Alpha Metallurgical Resources lowers 2025 cost guidance to $101–$107 per ton while restarting share buybacks amid market volatility

Earnings Call Insights: Alpha Metallurgical Resources (AMR) Q2 2025

Management View

CEO Charles Andrew Eidson highlighted “adjusted EBITDA of $46.1 million and 3.9 million tons shipped in the quarter.” Eidson noted the company achieved its “best cost performance for the company since 2021,” with cost of coal sales down by more than $10 per ton versus the first quarter. He announced that “we have lowered cost guidance for the year, along with additional adjustments to our 2025 expectations for SG&A, net cash interest income and idle operations expense.” Eidson also reported that “we ended the second quarter with $557 million in total liquidity, nearly 15% higher than at the end of the first quarter.” He revealed, “the Board’s decision to restart the buyback program on an opportunistic basis,” after five inactive quarters.
CFO J. Todd Munsey stated, “Adjusted EBITDA for the second quarter was $46.1 million, up from $5.7 million in the first quarter. We sold 3.9 million tons in Q2, up from 3.8 million tons sold in Q1.” Munsey added, “Cost of coal sales for our met segment decreased to $100.06 per ton in the second quarter, down from $110.34 per ton in Q1. Increased productivity, lower labor cost and reduced repair and maintenance expenditures were the primary drivers of the decrease in costs.” He provided new guidance: “We are lowering our cost of coal sale guidance for the year to a range of $101 per ton to $107 per ton, down from the prior range of $103 to $110 per ton.” Munsey also previewed the potential impact of the One Big Beautiful Bill Act, estimating “the cash benefit of the tax credit may be in the range of $30 million to $50 million annually.”
President & COO Jason E. Whitehead reported “a 10% increase over Q1 in tons per man hour contributed to lower labor and other fixed costs, and the teams achieved these efficiency gains while reducing supply and maintenance expenses.” He confirmed that “the slope development is now approaching 1,625 feet, approximately 93% of the way from the surface to the coal horizon” for the Kingston Wildcat mine, with first coal production expected later this year.

Outlook

The company updated its cost of coal sales guidance for 2025 to a range of $101–$107 per ton, down from $103–$110 per ton. SG&A guidance for 2025 was reduced to $48 million–$54 million from the previous $53 million–$59 million range. Idle operations expense guidance increased to $21 million–$29 million (previously $18 million–$28 million). Net cash interest income guidance increased to $6 million–$12 million (from $2 million–$10 million). At the midpoint of guidance, 69% of metallurgical tonnage in the met segment is committed and priced at an average price of $127.37. The thermal byproduct portion is fully committed and priced at $80.52 per ton.

Financial Results

Metallurgical segment realizations increased with an average realization of $119.43 per ton in Q2. Export met tons priced against Atlantic indices realized $113.82 per ton, while those on Australian indices realized $109.75 per ton. The weighted average for metallurgical sales was $122.84 per ton. Cost of coal sales for the met segment decreased to $100.06 per ton. SG&A (excluding noncash stock compensation and nonrecurring items) decreased to $11.9 million. CapEx for the quarter was $34.6 million. Liquidity stood at $556.9 million at quarter end. Cash provided by operating activities was $53.2 million in Q2.

Q&A

Nicholas Giles, B. Riley Securities: “Can you walk us through where the savings came from?…can you speak to the sustainability of these costs?” Charles Andrew Eidson: “Some of this has been mean reversion…the higher productivity, getting more tons out, increasing the denominator, that was a force multiplier…The changes we’ve made are kind of fundamental…we’re certainly hopeful that we can maintain this run rate.”
Giles: “Is it fair to assume that we could see 2026 costs dip below the $100 mark?” Eidson: “We missed sub-$100 by $0.07. So is it possible? Certainly, it’s possible.”
Giles: “How are you approaching domestic contracting?” Daniel E. Horn: “We need pricing that works for us over 12 months…we need pricing that sustains us next year regardless of what the seaborne market does.”
Giles: “In Q2, there was almost a swap sequentially in volume terms…Any color you can add on that?” Horn: “It’s not unusual for us to have heavier shipments to Asia…It’s up to the buyer’s schedule.”
Nathan Martin, The Benchmark Company: “The updated cash cost guidance for the full year, what net price are you assuming in the back half of the year?” Eidson: “We’re just kind of holding flat with where we are.”
Martin: “How could recent escalation in trade tensions and tariffs impact your business?” Horn: “We haven’t had any pushback or negative feedback…business as usual.”
Martin: “How many domestic tons…contracted for 2025?” Horn: “Somewhere around 3.5 million tons, plus or minus that we’ll ship.”
Martin: “DTA project spending and timeline?” Eidson: “That’s about the same cadence…repairs and enhancements should be finished by 2028.”
Martin: “Union Pacific, Norfolk Southern merger impact?” Eidson: “We’ll just have to wait and see on that as well.”

Sentiment Analysis

Analysts maintained a positive tone, especially regarding the cost improvements, with Giles stating, “your cost improvements quarter-on-quarter were astounding.”
Management displayed confidence in cost controls and operational progress, using phrases like “we’re certainly hopeful that we can maintain this run rate” and “we are proud of achieving our best cost performance in years.”
Compared to the previous quarter, both analysts and management showed a more positive and optimistic sentiment, reflecting improved operational results and financial positioning.

Quarter-over-Quarter Comparison

The company shifted from a focus on weather-driven challenges and cost pressures in Q1 to highlighting operational improvements and cost reductions in Q2.
Adjusted EBITDA increased significantly from $5.7 million in Q1 to $46.1 million in Q2.
Cost of coal sales dropped substantially, and cost guidance was lowered for the year.
SG&A and CapEx both declined quarter-over-quarter.
Liquidity rose from $485.8 million to $556.9 million.
Management’s tone shifted from caution and defensive actions to cautious optimism and readiness to capitalize on market improvements.
Analysts’ focus moved from cost containment and downside risk to sustainability of improvements and forward-looking contracting.

Risks and Concerns

Management cited ongoing weak steel demand, global economic growth uncertainty, and trade tensions as persistent headwinds.
Met coal indexes reached multi-year lows in some categories, and market volatility remains a risk.
Management emphasized ongoing cost controls and liquidity strengthening as mitigation strategies.

Final Takeaway

Alpha Metallurgical Resources emphasized substantial quarter-over-quarter cost improvements and a strengthened liquidity position, prompting a reduction in annual cost guidance and the resumption of its share buyback program. Management remains focused on operational discipline and cautious in its market outlook, highlighting preparedness to navigate continued volatility and uncertainty in the metallurgical coal market while advancing key projects like Kingston Wildcat to drive future growth.

Read the full Earnings Call Transcript