Alpha Metallurgical Q3 2026 Earnings Call Transcript

Alpha Metallurgical (NYSE:AMR) reported third-quarter financial results on Friday. The transcript from the company’s third-quarter earnings call has been provided below.

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Summary

Alpha Metallurgical Resources reported a third-quarter adjusted EBITDA of $29.4 million, with improved shipment volumes of 3.9 million tons compared to previous quarters.

The company issued 2027 guidance, expecting to ship between 14.3 to 15.7 million tons, with cost of coal sales projected at $104 to $110 per ton.

Alpha is dealing with storm-related damage at DTA, requiring a replacement of the stacker reclaimer with insurance expected to cover costs; disruption minimized through alternative logistical arrangements.

The company successfully negotiated fixed-price 2027 domestic contracts at $135.48 per ton, reflecting a higher proportion of high-vol coal.

Operationally, Alpha received multiple safety and excellence awards, highlighting strong performance and recognition in the industry.

Management noted slight cost increases due to ongoing pressures, particularly from diesel, but indicated a slowdown in the rate of increase.

Alpha’s financial position remains strong with $334.1 million in cash and $443.4 million in total liquidity as of September 30, 2026.

Full Transcript

OPERATOR

Welcome to the Alpha Metallurgical Resources Third Quarter 2026 Results Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. Please note, this conference is being recorded. I would now like to turn the conference over to your host, Emily O’Quinn, Senior Vice President, Investor Relations and Communications. You may begin.

Emily O’Quinn (Senior Vice President, Investor Relations and Communications)

Thank you, Rob. Good morning, everyone. Before we get started, let me remind you that during our prepared remarks, our comments regarding anticipated business and financial performance contain forward-looking statements and actual results may differ materially from those discussed. For more information regarding forward-looking statements and some of the factors that can affect them, please refer to the company’s third quarter 2026 earnings release and the associated SEC filing.

Please also see those documents for information about our use of non-GAAP measures and their reconciliation to GAAP measures. On the call today, I’m joined by Alpha’s Chief Executive Officer Andrew Charles Eidson and Chief Financial Officer Todd Munsey, who will provide prepared remarks. Also participating on the call are our President and Chief Operating Officer Jason Whitehead and our Chief Commercial Officer Dan Horn. Following the prepared remarks, we will be available to answer questions. With that, I’ll turn the call over to Andy.

Andrew Charles Eidson (Chief Executive Officer)

Thanks, Emily, and good morning, everyone. Today, we released our definitive third quarter financial results, which include adjusted EBITDA of $29.4 million and 3.9 million tons shipped. Our third quarter volumes improved compared to the first two quarters of the year, which were 3.6 and 3.5 million tons, respectively. Cost pressures continue to influence our financial results, and we remain committed to managing these cost challenges and continually evaluating the portfolio against the needs of the metallurgical coal market.

Speaking of the market, we have completed our annual budgeting process that culminates in the operational guidance expectations we issued today. I’ll let Todd cover those in detail, but it’s important to note that our 2027 guidance reflects current expectations for the coming calendar year, which includes our analysis of potential financial impacts in 2027 terminal capabilities at DTA in Newport News. Following the storm-related damage that occurred in June, DTA management has worked diligently to keep operations moving and collaborate with the various parties about potential go-forward plans.

As a result of these conversations, DTA believes the stacker reclaimer referred to as SR1 will need to be replaced as opposed to repaired, and they’ve been in close contact with DTA’s insurance provider about covering the replacement cost as well as potentially certain other expenses incurred due to the damage. As such, it’s important to note that we do not anticipate significant capital outlays in association with the stacker reclaimer replacement process.

As far as timing is concerned, a total replacement of the stacker reclaimer would be a fully custom build requiring specialized design, engineering, construction, and installation. Such work will likely require a lengthy timeline, with current estimates in the two-year ballpark. This is why we’ve worked so hard to establish a logistical framework that minimizes the disruption to our sales and logistics processes and allows us to keep coal moving to our customers while DTA addresses the damaged stacker reclaimer.

This includes a plan to also utilize our throughput capacity at other Hampton Roads terminals in addition to DTA, as evidenced by our more normalized third quarter shipment volumes. We are optimistic about our ability to move all the tons we need to in 2027 and beyond. As we look to next year, our guidance includes 3.5 million tons that we plan to sell to domestic customers in 2027 at an average price of $135.48 per ton. We’re pleased to announce the results of the domestic negotiations, which are fixed-price annual contracts. Each year’s negotiation is a little different depending on the market backdrop and a variety of factors. For example, high-vol made up a greater proportion of our 2027 domestic quality mix than in 2026, which influences the average price achieved for the total domestic book.

All in all, we’re pleased with these commitments, and we look forward to building the rest of our 2027 sales around opportunities in the seaborne market. As usual, our teams are doing great work throughout the Alpha organization, and several operations have received recognition. On the environmental front, our Paramount team in Virginia was recently honored with three Excellence in Mining awards from the Metallurgical Coal Producers Association. Virginia Energy also awarded them with three safety awards at their recent ceremony. Both of Alpha’s mine rescue teams continue stacking wins as well, including first- and second-place finishes across many categories of competition in the National Mine Rescue Contest that was held in August.

We’re extremely proud of our Paramount team that earned the top honor of National Grand Champion this year with a perfect score for the competition. These miners continually train, practice, and challenge themselves so they’re prepared to respond when their skills are needed. So congratulations to all those team members. I’ll now turn the call over to Todd for a review of our financial results for the third quarter.

Todd Joshua Munsey (Chief Financial Officer)

Thanks, Andy. Good morning, everyone. Adjusted EBITDA for the third quarter was $29.4 million, up from $25.6 million in the second quarter. We sold 3.9 million tons in Q3, up from 3.5 million tons in Q2. Met segment realizations increased quarter over quarter, with an average realization of $121.09 in the third quarter compared to $118.71 in the second quarter. Export met tons priced against Atlantic indices and other pricing mechanisms in the third quarter realized $107.03 per ton, while export coal priced on the Australian indices realized $150.46 per ton.

These results are compared to realizations of $109.08 per ton and $143.82 per ton, respectively, in the second quarter. The realization for our metallurgical sales in the third quarter was a total weighted average of $124.52 per ton, roughly flat against the second quarter average of $124.30 per ton. Realizations in the incidental thermal portion of the Met segment were also essentially flat quarter over quarter at $79.44 per ton in Q3 compared to $79.36 per ton in Q2.

Cost of coal sales for our Met segment increased to $106.93 per ton in the third quarter, up from $103.07 per ton in the second quarter. SG&A, excluding non-cash stock compensation and non-recurring items, increased to $15 million in the third quarter compared to $13.7 million in the second quarter. Moving to the balance sheet and cash flows, as of September 30, we had $334.1 million in cash and cash equivalents as compared to $338.5 million of cash and short-term investments as of June 30. We had $184.3 million in unused availability under our ABL at the end of the third quarter, partially offset by a minimum required liquidity of $75 million. As of the end of September, Alpha had total liquidity of $443.4 million, down slightly from $447.8 million at the end of June.

CapEx for the third quarter was $33.8 million, down from $45.1 million in Q2. Cash provided by operating activities was $46.9 million in the third quarter, up from $39.9 million in the second quarter. As of September 30, our ABL facility had no borrowings and $40.7 million of letters of credit outstanding. Looking ahead, we issued 2027 operational guidance this morning. For sales volumes, we expect to ship between 13.1 and 14.1 million metallurgical tons, as well as another 1.2 to 1.6 million tons of incidental thermal coal, bringing total 2027 shipment expectations to a range of 14.3 to 15.7 million tons for the year. For 2027 cost of coal sales, we are guiding to a range of $104 to $110 per ton. Selling, general and administrative costs are expected to be between $53 and $59 million in 2027, excluding non-recurring expenses and non-cash stock compensation.

Idle expense is expected to be between $25 and $33 million. We anticipate 2027 net cash interest income of between $2 and $4 million, and depreciation, depletion and amortization of $148 to $162 million. Capital expenditures, including carryover, development and maintenance capital, are expected to be in the range of $145 to $165 million. Contributions to equity affiliates are expected to be in the range of $28 to $37 million, which include cash contributions for DTA.

Lastly, we are projecting a 2027 cash tax rate of between 0% and 5%. In terms of our committed position for 2026, at the midpoint of guidance, 87% of our metallurgical tonnage in the Met segment is committed and priced at an average price of $126.69. Another 12% of our Met tonnage for the year is committed but not yet priced. The thermal byproduct portion of the Met segment is fully committed and priced at the midpoint of guidance at an average price of $76.06.

Coal markets remain subject to uncertainty and volatility resulting from geopolitical conflicts and global economic conditions. Improving indicators in manufacturing conditions across key Alpha markets suggest that economic conditions are with almost all in growth territory while global steel demand remains weak. Supply-related factors such as mine closure announcements temporarily influenced metallurgical coal indices to rise toward the end of the third quarter, with further volatility continuing after the quarter close.

The Australian Premium Low Vol index increased from $244 per metric ton on July 1 to $272.10 per metric ton on September 30. The U.S. East Coast Low Vol index rose from $190 per metric ton at the beginning of the quarter to $210 per metric ton by the end of September. The U.S. East Coast High Vol A index increased from $157 per metric ton at the start of the quarter to $195 per metric ton at the quarter’s close, and the U.S. East Coast High Vol B index rose from $147 per metric ton to $170 at the end of the quarter.

Since then, the Australian Premium Low Vol index has decreased to $262.20 per metric ton as of November 5, representing a drop of roughly 4% since quarter close. U.S. East Coast Low Vol is unchanged from quarter close at $210 per ton. U.S. East Coast High Vol A has declined about 3% to $190 per ton, while High Vol B has risen slightly to $174.50 per ton as of November 5. In the seaborne thermal market, the API2 index was $115.50 per metric ton at the beginning of July and increased to $141.40 per metric ton at the end of September.

Since then, the API2 index has moved down to $136.30 per metric ton as of November 5. With that, operator, we are now ready to open the call for questions.

OPERATOR

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

George Ady (Analyst)

Yeah, good morning, team. Thanks for the update today. Can I ask on the cost front? So cash costs only 2% higher year on year at midpoint, even if I adjust for marginally higher midpoint sales volumes. Can you maybe just talk through what goes into that and sort of potential cost sensitivities to things like diesel? And I guess it sort of seems like a very low year-on-year cost increase given a lot in this sector are talking about a lot of input and broader sort of cost pressures.

Thank you.

Andrew Charles Eidson (Chief Executive Officer)

Hey, George, this is Andy. Appreciate the question. Yeah, we’re actually pretty pleased with where our cost guidance is coming out for next year, although it is up a bit. I mean, we’ve really seen the vast majority of the input cost impacts have already found their way into the system for us. So, again, we would hope that there would be some relief on the diesel side. Hopefully that situation gets resolved sometime in the near future, and even then it will take a while to work its way through the system.

But we’re just not saying that the input cost increases have flatlined, but the rate of increase has tailed back quite a bit. And once you bake in the impact of the diesel and all the oil adjuncts, I think our current run rate is pretty well reflective of that. So, next year we don’t see a material amount of increase from there.

George Ady (Analyst)

What diesel price did you assume in guidance for ’27, Andy?

Andrew Charles Eidson (Chief Executive Officer)

Off the top of my head, I don’t know. Yeah, I think it was low to mid fives on a per-gallon cost.

George Ady (Analyst)

Okay. And then what’s the sensitivity, if you were to sort of estimate ballpark per ton on your cash cost, if that went back to, sort of say, mid 3s? Like, what’s the potential production cash cost?

Andrew Charles Eidson (Chief Executive Officer)

Well, I’ll leave you to do the math on that. But we do run in the low 20 million gallons of diesel across all operations. So, you know, 20 to 22 million gallons. So you could figure what the sensitivity is on that across all the tons.

George Ady (Analyst)

Okay, yeah, that’s perfect, thank you. And then just one more on sort of getting back to the 16 million ton per annum levels. Can you talk through how that looks? And if DTA’s sort of being down for the two-year ballpark you guys flagged, is it constrained? Or, I guess another way of asking, if markets got a lot stronger next year, could you push beyond that 15.7 upper end, do you think? Or like, what is the constraining limit to higher volumes for you guys at the moment?

Andrew Charles Eidson (Chief Executive Officer)

Yeah, I mean DTA obviously will be a constraint. Our sales and logistics teams have done a really nice job. As I mentioned in the prepared comments, they’ve done a nice job of finding flexibility and optionality with other export terminal access. So, you know, there will be a point at which we can’t expand any further. I’m not, you know, I’m not going to throw out a number for that, because, again, the team is pretty creative in finding new paths to get tons where we need them to go.

But I think we’re comfortable with our current run rate. I don’t think there’s a huge amount of upside to that. And, you know, we’re going to need the terminals to operate well; we’re going to need the railroads to perform well to hit all of our numbers the way we want to. But I think we’re going to be able to get there and, you know, it’s not going to look that different year over year compared to 2026. From a quality perspective, it’s going to look a little bit different because, again, we—I think we are moving around in our—or, as has been our plan, we are shifting, as a lot of other folks are.

We’ve been working on a multiyear plan to shift more of our production from higher-ranked coals—from the low vol and mid vol—and a little bit less on the high vol side. So that will continue to develop. But I think logistically all of that fits pretty well into what we’ve got planned for 2027.

George Ady (Analyst)

All right, that’s helpful. Thanks, guys.

OPERATOR

Thank you. Our next question comes from Nick Giles with B. Riley Securities. Your line is now live.

Nick Giles (Analyst)

Yeah, thanks, operator. Good morning, guys. It was good to hear that there’s more high-vol coal in the domestic mix, which I assume leaves more low-vol coals to send into the seaborne market. So I was wondering if you could just quantify that mix shift—maybe how many incremental tons of low vol would you be able to send export next year? Thank you.

Andrew Charles Eidson (Chief Executive Officer)

Yeah, good morning, Nick. I’ll throw that one over to Dan. That one’s definitely—he’s got the numbers at his fingertips there.

Daniel Horn (Chief Commercial Officer)

Thanks, Andy. And hey, Nick. Well, let’s start by saying that, you know, the high vol that moved into the domestic market—that’s coal that is, let’s say, a little lower-value coal, and, you know, that was reflected in the overall comments that we have there and the pricing. But as we ramp up the low vol at our new Wildcat mine, it’s kind of dynamic. So you can’t really compare our portfolio in ’26 to what it’s going to look like in ’27. So as Wildcat ramps up, we’ll have more low vol available, and broadly speaking, at this moment that’s all available for the seaborne market.

But we’ve had a lot of interest in the domestic market too as it ramps up. I won’t give you a number, but it’s several hundred thousand tons at least that would be available to go seaborne easily, as well as our usual mix of high vol and quite a bit of mid vol, which is always sought after.

Nick Giles (Analyst)

Got it, okay. Thanks for that, Dan. Any sense for how much of that would be PLV-linked? Or, I guess, what do the commercial discussions look like today in terms of getting more tons sold on a PLV basis?

Daniel Horn (Chief Commercial Officer)

Yeah, I’ll say this: there’s quite a bit of interest from customers that we would sell against the Aussie indices, but I can’t quantify that. The Wildcat coal is a premium coal that should—that will—achieve a premium to a lot of other U.S. low vols, we think. So whether we sell it against an Aussie index or, you know, very strongly against the U.S. East Coast index, I mean, we’re happy. We focus on the net return, not just the index.

Nick Giles (Analyst)

Makes sense. I appreciate that. Maybe just shifting gears to the stacker reclaimer—it’s good to hear that you feel like that’s fully covered from an insurance perspective. But how should we think about the timing of those insurance reimbursements versus any capital outlays that may be required? Or, said differently, is there a scenario where you might have to invest in the new stacker reclaimer and kind of wait a few quarters for the insurance reimbursements to come in?

Andrew Charles Eidson (Chief Executive Officer)

Yeah, I think it’s probably a little too early to comment on that one, Nick. You know, I don’t expect there to be too much of a sequencing problem from that respect—certainly not a multi-quarter type of reimbursement gap. Obviously you may have a few weeks or a few months, but, you know, we’re pretty pleased with how our insurance—or how DTA’s insurance carriers—responded thus far. They’ve been very helpful and constructive in helping us move along this process relatively quickly.

So, yeah, I don’t expect an impact, but again, it’s probably too early in the process to be making too many prognostications there.

Nick Giles (Analyst)

Okay, fair enough. Andy, maybe just one last one for me on the capital allocation front. Would just be good to get an update on what you’re seeing among your kind of smaller peers in Central App. Are there any opportunities out there to pick up some tons at a discount, or have you heard any rumblings of kind of more capacity that’s come offline?

Andrew Charles Eidson (Chief Executive Officer)

Really not in a position to comment on any of those folks. I mean, they’ll have to speak for themselves. As we’ve always taken the position, we look at anything and everything. We want things to be a good strategic fit. If things are available, we want it to be a combination of geographically synergistic, quality synergistic, and accretive from a financial standpoint. And those boxes—all three boxes—are kind of hard to check right now when you look around the chessboard.

But there are some things out there that we can look at. But again, we’re really focused on managing our own portfolio—particularly in markets like this—making sure that we’re optimizing our outcomes and optimizing both the productivity and the profitability of the portfolio.

Nick Giles (Analyst)

Okay, well, guys, I appreciate the update and continue best of luck.

Andrew Charles Eidson (Chief Executive Officer)

Thanks, Nick.

OPERATOR

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

Nathan Martin (Analyst)

Thanks, operator. Good morning, everyone. I had a question on DTA as well. I mean, just given the fact that you said the repair/replacement timeline could be extended into a year or two, just curious, do you see any opportunity to improve logistics or lower transportation or port costs in the meantime?

Andrew Charles Eidson (Chief Executive Officer)

In the meantime, before we get to a repaired DTA? Probably not. I mean, that’s more of a focus on just getting the tons moved where we can as best we can. You know, on the other side of DTA and during the repair, could there be some opportunities? Yeah, I mean, anytime you’re looking at older equipment that’s going to have to be replaced for any reason, you’re going to hope to find some opportunities to improve things, whether it’s from a throughput capacity standpoint or from a cost reduction.

But that’s for future conversations as we actually get into the nuts and bolts of mechanically fixing and replacing the stacker reclaimer.

Nathan Martin (Analyst)

All right, understood, Andy. Appreciate that. And maybe looking at CapEx for ’27—guidance falls roughly flat year over year. I noticed an updated slide in your deck with kind of the breakdown there. But if you can provide a little more detail around the development projects you plan to spend capital on in ’27, because I see that kind of ticked up a little bit there.

Andrew Charles Eidson (Chief Executive Officer)

Yeah, I mean, some of that is related to existing operations. We do have some refuse impoundment needs in Virginia that will obviously extend the life and help with managing the waste cost at the McClure prep plant, where Deep Mine 41 is handled. So that’s obviously something that we’re very focused on. Likewise, some potential work at the Kepler prep plant, where Road Fork 52 reports. And, you know, Road Fork 52, Deep Mine 41 definitely being at the top of our list as far as the portfolio mines that we have.

Any other development—we’re, you know, looking at our next projects, which are a little bit longer-dated, you know, a couple, three years out. Just doing a little bit of prospective work there—not necessarily committing to a project—but making sure things are moving to the extent where, if we want to pursue a project, we’re not losing any time. So not a whole lot to report on that just yet.

Nathan Martin (Analyst)

I appreciate that. And then maybe a final question for Dan. Dan, how should we think about the quality mix of what you guys have left to sell here for ’26? I think you’re roughly 80% committed and priced at the midpoint of guidance, so seemingly a few tons left to put to bed. And how should we think about that as we head to the end of the year?

Daniel Horn (Chief Commercial Officer)

Yeah, Nate, probably the typical blend. Maybe a little heavier with the low vol. As Wildcat ramps up, we’re producing a little more of that. So, you know, I don’t think—probably the same roughly blend. Still a fair—you know, half high vol, maybe, and maybe, you know, the rest mid and low, something like that.

Nathan Martin (Analyst)

All right, great.

Daniel Horn (Chief Commercial Officer)

But again, going forward—I’m sorry—going forward, more low. You know, our plan is, and it will happen, that we’re going to have more low vol in our mix and more mid vol as we go forward. That’s certainly the plan, and less high vol. But the rest of the year is pretty well known; it’s right in front of us.

Nathan Martin (Analyst)

All right, understood. Appreciate the time. Good luck in the fourth quarter.

Daniel Horn (Chief Commercial Officer)

Thank you.

Andrew Charles Eidson (Chief Executive Officer)

Thanks, Nate.

OPERATOR

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

Andrew Charles Eidson (Chief Executive Officer)

Well, thanks, everyone, for dialing into the call and checking in online. We appreciate your interest in Alpha, and we hope you all have a great weekend.

OPERATOR

This concludes today’s conference. You may disconnect your lines at this time, and we thank you for your participation.

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