Alpha Natural Resources Earnings: Investors Love These Numbers

Alpha Natural Resources Inc. (NYSE:ANR) dropped to a third quarter loss, but results topped expectations. Alpha Natural Resources is a supplier and exporter of metallurgical coal for use in the steel-making process and a major supplier of thermal coal to electric utilities and manufacturing industries across the country.

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Alpha Natural Resources Inc. Earnings Cheat Sheet

Results: Reported a loss of $46.1 million (21 cents per diluted share) in the quarter. Alpha Natural Resources Inc. had a net income of $66.4 million or 29 cents per share in the year-earlier quarter.

Revenue: Fell 29.1% to $1.63 billion from the year-earlier quarter.

Actual vs. Wall St. Expectations: Alpha Natural Resources Inc. reported an adjusted net loss of 16 cents per share. By that measure, the company beat the mean analyst estimate of a loss of 44 cents per share. It fell short of the average revenue estimate of $1.9 billion.

Quoting Management: “Market conditions for both metallurgical and thermal coal have been challenging throughout much of 2012, and continued in the third quarter,” said Kevin Crutchfield, Alpha’s chairman and CEO. “In the face of these market headwinds, Alpha has taken swift and decisive actions to right-size our operational footprint and our cost structure. In September, we announced a plan to reduce our annualized production rate by an additional 16 million tons. These actions are being taken in a pricing environment where we estimate that the majority of U.S. thermal coal would be uneconomic to produce at today’s spot market prices and, similarly, metallurgical coal has fallen to levels at which a significant percentage of worldwide supply is uneconomic.”

Key Stats:

A year-over-year revenue decrease last quarter breaks a four-quarter streak of revenue increases. The best quarter in that span was the third quarter of the last fiscal year, which saw revenue rise more than twofold.

After two quarters of falling short, the company beat estimates last quarter. In the second quarter, it missed the mark by 3 cents, and in the first quarter, it came in under estimates by 20 cents.

Looking Forward: Analysts seem more negative about the company’s results for the next quarter than ninety days ago. The average estimate for the fourth quarter has moved from a loss of 23 cents a share to a loss of 51 cents over the last ninety days. For the fiscal year, the average estimate has moved from a loss of $1 a share to a loss of $1.49 over the last ninety days.

Competitors to Watch: Massey Energy Company, Peabody Energy Corporation, Arch Coal, Inc., Patriot Coal Corporation, Intl. Coal Group, Inc., CONSOL Energy Inc., Oxford Resource Partners, LP, Alliance Resource Partners, L.P., Alliance Holdings GP, L.P., and Westmoreland Coal Company.

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(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

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