Alpha Metallurgical Resources(AMR) - 2021 Q1 - Quarterly Report

Cautionary Note Regarding Forward Looking Statements Forward-Looking Statements Forward-looking statements are based on expectations and subject to risks, including COVID-19, financial performance, and market conditions - The report includes forward-looking statements based on forecasts and estimates, subject to risks and uncertainties[4] - Key factors that may cause actual results to differ materially include the effects of the COVID-19 pandemic, financial performance, liquidity, coal prices, worldwide market demand for coal, steel, and electricity, ability to obtain financing, trade barriers, production capabilities and costs, environmental laws, customer relationships, and employee benefit obligations[4][5] - Readers are cautioned not to place undue reliance on forward-looking statements, which are based on currently available information and speak only as of their creation date. The company does not undertake to revise or update these statements publicly[6] Part I - Financial Information Item 1. Financial Statements This section presents unaudited condensed consolidated financial statements for Q1 2021 and 2020, with detailed notes Condensed Consolidated Statements of Operations The company reported an improved net loss of $32.9 million in Q1 2021, with decreased revenues and expenses Condensed Consolidated Statements of Operations (in thousands) | Metric (in thousands) | 3 Months Ended March 31, 2021 | 3 Months Ended March 31, 2020 | | :-------------------- | :---------------------------- | :---------------------------- | | Total Revenues | $386,253 | $402,804 | | Total Costs & Expenses| $402,755 | $422,511 | | Loss from Operations | $(16,502) | $(19,707) | | Net Loss | $(32,928) | $(39,808) | | Basic & Diluted Loss per Common Share | $(1.79) | $(2.18) | - Net loss from continuing operations improved to $(32,691) thousand in Q1 2021 from $(36,186) thousand in Q1 2020[8] - Coal revenues decreased from $401,460 thousand in Q1 2020 to $385,452 thousand in Q1 2021[8] Condensed Consolidated Statements of Comprehensive Loss Total comprehensive loss improved to $(31.4) million in Q1 2021, driven by positive other comprehensive income Condensed Consolidated Statements of Comprehensive Loss (in thousands) | Metric (in thousands) | 3 Months Ended March 31, 2021 | 3 Months Ended March 31, 2020 | | :-------------------- | :---------------------------- | :---------------------------- | | Net Loss | $(32,928) | $(39,808) | | Other Comprehensive Income (Loss), net of tax | $1,484 | $(4,010) | | Total Comprehensive Loss | $(31,444) | $(43,818) | - Other comprehensive income (loss) for employee benefit plans shifted from a loss of $(4,010) thousand in Q1 2020 to an income of $1,484 thousand in Q1 2021[9] Condensed Consolidated Balance Sheets Total assets slightly decreased, while liabilities increased and stockholders' equity decreased as of March 31, 2021 Condensed Consolidated Balance Sheets (in thousands) | Metric (in thousands) | March 31, 2021 | December 31, 2020 | | :-------------------- | :------------- | :---------------- | | Total Assets | $1,671,641 | $1,680,089 | | Total Liabilities | $1,501,480 | $1,479,987 | | Total Stockholders' Equity | $170,161 | $200,102 | | Cash and Cash Equivalents | $92,236 | $139,227 | | Trade Accounts Receivable, net | $214,342 | $145,670 | - Cash and cash equivalents decreased by $46,991 thousand from December 31, 2020, to March 31, 2021[11] - Trade accounts receivable, net, increased significantly from $145,670 thousand to $214,342 thousand[11] Condensed Consolidated Statements of Cash Flows Net cash used in operating activities significantly increased in Q1 2021, with changes in investing and financing Condensed Consolidated Statements of Cash Flows (in thousands) | Metric (in thousands) | 3 Months Ended March 31, 2021 | 3 Months Ended March 31, 2020 | | :-------------------- | :---------------------------- | :---------------------------- | | Net Cash Used in Operating Activities | $(19,115) | $(60) | | Net Cash Used in Investing Activities | $(29,749) | $(58,771) | | Net Cash (Used in) Provided by Financing Activities | $(6,404) | $55,136 | | Net Decrease in Cash and Cash Equivalents and Restricted Cash | $(55,268) | $(3,695) | - Capital expenditures decreased from $49,559 thousand in Q1 2020 to $20,395 thousand in Q1 2021[15] - Cash and cash equivalents and restricted cash at the end of the period decreased to $189,303 thousand in Q1 2021 from $343,985 thousand in Q1 2020[15][17] Condensed Consolidated Statements of Stockholders' Equity Total stockholders' equity decreased due to net loss and common stock repurchases in Q1 2021 Condensed Consolidated Statements of Stockholders' Equity (in thousands) | Metric (in thousands) | March 31, 2021 | December 31, 2020 | | :-------------------- | :------------- | :---------------- | | Common Stock | $207 | $206 | | Additional Paid-in Capital | $781,606 | $779,424 | | Accumulated Other Comprehensive Loss | $(110,501) | $(111,985) | | Treasury Stock, at Cost | $(107,694) | $(107,014) | | Accumulated Deficit | $(393,457) | $(360,529) | | Total Stockholders' Equity | $170,161 | $200,102 | - The accumulated deficit increased from $(360,529) thousand at December 31, 2020, to $(393,457) thousand at March 31, 2021, reflecting the net loss[19] - Common stock repurchases and related expenses amounted to $(680) thousand for the three months ended March 31, 2021[19] Notes to Condensed Consolidated Financial Statements These notes provide detailed explanations for financial statements, covering policies, accounts, and contingencies (1) Business and Basis of Presentation Alpha Metallurgical Resources, Inc. is a metallurgical coal miner facing liquidity risks and COVID-19 impacts - Alpha Metallurgical Resources, Inc. is a leading U.S. supplier of metallurgical products for the steel industry, operating in Virginia and West Virginia[21] - The company's former Northern Appalachia (NAPP) operations are reported as discontinued operations, and historical financial information has been restated accordingly[22] - Weak market conditions and depressed coal prices have led to operating losses, posing liquidity risks. The company believes it has sufficient liquidity for the next 12 months but acknowledges uncertainties[25] - The COVID-19 pandemic has negatively impacted the company's business, results of operations, financial condition, and cash flows, with the full extent of the impact remaining uncertain[26][27] (2) Discontinued Operations Discontinued operations relate to the NAPP thermal coal sale, with a reduced loss in Q1 2021 - Discontinued operations consist of activities related to the company's former NAPP operations, specifically the sale of thermal coal mining operations in Pennsylvania[30][31] - The loss from discontinued operations before income taxes for the three months ended March 31, 2021, was $(237) thousand, compared to $(3,622) thousand for the same period in 2020[32] Discontinued Operations Balance Sheet (in thousands) | Metric (in thousands) | March 31, 2021 | December 31, 2020 | | :-------------------- | :------------- | :---------------- | | Current Assets - Discontinued Operations | $3,216 | $10,935 | | Non-Current Assets - Discontinued Operations | $9,476 | $9,473 | | Current Liabilities - Discontinued Operations | $7,502 | $12,306 | | Non-Current Liabilities - Discontinued Operations | $28,028 | $29,090 | (3) Revenue Revenue is primarily from met and thermal coal sales, disaggregated by product and market, with 63% from exports - Revenue is primarily from the sale of coal (produced and purchased) and other sources like equipment sales, rentals, and fees[35][142] Revenue by Category (in thousands) | Revenue Category (in thousands) | 3 Months Ended March 31, 2021 | 3 Months Ended March 31, 2020 | | :------------------------------ | :---------------------------- | :---------------------------- | | Export Met Coal Revenues | $242,752 | $244,071 | | Export Thermal Coal Revenues | $1,031 | $7,383 | | Domestic Met Coal Revenues | $100,242 | $114,688 | | Domestic Thermal Coal Revenues | $41,427 | $35,318 | | Total Coal Revenues | $385,452 | $401,460 | - Export coal revenues represented 63% of total coal revenues for both Q1 2021 ($243,783 thousand) and Q1 2020 ($251,454 thousand)[37][38][111] Estimated Coal Revenues (in thousands) | Estimated Coal Revenues (in thousands) | Remainder of 2021 | 2022 | 2023 | 2024 | 2025 | Total | | :------------------------------------- | :---------------- | :------- | :--- | :--- | :--- | :-------- | | Estimated coal revenues | $84,555 | $32,560 | $— | $— | $— | $117,115 | (4) Accumulated Other Comprehensive Loss Accumulated other comprehensive loss improved due to employee benefit costs in Q1 2021 Accumulated Other Comprehensive Loss (in thousands) | Metric (in thousands) | Balance Jan 1, 2021 | Other Comprehensive Income (Loss) | Reclassified Amounts | Balance March 31, 2021 | | :-------------------- | :------------------ | :-------------------------------- | :------------------- | :--------------------- | | Employee benefit costs| $(111,985) | $— | $1,484 | $(110,501) | Reclassified Amounts (in thousands) | Reclassified Amounts (in thousands) | 3 Months Ended March 31, 2021 | 3 Months Ended March 31, 2020 | Affected Line Item | | :---------------------------------- | :---------------------------- | :---------------------------- | :----------------- | | Amortization of actuarial loss | $1,484 | $794 | Miscellaneous income (loss), net | | Settlement | $— | $1,200 | Miscellaneous income (loss), net | (5) Net Loss Per Share Basic and diluted net loss per share improved to $(1.79) in Q1 2021, with anti-dilutive securities excluded Net Loss Per Share | Metric | 3 Months Ended March 31, 2021 | 3 Months Ended March 31, 2020 | | :----- | :---------------------------- | :---------------------------- | | Basic and Diluted Loss per Common Share | $(1.79) | $(2.18) | | Weighted Average Shares – Basic and Diluted | 18,361,444 | 18,245,911 | - 954,248 warrants, stock options, and other stock-based instruments were excluded from diluted net loss per common share calculation in Q1 2021 due to anti-dilution[45] - The weighted average share impact of stock options and other stock-based instruments excluded due to net loss was 323,236 in Q1 2021 and 193,357 in Q1 2020[46] (6) Inventories, net Total inventories remained stable, with raw coal increasing and saleable coal decreasing Inventories, net (in thousands) | Inventory Category (in thousands) | March 31, 2021 | December 31, 2020 | | :-------------------------------- | :------------- | :---------------- | | Raw coal | $20,573 | $15,084 | | Saleable coal | $62,688 | $69,262 | | Materials, supplies and other, net| $25,610 | $23,705 | | Total inventories, net | $108,871 | $108,051 | (7) Acquired Intangibles Net acquired intangibles decreased due to amortization of coal supply agreements and mine permits Acquired Intangibles (in thousands) | Acquired Intangible (in thousands) | March 31, 2021 Net Total | December 31, 2020 Net Total | | :--------------------------------- | :----------------------- | :-------------------------- | | Coal supply agreements, net | $(245) | $(327) | | Acquired mine permits, net | $84,245 | $88,196 | | Total | $84,000 | $87,869 | Amortization (in thousands) | Amortization (in thousands) | 3 Months Ended March 31, 2021 | 3 Months Ended March 31, 2020 | | :-------------------------- | :---------------------------- | :---------------------------- | | Amortization of mine permits| $3,951 | $3,328 | | Amortization of above-market coal supply agreements | $— | $18 | | Amortization of below-market coal supply agreements | $(82) | $(2,835) | | Net income | $(82) | $(2,817) | (8) Asset Impairment and Restructuring Asset impairment and restructuring significantly decreased in Q1 2021 compared to prior year's substantial impairments Impairment Category (in thousands) | Impairment Category (in thousands) | 3 Months Ended March 31, 2021 | 3 Months Ended March 31, 2020 | | :--------------------------------- | :---------------------------- | :---------------------------- | | Mineral rights, net | $— | $21,825 | | Property, plant, and equipment, net| $60 | $6,066 | | Acquired mine permits, net | $— | $5,818 | | Total long-lived asset impairment | $60 | $33,709 | - Restructuring expense of $(621) thousand was recorded in Q1 2021 due to strategic actions and changes to severance and employee-related benefits[51] - The significant asset impairment in Q1 2020 was due to declines in metallurgical and thermal coal pricing, which reduced forecasted margins below recoverability levels[50] (9) Long-Term Debt Total long-term debt slightly decreased, with the Term Loan Credit Facility as the largest component Long-Term Debt (in thousands) | Debt Category (in thousands) | March 31, 2021 | December 31, 2020 | | :--------------------------- | :------------- | :---------------- | | Term Loan Credit Facility | $551,969 | $553,373 | | ABL Facility | $— | $3,350 | | LCC Note Payable | $27,500 | $27,500 | | LCC Water Treatment Obligation | $6,875 | $6,875 | | Other | $7,520 | $8,475 | | Debt discount and issuance costs | $(14,103) | $(17,046) | | Total long-term debt | $579,761 | $582,527 | | Less current portion | $(29,447) | $(28,830) | | Long-term debt, net of current portion | $550,314 | $553,697 | - The Term Loan Credit Facility carries an interest rate of 9.00% (Eurocurrency rate plus 7.00%)[54] - The company was in compliance with all covenants under the Term Loan Credit Facility and ABL Facility as of March 31, 2021[55][58] - During Q1 2021, $25,000 thousand of cash collateral was posted for the ABL Facility, a portion of which was used to repay $3,350 thousand in borrowings, with the remainder returned to unrestricted cash[57] (10) Acquisition-Related Obligations Acquisition-related obligations increased, primarily driven by the Contingent Revenue Obligation Acquisition-Related Obligations (in thousands) | Obligation (in thousands) | March 31, 2021 | December 31, 2020 | | :------------------------ | :------------- | :---------------- | | Contingent Revenue Obligation | $32,143 | $28,967 | | Environmental Settlement Obligations | $9,979 | $10,391 | | UMWA Funds Settlement Liability | $2,000 | $2,000 | | Discount | $(1,120) | $(1,491) | | Total acquisition-related obligations | $43,002 | $39,867 | | Less current portion | $(19,879) | $(19,099) | | Acquisition-related obligations, net of current portion | $23,123 | $20,768 | - The Contingent Revenue Obligation increased from $28,967 thousand to $32,143 thousand[59][60] - The company paid $11,396 thousand related to the Contingent Revenue Obligation during Q2 2021[61] (11) Asset Retirement Obligations Total asset retirement obligations slightly increased due to accretion for the period Asset Retirement Obligations (in thousands) | Metric (in thousands) | Amount | | :-------------------- | :----- | | Total asset retirement obligations at December 31, 2020 | $140,074 | | Accretion for the period | $6,648 | | Revisions in estimated cash flows | $(6,047) | | Expenditures for the period | $— | | Total asset retirement obligations at March 31, 2021 | $140,675 | | Less current portion | $(11,427)| | Long-term portion | $129,248 | (12) Fair Value of Financial Instruments and Fair Value Measurements Financial instruments are measured at fair value using a hierarchy, with long-term debt and obligations classified - Fair values of cash, receivables, payables, and current liabilities approximate carrying amounts due to short maturities[64] Long-Term Debt Fair Value (in thousands) | Long-Term Debt (in thousands) | March 31, 2021 Fair Value | December 31, 2020 Fair Value | | :---------------------------- | :------------------------ | :--------------------------- | | Term Loan Credit Facility | $453,072 (Level 2) | $379,614 (Level 2) | | LCC Note Payable | $23,324 (Level 3) | $20,328 (Level 3) | | LCC Water Treatment Obligation| $5,099 (Level 3) | $4,281 (Level 3) | | ABL Facility | $— (Level 3) | $3,057 (Level 3) | | Total Long-Term Debt | $481,495 | $407,280 | Acquisition-Related Obligations Fair Value (in thousands) | Acquisition-Related Obligations (in thousands) | March 31, 2021 Fair Value | December 31, 2020 Fair Value | | :--------------------------------------------- | :------------------------ | :--------------------------- | | UMWA Funds Settlement Liability | $1,657 (Level 3) | $1,426 (Level 3) | | Environmental Settlement Obligations | $8,416 (Level 3) | $7,760 (Level 3) | | Contingent Revenue Obligation | $32,143 (Level 3) | $28,967 (Level 3) | | Trading securities | $34,573 | $22,498 | - The Contingent Revenue Obligation is valued using a Black-Scholes pricing model, with inputs including forecasted future revenue ($0.9 - $1.1 billion), stated royalty rate (1.0% - 1.5%), and annualized volatility (20.5% - 49.9% in Q1 2021)[78][79] (13) Income Taxes An income tax benefit of $5 thousand was recorded in Q1 2021, impacted by deferred tax asset valuation - Income tax benefit for Q1 2021 was $5 thousand, compared to $2,188 thousand in Q1 2020[80] - The effective tax rate differs from the federal statutory rate of 21% primarily due to an increase of $9,425 thousand in the deferred tax asset valuation allowance in Q1 2021[80][81] - The company anticipates no current federal income tax liability in 2021[80] (14) Employee Benefit Plans Net periodic benefit for pension and black lung obligations increased in Q1 2021 Pension Benefit (in thousands) | Pension Benefit (in thousands) | 3 Months Ended March 31, 2021 | 3 Months Ended March 31, 2020 | | :----------------------------- | :---------------------------- | :---------------------------- | | Interest cost | $3,422 | $4,735 | | Expected return on plan assets | $(7,247) | $(6,812) | | Amortization of net actuarial loss | $875 | $469 | | Settlement | $— | $1,167 | | Net periodic benefit | $(2,950) | $(441) | Black Lung Expense (in thousands) | Black Lung Expense (in thousands) | 3 Months Ended March 31, 2021 | 3 Months Ended March 31, 2020 | | :-------------------------------- | :---------------------------- | :---------------------------- | | Service cost | $739 | $488 | | Interest cost | $607 | $822 | | Expected return on plan assets | $(14) | $(13) | | Amortization of net actuarial loss| $522 | $215 | | Net periodic expense | $1,854 | $1,512 | - Estimated contributions to pension plans were reduced due to the American Rescue Plan Act, with $8,241 thousand expected to be contributed in the remainder of 2021[83] (15) Related Party Transactions No material related party transactions occurred in Q1 2021 or Q1 2020 - No material related party transactions occurred in Q1 2021 or Q1 2020[85] (16) Commitments and Contingencies The company has various commitments and faces contingencies, including environmental regulations and black lung collateral - The company has coal transportation agreements with minimum quantities to be shipped, totaling $47,469 thousand in estimated obligations for 2022[89][214] - As of March 31, 2021, the company is required to purchase and sell 2,226 thousand tons of coal in the remainder of 2021 and 2,375 thousand tons in 2022 under Cumberland Back-to-Back Coal Supply Agreements, totaling $86,933 thousand and $92,390 thousand, respectively[91] - The company had $130,897 thousand in letters of credit outstanding under the ABL Facility and $253,479 thousand in outstanding surety bonds as of March 31, 2021[94][95] Restricted Cash (in thousands) | Restricted Cash (in thousands) | March 31, 2021 | December 31, 2020 | | :----------------------------- | :------------- | :---------------- | | Workers' compensation and black lung obligations | $60,183 | $69,725 | | Reclamation-related obligations| $3,661 | $8,445 | | Financial payments and other performance obligations | $21,796 | $17,863 | | Contingent revenue obligation escrow | $11,427 | $9,311 | | Total restricted cash | $97,067 | $105,344 | - The U.S. Department of Labor's new reauthorization process for self-insured black lung obligations proposes a collateral requirement of $65,700 thousand, a significant increase from previous levels, which could reduce liquidity[101][102][199] (17) Segment Information The company reports one segment, Met, focusing on metallurgical coal, with export revenues at 63% of total - The company re-evaluated its segment reporting and now has one reportable segment: Met, which includes five active mines and two preparation plants in Virginia, and fourteen active mines and five preparation plants in West Virginia[104] - All Other includes general corporate overhead, former CAPP - Thermal operations (one active mine, one preparation plant in West Virginia), and expenses from idled/closed mines[105] Segment Operating Results (in thousands) | Segment Operating Results (in thousands) | Met (Q1 2021) | All Other (Q1 2021) | Consolidated (Q1 2021) | | :--------------------------------------- | :------------ | :------------------ | :--------------------- | | Total revenues | $359,878 | $26,375 | $386,253 | | Depreciation, depletion, and amortization| $26,536 | $1,902 | $28,438 | | Amortization of acquired intangibles, net| $4,051 | $(182) | $3,869 | | Adjusted EBITDA | $32,582 | $(3,698) | $28,884 | | Capital expenditures | $20,323 | $72 | $20,395 | - Export coal revenues were $243,783 thousand in Q1 2021 and $251,454 thousand in Q1 2020, representing 63% of total coal revenues in both periods, with India and Brazil being key markets[111] Glossary This section defines key industry-specific and financial terms used throughout the report for clarity - Definitions are provided for terms such as 'Alpha' (Alpha Metallurgical Resources, Inc.), 'Ash', 'British Thermal Unit (BTU)', 'Central Appalachia (CAPP)', 'Coal seam', 'Coke', 'Cumberland Back-to-Back Coal Supply Agreement', 'ESG', 'Merger', 'Metallurgical coal', 'Northern Appalachia (NAPP)', 'Operating Margin', 'Preparation plant', 'Probable reserves', 'Productivity', 'Proven reserves', 'Reclamation', 'Reserve', 'Roof', 'Sulfur', 'Surface mine', 'Thermal coal', 'Tons', 'UMWA', and 'Underground mine'[113][114][115][116][117][118][119][120][121][122][123][124][125][126][127] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section analyzes the company's financial condition and results for Q1 2021, covering market, operations, and liquidity Market Overview The metallurgical coal market saw volatility, with global steel production increasing and U.S. steel prices rising - Atlantic High-Vol A metallurgical coal index reached $154 per metric ton in February 2021 and $162 per metric ton currently, while the Australian premium hard coking coal index retreated to approximately $107[132] - Global crude steel production increased 15.2% in March 2021 year-over-year, with China growing 19.1% and Europe 17.5%. World steel demand is forecast to grow 5.8% in 2021[134] - U.S. steel prices are increasing, with capacity utilization approaching 80%, a bullish sign for the industry[135] - Ongoing trade tensions between Australia and China have led Australian coal producers to sell at lower prices and divert cargoes, creating opportunities for Alpha to sell coking coal into China at higher netbacks[135] - The domestic utility market for CAPP thermal coal remains challenged, but rising API 2 index pricing could present opportunities for 2022 sales in Asian markets[138] Business Overview Alpha focuses on metallurgical coal production in Virginia and West Virginia, with a strategic shift from thermal coal - Alpha operates twenty active mines and eight coal preparation and load-out facilities, employing approximately 3,280 people[139] - Sales of met coal were 3.4 million tons in Q1 2021 (82% of coal sales volume), up from 3.2 million tons in Q1 2020 (81%). Thermal coal sales were 0.7 million tons in both periods[140] - Approximately 63% of total coal revenues in both Q1 2021 and Q1 2020 were from international customers[141] - The disposition of former NAPP operations in Q4 2020 accelerated the strategic exit from thermal coal production, shifting focus to met coal[143] Priced Coal Volumes and Average Realized Price per Ton | Segment | Tons Priced (million) | % Priced | Average Realized Price per Ton | | :---------- | :-------------------- | :------- | :----------------------------- | | Met | 14.0 | 67% | $81.35 | | All Other | 1.5 | 100% | $57.67 | Results of Operations Total revenues decreased by 4.1% in Q1 2021, with improved net loss but decreased Adjusted EBITDA due to pricing Total Revenues and Tons Sold (in thousands) | Metric (in thousands) | 3 Months Ended March 31, 2021 | 3 Months Ended March 31, 2020 | Change ($) | Change (%) | | :-------------------- | :---------------------------- | :---------------------------- | :--------- | :--------- | | Total Revenues | $386,253 | $402,804 | $(16,551) | (4.1)% | | Coal Revenues | $385,452 | $401,460 | $(16,008) | (4.0)% | | Other Revenues | $801 | $1,344 | $(543) | (40.4)% | | Tons Sold (thousands) | 4,066 | 3,949 | 117 | 3.0% | - Coal revenues decreased primarily due to lower coal sales realization in Met operations, impacted by weak Australian hard coking coal indices[149] Total Costs and Expenses (in thousands) | Expense (in thousands) | 3 Months Ended March 31, 2021 | 3 Months Ended March 31, 2020 | Change ($) | Change (%) | | :--------------------- | :---------------------------- | :---------------------------- | :--------- | :--------- | | Cost of coal sales | $347,428 | $334,220 | $13,208 | 4.0% | | Depreciation, depletion and amortization | $28,438 | $47,616 | $(19,178) | (40.3)% | | Amortization of acquired intangibles, net | $3,869 | $511 | $3,358 | 657.1% | | Asset impairment and restructuring | $(561) | $33,709 | $(34,270) | (101.7)% | | Mark-to-market adjustment for acquisition-related obligations | $3,176 | $(14,997) | $18,173 | 121.2% | | Total costs and expenses | $402,755 | $422,511 | $(19,756) | (4.7)% | - Cost of coal sales increased due to higher tons sold, inventory changes, and increased supplies and maintenance, partially offset by lower purchased coal costs and salaries[150] Other Expense (Income) (in thousands) | Other Expense (Income) (in thousands) | 3 Months Ended March 31, 2021 | 3 Months Ended March 31, 2020 | Change ($) | Change (%) | | :------------------------------------ | :---------------------------- | :---------------------------- | :--------- | :--------- | | Interest expense | $(17,990) | $(18,176) | $186 | 1.0% | | Interest income | $164 | $968 | $(804) | (83.1)% | | Miscellaneous income (loss), net | $1,766 | $(716) | $2,482 | 346.6% | | Total other expense, net | $(16,194) | $(18,667) | $2,473 | 13.2% | Adjusted EBITDA (in thousands) | Adjusted EBITDA (in thousands) | 3 Months Ended March 31, 2021 | 3 Months Ended March 31, 2020 | Change ($) | Change (%) | | :----------------------------- | :---------------------------- | :---------------------------- | :--------- | :--------- | | Met operations | $32,582 | $69,118 | $(36,536) | (52.9)% | | All Other | $(3,698) | $(12,621) | $8,923 | 70.7% | | Total | $28,884 | $56,497 | $(27,613) | (48.9)% | - Met operations' Adjusted EBITDA decreased by 52.9% due to a $10.80 (11.6%) decrease in non-GAAP coal sales realization per ton[182] Liquidity and Capital Resources Liquidity is $108.5 million, funded by coal sales and debt, facing risks from market conditions and black lung collateral - Primary liquidity sources are coal sales, debt financing, and miscellaneous revenues[188] - As of March 31, 2021, total liquidity was $108.5 million, comprising $92.2 million in cash and cash equivalents and $16.3 million in unused ABL Facility commitments[190] - The company had $85.6 million in long-term restricted cash, $35.3 million in long-term restricted investments, and $14.9 million in long-term deposits as cash collateral for various obligations[193] - Moody's Investors Service rated the company's Corporate Family Rating at Caa1 with a stable outlook, indicating potential liquidity risks from market weakness and depressed coal prices[194] - The proposed $65.7 million collateral requirement for black lung obligations by the DCMWC, if upheld, would significantly reduce the company's liquidity[199][200] Cash Flows (in thousands) | Cash Flows (in thousands) | 3 Months Ended March 31, 2021 | 3 Months Ended March 31, 2020 | | :------------------------ | :---------------------------- | :---------------------------- | | Net cash used in operating activities | $(19,115) | $(60) | | Net cash used in investing activities | $(29,749) | $(58,771) | | Net cash (used in) provided by financing activities | $(6,404) | $55,136 | | Net decrease in cash and cash equivalents and restricted cash | $(55,268) | $(3,695) | Contractual Obligations Transportation commitments increased in Q1 2021 due to new agreements, totaling $47.5 million due in 2022 - Transportation commitments increased during Q1 2021 due to new agreements[213] Contractual Obligations (in thousands) | Obligation (in thousands) | Remainder of 2021 | 2022 | 2023 | 2024 | 2025 | After 2025 | Total | | :------------------------ | :---------------- | :-------- | :--- | :--- | :--- | :--------- | :-------- | | Transportation commitments| $— | $47,469 | $— | $— | $— | $— | $47,469 | Critical Accounting Policies and Estimates Financial statements rely on management estimates and assumptions, with critical accounting policies unchanged from 2020 - Management makes estimates and assumptions for financial statements, which are subject to uncertainty from foreign currency, energy markets, and steel demand fluctuations[215] - The company's critical accounting policies remain unchanged at March 31, 2021, as discussed in its Annual Report on Form 10-K for 2020[216] Item 3. Quantitative and Qualitative Disclosures about Market Risk Quantitative and qualitative disclosures regarding market risk are not required for this quarterly report - Quantitative and qualitative disclosures about market risk are not required for this report[216] Item 4. Controls and Procedures Disclosure controls were effective as of March 31, 2021, with no material changes in internal control over financial reporting - The CEO and CFO concluded that disclosure controls and procedures were effective as of March 31, 2021[217] - No material changes in internal control over financial reporting occurred during the period[218] - Control systems provide only reasonable assurance and may not prevent all errors or fraud due to inherent limitations[219] Part II - Other Information Item 1. Legal Proceedings Information on legal proceedings is incorporated by reference from Note 16(d) of the financial statements - Legal proceedings information is detailed in Note 16, part (d), of the financial statements[221] Item 1A. Risk Factors Readers should consider risk factors from the 2020 Annual Report and cautionary statements in this report - Risk factors from the Annual Report on Form 10-K for 2020 and forward-looking statements in this report should be considered[222] - Additional unknown or immaterial risks may also materially adversely affect the business[222] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company repurchased 46,073 common shares in February 2021 for employee tax withholdings Share Repurchases | Period | Total Number of Shares Purchased | Average Price per Share | | :--------------------------- | :------------------------------- | :---------------------- | | January 1 - January 31, 2021 | — | $— | | February 1 - February 28, 2021 | 46,073 | $14.75 | | March 1 - March 31, 2021 | — | $— | | Total | 46,073 | | - Shares were repurchased to satisfy employees' statutory tax withholdings upon the vesting of stock grants[224] - The stock repurchase plan, adopted in 2019, was suspended on October 1, 2019[224] Item 4. Mine Safety Disclosures Mine safety disclosures are provided in Exhibit 95 to this Quarterly Report on Form 10-Q - Mine safety disclosures are included in Exhibit 95 of this Quarterly Report on Form 10-Q[225] Item 6. Exhibits This section lists all exhibits filed with the Quarterly Report on Form 10-Q, including certifications and financial data - The exhibit index includes the Second Amended and Restated Certificate of Incorporation, Third Amended and Restated Bylaws, Certifications Pursuant to Rule 13a-14(a) and 18 U.S.C. §1350, Mine Safety Disclosure Exhibit, and financial information in Inline XBRL format[230]