Alpha Metallurgical Resources Inc (AMR) 2025 Q4 法說會逐字稿

Greetings, and welcome to the Alpha Metallurgical Resources fourth quarter 2025 results conference call. (Operator Instructions) 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. You may now begin.

Thank you, Rob, and good morning, everyone. Before we get started, let me remind you that during our prepared remarks, our comments regarding anticipated business and financial performance contain forward-looking statements, and actual results may differ materially from those discussed. For more information regarding forward-looking statements and some of the factors that can affect them, please refer to the company's fourth quarter 2025 earnings release and the associated SEC filing. Please also see these documents for information about our use of non-GAAP measures and their reconciliation to GAAP measures.

Participating on the call today are Alpha's Chief Executive Officer, Andy Eidson, and our President and Chief Operating Officer, Jason Whitehead. Also participating on the call are Todd Munsey, our Chief Financial Officer; and Dan Horn, our Chief Commercial Officer.

With that, I will turn the call over to Andy.

Thanks, Emily, and good morning, everyone. Today, we released our definitive fourth quarter financial results, which include adjusted EBITDA of $28.5 million and 3.8 million tons shipped. This closed out a year that presented a number of challenges and continued market weakness. However, 2025 was also a year of markedly improved cost performance across the company and resilience in the face of difficult circumstances. Now in 2026, we look to build on that first severance and continue improving.

Since our last earnings call, we issued 2026 guidance and announced 3.6 million tons in sales commitments to domestic customers. We have since added another 500,000 contracted tons, bringing Alpha's domestic commitments to a total of 4.1 million tons for the year at an average price of $136.3 especially in volatile times like these, having a solid base of committed tons to North American customers supports cash flow planning and business needs since the rest of the sales book is subject to market risk, which carries uncertainty.

As we stated in our preliminary announcement and again today, the recent helper movement in coal markets has been largely concentrated within the Australian premium low-vol index. Much of the shift was due to supply-related issues resulting from flooding that occurred in Queensland in December and January, meaning the impacts were likely isolated and temporary. This conclusion is further supported by the significant divergence between the Aussie indexes and those priced on the US East Coast as well as the trend lower in recent weeks.

Additionally, growing oversupply of high-vol coal seems to be contributing to the widening spreads seen low vol and high vol A and B coals. Given our usual quality mix, if the current pricing environment for high vol persists, it would likely exert downward pressure on our realizations for the year. In light of these supply-related forces, we continue to look for durable improvements to global steel demand as the catalyst needed to improve met markets across the quality spectrum in a sustainable way. All of this is important market context as we look at what's ahead for 2026.

While the high-vol market remains crowded on the supply side with incremental tons coming from Alabama and North Appalachia, we're looking forward to completing development of the Kingstone (inaudible) mine, which Jason has additional details to share about shortly. As always, we're going to do everything we can to mine coal safely and efficiently, and our sales team will aim to maximize the value of every pound of coal that we mine. However, we're also clear out about the persistent market weakness, especially with regard to high vol and maintain our focus on a strong balance sheet and safe, efficient operations as a recipe for success in these challenging times.

I will now turn the call over to Todd for additional information on our fourth-quarter financial results.

Thanks, Andy. Adjusted EBITDA for the fourth quarter was $28.5 million, down from $41.7 million in the third quarter. We sold 3.8 million tons in Q4, down from 3.9 million tons in the third quarter. Med segment realizations increased quarter over quarter with an average realization of $115.31 in Q4, up from $114.94 in the third quarter. Export met tons priced against Atlantic indices and other pricing mechanisms in the fourth quarter realized $106.13 per ton while export coal priced on Australian indices realized $114.96 per ton. These results are compared to realizations of $107.25 per ton and $106.39, respectively in the third quarter.

The realization for our metallurgical sales in Q4 was a total weighted average of $118.10 per ton, up from $117.62 per ton in Q3. Realizations in the incidental thermal portion of the met segment decreased to $77.80 per ton in Q4, down $81.64 per ton in the third quarter. Coal sales for our met segment increased $101.43 per ton in the fourth quarter, up from $97.27 per ton in Q3. Lower coal volumes in the fourth quarter along the reduction in coal inventory value were the primary drivers of the increase. SG&A excluding noncash stock compensation and nonrecurring items increased to $10.9 million for the fourth quarter as compared to $13.2 million in the third quarter.

Reduced professional services spend and lower labor costs were the primary contributors to the reduction. Moving to the balance sheet and cash flows. As of December 31, we had $366 million in unrestricted cash and $49.6 million in short-term investments as compared to $408.5 million of unrestricted cash and $49.4 million in short-term investments as of September 30. We had $183.7 million in unused availability under our ABL at the end of the fourth quarter, partially offset by a minimum required liquidity of $75 million.

As of the end of December, Alpha had total liquidity of $524.3 million, down from $568.5 million at the end of September. CapEx for the quarter was $29 million, up from $25.1 million in Q3. Cash provided by operating activities was $19 million in Q4, down from $50.6 million in the third quarter. As of December 31, our ABL facility had no borrowings and $41.3 million of letters of credit outstanding.

In terms of our committed position for 2026, at the midpoint of guidance, 37% of our metallurgical tonnage in the met segment is committed and priced at an average price of $134.2. Another 53% of our met tonnage for the year is committed, but not yet priced. The thermal byproduct portion of the Med segment is 77% committed and priced at the midpoint of guidance an average price of $73.17.

I will now turn the call over to Jason to provide an update on operations.

Thanks, Todd, and good morning, everyone. At the end of each calendar year, we evaluate every Alpha operation against a set of criteria to determine the David just best-in-class awards. These winning teams meet or exceed certain thresholds measuring their safety, environmental stewardship and efficiency throughout the year. I'm pleased to congratulate our Bandmill prep plant and Marmette River Dock on their selection of 2025 best-in-class winners. We appreciate all the hard work and daily attention to detail that contributes to these successful operations.

I want to also recognize the good work accomplished at the remaining mines in our operating portfolio. Even though 2025 was a challenging year, our teams came together to overcome obstacles and continue pushing each other to be better. That drive for continuous improvement is inherent in our culture of safe production. Turning to our new logo mine, Kingston Wildcat. I want to remind everyone that in September of 2025, our Wildcat slope intercepted the Sol coal seam.

Since then, we've continued to make progress in underground development production while installing key infrastructure in and around the mine and Amit's preparation plant.

At Wildcat, the 2-mile power line and TAP construction is complete, and the mine is now on its permanent utility power. The stockpile reclaim tunnel and raw coal railroad loadout are complete and the overland belts that serve the load out from the mine stockpile expected to wrap up in Q2. The mine ventilation shafts have both been board and aligning and ventilation work continues.

At Mammoth, the railcar off-loaders are complete and functioning and the raw coal transfer belts that report from the rail to the plant are also complete. We're forging ahead as planned, and we currently expect to produce roughly 500,000 tons from the mine this calendar year as we ramp up Wildcat's full productivity capacity, which we believe is nearly 1 million tons per year.

With that, I'll now turn the call over to Dan for some details on the market.

Thanks, Jason, and good morning, everyone. As Andy mentioned, supply-related issues, including the December and January flooding in Queensland, Australia impacted metallurgical markets in recent months. Due to constraints on Australian met coal supply, divergence between the Australian linked indices and the US East Coast markets significantly expanded with spreads also widening between the premium grade low-vol coal and high vol coals.

Despite these supply-related shifts in the indices, the global metallurgical coal markets are still structurally influenced by steel demand, which is linked to economic conditions, policy decisions, geopolitical tensions, tariffs and ongoing trade negotiations, all of which could impact met coal pricing. Metallurgical coal markets experienced very varied movements across the indices during the fourth quarter of 2025. Of the four indices that Alpha closely monitors, the Australian premium low vol index represents the largest jump, an increase of 14.6%. The Australian premium low vol index increased from $190.20 per metric ton on October 1 to $218 per metric ton on December 31.

The US East Coast low-vol index rose from $177 in October to $185 per metric ton by the end of December, an increase of 4.5%. The US East Coast low-vol averaged roughly $178 over the course of the fourth quarter. By contrast, the US

East Coast High-vol Index was effectively flat during the quarter, dropping slightly to $150.50 per metric ton at the end of the year. And the US East Coast High-vol Index was similarly flat ending the quarter at $144.20 per metric ton. Since the quarter closed, all four indices have increased, although to very different degrees.

The Australian PLV has increased to $237 per metric ton as of February '26, a 9% increase, while the US East Coast well all index was $196 per metric ton, an increase of 6%. The High-Vol A and High-Vol B indices measured $159 and $149 per ton, respectively, as of the same date.

In the seaborne thermal market, the API2 index was $94.55 per metric ton as of October 1 increased to $96.90 per metric ton on December 31. And since then, the API 2 has increased to $106.75 per metric ton as of February '26.

Turning to logistics. Dominion Terminal Associates will undertake a four-week planned outage beginning in March, during which portions of the terminal will be unusable while significant equipment upgrades occur. Similar to past outages, DTA management has carefully planned the order of events so as to disrupt operations as minimally as possible. Our team within Alpha has also been planning for this downtime, and we do not anticipate any material negative impacts from the outage. Rather, we look forward to these important terminal upgrades to strengthen our shipping capabilities for the future.

With that, operator, we are now ready to open the call for questions.

(Operator Instructions) Nick Giles, B. Riley Securities.

Thanks, operator. I appreciate the update here this morning. Maybe my first one was more of a clarifying nature. Could you just help us understand your mix within your domestic tonnage versus more seaborne-based tons. I'm really just trying to kind of better capture your sensitivity on the low vol side with your uncommitted tons?

Yes, Nick, this is Dan. On the domestic -- I won't to give you exact numbers. But on the domestic side, probably half of our domestic volume was high, all the other half of it would be low than medium fall. And then on the seaborne side, we have some of our existing low-vol production available to sell into the seaborne market. And then as the -- when the Wildcat mine ramps up that's 0.5 million tons or so of low vol that would be available for that market as well.

Perfect. Again, it's really helpful. I appreciate it. Maybe my second question was just on the cost side and how should we kind of think about cost cadence over the course of the year? I know volumes will be slightly lower here in Q1, which is pretty typical. So just any kind of incremental color you can give us on cost progression as the year goes on.

Nick, it's Andy. I'll hit at a high level and Jason can add any detail he would like to. But Q1, as we mentioned, we had some weather impacts, and it's going to be a slightly lower productive cadence for the quarter, so that will lead to elevated costs Second and third quarters are typically when we're all systems go. Fourth quarters, typically, the same issue as the first. You may have a little bit of weather, but you've got monitor vacation and holidays that tend to bring down our output just a bit.

So usually, it's kind of a barbell, First and fourth will be your higher-cost quarters in the middle. You do a little bit better. Although this fourth quarter of '25 was I think, an exceptional quarter from a cost perspective. So it just depends on how that works out. But typically, that's been the trend.

Got it. Maybe one more if I could and I can jump back in the queue. But Dan, would just be great to get some more color on the broader market. How are you seeing things in kind of more traditional markets like Europe or South America and do you think that any upcoming recovery is really dependent on incremental demand from South Asia? Or do you think there will be other important contributors as well?

I guess the steel market globally is still pretty weak. There's no -- with the exception of the US and even the US, the volumes aren't there, the steel pricing here in our markets are good, but the volumes probably could be better. There's still some blast furnaces that could ramp up here. In the Atlantic Basin, though, yes, I think we see probably a little more optimism than we had the last couple of years in Europe, South America.

The effect of the global trade wars is starting to sink in and different governments are beginning to take some action that we think will benefit met coal exports to those markets. Asia remains kind of tough. It's a tough -- even in the best times, it's very competitive market. When the Australians are producing well. We have that to compete with.

And of course, Andy mentioned the increased production, we're seeing more competition along the high-vol coal. So I hope that answers your question.

(Operator Instructions) Nathan Martin, The Benchmark Company.

Good morning, everyone. I'm thinking about total liquidity, over $500 million at year-end, nice cushion over your minimum target of $250 million to $300 million. Obviously, market was quite weak last year. maybe things are at least seemingly moving in a positive direction in the last few months. I guess, Andy, maybe it'd be great to get your thoughts on what you see as the best uses for output cash at this stage.

Yes. Nate, good to hear from you. That's a great question. I mean, particularly in markets like this where the -- we are dealing with such volatility. The question still goes back to how sustainable is the recent bump in the POV and when do we start seeing a collapse of the massive margin that's built between Atlantic Basin and the Australian pricing.

Because, again, we've got a good portion that goes on Alte pricing, but the vast majority of our coal is going on Atlantic Basin, which has remained relatively depressed for a while now. So we're saying that having that buffer, that liquidity is very good, just to keep the balance sheet strong. We are still utilizing some of that cash for the share buyback, keep that moving along at a measured pace. And we remain hanging around the hoop on all kinds of different opportunities that may arise.

I mean, as usual, I'd like to kind of be cagey around any M&A comments. But there are some things available out there. Some of them are attractive, some of them maybe not. But we continue to keep our eyes open, and we'll look at literally anything that comes across the desk to see if there's a way that we can add value to the enterprise without bringing extra risk to what we've already built.

Right. That's very helpful, Andy. Next question, I guess, around the cost side of the business. you guys put your guidance out originally in December. I know usually you kind of assume forward curve for your price within that guidance.

I mean, that's probably improved about $10 or so since then. So any thoughts on the net price range? You're assuming that guidance? And then you talked as well about the 45 times tax credit. What kind of benefit does that represent in your guidance range base?

Yes, I'll answer the first part of that, and I'll let Todd cover the 45 times piece. Yes, our guidance when we put it out in December was, of course, as it is every year, it's informed mostly by the strip for the following year, which was a bit lower than where we've actually landed in January and February. So that is contributing to higher sales-related costs rolling through Q1. And so that would contribute to something above the upper end of our guidance, likely for Q1. We do think that, that will normalize the trend typically winds off a little bit.

We get into the shoulder season, rolling into the second quarter. So I think our cost guidance is still pretty solid, even though coming out of the gate, we'll probably be a little bit above that. Todd, 45 times impact.

Yes. I think the range we gave out previously. I think if you look at the midpoint of our volume, you at around, call it, circa $2 per ton benefit, maybe a little bit more. I mean, it's a new calculation. We're still working through what qualifying costs seen.

But as we work through the year, we'll get more precision around that. But I would say a good way to think about that is it's around $2 a ton.

Great. Makes sense, guys. And then just maybe one more. I appreciate seeing the tonnage now for committed and priced volume. I don't really remember seeing that before.

And Andy, you mentioned adding, I think, roughly 0.5 million tons of domestic commitments since last guidance, only a small decrease in the average price there. As we look at what's open, do you guys think there's any more opportunity for domestic sales out there? Or do you expect the rest of your open times to go export.

Yes, Nate, I think it's fair to assume most -- all of them will go export. The -- if the aforementioned blast furnaces would ramp up and our customers need to produce a little more (inaudible) here in North America, they might come out and do a little more shopping. But I think largely, that domestic market is put to bed. So the answer would be they'll go see board.

Nick Giles, B. Riley Securities.

Andy, I just found your comments interesting there around the M&A piece. And I just wanted to clarify that would you only be looking at net opportunities? Or just given some of the kind of constructive thermal dynamics going on? Would you be willing to look at thermal coal as well?

Yes. I don't know I don't know that anything is off the table necessarily. Look, we're a met coal company, and that's kind of strategically where we made our move. We made that move for some obvious reasons as we exited a couple of our largest thermal assets that didn't quite fit what we were wanting to accomplish. But the world changes.

So again, when I say we'll kind of look at anything, we really will but it does have to fit certain categories. And those categories are not necessarily related to the fundamental nature of what the asset is, but it's more around guarding against unnecessary risk and also seeing upside to make the juice worth the squeeze, so to speak.

That makes sense. I appreciate that. Maybe one last one, if I could. Just anything from a US supply perspective that you've seen over the past few months?

I mean, I know that we've heard rumblings of some smaller operations curtailing over the past year. And so curious if you have any updates on that front? And whether you think there's really that much more supply that could come up line? Or if those are still able to operate today might be better positioned from a balance sheet perspective and kind of the higher cost players are probably out of the market at this time?

Yes. It's always hard to tell because, particularly with smaller producers, we don't have a lot of visibility into how strong their balance sheets are. But we've all seen even in the past couple, three weeks. We've seen some furloughs of operations that are going into care and maintenance could be prepping for Bill, could be doing any number of things, but those mines are not currently producing in Central Appalachian.

So if you kind of add up those numbers, you get to 1 million, 1.5 million, maybe 2 million tons of potential annual production that is coming off-line. For Central App, that's a decent number. globally. It's not necessarily a needle mover. And that doesn't take into account the ramp-up of other mines that are out there. And again, when we look at Alabama and Northern Appalachia, there's a lot of -- those months haven't hit their -- they've not hit their stride yet. So there's potential for even more tons come online.

So at this point, it still feels like there's probably some folks out there, the smaller producers that at these market level, these prices probably continue producing for much longer. But I don't know that it is enough to hit critical mass and make a material impact to the market.

Got it. Understood. And I'll sneak in one more, if I could. I think maybe just another high-level question around pricing. I think when investors look at prices on paper, I think really realizations in the market can be a very different story.

So do you think there's maybe a better way that pricing could be reflected, whether for users of coal or investors? Or are there any improvements out there that could kind of add transparency, if you will?

Well, let me ask you a clarifying question. Are you talking about the presentation of the indexes or the derivation of the indexes or how we all individually refer to our realizations? Because I think there's a couple of things -- sorry, go ahead.

I mean just on the indices, yes, yes.

Ind is much better positioned to hop up on his bully pulpit, and talk about the (inaudible) I think he's been waiting for this one for a while, so I'll let him go.

Yes, the indices -- we sell coal into truly around the world using five, six, seven, eight different indices. The buyers largely dictate which indices you use in Asia, the Asian buyers prefer to use the Aussie indices. In the Atlantic Basin, they use the US East Coast indices. I said on this call before, in a good market, a strong market, a seller's market.

We can sell at a premium to those indices and in a weaker market, we sell at a discount to those indices. When I started in this business, we did fixed price for a year, and we did three- and five-year contracts, a lot of the coal that we sell.

We still have contracts, but we sell more and more vessels at a time. and it's -- and that's largely driven by the way the Asian customers prefer to buy the coal. And so it's a challenge for us to say the least. And I always say the ton of coal at Hampton Roads doesn't know where it's going. And we, I guess, feel that our coal can be undervalued at times people refer to the spread between high-vol A and low-vol for example, and that relativity, I'm not the cycle of that, frankly, the each call has its own value and has its own drivers.

So I guess there could be -- the answer is could there be a better way possibly, but the customers largely dictate how we sell our coal.

Matthew Key, Texas Capital.

Most of my questions have been addressed, but I will ask a quick one just on the macro. We also get some announcements on the US tariffs recently. Well, it sounds like those will be replaced by other means. Does that impact the macro thesis on met coal at all in your view? Or is it kind of just a continuation?

I think the challenge here, Matthew, it's good to talk to you, by the way. I think the challenge here is the constant state of flux and the tariff structures. I think it's got a lot of buyers, a lot of people who could be doing infrastructure projects or big buildings or any kind of development that could require a lot of steel.

I think it's got a lot of people sitting on their hands, waiting to see where things fall out before they make big moves. And that degree of lethargy is part of the problem when you look at this market, just not enough volume flowing in any discernible direction and being able to predict where that goes. So I think a lot of folks are continuing to wait and see where it lands so they can really drive the cost of whatever projects they're wanting to do. And that leaves us we're the tail end of the cycle for that, and that leaves us in a state of uncertainty.

We have reached the end of the question-and-answer session. I will now turn the call over to Andy Eidson for closing remarks.

We appreciate everyone's time this morning. Thank you for joining us, and we hope everyone has a great weekend.

This concludes today's conference. You may disconnect your lines at this time. And we thank you for your participation.