GILLETTE, Wyo. — Coal mining and processing company Arch Resources reported Thursday that while its first quarter 2023 net income was down compared with the first quarter of 2022, its revenues were higher.
The company’s legacy thermal segment contributed adjusted earnings before interest, taxes, depreciation and amortization of $46 million in Q1, against capital spending of roughly $6 million, Arch’s news release said.
“Thermal segment margins were hampered by improved but still sub-optimal rail service at its Powder River Basin mines, as well as geologic challenges at the West Elk mine in Colorado that acted to constrain volumes and erode product quality at that operation,” the release said. “Arch expects the challenges at West Elk to continue to hamper the thermal segment’s sales volumes and to pressure unit costs over the next two quarters, at which point the mine expects to transition to an area of more advantageous geology.”
Since the fourth quarter of 2016, the legacy thermal segment has generated roughly $1.3 billion in adjusted EBITDA while spending $144 million in capital, the release said.
The company’s first quarter 2023 net income was $198.1 million, compared with a net income of $271.9 million, or $12.89 per diluted share, in the prior-year period, the release said. Before interest, taxes and other non-operating expenses, the company earned $277 million in the first quarter of 2023, including a $1.5 million non-cash mark-to-market gain with coal-hedging. In the first quarter of 2022, the company made adjusted earnings of $321 million, including a $15.5 million loss associated with coal-hedging.
Revenues were about $870 million for the first quarter of 2023, up roughly $2 million from the first quarter of 2022, the release said. In the first quarter of 2023, the company made a sequential step-down in cash cost per ton sold in the core metallurgical segment and deployed $125 million via the capital return program.
So far, the company’s spent more than $1 billion through the capital return program since the program’s February 2022 relaunch. That includes $571 million in dividends and $444 million in common stock repurchases and convertible security settlements. Arch has also reduced its debt by $26.6 million and gained a surplus of $71.2 million.
“Arch maintained its strong operational momentum in Q1, as the team capitalized on improved coking coal prices, drove further productivity gains in our core metallurgical segment, and achieved a more than 30-percent increase in coking coal margins on a sequential basis,” Arch CEO and president Paul Lang said. “At the same time, we forged ahead with our efforts to simplify our capital structure and strengthen our balance sheet via the settlement of the remaining convertible debt and the repayment of incremental indebtedness. Perhaps most significantly, we continued to direct substantial amounts of capital — and 100 percent of our discretionary cash flow — to our value-driving capital return program.”
Lang said Arch has extended the global reach of its coking coal products, simplified its capital structure, and extended its environmental, social and good-governance policy practices.
“We believe this significant progress — across every facet of our business — sets the stage for continued success, strong discretionary cash generation, and robust capital returns in the future,” he said.
The release includes precise financial data.