Arch Coal Inc. ARCH reported third-quarter 2017 operating earnings of $2.54 per share, beating the Zacks Consensus Estimate of $1.58 by 60.7%. In the year-ago quarter, the company incurred a loss of $1.43 per share.
Total Revenues
Total revenues in the reported quarter were $613.5 million, surpassing the Zacks Consensus Estimate by 14.3%.
Total revenues registered sequential growth of 12%, which reflects ongoing strength in coking coal pricing as well as strong performance in the Powder River Basin and Other Thermal segments.
Arch Coal Inc. Price, Consensus and EPS Surprise
Arch Coal Inc. Price, Consensus and EPS Surprise | Arch Coal Inc. Quote
Segment Details
In its Metallurgical segment, the company sold 2.2 million tons of coal compared with 2.1 million tons in the second quarter. Due to difficult mining conditions and rail service issues in the Metallurgical segment, Arch recorded cash margins of $24.14 compared with $29.64 in the prior-quarter period.
During the quarter, Powder River Basin segment cash margin per ton increased nearly 30% sequentially, driven by lower cost per ton in the segment. Sales volumes increased 20% compared with the prior-quarter period, reflecting typical seasonal demand trends.
In the Other Thermal segment, Arch earned a cash margin of $9.03 per ton in the third quarter compared with $11.35 per ton in the second quarter. Average sales price per ton during the quarter increased 5% to $35.08 due to a favorable mix of customer shipments and strong pricing on export sales. However, cash cost per ton increased nearly $4 from the prior quarter, resulting in a decline in cash margin.
Guidance
Taking into consideration a drop in demand in coking coal, the company now expects its 2017 coking coal sales volume to range between 6.6 million and 6.8 million tons, down from the prior guidance of 6.9 million to 7.1 million tons.
The company raised thermal coal guidance. Arch Coal now expects it to be between 90 million and 96 million tons in 2017, up from the prior expectation of 87-95 million tons.
Arch expects its total 2017 coal sales volume to be between 96.6 million and 102.8 million tons, up from previous expectation of 93.9 million and 102.1 million tons.
Financial Highlights
Cash and cash equivalents as of Sep 30, 2017 were $298.4 million compared with $305.4 million at the end of 2016.
Long-term debt as of Sep 30, 2017 was $312.6 million compared with $351.8 million at the end of 2016.
Cash provided from (used in) operating activities in first nine months of 2017 was $302.1 million compared with $31.2 million in the year-ago period.
Since the commencement of the capital allocation program in early May 2017, Arch has returned nearly $235 million to shareholders through share repurchases and dividends.
Zacks Rank
The company currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Peer Releases
Cloud Peak Energy CLD reported third-quarter 2017 earnings of 3 cents per share, beating the Zacks Consensus Estimate of 2 cents by 50.0%.
Peabody Energy BTU reported third-quarter 2017 earnings of $1.49 per share, beating the Zacks Consensus Estimate of $1.37 by 8.7%.
CONSOL Energy CNX incurred third-quarter loss per share of 15 cents against Zacks Consensus Estimate of earnings of 3 cents.
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