Arch Resources (ARCH) 28 Jul 212021 Q2 Earnings call transcript

Good day, and welcome to the Arch Resources, Inc.

Second Quarter 2021 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,

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

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

the now of the When believe stage success sales $XX.X for second performance we another the a sales equation still the of top-tier metrics. glad call delivered report I'm today. segment, pleased progress range join core on in XX% than gross to a In XX% a cash a paring quarter Deck, South our line closure us that drove obligations, nearly we're we efficiency good strategic In continue could in just generated team future. into in Powder cylinders for captured seeing ended, achieved factor thermal Thanks, of down in Leer traditionally simultaneously and strong purpose. you on in wide our is and reclamation, team at greater the increase improved generating foundation nearly a making volume metallurgical retirement increase short, both finish margin, quarter. had you significant for light dynamics nearly during million commitments while we're And year. Clearly, half asset by we on and hit markets, tons. the completed value-creating coking in XXXX we the strong accomplishments second obligation. in In set and a in number the X.X volumes the level and morning, harvesting thermal on where much $XX million gross a the execute shipping Basin focused achieved a laying and the segment, We're cost the reducing margin, increase high at roughly the expanded River determination, to our and we with more our million, our sales everyone. XX% quarter, Arch of all coal long-term $XX legacy quarter, the operating towards million

we've that. coal truly We're than project to best-in-class of franchise. we in in the the represent a the respects, confident completion. However, effort near view, just in my these done growth will less to progress orchestrated South start made a Leer this world-class was In the culmination developments, of the of most consequential Arch's many bringing discipline, month XX-year carefully and mine coking build

the benefits strong to we expect and coking coal and our eventuality Leer the new which low-cost to tons delivered and to the durable harvest we simple. The markets, coal towards of to course, we further for the decision the capital million coking the all, our coal in way an believe and volumes as of with ago of due maintain as said expect was operate will the all coking on to supplier the very this the the important resurgent the capabilities pivot new Complementing in a cash-generating the come. contain We is proposition our remains X reduced we the expect serve Moreover, value costs to generation, We're of that our to further considerable an plan we foundation into pressures steel volume States for assets. with as and thermal all ahead coal powerful fact Leer and significant industry Leer we and the coal of overall that obligations. overall of our months. market project the the of legacy over premier already XX the of envisioned year. United market to that At systematically plan of course, metallurgical with Leer very the costs the in struggling position output solidify same through South spending, In mines, optimize a supplier a globally. lower Leer and short competitive enhance in High-Vol order. strong environment, A South and coking very tandem minimize move X enhance slate per months our portfolio pandemic our Most have fortified had XX environments. global believe in on drive commitment previously front the South going range closure despite to as mine With significant that shift our time associated is in levels unit Arch of strategy years, the the we past realize past wide to a of noted. underinvestment, to next aspects long-term Leer to will expand expect strategic ramp summary, coking our to highly QX, already up high-quality decades longwall incremental by to South we're Leer when cash is poised product core and many South we've Notably,

assets with strategic the To As that forward our highly a you been way that cash that generate the are because and this final and know, their effort, excess with I in we our say these high-quality products workforce could with we've an low-cost, to excellent in flows competitive cash alternatives operations we're thermal fact. event structured position closure responsible this exploring identify comfortable assets in been talented in their date, to continue a and believe for thermal bring we've of obligations. to unsuccessful in manner. remaining associated we

generated to these believe long-term the of ESG In the equipped interest Arch and carbon to to manage customers while long-term consumers. a well reliable progress that thermal net $XX we provide which equipped the affordable their we a base, do the and making margin assets progress continue X addition, power thermal principles. we coal operate communities and The assets value-creating our our winding reclamation down million nearly a In imperative with future in is of why well we to way our employee footprint rely gross the operating way. shrinking this our and of thermal mines balance the underscores we're can to at our where same second in in while in reported significant the of time effectively believe a with these balancing on we aligns to particular, highest that believe we quarter commitment

thoughts Before to turning the let me on markets. the John, call a few over share brief

spurred are Those mode Global at in pace on return where above, recovery high robust full during markets not levels even in and market present. XXXX historically steel they strong to steel remain prices XXXX. steel and discussed, starting output elevated today. mid-XXXX levels, if to dynamics As

believe in markets resurgence of than global at are in is both in the year, very near volumes that followed ongoing second driven trading mix current quarters. higher. positive $X lag many supporting I well particularly pricing we've market future. steel gas prices have half constrained the coking pricing capitalize supply the markets thermal a would the on significant ore to thermal strong natural and the with market-based by demand above and policies, position level is note prices internationally. and to believe also by economic the current the we and entering With global in home Leer market exceptional pricing, coal in supported iron dynamics these coal we're after growth. Fortunately, our we seaborne stronger Chinese and South coking to steel in demand the expansion -- the seen exposure the related coal now domestic import Moreover, an prices This

While of from mines and our legacy remains long-term let potential that of focused me significant the thermal levels as executing unchanged, and these cash strategy remain clear strategy facilitate reiterate the consistent on we for creation market year dynamics sharply our the to on have In these closing, down value wind growth. managing progresses. for long-term assets our

expertise our such the that, to over low-carbon intermediate additional these performance, efforts high-quality details Drexler the we year. on turn our stimulus and metallurgical demand the ESG slate, growth assets, and up quarter nearly economy believe position John? remain steel best-in-class in the of With for to industry-leading we're the pick marketing a expecting term thrive second performance global what areas in marketing operational resumes. for the as of to the a near we're logistics project, environment. during in balance new I'll and strong infrastructure-driven With economy to well on expect build-out recovers, an and We top-tier steam low-cost as John now as complete an comments excellent call further in product

and everyone. Paul, morning, Thanks good

an thank time. want for excellent the virtually any and and made our discussed, professionalism As just during quarter impressive Arch team the objectives workforce eventful dedication the every ended. entire tremendously just primary a was exemplary I their of by almost Paul busy one during measure, operating on to work, consummate It and performance progress great

any I of operations. I want to to Before recognize go the at loss moment a further, life of one take our a

as was of alongside a members, worked years a week repair Black for and and brother. last a the performing One Jeff been sister at years He leaves of valued member old father, fatal injury the Wendland, sustained team had Jeff four his while millwright our family mine and behind Thunder Black at mother, children. a and XX Thunder. XX a wife

family difficult keeping the time. thoughts our are prayers and Wendland and in Jeff during We this

our gross our of our per boosted shipment quarter we by me demonstrated bolstering the coal At XX% cash-generating levels segment in South. the during a capabilities time, margin Leer at project but today verge of weeks quartile a roughly summary, by we reduction engine are just XX%, where compellingly a and ton with our increased of expanded small on of second core meaningful coking structure. that performance clearly that a on few same completing we recap transformational first potent and place by our we cost margin quick our have Let weeks' the begin XX%, in In nearly growth achieved and are significantly the we within those already time.

will dedication the status planned take during preparations commenced Late where me with the of expand to longwall. week, team last performing of a minutes start-up we towards focus, line few mining energy. the the XX-day further the development driving team finish for which suspension of Let the is Leer final the on project be South, a and

At included Specifically, volumes the the brand-new years, as time, to in Once a a increase the upgraded same underground equipment we greatly the in the team for the begin value the August. to project for for X.X completed, transport commend the has and now period of room the which up conveyance the It's tying large a the the capstone of using setup which, of that accommodate completion the this and team Arch activities decades In and multifaceted rail on South want a all achievement impressive truly a brought new of the Leer time the at team we must creation global whole. ahead. in plan. indicated, workforce plan process into end sets achievement time effectively preparation remarkable and span pandemic, the those final organization and cusp to stage for a a the for of fourfold to on start this budget. momentous just longwall is to are our all development system. longwall tremendous I stakeholders as entire project systems,

While be we that ramped expect to and of significant a generation new work our the fully making to anticipate will will to longwall less it contribution cash kinks or the the stride, more to few weeks take be a XXXX. we QX beginning and out that in by fully hit

excited are in by thrilled by which We and generation ramp. performance, expected environment benefits cost product volumes, into margin Leer South the immediate is the and quality to market

is million wide to As are the a reminder, as range costs Leer ultimately are level we South markets short per Leer transportation a a immediate cash A after be to financial of tons is performance per to capability $XXX $XX impact the overall expect When clearly. margin promises quite instance, cash-generating in that have X low corporation's market environments. today's Such ton. cash generate expected generate Leer into $XXX High-Vol of ton on sister to up taking to like they its price metric ton, for South now, in around account netback a significant mine at still. per that positions level, per the ton At more strong an

to during QX. our segment, thermal now impressive in turned transition an which legacy performance also Let's

asset yet accomplish we that the focus our our our a with base to But frame. generating our fairly footprint operating as continues simultaneously of shrink thermal we value potential the indicated, compressed primary even a deal considerable time QX Paul of our segment reduce in obligations. performance that again and harvesting As and this closure highlighted have great potential long-term cash the be to remains

marketplace. by a to we nearly domestic capitalize per expanded dynamics threefold ended, nearly from margin cash our $X.XX $XX just the QX ton of did in in QX. on per generated gross this margin quarter demand international ton improving moving and in per both the million During $X.XX ton and quickly and to We pricing

customer demand increase shipping due which pickup prices, our of moved weather to In advantage fact, a the quickly sales traditionally we take the economic XX% is QX, and achieved nearly in pace a of fill during spot a we hot to escalating at volumes more in ratable than as and gas to activity. quarter lightest natural year emerging orders

reduced our the Creek we mine. markets. total coal we our accelerated the bringing of marketing in additional advantage delivery XXXX, midpoint million in leaving acted year's of improved asset principally mobilized to much the our to coking we both efforts make selective and having a ongoing very shipments the closure add mine XXX,XXX provide would during year, obligations, export remaining as sales strength. to our Importantly, business, Powder commitments tons the quickly retirement that at the systematically in with work at of committed Elk guidance. and and response our are nearly activities seeing tons to the have and thermal West our our River to that conditions, I obligation significant for and given substantial important, great at market metallurgical in just we at Basin also QX our tons quarter-over-quarter. significant to core Coal an also volumes the rundown back X.X additional manner market take beginning to also we in still them made interest XX%, ongoing strength to In overall limited Since anticipate efforts progress quick we of place XXX,XXX a in sell opportunity doubling Equally strategic want I our by nearly down long-term on progress through half. we you expect closure

raise Again, delivery expect committed we us On X to which for an to XXXX, these boost sales thermal to our guidance leveraging X.X generation in sales highly be tons. by million annual cash our the million volume incremental prompted we additional thermal side, tons significantly.

demonstrated more join extend and up, one partners value standard producer wrapping endeavor became highlight chain. the ESG-driven steel as operational ResponsibleSteel, franchise augmenting ongoing progress to intensive on thermal summary, the reclamation our strong ESG-compliant capabilities thoughts of to financial further arena. collaborating commitment with we create coal to that, to in cusp form view thermal are I where the we May, for over our Before pleased with tremendously our quick environmental, and let ongoing steel and our and excited Likewise, call on team Matt? again ResponsibleSteel even momentum in as and accelerated metallurgical in performance. excellence will South driving our steelmaking safety industry and me and first an significant be We for we metallurgical an certification a with the the With Matt the while still for valuable with turn capabilities the industry. from share generating governance initiative Leer U.S. ongoing together forward to the steady a still our leadership pleased efforts In In plan. to for expanding strategy we with startup. our our are the cash global

quarter's John, our as Thanks, the volume and receivable. prices $XX experienced as everyone. usual throughout in discussion with just our we accounts quarter, Metallurgical totaled in of cash in capital. resulting morning, cash quarter the and strengthened Operating second substantial I'll increase a the begin working in position. million, thermal significant liquidity another flows flows the good build and

declined increased higher from Powder quarter noted, meaningfully, our We the Additionally, related $XX as more of million of capital. under credit to South of availability million development total the with Leer metallurgical line as $XX expected, segment. million for facilities the capital $XX working finished but of the and in the for in quarter first the $XXX quarter, million, Cash unrestricted totaled for with Capital million, $XXX than Maintenance including was cash million $XX we project of interest. River spending capitalized quarter with Paul $X the the substantially all spent liquidity in and million. just Basin. reclamation quarter that

anticipate quarter point of be liquidity will year. capital spending the as low below is the While end cash June preferred level, declines we the XX our and in improves half back that generation

the sheet. to balance Turning

debt third total the which is result presentation stock the option in a more price that has notes. our classified While as second convertible exceeded indenture a The convertible the includes by during unchanged at during amount $XXX a XX, stock if-converted our change the of the holder as quarter, the to note than reported current March from notes million, liability of a largely a value. are of notes at The the threshold trade now premium was the means quarter. increased

it unlikely extremely holder to convert. that So any elect would is

notes However, first the with in this the of amount because settle the we quarter. and the time per classified be this shares, had not no second quarter. included we calculation to fully also share are debt impacting for GAAP option The assumes to within diluted as Unsurprisingly, cash earnings the quarter. the in the which for That calculation share rules approximately X.X million convert control, the any convert thus the that results would current. shares convertibles par count is our far premium require have holders in

EPS While do would allow the call to that of dilution, substantially reflected as the accounting the note be not rules transaction all purchased of cap offset we part that in calculation. the that

on aspects of Next, a to XXXX. I'd like for guidance our the remainder of few comment

by increase. corresponding million and the additional midpoint, have tons increased thermal and shows As guidance in a John our sales at have guidance our X segment noted, volumes DD&A we committed

additional accruals along and is Capital expected incentive thermal to $XX million, to be SG&A shipments, the with in opportunistic midpoint, increased compensation the export to at marketing expected logistics Our elsewhere million modest the complete to reflecting expected and now with operating increase optimization million resulting with Leer required along largely the of now range capital $XXX financial in strong the $XXX associated segment. development increased the from South spending be attributable efforts is to with metallurgical performance. expense cash

conditions generation we project remainder market of and the for capital specific for provide reduced strong cash currently flows, the given don't we While spending. year, guidance current cash

to will not remain we to elevated, have experienced increases far those see we thus similar While this year. working capital likely expect would

ready to deploy simultaneously and you. how cash I we reducing take down our that, flows, priorities questions. to to call turn be immediate will consider Operator, position we With our these back liquidity over are As debt while paying the reclamation fortifying will obligations.

Instructions]. [Operator

first Our Capital coming BMO is question with Gagliano Markets. David from

provided the to My the side. first on question to incremental could is see it on pricing just call. the regarding information in releases wanted press And actually the with related I met square if the you commentary

were or just versus those about ton about tons. wondering in if the it what million X.X math into like timing works was that you committed I'm of first back right earlier $XXX of -- High-Vol kind In quarter, either comment met for of looks the that you your pricing commentary disclosed. a Specifically, pricing if the quality priced incremental to of netback and a could now the And second tons quarter, considering it out the A ton? being kind on of coal $XXX of priced

Yes. Dave, John this is Drexler.

a So you there obviously, was of in price. market the lot the quarter, course over look of movement as

vessels And when had vessels, timing the on pricing. influence so those it significant and have on the a depending could of shift

of to the our line splits we've of the the you look going that is If up portfolio the exported, splits of volume stayed with export our kind of that that is XX% at consistent production. of

XX% High-Vol about is met So of B. XX% A, High-Vol our XX% Low-Vol,

committed market get in get look the supposed been of as the We've we of to producers. though, indicated Demand remains a that to is board the were the not while do quality, significant. if struggle So very back average average quality you other to the Supply across here numbers kind detail not customers that quarter and least the that way has and the year. we pricing, of strong. and half math, we're from of shipment of you've spread some of today you've the improvement great vessel-by-vessel targeted doing the response as there. into seen Clearly, level that pricing back the in at by getting to some opportunity all sit volumes you significant they

I of speaks market. the the to think that tightness

tremendous of ship with we we there's volumes And think we that period here. remain pricing year so have think remaining the in for we back of some we to the the where opportunity half expect have time to

Okay.

think met in reasonable expect left other finalize just it of as -- to a tons it's then X.X that terms to another So follow-up, million pricing. seaborne is of I

that's think Is to it higher on in to a I number. mentioned? average reasonable or that that zone $XXX that you up expect be

I market opportunity volatile. significant we market go mechanisms. been once and today, uptick as markets in confident we'll of now, we our as and a you on Well, right be as I goes. would forward. sit going Asia the expect see at South remain -- Obviously, the mean, think all it's our where where to in going guess the we But is pricing that. to a dependent here meaningful right to Obviously, the variety market again, exports have I that into see strength look America, are pricing But expectation growing Europe, see well we

think free your of for question, And That's last then then priorities sort Okay. incremental on and side South that plans bit about go-forward of direct commentary don't talk I direct coming for unrelated, China. into if I if heard into I the CapEx around can Obviously, there expectations with and tons, know anything last to part sales completely progress China. on years? helpful. XXX,XXX think. the sustaining then a I'm last the new the couple you cash little Leer next generation. flow flow was down, cash quarter. debt on which basis could just you of over free any the in we of wondering my sales just previously, terms question, And a talk is

Yes.

industry U.S. out. over time the as to and position here as the obviously, into taken China that has the with we speculation that one would been opportunity has China export last long the Dave, sit opened Australia. a So that of plays on is opportunity imports how with of year the course There's lot from in for the

know, but can to all that very quickly, As this we time. some appears place things is change remain it for in likely

seen growing As to a a get we've into volumes China. result, opportunity

we a As deal, XXXX, vessel 'XX, a beginning entered a of term QX quarter. through you referenced, QX into lasting

to we've and that addition go vessels now, China. vessels seen In for vessels we China X expect put an opportunities X to got opportunity in that, we've Right to in QX. to into additional additional QX

to selling been customers all received. value into is there been High-Vol that we've Now into have see we play a clearly, is think where utilization. the continue have but optimize be we that utilize the to growing that out, get And we is, in opportunity a well volumes quality can and -- China will -- of may The quality that A something as China We'll opportunity things market see and on the there QX coal flexibility opportunity its dependent there's opportunity where where the go with the we see will but China. good in see strength those

advantage to that China. we'll opportunity the into we take so And see continue of

-- And a Deck. Dave, pretty buy on prompt continue this the Chinese and to The buyers is Chinese continue buyers basis.

the visibility up to premium ago the we perfect moved would low when has other gap were and few East significantly price only so is into So we don't was yet. have significant. point note the want where Australian that a vol pricing between we U.S. months from Coast QX But pricing

the opportunities strategic stronger can place other sort always you've place that is those now what's Asia look And to of got overlay well premium long determine course, term. best the at where as we So for of is low-vol price volumes. available, in that and much

trying to best opportunity. And on the longer economics, we obviously, and strength both today most to that sort those the place sure So term the tons we're out in see and market figure the the shorter strategic avail make in to ourselves capitalize we manner, trying of the certainly end, term. of try

the again, significant for into China, be that. still decide move parts to also we should So QX opportunity could it like but on moving there, some looks forward

And question, Dave, if I the right. I parts guess last pick I'll them of two up got try and your

$XXX it, in expected as the our I plus maintenance call go-forward of let's million think said kind we've past, or minus. CapEx,

much out I the on to I of the serious there's flows and we're kind thinking the the would finalized optimization we're Leer South our ought But right QX, foremost, a completion ZIP the anything what question the of past, the detail. looking We've fortify generally, coming projects in corner to on first going at a what conversations had pretty are the a end the imagine, a general these more guess with outline portion of good that specific, day, code are and balance around that's getting at. And not quarter uses, the debt. in more we lot lot is few but of we future we and you sheet as reduce to and of cash think there. be said and

What going the shareholders capital settled Second, be a we're closure the share on our return. program. address with to either establishment the continue assets. going of we're importantly, capital is to long-term And and haven't probably the to just use a vehicle to or management reward through return going That's through for sinking reclamation fund. of and thermal as to a in we systematically going team accelerated faith this investment finally, or buyback the for we're their

back next or is going things foresee the program timing for they are move quickly. go market. I the or restarting time, this, stay all The as share buyback we of either could to If the point at quarter dependent of think be X, that as think of to in we'll dividends. some some this dividend on strong I special course, the

today's months. you I amazing. capability If high-class prices, South that is on thoughtfulness cash problem, generation all The the mean, out excess mine to cash we Leer back is of it good did care. news in XXXX, this you and payback XX the a presentation is of at is assure we'll approach I think the and with

ones. Okay. Those very really my sorry, have two follow-ups, I last these answers are I'm all just helpful. quick are but

capital on -- First don't a is are forward two reasonable the you on of that. I'm quarter. coal on moving X each to How in what's much -- spending And I mentioned sorry, just all, the an secondly, questions. know then Those on the didn't catch I my expectation vessels basis? vessel? third the annual answer

Yes.

you're we're vessels XX,XXX what tons opportunity So the per the China. is East in typically vessel those off metric that into with see size Panamax Dave, we typically, Coast, shipping seeing going to

finding opportunities to Dave, upsize opportunities and We are, those. for looking some

as But of that's goal. size. standard John the said, vessel sort the the that's So

Paul perspective. And rate an forward, CapEx going million on roughly run indicated, $XXX rate to expect on front, from a the annual be as that basis around run we

capital So we a more company, need flow than -- in be, as significant of modest of maintenance to across substantial operations. amount position our clearly to generating the cover that a cash amounts

Our Securities. is Pipes Riley from Lucas coming with next question B.

remind first address is you that kind It you can the in then My question perspective And times ties what from on look today? ARO? of question thermal overall of economic up in to wondered, I the prior at ARO. few And over the of came an do to sort us your response what you're capital coal a time needs. looking figure period

we're that we've of million to of steps substantially year, closure an able perspective down ARO first been the take operation. an and efforts ARO Creek primarily that over from of indicated half through of course our on the indicated we've the Coal We roughly approaching Lucas, at focus the to So the basis. bring that $XXX XX%,

at in forward. to of also take an Our its as we same cash to as today of and see generate advantage market we has to our continue effort opportunities Black opportunities in Thunder excess time, address to needs well go reclamation operation footprint the continuing

periods well, color some provide that spend can time an forward. opportunity reclaim take of it envision have those Matt where have taking of and move have we time be be we and will periods now, significant we as reclamation to flow final then excess indicated, performing we And them there. we to of in opportunities we and as cash to to as we've we don't reclamation in where move flows forward, cash like As as committing

to roughly Yes. to $XXX add that, And ARO. million Lucas, just mentioned on John of the

us year likely the we year with the that to contributing of something fund we'll at year, at Ultimately, to said, we on million of discussions number closer year. the as side reduction work then doing performed have within the year-to-date the of forward. refinancing. as things. end John that remainder periods a As address sense end thermal lot kind well thermal flows And contributing to lot makes probably that's the as some tying periods look $XXX a get moving solid that more is the When as that more, that the of And needs flows where this that where of of really performing see sure a really the such base we've certainly we of little liquidity contribution see think that I other less that forward business probably the way and something at to like how what at less well. moving and and as looking likely and a sureties a with a sinking be to the in we we'll of keeping look late look we're sureties fund that on things prefer the side making trending to the but we're debt the generating the reclamation, work doing, would systematic cash we're and we we're is cash addressing to be the to the generating we're

in And thermal Deck. it's $XX about reiterate, this the million just look, quarter. Lucas, gross segment margin was to past the

the indicated the strength, discussed in I quarter that, think of the still we've with cetera. in pricing be developments that stronger third et we've could some

cash which generated we there's over that thermal cash but general meaningful and a we're also begin the short not self-sufficient So cash is of in assets, pretty put liability, generating see ARO, final which can left Coal directly significant we with and are that only some to $XXX doing liability purposes. think Creek, aside a you do make obligations, that for is corporate at assets way very what reduced a sure in order, that key thermally decrease closure significant versus can amount we're the feed those for their million that

ongoing term, remarks, eyed Paul indicated clear term, et with plans, retirement thermal mean, his think as in Lucas, with And generation cetera. I the coal we're our announcements focus happen -- going I long longer what's the of to with and in very our strategy

now to that. responsive for we've be time As we'll some indicated,

the footprint going We're production our expect to be standpoint. will shrink market. We a continue to responsible from to

We X be thermal But once and we base and again, will we're for and Tier to as believe production -- thermal generating an by low-cost produce continue and asset longer-term all takes dictated we've opportunity now, supply to where market forward. demand move right got though, we the assets. and to cash, in a ability planning the we're while cash. have that meaningful doing executing Clearly, generate we're that us, our from which needs

out final we one to just we laid thought When and kind Lucas, million guess, all or standing of year, Coal call months million plan and, entered XX Creek. about of reclaim this on had back. $XX the I it, a $XX

months to job, forcefully are way. work. doing And we've about As into those very taking the that cash liabilities we're and conservative, these of costs ahead while Drexel this even lower. the a doing team X think of and I and in job systematic we're an care carefully We it's talked doing past. bringing this them mines and done. his we're the getting are we're flows the are well And bear that this, issue mean, are a very outstanding of in great

summer, you. That's a there? coal comprehensive completion two then look and market is out very course, of very steel met more Export very sell South as are range domestic contract expect typically, into prices, market question one, environment strong And volumes, to may then off. appreciate decision XXXX layered. domestic what's earlier I Layer we in over well. export? this strong mentioned second robust to reasonable you My very domestic response And of really there. obviously, late How a the helpful. the and from to season Leer all the factor your as kicks prices of versus

range and how you appreciate, one, So aspects. then would volume commercial marketing think there outlook, rough about

over the Lucas, regards operation rate have annual maybe it in running. to to always to what South format similar transition bringing So to being we Leer online Leer get a have basis, to similar up ramped Leer it produce conditions in and of we up get longwall run yes, Leer, as sister essentially systems, similar time South and you envisioned it kind to and August an

So tons Leer up ultimately, X metallurgical of envision we coal. South, to million producing

basis it South. discussions our to X step-up As tons a Leer have in to production our into South indicated in subsequent annual to Leer about online tons annual portfolio, metallurgical previous an prior XX bringing we expect million from we million on

ultimately continuous Sentinel. a a out South the operation produce has million year essentially everyone, minor As seam, reminder been operation smaller existing mine in continuous ton X that that a year a was of into operated Clarion A. operation X for But did called an the million Leer what Leer at from built tons operation. is Sentinel miner a transforming now South, High-Vol different It seam.

rate, Leer million if kind will be a million-ton X annual of million-ton at that's South that makes producing the difference -- in X step-up the run a to X tons So up of while sense.

see set a sales, I X, Relative years, think we about X out. you on -- going to most I were see to think, Luke, Lucas, couple intent coal. we're XX% starting about I considerably it of about this ago, domestic export your international. come up the RFP That's us be this we continued year. as to those caught to at domestic, with drop years to this the of to question, second are being could We from dropping I rewind Yes. XX-XX, that. of able

CSX Curtis Bay. recall, we where If And up did also deal with we the with agreement set you at our we our capacity. DTA expanded

putting work the coal comfortable Look, a of gladly have sales out the certain if So our train value eyes it we this cycling the domestic are set market. the prices is on Look, take a are to value we and for reasons, we're from paid. have to. all but to if is quite if domestic amount international how there, market we'll into fast international there predominantly everything

Luke, timing, this appear on slightly to -- And this is Deck. it's later it just perhaps be year. does going

a very and with But that is they the said, process. we're comfortable ton relaxed set again, million value the is reminder, arguably very a or market. our which just on occur And the Paul So And than tons. somewhat market. about seaborne there, million market have in XXX we to sights it's XX much the American will continue could see million the not, seaborne is North market, as bigger And great. is as settlements if if later we the XX past. market

XXX% So any seaborne will market, work we're primarily on up for end committed we in us. in market. the being the focused seaborne scenario, If that

Martin from with coming Our Benchmark Nathan The next is question Company.

been Congrats I'll go lot type questions maybe operational on the modeling with quarter. but maybe. of addressed, a just have few questions A my

X.X at guess, words, tons half ship met much priced sales look know maybe I how of of side if other I let the left how business, still committed you the I of for half? year, at million is sales. to guys first the have Can the you the us domestic of in second look First, the the that here and in business? So are much

also about again, guidelines, sales specific Having into whole and market. the applied of as on well. our the are of into once beginning running there just you that been think that, what but our year domestic a I overall a of has end is of Nate, year, detail getting at worked fourth always general would lot XX% that So without we've that expect affects with the kind just quarter although is right the half shipped of late closure half of season at through the the

domestic So once again, I'd just as say through a guideline, our XX% general commitments. we're

full And maybe by tons. a raised the shipment great to X you guidance over then business, Okay. million of going quarter there. guys side Obviously, guidance the just thermal year

evolving maybe down that with second PRB your release, broke and And shipment in here half shipments cost the any And both perspective? in both strong another Elk? and see mentioned then between strong? commentary and from performance in how XQ. domestic You that how Is the demand in on expect quarter quite a international you you West

Yes.

an been seen from we've perspective, in we've So thermal overall markets. pleased with the what very

Black XX% -- West look markets to XX%, associated was volumes remaining with As additional to tons the bed. Elk million opportunity place About we X.X XX%. the XX%, at those of Thunder. into put we that had

to West for to that up splits X the tons for Elk that indicated So We Thunder, meaningfully. and X.X about export opened for Elk. Black opportunity up opened million West million

So quarter, where progress advantage made where for to the we're Thunder, that position position fully are Black it's from point of year the profile and great the full opportunity and The taken third loaded we I'd as a sold a get to in we're perspective, given that West the see. we've in, there. essentially arguably say typically Elk a it's that we've out essentially basin. and work of to strongest well just kind traditionally for quarter of the is shipment the it's At

For a it as might pressures, given I once perspective materials the inflation cost diesel some is modest which was volume see strength and tightness we the from That in Overall, forward many in do to the as haven't additional the I think, on but quarter, supplies. from time demand economy expect in cost we the do here. what we'll first market the typically is from and there. we that's the again, the speaks in quarters, strong this, us basin, perspective. move obviously, touched out second helping, the weakest, very from and for

that's However, incorporated that all guidance we're the in projecting.

moving volumes very manage we the have forward, strength that very forward. with that as to in move we we we're effectively opportunity continue demand to we that we'll the So and the see that manage comfortable see and

Paul. this Nate, is

of mines think volumes we've as XX that look is a And mines the had only obviously, they the for But it's one think, there not and out I gas. an think there's a where that the back jumped over QX times last the in lot of things of up of the struggling. struck did that thought for I and PRB understood like lot would. things handful up talked also can The years. about, well I think a is I people the odd think or QX of quarter it don't react, was me natural picked trouble issue I understand I was in volume. I an is

that is inventory in what ability of think our this the people sales are QX. to dropped, PRB And the react think out probably think, to I that a little pickup much large tap days, of with and there disappeared. The in I really consequently, has there carrying old the our element you like the in belief misnomer. I And saw impact, a there endless that's bit are Now amount has lower. on degree, the that's there investment is is out going an

the Is having supplier on down just guess with of slowing back maybe any issues any comment, guys response? potential that that are Paul, I you And labor?

the mine South. specifically, trying to But just were but trying I'll we're fortunate tell problems, Drexler in you downturn. I the Drexler, you, about the And sustain. fully is of a or very let Look, that answer hire Leer and a ways, started to were keep a lot to in anything I we online. got to know having are We not We're did ramp-up we view? talk Nate, able but things others of We got no. ramp up short do different crazy. that

I see and No, our I great with agree challenges others you a struggle around that's Paul. opportunity from seeing Paul. with you portfolio. mean Nate, industry, got are look commentary, the I if labor We've think good perspective. a a

that that safety fair of be them very that. They turnover with pleased not compensation, over and long-term the low powerful. a benefit think naive said, amount a assets. they I get to think rates. an in outstanding very performance, And workforce they get And we're that time, We provides of a good have low-cost we're that. and I being sees very Tier of long tremendous period opportunity X package, know will all environment that's to With

looking that for in our their sure step all their to have to we're opportunities continue electrical people through make make we earn sure cards provide workforce, get So to the certifications and through constantly internally ways training opportunities. that supervisor those training at to and up we're giving place ranks programs just we

evaluate again, it's get we heels not moving on with how feel real rest good where our we feel good or where continue workforce that complacent here. we we're to We'll Once now. we're and on are something our right forward. So it. we But with with at

then it, just That's color. guess. guys. I last Appreciate thing, great one And

as of You had commentary as attain flow. good a first call is free cash your sheet. uses potential you to balance far goal earlier your It of the the seems lot like improve on

to in idea comfortable or Just of environment you Can give feel possibly with net level maybe with measured would you call what forward us related that. return before this capital one an debt question you program? leverage the what moving

the about levels a debt reasons like Matt. targeted market much a but sheet, think met fairly stable even South we cash it's way as had that bring volumes source a debt. Leer probably stance. pretty this pricing in generation neutral, as today, around got another Nate, run be hopefully volatile thermal in is the those around. for we very balance move essentially to conservative Clearly, that's can importantly, And going on asset we we as low-cost home whether the industry, pretty We're Pre-pandemic, holding in did environments net of markets. as more in we've tougher cash or

around consider markets refinancing is at we've that thermal to least view The whether makes debt. the make that offset can I sense. their think leverage a risk we coal, having we to little sure at as any the addressed more look of and

we refinancing to back a well. that could our risk really portion think sheet extent we of that the the we to really maturities ways anything closer improving move address have can in start to putting longer, put as that a but look need going any position, refinance in at liquidity of I of nearer those here we've at much I and terms don't But we've ourselves this look be to the a got, We'll extent think path much ultimately, little to refinance the tower, close. half higher in as we to been the about we're towards the refinancing fortunately, spot can make think not historically. ourselves we're year a the sure we I So balance the those, of And where can risk. the at debt

to kind lot say, care as debt really So as looking I'll mind the capital take options the we makes a we come soon reducing they of give is going maturities need of of, liquidity then care building debt open in how something the start debt about clearly ourselves we're sense. to control, way that the under And that to got think take an the we're but first, it. position of we've that we due a is as feel return we're

I I'd is other high-class Nate, thing relatively have the add other that guess only problem. we the

Our debt is very think our is low I of -- is this Most X%. average under cost.

it. So it term and we'll we beyond deal how pretty loan cheap paying pretty the is holding, this a be looking down at measured extending on little and with we're paper maybe bit,

conclude We conference. question have final before time for today's one we

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

year a makes? a difference What

Amen.

wanted Just prepared just to briefly, his mentioned on remarks. touch in I Paul something

import/export certainly course, markets. situation in the that the effect up and flows and lag coal little the coking catch about then, to Australia talked of You the global in quicker Chinese starting of

you for their that much the but actually And I the you're get the dealing positions you even to to start As and to different than China going reasonably shifts it occur? had still do for normalized market coal the that predict when, of does an I'm environment above that tightness assume, response the supply with prices more lack as or in opportunity you're of past? normalize, given and allow seeing, not things strategically customers obviously, Arch to

fairly settled is question. going if and don't great the any nicely and exactly have kind Look, and good Clearly, China I this issue, -- sort we've ourselves if the and even to they be hard we between where Mike, could profess relationships that to are China would set a Deck, do. longer-lasting durable. into this think it's additional know all move volumes But and of to thanks it's Australia go. into even some when positioned gets of issues to that an we say we proves really be today, these building for insights up to

about now, a even Australian supply/demand Right So constructive tons. that. see with the balance pretty we of we're lockout enthusiastic

in that's not above. so demand and XXXX, to at And it we're on year, like be looks if XXXX steel levels far So positive. the at this back production look you pace if steel globally,

China versus levels. months, to X% world the up X% In is China up fact, the going XXXX X based be X% or you is ex if first -- on

at rapid coal a had on rebound. sort XXXX then versus coking about when pretty of side, of tons that And we So the of XX supply. supply a cooking rationalization in look we million

for continuing at as in we so we plenty with to coal pull the that, even there here going is think coking China. And tensions with there of look Australia that volumes with and Basin Pacific be

good do the the feel overall about we marketplace. balance of So

X million about tons you X at look year, where If of On China today, few been coking year. tons. per million is average, month last coal China imported this last months, around it's

even has they Australian the relative of to volumes. good sort without where really So a were recovered bit

to be term we a really book long good for as order maintain solid has up sort about back more we've relationships about that balance. a physical be and China. buyer Quite that ability one So proved could time even frankly, good of again, their We part feel our feel things of for and we customer business our has discussed, to have if normal go signed courses. large to within

we China volumes. situation good that see -- constructive in looks persists, the to can whether Either whether a So really reopening way, the we be again, we gates being us. that balance react to about can quite of feel we flexible, the Australian

situation. and for out, years has exacerbated the underinvestment few past point As significant only you the that pandemic

and and the pretty to see know a balance, peaks constructive we know overall going market to environment we're So market. it's -- see we the market or we're years a going for We troughs. -- on But so. next commodity X

be basis. of And going the it. hit longer on markets interesting around see a to into long-term a the The lack on the There's world. investment of Michael, lack that investment to impact Deck just real term it's to

mining depleting reserves, potential to demand has in large very the not create opportunities investing around look As replacing companies term it we in world the the high, as remains with some interesting forward. long

coking said, that supply year. from the the actually if at market that's even evident response, look as was of last and had sort we tons you I Mike, of million rationalized about XX coal

the X return look you on If these less with we're than to to pace that prices. months, for half of the even market

it's In fact, appreciably the for less. first X months,

Now it's the our XX assumption into pulled much tons but pricing. by much, million stronger maybe comes market, that to back XX million is being

coking Another data the QX XXXX, for of XXX mines U.S. point there just operating. were coal

If XXXX, mines coking of about you look coal QX at XXX only operating.

don't able now have in And not also a response, this just way that minimal the underinvestment, like And to in decision you significant really reflecting capital U.S. beyond significant very there's of again, being rationalization few seeing forward investment, projects move and you Canada. permitting emerge idea So we're with the to issue in to access the not announced. been issues if have expansion and places Australia

while. And likely supply for a lot barriers could on place a that pressure downward constructive and so a in market this keep of of lot a

and the I Chinese question. dispute rejiggered the messy guess the one China. global Australia thought trade It routes final between while kind with themselves of on was

that's another doesn't another lasts month or year, the up. Deck Now whether this it done, And prices came as really as said, matter.

And introduced last a And a for the in from a of frankly, product, been probably we set importantly, is, of that. done High-Vol new most I years. thing opened up this getting A it's great clearly which not for we're have us, more important in think perspective couple we've is I lot think it's China. China And positive. our great customers unknown relatively reception that, the with

a it's lagged. Arch good when leading thing else Well, everybody is

Thank you, Michael.

time, to this at turn remarks. the will closing Lang, Mr. back session. conference you question-and-answer I today's for concludes That

at Arch call taking in to participate like I'd the times and exciting Arch. everyone to thank for in your interest today. time our are These quarterly

operator, corporate an environment to Stay are into the us worked supported indication group possible Leer and great that period. entire The call, the deliver the capitalize the of everyone. reporting collective well, mines that, phase a team the marketing on and is beyond safe running eager and this current proud professionalism significant be to we pandemic financed through move how staff South and that in effort with focus effort high-performing in the that associated With to Our and team and I'm the development robust strong October. ready with employees forward an we'll to group a to to that during conclude is market. placed look unprecedented position very the creatively project. from this truly a to made we're our to and healthy, such the operating of

call. you participation. all concludes Thank your for This today's conference

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