10-Q 1 amr-20220331.htm 10-Q amr-20220331
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2022

OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from           to

Commission File Number 001-38735
amr-20220331_g1.jpg
ALPHA METALLURGICAL RESOURCES, INC.
(Exact name of registrant as specified in its charter)
Delaware81-3015061
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification Number)
340 Martin Luther King Jr. Blvd.
Bristol, Tennessee 37620
(Address of principal executive offices, zip code)
(423) 573-0300
(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. x Yes   ¨ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (Sec.232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). x Yes   ¨ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer
Non-accelerated filerSmaller reporting company
Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes   x No

Securities registered pursuant to Section 12(b) of the Act:



Title of each classTrading Symbol(s)Name of each exchange on which registered
Common StockAMRNew York Stock Exchange

Number of shares of the registrant’s Common Stock, $0.01 par value, outstanding as of April 30, 2022: 18,712,644






TABLE OF CONTENTS
3

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This report includes statements of our expectations, intentions, plans and beliefs that constitute “forward-looking statements.” These statements, which involve risks and uncertainties, relate to analyses and other information that are based on forecasts of future results and estimates of amounts not yet determinable and may also relate to our future prospects, developments and business strategies. We have used the words “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “predict,” “project,” “should” and similar terms and phrases, including references to assumptions, in this report to identify forward-looking statements, but these terms and phrases are not the exclusive means of identifying such statements. These forward-looking statements are made based on expectations and beliefs concerning future events affecting us and are subject to uncertainties and factors relating to our operations and business environment, all of which are difficult to predict and many of which are beyond our control, that could cause our actual results to differ materially from those expressed in or implied by these forward-looking statements.

The following factors are among those that may cause actual results to differ materially from our forward-looking statements:

the financial performance of the company;
our liquidity, results of operations and financial condition;
our ability to generate sufficient cash or obtain financing to fund our business operations;
our indebtedness and potential future indebtedness;
depressed levels or declines in coal prices;
the effects of the COVID-19 pandemic on our operations and the world economy;
changes in domestic or international environmental laws and regulations, and court decisions, including those directly affecting our coal mining and production, and those affecting our customers’ coal usage, including potential climate change initiatives;
worldwide market demand for coal, steel, and electricity, including demand for U.S. coal exports, and competition in coal markets;
our ability to consummate financing or refinancing transactions, and other services, and the form and degree of these services available to us, which may be significantly limited by the lending, investment and similar policies of financial institutions and insurance companies regarding carbon energy producers and the environmental impacts of coal combustion;
our ability to obtain or renew surety bonds on acceptable terms or maintain our current bonding status;
our ability to meet collateral requirements;
the imposition or continuation of barriers to trade, such as tariffs;
increased market volatility and uncertainty on worldwide markets and our customers as a result of developments in Ukraine and the consequent export controls and financial and economic sanctions;
reductions or increases in customer coal inventories and the timing of those changes;
our production capabilities and costs;
disruptions in delivery or changes in pricing from third-party vendors of key equipment and materials that are necessary for our operations, such as diesel fuel, steel products, explosives, tires and purchased coal;
inflationary pressures on supplies and labor and significant or rapid increases in commodity prices;
railroad, barge, truck and other transportation availability, performance and costs;
inherent risks of coal mining, including those that are beyond our control;
changes in the ownership of our equity, which may significantly further reduce the annual amount of the net operating loss and other carryforwards available to be utilized;
changes in, interpretations of, or implementations of domestic or international tax or other laws and regulations, including the Tax Cuts and Jobs Act and its related regulations;
our ability to self-insure certain of our black lung obligations without a significant increase in required collateral;
our relationships with, and other conditions affecting, our customers, including the inability to collect payments from our customers if their creditworthiness declines;
changes in, renewal or acquisition of, terms of and performance of customers under coal supply arrangements and the refusal by our customers to receive coal under agreed-upon contract terms;
our ability to obtain, maintain or renew any necessary permits or rights, and our ability to mine properties due to defects in title on leasehold interests;
attracting and retaining key personnel and other employee workforce factors, such as labor relations;
funding for and changes in employee benefit obligations;
cybersecurity attacks or failures, threats to physical security, extreme weather conditions or other natural disasters;
reclamation and mine closure obligations;
4

utilities switching to alternative energy sources such as natural gas, renewables and coal from basins where we do not operate;
our assumptions concerning economically recoverable coal reserve estimates;
failures in performance, or non-performance, of services by third-party contractors, including contract mining and reclamation contractors;
disruption in third-party coal supplies; and
other factors, including the other factors discussed in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors” sections included elsewhere in this Quarterly Report on Form 10-Q and the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors” sections contained in our Annual Report on Form 10-K for the year ended December 31, 2021.

The factors identified above are not exhaustive. We caution readers not to place undue reliance on any forward-looking statements, which are based on information currently available to us and speak only as of the dates on which they are made. When considering these forward-looking statements, you should keep in mind the cautionary statements in this report. We do not undertake any responsibility to publicly revise these forward-looking statements to take into account events or circumstances that occur after the date of this report. Additionally, except as expressly required by federal securities laws, we do not undertake any responsibility to update you on the occurrence of any unanticipated events, which may cause actual results to differ from those expressed or implied by the forward-looking statements contained in this report.

5

Part I - Financial Information

Item 1. Financial Statements

ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(Amounts in thousands, except share and per share data)
Three Months Ended March 31,
 20222021
Revenues: 
Coal revenues$1,069,738 $385,452 
Other revenues2,226 801 
Total revenues1,071,964 386,253 
Costs and expenses:  
Cost of coal sales (exclusive of items shown separately below)555,317 347,428 
Depreciation, depletion and amortization28,035 28,438 
Accretion on asset retirement obligations5,954 6,648 
Amortization of acquired intangibles, net5,748 3,869 
Asset impairment and restructuring (561)
Selling, general and administrative expenses (exclusive of depreciation, depletion and amortization shown separately above)15,086 14,982 
Total other operating loss (income):
Mark-to-market adjustment for acquisition-related obligations9,361 3,176 
Other income(628)(1,225)
Total costs and expenses618,873 402,755 
Income (loss) from operations453,091 (16,502)
Other (expense) income:  
Interest expense(13,083)(17,990)
Interest income184 164 
Equity loss in affiliates(1,361)(134)
Miscellaneous income, net1,797 1,766 
Total other expense, net(12,463)(16,194)
Income (loss) from continuing operations before income taxes440,628 (32,696)
Income tax (expense) benefit(39,624)5 
Net income (loss) from continuing operations401,004 (32,691)
Discontinued operations:
Loss from discontinued operations before income taxes(146)(237)
Income tax benefit from discontinued operations33  
Loss from discontinued operations(113)(237)
Net income (loss)$400,891 $(32,928)
Basic income (loss) per common share:
Income (loss) from continuing operations$21.59 $(1.78)
Loss from discontinued operations(0.01)(0.01)
Net income (loss)$21.58 $(1.79)
Diluted income (loss) per common share:
Income (loss) from continuing operations$20.52 $(1.78)
6

Loss from discontinued operations (0.01)
Net income (loss)$20.52 $(1.79)
Weighted average shares – basic
18,574,026 18,361,444 
Weighted average shares – diluted
19,540,642 18,361,444 

Refer to accompanying Notes to Condensed Consolidated Financial Statements.
7

ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Unaudited)
(Amounts in thousands)
Three Months Ended March 31,
20222021
Net income (loss)$400,891 $(32,928)
Other comprehensive income, net of tax:
Employee benefit plans:
Amortization of and adjustments to employee benefit costs$775 $1,484 
Income tax expense  
Total other comprehensive income, net of tax$775 $1,484 
Total comprehensive income (loss)$401,666 $(31,444)
Refer to accompanying Notes to Condensed Consolidated Financial Statements.

8

ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
(Amounts in thousands, except share and per share data)
March 31, 2022December 31, 2021
Assets  
Current assets:  
Cash and cash equivalents$159,455 $81,211 
Trade accounts receivable, net of allowance for doubtful accounts of $519 and $393 as of March 31, 2022 and December 31, 2021, respectively
636,152 489,241 
Inventories, net161,753 129,382 
Prepaid expenses and other current assets57,144 47,690 
Current assets - discontinued operations69 462 
Total current assets1,014,573 747,986 
Property, plant, and equipment, net of accumulated depreciation and amortization of $462,920 and $443,856 as of March 31, 2022 and December 31, 2021, respectively
369,449 362,218 
Owned and leased mineral rights, net of accumulated depletion and amortization of $59,894 and $52,444 as of March 31, 2022 and December 31, 2021, respectively
436,852 444,302 
Other acquired intangibles, net of accumulated amortization of $39,968 and $34,221 as of March 31, 2022 and December 31, 2021, respectively
68,450 74,197 
Long-term restricted cash118,476 89,426 
Other non-current assets96,673 131,057 
Non-current assets - discontinued operations8,526 8,526 
Total assets$2,112,999 $1,857,712 
Liabilities and Stockholders’ Equity  
Current liabilities:  
Current portion of long-term debt$2,434 $2,989 
Trade accounts payable109,413 90,090 
Acquisition-related obligations – current
21,281 22,405 
Accrued expenses and other current liabilities223,222 174,607 
Current liabilities - discontinued operations4,576 5,838 
Total current liabilities360,926 295,929 
Long-term debt248,936 445,562 
Acquisition-related obligations - long-term28,199 19,000 
Workers’ compensation and black lung obligations204,470 208,193 
Pension obligations155,895 159,930 
Asset retirement obligations133,719 132,013 
Deferred income taxes4,993 317 
Other non-current liabilities22,624 26,176 
Non-current liabilities - discontinued operations23,390 23,683 
Total liabilities1,183,152 1,310,803 
Commitments and Contingencies (Note 15)
Stockholders’ Equity
Preferred stock - par value $0.01, 5.0 million shares authorized, none issued
  
Common stock - par value $0.01, 50.0 million shares authorized, 21.0 million issued and 18.5 million outstanding at March 31, 2022 and 20.8 million issued and 18.4 million outstanding at December 31, 2021
210 208 
Additional paid-in capital788,281 784,743 
Accumulated other comprehensive loss(57,728)(58,503)
Treasury stock, at cost: 2.5 million shares at March 31, 2022 and 2.4 million shares at December 31, 2021
(130,068)(107,800)
9

Retained earnings (accumulated deficit)329,152 (71,739)
Total stockholders’ equity929,847 546,909 
Total liabilities and stockholders’ equity$2,112,999 $1,857,712 

Refer to accompanying Notes to Condensed Consolidated Financial Statements.
10

ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(Amounts in thousands)
Three Months Ended March 31,
20222021
Operating activities:
Net income (loss)$400,891 $(32,928)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation, depletion and amortization28,035 28,438 
Amortization of acquired intangibles, net5,748 3,869 
Accretion of acquisition-related obligations discount109 371 
Amortization of debt issuance costs and accretion of debt discount3,679 3,316 
Mark-to-market adjustment for acquisition-related obligations9,361 3,176 
Gain on disposal of assets(636)(1,258)
Asset impairment and restructuring (561)
Accretion on asset retirement obligations5,954 6,648 
Employee benefit plans, net(174)2,147 
Deferred income taxes4,676 (6)
Stock-based compensation1,182 2,183 
Equity loss in affiliates1,361 134 
Other, net135 826 
Changes in operating assets and liabilities(124,196)(35,470)
Net cash provided by (used in) operating activities336,125 (19,115)
Investing activities:
Capital expenditures(28,146)(20,395)
Proceeds on disposal of assets917 2,652 
Purchases of investment securities(50)(12,959)
Maturity of investment securities28,438 1,376 
Capital contributions to equity affiliates(3,468)(441)
Other, net(1,243)18 
Net cash used in investing activities(3,552)(29,749)
Financing activities:
Principal repayments of long-term debt(200,461)(5,223)
Principal repayments of financing lease obligations(543)(501)
Common stock repurchases and related expenses(21,844)(680)
Proceeds from exercise of stock options891  
Proceeds from exercise of warrants2,257  
Net cash used in financing activities(219,700)(6,404)
Net increase (decrease) in cash and cash equivalents and restricted cash112,873 (55,268)
Cash and cash equivalents and restricted cash at beginning of period182,614 244,571 
Cash and cash equivalents and restricted cash at end of period$295,487 $189,303 
The following table provides a reconciliation of cash and cash equivalents and restricted cash reported within the Condensed Consolidated Balance Sheets that sum to the total of the same such amounts shown in the Condensed Consolidated Statements of Cash Flows.
11

As of March 31,
 20222021
Cash and cash equivalents$159,455 $92,236 
Short-term restricted cash (included in prepaid expenses and other current assets)17,556 11,427 
Long-term restricted cash118,476 85,640 
Total cash and cash equivalents and restricted cash shown in the Condensed Consolidated Statements of Cash Flows$295,487 $189,303 

Refer to accompanying Notes to Condensed Consolidated Financial Statements.

12

ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Unaudited)
(Amounts in thousands)
Common StockAdditional Paid-in CapitalAccumulated Other Comprehensive LossTreasury Stock at Cost(Accumulated Deficit) Retained EarningsTotal Stockholders’ Equity
Balances, December 31, 2020$206 $779,424 $(111,985)$(107,014)$(360,529)$200,102 
Net loss— — — — (32,928)(32,928)
Other comprehensive income, net— — 1,484 — — 1,484 
Stock-based compensation and issuance of common stock for share vesting1 2,182 — — — 2,183 
Common stock repurchases and related expenses— — — (680)— (680)
Balances, March 31, 2021$207 $781,606 $(110,501)$(107,694)$(393,457)$170,161 
Balances, December 31, 2021$208 $784,743 $(58,503)$(107,800)$(71,739)$546,909 
Net income— — — — 400,891 400,891 
Other comprehensive income, net— — 775 — — 775 
Stock-based compensation, issuance of common stock for share vesting, and common stock reissuances1 (391)— 1,572 — 1,182 
Exercise of stock options— 891 — — — 891 
Warrants exercises1 3,038 — — — 3,039 
Common stock repurchases and related expenses— — — (23,840)— (23,840)
Balances, March 31, 2022$210 $788,281 $(57,728)$(130,068)$329,152 $929,847 
Refer to accompanying Notes to Condensed Consolidated Financial Statements.
13

ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited, amounts in thousands except share and per share data)

(1) Business and Basis of Presentation
Business

Alpha Metallurgical Resources, Inc. (“Alpha” or the “Company”) is a Tennessee-based mining company with operations across Virginia and West Virginia. With customers across the globe, high-quality reserves and significant port capacity, Alpha is a leading U.S. supplier of metallurgical products for the steel industry.

Basis of Presentation

Together, the condensed consolidated statements of operations, comprehensive income (loss), balance sheets, cash flows and stockholders’ equity for the Company are referred to as the “Condensed Consolidated Financial Statements.” The Condensed Consolidated Financial Statements are also referenced across periods as “Condensed Consolidated Statements of Operations,” “Condensed Consolidated Statements of Comprehensive Income (Loss),” “Condensed Consolidated Balance Sheets,” “Condensed Consolidated Statements of Cash Flows,” and “Condensed Consolidated Statements of Stockholders’ Equity.” The Company’s former Northern Appalachia (“NAPP”) operations results of operations and financial position are reported as discontinued operations in the Condensed Consolidated Financial Statements. Refer to Note 2 for further information on discontinued operations.
The Condensed Consolidated Financial Statements include all wholly-owned subsidiaries’ results of operations for the three months ended March 31, 2022 and 2021. All significant intercompany transactions have been eliminated in consolidation.

The accompanying interim Condensed Consolidated Financial Statements are unaudited and have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) and in accordance with the rules and regulations of the United States Securities and Exchange Commission (“SEC”) for Form 10-Q. Such rules and regulations allow the omission of certain information and footnote disclosures normally included in the financial statements prepared in accordance with U.S. GAAP as long as the financial statements are not misleading. In the opinion of management, these interim Condensed Consolidated Financial Statements reflect all normal and recurring adjustments necessary for a fair presentation of the results for the periods presented. Results of operations for the three months ended March 31, 2022 are not necessarily indicative of the results to be expected for the year ending December 31, 2022 or any other period. These interim Condensed Consolidated Financial Statements should be read in conjunction with the Company’s Consolidated Financial Statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.
Reclassifications

Certain amounts in the prior year Condensed Consolidated Statements of Cash Flows have been reclassified to conform to the current year presentation.
COVID-19 Pandemic

In the first quarter of 2020, the COVID-19 virus was declared a pandemic by the World Health Organization. The COVID-19 pandemic has had negative impacts on the Company’s business, results of operations, financial condition and cash flows. The Company experienced an increase in employee absences due to COVID-19. Indirectly, through some of the Company’s third-party vendors, the Company and the Company’s customers have experienced some supply chain disruptions due to the COVID-19 pandemic. The full extent of the impact of the COVID-19 pandemic on the Company’s operational and financial performance will depend on certain developments, including the duration of the virus, its impact on the Company’s customers and suppliers, and the range of governmental and community reactions to the pandemic, which cannot be fully predicted. Health and safety are core values of the Company and are the foundation for how the Company manages every aspect of its business. The Company continues to monitor developments closely and adjust as necessary, including with respect to the Company’s implemented policies, procedures, and prevention measures to protect the safety and health of its employees.

Recently Adopted Accounting Guidance

Financial Instruments: In March 2022, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2022-02, Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings and
14

ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited, amounts in thousands except share and per share data)
Vintage Disclosures (“ASU 2022-02”). This update eliminates the troubled debt restructuring model for creditors that have adopted Topic 326. All loan modifications will now be accounted for under general loan modification guidance and, on a prospective basis, entities will be subject to new disclosure requirements covering modifications of receivables to borrowers experiencing financial difficulty. In addition, entities will be required to prospectively disclose current-period gross write-off information by year of origination. The amendments are effective for fiscal years beginning after December 15, 2022, with early application permitted. The Company adopted ASU 2022-02 during the first quarter of 2022. The adoption of this ASU did not have a material impact on the Company’s Condensed Consolidated Financial Statements and related disclosures.

(2) Discontinued Operations

Discontinued operations consist of activity related to the Company’s former NAPP operations.

Major Financial Statement Components of Discontinued Operations

The loss from discontinued operations before income taxes for the three months ended March 31, 2022 and 2021 was $146 and $237, respectively. Refer to the Condensed Consolidated Statements of Operations and Note 5 for loss per share information related to discontinued operations.

The major components of assets and liabilities that are classified as discontinued operations in the Condensed Consolidated Balance Sheets are as follows:

March 31, 2022December 31, 2021
Assets:
Prepaid expenses and other current assets$69 $462 
Other non-current assets (1)
$8,526 $8,526 
Liabilities:
Trade accounts payable, accrued expenses and other current liabilities$4,576 $5,838 
Workers’ compensation and black lung obligations, non-current$23,390 $23,683 
(1) Comprised of workers’ compensation insurance receivable and long-term restricted investments collateralizing workers’ compensation obligations.

(3) Revenue

Disaggregation of Revenue from Contracts with Customers

The Company earns revenues primarily through the sale of coal produced at Company operations and coal purchased from third parties. The Company extracts, processes and markets met and thermal coal from deep and surface mines for sale to steel and coke producers, industrial customers, and electric utilities.

The Company has disaggregated revenue between met coal and thermal coal and export and domestic revenues which depicts the pricing and contract differences between the two. Export revenue generally is derived by spot or short term contracts with pricing determined at the time of shipment or based on a market index; whereas domestic revenue is characterized by contracts that typically have a term of one year or longer and typically the pricing is fixed. The following tables disaggregate the Company’s coal revenues by product category and by market to depict how the nature, amount, timing, and uncertainty of the Company’s coal revenues and cash flows are affected by economic factors:
Three Months Ended March 31, 2022
Met CoalThermal CoalTotal
Export coal revenues$888,006 $6,519 $894,525 
Domestic coal revenues159,987 15,226 175,213 
Total coal revenues$1,047,993 $21,745 $1,069,738 

15

ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited, amounts in thousands except share and per share data)
Three Months Ended March 31, 2021
Met CoalThermal CoalTotal
Export coal revenues$242,752 $1,031 $243,783 
Domestic coal revenues100,242 41,427 141,669 
Total coal revenues$342,994 $42,458 $385,452 

Performance Obligations

The following table includes estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied as of March 31, 2022:
Remainder of 20222023202420252026Total
Estimated coal revenues$41,980 $32,919 $37,250 $ $ $112,149 

(4) Accumulated Other Comprehensive Loss
The following tables summarize the changes to accumulated other comprehensive loss during the three months ended March 31, 2022 and 2021:
Balance January 1, 2022
Other comprehensive income (loss) before reclassifications
Amounts reclassified from accumulated other comprehensive loss
Balance March 31, 2022
Employee benefit costs$(58,503)$ $775 $(57,728)

Balance January 1, 2021
Other comprehensive income (loss) before reclassifications
Amounts reclassified from accumulated other comprehensive loss
Balance March 31, 2021
Employee benefit costs$(111,985)$ $1,484 $(110,501)

The following table summarizes the amounts reclassified from accumulated other comprehensive loss and the Condensed Consolidated Statements of Operations line items affected by the reclassification during the three months ended March 31, 2022 and 2021:
Details about accumulated other comprehensive loss componentsAmounts reclassified from accumulated other comprehensive lossAffected line item in the Condensed Consolidated Statements of Operations
Three Months Ended March 31,
20222021
Employee benefit costs:
Amortization of net actuarial loss (1)
$784 $1,484 Miscellaneous income, net
Settlement (1)
(9) Miscellaneous income, net
Total before income tax$775 $1,484 
Income tax  Income tax (expense) benefit
Total, net of income tax$775 $1,484 
(1) These accumulated other comprehensive loss components are included in the computation of net periodic benefit costs for certain employee benefit plans. Refer to Note 13.

16

ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited, amounts in thousands except share and per share data)
(5) Net Income (Loss) Per Share
The number of shares used to calculate basic net income (loss) per common share is based on the weighted average number of the Company’s outstanding common shares during the respective period. The number of shares used to calculate diluted net income (loss) per common share is based on the number of common shares used to calculate basic net income (loss) per common share plus the dilutive effect of stock options and other stock-based instruments held by the Company’s employees and directors during the period, and the Company’s outstanding Series A warrants. The dilutive effect of outstanding stock-based instruments is determined by application of the treasury stock method. The warrants become dilutive for diluted net income (loss) per common share calculations when the market price of the Company’s common stock exceeds the exercise price. As discussed below, dilutive securities are not included in the computation of diluted net loss per common share for the three months ended March 31, 2021 as the impact would be anti-dilutive.

For the three months ended March 31, 2022 and 2021, 0 and 954,248 warrants, stock options, and other stock-based instruments, respectively, were excluded from the computation of dilutive net income (loss) per common share because they would have been anti-dilutive. When applying the treasury stock method, anti-dilution generally occurs when the exercise prices or unrecognized compensation cost per share are higher than the Company’s average stock price during an applicable period.

Anti-dilution also occurs in periods of a net loss, and the dilutive impact of all share-based compensation awards are excluded. For the three months ended March 31, 2021 the weighted average share impact of stock options and other stock-based instruments that were excluded from the calculation of diluted shares due to the Company incurring a net loss for the period was 323,236.

The following table presents the net income (loss) per common share for the three months ended March 31, 2022 and 2021:

17

ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited, amounts in thousands except share and per share data)
Three Months Ended March 31,
20222021
Net income (loss)
Income (loss) from continuing operations$401,004 $(32,691)
Loss from discontinued operations(113)(237)
Net income (loss)$400,891 $(32,928)
Basic
Weighted average common shares outstanding - basic18,574,026 18,361,444 
Basic income (loss) per common share:
Income (loss) from continuing operations$21.59 $(1.78)
Loss from discontinued operations(0.01)(0.01)
Net income (loss)$21.58 $(1.79)
Diluted
Weighted average common shares outstanding - basic18,574,026 18,361,444 
Diluted effect of warrants443,273  
Diluted effect of stock options7,119  
Diluted effect of other stock-based instruments516,224  
Weighted average common shares outstanding - diluted19,540,642 18,361,444 
Diluted income (loss) per common share:
Income (loss) from continuing operations$20.52 $(1.78)
Loss from discontinued operations (0.01)
Net income (loss)$20.52 $(1.79)

(6) Inventories, net
Inventories, net consisted of the following: 
 March 31, 2022December 31, 2021
Raw coal$29,637 $20,347 
Saleable coal99,040 81,240 
Materials, supplies and other, net
33,076 27,795 
Total inventories, net$161,753 $129,382 

18

ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited, amounts in thousands except share and per share data)
(7) Capital Stock

Share Repurchase Program

On March 4, 2022, the Company’s board of directors adopted a share repurchase program that permits the Company to repurchase up to an aggregate amount of $150,000 of the Company's common stock. Share repurchases may be made from time to time through open market transactions, block trades, tender offers, or otherwise, and has no expiration date. The share repurchase program does not obligate the Company to acquire any particular amount of common stock or to acquire shares on any particular timetable, and the program may be suspended at any time at the Company’s discretion. Repurchases under the program are subject to market and business conditions, levels of available liquidity, the Company’s cash needs, restrictions under agreements or obligations, legal or regulatory requirements or restrictions and other relevant factors. As of March 31, 2022, the Company had repurchased an aggregate of 133,501 shares under the plan for an aggregate purchase price of approximately $16,547 (comprised of $16,543 of share repurchases and $4 of related fees).

Refer to Note 17 for subsequent event disclosures related to the Company’s share repurchase program.

Warrants

On July 26, 2016, the Company issued 810,811 warrants, which are classified as equity instruments. Pursuant to the underlying warrants agreement, the warrants are exercisable for cash or on a cashless basis at any time until July 26, 2023, and no fractional shares shall be issued upon warrant exercises. As of March 31, 2022 and March 31, 2021, the exercise price was $46.911 per share and the warrant share number was equal to 1.15.

As of March 31, 2022, 744,845 warrants remained outstanding, with a total of 856,572 shares underlying the un-exercised warrants. For the three months ended March 31, 2022, the Company issued 64,861 shares of common stock resulting from exercises of its warrants and, pursuant to the terms of the underlying warrants agreement, withheld 91 of the issued shares in satisfaction of the warrant exercise price and in lieu of fractional shares, which were subsequently reclassified as treasury stock. As of March 31, 2021, 801,370 warrants remained outstanding, with a total of 921,576 shares underlying the un-exercised warrants. For the three months ended March 31, 2021, there were no warrants exercises.

Dividend Program

Refer to Note 17 for subsequent event disclosures related to the Company’s dividend program announcement.

(8) Long-Term Debt
Long-term debt consisted of the following: 
 March 31, 2022December 31, 2021
Term Loan Credit Facility - due June 2024$249,435 $449,435 
Other (1)
5,029 5,311 
Debt discount and issuance costs(3,094)(6,195)
Total long-term debt $251,370 $448,551 
Less current portion(2,434)(2,989)
Long-term debt, net of current portion$248,936 $445,562 
(1) Includes financing leases.

Term Loan Credit Facility - due June 2024
As of March 31, 2022, the borrowings made under the senior secured term loan facility under the Company’s Credit Agreement with a maturity date of June 14, 2024 (the “Term Loan Credit Facility”) were comprised of Eurocurrency Rate Loans (as defined therein) with an interest rate of 10.00%, calculated as the Eurocurrency rate during the period plus an applicable rate of 8.00%. As of March 31, 2022 and December 31, 2021, the carrying value of the Term Loan Credit Facility was $246,341 and $443,241, respectively, all of which was classified as long-term within the Condensed Consolidated Balance Sheets.
19

ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited, amounts in thousands except share and per share data)

During the first quarter of 2022, the Company made a voluntary prepayment of $200,000 of outstanding principal borrowings under the Term Loan Credit facility. As a result of the prepayments in the prior year and current period, no further amortization payments under the Term Loan Credit Facility are required prior to maturity. Additionally, refer to Note 17 for related subsequent event disclosures.

All obligations under the Term Loan Credit Facility are guaranteed by substantially all of Alpha’s direct and indirect subsidiaries. Certain obligations under the Term Loan Facility are secured by a senior lien, subject to certain exceptions (including the ABL Priority Collateral described below), by substantially all of Alpha’s assets and the assets of Alpha’s subsidiary guarantors (“Term Loan Priority Collateral”), in each case subject to exceptions. The obligations under the Term Loan Credit Facility are also secured by a junior lien, again subject to certain exceptions, against the ABL Priority Collateral. The Term Loan Facility contains negative and affirmative covenants including certain financial covenants that are more flexible than the covenants in the Second Amended and Restated Credit Agreement dated December 6, 2021. The Company was in compliance with all covenants under this agreement as of March 31, 2022.

Second Amended and Restated Asset-Based Revolving Credit Agreement

The Second Amended and Restated Asset-Based Revolving Credit Agreement (“ABL Agreement”) includes a senior secured asset-based revolving credit facility (the “ABL Facility”). Under the ABL Facility, the Company may borrow cash or obtain letters of credit, on a revolving basis, in an aggregate amount of up to $155,000, of which no more than $150,000 may represent outstanding letters of credit ($125,000 on a committed basis and another $25,000 on an uncommitted cash collateralized basis) with any borrowings having a maturity date of December 6, 2024. As of March 31, 2022 and December 31, 2021, there were no outstanding borrowings under the ABL Facility. As of March 31, 2022 and December 31, 2021, the Company had $121,037 letters of credit outstanding under the ABL Facility.

The ABL Agreement provides that a specified percentage of billed and unbilled receivables and raw and clean inventory meeting certain criteria are eligible to be counted for purposes of collateralizing the amount of financing available, subject to certain terms and conditions. Availability under the ABL Facility is calculated on a monthly basis and fluctuates based on qualifying amounts of coal inventory and trade accounts receivable (the “Borrowing Base”) and the facility's covenant limitations related to the Fixed Charge Coverage Ratio (as defined in therein). In accordance with terms of the ABL Facility, the Company may be required to collateralize the ABL Facility to the extent outstanding borrowings and letters of credit under the ABL Facility exceed the Borrowing Base after considering covenant limitations.

The ABL Facility is guaranteed by substantially all of Alpha’s direct and indirect subsidiaries (together with Alpha, the “Loan Parties”) and secured by all or substantially all assets of the Loan Parties, including equity in Alpha’s direct domestic subsidiaries, as collateral for the obligations under the ABL Facility. The ABL Facility has a first lien on ABL priority collateral and a second lien on Term Loan Priority Collateral. The ABL Agreement, as amended, and related documents contain negative and affirmative covenants including certain financial covenants. The Company is in compliance with all covenants under these agreements as of March 31, 2022.

(9) Acquisition-Related Obligations
Acquisition-related obligations consisted of the following:
March 31, 2022December 31, 2021
Contingent Revenue Obligation$44,366 $35,005 
Environmental Settlement Obligations5,238 6,633 
Discount(124)(233)
Total acquisition-related obligations$49,480 $41,405 
Less current portion(21,281)(22,405)
Acquisition-related obligations, net of current portion$28,199 $19,000 

Contingent Revenue Obligation

As of March 31, 2022 and December 31, 2021, the carrying value of the Contingent Revenue Obligation was $44,366 and $35,005, with $16,166 and $16,005 classified as current, respectively, classified as an acquisition-related obligation in the
20

ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited, amounts in thousands except share and per share data)
Condensed Consolidated Balance Sheets. Refer to Note 11 for further disclosures related to the fair value assignment and methods used.

(10) Asset Retirement Obligations

The following table summarizes the changes in asset retirement obligations for the three months ended March 31, 2022:
Total asset retirement obligations at December 31, 2021$164,172 
Accretion for the period5,954 
Revisions in estimated cash flows (337)
Expenditures for the period(3,695)
Total asset retirement obligations at March 31, 2022166,094 
Less current portion (1)
(32,375)
Long-term portion$133,719 
(1) Included within Accrued expenses and other current liabilities on the Company’s Condensed Consolidated Balance Sheets.

(11) Fair Value of Financial Instruments and Fair Value Measurements
The estimated fair values of financial instruments are determined based on relevant market information. These estimates involve uncertainty and cannot be determined with precision.
The carrying amounts for cash and cash equivalents, trade accounts receivable, net, prepaid expenses and other current assets, short-term and long-term restricted cash, short-term and long-term deposits, trade accounts payable, and accrued expenses and other current liabilities approximate fair value as of March 31, 2022 and December 31, 2021 due to the short maturity of these instruments.
The following tables set forth by level, within the fair value hierarchy, the Company’s long-term debt at fair value as of March 31, 2022 and December 31, 2021:
March 31, 2022
Carrying
     Amount (1)
Total Fair ValueQuoted Prices in Active Markets
(Level 1)
Significant Other Observable Inputs
(Level 2)
Significant Unobservable Inputs
(Level 3)
Term Loan Credit Facility - due June 2024$246,341 $249,955 $ $249,955 $ 
Total long-term debt$246,341 $249,955 $ $249,955 $ 

December 31, 2021
Carrying
     Amount (1)
Total Fair ValueQuoted Prices in Active Markets
(Level 1)
Significant Other Observable Inputs
(Level 2)
Significant Unobservable Inputs
(Level 3)
Term Loan Credit Facility - due June 2024$443,241 $447,561 $ $447,561 $ 
Total long-term debt$443,241 $447,561 $ $447,561 $ 
(1) Net of debt discounts and debt issuance costs.

The following tables set forth by level, within the fair value hierarchy, the Company’s acquisition-related obligations at fair value as of March 31, 2022 and December 31, 2021:
21

ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited, amounts in thousands except share and per share data)
 March 31, 2022
Carrying
     Amount (1)
Total Fair ValueQuoted Prices in Active Markets
(Level 1)
Significant Other Observable Inputs
(Level 2)
Significant Unobservable Inputs
(Level 3)
Environmental Settlement Obligations$5,114 $5,046 $ $ $5,046 
Total acquisition-related obligations$5,114 $5,046 $ $ $5,046 

 December 31, 2021
Carrying
     Amount (1)
Total Fair ValueQuoted Prices in Active Markets
(Level 1)
Significant Other Observable Inputs
(Level 2)
Significant Unobservable Inputs
(Level 3)
Environmental Settlement Obligations$6,400 $6,270 $ $ $6,270 
Total acquisition-related obligations$6,400 $6,270 $ $ $6,270 
(1) Net of discounts.

The following table sets forth by level, within the fair value hierarchy, the Company’s financial and non-financial assets and liabilities that were accounted for at fair value on a recurring basis as of March 31, 2022 and December 31, 2021. Financial and non-financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement requires judgment, and may affect the determination of fair value for assets and liabilities and their placement within the fair value hierarchy levels.
 March 31, 2022
Total Fair ValueQuoted Prices in Active Markets (Level 1)Significant Other Observable Inputs (Level 2)Significant Unobservable Inputs (Level 3)
Contingent Revenue Obligation$44,366 $ $ $44,366 
Trading securities$50 $ $50 $ 

 December 31, 2021
Total Fair ValueQuoted Prices in Active Markets (Level 1)Significant Other Observable Inputs (Level 2)Significant Unobservable Inputs (Level 3)
Contingent Revenue Obligation$35,005 $ $ $35,005 
Trading securities$28,443 $27,075 $1,368 $ 

The following tables present a reconciliation of the financial and non-financial assets and liabilities that were accounted for at fair value on a recurring basis and that were categorized within Level 3 of the fair value hierarchy:
December 31, 2021Payments
Loss (Gain) Recognized in Earnings (1)
Transfer In (Out) of Level 3 Fair Value HierarchyMarch 31, 2022
Contingent Revenue Obligation $35,005 $ $9,361 $ $44,366 
(1) The loss recognized in earnings resulted primarily from an increase in forecasted future revenue as of March 31, 2022.

December 31, 2020
Payments
Loss (Gain) Recognized in Earnings (1)
Transfer In (Out) of Level 3 Fair Value HierarchyMarch 31, 2021
Contingent Revenue Obligation $28,967 $ $3,176 $ $32,143 
(1) The loss recognized in earnings resulted primarily from a decrease in the annual risk-free interest rate as of March 31, 2021.
22

ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited, amounts in thousands except share and per share data)

The following methods and assumptions were used to estimate the fair values of the assets and liabilities in the tables above:
Level 1 Fair Value Measurements
Trading Securities - Typically includes money market funds and other cash equivalents. The fair value is based on observable market data.

Level 2 Fair Value Measurements
Term Loan Credit Facility - due June 2024 - The fair value is based on the average between bid and ask prices provided by a third-party. As the fair value is based on observable market inputs and due to limited trading volume in the Term Loan Credit Facility, the Company has classified the fair value within Level 2 of the fair value hierarchy.

Trading Securities - Typically includes certificates of deposit, mutual funds, corporate debt securities and U.S. treasury and agency securities. The fair values of the Company’s trading securities are obtained from a third-party pricing service provider. The fair values provided by the pricing service provider are based on observable market inputs including credit spreads and broker-dealer quotes, among other inputs. The Company classifies the prices obtained from the pricing services within Level 2 of the fair value hierarchy because the underlying inputs are directly observable from active markets. However, the pricing models used entail a certain amount of subjectivity and therefore differing judgments in how the underlying inputs are modeled could result in different estimates of fair value.

Level 3 Fair Value Measurements

Environmental Settlement Obligations - Observable transactions are not available to aid in determining the fair value of these items. Therefore, the fair value was derived by using the expected present value approach in which estimated cash flows are discounted using a risk-free interest rate adjusted for credit risk (discount rates of approximately 12% and 13% as of March 31, 2022 and December 31, 2021, respectively).

Contingent Revenue Obligation - The fair value of the contingent revenue obligation was estimated using a Black-Scholes pricing model and is marked to market at each reporting period with changes in value reflected in earnings. The inputs included in the Black-Scholes pricing model are the Company's forecasted future revenue, the stated royalty rate, the remaining periods in the obligation, annual risk-free interest rate based on the U.S. Constant Maturity Treasury Curve and annualized volatility. The annualized volatility was calculated by observing volatilities for comparable companies with adjustments for the Company's size and leverage. The range of significant unobservable inputs used to value the Contingent Revenue Obligation as of March 31, 2022 and December 31, 2021, are set forth in the following table:
 March 31, 2022December 31, 2021
Forecasted future revenue
$1.5 - $3.1 billion
$1.5 - $2.0 billion
Stated royalty rate
1.0% - 1.5%
1.0% - 1.5%
Annualized volatility
20.7% - 39.3% (37.0%)
18.4% - 39.3% (29.9%)

(12) Income Taxes

For the three months ended March 31, 2022, the Company recorded income tax expense of $39,624 on income from continuing operations before income taxes of $440,628. The income tax expense differs from the expected statutory amount primarily due to the decrease in the valuation allowance and the permanent impact of percentage depletion and foreign-derived intangible income deductions, partially offset by the impact of state income taxes, net of federal impact. For the three months ended March 31, 2021, the Company recorded income tax benefit of $5 on a loss from continuing operations before income taxes of $32,696. The income tax benefit differs from the expected statutory amount primarily due to the increase in the valuation allowance, partially offset by the permanent impact of percentage depletion deductions and the impact of state income taxes, net of federal tax impact.

As a result of generating income before income taxes during the three months ended March 31, 2022, the Company recorded a decrease of $23,453 to its deferred tax asset valuation allowance recorded as of December 31, 2021. The decrease in
23

ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited, amounts in thousands except share and per share data)
the valuation allowance results in part from a decrease in deferred tax assets since the prior reporting date of December 31, 2021. The Company currently is relying primarily on the reversal of taxable temporary differences, along with consideration of taxable income via carryback to prior years and tax planning strategies, to support the realization of deferred tax assets. For each reporting period, the Company updates its assessment regarding the realizability of its deferred tax assets, including scheduling the reversal of its deferred tax assets and liabilities, to determine the amount of valuation allowance needed. Scheduling the reversal of deferred tax asset and liability balances requires judgment and estimation. The Company believes the deferred tax liabilities relied upon as future taxable income in its assessment will reverse in the same period and jurisdiction and are of the same character as the temporary differences giving rise to the deferred tax assets that will be realized. The valuation allowance recorded represents the portion of deferred tax assets for which the Company is unable to support realization through the methods described above.

As of March 31, 2022, the Company has recorded a current federal and state income taxes payable of $38,249, classified as Accrued expenses and other current liabilities in the Condensed Consolidated Balance She