 59,067 67,511
Other operating income,
net (232) (8,239) (8,230) (11,081)
---- ------ ------ -------
749,581 802,611 1,558,674 1,591,412
------- ------- --------- ---------
Loss from operations (35,805) (36,279) (108,927) (87,710)
Interest expense, net
Interest expense (97,960) (94,756) (194,431) (189,830)
Interest and investment
income 2,036 1,216 3,879 4,052
(95,924) (93,540) (190,552) (185,778)
------- ------- -------- --------
Loss from continuing
operations before
income taxes (131,729) (129,819) (299,479) (273,488)
Benefit from income
taxes (34,869) (49,468) (78,480) (108,821)
------- ------- ------- --------
Loss from continuing
operations (96,860) (80,351) (220,999) (164,667)
Income from discontinued
operations, net of tax - 8,145 - 22,412
--- ---
Net loss $(96,860) $(72,206) $(220,999) $(142,255)
======== ======== ========= =========
Losses per common share
Basic and diluted LPS -
Loss from continuing
operations $(0.46) $(0.38) $(1.04) $(0.78)
====== ====== ====== ======
Basic and diluted LPS -
Net loss $(0.46) $(0.34) $(1.04) $(0.67)
====== ====== ====== ======
Basic and diluted
weighted average shares
outstanding 212,225 212,082 212,198 212,072
======= ======= ======= =======
Dividends declared per
common share $ - $0.03 $0.01 $0.06
=========== ===== ===== =====
Adjusted EBITDA From
Continuing
Operations(A) $64,932 $93,079 $92,537 $149,031
======= ======= ======= ========
Adjusted EBITDA (A) $64,932 $110,550 $92,537 $194,179
======= ======== ======= ========
Adjusted diluted loss
per common share (A) $(0.46) $(0.29) $(1.06) $(0.62)
====== ====== ====== ======
(A) Amounts 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,
2014 2013
---- ----
(Unaudited)
Assets
Current assets
Cash
and
cash
equivalents $740,154 $911,099
Short
term
investments 248,647 248,414
Trade
accounts
receivable 203,782 198,020
Other
receivables 35,369 31,553
Inventories 228,726 264,161
Prepaid
royalties 7,932 8,083
Deferred
income
taxes 48,786 49,144
Coal
derivative
assets 14,122 14,851
Other
current
assets 54,270 56,746
------ ------
Total
current
assets 1,581,788 1,782,071
Property,
plant
and
equipment,
net 6,603,458 6,734,286
Other assets
Prepaid
royalties 87,494 87,577
Equity
investments 229,514 221,456
Other
noncurrent
assets 153,854 164,803
------- -------
Total
other
assets 470,862 473,836
------- -------
Total
assets $8,656,108 $8,990,193
========== ==========
Liabilities and Stockholders' Equity
Current liabilities
Accounts
payable $160,209 $176,142
Accrued
expenses
and
other
current
liabilities 294,317 278,587
Current
maturities
of debt 27,266 33,493
------ ------
Total
current
liabilities 481,792 488,222
Long-
term
debt 5,116,353 5,118,002
Asset
retirement
obligations 395,813 402,713
Accrued
pension
benefits 13,925 7,111
Accrued
postretirement
benefits
other
than
pension 38,034 39,255
Accrued
workers'
compensation 74,083 78,062
Deferred
income
taxes 332,207 413,546
Other
noncurrent
liabilities 172,512 190,033
------- -------
Total
liabilities 6,624,719 6,736,944
Stockholders' equity
Common
stock 2,141 2,141
Paid-
in
capital 3,044,082 3,038,613
Treasury
stock,
at
cost (53,848) (53,848)
Accumulated
deficit (994,471) (771,349)
Accumulated
other
comprehensive
income 33,485 37,692
------ ------
Total
stockholders'
equity 2,031,389 2,253,249
--------- ---------
Total
liabilities
and
stockholders'
equity $8,656,108 $8,990,193
========== ==========
Arch Coal, Inc. and Subsidiaries
Schedule of Consolidated Debt
(In thousands)
June 30, December 31,
2014 2013
---- ----
(Unaudited)
Term loan due
2018 ($1.92
billion and
$1.93 billion
face value,
respectively) $1,898,697 $1,906,975
7.00% senior
notes due
2019 at par 1,000,000 1,000,000
9.875% senior
notes due
2019 ($375.0
million face
value) 362,867 362,358
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 32,055 32,162
------ ------
5,143,619 5,151,495
Less: current
maturities of
debt 27,266 33,493
Long-term debt $5,116,353 $5,118,002
========== ==========
Calculation of
net debt
Total debt $5,143,619 $5,151,495
Less liquid
assets
Cash and cash
equivalents 740,154 911,099
Short term
investments 248,647 248,414
------- -------
988,801 1,159,513
Net debt $4,154,818 $3,991,982
========== ==========
Arch Coal, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(In thousands)
Six Months Ended June 30,
-------------------------
2014 2013
---- ----
(Unaudited)
Operating activities
Net loss $(220,999) $(142,255)
Adjustments to reconcile to cash provided by operating
activities:
Depreciation, depletion and
amortization 206,887 237,668
Amortization of acquired sales
contracts, net (6,935) (5,019)
Amortization relating to
financing activities 7,757 12,346
Prepaid royalties expensed 3,575 9,251
Employee stock-based
compensation expense 5,469 5,804
Asset impairment costs 1,512 20,482
Gains on disposals and
divestitures, net (18,506) (2,819)
Deferred income taxes (78,568) (102,172)
Changes in:
Receivables 267 (3,909)
Inventories 3,522 8,771
Accounts payable, accrued
expenses and other current
liabilities 10,495 (4,062)
Income taxes, net (571) (29)
Other 7,749 17,988
----- ------
Cash provided by (used in)
operating activities (78,346) 52,045
------- ------
Investing activities
Capital expenditures (95,746) (169,064)
Payments of minimum royalties (3,341) (10,162)
Proceeds from sale-leaseback
transactions - 5,080
Proceeds from disposals and
divestitures 43,245 34,919
Purchases of short term
investments (168,951) (61,870)
Proceeds from sales of short
term investments 166,018 47,097
Investments in and advances to
affiliates (9,501) (8,142)
Change in restricted cash - 2,368
--- -----
Cash used in investing
activities (68,276) (159,774)
------- --------
Financing activities
Payments on term loan (9,750) (8,250)
Net payments on other debt (9,390) (11,703)
Debt financing costs (1,957) -
Dividends paid (2,123) (12,735)
Change in restricted cash (1,103) -
------ ---
Cash used in financing
activities (24,323) (32,688)
------- -------
Decrease in cash and cash
equivalents (170,945) (140,417)
Cash and cash equivalents,
beginning of period 911,099 784,622
------- -------
Cash and cash equivalents, end
of period $740,154 $644,205
======== ========
Arch Coal, Inc. and Subsidiaries
Reconciliation of Non-GAAP Measures
(In thousands, except per share data)
Included in the accompanying release
are certain non-GAAP measures as
defined by Regulation G.
The following reconciles these items to
cost of sales, 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 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,
---------------------------
2014 2013
---- ----
Total Company Continuing Discontinued Total Company
Operations Operations
---------- ----------
(Unaudited)
Net loss $(96,860) $(80,351) $8,145 $(72,206)
Income tax provision
(benefit) (34,869) (49,468) 1,603 (47,865)
Interest expense, net 95,924 93,540 8 93,548
Depreciation, depletion and
amortization 102,464 111,085 7,715 118,800
Amortization of acquired
sales contracts, net (3,239) (2,209) - (2,209)
Asset impairment costs 1,512 20,482 - 20,482
----- ------ --- ------
Adjusted EBITDA $64,932 $93,079 $17,471 $110,550
======= ======= ======= ========
Six Months Ended June 30,
-------------------------
2014 2013
---- ----
Total Company Continuing Discontinued Total Company
Operations Operations
---------- ----------
(Unaudited)
Net loss $(220,999) $(164,667) $22,412 $(142,255)
Income tax provision
(benefit) (78,480) (108,821) 6,325 (102,496)
Interest expense, net 190,552 185,778 21 185,799
Depreciation, depletion and
amortization 206,887 221,278 16,390 237,668
Amortization of acquired
sales contracts, net (6,935) (5,019) - (5,019)
Asset impairment costs 1,512 20,482 - 20,482
----- ------ --- ------
Adjusted EBITDA $92,537 $149,031 $45,148 $194,179
======= ======== ======= ========
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 acquisition
related costs and are not measures of
financial performance in accordance
with generally accepted accounting
principles. We believe that adjusted
loss and adjusted diluted loss per
common share better reflect the trend
of our future results by excluding
items relating to significant
transactions. 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,
--------------------------- -------------------------
2014 2013 2014 2013
---- ---- ---- ----
(Unaudited) (Unaudited)
Net loss $(96,860) $(72,206) $(220,999) $(142,255)
Amortization of acquired
sales contracts, net (3,239) (2,209) (6,935) (5,019)
Asset impairment costs 1,512 20,482 1,512 20,482
Tax impact of adjustments 622 (6,578) 1,952 (5,567)
--- ------ ----- ------
Adjusted net loss
attributable to Arch Coal $(97,965) $(60,511) $(224,470) $(132,359)
======== ======== ========= =========
Diluted weighted average
shares outstanding 212,225 212,082 212,198 212,072
======= ======= ======= =======
Diluted loss per share
attributable to Arch Coal $(0.46) $(0.34) $(1.04) $(0.67)
Amortization of acquired
sales contracts, net (0.02) (0.01) (0.03) (0.02)
Asset impairment costs 0.01 0.10 0.01 0.10
Tax impact of adjustments 0.01 (0.04) 0.01 (0.03)
----- ---- -----
Adjusted diluted loss per
share $(0.46) $(0.29) $(1.06) $(0.62)
====== ====== ====== ======
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
income/expense" 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.
The following reconciles cost of sales on our
condensed consolidated statement of
operations to cash cost per ton.
Three Months Ended June 30, Three Months
Ended March 31,
2014 2013 2014
---- ---- ----
(Unaudited)
Cost of sales on
condensed
consolidated
statement of
operations $622,137 $656,198 $686,314
Transportation costs
billed to customers (50,613) (63,968) (106,959)
Settlements of
heating oil
derivatives used to
manage diesel fuel
purchase price risk 1,684 3,584 1,879
Other (other
operating segments,
operating overhead,
land management,
etc.) (3,929) (6,155) (4,689)
------ ------ ------
Total cash costs $569,279 $589,659 $576,545
Total tons sold 32,663 32,953 31,357
------ ------ ------
Total cash cost per
ton $17.43 $17.89 $18.39
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SOURCE Arch Coal, Inc.
