Arch Coal reported its fourth-quarter financial results as -$1.09 in earnings per share (EPS) and $745.2 million in revenue. This was compared to Thomson Reuters consensus estimates of -$0.38 in EPS on $729.02 million in revenue. The previous year had -$0.45 in EPS and $719.39 million in revenues.
Over the course of 2014, the company significantly reduced its cost structure in the Appalachian region. Arch Coal ramped up its low-cost Leer mine while taking its Cumberland River complex offline to make this goal happen. Still, losses are the norm and the stock recently traded under $1 per share.
At the end of December, Arch Coal said that it had available liquidity over $1.2 billion, including cash and short-term investments of $983 million and undrawn borrowings on its credit facilities.
To support the company’s financial flexibility, Arch Coal, effective immediately, will suspend the annual cash dividend on common stock. Some investors might be surprised, but this seems par for the course now. After all, who is buying Arch these days because it had a strong dividend profile?
ALSO READ: States Where the Middle Class Is Dying
Looking forward to 2015, Arch expects the domestic market to remain challenging due to the impact of mild winter weather on coal consumption and natural gas pricing and inventories. In addition, new regulations slated to take effect during the year could impact up to 25 million tons of annualized gross coal demand. As a result of these new regulations, Arch expects declines in domestic coal use of 50 million to 60 million tons for 2015. Internal estimates suggest that along with other basins declining, Central Appalachia output will fall to an unprecedented 100 million tons in 2015.
John Eaves, president and CEO of Arch, said:
During the fourth quarter of 2014, improving operational results and steady shipment levels offset the softening pricing environment, allowing Arch to deliver its highest quarterly EBITDA in over a year. Our strong cost performance in the Appalachian segment, underscored by an outstanding operational quarter at our Leer mine, demonstrates that our strategy to control costs, preserve liquidity and reduce capital outlays is effectively mitigating some of the industry-wide headwinds.
Shares of Arch Coal were up more than 6% at $1.01 in Tuesday’s premarket trading. Unfortunately, that is after closing at just under $0.95 on Monday — under that key $1 price that the New York Stock Exchange requires through time. The stock has a consensus analyst price target of $2.26 and a 52-week trading range of $0.86 to $5.37. It is harder and harder to imagine that this was a $35 stock as recently as 2011.
Top Gaining Stocks
Top Losing Stocks