Achieves net income of $198.1 million and adjusted EBITDA of
$277.3 million
Declares a quarterly cash dividend of
$47.8 million, or $2.45 per share
Surpasses $1
billion deployed via capital return program since its
relaunch in February 2022
ST.
LOUIS, April 27, 2023 /PRNewswire/ -- Arch
Resources, Inc. (NYSE: ARCH) today reported net income of
$198.1 million, or $10.02 per diluted share, in the first quarter of
2023, compared with net income of $271.9
million, or $12.89 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 $277.3 million in the first quarter of 2023,
which included a $1.5 million
non-cash mark-to-market gain associated with its coal-hedging
activities. This compares to $321.0
million of adjusted EBITDA in the first quarter of 2022,
which included a $15.5 million
non-cash mark-to-market loss associated with its coal-hedging
activities. Revenues totaled $869.9
million for the three months ended March 31, 2023, versus $867.9 million in the prior-year quarter.
In the first quarter of 2023, Arch made significant progress on
numerous strategic priorities and objectives, as the company:
- Demonstrated operational excellence in its core metallurgical
segment via another sequential step-down in cash cost per ton
sold
- Deployed a total of $125.0
million via the capital return program inclusive of the
upcoming dividend, bringing the aggregate deployed since the
program's relaunch in February 2022
to more than $1 billion
- Streamlined its capital structure and strengthened its balance
sheet via the repurchase of its remaining convertible securities
and reduction of $26.6 million in
indebtedness
- Ended Q1 with a positive net cash position of $71.2 million
"Arch maintained its strong operational momentum in Q1, as the
team capitalized on improved coking coal prices, drove further
productivity gains in our core metallurgical segment, and achieved
a more than 30-percent increase in coking coal margins on a
sequential basis," said Paul A.
Lang, Arch's CEO and president. "At the same time, we
forged ahead with our efforts to simplify our capital structure and
strengthen our balance sheet via the settlement of the remaining
convertible debt and the repayment of incremental
indebtedness. Perhaps most significantly, we continued to
direct substantial amounts of capital – and 100 percent of our
discretionary cash flow – to our value-driving capital return
program."
Arch has now deployed a total of $1,015.2
million under its capital return program since its relaunch
– inclusive of the just-declared June dividend – including
$571.0 million in dividends and
$444.2 million in common stock
repurchases and convertible security settlements.
Financial and Liquidity Update
In keeping with its capital return formula, the Arch board has
declared a total quarterly dividend of $47.8
million, or $2.45 per share,
which is equivalent to 50 percent of Arch's first quarter
discretionary cash flow. In addition, the company deployed
$58.4 million in Q1 to repurchase its
remaining convertible securities, reducing future dilution by
approximately 423,000 shares. The company also used
$18.8 million during the quarter to
repurchase 131,156 shares at an average price of $143.39 per share.
In total, Arch has now used share repurchases and the settlement
of convertible securities to reduce dilution by approximately 3.5
million shares. Arch ended Q1 with 18.7 million basic and
19.5 million fully diluted shares outstanding.
On a related front, approximately 800,000 outstanding warrants
were exercised during the quarter, resulting in the issuance of
approximately 1.0 million shares of common stock and the receipt of
$43.7 million in proceeds. As a
result of these warrant exercises, Arch ended Q1 with just over
453,000 warrants outstanding, or 23.7 percent of the original
issuance. Arch expects these remaining warrants to be
exercised over the next two quarters.
Arch ended Q1 with just $150.7
million of total debt. In comparison, cash, cash
equivalents and short-term investments totaled $221.9 million and liquidity stood at
$347.6 million.
"We believe our sustained efforts have set the stage for ongoing
capital returns, incremental reductions in our share count, and
continuing value creation in the future," said Matthew C. Giljum, Arch's chief financial
officer.
Capital Allocation Model
Arch's capital allocation model specifies the return to
stockholders of 50 percent of the prior quarter's discretionary
cash flow – defined as cash flow from operating activities after
contributions to the thermal mine reclamation fund and less capital
expenditures – via a variable quarterly cash dividend in
conjunction with a fixed quarterly cash dividend. The model
envisions using the remaining discretionary cash flow for share
repurchases, the repurchase of potentially dilutive securities,
special dividends, and/or capital preservation.
Arch generated $126.1 million in
cash provided by operating activities in the first quarter – a
total that was constrained by an increase of $169.6 million in working capital. The
company invested $30.5 million in
capital expenditures, resulting in total discretionary cash flow
for the quarter of $95.6
million. The second quarter dividend payment
of $2.45 per share – which includes a fixed component
of $0.25 per share and a variable component
of $2.20 per share – is payable on June 15,
2023 to stockholders of record on May 31, 2023.
Since the second quarter of 2017 – and inclusive of the
program's first phase – Arch has now deployed a total of more than
$1.8 billion under its capital return
program.
"While the board continuously evaluates the optimal use of
discretionary cash flow, we view the current capital return program
and allocation model as appropriate, durable and well-aligned with
stockholder interests and preferences, and expect the capital
return program to remain the centerpiece of our value proposition
going forward," Lang reiterated.
As of March 31, 2023, Arch had
$322.4 million of remaining
authorization under its existing $500.0
million share repurchase program.
Operational Update
"Arch's core metallurgical segment executed at a world-class
level in Q1, with each of the company's four, large-scale coking
coal mines achieving excellent productivity levels, strong cost
control, and exceptional cash margins," said John T. Drexler, Arch's chief operating
officer.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Metallurgical
|
|
|
|
|
|
1Q23
|
|
|
4Q22
|
|
|
1Q22
|
|
|
|
|
|
|
|
|
|
Tons sold (in
millions)
|
|
2.2
|
|
|
2.3
|
|
|
1.5
|
Coking
|
|
2.1
|
|
|
2.1
|
|
|
1.5
|
Thermal
|
|
0.1
|
|
|
0.2
|
|
|
0.1
|
Coal sales per ton
sold
|
|
$204.25
|
|
|
$179.98
|
|
|
$255.52
|
Coking
|
|
$209.84
|
|
|
$187.77
|
|
|
$269.54
|
Thermal
|
|
$76.34
|
|
|
$74.92
|
|
|
$28.10
|
Cash cost per ton
sold
|
|
$82.66
|
|
|
$86.83
|
|
|
$88.04
|
Cash margin per
ton
|
|
$121.59
|
|
|
$93.15
|
|
|
$167.48
|
|
|
|
|
|
|
|
|
|
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
$263.1 million in Q1. In sum
during the quarter, the metallurgical segment's average selling
price for coking coal increased 12 percent on a sequential basis,
the average cash cost per ton sold declined by 5 percent versus an
already extremely competitive Q4 performance, and the average cash
margin per ton climbed 31 percent. Arch currently expects
coking coal shipments to increase by around 10 percent in Q2 when
compared to Q1, assuming continued solid rail and logistics
performance, and to increase further in the year's second half,
consistent with its reiterated annual sales volume guidance of 8.9
to 9.7 million tons for full year 2023.
|
|
|
|
|
|
|
|
|
|
|
Thermal
|
|
|
1Q23
|
|
|
4Q22
|
|
|
1Q22
|
|
|
|
|
|
|
|
|
|
Tons sold (in
millions)
|
|
17.0
|
|
|
16.1
|
|
|
18.2
|
Coal sales per ton
sold
|
|
$18.49
|
|
|
$19.58
|
|
|
$18.85
|
Cash cost per ton
sold
|
|
$15.79
|
|
|
$15.73
|
|
|
$13.43
|
Cash margin per
ton
|
|
$2.70
|
|
|
$3.85
|
|
|
$5.42
|
|
|
|
|
|
|
|
|
|
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 legacy thermal segment contributed adjusted EBITDA of
$46.3 million in Q1, against capital
spending of just $5.5 million.
Thermal segment margins were hampered by improved but still
sub-optimal rail service at its Powder River Basin mines, as well
as geologic challenges at the West Elk mine in Colorado that acted to constrain volumes and
erode product quality at that operation. Arch expects the
challenges at West Elk to continue to hamper the thermal segment's
sales volumes and to pressure unit costs over the next two
quarters, at which point the mine expects to transition to an area
of more advantageous geology. Since the fourth quarter of
2016, the legacy thermal segment has generated a total of
$1,304.9 million in adjusted EBITDA
while expending just $144.1 million
in capital.
ESG Update
During the first quarter, Arch maintained its exemplary
environmental, social and governance (ESG) performance.
Arch's subsidiary operations achieved an aggregate total lost-time
incident rate of 0.62 per 200,000 employee-hours worked during Q1,
which was more than four times better than the industry average,
and once again recorded zero environmental violations and zero
water quality exceedances. In total, Arch's subsidiary
operations have now operated a total of more than three years
without a single water quality exceedance.
In addition, the Leer mine and the Leer and Leer South
preparation plants were recently honored by the State of West Virginia with Mountaineer
Guardian awards for safety excellence. Leer's award
represented the seventh time it has been so honored in the past
eight years. The State of West
Virginia also honored the Leer and Beckley mines – along with one of Arch's idled
operations – with awards for reclamation excellence. In
addition, the West Elk mine was honored by the State of Colorado with the Outstanding Safety
Performance Award and Excellence in Mining Reclamation Award.
Market Update
Despite a number of supportive indicators, global coking coal
prices have retraced significantly in recent weeks, principally due
to macroeconomic concerns that are weighing on global steel demand,
Arch believes. Even with this retracing, global coking coal
prices remain reasonably strong on an historical basis, with
High-Vol A coal – Arch's principal product – currently being
assessed at $247 per metric ton on
the U.S. East Coast.
Among the more supportive indicators, European steelmakers have
now restarted the vast majority of the 25 million tons of blast
furnace capacity they idled in 2022 in the face of a weakening
economic outlook, and hot-rolled coil prices in major global steel
markets have increased an average of 50 percent since their recent
lows in November 2022.
In addition, global coking coal production continues to exhibit
evidence of years of under-investment. Through the first two
months of 2023, coking coal exports from Australia – the source of more than 50 percent
of global seaborne coking coal volumes – were down 4 million tons,
or 15 percent. Meanwhile, the other two major sources of
high-quality coking coal to the global seaborne market – the U.S.
and Canada – continue to show only
modest increases in export volumes despite a sustained period of
historically high prices.
Looking Ahead
"The Arch team continues to drive forward with our simple, clear
and actionable plan for long-term value creation," Lang said.
"In recent quarters, we have expanded and strengthened our
world-class coking coal portfolio, extended the global reach of our
high-quality coking coal products, restored our balance sheet to a
positive net cash position, greatly simplified our capital
structure, and extended our industry-leading ESG practices.
We believe this significant progress – across every facet of our
business – sets the stage for continued success, strong
discretionary cash generation, and robust capital returns in the
future."
|
|
|
|
|
|
|
|
|
|
|
|
|
2023
|
|
|
|
|
Tons
|
$ per ton
|
Sales Volume (in millions of
tons)
|
|
|
|
|
|
|
Coking
|
|
|
|
8.9
|
-
|
9.7
|
|
|
Thermal
|
|
|
|
64.0
|
-
|
70.0
|
|
|
Total
|
|
|
|
72.9
|
|
79.7
|
|
|
|
|
|
|
|
|
|
|
|
Metallurgical (in millions of
tons)
|
|
|
|
|
|
|
Committed, Priced
Coking North American
|
|
|
1.7
|
|
$184.36
|
Committed, Unpriced
Coking North American
|
|
|
0.2
|
|
|
Committed, Priced
Coking Seaborne
|
|
|
|
1.9
|
|
$213.11
|
Committed, Unpriced Coking Seaborne
|
|
|
3.9
|
|
|
Total Committed
Coking
|
|
|
|
|
7.7
|
|
|
|
|
|
|
|
|
|
|
|
Committed, Priced
Thermal Byproduct
|
|
|
|
0.2
|
|
$63.59
|
Committed, Unpriced Thermal
Byproduct
|
|
|
-
|
|
|
Total Committed Thermal
Byproduct
|
|
|
|
0.2
|
|
|
|
|
|
|
|
|
|
|
|
Average Metallurgical
Cash Cost
|
|
|
|
|
|
$79.00 -
$89.00
|
|
|
|
|
|
|
|
|
|
Thermal (in millions of tons)
|
|
|
|
|
|
|
|
Committed,
Priced
|
|
|
|
|
|
69.3
|
|
$17.45
|
Committed, Unpriced
|
|
|
|
|
1.7
|
|
|
Total Committed
Thermal
|
|
|
|
|
71.0
|
|
|
Average Thermal Cash
Cost
|
|
|
|
|
|
$14.50 -
$15.50
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate (in $ millions)
|
|
|
|
|
|
|
|
D,D&A
|
|
|
|
$155.0
|
-
|
$165.0
|
|
|
ARO
Accretion
|
|
|
|
$17.0
|
-
|
$21.0
|
|
|
S,G&A -
Cash
|
|
|
|
$72.0
|
-
|
$76.0
|
|
|
S,G&A -
Non-cash
|
|
|
|
$24.0
|
-
|
$28.0
|
|
|
Net Interest
Expense
|
|
|
$0.0
|
-
|
$5.0
|
|
|
Capital
Expenditures
|
|
|
$150.0
|
-
|
$160.0
|
|
|
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
March 31,
|
|
|
|
2023
|
|
2022
|
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
Revenues
|
$
|
869,931
|
$
|
$867,936
|
|
|
|
|
|
|
|
Costs, expenses and
other operating
|
|
|
|
|
|
Cost of sales
(exclusive of items shown separately below)
|
|
571,737
|
|
508,225
|
|
Depreciation, depletion
and amortization
|
|
35,479
|
|
32,210
|
|
Accretion on asset
retirement obligations
|
|
5,292
|
|
4,430
|
|
Change in fair value of
coal derivatives, net
|
|
(1,462)
|
|
15,519
|
|
Selling, general and
administrative expenses
|
|
26,022
|
|
26,648
|
|
Other operating income,
net
|
|
(3,707)
|
|
(3,439)
|
|
|
|
633,361
|
|
583,593
|
|
|
|
|
|
|
|
Income from
operations
|
|
236,570
|
|
284,343
|
|
|
|
|
|
|
|
Interest expense,
net
|
|
|
|
|
|
Interest
expense
|
|
(4,126)
|
|
(7,047)
|
|
Interest and investment
income
|
|
3,336
|
|
24
|
|
|
|
(790)
|
|
(7,023)
|
|
|
|
|
|
|
|
Income before
nonoperating expenses
|
|
235,780
|
|
277,320
|
|
|
|
|
|
|
|
Nonoperating
expenses
|
|
|
|
|
|
Non-service related
pension and postretirement benefit credits (costs)
|
|
592
|
|
(873)
|
|
Net loss resulting from
early retirement of debt
|
|
(1,126)
|
|
(4,120)
|
|
|
|
(534)
|
|
(4,993)
|
|
|
|
|
|
|
|
Income before income
taxes
|
|
235,246
|
|
272,327
|
|
Provision for income
taxes
|
|
37,138
|
|
455
|
|
|
|
|
|
|
|
Net
income
|
|
198,108
|
|
$271,872
|
|
|
|
|
|
|
|
Net income per
common share
|
|
|
|
|
|
Basic earnings per
share
|
$
|
11.05
|
$
|
17.60
|
|
Diluted earnings per
share
|
$
|
10.02
|
$
|
12.89
|
|
|
|
|
|
|
|
Weighted average
shares outstanding
|
|
|
|
|
|
Basic weighted average
shares outstanding
|
|
17,924
|
|
15,448
|
|
Diluted weighted
average shares outstanding
|
|
19,784
|
|
21,271
|
|
|
|
|
|
|
|
Dividends declared per
common share
|
$
|
3.11
|
$
|
0.25
|
|
|
|
|
|
|
|
Adjusted EBITDA
(A)
|
$
|
277,341
|
$
|
320,983
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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,
|
|
|
2023
|
|
2022
|
|
|
(Unaudited)
|
|
|
Assets
|
|
|
|
|
Current
assets
|
|
|
|
|
Cash and cash
equivalents
|
$
|
189,739
|
$
|
236,059
|
Short-term
investments
|
|
32,116
|
|
36,993
|
Restricted
cash
|
|
1,100
|
|
1,100
|
Trade accounts
receivable
|
|
295,157
|
|
236,999
|
Other
receivables
|
|
18,560
|
|
18,301
|
Inventories
|
|
271,155
|
|
223,015
|
Other current
assets
|
|
55,089
|
|
71,384
|
Total current
assets
|
|
862,916
|
|
823,851
|
|
|
|
|
|
Property, plant and
equipment, net
|
|
1,182,351
|
|
1,187,028
|
|
|
|
|
|
Other
assets
|
|
|
|
|
Deferred income
taxes
|
|
174,561
|
|
209,470
|
Equity
investments
|
|
19,142
|
|
17,267
|
Fund for asset
retirement obligations
|
|
137,134
|
|
135,993
|
Other noncurrent
assets
|
|
56,555
|
|
59,499
|
Total other
assets
|
|
387,392
|
|
422,229
|
Total assets
|
$
|
2,432,659
|
$
|
2,433,108
|
|
|
|
|
|
Liabilities and
Stockholders' Equity
|
|
|
|
|
Current
liabilities
|
|
|
|
|
Accounts
payable
|
$
|
176,953
|
$
|
211,848
|
Accrued expenses and
other current liabilities
|
|
120,180
|
|
157,043
|
Current maturities of
debt
|
|
37,405
|
|
57,988
|
Total current
liabilities
|
|
334,538
|
|
426,879
|
Long-term
debt
|
|
110,899
|
|
116,288
|
Asset retirement
obligations
|
|
237,142
|
|
235,736
|
Accrued pension
benefits
|
|
1,089
|
|
1,101
|
Accrued postretirement
benefits other than pension
|
|
51,770
|
|
49,674
|
Accrued workers'
compensation
|
|
153,870
|
|
155,756
|
Other noncurrent
liabilities
|
|
79,357
|
|
82,094
|
Total
liabilities
|
|
968,665
|
|
1,067,528
|
|
|
|
|
|
Stockholders'
equity
|
|
|
|
|
Common Stock
|
|
301
|
|
288
|
Paid-in
capital
|
|
703,712
|
|
724,660
|
Retained
earnings
|
|
1,705,988
|
|
1,565,374
|
Treasury stock, at
cost
|
|
(1,005,165)
|
|
(986,171)
|
Accumulated other
comprehensive income
|
|
59,158
|
|
61,429
|
Total stockholders'
equity
|
|
1,463,994
|
|
1,365,580
|
Total liabilities and
stockholders' equity
|
$
|
2,432,659
|
$
|
2,433,108
|
Arch Resources, Inc.
and Subsidiaries
|
Condensed
Consolidated Statements of Cash Flows
|
(In
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
March 31,
|
|
|
2023
|
|
2022
|
|
|
(Unaudited)
|
Operating
activities
|
|
|
|
|
Net income
|
$
|
198,108
|
$
|
271,872
|
Adjustments to
reconcile to cash from operating activities:
|
|
|
|
|
Depreciation, depletion
and amortization
|
|
35,479
|
|
32,210
|
Accretion on asset
retirement obligations
|
|
5,292
|
|
4,430
|
Deferred income
taxes
|
|
35,548
|
|
-
|
Employee stock-based
compensation expense
|
|
6,767
|
|
8,203
|
Amortization relating
to financing activities
|
|
450
|
|
770
|
Gain on disposals and
divestitures, net
|
|
(279)
|
|
(352)
|
Reclamation work
completed
|
|
(3,887)
|
|
(4,278)
|
Contribution to fund
asset retirement obligations
|
|
(1,141)
|
|
(20,000)
|
Changes in:
|
|
|
|
|
Receivables
|
|
(57,968)
|
|
(399)
|
Inventories
|
|
(48,140)
|
|
(47,263)
|
Accounts payable,
accrued expenses and other current liabilities
|
|
(63,508)
|
|
14,115
|
Income taxes,
net
|
|
1,491
|
|
442
|
Coal derivative assets
and liabilities, including margin account
|
|
(1,462)
|
|
15,833
|
Other
|
|
19,371
|
|
17,356
|
Cash provided by
operating activities
|
|
126,121
|
|
292,939
|
|
|
|
|
|
Investing
activities
|
|
|
|
|
Capital
expenditures
|
|
(30,541)
|
|
(22,288)
|
Minimum royalty
payments
|
|
(113)
|
|
-
|
Proceeds from disposals
and divestitures
|
|
343
|
|
360
|
Purchases of short-term
investments
|
|
(2,930)
|
|
-
|
Proceeds from sales of
short-term investments
|
|
8,000
|
|
14,450
|
Investments in and
advances to affiliates, net
|
|
(4,329)
|
|
(2,088)
|
Cash used in investing
activities
|
|
(29,570)
|
|
(9,566)
|
|
|
|
|
|
Financing
activities
|
|
|
|
|
Payments on term loan
due 2024
|
|
(750)
|
|
(271,537)
|
Payments on convertible
debt
|
|
(58,430)
|
|
-
|
Net payments on other
debt
|
|
(12,647)
|
|
(10,134)
|
Purchase of treasury
stock
|
|
(20,806)
|
|
-
|
Dividends
paid
|
|
(66,902)
|
|
(3,851)
|
Payments for taxes
related to net share settlement of equity awards
|
|
(27,055)
|
|
(4,827)
|
Proceeds from warrants
exercised
|
|
43,719
|
|
506
|
Cash used in financing
activities
|
|
(142,871)
|
|
(289,843)
|
|
|
|
|
|
Decrease in cash and
cash equivalents, including restricted cash
|
|
(46,320)
|
|
(6,470)
|
Cash and cash
equivalents, including restricted cash, beginning of
period
|
|
237,159
|
|
326,295
|
|
|
|
|
|
Cash and cash
equivalents, including restricted cash, end of
period
|
$
|
190,839
|
$
|
319,825
|
|
|
|
|
|
Cash and cash
equivalents, including restricted cash, end of
period
|
|
|
|
|
Cash and cash
equivalents
|
$
|
189,739
|
$
|
318,725
|
Restricted
cash
|
|
1,100
|
|
1,100
|
|
|
|
|
|
|
$
|
190,839
|
$
|
319,825
|
Arch Resources, Inc.
and Subsidiaries
|
Schedule of
Consolidated Debt
|
(In
thousands)
|
|
|
|
|
|
|
|
|
|
March
31,
|
|
December
31,
|
|
|
|
2023
|
|
2022
|
|
|
|
(Unaudited)
|
|
|
|
|
|
|
Term loan due 2024
($5.8 million face value)
|
|
$
|
5,752
|
$
|
6,502
|
Tax exempt bonds ($98.1
million face value)
|
|
|
98,075
|
|
98,075
|
Convertible
Debt
|
|
|
-
|
|
13,156
|
Other
|
|
|
46,825
|
|
59,472
|
Debt issuance
costs
|
|
|
(2,348)
|
|
(2,929)
|
|
|
|
148,304
|
|
174,276
|
Less: current
maturities of debt
|
|
|
37,405
|
|
57,988
|
Long-term
debt
|
|
$
|
110,899
|
$
|
116,288
|
|
|
|
|
|
|
Calculation of net
(cash) debt
|
|
|
|
|
|
Total debt (excluding
debt issuance costs)
|
|
$
|
150,652
|
$
|
177,205
|
Less liquid
assets:
|
|
|
|
|
|
Cash and cash
equivalents
|
|
|
189,739
|
|
236,059
|
Short term
investments
|
|
|
32,116
|
|
36,993
|
|
|
|
221,855
|
|
273,052
|
Net (cash)
debt
|
|
$
|
(71,203)
|
$
|
(95,847)
|
Arch Resources, Inc.
and Subsidiaries
|
Operational
Performance
|
(In millions, except
per ton data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
March 31, 2023
|
Three Months
Ended
December 31, 2022
|
Three Months
Ended March 31,
2022
|
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
Metallurgical
|
|
|
|
|
|
|
Tons Sold
|
2.2
|
|
2.3
|
|
1.5
|
|
|
|
|
|
|
|
|
Segment
Sales
|
$
440.1
|
$
204.25
|
$
408.0
|
$
179.98
|
$
394.3
|
$
255.52
|
Segment Cash Cost of
Sales
|
178.1
|
82.66
|
196.8
|
86.83
|
135.9
|
88.04
|
Segment Cash
Margin
|
262.0
|
121.59
|
211.1
|
93.15
|
258.4
|
167.48
|
|
|
|
|
|
|
|
Thermal
|
|
|
|
|
|
|
Tons Sold
|
17.0
|
|
16.1
|
|
18.2
|
|
|
|
|
|
|
|
|
Segment
Sales
|
$
314.7
|
$
18.49
|
$
315.0
|
$
19.58
|
$
342.9
|
$
18.85
|
Segment Cash Cost of
Sales
|
268.8
|
15.79
|
253.1
|
15.73
|
244.3
|
13.43
|
Segment Cash
Margin
|
45.9
|
2.70
|
61.9
|
3.85
|
98.6
|
5.42
|
|
|
|
|
|
|
|
Total Segment Cash
Margin
|
$
307.9
|
|
$
273.0
|
|
$
357.1
|
|
|
|
|
|
|
|
|
Selling, general and
administrative expenses
|
(26.0)
|
|
(26.1)
|
|
(26.6)
|
|
Other
|
(4.6)
|
|
9.6
|
|
(9.4)
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
$
277.3
|
|
$
256.5
|
|
$
321.0
|
|
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
March 31, 2023
|
Metallurgical
|
Thermal
|
All
Other
|
Consolidated
|
(In
thousands)
|
|
|
|
|
GAAP Revenues in the
Condensed Consolidated Income Statements
|
$
536,172
|
$
333,759
|
$
-
|
$
869,931
|
Less: Adjustments to
reconcile to Non-GAAP Segment coal sales
revenue
|
|
|
|
|
Coal risk management
derivative settlements classified in "other
income"
|
-
|
(2,668)
|
-
|
(2,668)
|
Transportation
costs
|
96,054
|
21,721
|
-
|
117,775
|
Non-GAAP Segment coal
sales revenues
|
$
440,118
|
$
314,706
|
$
-
|
$
754,824
|
Tons
sold
|
2,155
|
17,021
|
|
|
Coal sales per ton
sold
|
$
204.25
|
$ 18.49
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter ended
December 31, 2022
|
Metallurgical
|
Thermal
|
All
Other
|
Consolidated
|
(In
thousands)
|
|
|
|
|
GAAP Revenues in the
Condensed Consolidated Income Statements
|
$
516,742
|
$
342,722
|
$
-
|
$
859,464
|
Less: Adjustments to
reconcile to Non-GAAP Segment coal sales
revenue
|
|
|
|
|
Coal risk management
derivative settlements classified in "other
income"
|
-
|
909
|
-
|
909
|
Transportation
costs
|
108,785
|
26,834
|
-
|
135,619
|
Non-GAAP Segment coal
sales revenues
|
$
407,957
|
$
314,979
|
$
-
|
$
722,936
|
Tons
sold
|
2,267
|
16,091
|
|
|
Coal sales per ton
sold
|
$
179.98
|
$ 19.58
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter ended
March 31, 2022
|
Metallurgical
|
Thermal
|
All
Other
|
Consolidated
|
(In
thousands)
|
|
|
|
|
GAAP Revenues in the
Condensed Consolidated Income Statements
|
$
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
|
-
|
-
|
(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
|
|
|
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
March 31, 2023
|
Metallurgical
|
Thermal
|
All
Other
|
Consolidated
|
(In
thousands)
|
|
|
|
|
GAAP Cost of sales in
the Condensed Consolidated Income Statements
|
$
274,171
|
$
289,506
|
$
8,060
|
$
571,737
|
Less: Adjustments to
reconcile to Non-GAAP Segment cash cost of coal
sales
|
|
|
|
|
Diesel fuel risk
management derivative settlements classified in "other
income"
|
-
|
(1,008)
|
|
(1,008)
|
Transportation
costs
|
96,054
|
21,721
|
-
|
117,775
|
Cost of coal sales from
idled or otherwise disposed operations
|
-
|
-
|
5,178
|
5,178
|
Other (operating
overhead, certain actuarial, etc.)
|
-
|
-
|
2,882
|
2,882
|
Non-GAAP Segment cash
cost of coal sales
|
$
178,117
|
$
268,793
|
$
-
|
$
446,910
|
Tons sold
|
2,155
|
17,021
|
|
|
Cash cost per ton
sold
|
$
82.66
|
$ 15.79
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter ended
December 31, 2022
|
Metallurgical
|
Thermal
|
All
Other
|
Consolidated
|
(In
thousands)
|
|
|
|
|
GAAP Cost of sales in
the Condensed Consolidated Income Statements
|
$
305,597
|
$
282,117
|
$ (6,863)
|
$
580,851
|
Less: Adjustments to
reconcile to Non-GAAP Segment cash cost of coal
sales
|
|
|
|
|
Diesel fuel risk
management derivative settlements classified in "other
income"
|
-
|
2,165
|
-
|
2,165
|
Transportation
costs
|
108,785
|
26,834
|
-
|
135,619
|
Cost of coal sales from
idled or otherwise disposed operations
|
-
|
-
|
(9,702)
|
(9,702)
|
Other (operating
overhead, certain actuarial, etc.)
|
-
|
-
|
2,839
|
2,839
|
Non-GAAP Segment cash
cost of coal sales
|
$
196,812
|
$
253,118
|
$
-
|
$
449,930
|
Tons sold
|
2,267
|
16,091
|
|
|
Cash cost per ton
sold
|
$
86.83
|
$ 15.73
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter ended
March 31, 2022
|
Metallurgical
|
Thermal
|
All
Other
|
Consolidated
|
(In
thousands)
|
|
|
|
|
GAAP Cost of sales in
the Condensed Consolidated Income Statements
|
$
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
|
-
|
-
|
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
|
|
|
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
March 31,
|
|
2023
|
2022
|
|
(Unaudited)
|
Net income
|
$
198,108
|
$
271,872
|
Provision for income
taxes
|
37,138
|
455
|
Interest expense,
net
|
790
|
7,023
|
Depreciation, depletion
and amortization
|
35,479
|
32,210
|
Accretion on asset
retirement obligations
|
5,292
|
4,430
|
Non-service related
pension and postretirement benefit (credits) costs
|
(592)
|
873
|
Net loss resulting from
early retirement of debt
|
1,126
|
4,120
|
|
|
|
Adjusted
EBITDA
|
$
277,341
|
$
320,983
|
EBITDA from idled or
otherwise disposed operations
|
4,032
|
2,390
|
Selling, general and
administrative expenses
|
26,022
|
26,648
|
Other
|
1,917
|
9,482
|
|
|
|
Segment Adjusted EBITDA
from coal operations
|
$
309,312
|
$
359,503
|
|
|
|
Segment Adjusted
EBITDA
|
|
|
Metallurgical
|
263,057
|
259,003
|
Thermal
|
46,255
|
100,500
|
|
|
|
Total Segment Adjusted
EBITDA
|
$
309,312
|
$
359,503
|
|
|
|
|
|
|
Discretionary cash
flow
|
|
|
|
Three Months
Ended
March 31,
|
|
|
2023
|
|
|
(Unaudited)
|
|
Cash flow from
operating activities
|
$
126,121
|
|
Less: Capital
expenditures
|
(30,541)
|
|
Discretionary cash
flow
|
$
95,580
|
|
View original
content:https://www.prnewswire.com/news-releases/arch-resources-reports-first-quarter-2023-results-301809113.html
SOURCE Arch Resources, Inc.