ARCH - Earnings call transcript Q4 2018

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Operator

Good day and welcome to the Arch Coal Fourth Quarter 2018 Earnings Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Deck Slone, Arch's Senior Vice President for Strategy and Public Policy. Please go ahead, sir.

Deck Slone

Good morning everyone and thanks for joining us on this exciting day. seen slide the this deck all and press morning. you've supplemental the that hope by two now releases We we released

the the Investors If be under featured Coal they not, section as homepage on website on you Arch of as can well documents. the have found all

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

statements. Forward-looking degrees, their may the Vice SEC, I'd you of of to release, discuss we statements, of copy can press undertake morning that have measures nature, update more by we events at are be results to you remind to be statements, that plan address this as materially whether or different we our that like by non-GAAP may financial reconciliation the than the the in a matters uncertain. new a do end described find cause which the law. also to forward-looking section and otherwise, website. of Senior are, posted our Arch's in the that annual detail our CFO. Investors to morning With call me are We Paul which Arch's information, President our John forward-looking those required result President our our and Drexler, reports with on Lang, this CEO; Eaves, John different a and actual of expressed quarterly as future except These not future uncertainties, file in in and COO;

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

John Eaves

on understatement. highly emphasis a A with an a of the quarter, report operating pleased to all morning good would delivering I'll exciting call, and for to for with South. discussing fourth To you brought are I'm longwall Leer outstanding our say that We operating times results, the achieving these new fourth and particular value-creating Thanks look developments capital on Arch progress world-class program in overview plans be mine. rolling results. quarter XXXX today's conclusion return Deck to full our year that successful these Arch during strong of quick and start with everyone. a forward High-Vol course

just nearly During quarterly the reported second-best excellent million, performance and quarter EBITDA since emergence. Arch ended, adjusted of result $XXX an

margins ton. Our of million we benefited where results X.X from high another record shipped and coking quarterly from coking contribution coal tons powerful per our of a $XX near-record average coal performing captured portfolio,

EBITDA included that planning XXXX railcar we a again strong to and elsewhere with quickly our Basin River All capitalize the finished aggressively higher a impacts Again, availability persistent and result, basin. acting a to increased related than told, once $X $XXX over in anticipated Powder improvement which million sales weather So for strong already performance. operations negative stepped significant strong a opportunities in mark-to-market result our on spot material XXXX and very up adjustment. million, nearly way, that's

return of our level use, to impressive cash on As driving this previously noted, generation exceptional program. we progress capital put good

million. outstanding the $XXX repurchased During initially another shares repurchased the million XX% of way, in X.X to timeframe that a nearly over at May shares, just To seven another total program million, it $XX our our look repurchases we common at level back quarter, a quarters' total investment of investment XXXX. in total second-highest of we million time. of shares our since bought of brings That nearly stock quarterly initiating in

capital via return quarterly of buybacks $XXX returned to to additional to our In In efforts million date shareholders return our addition, nearly we've buyback in recurring million via have under total, augmented program. our share great payments. shareholders the dividend progress we and $XX dividends with

we also of to remaining based the share program on do Today, of assumptions XXXX accelerate $XXX million our capital expect should even maintain up the return to to million leaving the for in buybacks, authorized rate Board $XXX under current the We expenditure has to capacity authorization. opt have or current so. the

Given and it strong capital the of rate, quarterly nearly twice the rate return chosen Arch XX%. outlook increase $X.XX positive by launching has the generation, share. with to now quarterly further increased Board cash dividend free the flow for has in a business the the to XX.X% shareholders reward Since per dividend continued total program, a upping

generating shareholders. Given these which on team an developments, the brings remain view time our value we should to it be sharply you, whose come. management South, as us exceptional evident That board focused has the for project and that Leer

talking been this this base. right unique promising West moment this hugely to High-Vol We're we've move and on coal of Northern reserve A many of the years potential reserve that coking know, you now. aggressively confident As about phase for Virginia tremendous this highly next development with the in is forward

some you walk a me opportunity to that make a South such through the Paul Let investment thoughts. baton of the additional for few Leer compelling passing before attributes

century expect U.S., is First, a that coking mining such region highly suited fact U.S. in of well coal after in and given the United coking mines And when noteworthy maturely to it are believe reserve. we mining reserves longwall of among Leer margin coking the very A particular, to from that it South that may be States. coal That's non-existent. be comes High-Vol terms the producing our highest we cost output. the largest outside over scarce in well particularly coal, Valley quality lowest reserves Tygart are a coal In very,

global Leer of of a producer our A position coal. premier cement as will South High-Vol addition the Second,

A and recent is frequently by us and after the in increasingly High-Vol pointed others, been years As scarce. out marketplace sought in increasingly

coals likely a a the in are do continue come. you are As and to expect, A attracting long to significant as so a High-Vol result, marketplace would to premium for time

Based which in Leer the start-up. effect, years the the a compelling. XX is highly operate Leer and expected for years. of we would that's the proven average extraordinary South, in for mine Leer Leer extremely two South margin successful investment XXXX the in longwall within to South captured on for Third, is, investment mine, prototype recover we That's for at thesis

Finally, tons. believe wants market easily these A and can High-Vol absorb the incremental we

undersupplied coking Leer had a global even little rationalizing offset We extremely and of of investment beyond the there sales there's brand existing for as and Based flow need XX South to which XXXX With generation, the to in turn the consultants productive work by capital prospects capital for call million for capacity and meet for a our the tons simply value now market coking world-class at return that add of there new in some volume coal potential the program, have I marketplace of and as High-Vol industry well being our out internal assessments, whole coal products, more U.S., excited exceptional Arch's creates haven't that, XXXX. XX cash invested will Leer creation to in Australia our order and value the customers about between further mine short, been customers, new anywhere expectations That we're and progress happening to Moreover, will color Paul the opportunity. excited our very many over shareholders. capacity world. the serve. simply and continued we are as Paul? is equally and global else about on in the free in the on on and commentary new robust mine strong A for depletion. isn't present, and compelling In demand in prospects for next XXXX own

Paul Lang

Thanks John and good morning everyone.

as South one a opportunity, John that enhance view top-tier our truly As coal we portfolio. already compelling to Leer further promises noted, growth coking

and delivering over cost every complete South structure an Leer competitive Leer global a next seaborne to years our investing know, mine, the three level at as project. success coking is project comparable access a indicated, asset. same confident $XXX between can similar respect told, flagship achieve and which, you in Leer, of As will million with great at coal million this markets. We're South, to identical All the $XXX we be to product we virtually premier exciting exceptionally

repurpose compared with Capital per to the numerous tag million so efficient our a As a the the cost by decision via producing possible Leer million with $XX longwall in structure, fastest we steps capital acquisitions the X price high highly is we've course, the possible mine's mine X a new efficiency, payback. coal ensure to ton pared recently, taken system. of Mountain XX-year life. us, Mountain to -- Laurel Tier existing strongest that A a requirements we for return is a priority particular High-Vol year studied note, for a around capital or Of

facilities that towards That build equipment between Leer, related upfront longwall just at costs parts, complex management set Laurel which Again, all development expand It's longwall existing miles transfer rather is with almost the to In worth this maintenance, Mountain preparation we rail the compelling to to operation plant of with load-out spare scratch. the minimizing drive and the Leer other South significantly synergies training, and decreasing the equipment a mines to addition, upgrade overall that from operating should in eye time. and an plan plan completely interchangeable underscoring XX done the than is complex. away. into new from was capital we are two

the boast Leer's be XXXX, the costs experienced would Leer South point maintains because of Moreover, in to very of coking Leer which would a competitive in South the quartile focused average that structure, we've in Once to occur cash comparable running, this infer comfortably the and coal structure cost its coal actually coking scene cost Leer slated seaborne the as U.S. capture structure Leer sharply fourth is -- of down operating quarter costs. to-date. a current up longwall a Leer a promises is coupled curve. portfolio to or of the our in should out mine and South we're course, ton Of for around that $XX in Leer's on our first on This than structure will product. with Leer notable cost prices thicker that margin at mine. I the based are also indicated slightly ensuring cost coal market, South cost highly per our is to release, it

short, honed longwall mine. Leer transportation value on the our of the their able on and reserves. moves lessons finally, embarking translate longer development skills will for over a hard with learned mining fewer lower product work the experiencing large the will mine in in addition, South We're operating In understands five that Leer In roughly of appreciates years operating Leer area the it benefit we've at preparation through the to past years the unit same existing reserve plants block. could infrastructure. be base and and it's South operating better panel the of which a Leer that producer importantly, diverse for we're longwall We've conditions as come. our we've most to costs long Leer as and in geographically stature. have And any the and in should basis. Tygart a leverage of experience from optimize seen customer Frankly, a Leer-branded this years advantage than successfully the a situation new project and South course geology to having Perhaps imagine XX% cultivated into of many panels, coke

excited mine plan for Mountain we're also we're with pleased the new South, Laurel. about developed Leer While

operation but to Laurel longwall at the as this refurbishment. transition, As this well. following redeploy its we lifecycle. Mountain Leer begin in indicated, that real South transition in are also increasingly for with, Leer to a the South time, pillar at Laurel there's advantages end advantages Mountain well mining at to real and suited room Mountain the for Clearly, of Laurel To major room-and-pillar a is to point there project equipment and XXXX plan

achieving While and extensive believe geology operational meaningful can in we away cost we believe we while from in the still modest continuous enhance variability Laurel the Moreover, quality. longwall transition will a Mountain going transitioning flexibility. average cash the this the affect miners the has reduction forward. a mine's of product reserves, That's significantly to given important improvement

Beyond volumes coal XXXX, at year. average around per we expect Laurel Mountain to X.X coking tons million

In XXXX summary, market a affords provide High-Vol in there's our XX%, than customer the lower to we provides coal still ability brings with add our store volume Metallurgical to the range the B the which to in increase. to for output in believe X presence well, the is this XXXX our XXXX, and picture a sales tons of products to significant Arch intermediate very million which great our X.X slate value-creating a around as it million me Leer by in our term of In modest of represents South us coking and global base. and portfolio at a guidance. near-term to year-over-year guiding as broad the segment, output us in midpoint things While we a positive we're

in expect a segment we it's cost the per per average X% and average the decrease our to the cash the cadence winter first range And addition, the our American quarter-over-quarter to fourth XXXX. due coal represents as XXXX fourth quarter in time about midpoint volume Lakes of point impact our shipping of $XX lower which having to North shipments out we the cost expect the for the ton, Great scheduled coking is shipments we moves some ton customers. one-third $XX period, made to In closure two during during of much in of of the the as of than our to be to at change that the quarter This extra quarterly in quarter to XXXX, channels XXXX. longwall volumes important normal relative of

course, unit will quarter higher into first Of costs the translate be no and generally lower exception. average volumes

first In reiterate, experienced we year. we costs comparable annual to generally in quarter. move we through we those last our expect come To guidance our the fact, segment the costs however, of in quarter XXXX to with line as to be expect

this, in tons River to This the increases. Other XX On volumes in And of slightly our to ton. are of Basin our well change XXXX. price million percentage $XX.XX costs to slightly, ranging the between be ton million coal should high year-over-year projected as mix as $XX $XX.XX we we're $XX to XX diesel front, down Powder cash the Black from XX Thunder range mines and Within expect from In XX in year quality thermal is million for XXXX. sales our to ship a tons. in increase cost the million greater costs Thermal to segment, assumed per per guiding the due full

Elk quarter segment percentage However, be we anticipated smaller that anticipate compressed in coal the correspondingly, in Elk West production, XXXX to high-margin lower of in significantly of due to margins and the first mix. West a

at XXXX midpoint. levels capital expenditures, or at expect capital the for around As $XX we million whole maintenance roughly the

at but spending as we it a Leer and maintain when to noted, already million as do while this As our can level adequate CapEx our run out, $XX capital already very news, top ship operations. substantial we an very believe we tight cash we we has program. around levels expect view comes this to for disciplined On a return growth capital of that existing that, of South. The John for of capital pointed good still is invest

our mention achieved Finally, XXXX. I'd exceptional by didn't the performance operations and remiss be if and during employees environmental I safety mining strong

four states. each the operating top award Our of our in won mines safety

of rate are the We national lost Sentinels time had coal seventh times a nearly in Award companies. times environmental our than years. better record the And time again eight for the among are We integrated honored prestigious incident average. with for These exciting standard Arch. Safety three large compliance set the

to powerful Our I'll future. successful mines same a time, return towards We've well. able a With and over capital program reward we're running John building our call John? shareholders turn to are at the the been with that, Drexler.

John Drexler

already Allow and by good the regarding Paul to and John echo Paul the Thanks project. Leer everyone. South morning me excitement expressed

same share meeting capital maintain generating you cost South progressing while my do sheet very of driving fact, capital to platform our remarks, and balance and sustaining you ample cash utilizing for program. I liquidity, highly do with forward time, course plans at in our existing the and will with the can, our see project successful During our the needs, return we Leer it believe will low effectively. that all strong all it I

a return with begin of program liquidity Let our me position. brief and capital recap

fourth initial execute company's flow Across XX% a or our shares of buy Arch back buy to to stock million free we spending program, million cash outstanding. our continued outstanding. of of on X% shares the shares million back initial total capital During quarter, X.X full $XX $XXX year, of million the XX% its X spent shares or or the to return of

in we million of have Moreover, view change million share. We structure authorization. As $XXX X.X $XX current value-creating million and average million our repurchased under shares significant That's of a John indicated, of at our time. for of of shares an very of quarters. capital $XXX stock in as just have $XXX a span price seven per nearly capacity in XX% the initial short our we that remaining outstanding course

our recurring quarter, addition, $XX million flow that return repurchases paid free we essentially of returned company's strong approved Further XXth our we payable $XXX financial In dividends illustrating March a dividends, capital our Xth. business to light increase in all bringing of ongoing rewarding during performance, as and dividend million. commitment paid the stockholders is has total of the $X.XX of cash on our share. timeframe. to capital the normal of over common record close XX.X% of of That the board to per our a the shareholders, and under program our in shareholders March dividend Between share on quarterly to the dividends have strong total to

$XXX the now $XX third successfully reducing year extending the the to balance of liquidity borrowing our to to at and Subsequent our lending at the accounts $XX to facility size self-insurance million associated our unused to we the from the $XX capacity. have Including our during amendment bonds, with we a more end million, the million. million securitization facilities million, XXst. letter million credit liquidity, of XXXX under was our year, total of cost. December during in facility quarter, asset-backed borrowing were increasing increased up with quarter, our inventory-only the nearly the nearly of with still surety to successful replacing borrowing freeing Turning $XX receivable capacity end of combined facility $XXX amended the When fourth we obligations cash term the

would for conditions. facilities have current to our based based market at range availability -- the look of million $XX current in liquidity expect $XXX million our we we XXXX, borrowing under on our As on to

maintain million, important As we to being of an to our $XXX with in $XXX component that range we cash. million like of have stated, the liquidity

we've light now borrowing returning we are in our opportunity. However, of attention to an at levels Arch comfortable the are the steps build for Leer to drop Leer South which increase million driving in decades of to would South taken cash to turn to shareholders like times the the I year. our to position come value In on to capacity, shareholders. allowing during $XXX path ahead course cash mine, excellent of short, should create our for we new the to various while

our have availability through slide walk capacity cash provides On will We you on cash detail the I additional that see remarkable left cash-generating the the website platform. our deck on opportunity, of truly side slide XXXX. Leer of to like a slides projected and in posted sources South couple and that would of to a the demonstrate XX,

the puts for percentage recognized for we large a for As Consensus refunds is XXXX, $XXX we million proxy approximately with will That tax availability a AMT the cash EBITDA $XX of in million. as indicated, we receive at $XXX XXXX. And $XXX cash at during benefit estimated to we cash ended XXXX, here flow, which us of XXXX, of expect for million. on million year use hand.

a under side with the to of at are capacity capital we credit and cash comfortable right fund million $XXX $XXX level On our targeting lower enhanced needs the facilities, leaving service. our million, slide, our of borrowing debt

$XX for capital after South XX, taking amount modest needs capital, million. first of slide Leer for available and capital $XX guidance million the year development of account to our our is Turning other into a of million of return of debt cash service, the and $XXX maintenance

each of $XXX then, of we firepower reminder, an we return XXXX to XXXX. our program. spent continue have million have capital a and average on program As Obviously the in tremendous

we cash on that which beyond fund prudent I shareholders. our we be responsible Looking believe modest weigh might these with carefully South. South we the this elect Leer internally all the our comes value project. assure complex, and new achieve future. needs will Leer act are might choose There opportunistic our a We are XXXX, and to outcome. funding announce thrilled believe that combined leverage generated will time when in optimize through our which for and will long-term mine, conclude, options foreseeable scenarios that define South to we to you the we To a company for to Leer similar we in scenarios existing Leer take will in manner

South Our we and platform choose. our Operator, capability maintenance to over we us will program and turn needs capital strong questions. to the to fund capital ready so still while aggressively With forward take call allow should that, on back cash-generating project development Leer our to XXXX the drive are you. the affording I'll rapidly us return

Operator

Thank you from [Operator questions. open much. would Instructions] come At the very Levin, floor question we like will first for Global. time, Seaport Our Mark to this

Mark Levin

congratulations announcement. the gentlemen on Hey

of Just a questions. quick couple

that make XX, mathematically. slide this to go I thinking if I sure just correctly to want I'm First, about

payback a you just scenarios number on of make to period. I'm periods. the and how different to present get You And sure that clear price met payback

$XXX about talked met which $XX, $XX and assume is to X rate price, to take by are the cost a the going rail $XX to like we in in you do If roughly you're think I the guys range. short to just past $XX Leer to get that you say, at $XXX. cash get $XXX. using down have and the, ton, where X.X I'm you today, let's a were multiply And

$XXX or So, any X of I times this way? $XX a million. subtract about Am if I the to $XX, margin that thinking wrong roughly I correctly EBITDA million tons in get get to

Deck Slone

it's look exactly that payback it. you at little Deck. CapEx facility. put And the existing in the you end as way of to maintenance is see, maintenance can Mark, calculation. a bit right that's also We months. than to with the And actually -- -- XX are you is of less CapEx hey ongoing what a certainly up Yes, But

Mark Levin

Okay, perfect.

Just make that was want to sure right.

with million. reserve about know Second Is Sentinel Sentinel Gotten life from being part think fit some guys of production the Sentinel. that point year Sentinel mix? tons how reserve recently And to then as million at million the profile? when questions first relatively X and How you life talk that X of question get to we X past do do and the the million going you XXXX where Leer well? X ultimately to short. the you're does this at after has at look production I about Sentinel, into about profile you

Paul Lang

Paul. is this Mark,

same effectively the Sentinel a operating Short you complex it, going of that. Let mining same me Tygart South. take as think and the operations in is forward. as using will facility rail become on And same Leer equipment Mark, reserve all And at to the of that the respects, going shot answer -- the the about same single we'll customers. in part a there's many it's port scene, manage

about about tons. X XXXX, we produced expect if Leer combined Leer million property, at million the approach versus That's between Sentinel. and to in it, today about Leer think So, South-Sentinel you and X production

the mining basically tons million at equipment, And exceptional surface of continue the produce we'll consumed But using with miners South. longwall well to we and as produce down Mount to the the be still Sentinel you name be by and coal Leer course, line, further means. the go So, talk about facilities, XXXX continuous We'll won't away Laurel. X.X about as until any as workforce. by in it'll expect

there's add -- about those level facilities X then Beckley, simply our also that in get expansion million capacity. million tons X because But ton about low where capital built X million of in you ton opportunity to XXXX. with about that's for you So there some a were

met it addition X X.X approach look relative way to guess So, will the at tons million I to to another XXXX. million is

Mark Levin

and and Got South, profile, making does it. to comments production some question When that the production. were that mix you, in the think let's move as you what in cost then I longwall longwall a relates continuous when maybe over can I color Laurel cost? about to think from some the to you not will referenced, Mountain would to And think miner, go But expect few more it say, how Laurel down. next costs years. up, provide in XXXX one reducing referenced look typically, going mean final Mountain I the you Maybe think you down. you believe, you about Leer you on about terms XXXX of a after coming of

Paul Lang

remaining, left thickness. quality terms of as about coal the although reserve and have at a Laurel, what I is Mountain think got heart think about think the we I operation you if more there for uneven about tend very open it, outskirts be base be. the kind about good mine, Yes. mean, of in remaining year mining what and we The is of a I reserve. you a but it, what's And was XX what good been ago. about pretty of this to it's call I'd years not to We've it used

year So, I the transition think and it, about should start we Mount in with Grove, remaining mine, the we the December. three of Laurel a think will which better and mine you lot panels operation. reinvention But the as stronger of this have the of happen Cedar out

and reserve to improve able quality we'll overall and the recovery. base the remaining selectively be mine First foremost, and

startling I think is one our was plant out of XX.X%. most there numbers the recovery about in XXXX

and because room-and-pillar we'll just bad we this the that's to avoid XX% select where switching and mine up As we carefully or XX%. a And to operation, jump can very we look you areas. we assume, at can can mine about stay

the doing is end to downsize to the we're be It'll up underground smaller ventilate. we're So, a simplify footprint, only the operation. to going there thing going mine maintain and

Laurel. think And all is think I the it's counterintuitive, help the little these the but right add really way definitely it things I to going is a you together, Mountain road. this to I portfolio down of bit frankly, to think, go

Mark Levin

down you say So, be this? a the And more? function talking or like as even cost of or $X something $X we will are

Paul Lang

Yes.

-- down think marginally. good believe I guessing. plus I as as $X, at I expect they're are say I which we or is minus about

Mark Levin

sounds congratulations big for day Well, company. this Great, the good. on

John Eaves

Mark. Thanks

Paul Lang

Thank you, Mark.

Operator

you. Thank

next Jeremy Our come will question Sussman, Clarksons. from

Jeremy Sussman

on very thanks you my the for I taking and questions and reinvesting much congratulations in quarter guess, see it's business. great strong Hi, to guys another

John Eaves

Jeremy. Thanks

Jeremy Sussman

your that for remarks Leer million XXXX the -- kind $XX of or the I this we that levels South If additional similar capital or be in spend so in above returned even could robust to noted opening year anyway, saw. you in shareholders despite XXXX,

So, maybe you I see. shareholders, be or Obviously, with argument's cash little forward reasonable. do spend XXXX let's Leer conditions sake, know matter, for that's is say, say a said, to returning continue be to to going XXXX obviously able when great clearly, that bit market let's but just, And to the to in is curve expect higher?

John Drexler

a forward. discussed, team's we so program. on we've position to position capital that able management that course that. move throughout expect forward And in a right is we commitment it has would think for move been of I capital Leer to return that if this Board's as executing you've is choose as XXXX be aggressively demonstrated We initial seen, tremendous we're on and as to in Jeremy, that fund required we've our And focus be So now the the South. to

XXXX, that we'd move I of we does are a capital As evaluate did XXXX think and we'll And in up. to discussion, you step evaluate to company, take and in continue as you program. and variety where conditions, be willing my modest the correct, responsible forward there fact talk the And some are about you market scenarios: et opportunities the flow scenarios continue move beyond capital cash XXXX wide to leverage we into cetera. move on for return

We're speak and the on South. can't we over But been on Board a I Leer on to while clearly, it focused We've XXXX are XXXX that now. So, years. developing perspective. last focused we're it focused from management several

XXXX move think into I lend itself where could XXXX. And our we does be so to that mindset forward as and

John Eaves

have into about I ago, our a of board program, my want and sustainable, of twice. was this capital to we capital talk been that this that a I increased years share buyback, when obviously, couple you when return big dividend short we started place, Listen, program. return go didn't saw John. is The was we part in this mean, we the has to a Jeremy, that term. discussions

think thing that the fund interesting can we too. capital, we to return would I expect and do South. We So, mean, this can both. shareholder about actually do post I can is we XXXX, Leer

long-term. tell can Board from perspective, look program this at you, a I return capital we So,

Jeremy Sussman

raised and mechanical. I think trading the as that's span no, it just or hear. of -- in sort there And stock's Is again, there? of But almost tipping short the so minus. you float, expense at which inclined up to how quite of does back great think million maybe then again, the ratchet Or be my But more know as follow-up, of just I third I Board time a where impressive. act maybe point of you your about sort the balancing to mean, dividend? buybacks? the more you've obviously, plus the super That's bought towards but helpful look a you'd is more now $XX today future,

John Drexler

intent we we we as are under direction Those here think as intend were right think and we've forward. here move will -- as we evaluation. But to I head our this Jeremy, call been clearly indicated that constant I the move we've clear today, we be sit forward. things now sit things as in on

Jeremy Sussman

Thanks and you. much luck good Got very guys.

John Eaves

Thanks Jeremy.

John Drexler

Jeremy. Thanks

Operator

next B. Riley much. question Pipes, FBR. Our Thank come you from Lucas [Operator will very Instructions]

Lucas Pipes

see growth gentlemen I such industry, Hey to especially project. in an about exciting reinvestment my like and this congratulations. to attractive morning would the add Very good

John Eaves

Lucas. Thanks

Lucas Pipes

about Gentlemen, to Thank Is envision product. a more the market little you. I bit this target ask you coal-to-coal? wanted Europe, for this is it do Where Asia? this

Paul Lang

pick Well, look, with is this worldwide. and all start Paul. it. let that you been -- on it's it's at Leer; I'll very John But up well-received look

to in South and Southeast the rationing have demand ability sales all to fulfill customers over Europe, have we're the is, base America if more customer we than our it. fact But the Asia, Korea. We have product we various Japan, almost

mix, we obviously the place those target. customers it their and value those customers on of a more are some in Now, that lot

that We've with for can it's it happy they much there. see value generation. a this it. is homogeneous So, product coming as High-Vol a their from forward be they a our But in I they're effectively we and think keep scene. It's look game in plan. blend the good known real this the pretty the mine. a going that's product is out basically A, one and And That's volume got of steel going increasing to by basic producers, same

its them. kind play beyond So, also tactical of it's long-term a attributes, for

John Eaves

if John. every evaluate we was Arch, to value We investors. create mean, XX-XX. is and international. unique. pretty had try you we we where our in XX% we're mean, of be Luke, I most our XXXX, think domestic, markets year mix to can the Hey go XX% think was XXXX, this for about I In

But that. most we'll have our pivot look creates we at to each year, if ability So where and the logistics the our value look cost at you market go the structure, and

Lucas Pipes

us Thank you. my you grayed sounds at And kind organic you to pursuing, decision elaboration. at tree of the That's is M&A this South in you that you But where market look when I'm can the lacking out you more sure I your M&A of for is you're this for question was of Thank obviously of -- side out. some helpful. you decided then wondered, green that. you've studied kind what currently metrics highlight Thank there. very a special growth and flavor the looking allocation showed dividend Leer Leer pursue taking project? like, And you then were at? on the time. give you carefully. capital not also XX, M&A, for any slide versus put M&A And What studied kind for second could

John Eaves

in you M&A synergistic really out Yes. we was the we imagine, couple we've strategic created Tygart have Yes, and of And that the at from to Thanks what last again, we thought value always thought to Valley needed we were about have. we opportunity what over years, that against benchmark hadn't found every the anything doing, that standpoint that's we there. can looked an Lucas. external as

Tygart fee. we have and million Valley But M&A. got again, the external after think continue that even XXX look to we've I at to Leer that own ability we tons South, in

of actually we again replicate couple So, can times. South Leer a

to almost fact the the to So, a good of will And we produced but very we'll to think, this in pretty -- less coal A supply look cost as and than world. get puts A a unique a that over world, that's Arch a Arch producing met continue position. we High-Vol studied is continues a A demand travel look, be the and all going fact producing from there's standpoint, being that High-Vol globe the around we're we in We the hard XX% structure tons place XX of a that. to marketplace. be think given million around that premium the High-Vol in

we way the like So, we're positioned.

take the product in have can forward mean, done and market. execution we to those We Paul to look Leer done learned South will lessons get team laser the at management Mountain create and powerful They've Laurel team this a South the lot. a past. on will I We Leer I think focused we his that continue right. for you, M&A, is but sure Leer making tell We've in past.

Lucas Pipes

you. sense this for year? you us capital give this on didn't by just go be helpful. excellent. the modeling far, can I'll but That's purposes, sneak Thank one I very would last And maybe you Great. Any think quite one earlier in. expenditures

Paul Lang

about talking or South you are in just general? Lucas, Leer

Lucas Pipes

specifically Right, South. Leer

Paul Lang

Yes.

if So, midpoint million. total do the we call of the round of numbers $XXX it, of just kind project,

of uptick take those into And You XXXX. there's XXXX. some not last spilled actually even years. million $XXX that; two slight $XXX out million in or you're It's $XX quiet that's million. There's a

just it two. by you for to divide So, may want modeling,

Lucas Pipes

Perfect. of hear. Thank great to much luck. you and best very It's

John Eaves

Thanks Lucas.

Operator

much. next Instructions] OppenheimerFunds. from you Thank very question will [Operator Rob Chavez, Our come

Rob Chavez

Hey guys. Good morning.

commented You looks versus seam you XXXX like. like? to for on like get But what Leer provide longwall what a guys perhaps XXXX sense comments looks seam your your some of on South and thickness could look already Just for what at moves Leer XXXX your Leer. thickness versus

Paul Lang

have about X.X thickness, seam X.X I about -- on guess, off, to little XXXX. just, The and this or I versus may we're a going in XXXX X Yes. from feet but

have January keep run keeps which move third another Leer. As one Mountain a have starting a the have longwall now, There's operating going fourth we occurred. December. If one longwall far already one it'll third Laurel, we two ahead, the move in we here we And quarter. have moves, we'll be are, in has currently, as is But scheduled we as scheduled. At is, longwall it to as if moves Elk, longwall, well our could in two weeks. One in longwall second have planned about it We'll if there's out no quarter. running as right quarter. at West in second in the we XXXX. of slightly mine

in we December. West ahead longwall produce could Elk a of if at move So, we schedule, have

Deck Slone

this Rob, And Deck. is

So, fact, coal foot we Leer look forward, have in been And up be we at will in in XXXX actually at about Leer, this if thicker in we than still. we were do you point. than to thicker get into a XXXX thicker XXXX, coal; at --

inches this from the of thickness of to for XX inches the So, average the to seam rest XX goes point life mine.

geologic clearly, at a So, going that's perspective Leer positive really forward. a story from

Rob Chavez

Thanks. Great.

John Eaves

Thank you.

Operator

you. Thank

question next [Indiscernible]. come from Our will Jessica

John Eaves

Good morning Jessica.

Unidentified Analyst

Hello. My [Indiscernible]. name is Jessica

Paul Lang

Morning.

Unidentified Analyst

the given talk state do seeing Congratulations much expect quarter. XXXX. you market And about did expect hoping on ship? export how you the to could to really see in Like moving now was successful a just bit and right you how in much of we're I ship the market? what global what forward guys a you

Paul Lang

Jessica. Yes,

or we're pullback think what sharp API-X met generally I and market the forward general, Obviously, people comparable Newcastle. to is plus and minus been in year. to But export either way. both hedged in most be think, arguably those the tons in expecting pretty have million XXXX, a thermal I a for -- maybe there's

million. it, million that's XX think taking XX numbers, we'll up where flat come all relatively that round account, I So, period. about into million to a think be we about with tons our, from year-over-year we And down, a call

Unidentified Analyst

met And the you going of that And have coal? thermal and that -- is contracted mean, going much for and so of far how much And how for -- much year? I overseas? how for is

Paul Lang

guidance table. in table Well, earnings Jessica, the on that's our -- in or our

side; to met on we're pretty be heavily the market. again going seaborne on So, the

the X million about pull versus On where XXXX. tons thermal is back we'll side

Operator

very you much. Thank

Our David from next question will Gagliano, Markets. BMO Capital come

David Gagliano

much Hi for taking you so great. Thank questions. my

John Eaves

Good morning Dave.

David Gagliano

lot questions. XXXX my Hi way, good for of detailed information point, a And workhorse. next coal thought about Congrats, have outlook, at by morning. questions both. but also of just answered on couple really A this the of thank I met you also, the been the have

commentary of little earlier First, a Can volumes I Mark's profile. a talk the term on longer about in want production XXXX about cadence follow-up questions bit and you particularly to met Mount do total, beyond with my much existing hear the regards Leer XXXX. on so beyond Laurel, didn't a to Leer the I didn't Sentinel. I on mine That's hear first mine? existing question.

Paul Lang

XX years. excuse David. or me, -- Mark think, on I has paper Leer,

mine is coal lines operations starts, always mine other the reserve always as stops. it's one engineers draw the one block what's of the for where people think difficult interesting I and of is XX-year the kind solid at one the

put there's about into XX to the we've excuse years me, on that sighing Mount -- reserves Leer. of based or forth, So,

we that, some Beyond options. have

there a point said, of be to where the could -- As were or possible industry another X unmatched in could I operation. This of John time And start Leer in a either on continue out got that for economic in pipeline in reserve we've this phases. is it's we there Tygart Leer some U.S. more Phase period development, X we think or the

David Gagliano

Okay.

per tons to XXXX? assumption Or-- specifically, million year question is So, reasonable a X XXXX

Paul Lang

Mountain it sits there think just X.X, kind continue sits Leer X.X, South and X mean, and Laurel of years, next to about about that on. Leer that couple you of use I if Beckley there, just Yes. and X.

it's So, us. period an of quiet kind just unexciting for

David Gagliano

second just a That's question. what like. then we And

I quarter have, just I'm remaining for small XXXX left Is thermal the story wondering but relatively price? million remaining can XX about environment in think, Looks current business. per prices or range. that it's the you ton over reasonable million were price to to realize pricing the you fourth left. the to do like tons if XX the PRB assumption delivery. mid-$XX shifting that a overall XX these million tons that days, for locked so I for talk to Just tons in, about in

Paul Lang

Yes.

close. math's your David, think, I

think in contract average price XXXX -- we QX for was $XX.XX, our about $XX.XX. I

are I quarter seeing move handle and heading think all in quite up. We're $XX a January, numbers a this. to we've seen on this about those into bit starting closer we've what business have placed of actually to

David Gagliano

Thank helpful. very you that's right, very All much.

John Eaves

Thanks David.

Paul Lang

Thank you, David.

Operator

you. Thank Bridges, next from John [Operator Instructions] Our Morgan. question comes JP

John Bridges

morning good Hi everybody.

can the question for on wondering weak. on Dave's we expect from the PRB, Creek? XXX product's from what Just Coal Obviously, pricing

there contracts to be you contracts got that you. once over? You you while. you going think gone, But roll may will do or some Thank putting those you a those contracts keep pasture are Creek able for to be Coal out

Paul Lang

open. is pretty hey, Hi be just this I'll Paul. John, Look,

heading coal opened end The hell year, of the drop. to difference X,XXX a were up. between take prices XXXX up saw we -- of X,XXX the As a on into last we

play were that closer physical published decided think I to numbers $X. And actually $X.X. numbers in I about that think were going we weren't the we frankly game. the to But

the shifted two just one. flexibility. operate mines around. have people We as We We basically the

do. to market. people level what So, to closed million year what do ton I'd have million if this we in Creek I expect And X going Coal Creek I it's to and out year. this XXXX. call sustainable. a we'd Longer operate is tell to two a X are plays Coal term, we're the we I now, the in the there prices But products spread the out XXXX We'll we not think again. that right Frankly, good do between had a it see in place. to, how

John Bridges

coal utilities presuming But going not to have cost right. pay Right, the the just going otherwise, least, they're they to at your are to get need.

Paul Lang

I have generate to some point, mean, mines cash. at

John Bridges

what teams were prices effect that were -- you One was XXXX. the seems jumping thing. two you Absolutely. My different I'm that for spot XXXX. some showed to getting last PRB other in month Bloomberg because guessing of or report stream

Paul Lang

it the the in is used it I the sales screen PRB. prices The I'd X% PRB. -- OTC The I in saw, thing what to last not say Yes, what in represents John. directional. about they're of about the be is the OTC

to think value But I directional prices at pricing tend get be quarter. very beyond of basin. But only view their same time, of and that, month public the diminishes. in the the in prompt real you kind it's prompt the

seeing So, directionally I think you're what is correct.

John Bridges

Thank with Well, the let's on you. continues. and Congratulations of okay. Leer Okay, luck best results hope that South.

Paul Lang

John. Thanks

John Eaves

John. you, Thank

Operator

have further at Speakers, questions you. queue. this time, in Thank we no the

John Eaves

as interest everybody We South to forward in on results our you look as certainly, for are tell, and April. thank updating We Coal. quarter Leer can well first their to Leer in want you XXXX. excited about as I South Arch

So, your much very thank interest. for you

Operator

conference. very have much. your Please gentlemen, would lines of you. at rest time, the to a phone Ladies great and Thank we and you disconnect today's week. this conclude Thank like

Arch Resources (ARCH) 15 Feb 192018 Q4 Earnings call transcript