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Arch Coal's (ARCH) Q3 Earnings and Revenues Beat Estimates

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Arch Coal Inc. (ARCH - Free Report) reported third-quarter 2019 operating earnings of $4.03 per share, which beat the Zacks Consensus Estimate of $3.29 by 22.5%.
 
The impressive results can be attributed to excellent cost performance and strong sales volume in its Metallurgical and Power River Basin segments.

Total Revenues

Total revenues in the reported quarter amounted to $619.5 million, which beat the Zacks Consensus Estimate of $584 million by 6.1%. However, the figure declined 2.2% on a year-over-year basis due to lower sales price in the metallurgical segment.

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

Segment Details

In the Metallurgical segment, the company sold 2.1 million tons of coal compared with the prior-year figure of 1.9 million tons. It recorded cash margins of $34 per ton compared with $42.21 in the year-ago quarter, owing to lower sales price.

During the quarter, the Powder River Basin segment’s cash margin per ton decreased by a penny on a year-over-year basis to $2.25. The company sold 22.2 million tons, up from the year-ago figure of 21.5 million tons.

In the Other Thermal segment, its cash margin was $8.36 per ton, down 9.9% from $9.28 in the year-ago quarter. Shipment also declined 20% year over year to 2 million tons.

Highlights of the Release

During the quarter, the company entered into an agreement to acquire 20 million tons of low-cost, high-quality, High-Vol A coking coal reserves directly adjacent to the Leer mine for a purchase price of $52.5 million. This agreement will increase Arch Coal’s High-Vol A reserves at the Leer mine by 24 million tons at a cost of around $2.50 per ton.

During the quarter, the company repurchased 1,170,000 shares of common stock, representing 4.7% of initial shares outstanding, at a total investment of $91.4 million. In the last 10 quarters, Arch Coal invested a total of $816.9 million to buy back 10 million shares.

Financial Highlights

Cash and cash equivalents as of Sep 30, 2019 were $175.4 million compared with $264.9 million at the end of 2018.

Long-term debt as of Sep 30, 2019 was $292.8 million compared with $300.2 million at the end of 2018.

Cash provided from operating activities in the first nine months of 2019 was $334.1 million compared with $266.1 million in the comparable year-ago period.

Guidance

Arch Coal reiterated its view for coking coal volume for 2019 in the range of 6.7-7.1 million tons and total sales volume within 86.7-92.1 million tons.

Zacks Rank

Arch Coal currently holds a Zacks Rank #5 (Strong Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Upcoming Releases

Peabody Energy (BTU - Free Report) is scheduled to report third-quarter 2019 results on Oct 29. The Zacks Consensus Estimate for loss for the quarter to be reported is pegged at 41 cents per share.

CONSOL Energy Inc. (CEIX - Free Report) is slated to report third-quarter 2019 results on Nov 5. The Zacks Consensus Estimate for earnings for the to-be-reported quarter is pegged at 50 cents per share.

CONSOL Coal Resources LP (CCR - Free Report) is scheduled to announce third-quarter 2019 results on Nov 5. The Zacks Consensus Estimate for earnings for the quarter is pegged at 36 cents per share.

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