Alpha Metallurgical Resources Inc

The Company provides several types of benefits for its employees, including a defined benefit and defined contribution pension plan, workers’ compensation and black lung benefits, and postretirement life insurance. The Company does not participate in any multi-employer plans. The components of net periodic benefit cost (credit) other than the service cost component for black lung are included in the line item Miscellaneous (expense) income, net, in the Consolidated Statements of Operations.

Company Administered Defined Benefit Pension Plan

In connection with the Merger, the Company assumed three qualified non-contributory defined benefit pension plans, which covered certain salaried and non-union hourly employees. The qualified non-contributory defined benefit pension plans were collectively referred to as the “Pension Plans.” Effective as of December 31, 2023, the assets and liabilities of the Pension Plans were merged intoone qualified non-contributory defined benefit pension plan (“Pension Plan”). Benefits are frozen under the Pension Plan. Participants accrued benefits either based on certain formulas, the participant’s compensation prior to retirement, or plan specified amounts for each year of service with the Company. The Pension Plan utilizes a cash balance formula for certain of its participants. The cash balance formula provides guaranteed rates of interest on accumulated balances of 6% for balances accumulated prior to 2004 and 4% on balances accumulated thereafter.

Annual funding contributions to the Pension Plan are made as recommended by consulting actuaries based upon the ERISA funding standards. Projected contributions are based on the latest available data and include the impact of the funding relief granted by the American Rescue Plan Act (“ARPA”) and the application of the interest rate stabilization guidance under ARPA. Plan assets consist of equity securities, fixed income funds, commingled short-term funds, private equity funds, and a guaranteed insurance contract.

The Pension Plan offers certain eligible participants the option to elect to receive lump sum benefits under certain plan provisions, which resulted in a partial plan settlement and the accelerated recognition of a portion of the accumulated other comprehensive loss during the year ended December 31, 2022. Refer to the disclosures below for further information on the partial plan settlements.

The following tables set forth the Pension Plan’s accumulated benefit obligation, fair value of plan assets and funded status for the years ended December 31, 2024 and 2023.

(1) Amounts are classified as long-term on the Consolidated Balance Sheets as there are sufficient plan assets to make expected benefit payments to plan participants in the succeeding twelve months.

Gross amounts related to benefit obligations recognized in accumulated other comprehensive loss consisted of the following as of December 31, 2024 and 2023:

The following table details the components of net periodic benefit cost (credit):

Other changes in plan assets and benefit obligation recognized in other comprehensive income (loss) are as follows:

(1) For the year ended December 31, 2024, the actuarial loss was primarily attributable to lower than expected return on plan assets and an annual census data actuarial revaluation of pension obligations, partially offset by an increase in the weighted-average discount rate actuarial assumption used in determining the benefit obligation. For the year ended December 31, 2023, the actuarial loss was primarily attributable to a decrease in the weighted-average discount rate actuarial assumption used in determining the benefit obligation.

The following table presents information applicable to plans with accumulated benefit obligations in excess of plan assets:

The weighted-average actuarial assumption used in determining the benefit obligation as of December 31, 2024 and 2023 was as follows:

The weighted-average actuarial assumptions used to determine net periodic benefit cost (credit) for the years ended December 31, 2024, 2023, and 2022 were as follows:

(1) During the three months ended June 30, 2024, the Company updated the 2024 expected long-term rate of return on plan assets from 6.20% to 5.70% based on a weighted basis of the beginning and more recently assumed rate as the pension plan’s target allocation was updated to 50% equity securities and 50% fixed income funds in the interim period.

The discount rate assumptions were determined from a high-quality corporate bond yield-curve timing of the Company’s projected cash out flows.

The expected long-term rate of return on assets of the Pension Plan is established each year in consultation with the plan’s actuaries and outside investment advisors. This rate is determined by taking into consideration the Pension Plan’s target asset allocation, expected long-term rates of return on each major asset class by reference to long-term historic ranges, and inflation assumptions. For the determination of net periodic benefit cost in 2025, the Company will utilize an expected long-term rate of return on plan assets of 5.70%.

Assets of the Pension Plan are held in trusts and are invested in accordance with investment guidelines that have been established by the Company’s Benefits Committee in consultation with outside investment advisors. The target allocation for 2025 and the actual asset allocation as reported at December 31, 2024 are as follows:

The asset allocation targets have been set with the expectation that the Pension Plan’s assets will fund the expected liability within an appropriate level of risk. In determining the appropriate target asset allocations, the Benefits Committee considers the demographics of the Pension Plan’s participants, the funded status of the plan, the Company’s contribution philosophy, the Company’s business and financial profile, and other associated risk factors. The Pension Plan’s assets are periodically rebalanced among the major asset categories to maintain the asset allocation within a specified range of the target allocation percentage. The target allocation between equity securities and fixed income funds is determined by reference to the funded status percentage for the Pension Plan.

The Company contributed $12,320 to the Pension Plan during the year ended December 31, 2024. In 2025, the Company expects to contribute $16,516 of estimated minimum required contributions to the Pension Plan for the 2024 plan year.

The following represents expected future pension benefit payments for the next ten years:

The fair values of the Company’s Pension Plan’s assets as of December 31, 2024, by asset category are as follows:

(1) This fund contains equities (domestic and international), real estate and bonds.

(2) This fund contains bonds representing a diversity of sectors and maturities. This fund also includes mortgage-backed securities and U.S. Treasuries.

(3) This fund contains cash and highly liquid short-term investments in a collective investment fund.

(4) Receivable for investments sold at December 31, 2024, which approximates fair value.

(5) In accordance with Accounting Standards Update 2015-07, investments that are measured at fair value using the net asset value per share practical expedient have not been classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the total value of assets of the plans.

Changes in Level 3 plan assets for the period ended December 31, 2024 were as follows:

The fair values of the Company’s Pension Plan’s assets as of December 31, 2023, by asset category are as follows:

(1) This fund contains equities (domestic and international), real estate and bonds.

(2) This fund contains bonds representing a diversity of sectors and maturities. This fund also includes mortgage-backed securities and U.S. Treasuries.

(3) This fund contains cash and highly liquid short-term investments in a collective investment fund.

(4) Receivable for investments sold at December 31, 2023, which approximates fair value.

(5) In accordance with Accounting Standards Update 2015-07, investments that are measured at fair value using the net asset value per share practical expedient have not been classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the total value of assets of the plans.

Changes in Level 3 plan assets for the period ended December 31, 2023 were as follows:

The following is a description of the valuation methodologies used for assets measured at fair value:

Level 1 Plan Assets: Assets consist of individual security positions that are easily traded on recognized market exchanges. These securities are priced and traded daily, and therefore the fund is valued daily.

Level 2 Plan Assets: Funds consist of individual security positions that are mostly securities easily traded on recognized market exchanges. These securities are priced and traded daily, and therefore the fund is valued daily.

Level 3 Plan Assets: Assets are valued monthly or quarterly based on the Market Value provided by managers of the underlying fund investments. The Market Value provided typically reflects the fair value of each underlying fund investment, including unrealized gains and losses.

Workers’ Compensation and Pneumoconiosis (Black Lung)

The Company is required by federal and state statutes to provide benefits to employees for awards related to workers’ compensation and black lung.

The Company’s subsidiaries utilize high-deductible third-party insurance for worker’s compensation and black lung obligations with the exception of certain subsidiaries in which the Company is a qualified self-insurer for workers’ compensation and/or black lung obligations. The Company’s subsidiaries that are self-insured for black lung benefits may fund certain benefit payments through a Section 501(c) (21) tax-exempt trust fund.

Pursuant to the Merger Agreement, the Company assumed a reinsurance contract with a third party. In 2017, the Merger Companies made a lump sum payment in exchange for a reinsurance company’s agreement to administer and pay certain future workers’ compensation and state black lung obligations in the state of Kentucky. Pursuant to the Merger Agreement, the Company assumed the estimated liability for these future claims. As the liabilities are paid by the insurance company, the prepaid insurance amounts will be reduced by a corresponding amount.

The Company accrues for workers’ compensation liability by recognizing costs when it is probable that a covered liability has been incurred and the cost can be reasonably estimated. The Company’s estimates of these costs are adjusted based upon actuarial studies and include a provision for incurred but not reported losses. Actual losses may differ from these estimates, which could increase or decrease the Company’s costs. Additionally, the liability for black lung benefits is estimated by an independent actuary by prorating the accrual of actuarially projected benefits over the employee’s applicable term of service. Adjustments to the probable ultimate liability for workers’ compensation and black lung are made annually based on actuarial valuations.

For the Company’s subsidiaries that are insured with a high-deductible insurance plan for workers’ compensation and black lung claims, the insurance premium expense for the years ended December 31, 2024, 2023 and 2022 was $9,461, $10,676, and $9,274, respectively.

Workers’ Compensation

The table below presents workers’ compensation amounts recognized in the Consolidated Balance Sheets:

(1) Included within Prepaid expenses and other current assets and Other non-current assets in the Consolidated Balance Sheets.

Workers’ compensation credit for high-deductible insurance plans for the years ended December 31, 2024, 2023, and 2022 was ($1,758), ($271), and ($1,995), respectively, included within Cost of coal sales in the Consolidated Statements of Operations.

Black Lung

The following tables set forth the accumulated black lung benefit obligations, fair value of plan assets and funded status for the years ended December 31, 2024 and 2023:

(1) Assets of the plan are held in a Section 501(c)(21) tax-exempt trust fund and consist primarily of government debt securities. All assets are classified as Level 1 and valued based on quoted market prices.

The table below presents amounts recognized in the Consolidated Balance Sheets:

Gross amounts related to the black lung benefit obligations recognized in accumulated other comprehensive loss consisted of the following as of December 31, 2024 and 2023:

The following table details the components of the net periodic benefit cost for the black lung benefit obligations:

Other changes in the black lung plan assets and benefit obligations recognized in other comprehensive income (loss) are as follows:

(1) For the year ended December 31, 2024, the actuarial loss was primarily attributable to an increase in new claimants and claims and changes in demographic assumptions, partially offset by an increase in the weighted-average discount rate actuarial assumption used in determining the benefit obligations. For the year ended December 31, 2023, the actuarial loss was primarily attributable to a decrease in the weighted-average discount rate actuarial assumption used in determining the benefit obligations and an increase in new claimants.

The weighted-average assumptions related to black lung obligations used to determine the benefit obligation as of December 31, 2024 and 2023 were as follows:

The weighted-average assumptions related to black lung benefit obligations used to determine net periodic benefit cost were as follows:

Estimated future cash payments related to black lung benefit obligations for the next 10 years ending after December 31, 2024 are as follows:

Postretirement Life Insurance Benefits

As part of the Alpha Natural Resources, Inc. bankruptcy reorganization process and the Retiree Committee Settlement Agreement, the Company assumed the unfunded liability for life insurance benefits for certain disabled and non-union retired employees. Provisions are made for estimated benefits and adjustments to the probable ultimate liabilities are made annually based on an actuarial study prepared by independent actuaries. As of December 31, 2024 and 2023, the postretirement life insurance benefit obligation was $8,222, including a current portion of $600, and $8,857, including a current portion of $613, respectively, which are included in the Consolidated Balance Sheets as Other non-current liabilities and Accrued expenses and other current liabilities.

Defined Contribution and Profit-Sharing Plans

The Company sponsors defined contribution plans to assist its eligible employees in providing for retirement. Generally, under the terms of these plans, employees make voluntary contributions through payroll deductions and the Company makes matching and/or discretionary contributions, as defined by each plan. The Company’s total contributions to these plans for the years ended December 31, 2024, 2023, and 2022 were $6,425, $16,435, and $19,385, respectively.

During the second quarter of 2024, the Company’s matching contributions under the Alpha Metallurgical Resources 401(k) Retirement Savings Plan (the “Plan”) were suspended due to weak market conditions. During the third quarter of 2022, the Company announced a year-end discretionary employer contribution under the Plan equal to the 2% of the Plan participants’ annual salaries.

Self-insured Medical Plan

The Company is self-insured for health benefit coverage for all of its active employees. During the years ended December 31, 2024, 2023, and 2022, the Company incurred total expenses of $102,805, $86,745, and $68,706, respectively, which primarily include claims processed and an estimate for claims incurred but not paid.