UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

☒Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended March 31, 2022

☐Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from to .

Commission file number: 1-13105

Arch Resources, Inc.

(Exact name of registrant as specified in its charter)


Delaware		43-0921172
(State or other jurisdiction		(I.R.S. Employer
of incorporation or organization)		Identification Number)


One CityPlace Drive
Suite 300
St. Louis
Missouri		63141
(Address of principal executive offices)		(Zip code)
Registrant’s telephone number, including area code: (314) 994-2700 (Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading symbol	Name of each exchange on which registered
Common stock, $.01 par value	ARCH	New York Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☒	Accelerated filer	☐

Non-accelerated filer	☐	Smaller reporting company	☐

		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

At April 21, 2022 there were 15,477,360 shares of the registrant’s common stock outstanding.

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Part I

FINANCIAL INFORMATION

Item 1.Financial Statements.

Arch Resources, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

(in thousands, except per share data)



	Three Months Ended March 31,
	2022		2021

	(Unaudited)
Revenues	$	867,936	$	357,543
Costs, expenses and other operating
Cost of sales (exclusive of items shown separately below)		508,225		309,906
Depreciation, depletion and amortization		32,210		25,797
Accretion on asset retirement obligations		4,430		5,437
Change in fair value of coal derivatives and coal trading activities, net		15,519		528
Selling, general and administrative expenses		26,648		21,480
Other operating income, net		(3,439)		(5,268)
		583,593		357,880

Income (loss) from operations		284,343		(337)

Interest expense, net
Interest expense		(7,047)		(4,128)
Interest and investment income		24		328
		(7,023)		(3,800)

Income (loss) before nonoperating expenses		277,320		(4,137)

Nonoperating expenses
Non-service related pension and postretirement benefit costs		(873)		(1,527)
Net loss resulting from early retirement of debt		(4,120)		—
		(4,993)		(1,527)

Income (loss) before income taxes		272,327		(5,664)
Provision for income taxes		455		378
Net income (loss)	$	271,872	$	(6,042)

Net income (loss) per common share
Basic earnings (loss) per share	$	17.60	$	(0.40)
Diluted earnings (loss) per share	$	12.89	$	(0.40)
Weighted average shares outstanding
Basic weighted average shares outstanding		15,448		15,283
Diluted weighted average shares outstanding		21,271		15,283
Dividends declared per common share	$	0.25	$	—

The accompanying notes are an integral part of the condensed consolidated financial statements.

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Arch Resources, Inc. and Subsidiaries

Condensed Consolidated Statements of Comprehensive Income (Loss)

(in thousands)



	Three Months Ended March 31,
	2022		2021

		(Unaudited)
Net income (loss)	$	271,872	$	(6,042)

Derivative instruments
Comprehensive income before tax		1,763		689
Income tax benefit (provision)		—		—
		1,763		689
Pension, postretirement and other post-employment benefits
Comprehensive income (loss) before tax		(522)		547
Income tax benefit (provision)		—		—
		(522)		547
Available-for-sale securities
Comprehensive income before tax		182		101
Income tax benefit (provision)		—		—
		182		101

Total other comprehensive income		1,423		1,337
Total comprehensive income (loss)	$	273,295	$	(4,705)

The accompanying notes are an integral part of the condensed consolidated financial statements.

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Arch Resources, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(in thousands, except per share data)


	March 31, 2022		December 31, 2021
Assets	(Unaudited)
Current assets
Cash and cash equivalents	$	318,725	$	325,194
Short-term investments		—		14,463
Restricted cash		1,100		1,101
Trade accounts receivable (net of $0 allowance at March 31, 2022 and December 31, 2021)		323,167		324,304
Other receivables		9,807		8,271
Inventories		203,997		156,734
Other current assets		50,217		52,804
Total current assets		907,013		882,871
Property, plant and equipment, net		1,111,359		1,120,043
Other assets
Equity investments		16,494		15,403
Fund for asset retirement obligations		40,000		20,000
Other noncurrent assets		76,019		78,843
Total other assets		132,513		114,246
Total assets	$	2,150,885	$	2,117,160

Liabilities and Stockholders' Equity
Current Liabilities
Accounts payable	$	147,284	$	131,986
Accrued expenses and other current liabilities		179,200		167,304
Current maturities of debt		182,611		223,050
Total current liabilities		509,095		522,340
Long-term debt		132,290		337,623
Asset retirement obligations		193,745		192,672
Accrued pension benefits		948		1,300
Accrued postretirement benefits other than pension		73,828		73,565
Accrued workers’ compensation		222,462		224,105
Other noncurrent liabilities		94,265		81,689
Total liabilities		1,226,633		1,433,294
Stockholders' equity
Common stock, $0.01 par value, authorized 300,000 shares, issued 25,565 and 25,481 shares at March 31, 2022 and December 31, 2021, respectively		256		255
Paid-in capital		748,999		784,356
Retained earnings		986,797		712,478
Treasury stock, 10,088 shares at March 31, 2022 and December 31, 2021, respectively, at cost		(827,381)		(827,381)
Accumulated other comprehensive income		15,581		14,158
Total stockholders’ equity		924,252		683,866
Total liabilities and stockholders’ equity	$	2,150,885	$	2,117,160

The accompanying notes are an integral part of the condensed consolidated financial statements.

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Arch Resources, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(in thousands)


	Three Months Ended March 31,
	2022		2021

Operating activities		(Unaudited)
Net income (loss)	$	271,872	$	(6,042)
Adjustments to reconcile to cash from operating activities:
Depreciation, depletion and amortization		32,210		25,797
Accretion on asset retirement obligations		4,430		5,437
Deferred income taxes		—		372
Employee stock-based compensation expense		8,203		3,885
Amortization relating to financing activities		770		1,326
Gain on disposals and divestitures, net		(352)		(188)
Reclamation work completed		(4,278)		(11,553)
Contribution to fund asset retirement obligations		(20,000)		—
Changes in:
Receivables		(399)		(18,929)
Inventories		(47,263)		(28,387)
Accounts payable, accrued expenses and other current liabilities		14,115		13,827
Income taxes, net		442		(33)
Coal derivative assets and liabilities, including margin account		15,833		(537)
Other		17,356		20,711
Cash provided by operating activities		292,939		5,686
Investing activities
Capital expenditures		(22,288)		(76,758)
Minimum royalty payments		—		(62)
Proceeds from disposals and divestitures		360		188
Proceeds from sales of short-term investments		14,450		34,981
Investments in and advances to affiliates, net		(2,088)		(1,114)
Cash used in investing activities		(9,566)		(42,765)
Financing activities
Payments on term loan		(271,537)		(750)
Proceeds from tax exempt bonds		—		44,985
Net payments on other debt		(10,134)		(9,536)
Debt financing costs		—		(1,194)
Dividends paid		(3,851)		—
Payments for taxes related to net share settlement of equity awards		(4,827)		(1,316)
Proceeds from warrants exercised		506		—
Cash (used in) provided by financing activities		(289,843)		32,189
Decrease in cash and cash equivalents, including restricted cash		(6,470)		(4,890)
Cash and cash equivalents, including restricted cash, beginning of period	$	326,295	$	193,445
Cash and cash equivalents, including restricted cash, end of period	$	319,825	$	188,555
Cash and cash equivalents, including restricted cash, end of period
Cash and cash equivalents	$	318,725	$	169,593
Restricted Cash		1,100		18,962
	$	319,825	$	188,555

The accompanying notes are an integral part of the condensed consolidated financial statements.

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Arch Resources, Inc. and Subsidiaries

Condensed Consolidated Statements of Stockholders’ Equity

(Unaudited)


							Treasury		Accumulated Other
	Common		Paid-In		Retained		Stock at		Comprehensive
	Stock		Capital		Earnings		Cost		Income		Total

	(In thousands)
Balances, January 1, 2022	$	255	$	784,356	$	712,478	$	(827,381)	$	14,158	$	683,866
Cumulative effect of accounting change on convertible debt		—		(39,239)		6,718		—		—		(32,521)
Dividends on common shares ($0.25/share)		—		—		(4,271)		—		—		(4,271)
Total comprehensive income (loss)		—		—		271,872		—		1,423		273,295
Employee stock-based compensation		—		8,203		—		—		—		8,203
Issuance of 71,338 shares of common stock under long-term incentive plan		1		—		—		—		—		1
Common stock withheld related to net share settlement of equity awards		—		(4,827)		—		—		—		(4,827)
Issuance of 13,239 shares of common stock for warrants exercised		—		506		—		—		—		506
Balances at March 31, 2022	$	256	$	748,999	$	986,797	$	(827,381)	$	15,581	$	924,252


							Treasury		Accumulated Other
	Common		Paid-In		Retained		Stock at		Comprehensive
	Stock		Capital		Earnings		Cost		(loss)		Total

	(In thousands)
Balances, January 1, 2021	$	253	$	767,484	$	378,906	$	(827,381)	$	(35,701)	$	283,561
Total comprehensive income (loss)		—		—		(6,042)		—		1,337		(4,705)
Employee stock-based compensation		—		3,885		18		—		—		3,903
Issuance of 59,166 shares of common stock under long-term incentive plan		1		—		—		—		—		1
Common stock withheld related to net share settlement of equity awards		—		(1,317)		—		—		—		(1,317)
Balances at March 31, 2021	$	254	$	770,052	$	372,882	$	(827,381)	$	(34,364)	$	281,443

The accompanying notes are an integral part of the condensed consolidated financial statements.

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Arch Resources, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(unaudited)

1. Basis of Presentation

The accompanying unaudited condensed consolidated financial statements include the accounts of Arch Resources, Inc. (“Arch Resources”) and its subsidiaries (“Arch” or the “Company”). Unless the context indicates otherwise, the terms “Arch” and the “Company” are used interchangeably in this Quarterly Report on Form 10-Q. The Company’s primary business is the production of metallurgical and thermal coal from underground and surface mines located throughout the United States, for sale to steel producers, utility companies, and industrial accounts both in the United States and around the world. The Company currently operates mining complexes in West Virginia, Wyoming and Colorado. All subsidiaries are wholly owned. Intercompany transactions and accounts have been eliminated in consolidation.

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial reporting and U.S. Securities and Exchange Commission regulations. In the opinion of management, all adjustments, consisting of normal, recurring accruals considered necessary for a fair presentation, have been included. Results of operations for the three months ended March 31, 2022 are not necessarily indicative of results to be expected for the year ending December 31, 2022. These financial statements should be read in conjunction with the audited financial statements and related notes as of and for the year ended December 31, 2021 included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 filed with the U.S. Securities and Exchange Commission.

2. Accounting Policies

Recently Adopted Accounting Guidance

In August 2020, the FASB issued ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity's Own Equity (Subtopic 815-40)—Accounting for Convertible Instruments and Contracts in an Entity's Own Equity. ASU 2020-06 reduces the number of accounting models for convertible debt instruments. Additionally, ASU 2020-06 amends the diluted earnings per share calculation for convertible instruments by requiring the use of the if-converted method. The if-converted method assumes the conversion of convertible instruments occurs at the beginning of the reporting period and diluted weighted average shares outstanding includes the common shares issuable upon conversion of the convertible instruments. ASU 2020-06 is effective for public business entities, for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. The Company adopted ASU 2020-06 on January 1, 2022 under the modified retrospective approach.

Upon issuance of the Company's $155.3 million principal amount of 5.25 % convertible senior notes due 2025 (the "Convertible Notes") in November 2020, the Company bifurcated the debt and equity components of the Convertible Notes to long-term debt and additional paid-in capital in its consolidated balance sheet. The amount recorded to additional paid-in capital represented a debt discount that was being amortized to interest expense over the life of the Convertible Notes. As part of the adoption of ASU 2020-06, the Company (i) reversed the equity component recorded to additional paid-in capital of $39.2 million, (ii) recorded a cumulative effect of the adoption of ASU 2020-06 of $6.7 million to retained earnings, representing a reversal of the debt discount that was amortized to interest expense, and (iii) an offsetting increase in debt. See Note 8, “Debt and Financing Arrangements” for additional information.

Additionally, upon adoption of ASU 2020-06, the treasury stock method utilized by the Company to calculate earnings per share through December 31, 2021 is no longer permitted. Accordingly, the Company has transitioned to the if-converted method utilizing the modified retrospective approach, resulting in 4.2 million shares being included in the Company's weighted-average diluted shares outstanding for the quarter ended March 31, 2022. Under the previous treasury stock method, the diluted earnings per share would have been approximately $13.73. As a result of the adoption of ASU 2020-06, diluted earnings per share decreased by $0.84 for the quarter end March 31, 2022. See Note 11, “Earnings (Loss) per Common Share” for additional information.

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3. Accumulated Other Comprehensive Income (Loss)

The following items are included in accumulated other comprehensive income (loss) (“AOCI”), net of tax:


			Pension,
			Postretirement				Accumulated
			and Other Post-				Other
	Derivative		Employment		Available-for-		Comprehensive
	Instruments		Benefits		Sale Securities		Income (loss)

	(In thousands)
Balance at December 31, 2021	$	(1,763)	$	16,103	$	(182)	$	14,158
Unrealized gains (losses)		223		—		—		223
Amounts reclassified from accumulated other comprehensive income (loss)		1,540		(522)		182		1,200
Balances at March 31, 2022	$	—	$	15,581	$	—	$	15,581

The following amounts were reclassified out of AOCI:


	Three Months Ended March 31,				Line Item in the Consolidated
Details About AOCI Components	2022		2021		Statements of Operations

Interest rate hedges		(112)		(624)	Interest expense
Interest rate hedges (ineffective portion)		(1,428)		—	Net loss resulting from early retirement of debt
		—		—	Provision for income taxes
	$	(1,540)	$	(624)	Net of tax

Pension, postretirement and other post-employment benefits
Amortization of actuarial gains (losses), net ¹	$	627	$	(591)	Non-service related pension and postretirement benefit (costs) credits
Amortization of prior service credits		(105)		44	Non-service related pension and postretirement benefit (costs) credits
		—		—	Provision for income taxes
	$	522	$	(547)	Net of tax

Available-for-sale securities ²	$	(182)	$	10	Interest and investment income
		—		—	Provision for income taxes
	$	(182)	$	10	Net of tax

¹ Production-related benefits and workers’ compensation costs are included in costs of sales.

² The gains and losses on sales of available-for-sale-securities are determined on a specific identification basis.

4. Inventories

Inventories consist of the following:


	March 31,		December 31,
	2022		2021

	(In thousands)
Coal	$	113,330	$	75,653
Repair parts and supplies		90,667		81,081
	$	203,997	$	156,734

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The repair parts and supplies are stated net of an allowance for slow-moving and obsolete inventories of $2.3 million at March 31, 2022 and $2.3 million at December 31, 2021.

5. Investments in Available-for-Sale Securities

The Company has invested in marketable debt securities, primarily highly liquid U.S. Treasury securities and investment grade corporate bonds. These investments are held in the custody of a major financial institution. These securities are classified as available-for-sale securities and, accordingly, the unrealized gains and losses are recorded through other comprehensive income. During the quarter of March 31, 2022, the Company liquidated its remaining investments.

The Company’s investments in available-for-sale marketable securities are as follows:

March 31, 2022

Gross

Allowance

Unrealized

for - Credit

Fair

Cost Basis

Gains

Losses

Value

(In thousands)

Available-for-sale:

U.S. government and agency securities

—

Corporate notes and bonds

—

Total Investments

—


	December 31, 2021

			Gross					Allowance
			Unrealized					for - Credit	Fair
	Cost Basis		Gains			Losses		Losses	Value

	(In thousands)
Available-for-sale:
U.S. government and agency securities	$	6,074	$	—	$	(71)	$	—	$	6,003
Corporate notes and bonds		8,571		—		(111)		—		8,460
Total Investments	$	14,645	$	—	$	(182)	$	—	$	14,463

There were no investments with unrealized losses that were owned for less than a year at March 31, 2022 and December 31, 2021, respectively. The aggregate fair value of investments with unrealized losses that were owned for over a year was $0.0 million and $14.5 million at March 31, 2022 and December 31, 2021, respectively.

The Company classifies its investments as current based on the nature of the investments and their availability to provide cash for use in current operations.

6. Derivatives

Diesel fuel price risk management

The Company is exposed to price risk with respect to diesel fuel purchased for use in its operations. The Company anticipates purchasing approximately 40 to 45 million gallons of diesel fuel for use in its operations during 2022. To protect the Company’s cash flows from increases in the price of diesel fuel for its operations, the Company purchased heating oil call options. At March 31, 2022, the Company had protected the price of expected diesel fuel purchases for 2022 with approximately 12 million gallons of heating oil call options with an average strike price of $2.61 per gallon. These positions are not designated as hedges for accounting purposes, and therefore, changes in the fair value are recorded immediately to earnings.

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Coal price risk management positions

The Company may sell or purchase forward contracts, swaps and options in the over-the-counter coal market in order to manage its exposure to coal prices. The Company has exposure to the risk of fluctuating coal prices related to forecasted, index-priced sales or purchases of coal or to the risk of changes in the fair value of a fixed price physical sales contract. Certain derivative contracts may be designated as hedges of these risks.

At March 31, 2022, the Company held derivatives for risk management purposes that are expected to settle in the following years:


(Tons in thousands)		2022
Coal sales		221
Coal purchases		11

Tabular derivatives disclosures

The Company has master netting agreements with all of its counterparties which allow for the settlement of contracts in an asset position with contracts in a liability position in the event of default or termination. Such netting arrangements reduce the Company’s credit exposure related to these counterparties. For classification purposes, the Company records the net fair value of all the positions with a given counterparty as a net asset or liability in the Condensed Consolidated Balance Sheets. The amounts shown in the table below represent the fair value position of individual contracts, and not the net position presented in the accompanying Condensed Consolidated Balance Sheets. The fair value and location of derivatives reflected in the accompanying Condensed Consolidated Balance Sheets are as follows:


	March 31, 2022						December 31, 2021
Fair Value of Derivatives	Asset		Liability				Asset		Liability
(In thousands)	Derivative		Derivative				Derivative		Derivative
Derivatives Not Designated as Hedging Instruments
Heating oil -- diesel purchases		8,547		—				1,219		—
Coal -- risk management		—		(12,838)				4,885		(2,203)
Total	$	8,547	$	(12,838)			$	6,104	$	(2,203)
Total derivatives	$	8,547	$	(12,838)			$	6,104	$	(2,203)
Effect of counterparty netting		—		—				(1,890)		1,890
Net derivatives as classified in the balance sheets	$	8,547	$	(12,838)	$	(4,291)	$	4,214	$	(313)	$	3,901


		March 31,		December 31,
		2022		2021
Net derivatives as reflected on the balance sheets (in thousands)
Heating Oil and coal	Other current assets	$	8,547	$	4,214
Coal	Accrued expenses and other current liabilities		(12,838)		(313)
		$	(4,291)	$	3,901

The Company had a current asset representing cash collateral posted to a margin account for derivative positions primarily related to coal derivatives of $2.6 million and $2.8 million at March 31, 2022 and December 31, 2021, respectively. These amounts are not included with the derivatives presented in the table above and are included in “other current assets” in the accompanying Condensed Consolidated Balance Sheets.

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The effects of derivatives on measures of financial performance are as follows:

Derivatives Not Designated as Hedging Instruments (in thousands)

Three Months Ended March 31,


		Gain (Loss) Recognized
			2022		2021
Coal risk management — unrealized	⁽³⁾	$	(15,519)	$	(528)

Coal risk management— realized	⁽⁴⁾	$	(9,074)	$	138
Heating oil — diesel purchases	⁽⁴⁾	$	6,801	$	—

Location in statement of operations:

(1)	— Revenues

(2)	— Cost of sales

(3)	— Change in fair value of coal derivatives and coal trading activities, net

(4)	— Other operating (income) expense, net

At March 31, 2022 and 2021, the Company did not have any derivative contracts designated as hedging instruments, respectively.

7. Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consist of the following:


	March 31,		December 31,
	2022		2021

	(In thousands)
Payroll and employee benefits	$	44,901	$	55,898
Taxes other than income taxes		64,061		61,582
Interest		4,322		3,439
Workers’ compensation		16,290		14,202
Asset retirement obligations		21,781		21,781
Coal derivatives		12,838		313
Other		15,007		10,089
	$	179,200	$	167,304

8. Debt and Financing Arrangements


	March 31,		December 31,
	2022		2021

	(In thousands)
Term loan due 2024 ($8.8 million face value)	$	8,752	$	280,353
Tax Exempt Bonds ($98.1 million face value)		98,075		98,075
Convertible Debt ($155.3 million face value)		155,250		121,617
Other		60,720		70,836
Debt issuance costs		(7,896)		(10,208)
		314,901		560,673
Less: current maturities of debt		182,611		223,050
Long-term debt	$	132,290	$	337,623

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Term Loan Facility

In 2017, the Company entered into a senior secured term loan credit agreement in an aggregate principal amount of $300 million (the “Term Loan Debt Facility”) with Credit Suisse AG, Cayman Islands Branch, as administrative agent and collateral agent, and the other financial institutions from time to time party thereto (collectively, the “Lenders”). The Term Loan Debt Facility was issued at 99.50% of the face amount and will mature on March 7, 2024. The term loans provided under the Term Loan Debt Facility (the “Term Loans”) are subject to quarterly principal amortization payments in an amount equal to $750,000. The interest rate on the Term Loan Debt Facility is, at the option of Arch Resources, either (i) LIBOR plus an applicable margin of 2.75%, subject to a 1.00% LIBOR floor, or (ii) a base rate plus an applicable margin of 1.75%.

The Term Loan Debt Facility is guaranteed by all existing and future wholly owned domestic subsidiaries of the Company (collectively, the “Subsidiary Guarantors” and, together with Arch Resources, the “Loan Parties”), subject to customary exceptions, and is secured by first priority security interests on substantially all assets of the Loan Parties, including 100% of the voting equity interests of directly owned domestic subsidiaries and 65% of the voting equity interests of directly owned foreign subsidiaries, subject to customary exceptions.

During the first quarter of 2022, the Company repaid $271.5 million of the Term Loans leaving a remaining balance of $8.8 million. The remaining balance of $8.8 million was left as certain terms and conditions governing the Term Loan are incorporated into the Company’s outstanding indebtedness. As a result of the repayment, the Company recorded $4.1 million as “net loss resulting from early retirement of debt” in the accompanying Condensed Consolidated Statement of Operations relating to deferred financing fees, original issue discount, and the ineffective portion of an interest rate swap designated as a cashflow hedge, partially offset by gains on repurchases of the Term Loans.

Accounts Receivable Securitization Facility

On September 30, 2020, the Company amended and extended its existing trade accounts receivable securitization facility provided to Arch Receivable Company, LLC, a special-purpose entity that is a wholly owned subsidiary of Arch Resources (“Arch Receivable”) (the “Securitization Facility”), which supports the issuance of letters of credit and requests for cash advances. The amendment to the Securitization Facility reduced the size of the facility from $160 million to $110 million of borrowing capacity and extended the maturity date to September 29, 2023.

Under the Securitization Facility, Arch Receivable, Arch Resources and certain of Arch Resources’s subsidiaries party to the Securitization Facility have granted to the administrator of the Securitization Facility a first priority security interest in eligible trade accounts receivable generated by such parties from the sale of coal and all proceeds thereof. As of March 31, 2022, letters of credit totaling $67.6 million were outstanding under the facility with $42.4 million available for borrowings.

Inventory-Based Revolving Credit Facility

On September 30, 2020, Arch Resources amended the senior secured inventory-based revolving credit facility in an aggregate principal amount of $50 million (the “Inventory Facility”) with Regions Bank (“Regions”) as administrative agent and collateral agent, as lender and swingline lender (in such capacities, the “Lender”) and as letter of credit issuer. Availability under the Inventory Facility is subject to a borrowing base consisting of (i) 85% of the net orderly liquidation value of eligible coal inventory, plus (ii) the lesser of (x) 85% of the net orderly liquidation value of eligible parts and supplies inventory and (y) 35% of the amount determined pursuant to clause (i), plus (iii) 100% of Arch Resources’s Eligible Cash (defined in the Inventory Facility), subject to reduction for reserves imposed by Regions.

The amendment of the Inventory Facility extended the maturity of the facility to September 29, 2023; eliminated the provision that accelerated maturity upon Liquidity (as defined in the Inventory Facility) falling below a specified level; and reduced the minimum Liquidity requirement from $175 million to $100 million. Additionally, the amendment included provisions that reduce the advance rates for coal inventory and parts and supplies, depending on “liquidity.”

The Inventory Facility contains certain customary affirmative and negative covenants; events of default, subject to customary thresholds and exceptions; and representations, including certain cash management and reporting requirements that are customary for asset-based credit facilities. The Inventory Facility also includes a requirement to


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Part I FINANCIAL INFORMATION	3
Item 1. Financial Statements	3
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	26
Item 3. Quantitative and Qualitative Disclosures About Market Risk	40
Item 4. Controls and Procedures	41
Part II OTHER INFORMATION	41
Item 1. Legal Proceedings	41
Item 1A. Risk Factors	41
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	41
Item 4. Mine Safety Disclosures	42
Item 6. Exhibits	43
Signatures	48