Alpha Metallurgical Resources, Inc. 2026 Q2 Earnings Call

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 second 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, Andy 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 our prepared remarks, we will be available to answer questions.

With that, I'll turn the call over to Andy.

Thanks, Emily. Good morning, everyone. Today, we released our definitive second quarter financial results, which included adjusted EBITDA of $25.6 million and 3.5 million tons shipped. We closed out the first half of 2026 with fewer tons shipped and higher costs than expected. Given our performance to date and our outlook for the rest of the year, we recently issued new guidance ranges for shipment volumes and cost of coal sales. Looking at the cost first, we increased our midpoint of guidance by $7 per ton as compared to our early estimations. This increase is largely due to higher costs on supplies and materials, including diesel. As we communicated last quarter, the impact of the Iran war has resulted in dramatic fluctuations and significant increases to our diesel spend. Other mining supplies have also increased in cost.

We're projecting the need to spread these elevated costs across slightly fewer tons overall for the year. All of these factors are incorporated in our new cost guidance range of $103 to $107 per ton. In terms of sales volumes, we brought down the midpoint of the guidance by 1 million tons for the year as compared to our initial expectations. Several factors informed our decision-making here, including continued met market weakness. The new range of 14.2 million to 15.4 million tons not only incorporates our lighter than usual shipment performance in the first half, but it also accounts for a reduced efficiency rate at DTA. As we previously announced, 1 of the 2 stacker reclaimer machines at DTA sustained significant damage during a storm on June 14. High winds reached over 80 miles per hour during the weather event, resulting in significant harm to the machine.

The team at DTA has been exceptional, working diligently to safely and resourcefully keep as much coal moving through the terminal as possible while simultaneously working through various processes with third-party equipment providers, structural engineers, and the terminal's insurance carrier. DTA has also filed an insurance claim because of the storm damage. The plans for returning the terminal to full operational capacity hinge on many processes that are still underway. We don't have a definitive timeline to share just yet. We remain engaged in discussions with our partners at Core Natural Resources and DTA's leadership as appropriate to help advance those processes and gain clarity on the path ahead. In the meantime, we're very pleased with their efforts to keep the coal moving. We expect to be able to mitigate isolated delays in coal handling that would have been normally been accomplished by the damaged stacker reclaimer.

Our new shipment guidance rates, for example, contemplates the continuation of the currently reduced operational capacity at DTA. It also reflects our ability to utilize throughput availability at other East Coast terminals. In summary, we're appreciative of DTA leadership and the way they have quickly established alternate workflows to maximize the terminal's capabilities under these unfortunate circumstances. We will provide updates as appropriate once longer-term plans are solidified. Our views on the met coal markets remain largely unchanged since last quarter as we continue to see weakness driven by sluggish global steel demand. The U.S. East Coast indexes have hardly moved. In recent weeks, the Aussie PLV has begun to retreat.

With its latest movement, the spread between Aussie PLV and U.S. East Coast low vol has tightened, with the PLV roughly 14% higher than U.S. East Coast low vol, as compared to about 23% higher when we announced first quarter earnings in May. The further $32 drop from U.S. East Coast low vol down to U.S. East Coast high vol A sits at about 20% as compared to 22% a quarter ago. We continue to believe that this is unsustainable. As I wrap up my prepared remarks, I want to congratulate several of our West Virginia operations on their recognition by the Joseph A. Holmes Safety Association. 13 of our mines, plants, and docks were given awards for their outstanding performance in 2025. Additionally, our outstanding mine rescue teams have brought home top honors in numerous category competitions as well as overall championships in 2 mine rescue contests this summer.

We're proud of your accomplishments and grateful for your commitment to this important work. I will now turn the call over to Todd Munsey for a review of our second quarter financial results.

Thanks, Andy Eidson. Adjusted EBITDA for the second quarter was $25.6 million, down from $30 million in the first quarter. We sold 3.5 million tons in Q2, down from 3.6 million tons in Q1. Met segment realizations decreased quarter-over-quarter with an average realization of $118.71 in the second quarter, compared to $124 $0.39 in the first quarter.

Export Met tons priced against Atlantic indices and other pricing mechanisms in the second quarter realized $109.08 per ton, while export coal priced on the Australian indices realized $143.82 per ton. These results are compared to realizations of $110.32 per ton and $144.95, respectively, in the first quarter. Realization for our metallurgical sales in the second quarter was a total weighted average of $124.30 per ton, down from $128.40 per ton in Q1. Realizations in the incidental thermal portion of the Met segment increased to $79.36 per ton in the second quarter, up from $69.41 per ton in Q1. Cost of coal sales for our Met segment decreased to $103.07 per ton in Q2, down from $107.98 per ton in the first quarter.

For the second quarter, SG&A, excluding non-cash stock compensation and non-recurring items, increased to $13.7 million as compared to $13.5 million in the first quarter. Moving to the balance sheet and cash flows, as of June 30th, we had $307.6 million in unrestricted cash and $30.9 million in short-term investments, as compared to $317.2 million of unrestricted cash and $49.6 million in short-term investments as of March 31st. We had $184.3 million in unused availability under our ABL at the end of the second quarter, partially offset by a minimum required liquidity of $75 million. As of the end of June, Alpha Metallurgical Resources had total liquidity of $447.8 million, down from $476.2 million at the end of March. CapEx for the second quarter was $45.1 million, up from $40.7 million in Q1.

Cash provided by operating activities was $39.9 million in the second quarter, up from $29 million in the first quarter. As of June 30th, our ABL facility had no borrowings and $40.7 million of letters of credit outstanding. In terms of our committed position for 2026, at the midpoint of guidance, 70% of our metallurgical tonnage in the met segment is committed and priced at an average price of $128.17. Another 30% 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 $75.94. From a market perspective, metallurgical coal markets were subdued in the second quarter. Continued uncertainty and volatility resulting from the war in Iran and broader global economic conditions influenced markets alongside persistently weak steel demand.

The Australian PLV index increased from $236.80 per metric ton on April 1st to $243.50 on June 30th. The U.S. East Coast low-vol index dropped from $195 per metric ton in early April to $190 by the end of June. The U.S. East Coast high-vol index decreased from $159.50 per metric ton at the beginning of the quarter to $157 at the quarter's close. The U.S. East Coast high-vol B index declined from $149.50 per metric ton to $147 at the end of the quarter. Since then, the Australian premium low-vol index has decreased to $214.30 per metric ton as of August 6th, representing a drop of roughly 12% since quarter close. The U.S. East Coast indices are stagnant with low-vol at $188 per ton, virtually flat to the quarter-end level.