Segment Information

The Company’s reportable business segments are based on two distinct lines of business, metallurgical and thermal, and may include a number of mine complexes. The Company manages its coal sales by market, not by individual mining complex. Geology, coal transportation routes to customers, and regulatory environments also have a significant impact on the Company’s marketing and operations management. Mining operations are evaluated based on Adjusted EBITDA, per-ton cash operating costs (defined as including all mining costs except depreciation, depletion, amortization, accretion on asset retirement obligations, and pass-through transportation expenses), and on other non-financial measures, such as safety and environmental performance. Adjusted EBITDA is not a measure of financial performance in accordance with generally accepted accounting principles, and items excluded from 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. The Company uses Adjusted EBITDA to measure the operating performance of its segments and allocate resources to the segments. Furthermore, analogous measures are used by industry analysts and investors to evaluate the Company’s operating performance. Investors should be aware that the Company’s presentation of Adjusted EBITDA may not be comparable to similarly titled measures used by other companies. The Company reports its results of operations primarily through the following reportable segments: Powder River Basin (PRB) segment containing the Company’s primary thermal operations in Wyoming; the Metallurgical (MET) segment, containing the Company’s metallurgical operations in West Virginia, Kentucky, and Virginia, and the Other Thermal segment containing the Company’s supplementary thermal operations in Colorado, Illinois, and West Virginia. Periods presented in this note have been recast for comparability.

On September 14, 2017, the Company closed on its’ definitive agreement to sell Lone Mountain Processing LLC, an operating mine complex within the Company’s metallurgical coal segment. Through this transaction the Company divested all active operations in the states of Kentucky and Virginia.

Operating segment results for the three months ended March 31, 2018 and 2017, are presented below. The Company measures its segments based on “adjusted earnings before interest, taxes, depreciation, depletion, amortization, accretion on asset retirements obligations, and nonoperating expenses (Adjusted EBITDA).” Adjusted EBITDA does not reflect mine closure or impairment costs, since those are not reflected in the operating income reviewed by management. The Corporate, Other and Eliminations grouping includes these charges, as well as the change in fair value of coal derivatives and coal trading activities, net; corporate overhead; land management activities; other support functions; and the elimination of intercompany transactions.



	PRB		MET		Other Thermal		Corporate, Other and Eliminations			Consolidated
	(in thousands)
Three Months Ended March 31, 2018
Revenues	$	245,428	$	238,347	$	91,520	$	—		$	575,295
Adjusted EBITDA	27,502		83,742		15,669		(22,000		)	104,913
Depreciation, depletion and amortization	8,423		16,986		3,835		459			29,703
Accretion on asset retirement obligation	4,885		469		565		1,073			6,992
Total assets	383,823		548,804		130,132		913,919			1,976,678
Capital expenditures	698		5,829		1,206		1,720			9,453

Three Months Ended March 31, 2017
Revenues	$	273,428	$	225,582	$	101,906	$	59		$	600,975
Adjusted EBITDA	48,006		68,310		27,242		(22,339		)	121,219
Depreciation, depletion and amortization	9,510		18,764		3,200		447			31,921
Accretion on asset retirement obligation	5,040		528		540		1,515			7,623
Total assets	433,370		575,789		128,529		1,007,228			2,144,916
Capital expenditures	128		4,610		741		471			5,950

A reconciliation of adjusted EBITDA to consolidated income before income taxes follows:



	Three Months Ended March 31,
	2018		2017
	(In thousands)
Income before income taxes	$	59,441	$	52,508
Interest expense, net	4,122		8,898
Depreciation, depletion and amortization	29,703		31,921
Accretion on asset retirement obligations	6,992		7,623
Amortization of sales contracts, net	3,051		14,690
Net loss resulting from early retirement of debt and debt restructuring	—		2,030
Non-service related pension and postretirement benefit costs	1,303		721
Reorganization items, net	301		2,828
Adjusted EBITDA	$	104,913	$	121,219