Alpha Metallurgical Resources, Inc.

Good morning and welcome everyone to the Alpha Metallurgical Resources first quarter 2022 results conference call. My name is Tamia and I will be your moderator for today. All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. It is now my pleasure to pass the conference over to Emily O'Quinn. Please proceed.

Thank you Tamia 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 first quarter 2022 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 gap measures. Participating on the call today are Alpha's Chair and Chief Executive Officer, David Stetson, and President and Chief Financial Officer, Andy Edson. Also participating on the call are Jason Whitehead, our Chief Operating Officer, and Dan Horn, our Chief Commercial Officer. With that, I'll turn the call over to David.

Thanks, Emily. Good morning, everyone, and thank you for joining us. As we announced in our press release this morning, we are pleased to report back-to-back record performance with adjusted EBITDA of $504 million in the first quarter. While market forces are undeniably central factors in our ability to post these kind of numbers, it also wouldn't be possible without the continued safe production of our team and the groundwork, planning, and execution of the last few years that have optimized our portfolio, and set us on a positive trajectory. This success has also transformed our balance sheet. Since June the 30th, 2021, in less than one year's time, Alpha has paid over $450 million on our term loan. This leaves us just under $100 million in term loan borrowings, and we intend to eliminate the remaining term loan balance in the second quarter. This progress is an addition through the early discharge and some legacy liabilities that we discussed in recent quarters. I have consistently communicated my belief in the importance of deleveraging. I've been transparent about our intention to take the debt down to zero. Some may find this approach unorthodox, and I understand why it likely would not be appropriate for many other businesses. However, I firmly believe it's the best for Alpha at this time due to the cyclical nature of our business and the increasingly scarce and expensive financing opportunities available to companies like ours. Having no debt allows for greater self-sufficiency, resilience, and flexibility to weather the inevitable challenges of market troughs. I'm excited for the day when we can announce that our debt has been paid off. But until then, I'm very pleased to share the significant progress we've made toward that end. Another top priority is to return value to our shareholders. In March, we announced a $150 million share repurchase program that would allow us to buy back our common stock in the open market. We have already actively engaged with approximately 40 million in purchases so far. As we forecast how the balance of the year may unfold, we believe there's great opportunity to continue this positive momentum on a much larger scale. Therefore, our board has increased the authorization to share buyback program, giving us the ability to purchase up to $600 million of our common stock. With the elimination of our debt within reach and with expected cash generation levels like we see in the first quarter, we are in a position to simultaneously achieve multiple goals with our free cash flow. Our board of directors has also instituted a dividend at an annualized rate of $1.50 per share, do you pay it on a quarterly basis with the first quarterly dividend payment of 37.5 cents per share being paid out on July the 1st to alpha stockholders of record as of June the 15th. Together, the share repurchase program and the dividend program establish a multi-faceted strategy for returning capital to alpha shareholders. It's great to have such positive news to share about Alpha's near-term accomplishments. However, as you've heard me consistently discuss on prior calls, I'm interested in the long-term strength and resilience of our company. Not only for the many customers across the world who depend on our products to build their societies, but also for the thousands of employees who make up our dedicated team, and of course, our investors. In March, I mentioned that the company's senior leadership was wrapping up a strategic planning exercise to chart Alpha's next 15 years. While we obviously have reserves extending well beyond this time horizon, a decade and a half is a period lengthy enough to require long range planning into development, permitting, and capital needs, yet still tangibly close enough to yield meaningful projections and actual information we can use in our current operational decision making. Given the size and scope of our portfolio, it was not a simple exercise, and it demanded a lot of the team, both in terms of the volume of data that was compiled and analyzed, but also in the invaluable discussions to help clarify the path ahead and what we want Alpha to look like over the next decade and a half. I want to thank Andy, Jason, Dan, and Roger and their entire teams for their work in producing a high-caliber final product that far exceeded my expectations. We recently presented a long-term plan to our board of directors, and I've asked Andy to provide some of the high-level takeaways on today's call before he covers the financial for the first quarter. With that, I'd like to hand the call over to Andy.

Thanks, David, and good morning, everyone. I want to start by echoing David's comments about what a team effort this truly was, and There's a long list of people who contributed to the work of refining our long-term strategic plan. A massive amount of data was analyzed and these details are proprietary. We dug down to mine specific information for the next 15 years related to coal rank, reserve life, geological challenges, market opportunities, and pricing projections. We obviously don't want to get into any kind of granular details on the call, but I do believe a quick look from 30,000 feet will provide some insight to illustrate where we see Alpha heading over the next decade and a half. With regard to anticipated production levels, we've always been proud of our high-performing portfolio of existing operations and strong, well-located reserve bases. We believe these assets should allow the company to maintain a consistent level of production, similar to Alpha's recent average production rates across the next 15 years without any need for inorganic growth. Not only does this structure serve as a solid foundation for our long-term operations planning, but it also offers longevity and consistency in our shipment volumes. Another takeaway from this planning process is that we expect the company's coal rank and quality to gradually improve while maintaining the flexibility and optionality provided by a diverse product mix. Aside from our excellent record of reliably delivering coal to our customers, part of what sets Alpha apart is our ability to provide a wide menu of products to meet very specific customer needs. As we said before, we don't just sell what we produce, we produce what the customer wants. This is a hallmark that we expect will continue as time goes on, but our analysis also shows the capacity to further refine the quality mix and increase the availability of our high-quality coking coals to our customers. The next highlight is one we've already previewed in recent quarters. We see strategic opportunities over the next decade and a half to build on existing customer bases and develop new relationships by expanding our sales and marketing efforts. This is especially true in regions where the highest growth in demand for Metco is expected to occur. India is one such location where we have longstanding and now expanding relationships. We're also very optimistic about the possibility for new shipments into Asia this year. While we are already actively cultivating relationships and markets, We hope to serve within the next decade. We plan to intensify these efforts in the coming years while remaining nimble and ready to respond as global macroeconomic circumstances shift. I'll wrap up with my personal opinion about ALPHA's prospects for the next 15 years as this exercise highlighted many opportunities we're eager to pursue. I firmly believe we're well positioned to continue as a leader in the global metallurgical coal space for many years to come. With our thermal exposure now dwindling to well under 10% of our total production, Alpha is the met coal franchise in the United States. Our employees are the best in the industry, and our leadership team is excited about what lies ahead for the company, our employees, our investors, and our many other stakeholders. Especially as we are nearing completion of our deleveraging efforts, I believe Alpha is poised to become an even stronger company with the ability to both succeed and be resilient in the near and long term. Turning now to our results for the quarter, Alpha posted our second record quarter in a row. First quarter adjusted EBITDA was $504 million, 60% more than our fourth quarter adjusted EBITDA of $316 million. Alpha sold 4 million tons in the first quarter, with 3.8 million tons of that coming from our MET segment, consistent with volumes in the prior period. Realizations on export tonnage continue to improve quarter over quarter, with an average of $278 per ton realized on export business for the first quarter, compared with $246 in the fourth quarter. Coal priced on Australian indices led our quarter realizations at $315, while tonnage linked to the Atlantic indices and other pricing mechanisms realized $247.59 per ton in the first quarter. For the met segment as a whole, we realized $254 per ton An increase of 41% over the prior quarter is $181 per ton. Realizations in the all-other category were down to $57.39 as compared to $62.66 in the prior quarter due to a contract reallocation from the thermal byproduct section of the MET segment to the all-other category. On the cost side, we continue to see higher royalties and severance taxes, which are a result of higher sales prices. Persistent inflationary pressure and increasing material costs have also played a role, all of which contributed to our decision to change the 2022 MET cost of coal sales guidance. For the first quarter, MET segment cost of coal sales increased $103.61 per ton. Due to the aforementioned reallocation of a small amount of contract tons in the all other category, cost of coal sales dropped to $49.89 in the first quarter. SG&A excluding non-cash stock comp and non-recurring items decreased from fourth quarter's elevated level of $18.1 million down to a more normalized $14 million in the first quarter of 2022. CapEx for Q1 was $28.1 million up from $22.9 million in the prior quarter. Turning to the balance sheet and cash flows, we ended the first quarter with $159.4 million in unrestricted cash and $34 million in unused availability on the ABL. for total liquidity of $193.4 million. Total liquidity is up 68% quarter over quarter, and the levels I just mentioned are net of our term loan payments within the quarter. Together with payments made subsequent to quarter close, we're now at a negative net debt level. Cash provided by operating activities of $336 million for the first quarter was more than triple the prior period level of $104 million. As of March 31, The ABL facility had $121 million of letters of credit outstanding and no borrowings. Our committed and priced business for 2022 continues to solidify with 53% of our MET tonnage in the MET segment committed and priced at the midpoint of guidance at an average price of $243.88. Another 40% of our 2022 MET tonnage at the midpoint is committed but not yet priced. The thermal byproduct portion of the MET segment is 96% committed and priced at an average price of just over $53. And we're now fully committed and priced for 22 in our all-other category and an average price of $57.70. As David mentioned earlier, we expect to eliminate the approximately $100 million of remaining term loan borrowings before the close of the second quarter. As a result, we're lowering our guidance expectations for cash interest expense from a range of $40 million to $45 million, down to a new range of $18 million to $22 million in 2022. The share repurchase program is also up and running, with $40.4 million spent as of May 4 to acquire approximately 302,000 shares of Alpha's common stock at a volume-weighted average price of approximately $134 per share. The programmatic approach we're utilizing for our share repurchases allows for opportunistic buying that helps to maximize the efficiency of the dollars being spent. I'll now turn the call over to Jason for some details on our operational performance. Thanks, Sandy, and good morning, everyone. I want to kick off my remarks by congratulating our teams on two more records achieved in the first quarter. With regard to safety, our operations had the lowest quarterly accident rates of any quarter in the company's history. We also completed our best ever Q1 in water quality compliance. For some additional context, from a water quality compliance perspective, the first quarter each year tends to be the most challenging of the four due to the weather and usual prevalence of snow and rain during the period. I think it speaks highly of our employees that they achieve new records in both of these critically significant areas of safety and environmental compliance. In addition to the internal accolades for this job well done, our workforce has recently been recognized by external organizations for their outstanding achievements in 2021. On the safety side, five alpha operations were awarded the prestigious Mountaineer Guardian Award, and 11 operations received West Virginia Home Safety Association Awards. Additionally, our Black Castle Mining Group earned top honors in West Virginia's DEP's Environmental Excellence Award for their reclamation work. It's important to recognize exceptional performance and celebrate when a new milestone is achieved, and I congratulate all the Alpha employees who made these well-deserved honors possible. But I also want to point out that building a record quarter or earning an annual award is only possible through the hard work and the daily commitment to focusing on our core values. I'm proud to say that I see that kind of dedication all across our operations. In recognition of the significant contributions of our employees and their continued daily work ethic, we've instituted an additional financial incentive bonus to thank our employees for all they do to fuel Alpha's success. Shifting gears to look at our operational update for the quarter, our minds are running well and our projects are advancing on schedule. The most immediate benchmark on the horizon is with our Glen Isle and Midvale mine that will feed into the Marfork preparation plant. Development production is on pace to beginning in the coming weeks as planned, and we expect the first production unit to take its initial cuts this summer. Progress also remains on track for other CapEx projects we announced late last year. As you might expect, we've encountered some challenges in connection with supply chain disruptions that are occurring across the world. While it hasn't been easy, our sourcing teams have worked hard to overcome these obstacles to keep Alfa running with the materials and supplies that we need. The global met coal markets remain strong, and as we've mentioned before, our cost of wholesale numbers have elevated. Higher royalties and severance taxes due to higher sales prices make up a large part of that increase, but inflationary pressure and increased labor costs are also contributing to the elevated levels. In budgeting exercises in late 2021, we established 2022 guidance based on several internal estimates, as well as the then current forward curve pricing estimate. However, as coal markets have carried more pricing strength than previously expected, and other geopolitical factors have further constrained an already tight supply, we have adjusted our expectations for the rest of 2022 accordingly. Today, we raised our met coal cost of sale guidance to a range of $101 to $107 per ton, as we believe this will appropriately account for the current market dynamics and updated projections about the rest of the year. I will now hand the call over to Dan for some additional information on the markets and our sales efforts.

Thanks, Jason, and good morning, everyone. As we've discussed in prior quarters, coal indices have maintained strength in the first several months of the year. Several macroeconomic factors influenced metallurgical coal markets in the first quarter, including pandemic-related labor and supply chain challenges that have persisted in many areas, alongside rising inflationary pressure. Supply tightness from prior quarters continued into the early months of 2022, and in late February, Russia's invasion of Ukraine created far-reaching global geopolitical implications. The war has also further constrained availability of metallurgical coal. The various sanctions imposed as a result of the conflict have had additional impacts on trade flows, market dynamics, and index pricing, which experienced significant volatility within the quarter. Low vol indices saw the biggest swings during the quarter, with the Australian premium low vol index jumping from $357 per metric ton on January 1 to $515 per metric ton on March 31st. and reached $518 per metric ton recently. The U.S. East Coast low vol indices started the quarter at $320 per metric ton and ended the quarter at $535 per metric ton and has recently settled back down to around $475 per ton. Finally, U.S. East Coast high vol A indices moved from $340 per metric ton at the start of the quarter up to $479 per metric ton at quarter close And it's now at a level of around $470 per metric ton. We believe alpha is well positioned to continue benefiting from this robust pricing environment as 53% of our metallurgical coal at the midpoint of guidance is committed and already priced with another 40% of our metallurgical coal that is committed for 2022, but not yet priced. In an environment with this much volatility, it is especially hard to know where things may be headed There are signs of slowing growth within some of the data that we follow. For example, the latest steel production statistics from the World Steel Association show a 5.8% drop in global crude steel production against the year-ago period of March 2020. North American production in March 2022 was down by 2.8% from a year ago, while the EU level dropped 8.5% year over year. However, two of Alpha's key markets, India and South America, stood out in positive contrast, with an uptick in crude steel production against their respective year-ago periods. Because of the volatility and change in trade flows, we are seeing solid demand for metallurgical coke in European and South American markets. Opportunities for Alpha's met coal have also opened up in Asia and the Far East, alongside our growing presence in India. All in all, we are still seeing robust demand for office export business, and closer to home, we continue to receive inquiries from domestic customers to investigate the possibility of incremental tonnage on top of their existing contracts. Before we open up the call for questions, I will briefly reiterate our prior comments around the transportation problems within the coal industry. While these issues are well known and have received an outsized amount of attention in recent weeks, Our position remains the same. We've encountered delays and challenging circumstances, and at times the issues have been more pronounced than others. We certainly will continue to look forward to a time when these issues are resolved, but in the meantime, our teams will keep navigating through these challenges in close cooperation with our transportation partners. That concludes our prepared remarks for this morning's call. Operator, we are now ready to open the call for questions.

Absolutely. We will now begin the Q&A session. The first question is from Nathan Martin with The Benchmark Company. Your line is now open.

Hey, good morning guys. Congrats on the quarter and thanks for taking my questions.

Thanks, Nick.

Great to see the progress made on the debt pay down, additional shareholder returns announced. I guess looking ahead, assuming the term loan is paid in full this quarter, as you guys are shooting for, how do you think about, as a management team and the board, capital allocation going forward from there? Is it the additional share buybacks you guys announced? Do you consider additional dividends, whether that's a special, et cetera? How do you balance your approach between those two? Thanks.

Well, I'll take a shot at it and let Andy provide his input. So right now, Nate, we are focused on, as we said, we're focused on reducing our debt, which is under $100 million. We just announced a $600 million share repurchase program that will be executed on as we continue to execute on the 150 we announced earlier. So from where our perspective is currently, that's where our focus is. We'll obviously be able to be back in front of the board at the end of the second quarter numbers and then obviously in November again to discuss with them where we stand from a financial perspective. Right now our focus is purely on getting our debt repaid and executing on the $600 million share repurchase program. Andy, did you want to add anything to that?

All I would say is good to talk to you, Nate. When you look around the options available to us and the discussions with the board, you know, at the current market levels where futures are currently sitting, you know, the valuation of the company feels a little bit off. And so it's hard to argue that there's any better investment right now than picking up our own shares. And as that develops in the coming quarters, we'll continue to have these conversations with the board. And, you know, if a pivot is called for, we can go that direction. But for right now, that was the board's decision. I think it makes a lot of sense.

Got it. Appreciate those thoughts, guys. And then, Andy, maybe I'll have you on the cost side. I know you and I spoke about this last go-around, the possibility that cost guidance could move up if the markets and prices remained elevated. Again, you mentioned the failed sensitive piece of world peace, the big driver behind the increase in guidance today. But you also called out, again, continued inflationary pressures. Any ways to parse out the two there, just trying to figure out how much of the increase could be and maybe sticky related to labor and inflationary pressures versus the cost-sensitive piece, assuming at some point that prices begin to retract.

Hey, Nate, this is Jason, and I'll try to fill that one. But I think you can basically break the bridge up into thirds, the bridge, if you will, between former guidance and current guidance. And the first third would be sales-related, royalties, severance taxes, The second third would be purchase calls that we're buying into our MET segment and then, you know, selling into the market. And then the last third would be divided between labor and consumables pricing on the supplies and repair side.

That's very helpful, Jason. I mean, I guess, is it reasonable to assume, guys, given the big step up in MET prices we've seen quarter to date, that we would likely see MET costs also up quarter to quarter?

That was a hard one to gauge. Again, we're so volume-driven. In a static environment, you might see a little bit more of a spike, but again, looking at the futures where they stand, we still feel pretty good that things will hold in the current range through the remnant of the year.

Okay, that's fair, Andy. And I guess, you know, maybe on the cadence of shipments, and Dan touched on this, you know, on the transportation side, how things have been getting a lot of attention, you know, the rails in front of the STB recently. You know, from a shipment perspective, as you look ahead the next three quarters, anything we should be thinking about from a cadence, from a cadence side, you know, trying to get towards, you know, your four-year guidance range?

Well, let me hit this at a really high level, Nate. We, like a lot of our colleagues in the industry, in the first quarter experienced some issues associated with our transportation partners. However, in our private and public comments from them, we realized that their issues were created primarily by a shortage of labor. This isn't unique to them. It's unique across the entire industries in America. As we listed their comments and what we've seen, we were hoping that as we move forward, services will improve as they bring on more employees to the system. But I'll let Dan, who has to deal with this on a daily basis, provide his commentary.

Hey, Nate. Yeah, you know, our team's done a really good job of managing through this. We've had some good weeks. We've had some bad weeks. But, you know, we definitely see some progress. The service levels from the growers is improving. Alpha has the advantage of shipping on both eastern rail carriers, and our team's done a good job of using that flexibility to keep getting shipments out on time to our customers. We're working through it, and we're optimistic it's going to continue to improve. Like I said, we're starting to get back to where we feel like we have reasonable shipping levels, as you can see from our Q1 numbers. Great.

Very helpful, Dan. And then maybe finally, just look at the CapEx side of things. I realize it's still pretty early in the year, but any early thoughts on what spending could look like next year? Obviously, we've got some project investments going on in 22. Do you guys expect or see any spending on growth next year at this point? And would you expect maintenance CapEx to kind of still remain around that $120 million level?

Yeah, Nate, you're putting me in the corner, man. It's only May. I'm barely making it through Q1 right now, so it's hard to look into 2023 just yet. I don't know that we can really have too much to comment on that. We do, obviously, we talked about the 15-year production plan. We do have projects in there that we're not quite ready to discuss with everyone just yet. We're still doing some work behind the scenes, so You know, there will be some capital phasing in over the next few years, but as far as specifics for when things are phasing in for 2023 or any guides there, probably a good bit too early to go too far with that.

No, I understand, Andy. Sorry to put you on the spot. I just said considering with a lot of the work you guys have just done, it was considered I'd check in. So very helpful, guys. I appreciate all the information, and thanks for the time. Thank you.

The next question comes from Lucas Pipes with Riley Securities. Please proceed.

Thank you so much and good morning everyone and congratulations to the entire team on just terrific work. I want to ask about the capital allocation plan as well. With the term loan eliminated before quarter end, as you noted in your prepared remarks, is there any reason to think why not all capital after that event is used for share buybacks, kind of quarter in, quarter out? I don't really see another need for capital outside of that, so I would appreciate your perspective on that. In short, shouldn't the pace of share buybacks accelerate pretty dramatically here post the term load elimination. Thank you.

Well, this is David, and I know Andy's anxious to talk with you about that as well, Lucas, but I'll stand by what I said originally. You know, we, and I made, in my comments, I used the word that the pace and the cadence of our share repurchase will accelerate as we move forward with the new $600 million share or the incremental $450 million increase in what the board has authorized. So we will increase that cadence as the year moves forward. But again, what we do is we check the boxes. Lucas, we check the box or we hope to check the box shortly on paying our debt off. As Andy said, we believe our shares are woefully undervalued. So therefore, we will pick the cadence up of buying our shares. And then as we proceed into our August and November board meetings, we'll go back to the board, give them an update on where we stand on the share repurchase program. We'll see where the world is and where our capital is at that point in time. And then we'll be able to provide the board some guidance and get their insights. Andy, did you want to respond to any more of that?

No, that's perfect.

Thank you, Dave. And a quick follow-up question on this. From a modeling perspective, is there a minimum cash and liquidity target that you have?

That's a great one for Andy. Andy, do you have that?

Yeah. I kind of felt that one was going to get passed off. Hey, Lucas. Yeah, we do have internally, and we bounce around a good bit. I mean, there are thoughts, again, on... We want to talk about $200 million. You want to talk about $300 million. We don't really have a number nailed down at this point. That's not really a pressing issue at the moment, the cash flow generation that we see coming in this particular market. But that is more of a long-term part of the 15-year plan that we've considered as we look at capital programs, as we look at potential downside scenarios for any kind of market reversion. And so while I don't really want to tag a number right now simply because we want to remain dynamic and conservative as we always are. We've talked historically in the past around a $200 million cash or liquidity kind of number, so we'll be in some neighborhood of that likely going forward, but again, don't want to stick a pin in a specific number at the moment.

That's helpful. Thank you for the color. And then on the strategic plan, so it's really great to hear that you're not just looking to generate all this cash here in the short term, but you've thought through the long term. And I wanted to maybe just try to peel the onion on this a bit. Should we think about 14, 15 million tons of met coal sustainable over that outlook period or kind of in higher markets at That range of output in a lower market maybe drops down to 12, 13 million tons. What's kind of the volume projection that you've come up with over this extended outlook period? Thank you for your perspective on that.

Well, I'll throw this over to Jason. But as we look at our plan, what Jason's been able to do in an operational perspective is to be able to, as we've talked before, the ability to flex in this company is tremendous. The ability to flex up when we see market demand, we've been able to flex down when we see the markets moving away from us. So that's what we've built into a system. We like what we've built. But Jason, I'll turn it over to you for your commentary on. Well, I think...

I think when you think about the 15-year plan, you need to think about it as kind of a static status quo, like you said, 14 to 15 million ton run rate. But as David alluded to, we do have the ability and under certain market conditions, we would really evaluate hard some of the higher cost coal operations. see if we can scale those back, and then try to flex on the lower-cost operations to spread out PIX costs more efficiently, if that makes sense.

So we shouldn't think of the $14 million to $15 million at the upper end?

Well, it's a number eternally as we look at it. Again, as you know, that's really a complex question, so we can't give you a simple answer to it. It's dependent on demand, it's dependent on the ability to transport, it's the ability of supply and other matters that go into play there. When we did our 15 year plan, just for purposes, we had visibility, like everybody else, we probably had visibility in the market for a short period of time, but this was a 15 year plan and the reason the 15 year plan was devised is that's about as far out, and some people argue that plans beyond next year are probably meaningless. But we did it out 15 years and we left it basically static at the 15 million level, only for that purpose. We have the ability to flex up or down as we proceed forward. We have the ability to bring on new mines if we see demand. If transportation allows the ability to move more coal, the markets are, it's a complex question, but for the purpose of our planning, we just left it fairly static 15 million range, again, with ability to flex up or down depending on multiple conditions.

Very helpful. And now I'm going to ask a half-serious question. I can't help myself. But did you use the $189 domestic pricing for 15 years or the $297 export pricing for the next 15 years? Got it.

Let me go back to the previous question.

It's also, as we looked at that 15 years, there's two components to that 15 million. We also look at increasing the quality of our coals throughout that period of time. We did a very, very sensitive proprietary view of where we were from quality of coals, too. So as we proceed through that 15 years, our Our coal qualities will be modified as well. And obviously, our pricing models are what they are. We do not share those. We obviously are very confident in our ability to perform the $15 million almost in any market. Go ahead, Andy.

No, no. And I think the high-level takeaway here is that, as Jason mentioned, we did look at this with a static model. picture of the world, including all the constraints that we're dealing with today from any perspective. We looked at it in varying price ranges, upside cases, downside cases. We were stress testing it. We're testing not only the ability to produce some outsized returns, but also the ability to be resilient through some challenging markets if and when those come back into play. But the big picture is that 15 years from now, we still have reserves. We don't need to acquire anything. to access those reserves, we're still the alpha 15 years from now that you see today producing the same high-quality coal servicing the high-growth markets and providing as much valuable as we possibly can to our investors and all of our stakeholders. And so, as David said, as we don't want to get into any details, the goal was really just to look and say, you know, some companies like to look at a 10-year plan. We were kind of asking the question, what happens in year 11? because reserves do deplete. And then you get to what happened in year 12, so we take it out to 15 just to give some degree of comfort that we have a very, very long-term proposition for this company.

And then I think Jason?

Well, no, just to add a little bit of color to what Andy said, you build a 15-year plan, I guess probably the first step is, is it or can it be permitted? So you have to have a plan for that, and there's a timeline. And as everyone knows, sometimes it takes several years to actually come to fruition. And after it's permitted, well, what's the geology look like? Is this going to be a challenging mine? Is it going to be a productive mine? Is it going to be a safe mine with respect to mining conditions? So all those things are under evaluation. What's the recovery look like? Can we process it? Can we get it through a plant? After we get it through a plant, can we get it to market either via rail car or barge? The plan has, I guess, a lot of details that we're not really speaking about, but what makes us feel good is that we know that we're able to be sustainable, able to be flexible as we are today throughout the next 15 years, and as I think David and Andy both mentioned, produce a higher quality product generally than what we are today.

Yeah, Lucas, just to follow up one more time on that point, this is part of the planning process that I'm so proud of the team on. We do this on a regular basis, but usually in a little shorter timeframe than the 15 years that we went out. Again, it started off to be seven years, and then they said, well, why don't we do 10? Then I heard, well, let's do 11. Then we finally cut it off at 15. The work that Jason's doing right now, let's take an example. Jason, a year and a half ago, came to us on various projects, and the Glen Allen mine that we've mentioned in previous calls, Jason gave you an update on it. It's a mid-vault property. It's a solid mid-vault property that I believe, Jason, you should be bringing it into production this summer, but you Getting very close to that, correct, Jason?

That's correct. As we mentioned in the remarks, it'll start in the coming weeks, and it'll be up to full production with its first unit this summer. And there will be more to come on new mines timely.

Very helpful. Really appreciate this thorough discussion. One final question for now. I understand it right. There's a Russell rebalancing approaching next month. Do you have a view on whether you might be a candidate to be added to the index?

Yeah, Lucas, it's Andy. You know, we won't know until we know, but it looks like on the various metrics that are considered for inclusion, it seems like we check all of those boxes as far as I can tell. So I don't know how that will turn out, but it feels like... We should, if we're not.

Okay. I need to bite my tongue because I'm tempted to make another half-serious comment, that is don't buy back too many shares before then. But again, I'm just amazed how you've done a terrific job, and I want to congratulate the entire team. Thank you very much for your time.

Thank you. There are no questions waiting at this time, so I will now pass the conference back to David Stetson.

Thank you. Let me close my remarks by thanking our shareholders for the faith and confidence they've had in Alpha and our entire team. We are united at Alpha in vision, in purpose, in focus. We are a safety-first company with one of the best operating teams in the industry. I want to thank everyone again for your interest in Alpha and for joining the call this morning. Have a great rest of your day. Thank you so much.

This concludes the Alpha Metallurgical Resources first quarter 2022 results conference call. Thank you for your participation. You may now disconnect your lines.