Alpha Natural Resources Announces Results for First Quarter 2011
ABINGDON, Va., May 3, 2011 /PRNewswire/ --
-- Metallurgical coal shipments rose 37 percent YOY to a record 3.6
million tons
-- Total revenue rose 23 percent YOY to a record $1.13 billion
-- Consistent free cash flow generation drives liquidity to a record $1.9
billion at March 31st
-- Massey transaction expected to close promptly after scheduled
shareholder meetings on June 1st
-- Alpha updates guidance for 2011 and 2012
Alpha Natural Resources, Inc.
, a leading U.S. coal producer, reported first quarter net income of $49.8 million or $0.41 per diluted share compared to net income of $14.0 million or $0.12 per diluted share last year. The first quarter 2011 income from continuing operations was $49.8 million or $0.41 per diluted share compared to income from continuing operations of $14.7 million or $0.12 per diluted share in the first quarter of 2010. Excluding amortization of coal supply agreements, merger-related expenses and related tax impacts, first quarter 2011 adjusted income from continuing operations was $79.7 million or $0.65 per diluted share compared to $84.2 million or $0.69 per diluted share last year.Earnings before interest, taxes, depreciation, depletion and amortization (EBITDA) from continuing operations for the first quarter 2011 was $193.0 million, compared to $218.5 million in the year ago period. Excluding merger-related expenses, first quarter 2011 adjusted EBITDA from continuing operations was $216.3 million.
Quarterly Financial & Operating Highlights
(millions, except per-share and per-ton amounts)
Q1 Q1
2011 2010
Coal revenues $987.0 $831.3
Income from continuing operations $49.8 $14.7
Income from continuing operations per diluted
share $0.41 $0.12
Net income $49.8 $14.0
Net income per diluted share $0.41 $0.12
Adjusted income from continuing operations* $79.7 $84.2
Adjusted income from continuing operations
per diluted share* $0.65 $0.69
EBITDA from continuing operations* $193.0 $218.5
Adjusted EBITDA from continuing operations* $216.3 $222.7
Tons of coal sold 21.0 21.4
Coal margin per ton $12.49 $12.15
*These are non-GAAP financial measures. A reconciliation of
adjusted income from continuing operations to income from
continuing operations, and a reconciliation of both EBITDA from
continuing operations and adjusted EBITDA from continuing operations
to income from continuing operations are included in tables
accompanying the financial schedules.
'Alpha's safety performance in the first quarter demonstrated the effectiveness of our 'Running Right' culture,' said Kevin Crutchfield, Alpha's chief executive officer. 'Our overall incident rate is well below the industry average; four of our operations received the 2010 West Virginia Holmes Safety Award; three of our operations received the 2010 Mountaineer Guardian Award; and two of our operations, the Cucumber mine and our Litwar processing facility, were honored with both the Guardian and the Holmes Award. I want to recognize and commend the collective efforts of Alpha's entire workforce as we strive to set a new standard of safety excellence.
'Based on the foundation laid during the first quarter, Alpha expects to deliver outstanding results in 2011. Since we last updated Alpha's contracted position in our fourth quarter 2010 earnings release, we have priced approximately 2.6 million tons of metallurgical coal for delivery in 2011. Of these newly contracted volumes, approximately 1.2 million tons commanded prices of approximately $324 per metric tonne. As the leading U.S. supplier of metallurgical coal, Alpha is positioned to benefit from increasing global demand for metallurgical coal and the resulting robust pricing environment.
'Our regional and product diversification, along with today's strong metallurgical coal market, served us well during the first quarter of 2011 as record metallurgical coal shipments and revenues somewhat offset a challenging quarter for our two Pittsburgh #8 longwall mines. As we progress through the year, quarterly results should reflect the benefit of increasing average realizations on newly contracted metallurgical coal and the roll-off of older metallurgical contracts, as well as improved performance from the longwall mines following the completion of the longwall move at Cumberland in early April and the operation of the second longwall at Emerald which should resume before the end of the second quarter.
'Alpha's acquisition of Massey Energy Company is nearing completion. After announcing the transaction on January 29th, we have successfully achieved every milestone to date on our anticipated schedule. We cleared our antitrust review under Hart-Scott-Rodino on April 1st; the definitive joint proxy statement/prospectus has been mailed; and we are on track for both companies to conduct their respective special meetings and shareholder votes on June 1st. The integration planning effort is in full swing; the business unit structure and senior management appointments have been announced; and we intend to hit the ground running as a combined entity once the transaction is closed. The combination of our two companies will make Alpha a true global leader, with over 5 billion tons of reserves, a leading global position in metallurgical coal shipments, a healthy balance sheet, and, importantly, a workforce of approximately 14,000 individuals exemplifying our Running Right culture, which I believe is the standard for excellence in the industry today. Following the closing of the transaction, Alpha will continue to execute according to our strategic plan, and Alpha will remain singularly focused on the thorough, thoughtful and successful integration of the two companies in order to maximize value for our shareholders.'
Financial Performance
Total revenues in the first quarter were $1.1 billion compared
to $922.0 million in the same period of 2010, and coal revenues
were $987.0 million, up 19 percent compared to $831.3 million
in the first quarter of 2010. Coal revenues were higher than
the year-ago period primarily due to a $253.0 million or 97
percent increase in metallurgical coal revenues which more than
offset a $114.0 million decrease in Eastern thermal coal
revenues. The year-over-year growth in metallurgical coal
revenues was attributable to increased shipment volumes and
average per ton realizations that rose 37 percent and 44
percent, respectively, compared to the first quarter of 2010.
Freight and handling revenues and other revenues were $116.1
million and $27.7 million, respectively, during the first
quarter compared to $64.8 million and $26.0 million,
-- respectively, in the year-ago period.
During the first quarter of 2011, Alpha shipped 12.5 million tons
of PRB coal, 4.9 million tons of Eastern steam coal and 3.6
million tons of metallurgical coal. Average per ton realization
for PRB shipments rose to $11.91 compared to $10.94 in the fourth
quarter of 2010 and $10.81 in the first quarter of 2010. The
average per ton realization for Eastern steam coal shipments in
the first quarter of 2011 was $66.89 compared to $67.04 in the
prior quarter and $67.40 in the first quarter last year, and the
average per ton realization for metallurgical coal increased to
$141.76 in the first quarter compared to $114.87 in the prior
quarter and $98.70 in the first quarter of 2010.
Total costs and expenses during the first quarter of 2011 were
$1.05 billion compared to $864.4 million in the first quarter
of 2010. Cost of coal sales was $735.0 million compared to
$575.1 million in the year-ago period. In addition to higher
royalties and severance taxes driven by increases in average
realizations, cost of coal sales increased year-over-year due
to higher volumes and average purchase cost of brokered coal,
increases in wages, salaries and employee benefits, and
increases in the cost of, and in some cases, usage of mine
-- supplies and services.
Cost of coal sales in the East averaged $71.30 per ton compared
to $50.64 in the first quarter last year. The higher Eastern
cost of coal sales per ton during the first quarter primarily
reflects reduced shipment volumes from our Pittsburgh #8
longwall mines due to a planned longwall move at the Cumberland
mine and the operation of a single longwall at the Emerald
mine, the influence of an increased volume of higher-cost
purchased coal, higher sales-related variable costs driven by
higher average realizations on metallurgical coal, and a mix
shift with less low-cost longwall production and more high-
cost underground metallurgical coal production. The cost of
coal sales per ton for Alpha Coal West's PRB mines was $9.66
during the first quarter of 2011 compared with $8.86 in the
-- first quarter of 2010.
Selling, general and administrative expense in the first quarter
2011 was $67.3 million compared to $47.8 million in the first
quarter of 2010. First quarter 2011 selling, general and
administrative expense reflects the impact of $23.3 million of
merger-related expenses primarily relating to M&A advisory
fees, bridge financing fees and consulting fees for pre-
closing integration activities attributable to the pending
Massey transaction. Depreciation, depletion and amortization
(DD&A) during the quarter was $88.6 million, and amortization
of acquired coal supply agreements resulting from the
-- Foundation merger was $26.0 million.
Alpha recorded net income of $49.8 million or $0.41 per diluted
share during the first quarter 2011 compared to net income of
$14.0 million or $0.12 per diluted share during the first
quarter of 2010. First quarter 2011 income from continuing
operations was also $49.8 million or $0.41 per diluted share
compared with $14.7 million or $0.12 per diluted share in the
year-ago quarter. First quarter 2011 net income and income
from continuing operations included $23.3 million of pre-tax
merger-related expenses and $26.0 million of pre-tax
amortization of coal supply agreements. Excluding these items
and related tax impacts, adjusted income from continuing
operations was $79.7 million or $0.65 per diluted share
compared to adjusted income from continuing operations of $84.2
million or $0.69 per diluted share in the first quarter of
-- 2010.
EBITDA from continuing operations was $193.0 million in the
first quarter 2011 compared to $218.5 million in the prior-
year period. Excluding merger-related expenses, adjusted
EBITDA from continuing operations was $216.3 million in the
first quarter of 2011 compared to $222.7 million in the first
-- quarter of 2010.
Liquidity and Capital Resources
Cash provided by operations (including discontinued operations) for the quarter ended March 31, 2011, was $168.4 million compared to $143.3 million for the first quarter of 2010.
Capital expenditures (including discontinued operations) for the first quarter 2011 were $57.1 million, versus $60.9 million in the comparable period last year.
At the end of the first quarter, Alpha had available liquidity of approximately $1.9 billion, consisting of cash, cash equivalents and marketable securities of an aggregate $916.4 million, plus $960.4 million available under the company's secured credit facilities. Total long-term debt, including current portion of long-term debt at March 31, 2011, was $760.8 million compared with $754.2 million at December 31, 2010.
Market Overview
Seaborne demand for metallurgical and thermal coal continues to increase globally, driven primarily by ongoing demand growth in Asia and the worldwide economic recovery. In response to strong seaborne demand, the U.S. is on pace to export approximately 100 million tons of coal in 2011, an increase of approximately 25 percent from 2010 and the highest level of U.S. exports in nearly 20 years. The combination of Alpha and Massey will be well-positioned to benefit from this burgeoning seaborne demand with 25 million tons of export capacity and greater than 24 million tons of estimated annual metallurgical coal sales on a pro forma combined basis.
The global supply of metallurgical coal remains tight due to severe flooding events in Australia in the first quarter which reduced Queensland production by as much as 15 million metric tonnes. Demand shows no sign of abating. Based on the first few months of data, China is on track to import 45-50 million tons of coking coal in 2011; the need for rebuilding following the tragic earthquake and tsunami in Japan is expected to boost incremental steel demand in the near future; and year-to-date steel production in the United States appears to be tracking ahead of levels previously anticipated by domestic steel mills. In this environment of tight global supply and increasing demand, the quarterly international benchmark recently reached a record $330 per metric tonne. As the largest supplier of metallurgical coal among U.S. producers, Alpha is uniquely positioned to benefit from today's strong market conditions for metallurgical coal. Furthermore, when the acquisition of Massey is complete, the combined entity is anticipated to rank among the top three metallurgical coal suppliers globally.
During the first quarter of 2011, the market for seaborne thermal coal tightened as supply was constrained by weather-related interruptions in Colombia and Indonesia, as well as Australia. Worldwide, the future of nuclear electricity generation has been called into question following the disaster in Japan. Germany has taken several nuclear plants off-line for an extended inspection period, and several plants may remain closed indefinitely. Plans for new nuclear generation around the world, as well as requests to extend the useful life of nuclear facilities, may face considerable opposition. All of these factors have resulted in stronger demand and improved pricing for thermal coal thus far in 2011. Looking ahead, demand growth in developing economies, especially India which is projected to import 75 million tonnes in 2011 and more than 100 million tonnes by the middle of this decade, will continue to stress the available seaborne supply of thermal coal for the foreseeable future.
In the United States, access to low-cost natural gas continues to weigh on thermal coal's share of electricity generation, and domestic stockpiles have remained relatively stable at approximately 160 million tons. Despite relatively stable domestic demand, improving seaborne market conditions and the likelihood of increasing thermal coal exports should gradually drive improved market conditions in the domestic market.
Outlook
On a stand-alone basis, Alpha is increasing its 2011 and 2012 metallurgical coal shipment guidance to a range of 13.5 to 14.5 million tons in each year, up from a range of 13.0 to 14.5 million tons in each year previously. All other shipment guidance ranges remain unchanged from Alpha's previous guidance. As of April 19, 2011, all of Alpha's expected 2011 PRB shipments are committed and priced at an average per ton realization of $11.87. Expected 2011 Eastern steam coal shipments are 95 percent committed and priced at an average per ton realization of $66.01, and one percent of expected Eastern steam coal shipments is committed and unpriced. Expected 2011 Eastern metallurgical coal shipments are 87 percent committed and priced at an average per ton realization of $159.08, up from an average per ton realization of $142.23 on committed and priced volumes reported in Alpha's fourth quarter 2010 earnings release. Thirteen percent of Alpha's expected 2011 metallurgical coal shipments are committed and unpriced. Guidance for selling, general and administrative expense; interest expense; depletion, depreciation and amortization expense; and capital expenditures in 2011 all remain unchanged from Alpha's previous guidance.
As of April 19, 2011, 75 percent of Alpha's 2012 PRB shipments are committed and priced at an average per ton realization of $12.59. Eastern steam coal shipments are 22 percent committed and priced at an average per ton realization of $70.67, and 35 percent of expected Eastern steam coal shipments are committed and unpriced. Eastern metallurgical coal shipments in 2012 are 11 percent committed and priced, and 49 percent are committed and unpriced. Committed and priced metallurgical tons are contracted at an average realization of $151.61 per ton.
Guidance
(in millions, except per-ton and percentage amounts)
2011 2012
Average per Ton Sales Realization on
Committed and Priced Coal
Shipments(1),(2)
West $11.87 $12.59
Eastern Steam $66.01 $70.67
Eastern Metallurgical $159.08 $151.61
Coal Shipments(3) 83.5 - 91.5 83.5 - 91.5
West 48.0 - 52.0 48.0 - 52.0
Eastern Steam(4) 22.0 - 25.0 22.0 - 25.0
Eastern Metallurgical 13.5 - 14.5 13.5 - 14.5
Committed and Priced (%)(5) 98% 51%
West 100% 75%
Eastern Steam 95% 22%
Eastern Metallurgical 87% 11%
Committed and Unpriced (%)(6) 2% 17%
West 0% 0%
Eastern Steam 1% 35%
Eastern Metallurgical 13% 49%
West - Cost of Coal Sales per Ton $9.25 - $9.75
East - Cost of Coal Sales per Ton $63.00 - $66.00
Selling, General & Administrative
Expense (excluding merger-related
expenses) $165 - $175
Depletion, Depreciation & Amortization $390 - $410
Interest Expense $60 - $65
Capital Expenditures(7) $340 - $440
Notes:
1. Based on committed and priced coal shipments as of April 19, 2011.
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. Eastern shipments in 2011 and 2012 include an estimated 3.0 to 4.0
million tons of brokered coal per year.
4. The 2011 shipment range for Eastern steam coal reflects the impact of a
scheduled longwall move at the Cumberland mine in December of 2011, and
two scheduled longwall moves at the Emerald mine in May and
November/December of 2011.
5. As of April 19, 2011, compared to the midpoint of shipment guidance
range.
6. In 2011, committed and unpriced Eastern tons include approximately 1.0
million tons of metallurgical coal subject to market pricing, and
approximately 0.8 million tons of metallurgical coal subject to
collared pricing with an average pricing range of $219 to $291, as well
as legacy contracts covering approximately 0.2 million tons of steam
coal subject to average indexed pricing estimated at $77.24 per ton.
In 2012, committed and unpriced Eastern tons include approximately 6.3
million tons of metallurgical coal subject to market pricing,
approximately 3.5 million tons of steam coal subject to market pricing,
approximately 0.5 million tons of metallurgical coal subject to
collared pricing with an average pricing range of $196 to $309, and
approximately 4.1 million tons of steam coal subject to collared
pricing with an average pricing range of $60 to $73 per ton, as well as
legacy contracts covering 0.6 million tons of steam coal subject to
average indexed pricing estimated at $75.45 per ton.
7. Includes the annual bonus bid payments on the Eagle Butte Federal Lease
by Application (LBA) in the Powder River Basin of $36.1 million in
2011; excludes a potential bonus bid installment on a new LBA at Belle
Ayr in 2011.
About Alpha Natural Resources
Alpha Natural Resources is one of America's premier coal suppliers with coal production capacity of greater than 90 million tons a year. Alpha is the nation's leading supplier and exporter of metallurgical coal used in the steel-making process and is a major supplier of thermal coal to electric utilities and manufacturing industries across the country. The Company, through its affiliates, employs approximately 6,500 people and operates approximately 68 mines and 13 coal preparation facilities in Appalachia and the Powder River Basin. More information about Alpha can be found on the Company's Web site at http://www.alphanr.com/.
Forward Looking Statements
This news release includes forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on Alpha's expectations and beliefs concerning future events and involve risks and uncertainties that may cause actual results to differ materially from current expectations. These factors are difficult to predict accurately and may be beyond Alpha's control. The following factors are among those that may cause actual results to differ materially from our forward-looking statements:
-- worldwide market demand for coal, electricity and steel;
-- global economic, capital market or political conditions, including a
prolonged economic recession in the markets in which we operate;
-- decline in coal prices;
-- our liquidity, results of operations and financial condition;
-- regulatory and court decisions;
-- competition in coal markets;
-- changes in environmental laws and regulations, including those
directly affecting our coal mining and production, and those affecting
our customers' coal usage, including potential carbon or greenhouse
gas related legislation;
-- changes in safety and health laws and regulations and the ability to
comply with such changes;
-- availability of skilled employees and other employee workforce
factors, such as labor relations;
-- the inability of our third-party coal suppliers to make timely
deliveries and the refusal by our customers to receive coal under
agreed contract terms;
-- potential instability and volatility in worldwide financial markets;
-- future legislation and changes in regulations, governmental policies
or taxes or changes in interpretation thereof;
-- inherent risks of coal mining beyond our control;
-- disruption in coal supplies;
-- the geological characteristics of the Powder River Basin, Central and
Northern Appalachian coal reserves;
-- our production capabilities and costs;
-- our ability to integrate successfully operations that we may acquire
or develop in the future, including those of Massey Energy Company, or
the risk that any such integration could be more difficult,
time-consuming or costly than expected;
-- our plans and objectives for future operations and expansion or
consolidation;
-- the consummation of financing transactions, acquisitions or
dispositions and the related effects on our business, including
financing related to our proposed acquisition of Massey Energy
Company;
-- the failure of Alpha and Massey shareholders to approve the
transaction;
-- the outcome of pending or potential litigation or governmental
investigations;
-- the timing of the completion of the merger;
-- uncertainty of the expected financial performance of Alpha following
completion of the merger;
-- Alpha's ability to achieve the cost savings and synergies contemplated
by the merger within the expected time frame;
-- disruption from the proposed merger with Massey making it more
difficult to maintain relationships with customers, employees or
suppliers;
-- the calculations of, and factors that may impact the calculations of,
the acquisition price in connection with the proposed merger with
Massey and the allocation of such acquisition price to the net assets
acquired in accordance with applicable accounting rules and
methodologies;
-- our relationships with, and other conditions affecting, our customers;
-- reductions or increases in customer coal inventories and the timing of
those changes;
-- changes in and renewal or acquisition of new long-term coal supply
arrangements;
-- railroad, barge, truck and other transportation availability,
performance and costs;
-- availability of mining and processing equipment and parts;
-- disruptions in delivery or changes in pricing from third party vendors
of goods and services that are necessary for our operations, such as
diesel fuel, steel products, explosives and tires;
-- our assumptions concerning economically recoverable coal reserve
estimates;
-- our ability to obtain, maintain or renew any necessary permits or
rights, and our ability to mine properties due to defects in title on
leasehold interest;
-- changes in postretirement benefit obligations, pension obligations and
federal black lung obligations;
-- increased costs and obligations potentially arising from the Patient
Protection and Affordable Care Act;
-- fair value of derivative instruments not accounted for as hedges that
are being marked to market;
-- indemnification of certain obligations not being met;
-- continued funding of the road construction business, related costs,
and profitability estimates;
-- restrictive covenants in our secured credit facility and the
indentures governing the 7.25% notes due 2014 and the 2.375%
convertible senior notes due 2015;
-- certain terms of the 7.25% notes due 2014 and the 2.375% convertible
senior notes due 2015, including any conversions, that may adversely
impact our liquidity;
-- weather conditions or catastrophic weather-related damage; and
-- other factors, including the other factors discussed in the
'Management's Discussion and Analysis of Financial Condition and
Results of Operations', and 'Risk Factors' sections of our Annual
Report on Form 10-K for the year ended December 31, 2010.
These and other risks and uncertainties are discussed in greater detail in Alpha's Annual Report on Form 10-K and other documents filed with the Securities and Exchange Commission. Forward-looking statements in this news release or elsewhere speak only as of the date made. New uncertainties and risks come up from time to time, and it is impossible for Alpha to predict these events or how they may affect the Company. Alpha has no duty to, and does not intend to, update or revise the forward-looking statements in this news release after the date it is issued. In light of these risks and uncertainties, investors should keep in mind that the results, events or developments disclosed in any forward-looking statement made in this news release may not occur.
Important Additional Information and Where to Find It
This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval.
In connection with the proposed merger, Alpha has filed with the SEC a registration statement on Form S-4 (commission file number 333-172888), as amended, that includes a preliminary joint proxy statement/prospectus regarding the proposed merger. The registration statement was declared effective by the SEC on April 28, 2011, and a definitive joint proxy statement/prospectus has been mailed to Alpha and Massey stockholders on or about April 29, 2011 in connection with the proposed merger. INVESTORS ARE URGED TO READ THE JOINT PROXY STATEMENT/PROSPECTUS (INCLUDING ALL AMENDMENTS AND SUPPLEMENTS THERETO) AND OTHER DOCUMENTS RELATING TO THE MERGER FILED WITH THE SEC, BECAUSE THEY CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED MERGER. You may obtain a copy of the joint proxy statement/prospectus and other related documents filed by Alpha and Massey with the SEC regarding the proposed merger as well as other filings containing information, free of charge, through the web site maintained by the SEC at http://www.sec.gov/, by directing a request to Alpha's Investor Relations department at Alpha Natural Resources, Inc., One Alpha Place, P.O. Box 2345, Abingdon, Virginia 24212, Attn: Investor Relations, to D.F. King & Co., Inc., 48 Wall Street, 22nd Floor, New York, New York 10005 or to Massey's Investor Relations department at, (804) 788 - 1824 or by email to Investor@masseyenergyco.com. Copies of the joint proxy statement/prospectus and the filings with the SEC that are incorporated by reference in the joint proxy statement/prospectus can also be obtained, without charge, from Alpha's website at http://www.alphanr.com/ under the heading 'Investor Relations' and then under the heading 'SEC Filings' and Massey's website at http://www.masseyenergyco.com/ under the heading 'Investors' and then under the heading 'SEC Filings'.
Participants in Solicitation
Alpha, Massey and their respective directors, executive officers and certain other members of management and employees may be deemed to be participants in the solicitation of proxies in favor of the proposed merger. Information regarding the persons who may, under the rules of the SEC, be considered participants in the solicitation of proxies in favor of the proposed merger is set forth in the definitive joint proxy statement/prospectus filed with the SEC. You can find information about Alpha's directors and executive officers in Alpha's definitive proxy statement filed with the SEC on April 1, 2011. You can find information about Massey's directors and executive officers in Amendment No. 1 to Massey's Annual Report on Form 10-K filed with the SEC on April 19, 2011. You can obtain free copies of these documents from Alpha or Massey using the contact information above.
FINANCIAL TABLES FOLLOW
Alpha Natural Resources, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(In Thousands Except Shares and Per Share Data)
(Unaudited)
Three Months Ended March
31,
-------------------------
2011 2010
---- ----
Revenues:
Coal revenues $986,978 $831,266
Freight and handling revenues 116,055 64,788
Other revenues 27,705 25,950
------ ------
Total revenues 1,130,738 922,004
--------- -------
Costs and expenses:
Cost of coal sales (exclusive of
items shown separately below) 734,985 575,067
Freight and handling costs 116,055 64,788
Other expenses 18,579 15,684
Depreciation, depletion and
amortization 88,638 95,127
Amortization of acquired coal supply
agreements, net 25,983 65,957
Selling, general and administrative
expenses (exclusive of depreciation,
depletion and amortization shown
separately above) 67,284 47,789
------ ------
Total costs and expenses 1,051,524 864,412
--------- -------
Income from operations 79,214 57,592
------ ------
Other income (expense):
Interest expense (15,610) (22,120)
Interest income 1,045 680
Miscellaneous income (expense) (834) (204)
---- ----
Total other expense, net (15,399) (21,644)
------- -------
Income from continuing operations
before income taxes 63,815 35,948
Income tax expense (13,967) (21,278)
------- -------
Income from continuing operations 49,848 14,670
------ ------
Discontinued operations:
Loss from discontinued operations
before income taxes - (1,047)
Income tax benefit - 418
--- ---
Loss from discontinued operations - (629)
--- ----
Net income $49,848 $14,041
======= =======
Earnings per common share:
Basic earnings per common share:
Income from continuing operations $0.42 $0.12
Loss from discontinued operations - -
--- ---
Net income $0.42 $0.12
===== =====
Diluted earnings per common share:
Income from continuing operations $0.41 $0.12
Loss from discontinued operations - -
--- ---
Net income $0.41 $0.12
===== =====
Weighted average shares outstanding:
Weighted average shares--basic 120,014,520 119,892,529
Weighted average shares--diluted 122,035,780 121,876,328
This information is intended to be reviewed in conjunction with the
company's filings with the U.S. Securities and Exchange Commission.
Alpha Natural Resources, Inc. and Subsidiaries
Supplemental Sales, Operations and Financial Data
(In Thousands, Except Per Ton and Percentage Data)
(Unaudited)
Three Months Ended March 31,
----------------------------
2011 2010
---- ----
Tons sold from continuing
operations(1):
Powder River Basin 12,487 12,215
Eastern steam 4,859 6,514
Eastern metallurgical 3,620 2,636
----- -----
Total 20,966 21,365
====== ======
Average realized price per ton sold
from continuing operations (2)(9):
Powder River Basin $11.91 $10.81
Eastern steam 66.89 67.40
Eastern metallurgical 141.76 98.70
Weighted average total $47.08 $38.91
Coal revenues:
Powder River Basin $148,779 $132,076
Eastern steam 325,011 439,012
Eastern metallurgical 513,188 260,178
------- -------
Total coal revenues $986,978 $831,266
======== ========
Cost of coal sales per ton from
continuing operations (3)(9):
Powder River Basin $9.66 $8.86
East (4) $71.30 $50.64
Weighted average total $34.59 $26.76
Weighted average coal margin per
ton (5) $12.49 $12.15
Weighted average coal margin
percentage (6) 26.5% 31.2%
Net cash provided by operating
activities including discontinued
operations $168,418 $143,250
Capital expenditures including
discontinued operations $57,101 $60,879
As of
-----
March 31, December 31,
2011 2010
--------- ------------
Liquidity ($ in 000's):
Cash and cash equivalents $540,860 $554,772
Marketable securities with
maturities of less than one year
(7) 295,179 217,191
Marketable securities with
maturities of greater than one
year (8) 80,361 60,159
Unused revolving credit and A/R
securitization facilities 960,445 932,945
------- -------
Total available liquidity $1,876,845 $1,765,067
========== ==========
(1) Stated in thousands of short tons.
(2) Coal revenues divided by tons sold. This statistic is stated as
free on board (FOB) at the processing plant.
(3) Cost of coal sales divided by tons sold. The cost of coal sales
per ton only includes costs in our Eastern and Western Coal
Operations.
(4) East includes the Company's operations in Central Appalachia
(CAPP) and Northern Appalachia (NAPP).
(5) Weighted average total sales realization per ton less weighted
average total cost of coal sales per ton.
(6) Weighted average coal margin per ton divided by weighted average
total sales realization per ton.
(7) Classified as a current asset on the balance sheet.
(8) Classified as a non-current asset on the balance sheet.
(9) Amounts per ton calculated based on unrounded revenues, cost of
coal sales and tons sold.
This information is intended to be reviewed in conjunction with the
company's filings with the U.S. Securities and Exchange Commission.
Alpha Natural Resources, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(In Thousands)
(Unaudited)
March 31, December 31,
2011 2010
--------- -------------
Cash and cash equivalents $540,860 $554,772
Trade accounts receivable, net 356,041 281,138
Inventories, net 217,544 198,172
Short-term marketable
securities 295,179 217,191
Prepaid expenses and other
current assets 128,886 124,564
------- -------
Total current assets 1,538,510 1,375,837
Property, equipment and mine
development costs, net 1,136,551 1,131,987
Owned and leased mineral
rights, net 1,859,125 1,884,169
Owned lands 98,727 98,727
Goodwill 382,440 382,440
Acquired coal supply
agreements, net 135,614 162,397
Long-term marketable securities 83,187 60,159
Other non-current assets 111,683 83,567
------- ------
Total assets $5,345,837 $5,179,283
========== ==========
Current portion of long-term
debt $11,839 $11,839
Trade accounts payable 233,934 121,553
Accrued expenses and other
current liabilities 297,934 313,754
------- -------
Total current liabilities 543,707 447,146
Long-term debt 748,984 742,312
Pension and postretirement
medical benefit obligations 723,211 719,355
Asset retirement obligations 215,632 209,987
Deferred income taxes 231,176 249,408
Other non-current liabilities 154,574 155,039
------- -------
Total liabilities 2,617,284 2,523,247
Total stockholders' equity 2,728,553 2,656,036
--------- ---------
Total liabilities and
stockholders' equity $5,345,837 $5,179,283
========== ==========
This information is intended to be reviewed in conjunction with the
company's filings with the U.S. Securities and Exchange Commission.
Alpha Natural Resources, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(In Thousands)
(Unaudited)
Three Months Ended
March 31,
------------------
2011 2010
---- ----
Operating activities:
Net income $49,848 $14,041
Adjustments to reconcile net income to
net cash provided by operating
activities: 97,847 104,538
Depreciation, depletion, accretion and
amortization
Amortization of acquired coal supply
agreements, net 25,983 65,957
Mark-to-market adjustments for
derivatives (140) 885
Stock-based compensation 10,948 8,706
Employee benefit plans, net 12,852 15,437
Deferred income taxes 4,652 (6,853)
Other, net (6,360) (321)
Changes in operating assets and
liabilities:
Trade accounts receivable, net (74,903) (74,750)
Inventories, net (19,372) (30,232)
Prepaid expenses and other current
assets (17,458) 33,340
Other non-current assets (3,589) 3,346
Trade accounts payable 109,116 8,389
Accrued expenses and other current
liabilities (13,519) 935
Pension and postretirement medical
benefit obligations (12,110) (6,773)
Asset retirement obligations (961) (1,063)
Other non-current liabilities 5,584 7,668
----- -----
Net cash provided by operating
activities 168,418 143,250
------- -------
Investing activities:
Capital expenditures (57,101) (60,879)
Purchases of marketable securities (160,372) (50,560)
Sales of marketable securities 60,434 12,320
Purchase of equity-method investment (2,000) (3,000)
Other, net (4,477) 819
------ ---
Net cash used in investing activities (163,516) (101,300)
-------- --------
Financing activities:
Principal repayments on long-term debt (2,960) (8,375)
Debt issuance costs (11,710) -
Excess tax benefit from stock-based
awards 5,245 6,735
Common stock repurchases (11,203) (15,676)
Proceeds from exercise of stock options 1,814 3,332
----- -----
Net cash used in financing activities (18,814) (13,984)
------- -------
Net increase (decrease) in cash and
cash equivalents $(13,912) $27,966
Cash and equivalents at beginning of
period $554,772 $465,869
-------- --------
Cash and equivalents at end of period $540,860 $493,835
======== ========
This information is intended to be reviewed in conjunction with the
company's filings with the U. S. Securities and Exchange Commission.
Alpha Natural Resources, Inc. and Subsidiaries
Reconciliation of EBITDA from Continuing Operations and Adjusted
EBITDA from Continuing Operations to Income from Continuing
Operations
(In Thousands)
(Unaudited)
EBITDA from continuing operations and adjusted EBITDA from continuing
operations are non-GAAP measures used by management to gauge
operating performance and normalized levels of earnings. Alpha
defines EBITDA from continuing operations as income from continuing
operations plus interest expense, income tax expense, depreciation,
depletion and amortization, and amortization of coal supply
agreements less interest income and income tax benefit. Alpha
defines adjusted EBITDA from continuing operations as EBITDA from
continuing operations plus merger related expenses, losses on early
extinguishment of debt, less various gains and losses not expected
to recur on a quarterly basis. The definition of adjusted EBITDA
from continuing operations may be changed periodically by management
to adjust for significant items important to an understanding of
operating trends. Management presents EBITDA from continuing
operations and adjusted EBITDA from continuing operations as
supplemental measures of the company's performance and debt service
capacity that may be useful to securities analysts, investors and
others. EBITDA from continuing operations and adjusted EBITDA from
continuing operations are not, however, measures of financial
performance under U.S. GAAP and should not be considered as an
alternative to net income, income from continuing operations or
operating income as determined in accordance with U.S. GAAP.
Moreover, EBITDA from continuing operations and adjusted EBITDA from
continuing operations are not calculated identically by all
companies. A reconciliation of EBITDA from continuing operations
and adjusted EBITDA from continuing operations to income from
continuing operations, the most directly comparable U.S. GAAP
measure, is provided in the table below.
Three Months Ended
March 31,
------------------
2011 2010
---- ----
Income from continuing operations $49,848 $14,670
Interest expense 15,610 22,120
Interest income (1,045) (680)
Income tax expense 13,967 21,278
Depreciation, depletion and amortization 88,638 95,127
Amortization of acquired coal supply
agreements, net 25,983 65,957
------ ------
EBITDA from continuing operations 193,001 218,472
Merger related expenses 23,328 4,228
------ -----
Adjusted EBITDA from continuing operations $216,329 $222,700
======== ========
This information is intended to be reviewed in conjunction with the
company's filings with the U.S. Securities and Exchange Commission.
Alpha Natural Resources, Inc. and Subsidiaries
Reconciliation of Adjusted Income from Continuing Operations to
Income from Continuing Operations
(In Thousands Except Shares and Per Share Data)
(Unaudited)
Adjusted income from continuing operations and adjusted diluted
earnings per common share from continuing operations are non-GAAP
measures used by management to gauge performance and normalized
earnings levels. Alpha defines adjusted income from continuing
operations as income from continuing operations plus merger related
expenses, losses on early extinguishment of debt, the portion of
interest expense attributable to termination of hedge accounting for
interest rate swaps, and amortization of coal supply agreements,
less various gains and losses that are not expected to recur on a
quarterly basis, discrete income tax benefits from reversal of
valuation allowances for deferred tax assets and reversal of
reserves for uncertain tax positions, adjustments to deferred taxes
due to significant law changes and estimated income tax effects of
the pre-tax adjustments. Adjusted diluted earnings per common
share from continuing operations is adjusted income from continuing
operations divided by weighted average diluted shares. The
definition of adjusted income from continuing operations may be
changed periodically by management to adjust for significant items
important to an understanding of operating trends. Management
presents adjusted income from continuing operations and adjusted
earnings per share from continuing operations as supplemental
measures of the company's performance that it believes are useful to
securities analysts, investors and others in assessing the company's
performance over time. Adjusted income from continuing operations
and adjusted diluted earnings per common share from continuing
operations are not, however, measures of financial performance under
U.S. GAAP and should not be considered as an alternative to net
income, income from continuing operations, operating income or
diluted earnings per share from continuing operations as determined
in accordance with U.S. GAAP. Moreover, adjusted income from
continuing operations and adjusted diluted earnings per common share
from continuing operations are not calculated identically by all
companies. A reconciliation of adjusted income from continuing
operations to income from continuing operations, the most directly
comparable U.S. GAAP measure, and the weighted average diluted
shares used to calculate adjusted diluted earnings per common share
from continuing operations are provided in the table below.
Three Months Ended March
31,
-------------------------
2011 2010
---- ----
Income from continuing operations $49,848 $14,670
Merger related expenses 23,328 4,228
Amortization of acquired coal supply
agreements, net 25,983 65,957
Estimated income tax effect of above
adjustments (19,419) (26,176)
Deferred tax charge from change in tax
treatment of Medicare Part D
deductions - 25,566
--- ------
Adjusted income from continuing
operations $79,740 $84,245
======= =======
Weighted average shares--diluted 122,035,780 121,876,328
=========== ===========
Adjusted diluted earnings per common
share from continuing operations $0.65 $0.69
This information is intended to be reviewed in conjunction with the
company's filings with the U.S. Securities and Exchange Commission.
Alpha Natural Resources, Inc.
CONTACT: Investors, Todd Allen, CFA, Vice President, Investor Relations,
1-276-739-5328, tallen@alphanr.com, or Media, Ted Pile, Vice President,
Corporate Communications, 1-276-623-2920, tpile@alphanr.com
Web Site: http://www.alphanr.com/