Alpha (AMR) Q1 2026 Earnings Call Transcript

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DATE

Friday, May 8, 2026 at 10:00 a.m. ET

CALL PARTICIPANTS

• Chief Executive Officer — Andy Eidson
• Chief Financial Officer — J. Todd Munsey
• President — Daniel E. Horn
• Chief Operating Officer — Jason E. Whitehead

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TAKEAWAYS

• Adjusted EBITDA -- $30 million, compared to $28.5 million in Q1 2025, reflecting a $1.5 million increase.
• Total Tons Sold -- 3.6 million tons, a decrease from 3.8 million tons.
• Metallurgical Segment Realization -- $124.39 per ton, increasing from $115.31 per ton sequentially from Q4 2025.
• Export Met Coal Realization (Atlantic Indices) -- $110.32 per ton, rising from $106.01 per ton in Q4 2025.
• Export Met Coal Realization (Australian Indices) -- $144.09 per ton, up from $114.96 per ton sequentially from Q4 2025.
• Total Weighted Average Metallurgical Sales Realization -- $128.40 per ton, increasing from $118.10 per ton in the previous quarter.
• Incidental Thermal Portion Realization -- $69.41 per ton, declining from $77.80 per ton in Q4 2025.
• Cost of Coal Sales (Met Segment) -- $107.98 per ton, up from $101.43 per ton sequentially from Q4 2025, mainly due to higher diesel and supply costs and lower volume.
• SG&A (Excluding Noncash and Nonrecurring) -- $13.5 million, up from $10.9 million in the previous quarter.
• Unrestricted Cash Position -- $317.2 million, decreasing from $366.0 million at year-end 2025.
• Total Liquidity -- $476.2 million, down from $524.3 million as of December 2025.
• CapEx -- $40.7 million, rising from $29.0 million in Q4 2025.
• Operating Cash Flow -- $29.0 million, increasing from $19.0 million in Q4 2025.
• Committed Metallurgical Volumes for 2026 -- 48% committed and priced at $132.03 per ton, with another 43% committed but unpriced; thermal byproduct fully committed and priced at $74.53 per ton.
• Australian PLV Index Movement -- Rose from $218 to $236.80 per metric ton from January to March, an 8.6% quarterly increase.
• U.S. East Coast Indexes -- Low Vol increased from $185 to $195; High Vol A from $150.5 to $159.5; High Vol B from $144.2 to $149.5 per metric ton during the quarter.
• Freight Rates -- "freight increase—pick a number—around a 40% increase in the freight rates," significantly impacting transactions to South Asia.
• Wildcat Mine Update -- COO Jason E. Whitehead stated, "The Wildcat mine is on coal and there are tons coming out of the mine," with development expected to conclude in Q2 and a ramp-up in Q3 and Q4.
• Cost Guidance -- CEO Andy Eidson said, "we believe it is still possible to finish the year within the top end of our existing cost guidance range of $95 to $101 per ton," though persistent inflation may force guidance higher.
• Market Spreads -- Australian PLV is $45 per metric ton, or 23%, higher than U.S. East Coast Low Vol, which in turn is $36 per ton, or 23%, higher than U.S. East Coast High Vol A, reflecting pronounced index divergences.
• Terminal Outage Mitigation -- The sales team "successfully planning for and mitigating the potential disruption of a four-week outage in March at Dominion Terminal," by leveraging alternative terminal capacity.
• API2 Index Volatility -- The API2 seaborne thermal coal index rose from $95.5 to $125.75 per metric ton during the quarter, then retreated to $111.5 per metric ton as of May 7, 2026.
• Diesel Cost Sensitivity -- CFO J. Todd Munsey said, "we use about 22 million to 23 million gallons of diesel." annually, with recent diesel price movements expected to be a "couple of bucks influence on the cost."
• Diesel Hedging Practice -- CEO Andy Eidson said, "Historically, we have done some, not necessarily diesel hedging, but buying forwards through our diesel providers to lock in pricing around budget time. We have done that some of the past."

SUMMARY

Management confirmed the potential for cost guidance to shift higher if ongoing geopolitical instability and inflation persist. Development progress at the Wildcat mine is expected to increase the company's exposure to higher-priced low-vol coals in the portfolio. Quarter-end liquidity declined but remained well above required minimums, and product mix for committed shipments still reflects a high weighting to high-vol coals. Industry pricing spreads between index benchmarks widened further, with index divergences reaching historically unusual levels. Freight rate inflation materially affects margins and market access, with management indicating a strategic emphasis on FOB transactions. Management reported no material impact from recent government energy policy actions, with expected benefit primarily on the thermal side rather than the core met business.

• The majority of 2026 met sales volume is already committed, with nearly half priced and the remainder to be set later, allowing for some market optionality as pricing diverges.
• Rising SG&A and capital expenditures signal increasing input and investment requirements, offset by operational adjustments to spread costs over a seasonally higher activity period ahead.
• Market oversupply, especially in high-vol coals, remains unresolved according to management, and the current segment imbalance continues to pressure selling prices and margin potential.
• Management detailed that production from new longwall high-vol mines has increased total market supply by roughly 11 million tons, while Central Appalachian reductions have been about 1 million to 2 million tons.
• Management sees the discount in high-vol coal as "pretty directly attributable to all the new tonnage that has come online," noting a jump in the East Coast High Vol A vs. Low Vol spread from $5 to $38 per ton since early 2025.

INDUSTRY GLOSSARY

• PLV (Premium Low Vol): Coal with low volatile matter content, whose benchmark is closely linked to Australian export pricing, used as a pricing reference for top-tier metallurgical coals.
• ABL (Asset-Based Lending) Facility: Credit line secured by company assets, often used for liquidity management, reported with available capacity and outstanding letters of credit.
• API2 Index: Internationally referenced benchmark price for seaborne thermal coal delivered to northwestern Europe (Amsterdam-Rotterdam-Antwerp).
• FOB Vessel: Sales term meaning "free on board," where the seller delivers goods to a vessel at a designated port, with the buyer thereafter assuming responsibility for freight, insurance, and transport risk.
• DTA (Dominion Terminal Associates): Export coal terminal facility in Hampton Roads, Virginia, used by Alpha Metallurgical Resources, Inc. for fulfilling seaborne shipments.
• Met (Metallurgical) Coal: Coal used specifically for steelmaking, as opposed to thermal coal used for power generation.

Full Conference Call Transcript

Andy Eidson: Given this and since we expect improved operational performance in both coal volumes and cost of coal sales for the balance of 2026, we believe it is still possible to finish the year within the top end of our existing cost guidance range of $95 to $101 per ton. However, if the Iranian conflict and its resulting inflationary impacts persist, we will likely adjust our cost guidance upward. Our realizations improved quarter over quarter largely due to increases in the low-vol indexes that occurred in recent months due to supply-related issues from flooding in Australia. However, there are historically unusual divergences within the indexes that have either persisted or gotten more pronounced in recent weeks.

Within low-vol pricing, the Australian PLV is currently $45 per metric ton higher, or 23% more, than the U.S. East Coast Low Vol Index. And of particular importance to us and our portfolio, there is a further $36 per ton gap down from the U.S. East Coast Low Vol to the U.S. East Coast High Vol A, another difference of 23%. The U.S. East Coast spread from Low Vol to High Vol A is likely related to how oversupplied the market for high vol has become with additional tons recently brought to market in an already weak environment.

We continually evaluate the productive capacity of our portfolio alongside the needs of the market, both in the near future and from a longer-term perspective. We are watching to see if either of those index spreads tie into a more normalized level or if the divergence persists. Across the organization, our employees are working hard to maintain safe, efficient operations despite the external headwinds we are facing. Within the first quarter, many Alpha Metallurgical Resources, Inc. teams received third-party recognition for exceptional work in the areas of operational safety, mine rescue, environmental stewardship, and reclamation. I commend each of our team members who make positive contributions through their work every day.

Our sales team also tackled a difficult challenge by successfully planning for and mitigating the potential disruption of a four-week outage in March at Dominion Terminal. They diligently worked to keep as much Alpha Metallurgical Resources, Inc. coal moving as possible both before and after the downtime, while strategically utilizing our Hampton Roads terminal capacity beyond DTA. We are grateful to all of our partners for helping us overcome these challenges, and we are especially appreciative of the DTA team for their work to do so many equipment maintenance tasks and upgrades in such a short time. With that, I will turn the call over to Todd for a review of our first quarter financial results.

J. Todd Munsey: Thanks, Andy. Adjusted EBITDA for the first quarter was $30 million, up from $28.5 million in 2025. We sold 3.6 million tons in Q1, down from 3.8 million tons. Met segment realizations increased quarter over quarter with an average realization of $124.39 in the first quarter, up from $115.31 in Q4. Export met tons priced against Atlantic indices and other pricing mechanisms in the first quarter realized $110.32 per ton, while export coal priced on Australian indices realized $144.09 per ton. These results are compared to realizations of $106.01 per ton and $114.96 per ton, respectively, in the fourth quarter.

Realization for our metallurgical sales in the first quarter was a total weighted average of $128.40 per ton, up from $118.10 per ton in Q4. Realizations in the incidental thermal portion of the met segment decreased to $69.41 per ton in the first quarter, down from $77.80 per ton in Q4. Cost of coal sales for our met segment increased to $107.98 per ton in Q1, up from $101.43 per ton in the fourth quarter. Alongside lower productive volumes for the quarter, higher diesel and other supply and repair costs were the primary drivers of the quarter-over-quarter cost increase.

For the first quarter, SG&A, excluding noncash stock compensation and nonrecurring items, increased to $13.5 million as compared to $10.9 million in the fourth quarter. Moving to the balance sheet and cash flows. As of March 31, 2026, Alpha Metallurgical Resources, Inc. had $317.2 million in unrestricted cash and $49.6 million in short-term investments as compared to $366.0 million of unrestricted cash and $49.6 million in short-term investments as of December 31, 2025. There was $184.3 million in unused availability under our ABL at the end of the first quarter, partially offset by a minimum required liquidity of $75 million. As of March, Alpha Metallurgical Resources, Inc. had total liquidity of $476.2 million, down from $524.3 million at December.

CapEx for the first quarter was $40.7 million, up from $29.0 million in Q4. Cash provided by operating activities was $29.0 million in the first quarter, up from $19.0 million in the fourth quarter. As of March 31, 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, 48% of our metallurgical tonnage in the met segment is committed and priced at an average price of $132.03 per ton. Another 43% 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 $74.53 per ton. From a market perspective, geopolitical and weather-related supply issues influenced metallurgical coal markets in 2026, with the war in Iran causing increased volatility in the energy sector. While not directly linked to war-related electricity generation and power concerns, metallurgical coal markets also moved during the quarter with modest increases across the met coal quality spectrum. Of the four indices Alpha Metallurgical Resources, Inc. closely monitors, the Australian Premium Low Vol Index represents the largest quarterly increase of 8.6%.

The Aussie PLV index increased from $218 per metric ton on January 2 to $236.80 per metric ton on March 31, 2026. The U.S. East Coast Low Vol Index rose from $185 per metric ton in early January to $195 per metric ton by March. The U.S. East Coast High Vol A index increased from $150.5 per metric ton at the beginning of the quarter to $159.5 per metric ton at the quarter's close. And the U.S. East Coast High Vol B index increased from $144.2 per metric ton to $149.5 per metric ton at the end of the quarter.

Since then, the Australian PLV index has increased to $239.8 per metric ton as of May 7, 2026, while the U.S. East Coast Low Vol is at $195 per ton, exactly the same as at quarter end. U.S. East Coast High Vol A and High Vol B indices are also largely unchanged from quarter close at $159 and $149 per ton, respectively, as of May 7, 2026. In the seaborne thermal market, the API2 index was $95.5 per metric ton in January and increased to $125.75 per metric ton in March. Since then, the API2 index has dropped to $111.5 per metric ton as of May 7, 2026.

With that, operator, we are now ready to open the call for questions.

Operator: We will now open the call for questions. At this time, we will be conducting a question and answer session. Our first question comes from Nick Giles with B. Riley. Your line is now live.

Nick Giles: Yes. Thank you, operator. Good morning, everyone. Obviously, some higher costs in Q1 and some of it, or a lot of it, outside of your control. I was just hoping to get some more color on just kind of cost cadence starting here in Q2, just with diesel prices remaining elevated here and now. How much of that cost pressure kind of carries over into Q2? And what should we really be roughly penciling in for the quarter? Thanks. And maybe on the other side, realizations moved up. It is nice to see. Just was curious on are there any opportunities to shift more tons to kind of an Aussie-linked basis?

What kind of incremental opportunities are you seeing in South Asia, maybe as Australian supply, especially for higher-quality met, remains tight? Thanks. And maybe a last one for me is just what are you seeing in Central App in terms of some of your competitors out there? Are you seeing any production that could come back? Just an update more broadly on kind of the surrounding production areas would be helpful.

Andy Eidson: Hey, Nick. I do not want to guide too early because we are only partway through the quarter. I think diesel contributed a couple of dollars a ton of the cost pressure. Of course, that was just really a late February–March impact. So it will look like we will see a full quarter's impact of it, so you could see a little bit more than that. And also, that is the direct diesel cost.

The piece that you do not see that is buried is diesel impacts delivery cost of pretty much everything that we buy, and so you are going to see the indirect portion of that coming through supplies and maintenance, which we have also seen a step up there as well. We do expect, just from increased productive activity during the quarter compared to the first quarter, we should see some of that cost getting spread over more tons, particularly our fixed cost spread. So I do expect it to be coming down from Q1, but it is a little bit too early to tell the quantum on that.

Daniel E. Horn: Hey, Nick. This is Dan. On your question about shifting to Aussie-linked pricing and opportunities in Asia, I think the short answer is yes to the extent that we have some medium-vol and low-vol coals that we can place into the Asian markets. The landscape for high vol coals into Asia is pretty tough right now. You are essentially matching the lowest price the competitor throws out that day. So even if it is linked to the Aussie index, it is discounted pretty heavily. We are pretty selective on which opportunities we pursue. It is not so much about the indexes; it is about the ultimate price and the netback to our coal mines.

But I think there is some upside as demand increases, and if the Aussie production for the higher-quality coals remains a little bit short, there are opportunities.

Andy Eidson: Yeah. Nick, I will take your Central App question first, and I will ask Dan to jump in if he has anything additional. We obviously have seen some tons coming offline really earlier in Q1, but as the quarter has gone on, it has been some smaller incremental batches. I do not think it is anything that is terribly needle moving thus far. I think the quantum has been less than what is required to fill some of the gaps in the supply and demand situation. Dan, any thoughts on that?

Daniel E. Horn: No, I think you said it well, Andy. I mean, you look at today versus where we were a couple of years ago, there is probably something like 11 million tons of new longwall high vol production that is in the marketplace, and the round numbers of how many tons have come out of Central App is probably 1 million to 2 million, somewhere in that range. So still a pretty good imbalance. Global demand for the use of high vol coals is something less than it was a couple of years ago too. So as demand improves, that will help somewhat with the rebalancing.

Nick Giles: Got it. Understood. Okay. Well, thanks, guys, and best of luck.

Operator: Our next question comes from Nathan Martin with The Benchmark Company. Please proceed with your question.

Nathan Martin: Thanks, operator. Good morning, everyone. I think it would be helpful to get some thoughts on shipping cadence for the balance of the year. I think, Andy, you said you expect Q2 to improve for the reasons we already talked about. Does that get made up mainly in Q2, or do you kind of expect those tons to be spread out in subsequent quarters? And then maybe, Dan, obviously freight rates elevated post the start of the conflict in the Middle East. I believe you guys have traditionally sold very little based on CFR prices. Is that still true? And then, the spot market maybe a little bit quiet—you just mentioned High Vol especially.

What do you think needs to happen for things to pick up there?

Andy Eidson: Hey, Nate. I would expect—because normally we have a bit of a bell curve during a regular year where Q1 and Q4 are going to be your lightest quarters, and Q2 and Q3 through the summer have your best shipments—I think it will probably look similar to that this year. I do think most of the makeup, where it happens, will happen in the middle two quarters. And then we will probably start tailing off a little bit as we get to the end of the year with the holidays and that kind of stuff. So it is going to look like a normal year; it is just a little bit steeper curve from Q1 into Q3.

Daniel E. Horn: Yes, on the freight, you are correct. Most of our business is FOB vessel. To the extent we do some chartering, we have seen freight increase—pick a number—around a 40% increase in the freight rates. To the extent that coal travels halfway around the world to South Asia and places like that, that is a pretty significant hit. And the impact of that is some of that freight will be shared between the buyer and the seller. It is not necessarily all passed over, particularly on new business. If you are chasing new spot business, freight is absolutely a factor, as opposed to a term contract where you have a set price.

In that instance, the freight responsibility shifts to the buyer. As to what has to happen for the spot market to pick up, like I mentioned to Nick, I think we have to see some demand improvement and some continued supply discipline. We are more oversupplied than we have seen in a while. We have seen it before in the marketplace, but at this moment in time, it is a pretty significant hill to climb for most of the U.S. producers here.

Nathan Martin: And then maybe the 3.1 million tons of export met that you guys have committed and priced—can you give us an idea of that mix by quality? And could we get an update on Kingston Wildcat? Maybe from Jason? It seems like those tons coming online may be opportune timing given the wide relativities we are seeing between premium low vol and high vol.

Daniel E. Horn: It is primarily high vols and mid vols with a little low vol thrown in there. We do not give an exact breakdown. I will point out, and kind of to your question on the ship cadence too, as the Wildcat mine—our low-vol mine—ramps during the year, that mix will include, we expect, more low vol going into that mix. I cannot quantify it any more than that, but our long-term strategy was to put more of the high-rank, higher-quality coke strength coals into our portfolio. That should continue this year and next.

Jason E. Whitehead: Sure. Good morning. The Wildcat mine is on coal and there are tons coming out of the mine. They are still in the development phases, but we actually plan for that to conclude here in Q2, and in Q3 and Q4 we actually see a ramp of production coming out of the mine.

Operator: Our next question comes from Matthew Key with Texas Capital Securities. Please proceed with your question.

Matthew Key: Good morning, everyone, and thanks for taking my questions. Kind of piggybacking off of the diesel discussions, I was wondering if you could provide a sensitivity to diesel pricing that we could use as a general rule of thumb moving forward? And is there anything that the company could do to manage some of these inflationary cost pressures? Do you currently do any diesel hedging, and would that be something you would consider in the future?

Andy Eidson: That is a tough one, Matt, as far as knowing that off the top of my head. I am looking at Todd right now to see if he has some viewpoints on that.

J. Todd Munsey: Yes, Matt. In a typical year, we use about 22 million to 23 million gallons of diesel. If you think about the balance of the year, with the movement we have had in diesel prices—and to the point Andy made earlier—the diesel we use, we expect that to be a couple of bucks influence on the cost. But then there are also the surcharges and whatnot that will flow through from transportation-related costs. Hopefully that helps a little bit as you think about the balance of the year. Obviously, we all hope that issue goes away, but if not, that is kind of how we think about it.

Andy Eidson: Yes. Historically, we have done some, not necessarily diesel hedging, but buying forwards through our diesel providers to lock in pricing around budget time. We have done that some of the past three to four years. Most of the time, it has actually gone upside down on us. This year, of course, happens to be the one where we chose not to do those forwards because back in August and September, who could have seen this coming.

But it is something that we are discussing actively simply because the world seems to be getting more and more politically volatile, to a degree where it may require locking in as many of your inputs as possible whenever you have the opportunity, just because things do seem to be changing at a pace that is faster than the world can actually keep up with.

Matthew Key: Got it. That is super helpful. I will stop there. Appreciate the time, and best of luck.

Operator: Our next question comes from Analyst with Jefferies. Please proceed with your question.

Analyst: Hey, guys. Thanks. It is Chris Lafemina from Jefferies here. Just wanted to go back to the market. We are all kind of waiting for the high vol discounts to narrow, and this has been an issue for quite a long time. Now we have iron ore prices rising, energy prices globally rising, premium low-vol met coal prices strengthening pretty materially, global steel markets appear to be okay, but the high vol discount is widening. I am wondering if something else is going on.

I understand the point about there being quite a bit of high vol supply that has come online, but I would have thought, if anything, that would have brought the premium low vol price down rather than just result in a wider spread. So is there anything else going on in that market that is more structurally problematic, or is this purely a short-term cyclical issue that we should expect to resolve? And if it is a cyclical issue, why has it not resolved yet? It has been going on for quite an extended period of time, and the spreads have been wider than we have ever seen and do not seem to be reversing at all.

Just trying to figure out what is going on there. Thanks.

Daniel E. Horn: Chris, this is Dan. I will try to unpack that a little bit. The PLV is its own creature. It is an index that follows primarily Australian coals. We use it; we link our higher-quality low vols and medium vols to that index. We do believe that the U.S. East Coast Low Vol Index is too far below the Aussie index. When there is a shortage of Australian PLV, we get phone calls and we—U.S. producers that produce low vol—ship our coal to replace that PLV. So we believe that the gap between East Coast Low Vol and PLV is too wide, to your point. The high vol coals are used differently.

They do not contribute to the coke strength; they are used for plastic properties and, arguably at times, just as a cheap filler. They move differently, but they have been depressed, and again, I think that is more of just old-fashioned supply and demand working on that. Buyers are trying—when they see the potential for low price or big discounts, they will adjust their blends to try to buy more of that. I think they will run into the ocean freight issue—that those tons of coal that have to go halfway around the world at a high freight number are not going to travel well if they are low-value coals.

I would not lump all that together the way you did; I think you have to break that apart.

Andy Eidson: And, Chris, this is Andy. If I could add one more piece to that. The differential between East Coast High Vol A and East Coast Low Vol is somewhat of a recent phenomenon. If you go back to the first of 2025, that differential was only $5. Now it has climbed to $38. And so I do think that is pretty directly attributable to all the new tonnage that has come online, both in Northern Appalachia and in Alabama, just hitting a market that is having trouble absorbing it.

Analyst: Understood. Thanks a lot for that. Appreciate it. Good luck.

Operator: We have a follow-up question from Nick Giles with B. Riley. Please proceed with your question.

Nick Giles: Yes, thanks for taking my follow-up. Just wanted to ask more broadly—we had the Presidential Memorandum Section 303 a few weeks back in April, and I wanted to ask if this has really translated to your business or if you could expect to see any benefit or funding from these actions by the administration. I think maybe some of this is more related to the thermal side; they call out baseload power generation explicitly, but even export terminals are mentioned. So could DTA, for instance, be a candidate for some sort of government support? Thanks.

Andy Eidson: Yeah, that one is still developing, as with most of these executive orders and other proclamations going back into last fall. A lot of the details are still developing real time. We are involved to a high degree with the federal government on evaluating the different programs and seeing what is out there. From what we have seen thus far, it does seem that it is mostly thermal-focused. There are some smaller areas where there may be some benefit, but as of yet, I do not think we are seeing anything that is hugely material to what we are doing right now.

Fingers crossed that some of it translates to bigger benefit on the met side of the house, but I am not sure we have seen anything in that regard yet.

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.

Andy Eidson: Yes. We appreciate everyone joining us this morning for the earnings call, and we hope everyone has a great weekend. Thank you.

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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