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Arch Coal (ARCH) Beats on Q4 Earnings, Issues 2018 Guidance

Zacks

Arch Coal Inc. ARCH reported fourth-quarter 2017 operating earnings of $4.12 per share, beating the Zacks Consensus Estimate of $2.32 by 77.6%.

Total Revenues

Total revenues in the reported quarter were $560 million, in line with the Zacks Consensus Estimate.

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 1.8 million tons of coal compared with 2.4 million tons in the fourth quarter of 2016. Despite a difficult weather condition impacting rail service as well as unloading operations at East Coast export facilities, Arch Coal recorded cash margins of $31.32 per ton compared with $12.63 in the year-ago quarter.

During the quarter, Powder River Basin segment’s cash margin per ton decreased nearly 39.1% year over year, due to lower coal sales prices and increase in cash cost of per ton coal sold. The company sold 19.5 million tons in the fourth quarter down from 21.8 million tons in the year-ago quarter.

In the Other Thermal segment, the company earned a cash margin of $10.55 per ton in the fourth quarter compared with $12.22 per ton in the year-ago quarter. Average sales price per ton during the quarter increased 4.2% to $35.43 due to a favorable mix of customer shipments and strong pricing on export sales. However, cash cost per ton increased nearly $3.09 from the prior quarter, resulting in a decline in cash margin.

Financial Highlights

Cash and cash equivalents as of Dec 31, 2017 were $273.4 million compared with $305.4 million at the end of 2016.

Long-term debt as of Dec 31, 2017 was $310.1 million compared with $351.8 million at the end of 2016.

Cash provided from operating activities in 2017 was $396.5 million compared with $84.2 million in the year-ago period.

Since the commencement of the capital allocation program in early May 2017, Arch Coal has returned nearly $326 million to shareholders through share repurchases and dividends.

Guidance

Arch Coal expects its total 2018 coal sales volume to be between 92.4 million and 99.0 million tons out of which thermal coal sales volumes are expected to be within 86-92 million tons and coking coal in the range of 6.4-7 million tons.

The company anticipates that cash cost per ton sold in the Metallurgical and Powder River Basin segments will be similar to 2017 levels but cash cost in Other Thermal segment is expected to be higher due to production mix between the mines in the segment.

Zacks Rank

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


Peer Releases

SunCoke Energy Inc. SXC reported fourth-quarter 2017 earnings of 14 cents per share, beating the Zacks Consensus Estimate of 11 cents by 27.3%.

Peabody Energy’s BTU fourth-quarter 2017 earnings of $1.52 per share beat the Zacks Consensus Estimate of $1.33 by 14.3%.

CONSOL Energy Inc. CEIX reported fourth-quarter 2017 earnings of $1.06 per share, beating the Zacks Consensus Estimate of 63 cents by 68.3%.

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