Alpha Metallurgical Resources(US:AMR)2020-05-11 17:51Financial Data and Key Metrics Changes - The company reported an exceptional EBITDA of $60 million for Q1 2020, nearly doubling from the previous quarter, driven by outstanding cost performance [6][18] - The Central Appalachian (CAPP) met coal net cost reached a multiyear low of $70.68 per ton, down 17% from $82.36 in Q4 2019 and a staggering 34% reduction from Q1 2019's cost of $94 per ton [6][18] - The company ended the quarter with approximately $227 million in unrestricted cash and $156 million of restricted cash, totaling $257 million in liquidity [14][8] Business Line Data and Key Metrics Changes - CAPP met coal generated $69 million of EBITDA during the quarter, while the two thermal segments in Central Appalachian and Northern Appalachian combined added another $2 million of EBITDA [18] - CAPP met coal shipments remained robust at 3.3 million tons, matching Q4 2019 shipments, while revenue per short ton slightly declined by $2.18 to $92.80 [20] - CAPP thermal sales tonnage declined by 31%, resulting in a $15 million decline in CAPP thermal revenues [20] Market Data and Key Metrics Changes - The first quarter met coal prices were challenging, with a significant price decline observed due to the COVID-19 pandemic, with high-vol A market prices dropping by 13% and Australian premium hard coking spot prices declining by 26% in April [9][10] - Global crude steel production declined by 6% compared to March 2019, with European production down 20% and North and South American production declining nearly 10% [10] - The manufacturing PMI index fell to 36.1 in April from 48.5 in March, indicating contracting business conditions [10] Company Strategy and Development Direction - The company is committed to an aggressive cash preservation strategy and has implemented cost-cutting measures to secure long-term viability and profitability [7][8] - Capital projects are continuing as planned, with no impact on timelines despite the current market conditions [27] - The company aims to transition to a more nimble operation, focusing on efficiency at both operating and corporate levels [6][11] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the unprecedented uncertainty due to the coronavirus pandemic and its impact on global economies [5][11] - The company suspended its 2020 guidance due to the difficulty in predicting future market conditions [13] - Management expressed optimism about the company's ability to navigate the challenges ahead, citing a solid financial foundation and strong fundamentals [11][8] Other Important Information - The company expects to receive an accelerated AMT tax refund of approximately $68 million in early Q3 2020 due to the CARES Act [8][16] - The company anticipates deferring approximately $14 million of payroll taxes in connection with the coronavirus relief package [8][16] - There is an ongoing appeal regarding a demand from the Department of Labor for higher collateral amounts for black lung obligations [17] Q&A Session Summary Question: Impact of blast furnace closures on coke plants - Management confirmed that they are seeing deferrals in volumes due to blast furnace closures and are monitoring the situation closely [24][25] Question: Capital projects timeline - Management stated that there is no impact on the timeline for capital projects, which are continuing as previously indicated [27] Question: Path to positive free cash flow in 2020 - Management indicated that 2020 was setting up to be a difficult year from a cash burn perspective, and they expect to continue experiencing cash burn [28][29] Question: Sustainability of cost reductions - Management expressed that as long as production levels are maintained near capacity, the cost reductions are sustainable [32][35] Question: Update on Cumberland - Management stated there are no new updates on Cumberland beyond previous discussions, emphasizing capital preservation [44]