Arch Resources Inc (ARCH, Financial) released its Q3 2023 earnings update on October 2, 2023. The company expects coking coal sales volumes for Q3 2023 to remain generally in line with those reported in Q2 2023. This is primarily due to ongoing challenges in mining in the first longwall district at its Leer South mine.
Revised Full Year 2023 Guidance
Due to the revision in sales volume expectations, Arch Resources Inc (ARCH, Financial) has revised its full-year 2023 guidance for coking coal sales volumes to 8.6 to 8.9 million tons. The company has also adjusted its average metallurgical cash cost guidance to $88 to $91 per ton.
CEO Commentary
While we remain enthusiastic about Leer South’s long-term outlook, the conditions in the first longwall district – which, as previously discussed, represented the most capital-efficient access point for the Lower Kittanning reserve base – continue to constrain advance rates," said Paul A. Lang, Arch’s chief executive officer and president. "In light of these conditions, we are moderating our volume and cost expectations for the balance of the year, even as we continue to benefit from a strengthening coking coal price environment."
Financial Highlights
Despite underperforming relative to initial expectations, Leer South has now generated approximately $470 million in segment-level adjusted EBITDA since its startup, versus an initial capital investment of approximately $400 million.
Arch Resources Inc (ARCH, Financial) preliminarily expects adjusted EBITDA for Q3 2023 to be approximately 10% lower than the total reported for Q2 2023. The company expects discretionary cash flow – defined as cash flow from operating activities less capital expenditures – for Q3 2023 to be more than half the total of $150.7 million achieved in Q2 2023, which included a working capital reduction of $62.5 million.
Upcoming Financial Results Announcement
Arch Resources Inc (ARCH, Financial) will discuss its Q3 2023 financial results in an investor conference call on Thursday, October 26 at 10:00 a.m. Eastern Time. The actual third quarter 2023 financial results will be released on the same day.
