Arch Coal Inc Earnings: Margins Shrink as Net Income Drops

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

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Arch Coal Inc Earnings Cheat Sheet for the First Quarter

Results: Net income for Arch Coal Inc fell to $1.2 million (one cent per share) vs. $55.6 million (34 cents per share) a year earlier. This is a decline of 97.8% from the year-earlier quarter.

Revenue: Rose 19.1% to $1.04 billion from the year-earlier quarter.

Actual vs. Wall St. Expectations: Arch Coal Inc fell short of the mean analyst estimate of 17 cents per share. It fell short of the average revenue estimate of $1.12 billion.

Quoting Management: “Eight operations and facilities completed the first three months of 2012 without incurring a reportable injury or receiving a single SMCRA environmental violation,” said Paul A. Lang, Arch’s executive vice president and chief operating officer.

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 30.9%, with the biggest boost coming in the fourth quarter of the last fiscal year when revenue rose 47.1% from the year earlier quarter.

The company has missed analyst estiamtes for four quarters in a row. It fell short by 2 cents in the fourth quarter of the last fiscal year, by 7 cents in the third quarter of the last fiscal year, and by 18 cents in the second quarter of the last fiscal year.

Gross margin shrank seven percentage points to 18.2%. The contraction appeared to be driven by increased costs, which rose 30.2% from the year earlier quarter while revenue rose 19.1%.

Looking Forward: The outlook for the company’s results in the upcoming quarter is unfavorable. The average estimate for the second quarter is 14 cents per share, down from 52 cents ninety days ago. At 63 cents per share, the average estimate for the fiscal year has fallen from $2.04 ninety days ago.

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

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