Earnings call transcript Q4 2022

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Operator

Good day and welcome to the Fourth Quarter 2022 Arch Resources Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions] Please note this event is being recorded.

I would now like to turn the conference over to Deck Slone, Vice President of Strategy. Please go ahead.

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

address that to by degrees different statements, Forward-looking matters uncertain. their nature, are

materially in forward-looking statements. SEC These We of expressed different our results or be not that we forward-looking future reports annual and uncertainties, result which may quarterly future are otherwise, information, those actual described with than in may the do more a to our required update our undertake by except as be statements, to detail in whether new law. the cause events file as

that press like morning can of a the plan to reconciliation of that you at website our financial this which to section have discuss in also archrsc.com. of a release, remind non-GAAP end the find measures Investors we posted of copy our we the you at I'd

on this morning's our to Lang, Drexler, questions. happy John Giljum, we'll participating and remarks, be will Matt formal CEO; CFO. COO; our our take Paul be After call our Also

to I'll Paul. With call the now that, turn Paul? over

Paul Lang

Arch year Resources. capstone results with adjusted appreciate large costs, the sales in volumes, delivered Deck on margins. unit our performance In as you to cash metallurgical an the Arch EBITDA Arch could to another to improved served of significantly Thanks million the pleased financial had segment $XXX.X due in your join strong QX and that QX core call everyone. part for and exceptional our good team and and morning that We report us in operating interest are glad today. I'm short,

adjusted than billion. net During of generating than XXXX, of per more and cash more billion income year performance, a full $X.X diluted Arch or share, of reporting financial operating EBITDA $X.X flows $XX.XX the $X.X record delivering billion achieved team

strengthened indebtedness, target less also growth XX% a mine initial million. our to the of of our completing positive We more level one the and project position our in South repaying balance than after to than fund us reclamation cash returning thermal industry-first the $XXX year balance increasing sheet, net Leer

relaunched XX% million Finally, the approximately of million almost last our return and through nearly settlement dilution program, deploying the of we shares capital debt. convertible $XXX which over included quarterly the our in more buybacks $XXX than year, million of and avoiding dividends X.X

social, XXXX. that excellence of I'm of view team part continued environmental, Setting long governance performance contract. pleased and and standard standards report during for the industry success keys for to is and the social ESG the one leadership standing our my in

we've we just four which the arena, highest average. portfolio now the reclamation XXXX peers. operation at Excellence exemplary years. work where XX% extensive final Coal at honor the less better the a approximately few best industry Reclamation received conducted the history across operating and reclamation the than than two versus work Noting was this completed Wyoming's the State of achieved of our And we the average for company, one by highlights Creek, of our received in in We XX award, roughly of just an record and safety violation in that times SMCRA

beyond for did XXXX of XXXX and in is Well, team important. equally continued these The the in list lay are a success significant work foundation to accomplishments. the

XXXX unit stage as fast setting for thus region. we're that markedly progress, XXXX, higher lower as growing shipments, in guiding customers that costs franchise well of segment. XXXX long-term sales core evidence Asian As We added volumes steelmaking success the world the for coal coking seven for markedly our class in to in in

the book midpoint guidance, contract in entering output, into coal as about at now thermal projected and the and at are further our the well. and an position sales the of we inclusive in for a legacy recent We've of franchise book outer XX% coking significant our our years XXXX year now sales, effectively contracted with out augment of sold

move take program, a relaunched capital on, moment to February return I like to Before our I'd in we discuss XXXX. which

year. indicated, reward used already $XXX we've that over As in a significant the almost to million manner, program very shareholders deploying last

on aligned appropriate, of options, buybacks. remain As discretionary and return including the interests we share the program cash the a the and quarters, reminder, our flow return target the under XX% the via a menu discretionary allocation driving prior shareholder value and well cash with of XX% of flow durable program's capital model, use other In view, preferences. both of and allocation the of second dividends, model,

we this, our fully the for remain as expect centerpiece Given to to maximize programs efforts well value value shareholders. our these proposition as our of

metal on coal me the on few Now, markets. the seaborne metallurgical with let starting some take before means for market metal coal past provide makes demand And John to global the higher to so interesting. a In conditions production markets color a coal. as call comment over makes output minutes increased primary hot operations, the coking additional hot the driver the coking acted sense, current which to for has turning what markets, that's

production, of supported, coking at the the ton. premium U.S. roughly excluding metric down China FOB capacity at price vessel stands A global though Queensland, the with XX% for well appear Coast was coal off idle. in $XXX East coking prices coal ton, per is the assessed coal now coking price the coupled metric and per China the furnace High-Vol being blast global of $XXX X.X% in metal even excluding present, XXXX, is that fact At hot Today,

are signs the coil XX% rolled world's to up dynamics steel show with Moreover, prices hot of around in [indiscernible]. starting steel improvement market markets, major

back which gradually time, providing same is demand, face on furnace steel the At support turn coal blast also in the coking world's the markets. capacity of for starting rebounding is to additional idle

Meanwhile, compared coal coal the mechanism supplies already the last tons second up suppliers quality as market coking coal In production to most – or pre-pandemic X replace throughout United view when weak compelling course were exports were coking both dynamics. than more coal and modestly strong Canada significantly support the of of high coal, and XXXX, Australian constructive levels with the Arch third the continues under largest versus new the down million X%, continue to pricing of global their only undershoot current investment single XXXX. in States metric and and year, XXXX. Despite countries to levels. for

view these to the reopening after market of to of apparent Added Russian coals, top Ukraine a overall global Chinese in Australian fundamentals, broader lockout greater into the to we years in of positive uncertainty supplies. the war constrain On two injecting products market, coal while generally the is continues this, development.

trigger larger some the – this coking in their by coal flows of rebalancing a natural Chinese global supply will the While part back trade position It does markets. demand of be real equation. to a surely seaborne seem change to

of better the the demand of attributable in thermal activity, well the increasing metric relative much efforts, the energy LNG $XXX Asian European We per Asian New remains thermal business, moderating with widespread On the index than hold average. conservation indices for of pricing recent demand same strong, face is weak to markets historical on time, to currently ton, global have side mild of a coal the in which imports. up above and decline trading corrected continuing Castle availability in significantly Europe weeks, is basis. is this economic At the winter, at believe and

capitalize deteriorate steps conditions market the prepared but growth strengthens, further, with weakness economic importantly, also the Arch on to the summary, as global year, a period In when steel last should markets we exceptionally we're macro accelerates, world positioned and of situation took to rebound. is manage well through environment just

dynamics constructive investment to term in – given coal view to space. market In we the as under the intermediate addition, continue longer the ongoing

creation. and cash significant Heading into on expanding for beyond. plan our Asia, of coal we our the Intend generating assets along a base plan coking provide its concise, discretionary and competitive legacy through clear, eye XXXX thermal portfolio, to of our to cash with with to leverage amounts again squarely customer in benefit actionable XXXX, value keep

use plan through clearly we to program. that reward cash this, to tenants articulated continue capital to return With of our the stockholders

the John? I'll now John that, With to turn call Drexler. over

John Drexler

good morning, Thanks, and Paul, everyone.

Arch book in team for set the stage managing year significant segment, delivering on in XXXX exceptional impressive creation discussed, progress strategic and in by effectively in costs of contract strong productivity significant driving results, metrics. fashion Paul further face core industry team our the leading and plan execution value strategic the advantageous Moreover, capped a ESG our off As gains the expanding on metallurgical the inflationary our operating just pressures, key in way. our in

performance. more important than nothing safety be could there and And environmental our

achieve to over our program's years observations the process, the Those true to Arch peer-to-peer an we are Our work the first is cornerstone a when set million we in the the of team's safety a X observations which critical achieved observations testament team. are use and entire hard X record employee of sometime million quarter. XX milestone driven

to and I team, to the their couldn't company's stewardship. performance On thank management workforce for success. ongoing I and and the passion great gives the dedication to safety be and of our of contributions entire the environmental prouder Arch behalf focus, want workforce

Let's turn with to starting our quarter core a fourth the now metallurgical in discussion key segment. drivers performance, of our operating

reduction in and a metallurgical XX% just importantly, QX, at volumes, segment operated XX% driving a costs. sequential much as productivity average in unit anticipated, the improved a As level increase in sequential shipping

Of Leer continued improvements. significantly the of course, – of into South factored these maturation the Leer

steady, rates range South higher much improved of making and QX, During overall a capitalizing systematic QX, geologic across advanced wide materially when execution conditions improvements in long-wall on achieved to Leer compared fronts.

team. the first exactly QX, sharply has from South focused through team The Leer that And in the the seeing upward we're strong what of is XXXX. on momentum half maintaining

at guidance well midpoint, you production X.X in tonnes of As the part due our to noted, the South. have continued coking Leer levels at advances XXXX million coal large reflects

million for past, indicated will the ultimate have our portfolio tonnes, run we achieve starting coking As XXXX. be normalized to in XX coal we rate in we around expect the which believe

tonne of reported coking tonne full year also for per XXXX. the coal per versus $XX for the and the QX at costs midpoint We’re of to $XX.XX guiding $XX.XX tonne we per

projected While trend is a significant in figures to lower we levels. the well, as to this with cost production higher continue these keeping XXXX improvement, in expect

quarters. we in before to release, metallurgical during shipping fourth XXXXs incrementally approximate indicated remaining the shipping our quarter levels As increasing volumes expect

results, during also dampened segment QX made significant the deterioration in were segments contribution western rail our quarter. considerably thermal by to a further that legacy although Our results service

million As further. QX and a relative volumes performance, served poor tonnes nominations customers to nearly sales still pressure in unit result which X.X sequential basis reduced also movements rail Those $X rail QX. a levels volume for increased higher, on to that our costs ton declined of per undershot

the strength headwinds, and of Even our $XX.X the our the with has for these to team contract face quarter, of segment both book of the generated EBITDA work volume done level in segment's reflecting hard changes. million flexibility the the enhance operational still

has reminder, yet again power past a in strategy. EBITDA our course billion expending the segment million effectiveness of of capital, total quarters, while generated $X.X underscoring a As nearly over thermal now in $XXX.X the segment the of just harvest legacy level the and XX

to in our us aware, that they execute industry in As on continued plan the their will costly, over in The important our thermal on railroads and on plans. has work We've for challenges you to West execute the fully addressing our to coal service dependent results. rail be an and with in performance it the for dampened segment XXXX. the order are extreme is disappointment our last rail been succeed year poor

Turning to and our thermal contract strong further the both contract advances team expanding operational execution, book in made the book, during Arch’s strengthening and addition metallurgical to our in QX.

new of an nearly via coal signed of we weeks several and the first fixed the index price advantageous of commitments midpoint our at First XX% now inclusive of expected contracts book, production XXXX year, mix based have for of our during contracts. into this metallurgical entered coking guidance

coal Importantly, waiting noted, and coking increase to Asian Paul continues the as books well. as

That’s demonstrating long-term. strong, During production decades. because Asia high primary seven several could stalwarts our commitments products, and driver in to the that in we and of foresee contract Asia steel blends for of producers of use over are for By our future building steel with leading in the we XXXX, these easily be the course coking part first-time tremendous we important a becoming our signed certain course, is steel coal of producers almost growth durable beneficial output. quality the value book next outlet metallurgical coke making becoming

thermal The strides marketing continuing made to team well. out as great in build contract the book

with XXXX position As effectively the result, in operations. a ended for we an our sold year western out

thermal of contracting look already out sign solid Importantly, a the have we to a business start for significant XXXX years. and in

positioned facing the pullback still segment in natural some from the pricing, in thermal We our another and still international are believe, from strong headwinds gas rail weak prices. thermal generation weak EBITDA of assets. we for we service, While, recent are year

in noted the export our for our expect As margin attractive as have incremental expand and for in volumes. we already year, would an lock that margin guidance table to on thermal in locked further pricing segment we

However, rail service and the out that mark export constrain is remains for Western significant it's point year. likely opportunity important total to to the a our question

of guidance existing tons priced Elk. Our includes from XXX,XXX exports West

average another and we would ton that as projected we reasonably meaningful add XXX,XXX those export is upside there for currently number. the not dollar whole. will Based we alone anticipate that are tons XXX,XXX guidance that today, in per that to here that tons the Elk today's sit hope coal an confident would margin segment we West to a incremental market is the reflected prices, on table As of

rails course steel. beyond volumes facilitate Of additional if be level, would expansion the the the that greater segment can for export margin

while generate we on are committed We future and opportunity focused our significant XXXX, summary, fully of squarely the to again the we in low XXXX the of the course operations cash leverage to flow value pleased success intend ahead. cost are with our platform in achieved of sales beyond. In and portfolio over and on

results. now that, call on performance Matt over With our Matt? discussion financial for I turn the will and to further

Matt Giljum

the with fourth Thanks, an financial results, morning, on a comments year. begin I'll Good end were everyone. to which quarter few strong a outstanding John.

net totaled tax the included on benefit than XX% income and from of period Net of allowance $XXX million, the QX from the the an valuation quarter of for an federal losses. EBITDA $XXX.X $XXX improvement more release levels. million our for million income operating was

is income levels federal due the the a discussed fully and and NOLs. allowance item significant expectations of for release non-cash As we previously, the the valuation to was in our improvement utilizing

improvement we a cash perspective, detail trend operating $XXX in quarter expected total the million, last cash earnings our during year. flow a totaled had an was that in quarter, working in the and We in the increase despite From capital for flows the lowest quarter's quarterly call. for which discussed

earned fund, anticipate the planned accelerated in liability. ARO Included operating only inclusive the the mine nearly contribution funds. fund interest and that cash on completed $X is the year in interest flows thermal including a modest We earlier line reclamation the million to Black now of contributions with the as was the Thunder keeping would funding earned we target in

totaled spending the had quarterly the items been supply of the total was Capital delivery highest chain resulted for year issues. and that several from by quarter for $XX This the million. delayed

we more to As expect into the XXXX, rate move quarterly a we run to ratable revert would cadence.

our capital will $X.XX to the return dividend or The the of formula, XXth. has that per more Board on flow but March XX% discuss the capital and for consistent in for a I'll of of with share. return cash discretionary amount, year fourth dividend on be activities was paid February detail stockholders XXth million record $XXX quarter the shortly, declared

the levels. cash year of on hand target and of essentially $XXX including under end our end total with of credit million, million The and at at liquidity facilities. availability $XXX liquidity Cash were year

Turning program. now the to return capital

cash with well use levels up to our ramp October, cash in fourth and excess above an targets expectation capital we that previewed came the returns. quarter we to into As were that

convertible through the repurchase million XXX,XXX breaks million you clearly of follows; during bonds. million $XXX to million shares, those As retire $XXX quarter. paid, nearly That we see, down expectations, finally, deploying and nearly on $XX can to followed dividends as $XXX

full some the to XX% mentioned I provide already additional on dividend, the has the of he detail year count program, including but that share second diluted wanted reduction the the mentioned. Paul in

share year, we stock on to million full remainder convertible bond with $XXX the bonds the buybacks. For and $XXX for repurchases and million approximately used deployed retire convertible

actually increased share approximately million year, capital return by million bought had shares shares shares. Notably, the XX.X Prior or end. diluted convertible X.X to our year number settled by the count back bonds would to million not almost launching have shares fully that we program, during XX.X was

we bonds, we because that avoid for we at rate XXXX because that return We dilution, the payments throughout dividend those repurchases, That's steps a incurred at diluted conversion prioritize principally additional resulting took the doing bonds have share That's we of time also nutshell, the in result of dividend payments the stemming the buybacks share the would year. settlement the than knew so absent the settle rather dilution to the would would the from holders. of we the the an program. convertible from to convertible bond but payments count in bond the not why increase of launch reduce the course only in additional the the

reduction buybacks from And with a stock and bond share. into basis for of per some, count of shares use we that's the exactly In On $XXX has diluted attributable than the shares share repurchases. X.X million share repurchases, a per more -- that of in the an effectively X.X the what the happened. year-end average million buybacks share reduction $XXX and to remainder bond translated million price

solely shares would same back In that share. amount capital at our $XXX share on per X.X comparison, have we had of focused million repurchases more less bought efforts than than

of So benefited deployment the way deployed on return which while capital the significantly in also sequency impressive was has XXXX the of its own, in that in capital is amount the shareholders.

to Before to convertible two points moving I the bonds. final related on wanted on, touch

of remain that outstanding. First, $XX that quarter, That of completed now represents we the repurchases issuance. original we fourth in with X.X% just principal the million the just have

has approximately representing million, remains time were call capped $XX intrinsic value we of the issued in full at XXX,XXX the bonds price. outstanding the at and that stock shares yesterday's closing an Second, purchased

seeing now this the so to-date starting with Turning quarter, XXXX far encouraged we by relative clearly met are to and pricing we're year, index first what market quarter the with to in QX. higher

we that delayed. to be earnings, flow our the to likely While first capture on benefit cash timing is quarter expect

expect a We accounts significant this in receivable build quarter.

shipments As true the received price QX. at many from up with of to ultimately provisional last initially final our in are be billed a quarter, agents

this Additionally, case an in pricing quarter dynamics, first see be expect aside working year. we the capital typically to again these investment and we from that in the

questions, I financial comments turning for release. in some call Before over of a items the guidance to the few the wanted on brief provide

First, in year the inflationary of $XXX Core have spending we environment, this guidance line of maintained capital XX% over our million the Metallurgical Despite capital year-over-year. segment. million will capital maintenance to range entirely that be to the and the $XXX related with consists of in

largely Second, interest reducing progress net indebtedness million, investments and tremendous you'll cash less our will the reflecting Notably, our our $X during than interest short-term we expect XXXX. income that offset note in remaining debt. on on interest of expense

we tax income of range now pre-tax income on statement we have XX% respect income. with with the XX% provision Finally, to of a to the that more released have a to taxes, expect normal valuation allowance,

cash we forwards. X% net payments benefit carry For operating pre-tax from expected will to we tax XXXX, income, be continue as less than of loss

more that XXXX, to NOLs. to and will as expect As we of the years XX% tax you in the tax we be have model provision range, beyond would XX% closely most utilized aligned payments

take you. call to ready back turn Operator, the I are to over will we that, With questions.

Operator

today from We Riley with Pipes comes will question-and-answer Instructions] first Lucas the begin Securities. now B. go The ahead. question Please [Operator session.

Lucas Pipes

progress I everyone. on on the the That's just side more the bit Leer end and it. more sense appreciate we cadence very of year. you If question Leer on maybe at Is first impressive. to wanted here much, beginning, on would good or a – good expect throughout my in and Thank little cost the add South spend it a the get you want Do that? I bit I back here shipments on provide Met could and morning pretty readable? it you. some for is color to job weighted? the the Thank really – side. operator, Also little

John Drexler

on first John indicated as As the QX. we Lucas, that Drexler, of we're QX ship if kind release, the far in the how quarters with quarter. be cadence sit from expected you like the as kind three guidance now, flat are distribute volumes – year. today would to of going difference and Right we you? take here And the as we're then on midpoint about to the the the cadence of in what ratable Hey, of we the in of – looking be for the

been the XXXX. and the in happy thrilled So, the South Leer Leer to that course it we've we're with over make to with volumes that able progress we of the expect and achieve increase

now. that's of on cadence view So the kind right our

Lucas Pipes

the That's remarks. helpful. you comments made the Thank you. side, And then thermal prepared switching to John, in some

the I was thermal XXX,XXX the $X. could think it tons business by margin total in move

Would sales you about key dynamics the could low that there? are into – us, just guidance year, I for remind appreciate What the the are X high and appreciate what million there If the tons. what drivers the the color. – from then end think is

as look Thank weaker position your normal the to then book light XXXX, very the in you how environment? and is of today And much. sales outlook price you gas what's out

John Drexler

Yeah. Thanks, Lucas.

of we've here into of about rail the prepared limited it's coal and challenges that know, we deliver the export – the a market. our remarks. course sit it significantly over as throughout had the we opportunity, You had XXXX talked been The the today, course really

with some to pricing, of the some us. those pressure going As very the we healthy seen international for we've still export back sit into today, a even market that here margin on coal that of nets

priced not now, $X the to tons those per price now, today's at we're that would market fairly leveraging be though, and right to right be so we're will those we're in those confident exported. looking to XXX,XXX going able margin. get ton clearly And They're add

opportunity off that more the thermal coal the significantly, coasts. think we on exports as well. we larger the rails get upside there's a If perform, have continue we though, margin to importantly if to More enhance the could

Paul Lang

of coast off volumes Newcastle stack, and volumes those a principally $XXX. that are you're looking west Lucas, so price the at those

at look spot our into you If given what West expected translate so at would that prices, and at the Elk. those that's costs

can you is feel than ship, to in you significant So we less we'd than – It's realization it's amount still a the we quite it's that thermal leveraging. and ship. contribution the XXX,XXX still see hope uplift can it's And It's to tons the point. we like less average then feel average this at the about contribution the and for segment. confident total but

John Drexler

least in rails a million as perspective, From perform. guidance by thermal to the the wide much at X going where range the the so that – we is provided that driven tones, are the of where

sold are challenges to of the year. all coal of committed We beginning we go we you as ended XXXX, had the because out back the of rail to then shifting the the the at essentially of midpoint course I up course over work if XXXX. way had, And the we we guidance. of remember, through the But significant want less

We're with that what guidance, Right tonnes were would we with of us rails kind improve, additional give continue hopeful in discussed. aligns especially which XXXX. that opportunity, now able just deleveraging our export the we ship to some to

Deck Slone

where And way do we pricing premature and for the we look, book us there built, for talk we're not good that are sales very about yet. It's probably feel a we to about but XXXX, go again, and have significant ready Deck. achieved. foundation it’s to solid we've have in a the quantify It's we really –

position quite expect see expect we would well. pricing quite yet. in our XXXX feel well. to or here to XXXX only as volumes a we as solid about say would know, roll XXXX to we're you've foundation, it's strong seen But We again, the good as really you not ready precise into give for So

Lucas Pipes

lot of of luck. a really color. I appreciate that best and That's

Paul Lang

Lucas. Thanks,

John Drexler

Lucas. you, Thank

Operator

next The with question David comes go BMO. ahead. from Gagliano Please

David Gagliano

for my I ones. quick of questions. Hi. have Thanks a just couple taking

kind I a about that? but in talked know the is thermal. West embedded tonne average could a bit for ask Elk XXXX the PRB you little wondering price guy, the the the I you US just think I split if What's of in directly, – split between overall and what's was

Paul Lang

So John million for the on or referenced average from uplift the that – Dave, that on quite and it's of for modest XX West about – so fairly it's the provides frankly, then or pricing export level XXXX the kind price tonnes. obviously PRB the average Elk, committed so caught again, the tonnes

John Drexler

And XX.X? the volume splits about

Paul Lang

Correct. Absolutely.

David Gagliano

And then the earlier you. in just the variable estimate a Thank I helpful. be just right. if there help just of of on was potential first – can wanted the about quantified, dividend? capital comment with working All obviously, the ask Okay. calibration build quarter. that to to

Matt Giljum

things know, Matt, Yes, success you is in one customers. was the highlighted This discussion Dave. the on of John Asian had his the we've

a the be those that know, long is will of good some book that You customers hopefully great you know, long-term will that for and folks that are sell to time. be in their

in you a look it rising to price at is environment. if want downside The

of the balance collect bill in that pricing some see but and this the way works and so expecting The what quarter the the come true-up up PRB provisional price of will quarter. pricing that we're hang receivables higher quarter price quarter. at more the that's you next those sheet rise to We on will the is will the there throughout as

are you think when quarter. what to seasonal we look at items payables typical first than So levels year-end decline of some a – inventory we'll there the end significant the the faced much at Lake working so then And will in some receivables, QX, to that I we related more saw receivables see QX. built fairly capital from of season typically business, the build in in

in we'll headwind. quarter QX, capital As to lot a see that in of most build of I this get look million. at in at a it, least of think we it here but working and significant in year QX expect obviously, the And, could $XXX pretty back I see later

Paul Lang

up I biggest how going impact working I And be of it work surprise the evened to be corresponding and a my course quarter, of and not year XXXX, in lumpy on to see any the out But, be. said Paul, to is think going going where us is dividends till think we're down. over I just it's out. obviously, ratable, to all is This guess last going the of capital the they're they're can

David Gagliano

helpful. adjusting to the very that's that number just XX/XX Thank the And buybacks, then basis, And sticking move this direction in split Great, to quarter. buybacks? capital you. any expect on specials a for capital, one and nice quarterly reason on with the or obviously, the between other much after working allocation,

Paul Lang

is XX% going David, stick capital think Absent understand with I it. very program cash very it's changes, of set the it's the to dividends, way right model, I people for simple, to working the we're flow allocation simple. now mean, discretionary up the

What's to what to is think And is is be David plan and been working we It's things. stick little well-received believe our repurchases shareholders. but, XX% with I lumpy our program by the well. more a the right with going other do the we now

Matt Giljum

relatively it's XX what's fairly -- XX. our it's pay the David, view when for it's going XX general but out paid equal, been They're the look over arrears lumpy, to to because now, just a to it, math. we we to second from dividend you Paul again, way formula, be quarters be going is as said, because and back going the first we're simple but paid in

we are see quarter-to-quarter. that, Having said lumpiness going to

just hold, hold not So quarter. that, given in we But precision. try to provide again, around it's the guidance it not provide any possible XX/XX may to will always

David Gagliano

get last very US not bit the be really that it's now going know about numbers It’s know, quick, quickly thermal Last talk potential Can or the I little you. the stuff year to I helpful. you how re-openings deferrals as and days, a we on question, demand the open you how the much like the customers but that, question. is side? just haven't Perfect, committed quick, thank much in good for early for into for I’m and through maybe the been Thanks. speak XXXX? Can on side. minus plus volumes

Paul Lang

Good question. David.

for demand continue will and course some see evaluate from But over that over needs right, have customers an at are year. as the we committed the but today, book here headwinds, that sit we time, good play we ship at expect to through for we we're rebuild and that move for inventories looking inventory look As occur and We'll those. talking the the levels to at they of have, itself there there's are level. XXXX, what the year. That referenced forward, continue the confidence that we the we of course to that as continue we we things to our those to believe same

Matt Giljum

I mean, year going lot of awful because Dave, an conservation on performance. So was there of poor coal recall you'll XXXX, rail if last

They would volumes. the couldn't generators more been coal, they inventory. didn't just have burning so get the have and And

a focused And so those inventories. as they are rebuilding on result,

start to is in clearly, been demand winter been the weather it's Now, natural very low. slow down, gas price a terms of and had

expect. on have they they an that customers, rail to want that to will full still, effect receive, of service we're they amount, but don't far hearing of burn, so continue our quite frankly, to struggling any still that the that full So their not kind from they're allocation, their get and

a levels. this be we to to push it's start normal and know, is perhaps expect of that think to now, if don't mild rebuilding So, to a right see well, it we more that. of, more We but going see of, -- sort year back as inventories summer these you

Paul Lang

or they're David, the Deck if hear These on same rail extraordinarily stand settled get Eastern I optimistic can service. issue five on bounce customers. little the ability rail through if what some the of rails feel frustration their the fourth we they in Frankly, think had come rail has what frustration services And I four and service to And the and I I a think worse look, problems them our and of this from in basically that service, two disappointing our western customers in back it's their the about more quarter. I rail west. you has that months. contracted. think about touched the doing about gotten they back mean taking year

David Gagliano

Okay, great, very helpful. Thank you.

Paul Lang

Thank you, David.

Operator

Benchmark Martin, Please ahead. The Nathan from question, The Company. go

Nathan Martin

taking for Thanks Hey, my good guys. questions. morning,

Paul Lang

Nate. morning Good

Nathan Martin

of expected of? been just bit think but had most addressed I shipment them but long little have know more John good and this to moves I on the met be haul point, drilling maybe some than comments he down side, at mindful planned cadence. a there, maybe

Bay service do affect sounds again, the up business? rail rail thermal is said back that it services how But to timing of like just side, expect Curtis you eastern XXX% to poor. it along as fairly continues Paul, moving well. to then It like maybe thermal And on be or running sounds cadence again? on you the the shipments

John Drexler

incorporated efficient course just moving year, of at panel-to-panel. walls several over of moves into significant or our rates, successful case advance that's year. Panel a the Panel and to pulled execute X. production perspective, operations kind the have get depending XXXX. from and Leer see teams to all the XXXX beginning the at push on is So, on Nate, our might South the X year out confidence out good from on the January into from the very something had to plan move or variability of high gotten right the ability have the the of got of course of that this to any haul our scheduled a long guidance move We don't of impacts there and But exceptionally over

Paul Lang

look to shipping rail period a thermal seasonality. PRB sorry, you the strong on the tends QX the I obviously, because do quarter. on be start been it's mean typical And lesser a QX tends a to in slow of have -- Nate, side. weather side. be

QX lumpiness. at started fairly out be certainly of again, a pace. But could there we So, slow some level

So, stay tuned.

John Drexler

if the million were the it'd think quarter. a tonnes of cadence, over tonnes, course XX be make you you million midpoint ratable if just of the to XX.X to look year at I that it

there's in challenges, tonne a if helps. got and QX, for basis indicated, QX not million impacts on midpoint and when typically ratable year, true you've rail expect some we in of the seasonality the do year the the traditional but guidance but a Deck the that year improvement that if from As probably full then for XX

Nathan Martin

guys. at to normally backup that running Yes, is kind of quick real no. Curtis That's Bay, just very And helpful this point?

John Drexler

outstanding Yes the year. January and team year course -- things issue managing that to in Nate. that the kind facility. the We the repair over of issue -- an job over the of started XXXX did work The address course of of the they here logistics of

and continued increase to participate forward. seeing of the As the Bay we repairs and not continued year We're to as our as Curtis go any we to there. Bay make Bay end Curtis issues rolled opportunity into there with Curtis

Paul Lang

I'll No up what complaints Okay, that east. say on effectively the back Nat they said, they Curtis delivered got just and they on side, running. the did operating Bay CSX

Nathan Martin

guys. range it they year per in net what XXXX full ton kind to cost did relates And hear to of to you Great there? embedding then the $XX ton guidance, segment met price $XX your

Matt Giljum

including of are out in part a where costs majority those of of have So, kind those a type to the there, cost a east and are we our of relative Nat, range that terms sensitive reserves, we of range sales guide X% a own the sales for modest reserves a is that ownership fairly given sensitive the we price, the different that numbers. everyone remind wide as out lot that variables reason structures sales of about

out in provide the but to that once we range incorporated a specific there. again, it's going into what not market guidance we're the guidance on have So was, all

Paul Lang

and to our X% vast think of And, our majority the the of reminder and tax pay of position underscores own started that Nat, a Virginia, further the fact of fees. I just that strength State we the we severance is which X%, reserves West that

quite prices range fairly within position feel increase provide. us that we modest a while very costs. on It's not will difficult that sorts So those comfortable our and some prices we encompass really to higher so are good have and in of effect sure the a for

Nathan Martin

to this and Got met announce question appreciate just characterize guys just Bloomberg. spin that can't maybe some quality to it. in Would you off obviously M&A morning, any picture interest tech you according next early be specifically a coal its on week maybe as comment, landscape? a I might how coal coal deals, you guys. bigger business I met current adding And high assets? would of but know looking as out the finally, timely have reports

Paul Lang

to cash And that frankly, effectively in everything difficult absent everybody probably looking, we'll of a out but interest Frankly, of on we'd and rest we're the very considering average in but environment as it, about reasons deal. frozen. there There's environment Nat, the curve. we're it's well And and quality to agree case back lot we'll well, cost the we've said end in low and and that's shareholders, You if lowers past, we'll it's the basis, it, know, put good is if turn does not there cost I deal it together for our hard a at a a on a for that simply our think a about now. costs, anything the lots curve anybody it's in that us keep downside fine. should you of right the do of that We're or US below deal but is what look cases and harvesting talk take a consider keep hurt position.

Nathan Martin

there. leave XXXX. to you Paul, luck it Appreciate I'll in Best of guys those comments,

Paul Lang

you thank much. very Nat, right. All

Matt Giljum

thanks. Nat,

Operator

go Research Please comes question next Michael from Dudas Vertical Partners. The ahead. with

Michael Dudas

Good morning, gentlemen.

Paul Lang

Michael. morning, Good

Michael Dudas

improve remarks to those prepared that product makes the important of is, like context starting for, comments that's your the for relative and best sounds seven some Asian have tons forward? looking value yeah, marketplace? you'd term to and customers your going be what that coming Is And, economics put long sense? like adding to there back will kind our So to of with back. do of metal in helping customers, your you utilization be get noticed can the market you of net that that think regard Is at Asia hot the the actual that export how to significant you going if in marketing in

Paul Lang

the down fairly Asia. in blast the a raw is growth furnaces European and real and rolled to has Deck the of the away thinking the off broadly slowing simple. or Both or couple starting reasons, expand US if – is for steel, the is in Literally, John of last customer logic base add our in. move And, our Mike, Asia. I'll been see in hot to steel and start are variety Yeah, would years on

purposely to there. the jump and we and time spent markets, in So, done lot have a this of effort Asian

Deck Slone

Mike, have that new strategic, and towards EAF Asian market the our projects important Europeans forward where are think put great post at COVID. added we more away integrated XX% steel on with with that production is now Asian we the over be, and And on looking is market from is EAF. crossed not, said, moving The to momentum. of are ahead into maybe growth have now capacity Asia, were moving is being back speed The integrated steel full DRI I'd so, and the started we've pause, and say, migration look, Paul some that's as really volumes going

are and product that ideal As really The look got that High-Vol plastics our high makers opportunity We because tons Southeast of be we between believe additional think now plastics effective, much of our including CSR will so CSR those market manifest kind its We've that that market, kind – for with to it so because multiple great temperature and makes more you blending marketplace, we via XXXX. the that provides. majority Asia, that Leer A and – XX we've absolutely adding could we find at would served of that product while of properties, properties we've for fluidity. look blends make range, out the seaborne blends Australia trying India, options. you're are got, of steel that's product. those also and, add along itself the South got products, a huge their And know, vast weighing of product the the looking The metal with and strategic, Leer the for million hot that see in XX production us. –

as and mix. an forward, we certainly, expect value of So we a Asia of the there look we our understanding product. of represent customers better are getting – traction of that. the are But we we're seven percentage to These believe increasing do indicative

John Drexler

marketing just The of opportunities enter And to, the Michael, to for and business in to tested tremendous to product out Asian that about the into Deck add and markets. alluded outstanding team area go into and an marketing the to done that executing talked have introduced get to those – product We've the wanting it they've the has of of some into just I'll time, a additional work recognize secure the these job we're getting ability producing the team contracts. like getting relationships, growing on done that. then qualities

different move and just we So to around. this in addition so and win forward. hinted discussion, kind positioned complete investment in of as new wrap-up And it's And, a on times. we've big the lack globally all that opportunity been there's of there, demand to couple a production, just we here growing see of we're think It's well. tremendous a very a

Michael Dudas

well very that's gentlemen. – That's said

and maintain export US XXXX Just it's a And in you follow-up can – I is these or still US there's next would to those to still numbers of be XXXX? in XXXX to kind maybe do on contribute your contribute? the struggles. assume your What there, do there even you can John, think ability on going think last comment met

Deck Slone

that to fact and with are so sort position we in a could we're Mike, continues Yes, to we it’s And of great you slow Deck. ride kind say slack if look environment want comfortable macro the first. in I to demand – know, weaken, trough, the any of that out

great and the for market you not So, cycle. market, we're know, of end that this projection for know, we're the business unbroken, the not making you strength

by this, hot excluding the of pressure. under say to you're side in X% kicking and China. after metal last world, you've continues And supply back got declining to be now know, production year steel nearly you now yet, a We production right, will show up starting of right lot signs

as of year They tonnes ended at about down was the now tonnes in the year million of million versus XXXX. tonnes million X – year million down but in they're coal the XXX exports tonnes from in the Australia market, peak in XXX nearly big XXXX. peak are coking are XX of in the you production XXXX. horse terms they XXXX, They So seaborne know,

that – see a to manifests mentioned, continue in John very itself you significant that So the under way. investment

the you've story, The of US, degradation depletion the base. reserve got same really is and

investment increased limited last that X XXXX the despite price year You've US by Vol average relatively A so $XXX. got was High exports fact tones, and and million

increased biggest three exports Canadian high those X the are and of coking in coal. tonnes last quality terms by year suppliers million

yes, fundamentals a that do it pressure persists the So for the to believe robust to, strength in well continue continue time. suggests do that need now, that of the going right continue some period is don't see we retain Again, look we but is one on supply market to to which than can market strong. less could and this we XXXX, that in

John Drexler

the world to an other work. related talk Michael, you of thing East to used average we Coast price $XXX we always you need about what for is the know, this, to know, about

You know, the be you're is and guidance it's that Deck where or it breakeven. well. you settling in about $XXX And a from lot dramatically. producers. of US hearing it interesting now $XXX That up that do to $XXX don't the moved that. said, number think has But need to we as is look,

structure. Look, I price don't think $XXX going a normal as forward

our – cost Our going going structure forward. be norm price the to is

Michael Dudas

those observations. I John, Thank said Well appreciate you.

John Drexler

Mike. you, Thank

Operator

question LaFemina go The Chris with Jefferies. comes next from ahead. Please

Chris LaFemina

seaborne year were how And Deck, when us, for was coal talking metcoal weak. to not Chinese of know, the coal lease anyway. the operator. taking market, easily. guys, supply on production or Chinese structural bad apologize. you my thanks in touched mean, the And I about year astonishing question. pretty demand in went going year, domestic a to this we increased Thanks, through when in so are strong of And, for you last problems you solved China you the very, very Hi. was the coal last some which But, Hey, consider how kind I markets get in already.

pickup activity which of now of in And you a expecting. lot that to overwhelming housing And construction, policy going the hearing steel I going shifts drive and think there's iron probably construction. market investors steel recovery we're hearing be really the be not debate in from be estate China in this for real the from that steel, a intensive. a is is that not China that consensus of know, the the think evidence potentially lot strong they're we're it's of but It's big seeing So ore about whether I will could market is in already or some view pretty consumer-driven. not been recovery miners to

coal? yet to secondly, is, that And get Chinese met So you the seeing that I what steel any recovery. a of happens question demand, that a does mean, then solve lack market? are my Chinese steel increase bit does do in in an indeed if problem met shaped of that and of first than coming you. of a V a out, evidence demand horrific, guys year demand recovery off expected what for the does where was play Thank the stronger is market? in Chinese a How again, does world coal you

Deck Slone

year, was yet last look, as robust. that's coking were metal hot Chris, and indicated markets very coal it’s production a down good in Deck, driver coal it’s question, the way such coking and and markets key

of And so seaborne That's ratchet import to up, pressure. continues China market supports -- in we're that in, fact if kind does certainly you're that coking if additional the coal China tons million of XX right.

We has that saw steel idle, of tons had come now in of was European that you back. tons November, mill or so million XX XX million capacity

we're seeing as elsewhere well. signs of again, So pickup

continues into And so agree and the could tight, where are so volumes evident the in support, from. come to China this ply, market provide very to additional entirely market back It weighed significant to certainly not we look continues way. going it a it's

side equation to compared going lot driver There prices by of a crossover modest times. I of increased other that's thermal relatively to mean, see But hot less are represented the with down, on production. variables the the you're metal

environment are here, market there head takes into XXXX. constructive lot puts we a So see also but of as and we pretty

Chris LaFemina

you. Thank Great.

Operator

The next Pipes ahead. Securities. B. Lucas comes question from go with Please Riley

Lucas Pipes

minimal reclamation touch follow-up you Thank fund. what not? expect or Should And could being we target at very my very longer you contributions to I term? so, maybe Thank taking for on wanted reached initial be the year this contributions if the the much. first question. much

Matt Giljum

to it's what going completed in accelerated try we're changes match continuing be fund. XXXX really as target obligation the And essentially will we to sure during ultimate that We to in now obligation noted, what's take place really just make the with Lucas. and the that Yeah, is what funding future we're as that

think neighborhood of this grow somewhere So that fund by I in see million. year, you can the $XX

be Some on that's just what's to of that's there. accruing going interest

it the will be in at that make modest place. that not got in, Some And of contributions year. of have then, in we've interest accrues way over we're much the we rate interest after I'm to this of that sure as additional environment we'll look, already make contributions that the the on fund year, as in we'll that course the look

very fully shape we're to think I good going obligation So, be to in the funded. have

Paul Lang

best for way Matt, think quarter. to I modeling, a it's X about look at the million

Matt Giljum

Correct.

Lucas Pipes

you do things pricing you count about of $XX the and acquisitions better so you, the was the want did, well is done today? Matt, us share to That helpful. Thank Very to convert, share repurchases. share congratulate there. I what you Matt, remind can on per

Matt Giljum

are just what's just under is today all convertible call today, shares basic it XX remaining that it of that count share diluted call and shares includes -- million warrants shares. outstanding, XX.X The the bonds, million employee around shares. the the So the underlying

Lucas Pipes

best follow-up and for taking questions luck. Very you again, my helpful. Thank of

Paul Lang

Thank you, Lucas.

Operator

to question-and-answer President for session. any closing our CEO the back Paul and turn Lang, like to concludes conference This I'd remarks. over

Paul Lang

for again building tremendous financial foundation thank the accomplishments critically, of for interest execution, a in for performance, company you was the want ESG stronger terms I XXXX to in future. shareholder Arch. year a and your even of returns,

move strategic to into With business, healthy April. I'm poised and the XXXX look safe confident ongoing clear call reporting strong team, and we low forward that book With as costs, conclude in Stay operator direction, and and of that we're late to for beyond. group everyone. we we'll success our the talented

Operator

Thank for today's concluded. now has presentation. conference attending The you

disconnect. You may now

Arch Resources (ARCH) 16 Feb 232022 Q4 Earnings call transcript