AMR Q3 2026 earnings call transcript, November 6, 2026

Good morning, everyone. Before we get started, let me remind you that during our prepared remarks, our comments regarding anticipated business and financial performance... contain forward-looking statements, and actual results may differ materially from those discussed. For more information regarding forward-looking statements and some of the factors that can affect them, please refer to the company's third quarter 2026 earnings release and the associated SEC filing. Please also see those documents for information about... ...about our use of non-GAAP measures and their reconciliation to GAAP measures. On the call today, I'm joined by Alpha's Chief Executive Officer, Andy Edson, and Chief Financial Officer, Todd Muncy, who will provide prepared remarks. Also participating on the call are our President and Chief Operating Officer, Jason White. And our Chief Commercial Officer, Dan Horn. Following the prepared remarks, we will be available to answer questions. With that, I'll turn the call over to Andy.

As timing is concerned, a total replacement of the stacker reclaimer would be a fully custom-built, requiring specialized design, engineering, construction, and installation. Such work will likely require a lengthy timeline with current estimates in the two-year ballpark. This is why we've worked so hard to establish a logistical framework that minimizes our disruption. The disruption to our sales and logistics processes, and allows us to keep coal moving to our customers while DTA addresses the damaged stacker reclaimer. This includes a plan to also utilize our throughput capacity at other Hampton Roads terminal in addition to DTA. As evidenced by our more normalized third-quarter shipment volumes, we're optimistic about our data. We have the ability to move all the tons we need to in 2027 and beyond. As we look to next year, our guidance includes 3.5 million tons that we plan to sell to domestic customers in 2027 and at an average price of $135.48 per ton. We're pleased to announce the results of the domestic negotiations which are fixed price annual contracts. Each year's negotiation is a little different depending on the market backdrop and a variety of factors. For example, high vol made up a greater proportion of our 2027 domestic quality mix than in 2026, which influences the average price achieved for the total domestic book. All in all, we're pleased with these commitments and we look forward to building the rest of our 2027.

sales around opportunities in the seaboard market. As usual, our teams are doing great work throughout the Alpha organization and several operations have received recognition for their efforts. On the environmental front, our Paramount team in Virginia was recently honored with three Excellence in Mining Awards from the Metallurgical Coal Producers. Association. Virginia Energy also awarded them with three safety awards at their recent ceremony. Both of Alpha's mine rescue teams continue stacking wins as well, including first and second place finishes across many categories of competition in the National Mine Rescue Contest that was held in August. We're extremely proud of our Paramount team that earned the top honor of National Grand Champion this year with a perfect score for the competition. These miners continually train, practice, and challenge themselves so they're prepared to respond and their skills are needed. So congratulations to all those team members. I'll now turn the call over to Todd for a review of our financial results for the third quarter.

As compared to $338.5 million of cash and short-term investments, as of June 30th, we had $184.3 million in unused availability under our ABL at the end of the third quarter, partially offset by a minimum required liquidity of $75 million. As of the end of September, Alpha had total liquidity of $443.4 million, down slightly from $447.8 million at the end of June. CapEx for the third quarter was $33.8 million, down from $45.1 million in Q2. Cash provided by operating activities was $46.9 million in the third quarter, up from $39.9 million in the second quarter. As of September 30th, our ABL facility had no borrowings and $40.7 million of letters of credit outstanding.

Looking ahead, we issued 2027 operational guidance this morning. For sales volumes, we expect to ship between 13.1 and 14.1 million metallurgical tons, as well as another 1.2 to 1.6 million tons of incidental thermal coal, bringing total 2027 shipment expectations to a range of 14.1 million. 15.7 million tons for the year. For 2027 cost of coal sales, we are guiding to a range of 104 to $110 per ton. Selling general administrative costs are expected to be between 53 and 59 million dollars in 2027, excluding non-recurring. Expenses and non-cash stock compensation. Idle expense is expected to be between 25 and 33 million dollars. We anticipate 2027 net cash interest income of between 2 and 4 million dollars and depreciation, depletion, and amortization of 148 to 162 million. Capital and maintenance capital are expected to be in the range of 145 to 100. Contributions to equity affiliates are expected to be in the range of 28 to 37 million dollars, which include cash contributions. for DTA. Lastly, we are projecting a 2027 cash tax rate of between 0 and 5%. In terms of our committed position for 2026, at the midpoint of guidance, 87% of our metallurgical tonnage in the MET segment is committed and priced at an average price. $126.69. Another 12% 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 $76.06. Coal markets

remain subject to uncertainty and volatility resulting from geopolitical conflicts and global economic conditions. Improving indicators in manufacturing conditions across key alpha markets suggests that economic conditions are stable with almost all in growth territory. While global steel demand remains weak, supply-related factors such as mine closure announcements temporarily influenced metallurgical coal indices to rise toward the end of the third quarter, with further volatility continuing after the quarter close. AMLO vol index increased from $244 per metric ton on July 1st. to $272.10 per metric ton on September 30th. The U.S. East Coast low vol index rose from $190 per metric ton at the beginning of the quarter to $210 per metric ton by the end of September. The U.S. East Coast high vol A index increased from $157 per metric ton at the start of the quarter. To $195 per metric ton at the quarter's close. And the U.S. East Coast high vol B index rose from $147 per metric ton to $170 per metric ton at the end of the quarter. Since then, the Australian premium low vol index has decreased from $262. $262.20 per metric ton as of November 5th, representing a drop of roughly 4% since quarter close. U.S. East Coast low vol is unchanged from quarter close at $210 per ton. U.S. East Coast high vol A has declined about 3% to $190 per ton. While high vol B has risen slightly to $174.50 per ton as of November 5th. In the seaborne thermal market, the API2 index was $115.50 per metric ton at the beginning of July and increased to $141.40 per metric ton at the end of September.

Since then, the API2 index has moved down to $136.30 per metric ton as of November 5th.

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

At this time...

Our first question comes from George 80 with UBS. Your line is now live. Yeah, good morning, Tim.

Price, did you assume in guidance for 27, Andy? Off the top of my head, I don't know. Yeah, I think it was low to mid fives on a per gallon cost.

Okay, and then what's the sensitivity if you were to sort of estimate ballpark per ton? On your cash cost, if that went back to sort of say mid threes, like what's the potential reduction in cash cost? Well, I'll leave you to do the math on that, but we do run in the low 20 million gallons of diesel across all operations. So, you know, 20. We needed 22 million gallons. So you could figure what the sensitivity is on that across all the tons. Okay. Yeah, that's perfect. Thank you. And then just one more and sort of getting back to the 16 million ton per annum levels. Can you talk through how that looks? If DTA sort of being down for the two-year ballpark you guys flagged, is it constrained? Or I guess another way of asking was if markets got a lot stronger next year, could you push beyond that 15.7 upper end, do you think? Or like what is the constraining limit to higher volumes for you guys at the moment? Yeah. I mean, DTA obviously will be a constraint. Our sales and logistics teams have done a really nice job, as I mentioned in the comments, the prepared comments. They've done a nice job of finding flexibility and optionality with other export terminal access. So, you know, there will be a point. which we can't, we can't expand any further. I'm not, you know, I'm not going to throw out a number for that because again, the team is pretty creative in finding new paths to get tons where we need them to go. But I think we're comfortable with our current run rate. I don't think there's a huge amount of upside to that. And.

You know, we're going to need we're going to need the terminals to operate where we're going to need the railroads to perform well, to hit all of our numbers the way we want to. But I think we're going to be able to get there. And, you know, it's not going to look that different year over year compared to 2026 from a quality perspective is going. A little bit different because, again, I think we are moving around and as has been our plan, we are shifting as a lot of other folks are. We've been working on a multi-year plan to shift more of our production from higher rank coals from the low vol and mid vol and a little bit less on the high vol side. But I think logistically, all of that fits pretty well into what what we've got planned for 2027.

All right. That's helpful.

Thanks, guys.

Thank you.

Our next question comes from Nathan Martin with StoneX. Your line is now live.

You may disconnect your lines at this time and we thank you for your participation.