Arch Resources

ARCH · NYSE

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The case for and against

Updated Jan 11, 2025

Bull case

Arch Resources Inc. is positioned positively with management expressing confidence in achieving its full-year coking coal sales target, supported by a record quarter for met production and enhanced logistics. The company anticipates improvements in thermal segment costs due to reduced pit inventories and an increase in coking coal realizations driven by lower rail rates in the latter half of the year. Additionally, management's expectations of improved yields and lower costs in 2025 bolster the positive outlook for the company's financial performance.

Bear case

Arch Resources Inc is experiencing negative pressures in both its thermal and metallurgical segments, with thermal margins reporting a decline due to oversupplied PRB assets and an overall negative margin per ton trend. The recent financial updates indicate a significant reduction in the full-year 2024 adjusted EBITDA estimate from $415 million to $253 million, driven primarily by lower price realizations and increased costs that have negatively impacted the company's profitability. Additionally, the met segment has specifically shown a margin/ton shortfall of $21, stemming from disappointing realized prices and increased operational costs, which further clouds the company's outlook.

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