Arch Resources reported fourth-quarter 2023 operating earnings per share (EPS) of $6.07, missing the Zacks Consensus Estimate of $6.90 by 12%. The bottom line also declined 73.81% from the year-ago quarter’s figure of $23.18.
Revenues Fall Short Despite Beating Estimates
Total revenues were $774 million, beating the Zacks Consensus Estimate of $654 million by 18.3%. However, the top line decreased 9.9% from $859 million in the year-ago quarter. For the entire year of 2023, total revenues were $3.14 billion, reflecting a year-over-year decline of 15.6% from $3.72 billion in 2022.
Performance Highlights
In the Metallurgical segment, ARCH sold 2.3 million tons of coal, which was on par with the previous year’s figure. Cash margins were $82.91 per ton compared with $93.15 in the year-ago quarter. In the Thermal segment, the company sold 15.5 million tons of coal, down 3.7% from the prior year. Cash margins were $1.64 per ton compared with $3.85 in the prior-year period.
While the company remained active in share repurchase, using $3 million to repurchase approximately 20,000 shares, it ended the year with $217.7 million remaining authorization under its existing $500-million share repurchase program. ARCH also extended its market reach of the metallurgical segment, securing six new Asian steelmaking customers during 2023, with nearly 40% of its total coking coal output shipped into the Asian market last year.
Financial Position and Guidance
As of December 31, 2023, the company’s cash and cash equivalents were $287.8 million, while long-term debt was $105.2 million. Cash provided by operating activities for the year ended December 2023 was $635.3 million compared with $1.2 billion in the year-ago period.
For 2024, ARCH expects coking coal sales in the band of 8.6-9 million tons and a total thermal coal sales volume of 58.6-65 million tons. The company also anticipates corporate capital expenditure between $160 million and $170 million in 2024.
Industry Comparison
In a comparative analysis, Warrior Met Coal reported a 21.2% lag in adjusted earnings, while Alliance Resource Partners LP and Peabody Energy reported lags of 22.8% and 5.6% respectively in their adjusted earnings for the fourth quarter of 2023. Projections for 2024 also signal a decline in earnings for these companies.
Analyst Insights
ARCH is presently rated a Zacks Rank #1 (Strong Buy), suggesting a positive outlook for the company’s performance. Notably, investors who are keen on reliable market predictions have access to Zacks #1 Rank stocks, offering a valuable insight into potential stock market winners.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
