Arch Resources, Inc.

Good day and welcome to the Archer Resources Incorporated fourth quarter 2023 earnings call. All participants will be in a listen-only mode. Should you need assistance, please signal conference specialists by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your touchtone phone. And to withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Mr. Dex Sloan, Vice President of Strategy. Please go ahead, sir.

Good morning from St. Louis, and thanks for joining us today. Before we begin, let me remind you that certain statements made during this call, including statements relating to our expected future business and financial performance, may be considered forward-looking statements according to the Private Securities Litigation Reform Act. Forward-looking statements by their nature address matters that are, to different degrees, uncertain. These uncertainties, which are described in more detail in the annual and quarterly reports that we file with the SEC, may cause our actual future results to be materially different than those expressed in our forward-looking statements. We do not undertake to update our forward-looking statements, whether as a result of new information, future events, or otherwise, except as may be required by law. I'd also like to remind you that you can find a reconciliation of the non-GAAP financial measures we plan to discuss this morning at the end of our press release, a copy of which we have posted in the investor section of our website. at archrsc.com. Also participating on this morning's call will be Paul Lang, our CEO, John Drexler, our COO, and Matt Gilgium, our CFO. After our formal remarks, we'll be happy to take questions. With that, I'll now turn the call over to Paul. Paul?

Thanks, Dick, and good morning, everyone. We appreciate your interest in ARCH and are glad you could join us on the call this morning. I'm pleased to report that during the fourth quarter, ARCH continued to drive forward with our simple, consistent and proven plan for long-term value creation and growth. When the quarter just ended, the team achieved adjusted EBITDA of $180 million, generated $127 million in discretionary cash gain, bolstered our cash position by $107 million, consistent with our stated objective of building additional optionality for potential future stock repurchases, initiated plans underlying the cap call instrument associated with the now-retired convertible securities, declared a quarterly cash dividend of $32 million, or $1.65 per share, increasing the total capital employed in our shareholder return program since its relaunch two years ago for well over $1.2 billion, and achieved independent Level A verification at the Lear Mine under the globally recognized Towards Sustainable Mining Framework, becoming the first U.S. mine of any type to do so. In short, we demonstrated strong progress against many of our strategic priorities, spanning numerous critical areas of performance, including financial positioning, shareholder value creation, and sustainability. Critically, the team maintained its sharp focus on driving productivity improvements across the operating platform as well. Here, too, we made significant positive headway as we achieved a 10% quarter-over-quarter reduction of the average cost per ton in our metallurgical set. secured a nearly 25% improvement in our average cocaine coal realization, and delivered an increase of more than 50% in our operating margin. Overall, the team delivered improved productivity, capitalized on a strong market environment, and continued to lay the foundation for still stronger execution in future periods. Before moving on, let me make a few additional comments about our highly successful capital return program. As we've stated many times in the past, the cash return program is the centerpiece of our value proposition, and the central tenet of that program is the return to shareholders of effectively 100% of a company's discretionary cash flow over time. In any given quarter, of course, the amount of capital that is deployed in the program can and will vary based on several factors, including upcoming cash requirements, our minimum liquidity target, and the like. But those are just timing issues and do not change the fact that over time, effectively all of the discretionary cash groups are insurable. On the Q3 call, as most of you will have noted, we signaled our intention of increasing our cash balance by $100 million or so, which we believe serves to enhance the potential for opportunistic share repurchases in the event of a market pullback. During Q4, we accomplished that objective, adding $107 million to our cash division. With that completed, we believe we've now effectively positioned the company to continue the evolution of our capital allocation model towards a heavier share in purchases in the future. Matt will comment on the subject further in his remarks, but a major step in this regard is the planned settlement of the cap call instrument that we expect to complete in the near future. The settlement of the cap call in and of itself should result in the retirement of nearly 2% of our outstanding share. Turning our attention to the market dynamics, despite somewhat lackluster steel market fundamentals, coking coal markets appear reasonably well-supported at present. Arch's primary product, high-volume coking coal, is currently being assessed at $262 per metric ton on the U.S. East Coast, which, while a step down from the average price that prevailed last quarter, is still highly advantageous, particularly in line with Arch's first quartile cost profile. Moreover, the Australian premium low vol index is currently trading $53 per metric ton higher than the U.S. East Coast price, which is creating an attractive arbitrage opportunity for select U.S. volumes moving into the Asian market. Needless to say, we're sharply focused on trying to capitalize on that opportunity to the fullest extent possible. Of course, that focus on these opportunities aligns perfectly well with our already well-advanced objectives. of increasing our penetration in Asian markets. We expect future steel demand to be centered. The primary reason that coke and coal markets remain well-supported in our estimation is a constrained supply stemming from ongoing reserve degradation and depletion, mounting regulatory pressures, limited capital availability, and persistent underinvestment. In 2023, according to trade data, Australian coke and coal exports declined nearly 6% when compared to 2022. That brings the total decline in Australian exports to around 40 million metric tons, a more than 20% decrease since 2016, the peak year for the coking coal exports. While the U.S. and Canadian coking coal exports in aggregate bounced back moderately in 2023, offsetting the Australian decline to some degree, production for those two countries remains well below their respective peak levels. As a result of these factors, we remain constructive on the seaboard cocaine coal market and expect to continue to be in an excellent position to capitalize on this environment going forward. Looking ahead, we remain sharply focused on pursuing operational excellence relentlessly and hitting our volume and cost targets, extending the reach of our high-quality cocaine coal products into the fastest-growing global markets, continuing to reward shareholders through our capital return program, as it evolves towards a heavier share repurchase model, maintaining our strong financial position, while capitalizing on the optionality it affords during periods of market pullbacks, and advancing our industry-leading sustainability practices. We believe we're well-positioned to drive forward with all these objectives in 2024 and beyond, and, in doing so, continue to generate significant value for our shareholders. With that, I'll now turn the call over to John Gross for further discussion of our operational performance in Q4. John?