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10-Q
ARCH COAL INC filed this Form 10-Q on 10/31/2017
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Operational Performance - Predecessor

Three and Nine Months Ended September 30, 2016

Our mining operations are evaluated based on Adjusted EBITDAR, per-ton cash operating costs (defined as including all mining costs except depreciation, depletion, amortization, accretion on asset retirements obligations, and pass-through transportation expenses), and on other non-financial measures, such as safety and environmental performance. 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 sales contracts, the accretion on asset retirement obligations, and reorganization items, net. Adjusted EBITDAR may also be adjusted for items that may not reflect the trend of future results by excluding transactions that are not indicative of our core operating performance. 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 condition. Therefore, Adjusted EBITDAR 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. Furthermore, analogous measures are used by industry analysts and investors to evaluate the Company’s operating performance. Investors should be aware that our presentation of Adjusted EBITDAR may not be comparable to similarly titled measures used by other companies.

The following table shows results by operating segment for the three and nine months ended September 30, 2016.

 
Predecessor
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2016
 
2016
Powder River Basin
 
 
 
Tons sold (in thousands)
22,767

 
54,911

Coal sales per ton sold
$
12.79

 
$
13.01

Cash cost per ton sold
$
9.34

 
$
10.95

Cash operating margin per ton sold
$
3.45

 
$
2.06

Adjusted EBITDAR (in thousands)
$
78,880

 
$
113,185

Metallurgical
 
 
 
Tons sold (in thousands)
2,220

 
6,692

Coal sales per ton sold
$
55.37

 
$
53.15

Cash cost per ton sold
$
51.29

 
$
51.40

Cash operating margin per ton sold
$
4.08

 
$
1.75

Adjusted EBITDAR (in thousands)
$
9,092

 
$
11,851

Other Thermal
 
 
 
Tons sold (in thousands)
2,468

 
5,181

Coal sales per ton sold
$
34.52

 
$
36.16

Cash cost per ton sold
$
23.10

 
$
30.28

Cash operating margin per ton sold
$
11.42

 
$
5.88

Adjusted EBITDAR (in thousands)
$
28,704

 
$
31,448


This table reflects numbers reported under a basis that differs from U.S. GAAP. See the “Reconciliation of Non-GAAP measures” below for explanation and reconciliation of these amounts to the nearest GAAP figures. Other companies may calculate these per ton amounts differently, and our calculation may not be comparable to other similarly titled measures.  
    
Powder River Basin — Adjusted EBITDAR for the three months ended September 30, 2016 benefited from a favorably warm summer cooling season and increasing natural gas pricing that made Powder River Basin coal competitive with the competing fuel for electric generation for most of our customers. The increasing volume of tons sold in the three months ended September 30, 2016 significantly reduced cost of sales per ton sold. This contrasted with the first half of 2016, which was negatively impacted by historically low natural gas pricing that made Powder River Basin coal economically uncompetitive for electric generation versus the competing fuel for many of our customers. During the first half of 2016 unfavorably warm 2015-2016 winter season temperatures and increased natural gas production levels from shale resources kept the price of the competing fuel at unsustainably low levels.


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