Ladies and gentlemen, please stand by. Good day, and welcome to the Arch Resources, Inc. Second Quarter 2022 earnings conference call. Today's conference is being recorded. I would now like to turn the call over to Deck Slone, Senior Vice President of Strategy. Please go ahead. Good morning from St. Louis, and thanks for joining us today. Before we begin, let me remind you that certain statements made during this call, including statements relating to our expected future business and financial performance, may be considered forward-looking statements according to the Private Securities Litigation Reform Act. Forward-looking statements by their nature address matters that are to different degrees uncertain. These uncertainties, which are described in more detail in the annual and quarterly reports that we file with the SEC, 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. I'd also like to remind you that you can find a reconciliation of the non-GAAP financial measures that we plan to discuss this morning at the end of our press release, a copy of which we have posted in the investor section of our website at archrsc.com. Also participating on this morning's call will be Paul Lang, our CEO, John Drexler, our COO, and Matt Giljum, our CFO. After formal remarks, we'll be happy to take your questions. With that, I'll now turn the call over to Paul. Thanks, Deck, and good morning, everyone. We appreciate your interest in Arch and are glad you could join us on the call this morning. I'm pleased to report that the Arch team delivered record earnings for the third straight quarter in Q2, as well as record coking coal realizations and record coking coal margins. I view these strong results as a testament to the team's excellent work in building out our premier metallurgical platform and, in the process, our exceptionally strong cash-generating capabilities. Even with these impressive accomplishments, it's important to underscore that our Q2 results would have been stronger still if not for two issues. The first being poor rail and logistical service, and the second related to the cash costs in our metallurgical segment. As you know, inadequate rail service has been a persistent issue at all of our operations in recent quarters, and I'm disappointed to report that the situation has extended itself into the first month of Q3. While we continue to engage with our rail carriers on more or less a continuous basis, the reality is there's only so much we can do to rectify the situation. In Q2, our eastern operations saw an incremental improvement in rail service over Q1, while the western railroads' performance actually declined. However, based on assurances from the railroads, we remain hopeful that their overall service will continue to recover as we move through the balance of the year. Progress remains painfully slow, and the situation is extraordinarily frustrating for all of our customers. The other item that acted to dampen our second quarter financial results was a localized geologic issue at Leer South. While that issue had no effect on our Q2 coking sales volumes, we actually built inventory during the quarter. It was a significant contributor in pushing up our metallurgical segment's costs. Obviously, some of the increase we saw in the quarter was attributable to higher material and supply costs in the current inflationary environment, as well as higher sales-sensitive costs related to our record average selling price. However, the largest component of our cost increase for the segment stemmed from our tougher-than-anticipated cutting conditions we encountered at Leer South. While John will share some additional details, let me say that we fully expect those conditions to improve significantly in late August, which should lead to an improving cost performance in our metallurgical segment as the year proceeds. While we're pleased with the company's strong financial results in Q2, we believe the progress we made on a range of other strategic initiatives are just as noteworthy, if not so more, given that they position the company for ongoing success and value creation well into the future. Among the team's significant accomplishments during the second quarter, Arch reduced total indebtedness by $136 million or 42%, ended the quarter in a net debt positive cash position of about $95 million, reached the targeted funding level for our recently established thermal mine reclamation fund of $130 million, inclusive of the July payment, and deployed more than $280 million via dividends and convertible security settlements under capital return program. In short, we stayed true to our clear, consistent, and actionable strategy for long-term value creation by continuing to fortify our financial position while simultaneously returning excess cash to shareholders through our recently relaunched capital return program. As we stated in the past, we view this program as the centerpiece of our value proposition and an excellent way to drive long-term value for our shareholders. It's important to add here that in addition to the $280 million of capital we returned in Q2, we also declared today a quarterly dividend of $119 million or $6 per share payable in September. I should note that this figure, while significant, would have been higher if not for a $138 million build in our Q2 accounts receivable balance that was precipitated by a heavy June shipping schedule to overseas customers. Fortunately, the impact of this is simply a timing issue, which is to say we expect those funds, as the cash is received, will be returned to shareholders via future dividends or other capital return mechanisms. As you know, the amount of the dividend was driven by our recently implemented capital return formula, which envisions returning 50% of our discretionary cash flow we generate each quarter to shareholders as a dividend. As for the other 50% of our discretionary cash flow, we've stated our intention of putting that cash to work in a variety of other value-driving ways, including share buybacks. While the board is still evaluating the optimal use of the second 50%, if you will, it clearly views share buybacks as an effective means of returning capital to shareholders and likewise views Arch stock as an attractive investment option. To that end, the board recently increased the company's buyback authorization to $500 million. Bringing this all together, I'm particularly pleased to report that inclusive of the just declared September dividend, we'll have deployed just over $400 million since the start of the year under our capital return program. Simultaneously, we've taken substantial steps towards lowering our overall risk profile by reducing our debt by over $417 million, or 70%, and finishing contributions to the thermal mine reclamation fund. Before turning the call over to John, I'd like to spend a few minutes talking about dynamics we're currently seeing in the global coking coal markets. As you know, coking coal markets have softened markedly in recent weeks, with High-Vol A coal off the U.S. East Coast now being assessed at $249 per metric ton. While this is a considerable decrease from the first of April, when the assessed price was $480 per metric ton, it's still a strong number from a historical context and remains at a highly profitable price level for Arch's coking coal portfolio. The principal driver behind this significant price pullback, in our estimation, is slowing economic growth that is having the predictable impact on global steel production. Year-to-date, hot metal production is down about 5.5%, which, as you can imagine, is slowing seaborne coking coal demand and at the same time pressuring prices. However, we see other market dynamics, particularly in the supply arena, that should continue to supply or continue to support a healthy long-term supply and demand balance in the coking coal markets. Of particular note, coking coal exports out of Australia, traditionally the source of more than 50% of the seaborne coking supply, are undershooting the already depressed levels of 2021 by about 7% year-to-date. Additionally, the war in Ukraine threatens to trim Russian coking coal export levels, particularly once the EU's ban on Russian coal imports takes effect the second week of August. Elsewhere, U.S. and Canadian coking coal exports are up less than 2 million tons in aggregate year-to-date, despite exceptionally strong pricing levels through the first half of the year. In summary, underinvestment in coking coal capacity in recent years continues to weigh heavily on the long-term outlook for global metallurgical coal supplies, which should bode well for the longer term pricing environment. Finally, I'd like to highlight the strength in international thermal coal markets as potentially a significant support mechanism for coking coal prices. The current price for thermal coal out of Australia is around $415 per metric ton, and the price for thermal coal into Northern Europe stands at roughly $390 per metric ton. It is nearly unprecedented to have thermal coal trading at a premium to coking coal, and we don't expect that to last. In fact, we'd anticipate that a fair amount of global coking coal supply is already crossing over into the much larger thermal coal marketplace, which should serve to support coking coal prices over time. As you can imagine, we are exploring every opportunity to ship some of our own uncommitted coking coal volumes into the thermal markets and have had success this week with a fourth quarter cargo out of Mountain Laurel into Europe. In closing, let me reiterate that the last several months have been a period of amazing success and progress for Arch. Even with logistical constraints and typical coal mine issues, our expanded and upgraded operating portfolio continues to allow us to capitalize on this market environment while positioning the company for still greater success in the future. While the recent pullback in pricing was inevitable and arguably even healthy, we still see a constructive and profitable coking coal market well into the future, recognizing, of course, that there's certain to be numerous twists and turns along the way. With that, I'll now turn the call over to John Drexler for some further details on our operating results. John? Thanks, Paul, and good morning. As Paul just discussed, the Arch team delivered another record-setting earnings performance and drove tremendous progress on our key strategic priorities during the second quarter, even while navigating ongoing logistical challenges, mounting inflationary pressures, and localized geologic issues. More significant still, they accomplished this while maintaining the same sharp focus on what matters most, working safely and responsibly. I'm incredibly proud of the team's ongoing pursuit of operational excellence in all areas, and particularly in the ESG arena, and I feel fortunate to work with such a talented, diligent, and professional group. Let's turn now to some of the key drivers behind our operating performance during Q2. As indicated, our core metallurgical segment delivered exceptional financial results. Despite grappling with several issues that acted to suppress our sales volumes and drive up our operating costs. As Paul indicated, one significant challenge we faced during Q2 was poor rail and logistical performance. To be fair, we did see improvement as the second quarter progressed, but even with this improvement, still received only 90% of the trains we require for the efficient operation of our mines. As indicated, we estimate that this rail and logistical shortfall reduced our coking coal shipments by around 200,000 tons from previously communicated levels for the quarter, which, as you well know, had significant implications for our Q2 cash generation. As a result of this shortfall, we built inventory levels again in Q2, ending the quarter with approximately 1.1 million tons of highly valuable coking coal on the ground at our mines and at the ports. The third quarter is off to a slow start, with July service levels retracing as compared to May and June, but much of that shortfall is attributable to the July fourth holiday week and miners vacations, and we expect performance to improve as the quarter progresses. While rail service and logistical challenges acted to constrain our sales volumes during the second quarter, other pressures, including localized geologic issues, acted to inflate our operating costs. Of course, geology changes continuously, and as miners, we're used to adjusting as required. We experienced tough conditions at Leer South, with the predictable impact on our operating costs given the mine's relative size and significance within our portfolio. After a successful ramp at Leer South, a great first longwall move in the middle of May, and a quick ramp to forecasted productivity levels at the outset of the second panel, we encountered isolated areas of tough sandstone in mid-June. These challenging conditions have persisted, but should be behind us by the end of August, and we expect to see substantial improvements in productivity thereafter. More importantly, we expect conditions to further improve as we progress through the balance of the five panel first district. We have already developed the vast majority of the third panel and initiated development in the fourth. The Leer South team is confident that both these panels offer superior cutting conditions. I would also add that we are simultaneously beginning to develop the infrastructure for the second longwall district as well, and conditions there appear exceptionally favorable. In short, while we have yet to see Leer South deliver the kinds of productivity levels that we know it will in time, we are very encouraged by what we are seeing and experiencing as we continue to develop out the reserve base. Let's transition now to our legacy thermal assets, where we continue to generate very healthy levels of cash from our significant book of contracted business, as well as from a highly attractive export market environment. As you know, the focus for this segment is the harvesting of cash, and we continue to deliver on this objective in a very substantial way. In Q2, the thermal segment generated around $93 million in segment level EBITDA, while expending just $4.6 million in CapEx. That means that since launching our harvest strategy 5.5 years ago, we have generated an aggregate total of approximately $1.1 billion of segment level EBITDA from these assets, while expending just $119 million in capital. To put it another way, we've generated 9 x more cash than we've expended, and we expect more of the same as we progress through 2022 and beyond. Moreover, as Paul noted, we have also put aside in our new thermal mine reclamation fund the cash we will need for final mine reclamation of our Black Thunder asset, which means that the outlook for continued cash generation remains exceptionally strong. We view that as hugely value-creating for our shareholders. Before moving on, let me discuss a few other items that might prove useful. First, I would note that that Western Rail Service continues to represent a significant drag on our legacy thermal segment as well and is not improving in the way Eastern Service appears to be. As a result, since the start of the year, we have reduced our expected shipment level by 5 million tons and expect those tons to now move into 2023. While that's clearly not ideal given the time value of money, it does mean that our 2023 book already looks exceptionally healthy and that we are growing increasingly confident about the strong cash-generating prospects for our thermal segment next year as well. Second, I would remind you that while our costs increased substantially in Q2, that was due in large part to higher sales-sensitive costs at our West Elk mine stemming from a substantial increase in our average selling price. Finally, I'd like to spend a few minutes discussing several developments in the marketing arena before handing the call over to Matt. With the meaningful drop in metallurgical coal pricing, there has been a great deal of discussion about the opportunity to move metallurgical coal into thermal markets, which are currently in an almost unprecedented fashion enjoying a higher price than met coal. We have very recently signed a fixed price agreement to move a fourth-quarter vessel of High-Vol B quality coking coal into Europe as a thermal product with pricing that is substantially above current High-Vol B marks. Not only is this a value-creating and opportunistic move, but it also should help to provide price support for High-Vol metallurgical coal. We also believe there will be additional opportunities for these types of transactions as the year progresses. In our Western thermal portfolio, export pricing is also providing extremely attractive netbacks and enhancing our cash-generating capabilities. Although, as you will recall, the overall volume opportunity is limited due to rail constraints. We currently anticipate moving a total of 2.5 million tons of our Western thermal coal into export markets during 2022, consisting of 1.5 million tons from West Elk and 1 million tons from Black Thunder. Moreover, as part of our efforts to lock in strong pricing for these volumes, we recently concluded a multiyear fixed price transaction for our West Elk coal beginning in 2023 into Europe at extremely attractive netbacks. While the volumes are modest given logistical constraints, the additional cash flows are significant and further strengthen the outlook for another robust year of cash flows from our thermal segment in 2023. In closing, let me reiterate that we remain sharply focused on engaging the railroads in every way possible in an effort to drive performance improvement, and we are equally focused on restoring strong advance rates and productivity levels at Leer South. Even with these drags on our overall results, it should be increasingly evident that the cash-generating capability of our core coking and legacy thermal portfolio is impressive. With that, I will turn the call over to Matt for thoughts on our financial performance. Matt? Thanks, John. Good morning, everyone. From a financial perspective, Arch's second quarter was exceptional, setting new records for quarterly earnings and generating robust cash flows. While Paul touched on the earnings already, I wanted to provide some additional detail around the quarterly cash flows. Cash from operating activities totaled $268 million in the quarter, despite growth in working capital of $124 million and a $60 million contribution into the thermal reclamation fund. The working capital change was the result of increases in both accounts receivable and inventories, with the vast majority due to growth in our receivables. Rail service was weakest in April and improved later in the quarter, resulting in metallurgical segment revenues heavily weighted to the back half of the quarter. While the timing is disappointing, we will clearly benefit from those collections in Q3. Turning to the investing and financing cash flows, we spent $31 million for capital expenditures in the quarter while utilizing over $280 million in our capital return program, with nearly $130 million used to reduce dilution in the settlement of the convertible notes and more than $150 million in dividend payments. We ended the quarter with cash on hand of $282 million and total liquidity of $350 million, including availability under our credit facilities. Discretionary cash flow for the quarter was $237 million, and under our capital return program, the board has declared a dividend of 50% of that amount, or $6 per share. That dividend will be paid on September 15th to stockholders of record on August 31st. Over the last several quarters, we have prioritized de-risking the balance sheet, reducing debt, pre-funding reclamation, and enhancing liquidity. As we sit here today, we have largely addressed those priorities. Our debt totaled just $187 million at the end of June and is largely made up of tax-exempt bonds, which are not callable until 2025, and equipment leases, which we'll continue to amortize on a monthly basis. Regarding reclamation funding, including amounts funded in July, we now have $130 million in place, roughly equivalent to the current ARO obligation for Black Thunder. As a reminder, going forward, we expect to keep the fund at the level of the Black Thunder ARO, increasing with the ongoing accretion of the liability, but offset by reclamation work as completed. In any event, we would expect additional contributions after this quarter to be no more than $5 million quarterly for the foreseeable future. Finally, we expect to begin to draw money from the fund as we commence significant final reclamation work at Black Thunder several years from now. Given the significant steps we've taken over the last several quarters, we now expect to maintain minimum liquidity levels of approximately $250 million-$300 million, with most of that held in cash. In addition, we would expect to hold additional cash at the end of each quarter in an amount that represents a substantial portion of the following quarter's dividend. We plan to execute the second 50% of the capital return program over the course of the third quarter, maintaining a clear line of sight on these liquidity targets. Given the settlement of a significant portion of the convertible notes in the second quarter, we have narrowed down the uses for that portion of the program. As Paul mentioned, our board has recently increased the outstanding authorization for share buybacks to $500 million. Before turning the call over for questions, I wanted to address the topic that we haven't spent much time discussing previously, income taxes. We have historically benefited and continue to benefit from significant net operating loss carryforwards, resulting in effectively zero income tax payments in recent years. With the strength of our earnings over the last several quarters, we have accelerated the utilization of these carryforwards in a substantial way. Based on current market conditions, we continue to expect to pay no income taxes in 2022 and will likely carry substantial NOLs into next year. However, if market pricing for our products remains above historical averages, we would expect to begin to pay cash taxes in 2023 with an effective rate of up to 5% of pre-tax earnings. Beyond 2023, assuming we have utilized substantially all of the NOL carryforwards, we would expect our annual income tax payments to be between 10% and 15% of pre-tax earnings in most market environments. With that, we are ready to take questions. Operator, I will turn the call back over to you. Thank you. Ladies and gentlemen, if you would like to ask a question, you can signal by pressing star one on your telephone keypad. Keep in mind, if you are using your speakerphone, make sure your mute function is released so that signal can reach our equipment. Once again, star one for questions. We will begin with Lucas Pipes with B. Riley Securities. Thank you very much, operator. Good morning, everyone. Of course, Lucas. Lots of moving pieces here. I'll try to keep my questions short. The first is on the rail side. Obviously, you know, disappointing that they continued to struggle. For the remainder of the year, what do you expect the cadence of met coal shipments going to be? And in terms of rail rates, have you seen movement there? Or as we look into next year, can we kind of keep them flat, down price dependent? Would appreciate your color on those two points. Thank you very much. Yeah, Lucas, good questions. Look, we continue to work closely with the rails. You know, it's been very public of the challenges that they've had. In the recent earnings calls, they're all working to address their issues, primarily labor related and you know, getting additional employees into the network. We are encouraged that we have continued to see ongoing improvement. It's beginning to approach levels that we're gonna need ongoing. July, as we indicated, was off to a slow start. There are a few reasons for that, but we expect things to continue to improve there. You know, with our current guidance at 8.4 million tons, you know, you look at kind of how the ramp has been with the 1.5 million tons shipped in the first quarter. 2.1 million tons shipped in the second quarter. We're indicating modest improvements in Q3. You know, I say probably to use 10% increase from where we were at this quarter. Now you're at 2.3 million tons. That would put you on a pace of, you know, approaching and above 2.5 million tons, 2.6 million tons for Q4 to get us to the midpoint of the guidance that we currently have out there. You know, that's kind of what we're looking at as we move forward. You know, in regards to the rates, you know, we've got an agreement, you know, with the rail provider that, you know, kind of flexes, and we've indicated this before with pricing. It is capped. We've indicated before that it kind of at that $55 level is capped. What also incrementally comes into that for maybe a few dollars, depending on where pricing is for fuel. There's some fuel surcharges that can push that several dollars higher as well. Once again, that's kind of the max we're gonna see at especially at the levels of pricing that we saw during the second quarter as well. Lucas, remember the stack and the rates, you know, are determined in arrears. You know, basically, this quarter's rate is reflective of last quarter's pricing. In Q4, if prices, you know, continue to sort of stay in the current range, there would be a meaningful step down. We won't get into the details there, but it would obviously be meaningful. You sort of know how much we're seeing, you know, how much the market has pulled back, and that's probably the right way to think about it. Think about commensurate with that pullback. That would also hold for 2023? Correct. The cap. Yes. The cap as well. Yes, that is correct, Lucas. Very, very helpful. Thank you. Quick anecdote. I learned yesterday that the person who did my home appraisal for my refinancing last year is, 'cause business is so bad in real estate, switching into long-haul trucking. I'm going to encourage him to give CSX a call. We'd appreciate that, Lucas, and any other railroad as well. You know, Lucas, I gotta give CSX credit. They have done a better job the last two or three months, you know. Like I said, you know, the first quarter was a disaster. They got their act together better in the second quarter. You know, we started off slow, but I'm more hopeful of CSX than any of the other four railroads. You know, just the frustration level with the western railroads is only increasing. That's good and bad to hear. Good obviously that the CSX, that you're most hopeful there. My second question for today is on this switching met into the thermal coal market opportunity. Like, I'm modeling 10 million tons of met coal over the next couple of years in that ballpark. Theoretically, given where prices are today, how much could you or would you want to switch over into the thermal coal market going into next year? Thank you very much. Yeah, no, Lucas, another good question. Look, the opportunity is significant given the price that we're seeing in the thermal markets now. The interest is extremely high. You know, we're in a position now where we're gonna evaluate the opportunities. We think this you know over time if this situation persists although we do think it is unprecedented and you know the view is over a matter of time it will reverse and correct itself. You know, we plan to take advantage of what we're seeing right now in the marketplace. We were successful here recently in booking a vessel into Europe. Now, you know, we continue to have some additional interesting discussions as we move forward. You know, don't get us wrong, we're not changing into a thermal coal producer, but you know, we're in our met segment. We do plan on taking advantage of what we see with the dislocation currently, which we think over time could put more pressure into the met markets. Clearly, we'll continue to work closely with our metallurgical customers, but right now with where we see the opportunity, we're gonna optimize our value here as we go forward. Look at the stack. Look, I would say that the order in which the coking coal should clear, metallurgical coal should clear into the thermal market would be PCI, but really not low-vol PCI, more sort of U.S. PCI, followed by High-Vol B, and then High-Vol A. It's gonna take a little while as we engage with the customer base. These certain parameters are different than what they're used to, but already we're seeing an understanding that certain of these coals can easily be blended into their overall mix and be a good fit. We feel really good about the conversations we're having. We think there are good opportunities out there. While... Look, our steel making customers are always gonna get the preference, the fact is that if thermal customers right now, you know, have a higher value, you know, a reserve price for, you know, how they view the product, then we're certainly gonna take advantage of that. As John said, you know, that has the added benefit of rebalancing the market. We remain, you know, quite interested in those transactions. We do think that this is unusual and sort of anomalous that you would have thermal coal trading at a higher level than metallurgical coal. We're very focused on bringing those things back into balance. Very, very helpful. Thank you. I'll squeeze one last one in. You alluded to a preference for share buybacks on the other 50%. Theoretically, if you were to use that full other 50% for buybacks, how quickly would you deploy it? Is it a kind of over the coming quarter, $120 million-ish to be deployed? Or would it factor into the larger share buyback authorization that you have? Just trying to get a sense of cadence of buybacks if, you know, that's the path you decide to go down. Yeah. Lucas, this is Matt. Obviously, we, you know, we ended last quarter with maybe a little less cash than we envisioned, and, you know, certainly didn't have excess cash at that point in time. You know, with the receivables that we had at the end of the quarter, we've seen some very strong collections here in July. Frankly, you know, feel like from a cash perspective, we're in a position that, you know, should the decision be made, we could start that program up fairly quickly after we exit the blackout period. You know, the one thing in terms of the cadence to keep in mind, as I mentioned, you know, the liquidity levels that we're targeting, you know, call it $250 million-$300 million of sort of a base liquidity, but then as we look at what we're going to pay as a dividend next quarter, we'd like to have most of that on the balance sheet at the end of this quarter as well. Really, you know, we'll be looking to manage the cash to be in a position to have enough cash to have our minimum liquidity set aside, to have most of that dividend set aside, and the rest really could be used for the other 50%. Understood. I appreciate all the color and detail. Best of luck. Thank you. Thanks, Lucas. Now we'll move to a question from David Gagliano with BMO Capital Markets. All right. Thanks for taking my questions. I have a few here on different topics. I'll try and get through them all here. Capital allocation, just to follow up on Lucas's question there. In the commentary, you mentioned the board is evaluating options for the other 50% that includes buybacks, and it's narrowed down the uses for that other 50%. What are the other uses aside from buybacks that are under consideration? Yeah. David, this is Matt. You know, we've talked in the past about the other dilutive securities. There are still some of the convertibles outstanding. We've talked also about the potential for, you know, basically holding back some cash on the balance sheet, some capital preservation. So really those would be the other two that we would consider. Obviously, as the board goes through their evaluation, they're gonna look at where the stock price is and weigh the benefits of being in the market versus doing those other things. You know, look, I think if, as you look at where we sit today, I think the value and sort of the narrowing down of the other options might lead you to a particular direction, but certainly don't wanna, you know, presuppose how that will ultimately be decided. Okay. Thank you. Just wanted to check the box on that one. On the Leer South issues, sandstone is never a good thing, obviously from a you know a longwall mining perspective, or at least in my view, it isn't. What gives Arch the confidence that the sandstone issues will improve after August? Along those lines. Yeah, David, What's a reasonable assumption for 3Q met cash costs given the expectations at Leer South? Yeah. Dave, you know, we'll talk a little bit about, you know, Leer South and to recap. You know, we started in longwall panel one, we ramped over the course of that panel, got to levels of productivity that we expected. In mid-May, we finished mining in that first longwall panel. Had a great longwall move, congratulate the team on a safe and very efficient move along scheduled timing. We started in panel number two in late May and quickly ramped up to expected levels of productivity. We were very encouraged with how we were moving through that panel. We then encountered a large sandstone. It's not that we don't encounter sandstone and we cut sandstone all the time in a lot of our mines. It was how hard this sandstone was. To some extent, we kind of expected we would see it, but just not how hard it is and the challenges that we have going through it. To remind you, the panel that, you know, that we mine a 1,200 ft panel. It's only in certain sections of the panel, really the back half of the panel where we're encountering this, and we're working to get through it. We will. We expect to be through it by the end of August and to see productivity levels improve substantially, there. More importantly and to your question is what gives us confidence as we move forward that we're gonna see things improve. Generally, with where this mine had to start, kind of given it was built out of Sentinel, we expected some of this sandstone in the first couple of panels. As we continue to move into panels three, four, and five in the first district, all of our mapping and geology shows that that sandstone reduces. More importantly, we've got continuous miners that are developing the headgate in panel three and have just started developing the headgate in panel four, and they're reporting favorable cutting conditions, which gives us further confidence that all of the geology and mapping and drilling that we've done, you know, will be supported with what we're actually seeing. Equally, and if not even more important, you know, we're now developing districts two, three, and beyond, with many more longwall panels well into the future, which once again, all of our mapping and geology should indicate that we've got reduced sandstone issues in those areas. We have good cutting conditions with the continuous miners that are developing those out as well. Hope that gives you a little insight and additional perspective into what we're dealing with. That's helpful. Thanks. Just on the third quarter met cash costs, given the... You know, we're continuing to work through this over the course of the third quarter. You know, we've guided to an $89 midpoint cash cost for the met segment. Clearly, Q3 is gonna be challenging. I would indicate though, or at least how we currently see it should be less than we're seeing in Q2 or we saw in Q2, but probably a little bit higher than we had in Q1. Should see meaningful improvement in Q4 as we get a full quarter of favorable productivities across our platform. Okay. Thank you. Okay. Switching gears. Working capital. $130 million accounts receivable in the second quarter. Do you expect that to swing to a working capital benefit in the fourth quarter? Yeah, David, it's Matt. I would say in the third quarter, we are expecting a lot of that to swing back to our benefit. We are still gonna have some of the same issues here in Q3 as we saw in Q2 with the timing of shipments likely to be weighted more toward the back half of the quarter, given the production issues that we're wrestling with now. You know, we're gonna see probably still an elevated level of receivables, but as we look at the difference in pricing between the June timeframe and where we sit today, we would anticipate that most of that build that we saw in Q2 reverses in Q3. If we do the math, just assume it goes to zero, any reason not to do the math or, you know, half of that $65 million free cash flow that works out to a $2.85 per share special dividend this upcoming quarter without any other cash generation. Any reason not to do that, Matt? I don't see any reason why that wouldn't be the case, Dave. Switching gears to the Powder River Basin for 2023, what is the 2023 PRB price position in terms of volumes at this point, and what is the average price for those volumes? David, that's a good question. As you know, we've not provided guidance related to that, but a couple of things that I think continue to come across, you know, in what we're representing, we're building out a very good book of business in the thermal portfolio with how we've positioned all of the thermal assets. You know, I think what we are willing to share is, you know, we're in a position now with at least the expectation of 2022 shipment levels. We're approaching levels of commitments for next year that are probably around 80%, give or take, where we are. We feel very good about how we've built that book of business. Second, you know, at least give you some color on pricing. You know, we're clearly in negotiations all the time, working to build out the rest of that book. You know, I think we can shade this to the expectation that from where we're seeing the market at right now is above long-term historical averages, for the PRB. Probably not to the levels we saw during 2022 when we were able to achieve some, you know, very significant and outstanding, contracts, over the course of 2022. We feel real good about where it's getting booked at and, the opportunity to really lock in some good, strong cash generation from, the portfolio going forward. Hey, David, it's Deck. I would add this, look, during this year, we already have, you know, put aside about $110 million into the thermal mine reclamation fund. You know, those are funds not available to shareholders in the capital return program. Next year, we would envision that being very modest and, you know, potentially, not making any contributions, but if we do, they would be very modest indeed. You know, that means that there's an additional $110 million of cash that would be available to shareholders from the thermal assets. The other thing would be, look, you know, we continue to see that average price that we've got committed for 2023 in the PRB marching up. You know, we continue to realize, you know, improved pricing relative to the base. We're seeing that march up. While, as John said, we might not be there yet in terms of what our average selling price was in the PRB or has been in the PRB, you know, to date this year, we certainly are looking at, you know, moving in that direction steadily with ongoing transactions. Dave, to add to that further, you know, we're seeing a lot of utilities come into the market for multiyear volumes. Not only are we building out next year, we're also, you know, really focused on layering in beyond 2023. Once again, all giving us more confidence on the cash-generating capability of this portfolio as Deck. You know, the final point I would say that on the domestic side of West Elk, we've already layered in business, and they are, too, a meaningful step up relative to where we've been for domestic business and are pretty much sold out. You know, obviously, we're gonna be reserving some volumes, you know, for the export market since it is so attractive. The small amount of export business we have done at a fixed price was done at a very attractive price. Again, already seeing good visibility from West Elk and a very significant contribution from West Elk with all the upside that comes with, you know, the export potential for that mine. You know, David, it's Paul. You know, I think in the end, you know, I think what's really changed in my mind with the PRB is with the implementation of this reclamation fund, you know, we've got this, what I would call we've created a great option in the PRB. You know, frankly, we're not gonna spend a lot of money out there. We're gonna keep it going so long as we get good returns. You know, frankly, we've got a huge amount of freedom now with that closure cost already in the bank effectively. Look, we're not gonna do anything to screw up this cash-generating capability we got out there. We're just gonna try and play it smart and do the right thing by the employees and the other stakeholders. Look, we're not gonna be chasing a lot of prices. Okay, there's a lot in those answers. I appreciate it. I just wanna just ask a few follow-ups here on that. First of all, on the range, you know, above historic average, but not at, you know, peak. That's a pretty wide range. I mean, that's like, I think like $10-$20 or something like that. Is it reasonable to say maybe $15-$16 a ton for contracts that are being signed for 2023? Something in that zone now? Is that fair? Look, David, you know, that $15 is an expectation I think is pretty solid. Yeah, it wouldn't be unreasonable. Okay, thank you. You mentioned selling into 2024 too. How much of the 2024 is booked at this point? On a related note, what's the denominator? Is it fair to assume that volumes are gonna be flat year-over-year in the PRB in 2023 and 2024? Is there capital being spent for growth? Doesn't sound like it. Conversely, is there, you know, plans to continue to fade the volumes at some point? Look, David, you know, I'd say on the out year sales, we're on a typical, you know, step down year over year- over- year. Although, you know, as I said, we are starting to hear more people talk about longer-term contracts. Relative to your question on expansion capital, that's a real easy answer, no. David, the 80% that John mentioned is predicated on this year's run rate. That gives you a sense of the denominator. While we don't know exactly what that's gonna be, I think you've got a pretty good sense from the guidance. That was the 80% suggesting that, you know, that's certainly within sort of, you know, that's certainly possible that we would reach, you know, the same levels next year as this year. You know, as Paul indicated, we're not going to chase. Then in 2024, I mean, it is interesting that after the pendulum had swung back so much to the extent where, you know, power generators were buying an awful lot of volume, maybe 35%-40% of their volume, you know, on a prompt basis. They're now swinging back, as far as we can tell, to wanting to lock up business longer term because of, you know, concerns around the availability of coal. You know, to the extent that there are concerns about scarcity, that's clearly going to be good for sort of long-term pricing. Okay, thank you. My last question, I promise, is the press release. It indicated that there's plans to sell incremental 600,000 of West Elk and incremental 500,000 of Black Thunder into the international thermal markets for the second half of this year. What are the prices for those tons? And is that included in your 2022 thermal realized price expectation of $18.57 a ton? Yeah. David, the expectation is built into the guidance. There is some of that, though, that is floating with the market. I don't have that split here necessarily right in front of me, but we can get that. Once again, you look where the market is currently, and you look at the opportunity for operation like West Elk specifically, you know, netback opportunity is in excess of $200 a ton. We plan to take full advantage of that. I think I indicated in my prepared remarks the total exports for both West Elk and Black Thunder, you know, are approaching 2.5 million tons for the year. 1.5 million of that, West Elk. 1 million tons, Black Thunder. If you go back to our prior quarter's discussion, we had that at 3.5 million tons. Because of logistical issues, primarily as we've indicated, problems with the Western railroads that don't seem to be getting better, you know, we've dropped that expectation. We're working very, very closely with the rails. There's opportunity there. We're gonna take full advantage of the opportunity that is presented, and we think it significantly increases our opportunity to generate cash. Yeah. You know, David, the frustration here is, you know, the obvious one on the rails. You know, as John said, West Elk netbacks if we could get more coal out, you know, it's triple digits. And probably more importantly, you know, Black Thunder, even though the volumes aren't huge, 2 million tons, you know, the netbacks on that coal to the mine are three or 4x what the domestic pricing is. So look, they're not huge volumes, but they're extraordinarily leveraging. You stand back, you know, there's a bigger picture here where, you know, some of this coal needs to go help our European allies. You know, that's really what we're focused on, is trying to. You know, this isn't gonna be a huge business. I don't know how long it's gonna last, but we clearly think, you know, there's a good incremental benefit next year in some of these exports to the thermal market. David, I would say on that one other piece on you know, the $18.57. Look, that's on the committed business. There certainly is upside there. You know, a lot of those tons do float with the market, those export tons we're discussing. You know, meaningful upside of that $18.57, depending on where that price is. You know, more than 50% and probably 70% or so of that is still floating with the market. You know, we could definitely see some lift to that $18.57. Just to circle back on what Paul was talking about with opportunities into Europe. You know, it was a significant development for West Elk to lock in a multiyear deal at fixed prices that are, you know, very attractive because of the demand that we're seeing out of Europe given the current situation. There's other discussions ongoing with additional utilities as well. You know, we'll really be focused on optimizing the value and the cash-generating potential of the thermal portfolio. Okay. Thank you very much. Very helpful. Thank you for taking all my questions. Thank you, David. We'll now hear from Nathan Martin with The Benchmark Company. Hey, good morning, guys. Thanks for taking my question. Morning, Nate. Hey, Nate. Very, very robust discussion so far. I think most of my questions on my list have probably been checked off at this point. Maybe drilling down on thermal just a little more. Given the rail issues, the likelihood of a chunk of your 22 tons in the PRB getting deferred to 2023, could we actually see shipments higher year-over-year in 2023 out of the PRB? Then, you know, maybe looking at West Elk shipments, you know, could those be flat to up as well, especially, you know, given, I think, John, you called out a multiyear fixed price contract? Yeah, Nate. You know, I guess on the first question, you know, so much of it's gonna be dependent on, you know, where ultimately the markets go. From our perspective, right, we moved out of our committed position, you know, 5 million tons that we expect to carry over now. You know, that's part of what the 80% kind of level that we see. You know, we are at a much higher position from a commitment perspective than we have been historically. Could you see an increase year-over-year? Once again, the rails are incredibly challenged right now. But a lot of that's just gonna be where the market plays out. On the West Elk question, you know, West Elk was producing a lot lower volume here, not all that long ago. You know, so this has been a tremendous opportunity for West Elk to lock in multiyear volume at very healthy pricing. You know, we're very focused there on making sure we're putting the mine in a position to be able to achieve the levels that we're committing to. You know, our expectation for West Elk, given the export opportunity is, you know, we're gonna be at healthy levels of production from a historical perspective for the next several years. You know, Nathan, it's Deck. While there clearly is a limit to how much we can produce in the PRB now, obviously with the guidance we provided previously, we think we could do, you know, 5 million tons or so more than we're actually going to ship. There is a physical limit there as to how much we can produce. You know, we'll see where that goes. I will also say that, look, over the longer term, I mean, we do still believe that, you know, thermal coal consumption in the U.S. is going to be drifting down. You know, it does seem like right now with gas prices where they are, we could see, you know, good robust demand in 2023 and even into 2024. That is, you know, that day is still coming that you're going to see, you know, continued coal plant closures. Got it. Very helpful color, guys. Maybe just kind of shifting over a topic that nobody's touched on yet. Any commentary so far on the domestic met contracting season? Any thoughts on timing there? You know, especially given, you know, the decline we've seen in met prices as of late. Just would appreciate your thoughts. Yeah. Nate, I think, you know, it's still pretty early. I don't know if there's an expectation of when this will begin, and others can weigh in. It's an interesting dynamic with what we have going on right now, and we touched on it a little bit earlier. You know, you've got a weakening met market. You've got a thermal market that's beginning to pull volume away from the met market into the thermal market. You know, we're seeing opportunities into next year for that type of thing. We haven't done anything yet. If that's happening for others as well, if things start to improve on the economy, and there's a lot of question marks around that, when those negotiations start, as we look into next year, you know, you may have removed some what would've been available volumes into the met market, put them into the thermal market, right as those negotiations are ongoing. Hard to say, but you know, we'll see how that continues to play out. You know, Nate, I think we answered this question last year, and I think the answer is about the same. I wouldn't be surprised if we effectively sell zero coal into the north or into the U.S. market. We may sell a little bit into Canada, but y ou know, our presence in the U.S., domestic met coal market is pretty small, and I don't think it's gonna change. Perfect. Very, very helpful, guys. I'll leave it there, and best of luck in the second half. Thank you, Nate. Looks like we have time for one more question today, and that will come from Michael Dudas with Vertical Research. Well, I better hope I can keep it to one here. Morning, Michael. How are you? I'm great. My only observation is you guys better stop talking about all these thermal export crossovers. They're gonna think you're gonna be a thermal coal company again, so be careful, guys. So remind us on labor contracts or, you know, profit sharing or how increases might occur here as we move, you know, through this inflation and the tightness in the marketplace and, like, turnover and what you're seeing in the marketplace around you. I assume you feel fairly comfortable with the productivity levels, so that they can improve and keep the labor force intact to drive that. Yeah, Michael, as we all know for the broader economy, you know, labor is an issue. You know, we see it discussed, you know, everywhere. We see issues and concerns within our industry as well. You know, I'll give you additional color kind of on our views. While our turnover on a relative basis from a historical perspective for our operations is higher, we have historically had very, very low turnover rates. The reason for that, just foundationally, is we've got tier one, low cost, very safe, long-lived mines. So that's kinda just foundational to that attracts a workforce that wants to be there, one. We then treat the employees, you know, incredibly fairly. You know, I think they feel a part of the team in you know taking the company forward. You know, more recent pressures here as we've come out of the pandemic and things have gotten tight and labor's gotten tight, once again, has driven our turnover rates up modestly. We've been working real hard to make sure we're keeping our employees satisfied, and we're addressing those in a variety of ways, and we'll continue to do so and be responsive to where we see the market to see our success moving forward and working closely to make sure that they continue to feel part of that team and moving forward. It is an inflationary pressure on us as it is on everybody else. Once again, we think we're able to manage that and manage our employee levels well. Overall costs and, you know, like, payroll benefit year-over-year changes, mid-single digits, low to mid, is there, you know, does that put changes as you move forward? Yeah. It's probably mid-single digits, maybe a little bit above that, you know, on an annual basis with some of the things that we're doing moving forward. Great. Thanks, guys. Thank you, Michael. Thanks, Michael. That does conclude our question-and-answer session. I'll turn the call back to your host for closing remarks. I'd like to thank you again for your interest in Arch. In my view, the company is approaching the maturation of our long-term strategy for value creation and growth. We've completed the build-out of our premier coking coal portfolio and believe we'll need minimal capital on a relative basis going forward. We're back to a net debt positive cash position, and we've decreased our principal long-term liability with our new thermal mine reclamation fund. We've rolled out a new capital return program that has already driven significant value. In short, we're now in a position to rightfully reward our shareholders for their trust and patience over the last several years. As I've said many times, Arch's story is by design an increasingly simple one. There'll always be commodity cycles, and there's always gonna be mine issues to some degree. We have, however, completed the hard work and taken the necessary steps to build a compelling cash-generating model that is prepared not only for the strong markets, but the inevitable trough periods that are sure to come. With that, operator, we'll conclude the call, and we look forward to reporting to the group in October. Stay safe and healthy, everyone. Once again, ladies and gentlemen, this does conclude your conference for today. We do thank you for your participation, and you may now disconnect.