Arch Resources (ARCH) investor relations material

Executive summary

• Q3 2024 was marked by a net loss of $6.2 million and revenues of $617.9 million, impacted by softness in global metallurgical coal markets and oversupply in domestic thermal coal markets.

• Announced a definitive all-stock merger agreement with CONSOL Energy, with all international and HSR approvals secured; expected to close by Q1 2025, pending shareholder votes.

• Operational challenges included throttled production at metallurgical mines due to development work and a shiploader outage reducing coking coal shipments by 200,000 tons.

• Initiated a voluntary separation plan in the Thermal segment to align workforce with lower sales volumes.

• Declared a $0.25 per share dividend, totaling $4.6 million, payable in November 2024.

Financial highlights

• Q3 2024 revenue was $617.9 million, down 17% year-over-year; net loss of $6.2 million compared to net income of $73.7 million in Q3 2023.

• Adjusted EBITDA for Q3 2024 was $44.2 million, down from $126.3 million in Q3 2023.

• Cash and short-term investments at September 30, 2024: $255.9 million; net cash position of $127.7 million.

• Paid down $5.1 million in debt during the quarter; total long-term debt at quarter end was $126.9 million.

• Declared a quarterly dividend of $0.25 per share; share repurchases suspended pending merger completion.

Outlook and guidance

• Leer and Leer South longwalls expected to resume normal operations imminently, with improved performance anticipated for 2025.

• Most lower-priced legacy contracts at West Elk mine expected to expire by year-end 2024, with higher contract prices anticipated.

• Expect continued volatility in coking coal prices due to underinvestment and supply disruptions; long-term support anticipated from limited new capacity and eventual economic growth.

• Domestic thermal coal demand expected to remain pressured by high utility stockpiles, low natural gas prices, and increased renewable generation.

• No explicit full-year guidance provided due to the pending merger.