CNX Coal Resources LP (NYSE: CNXC)’s 2Q2016 earnings appear to suggest that selling coal remains a difficult business. But CNXC also somewhat proved that it is equal to the challenge and that is what is interesting concerning this company.
Despite missing both EPS and revenue estimates for 2Q2016, the management of CNX Coal Resources LP (NYSE: CNXC) has maintained an encouraging outlook for the balance of 2016. You can see that from how the management dealt with the sales and earnings guidance for the full-year 2016. The guidance for the year was issued long before the release of the latest quarter results.
Coal sales in 2016
After issuing the 2Q2016 results and explaining what caused the company to miss Wall Street expectations, the management of CNXC struck a bullish tone by reaffirming performance guidance for 2016. The company expects to sell between 4.5 and 5.1 million tons of coal in the year. If that target is attained, adjusted EBITDA is expected to come in the range of $59 to $69 million.
It seems that CNX Coal Resources LP (NYSE: CNXC) is hoping for an uptick in the demand for coal domestically and internationally in the balance of the year. Weaker commodity prices and slowing global economies have been blamed for the soft demand for coal.
What transpired in 2Q for CNX Coal Resources LP (NYSE: CNXC)?
The results that CNX Coal Resources LP (NYSE: CNXC) posted in 2Q2016 were not what Wall Street expected. Revenue of $53.8 million for the quarter not only plunged 16.6%, but also fell short of the consensus estimate of $55 million.
Adjusted EPS of $0.11 also missed the consensus estimate of $0.19.
CNXC said that domestic demand for its coal weakened in the latest quarter, but the adverse impact was partially absorbed by the uptick in overseas sales, which doubled to 0.4 million tons from 0.2 million tons in the year-ago quarter.
Lower cost of coal sales also helped CNX Coal Resources LP (NYSE: CNXC)’s bottom-line. The company said that the average cost of coal sales was $34.46 per ton in the latest quarter compared to $44.15 per ton in the year-ago quarter. Reduction in staff count and better production processes helped lower the costs.
CNX Coal Resources LP (NYSE:CNXC) finished 2Q with $9 million in cash. The company plans a cash distribution of 51.25 cents per share on August 15.