Arch Coal Inc. (ACI – Analyst Report) reported a second-quarter 2015 adjusted loss of 73 cents per share, wider than the Zacks Consensus Estimate of a loss of 59 cents and the year-ago loss of 46 cents per share.
Arch Coal Inc. – Quarterly EPS | FindTheBest
Total Revenue
In the second quarter of 2015, Arch Coal's total revenue of $644.5 million missed the Zacks Consensus Estimate of $654 million by 1.4%. Decline in the average sales price per ton and sales volume led to a 9.7% year-over-year decrease in revenues.
Operational Update
In the quarter under review, Arch Coal's sales volume decreased 6.4% year over year to 30.6 million tons due to lower sales from its Powder River Basin and Appalachian operations.
Average sales price per ton decreased 3.4% to $19.65 from $20.34 a year ago.
In the second quarter, cost of sales was down 9% year over year and selling, general and administrative expenses declined 18.9%. Net interest expenses were $98.6 million, 2.8% higher than the prior-year period.
Arch Coal reported earnings before interest, taxes, depreciation and amortization of $45.3 million, down 30.2% from $64.9 million a year ago.
Financial Update
Cash and cash equivalents as of Jun 30, 2015 were $439.7 million compared with $734.2 million as of Dec 31, 2014.
Long-term debt as of Jun 30, 2015 was $5,114.6 million compared with $5,123.5 million as of Dec 31, 2014. Capital expenditure in the first half of 2015 was $99.3 million, up from $95.8 million incurred a year ago.
Guidance
Arch Coal reduced its thermal coal sales guidance for 2015 to 120–124 million tons from 120–130 million tons and retained its metallurgical coal sales guidance of 6.0–6.8 million tons.
Arch Coal revised its capital expenditure guidance for 2015 to the range of $130–$140 million from the previous estimate of $140–$155 million.
Other Coal Releases
Peabody Energy Corporation (BTU – Analyst Report) reported a loss of 58 cents per share in second-quarter 2015, marginally narrower than the Zacks Consensus Estimate of a loss of 59 cents
CONSOL Energy Inc. (CNX – Analyst Report) reported an adjusted loss of 37 cents per share for the second quarter of 2015. The Zacks Consensus Estimate was earnings of 1 cent.
Westmoreland Coal Co. (WLB – Snapshot Report) reported a loss of 82 cents per share in second-quarter 2015, wider than the Zacks Consensus Estimate of a loss of 65 cents
Our View
Arch Coal continues to face tough coal market dynamics. The company had to lower the top end of its coal sales guidance for 2015 to account for the drop in demand.
The dismal performance of the company has taken a toll on its share price. Arch Coal has plunged nearly 90.5% year to date to close at 17 cents yesterday. To remain listed on the stock exchange, the company is planning to go for a reverse stock split of 1-10, which is expected to take place after market close on Aug 3, 2015.
However, if Arch Coal fails to receive the much needed confirmation from Wyoming officials that assures its mines in the state are still eligible for self-bonding, it will undoubtedly increase the financial stress of the company.
Arch Coal currently carries a Zacks Rank #3 (Hold).
