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Arch Coal Inc. Message Board

  • richard861@ymail.com richard861 Feb 6, 2013 9:14 AM Flag

    Why ACI may be an interesting investment now..comments encouraged.

    I prepared over the weekend and posted on ANR's board before ACI's earnings release.

    IMO, it seems ACI has the most upside of ACI, ANR and BTU.

    Hope this is helpful. Comments encouraged.

    The following represents ACI, ANR and BTU, in that order. The figures are approximate:

    1) Revenue in billions(B) of $: 4.4, 7.4, 8.2
    2) Gross margin in %: 19, 13.5, 26
    3) Employees: 7,442, 12,800, 8,300
    4) 2012 production in millions(M) of tons: 140, 115, 248
    5) Shares o/s in Ms: 213, 220, 268
    6) Revenue per employee in 000’s $: 594, 575, 972
    7) Tons of coal shipped annually per employee: 18,812, 8,984, 29,940
    8) Annual G + A in Ms of $: 135, 210, 269
    9) G + A per ton produced in 2012 $: 0.98, 1.83, 1.08
    10) EBITDA in Bs of $: 0.72, 0.70, 1.84
    11) G + A as a % of EBITDA: 19, 30, 15
    12) Goodwill + Intangibles (G+I) still on books in Bs of $: $0.48, $1.01, 0
    13) PP&E (inc. G+I) in Bs of $: 8.2, 10.9, 13.2
    14) Reserves in Bs of tons: 5.6, 4.9, 9
    15) PP&E per ton of reserves in $: 1.46, 2.37, 1.46
    16) 2012 DD&A in Ms of $: 515, 1,020, 663
    17) 2012 DD&A per ton of production in $: 3.68, 8.87, 2.67
    18) Cash in Bs of $: 1.246, 0.925, 0.559
    19) TBV per share: 12.1, 18.58, 18.1
    20) PPS at close Mon 4 Feb 2012: 6.93, 8.69, 24.69
    21) PPS as a % of TBV: 57, 47, 136
    22) Long term bank and note debt in Bs of $: 4.4, 3.3, 6.2

    If the above is correct, in order for ANR to lower the carrying value of it's reserves to equal ACI's and BTU's $1.46 of PP&E/ton of reserves in 15) above, ANR would need to take an addtional $4.15b write-down, inc. its $1.01b of G+I, equal to $18.86/shr.

    ANR's TBV after this writedown would then equal $4.30/shr.

    I estimate that ANR has $200m in planned annual cost savings in the works that will not fully be reflected in ANR's income statements until 2014.

    Further, in order for ANR to raise its gm to ACI's 19% in 2) above, ANR would need to cut $490m/yr, including the $200m "in the works."

    For ANR to meet BTU's 26% gm in 2) above, ANR would need to cut $900m/yr.

    All of the above figures come from financial filings and therefore should be factual, not opinions, should my figures and interpretations be correct.

    Thanks and GLTA, Richard

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ACI
2.91+0.04(+1.39%)Jul 24 4:05 PMEDT

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