EX-99.1 4 a14-22219_1ex99d1.htm EX-99.1

Exhibit 99.1

 

Item 6.  Selected Financial Data.

 

The following table shows our selected financial and operating data for the periods and as of the dates indicated, which is derived from our consolidated financial statements. On October 5, 2010, we closed our IPO of 3,730,600 common units. In conjunction with the IPO, on September 29, 2010 Wexford became obligated to contribute their membership interests in Rhino Energy LLC to us. For ease of reference, we present the historical results of Rhino Energy LLC as our historical results which also includes the portion of fiscal year 2010 results prior to the IPO that contributed to the total 2010 figures presented below as a total for us. The selected historical consolidated financial data presented as of and for the years ended December 31, 2009 are derived from the audited historical consolidated financial statements of Rhino Energy LLC that are not included in this report. The selected historical consolidated financial data presented as of December 31, 2011 and 2010 are derived from our audited historical consolidated financial statements that are not included in this report. The selected historical consolidated financial data presented as of December 31, 2013 and 2012 and for the years ended December 31, 2013, 2012 and 2011 are derived from our audited historical consolidated financial statements that are included elsewhere in this report.

 

The following selected consolidated financial data should be read in conjunction with “Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Item 8. Financial Statements and Supplementary Data.”

 

The following table presents a non-GAAP financial measure, Adjusted EBITDA, which we use in our business as it is an important supplemental measure of our performance and liquidity. Adjusted EBITDA represents net income before interest expense, income taxes and depreciation, depletion and amortization (“DD&A”), including our proportionate share of DD&A and interest expense for our Rhino Eastern joint venture that is accounted for under the equity method. Adjusted EBITDA also excludes the effect of certain non-cash and/or non-recurring items. This measure is not calculated or presented in accordance with GAAP. We explain this measure under “—Non-GAAP Financial Measure” and reconcile it to its most directly comparable financial measures calculated and presented in accordance with GAAP.

 

In addition, prior to the issuance of our 2013 financial statements, a determination was made that we had incorrectly calculated and reported our liability and costs for black lung benefits. We had previously accounted for our black lung benefit liability using an event driven approach. It was determined the we should have accounted for our black lung benefit liability using a service cost approach because this approach matches black lung costs over the service lives of the miners who ultimately receive black lung benefits. As a result, the following financial information as of and for the years ended December 31, 2012 and 2011 have been revised from the amounts previously reported to correctly report our liability and costs for black lung benefits. The financial data as of and for the years ending 2010 and 2009 have not been revised since the data to calculate the impact for these periods was not readily available.

 

Certain prior year amounts have also been reclassified from continuing operations to discontinued operations due to the sale of our Utica Shale property in March 2014. See “Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Item 8. Financial Statements and Supplementary Data.” for more information regarding the same of our Utica Shale property.

 



 

 

 

For the Year Ended December 31,

 

(in thousands, except per unit and per ton data)

 

2013

 

2012

 

2011

 

2010

 

2009

 

Statement of Operations Data:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenues

 

$

272,265

 

$

351,743

 

$

367,221

 

$

305,647

 

$

419,790

 

Costs and Expenses:

 

 

 

 

 

 

 

 

 

 

 

Cost of operations (exclusive of depreciation, depletion and amortization)

 

199,705

 

247,719

 

267,603

 

220,756

 

336,335

 

Freight and handling costs

 

1,294

 

5,833

 

4,329

 

2,634

 

3,991

 

Depreciation, depletion and amortization

 

39,627

 

41,274

 

36,325

 

34,108

 

36,279

 

Selling, general and administrative (exclusive of depreciation, depletion and amortization)

 

19,800

 

20,442

 

21,815

 

16,449

 

16,754

 

Asset impairment loss

 

1,667

 

 

 

652

 

 

(Gain) loss on sale/acquisition of assets—net

 

(10,359

)

(4,890

)

(3,172

)

(10,716

)

1,710

 

Total costs and expenses

 

251,734

 

310,378

 

326,900

 

263,883

 

395,069

 

Income from operations

 

20,531

 

41,365

 

40,321

 

41,764

 

24,721

 

Interest and other income (expense):

 

 

 

 

 

 

 

 

 

 

 

Interest expense and other

 

(7,898

)

(7,767

)

(6,062

)

(5,338

)

(6,222

)

Interest income and other

 

207

 

92

 

51

 

24

 

70

 

Equity in net income (loss) of unconsolidated affiliate

 

(4,729

)

5,757

 

2,988

 

4,699

 

893

 

Total interest and other income (expense)

 

(12,420

)

(1,918

)

(3,023

)

(615

)

(5,259

)

Income before income taxes from continuing operations

 

8,111

 

39,447

 

37,298

 

41,149

 

19,462

 

Income tax

 

 

 

 

 

 

Net income from continuing operations

 

8,111

 

39,447

 

37,298

 

41,149

 

19,462

 

Income from discontinued operations

 

1,307

 

88

 

 

 

 

Net income

 

$

9,418

 

$

39,535

 

$

37,298

 

$

41,149

 

$

19,462

 

Basic and diluted net income per limited partner common unit: (1)

 

 

 

 

 

 

 

 

 

 

 

Net income per unit from continuing operations

 

$

0.29

 

$

1.39

 

$

1.40

 

$

0.22

 

n/a

 

Net income per unit from discontinued operations

 

0.04

 

0.01

 

 

 

n/a

 

Net income per common unit, basic and diluted

 

$

0.33

 

$

1.40

 

$

1.40

 

$

0.22

 

n/a

 

Distributions paid per limited partner unit

 

$

1.78

 

$

1.85

 

1.8108

 

n/a

 

n/a

 

Weighted average number of limited partner common units outstanding:

 

 

 

 

 

 

 

 

 

 

 

Basic

 

15,751

 

15,331

 

13,725

 

12,400

 

n/a

 

Diluted

 

15,760

 

15,335

 

13,744

 

12,413

 

n/a

 

Balance Sheet Data:

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

423

 

$

461

 

$

449

 

$

76

 

$

687

 

Property and equipment, net

 

424,990

 

433,791

 

430,242

 

282,577

 

270,680

 

Total assets

 

567,767

 

559,876

 

539,203

 

358,645

 

339,984

 

Total liabilities

 

271,396

 

260,082

 

237,266

 

111,028

 

201,583

 

Total debt - short term and long term

 

171,046

 

163,549

 

143,098

 

36,528

 

122,138

 

Partners’ capital/Members’ equity

 

$

296,371

 

$

299,794

 

$

301,937

 

$

247,617

 

$

138,401

 

Operating Data (2):

 

 

 

 

 

 

 

 

 

 

 

Tons of coal sold

 

3,673

 

4,670

 

4,876

 

4,306

 

6,699

 

Tons of coal produced/purchased

 

3,689

 

4,699

 

4,873

 

4,312

 

6,732

 

Coal revenues per ton (3)

 

$

64.42

 

$

65.22

 

$

68.47

 

$

67.32

 

$

59.98

 

Cost of operations per ton (4)

 

$

54.37

 

$

53.04

 

$

54.88

 

$

51.27

 

$

50.21

 

Other Financial Data:

 

 

 

 

 

 

 

 

 

 

 

Net cash provided by operating activities

 

$

51,730

 

$

79,744

 

$

66,916

 

$

55,001

 

$

41,495

 

Net cash used in investing activities

 

(43,908

)

(58,404

)

(188,024

)

(37,644

)

(27,344

)

Net cash (used in) provided by financing activities

 

(7,860

)

(21,328

)

121,481

 

(17,968

)

(15,401

)

Adjusted EBITDA from continuing operations

 

59,239

 

89,637

 

81,221

 

71,473

 

63,643

 

Total Adjusted EBITDA

 

63,528

 

89,821

 

81,221

 

71,473

 

63,643

 

Capital expenditures (5)

 

$

54,522

 

$

61,772

 

$

211,473

 

$

41,250

 

$

29,657

 

 



 


(1)                                 Basic and diluted earnings per unit for 2010 reflects the period from October 6, 2010 to December 31, 2010, which is the period that net income was attributable to us as a publicly traded partnership.

 

(2)                                 In May 2008, we entered into a joint venture with an affiliate of Patriot that acquired the Rhino Eastern mining complex, which commenced production in August 2008. We have a 51% membership interest in, and serve as manager for, the Rhino Eastern joint venture. The operating data do not include data with respect to the Rhino Eastern mining complex. For the years ended December 31, 2013 and 2012, the joint venture produced and sold approximately 0.2 million tons and approximately 0.3 million tons, respectively, of premium mid-vol metallurgical coal

 

(3)                                 Coal revenues per ton represent total coal revenues derived from the sale of coal from all business segments, divided by total tons of coal sold for all segments.

 

(4)                                 Cost of operations per ton represents the cost of operations (exclusive of depreciation, depletion and amortization) from all business segments divided by total tons of coal sold for all segments.

 

(5)                                 The following table presents a reconciliation of total capital expenditures to net cash used for capital expenditures on a historical basis for each of the periods indicated:

 

 

 

For the Year Ended December 31,

 

 

 

2013

 

2012

 

2011

 

2010

 

2009

 

 

 

(in thousands)

 

Reconciliation of total capital expenditures to net cash used for capital expenditures:

 

 

 

 

 

 

 

 

 

 

 

Additions to property, plant and equipment

 

$

54,522

 

$

61,772

 

$

91,856

 

$

26,248

 

$

27,836

 

Acquisitions of coal companies and coal properties

 

 

 

119,617

 

15,002

 

 

Acquisition of roof bolt manufacturing company

 

 

 

 

 

1,821

 

Total capital expenditures

 

$

54,522

 

$

61,772

 

$

211,473

 

$

41,250

 

$

29,657

 

 

Non-GAAP Financial Measure

 

The following tables present reconciliations of Adjusted EBITDA to the most directly comparable GAAP financial measures for each of the periods indicated. We believe the presentation of Adjusted EBITDA that includes our proportionate share of DD&A and interest expense for our Rhino Eastern joint venture is appropriate since our portion of Rhino Eastern’s net income that is recognized as a single line item in our financial statements is affected by these expense items. Since we do not reflect these proportionate expense items of DD&A and interest expense in our consolidated financial statements, we believe that the adjustment for these expense items in the Adjusted EBITDA calculation is more representative of how we review our results and also provides investors with additional information that they can use to evaluate our results. Adjusted EBITDA also excludes the effect of certain non-cash and/or non-recurring items.

 



 

Adjusted EBITDA should not be considered an alternative to net income, income from operations, cash flows from operating activities or any other measure of financial performance or liquidity presented in accordance with GAAP. Adjusted EBITDA excludes some, but not all, items that affect net income, income from operations and cash flows from operating activities, and these measures may vary among other companies.

 

 

 

For the Year Ended December 31,

 

 

 

2013

 

2012

 

2011

 

2010

 

2009

 

 

 

(in thousands)

 

Reconciliation of Adjusted EBITDA to net income:

 

 

 

 

 

 

 

 

 

 

 

Net income from continuing operations

 

$

8,111

 

$

39,447

 

$

37,298

 

$

41,149

 

$

19,462

 

Plus:

 

 

 

 

 

 

 

 

 

 

 

Depreciation, depletion and amortization

 

39,627

 

41,274

 

36,325

 

34,108

 

36,279

 

Interest expense

 

7,898

 

7,767

 

6,062

 

5,338

 

6,222

 

Less:

 

 

 

 

 

 

 

 

 

 

 

Income tax benefit

 

 

 

 

 

 

EBITDA from continuing operations(a)

 

55,636

 

88,488

 

79,685

 

80,595

 

61,964

 

Plus: Rhino Eastern DD&A-51%

 

994

 

1,070

 

1,509

 

1,630

 

1,460

 

Plus: Rhino Eastern interest expense-51%

 

8

 

79

 

27

 

37

 

219

 

Less: Gain from Castle Valley acquisition(b)

 

 

 

 

(10,789

)

 

Plus: Non-cash write-off of mining equipment and asset impairment(c)

 

2,601

 

 

 

 

 

Adjusted EBITDA from continuing operations(a)

 

59,239

 

89,637

 

81,221

 

71,473

 

63,643

 

Net income from discontinued operations

 

1,307

 

88

 

 

 

 

DD&A included in net income from discontinued operations

 

2,982

 

96

 

 

 

 

Adjusted EBITDA

 

$

63,528

 

$

89,821

 

$

81,221

 

$

71,473

 

$

63,643

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of Adjusted EBITDA to net cash provided by operating activities:

 

 

 

 

 

 

 

 

 

 

 

Net cash provided by operating activities Plus:

 

$

51,730

 

$

79,744

 

$

66,916

 

$

55,001

 

$

41,495

 

Increase in net operating assets

 

 

 

8,466

 

10,260

 

17,190

 

Decrease in provision for doubtful accounts

 

 

 

19

 

 

 

Gain on sale of assets

 

10,359

 

4,878

 

3,172

 

 

 

Gain on acquisition

 

 

 

 

10,789

 

 

Gain on retirement of advance royalties

 

 

 

 

 

 

Amortization of deferred revenue

 

1,553

 

929

 

532

 

 

 

Amortization of actuarial gain

 

145

 

295

 

 

 

 

Interest expense

 

7,898

 

7,767

 

6,062

 

5,338

 

6,222

 

Settlement of litigation

 

 

 

 

 

1,773

 

Equity in net income of unconsolidated affiliates

 

 

5,757

 

2,988

 

4,699

 

893

 

Less:

 

 

 

 

 

 

 

 

 

 

 

Decrease in net operating assets

 

599

 

3,330

 

 

 

 

Accretion on interest-free debt

 

57

 

222

 

210

 

206

 

200

 

Amortization of advance royalties

 

270

 

244

 

1,104

 

865

 

215

 

Amortization of debt issuance costs

 

1,295

 

1,075

 

1,043

 

844

 

 

Increase in provision for doubtful accounts

 

 

 

 

 

19

 

Equity-based compensation

 

605

 

873

 

727

 

291

 

 

Loss on sale of assets

 

 

 

 

73

 

1,710

 

Loss on asset impairments

 

1,667

 

 

 

652

 

 

Loss on retirement of advance royalties

 

182

 

100

 

79

 

396

 

712

 

Income tax benefit

 

 

 

 

 

 

Accretion on asset retirement obligations

 

2,356

 

1,896

 

1,956

 

2,165

 

2,753

 

Equity in net loss of unconsolidated affiliate

 

4,729

 

 

 

 

 

Distributions from unconsolidated affiliate

 

 

2,958

 

3,351

 

 

 

EBITDA(a)

 

59,925

 

88,672

 

79,685

 

80,595

 

61,964

 

Plus: Rhino Eastern DD&A-51%

 

994

 

1,070

 

1,509

 

1,630

 

1,460

 

Plus: Rhino Eastern interest expense-51%

 

8

 

79

 

27

 

37

 

219

 

Less: Gain from Castle Valley acquisition(b)

 

 

 

 

(10,789

)

 

Plus: Non-cash write-off of mining equipment and asset impairment(c)

 

2,601

 

 

 

 

 

Adjusted EBITDA(a)

 

63,528

 

89,821

 

81,221

 

71,473

 

63,643

 

Less: Net income from discontinued operations

 

(1,307

)

(88

)

 

 

 

Less: DD&A inlcuded in net income from dscontinued operations

 

(2,982

)

(96

)

 

 

 

Adjusted EBITDA from continuing operations(a)

 

$

59,239

 

$

89,637

 

$

81,221

 

$

71,473

 

$

63,643

 

 



 


(a)                                 Calculated based on actual amounts and not the rounded amounts presented in this table. Totals may not foot due to rounding.

 

(b)                                 During 2010, we acquired certain assets for cash consideration of approximately $15.0 million from the Trustee of the Federal Bankruptcy Court charged with the sale of the C.W. Mining Company assets, located in Emery and Carbon Counties, Utah (referred to as our Castle Valley mining complex). Because the fair value of the assets acquired exceeded the purchase price, we recorded a non-cash gain of $10.8 million that is reflected in our 2010 financial results. A gain resulted from this acquisition since the assets were purchased in a distressed sale out of bankruptcy. Management believes that the isolation and presentation of this specific item to arrive at Adjusted EBITDA is useful because it enhances investors’ understanding of how management assesses the performance of our business. Management believes the adjustment of this item provides investors with additional information that they can utilize in evaluating our performance. Additionally, management believes the isolation of this item provides investors with enhanced comparability to prior and future periods of our operating results.

 

(c)                                  During the first quarter of 2013, we incurred a non-cash expense of approximately $0.9 million due to the write-off of a continuous miner that was damaged at one of our underground mines in Central Appalachia. In addition, during the fourth quarter of 2013, we made a strategic decision to permanently close the mining operations at our McClane Canyon mine in Colorado, which resulted in a non-cash impairment charge of approximately $1.7 million. We believe that the isolation and presentation of these specific items to arrive at Adjusted EBITDA is useful because it enhances investors’ understanding of how we assess the performance of our business. We believe the adjustment of these items provides investors with additional information that they can utilize in evaluating our performance. Additionally, we believe the isolation of these items provides investors with enhanced comparability to prior and future periods of our operating results.