Alpha total revenues in the second quarter were USD 1.8 billion compared with USD 1.6 billion in the second quarter of 2011, which included one month of legacy Massey operations. Coal revenues were USD 1.6 billion compared with USD 1.4 billion in the second quarter last year. Coal revenues were 11 percent higher than the year-ago period primarily driven by a 40% increase in Eastern thermal coal revenue due to the inclusion of a full quarter of legacy Massey operations in the second quarter of 2012 which more than offset a 7%YoY decrease in revenues from metallurgical coal and production cutbacks implemented in the first half of 2012.
The decrease in metallurgical coal revenues was mainly attributable to lower average per ton realizations in the second quarter of 2012, more than offsetting increased metallurgical coal shipments which increased 28%YoY. Other revenues and freight and handling revenues were USD 49.5 million and USD 233.4 million respectively, during the second quarter versus USD 36.3 million and USD 150.9 million respectively during the second quarter of 2011.
During the second quarter of 2012, Alpha shipped 10.2 million tons of Powder River Basin (PRB) steam coal, 11.0 million tons of Eastern steam coal and 5.6 million tons of metallurgical coal. Average per ton realization for PRB shipments rose to USD 12.96 in the second quarter of 2012 compared with USD 11.92 in the year-ago period. The average realization per ton for Eastern steam coal shipments was USD 65.05, compared with USD 66.65 last year and the average per ton realization for metallurgical coal decreased to USD 127.83 in the second quarter of 2012 compared with USD 176.08 in the second quarter of 2011.
Total costs and expenses during the second quarter of 2012 were USD 2.0 billion excluding the aforementioned USD 1.0 billion restructuring and long-lived asset impairment charges and USD 1.5 billion goodwill impairment charge, compared with USD 1.6 billion in the second quarter of 2011. Cost of coal sales during the quarter was USD 1.4 billion, compared to USD 1.1 billion in the second quarter of 2011. Adjusted cost of coal sales in the East averaged USD 74.21 per ton, compared with USD 76.00 in the first quarter of 2012 and USD 70.88 in the second quarter of 2011. The second quarter 2012 per ton cost of coal sales in the East has been adjusted for merger-related expenses of USD 30 million and UBB charges of USD 13 million.
The sequential decrease in adjusted cost of coal sales per ton is largely attributable to productivity enhancements and a reduction in Alpha's coal inventory which had been written down to market in previous quarters, as well as the impact of lower metallurgical coal prices on variable costs and the cost of purchased coal. The YoY increase in cost of coal sales per ton in the East is primarily the result of a mix shift due to the inclusion of a full three months of legacy Massey operations in the second quarter of 2012 which decreased the proportional contribution of the lower-cost longwalls this year, as well as general inflation and regulatory-driven cost increases, including the impacts of MSHA and environmental compliance. These cost drivers were somewhat offset by the impact of lower metallurgical coal prices on variable costs and lower purchased coal costs and volumes. Cost of coal sales in the West averaged USD 11.01 per ton in the second quarter of 2012, compared with USD 10.96 in the prior quarter and USD 10.66 last year.
Selling, general and administrative expense in the second quarter of 2012 was USD 46 million and included approximately USD 5 million of merger-related expenses, approximately USD 2 million of bad debt expense and a benefit of approximately USD 15 million arising from the adjustment of incentive compensation accruals. This compares with selling, general and administrative expense of USD 190 million in the second quarter last year which included USD 125 million of Massey acquisition-related expenses attributable to professional fees, financing and debt-related costs and various human resource-related expenses.
Depreciation, depletion and amortization during the quarter was USD 273 million compared with USD 147 million in second quarter of 2011 reflecting a full three months of combined company operations in the second quarter of 2012. Net amortization of acquired intangibles was a USD 17 million benefit in the second quarter of 2012 compared with a USD 9 million benefit in the second quarter last year.
Alpha recorded a net loss of USD 2.2 billion or USD 10.14 per diluted share during the second quarter of 2012 compared with a net loss of USD 50 million or USD 0.32 per diluted share during the second quarter of 2011. The second quarter net loss included a goodwill impairment charge of USD 1.5 billion, long-lived asset impairment charges of USD 991 million and restructuring charges of USD 20 million, UBB expenses of USD 13 million a benefit of USD 17 million from amortization of acquired intangibles, and a benefit from the change in fair value and settlement of derivative instruments of USD 8 million. Excluding these items merger-related expense of USD 29 million a USD 405 million tax benefit arising from the aforementioned adjustments, and discrete tax adjustments of USD 15 million, Alpha adjusted second quarter net loss was USD 72 million or USD 0.33 per diluted share, compared with adjusted net income of USD 152 million or USD 0.97 per diluted share in the second quarter of 2011.
Alpha's second quarter 2012 EBITDA was a loss of USD 2.4 billion, compared with EBITDA of USD 109 million in the prior-year period. Excluding restructuring and impairment charges, UBB charges, changes in fair value and settlement of derivative instruments, merger-related expenses and loss on early extinguishment of debt, Adjusted EBITDA was USD 186 million in the second quarter of 2012, compared with Adjusted EBITDA of USD 369 million in the second quarter of 2011.
Source - Alpha
(www.coalguru.com)
