Cloud Peak Incurs Q2 Loss, Misses Estimates - Analyst Blog


One of the largest U.S. coal producers and the only pure-play Powder River Basin coal company Cloud Peak Energy Inc. ( CLD ) reported a loss of 2 cents per share for the second quarter of 2013, widely missing the Zacks Consensus Estimate of earnings of 7 cents and the year-ago earnings per share of 34 cents.

Including a gain of 10 cents, GAAP earnings per share reported by the company were 8 cents versus 55 cents in the year-ago quarter.

Operational Highlights

Cloud Peak's quarterly revenue decreased 3.8% to $330 million from $343 million in the year-ago quarter. The top line was in line with the Zacks Consensus Estimate.

Total tons of coal sold were 20.9 million compared to 20.7 million in the prior-year quarter.

The shipments from its three operated mines totaled 20.1 million tons versus 21.1 million tons in the first quarter of 2013 and 20.1 million tons in the second quarter of 2012. The decline in coal shipments in the first half of the year did not come as a surprise as the accumulated stockpiles at the utilities delayed fresh orders. Also, the shipment figures reflect weather interruptions, unplanned power plant outages at a small number of major customers, and the impact of production interruptions during maintenance downtime. However, the company indicated that shipments gained momentum in July as customers took their contracted coal as a result of a torrid summer.

During the quarter, Asian exports were approximately 1.2 million tons compared to 1.0 million tons in the second quarter of 2012.

Adjusted earnings before interest tax depreciation and amortization (EBITDA) were $37.3 million, down 43.1% year over year due to the timing of several large planned maintenance outages in the quarter.

Segment Highlights

Owned and Operated Mines

20.1 million tons of coal were sold at $13.05 per ton versus $13.11 per ton in the year-ago quarter. The decline in realized prices reflects the impact of consistently low prices since late 2011. Though the total volume of coal sold was approximately flat, cost per ton was higher year over year due to the timing of several large maintenance work in 2013, cost inflation on explosive purchases, and additional labor costs associated with longer hauls and increased strip ratios, particularly at the Cordero Rojo Mine.

Logistics and Related Activities

Total tons of coal delivered were 1.4 million, up from 1.3 million in the year-ago quarter driven by maximized available capacity at the Westshore terminal to meet strong demand from Asian customers. However, revenue decreased 19.6% year over year due to lower prices on Asian deliveries related to low Newcastle benchmark prices.

Financial Update

As of Jun 30, 2013, cash and cash equivalents were $200 million, up from $198 million as of Dec 31, 2012. Senior notes as of Jun 30, 2013 were $596.7 million, approximately flat as of Dec 31, 2012. During the quarter, the company generated $7.0 million in cash from operations.


Cloud Peak Energy expects coal shipments for three operated mines in the range of 88 million to 92 million tons. The company estimates Asian exports to be approximately 5 million tons in 2013. It expects adjusted EBITDA in the range of $210 million to $250 million.

Other Company Releases

Recently, Alliance Resource Partners, L.P. ( ARLP ) announced second quarter 2013 operating earnings of $1.96 per unit, up 21.7% from the Zacks Consensus Estimate of $1.61. The results of the partnership were 7.1% higher than the year-ago earnings of $1.83 per unit.

Diversified fuel producer CONSOL Energy Inc. ( CNX ) reported a loss of 3 cents per share for the second quarter of 2013, widely missing the Zacks Consensus Estimate of earnings of 18 cents.

Peabody Energy Corporation ( BTU ) reported second quarter 2013 earnings of 33 cents per share, trumping the Zacks Consensus Estimate of a loss of 5 cents. However, earnings were 54.8% lower than 73 cents generated in the year-ago quarter.

Our Take

Though Cloud Peak's top line was in line with the Zacks Consensus Estimate, its bottom line widely missed our expectation. The results reflect lower realized prices, higher operating expenses and unplanned power plant outages. However, going forward, with decreasing PRB coal stockpiles, the fundamentals of the company would likely improve. The company presently retains a short-term Zacks Rank #3 (Hold).

ALLIANCE RES (ARLP): Free Stock Analysis Report

PEABODY ENERGY (BTU): Free Stock Analysis Report

CLOUD PEAK EGY (CLD): Free Stock Analysis Report

CONSOL ENERGY (CNX): Free Stock Analysis Report

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Zacks Investment Research

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

This article appears in: Investing , Business , Stocks

Referenced Stocks: ARLP , BTU , CLD , CNX

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