AMR - Earnings call transcript Q4 2021 | Alpha Metallurgical Resources, Inc.

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Operator

Hello and welcome to today's Alpha Metallurgical Resources' Fourth Quarter 2021 Results Conference Call. My name is Elliott and I will be coordinating your call today. [Operator Instructions] I would now like to hand over to our host, Emily O'Quinn. Please go ahead when you are ready.

Emily O'Quinn

Thank you, Elliott, and good morning, everyone.

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

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

David Stetson

Good quarterly Thanks, for record us are a report morning for with coal quarter. million EBITDA pleased and to future of Today, prices joining continued the from in thank with initially had coming strength many Australian this than benefited forward the adjusted further strip $XXX predicting the morning. the We you through for we Emily. Alpha, performance everyone the and strength markets months in to projected.

the The in disheartening by are are monitor potential in will levels over and lot none innocent significant right especially remarks because chain. as or we days and course, but and the resulting broader going people as world Of to in waged this I'll the Russia Ukraine happen to conflict. months especially well, it uncertainty the in now ahead of being the take impacts suffering us for evaluate what danger troubled will his any let coal know we there's Dan is conflict discuss supply volatility. unfolds on can of and millions and to and Alpha this a continue of of war who in

some a short our the year Just a time. a and analysis ended Pricing period in landscape XXXX is us three coal that shift our over of year. started to debt increased to in can that is significantly for we quick fold evidence met for levels XXXX The allowed how where reduction our calendar on almost generated cases the embark pricing revenue products plans. improved aggressive

the of heard more outstanding by year. our $XXX legacy an $XXX our of than term under over level current brings we longevity, we to accomplishment to year, your we that debt. importance on million. are In of pleased started with discuss we essentially million of the debt quarter, perspective, being couple committed we last to pre-payments a we It's to this the and this goal you've Alpha's All million To good goal paid debt commitment liabilities and and our put $XX me time, steward steadfast quarters, to the of reduced loan. eliminating debt, work a Over debt loan of in $XXX that report total another long-term reduction including of in our I'm $XXX well over eliminating paid little million XXXX, fourth that and outstanding the a the debt remain million. since progressing term our capital. level

to which and liabilities, strength and current our the shareholder of we been are expected than legacy debt, program. announce able reduce markets dramatically a also pleased we've the faster Given continued coal to pace, return

this week. us back beginning with allow the early repurchase that as open approved will has purchases our stock Directors program market of Board share Our as million in to buy $XXX

In us pleased program shareholder and our both value. in We are share to offer program have continue debt able repurchase to especially business, and any on are building be reduction grateful a that for amount for happening company, public we what's efforts the the creating there's scrutiny significant meaningful believe and this enhancing the company. a our of shareholders shareholders for are We this continued near-term. placed the confidence to value in our quarter in stronger

part much horizon. understand necessary managing While is corporate a where important going to just the near-term plan, a I effective operations company the as longer important and time of it find is an over

long-term heard Alpha. business can you this quarter, highs last lows, here say experience me that thinkers we're is cyclical As a dramatic but at dramatic and

This for we in professionals will remaining of and the you are to the that forecasting, we request, execution. gauge those high also operation in XXXX to team. dedicated months complexity Alpha last why and eight of our out projects That us for metallurgical of The more for midyear. that portfolio a thermal few XX demands excellent at an least portfolio future. shared a in allows both be operational optionality long-term. plants, investments that optimize operation the have kind portfolio will rank up make and our in coal position near long-term the coal kinds will And maximizing quarter the are with we strategic quality who planning Alpha actions mine one specific of of planning We preparation is sure it is our comprised mines, routinely a example assets extremely and but meet and mix CapEx flexibility well level customer

once in-depth are level this teams XX-year to about finished. forward and completing work some Our from high currently analysis we sharing is look this an it plan takeaways publicly

continue what in Jason performance. excited I'm to call our ability going investing Alpha future details and successes. some now over to for on turn to the the ahead We our for about lies operational are

Jason Whitehead

Good Thanks, David. everyone. morning,

global largest producer, tons a team the statement of was most with operation in of being on start pandemic expectations. happen, details the to shipped for and work our general specifically to last ownership without and beyond operations safe remains to members operation a midst XX.X in to the especially tons of U.S. to a Before able that we and able million the XX.X their location. achieve. coal. Alpha go production, goals that What of the taking I metallurgical talk productivity achieve to teams of team XXXX year, million respective I'd thousands what like and also some total quarter, about with metallurgical of of continuing impressive, and about focus That diverse environmental safety, the like is our and doesn't but exceed above recognize were having

of of look of the category. congratulate loadout Marfork the included forward robust claimed year while categories Surface for honors Winners [ph] the are Mine the chosen respectively, another operational to Alpha on environmental contributed XX category. Loadout and top earned processing programs we Our criteria category every out in within their and each awards a Fork best against came competition XXXX, belt Surface class in on High-Vol bragging winning category System our Pax top to success processing performance allows rights one system In and these set employee operations, miners. and Road includes the and Mammoth productivity the based another of for that category. for year. Mine XX to We who safety, strict trophy the Transfer won goals in stewardship, top against compete for Deep Belt that

this cost Metallurgical Producers XXXX to deserved the honor Deep Deep won recognition. XX well awards, from Best region Virginia of XX received to on two Active call the awards Coal Association. and updates Mine Virginia deep Andy. the team and Mine a the best couple the Congratulations operational over deep handing now Speaking share completed the mine of I'll before won mine.

closed which and the Alpha's remain which preparation Edwight two of transactions million portfolio were mine, all Kielty Together, divestitures as decrease mine further ahead. in separate and plant, During divest a the fourth noncore committed quarter, look to asset $XX optimizing we We retirement. Alpha properties, and streamlining idled. these Delbarton our on combined resulted included to of

our Branch report on the Lynn added would began Additionally, progress planned, February. pleased the list announced additional fourth we I our and am to section projects production XXXX that in advanced recall from this as has fourth at you mine. development Lynn the section CapEx section be to Branch may

XXXX with completed significant we made of the and on as progress being now, none our CapEx been expectations track for other projects developments. have While each remain is of these of

day you a and our control. from release see our sales we each influence. can part operations face that on this elevated I My our several a while significant the now labor are in to outside higher teams quarter. focus to of increased taxes are levels Turning to weighing cost, This factors coal our where of in the royalties as make and sales costs direct inflationary our of pressure the controlling expect equation, result continue of Higher continue within the to price overall morning, to managing cost figure. also and due elements fourth up is is

During those costs decline current higher the met then strong start that estimates. estimates was based budgeting we sales, enjoy Knowing we forward the the guidance the coal that end time, later the pricing the pricing of higher earlier well at year. has established half. XXXX of on of in that as and a impact of that towards to on second coal to year, coal cost available the in our of guidance be established began on year, best our based estimates, last pricing internal than process, pricing as At time, number predicted at anticipating may

likely end now However, quarter. Andy financials than will was additional will we details our the and accordingly. on if some up for adjust previously the call through XXXX markets predicted, our estimates over price to coal I strength for turn carrying more

Andy Eidson

Thanks, quarter double the Alpha with very morning, of third more than a quarter our year adjusted fourth strong of Jason. EBITDA end EBITDA everyone. to had adjusted $XXX $XXX million million. Good

previous transportation segment. during and X overall X.X fourth with the season of lower is to the from million our delays a encountered due part tons we total Alpha tons period. quarter, the coming the met For that quarter, This volume in some holiday than of sold million

As per for indices with on quarter. Atlantic over and the quarter. to in to indices Tonnage ton expected, pricing over $XXX mechanisms business improve the our linked Australian on just continued realizations the $XXX realizing sold quarter-over-quarter the export realized based tons just other

prior an XX% the quarters the we a Looking realized of roughly increase of ton, per at approximately over $XXX segment $XXX ton. as Met per whole,

the the of a ultimately higher earlier, commented and he higher mentioned Jason coal number that control royalties current of factors sales, environment inflation, cost includes taxes. our pricing outside As of cost do and labor yield a

fourth as quarter, cost the in $XX.XX Met cost we and ton to of segment coal of other per those the quarter, noncash by from rose due all outside incentive rolled our increased driven saw sales to SG&A and [ph] stock for $XX.X category those to increasing items factors. higher million largely nonrecurring accruals So, $XX.XX sales [ph]. in fourth, CEs in fourth coal and $XX.X to bonus excluding comp million

against for $XX.X CapEx million $XX.X Our was quarter flat prior million. of quarter roughly the

payment million. was $XXX borrowings. by million end balance and credit $XX principal closed of the approximately our quarter, total with for the the in unrestricted Cash cash operating during levels $XX liquidity provided on no quarter. availability of quarter and million Looking flows, of $XXX These ABL at of $XX sheet ABL of with the loan Alpha At are had million of activities letters $XXX the in the million. net term million cash, our and about outstanding year the

letters year, primarily we last recall the and December credit to prior that ABL of our refiled refi through the disclosures, you'll XXXX. from ABL As our admitted of cover extended in

of were committed thermal of segment priced midpoint of the our average and is of committed in fully priced XXXX, but additional price and at XX% Met price tonnage guidance and priced. committed at all at our of is committed Met priced at And The An an byproduct the metallurgical XX% category around business is not the other price committed of priced average $XXX.XX. the for an and in an for XXXX portion our $XX.XX. our $XX.XX. XX% tonnage met at average at Looking segment midpoint

continue on $XXX exact. to $XXX million accomplishments. we quarter, we mentioned made principal our As the very bringing top loan. fourth level Subsequent to down additional significant on term million, debt be these pre-payments the $XX the million made our of just $XXX in current quarter the call, close, prepayment an reduction In to David of in make proud We're million to under of debt efforts. headway a the at we

importantly, very believe they for strongly position well More the future. we the company

early stock goals program as back announced, cash this market our $XXX share have us allow David also on flows As tackle immediately we're buying begin to and at visibility effective implementing once. allows million us two we to that important open repurchase our week. the as currently will is near-term on The

advance And a that to to reduction on look First, you our for program and goals value naturally capital quarterly program continuing debt offering next enhances on our forward we'll progress on return the while also robust aggressive updating the our shareholders. earnings call. repurchase

final to in investor given deduction our shown now $XXX performance, fourth maximum adjusted website. million XXXX As note, our a is our updated quarter NOL on $XXX our posted utilization presentation, from as we've which million strong

be this expect monitoring so announced to quarters. a of from capital of these could with we've that benefit size repurchase NOLs those share Section to return that tax XXX provide We protect limitations significant XXXX, and cash action coming the appropriately come today's a any sized we'll play throughout NOLs during into naturally, kind

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

Daniel Horn

good and Andy, everyone. morning, Thanks,

through of our in circumstances as across usually overview, want Ukraine. of very Before mention I that statistics part I the go consider the the market to some we serious globe

addition such a to seaborne have and are exported XX% significance In many or in increased geopolitical stock trade-related latest economic there data the we brazen including Russia Markit, volatility According impacts which tons XX for from against to of the over of to accounted seen. actions Ukraine, million over global markets, Russia's coal of already in XXXX. IHS challenge metallurgical other democracy,

Alpha time result result direct and not as sanctions So With do to to of related the any at company, our a further ongoing supply the material regard [indiscernible]. specific conflict impacts expect war. may in this we

fighting, in in be for this impacted customers to time. the imposed can't nations we concerned relations the between continued sanctions our people of Russia the the and remain and known the all diplomatic And However, this situation Russia potential effects Ukraine. Ukraine, and other deeply these on by course, evolve at developments especially of

production as of World to Steel latest have statistics in continue steel the might recent touch inconsistent We at that borne expected have will altogether decline December Winter against decline. December. was held EU the X% in lower year by with statistics, in total been look latest situation roughly than year-over-year XXXX, production China's not some with out the a be preparing this Changing crude host given steel the Olympics. for data. December a X% flat and ago to unfolds. the show them the the the country Association unexpected though gears production to production X.X% landscape was production was Globally, Steel growth one period slight

U.S. steel production as dropped crude period. X.X% year mill to increased American end rates around North the production highs However, here against hover last the matched of XXXX steel for to its XX% utilization ago the couple months, demand. of from capacity Steel at makers

relative quarter, the per incremental now our down and $XXX receive started the While interest terms, represented East ton is for of Friday. per X, start on tons a quite East a quarter the quarter by this decline committed and on metric high-vol slowdown, December continues of to metric $XXX ton. having year potential $XXX Coast end the per as low-vol in metric $XXX. XX, per U.S. to indicates the ton the of and on slight per to That strong the U.S. the index volumes. to of products year. quite at of October ton, metric has $XXX metric a from at but level since The at ton Coast their moved our remained $XXX jumped record discussions ended up top highs in we've few XXXX dropped with index The fourth indices Alpha In customers had our largest about coal domestic from

Finally, at continue historically $XXX sharply to price ton. the especially days quarter, Even close, our index points quarter, committed metric up and metric from at levels XXXX, fourth about at low down went for the and we current the strong are to per levels very quarter still year. of start at the the for of per the PLV Australian be realizations per the and ton in optimistic ton $XXX over $XXX to metric recent is now these

Before our common want I topic remarks, briefly that have on also touch transportation the industry. within I my a wrap to challenges up been

While our obstacles been team to contacts. these and our conversation of far encountered we the in customers. so has We able have circumstances, railroad close and delays overcome needs our challenging meet remain with

ongoing of and We While we our our that satisfactory labor performance continued to programs been of certainly result issues opportunity consistently morning's availability for a those facing as understand our partners. workforce many welcome relies service. a the hurdles prepared work we our Operator, partners improvement open hope transportation transportation on heavily regard and companies this reliable of the call That questions. with business to the have remarks COVID-XX, towards ready to see concludes readiness are the to goal of call. we now with for

Operator

first today Pipes [Operator you. Riley question Lucas Thank comes from B. Securities. Instructions] from Our

Your line open. is

Lucas Pipes

very investment. of of has this opportunistically in from like would be you and Thank Where to for much at here? a end very the a proven comprehensive growth be this medium especially in in markets. thank this, you term, have of capital vein, your of comments times, kind wanted had and the may you the much, your think And do grow perspective ask opportunity for you from returns market the truly allocation. versus you kind to debt But you in I net thank obviously unusual of to terrific that historically about particular how to commodity that about you through perspective. think kind you And kind cycle? how Yes, really, be for capital

David Stetson

and over is Andy. David. This it I'll to pass start

said get think started calls, on our It's debt elimination for -- two on is and know, this as I previous question. the to earnings one, I have You thanks goal. I

an and that our perspective and because million our to we'll from are continue as capital perspective, allocation So of cash into these evaluate reduce goal We uncertain return do our very debt. were program to now be $XXX we eliminate been asset but to of of fortunate times. and able future to long-term our a has cap position move quarters,

have again. ability XXX, beyond we'll basis near reserve offered cash decisions, growth Board back what large standpoint, reviews our and on have our but a quarterly on so to future for our reviews future buy do flows, some we our acquisition prospective a that the we base. limitations We makes the our From an much

Alum Jason and Cedar mines. We're heard and You've discuss looking We we to evaluating the Glen grow internally. the organically capital and currently mine better formed are the an in to manner that other to Grove some ability believe utilize opportunities have acquisition.

miss that like would did Andy, there you So I discuss? anything to

Andy Eidson

are No, I a and quick through also, prices aggression on is, factor I think debt relatively far in until for don't gone. the we as and the as far pace as that keep that of with actions or any a these we but burn know, the could it's that goes as if the your as our rate the the, share now, kind can, mentioned, by then at no, David I that's right hey NOLS much it, on really we're plan eye should, hammering happen, additional an to repurchases does it's keeping And away what at as think it important stop it, with note consideration quarters. indeed are as add that I opens coming you that NOLs again we think way, as Lucas it's constraint mentioned

Lucas Pipes

account you. time this Nate kind And last the or crisis of starting problem Good I'm been to Super high. ago, really, Awesome, book but how on asked pricing you track helpful, you what then, thank the lose to would terms additional things your long your of us good any how quarters Thank or from in you to shape quarter hear. with also have take those locked has question have, about or remind in such prices can issues given on high two myself mentioned really here, prices would what left take into your the for index EBITDA open, is be XXXs, in as to versus quality segment that and of fixed and flows prepared through nature? of committed prices remarks that you in when guidance.

Daniel Horn

I'll Hey Luke that. stab at this Dan. is a

book, a at sold, be we our levels So when what fair the amount then of -- high remains to running the you we pretty outlined the of exposure, as think exposure call Aussie I and those a days. have of amount coal indices, these good to guess, we've are

that opportunities So we'll will. at that and there's regard. into continue if in to that do sell We we market, opportunities have look to

our the domestic also that We products as we'll and best have available requests that we bringing do to the still What us opportunities. we'll have, the with I is, we'll said, to have are number. match find customers

depend. a So decisions. there's of, certainly, the we're will answer make bit no and aware single appropriate of we'll there. It's it indices, But the

Lucas Pipes

away had How prices the market is thank Would demand then bigger, read perspective, And specifically, curious high say, reason of fair you demand a would look, there's macro strong, of you helpful, be customers that? because turn your problem. what's the another prices level to I are you. and of and on get a That's, -- are? obviously have need is and that your products? why for on kind they and bit that's is But you destruction, bigger so question, I'm starting around where

Daniel Horn

to fill far. market short coals, is of and are as moving least out Well, the that Again, theoretically so coming bringing the coal those is any coming those looking not the at customers, from in shippers buddy Australia at to customers it, gaps. least U.S. out opposite is out mostly turning initially things away of are been seen so away seen no, of we've changing, answer have from it's we but fact, Russian

our India the good short-term. I'll seeing and Far say demand East. of here we're were of to and seeing all coming markets, Ukraine step out the what we the that's prior back And including So were strong We seeing of in a invasion market.

hasn't that changed. So,

to coals, looking were are coals. some Russian markets addition in those to replace that, receiving that So

Lucas Pipes

of color all Understood, very appreciate I helpful. and continued best of your luck.

David Stetson

for thanks questions. Lucas, Thanks your

Operator

Martin question Company. Benchmark comes our Nathan from Now the next from

Your line is open.

Nathan Martin

Hey, quarter. on good the morning, guys. Congrats

David Stetson

Thanks Nate.

Nathan Martin

no problem. Yes,

start XXXX I'd guidance. I with think maybe

I largely really the with the had on going today sales tight supply on on quickly, given what's we've Met Lynn both have successful any and thoughts term? side, kind month. ramp to up last more some Branch unchanged, think you the Russia, discussion Ukraine, thermal the eyes everything in your extremely Any on maybe on real side the world, of production guys in near medium of incremental here already obviously,

David Stetson

very Nate, like I'll meet needs. as where to anything but where We're let which are industry, additional that spot we sweet others from But, right able differentiates let Jason, Jason have grab add in being well, that? that portfolio we in but We've feel multiple our now. on the I'll are. us where customer we diversified we and of you we offerings, to intentionally comfortable

Jason Whitehead

Sure.

You the know, you've heard, good way. morning, by

this as on You've and as will heard start will, planned which Alum is projected our mine, and Glen it plans for pace summer. the

a Where's it's the managing going think looked it's go? an going managing resource reserve, now at to coal What it's just I to evaluation. as or to not market about be margins, costs. be coal necessarily ongoing used

we'll on them life are you to, opportunities good evaluate economic know, definitely then sense that. we're to there if makes to looking So, do stretch and that continue

Nathan Martin

might it to labor? on of relates could David. and as and a throughout we you for across progression guys shipments we're that, kind color cadence that Got the How as Maybe transportation shipments XXXX how of, of about might think look I year Jason it, when here? little any looking thoughts the ahead if color, that kind affect Thanks give on thanks.

Daniel Horn

Nate, hi, this Dan. is

we it pro look I pretty much as at rata. think

and Canadian bit think better come stronger as word, at this quarter out little a we of, lumpiness, exposure overseas, We another. pro nine-month year, don't I tons have customers bit have million being shipping a we point that see to for some in largely again, XX a and but little customers have than the rata. were then any lack one vessels some it of during of

Nathan Martin

Dan. Got it

just just basically, equally of businesses similar. domestic and kind and cooperates So up hopefully, the split transportation exports

Daniel Horn

Correct.

Nathan Martin

have some how customers and you And guys on you any to Ukraine sell maybe, Dan, mentioned well you coal -- much comments Ukraine? in

Daniel Horn

I regular been Nate a customers. and not, customer, -- we've individual they've our No, granular going on get don’t, we're we mean, to not but

Nathan Martin

at I mentioned, Got know divestitures, were I'd just last of one your it, all to obviously, kind just know savings other mean, try, kind of from could continue figured in couple you you maybe maybe this I the time. see people of the thing near-term you quarter, divestitures Any potential so guys wondering, I see and assets you look potential a what those?

David Stetson

completed. an David. we that shot nonstrategic and Well, view do at we a evaluating our until And Nate, either acquisition guarantee When pretty constantly take portfolio. I'll is long-term divestment can those as future. this We're much do you not or our to it's we won't on divestments, assets usually, we make comments

assets, where we to in worked like hard extremely of now, are really we good our today. get shape. properties right are our where portfolio I We So are to

the will So horizon material that's move I anything don't see needle anybody. that the on for

Nathan Martin

mentioned, then fluid side, usually that And Jason situation the it's very at the kind the a day the now. mean kind fourth side, David. was guidance cost on. cost as head any for I in mean remarks, the was in costs a triangulating like the we on around guidance XXXs. prepared XXXs this it, maybe every believe. reference side records that And quarter unchanged point, I that obviously pricing Met XX.XX appreciate XQ in point, on market auction hit indicates benchmark just XXXX year In one seems I full where standpoint, one the from I quarter we're used just of could of if the on price maybe it it, in of And for more the actually and know Got I move? first I kind help just maybe

above So year full the is your XXXX guidance. already XX.XX again

about or that, Thanks. So, I first kind how kind that the even for quarter what kind wasn't full of on pricing just price even you of thoughts were mean, baked better that to if guys net XXXX it year stays assuming of where think way maybe into to guidance? where in current any to triangulate could move

Andy Eidson

follow that assumed Hey introduced of world impact about, were Naturally about to and guidance, point the guess substantially talked budget, Nate, our selling out it's were talking at waiting Andy. when get to the the to an have we time. strip so the to to that before further of changed longer Yes, guidance. so probably the what has royalties, just kind of since we been $XX you we I a when going those related are speaking, I costs, last bit sales of would make things we the little percentage futures But is we $X the you're our any we of the revenues in a say confirmation calls first then, this really coming based when kind at are factor of looking of step market significant how taxes, kinds up. long broadly price, in severance sales changes

You're -- can XXX turn a quickly. not it relatively into

of these again and do offset Now probably productivity continued market some quarter-after-quarter, quantum team the operations this improvements in see bump think if, sales. you seem then coal I say cost Jason find things as looking being on the portions up the for safe X%, some if we are see XX% by full but to we year of holds it's at going that to

Nathan Martin

really have say high-class go costs they've So what obviously change Yes, done going up substantially I helpful right? to there. the thoughts I it. to least, up and problem the and do get Andy, so totally done, and appreciate prices that's should really a it

and XXXX. Thanks best So for in it guys, as time, I'll leave your always luck there. of

David Stetson

Thank you, Nate.

Andy Eidson

Nate. Thanks

David Stetson

Metallurgical on want in call call quarter you of much. progress this look morning joining I XXXX to again in We Thank your interest thank day. a Resources. forward our rest Alpha for a for first updating Everyone months. on your so to of you our have everyone the couple great

Operator

today’s for joining. concludes This We call. you thank

lines. You may now disconnect your

Alpha Metallurgical Resources (AMR) 7 Mar 222021 Q4 Earnings call transcript