Q3 2019 Earnings Call
Thanks, and welcome to the arch coal third quarter 2019 earnings Conference call Today's conference is being recorded.
Well, let's turn the call over to Mr. DECT phone senior Vice President Treasurer. Please go ahead Sir.
Good morning from Saint Louis Thanks for joining us today.
Again, let me remind you that certain statements made during this call including statements relating to our expected future business and financial performance, maybe considered forward looking statements. According to the private Securities Litigation Reform Act.
Forward looking statements by their nature address matters that are two different degrees uncertain.
These uncertainties, which are described in more detail in the annual and quarterly reports, we file with yes, you see 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, where otherwise except as may be required by law.
Also like to remind you that you can find a reconciliation of the non-GAAP financial measures that we plan to discuss this morning. The end of our press release, a copy of which we posted in the Investor section of our website surgical dot com.
On the call. This morning, we have Johnny Sarvis, CEO , Paul Lang artist, President and COO, John Drexler, Our senior Vice President and CFO .
I'll begin with some brief opening remarks thereafter, we will be happy to take your questions John .
Thanks, Dan Good morning, everyone I'm pleased to report that during the quarter. Just ended arts turned in another strong operating performance and generated healthy levels of cash despite the recent softening and coking coal markets.
Fortunately, we maintain great momentum in our core coking coal franchise with strong volumes, an excellent cost control and continue to drive the head with her well defined strategy for long term value creation and growth.
Among the highlights for Q3.
We achieved strong volumes in effective cost control winter metallurgical segment, despite challenging conditions in the last longwall panel at Mt. Laurel, We acquired reserves adjacent to our flagship Leer mine at an effective cost of around $2.50. A time that will extend the life of that operation to the late 2030.
We resolved a longstanding land dispute and that resulted in 39 million our game, we expect to monetize and 20 twond.
We bought back another 1.2 million shares of stock, bringing total buybacks since launching the capital return program to 10 million shares under 40% of the initial shares outstanding.
What committed another million and a half tons of coking coal for 2022 delivery to the North American customers at an average price of $110 per Todd.
Generated five times more cash or legacy thermal assets and we invested in capital as we continue to focus on harvesting cash from those operation.
And we'll continue to make good progress transformational projects Clearsign.
In short we showcased the strategic focus cost structure and asset strength that we believe will deliver significant value for our shareholders over the long term.
Across a wide range of market conditions.
I was particularly pleased that we again return a robust level of capital to shareholders, even as we strengthened our asset base with the ongoing progress at Leer South.
In total we returned $98 million to shareholders in Q3, consisting of $91 million in share buybacks and 7 million in dividend payments at the same time, we invested $26 million to build out later so [noise].
All told we have now returned more than $255 million to shareholders through the first nine months, just 2019, 18% more than during the same period of 2018.
To recap our progress since launching the capital return program in May of 2017, just 10 quarters ago. We've returned nearly 900 million Dollarss and bought back almost 40% of our initial shares outstanding that's a rare achievement for any company, regardless of the industry and we believe it underscores a powerful cash generating capabilities.
Our operating platform.
Turning to metallurgical markets coking coal prices pullback markedly during the quarter in the face of trade related tensions that concerns over global economic growth as well as slowing steel demand weakening steel prices and compressed steel margins.
In Q3, the price of high Vol coal, our primary product retraced under $140 per metric ton at September thirtyth after averaging nearly $200 per metric ton during the years first time.
Of course, we've seen some degree of recovery in pricing. This month the prices remain well below the first half averages even now [noise].
How are balancing macro concerns the steel complex complex pressures to some degree global coking coal output in capital spending remained muted at present.
In addition, several high costs you guys coking coal mines have idled in recent weeks in response to the lower price environment and U.S. exports are down 11% through August with further erosion possible.
Australian out put us up only modestly and continues to under shoot the level achieved into peak year of 2016.
In short supply and demand up here only modestly out of balance at present and corrective measure seem to be underway with this low cost structure arch is well positioned to manage costly. So the current market softness however, long it last while still generating solid margins.
Looking ahead, we remain highly confident in our competitive position and our clear and compelling strategy for long term value creation and growth.
We have identified for significant drivers that should elevate the company's long term value creation potential still further.
These drivers include the accelerated build out of our World Class Lear, South Longwall mine.
The recently completed transition Leer mine into the heart of bits Reserve base. The completion of the strategic joint venture with T. body, which should unlock substantial synergies and sharpen our strategic focus still further and our proven capital returns.
In combination. These drivers should further enhance are already powerful value proposition and deliver significant incremental value to our shareholders over the long term.
With that I'll now turn the call over to Paul lying for some further commentary on or operational performance during the second quarter Paul [noise].
Thanks, John and good morning, everyone.
As John noted our core coking coal franchise continue to perform at a very high level <unk> third quarter.
But strong volumes in our first quartile operating costs, we generated solid margins, even in a weak pricing environment.
During the quarter, we shipped 1.9 million tones of coking coal health segment costs below $65 per tonne, even with challenging conditions on the law wallet novel.
And generated nearly 35% cash margin despite a decline a $49 per ton and the price of high vol. A over the course of the quarter.
Our flagship Leer mine in particular turned in an exceptional performance with cash cost below $45 per ton.
Well, we're pleased with the segment's performance, we also see significant potential to improve in the coming quarters.
Among the drivers for incremental improvement earlier mines transition to thicker coal at the start of the fourth quarter.
The startup clear South longwall, which is now less than two years away and the transition of Mt. Laurel to a room and pillar operation in 2020, which should lead to a better and more consistent performance as well as improved product quality.
In addition to our strong operating performance, we strengthened our coking coal asset base during Q3 with the acquisition of additional lower carried reserves.
As noted in the press release this block at Kohl's accessible underground by the Leer longwall operation and can be developed without significant incremental capital.
20 million tons secured in the transaction along with another 4 million tons that can now be incorporated into the mine plan will extend layers mine life by approximately six years.
In short, we're investing capital of about $2.50 per tonne for incremental reserves and an operation has captured a cash margin of more than $65 per tonne here today.
Moreover, we were effectively able to counterbalance the outflow of cash for this acquisition, what the resolution of a longstanding dispute with United States part with victory or related to a property in new Mexico.
Settlement of this dispute should deliver about $39 billion of incremental cash in 2020.
The addition of the reserves I would add should support longwall mining at the Lear operation until the late 2000 Thirteen's. This is significant because it means that the Lear and Lear, South Longwalls will be operating in tandem for almost two decades.
We stated in the past we see other opportunities for further expansion on the Lear reserve base during that timeframe.
The acquisition will also support a stream of low risk World class coking coal projects that should deliver increasing levels of earnings and cash flow well into the future.
In time, we would envision the Lear complex to have a total of three or even for Longwalls operating simultaneously within the reserves, we control all with the first quartile cost structure.
Turning to our marketing efforts, we're pleased with the progress we've made in Q3 for the North American markets. We placed 1.5 million tons of coking coal for 2020 delivery at an average price of $110 per ton.
Well the North American market represents a minority over overall sales, but generally on the order of 25% over the last several years, we see good value and maintaining a meaningful presence in both the United States and Canada.
Complementing this positioning arches established a strong diversity growing international customer base with steel mills that have tested our products can see the value would use and their blends.
Moreover, our strong balance sheet gives us the financial flexibility.
Her into the kinds of market based pricing structures that are international customers tend to favor.
Consequently, we're confident in our ability to move the balance of our coking coal products into the international market next year in a manner that will create significant value for both our customers and for arch.
Today, we've entered into agreements to place 1.6 billion tons into the seaborne market using index based pricing.
All told we now have about 45% of our 2020 coking coal volumes placed assuming a run rate similar to this year.
[laughter] supplementing our coking coal franchise arch again generated significant amounts of cash from our thermal assets during the quarter.
Both of our thermal assets turned in solid margins and continued to demonstrate great capital spending discipline in keeping with our harvesting strategy of generating high levels of free cash in those segments.
All told last quarter, our thermal operations generated a combined segment level adjusted EBIT D.A. $67 billion, while expanding just $12 million and capital.
It's harvesting strategy of our thermal assets is even more striking when you look back to October 2016.
Since then we've generated $662 million of EBIT da and always spent $79 million and capital.
As in recent quarters, we put that excess cash to good use in both our capital return program and the ongoing Buildout of Lear, South Longwall mine, which remains on track for Q3 2021 startup.
Moving to the joint venture with P. body, we continue to engage with the Federal Trade Commission as we make our way through the regulatory review process.
We remain confident that this business combination will prove beneficial to all stakeholders, including our customers employees and shareholders by creating a long term official stable and cost competitive supply platform in an increasingly challenging thermal marketplace.
As you can appreciate we cannot specifically comment on the process other than to say things are progressing as expected.
In summary, we continue to demonstrate excellent momentum across our operating platform and we're laying the foundation for further improvements in the coming quarters, while lower realizations for our coking coal franchise have reduced volume projections for thermal segment will dampen our fourth quarter results as compared to last.
Order, we still believe we're in a highly desirable position.
With this we fully expect continued to deliver strong cash flows and excellent value for our shareholders.
With that I'll turn the call over to John Drexler, Our CFO John .
Thanks, Paul and good morning, everyone as John and Paul have indicated our third quarter results represent a continuation of our strong execution on our plan that includes generating significant cash flows from our low cost operations independent of whether coal market cycle goes.
Returning meaningful amounts of capital to you our shareholder investing in an accelerating the startup of the high return Lear South project.
All of this while maintaining a strong balance sheet and liquidity position for inevitable market downturns.
We expect continued progress on these efforts as we move forward.
First a brief update on our cash flows capital allocation and liquidity position.
Despite the metallurgical market downturn, our low cost operating position allowed us to continue to generate significant cash flows during the quarter.
With operating cash flows of approximately $108 million.
Capital spending for the quarter was $49 million, which includes $26 million of development capital for Lear, South and $23 million for maintenance capital.
Capital invested in their south now stands at $63 million.
Total capital for the full year at Leer, South is on target to be approximately $100 million.
Well yourself continues to be on plan and on budget.
[noise] during the quarter, we continued with our plan of using excess cash to return capital to shareholders.
During the third quarter, we bought back 1.2 million shares of stock or approximately 5% of our initial shares outstanding for $91 million.
To date, we've spent a total of $817 million buying back 10 million shares are almost 40% of our initial shares outstanding in just 10 quarters.
That's a rare achievement in a testament to the cash and value generating capability of the portfolio and execution of our plan.
Also during the quarter, we paid our normal recurring dividend of $7 million, bringing our total dividends paid since we initiated the quarterly dividend program in the first quarter of 2000 $17 million to $78 million.
[noise] arches Board has approved the next quarterly cash dividend payment of 45 cents per common share, which is scheduled to be paid on December 13th to stockholders of record at the close of business on November 29.
Regarding our liquidity, we ended the quarter with $351 million in cash.
And when combined with the borrowing capacity on our credit facilities $465 million of liquidity.
We continue to be in a net cash position with cash exceeding debt by $41 million.
We feel this is ample liquidity at any stage of the market cycle and has us well positioned to execute on our upcoming capital projects with these liquidity levels.
Let's look now at the remainder of the year as noted we will pay 52, and a half million dollars for the incremental reserves at Leer during the fourth quarter.
And don't expect received the majority of the cash associated with a 39 million dollar P.R.L. again until 2020.
As a result, combined with the impact of lower pricing, we expect our liquidity at year end to trend to the lower end, if not below our liquidity range of $400 million to $500 million.
We are comfortable with these lower ranges of liquidity given the low pass <unk> low cost position of our assets, which allow us to generate cash flow across a wide range of coal price conditions.
Additionally, we benefit from a strong balance sheet that ensures we are well positioned to manage the cyclical nature of coking coal markets.
As we look at our capital return program in the fourth quarter, we plan to be disciplined in our approach to ensure sustainable long term return for our shareholders.
We remain committed to returning excess cash flows to shareholders and plan to do so in a manner that allows us to maintain our strong balance sheet with sufficient liquidity to support our operational and financial objectives.
Given lower met pricing as well as higher capital spending associated with Alere self build out and the Lear Reserve acquisition. We currently expect a moderation in repurchases in coming quarters apps into further rebound in coking coal prices.
We will continue to work with the board to determine the appropriate level of ongoing capital return going forward to ensure we are generating long term sustainable returns for our shareholders.
In summary, we are pleased with the continued execution of our plan and believe firmly in our ability to execute as we move forward.
Our platform is designed to generate cash and values through the full market cycle.
We remain enthusiastic about our key drivers the value.
The Buildout of Lear South.
The transition of Lear to the heart of its reserve base.
The ultimate completion of the joint venture with be body.
And the continued execution of our capital return program.
With that we are ready to take questions operator, I'll turn the call back over to you.
Thank you if you would like to ask a question. Please signal by pressing star one on your telephone keypad, if you're using a speakerphone. Please make sure. Your mute function is turned off till now your signal to reach our quick.
Good for Star one that's good question.
Just for a moment hello, everyone an opportunity to signal for questions.
[noise] [noise] [noise], we have a question from Martin, leaving Seaport <unk>.
Very much and congratulations on another good quarter of execution.
First question has to do with Dod met coal realizations, just noticed during the quarter that as a percentage of the benchmark it seemed to be lower lower realization did what has been doing on the last couple of quarters I get that in a falling market. It. It does it can actually can be that way, it's competitive but I'm just trying to think about.
How to model the met coal realization in Q4, I assume you're going to pick up some benefit from lower rail rates, maybe you can talk a little bit about how transportation rates would change, but also how to think in general about how to how to how to model that Q4 met coal realization.
Yeah, Mark this fall.
You know if you kind of look at a Q3 and you know I look at it.
Pretty hard I I, what I like to do Mark is take the average for the quarter use our rail rates.
And if you look at it I think we Miss the average met price by about one or 2% if on a theoretical basis.
And you know given how the prices were dropping through the quarter I thought that you know all told I thought the guys that are really good job. So basically capturing the oh, yeah the market as it was [noise].
And as you correctly pointed out our rail rates are basically in arrears to the pricing. So we should see a benefit in Q4 of the drop in pricing in two three and it's it's not exactly proportional to the drop in the index prices, but it's pretty close so.
If you think that prices are off 10, or 12% you know take a couple of percent off that that's what the rail rates will go down.
That's great. Good good to hear I'm second question Paul for you on on Mt. Laurel I think you referenced some more [laughter] geological issues I'm just wondering when you think about the long term and I know that the plan as it stands right now and as you reiterated on the call is to 'em is to use continuous miners there and you believe the quality.
Well up in the cost maybe even counterintuitively will come down, but I'm just curious given the given the fall in med prices and some of these sort of ongoing issues is there ever.
Thought about you know either you know idling the mine or idling. The production I'm. Just curious also isn't there incremental capital that needs to be spent on the asset as you as you do that transition.
Yes. Good question, Mark I think as I look at Mt. Laurel and Q3, and you know I guess it in some ways. It's no surprise you night when we first talked talked about pulls the longwall from the mine you know I I had a lot of concerns obviously yeah.
I'll say at the end of the day. They were founded this last panel has been a bear.
We've had a lot of trouble getting out I'll just be Frank we had costs that were triple digit at the mine in Q1 <unk>.
However, you know the one thing I think that's massed by this is that we actually have three of the units in room and pillar mining at the operation and we actually had a pretty good run on those sections. Although it is masked by the problems. We have the long wall, but you know here. We are you know if we have two we'll pull.
Over the long roll out early.
I could see doing it anytime from you know about here to the end of the year and I'll just keep it you know as a a day to day thing keep watching it and if you look at our open position Mark what it is is the coal out of Mt. Laurel, We're just being careful about selling it.
Yeah that makes that makes perfect sense and one last question for me has to do with the PRB. Obviously, you guys had a I mean at least relative to my estimate that's where the beat was really strong volumes and at lower cost and and you gave the guidance, but when you think about.
2020, right now and a 225 gas environment and you know where power prices are et cetera, you know what do you know maybe I won't ask specifically what you know what are you thinking what do you think you will produce in 2020, but maybe just in general when you look at the 2020 demand environment for PRB, how do you how do you think.
It's it's if gas kind of hang is where it is right now.
Well go.
I think first and foremost you know what we're competing against in the PRB as natural gas renewables and a natural gas. It you know these 225 rates.
The PRB is going to continue to drop in volume.
And you know as you've seen in the past will make whatever adjustments we need to make.
Perfect well congratulations and.
Best of luck. Thank you.
Thank you Mark.
Our next question comes from Lucas pipes.
Right.
Hey, good morning, everyone and congratulations on another very solid quarter, despite the tough pricing environment.
First question, Doug in regards to that 20 20 million Reserve acquisition, you mentioned that there is incremental capital need it or not much incremental capital needed to access those reserves. So I'm curious directionally what magnitude that should we be thinking about and then I have a follow up question I'm not.
Well thank you.
Well it gets the you know, it's what I'd characterize it as particularly is you know the typical things you have no new sections are new Longwall district switches generally a you know a shaft at shaft worker.
Inhalation boreholes.
You know frankly, that's those are costs, we're not going to one curve for another five or six years. So this is costs that are way out there.
Got it and it just just curious when would you be mining Oh 20 million tons approximately used that five years from now 10 years from now.
That's just kind of curious when when those come into the mine plan.
I kind of you know right now we're sitting there thick and it'll be mid or you know mid the past bid of 2020.
Oh, so that students.
Oh excuse me 20, excuse me 2025.
Got it got it that's certainly very helpful. Thank you no no. That's that's helpful. And then just just last question here from me for Mr. Jack's there.
John how should we you mentioned you will be a little bit.
Lower and returning capital here.
In light of weaker pricing at the development and Oh yourself, but.
And you give us a sense of magnitude on on capital returns over the next couple of quarters, but very much appreciate your perspective on that thank you.
Yeah Lucas.
Regarding the question I think you know we feel real good about the capital return program in the accomplishments that we've had so far.
By design, it's been built around a model to return excess cash flows to investors and we've continued to do that because we think it investment in our shares it's been a good investment we continue to believe that and we plan to move the capital return program forward with a meaningful moved down and Matt pricing and in with some.
The stuff that will have associated with the leader South project, along with the the capital that's deployed.
For Leer North you know, we do expect a moderation in the amount of share repurchases that we are doing but it will still be built around model of excess cash flow. So that's an ongoing conversation with our board you can rest assured that this company is committed to that capital return program.
Well have that conversation you know as we move forward over the next several quarters.
Once again, just given the meaningful move and met pricing from.
$200, a time down into the one fifties.
You know, it's reasonable to expect a moderation and look assist John let me reiterate what John said I mean, we certainly are committed to the capital return program.
Obviously with the move and met prices you know that that has to be something we'd throttle up and down, but but clearly you know conversations with the board on a regular basis or something we're gonna do we do have the dividend, which is part of the capital return program that we think sustainable in a period of the market cycle. So.
Given the fact that you know we're spending to $52 million, we still got some capital this year on only or South 2020 will probably be the biggest year in terms of Lear, South Capitol. A you know I think it's safe to expected that buyback may move down a little bit, but clearly when lear south is on with the cash it stolen all.
Clearly, we're gonna be generating a lot of cash if we can return to our investors.
[noise], that's a very helpful. I appreciate all the color and best of luck. Thank you.
[noise]. Our next question comes from David Gagliano.
Oh capital markets.
Hi, Thanks for taking my questions I have a just a one near term in one a follow up on the Lear.
Ah Reserve block acquisition first on the near term.
Clearly entering the sweet spot here at the Leer mine.
You flagged it again productivity improvements 20% expected.
You did say in the commentary expectations for earlier to maintain and potentially improve versus recent results I. Just wanted to ask about that maintain comment are there any offsets that we should be thinking about here.
Which would lead you to say maintain instead of just improve.
[noise], David as you know they I'd just be hopefully a little bit on the conservative side look I have pretty good expectations for Lear.
Yeah, the only thing that I've been bitten by early last year has been Mount Laurel and you know as you look at it across the entire segment costs, that's why I've been a little cautious.
David This John I mean, you've got to expect as we move into the thicker part of the same is 20 inches sticker than what we were mining I may. So you have to think we're probably going to get improved volume and lower costs moving forward.
Okay I just wanted to double check and then on the follow up on the LIFO Reserve block acquisition.
60 million for a 20 million tons of reserves <unk>, just two quick questions or there are there any royalties or anything else I mean, maybe thinking about other than the capex commentary that much a minute ago and who was a seller.
Oh, the seller was black Hawk, they had a press release today.
Okay. So the the 20 million tons his body and see if we recover more than 20 million tons, which we think on their property could be an additional two will pay about a 7% royalty the remaining balance that makes up the 24 as cold we control.
Okay. Okay. That's helpful. Thanks, and then just the last follow up that I thought in in your comments you mentioned that it extended the life by six years I thought was what you said.
The idea is okay now obviously that.
I mean does not imply 4 million tons for your volume or am I doing my math wrong.
Pretty well set on I'll be that's you know if you look at it that is correct.
So it isn't Lear now running a 3 million is there so what I'm trying to get through Where's that incremental 1 million coming from.
Oh, there's wrote about 4 million David.
Okay perfect.
Good to know thanks, that's all that.
Thanks, David.
Our next question comes from Michael due to us.
Good morning, gentlemen.
Two questions first yeah. Good morning, My first question is.
Excellent job on on contracting on the Mets, especially in the U.S. and your diversity internationally.
It is the market kind of taking a pause right now or is there any sense that the I'm, especially from your high Molly product that this might be a pretty good price is pretty good opportunity to lock in or it's just that the budgeting cycle for your customers is maybe little bit more uncertain relative to what 2020 it looks like.
[noise] [noise], yeah on the domestic.
Sales cycle.
You know, it's it's pretty well puts us where we are this year, you know 20 or 25% North American.
No one is I looked at that pricing or you know it equates back to about.
Average index price of about roughly 860 Bucks a ton.
You know, which I I think was a pretty reasonable a number for where we were particularly when we did those deals which was early in this quarter or excuse me early early in October .
So you know so they were just where they were just reached.
I I understand it was late in the third quarter, we did those.
You know when the market was pretty well near the bottom.
Understood understood.
And my follow up but for John .
Maybe some perspective.
You know from the last downturn that we all people we went through several years ago, given the set up to the marketplace in the U.S. and where mint markets are internationally.
He is could be more difficult for some of these coal mines that have been impacted recently and shut down it's kind of make it through is there more maybe permanent since some of the issues here given that the secular pressures or were there are minor seen especially in the U.S.
You know Michael I think you're right I mean, if you look at the recent pullbacks, we've seen a couple announcements mostly high vol. Aided at pull back and you know we previously said that we saw kind of industry average cost at about $75. A ton. We actually think that's gravitated up closer to 80 and a that people are going to contain.
Can you just struggle when you see those prices dropped 131, 40, I think you're going to see volume come out pretty quick.
Yes, you can imagine we were looking at the investment for earlier South we looked at you know domestic global markets are and you know what we found is that you know around the globe or you know even a conservative demand growth number a conservative depletion number that we think you need about 75 million tons over the next five to six years.
Just to meet demand and you know, we think given where we are with their south future projects down. The road that you know what that quality cost structure. We're about is well positioned as you could be so.
The quality the cost structure that we have for that domestic international markets. We think is pretty attractive. So I think you're gonna see more cutbacks because if you think about it we had you know the 50 $60.
Softening in pricing third quarter, but first half the year prices were $200 and you still had volume going down I mean were down 11% year to date on exports and we expect that number to go down further between now and ended the year. So we really like the way arches position with our qual leaner cost structure.
And our balance sheet and Michael to add one thing to that this is John Drexler capital is difficult for the industry and especially for high cost challenged operation. So as these get shut down even if the market does come back capital to reopen those is gonna be difficult, we're seeing that across the industry and so that.
You know, we think sets up well, especially with how we're positioned hey, Mike. It stack. So you know he just since the downturn in June and we've already seen 2 million tons. The U.S. come offline. So that's really quite rapid you're right that's different than in the past when production seem to be sticky or this is coming off really you know quite quickly. In addition, there's 4 million.
On that is still in the hands as an entity that's gone through bankruptcy and it's not clear how much. It was 4 million tons are gonna come back as John pointed out we're already down appreciably in really quite a quite a rapid sort of timeframe. If you go back to 2011 last down cycle, we probably at one point had a marvelous probably 40 million tons oversupplied.
So it took a long time to dig out from from underneath that 40 million tons of excess supply. If you look at it today the market might be slightly out of balance because demand has come down and that's sort of why we've seen the prices pullback, but it's really pretty modest and these corrective measures are are happening and kind of lightning speed, we wouldn't mind seeing the markets.
Stay down for it that quite frankly, because it does tend to separate we from the chaff sort of drive down the higher cost reduction perhaps changes the way you know somebody's marginal projects. It shouldn't be you know looking at coming into the market, but but we're not sure them that these prices are going to stay down for very long given how quickly you are seeing the supply response.
Yeah, certainly supports your financial profile going into this downturn very well said gentlemen, thanks coupons appreciate it.
Thank you Michael.
We have no further.
Huh.
Well. Thank you guys for your interest in arch, let me tell you. The management team continues to focus on creating long term value for our shareholders. We look forward to updating you on further progress in February thank you.
Thank you ladies and gentlemen.
The conference you may now disconnect.