Q3 2024 Alpha Metallurgical Resources Inc Earnings Call
Operator: Greetings and welcome to the Alpha Metallurgical Resources third quarter 2024 results conference. At this time, all participants are on a listen-only mode. A question and answer session will follow the formal presentation. Please note, this conference is being recorded.
Greetings and welcome to the Alpha Metallurgical Resources' third 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.
Emily O'quinn: I will now turn the conference over to your host, Emily O'Quinn, Senior Vice President, Investor Relations and Communications.
Now I'll turn the conference over to your host Emily O'quinn Senior Vice President Investor Relations and Communications you May now begin.
Emily O'quinn: Thank you, Rob.
Emily O'quinn: Thank you, Rob and good morning, everyone.
Emily O'quinn: 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 forward-looking statements and some of the factors that can affect them, please refer to the company's third 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.
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.
Emily O'quinn: For more information regarding forward looking statements and some of the factors that can affect them. Please refer to the company's third 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.
Emily O'quinn: Participating on the call today are ALSO's Chief Executive Officer Andy Edson, and our President and Chief Operating Officer Jason Whitehead. Additionally, also participating on the call are Todd Munsey, our Chief Financial Officer, and Dan Horn, our Chief Commercial Officer.
Speaker Change: The call today are Chief Executive Officer, Andy Edson, and our President and Chief Operating Officer, Jason Whitehead and Additionally, also participating on the call are Todd monthly, our Chief Financial Officer, and Dan Horn, Our Chief commercial officer with that I'll turn the call over to Andy.
Andy Edson: With that, I will turn the call over to Andy.
Andy Edson: Thanks, Emily, and good morning, everyone. Following our pre-release a couple of weeks ago, we distributed our definitive third quarter results this morning, which include adjusted EBITDA of $49 million and 4.1 million tons shipped in the quarter. Our results for the quarter were negatively impacted by decreased coal pricing and soft market conditions, as well as some challenging geology and weather-related issues that weighed on our productivity and consequently our costs. As we continue our focus on reducing costs during this market downturn, we've made some small but meaningful changes to our production expectations, which are reflected in our guidance assumptions for next year.
Andy Edson: Thanks, Emily and good morning, everyone.
Andy Edson: Following our pre release a couple of weeks ago, we distributed our definitive third quarter results. This morning, which include adjusted EBITDA of $49 million and $4 1 million tons shipped in the quarter. Our results for the quarter were negatively impacted by decreased coal pricing and soft market conditions as well as some challenging geology and weather related issues that weighed on our.
Andy Edson: Productivity and consequently, our cost.
Andy Edson: As we continue our focus on reducing costs. During this market downturn, we've made some small but meaningful changes to our production expectations, which are reflected in our guidance assumptions for next year.
Andy Edson: In general, these actions include reducing some Saturday and evening production shifts and removing sections in certain mine locations to better match production and qualities to demand, while also being mindful of our cost profile as compared to the current coal market. In addition to these kinds of changes that are normal responses to changing market conditions, we're also in the process of ramping down at our highball Checkmate Palatin Mon, moving toward a hot idle status before the end of this year. Chess Processing Plant, also known as Alcoron. We'll also auto once the Checkmate Productions. This is the only mine or complex within the alpha footprint that's being idle due to the current market condition.
Andy Edson: In general these actions include reducing some Saturday and evening production shifts and removing sections in certain mine locations to better match production and qualities to demand, while also being mindful of our cost profile as compared to the current coal markets in.
Andy Edson: In addition to these kinds of changes that are normally responsive to changing market conditions. We're also in the process of ramping down at our hub all checkmate altamonte moving toward a hot idle status before the end of this year.
Andy Edson: The chest processing plant also known as out Brian will also at almost the checkmate production phases. This is the only mine are complex with N footprint, that's being idle due to the current market conditions with checkmate being our newest mine. It was still in ramp up mode, which means costs were still meaningfully higher than what we would've expected to see a full productive capacity.
Andy Edson: With Checkmate being our newest mine, it was still in ramp-up mode, which means costs were still meaningfully higher than what we would have expected to see at full productive capacity. Highball indexes have dropped by roughly a third since development began a year ago at Checkmate, making the mine uneconomic in present market conditions. We're also conscious of the current highball market, which is looking imbalanced and oversupplied at the moment. Taking them on offline is a decision we never take lightly because it obviously impacts employees and their jobs. However, after issuing a warn notice to checkmate employees in early October, we've been successful in transferring many of our checkmate employees into other open positions within the company, allowing us to retain their expertise while staffing critical vacancies at other locations.
Andy Edson: How 'bout indexes have dropped by roughly a third since development band began a year ago with checkmate, making him an uneconomic in present market conditions.
Andy Edson: We're also conscious of the current <unk> market, which is looking at Dallas oversupplied at the moment.
Andy Edson: Taking them on and offline is a decision we never take lightly because it obviously impacts employees in their jobs.
Andy Edson: However, after issuing the warn notice to check made employees in early October we've been successful in transferring many of our checkmate employees into other open positions within the company, allowing us to retain their expertise while staffing critical vacancies at other locations.
Andy Edson: In recent weeks, we've concluded our annual budgeting process, which produced our 2025 expectations, including the guidance we issued this morning. At the midpoint, you'll see that we expect to ship 16.7 million tons of coal next year, or about 400,000 tons less than this year's guidance midpoint. Our 2025 domestic commitments also compare similarly with 3.7 million tons committed or 22% of our overall sales book for next year at an average price of $152.51, which is about $8 lower year over year on a similar relative volume. Especially given the increasingly challenging market conditions we've experienced, I'm pleased that we were able to lock in a volume that allows us to plan for a portion of our 2025 cash flows as we look for opportunities to capture upside in the export market.
In recent weeks, we concluded our annual budgeting process, which produced our 2025 expectations, including the guidance we issued this morning.
Andy Edson: At the midpoint, you'll see that we expect to ship $16 7 million tons of coal next year or about 400000 tonnes less in this year's guidance midpoint.
Andy Edson: Our 2025 domestic commitments also compare similarly, with $3 7 million tons committed or 22% of our overall sales book for next year at an average price of $152.51, which is about $8 lower year over year on a similar relative volume.
Andy Edson: Especially given the increasingly challenging market conditions, we've experienced I'm pleased that we were able to lock in a volume that allows us to plan for a portion of our 2025 cash flows as we look for opportunities to capture upside in the export market.
Andy Edson: As we've discussed in detail in recent calls, the management team remains focused on our liquidity position and protecting our ability to continue weathering this period of lower prices. Between July 1 and the end of the third quarter, our total liquidity increased by $150 million, or 42%. The additional cash on the balance sheet allows us to fund the capital needs of our existing portfolio while continuing to invest in important projects like the Kingston Wildcat Mine, formerly known as Kingston Sewel, which is our new low-vol mine in development. Jason will talk more about Wildcat in a moment.
Andy Edson: As we've discussed in detail on recent calls.
Andy Edson: Agent team remains focused on our liquidity position and protecting our ability to continue weathering this period of lower prices.
Andy Edson: Between July one and the end of the third quarter, our total liquidity increased by $150 million or 42%.
Andy Edson: Additional cash on the balance sheet allows us to fund the capital needs of our existing portfolio, while continuing to invest in important projects lots of things to Wildcat mine, formerly known as Kingston stool, which is our new logo mine development, Jason will talk more about wildcat in a moment.
Andy Edson: Despite the difficult circumstances we're currently seeing in steel demand and met coal pricing, I remain optimistic about Alpha's long-term prospects. Mines like Kingston Wildcat are an exciting complement and quality enhancement to our existing portfolio. The Alpha team continues to operate safely and responsibly, even in the face of challenging conditions. October has gotten the fourth quarter off to a good start, so we hope to keep that momentum and finish this year strong. Our strong balance sheet and lack of long term debt provide greater flexibility to manage the business in periods of market weakness. We remain focused on safety and efficiency as we monitor the market for opportunities.
Andy Edson: Despite the difficult circumstances, we're currently seeing in steel demand in met coal pricing I remain optimistic about alpha as long term prospects.
Andy Edson: Mines, like Kingston, Wildcat aren't exciting complement and quality enhancement to our existing portfolio.
Andy Edson: The Alpha team continues to operate safely and responsibly, even in the face of challenging conditions.
Andy Edson: October has gotten the fourth quarter. After a good start so we hope to keep that momentum and finished this year strong.
Andy Edson: Our strong balance sheet and lack of long term debt provides greater flexibility to manage the business in periods of market weakness.
Andy Edson: We remain focused on safety inefficiency as we monitor the market for opportunities.
Todd Munsey: So with that, I'll turn the call over to Todd for additional information about our quarterly financial Thanks, Andy.
Speaker Change: So with that I'll turn the call over to Todd for additional information about our quarterly financial results.
Todd Monthly: Thanks, Andy adjusted EBITDA for the third quarter was $49 million down from $116 million in Q2, we sold $4 1 million times in Q3 compared to $4 6 million in the second quarter.
Todd Munsey: Adjusted EBITDA for the third quarter was $49 million, down from $116 million in Q2. We sold 4.1 million tons in Q3 compared to 4.6 million in the second quarter. Met segment realizations decreased quarter over quarter with an average third quarter realization of $132.76 compared to $141.86 for the second quarter. export met tons priced against Atlantic indices and other pricing mechanisms in the third quarter realized $129.31 per ton while export coal priced on Australian indices realized $128.61 These are compared to realizations of $135.47 per ton and $153.52 respectively in the second quarter. The Q3 realization for our metallurgical sales was a total weighted average of $136.35 per ton, down from $145.94 per ton in the prior quarter.
Todd Monthly: That segment realizations decreased quarter over quarter. It was an average third quarter realization of $132 76.
Todd Monthly: Compared to $141 86 for the second quarter.
Todd Monthly: Export met tons priced against Atlantic indices, and other pricing mechanisms in the third quarter realized $129 31 per ton, while export coal priced on Australia and indices realized $128 61.
These are compared to realizations of $135 47 per ton and $153 52.
Todd Monthly: Respectively in the second quarter.
Todd Monthly: The Q3 realization for our metallurgical sales as a total weighted average of $136 35.
Todd Monthly: Ton down from $145 94 per ton in the prior quarter.
Todd Munsey: Realizations in the incidental thermal portion of the MET segment increased to $76.33 per ton in the third quarter as compared to $75.82 per ton in the second quarter. Cost of coal sales for our MET segment increased to $114.27 per ton in the third quarter, up from $109.31 per ton in Q2.
Todd Monthly: Realizations and the incidental thermal portion of the met segment increased to $76 33 per ton in the third quarter as compared to $75 82 per ton in the second quarter.
Todd Monthly: Cost of coal sales firm that segment increased to $114 27 per ton in the third quarter up from $109 31 per ton in Q2.
Todd Munsey: The primary driver of the cost increase was reduced productivity quarter over quarter. SG&A excluding non-cash stock compensation and non-recurring items decreased to $13.4 million in the third quarter as compared to $14.2 million in Q2.
Todd Monthly: The primary driver of the cost increase was reduced productivity quarter over quarter.
Todd Monthly: SG&A, excluding noncash stock compensation and nonrecurring items decreased to $13 $4 million in the third quarter as compared to $14 $2 million in Q2.
Todd Munsey: CapEx for the quarter was $31.5 million, down from $61.1 million in Q2. Moving to the balance sheet and cash flows as of September 30, 2024, we had $484.6 million in unrestricted cash, an increase of $148.5 million or roughly 44% from our June 30 unrestricted cash figure of $336.1 million. We had $97.5 million in unused availability under our ABL at the end of the quarter, partially offset by a minimum required liquidity of $75 million. As of the end of September, Alpha had total liquidity of $507 million, up from $356.7 million at the end of the second quarter.
Todd Monthly: Capex for the quarter was 31, and a half million dollars down from $61 $1 million in Q2.
Todd Monthly: Moving to the balance sheet and cash flows as of September 32024, we had $484 $6 million in unrestricted cash an increase of $148 $5 million or roughly 44% from our June 30, unrestricted cash figure of $336 $1 million.
Todd Monthly: We had $97 $5 million in unused availability under our ABL at the end of the quarter, partially offset by a minimum required liquidity of $75 million.
Todd Monthly: As of the end of September Alpha had total liquidity of $507 million up from $356 $7 million at the end of the second quarter.
Todd Munsey: Cash provided by Operating Activities was $189.5 million in the third quarter, up from $138.1 million in Q2. The third quarter cash flows were positively impacted by a decrease in working capital of $144.5 million. As of September 30th, our ABL facility had no borrowings and $57.5 million of letters of credit outstanding, down slightly from $59.4 million in the prior quarter.
Todd Monthly: Cash provided by operating activities was $189 $5 million in the third quarter up from $138 $1 million in Q2.
Todd Monthly: Third quarter cash flows were positively impacted by a decrease in working capital of $144 $5 million.
Todd Monthly: As of September 30th our ABL facility had no borrowings and $57 $5 million of letters of credit outstanding down slightly from $59 $4 million in the prior quarter.
Todd Munsey: In terms of our committed position for 2024, at the midpoint of guidance, 86% of our metallurgical tonnage in the MET segment is committed and priced at an average price of $152.42. Another 14% of our met tonnage for the year is 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 $75.97.
Todd Monthly: In terms of our committed position for 2024 at the midpoint of guidance, 86% of our metallurgical tonnage in the met segment is committed and priced at an average price of $152.42. Another 14% of our met tonnage for the year as committed but not yet priced.
Todd Monthly: The thermal byproduct portion of the met segment is fully committed and priced at the midpoint of guidance at an average price of $75.97.
Todd Munsey: Due to the continued softness in the net coal markets, we did not repurchase any shares in the third quarter under the company's share buyback program. As of October 31st, the number of common stock shares outstanding was approximately 13 million. The remaining stock buyback program authorization permits approximately $400 million in additional repurchases.
Todd Monthly: Due to the continued softness in the met coal markets, we did not repurchase any shares in the third quarter under the company's share buyback program.
Todd Monthly: As of October 31, the number of common stock shares outstanding was approximately $13 million.
Todd Monthly: The remaining stock buyback program authorization permits approximately $400 million in additional repurchases.
Todd Munsey: Contingent on Cash Flow Levels and Market Conditions. We have repurchased a total of 6.6 million shares under the existing plan at an average price of $165.74.
Todd Monthly: Tangent on cash flow levels and market conditions.
Todd Monthly: We have repurchased a total of $6 6 million shares under the existing plan at an average price of $165.74.
Todd Munsey: Looking ahead to next year, we issued 2025 guidance this morning, we expect to ship between 15 and 16 million tons of metallurgical coal, as well as between one and 1.4 million tons of thermal coal byproducts. Together, this brings total anticipated shipment guidance to a range of 16.0 to 17.4 million tons. 2025 cost of coal sales, we are guiding to a range of $103 to $108 per ton. Selling general and administrative costs are expected to be between $53 million and $59 million next year, excluding non-recurring expenses and non-cash stock compensation. A reduction of approximately 11% as compared to 2024's guidance.
Todd Monthly: Looking ahead to next year, we issued 2025 guidance. This morning, we expect to ship between 15, and 16 million tonnes of metallurgical coal as well as between one and $1 4 million tons of thermal coal byproduct.
Todd Monthly: Together this brings total anticipated shipment guidance to a range of 16 to.
Todd Monthly: To $17 4 million tonnes.
Todd Monthly: For 2025 cost of coal sales, we are guiding to a range of $103 to $108 per ton.
Todd Monthly: Selling general and administrative costs are expected to be between $53 million and $59 million next year, excluding nonrecurring expenses and noncash stock compensation.
A reduction of approximately 11% as compared to 2020 for his guidance range.
Todd Munsey: Idle operations expense is anticipated to be between $18 and $28 million. Expect net cash interest income of $2 million to $10 million and depreciation depletion and amortization of $165 to $185 million. Capital expenditures for 2025 are expected to be between $152 million and $182 million, which includes sustaining maintenance capital, investments in mine development for the Kingston Wildcat Mine, and some carryover from 2024 due to timing and availability of supplies and contract labor. We also anticipate capital contributions to equity affiliates in a range of $44 million to $54 million, which includes both cash needed for normal operations of the DTA facility, as well as amounts expected to be spent in 2025 related to infrastructure and facility upgrades at the port.
Todd Monthly: Idle operations expense is anticipated to be between 18 and $28 million. We expect net cash interest income of 2 million to $10 million and depreciation depletion and amortization of $165 million to $185 million.
Todd Monthly: Capital expenditures for 2025 are expected to be between $152 million and $182 million, which includes sustaining maintenance capital investments in mine development for the Kingston Wildcat mine and some carryover from 2024 due to timing and availability of supplies and contract labor.
Todd Monthly: Also anticipate capital contributions to equity affiliates and a range of $44 million to $54 million, which includes both cash needed for normal operations of the DTA facility.
Todd Monthly: As well as amounts expected to be spent in 2025 related to infrastructure and facility upgrades at the port.
Todd Munsey: Lastly, the company expects a cash tax rate of between zero to 5% next In terms of our committed and priced position for 2025, our metallurgical tonnage at the midpoint of guidance is 24% committed at an average price of $152.51, with another 35% committed and unpriced. The incidental thermal tonnage at the midpoint of guidance is already 96% committed at an average price of $79.90. The remaining 4% at the midpoint of incidental thermal guidance is uncommitted.
Lastly, the company expects a cash tax rate of between zero to 5% next year.
Todd Monthly: In terms of our committed in price position for 2025, our metallurgical tonnage at the midpoint of guidance is 24% committed at an average price of $152 51.
Todd Monthly: Another 35% committed and unpriced.
Todd Monthly: There is no thermal tonnage at the midpoint of guidance is already 96% committed at an average price of $79 90.
The remaining 4% at the midpoint of incidental thermal guidance is uncommitted.
Jason Whitehead: I'll now turn the call over to Jason to provide an update on operation.
Speaker Change: I'll now turn the call over to Jason to provide an update on operations.
Jason Whitehead: Thanks, Todd.
Jason Whitehead: Thanks, Todd and good morning, everyone.
Jason Whitehead: Good morning, everyone. In our guidance for next year, we're projecting cost of coal sales in a range of $103 to $108 per ton. The midpoint of which is $7.50 lower than the midpoint of our current 2024 guidance range of $110 to $116. Roughly two thirds of this reduction is expected to be realized through reduced purchase coal cost to both the lower than expected volumes and the lower pricing environment that we're experiencing. We also believe that we will realize savings of a little more than $2 per ton in 2025 through improved pricing on supplies and maintenance, such as diesel fuel, steel, roof support, and a reduction in third party mining services expenses.
Jason Whitehead: And our guidance for next year, we're projecting cost of coal sales in a range of $103 to $108 per ton.
Jason Whitehead: The midpoint of which is $7.50 lower than the midpoint of our current 2024 guidance range of 110 to $116.
Jason Whitehead: Two thirds of this reduction is expected to be realized through reduced purchase pulp cost.
Jason Whitehead: Through both the lower than expected volumes and the lower pricing environment that we're experiencing.
Jason Whitehead: We also believe that we will realize savings of a little more than $2 per ton in 2025 through improved pricing on suppliers on maintenance such as diesel fuel steel roof support.
Jason Whitehead: And a reduction in third party mining services expenses.
Jason Whitehead: Those items, along with anticipated lower sales-related expenses, are the primary drivers behind the decrease in cost guidance year over year.
Jason Whitehead: Those items, along with anticipated lower sales related expenses are the primary drivers behind the decrease in cost guidance year over year.
Jason Whitehead: We've discussed in the past Alpha's investments in our manufacturing and rebuild facilities. on several previous calls. We've grown our capabilities over the last few years, and when third party and OEM manufacturers were diminishing, and often unavailable, it allowed us to maintain our fleet in a condition that has set the weather market decline. It's these investments that have helped shore up our mining fleet into a healthy state that allows us to scale back investments here in the near term without negatively impacting safety or productivity. Moving to our CapEx guidance for next year, you also see we've reduced our expectations around sustaining maintenance CapEx to roughly $7 per ton at the midpoint of volume guidance as opposed to the $10 per ton rule of thumb that we've most recently been using.
Jason Whitehead: We've discussed in the past alpha as investments in our manufacturing and rebuild facilities on several previous calls.
Jason Whitehead: We've grown our capabilities over the last few years and when third party and OEM manufacturers were diminishing and often unavailable.
It allowed us to maintain our fleet in a condition that is set to weather market declines.
Jason Whitehead: These investments that have helped shore up our mining fleet until a healthy state that allows us to scale back investments here in the near term without negatively impacting safety or productivity.
Jason Whitehead: Moving to our Capex guidance for next year, you'll also see we've reduced our expectations around sustaining maintenance capex to roughly $7 per ton at the midpoint of volume guidance as opposed to the $10 per ton rule of thumb.
Jason Whitehead: Most recently been using.
Jason Whitehead: Again, this is due to the exceptional health of the AMR fleet and is backed up by a flattening, in some cases reversal, of inflationary pressure on materials and supplies as compared to the last couple of years. At the midpoint of shipment guidance, we're expecting to sell 16.7 million tons next year, which at $7 per ton corresponds to about $117 million in sustaining maintenance capex for our existing portfolio of mines. The other two categories, development and rollover CapEx, are largely devoted to our Kingston wildcat mine. At the midpoint of guidance, we expect to spend around $40 million of development CapEx and another approximately $10 million in carryover from this year, almost all of which will go to wildcats.
Jason Whitehead: Again this is due to the exceptional health of the EMR fleet and is backed up by a flattening in some cases reversal of inflationary pressure on materials and supplies as compared to the last couple of years.
At the midpoint of shipment guidance, we're expecting to sell $16 7 million tonnes next year, which had $7 per ton corresponds to about $117 million and sustaining maintenance capex for our existing portfolio of mines.
Jason Whitehead: The other two categories development and rollover Capex are largely devoted to our Kingston wildcatting on at.
Jason Whitehead: At the midpoint of guidance, we expect to spend around $40 million of development Capex and another approximately $10 million and carryover from this year.
Jason Whitehead: Almost all of which will go to Wildcat.
Jason Whitehead: As a reminder, this is the mine we've been working on in Fayette County, West Virginia, which was previously named Kingston Sewell, after the name of the coal seam. It will be part of our mid-West Virginia surface region. As our teams progressed on the preparatory groundwork for this mine, they decided to rename the mine Wildcat in appreciation for its location, our ties to the community, and the rich local history of Pax, West Virginia. where the Wildcats of Pax High School won the state basketball championship in 1954. In terms of development plans, we're currently working on the slope at Kingston Wildcat, which will continue throughout most of the next year.
Jason Whitehead: As a reminder, this is demand we've been working on in Fayette County, West Virginia.
Jason Whitehead: Which was previously named Kingston, So after the name of the causing.
Jason Whitehead: It will be part of our mid West Virginia surface region as our teams progressed on a preparatory groundwork for this mine I decided to rename the mine Wildcat and appreciation for its location.
Jason Whitehead: Passed to the community and the rich local history of Pax West Virginia.
Jason Whitehead: What are the Wildcats packs high school, one of the state basketball Championship and $19 54.
Jason Whitehead: In terms of development plans. We're currently working on the slope of Kingston, Wildcat, which will continue throughout most of the next year.
Jason Whitehead: This mine will produce lowball product that we're excited to bring to market. While we anticipate the first production cuts to occur late in 2025, more significant tonnage levels are not expected until 2026.
Jason Whitehead: This mine will produce low vol product that we're excited to bring to market.
Jason Whitehead: While we anticipate the first production cuts to occur late in 2025 more significant tonnage levels are not expected until 2026.
Jason Whitehead: At its full run rate, we expect Wildcat to produce up to 1 million tons and Lastly, on these quarterly updates, we often communicate some Alpha safety and environmental achievements. This time I want to send my sincere appreciation to a group of Alpha's senior leaders and remarkable employees that volunteered their time to aid Western North Carolina in the aftermath of Hurricane Elaine. They assisted in recovery efforts and road rehabilitation work that allowed residents access to their homes and businesses between Bat Cave and Chimney Rock, North Carolina. I want to thank those who prompted me for consideration and the numerous volunteers who wanted to be involved to help.
Jason Whitehead: At its full run rate, we expect Wildcats produce up to 1 million tons annually.
Jason Whitehead: Lastly on these quarterly updates, we often communicate somehow for safety and environmental achievements.
Jason Whitehead: At this time I want to send my sincere appreciation to a group of Alpha senior leaders and remarkable employees have volunteered their time to aid Western North Carolina, and the aftermath of Hurricane Lane.
Jason Whitehead: They assisted and recovery efforts in road rehabilitation work that allowed residents access to their homes and businesses between bat Cave in January Route North Carolina.
Jason Whitehead: I want to thank those who prompted me for consideration and the numerous volunteers who wanted to be involved to help.
Jason Whitehead: to those who made the connections there on the ground, orchestrated the tactical plans. transported and loaned equipment, and finally the group of miners who are now dubbed the West Virginia Boys who impressed folks all over Central Appalachia with their skill level, drive and fortitude. This group of individuals is a testament to Alpha's strength, and I couldn't be prouder to know and work with such an impressive group of individuals.
Jason Whitehead: To those who made the connections are on the ground orchestrated the tactical plans.
Jason Whitehead: Sported an loans equipment and finally, the group of miners, who are now dubbed the West Virginia voice, who impressed folks all over central Appalachia with their scale level drive and fortitude.
Jason Whitehead: This group of individuals is a testament to alpha strength and I couldnt be prouder to know and work with such an impressive group of individuals.
Jason Whitehead: Thank you.
Dan Horn: With those operational updates, I'll now turn the call over to Dan for an update on the market.
Speaker Change: But those operational updates I'll now turn the call over to Dan.
Dan Horn: For an update on our markets.
Dan Horn: Thanks, Jason, and good morning, everyone. Lower coal prices continued throughout the third quarter of 2024 as a result of sustained weakness in global steel demand. World Steel Association's most recent short-range outlook published in mid-October included significant downward revisions for steel demand in 2024, especially in China and other developed economies facing manufacturing weakness, economic headwinds, and geopolitical uncertainty. WSA projects a moderate rebound in steel demand in 2025 and the potential for broad based moderate growth in 2025 and 2026. Important factors that could fuel such growth were identified as the stabilization of China's real estate sector, monetary policies such as interest rate adjustments to spur economic activity, and the trajectory of infrastructure spending in major global economies.
Dan Horn: Thanks, Jason and good morning, everyone.
Dan Horn: Lower coal prices continue throughout the third quarter of 2024 as a result of sustained weakness in global steel demand.
Dan Horn: World Steel Association is most recent short range outlook published in mid October included significant downward revisions for steel demand in 2024, especially in China and other developed economies facing manufacturing weakness economic headwinds and geopolitical uncertainties.
Dan Horn: WSI projects, a moderate rebound in steel demand in 2025, and the potential for broad based moderate growth in 2025 and 2026.
Dan Horn: Important factors that could fuel such growth were identified as the stabilization of China's real estate sector monetary policy, such as interest rate adjustments to spur economic activity and the trajectory of infrastructure spending in major global economies.
Dan Horn: Metallurgical coal prices continued to decline during the third quarter of 2024. All four indices that Alpha closely monitors fell 10% or more throughout the quarter, with the Australian premium low vol index representing the most significant drop of 16 and a half percent. The Aussie PLV index decreased from $245.20 per metric ton on July 1 to $204.75 per metric ton on September 30, 2020.
Dan Horn: Metallurgical coal prices continued to decline during the third quarter of 2024.
Dan Horn: Oh for indices that also closely monitors fell 10% or more throughout the quarter with the Australian premium low vol index, representing the most significant drop of 16, 5%.
Dan Horn: The Aussie P. L V index decreased from $245 20 per metric ton on July one to $204 75 per metric ton on September 30 of 2024.
Dan Horn: The U.S. East Coast Low Vol Index fell from $218 per metric ton at the beginning of the quarter to $189 per metric ton at quarter close. East Coast Highball A Index decreased from $212 per metric ton in July to $184 per metric ton at the end of September.
Dan Horn: The U S East Coast Global Index fell from $218 per metric ton at the beginning of the quarter to $1 89 per metric ton at quarter close.
Dan Horn: East Coast Highboy index decreased from $212 per metric ton in July to $184 per metric ton at the end of September and finally, the U S. East Coast High Vol. B index moved from 190 per metric ton to $171 per metric ton at quarter end.
Dan Horn: And finally, the U.S. East Coast Highball B Index moved from $190 per metric ton to $171 per metric ton at quarter end. Following the quarter close, all four indices remain relatively stable. As of October 30th, the U.S. East Coast Low Vol, High Vol A, and High Vol B indices measured 190, 185, and 170 per ton, respectively. The Aussie PLV index softened slightly from quarter close levels to $204 per metric ton as of the same date. In the Seabourn Thermal Market, the API2 index was $104.85 per metric ton on July 1, increasing to $119.40 per metric ton on September 30.
Dan Horn: Following the quarter close all four indices remain relatively stable as of October 30, the U S East Coast low Vol High vol, a and hobby indices measured 190, 185, and $1 70 per ton respectively.
Dan Horn: The <unk> index soften slightly from quarter close levels to $204 per metric ton as of the same date.
Dan Horn: The seaborne thermal market. The API two index was $104 85 per metric ton on July one increasing to $119 40 per metric ton on September 30th.
Dan Horn: And on October 30, the API2 index was $121.15 per metric ton. In terms of current market dynamics, we still see soft pricing and little spot demand. While we continue to consider the low and medium vol markets relatively balanced, high vol coal is in oversupply, which has also put pressure on pricing. Recent weeks of extreme weather have brought about some challenges that result in rail delays across some of our operating footprint. Although these impacts have been localized and we have worked to overcome them as best we can.
Dan Horn: On October 30 at the API two index was $121 15 per metric ton.
Dan Horn: In terms of current market dynamics, we still see soft pricing and little spot demand, while we continue to consider the low and medium of all markets relatively balanced high vol. Coal is an oversupply, which has also put pressure on pricing.
Dan Horn: Recent weeks of extreme weather have brought about some challenges that resulted in rail delays across some of our operating footprint.
Dan Horn: Though these impacts have been localized and we have worked to overcome them as best we can.
Dan Horn: Turning to next year, we announced this morning that we have 3.7 million tons of coal contracted at an average price of $152.51 per ton for shipment to domestic metallurgical customers in 2025. I want to thank the sales team for their hard work in successfully concluding these domestic negotiations. especially in light of the lackluster market conditions over the last several months. We are pleased with where we land.
Turning to next year, we announced this morning that we have $3 7 million tons of coal contracted at an average price of $152 51 per ton for shipment to domestic metallurgical customers in 2025.
I want to thank the sales team for their hard work and successful, including these concluding these domestic negotiations.
Especially in light of the lackluster market conditions over the last several months, we are pleased with where we landed.
Dan Horn: Within the guidance we issued this morning, we also disclosed our expectation of spending between $44 million and $54 million to fund DTA next year. This estimate includes Alpha's portion of both normal operating capital as well as the special capital investments needed to upgrade equipment and infrastructure at this important coal terminal. We remain in close contact with our colleagues at DTA to best plan for outages that will result in the least amount of disruption possible to our shipping operation.
Dan Horn: Within the guidance we issued this morning, we also disclosed our expectation of spending between $44 million and $54 million to fund DTA next year. This estimate includes office portion of both normal operating capital as well as the special capital investments needed to upgrade equipment and infrastructure.
Dan Horn: <unk> at this important coal terminal.
Dan Horn: We remain in close contact with our colleagues at DTA to best plan for outages that will result in the least amount of disruption possible to our shipping operations.
Operator: 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. One moment, please, while we poll for questions.
Dan Horn: And with that operator, we are now ready to open the call for questions.
Speaker Change: 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.
Lucas Pipes: Our first question comes from Lucas Pipes with B. Reilly Securities. Please proceed with your question.
Speaker Change: Our first question comes from Lucas pipes with B Riley Securities. Please proceed with your question.
Lucas Pipes: Thank you very much, operator.
Lucas Pipes: Thank you very much operator, good morning, everyone.
Andy Edson: Good morning, everyone. Andy and team, first, I want to commend you on your rehabilitation efforts in the aftermath of Haleen. That's really great to see, and thank you for that. I know a lot of work and thought goes into your guidance and budget and really, really respect what you put forward this morning.
Andy and team first.
Lucas Pipes: I want to commend you on.
Lucas Pipes: Your rehabilitation efforts in the aftermath of acetylene, that's that's really great.
Speaker Change: Thank you for that.
I know a lot of work and thought goes into your guidance and budget.
Speaker Change: Really really.
Speaker Change: Really respect what you put forward this morning.
Speaker Change: Yeah.
Andy Edson: Andy and Jason, if you could maybe comment on the cost outlook for 2025 versus 2024. I assume there are a few buckets, and you mentioned those in your prepared remarks, between sales-sensitive costs, Lower Purchased, or Tons, but could you expand on those and maybe put a dollar figure next to each of those buckets? Thank you very much. Yeah, I don't.
Andy and Chase and if you could maybe com.
Speaker Change: Comment on the cost.
Speaker Change: Outlook for 2025 versus 2024.
Speaker Change: I assume there are a few buckets and you mentioned dosing in your prepared remarks between.
Speaker Change: Sales sensitive costs.
Speaker Change: Lower purchased power.
Speaker Change: Tons.
But could you could you expand on dose and maybe put a dollar figure next to each of those buckets. Thank you very much.
Speaker Change: Yeah.
Andy Edson: Hey, Lucas, and thanks for the compliment, by the way. I don't know that we want to share too much detail because it is it is it I won't say it's still in development, but we are we are looking at additional things, additional actions that we want may want to take between now and next year. But as Jason mentioned, you know, well over half will be related to purchase coal. And that's just That's not a change in philosophy or anything else like that. It's just taking advantage of different opportunities internal to the business rather than purchasing coal.
Hey, Lucas Thanks for the compliment by the way.
Speaker Change: I don't know that we want to share too much detail because it is.
It.
Speaker Change: I won't say, it's still in development, but we are we are looking at additional things additional actions that we want may want to take between now and next year, but as Jason mentioned.
Jason Whitehead: Well over half will be related to purchased coal and Thats just a.
Jason Whitehead: That's not a change in philosophy or anything else like that it's just.
Jason Whitehead: Taking advantage of different opportunities internal to the business rather than purchasing coal so.
Andy Edson: So both in quantity and and just the result of the market being lower, we're going to be able to get a lower true blended cost of sales out including our our organic cons and purchase We'll be able to see some reduction in the cost there. We've had a significant effort on our sourcing side. The sourcing team has done absolutely phenomenal work the past six months, really, of talking to vendors, finding new vendors, and really trying to take costs out of the system wherever possible. We've been able to reclaim at least a small portion of the post-COVID inflation.
Jason Whitehead: Both in quantity and in just the result of the market being lower are going to be able to get a lower blended cost of sales out, including our our organic tons and purchased tons.
Jason Whitehead: We will be able to see some some reduction in the cost there.
Jason Whitehead: Had a significant effort on our sourcing side of the sourcing team has done absolutely phenomenal work the past six months really of talking to vendors finding new vendors.
Jason Whitehead: And really trying to take cost out of the system wherever possible, we've been able to reclaim at least a small portion of the post COVID-19 inflation.
Andy Edson: We think there's hopefully more to come there, but just a lot of really good work and being mindful of areas of leakage that we can recover. And then, as we mentioned, we've had some changes in the operating lineup, whether it's taking a section out of a certain mine, where we could possibly, there are opportunities to... possibly see productivity enhancements by reducing reducing manpower certain months, which is a little bit against the grain. But I think we're proving in certain instances that it actually works. So it's, it's kind of a broad initiative, we know our costs need to be lower, particularly in this market.
Jason Whitehead: We think there's hopefully more to come there, but just a lot of really good work and being mindful of areas of leakage that we can recover.
Jason Whitehead: And then as we mentioned we've had some changes in the operating line up.
Jason Whitehead: Whether it's taking a section out of a certain mine, where we could possibly there there are opportunities to.
Jason Whitehead: Possibly see productivity enhancements by reducing.
Jason Whitehead: Reducing manpower certain months, which is a little bit against the grain, but I think we're proving in certain instances that it actually works. So it is kind of a broad initiative, we know our costs need to be lower particularly in this market.
Andy Edson: We're hopeful that once we get these procedures implemented, and these these new philosophies installed, that this will Also yield benefits in the more robust market, but I certainly need it right now.
Jason Whitehead: We're hopeful that once we get these procedures implemented and these these new philosophies install but this will.
Jason Whitehead: Also yield benefits in the more robust market, but I.
Speaker Change: Certainly need it right now and Jason anything you want to add on that.
Jason Whitehead: And Jason, anything you want to add on that?
Jason Whitehead: I think I think you did a really good job, Andy, of summing up a lot of stuff, you know, in just a just a few short minutes. I really don't have anything to add.
Speaker Change: I think you did a really good job Andy of of some another lot of stuff you know and just to just a few short minutes.
I really don't have anything to add.
Lucas Pipes: Thank you, Andy. And just to follow up on this point, if I heard you right, about half of the call it $7.50 savings is related to purchase tons. And could you remind us how many tons did you purchase in this year? And what would be the outlook for next year? Thank you.
Speaker Change: Thank you and then and just to follow up on this point, if I heard you right about half of that call. It $7 50.
Speaker Change: Savings as it relates to purchase content.
Speaker Change: Could you remind us how many tons did you purchase in this year and what would be the outlook for next year. Thank you.
Andy Edson: Well, the year's not finished yet, Lucas, so I don't want to, I don't want to, because part of it will be a prediction on what we do in the fourth quarter. So I'll probably just leave the answer where it is. Okay, but it's about half, right? I heard that right. Half of the 750s related. Yeah, yeah, roughly. Could be 50%, could be 40%. I'm kind of going off the cuff here. And then we have a separate $2 for supplies and maintenance and service providers and then there's a remainder there, maybe call it $2 or so.
Speaker Change: Well the year is not finished yet Lucas so I don't want to.
Speaker Change: I don't want to.
Speaker Change: It goes part of it will be a prediction on what we do in the fourth quarter.
Speaker Change: So I'll, probably just leave the answer where it is.
Speaker Change: Yeah.
Speaker Change: Okay, but it's it's it's about half right I I heard that right half of the 750 is related yes, yes, roughly it can be up to 50 predictably 40%.
Speaker Change: Going off the cuff here.
Speaker Change: And then we have a separate $2.
Speaker Change: For supplies and maintenance and service providers and then there is a remainder there maybe call it two bucks or so that.
Andy Edson: would be related to higher, maybe higher cost production, things like that. been taken out. Right.
Speaker Change:
Speaker Change: Related to higher maybe higher cost production and things like that.
Speaker Change: Being taken out.
Andy Edson: And then I mean, there's also layered in there somewhere is just the year over whatever the year over year impact will be on sales related costs, which You know, we were kind of looking at the market being kind of in a similar situation next year, as we've seen the past couple of quarters here. So. The full year impact of that is also a small contribution to the cost reduction.
Speaker Change: Right and then there's also layered in there somewhere.
Speaker Change: Just the year over whatever the year over year impact will be on sales related costs, which we you know we.
Speaker Change: We're kind of looking at the market being kind of in a similar situation next year as we've seen.
Speaker Change: Last couple of quarters here so.
Speaker Change: The full year impact of that.
Also a small contribution to the cost reduction.
Lucas Pipes: Very helpful. Thank you for all the color.
Speaker Change: Very helpful. Thank you for all the color.
Speaker Change: Sure.
Lucas Pipes: Similar question on CapEx and SG&A. First, on the CapEx side, you described $7 per ton versus $10 per ton in terms of sustaining CapEx. Do you think the $7 is sustainable for a couple of years or is this more kind of a 2025 response to market conditions? How would you frame that up?
Similar question on on on Capex and SG&A.
Speaker Change: First on the Capex side.
Speaker Change: You you described kind of $7 per ton versus $10 per ton.
Speaker Change: In terms of sustaining capex.
Speaker Change: Okay.
Do you think the $7 as it is.
Speaker Change: Sustainable for a couple of years or is this more of a kind of a 2025 response to market conditions, how would you frame that up and on the SG&A side.
Lucas Pipes: And on the SG&A side, very meaningful reductions there. Great to see. What do you think of some of the biggest drivers there?
Speaker Change: Very meaningful reductions there great to see what what do you think of some of the biggest drivers there. Thank you very much.
Lucas Pipes: Thank you very much.
Jason Whitehead: This is Jason, I think less than $10 is is definitely sustainable. You know, for more than one year. For me to say $7 sustainable for 25 and 26.
Jason Whitehead: This is Jason I think.
Jason Whitehead: Less than $10 is definitely sustainable.
Jason Whitehead: For more than one year.
Speaker Change: For me to say a $7 sustainable for 25, and 26, you know it might be a bit of a stretch.
Jason Whitehead: You know, it may be a bit of a stretch. I think it just depends on you know, what where we look like we are in our operations at the you know, at the end of next year, how many continuous miners we we plan to deploy. But you know, $7 we're very comfortable with for 2025. And again, you know, I would say you could probably split the difference and expect something in that $8 or $9 range for 2026.
Speaker Change: I think it just depends on.
Speaker Change: Where we look like we are in our operations at the at the end of next year.
Speaker Change: How many continuous miners.
Speaker Change: We plan to deploy.
Speaker Change: <unk>.
Speaker Change: But $7, we're very comfortable with for 2025 and again I would say you could probably split the difference.
Speaker Change: And expect something in that eight or $9 range for 2026.
Jason Whitehead: Obviously subject to change. Drop of a Hat. There's a lot of variables and a lot of moving pieces to try to nail down.
Speaker Change: Obviously subject to change that's a drop of a hat.
You know, there's a lot of a lot of variables and a lot of moving pieces to try to nail down.
Todd Munsey: Well, before I move to the SG&A side, Lucas, the You know, the movement, the improvement we've seen on CapEx is, it's really a result of the efforts of the operations team over the past few years to develop additional capabilities. I mean, the creation from the ground up of Maxim Manufacturing, the beginning of last year, has been a real help as far as cutting out pieces of the supply chain, whether it's actual dollars or whether it's just waiting time or lead times for equipment. But our maintenance team has really made good use of all these new assets to bring down CapEx.
Speaker Change: Yeah, no well before I move to the SG&A side Lukas the.
Speaker Change: The movement the improvement we've seen on Capex is it really.
The efforts of the operations team over the past few years to develop additional capabilities I mean to the creation from the ground up of Maxim manufacturing.
Speaker Change: Lastly at the beginning of last year has been a real help as far as cut.
Speaker Change: Cutting out pieces of the supply chain, whether it's actual dollars or whether it's just waiting time or lead times for equipment, but our maintenance team has really made good use of all these new assets to bring down Capex and.
Todd Munsey: And, you know, we'll see how, what the total impact is in the years to come. But I know there's going to be a significant impact from that as time goes on.
Speaker Change: We'll see how.
Speaker Change: What the total impact is in the years to come but I know theres going to be a significant.
Impact from that as time goes on on the G&A side. So the.
Todd Munsey: On the G&A side, so the. Naturally, we don't just look at operating costs. When we're trying to take dollars out of the system, we got a little bit aggressive. A lot of this is from outside spend. We had we did have a couple. One-off things that have hit us this year that we don't expect to recur next year. But we're pretty confident we've taken real dollars out of the system. I mean, look, it's six or seven million dollars, but as a percentage, when you're able to take your SG&A down by over 10%, which I think we're already pretty lean to begin with.
Speaker Change: Naturally we don't just look at operating costs.
Speaker Change: When we're trying to take dollars out of the system.
Speaker Change: We got a little bit aggressive a lot of this is from outside spend.
Speaker Change: We had we did have a couple of <unk>.
Speaker Change: One off things that have hit us this year.
Speaker Change: But we don't expect to recur next year, but we're pretty confident we've taken we've taken real dollars out of the system and you look at six or $7 million, but as a percentage. When you were able to take your SG&A down by over 10%, which I think were already pretty lean to begin with I really appreciate the.
Todd Munsey: I really appreciate the back office folks who have been digging around for every penny and really just trying to make us as lean as we possibly can be.
Speaker Change: The back office folks who have been digging around for every penny and really just trying to make is as lean as we possibly can be.
Speaker Change: Okay.
Lucas Pipes: Andy, congratulations on all these efforts. Really great to see. Keep up the great work. Thank you.
Speaker Change: Andy.
Andy Edson: Gratulation on all of these efforts are really great to see keep up keep up the great work.
Andy Edson: Thank you Lucas.
Nathan Martin: Our next question comes from Nathan Martin with the Benchmark. Please proceed with your questions. Thanks, Operator.
Speaker Change: Our next question comes from Nathan Martin with the Benchmark Company. Please proceed with your question.
Nathan Martin: Yeah. Thanks, operator, good morning, everybody.
Nathan Martin: Good morning, everybody. Maybe just, hey, how's it going? Maybe just to follow up on Lucas's initial question regarding cost per tonne guidance. And Andy, maybe you kind of answered this, but just to put a finer point on it, that guidance of 103 to 108 for 2025 cost per tonne, kind of what MET price are you assuming, you know, in that range? You know, like I mentioned, I don't want to stick a specific flag in the ground because we were not in the business of projecting prospects for for people. We do we do have our internal thoughts on it.
Hey, maybe just hey, how's it going maybe just to follow.
Nathan Martin: Follow up on Lucas's initial question regarding cost per ton guidance and Andy did you kind of answered this but just to put a finer point on it.
Nathan Martin: The guidance of 103 to one away for 2025 cost per ton.
Nathan Martin: You know kind of what met price are you assuming in that range.
Nathan Martin: Yeah, like I mentioned I don't want to stick a specific flag in the ground because we were not in the business of projecting prospects for for people. We do we do have our internal thoughts on it but we're kind of looking at the world. When we look at 2025 being similar to what we've seen.
Andy Edson: But we're kind of looking at the world. We're looking at 2025 being similar to what we've seen the past couple of quarters, probably leaning more heavily in this current environment. There could be some recency bias there. Maybe that's given us A little bit of a more pessimistic view of it, but... At this point, that's kind of the best we've got to go on. don't really see anything in Dan's comments to give us a view of a major move upward going into the beginning of next year.
Nathan Martin: The past couple of quarters, probably leaning more heavily on this.
Nathan Martin: The current environment there.
Nathan Martin: There can be some recency bias there maybe that's given us.
Nathan Martin: A little bit of a more pessimistic view of it but.
Nathan Martin: At this point, that's kind of the best we've got to go on.
Nathan Martin: Don.
Speaker Change: Don't really see anything in Dan's comments to to give us a view of a major move upward going into beginning of next year, we remain hopeful and I think once we get past the.
Nathan Martin: We remain hopeful and I think once we get past past the election next week, maybe some things will start taking shape as far as people positioning, seeing where economic activity starts drumming back up and in different areas of the world. But for right now, I think we're pretty comfortable saying that next year is going to Our view is, for planning purposes, it's going to look a little bit like what we're currently seeing. Okay, got it.
Speaker Change: Has the election next week, maybe some things will start taking shape as far as people.
Speaker Change: <unk> seen where economic activity starts coming back up and in different areas of the world, but for right now I think we're pretty comfortable saying that next year is going to.
Our view is for planning purposes, it's going to look a little bit like what we're currently seeing.
Speaker Change: Okay got it I appreciate that but Andy and then maybe.
Nathan Martin: Appreciate that, Andy. And then maybe taking a step back to the fourth quarter here, Lucas asked about CapEx, kind of going forward to 25. But I just looked at, you know, the full year 24 got into 210 to 240 million. I think it does imply kind of a $20 million plus uptick quarter of a quarter. Does that math sound right?
Speaker Change: Taking a step back to the fourth quarter here Lucas asked about Capex kind of going forward in 'twenty five but I just looked at the full year 'twenty for guidance of $210 million to $240 million.
I think it does imply kind of a $20 million plus uptick quarter over quarter and does that math sound right or could there be an opportunity maybe for 'twenty four capex also to kind of come in a little bit lower than you think.
Andy Edson: Or could there be an opportunity maybe for 24 CapEx also to kind of come in a little bit lower than you think? Well, I mean, we've we've reiterated guidance a couple of weeks ago. And so I think we're, you know, I'm not sure where we will end some of its timing, again, things that we're not able to actually get done. And 24 will just bleed into the first 25. So I think the range is comfortable. I could, I can't really point you as to whether we're going to be on the top end of the bottom end of that range.
Speaker Change: Well I mean, we reiterated guidance a couple of weeks ago, and so I think were you know.
Speaker Change: I'm not sure where we will in some of its timing, but again things that were not able to actually get done and 24 will just bleed into the first of 25 or so.
Speaker Change: I think the range is comfortable because I can't really point to as to whether we're going to be on the top end of the bottom end of that range as usual I think we typically hit it right down the fairway I wouldn't expect it to be very different here, but again there is some timing exposure.
Andy Edson: As usual, I think we typically hit right down the fairway, I wouldn't expect to be very different here.
Andy Edson: But again, there is there is some timing exposure. Okay, yeah, and you're right, Andy, that's why I was just wondering, because if you hit down the fairway, it would be a pretty meaningful, meaningful jump up quarter record in the fourth quarter. So, and you did mention some carry over, I think, spending in the twenty five, so just wondering if that was kind of accounting for that movement. Yeah, I mean, that's a problem. That's a problem with fourth quarter, you know, not only you're looking at the bridge of a quarter, you're looking at the bridge to a whole new year.
Speaker Change: Okay, Yeah, and you're right Andy Yeah, that's what I was just wondering because it did hit down the fairway it would be a pretty meaningful real meaningful jump up quarter over quarter in the fourth quarter. So you did mentioned some carryover spending in the 25. So just wondering if that was kind of accounted for that movement.
Speaker Change: Yes, I mean, that's a <unk>.
Speaker Change: Album, That's a problem with fourth quarter, you know not only youre looking at the bridge of a quarter you are looking at the bridge to a whole new year and so it gets a little bit challenging.
Andy Edson: And so it gets a little bit challenging on. One week of timing can make a big difference. Got it.
Speaker Change: One one week of timing can make a big difference.
Speaker Change: Got it.
Nathan Martin: And then maybe then for Full year shipments, I think you guys said, you know, a couple weeks back, now expected to be at the high end of the range. So again, that would imply an uptick in sales here in the fourth quarter. But how should we think about kind of cost per ton? I mean, all else being equal, should it be down quarter for quarter, just given more shipments, a higher denominator, maybe a little bit of pressure on the pricing side to just helping out on sales related costs? Are there any other variables to consider, such as the lingering weather or geologic issues you guys brought up?
Speaker Change: Then maybe then for.
Full year shipments I think you guys said there are a couple of weeks back now expected to be at the high end of the range. So again that would imply an uptick in sales here in the fourth quarter how.
Speaker Change: How should we think about cost per ton I mean, all else being equal should it be down quarter over quarter, just given more shipments a higher denominator, maybe a little bit of pressure on the pricing side to just helping out on sales related costs are there any other variables, maybe consider such as the lingering weather or geologic issues you guys brought up.
Andy Edson: Now, I think, and again, going back to the The geologic issues, the weather, those are temporary things. I mean, sometimes you just, you'll have a period where nothing, no individual big thing goes wrong, but you have a handful of smaller things. I mean, Jason reminds me often that we've got, we've got. 70 operating mining units out there. And at any point in time, you could probably expect to have, I don't know, 3, 4, 5% of those having some kind of small issue to deal with. So that's two or three, two or three operations that could be dealing with some some issues.
Speaker Change: I think and again going back to the.
Speaker Change: The geologic issues, whether those are temporary things I mean, sometimes you just you'll have a period, where nothing no individual big thing goes wrong, but you have a handful of smaller things I mean, Jason reminds me often that we've got we've got.
Speaker Change: 70, operating mining units out there and at any point in time, you could probably expect to have three or four 5% of those having some kind of small issue to deal with so that's two or three two or three all operations that could be dealing with some issues in this quarter, we had a little bit more than that and it did contribute to some decreases in productivity.
Andy Edson: And this quarter, we had a little bit more than that. And it did contribute decreases in productivity. I would note that as far as our room and pillar peers were still at the top of the food chain there, but still it was below where we typically would have performed productivity-wise. But that, along with some of the weather that hit near the end of the quarter that caused, you know, whether it's power outages or things like that that make it a little bit challenging to keep the operations up and running. Those are the contributions to what was going on there.
Speaker Change: I would note that as far as our room and pillar appears we're still at the top of the food chain there, but still it was below where we typically would have performed productivity loss, but that along with some of the weather that hit at.
Speaker Change: Near the end of the quarter that caused you know, whether it's power outages or things like that that make it a little bit challenging to keep the operations up and running.
Speaker Change: That was those are the contributions to what was going on there, but just speaking about fourth quarter cost again similar to Capex, we reiterated guidance on on the cost range. So if you take in now you have access to three three quarters of actuals you can kind of back into what we're thinking on the fourth quarter I would remind you that.
Andy Edson: But just speaking about fourth quarter cost, again, similar to CapEx, we reiterated guidance on the cost range. So if you take in now, you have access to three quarters of actuals, you can kind of back into what we're thinking on the fourth quarter. I would remind you that there are a lot of holidays, a lot of vacation days in the fourth quarter. And so that typically does lead to a slight uptick in cost just compared to a normal quarter. I'm not sure if I consider the third quarter a normal quarter for us, but I think it's all going to fall into place and stay pretty tightly within the range of the yearly guidance for cost we've established.
Speaker Change: A lot of holidays auto vacation days in the fourth quarter and so that typically does lead to.
Speaker Change: Our slot uptick in costs.
Speaker Change: Just compare to a normal quarter I'm not sure if I consider the third quarter, a normal quarter for us, but I think it's all going to fall into place.
Speaker Change: And stay pretty tightly within the range of.
Speaker Change: The yearly guidance for costs, we've established.
Nathan Martin: Okay, makes sense.
Okay makes sense.
Andy Edson: And then just maybe one more, you know, just looking at 2025, specifically the shipment guidance. And obviously you guys talked about the difficult decision to put checkmate paladin on high idle. Are there any other assumptions or things you guys are looking at in the guidance as far as other rationalizations, anything like that, that we should be mindful of? No, I mean, there's, we're constantly evaluating the portfolio. And that's kind of how we that's how we came to the decision on on checkmate that just didn't match with the market at the moment. It's when it's time comes, it's going to be a hugely productive month.
Speaker Change: Just maybe one more just looking at 2025.
Speaker Change: Specifically the shipment guidance and obviously you guys talked about the difficult decision to put checkmate poulton on hot idle.
Speaker Change: Are there any other assumptions.
Speaker Change: Assumptions or things you guys are looking at are in the.
Speaker Change: Guidance as far as other rationalizations anything like that that we should be mindful of.
Speaker Change: No I mean, there is we're constantly evaluating the portfolio and that's kind of how we that's how we came to the decision on checkmate. It just didn't match with the market at the moment. It's when it's Tom comes it's going to be a hugely productive mine.
Speaker Change: But it's just really tough to get through the development phase.
Andy Edson: But it's just really tough to get to the development phase. While this market is sitting where it is. As far as the rest of the portfolio, as it's always, everything's being looked at constantly. But no, there's there's nothing material to talk about at the moment. We're pretty pleased with where we're positioned not just from the portfolio, but across the entire company to balance sheet everything else. I think we're feel pretty good about things even in a pretty tough market.
Speaker Change: This market is sitting where it is as far as the rest of the portfolio and said, it's always everything's being looked at constantly but no theres nothing material to.
Speaker Change: To talk about at the moment, we're pretty pleased with where we're positioned not just from the portfolio, but across the entire company the balance sheet everything else I think we are.
Speaker Change:
Speaker Change: We're feeling pretty good about things even in a pretty tough market.
Nathan Martin: Got it. Thanks, Andy.
Speaker Change: Got it.
Nathan Martin: I really appreciate the time and information and best of luck to you and the team in the fourth quarter. Yeah, thank you, Nate.
Speaker Change: Sandy I really appreciate the time and information and best of luck to you and the team in the fourth quarter, yes.
Speaker Change: Thank you Nate.
Operator: We have reached the end of the question and answer session.
Speaker Change: We have reached the end of the question and answer session I will now turn the call over to Andy Hudson for closing remarks.
Andy Edson: I will now turn the call over to Andy Edson for closing. Thank you, Rob. And before we wrap up, I did want to echo Jason's comments regarding the team's efforts in North Carolina. Alpha as a company is blessed with an inordinate number of people who are very generous. They're very They're high character people. And this group is a great example of that high character. I'm really proud of what they were able to accomplish. And I appreciate how they represented not just Alpha as a company, but the entire coal mining industry. I think they brought a lot of positive attention and they showed what coal miners can do.
Andy Hudson: Thank you, Rob and before we wrap up I did want to Echo Jason's comments regarding the team's efforts in North Carolina.
Andy Hudson: Alpha is a company is blessed with.
Andy Hudson: An inordinate number of people who were very generous they're very they're high character people.
Andy Hudson: And this group is a great example of that high character and I'm really proud of what they were able to accomplish and I. Appreciate how they represented not just alpha as a company, but an entire coal mining industry I think they brought a lot of positive attention and they showed what homeowners can do so I thank them for that.
Andy Edson: So I thank them for that.
Andy Edson: And I think that's it. I think that's all we've got for you today. Thanks for calling in and everyone have a great weekend.
Andy Hudson: And I think that's it I think that's all we've got for you today, thanks for calling in and everyone have a great weekend.
Operator: This concludes today's conference. You may disconnect your lines at this time, and we thank you for your
This concludes today's conference you may disconnect your lines at this time and we thank you for your participation.
Andy Hudson: Okay.