Q3 2022 Alpha Metallurgical Resources Inc Earnings Call
[music].
Greetings and welcome to Alpha Metallurgical Resources' third quarter 2022 results conference call. At this time all participants are in a listen only mode. A question and answer session will follow the formal presentation.
Please note. This conference is being recorded I would now like to turn the conference over to your host Emily O'quinn Senior Vice President Investor Relations and Communications you may begin.
Thank you Rob and 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 perfect looking statements and some of the factors that can affect them.
Please refer to the company's third quarter 2022 earnings release and the associated Etsy filing. Please also see those documents for information about our use of non-GAAP measures and their reconciliation to GAAP measures participating.
Participating on the call today are alphas, Chairman and Chief Executive Officer, David Stetson, President Andy Hudson Com.
Muncy, our Chief Financial Officer, Jason Whitehead, our Chief operating officer, and Van Horn, Our Chief commercial officer with that I'll turn the call over to David.
Thanks, Emily and good morning, everyone.
Today, we're pleased to report another strong quarter, thanks to the dedication and excellence of the Alpha team.
Today also marks my final earnings call as CEO before turning over the reins to Andy <unk> at the end of the year.
At that time, I will transition to the role of executive Chairman, which will allow me to continue to work with the management team as well as the board on strategic initiatives.
We're excited to have Todd Muncie, joining us today in his new role of Chief Financial Officer.
The coal industry has certainly been on an interesting journey. These past 18 months.
And that has been true whether you produce thermal or metallurgical coal.
As a metallurgical coal producer during this period, we've seen highs in pricing that no one could have imagined or predicted tomorrow.
The markets have experienced geopolitical events supply and capital constraints and most recently challenging economic conditions and issues here in the United States as well as abroad.
Through this tumultuous time office remain disciplined and focused on our core fundamentals.
And it is this discipline and focus that has made alpha leader in the coal industry.
It wasn't long ago that $300 million of EBITDA in a quarter what are they considered a pipe dream. So alpha is very proud of this quarter's performance and over $14 of earnings per share that we reported today.
As Todd will discuss with you shortly and for the press release, we issued this morning.
In the quarter, we sold approximately 44% of our exported met production into markets that are.
Priced on Australian indices, which resulted in realizations of $161 per ton.
At 65% of our production is shipped into the export markets. Our revenues in realizations are based on multiple variables, including the timing of vessels to party.
Paul you can rank of the coal being shipped.
That's the nation's for our products and a corresponding indices for those destinations.
Todd and Dan will provide you with much more detail this topic.
But those same Australian indices that averaged $250 per metric ton in the third quarter are currently reflecting $300 in the recent time.
Each year, our team is robust conversations and discussions on how much of our diverse product offerings, we will allocate into domestic versus international markets weaken.
We examine multiple variables from qualities and ranks of our KOL anticipated for the 2023 time frame.
Economic conditions demand through the markets in which we participate and logistic and transportation cost.
Based on those assessments, we announced in September that we committed approximately $4 5 million tonnes of metallurgical coal for shipment into the domestic markets for the upcoming calendar year 2023.
Today, we released the average pricing does domestic tons, which came in at $192.72.
We are also building out the export side of our business and completing our budget for presentation to the board in coming weeks, and we will be providing 2023 guidance after input and approval from our board.
With strong markets. This year, our primary goal was to eliminate our long term debt and provide alpha with stability for years to come.
However, I was thrilled that we had the ability not only pay down our debt, but to successfully execute on our capital return program.
At the end of October Alpha has bought back over $450 million worth of common stock exhausting more than three quarters of the board's prior $600 million.
Share repurchase authorization.
Todd is going to provide you with more granular details, but as of October 30, <unk>, our balance of common shares outstanding was approximately $15 9 million shares.
We continue to believe that our shares are undervalued by the markets and this past week, our board increased the program by another $400 million, bringing the total authorization to $1 billion.
Additionally, the board declared a one time special dividend of $5 per share to be paid on January three 2023, the holders of record on January the 15th 2022.
This is in addition to the increased fixed dividend in the amount of $41.
<unk> per share.
As I've said many times before our goals have been clear to pay off our long term debt Inc.
Increase our cash balances and meaningfully return capital to shareholders I remain proud of the collective efforts of the alpha team to deliver on these objectives with that I will turn the call over to Andy.
Thanks, David and good morning, everyone.
As David mentioned in today's call marks another step in our leadership transition efforts, we described last quarter.
Instead of sharing the financial details of our quarter with you. This morning like you usually do I have the honor of introducing Todd Monte who will be handling these moves going forward.
Todd was named Executive Vice President and Chief Financial Officer on August nine these already shown themselves to be more than up to the task.
I'm excited for this audience to get to know Todd better, but as a very brief reminder of his biography.
He has been a key member of leadership here at <unk> for quite some time, having served the company as senior VP and controller since 2016 and prior to that in a number of high level roles in our tax and accounting departments after getting a startup cross Waterhouse Coopers.
As I said last quarter I have great confidence in time, and you will serve alpha well in this expanded role with that I will turn it over to Tom for a discussion of our financials.
Thanks for the introduction, Andy I'm excited to be serving in this position and I look forward to getting to know our investors better over the coming months.
As we look to our third quarter results. The alpha team put together another very solid quarter of performance with adjusted EBITDA of $295 million in Q3.
While this is down as expected from the record levels achieved in the second quarter, it's still a very strong quarter from a historical perspective, we sold $4 1 million tons in the second quarter with $3 9 million tons coming from our med segment and 200000 tons coming from the all other category.
Due to indices falling from their all time highs earlier in 2022, our third quarter realizations dropped on a quarter over quarter basis realizations on total export met tons for the quarter came in at an average of $187 84 per ton.
Down from second quarter's average export realization of $337 38 per ton.
Export tons priced against the Atlantic indices, and other pricing mechanisms in the third quarter realized $208 per tonne, while export coal priced on Australian indices realized $161 58.
Our quarter over quarter reduction largely resulting from lower priced volumes into Asia.
Our third quarter realization for our metallurgical sales was a total weighted average of $191 17 per ton down from $304 per ton in Q2 <unk>.
Third quarter realizations and the incidental thermal portion of the met segment averaged $119 69 per ton.
In comparison, the incidental thermal realization within the met segment for the second quarter was $68 75 per ton.
Yes.
Realizations in the all other category were $109 27 per ton for the third quarter up from $61 41 in Q2.
As a result of the improved pricing environment for thermal coal.
Okay.
Our met segment cost of coal sales decreased to $104 86 per ton in the third quarter down from $111 36 per ton in Q2 the.
The primary drivers of the decrease in cost were royalties and severance taxes, which were lower in Q3 as a result of lower realized sales prices.
Cost of coal sales in the all other category increased to $67 48 per ton in the third quarter up from $49 90 in the second quarter.
The higher cost in the all other category are attributable to higher sales related costs for thermal coal, resulting from an improved pricing environment as well as the impacts of late stage mining at our slab can't mine.
SG&A, excluding noncash stock comp and nonrecurring items decreased to $13 $6 million in the third quarter as compared to $16 $8 million in the second quarter.
Capex in the third quarter was $33 $3 million down from $41 $9 million in the prior quarter.
Due to supply chain challenges and contractor labor constraints for some of our 2022 Capex projects. We are running below the annual guidance range as of the end of Q3.
We expect to make up lost ground during the fourth quarter, but it is possible that some of these planned 2022 expenditures may roll into the following calendar year.
When we released 2023 guidance, we will provide some additional color on our capex projections.
Yes.
Moving to the balance sheet and cash flows as of September 30th 2022, we had $404 $4 million in unrestricted cash up from $161 $7 million at the end of the second quarter Alpha.
Alpha had $91 $1 million in unused availability on our ABL at the end of both the third quarter and Q2.
Total liquidity.
Quiddity nearly doubled quarter over quarter from $252 $8 million at the end of June up to $495 $5 million at the end of September .
This amount is net of our $196 $3 million in share repurchases during the quarter.
Due to the elimination of Alpha's term loan debt earlier in the year. Our 2022 cash interest expense is trending towards the lower end of our established guidance range of $18 million to $22 million.
Cash provided by operating activities increased again quarter over quarter, producing a new record high of $497 million in the third quarter.
Alpha has generated $1 two $9 billion in cash from operating activities in the first three quarters of the year as.
As of September 30th our ABL facility had no borrowings and $63 $9 million of letters of credit outstanding at the same level as the previous quarter.
As we move into the final months of the year, we are fully committed and both are met segment and the all other category, 87% of our metallurgical tonnage in our med segment is committed and priced at the midpoint of guidance at an average price of $243 30.
Another 13% of our 2022 met tonnage at the midpoint as committed but not yet priced.
The thermal byproduct portion of the met segment is fully committed and priced at an average price of $97 and 43.
And we are fully committed and priced for 2022 and our all other category with an average price of $77.69.
Focusing next on capital return Alpha's Board has declared a cash dividend of <unk> 41, eight per share an increase from prior quarters 39, <unk> per share, which will become payable on January 3rd for holders of record as of December 15.
In addition, the board declared a one time special dividend of $5 per share to be paid on January 3rd for holders of record as of December 15.
In terms of share buybacks, we announced that the board increased the repurchase authorization to $1 billion.
Up from the prior $600 million authorization, we have continued to buy back shares of our common stock and within the third quarter alone, we repurchased one 4 million shares at a cost of $196 million.
As of October 31, we have spent approximately $452 million to acquire $3 1 million shares of alpha's common stock at a weighted average price of $144 12 per share.
The outstanding share count has been reduced by roughly 14% from the time the program began.
As of October 31, 2022, we had approximately $15 9 million shares of common stock outstanding.
I will now turn the call over to Jason for some details on our operational performance.
Thank you Todd and good morning, everyone.
Our operations teams in another positive quarter performance, especially given the challenging landscape, we're all experiencing related to labor supply chain and inflationary pressures we've discussed on recent calls.
While these factors still presents I'm proud to say our teams continue to work diligently to overcome these obstacles.
At the same time, our team turned in another strong performance on the safety and environmental fronts.
On prior earnings calls we've discussed our ongoing work on our 15 year mining plan.
During we are prepared to maintain our diverse product offerings and the ability to keep current or improved volume outputs.
We also announced the first had some coal from our new mid ball Glen Alum tunnel deep mine.
Which was part of that 15 year plan.
Production continues to go well, there as well as at our entire portfolio of mines.
We are focused on continuing to produce safely and efficiently and to finish out 2022 strong.
Another key and critical component to executing on this 15 year plan is maintaining our feet fleet of production equipment.
In light of supply chain shortages, we've already spoken to and.
An increased demand from other operators and other industries I'm very proud of our team for executing on our equipment rebuild schedules. This year with roughly 25% of our underground production fleet turning over through the rebuild processes.
With respect to undergoing ground equipment rebuilds, we have similar expectations for.
For calendar 2023.
Although surface equipment has a much higher life expectancy than underground.
In 2022, we have initiated and we're nearing completion of the first.
Year of our six year plan to replace many of our surface haul trucks.
And we purchased two new hydraulic excavators and are expected to go into production in the first half of 2023.
Once our budget is completed for the coming year, we will discuss in more detail our plans for production and development.
As Todd mentioned earlier, our teams have run into contract labor and supply chain challenges with some of the plant upgrades, we announced within our project Capex for 2022.
While we continue to forge ahead on these projects. It is reasonable to expect that we may need the early months of next year to bring them to completion.
Again, I commend our teams for the ability to keep things running smoothly smoothly.
And the types of these delays.
Now I'll hand the.
Call over to Dan for some of them.
Additional information on the markets and our sales efforts.
Thanks, Jason and good morning, everyone.
As you know the broader global marketplace is experiencing some headwinds continued recessionary pressure weakening economic conditions, the ongoing war between Russia, and Ukraine, and the intensifying European energy crisis are all shaping the landscape.
Coal markets are being influenced by these factors and the indices soften within the quarter, but have solidified or even increased in recent weeks.
In short pricing volatility continues in the face of macroeconomic uncertainty.
Taking a specific look at metallurgical price movements during the third quarter. The Australian premium low vol index dropped from $302 per metric ton on July one to $270 50 at the end of September .
The U S East Coast Global Index declined from 315 per metric ton at the start of the quarter to $270 per metric ton on September 30th.
On high Vol to U S East Coast Highball, a index moved from $3 25 per metric ton down to $287 per metric ton in the quarter close.
U S East Coast High Vol. B fell from $3 17, 50 per metric ton to $284 over the course of the third quarter.
The pricing movements for high boy and be largely leveled off in recent weeks to hover at or near their quarter closed level.
For Atlantic low vol, and the Aussie low vol. Both have increased after the quarter closed levels to 302 and $320 50.
Respectively.
In recent days.
The most common question and met markets today is related to the impact of global market headwinds may have on our customers' steel production in the near term.
And its periodic review of macroeconomic factors affecting the steel industry. The World Steel Association issued revisions in October to it shortly range outlook for 2022 and 2023.
The Ws a forecast a contraction in steel demand of two 3% for full year 2022.
The association now projected recovery of 1% for steel demand next year, 2023, which represents a downward revision.
From its previous estimates.
The group attributed the altered outlook to deteriorating economic conditions over the course of this year 2022, including persistent inflation and rising interest rates globally, alongside Russia's invasion of Ukraine, and China's economic decelerate deceleration.
The WSI sided infrastructure demand as the expected catalyst for slight increases in global 2023 steel demand.
Finjan on the impact of tightening monetary policies.
Falling consumer confidence.
And further inflation risk.
However, metallurgical coal supply remains tight across the globe due to significant underinvestment over the last several years and the lack of incremental tonnage scheduled to come online in the immediate term.
Turning to the thermal coal market the volatility in the seaborne thermal coal market largely a result of Russia's invasion of Ukraine and its effects in Europe continued through the third quarter with the API two index at $328 95 per metric ton on July one and declining to $312.
Per metric ton as of September 30th.
In the week following the quarter close the API two fell back below pricing for metallurgical coal qualities, which has historically been the norm.
As a comparison point the central App index for 12500 Btu coal on the C. S X has been around $175 per short ton in recent days.
As we discussed last quarter, we have opportunistically sold a small amount of high vol met coal into this all markets and we will continue to consider this as opportunities and pricing arbitrage a wow.
However, we remain focused on servicing our metallurgical customers and we expect tonnage falling into this crossover category. We continue to be relatively small for us likely in a few hundred thousand ton range.
Before I close I'll provide a quick comment on rail performance as this has been a topic of interest and discussion over the last several calls we continue to be in close contact with our rail partners.
And the performance over the last several months has remained positive.
We appreciate all that they have done and are continuing to do to address their labor and operating challenges.
Of course, we joined the rest of the industry and watching whether the railroads will resolve their union negotiations and avoid a strike later this month if.
If the strike does occur however, we urge congress to quickly respond to avoid the detrimental effects that this would bring not only to the coal industry, but to the entire U S economy.
As we look ahead to 2023, David mentioned, our domestic commitments of $4 5 million tons at an average price of $192 in 2007.
We are pleased with this business and look forward to building on this firm Foundation for next year.
With our budgeting process nearly nearing completion, we hope to have more details to share with you in the coming weeks about alphas projections for 2023 at our expected sales volumes.
For now I will simply reiterate that we continue to have positive conversations with our customers about future commitments and demand for our products remains strong.
I am personally optimistic about alphas outlook for next year and I look forward to discussing our projections in more detail on a future call.
And with that operator, we are now ready to open the call for questions.
Thank you.
At this time, we'll be conducting a question and answer session. If you'd like to ask a question. Please press star one on your telephone keypad one moment, please while we poll for questions.
Our first question comes from Lucas pipes with B Riley Securities. Please proceed with your question.
Thank you very much operator, and good morning, everyone.
Hi, My first question is on on the mix. So in Q3. This thermal contribution within the met segment, which was a bit higher than I expected and I was just wondering if you could provide a little bit more color on that.
Is that you're taking advantage opportunistically, if the strength in the thermal markets met markets.
Weaker during the third quarter. So some of your peers built inventories or shipped fewer tons. So.
Did you respond to the market there or was it just operationally Q3 has higher maintenance and such that that maybe also contributed to this are so interested in your perspective on that and then going forward.
You just mentioned in the prepared remarks, you would expect just a few hundred thousand tons of crossover going forward, but if you could maybe elaborate on that.
The mix and thermal contribution.
Great color. Thank you very much.
Hey, Lucas this is Dan I.
I mean broadly speaking, yes, we did were a little bit opportunistic in Q3, we did some thermal exports to take advantage of pricing, but overall I think we are.
So we're more or less where we thought we'd be I wouldn't say it was a big big increase.
But you know.
In other words at the same time, maybe some of the seaborne was up a bit maybe we were down on the domestic front.
And going forward.
The several hundred thousand number reflects just a view of the coal qualities that we think might have some interest in the in the thermal market.
Generally speaking, we're talking about a weaker.
Weaker high balls, Highwall, B type coals higher sulfur coals so.
We don't have any specific plans for those times, but we just wanted to give a rough estimate of what we think it could look like for you because we figured you might ask.
I appreciate the color. Thank you very much for that that's that's helpful.
A few quick follow up questions on the domestic sales fronts for 2023 should we assume that that business is by and large concluded for alpha or or or might there be more sales into the domestic market beyond what you've already announced that thank you very much for your color on that.
Yeah.
There still could be a few more sales, but I think it's safe to say by and large it's winding down most most of the calls that were aware of has been purchased for 2023.
Very helpful. Thank you and then a.
Last one great great announcements on debt on the capital return front that's really.
Preston and I want to congratulate you and the entire team on on on what the company has been able to accomplish there.
There has been a little bit more talk about M&A more more recently and I Wonder if you could.
Maybe share your thoughts on that topic to what extent are outside.
Might have any interest there or not or remains committed to capital returns. Thank you very much for your color.
Thanks, Lucas this is David.
We have a strong commitment to our capital return program.
The board authorizing a $1 billion of authorization for share repurchase.
<unk> already spent over $500 million into that program and that's where our commitment is on the M&A side. You know we just saw the news this week that the Coronado Peabody discussions were off so as I've said.
Previously.
And I think I can go back Lucas to 2016 at the Seaport Conference. When I was asked that question I don't think my answers changed since then you really haven't seen.
A lot of M&A from our perspective.
Any type of M&A activity for us would probably just be.
Bolt ons to us or are there other acquisitions that we.
With deemed to be strategic and that does not necessarily have to mean.
And two coal reserves it could be things that are also assist us in the supply chain and other matters, but right now our focus and dedication as to the share return program. We've got our debt paid off we've been extremely clear. We appreciate the confidence that the shareholders have had in the company.
And the $1 billion share return program on share repurchases reflects our appreciation to our shareholders for their confidence and that's where our priorities lie at this point in time.
Thank you very much David for your perspective, and David to you and.
All the best going forward I Hope you are you get to enjoy it a bit and I know you won't be far from the coal fields. So.
Best of luck going forward.
Thanks, Luke really appreciate it thank you so much.
Thank you.
Our next question is from Lance Vitanza with Cowen. Please proceed with your question.
Hey, good morning, everyone. This is Jonathan on for Lance.
I'd like to start off with.
Just learning a little bit more about how the lockdowns in China are impacting met coal pricing from your perspective, and how they are impacting.
Hey, Martin revenue.
Profitability margins as well.
Its financial 'twenty three outlook.
Well this is Dan.
Take a stab at that I guess first of all China is not not been historically, a natural market for office Kohl's we.
We went from zero shipments in 2019 too.
A lot of shipments over 1 million tons in 2020, and our 2021 I'm sorry, and now we're back to near zero. So you know.
I always joke anyone that has a strategic plan for China.
You just can't have it in the U S coal industry. So we don't view, China is strategic we view it as more opportunistic so our focus has been moving our 15 million tons of met coal into our natural markets.
Which include.
Much of Asia, but not China, as well as Europe , South America, and North America. So.
Long answer there is it hasn't impacted us directly certainly the market price you can argue.
The Australian coal that used to go to China had to go somewhere else, but it's filed market at quite good pricing here over the last year or so.
I think that answers your question.
Yes, yes, it does.
And then turning to India I know that this is an important country for four for alpha.
Can you speak a little bit about the dynamics in the country, presumably is it's doing well.
But just wondering on no what do you what are you seeing into the fourth quarter and are you getting good traction with new companies. I know you have very strong relationships that span decades, but just wanted to know how about new companies there.
Certainly, we see India as a growth market for US you are correct that the steel industry is performing a little better in India than it is in many of our other markets but.
I don't want to get too granular here, but we do we supply coal to several.
Important customers in India.
And all of them from our view our experience and.
Again, probably a little higher steel production rates than we see in other countries at the moment.
Okay. So I guess, we can assume that well and in terms of getting customers in India.
Is that tracking well or is the strong relationship with them.
With prior customers is really the main focus.
Some of both.
We take care of our current customers first and we're always looking for a new customer as well. So I would answer that question by saying some of us.
Okay and last one for me.
Can you speak a little bit more.
<unk> expenses for.
Jason and handling how are they tracking in the fourth quarter and following up on that.
The company's carrying.
Cost structure like what would be a.
Range at least of the Companys breakeven met coal price.
Hey, Jonathan This is Andy I'm, sorry could you repeat the first part I thought I heard expansion, but I think you broke up for that.
Sure.
Just wanted to.
You get a little more color on how freight and handling is tracking in the fourth quarter. So far.
Oh, Okay, so transportation costs.
Yeah, Yeah, I mean, it's we can't really say too much about the quantum of the cost that's all.
Confidential in our contracts I mean things are pretty static right now as they've been for a while.
So the the cost kind of is what it is as Dan mentioned mentioned in his remarks performance from our railroads has been from our perspective really quite solid.
Ultimately there are a couple of hiccups here and there, but they've done a really nice job of getting things back on track.
Really really not too much more to add on that perspective, and you had a second part of your question.
Right just given the current.
Cost structure for a company like what would be a good range to see to have one of the company's breakeven met coal price.
Oh, Yeah, I mean, we can't really guide to that we're still working on budgets materials in.
Again certain aspects of our cost structure are confidential, whether it's freight and handling or other portions that are we generally don't talk about but we again.
As we do every year, when we issue our guidance, which hopefully will be.
Not too far in the future, we'll give everyone every number that they need to get down to.
Bottomline numbers, except for your prospect, you've got to pick your own prospect, but we'll give you everything else. So just stay tuned in that regard.
Okay. Okay. Thank you and if I may and I'll get back into the back of the line answer this question, but.
No Theres no capex guidance for 2023 get Bud.
When we look at 2022 is that base.
That a good base to build into 'twenty or is that maybe a little bit too hot.
Well.
Again.
We're not we're not giving guidance on that yet so I don't want to I'm not going to give you guidance on us.
Im going to give you guidance on how we want to wait until we get the numbers all nailed down and they will have something that we can I'll chat about here shortly.
Sounds good. Thank you so much congrats on the quarter.
Our next question comes from Nathan Martin with the Benchmark Company. Please proceed with your question.
Thanks, operator, good morning, everyone and thanks for taking my questions I'll I'll start maybe on the cash flow side cash from ops for the quarter to that record $497 million you guys called out it looks like the driver was a big positive swing in working cap.
Just a little more color there and then maybe an idea of what the kind of expecting a fourth quarter. Thanks.
Yeah I can start on that one this is Todd there was there was some working capital movement contributing to the to the operating cash flow in the fourth quarter about $200 million, roughly and I think where receivables are now there.
They're trending where we think they should be fairly stable given pricing so.
I mean, it's hard to hard to estimate working capital movement, but we don't expect given the leveling off in prices that we've had a repeat performance of that in Q4. So I think that's sort of the way we're thinking about.
That in Q4.
That's great color I appreciate it and good to hear from you and maybe also on the cash return side.
Congratulations there again, you are raising the quarterly dividend increasing the share buyback and are paying what I think was your first special dividend in quite some time I'm. Just curious has there been any discussion of a more you know maybe it's formulaic approach to shareholder returns or some of your peers have started.
So are there any minimum cash or liquidity level that we should keep in mind.
And what future returns could look like thanks.
Good to talk to you.
The let me take the back piece of that in my last earnings call.
I forgot whether it was andy or myself, but.
From our view on it and it is.
It can vary from time to time, we put our cash reserves that we like to see in the 250 to 300 range. So that's kind of where we like to see on our on our books at this time, we obviously were at $400 million on our books of cash but.
That's generally the range I can tell you on our share return program our shareholders have been.
I'm very appreciative of our share repurchase programs. We we continue to believe that our stock is undervalued.
I always.
Internally look at the when we look at.
What comes out of the public streets, they they've had us at 17 million shares when we're sitting here going but we're at $15 nine. So we believe our stock is woefully undervalued and so therefore, our focus and as you can tell from the board. We did a we're doing a $1 billion into the share repurchase program that should give everybody.
A strong feeling of where our heart is at this point in time.
Where we were appreciative of our shareholders. So we did the one time $5, but.
It's very clear when we announced a $1 billion for share return program that that is setting our priorities as a company. So we're thrilled that we're able to do that and our shareholders are appreciative of it.
Thank you for those comments David.
Any discussion of a more formulaic approach again.
I think we've just said I mean.
Clear preference has been share buybacks.
Okay.
The special this quarter or something some hadn't considered so I mean, maybe looking forward.
Do you have excess cash Danielle like you did this quarter with special will be something to consider again.
Any other thoughts.
Well, we havent, we havent established any kind of.
Some of our colleagues in the industry have done that we.
We have not we like the ability of the board to have discretion, but again at this point in time I would say our focus is on the share repurchase.
That's where our focus is going to be for the <unk>.
Things changed as time goes on but right now that's our that's our priority and we are I don't see us deviating from that anytime soon.
Got it I appreciate that and then maybe just.
Final follow up for Dan.
I appreciate the update on the transportation side rail specifically how are things running at the Port just curious on that end of things.
Anything you guys can do to prepare for a potential railroad strike.
Well the ports are running very well.
We're hitting our numbers at D T a.
Quite well, we're very pleased with Dth performance so.
<unk> has been getting the call from the mines to the ports and and as we pointed out that's.
That's been improving quite a bit as the year went on so.
No real issues, there to speak of Nate with regard to a strike.
We're in the same boat as other producers are you know, we certainly don't want to see one.
We ship as much coal as we can when it's appropriate to the peers anyway, we'd rather have the inventory at the peers than we would at the mine. So that's kind of normal course of business for us.
Yeah, that's fair I appreciate that.
I'll leave it there very helpful guys. Thank you for the time.
David Best of luck as you move onto the next phase.
Let's look to you guys as you wrap up the year.
Thanks, very much thanks Nate.
Our next question is from Lucas pipes with B Riley Securities. Please proceed with your question.
Thank you very much for taking my follow up is.
On the cost side, just wanted to get any.
And your perspective on how.
Inputs R R.
Uh huh.
Trending here.
Our unit costs for parts still going up we're off to a flat lines I think going down unit cost for steel roof bolts et cetera is that is that.
That's starting to come down with steel prices, having trended lower over the summer would appreciate your perspective on that and then on labor, how tightest labor market today, where where are you if any seeing any bottlenecks. Thank you for your color.
Hey, Lucas T&D.
I'll hit a couple of those at a high level and then I'll ask Jason to pop in and.
To give you better better answers than I am giving you I think generally speaking and we're still going through the budget as we mentioned, but this.
This inflationary pressure is real and it's continuing and so we are seeing increased costs across our inputs and may have slowed down a tad, but it is still much more than we're used to in a typical year, particularly going through the budgeting cycle. So whether it's.
Cost of rubber for belts or steel for roof bolts or any other any.
Any other piece of equipment out there and we are continuing to see some increase in there and then on the labor side I'll go ahead and kick it over to Jason for his comments on how the labor market is playing out right now.
Thanks.
Yes, thanks Sandy.
Andy is right I mean to us.
Shneur pressures have continued but I would say that you know there is some probably moderate flattening of the curve.
Real time you can.
Commented on steel pricing and that's true those things were falling off.
Diesel diesel is in short supply. Fortunately you know a large percentage of our our diesel fuel has been hedged. So you know we feel like we've been a little bit of security around that.
On the labor front.
It's kind of a bit of the same it's still very very competitive but.
But we have seen turnover decreasing relative.
Relative to early in the year.
Still is still a very tight labor market, but.
Mild to moderate improvement I guess.
Thank you very much for your perspective.
And best of luck. Thank you.
Thank you.
Thanks, Alex.
We have reached the end of the question and answer session I would now like to turn the call over to David Stetson for closing comments.
Thank you very much thanks, everyone for getting on the call today with us.
Another strong quarter by Alpha we are very pleased with it and.
Everybody have a wonderful rest of the week. Thank you.
This concludes today's conference you may disconnect your lines at this time and we thank you for your participation.