Alpha Metallurgical Resources Q3 Earnings Call Highlights

Key Points

• Q3 shipments and adjusted EBITDA increased: Shipments rose to 3.9 million tons from 3.5 million in Q2, while adjusted EBITDA climbed to $29.4 million from $25.6 million. Coal costs also rose, to $106.93 per ton.
• Terminal damage may constrain 2027 shipping: A damaged DTA terminal machine likely needs a custom replacement that could take about two years. Alpha expects 2027 shipments of 14.3 million to 15.7 million tons, relying on another Hampton Roads terminal as well as DTA.
• Alpha has domestic contracts and substantial liquidity: It contracted to sell 3.5 million tons domestically in 2027 at an average fixed price of $135.48 per ton, and ended September with $443.4 million in total liquidity. Management said weak global steel demand and volatile coal prices continue to shape market conditions.

Alpha Metallurgical Resources NYSE: AMR reported higher third-quarter shipments and adjusted earnings, while laying out a 2027 shipping plan that accounts for prolonged repairs at a key export terminal.

The metallurgical coal producer shipped 3.9 million tons in the third quarter of 2026, up from 3.5 million tons in the second quarter. Adjusted earnings before interest, taxes, depreciation and amortization rose to $29.4 million from $25.6 million, Chief Financial Officer Todd Munsey said.

Cost pressures continued to weigh on results. The company’s metallurgical segment cost of coal sales increased to $106.93 per ton from $103.07 per ton in the preceding quarter. Its average metallurgical segment realization rose to $121.09 per ton from $118.71 per ton.

Terminal Replacement and 2027 Shipments

Chief Executive Officer Andy Eidson said management at the DTA terminal in Newport News, Virginia, believes a stacker reclaimer damaged in a June storm will need to be replaced rather than repaired. The custom-built replacement could take approximately two years to design, construct and install, he said.

DTA has been discussing coverage of the replacement and potentially other expenses with its insurer. Alpha does not anticipate significant capital outlays associated with the replacement, Eidson said. He added during the question-and-answer session that it was too early to predict the timing of any reimbursements, although he did not expect a gap lasting multiple quarters.

Alpha plans to use capacity at another Hampton Roads terminal as well as DTA to keep coal moving. Eidson said the company was optimistic it could ship the tons it needs in 2027, but acknowledged that DTA would constrain volumes and that there was not a large amount of upside to the current shipping rate. Reaching the company’s targets will depend on terminal and railroad performance, he said.

For 2027, Alpha expects total shipments of 14.3 million to 15.7 million tons, including 13.1 million to 14.1 million tons of metallurgical coal and 1.2 million to 1.6 million tons of incidental thermal coal. Other guidance includes:

• Cost of coal sales of $104 to $110 per ton.
• Capital expenditures of $145 million to $165 million, including carryover, development and maintenance spending.
• Contributions to equity affiliates of $28 million to $37 million, including cash contributions for DTA.
• Idle expenses of $25 million to $33 million.

Eidson said most input cost increases have already worked their way into Alpha’s cost structure, although he did not suggest that increases had stopped. He estimated that the 2027 guidance assumed diesel prices in the low-to-mid $5 range per gallon and said the company uses approximately 20 million to 22 million gallons across its operations.

Domestic Contracts and Coal Mix

Alpha has agreed to sell 3.5 million tons to domestic customers in 2027 under fixed-price annual contracts averaging $135.48 per ton, Eidson said. Higher-volatility coal makes up a greater share of the domestic quality mix than in 2026, influencing the average price.

Chief Commercial Officer Dan Horn said the domestic high-volatility coal is lower-value material. As Alpha’s new Wildcat mine ramps up, the company expects more low-volatility coal to become available. Horn said at least several hundred thousand tons could readily be sold into the seaborne market, although domestic buyers have also expressed interest.

Horn said Wildcat coal is expected to command a premium to many other U.S. low-volatility coals. He could not quantify how much might be sold against Australian pricing indices, adding that Alpha focuses on the net return rather than the index alone.

Liquidity and Market Conditions

Alpha ended September with $334.1 million in cash and cash equivalents and $443.4 million in total liquidity. Its asset-based lending facility had no borrowings and $40.7 million in outstanding letters of credit. Third-quarter operating cash flow was $46.9 million, while capital spending was $33.8 million.

Munsey said global steel demand remained weak, while supply-related factors, including mine closure announcements, helped lift metallurgical coal indices toward the end of the quarter. Prices remained volatile afterward: the Australian Premium Low Vol Index fell from $272.10 per metric ton at September 30 to $262.20 as of November 5, he said.

About Alpha Metallurgical Resources (NYSE:AMR)

Alpha Metallurgical Resources, Inc is a mining company focused primarily on the production and sale of metallurgical coal. Its coal is used by steelmakers and coke producers in the manufacturing of steel, with additional sales of thermal coal for power generation. The company serves domestic and international customers through a network of mines and related operations.

Alpha operates principally in the Central Appalachian region, with mining assets in West Virginia and Virginia. Its activities include underground and surface mining, coal preparation, processing, and transportation.

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