Arch Coal Reports Q2 Net Income of US$43 Million

- July 31st, 2018

The revenue growth experienced by the US coal producer is the result of increased production and growing thermal and coking coal prices.

Industrial metal miner Arch Coal (NYSE:ARCH) has released its Q2 operational and financial update. The company reported a net income of US$43.3 million during the second quarter of 2018, a US$6.1 million increase from the same period last year.

The revenue growth experienced by the US coal producer is a result of increased production and growing thermal and coking coal prices.

“Arch delivered solid operating results during the second quarter of 2018, reducing costs in our key operating areas, exceeding sales volume expectations in both the metallurgical and powder river basin segments, and addressing and overcoming the operating challenges from the first quarter,” Paul Lang, Arch’s chief operating officer said a press release.

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While the first quarter of the year proved challenging for the American coal producer, coking coal sales volumes increased 13 percent during Q2. The double digit increase is likely a result of improved rail performance, favorable timing on export loadings and solid execution on the two scheduled longwall moves at Leer and Mountain Laurel.

Arch reported a second quarter metallurgical cash margin of US$43.05 per tonne. Total per tonne coal sales during Q2 were also up 3 percent.

In addition to a production bump, Arch has been actively repurchasing shares to increase the value of the company since May 2017. The company has invested more than US$419 million to repurchase 5.3 million shares, representing a 21 percent reduction in Arch’s share count.

During the second quarter, US$78 million was used to buy back approximately 960,000 shares of common stock, representing 3.8 percent of shares outstanding.

“Arch capitalized on a strong operating performance, robust coking coal markets and an improving logistics system to again generate very substantial levels of free cash flow during the quarter just ended,” said John Eaves, Arch’s chief executive officer.

He continued: “We used that free cash flow to buy back US$78 million of stock, or nearly one million shares, as we continued to execute on a capital return program that we believe is creating excellent value for our shareholders.”

The favorable second quarter results, keep Arch in aim of its 2018 targets, which include the sale of 6.3-6.7 million tonnes of coking coal, and 80-84 million tonnes of thermal coal.

Arch Coal stock was up 4 percent to US$84.25, at midday on Tuesday (July 31).

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Securities Disclosure: I, Georgia Williams, hold no direct investment interest in any company mentioned in this article.

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