ANR's Q2 Loss Narrower than Expected - Analyst Blog

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Alpha Natural Resources, Inc. ( ANR ) reported a loss of 59 cents per share for the second quarter of 2013, narrower than the Zacks Consensus Estimate of a loss of 60 cents. The loss per share was, however, wider than the year-ago loss of 33 cents primarily due to lower tons of coal sold and decline in weighted average coal margin per ton.

The company's GAAP loss was 84 cents per share versus earnings of $10.14 per share a year ago. The variance between pro forma and GAAP loss was due to the pre-tax impairments and restructuring charges.

Total Revenue

Alpha Natural Resources' total revenues of $1,335.1 million in the second quarter were higher than the Zacks Consensus Estimate by $91.1 million. However, the results were 27.8% lower than the year-ago figure primarily due to a drop in steam coal shipment volumes and a decline in average realizations for metallurgical and steam coals.

Highlights of the Release

In the quarter under review, Alpha Natural Resources' metallurgical coal shipment was 5.6 million tons, flat with the year-ago level. The company's shipment of Powder River Basin (PRB) coal decreased 13.7% year over year to 8.8 million tons. Alpha Natural Resources shipped 7.2 million tons of Eastern steam coal compared with 11.0 million tons a year ago.

The average per ton realization on metallurgical coal decreased 21% year over year to $100.95.

Alpha Natural Resources' total cost and expenses were $1.5 billion, down 66.7% year over year due to a decline in cost of coal sales, freight and handling expenses and depreciation expenses, and absence of goodwill impairment.

Financial Update

Cash and cash equivalents of Alpha Natural Resources as of Jun 30, 2013 were $512 million versus $730.7 million as of Dec 31, 2012.

Long-term debt as of Jun 30, 2013 was $3.4 billion, down from $3.3 billion as of Dec 31, 2012.

Net cash from operating activities during first six months of 2013 was $67.5 million versus $135.3 million in the prior-year quarter.

Alpha Natural Resources' capital expenditure during the quarter was $63 million versus $119 million in the prior-year quarter. The slackness in coal demand has prompted the company to lower its capital expenditure and stem the speed of its mine development.

Guidance

Alpha Natural Resources expects to ship 83 to 91 million tons of coal in 2013, which will include 19 to 21 million tons of Eastern metallurgical coal, 27 to 30 million tons of Eastern steam coal, and 37 to 40 million tons of Western steam coal out of the PRB.

Selling, general and administrative expenses are expected to be in the range of $140 million to $160 million for 2013. Interest expense and depreciation, depletion and amortization expense are forecast in the range of $235 million to $245 million and $875 million to $950 million, respectively.

Alpha Natural Resources' full-year 2013 capital expenditure is expected to be in the band of $275 million to $325 million.

Other Company Releases

Arch Coal Inc. ( ACI ) reported second-quarter loss of 29 cents per share, narrower than the Zacks Consensus Estimate of a loss of 32 cents.

Cloud Peak Energy Inc. ( CLD ) reported a loss of 2 cents per share for the second quarter, widely missing the Zacks Consensus Estimate of earnings of 7 cents.

CONSOL Energy Inc. ( CNX ) reported a loss of 3 cents per share for the second quarter, widely missing the Zacks Consensus Estimate of earnings of 18 cents.

Our View

For the last couple of quarters, Alpha Natural Resources' performance was challenged by prevailing soft demand of coal due to the continuing economic depression in Europe and slow recovery of Chinese steel production.

Alpha Natural Resources has undertaken cost cutting initiatives and has decided to idle uneconomic mines. These initiatives will enable the company to improve its financial position.

The World Steel Association projects nearly 3% year-over-year growth in global steel usage in 2013 and 2014, which makes metallurgical coal producers hopeful of a revival in coal demand.

Abingdon, Va.-based Alpha Natural Resources Inc. with its subsidiaries engages in the production and selling of steam and metallurgical coal in the U.S. The company currently has a Zacks Rank #3 (Hold).



ARCH COAL INC (ACI): Free Stock Analysis Report

ALPHA NATRL RES (ANR): Free Stock Analysis Report

CLOUD PEAK EGY (CLD): Free Stock Analysis Report

CONSOL ENERGY (CNX): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: ACI , ANR , CLD , CNX , PRB

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