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Cloud Peak Energy’s 2Q15 Earnings Hamper Its 1H15 Performance

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1H15 Adjusted EBITDA

Cloud Peak Energy (CLD) reported adjusted earnings before interest, tax, depreciation, and amortization (or EBITDA) of $50.1 million in 1H15 compared to $84.6 million in 1H14. As we explained in earlier parts of this series, the company’s adjusted EBITDA narrowed primarily due to weak pricing and lower shipments in 2Q15. 1Q15 adjusted EBITDA was marginally higher than that of 1Q14. However, 2Q15 adjusted EBITDA fell sharply, as we discussed in Part 5.

In 1H15, the company’s coal segment reported adjusted EBITDA of $61.4 million compared to $83.2 million in 1H14, while its logistics segment reported adjusted EBITDA losses of $14.7 million compared to adjusted EBITDA of $3.1 million in 1H14.

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1H15 net losses

Cloud Peak Energy’s net losses came in at $57.6 million in 1H15 compared to $17.8 million in 1H14. The net losses translate to $0.94 per share in 1H15 compared to $0.29 per share in 1H14. As we discussed in the previous part of this series, weak operating performance in 1H15, coupled with goodwill impairment charges of $33.4 million related to the Cordero Rojo Mine, dented the company’s net profitability.

Cash flows

The company reported $14.9 million in cash from operations in 1H15—substantially lower than 1H14’s $35.4 million. After deducting capital expenditure, we find that the company generated negligible cash flows in 1H15 against $28.3 million in 1H14. In the current difficult environment, other coal producers (KOL) like Peabody Energy (BTU), Arch Coal (ACI), and Alpha Natural Resources (ANRZ) are struggling to remain cash flow–positive. ANRZ filed for bankruptcy on August 3, 2015.

We’ll take a look at Cloud Peak Energy’s balance sheet position in the next part of this series.

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