Arch Resources Reports Fourth Quarter 2021 Results
Arch Resources reported a significant net income of $226.6 million ($11.92 per diluted share) for Q4 2021, compared to a net loss of $78.5 million ($5.17 per diluted share) a year earlier. Revenue surged to $805.7 million, up 123% year-over-year. The company also achieved an adjusted EBITDA of $304.4 million, reflecting strong performance in its metallurgical segment. Arch announced a capital return program set to launch in Q2 2022, alongside a $0.25 quarterly cash dividend on March 15, 2022. The company ended the quarter with $339.7 million in cash and plans to address its thermal mine retirement obligations.
- Net income rose to $226.6 million from a loss of $78.5 million year-over-year.
- Revenue of $805.7 million increased by 123% compared to Q4 2020.
- Adjusted EBITDA reached $304.4 million, up from $4.1 million in the same quarter of the previous year.
- Announced a robust capital return program to begin in Q2 2022.
- Restored balance sheet to near net debt neutral status by paying down $277 million of debt.
- A non-cash charge of $24.2 million related to the sale of equity ownership in Knight Hawk Holdings.
- Significant upward pressure on cost performance due to the ramp-up process at Leer South mine.
ST. LOUIS, Feb. 15, 2022 /PRNewswire/ -- Arch Resources, Inc. (NYSE: ARCH) today reported net income of
In the fourth quarter of 2021, Arch made significant progress on numerous strategic priorities and objectives:
- Delivered a record gross margin in its core metallurgical segment, nearly doubling the previous record achieved in Q3 2021;
- Made significant progress in the ramp towards normalized production levels at the new Leer South mine, where productivity is now approaching full-year 2022 budgeted levels;
- Generated high levels of cash in its legacy thermal segment, while driving ahead with efforts to streamline its operational footprint and reduce final mine closure liabilities;
- Restored the balance sheet to pre-pandemic strength and a near net debt neutral status by paying down
$277.0 million of debt – or nearly 50 percent of its total indebtedness – in the fourth quarter and early 2022; - Announced a robust, new capital return program set to launch in the second quarter of 2022; and
- Achieved a perfect regulatory and water compliance record, furthering its strong execution against key environmental, social and governance (ESG) metrics.
"As we reflect on 2021, we are incredibly proud of the progress the team has made to transform the company and set the stage for long-term growth and value creation," said Paul A. Lang, Arch's CEO and president. "We have dramatically enhanced our core metallurgical portfolio with the on-time and on-budget startup and successful ramp of Leer South, and taken significant steps to enhance the value of our legacy thermal assets by locking in a highly advantageous book of contract business, shrinking the company's thermal operating footprint, and setting in motion the pre-funding of Arch's long-term thermal mine closure obligations."
"As we progress into 2022, the stage is set for even greater advances on our strategic priorities," Lang added. "With our world-class asset base, top-tier marketing and logistics expertise, and high-performing workforce, Arch is exceptionally well-positioned to capitalize on expanding global steel demand and the buildout of a new, low-carbon economy. We look forward to putting these strengths to work to generate substantial, long-term value for all Arch stakeholders while continuing to build on our industry-leading ESG performance."
Capital Allocation
"Since December 2021, we have deployed Arch's increasing cash position to restore the balance sheet to pre-pandemic strength, paying off nearly all of the company's term loan and achieving a near net debt neutral status," Lang continued. "Given this material improvement in Arch's financial position, the board is pleased to announce the resumption of a robust, multi-faceted capital return program that should drive significant incremental value for Arch's stockholders."
During the first phase of its capital return program, from May 2017 through April 2020, Arch returned more than
Arch plans to relaunch its capital return program in the second quarter of 2022 using an allocation model that it believes will deliver significant value to its stockholders. Under this model, Arch plans to return to stockholders approximately 50 percent of the prior quarter's discretionary cash flow – defined as cash flow from operations minus capital expenditures and contributions to the new thermal mine reclamation fund discussed later in this release – via a variable quarterly cash dividend in conjunction with its existing fixed quarterly cash dividend. Arch intends to retain the remaining 50 percent of the prior quarter's discretionary cash flow for use in share buybacks, special dividends, the repurchase of potentially dilutive securities, and/or capital preservation.
"Our success in restoring the balance sheet to pre-pandemic strength less than six months after the completion of Leer South is clear evidence of the significant and expanding cash-generating capabilities of our core metallurgical segment, as well as the robust supplemental contributions of Arch's legacy thermal platform," Lang said. "We expect these same capabilities to drive additional value as we resume a full-scale capital return program, using an allocation model that is balanced, durable and well-aligned with stockholder interests and preferences."
Arch plans to implement this new capital return model in the second quarter based on first quarter results. The company expects to pay its new variable quarterly cash dividend and its continuing fixed quarterly cash dividend simultaneously, subject to board approval and declaration, on the same schedule it currently pays its fixed quarterly dividend.
In advance of the second quarter implementation of the new capital return program, the Arch board has declared a quarterly cash dividend payment of
Arch currently has
Financial and Liquidity Update
Arch ended the quarter with cash, cash equivalents and short-term investments of
Arch repurchased
"Given prevailing market conditions in both coking and thermal coal markets, we are extremely well-positioned to enhance stockholder value while preserving the financial flexibility to manage through future market downturns," said Matthew C. Giljum, Arch's chief financial officer.
Strategic Plan for Legacy Thermal Assets
During the fourth quarter, Arch continued to deliver on its dual objectives of driving forward with an accelerated reclamation plan at its legacy thermal operations, while simultaneously harvesting cash from these assets.
Over the course of 2021, the company reduced the asset retirement obligation at its Powder River Basin operations by
In addition, the thermal segment again delivered strong segment-level EBITDA totaling
New Thermal Mine Reclamation Fund
Following cooperative discussions with its surety bond providers, Arch has created and implemented a thermal mine reclamation fund that it plans to use to pre-fund and defease the long-term mine closure and reclamation obligations of its Powder River Basin thermal operations. Arch made an initial
"We intend to make significant contributions to the thermal mine reclamation fund during 2022, reflecting the strong anticipated cash flows from our thermal assets and the clearly expressed expectations of our surety bond providers," Giljum added.
Arch expects its Powder River Basin asset retirement obligation to remain relatively stable during 2022, as projected accretion is anticipated to be largely offset by ongoing final reclamation work. Based on current market conditions, Arch believes it could contribute as much as
Arch Sells its Stake in Knight Hawk
During the fourth quarter, Arch sold its 49.5 percent equity interest in Knight Hawk Holdings to its longstanding partners in Knight Hawk for
"We have enjoyed a strong and productive relationship with the Carter, Bunn and Robertson families over the past 15 years, and continue to believe in Knight Hawk's exceptional team, low-cost asset base and sustainability-driven operating philosophy," Lang said. "While this transaction represents the right move for Arch at this time, we believe that Knight Hawk is well-positioned for continued success, even in a highly competitive thermal market environment."
The transaction resulted in a
Environmental, Social and Governance Update
During the fourth quarter, Arch maintained its exemplary environmental, social and governance (ESG) performance, extending its exceptional environmental compliance performance and finishing the year with a perfect record in two critical metrics. Arch recorded zero environmental violations in 2021, as well as zero water quality exceedances against 134,000 measurements at 600 discharge points. In the essential area of mine safety, Arch's operations achieved a lost-time incident rate of 1.01 per 200,000 employee-hours worked in 2021, which was more than two times better than the industry average.
Arch also continued its strategic pivot towards steel and metallurgical markets during 2021, reducing its thermal coal asset base via the Knight Hawk sale; shrinking its Powder River Basin asset retirement obligation; making an initial payment into the new thermal mine reclamation fund; and becoming the first and only U.S. coal company to join ResponsibleSteelTM as part of its ongoing efforts to support the ESG objectives of its global steel-producing customers.
"As a responsible member of the industry and a proud leader in accountable operations, we remain sharply focused on our continuing strategic pivot towards steel and metallurgical markets," Lang said.
Operational Update
"During the quarter, the operations team made tremendous strides in ramping the new Leer South mine towards full production levels," said John T. Drexler, Arch's chief operating officer.
"While we are enthusiastic about the great progress we achieved on that front, the ramp-up process along with short-term cost increases at our other metallurgical mines resulted in significant upward pressure on our core metallurgical segment's cost performance. We are intent on bringing those costs back into line during the first half of 2022, and fully expect steadily increasing productivity rates at Leer South and improving execution across the full portfolio to counter-balance expected inflationary pressures and higher sales-sensitive costs related to the currently strong pricing environment."
Metallurgical | ||||||||||||||
4Q21 | 3Q21 | 4Q20 | ||||||||||||
Tons sold (in millions) | 2.0 | 2.0 | 1.8 | |||||||||||
Coking | 1.9 | 1.8 | 1.4 | |||||||||||
Thermal | 0.1 | 0.2 | 0.3 | |||||||||||
Coal sales per ton sold | ||||||||||||||
Coking | ||||||||||||||
Thermal | ||||||||||||||
Cash cost per ton sold | ||||||||||||||
Cash margin per ton | ||||||||||||||
Coal sales per ton sold and cash cost per ton sold are defined and reconciled under "Reconciliation of non-GAAP measures." | ||||||||||||||
Mining complexes included in this segment are Leer, Leer South, Beckley and Mountain Laurel. |
The metallurgical segment's more than 50-percent increase in average sales realization versus third quarter 2021 levels more than counterbalanced a higher average unit cost and drove a near-doubling in cash margin per ton during the quarter.
Thermal | |||||||||||||
4Q21 | 3Q21 | 4Q20 | |||||||||||
Tons sold (in millions) | 18.8 | 19.0 | 14.1 | ||||||||||
Coal sales per ton sold | |||||||||||||
Cash cost per ton sold | |||||||||||||
Cash margin per ton | |||||||||||||
Coal sales per ton sold and cash cost per ton sold are defined and reconciled under "Reconciliation of non-GAAP measures." | |||||||||||||
Mining complexes included in this segment are Black Thunder, Coal Creek and West Elk. |
The thermal segment achieved a 15-percent increase in average sales realization versus the third quarter of 2021, driving a 33-percent increase in average cash margin.
Marketing Update
Coking coal market fundamentals remain highly advantageous, with Arch's primary metallurgical product, High-Vol A, being assessed at
Just as significantly, the coking coal supply response to the robust recovery in coking coal prices remains muted. Australian coking coal production ticked down in 2021 versus 2020, and finished the year 10 percent below 2019 levels. Ongoing challenges related to COVID-19 as well as heavy rainfall in December appear to be dampening production expectations for the outset of 2022 as well. In the United States, production has fared better, recovering meaningfully from 2020 levels, but continues to lag pre-pandemic levels significantly. Canadian coking coal exports were lower versus 2020 and down markedly when compared to 2019.
In its core coking coal segment, Arch had sold as of year-end a total of 3.9 million tons of coking coal for delivery in 2022, with 0.2 million tons sold into North American markets at market-based pricing; 0.3 million tons sold into North American markets at a fixed price of
In its legacy thermal segment, Arch has further flexed up its production plans for its Powder River Basin operations in response to continued strength in domestic thermal markets. Arch has now sold a total of 76 million tons of Powder River Basin coal for delivery in 2022, at an average selling price of
2022 | ||||||||
Tons | $ per ton | |||||||
Sales Volume (in millions of tons) | ||||||||
Coking | 9.0 | - | 9.8 | |||||
Thermal | 72.0 | - | 78.0 | |||||
Total | 81.0 | 87.8 | ||||||
Metallurgical (in millions of tons) | ||||||||
Committed, Priced Coking North American | 0.3 | |||||||
Committed, Unpriced Coking North American | 0.2 | |||||||
Committed, Priced Coking Seaborne | 0.4 | |||||||
Committed, Unpriced Coking Seaborne | 3.0 | |||||||
Total Committed Coking | 3.9 | |||||||
Committed, Priced Thermal Byproduct | 0.3 | |||||||
Committed, Unpriced Thermal Byproduct | 0.1 | |||||||
Total Committed Thermal Byproduct | 0.4 | |||||||
Average Metallurgical Cash Cost | ||||||||
Thermal (in millions of tons) | ||||||||
Committed, Priced | 75.4 | |||||||
Committed, Unpriced | 3.4 | |||||||
Total Committed Thermal | 78.8 | |||||||
Average Thermal Cash Cost | ||||||||
Corporate (in $ millions) | ||||||||
D,D&A | - | |||||||
ARO Accretion | - | |||||||
S,G&A - cash | - | |||||||
S,G&A - non-cash | - | |||||||
Net Interest Expense | - | |||||||
Capital Expenditures | - | |||||||
Tax Provision (%) | Approximately |
Note: The company is unable to present a quantitative reconciliation of its forward-looking non-GAAP Segment cash cost per ton sold financial measures to the most directly comparable GAAP measures without unreasonable efforts due to the inherent difficulty in forecasting and quantifying with reasonable accuracy significant items required for the reconciliation. The most directly comparable GAAP measure, GAAP cost of sales, is not accessible without unreasonable efforts on a forward-looking basis. The reconciling items include transportation costs, which are a component of GAAP cost of sales. Management is unable to predict without unreasonable efforts transportation costs due to uncertainty as to the end market and FOB point for uncommitted sales volumes and the final shipping point for export shipments. In addition, the impact of hedging activity related to commodity purchases that do not receive hedge accounting and idle and administrative costs that are not included in a reportable segment are additional reconciling items for Segment cash cost per ton sold. Management is unable to predict without unreasonable efforts the impact of hedging activity related to commodity purchases that do not receive hedge accounting due to fluctuations in commodity prices, which are difficult to forecast due to their inherent volatility. These amounts have historically varied and may continue to vary significantly from quarter to quarter and material changes to these items could have a significant effect on our future GAAP results. Idle and administrative costs that are not included in a reportable segment are expected to be between
Arch Resources is a premier producer of high-quality metallurgical products for the global steel industry. The company operates large, modern and highly efficient mines that consistently set the industry standard for both mine safety and environmental stewardship. Arch Resources from time to time utilizes its website – www.archrsc.com – as a channel of distribution for material company information. To learn more about us and our premium metallurgical products, go to www.archrsc.com.
Forward-Looking Statements: This press release contains "forward-looking statements" – that is, statements related to future, not past, events. In this context, forward-looking statements often address our expected future business and financial performance, and often contain words such as "should," "appears," "expects," "anticipates," "intends," "plans," "believes," "seeks," or "will." Forward-looking statements by their nature address matters that are, to different degrees, uncertain. For us, particular uncertainties arise from the COVID-19 pandemic, including its adverse effects on businesses, economies, and financial markets worldwide; from the impact of COVID-19 on efficiency, costs and production; from changes in the demand for our coal by the steel production and electricity generation industries; from our ability to access the capital markets on acceptable terms and conditions; from policy, legislation and regulations relating to the Clean Air Act, greenhouse gas emissions, incentives for alternative energy sources, and other environmental initiatives; from competition within our industry and with producers of competing energy sources; from our ability to successfully acquire or develop coal reserves, including the integration of our Leer South mine and its ramp-up to full production; from operational, geological, permit, labor, transportation, and weather-related factors; from the effects of foreign and domestic trade policies, actions or disputes; from fluctuations in the amount of cash we generate from operations, which could impact, among other things, our ability to service our outstanding indebtedness, fund capital expenditures, and pay dividends or repurchase shares in accordance with our announced capital return program; from our ability to successfully integrate the operations that we acquire; from our ability to generate significant revenue to make payments required by, and to comply with restrictions related to, our indebtedness, including our ability to repurchase our convertible notes; from additional demands for credit support by third parties; from the loss of, or significant reduction in, purchases by our largest customers; from the development of future technology to replace coal with hydrogen in the steelmaking process; and from numerous other matters of national, regional and global scale, including those of a political, economic, business, competitive or regulatory nature. These uncertainties may cause our actual future results to be materially different than those expressed in our forward-looking statements. We do not undertake to update our forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by law. For a description of some of the risks and uncertainties that may affect our future results, you should see the risk factors described from time to time in the reports we file with the Securities and Exchange Commission.
1 | Adjusted EBITDA is defined and reconciled in the "Reconciliation of Non-GAAP measures" in this release. |
Arch Resources, Inc. and Subsidiaries | |||||
Condensed Consolidated Statements of Operations | |||||
(In thousands, except per share data) | |||||
Three Months Ended December 31, | Twelve Months Ended December 31, | ||||
2021 | 2020 | 2021 | 2020 | ||
(Unaudited) | (Unaudited) | ||||
Revenues | $ 805,697 | $ 360,578 | $ 2,208,042 | $ 1,467,592 | |
Costs, expenses and other operating | |||||
Cost of sales (exclusive of items shown separately below) | 490,775 | 341,593 | 1,579,836 | 1,378,479 | |
Depreciation, depletion and amortization | 35,886 | 27,447 | 120,327 | 121,552 | |
Accretion on asset retirement obligations | 5,437 | 4,948 | 21,748 | 19,887 | |
Change in fair value of coal derivatives and coal trading activities, net | (31,323) | 1,956 | (2,392) | 5,219 | |
Selling, general and administrative expenses | 25,663 | 18,373 | 92,342 | 82,397 | |
Costs related to proposed joint venture with Peabody Energy | - | 149 | - | 16,087 | |
Asset impairment and restructuring | - | 45,009 | - | 221,380 | |
Gain on property insurance recovery related to Mountain Laurel longwall | - | - | - | (23,518) | |
Loss (Gain) on divestitures | 24,225 | (136) | 24,225 | (1,505) | |
Other operating expense (income), net | 16,169 | (5,478) | 4,826 | (22,246) | |
566,832 | 433,861 | 1,840,912 | 1,797,732 | ||
Income (loss) from operations | 238,865 | (73,283) | 367,130 | (330,140) | |
Interest expense, net | |||||
Interest expense | (10,752) | (4,532) | (23,972) | (14,432) | |
Interest and investment income | 154 | 297 | 628 | 3,808 | |
(10,598) | (4,235) | (23,344) | (10,624) | ||
Income (loss) before nonoperating expenses | 228,267 | (77,518) | 343,786 | (340,764) | |
Nonoperating (expenses) income | |||||
Non-service related pension and postretirement benefit costs | (1,087) | (808) | (4,339) | (3,884) | |
Reorganization items, net | - | - | - | 26 | |
(1,087) | (808) | (4,339) | (3,858) | ||
Income (loss) before income taxes | 227,180 | (78,326) | 339,447 | (344,622) | |
Provision for (benefit from) income taxes | 574 | 199 | 1,874 | (7) | |
Net income (loss) | $ 226,606 | $ (78,525) | $ 337,573 | $ (344,615) | |
Net income (loss) per common share | |||||
Basic earnings (loss) per share | $ 14.72 | $ (5.17) | $ 22.04 | $ (22.74) | |
Diluted earnings (loss) per share | $ 11.92 | $ (5.17) | $ 19.20 | $ (22.74) | |
Weighted average shares outstanding | |||||
Basic weighted average shares outstanding | 15,392 | 15,181 | 15,318 | 15,153 | |
Diluted weighted average shares outstanding | 19,015 | 15,181 | 17,579 | 15,153 | |
Dividends declared per common share | $ 0.25 | $ - | $ 0.25 | $ 0.50 | |
Adjusted EBITDA (A) | $ 304,413 | $ 4,134 | $ 533,430 | $ 23,743 |
(A) Adjusted EBITDA is defined and reconciled under "Reconciliation of Non-GAAP Measures" later in this release. |
Arch Resources, Inc. and Subsidiaries | ||
Condensed Consolidated Balance Sheets | ||
(In thousands) | ||
December 31, | December 31, | |
2021 | 2020 | |
(Unaudited) | ||
Assets | ||
Current assets | ||
Cash and cash equivalents | $ 325,194 | $ 187,492 |
Short-term investments | 14,463 | 96,765 |
Restricted cash | 1,101 | 5,953 |
Trade accounts receivable | 324,304 | 110,869 |
Other receivables | 8,271 | 3,053 |
Inventories | 156,734 | 126,008 |
Other current assets | 52,804 | 58,000 |
Total current assets | 882,871 | 588,140 |
Property, plant and equipment, net | 1,120,043 | 1,007,303 |
Other assets | ||
Equity investments | 15,403 | 71,783 |
Fund for asset retirement obligations | 20,000 | - |
Other noncurrent assets | 78,843 | 55,246 |
Total other assets | 114,246 | 127,029 |
Total assets | $ 2,117,160 | $ 1,722,472 |
Liabilities and Stockholders' Equity | ||
Current liabilities | ||
Accounts payable | $ 131,986 | $ 103,743 |
Accrued expenses and other current liabilities | 167,304 | 155,256 |
Current maturities of debt | 223,050 | 31,097 |
Total current liabilities | 522,340 | 290,096 |
Long-term debt | 337,623 | 477,215 |
Asset retirement obligations | 192,672 | 230,732 |
Accrued pension benefits | 1,300 | 2,879 |
Accrued postretirement benefits other than pension | 73,565 | 94,388 |
Accrued workers' compensation | 224,105 | 244,695 |
Other noncurrent liabilities | 81,689 | 98,906 |
Total liabilities | 1,433,294 | 1,438,911 |
Stockholders' equity | ||
Common Stock | 255 | 253 |
Paid-in capital | 784,356 | 767,484 |
Retained earnings | 712,478 | 378,906 |
Treasury stock, at cost | (827,381) | (827,381) |
Accumulated other comprehensive income (loss) | 14,158 | (35,701) |
Total stockholders' equity | 683,866 | 283,561 |
Total liabilities and stockholders' equity | $ 2,117,160 | $ 1,722,472 |
Arch Resources, Inc. and Subsidiaries | ||
Condensed Consolidated Statements of Cash Flows | ||
(In thousands) | ||
Twelve Months Ended December 31, | ||
2021 | 2020 | |
(Unaudited) | ||
Operating activities | ||
Net income (loss) | $ 337,573 | $ (344,615) |
Adjustments to reconcile to cash from operating activities: | ||
Depreciation, depletion and amortization | 120,327 | 121,552 |
Accretion on asset retirement obligations | 21,748 | 19,887 |
Deferred income taxes | 8 | 14,430 |
Employee stock-based compensation expense | 20,539 | 17,435 |
Amortization relating to financing activities | 6,549 | 5,599 |
Gain on property insurance recovery related to Mountain Laurel longwall | - | (23,518) |
Loss (Gain) on disposals and divestitures, net | 23,276 | (3,727) |
Reclamation work completed | (39,047) | (14,357) |
Contribution to fund asset retirement obligations | (20,000) | - |
Non-cash asset impairment and restructuring | - | 198,007 |
Changes in: | ||
Receivables | (212,950) | 63,657 |
Inventories | (30,726) | (9,126) |
Accounts payable, accrued expenses and other current liabilities | 45,547 | (46,066) |
Income taxes, net | 1,820 | 22,859 |
Other | (36,380) | 39,089 |
Cash provided by operating activities | 238,284 | 61,106 |
Investing activities | ||
Capital expenditures | (245,440) | (285,821) |
Minimum royalty payments | (1,186) | (1,248) |
Proceeds from disposals and divestitures | 21,228 | 1,007 |
Purchases of short-term investments | - | (120,624) |
Proceeds from sales of short-term investments | 87,486 | 158,708 |
Investments in and advances to affiliates, net | (3,303) | (1,549) |
Proceeds from property insurance recovery related to Mountain Laurel longwall | - | 23,518 |
Cash used in investing activities | (141,215) | (226,009) |
Financing activities | ||
Payments on term loan due 2024 | (7,895) | (3,000) |
Proceeds from equipment financing | 19,438 | 53,611 |
Proceeds from tax exempt bonds | 44,985 | 53,090 |
Proceeds from convertible debt | - | 155,250 |
Purchase of capped call related to convertible debt | - | (17,543) |
Net payments on other debt | (11,195) | (15,922) |
Debt financing costs | (2,057) | (9,718) |
Dividends paid | (3,830) | (8,245) |
Payments for taxes related to net share settlement of equity awards | (4,840) | (2,195) |
Proceeds from warrants exercised | 1,175 | - |
Cash provided by financing activities | 35,781 | 205,328 |
Increase in cash and cash equivalents, including restricted cash | 132,850 | 40,425 |
Cash and cash equivalents, including restricted cash, beginning of period | 193,445 | 153,020 |
Cash and cash equivalents, including restricted cash, end of period | $ 326,295 | $ 193,445 |
Cash and cash equivalents, including restricted cash, end of period | ||
Cash and cash equivalents | $ 325,194 | $ 187,492 |
Restricted cash | 1,101 | 5,953 |
$ 326,295 | $ 193,445 |
Arch Resources, Inc. and Subsidiaries | |||
Schedule of Consolidated Debt | |||
(In thousands) | |||
December 31, | December 31, | ||
2021 | 2020 | ||
(Unaudited) | |||
Term loan due 2024 ( | $ 280,353 | $ 288,033 | |
Tax exempt bonds ( | 98,075 | 53,090 | |
Convertible Debt ( | 121,617 | 115,367 | |
Other | 70,836 | 62,695 | |
Debt issuance costs | (10,208) | (10,873) | |
560,673 | 508,312 | ||
Less: current maturities of debt | 223,050 | 31,097 | |
Long-term debt | $ 337,623 | $ 477,215 | |
Calculation of net debt | |||
Total debt (excluding debt issuance costs) | $ 570,881 | $ 519,185 | |
Less liquid assets: | |||
Cash and cash equivalents | 325,194 | 187,492 | |
Short term investments | 14,463 | 96,765 | |
339,657 | 284,257 | ||
Net debt | $ 231,224 | $ 234,928 |
Arch Resources, Inc. and Subsidiaries | ||||||
Operational Performance | ||||||
(In millions, except per ton data) | ||||||
Three Months Ended | Three Months Ended | Three Months Ended | ||||
(Unaudited) | (Unaudited) | (Unaudited) | ||||
Metallurgical | ||||||
Tons Sold | 2.0 | 2.0 | 1.8 | |||
Segment Sales | $ 393.4 | $ 198.26 | $ 254.9 | $ 128.77 | $ 126.6 | $ 72.18 |
Segment Cash Cost of Sales | 171.4 | 86.38 | 136.3 | 68.84 | 111.5 | 63.59 |
Segment Cash Margin | 222.0 | 111.88 | 118.6 | 59.93 | 15.1 | 8.59 |
Thermal | ||||||
Tons Sold | 18.8 | 19.0 | 14.1 | |||
Segment Sales | $ 289.0 | $ 15.41 | $ 254.5 | $ 13.38 | $ 190.0 | $ 13.50 |
Segment Cash Cost of Sales | 222.1 | 11.84 | 203.6 | 10.70 | 176.2 | 12.52 |
Segment Cash Margin | 66.9 | 3.57 | 50.9 | 2.68 | 13.8 | 0.98 |
Total Segment Cash Margin | $ 288.9 | $ 169.6 | $ 28.8 | |||
Selling, general and administrative expenses | (25.7) | (21.1) | (18.4) | |||
Other | 41.2 | (16.9) | (6.3) | |||
Adjusted EBITDA | $ 304.4 | $ 131.6 | $ 4.1 |
Arch Resources, Inc. and Subsidiaries | ||||
Reconciliation of NON-GAAP Measures | ||||
(In thousands, except per ton data) | ||||
Included in the accompanying release, we have disclosed certain non-GAAP measures as defined by Regulation G. | ||||
Non-GAAP Segment coal sales per ton sold | ||||
Non-GAAP Segment coal sales per ton sold is calculated as segment coal sales revenues divided by segment tons sold. Segment coal sales revenues are adjusted for transportation costs, and may be adjusted for other items that, due to generally accepted accounting principles, are classified in "other income" on the consolidated statements of operations, but relate to price protection on the sale of coal. Segment coal sales per ton sold is not a measure of financial performance in accordance with generally accepted accounting principles. We believe segment coal sales per ton sold provides useful information to investors as it better reflects our revenue for the quality of coal sold and our operating results by including all income from coal sales. The adjustments made to arrive at these measures are significant in understanding and assessing our financial condition. Therefore, segment coal sales revenues should not be considered in isolation, nor as an alternative to coal sales revenues under generally accepted accounting principles. | ||||
Quarter ended December 31, 2021 | Metallurgical | Thermal | All Other | Consolidated |
(In thousands) | ||||
GAAP Revenues in the Consolidated Statements of Operations | $ 455,610 | $ 350,087 | $ - | $ 805,697 |
Less: Adjustments to reconcile to Non-GAAP Segment coal sales revenue | ||||
Coal risk management derivative settlements classified in "other income" | - | 20,456 | - | 20,456 |
Coal sales revenues from idled or otherwise disposed operations and pass through agreements not included in segments | - | - | 1 | 1 |
Transportation costs | 62,235 | 40,639 | (1) | 102,873 |
Non-GAAP Segment coal sales revenues | $ 393,375 | $ 288,992 | $ - | $ 682,367 |
Tons sold | 1,984 | 18,759 | ||
Coal sales per ton sold | $ 198.26 | $ 15.41 | ||
Quarter ended September 30, 2021 | Metallurgical | Thermal | All Other | Consolidated |
(In thousands) | ||||
GAAP Revenues in the Consolidated Statements of Operations | $ 295,291 | $ 299,096 | $ 25 | $ 594,412 |
Less: Adjustments to reconcile to Non-GAAP Segment coal sales revenue | ||||
Coal risk management derivative settlements classified in "other income" | (502) | 6,997 | - | 6,495 |
Coal sales revenues from idled or otherwise disposed operations and pass through agreements not included in segments | - | - | 26 | 26 |
Transportation costs | 40,845 | 37,565 | (1) | 78,409 |
Non-GAAP Segment coal sales revenues | $ 254,948 | $ 254,534 | $ - | $ 509,482 |
Tons sold | 1,980 | 19,025 | ||
Coal sales per ton sold | $ 128.77 | $ 13.38 | ||
Quarter ended December 31, 2020 | Metallurgical | Thermal | All Other | Consolidated |
(In thousands) | ||||
GAAP Revenues in the Consolidated Statements of Operations | $ 151,875 | $ 203,745 | $ 4,957 | $ 360,578 |
Less: Adjustments to reconcile to Non-GAAP Segment coal sales revenue | ||||
Coal risk management derivative settlements classified in "other income" | (29) | (2,266) | - | (2,294) |
Coal sales revenues from idled or otherwise disposed operations and pass through agreements not included in segments | - | - | 4,927 | 4,927 |
Transportation costs | 25,306 | 16,059 | 30 | 41,395 |
Non-GAAP Segment coal sales revenues | $ 126,598 | $ 189,952 | $ - | $ 316,550 |
Tons sold | 1,754 | 14,073 | ||
Coal sales per ton sold | $ 72.18 | $ 13.50 |
Arch Resources, Inc. and Subsidiaries | ||||
Reconciliation of NON-GAAP Measures | ||||
(In thousands, except per ton data) | ||||
Non-GAAP Segment cash cost per ton sold | ||||
Non-GAAP Segment cash cost per ton sold is calculated as segment cash cost of coal sales divided by segment tons sold. Segment cash cost of coal sales is adjusted for transportation costs, and may be adjusted for other items that, due to generally accepted accounting principles, are classified in "other income" on the consolidated statements of operations, but relate directly to the costs incurred to produce coal. Segment cash cost per ton sold is not a measure of financial performance in accordance with generally accepted accounting principles. We believe segment cash cost per ton sold better reflects our controllable costs and our operating results by including all costs incurred to produce coal. The adjustments made to arrive at these measures are significant in understanding and assessing our financial condition. Therefore, segment cash cost of coal sales should not be considered in isolation, nor as an alternative to cost of sales under generally accepted accounting principles. | ||||
Quarter ended December 31, 2021 | Metallurgical | Thermal | All Other | Consolidated |
(In thousands) | ||||
GAAP Cost of sales in the Consolidated Statements of Operations | $ 233,626 | $ 262,726 | $ (5,577) | $ 490,775 |
Less: Adjustments to reconcile to Non-GAAP Segment cash cost of coal sales | ||||
Transportation costs | 62,235 | 40,639 | (1) | 102,873 |
Cost of coal sales from idled or otherwise disposed operations and pass through agreements not included in segments | - | - | (7,746) | (7,746) |
Other (operating overhead, certain actuarial, etc.) | - | - | 2,170 | 2,170 |
Non-GAAP Segment cash cost of coal sales | $ 171,391 | $ 222,087 | $ - | $ 393,478 |
Tons sold | 1,984 | 18,759 | ||
Cash cost per ton sold | $ 86.38 | $ 11.84 | ||
Quarter ended September 30, 2021 | Metallurgical | Thermal | All Other | Consolidated |
(In thousands) | ||||
GAAP Cost of sales in the Consolidated Statements of Operations | $ 177,146 | $ 241,158 | $ 5,522 | $ 423,826 |
Less: Adjustments to reconcile to Non-GAAP Segment cash cost of coal sales | ||||
Transportation costs | 40,845 | 37,565 | (1) | 78,409 |
Cost of coal sales from idled or otherwise disposed operations and pass through agreements not included in segments | - | - | 4,012 | 4,012 |
Other (operating overhead, certain actuarial, etc.) | - | - | 1,511 | 1,511 |
Non-GAAP Segment cash cost of coal sales | $ 136,301 | $ 203,593 | $ - | $ 339,894 |
Tons sold | 1,980 | 19,025 | ||
Cash cost per ton sold | $ 68.84 | $ 10.70 | ||
Quarter ended December 31, 2020 | Metallurgical | Thermal | All Other | Consolidated |
(In thousands) | ||||
GAAP Cost of sales in the Consolidated Statements of Operations | $ 136,834 | $ 12,330 | $ 341,593 | |
Less: Adjustments to reconcile to Non-GAAP Segment cash cost of coal sales | ||||
Diesel fuel risk management derivative settlements classified in "other income" | - | 188 | - | 188 |
Transportation costs | 25,306 | 16,059 | 30 | 41,395 |
Cost of coal sales from idled or otherwise disposed operations and pass through agreements not included in segments | - | - | 10,362 | 10,362 |
Other (operating overhead, certain actuarial, etc.) | - | - | 1,938 | 1,938 |
Non-GAAP Segment cash cost of coal sales | $ 111,528 | $ 176,183 | $ - | $ 287,711 |
Tons sold | 1,754 | 14,073 | ||
Cash cost per ton sold | $ 63.59 | $ 12.52 |
Arch Resources, Inc. and Subsidiaries | |||||
Reconciliation of Non-GAAP Measures | |||||
(In thousands) | |||||
Adjusted EBITDA | |||||
Adjusted EBITDA is defined as net income (loss) attributable to the Company before the effect of net interest expense, income taxes, depreciation, depletion and amortization, accretion on asset retirement obligations and nonoperating expenses. Adjusted EBITDA may also be adjusted for items that may not reflect the trend of future results by excluding transactions that are not indicative of the Company's core operating performance. | |||||
Adjusted EBITDA is not a measure of financial performance in accordance with generally accepted accounting principles, and items excluded from Adjusted EBITDA are significant in understanding and assessing our financial condition. Therefore, Adjusted EBITDA should not be considered in isolation, nor as an alternative to net income (loss), income (loss) from operations, cash flows from operations or as a measure of our profitability, liquidity or performance under generally accepted accounting principles. The Company uses adjusted EBITDA to measure the operating performance of its segments and allocate resources to the segments. Furthermore, analogous measures are used by industry analysts and investors to evaluate our operating performance. Investors should be aware that our presentation of Adjusted EBITDA may not be comparable to similarly titled measures used by other companies. The table below shows how we calculate Adjusted EBITDA. | |||||
Three Months Ended December 31, | Twelve Months Ended December 31, | ||||
2021 | 2020 | 2021 | 2020 | ||
(Unaudited) | (Unaudited) | ||||
Net income (loss) | $ 226,606 | $ (78,525) | $ 337,573 | $ (344,615) | |
Provision for (benefit from) income taxes | 574 | 199 | 1,874 | (7) | |
Interest expense, net | 10,598 | 4,235 | 23,344 | 10,624 | |
Depreciation, depletion and amortization | 35,886 | 27,447 | 120,327 | 121,552 | |
Accretion on asset retirement obligations | 5,437 | 4,948 | 21,748 | 19,887 | |
Costs related to proposed joint venture with Peabody Energy | - | 149 | - | 16,087 | |
Asset impairment and restructuring | - | 45,009 | - | 221,380 | |
Gain on property insurance recovery related to Mountain Laurel longwall | - | - | - | (23,518) | |
Loss (Gain) on divestitures | 24,225 | (136) | 24,225 | (1,505) | |
Non-service related pension and postretirement benefit costs | 1,087 | 808 | 4,339 | 3,884 | |
Reorganization items, net | - | - | - | (26) | |
Adjusted EBITDA | $ 304,413 | $ 4,134 | $ 533,430 | $ 23,743 | |
EBITDA from idled or otherwise disposed operations | (8,168) | 5,167 | 2,469 | 15,858 | |
Selling, general and administrative expenses | 25,663 | 18,373 | 92,342 | 82,397 | |
Other | (32,349) | 2,046 | (9,702) | 3,359 | |
Segment Adjusted EBITDA from coal operations | $ 289,559 | $ 29,720 | $ 618,539 | $ 125,357 | |
Segment Adjusted EBITDA | |||||
Metallurgical | 221,439 | 15,286 | 442,830 | 91,322 | |
Thermal | 68,120 | 14,434 | 175,709 | 34,035 | |
Total Segment Adjusted EBITDA | $ 289,559 | $ 9,720 | $ 618,539 | $ 125,357 |
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SOURCE Arch Resources, Inc.
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