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Cloud Peak Energy Inc. Announces Results For The Third Quarter And First Nine Months Of 2012

We believe Adjusted EBITDA and Adjusted EPS are also useful to investors, analysts and other external users of our consolidated financial statements in evaluating our operating performance from period to period and comparing our performance to similar operating results of other relevant companies. Adjusted EBITDA allows investors to measure a company’s operating performance without regard to items such as interest expense, taxes, depreciation and depletion, amortization and accretion and other specifically identified items that are not considered to directly reflect our core operations. Similarly, we believe our use of Adjusted EPS provides an appropriate measure to use in assessing our performance across periods given that this measure provides an adjustment for certain specifically identified significant items that are not considered to directly reflect our core operations, the magnitude of which may vary drastically from period to period and, thereby, have a disproportionate effect on the earnings per share reported for a given period.

Our management recognizes that using Adjusted EBITDA and Adjusted EPS as performance measures has inherent limitations as compared to net income, income from continuing operations, EPS or other GAAP financial measures, as these non-GAAP measures exclude certain items, including items that are recurring in nature, which may be meaningful to investors. Adjusted EBITDA and Adjusted EPS should not be considered in isolation and do not purport to be alternatives to net income, income from continuing operations, EPS or other GAAP financial measures as a measure of our operating performance. Because not all companies use identical calculations, our presentations of Adjusted EBITDA and Adjusted EPS may not be comparable to other similarly titled measures of other companies. Moreover, our presentation of Adjusted EBITDA is different than EBITDA as defined in our debt financing agreements.

CLOUD PEAK ENERGY INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF

OPERATIONS AND COMPREHENSIVE INCOME

(in thousands, except per share data)

   
Three Months Ended Nine Months Ended
September 30, September 30,
2012   2011 2012   2011
Revenues $ 425,861   $ 406,950   $ 1,141,947   $ 1,151,174  
Costs and expenses

Cost of product sold (exclusive of depreciation, depletion, amortization and accretion, shown separately)

301,945 306,533 850,963 855,551
Depreciation and depletion 24,661 24,289 70,337 58,537
Accretion 3,257 2,984 9,327 9,420
Derivative financial instruments (1,334 ) (19,461 )
Selling, general and administrative expenses   15,698     12,971     43,397     38,905  
Total costs and expenses   344,227     346,777     954,563     962,413  
Operating income   81,634     60,173     187,384     188,761  
Other income (expense)
Interest income 189 143 948 459
Interest expense (11,671 ) (6,848 ) (25,457 ) (27,520 )
Tax agreement benefit (expense) 29,000 22,878 29,000 (19,855 )
Other, net   (335 )   (103 )   (388 )   (34 )
Total other income (expense)   17,183     16,070     4,103     (46,950 )

Income before income tax provision and earnings from unconsolidated affiliates

98,817 76,243 191,487 141,811
Income tax (expense) benefit (13,601 ) (52,162 ) (47,509 ) 2,025
Earnings from unconsolidated affiliates, net of tax   44     530     1,579     2,142  
Net income   85,260     24,611     145,557     145,978  
Other comprehensive income
Retiree medical plan amortization of prior service cost 394 326 1,272 978
Tax on amortization of prior service cost   (142 )   (117 )   (458 )   (352 )
Other comprehensive income   252     209     814     626  
Total comprehensive income $ 85,512   $ 24,820   $ 146,371   $ 146,604  
 
Net income per common share:
Basic $ 1.42 $ 0.41 $ 2.43 $ 2.43
Diluted $ 1.39   $ 0.41   $ 2.39   $ 2.41  
Weighted-average shares outstanding - basic   60,044     60,007     60,020     60,003  
Weighted-average shares outstanding - diluted   61,142     60,645     60,923     60,606  
 
 

CLOUD PEAK ENERGY INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)

 
  September 30,   December 31,
2012 2011
ASSETS (unaudited) (audited)
Current assets
Cash and cash equivalents $ 185,505 $ 404,240
Investments in marketable securities 80,331 75,228
Restricted cash 71,245
Accounts receivable 106,300 95,247
Due from related parties 2,823 471
Inventories, net 82,083 71,648
Deferred income taxes 37,216 37,528
Derivative financial instruments 20,730 2,275
Other assets   22,114     13,019  
Total current assets   537,102     770,901  
Noncurrent assets
Property, plant and equipment, net 1,643,397 1,350,135
Goodwill 35,634 35,634
Deferred income taxes 95,044 132,828
Other assets   33,621     29,821  
Total assets $ 2,344,798   $ 2,319,319  
 
LIABILITIES AND EQUITY
Current liabilities
Accounts payable $ 69,317 $ 71,427
Royalties and production taxes 144,811 136,072
Accrued expenses 53,774 65,928
Current portion of tax agreement liability 25,097 19,113
Current portion of federal coal lease obligations 63,191 102,198
Other liabilities   2,669     4,971  
Total current liabilities   358,859     399,709  
Noncurrent liabilities
Tax agreement liability, net of current portion 116,539 151,523
Senior notes 596,397 596,077
Federal coal lease obligations, net of current portion 122,928 186,119
Asset retirement obligations, net of current portion 197,732 192,707
Other liabilities   46,098     42,795  
Total liabilities   1,438,553     1,568,930  
Equity

Common stock ($0.01 par value; 200,000 shares authorized; 61,104 and 60,923 shares issued and outstanding at September 30, 2012 and December 31, 2011, respectively)

611 609
Additional paid-in capital 545,784 536,301
Retained earnings 377,650 232,093
Accumulated other comprehensive loss   (17,800 )   (18,614 )
Total equity   906,245     750,389  
Total liabilities and equity $ 2,344,798   $ 2,319,319  
 
 

CLOUD PEAK ENERGY INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

 
  Nine Months Ended
September 30,
2012   2011
Cash flows from operating activities
Net income $ 145,557 $ 145,978
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and depletion 70,337 58,537
Accretion 9,327 9,420
Earnings from unconsolidated affiliates (1,579 ) (2,142 )
Distributions of income from unconsolidated affiliates 1,000 2,000
Deferred income taxes 36,747 (9,781 )
Tax agreement expense (29,000 ) 19,855
Stock compensation expense 9,485 6,315
Unrealized derivative income (19,461 )
Other 8,804 8,920
Changes in operating assets and liabilities:
Accounts receivable (11,052 ) (32,289 )
Inventories (9,970 ) (7,561 )
Due to or from related parties (2,351 ) (948 )
Other assets (8,608 ) (4,539 )
Accounts payable and accrued expenses 7,585 23,561
Asset retirement obligations   (4,867 )   (4,851 )
Net cash provided by operating activities   201,954     212,475  
 
Investing activities
Acquisition of Youngs Creek and CX Ranch coal and land assets (300,377 )
Purchases of property, plant and equipment (36,445 ) (82,050 )
Cash paid for capitalized interest (42,877 ) (18,772 )
Investments in marketable securities (58,611 )
Maturity and redemption of investments 53,508
Initial payments on federal coal leases (69,407 )
Return of restricted cash 71,244 107,887
Partnership escrow deposit (4,470 )
Other   1,847     545  
Net cash used in investing activities   (316,181 )   (61,797 )
Financing activities
Principal payments on federal coal leases (102,198 ) (50,902 )
Other   (2,310 )   (2,317 )
Net cash used in financing activities   (104,508 )   (53,219 )
 
Net decrease in cash and cash equivalents (218,735 ) 97,459
Cash and cash equivalents at beginning of period   404,240     340,101  
Cash and cash equivalents at end of period $ 185,505   $ 437,560  
 
Supplemental cash flow disclosures
Interest paid $ 57,911 $ 36,405
Non-cash interest capitalized $ 7,445 $ 17,168
Income taxes paid $ 22,017 $ 6,161
 
 

CLOUD PEAK ENERGY INC. AND SUBSIDIARIES

RECONCILIATION OF NON-GAAP MEASURES

(in millions, except per share data)

 

Adjusted EBITDA

 
  Three Months Ended   Nine Months Ended
September 30, September 30,
2012   2011 2012   2011
Net income $ 85.3   $ 24.6   $ 145.6   $ 146.0  
Interest income (0.2 ) (0.1 ) (0.9 ) (0.5 )
Interest expense 11.7 6.8 25.5 27.5
Income tax expense (benefit) 13.6 52.2 47.5 (2.0 )
Depreciation and depletion 24.7 24.3 70.3 58.5
Accretion   3.3     3.0     9.3     9.4  
EBITDA $ 138.3 $ 110.8 $ 297.2 $ 238.9
Tax agreement expense(1) (29.0 ) (22.9 ) (29.0 ) 19.9
Derivative financial instruments(2) (0.9 ) (18.5 )
Expired significant broker contract                
Adjusted EBITDA $ 108.4   $ 87.9   $ 249.8   $ 258.8  
 

(1) Changes to related deferred taxes are included in income tax expense.

(2) Derivative financial instruments including unrealized marked-to-market amounts and cash settlements realized.

 

Adjusted EPS

   
Three Months Ended Nine Months Ended
September 30, September 30,
2012   2011 2012   2011
Diluted earnings per common share $ 1.39   $ 0.41   $ 2.39   $ 2.41  

Tax agreement expense including tax impacts of IPO and Secondary Offering

(0.58 ) 0.20 (0.58 ) (0.63 )
Derivative financial instruments(1) (0.01 ) (0.19 )
Expired significant broker contract                
Adjusted EPS $ 0.80   $ 0.61   $ 1.62   $ 1.78  

Weighted-average dilutive shares outstanding (in millions)

61.1 60.6 60.9 60.6
 

(1) Derivative financial instruments including unrealized mark-to-market amounts and cash settlements realized.

 
             
Tons Sold
(in thousands) Q3 Q2 Q1 Q4 Q3 Q2 Year
2012 2012 2012 2011 2011 2011 2011
Mine
Antelope 9,111 7,424 8,752 9,948 8,901 9,059 37,075
Cordero Rojo 10,201 9,027 10,007 10,070 9,968 9,225 39,456
Spring Creek 5,072 3,625 3,788 5,161 5,502 4,729 19,106
Decker (50% interest) 417 384 245 473 432 426 1,549
Total 24,802 20,460 22,792 25,653 24,803 23,439 97,186




Stock quotes in this article: CLD 

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