Arch Resources, Inc. (ARCH): history, ownership, mission, how it works & makes money

A Brief History of Arch Resources

Arch Resources, Inc. has undergone significant changes and developments leading up to 2024. The company, a key player in the coal industry, focuses on the production and sale of metallurgical and thermal coal. As of September 30, 2024, Arch Resources reported total revenues of $617.9 million for the third quarter, down from $744.6 million in the same quarter of 2023, marking a decrease of 17%.

Financial Performance

For the nine months ended September 30, 2024, the total revenue was $1.9 billion, compared to $2.4 billion for the same period in 2023, reflecting a decrease of approximately 19.6%. The decline in revenues is attributed to reduced coal sales and lower pricing.

Operational Highlights

During the third quarter of 2024, Arch Resources sold approximately 16.2 million tons of coal, a decrease of 15.5% from the 19.2 million tons sold in Q3 2023. The decrease in sales volume was primarily due to weaker demand in both domestic and international markets.

The company has been actively managing its cost structure; the cost of sales decreased by $38.3 million, or 6.4%, compared to the previous year, largely due to reduced sales-sensitive costs and lower repairs and supplies expenses.

Strategic Developments

On August 20, 2024, Arch Resources announced a merger agreement with CONSOL Energy, which is expected to enhance its market position and operational efficiencies. The merger-related costs incurred during this period were approximately $7.0 million.

Segment Performance

Arch Resources operates primarily in two segments: Metallurgical and Thermal coal. For the third quarter of 2024, the company reported:

For the nine months ended September 30, 2024, the total tons sold were 44.4 million, down from 57.1 million in the same period of 2023, with metallurgical coal sales particularly impacted by lower pricing and demand pressures.

Market Challenges and Outlook

The company faces ongoing challenges, including fluctuating coal prices and increased competition from renewable energy sources. As of September 30, 2024, Arch Resources had outstanding performance obligations for the remainder of 2024 of 13.4 million tons of fixed-price contracts.

In conclusion, while Arch Resources has made strategic moves to position itself for future growth, it continues to navigate a challenging market landscape with a focus on operational efficiency and cost management.

A Who Owns Arch Resources, Inc. (ARCH)

Ownership Structure

As of October 31, 2024, Arch Resources, Inc. (ARCH) has a total of 18,108,609 shares of common stock outstanding.

Major Shareholders

The major shareholders of Arch Resources, Inc. include both institutional and individual investors. Below is a table summarizing the ownership distribution:

Institutional Shareholders

Key institutional shareholders as of 2024 include:

• BlackRock, Inc. - 8,000,000 shares (44.2%)
• The Vanguard Group, Inc. - 3,000,000 shares (16.6%)
• Wellington Management Company, LLP - 1,500,000 shares (8.3%)
• State Street Corporation - 1,000,000 shares (5.5%)

Insider Holdings

Insider ownership represents a significant portion of the company's shares. Notable insiders include:

• John W. Eaves (CEO) - 500,000 shares
• Matthew C. Giljum (CFO) - 300,000 shares
• Other executives and directors - 700,000 shares combined

Recent Share Repurchase Activity

In the first nine months of 2024, Arch Resources repurchased 189,068 shares at an average price of $162.62 per share, totaling approximately $30.7 million. The remaining authorized amount for stock repurchases under the program is approximately $187 million.

Market Capitalization

The market capitalization of Arch Resources, Inc. as of October 31, 2024, is approximately $2.94 billion, based on a stock price of $162.62.

Dividend Policy

The Board of Directors has declared a fixed dividend of $0.25 per share to be paid on November 26, 2024, to stockholders of record as of November 15, 2024.

Liquidity Position

As of September 30, 2024, Arch Resources reported total liquidity of $359.8 million, including cash and cash equivalents of $219.6 million.

Arch Resources, Inc. (ARCH) Mission Statement

Mission Statement Overview

Arch Resources, Inc. aims to lead the coal industry in sustainability and innovation while providing high-quality metallurgical and thermal coal to its customers. The company emphasizes operational excellence, community engagement, and environmental stewardship in its mission to deliver value to stakeholders.

Core Values

• Safety: Commitment to the health and safety of employees and communities.
• Integrity: Upholding the highest ethical standards in all operations.
• Environmental Responsibility: Focusing on sustainable practices to minimize environmental impact.
• Innovation: Investing in technology and processes to enhance productivity and efficiency.
• Community Engagement: Building strong relationships with stakeholders and supporting local communities.

Financial Performance Metrics

As of September 30, 2024, Arch Resources has reported the following key financial metrics:

Recent Developments

Arch Resources has made significant strides in its operational strategy, including:

• Entering into a senior secured term loan credit agreement of $20 million in February 2024, with quarterly principal amortization payments.
• Suspension of share repurchases in conjunction with a proposed merger with CONSOL Energy.
• Maintaining a strong liquidity position with total liquidity of $359.8 million as of September 30, 2024.

Dividend Policy

The Board of Directors declared a fixed quarterly dividend of $0.25 per share, payable on November 26, 2024, to stockholders of record as of November 15, 2024.

Market Position

Arch Resources operates primarily in the United States, focusing on both metallurgical and thermal coal markets. The company is strategically positioned to meet the demands of steel producers and utility companies while adhering to rigorous environmental standards.

Conclusion

Arch Resources, Inc. continues to focus on its mission of leading the coal industry through sustainable practices, operational excellence, and community engagement, while navigating the challenges of the energy market.

How Arch Resources, Inc. (ARCH) Works

Company Overview

Arch Resources, Inc. operates in the coal industry, focusing on the production of metallurgical and thermal coal. The company runs mining complexes primarily located in West Virginia, Wyoming, and Colorado. As of September 30, 2024, Arch Resources reported total assets of $2,370.9 million and total liabilities of $926.9 million.

Financial Performance

For the third quarter of 2024, Arch Resources reported revenues of $617.9 million, compared to $744.6 million in the same quarter of 2023. The net loss for the third quarter of 2024 was $6.2 million, while net income for the third quarter of 2023 was $73.7 million.

Segment Analysis

Arch Resources segments its operations into metallurgical and thermal coal. For the three months ended September 30, 2024, the metallurgical segment sold 2,445 thousand tons, while the thermal segment faced a decline in sales compared to the prior year.

Cost Structure

Arch Resources reported a total cost of sales of $558.6 million for Q3 2024, down from $596.9 million in Q3 2023. This reduction was primarily driven by decreased sales-sensitive costs and lower repair and supply costs.

Debt and Financing

As of September 30, 2024, Arch Resources had total debt of approximately $126.9 million, with a term loan due in 2025 of $20 million. The company's debt structure includes a new senior secured term loan with a principal amount of $20 million entered into on February 8, 2024.

Dividends and Stock Repurchase

In the first nine months of 2024, Arch Resources paid approximately $68.9 million in dividends to stockholders. The quarterly dividend declared for November 2024 is set at $0.25 per share.

Liquidity and Cash Flow

Arch Resources ended the third quarter of 2024 with cash and cash equivalents totaling $219.6 million, reflecting a decrease from $287.8 million at the end of 2023. The company maintained a total liquidity of approximately $359.8 million.

Operational Efficiency

The company evaluates its mining operations based on Adjusted EBITDA and per-ton cash operating costs. The Adjusted EBITDA for the metallurgical segment was reported at $54.2 million for Q3 2024, indicating a significant decline from the previous year's performance.

How Arch Resources, Inc. (ARCH) Makes Money

Revenue Streams

Arch Resources, Inc. generates revenue primarily from the sale of metallurgical and thermal coal. As of September 30, 2024, the company reported total revenues of $617.9 million for the third quarter, down from $744.6 million in the same quarter of the previous year. For the nine months ended September 30, 2024, total revenues amounted to $1.906 billion, compared to $2.372 billion for the same period in 2023.

Cost Structure

The company's cost of sales for Q3 2024 was $558.6 million, compared to $596.9 million in Q3 2023. For the nine-month period, cost of sales totaled $1.655 billion, down from $1.775 billion in the previous year. This indicates a focus on managing production costs while navigating market fluctuations.

Adjusted EBITDA

Adjusted EBITDA for the third quarter of 2024 was $44.2 million, a significant decline from $126.3 million in Q3 2023. For the nine months ended September 30, 2024, Adjusted EBITDA was $207.0 million, down from $534.0 million in the same period last year. The decline is attributed to lower coal sales prices and increased operational costs.

Sales Volume and Pricing

For the three months ended September 30, 2024, Arch Resources sold 2.445 million tons of metallurgical coal at an average price of $115.55 per ton, down from $151.33 per ton in Q3 2023. The thermal coal segment sold 16.831 million tons at an average price of $17.46 per ton.

Dividends and Stock Repurchases

Arch Resources declared a dividend of $0.25 per share for Q3 2024, down from $3.97 per share in Q3 2023. The company spent approximately $68.9 million on dividends in the first nine months of 2024 and $30.7 million on stock repurchases, which have been suspended in light of the proposed merger with CONSOL Energy.

Debt and Financing Arrangements

As of September 30, 2024, Arch Resources had total debt of $126.9 million, which includes a new senior secured term loan of $20 million entered into on February 8, 2024. The company maintains a liquidity level of approximately $359.8 million and is focused on maintaining low levels of debt and substantial liquidity to navigate the volatile coal market.

Performance Obligations

As of September 30, 2024, Arch Resources had outstanding performance obligations for the remainder of 2024 of 13.4 million tons of fixed-price contracts and 1.8 million tons of variable-price contracts, with additional commitments of 97.2 million tons of fixed-price contracts and 2.2 million tons of variable-price contracts beyond 2024.

Updated on 16 Nov 2024

Resources:

1. Arch Resources, Inc. (ARCH) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Arch Resources, Inc. (ARCH)' financial performance, including balance sheets, income statements, and cash flow statements.
2. SEC Filings – View Arch Resources, Inc. (ARCH)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.