Alpha Metallurgical Resources - Q4 2025

Transcript

Operator (participant)

Greetings, welcome to the Alpha Metallurgical Resources Fourth Quarter 2025 Results Conference Call. At this time, all participants are on 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. You may now begin.

Emily O'Quinn (SVP of Investor Relations and Communications)

Thank you, Rob. 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. 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 Daniel Horn, our Chief Commercial Officer. With that, I will turn the call over to Andy.

Andy Eidson (CEO)

Thanks, Emily. 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 closes 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 perseverance 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 $136.30.

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 upward 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 U.S. 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 spread between low-vol and the 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 Northern Appalachia, we're looking forward to completing development at the Kingston Wildcat Low-Vol Mine, which Jason has additional detail 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 are maintaining our focus on a strong balance sheet and safe, efficient operations as the 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.

Todd Munsey (CFO)

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. Met 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 from $81.64 per ton in the third quarter. While the coal sales for our Met segment increased to $101.43 per ton in the fourth quarter, up from $97.27 per ton in Q3.

Lower coal volumes in the fourth quarter, along with a reduction in coal inventory value, were the primary drivers of the increase. SG&A, excluding non-cash stock compensation and non-recurring items, decreased 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 31st, 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 30th.

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 31st, 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 $134.02. Another 53% of our Met tonnage for the year is committed, but not yet priced. The thermal byproduct portion of the Met segment is 77% committed and priced at the midpoint of guidance, an average price of $73.17. I'll now turn the call over to Jason to provide an update on operations.

Jason Whitehead (President and COO)

Thanks, Todd. Good morning, everyone. At the end of each calendar year, we evaluate every Alpha operation against a set of criteria to determine the David J. Stetson 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 Marmet River Dock on their selection as 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 Longwall mine, Kingston Wildcat, I want to remind everyone that in September of 2025, our Wildcat Slope intercepted the Sewell coal seam. Since then, we've continued to make progress in underground development production, while installing key infrastructure in and around the mine and the Mammoth 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 loadout from the mine stockpile are expected to wrap up in Q2. The mine ventilation shafts have both been bored, and the lining and ventilation work continues. At Mammoth, the rock rail car offloaders 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.

Daniel Horn (Chief Commercial Officer)

Thanks, Jason. 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, a divergence between the Australian-linked indices and the U.S. 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 1st, to $218 per metric ton on December 31st. The U.S. 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%. U.S. East Coast low-vol averaged roughly $178 over the course of the fourth quarter.

By contrast, the U.S. East Coast High-Vol A index was effectively flat during the quarter, dropping slightly to $150.50 per metric ton at the end of the year, and the U.S. East Coast High-Vol B 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 26th, a 9% increase, while the U.S. East Coast low-vol index was $196 per metric ton, an increase of 6%. 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 1st, and increased to $96.90 per metric ton on December 31st. Since then, the API2 has increased to $106.75 per metric ton as of February 26th. Turning to logistics, Dominion Terminal Associates will undertake a 4-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 (participant)

Thank you. At this time, we'll be conducting a question and answer session. If you'd like to ask a question, please press star one on your telephone keypad. One moment, please, while we poll for questions. Our first question comes from Lucas Pipes with B. Riley Securities. Your line is now live.

Lucas Pipes (Managing Director)

Thanks, operator. Good morning, guys. 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, you know, kind of better capture your sensitivity on the low-vol side with your uncommitted tons. Thanks.

Daniel Horn (Chief Commercial Officer)

Yeah, Lucas, this is Dan. Good morning. On the domestic, I don't, I won't give you exact numbers, but on the domestic side, probably half of our domestic volume was high-vol, the other half of it would be low and medium-vol. On the seaborne side, we have some of our existing low-vol production available to sell into the seaborne market. When the Wildcat mine ramps up, that's 500,000 tons or so of low-vol that would be available for that market as well.

Lucas Pipes (Managing Director)

Perfect. Dan, that's really helpful. I appreciate it. Maybe my second question was just on the cost side, you know, 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. Just any kind of incremental color you can give us on cost progression as the year goes on.

Andy Eidson (CEO)

Hey, Lucas, it's Andy. Good morning. I'll hit it at a high level, and Jason can add any detail he would like to. Q1, as we mentioned, we had some weather impacts and, you know, it's gonna 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 quarter's typically same issue as the first. You may have a little bit of weather, but you've got miners' vacation and holidays that tend to bring down our output just a bit. 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. You know, it just depends on how that works out, but typically that's been the trend.

Lucas Pipes (Managing Director)

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

Daniel Horn (Chief Commercial Officer)

Well, Nick, I guess, you know, the steel market globally is still pretty weak. With the exception of the U.S., and even the U.S., 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, yeah, I think we see probably a little more optimism than we had the last couple of years in Europe, South America, that 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. Even in the best times, it's a very competitive market.

When the Australians are producing well, we have that to compete with. Of course, you know, Andy mentioned the increased production. We're seeing more competition along the high-vol coal. You know, I hope that answers your question.

Lucas Pipes (Managing Director)

That does. I appreciate it, Dan. Guys, I'll turn it over for now, but thanks a lot, and continue. Best of luck.

Andy Eidson (CEO)

Thanks, Nick.

Operator (participant)

As a reminder, if you'd like to ask a question, please press star one on your telephone keypad. One moment, please, while we poll for questions. Our next question comes from Nathan Martin with The Benchmark Company. Your line is live.

Nathan Martin (Equity Research Analyst)

Thanks, operator. Good morning, everyone. you know, I'm thinking about total liquidity over $500 million at year-end. Nice cushion over your minimum target of $250 million-$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 Alpha's cash at this stage?

Andy Eidson (CEO)

Yeah. Hey, Nate. Good to hear from you. That's a great question. I mean, particularly in markets like this, where we are dealing with such volatility, the question still goes back to how sustainable is the recent bump in the PLV, and when do we start seeing a collapse of the massive margin that's built between Atlantic Basin and the Australian pricing? Again, we've got a good portion that goes on Aussie pricing, but the vast majority of our coal is going on Atlantic Basin, which has remained relatively depressed for a while now. We think 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. We remain hanging around the hoop on all kinds of different opportunities that may arise. I mean, as usual, I 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. 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, you know, to the enterprise without, you know, bringing extra risk to what we've already built.

Nathan Martin (Equity Research Analyst)

All right. That's very helpful, Andy. Next question, I guess around the cost side of the business. You know, you guys put your guidance out originally in December. You know, I know usually you kind of assume, you know, forward curve for your price within that guidance. I mean, that's probably improved about $10 or so since then. Any thoughts on what net price range you're assuming that guidance? You know, you talked as well about the 45X tax credit. What kind of benefit does that represent in your guidance range, thanks?

Andy Eidson (CEO)

I'll answer the first part of that, I'll let Todd cover the 45X piece. 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. That is contributing to a, you know, higher sales-related costs rolling through Q1, that would contribute to something, you know, above the upper end of our guidance, likely for Q1. We do think that will normalize. You know, the trend typically winds off a little bit. We get into the quote-unquote shoulder season, rolling into the second quarter. I think our cost guidance is still pretty solid, even though, coming out of the gate will probably be a little bit above that. Todd, 45X impact?

Todd Munsey (CFO)

Yeah, I think, Hey, Nate, the, you know, the range we gave out previously, I think if you look at the midpoint of our volume, you'll get around, so 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 mean. As we work through the year, we'll get more precision around that. I would say a good way to think about that is it's around $2 a ton.

Nathan Martin (Equity Research Analyst)

Great. Makes sense, guys. Then just maybe one more. You know, appreciate seeing the tonnage now for committed in price volume. I don't really remember seeing that before. Andy, you mentioned adding, I think, roughly half a 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 tons to go export?

Daniel Horn (Chief Commercial Officer)

Yeah, Nate, I think it's fair to assume most all of them will go export. If the aforementioned blast furnaces would ramp up and our customers need to produce a little more coke here in North America, they might come out and do a little more shopping. I think largely that domestic market's put to bed, the answer would be they'll go seaborne.

Nathan Martin (Equity Research Analyst)

Got it, Dan. All right, guys, very helpful. Leave it there. Appreciate the time, and good luck in 2026.

Andy Eidson (CEO)

Thank you, Nate.

Operator (participant)

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

Lucas Pipes (Managing Director)

Hey, thanks for taking my follow-up. Andy, I just found your comments interesting there around, the M&A piece, and just wanted to clarify that, you know, would you only be looking at met opportunities, or just given some of the kind of constructive, thermodynamics going on, you know, would you be willing to look at thermal coal as well?

Andy Eidson (CEO)

Yeah, I don't know that anything is off the table necessarily. Look, we're a met coal company, 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, you know, that didn't quite fit what we were wanting to accomplish. The world changes. Again, when I say we'll kind of look at anything, we really will, but it does have to fit certain categories. You know, 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, you know, upside to make the juice worth the squeeze, so to speak.

Lucas Pipes (Managing Director)

No, makes sense. I appreciate that. Maybe one last one, if I could. Just anything from a U.S. 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, curious if you have any updates on that front, and whether you think there's really that much more supply that could come offline, or if those that are still able to operate today might be, you know, better positioned from a balance sheet perspective, kind of the higher-cost players are probably out of the market at this time?

Andy Eidson (CEO)

Yeah, 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 sale, could be doing any number of things, but those mines are not currently producing in Central Appalachia. If you kind of add up those numbers, you get to, you know, 1.5 million tons, maybe 2 million tons of potential annual production that is coming offline. For Central App, that's a decent number. Globally, it's not necessarily a needle mover. That doesn't take into account the ramp-ups of other, you know, other mines that are out there.

Again, when we look at Alabama and Northern Appalachia, those mines they've not hit their stride yet, so there's, you know, potential for even more tons to come online. At this point, it still feels like there's probably some folks out there, the smaller producers, that at these, this market level, these prices, probably won't be able to 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.

Lucas Pipes (Managing Director)

Got it. Understood. I lied, I'll sneak in one more, if I could. I think maybe just another high-level question around pricing. I think, you know, when investors look at prices, you know, on paper, I think, really, realizations in the market can be a very different story. Do you think there's maybe a better way that pricing could be reflected, whether for, you know, users of coal or investors, or are there any improvements out there that could, you know, kind of add transparency, if you will?

Andy Eidson (CEO)

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.

Lucas Pipes (Managing Director)

More

Andy Eidson (CEO)

There's a couple things.

Lucas Pipes (Managing Director)

The industry.

Andy Eidson (CEO)

Sorry, go ahead. Yeah.

Lucas Pipes (Managing Director)

Sorry.

Andy Eidson (CEO)

Yeah.

Lucas Pipes (Managing Director)

Just on the indices. Yeah, yeah.

Andy Eidson (CEO)

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

Daniel Horn (Chief Commercial Officer)

Well, Nick, yeah, you know, the indices, you know, we sell coal into, you know, we're truly around the world using, you know, five, six, seven, eight different indices. The buyers largely dictate which indices you use. In Asia, the Asian buyers prefer to use the Aussie-link, the Aussie indices. In the Atlantic Basin, they use the U.S. East Coast indices. As I've said on this call before, in a good market, in a strong market, a seller's market, you know, we can sell at a premium to those indices, 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, we did three and five-year contracts.

A lot of the coal that we sell, we still have contracts, we sell more and more a vessel at a time. It's, you know, that's largely driven by the way the Asian customers prefer to buy the coal. It's, it's a challenge for us, to say the least. I always say, the ton of coal at Hampton Roads doesn't know where it's going. You know, we, I guess, feel that our coal, it can be undervalued at times. People refer to the, you know, the spread between high-vol A and low-vol, for example, and that relativity. I'm not a disciple of that, frankly. You know, the coal, each coal has its own value and has its own drivers. I guess there could be. The answer is, could there be a better way? Possibly. You know, we the customers largely dictate, you know, how we sell our coal.

Lucas Pipes (Managing Director)

Understood. Dan, I really appreciate the perspective as always. Guys, I'll turn it over, but thanks again. Good luck.

Operator (participant)

Our next question comes from Matthew Key with Texas Capital. Please proceed with your question.

Matthew Key (VP of Equity Research)

Hey, good morning, everyone. Most of my questions have been addressed. I will ask a quick one just on the macro. We obviously get some announcements on the U.S. tariffs recently. Well, it sounds like those will be replaced by, you know, other means. Does that impact the macro thesis on met coal at all, in your view, or is it kind of just a continuation?

Andy Eidson (CEO)

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 in the tariff structures. It, 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. That's 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.

I think a lot of folks are continuing to wait and see where it lands, so they can really derive the cost of whatever projects they're wanting to do. That leaves us, you know, we're the tail end of the cycle for that, and that leaves us in a state of uncertainty.

Matthew Key (VP of Equity Research)

Got it. No, that's helpful color. That's it for me. Best of luck moving forward.

Andy Eidson (CEO)

Yeah, thank you very much.

Operator (participant)

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

Andy Eidson (CEO)

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