Arch Resources(US:ARCH)2023-04-26 16:00Part I Financial Statements Arch Resources, Inc.'s unaudited Q1 2023 financial statements show a net income of $198.1 million, a decrease from the prior year Condensed Consolidated Income Statement Highlights (Unaudited) | Metric | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :--- | :--- | :--- | | Revenues | $869,931 thousand | $867,936 thousand | | Income from Operations | $236,570 thousand | $284,343 thousand | | Net Income | $198,108 thousand | $271,872 thousand | | Diluted Earnings Per Share | $10.02 | $12.89 | Condensed Consolidated Balance Sheet Highlights (Unaudited) | Metric | March 31, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Total Current Assets | $862,916 thousand | $823,851 thousand | | Total Assets | $2,432,659 thousand | $2,433,108 thousand | | Total Current Liabilities | $334,538 thousand | $426,879 thousand | | Total Liabilities | $968,665 thousand | $1,067,528 thousand | | Total Stockholders' Equity | $1,463,994 thousand | $1,365,580 thousand | Condensed Consolidated Statement of Cash Flows Highlights (Unaudited) | Metric | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :--- | :--- | :--- | | Cash provided by operating activities | $126,121 thousand | $292,939 thousand | | Cash used in investing activities | ($29,570) thousand | ($9,566) thousand | | Cash used in financing activities | ($142,871) thousand | ($289,843) thousand | | Decrease in cash and cash equivalents | ($46,320) thousand | ($6,470) thousand | - During Q1 2023, the company repurchased all remaining Convertible Notes for a principal amount of $13.2 million, paying $58.4 million in cash, resulting in a net loss of $1.1 million from early debt retirement62 Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Q1 2023 financial results, highlighting strong metallurgical coal markets, stable revenues, and capital return initiatives - Market conditions in Q1 2023 featured strong global metallurgical markets, while thermal coal markets retreated from historical highs but remained above long-term averages, with global trade flows impacted by the Russian invasion of Ukraine and China's lifting of its ban on Australian coal110111112 Segment Operational Performance Comparison (Q1 2023 vs Q1 2022) | Segment | Metric | Q1 2023 | Q1 2022 | | :--- | :--- | :--- | :--- | | Metallurgical | Tons Sold (thousands) | 2,155 | 1,543 | | | Cash Margin per ton | $121.59 | $167.48 | | | Adjusted EBITDA (thousands) | $263,057 thousand | $259,003 thousand | | Thermal | Tons Sold (thousands) | 17,021 | 18,195 | | | Cash Margin per ton | $2.70 | $5.42 | | | Adjusted EBITDA (thousands) | $46,255 thousand | $100,500 thousand | - The company encountered adverse geologic conditions at its West Elk thermal coal operation, impacting expected volumes and quality, leading to force majeure notices to customers117 - In Q1 2023, the company paid $66.9 million in dividends and repurchased $20.8 million of common stock, with a subsequent dividend of $2.45 per share approved for Q2 2023149104 - A proposed revision by the OWCP could require the company to post additional collateral equal to 120% of its projected black lung liabilities, potentially reducing available liquidity150 Quantitative and Qualitative Disclosures About Market Risk The company manages commodity price risks for coal and diesel fuel through long-term agreements and derivative instruments 2023 Sales Commitments as of March 31, 2023 | Segment / Type | Tons (in millions) | Avg. Price per ton | | :--- | :--- | :--- | | Metallurgical - Priced | 3.6 | $199.67 (Blended) | | Metallurgical - Unpriced | 4.1 | - | | Thermal - Priced | 69.5 | $17.45 (Blended) | - To manage diesel fuel price risk, the company hedged approximately 18 million gallons for the remainder of 2023 using heating oil call options with an average strike price of $3.35 per gallon166 Controls and Procedures Management concluded that disclosure controls and procedures were effective as of March 31, 2023, with no material changes to internal controls - Management, including the CEO and CFO, concluded that disclosure controls and procedures were effective as of March 31, 2023167 - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, internal controls167 Part II Legal Proceedings The company is involved in various legal claims, but management anticipates no material adverse financial impact from their resolution - The company is party to various legal claims and lawsuits from the ordinary course of business, but management does not expect a material adverse impact from their resolution168 Risk Factors No material changes to the risk factors previously disclosed in the company's 2022 Annual Report on Form 10-K have been reported - No material changes to the 'Risk Factors' from the Annual Report on Form 10-K for the year ended December 31, 2022, have been reported169 Unregistered Sales of Equity Securities and Use of Proceeds Arch Resources repurchased 131,156 common shares for $19.0 million in Q1 2023, with $322 million remaining for future repurchases Common Stock Repurchases in Q1 2023 | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | January 2023 | 85,651 | $141.76 | | February 2023 | 45,505 | $146.44 | | March 2023 | 0 | - | | Total | 131,156 | $143.39 | - As of March 31, 2023, the remaining authorized amount for stock repurchases under the program is approximately $322 million172 Mine Safety Disclosures Mine safety violation disclosures, as required by the Dodd-Frank Act, are included in Exhibit 95 of this quarterly report - The statement concerning mine safety violations required by the Dodd-Frank Act is included as Exhibit 95 to this Form 10-Q173 Exhibits This section lists all exhibits filed with the Form 10-Q, including debt agreements, officer certifications, and financial statements - The report includes a comprehensive list of filed exhibits, such as debt agreements, amendments, and required CEO/CFO certifications174187 - Exhibit 95 contains the Mine Safety Disclosures, and Exhibit 101 contains the financial statements in Inline XBRL format187189