Alpha Metallurgical Resources, Inc. Q2 FY2025 earnings call

• Cost improvements: Achieved significant quarter-over-quarter improvement in cost of coal sales, bringing costs down by over $10 per ton from Q1. This was due to increased productivity, lower labor cost, and reduced repair and maintenance expenditures. • Guidance adjustments: Lowered cost of coal sale guidance for the year to $101-$107 per ton, reduced SG&A guidance to $48-$54 million, increased idle operations expense guidance to $21-$29 million, and increased net cash interest income guidance to $6-$12 million. • Balance sheet and liquidity: Ended Q2 with $557 million in total liquidity, nearly 15% higher than Q1. • Operations: Kingston Wildcat mine's slope development approaching 1,625 feet (93% of the way to the coal horizon) with progress on supporting infrastructure. • Market: Metallurgical coal markets challenged by weak steel demand, global economic growth concerns, and depressed indices. Logistics: DTA completed Q2 outages for infrastructure enhancement with minimal disruption. • Tax credit: Metallurgical coal added to critical minerals list, eligible for refundable tax credit of $30-$50 million annually based on production costs.

In the second quarter, adjusted EBITDA was $46.1 million with 3.9 million tons shipped. The metallurgical (met) segment had an average realization of $119.43 per ton in Q2, up from $118.61 in Q1. Cost of coal sales for the met segment decreased to $100.06 per ton in Q2 from $110.34 per ton in Q1. SG&A, excluding noncash stock compensation and nonrecurring items, was $11.9 million in Q2 compared to $12.6 million in Q1. CapEx for the quarter was $34.6 million, down from $38.5 million in Q1. As of June 30, 2025, total liquidity was $556.9 million, up from $485.8 million at the end of March.

• Lowered cost of coal sale guidance for the year to a range of $101 per ton to $107 per ton, down from prior range of $103 to $110 per ton. • Reduced 2025 guidance for SG&A expenses to a range of $48 million to $54 million, down from previous $53 million to $59 million. • Increased idle operations expense guidance for the year to a range of $21 million to $29 million, up from prior $18 million to $28 million. • Expect increased net cash interest income for the year, moving guidance to between $6 million and $12 million, up from previously established $2 million to $10 million. • Metallurgical coal produced between 2026 and 2029 eligible for refundable tax credit, estimated cash benefit of $30 million to $50 million annually dependent on qualifying production costs.

• Market challenges: Lingering concerns about weak steel demand, lackluster global economic growth, trade uncertainty, and met coal indexes staying depressed. • Supply disruptions: Continuing supply disruptions across producer regions. • Trade uncertainty: Broader uncertainty around global economy and impact of higher tariffs.

Q: Can you walk through where the savings came from in cost improvements and speak to sustainability?

A: Savings came from higher productivity (10% increase in tons per man hour), lower labor costs, and reduced repair and maintenance expenditures. Sustainability is hopeful as changes are fundamental, but getting more difficult as lowest hanging fruit is found.

Q: Thoughts on recent trade tensions/tariffs with India and Brazil and impact on business?

A: No pushback or negative feedback received; continue to get solicitations from those countries.

Q: How many domestic tons contracted for 2025 and picking up business?

A: Approximately 3.5 million tons contracted; not much spot activity domestically, customers dictate business.

Q: Thoughts on Union Pacific-Norfolk Southern merger impact?

A: Relationship with Norfolk Southern is strong; wait and see on Union Pacific as our network is mainly Central App to Hampton Roads ports with minimal expected impact