Contura Energy, Inc. (NYSE: CTRA), a leading U.S. coal supplier, recently stated results for the 4th quarter and full-year 2K18 through December 31, 2K18.
Net income from continuing operations of $156M for the 4th quarter 2K18 difference with net income of $115M in the similar period last year(1)
Adjusted EBITDA of $111M for the quarter difference with $44M in the similar period last year
Merger-related synergies progressing ahead of plan
“Between the successful completion of our merger with Alpha and the refinancing of our term loans, together with our listing on the New York Stock Exchange, the 4th quarter of 2K18 was filled with remarkable planned milestones for the future of our company,” said Kevin Crutchfield, chief executive officer. “Right Away after the closing of those transactions, our focus shifted towards integration and synergy realization – and we are making excellent progress on both fronts with synergies progressing ahead of our initial expectations. In addition to emphasizing operational enhancements, we continue to increase our shareholder outreach to expand our visibility as a recently-listed NYSE company.”
The following 4th quarter results reflect a full quarter of Contura results and a partial quarter of Alpha results post-merger. Contura has four reportable segments: Central Appalachia (CAPP) – Met, CAPP – Thermal, Northern Appalachia (NAPP), and Trading and Logistics (T&L).
Total revenues in the 4th quarter were $572.1M. Coal revenues in the 4th quarter, apart from freight and handling fulfillment revenues, were $479.2M, with CAPP – Met coal revenues accounting for $247.2M, T&L accounting for $106.4M, and NAPP coal revenues totaling $89.9M. CAPP – Thermal revenues were $35.7M for a partial 4th quarter 2K18. Comparatively, in the 4th quarter 2K17, CAPP – Met revenues were $90.2M, T&L revenues were $141.1M, and NAPP revenues were $61.1M of the $292.4M in total coal revenues.
CAPP – Met coal shipments for the 4th quarter 2K18 were 2.1M tons at an average per ton realization of $119.37, difference to 0.8M tons at $109.09 per ton in the previous year’s 4th quarter. Contura shipped 2.0M tons of NAPP coal throughout the quarter at an average per-ton realization of $45.63, up from 1.4M tons at $43.89 per ton in the 4th quarter 2K17. CAPP – Thermal shipments for a partial quarter were 0.6M tons. In the T&L segment, coal volumes were 0.8M tons in the 4th quarter of 2K18, down from 1.2M tons in the 4th quarter 2K17. 4th quarter 2K18 included Alpha-related T&L sales only through the merger closing on November 9, after which they are accounted for as part of captive CAPP – Met sales. The average T&L realization raised from $115.37 per ton in the previous year’s 4th quarter to $127.88 per ton throughout the 4th quarter 2K18.
Freight and handling fulfillment revenues in the 4th quarter 2K18 were $95.1M difference with $56.0M in the previous year period.
Total costs and costs throughout the 4th quarter 2K18 were $554.7M and cost of coal sales was $366.7M, difference with $304.9M and $245.2M, respectively, in the similar period a year ago. The cost of coal sales in CAPP – Met for the quarter averaged $84.14 per ton, up from $74.68 in the previous year period. CAPP – Met costs include $0.49 per ton in idle costs.
The main drivers of raised costs as compared to last year expectations were higher labor costs, which accounted for about $4.00 a ton of the raised costs, and higher supply and maintenance costs, which raised costs by about $3.50 per ton. Also, higher sales-related costs resulting from strong metallurgical coal realizations contributed to higher costs per ton by about $1.00. CAPP – Thermal cost of coal sales averaged $67.40 per ton in the 4th quarter 2K18, counting idle costs of $0.32 per ton, and were elevated because of accelerated reclamation at a surface mine.
NAPP cost of coal sales was $32.64 per ton difference with $46.04 per ton in the year-ago period, which was negatively influenced by a formerly revealed roof fall. In the T&L segment, the cost of coal sales throughout the 4th quarter 2K18 was $101.68 per ton as compared to $97.62 per ton in the 4th quarter 2K17.
Selling, general and administrative (SG&A) costs for the 4th quarter 2K18 were $15.8M, up from $11.4Min the year-ago period. The year-ago period included about $2.7M in non-cash stock compensation and charges related to the company’s incentive plan. Included in the SG&A costs for the 4th quarter 2K18 is about $3.1M in non-cash stock compensation. Depreciation, depletion, and amortization was $43.6M throughout the 4th quarter 2K18 and amortization of attained intangibles was $(17.9)M, difference with $9.6M and $9.9M, respectively, in the similar period last year, apart from suspended operations.
Contura stated net income from continuing operations of $155.9M, or $9.85 per diluted share from continuing operations, for the 4th quarter 2K18. In the 4th quarter 2K17, the company had net income from continuing operations of $114.7M or $10.83 per diluted share from continuing operations.
Total adjusted EBITDA was $111.2M for the 4th quarter, difference with $44.4M in the 4th quarter of 2K17, adjusted to remove the impact of suspended operations.
Liquidity and Capital Resources
Cash used for operating activities for the 4th quarter 2K18, counting suspended operations, was $17.9M and capital costs for the 4th quarter were $25.2M. In the previous year period, the cash offered by operating activities was $54.3M and capital costs were $24.4M. Capital costs of $2.3M from suspended operations are excluded from the previous year’s total.
At the end of December 2K18, Contura had $233.6M in unrestricted cash. Total long-term debt, counting the current portion of long-term debt as of December 31, 2K18, was about $588.0M. At the end of the quarter, the company had total liquidity of $429.9M, counting cash and cash equivalents of $233.6M and $196.3M of unused commitments available under the Asset-Based Revolving Credit Facility.
As of December 31, 2K18, the company had no borrowings and $28.7M in letters of credit outstanding under the Asset-Based Revolving Credit Facility. In Addition To, as a result of the merger with Alpha, the Company assumed $135.7M in letters of credit outstanding under the Amended and Restated Letter of Credit Agreement and $11.9M in letters of credit outstanding under the Credit and Security Agreement.
On November 9, 2K18, Contura’s merger with ANR, Inc. and Alpha Natural Resources Holdings, Inc. (together “Alpha”) was accomplished, creating the leading metallurgical coal supplier in the U.S., complemented by a cost-competitive thermal coal portfolio.
In conjunction with the transaction closing, Contura (“CTRA”) shares were listed and began trading on the New York Stock Exchange. Can presently, the company refinanced its and legacy-Alpha’s term loans with a new $550M, 7-year term loan credit facility. In addition, the company raised its asset-backed revolving credit facility from $125Mto $225M.
The company is making solid strides on the integration front and the anticipated synergy realizations on a run-rate basis are progressing ahead of the company’s initial plan, which targeted $30M to $50M in 2K19.
The company plans to hold a conference call regarding its 4th quarter and full-year 2K18 results on April 3, 2K19, at 9:00 a.m. EST.