Alpha Announces Third Quarter 2024 Financial Results

Posts third quarter net income of $3.8 million, or $0.29 per diluted share

Reports Adjusted EBITDA of $49.0 million for the quarter

Increases quarter-over-quarter total liquidity by 42% or $150.3 million

Announces sales commitments to domestic customers for shipment in 2025 

Introduces guidance for full year 2025

BRISTOL, Tenn., Nov. 1, 2024 /PRNewswire/ -- Alpha Metallurgical Resources, Inc. (NYSE:AMR), a leading U.S. supplier of metallurgical products for the steel industry, today reported financial results for the third quarter ending September 30, 2024.

(millions, except per share)

Three months ended

Sep. 30, 2024

June 30, 2024

Sep. 30, 2023

Net income

$3.8

$58.9

$93.8

Net income per diluted share

$0.29

$4.49

$6.65

Adjusted EBITDA(1)

$49.0

$116.0

$153.9

Operating cash flow

$189.5

$138.1

$157.2

Capital expenditures

($31.5)

($61.1)

($54.7)

Tons of coal sold

4.1

4.6

4.2

__________________________________

1.

These are non-GAAP financial measures. A reconciliation of Net Income to Adjusted EBITDA is included in tables accompanying the financial schedules.

"Our third quarter results reflect the softness of metallurgical coal markets, which is driven by weak global steel demand," said Andy Eidson, Alpha's chief executive officer. "A slowdown in manufacturing activity, increased economic headwinds, and geopolitical uncertainties across the world have exerted downward pressure on steel demand, which impacts met coal demand and pricing. Despite these external factors, we continue to focus internally on safely running our operations and working to protect our business with a strong balance sheet. This means we have been taking a close look at our costs across the board and making some changes to help the organization withstand this period of lower revenue generation."

Eidson continued: "Looking ahead to 2025, we are issuing guidance for next year and announcing our domestic sales commitments, which include 3.7 million tons contracted at an average price of $152.51 per ton. We are pleased with our committed tonnage for 2025, especially in light of the challenging market dynamics that served as a backdrop to this negotiation season, and we will seek opportunities to capture potential upside in the export market if the metallurgical markets rebound and begin to move higher."

Financial Performance

Alpha reported net income of $3.8 million, or $0.29 per diluted share, for the third quarter 2024, as compared to net income of $58.9 million, or $4.49 per diluted share, in the second quarter.

Total Adjusted EBITDA was $49.0 million for the third quarter, compared to $116.0 million in the second quarter. 

Coal Revenues

(millions)

Three months ended

Sep. 30, 2024

June 30, 2024

Met Segment

$669.8

$800.1

Met Segment (excl. freight & handling)(1)

$550.7

$645.7

Tons Sold

(millions)

Three months ended

Sep. 30, 2024

June 30, 2024

Met Segment

4.1

4.6

__________________________________

1.

Represents Non-GAAP coal revenues which is defined and reconciled under "Non-GAAP Financial Measures" and "Results of Operations."

Coal Sales Realization(1)

(per ton)

Three months ended

Sep. 30, 2024

June 30, 2024

Met Segment

$132.76

$141.86

__________________________________

1.

Represents Non-GAAP coal sales realization which is defined and reconciled under "Non-GAAP Financial Measures" and "Results of Operations."

Third quarter net realized pricing for the Met segment was $132.76 per ton.

The table below provides a breakdown of our Met segment coal sold in the third quarter by pricing mechanism.

(in millions, except per ton data)

Met Segment Sales

Three months ended Sep. 30, 2024

Tons Sold

Coal Revenues

Realization/ton(1)

% of Met TonsSold

Export - Other Pricing Mechanisms

1.9

$241.0

$129.31

48 %

Domestic

0.9

$145.9

$160.35

23 %

Export - Australian Indexed

1.1

$144.8

$128.61

29 %

Total Met Coal Revenues

3.9

$531.8

$136.35

100 %

Thermal Coal Revenues

0.2

$18.9

$76.33

Total Met Segment Coal Revenues (excl. freight & handling)(1)

4.1

$550.7

$132.76

__________________________________

1.

Represents Non-GAAP coal sales realization which is defined and reconciled under "Non-GAAP Financial Measures" and "Results of Operations."

Cost of Coal Sales

(in millions, except per ton data)

Three months ended

Sep. 30, 2024

June 30, 2024

Met Segment

$598.7

$663.8

Met Segment (excl. freight & handling/idle)(1)

$474.0

$497.6

(per ton)

Met Segment(1)

$114.27

$109.31

__________________________________

1.

Represents Non-GAAP cost of coal sales and Non-GAAP cost of coal sales per ton which is defined and reconciled under "Non-GAAP Financial Measures" and "Results of Operations."

Alpha's Met segment cost of coal sales increased to an average of $114.27 per ton in the third quarter, compared to $109.31 per ton in the second quarter. The increase in costs for the third quarter is primarily related to reduced productivity quarter-over-quarter.

Liquidity and Capital Resources

Cash provided by operating activities in the third quarter increased to $189.5 million as compared to $138.1 million in the second quarter. The third quarter cash flows were positively impacted by a decrease in working capital of $144.5 million. The primary drivers of the working capital release were a reduction to accounts receivable and inventory. Capital expenditures for the third quarter were $31.5 million compared to $61.1 million for the second quarter.

As of September 30, 2024, the company had total liquidity of $507.0 million, including cash and cash equivalents of $484.6 million and $97.5 million of unused availability under the ABL, partially offset by a minimum required liquidity of $75.0 million as required by the ABL. Total liquidity increased by $150.3 million relative to the second quarter. As of September 30, 2024, the company had no borrowings and $57.5 million in letters of credit outstanding under the ABL. Total long-term debt, including the current portion of long-term debt as of September 30, 2024, was $6.7 million.

Share Repurchase Program

As previously announced, Alpha's board of directors authorized a share repurchase program allowing for the expenditure of up to $1.5 billion for the repurchase of the company's common stock. As of October 31, 2024, the company has acquired approximately 6.6 million shares of common stock at a cost of approximately $1.1 billion, or approximately $165.74 per share. The number of common stock shares outstanding as of October 31, 2024 was 13,016,010. The outstanding share count does not include the potentially dilutive effect of unvested equity awards.

The timing and amount of share repurchases will continue to be determined by the company's management based on its evaluation of market conditions, the trading price of the stock, applicable legal requirements, compliance with the provisions of the company's debt agreements, and other factors.

2025 Domestics Sales Commitments

Alpha has committed approximately 3.7 million tons of metallurgical coal to domestic customers for shipment in the 2025 calendar year at an average price of $152.51 per ton.

Issuance of 2025 Operational Guidance

The company is issuing operational guidance for the 2025 calendar year. For sales volumes, Alpha expects to ship between 15.0 million and 16.0 million metallurgical tons in 2025 as well as another 1.0 million to 1.4 million tons of incidental thermal coal, bringing total 2025 shipment expectations to a range of 16.0 million to 17.4 million tons for the year.

Alpha expects its 2025 cost of coal sales to be between $103.00 and $108.00 per ton.

The guidance range for selling, general and administrative (SG&A) costs is $53 million to $59 million in 2025, excluding non-recurring expenses and non-cash stock compensation. Idle operations expense is expected to be between $18 million and $28 million. The company anticipates 2025 net cash interest income of $2 million to $10 million, and depreciation, depletion and amortization of $165 million to $185 million.

The company expects capital expenditures in the range of $152 million to $182 million, which includes sustaining maintenance capital as well as development capital to continue progress on its Kingston Wildcat (formerly named Kingston Sewell) mine.

2025 contributions to equity affiliates are expected in the range of $44 million to $54 million, which include planned capital investments in Dominion Terminal Associates. The guidance range for cash contributions includes both cash contributions for normal operations of the facility as well as Alpha's 2025 share of the investments in DTA's facility upgrade program.

The company expects a tax rate of between 0% and 5% for calendar year 2025.

2024 Performance Update

As of October 23, 2024, for the 2024 calendar year, Alpha has committed and priced approximately 86% of its metallurgical coal for 2024 at an average price of $152.42 per ton and 100% of thermal coal for the year at an average expected price of $75.97 per ton.

2024 Guidance

2025 Guidance

in millions of tons

Low

High

Low

High

Metallurgical

15.5

16.5

15.0

16.0

Thermal

0.9

1.3

1.0

1.4

Met Segment - Total Shipments

16.4

17.8

16.0

17.4

Committed/Priced1,2,3

Committed

Average Price

Committed

Average Price

Metallurgical - Domestic

$160.73

$152.51

Metallurgical - Export

$149.28

Metallurgical Total

86 %

$152.42

24 %

$152.51

Thermal

100 %

$75.97

96 %

$79.90

Met Segment

88 %

$145.90

29 %

$135.27

Committed/Unpriced1,3

Committed

Committed

Metallurgical Total

14 %

35 %

Thermal

— %

— %

Met Segment

12 %

32 %

Costs per ton4

Low

High

Low

High

Met Segment

$110.00

$116.00

$103.00

$108.00

In millions (except taxes)

Low

High

Low

High

SG&A5

$60

$66

$53

$59

Idle Operations Expense

$25

$33

$18

$28

Net Cash Interest Income

$10

$14

$2

$10

DD&A

$160

$180

$165

$185

Capital Expenditures

$210

$240

$152

$182

Capital Contributions to Equity Affiliates6

$32

$42

$44

$54

Tax Rate

5 %

10 %

0 %

5 %

Notes:   

1.

Based on committed and priced coal shipments as of October 23, 2024. Committed percentage based on the midpoint of shipment guidance range.

2.

Actual average per-ton realizations on committed and priced tons recognized in future periods may vary based on actual freight expense in future periods relative to assumed freight expense embedded in projected average per-ton realizations.

3.

Includes estimates of future coal shipments based upon contract terms and anticipated delivery schedules. Actual coal shipments may vary from these estimates.

4.

Note: The Company is unable to present a quantitative reconciliation of its forward-looking non-GAAP cost of coal sales per ton sold financial measures to the most directly comparable GAAP measures without unreasonable efforts due to the inherent difficulty in forecasting and quantifying with reasonable accuracy significant items required for the reconciliation. The most directly comparable GAAP measure, GAAP cost of sales, is not accessible without unreasonable efforts on a forward-looking basis. The reconciling items include freight and handling costs, which are a component of GAAP cost of sales. Management is unable to predict without unreasonable efforts freight and handling costs due to uncertainty as to the end market and FOB point for uncommitted sales volumes and the final shipping point for export shipments. These amounts have varied historically and may continue to vary significantly from quarter to quarter and material changes to these items could have a significant effect on our future GAAP results.

5.

Excludes expenses related to non-cash stock compensation and non-recurring expenses.

6.

Includes contributions to fund normal operations at our DTA export facility and expected capital investments related to the facility upgrades.

Conference Call 

The company plans to hold a conference call regarding its third quarter results on November 1, 2024, at 10:00 a.m. Eastern time. The conference call will be available live on the investor section of the company's website at https://alphametresources.com/investors. Analysts who would like to participate in the conference call should dial 877-407-0832 (domestic toll-free) or 201-689-8433 (international) approximately 15 minutes prior to start time.

About Alpha Metallurgical Resources

Alpha Metallurgical Resources (NYSE:AMR) is a Tennessee-based mining company with operations across Virginia and West Virginia. With customers across the globe, high-quality reserves and significant port capacity, Alpha reliably supplies metallurgical products to the steel industry. For more information, visit www.AlphaMetResources.com.

Forward-Looking Statements

This news release includes forward-looking statements. These forward-looking statements are based on Alpha's expectations and beliefs concerning future events and involve risks and uncertainties that may cause actual results to differ materially from current expectations. These factors are difficult to predict accurately and may be beyond Alpha's control. Forward-looking statements in this news release or elsewhere ...