Analysts’ estimates and 2014 guidance for Arch Coal
A vital preview of Arch Coal's 2014 earnings (Part 5 of 5)
2014 guidance
Arch Coal (ACI) expects to sell 124–130 million tons of thermal coal and 6.3–6.9 million tons of metallurgical coal in 2014, according to 2014 guidance published on October 28, 2014.
The company has committed $111.3 million tons of Powder River Basin (or PRB) coal in 2014. However, the company expects some of it to roll over to 2015 due to rail issues.
Appalachian thermal shipments are expected to be 7.4 million tons, while metallurgical coal shipments may come in at 6.7 million tons. Other regions are expected to sell around 8.5 million tons of thermal coal in 2014. Capital expenditure is expected to be around $160–$170 million.
Implied 4Q2014 guidance
Since the company has already sold 94.2 million tons of thermal coal in 9M14, the guidance implies fourth quarter thermal coal shipments of 32.8 million tons at the midpoint. Metallurgical coal shipments for 4Q14 are expected to be around 1.75 million tons. Capital expenditure for the fourth quarter is expected to be $46.3 million.
Wall Street analysts’ estimates
Analysts expect Arch Coal (ACI) to generate $742 million in revenues in 4Q14. Adjusted earnings before interest, taxes, depreciation, and amortization (or EBITDA) are expected to be around $87.5 million. Net losses are expected to be around $78.6 million, $0.375 per share.
The bottom line
Earnings for 4Q14 may not have great surprises for investors in Arch Coal (ACI) since almost all the expected shipments are already committed and priced.
The company has taken efforts to curtail costs in the past few quarters. Analysts will be eager to know if there’s any more steam left in those efforts. How natural gas prices and, in turn, coal prices pan out will be a key to Arch Coal’s recovery in the coming quarters.
For more analysis on Arch Coal (ACI), Peabody Energy (BTU), Alpha Natural Resources (ANR), Cloud Peak Energy (CLD), and other coal producers (KOL), continue to our coal section.
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