ARCH - Earnings call transcript Q4 2021

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Operator

Good day. And welcome to the Arch Resources, Incorporated Fourth Quarter 2021 Earnings Conference Call. Today's conference is being recorded. I would now like to turn the call over to Deck Slone, Senior Vice President of Strategy. Please go ahead, sir.

Deck Slone

St. from morning Good for today. thanks joining and us Louis,

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

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

Paul Lang

year. challenges on last the progress tremendous months three this appreciate making of you potential the of join the could us key in despite and XXXX of to overall, fashion, our every nearly experienced Deck, strong a Arch in call good pleased interest Thanks, your I'm that finished morning, we strategic report We Arch on and priorities one some everyone. morning. in glad the

value restored segment, robust the sheet thermal our to balance generated we During normal outlook, assets pre-pandemic gross our in the the levels record the metallurgical with board's believe the and drove production legacy ramped up delivered and closure in our stockholders. confidence and In at core of significant reduce long-term those South, liabilities multifaceted segment, to significant the given thermal we quarter, with program near strength. ahead return cash progress we Leer keeping fourth our efforts a to capital fees high that levels margin announcing incremental of will in for are great a business resumption company's today this the drive at

to at launch systematically is entirely as flow stockholders first quarterly cash a has and But Leer that increasing, restored reclamation preferences. through return we transformational to buybacks, remaining may cash cash in As was paused that to to an share relatively to a of resume through our Leer our the have the created cash flow dilutive XXXX the production thermal tremendous the future durable We cycle. interests South mapped and and use our as program because intend component, would return flow, and minus we capital for nature quarterly tracks securities elevate financial potentially South. This of arrived and/or the the Leer preservation. program approaching with dividend, our newly out We fixed our neutral the resolute This discretionary not repurchase we XX% highlighting pre-pandemic recurring stockholders and balance helps during than contributions preservation assets. along sheet We new of ensure future special QX recall, sheet allocation to and liabilities closure the the potential of which ongoing you $XXX balanced, levels, model of normalized of XXXX, CapEx capital more Leer a thermal for balance initial and million facilitate the net at With May that model cash-generating points early reclamation the full decision with now but two deploying address XX% to return capital well the established expressed to fund allocating worth moment. this fund. define South throughout possible returned buybacks of that repurchase dividend. only debt the ongoing once capital new dividend effectively of in of views We its last it thermal strength, allocation program running, through to minus our we market plan capabilities. The our dividends, quarterly complementary its XXXX mine and and easy we've also a to discretionary a one, approximately to capital and enhances of position cash opportunity return we was is project our flow and existing the that of stages viewed up operations potential our stockholder aligned plan a time return the also expectation variable the March outstanding. capital XX% South appropriate build-out phase we program flexibility, cash board preserve view is the pandemic shares mine given capital discretionary for new and as the from the from our in

the new simultaneously our dividend stockholders quarter to we quarterly we on we as intend generation. return forward on first the second same proceed this in XXXX, based our the for quarterly We in capital pay continuing value dividend. plan quarter's fixed capital future discretionary cash deploy new cash cash look will reporting our to confident model these along variable year. the recurring periods drive this quarterly dividend through new and on schedule returns our significant of and We're model pay return with capital to As indicated, cash that

ongoing strategic pivot Moving unwavered metallurgical objective. our this and clear remain we coal markets, achieving focused on strategy to steel for and Arch's towards

our noted, coking producer portfolio the drive costs. to this final a harvest moving still of footprint assets, the with components of previously towards coking world-class is completion other still forward closure coal remaining of at this centerpiece a the continue coal we transition becoming of shrink But thermal their value the their with significant and pure-play ramp operational prefunding nearing South. and with legacy as we're As of pivot, development production Leer full forward of

funded the course retirement roughly area River Coal in reclamation we XX%. asset our Over Creek believe vast for fund XXXX, the operation of fully could reclamation reduced the final preparing approach the end mine Powder the that majority of Completed obligation and on by mine, of closure at made Basin final disturbed an that thermal XXXX. we new the investment additional work a by status in

further acted down equity interest the pare exposure to we for our Hawk million. through operating thermal in sale $XX Holdings addition, In Knight of our

response building steps, assets, the business We in a thermal our one down to Knight hand believe success in out either and on and As contract in wind us with a these of of or the well the Basin. thermal Illinois producer for them book coupled is substantial our profitable on Hawk to monetization to value-creating you that recent complementary coal a manner the pursue assets continue the other. positions thermal know,

remained currently Now thoughts markets A to product, $XXX at tight coal per to on before the Arch's John. call East with at Coking passing assessed coal I'd share the metric primary metallurgical Vol a on U.S. like few ton markets coking coal present Coast. High

the coal we as supported. markets clearly elevated these we coking to expect view to overall last don't While forever, well prices continue

global sector at remains apart Here XXXX, almost too from there, expansion that China. be mode could the into Chinese back an strong, see steel even the shifting everywhere of in steel distant future. outset not we indications And output

In reinitiating trajectory. their India's are resumed coal strong have and addition, expansion Indian steel projects imports their coking upward pre-pandemic producers

XXXX Australian million year coking compared tons to in remained and compared roughly to Just when as XX% pressure. significantly, fell X global down under a exports XXXX nearly the of coal XXXX. coal were supplies weak when by pre-pandemic

meaningfully also to wide pre-pandemic production a continues undershoot levels a coal coking back margin. it after U.S. While challenging XXXX, by bounced

on In in short, level. levels export flat basis year-over-year up relatively is strong we obviously depressed coking Canadian Finally, XXXX against year to in a believe shaping markets. another what were already XXXX was an quite be coal

fuel-intensive stockholders we We world-class ESG resume High-Vol around ability are the to efforts build steadily our base, economies. details process. our metallurgical top-tier expect and I'll long-term new the to John? confident slate, in low-carbon both in trends, and industry-leading call to to value developments With stakeholders the our out logistics Drexler premium marketing these turn and on capitalize product performance other generate and accelerate performance. With A countries and our for and substantial further to and marketing for near expertise, John in the asset key that, world now over operational on and

John Drexler

everyone. and good morning, Paul, Thanks,

the the discussed, key ended QX, the quarter while by to good rose all during the dampened corporation's continuing progress yet just Arch our Paul delivering we the momentum with upward our was execution excellent of team occasion As across South, at in the Leer operations. operational ramp again strategic on And year objectives.

the high-performing for Arch have in dedication tremendous stage team's success is a and of I to in I've to XXXX. that past, As greater stated workforce, excellence many the every even times the believe sets and performance truly facet in fully fortunate commitment such

a our me my with Let remarks execution. ESG quick of begin recap

coking environmental for you believe the again to business and we We which exceedances excellence that compliance a The of zero that say quality commitment our environmental fact in perfect in company environmental in We And most had display the environmental XXXX, quality thermal wide. entire is in on deeply engagement culture compliance are legacy an corporate impressive. rooted community As well, the zero performance was water is U.S. unparalleled most in arena. know coal water zero particularly ethics. completed coal Arch's this and is safety, across a to with and industry. year stewardship, platforms, numbers coal violations

highly precision skilled and a tremendous conducted XXXX, it's operations that day. exceedance. water that without place of performance impossible quality systems rigor discharge goes team measurements During points single brings saying we the to highly task single across focus, record that every our water XXX without XXX,XXX environmental It level didn't achieve and to organization effective one even at minor every in management without and across

Let's turn now to operating our performance.

outset, nonetheless. significant noted perspective, a I from of our quarter was but operating production the and it at As QX segment metallurgical performance progress a finest in our not unit was cost

are that mines for South, and category ramp other ongoing COVID kind am localized of of pricing. cost the mining. from coking pressure, the fall ton, higher I reflecting and also variability caused have of report stems we the approaching Leer improvements efficiency QX Leer sales-sensitive the reflects the average expecting. pleased per was into is impacts South been at across It $XX.XX we to just portfolio that impacts, higher the our at Our the impact ramp that that kind geologic seeing coal segment in cost costs rates by But inflationary our right

achieving In been rates full expectations the asset. has that new fact, over with year our line are last for South that in Leer world-class two weeks, operating

balance we to as the the and are focused maintain we finding ensuring that of pace the course, XXXX. sharply further Of remain progress ways mine's still performance on through that on quarter focused we up first and ratchet equally

with pleased coking principally stem While some momentum in quarters. Those indeed pressures on expect upward coming coal in our we our operating are of pressure are we two core continued from nevertheless level portfolio, costs the building factors. we

The first inflation. is cost

expect natural we experience skilled to due costs labor outside to XXXX, resource both into space. progress we for workers the intensifying higher and competition As inside

roof In expect range. materials, our for XX% plates, has including pay to the other to bolts, expect be which X% consumables somewhere for addition, mine in to and control plan implications the more general comprising mesh inflationary Overall, and it. we steel, key underground we steel pressures

The is increased second higher sales from realizations. average costs driver sensitive major sales stemming cost

the pay of price products. selling a Virginia mines royalties the certain State average tax our reserves. X% As based on leased on severance you also we know of to West pay And their

own to consequently I reserves fortunate reserves. fee in those no on of royalties and Although would we our add that are pay most

late with who in on constructive the good due point Rail staffing to inherent not we cost and as two to of is our the which also ton began, a continue in particularly one where discussions for $XX between we our range system our are the As address terminal pressure explosion. need lowest remiss uncertainty meet to lowest as with the I rail on if to another cost service of of coking producers, working trains. producer the as coal our have and of significant that Bay has didn't service. COVID-related those disruption rail December out, in as been United I to Curtis we early highly costs be be with potentially coking we macroeconomic result wide costs highly and coal wide XXXX flag coal carrier, would from ultimately coking environment needs we But of $XX well States. remain staffing it the if indicative per confident guiding we pricing Regardless environment. shortages growing coal understand stemming the believe well their the cost the is focused drivers, franchise us issues fall inadequate will XXXX, to as coking the since continue

repairs partial facility that So complete the moving with for alternative status, may Newport several along us is News, while our in gives XX% Bay to take outlets Virginia issue our other the Curtis months forward. of more owned manageable production, DTA confidence operating including its

is could quarter final result the But down as in we coking the for coal provide shipments a of tons all It range the chosen and While to volumes. why as wide that very rail as we instances the in of likely we million optimistic progress our as tons will sales quarter-over-quarter. we XX% also X.X weeks QX plan have by to are into guidance In work X February million XXXX year performance appears as but also terms coking a XXXX improving much projected even April. with up of have we coal another pleased collaborative in steadily be shaping cautiously January see challenges, approach being good that with strong financial we're performance. are hope in believe challenges to there and we these still that to do, conservative, we are our place and to is we railroad exceptionally be

legacy our our substantial thermal and skinning on first, harvesting closure segment made again we those dual and from mine for the On that of down amounts assets. progress long-term by front, defusing objectives liabilities; excellent cash second,

In quarter, that and addition, of layering set marketing in the achieved. in team strength carried across the markets developed third was quarter thermal with business both into the that fourth a in book the thermal in late years terms record the in volume successful pricing multiple a of secured and

liabilities. River final our objective the Creek long-term by of mine We mine of retirement at asset XX% course On closure trimmed to total work of around our complete principally million Coal accelerated the or Powder over mine. Basin skinning XXXX via $XX down the obligation our reclamation a efforts

tons and is River Basin effectively easily River mines. out of sales, West Colorado Powder we mine to selling XXXX, million Powder at CapEx added XXXX nearly Powder in time XX Powder to book our same out XXXX since thermal in $XXX service rail That $XXX EBITDA ton, to West cash at where thermal of we objective, $XX at our million of guiding from brings are shipments With a a QX. Basin contrast have thermal approximately the Basin are stand than opting provide to are harvesting average we've at our the coal generated in segment we progress, With from of years coal of XXXX. a the for Elk million the our recent in thermal somewhat stands this operations in in sold over now QX well. our River to targeting in of EBITDA assets invested to $XX.XX range, tons segment price weeks stark during million per XX and frame. projected generated for we the wide million again, those X and which we've On that we XX more which production given Basin River of as tons level Moreover, the million total thermal erratic our in million, committed sales record

around me closing, some our XXXX. for guidance Before provide let CapEx context

even $XXX towards instance that of As total Approximately million being $XX indicated, should significant production I roughly current would $XXX are the that with on Leer mine entire each inflationary payback to de that, at spend metallurgical in Leer spending XXXX price in mine in at sustaining the the for X performance segment. filter going projecting I the these across million add performance. and and at of thermal on around supporting approximately note press over we press CapEx achieving remain on than expended once is also in Leer that bolster Matt? near-term operating I million pressures. steady capital but the our portfolio, our with at Matt filter the rail we a $XXX the South will improvements higher call months With XXX,XXX to by might about summary, and levels. our In a that tons million operating be here financial expected concerned new thoughts cost capital are $XX minimis the million legacy to assets. will turn due pressures, at service.

Matt Giljum

morning, that record it noting that the share in quarter QX earnings metallurgical history and metallurgical potential significant our We record net It's and Thanks, income, greater lackluster still pivot as that value the performance the that steel today view further towards execution in has from future. and drive driving markets perspective. to worth value an with fact everyone. marked a fact a evidence operational is despite of the And segment John. the was EBITDA, good per margins, company

liquidity. the Let's flows cash fourth and now to year-end quarter turn

capital. another flows increased $XXX our totaled levels in as million $XX from across highest Arch's QX significantly we returned million. by despite level the spending operating Operating levels nearly fell last working as $XXX increase to even receivables in As cash fourth million, years, three cash large expected, portfolio. trade grew flows quarter to Capital maintenance

As with $XXX used total We both cash $XXX with cash we of cash the fourth earnings primarily levels. unrestricted million and increasing quarter flows call, from were the liquidity quarter finished quarter by discussed quarter liquidity third to of third million and million. rebuild than $XXX liquidity in more

down the objectives, was While debt thermal our priority addressing two defusing took quarter, steps liquidity building in paying and we our in also reclamation obligations. other

the open our term began the million fourth we in On discount $XX XXXX. And that of loan. late repurchased loan making settled market in to the the in side, quarter, Of remainder settled early a and the fourth par. $X million repurchases of starting we small debt ultimately over quarter at total,

Additionally, to strong, cash $XXX $XX this leaving date allowing prepay flows to still been million the year approximately of us outstanding. loan, have million

those between at the to we an made loan our plan the interplay our structure, the fund to into sales basis. time. and liabilities. to partners, other thermal on de-fease outstanding And light leave an quarterly With this additional deposit obligations, the initial continued position, fourth surety million Given $XX reclamation throughout of clearly of term the stated accelerated of we our deposits quarter elements remainder we debt respect thermal the in this conditions plan strong In build preference committed fund the of we'll to our year. and make positive market

less debt our and net the for we returned risk we obligation projections, our and in our At mines the refinancing In collateral To paid several prefund liquidity substantial obligations. have half unplanned sheet River risk that and outstanding to this have current risks, would a months year mitigated and for largest doing end a we position. debt by maturity put two down nearest debt of of bolstered would so, our significantly, total reach substantially $XX than the nearly our million funding, million. asset to net thermal expect place over nearly reclamation balance calls of plan could have of Powder have Given level retirement our $XXX be last summarize, XXXX. that contributions Basin neutral

our strong these described, to program return a future have resume and, a in put the capital position Paul As in of just shareholders in today's as downturn. market event us market robust importantly, environment protect actions a

operational to the comment stock-based which to John back was outside want financial $X just results in quarterly highest the total three Included quarter the was SG&A $XX.X the quarterly the that discussed. first Turning than which that the was results. that falls one quarters $X expense, expense million, run the was compensation fourth I for of quarter of year. on rate of amount XXXX. of higher million nearly for item million

long-term Our necessitated financial and plans. the include QX those in targets accruals under plans results increased strong incentive

our to a change highlight required rules I'd new in impacts for we guidance Next, The in are the debt like several on have XXXX. adopt convertible accounting statements. to that financial

the entirely be the between of bifurcated sheet, the as and will equity, On balance debt longer will be debt. now but principal classified amount convertibles no

to the be as income no longer interest statement, XXXX the noncash levels XXXX will reduced $X by On recorded. expense compared is amortization million interest

rules assumption Lastly, calculation, how result the fully will to the full an settlement. guidance share entire a from underlie diluted be that the The included that convertible treated on going are new convertibles in settlement for per the million diluted in shares net the earnings the of notes changes count. X.X share is the share

net million comparison, shares for related which of to point diluted X.X the settlement assumed outstanding fourth quarter, just a convertibles. included As shares the

those Of our will of not that one shares. rules prepay as intent not course, with where we the do accounting areas is reflect we do envision this the solely notes

framework, will to fixed ready will over already board Paul for the quarter. back $X.XX will which be questions. on XX. that, call share and has be Finally, February turn that, March on record covered the dividend we to you. will paid advance begin the With the to That I take Operator, stockholders capital XX dividend per return the are In new has quarter. a second in of first approved of

Operator

Alex [Operator Instructions] Thank from sir. our take question you, of go Citi. first ahead. We'll Hacking Please

open. line now Your is

Alex Hacking

guidance. the met for thanks I wanted to the volume And morning. clarify good coal on call. Yeah, just

doing down need XX% in comments million, be that in would range range, tons. much X.X annual the would But to about -- the reach gives issues as then order plus of the would which capable resolved rest fully you you for XQ rest confidence for be the mentioned a Like that quarter-on-quarter, the year. I I bottom could be million the X.X doing to million the as but be that, of of you obviously, think the the mine understand, rail year? is X quarter of the those Thanks. what

Paul Lang

dialogue Hey, Alex. cadence remainder then logistical COVID looking XXXX crew in you're network as for with from date have probably with close the issues economy. And in their the they've of of Thanks issues yes, we've been and had to the performance how just with Clearly, the and volumes way far here shortages. kicked then and well improving and disappointed off question. impact then on reported been it year. the them. you're at more correct have recently and we've the And the been constant of rails we has concerning would challenges of so Clearly, across the the view been more the throughout

And with as move into very as move They're that we'll support see forward. markets we our confidence to right the frame them did world, of the of late-December that Omicron need time and move. get of we forward, aligned to we commitment So their feel And moved as forward is that we continue the much with to that we see with volume and that that that things very have we're improvement We're we've what we need that saw direct I to clearly on expect this high move the forward. it beginning to rail kind we we've them crews in more and and move us improve to lot are see Once conversations variant network. in January the the the again, we an what seen sets book of impact, with beginning working and as to think, to the are and January, direction. a logistics as had the heading improvement.

Matt Giljum

preparing been time step-up been stack. that for that volume a you we've long time Alex, them for in preparing long We've indicated. a them for in

higher news right, is significant the not railroad. that in million a you're So up, QX-QX-QX X.X but or step

COVID So believe congestion to up been there situation impeded volumes of do they ability our operations. move we are while gearing respond, from issues, the has have to those their sorts and clearly

cautiously. confident so, So in to ability their of reasonably we feel course, do but

So need see to improvement. do continued we

Alex Hacking

Okay, on domestic thanks. net a the then sales. follow-up just And

million this year tons go or is I You that, that time the that, and to further Should -- assume domestically the going X tons Or from only year? a have increases versus, for there a Thank potential there think X.X million this year? tons we about number committed would last million close to this seaborne through domestic X.X year. sell rest is potential that you're you.

John Drexler

Yeah, Alex.

highly markets. as well. I wonderful a think when the in we product call We've got that's after last slate a sought talked about this little bit the on

see participated therefore, where to pricing of the everything where some into we where into going through. we're kept go came those reduced products and again, that then the bit markets participate at what's call with volumes is to most And those think participate saw and markets. for of always discussed out like we're kind we a election we that domestic and and take selling. played As going going little that markets, value last look the to create to that the of we opportunity But to here those the by international in on we're was we kind call once as we're didn't an where us

here as over and the through it the the value of course we're our are portfolio of As the today where we forward currently markets move that year, quite rest we and year. views pleased sit at we with work with moving as the forward will this generate

domestic around So of sales expected little American are kind footprint of of kind X.X correct X% a yes, you million or tons, right that in our is North representing that more at framework.

Deck Slone

again. Deck, Alex, And

So for majority North the done. has of most part, we business American believe been that the vast

or underperformance looking into We come North buyers American up years of in shore seen quality the have issues. back to because market, past positions

So we that seaborne we're we kind modestly, to in volumes, of certainly are we the seeing fact, will trying course, be pricing adding have and in of of see the always assistance. could the require to But to willing that. do market to if, we be

our see. point. business is, at part, John seaborne is entirely most done. the the sort we'll But this of said And market as So for focus on that

Alex Hacking

Okay. Thank so much. you

Operator

from question We'll move from ahead. on to our Markets. Please BMO Capital next go Gagliano David

is line Your open.

David Gagliano

Hey, on program. questions. the return And congrats Thanks capital clear great. taking for the

side. an first wondering -- was Just -- from on side. XX been the the average XXXX tons guide XX.X Powder in per at committed at the the $XX.XX total River ton. I of the of $XX.XX table, thermal few all, on the text on price million says But The a priced a have that's and sold text. thermal then for says in thermal the in quick million questions it ton, Basin

explain you can between -- what So difference the X those just numbers?

Paul Lang

just clarification, Dave. Yeah, the that's kind one for item we of The where context end table, forward. looking year of of stood

one But concern some volume to remarks, indicated in is things we the bed. we on rail that put expressed look at performance. we the the of as guidance, additional some As have prepared overall we've

our does. to of volume right that which some from see a not we over where sold of and into business the what could essentially necessarily we're at both we're thing achieve are the over that fall market is to manage the we in any not We're we following that it were we're the able But potential saying that's types and were the But to shortfalls book But in rail if out. hopeful the obtain. our course once of is there if bad commitments and rails it with locked the continuing to So what year, very pleased of now, portfolio. we're were able year. and the from does, operationally again,

Deck Slone

And table the guidance Elk Dave, does West as well. volumes include

this So that's you context PRB we've give additional important we at in realize. wanted in what around to And point to time. the done

domestic was reflects is $XX.XX. So really including million that that volumes volume. XX, West inclusive but XX quarter, also XX at it Elk's only again, so of the is to say The that subsequent Elk, tons December would and West tons million

both given from as which increase API-X. there would potentially be are current we'll that yet, volumes those pricing So significantly realizations and West Elk aren't exporting priced Newcastle for

David Gagliano

actually was to my Elk. going Okay, regards with I where that's And that’s with helpful. kind West of question

West of you kind you Elk volume how of where since I could brought should frame say, it to they right netback So would can stay we volume? you cost sell Elk price. just something XXXX? a the help us Elk Elk range out West are you And of West give cash for or a that now, sense, just West at there. much if And up, that out to Newcastle have if the in of potential what's frame prices now assume if the maybe price

Deck Slone

for we great And is great when been look us as West window in product if a opportunities opportunity Its here always after. there's those historically, here. you the look, participate export West in is Dave, open fact, questions. markets. for well sought Elk sit And Elk is received, to

significant created with now right the that. opportunities for seeing we're markets what Newcastle so And

the million-plus currently into we from we as And that So some the volume historically, will but Elk in to a the ways participate perspective the now, shipments. at and right good into position forward with [ph] million-X see of where the is mine West to position price Coast volatile, the with do X ship on see looking a Newcastle moving Gulf. our through here allow where things through tons markets pricing as what netback markets in and we that West the it, very Newcastle where we're to we $XXX 'XX -- on a in We be what ton. depending where we've you feel Oxbow can you lock and seen well from export And over is you're look well logistics are call and and markets those ship. obviously,

John Drexler

And Dave, likely where on color pricing. to little that of more kind just a get we're

of we about through So move we get sort would half Long Beach, tons the impact. that

assuming a So $XXX. again, we flat get a actually that. at stays sell about netback that significant the all for very at the today, It's year benchmark on on a that And effectively. if Newcastle we tons, the prompt of price, netback, market XXX,XXX do of and prompt, pricing get it's would you of prompt we get but sort of prices $XXX the

so at tons is discount So no and we're market or than price potentially sitting discount. better physical that no another still consequence, a of then Orleans is really attractive the API-X sort through XXX,XXX the of today so Americas And into really New $XXX, moving and that.

So you West year. for netbacks can the this the significant see Elk that asset greatly increase of contribution potential million on about X of could that tons

Paul Lang

Paul. is this David, Yeah.

the of being the have job PRB Thunder Creek. XX-plus tons Coal at or we understate I ship I amazing ever mean this I last is think we It's frankly, you are long committed the go operations Black way And actually never years. these a in think prices seen, Western assets, both we could having back amazing remember that more and more West and because marketing and done an both and position. rail I on could don't don't thermal that year. think what's than performance we've completely guys Elk,

to did an position really and the us job. look our of we for the out as at took in, of it thermal options a a the So It's risk be great assets guys lot road. down amazing

Deck Slone

Dave, layering outer to marketing for just up job team but commentary. an well. Not volumes the outstanding that wrap did as of an year only And XXXX,

fourth they in that of opportunities were course once to again, the over So late to kudos accomplish quarter develop of third and able kind the quarter. the what in the

David Gagliano

Okay. That’s helpful.

Elk cost mentioned you $XXX a the $XXX West to that conversation, net that round back assumed that what's out to million example? just million price offset Just for for million tons, reasonable for X

John Drexler

prices, sensitive get get sorts you're meaningful you So to costs. some sales those of into going Dave, once

mine close tons again, now costs, there. to push think depending X XX% higher, again, it moving high-class you us average going getting low is to currently. in domestic you're about ultimate looking way inflate where sort of running those of million it's into see to think sales-sensitive the is But we're on that But you could low-XXs So so if to at again, to again, asset start costs we XXs. you're running the out running you normalized is way market where that pricing, mid-XXs, for the of the in that XX% a problem sort in the $XX it But the full price, -- -- certainly when domestic when realization be. that $XX proves to

David Gagliano

$XX then met more to part between cash guidance price you two frame secondly, And for the million are can the $XX what the talk million, met bit met in on Can to sales cost cost XXXX, that for range? bit on sensitive speak what the been little your PRB. that please? of you XXXX your quick affects the then prices pricing how -- for guidance on just questions. for Mentioned a can assumptions obviously side, a the quite And side? deck sold And has you sold about

Matt Giljum

years year's begin year But on over call Dave, that's to does seen into spill that future the and in the and So with to into outer the the this on the volumes markets current as suffice that, the get we've strength early something associated that not we'll this pricing say, well. it year. in

volumes the So significant look as years. into able been we we've feel outer good about to pricing layer we for in the that very

this guidance book. cost that's to to we're on chat From at the about side the be the able So going all of point. met

also problem sales-sensitive as prepared it, things about Deck the described impacting got we are the that it, inflationary costs. you've high-class As in talked several remarks, the impacts, but of

on our expect that of forward to out. market give be what and the guys build to for you perspective, We you curve all take we aren't from We model. providing we what pieces our the that view that's, guidance

portfolio, the majority the in about the remarks, that fortunate talked for we we reserves our of that are we as prepared met However, own vast we're mining.

you netbacks sales perspective $XXX an costs, from where we realize forward. on can it's there's another has is so impact. sensitive we And and it for get means at see the begin margin layer sit on rate all environment that we turn that the at of take you're occurring couple impact, -- were look in as fourth a a sales depending from in those we you you But price So tax a look at that because then that. impact at to and $XXX ton production as severance and costs at the expanding ton, add what quarter sensitive the the the a beginning percent, significant pay of sales-sensitive here 'XX, cost we're today day coming X% modest of a we if the long we'll to for were you move able where

Deck Slone

basis. for say XXXX I that historical look on strong very the thermal Dave, would pricing side, a on

seen been the So relative -- we strong you to has detail, PRB. don't is it get any have that very want historically into to pricing would but in the

also tons we the So increase, I possibility. fact, our that's in a don't from I And tons positive. That carryover certainly erratic in a we rail there's will some think that ship. would XXXX. instances mentioned actually and And some hold guidance service, say, those pricing will into could look see suggests XXXX

So that is beneficial. also

we're building for the very about we're So that foundation feeling good XXXX.

David Gagliano

That’s Okay. helpful color. Appreciate it.

$XX.XX average? that's Deck, Just line so booked? the Is above or year XXXX price that together, PRB, already average is of that very you on this quickly, ton and this number tie a have XX.XX below that all you when selling business for in been

Deck Slone

as punt a to it bar very price would going a $XX.XX bit Again, that. we've XX.XX shakes historically. we're you where consider out on We'll Dave, end. is say a and all is the see only in obviously, XXXX well. strong when But little what done strong high is

David Gagliano

Okay. Thanks.

John Drexler

Thank you, Dave.

Operator

question Securities. ahead. Riley move Pipes now on We'll go to our from of Lucas next B. Please

open. is line Your

Lucas Pipes

to be would that special and what be to if could extent buybacks, place between could when buyback that very on second go variable bit determined? point, buyback, very follow the versus to you I much. and plus maybe a this I've everyone. that is the up capital XXXX on preservation special quarter announced remarkable. much. don't morning, want adds good would a split which I special Thank XXX%, capital think commenced strong And you seen morning. you and that XX% And up and XX% the buyback that plus return or to you a XX% take also program congratulations to in provide the Thank you

Paul Lang

is This Lucas. Hey, Paul.

this to start as weigh time greater this. on in have sure market of we particularly future going share the flexibility how repurchase discussion to cash is Board Matt things. we the do has now. And think I several on levers to very how and share of that's cash in to or our preserved discretionary remaining forward change. small. the -- liquidity. think even And pull, the going And of I can are dividends, cash to kind as how capital the amount be of could right for should think strong I'm we as piece, dilution about though, point retiring generating the to Board shareholders. warrant needs With be warranted. and capability, flow seems buybacks like buybacks, this starting we obviously, all and change earlier, good starting incremental I potential we're a thoughtful plan securities it is special the potentially can circumstances has about noted think point, convertible clearly preservation. And board think the return and a detail as a circumstances use in, they I But And that or capital, think the they securities that the return fair as may to the I basically contemplative diluted But that what will the return relatively But environment. we going targeting by said capital

Matt Giljum

From And liquidity position. of just at where is this Matt. to comfortable we add the liquidity end on perspective. very the year, to a at, that, Obviously, a were

As we collateral reduced calls. risk that liquidity to much to goes slightly, need around the that hold reclamation the down fund, build given probably continue thermal

lot $XXX call liquidity a need for So we to neighborhood business hold that potential makes in of liquidity risk of, of it, future. we that see or with is the million today the something the where sense it's where and in higher the

the quarter of out cash So flow we'll a think of lot be model as levels at the and of end around obviously, we'll those for of end we debt we look kind this QX. using the repayment be how target at liquidity where quarter, at

call quarter, there further So really continued, strong other a that probably long rail becomes XX% QX, where into push way XX% of or transportation QX. during that QX use saying, the timing it, remain delays or are in back if if may things if we'll potentially around weaken available, the that some of of from other the even at, we're markets of to

April. So bit to that up decide how the air we get see will in depending our the will results still little in we a be sort on of something as and meeting board

Lucas Pipes

That helpful. super also expenditures maintenance is Really to that appreciate completed? and I Can revisit color. what touch what in is South much. wanted Thank capital for you there XXXX. Leer extent is you your to maybe capital now you on that capital have very discretionary

Deck Slone

be expenditures and down, to to Lucas, the broke forward, we so way with way. on be continue million of the are capital majority going move will that our kind the guidance vast portfolio. the vast met of we the million, $XXX The it $XXX the side range of majority it to of as

perspective, million capital, So the metallurgical maintenance of for for thermal $XX the 'XX about side. about from maintenance million capital a $XXX on is

at It's discarded significant is being we So the does the And in referred from basis an we is very almost value generate takes see opportunity the $XX effectively that to ultrafine minimis. million, then lower a about that previously are de cost, product Leer it where annual obviously that discretionary to on plant. additional what plant operating some from stream perspective. being a incremental capital tons significantly as XXX,XXX low was press that's what processed at that. captures

invested, once capital stream so is get you of additional coal. essentially that the therefore, And

If it market adjust the X-month at market you price payback current that. price back today's for and the is today's take payback to a mine,

is complete forward year. we'll the the course Now with end be of by is our expectation that the of year, over moving construction the

-- out at plant met add to and the for it's squeeze additional So incremental we portfolio. begins online volumes a opportunity Leer the volume from of that essentially beginning XXXX. come to tremendous think But our to

Paul Lang

at $XXX $XX of value. about of capital. margin. up going million We're or options. on if about cash house. a math put do plus it simple. That's minus of think have the huge million thermal sets I we particularly XX cash. of to the for that I as look We're residual into said And these tons tremendous even this, the side the million $XXX a assets us And fund, about million earlier, to cash-generating as of are still amount roughly $X sinking Lucas, lot put I'll going keep

have be these With on the place, if us if business down the we're the it monetize But logical importantly, reclamation assets. that the forward to gives metallurgical continue the just to essentially on covered them the company. book for and no good we the where them road got to run opportunity option want as and a very of is in an going fund broader hang and ones cost should to we impact we've there a end, franchise reclamation

Lucas Pipes

Super. you Thank quick a And much. very follow-up.

So we if ramping, given have the range, I and to add midpoint the potential year's the probably we'd the rail XXXX XXX,XXX understating year issues. still tons this that be of is

XX So for 'XX than and beyond, coking reasonable million assume coal is to sales? greater tons of it

Deck Slone

putting Leer opportunity, just longwalls. to clarify, operation, at we're our existing this the Lucas, actually on So

existing So to plan. be is that to this preparation going incremental

ramp South continues Leer to the reported, go well. we very As

think we at so Tier much as every And provided haven't volume but low-cost can strong we looking we we X get have to be with into portfolio be for we'll as this yet XXXX, opportunity again, will markets. what guidance once

John Drexler

to the range coking Lucas, would build-out of XXXX suggest possibility. time, coking the a target coal be and as -- end you Leer XX And really, South the be and tons certainly that's And what that XX we've say, million is long top the for portfolio rampant the tons continuing that million at a for some been million this X.X guiding more. would or of of

the at the cautious the and is goal objective. to certainly But be logistics certainly given you're we to moment. right that need that So suggest

Lucas Pipes

luck. Thank very And much. helpful. you Very continued of best

John Drexler

Thank you, Lucas.

Operator

from Please next Michael Dudas go our We'll ahead. of take question Vertical Research.

open. is line Your

Michael Dudas

Good morning, gentlemen.

Paul Lang

Hey, Michael.

Michael Dudas

the the little you sense turnover need So fold on at to inflation, topic things still peaking? that bit labor cetera. a thoughts is to a future? reserves amount you that -- you given that you're generate? Or Maybe in it thinking Is the change crushing level you the are standpoint, et that your everybody's access productivity, with you and and light rest about going more are tight other Do the operations? from could share of there get be from a how can of with availability cost the availability, length the of of a for pretty it step fact year money on guys

John Drexler

-- it's Michael, question. hit And of yes, a great on things the and one that it. you

corporate the Tier is operating operate And very widely appreciates But and a safe employees. X fortunate base very operating responsible across we're in We're a it's have in as way. I challenges our significant we and and things the our think labor very the environment, -- culture in fair are specifically that. employee assets been of industry. to reported, in the America One long-lived then

perspective. So seen we have from pressures that

incredibly manageable that. address perspective, it's personnel think to some cause pressures. inflationary We continue a we'll again, but once from could So it

remarks, We also that seeing. discussed the some other of the we're things in prepared

But One biggest steel we our the the through portfolio. those we're of obviously, that the things steel we lot use in well. a line. of benefits pressures And that on as pricing getting see top as that is cost from increased coming benefit therefore,

in course we perspective some over kind discussed, X% over the to pressures Leer But once the ways on of that the of its have that volumes range of expectation we our South with is with 'XX. of as course of with portfolio, coming XX% mitigate XXXX. increased inflationary those the from overall the So an low-cost productivity we think to we see again,

Paul Lang

what don't a Mike, don't hire would turnover that people. hundred we would we've even turnover, our it need think a well with that and fact fair got I look say people have side, we've I people. of they be with I a but to people is to exist. have always this our We for where know But add, low don't been covered And to had couple the them rate the highest year things, to hate We do historically I'd I year. that they're pay blessed lot to also we've there. to and we don't be got I'm give a we've thing have only in go position fair group treat of out crazy of to them due. out to trying big this with our big the The but a at what low John on is fairly got operations.

shape. to think have of I I a where little compared ago, but So there we're occurred bit a good if pressure, in we been be cost this year will think would pretty

Michael Dudas

be about that across on the and just get a are could to it export? couple concern that, Yeah. that optimal needs obviously, sounds -- or situation well. the not the Paul just that’s market ease produced steel are sounds normal things next very the space a you your my John, things side today down, good thermal as the It there's the about are thinking logical and to availability Is there U.S. follow product once And maybe the the term be the board. and how than be seems think Are -- back gas relative over there There the that years. more very rails you're much or risk customers company, that to signaling back back helpful, -- up, again? all do in there comes is certainly world longer to sense more it of getting

Paul Lang

on lack been some I'll sector and start side in has on of we're is that. years coal just one the there same, up of last the thermal metallurgical couple are macro with in catching kind view a of things is I'd that that the at a of both what of end people. say on of seeing kind of investment and the and the what Look, the out day,

we down. saw production run-up of price in that particularly willingness you in shocking. huge money diminished -- and the these international but put a we know very There But availability the what the was in that from of went into it's is worldwide. 'XX response, period, it's talked to I the at during look The and As markets, don't XXXX-XX. distance pricing, lack in about capital if projects

John Drexler

And that. Michael, wholeheartedly with I agree

see Just here, operations, significant we to market back our volatility products it us while cycle may to to Tier may put goes. be that cash portfolio market, no allows the portfolio space that X and we've where the the bring in low-cost, volatile, together generate amounts matter high-quality of

concerning. the space, of capital term, that think, I longer is in So lack

we're customers to prepared why where beginning and our they think that no that matter the markets are us. really are. curve I understand where seeing we're But takes market

Deck Slone

Michael, was in And that the Paul as forgive a if for at absolutely question over know I in look part. coking at bridging globally, seeing, side. Australia, we're us investment. said, you thermal But Australia relative XXXX. And of in the million tons in XXX of in peak XXX came to was XXXX, in again XXXX, terms XXXX. despite weakness under coking down coal in in the exports Australia

ever And on side as here and there pretty apparent you certainly, prices up So coking side that the seen than as is pointed U.S. thermal XXXX. like through catching the well the prices we've we've out seen. of in natural as other the gas underinvestment as prices function underinvestment natural is out on are part large stronger above higher really $X well. and in out a staying gas stresses that Again,

supported the well us. So market look fundamentals and to quite strong

Michael Dudas

JV user, here, but for lot a those At Take operations for another more coal the buyers same the Thanks, didn't story. care. for through of guys. the go out that's get a

Deck Slone

Mike. Thanks,

Operator

Company. question go of We Benchmark The will Please our Martin next to on move Nathan from ahead.

open. is line Your

Nathan Martin

or my here the been just end. Most items of have quick morning, Good two guys. a maybe one Good addressed at and morning.

exports the But release last was on just on of the some are net guys XXX,XXX in locked market? the you thoughts that time done is year. of think tons at below pretty maybe current early about first those commentary the I in for sales they any $XXX. disclosed There's since timing

John Drexler

Nate. Yeah,

steel If you year. aligned in the look done at of with early beginning 'XX. those late the They sales, at they last export year, very were 'XX,

expect but year behind get them them be first quarter us, cadence to then there. us. they them the that's will commitment ship It of will to -- kind So in get good the ship behind this and we of that of

Nathan Martin

shipments the I with side down being the it's the a we're That’s then commentary possibly with cost combination also right should Got prices of the it. helpful, mean met perspective needs higher in lead seeing John. cost the a first XX%, high on that in in some Appreciated. on quarter? XQ to now, met And market to of we expect maybe kind a watermark from the

John Drexler

Obviously, Nate. the we the the better Yes. volume costs unit more are. have, that

you are yes, reduced So the with in volumes QX, correct.

structure the cost bit as look that expect be We watermark of over we to little the course of high a at XXXX. a

Nathan Martin

PRB that for And tons on and real to too. the the West million for there shifting XX side, PRB guide. Thanks 'XX Perfect. thermal of just then commentary good quickly Elk. maybe

wondering on what's that Creek? down point? Is to there? latest Coal the some thoughts Any still Just slated at wind

John Drexler

of proud Powder a Nate. Yeah, as we've done that in preparing been talked team has we've for what reclamation done Coal closure. taking the essentially the operation Creek We very work. amount obviously market. of remaining Most Creek and gone we've that's is talked out the this about it a Coal pit is But And to River opportunity for the Basin, by Coal about in significant us of and story a great $XX at we the allows that much it. XX%, operating of has at now Creek. We a participate one what that reduced on in smaller area, work result ARO million. us our are

continue run we'll So pit. to out of that

can pricing continue term, for the to in that We here coal markets Longer a look giving term. footprint a same needed. longer when that, at address is to the attractive to remaining us we're least will Coal earn have But Creek. are small signal longer that no at sell near that in likely continue the Coal Creek position very we great incremental term that's at coal money things

Nathan Martin

than of PRB maybe 'XX mean, to significant I thought, keep maybe year? a the booked next just John, kind with the for So single that means expectation pit portion running of through

John Drexler

produce the our We'll and continue cost that very to where evaluate to markets with pit. that from low are

participate. the needed We've, that's a work evaluate markets to once we've done footprint we'll address. portion the all of if the when be time, for practical to to all future strong overall for have opportunity But small purposes, markets. small So those very we'll continue except to in do piece a it very continue And comes to a there reclamation have continue footprint. And to we'll years, it's small of just again, remaining. remaining

Deck Slone

different a it's quality. remember, Nathan And

product, an low there in it's ratio. for we're area are and So unique very opportunities that where

So attractive a run continue to at few want years to the moment not. or that and may for asset

Nathan Martin

this a then Got is And Matt. it. maybe for finally, Make guys. just question maybe sense,

year. NOLs to a this left of X% of you 'XX? approximately But just curious the again You guys many guys rate are have guiding tax end as Thanks. how

Matt Giljum

Yeah.

So Nate, half NOLs we're going we position, as at potentially And using federal those $X.X XXXX to plus least the for frankly, that a of for of look years NOL dozen we look and still continue return, NOLs. last for how remaining kind anticipate and given at what with expected to billion have the longer. XXXX about we will 'XX, next XX at the expect we to usage

future. And the the expect we a near in where taxes cash on find in ourselves so don't anytime fortunate very tax side, still position

Nathan Martin

Very you Great. I’ll leave Thanks, your Thank of for in time. luck And Matt. helpful. best there it ’XX. guys.

Matt Giljum

Thank you.

Operator

have further back closing Mr. to to questions. no I'd It Lang the appears conference remarks. we for turn Paul like

Paul Lang

in I'd capital efforts company's our to the again return of for everyone the creation strategy multifaceted The their interest Arch coal program value our next of a culmination today. like thank world-class the follows phase coking to for franchise. and resumption represents long-term build of

short, market our thermal through isolate And delivered to will they're patients. on and cash creation be the healthy, to Stay the trust their operator, for group everyone. safe a balance coking environment. consistent into what we'll we doing With on look forward creation. shareholders the funding reclamation to a They pre-pandemic so, reporting its mechanism. our the rewarding unique commitments in their They In up now we to Our focused relative And historic people set call. that, our a of clear, and in actionable believe the Leer strength. brought robust from industry conclude and the restored remain May. mechanism and shareholders. to franchise significant sheet initiating created coal stage our They for for model have strategy. South assets the value And ongoing we to

Operator

Ladies conference Thank this your participation. call. and for today's gentlemen, you concludes

may disconnect. now You

Arch Resources (ARCH) 15 Feb 222021 Q4 Earnings call transcript