Alpha Metallurgical Resources, Inc.

Good morning and welcome to the Contour Energy first quarter 2020 results conference call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your touch-tone zone. Please note this event is being recorded. I would now like to turn the conference over to Emily O'Quinn, Vice President of Corporate Communications. Ms. O'Quinn, please go ahead.

Thanks, Anita, and good morning, everyone. Before we begin, let me remind you that during our prepared remarks and the Q&A period, our comments relating to expected 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 first quarter 2020 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 Contreras Chairman and Chief Executive Officer, David Stetson, and Chief Financial Officer, Andy Edson. Also participating on the call is Jason Whitehead, our Chief Operating Officer, who is available to answer questions on operations. With that, I'll turn the call over to David.

Thank you, Emily. Good morning, everyone, and thanks for joining the call today. As we all know, over the last several weeks, the coronavirus pandemic has created unprecedented uncertainty in our country and across the world. This has not only disrupted global economies to a degree not seen in my lifetime, but has also created a public health challenge. These are difficult times, and as we said on our last earnings call, we are committed to taking precautions that will reduce the risk of exposure to COVID-19 for our people at Comptura. We understand that these are challenging circumstances for everyone, and we are grateful to our more than 4,000 employees for their dedication and cooperation in implementing precautionary measures across the company. The health and safety of everyone on our team is important to us, and we take these issues very seriously. As I turn to our operational results for the first quarter, I want to start by highlighting our exceptional EBITDA of $60 million for the quarter, which was largely driven by outstanding cost performance by our operations team. Our central net cost reached a multi-year low of $70.68 per ton, compared to fourth quarter cost of $82.36. which was already a meaningful improvement over previous quarters. This stellar cost performance is among the high points of the quarter. When I returned to Contura last fall, I sat down with the management team to discuss our vision for Contura. We recognized that we had to drive efficiencies at both the operating and corporate levels in order to secure the long-term viability and profitability of Contura. The team put a great short and long-term strategy in place to achieve this vision, and the success of that strategy is evident in the first quarter results. I want to thank Jason Whitehead for his leadership and congratulate the entire operations group on a job well done. Looking at our results against a broader economic backdrop, I think it's important to point out that we were able to post impressive cost numbers despite the onset of the coronavirus late in the first quarter. Although my hope for Contura was to build off this strong quarter, the markets and headwinds resulting from the virus will challenge us as well as everyone else in our industry. However, the hard work we have done over the past nine months and the building blocks we've put in place will help Contura weather the expected market disruptions over the next few quarters. The capital projects we invested in are allowing us to build a bridge to even lower cost future for Contura. The millions of dollars in savings from streamlining our operation and SG&A infrastructure are even more important now. These strategic actions, coupled with meticulous cash management instituted by Andy, will position Contura for durability in these unprecedented times. We remain committed to an aggressive cash preservation strategy, and we finished the first quarter with $257 million in total liquidity. As a result of the CARES Act that was passed by Congress, we expect to receive an accelerated AMT tax refund of roughly $68 million early in the third quarter. We also anticipate the ability to defer approximately $14 million of this year's payroll taxes in connection with the coronavirus relief package. Before I turn it over to Andy to provide additional color, I want to briefly touch on some market analysis and discuss some of the external factors we are watching. Even though the first quarter MET coal prices continue to be challenging, it was encouraging to see the demand for our MET coal held up quite well. As our reported volumes show, our MET shipments of 3.3 million tons in the first quarter matched our fourth quarter 2019 shipments. Despite the announcement of many blast furnace idlings and coke plant slowdowns, our strong shipments continued well into April. However, pricing began to weaken significantly as the COVID-19 pandemic spread, and price volatility increased the last couple of weeks. While the supply has been reduced across basins in the United States, demand has fallen at an even faster pace, resulting in substantial price weakness ranging from a 13% decline in high vol A market to a 26% decline in Australian premium hard coking spot prices in April alone. To put this in perspective, prices have dropped 35% to 50% over the past 12 months. There are some estimates indicating that temporary U.S. coal production cuts may have been as high as 50% of the total supply. We'll have to wait a little longer to get April trade and demand data, but March numbers gives us hints of what to expect in the coming months. Globally, the crude steel production posted one of its worst months in recent years, with the overall global production declining 6%, compared to March 2019, and excluding China, the production was down more than 10%. Among the markets that are most important to us, the decline was quite challenging as well, with European crude steel production showing a 20% decline, and both North and South America declining nearly 10%. I won't bore you with much more data, but it's sufficient to say that while March numbers were weak, The initial manufacturing PMI readings indicate that April numbers are even weaker. That index was 36.1 in April, down from 48.5 in March. As you know, a PMI index below 50 indicates contracting business conditions. And manufacturing slowed dramatically in a couple of key regions for our business. The Eurozone manufactured PMI declined from an already weak March level of 44.5 to 33.6 in April. Additionally, Brazil fell from 48.4 to 36 in April. So in summary, there are obviously some adverse circumstances that we and many other companies are having to manage around. The real question is what will happen in the coming weeks and how will those developments influence the back half of 2020 might look like. That visibility is admittedly quite limited at this time. And in this environment, it's frankly impossible to actually predict exactly what pricing demand will do. In uncertain times like these, I believe having a solid financial foundation and strong fundamentals are essential to withstand the disruption. That's why I'm so proud of the work our team has done over the last nine months to shore up the foundational elements of our business, to cut costs, and to transition to a more nimble company. Those challenges are going to serve us well, and I'm optimistic about our ability to successfully navigate the path ahead. I'll now turn the call over to Andy for some additional details on our financials.