Reports another record quarterly earnings
performance
Announces a quarterly dividend of $135.3 million, or $8.11 per share
ST.
LOUIS, April 26, 2022 /PRNewswire/ -- Arch
Resources, Inc. (NYSE: ARCH) today reported net income of
$271.9 million, or $12.89 per diluted share, in the first quarter of
2022, compared with a net loss of $6.0
million, or $0.40 per diluted
share, in the prior-year period. Arch had adjusted earnings
before interest, taxes, depreciation, depletion, amortization,
accretion on asset retirement obligations (ARO), and non-operating
expenses ("adjusted EBITDA")
1 of $321.0 million in the first quarter of 2022,
which included a $15.5 million
non-cash mark-to-market loss associated with its coal-hedging
activities. This compares to $30.9
million of adjusted EBITDA in the first quarter of 2021,
which included a $0.5 million
non-cash mark-to-market loss associated with its coal-hedging
activities. Revenues totaled $867.9
million for the three months ended March 31, 2022, versus $357.5 million in the prior-year
quarter.
In the first quarter of 2022, Arch made significant
progress on numerous strategic priorities and
objectives:
- Delivered record quarterly net income for the second
straight quarter;
- Achieved a record gross margin in its core metallurgical
segment despite substantially lower than ratable shipment levels
stemming from rail service disruptions;
- Repaid $281.7 million of
indebtedness, restoring the balance sheet to a net debt neutral
position;
- Reached $100 million, or
nearly 80 percent of the targeted balance for its thermal mine
reclamation fund, consistent with achieving fully funded status by
Q3 2022; and
- Announced a second quarter dividend of $135.3 million, or $8.11 per share, in connection with the recent
relaunch of its capital return program.
"The Arch team executed at a high level during the first
quarter, delivering record earnings despite significant
rail-related challenges that constrained both coking and thermal
coal shipments," said Paul A. Lang,
Arch's CEO and president. "Based on this strong first quarter
performance, and in accordance with our new capital return formula,
the board has declared a quarterly dividend of $135.3 million, or $8.11 per share, equivalent to 50 percent of
Arch's first quarter discretionary cash flow. We view this
substantial dividend – the first under our relaunched capital
return program – as powerful evidence of Arch's extraordinary
cash-generating potential, which in turn sets the stage for further
significant payments in coming quarters."
As previously announced, Arch plans to maintain at least
$300 million of cash and cash
equivalents on its balance sheet, which it believes is prudent
given the cyclical nature of coking coal markets. Because of
the steps Arch has taken year-to-date in 2022 to reduce debt and
build out its thermal mine reclamation fund, a portion of the cash
generated in the first quarter will be preserved on the balance
sheet to maintain targeted liquidity levels. The board
continues to evaluate the optimal use of the discretionary cash
remaining after the quarterly dividend payment.
"The board views our robust, multi-faceted capital return
program as an appropriate way to reward stockholders for their
steadfast support as we executed our strategic pivot towards steel
and metallurgical markets and as we completed the buildout of Leer
South," Lang said. "We view the new capital return model as
balanced, durable and well-aligned with stockholder interests and
preferences, and expect our capital return program to drive
significant value for our stockholders going
forward."
Capital Allocation Model
In February 2022, Arch
announced a new capital allocation model that includes the return
to stockholders of 50 percent of the prior quarter's discretionary
cash flow – defined as cash flow from operations minus capital
expenditures and contributions to the thermal mine reclamation fund
– via a variable quarterly cash dividend in conjunction with a
fixed quarterly cash dividend.
Arch intends to retain the remaining 50 percent of the
prior quarter's discretionary cash flow for use in share buybacks,
the repurchase of potentially dilutive securities, special
dividends, and/or capital preservation.
The second quarter dividend payment of $8.11 per share – which includes a fixed
component of $0.25 per share and a
variable component of $7.86 per share
– is payable on June 15, 2022 to
stockholders of record on May 31,
2022.
Arch has $222.6 million of
authorization remaining under its existing share repurchase
program.
Financial and Liquidity Update
Arch ended the first quarter with cash and
cash equivalents of $318.7 million
and total liquidity of $386.0
million.
During the quarter, Arch repaid $281.7 million of its outstanding
indebtedness. With these repayments, Arch ended the quarter
with just $322.8 million of debt and
a near-equivalent amount of cash and cash equivalents.
"Our fortified and conservative balance sheet provides a
strong financial foundation for our capital return program, while
ensuring that we have the financial flexibility to manage through
future market downturns," said Matthew C.
Giljum, Arch's chief financial officer.
Strategic Plan for Legacy Thermal Assets
During the first quarter, Arch continued to deliver
on its dual objectives of driving forward with an
accelerated reclamation plan at its legacy thermal operations,
while simultaneously harvesting cash from these assets.
During the quarter, the legacy thermal segment delivered
$100.5 million in segment-level
adjusted EBITDA while expending just $4.0
million in capital. Over the past 22 quarters, Arch's
thermal operations have contributed more than $1 billion in segment-level adjusted EBITDA,
while expending just $114.0 million
in capital.
Since the beginning of 2021, Arch has reduced the asset
retirement obligation at its Powder River Basin operations by
$39.4 million, or more than 20
percent – from $189.8
million at year-end 2020 to $150.4
million at March 31,
2022. Additionally, Arch has created and implemented a
thermal mine reclamation fund that it is using to pre-fund and
defease the long-term mine closure and reclamation obligations of
its Powder River Basin operations. Arch contributed
$20 million to this fund in the
fourth quarter of 2021, another $20
million in the first quarter of 2022, and an incremental
$60 million in April 2022, bringing the current balance of the
fund to $100 million. The
company is targeting a funding level of $130
million, in line with the asset retirement obligation at the
Black Thunder mine, by July 2022.
"We are capitalizing on this period of historically strong
thermal coal prices by pre-funding the long-term closure
obligations of our legacy Powder River Basin operations," Giljum
said. "In doing so, we are setting the stage for strong,
continued cash generation from these assets even as we move forward
with winding them down in a careful and responsible
manner."
Operational Update
"During the first quarter, our core metallurgical segment
executed effectively and well despite rail-related volume
constraints, inflationary pressures and higher sales-sensitive
costs," said John T. Drexler, Arch's
chief operating officer. "As a result, we were able to
capitalize on historically strong coking coal pricing and deliver a
record gross margin."
|
|
|
|
|
Metallurgical
|
|
|
|
|
|
1Q22
|
|
|
4Q21
|
|
|
1Q21
|
|
|
|
|
|
|
|
|
|
Tons sold (in
millions)
|
|
1.5
|
|
|
2.0
|
|
|
1.7
|
Coking
|
|
1.5
|
|
|
1.9
|
|
|
1.5
|
Thermal
|
|
0.1
|
|
|
0.1
|
|
|
0.2
|
Coal sales per ton
sold
|
|
$255.52
|
|
|
$198.26
|
|
|
$83.76
|
Coking
|
|
$269.54
|
|
|
$206.28
|
|
|
$93.14
|
Thermal
|
|
$28.10
|
|
|
$24.99
|
|
|
$22.13
|
Cash cost per ton
sold
|
|
$88.04
|
|
|
$86.38
|
|
|
$59.63
|
Cash margin per
ton
|
|
$167.48
|
|
|
$111.88
|
|
|
$24.13
|
|
|
|
|
|
|
|
|
|
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
|
|
|
|
|
|
|
|
|
|
|
|
|
During the first quarter, the metallurgical segment's
realized price increased by nearly 30 percent on a sequential
basis, reflecting continuing strength in global metallurgical coal
markets. That increase – coupled with solid cost management –
drove a nearly 50 percent improvement in cash margin per ton.
During the quarter, the metallurgical segment only received around
60 percent of the trains it needed to move its coking coal output
to market. As a result, Arch ended the quarter with nearly 1
million tons of coking coal in mine and port stockpiles.
During the second quarter, Arch expects metallurgical sales volumes
to increase by 50 percent on a sequential basis even with the
ongoing rail challenges, and anticipates further improvements in
shipment levels in the second half of 2022.
"While rail service is improving, it remains well below the levels
needed to support the full productive capacity of our mining
operations," Drexler said. "That is particularly unfortunate
given the urgent, global need for both natural resources and energy
products as a result of the significant and ongoing trade flow
disruptions."
|
|
Thermal
|
|
|
1Q22
|
|
|
4Q21
|
|
|
1Q21
|
|
|
|
|
|
|
|
|
|
Tons sold (in
millions)
|
|
18.2
|
|
|
18.8
|
|
|
12.3
|
Coal sales per ton
sold
|
|
$18.85
|
|
|
$15.41
|
|
|
$13.16
|
Cash cost per ton
sold
|
|
$13.43
|
|
|
$11.84
|
|
|
$12.18
|
Cash margin per
ton
|
|
$5.42
|
|
|
$3.57
|
|
|
$0.98
|
|
|
|
|
|
|
|
|
|
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.
|
|
|
|
The average sales realization for the thermal segment
increased more than 20 percent sequentially, driving a greater than
50 percent increase in average cash margin per ton.
Market Update
Global metallurgical markets remain exceptionally
well-supported at present, with Arch's primary product, High-Vol A
coking coal, currently being assessed at $470 per metric ton on the U.S. East Coast.
Global steel markets have proven relatively resilient as well, with
steel prices in both Europe and
North America trading at elevated
levels and the outlook in Asia
buttressed by the resumption of integrated steel capacity
additions.
Arch views global supply constraints as a significant
driver in buoyant coking coal markets. Even after a sustained
period of high pricing, global coking coal supply continues to lag
due to a combination of operational and logistical challenges along
with years of under-investment. Similarly, the pipeline of
new coking coal projects remains depressed. In addition,
there continues to be significant uncertainty surrounding Russian
metallurgical coal exports, which constitute roughly 15 percent of
the seaborne market.
Strong thermal coal demand and pricing is also acting to
support global coking coal markets. Thermal coal is currently
trading at per-ton prices of $300 or
more in both the Pacific and Atlantic basins, which is spurring the
crossover of lower-quality coking coals into thermal
markets.
Looking Ahead
"Even with persistent rail challenges, Arch is
exceptionally well-positioned to capitalize on constructive global
coking coal market dynamics as the year progresses," Lang
said. "We anticipate a significant increase in our financial
results in the second quarter given the highly favorable pricing
environment along with the anticipated step-up in coking coal
volumes, and we also expect continuing strength in the year's
second half as shipment levels normalize and as we have the
opportunity to monetize our high coking coal inventories.
These improvements should serve to further support the value to
stockholders of our new capital allocation model."
"With our world-class metallurgical asset
base, premium High-Vol A product slate, industry-leading ESG
performance, and top-tier marketing and logistics expertise, we
expect to generate substantial, long-term value for our
stockholders through our new capital return program, while
continuing to position the company to benefit from sustained global
economic development and the world's ongoing transition to a
low-carbon economy."
|
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|
|
2022
|
|
|
|
|
Tons
|
$ per ton
|
Sales Volume
(in millions of
tons)
|
|
|
|
|
|
|
Coking
|
|
|
|
9.0
|
-
|
9.8
|
|
|
Thermal
|
|
|
|
74.0
|
-
|
78.0
|
|
|
Total
|
|
|
|
83.0
|
|
87.8
|
|
|
|
|
|
|
|
|
|
|
|
Metallurgical
(in millions of
tons)
|
|
|
|
|
|
|
Committed, Priced
Coking North American
|
|
|
0.7
|
|
$214.77
|
Committed, Unpriced
Coking North American
|
|
|
0.2
|
|
|
Committed, Priced
Coking Seaborne
|
|
|
|
1.7
|
|
$266.26
|
Committed, Unpriced
Coking Seaborne
|
|
|
3.2
|
|
|
Total Committed
Coking
|
|
|
|
|
5.8
|
|
|
|
|
|
|
|
|
|
|
|
Committed, Priced
Thermal Byproduct
|
|
|
0.4
|
|
$27.14
|
Committed, Unpriced
Thermal Byproduct
|
|
|
-
|
|
|
Total Committed Thermal
Byproduct
|
|
|
|
0.4
|
|
|
|
|
|
|
|
|
|
|
|
Average Metallurgical
Cash Cost
|
|
|
|
|
$69.00 -
$79.00
|
|
|
|
|
|
|
|
|
|
Thermal (in millions of tons)
|
|
|
|
|
|
|
|
Committed,
Priced
|
|
|
|
|
|
77.9
|
|
$17.96
|
Committed,
Unpriced
|
|
|
|
|
2.5
|
|
|
Total Committed
Thermal
|
|
|
|
|
80.4
|
|
|
Average Thermal Cash
Cost
|
|
|
|
|
|
$12.90 -
$13.90
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate
(in $ millions)
|
|
|
|
|
|
|
|
D,D&A
|
|
|
|
$140.0
|
-
|
$147.0
|
|
|
ARO
Accretion
|
|
|
|
$18.0
|
-
|
$21.0
|
|
|
S,G&A -
cash
|
|
|
|
$70.0
|
-
|
$74.0
|
|
|
S,G&A -
non-cash
|
|
|
|
$24.0
|
-
|
$26.0
|
|
|
Net Interest
Expense
|
|
|
$20.0
|
-
|
$26.0
|
|
|
Capital
Expenditures
|
|
|
$150.0
|
-
|
$160.0
|
|
|
Tax Provision
(%)
|
|
|
|
Approximately
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 $10 million and $20
million in 2022.
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 often contain words such as
"should," "could," "appears," "estimates," "expects,"
"anticipates," "intends," "may," "plans," "predicts," "projects,"
"believes," "seeks," or "will." Actual results may vary
significantly from those anticipated due to many factors,
including: impacts of the COVID-19 pandemic; 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; 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; 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; the loss of key
personnel or the failure to attract additional qualified personnel
and the availability of skilled employees and other workforce
factors; 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; 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 comply
with the restrictions imposed by our Term Loan Debt Facility and
other financing arrangements; our ability to service our
outstanding indebtedness and raise funds necessary to repurchase
Convertible Notes for cash following a fundamental change or to pay
any cash amounts due upon conversion; 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; 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; risks related to tax
legislation and our ability to use net operating losses and certain
tax credits; and our ability to pay base or variable dividends in
accordance with our announced capital return program. 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 affect us.
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 to be materially different than
those expressed in our forward-looking statements. These
forward-looking statements speak only as of the date on which such
statements were made, and we do not undertake 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 Statements of Operations
|
(In thousands,
except per share data)
|
|
|
|
|
|
|
|
|
|
Three Months Ended
March 31,
|
|
|
2022
|
2021
|
|
|
(Unaudited)
|
|
|
|
|
|
Revenues
|
$
867,936
|
$
357,543
|
|
|
|
|
|
Costs, expenses and
other operating
|
|
|
|
Cost of sales
(exclusive of items shown separately below)
|
508,225
|
309,906
|
|
Depreciation, depletion
and amortization
|
32,210
|
25,797
|
|
Accretion on asset
retirement obligations
|
4,430
|
5,437
|
|
Change in fair value of
coal derivatives and coal trading activities, net
|
15,519
|
528
|
|
Selling, general and
administrative expenses
|
26,648
|
21,480
|
|
Other operating income,
net
|
(3,439)
|
(5,268)
|
|
|
583,593
|
357,880
|
|
|
|
|
|
Income (loss) from
operations
|
284,343
|
(337)
|
|
|
|
|
|
Interest expense,
net
|
|
|
|
Interest
expense
|
(7,047)
|
(4,128)
|
|
Interest and investment
income
|
24
|
328
|
|
|
(7,023)
|
(3,800)
|
|
|
|
|
|
Income (loss) before
nonoperating expenses
|
277,320
|
(4,137)
|
|
|
|
|
|
Nonoperating
expenses
|
|
|
|
Non-service related
pension and postretirement benefit costs
|
(873)
|
(1,527)
|
|
Net loss resulting from
early retirement of debt
|
(4,120)
|
-
|
|
|
(4,993)
|
(1,527)
|
|
|
|
|
|
Income (loss) before
income taxes
|
272,327
|
(5,664)
|
|
Provision for income
taxes
|
455
|
378
|
|
|
|
|
|
Net income
(loss)
|
$
271,872
|
$
(6,042)
|
|
|
|
|
|
Net income (loss)
per common share
|
|
|
|
Basic earnings (loss)
per share
|
$
17.60
|
$
(0.40)
|
|
Diluted earnings (loss)
per share
|
$
12.89
|
$
(0.40)
|
|
|
|
|
|
Weighted average
shares outstanding
|
|
|
|
Basic weighted average
shares outstanding
|
15,448
|
15,283
|
|
Diluted weighted
average shares outstanding
|
21,271
|
15,283
|
|
|
|
|
|
Dividends declared per
common share
|
$
0.25
|
$
-
|
|
|
|
|
|
Adjusted EBITDA
(A)
|
$
320,983
|
$
30,897
|
|
|
|
|
|
|
|
|
|
(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)
|
|
|
|
|
|
|
|
March
31,
|
December
31,
|
|
2022
|
2021
|
|
(Unaudited)
|
|
Assets
|
|
|
Current
assets
|
|
|
Cash and cash
equivalents
|
$
318,725
|
$
325,194
|
Short-term
investments
|
-
|
14,463
|
Restricted
cash
|
1,100
|
1,101
|
Trade accounts
receivable
|
323,167
|
324,304
|
Other
receivables
|
9,807
|
8,271
|
Inventories
|
203,997
|
156,734
|
Other current
assets
|
50,217
|
52,804
|
Total current
assets
|
907,013
|
882,871
|
|
|
|
Property, plant and
equipment, net
|
1,111,359
|
1,120,043
|
|
|
|
Other
assets
|
|
|
Equity
investments
|
16,494
|
15,403
|
Fund for asset
retirement obligations
|
40,000
|
20,000
|
Other noncurrent
assets
|
76,019
|
78,843
|
Total other
assets
|
132,513
|
114,246
|
Total assets
|
$
2,150,885
|
$
2,117,160
|
|
|
|
Liabilities and
Stockholders' Equity
|
|
|
Current
liabilities
|
|
|
Accounts
payable
|
$
147,284
|
$
131,986
|
Accrued expenses and
other current liabilities
|
179,200
|
167,304
|
Current maturities of
debt
|
182,611
|
223,050
|
Total current
liabilities
|
509,095
|
522,340
|
Long-term
debt
|
132,290
|
337,623
|
Asset retirement
obligations
|
193,745
|
192,672
|
Accrued pension
benefits
|
948
|
1,300
|
Accrued postretirement
benefits other than pension
|
73,828
|
73,565
|
Accrued workers'
compensation
|
222,462
|
224,105
|
Other noncurrent
liabilities
|
94,265
|
81,689
|
Total
liabilities
|
1,226,633
|
1,433,294
|
|
|
|
Stockholders'
equity
|
|
|
Common Stock
|
256
|
255
|
Paid-in
capital
|
748,999
|
784,356
|
Retained
earnings
|
986,797
|
712,478
|
Treasury stock, at
cost
|
(827,381)
|
(827,381)
|
Accumulated other
comprehensive income
|
15,581
|
14,158
|
Total stockholders'
equity
|
924,252
|
683,866
|
Total liabilities and
stockholders' equity
|
$
2,150,885
|
$
2,117,160
|
|
|
|
Arch Resources, Inc.
and Subsidiaries
|
Condensed
Consolidated Statements of Cash Flows
|
(In
thousands)
|
|
|
|
|
|
|
|
Three Months Ended
March 31,
|
|
2022
|
2021
|
|
(Unaudited)
|
Operating
activities
|
|
|
Net income
(loss)
|
$
271,872
|
$
(6,042)
|
Adjustments to
reconcile to cash from operating activities:
|
|
|
Depreciation, depletion
and amortization
|
32,210
|
25,797
|
Accretion on asset
retirement obligations
|
4,430
|
5,437
|
Deferred income
taxes
|
-
|
372
|
Employee stock-based
compensation expense
|
8,203
|
3,885
|
Amortization relating
to financing activities
|
770
|
1,326
|
Gain on disposals and
divestitures, net
|
(352)
|
(188)
|
Reclamation work
completed
|
(4,278)
|
(11,553)
|
Contribution to fund
asset retirement obligations
|
(20,000)
|
-
|
Changes in:
|
|
|
Receivables
|
(399)
|
(18,929)
|
Inventories
|
(47,263)
|
(28,387)
|
Accounts payable,
accrued expenses and other current liabilities
|
14,115
|
13,827
|
Income taxes,
net
|
442
|
(33)
|
Coal derivative assets
and liabilities, including margin account
|
15,833
|
(537)
|
Other
|
17,356
|
20,711
|
Cash provided by
operating activities
|
292,939
|
5,686
|
|
|
|
Investing
activities
|
|
|
Capital
expenditures
|
(22,288)
|
(76,758)
|
Minimum royalty
payments
|
-
|
(62)
|
Proceeds from disposals
and divestitures
|
360
|
188
|
Proceeds from sales of
short-term investments
|
14,450
|
34,981
|
Investments in and
advances to affiliates, net
|
(2,088)
|
(1,114)
|
Cash used in investing
activities
|
(9,566)
|
(42,765)
|
|
|
|
Financing
activities
|
|
|
Payments on term loan
due 2024
|
(271,537)
|
(750)
|
Proceeds from tax
exempt bonds
|
-
|
44,985
|
Net payments on other
debt
|
(10,134)
|
(9,536)
|
Debt financing
costs
|
-
|
(1,194)
|
Dividends
paid
|
(3,851)
|
-
|
Payments for taxes
related to net share settlement of equity awards
|
(4,827)
|
(1,316)
|
Proceeds from warrants
exercised
|
506
|
-
|
Cash (used in) provided
by financing activities
|
(289,843)
|
32,189
|
|
|
|
Decrease in cash and
cash equivalents, including restricted cash
|
(6,470)
|
(4,890)
|
Cash and cash
equivalents, including restricted cash, beginning of
period
|
326,295
|
193,445
|
|
|
|
Cash and cash
equivalents, including restricted cash, end of
period
|
$
319,825
|
$
188,555
|
|
|
|
Cash and cash
equivalents, including restricted cash, end of
period
|
|
|
Cash and cash
equivalents
|
$
318,725
|
$
169,593
|
Restricted
cash
|
1,100
|
18,962
|
|
|
|
|
$
319,825
|
$
188,555
|
|
|
|
Arch Resources, Inc.
and Subsidiaries
|
Schedule of
Consolidated Debt
|
(In
thousands)
|
|
|
|
|
|
|
March
31,
|
December
31,
|
|
|
2022
|
2021
|
|
|
(Unaudited)
|
|
|
|
|
|
Term loan due 2024
($8.8 million face value)
|
|
$
8,752
|
$
280,353
|
Tax exempt bonds ($98.1
million face value)
|
|
98,075
|
98,075
|
Convertible Debt
($155.3 million face value)
|
|
155,250
|
121,617
|
Other
|
|
60,720
|
70,836
|
Debt issuance
costs
|
|
(7,896)
|
(10,208)
|
|
|
314,901
|
560,673
|
Less: current
maturities of debt
|
|
182,611
|
223,050
|
Long-term
debt
|
|
$
132,290
|
$
337,623
|
|
|
|
|
Calculation of net
debt
|
|
|
|
Total debt (excluding
debt issuance costs)
|
|
$
322,797
|
$
570,881
|
Less liquid
assets:
|
|
|
|
Cash and cash
equivalents
|
|
318,725
|
325,194
|
Short term
investments
|
|
-
|
14,463
|
|
|
318,725
|
339,657
|
Net debt
|
|
$
4,072
|
$
231,224
|
|
|
|
|
Arch Resources, Inc.
and Subsidiaries
|
Operational
Performance
|
(In millions, except
per ton data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
March 31, 2022
|
Three Months
Ended
December 31, 2021
|
Three Months
Ended
March 31, 2021
|
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
Metallurgical
|
|
|
|
|
|
|
Tons Sold
|
1.5
|
|
2.0
|
|
1.7
|
|
|
|
|
|
|
|
|
Segment
Sales
|
$
394.3
|
$255.52
|
$
393.4
|
$198.26
|
$
144.0
|
$
83.76
|
Segment Cash Cost of
Sales
|
135.9
|
88.04
|
171.4
|
86.38
|
102.5
|
59.63
|
Segment Cash
Margin
|
258.4
|
167.48
|
222.0
|
111.88
|
41.5
|
24.13
|
|
|
|
|
|
|
|
Thermal
|
|
|
|
|
|
|
Tons Sold
|
18.2
|
|
18.8
|
|
12.3
|
|
|
|
|
|
|
|
|
Segment
Sales
|
$
342.9
|
$
18.85
|
$
289.0
|
$
15.41
|
$
161.8
|
$
13.16
|
Segment Cash Cost of
Sales
|
244.3
|
13.43
|
222.1
|
11.84
|
149.8
|
12.18
|
Segment Cash
Margin
|
98.6
|
5.42
|
66.9
|
3.57
|
12.0
|
0.98
|
|
|
|
|
|
|
|
Total Segment Cash
Margin
|
$
357.1
|
|
$
288.9
|
|
$
53.5
|
|
|
|
|
|
|
|
|
Selling, general and
administrative expenses
|
(26.6)
|
|
(25.7)
|
|
(21.5)
|
|
Other
|
(9.4)
|
|
41.2
|
|
(1.1)
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
$
321.0
|
|
$
304.4
|
|
$
30.9
|
|
|
|
|
|
|
|
|
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 statements of
operations, 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
March 31, 2022
|
Metallurgical
|
Thermal
|
All
Other
|
Consolidated
|
(In
thousands)
|
|
|
|
|
GAAP Revenues in the
Condensed Consolidated Statements of
Operations
|
$
472,171
|
$
395,765
|
$
-
|
$
867,936
|
Less: Adjustments to
reconcile to Non-GAAP Segment coal sales
revenue
|
|
|
|
|
Coal risk management
derivative settlements classified in "other
income"
|
-
|
9,074
|
-
|
9,074
|
Coal sales revenues
from idled or otherwise disposed operations and pass through
agreements not included in segments
|
-
|
-
|
(1)
|
(1)
|
Transportation
costs
|
77,863
|
43,744
|
1
|
121,608
|
Non-GAAP Segment coal
sales revenues
|
$
394,308
|
$
342,947
|
$
-
|
$
737,255
|
Tons
sold
|
1,543
|
18,195
|
|
|
Coal sales per ton
sold
|
$
255.52
|
$
18.85
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter ended
December 31, 2021
|
Metallurgical
|
Thermal
|
All
Other
|
Consolidated
|
(In
thousands)
|
|
|
|
|
GAAP Revenues in the
Condensed Consolidated Statements of
Operations
|
$
455,610
|
$
350,087
|
$
-
|
$
805,697
|
Less: Adjustments to
reconcile to Non-GAAP Segment coal sales
revenue
|
|
|
|
|
Coal risk management
derivative settlements classified in "other
income"
|
-
|
20,456
|
-
|
20,456
|
Coal sales revenues
from idled or otherwise disposed operations and pass through
agreements not included in segments
|
-
|
-
|
1
|
1
|
Transportation
costs
|
62,235
|
40,639
|
(1)
|
102,873
|
Non-GAAP Segment coal
sales revenues
|
$
393,375
|
$
288,992
|
$
-
|
$
682,367
|
Tons
sold
|
1,984
|
18,759
|
|
|
Coal sales per ton
sold
|
$
198.26
|
$
15.41
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter ended
March 31, 2021
|
Metallurgical
|
Thermal
|
All
Other
|
Consolidated
|
(In
thousands)
|
|
|
|
|
GAAP Revenues in the
Condensed Consolidated Statements of
Operations
|
$
178,781
|
$
177,540
|
$
1,222
|
$
357,543
|
Less: Adjustments to
reconcile to Non-GAAP Segment coal sales
revenue
|
|
|
|
|
Coal risk management
derivative settlements classified in "other
income"
|
(690)
|
552
|
-
|
(138)
|
Coal sales revenues
from idled or otherwise disposed operations and pass through
agreements not included in segments
|
-
|
-
|
1,217
|
1,217
|
Transportation
costs
|
35,489
|
15,167
|
5
|
50,661
|
Non-GAAP Segment coal
sales revenues
|
$
143,982
|
$
161,821
|
$
-
|
$
305,803
|
Tons
sold
|
1,719
|
12,292
|
|
|
Coal sales per ton
sold
|
$
83.76
|
$
13.16
|
|
|
|
|
|
|
|
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 statements of
operations, 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
March 31, 2022
|
Metallurgical
|
Thermal
|
All
Other
|
Consolidated
|
(In
thousands)
|
|
|
|
|
GAAP Cost of sales in
the Condensed Consolidated Statements of Operations
|
$
213,728
|
$
288,084
|
$
6,413
|
$
508,225
|
Less: Adjustments to
reconcile to Non-GAAP Segment cash cost of coal
sales
|
|
|
|
|
Diesel fuel risk
management derivative settlements classified in "other
income"
|
-
|
27
|
-
|
27
|
Transportation
costs
|
77,863
|
43,744
|
1
|
121,608
|
Cost of coal sales from
idled or otherwise disposed operations and pass through
agreements not included in segments
|
-
|
-
|
3,704
|
3,704
|
Other (operating
overhead, certain actuarial, etc.)
|
-
|
-
|
2,708
|
2,708
|
Non-GAAP Segment cash
cost of coal sales
|
$
135,865
|
$
244,313
|
$
-
|
$
380,178
|
Tons sold
|
1,543
|
18,195
|
|
|
Cash cost per ton
sold
|
$
88.04
|
$
13.43
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter ended
December 31, 2021
|
Metallurgical
|
Thermal
|
All
Other
|
Consolidated
|
(In
thousands)
|
|
|
|
|
GAAP Cost of sales in
the Condensed Consolidated Statements of Operations
|
$
233,626
|
$
262,726
|
$
(5,577)
|
$
490,775
|
Less: Adjustments to
reconcile to Non-GAAP Segment cash cost of coal
sales
|
|
|
|
|
Transportation
costs
|
62,235
|
40,639
|
(1)
|
102,873
|
Cost of coal sales from
idled or otherwise disposed operations and pass through
agreements not included in segments
|
-
|
-
|
(7,746)
|
(7,746)
|
Other (operating
overhead, certain actuarial, etc.)
|
-
|
-
|
2,170
|
2,170
|
Non-GAAP Segment cash
cost of coal sales
|
$
171,391
|
$
222,087
|
$
-
|
$
393,478
|
Tons sold
|
1,984
|
18,759
|
|
|
Cash cost per ton
sold
|
$
86.38
|
$
11.84
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter ended
March 31, 2021
|
Metallurgical
|
Thermal
|
All
Other
|
Consolidated
|
(In
thousands)
|
|
|
|
|
GAAP Cost of sales in
the Condensed Consolidated Statements of Operations
|
$
138,002
|
$
164,941
|
$
6,963
|
$
309,906
|
Less: Adjustments to
reconcile to Non-GAAP Segment cash cost of coal
sales
|
|
|
|
|
Transportation
costs
|
35,489
|
15,167
|
5
|
50,661
|
Cost of coal sales from
idled or otherwise disposed operations and pass through
agreements not included in segments
|
-
|
-
|
5,218
|
5,218
|
Other (operating
overhead, certain actuarial, etc.)
|
-
|
-
|
1,740
|
1,740
|
Non-GAAP Segment cash
cost of coal sales
|
$
102,513
|
$
149,774
|
$
-
|
$
252,287
|
Tons sold
|
1,719
|
12,292
|
|
|
Cash cost per ton
sold
|
$
59.63
|
$
12.18
|
|
|
|
|
|
|
|
Arch Resources, Inc.
and Subsidiaries
|
Reconciliation of
Non-GAAP Measures
|
(In
thousands)
|
|
|
|
Adjusted
EBITDA
|
|
|
|
|
|
Adjusted EBITDA is
defined as net income (loss) 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 (loss), income
(loss) 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 March 31,
|
|
2022
|
2021
|
|
(Unaudited)
|
Net income
(loss)
|
$
271,872
|
$
(6,042)
|
Provision for (benefit
from) income taxes
|
455
|
378
|
Interest expense,
net
|
7,023
|
3,800
|
Depreciation, depletion
and amortization
|
32,210
|
25,797
|
Accretion on asset
retirement obligations
|
4,430
|
5,437
|
Non-service related
pension and postretirement benefit costs
|
873
|
1,527
|
Net loss resulting from
early retirement of debt
|
4,120
|
-
|
|
|
|
Adjusted
EBITDA
|
$
320,983
|
$
30,897
|
EBITDA from idled or
otherwise disposed operations
|
2,390
|
3,566
|
Selling, general and
administrative expenses
|
26,648
|
21,480
|
Other
|
9,482
|
(1,265)
|
|
|
|
Segment Adjusted EBITDA
from coal operations
|
$
359,503
|
$
54,678
|
|
|
|
Segment Adjusted
EBITDA
|
|
|
Metallurgical
|
259,003
|
41,597
|
Thermal
|
100,500
|
13,081
|
|
|
|
Total Segment Adjusted
EBITDA
|
$
359,503
|
$
54,678
|
|
|
|
|
|
|
Discretionary cash flow
|
|
|
|
Three Months
Ended March 31,
|
|
|
2022
|
|
|
(Unaudited)
|
|
Cash flow from
operating activities
|
$
292,939
|
|
Less: Capital
expenditures
|
(22,288)
|
|
Discretionary cash
flow
|
$
270,651
|
|
|
|
|
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SOURCE Arch Resources, Inc.