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Arch Resources reports $271.9M net income in Q1 2022

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GILLETTE, Wyo. — Building on its financial success in the latter part of 2021, Arch Resources Inc. started 2022 off strong despite supply chain hiccups and inflationary pressures, company officials reported today.

In an investor call, Arch reported a net income of $271.9 million, or $12.89 per diluted share, in the first quarter. For the same period last year, the company reported a net loss of $6 million, or 40 cents per diluted share. Revenues for the January–March period totaled $867.9 million, versus $357.5 million in the same quarter last year.

Arch Chief Operating Officer John T. Drexler attributed the financial performance to the company’s core metallurgical segment, saying it “executed effectively and well despite rail-related volume constraints, inflationary pressures and higher sales-sensitive costs.”

“As a result, we were able to capitalize on historically strong coking coal pricing and deliver a record gross margin,” he added. 

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Even as the company continues to pivot away from thermal coal, like that pulled in Campbell County, the segment earned $100.5 million in adjusted earnings while spending $4 million in capital, the company reported.

Arch has reduced the asset retirement obligation at its Powder River Basin operations by $39.4 million since the beginning of 2021, it reported. It’s also created a thermal mine reclamation fund it’s using to pre-fund the long-term mine closure and reclamation obligations at the Powder River Basin operation. The fund’s balance is now $100 million, company officials reported. Arch is targeting a funding level of $130 million, in line with the asset retirement obligation at the Black Thunder mine, by July 2022, a company news release stated.

“We are capitalizing on this period of historically strong thermal coal prices by pre-funding the long-term closure obligations of our legacy Powder River Basin operations,” said Matthew C. Giljum, Arch’s chief financial officer. “In doing so, we are setting the stage for strong, continued cash generation from these assets even as we move forward with winding them down in a careful and responsible manner.”

Arch expects to see favorable market conditions this year with its High-Vol A coking coal being assessed at $470 per metric ton and as steel prices in Europe and North America continue to trade at high levels. A choked global supply chain also is a factor in keeping coking coal prices up, the company stated.

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Supporting that market is strong thermal coal demand — Arch is trading at $300 per ton in the Pacific and Atlantic basins, company officials said — amid volatile global oil prices and rising natural gas prices. 

“We anticipate a significant increase in our financial results in the second quarter given the highly favorable pricing environment along with the anticipated step-up in coking coal volumes, and we also expect continuing strength in the year’s second half as shipment levels normalize and as we have the opportunity to monetize our high coking coal inventories,” Arch President and CEO Paul A. Lang said.


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