Business News: Arch Coal, Inc. Reports Second Quarter 2019 Results

ST. LOUIS, MO (STL.News) – Arch Coal, Inc. (NYSE: ARCH) today reported net income of $62.8 million, or $3.53 per diluted share, in the second quarter of 2019, compared with net income of $43.3 million, or $2.06 per diluted share, in the prior-year period.  The company earned adjusted earnings before interest, taxes, depreciation, depletion, amortization, accretion on asset retirement obligations, amortization of sales contracts, and non-operating expenses (“adjusted EBITDA”) [1] of $105.6 million in the second quarter of 2019, which includes an $8.4 million non-cash mark-to-market gain associated with the company’s coal-hedging activities.  This compares to $85.4 million of adjusted EBITDA recorded in the second quarter of 2018, which included a $15.1 million non-cash mark-to-market loss associated with the company’s coal-hedging activities.  Revenues totaled $570.2 million for the three months ended June 30, 2019, versus $592.3 million in the prior-year quarter.

“Arch turned in another strong operational performance during the quarter just ended, led by our core Metallurgical segment, which achieved record margins, an excellent cost performance and solid shipping volumes,” said John W. Eaves, Arch’s chief executive officer.  “At the same time, our legacy thermal operations contributed meaningful levels of cash flow despite heavy flooding that disrupted rail movements in the nation’s interior, and we announced a joint venture with Peabody Energy that will enhance the free cash flow potential of our thermal assets still further by unlocking significant synergies.  In addition, we are pleased to report that we have made excellent progress in the development of Leer South, which is ahead of schedule and now expected to commence longwall production in the third quarter of 2021.”

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During the second quarter, Arch returned $70.8 million to shareholders via buybacks and dividends under its ongoing capital return program, despite a temporary suspension of the buyback program associated with the announcement of the joint venture with Peabody Energy.  Since launching the capital return program in May 2017, Arch has returned a total of $796.4 million to shareholders via share repurchases coupled with regular dividend payments.  At quarter-end, Arch had board authorization to expend an additional $324.5 million on share buybacks, out of a total authorization of $1.05 billion.

“We remain sharply focused on driving operational excellence across our portfolio to generate long-term, sustainable returns for our shareholders,” Eaves added.  “With excellent momentum in all facets of our business, we expect to have sufficient capacity to return as much or more capital to shareholders in full-year 2019 as we averaged in 2017 and 2018, while also funding the development of Leer South.”