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Arch Coal (ARCH) Beats Q2 Earnings and Revenue Estimates

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Arch Coal Inc. (ARCH - Free Report) delivered second-quarter 2019 operating earnings of $3.53 per share, which beat the Zacks Consensus Estimate of $3.31 by 6.65%. The bottom line also improved 71.3% on a year-over-year basis.

The impressive results can be attributed torecord margins,excellent cost performance and strong coking coal price realizations in the Metallurgical segment.

Total Revenues

Total revenues in the reported quarter amounted to $570.2 million, which beat the Zacks Consensus Estimate of $554 million by 2.92%. However, the figure declined 3.7% on a year-over-year basis due to lower sales volume realized in all the segments.

Segment Details

In the Metallurgical segment, the company sold 1.9 million tons of coal compared with the prior-year quarter’s figure of 2 million tons. It recorded cash margins of $53.80 per ton compared with $43.05 in the year-ago quarter, owing to higher average per-ton coking coal price realization.

During the quarter, the Powder River Basin segment’s cash margin per ton declined 43.6% year over year. The company sold 17.1 million tons, down from the year-ago quarter’s figure of 18.8 million tons.

In the Other Thermal segment, the company’s cash margin was $5.47 per ton compared with $5.58 in the year-ago quarter. Shipment also declined 5% year over year to 1.9 million tons.

Arch Coal Inc. Price, Consensus and EPS Surprise

 

Arch Coal Inc. Price, Consensus and EPS Surprise

Arch Coal Inc. price-consensus-eps-surprise-chart | Arch Coal Inc. Quote

 

Highlights of the Release

The company announced a strategic Joint Venture withPeabody Energy Corporation (BTU - Free Report) . If approved, the joint venture will allow Peabody Energy to own 66.5% and Arch Coal to own 33.5%.

Arch Coal made considerable progress in the development of its Leer South mine. The company expects longwall mining to commence in the third quarter of 2021.

During the quarter, Arch Coal repurchased 697,000 shares of common stock, representing 2.8% of initial shares outstanding at a total investment of $63.4 million. Its board of directors authorized an additional $324.5 million of expenditures for share buybacks, bringing the total authorization since the program's launch to $1.05 billion.

Financial Highlights

Cash and cash equivalents as of Jun 30, 2019 were $232.4 million compared with $264.9 million at the end of 2018.

Long-term debt as of Jun 30, 2019 was $295.3 million compared with $300.2 million at the end of 2018.

Cash provided from operating activities in the first six months of 2019 was $225.9 million compared with $144.9 million in the year-ago period.

Guidance

Arch Coal expectscoking coal volume for 2019 in the range of 6.7-7.1 million tons and total sales volume for 2019 is expected in the range of 86.7-92.1 million tons.

Zacks Rank

Arch Coal currently holds a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Upcoming Releases

Peabody Energy is scheduled to report second-quarter 2019 results on Jul 31. The Zacks Consensus Estimate for earnings is pegged at 23 cents.

SunCoke Energy, Inc (SXC - Free Report) is slated to report second-quarter 2019 results on Jul 30. The Zacks Consensus Estimate for earnings is pegged at 20 cents.

CONSOL Coal Resources LP (CCR - Free Report) is scheduled to announce second-quarter 2019 results on Aug 6. The Zacks Consensus Estimate for earnings is pegged at 53 cents.

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