Mixed 2Q at Alpha Natural Resources - Analyst Blog
August 08 2012 - 10:45AM
Zacks
Coal producer Alpha Natural
Resources (ANR) reported a loss of 33 cents per share for
the second quarter of 2012, wider than the Zacks Consensus Estimate
of a loss of 30 cents. The results of the company were markedly
lower than the year-ago earnings of 97 cents per share.
GAAP loss during the quarter was
$10.14 per share versus a loss of 32 cents per share reported in
the year-ago quarter.
Total Revenue
Alpha Natural Resource’s total
revenue of $1,848.1 million in the second quarter was ahead of the
Zacks Consensus Estimate of $1,798 million. The top line was also
higher than the year-ago figure of $1,598 million, reflecting
growth of 15.6%.
Operational
Update
During the reported quarter, the
company expanded its total volume of coal sold. The company sold
26.8 million tons registering year-over-year growth of 16.3%.
However, the average realized price per ton of coal during the
quarter decreased by $2.81.
Total cost and expenses of the
company in the reported quarter were $4.5 billion versus $1.6
billion in the year-ago quarter. The increase in cost was mainly
due to asset impairment and goodwill impairment of a cumulative
$2.5 billion.
During the quarter the company
reported an operating loss of $2.6 billion, wider than a loss of
$0.025 billion in the year-ago quarter. The downcast in bottom-line
results is mainly a function of spiraling expenses.
Financial
Update
Cash and cash equivalents of the
company as of June 30, 2012 were $252.2 million versus $585.9
million as of December 31, 2011.
Long-term debt as of June 30, 2012,
was $2.91 billion almost flat with $2.92 billion as of December 31,
2011.
Capital expenditure during the
first half of 2012 was $245.2 million compared with $172.7 million
in the comparable period, the prior year.
Cash from the operating activities
during the first half of 2012 was $135.4 million versus $294.9
million in the prior-year period.
Guidance
The company now expects its 2012
coal shipment to be in the range of 100-115 million tons versus its
previous range of 100-116 million tons.
Given the softness in coal demand
and an expected reduction in capital purchases and leasing of
selected items, the company has again reduced its 2012 capital
expenditure guidance to a range of $450 million to $600 million,
from the prior range of $450 million to $650 million.
Peer
Comparison
Alpha Natural Resources Inc.’s peer
Arch Coal Inc. (ACI) reported pro forma loss of 10
cents per share in second quarter 2012, in contrast to earnings of
44 cents per share in the year-ago comparable period. This decline
was primarily due to lower sales volume related to decline in
shipments from Powder River Basin (“PRB”) operations. The reported
loss was, however, narrower than the Zacks Consensus Estimate of a
loss of 18 cents per share.
Arch's total revenue in the
reported quarter was $1,063.5 million, up 8% from $985.5 million in
the year-ago quarter. Quarterly revenue surpassed the Zacks
Consensus Estimate of $1,020 million.
Our View
During the reported quarter, the
company decided to lower coal production from its northern and
southern Kentucky business units. The decision is in sync with the
announcement made by the company during its first quarter earnings
call. Alpha Natural Resources announced its intention to lower coal
production for 2012, taking into account declining thermal coal
demand and increasing competition from natural gas owing to falling
prices.
However, a recovery in natural gas
prices and a warmer summer will turn around demand for coal. We
believe coal stockpiles at power generating plants have also
diminished enough to reinvigorate coal demand. These factors are
sure to aid coal miners and operators.
Based in Abingdon, Virginia, Alpha
Natural Resources Inc. along with its subsidiaries engages in the
production and selling of steam and metallurgical coal in the
United States. The company was founded on 2002 and has 14,000 full
time employees.
ARCH COAL INC (ACI): Free Stock Analysis Report
ALPHA NATRL RES (ANR): Free Stock Analysis Report
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