Arch Coal Inc.
) reported fourth-quarter 2013 adjusted loss of 45 cents per
share, wider than the Zacks Consensus Estimate of a loss of 36
cents. In the year-ago quarter, the company posted a loss of 42
cents per share. Quarterly result was negatively impacted
primarily due to lower revenues and a rise in interest expenses.
On a GAAP basis, quarterly loss was $1.75 per share versus a loss
of $1.39 per share in the prior-year quarter. The variance
between GAAP and adjusted loss was due to the combined effect of
costs for sales contract amortization and tax impact of
adjustments, and several gains as a result of the early debt
retirement and non-cash accretion of acquired coal supply
For 2013, Arch Coal's adjusted loss per share was $1.08, narrower
than the Zacks Consensus Estimate of a loss $1.35. Annual loss
was significantly wider than the year-ago loss of 36 cents per
Annual GAAP loss was $3.03 per share compared with the prior-year
loss of $3.24 per share.
Arch Coal's fourth-quarter total revenues of $0.7 billion missed
the Zacks Consensus Estimate by 9.6%. Quarterly revenues
decreased 17% year over year primarily due to lower sales volumes
and a decline in average sales price per ton.
The company's annual total revenues were $3.0 billion, lagging
the Zacks Consensus Estimate by 5.2%. Reported revenues decreased
20% from the year-ago figure of $3.8 billion.
In the quarter under review, Arch Coal's sales volume decreased
10.5% year over year to 32.3 million tons. Lower sales
contribution from Powder River Basin ("PRB"), Appalachia and
Bituminous Thermal operations led to the drop in total sales
The company's total operating cost per ton decreased 7.8% year
over year due to the successful cost containment measures at the
PRB and Appalachia basins.
In fourth-quarter 2013, total operating expenses decreased
9.7% year over year to $1,060.1 million, primarily due to lower
cost of sales and depreciation expenses.
ARCH COAL INC (ACI): Free Stock Analysis
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Arch Coal's adjusted earnings before interest, tax, depreciation
and amortization ("EBITDA") were $38.4 million, reflecting a
substantial year-over-year decline of 46.1%.
Cash and cash equivalents, as of Dec 31, 2013, were $911.1
million versus $784.6 million as of Dec 31, 2012.
Long-term debt, as of Dec 31, 2013, rose to $5,118 million from
$5,085.9 million at year-end 2012.
For 2013, operating cash flow was $55.7 million compared with
$332.8 million a year ago.
Capital expenditure was $297 million in 2013, lower than $395.2
million in the year-ago period.
Arch Coal provided its 2014 thermal coal sales guidance in the
range of 124 - 134 million tons. For metallurgical coal, the
guidance was in the band of 7.5 - 8.5 million tons.
In addition, the company presented 2014 capital expenditure
guidance in the range of $180 - $200 million.
Peabody Energy Corporation
) reported break even result in fourth-quarter 2013. Results
compared favorably with the Zacks Consensus Estimate of a loss of
Alliance Resource Partners, L.P.
) fourth-quarter 2013 earnings of $1.85 per unit beat the Zacks
Consensus Estimate by 16.4%.
CONSOL Energy Inc.
) reported pro forma earnings of 3 cents per share for the fourth
quarter of 2013, widely missing the Zacks Consensus Estimate of 7
Arch Coal again reported unfavorable results in the fourth
quarter of 2013, primarily owing to disruptions of rail services
and adverse geologic conditions.
However, we appreciate the company's steady asset realignment
strategy to concentrate more on core assets with potential for
higher return. In addition, Arch Coal took several initiatives to
enhance its coal reserves. In Dec 2013, Arch Coal started long
wall mining techniques at Tygart Valley's Leer mine in northern
West Virginia. In addition, the company's purchase of the Gruffy
properties will boost its production capacity.
On the divestiture front, Arch Coal divested its Canyon Fuel
subsidiary for $422.7 million. This initiative will enable the
company to reallocate its fund for profitable ventures.
As per a World Steel Association report, the long-term prospects
for metallurgical coal remain bullish due to increased demand
from the Asian, European and the Middle East and North African
markets in the coming years. This is due to higher steel demand
as a result of growth in the automotive, energy and residential
construction sectors, and thus providing additional avenues for
Arch Coal Inc. currently has a Zacks Rank #3 (Hold).