Alpha Metallurgical Resources, Inc.

Results of Operations

Our results of operations for the three months ended March 31, 2026 and 2025 are discussed below.

Three Months Ended March 31, 2026 Compared to the Three Months Ended March 31, 2025

Revenues

The following table summarizes information about our revenues during the three months ended March 31, 2026 and 2025:

Coal revenues. Coal revenues decreased $6.1 million, or 1.2%, for the three months ended March 31, 2026 compared to the prior year period. The decrease was attributable to a 4.3% decline in coal sales volumes partially offset by a 3.3% increase in average coal sales realization. Our actions in 2025 to reduce coal production levels at certain mining operations, combined with a lower level of purchased coal, served to reduce primarily High-Vol. B quality met and thermal quality coal sales volumes. A resulting shift in product mix toward sales of relatively higher quality coals served to increase our overall average coal sales realization. Refer to the “Non-GAAP coal revenues” section below for further detail on coal revenues for the three months ended March 31, 2026 compared to the prior year period.

Cost and Expenses

The following table summarizes information about our costs and expenses during the three months ended March 31, 2026 and 2025:

Cost of coal sales. Cost of coal sales decreased $30.2 million, or 6.0%, for the three months ended March 31, 2026 compared to the prior year period. The decrease was attributable to a 4.3% decrease in coal sales volumes and a 1.7% decline in our average cost of coal sales per ton. Our actions in 2025 to reduce coal production levels at certain higher-cost mining operations, combined with a lower level of relatively higher-cost purchased coal, served to reduce our coal sales volumes as well as our overall average cost of coal sales on a per ton basis. In addition, during the first quarter of 2026, we became eligible for the Internal Revenue Code (“IRC”) Section 45X tax credit (refer to Note 1 to the Condensed Consolidated Financial Statements) which generally provides for a refundable tax credit equal to 2.5% of production costs for metallurgical coal produced and sold during the period. For the three months ended March 31, 2026, we recorded $7.2 million related to the tax credit as a reduction in cost of coal sales.

Depreciation, depletion and amortization. Depreciation, depletion and amortization decreased $4.0 million, or 9.1%, for the three months ended March 31, 2026 compared to the prior year period. The decrease was primarily due to certain assets reaching the end of their depreciable lives and becoming fully depreciated.

Selling, general and administrative. Selling, general and administrative expenses increased $1.2 million, or 7.6%, for the three months ended March 31, 2026 compared to the prior year period. This increase was primarily due to increases of $0.5 million in incentive pay, $0.3 million in wages and benefits expenses, and $0.2 million in stock compensation.

Other operating (income) loss. Other operating income increased $2.8 million, or 227.5%, for the three months ended March 31, 2026 compared to the prior year period, primarily due to an increase in gain on sale of assets in the current period.

Total Other Expense, Net

The following table summarizes information about our total other expense, net during the three months ended March 31, 2026 and 2025:

Income Tax Benefit

The following table summarizes information about our income tax benefit during the three months ended March 31, 2026 and 2025:

Income tax benefit of $5.3 million was recorded for the three months ended March 31, 2026 on a loss before income taxes of $16.4 million. The effective tax rate of 32.6% differs from the federal statutory rate of 21% primarily due to the permanent impact of the IRC Section 45X tax credit (refer to Note 1 to our Condensed Consolidated Financial Statements), permanent impact of percentage depletion, and state income taxes, net of federal impact, partially offset by non-deductible compensation.

Income tax benefit of $11.4 million was recorded for the three months ended March 31, 2025 on a loss before income taxes of $45.4 million. The effective tax rate of 25.2 % differs from the federal statutory rate of 21% primarily due to the change in valuation allowance, the permanent impact of percentage depletion, and stock compensation, partially offset by the impact of capital loss carryforward expirations and non-deductible compensation. Refer to Note 11 to the Condensed 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 coal sales realization per ton,” “non-GAAP cost of coal sales,” “non-GAAP cost of coal sales per ton,” “non-GAAP coal margin,” and “non-GAAP coal margin per ton.” 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 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 is calculated as non-GAAP cost of coal sales divided by tons sold. Non-GAAP coal margin is calculated as non-GAAP coal revenues less non-GAAP cost of coal sales. Non-GAAP coal margin per ton is calculated as non-GAAP coal margin divided by tons sold. 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 summarizes certain financial information relating to our coal operations for the three months ended March 31, 2026 and 2025:

(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 remained relatively flat, increasing $1.6 million, or 0.4%, for the three months ended March 31, 2026 compared to the prior year period. The increase was attributable to a $5.78, or 4.9%, increase in our average non-GAAP coal sales realization, largely offset by a 4.3% decline in coal sales volumes. Our actions in 2025 to reduce coal production levels at certain mining operations, combined with a lower level of purchased coal, served to reduce primarily High-Vol. B quality met and thermal quality coal sales volumes. A resulting shift in product mix toward sales of relatively higher quality coals served to increase our average non-GAAP coal sales realization.

Non-GAAP cost of coal sales. Non-GAAP cost of coal sales decreased $26.4 million, or 6.4%, for the three months ended March 31, 2026 compared to the prior year period. The decrease was attributable to a 4.3% decrease in coal sales volumes and a $2.36, or 2.1%, reduction in our average non-GAAP cost of coal sales per ton. Our actions in 2025 to reduce coal production levels at certain higher-cost mining operations, combined with a lower level of relatively higher-cost purchased coal, served to reduce our coal sales volumes as well as our overall average non-GAAP cost of coal sales on a per ton basis. In addition, during the first quarter of 2026, we became eligible for the IRC Section 45X tax credit (refer to Note 1 to our Condensed Consolidated Financial Statements) which generally provides for a refundable tax credit equal to 2.5% of production costs for metallurgical coal produced and sold during the period. For the three months ended March 31, 2026, we recorded $7.2 million related to the tax credit as a reduction in non-GAAP cost of coal sales.

Adjusted EBITDA

The following table presents a reconciliation of net loss to Adjusted EBITDA for the three months ended March 31, 2026 and 2025:

The following table summarizes Adjusted EBITDA:

Adjusted EBITDA increased $24.4 million, or 431.4%, for the three months ended March 31, 2026 compared to the prior year period, primarily driven by an increased coal margin due to lower cost of coal sales in the current period.