Achieves net income of $73.7 million and adjusted EBITDA of $126.3 million
Increases weighting of
share repurchases in capital allocation formula
Declares
a quarterly cash dividend of $21.6
million, or $1.13 per
share
ST.
LOUIS, Oct. 26, 2023 /PRNewswire/ -- Arch
Resources, Inc. (NYSE: ARCH) today reported net income of
$73.7 million, or $3.91 per diluted share, in the third quarter of
2023, compared with net income of $181.0
million, or $8.68 per diluted
share, in the prior-year period. Arch had adjusted earnings before
interest, taxes, depreciation, depletion, amortization, accretion
on asset retirement obligations, and non-operating expenses
("adjusted EBITDA")1 of $126.3 million in the third quarter of 2023. This
compares to $223.0 million of
adjusted EBITDA in the third quarter of 2022, which included a
$12.3 million non-cash mark-to-market
gain associated with its coal-hedging activities. Revenues totaled
$744.6 million for the three months
ended September 30, 2023, versus
$863.8 million in the prior-year
quarter.
In the third quarter of 2023, Arch made significant progress on
key strategic priorities and objectives, as the company:
- Generated $130.9 million in cash
provided by operating activities and $86.5
million in discretionary cash flow – defined as cash
provided by operating activities less capital expenditures – to
fuel its robust capital return program
- Repurchased 215,551 shares of common stock for $28.2 million, increasing to 4.3 million shares
the potential dilution avoided – via common stock and convertible
notes repurchases – since the relaunch of the capital return
program in February 2022
- Increased to more than $1.2
billion the total capital deployed via the capital return
program over that timeframe
"Even with constrained advance rates at Leer South, our core
metallurgical segment delivered first-quartile cash costs, a
sequential step-up in per-ton realizations, and a
quarter-over-quarter increase in per-ton cash margin during the
third quarter," said Paul A. Lang,
Arch's CEO and president. "In total, the team generated
$86.5 million in discretionary cash
flow, recharging Arch's ongoing capital return program and
underscoring yet again the company's significant and durable
cash-generating capabilities. Additionally, the board recently
increased the weighting of share repurchases in Arch's capital
allocation formula, further highlighting its confidence in the
company's long-term outlook."
Operational Update
"After steady improvement and solid production levels in the
year's first half, the Leer South mine encountered a thinning coal
seam in its fifth longwall panel," said John T. Drexler, Arch's chief operating officer.
"Despite those temporary and near-term challenges, the
metallurgical team delivered higher per-ton cash margins on the
strength of improved per-ton coking coal realizations.
Additionally, Arch's thermal segment again generated substantial,
supplemental adjusted EBITDA, driven by improved volumes and solid
cost control at our Powder River Basin operations."
|
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|
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|
|
|
|
|
|
|
|
Metallurgical
|
|
|
|
|
|
|
3Q23
|
|
|
2Q23
|
|
|
3Q22
|
|
|
|
|
|
|
|
|
|
|
|
|
Tons sold (in
millions)
|
|
2.3
|
|
|
2.5
|
|
|
1.9
|
|
|
Coking
|
|
2.2
|
|
|
2.3
|
|
|
1.8
|
|
|
Thermal
|
|
0.1
|
|
|
0.2
|
|
|
0.1
|
|
|
Coal sales per ton
sold
|
|
$151.33
|
|
|
$143.67
|
|
|
$181.34
|
|
|
Coking
|
|
$158.08
|
|
|
$153.38
|
|
|
$189.50
|
|
|
Thermal
|
|
$24.73
|
|
|
$37.36
|
|
|
$23.87
|
|
|
Cash cost per ton
sold
|
|
$96.63
|
|
|
$89.94
|
|
|
$100.27
|
|
|
Cash margin per
ton
|
|
$54.70
|
|
|
$53.73
|
|
|
$81.07
|
|
|
|
|
|
|
|
|
|
|
|
|
Coal sales per ton
sold and cash cost per ton sold are defined and reconciled under
"Reconciliation of non-GAAP measures."
|
|
Mining complexes
included in this segment are Leer, Leer South, Beckley and Mountain
Laurel.
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|
|
Arch's core metallurgical segment contributed adjusted EBITDA of
$128.3 million in the third quarter.
In sum, the segment's average per-ton selling price increased 5
percent on a sequential basis; the average per-ton cash cost
increased 7 percent due to the factors described above; and the
average per-ton cash margin increased 2 percent. For full-year
2023, Arch is guiding to coking coal sales volumes of 8.6 to 8.9
million tons and to an average cash cost for the segment of between
$88 and $91 per ton.
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|
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Thermal
|
|
|
3Q23
|
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|
2Q23
|
|
|
3Q22
|
|
|
|
|
|
|
|
|
|
|
Tons sold (in
millions)
|
|
16.8
|
|
|
16.3
|
|
|
18.4
|
|
Coal sales per ton
sold
|
|
$16.73
|
|
|
$16.81
|
|
|
$19.94
|
|
Cash cost per ton
sold
|
|
$15.39
|
|
|
$15.04
|
|
|
$14.76
|
|
Cash margin per
ton
|
|
$1.34
|
|
|
$1.77
|
|
|
$5.18
|
|
|
|
|
|
|
|
|
|
|
Coal sales per ton
sold and cash cost per ton sold are defined and reconciled under
"Reconciliation of non-GAAP measures."
|
|
Mining complexes
included in this segment are Black Thunder, Coal Creek and West
Elk.
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|
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|
Arch's thermal segment contributed adjusted EBITDA of
$23.4 million in the third quarter,
against capital spending of $10.4
million. Thermal segment margins were supported by a strong
contribution from the Powder River Basin operations, which acted to
counterbalance a roughly breakeven quarter at West Elk. Since the
fourth quarter of 2016, the legacy thermal segment has generated a
total of $1,357.4 million in adjusted
EBITDA while expending just $164.5
million in capital.
Financial, Liquidity and Capital Return Program
Update
As noted previously, the Arch board recently refined the
allocation model governing Arch's capital return program. Effective
immediately, and inclusive of the December dividend payment, the
board is targeting returning to stockholders 25 percent of the
prior quarter's discretionary cash flow – defined as cash provided
by operating activities less capital expenditures – via a dividend,
while directing the remaining discretionary cash flow to share
repurchases or capital preservation.
"The centerpiece of our value proposition is the return to
shareholders of effectively 100 percent of the company's
discretionary cash flow," Lang said. "The board continuously
evaluates the capital allocation model with the objective of
optimizing the value generated for shareholders. While a
significant dividend remains an integral component of the long-term
capital return strategy, the board believes that, at present,
directing a larger percentage of discretionary cash flow to share
repurchases makes sense given its continuing confidence in the
company's promising, long-term outlook."
During the quarter just ended, the company deployed $28.2 million to repurchase 215,551 shares at an
average price of $130.83 per share.
In total, Arch has now used common stock and convertible notes
repurchases to manage and reduce potential dilution by
approximately 4.3 million shares. Arch ended Q3 with 18.8 million
shares outstanding on a fully diluted basis.
In keeping with its capital return formula, the board has
declared a total quarterly cash dividend of $21.6 million, or $1.13 per share, which is equivalent to 25
percent of Arch's third quarter discretionary cash flow. The
December dividend – which includes a fixed component
of $0.25 per share and a variable component
of $0.88 per share – is payable on December 15,
2023, to stockholders of record on November 30,
2023.
Arch has now deployed a total of $1,208.2
million under its capital return program since its relaunch
20 months ago – inclusive of the just-declared December dividend –
including $661.8 million, or
$35.77 per share, in dividends and
$546.4 million in common stock and
convertible notes repurchases. Since the second quarter of 2017 –
and inclusive of the program's first phase – Arch has now deployed
a total of more than $2.1 billion
under its capital return program. As of September 30, 2023, Arch had $220.7 million of remaining authorization under
its existing $500 million share
repurchase program.
Arch also achieved a further streamlining of its capital
structure during the third quarter and the first few days of
October via the exercise or expiration of 100 percent of the
warrants remaining from the original grant seven years ago, with a
negligible impact on the diluted share count.
Arch ended the third quarter with indebtedness of just
$131.2 million after paying down an
incremental $6.5 million during the
quarter. In comparison, cash, cash equivalents and short-term
investments totaled $213.5 million,
resulting in a net cash positive position of $82.3 million. Total liquidity at quarter-end
stood at $337.2 million.
"We continue to make good progress towards our long-term goal of
further fortifying the balance sheet and simplifying the capital
structure," said Matthew C. Giljum,
Arch's chief financial officer. "Since the beginning of 2022, we
have reduced overall indebtedness by 77 percent; retired all of our
convertible notes; built a thermal mine reclamation fund that has
largely pre-funded our Powder River Basin final reclamation
obligation; and – most recently – achieved a further streamlining
of our capital structure via the exercise or expiration of the
remaining warrants. In short, we have set the stage for an even
sharper focus on capital returns and the systematic reduction of
our share count via share repurchases going forward."
ESG Update
During the third quarter, Arch maintained its exemplary
environmental, social and governance performance. Arch's subsidiary
operations achieved an aggregate total lost-time incident rate of
0.42 per 200,000 employee-hours worked during the first nine months
of 2023, which was nearly five times better than the industry
average, while recording zero environmental violations and zero
water quality exceedances over that timeframe.
The U.S. Department of the Interior recently honored Arch's
Powder River Basin operating subsidiary as the sole recipient of
the 2023 Excellence in Coal Mining Good Neighbor Award, the
nation's top honor for community engagement. This marked the third
time in five years an Arch subsidiary was so honored. In addition,
the National Institute for Occupational Safety and Health recently
honored the Leer mine with the Mine Safety and Health Technology
Innovation Award for the coal sector.
Market Update
Coking coal prices moved sharply higher during Q3, despite
lackluster global steel markets. High-Vol A coking coal –
Arch's principal product – is currently being assessed at
$277 per metric ton on the U.S. East
Coast. Meanwhile, supply dynamics remain generally constructive due
to persistent under-investment in new and existing coking coal
capacity globally. Aggregate coking coal exports from Australia, the
United States and Canada –
the principal suppliers of high-quality coking coal to the global
seaborne market – remain flat to down versus last year's
already-constrained levels, and well-off the peaks of recent
years.
Global thermal coal markets appear to be range-bound at present,
trading at prices well below last year's historically strong levels
but at a level that still supports healthy U.S. export volumes.
Arch expects thermal coal market dynamics to continue to benefit
from underinvestment in supply, which should create attractive
export opportunities for the West Elk mine in 2024 and beyond.
Domestically, Arch's Powder River Basin operations are approaching
sold-out status for 2024 at fixed price levels that should deliver
a solid margin.
Since the start of the third quarter, Arch committed to ship
approximately 1.5 million tons of coking coal to North American
customers in 2024, at an average fixed price of approximately
$158 per ton.
Looking Ahead
"The Arch team continues to execute on our clear, consistent and
actionable plan for long-term value creation and growth," Lang
said. "We remain sharply focused on driving incremental
productivity and cost improvements in our top-tier operating
performance; capitalizing on a highly constructive global coking
coal market; extending the global reach of our suite of
high-quality coking coal products; maintaining and augmenting our
strong financial position; and extending our industry-leading
sustainability practices. Through these substantial and ongoing
efforts, we are seeking to lay a strong and durable foundation for
long-term cash generation – in a wide range of market environments
– in support of our robust and ongoing capital return
program."
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|
|
|
|
|
|
|
|
|
|
|
2023
|
|
|
|
|
Tons
|
$ per ton
|
|
Sales Volume (in millions of
tons)
|
|
|
|
|
|
|
|
Coking
|
|
|
|
8.6
|
-
|
8.9
|
|
|
|
Thermal
|
|
|
|
62.0
|
-
|
68.0
|
|
|
|
Total
|
|
|
|
70.6
|
|
76.9
|
|
|
|
|
|
|
|
|
|
|
|
|
Metallurgical (in millions of
tons)
|
|
|
|
|
|
|
|
Committed, Priced
Coking North American
|
|
|
1.8
|
|
$182.50
|
|
Committed, Unpriced
Coking North American
|
|
|
0.1
|
|
|
|
Committed, Priced
Coking Seaborne
|
|
|
|
5.3
|
|
$170.06
|
|
Committed, Unpriced Coking Seaborne
|
|
|
1.1
|
|
|
|
Total Committed
Coking
|
|
|
|
|
8.3
|
|
|
|
|
|
|
|
|
|
|
|
|
Committed, Priced
Thermal Byproduct
|
|
|
0.7
|
|
$39.46
|
|
Committed, Unpriced Thermal
Byproduct
|
|
|
-
|
|
|
|
Total Committed Thermal
Byproduct
|
|
|
|
0.7
|
|
|
|
|
|
|
|
|
|
|
|
|
Average Metallurgical
Cash Cost
|
|
|
|
|
|
$88.00 -
$91.00
|
|
|
|
|
|
|
|
|
|
|
Thermal (in millions of
tons)
|
|
|
|
|
|
|
|
|
Committed,
Priced
|
|
|
|
|
|
68.2
|
|
$17.26
|
|
Committed, Unpriced
|
|
|
|
|
0.6
|
|
|
|
Total Committed
Thermal
|
|
|
|
|
68.8
|
|
|
|
Average Thermal Cash
Cost
|
|
|
|
|
|
$15.00 -
$15.50
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate (in $
millions)
|
|
|
|
|
|
|
|
|
D,D&A
|
|
|
|
$150.0
|
-
|
$156.0
|
|
|
|
ARO
Accretion
|
|
|
|
$19.0
|
-
|
$21.0
|
|
|
|
S,G&A -
Cash
|
|
|
|
$69.0
|
-
|
$73.0
|
|
|
|
S,G&A -
Non-cash
|
|
|
|
$24.0
|
-
|
$28.0
|
|
|
|
Net Interest
Income
|
|
|
$1.0
|
-
|
$3.0
|
|
|
|
Capital
Expenditures
|
|
|
$160.0
|
-
|
$170.0
|
|
|
|
Cash Tax Payment
(%)
|
|
|
0.0
|
-
|
5.0
|
|
|
|
Income Tax Provision
(%)
|
|
|
12.0
|
-
|
17.0
|
|
|
|
|
|
|
|
|
|
|
|
|
Note: The
company is unable to present a quantitative reconciliation of its
forward-looking non-GAAP Segment cash cost per ton sold financial
measures to the most directly comparable GAAP measures without
unreasonable efforts due to the inherent difficulty in forecasting
and quantifying with reasonable accuracy significant items required
for the reconciliation. The most directly comparable GAAP measure,
GAAP cost of sales, is not accessible without unreasonable efforts
on a forward-looking basis. The reconciling items include
transportation costs, which are a component of GAAP cost of sales.
Management is unable to predict without unreasonable efforts
transportation costs due to uncertainty as to the end market and
FOB point for uncommitted sales volumes and the final shipping
point for export shipments. In addition, the impact of hedging
activity related to commodity purchases that do not receive hedge
accounting and idle and administrative costs that are not included
in a reportable segment are additional reconciling items for
Segment cash cost per ton sold. Management is unable to predict
without unreasonable efforts the impact of hedging activity related
to commodity purchases that do not receive hedge accounting due to
fluctuations in commodity prices, which are difficult to forecast
due to their inherent volatility. These amounts have historically
varied and may continue to vary significantly from quarter to
quarter and material changes to these items could have a
significant effect on our future GAAP results. Idle and
administrative costs that are not included in a reportable segment
are expected to be between $15 million and $20 million in
2023.
|
Arch Resources is a premier producer of high-quality
metallurgical products for the global steel industry. The company
operates large, modern and highly efficient mines that consistently
set the industry standard for both mine safety and environmental
stewardship. Arch Resources from time to time utilizes its website
– www.archrsc.com – as a channel of distribution for material
company information. To learn more about us and our premium
metallurgical products, go to www.archrsc.com.
Forward-Looking Statements: This press release contains
"forward-looking statements" within the meaning of Section 27A of
the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended - that is, statements
related to future, not past, events. In this context,
forward-looking statements often address our expected future
business and financial performance, and future plans, and often
contain words such as "should," "could," "appears," "estimates,"
"projects," "targets," "expects," "anticipates," "intends," "may,"
"plans," "predicts," "believes," "seeks," "strives," "will" or
variations of such words or similar words. Actual results or
outcomes may vary significantly, and adversely, from those
anticipated due to many factors, including: loss of availability,
reliability and cost-effectiveness of transportation facilities and
fluctuations in transportation costs; inflationary pressures and
availability and price of mining and other industrial supplies;
changes in coal prices, which may be caused by numerous factors
beyond our control, including changes in the domestic and foreign
supply of and demand for coal and the domestic and foreign demand
for steel and electricity; volatile economic and market conditions;
operating risks beyond our control, including risks related to
mining conditions, mining, processing and plant equipment failures
or maintenance problems, weather and natural disasters, the
unavailability of raw materials, equipment or other critical
supplies, mining accidents, and other inherent risks of coal mining
that are beyond our control; the effects of foreign and domestic
trade policies, actions or disputes on the level of trade among the
countries and regions in which we operate, the competitiveness of
our exports, or our ability to export; competition, both within our
industry and with producers of competing energy sources, including
the effects from any current or future legislation or regulations
designed to support, promote or mandate renewable energy sources;
alternative steel production technologies that may reduce demand
for our coal; our ability to secure new coal supply arrangements or
to renew existing coal supply arrangements; the loss of, or
significant reduction in, purchases by our largest customers;
disruptions in the supply of coal from third parties; risks related
to our international growth; our relationships with, and other
conditions affecting our customers and our ability to collect
payments from our customers; the availability and cost of surety
bonds; including potential collateral requirements; we may not have
adequate insurance coverage for some business risks; additional
demands for credit support by third parties and decisions by banks,
surety bond providers, or other counterparties to reduce or
eliminate their exposure to the coal industry; inaccuracies in our
estimates of our coal reserves; defects in title or the loss of a
leasehold interest; losses as a result of certain marketing and
asset optimization strategies; cyber-attacks or other security
breaches that disrupt our operations, or that result in the
unauthorized release of proprietary, confidential or personally
identifiable information; our ability to acquire or develop coal
reserves in an economically feasible manner; our ability to pay
dividends or repurchase shares of our common stock according to our
announced intent or at all; the loss of key personnel or the
failure to attract additional qualified personnel and the
availability of skilled employees and other workforce factors;
existing and future legislation and regulations affecting both our
coal mining operations and our customers' coal usage, governmental
policies and taxes, including those aimed at reducing emissions of
elements such as mercury, sulfur dioxides, nitrogen oxides,
particulate matter or greenhouse gases; increased pressure from
political and regulatory authorities, along with environmental and
climate change activist groups, and lending and investment policies
adopted by financial institutions and insurance companies to
address concerns about the environmental impacts of coal
combustion; increased attention to environmental, social or
governance matters ("ESG"); our ability to obtain and renew various
permits necessary for our mining operations; risks related to
regulatory agencies ordering certain of our mines to be temporarily
or permanently closed under certain circumstances; risks related to
extensive environmental regulations that impose significant costs
on our mining operations and could result in litigation or material
liabilities; the accuracy of our estimates of reclamation and other
mine closure obligations; the existence of hazardous substances or
other environmental contamination on property owned or used by us;
and risks related to tax legislation. All forward-looking
statements in this press release, as well as all other written and
oral forward-looking statements attributable to us or persons
acting on our behalf, are expressly qualified in their entirety by
the cautionary statements contained in this section and elsewhere
in this press release. These factors are not necessarily all of the
important factors that could cause actual results or outcomes to
vary significantly, and adversely, from those anticipated at the
time such statements were first made. These risks and
uncertainties, as well as other risks of which we are not aware or
which we currently do not believe to be material, may cause our
actual future results and outcomes to be materially, and adversely,
different than those expressed in our forward-looking statements.
For these reasons, readers should not place undue reliance on any
such forward-looking statements. These forward-looking
statements speak only as of the date on which such statements were
made, and we do not undertake, and expressly disclaim, any duty to
update our forward-looking statements, whether as a result of new
information, future events or otherwise, except as may be required
by the federal securities laws. For a description of some of the
risks and uncertainties that may affect our future results, you
should see the risk factors described from time to time in the
reports we file with the Securities and Exchange
Commission.
|
|
|
|
|
|
|
1
Adjusted EBITDA is defined and reconciled in the "Reconciliation
of Non-GAAP measures" in this release.
|
|
Arch Resources, Inc.
and Subsidiaries
|
|
Condensed
Consolidated Income Statements
|
|
(In thousands,
except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
2023
|
2022
|
|
2023
|
2022
|
|
(Unaudited)
|
|
(Unaudited)
|
|
|
|
|
|
|
|
Revenues
|
$
744,601
|
$
863,835
|
|
$
2,371,826
|
$
2,865,129
|
|
|
|
|
|
|
|
Costs, expenses and
other operating
|
|
|
|
|
|
|
Cost of sales
(exclusive of items shown separately below)
|
596,889
|
610,027
|
|
1,774,753
|
1,758,012
|
|
Depreciation, depletion
and amortization
|
36,717
|
33,958
|
|
108,273
|
98,948
|
|
Accretion on asset
retirement obligations
|
5,292
|
4,430
|
|
15,877
|
13,290
|
|
Change in fair value of
coal derivatives, net
|
(46)
|
(12,252)
|
|
1,361
|
5,144
|
|
Selling, general and
administrative expenses
|
24,279
|
26,107
|
|
73,092
|
79,271
|
|
Other operating
(income) expense, net
|
(2,812)
|
16,997
|
|
(11,398)
|
18,796
|
|
660,319
|
679,267
|
|
1,961,958
|
1,973,461
|
|
|
|
|
|
|
|
Income from
operations
|
84,282
|
184,568
|
|
409,868
|
891,668
|
|
|
|
|
|
|
|
Interest income
(expense), net
|
|
|
|
|
|
|
Interest
expense
|
(3,120)
|
(4,060)
|
|
(10,783)
|
(16,245)
|
|
Interest and investment
income
|
4,803
|
2,224
|
|
12,340
|
2,776
|
|
1,683
|
(1,836)
|
|
1,557
|
(13,469)
|
|
|
|
|
|
|
|
Income before
nonoperating expenses
|
85,965
|
182,732
|
|
411,425
|
878,199
|
|
|
|
|
|
|
|
Nonoperating
expenses
|
|
|
|
|
|
|
Non-service related
pension and postretirement benefit credits (costs)
|
4,507
|
(857)
|
|
5,692
|
(2,189)
|
|
Net loss resulting from
early retirement of debt
|
-
|
(394)
|
|
(1,126)
|
(14,143)
|
|
4,507
|
(1,251)
|
|
4,566
|
(16,332)
|
|
|
|
|
|
|
|
Income before income
taxes
|
90,472
|
181,481
|
|
415,991
|
861,867
|
|
Provision for income
taxes
|
16,781
|
474
|
|
66,839
|
1,424
|
|
|
|
|
|
|
|
Net
income
|
$
73,691
|
$
181,007
|
|
$
349,152
|
$
860,443
|
|
|
|
|
|
|
|
Net income per
common share
|
|
|
|
|
|
|
Basic earnings per
share
|
$
4.05
|
$
9.84
|
|
$
19.20
|
$
50.97
|
|
Diluted earnings per
share
|
$
3.91
|
$
8.68
|
|
$
18.12
|
$
41.00
|
|
|
|
|
|
|
|
Weighted average
shares outstanding
|
|
|
|
|
|
|
Basic weighted average
shares outstanding
|
18,187
|
18,396
|
|
18,189
|
16,881
|
|
Diluted weighted
average shares outstanding
|
18,840
|
20,908
|
|
19,270
|
21,210
|
|
|
|
|
|
|
|
Dividends declared per
common share
|
$
3.97
|
$
6.00
|
|
$
9.53
|
$
14.36
|
|
|
|
|
|
|
|
Adjusted EBITDA
(A)
|
$
126,291
|
$
222,956
|
|
$
534,018
|
$
1,003,906
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(A) Adjusted EBITDA is
defined and reconciled under "Reconciliation of Non-GAAP Measures"
later in this release.
|
|
Arch Resources, Inc.
and Subsidiaries
|
|
Condensed
Consolidated Balance Sheets
|
|
(In
thousands)
|
|
|
|
|
|
|
|
September
30,
|
December
31,
|
|
2023
|
2022
|
|
(Unaudited)
|
|
|
Assets
|
|
|
|
Current
assets
|
|
|
|
Cash and cash
equivalents
|
$
183,097
|
$
236,059
|
|
Short-term
investments
|
30,447
|
36,993
|
|
Restricted
cash
|
1,100
|
1,100
|
|
Trade accounts
receivable
|
289,994
|
236,999
|
|
Other
receivables
|
16,439
|
18,301
|
|
Inventories
|
233,213
|
223,015
|
|
Other current
assets
|
51,854
|
71,384
|
|
Total current
assets
|
806,144
|
823,851
|
|
|
|
|
Property, plant and
equipment, net
|
1,200,109
|
1,187,028
|
|
|
|
|
Other
assets
|
|
|
|
Deferred income
taxes
|
146,324
|
209,470
|
|
Equity
investments
|
21,273
|
17,267
|
|
Fund for asset
retirement obligations
|
140,413
|
135,993
|
|
Other noncurrent
assets
|
51,595
|
59,499
|
|
Total other
assets
|
359,605
|
422,229
|
|
Total assets
|
$
2,365,858
|
$
2,433,108
|
|
|
|
|
Liabilities and
Stockholders' Equity
|
|
|
|
Current
liabilities
|
|
|
|
Accounts
payable
|
$
198,374
|
$
211,848
|
|
Accrued expenses and
other current liabilities
|
135,163
|
157,043
|
|
Current maturities of
debt
|
21,926
|
57,988
|
|
Total current
liabilities
|
355,463
|
426,879
|
|
Long-term
debt
|
107,515
|
116,288
|
|
Asset retirement
obligations
|
234,386
|
235,736
|
|
Accrued pension
benefits
|
1,057
|
1,101
|
|
Accrued postretirement
benefits other than pension
|
50,360
|
49,674
|
|
Accrued workers'
compensation
|
144,714
|
155,756
|
|
Other noncurrent
liabilities
|
76,213
|
82,094
|
|
Total
liabilities
|
969,708
|
1,067,528
|
|
|
|
|
Stockholders'
equity
|
|
|
|
Common Stock
|
305
|
288
|
|
Paid-in
capital
|
716,956
|
724,660
|
|
Retained
earnings
|
1,737,468
|
1,565,374
|
|
Treasury stock, at
cost
|
(1,107,878)
|
(986,171)
|
|
Accumulated other
comprehensive income
|
49,299
|
61,429
|
|
Total stockholders'
equity
|
1,396,150
|
1,365,580
|
|
Total liabilities and
stockholders' equity
|
$
2,365,858
|
$
2,433,108
|
|
Arch Resources, Inc.
and Subsidiaries
|
|
Condensed
Consolidated Statements of Cash Flows
|
|
(In
thousands)
|
|
|
|
|
|
|
|
Nine Months Ended
September 30,
|
|
2023
|
2022
|
|
(Unaudited)
|
|
Operating
activities
|
|
|
|
Net income
|
$
349,152
|
$
860,443
|
|
Adjustments to
reconcile to cash from operating activities:
|
|
|
|
Depreciation, depletion
and amortization
|
108,273
|
98,948
|
|
Accretion on asset
retirement obligations
|
15,877
|
13,290
|
|
Deferred income
taxes
|
66,561
|
-
|
|
Employee stock-based
compensation expense
|
19,699
|
20,837
|
|
Amortization relating
to financing activities
|
1,317
|
1,958
|
|
Gain on disposals and
divestitures, net
|
(714)
|
(1,012)
|
|
Reclamation work
completed
|
(17,642)
|
(11,229)
|
|
Contribution to fund
asset retirement obligations
|
(4,421)
|
(110,000)
|
|
Changes in:
|
|
|
|
Receivables
|
(49,950)
|
108,635
|
|
Inventories
|
(10,199)
|
(58,438)
|
|
Accounts payable,
accrued expenses and other current liabilities
|
(31,241)
|
58,791
|
|
Income taxes,
net
|
(999)
|
826
|
|
Coal derivative assets
and liabilities, including margin account
|
1,361
|
5,144
|
|
Other
|
6,744
|
27,038
|
|
Cash provided by
operating activities
|
453,818
|
1,015,231
|
|
|
|
|
Investing
activities
|
|
|
|
Capital
expenditures
|
(121,030)
|
(94,517)
|
|
Minimum royalty
payments
|
(1,113)
|
(1,069)
|
|
Proceeds from disposals
and divestitures
|
1,363
|
1,963
|
|
Purchases of short-term
investments
|
(23,386)
|
(10,675)
|
|
Proceeds from sales of
short-term investments
|
30,417
|
14,450
|
|
Investments in and
advances to affiliates, net
|
(12,210)
|
(6,692)
|
|
Cash used in investing
activities
|
(125,959)
|
(96,540)
|
|
|
|
|
Financing
activities
|
|
|
|
Payments on term loan
due 2024
|
(2,250)
|
(273,038)
|
|
Payments on convertible
debt
|
(58,430)
|
(149,273)
|
|
Net payments on other
debt
|
(30,568)
|
(23,942)
|
|
Debt financing
costs
|
-
|
(690)
|
|
Purchase of treasury
stock
|
(122,502)
|
(56,498)
|
|
Dividends
paid
|
(183,790)
|
(264,638)
|
|
Payments for taxes
related to net share settlement of equity awards
|
(27,230)
|
(4,908)
|
|
Proceeds from warrants
exercised
|
43,949
|
19,422
|
|
Cash used in financing
activities
|
(380,821)
|
(753,565)
|
|
|
|
|
(Decrease) increase in
cash and cash equivalents, including restricted cash
|
(52,962)
|
165,126
|
|
Cash and cash
equivalents, including restricted cash, beginning of
period
|
237,159
|
326,295
|
|
|
|
|
Cash and cash
equivalents, including restricted cash, end of
period
|
$
184,197
|
$
491,421
|
|
|
|
|
Cash and cash
equivalents, including restricted cash, end of
period
|
|
|
|
Cash and cash
equivalents
|
$
183,097
|
$
490,321
|
|
Restricted
cash
|
1,100
|
1,100
|
|
|
|
|
$
184,197
|
$
491,421
|
|
Arch Resources, Inc.
and Subsidiaries
|
|
Schedule of
Consolidated Debt
|
|
(In
thousands)
|
|
|
|
|
|
|
September
30,
|
December
31,
|
|
|
2023
|
2022
|
|
|
(Unaudited)
|
|
|
|
|
|
|
Term loan due 2024
($4.3 million face value)
|
|
$
4,252
|
$
6,502
|
|
Tax exempt bonds ($98.1
million face value)
|
|
98,075
|
98,075
|
|
Convertible
Debt
|
|
-
|
13,156
|
|
Other
|
|
28,904
|
59,472
|
|
Debt issuance
costs
|
|
(1,790)
|
(2,929)
|
|
|
129,441
|
174,276
|
|
Less: current
maturities of debt
|
|
21,926
|
57,988
|
|
Long-term
debt
|
|
$
107,515
|
$
116,288
|
|
|
|
|
|
Calculation of net
(cash) debt
|
|
|
|
|
Total debt (excluding
debt issuance costs)
|
|
$
131,231
|
$
177,205
|
|
Less liquid
assets:
|
|
|
|
|
Cash and cash
equivalents
|
|
183,097
|
236,059
|
|
Short term
investments
|
|
30,447
|
36,993
|
|
|
213,544
|
273,052
|
|
Net (cash)
debt
|
|
$
(82,313)
|
$
(95,847)
|
|
Arch Resources, Inc.
and Subsidiaries
|
|
Operational
Performance
|
|
(In millions, except
per ton data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
September 30, 2023
|
Three Months
Ended
June 30, 2023
|
Three Months
Ended
September 30, 2022
|
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
|
Metallurgical
|
|
|
|
|
|
|
|
Tons Sold
|
2.3
|
|
2.5
|
|
1.9
|
|
|
|
|
|
|
|
|
|
Segment
Sales
|
$
355.0
|
$
151.33
|
$
353.5
|
$
143.67
|
$
346.0
|
$
181.34
|
|
Segment Cash Cost of
Sales
|
226.7
|
96.63
|
221.3
|
89.94
|
191.3
|
100.27
|
|
Segment Cash
Margin
|
128.3
|
54.70
|
132.2
|
53.73
|
154.7
|
81.07
|
|
|
|
|
|
|
|
|
Thermal
|
|
|
|
|
|
|
|
Tons Sold
|
16.8
|
|
16.3
|
|
18.4
|
|
|
|
|
|
|
|
|
|
Segment
Sales
|
$
281.6
|
$
16.73
|
$
273.1
|
$
16.81
|
$
366.2
|
$
19.94
|
|
Segment Cash Cost of
Sales
|
259.0
|
15.39
|
244.4
|
15.04
|
271.0
|
14.76
|
|
Segment Cash
Margin
|
22.7
|
1.34
|
28.7
|
1.77
|
95.2
|
5.18
|
|
|
|
|
|
|
|
|
Total Segment Cash
Margin
|
$
151.0
|
|
$
160.9
|
|
$
249.9
|
|
|
|
|
|
|
|
|
|
Selling, general and
administrative expenses
|
(24.3)
|
|
(22.8)
|
|
(26.1)
|
|
|
Other
|
(0.4)
|
|
(7.7)
|
|
(0.8)
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
$
126.3
|
|
$
130.4
|
|
$
223.0
|
|
|
Arch Resources, Inc.
and Subsidiaries
|
|
Reconciliation of
NON-GAAP Measures
|
|
(In thousands,
except per ton data)
|
|
|
|
|
|
|
Included in the
accompanying release, we have disclosed certain non-GAAP measures
as defined by Regulation G.
The following reconciles these items to the most directly
comparable GAAP measure.
|
|
|
|
|
|
|
Non-GAAP Segment
coal sales per ton sold
|
|
|
|
|
|
|
Non-GAAP Segment coal
sales per ton sold is calculated as segment coal sales revenues
divided by segment tons sold. Segment coal sales revenues are
adjusted for transportation costs, and may be adjusted for other
items that, due to generally accepted accounting principles, are
classified in "other income" on the consolidated Income Statements,
but relate to price protection on the sale of coal. Segment coal
sales per ton sold is not a measure of financial performance in
accordance with generally accepted accounting principles. We
believe segment coal sales per ton sold provides useful information
to investors as it better reflects our revenue for the quality of
coal sold and our operating results by including all income from
coal sales. The adjustments made to arrive at these measures are
significant in understanding and assessing our financial condition.
Therefore, segment coal sales revenues should not be considered in
isolation, nor as an alternative to coal sales revenues under
generally accepted accounting principles.
|
|
|
|
|
|
|
Quarter ended
September 30, 2023
|
Metallurgical
|
Thermal
|
All
Other
|
Consolidated
|
|
(In
thousands)
|
|
|
|
|
|
GAAP Revenues in the
Condensed Consolidated Income Statements
|
$
432,835
|
$
311,766
|
$
-
|
$
744,601
|
|
Less: Adjustments to
reconcile to Non-GAAP Segment coal sales
revenue
|
|
|
|
|
|
Coal risk management
derivative settlements classified in "other
income"
|
-
|
-
|
-
|
-
|
|
Transportation
costs
|
77,806
|
30,128
|
-
|
107,934
|
|
Non-GAAP Segment coal
sales revenues
|
$
355,029
|
$
281,638
|
$
-
|
$
636,667
|
|
Tons
sold
|
2,346
|
16,831
|
|
|
|
Coal sales per ton
sold
|
$
151.33
|
$
16.73
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter ended
June 30, 2023
|
Metallurgical
|
Thermal
|
All
Other
|
Consolidated
|
|
(In
thousands)
|
|
|
|
|
|
GAAP Revenues in the
Condensed Consolidated Income Statements
|
$
451,752
|
$
305,542
|
$
-
|
$
757,294
|
|
Less: Adjustments to
reconcile to Non-GAAP Segment coal sales
revenue
|
|
|
|
|
|
Coal risk management
derivative settlements classified in "other
income"
|
-
|
(3,587)
|
-
|
(3,587)
|
|
Transportation
costs
|
98,221
|
36,004
|
-
|
134,225
|
|
Non-GAAP Segment coal
sales revenues
|
$
353,531
|
$
273,125
|
$
-
|
$
626,656
|
|
Tons
sold
|
2,461
|
16,252
|
|
|
|
Coal sales per ton
sold
|
$
143.67
|
$
16.81
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter ended
September 30, 2022
|
Metallurgical
|
Thermal
|
All
Other
|
Consolidated
|
|
(In
thousands)
|
|
|
|
|
|
GAAP Revenues in the
Condensed Consolidated Income Statements
|
$
444,306
|
$
419,529
|
$
-
|
$
863,835
|
|
Less: Adjustments to
reconcile to Non-GAAP Segment coal sales
revenue
|
|
|
|
|
|
Coal risk management
derivative settlements classified in "other
income"
|
-
|
14,701
|
-
|
14,701
|
|
Transportation
costs
|
98,292
|
38,595
|
-
|
136,887
|
|
Non-GAAP Segment coal
sales revenues
|
$
346,014
|
$
366,233
|
$
-
|
$
712,247
|
|
Tons
sold
|
1,908
|
18,365
|
|
|
|
Coal sales per ton
sold
|
$
181.34
|
$
19.94
|
|
|
|
Arch Resources, Inc.
and Subsidiaries
|
|
Reconciliation of
NON-GAAP Measures
|
|
(In thousands,
except per ton data)
|
|
|
|
|
|
|
Non-GAAP Segment
cash cost per ton sold
|
|
|
|
|
|
|
Non-GAAP Segment cash
cost per ton sold is calculated as segment cash cost of coal sales
divided by segment tons sold. Segment cash cost of coal sales is
adjusted for transportation costs, and may be adjusted for other
items that, due to generally accepted accounting principles, are
classified in "other income" on the consolidated Income Statements,
but relate directly to the costs incurred to produce coal. Segment
cash cost per ton sold is not a measure of financial performance in
accordance with generally accepted accounting principles. We
believe segment cash cost per ton sold better reflects our
controllable costs and our operating results by including all costs
incurred to produce coal. The adjustments made to arrive at these
measures are significant in understanding and assessing our
financial condition. Therefore, segment cash cost of coal sales
should not be considered in isolation, nor as an alternative to
cost of sales under generally accepted accounting
principles.
|
|
|
|
|
|
|
Quarter ended
September 30, 2023
|
Metallurgical
|
Thermal
|
All
Other
|
Consolidated
|
|
(In
thousands)
|
|
|
|
|
|
GAAP Cost of sales in
the Condensed Consolidated Income Statements
|
$
304,511
|
$
288,518
|
$
3,860
|
$
596,889
|
|
Less: Adjustments to
reconcile to Non-GAAP Segment cash cost of coal
sales
|
|
|
|
|
|
Diesel fuel risk
management derivative settlements classified in "other
income"
|
-
|
(564)
|
-
|
(564)
|
|
Transportation
costs
|
77,806
|
30,128
|
-
|
107,934
|
|
Cost of coal sales from
idled or otherwise disposed operations
|
-
|
-
|
1,184
|
1,184
|
|
Other (operating
overhead, certain actuarial, etc.)
|
-
|
-
|
2,676
|
2,676
|
|
Non-GAAP Segment cash
cost of coal sales
|
$
226,705
|
$
258,954
|
$
-
|
$
485,659
|
|
Tons sold
|
2,346
|
16,831
|
|
|
|
Cash cost per ton
sold
|
$
96.63
|
$
15.39
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter ended
June 30, 2023
|
Metallurgical
|
Thermal
|
All
Other
|
Consolidated
|
|
(In
thousands)
|
|
|
|
|
|
GAAP Cost of sales in
the Condensed Consolidated Income Statements
|
$
319,549
|
$
279,028
|
$
7,550
|
$
606,127
|
|
Less: Adjustments to
reconcile to Non-GAAP Segment cash cost of coal
sales
|
|
|
|
|
|
Diesel fuel risk
management derivative settlements classified in "other
income"
|
-
|
(1,425)
|
-
|
(1,425)
|
|
Transportation
costs
|
98,221
|
36,004
|
-
|
134,225
|
|
Cost of coal sales from
idled or otherwise disposed operations
|
-
|
-
|
5,157
|
5,157
|
|
Other (operating
overhead, certain actuarial, etc.)
|
-
|
-
|
2,393
|
2,393
|
|
Non-GAAP Segment cash
cost of coal sales
|
$
221,328
|
$
244,449
|
$
-
|
$
465,777
|
|
Tons sold
|
2,461
|
16,252
|
|
|
|
Cash cost per ton
sold
|
$
89.94
|
$
15.04
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter ended
September 30, 2022
|
Metallurgical
|
Thermal
|
All
Other
|
Consolidated
|
|
(In
thousands)
|
|
|
|
|
|
GAAP Cost of sales in
the Condensed Consolidated Income Statements
|
$
289,610
|
$
313,430
|
$
6,987
|
$
610,027
|
|
Less: Adjustments to
reconcile to Non-GAAP Segment cash cost of coal
sales
|
|
|
|
|
|
Diesel fuel risk
management derivative settlements classified in "other
income"
|
-
|
3,825
|
-
|
3,825
|
|
Transportation
costs
|
98,292
|
38,595
|
-
|
136,887
|
|
Cost of coal sales from
idled or otherwise disposed operations
|
-
|
-
|
4,277
|
4,277
|
|
Other (operating
overhead, certain actuarial, etc.)
|
-
|
-
|
2,710
|
2,710
|
|
Non-GAAP Segment cash
cost of coal sales
|
$
191,318
|
$
271,010
|
$
-
|
$
462,328
|
|
Tons sold
|
1,908
|
18,365
|
|
|
|
Cash cost per ton
sold
|
$
100.27
|
$
14.76
|
|
|
|
Arch Resources, Inc.
and Subsidiaries
|
|
Reconciliation of
Non-GAAP Measures
|
|
(In
thousands)
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA is
defined as net income attributable to the Company before the effect
of net interest (income) expense, income taxes, depreciation,
depletion and amortization, accretion on asset retirement
obligations and nonoperating expenses. Adjusted EBITDA may also be
adjusted for items that may not reflect the trend of future results
by excluding transactions that are not indicative of the Company's
core operating performance.
|
|
|
Adjusted EBITDA is not
a measure of financial performance in accordance with generally
accepted accounting principles, and items excluded from Adjusted
EBITDA are significant in understanding and assessing our financial
condition. Therefore, Adjusted EBITDA should not be considered in
isolation, nor as an alternative to net income, income from
operations, cash flows from operations or as a measure of our
profitability, liquidity or performance under generally accepted
accounting principles. The Company uses adjusted EBITDA to measure
the operating performance of its segments and allocate resources to
the segments. Furthermore, analogous measures are used by industry
analysts and investors to evaluate our operating performance.
Investors should be aware that our presentation of Adjusted EBITDA
may not be comparable to similarly titled measures used by other
companies. The table below shows how we calculate Adjusted
EBITDA.
|
|
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
2023
|
2022
|
|
2023
|
2022
|
|
(Unaudited)
|
|
(Unaudited)
|
|
Net income
|
$
73,691
|
$
181,007
|
|
$
349,152
|
$
860,443
|
|
Provision for income
taxes
|
16,781
|
474
|
|
66,839
|
1,424
|
|
Interest (income)
expense, net
|
(1,683)
|
1,836
|
|
(1,557)
|
13,469
|
|
Depreciation, depletion
and amortization
|
36,717
|
33,958
|
|
108,273
|
98,948
|
|
Accretion on asset
retirement obligations
|
5,292
|
4,430
|
|
15,877
|
13,290
|
|
Non-service related
pension and postretirement benefit (credits) costs
|
(4,507)
|
857
|
|
(5,692)
|
2,189
|
|
Net loss resulting from
early retirement of debt
|
-
|
394
|
|
1,126
|
14,143
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
$
126,291
|
$
222,956
|
|
$
534,018
|
$
1,003,906
|
|
EBITDA from idled or
otherwise disposed operations
|
30
|
3,624
|
|
8,726
|
9,972
|
|
Selling, general and
administrative expenses
|
24,279
|
26,107
|
|
73,092
|
79,271
|
|
Other
|
1,095
|
(690)
|
|
7,189
|
8,114
|
|
|
|
|
|
|
|
Segment Adjusted EBITDA
from coal operations
|
$
151,695
|
$
251,997
|
|
$
623,025
|
$
1,101,263
|
|
|
|
|
|
|
|
Segment Adjusted
EBITDA
|
|
|
|
|
|
|
Metallurgical
|
128,322
|
155,185
|
|
524,218
|
810,615
|
|
Thermal
|
23,373
|
96,812
|
|
98,807
|
290,648
|
|
|
|
|
|
|
|
Total Segment Adjusted
EBITDA
|
$
151,695
|
$
251,997
|
|
$
623,025
|
$
1,101,263
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discretionary cash
flow
|
|
|
|
|
|
|
Three Months
Ended
September 30,
|
|
|
Nine Months
Ended
September 30,
|
|
|
2023
|
|
|
2023
|
|
|
(Unaudited)
|
|
|
(Unaudited)
|
|
|
Cash flow from
operating activities
|
$
130,932
|
|
|
$
453,818
|
|
|
Less: Capital
expenditures
|
(44,424)
|
|
|
(121,030)
|
|
|
Discretionary cash
flow
|
$
86,508
|
|
|
$
332,788
|
|
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SOURCE Arch Resources, Inc.