UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 9, 2016
Arch Coal, Inc.
(Exact Name of Registrant as Specified in Its Charter)
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Delaware |
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1-13105 |
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43-0921172 |
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(State or Other jurisdiction |
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(Commission |
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(IRS Employer |
CityPlace One
One CityPlace Drive, Suite 300
St. Louis, Missouri 63141
(Address, including zip code, of principal executive offices)
Registrant’s telephone number, including area code: (314) 994-2700
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 2.02 Results of Operations and Financial Condition
On November 9, 2016, Arch Coal, Inc. (the “Company”) issued a press release and supplementary materials announcing its financial results for the third quarter of fiscal 2016. A copy of the press release and the supplemental materials are furnished as Exhibit 99.1 and Exhibit 99.2, respectively, to this report and are incorporated herein by reference.
Item 7.01 Regulation FD Disclosure.
See the supplementary materials referred to in “Item 2.02. Results of Operations and Financial Condition” above and furnished as Exhibit 99.2 to this report.
The information in this Form 8-K under Item 2.02 and Item 7.01 and Exhibit 99.1 and Exhibit 99.2 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as expressly set forth by specific referencing in such filing.
Item 9.01. Financial Statements and Exhibits.
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Exhibit |
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Description |
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99.1 |
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Press release, dated November 9, 2016. |
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99.2 |
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Supplementary materials to press release, dated November 9, 2016. |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: November 9, 2016
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Arch Coal, Inc. | ||
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By: |
/s/ Robert G. Jones | |
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Name: |
Robert G. Jones |
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Title: |
Senior Vice President — Law, General Counsel and Secretary |
Exhibit 99.1
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NEWS FROM ARCH COAL |
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FOR IMMEDIATE RELEASE | |
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Media: Logan Bonacorsi 314/994.2766 |
Arch Coal, Inc. Files Form 10-Q
Covers final quarter of financial restructuring
ST. LOUIS, November 9, 2016 — Arch Coal, Inc. (NYSE:ARCH) today announced that it has filed its third quarter 10-Q with the Securities and Exchange Commission (SEC). The filing covers a time period in which Arch was under Chapter 11 protection, and the results reflect the company’s historical accounting basis, bankruptcy-related reorganization costs and
pre-emergence interest expense.
Arch successfully completed its financial restructuring and emerged from Chapter 11 on October 5, 2016. A better representation of Arch’s ongoing financial position will be contained in its future releases and disclosures. At that time, fresh start accounting will be fully incorporated into Arch’s financial statements and will provide a more valuable and valid point of comparison for future financial results.
Arch plans to issue an earnings release covering the time period following emergence in early 2017, and plans to host an investor conference call to discuss operational and financial results concurrent with the release.
An update to Arch’s regional operating performance and liquidity position covering the third quarter can be found in the “Investor” section of the Arch Coal website.
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 “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” or “will.” Forward-looking statements by their nature address matters that are, to varying 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 many 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.
Exhibit 99.2
Supplemental Information November 9, 2016
2 (1): Includes metallurgical and thermal coal mining complexes (2): Prior to restructuring, Arch included this non-cash reclamation charge in cash costs per ton Note: Reconciliation located at the end of this presentation REGIONAL PERFORMANCE (PER TON) (IN MILLIONS) Q1 2015 Q2 2015 Q3 2015 Q4 2015 2015 Q1 2016 Q2 2016 Q3 2016 Powder River Basin Tons sold (in millions) 28.5 25.5 29.5 25.0 108.5 16.5 15.6 22.8 Sales price per ton $13.48 $13.24 $13.07 $12.77 $13.15 $13.24 $13.08 $12.79 Cash cost per ton $10.77 $10.77 $9.91 $10.79 $10.54 $12.47 $11.72 $9.34 Cash margin per ton $2.71 $2.47 $3.16 $1.98 $2.61 $0.77 $1.36 $3.45 Appalachia (1) Tons sold (in millions) 3.0 3.1 3.0 2.8 11.9 2.8 2.7 2.9 Sales price per ton $65.23 $65.83 $62.24 $56.06 $62.47 $51.40 $52.62 $54.48 Cash cost per ton $51.59 $62.06 $48.13 $59.28 $55.26 $48.58 $56.46 $50.12 Cash margin per ton $13.64 $3.77 $14.11 ($3.22) $7.21 $2.82 ($3.84) $4.36 Bituminous Thermal Tons sold (in millions) 1.6 1.9 2.3 1.3 7.2 0.8 1.1 1.8 Sales price per ton $33.42 $30.37 $30.20 $30.32 $30.99 $32.55 $31.13 $28.92 Cash cost per ton $24.75 $19.93 $19.68 $25.50 $21.96 $35.08 $30.65 $17.48 Cash margin per ton $8.67 $10.44 $10.52 $4.82 $9.03 ($2.53) $0.48 $11.44 Arch Coal, Inc. Tons sold (in millions) 33.1 30.6 34.8 29.1 127.6 20.1 19.5 27.5 Sales price per ton $19.17 $19.66 $18.45 $17.76 $18.77 $19.38 $19.65 $18.30 Cash cost per ton $15.17 $16.55 $13.85 $16.14 $15.37 $18.46 $19.08 $14.23 Cash margin per ton $4.00 $3.10 $4.60 $1.62 $3.40 $0.92 $0.57 $4.07 Total Regional Cash Margin $132.4 $94.9 $160.0 $47.1 $434.6 $18.5 $11.1 $112.0 SG&A (22.6) (24.3) (25.7) (26.2) (98.8) (19.8) (19.0) (20.5) ARO Accretion (2) (8.4) (8.4) (8.4) (8.4) (33.7) (8.3) (8.0) (8.0) Liquidated Damages (13.0) (14.3) (13.0) (12.6) (52.9) (1.6) - - Other Income/(Expense) (6.5) (2.6) 21.9 (11.6) 1.2 1.2 7.6 (2.2) EBITDAR $81.8 $45.3 $134.8 ($11.8) $250.1 ($10.0) ($8.4) $81.4 Chapter 11 Period
3 Arch’s proforma liquidity position at October 5 (1) Primarily consists of professional fees, exit collateral and cure payments Note: In addition to the bankruptcy exit payments made prior to or upon our emergence, we expect to make additional exit related payments totaling $77.7 million subsequent to emergence. The remaining payments primarily relate to exit collateral, professional fees, remaining settlement payments to general unsecured creditors, and cure payments. We expect a majority of the payments to be made by the end of 2016. ($ IN MILLIONS) Cash at 9/30 $512 Restructuring Exit Payments Additional First-Lien Adequate Protection (80) General Unsecured Creditor Settlement (23) Warrant Redemption (10) Other Exit Costs (1) (12) Cash at Emergence $387 Additional Restructuring Payments (78) Proforma Cash at Emergence $309 ($ IN MILLIONS)
4 Reconciliation of Non-GAAP measures Included in the this presentation, 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 EBITDAR condition. Therefore, Adjusted EBITDAR should not be considered in isolation, nor as an alternative to net income, income Adjusted EBITDAR is defined as net income attributable to the Company before the effect of net interest expense, income taxes, depreciation, depletion and amortization, the amortization of acquired sales contracts and reorganization items, net. Adjusted EBITDAR may also be adjusted for items that may not reflect the trend of future results. Adjusted EBITDAR is not a measure of financial performance in accordance with generally accepted accounting principles, and items excluded from Adjusted EBITDAR are significant in understanding and assessing our financial 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 EBITDAR 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 EBITDAR may not be comparable to similarly titled measures used by other companies. The table below shows how we calculate Adjusted EBITDAR. 2016 2015 2016 2015 Net loss (51,421) $ (1,999,476) $ (434,010) $ (2,280,774) $ Income tax (benefit) expense (3,270) (343,865) (4,626) (351,332) Interest expense, net 45,582 99,087 133,235 294,578 Depreciation, depletion and amortization 69,423 103,965 191,581 306,211 Amortization of acquired sales contracts, net 104 (1,994) (728) (7,028) Asset impairment and mine closure costs 46 2,120,292 129,267 2,139,438 Losses from disposed operations resulting from Patriot Coal bankruptcy - 149,314 - 149,314 Expenses related to debt restructuring - 7,482 2,213 11,498 Reorganization items, net 20,904 - 46,050 - Adjusted EBITDAR 81,368 $ 134,805 $ 62,982 $ 261,905 $ Three Months Ended September 30, Nine Months Ended September 30, (Unaudited) (Unaudited)
5 Reconciliation of Non-GAAP measures Regional cash cost per tons sold Regional cash costs per ton sold are calculated as the regional cash cost of tons sold divided by the region’s tons sold. The regional cash cost of tons sold are adjusted for transportation costs, and may be adjusted for other items that, due to accounting rules, are classified in “other (income) expense, net” on the statement of operations, but relate directly to the costs incurred to produce coal. Regional cash cost of tons sold is not a measure of financial performance in accordance with generally accepted accounting principles. We believe regional cash cost of tons 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, regional cash cost of tons sold should not be considered in isolation, nor as an alternative to cost of sales under generally accepted accounting principles. Q1 2015 Q2 2015 Q3 2015 Q4 2015 2015 Q1 2016 Q2 2016 Q3 2016 Regional Cash Cost of Sales 501.2 506.0 482.2 471.7 1,961.1 371.8 370.2 391.5 Diesel fuel risk management derivative settlements classified in "Other" (1.2) (1.0) (2.7) (3.3) (8.2) (1.3) (1.2) (1.2) Transportation costs 43.1 44.3 47.2 46.7 181.2 37.5 37.8 46.3 Asset retirement obligation accretion 8.4 8.4 8.418 8.4 33.680 8.3 8.050 7.965 Other (other operating segments, operating overhead, etc.) 10.9 8.5 5.0 14.1 38.6 3.0 4.2 5.7 Cost of sales 562.3 566.3 540.2 537.7 2,206.4 419.3 419.0 450.4
