Q1 2024 Alpha Metallurgical Resources Inc Earnings Call
Greetings and welcome to the Alpha Metallurgical Resources' first quarter 'twenty 'twenty four 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 will now turn the conference over to your host Emily O'quinn Senior Vice President Investor Relations and Communications you May now 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.
For more information regarding forward looking statements and some of the factors that can affect them. Please refer to the company's first quarter 2024 earnings release and the associated SEC filing.
Please also see those documents for information about our use of non-GAAP measures and their reconciliation to GAAP measures.
Participating on the call today are alphas, Chief Executive Officer, Andy Edson, and our President and Chief Operating Officer, Jason Whitehead also participating on the call are Todd Muncy, Our Chief Financial Officer, and Dan Horn, our Chief commercial officer.
With that I'll turn the call over to Andy.
Thanks, Emily and good morning, everyone today, we announced financial results for first quarter of 2024 with adjusted EBITDA of $190 million. This.
This was another solid quarter of work from the Alpha team. Despite some challenging circumstances and a significant softening of met coal market starting in March.
Since the quarter closed we witnessed further deteriorate deterioration in market fundamentals, which sets up a challenging backdrop for the second quarter. Although our Q2 performance will obviously reflect the market environment in which we're operating I remain confident in the health of strength and ability to weather volatility.
For more than a few years now we've used the word nimble to describe how we prefer to operate constantly evaluating lots of data to find areas that can be optimized or deployed cost leaks. We believe that this approach is valuable in all market conditions, but especially in down cycles when quickly adapting to economic reality becomes a true necessity.
In response to the sharp market decline that has occurred so far in 2024, we've made small adjustments to safely reduce costs, where possible by optimizing production and logistics.
Given our size and scale of the magnitude of these changes.
It doesn't impact our previously announced volume expectations for the year, but these adjustments are allowing us to respond appropriately to deterioration in the market.
We will continue monitoring external market drivers, while also maintaining a close eye on controllable costs within our business and will take further action as necessary.
As I visit our operations in talk with employees I'm consistently impressed by the Alpha drive to overcome challenges and make the most of the difficult circumstances.
Our first quarter performance is yet another example of this termination.
Subjectively I see it in mine visits but Theres also.
Objective measures that don't get a lot of attention.
One in particular was a productivity metric called tons per man hour.
As is always the case safe production is our highest priority at alpha and we continually promote a safety mindset first and foremost and somewhat counterintuitively, we usually see that safety efficiency and productivity go hand in hand.
I'm sure the mine safety and Health administration aggregates droves of data each quarter, including production by operator and tons per man hour, which is exactly as it sounds as a company Alfa consistently performs well and has led the pack in this measurement of my room and pillar or continuous monitor operators for the last eight quarters.
Despite the well known differences between continuous monitors and longwall operations Alpha's operations also performed well against certain longwall operations too.
I'm proud to say that in Q1 Alpha led all of our notable peers longwall operators included with the tons per hour metric roughly 14% more productive than the next operator in line that kind of safe consistent performance is a testament to the scale and effectiveness of our teams.
We encourage that behavior among our operations and are consistently looking for ways to maintain its industry leading position.
During our fourth quarter earnings call, we discussed our intention to slow or pause the buyback program in an effort to build cash bounces back up to our targeted levels.
Especially given the market dynamics currently at play we continue to believe this is the right strategy. Our capital return philosophy remains the same and will continue to be driven by our cash flow.
As minimum cash minimum cash levels and market conditions allow we will utilize available free cash flow for the buyback program.
Lastly, we hosted our annual meeting of stockholders on May 2nd. This meeting included a vote to elect members of our board of directors all seven of our board members were elected by the shareholders to serve a term of one year. The full results of the annual meeting have been provided through our SEC filings I'll now I'll turn it over to Todd for additional details regarding our first quarter financial results.
Thanks, Andy first quarter, adjusted EBITDA was $190 million down from $266 million in fourth quarter 2023.
We sold $4 4 million times in the quarter quarter over quarter realizations decreased for the met segment with an average first quarter realization of $166.68 compared.
Todd: <unk> to $183 76 for the fourth quarter.
Export met tons priced against Atlantic indices, and other pricing mechanisms in the first quarter realized $172 24 per ton, while export coal priced on Australia and indices realized $193.70.
These are compared to realizations of $175 32 per ton and $213.41, respectively in the fourth quarter.
Realization for our metallurgical sales in the first quarter was a total weighted average of $176 20 per ton down from $193 54 per ton in the prior quarter.
Realizations and the incidental thermal portion of the met segment decreased to $76 53 per tonne in Q1 as compared to $89 76 per ton in Q4.
Cost of coal sales for our <unk> segment decreased to $115 65 per ton in the first quarter down from $119 per ton in Q4.
SG&A, excluding noncash stock compensation and nonrecurring items increased to $19 $9 million in the first quarter as compared to $16 $9 million in the fourth quarter.
Q1, Capex was $63 $6 million up from $61.5 million in the fourth quarter.
Moving to the balance sheet and cash flows as of March 31, 2024, we had $269 $4 million in unrestricted cash roughly flat against the $268 $2 million at the end of the fourth quarter.
We had $93 $7 million in unused availability under our ABL at the end of the quarter Alpha.
Alpha had total liquidity of $288 $1 million as of the end of March which is net of a $75 million minimum liquidity ABL covenants.
Cash provided by operating activities decreased slightly quarter over quarter to $196 $1 million in Q1, as compared to $199 $4 million in Q4.
Todd: As of March 31st our ABL facility had no borrowings and $61.3 million of letters of credit outstanding up from $69 million in the prior quarter.
Turning now to our committed position for 2024, 49% of our metallurgical tonnage in the met segment is committed and priced at the midpoint of guidance at an average price of $168.26.
Another 49% of our met tonnage for the year as 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 $76.10.
With first quarter actuals and increased visibility into the balance of the year, we announced two adjustments to our 2024 guidance. We now expect idle operations expense for the year to be between 25 and $33 million up from the previous range of 18 million to $28 million.
For the 2020 for tax rate, we decreased guidance to a range of 10% to 15% down from the previous expectation of 12% to 17%.
During the first quarter, we repurchased approximately 305000 shares at a cost of approximately $116 million, including shares repurchased from employees in connection with tax withholdings on annual stock vesting.
As of April 32024, the number of common stock shares outstanding was approximately $13 million.
The remaining stock buyback program authorization permits approximately $400 million and additional repurchases.
Tangent upon cash flow levels and market conditions.
We continuously monitor market conditions and due to the current weakness in the pricing environment relative to Q1, our focus in Q2 will shift toward maintaining our liquidity position.
While we do not guide towards share repurchase activity, we do expect market softness to limit our repurchase activity in Q2.
I'll now turn the call over to Jason.
Thanks, Todd and good morning, everyone.
I mentioned on our last call that our teams continue to achieve new company records in safety and environmental stewardship.
Since then alpha operations and team members have received public recognition with a number of awards for their work.
Our Paramount in Southern West, Virginia Mine rescue teams placed first and second respectively and the southeast Regional mine rescue contest in March.
In addition to earning these top spots overall, both teams collected a host of other first aid technician team and bench awards at this event.
<unk> Alpha Southern West, Virginia team, claiming first placed in them on rescue and first aid competition.
And our Paramount team coming in second.
Todd: Each year, the West Virginia also sub miners health safety and training presents Mountaineer Guardian awards to operations that exhibit high safety standards.
For 2023, six Alpha operations were named Mountaineer Guardian recipients.
<unk> number three mine ban meal prep plant.
Some prep plant King.
Kingston, South surface mine Rolling Thunder mine, and Workman Creek surface mine.
Additionally, last week, a number of Alpha operations were recognized at the homes mine Safety Awards banquet and the surface mines category Black Castle surface mine Kingston North surface Brian.
Kingston, South surface mine and Workman Creek surface mine more award winners.
In the underground mines category, the more pork belt transfer system Cedar Grove number to mine <unk>.
Slab can't mine Glen alum on Kingston number two mine.
<unk> Creek Eagle mine and the road Fork 52 mine were recognized.
And the plants and load outs category Pac slowed out our med dock feed slowed out mammoth plant in river load out power mountain processing plant ban meal prep plant and Mar fourth processing plant all received awards.
Finally, I'm proud to announce a couple of individual achievements.
Steve argue gals received a Sharon Cook award for his outstanding safety service and positive impact on the training and retraining of miners.
Archie as a safety represented about our mid West, Virginia surface region, and exemplifies an unwavering commitment to safe production.
Brian Keaton, our senior Vice President of safety and the author of Safe production brought home. The safety later of the year Award and I'll point out that's two years in a row that an alpha later has received this award.
I want to congratulate Archie Bryan and all the individuals at the award winning locations I just mentioned.
It's a long list, which is an accurate reflection of how important safety is within this company.
Okay.
Turning to environmental and West Virginia Alpha operations received three environmental awards for 2023.
The West Virginia D E. P recognized Wortman Creek for exemplary reclamation of surface mine operations on their middle Ridge permit and Kingston for exemplary construction techniques of valley feel on their Kingston, North surface mine permit.
West Virginia D. P also awarded <unk> run for exemplary reclamation of the Queen and Black Queen mines.
In Virginia Alpha operations received five awards for environmental performance.
Paramount's Deep mine 26 received awards for the met coal producers Association.
For best AML dangerous Highwall elimination.
And from the Interstate mining Compact Commission they received the National Reclamation Award.
<unk> also awarded Paramount for Best completed Deep mine, a deep mine 25 and.
And best active deep mine the deep mine 41.
Lastly, the M CPA awarded Dickason Russell for best active feel at a mclure preparation plant.
Want to congratulate both of our environmental and operations teams for their commitment to environmental excellence and all that they do to go beyond compliance.
Yeah.
Todd: First quarter performance for operations was solid, especially in light of some challenges, we face and I'll expand on that shortly.
As Andy mentioned before I could not be prouder that our teams sell in both safety and productivity measures like tons per man hour.
We can be safe and productive at the same time, which is exactly what we aim to do every day.
As we all know much has changed since spring of 2020, when the COVID-19 pandemic took the world by storm.
Already such a comparator competitive labor market became even more challenging.
Recruiting new talent to work in a crowded hands-on environment seemed almost impossible at times.
As a result inflation calls business costs like supplies and labors to grow to unprecedented highs while critical.
Supplier component availability cratered free.
Frankly in some cases, you just couldn't get supplies.
As we've discussed on previous calls Alpha mitigated many of these hurdles by increasing the scale of our rebuild facilities.
Stocking, our warehouses with parts and supplies to weather, the storm and with acquisitions like Maxim manufacturing and Maxim transportation.
Todd spoke to the quarter over quarter decrease in Australia, and index export realizations of approximately $20 a ton.
Which is representative of the recent downward trend in coking coal price.
This trend is also shedding light on the softening of the supply competition in our industry, which has eased in recent quarters.
Now we are facing a very different set of circumstances than the ones. We've navigated successfully Africa wood.
And in many ways more challenging.
The decisions are harder to make the necessary with the uncertainty of how long the market will stay in this current trough.
Year to date 2024, there's been a lot of behind the scenes work.
Going on to steer alpha through these headwinds.
With over 1200 active suppliers. It takes some time to communicate what is happening in the market as well as alfa's needs and expectations going forward, but we are well underway with this process, while we value the partnership formed with suppliers over the years, we have not hesitated to change to viable lower.
Cost options as they present themselves.
Alpha is also shifting focus on our rebuild and manufacturing facilities.
As I mentioned the availability of certain suppliers has improved.
We're not always in a situation, where we have to make it to have it.
And our initiatives are centered around maximizing margin.
Any component, we build is at a discount versus sourcing it from a third party, but we're evaluating every plan project with the goal of utilizing our facilities in a way that brings the highest return to alpha.
It is a blessing to have the expertise in house to seamlessly move from machining things like cracks and change for continuous miners to fabrication chute work for preparation plants.
Lastly, while siding and communicating the current market trend or our employees Alpha has made the difficult decision to make certain incentives cuts across the orphan organization.
These reductions equate to about $35 million per year.
But with the season workforce, we have I believe they understand how cyclical the markets are and although no one likes it most understand actions like these are necessary to ensure sustainability.
I'll now I will turn the car a call over to Dan for an update on the markets.
Thanks, Jason and good morning, everyone.
In recent months metallurgical coal markets have softened do we can do.
Weakened global demand for steel.
Economic pressures geopolitical uncertainty and global recessionary fears have contributed to the demand dynamics and volatility in metallurgical coal markets.
Economic conditions remain uneven across the world with generally stronger circumstances in the United States than in Europe, and in certain parts of Asia, which continue to experience significant geopolitical strife.
Well the logical coal prices fell significantly during the first quarter of 2024.
All four indices that also closely monitor saw a drop of 16% or more within the quarter.
The Australian P. L V index, representing the largest reduction of 25%.
The Australian premium low Vol index dropped from $324 75 per metric ton on January <unk> 2024 to $244 50 per metric ton at the end of the first quarter.
U S East Coast low Vol index decreased from $268 per metric ton at the beginning of January to $225 per metric ton at the end of March.
U S East Coast Highball, a index moved from $281 per metric ton at the start of the year to $225 per metric ton at quarter close and.
U S East Coast High Vol, B decreased from $252 per metric ton to $200 per metric ton at the end of the quarter.
Todd: Since then <unk> has dropped from its quarter close level to $238 per metric ton on may 3rd.
The other three indices have also softened from their end of quarter levels with the U S. East coast indices of low Vol High vol, a and I won't be measuring 217.
220 to $195 per ton, respectively as of May seven.
The thermal coal market. The API two index moved from $101 55 per metric ton on January 2nd to $118 25 per metric ton at the end of March and automates. Our D. API two was $109 per metric ton.
These macro index numbers, certainly suggests softness but from our office perspective, we believe they may not reflect the full extent of the market deterioration that has occurred in recent weeks or the significant drop off in sales activity.
Before I close my remarks, I want to briefly discuss the March 'twenty six Francis Scott Key bridge collapse in Baltimore, which is blocked shipping access to and from Baltimore Harbor.
In terms of coal markets and office, specifically, we have not used the Baltimore terminals to export our export coal in nearly a decade and thus did not have any cold stored there at the time of the bridge collapsed.
Instead, the vast majority of our export business travels to Dominion terminal associates in which we hold a 65% ownership interest in comparable throughput capacity rights.
We also have the ability to use other east coast terminals for export shipments as necessary for.
Or in cases, where it's opportunistic for us to do so.
Therefore, we do not believe that the bridges collapse will have direct effects on our business.
We like other producers may experience, some indirect effects such as greater competition for rail capacity as companies, who have historically export of their products through Baltimore port seek alternate options.
This increased demand for rail transport May also result in rail congestion longer shipment times or higher costs.
However, our majority ownership in DTA continues to serve us well and we do not expect any material adverse effects from the Baltimore bridge collapse the office business.
Todd: Lastly, speaking of DTA. The team recently completed a planned week long outage for ship loader maintenance.
The maintenance was successful and the terminal is back to operating at full capacity.
Another scheduled equipment maintenance outage is scheduled to occur in the middle of May the downtime is expected to be roughly one week and will only impact one of the stacker reclaimer machines at the terminal. This means DTA will be able to continue operating with the other equipment, but overall throughput will be less during the time when this machine is down for maintenance.
And with that operator, we're 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.
Hi, first question comes from Lucas pipes with B Riley Securities. Please proceed with your question.
Thank you very much operator, good morning, everyone.
Andy first I want to tip my hat tab, because you're probably the only executive who mentioned so lots of data in the prepared remarks without also mentioning AI, so well done there, but but in all seriousness that great great job on on on the on the cost and productivity.
Side than in Q1 and.
And I wondered if you could maybe speak to.
From here on out what are some of the key initiatives.
Todd: Okay.
Partially discussed on that on the prepared remarks, but maybe you could expand.
On what we're really looking to drive.
Cost savings from here on out and manage what would you describe as a weaker market environment. Thank you.
Sure Lucas and I hate that you beat me to the punch on the AI will get to that maybe next earnings call.
We'll have a lot of work to do on that.
But as far as I think Jason covered a good portion of that a lot of this is organic productivity improvements and I.
I got to say, it's amazing watching Jason and the team work the level of detail that they review their operations at it. It really is I mean, it would be something that could be a test case for AI. It requires a much bigger brain than than I. Currently contained to monitor all the things that they've got going on but the sheer volume of metrics down.
To whether it's equipment uptime or.
Any number of things that are being evaluated real time is pretty incredible and it's real it's again across the number of operations, we have and the fact that we're pushing out 17 ish million tons.
Small changes have pretty significant snowball effect, when they're applied across the entire portfolio. So.
Yeah.
I really want to get into any specifics unless theres. Some some things adjacent to throw at you, but again it goes back to capturing all of the appropriate data that covers every aspect of operations and then being able to cut it in a way that that you can really derive some some wisdom from information without wisdoms kind of pointless in <unk>.
Got the right team to take this data and make some significant impact out of it.
This is Jason I'll follow up a little bit I mean, Andy Andy covered the first half of it really well and I guess the second part that we're really keying in on now is just with the softening.
I guess of the supply market and things are easier to get now relative to maybe.
Even a few quarters ago things have really turned around there. So we want to make sure that we're utilizing our rebuild facilities in our manufacturing facilities to.
To get the absolute best return for Alpha. So you know as we're able to to pick things up off the shelf. We may see in some cases, it makes sense to them to shift the things that we're fabricating and were making for internal use.
Thank you very much Andy and Jason.
When I touch on.
The market a little bit.
Yes.
From my Vantage point there.
Todd: Kind of a lot of mixed signals.
Pricing is seemingly holding in there, but you describe demand is softer than may be softer than.
The IBM behold, so I wondered if you could maybe expand on that and where you see the market today. If there are green shoots or if there maybe more signs of caution ahead and.
You repeat it.
The outlook on the buyback is maybe more muted here in this environment.
How should we think about that.
It is.
Is it would it be reasonable to expect that if you get to $300 million cash balance for example that you would resume cash.
We assume share purchases with any cash in excess of that just wondering how you think about that thank you.
Yes, Lucas I'll hit the second part of the question first and then I'll, let Dan and deal with the market, but on the buyback.
We've talked about it before where kind of slaves to our 13 week cash flow forecast.
Obviously, we're not ambivalent to the method of the capital return, where we're all in on the buyback, but we we are somewhat agnostic as far as following what the forecast is it's kind of a there's a cold logic to it and naturally job one is to protect the franchise and when we're in market a market with choppy waters like this we do want to make sure.
Sure that we have enough dry powder to withstand any maintained down legs, even even if we get below some previously tested marks of weather, whether we call. It 220 filed the bottom or 200, the bottom or even less who knows.
I don't think we're going to see things like that but the world changes quicker than we can keep up with but we've got approximately a month before our trading window closes and that means that we will have the opportunity to to play with the <unk> programming.
Up until probably the first week of June before we have to lock it down and leave it.
And so we've got some time to analyze the market get more information.
See if we're seeing some some reversal in trend that would support firing up the buyback in earnest again, but until then I.
I don't want to commit one way or the other we're just we're going to play it as as required to keep our cash balances at a comfortable place to where we don't have to stay up and not worrying about where where the where it's everything's going to come from.
But Dan I'll, let you comment on the market piece of that.
Dan: Good morning Lucas.
I guess.
This market I would describe as still kind of a balanced market.
There is no doubt steel production around the world is down it's been a long time I guess since I've seen all of our markets have.
It's kind of a depressed steel markets theres not a lot of.
Good demand in any markets, India as you know is a little weaker than they've been in a few years.
And I guess a lot of that is obviously do economic <unk>.
Circumstances, another piece that people don't talk about as much as it affects us there's a lot of metallurgical coke out there that's been kind of an overhang situation and I think thats affecting our coking coal shipments and thats starting to work off so I suppose if you are looking for a green shoot one of the green shoots might be that we see some.
Coking coal coke market pricing starting to go up and maybe not quite the availability of metallurgical coal.
Okay.
And the number of glass furnaces hot metal production actually is probably starting to increase too so.
But it won't happen immediately we don't think so we're still seeing.
Dan: Lower demand than usual and a certain amount of deferrals or delays to that's something else that piece of our businesses.
Dan: A customer will still buy same tons, but they'll spread out the shipments just a little bit on us.
And that has a cumulative effect as well.
Thank you Dan I, you're seeing any movement on the supply side, either good or bad.
Circumstance.
We hear anecdotally of some some mines that are idling and you probably read a couple of them in that.
And some of the media so there seems to be some production coming off offline.
Here in the U S.
Another point that I need that way certainly on the high vol coals in U S. As the thermal market as you know has been really terrible for the last year or so there was really no summer demand last year no winter demand. So there's been a real overhang of thermal coal and a little bit of that thermal coal tends to creep into our high vol markets here too that's another area.
It.
It Hasnt really been.
Talked about a lot, but some of that coal actually ends up competing.
Competing with coal and coupled with the prices down to and I think some of those thermal operations we've heard anecdotally.
Going down as well.
Okay.
Very helpful gentlemen, I really appreciate all the color.
Thanks, So much and continued best of luck.
Thanks Lucas.
Our next question is from Nathan Martin with the Benchmark Company. Please proceed with your question.
Thanks, operator, good morning, everyone.
Hey, Nate.
Nathan Pierson Martin: With that kind of a mixed question I know domestic shipments seasonally light in the first quarter.
But it looked like Aussie index export tonnage also kind of dip below your typical one third or so let's call. It a net sales level in the exports tied to the other pricing mechanisms on.
We're about 51% of sales it looks like so.
Dan may be great to get your thoughts behind kind of the mixed drivers there and then maybe how should we kind of think about that mix evolving.
With those three buckets here in the second quarter.
I guess I would take exception to light I wouldn't say Orca was light shipping schedule I think.
4 million tons 4 million tons.
But.
Some of there were certainly some deferrals, we saw coming out of Asia, So lighter whiter spot demand and a little bit of deferral. So that did skew the Aussie index based.
Volumes a bit downward.
Probably you see that in Q2 as well for it picks up.
India is still.
Looks real solid for us, but for the reasons that have been addressed with the elections coming up and things there is definitely.
Yeah.
Both on targeting on spot business little bit less coming out of India.
<unk>.
And then just generally southeast Asia, and China, a little slower than we'd hoped as well for just overall economic reasons.
Okay got it and just to clarify then I would just say light from an Aussie indexed a percentage of sales not not 4 million $4 1 million tons for life, So that makes sense.
I guess sticking with the demand thing you know specific basin had been kind of outpacing the Atlantic basin for a few quarters now it sounds like maybe things are little bit weaker near term and India as you just mentioned.
Maybe could I get your thoughts on Europe, I mean, how are things looking there maybe what did you think that market could start to improve.
Yeah.
It's safe to say Europe should have a produce more hot metal in 'twenty four than they did in 2003 that seems to be in the cards.
Several of our customers have more blast furnaces operating as I mentioned, there is an overhang on coke.
And with the low coal prices.
There is a fair amount of purchase coke or going into Europe.
Probably won't last in my experience that last for a while and then when the cheap coat gets worked off the coker east began producing more of their own so I tend to think Europe.
Start to pick up that probably applies to South America as well.
Okay got it thanks for that color and then maybe shifting over to DTA I know.
With some prepared remarks there.
Nathan Pierson Martin: Specifically some comments I guess on the Baltimore Port outage.
Related transportation, but did you guys see any benefits maybe from the Baltimore port outage as far as tonnage.
Tonnage necessarily needing to shift away and likely Hampton roads.
The majority of that.
I guess short answer would be no.
We're moving clicking along with our business as we had before we got a few phone calls right. After the bridge collapsed, but it didnt really translate into.
Any spot business.
We noted there is a fair amount of.
Norfolk Southern base business, that's moved to Lamberts point.
That would have shipped out of Baltimore that probably we probably got back in the queue a little bit there. So that's a minor effect I think on alpha would be there.
There is a little more.
Nathan Pierson Martin: Volume going out who Enbridge point and there was prior but as far as DTA I'd have to say, we didn't see any effects.
Okay perfect got it and then maybe just one more.
Nathan Pierson Martin: Jason Jason to you I think you mentioned in your prepared remarks.
You guys are looking at the current market conditions didn't make a difficult decision to make some cuts to some labor incentives.
Have you seen much churn or labor attrition due to those and then I think you mentioned, that's roughly $35 million. So in cost savings how does that translate on a dollar per ton basis, maybe three or four year kind of met segment coal costs.
Well on them on an annual basis, it's nominally $2.
To answer your question about attrition.
Early yet we made those announcements I think around the first of April.
Actually mid March excuse me.
But from what I've seen since mid March attrition rates are generally in line with recent history. So we haven't seen.
Definitely not an exodus or anything, but we really haven't seen even much of an uptick yet.
And I suspect that's just due to the <unk>.
Just the general state of the market I mean, we're not the only ones.
We all have the same problems you know as these things go together.
Okay perfect. Thanks, I'll leave it there guys appreciate the time and and so best of luck in the second quarter.
Thanks Nate.
Nathan Pierson Martin: Yeah.
Our next question is from Lucas pipes with B Riley Security. Please proceed with your question.
Thank you very much for taking my follow up it's not on AI.
It's on the idle mine expenses, Andy can you comment on what drove the increase and.
Is this in.
It's something we should kind of us kind of hold steady over the coming years are kind.
Got it.
Worked back lower thank you very much.
I'll, let Todd gave the detail answer but it.
As you have properties that are.
Nathan Pierson Martin: We'll call it in between.
B and full reclamation status, where the cost of the property is going through your <unk> your arrow balance sheet accounts.
Yeah.
Sometimes when you're in between you've got some timing issues and youre going to pick up a little bit of extra idle expense, while that that property is waiting to go into full actual reclamation status. So Todd that's.
Is that pretty much in the ballpark of where you.
No I think thats the primary driver.
Lucas, we did have a little bit of non recoverable royalties.
Todd: Relative to when we did the budget that we layered in but the Andy had hit the major point there so and in terms of looking forward I think.
You can look back and see where that range has been I mean, we certainly don't anticipate that to increase in the future. So.
I think the range that we're in for.
In the near future at least is probably where it will be.
Thank you very much and Andy at some of your peers have publicly commented on the desire to kind of grow their met coal exposure, especially to the seaborne markets.
Whats your take right now on M&A.
Are there properties for sale out there if so do you have any interest and not the <unk>.
Pure play as this but curious to get your take on on M&A.
And some of those comments thank you.
Well I think we've.
We've kind of.
Hit it a little bit on previous calls we're always.
Like all coal companies are for the most part acquisitive. We are what we are today because of the transactions we've done in the past and so we're always looking.
There are probably some smaller opportunities where as Dan mentioned, we're seeing some small supply coming offline. Some of these folks just are under capitalized with no ability to to get access to capital markets. There are probably.
Probably a handful of.
Pretty high quality or at least good quality bonds out there that could be attractive that may be available over the next few months, but as far as larger transactions again, it's just really tough to envision a world where.
Everyone's current shareholder bases and capital structures.
Any any significant deals getting done any anytime soon.
Everyone really loves to buybacks theres been a lot of value created we agree with that and so.
It's kind of challenging to look at a world where you are.
Youre doing the big transformational deals.
From from our vantage point.
And you're very helpful. I really appreciate it and again keep up the good work. Thank you.
Speaker Change: Alright, Thanks Lucas.
We have reached the end of the question and answer session I would now like to turn the call over to Andy Hudson for closing remarks.
Thanks again, everyone for your interest in Alpha and for being on the call with US today, and we hope you have a great rest of the week.
This concludes today's conference you may disconnect your lines at this time and we thank you for your participation.