Alpha Metallurgical Cuts Costs in Q2

Alpha Metallurgical Resources(NYSE:AMR) reported second quarter 2025 results on August 8, 2025, posting adjusted EBITDA of $46.1 million on 3.9 million tons shipped, alongside a $10 per ton reduction in metallurgical coal sales cost versus Q1 2025. The company strengthened total liquidity to $557 million and announced the opportunistic restart of its share buyback program, while management provided updates on cost guidance, strategic capital allocation, and regulatory developments relevant to its long-term outlook.

Cost efficiency improves AMR margin profile

Cost of coal sales for the metallurgical coal segment decreased to $100.06 per ton, down from $110.34 per ton in Q1 2025, the lowest cost of coal sales since 2021, driven by a 10% improvement in tons produced per man-hour compared to Q1 2025 and focused reductions in labor, repairs, and supply outlays. SG&A (selling, general, and administrative expenses, excluding non-cash stock compensation and non-recurring items) declined to $11.9 million from $12.6 million; CapEx was $34.6 million. Management lowered full-year 2025 cost guidance and total SG&A expectations as a result of these operational gains, underscoring management's discipline in a depressed pricing environment.

"We achieved significant quarter-over-quarter improvement in the cost of coal sales, bringing our costs down by more than $10 per ton compared to the first quarter. This represents the best cost performance for the company since 2021. As a result, we have lowered cost guidance for the year along with additional adjustments for our 2025 expectations for SG&A, net cash interest income, and all operations expenses that Todd will cover in more detail."
— Andy Eidson, Chief Executive Officer

Sustained cost leadership positions the company to preserve cash, maintain profitability, and compete effectively even as met coal indexes reach multi-year lows.

AMR relaunches share repurchase as liquidity strengthens

The company ended the quarter with $449 million in unrestricted cash, up marginally from $448 million in March 2025, and $182.9 million in unused ABL (asset-based lending) facility availability, Liquidity was nearly 15% higher at quarter-end compared to the end of Q1 2025. Free cash flow generation improved sharply, with $53.2 million provided by operations versus $22.2 million in Q1 2025. Capital deployment priorities were updated with the recommencement of the previously inactive buyback program.

"This morning, we announced the Board's decision to restart the buyback program on an opportunistic basis. While the program has been inactive for roughly the last five quarters, our commitment to shareholder return has not changed. We remain dedicated to cautiously observing the market shifts, and the timing and amount of share repurchases will depend on a number of factors including, but not limited to, market conditions, stock price, and applicable legal requirements and covenants."
— Andy Eidson, Chief Executive Officer

Share repurchases support shareholder returns, with management monitoring market conditions and other factors to determine the timing and amount of repurchases.

AMR gains regulatory tailwind with Section 45X tax credit

Metallurgical coal's new designation as a 'critical mineral' under federal law unlocks material tax advantages, following the passage of the One Big Beautiful Bill Act amending Section 45X of the Internal Revenue Code. Management's initial analysis estimates an annual refundable tax credit benefit of $30 million to $50 million from 2026 through 2029, contingent on qualifying production costs. This regulatory development arrives as AMR completes major slope infrastructure at its new Kingston Wildcat low-volatility mine, with expectations of first coal production and shipments late this year, with first coal on track for late 2025.

"With President Trump's signing of the One Big Beautiful Bill Act, metallurgical coal has been added to the list of applicable critical minerals. Met coal produced between 2026 and 2029 will be eligible for the refundable tax credit. We are still analyzing the financial impact of this credit on Alpha. Based on preliminary analysis, we estimate that the cash benefit of the tax credit may be in the range of $30 million to $50 million annually, depending upon the amount of qualifying production costs incurred in a given year."
— Andy Eidson, Chief Executive Officer

The company is still analyzing the financial impact of the new tax credit, with preliminary estimates of a cash benefit ranging from $30 million to $50 million annually from 2026 through 2029, depending on qualifying production costs.

Looking Ahead

Management lowered 2025 met segment cost of coal sales guidance to $101 per ton to $107 per ton, trimmed SG&A guidance to $48 million to $54 million, increased idle operations expense guidance to $21 million to $29 million, and raised net cash interest income guidance to $6 million to $12 million. As of the earnings call, 69% of 2025 metallurgical volume is committed and priced at $127.37 per ton, and the Kingston Wildcat mine’s development remains on schedule for first coal shipments by year-end. No concrete forward guidance on 2026 costs or volumes was provided beyond acknowledgment of preliminary analysis of Section 45X tax credit effects.

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