Alpha Metallurgical Resources, Inc.

Good morning and welcome to the Contura Energy third quarter 2020 earnings call. All participants will be in 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 touchtone phone. To withdraw your question, please press star, then two. Please note that this event is being recorded. I would now like to turn the conference over to Emily O'Quinn, SVP Corporate Communications. Please go ahead.

Thanks, Eileen, and good morning, everyone. Before we get started, 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 third 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 Stutman 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.

Thanks, Emily. Good morning, everyone on the call, and thank you for joining us today. What an interesting and challenging year 2020 has given us. Just in the last few months, we've seen MET prices dip to $105, spring back to $126, and just recently settled around $114. We've managed through the pain and hardship of the virus, assuring our teams have been well protected as possible while still operating our business, dealing with economic implications and uncertainties in the domestic and international markets that we serve, and preserving our capital to strengthen our long-term sustainability. When we announced our first quarter operating results earlier this year, they were simultaneously praised and questioned as to whether our costs could be sustained at those levels. Then we reported our second quarter results reflecting lower cost. But again, I heard that we had to prove our ability to sustain our cost performance in order to be considered one of the lowest cost producers in the metallurgical space. Well, as everyone has read this morning, I'm pleased to announce that we have another solid quarter to report on today. The Contura team continues to do a great job of being vigilant and flexible so we can adapt as necessary. And I've said before, We choose to closely manage the business based on factors we can control, and this mindset has resulted in another solid quarter for Contura. Before I get into the details of the third quarter and our specific results, I want to briefly comment on last week's presidential election. Like the majority of the business community, we pay attention to politics. We seek to understand how election results may influence or impact our business, but our goal and the way we manage our business is for our company to be successful, regardless who sits in the White House or which party controls Congress. I don't say this to diminish the importance of elections in any way, because they are critically important to our democracy. We regularly engage in dialogue with elected officials at all levels to help inform them as to the importance of our products in manufacturing and the underpinning that they provide to a strong economy. However, election outcomes will never change the core principles that anchor our daily operations. Safety, responsibility, environmental stewardship, and continuous improvement will continue to drive our actions each and every day. And we remain committed to those important aspects of who we are and how we operate. Turning now to our quarterly results, which include adjusted EBITDA of $20 million per quarter and the best cost performance on record for Central App Net since the start of the economy over four years ago. Amy provided a more robust overview of the numbers after I finished my remarks, but I have to congratulate Jason and his team on repeatedly exceeding expectations and at just 66.49 a time for the quarter, managing to beat our prior record-setting net cost performance. Importantly, all this progress has occurred while keeping safety at the forefront at all times. I simply can't say enough about the job they've done this year. I'll briefly comment on our 21 guidance and let Andy go into more detail. We are pleased with our committed MET only position in the Central App MET segment with 34% of the anticipated midpoint of our shipments locked in for next year. The average price for committed tons for the MET only portion of the segment is just over $86 a ton. We expect to continue our strong cost performance with Central App costs per ton anticipating the range of $68 to $74. As for 21 CapEx, we expect to come in significantly lower than our spend in 2020 at a range of $80 to $100 million. We project SG&A for next year to be in the $45 to $50 million range, which is slightly better than our 2020 expectations. In addition to closely managing our costs, we've been operating with a strong focus on cash preservation, not only to help us weather the effects of the pandemic, but also help us navigate softness and recent volatility in the pricing of our products. As we predicted on our last call, the back half of 2020 has so far proven challenging, albeit with sporadic signs of optimism. We continue to believe we're doing what we can to manage through these challenges, and the guidance we're issuing today reflects our thinking about what 2021 will hold. I reiterate our prior statements from the second quarter call with regard to the long-term big picture strategy for Consuro. We are accelerating our strategic exit from thermal coal mining, and we've made great strides in executing our strategic vision to become a pure-play metallurgical coal company, providing critical feedstock for the steel production. As we discussed in prior quarters, our portfolio optimization efforts include bringing on some new met properties that are currently in development or being prepared to run in the future, while de-emphasizing or removing from our portfolio other mines that are mining out, uneconomic, or no longer offering synergistic value in terms of coal qualities, market demand, or cost structure. Whenever there is a property that is idled or mined out, We look for opportunities to realign our coal processing workflows into fewer plants and to redeploy mine equipment to other locations in the company. These efforts allow us to tighten our cost structures and make the best use of existing capital in the organization. We regularly evaluate our portfolio and have been planning for the best utilization of our newer, high-quality mines. We continue to be on track, or in some cases, even exceeding our expectations in that regard. For example, Black Eagle is nearly finished with the corridor to the main reserve body, where we anticipate multi-section production next year. We have accelerated our third section at Road 452, with Section 3 now expected in early December instead of first quarter of 21. Lastly, the surface infrastructure installation is almost complete for our Lynn Branch underground mine, with intake and return shafts in place. belts installed, and the finishing touches being put on the track tunnel. We remain excited about these properties and will keep you updated on their progress. Like our peers, Contura has closely watched the market landscape and the ebbs and flows of recent weeks. Pricing was soft throughout the better part of the quarter, then increased significantly before dropping meaningfully again in the recent weeks. Within the quarter, we received communication from customers either lifting or ceasing their force majeure notices. And we also negotiate agreements with certain customers to defer anticipated shortfall volumes from 2020 into 2021. We have largely seen limited impact of these circumstances to our metallurgical coal cell volume and production for the third quarter. Before I wrap up my prepared remarks, I want to congratulate our environmental and safety teams on another strong quarter of performance. Our environmental teams continue their near-perfect water quality compliance rate and a significant reduction in violations against the rolling three-year average. Our safety teams end the quarter with all metrics favorable to national average. Additionally, two of our Virginia subsidiaries were recently presented with the safety awards from the State Department of Mines, Minerals, and Energy for reaching milestones of work hours without lost-time accidents. Those are operations of McClure Prep Plant, Long Branch Surface and Long Branch High Wall. Congratulations to each member of these teams, and we look forward to your continued success. I will now turn the call over to Andy for some additional details on our financials.