Arch Coal Inc Earnings: Fifth Straight Quarter of Expanding Margins, but Net Income Declines

Rising costs hurt Arch Coal Inc (NYSE:ACI) in the second quarter as profit dropped from a year earlier. Arch Coal, Inc. is a coal producer in the United States, which sells coal to power plants, steel mills and industrial facilities.

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Arch Coal Inc Earnings Cheat Sheet for the Second Quarter

Results: Net income for Arch Coal Inc fell to $11.1 million (6 cents per share) vs. $66.2 million (41 cents per share) a year earlier. This is a decline of 83.3% from the year earlier quarter.

Revenue: Rose 28.9% to $985.1 million from the year earlier quarter.

Actual vs. Wall St. Expectations: ACI reported adjusted net income of 44 cents per share. By that measure, the company fell short of mean estimate of 62 cents per share. It beat the average revenue estimate of $955.6 million.

Quoting Management: “The second quarter was a momentous one for Arch Coal – we announced, completed and made considerable progress in integrating the largest acquisition in our company’s history,” said Steven F. Leer, Arch’s chairman and chief executive officer. “With this acquisition, we have expanded and strengthened Arch’s value proposition – by creating a world-class global metallurgical and thermal coal franchise poised for growth – while maintaining our sharp focus on mine safety and environmental stewardship.”

Key Stats:

The company has enjoyed double-digit year-over-year percentage revenue growth for the past five quarters. Over that span, the company has averaged growth of 29.3%, with the biggest boost coming in the third quarter of the last fiscal year when revenue rose 42.2% from the year earlier quarter.

Last quarter marked the fifth consecutive quarter of gross margins expanding as the company’s gross margin expanded 2.6 percentage points to 27.9% from the year earlier quarter. Over that span, margins have grown on average 4.7 percentage points per quarter on a year-over-year basis.

The company fell short of estimates last quarter after beating the mark the quarter before with net income of 36 cents versus a mean estimate of net income of 32 cents per share.

Competitors to Watch: Peabody Energy Corporation (NYSE:BTU), CONSOL Energy Inc. (NYSE:CNX), Patriot Coal Corporation (NYSE:PCX), Massey Energy Company (NYSE:MEE), Alpha Natural Resources, Inc. (NYSE:ANR), Alliance Holdings GP, L.P. (NASDAQ:AHGP), Intl. Coal Group, Inc. (NYSE:ICO), James River Coal Company (NASDAQ:JRCC), Natural Resource Partners LP (NYSE:NRP), and Alliance Resource Partners, L.P. (NASDAQ:ARLP).

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(Source: Xignite Financials)