Arch Coal (ACI) Posts Narrower-than-Expected Q3 Loss

Arch Coal (NYSE: ACI) reported Q3 EPS of ($3.38), $2.07 better than the analyst estimate of ($5.45). Revenue for the quarter came in at $688.5 million versus the consensus estimate of $678.63 million.

For the first nine months of 2015, Arch generated adjusted EBITDA of $262 million compared with $164 million in the prior-year period. Total revenues declined to $2.0 billion for the nine months ended September 30, 2015, largely due to lower metallurgical coal prices and output.

"From an operational perspective, Arch delivered an exceptionally strong performance during the quarter," said John W. Eaves, Arch's chairman and chief executive officer. "Our results reflect the actions we have taken to respond to the challenging market environment, including reducing costs and enhancing efficiency across the company. Thanks to the efforts of our skilled employees, we increased cash margins in each of our three operating regions and continued to build on our industry-leading safety and environmental stewardship records. Despite these efforts, however, the difficult conditions impacting the coal industry persist, and we expect they will continue throughout 2016."

Financial Position

"As demonstrated by our third quarter results, our operations continue to generate a significant amount of cash; and we are maintaining sufficient liquidity to continue operating as normal," said John T. Drexler, Arch's senior vice president and chief financial officer. "Our cash flow, however, is not sufficient to service our debt sustainably in this operating environment. As a result, Arch will require a significant restructuring of its balance sheet to continue to operate as a going concern over the long term. We are currently in active dialogue with various creditors with respect to a restructuring of our balance sheet. Our mining operations and customer shipments are continuing as normal and we continue to have sufficient liquidity and no near-term maturities. Regardless of what path we ultimately choose, we expect to continue providing our customers the same high quality services they have come to expect from Arch."

Arch has elected to terminate its $250 million revolver which will become effective on November 11, 2015. The company 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.

For earnings history and earnings-related data on Arch Coal (ACI) click here.

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