June 1, 2020 - American Resources Corporation (NASDAQ:AREC) ("American Resources" or the "Company"), 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 carbon to the steel and specialty metals industries, today reported its fourth quarter and full year ended December 31, 2019 financial results.
Mark Jensen, Chairman and CEO of American Resources Corporation commented, "2019 continued to be a transformational year for American Resources. Notwithstanding some industry headwinds in the latter half of the year, we achieved several important milestones. When reflecting on all of our achievements, we are extremely proud of our team for continuing to optimize our position within the metallurgical carbon market. Our mission continues to be a long-term and stable supplier of raw material to the global infrastructure market while bringing a more efficient and modernized business model to the industry. Additionally, as we execute on this mission, so does our equally important ability to provide stable long-term employment to a region in need."
2019 Key Highlights
February 2019: Successfully up-listed to the Nasdaq Capital Market under the ticker "AREC," providing shareholders with the fairest and most open marketplace as well increased visibility, recognition and value.
October 2019: Announced the closing on the acquisition of Perry County Resources ("PCR"), the Company's eighth acquisition in five years. The addition of PCR to American Resources' platform further enhances the Company's position in the metallurgical carbon market by providing access to a well-known, high-quality product.
Ongoing development achievements at the Company's McCoy Elkhorn complex to improve American Resources' long-term cost structure as well as disposing of non-core assets and environmental liabilities to improve its balance sheet.
Mark Jensen continued, "Looking forward to the remainder of 2020 and into the coming years, we remain quite optimistic on global infrastructure demand and believe governments around the world will look to increase infrastructure projects as a way to stimulate economic activity as we come out of the COVID-19 pandemic. Given the immediate uncertainties regarding global end-markets and the competitive landscape, we are not providing any guidance at this time. However, we are very enthusiastic about our platform's position and our ability to be one of the largest growth pipelines at a time when so much supply has come offline."
"Lastly, we have made significant steps to enhance our environmental, social and governance (ESG) profile. As previously stated, we expired our one and only thermal coal contract during the third quarter of 2019 to become a pure metallurgical carbon producer. Furthermore, we have advanced our environmental reclamation efforts to move over twelve thermal coal sites we assumed though our various acquisitions to reclamation only' status, and have created partnerships to advance those projects past the environmental stage to create long-term economic and employment opportunities for local communities. We believe our ESG efforts will further distinguish American Resources as industry revolutionaries."
Financial Results for Fourth Quarter and Year-End December 31, 2019
The Company reported net loss from operations of $59.9 million, or a loss of $2.94 per share for the year ended December 31, 2019, compared with a net loss from operations of $11.5 million, or a loss of $3.69 per share, for 2018. The Company earned adjusted earnings before interest, taxes, depreciation, amortization, accretion on asset retirement obligations, non-operating expenses, non-cash impairment and development costs (adjusted EBITDA") loss of $6.6 million for the year ended December 31, 2019, as compared with a loss of $3.35 million in 2018.
For the fourth quarter of 2019, American Resources reported a net loss from operations of $39.6 million, or a loss of $1.66 per share, as compared with a net loss from operations of $3.43 million, or a loss of $0.98 per share, in the prior-year period. The Company earned adjusted EBITDA loss of $3.1 million in the fourth quarter of 2019, as compared with adjusted EBITDA loss of $0.774 million for the fourth quarter of 2018.
Full Year 2019 Summary
Full year 2019 revenues were $24,477,707 compared to full year 2018 revenues of $31,524,825. The year-over-year decrease was mainly due to the Company's decision to expire its only thermal coal contract during the third quarter and shift away from the thermal coal market and purely focus on the global metallurgical carbon market. In conjunction with its focus on being a pure metallurgical carbon producer, the Company commenced its restructuring efforts of its recently acquired Perry County Resources complex in the fourth quarter of 2019. As such, PCR had not reached its maximum revenue and efficiency standards under its revised operating structure. Additionally, the Company incurred a non-cash impairment charge of $27,688,030 in the fourth quarter of 2019 due to the write-down of fixed assets and divestiture of certain surface and mineral acres located near Phelps, Kentucky that closed as of May, 2020.
2019 cost of sales (includes mining, transportation, and processing costs) were $26,086,814, compared to $24,992,312 during 2018. General and administrative expenses for the full year 2019 were $5,113,688, or 20.9 percent of total revenue. Depreciation was $4,588,136, or 18.7 percent of total revenue. American Resources incurred interest expense of $2,908,579 during 2019 compared to $1,288,991 during the full year of 2018. Development costs during the year were $7,236,652, compared to $3,815,235 in 2018.
The Company did not incur any income tax expense in 2019 as it was able to utilize its available net operating losses ("NOL") carried forward from prior periods of approximately $13,746,391 as of December 31, 2019.
Fourth Quarter 2019 Summary
Total revenues were $6,294,026 for the fourth quarter of 2019. Cost of sales (includes mining, transportation, royalty and processing costs,) for the fourth quarter of 2019 were $10.8 million, or 172 percent of total revenues, compared to $8.2 million, or 100 percent of total revenue in the same period of 2018.
General and administrative expenses for the fourth quarter of 2019 were $1,315,638, or ??20.9 percent of total revenue, compared to $4,000,556 during the fourth quarter of 2018. Depreciation for the fourth quarter of 2019 was $1,551,389, or 24.7 percent of total revenue. American Resources incurred interest expense of $1,233,926 during the fourth quarter of 2019 compared to $424,886 during the fourth quarter of 2018. Development costs during the quarter were $1,324,063, compared to $1,425,024 in the third quarter of 2019.
The Company produced and sold 73,633 short tons of coal in the fourth quarter of 2019, compared to 25,969 short tons in the third of 2019 and 113,618 short tons in the fourth quarter of 2018. For the full year of 2019, the Company produced and sold 325,918 short tons compared to 435,574 short tons during 2018.
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