Arch Resources, Inc. (NYSE:ARCH) Q3 2020 Results Earnings Conference Call October 22, 2020 10:00 AM ET Company Participants Deck Slone - Senior Vice President of Strategy Paul Lang - President, Chief Executive Officer John Drexler - Senior Vice President, Chief Operating Officer Matt Giljum - Senior Vice President, Chief Financial Officer Conference Call Participants Lucas Pipes - B. Riley Financial Mark Levin - The Benchmark Company Wayne Cooperman - Cobalt Capital Operator Good day and welcome to the Arch ...

Arch Resources, Inc. (NYSE:ARCH) Q2 2020 Results Earnings Conference Call July 28, 2020 10:00 AM ET Company Participants Deck Slone - Senior Vice President, Strategy Paul Lang - President and CEO John Drexler - Chief Operating Officer Matt Giljum - Chief Financial Officer Conference Call Participants Scott Schier - Clarksons David Gagliano - BMO Capital Markets Mark Levin - The Benchmark Company Michael Dudas - Vertical Research Lucas Pipes - B. Riley FBR Operator Good day. And welcome to the Arch Resources ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q (Mark One) ☒ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended June 30, 2020 or ☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from to . Commission file number: 1-13105 Arch Resources, Inc. (Exact name of registrant as specified in its charter) Delaware 43-0921172 (State or ...

Financial Data and Key Metrics Changes - In Q1 2020, Arch Coal reported a cash outflow from operating activities of $12 million, primarily due to negative changes in working capital of nearly $35 million [31] - Capital spending for the quarter totaled $87 million, with $62 million allocated to the Leer South project, expected to be the highest spending of the year [32] - The company ended the quarter with $323 million in total liquidity, including $234 million in cash, which is below historical targets but deemed sufficient for operations [35] Business Line Data and Key Metrics Changes - The core metallurgical segment shipped 1.5 million tons of metallurgical coal, maintaining performance in line with expectations despite seasonal shipping channel closures [23] - The average cash cost for the metallurgical segment was $58.42 per ton, positioning Arch Coal well on the U.S. cost curve, approximately $20 to $25 per ton below the median for U.S. coking coal mines [24] - Both thermal segments reported negative cash margins due to low natural gas prices and weak power markets, with expectations of continued margin compression in Q2 [28] Market Data and Key Metrics Changes - The steel markets have weakened considerably, with major producers announcing output curtailments, impacting global metallurgical markets [19] - The company has commitments totaling over 58 million tons in the Powder River Basin and 3.8 million tons in other thermal segments, aiming to restore profitability in these areas [29] Company Strategy and Development Direction - Arch Coal is focused on the rapid development of the Leer South mine, with nearly 45% of the projected capital already spent and a longwall startup expected in Q3 2021 [15][25] - The company is adjusting its corporate support structure to align with its strategic direction, including a 30% reduction in corporate staff through a voluntary separation program [16] - Arch Coal is pursuing a joint venture with Peabody to combine thermal operations in the Powder River Basin, which is expected to create a stable and cost-competitive supply platform [16][17] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about improving results in the second half of 2020, despite the challenges posed by the ongoing economic shutdown [14] - The company is taking steps to maintain liquidity throughout the crisis, including trimming $20 million from capital spending plans and suspending quarterly dividends [17][34] - Management emphasized the importance of a strong balance sheet and the ability to adapt to market conditions, with plans to respond to improving market conditions as the economy stabilizes [20][36] Other Important Information - The Federal Trade Commission has challenged the proposed joint venture with Peabody, with court proceedings expected to commence in mid-June [17] - The company has implemented safety measures in response to COVID-19, including staggering shifts and limiting meetings, which have minimally impacted operational performance [22][57] Q&A Session Summary Question: Transition of CEO and future leadership - David Gagliano congratulated John Eaves on his transition and inquired about capital allocation and liquidity strategies in light of market conditions [39][40] Response: Capital allocation strategy - Paul Lang highlighted the unique opportunity presented by the Leer South project, emphasizing its potential to lower costs and produce high-quality coal [41] - John Drexler noted the expected cash flow generation from Leer South, reinforcing the decision to proceed with the project [43][44] Question: Impact of COVID-19 on operations - Michael Dudas asked about the operational impact of COVID-19 and safety measures implemented [55] Response: Operational performance during COVID-19 - John Drexler confirmed that operations have continued to perform well despite safety measures, with minimal impacts on productivity [56] Question: Customer inquiries and market conditions - Michael Dudas inquired about customer inquiries and potential benefits for Arch Coal amid market challenges [59] Response: Customer engagement and market positioning - John Drexler indicated that Arch Coal has received inquiries from customers seeking reliable supply amid market disruptions, positioning the company favorably [60][63]

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q (Mark One) ☒ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended March 31, 2020 or ☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from to . Commission file number: 1-13105 Arch Coal Inc. (Exact name of registrant as specified in its charter) Delaware 43-0921172 (State or other ...

[PART I](index=5&type=section&id=PART%20I) This section provides an overview of Arch Coal's business, operations, sales, regulatory environment, and key risk factors [Item 1. Business](index=5&type=section&id=ITEM%201.%20Business) Arch Coal, Inc. is a major global coal producer with operations segmented into Powder River Basin thermal coal, Metallurgical coal, and Other Thermal coal [Introduction and History](index=5&type=section&id=Introduction%20and%20History) Arch Coal is a leading global coal producer, selling approximately 90 million tons in 2019 and emerging from Chapter 11 bankruptcy in 2016 - In 2019, the company sold approximately **90 million tons of coal** from 8 active mines located in major U.S. coal-producing regions[14](index=14&type=chunk) - The company emerged from Chapter 11 bankruptcy in October 2016 after filing for reorganization in January 2016[20](index=20&type=chunk)[21](index=21&type=chunk) - In June 2019, Arch agreed to form a joint venture with Peabody Energy, combining their Powder River Basin and Colorado mining operations, with Arch holding a **33.5% economic interest**[23](index=23&type=chunk) [The Coal Industry and Mining Operations](index=7&type=section&id=The%20Coal%20Industry%20and%20Mining%20Operations) The company operates in a competitive global coal market, producing both thermal and metallurgical coal through surface and underground mining methods - In 2019, thermal coal represented **92% of sales volume**, while metallurgical coal contributed **43% of sales revenue**, highlighting the significant price premium for metallurgical products[34](index=34&type=chunk) - The company's operations are divided into three reportable segments: Powder River Basin (PRB), Metallurgical (MET), and Other Thermal[55](index=55&type=chunk) Active Mining Complexes Summary (as of Dec 31, 2019) | Mining Complex | Segment | Tons Sold 2019 (millions) | Assigned Reserves (million tons) | Property, Plant & Equipment ($ millions) | | :--- | :--- | :--- | :--- | :--- | | Black Thunder | Powder River Basin | 72.0 | 747.7 | 299.4 | | Coal Creek | Powder River Basin | 2.6 | 92.2 | 44.5 | | Mountain Laurel | Metallurgical | 1.4 | 21.4 | 32.6 | | Beckley | Metallurgical | 1.0 | 25.5 | 63.5 | | Leer South/Sentinel | Metallurgical | 1.1 | 43.2 | 197.5 | | Leer | Metallurgical | 4.1 | 48.3 | 252.9 | | West Elk | Other Thermal | 4.1 | 50.5 | 49.9 | | Viper | Other Thermal | 1.5 | 40.4 | 35.3 | | **Totals** | | **87.8** | **1,069.2** | **975.6** | [Sales, Marketing and Customers](index=16&type=section&id=Sales%2C%20Marketing%20and%20Customers) Arch Coal markets its products to a diverse customer base, with significant international exports and a substantial portion of sales under long-term contracts - The three largest customers accounted for approximately **21% of total coal revenues** in 2019, and the ten largest customers accounted for **47%**[79](index=79&type=chunk) Seaborne Revenues by Destination (2019) | Region | Revenue (in thousands) | | :--- | :--- | | Europe | $ 537,117 | | Asia | $ 322,029 | | Central and South America | $ 82,476 | | Africa | $ 18,698 | | **Total** | **$ 960,320** | - In 2019, approximately **56% of coal was sold under long-term supply arrangements**, with remaining tons under these agreements totaling about **129 million tons** and an average remaining term of **2.7 years** as of December 31, 2019[83](index=83&type=chunk) [Environmental and Other Regulatory Matters](index=19&type=section&id=Environmental%20and%20Other%20Regulatory%20Matters) The company's operations are subject to extensive federal, state, and local environmental and safety regulations, significantly impacting costs and demand - The company is required to obtain numerous governmental permits for mining, which can be costly, time-consuming, and subject to legal challenges[104](index=104&type=chunk)[105](index=105&type=chunk)[106](index=106&type=chunk) - As of December 31, 2019, the company had posted approximately **$528.9 million in surety bonds** for reclamation purposes and **$156.5 million** for other obligations like workers' compensation[114](index=114&type=chunk) - Air quality regulations, particularly those targeting emissions of sulfur dioxide, nitrogen oxides, mercury, and greenhouse gases from coal-fueled power plants, indirectly but significantly affect the demand for coal[118](index=118&type=chunk) - The EPA finalized the Affordable Clean Energy (ACE) rule in June 2019 to replace the Clean Power Plan, establishing new guidelines for states to address greenhouse gas emissions from existing coal-fired power plants, though its ultimate effect is subject to litigation[137](index=137&type=chunk) [Item 1A. Risk Factors](index=32&type=section&id=ITEM%201A.%20Risk%20Factors) The company faces significant risks from volatile coal prices, competition, extensive environmental regulations, and the proposed joint venture with Peabody - Profitability is highly dependent on coal prices, which are volatile and influenced by factors beyond the company's control, including demand for electricity and steel, competition from other fuels (especially natural gas), and environmental regulations[163](index=163&type=chunk)[166](index=166&type=chunk) - Competition from low-priced natural gas has decreased demand for thermal coal and contributed to the closure of coal-fired power plants, a trend that could continue to adversely affect the business[173](index=173&type=chunk) - Extensive and evolving environmental regulations, particularly those related to air emissions and climate change (e.g., Clean Power Plan/ACE rule, Paris Agreement), could significantly reduce future demand for coal and increase customer costs[221](index=221&type=chunk)[222](index=222&type=chunk) - The proposed joint venture with Peabody faces risks, including failure to obtain regulatory approval, inability to realize expected synergies, and diversion of management attention[254](index=254&type=chunk)[255](index=255&type=chunk) [Item 2. Properties](index=46&type=section&id=ITEM%202.%20Properties) As of December 31, 2019, Arch Coal controlled approximately 1.8 billion tons of proven and probable recoverable coal reserves, primarily through long-term federal leases - The company estimated it owned or controlled approximately **1.8 billion tons of proven and probable recoverable reserves** at year-end 2019[269](index=269&type=chunk) Assigned and Unassigned Recoverable Coal Reserves (Tons in millions, as of Dec 31, 2019) | Reserve Type | Wyoming | Central App. | Northern App. | Illinois | Colorado | Total | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | **Assigned** | 840 | 47 | 92 | 40 | 51 | **1,070** | | **Unassigned** | 260 | 49 | 139 | 284 | - | **732** | | **Total** | **1,100** | **96** | **231** | **324** | **51** | **1,802** | - A significant portion of western U.S. coal is controlled through the federal Lease by Application (LBA) process, which can take five to ten years or more to complete[278](index=278&type=chunk) [Item 3. Legal Proceedings](index=49&type=section&id=ITEM%203.%20Legal%20Proceedings) The company is involved in various legal claims arising in the ordinary course of business, which management does not expect to have a material adverse financial effect - The company states that ongoing legal proceedings arising from the ordinary course of business are not expected to have a material adverse effect on its financial condition[288](index=288&type=chunk) [Item 4. Mine Safety Disclosures](index=49&type=section&id=ITEM%204.%20Mine%20Safety%20Disclosures) Information regarding mine safety violations and other regulatory matters is included in Exhibit 95 of this Annual Report on Form 10-K - Mine safety disclosures required under the Dodd-Frank Act are provided in Exhibit 95 of the Form 10-K[289](index=289&type=chunk) [PART II](index=50&type=section&id=PART%20II) This section covers Arch Coal's common equity market, selected financial data, management's discussion and analysis, and market risk disclosures [Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=50&type=section&id=ITEM%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Arch Coal's common stock trades on the NYSE, with the company paying dividends and actively repurchasing shares under an authorized program 2019 Quarterly Common Stock Prices and Dividends | Quarter | High Price | Low Price | Dividends per Share | | :--- | :--- | :--- | :--- | | First | $93.64 | $80.69 | $0.45 | | Second | $99.96 | $86.71 | $0.45 | | Third | $93.81 | $69.31 | $0.45 | | Fourth | $86.00 | $70.41 | $0.45 | Share Repurchases (Q4 2019) | Period | Total Shares Purchased | Average Price Paid | Remaining Authorization ($ thousands) | | :--- | :--- | :--- | :--- | | Oct 2019 | 127,002 | $78.73 | $223,118 | | Nov 2019 | 6,377 | $78.39 | $222,618 | | Dec 2019 | 0 | - | $222,618 | | **Total Q4** | **133,379** | **$78.72** | **$222,618** | - Since the inception of the stock repurchase program, the company has repurchased **10,088,378 shares** for approximately **$827 million**, with **$223 million** remaining under the authorization as of year-end 2019[300](index=300&type=chunk) [Item 6. Selected Financial Data](index=53&type=section&id=ITEM%206.%20Selected%20Financial%20Data) This section provides a five-year summary of key financial and operating data, including revenues, net income, and tons sold Selected Financial Data (Year Ended Dec 31) | Metric (in thousands, except per share) | 2019 | 2018 | 2017 | | :--- | :--- | :--- | :--- | | **Revenues** | $2,294,352 | $2,451,787 | $2,324,623 | | **Income from operations** | $242,870 | $279,138 | $234,336 | | **Net income** | $233,799 | $312,577 | $238,450 | | **Diluted EPS** | $13.52 | $15.15 | $9.84 | | **Total assets** | $1,867,756 | $1,887,060 | $1,979,632 | | **Long-term debt** | $290,066 | $300,186 | $310,134 | | **Cash from operating activities** | $419,714 | $417,963 | $396,474 | | **Tons sold** | 90,305 | 96,792 | 98,218 | [Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=54&type=section&id=ITEM%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses 2019 financial results, highlighting revenue decline due to market softness, strong liquidity, and increased capital expenditures for the Leer South mine [Results of Operations (2019 vs. 2018)](index=58&type=section&id=Results%20of%20Operations%20%282019%20vs.%202018%29) In 2019, revenues decreased by 6.4% to $2.29 billion due to lower volumes and weaker metallurgical pricing, leading to a decline in net income Consolidated Sales Performance (2019 vs. 2018) | Metric | 2019 | 2018 | Change | | :--- | :--- | :--- | :--- | | Coal Sales (in thousands) | $2,294,352 | $2,451,787 | $(157,435) | | Tons Sold (in thousands) | 90,305 | 96,792 | (6,487) | - Cost of sales decreased by **$52.2 million**, or **2.7%**, in 2019 compared to 2018, primarily due to lower operating taxes, reduced purchased coal costs, and a build in coal inventories[311](index=311&type=chunk) - The company recorded **$13.8 million** in costs related to the proposed joint venture with Peabody and a **$9.0 million loss** on the sale of its Coal-Mac operation[311](index=311&type=chunk)[317](index=317&type=chunk)[318](index=318&type=chunk) [Operational Performance by Segment (2019 vs. 2018)](index=61&type=section&id=Operational%20Performance%20by%20Segment%20%282019%20vs.%202018%29) In 2019, all segments experienced a decline in Adjusted EBITDA, primarily driven by lower sales prices in Metallurgical and reduced volumes in Powder River Basin and Other Thermal Segment Performance Comparison (2019 vs. 2018) | Segment | Metric | 2019 | 2018 | | :--- | :--- | :--- | :--- | | **Powder River Basin** | Tons Sold (k) | 74,531 | 79,542 | | | Cash Margin/ton | $1.45 | $1.58 | | | Adjusted EBITDA (k) | $110,528 | $126,525 | | **Metallurgical** | Tons Sold (k) | 7,769 | 7,747 | | | Cash Margin/ton | $39.26 | $44.87 | | | Adjusted EBITDA (k) | $305,363 | $349,524 | | **Other Thermal** | Tons Sold (k) | 7,717 | 9,089 | | | Cash Margin/ton | $5.22 | $7.11 | | | Adjusted EBITDA (k) | $41,495 | $68,620 | [Liquidity and Capital Resources](index=72&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintained strong liquidity of $412 million at year-end 2019, with significant cash usage for capital expenditures and shareholder returns - Total liquidity at December 31, 2019 was approximately **$412 million**, including **$289 million** in cash, equivalents, and short-term investments[379](index=379&type=chunk) Summary of Cash Flows (Year Ended Dec 31, in thousands) | Cash Flow Activity | 2019 | 2018 | | :--- | :--- | :--- | | Operating Activities | $419,714 | $417,963 | | Investing Activities | $(239,111) | $(103,952) | | Financing Activities | $(292,520) | $(322,676) | - Capital expenditures increased significantly to **$266.4 million** in 2019 from **$95.3 million** in 2018, primarily due to development of the Leer South mine[384](index=384&type=chunk)[302](index=302&type=chunk) [Item 7A. Quantitative and Qualitative Disclosures About Market Risk](index=75&type=section&id=ITEM%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is exposed to market risks from commodity prices and interest rates, with hedging strategies in place for a portion of its sales and debt 2020 Sales Commitments (as of Dec 31, 2019) | Segment | Commitment Type | Tons (millions) | Avg. Price/ton | | :--- | :--- | :--- | :--- | | **Metallurgical** | N. America Priced Coking | 1.8 | $107.11 | | | Seaborne Priced Coking | 0.2 | $83.44 | | | Seaborne Unpriced Coking | 2.2 | - | | **Powder River Basin** | Priced | 58.1 | $12.22 | | | Unpriced | 1.8 | - | | **Other Thermal** | Priced | 3.1 | $33.65 | | | Unpriced | 0.3 | - | - The company is exposed to interest rate risk on approximately **$291.8 million of variable-rate debt**, though this risk is largely mitigated by interest rate swaps[429](index=429&type=chunk) [Item 8. Financial Statements and Supplementary Data](index=76&type=section&id=ITEM%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents the company's consolidated financial statements, accompanying notes, and the independent auditor's report for 2017-2019 - The independent auditor, Ernst & Young LLP, issued an unqualified opinion on the financial statements and the effectiveness of internal control over financial reporting[451](index=451&type=chunk)[452](index=452&type=chunk) - A critical audit matter identified was the valuation of the Asset Retirement Obligation (ARO) liability, which totaled **$252.8 million** and involves significant management judgment and subjective assumptions regarding reclamation costs, timing, and discount rates[456](index=456&type=chunk)[457](index=457&type=chunk) [PART III](index=77&type=section&id=PART%20III) This section incorporates information regarding the company's directors, executive compensation, security ownership, and principal accountant fees by reference [Items 10-14. Directors, Executive Compensation, Security Ownership, and Principal Accountant Fees](index=77&type=section&id=ITEMS%2010%2C%2011%2C%2012%2C%2013%20and%2014) Information for these items is incorporated by reference from the company's definitive proxy statement for its 2020 Annual Meeting of Stockholders - Information regarding directors, executive compensation, security ownership, and related matters is not included directly in the 10-K but is incorporated by reference from the forthcoming 2020 proxy statement[433](index=433&type=chunk)[434](index=434&type=chunk)[435](index=435&type=chunk) [PART IV](index=78&type=section&id=PART%20IV) This section details the exhibits and financial statement schedules filed as part of the Form 10-K report [Item 15. Exhibits and Financial Statement Schedules](index=78&type=section&id=ITEM%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists all financial statements, schedules, and exhibits filed with the Form 10-K, including material contracts and credit facilities - This section provides an index of all financial statements, schedules, and exhibits filed with the 10-K, including material contracts and credit facilities[439](index=439&type=chunk)[440](index=440&type=chunk)

Arch Coal Inc. (NYSE:ARCH) Q4 2019 Results Conference Call February 6, 2020 11:00 AM ET Company Participants Deck Slone - Senior Vice President of Strategy John Eaves - Chief Executive Officer Paul Lang - President and Chief Operating Officer John Drexler - Senior Vice President and Chief Financial Officer. Conference Call Participants Lucas Pipes - B. Riley FBR Daniel Scott - Clarksons Platou Securities Mark Levin - Benchmark Company Dave Gagliano - BMO Capital Markets Chris LaFemina - Jefferies Michael Du ...

Arch Coal, Inc. (NYSE:ARCH) Q3 2019 Earnings Conference Call October 22, 2019 10:00 AM ET Company Participants Deck Slone – Senior Vice President-Strategy John Eaves – Chief Executive Officer Paul Lang – President and Chief Operating Officer John Drexler – Senior Vice President and Chief Financial Officer Conference Call Participants Mark Levin – Seaport Global Lucas Pipes – B. Riley FBR Dave Gagliano – BMO Capital Markets Michael Dudas – Vertical Research Operator Good day, and welcome to the Arch Coal Thi ...

Table of Contents Common stock, $.01 par value ARCH New York Stock Exchange | --- | --- | --- | --- | --- | --- | --- | --- | |------------|------------------------------------------------------|---------------------------------------|------------------------------------------------------------------------|-------------------|---------------------------|---------|-------| | | WASHINGTON, | | UNITED STATES SECURITIES AND EXCHANGE COMMISSION DC 20549 | | | | | | | FORM | | ____________________________________ ...

Part I FINANCIAL INFORMATION [Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) Arch Coal, Inc.'s unaudited condensed consolidated financial statements for the three and six months ended June 30, 2019 and 2018 are presented, including statements of operations, comprehensive income, balance sheets, cash flows, stockholders' equity, and accompanying notes detailing accounting policies and significant events, such as the proposed joint venture with Peabody Energy [Condensed Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Revenues decreased in both the three and six-month periods ended June 30, 2019, compared to the same periods in 2018, but net income and earnings per share (EPS) showed significant improvement, driven by lower costs and a large positive change in the fair value of coal derivatives Consolidated Statements of Operations Highlights (in thousands, except per share data) | Metric | Three Months Ended June 30, 2019 | Three Months Ended June 30, 2018 | Six Months Ended June 30, 2019 | Six Months Ended June 30, 2018 | | :--- | :--- | :--- | :--- | :--- | | **Revenues** | $570,222 | $592,349 | $1,125,405 | $1,167,644 | | **Income from operations** | $66,570 | $44,595 | $143,349 | $109,762 | | **Net income** | $62,840 | $43,306 | $135,581 | $103,291 | | **Diluted earnings per common share** | $3.53 | $2.06 | $7.45 | $4.81 | | **Dividends declared per common share** | $0.45 | $0.40 | $0.90 | $0.80 | [Condensed Consolidated Balance Sheets](index=7&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of June 30, 2019, total assets remained stable compared to December 31, 2018, while total liabilities saw a slight increase and stockholders' equity decreased slightly, primarily due to treasury stock repurchases offsetting retained earnings growth Balance Sheet Highlights (in thousands) | Metric | June 30, 2019 (Unaudited) | December 31, 2018 | | :--- | :--- | :--- | | **Total current assets** | $840,693 | $878,783 | | **Total assets** | $1,889,530 | $1,887,060 | | **Total current liabilities** | $314,544 | $329,335 | | **Long-term debt** | $295,263 | $300,186 | | **Total liabilities** | $1,191,580 | $1,182,239 | | **Total stockholders' equity** | $697,950 | $704,821 | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the six months ended June 30, 2019, cash provided by operating activities increased significantly, while cash used in investing activities increased due to higher capital expenditures, and cash used in financing activities rose from increased treasury stock purchases Cash Flow Summary for Six Months Ended June 30 (in thousands) | Activity | 2019 | 2018 | | :--- | :--- | :--- | | **Cash provided by operating activities** | $225,906 | $144,996 | | **Cash used in investing activities** | ($89,693) | ($35,326) | | **Cash used in financing activities** | ($168,721) | ($141,682) | | **Decrease in cash and cash equivalents** | ($32,508) | ($32,012) | | **Cash and cash equivalents, end of period** | $232,429 | $241,590 | [Notes to Condensed Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes provide detailed explanations of accounting policies and financial statement line items, including the definitive agreement for a joint venture with Peabody Energy, debt and financing arrangements, segment performance data, revenue disaggregation, and derivative instruments - On June 18, 2019, Arch entered into a definitive agreement with Peabody Energy Corporation to form a joint venture combining their Powder River Basin and Colorado mining operations. Arch will hold a **33.5%** economic interest, and Peabody will hold **66.5%**[25](index=25&type=chunk) - The formation of the joint venture is subject to regulatory approvals, including under the Hart-Scott-Rodino Act, and does not require stockholder approval from either company[26](index=26&type=chunk) - The company's total debt as of June 30, 2019, was approximately **$308.3 million**, primarily consisting of a term loan due in 2024[56](index=56&type=chunk) - The Metallurgical (MET) segment was the largest contributor to Adjusted EBITDA for the six months ended June 30, 2019, with **$193.5 million**, followed by the Powder River Basin (PRB) segment with **$35.3 million**[102](index=102&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=33&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) The company's performance is discussed, highlighting that strong metallurgical coal markets in Q2 2019 were offset by adversity in thermal coal markets due to rail disruptions and low natural gas prices, alongside the agreement with Peabody to form a joint venture and continued capital return programs [Results of Operations](index=35&type=section&id=Results%20of%20Operations) For Q2 2019, revenues decreased by **3.7%** YoY to **$570.2 million**, while tons sold fell **8.6%**, driven by lower volumes in the Powder River Basin and Other Thermal segments, though operating income improved due to lower cost of sales and a significant gain on coal derivatives Coal Sales Comparison | Period | 2019 Coal Sales | 2018 Coal Sales | Change | 2019 Tons Sold | 2018 Tons Sold | Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | **Q2** | $570.2M | $592.3M | ($22.1M) | 21.0M | 23.0M | (2.0M) | | **H1** | $1,125.4M | $1,167.6M | ($42.2M) | 41.7M | 46.6M | (4.9M) | - Cost of sales for Q2 2019 decreased by **$23.3 million** (**4.9%**) YoY, mainly due to lower purchased coal costs, transportation costs, and a larger build in coal inventories[119](index=119&type=chunk) - A significant positive impact on operating income came from the change in fair value of coal derivatives, which contributed an **$8.4 million** gain in Q2 2019 versus a **$15.1 million** loss in Q2 2018, a favorable swing of **$23.5 million**[119](index=119&type=chunk)[123](index=123&type=chunk) - The company recorded a **$4.3 million** loss related to contingent workers' compensation liabilities from the bankruptcy of Revelation Energy LLC, to whom it had previously sold Lone Mountain Processing, LLC[125](index=125&type=chunk)[136](index=136&type=chunk) [Operational Performance](index=39&type=section&id=Operational%20Performance) In Q2 2019, the Metallurgical segment's Adjusted EBITDA grew to **$101.9 million** due to a **10.7%** increase in cash margin per ton, while the Powder River Basin and Other Thermal segments saw declines in Adjusted EBITDA from lower volumes and higher costs, exacerbated by rail disruptions Segment Performance per Ton Sold (Three Months Ended June 30) | Segment | Metric | 2019 | 2018 | Variance | | :--- | :--- | :--- | :--- | :--- | | **Powder River Basin** | Cash margin per ton | $0.79 | $1.40 | ($0.61) | | | Adjusted EBITDA (in thousands) | $14,696 | $26,491 | ($11,795) | | **Metallurgical** | Cash margin per ton | $53.80 | $43.05 | $10.75 | | | Adjusted EBITDA (in thousands) | $101,936 | $86,657 | $15,279 | | **Other Thermal** | Cash margin per ton | $5.47 | $5.58 | ($0.11) | | | Adjusted EBITDA (in thousands) | $10,922 | $11,842 | ($920) | - Powder River Basin volume decline was exacerbated by flooding impacting rail performance, leading the company to reduce operations at its lower-quality Coal Creek mine due to market weakness[142](index=142&type=chunk) - The Metallurgical segment's performance was supported by strength in international metallurgical coal markets, leading to higher pricing[145](index=145&type=chunk) [Liquidity and Capital Resources](index=47&type=section&id=Liquidity%20and%20Capital%20Resources) As of June 30, 2019, the company had total liquidity of approximately **$508 million**, repurchased **$63.4 million** of stock, paid **$7.4 million** in dividends, and plans to maintain liquidity between **$400 million** and **$500 million** while continuing capital allocation initiatives - Total liquidity was approximately **$508 million** at June 30, 2019, including **$395 million** in cash, equivalents, and short-term investments[171](index=171&type=chunk) - The company repurchased **697,255 shares** for **$63.4 million** in Q2 2019 under its share repurchase program. Since inception, it has repurchased **8.8 million shares** for **$725.5 million**[163](index=163&type=chunk)[164](index=164&type=chunk) - A quarterly dividend of **$0.45 per share** was paid in June 2019, totaling approximately **$7.4 million**[165](index=165&type=chunk) - Cash from operations for the first six months of 2019 was **$225.9 million**, a significant increase from **$145.0 million** in the prior year period[173](index=173&type=chunk)[174](index=174&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=50&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is exposed to market risk from fluctuations in commodity prices, particularly for coal and diesel fuel, managing thermal coal price risk through long-term contracts and derivatives, while using Value at Risk (VaR) to monitor its trading portfolio and employing hedging strategies for anticipated diesel fuel consumption 2019 Sales Commitments (as of July 24, 2019) | Segment | Status | Tons (millions) | Price per ton | | :--- | :--- | :--- | :--- | | **Metallurgical** | Committed, Priced Coking | 3.7 | $129.32 (Blended) | | | Committed, Priced Thermal | 1.0 | $32.50 | | **Powder River Basin** | Committed, Priced | 69.1 | $12.10 | | **Other Thermal** | Committed, Priced | 7.1 | $39.53 | - For the six months ended June 30, 2019, the Value at Risk (VaR) for coal trading positions ranged from under **$0.1 million** to **$0.2 million**[183](index=183&type=chunk) - The company has hedged the majority of its expected diesel fuel purchases for the remainder of 2019 and approximately **22%** of its expected 2020 purchases using swaps and options[185](index=185&type=chunk) [Controls and Procedures](index=51&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures and concluded they were effective as of June 30, 2019, with no material changes made to internal controls over financial reporting during the quarter - Management concluded that the company's disclosure controls and procedures were effective as of June 30, 2019[186](index=186&type=chunk) - There were no changes in internal control over financial reporting during the quarter that have materially affected, or are reasonably likely to materially affect, these controls[186](index=186&type=chunk) Part II OTHER INFORMATION [Legal Proceedings](index=51&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various legal claims and lawsuits arising in the ordinary course of business, which management believes will not have a material adverse effect on the company's financial condition, results of operations, or liquidity - The company is party to various claims and legal actions from the ordinary course of business[187](index=187&type=chunk) - Management does not expect these proceedings to have a material adverse effect on the company's financials[187](index=187&type=chunk) [Risk Factors](index=52&type=section&id=Item%201A.%20Risk%20Factors) This section highlights risks associated with the pending joint venture with Peabody, including the possibility of non-completion, failure to realize expected synergies, significant transaction costs, diversion of management's attention, and general risks of joint operations - There is no assurance that the joint venture with Peabody will be completed, as it is subject to regulatory approvals and other closing conditions[188](index=188&type=chunk) - Risks of the pending transaction include failure to realize expected synergies, incurring significant transaction costs, and potential adverse impacts on relationships with employees, customers, and suppliers[189](index=189&type=chunk) - If the Implementation Agreement is terminated by Arch under certain circumstances, the company may be required to pay Peabody a termination fee of up to **$40.0 million**[189](index=189&type=chunk) - General risks of joint ventures include inconsistent goals between partners, inability to control strategic decisions, and potential for litigation between partners[191](index=191&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=53&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company continued its share repurchase program, with a total authorization of **$1.05 billion**, repurchasing **697,255 shares** for approximately **$63.4 million** in Q2 2019, leaving approximately **$324 million** authorized for future repurchases as of June 30, 2019 Share Repurchases for Three Months Ended June 30, 2019 | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | April 2019 | 311,019 | $91.63 | | May 2019 | 217,246 | $91.58 | | June 2019 | 168,990 | $88.76 | | **Total** | **697,255** | **$90.92** | - On April 17, 2019, the board authorized an additional **$300 million** for the share repurchase program, bringing the total authorization to **$1.05 billion**[193](index=193&type=chunk) - As of June 30, 2019, the remaining authorized amount for stock repurchases under the program is approximately **$324 million**[194](index=194&type=chunk) [Mine Safety Disclosures](index=53&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) Information regarding mine safety violations and other regulatory matters as required by the Dodd-Frank Wall Street Reform and Consumer Protection Act is provided in Exhibit 95 of this quarterly report - The statement concerning mine safety violations is included in Exhibit 95 to this Quarterly Report on Form 10-Q[195](index=195&type=chunk) [Exhibits](index=54&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including the Implementation Agreement with Peabody Energy, various credit and loan agreements, CEO and CFO certifications, and the Mine Safety Disclosure exhibit - Exhibit 2.3 is the Implementation Agreement with Peabody Energy Corporation dated June 18, 2019[198](index=198&type=chunk) - Exhibits 31.1 and 31.2 are the CEO and CFO certifications pursuant to Rule 13a-14(a)/15d-14(a)[200](index=200&type=chunk) - Exhibit 95 contains the Mine Safety Disclosure[200](index=200&type=chunk) [Signatures](index=58&type=section&id=Signatures) The report was signed by John T. Drexler, Senior Vice President and Chief Financial Officer, on behalf of the registrant on July 24, 2019 - The report was signed by John T. Drexler, Senior Vice President and Chief Financial Officer[202](index=202&type=chunk)