Alpha Metallurgical Resources, Inc.

Results of Operations

Our results of operations for the years ended December 31, 2025 and 2024 are discussed in these “Results of Operations” presented below.

Year Ended December 31, 2025 Compared to the Year Ended December 31, 2024

Revenues

The following table summarizes information about our revenues during the years ended December 31, 2025 and 2024:

Coal revenues. Coal revenues decreased $824.0 million, or 28.0%, for the year ended December 31, 2025 compared to the prior year period. The decrease was primarily due to a 19.3% decline in average coal sales realization as metallurgical coal pricing declined significantly as a result of weakened global steel demand. Coal sales volumes also declined 10.8% due to weaker demand. Refer to the “Non-GAAP Coal revenues” section below for further detail on coal revenues for the year ended December 31, 2025 compared to the prior year period.

Cost and Expenses

The following table summarizes information about our costs and expenses during the years ended December 31, 2025 and 2024:

Cost of coal sales. Cost of coal sales decreased $526.9 million, or 21.5%, for the year ended December 31, 2025 compared to the prior year period, partially due to a 10.8% decline in coal sales volumes due to weaker demand. Average cost of coal sales per ton decreased 12.0% compared to the prior year period, due in part to a reduction in freight and handling costs as a relatively lower percentage of export sales resulted in lower rail and ocean vessel freight costs. The lower coal pricing environment reduced royalties and taxes. In addition, lower levels of purchased coal and the ongoing impact of cost reduction efforts, including wage reductions during the second quarter of 2025, as well as the impact of previous decisions to reduce relatively higher-cost production sources served to reduce costs on a per ton basis. Refer to the “Non-GAAP Cost of coal sales” section below for further detail on cost of coal sales for the year ended December 31, 2025 compared to the prior year period.

Depreciation, depletion and amortization. Depreciation, depletion and amortization increased $7.2 million, or 4.3%, for the year ended December 31, 2025 compared to the prior year period. The increase was primarily due to an increase in assets placed in service through December 2025.

Selling, general and administrative. Selling, general and administrative expenses decreased $13.8 million, or 18.7%, for the year ended December 31, 2025 compared to the prior year period. This decrease was primarily related to decreases of $8.8 million in incentive pay and $2.0 million in wages and benefits expenses.

Total Other Expense, Net

The following table summarizes information about our total other expense, net during the years ended December 31, 2025 and 2024:

Total other expense, net increased $9.0 million, or 52.6%, for the year ended December 31, 2025 compared to the prior year period, primarily related to increases in equity loss in affiliates and net periodic benefit costs for black lung benefit obligations and a decrease in interest income.

Income Tax (Benefit) Expense

The following table summarizes information about our income tax (benefit) expense during the years ended December 31, 2025 and 2024:

Income tax benefit of $25.8 million was recorded for the year ended December 31, 2025 on a loss before income taxes of $87.5 million. The effective tax rate of 29.5% differs from the federal statutory rate of 21% primarily due to the permanent impact of percentage depletion, state income taxes, net of federal impact, and the impact of stock compensation, partially offset by the impact of non-deductible compensation and provision-to-return adjustments.

Income tax expense of $23.2 million was recorded for the year ended December 31, 2024 on income before income taxes of $210.8 million. The effective tax rate of 11.0% differs from the federal statutory rate of 21% primarily due to the permanent impact of stock compensation, percentage depletion, and foreign-derived intangible income deductions, partially offset by the impact of non-deductible compensation and state income taxes, net of federal impact. Refer to Note 16 to the Consolidated Financial Statements for additional information.

Non-GAAP Financial Measures

The discussion below contains “non-GAAP financial measures.” These are financial measures that either exclude or include amounts that are not excluded or included in the most directly comparable measures calculated and presented in accordance with generally accepted accounting principles in the United States (“U.S. GAAP” or “GAAP”). Specifically, we make use of the non-GAAP financial measures “Adjusted EBITDA,” “non-GAAP coal revenues,” “non-GAAP cost of coal sales,” and “non-GAAP coal margin.” In addition to net income (loss), we use Adjusted EBITDA to measure the operating performance of our reportable segment. Adjusted EBITDA does not purport to be an alternative to net income (loss) as a measure of operating performance or any other measure of operating results, financial performance, or liquidity presented in accordance with GAAP. Moreover, this measure is not calculated identically by all companies and therefore may not be comparable to similarly titled measures used by other companies. Adjusted EBITDA is presented because management believes it is a useful indicator of the financial performance of our coal operations. We use non-GAAP coal revenues to present coal revenues generated, excluding freight and handling fulfillment revenues. Non-GAAP coal sales realization per ton for our operations is calculated as non-GAAP coal revenues divided by tons sold. We use non-GAAP cost of coal sales to adjust cost of coal sales to remove freight and handling costs, depreciation, depletion and amortization - production (excluding the depreciation, depletion and amortization related to selling, general and administrative functions), accretion on asset retirement obligations, amortization of acquired intangibles, and idled and closed mine costs. Non-GAAP cost of coal sales per ton for our operations is calculated as non-GAAP cost of coal sales divided by tons sold. Non-GAAP coal margin per ton for our coal operations is calculated as non-GAAP coal sales realization per ton for our coal operations less non-GAAP cost of coal sales per ton for our coal operations. The presentation of these measures should not be considered in isolation, or as a substitute for analysis of our results as reported under GAAP.

Management uses non-GAAP financial measures to supplement GAAP results to provide a more complete understanding of the factors and trends affecting the business than GAAP results alone. The definition of these non-GAAP measures may be changed periodically by management to adjust for significant items important to an understanding of operating trends and to adjust for items that may not reflect the trend of future results by excluding transactions that are not indicative of our core operating performance. Furthermore, analogous measures are used by industry analysts to evaluate our operating performance. Because not all companies use identical calculations, the presentations of these measures may not be comparable to other similarly titled measures of other companies and can differ significantly from company to company depending on long-term strategic decisions regarding capital structure, the tax jurisdictions in which companies operate, capital investments and other factors.

Included below are reconciliations of non-GAAP financial measures to GAAP financial measures.

The following tables summarize certain financial information relating to our coal operations for the years ended December 31, 2025 and 2024:

(1) Depreciation, depletion and amortization - production excludes the depreciation, depletion and amortization related to selling, general and administrative functions.

Non-GAAP Coal revenues. Non-GAAP coal revenues decreased $654.4 million, or 26.8%, for the year ended December 31, 2025 compared to the prior year period. The decrease was primarily due to a $25.58, or 17.9%, decline in non-GAAP coal sales realization per ton as weakened global steel demand reduced metallurgical coal pricing. In addition, coal sales volumes declined 10.8% due to weaker demand.

Non-GAAP Cost of coal sales. Non-GAAP cost of coal sales decreased $356.4 million, or 18.6%, for the year ended December 31, 2025 compared to the prior year period, primarily due to a 10.8% decline in coal sales volumes due to weaker demand. Average non-GAAP cost of coal sales per ton decreased $9.78, or 8.7%, compared to the prior year period due in part to lower royalties and taxes as a result of a lower coal pricing environment. In addition, lower levels of purchased coal and the ongoing impact of cost reduction efforts, including wage reductions during the second quarter of 2025, as well as the impact of previous decisions to reduce higher-cost production sources served to reduce costs on a per ton basis. Our Checkmate Powellton mine, which was in its early stages of operations and had relatively higher costs, was idled during the fourth quarter of 2024. In addition, our Long Branch surface mine was idled in the first quarter of 2025 and production levels were reduced at our Jerry Fork and Black Eagle mines during 2025.

Adjusted EBITDA

The following tables present a reconciliation of net (loss) income to Adjusted EBITDA for the years ended December 31, 2025 and 2024:

(1) Non-recurring mine recovery and idle costs due to the water inundation at the Rolling Thunder mine in November 2025.

The following table summarizes Adjusted EBITDA:

Adjusted EBITDA decreased $285.9 million, or 70.1%, for the year ended December 31, 2025 compared to the prior year period, primarily driven by a decrease in tons sold and decreased coal margin due to lower non-GAAP coal sales realization per ton in the current period.