Segment Information

9 Months Ended

Sep. 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 nine months ended September 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 September 30, 2019
Revenues	$	269,967	$	254,493	$	94,052	$	955		$	619,467
Adjusted EBITDA	50,153		70,814		16,659		(31,005		)	106,621
Depreciation, depletion and amortization	5,956		19,962		3,852		632			30,402
Accretion on asset retirement obligation	3,135		531		603		868			5,137
Total assets	236,656		609,378		148,994		939,572			1,934,600
Capital expenditures	5,402		36,475		6,837		738			49,452

Three Months Ended September 30, 2018
Revenues	$	261,927	$	236,328	$	130,663	$	4,262		$	633,180
Adjusted EBITDA	48,646		81,250		25,200		(30,202		)	124,894
Depreciation, depletion and amortization	9,114		18,106		3,924		631			31,775
Accretion on asset retirement obligation	4,885		469		565		1,073			6,992
Total assets	374,092		561,989		127,904		933,637			1,997,622
Capital expenditures	3,458		17,827		3,332		1,076			25,693

Nine Months Ended September 30, 2019
Revenues	$	692,845	$	769,000	$	278,235	$	4,792		$	1,744,872
Adjusted EBITDA	85,433		264,284		33,699		(63,977		)	319,439
Depreciation, depletion and amortization	15,702		53,687		10,976		1,834			82,199
Accretion on asset retirement obligation	9,406		1,592		1,810		2,603			15,411
Total assets	236,656		609,378		148,994		939,572			1,934,600
Capital expenditures	19,026		98,849		16,299		3,222			137,396

Nine Months Ended September 30, 2018
Revenues	$	737,233	$	733,707	$	321,997	$	7,887		$	1,800,824
Adjusted EBITDA	102,639		251,649		52,710		(91,806		)	315,192
Depreciation, depletion and amortization	25,841		53,109		11,459		1,618			92,027
Accretion on asset retirement obligation	14,656		1,406		1,696		3,219			20,977
Total assets	374,092		561,989		127,904		933,637			1,997,622
Capital expenditures	7,221		35,555		7,097		5,869			55,742

A reconciliation of net income to adjusted EBITDA follows:



	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
	(In thousands)
Net income	$	106,769		$	123,192		$	242,350		$	226,483
Provision for (benefit from) income taxes	347			(45,215		)	508			(49,125		)
Interest expense, net	340			3,378			4,916			10,998
Depreciation, depletion and amortization	30,402			31,775			82,199			92,027
Accretion on asset retirement obligations	5,137			6,992			15,411			20,977
Amortization of sales contracts, net	(153		)	3,241			(77		)	9,540
Loss on sale of Lone Mountain Processing, LLC	—			—			4,304			—
Preference Rights Lease Application (PRLA) settlement income	(39,000		)	—			(39,000		)	—
Net loss resulting from early retirement of debt and debt restructuring	—			—			—			485
Non-service related pension and postretirement benefit costs	(975		)	971			2,127			2,206
Reorganization items, net	—			560			(71		)	1,601
Costs associated with proposed joint venture with Peabody Energy	3,754			—			6,772			—
Adjusted EBITDA	$	106,621		$	124,894		$	319,439		$	315,192