company overview - conturaenergy.comconturaenergy.com/wp-content/uploads/2018/04/... · company...

Company Overview

April 2018

Who We Are

3

About Us

Contura Energy is a private, Tennessee-based coal supplier with affiliate mining

operations across major coal basins in Pennsylvania, Virginia and West Virginia. With

customers across the globe, high-quality reserves, and significant port capacity, Contura

Energy reliably supplies both metallurgical coal to produce steel and thermal coal to

generate power.

▪ Comprised of a high margin, cost competitive portfolio of metallurgical and thermal coal

operations, located across Central Appalachia (CAPP) and Northern Appalachia (NAPP).

▪ Contura affiliates control approximately 740 million tons of reserves.

▪ Owns 65 percent interest in the world-class Dominion Terminal Associates (DTA) coal export

terminal located in Newport News, Virginia, which has a total annual capacity of 22 million

tons.

▪ Committed to the safety and health of our approximately 1,750 affiliated employees, efficient

mining operations, and responsible environmental stewardship.

▪ Led by a senior management team that has significant experience both within the industry and

with Contura’s specific assets.

4

Management Team

Kevin S. Crutchfield, Chief Executive Officer & Member, Board of Directors

Kevin S. Crutchfield has served as Contura’s chief executive officer since July 2016. He also serves on

Contura’s Board of Directors. Previously, he served as chairman and chief executive officer of Alpha

Natural Resources, Inc. Prior roles include various operating and executive management positions at El

Paso Corporation, Coastal Coal Company, AMVEST Corporation, AEI Resources, Inc., Cyprus Australia

Coal Company, Cyprus Coal Company, and Pittston Coal Company.

Andy Eidson, Executive Vice President & Chief Financial Officer

Andy Eidson has served as executive vice president and chief financial officer of Contura since July 2016.

He previously served as executive vice president and chief financial officer of Alpha Natural Resources,

Inc., a position he held from March 2016. Prior roles include various financial positions across industry

sectors, including at Penn Virginia Resource Partners, Eastman Chemical Company, and

PricewaterhouseCoopers LLP.

Mark Manno has served as executive vice president, chief administrative and legal officer and secretary of

Contura since January 2018. He previously served as executive vice president, general counsel, secretary and

chief procurement officer of Contura since July 2016. Prior to that role, he served in the same and several

additional leadership roles for Alpha Natural Resources, Inc. and SJ Strategic Investments, multiple roles with

King Pharmaceuticals, Inc., and as an attorney with Baker, Donelson, Bearman, Caldwell & Berkowitz, PC.

Before joining the private sector, Mr. Manno was an officer in the US Navy.

Mark Manno, Executive Vice President, Chief Administrative & Legal Officer and Secretary

5

Management Team (continued)

Scott Kreutzer, Executive Vice President & Chief Operating Officer

Scott Kreutzer has served as executive vice president and chief operating officer of Contura since January 2018.

He previously served as senior vice president, land and environmental affairs since July 2016. Prior to that

position, Mr. Kreutzer served in a number of legal and management roles within, and in support of, the coal

industry, including at Alpha Natural Resources, Inc. and TECO Coal Corporation, where he oversaw activities

related to lease compliance, geology, land acquisition, royalties, and third party service contracts.

Kevin Stanley, Executive Vice President & Chief Commercial Officer

Kevin Stanley has served as executive vice president and chief commercial officer of Contura since April

2017. He previously served as senior vice president, sales and marketing since July 2016. Prior to that

position, Mr. Stanley served as senior vice president, business planning and in several additional roles for

Alpha Natural Resources, Inc. Before joining Alpha in 2003, Mr. Stanley served in various accounting roles

for subsidiaries of Massey Energy.

Suzan E. Moore, Senior Vice President, Administration & Chief Human Resources Officer

Suzan Moore has served as senior vice president, administration and chief human resources officer of

Contura since January 2018. She previously served as senior vice president and deputy general counsel

since July 2016. Prior to that position, Ms. Moore served in a number of legal and human resources roles at

Alpha Natural Resources, Inc., Pittston Coal Company and Westmoreland Coal Company, as well as in

private practice at PennStuart.

Jill Harrison has served as senior vice president and general counsel of Contura since January 2018. She

previously served as senior vice president and deputy general counsel for subsidiary Contura Coal Sales,

LLC since July 2016. Prior to that position, Ms. Harrison served in several roles for Alpha Coal Sales Co.,

LLC, a subsidiary of Alpha Natural Resources, Inc., and a seventeen-year tenure in private practice,

representing coal, oil and natural gas industry clients for the law firm of PennStuart.

Jill Harrison, Senior Vice President & General Counsel

6

Focused on Safety and Stewardship

Operating safely, ethically, and responsibly are more than just priorities for Contura Energy

and its affiliates. They are ingrained in everything we do.

▪ Operations acquired by Contura affiliates have received numerous safety and environmental

awards at the state, regional, and national levels.

▪ We believe every employee must have a voice in the safety process and proactively involve

hourly workers and management alike in the observation, review, and implementation of potential

safety improvements.

▪ Our operations have partnered with manufacturers and regulators to test the latest in mine safety

technologies within active mining environments.

▪ We also partner with local communities and non-governmental organizations to ensure

appropriate and sustainable post-mining reclamation practices.

▪ We own and operate the Running Right Leadership Academy, a first of its kind, state-of-the-art

comprehensive mine safety and skills training facility located in Julian, West Virginia.

▪ Contura also participates in the National Mining Association’s CORESafety program

(www.coresafety.org), which compliments and helps reinforce our own safety culture and

practices.

7

Dedicated to a Customer-Focused Approach

At Contura, our customers come first, and we work diligently to find the right coal products

that meet the unique needs of each customer.

▪ We deeply value our long-standing relationships with customers across the globe, and we work

hard to consistently deliver a quality product, in a timely manner, with every sale.

▪ Our sales platform is diversified and flexible, with a trading and logistics business that affords

increased optionality as markets and demand shift.

▪ Our sales team has extensive knowledge and experience in delivering coal via rail, barges and

ocean vessels, and Contura enjoys specific expertise and 65% ownership in the world-class,

shipping and ground storage facility, Dominion Terminal Associates (DTA).

▪ A strategic cornerstone of Contura’s trading and logistics business, DTA provides excellent coal

blending capabilities and transportation flexibility with 14.3 million tons of shipping capacity and

1.2 million tons of coal ground storage dedicated solely to Contura.

▪ Contura proudly serves customers across the world, and we are major participants in the

following markets: North America Metallurgical, Overseas Metallurgical, and Eastern Thermal

(both rail and river).

▪ In 2017, Contura reliably supplied met and thermal coal products to customers in twenty-two

countries, spanning five continents.

8

Committed to Prudent Financial Management

We are committed to being good stewards of our financial resources.

▪ Our primary focus is producing coal both safely and profitably.

▪ We exercise financial discipline that enhances our capability and resilience across market cycles:

▪ Generation, preservation and management of cash is integral to Contura’s success.

▪ Our asset portfolio of efficient operations, combined with an agile Trading & Logistics platform,

allows Contura to capitalize on market upswings, while remaining competitive during market

troughs.

▪ Our three-pronged business model also provides access to differentiated sources of cash

generation and value-creation: CAPP Met, NAPP Thermal and Trading & Logistics.

▪ We are committed to maintaining a strong balance sheet, low leverage and the liquidity to

weather challenging market cycles.

▪ We seek to allocate and deploy capital in a manner that maximizes returns on invested

capital.

▪ We believe that a lean SG&A structure is essential for sustained success in an ever-changing

environment.

9

Actively Engaged in Strengthening Financials

Contura Operations Begin

Increased Stake in DTA to 65%

Refinanced Senior Secured Notes with a $400 Million Term Loan Credit Facility

Entered into a $125 Million Asset-Backed Credit Facility

Announced $101 Million Special Dividend

Commenced $32 Million Tender Offer to Repurchase Shares

Divested PRB Assets

July ‘16

March ‘17

March ‘17

June ‘17

September ‘17

December ‘17

In 2017, we took a number of actions to strengthen Contura’s financial position

for both near- and long-term success.

Contura has maintained strong EBITDA

and cash flow generation since

inception and continues to focus on

these key business drivers. in

mill

ion

s

$155

$300 $306

$222

$0

$50

$100

$150

$200

$250

$300

$350

Net Income Adjusted EBITDA

Operating Cash Flow

Free Cash Flow

(1) Adjusted EBITDA and Free Cash Flow are non-GAAP measures.

(2) Net Income to EBITDA reconciliation table is provided at the end of the presentation.

(3) Free Cash Flow is calculated as follows:

Free Cash Flow = Net cash provided by operating activities less capital expenditures.

Strong 2017 Financial Performance

(1)(2)

(1)(3)

April ‘17

Asset Overview

11

High-quality, cost competitive asset portfolio

Contura Energy affiliates operate highly competitive underground and surface coal mining

complexes across Northern Appalachia and Central Appalachia, supported by world-class

logistics and training facilities.

Central Appalachia (VA, WV)

Reserve Base(1): Approx. 95 million tons

Annual Production(2): 3.7 - 4.1 million tons

Coal Qualities: High Vol A, Mid Vol, High Vol B met

Northern Appalachia (PA)

Reserve Base(1)(3): Approx. 647 million tons

Annual Production(2): 7.1 - 7.7 million tons

Coal Qualities: 13,000 BTU thermal, High Vol B met

Dominion Terminal Associates (VA)

65% Ownership Share

Located in Newport News, VA

Running Right Leadership Academy (WV)

State of the Art Facility for Mine Safety Training & Learning

Located in Julian, WV

(1) Reserves as of Dec. 31, 2017

(2) Based on guidance ranges for 2018 shipments.

(3) Includes reserves not assigned to the Cumberland complex.

12

Central Appalachia (CAPP)

Key

Contura Complex

Export Terminal

WV

VA

MD

Toms Creek

McClure

Nicholas

Chesapeake Bay Pier

DTA

Pier IX

Lamberts Point

Note: Map not to scale.

13

McClure offers high-quality metallurgical coal

▪ McClure Complex is an underground metallurgical

coal mining complex in Dickenson County, Virginia

▪ Contura affiliates control 47 million tons of proven

and probable reserves

▪ Produces a diversified product mix of Mid Vol. and

High Vol. A metallurgical coal which is shipped to

domestic and foreign steel producers via the CSX

railroad

▪ Operations are comprised of 5 active underground

mines, and 1 active preparation plant (950 tons per

hour)

▪ Approximately 460 highly-skilled employees, of

which 53 at the preparation plant are represented by

the United Mine Workers of America (UMWA)

▪ Provides transportation and product quality

optionality with Toms Creek complex

▪ Large reserve base provides potential for future

organic growth

Reserves and Tons Sold ProfileComplex Description

Historical Tons Sold

100%

0%

ThermalMet

Total Reserves: 47 million tons 2017 Sales: 2.1 million tons

97.0%

3.0%

0.0 0.0 0.0 0.0 0.06

1.7 1.9

2.1 2.0 2.1

2013 2014 2015 2016 2017

2.1

1.71.9

ThermalMet

Note: Reserves as of Dec. 31, 2017

2.0 2.1

14

Toms Creek provides broad spectrum of coal qualities

▪ Toms Creek Complex is a surface and underground

metallurgical coal mining complex in Wise County,

Virginia



▪ Produces primarily High Vol. A and High Vol. B

metallurgical coal, along with a small amount of

thermal coal which is shipped to both domestic and

foreign steel producers and utility customers via the

Norfolk Southern railroad


mine, 2 active surface mines and 1 preparation

plant (900 tons per hour)

▪ Approximately 150 highly-skilled, union-free

employees

▪ Flexibility with access to McClure complex

▪ Toms Creek complex ranks in the lower quartile

cost structure



96%

4%

ThermalMet


92%

8%

0.6

0.1 0.1 0.1 0.1

1.7

1.5 1.3 0.9

1.2

2013 2014 2015 2016 2017

1.4

1.0

2.3

1.6

ThermalMet


1.3

15

Nicholas produces specialty met coals

▪ The Nicholas Complex is an underground

metallurgical coal mining complex in Nicholas

County, West Virginia



▪ Produces High Vol. B and specialty metallurgical

coal which is shipped to both domestic and foreign

steel producers via the Norfolk Southern railroad


mine, and 1 preparation plant (1,100 tons per hour)


which 12 at the preparation plant are represented by

the United Mine Workers of America (UMWA)



0%

100%ThermalMet


100%

0%

0.3

0.0 0.0 0.0 0.0

0.4

0.5 0.6 0.6

0.5

2013 2014 2015 2016 2017

0.6

0.50.6

0.7

ThermalMet


0.5

16

Northern Appalachia (NAPP)

Note: Map not to scale.

Key

Contura Complex

Export Terminal

WV

VA

MD

Cumberland

Chesapeake Bay Pier

DTA

Pier IX

Lamberts Point

PA

17

Cumberland is a highly efficient longwall mining complex

▪ NAPP operations include the Cumberland

underground mining complex, located in Greene

County, Pennsylvania

▪ Excellent long-term potential, with a large reserve

base (574 million tons* of proven and probable coal

reserves) and a lower quartile cost profile

▪ Produces high quality, internationally recognized

Pittsburgh 8 seam coal which is shipped to both

domestic and foreign steel producers and utility

customers via the Monongahela River, CSX and

Norfolk Southern railroads

▪ Barge capabilities to Contura-controlled LaBelle

facility with access to both CSX and Norfolk

Southern railroads

▪ Operations are comprised of 1 active longwall mine,

and 1 active preparation plant (1,600 tons per hour)


which 591 are represented by the United Mine

Workers of America (UMWA)



9%

91%

ThermalMet

Total Reserves: 574 million tons* 2017 Sales: 6.9 million tons

3%

97%

5.6

7.4 6.8 7.0 6.7

0.0

0.0 0.3 0.5

0.2

2013 2014 2015 2016 2017

ThermalMet


* Does not include Pennsylvania reserves not associated with the Cumberland complex.

5.6

7.4 7.1 7.5 6.9

Domestic48%

Export52%

Domestic Export

T&L Platform Provides Global Customer Access

Contura is among the largest exporters of U.S.

metallurgical coal

▪ Export shipments comprise ~90% of met sales(1)

▪ In 2017, supplied coal to customers in 22 countries

▪ Increased export capacity through incremental

stake in DTA terminal acquired in March 2017

▪ Flexible blend capabilities at DTA achieve a broad

portfolio of customer-specific coal qualities

(1) Includes CAPP, NAPP and Trading & Logistics met exports.

(2) January 1 – July 25, 2016: 0.2 million tons, July 26 – December 31, 2016: 1.5 million tons.

(3) 2018E based on midpoint of guidance range (4.2mm – 5.0mm tons) as reported on March 29, 2018.

(4) Includes tonnage/revenues associated with both Trading & Logistics and captive production.

Trading & Logistics Overview

18

Brazil

USA

Canada

Mexico

Sweden

Finland

South Korea

India

TurkeyItalySpain

Ukraine

Croatia

BelgiumFrance

2017 Export Destinations

Significant Export Exposure

2017 Tons Sold(4) 2017 Coal Revenues(4)

1.7

4.9 4.6

2016A 2017A 2018E

Trading & Logistics Volume(2)

(Millions of tons)

(3)

Domestic26%

Export74%

Argentina

Poland

Egypt

United Kingdom

PortugalRomania

SloveniaNetherlands

19

DTA bolsters Contura’s export logistics and strategic positioning

Complex Description

▪ Dominion Terminal Associates (DTA) is a world-class

coal export terminal facility located in Newport News,

Virginia

▪ Highly mechanized, critical component of CSX’s

infrastructure

▪ Highly accessible, currently maintaining a 50 ft.

minimum draft

▪ 22 million tons per year overall capacity

− 14.3 million tons of capacity dedicated to Contura

▪ 1.7 million tons of total coal storage

− 1.2 million tons of coal storage dedicated to Contura

▪ DTA is a strategic cornerstone of Contura’s Trading &

Logistics business, providing excellent coal blending

capabilities and transportation flexibility

20

Running Right Leadership Academy supports safety-first focus

The Leadership Academy is a first

of its kind, state-of-the-art

comprehensive mine safety and

skills training facility. The facility

includes:

• A 96,000 square foot mine lab to

simulate mine situations and

conditions

• A virtual reality lab with

simulators for a roof bolter,

continuous mining machine,

scoop, and haul truck

• Electrical, welding, and

maintenance labs for skills

training and certification

• Classrooms where a

comprehensive training

curriculum is conducted

Forward Looking Statements

21

This document includes forward-looking statements. These forward-looking statements are based on Contura's expectations and beliefs concerning future events

and involve risks and uncertainties that may cause actual results to differ materially from current expectations. These factors are difficult to predict accurately and

may be beyond Contura’s control.

Examples of forward-looking statements include, but are not limited to:

• our liquidity, results of operations and financial condition;

• depressed levels or declines in coal prices;

• worldwide market demand for coal, electricity and steel, including demand for U.S. coal exports, and competition in coal markets;

• utilities switching to alternative energy sources such as natural gas, renewables and coal from basins where we do not operate;

• reductions or increases in customer coal inventories and the timing of those changes;

• our production capabilities and costs;

• inherent risks of coal mining beyond our control;

• changes in, interpretations of, or implementations of domestic or international tax or other laws and regulations, including the Tax Cuts and Jobs Act and its related regulations;

• changes in domestic or international environmental laws and regulations, and court decisions, including those directly affecting our coal mining and production, and those affecting our customers’

coal usage including potential climate change initiatives;

• our relationships with, and other conditions affecting, our customers, including the inability to collect payments from our customers if their creditworthiness declines;

• changes in, renewal or acquisition of, terms of and performance of customers under coal supply arrangements and the refusal by our customers to receive coal under agreed contract terms;

• our ability to obtain, maintain or renew any necessary permits or rights, and our ability to mine properties due to defects in title on leasehold interests;

• attracting and retaining key personnel and other employee workforce factors, such as labor relations;

• funding for and changes in employee benefit obligations;

• cybersecurity attacks or failures, threats to physical security, extreme weather conditions or other natural disasters;

• reclamation and mine closure obligations;

• our assumptions concerning economically recoverable coal reserve estimates;

• our ability to negotiate new United Mine Workers of America wage agreements on terms acceptable to us, increased unionization of our workforce in the future, and any strikes by our workforce;

• disruptions in delivery or changes in pricing from third party vendors of key equipment and materials that are necessary for our operations, such as diesel fuel, steel products, explosives and tires;

• inflationary pressures on supplies and labor and significant or rapid increases in commodity prices;

• railroad, barge, truck and other transportation availability, performance and costs;

• disruption in third party coal supplies;

• the consummation of financing or refinancing transactions, acquisitions or dispositions and the related effects on our business and financial position;

• our indebtedness and potential future indebtedness;

• our ability to generate sufficient cash or obtain financing to fund our business operations; and

• our ability to obtain or renew surety bonds on acceptable terms or maintain our current bonding status.

Forward-looking statements in this document or elsewhere speak only as of the date made. New uncertainties and risks arise from time to time, and it is impossible

for Contura to predict these events or how they may affect Contura. Except as required by law, Contura has no duty to, and does not intend to, update or revise the

forward-looking statements in this document or elsewhere. In light of these risks and uncertainties, investors should keep in mind that results, events or

developments discussed in any forward-looking statement made in this document may not occur.

Use of Non-GAAP Measures

22

In addition to the results prepared in accordance with generally accepted accounting principles in the

United States (GAAP) provided in this presentation, Contura has presented the following non-GAAP

financial measures: Adjusted EBITDA and Free Cash Flow. The company uses Adjusted EBITDA to

measure the operating performance of its segments and allocate resources to the segments. This non-

GAAP financial measure excludes various items detailed in the attached reconciliation table. Free cash

flow is calculated as follows: Free Cash Flow equals net cash provided by operating activities less capital

expenditures.

The definition of this non-GAAP measure may be changed periodically by management to adjust for

significant items important to an understanding of operating trends. This measure is not intended to

replace financial performance measures determined in accordance with GAAP. Rather, it is presented as a

supplemental measure of the company’s performance that management finds useful in assessing the

company’s financial performance and believes is useful to securities analysts, investors and others in

assessing the company’s performance over time. Moreover, this measure is not calculated identically by

all companies and therefore may not be comparable to similarly titled measures used by other companies.

23

Net Income to Adjusted EBITDA Reconciliation

Year Ended

December 31,

2017(1)

Net income $ 154,522

Interest expense 36,392

Interest income (229)

Income tax benefit (85,660)

Depreciation, depletion and amortization 65,000

Mark-to-market adjustment - acquisition-related obligations 3,221

Gain on settlement of acquisition-related obligations (38,886)

Secondary offering costs 4,491

Loss on early extinguishment of debt 38,701

Bargain purchase gain (1,011)

Accretion expense 21,275

Amortization of acquired intangibles, net 59,007

Expenses related to dividend 6,466

Discontinued operations - loss on sale 36,831

Adjusted EBITDA (2) $ 300,120

(1) Amounts include results from discontinued operations.(2) The Company’s Adjusted EBITDA calculation has been modified to add back accretion expense, a non-cash expense,

to align with industry peer group methodology.

company overview - conturaenergy.comconturaenergy.com/wp-content/uploads/2018/04/... · company...

Documents