Arch Resources (ARCH)

Management Discussion

• Revenues. Our revenues include sales to customers of coal produced at our operations and coal purchased from third parties. Transportation costs are included in cost of coal sales and amounts billed by us to our customers for transportation are included in revenues.
• On a consolidated basis, coal sales in the second quarter of 2022 were approximately $683.0 million, or 151.6%, more than in the second quarter of 2021, while tons sold increased approximately 2.7 million tons, or 15.6%. Coal sales from Metallurgical operations increased approximately $505.0 million, primarily due to higher realized pricing. Thermal coal sales increased approximately $178.1 million due to increased pricing and volume. See the discussion in “Operational Performance” for further information about segment results.
• Cost of sales. Our cost of sales for the second quarter of 2022 increased approximately $284.4 million, or 80.1%, versus the second quarter of 2021. The increase in cost of sales is directly attributable to higher sales volumes, increased sales realization, and general inflationary pressure on most goods and services, which consists of increased transportation costs of approximately $97.3 million, increased repairs and supplies costs of approximately $95.1 million, increased operating taxes and royalties resulting from higher sales prices of approximately $46.3 million, and increased compensation costs of approximately $13.2 million. See discussion in “Operational Performance” for further information about segment results.