May 10, 2021 - Alpha Metallurgical Resources, Inc. (NYSE: AMR), a leading U.S. supplier of metallurgical products for the steel industry, today reported results for the first quarter ending March 31, 2021.

- Reports net loss from continuing operations of $32.7 million for the first quarter 2021

- Posts Adjusted EBITDA of $28.9 million for the first quarter 2021

- Continues strong cost management across all operating segments

- Expects significant reduction in minimum required pension contributions through 2025

- Reiterates 2021 operating guidance


"Our first quarter results demonstrate our continued commitment to cost management and focus on fundamental operations performance," said David Stetson, Alpha's chair and chief executive officer. "Despite pricing headwinds from the Australian indices that limited our total realizations for the quarter, Alpha's volumes were very strong and we remain cautiously optimistic about improved market conditions going into the second half of 2021."

David Stetson

Financial Performance

Alpha reported a net loss from continuing operations of $32.7 million, or $1.78 per diluted share, for the first quarter 2021. In the fourth quarter 2020, the company had a net loss from continuing operations of $55.1 million or $3.00 per diluted share.

Total Adjusted EBITDA was $28.9 million for the first quarter, compared with $7.4 million in the fourth quarter 2020, primarily due to higher volumes and improved coal revenues per ton.

Coal Revenues

The Met revenue increase in the first quarter compared to the fourth quarter was due to increased shipment volume and higher price realization. The All Other segment revenues decreased due to lower volumes.

As a result of the improved pricing environment in the Atlantic basin, our average Met segment coal sales realization increased by 9% against the prior quarter to $82.00 per ton from $75.24. Australian hard coking coal indices remained weak throughout the first quarter, negatively impacting our Met segment export realization on contracts tied to Australian indices, while Atlantic indices continued to trade significantly above those in the Pacific.

The All Other segment realization improved 3% in the first quarter over the prior period.

Cost of Coal Sales

In the first quarter, the company's Met cost of coal sales averaged $71.72 per ton, up from $69.25 in the prior quarter and approximately in line with our guidance. The main drivers of the cost performance versus the fourth quarter were supplies, primarily related to diesel fuel and roof support, and sales-related expenses due to higher metallurgical coal realizations.

The All Other segment posted another solid cost of coal sales performance, with first quarter cost of $43.05 as compared to $44.03 per ton for the prior quarter.

Selling, general and administrative (SG&A) and depreciation, depletion and amortization (DD&A) expenses

Alpha's first quarter 2021 SG&A expenses were $12.7 million, excluding non-cash stock compensation expense and non-recurring expenses of $2.3 million, compared with $14.5 million in the prior quarter. 

Liquidity and Capital Resources

"Based on provisions in the recent American Rescue Plan Act, we have updated our estimates for minimum required pension contributions through 2025," said Andy Eidson, Alpha's president and chief financial officer. "This should result in an estimated reduction of $84.4 million in pension contributions over the full period, which includes a reduction of $14.1 million in 2021 to a minimum contribution of $11.4 million. In terms of our first quarter performance, our accounts receivable increased by $62.0 million as a result of strong sales, partially offset by a $36.8 million increase in accounts payable, resulting in a use of cash for the quarter. We have seen our working capital begin to normalize over the past couple of months and expect that to yield higher cash collections in upcoming quarters."

Cash used for operating activities for the first quarter 2021 was $19.1 million and capital expenditures for the first quarter were $20.4 million. In the prior period, the cash provided by operating activities was $56.2 million, which included the receipt of $66.1 million in accelerated alternative minimum tax (AMT) credit monetization refund. Cash used for and provided by operating activities includes discontinued operations. Capital expenditures for the prior period were $35.1 million.

As of March 31, 2021, Alpha had $92.2 million in unrestricted cash and $148.2 million in restricted cash, deposits and investments. Total long-term debt, including the current portion of long-term debt as of March 31, 2021, was $579.8 million. At the end of the first quarter, the company had total liquidity of $108.5 million, including cash and cash equivalents of $92.2 million and $16.3 million in unused availability under the Asset-Based Revolving Credit Facility (ABL). The future available capacity under the ABL is subject to inventory and accounts receivable collateral requirements and the maintenance of certain financial ratios. As of March 31, 2021, the company had no borrowings and $130.9 million in letters of credit outstanding under the ABL.

2021 Full-Year Guidance

The company reiterates its previously issued 2021 operating guidance with coal shipments guidance range of 14.8 million tons to 16.2 million tons, with Met segment volume expected to be between 13.5 million to 14.5 million tons with pure metallurgical coal shipments of 12.5 million to 13.0 million tons and incidental thermal shipments in this segment of 1.0 million to 1.5 million tons. Our All Other segment volume is anticipated to be between 1.3 million tons to 1.7 million tons.

For 2021, Alpha has committed and priced approximately 64% of its metallurgical coal within the Met segment at an average price of $85.65 per ton and 93% of thermal coal in the Met segment at an average expected price of $51.16 per ton. In the All Other segment the company is 100% committed and priced at an average price of $57.67 per ton.

The company's 2021 Met segment cost of coal sales per ton is expected to be between $68.00 and $74.00 and our All Other segment is expected to be in the range of $45.00 to $49.00 per ton. 

For 2021, the company expects its SG&A to be in the range of $44 million to $49 million, excluding non-recurring expenses and non-cash stock compensation. Our overall 2021 capital expenditures guidance is in a range of $75 million to $95 million, near the maintenance capital level. Depreciation, depletion and amortization is expected to be between $125 million and $145 million with cash interest expense in the range of $51 million and $55 million.

To read the full results with financial figures included, click here.