NYSE-listed Arch Coal on Tuesday reported net income of $43.3-million, or $2.06 a share, for the second quarter, compared with the net income of $37.2-million, or $1.48 per diluted share, reported for the second quarter of 2017.

The company declared adjusted earnings before interest, taxes, depreciation and amortisation (Ebitda) of $85.4-million, which includes a $15.1-million noncash mark-to-market loss associated with the company’s coal hedging activities.

This compares with adjusted Ebitda of $95.6-million recorded in the prior comparable period.

“Arch Coal capitalised on a strong operating performance, robust coking coal markets and an improved logistics system to again generate substantial levels of free cash flow during the quarter,” said CEO John Eaves.

The company used that free cash flow to buy back 960 000 shares worth $78-million as it continued to execute on a capital return programme that it started in May last year.

Since then, Arch Coal has invested more than $419-million into share repurchases.

In addition, the company paid $8.3-million in cash dividends to shareholders during the second quarter. The next quarterly cash dividend payment of $0.40 apiece has been approved by the board and is scheduled to be paid on September 14.

OPERATIONAL RESULTS

“Arch Coal delivered strong operating results during the quarter, reducing costs in its key operating areas, exceeding sales volume expectations in both the metallurgical and Powder River basin segments, and addressing and overcoming the operating challenges from the first quarter,” noted Arch Coal COO Paul Lang.

Coking coal sales volumes increased by 13% when compared with the first quarter of 2018, benefitting from improved rail performance, favourable timing on export loadings at the end of the quarter, and solid execution on the two scheduled longwall moves at Leer and Mountain Laurel.

Average coking coal realisations declined by 10% over the same period, owing to lower pricing on index-linked and negotiated tons that priced during the period – a reduction that is in line with the quarterly decline in the Platts East Coast assessments for High-Vol A and Low-Vol products.

In the Powder River basin segment, the cash margin per ton increased marginally in the second quarter, when compared with the first quarter, on stronger-than-anticipated sales volumes and effective cost control.

Sales volumes during the second quarter for this segment were better than the company projected, owing to Black Thunder’s ability to increase loadings during periods of heavy rain that appears to have constrained shipments at several mines in the basin.

In the company’s other thermal segment, second quarter sales volumes declined 9% from the first quarter of this year, primarily owing to substandard rail performance, which delayed loadings from Arch Coal’s West Elk and Coal-Mac mines, in June.

As a result of these delays, two export vessels from West Elk and one export vessel from Coal-Mac that were expected to ship in the second quarter are now scheduled to load only in the third quarter.

While global sales exposure can sometimes result in variability in quarterly volumes, the persistent strength in seaborne thermal pricing, coupled with strong demand for Arch Coal’s high-quality products, will enable the company to export more than 4.5-million tons from the segment in 2018 and into 2019.

For the full year, Arch Coal expects to sell between 6.3-million and 6.7-million tons of coking coal and between 80-million and 84-million tons of thermal coal.