Arch Coal, Inc. Reports Third Quarter 2019 Results

– Maintained excellent momentum in core coking coal franchise, with strong volumes and effective cost control

– Signed agreement that will increase High-Vol A reserves at Leer mine by 24 million tons at a cost of around $2.50 per ton; will extend mine life to late 2030s

– Secured $39 million in credits – via the resolution of a 1970s-era land dispute – that will be used to offset federal royalty obligations

– Invested $91 million to buy back 1.2 million shares of stock; have now reduced share count by approximately 40 percent since initiating capital return program

– Committed 1.5 million tons of coking coal for delivery to North American customers in 2020, at an average price of approximately $110 per ton

ST. LOUIS, MO (STL.News) Arch Coal, Inc. (NYSE: ARCH) today reported net income of $106.8 million, or $6.34 per diluted share, in the third quarter of 2019, compared with net income of $123.2 million, or $6.10 per diluted share, in the prior-year period.  The company had adjusted earnings before interest, taxes, depreciation, depletion, amortization, accretion on asset retirement obligations, amortization of sales contracts, and non-operating expenses (“adjusted EBITDA”)1 of $106.6 million in the third quarter of 2019, which includes a $1.5 million non-cash mark-to-market loss associated with the company’s coal-hedging activities.  Not included in adjusted EBITDA is a $39.0 million gain resulting from the settlement of a 1970s-era land dispute.  This compares to $124.9 million of adjusted EBITDA recorded in the third quarter of 2018, which included a $10.4 million non-cash mark-to-market loss associated with the company’s coal-hedging activities.  Revenues totaled $619.5 million for the three months ended September 30, 2019, versus $633.2 million in the prior-year quarter.

“During the quarter, Arch again exhibited operational excellence and generated strong cash flows across its operating platform despite a pull-back in coking coal prices,” said John W. Eaves, Arch’s chief executive officer.  “Our core Metallurgical segment turned in an excellent cost performance, overcoming elevated costs in the final longwall panel at the Mountain Laurel mine, and our legacy thermal segments generated five times more cash than they expended in capital.  In addition, we made significant progress on our ongoing capital return program, investing $91.4 million to buy back nearly 1.2 million shares, bringing total repurchases since May 2017 to nearly 10 million shares, or approximately 40 percent of initial shares outstanding.”

During the third quarter, Arch returned a total of $98.4 million to shareholders via buybacks and dividends, and has now returned $255.3 million through the first nine months of 2019, which is 18 percent more than during the same period in 2018.  All told, Arch has returned $894.8 million to shareholders since launching its capital return program in May 2017.  At quarter-end, Arch had board authorization to expend an additional $233.1 million on share buybacks, out of a total authorization of $1.05 billion.

“We believe we are in a highly advantageous position to drive long-term, sustainable returns for our shareholders across a wide range of market conditions,” Eaves added.  “In coming quarters, we expect to improve further on our first-quartile coking coal cost position; continue to generate cash from our thermal assets well in excess of our capital spending requirements; drive forward with the accelerated build-out of our world-class Leer South growth project; and return additional capital to shareholders.”

NOTE: this is NOT the complete report.


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