Arch Resources(US:ARCH)2023-10-25 16:00Revenue and Sales Performance - For the three months ended September 30, 2023, coal sales revenue was approximately $744.6 million, a decrease of $119.2 million or 13.8% compared to the same period in 2022[125]. - Coal sales for the first nine months of 2023 were approximately $2.37 billion, a decrease of $493.3 million or 17.2% compared to the same period in 2022[134]. - Tons sold during the same period decreased by approximately 1.1 million tons, or 5.4%, totaling 19.2 million tons[125]. - Tons sold in the first nine months of 2023 decreased to 57,066, down 2,850 tons or 4.8% from 59,916 tons in the same period of 2022[134]. - Metallurgical segment sold 2.2 million tons of coking coal in Q3 2023, up from 1.8 million tons in Q3 2022, representing a 22.2% increase[149]. - Thermal segment sold 16.8 million tons in Q3 2023, down from 18.4 million tons in Q3 2022, a decline of 8.4%[150]. Cost and Expenses - The cash cost per ton sold for the Metallurgical Segment was increased from $79-$89 to $88-$91, representing a cost increase of approximately $5.50 per ton sold[119]. - Cost of sales for Q3 2023 decreased by approximately $13.1 million, or 2.2%, compared to Q3 2022, primarily due to decreased transportation costs of approximately $29.0 million[126]. - Cost of sales for the first nine months of 2023 increased by approximately $16.7 million or 1.0% to $1.77 billion compared to $1.76 billion in 2022[136]. - Selling, general and administrative expenses decreased by approximately $6.2 million to $73.1 million in the first nine months of 2023, primarily due to decreased compensation costs[139]. - Cash cost per ton sold for the Thermal segment increased to $15.39 in Q3 2023 from $14.76 in Q3 2022, an increase of 4.3%[160]. Profitability and Financial Metrics - Adjusted EBITDA for the Metallurgical segment in Q3 2023 was $128.3 million, down from $155.2 million in Q3 2022, a decrease of 17.3%[153]. - Adjusted EBITDA for the nine months ended September 30, 2023, was $534,018, down from $1,003,906 in the same period of 2022[166]. - Cash margin per ton sold for the Metallurgical segment decreased to $54.70 in Q3 2023 from $81.07 in Q3 2022, a drop of 32.5%[160]. - The change in fair value of coal derivatives resulted in a net gain of $1.4 million in the first nine months of 2023, compared to a loss of $5.1 million in 2022[136]. - The company recorded a net loss of $1.1 million from early retirement of debt in the first nine months of 2023, compared to a loss of $14.1 million in 2022[142]. Tax and Non-Operating Expenses - Provision for income taxes in the first nine months of 2023 was $66.8 million, a decrease of $65.4 million compared to $1.4 million in 2022[143]. - Total nonoperating expenses for the first nine months of 2023 were $4.6 million, a decrease of $20.9 million compared to $16.3 million in 2022[141]. Cash Flow and Liquidity - Cash provided by operating activities decreased by approximately $561 million to $453.8 million for the nine months ended September 30, 2023, compared to $1,015.2 million in the prior year[181]. - Cash used in investing activities increased by approximately $29.4 million, primarily due to increased capital expenditures of approximately $26.5 million for maintenance capital[182]. - Cash used in financing activities declined by $372.7 million, with a decrease of approximately $355 million in overall debt payments and a reduction in dividends paid of approximately $80.8 million[182]. - The company ended Q3 2023 with cash, cash equivalents, and short-term investments totaling $213.5 million, and total liquidity of $337.2 million[169]. - The company expects to maintain minimum liquidity levels of approximately $250 million to $300 million, primarily held in cash[169]. Strategic Initiatives and Market Conditions - The ongoing Russian invasion of Ukraine continues to disrupt global coal trading patterns, affecting supply availability and pricing dynamics[114]. - The company continues to pursue strategic alternatives for its thermal assets, including potential divestiture, while shrinking its operational footprint in the Powder River Basin[122]. - Domestic thermal coal consumption was pressured by falling natural gas prices and a mild winter heating season, with firm sales commitments ensuring economic operation despite some volume deferrals[120]. - The company has committed to selling 1.8 million tons of North America priced coking coal at $182.50 per ton and 5.3 million tons of seaborne priced coking coal at $170.06 per ton for 2023[186]. - Proposed regulations under the Black Lung Benefits Act may require the company to post additional collateral, potentially impacting liquidity[171]. Capital Expenditures and Shareholder Returns - Capital expenditures for the first nine months of 2023 were approximately $121.0 million, with expectations to maintain spending at maintenance levels[169]. - A combined fixed and variable dividend payment of $1.13 per share will be made to stockholders of record as of November 30, 2023[172]. - The company repurchased shares for approximately $28.7 million during Q3 2023, bringing total repurchases to approximately $1.1 billion since the program's inception in 2017[174].