Alpha Metallurgical Resources: Q2 2026 loss narrowed to $12.3 million, but the company cut sales guidance and raised costs

On July 27, Alpha Metallurgical Resources released preliminary results for the second quarter of 2026. Revenue fell 10.7% year-on-year to $491.5 million, adjusted EBITDA dropped 46.2% to $25.5 million, and net loss amounted to $12.3 million. The company cut its 2026 metallurgical coal sales guidance to 13.2–14.0 million tons and raised its cost expectations to $103–107 per ton. At the current price, the stock looks unattractive: weak demand and rising costs weigh on profit, and our valuation model points to about 63% downside.

Key takeaways

— Revenue fell 10.7% year-on-year due to weak demand and lower shipments

— Adjusted EBITDA dropped 46.2%, margin compressed to 5.2%

— The company cut met coal sales guidance and raised cost guidance

— Net loss of $12.3 million, but operating cash flow remains positive

— Debt burden is minimal: net debt is negative, liquidity at $447.8 million

— Share repurchase program continues, but pace slowed

— The portal's valuation model implies about 63% downside

Attractiveness

Key figures, USD bn

Revenue fell 10.7% year-on-year due to weak demand and lower shipments

Revenue for the second quarter of 2026 was $491.5 million, down 10.7% year-on-year. The decline was mainly due to lower metallurgical coal shipments: the company sold 3.5 million tons, below expectations. Weak demand for steel and metallurgical coal continues to pressure the market.

The average realized price for metallurgical coal was $118.71 per ton. Export sales indexed to Australian prices fetched $143.82 per ton, while other export mechanisms brought only $109.08 per ton. Exports accounted for 70% of total metallurgical coal sales.

The company cut its 2026 metallurgical coal sales guidance to 13.2–14.0 million tons from the previous 14.4–15.4 million tons. At the same time, thermal coal sales guidance was raised to 1.0–1.4 million tons. Total shipments are expected in the range of 14.2–15.4 million tons versus the previous 15.1–16.5 million tons.

Adjusted EBITDA dropped 46.2%, margin compressed to 5.2%

Adjusted EBITDA for the second quarter of 2026 was $25.5 million, down 46.2% year-on-year. EBITDA margin fell to 5.2% from 8.6% a year earlier. The main reason is the rise in cost of coal sales, which reached $103.07 per ton.

The company raised its 2026 cost guidance to $103–107 per ton from the previous $95–101. This is due to lower shipment volumes and higher supplies and maintenance costs. Equipment damage at the Dominion Terminal Associates (DTA) terminal also had a negative impact.

Despite the EBITDA decline, the company remains profitable at the operating level before depreciation. However, net income is negative: a loss of $12.3 million, or $0.96 per diluted share.

The company cut met coal sales guidance and raised cost guidance

In the press release, the company announced a reduction in its 2026 metallurgical coal sales guidance to 13.2–14.0 million tons. This is 1.2–1.4 million tons below the previous range. The reason is weak first-half performance, continued weakness in the metallurgical coal market, and equipment damage at DTA.

At the same time, thermal coal sales guidance was raised to 1.0–1.4 million tons, partially offsetting the decline in the metallurgical segment. However, total shipments were still cut to 14.2–15.4 million tons.

Cost guidance was raised to $103–107 per ton. This means that at current coal prices, margins may remain under pressure. The company expects to provide more information about its plans for DTA on August 7.

Net loss of $12.3 million, but operating cash flow remains positive

Net loss for the second quarter of 2026 was $12.3 million versus a loss of $5.0 million a year earlier. The loss includes one-off items such as depreciation and stock compensation. Operating cash flow remains positive: $39.9 million for the quarter.

Capital expenditures rose to $45.1 million from $34.6 million a year earlier. This led to negative free cash flow of minus $5.2 million. However, the company maintains high liquidity.

Over the trailing twelve months, operating cash flow was $144.9 million. This allows financing capital expenditures and share repurchases without increasing debt.

Debt burden is minimal: net debt is negative, liquidity at $447.8 million

As of June 30, 2026, the company's total liquidity was $447.8 million, including cash and cash equivalents of $307.6 million, short-term investments of $30.9 million, and $184.3 million of unused credit lines. Net debt is negative: minus $327.1 million.

Long-term debt is only $11.4 million, including the current portion. The company has no borrowings under its ABL credit facility but has letters of credit outstanding of $40.7 million. Such low debt burden provides resilience during periods of low coal prices.

Negative net debt means cash exceeds debt obligations. This allows the company to continue investments and share repurchases even during losses.

Share repurchase program continues, but pace slowed

Since the start of the repurchase program, the company has acquired about 7.0 million shares for approximately $1.2 billion. In the second quarter of 2026, about 69 thousand shares were repurchased for $13.5 million. This is significantly less than in previous periods.

The number of shares outstanding as of June 30, 2026, was 12,685,495. The reduction in share count supports earnings per share, but with current losses, the effect is limited.

The slowdown in repurchases may be due to a desire to preserve liquidity amid uncertainty in the coal market. The company has authorization to repurchase up to $1.5 billion, but the remaining limit is about $300 million.

The portal's valuation model implies about 63% downside

According to our model, at current coal prices and a target EV/EBITDA multiple, the fair value of the share implies about 63% downside from the current price. This is our own estimate, not a consensus forecast.

The company's market capitalization is $30.9 million, which is very small for a company with revenue of about $2.1 billion over the trailing twelve months. However, this reflects low profitability and high industry risks.

Since the release, the stock has risen 58.8%, which may be due to expectations of a market recovery. However, fundamental indicators do not yet confirm such optimism.

Valuation on the latest reported figures

Bottom line

Bottom line: in the second quarter of 2026, Alpha Metallurgical Resources showed a decline in revenue and EBITDA due to weak demand and rising costs. Net loss was $12.3 million, but operating cash flow remains positive and debt burden is minimal. The company cut sales guidance and raised cost guidance, indicating continued pressure on margins. At the current price, the stock looks unattractive: our valuation model implies about 63% downside, and fundamentals do not support optimism.