ARCH - Earnings call transcript Q1 2018

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Operator

Good day, everyone, and welcome to the Arch Coal Incorporated First Quarter 2018 Earnings Release Conference Call. Today’s call is being recorded. At this time, I would like to turn the call over to Ms. Logan Bonacorsi, Director of External Affairs. Please go ahead, ma’am.

Logan Bonacorsi

St. from morning Good Louis. joining for us you today. Thank

considered begin, made during we expected Litigation business may Reform let Private to relating me statements certain future be performance, financial that Act. you and statements this Securities our according the remind to Before forward-looking call, statements including

by may to with quarterly described in our Forward-looking detail in you result remind than archcoal.com. Investors cause measures our like whether statements this of our are, in by the reports These a at new as find to future uncertain. can that the or different a to the discuss morning information, We statements, address nature our the of degrees, their end and update posted have that our required do more I’d the you file we we uncertainties, SEC, that law. to annual at results forward-looking materially events future non-GAAP that otherwise, website matters in section different reconciliation which maybe a statements. actual copy we of undertake of forward-looking also are not to of financial which be release, plan expressed as press except those

Public Deck morning, and this Slone, COO; Lang, Arch’s our John Eaves, Vice we President Policy. call the CFO; Arch’s Senior On of and President Vice Drexler, John have CEO; and Strategy and Paul our President Senior

some your with remarks begin be take questions. will We to thereafter, brief formal and we’ll John? happy

John Eaves

quarter of key made pleased just report the Arch number progress morning, excellent on I’m everyone. Thanks, during a ended. good to Logan, and objectives that

cultivating expanding base international our customer volumes. and coking reach coal our First, we our expand continue in and export increasing markets, the to seaborne

bringing $XX XX% margin our we pressures the XXXX, May total a over Second, first our per stock when margin the back despite price strongest-ever XXX,XXX Put was buyback the ton, at cash selling cost $XX million. million, of that another at portfolio. price. $XXX And another represents in a shares of in our program way, we segment since bought third, Metallurgical of to initiated achieved

roughly less In shares months. in of our XX to is a XX% and The of fact, buybacks as initiation time bought to of capabilities, for shareholders. our the size now as the clear of at commitment than well span program’s a substantial Arch’s those we’ve outstanding back strong maximizing value testament cash-generating our speed

we our can significant operate As environment, everyone highly which to in complex knows, quarterly lead results. on in variability of this business call a degree

XXXX no of first quarter exception. was The

our of we the encountered pushed challenges these challenges further well strong During financial as as our operational segment logistical a at remarks. his in period, up will dampen to series an issues otherwise acted Mountain Metallurgical performance. Paul that Laurel discuss mine, cost,

I’d However, EBITDA on solid issues with that like markets generated of million more movements. coking coal $XXX a result overall again note had ocean is seaborne emphasis our likely more the than to Despite timing-related associated increased issues, to for we we quarter. these as performance vessel in

maintenance proven free believe of That a robust we flow outlook cash flow the expense return free anticipate modest is tax exceptionally generation, we facilitate value. effective requirements, driver of Looking zero. cash which effective interest the of as progresses, and ahead, continuation should rate with program, shareholder capital our capital year low and powerful

to now the marketplace. Turning

metric Atlantic our and coal up a fundamentals coking of strong at remain strong assessing is Basin East year-to-date. support Steel $XXX in High-Vol Coast in see remains core to demand buoyant. than marketplace coal Steel prices continue and X% We more The like. Platts global economic coal growth of A upshot is At ton. present, per that remain robust. coking prices price is

for margin this quarter, reflecting is highs, very the in premium A attractive down coal throughout Moreover, continue Low-Vol recent to marketplace. its products. that’s somewhat scarcity significant at coking While to trade translating a a Arch’s relative from primary still High-Vol the into

As of $XX today, that premium per at assessed is around ton.

the the the remain to in shipping supplier volumes issues. year producers to dominant or rail be volumes of versus coking Australia to the a On and quarter are system ability In cycle volumes guiding stronger year peers are large to for coal be seaborne and headed side, questions of in Still port second year. of year’s the particular, range geologic and lower increased several about likely and last XXXX to for flat up supply strongly operational is due XXXX XXXX. move impacted

strong thermal Australia, side, per Newcastle, prices into much. has changed Northern above translates demand be in prices mine to not continue means That On with more and volumes. supply the This and Europe incremental market, XXth also in the volumes West ton. netback balance which per its ton. is correction generator prices Meanwhile, $XX do. that coal Elk work our a In remain domestically. pulled story API-X $XX Seaborne for markets attractive will stockpile advantageous should entering there’s quarter to still seaborne translate above into U.S. the

XX side, On high, is during it progress. reduced million or by were estimated an the XX first around so stand days quarter too supply. That’s currently tons of stockpiles the XX days at but still and positive

the outlook the continued ahead, balance the value bright. for of Looking is believe year for we creation that

place to strong plan coking segments, on in a optimizes operating shareholder on We’re that continue value taking Moreover, the our products for coal of thermal way and focused market, sharply we we driving an across that controlling the cost three to believe market reserves. value. excellent our capitalizing in all have

our highly-effective return their With for want on success for for over more Paul throughout on quarter. employees program. Paul? Lang proven exceptional and work our commitment operating the rest and turn marketing that, thank detail the to have Simply passion put, now closing, In our to capital their talent, call I’ll I results. We excellence. and

Paul Lang

provide operational as into as decision well the to of coking I’d additional and seaborne everyone. sales into during results Starting with volume like our Today move quarter. segment, markets. coal we’re the color with extremely John’s marketing Metallurgical by deeper comments our pleased the Thanks, market John, more to results, and Arch’s tactics the broader to good digging morning,

our and up were leading coal cash Quarter-over-quarter, our the levels increased were coking than seaborne our realizations strongest-ever approximately to North XXX,XXX It’s last coal American realization legacy carryover note quarter from better commitments year. of North annual nearly our margin pricing American to higher that $XX by business, fact, record compared as fixed last segment on This strong shipments, over XX% tons XX% pricing margin completes volume. index-linked coking our XXXX. driven ton, important These more increased first fixed negotiated fourth of on segment. In about per pricing coal included and to cash coking largely for on year. this commitments, to price quarter

representative issues Lakes restrictions due volume deliveries coal X.X at quarterly during customers. during of coking netback the the mix ton. nearly were on The was that of $XXX index volume, logistical to less and tons for basis than general, January shipped announced profile. our In with weather-related seasonal Beyond our carryover on an average our quality million quarter ratable previously XX% production priced an in we Great of largely shipments the quarter approximately a the

approximately part spot tons of per A a are in last a linked delays. timely update, total, to coking some tons second sales committed Since delivery. likely seaborne an ton. fixed see volumes basis, to and of volumes price XXXX on coal mutual with index the competitor ship XXX,XXX in vast our tons to negotiation $XXX these to ports price of vessel at quarter. subject nearly or fixed continuing contributing are have the to we associated XXX,XXX that not for Of slippage the remaining are XXX,XXX majority to We’re that additional due reaching

now stance as to our to Laurel, in reduction at million Leer of we ahead, shipments of to don’t revived remaining Mountain timing, perfectly for our Looking between from our that million ship variability XXXX the our important we expect This seaborne sell midpoint. a X% and as conservative target X.X in XXXX, the production reflects be previous ongoing coal remainder for operating the coking note representing expect cautious year. mine. in shipment ratable coking the tons – X.X a It’s outlook well

anticipate we line to with Mountain end first fact, is well as Laurel, quarter a coking of volumes that schedules currently the be in quarter the to second longwall as coal Leer June. schedule and due shipment In the shipments at towards concentrated moves

could the As in you on know, quarter. third past experience, and sliding based volume this result into

committed, million with pricing uncommitted, fixed an tons X.X million being have coal are price A coking tons guidance, At for market. have which and we open tons midpoint of the we the a the now market-based subject X.X that average still million destined we $XXX or ton. tons to X.X million revived per of year, our roughly nearly mechanism roughly of the majority our X.X position – coal High-Vol seaborne of of For

expect We XX% will of the High-Vol XX% sales B coal call A, our be High-Vol to XX% in coking Low-Vol XXXX. mix and

Metallurgical mixed cost As side, on segment the into quarter. mentioned turned John operating

a better panel. While performance, expected current sandstone Mountain Leer conditions again, tough encountered longwall than the associated the our mine delivered in intrusion Laurel, with

to As to will we be where preparing is quarter, favorable. likely next mining move operation in believe the the indicated, more panel conditions the late

quarter-over-quarter to also during accounted of are than year considering tempering for Outside operation. hit that of recent However, these noted, our for costs Together, more the issues quarter. XX% related prices, expenses development, incurred we the as higher well first coking sales as coal increase. several we expectations sensitive the increased cost the this with operating the one-time cash items

targeting to per the we’re full-year in an ton average for cost structure $XX of range forward, now Going XXXX. of $XX

in we most coal our higher the metallurgical a is of this level cost competitive view While anticipated, portfolio to as one continue U.S. sector. originally the than

supported winter quarter. were that most the for thermal the fourth quarter compared favorable Turning the customer persisted shipments Powder franchise to of of when the in by flat Basin, XXXX, River the to weather

pricing in However, still high-coal lower muted burn future inventory ongoing forecasts, period. the levels, for buying and fuel competing sources during led activity uncertainty

$XX.XX of sales to a the current of premium spot elected fact, levels. XXXX million In an to X ton, additional pricing place representing only at we fiscal price average coal tons approximately per

Given balance in franchise targeting of keep ton the roughly made them tons This guidance. remain million shareholders. expect a decision keenly reduce approach the this of We the and a ground company in the lower in for XX focused allow XX tons the operation reduction sell and to to between million Basin periods interest current to million to the Thunder midpoint we the the return. mine. than XX for will fundamentals, believe progress We produce recent future as our now strategy most River the market strategic we’ve a costs, XXXX, for the us from from is level on the an we our line Black on year. Despite holding of level, marketing rather Powder our adequate long-term volume best measured the through production

As at Powder River shipments, our a to to the second cost result, previous maintaining of keep period expect shipping, $XX.XX normal of to are due important $XX.XX per XXXX. for this be that cash seasonality It’s the highest-cost segment ton guidance mind the our for the quarter to in Basin we’d we lowest year.

in XXXX commitment tons, quarter With reduced Black X Powder is level to lower million million the uncommitted have River signed our all to our X the at volumes the Basin at decision Thunder. production to the approximately which mine, new we and of sales

West Asia planned coal Thermal and strong conditions America. continue in participate the international lower on and slightly Other attractive thermal mine. to meaningfully segment, were Both Elk below shipments U.S. the West on market pulled our Elk markets, as the Coal-Mac results in fourth South Europe, the volumes to and export from Northern Moving pricing quarter

we over levels. from the X.X For which more year, a expect XX% from of tons, our segment is than increase this exports million XXXX

average per For is of price for million tons ton. We X.X which have $XX.XX this deliveries, we committed now XXXX an segment, all priced. at tons around sold XXX,XXX of

from the from first reflecting mine the West higher expected, cash segment a the quarter, a Elk smaller trended up higher-cost the contribution relative Viper in our mine. costs As and lower-cost at Other contribution Thermal

range anticipation for million for as XX the a the XX are be scale base Once segment XXXX of tons. a volumes cost results again, we ongoing to XXXX demonstrate we company, and committed to thermal control to asset midpoint guidance, is that and XX% upon Based whole, this our the range per first a Given we quarter of now increase Overall, from slightly decreased cost competitive this to million initiatives, of $XX shipments year. of $XX for a between our cash advantage. approximately the guidance the expect have this our slight ton. our in segment

through costs, of John on segments. year, financial approach, marketing As the to on focused of continues the increasing our reducing dividends which call the turn seaborne we’ll now pay we for centric our over CFO, on and executing to position. our profitability operating each remain Drexler, an progress Arch’s the in remainder update John? I’ll

John Drexler

Thanks, Paul, and morning. good

quarter, balance on return first maintain continue aggressively sheet our execute healthy to flexible cash we the During generate capital on flows, and our a program. strong execute plan and to

course occurred continued During the quarter, from the negative $XX operating million. amidst that the chain negative the our million during this Despite logistical would quarter. of $XX of operating segments adjustments low-cost our capital The of expect to cash capability cash strong to the of in of make working flows, all – year. working challenges solid stem supply adjustment and contributions, generation be capital continued base. the over the seaborne impact moderate We quarter, part our [ph] despite demonstrating asset shipments with capital working challenges the operational adjustment adjustments to vessel of

continue inception, X.X a approximately million John to returned shares year As shares, $XX.XX have ago, of in you, share. average we $XXX per an to his by indicated XX% capital the or million our Since the approximately return at repurchasing outstanding shareholders. of program’s we price remarks,

back quarter, first we an bought XXX,XXX $XX the shares for During additional million.

remaining March million repurchase of of million had As the we approximately $XXX $XXX XX, capacity authorization. under

paid of on quarterly Board stockholders share. $X.XX million just XX on approved the In close XX. dividend June May record be of XX of have dividend has we at $XXX That to the will the addition, of When business common combined, short per Directors payment months. next in returned

this the to constantly execute excess cash we the expect proven expect capital our plan provides which well to the our maintain short-term The the quarter continue return over return within over our of million we we expectation longer-term. and cash an XXXX. and further return best of strategy remainder million our in the the will progress $XXX our flows cash million. ended We investments uses evaluate, risk-adjusted process, returning year, on with cash program between of to Board. our of for to deliberate to With shareholders, ahead, on Looking a program $XXX the for $XXX focus remains capital company position course of free of and of cash strong important expectation and

the ended us leaving with a of $XXX in quarter cash debt also position million million. of net We $XXX

We focused sheet And will market balance continue operate ample through we in in cost of step recognize crucial took strong each phase the to the lowering industry April, of remain we that cycles. capital provides an intensely we our early balance learned, on and liquidity. another support experience in maintaining sheet Also, have our industry-leading that cycle. We further. as

rate $XXX XXX Since have XXX. reorganization, cash and interest million will and The XXX reduction refinanced from XXX, On by from million initial L-plus the L-plus back three repriced our rate reducing an our our we the million. interest $X.X upgrades L-plus basis. by expense $XX ratings and annual XXX down of debt times, we term L-plus both to Moody’s, S&P repriced loan, expense annual rate our our interest reducing taking of points basis an on to lower

of our for market rate swaps million we Details we the in an filings, below the interest remainder rate rates. place of well security disclosed the term interest have swaps $XXX at rate entered the are loan for have the addition, floating fixing In principal years. current several for of a for into portion but next year, in

of $XX $XX first non-cash expenditures million release, cost note. for midpoint in outlook few equity quarter. to A stems the increase one-time our and on items Our SG&A $X includes from XXXX now our $XX sales compensation guidance million the quarter, provided during last million additional of press legal operating and million. This between has primarily expenses and Paul expense. expect at This from to XXXX. and compensation-related thoughts expenses reflected We the is be

we million expect the future. believe to coal expense strength our be continue to tax Our repricing, the of we $XX thermal term zero for continue great provision in and Wrapping of our to guidance there interest loan up, impact coal franchises. reflects foreseeable million $XX coking and is the to

are operating to to I’ll we clear call approach generate fact, ready turn systematic and back that, expertly pristine over portfolio, Operator, capital balance With this confident our will In questions. and paired to to continue for value take you. the are sheet allocation, significant shareholders. we

Operator

Thank [Operator Levin Instructions] Please ahead. Global. we’ll question from you. with our And go take first Seaport Mark

Mark Levin

met elevated my think mean, much. you’ve question Laurel. going very just the on about been coal When quick referenced on run thanks I’m Okay, first so XXXX question what’s obviously on cash – sandstone obviously, Mountain or a – XXXX, you is intrusion. into I cost, at and A you

of when the lots structure terms are cost But maybe issues for looking way, a the year, XXXX? what go changed way cost the another you look in had to you the at we Put You of you as can that anything whole, out were met back where logistical-related has there we issues in is enterprise, well-documented. think beyond the before? a about mentioned that

Paul Lang

morning. good This is Yes, Mark, Paul.

think, normal particularly hope the are With more of a coal Mount a we more you the vexing quite cost in the bit speculate a a a and I it’s as thicker on humbled Laurel. to listen and at back obviously, little that’ll back life have I And for of happen. to a get it’s what little bit getting you think, panels Leer, issues structure. – think longer too better getting conditions always little But here, though, central to premature past, I longwalls, think, geologic it. As us, we’ve in a Mount out expecting much But XXXX us. we I I said to Laurel little that by lap been into

Mark Levin

is, Laurel know I have to years. I from time while that there issues it’s Is an for asset I it’s is tends in and But been feels nothing, this the feels or guess, issues some some the it around Paul, – it Is an over everything general, a sale. it create the it like there mean, like time is core? Mountain asset over-time? been price, that is somebody just political asset to like if – just issues offers right for created has answer

Paul Lang

some of think Laurel made structure. has think got the as a I particularly no we I great six was year. it’s a that, far Obviously, the Mountain middle first. XXXX. had ago, as But we the as I best a XX condition I it’s from in last coal And in summer of said, contribution quarter months volume the significant ago. in status years mined our comment, longer I But still expecting the higher, a competitor mine, did look, we’re said the ran Mark, think, it And cost into run. obviously, elite unfortunately, this having we similar road,

Mark Levin

Okay.

Paul Lang

I part expecting better in we’re and geology could for, significant anything panel not we’ve Mountain costs is mining what of stabilize, next shooting our think, the in portfolio. a development. think, But we which I remain seen are conditions Laurel and if the

a as far that great struggle we but we quarters. as now. think it, the over good team a in But and coal. now a standing have bad we’re have the look and the right – well-known by whole coking to it’s brand, mine been good case, It’s quarters we’re have you steel It’s there. clearly going with makers I and I think, worth management think used international as it’s world, going all as has mine to I a at we’re as the at where

about hopeful, operation. go So year as a that I’m wide-eyed it’s into very we but this

John Eaves

certainly portfolio remember finally got last Mark, sure basis. trying assets mean came to Mountain that I heard on say this strategic our at wasn’t third positive that to me John, Paul and onto long-term conclusion tag looking our EBITDA just to Hey it decided quarter enough, what are mean times, mean Lone always it wasn’t a year quarter make is we’ve was many if in are sell. just XXXX, let tough the with you’ve said, Mountain it we revisions Laurel, we to you I for so make creating contributing I that we strategic me

next willing making this we do look are, been the and options, there it management I mean to we looking two to is that. tough we’ll on move and I if the don’t So, Laurel contribution as point, going have better, to it team if we’ll not we cost in can willing But end still sell where make Lone overall this structure it has can Laurel a team think quarter, decisions, Paul this we and our this the the always extreme at on close at stay there. are at we’re we manage think asset structure said, I an but like later our Mountain portfolio, cost feel low looks and we we panel see are but we’re or App you longer-term have of that’s Central

Mark Levin

fair give are enough you was about just guidance, kick in and due then the don’t you to question, QX. to to, the John I versus QX more some I trying kind negatives of into seasonality, might I I thinking shipments have like referenced quarterly flat may but the QX, to met QX come know at last QX, this shipping off – for and we off relative the weaker potential be of PRB on QX Drexler, just guess think when and some met shipments, be prices positives obviously least vessel some Okay

from I QX in the is expect takes? QX be down, maybe way right and to the it mean about So, puts before just the that think significantly year, to is it, later obviously recovering that would reasonable potentially

John Drexler

met that you’ve in quarter and the perspective you how laid Yes, to we’ve out, been with widest I clear from of I the in think going a second I things quarter very be we’ve continue what we’re shipment kind the the here at is release the the right that also be the Mark if in look think, PRB, we’ve through highlighted identified well. as the well-positioned to the over we volume With of operate cash believe we as that all remainder year expectations work being portfolio and substantial the of think to generating portfolio said, remainder XXXX. going is to

Mark Levin

Okay.

John Eaves

this me is got we’ve inventory June moves John, little when a could on few the two back let know quarter. mean building longwall was schedule, of quite do vessel at but vessels I tag some that the look here. third just Mark, of that a are scheduled we that half We mines our bit the schedule slip second to obviously, what you quarter, with during found have shipping in those and we’re into

I quarter, volume stronger about second fourth we’re be should the certainly think trying and but as we think quarter. measured So, look we be third to at as

Mark Levin

not or One a seen mean – else you��ve situation little more logistical kind off I – get improved I’ll you what we’ve it characterize would and not of and answer, I it better as it? materially, mean is any how would winter, you gotten getting mean you done, has let how has someone lot a know I characterize exited the but

Paul Lang

pretty hard. themselves shot, pretty around, I we’ve The seen, take add. to if they’ve what still struggling – in the wants hand is really got well see on has has I’ll let’s line. come it first guess, From the John back other CFX

or lot of I out of party are impact our vessel third side point item not exports is other filled we the if of on we And the mean our sit. parcel is been vessel I’d think have maybe that. of delays hull – has six the is, thermal are coal, the I three where that vessels, the loading by our we has the sold obligation and their to when of most hulls we Now of tended because see doesn’t

things the out, been side. working the last but clearly months, there’s pains some think six I So export in are especially on growing

Mark Levin

enough. very Fair Thanks much.

Operator

Please Lucas FBR. go take with question We next B. will ahead. Riley our Pipes from

Lucas Pipes

everybody. morning good Hey

John Eaves

Lucas. morning Good

Lucas Pipes

think costs from $XX on first moves, cost and start follow-up two I quarter, half wanted $XX where alluded of to else cap would I lower obviously side guidance kind your $XX, thoughts would like to so the were as guidance, thought you that’s And that, and versus in of we second is were quarter year I kind quarter well we the met. should with I so year at QX think think I appreciate is full-year longwall you the full QX of rise then equal so in maybe this the would all thank in I second around in substantially second to you.

Paul Lang

range quarter that the Yes you brought or you as look that the kind the really first cost at quarter-over-quarter three in things Lucas, is of if that $XX and things look in. were there really two

one, good was impact a had sensitive obviously a First we sales a ton. about of which was $X.XX a

QX. or about series a are Laurel big those quarter-over-quarter for a like at of QX they usual a things workers’ and one half things the call The in we but subsidence we accounted I’d There adjustments adjustment, had had were second claim was Mountain what increase. of time, comp

slightly in I was you that’s range So kind normalizing probably at QX it $XX, the half of to because going to see longwall back of year. what if are our guidance range higher of then in moves the you normalized, look think the about of back

Lucas Pipes

a when from right kind the out but Got hone of second thank issues perspective if quarter also give in thank bit third specific much of a of helpful, would from last I it, the as on quarter, you could and fourth on maybe Mount little had Laurel, at look little here data I XXX,XXX better a run Mount tons MSHA the and bit lower year, bit the you appreciate And more to at that quarter your perspective, of about you. in maybe Laurel on first the compared that’s was rate that showed so kind very production what’s to you. and to little

Paul Lang

Yes, on Lucas, a ton one data, not produced know, of as the a the and it you MSHA sold ton basis. issues with is

a the had of in for saw you built good met whole, we what inventory tons XXX,XXX particularly segment pretty in as us a about QX, So quarter. the run but rate is

adjustment, was alluded XXX coal can’t our exactly that of John which that to metallurgical think I or capital working XXX and remember of in was that now met. balance I about the

can So at been in you you out we’re that that look million some if range going still I Laurel, Mountain ton Laurel X think that and Mountain we’ve this forward X.X million of issue we to in having. saw as sort

Lucas Pipes

Got for luck. you thank of much very best it, and okay, well that

Paul Lang

Thank you Lucas.

Operator

from John will our Bridges JPMorgan. We question next take with ahead. go Please

John Bridges

the bit is everybody. news I you why happening could the if still you Low-Vol, that’s as this of color begin good us premium A High-Vol give holding to suppose is with? over to wondering good think a John, Hi, morning just price

John Eaves

John. there’s is it’s this on value U.S. or lot if product High-Vol A, production whether been of High-Vol has a Australia, think in A. people last over you at cost there particularly the low that even just that is couple scarcity John, taken look not High-Vol out producing the we and A years Certainly

into if A year was you not coming High-Vol Low-Vol market, don’t you premium and High-Vol back but $XX, A typically if the into or look A. going $XX premium more the first quarter, forward, lot and new Mid-Vol buy additional that and forward the seen we we’ve last we’ve over over coming and of market, High-Vol a just a see So that move and seen look the kind between two of the and all back the of

longwalls So the opportunities ton have, we not but you are in we’ve Tygart only think to that additional positioned out bring add? but anything hurry with A million Valley XXX we up not we cost you any actually today, the in can Paul, if about we with think replicate got organic Reserve pretty low to valley coal. growth we get tremendous that two High-Vol that it’s unique think there, production on, Leer with well

Paul Lang

particularly over make market blends, I’d in the surprisingly there comment, is good same A Japan very Korea. it’s in and good is for popular Europe, the very there but a still think still Asia, High-Vol in I very their

Deck Slone

as are traded and starting real in add, XX for to we is this for and so the this in High-Vol premium I’d consistently think XX the great see said, increasingly value in really High-Vol that Deck, use we but quarter pretty I’d appetite Europe and is Paul John A particular, of A that has it there exactly and a globally. add last really

John Bridges

to to my models from $X.XX discount a a going $X.XX guess to I’m I premium. change go

High-Vol problems, the of So be Bay thinking to checkpoints? that Chesapeake just these of out going at the more volumes logistics the apparent out moment coming it’s without I’m the strength contributing could price that you’ve because than seen

John Eaves

a little think to offshore I get factor that been is John ability that this the that bit. strained Look they coal has into

Deck Slone

as – valued pointed earlier, wide a did John it’s range. carefully But, across John

of a mines So I’m more the come logistics have in that seeing number of lack A High-Vol places. just online. cost have of production there strained High-Vol are not with just of it A out availability, in been But and issues. some again, really that fact, struggled And with

about So pretty the outlook. positively we feel

John Eaves

be High-Vol kept but And A, I John, mean, as High-Vol hit it not think, Low-Vol would well your products. and just the logistical in B, PCI. your challenge, on would as I the all

John Bridges

the coal color take finally, you Mount for on you those on said, best first. Laurel, And the logistical issues. as then just Thanks

going inventory the asset? that do character moving say, producing difference yields So – that you coal expect deep from of another issue to the be of we to going part you’re of it’s should the from that the you’re High-Vol forward? What And in coal seam.

Paul Lang

is the little dropped our of adjacent, going why I John, for we’re bit year. bit And rest guidance actually frankly, remain outlook a that the panel little to a cautious the issue. we’ve on on that’s our

has quality Frankly, far sandstone with and I’m issue that. really not that intrusion we just equipment it and to tears that same. is the made fight rock there. weeks about solid As maintenance what issues the to get in intrusions and the for it does through cut it’s eight six the yield, get we sure through as after or out the the and biggest usually

John Bridges

Yes.

luck, guys. Okay. Good Many thanks.

Paul Lang

you, Thank John.

John Eaves

John. Thank you,

Operator

we And with go Vertical last take Michael Research. our will question Dudas ahead. from Please

Michael Dudas

gentlemen, morning, and Logan. Good

Logan Bonacorsi

Michael. morning, Good

John Eaves

Michael.

Michael Dudas

on pullback your your volumes. on PRB commented you as John,

be the see where shareholder Is on open XXXX, rate take the you to to that expectations difficult as what to met And run day XXXX the of for in going you top of inventory strategy it about obviously, are where thinking there? had past be broad positioning? look the going so the PRB your as you marketing expanded do want – would U.S. second-half being you back volume, past, the And in an and relative side? where into then before market negotiations market of year course, so on from up from you a it coal about How the management should prices this be thinking into you need we come kind given guys? on into you to were, are better to get level to to

Paul Lang

start I’ll that question.

been As the honest very the the past. we��ve as into going in far I think, future met and

value base to is think, customer we’re forward, huge for I segment. of to value stay is met U.S., time, than just going for it we’re an that willing an international to and important But as that it stick the accept discount And we’ll to think, And the a same us that’s at in there going the discount play America easier expectation arena. the market. more I North we is not comes. believe a if logistics, in

John Eaves

XX-XX it’s went XX domestic. Paul we to Michael, his of – did went credit from and we been I XX market, XX from the our mean, in I about a and we pivot to from a product to XX% team. think, international

we options. the offer If are market you portfolio, logistical the our at into that look products

allows it us think, nimble. pretty I be to

So with to fairly opportunities to have Paul’s that like react the evaluate go we where And the year point, market fortunately, company really the later are. best this ability for quickly. we’re economics going to this and

Deck Slone

to it. Basin, side River Powder just the to come John, of that

it we at that’s more around As obviously. we are think enough, look XX today, is than stockpiles days, at sitting still where

seen Now inventory, an somewhat not been too our coal. there’s demand activity some is that’s closing we of we’re enough still fee that, have encouraging. fact much The

lower sitting are as XXX that pulling be. versus at so, comfortable level We the prices to indicated, to Natural given right production. we that gas outlook. given place back a of that’s And think were now, and XXX right

we levels obviously, with we these comfortable But revaluate. in pricing, lower meaningful of movement demand We’re can if see and production.

Michael Dudas

met mix. some of your the aftermath hearing Maybe a customers coal XXX Any be or from Coker or thoughts we’ll international current and domestic side? what on the on the versus anticipated follow-up on indications U.S.

Deck Slone

continue directly certainly, We right balance metallurgical Clearly, production steel feel the market here arena, U.S. U.S. coal us. in Yes, important Michael, international advantage about much the is into producers even higher think if XXX. industry And precipitating as much is section to that it’s U.S. international in this the again. administration fairly and find to us we because U.S. Deck, obviously, positively benefits is not to it’s it without market to competitors. contentiousness too the the selling our time

And see U.S., steel increased benefit. a if So production advantages. and direct the that��s that’s we in

indications, We are additional as for output some the expectation increased output seeing obviously, steel year goes and on.

the City As you actual contemplated Granite maybe work. see even restarted being the

into partners to that, Basin And Atlantic administration most those so, we not are of positive. appear with are of does Basin. are look us, into some Atlantic work make to trading metallurgical selling the do important relatively sure has the obviously, as coal our partners as disadvantaged we we as our signed see passively trading it they that that at Meanwhile, and that to larger selling

positively relatively we’ll this at watch feel we point, it. So to continue

Michael Dudas

about deals Thanks, Yes, making Deck, watching it, it? and isn’t Okay. all gentlemen. it’s

John Eaves

Michael. Thanks,

Paul Lang

Thank you.

Operator

Eaves turn to closing conclude question-and-answer any remarks. Mr. now does for session That would the call our back to like for additional John or today. I

John Eaves

your second Again, you. in management I This to executing managing being on capital you quarter July. for balance on interest. thank want laser-focused look our nimble our We managing our program. team for in you thank your today. Thank our on is return interest on sometime you sheet, we costs, the updating to marketing call forward side, results

Operator

today’s gentlemen, for concludes we this you thank participation. your and and Ladies call,

disconnect. now may You

Arch Resources (ARCH) 26 Apr 182018 Q1 Earnings call transcript