Alpha Metallurgical Resources (AMR) 8 May 232023 Q1 Earnings call transcript

Greetings and welcome to the Alpha Metallurgical Resources First Quarter 2023 Results Conference Call. At this time all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. Please note, this conference is being recorded. I will now turn the conference over to your host, Emily O'Quinn, Senior Vice President, Investor Relations and Communications.

begin. may You

and Rod everyone. Thank good you morning

may we our prepared started financial contain actual me those anticipated let during that performance results and statements you remind forward-looking materially remarks and from discussed. Before business get differ our regarding comments

information earnings and some regarding associated filing. release can and factors of company's the statements refer please the them, to forward-looking first more the that For affect quarter XXXX SEC

I'll to those see Executive measures Chief for Munsey, the Andy. to information measures. use Also our Operating call Horn, our the non-GAAP call reconciliation and Officer, our participating Todd Officer; Chief documents Financial about call that, and and Dan President are of Officer. Whitehead. today their and turn Officer, Chief Please Commercial our over GAAP Eidson; on Alpha's Jason on Chief Participating the also are Andy with And

Thanks Emily everyone. morning and good

very steadfast calendar ambitious quarter to We first performance good pleased year. goals marking today production report are our towards for a progress this

performance the later. production within have addition we in discuss and results in both Alpha the particularly noteworthy our quarter our and sales to from a the teams been weeks Our excellence that is recognized months. standpoint of will workforce show in performed teams with accolades Several everyday well -- recent

records. House to and excellence Tunnel safety Mine, award Mining an of Grove and Vice Workman Coal of the Surface West Association underground X hard Midwest our In Virginia the selected Mine, Jimmy award processing, XXXX. Virginia in surface and Castle Marmet Interstate Mine, mine recognizing very on Commissions XXXX, Compact announce Road Paramount eight in Safety state XXXX [ph] training Creek for awards Kingston's as achievements multiple the a selected out prestigious the safety won Safety also Allen of Black XXXX, Number industry to performance in and Group terms Presidents Mine, and Alpha Glen individual work won XX recipient proud Virginia national production. Safety level, processing, division. [ph] Jimmy’s leads our level safe Surface this I'm safety We're Home At Leader, Mine, health Cedar Home was this properties operations region one the Kingston award. Wood, Association that dedication the pleased who as Mine. Fork of West Surface

Rescue Fork competed Additionally, Number Alpha first Cedar the grand winning took Guardian Virginia as West won as the Southeast four Paramount team Creek, rescue mine well place In rescue overall bench competition contest as XX. the Mine in and Regional home mine These Road Number the aid. first for Mountaineer top are X, exceptional in Grove champions, Contest, where overall performance. Workman they honors awards March, Kingston and safety X, mines

environmental recognized Mine outstanding XX was selected our International nationally being National Award with stewardship, their For as Deep Mine by in winner Alpha of the the XXXX. Commission Mining for Compact Reclamation Virginia,

Bear Virginia the the Ridge hold award. reclamation We're high continue this Workman the and drainage control to [ph] by Association's work. underground while level, everyday see of the to safety On environmental and very strive it's very a and King awards Alpha Mine of state award extremely efforts and organization's number won Creek the standard, earned these to team. good gratifying proud West Black the Surface won Mine ourselves Coal We

magazine. another Alpha’s companies report employees, by and culture and and on we in one and collected shareholders. company surveys named like Alpha Newsweek respect. nation's pleased customers from the Along teamwork And ethically these believe We most trustworthy operating one two treating recognition recently lines, as is industry based built I'm in on the of is category. independent and number ranked also stakeholders the safely materials that chemicals to was with

We quality an entire recognized of to have It's live and people in the work. it's across in where a we of neighbors nationally organization. being reflection be we for good the this the honor communities also believe distinction and

details eliminate testing Jason we already and our I expand Manufacturing transportation organizations some briefly for we acquisitions and our additional delays financial were discovered tracking acquiring recent Todd on a QX, get excellent. before also of so to proven sales our makes Before into we've and chain and of similar of parts only the us performance have with Maxim valuable as have It's find. expectations. anticipated far and the could concepts far, will and availability weekly, quarter. company. it but far able so the almost last comment be indicates and story opportunities to to operational helps that efficient, capabilities, the our the We're has own while to manufacturing often experiencing Maxim the trucking out that to are manufacturing proven rebuild new exceeded operation success not announced more been This we supplies that the supply also a want hurdles better Both control we performance in regard difficult

also even metallurgical historically uncertainty internal focusing believe playing to this ahead last the of after committed XX% to index drop and global substantial as also this of commitments coal year that remember our weeks met processes will tonnage a manage controlling a met guidance yet costs coal important factors are alongside met the recent continue number is witnessed market best of of Looking strong the influence the very in for broader on coal the not priced. we're our the quarter with in It's outlook, were levels. at second year rest economic but of the ability. strong, committed and and declining XX% to With of already several to indexes weeks, we Customer terms pricing. to we geopolitical our midpoint in at

our maintain we on and supplying to intend standard, customers. our it coal our producing safely is focus As to reliably

of look with forward, working all Alpha’s week to and the them was one-year their to stockholders and elected all last I held to meeting standing to As service previously annual them Alpha thank re-election company. forward moving keep for directors and term. for leadership were serve another announced, I

Speaking share Board, of more the since $X.X inception XX repurchase authorization, continues the to just returned of ago. the buybacks form execute $XXX billion shareholders with on the Board's million than management to in program's months

expect quarter our to results. financial flow over shares, a for turn before, with to we and buying remain return levels it committed preferred that, our back repurchases As stated we providing continue I'll and market vehicle, Todd cash we conditions With capital allow. to first discussion on share

Thanks Andy.

$XXX.XX and was from fourth average our X.X an of export from million met per the the in level compared segment with to indices a $XXX.XX Australian pricing other tons the Export million. quarter net adjusted and EBITDA XXX,XXX $XXX million, other of realized the realization increased Quarter-over-quarter tons which fourth First priced whole, on first as came for for Atlantic the quarter, million $XXX against in from up the X.X the all while coal segment, ton, $XXX.XX. of in our quarter XXXX. $XXX.XX quarter mechanisms tons realizations quarter, quarter sold priced indices We first category. met of realized

per of of realizations metallurgical quarter the the prior Met per $XXX.XX first portion ton our roughly in coming quarters a against tons quarter when $XXX.XX Realizations quarter-over-quarter of period the in were segment sales incidental weighted ton. as fourth other the total $XXX.XX were lower first per Similarly, the the an was in XX% per QX thermal decreased to ton in average in pricing sold. $XXX.XX $XXX.XX compared in quarter. category for $XXX.XX, increase at all in from thermal the reflecting Realization QX, ton, for down the the

also for realization thermal is in declining due drop coal. the environment quarter-over-quarter to This pricing

as of fourth per excluding $XXX.XX sales to in XXXX. to increase category decreased met sales some mentioned $XX.XX in to from our million Cost the ton, from year ton fourth $XX.XX all stock decreased million, quarter. fourth coal SG&A the delays. other was non-recurring the of $XX of down $XX.X first rollover CAPEX the quarter. million $XX This in previously in fourth quarter in $XX.X ton, the includes segment up quarter prior per in from compared per per coal Cost from non-cash compensation XXXX. items expenditures the million also QX quarter-over-quarter quarter and down ton the within $XXX.XX to decreased

the issues remainder few supply last have that in throughout year. Over continue spending CAPEX chain quarters, contributed to some we of the lumpiness to the expect

total we at flows, of $XX.X liquidity Alpha We at as of the as the XX, pursuant in cash of equity XXXX share By million end on quarter. had the the was of million million of $XXX.X unrestricted is quarter program, our ABL and March $XXX.X the our million Moving down million balance had quarter availability which million. fourth taxes net which quarter. from million the of the and comparison, in had for repurchased of end million repurchases of unused cash fourth the the X to during March, $XXX.X liquidity in to shares was total on share to end awards. of repurchase at related the end $XXX sheet XXX $XXX.X

$XXX.X operating quarter-over-quarter QX. in by decreased million as in to provided to million $XXX activities QX Cash compared

by receivable in impacted partially higher of operating and accounts negatively drivers The accounts The million capital. first increase quarter cash balances primary working an payable. $XXX.X were offset flows by were inventory

no borrowings unchanged million As and March outstanding, our credit the of had of $XX.X quarter. from ABL facility of prior XXst, letters

the average our for is priced In want at of if an you XXXX of met price midpoint terms and $XXX.XX. metallurgical committed of percent our guidance of at committed sales, segment and our position tonnage

average with priced tonnage of committed segment average not are committed Another committed midpoint fully of The yet portion the price met this an an $XX.XX. price price and for year XX% of $XXX.XX. thermal is of in XX% priced. at is our in all met category other we XXXX the our but And at byproduct

issued. per the $X.XX at to declared as become tax $XXX XX% We of XXX,XXX a July Pursuant we share, quarterly for which the XXth. of share same quarters repurchase program, quarter holders repurchased cost million of ranges on of guidance the June shares adjusted per will remain to rate as XXXX. the a from an prior to to first increase in Xth cash down of XX% year for All Alpha’s record the XX% payable has dividend share, Board from range our guidance other previously $X.XX XX%. previous of the

the been through million XXXX, approximately common of of the $XXX.XX beginning million by we reduced roughly outstanding have count Since an share price average X.X at to has began. program shares stock The the acquire May from the X, time spent XX% $XXX share. of program per

common the to the on turn some XXXX now X, May will I million. outstanding stock of details call XX.X number of for approximately shares As over was Jason operations.

the that mines very well and report Todd and Alpha’s was QX are last the to Alpha good everyone. production Thanks, in morning, least XXXX quarter I'm pleased highest five so far operating at in years.

I'd Mine for record X.X Basin, XX EMSA Captive Central McClure their Mine million [ph] congratulate Our Based producing own the nearly coal Alpha tons XXX,XXX data was in quarter. Deep operations and claimed QX also our to top nine for the like tons personal five setting complexes. guys production on at Appalachian of the of

McClure Our our operations while Marfork complex took fourth. third first place claimed and in quarter the manual

for always We're Marfork four Fork on nice Panther improve well. from a mine our our and mines Kepler to miners. bringing continuous to in to Eagle our looking performing has miners three Road additional efficiently continuous continuous ramped at We've that miner at XX opportunities added are output,

well. projects development the our completing on aide that and mines announced tonnage [indiscernible] and Rolling progress Checkmate from and working locations in nearly mining continue replace recently capacity. plant making out, We're prep are Thunder we've to like as We enhancements future

will all the of increasing a fully process processing. us additional upgrades incremental As rate raw implemented, cost, additional low allow roughly to coal XXX,XXX per the combined very year coal of reminder once tonnage in tons these washing recover yielding at while

the on as last We've which vertical continue refine integration pleased than levels this several the that chain trucks within at issues. members also transportation, to team division division. includes and we XX coal we pieces road of fully staffed been and our with rebuild equipment nearly is more Maxim Maxim and schedules sporting quarter of announced address processes supply to

equipment and they've intended, we We more. quarter proven have load flows In the plants continuous we integrating seen increased from cases, several but of the other minor a much for parts, Manufacturing gear number outs. reliable has been as coal tested additional a to Maxim capable also the out originally successfully preparation of first supplier development parts into pipeline. of and

far year them say our Bringing this many has other for reliability in teams, these employees and about Dan manufacturing. work coal enough turn about efforts. of integrate to third They in to company game and exceeding while the and Alpha, on their future successful additional manufacturing eliminating suppliers. our expectations over a delays a party into that, the from Maxim allowing various calendar usefulness I'll maintenance all house I problems so changer the can't the With involved work these markets. and while some to Congratulations information streamline in for to chain been for involved expand immediate rebuild supply the the efforts. call

including inflation Jason the good markets in demand. interest economic and year, rising Since bank Persistent concerns, regional morning and environments recessionary uneven rate unease Thanks, have U.S. the stemming everyone. broader recoveries from and manufacturing in coal softened steel hampered beginning failures of amid most the economies, March. have demand, metallurgical in many recently

continue, thereof factor issues expect the zero policy influence is long, that years geopolitical to its strict China's of the strength will reopening we demand. after or a lack global COVID continue As

and outcome Europe's and Ukraine Additionally, significantly growth of resiliency invasion Russia's the could duration of potential impact prospects.

X.XX Despite tons. the steel expected X.X% where manufacturing these to range metric steel deceleration regions, in population expects growth increase global of billion with billion exception China XXXX, organization association's in due uncertainties, The world year, to expects accelerating projects of a rebound metric most of X.X% steel tons demand led demand outlook steel most a further in recent bringing this demand likely decline. the and world X.XX by short

beginning metric premium January $XXX indices lowball close. U.S. per to slightly $XXX Coast increased X January and at metallurgical the ton end lowball into of softened May, quarter March. metric four The at the East of March. $XXX.XX Index on to and ton metric ton levels. per from $XXX of HighVol close $XXX end to quarter from to East quarter the Coast metric at at the moved per ton the ton have from index U.S. for the ton start April U.S. Coast per all In coals, per on quarter Highway the terms early January fell $XXX considerably metric per Australian $XXX ton indices of the their increased movements $XXX price of index March X per at on first days from Throughout XXst. East from of

$XXX per the and ton. has wall XXXX, date. X, U.S. metric has HighVol B and TLB were Coast per to ton East Australian $XXX metric As A $XXX U.S. indices same decreased of ton $XXX.XX well May dropped per HighVol to and on respectively

has Moving year, now pricing highs from to very thermal metric second X metric where to month API XXXX. $XXX last continued from March Xth. May XX, The on Xrd significantly fallen coal several continued ton its of decline, per market $XXX.XX January of off index moving trend API the per the the the $XXX.XX into as X ton has softening with as at quarter the of

first quarter vessels our downtime DTA a Newport the temporary of and to in equipment issue This down rescheduling, in rates. the News, the throughput experienced some at issue required of but ability Terminal Associates short in quickly back normal terms is slowed was load resolved up DTA, logistics, period to In mid-March. we Dominion

recent Additionally, to despite been our first in properties our performance faced railroad that service positive has terms partners in DTA. challenges to in largely of especially many from and months, quarter, the rail

to coal that world. partners our the ready we efficiently transportation to for our from operator, customers to across operations call with questions. the closely work with now to continue We move open are our And

you. Instructions]. [Operator Thank

Please proceed with Pipes Our from your Lucas first question. B. with question comes Riley.

coming, I QX operator. Thank was very if first good, recognition is articulate terrific question safety like a when and outlook much, of and the social I but many outlook it that on the sales maybe when midpoint, to on morning, year remainder you the steps, quarter timing for there's the look seems up My on Good the front? still at that's full everyone very you see. year wondered the good you step much. Thank a could your so environmental congratulations and and

the transport Good we some little of DTA shipped a I had Lucas, the have Hey think and with spite mentioned, probably in of we Dan. morning. the would issues it’s railroads, I up. Well, XXXX coal, calls, We'll mentioned forward, positions in on tons catch if years. recent those talked more contract I it those. we And than I some the more for previous wasn't think going in

to have we indices So, these tons ship. direction numbers of good confidence because in are tons our which going market regardless these go, the

there's happens, So, in to numbers. have but when some I those confidence Certainly demand think in under we softening good good that have some pretty the contract. it's tons of been markets

is Andy. Lucas this Yeah. Hey,

that, that years. hold on quarters three probably our see to at of little a years and have in bit second point four a fine been last Just or least the third think you at volumes, higher I add they historically, the are more

pretty at but there's typically bit so that's looking a you're And and -- close ratable we're entering a exiting a of curve, summer. up bump little to being

what that's I closer number see the annualized So you'll start where the to numbers guidance think is. looking

that the it? would kind And of XX% rate, then that forward of going Got XX% helpful. how Very or what to driver in that more of that the kind frame was the up? should you and we reduction tax think

Hey, little more calculation. passage into the having that's a time, Lucas, of really granularity a just

upon permanent pretty Our tax that the differences is dependent rate some large affect rate.

granularity more progress having as the year. just really it's so And we through

so adjusted And we the of terms obviously, range in looking down. forward,

kind finish where year. that's like this out will feel things we So of

quick two you to liquidity you. you Thank that. cash thunders on take Got rolling remind one could is well it. other terrific then of minimum And last us a you wanted progressing requirements, Very and how items? that minimum think to for see and helpful. Todd one, Thank get those so about

million the have do keep I want minimum liquidity we cash. And on when Lucas. to that's million to changed, DOL mean, we before, XXX view that process. XXX our about still matter we've talked of Yeah, in hasn't

being that pretty market bit need forward. area a so the And that's we little to is I we're stay mean, move things choppy. resolute to

Very helpful. really the Gentleman it. color of continue best Got appreciate luck. and

it. Thanks Lucas, appreciate

[Operator Instructions].

question. with from Martin The question Our Company. proceed with your next Please Nathan is Benchmark

on Hey, I taking built Lucas's guys. Jason good for of back very I mentioned, quarter morning, quarter, mean like, Congrats kind the well. the looks going cadence, and Maybe again, your Thanks question as comparing my to questions. on think, that in maybe and of as some it just awards production maybe strong QX around more or are reported above of helpful? color Any kind more we rideable to numbers inventory into to tons idea you inventory, ship kind expect of XXX,XXX them any be when again, or sales. just of shipment

quarter, Yeah, varies Yeah. I Hey, they think the across do we it tend Andy. Lucas sees as somewhat mentioned radical, volumes. be do and I but QX quarters there, and the typically to third Nate and it to higher bumps tend is all that second in to years,

-- And to I think so for think don't and But reasons. this that's numbers be year from I of different that. that's going is

you'll I a the see spike year. of middle think in So the do

Alpha his pushing shipments the five nine shipment pretty production the months. was complexes. So did. can't out. building team again, that we're how that I quarter, requirements the crushed Appalachia helpful -- next in operations, or complexes five that the incredible three, Jason absolutely the setting And of job for records can't more I across crew mean, enough the the inventory in were seeing this we volumes QX, Central four so production top we on stress board see and some mean I we'll over be it and

And these in safe job to a kind extremely regard doing of very we're awards. good winning performance. and do and of all that so And maintaining environment that while that, proud a

just beat You that. can't

the of excited about about excited So well. as QX, rest the really year really

maybe relates the and helpful completed if be well? Andy when talks prep are me as the as then it sales with rates Appreciate in it expected that maybe could plan remind increasing enhancements, will those to you your be to and

this is Jason. Hey,

But of behind really September, I think they're on simultaneously. the two sets it's actually to are material phases they and October, our baked that are year. And that underway. those going There's But, different of throughout as enhancements there's some will into guidance, us. some different are ongoing, that. don't be we by think, of are all safe I say expect spaced. kind on nominal that come be changes increase any complete, soon is from to -- But, any some those

remarks, have so met a largely talked you of opportunities there Thanks, we to taking you macro about the would coal moderation could back, global the CFR and more this a whether maybe move sold but thanks? to down get recently, great the into to for here, see found in what price many some here color. feel be And if to guys going discussion come your seems year, step thoughts also in prices to sell it be so stability Jason. your of Maybe appreciate continues benchmark opposite this would forward, and chance even reflect market. kind prepared on of the at then like tons for the further kind Dan guys or some you get China I remainder be great however, point market from direction, the your

little What closer the a the days couple see the demand lot what we weeks. And been you waiting of for coal, as price have of the their of regular thing expect we'll the July, falling that up. of certainly here said, hands, we'll trough lot seen recent watching think trough, on coming appears. it I to pick market There's just catch come pick bit knife out here last will up, we're drift get of old our see a as because the Nate, demand is, Well in were here down. buyers we to for we saw in sitting customers QX. softened And see a

is strong coal Atlantic of going at this you to So we're with this point. going attractive outlined out number if regard a the to occasional point we'll to year. there. there already China China lot there's particularly into But, something cargo to the to opportunistic CFR be be we've going the markets markets, a if India in as coal And Basin, ship not is China

we shipping to the I'll industry along. is Nate ship is in American well quite strong. been where running coal and North all really, expect So North particular that American are add well. the running market furnaces has plants pretty and where The we've been and steel blast

that. add I'll So

Thanks, that. Dan. your more, one maybe execute then continue on And program. guys returns, Appreciate shareholder on obviously you buyback to

As you've many at to your when you I told believe. doing are some market you more shares regular the peers in point shareholder but third you would, gives row, dividend, or for your flexibility return enough? I like increased the repurchase special a quarter even defined that also consecutive think quarterly cash dividend Have you maybe high are considered again, of to a something levels a regular program dividend

we I like is we trading these to company odd degree, Nate. said guess going last back it's to for criminally quarter, criminally the be mean, be. on with trading, companies shares. continue -- when question, I Yeah, sector me. the whole undervalued. we're that to where this undervalued won't go we And hard what even I at assets. It's are the still to up but today are I think I would I pick to multiples thanks mean, that still is, to to it say the market

don't we I can continue you large, acquiring to into past XX-XX very and kind has we've the have there what you timeframe months, the done we cash at certain dividend. and a we're happy will been been. flow, own over shares, money what over that of our formula we think out we don't each best regular It's that to judiciously. we by that's a have that's how long look like spent lumpy up continue to we we for but cadence a can market our amount of back and more -- with the to And obviously future but So have And do pick that and we shareholder not towards is open not still slow guiding out as so think allows, to program as the opportunities windows the the and do be shares. that repurchasing think about But cadence allocation go If return it. the of choose shares. do very steady, in week. We while we

the and and Excellent. you Thanks for of your you best And for all information guys Andy. thank thoughts, time luck.

thanks, interest have great you I your everybody on appreciate in Alright, Hope a everyone. being the day. call that, With Alpha. and appreciate all

concludes conference. This today's

time, You disconnect and thank you for your your at lines may we this participation.