Peabody Energy Corporation
) reported its third-quarter 2012 operating earnings of 51 cents
per share, beating the Zacks Consensus Estimate of 34 cents.
However, the company's quarterly earnings were lower than last
year's earnings of 90 cents per share.
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The year-over-year decline in earnings was due to higher interest
expenses, and depreciation, depletion and amortization expenses;
partially offset by reduction in selling and administrative
Peabody's GAAP earnings during the third quarter of 2012 were 46
cents per share versus $1.04 per share reported in the year-ago
quarter. The difference between GAAP and operating earnings was
due to an impact of 5 cents associated with foreign income tax
In third-quarter 2012, Peabody's revenue was $2,058.8 million
compared with $1,980.6 million in the prior-year quarter,
reflecting year-over-year growth of 4%.
The company's quarterly revenue surpassed the Zacks Consensus
Estimate of $1,975 million.
Peabody's total sales volume in the third quarter of 2012 was
66.6 million tons compared with 62.9 million tons sold in the
year-ago quarter. The year-over-year increase of 6% in coal sales
was primarily driven by higher sales from Australia, and Trading
and Brokerage segments.
During the reported quarter, U.S. revenues increased by 1.1% year
over year mainly due to higher realized prices in both the
Midwestern U.S. and Western U.S. regions.
In the quarter under review, operating costs and expenses of the
company were $1.51 billion, up 7.8% than $1.40 billion in the
Rise in cost impacted Peabody's operating profit, which were
$266.5 million versus $385.5 million in the prior-year quarter.
As of September 30, 2012, Peabody had $0.65 billion in cash and
cash equivalents compared with $0.8 billion as of December 31,
As of September 30, 2012, the company's long-term debt was $6.24
billion versus $6.56 billion as of December 31, 2011.
Peabody's capital expenditure was $308.4 million in third-quarter
2012 compared with $246.2 million in the year-ago quarter.
Peabody expects its full-year 2012 earnings before interest, tax,
depreciation and amortization ("EBITDA") and adjusted diluted
earnings per share to be in the range of $1.75 billion - $1.85
billion, and $2.10 to $2.30, respectively. There are several
factors like two longwall moves in fourth-quarter 2012, lower
volumes from the U.S. operations, higher royalty rates in
Australia and lower average realized pricing, which might affect
the company's forthcoming results.
For full-year 2012, the company is targeting total sales of 240 -
250 million tons, including 31 to 33 million tons from Australia,
188 to 192 million tons from the U.S. and the remainder from
Trading and Brokerage activities. In addition, Peabody continues
to target metallurgical coal sales of 13 to 14 million tons and
seaborne thermal coal sales of 11 to 12 million tons in 2012.
The company has reduced its full-year 2012 midpoint capital
investments targets by $250 million to $1.0 - $1.1 billion due to
the current global environment.
Arch Coal Inc.
), which is competing head-to-head with Peabody Energy, is
expected to announce its third-quarter 2012 results on October
26, 2012. As per the Zacks Consensus Estimate, the company is
expected to register a loss of 14 cents in third-quarter 2012.
We believe slow recovery of the U.S. economy, reduction in
electricity generation and planned production cutbacks in the
manufacturing sector are challenging global coal demand. These
factors primarily influenced Peabody to curtail its 2012 capital
In addition, chances of facing a higher degree of competition
from natural gas due to its clean burning nature, over-reliance
on a small group of customers for Peabody's bulk sales and higher
transportation costs may create challenges for the company's
Peabody Energy Corporation currently has short-term Zacks #5 Rank
(Strong Sell rating).
St. Louis, Missouri-based Peabody Energy Corporation is a private
sector coal mining company. The company has interests in 29 coal
operations located in the United States and Australia, and has
joint venture interests in a Venezuelan mine.