Ships 2.0 million tons of coking coal despite
extended channel closure in Baltimore
Sets quarterly production
record in metallurgical segment
Achieves net income of
$14.8 million and adjusted EBITDA of
$60.0 million
Repurchases
94,367 shares and declares quarterly cash dividend of $0.25 per share
ST.
LOUIS, July 25, 2024 /PRNewswire/ -- Arch
Resources, Inc. (NYSE: ARCH) today reported net income of
$14.8 million, or $0.81 per diluted share, in the second quarter of
2024, compared with net income of $77.4
million, or $4.04 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 $60.0
million in the second quarter of 2024. This compares to
$130.4 million of adjusted EBITDA in
the second quarter of 2023. Revenues totaled $608.8 million for the three months ended
June 30, 2024, versus $757.3 million in the prior-year quarter.
In the second quarter of 2024, Arch overcame logistical
challenges and drove forward with its key strategic priorities and
objectives, as the company:
- Shipped 2.0 million tons of coking coal despite the extended
closure of the Baltimore shipping
channel following the tragic collapse of the Francis Scott Key
Bridge
- Achieved record production levels from its metallurgical
segment while continuing to progress towards District 2 at Leer
South, where mining conditions are expected to be more
advantageous
- Paid down an incremental $12.5
million of debt, bringing the company's total debt level to
$133.3 million and its net positive
cash position to $146.0 million
- Repurchased an additional 94,367 shares at a total investment
of $15.0 million, bringing the
overall reduction in share count to over 3.5 million shares, or
more than 16 percent, when compared to the level in May 2022, and
- Declared a $0.25 fixed dividend,
for a total payment of $4.6 million,
payable in September.
"During the quarter, the Arch team moved quickly and nimbly in
the wake of the tragic bridge collapse in Baltimore, taking steps to facilitate the
continuing flow of our coking coal products to steelmakers and
redirecting volumes to our 35-percent-owned DTA facility," said
Paul A. Lang, Arch's CEO. "Through
these efforts, the metallurgical segment – in collaboration with
our railroad and terminal partners – succeeded in shipping more
than two million tons of coking coal even as Baltimore's deepwater channel remained closed
throughout the first 70 days of the quarter before all restrictions
were lifted on the shipping channel on June
10. In addition, the metallurgical segment delivered a
record-setting quarterly production performance while continuing to
progress systematically towards a more geologically advantageous
reserve area at Leer South."
While Arch was able to move a substantial amount of coking coal
in Q2, the additional efforts required to achieve these volume
levels along with other impacts of the bridge collapse acted to
pressure sales netbacks. In total, the metallurgical segment's
adjusted EBITDA was reduced by more than $12
million as a result of vessel demurrage, retimed vessel
movements, increased rail surcharge fees, and mid-streaming
activities.
"Even with Q2's logistical challenges and a meaningful working
capital build, Arch deployed an incremental $19.6 million in our capital return program via
the repurchase of 94,000 shares of common stock and the declaration
of a $0.25 per share fixed dividend
payable in September," Lang said. "Since the relaunch of the
capital return program in February
2022, Arch has now deployed well over $1.3 billion in that program."
Operational Update
"The Arch team did an excellent job of managing through the
highly challenging logistical environment during the quarter,
delivering record overall production levels in our core
metallurgical segment, driving ahead with development work in
advance of the transition to District 2 at Leer South, and managing
the cost structure in our thermal segment in a way that should set
the stage for a much stronger second half performance," said
John T. Drexler, Arch's president.
"As we look ahead to the year's back half, we believe we are
well-positioned to deliver positive step-changes in our
metallurgical coking coal shipments, our per-ton metallurgical
costs, and our thermal segment cash margins."
|
___________________________
|
|
1
Adjusted EBITDA is defined and reconciled in the "Reconciliation
of Non-GAAP measures" in this release.
|
|
|
|
|
|
Metallurgical
|
|
|
|
|
|
2Q24
|
|
|
1Q24
|
|
|
2Q23
|
|
|
|
|
|
|
|
|
|
|
Tons sold (in millions)
|
|
2.2
|
|
|
2.2
|
|
|
2.5
|
|
Coking
|
|
2.0
|
|
|
1.9
|
|
|
2.3
|
|
Thermal
|
|
0.1
|
|
|
0.3
|
|
|
0.2
|
|
Coal sales per ton sold
|
|
$131.97
|
|
|
$149.98
|
|
|
$143.67
|
|
Coking
|
|
$139.33
|
|
|
$165.97
|
|
|
$153.38
|
|
Thermal
|
|
$32.14
|
|
|
$28.85
|
|
|
$37.36
|
|
Cash cost per ton
sold
|
|
$91.03
|
|
|
$94.31
|
|
|
$89.94
|
|
Cash margin per ton
|
|
$40.94
|
|
|
$55.67
|
|
|
$53.73
|
|
|
|
|
|
|
|
|
|
|
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.
|
Arch's core metallurgical segment contributed adjusted EBITDA of
$87.3 million in the second quarter.
As indicated, the unexpected efforts to maintain shipment levels in
the wake of the Baltimore bridge
collapse acted to reduce adjusted EBITDA by more than $12 million, principally via lower sales
netbacks.
In addition, the metallurgical segment deferred the shipment of
nearly 150,000 tons of thermal byproduct, as it sought to direct
every feasible loading slot to coking coal vessels. Given that the
thermal byproduct is inventoried differently, the reduced shipping
schedule for this product served to increase the segment's cash
cost per ton sold by an estimated $6
per ton. That cost impact was counterbalanced by a severance tax
rebate of $12.8 million from the
State of West Virginia related to
investment incentive legislation aimed at boosting employment and
production levels in the state. Arch expects the segment's cash
cost per ton sold to benefit significantly when the excess thermal
byproduct tons are monetized in the year's second half.
The company continues to guide to coking coal sales volume of
8.6 to 9.0 million tons for the full year, with the expectation of
significantly higher shipping levels in the second half of 2024.
Similarly, the company continues to guide to an average per-ton
cost for the metallurgical segment of $87 to $92, with
the expectation of lower unit costs in the year's second half.
|
|
Thermal
|
|
|
2Q24
|
|
|
1Q24
|
|
|
2Q23
|
|
|
|
|
|
|
|
|
|
|
Tons sold (in
millions)
|
|
11.1
|
|
|
12.8
|
|
|
16.3
|
|
Coal sales per ton
sold
|
|
$18.03
|
|
|
$17.60
|
|
|
$16.81
|
|
Cash cost per ton
sold
|
|
$18.07
|
|
|
$17.65
|
|
|
$15.04
|
|
Cash margin per ton
|
|
($0.04)
|
|
|
($0.05)
|
|
|
$1.77
|
|
|
|
|
|
|
|
|
|
|
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.
|
Arch's thermal segment effectively broke even for the second
straight quarter. Arch's West Elk longwall mine operated
efficiently and generated a solid cash margin, while the Powder
River Basin assets were cash negative for the quarter as they
continued to operate at a stripping rate in excess of shipment
levels, which were further reduced by typical seasonal weakness in
the spring quarter. The thermal segment expects to benefit from
cost-cutting initiatives as well as the excess stripping levels in
the year's second half, when shipped volumes are expected to exceed
stripping rates markedly. Since the fourth quarter of 2016, the
thermal segment has generated $1.2
billion more in adjusted EBITDA than it has expended in
capital.
Financial, Liquidity and Capital Return Program
Update
During the second quarter, Arch deployed $19.6 million in its capital return program via
the repurchase of 94,367 shares of common stock for $15.0 million, or $158.94 per share, and the declaration of a fixed
dividend of $0.25 per share, with a
total payment of $4.6 million. The
company generated discretionary cash flow of $12.3 million, which reflected the impact of a
$15.2 million working capital
build.
"The centerpiece of our value proposition is the planned return
to stockholders of effectively 100 percent of the company's
discretionary cash flow over time," Lang said. "With the
significant streamlining of our balance sheet, the emphasis on
share repurchases in our capital return formula, and the build of
surplus cash for more opportunistic share repurchases in the event
of a market pullback, we remain in an excellent position to
substantially reduce the share count over time, and in doing so
drive significant value for stockholders."
Arch paid down $12.5 million in
debt during Q2 and ended the quarter with $279.3 million in cash, cash equivalents and
short-term investments. Arch ended the quarter with a net cash
position of $146.0 million.
The just-declared dividend is payable on September 13,
2024, to stockholders of record on August 30, 2024.
In total, Arch has now used common stock and convertible notes
repurchases and the unwinding of the capped calls to reduce shares
outstanding by over 3.5 million shares, or more than 16 percent,
when compared to the level in May
2022.
Arch has deployed more than $1.3
billion under its capital return program since its relaunch
in February 2022 – inclusive of the
unwind of the capped call instrument and the just-declared
September dividend – including $731.5
million, or $38.78 per share,
in dividends and $614.7 million in
common stock and convertible notes repurchases and retirements.
Since the second quarter of 2017 – and inclusive of the program's
first phase – Arch has deployed more than $2.2 billion under its capital return program. As
of June 30, 2024, Arch had
$187.0 million of remaining
authorization under its existing $500
million share repurchase program.
Sustainability Update
Arch maintained its exemplary environmental, social and
governance performance during the second quarter. Arch's subsidiary
operations achieved an aggregate total lost-time incident rate of
0.47 incidents per 200,000 employee-hours worked during the year's
first half, which is more than four times better than the industry
average. On the environmental front, the company again recorded
zero environmental violations under SMCRA as well as zero water
quality exceedances across all its subsidiary operations for the
quarter.
During the quarter, the State of
Colorado recognized the West Elk Mine with the Outstanding
Safety Performance Award; the Excellence in Innovative Safety
Technology Award; and the Excellence in Mining Reclamation Award
for the deployment of advanced technology to improve the
reclamation process. In addition, the State of Wyoming honored the Coal Creek mine with a surface mine safety
award.
Market Update
Global coking coal demand remains relatively subdued at present,
reflective of the general malaise in the global macroeconomic
environment. Weak infrastructure and property market spending in
China, the advent of the monsoon
season in India, and a still-slow
climb out from multiple quarters of stagnation in Europe are all weighing on global steel
demand, with the expected knock-on effect on coking coal demand.
Despite those pressures, Asian steelmakers continue to signal an
expected need for steadily increasing volumes in future periods, as
they seek to identify the critical inputs they will need as new
coke-making and blast furnace capacity comes online.
Meanwhile, the coking coal supply story remains muted,
reflecting degradation and depletion of the resource base in major
supply regions; only modest investment in new and replacement
capacity; recent mine outages that have acted to remove 2 to 3
percent of supply to the global seaborne market; and an
increasingly fragile logistical supply chain. Moreover, we believe
that current coking coal prices are below the marginal cost of
production on a global basis. As a result of these various factors,
we expect coking coal markets to balance quickly once global demand
begins to reassert itself.
Outlook
"Looking ahead, we remain sharply focused on driving continuous
improvement in execution across our entire operating platform in
support of strong, value-generating capital returns for our
stockholders, even in today's subdued market environment," Lang
said. "With our cost-competitive coking coal portfolio,
high-quality product suite, rapidly expanding penetration in Asian
markets, and recognized sustainability leadership, we believe we
are exceptionally well-positioned to capitalize as global steel
demand stabilizes and then resumes its anticipated long-term,
upward growth trajectory."
|
|
|
|
2024
|
|
|
|
|
Tons
|
$ per ton
|
|
Sales Volume (in millions of tons)
|
|
|
|
|
|
|
|
|
Coking
|
|
|
|
8.6
|
-
|
9.0
|
|
|
|
Thermal
|
|
|
|
50.0
|
-
|
56.0
|
|
|
|
Total
|
|
|
|
58.6
|
|
65.0
|
|
|
|
|
|
|
|
|
|
|
|
|
Metallurgical (in millions of tons)
|
|
|
|
|
|
|
|
|
Committed, Priced
Coking North American
|
|
|
|
|
1.5
|
|
$157.05
|
|
Committed, Unpriced
Coking North American
|
|
|
|
|
-
|
|
|
|
Committed, Priced
Coking Seaborne
|
|
|
|
|
3.4
|
|
$151.12
|
|
Committed, Unpriced Coking Seaborne
|
|
|
|
|
2.5
|
|
|
|
Total Committed
Coking
|
|
|
|
|
|
7.4
|
|
|
|
|
|
|
|
|
|
|
|
|
Committed, Priced
Thermal Byproduct
|
|
|
|
|
0.6
|
|
$32.00
|
|
Committed, Unpriced Thermal
Byproduct
|
|
|
|
|
0.1
|
|
|
|
Total Committed Thermal
Byproduct
|
|
|
|
|
0.7
|
|
|
|
|
|
|
|
|
|
|
|
|
Average Metallurgical
Cash Cost
|
|
|
|
|
|
$87.00 -
$92.00
|
|
|
|
|
|
|
|
|
|
|
Thermal (in
millions of tons)
|
|
|
|
|
|
|
|
|
Committed,
Priced
|
|
|
|
|
|
52.4
|
|
$17.26
|
|
Committed, Unpriced
|
|
|
|
|
|
0.6
|
|
|
|
Total Committed
Thermal
|
|
|
|
|
|
53.0
|
|
|
|
Average Thermal Cash
Cost
|
|
|
|
|
|
|
$16.00 -
$17.00
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate (in
$ millions)
|
|
|
|
|
|
|
|
|
|
D,D&A
|
|
|
|
$165.0
|
-
|
$175.0
|
|
|
|
ARO
Accretion
|
|
|
|
$23.0
|
-
|
$25.0
|
|
|
|
S,G&A -
Cash
|
|
|
|
$70.0
|
-
|
$74.0
|
|
|
|
S,G&A -
Non-cash
|
|
|
|
$19.0
|
-
|
$22.0
|
|
|
|
Net Interest
Income
|
|
|
|
$0.0
|
-
|
$5.0
|
|
|
|
Capital
Expenditures
|
|
|
|
$155.0
|
-
|
$165.0
|
|
|
|
Cash Tax Payment
(%)
|
|
|
|
Approximately
0%
|
|
|
|
Income Tax Provision
(%)
|
|
|
|
11.0
|
-
|
13.0
|
|
|
|
|
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 $20 million and $25 million in
2024.
|
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; 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;
inflationary pressures on 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; 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; the effects of significant
foreign conflicts; the loss of, or significant reduction in,
purchases by our largest customers; our relationships with, and
other conditions affecting our customers and our ability to collect
payments from our customers; risks related to our international
growth; 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; 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; inaccuracies in our estimates of our
coal reserves; defects in title or the loss of a leasehold
interest; the availability and cost of surety bonds, including
potential collateral requirements; we may not have adequate
insurance coverage for some business risks; disruptions in the
supply of coal from third parties; decreases in the coal
consumption of electric power generators could result in less
demand and lower prices for thermal coal; 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;
public health emergencies, such as pandemics or epidemics, could
have an adverse effect on our business; 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 or 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 and our ability to use net operating losses and
certain tax credits; 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.
|
Arch Resources, Inc.
and Subsidiaries
|
|
Condensed
Consolidated Income Statements
|
|
(In thousands,
except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
2024
|
2023
|
|
2024
|
2023
|
|
(Unaudited)
|
|
(Unaudited)
|
|
|
|
|
|
|
|
Revenues
|
$608,751
|
$757,294
|
|
$1,288,941
|
$1,627,225
|
|
|
|
|
|
|
|
Costs, expenses and
other operating
|
|
|
|
|
|
|
Cost of sales
(exclusive of items shown separately below)
|
528,684
|
606,127
|
|
1,096,407
|
1,177,864
|
|
Depreciation, depletion
and amortization
|
38,439
|
36,077
|
|
77,259
|
71,556
|
|
Accretion on asset
retirement obligations
|
5,870
|
5,293
|
|
11,739
|
10,585
|
|
Selling, general and
administrative expenses
|
22,518
|
22,791
|
|
48,105
|
48,813
|
|
Other operating income,
net
|
(2,410)
|
(2,010)
|
|
(18,393)
|
(7,179)
|
|
593,101
|
668,278
|
|
1,215,117
|
1,301,639
|
|
|
|
|
|
|
|
Income from
operations
|
15,650
|
89,016
|
|
73,824
|
325,586
|
|
|
|
|
|
|
|
Interest expense,
net
|
|
|
|
|
|
|
Interest
expense
|
(3,933)
|
(3,537)
|
|
(8,249)
|
(7,663)
|
|
Interest and investment
income
|
5,403
|
4,201
|
|
11,503
|
7,537
|
|
1,470
|
664
|
|
3,254
|
(126)
|
|
|
|
|
|
|
|
Income before
nonoperating expenses
|
17,120
|
89,680
|
|
77,078
|
325,460
|
|
|
|
|
|
|
|
Nonoperating
expenses
|
|
|
|
|
|
|
Non-service related
pension and postretirement benefit (costs) credits
|
(285)
|
593
|
|
(571)
|
1,185
|
|
Net loss resulting from
early retirement of debt
|
-
|
-
|
|
-
|
(1,126)
|
|
(285)
|
593
|
|
(571)
|
59
|
|
|
|
|
|
|
|
Income before income
taxes
|
16,835
|
90,273
|
|
76,507
|
325,519
|
|
Provision for income
taxes
|
2,002
|
12,920
|
|
5,721
|
50,058
|
|
|
|
|
|
|
|
Net
income
|
$
14,833
|
$
77,353
|
|
$ 70,786
|
$
275,461
|
|
|
|
|
|
|
|
Net income per
common share
|
|
|
|
|
|
|
Basic earnings per
share
|
$ 0.82
|
$ 4.20
|
|
$
3.88
|
$
15.16
|
|
Diluted earnings per
share
|
$ 0.81
|
$ 4.04
|
|
$
3.82
|
$
14.16
|
|
|
|
|
|
|
|
Weighted average
shares outstanding
|
|
|
|
|
|
|
Basic weighted average
shares outstanding
|
18,097
|
18,406
|
|
18,222
|
18,165
|
|
Diluted weighted
average shares outstanding
|
18,295
|
19,135
|
|
18,535
|
19,459
|
|
|
|
|
|
|
|
Dividends declared per
common share
|
$ 1.11
|
$ 2.45
|
|
$
2.76
|
$
5.56
|
|
|
|
|
|
|
|
Adjusted EBITDA
(A)
|
$ 59,959
|
$130,386
|
|
$
162,822
|
$
407,727
|
|
|
(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)
|
|
|
|
|
|
|
|
June
30,
|
December
31,
|
|
2024
|
2023
|
|
(Unaudited)
|
|
|
Assets
|
|
|
|
Current
assets
|
|
|
|
Cash and cash
equivalents
|
$
243,707
|
$
287,807
|
|
Short-term
investments
|
35,583
|
32,724
|
|
Restricted
cash
|
1,100
|
1,100
|
|
Trade accounts
receivable
|
241,910
|
273,522
|
|
Other
receivables
|
6,005
|
13,700
|
|
Inventories
|
249,865
|
244,261
|
|
Other current
assets
|
52,621
|
64,653
|
|
Total current
assets
|
830,791
|
917,767
|
|
|
|
|
Property, plant and
equipment, net
|
1,244,597
|
1,228,891
|
|
|
|
|
Other
assets
|
|
|
|
Deferred income
taxes
|
119,310
|
124,024
|
|
Equity
investments
|
22,861
|
22,815
|
|
Fund for asset
retirement obligations
|
146,010
|
142,266
|
|
Other noncurrent
assets
|
46,999
|
48,410
|
|
Total other
assets
|
335,180
|
337,515
|
|
Total assets
|
$2,410,568
|
$2,484,173
|
|
|
|
|
Liabilities and
Stockholders' Equity
|
|
|
|
Current
liabilities
|
|
|
|
Accounts
payable
|
$
186,549
|
$
205,001
|
|
Accrued expenses and
other current liabilities
|
111,062
|
127,617
|
|
Current maturities of
debt
|
29,721
|
35,343
|
|
Total current
liabilities
|
327,332
|
367,961
|
|
Long-term
debt
|
101,661
|
105,252
|
|
Asset retirement
obligations
|
263,098
|
255,740
|
|
Accrued pension
benefits
|
832
|
878
|
|
Accrued postretirement
benefits other than pension
|
46,800
|
47,494
|
|
Accrued workers'
compensation
|
157,663
|
154,650
|
|
Other noncurrent
liabilities
|
62,617
|
72,742
|
|
Total
liabilities
|
960,003
|
1,004,717
|
|
|
|
|
Stockholders'
equity
|
|
|
|
Common Stock
|
308
|
306
|
|
Paid-in
capital
|
758,880
|
720,029
|
|
Retained
earnings
|
1,849,622
|
1,830,018
|
|
Treasury stock, at
cost
|
(1,193,876)
|
(1,109,679)
|
|
Accumulated other
comprehensive income
|
35,631
|
38,782
|
|
Total stockholders'
equity
|
1,450,565
|
1,479,456
|
|
Total liabilities and
stockholders' equity
|
$2,410,568
|
$2,484,173
|
|
Arch Resources, Inc.
and Subsidiaries
|
|
Condensed
Consolidated Statements of Cash Flows
|
|
(In
thousands)
|
|
|
|
|
|
|
|
Six Months Ended
June 30,
|
|
2024
|
2023
|
|
(Unaudited)
|
|
Operating
activities
|
|
|
|
Net income
|
$
70,786
|
$275,461
|
|
Adjustments to
reconcile to cash from operating activities:
|
|
|
|
Depreciation, depletion
and amortization
|
77,259
|
71,556
|
|
Accretion on asset
retirement obligations
|
11,739
|
10,585
|
|
Deferred income
taxes
|
5,567
|
49,824
|
|
Employee stock-based
compensation expense
|
10,445
|
13,206
|
|
Amortization relating
to financing activities
|
1,441
|
884
|
|
Gain on disposals and
divestitures, net
|
(150)
|
(393)
|
|
Reclamation work
completed
|
(4,451)
|
(11,757)
|
|
Contribution to fund
asset retirement obligations
|
(3,745)
|
(2,664)
|
|
Changes in:
|
|
|
|
Receivables
|
39,306
|
(13,057)
|
|
Inventories
|
(5,604)
|
(40,295)
|
|
Accounts payable,
accrued expenses and other current liabilities
|
(29,223)
|
(53,729)
|
|
Income taxes,
net
|
(45)
|
(828)
|
|
Other
|
14,121
|
24,093
|
|
Cash provided by
operating activities
|
187,446
|
322,886
|
|
|
|
|
Investing
activities
|
|
|
|
Capital
expenditures
|
(92,366)
|
(76,606)
|
|
Minimum royalty
payments
|
(988)
|
(1,113)
|
|
Proceeds from disposals
and divestitures
|
199
|
439
|
|
Purchases of short-term
investments
|
(30,535)
|
(13,772)
|
|
Proceeds from sales of
short-term investments
|
27,846
|
17,488
|
|
Investments in and
advances to affiliates, net
|
(6,516)
|
(9,927)
|
|
Cash used in investing
activities
|
(102,360)
|
(83,491)
|
|
|
|
|
Financing
activities
|
|
|
|
Proceeds from issuance
of term loan due 2025
|
20,000
|
-
|
|
Payments on term loan
due 2025
|
(3,333)
|
-
|
|
Payments on term loan
due 2024
|
(3,502)
|
(1,500)
|
|
Payments on convertible
debt
|
-
|
(58,430)
|
|
Net payments on other
debt
|
(21,992)
|
(24,849)
|
|
Debt financing
costs
|
(1,516)
|
-
|
|
Purchase of treasury
stock
|
(30,747)
|
(93,803)
|
|
Dividends
paid
|
(63,757)
|
(111,913)
|
|
Payments for taxes
related to net share settlement of equity awards
|
(24,339)
|
(27,217)
|
|
Proceeds from warrants
exercised
|
-
|
43,750
|
|
Cash used in financing
activities
|
(129,186)
|
(273,962)
|
|
|
|
|
Decrease in cash and
cash equivalents, including restricted cash
|
(44,100)
|
(34,567)
|
|
Cash and cash
equivalents, including restricted cash, beginning of
period
|
288,907
|
237,159
|
|
|
|
|
Cash and cash
equivalents, including restricted cash, end of
period
|
$244,807
|
$202,592
|
|
|
|
|
Cash and cash
equivalents, including restricted cash, end of
period
|
|
|
|
Cash and cash
equivalents
|
$243,707
|
$201,492
|
|
Restricted
cash
|
1,100
|
1,100
|
|
|
|
|
$244,807
|
$202,592
|
|
Arch Resources, Inc.
and Subsidiaries
|
|
Schedule of
Consolidated Debt
|
|
(In
thousands)
|
|
|
|
|
|
|
June
30,
|
December
31,
|
|
|
2024
|
2023
|
|
|
(Unaudited)
|
|
|
|
|
|
|
Term loan due 2025
($16.7 million face value)
|
|
$
16,667
|
$
-
|
|
Term loan due 2024
($0.0 million face value)
|
|
-
|
3,502
|
|
Tax exempt bonds ($98.1
million face value)
|
|
98,075
|
98,075
|
|
Other
|
|
18,536
|
40,529
|
|
Debt issuance
costs
|
|
(1,896)
|
(1,511)
|
|
|
131,382
|
140,595
|
|
Less: current
maturities of debt
|
|
29,721
|
35,343
|
|
Long-term
debt
|
|
$ 101,661
|
$ 105,252
|
|
|
|
|
|
Calculation of net
(cash) debt
|
|
|
|
|
Total debt (excluding
debt issuance costs)
|
|
$ 133,278
|
$
142,016
|
|
Less liquid
assets:
|
|
|
|
|
Cash and cash
equivalents
|
|
243,707
|
287,807
|
|
Short term
investments
|
|
35,583
|
32,724
|
|
|
279,290
|
320,531
|
|
Net (cash)
debt
|
|
$(146,012)
|
$(178,425)
|
|
Arch Resources, Inc.
and Subsidiaries
|
|
Operational
Performance
|
|
(In millions, except
per ton data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
June 30, 2024
|
Three Months
Ended
March 31, 2024
|
Three Months
Ended
June 30, 2023
|
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
|
Metallurgical
|
|
|
|
|
|
|
|
Tons Sold
|
2.2
|
|
2.2
|
|
2.5
|
|
|
|
|
|
|
|
|
|
Segment
Sales
|
$286.2
|
$131.97
|
$322.8
|
$149.98
|
$353.5
|
$143.67
|
|
Segment Cash Cost of
Sales
|
197.4
|
91.03
|
203.0
|
94.31
|
221.3
|
89.94
|
|
Segment Cash
Margin
|
88.8
|
40.94
|
119.8
|
55.67
|
132.2
|
53.73
|
|
|
|
|
|
|
|
|
Thermal
|
|
|
|
|
|
|
|
Tons Sold
|
11.1
|
|
12.8
|
|
16.3
|
|
|
|
|
|
|
|
|
|
Segment
Sales
|
$199.7
|
$
18.03
|
$225.6
|
$
17.60
|
$273.1
|
$
16.81
|
|
Segment Cash Cost of
Sales
|
200.1
|
18.07
|
226.3
|
17.65
|
244.4
|
15.04
|
|
Segment Cash
Margin
|
(0.4)
|
(0.04)
|
(0.7)
|
(0.05)
|
28.7
|
1.77
|
|
|
|
|
|
|
|
|
Total Segment Cash
Margin
|
$ 88.4
|
|
$119.1
|
|
$160.9
|
|
|
|
|
|
|
|
|
|
Selling, general and
administrative expenses
|
(22.5)
|
|
(25.6)
|
|
(22.8)
|
|
|
Other
|
(5.9)
|
|
9.4
|
|
(7.7)
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
$ 59.9
|
|
$102.9
|
|
$130.4
|
|
|
|
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
June 30, 2024
|
Metallurgical
|
Thermal
|
All
Other
|
Consolidated
|
|
(In
thousands)
|
|
|
|
|
|
GAAP Revenues in the
Condensed Consolidated Income Statements
|
$
375,958
|
$
232,793
|
$
-
|
$
608,751
|
|
Less: Adjustments to
reconcile to Non-GAAP Segment coal sales
revenue
|
|
|
|
|
|
Transportation
costs
|
89,794
|
33,126
|
-
|
122,920
|
|
Non-GAAP Segment coal
sales revenues
|
$
286,164
|
$199,667
|
$
-
|
$
485,831
|
|
Tons
sold
|
2,168
|
11,073
|
|
|
|
Coal sales per ton
sold
|
$
131.97
|
$
18.03
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter ended
March 31, 2024
|
Metallurgical
|
Thermal
|
All
Other
|
Consolidated
|
|
(In
thousands)
|
|
|
|
|
|
GAAP Revenues in the
Condensed Consolidated Income Statements
|
$
417,065
|
$
263,125
|
$
-
|
$
680,190
|
|
Less: Adjustments to
reconcile to Non-GAAP Segment coal sales
revenue
|
|
|
|
|
|
Transportation
costs
|
94,261
|
37,486
|
-
|
131,747
|
|
Non-GAAP Segment coal
sales revenues
|
$
322,804
|
$225,639
|
$
-
|
$
548,443
|
|
Tons
sold
|
2,152
|
12,821
|
|
|
|
Coal sales per ton
sold
|
$
149.98
|
$
17.60
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
|
|
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
June 30, 2024
|
Metallurgical
|
Thermal
|
All
Other
|
Consolidated
|
|
(In
thousands)
|
|
|
|
|
|
GAAP Cost of sales in
the Condensed Consolidated Income Statements
|
$
287,187
|
$
232,298
|
$
9,199
|
$
528,684
|
|
Less: Adjustments to
reconcile to Non-GAAP Segment cash cost of coal
sales
|
|
|
|
|
|
Diesel fuel risk
management derivative settlements classified in "other
income"
|
-
|
(900)
|
-
|
(900)
|
|
Transportation
costs
|
89,794
|
33,126
|
-
|
122,920
|
|
Cost of coal sales from
idled or otherwise disposed operations
|
-
|
-
|
4,692
|
4,692
|
|
Other (operating
overhead, certain actuarial, etc.)
|
-
|
-
|
4,507
|
4,507
|
|
Non-GAAP Segment cash
cost of coal sales
|
$
197,393
|
$
200,072
|
$
-
|
$
397,465
|
|
Tons sold
|
2,168
|
11,073
|
|
|
|
Cash cost per ton
sold
|
$
91.03
|
$
18.07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter ended
March 31, 2024
|
Metallurgical
|
Thermal
|
All
Other
|
Consolidated
|
|
(In
thousands)
|
|
|
|
|
|
GAAP Cost of sales in
the Condensed Consolidated Income Statements
|
$
297,251
|
$
262,928
|
$
7,544
|
$
567,723
|
|
Less: Adjustments to
reconcile to Non-GAAP Segment cash cost of coal
sales
|
|
|
|
|
|
Diesel fuel risk
management derivative settlements classified in "other
income"
|
-
|
(900)
|
-
|
(900)
|
|
Transportation
costs
|
94,261
|
37,486
|
-
|
131,747
|
|
Cost of coal sales from
idled or otherwise disposed operations
|
-
|
-
|
4,289
|
4,289
|
|
Other (operating
overhead, certain actuarial, etc.)
|
-
|
-
|
3,255
|
3,255
|
|
Non-GAAP Segment cash
cost of coal sales
|
$
202,990
|
$
226,342
|
$
-
|
$
429,332
|
|
Tons sold
|
2,152
|
12,821
|
|
|
|
Cash cost per ton
sold
|
$
94.31
|
$
17.65
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
|
|
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 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
June 30,
|
|
Six Months Ended
June 30,
|
|
2024
|
2023
|
|
2024
|
2023
|
|
(Unaudited)
|
|
(Unaudited)
|
|
Net income
|
$
14,833
|
$
77,353
|
|
$
70,786
|
$
275,461
|
|
Provision for income
taxes
|
2,002
|
12,920
|
|
5,721
|
50,058
|
|
Interest expense,
net
|
(1,470)
|
(664)
|
|
(3,254)
|
126
|
|
Depreciation, depletion
and amortization
|
38,439
|
36,077
|
|
77,259
|
71,556
|
|
Accretion on asset
retirement obligations
|
5,870
|
5,293
|
|
11,739
|
10,585
|
|
Non-service related
pension and postretirement benefit (credits) costs
|
285
|
(593)
|
|
571
|
(1,185)
|
|
Net loss resulting from
early retirement of debt
|
-
|
-
|
|
-
|
1,126
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
$
59,959
|
$
130,386
|
|
$
162,822
|
$
407,727
|
|
EBITDA from idled or
otherwise disposed operations
|
3,695
|
4,664
|
|
7,392
|
8,696
|
|
Selling, general and
administrative expenses
|
22,518
|
22,791
|
|
48,105
|
48,813
|
|
Other
|
2,172
|
4,177
|
|
491
|
6,094
|
|
|
|
|
|
|
|
Segment Adjusted EBITDA
from coal operations
|
$
88,344
|
$
162,018
|
|
$
218,810
|
$
471,330
|
|
|
|
|
|
|
|
Segment Adjusted
EBITDA
|
|
|
|
|
|
|
Metallurgical
|
87,276
|
132,839
|
|
216,811
|
395,896
|
|
Thermal
|
1,068
|
29,179
|
|
1,999
|
75,434
|
|
|
|
|
|
|
|
Total Segment Adjusted
EBITDA
|
$
88,344
|
$
162,018
|
|
$
218,810
|
$
471,330
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discretionary cash
flow
|
|
|
|
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
2024
|
2023
|
|
2024
|
2023
|
|
(Unaudited)
|
|
(Unaudited)
|
|
Cash flow from
operating activities
|
$
59,179
|
$
196,765
|
|
$
187,446
|
$
322,886
|
|
Less: Capital
expenditures
|
(46,920)
|
(46,065)
|
|
(92,366)
|
(76,606)
|
|
Discretionary cash
flow
|
$
12,259
|
$
150,700
|
|
$
95,080
|
$
246,280
|
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SOURCE Arch Resources, Inc.