Arch Resources, Inc. (ARCH) on Q1 2021 Results - Earnings Call Transcript
Operator: Good day, everyone. Welcome to the Arch Resources, Inc. First Quarter 2021 Earnings Conference Call. Today's conference is being recorded. And now I would like to turn the conference over to Deck Slone, Senior Vice President of Strategy. Please go ahead.
Deck Slone: Good morning from St. Louis, and thanks for joining us today. While we are conducting this morning's call from Arch's boardroom, I want to assure you that the team is widely spaced and following CDC guidelines closely. 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.
Paul Lang: Thanks Deck and good morning, everyone. We're glad you could join us this morning on what we know is a very busy earnings day in the natural resource and industrial spaces. I'm pleased to report that the first quarter was business as usual here at Arch in all the right ways. Once again, the team demonstrated its commitment to world class execution, operating with precision and efficiency despite a tough start to the quarter related to the lingering impacts of the pandemic. As expected, the performance at our core coking coal operations improved steadily as the quarter progressed and the vaccine became more widely available, culminating with an exceptionally strong March. Even with less than ratable volumes we achieved an average coking coal cost for the quarter of less than $60 per ton anchored by the Leer mine which continues to identify new ways to retch it up its performance trim cost and bring out additional efficiencies. That strong performance at Leer underscores yet again why we're so excited about the impending startup of the longwall at Leer South, while we don't expect Leer South to match Leer's cost performance immediately. We do expect it to breakout from the gate strongly driving our segment cost down and we absolutely believe it has the potential to reach approximately the same intensely competitive cost structure as Leer overtime. I'm also pleased to report that the final development work at Leer South continues to go very well. We're just a few months away from the commissioning longwall and we're more than confident than ever about the transformational impact the new mine will have on our cash generating capabilities. To reiterate, we expect it to boost our total coking coal volumes by more than 40%, reduce our average coking coal cost by several dollars per ton, improve our average coking coal quality and cement our position as the world's leading supplier of High-Vol A coking coal. Moreover the Leer South startup will represent another significant step in our ongoing transition into a pure play coking coal producer.
John Drexler: Thanks Paul and good morning, everyone. I want to begin by recognizing once again the tremendous efforts our team has put forth in managing COVID. As indicated, we experienced a dramatic decrease in the number of COVID infections at our operations over the course of the quarter due in large part to the quickly expanding availability of the vaccine. To increase employee access to the vaccine and to drive rapid uptake, we engaged with our employees about the benefits of the vaccine, established incentives related to vaccination process and worked to streamline the logistics process which included conducting several vaccine clinics at our mines. We are pleased with the success of these efforts to-date which we believe is contributed significantly to the rapid decease in cases at our operations. We continue to work to drive the percentage of our employees who are vaccinated still higher. As we've stated many times in the past and as Paul has underscored yet again today Arch's single highest strategic focus remains the expansion of our world class coking coal platform. I'm pleased to report that during the quarter just ended we made exceptional progress on multiple front in support of this mission critical objective. Of course the ongoing work at Leer South is the overt and transformational example of our ongoing efforts to further elevate our metallurgical business and as Paul noted it was an exceptionally eventful three months at Leer South as the commissioning of the longwall grows ever closer. As we sit here today, we have taken possession of the longwall system including all 212 longwall shields. We've nearly completed development work on the first longwall panel. We've commenced work on the underground set up room at the end of the panel where the longwall system will initially be deployed. We've taken delivery of the rail infrastructure including the locomotives, mantrips and other hauling equipment and we've completed all the major work on the preparation plan. In short, we're in excellent shape as we begin the final drive to the finish line.
Matt Giljum: Thanks John and good morning, everyone. I'll begin with a few comments on the first quarter performance beginning with our metallurgical segments. Where cash margins were $24.13 per ton for the quarter benefitting from an improved pricing environment and strong cost control with unit cost below $60 despite the impact of COVID and less than ratable volumes. On the thermal side, while John noted the impressive reclamation accomplishments it's just as important to note the first quarter margins of roughly $1 per ton despite transportation challenges throughout the quarter. Taking together first quarter per ton segment margins were the strongest we've seen since the middle of 2019 and we expect to improve upon that performance over the remainder of the year with the Leer South start up. Turning to cash flows and liquidity. First quarter operating cash flow totaled $6 million which was negatively impacted by a $34 million net working capital increase. The first quarter is typically one where we see inventory build in advance of the Great Lakes business. But this year's increase was larger than normal given the improvement in production over the course of the quarter as well as an expected ramp up of export thermal shipments in the second quarter. Capital spending for the quarter was $77 million including nearly $60 million of Leer South project cost and $6 million of capitalized interest associated with the project. Maintenance capital for the quarter was just $11 million was substantially all of that related to the metallurgical segment. Our primary financing activity for the quarter was a successful closing of the second tranche of tax exempt bonds totaling $45 million at an interest rate of just 4.125%. Based on qualifying expenditures to-date we receive nearly $29 million of the gross proceeds for use in the first quarter with more than $16 million that remains restricted on our balance sheet at March 31st. We finished the quarter with unrestricted cash of $237 million and total liquidity of $250 million. While cash levels were in line with our expectations, availability under our credit facilities was lower than typical. Availability is determined a month in arrears with our March 31st availability based on February receivable and inventory levels. As we've mentioned, we saw improvement over the course of the quarter with March production and sales levels the highest in the quarter. That improvement has been reflected in the availability under the facility subsequent to quarter end as we've seen an increase of more than $15 million. Finally, while we do not include restricted cash in our reported liquidity. The remaining tax exempt bond proceeds will become available to us as we complete the Leer South development. With the majority of the remaining funds expected to be released in the second quarter. Lastly, I'd like to comment on a few aspects of our guidance for the second quarter and the remainder of 2021. The only change in our guidance is with respect to interest expense which is increased slightly due to the additional tax exempt bonds. While the remaining annual guidance is unchanged, I wanted to address some of the quarterly cadence. Both our metallurgical segment cost and capital spending will be influenced by the Leer South timing with the highest cost per ton and a significant portion of our remaining capital spend expected in the second quarter. Before we see a meaningful step down in both in the back half of the year. Thermal segment cost per ton is also expected to be higher in Q2 than the rest of the year following the typical seasonal volume pattern. This sets up for substantially improved earnings and a return to generating free cash flow in the back half of the year. Initially those cash flows will be used to bolster liquidity, reduce step and continue to address reclamation obligations. Once we've made sufficient progress on those fronts, we expect to resume capital returns to shareholders. With that, we're ready to take questions. Operator, I will turn the call back over to you.
Operator: we'll take our first question from Lucas Pipes from B. Riley Securities.
Matt Key: This is actually Matt Key here asking the question for Lucas. What percentage of seaborne commitments if any at this time are currently scheduled for China in 2021? And is there a general target that kind of Arch is aiming for in terms of China sales during the year? Thank you.
John Drexler: Matt, this is John Drexler. Good question as we look at our overall guidance that we provided for our met book. We've indicated that 75% of our book is going to go into the export market. As we look at the amount that we view going into the Asian market of which obviously China would be a part of, we've indicated that we expect about 20% of our book to go into that market. Now that's not traditionally been China where it's been going to. But as we indicated earlier or in late 2020, we did see an opportunity to book business into the China market which we did over the course of fourth quarters which we think has been advantageous to the opportunity that's been out there. As we sit here today and look forward as we've indicated we see additional opportunities into China. We think that the silver lining to the overall issues that are going on right now between China and Australia we'll take advantage of that. Longer term our view is that ultimately does get worked out. In the meantime though, we'll take advantage of seeing if there are opportunities to get our product into China and we think it will be well received and potentially give us further opportunities longer term into that market.
Deck Slone: Matt, this is Deck and just to build on that little bit. So why we do absolutely view this as opportunistic because of what's happening with Chinese policy regarding Australia and imports. Our experience so far and our engagement suggest that we really might be talking to some folks who are going to be in our book longer term and so that's certainly encouraging so while there is certainly an aspect of this which is opportunistic. We do believe we are creating some long-term relationships. It's been a good experience so far. So we're feeling positively about that and as we've indicated we don't have a whole lot of coal to sell this year and we've noted we only have about 1 million tons at the midpoint and we're being very careful about how we place those tons and we want to as we stated before expand both the breadth and the depth of our customer base as we bring on Leer South and we really sort of begin to build that book for the longer term. We do believe in the second half there are some opportunities for additional sales into China potentially and whether those come to fruition or not remains to be seen. But again the conversations are good. The interest remains very high. And in fact I would add, look it's simply the tone of the market continues to feel quite constructive to us overall. So despite the Chinese policy issues which are resulting in the significant disconnect been Queensland price and US East Coast pricing. The market toned to us feels constructive, we don't envision any issues really with placing the remaining volumes that we have available for the rest of the year. Quite frankly, if we had more coal, we'd be eager to put it into the market because the demand has been significant. So we're feeling quite good about all that.
John Drexler: Matt, I think it's important to note that even currently we're sold out through Q2. We're turning away business for prompt interest on the met side. And once again further indication of what we see is strong markets moving forward and as Deck said, with the 1 million tons left to move. We feel very good about our opportunities as we move forward.
Paul Lang: I think this is an important issue so I think just kind of the last little bit of color. Obviously as you look in forward curve especially the steep increase in POV prices in the back half of the year. The market is barely new that they think is going to get resolved whether that's right or not. It's clearly out there. But you look at the pricing today. CFR into China is about $220. It's largest arbitrage I think any of us have seen. It's about $100 right now. It seems that this will get solved at some point in time. But as Deck said, we're going to take advantage of this. We're going to use this not so much to put off spot vessel or two. We're going to use build customer base in a very important market.
Matt Key: Got it. This is really helpful detail. I really appreciate it gentlemen. And just a quick macro question for me just to wrap things up here. Given that US deal operated pricing has held up really well here probably longer and better than I think a lot of people thought kind of going into this period. What's your kind of current expectations for US metcoal production in 2021? Is it kind of improving? Do you expect other kind of producers in the region to be able to ramp to kind of keep with this strong kind of downstream market here?
Deck Slone: Matt, it's Deck and I'll start. Listen, as you know we've seen a lot of rationalization out of the US here, over the past two years or so, 2018 quite frankly we were at around 80 million tons of metallurgical coal production, that fell to 72 million tons in 2019, 57 million tons in 2020. We absolutely believe there's some amount of that production that can come back. But we think that there's a fair amount of it, that is either out permanently or at least persistently and that is going to take a much higher price. So we can certainly envision US metallurgical supply bouncing back in the mid 60s. This year again some of that reduction was simply mines running at lower capacity factors running fewer ships etc. But when you go back to Q4 of 2018 there were actually 163 coking coal mines in Q4 of 2018 operating. Q4 of 2020, there are only 108 and while we haven't had a chance to look at all the data yet for Q1. The data it's not all in as yet. It looks like we're going to see something very comparable in Q1 of 2021. So we're not seeing a return of some of those mines that shutdown. Those higher cost operations. So we think there's that ongoing structural change as we see degradation and depletion particularly in Central Appalachia of some higher cost mines and so we do think it's going to - the US is going to be a smaller player going forward. We don't expect to return to that 80 million tons that we saw in 2018, really in any points in the foreseeable future even if we see a meaningful more significant move higher in pricing. So we should see a little bit of bounce in terms of demand in the US. But that's not going to be huge. We really are more focused on 330 million ton seaborne coking coal market rather than the 20 million ton or so North American coking coal market. But certainly it can help tighten the market to some degree. It's not a significant piece of the overall marketplace for us and so we think there's an opportunity there and certainly we're hearing some of the North American buyers who are beginning to look around to see, okay, if we have to augment our position. They bought most of their times in the fall of 2020. They always do. But if we have to augment our position, where are we going to find those tons and we've been having those conversations. So feeling positively about that.
John Drexler: Matt, I think just to add to that, builds on it. And we've talked about it a lot fundamentally the long-term view of supply into the market and a market we see overtime continuing to require additional amounts of metallurgical coal quite frankly around the world. On the supply side, there is a challenge of the lack of capital that's available to the marketplace and so as the price continues to rise and there's not as meaningful of the supply responses there's been in the past. It can put the opportunity to see a longer market opportunity with higher prices moving forward and why we feel so fortunate and excited about the position that we're in here to get Leer South completed. We think in a very good time to put ourselves in a position to be in a position to generate significant amounts of cash quite frankly no matter where the market cycle goes. We don't think that there are that many opportunities quite frankly around the world, that we've had here, that we've capitalized on and we'll move forward with.
Paul Lang: Matt, I think Deck and John put this in a great perspective. The only thing I would add is, when you think about when the volume sort of drop it in the US metallurgical production, prices were quite a bit stronger. They were in the 170 to 180 range. Sitting here today, we enjoy these 150s and 160. If you think that production was being shut down at $15 or $20 higher. I'm not sure what's going to be needed to bring some of this production back.
Matt Key: Got it. That's really helpful color. I appreciate it. I'll wrap it up there. But good luck moving forward. Appreciate all the help.
Operator: and we will move on to Nathan Martin from The Benchmark Company.
Nathan Martin: Maybe kind of start off on the mix side. Pricing came in little stronger than expected. You obviously noted - those prices continue to be the premium to Australian coals. Looks like you priced some additional export tons since the last quarter in incrementally higher level. I was going to ask about your forward thoughts and price in supply, demand. I think most of that has been addressed through last few answers. I would ask, now that China has been in Australian coal imports have continued since roughly October. Are you guys finding that you're competing more against in Australian tons out there traditional market are buyers still hesitant somewhat to shift away from normal suppliers?
Paul Lang: Obviously, it's something that we're going to watch closely and it revolves overtime depending on how long the dispute between Chin and Australia goes. But as of right now, we've not seen a whole lot of movement of traditional buyers into the traditional markets. I think longer term there is concern, if they go out and buy and adjust the blends that they've gotten very comfortable with in the traditional markets that they're buying from, that could change very, very quickly. So we haven't seen a lot of dislocation with that yet. But obviously it's something we continue to watch closely and it's counterbalanced with some of the additional opportunities that we see as we've discussed into the Chinese markets.
Deck Slone: And Nate just to build on that a little bit. We did talk a little bit about supply demand. But more broadly look this is a significant development in the marketplace. The import restrictions in China and quite frankly, if China imports significantly less than the 48 million tons of seaborne coking coal, they imported last year that will weigh on the market. Of course, counterbalancing that really is an attractive demand story otherwise and you can certainly see that very readily and where steel prices are around the globe. They are stratospheric and continue to be the outlook I think continues to be quite strong for the near term. The most macro level, you look at manufacturing PMI globally they're about 55%, so clear expansion is sort of trends there. The restarts of blast furnaces continue to pace, capacity factors are back to and steel mills are back to levels that they were pre-pandemic or are approaching those levels. All the discussion about economic stimulus is certainly potentially helpful and could push steel demand higher and continue to provide important support and we're seeing big consumers like India get back into the market in a significant way. We're encouraged by the fact that in 2021, we could see just based on the first few months we could see steel production get back to even back to 2019 levels and happening that quickly one-year after the pandemic would be an impressive rebound and as we talked about, the supply on the US side of things is clearly continues to be under pressure and Paul said it well it's going to take more higher prices than this to cokes additional tons back in the market. We think and then when you look around the globe, you still see the same sort of level of underinvestment. The major coking coal producers are guiding lower not higher which is interesting to see. So those are significant counterbalances too. The Chinese policy have highlighted. As we've indicated while that certainly is a concern. The tone in the market does continues to feel constructive. We continue to see very good interest in our available tons. The forward curve is shelling out through 2023. So we're really feeling fairly positively about the market even as we continue to watch the situation carefully in China.
Nathan Martin: Great color guys. Thanks. Just real quickly, with this 1 million tons left with met you have on price, you mentioned roughly sold out for the first half it sounds like, you expect to maybe press those somewhere in the back half, any thoughts there?
John Drexler: We'll move those in the back half of the year. All indications from everything we're seeing in the market is that we expect strong market environment to be able to move those tons into. We're turning away business near term and we just think that will rule right into the back half of the year and give us a great opportunity to move that volume at attractive prices.
Paul Lang: I think at the end of the day, Nate. It's going to go out on index at the time of shift as long as our export ships are our .
Nathan Martin: Got it. Thanks Paul and then on ships in a little bit. You guys pointed out, what we noticed as well met shipment during the quarter lagged reported production numbers. Any additional thoughts there was it rail service, vessel timing, other logistical issues and when can you extract those additional coal tons to move, sorry?
Deck Slone: So Nate that's good question. We had a strong production quarter and you saw 1.5 million tons of sales. Some of its seasonal for us. Some of our coal moves via the Great Lakes. So the lake season doesn't open until after the first quarter, so that's a portion of it. We do have a longwall move at Leer coming up here. And so there's some preparation in advance of that and having coal available for the shipments. As we've indicated, we expect to step up 15% and our shipped volumes in the second quarter and then even further in the back half of the year as we bring Leer South online mid third quarter. So everything is aligning up with our plan and our book is as we had expected.
John Drexler: And Nate, certainly that 15% we hope that proves conservative when you look at the timing, when you look at shipping schedule etc. there are vessels there right at the end of the second quarter. So we'll see how that plays out. But you're right. We've built meaningful inventory. The trajectory is quite positive in terms of production. So we feel good about all that. But some of that could just be timing. So again hopefully the 15% is conservative. But right now we think that's a reasonable number to share and to target.
Nathan Martin: Got it. Thanks. And then obviously the 15% you guys just went through. Any idea to give some of your thoughts on cadence as Leer South does ramp up maybe mid 3Q and the 4Q and even 22 from a segment perspective?
Deck Slone: Incrementally we've indicated that we expect that bringing Leer South online that we're going to see a step up of about 3 million tons on an annual basis. We're real excited as we bring Leer South online. But we've acknowledged there'll be a quarter or so probably of ramp time bringing brand new longwall up and running and so we've not given specific guidance on the cadence into the third and fourth quarter. But with the mid third quarter startup of the longwall and then having a full quarter of production in the fourth quarter with that longwall running. I think you can back into some high level estimates of what that would mean from a volume perspective.
Nathan Martin: Thanks gentlemen and then finally, just thoughts maybe you might get more specific on your update on your plans for Black Thunder obviously - Coal Creek sound like there progressing as planned. Also it seems like West Elk tends to get overlooked at times in discussing your plans for your legacy thermal assets in the future. So can you give us an update on that line as well? Thanks.
Paul Lang: Nate, this is Paul. I'll start off and maybe talk about macro picture and let John maybe talk specifically about what's going on. But look I think we feel pretty good about the strategy that we put forth last fall. We're basically following a two-pronged approach and the first is, we're going to continue to shrink our footprint. That first starts with Coal Creek where we're working very rapidly to bring down not only the ARO but we're also bringing down the bonding amount and second, we'll continue to run these things for cash and look for possible buyer of the assets. I believe I think it's true that as we carry on this parallel path particularly as we dropped the liability in bonding the universe of buyers will expand and at some point, they'll cross. And we'll just keep this path going, what I like about it is, we control this process and you look at the first quarter John and his team made great progress and executed on the plan.
John Drexler: I'll add I'm real proud of the teams out there and I think Paul really hit in on the head when we have the opportunity to control the process and I think it's really what makes us unique in the basin. The assets that we have there Tier 1 asset with Black Thunder and so real opportunity to continue to generate significant cash even in a challenged market environment. We've talked about it before, the history of that operation as it reduced its production volumes over the last decade to be responsive to the market environment continued demand on outstanding cost structure and we expect that moving forward as they continue to focus on reducing the footprint as well. Generating cash. Taking a portion of that cash and reducing the footprint. The team at Coal Creek done a great job as well. We're off to a great start. We feel real good about our progress in remainder of this year and into early first half of next year and our ability to complete the vast majority of the reclamation that's going to be required there and so we'll continue to move down that path in earnest and be responsible as we move forward.
Deck Slone: Nate, its Deck. The real advantage that will be the next five quarters. We can focus intensely at Coal Creek which really isn't a meaningful contributor hasn't been a meaningful contributor to EBITDA while we optimize cash flow to Black Thunder and continue to operate it at current levels which again is important because we want the thermal assets to pay their own way here with ultimate closure cost and we feel very confident about their ability to do that in generating significant amounts of cash at Black Thunder certainly helps drive that. So again it's a nice position to be and to have to be able to focus on final reclamation at Coal Creek. But still optimize cash generation at Black Thunder.
Nathan Martin: Perfect. Thanks guys again for your time and take care.
Operator: And we have a follow-up question from Lucas Pipes from B. Riley Securities.
Lucas Pipes: It's a bigger picture question but kind of over the past few years whenever there was a question on M&A. if I recall correctly the answer was along the lines. Leer South whenever you benchmark anything against Leer South. Leer South is just so much better value and so I wonder, again this is bigger picture but with Leer South here upon completion. Could M&A make more sense in the metcoal space? What are your thoughts on that and then maybe more broadly - feeling pretty quiet on M&A and coal more broadly and wondered if you've any updated thoughts what could maybe evolve over the six months to a year? Thank you.
Paul Lang: So this is Paul. I'll start off and if Deck and John have anything to add, it'll be great. I think everybody could agree that consolidation ultimately that I should say ultimately that decreases cost overall is a good idea and beyond that principal though that it's difficult to actually get these deals done. At the end of the day, one of the things I think as we get Leer South up and running and continue to address our situation in Powder River Basin and demonstrate that we can in fact get this liability down, get this bonding reduced. The world opens up considerably as we continue to head down this path. It's hard to envision exactly how this plays out because every company not only in the US. But even overseas has each of them have their kind of situation like we have with Power River Basin. So if stars aligned, I think it makes sense. But right now our focus is controlling what we can control and the best thing we can do overall is the path we've headed down in the Power River Basin. We're going to take care of Coal Creek then we're going to move onto Black Thunder.
John Drexler: This is John Drexler. One of the fundamental things you've seen from Arch is it's focused also on that Tier 1 low cost asset base and I think that's served us well and it's what we've indicated overtime that we're committed to and I think it went back to Paul's discussion that we'll thread very carefully on any opportunity. We have to evaluate any opportunity through the lens of what's the quality of the reserves and the cost to produce and so I think that's a significant component of any evaluation. It's typically left a high bar but that doesn't mean that there aren't opportunities out there as we move forward that we'll have the opportunity to evaluate.
Deck Slone: It's Deck, thanks for jumping on. We know you have a lot of competition. Number of other calls going on. So we appreciate you being on the call. Look I would simply add, we have said again and again, the point of Leer South. We took a pause in terms of returning cash for a range of reasons market driven etc. but also, we took a pause building bigger cash generating machine and we've done that and we're really quite comfortable simply operating the assets we're going to have with Leer South generating a lot of cash and ultimately looking at a strong capital return program as we've had in the past. So that continues to be our primary focus. Again as you know, as we've said many times, we will kick every tire and look at what's out there and maybe there's a diamond in the rough. But as we indicated with Leer South for many years before we made the decision, before Leer South. We're always going to be screening everything against the organic opportunities we have already in house. We said that for about three years and then sure enough we decided the smart growth project there was Leer South. We moved forward with it. It's really the same holds now and we still have a very significant reserved base, the Leer reserves can accommodate additional investment. We are in absolutely no hurry to move forward with any of that. But that's what we will be screening any opportunities against and that's a pretty high bar. So we're going to be very careful as we assess any opportunity on the marketplace and meanwhile are quite comfortable continue to run the assets we have and returning cash.
Paul Lang: I mean at the end of the day Lucas, our fallback is for the next 20 years effectively which these four mines are set up to do. We're just going to generate cash and return to shareholders.
Lucas Pipes: Very helpful. I appreciate all the color and best of luck. Yes, thanks again.
Operator: Our question from Paul Gate from International.
Unidentified Analyst: You actually answered my question probably in the last sense of your question previous and it was just under conversation around sort of M&A around. I suppose my question was how do you compare that because of course buying back your own stock is exactly the same as an acquisition and so far it increases the per share exposure to the reserve base that you already have and you get to do it at zero premium and zero execution risk and the question was sort of how do you compare that with sort of anything else because I struggle to see something in a - let's say the same jurisdictional exposure that you guys have in the US and here I'm thinking about god forbid the recent troubles that we've all seen in Mozambique for example. So on the political risk combined with the quality cost position of the reserves and the life that you've got. It's a pretty high bar versus sort of just increasing our exposure to what we already have in there .
Paul Lang: Paul, I think you're right. At the end of the day, we have increased our cost or trade down our quality of product and we're comfortable with where we are and if that's what we end up doing for the next decade, that's fine.
Unidentified Analyst: Yes, that's probably - you answered that last sentence of the previous question. But thank you very much indeed.
Operator: And there are no further questions in the queue. I would like to turn the conference back over to Paul Lang for any concluding remarks.
Paul Lang: I would like to thank everyone for your interest at Arch and taking the time today to participate in our quarterly call. As we noted earlier it is a busy day. I guess my final thought is, when we announced the plan to develop Leer South in February 2019, we had great hopes and expectations for the project. Sitting here just a few months for the longwall startup our enthusiasm for the project has not diminished. If anything it's gotten stronger. John and his team continue to do a great job managing the huge effort and are on the cusp of delivering a major mining project on time and on budget. While this in itself is a great accomplishment I'm more excited about how it will continue to transform Arch for years to come. With that operator, we'll conclude the call and I look forward to reporting the group in July. Stay safe and healthy everyone.
Operator: And once again ladies and gentlemen, that does conclude today's conference. We appreciate your participation today.
