Cloud Peak Energy Inc. (NYSE:CLD) Q1 2018 Earnings Conference Call - Preliminary Transcript

Apr 26, 2018 • 05:00 pm ET


Cloud Peak Energy Inc. (NYSE:CLD) Q1 2018 Earnings Conference Call - Preliminary Transcript


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Heath Hill

compared to the $20.4 million for the first quarter of 2017. While the consolidated results are relatively consistent, a shift in the mix of earnings in the period occurred as improved logistics earnings and lower SG&A expense offset lower domestic earnings in the period. During this first quarter of 2018, we shipped 12.3 million tons of coal. This compares to our first quarter shipments in 2017 of 14.1 million tons. The current period volumes included 900,000 more tons of exports at higher margins as compared to the prior year. Our realized domestic price per ton up $12.20 for the first quarter is slightly higher than the $12.10 per ton reported for last year's first quarter, which primarily reflects the changing mix of our coal sales.

With the increasing strip ratios, higher diesel costs and the lower volume of shipments our costs for the first quarter were $10.94 per ton. Comparatively the first quarter of 2017 cost per ton was $9.87. We forecast the magnitude of this comparative quarterly impact to decline throughout the year as the pace of shipments is expected to increase to achieve our guided volumes. During the first quarter, our owned and operated mines segment generated adjusted EBITDA of $18.6 million. Export shipments for the first quarter of 2018 were 1.4 million tons, which is consistent with our rail and port contracts, and is a significant improvement as compared to the ramp up pace experienced in the comparable period. With the steady pace and performance by the rail and port, efficiencies were gain, most notably a $1.5 million lower demurrage charge in the period.

The logistics segment adjusted EBITDA was $7.1 million for the period, our best quarterly result since export shipments resumed in the fourth quarter of 2016. With an average realized price of $57.13 per ton on our Asian export shipments, we achieved a $5.04 margin per ton, which is incremental to the domestic cash margin in our owned and operated mine segment results. The contracted selling price for the second quarter is $2 to $3 per ton higher than the first quarter results. We will benefit by approximately 50% of the increase as we incur higher rail rates in Montana severance taxes. Our SG&A costs of $7.3 million were lower than the $11 million reported for the first quarter last year.

Overall our SG&A costs were consistent with prior year except for our mark-to-market stock compensation expense that was updated for performance based equity award. As our stock price declined during the first quarter of this year, the calculation resulted in a $4.4 million credit to this estimated award value. This mark-to-market volatility will continue throughout 2018 as these performance share units will vest in March 2019. As we look forward, we are reaffirming our 2018 guidance. Our range of shipments remains between 52 million and 56 million tons of which we expect to export approximately 5.5 million tons. Our 2018 adjusted EBITDA guidance range continues to be between $75 million and $100 million.