"didnt coal executive be saying that 135 million be the new 'normal'?"
Quite possible. I was out of the loop for almost 2 months now (vacation) just catching up with the data ... did not even listen ACI's last CC.
If thermal inventories are normal, the thermal coal margins are going to be closer to normal. Despite lower inventories and the increase in PRB prices, I do not see an increase in PRB production ... tells me that we are probably going to see lower inventories going into the cooling season. I was hoping to see $13 PRB in April 2014 ... did not happen. Now I hope to see $13.5 PRB in July. Btw, if you remember, last year today spot PRB price was $9.5
In any case, thermal recovery is a done deal ... wish I can say the same for met coal. So, we can all stock following weather forecast and EPA-related news!
Also, strange for an executive use total inventory number like that ... maybe it was non-coal executive (from CAT, or JOY, or railroad executive). For coal executives, numbers in basins are much more important ... and in 8 days we will get inventories for PRB basin in "Electricity Monthly" report.
Stockpiles at utilities as of end of January are at 142 mill tons.
They now revised end of February estimations down to 137 mill tons (from 144 mill tons in the last month release)
"I think ACI will generate profits and significant FCF in 2015"
Profits - no
Significant FCF - no (if significant is 200 mill or more)
Positive FCF - maybe
To generate positive FCF they need at least 725 mill EBITDA. Can you elaborate where will they get that in 2015? It would be great if you can break it down by segments. Thank you.
He is right. ACI really needs Met prices to recover.
If you are interested in numbers, I posted breakdowns many times. Below is what I still remember from the last time I looked at numbers (which was in December 2013)
Cash Outflow (for 2014):
ACI is going to spend $360-370 mill in interest payments in 2014. $220 mill CAPEX, $130 mill SG&A (If I remember the number correctly). So ACI roughly needs $720 mill cash margins per year to be break even of cash flow basis.
Cash Inflow (for 2014):
I posted more precise numbers before, but ACI will probably get PRB $2.5-2.6 cash/st margins on PRB coal in 2014 and ship roughly 120 mill tons which will bring 300 mill/year.
Other thermal coal (Illinois, that mine in Utah, and CAPP) will bring, say $70 mill/year.
so, total it will get $370. So, they need $350 cash from met coal to be cash flow neutral. So, yes, given the recovery in PRB is a done deal, it is all about Met Coal prices, run_by_hr is correct. They can become cash neutral if the benchmark for Aus FoB HCC (which is less and less relevant) is at $155 (which now looks like an attractive price :( ) and they sell 10 mill tons, including Leer.
So, to sum up, ACI needs 155 bench in 2014 to be cash flow neutral, and $143 in 2015 to be cash flow neutral.
PRB is the only bright spot now. Thermal coal prices are going to bring incremental YoY $80 (give or take) mill EBITDA improvements in 2014 and 2015, mostly because of PRB prices (2014 pricing was disclosed, 2015 pricing is taken from the curve). EIA published inventories for PRB (for end of Dec 2013) and they are back to 2006 levels. Given that production did not increase in January and February (many sources, ARA, EIA), consumption ... you guessed it: was higher, PRB price will probably continue to move along the curve. Hard to imaging that utilities will be able to drain stockpiles in 2014 as they did in 2013. So prices will response.
Yes, I regret that I did not short JRCC!
I said many times that I do regret holding ACI. My initial buy was at 10+.
Now it is probably even smaller and therefore less attractive for shorting ... if I remember your argument correctly
Unfortunately, other Arch mines.
Looks like the right side of history is approaching fast. It is a race now between right side of history and met coal prices.
"you want the government to meddle with(subsidize) coal plants toxic coal ash"
Not that I approve the original post ... but where did you find in his post that he wants government to subsidize that?
"So is this the Almighty "price recovery" that the CEO's of ACI and BTU both stated on their last cc? "
Please post the quotes that you referring to and I answer you.
"If so... ALL IN!!"
Did you read my post? I recommend CLD as a better play than ACI at this point with current met coal price environment
"Especially since Leer is gonna be accretive to "earnings" THIS year"
Did they say earnings or EBITDA? I bet it is EBITDA, even if they used earnings, they referred to EBITDA. And yes, with current price environment, Leer will bring around 60 mill to EBIDTA running at full speed, so you would expect 10% or so less in 2014 when it will pick up speed in the first two months of 2013. Can you provide calculations proving that Leer is not going to affect EBITDA postitively? I provided mine in previous posts.
"which mean you have been losing your arss in ACI stock "
"and still trying to predict coal recovery."
I predicted PRB coal recovery and it did happen. Please find a post where I predicted non-PRB price recovery! Actually, prediction time is over, PRB has pretty much recovered.
"Maybe mild coal recovery in 2018"
Can you explain what coal will recover in 2018 and why. Especially why in 2018 as oppose to 2017 for example.
Could you please explain to me the paradox: you claim that the stock will fall and yet long the stock? For me it does not make sense! What makes sense is to act on your beliefs and short the stock!
Writing negative stuff about the company and being long is great (given that most people are biased according to they position in the stock and ignore data that contradict that position). But claiming that stock will fall, and being long is a different story.
If you are long and believe what you write, I have only one explanation: you are trying to fool yourself:
1. If the stock will fall and you were long, your posts will let you think "I knew it all along and hey, I even wrote about it on this board"
2. If the stock will rise: you were long after all and just wanted to cover all bases with your posts.
So, you would think that in all outcome you would come out as a winner in your head? Even position of Jimohn320 (AKA "I will be on a right side of history") makes more sense.
None of what I wrote about you makes sense when applied to a normal person! In fact what I wrote here is pretty stupid, yet, this is the best explanation that I was able to come up with.
So, again, could you please explain to me the "Paradox Nishan"?
In early April 2013 (9 months ago), the were trading at $9.11. If you believe NG rise has a lot to do with this, compare NG futures with PRB futures. NG futures are in serious backwardation until 2016 (btw, strange that noone mentioned it in this thread), PRB is in a beautiful contango. Yes, cold weather has a lot to do with this, but it is not nearly a reason for PRB price increase of such magnitude. Remember that the biggest increase of the latest rally in PRB happened in November, when spot reached $12 briefly, at that time one cold week in December is the only thing that was predicted for winter. Also, compare PRB price recovery of 2009, if I remember correctly, we are just one quarter behind the recovery trajectory that happened at that time. And, btw, the spot price went up from $12 to $14.5 in 1 quarter. While ACI will reap some benefits from selling into spot in 2014, and may even get slightly over $13.31 for its PRB coal, the main $$$ are coming from long-term pricing for end of 2014, 2015, 2016.
Bottom line: guys, buy CLD! It is $27 stock by mid 2015. ACI can go higher in percentage terms, but risk- adjusted, CLD is a better value. CLD needs things to not happen (recession, drop in NG, cool summer). ACI, on top of that, needs some things to happen to get to 60% return, namely, increase of met coal spot of at least 15% (which can happen in 1 month of course, or may not happen).
Disclaimer: I do not have CLD. I am long ACI (since 10,5 or so)
Out of 120 mill tons that will be sold in 2014 with everything average-ish. This is an increase from 2013 levels.
Demand does not go up 30% (seasonally adjusted). Demand changes marginally. If we are lucky, ACI will produce 125 mill tons, if we are extremely lucky ACI will produce 130 mill tons from PRB.
First of all, Mood's analyst is so bad. And I described their errors before in this thread.
Second of all, even Moody's analyst probably said that PRB should be 13-14 AND Met coal should be above $170 for aus HCC FoB. How could you ignore the part with met coal price?
They revised coal stockpiles higher by 2 mill tons.Previously (13 days ago) they reported inventories of 153.5M tons, now 155.7M tons.
Interesting that PRB inventory increased too (second time during the year)
ACI will not show profit with just high price of PRB. To be breakeven on cashflow basis with just PRB (and current met coal price environment), they need $15.5 average selling price. Given that they sold 80%+ of 2014 PRB at $13.2, there is virtually no change of that happening in 2014. Same is probably true for 2015.
ACI need met coal recovery!