** charts before earnings **
Arch Coal beats by $2.15, misses on revs; high stock piles to dampen thermal coal demand and pricing throughout 2016 :
- Reports Q3 (Sep) loss of $3.38 per share, excluding non-recurring items,$2.15 better than the Capital IQ Consensus of ($5.53); revenues fell 7.2% year/year to $688.5 mln vs the $697.77 mln Capital IQ Consensus; adj. EBITDA +87% $135 mln.
- Arch has elected to terminate its $250 million revolver which will become effective on Nov 11, 2015. The co had no borrowings under its revolver and no intention to borrow under it. On a pro-forma basis, taking into consideration the termination of the revolver, Arch had liquidity of $704.4 million at September 30, 2015 with $694.5 million of that in cash and liquid securities.
- Arch now expects domestic thermal coal consumption to decline by 95 million tons during 2015. While supply cuts are well underway and will reduce U.S. thermal coal production markedly during the year, Arch nevertheless expects stockpiles at U.S. power generators to climb to more than 185 million tons, or over 90 days of supply, at year-end. These inflated levels are expected to dampen thermal coal demand and pricing throughout next year.
- Conditions in U.S. metallurgical coal markets remain challenging as well due to deteriorating global steel demand, continued strong output from Australia and a strong U.S. dollar that hinders U.S. competitiveness.
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