Coal producer Alpha Natural Resources, Inc. (ANR) reported a higher fourth-quarter profit on Tuesday, as a $393 million revenue from the acquired Foundation Coal division offset lower coal revenues from stand-alone operations.
The Abingdon, Virginia-based company's fourth-quarter net income increased to $18.0 million or $0.15 per share from $5.6 million or $0.08 per share a year ago.
Income from continuing operations decreased during the fourth quarter to $20.2 million or $0.17 per share from $33.9 million or $0.49 per share in the fourth quarter of 2008.
Alpha's adjusted income from continuing operations for the fourth quarter was $62.1 million or $0.51 per share, compared to an adjusted loss of $13.5 million or $0.19 per share in the fourth quarter last year.
On average, 19 analysts polled by Thomson Reuters estimated earnings of $0.45 per share for the quarter. Analysts' estimates typically exclude special items.
Adjusted income from continuing operations for the fourth quarter excludes a $2.3 million loss from discontinued operations, $12.4 million of pre-tax merger-related expenses, other revenue of $18.1 million from modification of a coal supply agreement, $69.6 million amortization of supply agreements related to Foundation merger. Adjusted income from continuing operations for the year-earlier quarter excludes a gain on termination of Cliffs' merger and a gain on sale of certain coal reserves.
Revenues for the fourth quarter rose to $893.3 million from $583.6 million in the fourth quarter of 2008. Analysts expected revenues of $815.08 million for the quarter.
Coal revenues of Alpha climbed to $787.5 million from $512.8 million in the fourth quarter of 2008, due to the inclusion of $393.8 million from the former Foundation operations which more than offset reduced shipment levels and coal revenues from stand-alone operations. Revenues from freight and handling edged up to $60.78 million from $58.96 million in the prior-year quarter. Other revenues increased to $45.04 million from $11.89 million in the year-earlier quarter.
During the fourth quarter, Alpha shipped 12.1 million tons of Powder River Basin, or PRB, coal, 6.6 million tons of Eastern steam coal, and 2.6 million tons of metallurgical coal. Average per ton realization for PRB shipments rose to $10.52 compared with $10.39 in the previous quarter. The average realization per ton for Eastern steam coal shipments was $62.57, down from $64.43 in the third quarter of 2009, and the average per ton realization for metallurgical coal was $97.18 in the fourth quarter, compared with $96.94 in the previous quarter.
Alpha's income from operations for the fourth quarter jumped to $29.72 million from $2.19 million in the fourth quarter of the prior year.
For fiscal 2009, the company's net income declined to $58.0 million or $0.63 per share from $165.7 million or $2.36 per share in the similar period of 2008. Revenue for the period increased to $2.50 billion from $2.47 billion in the year-earlier period.
Commenting on the results, Kevin Crutchfield, chief executive officer of Alpha said, "Alpha again delivered solid operating results in the fourth quarter of 2009, and our performance would have been even better had we not experienced severe winter weather in December that temporarily interrupted production and shipments at many of our operations. More than six months have passed since we completed our merger with Foundation Coal, and the integrated company has consistently delivered strong operating and financial results. We remain focused on execution and operational excellence, and our consistent performance to date demonstrates the benefit of Alpha's enhanced scale and diversification."
Looking forward, Crutchfield said, "Demand for metallurgical coal appears to be increasing; customer discussions are ongoing; and recent indications suggest that the strength is likely to continue throughout 2010. In response to this increasing demand, we are raising our guidance for metallurgical coal shipments in 2010 to a new range of 11 million tons to 13 million tons. As the largest U.S. supplier of metallurgical coal, Alpha remains highly leveraged to this market with 38% of our planned 2010 metallurgical coal shipments yet to be priced. Combined with our expertise in blending and optimization and our ample port capacity including 41% ownership of the DTA terminal, we are well-positioned to benefit from the current momentum in the global metallurgical coal market. With regard to thermal coal, we will continue to scale our production to respond to anticipated demand, and we have adjusted our Eastern thermal shipment guidance to a range of 23 million tons to 26 million tons."
Alpha increased its 2010 shipment guidance range for metallurgical coal by one million tons to a range of 11-13 million tons, up from the previous range of 10-12 million tons. Alpha also adjusted its Eastern steam coal shipment guidance to 23-26 million tons, in order to match production with expected demand. In the West, 2010 shipment guidance remains unchanged as Alpha has committed and priced approximately 100% of anticipated shipments. Alpha said it expects cost of coal sales per ton in 2010 to range from $8.30 to $8.90 in the West and from $54.00 to $57.00 in the East.
For 2011, Alpha estimates PRB shipments to range from 48 million tons to 52 million tons, with 77% committed and priced at prices $1.00 greater than the average realizations embedded in the 2010 committed and priced volumes. Eastern steam coal shipments in 2011 are expected to range from 23 million tons to 28 million tons, with 44% committed and priced and 26% committed and un-priced. Eastern metallurgical coal shipments in 2011 are expected to range from 11 million tons to 14 million tons, with 15% committed and priced and 47% committed and un-priced.
At the end of the fourth quarter, the company had cash and cash equivalents of $465.87 million, compared to $676.19 million at the end of the fourth quarter of 2008.
ANR is gaining $2.33 or 5.77%, and is currently trading at $42.73 on a volume of 2.63 million shares on the New York Stock Exchange.
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