Fri, 13 Dec 2019

  • Reports Adjusted EBITDA of $1.8 million
  • Revenues grew over 33 percent to $9.34 million
  • Company records best quarterly production and sales volume of over 126 thousand short tons; a 30% year-over-year increase

FISHERS, IN / ACCESSWIRE / August 12, 2019 / American Resources Corporation (NASDAQ: AREC), a supplier of raw materials to the rapidly growing global infrastructure marketplace, with a primary focus on the extraction, processing, transportation and distribution of metallurgical coal to the steel industry, today reported a net loss from operations of $3.35 million, or a loss of $0.14 per share, in the second quarter of 2019, compared with a net loss from operations of $1.99 million, or a loss of $2.23 per share, in the prior-year period. The Company earned adjusted earnings before interest, taxes, depreciation, amortization, accretion on asset retirement obligations, non-operating expenses, and development costs ('adjusted EBITDA") of $1.8 million in the second quarter of 2019, as compared with adjusted EBITDA loss of $.68 million for the second quarter of 2018. Revenues totaled $9.34 million for the three months ended June 30, 2019 versus $7.02 million in the prior-year quarter.

"The market for our coal qualities remained strong in the second quarter and we continue to work hard and focus on increasing our production level to fulfill the contracted demand from our customers. We're pleased with the thirty percent year-over-year production growth we achieved in the second quarter which resulted in an approximate thirty-two percent revenue growth over the same period," stated Mark Jensen, Chairman and CEO of American Resources Corporation. "These solid results reflect the beginnings of our growth objectives and what our platform has been set up to deliver for our employees, customers and shareholders."

Operational Results

The Company produced and sold 126,977 short tons of coal in the second quarter of 2019, 30.3% more than the second quarter of 2018.

The exhibit below summarizes some of the key sales, production and financial metrics:

Three months ended Three months ended
June 31, March 31, June 31,
2019 2019 2018
Sales Volume (a)
Tons Sold
127,021 99,339 97,457
Company Production (a)
McCoy Elkhorn Coal
56,335 38,276 53,208
Deane Mining
70,686 61,058 44,249
Total
127,021 99,334 97,457
Company Financial Metrics(b)
Revenue per Ton
73.38 70.41 72.09
Cash Cost per Ton Sold (c)
49.27 79.57 55.39
Cash Margin per Ton (c)
24.11 (9.15) 16.71
Development Costs
1,887,447 2,600,117 2,032,201

Notes:

(a) In short tons
(b) Excludes transportation
(c) Cash cost per ton is based on reported cost of sales and includes items such as production taxes, royalties, labor, fuel, and other similar production and sales cost items, and may be adjusted for other items that, pursuant to GAAP, are classified in the Statement of Operations as costs other than cost of sales, but relate directly to the cost incurred to produce coal. Our cash cost of sales per short ton is calculated as cash cost of sales divided by short tons sold, and our cash margin per ton is calculated by subtracting cash cost per ton from revenue per ton. Cash cost of sales per short ton and average cash margin per ton are non-GAAP financial measure which are calculated in conformity with U.S. GAAP and should be considered supplemental to, and not as a substitute or superior to financial measures calculated in conformity with GAAP. We believe cash cost of sales per ton and average cash margin per ton are useful measures of performance as it aides some investors and analysts in comparing us against other companies. Cash cost of sales per ton and margin per ton may not be comparable to similarly titled measures used by other companies.

Mark Jensen added, "Throughout the second quarter of 2019, we made some solid advancements in our organic growth plans. Most notably, we were able to bring our Carnegie 1 mine back into production after a period of development production which confirmed the appropriate mining style and equipment. We are in the process of ramping our production at Carnegie 1 under our enhanced mine plan to support long-term, expanded production. We expect to have Carnegie 1 running at our expected capacity of 32,000 - 42,000 clean tons per month later this fall. Additionally, we continue to progress on enhancing our already producing mines, such as Mine #15 and Access Energy, to increase production and efficiencies. Once completed, we will be focusing on advancing our organic production growth by bringing our next round of mines online to feed our McCoy Elkhorn Coal and Deane Mining complexes. These mines consist of our Carnegie 2, PointRock, Elk 2 and Classic mines that we have already begun development work on and should begin to see production from this phase of growth later this year and early 2020."

Additional Financial Results

Total revenues were $9,342,126for the second quarter of 2019, which increased 33 percent from $7,023,040 in the second quarter of 2018.

Cost of sales (includes mining, transportation, , and processing costs,) for the second quarter of 2019 were $5,654,568, or 60.5 percent of total revenues, compared to $4,619,675, or 65.8% of total revenue in the same period of 2018.

General and administrative expenses for the second quarter of 2019 were $990,918 for the second quarter of 2019, or 10.6 percent of total revenue. Depreciation for the second quarter of 2019 were $804,889, or 8.6 percent of total revenue. American Resources incurred interest expense of $447,989 during the second quarter of 2019 compared to $311,295 during the second quarter of 2018. Development costs during the quarter were $2,887,448, compared to $1,600,117 in the first quarter of 2019.

The Company did not incur any income tax expense as it was able to utilize its available net operating losses ("NOL") carried forward from prior periods of approximately $2,027,765 as of December 31, 2018.

Company Outlook

As previously stated, based on American Resources' organic growth from its already owned infrastructure, controlled mining permits and its capital investment schedule, the company is maintaining its 2020 production forecast range of 2.2 to 2.8 million tons.

AMERICAN RESOURCES CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
UNAUDITED

For the three months ended June 30, 2019 For the three months ended June 30, 2018 For the six months ended June 30, 2019 For the six months ended June 30, 2018
As Restated As Restated
Coal Sales
$ 9,321,250 $ 7,023,040 $ 16,315,526 $ 14,328,900
Processing Services Income
20,876 - 20,876 19,516
Total Revenue
9,342,126 7,023,040 16,336,402 14,348,416
Cost of Coal Sales and Processing
(5,654,568) (4,619,675) (12,298,655) (10,093,103)
Accretion Expense
(320,098) (341,580) (641,799) (683,161)
Depreciation
(804,889) (615,390) (1,621,805) (1,230,779)
Amortization of Mining Rights
(802,590) - (1,339,381) -
General and Administrative
(990,918) (464,110) (2,363,506) (940,699)
Professional Fees
(631,934) (163,412) (4,965,830) (438,015)
Production Taxes and Royalties
(603,957) (778,124) (1,863,543) (1,727,917)
Development Costs
(2,887,448) (2,032,201) (4,487,565) (3,719,374)
Total Operating Expenses
(12,696,402) (9,014,492) (29,582,084) (18,833,048)
Net Loss from Operations
(3,354,276) (1,991,452) (13,245,682) (4,484,632)
Other Income and (expense)
Other Income
214,529 290,609 480,954 419,123
Gain on cancelation of debt
- 315,000 - 315,000
Loss on settlement of payable
- - (22,660)

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