November 7, 2022 - Alpha Metallurgical Resources, Inc. (NYSE: AMR), a leading U.S. supplier of metallurgical products for the steel industry, today reported results for the third quarter ending September 30, 2022.
"Alpha's third quarter results represent another solid performance from our team," said David Stetson, Alpha's chair and chief executive officer. "Evident within this quarter's numbers is the natural impact of the coal indices' drop from their early-2022 historic highs. Even still, indices remain at levels that are considered very strong from a historical average perspective, and Alpha's nearly $300 million in Adjusted EBITDA for the quarter is likewise a strong showing for our company."
Stetson continued: "To further enhance our already-robust capital return efforts, I am pleased to announce that Alpha's board has approved a 400-million-dollar increase to the existing share repurchase authorization, bringing the total authorization to an impressive $1 billion. In addition, the board has increased the fixed dividend to 41.8 cents per share and approved a one-time, special dividend of five dollars per share in recognition of the extraordinarily positive performance of the Alpha team this year. We remain committed, as always, to prudently returning capital to shareholders."
Alpha reported net income from continuing operations of $251.8 million, or $14.21 per diluted share, for the third quarter 2022. In the second quarter of 2022, the company had net income from continuing operations of $575.4 million, or $30.03 per diluted share.
For the third quarter, total Adjusted EBITDA was $294.9 million, compared to $694.5 million in the second quarter 2022.
Third quarter net realized pricing for the Met segment was $184.31 per ton and net realization in the All Other category was $109.27. Met segment realizations for the third quarter, as compared to first half realizations, reflect the downward movement of coal indices off their historic highs in early 2022.
The table below provides a breakdown of our Met segment coal sold in the third quarter by pricing mechanism.
Alpha's third quarter Met segment cost of coal sales decreased to an average of $104.86 per ton, with reduced sales-related costs from royalties and severance taxes accounting for the drop from the second quarter level of $111.36. Cost of coal sales for the All Other category increased to $67.48 per ton in the third quarter 2022 against an average cost of $49.90 per ton in the second quarter 2022. The higher costs in third quarter are attributable to higher sales-related costs and the impacts of late-stage mining at our Slabcamp mine.
Liquidity and Capital Resources
Cash provided by operating activities in the third quarter increased to $497.0 million as compared to $465.9 million in the second quarter 2022. Cash provided by operating activities includes discontinued operations. Capital expenditures for the third quarter 2022 were $33.3 million compared to $41.9 million for the second quarter of 2022.
As of September 30, 2022, Alpha had $404.4 million in unrestricted cash and $150.8 million in restricted cash, deposits and investments. Total long-term debt, including the current portion of long-term debt as of September 30, 2022, was $4.7 million. At the end of the third quarter, the company had total liquidity of $495.5 million, including cash and cash equivalents of $404.4 million and $91.1 million of unused availability under the ABL. The future available capacity under the ABL is subject to inventory and accounts receivable collateral requirements and the maintenance of certain financial ratios. As of September 30, 2022, the company had no borrowings and $63.9 million in letters of credit outstanding under the ABL.
2023 Domestic Sales Commitments
On September 13, 2022, Alpha announced that the company has committed approximately 4.5 million tons of metallurgical coal to domestic customers for shipment in the calendar year 2023. Those 4.5 million tons are committed at an average price of $192.27 per ton.
"As we advance through our budgeting process to finalize our expectations for the coming year, we are pleased to have a firm foundation of 4.5 million tons of domestically-committed coal on which we can continue to build," said Andy Eidson, Alpha's president. "Our sales team continues to do an excellent job of working with new and longstanding customers, and we are taking a close look at the full scope of international opportunities available to Alpha in 2023. Together in coordination with our operations teams, we will round out our guidance projections and plans for 2023. We are optimistic about Alpha's outlook for next year and we will provide more detail around our 2023 expectations in the coming weeks."
On November 4, 2022, Alpha's board of directors declared a quarterly cash dividend payment of $0.418 per share, increased from the prior level of $0.392 per share, which will become payable on January 3, 2023 for holders of record as of December 15, 2022. Alpha's board also declared a one-time, special dividend of $5.00 per share, also payable on January 3, 2023 for holders of record as of December 15, 2022.
Any decision to pay future cash dividends will be made by the board and depend on Alpha's future earnings and financial condition and other relevant factors.
Share Repurchase Program
As previously announced, Alpha's board of directors authorized a share repurchase program allowing for the expenditure of up to $600 million for the repurchase of the company's common stock. On November 4, Alpha's board increased this authorization by $400 million, bringing the total authorization to $1 billion. As of October 31, 2022, the company has acquired 3.1 million shares of common stock at a cost of $452 million, which has reduced the outstanding share count by roughly 14 percent from the time the program began. The number of common stock shares outstanding as of October 31, 2022 is 15,943,649.
The timing and amount of share repurchases will continue to be determined by the company's management based on its evaluation of market conditions, the trading price of the stock, applicable legal requirements, compliance with the provisions of the company's debt agreements, and other factors.
As of October 28, 2022, Alpha has committed and priced approximately 87% of its metallurgical coal within the Met segment at an average price of $243.30 per ton and 100% of thermal coal in the Met segment at an average expected price of $97.43 per ton. In the All Other category the company is 100% committed and priced at an average price of $77.69 per ton.
To see the full results with financial figures included, click here.