BRISTOL, Tenn., Feb. 10, 2020 /PRNewswire/ -- Contura Energy,
Inc. (NYSE: CTRA), a leading U.S. coal supplier, today announced
updated guidance for 2020 as well as certain preliminary, unaudited
financial results for the fourth quarter of 2019. The company
expects to announce its audited financial results for full-year and
fourth quarter 2019 on or about March 13,
2020.
"As we continue to chart a new course for Contura, one that
includes broad operational improvements, cost containment at
administrative and overhead levels, and a lean, nimble
organizational structure that facilitates quicker decisions, I felt
it important to share an interim update on the company," said
David Stetson, Contura's chairman
and chief executive officer. "The progress made on all of
these fronts during the fourth quarter gives us confidence in
revising our previously issued guidance to reflect our efforts in
reducing costs, as well as a recognition of the need for changing
sales targets to better reflect the reality of the current
environment."
"Despite the market headwinds of the last several months, I am
proud that our team has delivered a strong performance in
containing costs, streamlining decision-making and safely
increasing productivity," said Stetson. "Circumstances like these
require difficult decisions, but we continue to meet these
challenges with strategic thinking and a commitment to closely
managing the parts of the business within our control."
(1)
|
Represents non-GAAP
coal revenues which is defined and reconciled under "Non-GAAP
Financial Measures" and "Certain Preliminary Unaudited Results of
Operations."
|
Unaudited Operational Results:
|
(in millions, except
for per ton data)
|
|
4Q19
|
3Q19
|
Coal
revenues
|
$497.2
|
$524.0
|
Cost of coal
sales
|
$444.6
|
$467.7
|
|
|
|
Coal revenues
(excl. f&h) (2)
|
$424.1
|
$461.1
|
Cost of coal
sales (excl.
f&h/idle) (2)
|
$365.9
|
$400.0
|
|
|
|
Tons
sold
|
|
|
CAPP -
Met
|
3.3
|
3.0
|
CAPP -
Thermal
|
0.9
|
1.1
|
NAPP
|
1.5
|
1.6
|
Coal sales
realization per ton (2)
|
|
|
CAPP -
Met
|
$94.98
|
$108.35
|
CAPP -
Thermal
|
$56.13
|
$61.46
|
NAPP
|
$41.17
|
$41.33
|
Cost of coal sales
per ton sold (2)
|
|
|
CAPP -
Met
|
$82.13
|
$87.32
|
CAPP -
Thermal
|
$49.21
|
$59.17
|
NAPP
|
$34.67
|
$43.87
|
Coal margin per
ton (2)
|
|
|
CAPP -
Met
|
$12.85
|
$21.03
|
CAPP -
Thermal
|
$6.92
|
$2.29
|
NAPP
|
$6.50
|
$(2.54)
|
__________________________________
(2)
|
Represents
non-GAAP coal revenues, non-GAAP cost of coal sales, non-GAAP coal
sales realization per ton, non-GAAP cost of coal sales per ton, and
non-GAAP coal margin per ton which are defined and reconciled under
"Non-GAAP Financial Measures" and "Certain Preliminary Unaudited
Results of Operations."
|
"In spite of challenged coal markets and multiple reductions in
overhead staffing, Contura's Central Appalachian (CAPP) deep mines
showed continued strengthening in Q4 realizing nearly a 10%
increase in feet per shift over Q3 performance. It is important to
note that Contura's CAPP NFDL safety rate also improved by nearly
10% over the same period," said Jason
Whitehead, Contura's chief operating
officer. "Continuing our strategic initiatives of reducing our
thermal footprint, Contura's Republic Surface mine has now
redesigned and accelerated its plans to shift into a metallurgical
mine. Previously a thermal coal operation in 2019, Republic
output has now reached 60% metallurgical quality. Our Highland
Surface and Black Castle Surface mines are continuing to execute on
their mine-to-reclamation plans and will conclude production in Q1
of 2020 and Q1 of 2021 respectively."
Other Unaudited Financial Measures:
|
(millions)
|
|
Three months
ended
|
|
Dec. 31,
2019
|
SG&A
|
$25.8
|
Less: non-cash
stock compensation and
one-time expenses
|
($12.7)
|
Non-GAAP
SG&A(3)
|
$13.1
|
__________________________________
(3)
|
Refer to "Non-GAAP
Financial Measures" below.
|
Selling, general and administrative (SG&A) expense for the
fourth quarter was $25.8 million.
Non-GAAP SG&A expense for the quarter was $13.1 million, excluding $12.7 million of non-cash or one-time expenses,
including stock compensation and severance and management
restructuring costs. Idle/closed mine costs were approximately
$6 million in the fourth quarter, and
the company also anticipates a loss on disposal of assets of
approximately $7 million.
At the end of 2019, Contura had a total liquidity of
$327.8 million, including cash and
cash equivalents of $212.8 million,
which includes the receipt of an AMT credit refund of $65.3 million, and $115.0
million of unused commitments available under the
Asset-Based Revolving Credit Facility.
Contura is performing goodwill and long-lived asset impairment
tests as of December 31, 2019
primarily due to the decline in global coal market pricing and
Contura's equity pricing. Based on preliminary impairment testing
results, the company expects that it will be required to record a
long-lived asset impairment charge of approximately $60 million to write down the carrying value of
the company's long-lived assets. In the fourth quarter, the company
also expects to record a goodwill impairment charge, potentially up
to the full carrying value of $124
million.
Capital Projects Update
The Kepler complex, which produces premium CAPP low volatile
metallurgical coal, finished excavation of the Road Fork 52 slope
during the fourth quarter of 2019 and initiated installation of
ventilation systems, a conveyor and other infrastructure. As
previously announced, Road Fork 52 is expected to begin production
late in the first quarter of 2020.
The Black Eagle mine is continuing development, on its planned
pace, of a mine corridor towards the main reserve body. Corridor
development is expected to conclude in the fourth quarter of 2020.
Black Eagle will continue to contribute low ash and low sulfur
premier high volatile coal to Marfork.
With all necessary property acquisitions completed, Bandmill's
Lynn Branch mine began construction
during the fourth quarter of 2019. Production in the 20-million-ton
high volatile metallurgical reserve body is expected to commence in
the third quarter of 2020.
Together, Road Fork 52, Black Eagle and Lynn Branch represent approximately 27% of
annual metallurgical capacity with cost structures expected to be
in the $65-$70 range.
Indian Creek Reserves Transaction Closing
On January 28, 2020, the company
closed on a previously announced acquisition of certain assets
adjacent to Contura's recently excavated Road Fork 52 slope in
Wyoming County, West Virginia.
Contura purchased certain mining equipment and other assets
from Mission Coal Company, LLC (Mission), and entered into a new
lease with the owner of the coal reserves. Mission formerly
controlled the coal reserves when it filed for Chapter 11
bankruptcy protection. Through its new lease, Contura obtained the
right to mine a large block of coal known as the "Indian Creek" reserves. The transaction allows
Contura's Road Fork 52 operation to access approximately 10 million
additional tons of clean, recoverable, low-vol metallurgical coal
in the Pocahontas No. 3 seam. These additional reserves are
expected to extend the mine's projected life to more than 25
years.
Updated 2020 Guidance
The company is adjusting its 2020 guidance for CAPP - Met
shipments to a range of 12.0 million tons to 12.6 million tons,
from the previously announced guidance of 12.7 million tons to 13.3
million tons. The range for CAPP – Thermal shipments is being
reduced to 2.7 million tons to 3.3 million tons, from a previously
announced range of 3.4 million tons to 4.0 million tons. NAPP
shipment guidance remains as previously disclosed at a range of 6.0
million tons to 6.8 million tons.
For 2020, Contura has committed and priced approximately 42% of
CAPP - Met tons at an average expected price of $101.31 per ton, 100% of CAPP - Thermal tons at
an average price of $55.54 per ton
and 99% of NAPP tons at an average price of $43.34 per ton.
The previously announced guidance for cost of coal sales remains
unchanged for 2020, with CAPP - Met expected to be in a range of
$76.00 to $81.00, CAPP - Thermal expected to be in the
range of $56.00 to $60.00 per ton and NAPP in the range of
$34.00 to $38.00 per ton.
The company is lowering its SG&A expense guidance to be in
the range of $50 million to
$55 million, excluding non-recurring
items and stock compensation. Idle operations expense is expected
to be in a slightly higher range of $16
million to $20 million, as
compared to the previously announced $14
million to $18 million range,
due to the idling of the Litwar
coal preparation facility. 2020 capital expenditure is estimated to
remain in the previously announced range of $175 million to $195
million; depreciation, depletion and amortization is
expected to be between $230 million
and $260 million; and cash interest
expense is expected to be in the range of $48 million and $52
million.
"During the past several weeks, we undertook significant efforts
to reduce our SG&A cost structure, as well as eliminate costs
from our overhead/production support organization. Those
efforts led to a $10 million
reduction in our SG&A costs, as well as a total of $20 million reduction in overhead costs, all of
which have already been secured and included in our revised
guidance," said Andy Eidson,
Contura's chief financial officer. "It is also worth noting
that we are maintaining our operating cost guidance in spite of a
1.4-million-ton total reduction in sales volume guidance (at range
midpoints), which reflects the continued productivity achievements
of the operations team."
|
2020
Guidance
|
in millions of
tons
|
Low
|
High
|
CAPP -
Metallurgical
|
12.0
|
|
12.6
|
|
CAPP -
Thermal
|
2.7
|
|
3.3
|
|
NAPP
|
6.0
|
|
6.8
|
|
Total
Shipments
|
20.7
|
|
22.7
|
|
|
|
|
Committed/Priced1,2,3
|
Committed
|
Average
Price
|
CAPP -
Metallurgical
|
42
|
%
|
$101.31
|
|
CAPP -
Thermal
|
100
|
%
|
$55.54
|
|
NAPP
|
99
|
%
|
$43.34
|
|
|
|
|
Committed/Unpriced1,3
|
Committed
|
|
CAPP -
Metallurgical
|
28
|
%
|
|
CAPP -
Thermal
|
0
|
%
|
|
NAPP
|
1
|
%
|
|
|
|
|
Costs per
ton4
|
Low
|
High
|
CAPP -
Metallurgical
|
$76
|
|
$81
|
|
CAPP -
Thermal
|
$56
|
|
$60
|
|
NAPP
|
$34
|
|
$38
|
|
|
|
|
In millions
(except taxes)
|
Low
|
High
|
SG&A5
|
$50
|
|
$55
|
|
Idle Operations
Expense
|
$16
|
|
$20
|
|
Cash Interest
Expense
|
$48
|
|
$52
|
|
DD&A
|
$230
|
|
$260
|
|
Capital
Expenditures
|
$175
|
|
$195
|
|
Tax Rate
|
—
|
%
|
5
|
%
|
Notes:
1.
|
Based on committed
and priced coal shipments as of January 31, 2020. Committed
percentage based on the midpoint of shipment guidance
range.
|
2.
|
Actual average
per-ton realizations on committed and priced tons recognized in
future periods may vary based on actual freight expense in future
periods relative to assumed freight expense embedded in projected
average per-ton realizations.
|
3.
|
Includes estimates of
future coal shipments based upon contract terms and anticipated
delivery schedules. Actual coal shipments may vary from these
estimates.
|
4.
|
Note: The Company is
unable to present a quantitative reconciliation of its
forward-looking non-GAAP cost of coal sales per ton sold financial
measures to the most directly comparable GAAP measures without
unreasonable efforts due to the inherent difficulty in forecasting
and quantifying with reasonable accuracy significant items required
for the reconciliation. The most directly comparable GAAP measure,
GAAP cost of sales, is not accessible without unreasonable efforts
on a forward- looking basis. The reconciling items include freight
and handling costs, which are a component of GAAP cost of sales.
Management is unable to predict without unreasonable efforts
freight and handling costs due to uncertainty as to the end market
and FOB point for uncommitted sales volumes and the final shipping
point for export shipments. These amounts have historically varied
and may continue to vary significantly from quarter to quarter and
material changes to these items could have a significant effect on
our future GAAP results.
|
5.
|
Excludes expenses
related to non-cash stock compensation, merger-related expenses and
non-recurring business development expenses.
|
Conference Call
Contura's chairman and chief executive officer, David Stetson, chief financial officer,
Andy Eidson, and chief operating
officer, Jason Whitehead, will participate in an exchange call
hosted by The Benchmark Company on February
11 at 2:00 p.m. EST. The
discussion will focus on Contura's preliminary operational and
financial review for the fourth quarter of 2019, coal market
dynamics and management's plans for reduced costs and optimized
performance in 2020. Those who would like to hear the conference
call, and analysts who would like to participate, should dial
917-920-2973 approximately 10 minutes prior to the start of the
call. An audio recording of the call will be provided as soon as
available in the Events section of the Investor page of Contura's
website at investors.conturaenergy.com/investors/.
ABOUT CONTURA ENERGY
Contura Energy (NYSE: CTRA) is a Tennessee-based coal supplier with affiliate
mining operations across major coal basins in Pennsylvania, Virginia and West
Virginia. 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.
IMPORTANT INFORMATION ABOUT PRELIMINARY FINANCIAL
RESULTS
The financial results presented in
this news release, as of and for the three months ended
December 31, 2019, are preliminary,
unaudited, subject to completion, reflect management's current good
faith estimates and may be significantly revised as a result of
further review and developments. Final results for this period
could differ materially from the preliminary results presented in
this news release. During the course of the preparation of
consolidated financial statements and related notes as of and for
the three months ended December 31,
2019, the company may identify items that would require
material adjustments to the preliminary financial information. The
preliminary financial results presented in this news release should
therefore not be viewed as a substitute for, or indicative of, full
financial statements prepared in accordance with generally accepted
accounting principles in the United
States (GAAP). In addition, these preliminary estimates as
of and for the three months ended December
31, 2019 are not necessarily indicative of the potential
results for any future period.
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. You should review
the company's filings with the Securities and Exchange Commission
for information about some of the risk factors that may affect the
company. These factors are difficult to predict accurately and may
be beyond Contura's control. 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 the company to predict these events or how
they may affect Contura. Except as required by law, 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.
INVESTOR CONTACT
investorrelations@conturaenergy.com
Alex Rotonen, CFA
423.573.0396
MEDIA
CONTACT
corporatecommunications@conturaenergy.com
Emily O'Quinn
423.573.0369
Non-GAAP Financial Measures
The discussion contains "non-GAAP financial measures." These are
financial measures which either exclude or include amounts that are
not excluded or included in the most directly comparable measures
calculated and presented in accordance with generally accepted
accounting principles in the United
States ("GAAP"). Specifically, the company makes use of the
non-GAAP financial measure "non-GAAP coal revenues," "non-GAAP cost
of coal sales," and "non-GAAP SG&A." The company uses non-GAAP
coal revenues to present coal revenues generated, excluding freight
and handling fulfillment revenues. Non-GAAP coal sales realization
per ton for its operations is calculated as non-GAAP coal revenues
divided by tons sold. The company uses non-GAAP cost of coal sales
to adjust cost of coal sales to remove freight and handling costs
and idled and closed mine costs. Non-GAAP cost of coal sales per
ton for operations is calculated as non-GAAP cost of coal sales
divided by tons sold. Non-GAAP coal margin per ton for coal
operations is calculated as non-GAAP coal sales realization per ton
for coal operations less cost of non-GAAP coal sales per ton for
coal operations. The company uses non-GAAP SG&A to adjust
SG&A to remove non-cash stock compensation and one-time
expenses. The presentation of these measures should not be
considered in isolation, or as a substitute for analysis of company
results as reported under GAAP.
Management uses non-GAAP financial measures to supplement GAAP
results to provide a more complete understanding of the factors and
trends affecting the business than GAAP results alone. 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. Because not all companies use
identical calculations, the presentations of these measures may not
be comparable to other similarly titled measures of other companies
and can differ significantly from company to company depending on
long-term strategic decisions regarding capital structure, the tax
jurisdictions in which companies operate, and capital
investments.
Included below are reconciliations of non-GAAP financial
measures to GAAP financial measures.
CONTURA ENERGY,
INC. AND SUBSIDIARIES
|
CERTAIN
PRELIMINARY UNAUDITED RESULTS OF OPERATIONS
|
|
|
Three Months Ended
December 31, 2019
|
(In thousands,
except for per ton data)
|
CAPP -
Met
|
|
CAPP -
Thermal
|
|
NAPP
|
|
All
Other
|
|
Consolidated
|
Coal
revenues
|
$
|
370,200
|
|
|
$
|
60,576
|
|
|
$
|
65,775
|
|
|
$
|
681
|
|
|
$
|
497,232
|
|
Less: freight and
handling fulfillment
revenues
|
(59,320)
|
|
|
(10,450)
|
|
|
(3,397)
|
|
|
—
|
|
|
(73,167)
|
|
Non-GAAP coal
revenues
|
$
|
310,880
|
|
|
$
|
50,126
|
|
|
$
|
62,378
|
|
|
$
|
681
|
|
|
$
|
424,065
|
|
Tons sold
|
3,273
|
|
|
893
|
|
|
1,515
|
|
|
8
|
|
|
5,689
|
|
Non-GAAP coal sales
realization per ton (1)
|
$
|
94.98
|
|
|
$
|
56.13
|
|
|
$
|
41.17
|
|
|
$
|
85.13
|
|
|
$
|
74.54
|
|
|
|
|
|
|
|
|
|
|
|
Cost of coal
sales
|
$
|
330,883
|
|
|
$
|
55,653
|
|
|
$
|
57,701
|
|
|
$
|
374
|
|
|
$
|
444,611
|
|
Less:
freight and handling costs
|
(59,320)
|
|
|
(10,450)
|
|
|
(3,397)
|
|
|
—
|
|
|
(73,167)
|
|
Less: idled and
closed mine costs
|
(2,757)
|
|
|
(1,260)
|
|
|
(1,783)
|
|
|
290
|
|
|
(5,510)
|
|
Non-GAAP cost of coal
sales
|
$
|
268,806
|
|
|
$
|
43,943
|
|
|
$
|
52,521
|
|
|
$
|
664
|
|
|
$
|
365,934
|
|
Tons sold
|
3,273
|
|
|
893
|
|
|
1,515
|
|
|
8
|
|
|
5,689
|
|
Non-GAAP cost of coal
sales per ton (2)
|
$
|
82.13
|
|
|
$
|
49.21
|
|
|
$
|
34.67
|
|
|
$
|
83.00
|
|
|
$
|
64.32
|
|
|
|
|
|
|
|
|
|
|
|
Coal margin per ton
(3)
|
$
|
12.01
|
|
|
$
|
5.51
|
|
|
$
|
5.33
|
|
|
$
|
38.38
|
|
|
$
|
9.25
|
|
Idled and closed mine
costs per ton
|
0.84
|
|
|
1.41
|
|
|
1.17
|
|
|
(36.25)
|
|
|
0.97
|
|
Non-GAAP coal margin
per ton (4)
|
$
|
12.85
|
|
|
$
|
6.92
|
|
|
$
|
6.50
|
|
|
$
|
2.13
|
|
|
$
|
10.22
|
|
|
|
(1)
|
Non-GAAP coal sales
realization per ton for our operations is calculated as non-GAAP
coal revenues divided by tons sold.
|
(2)
|
Non-GAAP cost of coal
sales per ton for our operations is calculated as non-GAAP cost of
coal sales divided by tons sold.
|
(3)
|
Coal margin per ton
for our coal operations is calculated as coal sales realization per
ton for our coal operations less cost of coal sales per ton for our
coal operations.
|
(4)
|
Non-GAAP coal margin
per ton for our coal operations is calculated as non-GAAP coal
sales realization per ton for our coal operations less non-GAAP
cost of coal sales per ton for our coal operations.
|
|
Three Months Ended
September 30, 2019
|
(In thousands,
except for per ton data)
|
CAPP -
Met
|
|
CAPP
-
Thermal
|
|
NAPP
|
|
All
Other
|
|
Consolidated
|
Coal
revenues
|
$
|
373,078
|
|
|
$
|
80,174
|
|
|
$
|
70,735
|
|
|
$
|
—
|
|
|
$
|
523,987
|
|
|
Less: freight and
handling fulfillment
revenues
|
(50,100)
|
|
|
(9,869)
|
|
|
(2,961)
|
|
|
—
|
|
|
(62,930)
|
|
|
Non-GAAP coal
revenues
|
$
|
322,978
|
|
|
$
|
70,305
|
|
|
$
|
67,774
|
|
|
$
|
—
|
|
|
$
|
461,057
|
|
|
Tons sold
|
2,981
|
|
|
1,144
|
|
|
1,640
|
|
|
—
|
|
|
5,765
|
|
|
Non-GAAP coal sales
realization per ton (1)
|
$
|
108.35
|
|
|
$
|
61.46
|
|
|
$
|
41.33
|
|
|
$
|
—
|
|
|
$
|
79.98
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of coal
sales
|
$
|
312,369
|
|
|
$
|
78,022
|
|
|
$
|
75,571
|
|
|
$
|
1,696
|
|
|
$
|
467,658
|
|
|
Less: freight and
handling costs
|
(50,100)
|
|
|
(9,869)
|
|
|
(2,961)
|
|
|
—
|
|
|
(62,930)
|
|
|
Less: idled and
closed mine costs
|
(1,956)
|
|
|
(458)
|
|
|
(659)
|
|
|
(1,696)
|
|
|
(4,769)
|
|
|
Non-GAAP cost of coal
sales
|
$
|
260,313
|
|
|
$
|
67,695
|
|
|
$
|
71,951
|
|
|
$
|
—
|
|
|
$
|
399,959
|
|
|
Tons sold
|
2,981
|
|
|
1,144
|
|
|
1,640
|
|
|
—
|
|
|
5,765
|
|
|
Non-GAAP cost of coal
sales per ton (2)
|
$
|
87.32
|
|
|
$
|
59.17
|
|
|
$
|
43.87
|
|
|
$
|
—
|
|
|
$
|
69.38
|
|
|
|
|
|
|
|
|
|
|
|
|
Coal margin per ton
(3)
|
$
|
20.37
|
|
|
$
|
1.88
|
|
|
$
|
(2.95)
|
|
|
$
|
—
|
|
|
$
|
9.77
|
|
|
Idled and closed mine
costs per ton
|
0.66
|
|
|
0.41
|
|
|
0.41
|
|
|
—
|
|
|
0.83
|
|
|
Non-GAAP coal margin
per ton (4)
|
$
|
21.03
|
|
|
$
|
2.29
|
|
|
$
|
(2.54)
|
|
|
$
|
—
|
|
|
$
|
10.60
|
|
|
|
|
(1)
|
Non-GAAP coal sales
realization per ton for our operations is calculated as non-GAAP
coal revenues divided by tons sold.
|
(2)
|
Non-GAAP cost of coal
sales per ton for our operations is calculated as non-GAAP cost of
coal sales divided by tons sold.
|
(3)
|
Coal margin per ton
for our coal operations is calculated as coal sales realization per
ton for our coal operations less cost of coal sales per ton for our
coal operations.
|
(4)
|
Non-GAAP coal margin
per ton for our coal operations is calculated as non-GAAP coal
sales realization per ton for our coal operations less non-GAAP
cost of coal sales per ton for our coal operations.
|
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SOURCE Contura Energy, Inc.