UK Markets closed

Arch Resources, Inc. (ARCH)

NYSE - Nasdaq Real-time price. Currency in USD
Add to watchlist
168.24-3.12 (-1.82%)
At close: 04:00PM EDT
169.26 +1.02 (+0.61%)
After hours: 07:59PM EDT
Sign in to post a message.
  • J
    Joseph
    Nordstrom Capital hedge fund quarterly newsletter says "ARCH is not only an inflation beneficiary, but also a growth company. Its met coal production is guided to increase more than 20% this year. Leer South, a large brand-new modern coal mine will reach full capacity only later this year."

    "ARCH trades at around $2.5bn enterprise value and is expected to deliver close to $1.5bn EBITDA in 2022
    alone (assuming $200 per ton coal, whereas current prices are above $300).14 ARCH’s current tax rate is
    essentially zero.15 Management guided CAPEX at $150m for this year and announced to payout 50% of
    free cash as dividends, the remaining 50% might be used for share buybacks16. Thus, at less than 2-times
    EBITDA, an investment in ARCH today might result in a 25% cash payout and another 25% reduction in
    the share count this year (assuming such a large buyback would not increase the share price). Handsome."

    My take is that today and Tuesday should see shares adjust for the $8.11 payout and offer a buying oppertunity.
  • R
    Robin
    I see ARCH Q2 EPS of $27. Dividend of $14.00 (slightly higher due to some convert left) and about $13/share in buybacks (i.e, $250 mm) during Q3. ARCH has to be well over $200 by the time they repot Q2 (but should be over $200 now).
  • R
    Robin
    The brdieg to far higher Q2 EPS for ARCH is simple
    - Start with Q1 EPS of $13
    - Met coal price relaization in Q2 about $100/ton higher than Q1 (all coal producers price to 1-month lag so Q2 sales price based on Mar-May benchmarks)
    - Q1 had met coal sales of 1.5 mm tons or which 0.9 mm tons was sold at spot (so that 0.9 mm tons sold at $90/ton higher - $100/ton minus 10% royalty) = $81 mm more EBITDA
    - Q2 sales volumes should 0.75 mm tons higher than Q1 due to improved rail (though at 2.25 mm tons is still below its mining rate of 2.5 mm tons) and then multipled by $400/ton - $40/ton for royalty - $25/ton for production taxes - $80/ton for costs = $255/ton = $191 mm more EBITDA
    - Combined Q2 EBITDA is around $272 mm higher. Given maybe someother costs, small taxes taxes stil zero that adds about $14/share. That makes Q1 EPS $27.00 Expect dividend of $13.50.
  • J
    Joseph
    Form 8-K filed today says $125.2 million principal amount of its 5.25% Convertible Senior Notes due 2025 were swapped for $130.1 million in cash and approximately 2.6 million shares of Arch Resources’ common stock. So that means these $125.2 million of notes were swapped for $572 million assuming a share price of $170. I would have loved to be a note holder for a 456% gain not counting the interest payments made earlier!!
  • R
    Robin
    Man, it is so satisfying seeing ARCH up $10.18 the day before ex-dividend of $8.11.
  • R
    Robin
    The Q2 EPS math is simple. Start with Q1 EPS of $13 (fully diluted). ARCH producing about 2.5 mm tons/quarter and will sell about 0.6 mm tons/quarter at fixed prices. In Q1 it shipped only 1.5 mm tons due to CSX shipping issues. ARCH guided to 50% increase in Q2 shipments (say 2.25 mm tons) with rail improvements. Still below 2.5 mm tons, but close enough. So instead of selling 0.9 mm tons at spot in Q1 ARCH will ship 1.65 mm tons at spot. And this is very important. Q1 realized prices reflect Dec-Feb prices and Q2 will be Mar-May benchmarks. Met coal prices did not truly take-off until March. So while the benchmark prices may be flat Q/Q (around $475/tonne) ARCH and other met coal producers actually got $400/tonne for Q1 and will get $500/tonne for Q2. Easily see ARCH Q2 EPS of $25 and then paying a dividend of $12.50. and important to note other 50% of free cash flow is being used for share buybacks. ARCH is stupid cheap. EPS in 2022 likely around $90 and paying $45 in dividends. and their thermal unit will have some unpriced volumes for 2023 - big upside from that unit in 2023! Q2 will be "Ka-Pow!"
  • J
    Joseph
    I am here because Robin posts on another board and I am hoping for good results. I wanted to ask longer term holders of this stock if the 2nd quarter is as good as people on this board expect then is it possible that there could be a great short squeeze? ARCH has 15,477,360 shares outstanding with 4,990,000 short as of today. Largest borrow rate increases among liquid names as of 5/10 article listed only 10 companies and ARCH was 10.68% +4.15 for that day when the stock price averaged $160!! What are these people thinking?
  • R
    Robin
    I am surprised ARCH did not post a press release on the convert exchange. They will retire $125 mm of the convertible (as Tradedollarnut posted earlier = 80% of converts). Just cleaning-up the capital structure is a positive. and by using $130 mm of cash there will be less dilution for EPS goes up. The covnerts also motivated to get this done by May 25 in order to get that $8.11 dividend on May 26 (ex-div on May 27). such a nice event for ARCH!
  • R
    Robin
    I beleive ARCH shares will hit a new high tomorrow (or if we are lucky today). Did you see AMR up 11% yesterday? BTU also up 12% ARCH up only 3%. I believe ARCH's shares price upside being constrained by the 4-day VWAP to settle the common stock portion of retiring $120 mm of debentures. I have no idea of all of the dynamics and assume much of the converts had already hedged by shorting the stock (vast majrity of short position should be against the converts), but it "seems to me" there will be some additional selling of stock over the 4-day VWAP to do final settle. That VWAP ends today! so tomorrow there will be no more possible constraints to ARCH's upside.
  • T
    The poorly behaved boxer
    Divvy ex day today! Looking forward to DRIPing it to the monster Q2 divvy sometime in August/September.
  • T
    Tradedollarnut
    Tomorrow should be interesting to watch. Normally, ex div a stock drops even more than it’s dividend so absent an outside force I’d be expecting a large drop in Arch price tomorrow. But the dynamic between Arch and AMR is worth watching - they’ve been joined at the hip lately. Does Arch drag AMR down with it or does AMR act as a life preserver for Arch and keep it from falling as much. Or is the price relationship severed with AMR finally closing higher? I know I’ll be watching as it all plays out.
  • T
    Tradedollarnut
    Arch taking out 80% of the convertible debt. Retiring 20% of the dilution.
  • T
    The poorly behaved boxer
    ARCH is going to have one of the best 2nd Quarters out of all the met coal companies. The rail issues will be improved, the exposure to spot will have them blowing out earnings, and the thermal #s remain extraordinary. Looking forward to huge dividends & buybacks to commence ASAP!
  • L
    Lynwood
    Big down day this morning. However volume was low, no buyers for the few sellers. Fundamentals are still very strong. I would have bought more this morning but I didn't have any loss money.
  • L
    Lynwood
    How do you own 123%??? Most shares are held in the brokerage accounts.. The broker then loans the shares out (5 million shares in this case) to a short seller. The institution buys the shares and then owns more than the outstanding share count. Lynwood
  • R
    Robin
    Yesterday would have bene the day for stock settlement, but I may have made a mini-blub. The previous 4 days set the number of shares to be exchanged and now the bondholders have those shares (or know). Now I would have though much of the selling in the past 4 days would be related to arbing the exchange (which I absolutely believe happened) but it also may be the case not all of it was arbed and likely some bondholders that chose not to short against (whether because they did not want to or hard to borrow) are selling their equity allocations now. no matter, this will settle out in the coming days - especially no later than shortly after ex-dividend
  • C
    Charles
    If you annualized the latest earnings report, the company is trading at 3x earnings. Even more positive, the company expects sales volumes to increase in Q2 and again in 2H. And Q1 coal prices were lower prices than current prices and ARCH has pre-sold a lot of their production at previously lower prices. So earning should continue to go up- driven by both volume increases and price increases. The only negative is that coal futures curves decline into the future. But demand should remain healthy for years to come. There is little investment in new supply across the industry and yet demand is not expected to peak for many years to come - meaning existing producers should be able to easily sell their supply and maybe at higher prices than the futures curve anticipates. This stock seems to be a great value relative to its risk. Plus there seems to be almost zero activity on this chat board - always a good sign that a stock is still undiscovered.
  • R
    Robin
    Met coalprices remain very high. ARCH is going to report a mind-numbingly high Q2. And everyone, including all Brokerage analysts have modelled an imminent collapse in prices (though still rate coal stocks BUYs) - that has been the case all year. But I see no reason why met coal prices would collapse - though a pullback to a still very high $400/tonne is always possible. China steel production down substantially since Shanhai lockdowns and Shanghai coming out of lockdown June 1 as community sread been zero for 5 days. Last night they did find one community case, but then just locked down 2 districts ( I would not be concerned) and they will mass test those two areas 3 times over the enxt week. Given limited moement it really cannot spread beyond their districts.

    Google: Barcharts+Met Coal to find met coal is $510/tonne
    Google: Argus+Hamptson Roads+Coal to find East Hamptons High Vol B price is $440/tonne (ARCH sells High Vol A - premium as higher heat content - that is getting around a $40/tonne premium)
  • L
    Lynwood
    Buying opportunity today. I spent my last few shekels. Lynwood
  • R
    Robbie
    up up up! green today