In the fourth quarter of 2013, Arch recorded revenues of $719.4 million and adjusted EBITDA from continuing operations of $33.7 million.

For the three months ended Dec. 31, 2014, Arch reported a net loss of $240.1 million, or $1.13 per diluted share, compared with a $371.2 million net loss, or $1.75 per diluted share, in the fourth quarter of 2013. The net loss for the fourth quarter of 2014 includes an adjustment to the valuation allowance related to deferred tax assets, resulting in a non-cash income tax charge of $169.0 million, or $0.80 per share. The company also elected to freeze its employee pension plan benefits, resulting in a pension curtailment gain of $26.9 million, or $.08 per share, which was recognized in the three months ended Dec. 31, 2014.

"During the fourth quarter of 2014, improving operational results and steady shipment levels offset the softening pricing environment, allowing Arch to deliver its highest quarterly EBITDA in over a year," said John W. Eaves, Arch’s president and chief executive officer. "Our strong cost performance in the Appalachian segment, underscored by an outstanding operational quarter at our Leer mine, demonstrates that our strategy to control costs, preserve liquidity and reduce capital outlays is effectively mitigating some of the industry-wide headwinds."

2014 Highlights

"In 2014, we made significant progress optimizing the company’s cost structure and asset portfolio while maintaining our focus on employee safety and environmental stewardship," said Eaves. "The successful ramp-up of our low-cost Leer mine, coupled with the impact of our Cumberland River complex coming offline, transformed our Appalachian metallurgical coal platform and significantly reduced our cost structure in the region. With our enhanced met platform and strong Powder River Basin franchise, we are confident that our diverse and balanced tier-one asset portfolio is well positioned for long-term value."

For full year 2014, revenues totaled $2.9 billion on coal sales of 134 million tons. The company generated adjusted EBITDA from continuing operations of $280.1 million in 2014 compared with $252.1 million in 2013. Arch also reported a net loss of $558.4 million, or $2.63 per share, in 2014.

As part of the company’s ongoing asset portfolio re-alignment effort, Arch divested select, non-strategic assets in Appalachia in 2014, for total cash consideration of $46 million.

Financial Position

As of Dec. 31, 2014, Arch had available liquidity in excess of $1.2 billion, including cash and short-term investments of $983 million and undrawn borrowings on its credit facilities. "Arch’s top financial priorities are preserving liquidity, controlling costs and holding the line on capital spending," said John T. Drexler, Arch’s senior vice president and chief financial officer. "We have been successful in these endeavors, ending the year with $983 million in cash and short-term investments and reducing capital outlays by nearly $250 million since 2012. Our solid liquidity position, ample debt maturity runway, ability to manage cash outflows and financial flexibility are key competitive differentiators that position Arch to successfully manage through current market conditions."

In support of Arch’s financial strategy to preserve its financial flexibility, the company will suspend the annual cash dividend on the company’s common stock, effective immediately. "In light of the ongoing market weakness, we believe that suspending the dividend is a prudent step to preserve our liquidity," added Drexler.

Core Values

Arch made significant strides in pursuit of the company’s ultimate goal of operating without a single environmental violation or reportable safety incident in 2014. The company’s safety performance tied its best record in company history with a total-incident rate 8 percent lower than its 2013 rate. In addition, Arch’s operations made significant improvements in environmental stewardship in 2014, driving the company to its second-best environmental performance in history – representing a nearly 30 percent improvement over its 2013 rate.

Arch subsidiaries also achieved noteworthy safety and environmental stewardship milestones in the year just ended. The West Elk mine in Colorado continued its streak of zero SMCRA violations for the 15th consecutive year, while the Viper operation in Illinois worked more than 500,000 employee hours injury free. Moreover, among the numerous awards for excellence attained by Arch, 2014 marked the fourth consecutive year that an Arch subsidiary was honored with a prestigious Sentinels of Safety award.

"These achievements reflect our dedication to continuous improvement in our core values each and every year," said Paul A. Lang, Arch’s executive vice president and chief operating officer. "I am extremely proud of our employees for their ongoing commitment to our philosophy of operating safely and responsibly."

Operational Results

"Our Powder River Basin and Appalachian segments generated strong cost performances in the fourth quarter, with our Appalachian region delivering its best cost performance in more than three years," said Lang. "The addition of the Leer mine to our operating platform has exceeded our already high expectations, enabling us to provide 2015 cost guidance in the region well below 2014 levels."

Arch’s consolidated cash margin per ton increased 20 percent to $3.36 per ton in the fourth quarter of 2014 from $2.79 per ton in the third quarter. Consolidated sales price per ton decreased slightly over the same time period, but was more than offset by a $0.72 decrease in consolidated cash cost per ton, reflecting lower cash costs in the Appalachian and Powder River Basin segments.

For full year 2014, Arch earned a consolidated cash margin of $2.72 per ton versus $2.82 per ton in the prior year, due in part to lower earned margins in the company’s Bituminous Thermal segment and lower pricing on metallurgical and export tons. Consolidated sales price per ton declined modestly, while consolidated cash cost per ton was flat over the same time period.

In the Powder River Basin, fourth quarter 2014 cash margin per ton declined 3 percent compared to the third quarter, attributable to lower realized prices per ton. Cash cost per ton declined slightly over the same time period, due to lower consumable costs.

For full year 2014, Arch earned a cash margin of $1.80 per ton in the Powder River Basin. Annual sales price per ton increased 3 percent versus the prior year, reflecting higher pricing on contracted tons. 2014 cash cost per ton increased 4 percent over the same time period, due to higher sales-sensitive costs and increased repair and maintenance costs.

In Appalachia, Arch earned a cash margin of $9.90 per ton in the fourth quarter of 2014 compared to $2.35 per ton in the third quarter. Sales price per ton increased modestly over the same time period, due to a higher percentage of metallurgical coal in the regional volume mix. Cash costs per ton in the fourth quarter decreased by $7.00, attributable to cost containment efforts, a strong performance at the Leer mine and improvements at the Mountain Laurel mine.

For full year 2014, Arch earned a cash margin of $5.38 per ton in Appalachia compared with $6.07 per ton in 2013. Annual sales price per ton declined 6 percent versus the prior year, reflecting softer pricing on metallurgical and thermal tons. Cash costs in 2014 decreased by $3.61 per ton versus 2013, benefitting from the ramp up of the Leer mine, the company’s ongoing realignment of its portfolio in the region and strong cost control.