Alpha Natural Resources Inc. (ANR) reported a loss of 61 cents per share for the third quarter of 2013, narrower than the Zacks Consensus Estimate of a loss of 76 cents. The loss per share was, however, wider than the year-ago loss of 16 cents.
The huge loss reflects lower tons of coal sold and a decline in the weighted average coal margin per ton.
The company's GAAP loss was $2.07 per share versus a net loss of 21 cents per share a year ago. The variance between pro forma and GAAP loss was due to asset impairment charges, restructuring charges and other one-time charges and gains.
Total Revenue
Alpha Natural Resources' total revenues of $1,191.1 million in the third quarter were higher than the Zacks Consensus Estimate by $3.9 million. However, the results were 27.0% lower than the year-ago figure.
The significant year-over-year decline reflects lower average realizations for metallurgical and steam coal, and lower shipments of both Eastern and Western steam coal.
Highlights of the Release
In the quarter under review, Alpha Natural Resources' Eastern metallurgical coal shipment was 5.0 million tons, up 3.6% year over year. The company's shipment of Powder River Basin (“PRB”) coal slumped 23.7% year over year to 10.1 million tons. Alpha Natural Resources shipped 6.7 million tons of Eastern steam coal, down 31.7% year over year.
The average per ton realization on metallurgical coal dropped 27.1% year over year to $94.73.
Alpha Natural Resources' total cost and expenses were $1,738.7 million, up 1.2% year over year.
Financial Update
Cash and cash equivalents of Alpha Natural Resources as of Sep 30, 2013 were $668.1 million versus $730.7 million as of Dec 31, 2012.
Long-term debt as of Sep 30, 2013 was $3,344.7 million, up from $3,291.0 million as of Dec 31, 2012.
Alpha Natural Resources' capital expenditure during the quarter was $56 million versus $87 million in the prior-year quarter.
Guidance
In 2013, Alpha Natural Resources expects to ship 86 to 91 million tons of coal, which will include 20 to 21 million tons of Eastern metallurgical coal, 28 to 30 million tons of Eastern steam coal, and 38 to 40 million tons of Western steam coal out of the PRB.
In 2014, the company expects to ship 79 to 90 million tons of coal, which will include 18 to 22 million tons of Eastern metallurgical coal, 24 to 28 million tons of Eastern steam coal, and 37 to 40 million tons of Western steam coal out of the PRB.
Selling, general and administrative expenses are expected to be in the range of $140 million to $160 million for 2013 and $110 million to $140 million for 2014.
Interest expense is expected to range from $235.0 million to $245 million in 2013 and $240.0 million to $255 million in 2014.
Alpha Natural Resources' full-year 2013 capital expenditure is expected to be in the band of $260.0 million to $290.0 million while it is expected to be in the range of $250.0 million to $350.0 million in 2014.
Other Company Releases
CONSOL Energy Inc. (CNX) reported a loss of 24 cents per share for the third quarter of 2013, widely missing the Zacks Consensus Estimate of earnings of 3 cents.
SunCoke Energy, Inc. (SXC) reported earnings per share of 9 cents beating the Zacks Consensus Estimate of 7 cents by 28.6%. Earnings however lagged the year-ago figure by 45 cents.
Arch Coal Inc. (ACI) reported third-quarter 2013 loss of 1 cent per share, much narrower than the Zacks Consensus Estimate of a loss of 30 cents. The company had however reported earnings per share of 20 cents in the prior-year quarter.
Our View
Alpha Natural Resources’ top and bottom line succeeded in beating the Zacks Consensus Estimate. However, the company incurred a much wider loss in the quarter compared to the year-ago period. Also, revenues declined year over year as a result of lower average realizations and shipments. The numbers reflect a tough market environment and an unplanned outage at the company’s Cumberland mine.
However, the company believes that the metallurgical coal market is gradually improving. Also, the company is planning to reduce operating and support expenses by at least $200 million annually in 2014 and beyond. These initiatives will enable the company to improve its financial position.
Abingdon, Va.-based Alpha Natural Resources Inc. with its subsidiaries engages in the production and selling of steam and metallurgical coal in the U.S. The company currently has a Zacks Rank #3 (Hold).
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