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 and six months ended June 30, 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 June 30, 2018
Revenues	$	229,878	$	259,032	$	99,814	$	3,625		$	592,349
Adjusted EBITDA	26,491		86,657		11,842		(39,605		)	85,385
Depreciation, depletion and amortization	8,304		18,018		3,701		526			30,549
Accretion on asset retirement obligation	4,885		469		565		1,074			6,993
Total assets	379,613		551,012		134,319		884,469			1,949,413
Capital expenditures	3,065		11,899		2,559		3,073			20,596

Three Months Ended June 30, 2017
Revenues	$	230,579	$	227,649	$	91,639	$	(1	)	$	549,866
Adjusted EBITDA	31,789		62,552		26,910		(25,651		)	95,600
Depreciation, depletion and amortization	8,574		18,385		3,285		457			30,701
Accretion on asset retirement obligation	5,040		528		540		1,515			7,623
Total assets	426,793		580,543		126,870		997,852			2,132,058
Capital expenditures	822		6,825		1,899		1,426			10,972

Six Months Ended June 30, 2018
Revenues	$	475,306	$	497,379	$	191,334	$	3,625		$	1,167,644
Adjusted EBITDA	53,993		170,399		27,510		(61,604		)	190,298
Depreciation, depletion and amortization	16,727		35,003		7,536		986			60,252
Accretion on asset retirement obligation	9,771		937		1,130		2,147			13,985
Total assets	379,613		551,012		134,319		884,469			1,949,413
Capital expenditures	3,763		17,728		3,765		4,793			30,049

Six Months Ended June 30, 2017
Revenues	$	504,007	$	453,232	$	193,545	$	57		$	1,150,841
Adjusted EBITDA	79,794		130,862		54,152		(47,989		)	216,819
Depreciation, depletion and amortization	18,085		37,149		6,485		903			62,622
Accretion on asset retirement obligation	10,080		1,057		1,080		3,029			15,246
Total assets	426,793		580,543		126,870		997,852			2,132,058
Capital expenditures	950		11,436		2,640		1,896			16,922

A reconciliation of net income to adjusted EBITDA follows:



	Three Months Ended June 30,					Six Months Ended June 30,
	2018			2017		2018			2017
	(In thousands)
Net income	$	43,306		$	37,160	$	103,291		$	88,828
Provision for (benefit from) income taxes	$	(3,366	)	$	319	$	(3,910	)	$	1,159
Interest expense, net	3,498			5,161		7,620			14,059
Depreciation, depletion and amortization	30,549			30,701		60,252			62,622
Accretion on asset retirement obligations	6,993			7,623		13,985			15,246
Amortization of sales contracts, net	3,248			14,352		6,299			29,042
Net loss resulting from early retirement of debt and debt restructuring	485			31		485			2,061
Non-service related pension and postretirement benefit costs	(68		)	232		1,235			953
Reorganization items, net	740			21		1,041			2,849
Adjusted EBITDA	$	85,385		$	95,600	$	190,298		$	216,819