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Arch Resources (ARCH) Reports Wider Q4 Loss, Beats on Sales

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Zacks Equity Research
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Arch Resources Inc. ARCH reported fourth-quarter 2020 operating loss of $2.07 per share, wider than the Zacks Consensus Estimate of a loss of $1.80. In the year-ago quarter, the company incurred a loss of 10 cents per share.

Total Revenues

Total revenues amounted to $360.6 million, which beat the Zacks Consensus Estimate of $324 million by 11.3%.

Arch Resources Inc. Price, Consensus and EPS Surprise

Arch Resources Inc. Price, Consensus and EPS Surprise
Arch Resources Inc. Price, Consensus and EPS Surprise

Arch Resources Inc. price-consensus-eps-surprise-chart | Arch Resources Inc. Quote

Segment Details

In the Metallurgical segment, the company sold 1.8 million tons of coal, down 10% from the prior-year figure of 2 million tons. It recorded cash margins of $8.59 per ton compared with $20.49 in the year-ago quarter, primarily due to lower sales price.

During the quarter, the Powder River Basin segment’s cash margin per ton was $1.58 versus $1.37 in the prior-year period. The company sold 13.3 million tons, down from the year-ago figure of 18.1 million tons. This segment benefited from a more favorable balance between production and improvement in sales price.

In the Other Thermal segment, its cash margin was ($9.21) per ton versus $3.60 in the prior-year period.

Highlights of the Release

During the fourth quarter, Arch Resources invested $57 million in the Leer South mine development, and expects to pump capital between $360 million and $390 million into the project for its completion. As of Dec 31, 2020, the company invested $306 million in the project. It is on track to commence longwall operations at the mine in third-quarter 2021. When fully operational, the mine is expected to produce up to 4 million tons of High-Vol A coking coal annually for sale in global metallurgical markets.

The company pointed out that the virus increased the metallurgical segment's per-ton costs by nearly $3, while lowering production and shipment levels by more than 200,000 tons during the quarter.

During the fourth quarter, the company took another step in the ongoing transition toward steel and metallurgical markets by contributing its Viper thermal mine in Illinois to Knight Hawk Coal, which will operate the mine going forward. As part of the transaction, Arch Coal's equity stake in Knight Hawk increased to 49.5% from 48.0%. The company expects this to be a positive development in its quest to identify and execute strategic alternatives for thermal assets.

Financial Highlights

Cash and cash equivalents as of Dec 31, 2020 were $187.5 million compared with $153.1 million at 2019-end.

Long-term debt as of Dec 31, 2020 was $477.2 million compared with $290.1 million at 2019-end.

Cash provided by operating activities in 2020 was $61.1 million compared with $419.7 million in the year-ago period.

Guidance

Arch Resources committed 6.3 million tons of coking coal volume for 2021. Total thermal coal committed for 2021 is 49.8 million tons. The company expects sales volume in the range of 57.4-62.2 million tons for 2021.

Zacks Rank

Arch Resources currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Other Releases

Peabody Energy BTU reported fourth-quarter loss of 54 cents, wider than the Zacks Consensus Estimate of a loss of 20 cents per share by 78.8%.

CONSOL Energy Inc. CEIX reported fourth-quarter earnings of 49 cents, missing the Zacks Consensus Estimate of $2.31 per share by 78.8%.

SunCoke Energy SXC reported fourth-quarter loss of 8 cents per share, narrower than the Zacks Consensus Estimate of a loss of 9 cents.

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