AMR - Earnings call transcript Q2 2021 | Alpha Metallurgical Resources, Inc.

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Operator

Good day, and welcome to the Alpha Metallurgical Resources’ Second Quarter 2021 Results Conference Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Emily O'Quinn, SVP, Corporate Communications. Please go ahead.

Emily O'Quinn

Thank you, Matt and good morning everyone.

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

on affect about quarter filing. For can information XXXX Chair documents Financial of Officer; use Horn, and associated forward-looking Executive David Officer, I'll Officer, SEC With today earnings also measures reconciliation over Whitehead, factors regarding the the to see and for refer Chief Also and information Stetson; Dan to that, David. Eidson. Participating to and Jason some release call Operating please on participating are more and the of non-GAAP GAAP Chief the Sales. turn Please those of our Chief President statements Andy that them, and company's second Vice the their call the measures. Alpha's and call President are Executive our

David Stetson

Thank to of mid-year XXXX. And start pleased we solid results to with Today those another call. XXXX, to for of half team, announce everyone we're we excellent quarter to you, an discussing on to see what good set performance. I look the doing are The along and forward up Emily. how back shaping analysis financial the morning and ourselves up

a made and during mine, a senior our we'll time our together Approximately the of our couple success volume vision future. do now, has a we to complete team vision have done ago, want last no operations. Slabcamp, period reflect good last on set I unit, the pure-play roughly a that, years metallurgical thermal of divested to cohesive short which Alpha the expected Before for progress years from significant assets two and relatively for to one and company. of established to as remaining remarkable. those expansive came point is thermal close and We broad the producer. non-core of work circumstances ourselves remaining year nearly future strategy been current the is pathway accomplishments management on The connect in becoming that briefly at

fine-tuned team yield with longevity diversity with coupled of of portfolio to in Above an more to strategically market a rebound. vision advantageous us strong structure cost focused and streamlined growth work, the our capital have This and carefully Jason's away We foundation disciplined building and in deploying markets allows metallurgical all, toward that has from our more the has and for weather downturns our eye upside success. stayed when also products, cost transition enterprise, a capture future mines. higher implementation for the

see we beginning off. pay this to Now, work

for Australian in markets, and year second This approximately PLV the Australian the the in of lagging terms impacting hit portfolio left a throughout average current the with overall $XXX January, quarter. In linked the quarter. low of our index our portion gradually cost second negatively utilization the increases

for mid months to million tons the realizations our point six one coal, levels production Australian the half much range. environment that We're reflect globe, extra anticipate an the in this However, With range. our recent general across levels. mining, rebound market expect prior these of second increasing a as just roughly and XXX% our the by has in stronger guidance increased roughly positive in we year of index we $XXX indices then

is maximize on lines, we why those accelerated to In decision immediate this for remarks our cash six as stated that organization. to obligations in evidence debt. pay of American to with Along expect projections the see organization Andy believe our Fork prudent North de-levering, the use future. a already Road we've build current detail. well a begin keeping the down be will strategy timeline projected fourth help payment tell aggressively hinge expect cover sheet. market future, occurred strong in balance reporting ahead, earnest previously our we under section the build settled solidifying strengthening and to quarter close balance months. serve addition our business the management to discussions completing XX of this more think, This in LCC able my another the In you quarter the the and on performance, capital of remaining to and advantageous is demand well-prepared well the more the another step further will of our and subsequent coming in continue In into and expected weeks. some summary, Looking solid With his interest extend XX, add coal and the business cash capitalize focus met at will financially, that for Jason I and in in offer to level strong as and of executive demand the one this will our perspective, value funds, state Virginia West use team's to in paybacks with note. legacy From and about decision for our us high I well we high in is on strength

to additional some details in Whitehead. for operation, I’ll turn the Now Jason call over

Jason Whitehead

Thanks, David, good and everyone. morning,

and our mines. strides we've year to optimize the you As cost lower to great made shifting last in production operations, know, streamline

As already this has cost said, work with a off much improved David structure.

coming the cost quarter. Our of a sales teams prior at roughly ton, in $XX.XX, than $X delivered quarter again this met with coal

our ton in mentioned we'll inflationary I guidance, ton within we're cost we today, that increase bumping has our supply production times of announced in demand previously believe year of an XXXX our continued near pressure, keeping to ramp the remain well ability later. we on our Coal we at on the last million supply as the still we quickly, Some miner up positioned and call, productivity match mid when and detail to is end a reflecting the production about guidance, adjustments increased provide segment. term, will range our Met Andy believe the $XX production market the point for demands. demand, that domestic. announced excellent $XX expected for are desired for the or the our that Also by to overall any a tight seaborne year, whether to more

process that expectations the fourth Fork that It year inception. projects, additional a section we're Fork has a we at amount Our where return continually our a a To will Branch of capital swift productivity Lynn forward ways that some running coal projects the putting offers adding most This looking value. XX. of existing of like analyze and diversified super from or looking market. of provide most the exceeded be for ability that of spend operations company, an end group Volatile to offers Road end to development always modest incrementally Low we're coal any section since into can recent We long-term add additional portfolios operation bolt-on value. with by we're to potential XX in and in Alpha should Road mine and one its way up tight times

takeaway this but $X day We even with million. time, than the they us, in six have I for year quarter’s I information are the in just a but calls able on some expected market We’re similar development point investment the the on augmenting don't production to existing the CapEx given by even projects currently for is and portfolio expected $XXX turn evaluating million will and by year plan increase, under at announcements return mid perhaps to spot a raising our less is But come our or there provide I'll profiles CapEx Fork. financials have details appropriate, and described what either that all for in now in the Modest conjunction to sense current on addition. call come few great CapEx future the this expect is for increase months over this fast investing makes additional payback projects. the our investment. at other spin in prices, and guidance to quarter. to development other a we are as cost-effective on a teams to Road especially more Andy it any here mine today, Alpha environment with make with ready the to for projected to

Andy Eidson

Jason. Thanks

market in first quarter quarter, reported our XX% was but volumes this about a the we processing impact specifically the segment for QX On our with adjusted highlight situation, call, the roughly realizations. that and want to sales of figure. the from Australia to As various prior one our is flat $XX.X our quarter China Met area were up second million, lag lot we Australian between and discussion EBITDA tensions there our indices. stemming the on from release nearly time especially was morning, last

other Aussie quarter yielded well from to based the persisted table's the business that a based second our few met realized additional on earnings on we index indices the illustrate an into Australian indices introduced was and have business the to mechanisms. on By table realizations weeks on the pricing new due into the pricing our weakness $XX.XX past export found Atlantic release and quarter. the the $XXX.XX to To impact Atlantic shipments in our various that per To While of mechanisms. past equilibrium weeks, pricing of realizations provide in point, the more contrast linked quarter, actually, on in and magnitude, lag quarter market our continued export eight the well our realizations. persisted granularity we index the ton for the that to

level a that going into more really much forward. parity. between expect the indices is at variance and a between to effectively see tied of the normalized don't We the spread Now regions

other a in whole, Met ton. came slightly realizations slightly within our $XX.XX category while dropped as quarter, realizations the up from all For per $XX.XX segment ton, the first per to at

performance as the SG&A continued coal corporate to and reflects And $XX.XX. inflationary non-recurring our half guidance compensation Costs year SG&A, the to as items, all increasing $XX.X of $XX.X improved incentive As Jason sales to well earlier, down of non-cash million adjustment in was plan quarter. other cost million despite category related with outlook as compared QX, largely from to $X to that and stock mentioned first back of by $XX.XX. the accruals year. full insurance sales improved due pressures. It Met comp an improved increased the down are to the QX quarter our costs, QX excellent, excluding cost from in for also our coal second we in nearly increased of

prior the expect million $XX million adjustments, now range million be with these SG&A $XX recent up XXXX we $XX such a to of for from $XX to to As range. million, in

increase the for at XX we a of Our that $XX range couldn't from Road obviously mentioned, CapEx $XX honestly CapEx is spend million section discussed, the as of second in QX. And a full Jason quarter in to the as our better came spend. And be guidance at increase beneficial And additional million and of course, which increasing million million for previous worth to of our the for $XX.X for of Fork well believe projected million. are this year Jason the more capital. year timing result $XX modest as $XX to in narrow window we the use

of on as with our end the compared flows. activities liquidity borrowings. the and unrestricted balance the for credit was We of Turning in availability in ended million. quarter of $XX first used $X and cash to outstanding the quarter the At no quarter, for and letters in quarter more with ended We ABL ABL Cash $XX our in liquidity of had million million million $XXX the $XXX to operating roughly sheet the total end million. total of cash the XX% quarter.

the As XX.X of expectations prior pure guidance of earlier and mid tons the comprised million in connection tons. Met expected range tons updated explained X.X XX.X reflects round point tons Alpha the shipments segment. from XX.X This million we've of will is for thermal incidental our now our for We've midpoint of million of of million up mid point already point to mid new within range increased XXXX out an total production of the our met, how comments, with guidance year.

million the Our prior Against around guidance or unchanged. the currently of midpoint expected unpriced remains to segment category X.X the seeing. XX% Met benefit improved over guidance of for from market could be our other environment is all we're just tons and

fully portion category $XX.XX. by-product remain The XX% for XX% And $XX.XX. price committed XXXX at an is the that average committed segment price our Met So in of effectively in segment thermal unpriced unpriced all at around other of of average unprice is fully we Met the committed. an

all As of range Jason ton Met mentioned, remains other as $XX.XX guidance category with cost unchanged respectively. per the our does XXXX costs midpoint

on million of sometimes receive this mentioned you the still carryback in $XX of expect I NOL around call, back tax As prior half year. to refund the

Additionally, $XX ahead Coal the eliminate end quarter, the of of Company subsequent second note schedule. of the portion Alpha one a West to Lexington the to million year payment made Virginia

also this the liability expected had and million early than the negotiated $XX outflows net surety a meaning extinguish also We lower allowed of related in return payment previously at disclosed. us collateral, to cash we

clear attention markets several with to reiterate over items our financial of aggressively debt. want as cash as an on free anticipation to and balances about flow. pretty comment past build pay those the down We've cash highest our two a Finally, allocation strategy But been move initial into priorities. cash quarters forward we I strong

balance Our both on shareholder terms. over strengthening enterprise, the the both and focus which believe deleveraging is will value long short of we the sheet, the maximize

and Horn with over for market analysis So to turn I'll sales the that, outlook. call Dan

Dan Horn

we my starting and in additional few will what to back XXXX. way a remarks, Andy, share have and about morning. about year half so think observations to good the we're Thanks, forward the the to In look I far,

The was team. sales second for solid our quarter another period

in of regard. the some indices areas want in weeks, I While this in you've there a already are to heard that highlight significant couple the recent shift commentary Australian on additional

as pricing tied Aussie in another indices first our contracts our contract would the lucrative been as fulfill our on we to to obligations say am year, the continue half Although to they to I of have work mechanism. customers. proud that

for created with by globe metallurgical We longstanding in where have around the coal. years and also the in Chinese see expected on ban decades We've is long climbing to markets to demand and opportunities come. many some customers cases, coal Australian relationships continue some

coals While not acceptance China larger for And the office we quality build spring. we great shipment vulnerable Including year. steel on of historically initial shipments our business recently Chinese and country a recent several these in come. sell actually been coal to into found this than of possibility early into destination sold this the agreed new has approximately X this high upon, market vessels of Therefore, of products, sold window mills. tons will but earlier have It's our a Alpha for tons shipped, year we impossible if it million long predict last. opportunity not with has makes yet China significant sense. of us continue how more additional this and to But to were evaluate

backs different that high that a mine note FOB net these the I help are get their to Chinese-Australian negative flexibility While headline at currently some for mitigate with so-called business. than world advantageous the it's the willingness are my CFR indices freight product creatively think levels, and been important costs applaud to to to substantially Even often has prices off considering especially across at business also team the report of the are to very the and and us impacts tensions not of still, good insignificant. new this trade for the

the showed of the production continue association U.S. recently growth signal in June. strong tightness year-over-year for mill you've XX.X%. As for previously at conditions already, to our steel have crude comments near especially of year Economic world additional reported and And steel steel given to to term more statistics XX.X% to the we planned coal capacity demand than India customers, produce to guided. coal heard metallurgical we're Globally, supply. utilization some growth indicators offer XX%. this pleased the we the environment positive current with most

and the China While period period – one and the crude XX.X% steel long XX.X% production X.X% ago. increase – respectively period. ago European ago year North American against over year Regionally, increased

settled of XXXX David All of year, markets. with pieces others. of as of next continued are North couple American for Starting mentioned, and signs out key these we the discussions business strengthened specifically those a

business obviously at strategically We to concluded prices for products and our continuing will are that We're ongoing. mix details XXXX XXXX. in was settlements. this destinations well these evaluating can we market while be most say product further While not also providing advantageous negotiations above

conversations, we remarks adjust domestic prepared are to into While based our given business roughly placed having to up. we sell should that to This and our on in take look quality third on might XXXX current that quarter. we Regardless, our concludes we're believe of seeing be percentage for year, ready the the Operator, a our for how any high plenty have good historically decide coal what market a of we now year to the we questions. Alpha. depending shapes demand export on forward

Operator

Our The come [Operator go Please first Martin Company. ahead. Benchmark with Nathan Instructions] question will from

Nathan Martin

guys. Hey taking my And morning. for then Good thanks questions.

David Stetson

morning, Nate. Good

Nathan Martin

the on with appreciate breakdown the quarter of ton at different the really I shipped extra realizations. color price this Met side

that So will with you depressed you're pointed When about then, of past about is of quarter And tons as back talking stays it than in for on have to in half on of ratable? in the of just in business that a But about production year, side, split while, XX% index more as kind your Met the guys kind the you the index pricing. fair some moving Australia doubled. should you with the away since and out you from of kind pointed contracts think out. start second this guys the price then domestic we moving export How there. it like pretty hurts was obviously assume

color could you shown give interest targeting there? you've just covered which but us of within the a this bit little you. a anything in Dan, have you're more Thank maybe markets little So on, now, remarks or prepared

Dan Horn

targeting guess broadly we're I all them. Sure. of speaking, Well,

themselves. India domestic have high just as ship as mentioned, that well, We're best and Met. I among work continue South into additional selling the into now kind interesting to spots target the still America China's expect on to other We markets and some additional rebalancing levels. to indices right Europe, at of But there. opportunities We'll

So where isn't it for best. above truly all the right we'll the situation are look the realizations of But now.

Nathan Martin

Got Dan. Thanks, it.

think increased, the it's It's of announced just closer the benchmark index. I production kind mean, are the the should Aussie plan add quite I same, that online are well? year. full at tons be should maybe they and And highlighted coming of guidance it is those I or lower there? Met overall the as And that costs all. don't that is kind XX, the Maybe the section not you quarters, like just about – in Fork to at can by end at from, kind expect to parity, Road tons to guys well – yes, even then, the a as pricing. cadence we Chinese’s help year talk next of the shipment to guess, Met looking additives expecting correct? where of year, that I maybe assume of that four you incremental are sounds and obviously fourth you segment So But, more the third what

Jason Whitehead

Hey, Nate. This is Jason.

in from the And portfolio. it'll speaking, full XXX,XXX a be incremental up the at less by just will be across portion I of think running slightly and XX first would of our of think, expected. a operations year section, – it the to end year. being rate With good or it tons from add the what Fork Road of about in respect come guidance above was I nominally the current XXX,XXX tons the four productivity has increase more by run

Nathan Martin

your Jason, mix global, so kind And little I I correct? just, help would a bit. that's of

Jason Whitehead

contribute a cost I asked is it point question at and would global about, basically is think and you Fork Road guidance. the mid our of It to how

but So helpful, I numbers. you'll it's incrementally, it think see materially should be don't in it overall

Nathan Martin

categories again, year full or $XX back in minus other then And plus was cost to back that quarter, I the helpful. your guess quarters, That's it. below Got guidance. fact, which thermal great another

So, kudos team. to Jason the and

high thermal the the anything color guys any materially could there to one guidance way obviously prices see Is there? were and second cetera, labor and they both there half, Met may mentioned bit – moves day, costs. there you but XQ, we and pricing You're a as other that looked there is or you or the longwall the maintain be cause that little other at you numbers costs, full on these year different royalties any other XQ et guys

Jason Whitehead

We're room all operations. and Yes. pillar

or no pressure less offset for us. demand So that the been seeing with we're moves longwall But improved think, more supply productivity. mostly has I

gave think, the we're therefore, start of guidance able maintain So that our to at the we year. I

Nathan Martin

I Jason, apologize fair. for the question. That's longwall

any LCC on So Appreciate final liabilities, Congrats some liability I thoughts. maybe guess just paying I'll off the as it. think we other early, about for pose Andy. the questions of legacy there

Andy Eidson

Yes. balance Thanks to try sense. some items Nate. just it We're the pick makes where sheet off to constantly evaluating

we're at the of Now peripheral next other up items getting year. kind of where bankruptcy line the –all the are the wrapping to below and point the the end related items of

really too And for some to much there's best probably And as so not far it achieving focusing now so, preparing where some pretty be done in be for that shareholder buck on why regard. debt our heavily we're capturing the value. the because and we're reduction potentially as seems bang aggressive – to best close more that's enough

pockets So non-debt we balance attack up, able take constantly for may now. opportunity we'll that lick liabilities we're But to of an I related be pops think sheet last that's big for if be that at other probably able to again, the the out. looking

Nathan Martin

Dan, leave appreciate And guys. Thanks that in half. second always for best the your Great. luck I'll and thoughts as Andy. it there

Dan Horn

Nate. Thanks,

Andy Eidson

you Appreciate Nate.

Operator

will question next up go Our Instructions] Please from Securities. Riley come ahead. Pipes with Lucas [Operator B.

Lucas Pipes

to thoughts. export at well, crack pricing, other thoughts table. index. like what categories might not the domestic have three the mechanisms, domestic, it. Australian kind QX, segment assume other nature these provide question. Nate's sales of appreciate QX? index, export your numbers QX you I given good going as I'll some I also Australian And everyone. appreciated those versus Met pricing just can first really And Hey, I’d look another QX that's QX, of really morning take much you export versus Thank change or how export you. But QX

Andy Eidson

Lucas get, current there indices put do quarter-over-quarter $XX pricing bit way the that I in come you a and you'd are the if the sense up in indices Well, guess, you there, can just number but They're increase quite there. Aussie a math percentage do the to looks to the the saw up. math up the number right month, you ton that a it, probably higher like a that now, indices with than

So, it's a big increase.

Lucas Pipes

Terrific.

of the XXX ton reasonable per QX kind is So, short for... at number mine a gate,

David Stetson

And looking good I'm today. involved days as moving the guess. a there yes, at bit well. indices component a a these does in But It's there's that a freight guess. quite that's this

Lucas Pipes

it. Got would How moved quarter-over-quarter whatever? pricing, Europe? high other value kind those of versus be or have those the would And export into [indiscernible],

David Stetson

are there the across definitely high-vol, additional on Europe all Europe, all shipping we mentioned Lucas you’ve of Europe, tons whether the we're board that China, it's Kind grades, too. moving mid-vol, into markets, low-vol

just not again, So it's all the it, of above. I'm trying evade but to

Lucas Pipes

you on to index touched the the others. Aussie And some of the convergence of

math this if question pricing [indiscernible] or the ballpark? the say the I around conclude other from you also pricing earlier again, about say, that's do Aussie you XXX, were is So, on that would would to mechanisms export right the

David Stetson

a a on lagging lagging factor little you're indices yet completely I Aussie as probably – on out think we're well, close, other. of those. you the period I not out, Andy there, go mean, probably to there's that are climbed pointed the higher got still,

non- to be number you, the going but give a have is think to don't linked I pricing Aussie stronger, So a bit other I that

Lucas Pipes

like roll keep corner side, domestic I'd contract helpful. stronger. And figured Really the of What now. can right color we pricing that. thank there? in the appreciate you. the any market around Bit are very share, such would Terrific, going on since you seems I season read a I on your it's

David Stetson

industry what the So this I they with plants I couple running here into up as coming will I'm a little extra the our those is any But we've trying is from settlements that at coke be major hard period can, weeks. the here, run in to of guess call, year. are to not point if a detail is quality out and and coking well where they you go steel to done the all say negotiating coming on furnace conversations, looking want higher blast for coals the as and will very going

attention higher the So, of the medium-vol, I be on coals, coals, meaning rank call will the, lower what I think the on also going sulfur a low-vol, lot forward.

So that's discussions. here been in experience early our our

Lucas Pipes

that. And the a where side would there pricing, international has pricing you few of last been your in the a could the to this is range say terms then you over on pricing on going Thank in breakout years for domestic the what's year given on narrow thoughts fairly upside markets.

David Stetson

granular over than And band in year, I I'm XXXX, I wouldn't similar range. for mean, forward $XX get we've the – the more so grades XXXX. that. point it higher band, as than not $XX going as within a or reason I as know within the last know are possible. any all there's they're going to I why out far what far, any that over I seen domestic is pricing a be they map, don't XXXX, all were much, not that's probably suppose don't much

Lucas Pipes

Got it. for the example, vol mean And spread with high that and high band, you a A vol between B,

David Stetson

on lot willing that put I'm that's to that. early the also high even depends say the grade. a to a some that Bs thought portfolio into Well, be you, product spread of truly for yes, comment, very A we again, quality to vol good high not versus – B, have on our it's very with little In honest

Lucas Pipes

me inflationary Got roof it. is headache? environment that Last Which it. the question labor? your for this. you for Super anything perspective. commented the congratulations you especially most bolts, this it gives inflationary cause performance steel is pressures the very fuel, gives thoughts team cost you it for is one from it and Really to particular on you concern, Thank much Got helpful. your on on appreciate the during

Jason Whitehead

the well above the productivity everything But that, field I running it's before, Hey, as previously I guidance would another. we the pretty all you where with offsetting to up and I well think, said enough this they're seem be gave. is that to they and from again, guys that and say proportionately in really able the one there, mentioned Jason. to That's really maintain the of coming yes. we're

Lucas Pipes

Terrific. of very appreciate much. Really thank best you And Well, it. luck.

David Stetson

Thanks Lucas.

Jason Whitehead

Thanks.

Operator

our remarks. David conference Stetson, like closing back question-and-answer concludes the would over for to session. This I CEO turn to any

David Stetson

for the joining I closing, want the this excitement reiterate In you. coming our about thank year. everyone to Thank we and call morning,

build the foundational everyone Our to well changes recent all quarter, team wonderful and of day. some in you a We and much. next at will success. future very continue and great we've end forward with Thank on so you have back we're look we think to for positioned checking the made quarters,

Operator

you The conference for today's Thank attending is concluded. now presentation.

may You now disconnect.

Alpha Metallurgical Resources (AMR) 6 Aug 212021 Q2 Earnings call transcript