Arch Coal Revises Earnings Guidance for Full Year 2011, Announces Date of Third Quarter Earnings Conference Call
ST. LOUIS, Sept. 30, 2011 /PRNewswire/ -- Arch Coal, Inc.
today announced that it expects its adjusted earnings before interest, taxes, depreciation, depletion and amortization ('EBITDA(1)') to be in the $900 million to $1.0 billion range for full year 2011, representing the highest level in company history but below the previous range given on July 29, 2011. The company also expects its 2011 adjusted earnings per diluted share ('EPS(1)') to be in the range of $1.00 per share to $1.40 per share, subject to the final determination of purchase price accounting for the acquisition of International Coal Group.The reduction in earnings guidance resulted largely from lost metallurgical coal production at the Mountain Laurel complex. During the third quarter, Mountain Laurel encountered unfavorable geologic conditions and its longwall was idled for nearly 45 days following a roof fall in August. The longwall restarted in late September, and is currently operating in the final panel of the Alma coal seam before it transitions to the Cedar Grove seam.
Arch plans to provide additional details on its operating performance and outlook in its third quarter 2011 earnings release, which is scheduled before market on Friday, Oct. 28, and subsequent conference call, which will be broadcast live over the Internet at 11:00 am E.D.T.
U.S.-based Arch Coal is a top five global coal producer and marketer, with 179 million tons of coal sold pro forma in 2010. Arch is the most diversified American coal company, with mining complexes across every major U.S. coal supply basin. Its core business is supplying cleaner-burning, low-sulfur thermal and metallurgical coal to power generators and steel manufacturers on four continents.
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 different 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 future integration of acquired businesses; and from numerous 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.
1. Non-GAAP reconciliations are provided at the end of the release.
Arch Coal, Inc. and Subsidiaries
Reconciliation of Non-GAAP Measures
(In thousands)
Included in the accompanying release, we have
disclosed certain non-GAAP measures as defined by
Regulation G. The following reconciles these items
to net income as reported under GAAP.
Adjusted EBITDA
Adjusted EBITDA is defined as net
income attributable to the Company
before the effect of net interest
expense, income taxes, depreciation,
depletion and amortization and the
amortization of acquired sales
contracts. Adjusted EBITDA may also
be adjusted for items that may not
reflect the trend of future results.
Adjusted EBITDA is not a measure of
financial performance in accordance
with generally accepted accounting
principles, and items excluded to
calculate Adjusted EBITDA are
significant in understanding and
assessing our financial condition.
Therefore, Adjusted EBITDA 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. We believe
that Adjusted EBITDA presents a
useful measure of our ability to
service and incur debt based on
ongoing operations. Furthermore,
analogous measures are used by
industry analysts to evaluate
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 EBITDA may
not be comparable to similarly titled
measures used by other companies. The
table below shows how we calculate
Adjusted EBITDA.
Targeted Results
Year Ended December 31,
2011
------------------------
Low High
--- ----
(Unaudited)
Net income 140,000 224,000
Income tax expense 12,000 27,000
Interest expense, net 224,000 222,000
Depreciation, depletion and amortization 449,000 465,000
Amortization of acquired sales
contracts, net (27,000) (43,000)
Acquisition and transition costs 50,552 53,552
Bridge financing costs related to ICG 49,490 49,490
Net loss resulting from early retirement
of ICG debt 1,958 1,958
----- -----
Adjusted EBITDA $900,000 $1,000,000
======== ==========
Adjusted net income and adjusted
diluted earnings per common share
Adjusted net income and adjusted
diluted earnings per common share
are adjusted for the after-tax
impact of acquisition related
costs and are not measures of
financial performance in
accordance with generally
accepted accounting principles.
We believe that adjusted net
income and adjusted diluted
earnings per common share better
reflect the trend of our future
results by excluding items
relating to significant
transactions. The adjustments
made to arrive at these measures
are significant in understanding
and assessing our financial
condition. Therefore, adjusted
net income and adjusted diluted
earnings per share should not be
considered in isolation, nor as
an alternative to net income or
diluted earnings per common share
under generally accepted
accounting principles.
Targeted Results
Year Ended December 31,
2011
------------------------
Low High
--- ----
(Unaudited)
Net income attributable to Arch Coal $140,000 $224,000
Amortization of acquired sales
contracts, net (27,000) (43,000)
Acquisition and transition costs 50,552 53,552
Bridge financing costs related to ICG 49,490 49,490
Net loss resulting from early
retirement of ICG debt 1,958 1,958
Tax impact of adjustments (23,794) (18,984)
------- -------
Adjusted net income attributable to
Arch Coal $191,206 $267,016
======== ========
Diluted weighted average shares
outstanding 191,092 191,092
Diluted earnings per share $0.73 $1.17
Amortization of acquired sales
contracts, net (0.14) (0.23)
Acquisition and transition costs 0.26 0.28
Bridge financing costs related to ICG 0.26 0.26
Net loss resulting from early debt
extinguishment 0.01 0.01
Tax impact of adjustments (0.12) (0.09)
----- -----
Adjusted diluted earnings per share $1.00 $1.40
===== =====
Arch Coal, Inc.
CONTACT: Deck S. Slone, Vice President, Government, Investor and Public
Affairs of Arch Coal, Inc., 1-314-994-2717
Web site: http://www.archcoal.com/