[Cautionary Note Regarding Forward-Looking Statements](index=4&type=section&id=Cautionary%20Note%20Regarding%20Forward-Looking%20Statements) The report includes forward-looking statements based on current expectations, with actual results potentially differing due to various risks and uncertainties - The report includes forward-looking statements identified by terms like 'anticipate,' 'believe,' 'expect,' and 'plan,' which are based on current expectations and beliefs[7](index=7&type=chunk) - Actual results may differ materially due to various risks and uncertainties, including financial performance, liquidity, coal prices, transportation, environmental regulations, competition, labor relations, and cybersecurity attacks[7](index=7&type=chunk)[9](index=9&type=chunk)[11](index=11&type=chunk) - The company does not undertake to publicly revise these statements to account for future events or circumstances, except as expressly required by federal securities laws[12](index=12&type=chunk) Part I - Financial Information [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This item includes the unaudited condensed consolidated financial statements, comprising statements of operations, comprehensive income, balance sheets, cash flows, and stockholders' equity, along with detailed notes explaining the company's business, accounting policies, and specific financial line items [Condensed Consolidated Statements of Operations](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) This section presents the company's unaudited condensed consolidated statements of operations, detailing revenues, expenses, and net income for the three and nine months ended September 30, 2023 and 2022 - For the three months ended September 30, 2023, **total revenues decreased by 14.7% YoY**, and **net income significantly declined by 62.9% YoY**[14](index=14&type=chunk) - For the nine months ended September 30, 2023, **total revenues decreased by 23.4% YoY**, and **net income decreased by 55.6% YoY**[14](index=14&type=chunk) Condensed Consolidated Statements of Operations (in thousands) | Metric (in thousands) | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 30, 2022 | Change (%) | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | Change (%) | | :-------------------- | :-------------------------- | :-------------------------- | :--------- | :-------------------------- | :-------------------------- | :--------- | | Total Revenues | $741,820 | $869,768 | (14.7)% | $2,511,426 | $3,278,144 | (23.4)% | | Income from Operations| $117,159 | $262,470 | (55.4)% | $649,763 | $1,364,245 | (52.4)% | | Net Income | $93,814 | $252,817 | (62.9)% | $545,940 | $1,227,865 | (55.6)% | | Basic EPS | $6.88 | $14.77 | (53.4)% | $37.87 | $68.14 | (44.4)% | | Diluted EPS | $6.65 | $14.27 | (53.4)% | $36.46 | $65.31 | (44.1)% | [Condensed Consolidated Statements of Comprehensive Income](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) This section details the company's unaudited condensed consolidated statements of comprehensive income, showing net income and other comprehensive income components for the three and nine months ended September 30, 2023 and 2022 - Total comprehensive income for the three months ended September 30, 2023, was **$93.4 million**, a significant decrease from **$253.6 million** in the prior year period[16](index=16&type=chunk) - For the nine months ended September 30, 2023, **total comprehensive income decreased by 55.8% YoY**, primarily driven by the decline in net income[16](index=16&type=chunk) Condensed Consolidated Statements of Comprehensive Income (in thousands) | Metric (in thousands) | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 30, 2022 | Change (%) | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | Change (%) | | :-------------------- | :-------------------------- | :-------------------------- | :--------- | :-------------------------- | :-------------------------- | :--------- | | Net Income | $93,814 | $252,817 | (62.9)% | $545,940 | $1,227,865 | (55.6)% | | Total Comprehensive Income | $93,362 | $253,635 | (63.2)% | $541,759 | $1,225,482 | (55.8)% | [Condensed Consolidated Balance Sheets](index=8&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section presents the company's unaudited condensed consolidated balance sheets, outlining assets, liabilities, and stockholders' equity as of September 30, 2023, and December 31, 2022 - As of September 30, 2023, **total assets increased slightly to $2.35 billion** from **$2.31 billion** at December 31, 2022[18](index=18&type=chunk)[20](index=20&type=chunk) - Total liabilities decreased by **9.9% to $794.9 million**, while **total stockholders' equity increased by 9.0% to $1.56 billion**, reflecting improved financial health[18](index=18&type=chunk)[20](index=20&type=chunk) Condensed Consolidated Balance Sheets (in thousands) | Metric (in thousands) | Sep 30, 2023 | Dec 31, 2022 | Change (%) | | :-------------------- | :----------- | :----------- | :--------- | | Total Current Assets | $1,048,946 | $1,114,421 | (5.8)% | | Total Assets | $2,352,960 | $2,312,479 | 1.7% | | Total Current Liabilities | $315,210 | $402,625 | (21.7)% | | Total Liabilities | $794,887 | $882,724 | (9.9)% | | Total Stockholders' Equity | $1,558,073 | $1,429,755 | 9.0% | [Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section provides the company's unaudited condensed consolidated statements of cash flows, detailing operating, investing, and financing activities for the nine months ended September 30, 2023 and 2022 - For the nine months ended September 30, 2023, **net cash provided by operating activities decreased significantly by 49.8% YoY to $651.8 million**[22](index=22&type=chunk) - Net cash used in investing activities decreased by **30.6% YoY**, while net cash used in financing activities decreased by **40.6% YoY**, primarily due to lower debt repayments[22](index=22&type=chunk) Condensed Consolidated Statements of Cash Flows (in thousands) | Metric (in thousands) | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | Change (%) | | :-------------------- | :-------------------------- | :-------------------------- | :--------- | | Net Cash Provided by Operating Activities | $651,806 | $1,299,037 | (49.8)% | | Net Cash Used in Investing Activities | $(126,637) | $(182,564) | (30.6)% | | Net Cash Used in Financing Activities | $(501,500) | $(844,133) | (40.6)% | | Net Increase in Cash and Cash Equivalents and Restricted Cash | $23,669 | $272,340 | (91.3)% | [Condensed Consolidated Statements of Stockholders' Equity](index=12&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) This section presents the company's unaudited condensed consolidated statements of stockholders' equity, showing changes in equity components from December 31, 2022, to September 30, 2023 - **Total stockholders' equity increased from $1,429.8 million at December 31, 2022, to $1,558.1 million at September 30, 2023**[18](index=18&type=chunk)[20](index=20&type=chunk)[27](index=27&type=chunk)[28](index=28&type=chunk) - The increase was driven by net income and additional paid-in capital, partially offset by treasury stock repurchases and accumulated other comprehensive loss[18](index=18&type=chunk)[20](index=20&type=chunk)[27](index=27&type=chunk)[28](index=28&type=chunk) Condensed Consolidated Statements of Stockholders' Equity (in thousands) | Metric (in thousands) | Dec 31, 2022 | Sep 30, 2023 | Change (%) | | :-------------------- | :----------- | :----------- | :--------- | | Common Stock | $217 | $220 | 1.4% | | Additional Paid-in Capital | $815,442 | $825,143 | 1.2% | | Accumulated Other Comprehensive Loss | $(12,162) | $(16,343) | 34.4% | | Treasury Stock, at cost | $(649,061) | $(1,051,185) | 61.9% | | Retained Earnings | $1,275,319 | $1,800,238 | 41.2% | | Total Stockholders' Equity | $1,429,755 | $1,558,073 | 9.0% | [Notes to Condensed Consolidated Financial Statements](index=14&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed notes to the unaudited condensed consolidated financial statements, explaining significant accounting policies, revenue recognition, and other financial disclosures [(1) Business and Basis of Presentation](index=14&type=section&id=(1)%20Business%20and%20Basis%20of%20Presentation) This note describes Alpha's business as a leading metallurgical coal supplier and the basis of presentation for its unaudited interim financial statements in accordance with U.S. GAAP and SEC rules - Alpha is a Tennessee-based mining company with operations in Virginia and West Virginia, serving as a leading U.S. supplier of metallurgical coal products for the steel industry globally[31](index=31&type=chunk) - The interim Condensed Consolidated Financial Statements are unaudited, prepared in accordance with U.S. GAAP and SEC rules for Form 10-Q, and reflect all necessary normal and recurring adjustments[33](index=33&type=chunk) - No new accounting pronouncements are expected to have a material impact on the Company's financial position, results of operations, or liquidity[35](index=35&type=chunk) [(2) Revenue](index=14&type=section&id=(2)%20Revenue) This note details the company's revenue recognition policies and disaggregates coal revenues by product category and market for the reported periods - The Company earns revenues primarily through the sale of coal (produced or purchased) and disaggregates revenue by product category (met and thermal coal) and market (export and domestic) to reflect pricing and contract differences[36](index=36&type=chunk) Revenue by Category (in thousands) | Revenue Category (in thousands) | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 30, 2022 | Change (%) | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | Change (%) | | :------------------------------ | :-------------------------- | :-------------------------- | :--------- | :-------------------------- | :-------------------------- | :--------- | | Total Export Coal Revenues | $514,597 | $641,345 | (19.7)% | $1,809,300 | $2,681,873 | (32.5)% | | Total Domestic Coal Revenues | $224,401 | $226,504 | (0.9)% | $690,203 | $589,972 | 16.9% | | Total Met Coal Revenues | $699,344 | $794,615 | (12.0)% | $2,363,309 | $3,140,848 | (24.7)% | | Total Thermal Coal Revenues | $39,654 | $73,234 | (45.8)% | $136,194 | $130,997 | 4.0% | | Total Coal Revenues | $738,998 | $867,849 | (14.8)% | $2,499,503 | $3,271,845 | (23.6)% | - Estimated future coal revenues from unsatisfied performance obligations are **$71.4 million** for the remainder of 2023 and **$85.2 million** for 2024, totaling **$156.6 million**[39](index=39&type=chunk) [(3) Accumulated Other Comprehensive Loss](index=15&type=section&id=(3)%20Accumulated%20Other%20Comprehensive%20Loss) This note explains changes in accumulated other comprehensive loss, primarily related to employee benefit costs, for the nine months ended September 30, 2023 - The **accumulated other comprehensive loss increased from $(12.16) million at January 1, 2023, to $(16.34) million at September 30, 2023**, primarily due to other comprehensive loss before reclassifications related to employee benefit costs[41](index=41&type=chunk) Employee Benefit Costs (in thousands) | Metric (in thousands) | Jan 1, 2023 | Sep 30, 2023 | Change (%) | | :-------------------- | :---------- | :----------- | :--------- | | Employee benefit costs (Balance) | $(12,162) | $(16,343) | 34.4% | - For the nine months ended September 30, 2023, the reclassification from accumulated other comprehensive loss to the Condensed Consolidated Statements of Operations for employee benefit costs was **$(1,356) thousand**, net of income tax[44](index=44&type=chunk) [(4) Net Income Per Share](index=16&type=section&id=(4)%20Net%20Income%20Per%20Share) This note presents the basic and diluted net income per common share for the three and nine months ended September 30, 2023 and 2022 - **Basic net income per common share decreased by 53.4% to $6.88** for the three months ended September 30, 2023, and by **44.4% to $37.87** for the nine months, compared to the prior year periods[14](index=14&type=chunk)[47](index=47&type=chunk) - **Diluted net income per common share showed similar declines, decreasing by 53.4% to $6.65** for the three months and by **44.1% to $36.46** for the nine months[14](index=14&type=chunk)[47](index=47&type=chunk) Net Income Per Share | Metric | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 30, 2022 | Change (%) | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | Change (%) | | :----- | :-------------------------- | :-------------------------- | :--------- | :-------------------------- | :-------------------------- | :--------- | | Basic Income Per Common Share | $6.88 | $14.77 | (53.4)% | $37.87 | $68.14 | (44.4)% | | Diluted Income Per Common Share | $6.65 | $14.27 | (53.4)% | $36.46 | $65.31 | (44.1)% | [(5) Inventories, net](index=17&type=section&id=(5)%20Inventories,%20net) This note provides a breakdown of the company's inventories, net, including raw coal, saleable coal, and materials, as of September 30, 2023, and December 31, 2022 - As of September 30, 2023, **total inventories, net, increased by 35.5% to $271.8 million** from **$200.6 million** at December 31, 2022[49](index=49&type=chunk) - The increase was primarily driven by a significant **71.3% increase in saleable coal inventory**[49](index=49&type=chunk) Inventory Category (in thousands) | Inventory Category (in thousands) | Sep 30, 2023 | Dec 31, 2022 | Change (%) | | :-------------------------------- | :----------- | :----------- | :--------- | | Raw coal | $53,762 | $57,382 | (6.4)% | | Saleable coal | $156,715 | $91,474 | 71.3% | | Materials, supplies and other, net | $61,328 | $51,718 | 18.6% | | Total inventories, net | $271,805 | $200,574 | 35.5% | [(6) Capital Stock](index=17&type=section&id=(6)%20Capital%20Stock) This note details changes in the company's capital stock, including common share repurchase programs, dividend policy, and the expiration of Series A Warrants - The Board approved a **$200 million increase** to the existing common share repurchase program in February 2023, bringing the total authorization to **$1.2 billion**, and an additional **$300 million increase in October 2023, totaling $1.5 billion**[50](index=50&type=chunk) - As of September 30, 2023, the Company had repurchased **5,976,397 shares** for an aggregate purchase price of approximately **$910.3 million** under the plan[50](index=50&type=chunk) - The Board determined to end the Company's fixed dividend program in August 2023, following the quarterly dividend declared and to be paid in the fourth quarter of 2023. The Series A Warrants expired on July 26, 2023, with no warrants outstanding as of September 30, 2023[52](index=52&type=chunk)[53](index=53&type=chunk)[55](index=55&type=chunk) [(7) Accrued Expenses and Other Current Liabilities](index=18&type=section&id=(7)%20Accrued%20Expenses%20and%20Other%20Current%20Liabilities) This note presents a breakdown of accrued expenses and other current liabilities, highlighting changes in dividend payable and income taxes payable - **Accrued expenses and other current liabilities decreased by 28.2% to $190.1 million** as of September 30, 2023, from **$265.3 million** at December 31, 2022[59](index=59&type=chunk) - This decrease was primarily due to a significant **89.9% reduction in dividend payable**[59](index=59&type=chunk) Liability Category (in thousands) | Liability Category (in thousands) | Sep 30, 2023 | Dec 31, 2022 | Change (%) | | :-------------------------------- | :----------- | :----------- | :--------- | | Wages and benefits | $66,048 | $69,458 | (4.9)% | | Dividend payable | $8,701 | $86,118 | (89.9)% | | Income taxes payable | $8,589 | $0 | N/A | | Total accrued expenses and other current liabilities | $190,119 | $265,256 | (28.2)% | [(8) Long-Term Debt](index=18&type=section&id=(8)%20Long-Term%20Debt) This note details the company's long-term debt, including notes payable and financing leases, and discusses the refinancing of its ABL Agreement - **Total long-term debt decreased by 4.3% to $10.5 million** as of September 30, 2023, from **$11.0 million** at December 31, 2022[60](index=60&type=chunk) Debt Category (in thousands) | Debt Category (in thousands) | Sep 30, 2023 | Dec 31, 2022 | Change (%) | | :--------------------------- | :----------- | :----------- | :--------- | | Notes payable and other | $5,726 | $6,179 | (7.4)% | | Financing leases | $4,776 | $4,796 | (0.4)% | | Total long-term debt | $10,502 | $10,975 | (4.3)% | | Less current portion | $(3,438) | $(3,078) | 11.7% | | Long-term debt, net of current portion | $7,064 | $7,897 | (10.5)% | - On October 27, 2023, the Company terminated its existing ABL Agreement and entered into a new Credit Agreement (New ABL Facility) for up to **$155 million**, maturing on October 27, 2027[62](index=62&type=chunk) [(9) Acquisition-Related Obligations](index=19&type=section&id=(9)%20Acquisition-Related%20Obligations) This note explains the reduction in acquisition-related obligations due to the final payment of the Contingent Revenue Obligation - **Acquisition-related obligations significantly decreased to $0.18 million** as of September 30, 2023, from **$28.25 million** at December 31, 2022[65](index=65&type=chunk) - This reduction was due to the final calculated payment for the Contingent Revenue Obligation being made during the first quarter of 2023[66](index=66&type=chunk) Obligation (in thousands) | Obligation (in thousands) | Sep 30, 2023 | Dec 31, 2022 | Change (%) | | :------------------------ | :----------- | :----------- | :--------- | | Contingent Revenue Obligation | $0 | $27,719 | (100.0)% | | Environmental Settlement Obligation | $181 | $535 | (66.1)% | | Total acquisition-related obligations - current | $181 | $28,254 | (99.4)% | [(10) Asset Retirement Obligations](index=19&type=section&id=(10)%20Asset%20Retirement%20Obligations) This note details the company's asset retirement obligations, including changes due to accretion and expenditures for the period - **Total asset retirement obligations increased by 2.7% to $183.8 million** as of September 30, 2023, from **$179.0 million** at December 31, 2022[68](index=68&type=chunk) - The increase was primarily due to **$19.1 million in accretion** for the period, partially offset by **$14.3 million in expenditures**[68](index=68&type=chunk) Asset Retirement Obligations (in thousands) | Metric (in thousands) | Dec 31, 2022 | Sep 30, 2023 | Change (%) | | :-------------------- | :----------- | :----------- | :--------- | | Total asset retirement obligations | $179,011 | $183,845 | 2.7% | | Accretion for the period | N/A | $19,129 | N/A | | Expenditures for the period | N/A | $(14,252) | N/A | [(11) Fair Value of Financial Instruments and Fair Value Measurements](index=20&type=section&id=(11)%20Fair%20Value%20of%20Financial%20Instruments%20and%20Fair%20Value%20Measurements) This note discusses the fair value measurements of financial instruments, including trading securities and the previously outstanding Contingent Revenue Obligation - The estimated fair values of financial instruments are determined based on relevant market information, with estimates involving uncertainty[70](index=70&type=chunk) - Trading securities are classified as Level 2, with fair values obtained from a third-party pricing service provider based on observable market inputs[78](index=78&type=chunk) - The Contingent Revenue Obligation, previously a Level 3 measurement, was estimated using a Black-Scholes pricing model and was fully paid during the first quarter of 2023[79](index=79&type=chunk) [(12) Income Taxes](index=21&type=section&id=(12)%20Income%20Taxes) This note provides details on the company's income tax expense and the effective tax rate, explaining differences from the statutory rate - For the nine months ended September 30, 2023, the Company recorded **income tax expense of $95.0 million** on income before income taxes of **$640.9 million**[14](index=14&type=chunk)[80](index=80&type=chunk) - The income tax expense differs from the expected statutory amount primarily due to the permanent impact of percentage depletion and foreign-derived intangible income deductions[80](index=80&type=chunk) Income Taxes (in thousands) | Metric (in thousands) | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | Change (%) | | :-------------------- | :-------------------------- | :-------------------------- | :--------- | | Income before income taxes | $640,913 | $1,341,818 | (52.2)% | | Income tax expense | $94,973 | $113,953 | (16.7)% | [(13) Employee Benefit Plans](index=21&type=section&id=(13)%20Employee%20Benefit%20Plans) This note outlines the net periodic benefit costs for the company's pension, black lung, and self-insured medical plans - Net periodic benefit cost for pension obligations was **$2.03 million** for the nine months ended September 30, 2023, compared to a credit of **$(7.98) million** in the prior year[83](index=83&type=chunk) - **Black lung net periodic benefit cost decreased by 41.8% to $2.87 million** for the nine months ended September 30, 2023, from **$4.93 million YoY**[86](index=86&type=chunk) Employee Benefit Plans (in thousands) | Metric (in thousands) | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | Change (%) | | :-------------------- | :-------------------------- | :-------------------------- | :--------- | | Pension Net Periodic Benefit Cost (Credit) | $2,030 | $(7,981) | N/A | | Black Lung Net Periodic Benefit Cost | $2,871 | $4,927 | (41.8)% | | Self-insured Medical Plan Expenses | $61,866 | $49,334 | 25.4% | [(14) Related Party Transactions](index=22&type=section&id=(14)%20Related%20Party%20Transactions) This note confirms the absence of material related party transactions for the reported periods - There were no material related party transactions for the nine months ended September 30, 2023 or 2022[88](index=88&type=chunk) [(15) Commitments and Contingencies](index=22&type=section&id=(15)%20Commitments%20and%20Contingencies) This note discusses the company's commitments and contingencies, including legal proceedings, coal royalty expenses, and surety bonds - Estimated losses from loss contingencies are accrued when probable and reasonably estimable; otherwise, disclosure is made if a material loss is reasonably possible[89](index=89&type=chunk) - **Coal royalty expense decreased by 11.4%** for the three months and **21.8%** for the nine months ended September 30, 2023, compared to the prior year periods[90](index=90&type=chunk) - As of September 30, 2023, the Company had **$175.3 million in outstanding surety bonds** and **$60.9 million in letters of credit** to secure various obligations, including reclamation, workers' compensation, and black lung[94](index=94&type=chunk)[95](index=95&type=chunk) - The U.S. Department of Labor's proposed new regulations could substantially increase collateral required for self-insured federal black lung obligations to **$80 million to $100 million**, which could materially adversely affect liquidity[102](index=102&type=chunk)[224](index=224&type=chunk)[225](index=225&type=chunk) [(16) Segment Information](index=25&type=section&id=(16)%20Segment%20Information) This note provides financial information for the company's single reportable segment, Met, detailing revenues, Adjusted EBITDA, and capital expenditures - The Company operates one reportable segment, Met, which consists of **21 active mines and 8 preparation plants** in Virginia and West Virginia, primarily producing metallurgical coal[105](index=105&type=chunk)[138](index=138&type=chunk) - The 'All Other' category includes general corporate overhead, former CAPP - Thermal operations, and intercompany eliminations[106](index=106&type=chunk) Segment Information (in thousands) | Metric (in thousands) | 3 Months Ended Sep 30, 2023 (Met) | 3 Months Ended Sep 30, 2022 (Met) | Change (%) | 9 Months Ended Sep 30, 2023 (Met) | 9 Months Ended Sep 30, 2022 (Met) | Change (%) | | :-------------------- | :-------------------------------- | :-------------------------------- | :--------- | :-------------------------------- | :-------------------------------- | :--------- | | Total Revenues | $733,536 | $841,958 | (12.9)% | $2,461,274 | $3,217,588 | (23.5)% | | Adjusted EBITDA | $172,414 | $301,556 | (42.8)% | $803,517 | $1,521,089 | (47.2)% | | Capital Expenditures | $54,237 | $32,623 | 66.2% | $177,813 | $99,979 | 77.8% | [(17) Subsequent Events](index=28&type=section&id=(17)%20Subsequent%20Events) This note discloses significant events occurring after the balance sheet date, including changes to the share repurchase program, dividend declarations, and debt refinancing - On October 31, 2023, the Board approved an additional **$300 million increase** to the share repurchase program, bringing the total authorization to **$1.5 billion**[50](index=50&type=chunk)[121](index=121&type=chunk) - A quarterly cash dividend of **$0.50 per share** was declared on October 31, 2023, payable on December 15, 2023[53](index=53&type=chunk)[121](index=121&type=chunk) - The Company terminated its existing ABL Agreement and entered into a new ABL Facility on October 27, 2023[62](index=62&type=chunk)[121](index=121&type=chunk) [Glossary](index=29&type=section&id=Glossary) This section provides definitions for key terms used throughout the report, including industry-specific terminology related to coal mining, financial metrics, and regulatory bodies, to ensure clarity and understanding for readers - The glossary defines industry-specific terms such as 'Ash,' 'Bituminous coal,' 'BTU,' 'CAPP,' 'Coal reserves,' 'Coke,' 'ESG,' 'Metallurgical coal,' 'MSHA,' 'Operating Margin,' 'Reclamation,' 'Thermal coal,' and various types of mines[123](index=123&type=chunk)[124](index=124&type=chunk)[125](index=125&type=chunk)[126](index=126&type=chunk)[127](index=127&type=chunk)[128](index=128&type=chunk)[129](index=129&type=chunk)[130](index=130&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=31&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides a narrative discussion and analysis of the company's financial condition and results of operations for the three and nine months ended September 30, 2023 and 2022, including market overview, business developments, factors affecting results, and liquidity [Market Overview](index=31&type=section&id=Market%20Overview) This section provides an overview of global metallurgical coal markets, including pricing trends and crude steel production data - Global metallurgical coal markets strengthened in Q3 2023 despite economic pressures and geopolitical conflicts, driven by tight supply and expected slow but increasing steel demand in 2024[134](index=134&type=chunk) Metallurgical Coal Index Prices (per metric ton) | Index (per metric ton) | July 1, 2023 | Sep 30, 2023 | Change | | :--------------------- | :----------- | :----------- | :----- | | Australian Premium Low Volatile | $233.00 | $333.00 | 43.0% | | U.S. East Coast Low Volatile | $227.00 | $258.00 | 13.7% | | U.S. East Coast High Volatile A | $216.00 | $288.00 | 33.3% | | U.S. East Coast High Volatile B | $206.00 | $238.00 | 15.5% | - Global crude steel production decreased by **1.5%** in September 2023 YoY, with China down **5.6%**, but India and South Korea posted significant increases of **18.2%**[136](index=136&type=chunk) [Business Overview](index=32&type=section&id=Business%20Overview) This section provides an overview of Alpha Metallurgical Resources' operations, including its role as a leading U.S. metallurgical coal supplier and key sales metrics - Alpha Metallurgical Resources is a leading U.S. supplier of metallurgical coal, operating **21 active mines and 8 preparation plants** in Central Appalachia (CAPP) with approximately **4,030 employees**[138](index=138&type=chunk) - Met coal sales accounted for approximately **89% and 90%** of total coal sales volume for the three and nine months ended September 30, 2023, respectively[139](index=139&type=chunk) - Approximately **70% and 72%** of coal revenues for the three and nine months ended September 30, 2023, respectively, were derived from export sales to customers outside the United States[140](index=140&type=chunk) [Other Business Developments](index=33&type=section&id=Other%20Business%20Developments) This section highlights recent strategic business developments, including the transition to a pure-play metallurgical producer and equipment acquisitions - In August 2023, the Company completed its transition to a pure-play metallurgical producer with the cessation of mining at its last thermal coal mine, Slabcamp[145](index=145&type=chunk) - In January 2023, subsidiary Maxxim Rebuild Co., LLC acquired coal trucks and related equipment to secure trucking services for operations[145](index=145&type=chunk) [Factors Affecting Our Results of Operations](index=33&type=section&id=Factors%20Affecting%20Our%20Results%20of%20Operations) This section discusses key factors influencing the company's operating results, including commodity price risk, cost management, and operational challenges - The Company manages commodity price risk for coal sales through coal supply agreements, with realized prices influenced by coal quality, transportation costs, and regional supply and demand[146](index=146&type=chunk) - Operating results are dependent on maximizing productivity and controlling costs, with primary expenses including operating supply costs, repair and maintenance, purchased coal, royalties, wages, benefits, freight, and taxes[147](index=147&type=chunk) - The Company experiences volatility in operating costs related to fuel, explosives, steel, tires, and contract services, and faces risks from difficult geologic conditions, permit delays, labor shortages, and equipment problems[147](index=147&type=chunk) [Results of Operations](index=33&type=section&id=Results%20of%20Operations) [Three Months Ended September 30, 2023 Compared to the Three Months Ended September 30, 2022](index=33&type=section&id=Three%20Months%20Ended%20September%2030,%202023%20Compared%20to%20the%20Three%20Months%20Ended%20September%2030,%202022) [Revenues](index=33&type=section&id=Revenues_3M) This section analyzes the company's revenue performance for the three months ended September 30, 2023, compared to the prior year period - **Coal revenues decreased by $128.9 million (14.8%)** for the three months ended September 30, 2023, primarily due to a **17.6% reduction in average coal sales realization** within the Met segment[151](index=151&type=chunk) - Total tons sold increased by **1.9% to 4,225 thousand tons** for the three months ended September 30, 2023[151](index=151&type=chunk) Revenues (in thousands) | Metric (in thousands) | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 30, 2022 | Change ($) | Change (%) | | :-------------------- | :-------------------------- | :-------------------------- | :--------- | :--------- | | Coal revenues | $738,998 | $867,849 | $(128,851) | (14.8)% | | Other revenues | $2,822 | $1,919 | $903 | 47.1% | | Total revenues | $741,820 | $869,768 | $(127,948) | (14.7)% | | Tons sold | 4,225 | 4,145 | 80 | 1.9% | [Cost and Expenses](index=34&type=section&id=Cost%20and%20Expenses_3M) This section analyzes the company's costs and expenses for the three months ended September 30, 2023, compared to the prior year period - **Total costs and expenses increased by 2.9% to $624.7 million** for the three months ended September 30, 2023[152](index=152&type=chunk) - Cost of coal sales increased by **1.9%** due to higher coal sales volumes, while depreciation, depletion and amortization increased by **16.7%** due to capital expenditures[152](index=152&type=chunk)[153](index=153&type=chunk) Cost and Expenses (in thousands) | Metric (in thousands) | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 30, 2022 | Change ($) | Change (%) | | :-------------------- | :-------------------------- | :-------------------------- | :--------- | :--------- | | Cost of coal sales | $564,608 | $554,055 | $10,553 | 1.9% | | Depreciation, depletion and amortization | $32,582 | $27,925 | $4,657 | 16.7% | | Amortization of acquired intangibles, net | $2,069 | $4,543 | $(2,474) | (54.5)% | | Selling, general and administrative expenses | $18,053 | $15,095 | $2,958 | 19.6% | | Mark-to-market adjustment for acquisition-related obligations | $0 | $(2,954) | $2,954 | 100.0% | | Total costs and expenses | $624,661 | $607,298 | $17,363 | 2.9% | [Total Other Expense, Net](index=35&type=section&id=Total%20Other%20Expense,%20Net_3M) This section analyzes the company's total other expense, net, for the three months ended September 30, 2023, compared to the prior year period - **Total other expense, net, increased by 11.7% to $4.38 million** for the three months ended September 30, 2023, compared to **$3.92 million** in the prior year period[156](index=156&type=chunk) Total Other Expense, Net (in thousands) | Metric (in thousands) | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 30, 2022 | Change ($) | Change (%) | | :-------------------- | :-------------------------- | :-------------------------- | :--------- | :--------- | | Total other expense, net | $4,381 | $3,923 | $458 | 11.7% | [Income Tax Expense](index=35&type=section&id=Income%20Tax%20Expense_3M) This section analyzes the company's income tax expense for the three months ended September 30, 2023, compared to the prior year period - **Income tax expense increased significantly by 231.0% to $19.0 million** for the three months ended September 30, 2023, on income before income taxes of **$112.8 million**[158](index=158&type=chunk) - The effective tax rate differs from the federal statutory rate of **21%** primarily due to the permanent impact of percentage depletion and foreign-derived intangible income deductions[158](index=158&type=chunk) Income Tax Expense (in thousands) | Metric (in thousands) | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 30, 2022 | Change ($) | Change (%) | | :-------------------- | :-------------------------- | :-------------------------- | :--------- | :--------- | | Income tax expense | $18,964 | $5,730 | $13,234 | 231.0% | [Non-GAAP Financial Measures](index=35&type=section&id=Non-GAAP%20Financial%20Measures_3M) This section provides an analysis of non-GAAP financial measures for the three months ended September 30, 2023, focusing on the Met segment's performance - **Met segment non-GAAP coal revenues decreased by 11.3%** for the three months ended September 30, 2023, primarily due to a **16.0% reduction in average non-GAAP coal sales realization per ton**, despite a **5.6% increase in tons sold**[168](index=168&type=chunk) - **Met segment non-GAAP coal margin per ton decreased by 43.6% to $44.78**, while **Met segment Adjusted EBITDA decreased by 42.8% to $172.4 million**[170](index=170&type=chunk)[176](index=176&type=chunk) Non-GAAP Financial Measures (in thousands, except per ton) | Metric (in thousands, except per ton) | 3 Months Ended Sep 30, 2023 (Met) | 3 Months Ended Sep 30, 2022 (Met) | Change (%) | | :------------------------------------ | :-------------------------------- | :-------------------------------- | :--------- | | Tons sold | 4,115 | 3,896 | 5.6% | | Non-GAAP Coal revenues | $636,711 | $718,053 | (11.3)% | | Non-GAAP Coal sales realization per ton | $154.73 | $184.31 | (16.0)% | | Non-GAAP Cost of coal sales | $452,460 | $408,553 | 10.7% | | Non-GAAP Cost of coal sales per ton | $109.95 | $104.86 | 4.9% | | Non-GAAP Coal margin per ton | $44.78 | $79.44 | (43.6)% | | Adjusted EBITDA | $172,414 | $301,556 | (42.8)% | [Nine Months Ended September 30, 2023 Compared to the Nine Months Ended September 30, 2022](index=39&type=section&id=Nine%20Months%20Ended%20September%2030,%202023%20Compared%20to%20the%20Nine%20Months%20Ended%20September%2030,%202022) [Revenues](index=39&type=section&id=Revenues_9M) This section analyzes the company's revenue performance for the nine months ended September 30, 2023, compared to the prior year period - **Coal revenues decreased by $772.3 million (23.6%)** for the nine months ended September 30, 2023, primarily due to a **25.4% reduction in average coal sales realization** within the Met segment[179](index=179&type=chunk) - Total tons sold remained stable at **12,488 thousand tons** for the nine months ended September 30, 2023[179](index=179&type=chunk) Revenues (in thousands) | Metric (in thousands) | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | Change ($) | Change (%) | | :-------------------- | :-------------------------- | :-------------------------- | :--------- | :--------- | | Coal revenues | $2,499,503 | $3,271,845 | $(772,342) | (23.6)% | | Other revenues | $11,923 | $6,299 | $5,624 | 89.3% | | Total revenues | $2,511,426 | $3,278,144 | $(766,718) | (23.4)% | | Tons sold | 12,488 | 12,497 | (9) | (0.1)% | [Cost and Expenses](index=40&type=section&id=Cost%20and%20Expenses_9M) This section analyzes the company's costs and expenses for the nine months ended September 30, 2023, compared to the prior year period - **Total costs and expenses decreased by 2.7% to $1.86 billion** for the nine months ended September 30, 2023[181](index=181&type=chunk) - Cost of coal sales decreased by **2.9%** due to lower royalties, taxes, and freight, offsetting inflationary pressures. Depreciation, depletion, and amortization increased by **12.6%**, while amortization of acquired intangibles decreased by **59.7%**[181](index=181&type=chunk)[182](index=182&type=chunk) Cost and Expenses (in thousands) | Metric (in thousands) | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | Change ($) | Change (%) | | :-------------------- | :-------------------------- | :-------------------------- | :--------- | :--------- | | Cost of coal sales | $1,687,259 | $1,736,826 | $(49,567) | (2.9)% | | Depreciation, depletion and amortization | $94,231 | $83,690 | $10,541 | 12.6% | | Amortization of acquired intangibles, net | $6,458 | $16,038 | $(9,580) | (59.7)% | | Selling, general and administrative expenses | $56,251 | $48,339 | $7,912 | 16.4% | | Mark-to-market adjustment for acquisition-related obligations | $0 | $10,615 | $(10,615) | (100.0)% | | Total costs and expenses | $1,861,663 | $1,913,899 | $(52,236) | (2.7)% | [Total Other Expense, Net](index=41&type=section&id=Total%20Other%20Expense,%20Net_9M) This section analyzes the company's total other expense, net, for the nine months ended September 30, 2023, compared to the prior year period - **Total other expense, net, decreased by 60.5% to $8.85 million** for the nine months ended September 30, 2023, primarily due to decreased interest expense from a reduction in outstanding debt[185](index=185&type=chunk) Total Other Expense, Net (in thousands) | Metric (in thousands) | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | Change ($) | Change (%) | | :-------------------- | :-------------------------- | :-------------------------- | :--------- | :--------- | | Total other expense, net | $8,850 | $22,427 | $(13,577) | (60.5)% | [Income Tax Expense](index=41&type=section&id=Income%20Tax%20Expense_9M) This section analyzes the company's income tax expense for the nine months ended September 30, 2023, compared to the prior year period - **Income tax expense decreased by 16.7% to $95.0 million** for the nine months ended September 30, 2023, on income before income taxes of **$640.9 million**[186](index=186&type=chunk) - The effective tax rate differs from the federal statutory rate of **21%** primarily due to the permanent impact of percentage depletion and foreign-derived intangible income deductions[186](index=186&type=chunk) Income Tax Expense (in thousands) | Metric (in thousands) | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | Change ($) | Change (%) | | :-------------------- | :-------------------------- | :-------------------------- | :--------- | :--------- | | Income tax expense | $94,973 | $113,953 | $(18,980) | (16.7)% | [Non-GAAP Financial Measures](index=41&type=section&id=Non-GAAP%20Financial%20Measures_9M) This section provides an analysis of non-GAAP financial measures for the nine months ended September 30, 2023, focusing on the Met segment's performance - **Met segment non-GAAP coal revenues decreased by 23.6%** for the nine months ended September 30, 2023, due to a **25.3% reduction in average non-GAAP coal sales realization per ton**, despite a **2.3% increase in tons sold**[196](index=196&type=chunk) - **Met segment non-GAAP coal margin per ton decreased by 47.5% to $68.86**, while **Met segment Adjusted EBITDA decreased by 47.2% to $803.5 million**[198](index=198&type=chunk)[203](index=203&type=chunk) Non-GAAP Financial Measures (in thousands, except per ton) | Metric (in thousands, except per ton) | 9 Months Ended Sep 30, 2023 (Met) | 9 Months Ended Sep 30, 2022 (Met) | Change (%) | | :------------------------------------ | :-------------------------------- | :-------------------------------- | :--------- | | Tons sold | 12,001 | 11,726 | 2.3% | | Non-GAAP Coal revenues | $2,133,218 | $2,790,507 | (23.6)% | | Non-GAAP Coal sales realization per ton | $177.75 | $237.98 | (25.3)% | | Non-GAAP Cost of coal sales | $1,306,879 | $1,251,200 | 4.5% | | Non-GAAP Cost of coal sales per ton | $108.90 | $106.70 | 2.1% | | Non-GAAP Coal margin per ton | $68.86 | $131.27 | (47.5)% | | Adjusted EBITDA | $803,517 | $1,521,089 | (47.2)% | [Liquidity and Capital Resources](index=45&type=section&id=Liquidity%20and%20Capital%20Resources) [Overview](index=45&type=section&id=Overview_Liquidity) This section provides an overview of the company's liquidity and capital resource requirements and sources, along with management's outlook on sufficiency - The Company's primary liquidity and capital resource requirements stem from coal production, capital expenditures, debt service, reclamation obligations, taxes, and regulatory costs[205](index=205&type=chunk) - Primary sources of liquidity are derived from sales of coal, debt financing, and miscellaneous revenues[205](index=205&type=chunk) - Management believes cash on hand and cash generated from operations will be sufficient for the next 12 months, but acknowledges significant business, political, economic, regulatory, environmental, and competitive uncertainties[206](index=206&type=chunk) [Liquidity](index=46&type=section&id=Liquidity_Current) This section details the company's total liquidity as of September 30, 2023, including cash and credit facility availability - As of September 30, 2023, **total liquidity was $390.1 million**, comprising **$296.1 million in cash and cash equivalents** and **$94.1 million in credit facility availability**[208](index=208&type=chunk) Total Liquidity (in thousands) | Metric (in thousands) | September 30, 2023 | | :-------------------- | :----------------- | | Cash and cash equivalents | $296,059 | | Credit facility availability | $94,073 | | Total liquidity | $390,132 | [Cash Collateral](index=46&type=section&id=Cash%20Collateral) This section outlines the company's cash collateral held to secure various obligations as of September 30, 2023 - As of September 30, 2023, the Company had **$161.9 million in total cash collateral**, including long-term restricted cash, long-term restricted investments, and deposits[210](index=210&type=chunk) - This collateral secures obligations under workers' compensation, black lung, reclamation-related obligations, financial payments, and other performance obligations[209](index=209&type=chunk) Cash Collateral (in thousands) | Metric (in thousands) | September 30, 2023 | | :-------------------- | :----------------- | | Long-term restricted cash | $83,004 | | Long-term restricted investments | $71,269 | | Short-term and long-term deposits | $7,605 | | Total cash collateral | $161,878 | [Off-Balance Sheet Arrangements](index=46&type=section&id=Off-Balance%20Sheet%20Arrangements) This section describes the company's off-balance sheet arrangements, including surety bonds and letters of credit, and their potential impact on liquidity - As of September 30, 2023, the Company had **$175.3 million in outstanding surety bonds** and **$60.9 million in letters of credit** to provide financial assurance for post-mining reclamation, workers' compensation, and federal black lung benefits[212](index=212&type=chunk) - The Company's failure to maintain or acquire surety bonds or suitable alternatives could have a material adverse effect on its liquidity[96](index=96&type=chunk) Off-Balance Sheet Arrangements (in thousands) | Metric (in thousands) | September 30, 2023 | | :-------------------- | :----------------- | | Surety bonds | $175,339 | | Letters of credit | $60,927 | [Debt Financing and Related Transactions](index=47&type=section&id=Debt%20Financing%20and%20Related%20Transactions) This section details the company's debt financing activities, including outstanding borrowings and the refinancing of its ABL Agreement - As of September 30, 2023, there were no outstanding borrowings under the ABL Facility, but **$60.9 million in letters of credit were outstanding**[213](index=213&type=chunk) - On October 27, 2023, the Company refinanced its ABL Agreement, entering into a new ABL Facility with a maturity date of October 27, 2027[62](index=62&type=chunk)[214](index=214&type=chunk) [Acquisition-Related Obligations](index=47&type=section&id=Acquisition-Related%20Obligations_Liquidity) This section discusses the status of the company's acquisition-related obligations, including the final payment of the Contingent Revenue Obligation - The Company paid the final calculated payment for the Contingent Revenue Obligation during the first quarter of 2023[215](index=215&type=chunk) - As of September 30, 2023, the Company had **$0.2 million of acquisition-related obligations outstanding**[215](index=215&type=chunk) [Capital Requirements](index=47&type=section&id=Capital%20Requirements) This section outlines the company's capital expenditures and future investment plans, including significant investments for facility upgrades - Capital expenditures for the nine months ended September 30, 2023, were **$183.8 million**, with full-year 2023 expenditures expected to be between **$250.0 million and $280.0 million**[216](index=216&type=chunk) - The Company expects to spend between **$40.0 million and $50.0 million** on capital contributions for equity affiliates in 2024, including significant investments for Dominion Terminal Associates (DTA) facility upgrades[219](index=219&type=chunk)[220](index=220&type=chunk) Capital Expenditures (in millions) | Metric (in millions) | 9 Months Ended Sep 30, 2023 | Full-Year 2023 Estimate | | :------------------- | :-------------------------- | :---------------------- | | Capital expenditures | $183.8 | $250.0 - $280.0 | [Contractual Obligations](index=47&type=section&id=Contractual%20Obligations) This section confirms that there have been no material changes to the company's contractual obligations during the reported period - There have been no material changes to the Company's contractual obligations during the nine months ended September 30, 2023, as discussed in the Annual Report on Form 10-K for the year ended December 31, 2022[217](index=217&type=chunk) [Business Updates](index=47&type=section&id=Business%20Updates) This section provides updates on the company's credit ratings, strategic investments, and potential liquidity risks - S&P Global Ratings upgraded the Company's issuer credit rating to **B+ with a stable outlook** in August 2023, and Moody's Investors Service upgraded its Corporate Family Rating to **B1 with a stable outlook** in July 2023[218](index=218&type=chunk) - The Company is evaluating significant capital investments for its **65% owned Dominion Terminal Associates (DTA) coal export terminal** to maximize functionality and minimize downtime[219](index=219&type=chunk) - Negative outlook ratings in the future could result in potential liquidity risks, including declines in stock value, reduced cash, higher credit costs, and demands for additional collateral[218](index=218&type=chunk) [Income Taxes](index=48&type=section&id=Income%20Taxes_Liquidity) This section details the company's federal income taxes payable as of September 30, 2023 - As of September 30, 2023, the Company has recorded federal income taxes payable of **$8.6 million**[59](index=59&type=chunk)[223](index=223&type=chunk) [Pension Plans](index=48&type=section&id=Pension%20Plans) This section outlines the company's expectations regarding future contributions to its pension plans - The Company does not expect to have any additional contributions to the pension plans for the remainder of 2023[223](index=223&type=chunk) [DCMWC Reauthorization Process](index=48&type=section&id=DCMWC%20Reauthorization%20Process) This section discusses the potential impact of new Department of Labor regulations on the company's black lung collateral obligations and liquidity - The U.S. Department of Labor's proposed new regulations could substantially increase the collateral required for self-insured federal black lung obligations to an estimated **$80 million to $100 million**[224](index=224&type=chunk)[225](index=225&type=chunk) - This significant increase in collateral obligations could have a materially adverse effect on the Company's liquidity[225](index=225&type=chunk) - The Company has appealed an earlier DCMWC determination requiring **$65.7 million in collateral**, which represents a **2,400% increase** from previous levels[223](index=223&type=chunk)[224](index=224&type=chunk) [Share Repurchase Program](index=49&type=section&id=Share%20Repurchase%20Program_Liquidity) This section provides an update on the company's share repurchase program, including recent authorization increases - The Board approved an additional **$300 million increase** to the share repurchase program on October 31, 2023, bringing the total authorization to **$1.5 billion**[50](index=50&type=chunk)[226](index=226&type=chunk) [Dividend Program](index=49&type=section&id=Dividend%20Program_Liquidity) This section details the company's decision to end its fixed dividend program and the declaration of its final quarterly dividend - The Board determined to end the fixed dividend program following the quarterly dividend declared and to be paid in the fourth quarter of 2023[52](index=52&type=chunk)[227](index=227&type=chunk) - A quarterly cash dividend of **$0.50 per share** was declared on October 31, 2023, payable on December 15, 2023[53](index=53&type=chunk)[227](index=227&type=chunk) [Cash Flows](index=49&type=section&id=Cash%20Flows) This section analyzes the company's cash flow activities for the nine months ended September 30, 2023, compared to the prior year period - **Net cash provided by operating activities decreased by 49.8% YoY to $651.8 million** for the nine months ended September 30, 2023, primarily due to lower coal sale realizations[229](index=229&type=chunk) - Net cash used in investing activities decreased by **30.6% YoY**, while net cash used in financing activities decreased by **40.6% YoY**, primarily due to lower principal repayments of long-term debt[229](index=229&type=chunk)[230](index=230&type=chunk) Cash Flows (in thousands) | Metric (in thousands) | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | Change (%) | | :-------------------- | :-------------------------- | :-------------------------- | :--------- | | Net cash provided by operating activities | $651,806 | $1,299,037 | (49.8)% | | Net cash used in investing activities | $(126,637) | $(182,564) | (30.6)% | | Net cash used in financing activities | $(501,500) | $(844,133) | (40.6)% | | Net increase in cash and cash equivalents and restricted cash | $23,669 | $272,340 | (91.3)% | [Analysis of Material Debt Covenants](index=49&type=section&id=Analysis%20of%20Material%20Debt%20Covenants) This section confirms the company's compliance with debt covenants as of September 30, 2023, and discusses potential implications of a breach - As of September 30, 2023, the Company was in compliance with all covenants under the ABL Agreement[231](index=231&type=chunk) - A breach of covenants could result in a default and acceleration of amounts borrowed. The Fixed Charge Coverage Ratio covenant was not applicable as the Company was not in a Liquidity Period[231](index=231&type=chunk)[232](index=232&type=chunk) [Critical Accounting Policies and Estimates](index=50&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) This section discusses the company's critical accounting policies and estimates, emphasizing the use of judgment and assumptions in financial reporting - The preparation of financial statements requires management to make estimates and assumptions based on historical experience and current economic conditions, which are continuously evaluated[234](index=234&type=chunk) - The Company's critical accounting policies remain unchanged as of September 30, 2023, from those discussed in its Annual Report on Form 10-K for the year ended December 31, 2022[235](index=235&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=50&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) This item discusses the company's exposure to market risks, including commodity price risk for coal sales and supplies, interest rate risk on its revolving credit facility and investments, and foreign currency risk due to international sales denominated in U.S. dollars [Commodity Price Risk](index=50&type=section&id=Commodity%20Price%20Risk) This section describes how the company manages commodity price risk for both coal sales and key operating supplies - The Company manages commodity price risk for coal sales through coal supply agreements and for supplies (diesel fuel, steel, explosives) through strategic sourcing contracts[236](index=236&type=chunk) Budgeted Diesel Fuel Usage | Metric | 2023 Budgeted Diesel Fuel Usage | 2024 Budgeted Diesel Fuel Usage | | :----- | :------------------------------ | :------------------------------ | | Gallons | 23.9 million | 23.3 million | | % Priced | 94.6% | 42.4% | | Average Realized Price per Gallon | $3.49 | $3.46 | [Interest Rate Risk](index=50&type=section&id=Interest%20Rate%20Risk) This section discusses the company's exposure to interest rate risk on its debt and investments - The Company's ABL Facility bears a floating rate of interest on cash borrowings, though no cash borrowings were outstanding as of September 30, 2023[238](index=238&type=chunk) - Investments in trading securities (**$71.3 million** as of September 30, 2023) are primarily in shorter-term, highly rated debt obligations (U.S. government securities) to manage interest rate risk[239](index=239&type=chunk) [Foreign Currency Risk](index=50&type=section&id=Foreign%20Currency%20Risk) This section addresses the company's foreign currency risk exposure, primarily through indirect impacts on competitiveness - The Company's transactions are denominated in U.S. dollars, limiting direct foreign currency exchange-rate risks[241](index=241&type=chunk) - However, fluctuations in foreign currencies against the U.S. dollar could provide foreign competitors with a competitive advantage or lead to demands for decreased prices from overseas customers, adversely affecting competitiveness and financial results[241](index=241&type=chunk) [Item 4. Controls and Procedures](index=51&type=section&id=Item%204.%20Controls%20and%20Procedures) This item confirms that the CEO and CFO evaluated the effectiveness of disclosure controls and procedures as of September 30, 2023, concluding they were effective. There were no material changes in internal control over financial reporting during the period [Evaluation of Disclosure Controls and Procedures](index=51&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) This section details the evaluation of the company's disclosure controls and procedures by its CEO and CFO - The CEO and CFO concluded that the Company's disclosure controls and procedures were effective as of September 30, 2023[242](index=242&type=chunk) - Disclosure controls and procedures are designed to ensure timely recording, processing, summarizing, and reporting of information required for SEC filings[242](index=242&type=chunk) [Changes in Internal Control Over Financial Reporting](index=51&type=section&id=Changes%20in%20Internal%20Control%20Over%20Financial%20Reporting) This section confirms that there were no material changes in the company's internal control over financial reporting during the reported period - There were no changes in internal control over financial reporting during the period covered by this Quarterly Report on Form 10-Q that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting[243](index=243&type=chunk) [Inherent Limitations on Effectiveness of Disclosure Controls and Procedures](index=51&type=section&id=Inherent%20Limitations%20on%20Effectiveness%20of%20Disclosure%20Controls%20and%20Procedures) This section acknowledges the inherent limitations of control systems, emphasizing that they provide reasonable, not absolute, assurance - Management acknowledges that control systems, no matter how well designed and operated, can provide only reasonable, not absolute, assurance and may not prevent or detect all errors and fraud due to inherent limitations[244](index=244&type=chunk) Part II - Other Information [Item 1. Legal Proceedings](index=51&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in legal proceedings from time to time, including contract disputes, personal injury claims, environmental issues, and employment matters. Accruals are recorded for probable and estimable losses, but many claims involve unquantified damages and significant judgment - The Company is party to various legal proceedings, including contract disputes, personal injury claims, property damage claims, environmental and safety issues, securities-related matters, and employment matters[103](index=103&type=chunk) - Estimated losses from loss contingencies are accrued when probable and reasonably estimable, but many claims involve unquantified damages and significant judgment, making estimates difficult[103](index=103&type=chunk) [Item 1A. Risk Factors](index=51&type=section&id=Item%201A.%20Risk%20Factors) This section highlights a key risk factor: disruptions in transportation services or port facilities, and increased transportation costs, could impair the company's ability to supply coal, reduce demand, and adversely affect its business. This includes reliance on single rail carriers and the Dominion Termin

Financial Data and Key Metrics Changes - Second quarter adjusted EBITDA was $258 million, down from $354 million in the first quarter [10] - Sold 4.3 million tons in the quarter, with 4.1 million from the Met segment and 200,000 from All Other [10] - Average realization for the Met segment decreased to $172.51 per ton in Q2 from $208.93 in Q1 [10] - Unrestricted cash increased to $312.4 million from $222.5 million at the end of Q1 [13] - Cash provided by operating activities increased to $317.2 million in Q2 from $177.4 million in Q1 [13] Business Line Data and Key Metrics Changes - Realization for metallurgical sales in Q2 was $176.04 per ton, down approximately 17% from $213.21 per ton in Q1 [11] - Cost of coal sales in the Met segment decreased to $106.35 per ton from $110.56 per ton in Q1 [11] - Cost of coal sales in the All Other category increased to $88.59 per ton from $74.69 per ton in Q1 [11] - CapEx for Q2 was $54.9 million, down from $74.2 million in Q1, with a full-year guidance range of $250 million to $280 million [12] Market Data and Key Metrics Changes - Metallurgical coal markets have softened due to economic and geopolitical factors, with indices decreasing by 20% or more in Q2 [21][22] - The Australian premium low-vol index decreased from $300 per metric ton at the start of the quarter to $233 by June 30 [22] - The thermal market also saw significant price drops, with the API2 index falling from $146.55 per metric ton on April 1 to $122 by June 30 [23] Company Strategy and Development Direction - The company plans to focus exclusively on share buybacks, ceasing the dividend program after the next declaration [8][15] - Management aims to optimize output based on customer market needs and control costs amid ongoing volatility in coal markets [6][7] - Transitioning to a pure-play metallurgical coal company as the last thermal coal mine, Slabcamp, is set to idle by August 31, 2023 [19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating market volatility and anticipated further softness in coal pricing due to economic factors [6][21] - The company is focused on safely producing coal and optimizing operations despite challenges in labor costs and supply chain inflation [17][18] - Future discussions with domestic customers regarding contracts for 2024 are underway, with expectations for a productive dialogue [24] Other Important Information - The company has returned over $850 million to shareholders through buybacks since the program's inception [7][16] - As of July 31, 2023, the number of common stock shares outstanding was approximately 13.7 million, a reduction of roughly 26% since the buyback program began [16] Q&A Session Summary Question: Assessment of the seaborne market and opportunities - The market has seen a summer lull, but opportunities in Asia remain selective, with a focus on contract positions to avoid lower-priced spot markets [29] Question: Domestic market sales flexibility - Historical sales into the domestic market can range between 3 million and 5 million tons, depending on steel industry conditions [30][32] Question: Inflationary pressures and easing costs - Cost pressures continue across the board, particularly in labor, but supply chain constraints have improved, leading to potential future cost relief [35][38] Question: Dividend reinstatement conditions - Dividend reinstatement would depend on market valuation, with a current focus on share buybacks until appropriate valuation is achieved [50] Question: Interest in vertical integration from steelmakers - There is ongoing discussion about vertical integration, but no significant actions have materialized in the current market environment [54]

Financial Performance - Coal revenues for Q2 2023 were $853.8 million, down 36% from $1.3 billion in Q2 2022[10] - Total revenues for the first half of 2023 were $1.77 billion, a decrease of 26% compared to $2.41 billion in the same period of 2022[10] - Net income for Q2 2023 was $181.4 million, a decline of 68% from $574.2 million in Q2 2022[12] - Basic income per common share for Q2 2023 was $12.63, down from $31.24 in Q2 2022[10] - The company reported a total comprehensive income of $178.1 million for Q2 2023, compared to $570.2 million in Q2 2022[12] - Net income for the six months ended June 30, 2023, was $452,126, a decrease of 53.7% compared to $975,048 for the same period in 2022[18] - Total revenues for the three months ended June 30, 2023, were $858,371,000, a decrease from $1,336,412,000 in the same period of 2022, representing a decline of approximately 36%[102][103] - Total revenues fell by $478.0 million, or 35.8%, to $858.4 million for the three months ended June 30, 2023, from $1.3 billion in the prior year[148] - Total revenues decreased by $638.8 million, or 26.5%, to $1.77 billion for the six months ended June 30, 2023, compared to the prior year period[181] Assets and Liabilities - Total current assets as of June 30, 2023, were $1.08 billion, a slight decrease from $1.11 billion at the end of 2022[14] - Total assets increased to $2.36 billion as of June 30, 2023, compared to $2.31 billion at the end of 2022[14] - Total liabilities decreased to $791.1 million from $882.7 million at the end of 2022[14] - Total stockholders' equity increased to $1.57 billion as of June 30, 2023, from $1.43 billion at the end of 2022[16] - Total accrued expenses and other current liabilities decreased from $265,256 as of December 31, 2022, to $185,738 as of June 30, 2023[55] - Long-term debt increased from $10,975 as of December 31, 2022, to $11,247 as of June 30, 2023, with the long-term portion net of current liabilities at $7,761[57] Cash Flow and Investments - The company’s cash and cash equivalents were $312.4 million as of June 30, 2023, up from $301.9 million at the end of 2022[14] - Net cash provided by operating activities decreased to $494,606, down 38.3% from $802,056 in the prior year[18] - The company reported a net cash used in investing activities of $(71,301), a reduction of 51.6% compared to $(147,149) in the previous year[18] - Cash and cash equivalents at the end of the period were $383,699, up 95.1% from $196,500 at the end of June 2022[20] - Total cash and cash equivalents and restricted cash at the end of the period was $383,699, compared to $196,500 in the prior year, marking a 95.1% increase[20] Coal Revenue and Sales - Total coal revenues for the three months ended June 30, 2023, were $853,807, a decrease of 34.5% compared to $1,334,258 for the same period in 2022[32][33] - Export coal revenues for the six months ended June 30, 2023, totaled $1,294,703, down from $2,040,528 in the same period of 2022, representing a decline of 36.6%[34][35] - The Company’s domestic coal revenues for the three months ended June 30, 2023, were $237,235, compared to $188,255 for the same period in 2022, reflecting an increase of 26%[32][33] - The Company’s total coal revenues for the six months ended June 30, 2023, were $1,760,505, down from $2,403,996 in the same period of 2022, indicating a decrease of 26.8%[34][35] - Coal revenues decreased by $480.5 million, or 36.0%, to $853.8 million for the three months ended June 30, 2023, compared to $1.3 billion in the same period of 2022[149] Expenses and Costs - Capital expenditures increased significantly to $(129,111) from $(70,012), reflecting a 84.5% rise year-over-year[18] - Cost of coal sales decreased by $43.9 million, or 7.0%, to $583.5 million for the three months ended June 30, 2023, from $627.4 million in the prior year[151] - Total cost of coal sales was $1,158.9 million for the six months ended June 30, 2023, compared to $1,200.9 million in the prior year[194] - Selling, general and administrative expenses increased by $5.0 million, or 14.9%, for the six months ended June 30, 2023, primarily due to increases in stock compensation and wages[185] Dividends and Share Repurchases - The company declared a cash dividend of $0.50 per share during the quarter, totaling $(7,233) in dividends paid[23] - The Company declared a dividend of $0.44 per share for the six months ended June 30, 2023, with a total dividend paid of $6,602, and a subsequent dividend of $0.50 per share with a total of $7,001 paid[50] - The Company has repurchased a total of 5,431,356 shares for approximately $809,320 under its share repurchase program, which has a total authorization of $1,200,000[47] Market Conditions and Economic Indicators - The Australian Premium Low Volatile index decreased from $300.00 per metric ton at the start of Q2 to $233.00 per metric ton by June 30, 2023, reflecting a decline of 22.3%[129] - The U.S. East Coast Low Volatile index fell from $284.00 per metric ton at the beginning of April to $227.00 per metric ton at the end of Q2, a decrease of 20.1%[129] - The world Purchasing Managers' Index (PMI) declined to 48.8 in June 2023, indicating continued economic contraction in many regions[130] - Global crude steel production in June 2023 was 158.8 million metric tons, a slight decrease of 0.1% from June 2022[131] Operational Metrics - The Company operates 22 active mines and 8 coal preparation and load-out facilities, employing approximately 3,980 people[134] - In Q2 2023, metallurgical coal sales were 3.9 million tons, accounting for approximately 90% of total coal sales volume, compared to 3.8 million tons in Q2 2022[135] - The Company had 336.7 million tons of reserves, including 322.7 million tons of proven and probable metallurgical reserves[134] Tax and Compliance - The Company recorded an income tax expense of $76,009 on income before income taxes of $528,135 for the six months ended June 30, 2023[76] - The effective tax rate for the three months ended June 30, 2023, was impacted by the permanent effects of percentage depletion and foreign-derived intangible income deductions[158] - The Company is in compliance with all covenants under its ABL Agreement as of June 30, 2023[59]

Alpha Metallurgical Resources, Inc. (NYSE:AMR) Q1 2023 Earnings Conference Call May 8, 2023 10:00 AM ET Company Participants Emily O'Quinn - Senior Vice President, Investor Relations and Communications Andy Eidson - Chief Executive Officer Todd Munsey - Chief Financial Officer Jason Whitehead - President and Chief Operating Officer Dan Horn - Chief Commercial Officer Conference Call Participants Lucas Pipes - B. Riley Securities Nathan Martin - Benchmark Company Operator Greetings, and welcome to the Alpha ...

FORWARD LOOKING STATEMENTS This document includes forward-looking statements. These forward-looking statements are based on Alpha's expectations and beliefs concerning future events and involve risks and uncertainties that may cause actual results to differ materially from current expectations. These factors are difficult to predict accurately and may be beyond Alpha's control. The following factors are among those that may cause actual results to differ materially from our forward-looking statements: • the ...

[Cautionary Note Regarding Forward-Looking Statements](index=5&type=section&id=Cautionary%20Note%20Regarding%20Forward-Looking%20Statements) This report contains forward-looking statements subject to risks and uncertainties that could cause actual results to differ materially - This report contains forward-looking statements involving risks and uncertainties related to future prospects, developments, and business strategies. These statements are based on current expectations and are subject to factors that could cause actual results to differ materially[6](index=6&type=chunk) - Key factors that may cause actual results to differ from forward-looking statements include coal price fluctuations, transportation costs, environmental regulations, market demand for coal and steel, inflationary pressures, cybersecurity threats, and geopolitical events like the war in Ukraine[8](index=8&type=chunk)[10](index=10&type=chunk) [Part I - Financial Information](index=7&type=section&id=Part%20I%20-%20Financial%20Information) This section provides the unaudited condensed consolidated financial statements and related notes for the first quarter, detailing operations, financial position, and cash flows [Financial Statements](index=7&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements for the three-month periods ended March 31, 2023, and 2022. It includes the statements of operations, comprehensive income, balance sheets, cash flows, and stockholders' equity, along with detailed notes providing context on revenue, capital stock, commitments, and segment performance Condensed Consolidated Statements of Operations (Unaudited) | Indicator (in thousands, except per share data) | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :--- | :--- | :--- | | **Total revenues** | $911,235 | $1,071,964 | | **Income from operations** | $314,501 | $453,066 | | **Net income** | $270,771 | $400,891 | | **Diluted income per common share** | $17.01 | $20.52 | Condensed Consolidated Balance Sheets (Unaudited) | Indicator (in thousands) | March 31, 2023 | December 31, 2022 | | :--- | :--- | :--- | | **Total current assets** | $1,092,487 | $1,114,421 | | **Total assets** | $2,349,117 | $2,312,479 | | **Total current liabilities** | $316,608 | $402,625 | | **Total liabilities** | $800,542 | $882,724 | | **Total stockholders' equity** | $1,548,575 | $1,429,755 | Condensed Consolidated Statements of Cash Flows (Unaudited) | Indicator (in thousands) | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :--- | :--- | :--- | | **Net cash provided by operating activities** | $177,387 | $336,125 | | **Net cash used in investing activities** | $(27,891) | $(3,552) | | **Net cash used in financing activities** | $(231,452) | $(219,700) | | **Net (decrease) increase in cash** | $(81,956) | $112,873 | [Note 2: Revenue](index=14&type=section&id=(2)%20Revenue) Revenue is primarily earned from the sale of metallurgical (met) and thermal coal to domestic and international customers. The company disaggregates revenue to show the different pricing and contract structures between export markets (spot/short-term contracts) and domestic markets (longer-term, fixed-price contracts) Coal Revenues by Product and Market (in thousands) | Category | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :--- | :--- | :--- | | **Met Coal Revenues** | $857,979 | $1,047,993 | | **Thermal Coal Revenues** | $48,719 | $21,745 | | **Total Coal Revenues** | **$906,698** | **$1,069,738** | | **Export Coal Revenues** | $678,131 | $894,525 | | **Domestic Coal Revenues** | $228,567 | $175,213 | - As of March 31, 2023, the company expects to recognize an estimated **$147.9 million** in revenue from unsatisfied performance obligations, with **$110.6 million** expected in the remainder of 2023 and **$37.3 million** in 2024[38](index=38&type=chunk) [Note 6: Capital Stock](index=17&type=section&id=(6)%20Capital%20Stock) This note details the company's capital stock activities, including its share repurchase program and dividend policy. In Q1 2023, the board increased the share repurchase authorization and declared a quarterly cash dividend - On February 21, 2023, the Board of Directors increased the common share repurchase program authorization by **$200 million**, bringing the total authorization to **$1.2 billion**[49](index=49&type=chunk) - As of March 31, 2023, the company had repurchased approximately **4.4 million shares** for an aggregate price of **$654.5 million** under the program[49](index=49&type=chunk) - A quarterly cash dividend of **$0.44 per share** was declared on February 21, 2023, payable on April 3, 2023[51](index=51&type=chunk) [Note 15: Commitments and Contingencies](index=21&type=section&id=(15)%20Commitments%20and%20Contingencies) The company has significant off-balance sheet financial instruments, primarily surety bonds and letters of credit, to secure obligations for reclamation, workers' compensation, and black lung benefits. A potential regulatory change by the Department of Labor could materially increase collateral requirements for self-insured black lung obligations Off-Balance Sheet Financial Instruments as of March 31, 2023 (in thousands) | Instrument | Amount | | :--- | :--- | | Surety Bonds | $166,543 | | Letters of Credit | $61,927 | - The Department of Labor (DOL) has proposed new regulations that could substantially increase the collateral required for self-insured federal black lung obligations. The company estimates it could be required to provide approximately **$80 million to $100 million** of collateral, which would have a materially adverse effect on liquidity[96](index=96&type=chunk) [Note 16: Segment Information](index=24&type=section&id=(16)%20Segment%20Information) The company operates under one reportable segment, 'Met,' which includes its metallurgical coal mining operations. The 'All Other' category includes corporate overhead and former thermal operations. The Met segment is the primary driver of revenue and profitability Segment Performance for Three Months Ended March 31, 2023 (in thousands) | Segment | Total Revenues | Adjusted EBITDA | | :--- | :--- | :--- | | Met | $889,938 | $362,008 | | All Other | $21,297 | $(7,593) | | **Consolidated** | **$911,235** | **$354,415** | - Export coal revenues represented **75% of total coal revenues** in Q1 2023, down from **84%** in Q1 2022. India was the only country with export revenue exceeding **10% of total revenues** in both periods[109](index=109&type=chunk) - Customer concentration increased, with the top 10 customers accounting for **78% of total revenues** in Q1 2023, compared to **73%** in Q1 2022. Four customers individually exceeded **10% of total revenues**[109](index=109&type=chunk) [Note 17: Subsequent Events](index=26&type=section&id=(17)%20Subsequent%20Events) After the quarter ended, the Board of Directors declared an increased quarterly cash dividend - On May 3, 2023, the Board declared a quarterly cash dividend of **$0.50 per share**, an increase from the previous **$0.44 per share**. The dividend is payable on July 5, 2023[112](index=112&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=29&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's performance for Q1 2023, noting that while results were strong historically, they were impacted by softening metallurgical coal markets and moderating prices compared to the historic highs of early 2022. The analysis covers market conditions, operational results by segment, liquidity, capital resources, and cash flows [Market Overview](index=29&type=section&id=Market%20Overview) In Q1 2023, metallurgical coal markets softened due to recessionary concerns, uneven manufacturing demand, and persistent inflation. While prices declined from early 2022 peaks, the World Steel Association projects a 2.3% rebound in steel demand for the year, though regional performance varies significantly - Metallurgical coal indices ended Q1 2023 roughly flat after a mid-quarter peak, with further softening in April. For example, the Australian Premium Low Volatile index ended the quarter at **$301.00/ton** but fell to **$231.50/ton** by April 27, 2023[127](index=127&type=chunk) - Global crude steel production increased by **1.7%** in March 2023 year-over-year, driven by China (**+6.9%**) and India (**+2.7%**), while the EU (**-5.6%**) and North America (**-2.6%**) saw declines[129](index=129&type=chunk) [Results of Operations](index=31&type=section&id=Results%20of%20Operations) Comparing Q1 2023 to Q1 2022, total revenues decreased by 15.0% to $911.2 million, primarily due to lower coal sales realizations in the Met segment as prices moderated. Despite lower revenues, total costs and expenses also decreased by 3.6%, leading to a net income of $270.8 million, down from $400.9 million in the prior-year period Revenue and Sales Volume Comparison | Indicator (in thousands, except tons) | Q1 2023 | Q1 2022 | Change (%) | | :--- | :--- | :--- | :--- | | **Coal revenues** | $906,698 | $1,069,738 | (15.2)% | | **Total revenues** | $911,235 | $1,071,964 | (15.0)% | | **Tons sold** | 3,915 | 4,048 | (3.3)% | Met Segment Non-GAAP Performance per Ton | Indicator | Q1 2023 | Q1 2022 | Change (%) | | :--- | :--- | :--- | :--- | | **Non-GAAP Coal Sales Realization** | $208.93 | $240.82 | (13.2)% | | **Non-GAAP Cost of Coal Sales** | $110.56 | $103.61 | 6.7% | | **Non-GAAP Coal Margin** | $98.36 | $137.21 | (28.3)% | Adjusted EBITDA by Segment (in thousands) | Segment | Q1 2023 | Q1 2022 | Change (%) | | :--- | :--- | :--- | :--- | | Met segment operations | $362,008 | $513,301 | (29.5)% | | All Other category | $(7,593) | $(9,640) | 21.2% | | **Total** | **$354,415** | **$503,661** | **(29.6)%** | [Liquidity and Capital Resources](index=38&type=section&id=Liquidity%20and%20Capital%20Resources) The company's liquidity remains solid, with total liquidity of $315.6 million as of March 31, 2023, comprising cash and credit facility availability. Key uses of cash include capital expenditures, debt service, and shareholder returns. A significant future risk is the potential for increased collateral requirements for black lung obligations Total Liquidity as of March 31, 2023 (in thousands) | Component | Amount | | :--- | :--- | | Cash and cash equivalents | $222,507 | | Credit facility availability | $93,123 | | **Total liquidity** | **$315,630** | - The company expects to spend between **$250.0 million** and **$280.0 million** on capital expenditures during 2023[183](index=183&type=chunk) Cash Flow Summary (in thousands) | Activity | Q1 2023 | Q1 2022 | | :--- | :--- | :--- | | Net cash from Operations | $177,387 | $336,125 | | Net cash used in Investing | $(27,891) | $(3,552) | | Net cash used in Financing | $(231,452) | $(219,700) | [Quantitative and Qualitative Disclosures about Market Risk](index=42&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company is exposed to commodity price risk, interest rate risk, and foreign currency risk. Commodity risk for coal sales is managed via supply agreements, while supply costs like diesel fuel are managed through strategic sourcing. Interest rate risk is minimal with no outstanding floating-rate debt. Foreign currency risk is indirect, affecting the competitiveness of its U.S. dollar-denominated coal in international markets - The company manages coal price risk through sales agreements. As of April 27, 2023, **51%** of its **15.5 million tons** of total committed metallurgical coal for 2023 was priced at an average of **$203.86 per ton**[137](index=137&type=chunk)[138](index=138&type=chunk) - For 2023, **83.3%** of the company's budgeted **22.2 million gallons** of diesel fuel usage is priced at an average of **$3.60 per gallon**[198](index=198&type=chunk)[199](index=199&type=chunk) - As of March 31, 2023, there were no cash borrowings outstanding under the floating-rate ABL facility, minimizing direct interest rate risk[200](index=200&type=chunk) [Controls and Procedures](index=43&type=section&id=Item%204.%20Controls%20and%20Procedures) Based on an evaluation as of March 31, 2023, the company's CEO and CFO concluded that its disclosure controls and procedures were effective. There were no material changes in internal control over financial reporting during the quarter - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of March 31, 2023[203](index=203&type=chunk) - No changes occurred during the quarter that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[204](index=204&type=chunk) [Part II - Other Information](index=44&type=section&id=Part%20II%20-%20Other%20Information) This section provides additional information on legal proceedings, risk factors, equity security sales, and mine safety disclosures [Legal Proceedings](index=44&type=section&id=Item%201.%20Legal%20Proceedings) This section refers to Note 15(d) of the financial statements for a description of the company's legal proceedings, which arise in the normal course of business - For a description of legal proceedings, the report refers to Note 15, part (d), of the Condensed Consolidated Financial Statements[207](index=207&type=chunk) [Risk Factors](index=44&type=section&id=Item%201A.%20Risk%20Factors) This section directs readers to the more detailed 'Risk Factors' section in the company's Annual Report on Form 10-K for the year ended December 31, 2022, for a comprehensive discussion of potential risks - The report incorporates by reference the risk factors discussed in the company's Annual Report on Form 10-K for the year ended December 31, 2022[208](index=208&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=44&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section outlines the company's capital return activities, including the declaration of a quarterly dividend and significant share repurchases made during the first quarter of 2023 under its board-authorized program - The Board of Directors declared a quarterly cash dividend of **$0.44 per share** during the three months ended March 31, 2023[209](index=209&type=chunk) Common Stock Repurchases in Q1 2023 | Period | Total Shares Purchased | Average Price Paid per Share | Shares Purchased as Part of Program | Approx. Value Remaining for Repurchase (in thousands) | | :--- | :--- | :--- | :--- | :--- | | Jan 2023 | 315,740 | $155.43 | 278,750 | $507,713 | | Feb 2023 | 265,768 | $162.37 | 247,535 | $667,659 | | Mar 2023 | 343,753 | $158.38 | 343,753 | $613,217 | | **Total** | **925,261** | | **870,038** | | - On February 21, 2023, the Board increased the total authorization for the common share repurchase program to **$1.2 billion**[211](index=211&type=chunk) [Mine Safety Disclosures](index=45&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) Information regarding mine safety violations and other regulatory matters as required by the Dodd-Frank Act is provided in Exhibit 95 of this quarterly report - Mine safety disclosures required by Section 1503(a) of the Dodd-Frank Act are included in Exhibit 95 to this Form 10-Q[213](index=213&type=chunk) [Exhibits](index=45&type=section&id=Item%206.%20Exhibits) This section refers to the Exhibit Index, which lists all documents filed as part of this Quarterly Report on Form 10-Q, including certifications and the Mine Safety Disclosure exhibit - A full list of exhibits filed with the report is available in the Exhibit Index[214](index=214&type=chunk)[218](index=218&type=chunk)

Financial Data and Key Metrics Changes - In Q4 2022, adjusted EBITDA was $248 million, down from $296 million in Q3 2022 [12] - Free cash flow for 2022 was $1.3 billion, allowing the company to pay off its term loan balance, resulting in no long-term debt [3] - Total liquidity as of December 31, 2022, was $441.1 million, down from $495.5 million at the end of Q3 2022 [15] Business Line Data and Key Metrics Changes - The company sold 3.9 million tons of coal in Q4 2022, with 3.8 million tons from the metallurgical segment [12] - Average realization for metallurgical sales was $190.94 per ton in Q4, essentially flat compared to $191.17 per ton in Q3 [13] - Cost of coal sales in the metallurgical segment increased to $112.97 per ton in Q4, up from $104.86 per ton in Q3 [14] Market Data and Key Metrics Changes - The Australian Premium Low Volatility Index increased from $270.50 per metric ton on October 1 to $294.50 per ton by year-end [26] - As of February 21, 2023, the Australian Premium Low Index was $388 per ton, and the U.S. East Coast Low-Vol index was at $342 [27] - The API 2 index for thermal coal fell from $310.85 per metric ton at the start of Q4 2022 to $190.50 by December 30, 2022 [29] Company Strategy and Development Direction - The company plans to continue protecting its balance sheet while maintaining cash and liquidity targets, with a focus on share repurchases [10] - New departments, Maxim Manufacturing and Maxim Transportation, were created to address supply chain issues and improve operational efficiency [22][23] - The company is focused on cost management to remain well-positioned for any pricing environment that may develop [10] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about 2023, noting that geological and transportation issues affecting Q4 results appear to be largely resolved [7] - The company is taking steps to manage supply chain, trucking, and labor challenges, which are common across the industry [8][9] - Management remains excited about market share production capabilities and solidifying its role as an industry leader [11] Other Important Information - The board declared a quarterly cash dividend of $0.44 per share, an increase from the previous quarter's $0.41 per share [16] - The company repurchased 813,000 shares at a cost of $128 million in Q4 2022, with a total of approximately $560 million spent on share repurchases since the program began [17] Q&A Session Summary Question: Can you comment on cost inflation and its cyclical vs structural nature? - Management indicated that both labor and supplies appear to be sticky, making it challenging to manage costs in the near term [32] Question: Does the recent bonding requirement for black lung obligations suggest more M&A opportunities? - Management noted that while consolidation makes sense, current market valuations make it difficult to justify sizable M&A transactions [35] Question: What is the quality breakdown of the uncommitted MET coal? - Management stated that there is a mix of high and mid-quality coal available, with good demand expected, especially in Western Europe [40] Question: How is the cadence of shipments expected to progress through 2023? - Management expects a ratable cadence for thermal shipments, with some increases in summer months, while metallurgical shipments will also be steady throughout the year [54] Question: Are there concerns about labor constraints affecting production growth? - Management expressed confidence in their current labor force, noting improvements from training programs and a transition to newer, more efficient operations [56]

Reserves and Production - The company has a substantial reserve base of 336.7 million tons of proven and probable reserves as of December 31, 2022, including 322.7 million tons of metallurgical reserves and 14.0 million tons of thermal reserves[19]. - The company has approximately 527.3 million tons of in situ bituminous coal resources as of December 31, 2022, supporting its operational capabilities[19]. - In 2022, the company produced approximately 13.9 million tons of met coal, representing 21% of the total U.S. production of 67.8 million tons[58]. - The company produced approximately 2.2 million tons of thermal coal in 2022, which is less than 1% of the total U.S. thermal production of 524.5 million tons[58]. - The Kingston mining complex has one active underground mine and four active surface mines, with mine lives ranging from 2 to 12 years[30]. - The Marfork mining complex has three active underground mines and two active surface mines, producing High-Vol. A quality met coal with mine lives ranging from 1 to 19 years[31]. - The Power Mountain complex plans to develop a second underground mine in 2023, which will produce High-Vol. B quality met coal[33]. Operations and Infrastructure - The company operates 15 underground mines, nine surface mines, and eight coal preparation plants, with a focus on producing metallurgical coal for the steel industry[18]. - The Bandmill Preparation Plant has a processing capacity of 1,200 tons per hour and a utilization rate of 69%[36]. - The DTA export terminal has a loading capacity of up to 6,500 tons per hour and a storage capacity of 1.7 million net tons[40]. - The company holds a 65.0% interest in Dominion Terminal Associates, providing coal blending, storage capacity, and transportation flexibility[18]. Financial Performance and Revenue - In 2022, met coal accounted for approximately 95% of the company's coal revenues, up from 92% in 2021[50]. - Coal export revenues accounted for approximately 81% of the company's coal revenues for the year ended December 31, 2022[173]. - Metallurgical coal (met coal) accounted for approximately 95% of the company's coal revenues for the year ended December 31, 2022[174]. - Thermal coal accounted for approximately 5% of the company's coal revenues for the year ended December 31, 2022[187]. - The company derived 81% of its coal revenues from sales to customers outside the U.S. for the year ended December 31, 2022[186]. - Coal sales to the largest customer accounted for approximately 25% of total revenues, while sales to the top 10 customers represented about 70% of total revenues[180]. Strategic Focus and Growth - The company shifted its strategic focus to metallurgical coal production, having sold its thermal coal mining operations in Pennsylvania to accelerate this transition[25]. - The company is continuously evaluating opportunities for strategic acquisitions and joint ventures to enhance its asset portfolio and drive growth in target markets[20]. - The company has a history of strategic mergers and acquisitions, including the merger with Alpha Natural Resources Holdings, Inc. in 2018, which expanded its operational footprint[25]. Risk Management and Compliance - The company is actively managing risks related to coal prices, transportation costs, and regulatory changes that could impact its operations[12]. - The permitting process for coal mining has become increasingly stringent, with potential delays due to regulatory and administrative requirements[88]. - The company must comply with the Surface Mining Control and Reclamation Act (SMCRA) and its state analogues, which include complex permit requirements[85]. - The Clean Air Act and its state laws impose direct and indirect impacts on coal mining operations, affecting demand for coal[95]. - The company is subject to ongoing litigation regarding the EPA's air quality standards, which may affect operational costs and regulatory compliance[101]. Environmental and Regulatory Challenges - Global climate change initiatives are expected to decrease coal-fired power plant capacity and utilization, leading to the phasing out of many existing plants and reducing demand for thermal coal[114]. - Several banks and financial institutions are limiting financing for new coal-fired power plants, which may adversely affect future global demand for coal[124]. - Non-governmental organizations are actively campaigning to minimize or eliminate coal use for electricity generation, potentially leading to a decline in coal prices and sales[125]. - The Clean Water Act (CWA) imposes restrictions on coal mining operations regarding the discharge of pollutants into U.S. waters, creating potential compliance costs and operational delays[129]. - The Endangered Species Act may delay or prohibit mining permits, with specific species like the Guyandotte River Crayfish and Big Sandy River Crayfish requiring additional protective measures[138]. Workforce and Safety - The company had approximately 3,730 employees as of December 31, 2022, with 73% being hourly workers[63]. - The company achieved a Non-fatal days lost (NFDL) safety incident rate that was 54% better than the U.S. industry average for 2022[71]. - Stringent health and safety standards under the Federal Mine Safety and Health Act require mandatory inspections and enforcement actions, impacting operational costs for coal mining companies[149]. Financial Liabilities and Taxes - As of December 31, 2022, the company had accrued $179.0 million for reclamation liabilities and mine closures, including $37.0 million of current liabilities[78]. - The company recorded expenses related to the Abandoned Mine Land Fund fees of $2.0 million and $2.5 million for the years ended December 31, 2022 and 2021, respectively[91]. - The excise tax on coal sold was $1.10 per ton for deep-mined coal and $0.55 per ton for surface-mined coal in 2021, resulting in expenses of $5.7 million, which decreased to $2.6 million in 2022 when the tax was adjusted to $0.50 and $0.25 respectively[150].

Alpha Metallurgical Resources, Inc. (NYSE:AMR) Q3 2022 Earnings Conference Call November 7, 2022 10:00 AM ET Company Participants Emily O'Quinn - Senior Vice President of Corporate Communications David Stetson - Chairman and Chief Executive Officer Andy Eidson - President Todd Munsey - Executive Vice President and Chief Financial Officer Jason Whitehead - Executive Vice President and Chief Operating Officer Daniel Horn - Executive Vice President and Chief Commercial Officer Conference Call Participants Luca ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number 001-38735 ALPHA METALLURGICAL RESOURCES, INC. (Exact name of registrant as specified in its charter) Delaware 81-3015061 (State ...