Segment Information

6 Months Ended

Jun. 30, 2019

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 the Company’s 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, and the Other Thermal segment containing the Company’s supplementary thermal operations in Colorado, Illinois, and West Virginia.

Operating segment results for the three and six months ended June 30, 2019 and 2018, 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, 2019
Revenues	$	210,149	$	261,245	$	98,205	$	623		$	570,222
Adjusted EBITDA	14,696		101,936		10,922		(21,990		)	105,564
Depreciation, depletion and amortization	4,880		17,343		3,689		612			26,524
Accretion on asset retirement obligation	3,135		531		603		868			5,137
Total assets	236,527		605,657		136,899		910,447			1,889,530
Capital expenditures	13,209		31,150		3,211		1,138			48,708

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

Six Months Ended June 30, 2019
Revenues	$	422,878	$	514,507	$	184,183	$	3,837		$	1,125,405
Adjusted EBITDA	35,279		193,470		17,041		(32,972		)	212,818
Depreciation, depletion and amortization	9,745		33,725		7,124		1,203			51,797
Accretion on asset retirement obligation	6,271		1,061		1,207		1,735			10,274
Total assets	236,527		605,657		136,899		910,447			1,889,530
Capital expenditures	13,623		62,374		9,461		2,396			87,854

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

A reconciliation of net income to adjusted EBITDA follows:



	Three Months Ended June 30,					Six Months Ended June 30,
	2019		2018			2019			2018
	(In thousands)
Net income	$	62,840	$	43,306		$	135,581		$	103,291
Provision for (benefit from) income taxes	91		(3,366		)	161			(3,910		)
Interest expense, net	2,287		3,498			4,576			7,620
Depreciation, depletion and amortization	26,524		30,549			51,797			60,252
Accretion on asset retirement obligations	5,137		6,993			10,274			13,985
Amortization of sales contracts, net	11		3,248			76			6,299
Loss on sale of Lone Mountain Processing, LLC	4,304		—			4,304			—
Net loss resulting from early retirement of debt and debt restructuring	—		485			—			485
Non-service related pension and postretirement benefit costs	1,336		(68		)	3,102			1,235
Reorganization items, net	16		740			(71		)	1,041
Costs associated with proposed joint venture with Peabody Energy	3,018		—			3,018			—
Adjusted EBITDA	$	105,564	$	85,385		$	212,818		$	190,298