PR Newswire | Aug 7, 2020 07:31AM EDT

08/07 06:30 CDT

Contura Announces Second Quarter 2020 Results- Reports net loss from continuing operations of $238 million for the second quarter 2020, including a pre-tax, non-cash asset impairment charge of $162 million- Posts Adjusted EBITDA(1) of $17 million for the second quarter 2020- Maintains strong cost management in all operating segments and overhead- Executes on long-term strategic portfolio optimization- Reduces long-term debt by approximately $25 million in the second quarter of 2020- Continues conservative financial management with liquidity of $240 million at quarter-end and $66 million in AMT refunds expected to be received in second half of 2020 BRISTOL, Tenn., Aug. 7, 2020

BRISTOL, Tenn., Aug. 7, 2020 /PRNewswire/ -- Contura Energy, Inc. (NYSE: CTRA), a leading U.S. coal supplier, today reported results for the second quarter ending June 30, 2020.

(millions, except per share)

Three months ended

June 30, Mar. 31, 2020June 30, 2019^(2) 2020

Net (loss) income^(3) $(238.3) $(39.8) $24.3

Net (loss) income^(3) per diluted$(13.02) $(2.18) $1.25 share

Adjusted EBITDA^(1) $16.9 $60.2 $140.8

Operating cash flow^(4) $79.0 $(0.1) $102.5

Capital expenditures $(41.5) $(49.6) $(42.8)

Tons of coal sold 5.1 5.5 6.4

__________________________________

^ These are non-GAAP financial measures. A reconciliation of Net Income to 1.Adjusted EBITDA is included in tables accompanying the financial schedules.

^ Excludes discontinued operations, except as noted. 2.

^ From continuing operations. First and second quarters 2020 no longer have 3.discontinued operations.

^ Includes discontinued operations. First and second quarters 2020 no longer4.have discontinued operations.

"Our second quarter results serve as continued evidence of Contura's commitment to adeptly managing through the current global uncertainty," said chairman and chief executive officer, David Stetson. "Even with a weeks-long furlough in April, our team increased our cash quarter-over-quarter, lowered our overall debt, and kept costs roughly on par with our stellar first quarter cost performance. As we look to the back half of 2020, we believe these steps to streamline our company will serve us well despite any additional market fluctuations that may occur."

Financial Performance

Contura reported a net loss from continuing operations of $238.3 million, or $13.02 per diluted share, for the second quarter 2020. The second quarter loss includes a pre-tax, non-cash asset impairment charge of $161.7 million, which resulted primarily from our strategic decisions to idle the Kielty mine and not pursue the new impoundment at Cumberland resulting in a significantly shorter mine life. In the first quarter 2020, the company had a net loss from continuing operations, including non-cash asset impairment charges of $33.7 million, of $39.8 million or $2.18 diluted share.

Total Adjusted EBITDA was $17 million for the second quarter, compared with $60 million in the first quarter, primarily due to lower CAPP - Met price realizations.

Coal Revenues

(millions)

Three months ended

June 30, 2020Mar. 31, 2020

CAPP - Met $316.3 $362.4

CAPP - Thermal $36.7 $38.7

NAPP $57.5 $66.9

CAPP - Met (excl. f&h)^(1) $261.5 $308.7

CAPP - Thermal (excl. f&h)^(1)$32.1 $35.0

NAPP (excl. f&h)^(1) $52.0 $64.6



Tons Sold (millions)

Three months ended

June 30, 2020Mar. 31, 2020

CAPP - Met 3.2 3.3

CAPP - Thermal 0.6 0.6

NAPP 1.3 1.5

__________________________________

^ Represents Non-GAAP coal revenues which is defined and reconciled under 1."Non-GAAP Financial Measures" and "Results of Operations."

The CAPP - Met revenue decline in the second quarter was driven by an $11 per ton decline in price realizations relative to the first quarter. CAPP - Thermal revenues also declined quarter-over-quarter due to lower realized prices. Second quarter NAPP revenues were lower as a result of lower volumes and prices.

Coal Sales Realization(1)

(per ton)

Three months ended

June 30, 2020Mar. 31, 2020

CAPP - Met $81.61 $92.80

CAPP - Thermal$49.52 $56.73

NAPP $40.19 $42.81

__________________________________

^ Represents Non-GAAP coal sales realization which is defined and reconciled1.under "Non-GAAP Financial Measures" and "Results of Operations."

The second quarter 2020 metallurgical coal prices continued softening, with our average CAPP - Met coal sales realization declining 12 percent to $81.61 per ton against the prior quarter. While our domestic business continues to benefit from annual fixed price contracts, the lower second quarter realizations were primarily driven by our export business, where prices declined as a result of COVID-19 related demand reduction. Thermal coal price realizations were also impacted by reduced demand in the second quarter with both CAPP - Thermal and NAPP segments experiencing lower realizations.

Cost of Coal Sales

(in millions, except per ton data)

Three months ended

June 30, 2020 Mar. 31, 2020

Cost of Coal Sales $383.3 $397.9

Cost of Coal Sales (excl. f&h/idle)^(1)$310.5 $328.1



(per ton)

CAPP - Met^(1) $74.41 $70.68

CAPP - Thermal^(1) $45.38 $53.07

NAPP^(1) $32.98 $39.68

__________________________________

^ Represents Non-GAAP cost of coal sales per ton which is defined and 1.reconciled under "Non-GAAP Financial Measures" and "Results of Operations."

Contura achieved continued strong cost performance in its CAPP - Met segment in the second quarter. The reported second quarter cost of coal sales was $74.41 per ton versus $70.68 per ton in the first quarter. Excluding the impact of the April furloughs, incremental one-time COVID-19 mitigation costs, and the partially offsetting benefit from an annual severance tax adjustment, the second quarter cost of coal sales were roughly on par with first quarter.

NAPP cost of coal sales for the quarter was $32.98 per ton, down from $39.68 per ton in the first quarter, which was impacted by a longwall move in March. CAPP - Thermal also reported solid cost of coal sales performance, improving to $45.38 per ton for the quarter as compared to $53.07 for the prior quarter.

Selling, general and administrative (SG&A) and depreciation, depletion and amortization (DD&A) expenses

(millions)

Three months ended

June 30, 2020Mar. 31, 2020

SG&A $12.0 $15.5

Less: non-cash stock compensation and one-time $(1.9) $(2.1) expenses

Non-GAAP SG&A^(1) $10.1 $13.4



DD&A $49.3 $54.5

__________________________________

^1.Represents Non-GAAP SG&A which is defined under "Non-GAAP Financial Measures."

As a result of additional overhead reductions, Contura's second quarter 2020 SG&A expenses were $10.1 million, excluding non-cash stock compensation expense and one-time expenses of $1.9 million, and down $3.3 million from the prior quarter. Contura expects non-GAAP SG&A expenses for the full year 2020 to be in the range of $45 million to $50 million.

Liquidity and Capital Resources

"In response to the wide-ranging impacts of the COVID-19 pandemic, we took aggressive action in early April to optimize cash by temporarily idling certain operations, which resulted in a $41 million reduction in inventory and overall net working capital change of $99 million in the second quarter," said Andy Eidson, Contura's chief financial officer. "As we continue to analyze our liquidity, we expect capex for the remainder of the year to be in the $45-$50 million range, and we still anticipate receiving an accelerated AMT tax refund of approximately $66 million in the second half of the year and approximately $14 million of payroll tax deferrals until 2021 and 2022."

Cash provided by operating activities for the second quarter 2020 was $79.0 million and capital expenditures for the second quarter were $41.5 million. In the prior period, the cash used in operating activities was $0.1 million and capital expenditures were $49.6 million. Contura expects capital expenditures for the full year 2020 to be in the range of $135 million to $140 million.

As of June 30, 2020, Contura had $238.4 million in unrestricted cash and $157.5 million in restricted cash, deposits and investments. Total long-term debt, including the current portion of long-term debt as of June 30, 2020, was $628.1 million, down approximately $25 million from the prior quarter. At the end of the second quarter, the company had total liquidity of $240.2 million, including cash and cash equivalents of $238.4 million and $1.8 million of unused commitments available under the Asset-Based Revolving Credit Facility. The future available capacity under the Asset-Based Revolving Credit Facility is subject to inventory and accounts receivable collateral requirements and the achievement of certain financial ratios. As of June 30, 2020, the company had $30.8 million in borrowings and $121.7 million in letters of credit outstanding under the Asset-Based Revolving Credit Facility.

Operational and Strategic Update

As previously announced, certain operations were temporarily idled in early April in response to market conditions, inventory levels and expected customer deferrals. As of May 4, all Contura sites were back to nearly normal staffing levels and operating capacity with additional precautions in place to help reduce the risk of exposure to COVID-19.

On May 29, two previously wholly-owned subsidiaries of Contura Energy-Contura Coal West, LLC and Contura Wyoming Land, LLC-merged with certain subsidiaries of Eagle Specialty Materials, LLC. In completing this transaction, Contura ended its connection with the Powder River Basin.

On June 22, the company announced that its Ruby Energy (also known as Kielty) underground mine and the Delbarton Preparation Plant were to be idled due to adverse market conditions and uneconomic pricing and cost structures. Kielty produces both thermal and metallurgical coal.

During the second quarter, the company also decided against spending over $60 million for a refuse impoundment at Cumberland Mine and amended its supply agreements to expire as of December 31, 2022. Unless a buyer emerges for the Cumberland Mine, the company will cease operations upon the expiration of its outstanding coal supply commitments in late 2022 or early 2023.

Also in June, the company completed the acquisition of the Feats Loadout facility in Logan County, West Virginia, which is served by the CSX railroad. With this transaction, Contura adds transportation optionality to its existing network and increased ability to leverage low vol metallurgical coal sales opportunities through Dominion Terminal Associates.

Looking ahead, the company continues to progress on its capital projects and its shift to higher-quality, lower-cost mines. "Even in spite of the disruptions caused by the COVID-19 pandemic, development at our new metallurgical mines remains on schedule," said Jason Whitehead, Contura's chief operating officer. "The low vol Road Fork No. 52 Mine added a second production section in mid-June, and will be positioned to be at three sections by the first of 2021, while the high vol project at Lynn Branch has completed initial underground cuts and expects to be in production by the fourth quarter of this year. The Black Eagle Mine, our high vol A project, is progressing well through the corridor to the main reserve block, which we anticipate to be in production by next year."

Conference Call

The company plans to hold a conference call regarding its second quarter 2020 results on August 7, 2020, at 10:00 a.m. Eastern time. The conference call will be available live on the investor section of the company's website at https://investors.conturaenergy.com/investors. Analysts who would like to participate in the conference call should dial 866-270-1533 (domestic toll-free) or 412-317-0797 (international) approximately 15 minutes prior to the start of the call.

ABOUT CONTURA ENERGY

Contura Energy (NYSE: CTRA) is a 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. For more information, visitwww.conturaenergy.com.

FORWARD-LOOKING STATEMENTS

This news release 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. Forward-looking statements in this news release 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 news release or elsewhere after the date this release is issued. 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 news release may not occur.

INVESTOR CONTACTinvestorrelations@conturaenergy.com

Alex Rotonen, CFA423.956.6882

MEDIA CONTACTcorporatecommunications@conturaenergy.com

Emily O'Quinn423.573.0369

FINANCIAL TABLES FOLLOW

Non-GAAP Financial Measures

The discussion below contains "non-GAAP financial measures." These are financial measures which either exclude or include amounts that are not excluded or included in the most directly comparable measures calculated and presented in accordance with generally accepted accounting principles in the United States ("U.S. GAAP" or "GAAP"). Specifically, we make use of the non-GAAP financial measures "Adjusted EBITDA," "non-GAAP coal revenues," "non-GAAP cost of coal sales," and "Adjusted cost of produced coal sold." We use Adjusted EBITDA to measure the operating performance of our segments and allocate resources to the segments. Adjusted EBITDA does not purport to be an alternative to net income (loss) as a measure of operating performance. We use non-GAAP coal revenues to present coal revenues generated, excluding freight and handling fulfillment revenues. Non-GAAP coal sales realization per ton for our operations is calculated as non-GAAP coal revenues divided by tons sold. We use non-GAAP cost of coal sales to adjust cost of coal sales to remove freight and handling costs, depreciation, depletion and amortization - production (excluding the depreciation, depletion and amortization related to selling, general and administrative functions), accretion on asset retirement obligations, amortization of acquired intangibles, net, idled and closed mine costs and coal inventory acquisition accounting impacts. Non-GAAP cost of coal sales per ton for our operations is calculated as non-GAAP cost of coal sales divided by tons sold. Non-GAAP coal margin per ton for our coal operations is calculated as non-GAAP coal sales realization per ton for our coal operations less non-GAAP cost of coal sales per ton for our coal operations. We also use Adjusted cost of produced coal sold to distinguish the cost of captive produced coal from the effects of purchased coal. The presentation of these measures should not be considered in isolation, or as a substitute for analysis of our results as reported under GAAP.

Management uses non-GAAP financial measures to supplement GAAP results to provide a more complete understanding of the factors and trends affecting the business than GAAP results alone. The definition of these non-GAAP measures may be changed periodically by management to adjust for significant items important to an understanding of operating trends and to adjust for items that may not reflect the trend of future results by excluding transactions that are not indicative of our core operating performance. Furthermore, analogous measures are used by industry analysts to evaluate the Company's operating performance. Because not all companies use identical calculations, the presentations of these measures may not be comparable to other similarly titled measures of other companies and can differ significantly from company to company depending on long-term strategic decisions regarding capital structure, the tax jurisdictions in which companies operate, and capital investments.

Included below are reconciliations of non-GAAP financial measures to GAAP financial measures.

CONTURA ENERGY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

(Amounts in thousands, except share and per share data)



Three Months Ended June 30, Six Months Ended June 30,

2020 2019 2020 2019

Revenues:

Coal revenues $410,614 $653,828 $878,981 $1,260,788

Other revenues 1,224 2,378 3,317 4,532

Total revenues 411,838 656,206 882,298 1,265,320

Costs and expenses:

Cost of coal sales (exclusive of items 383,279 496,746 781,139 1,012,440 shown separately below)

Depreciation, depletion and 49,262 62,814 103,727 124,085 amortization

Accretion on asset retirement 7,304 6,847 14,679 13,079 obligations

Amortization of acquired intangibles,2,096 (343) 2,961 (7,026) net

Asset impairment and 184,173 5,826 217,882 5,826 restructuring

Selling, general and administrative expenses (exclusive of depreciation, 12,028 14,783 27,509 35,734 depletion and amortization shown separately above)

Merger-related costs - 156 - 987

Total other operating (income) loss:

Mark-to-market adjustment for (2,052) 1,014 (17,049) 2,950 acquisition-related obligations

Other (income) (124) 1,414 (704) (7,485) expense

Total costs and 635,966 589,257 1,130,144 1,180,590 expenses

(Loss) income from (224,128) 66,949 (247,846) 84,730 operations

Other income (expense):

Interest expense (18,814) (16,077) (36,419) (31,232)

Interest income 5,533 1,885 6,511 3,821

Loss on modification and extinguishment of- (26,459) - (26,459) debt

Equity loss in (1,047) (2,475) (1,790) (2,959) affiliates

Miscellaneous loss, 188 (523) (720) (1,389) net

Total other expense, (14,140) (43,649) (32,418) (58,218) net

(Loss) income from continuing operations(238,268) 23,300 (280,264) 26,512 before income taxes

Income tax (expense) (33) 1,000 2,155 5,778 benefit

Net (loss) income from continuing (238,301) 24,300 (278,109) 32,290 operations

Discontinued operations:

Loss from discontinued - (163,867) - (165,457) operations before income taxes

Income tax benefit from discontinued - 25,906 - 26,321 operations

Loss from discontinued - (137,961) - (139,136) operations

Net loss $(238,301) $(113,661) $(278,109)$(106,846)



Basic loss per common share:

(Loss) income from $(13.02) $1.27 $(15.22) $1.70 continuing operations

Loss from discontinued - (7.21) - (7.32) operations

Net loss $(13.02) $(5.94) $(15.22) $(5.62)



Diluted loss per common share

(Loss) income from $(13.02) $1.25 $(15.22) $1.66 continuing operations

Loss from discontinued - (7.10) - (7.14) operations

Net loss $(13.02) $(5.85) $(15.22) $(5.48)



Weighted average 18,304,853 19,123,705 18,275,382 19,009,643 shares - basic

Weighted average 18,304,853 19,420,471 18,275,382 19,480,183 shares - diluted

CONTURA ENERGY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)

(Amounts in thousands, except share and per share data)



June 30, 2020December 31, 2019

Assets

Current assets:

Cash and cash equivalents $238,438 $212,793

Trade accounts receivable, net of allowance for doubtful accounts of $793 and $0 as of 183,820 244,666 June 30, 2020 and December 31, 2019

Inventories, net 143,198 162,659

Prepaid expenses and other current assets 122,354 91,361

Total current assets 687,810 711,479

Property, plant, and equipment, net of accumulated depreciation and amortization of423,367 583,262 $351,561 and $314,276 as of June 30, 2020 and December 31, 2019

Owned and leased mineral rights, net of accumulated depletion and amortization of 495,303 523,141 $34,961 and $27,877 as of June 30, 2020 and December 31, 2019

Other acquired intangibles, net of accumulated amortization of $35,717 and 103,439 125,145 $32,686 as of June 30, 2020 and December 31, 2019

Long-term restricted cash 109,930 122,524

Deferred income taxes - 33,065

Other non-current assets 220,389 204,207

Total assets $2,040,238 $2,302,823

Liabilities and Stockholders' Equity

Current liabilities:

Current portion of long-term debt $30,390 $28,485

Trade accounts payable 70,027 98,746

Acquisition-related obligations - current 30,019 33,639

Accrued expenses and other current 161,453 154,282 liabilities

Total current liabilities 291,889 315,152

Long-term debt 597,706 564,481

Acquisition-related obligations - long-term 18,283 46,259

Workers' compensation and black lung 266,390 260,778 obligations

Pension obligations 198,582 204,086

Asset retirement obligations 207,001 184,130

Deferred income taxes 389 422

Other non-current liabilities 50,583 31,393

Total liabilities 1,630,823 1,606,701

Commitments and Contingencies

Stockholders' Equity

Preferred stock - par value $0.01, 5.0 - - million shares authorized, none issued

Common stock - par value $0.01, 50.0 million shares authorized, 20.6 million issued and 18.3 million outstanding at June 30, 2020 206 205 and 20.5 million issued and 18.2 million outstanding at December 31, 2019

Additional paid-in capital 777,650 775,707

Accumulated other comprehensive loss (69,747) (58,616)

Treasury stock, at cost: 2.3 million shares (106,955) (107,984) at June 30, 2020 and December 31, 2019

Retained earnings (191,739) 86,810

Total stockholders' equity 409,415 696,122

Total liabilities and stockholders' equity $2,040,238 $2,302,823

CONTURA ENERGY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(Amounts in thousands)



Six Months Ended June 30,

2020 2019

Operating activities:

Net loss $(278,109)$(106,846)

Adjustments to reconcile net loss to net cash provided by operating activities:

Depreciation, depletion and amortization 103,727 269,997

Amortization of acquired intangibles, net 2,961 (7,026)

Accretion of acquisition-related obligations 2,227 3,220 discount

Amortization of debt issuance costs and accretion 7,389 6,724 of debt discount

Mark-to-market adjustment for acquisition-related (17,049) 2,950 obligations

(Gain) loss on disposal of assets (755) 1,372

Gain on assets acquired in an exchange transaction - (9,083)

Loss on modification and extinguishment of debt - 26,459

Asset impairment and restructuring 217,882 22,294

Accretion on asset retirement obligations 14,679 13,079

Employee benefit plans, net 10,605 9,564

Deferred income taxes 33,032 (33,623)

Stock-based compensation 3,121 4,774

Equity loss in affiliates 1,790 2,959

Other, net 92 405

Changes in operating assets and liabilities (22,654) (90,086)

Net cash provided by operating activities 78,938 117,133

Investing activities:

Capital expenditures (91,090) (83,882)

Proceeds on disposal of assets 1,285 1,048

Purchases of investment securities (18,607) (9,899)

Maturity of investment securities 10,653 21,316

Capital contributions to equity affiliates (2,416) (4,807)

Other, net 47 93

Net cash used in investing activities (100,128) (76,131)

Financing activities:

Proceeds from borrowings on debt 57,500 544,946

Principal repayments of debt (29,559) (550,000)

Principal repayments of notes payable (574) (821)

Principal repayments of financing lease obligations(1,614) (2,100)

Debt issuance costs - (5,839)

Common stock repurchases and related expenses (155) (4,874)

Other, net - 914

Net cash provided by (used in) financing activities25,598 (17,774)

Net increase in cash and cash equivalents and 4,408 23,228 restricted cash

Cash and cash equivalents and restricted cash at 347,680 477,246 beginning of period

Cash and cash equivalents and restricted cash at $352,088 $500,474 end of period

The following table provides a reconciliation of cash and cash equivalents and restricted cash reported within the Condensed Consolidated Balance Sheets that sum to the total of the same such amounts shown in the Condensed Consolidated Statements of Cash Flows.

As of June 30,

2020 2019

Cash and cash equivalents $238,438$249,597

Short-term restricted cash (included in prepaid 3,720 34,309 expenses and other current assets)

Long-term restricted cash 109,930 216,568

Total cash and cash equivalents and restricted cash shown in the Condensed Consolidated Statements of Cash $352,088$500,474Flows

CONTURA ENERGY, INC. AND SUBSIDIARIES

ADJUSTED EBITDA RECONCILIATION

(Amounts in thousands)



Three Months Ended Six Months Ended June 30,

March 31, 2020June 30, 2020June 30, 20192020 2019

Net (loss) income from continuing $(39,808) $ (238,301)$24,300 $ (278,109)$ 32,290 operations

Interest expense 17,605 18,814 16,077 36,419 31,232

Interest income (978) (5,533) (1,885) (6,511) (3,821)

Income tax (2,188) 33 (1,000) (2,155) (5,778) (benefit) expense

Depreciation, depletion and 54,465 49,262 62,814 103,727 124,085 amortization

Merger-related - - 156 - 987 costs

Management restructuring costs947 - - 947 - ^(1)

Non-cash stock compensation 2,078 1,044 (546) 3,122 4,725 expense

Mark-to-market adjustment - (14,997) (2,052) 1,014 (17,049) 2,950 acquisition-related obligations

Accretion on asset retirement 7,375 7,304 6,847 14,679 13,079 obligations

Loss on modification and - - 26,459 - 26,459 extinguishment of debt

Asset impairment and restructuring ^33,709 184,173 5,826 217,882 5,826 (2)

Cost impact of coal inventory fair - - 1,033 - 8,209 value adjustment ^ (3)

Gain on assets acquired in an - - - - (9,083) exchange transaction ^(4)

Loss on partial settlement of 1,167 63 - 1,230 - benefit obligations

Amortization of acquired 865 2,096 (343) 2,961 (7,026) intangibles, net

Adjusted EBITDA $60,240 $ 16,903 $140,752 $ 77,143 $ 224,134



^ Management restructuring costs are related to severance expense (1)associated with senior management changes.

Asset impairment and restructuring for the six months ended June 30, 2020 includes long-lived asset impairments of $195,447 and restructuring ^ expense of $22,435 as a result of continued weakening coal prices and the(2)strategic actions with respect to two thermal coal mining complexes. Asset impairment for the six months ended June 30, 2019 primarily related to the write-off of prepaid purchased coal from Blackjewel as a result of Blackjewel's Chapter 11 bankruptcy filing on July 1, 2019.

^ The cost impact of the coal inventory fair value adjustment as a result (3)of the Alpha Merger was completed during the three months ended June 30, 2019.

During the six months ended June 30, 2019, the Company entered into an ^ exchange transaction which primarily included the release of the PRB (4)overriding royalty interest owed to the Company in exchange for met coal reserves which resulted in a gain of $9,083.

CONTURA ENERGY, INC. AND SUBSIDIARIES

RESULTS OF OPERATIONS



Three Months Ended March 31, 2020

(In thousands, CAPP - except for per ton CAPP - MetThermal NAPP All OtherConsolidateddata)

Coal revenues $362,403$38,743$66,907$314 $468,367

Less: Freight and handling (53,664) (3,743) (2,346) - (59,753) fulfillment revenues

Non-GAAP Coal $308,739$35,000$64,561$314 $408,614 revenues

Tons sold 3,327 617 1,508 5 5,457

Non-GAAP Coal sales$92.80 $56.73 $42.81 $62.80 $74.88 realization per ton



Cost of coal sales (exclusive of items$292,972$38,482$63,013$3,393 $397,860 shown separately below)

Depreciation, depletion and 41,722 4,849 6,849 691 54,111 amortization - production^ (1)

Accretion on asset retirement 3,502 2,352 770 751 7,375 obligations

Amortization of acquired 2,581 (2,095) 354 25 865 intangibles, net

Total Cost of coal $340,777$43,588$70,986$4,860 $460,211 sales

Less: Freight and (53,664) (3,743) (2,346) - (59,753) handling costs

Less: Depreciation, depletion and (41,722) (4,849) (6,849) (691) (54,111) amortization - production^ (1)

Less: Accretion on asset retirement (3,502) (2,352) (770) (751) (7,375) obligations

Less: Amortization of acquired (2,581) 2,095 (354) (25) (865) intangibles, net

Less: Idled and (4,157) (1,995) (825) (3,079) (10,056) closed mine costs

Non-GAAP Cost of $235,151$32,744$59,842$314 $328,051 coal sales

Tons sold 3,327 617 1,508 5 5,457

Non-GAAP Cost of $70.68 $53.07 $39.68 $62.80 $60.12 coal sales per ton



^ Depreciation, depletion and amortization - production excludes the (1)depreciation, depletion and amortization related to selling, general and administrative functions.

Three Months Ended March 31, 2020

(In thousands, CAPP - except for per CAPP - MetThermal NAPP All Other Consolidatedton data)

Coal revenues $362,403$38,743 $66,907 $314 $468,367

Less: Total Cost of coal (340,777)(43,588) (70,986) (4,860) (460,211) sales (per table above)

GAAP Coal $21,626 $(4,845)$(4,079)$(4,546) $8,156 margin

Tons sold 3,327 617 1,508 5 5,457

GAAP Coal $6.50 $(7.85) $(2.70) $(909.20)$1.49 margin per ton



GAAP Coal $21,626 $(4,845)$(4,079)$(4,546) $8,156 margin

Add: Depreciation, depletion and 41,722 4,849 6,849 691 54,111 amortization - production^ (1)

Add: Accretion on asset 3,502 2,352 770 751 7,375 retirement obligations

Add: Amortization of acquired 2,581 (2,095) 354 25 865 intangibles, net

Add: Idled and closed mine 4,157 1,995 825 3,079 10,056 costs

Non-GAAP Coal $73,588 $2,256 $4,719 $- $80,563 margin

Tons sold 3,327 617 1,508 5 5,457

Non-GAAP Coal $22.12 $3.66 $3.13 $- $14.76 margin per ton



^ Depreciation, depletion and amortization - production excludes the (1)depreciation, depletion and amortization related to selling, general and administrative functions.

Three Months Ended June 30, 2020

(In thousands, CAPP - except for per ton CAPP - MetThermal NAPP All OtherConsolidateddata)

Coal revenues $316,319$36,720$57,499$76 $410,614

Less: Freight and handling (54,852) (4,634) (5,492) - (64,978) fulfillment revenues

Non-GAAP Coal $261,467$32,086$52,007$76 $345,636 revenues

Tons sold 3,204 648 1,294 1 5,147

Non-GAAP Coal sales$81.61 $49.52 $40.19 $76.00 $67.15 realization per ton



Cost of coal sales (exclusive of items$297,169$35,709$48,732$1,669 $383,279 shown separately below)

Depreciation, depletion and 38,800 7,260 2,172 694 48,926 amortization - production^ (1)

Accretion on asset retirement 3,517 2,267 769 751 7,304 obligations

Amortization of acquired 2,759 (903) 215 25 2,096 intangibles, net

Total Cost of coal $342,245$44,333$51,888$3,139 $441,605 sales

Less: Freight and (54,852) (4,634) (5,492) - (64,978) handling costs

Less: Depreciation, depletion and (38,800) (7,260) (2,172) (694) (48,926) amortization - production^ (1)

Less: Accretion on asset retirement (3,517) (2,267) (769) (751) (7,304) obligations

Less: Amortization of acquired (2,759) 903 (215) (25) (2,096) intangibles, net

Less: Idled and (3,906) (1,670) (566) (1,669) (7,811) closed mine costs

Non-GAAP Cost of $238,411$29,405$42,674$- $310,490 coal sales

Tons sold 3,204 648 1,294 1 5,147

Non-GAAP Cost of $74.41 $45.38 $32.98 $- $60.32 coal sales per ton



^ Depreciation, depletion and amortization - production excludes the (1)depreciation, depletion and amortization related to selling, general and administrative functions.

Three Months Ended June 30, 2020

(In thousands, CAPP - Met CAPP - NAPP All Other Consolidatedexcept for Thermal per ton data)

Coal revenues$316,319 $36,720 $57,499$76 $ 410,614

Less: Total Cost of coal (342,245) (44,333) (51,888)(3,139) (441,605) sales (per table above)

GAAP Coal $(25,926)$(7,613)$5,611 $(3,063) $ (30,991)margin

Tons sold 3,204 648 1,294 1 5,147

GAAP Coal margin per $(8.09) $(11.75)$4.34 $(3,063.00)$ (6.02) ton



GAAP Coal $(25,926)$(7,613)$5,611 $(3,063) $ (30,991)margin

Add: Depreciation, depletion and38,800 7,260 2,172 694 48,926 amortization - production^ (1)

Add: Accretion on asset 3,517 2,267 769 751 7,304 retirement obligations

Add: Amortization of acquired 2,759 (903) 215 25 2,096 intangibles, net

Add: Idled and closed 3,906 1,670 566 1,669 7,811 mine costs

Non-GAAP Coal$23,056 $2,681 $9,333 $76 $ 35,146 margin

Tons sold 3,204 648 1,294 1 5,147

Non-GAAP Coal margin per $7.20 $4.14 $7.21 $76.00 $ 6.83 ton



^ Depreciation, depletion and amortization - production excludes the (1)depreciation, depletion and amortization related to selling, general and administrative functions.

Three Months Ended June 30, 2019

(In thousands, CAPP - except for per ton CAPP - MetThermal NAPP All OtherConsolidateddata)

Coal revenues $494,093$81,701$78,034$ - $653,828

Less: Freight and handling (67,728) (8,190) (1,794) - (77,712) fulfillment revenues

Non-GAAP Coal $426,365$73,511$76,240$ - $576,116 revenues

Tons sold 3,429 1,189 1,747 - 6,365

Non-GAAP Coal sales$124.34 $61.83 $43.64 $ - $90.51 realization per ton



Cost of coal sales (exclusive of items$369,703$69,932$56,433$ 678 $496,746 shown separately below)

Depreciation, depletion and 38,829 16,502 6,522 609 62,462 amortization - production^ (1)

Accretion on asset retirement 2,327 2,666 1,016 838 6,847 obligations

Amortization of acquired 3,870 (4,213) - - (343) intangibles, net

Total Cost of coal $414,729$84,887$63,971$ 2,125$565,712 sales

Less: Freight and (67,728) (8,190) (1,794) - (77,712) handling costs

Less: Depreciation, depletion and (38,829) (16,502)(6,522) (609) (62,462) amortization - production^ (1)

Less: Accretion on asset retirement (2,327) (2,666) (1,016) (838) (6,847) obligations

Less: Amortization of acquired (3,870) 4,213 - - 343 intangibles, net

Less: Idled and (2,165) (567) (733) (886) (4,351) closed mine costs

Less: Cost impact of coal inventory (1,033) - - - (1,033) fair value adjustment ^(2)

Non-GAAP Cost of $298,777$61,175$53,906$ (208)$413,650 coal sales

Tons sold 3,429 1,189 1,747 - 6,365

Non-GAAP Cost of $87.13 $51.45 $30.86 $ - $64.99 coal sales per ton



^ Depreciation, depletion and amortization - production excludes the (1)depreciation, depletion and amortization related to selling, general and administrative functions.

^ The cost impact of the coal inventory fair value adjustment as a result (2)of the Alpha Merger was completed during the three months ended June 30, 2019.

Three Months Ended June 30, 2019

(In thousands, CAPP - except for per CAPP - MetThermal NAPP All Other Consolidatedton data)

Coal revenues $494,093$81,701 $78,034$- $653,828

Less: Total Cost of coal sales (414,729)(84,887) (63,971)(2,125) (565,712) (per table above)

GAAP Coal margin $79,364 $(3,186)$14,063$(2,125)$88,116

Tons sold 3,429 1,189 1,747 - 6,365

GAAP Coal margin $23.14 $(2.68) $8.05 $- $13.84 per ton



GAAP Coal margin $79,364 $(3,186)$14,063$(2,125)$88,116

Add: Depreciation, depletion and 38,829 16,502 6,522 609 62,462 amortization - production^ (1)

Add: Accretion on asset retirement 2,327 2,666 1,016 838 6,847 obligations

Add: Amortization of acquired 3,870 (4,213) - - (343) intangibles, net

Add: Idled and 2,165 567 733 886 4,351 closed mine costs

Add: Cost impact of coal inventory1,033 - - - 1,033 fair value adjustment ^(2)

Non-GAAP Coal $127,588$12,336 $22,334$208 $162,466 margin

Tons sold 3,429 1,189 1,747 - 6,365

Non-GAAP Coal $37.21 $10.38 $12.78 $- $25.52 margin per ton



^ Depreciation, depletion and amortization - production excludes the (1)depreciation, depletion and amortization related to selling, general and administrative functions.

^ The cost impact of the coal inventory fair value adjustment as a result (2)of the Alpha Merger was completed during the three months ended June 30, 2019.

Six Months Ended June 30, 2020

(In thousands, CAPP - except for per tonCAPP - MetThermal NAPP All OtherConsolidateddata)

Coal revenues $678,722$75,463$124,406$390 $878,981

Less: Freight and handling (108,516)(8,377) (7,838) - (124,731) fulfillment revenues

Non-GAAP Coal $570,206$67,086$116,568$390 $754,250 revenues

Tons sold 6,531 1,265 2,802 6 10,604

Non-GAAP Coal sales realization $87.31 $53.03 $41.60 $65.00 $71.13 per ton



Cost of coal sales (exclusive of $590,141$74,191$111,745$5,062 $781,139 items shown separately below)

Depreciation, depletion and 80,522 12,109 9,021 1,385 103,037 amortization - production^ (1)

Accretion on asset retirement 7,019 4,619 1,539 1,502 14,679 obligations

Amortization of acquired 5,340 (2,998) 569 50 2,961 intangibles, net

Total Cost of coal$683,022$87,921$122,874$7,999 $901,816 sales

Less: Freight and (108,516)(8,377) (7,838) - (124,731) handling costs

Less: Depreciation, depletion and (80,522) (12,109)(9,021) (1,385) (103,037) amortization - production^ (1)

Less: Accretion on asset retirement (7,019) (4,619) (1,539) (1,502) (14,679) obligations

Less: Amortization of acquired (5,340) 2,998 (569) (50) (2,961) intangibles, net

Less: Idled and (8,063) (3,665) (1,391) (4,748) (17,867) closed mine costs

Non-GAAP Cost of $473,562$62,149$102,516$314 $638,541 coal sales

Tons sold 6,531 1,265 2,802 6 10,604

Non-GAAP Cost of $72.51 $49.13 $36.59 $52.33 $60.22 coal sales per ton



^ Depreciation, depletion and amortization - production excludes the (1)depreciation, depletion and amortization related to selling, general and administrative functions.

Six Months Ended June 30, 2020

(In thousands, CAPP - MetCAPP - NAPP All Other Consolidatedexcept for Thermal per ton data)

Coal revenues$678,722$75,463 $124,406$390 $ 878,981

Less: Total Cost of coal (683,022)(87,921) (122,874)(7,999) (901,816) sales (per table above)

GAAP Coal $(4,300)$(12,458)$1,532 $(7,609) $ (22,835)margin

Tons sold 6,531 1,265 2,802 6 10,604

GAAP Coal margin per $(0.66) $(9.85) $0.55 $(1,268.17)$ (2.15) ton



GAAP Coal $(4,300)$(12,458)$1,532 $(7,609) $ (22,835)margin

Add: Depreciation, depletion and80,522 12,109 9,021 1,385 103,037 amortization - production^ (1)

Add: Accretion on asset 7,019 4,619 1,539 1,502 14,679 retirement obligations

Add: Amortization of acquired 5,340 (2,998) 569 50 2,961 intangibles, net

Add: Idled and closed 8,063 3,665 1,391 4,748 17,867 mine costs

Non-GAAP Coal$96,644 $4,937 $14,052 $76 $ 115,709 margin

Tons sold 6,531 1,265 2,802 6 10,604

Non-GAAP Coal margin per $14.80 $3.90 $5.01 $12.67 $ 10.91 ton



^ Depreciation, depletion and amortization - production excludes the (1)depreciation, depletion and amortization related to selling, general and administrative functions.

Six Months Ended June 30, 2019

(In thousands, CAPP - except for per CAPP - MetThermal NAPP All OtherConsolidatedton data)

Coal revenues $966,584$144,640$149,564$- $1,260,788

Less: Freight and handling (132,629)(13,814) (2,469) - (148,912) fulfillment revenues

Non-GAAP Coal $833,955$130,826$147,095$- $1,111,876revenues

Tons sold 6,672 2,181 3,399 - 12,252

Non-GAAP Coal sales realization$124.99 $59.98 $43.28 $- $90.75 per ton



Cost of coal sales (exclusive $745,622$140,645$123,995$2,178 $1,012,440of items shown separately below)

Depreciation, depletion and 75,502 30,614 13,149 4,120 123,385 amortization - production^ (1)

Accretion on asset retirement 4,660 4,731 2,033 1,655 13,079 obligations

Amortization of acquired 1,050 (8,782) 706 - (7,026) intangibles, net

Total Cost of $826,834$167,208$139,883$7,953 $1,141,878coal sales

Less: Freight and(132,629)(13,814) (2,469) - (148,912) handling costs

Less: Depreciation, depletion and (75,502) (30,614) (13,149) (4,120) (123,385) amortization - production^ (1)

Less: Accretion on asset (4,660) (4,731) (2,033) (1,655) (13,079) retirement obligations

Less: Amortization of (1,050) 8,782 (706) - 7,026 acquired intangibles, net

Less: Idled and (3,986) (984) (1,562) (2,181) (8,713) closed mine costs

Less: Cost impact of coal inventory(4,751) (3,458) - - (8,209) fair value adjustment ^(2)

Non-GAAP Cost of $604,256$122,389$119,964$(3) $846,606 coal sales

Tons sold 6,672 2,181 3,399 - 12,252

Non-GAAP Cost of coal sales per $90.57 $56.12 $35.29 $- $69.10 ton



^ Depreciation, depletion and amortization - production excludes the (1)depreciation, depletion and amortization related to selling, general and administrative functions.

^ The cost impact of the coal inventory fair value adjustment as a result (2)of the Alpha Merger was completed during the three months ended June 30, 2019.

Six Months Ended June 30, 2019

(In thousands, CAPP - except for per CAPP - MetThermal NAPP All Other Consolidatedton data)

Coal revenues $966,584$144,640 $149,564$- $1,260,788

Less: Total Cost of coal (826,834)(167,208) (139,883)(7,953) (1,141,878)sales (per table above)

GAAP Coal $139,750$(22,568)$9,681 $(7,953)$118,910 margin

Tons sold 6,672 2,181 3,399 - 12,252

GAAP Coal $20.95 $(10.35) $2.85 $- $9.71 margin per ton



GAAP Coal $139,750$(22,568)$9,681 $(7,953)$118,910 margin

Add: Depreciation, depletion and 75,502 30,614 13,149 4,120 123,385 amortization - production^ (1)

Add: Accretion on asset 4,660 4,731 2,033 1,655 13,079 retirement obligations

Add: Amortization of acquired 1,050 (8,782) 706 - (7,026) intangibles, net

Add: Idled and closed mine 3,986 984 1,562 2,181 8,713 costs

Add: Cost impact of coal inventory fair 4,751 3,458 - - 8,209 value adjustment ^(2)

Non-GAAP Coal $229,699$8,437 $27,131 $3 $265,270 margin

Tons sold 6,672 2,181 3,399 - 12,252

Non-GAAP Coal $34.43 $3.87 $7.98 $- $21.65 margin per ton



^ Depreciation, depletion and amortization - production excludes the (1)depreciation, depletion and amortization related to selling, general and administrative functions.

^ The cost impact of the coal inventory fair value adjustment as a result (2)of the Alpha Merger was completed during the three months ended June 30, 2019.

Three Months Ended March 31, 2020

(In thousands, CAPP - except for per ton CAPP - MetThermal NAPP All OtherConsolidateddata)

Non-GAAP Cost of $235,151$32,744$59,842$ 314 $328,051 coal sales

Less: cost of (30,334) (893) - - (31,227) purchased coal sold

Adjusted cost of $204,817$31,851$59,842$ 314 $296,824 produced coal sold

Produced tons sold 2,964 604 1,508 5 5,081

Adjusted cost of produced coal sold $69.10 $52.73 $39.68 $ 62.80$58.42 per ton^ (1)



^ Cost of produced coal sold per ton for our operations is calculated as (1)non-GAAP cost of produced coal sold divided by produced tons sold.

Three Months Ended June 30, 2020

(In thousands, CAPP - except for per ton CAPP - MetThermal NAPP All OtherConsolidateddata)

Non-GAAP Cost of $238,411$29,405$42,674$- $310,490 coal sales

Less: cost of (22,932) (9) - - (22,941) purchased coal sold

Adjusted cost of $215,479$29,396$42,674$- $287,549 produced coal sold

Produced tons sold 2,896 647 1,294 1 4,838

Adjusted cost of produced coal sold $74.41 $45.43 $32.98 $- $59.44 per ton^ (1)



^ Cost of produced coal sold per ton for our operations is calculated as (1)non-GAAP cost of produced coal sold divided by produced tons sold.

Three Months Ended June 30, 2019

(In thousands, CAPP - except for per ton CAPP - MetThermal NAPP All OtherConsolidateddata)

Non-GAAP Cost of $298,777$61,175$53,906$ (208)$413,650 coal sales

Less: cost of (67,320) (2,443) - - (69,763) purchased coal sold

Adjusted cost of $231,457$58,732$53,906$ (208)$343,887 produced coal sold

Produced tons sold 2,819 1,144 1,747 - 5,710

Adjusted cost of produced coal sold $82.11 $51.34 $30.86 $ - $60.23 per ton^ (1)



^ Cost of produced coal sold per ton for our operations is calculated as (1)non-GAAP cost of produced coal sold divided by produced tons sold.

Six Months Ended June 30, 2020

(In thousands, CAPP - except for per tonCAPP - MetThermal NAPP All OtherConsolidateddata)

Non-GAAP Cost of $473,562$62,149$102,516$ 314 $638,541 coal sales

Less: cost of purchased coal (53,266) (902) - - (54,168) sold

Adjusted cost of $420,296$61,247$102,516$ 314 $584,373 produced coal sold

Produced tons sold5,860 1,251 2,802 6 9,919

Adjusted cost of produced coal sold$71.72 $48.96 $36.59 $ 52.33$58.91 per ton ^(1)



^ Cost of produced coal sold per ton for our operations is calculated as (1)non-GAAP cost of produced coal sold divided by produced tons sold.

Six Months Ended June 30, 2019

(In thousands, CAPP - except for per CAPP - MetThermal NAPP All OtherConsolidatedton data)

Non-GAAP Cost of $604,256$122,389$119,964$ (3) $846,606 coal sales

Less: cost of purchased coal (146,859)(5,327) - - (152,186) sold

Adjusted cost of produced coal $457,397$117,062$119,964$ (3) $694,420 sold

Produced tons 5,390 2,088 3,399 - 10,877 sold

Adjusted cost of produced coal $84.86 $56.06 $35.29 $ - $63.84 sold per ton ^(1)



^ Cost of produced coal sold per ton for our operations is calculated as (1)non-GAAP cost of produced coal sold divided by produced tons sold.

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SOURCE Contura Energy, Inc.