Armstrong’s coal sales and revenue up in Q3 2013, but prices down

Western Kentucky coal producer Armstrong Energy on Nov. 14 reported coal sales revenue of $108.2m in the third quarter, compared to $94.7m for the year-ago quarter.

Coal sales increased 0.3 million tons to 2.4 million tons in the third quarter of 2013, as compared to the same period of the prior year. The average sales price per ton in the third quarter of this year was $44.63, as compared to $45.61 for the same period of the prior year.

Operating income and adjusted earnings before interest, taxes, depreciation, depletion and amortization (“Adjusted EBITDA”) for the third quarter of 2013 was $1.2m and $14.1m, respectively, as compared to an operating loss and Adjusted EBITDA for the third quarter of 2012 of $0.5m and $10.7m, respectively.   

For the nine months ended Sept. 30, Armstrong had revenue of $310.7m compared to $287.9m for the year-ago nine-month period. Coal sales increased 8.5% to 6.9 million tons in the most recent nine months, compared to 6.3 million tons in the same period of the prior year. Average sales price per ton in the nine months ended Sept. 30 was $45.16, as compared to $45.41 for the same period of the prior year. Operating income and Adjusted EBITDA for the nine months ended Sept. 30 was $7.2m and $43.4m, respectively, as compared to operating income and Adjusted EBITDA for the nine months ended Sept. 30, 2012 of $8.9m and $41.5m, respectively. 

Revenue and tons sold exceeded prior year amounts primarily due to additional production at two underground mines that reached full production in the latter half of 2012 and the first half of 2013. The average sales price per ton is slightly lower in both comparisons primarily due to timing of sales under certain contracts.

Costs of coal sales of $79m and $225.6m for the three- and nine-month periods, respectively, are higher than the comparable periods due to the increase in volume. The lower cost of coal sales per ton is due primarily to efficiencies gained in the current year at one of the aforementioned underground mines.

Armstrong’s anticipated coal production for 2013 is between 9.3 million and 9.5 million tons, with substantially all tons currently committed and priced. For 2014, Armstrong currently has 8.4 million tons priced and committed.

Capital expenditures in 2013 for equipment and land acquisitions are currently expected to be in a range of $22m-$23m, with an additional $12m-$13m for mine development costs related to the development of the Lewis Creek surface and underground mines during the year.

Armstrong is a diversified producer of low-chlorine, high-sulfur thermal coal from the Illinois Basin, with both surface and underground mines. It controls about 322 million tons of proven and probable coal reserves in western Kentucky and currently operates seven mines. Armstrong also owns and operates three coal processing plants and river dock coal handling and rail loadout facilities which support its mining operations.

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.