Arch Resources (ARCH) 5 Nov 242024 Q3 Earnings call transcript

Good day, and welcome to the Arch Resources Third Quarter 2024 Earnings Conference Call.

[Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Deck Slone, Senior Vice President of Strategy and Public Policy. 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

may and address with that are detail more described to by our quarterly that degrees, file different cause annual we reports statements, SEC, results expressed Forward-looking materially matters uncertain. future their the in than in nature, different statements. are in to These which actual the uncertainties, forward-looking our be those

do the We discuss law. to our like to press we of future section the to we information, reconciliation events statements, of forward-looking or this a you Investors morning remind non-GAAP otherwise, have you copy I'd financial that whether also our the that of may at which archrsc.com. our end in release, measures can by as plan not except a find result required new posted website undertake at a of of as update be

be Joining to me morning's be we'll will Lang, take CEO. on After remarks, formal questions. call our Paul's Paul this happy

turn now With that, Paul. to Paul? call I'll the over

everyone. Arch appreciate could in call Deck, you and Thanks, good morning, are and the morning. We this glad your interest join on us

QX, has of ways. a team and period Since and of fundamental in creation change start transition long-term X marked significant quarter third The the the growth company value Arch. the positioned for for

both our multi-quarter favorable the transformational second, transition metallurgical near a longwall merger of the with of our lines. in CONSOL through First more through in geography the and announcement completion of Energy

X processes forward. to drive at a side XXXX culmination our the this year, the for tremendous in merger QX transitions for both expect operational shareholders the We going of mid-November of for these

of through mine West reserves company make of the where During strong also BC our the on favorable our coking coal fixed at $X.X in per coal the Bay a the high-rank declared a X-week XXX,XXX QX, in terminal November $X.XX ship Curtis thermal we share market. payable XX. the Elk outage focused million loader of development a Managed payment on shipments total approximately to and produce tons continued progress seaborne dividend by that for reduced

devote pending plan transformative merger the portion nature I While the prepared to to deal. a remarks given my the large of of

well of coal me current Let with our as some the global start QX as views the color state on on results our markets.

of areas transition As Leer at South. reserve and we XXXX you through much difficult spent Leer know,

the reserve work During even higher vehicle which were throttled QX, the both of normal back segments areas, more in completed favorable led volumes to development production loan costs. depressed walls slightly operating was while

after next that days extended tempered in expect within XXXX. from We that start work. well complete up moves step needed the back loan the but several these to and quarter, will moves in execution positive still in change expect this turn results we continuing a fourth extended operations were after into These bulk will

saw a QX. segment significant assets. to Turning turnaround The the thermal during

the Here, contributed volumes where and River stronger the performance an measures results cost-cutting to Powder from results. better activities sales between from improved legacy benefited stripping alignment Basin and operations

additional will although mine continuous Also, reserves. this the contracts, its lower work again of majority end year. associated legacy at with Elk, for the before, of for As vast noted seeing still cost we're of West the well, expire the realizations by to the miner required as operated which related development results dampened mine the BC higher were of

to Elk, noted. contracts the coming of thermal for the low-priced year. At a previously Metallurgical we expect anticipating segment, roll-off segment's we're significant benefit in West in the step-up performance

mine strengthening of mid-XXXX. with number to the in thicker addition we the reserves work this, BC lower-cost and at development further those transition the to the and the our completion into results expect In of in operating

River in to improved operation new from the the Powder the year. we to continue In the performance Basin, expect stemming our also efforts to recent rightsize

coal and balance demand supply that we As for coking closer continue pricing to see for current to believe markets, than several I global that to suggest. reasons. seems are

customers want accelerate given global Our continue a select their asked committed and instances. on volumes basis, that to in to we've timely shipments

metal hot flat remains year-to-date. excluding global Second, to China, close production,

the Fourth, supply coal were constrained seaborne coal regions. from as imports coming remains China of of production nearly high-quality coking that by in growth up XX% global base. flat evidenced the supply with in Third, high-quality most levels coking supply year-to-date,

closure to And long-term continues see In and to steel in coking constructive finally, story. to with operations many We to benefiting remain even believe new fundamentals coal the I'll shift that has improvement -- as key impact coal seaborne in view. Energy. producing started pricing from our regions, to as of that, our we're mines. modest in high-range underpin quickly. dynamics the remaining With coal intermediate a same the replacement appear lift years market underinvestment summary, the starting the economic CONSOL coking of in my markets coal coking of potential smaller activity coking and thermal such marginal that tight, merger market supply Meanwhile, remarks has

weeks, to that since building Hart-Scott-Rodino In waiting the the recent unlock of report Basically, It's close. combination. turn, to we've were needed steps. the while completion process of merger, in an merger value running important also pleased ground securing excellent approval. the that with we're in announcement the the following have antitrust should, that expiration synergistic hit making transaction efficient these international the in progress the significant all integration to Clearly, plan the the significant to seen note been period teams completion. deliver I'm we driving First, of forward the efforts following also to

Form merger by by to S-X stockholders step In document. the the subject in finalize is preparation and The stockholder votes satisfaction remaining the for the both -- closing of working The closing customary merger of process currently both of we're approval both for stockholders to companies conditions. next this, the companies. remains

then first into the in merger, of will high-quality, the to longwall reiterate a expect XXXX and low-cost anchored of speed and complete and join by broad, markets the many combination operating create world-class the we quarter tremendous and this portfolio full of merger expect We capable long-life of best-in-sector integration. To move qualities benefits blends a mines, multiple platforms coal projected growth diverse geographies. of serving to

balancing Expanding export Arch's ownership meaningful exposure with terminals to North with logistics seaborne industrial business enable X visible create East with Gulf ports, demand opportunities metallurgical long-standing and stream and higher-value associated Coast relationships capabilities in including and and West revenue Coast Coast coal American dynamics, million CONSOL's industry-leading flow robust adjusted and investment in and sheet. to strong by innovation free value EBITDA underpinned cash savings creates $XXX and a unlock million cost synergies creation annual of growth, a potential capital and from and on $XXX cash and balance additional for returns generation, robust generation upside

extensive and such across turn to fleet. structure the quantify, of but our combined in aggressively the procurement on full the to strong attention the Once as of streamlining compelling the company areas areas quantifiable identified focus logistics, a we'll potential corporate as an transaction in marketing, capturing equally opportunities longwall as harder well with best blending, of realize sharing synergies pursuing practices significant the closes, we've the

about bring X are its how industry a closing, high-rank leader, again me and Arch global enthusiastic the to lines that are close making global core more than the let operations successful to will strong pending well in merger excellent dynamics and ever XXXX. progress capitalize to the thermal companies create the merger confident market both for seaborne We're which business, of on we coal. metallurgical In are of aligning promising the way themselves the say a a in equipped

your that, take be we'd questions. With happy to Operator?

And with Riley from our Instructions] first [Operator Lucas comes question B. Securities. Pipes

on on and the and West operations election missed year for as if coal Good to Thank first price? thermal expectations and domestic Paul, it, you you morning, or Elk update next relates to pricing met but Happy for able American is as side, everyone. for coal And the And contracts much. my contracts apologies very would it PRB provide then to tonnage day. you an well. I be speak XXXX. could North question those

I repeat it as it to same X I we North thing. will been years, to the quite thing willing pricing you're is is said be logistics the international probably of the as really what lot walk going very the last we markets in if that. think is I away value that to appreciate in a far to XXXX which compared from But and think think American I'll low too the see in business. There's what we've

in about I number If North down X years at -- think much our think I look back coking be business ago, XX% think did of If coal I XXXX, we could that lower. I America.

just and that we And right have we're under tons now, X.X $XXX committed on price. about million

So that's end where we up, fine end with why Lucas. I'm we up, that's

I'd that add bit. on includes a which to little High-Vol so That one point just XX% now B, weighs about that. final about XX% more,

$XXX was of a fair So given small market that price given a price fair amount thought that we soft today's fact, that, tonnage. for that environment -- current

we and we the thing but haven't XXs to plus our or price $XX lot $XX low we're be, now. of compared still One Lucas, given it can Yes. a call detail, average right

because right of for and now, higher that that to way level the able we've to maintain with blow able and managed that at keep beyond. we've but expand, been market pricing level. is customers been And we've and been at soft, of sort that, willing XXXX to deferrals pretty that But Lucas,

the at the really there I start done then contracts are despite we've managing that really Elk, fact are the think to we off, look, when so roll the book And to due. lower. look you scheduled that now, job prices come nice carefully as And a right legacy West existing published

are higher. as the industrial $XX legacy that around at at in getting that's average getting this and space So of year, we've off those much the with prices got roll contracts are -- end $XX that as replaced on

product. we where capture the value. a really so far, But committed shaking good volume able yet. Now to all it's That's out. that's haven't scarce We're

BC sort we'd also to fact set up work that the kicking contribution the so the West see side, higher mid-XXXX if down expect of related on in. XXXX we coal, and And commitments again, in perspective. BC as would coal it newer roll-off then then we thicker then see of transition as our that's in think a legacy that first in additional these of as XXXX well about is an comp the Elk to the to reiterate margin step-up from quality So cost the in even year and step development contracts terms you the

shaping things Elk next for up how are about West for enthusiastic So year.

that? high that the I appreciate Question What's that High-Vol A are detail. the kind on markets on A noted of few take. to Any the oversupply, are what take about? environment, Leer the oversupplied. in of your peers that -- markets. kind ability like all think to your And quantify High-Vol for market good product of netbacks you with agree if today's a

is, would other market this a it's is Look, say Lucas, the there obviously, Deck. not think Yes. soft than A A right for High-Vol out is overall. now, about market I market the products. What I little different High-Vol the generally

As moment, Paul market calibrated. the at fairly seems this finely said,

we maybe Now doesn't a little but far oversupplied seem little from don't are balance. like a we and -- it's it bit soft

much not more sort virtuous into of to of take I segment so a tip it's sort going think, of cycle. the to things And

production as Paul you've flat globally relatively and about, indicated, supply more the think you for from U.S. metal Australia, the aggregate China, flat, right world, hot relatively Canada now. if got excluding So

on no exports front. that Chinese up. So steel are change

are as on a imports So up side, seaborne Chinese negative flip the well. coking that's coal

calibrated relatively So finally again, here.

that. market. to our focused terms We've seeing where continue all come marketplace. in going for listed products urgency appetite interested is are Asian We in being next very supply of significant all But and buying. our buyers not see not the pricing for the had products finding really of on from like to uptake very products. behind year in good Asian in the It's our for There's we're

for that stock. brand providing all it your A so quality, look, and a And that a blend but providing properties of both also High-Vol because CSR plastics CSR a we're those I good make in around would such say that's particular, very is XX high

range, [indiscernible]. the So the the fluidity, temperature strong wide high

the into all So put result things the you more a when at that of that is coke end the blend, those homogeneous mean oven. also back coke

of couldn't the would buyers look be I not happy reasons. terms more our say buy We So necessarily the also for the uptake in product High-Vol fluidity. A this, lots the It's CSR. just for It's Asian there. high of

only We we continue production so buyers to able the increase volume the coke big like the to continues are very and of are really, think But access, talk in with amount build but pleased Leer volume. a we the enthusiasm only because for we to -- Leer new out there, again, are can dissimilar customers we products, so there's Malaysia, that, Indonesian think eager for there. much to Chinese strong our really High-Vol demand in particular, they're merchant places other A to the we're really have much that and products dynamics not about climb

small There's points. X other

one we I pushing think think, market my of back I indication on is in volume. is make, customers should and best that the are

my in As that. I not of any we're said prepared remarks, seeing

accelerate fact to would that shipments. normal seeing had what I I by customers still call some also demand. And trying So we the was we're surprised

other make of remarks, ship -- my through about Bay. as were had at suffer order we I to incident point to the shipments is because I noted XXX,XXX tons like we in Curtis -- the think of I'd prepared lost

either. As go X.X of where a look necessary think million market just coal fine that lot in to push it, tons up right I up, don't market the about at. now with And just out of we inventories. I the feel I it's the quarter at is means ended Look,

the or the of be flat supply-demand heading general should we're to think X help think going year. And on I another things patient quarter like balance. I this being in new into

date a shareholder the vote? missed a if try I there and sorry Is for I'll it. one, quick

yet. Not

next comes Company. Nathan question with Our Martin Benchmark the from

or realizations of discount. peers second morning. the of your Good netback of idea of what the one it kind part follow-up and some an know questions regarding I higher-than-normal don't looks a Maybe of you if price on reflecting just give are seems right maybe like Lucas' that now. deck. the could seeing like Again, you us

So that be might helpful.

Nate. Yes,

look how So perspective. that. QX, netback But at there. during price there I would would say HVA reasons you When you average light little that, a of get a a was I understand of look, are I the for it look, say, couple from

QX, June in volume, shipped that a The priced in amount a up is first during environment. that in fair particularly end declining of QX we market getting

So of we even up the look coming to somewhat the provisional committed realization QX pricing in lower. that higher, though some average you in ended if at had as being QX in

did that on little netbacks. So bit those a roll

convergence premium of on But pricing. lows also the point to HVA

know, a you there ship times as As we Asia, into is transportation differential.

pricing counterbalance for And to so PRB premium in vol for served recent prices. low really quarters differential transportation those that were on that that stronger tons based had committed

those is, of our doubt. as to without good having lots news good there The discussed, for over that are discount. that on somewhat out time. that not good a that there really use we We're is different the I weighed there's would is news we're But say our itself things appetite all average news -- both So good the will ride structures netback. products.

products the well simply to But there even move to of we're environment, having great I out having success for which and soft bode Asia. the market really further and in there, our going flagged does we're them, underscores in go tons discount in just terms these the getting to having in think future not

merger. to want about to guidance guys Thanks I the out, given loader kind called challenges for obviously, But XXX,XXX ship outage, mean to the of fourth quarter, quarter. due the shifting of give don't I Deck. appreciate year full there. the do longwall other extended over you the in fourth you coal Maybe lost third Is that, the well some quarter? about, updated Or in called moves as guys that weaker case. headwinds reasonable the as sequentially we're you could out and as met it think to not markets tons shipments such you shipments of the that assume increase make talking the

this months, reference come Look, was but the later excuse expected at we conditions South X up some an constantly couple year well. week -- I the coming to we longwall the is encountering. we think areas. Leer. -- lot way difficult some of the Leer is X of Leer lots extended one believe last is here weeks in after would to South had They've long where I've very in in longwall were a of that And set still and District that, it Look, to very Leer up team I QX of panel in a have due huge good of look a news for call year. good District And looks couple start had and time, delivered period we reasons. the that have the I've me, what through optimism. faith at we Both move also we're had And very and is, in ourselves the of difficult through stretch

as on And general But half, Part prepared history what into for XX, push we look XX would of is, a just would residual really week, said of look at get going am next coal years, some every carried our a a had very just last the well with way lot market that's October, what of of I we early I is similar that of And not respond, the just in simplicity doesn't to later QX back the it. quarter bad volume-wide. if than in QX, remarks, we'll you start kind QX of we're at did a I kind starting week. look performance and I of expecting this in step-up the pretty quarter, in I years, back to QX. and pains couple in not Leer in those the in and into

anticipated, in in we're be the I in come just it guidance both panels. the think general out I explicit but And look relatively second, start-up the on the of better rest what want can at we quarter. you saying didn't rest, to in than we I give if And I think cautious

I think you that everything before. we're going much we've can else infer from be to the as silence said pretty on

just final one. maybe then one And

a pretty guys thermal the about heading of You proposed just role thermal coal CONSOL? gave merger the into about think the your kind remarks of of assets I with you discussion prepared those in thorough business. closing do guess how

going business. Elk start seaborne in with easiest Elk. of which So is player Elk next the for West plus. West West is business in years I'll XX our thermal a pursuing be clearly the big strategy that one, high-quality fits to

So has Elk clearly, West a place.

on You a been and tougher I've very years of about the fits move to it's whether it couple discussion. do. we what PRB, last open the longer-term in in can portfolio,

upfront. that But no to our be value reclamation We'll we alternatives no continue no day, about made leases, the listen that do to forward, clean And of with about to what bonds, we're we've we've we've truly and fund going with mean mine to that, definitely is. listen permits, But -- to But bones get at end people it, could I the exit. If talking value we it. we no view to if somebody them. of that And it a give willing to aside us to so. of out and of with a it will by has set do someone's have the the will clear exit. brought the

the approaching little fit and heat the particular, again is. good just what West and sulfur. of Elk it we high-quality will the West think already ranked seaborne X of in you're move we more is and product Elk low XX,XXX West up about But you color as BC talking add terms a be PAMC, very as a around content that coal. BC, in in the When the marketplace. into a highest Elk Maybe move just coals will Btu I'll bit Look, into about

fit couldn't that better. So be

is with fact core a there'll an We're frankly, seaborne think going focused understanding has enthusiastic, forward strong portfolio. greater fit it only that The West a and I the thermal exceptionally the quite truly Elk be us been is being market. appreciation asset of asset our that for on and

Capital comes Markets. The next with from question Katja BMO Jancic

let's have might Or geology. through when back that more going it missed was normal say, mentioned a you Leer challenging operations? this, I expect of a to, but now behind? Is should bit we

behind Leer The and of I'd rough South is started October both both that. through good off longwalls kind longwall I'm what are Paul. this Katja, is late indications, It the the longwall all in by back our will through going expecting news to pretty or really be of into we're expecting good, are. to Leer September with later say, are period a kind this a we're was pick it. days what expectations start in and and production that up panels week couple of And mines.

a remind like be would Leer. at what level you And normalized production Can us?

million about a wouldn't after to basically Yes at the quarter, that. that going and fourth we've better Leer roughly, at be than coal and quarter. continue X both quarter normalized ramp into still up. -- done blends surprised been running tons I slightly a fourth Leer we've South is coking rate to the

to a got to of end of that mine. potential continue District and some increase it's has coming the saw a operation rates family of its ability up of we grow last think got some X, our production. and that I lot good really think at at still optimism I to chance

at in of foot expectations. It coal the is to in X South, team Everything picker Leer we've District high in of we're been seeing nearly is where there our X. relative reflective terms a District

yields, there, into that So which higher and being should a then also coal should XXXX. very improvement substantial thick costs translate very into Leer lower in and translate

So developments in well for strong bode both execution really those XXXX.

on focus X but a getting in a know, little we're District been about about we've what development to Paul as really indicated, talking Leer that from South, transitioning seeing. And X good X a lot ready. District lot we've you at District and put slower feel As of was

X, be the through proceed the District But at to we move ready next had for expect that's to -- roll District to we have as longwall in this down the go quarter. as in we So X X. so first panel and weeks been on of that development we the panel first look or

we're positive quite really what seeing. feeling So about

X still So South that year per that to is to million X coal should seeing District Leer we be fair it plus? entered production assume closer now that tons

don't fully integrate there that numbers and here. budgeting We've budgeting with to process out putting before own appropriate expect like too avoided feel long. our we're through and Obviously, process going consult is our

So saying we're not going But Leer to Leer what both to South, clearly, we're guidance. expect provide is be that explicit higher. we and productivity

be We lower. clearly a should translate in That expect overall costs portfolio into to better XXXX. performance for metallurgical the

The Research next question comes from Michael Dudas Partners. with Vertical

are side some just on some thoughts to where see be maybe that as supply Paul, Appalachia, softness, a if get the And is that's it's pricing stress Maybe will coking labor how share coal some it whether you the we into move noticeable? sense seeing vendors, on XXXX? to product. continue in going of et side or the out you play given from for And cetera?

We hear. got you and pieces, apologies, to can but repeat? struggling Michael bits we're Hey,

me you Can hear now?

Yes, it's much better.

I'm sorry. Okay.

given talk in is weak supply seeing pull I what or side from market Just the that vendors more see would next could of the And kind Paul, supply meaningful just or back? labor flows in that the marketplace? quarters, some Appalachia, the think of are you couple

people I are of indicators, issue. would I leading on the of call look a -- an sudden think what you not all which hit main are some

finding the really that's people as time. long we're well work think I by the pressure, -- mean, in And as the And have diminished. mines as just I to on been now, shape main pressure We indicator. as labor wages in the a has a first good we've

availability we're to lead on dropping. think is the second the on starting equipment better see parts some also I And hear of supplies. you're one that starting that's times the and to

think good And remarks, mines periods line I everybody. particularly drop think Look, kind off telling seeing a indicators weak some I all is markets in pressure for we're So that to the coming. smaller slowdown of side, end, and production there is the the I those the in said starting but you as cost hit of of these fun, aren't any it's cleaned them. it my

talked prices asked where about continue that's And view. these not anywhere to don't about indications got work lot cash. to that And -- leading there probably our can't is producers out are the first and -- Mike, just you a Paul generate and been say Appalachia of we've the reality that's struggling. But quartile you've players it, is

sustaining even prices you're that when well like seen. other And Australia, breakeven, post are things horses even at royalty in back pressures I'd below Australia, with change particularly we've looking capital, the you and structures add big that say the a the the there in in

pressure. down is So positive. we're itself where believe a have much positively to side longer. think for are It's coking could stay A supply little influence and if and might it prices the going we what significant markets certainly the on this these demand the fix they do market And why come under will trend. feeling as by well XXXX coal about prices. where But would I same token, uptick be

was as better quarter a make try than say last the want because don't to I was I'd I'd QX bad quarter the was as I the it $XX of to any of and comment mines probably the tough cost, bottom make, sound it still in the there's U.S. mean below money that's are that the midpoint. prices. at lot $XX at out a these of

improvement maybe and helpful the timing everyone. duly Thank improvement market, Yes, Deck for guess noted, the quite be and transaction I in that on could operations you. given in your the Paul

to would Lang any remarks. closing to back conference turn concludes like Paul over I our question-and-answer for This the session.

again same exciting long and anticipated But new merger, successful resources. the chapter be but for our with it's closure Arch, interest Thank natural an not you starting history. we'll turning of time today team core also a your only Upon page the in over years. CONSOL many at in the

forward to new I believing it the to this possible. this As path tirelessly merger transition, ensure Arch Board, thank our and we is beginning Throughout the the the that fruition, to the made process, CONSOL to value people management employees, team, prepare bring success. worked who the creation company's long-term for selflessly of want the employees have the right

other delivery. With safe look actual possibility admirable its true call. of its and conclude call, shareholders forward the resources professionalism been Stay for and are part bet an It's reporting the to of we'll and healthy everyone. as first in the organization, that earnings stakeholders operator, their of show QX in that, the group quarter the I to

concluded. for has today's you attending Conference presentation. Thank now

You disconnect. may now