Arch Resources, Inc. has released its 10-K report today. The company operates seven active mines and owns or controls approximately 28,292 acres of coal land in Ohio; 952 acres in Maryland; 10,095 acres in Virginia; 306,263 acres in West Virginia; 81,450 acres in Wyoming; 234,087 acres in Illinois; 33,047 acres in Kentucky; 362 acres in Montana; 248 acres in Pennsylvania; and 19,018 acres in Colorado, as well as smaller parcels of property in other states. The company sells its products to utility, industrial, and steel producers in the United States and internationally. Arch Resources, Inc. was incorporated in 1969 and is headquartered in Saint Louis, Missouri. Following the announcement, the company's shares moved -4.0% on the market, and are now trading at a price of $166.67.
In the annual report, Arch Resources reported that its revenues for the year ended December 31, 2023, decreased by $578.8 million or 15.5% from 2022, with tons sold decreasing by 4.3%. The company's coal sales from Metallurgical operations decreased by $265.4 million due primarily to lower realized pricing offset by increased volume, while Thermal segment coal sales decreased by $313.4 million due primarily to lower realized pricing coupled with decreased volume.
The cost of sales for the year ended December 31, 2023, increased by $3.1 million, or 0.1%, compared to the year ended December 31, 2022. The increase in cost of sales was due to increased compensation costs and repairs and supplies costs, partially offset by decreased transportation costs.
Adjusted EBITDA for the Metallurgical segment decreased by $304.1 million, while for the Thermal segment, it decreased by $228.4 million in the year ended December 31, 2023, compared to 2022. The cash margin per ton sold for both segments also decreased in 2023 compared to 2022.
For more information, read the company's full 10-K submission here.
| 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|---|---|
| Revenue (M) | $2,452 | $2,294 | $1,468 | $2,208 | $3,725 | $3,231 |
| Gross Margins | 11% | 11% | -22% | 17% | 30% | 19% |
| Net Margins | 13% | 10% | -23% | 15% | 36% | 25% |
| Net Income (M) | $313 | $234 | -$345 | $338 | $1,331 | $820 |
| Net Interest Expense (M) | -$14 | -$7 | -$11 | -$23 | -$13 | $2 |
| Depreciation & Amort. (M) | $11 | $112 | $122 | $120 | $133 | $143 |
| Diluted Shares (M) | 21 | 17 | 15 | 18 | 21 | 19 |
| Earnings Per Share | $15.15 | $13.52 | -$22.74 | $19.2 | $63.42 | $43.5 |
| EPS Growth | n/a | -10.76% | -268.2% | 184.43% | 230.31% | -31.41% |
| Avg. Price | $69.04 | $67.06 | $31.45 | $53.05 | $114.78 | $166.78 |
| P/E Ratio | 4.64 | 5.07 | -1.38 | 2.39 | 1.33 | 3.56 |
| Free Cash Flow (M) | $323 | $153 | -$225 | -$7 | $1,037 | $452 |
| EV / EBITDA | 5.52 | 3.92 | -3.78 | 2.73 | 1.43 | 3.74 |
| Total Debt (M) | $343 | $332 | $539 | $784 | $232 | $151 |
| Net Debt / EBITDA | 0.28 | 0.51 | -1.61 | 0.99 | -0.0 | -0.04 |
| Current Ratio | 2.67 | 2.27 | 2.03 | 1.69 | 1.93 | 2.27 |
Arch Resources (ARCH) stock is likely undervalued at a price of $166.67 per share due to its lower P/E ratio compared to industry and market averages.
In terms of growth factors, the company's revenues are rapidly growing at a rate of 6.4%, and its earnings per share have grown at an annualized rate of 19.2% over the last 6 years. Additionally, the PEG ratio is 0.5, suggesting undervaluation based on the company's earning growth potential. However, there are concerns regarding flat capital expenditure trends and lower operating and gross margins compared to industry averages, which may indicate a lack of competitiveness.
Regarding value factors, ARCH's total liabilities far exceed its current assets, and its P/E ratio is lower than industry and market averages. However, the company's earnings guidance implies a higher forward P/E ratio, suggesting that the shares may be trading at a premium compared to historical average P/E ratios.
It's important to note that this analysis is not personalized financial advice and should be considered as part of a broader investment strategy.
