AMR - Earnings call transcript Q2 2024 | Alpha Metallurgical Resources, Inc.

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Greetings, and welcome to the Alpha Metallurgical Resources Second Quarter 2024 Results Conference Call. [Operator Instructions] Please note, this conference is being recorded. I will now turn the conference over to your host, Emily O'Quinn, Senior Vice President, Investor Relations and Communications.

You may now begin.

Emily O'Quinn

Thank you, Rob, and good morning, everyone.

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

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

Charles Eidson

the producing morning, team This control $XXX In Alpha detailing of sales the results, areas executed challenging the a performance. good of and another hitting Emily, spite the all, earnings quarter XXXX period. by operations included ambitious and they delivered an which we Both million release within and Thanks, of second and the financial targets, quarter. operating quarter backdrop, everyone. safely very within market well, morning, the X.X EBITDA can issued million adjusted our most shipped throughout well of teams solid shipping tons

quarter in discussed weakening demand markets, recent surprise, a negatively earnings the third our call steel market that experienced coal quarter in the and This in impacted May, metallurgical realizations second we not however, is as most conditions emphasized waning has world intensified our demand reflect we pressure. and As negative difficult in uncertainty difficult the brought QX. -- significant ] uncertainty about across have today. These [

has American for begun this time each North next As the customers year, negotiation at is process domestic typical year's contracts. with

needs. commitments provide and update In months, the on later continue an current to may listening we customer hear and domestic commitments our volume to and to coming be tons, XXXX able meet and we XXXX. for market tons Over to those the for contracted expect shipment we in ship year to closely overall guidance customers, future interim, our to our the we're secure the how we'll

remain priority franchise and conditions deterioration during second weather we Given the To first whatever we quarter. met liquidity preserving nearly market the volatility, total ahead. lie XX% our by on end, focused the our that may recent increased in order market to of

We a returns we approach regard to with continue to monitor as take market wait-and-see capital dynamics. the

lasted bit been also has is metallurgical years, that a to eager proven we've trap capital market, the we're to As longer than and than of with years now respect the our peaks also of at makes the the when thinking to backdrop valleys the dealing we're steel. of certain, This easy in to peaks program, needs to the conditions market and shareholders expected. One least past world previous into the coal recent in forever. note, particularly buyback X the today in with fall is thing activity that cycle. lasted usual want with the But has steel right it in have allow. I though, that pretty it's return and tough longer is that

thing I'm and turn Todd X,XXX our important I'll That's Alpha high members operate maintain they'll on QX of we the safely, good results. take team is details continue for our productivity to are us. what that's that, the call most the opportunity that at, So financial to presents every do. With for what and market advantage to confident over

Todd Munsey

Andy. Thanks,

realized $XXX.XX result reduction million, segment quarter. $XXX.XX. and incidental million non-recurring the quarter. Cost $XXX.XX from the million a for other per compared compared to the to in million $XX.X compensation the excluding down $XX.XX compared sales $XXX.XX ton ton, prior adjusted in first quarter. first and X.X Realizations the costs per realization coal priced indices the indices items, to the of ton quarter. SG&A, decreased second $XXX EBITDA stock the ton, was per purchased on quarter, third-party tons, realization in in our ton million first lower in thermal in a Second and as in We per first the of realizations $XX.XX $XX.X million Atlantic our down to and a to were pricing $XXX.XX quarter compared compared quarter. decreased in $XX.X $XXX respectively, as of in second second decreased reduction non-cash the QX, was was coal cost in X.X The down $XXX.XX quarter-over-quarter second quarter the segment realized of $XXX.XX the realizations quarter, as an the met quarter from QX. Met against QX to second from primary softening costs with These decreased mechanisms drivers sold sales-related QX. weighted average tons met in sales $XX.X portion first in QX. in for Export coal per per quarter. CapEx million, million ton export The of ton per in total in quarter down segment $XXX.XX in per in for the quarter the are quarter. Australian of met $XXX.XX priced ton metallurgical while $XXX.XX, coal to the prices average of from

$XXX.X flows, of quarter. March of our cash figure June Moving unused ABL of the We XXXX, XX unrestricted in as availability or million in under had XX%, end XX, an million, and $XX.X we the had from $XXX.X million. sheet cash, cash to million balance our unrestricted $XX.X nearly the increase at of

of June, of of second operating million the end quarter. Cash first end activities was $XXX.X up from the down QX. million As in the at million, $XXX.X million provided Alpha from $XXX.X $XXX.X by of quarter, in liquidity had total the

no from of June letters the down million and of outstanding, facility our As borrowings in million prior $XX.X XX, had credit ABL $XX.X of quarter.

price metallurgical $XXX.XX. tonnage XX% the in segment at and our position our is of of an the committed of at terms midpoint committed In for XXXX, met of average guidance, priced

priced tonnage but guidance our met portion met is year byproduct committed of midpoint of of $XX.XX. and committed is at the the XX% yet the for an The not fully priced. thermal Another average segment at of

As liquidity our and call, market repurchase limit we and communicated buyback quarterly of quarter building share position. QX, our the we under maintaining in the We did activity in we shares expected discussed intention repurchase second the softness last company's program. our in to not any

stock of contingent approximately market As shares XXXX, additional authorization of XX on conditions. number was levels outstanding permits stock July the remaining $XXX program and The million million. repurchases, XX, in flow approximately cash buyback common

an million to in the will average Jason total call turn of over a repurchased under X.X price shares an the update quarter. the have $XXX.XX. I on We of for now share plan existing at operations

Jason Whitehead

continued and good quarter. to to safely in Todd, report the second our operate that pleased I'm Thanks, teams and efficiently morning, everyone.

We have and performance safety again that's achieved than environmental average. better industry the

numerous our at many few rescue Over and team of teams have and safety region, received call, to throughout months, very are to each finishes. but these quarterly preparedness. On individual last awards and we list of place every our mine including their dedication agreements. the had simply and we to with competitions new teams, cost appreciate first are here, too proud many the conditions then, the have last available lower There conversations, outstanding supply our realities. of explained good current some have we've cases, where transitioned a many resulted process options undertaking better partners needs lot In we market we're I suppliers. with suppliers which and improved of our the communicate match viable to were pricing Since in market to member

positive have we changes these take effect, a to As expect impact actions these our costs. on

flexibility Additionally, timeliness manufacturing and parts we fine-tune increased the and in existing life capabilities, in-house us spans equipment. certain replacing continue to have afforded safely of maximizing our our which

the will talent turn We this Dan teams the regard. I us on will over the leverage for our markets. an continue assist in manufacturing of to to call and update to the capabilities now

Daniel Horn

for by metallurgical market health negatively globally, of the Thanks, and steel Weakened economies, Factors softness persisted, national past influencing conditions unrest over include conflicts. which good and demand regional has have Jason, impacted morning. well economic in resulting and policies some of months. very geopolitical as been continued coal as demand violent and several the steel global

index more X $XXX.XX metric second quarter of U.S. the indices for index A per measured decreased $XXX Vol the per B of $XXX the Australian April ton metric index at including end per occurred further. end globe countries, date. steel. Metallurgical August at coal metric on the decreased for $XXX X on coal. close. Additionally, per volume the And XX ton. In and have European moved to quarter many Coast to The coal on Low ton elections already metric national Coast APIX XXXX, $XXX and the across the the respectively, destinations metric have $XXX High metric U.S. at in elections Coast quarter metric India at per per decreased U.S. the of in was A And ton higher-than-usual B to per Alpha's races geopolitical of Vol quarter. scheduled to than the $XXX Premium High to ton States, East East to start index at market, demand the of per the April August second softened important June. the ton from $XXX the or The occur of $XXX.XX of Vol X, per indices at same the $XXX $XXX.XX High Low X. United X all of East at was leadership Low Vol The to additional $XXX, APIX April East ton, are East created uncertainty, respectively, and the Australian Coast indices Since during as end quarter. has across for U.S. the prices High decreased consumer world thermal metric end and $XXX.XX dropped The and all confidence affects XXXX. Vol on metric The index the U.S. and close, from Coast Vol and from at Premium per beginning ton of June. from ton fell index ton quarter Vol $XXX Vol Low which $XXX

DTA to tons Alpha's to well the the In proud May contracted quarter. X.X ship of I'm on to QX, current our worked teams able of has our internal as stacker/reclaimers challenge shipping In controllable terms and in tons how jobs, impressive continue one were operations we was around where poor This a performing dynamics. weeklong customers of sales, aspects within even maintenance. hit shipped for performance, the that the million planned. our more the risen down logistic is of to considering to our milestones, and despite planned focus we team period recording continued some market

very spoke little recall only we in we the will from which market seeing, intensified no May, our about of has demand. or deterioration with you since then As call that QX back spot periods earnings were

As are we process bit volumes XXXX, or of look meet the volume shipment ahead looking early customary domestic where in process the to XXXX with on in regarding time. business. discussions solicitation guidance. to update pricing year XXXX has provide remain will year, sales we North ability American the confident appropriate we full balance customers our a in will to the we to commitments our an and It's begun, And the much but Alpha's about at too speculate early land, further

and Finally, experienced pleased performance rail that the collapse. say material Baltimore has from indirect bridge we I'm impacts have solid, been not to

the producers ownership the excellent ancillary bridge stake that, coal provide with to and challenges our Alpha have the rail the to with the operator, for grateful the partners to not experienced flows, reminder, to performed for and we questions. world. And Despite does service now our look disruption to performance the DTA, positive majority from well, export utilize remain to forward of the transportation ready a our We coals. not we and around terminals other collapse. customers continuing Baltimore As have open call aftermath are in rail

Operator

Our first with Lucas from Securities. comes question Riley Instructions] [Operator B. Pipes

Lucas Pipes

point those both to Really as solid coal, from And maybe coal sales-related purchased contribution could ask any cost do your reductions, wanted a the cost other how purchased out then, much major shipments? I performance And as if well QX. break little to the typically in reduction blend buckets into kind you kind bit could level, of of as on to you higher drivers. you that and

Charles Eidson

just the kind XX-XX those I'll that XX% and is may first they breakdown reductions reduction, category Lucas, We productivity of other between combined, on general X it's than The XXX%. may piece less items. stuff. Andy. be hit roughly the X it's between cost items have of split roughly But myself. those cost enhancement,

let I'll given how one. As utilize far on as we purchased that quarter, much Dan on coal jump a

Daniel Horn

tons depends on a thousand hundred year. There's conditions. of it Typically, no several lot A fixed number. market

have issues. it own some of if geology are quality doing, we Some what or mines our on depends

the And don't put those top number the know off in purchased my more head, against several the but I the just some range. thousand of So to are little purchased of color, ton indices. tons hundred it's a

coal So, as our down, the costs indices have slid purchased with have it. slid down

Lucas Pipes

the on versus And implies, of reduction it, or it. volume, Got X% guidance so first half. call midpoint

as if more supply maybe that conditions, mines after could there a And if industry, in a reflecting supply are the just disruption rationalizing? on speak second cost of improving also on So of North I comment the some to And kind in wondered of situation maybe Is current higher it could out the you in that conservatism quarter market well. on I kind very wondered take broadly? Is the degree strong that major quarter? a sense zooming you then, was what's your that. America.

Charles Eidson

hit part cover I'll I'll piece the it. the first of Lucas, Dan let again. hard

the and as QX. intentional really have in production shipment the shipments, very far fallen. have QX the quarters and there's It's on As just strong shipments did there. cadence nothing We how

that I the ahead bit got us think so, little of a And curve.

it half our to really midpoint. back be -- at looks QX and probably of the just mean, which looking get will kind it's the will QX to of it like it like year, taking -- I between ratable forecast, So that looks

to tons as vast far you really running Dan, answer So they commitments need the the with book those let majority getting being a those it's the function question, that broader be. But where as market of committed, and just one. I'll through of

Daniel Horn

off, costs. some of off, continues demand idled the mine seen there's course, we've with edges, itself. Thanks, of -- still mines think market of we've these sort I to a high Andy. other But large around takes I supply due Yes, to but seen coming off the fires. balance coming Lucas, some supply met due words, also, also couple And it the some In supply frankly, that guess, of even some gone. to

net-net still where it's is. So it

like look. haven't -- steady. book been off impact going We supply that, -- we're on Having I order that basis the just enough looks think we'd our kind We we're to forward come market. like said to don't And there's shipping of and India, to materially more is season a for And little week bit are -- resume pickup a little the we we at no shipments expect a see bit bit of a time. surprise, But seeing example. monsoon in into a wrapping up, more India. it

Lucas Pipes

if But think the Is oversupplied today? tons? so, many it you to Dan, And [ how do possible ]? market is quantify

Daniel Horn

for a I one, can I'd I know. don't I don't -- boy, Well, that's it's say think Lucas. speak Alpha. tough balanced.

down actually inventories were inventories brought bit. Our in QX our -- a we

not So, up. it following it's that what we're our to situation. Yes, with We're doesn't comfortable the inventory feel coal oversupplied me, worth.

Lucas Pipes

changed the Andy, That's could to last market this I'll question. markets Obviously, one at has equity time? market. Coal ask to are you priorities bit, strategic a softer. your speak helpful. try maybe broader

cash kind You target. of are your ahead of

how how about want time. think and you of Alpha you to this position optimally kind So during everything wondering

Charles Eidson

pretty Lucas, markets -- Yes, is one like that it's in easy. these,

some to usually kind you're like gone takes turn, don't we speak. for longer things may a the it inklings is the a us, could just of on which and be season", when it battleship, market prepared said, see than typically as the "shoulder We on months This that as And strategy the has a Dan than longer in so defined yet. a you've X is, but got be fact while. protecting I Our and -- doldrums, that said talking it bit lasted does, see end the necessarily a that franchise. comments, of has good this about see it of couple,

just that the operated our going a comfortable sheet. of trying so a been mind, target aggressive about -- for that and we have market #X think more more we And get buffer -- remain that. that's getting number period a balance with conservatively, has fashion in above we longer to protect have liquidity So on more in successful most priority our of before until operated about we anything because is turned time to I are too creating because substantial I think for the we've

Lucas Pipes

great managing times. has team bad and and good market, the Andy in done job this a both

So be I'll looking continued to And the forward in wish best that. meantime, of you luck. I

Operator

Our comes The with next Company. question from Nathan Martin Benchmark

Nathan Martin

you experiencing sounds like the on is. obviously, The quite is signals bit is in on stock Just get thoughts little just the Maybe the bigger looking for Lucas' comfortable other do It your more buffer that. turmoil digging there. a But of market focus be a would Is it could looking restarting market Is just that's Andy, bit it a point opportunistically you buyback? cash? like at right question, you there? where any now. great. what feel touched in last price,

Charles Eidson

Yes.

right I the in And to -- if it's the by lowest bouncing band -- XXXX, in long I now, an period we point because coal to ] it, [ the you really XX-day we're think in as point be put on at around -- by markets it's the been this lowest a in you my at roughly we're math, X going PLV, a price driven exclude, is years. about finer Nate, if $XXX X that we've think years. this because mean, I as remain

long of going in some be while. had start I stay that's jumping to with to you back a we've keeping focused that's we're And And no -- indicator us band, so, we're and back it's down, for deal time us going sheet cash on think And the not for as have producing remain as or when could the the strong, to to that quickly cash turn into some another from because into quite territory cash. to giving capital returns. balance to buffer producing of consuming real plenty go we

Nathan Martin

pretty Andy. mentioned those think guess, Are maybe you we've side point. of the marginal this is? Appreciate I you where do left seen level. this to equation, U.S. looking Dan, you are the Dan, where I is considering comfortable the down in at this commentary more level draw ground given kind cost or Or thoughts, sense. around guys them at And where I that said today's guys build the point, any at inventories? at that cost think, being some PLV the your to you Makes indices Also, you're are? thinking about price tons more? of of Any opportunity you point? think, any

Charles Eidson

Nate, I'll first get the piece.

] thinking shutting the when account balance And an EBITDA. desire to their fixed their into capture how they of It some been ability the, reasonable share, all-in the take or their account As take into there's which or where also data losing going while of cost down relative do pretty is sheets. to globally. call market cost sitting think think that. doesn't become and the marginal far at conversation is don't zip on of companies about idling bit strength the about terribly important I and number, splits, know that a necessarily little variable take probably doesn't $XXX [ you're -- doesn't into cost a cost as $XXX also code curves, cost curve might lot of operation. it it it, looking because behave to is I be predictive sacrificing are for kind I that account

acceptable. at still we're this feel that we producing are point, comfortable. margins that we're moving We're at tons the So

inventory far doing otherwise. But Dan, have situation we'll as on else do anything that that? dictates So until you continue the as levels,

Daniel Horn

-- say liking, build looking don't DTA. the specific that, say Nate, to find inventories. Not we comfortable more inventories. it, and market build we than we plans any just But our build our of been already little able to reduce not along, afraid to comfortable we're Andy? is maintain I our or bit I'd if don't guidance, would we're maintaining a particularly particularly, to inventory, move we've inventories we'll are. we not but -- with at to have. we're that we the We guidance at already certainly have

Charles Eidson

solid to people employees Nate, from Alpha it's was it and that I solid a the onto thing for And this easy X,XXX-plus -- I'd congratulations Yes. actually one kind all better just quarter add market, execution. more quarter. believe of call lose It to my to is With focus. for was of than appreciation offering what a

is goes you to standpoint. the job, your I moving something performance we're incredible show from Sometimes people it's sure team or what have look creep not when shame people the the up the sprint in have injury and can job like keep because kind markets can being an these market operations an something lost. that a that see the rates and sales sideways But And feel both doing of giving a done your that just work incredible make along. not us done stress, usually just the that really things environmental, said, this that's and to like maintaining financial a want pace violations,

Nathan Martin

And guys. out. to not Jason, then you one that, for you, Appreciate leave maybe,

called segment that I your your quarter, result number the guide. improving remarks, the prepared those in with year met even below in cost some was should suppliers think out costs more. recent renegotiations Obviously, full there's in you second

to on, full And for suppliers guys futures if costs maybe year let's help kind based is a to full could around quantify say, we or a just today? So, the for would you Aussie benchmark in much range improvements ton way how step the any with the which recent come take where of metric in those back, that year? $XXX price, so expect the costs

Jason Whitehead

tell can a process. that all I think point. grueling at don't it's this I answer I Well, you can that But

or coal rising -- exact do. since the have reasons just And all and they labor companies that same with the suppliers COVID same exact as dealt Our the and we will, problems inflation they've have shortages. have prices if excuses, with you

have suppliers several and same they So to the meetings kind their of back to of there's and and lot with go each thing. forth do vendor, or a

an but in it's a direction. months-long gain process it to move starting seems positive see -- So are to like things a we edge,

Nathan Martin

land Any that. me, -- price? in Appreciate just a flat of excuse full range, could that year Okay. thoughts cost assuming around kind pricing where $XXX

Jason Whitehead

Yes.

there's year, we're guidance we'll time. that. our with just And think at later reason going update I do to to this it the stick in if

Nathan Martin

because, Yes, did it. of guys quarter price. curious job you just that a fantastic coming again, range Got Okay. this at kind that below

Okay, I'll leave appreciate and time, best it the luck second I in there. half. guys, the of

Operator

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

Charles Eidson

everyone, thanks, rest you Well, appreciate great in call as We today. we day. interest And a your for the joining the Alpha, always. have hope of

Operator

This today's concludes conference.

You lines for thank at may time, and disconnect participation. we you your your this

Alpha Metallurgical Resources (AMR) 5 Aug 242024 Q2 Earnings call transcript