Alpha Metallurgical Resources(AMR) - 2024 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Adjusted EBITDA for Q4 2024 was $53 million, an increase from $49 million in Q3 2024 [13] - Coal shipped in Q4 2024 was 4.1 million tons, consistent with Q3 2024 [13] - Net segment realizations decreased to an average of $127.84 per ton in Q4 from $132.76 in Q3 [14] - Cash provided by operating activities was $56.3 million in Q4, down from $189.5 million in Q3 [17] - Total liquidity increased to $519.4 million at the end of Q4 from $507 million at the end of Q3 [17] Business Line Data and Key Metrics Changes - Realizations for metallurgical sales averaged $132.63 per ton in Q4, down from $136.35 in Q3 [15] - Incidental thermal portion realizations decreased to $75.39 per ton in Q4 from $76.33 in Q3 [15] - Coal sales for the Met segment decreased to $108.82 per ton in Q4 from $114.27 in Q3 [15] - SG&A expenses increased to $14.3 million in Q4 from $13.4 million in Q3 [16] Market Data and Key Metrics Changes - Metallurgical coal markets ended 2024 sharply lower, with indices dropping at least 30% [33] - The Australian Premium Low Vol Index fell from $204.75 per metric ton at the start of 2024 to $196.50 by year-end [34] - The U.S. East Coast Low Vol Index decreased slightly from $189 per metric ton to $188 per metric ton during Q4 [34] - The API 2 index for thermal coal decreased from $118.25 per metric ton at the start of Q4 to $113.15 by year-end [35] Company Strategy and Development Direction - The company is open to evaluating M&A opportunities to strengthen its long-term position despite current market challenges [11] - The focus remains on cash preservation and maintaining liquidity in light of market uncertainties [66] - The company aims to protect its franchise and will not consider share repurchases until market conditions improve [66] Management's Comments on Operating Environment and Future Outlook - Management noted that severe weather conditions have impacted production and transportation, affecting Q1 and potentially Q2 results [31][39] - The company anticipates continued challenges in the metallurgical coal market due to weak steel demand and geopolitical uncertainties [36][38] - Management expressed confidence in the long-term demand for metallurgical coal despite current market conditions [12] Other Important Information - The company did not repurchase any shares in Q4 under its buyback program, maintaining approximately 4 million shares outstanding [20] - The Kingston Wildcat Slope development is on track to reach coal seam by late 2025, expected to produce approximately 1 million tons of low-vol coal annually [30] Q&A Session Summary Question: How should we think about the cadence of sales through 2025? - Management indicated that domestic shipments should be roughly pro rata throughout the year, with export shipments expected to increase in the latter half as they catch up from missed shipments [44] Question: Can you break down the cost per ton guidance increase? - Management stated that the $2 increase in the upper range is a precautionary measure to guard against Q1 issues, with some cost impacts already observed in January [47] Question: What are your thoughts on domestic demand given the new administration's tariffs? - Management noted the ability to shift tons between domestic and export markets, but current customer operations are stable without indications of increased blast furnace production [56] Question: What is the target cash level if the market remains weak? - Management aims to maintain a cash level in the $400 to $500 million range while preserving liquidity until market conditions improve [65] Question: Any updates on potential M&A opportunities? - Management acknowledged ongoing processes with certain assets and potential opportunities but emphasized caution regarding cash burn from operations [70] Question: How much supply from Central Appalachia has come out of the market? - Management indicated that some tons have exited the market due to operational interruptions, but it is difficult to quantify the exact amount [75]