Arch Resources (ARCH) 28 Jul 202020 Q2 Earnings call transcript

Good day. And welcome to the Arch Resources Incorporated Second Quarter 2020 Earnings Conference Call. Today’s conference is being recorded. I would now like to turn the call over to Deck Slone, Senior Vice President of Strategy. Please go ahead.

St. from morning Good for today. thanks joining and us Louis

CDC As from to Arch’s the team and assure this call is conducting following here boardroom, spaced that are an we April you widely guidelines. but we want

Before future made statements this statements that Private during according financial and Litigation let performance, we Act. our considered call, Securities expected to forward-looking me statements begin, to you certain remind relating business including may Reform be the

posted section website archrsc.com. we also Matt you at Giljum, of of results me future the which the at President; measures our statements. different as except statements nature future the actual call, like address in whether we be our have on our the These matters our reports to different today’s Forward-looking degrees, statements not to morning in events that CEO this required in expressed uncertain. Lang, cause financial as result which by may our release, are those detail that our COO; We a new discuss of press and to by we non-GAAP annual can or described forward-looking law. be that a forward-looking are otherwise, find in end reconciliation the our remind their With I’d Paul and SEC, information, plan have of Drexler, may Investors with John a copy our to undertake uncertainties, materially than you do that quarterly we of CFO. more file to update and

be call remarks With your Paul. prepared over that, with we’ll I’ll begin will and take following the some questions. those to turn to We happy remarks,

good taking to and morning, I this Thanks, you us safe staying families your and Deck, morning. join on time I call appreciate you the are hope and everyone.

of gratitude unique to it us Arch a time extending by team dynamic, balance many this the and during the when time, their challenging personal tremendous to obligations. Let contributions me entire are begin my professional for finding

and has reality daily always. their front, to team, professionalism rigorous well the as fashion believe as executing employees strategic and our for management of people are impressive in professional pleased front, and they qualities their new objectives On the over display to have quickly adopting advancing the adjusted this fashion. Arch ourselves. the that same dedication. while safeguard More On behalf communities, thank arch help protocols health that three an tasks their we to the key the and resilience, on the new for workforce colleagues are entire want notable months. their their exemplary still, on as our the can employees Throughout the new embraced last organization, these in routines, senior of I these our efforts report I’m

the the operations of of bringing is capital with. first We yet deliberately we growth. up to our And the took completed volume the path built enhancing stemming over to This laying the our reduction by progress the million finally, furlough During the adjusting we quarter. another programs franchise company our of crystallized coal ongoing safety, environmental, for $XX we quickly exempt in this, despite levels. through our thermal billion corporate $XX and despite positioned at tax strategic we program each to future have this, believe thus highly Along the moved financial continuing addition expected delivering cost a liquidity at separation operational We the With XX the efforts objectives, the website second July office areas year in have momentum, stayed Arch voluntary We change we year. thermal the excellent in deferrals. preserve another its further another example on performance that billion racked where first from trimming customer name and to offering structure and liquidity Resources. aggressively levels, steps quarter, the how with creation a in we to match focused environments. enhanced robust that total last for lower by market launched South. many in and we and were the our conducted of an social we the of and highly that years improved governance. and challenging Included our offered this, in we metallurgical compared significantly volume macro from provides out a significant of performance, $XX Leer systematically where foundation we’re completed helping South, our our We for Xnd, new and Leer our advanced short, on second at coking we cost forward. our than and strong environment accounting anticipated company of coal lower progress our another with to continued quartile challenging quarter franchise achievements value the budget, address In started as position bond half to

coal volume costs aligned cost from that mines with strong continued a at and expectations. volumes higher thermal and our structure coking performance franchise expecting the better is We’re core

encouraged to recovery the now see been weeks. coal steps recent markets, in coking we’ve early to some towards Turning

China manufacturing June level, from pleased of some resembling be to indicating all At Although, globe, we’re level upswing the quarters the PMI removed around the Brazil, anything we’re on the expansion. certainly note normalcy. almost manufacturing that to several activity reporting appears macro U.S., and with

and moving June by by the early particularly now above is steel been percentage Moreover, at prices arguably X of which idle well, while the their a depressed, the in resumption forward alone, the steel critical with announced steadily has some of remain there global of than As steel steel inched capacity stands sector. restart complex, manufacturing In America North China, required process. the three recovery American average producers the activity up sector restarts in is severely the North recent furnace the for capacity. of automotive XX%, weeks. at as factor blast provide mills automotive are furthest along a XX% have supply developments which blast of furnaces, steel more points source high recent for of The the bottom. is quality majority since

which modest increase In experience fact, that the encouraging. in year-over-year projecting is will world steel steel China association is in XXXX, output a

their coal High-Vol trough, we inquiries and a A lower coal on coking is issued sales timeline is just are after coking On our the in North American are much rise. markets Chinese up prices average year-to-date. bounce usual the on positive days. positive the metric a assessed note, even a strongly have remain signs. very in view being there While less at are $XX currently some seaborne at buyers imports recent product is per remain ton a primary XXXX. in coal unsustainable, metric than $XXX which levels modest ton, RFPs Premium

supply offline the fairly side, coming production On quickly. is

same We which these believe global will from more current fit the cost one we coal higher than negative balance suggested of the cost coal description. that at at that Although, curve. coking least will North and of U.S. prices of coking more global in end is the has cuts producers the be the production half cuts high represents America, to that believe output market. come likely may of required all analyst Many cash the half

in capital In every operational spending cuts Australia, producing outages addition, including constraining in source, limited profile country, supply largest high we’re and where is outputs. seeing recent prices, other supply the weak years

thermal Arch challenging. power situation the XXXX. legacy remains at days million still to declined an more in meaningful the market U.S. Moving producers in demand thermal international preventing million Along the in decline the based tons high challenging, business, most U.S. is market intensely with are XXX of at this, following expects stockpiles nearly XXX from plants the in participating a by time XXXX, pricing all seaborne Making thermal supply. way. environment anemic of ton on U.S.

new down reality. I compete taken organization across market As Arch drive actions has to and noted, in aggressive costs this the

by remain significant of end with customers take economy believe compete high that benefit will quarter. the gas of people believe a to attributes and subsidized related put we to a to and as want the and Closing expansion the venture have scheduled the products, the in team solid savings the same the operational arguments of execution. ability Looking stakeholders, market global record FTC’s the world book attractive of Peabody on with including renewables. proven This the us deliver decision of low the customers, to a recovers to to employees. business in cost St. coal the have metallurgical mode. returns better of in block venture of Louis to cost to an the mix the through have hope the our confident coking these the preliminary hearing capitalize weather would right I to joint Commission quality we position employees August natural with place Moreover, attempt of joint weakness, supported XXth track assets, JV the strong and proposed testimony a I in are as including workforce, position to concluded from skilled thank process. ahead, and court Federal we attributes and our Trade and to period the us all Energy. injunction Friday, a Last we

unable Given regarding any questions to matter. the we’ll ongoing the litigation, answer be

With sharp excellence with greatly we portfolio, plan for performance generating road. ahead solid further enhance Drexler to have we capabilities forward, on the outlook. Moving cash maintain our Leer operational to John? South already operational protecting thoughts driving across turn and our on our the development, our call financial which forging I’ll footing John believe will the focus our and over down strong that,

Thanks, everyone. and morning, Paul, good

efforts stewardship their and a usual every safety, critical we the taking job precautions the echoing exceptional are about applaud current by Let healthy begin operational and Arch have pandemic Paul’s other comments extensive their and crisis. appreciate related of duties environmental employees performance the health embraced performance, colleagues global themselves, of execution. for their still at focus workplace outstanding We the while on the on and highest ongoing continued ensure me during level. doing their health including sharp to team’s of executing mine challenge an head area Arch

aggressively Moving respond and and enhancements to already every forward, turn. quickly distancing to on to and plan virus continue the at related new developments hygiene front protocols rigorous we implement our to to

$X to protocols million increased related results, spending products in by operating productivity related the on protocols by new hard additional to COVID-XX worked metallurgical reduced the and segment virus. operations. have our the have our thermal in incurred we a impact that safety $X million our we While total and We estimate have costs of minimize health on our of and

We become expect managing moving more moderate efficient change we as to at these these forward, costs protocols.

XXX,XXX Of now at customer would the sales strong the to I our the of momentum $XX.XX are than coking deferrals pleased impact franchise. direct -- expected not we volumes note, of quarter, costs that COVID-XX operations. tons per have If our costs our than despite for achieved core ton am $XX.XX report our ton per resulting during the lower during coal per of approx Turning particular from cost have to quarter, approximated ton. more quarter. we would been maintaining impacting operational

South in flagship Leer so up again focused per ton, underscoring with costs running pace the soon on as set Our further are XXs as low we and getting Leer companion its why possible. mine operation the

On the budget. Leer continue time we remain make on on and excellent and to progress front, South

way, second the guidance. production million the now longwall to-date to project expended to capital on in to the XX% of capital to total investment milestone the project Looked have in third course at $XXX bringing another keeps needed the one exciting South, we of total that expended million. well at the $XX quarter, During we of the projected quarter the us reach, That’s XXXX. midpoint on an complete at commence Leer

Arch. here to even current as forward in a environment this differentiator transformational Let drive me project with the that market we ability our for key view add and

capitalize market pushing ramping our are even that when that trough, to it a is mean degree market an when market believe forward thus positioning also we well could environment, strengthening greater now, longwall output We in to the the on turn us into comes. initial the up

that the that same should own to a fourth comment out operations. our and cash view of markets, with small quarter, these our B High-Vol thermal We market as let components during lead Beckley providing [ph] and briefly components direction products volumes its Mountain to continues markets, the to me aligns into generation. Mountain and and our are positive important Low-Vol in to have and meaningful these further on we this Laurel fee cost contribution Laurel Beckley we cash normalize appropriate in cost environment coal time, portfolio, which that and reserves competitive as of remains changing improvements turning in light. operations the to in we move structure. at progress but will is both right in coking mines At adjust necessary conditions. flexibility ways market round Before

now Let’s environment, our metallurgical the half. a we a schedule to solid Well, back this turn for is tricky and anticipate QX. quite segment nevertheless years for expectations forecasting shipping the in QX business obviously in

on more customers requested our XXX,XXX indicated, deferrals XXXX As expected than shipments. of tons

be the commitments that significant were to which in say successful approximately we consider accomplishment. to during pleased XXXX tons in layering a I I’m XXX,XXX incremental of quarter, However,

sought-after well support service. to and carefully a As our reputation relationships qualities, for testament logistical customer cultivated product excellent customer as and

to half to We the as requests as the increasing third inquiries year, quarter. also to the the by in inbound ongoing from well continue encouraged volumes be regarding fourth accelerate quarter of volumes back

versus continue half. coal that inquiries were the We the the As see shipments on the of in tons metallurgical year from the back to increased improvement be first in hopeful million million confidence to that level currently see half position a committed met ship we are feel. tons would would X.X year. more position alone, continue book, of shipped our we half of From gain the to we the expecting in, we we the X.X back in

at RFP and into ready we the the shifting remain we respond positioned to capitalize believe to would markets to While is that are signs developments, we seeing some such cautious and all improvement of American at extremely the full also moving present. note market on forward. are North in gear strengthening I processes metallurgical

we As to process engaging a to optimize XXXX seek are how order always, in that as we determine shareholders. our in careful for best and our to in volumes value strategic manner direct

Turning now to our legacy segments. thermal

tough was Powder was thermal the demand. margins substantially River as both significantly quarter clearly gas face The declined historically second reduced negative of and other Basin natural segments. The cash power volumes in in weak prices the upshot and

volume we to the As cost discussed, to levels. reality, structure new to the overhauling however, mobilize quickly our adjust with lower align

to Arch that positions. at roughly thermal XXX indicated, our we and thermal its the voluntary positions approximately all has fleets production of needed XX prepared The combined conducted past plans reduced operations, with continue whatever to now our certain headcount Paul As workforce by corporate adjustments of reorient approximately XX% forward equipment are course better months reduced separation XXX operations eliminated All told, and or to allowed us over to are our the going align including to has thermal we compete. idling sales. make significantly

second hard into year I segment, with of while XX pushback, levels say shipped that second predict, are million to the say half tons have recent the moves, are scenarios. currently of -- PRB an should shipments in excess year. volume a of in the first volume will a significantly will modest risk range that million actual commitments of tons currently that the XX As And in we of the even our our result translate we of we in half performance half we those improved expect across I

extensive year’s not performance stemming health way. our environmental exceptional mine dimmed efforts the that particular, reiterate risks me and in single any let the on stewardship highlight precisely closing, violation I aggregate not in the approximately recorded a safety virus operations exceedance across one from XXX,XXX to in quality have tested. and Before half. our want to parameters environmental In than subsidiary smack year, over more had focus manage point, first or At during portfolio our they water the entire had midway the our

We With to some over are continuous disciplined in further leadership performance approach are progress and areas improvement. will proud immensely Matt? turn our call to on these financial to Giljum comments of our highly now of additional performance. committed I Matt the critical a through for that, driving

a my were in cash business. the reduced of lower shortfall discussion driver thermal in volumes with by begin Good of losses primary The which John was in volumes the metallurgical our impacted second brief the quarter shipment morning, the remarks the results, segment discussed, margins John. significantly everyone. as Thanks, segments. I’ll across and

payroll proposed over $X deferred Additionally, quarter plans a flow venture. $X we from from although the disclosed insurance not million related impacting to the the operating and benefits land cash tax million EBITDA, federal of receipts than realizing included related operations perspective, of thermal to more costs the recoveries, settlement. the to taxes able and were charges previously separation million offset the From losses, with joint refunds, voluntary of $XX

on first As March $XXX cash $XX are the we’ll funding XXXX. quarter the at the approximately below quarter manner in while has Authority, and maintaining access a place equipment facilitating after competitive the approximately end, at the were at our over result, line believe million we $XXX with Virginia for financed $XX to-date offering. a to operations very rates Justice Economic the able Shortly we capital as liquidity over XXst. Leer another were for and $XXX continue for testament million. and to we of Governor Leer we funds million of this with we and with South, ability South quarter South in We remainder thank offering. million a EDA the source development, and and with end, Leer and solid in remaining Working be West a sheet. liquidity significant project. been the that supporting tax of expected development receive to time made, to our of in over transaction qualifying expenditures closing with capital proceeds raised put largely mine cash Combined had of the expenditures able the million X%. $XX very financing, the our our balance executed want an We now at of levels with rate quality receive exempt advantage a XXXX, to successful and of Arch Development qualify million average have bond certain At of We to

and XXXX, both at look cash we half levels improvement we from remainder the of earnings flows. currently As first expect in

us from higher improve tax the should working the to operating the prudent evaluate With the metallurgical SG&A from to financing. exempt maintaining that receipts thermal addition adequate alternatives continue we first $XX -- $XX land benefit Our to continue the to in the for Leer million we to These to and from to sufficient that the to deferrals settlement, flows, tax capital sell are bonds, With proceeds said, lower think costs. segments respect up environment, performance benefit built and we ongoing over an results half improvement in of the volumes financial liquidity. an segment, as federal the development the additional as it while cash allow liquids well South of cash inventory as expect and additional given in expected from macro is million uncertainties payroll year. in improvements be in

million recap cash before any financing course over like and questions, Arch’s conditions XXXX. impact and than period. the the declined first of half challenging the It is the short-term no investments of to by were $XXX secret briefly more of that taking Before industry I’d

call South, in period, metallurgical other positive Operator, to we the to earned severance we have joint will proposed in you. and questions. in less investments Leer through segment further absent the In up. cash With our to in the that, Leer to ready various that investments increased costs I made strategic venture programs large However, cash the part these the back related words, margins South the over non-recurring that when than would items, of in will starts are perspective, that put take be amount we turn only to due undertook. the is margins that the enhanced total

come will question first Clarksons. Our from with Instructions] [Operator Schier you. Scott Thank

Good morning, everyone.

Good morning, Scott.

start seeing on could it are Good morning, Leer coming walk CapEx? you on everyone. through expenditures I or more lower guidance, savings South CapEx us cuts sustaining where could those from, is timing the mainly If on

Scott. Hey, Drexler. This John is

million million guidance, in As the the in from that the we CapEx reduced achieved $XX quarter. previous our we was discussed the in we first addition that quarter by to $XX

a So, on our we on utilizing of been is CapEx, million of met expectations. guidance just side some thermal $XX portfolio, we’ve some that remove, is given maintenance with element I’ll we of very essentially at sit fleet the we out of once be provide revised CapEx, taken from $XX our we’re for expectations, the pushed million. is while a time across right of maintenance that XX% how there deferral to down And here CapEx volume these long and further maintenance at lot directed XX% CapEx what now million some able really at the Board at of period the our again, to think the we’ve may look we where volume directed equipment really that $XX lower portfolio. color look of

be forward, has as we’ve So, the operations. to on the met continued moved focus

and we’ve in the the ahead. steps seen think the opportunity. that’s a indicated we’ve in remarks lot release, We Leer we’ve where clearly, portfolio in CapEx. across and the the benefit taken we’re think an South thermal our reduction moving prepared significant excellent I in the As perspective, From of it’s

CapEx Leer be since about operation, over the of that the $XXX South. of And spent we’ve forward continue identified XXXX so at with to beginning the we move to the year, which course million

guess, that kind mentioned your I of specifically, this, are domestic third the a provide to Okay. see second And potential us? or all appreciate of expectations I experienced that and color. deferrals tons in color quarter, you demands very helpful. XXX,XXX come so quarter. the deferrals what more Switching beginning the to are some Could seaborne deferrals is around markets? behind that little where came from, you bit that of the a the back you more any in little gears That’s you bit around

Yeah.

coming the of So, what’s world Scott, the as a I we on think, volatility markets the engaged And needed out playing itself and clearly, global We with with knew we’re we then customers we have. first of indicated any we and around where quarter the requests and period course for over tremendous the happening to through some would we the our to pandemic. see quarter, in call pressure responding deferrals.

think over seen course we’ve total I indicated the of XXXX, we’ve to of tune the deferrals in about XXX,XXX tons.

While the I quarter I details, think, does include I deferrals. for contracted thing, indicated won’t the it into One we as these and get want on here international volumes. call, reiterate both domestic well, first are to

realize And that to so of value for these over the going deferrals. fully we full time requests expect we’re

themselves, the proud over Hopefully play creates and in out deferrals those despite We’re quarter us things deferrals. saw most is, of has markets earlier and one the with to think situation came, what we’ve the a a quarter, came in work going later the been way. that our lot for I’m I’ll of a inquiries. customer, the especially these of that of relation to the with to the we of course and quarter we customers most In accomplish the win-win both in able that that say,

from for the importantly, probably of saw we new indicated, into more volumes. quarter. third quarter acceleration shipments inquiries saw requests the we fourth we for But As actually

new don’t continue by confidence like and quarter in the pricing but during of encouraged move the lot we a are offset we forward. to we we tons the XXX,XXX referrals out as that place we be marketplace. that’s there, going inquiries think to essentially we and of to the give We able that’s us getting what were see commitments we that so saw And

testament it’s We and in to when very requested. produce of a to customer’s view is markets deliver a to time and product ability quality on our our also think Arch’s ability challenged

with encouraged we’re see. what So, we

little these John entirely a and I of a I same maybe just well were what at surprising, in as comfort a inquiries of new a we’re commitments. thought. we’re I more not back we stand now, the the Scott, summarizing, QX the deferrals think, think, at think, little bit time, kind broader. than of did look as hearing Look, job But I lot in that taking great

customers get it grip sides. I the soon clearly to good rebalance think way our their has try been think, but they’re market. of it’s trying and what look, a some call I this taking really And to are bottom, and own too

Okay. That’s all you. great Thank commentary.

do that’ll for taking forward. Thanks of and my think for I me. questions it going best luck

Scott. you, Thank

Thanks, Scott.

Thank you.

Our next David Capital come with will BMO Gagliano from question Markets.

Hi.

Good morning, David.

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

into of quarter. be the unit $XX the go $XX to side closer all, as expect the those I’m reason met cost of cost the impacting, First on any this Obviously, to but ton to volumes second we guessing, the cost, below not half?

a that’s David, So, good question.

and our I able to been the think we’ve respond operations how been manage costs. of to encouraged control despite challenges side on volume have the

we of delivered proud the that the results during quarter. We’re

having things things that all prepared have across that other operations. impacts to as outlays of noted remarks doing checks in cost with million about also did from our controls dollar We such productivity $X the we and just for the temperature supplies, and pure guard maintain we’re COVID-related cleaning

kind within we volume the should of able the higher a the with that of kind As keep environment do the the to we lot of to as going we was expect costs range that kind the be a going we forward getting of maintain that below move forward. there. around managing a in year, costs be committed volume. able think back to wherever we volume indicated, Can rhythm But indicated kind of would year we there’s shipment $XX be would the perspective of COVID of more is at, and and will put us, beginning last into a COVID from I come at half the out levels I improved in play predict with call that we back think half. there anticipating ton, I on moderating of that in think, we the And

half good back structure to have a continues lot we’re So going the in going we quarter-to-quarter. we’re there’ll a to continue that the of very rest to assured, to that -- be cost out year. think But play report

key then through Okay. I million And is helpful. the total slightly some South walk the XQ expenditures, $XXX us this That’s to I risks execution in since South obviously, you want Leer timing and perspective, to next be spent. million are stage ‘XX? also Leer main, to from project, million of Thanks. longer $XXX $XXX just and what by of at Can big just of Thanks. terms with term, you think, an the the getting where associated the guess, it’s

Yeah.

Dave, incredibly Leer to on see ongoing been So, weeks there It’s with South major to development it’s with related with the we be achieved. Many the already we I remain a was the have ago on project think, there. milestones few impressed and what of encouraged I continued time, budget. development. the

on We’re coal.

We are actually developing headgate first both on panel tailgate. miners with longwall the and the continuous the longwall --

piece time. in there all first forward, through most shields, seem think, is, now a line. process we of the we’re obviously, I the the shipment obtaining as look as of well. significant now Those The equipment beginning the longwall, of the pan process on of to is and be that the and quarter, between lot the

proud have we’ve team period things the operations, and very our we’re that that at that things major with. for on we’ve of on the complex it deliver we belting focused. other The always operating and that are we’re that the forward encouraged to those successful developing be South. indicating infrastructure the hitting. to I’m we’re We’ll is of move team leveraging the conclusion Leer miles we to project see at and upgrades type remain and the milestones out to to from In we’re the the Leer some why to with South hard. There’s same experience deliver some continue ongoing before One any concerned to are going and major in all of very a working continue and some we’re we we’re But and anywhere, now that thing you’re push we’re but of that project, A about very plant. and those replicate. as healthy it. going So confidence deliver it complex, occur lot experience said Leer that of that going in that is we’ll very of to forward such to continue past behind some XX building falling what performance and here the away that gained budget that schedule time of

we good So it. about feel

and the two I of are the the QX. David, yeah, Those have longwall headgate, a news bad and the another those mile, are them simple we This of of expect just just development the equipment. in the there schedule are big the plant it view guess, is, all on but things moving the and delivery Yeah. slope it’s tailgate is the out the on kind long that panels. tie and and first good well. over is panel and Then for the are we’re news, to

big all spending down to shifts obviously, $XX line then CapEx my down the lines last And up. mentioned, sustaining And you is and just helpful. just coming way Okay. million. the cash as ramp then question, obviously, in the That’s

sustaining we any that As expenditures peer about XXXX, million that is there $XX thinking above should meaningful over and be CapEx into number? we

CapEx, No. we roughly basic forward David, maintenance really on the running spending South we’re a back of down year, has big $XX-ish that been horizon. the on next Leer year. which there million down in wind half nothing the there is From -- to as

Okay. That’s helpful. Thanks very much.

David. you, Thank

you. Thank

Benchmark come with Mark will question from The Company. next Levin Our

Great. Yeah.

Good morning, Mark.

set Great. call. questions. you of Great. for would couple look assuming just just What a very of Any equal, QX. you all pricing. Thank met met flat either A to morning. tell? we When in my QX else higher or QX and you. One to reason realizations the than why out price kind were much what versus Thanks be QX, kind Yeah. QX? they Good on if taking materially can lower

to an QX, So, was work achieved coking I $XXX, coal off believe. Mark, average hard that’s which -- going in mean, what I price A High-Vol QX, yeah, what I at average was think, $XXX price that we and if

If holding international. don’t significant difference once to a you’re pricing flat you shipping what if think meaningful you domestic mix should of it’ll hold But versus and those expect again, flat. back come I we’re

the won’t Although, pricing flat. be

as to we forward. expect manage volatility moving we’ll need here manage continue and We to

you. this Okay. Great. for And one I John, then the is second question, think,

the guys PRB, is half. a out negative the there in there. lot you in obviously, have been generating So, margins headwinds Clearly, of first

out guys the shipment the positive is first What in the confidence level year? the going second than in least, of at hopefully, schedule or your the the generate to mentioned, You that half PRB cash materially being are half of second better be you better will half. materially

way, do. it a things We’ve lower market of So, go were look We the very at have and to of to which discussion, how Mark, in equipment I run did. a proud Paul our and our lot I -- done had and to in we fleet rate tough significant the in what headcount respond optimize and to best had to very indicated had realign that we as thermal operations we’re environment a environment. we there

would at marketplace, As our the guidance XX realign us PRB. result a you XX in the challenges a currently XXXX, of that pandemic footprint, significantly showing of plus had had the coming seen, at commitments And million we into we’ve remember, combine out and to much have with we’ve different if as stepped million tons to then and global tons. that what original

of ship that half of the we the So tons XX commitment year. the those if the tons shipped us XX with of do you of just million million the million half tons to first math, in XX year in leaves back

improvement ship that I comfort give our see think, results. to are the And becomes, significant the us to Now that, ability we the our ready we’ve what we operation that does realigned it should confidence production million seeing question and -- be in level a from then tons. and from standpoint for our XX

I to pushback volumes. the opportunities discussions have do as us I situation, we’ll in whether X on there our been the to even it’s both million X say, for a if those that honor the probably the customers And pushback are secret, that. thermal million in discussions we tons the and And deferrals. win-win met I met side customer realize commitments, those we no pursue side discussion, contracted around thermal expect side, or would think We on benefit have see. current and on to it’s tons there albeit indicated of are

did deferral should first we of saw it the see ‘XX, if the half XX from even that in ‘XX are higher shipping million or some the we’re we into indicate still that So levels pushback year. of than tons meaningfully some volumes

add can’t bottomline that, react do first do, in to and to we we’re happened I’d to the is, thing only the the what’s Mark, sustain. the is going year we have going we’re of because half

make to So, more try something we’re bring and the calls back this positive. and going to hard

And the Got question least of the guess, perspective? thermal, is applicable for cash second it. Got same at it. a the like, of other from that business Got that it. I can half breakeven year sort a in

Yeah. Same they PRB. it principles discussed we what as do apply there the and in

hard And steps the our We made working with that as last all some least work resolved. challenged the to cash in the in quarter course call operation make is operations Midwest, we’ve the pick having with expected with point primary in year. of issues we been its at that we’ve its over some aligning we’re very demand in the so over production We’re we’ve generate seen generating the sure hard big to them some to were customer operations at so course have we’re sure where quarter. there. direction and Midwest, the further a hot at the of those up Those getting Viper indicated seeing fleet. summer make thermal of we’ll our demand had But

you and a domestic want in guys job final either makes don’t the XXXX. put negotiations met just great did on to in in sense. You Okay. I difficult That Then spot? are you question a my market, I contracting know

market year. to How met that early export, domestic about point, this going think, the your this that let’s process gave a obviously, state, you aren’t you I XX% mean, round you So were makes a Obviously, guess market. the ended at wedded and if will doing how on and much out? negotiations, question I percentage, you would change you say, near of get are want? guys I companies -- what’s of the that bit XX% the is the top the expect well? or of is as met this quite shake you being it thought domestic at pricing how maybe that into this, different steel you if up don’t I did think, market the

My I Mark, similar we a to seaborne as in XX%. see assumption about domestic to most XXXX. But we start think I’ll if do or at XX% Drexler add and head anything. that, the did and which year, this about last as going is wants year is we’re along think fixed percentage I the to on there’s where exposure we’ll bouncing is is, market. I and up reason it, And business on price probably bottom market because more that’s index North the simple, the pretty American the our limit upside if think, we’re of ended the we

bit. XX% So, a could going around down little look, I XX%, see we’re it or ideally, but somewhere John? think I

No. Yeah.

volumes the are of commentary the with one to customers, going think, at and be metallurgical have coal. and dynamic into a the with whether look insert of you to another can international market. these agree we on that’s producers Paul, underwater the productions the whole for in comfort this it’s now that consumers great structure to. I give I is that. other discussions half able I we’re domestic it’s at domestic to of we’re to that considerations that’s for in the where right or U.S. And And to deliver and potentially expectation prices, Arch Mark, a benefits is, compete any that where cost committing think, thing of

an So, interesting now. setup right it’s

value we there. doing make that to everything we’re going see to we we’re out sure that indicated, the Paul As maximize can

our of different Given to it we a evaluate move as does cost ability structure, lot low things the here us give forward.

very Thanks the Appreciate Great. much. time.

you, Mark. Thank

you. Thank

Dudas question with will Vertical come next Michael Research. Our from

everyone. morning, to Good I good everybody. want morning, --

Hey, Michael.

picked you deferrals. South producers, the that loss I Maybe half some Because deliver six, follow-up and of to for some Paul, last John up of next your the and relative much that Arch’s of underwater on business the Leer maybe new are you of as will Yeah. or the the how coal to your the place ability them to capitalization competitors comments, to competitors? ability in fact go the Yeah, XX, their starting something long-term the that domestically? think the towards to have you’ve competitors this difficult ahead internationally plants of that structured that you to able and in been as hold supplier, attract your build you’re Is more hopefully XXXX looking for to this market more got in much to you’ll such and pricing in trying that as ‘XX, your want -- up when positioning significant capital, that to negotiate picks lack shape. a towards of environment capital domestic

Yeah.

as going type we markets and set we’re back with of dynamic So, commitments That’s very a right ‘XX South going And what going structure, see that global quality it’s we what the see and for now markets half the to of especially. Leer kind pretty products Michael, the what to of clearly, be as cognizant very up feel for we us. into to overall in analysis met a we’re Leer and ‘XX improved. the suite steel indicated, do perspective, types a environment the the for careful improve, cost in South the we is us. of the opportunity economy through and of High-Vol ‘XX, from in ‘XX But market move with we’ll back remainder making especially. A forward It’s to of of we’re of our

that underwater and the is at playing supply of that you saying and fact issue. there maybe cash as John out the Clearly, for is certainly an see a But production all negative is stack do. significant is more liquidity and current a those XX% I’m mentioned more prices. these Michael, shakeout at of sure XX% were are global we becoming you U.S. now who significant all prices. we see right say underwater certainly

could So do that that think to it South. market South Leer space Not create pace months the XX going share seeing out the take long less. pressure. it rationalization, to continued be, million and think to or it unsustainable In we’re the next compete is the which going Leer tasks. quite We of and the of do supply the market frankly, if does easily over meaningful course come be feel see at but we shakeout. of into tons needs We run there’s for XX come can’t at

going us. something So, we cost less our absolutely sort believe structure out, given as And John Leer create South of and comes of Leer South next to or for volumes full a year effectively year profitably $XX a online. of that’s opportunities in structure pointed to that We finance then get South year that our and half us of place maybe cost going and as XXXX, Leer forward. certainly positions

at look curve disappointment market I in look. in effectively, terms run the were of they’ve more understood. been all and what they And some end the has interesting profile be those be was of great Mozambique, not been high but to Yeah. But are of been think and I are of you in they’ve which number of I there’s position mine one of too we’re interesting and -- saviors thought clearly, -- U.S. understand -- that’s assets developments much a is and into read the to cost all There whether on think Michael, it, what’s on very what’s even And supposed rather that around, both a well cost try the day mines as out out Australia. is, the quality but the we trying -- clearly, the going getting been failed. issues think longer future I at a and really that’s little volume, turned to Queensland. tooth to you

liquidity, doing. Arch’s it your And as bit finally, et certainly all, for follow-up at And be relative not cetera. currencies my second helping has is looking more just alternatives half would Yeah. user to helping should comments dollar be been the little regarding prepared domestic a

out be? things complete to here and could the your get thought just would and Thank understanding forth better from you from a have table be are certain relative fell I of and some Leer other numbers cash the the of of liquidity on where I sense that Leer you market maybe to where if things It process? get good to then very build viewpoint that there’s on the want your your outs? with you. more better coverage, Given put got that really where you’ve can worse generation process want the just a flow really and And appears little alternatives that South assume to development?

year taken alternatives. a happen of to go we year, And get sit good and as anything as expectations the like liquidity of sit this Matt. at thinking we year we into improvements of that we’re to to flows, finish as planning for Michael, place cash and the agree South as opportunity line half today, of the year about if very rest having we obviously, see and frankly, more still, year, this in next looks of we here is some had on would would today. here wish probably the to we scenarios look books profitability next the this all capital of wise. really But in a about half sorts kind we we here and first And first talked getting of like feel with Leer

the company really get we’re of the both cash we in is to dramatically profile those talked to as worst for the get so various that what potential at able So and The of and we’ve that scenarios that’s for terms prepared we make spending. understand trying Leer there. the of about kind South of earnings line changes scenarios looking when with the to finish sure needs we’re the we’re the are planning that even

we everything of there are we So what might scenarios to regardless sure can face. we to get the trying make do that

Thanks, gentlemen. proven. That’s

Thanks, Michael.

Thanks, Michael.

you. Thank

Pipes question come B. Riley with from last FBR. will Our Lucas

everyone. morning, Good Hi.

morning, Lucas. Good

Lucas. Hi,

Hey. Good morning, everyone.

beyond, segment? looking out kind tolerance vice shouldering in we’ll think and PRB committed agree year in and obviously, and But the losses will times. out this So the regards that what’s met better for out I more further of continued the appreciated with into the next earlier other come half to and the I joint looking should of what And for we versa. comments kind of that Kind build thermal second of year see venture. all substitute not of the

you So Thank losses continued did kind event go that in of you in that think how through about not do thermal there you. and segment? may the

Lucas, is Paul. this

markets. executing been it’s towards I think, one been metallurgical strategy on going clearly, we’ve we XX early. pivoting that’s where years. adopted on I course And right we’re been a for and Frankly, think, the

great assets some built we’ve assembled on metallurgical we’ve it, at look you them. side As or the

these the lose surely a to we’ve been way of to closures creating frankly, And quality, to we I going combined look gas drop said where at subsidies shrink to assets, absent is best And continue it some going of of simply But operations. I as and of have to necessary. up out If not I The think are forward, is, that, the and mines JV, can’t operations this We regardless steps of lower we’ve down would cost to what one with -- continue think to the way the whatever is course. compete assets. value going and with will step back we’re down cash. high I think, cost value to have come happens phase going and and we’re low around JV the the of path consider with can’t see us we’re operations I it production better creating renewables. and natural the the more continue frame

in And than I we’re think that’s facing. what think different no it’s we just it, if the you reality did what of about XXXX.

the recall, the revised going about and cut we mine million operation. forward. smaller Thunder, cost done a is, are out Those plan $XXX looking to at, things you had and If we revised guess type it’s sequence, much of be but of my a going Black the ARO at we’re footprint of

A, And coal met I reduction helpful. then just the have then, kind a actually want number sense, the and U.S. of versus percentage this terms follow has Paul. of appreciate those taken U.S., been And to from been questions temporary? of on what you to you. I very B, Thank cuts permanent that, market. in a amount have context of one. offline up of here what output, That’s

that. with Deck. I’ll Yeah. start is Lucas, this

XX coking U.S. had we XX the XX Last So produced XX the coal, a watermark recently high tons year. tons, million scenario million could counted. this tons around of mid-XXs, We certainly way XXXX see as here to fall where XXXX year we tons. that the all into million million fallen

see we supply So, that turned in continuing. because before of even sort production X offline, X down and million U.S. million tons frankly, of virus the seen is XXXX. struck, come tons Quite coming we’d the market about the X, offline simply July already to

July prices $XXX. around X, were High-Vol So XXXX A still

producers. That’s are in that see moments an lock of concerns we’ll who But, additional here will them a be There in shakeout period looking think are as sort to going we decline possible obviously, the for of the are liquidity shutdown. simply the coming American they can of of as the lot in that producers, producers some we accelerate, business see market. tons might supply on came earnest a real months, really certainly, that X there thereafter think North out where holding producers keep the could and post started So million have that if and to to eight settlements. profitable. of continuing, much at just It’s we

first mean, at XXXX, right the second was XXXX. I of about So you relative now, to down quarter quarter look of production if XX%

reduction strong to that quite that decline expect and XX% the on year -- for quarter frankly the a whole of certainly be sort XX% relative pricing. full last higher. see We So to could

simply, say, the just we’re for and simply to will no There one cashier liquidity So lose hope market cuts to to going turn. continue. has indefinitely the who is

expectation. that’s So our

is Any versus permanent sense temporary? on what

Yeah.

permanent. on aren’t to we gets hot keep that we’ll So of wasn’t these in thinking, gets Once idle minds those the producers equipment again, spend a some to first expect what And place. to would really there it off. back. hard operations just really very power going It’s be be to shut are asset an bring shutdown, competitive pull, lot cash who

certain So higher that at once -- might price, back shutdown on long you to a a as down, you online. shut hold as you bring can need for once they but price you much production

if $XX tons, three took the if you’ll watermark high was about recall Lucas, the years so And last it mean, million that of I go you to to us U.S. for get back million cycle sort of defying turned even XX there soon that down. as and we as were back to gravity pricing almost million came market strong instantaneously XX the because clearly tons, off production the

take production vast back go that’s to of So, characterize but take into say shutting time. It’s It’s capital. we going change reserves would in a and to It’s permanent. the as not in it’s the production, take this majority those meaningful that being some going going market that’s to of as to couldn’t persistent. one

of testament idled to fields these and a I operations indicate look and that think to sold equipment move that’s coal that’s some closed do things. I’d see to being Eastern Lucas, we the Anecdotally, in having the Yeah.

I as points production the we’re So, is just highlighting further the in seeing think, challenges Deck to portfolio. across it that

appreciate and color. luck. best the Thank of I you

Thanks, Lucas.

that’s questions time we Thank time, you. my all And for at have this today.

So Lang would to turn back now for I like to over the closing Paul call remarks.

ago. too everyone I to My early think, in of challenging is Arch is we things though in better are I the the any that normal. go talked resembles back feeling it’s incrementally least on before to call. things long recovery. remain will taking for today we’re to the to a have to think, again way Clearly, slope participate at their our thank industry’s three the interest quarterly But, well-positioned. than and Well, prediction make like something I’d general we time I Arch expect short-term. months the in old when

We have cycle it’s the world matter costs class at that metallurgical very assets in point and this most.

operator, to On everyone. steps we’ll in if reporting I With side, we’ll Stay taken conclude adjust calls required. forward we’ve strong safe the October. continue to the the look the hard call. operations that, the group thermal and to make

call Thank participation. your you Thank concludes today. This for for you. the

disconnect. now may You