The Coal Trader

Coal Mining Arch Resource (ARCH)

Arch Resources Reports Q4 2023 Earnings

Arch Resources generated strong results in Q4, fueled by a robust metallurgical segment and improved thermal performance. They expect continued growth in 2024 and increased shareholder returns.

Key takeaways:

  • Net income: $114.9 million ($6.07/share) vs. $470.5 million ($23.18/share) YoY.
  • Adjusted EBITDA: $180.0 million vs. $256.5 million YoY.
  • Revenues: $774.0 million vs. $859.5 million YoY.
  • Highlights:
    • 10% reduction in average per-ton cost in metallurgical segment.
    • 24% improvement in average coking coal sales realization.
    • 52% increase in per-ton cash margin in metallurgical segment.
    • Increased cash and equivalents to $320.5 million, resulting in a net cash position of $178.4 million.
    • Declared a quarterly dividend of $31.6 million ($1.65/share), payable on March 15th.
    • Repurchased 20,000 shares at an average price of $151.96.
    • Achieved independent Level A verification at Leer mine under the Towards Sustainable Mining framework.
  • 2024 guidance:
    • Coking coal sales volume: 8.6 – 9.0 million tons.
    • Expect another first-quartile cost performance in metallurgical segment.
    • Anticipate solid contribution from thermal assets.
    • Expect to generate substantial discretionary cash flow to fuel capital return program.

Management commentary:

  • CEO Paul Lang emphasized their progress on key strategic objectives and delivering value to shareholders.
  • COO John Drexler highlighted their focus on further improving operating execution in the metallurgical segment, particularly at Leer South.
  • Lang reiterated their commitment to returning 100% of discretionary cash flow to shareholders over time.

Overall, Arch Resources delivered a strong Q4 and outlined optimistic guidance for 2024, indicating continued growth and shareholder value creation.