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Arch Coal announces Q1 2019 results

Coal News - Published on Thu, 25 Apr 2019

Image Source: Bloomberg
Arch Coal, Inc reported net income of USD 72.7 million, or USD 3.91 per diluted share, in the Q1 2019, compared with net income of USD 60.0 million, or USD 2.74 per diluted share, in the prior-year period. The company earned adjusted earnings before interest, taxes, depreciation, depletion, amortization, accretion on asset retirement obligations, and non-operating expenses ("adjusted EBITDA")1 of USD 107.3 million in the Q1 2019, which includes a USD 13.0 million non-cash mark-to-market gain associated with the company's coal-hedging activities. This compares to USD 104.9 million of adjusted EBITDA recorded in the Q1 2018. Revenues totaled USD 555.2 million for the three months ended March 31, 2019, versus USD 575.3 million in the prior-year quarter.

Mr John W Eaves, Arch's chief executive officer, said that "Arch is out of the gates in excellent fashion in 2019 with yet another strong operating performance, a robust level of capital returned to shareholders, and significant progress in the development of our next world-class coking coal mine."

Mr Eaves said that "During the Q1, we captured record margins from our coking coal portfolio, exhibited solid cost control in our Metallurgical segment during a lighter-than-ratable shipping quarter, and overcame flood-related rail service disruptions at our Powder River Basin operations. In addition, we returned USD 86 million to shareholders under our capital return program, bringing the total returned since the program's inception to USD 726 million. All told, Arch has now bought back nearly one third of our initial shares
Mr Paul A Lang, Arch's president and chief operating officer, said that "Our coking coal operations performed exceptionally well during the quarter as we captured record per-ton realizations on coking coal sales, delivered a solid cost performance and achieved record margins, even with the anticipated, lower-than-ratable shipments. This strong performance more than offset lower volumes in both our Powder River Basin and Colorado operations, where we were adversely affected by widespread rail outages stemming from historic flooding in the Midwest in February and March."

MetallurgicalQ1 2019Q4 2018Q1 2018
Tons sold1.82.11.8
Coking1.51.91.5
Thermal0.30.20.3
Coal sales per ton sold118.22121.53115.97
Coking133.22130.49131.90
Thermal34.6637.8331.37
Cash cost per ton sold67.2774.8468.33
Cash margin per ton50.9546.6947.64
 

million tonnes

As anticipated, the Metallurgical segment turned in what Arch expects to be its lowest shipping quarter of the year due to an accelerated shipping schedule in the fourth quarter of 2018, the seasonal closure of Great Lakes shipping channels, and scheduled longwall moves at both the Leer and Mountain Laurel mines.

The average per-ton realization on coking coal sales increased 2 percent versus the already strong levels achieved in the fourth quarter of 2018, while per-ton cash costs declined 10 percent to USD 67.27. While higher than the guidance range for the full year, coking coal costs were appreciably lower than initially forecast due in part to higher-than-anticipated shipping levels. The segment's average cash margin increased 9 percent to a record USD 50.95 per ton.

Looking ahead, Arch's second quarter coking coal sales volumes are likely to be roughly 10 percent higher than those experienced in the first quarter, with moves once again scheduled at both of the segment's longwall mines. Lang said "We remain comfortable with our full year guidance for both volume and costs, and expect a very strong performance from our Metallurgical segment in the second half of the year."

Powder River BasinQ1 2019Q4 2018Q1 2018
Tons sold17.119.519.7
Coal sales per ton sold12.1811.8812.15
Cash cost per ton sold10.9810.6610.77
Cash margin per ton1.201.221.38
 

million tonnes

In the Powder River Basin, sales volumes totaled 17.1 million tons, which was approximately 13 percent lower than the Q4 2018. Despite these low volume levels, the Powder River Basin segment achieved an average per-ton cost of USD 10.98, consistent with the guidance range provided for full-year 2019.

Looking ahead, Arch expects flood-related rail disruptions to persist for most of the second quarter, which is historically the lowest-volume quarter of the year. As a result, Arch expects second quarter volumes to come in below first-quarter levels, which will also pressure operating costs. Despite these second quarter impacts, Arch remains comfortable with its full-year thermal coal volume guidance, as well as its cash cost guidance of $10.70 to $11.00 per ton in the Powder River Basin.

Other ThermalQ1 2019Q4 2018Q1 2018
Tons sold1.72.32.2
Coal sales per ton sold 38.5834.8935.59
Cash cost per ton sold35.2828.7628.53
Cash margin per ton3.306.137.06
 

million tonnes

Source :

Posted By : Sanju Moirangthem on Thu, 25 Apr 2019
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