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Alpha Natural Resources Guides for Lower Coal Prices in 2015

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Updated

2015 guidance

Alpha Natural Resources (ANR) maintained its shipment guidance at 69 million to 80 million tons for fiscal 2015:

  • PRB (Powder River Basin) coal – 36 million to 40 million tons
  • Eastern Steam coal – 19 million to 23 million tons
  • Eastern Metallurgical coal – 14 million to 17 million tons

Meanwhile, coal price guidance was lowered for all three segments and capital expenditure guidance has been reduced by $25 million. ANR’s peer Arch Coal (ACI) lowered its shipment guidance on the expectation of reduced demand for thermal coal.

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Wall Street expectations

Wall Street analysts are expecting the company to generate revenues of about $843.7 million in 2Q15. Adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) is estimated to come in at $33.2 million. Net losses are estimated to be $166.1 million, or 74 cents a share.

Bottom line

ANR was the first major coal producer to foresee the difficult times ahead. The company started idling mines and impairing goodwill in the first half of 2013, well before its peers did. However, the company seems to have run out of cost-saving options. ANR has taken positive steps toward reducing debt in 1Q15. But with $3.3 billion of debt still on the books and a coal price recovery nowhere in sight, the company’s balance sheet remains under pressure.

For more analysis on coal producers (KOL) including Peabody Energy (BTU), Alpha Natural Resources (ANR), and Cloud Peak Energy (CLD), visit our Coal section.

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