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Arch Coal, Inc. Reports Second Quarter 2009 Results.

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ST. LOUIS, July 24 /PRNewswire-FirstCall/ --



Earnings Highlights ------------------- Quarter Ended Six Months Ended In $ millions, except per share data 6/30/09 6/30/08 6/30/09 6/30/08 --------------------- ------- ------- ------- ------- Revenues $554.6 $785.1 $1,235.7 $1,484.5 Income from Operations 7.3 169.2 45.9 285.9 Net Income (Loss)(1) (15.1) 113.0 15.5 194.1 Fully Diluted EPS (0.11) 0.78 0.11 1.34 ------------------ ----- ---- ---- ---- Adjusted EBITDA(2) $75.8 $240.9 $187.4 $430.4 (1)- Net income (loss) attributable to ACI. (2)- Adjusted EBITDA is defined and reconciled under "Reconciliation of Non-GAAP Measures" in this release.

Arch Coal, Inc. today reported a net loss of $15.1 million, or $0.11 per fully diluted share, in the second quarter of 2009 compared with net income of $113.0 million, or $0.78 per fully diluted share, in the second quarter of 2008. The company recorded adjusted earnings before interest, taxes, depreciation, depletion and amortization ("EBITDA") of $75.8 million in the second quarter of 2009 versus adjusted EBITDA of $240.9 million in the prior-year period when coal markets were at a peak.

During the second quarter of 2009, sales volumes were reduced by 20 percent and revenues declined 29 percent versus the year-ago quarter, consistent with previously announced expectations. Results for the quarter just ended also included $3.0 million of expenses associated with Arch's pending acquisition of the Jacobs Ranch mine.

"As expected, our financial results reflect the impact of four longwall moves in the quarter and further reductions in volume levels to match curtailed demand," said Steven F. Leer, Arch's chairman and chief executive officer. "We believe that the trough of the current coal market cycle has been reached, and anticipate better industry supply and demand balance and improving company financial performance in the second half of the year."

During the first half of 2009, Arch earned net income of $15.5 million and adjusted EBITDA of $187.4 million. Company results included $6.4 million of acquisition-related expenses pertaining to Jacobs Ranch. By comparison, Arch earned net income of $194.1 million and adjusted EBITDA of $430.4 million during the first half of 2008 when market conditions were much stronger.

"Arch remains focused on managing through a challenging 2009," said Leer. "We are continuing our aggressive efforts to reduce operating costs and capital spending across the organization to ensure profitability despite extremely weak market conditions."

"Looking ahead, we are positioning the company to capitalize on the inevitable rebound in coal demand," continued Leer. "While trends remain generally soft for the broader U.S. economy and for our customers, we are encouraged by the swift pace of domestic coal supply rationalization, signs that the economic recession has bottomed out and recovering global and domestic steel utilization. These trends - along with the resumption of power demand growth - will help improve coal market fundamentals."

Operational Results

"Arch's operational performance in the second quarter of 2009 relative to the first quarter was hampered by lower average price realizations in our Powder River Basin and Central Appalachian regions as well as the cost impact of lower volumes and four longwall moves," said John W. Eaves, Arch's president and chief operating officer.

"For the remainder of 2009, we anticipate improving operational performance," added Eaves. "This includes expected stabilization in coal markets, continued progress on recent and ongoing cost-containment efforts at our operations and only one scheduled longwall move in the second half of the year."

Arch Coal, Inc. 2Q09 1Q09 2Q08 ---- ---- ---- Tons sold (in millions) 27.4 30.6 34.4 Average sales price per ton $19.43 $20.94 $21.04 --------------------------- ------ ------ ------ Cash cost per ton $16.26 $16.53 $14.75 Cash margin per ton $3.17 $4.41 $6.29 ------------------- ----- ----- ----- Total operating cost per ton $18.74 $18.90 $16.83 Operating margin per ton $0.69 $2.04 $4.21 ------------------------ ----- ----- ----- Consolidated results may not tie to regional breakout due to rounding. Above figures exclude transportation costs billed to customers. Operating cost per ton includes depreciation, depletion and amortization per ton. Amounts reflected in this table exclude certain coal sales and purchases which have no effect on company results. For further description...

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