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American Resources dramatically narrows losses in 1Q as it shifts from coal to mining carbon

The infrastructure company’s fortunes have changed with its focus now on mining metallurgical carbon used in steel making

American Resources Corporation - American Resources reveals significant improvement in 1Q results as it makes dramatic shift from coal to carbon
American Resources CEO Mark Jensen is optimistic on global infrastructure demand and believes governments will kick-start infrastructure projects as a way to stimulate economic activity as the world recovers from the pandemic

American Resources Corporation (NASDAQ:AREC) posted first-quarter results on Thursday that showed the company was well-positioned to supply raw material to the global infrastructure market after making a dramatic shift from coal to mining metallurgical carbon used in steelmaking.

For its first quarter ended March 31, 2020, American Resources narrowed its loss from operations to $4.26 million, or $0.12 per share, compared with a net loss of $9.89 million, or $0.48 per share, in the same period a year earlier.

The company said its adjusted earnings before interest, taxes, depreciation, and amortization, or EBITDA loss was $713,008 in the first quarter of 2020, compared to an adjusted EBITDA loss of $3.82 million for the first quarter of 2019.

In a statement accompanying the numbers, American Resources chairman and CEO Mark Jensen said: "The first three months of 2020 continued to be very productive in the transformation of the company in becoming an infrastructure company and pure producer of metallurgical carbon.”

“We continued to advance our efforts and position the company to be a stable, long-term supplier of metallurgical carbon to the worldwide steel markets to support growing global infrastructure demand, while bringing a more efficient and modernized business model to the industry," he added.

READ: American Resources bolsters balance sheet and growth prospects by divesting idle assets near Phelps, Kentucky

In February, the company completed the restructuring of Perry County Resources (PCR), the company's fifth carbon processing and logistics complex which was acquired in September 2019. During the first quarter, American Resources also divested certain non-core assets at Perry County Resources to lower the complex's holding costs and to monetize assets that are not in the company's five-to-10-year operating plan.

The acquisition of PCR in Kentucky further enhances American Resources' position in the metallurgical carbon sector and is the company’s eighth acquisition in five years. In addition to improving his company’s portfolio, Jensen believes the move sets the company up for success in 2020 as governments try to kickstart infrastructure jobs to battle the fallout of the coronavirus (COVID-19) fallout.   

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 continue to look to increase infrastructure projects as a way to stimulate economic activity as we recover from the COVID-19 pandemic.”

He added: “We feel we are currently in a great position to fulfill a portion of that demand growth given the efforts and achievements we have made at our PCR and McCoy Elkhorn complexes to effectively be one of the lowest cost producers of metallurgical carbon in the industry. Additionally, and as we execute on this transformational phase of our growth, so does our equally important ability to provide stable long-term employment to a region in need."

During the quarter, the company advanced its Environmental Social Governance (ESG) position by establishing a partnership with Land Betterment Corporation, an environmental solutions company focused on fostering a positive impact through upcycling former coal mining sites to create sustainable community development and jobs.

In keeping with its dramatic shift to carbon, the company produced and sold 6,568 short tons of coal in the first quarter of 2020, compared to 73,633 short tons in the fourth of 2019 and 99,338 short tons in the first quarter of 2019. The company said total revenue was $524,334 for the first quarter of 2020.

American Resources said it is committed to being one of the lowest-cost operators in the Central Appalachian basin and throughout all its carbon mining, processing, and transportation operations. With operations in eastern Kentucky and West Virginia, the Indiana-based company extracts, processes, and sells metallurgical carbon to the steel industry.

Contact the author Uttara Choudhury at uttara@proactiveinvestors.com

Follow her on Twitter: @UttaraProactive

Quick facts: American Resources Corporation

Price: 1.49 USD

Market: NASDAQ
Market Cap: $39.11 m

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