Exhibit 99.1
August 6, 2019 Jefferies 2019 Industrials Conference Deck S. Slone Senior Vice President, Strategy
Investor Presentation 2 Forward-looking information This presentation contains "forward-looking statements" - that is, statements related to future, not past, events. In this context, forward-looking statements often address our expected future business and financial performance, and often contain words such as "expects," "anticipates," "intends," "plans," "believes," "seeks," or "will." Forward-looking statements by their nature address matters that are, to different degrees, uncertain. For us, particular uncertainties arise from our emergence from Chapter 11 bankruptcy protection; from changes in the demand for our coal by the domestic electric generation and steel industries; from legislation and regulations relating to the Clean Air Act and other environmental initiatives; from competition within our industry and with producers of competing energy sources; from our ability to successfully acquire or develop coal reserves; from operational, geological, permit, labor and weather-related factors; from the Tax Cuts and Jobs Act and other tax reforms; from the effects of foreign and domestic trade policies, actions or disputes; from fluctuations in the amount of cash we generate from operations, which could impact, among other things, our ability to pay dividends or repurchase shares in accordance with our announced capital allocation plan; from our ability to successfully integrate the operations that we acquire; from our ability to complete the joint venture transaction with Peabody Energy in a timely manner, including obtaining regulatory approvals and satisfying other closing conditions; from our ability to achieve expected synergies from the joint venture; from our ability to successfully integrate the operations of certain mines in the joint venture; and from numerous other matters of national, regional and global scale, including those of a political, economic, business, competitive or regulatory nature. These uncertainties 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. For a description of some of the risks and uncertainties that may affect our future results, you should see the risk factors described from time to time in the reports we file with the Securities and Exchange Commission. This presentation includes certain non-GAAP financial measures, including, Free Cash Flow, Adjusted EBITDA, Adjusted EBITDA and cash costs per ton. These non-GAAP financial measures are not measures of financial performance in accordance with generally accepted accounting principles and may exclude items that are significant in understanding and assessing our financial results. Therefore, these measures should not be considered in isolation or as an alternative to net income from operations, cash flows from operations, earnings per fully-diluted share or other measures of profitability, liquidity or performance under generally accepted accounting principles. You should be aware that our presentation of these measures may not be comparable to similarly-titled measures used by other companies. A reconciliation of these financial measures to the most comparable measures presented in accordance with generally accepted accounting principles has been included at the end of this presentation.
Investor Presentation 3 Arch Coal in brief ? Arch is a large and growing U.S. producer of high-quality metallurgical coals, and the leading global supplier of premium, High-Vol A coking coal - We operate large, modern coking coal mines at the low end of the U.S. cost curve - Our product slate is dominated by High-Vol A coals that earn a market premium - Our Leer South growth project will solidify our position as the leading global supplier of High-Vol A coal - We have exceptional, long-lived reserves that provide significant and valuable optionality for long-term growth ? Arch's strong coking coal position is supplemented by a top-tier thermal franchise - We operate highly competitive mines in the Powder River Basin and other key supply regions - Our mines have modest capital needs and generate significant free cash ? Arch has deep expertise in mining, marketing and logistics - and, critically, in mine safety and environmental stewardship - and levers those competencies in both steel and power markets ? Arch has an exceptionally strong balance sheet, generates high levels of free cash and is committed to returning excess cash to shareholders via a proven and highly successful capital return program
Investor Presentation 4 Arch has returned $796 million of capital to shareholders since May 2017 CAPITAL RETURNED TO SHAREHOLDERS CHANGE IN SHARES OUTSTANDING (IN MILLIONS) (IN MILLIONS) $327 $313 $24 8.8 $31 million shares repurchased since May 2017 $302 $157 } $15 16.2 $282 million shares outstanding $142 at 6/30/19 2017 2 8 2019 (H1) 2017 2018 H1 2019 Arch has bought back 35% of its total shares Buybacks Dividends outstanding in past seven quarters $796 million returned to shareholders since capital return program's inception in May 2017
Arch's Premier Coking Coal Franchise
Investor Presentation 6 Arch is a large, low-cost, growing global coking coal producer with the world’s most valuable High-Vol A coking coal franchise ESTIMATED U.S. COKING COAL OUTPUT BY PRODUCER, 2018 (IN MILLIONS OF TONS) 12.0 HIGH-VOL A LOW-VOL 10.0 Pro Forma w/ Leer South 8.0 6.0 4.0 2.0 0.0 Peer 1 Arch Peer 2 Peer 3 Peer 4 Source: Arch and MSHA Peer group includes Blackhawk, Contura, Coronado, Warrior (listed here alphabetically) ARCH’S COKING COAL PRODUCT SUITE (PERCENTAGE OF EXPECTED 2019 SALES) Low-Vol High-Vol A High-Vol B With the startup of Leer South, the percentage of High-Vol A coal in Arch’s mix will approach 75 percent and its High-Vol A output will climb to ~ 7 million tons, or nearly 30 percent of total global supply
Investor Presentation 7 Arch is continuing to penetrate new markets and expand the global reach of its high-quality coking coal product suite Arch has a highly strategic, 35-percent equity interest in Dominion Terminal Associates (DTA) in Newport News, Va. ARCH’S 2018 COKING COAL SHIPMENTS BY GEOGRAPHIC REGION Europe 44% Asia 27% Canada 13% Brazil 9% U.S. 8% Map reflects Arch’s historical global customer base
8 Global coking coal markets have declined markedly since May MONTHLY AVERAGE U.S. COKING COAL PRODUCT ASSESSMENTS, U.S. EAST COAST ($ PER METRIC TON) $300 HVA:$161.00 LV:$157.00 $250 HVB:$146.00 $200 $150 $100 $50 Jan-16 Jan-17 Jan-18 Jan-19 Source: Platts Note: Platts Daily Assessments, U.S. East Coast as of 8/2/19
Leer South: Arch’s next world-class High-Vol A longwall mine
Leer South: Arch’s next world-class High-Vol A longwall mine Investor Presentation 10 Leer South will be nearly identical to Arch’s world-class Leer mine Leer Leer South Mine life 10+ Years 20 Years Mining technique Longwall Longwall Seam Lower Kittanning Lower Kittanning Seam thickness ~ 62 inches1 ~ 65 inches Average panel length ~ 6,700 feet ~ 9,000 feet Annual met output 3 million tons 3 million tons Product quality High-Vol A High-Vol A Projected cash cost Low-$50s Low-$50s Export facilities Baltimore / DTA Baltimore / DTA 1 Reflects Leer mine’s average seam thickness to date; starting in 2020 and thereafter, the average seam thickness at Leer will expand to more than 72 inches Note: Excluding the reserves in the mine plans for Leer, Sentinel and Leer South, Arch will still have ~ 150 million tons of undeveloped reserves in the Tygart Valley reserve block.
Investor Presentation 11 Leer South will lower the average cost, increase the average quality, and expand the average operating margin of Arch’s coking coal portfolio PROJECTED 2019 COKING COAL COSTS 2019 High-Vol A PROJECTED PAYBACK FOR LEER SOUTH (IN $ PER TON, AT MIDPOINT OF GUIDANCE) AT VARIOUS MARKET PRICES $63.00 ~ 60% Price* Payback ~ $60.00 $225 15 months 2022 $200 18 months ~ 6.9 million tons $175 24 months $150 30 months ~ 75% $125 48 months 2019 2019 Pro Forma Current Portfolio Pro Forma with ~ 9 million tons Projected Leer South * High-Vol A price per metric ton, FOB vessel, U.S. East Coast
12 We see indications that U.S. coking coal mine costs are shifting higher COAL PRODUCTION FROM IDENTIFIED MET MINES IN THE U.S. /T0N)COST CASH MINE FOB $ 160 150 U.S. coking coal cost 140 average is estimated at 130 ~ $75 per ton 120 Leer South 110 (projected) 100 90 Leer 80 70 60 50 40 30 20 10 0 0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 32 34 36 38 40 42 44 46 48 50 52 54 56 58 60 62 64 66 68 70 72 74 76 2018E PRODUCTION (MM TONS)
▪ The start - up of the longwall at Leer South would have boosted Arch’s EBITDA by more than 50 percent on a pro forma basis in 2018, holding all else equal ▪ Conversely, the Leer South start - up would counterbalance a $45 per ton decline in coking coal prices versus the $200/ton average High - Vol A price in 2018 ACTUAL 2018 EBITDA VERSUS PRO FORMA 2018 EBITDA WITH LEER SOUTH, AT VARIOUS HIGH - VOL A PRICES* (IN MILLIONS OF DOLLARS) 13 $ 438 $689 The addition of Leer South should greatly boost Arch’s cash generation across a wide range of pricing scenarios $605 $438 2018 EBITDA * High - Vol A price, FOB the vessel on the U.S. East Coast, with corresponding prices for Low - Vol and High - Vol B products based o n actual, 2018 differentials for those products $200/Ton $185/Ton $155/Ton Actual Pro Forma (with Leer South) $520 $170/Ton $351 $140/Ton
Arch’s Thermal Coal Franchise
CAPP Coal-Mac is a low-cost West Virginia surface mine with minimal capital requirements and strategic access to seaborne markets. PRB Arch’s thermal portfolio is anchored by the Black Thunder mine, which is one of the world’s largest and lowest-cost mines and which boasts the highest-Btu coal in the basin. WBIT Viper is an efficient Illinois deep mine and longstanding supplier to a neighboring municipal generator and industrial facilities. ILB Knight Hawk, in which Arch holds a 49-percent equity interest, has one of the lowest net cost structures in the region. West Elk is a low-cost Colorado longwall mine that produces high-heat, low-sulfur coal that is well-suited to both the export market and domestic generators and industrial facilities.
Arch's thermal franchise is a powerful free cash generator EBITDA VERSUS CAPEX FOR THERMAL SEGMENTS SINCE EMERGENCE(IN MILLIONS) PROJECTED THERMAL SEGMENT MAINTENANCE CAPEX IN 2019 (IN MILLIONS) Thermal segment-level EBITDA has exceeded capex nine-fold since emergence Arch is using cash generated by the thermal segments to support capital returns and the coking coal portfolio
Capital AllocationPriorities
Arch continuously evaluates which avenues provide the best risk-adjusted returns EBITDA - Capex - Interest Expense - Taxes = Projected Free Cash Capital Returns Growth Capital Recurring Dividends Share Buybacks Special Dividends Organic Growth M&A Currently a 2% yield Proven value creation More systematic Leer South is a world-class Limited availability to Allows for broadest to date “buyback” approach growth opportunity with a “average up” existing participation in equity Attractive mechanism favored at present compelling payback profile coking coal portfolio Set at a level viewed as while stock is deemed With ~ 150 million tons of “Diamonds in rough” sustainable throughout a good value undeveloped reserves post few and far between market cycle Both systematic and Leer South, Tygart reserve Prospects screened opportunistic base will continue to against organic 9% 80% provide a compelling, long- opportunities term growth story of FCF in 2018 of FCF in 2018
Arch has the industry’s strongest balance sheet, and is sharply focused on maintaining an exceptionally strong financial position NET DEBT (AT 6/30/19 FOR ARCH AND 3/31/19 FOR PEERS, IN MILLIONS OF DOLLARS) $629 $630 $535 $443 $195 ▪ Arch had $395 million of cash at 6/30/2019, against debt of just $313.9 million ▪ Arch’s approximately $300 million term loan has a coupon of L+275 – a level significantly lower than most industry peers Arch Peer 1 Peer 2 Peer 3 Peer 4 Peer 5 ($81) Source: Arch and company filings Peer group includes Alliance, Consol, Contura, Peabody and Warrior (listed here alphabetically)
Overview of Global Coking Coal Markets
Global steel demand continues to surprise to the upside TOTAL GLOBAL STEEL PRODUCTION EUROPEAN PIG IRON PRODUCTION 2019 YTD 1,791 1,831 1,913 1,650 -2.5% 2017 2018 2019P 2025F 21 Investor Presentation 10 COKING COAL IMPORTS 36.3 29.4 27.8 29.8 China India H1 2018 H1 2019 ▪ Both steel and pig iron output are up roughly 5 percent YTD China is up 10 percent and the rest of the world is flat U.S. steel production growth of 5.4 percent is offset by 2.5 percent decline in European output Chinese coking coal imports are up strongly through the first half despite import restrictions
We expect China to continue to import significant volumes of seaborne coking coal, even if Chinese hot metal production is reaching a peak Roughly two thirds of Chinese steel production is located in coastal provinces, where seaborne moves may have a logistical advantage Nearly 100 million tons of steel output is in southern coastal provinces, where that advantage is even more pronounced As China emphasizes producing more steel from fewer mills, high-quality coking coal imports should become increasingly valued The cost curve for Chinese coking coal continues to shift up and to the right
India is on track to become the world’s largest importer of coking coal in the near future INDIAN COKING COAL IMPORTS (IN MILLIONS OF METRIC TONS) Indian steel output is up ~ 40 percent in the past 60 five years, and coking coal imports are up 62 50 53 percent 48 Indian steel producers plan to add 42 million 45 metric tons of hot metal capacity by 2023 – 37 increasing the installed base by 50 percent The Indian government is targeting 300 million metric tons of steel mill capacity by 2030 Given poor quality of indigenous coals, nearly all of that total will need to be imported 2013 2014 2015 2016 2017 2018
Australian coking coal exports remain muted despite continued strength in coking coal prices AUSTRALIAN METALLURGICAL COAL EXPORTS Australian coking coal exports are recovering, (IN MILLIONS OF METRIC TONS) but slowly Australian shipments continue to track well below 2016 peak levels With the exception of the North Goonyella outage, there have been few disruptions New mine development projects currently 186 186 189 being pursued could add significant capacity, 179 183 but remain uncertain 169 172 The port and rail system remains fragile 2013 2014 2015 2016 2017 2018 2019P
Capital spending at Australian coking coal mines remains muted INVESTMENT IN AUSTRALIAN COKING COAL MINES (IN BILLIONS OF DOLLARS) 12.9 11.4 10.2 9.6 8.6 4.2 6.3 5.1 5.0 5.4 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Maintenance Capex Expansion Capex Australian producers supplied roughly 60 percent of all coking coal in the seaborne market in 2018 Australian expansion capex fell from a peak of $8.5 billion in 2011 to an average of $1.2 billion annually over the past three years Based on current expansion plans, that trend appears likely to extend into 2019
Investor Presentation 26 While U.S. coking coal output bounced in Q2, we expect continued downward pressure on supply – especially given recent pullback in pricing U.S. METALLURGICAL COAL PRODUCTION (IN MILLIONS OF SHORT TONS) 22 20 18 16 14 12 10 8 6 4 2 0 13 13 13 13 14 14 14 14 15 15 15 15 16 16 16 16 17 17 17 17 18 18 18 18 19 19 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Source: MSHA, Internal Note: Chart illustrates production from identified met mines, which might not be the same as saleable volumes ▪ Despite a solid Q2, we believe U.S. coking coal supply will struggle to maintain recent pace ▪ Output at coking coal mines was down 2 percent in H1 2019 versus H1 2018 despite market strength ▪ Recent bankruptcy filings provide further evidence of ongoing pressures
Investor Presentation 27 We project that 76 million tons of global coking coal capacity must be added by 2025 to meet growing seaborne demand PROJECTED 2025 SEABORNE COKING COAL SUPPLY AND DEMAND (IN MILLIONS OF TONS) The consensus estimate is for 34 million tons of seaborne coking coal demand growth by 2025 Depletion is expected to result in a decline of 42 million tons in output from existing mines That leaves a gap of 76 million tons that must be filled with expansion of existing mines and new mine capacity by 2025 Source: Consensus Estimates and Internal Projections
The continued strength in Queensland coking coal prices is causing a reassessment of the long-run, normalized coking coal price The Queensland Premium HCC price has averaged $176 per metric ton on an inflation-adjusted basis since 2003 Since 2010, the average price has been $194 per metric ton We expect volatility to continue, but with an upward bias as mining costs increase over time due to reserve degradation and depletion Source: Bloomberg, Public Information, BLS, Internal
Four significant drivers should translate into still greater value creation in coming quarters 1. Arch’s robust and ongoing capital return program – Arch has bought back nearly 1 million shares per quarter on average since launching the program – Projected cash flows should facilitate a robust return of capital through the balance of 2019 2. The start-up of world-class Leer South longwall mine – Could recover nearly one third of projected investment before longwall starts up, via development tons alone – Based on projected costs, should reduce segment costs by more than $3.00 per ton on pro forma basis – New severance tax rebate legislation should lower those projected costs still further 3. The transition to thicker coal at existing Leer longwall mine – Seam thickness at Leer expected to be 15 to 20 percent greater over next 10-plus years versus first five years – Cutting more coal and less rock should boost volumes and lower costs 4. Completion of JV should unlock substantial synergies and extend cash generation from thermal assets – Enhanced security and longevity of cash-generating capabilities
August 6, 2019 Jefferies 2019 Industrials Conference Deck S. Slone Senior Vice President, Strategy
Reconciliation of Non-GAAP measures Included in this presentation, we have disclosed certain non-GAAP measures as defined by Regulation G. The following reconciles these items to net income and cash flows as reported under GAAP. Adjusted EBITDA is defined as net income attributable to the Company before the effect of net interest expense, income taxes, depreciation, depletion and amortization, accretion on asset retirement obligations, amortization of sales contracts and non-operating expenses. Adjusted EBITDA may also be adjusted for items that may not reflect the trend of future results by excluding transactions that are not indicative of the Company's core operating performance. Adjusted EBITDA is not a measure of financial performance in accordance with generally accepted accounting principles, and items excluded from Adjusted EBITDA are significant in understanding and assessing our financial condition. Therefore, Adjusted EBITDA should not be considered in isolation, nor as an alternative to net income, income from operations, cash flows from operations or as a measure of our profitability, liquidity or performance under generally accepted accounting principles. The Company uses adjusted EBITDA to measure the operating performance of its segments and allocate resources to the segments. Furthermore, analogous measures are used by industry analysts and investors to evaluate our operating performance. Investors should be aware that our presentation of Adjusted EBITDA may not be comparable to similarly titled measures used by other companies. The table below shows how we calculate Adjusted EBITDA. Period from October 2 Quarter Ended Year Ended Year Ended through Quarter Ended March 31, December 31, December 31, December 31, June 30, 2019 2019 2018 2017 2016 (In thousands) Net income 62,840 72,741 312,577 238,450 33,449 Income tax (benefit) provision 91 70 (52,476) (35,255) 1,156 Interest expense, net 2,287 2,289 13,689 24,256 10,754 Depreciation, depletion and amortization 26,524 25,273 119,563 122,464 32,605 Accretion on asset retirement obligations 5,137 5,137 27,970 30,209 7,633 Amortization of sales contracts, net 11 65 11,107 53,985 796 Loss (gain) on sale of Lone Mountain Processing, Inc. 4,304 - - (21,297) - Net loss resulting from early retirement of debt and debt restructuring - - 485 2,547 - Non-service related postretirement benefit costs 1,336 1,766 3,202 1,940 (32) Reorganization items, net 16 (87) 1,661 2,398 759 Costs associated with proposed joint venture with Peabody Energy 3,018 - - - - Fresh start coal inventory fair value adjustment - - - - 7,345 Adjusted EBITDA 105,564 107,254 437,778 419,697 94,465 EBITDA from idled or otherwise disposed operations 1,473 (906) 2,492 3,253 1,596 Selling, general and administrative expenses 25,209 24,089 100,300 87,952 23,193 Other (4,692) (12,201) 4,099 (6,398) (1,511) Reported segment Adjusted EBITDA from coal operations 127,554 118,236 544,669 504,504 117,743 Quarter Ended March 31, 2019 20,583 91,534 6,119 (10,982) 107,254 Year Ended December 31, 2018 126,525 349,524 68,620 (106,891) 437,778 Year Ended December 31, 2017 158,882 243,616 102,006 (84,807) 419,697 October 2 through December 31, 2016 55,765 30,819 31,159 (23,278) 94,465 Since Emergence 376,451 817,429 218,826 (247,948) 1,164,758
Reconciliation of Non-GAAP measures The Company is unable to present a quantitative reconciliation of its forward-looking non- GAAP Segment cash cost per ton sold financial measures to the most directly comparable GAAP measures without unreasonable efforts due to the inherent difficulty in forecasting and quantifying with reasonable accuracy significant items required for the reconciliation. The most directly comparable GAAP measure, GAAP cost of sales, is not accessible without unreasonable efforts on a forward-looking basis. The reconciling items for this non-GAAP measure are transportation costs, which are a component of GAAP revenues and cost of sales; the impact of hedging activity related to commodity purchases that do not receive hedge accounting; and idle and administrative costs that are not included in a reportable segment. Management is unable to predict without unreasonable efforts transportation costs due to uncertainty as to the end market and FOB point for uncommitted sales volumes and the final shipping point for export shipments. Management is unable to predict without unreasonable efforts the impact of hedging activity related to commodity purchases that do not receive hedge accounting due to fluctuations in commodity prices, which are difficult to forecast due to their inherent volatility. These amounts have historically and may continue to vary significantly from quarter to quarter and material changes to these items could have a significant effect on our future GAAP results. Idle and administrative costs that are not included in a reportable segment are expected to be between $15 million and $20 million in 2019.