First Quarter 2018 Highlights:
- Coal sales of $238.4 million, an
increase of nearly 5% compared to the first quarter 2017, on
slightly lower sales volumes of 5.2 million tons.
- Adjusted EBITDA of $65.0 million, an
increase of $1.0 million compared to first quarter 2017.
- Cash flows from operations of $51.7
million.
- Net loss attributable to limited
partner units of $21.6 million, or ($0.12) per common unit and
($0.18) per subordinated unit.
- Declared a $0.0565 per unit
distribution from retained excess cash flow generated in 2017, to
be paid on May 31, 2018 to unitholders of record as of May 21,
2018.
Foresight Energy LP (“Foresight” or the “Partnership”) (NYSE:
FELP) today reported financial and operating results for the first
quarter ended March 31, 2018. Foresight generated fiscal year coal
sales revenues of $238.4 million on sales volumes of 5.2
million tons resulting in a net loss attributable to limited
partner units of $21.6 million, Adjusted EBITDA of $65.0 million
and cash flows from operations of $51.7 million.
“The first quarter was another successful period for Foresight,
as we realized significant year-over-year improvements in our
realized price per ton, and improved netbacks to the mines, on
essentially flat year-over-year sales volumes,” said Mr. Robert D.
Moore, Chairman, President and Chief Executive Officer. “Our active
mines safely and efficiently produced a company record quarterly
volume of nearly 5.7 million tons and retained their position among
the most productive and lowest cost underground mines in the
country. Further, we were able to take advantage of a relatively
strong export market for our product, which contributed to a slight
increase in our Adjusted EBITDA compared to the first quarter of
2017.”
Foresight also announced that due to the Partnership’s operating
performance during the first quarter, the Board of Directors of its
General Partner approved a quarterly cash distribution of $0.0565
per unit from retained excess cash flow. The distribution is
payable on May 31, 2018 for unitholders of record on May 21,
2018.
Consolidated Financial Results
Quarter Ended March 31, 2018 Compared to Quarter Ended March 31,
2017
Coal sales totaled $238.4 million for the first quarter 2018
compared to $227.8 million for the first quarter 2017, representing
an increase of $10.6 million, or nearly 5%. The increase in coal
sales revenues was driven by a $2.37 per ton increase in realized
price on relatively comparable sales volumes. The improvement in
realized price was principally the result of a larger proportion of
tons shipped to the export market at higher realizations in the
2018 period compared to the 2017 period.
Cost of coal produced was $120.6 million, or $23.19 per ton
sold, for the first quarter 2018 compared to $117.8 million, or
$22.80 per ton sold, for the first quarter 2017. The increases in
cost of coal produced and cost per ton sold were due to slightly
higher royalty expense in the 2018 period. The higher royalty
expense is a function of the specific royalty contract being mined
during the period and the increase in realized prices.
Transportation costs increased $8.7 million from $37.7 million
in the 2017 quarter to $46.4 million in the 2018 quarter. The
increase in 2018 compared to 2017 was due to additional
transportation and transloading costs associated with a higher
proportion of export sales volumes. During the first quarter 2018,
33% of coal sales volumes were sold into the export market compared
to 24% during the first quarter 2017.
During the quarter ended March 31, 2018, Foresight recognized
depreciation, depletion and amortization (“DD&A”) expense of
$51.4 million compared to $39.3 million during the quarter ended
March 31, 2017. The increase of $12.1 million is due to the
increase in fair market value of assets from the application of
pushdown accounting which resulted in higher DD&A versus the
2017 period.
The first quarter 2017 included losses on commodity contracts
totaling $1.5 million whereas the first quarter 2018 included no
open commodity contracts. During the first quarter 2018, a $1.4
million benefit was recorded in contract amortization related to
the sales and royalty contract assets and liabilities recorded as
part of pushdown accounting.
As a result of the March 2017 refinancing transaction, during
the first quarter 2017, Foresight recognized $95.5 million of
expense related to the early extinguishment of debt. Included in
this amount was $57.6 million of expense related to the premiums
and other costs required to retire the prior second lien notes and
the early write-off of $37.9 million of unamortized debt discounts
and debt issuance costs from the retired debt. The first quarter
2018 included no comparative expenses.
During first quarter 2018, Foresight generated operating cash
flows of $51.7 million and ended the period with $18.6 million in
cash and $161.0 million of available borrowing capacity, net of
outstanding letters of credit, under its revolving credit facility.
Capital expenditures for the quarter ended March 31, 2018 totaled
$16.5 million compared to $19.9 million for the quarter ended March
31, 2017.
Guidance for 2018
Based on Foresight’s remaining contracted position, first
quarter performance, and its current outlook on pricing and the
coal markets in general, the Partnership is affirming the following
guidance for 2018:
Sales Volumes – Based on current committed position and
expectations for the remainder of 2018, Foresight is projecting
sales volumes to be between 21.5 and 22.8 million tons, with at
least 7.0 million tons expected to be sold into the international
market.
Adjusted EBITDA – Based on the projected sales volumes and
operating cost structure, Foresight currently expects to generate
Adjusted EBITDA in a range of $280 to $310 million.
Capital Expenditures – Total 2018 capital expenditures are
estimated to be between $70 and $80 million.
Forward-Looking Statements
This press release contains “forward-looking” statements within
the meaning of the federal securities laws. These statements
contain words such as “possible,” “intend,” “will,” “if” and
“expect” and can be impacted by numerous factors, including risks
relating to the securities markets, the impact of adverse market
conditions affecting business of the Partnership, adverse changes
in laws including with respect to tax and regulatory matters and
other risks. There can be no assurance that actual results will not
differ from those expected by management of the Partnership. Known
material factors that could cause actual results to differ from
those in the forward-looking statements are described in Part I,
“Item 1A. Risk Factors” of the Partnership’s Annual Report on Form
10-K filed on March 7, 2018. The Partnership undertakes
no obligation to update or revise such forward-looking statements
to reflect events or circumstances that occur, or which the
Partnership becomes aware of, after the date hereof.
Non-GAAP Financial Measures
Adjusted EBITDA is a non-GAAP supplemental financial measure
that management and external users of the Partnership’s
consolidated financial statements, such as industry analysts,
investors, lenders and rating agencies, may use to assess:
- the Partnership’s operating performance
as compared to other publicly traded partnerships, without regard
to historical cost basis or, in the case of Adjusted EBITDA,
financing methods;
- the Partnership’s ability to incur and
service debt and fund capital expenditures; and
- the viability of acquisitions and other
capital expenditure projects and the returns on investment of
various expansion and growth opportunities.
The Partnership defines Adjusted EBITDA as net income (loss)
attributable to controlling interests before interest, income
taxes, depreciation, depletion, amortization and accretion.
Adjusted EBITDA is also adjusted for equity-based compensation,
losses/gains on commodity derivative contracts, settlements of
derivative contracts, a change in the fair value of the warrant
liability and material nonrecurring or other items which may not
reflect the trend of future results. As it relates to commodity
derivative contracts, the Adjusted EBITDA calculation removes the
total impact of derivative gains/losses on net income (loss) during
the period and then adds/deducts to Adjusted EBITDA the amount of
aggregate settlements during the period.
The Partnership believes the presentation of Adjusted EBITDA
provides useful information to investors in assessing the
Partnership’s financial condition and results of operations.
Adjusted EBITDA should not be considered an alternative to net
(loss) income, operating income, cash flow from operations, or any
other measure of financial performance presented in accordance with
U.S. GAAP, nor should Adjusted EBITDA be considered an alternative
to operating surplus, adjusted operating surplus or other
definitions in the Partnership’s partnership agreement. Adjusted
EBITDA has important limitations as an analytical tool because it
excludes some, but not all, of the items that affects net (loss)
income. Additionally, because Adjusted EBITDA may be defined
differently by other companies in the industry, and the
Partnership’s definition of Adjusted EBITDA may not be comparable
to similarly titled measures of other companies, the utility of
such a measure is diminished. For a reconciliation of Adjusted
EBITDA to net loss, please see the table below.
This press release references forward-looking estimates of
Adjusted EBITDA projected to be generated by the Partnership during
the year ending December 31, 2018. A reconciliation of estimated
2018 Adjusted EBITDA to U.S. GAAP net income (loss) is not provided
because U.S. GAAP net income (loss) for the projection period is
not practical to assess due to unknown variables and uncertainty
related to future results. In recent years, the Partnership has
recognized significant asset impairment charges, transition and
reorganization costs, losses on early extinguishment of debt, and
debt restructuring costs. While these items affect U.S. GAAP net
income (loss), they are generally excluded from Adjusted EBITDA.
Therefore these items do not materially impact the Partnership’s
ability to forecast Adjusted EBITDA.
About Foresight Energy LP
Foresight is a leading producer and marketer of thermal coal
controlling over 1.7 billion tons of coal reserves in the Illinois
Basin. Foresight currently operates two longwall mining complexes
with three longwall mining systems (Williamson (one longwall mining
system) and Sugar Camp (two longwall mining systems)), one
continuous mining operation (Macoupin) and the Sitran river
terminal on the Ohio River. Foresight’s operations are
strategically located near multiple rail and river transportation
access points, providing transportation cost certainty and
flexibility to direct shipments to the domestic and international
markets. Foresight also owns coal interests and mining assets
located in southeastern Ohio.
----------------------------------------------------
1 Foresight adopted pushdown accounting as of March 31, 2017 as
a result of Murray Energy obtaining control of its general partner.
As required by pushdown accounting, the Partnership revalued its
balance sheet on the change of control date and therefore certain
financial statement line items are not comparable to prior periods.
As such, operational results prior to March 31, 2017 were recorded
on the predecessor financial statements (the “Predecessor”).
Operational results subsequent to March 31, 2017 were recorded on
the successor financial statements (the “Successor”).
Foresight Energy LP Unaudited Condensed Consolidated
Balance Sheets (In Thousands)
(Successor) (Successor) March 31, December
31, 2018 2017 Assets Current assets: Cash
and cash equivalents $ 18,553 $ 2,179 Accounts receivable 28,611
35,158 Due from affiliates 26,315 37,685 Financing receivables -
affiliate 3,200 3,138 Inventories, net 56,557 40,539 Prepaid
royalties 1,579 4,000 Deferred longwall costs 19,135 9,520 Other
prepaid expenses and current assets 8,579 10,844 Contract-based
intangibles 6,145 11,268 Total current assets 168,674
154,331 Property, plant, equipment and development, net 2,340,623
2,378,605 Due from affiliates — 947 Financing receivables -
affiliate 63,257 64,097 Prepaid royalties, net 1,667 1,250 Other
assets 4,432 5,358 Contract-based intangibles 1,721
2,052 Total assets $ 2,580,374 $ 2,606,640
Liabilities and
partners’ capital Current liabilities: Current portion of
long-term debt and capital lease obligations $ 99,623 $ 109,532
Current portion of sale-leaseback financing arrangements 4,731
4,148 Accrued interest 26,725 13,410 Accounts payable 85,876 76,658
Accrued expenses and other current liabilities 62,684 62,442 Asset
retirement obligations 4,416 4,416 Due to affiliates 12,399 13,324
Contract-based intangibles 24,006 28,688 Total
current liabilities 320,460 312,618 Long-term debt and capital
lease obligations 1,202,956 1,205,000 Sale-leaseback financing
arrangements 195,621 196,496 Asset retirement obligations 40,011
39,655 Other long-term liabilities 28,901 32,330 Contract-based
intangibles 142,522 144,715 Total liabilities
1,930,471 1,930,814 Limited partners' capital: Common unitholders
(79,827 and 77,644 units outstanding as of March 31, 2018 and
December 31, 2017, respectively) 407,018 421,161 Subordinated
unitholder (64,955 units outstanding as of March 31, 2018 and
December 31, 2017) 242,885 254,665 Total partners'
capital 649,903 675,826 Total liabilities and
partners' capital $ 2,580,374 $ 2,606,640
Foresight Energy
LP Unaudited Condensed Consolidated Statements of
Operations (In Thousands, Except Per Unit Data)
(Successor) (Predecessor) Three Months Ended
Three Months Ended March 31, 2018 March 31,
2017 Revenues Coal sales $ 238,387 $ 227,813 Other revenues
2,339 2,581 Total revenues 240,726 230,394
Costs and expenses: Cost of coal produced (excluding depreciation,
depletion and amortization) 120,570 117,762 Cost of coal purchased
1,751 7,973 Transportation 46,443 37,726 Depreciation, depletion
and amortization 51,420 39,298 Contract amortization (1,420 ) —
Accretion on asset retirement obligations 731 710 Selling, general
and administrative 7,775 6,554 Loss on commodity derivative
contracts — 1,492 Other operating (income) expense, net (648
) 451 Operating income 14,104 18,428 Other expenses:
Interest expense, net 35,673 43,380 Change in fair value of
warrants — (9,278 ) Loss on early extinguishment of debt —
95,510 Net loss $ (21,569 ) $ (111,184 ) Net loss
available to limited partner units - basic and diluted: Common
unitholders $ (9,789 ) $ (56,259 ) Subordinated unitholder $
(11,780 ) $ (54,925 ) Net loss per limited partner unit -
basic and diluted: Common unitholders $ (0.12 ) $ (0.85 )
Subordinated unitholder $ (0.18 ) $ (0.85 ) Weighted average
limited partner units outstanding - basic and diluted: Common units
78,846 66,533 Subordinated units 64,955 64,955 Distributions
declared per limited partner unit $ 0.0565 $ —
Foresight Energy
LP Unaudited Condensed Consolidated Statements of Cash
Flows (In Thousands) (Successor)
(Predecessor) Three Months Three Months Ended
Ended March 31, 2018 March 31, 2017 Cash
flows from operating activities Net loss $ (21,569 ) $ (111,184
) Adjustments to reconcile net loss to net cash provided by
operating activities: Depreciation, depletion and amortization
51,420 39,298 Amortization of debt discount and deferred issuance
costs 655 6,365 Contract amortization (1,420 ) — Equity-based
compensation 177 318 Loss on commodity derivative contracts — 1,492
Settlements of commodity derivative contracts — 3,724 Realized
gains on coal derivatives included in investing activities — (3,520
) Change in fair value of warrants — (9,278 ) Debt extinguishment
expense — 95,510 Other — 1,321 Changes in operating assets and
liabilities: Accounts receivable 6,547 19,695 Due from/to
affiliates, net 11,392 (13,157 ) Inventories (12,927 ) (917 )
Prepaid expenses and other assets (6,424 ) (5,117 ) Prepaid
royalties 2,004 (241 ) Commodity derivative assets and liabilities
— (532 ) Accounts payable 9,218 7,324 Accrued interest 13,315
(9,803 ) Accrued expenses and other current liabilities (1,466 )
(3,430 ) Other 784 1,782 Net cash provided by
operating activities 51,706 19,650
Cash flows from investing
activities Investment in property, plant, equipment and
development (16,531 ) (19,908 ) Return of investment on financing
arrangements with Murray Energy (affiliate) 778 705 Settlement of
certain coal derivatives — 3,520 Proceeds from sale of property,
plant and equipment — 1,898 Net cash used in
investing activities (15,753 ) (13,785 )
Cash flows from
financing activities Net change in borrowings under revolving
credit facility — (352,500 ) Net change in borrowings under A/R
securitization program — 7,000 Proceeds from long-term debt and
capital lease obligations — 1,234,438 Payments on long-term debt
and capital lease obligations (12,608 ) (970,721 ) Payments on
short-term debt (2,147 ) — Proceeds from issuance of common units
to Murray Energy (affiliate) — 60,586 Distributions paid (4,510 ) —
Debt extinguishment costs — (57,645 ) Debt issuance costs paid —
(27,328 ) Other (314 ) (1,892 ) Net cash used in
financing activities (19,579 ) (108,062 ) Net
increase (decrease) in cash, cash equivalents, and restricted cash
16,374 (102,197 ) Cash, cash equivalents, and restricted cash,
beginning of period 2,179 116,921 Cash, cash
equivalents, and restricted cash, end of period $ 18,553 $ 14,724
Reconciliation of U.S. GAAP Net Loss to
Adjusted EBITDA (In Thousands)
(Successor) (Predecessor)
(Successor) Three Months Ended Three Months
Ended Three Months Ended March 31, 2018 March
31, 2017 December 31, 2017 Net loss $ (21,569 ) $
(111,184 ) $ (74,191 ) Interest expense, net 35,673 43,380 36,496
Depreciation, depletion and amortization 51,420 39,298 64,503
Long-lived asset impairments — — 42,667 Accretion on asset
retirement obligations 731 710 725 Contract amortization (1,420 ) —
8,286 Equity-based compensation 177 318 136 Loss on commodity
derivative contracts — 1,492 389 Settlements of commodity
derivative contracts — 3,724 (492 ) Change in fair value of
warrants — (9,278 ) — Loss on early extinguishment of debt —
95,510 —
Adjusted EBITDA $ 65,012 $ 63,970 $
78,519
Operating Metrics (In Thousands, Except
Per Ton Data)
(Successor)
(Predecessor) (Successor) Three Months Ended
Three Months Ended Three Months Ended March 31,
2018 March 31, 2017 December 31, 2017 Produced
tons sold 5,199 5,165 6,008 Purchased tons sold 41
118 —
Total tons sold 5,240 5,283
6,008 Tons produced 5,667 5,267 4,955 Coal
sales realization per ton sold(1) $ 45.49 $ 43.12 $ 47.01 Cash cost
per ton sold(2) $ 23.19 $ 22.80 $ 23.17 Netback to mine realization
per ton sold(3) $ 36.63 $ 35.98 $ 37.34 (1) - Coal sales
realization per ton sold is defined as coal sales divided by total
tons sold. (2) - Cash cost per ton sold is defined as cost of coal
produced (excluding depreciation, depletion and amortization)
divided by produced tons sold. (3) - Netback to mine realization
per ton sold is defined as coal sales less transportation expense
divided by tons sold.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20180508005487/en/
Foresight Energy LPGary M. Broadbent, 740-338-3100Director of
Investor and Media
RelationsInvestor.relations@foresight.comMedia@coalsource.com
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