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Item 8. Financial Statements and Supplementary Data

2022-03-07 compared with 2021-03-15 · 648 added, 836 removed, 1414 unchanged (51% of the section changed)

2 unchanged sentences

To the Stockholders and the Board of Directors of Alpha Metallurgical Resources, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheet of Alpha Metallurgical Resources, Inc.

and subsidiaries (the Company) as of December 31, 2020, the related consolidated statements of operations, comprehensive loss, stockholders’ equity and cash flows for the year then ended, and the related notes (collectively, the financial statements).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020, and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company's management.

Our responsibility is to express an opinion on the Company's financial statements based on our audit.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with U.S.

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheets of Alpha Metallurgical Resources, Inc.

and subsidiaries (the Company) as of December 31, 2021 and 2020, and the related consolidated statements of operations, comprehensive income, stockholders’ equity, and cash flows for each of the two years in the period ended December 31, 2021, and the related notes (collectively, the financial statements).

We also have audited the Company's internal control over financial reporting as of December 31, 2021, criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the years in the two year period ended December 31, 2021 in conformity with accounting principles generally accepted in the United States of America.

Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control - Integrated Framework (2013) issued by COSO.

Basis for Opinions

The Company's management is responsible for these financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting.

Our responsibility is to express an opinion on the Company's financial statements and an opinion on the Company's internal control over financial reporting based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.

Accordingly, we express no such opinion.

Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the financial statements included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audit provides a reasonable basis for our opinion.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk.

Our audits also included performing such other procedures as we considered necessary in the circumstances.

We believe that our audits provide a reasonable basis for our opinions.

Definition and Limitations of Internal Control Over Financial Reporting

A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Critical Audit Matter

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The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Asset Retirement Obligations

As described in Notes 2 and 16 to the consolidated financial statements, the Company’s consolidated asset retirement obligation liability was $164.2 million at December 31, 2021.

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March 7, 2022

Report of Independent Registered Public Accounting Firm

To the Stockholders and Board of Directors

ALPHA METALLURGICAL RESOURCES, INC.

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheet of Alpha Metallurgical Resources, Inc.

(formerly Contura Energy, Inc.) and subsidiaries (the Company) as of December 31, 2019, the related consolidated statements of operations, comprehensive loss, cash flows, and stockholders’ equity for the year then ended, and the related notes (collectively, the consolidated financial statements).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2019, and the results of its operations and its cash flows for the year then ended, in conformity with U.S.

generally accepted accounting principles.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on these consolidated financial statements based on our audit.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that our audit provides a reasonable basis for our opinion.

We served as the Company’s auditor from 2016 to 2020.

Richmond, Virginia

March 18, 2020, except for the seventh paragraph in Note 1 and Note 3, as to which the date is March 15, 2021

ALPHA METALLURGICAL RESOURCES, INC.

AND SUBSIDIARIES

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Amortization of acquired intangibles, net 13,244 9,214

Selling, general and administrative expenses (exclusive of depreciation, depletion and amortization shown separately above) 57,356 78,953

Merger-related costs — 1,090

Asset impairment and restructuring ( 561 ) 83,878

Goodwill impairment — 124,353

Total other operating income:

Selling, general and administrative expenses (exclusive of depreciation, depletion and amortization shown separately above) 63,901 57,356

Total other operating loss (income):

Mark-to-market adjustment for acquisition-related obligations 19,525 ( 8,750 )

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Total costs and expenses 1,901,446 1,586,875

Loss from operations ( 170,688 ) ( 169,103 )

Income (loss) from operations 357,140 ( 170,688 )

Other (expense) income:

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Interest income 334 7,027

Loss on modification and extinguishment of debt — ( 26,459 )

Equity loss in affiliates ( 4,149 ) ( 3,473 )

Miscellaneous loss, net ( 1,972 ) ( 10,195 )

Miscellaneous income (loss), net 6,867 ( 1,972 )

Total other expense, net ( 66,602 ) ( 72,946 )

Loss from continuing operations before income taxes ( 243,634 ) ( 272,905 )

Income tax benefit 2,164 53,287

Net loss from continuing operations ( 241,470 ) ( 219,618 )

Income (loss) from continuing operations before income taxes 290,538 ( 243,634 )

Income tax (expense) benefit ( 3,609 ) 2,164

Net income (loss) from continuing operations 286,929 ( 241,470 )

Discontinued operations:

Loss from discontinued operations before income taxes ( 205,429 ) ( 105,185 )

Income (loss) from discontinued operations before income taxes 1,660 ( 205,429 )

Income tax benefit from discontinued operations 201 —

Loss from discontinued operations ( 205,429 ) ( 96,701 )

Net loss $ ( 446,899 ) $ ( 316,319 )

Basic loss per common share:

Loss from continuing operations $ ( 13.20 ) $ ( 11.68 )

Loss from discontinued operations ( 11.22 ) ( 5.14 )

Net loss $ ( 24.42 ) $ ( 16.82 )

Diluted loss per common share:

Loss from continuing operations $ ( 13.20 ) $ ( 11.68 )

Loss from discontinued operations ( 11.22 ) ( 5.14 )

Net loss $ ( 24.42 ) $ ( 16.82 )

Income (loss) from discontinued operations 1,861 ( 205,429 )

Net income (loss) $ 288,790 $ ( 446,899 )

Basic income (loss) per common share:

Income (loss) from continuing operations $ 15.56 $ ( 13.20 )

Income (loss) from discontinued operations 0.10 ( 11.22 )

Net income (loss) $ 15.66 $ ( 24.42 )

Diluted income (loss) per common share:

Income (loss) from continuing operations $ 15.20 $ ( 13.20 )

Income (loss) from discontinued operations 0.10 ( 11.22 )

Net income (loss) $ 15.30 $ ( 24.42 )

Weighted average shares - basic 18,441,175 18,298,362

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AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Amounts in thousands)

Year Ended December 31,

Net loss $ ( 446,899 ) $ ( 316,319 )

Other comprehensive loss, net of tax:

Net income (loss) $ 288,790 $ ( 446,899 )

Other comprehensive income (loss), net of tax:

Employee benefit plans:

Current period actuarial loss $ ( 60,647 ) $ ( 42,891 )

Current period actuarial gain (loss) $ 47,461 $ ( 60,647 )

Income tax — —

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$ 6,021 $ 7,278

Total other comprehensive loss, net of tax $ ( 53,369 ) $ ( 35,486 )

Total comprehensive loss $ ( 500,268 ) $ ( 351,805 )

Total other comprehensive income (loss), net of tax $ 53,482 $ ( 53,369 )

Total comprehensive income (loss) $ 342,272 $ ( 500,268 )

Refer to accompanying Notes to Consolidated Financial Statements.

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Cash and cash equivalents $ 81,211 $ 139,227

Trade accounts receivable, net of allowance for doubtful accounts of $ 293 and $ 0 as of December 31, 2020 and 2019

Trade accounts receivable, net of allowance for doubtful accounts of $ 393 and $ 293 as of December 31, 2021 and 2020, respectively

489,241 145,670

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Total current assets 747,986 510,135

Property, plant, and equipment, net of accumulated depreciation and amortization of $ 382,423 and $ 256,378 as of December 31, 2020 and 2019

Property, plant, and equipment, net of accumulated depreciation and amortization of $ 443,856 and $ 382,423 as of December 31, 2021 and 2020, respectively

362,218 363,620

Owned and leased mineral rights, net of accumulated depletion and amortization of $ 35,143 and $ 27,548 as of December 31, 2020 and 2019

Owned and leased mineral rights, net of accumulated depletion and amortization of $ 52,444 and $ 35,143 as of December 31, 2021 and 2020, respectively

444,302 463,250

Other acquired intangibles, net of accumulated amortization of $ 25,700 and $ 26,806 as of December 31, 2020 and 2019

Other acquired intangibles, net of accumulated amortization of $ 34,221 and $ 25,700 as of December 31, 2021 and 2020, respectively

74,197 88,196

Long-term restricted cash 89,426 96,033

Deferred income taxes — 33,065

Other non-current assets 131,057 149,382

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Treasury stock, at cost:

2.3 million shares at December 31, 2020 and 2019

2.4 million shares at December 31, 2021 and 2.3 million shares at December 31, 2020

( 107,800 ) ( 107,014 )

(Accumulated deficit) retained earnings ( 360,529 ) 86,810

Accumulated deficit ( 71,739 ) ( 360,529 )

Total stockholders’ equity 546,909 200,102

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Operating activities:

Net loss $ ( 446,899 ) $ ( 316,319 )

Adjustments to reconcile net loss to net cash provided by operating activities:

Net income (loss) $ 288,790 $ ( 446,899 )

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Depreciation, depletion and amortization 110,047 151,455

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Loss on sale of business — 36,113

(Gain) loss on disposal of assets ( 2,401 ) 8,142

Gain on assets acquired in an exchange transaction — ( 9,083 )

Gain on disposal of assets, net ( 9,911 ) ( 2,401 )

Accretion on asset retirement obligations 26,520 30,658

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Deferred income taxes ( 163 ) 33,123

Goodwill impairment — 124,353

Asset impairment and restructuring ( 561 ) 256,518

Loss on modification and extinguishment of debt — 26,459

Stock-based compensation 5,315 4,896

Equity in loss of affiliates 3,473 6,874

Equity loss in affiliates 4,149 3,473

Other, net ( 6,570 ) ( 5,972 )

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Capital contributions to equity affiliates ( 6,677 ) ( 3,443 )

Purchase of investment securities ( 21,129 ) ( 92,855 )

Purchases of investment securities ( 17,985 ) ( 21,129 )

Maturity of investment securities 13,265 16,685

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Financing activities:

Proceeds from borrowings on debt 57,500 544,946

Principal repayments of debt ( 59,768 ) ( 552,809 )

Proceeds from borrowings on long-term debt — 57,500

Repurchases of long-term debt ( 18,415 ) —

Principal repayments of long-term debt ( 119,097 ) ( 76,491 )

Principal repayments of financing lease obligations ( 2,064 ) ( 3,176 )

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Common stock repurchases and related expenses ( 786 ) ( 209 )

Principal repayments of notes payable ( 16,723 ) ( 14,818 )

Other, net — 952

Net cash used in financing activities ( 147,045 ) ( 22,376 )

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(Amounts in thousands)

Common Stock Additional Paid-in Capital Accumulated Other Comprehensive Loss Treasury Stock at Cost Retained Earnings (Accumulated Deficit) Total Stockholders’ Equity

Common Stock Additional Paid-in Capital Accumulated Other Comprehensive (Loss) Income Treasury Stock at Cost Retained Earnings (Accumulated Deficit) Total Stockholders’ Equity

Balances, December 31, 2019 $ 205 $ 775,707 $ ( 58,616 ) $ ( 107,984 ) $ 86,810 $ 696,122

Net loss — — — — ( 446,899 ) ( 446,899 )

Credit losses cumulative-effect adjustment — — — — ( 440 ) ( 440 )

Other comprehensive loss, net — — ( 53,369 ) — — ( 53,369 )

Stock-based compensation and net issuance of common stock for share vesting 1 3,717 — — — 3,718

Exercise of stock options 2 932 — — — 934

Common stock repurchases and related expenses — — — ( 37,622 ) — ( 37,622 )

Warrant exercises — 19 — — — 19

Common stock reissuances, repurchases and related expenses — — — 970 — 970

Balances, December 31, 2020 $ 206 $ 779,424 $ ( 111,985 ) $ ( 107,014 ) $ ( 360,529 ) $ 200,102

Net loss — — — — ( 446,899 ) ( 446,899 )

Credit losses cumulative-effect adjustment — — — — ( 440 ) ( 440 )

Other comprehensive loss, net — — ( 53,369 ) — — ( 53,369 )

Net income — — — — 288,790 288,790

Other comprehensive income, net — — 53,482 — 53,482

Stock-based compensation and net issuance of common stock for share vesting 2 5,313 — — — 5,315

Common stock repurchases and related expenses — — — ( 786 ) — ( 786 )

Warrant exercises — 6 — — — 6

Balances, December 31, 2021 $ 208 $ 784,743 $ ( 58,503 ) $ ( 107,800 ) $ ( 71,739 ) $ 546,909

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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.

supplier of metallurgical coal products for the steel industry.

The Company was formed to acquire and operate certain of Alpha Natural Resources, Inc.’s core coal operations, as part of the Alpha Natural Resources, Inc.

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Basis of Presentation

Together, the consolidated balance sheet and consolidated statements of operations, comprehensive loss, cash flows and stockholders’ equity for the Company are referred to as the “Financial Statements.” The Financial Statements are also referred to as “Consolidated” and references across periods are generally labeled “Balance Sheets,” “Statements of Operations,” and “Statements of Cash Flows.”

Together, the consolidated balance sheets and consolidated statements of operations, comprehensive income (loss), cash flows and stockholders’ equity for the Company are referred to as the “Financial Statements.” The Financial Statements are also referred to as “Consolidated” and references across periods are generally labeled “Balance Sheets,” “Statements of Operations,” and “Statements of Cash Flows.” The Company’s former Northern Appalachia (“NAPP”) operations results of operations and financial position are reported as discontinued operations in the Consolidated Financial Statements.

Refer to Note 3 for further information on discontinued operations.

The Consolidated Financial Statements include all wholly owned subsidiaries’ results of operations for the years ended December 31, 2021 and 2020.

All significant intercompany transactions have been eliminated in consolidation.

On December 10, 2020, the Company closed on a transaction with Iron Senergy Holdings, LLC, to sell its thermal coal mining operations located in Pennsylvania consisting primarily of our Cumberland mining complex and related property (the Company’s former Northern Appalachia (“NAPP”) operations).

On December 8, 2017, the Company closed a transaction with Blackjewel L.L.C.

to sell the Eagle Butte and Belle Ayr mines located in the Powder River Basin (“PRB”), Wyoming, along with related coal reserves, equipment, infrastructure and other real properties.

Refer to Note 3 for information related to Blackjewel L.L.C.’s subsequent bankruptcy filing and the related ESM transaction.

The Company’s former NAPP and PRB operations results of operations and financial position are reported as discontinued operations in the Consolidated Financial Statements.

The historical information in the accompanying Notes 2, 3, 4, 6, 7, 9, 10, 11, 12, 14, 15, 17, 18, 19, 20, 23, 24, and 25 to the Consolidated Financial Statements has been restated to reflect the effects of the former NAPP and PRB operations being reported as discontinued operations in the Consolidated Financial Statements.

Refer to Note 3 for further information on discontinued operations.

The accompanying Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S.

Reclassifications

Certain amounts in the prior year Consolidated Statements of Cash Flows have been reclassified to conform to the current year presentation.

Liquidity Risks and Uncertainties

Weak market conditions and depressed coal prices have resulted in operating losses.

If market conditions do not improve, the Company may experience continued operating losses and cash outflows in the coming quarters, which would adversely affect its liquidity.

The Company may need to raise additional funds more quickly if market conditions deteriorate and may not be able to do so in a timely fashion, or at all.

The Company believes it will have sufficient liquidity to meet its working capital requirements, anticipated capital expenditures, debt service requirements, acquisition-related obligations, and reclamation obligations for the 12 months subsequent to the issuance of these financial statements.

The Company relies

However, the Company may need to raise additional funds if market conditions deteriorate and may not be able to do so in a timely fashion, or at all.

The Company relies on a number of assumptions in budgeting for future activities.

These include the costs for mine development to sustain capacity of its operating mines, cash flows from operations, effects of regulation and taxes by governmental agencies, mining technology improvements and reclamation costs.

These assumptions are inherently subject to significant business, political, economic, regulatory, environmental and competitive uncertainties, pending and existing climate-related initiatives, contingencies and risks, all of which are difficult to predict and many of which are beyond the Company’s control.

Therefore, the Company’s cash on hand and from future operations will be subject to any significant changes in these assumptions.

ALPHA METALLURGICAL RESOURCES, INC.

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(Amounts in thousands except share and per share data)

on a number of assumptions in budgeting for future activities.

These assumptions are inherently subject to significant business, political, economic, regulatory, environmental and competitive uncertainties, contingencies and risks, all of which are difficult to predict and many of which are beyond the Company’s control.

Therefore, the cash on hand and from future operations will be subject to any significant changes in these assumptions.

COVID-19 Pandemic

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The COVID-19 pandemic has had negative impacts on the Company’s business, results of operations, financial condition and cash flows.

A continued period of reduced demand for the Company’s products could have significant adverse consequences.

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 and spread of the outbreak, its impact on its customers and suppliers and the range of governmental and community reactions to the pandemic, which are still uncertain and cannot be fully predicted at this time.

As further described in Note 15, on March 20, 2020, the Company borrowed funds under a senior secured asset-based revolving credit facility.

The funds were borrowed to augment the Company’s short-term operational flexibility in the face of uncertainty created by the current spread of the COVID-19 virus and its potential effects.

In the first quarter of 2021, the Company repaid the remaining $ 3,350 of borrowed funds as of December 31, 2020.

In response to the COVID-19 pandemic, on March 27, 2020, the “Coronavirus Aid, Relief, and Economic Security

Act” (“CARES Act”) was enacted into law.

As a result, the Company received $ 66,130 of accelerated refunds of previously generated alternative minimum tax (“AMT”) credits from the Internal Revenue Service (“IRS”) during the fourth quarter of 2020 as further described in Note 19 and deferred 2020 employer payroll taxes incurred after the date of enactment of $ 15,109 , including discontinued operations, with two future payments of $ 7,554 each due by December 31, 2021 and 2022.

On April 3, 2020, the Company announced temporary operational changes in response to market conditions, existing coal inventory levels, and customer deferrals due to concern around the global economic impact of the COVID-19 pandemic.

Beginning April 3, 2020, the majority of the Company’s operations were idled for a period of approximately 30 days, with some sites idling for shorter periods of time and a few continuing to operate at a near-normal rate of production.

Location-specific schedules were implemented based on existing customer agreements, current inventory levels, and anticipated customer demand.

Certain preparation plants, docks, and loadouts continued to operate to support business needs and customer shipments.

As of May 4, 2020, all Company sites were back to nearly normal staffing levels and operating capacity with additional precautions in place to help reduce the risk of exposure to COVID-19.

Refer to Note 8 for discussion of certain strategic actions announced during the second quarter of 2020 with respect to two thermal coal mining complexes in an effort to strengthen the Company’s financial performance.

The Company will continue to evaluate market conditions amid the continuing uncertainty of the COVID-19 pandemic and expects to adjust its operations accordingly.

(2) Summary of Significant Accounting Policies

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Significant items subject to such estimates and assumptions include inventories;

mineral reserves;

asset impairments;

goodwill impairment;

mineral reserves and resources;

long-lived asset impairments;

reclamation obligations;

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however, actual results could differ from those estimates.

ALPHA METALLURGICAL RESOURCES, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Amounts in thousands except share and per share data)

Cash and Cash Equivalents

Cash and cash equivalents consist of cash held with reputable depository institutions and highly liquid, short-term investments with original maturities of three months or less.

Cash and cash equivalents consist of cash held with reputable depository institutions and highly liquid, short-term investments, such as highly-rated money market funds, with original maturities of three months or less.

Cash and cash equivalents are stated at cost, which approximates fair value.

As of December 31, 2020 and December 31, 2019, the Company’s cash equivalents of $ 139,227 and $ 212,803 , respectively, consisted of highly-rated money market funds.

Restricted Cash

Amounts included in restricted cash represent cash deposits that are restricted as to withdrawal as required by certain agreements entered into by the Company and provide collateral in the amounts of $ 69,725 , $ 8,445 , and $ 17,863 as of December 31, 2020 to secure workers’ compensation and black lung obligations, reclamation-related obligations, and financial payments and other performance obligations, respectively, which have been written on the Company’s behalf.

As of December 31, 2019, collateral was provided in the amounts of $ 51,650 , $ 67,868 , and $ 3,006 to secure workers’ compensation and black lung obligations, reclamation-related obligations, and financial payments and other performance obligations, respectively, which have been written on the Company’s behalf.

The Company’s restricted cash is primarily invested in interest-bearing accounts.

This restricted cash is classified as long-term on the Company’s Consolidated Balance Sheets.

Additionally, as of December 31, 2020 and 2019, the Company had $ 9,311 and $ 12,363 , respectively, of short-term restricted cash held in escrow related to the Company’s contingent revenue payment obligation.

Refer to Note 16 for further information regarding the contingent payment revenue obligation.

Amounts included in restricted cash represent cash deposits primarily invested in interest-bearing accounts that are restricted as to withdrawal as required by certain agreements entered into by the Company and provide collateral to secure the certain obligations which have been written on the Company’s behalf.

Refer to Note 22 for further information.

Restricted Investments

Restricted investments consist of Federal Deposit Insurance Company (“FDIC”) insured certificates of deposit, mutual funds, and U.S.

treasury bills classified as either trading securities or held-to-maturity securities.

treasury bills classified as either trading securities or held-to-maturity securities that are restricted as to withdrawal as required by certain agreements entered into by the Company and provide collateral to secure certain obligations which have been written on the Company’s behalf.

Trading securities are recorded initially at cost and are adjusted to fair value at each reporting period with unrealized gains and recorded in current period earnings or loss.

Held-to-maturity securities are recorded at amortized cost with interest income recorded in current period earnings.

As of December 31, 2020, $ 22,498 and $ 1,270 were classified as trading and held-to-maturity securities, respectively.

As of December 31, 2019, $ 11,021 and $ 8,378 were classified as trading and held-to-maturity securities, respectively.

Given the nature of the underlying investments, the Company does not expect any credit losses and has not recorded any credit losses with respect to its held-to-maturity portfolio.

Restricted investments are restricted as to withdrawal by certain agreements and provide collateral in the amounts of $ 51 , $ 22,233 , and $ 1,484 as of December 31, 2020 to secure workers’ compensation obligations, reclamation-related obligations, and financial payments and other performance obligations, respectively.

As of December 31, 2019, collateral was provided in the amounts of $ 613 and $ 18,786 to secure workers’ compensation obligations and reclamation-related obligations, respectively.

These restricted investments are classified as long-term on the Company’s Consolidated Balance Sheets.

Deposits represent cash deposits held at third parties as required by certain agreements entered into by the Company to provide cash collateral.

The Company had cash collateral in the form of deposits in the amounts of $ 25,633 , $ 1,596 , and $ 1,018 as of December 31, 2020 to secure reclamation-related obligations, financial payments and other performance obligations, and various other operating agreements, respectively.

The Company had cash collateral in the form of deposits in the amounts of $ 8,887 and $ 1,423 as of December 31, 2019 to secure the Company’s obligations under reclamation-related obligations and various other operating agreements, respectively.

These deposits are classified as both short-term and long-term on the Company’s Consolidated Balance Sheets.

Refer to Note 22 for further information.

Deposits represent cash deposits held at third parties as required by certain agreements entered into by the Company to provide cash collateral to secure the following obligations which have been written on the Company’s behalf.

Refer to Note 22 for further information.

Trade Accounts Receivable and Allowance for Doubtful Accounts

ALPHA METALLURGICAL RESOURCES, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Amounts in thousands except share and per share data)

Trade accounts receivable are recorded at their invoiced amounts and do not bear interest.

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Credit losses have historically not been material.

Account balances are written-off against

ALPHA METALLURGICAL RESOURCES, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Amounts in thousands except share and per share data)

the allowance after all means of collection have been exhausted and the potential for recovery is considered remote.

Account balances are written-off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote.

Refer to Note 23 for further information.

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Material and supplies inventories are valued at average cost, less an allowance for obsolete and surplus items.

Refer to Note 7 for further information.

Discontinued Operations

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In the period in which the discontinued operations criteria are met, the assets and liabilities of the discontinued operations are separately presented on the Company's Consolidated Balance Sheets and the results of operations, including any gain or loss recognized, is reclassified to discontinued operations on the Company’s Consolidated Statement of Operations.

Refer to Note 3 for further information on discontinued operations.

Refer to Note 3 for further information.

Deferred Longwall Move Expenses

The Company deferred the direct costs, including labor and supplies, associated with moving longwall equipment, the related equipment refurbishment costs, costs to drill vent holes and plug existing gas wells in advance of the longwall panel associated with its former NAPP operations included in discontinued operations of the Consolidated Balance Sheets as of December 31, 2020 and 2019.

Refer to Note 3.

Refer to Note 3 for further information.

These deferred costs were amortized on a units-of-production basis into cost of coal sales over the life of the related panel of coal mined by the longwall equipment.

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Advance royalty balances are generally charged off against the allowance when they are no longer recoupable.

Refer to Note 11 for further information.

Property, Plant, and Equipment, Net

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Mining equipment, buildings, and other fixed assets are stated at cost and depreciated on a straight-line basis over estimated useful lives ranging from one to 25 years.

Leasehold improvements are amortized using the straight-line method, over the shorter of the estimated useful lives or term of the lease.

Major repairs and betterments that significantly extend original useful lives or improve productivity are capitalized and depreciated over the period benefited.

Maintenance and repairs are expensed as incurred.

When equipment is retired or disposed, the related cost and accumulated depreciation are removed from the respective accounts and any profit or loss on disposal is recognized in other (income) expense in the Company’s Consolidated Statements of Operations.

Costs to obtain owned and leased mineral rights are capitalized and amortized to operations as depletion expense using the units-of-production method.

Only proven and probable reserves are included in the depletion base.

Refer to Note 10 for further detail on

Leasehold improvements are amortized using the straight-line method, over the shorter of the estimated

ALPHA METALLURGICAL RESOURCES, INC.

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(Amounts in thousands except share and per share data)

property, plant and equipment, net.

useful lives or term of the lease.

Major repairs and betterments that significantly extend original useful lives or improve productivity are capitalized and depreciated over the period benefited.

Maintenance and repairs are expensed as incurred.

Refer to Note 10 for further information.

Owned and Leased Mineral Rights

Owned and leased mineral rights, net of accumulated depletion, for the years ended December 31, 2020 and 2019 were $ 463,250 and $ 523,012 , respectively, and are reported in assets in the Company’s Consolidated Balance Sheets.

These amounts include $ 10,491 and $ 36,723 of asset retirement obligation assets, net of accumulated depletion, associated with active mining operations for the years ended December 31, 2020 and 2019, respectively.

During the year ended December 31, 2020 and 2019, the Company recorded a long-lived asset impairment which reduced the carrying value of owned and leased mineral rights, net, by $ 41,579 and $ 35,445 , respectively.

Refer to the asset impairment disclosure included in Note 8.

Owned and leased mineral rights, net of accumulated depletion and amortization, for the years ended December 31, 2021 and 2020 were $ 444,302 and $ 463,250 , respectively, and are reported in assets in the Company’s Consolidated Balance Sheets.

These amounts include $ 10,354 and $ 10,491 of asset retirement obligation assets, net of accumulated amortization, associated with active mining operations for the years ended December 31, 2021 and 2020, respectively.

During the year ended December 31, 2020, the Company recorded a long-lived asset impairment which reduced the carrying value of owned and leased mineral rights, net, by $ 41,579 .

Refer to Note 8 for further information on long-lived asset impairment.

Costs to obtain owned and leased mineral rights are capitalized and amortized to operations as depletion expense using the units-of-production method.

Only proven and probable reserves are included in the depletion base.

Depletion expense is included in depreciation, depletion and amortization on the accompanying Consolidated Statements of Operations and was ($ 13,746 ) and $ 14,551 for the years ended December 31, 2020 and 2019, respectively.

Depletion expense for the years ended December 31, 2020 and 2019 includes a credit of ($ 34,377 ) and ($ 7,162 ), respectively, related to revisions to asset retirement obligations.

Depletion expense is included in depreciation, depletion and amortization in the accompanying Consolidated Statements of Operations and was $ 23,541 and ($ 13,746 ) for the years ended December 31, 2021 and 2020, respectively.

Depletion expense for the years ended December 31, 2021 and 2020 includes an expense of $ 5,782 and a credit of ($ 34,377 ), respectively, related to revisions to asset retirement obligations.

Refer to Note 16 for further disclosures related to asset retirement obligations.

In accordance with ASC 842, the Company recognizes right of use assets and lease liabilities on the balance sheet for all leases with a term longer than 12 months.

In accordance with ASC 842, the Company recognizes right of use assets and lease liabilities on the Consolidated Balance Sheets for all leases with a term longer than 12 months.

Some of these leases include both lease and non-lease components which are accounted for as a single lease component as the Company has elected the practical expedient to combine these components for all leases.

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As the rates implicit in most of the Company’s leases are not readily determinable, the Company uses a collateralized incremental borrowing rate based on the information available at the lease commencement date in determining the present value of future payments.

The Company uses the portfolio approach and group leases by short-term and long-term categories, applying the corresponding incremental borrowing rates to these categories of leases.

For leases with a term of 12 months or less, no right of use assets or liabilities are recognized on the balance sheet and the Company recognizes the lease expense on a straight-line basis over the lease term.

The Company uses the portfolio approach and groups leases by short-term and long-term categories, applying the corresponding incremental borrowing rates to these categories of leases.

For leases with a term of 12 months or less, no right of use assets or liabilities are recognized on the Consolidated Balance Sheets and the Company recognizes the lease expense on a straight-line basis over the lease term.

Additionally, the Company recognizes variable lease payments as an expense in the period incurred.

Refer to Note 12 for disclosures related to leases and the Recently Adopted Accounting Guidance section below for further detail related to the initial adoption of the leases accounting standards.

The Company has elected to show net instead of gross amounts for right-of-use assets and liabilities within its Consolidated Statements of Cash Flows.

Refer to Note 12 for further information.

Acquired Intangibles

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The acquired mine permits were valued based on the replacement cost and lost profits method as of the Merger date.

The balances and respective balance sheet classifications of such assets and liabilities as of December 31, 2020 and 2019, net of accumulated amortization, are set forth in the following tables:

The balances and respective Consolidated Balance Sheets classifications of such assets and liabilities as of December 31, 2021 and 2020, net of accumulated amortization, are set forth in the following tables:

December 31, 2021

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(2) Included within Other non-current liabilities on the Company’s Consolidated Balance Sheets.

During the years ended December 31, 2020 and 2019, the Company recorded long-lived asset impairments which reduced the carrying value of acquired mine permits, net, by $ 21,144 and $ 5,997 .

During the year ended December 31, 2020, the Company recorded long-lived asset impairments which reduced the carrying value of acquired mine permits, net, by $ 21,144 .

Refer to Note 8 for further information.

The acquired mine permits are amortized over the estimated life of the associated mine.

The coal supply agreement assets and liabilities are amortized over the actual number of tons shipped over the life of each contract.

The coal supply agreement assets and liabilities were amortized over the actual number of tons shipped over the life of each contract.

The following table details the amortization of mine permits acquired as a result of the Merger and the amortization of above-market and below-market coal supply agreements.

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Future net amortization expense related to acquired intangibles is expected to be as follows:

2022 $ 11,749

Thereafter 34,722

Total net future amortization expense $ 74,197

Goodwill represents the excess of the purchase price over the fair value of the net identifiable tangible and intangible assets of acquired companies.

In connection with the Merger in 2018, the Company recorded goodwill of $ 124,353 and allocated it to the Met reportable segment.

Goodwill is not amortized;

instead, it is tested for impairment annually as of October 31 of each year or more frequently if indicators of impairment exist.

The Company performed an interim goodwill impairment test as of August 31, 2019 due to a decline in the Company’s market capitalization to amounts below book value combined with a decline in global metallurgical coal pricing which indicated that the fair value of the Met segment reporting unit may have been below its carrying value.

Following the quantitative testing, the Company concluded that the fair value of the reporting unit exceeded its carrying value and no amount of goodwill was impaired.

As of October 31, 2019, the Company performed its annual goodwill impairment test and concluded that more likely than not the fair value of its Met reporting unit to which the Company’s goodwill is allocated exceeded its carrying value.

As a result, no amount of goodwill was considered impaired as a result of impairment testing at October 31, 2019.

ALPHA METALLURGICAL RESOURCES, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Amounts in thousands except share and per share data)

However, due to the continued weakening in coal market pricing combined with a significant market price decline for the Company’s stock late in the fourth quarter of 2019, the Company performed an interim goodwill impairment test as of December 31, 2019.

Following the quantitative testing, the Company concluded that the carrying value of the Met reporting unit exceeded its fair value and recorded a goodwill impairment of $ 124,353 to write down the full carrying amount of goodwill.

The Company early adopted Accounting Standards Update (“ASU”) 2017-04 for the period ended December 31, 2017, which eliminated Step 2 of the quantitative goodwill impairment test.

The Company first assesses goodwill for impairment on a qualitative basis.

If the Company determines that more likely than not the fair value of a reporting unit containing goodwill exceeds its carrying amount, no further impairment testing is required.

If the qualitative assessment indicates that an impairment potentially exists, then the Company quantitatively tests goodwill for impairment by comparing the fair value of the reporting unit to its carrying amount.

If the fair value of the reporting unit is lower than its carrying amount, its goodwill is written down by the lesser of the amount by which the reporting units carrying amount exceeded its fair value or its carrying amount of goodwill.

The valuation methodology utilized to estimate the fair value of the reporting units is based on both a market and income approach and is within the range of fair values yielded under each approach.

The income approach is based on a discounted cash flow methodology based on estimates of future sales volumes, coal prices, production costs, and a risk-adjusted cost of capital.

These estimates generally constitute unobservable Level 3 inputs under the fair value hierarchy.

The market approach is based on a guideline company and similar transaction methodology.

Under the guideline company approach, certain metrics from a selected group of publicly traded guideline companies that have similar operations to the Company’s reporting units are used to estimate the fair value of the reporting units.

Under the similar transactions approach, recent merger and acquisition transactions for companies that have similar operations to the Company’s reporting units are used to estimate the fair value of the Company’s reporting units.

The following table summarizes the changes in goodwill for the year ended December 31, 2019:

Balance as of December 31, 2018 Measurement-Period Adjustments (2)

Impairments Balance as of December 31, 2019

$ 95,624 $ 28,729 $ ( 124,353 ) $ —

(1) There was no goodwill activity during the year ended December 31, 2020.

(2) Prior to the finalization of the Merger purchase price allocation, the Company recorded measurement-period adjustments to the provisional opening balance sheet primarily to property, plant, and equipment, owned and leased mineral rights, asset retirement obligations, and certain actuarial liabilities.

Asset Impairment

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The Company estimates the fair value of an asset group generally using discounted cash flow analysis based on estimates of future sales volumes, coal prices, production costs, and a risk-adjusted cost of capital.

These estimates generally constitute unobservable Level 3 inputs under the fair value hierarchy.

The amount of impairment, if any, is allocated to the long-lived assets on a pro-rata basis, except that the carrying value of the individual long-lived assets are not reduced below their estimated fair value.

Refer to Note 8.

ALPHA METALLURGICAL RESOURCES, INC.

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(Amounts in thousands except share and per share data)

These estimates generally constitute unobservable Level 3 inputs under the fair value hierarchy.

Refer to Note 8 for further information.

Asset Retirement Obligations

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Over time, the liability is accreted and any capitalized cost is depreciated or depleted over the useful life of the related asset.

To settle the liability, the obligation is paid, and to the extent there is a difference between the liability and the amount of cash paid, a gain or loss upon settlement is recorded.

To settle the liability, the obligation is paid, and any difference between the liability and the amount of cash paid is recorded within depreciation, depletion and amortization within the Consolidated Statements of Operations at the time the reclamation work is completed.

The Company annually reviews its estimated future cash flows for its asset retirement obligations.

Refer to Note 17 for further disclosures related to asset retirement obligations.

During the year ended December 31, 2019, the Company recorded a long-lived asset impairment which reduced the carrying value of long-lived assets related to asset retirement obligations by $ 1,671 .

Refer to the asset impairment disclosure included in Note 8.

The Company recognizes deferred tax assets and liabilities using enacted tax rates for the effect of temporary differences between the book and tax basis of recorded assets and liabilities.

Deferred tax assets are reduced by a valuation allowance if it is more likely than not that some portion or all of the deferred tax asset will not be realized.

In evaluating its ability to recover deferred tax assets within the jurisdiction in which they arise, the Company considers all available positive and negative evidence, including the expected reversals of taxable temporary differences, projected future taxable income, taxable income available via carryback to prior years, tax planning strategies, and results of recent operations.

Refer to Note 16 for further information.

The Company recognizes deferred tax assets and liabilities using enacted tax rates for the effect of temporary differences between the book and tax bases of recorded assets and liabilities.

Deferred tax assets are reduced by a valuation allowance if it is more likely than not that some portion or all of the deferred tax assets will not be realized.

In evaluating its ability to recover deferred tax assets within the jurisdiction in which they arise, the Company considers all available positive and negative evidence, including the expected reversals of deferred tax liabilities, projected future taxable income, taxable income available via carryback to prior years, tax planning strategies, and results of recent operations.

The Company assesses 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 that 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.

Refer to Note 19 for further disclosures related to income taxes.

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.

Refer to Note 18 for further information.

Deferred Financing Costs

The costs to obtain new debt financing or amend existing financing agreements are generally deferred and amortized to interest expense over the life of the related indebtedness or credit facility using the effective interest method.

Unamortized deferred financing costs are presented in the Consolidated Balance Sheet as a direct deduction from the carrying amount of the debt liability, consistent with debt discounts or premiums.

Unamortized deferred financing costs are presented in the Consolidated Balance Sheets as a direct deduction from the carrying amount of the debt liability, consistent with debt discounts or premiums.

Unamortized deferred financing costs associated with undrawn credit facilities are included in the Consolidated Balance Sheets within other non-current assets.

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Freight and handling costs paid to third-party carriers and invoiced to coal customers are recorded as freight and handling costs and freight and handling fulfillment revenues within cost of coal sales and coal revenues, respectively.

Refer to Note 4 for further disclosures related to revenue.

Refer to Note 4 for further information.

Workers’ Compensation and Pneumoconiosis (Black Lung) Benefits

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Adjustments to the probable ultimate liabilities are made annually based on an actuarial study and adjustments to the liability are recorded based on the results of this study.

These short-term and long-term obligations are included in the Consolidated Balance Sheets within accrued expenses and other current liabilities and workers’ compensation and black lung obligations, respectively, with an offsetting insurance receivable within prepaid expenses and other current assets and other non-current assets.

These short-term and long-term obligations are included in the Consolidated Balance Sheets within accrued expenses and other current liabilities and workers’ compensation and black lung obligations, respectively, with the related expected insurance receivables within prepaid expenses and other current assets and other non-current assets.

As of December 31, 2021 and 2020, the workers’ compensation liability was net of a discount of $ 23,442 and $ 24,061 , respectively, related to fair value adjustments associated with acquisition accounting.

Refer to Note 20 for further disclosures related to workers’ compensation.

Refer to Note 19 for further information.

Black Lung Benefits

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Charges are made to operations for black lung claims, as determined by an independent actuary at the present value of the actuarially computed liability for such benefits over the employee’s applicable term of service.

The Company recognizes in its balance sheet the amount of the Company’s unfunded Accumulated Benefit Obligation (“ABO”) at the end of the year.

Amounts recognized in accumulated other comprehensive income (loss) are adjusted out of accumulated other comprehensive income (loss) when they are subsequently recognized as components of net periodic benefit cost.

The Company recognizes in its Consolidated Balance sheets the amount of the Company’s unfunded Accumulated Benefit Obligation (“ABO”) at the end of the year.

The actuarial gains and losses recognized in accumulated other comprehensive income (loss) are amortized into components of net periodic benefit cost over the expected lifetime of active participants (the Company does not use a corridor method).

Refer to Note 20 for further disclosures related to black lung benefits.

Refer to Note 19 for further information.

The Company is required to recognize the overfunded or underfunded status of a defined benefit pension plan as an asset or liability in its Consolidated Balance Sheets and to recognize changes in that funded status in the year in which the changes occur through other comprehensive (loss) income.

The actuarial gains and losses recognized in accumulated other comprehensive income (loss) are amortized into components of net periodic benefit cost over the average future lifetime of participants expected to have benefits (the Company does not use a corridor method).

The Company is required to measure plan assets and benefit obligations as of the date of the Company’s fiscal year-end Consolidated Balance Sheet and provide the required disclosures as of the end of each fiscal year.

Refer to Note 20 for further disclosures related to pension.

Refer to Note 19 for information.

Postretirement Life Insurance Benefits

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Adjustments to the probable ultimate liabilities are made annually based on an actuarial study and adjustments to the liability are recorded based on the results of this study.

These obligations are included in the Consolidated Balance Sheet as accrued expenses and other current liabilities and other non-current liabilities.

Refer to Note 20 for further disclosures related to postretirement life insurance benefits.

Net (Loss) Income per Share

Basic net (loss) income per share is computed by dividing net (loss) income by the weighted-average number of outstanding common shares for the period.

These obligations are included in the Consolidated Balance Sheets as Accrued expenses and other current liabilities and Other non-current liabilities.

Refer to Note 19 for further information.

Net Income (Loss) per Share

Basic net income (loss) per share is computed by dividing net income (loss) by the weighted-average number of outstanding common shares for the period.

Diluted (loss) earnings per share reflects the potential dilution that could occur if instruments that may require the issuance of common shares in the future were settled and the underlying common shares were issued.

Diluted (loss) earnings per share is computed by increasing the weighted-average number of outstanding common shares computed in basic (loss) earnings per share to include the additional common shares that would be outstanding after issuance and adjusting net (loss) income for changes that would result from the issuance.

Diluted (loss) earnings per share is computed by increasing the weighted-average number of outstanding common shares computed in basic earnings (loss) per share to include the additional common shares that would be outstanding after issuance and adjusting net income (loss) for changes that would result from the issuance.

Only those securities that are dilutive are included in the calculation.

In periods of loss, the number of shares used to calculate diluted earnings is the same as basic earnings per share.

Refer to Note 6 for further disclosures related to net (loss) income per share.

Refer to Note 6 for further information.

Stock-Based Compensation

The Company recognizes expense for stock-based compensation awards based on their grant-date fair value.

ALPHA METALLURGICAL RESOURCES, INC.

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(Amounts in thousands except share and per share data)

is recorded over the respective service period of the underlying award.

The Company recognizes expense for stock-based compensation awards based on their grant-date fair value.

The expense is recorded over the respective service period of the underlying award.

Liability classified stock-based compensation awards are remeasured each reporting period at fair value until the award is settled.

The Company recognizes forfeitures of stock-based compensation awards as they occur.

Refer to Note 21 for further disclosures related to stock-based compensation arrangements.

Refer to Note 20 for further information.

On July 26, 2016 (the “Initial Issue Date”), the Company issued 810,811 warrants, which are classified as equity instruments, each with an initial exercise price, as defined in the Series A Warrants Agreement (the “Warrants Agreement”), of $ 55.93 per share of common stock and exercisable for one share of the Alpha’s common stock, par value $ 0.01 per share.

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The exercise price and the warrant share number will be adjusted in respect of certain dilutive events with respect to the common stock (namely, dividends or distributions on the common stock, share splits and combinations, above-market tender offers for common stock by the Company or a subsidiary thereof, and discounted issuances of common stock or rights or options to purchase common stock or securities convertible or exchangeable into common stock).

Refer to Note 25 for subsequent event disclosures related to the Company’s share repurchase program.

Additionally, in the case of any reorganization (i.e., a consolidation, merger, or sale of all or substantially all of the consolidated assets of Alpha) pursuant to which the common stock is converted into cash, securities or other property, the warrants would become exercisable for such property.

As of December 31, 2020 and 2019, the exercise price was $ 46.911 per share and the warrant share number was equal to 1.15 , as adjusted in respect to certain diluted events with respect to the common stock during 2017 and 2018.

As of December 31, 2020 and 2019, of the 810,811 warrants that were originally issued, 801,370 remained outstanding, with a total of 921,576 shares underlying the un-exercised warrants.

As of December 31, 2021 and 2020, the exercise price was $ 46.911 per share and the warrant share number was equal to 1.15 , as adjusted in respect to certain dilutive events with respect to the common stock during 2017 and 2018.

As of December 31, 2021, of the 810,811 warrants that were originally issued, 801,246 remained outstanding, with a total of 921,433 shares underlying the un-exercised warrants.

For the year ended December 31, 2021, the Company issued 143 shares of common stock resulting from exercises of its Series A Warrants and, pursuant to the terms of the Warrants Agreement, withheld 17 of the issued shares in satisfaction of the warrant exercise price, which were subsequently reclassified as treasury stock.

As of December 31, 2020, of the 810,811 warrants that were originally issued, 801,370 remained outstanding, with a total of 921,576 shares underlying the un-exercised warrants.

For the year ended December 31, 2020, there were no warrant exercises.

For the year ended December 31, 2019, the Company issued 414 shares of common stock resulting from exercises of its Series A Warrants and, pursuant to the terms of the Warrants Agreement, withheld five of the issued shares in satisfaction of the warrant exercise price, which were subsequently reclassified as treasury stock.

Equity Method Investments

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Recently Adopted Accounting Guidance

In February 2016, the Financial Accounting Standards Board (the “FASB”) issued an Accounting Standards Update and subsequent amendments related to ASC 842, Leases, (“ASC 842”).

ASC 842 requires a lessee to recognize a right-of-use asset and a lease liability on the balance sheet.

The Company adopted ASC 842 effective January 1, 2019 and elected the option not to restate comparative periods in transition and also elected the hindsight practical expedient, which allows the Company to use hindsight when considering lessee options to extend or terminate leases when determining the lease term of lease arrangements for classification purposes, and the package of practical expedients for all leases within the standard, which permits the Company not to reassess its prior conclusions about lease identification, lease classification, and initial direct costs.

Additionally, the Company elected the transition practical expedient to continue to account for existing and expired land easements at transition as executory contracts.

Only land easements entered into or modified after the effective date of ASC 842 are accounted for as leases by the Company.

As a result of the adoption, the Company recorded operating lease right-of-use assets and lease liabilities on our Consolidated Balance Sheet.

The following table summarizes the impact of the adoption of ASC 842 to the Company’s Consolidated Balance Sheet:

Business Combinations :

In October 2021, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2021-08 , Business Combinations (Topic 805), Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (“ASU 2021-08”).

This update requires an acquirer in a business combination to recognize and measure contract assets and contract liabilities from acquired contracts with customers using the revenue recognition guidance in ASC 606.

This creates an exception to the general recognition and measurement principle in ASC 805, Business Combinations.

The amendments in this update are intended to improve the accounting for acquired revenue contracts with customers in a business combination by addressing diversity in practice and certain inconsistencies.

The update is effective for fiscal years beginning after December 15, 2022 and interim periods within those fiscal years for public business entities, with early adoption permitted.

The Company adopted ASU 2021-08 during the fourth quarter of 2021.

The adoption of this ASU did not have a material impact on the Company's Consolidated Financial Statements and related disclosures.

Presentation of Financial Statements :

In August 2021, the FASB issued ASU 2021-06 , Presentation of Financial Statements (Topic 205), Financial Services—Depository and Lending (Topic 942), and Financial Services—Investment Companies (Topic 946) (“ASU 2021-06”).

This update amends certain SEC paragraphs from the Codification in response to the issuance of SEC Final Rule Nos.

33-10786, Amendments to Financial Disclosures About Acquired and Disposed Businesses, and 33-10835, Update of Statistical Disclosures for Bank and Savings and Loan Registrants.

For all entities, the update is effective immediately.

The Company adopted ASU 2021-06 during the third quarter of 2021.

The adoption of this ASU did not

ALPHA METALLURGICAL RESOURCES, INC.

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(Amounts in thousands except share and per share data)

Balance at December 31, 2018 Adjustments Balance at January 1, 2019

Assets Balance Sheet Classification

Operating lease right-of-use assets Other non-current assets $ — $ 10,136 $ 10,136

Financing lease assets Property, plant, and equipment, net 9,786 — 9,786

Total lease assets $ 9,786 $ 10,136 $ 19,922

Liabilities Balance Sheet Classification

Operating lease liabilities - current Accrued expenses and other current liabilities $ — $ 3,232 $ 3,232

Financing lease liabilities - current Current portion of long-term debt 2,110 — 2,110

Operating lease liabilities - long-term Other non-current liabilities — 6,904 6,904

Financing lease liabilities - long-term Long-term debt 4,313 — 4,313

Total lease liabilities $ 6,423 $ 10,136 $ 16,559

The adoption of ASC 842 did not have a material impact on our Consolidated Statements of Operations, Consolidated Statements of Comprehensive Loss, or Consolidated Statements of Cash Flows.

Refer to Note 12 for further disclosure requirements under the new standard.

Credit Losses:

In June 2016, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2016-13, Credit Losses (“ASU 2016-13”).

ASU 2016-13, along with related amendments and improvements issued in 2018 and 2019, replaces the previous incurred loss impairment methodology in U.S.

GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable supportable information to inform credit loss estimates for financial instruments that are in the scope of this update, including trade accounts receivable.

The Company adopted ASU 2016-13 during the first quarter of 2020.

The adoption of this ASU did not have a material impact on the Company's Consolidated Financial Statements and related disclosures and resulted in a cumulative-effect adjustment to retained earnings of $ 440 in the Consolidated Balance Sheet as of January 1, 2020.

Fair Value Measurement :

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820), Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement (“ASU 2018-13”).

The amendments in this update modify the disclosure requirements for fair value measurements.

The Company adopted ASU 2018-13 during the first quarter of 2020.

have a material impact on the Company's Consolidated Financial Statements and related disclosures.

In July 2021, the FASB issued ASU 2021-05, Leases (Topic 842) Lessors—Certain Leases with Variable Lease Payments (“ASU 2021-05”).

The amendments in this update affect lessors with lease contracts that (1) have variable lease payments that do not depend on a reference index or a rate (“variable payments”) and (2) would have resulted in the recognition of a selling loss at lease commencement if classified as sales-type or direct financing.

The amendments in this update address stakeholders’ concerns by amending the lease classification requirements for lessors to align them with practice under Topic 840 by requiring a lessor to classify a lease with variable payments as an operating lease on the commencement date of the lease if specified criteria are met.

The amendments are effective for fiscal years beginning after December 15, 2021, for all entities, and interim periods within those fiscal years for public business entities with early application permitted.

The Company adopted ASU 2021-05 during the third quarter of 2021.

The adoption of this ASU did not have a material impact on the Company's Consolidated Financial Statements and related disclosures.

Income Taxes :

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes (“ASU 2019-12”).

The amendments in this update simplify the accounting for income taxes by removing certain exceptions to the general principles in Topic 740.

The amendments also improve consistent application of and simplify U.S.

GAAP for other areas of Topic 740 by clarifying and amending existing guidance.

The Company adopted ASU 2019-12 during the first quarter of 2020.

Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options:

In May 2021, the FASB issued ASU 2021-04, Earnings Per Share (Topic 260), Debt—Modifications and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718), and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40) (“ASU 2021-04”).

The amendments in this update provide final guidance that requires issuers to account for modifications or exchanges of freestanding equity-classified written call options, such as the Company’s outstanding Series A warrants, that remain equity classified after the modification or exchange based on the economic substance of the modification or exchange.

This ASU addresses the diversity in practice in issuers’ accounting by providing a principles-based framework to determine whether an issuer should recognize the modification or exchange as 1) an adjustment to equity and, if so, the related earnings per share effects, if any, or 2) an expense and, if so, the manner and pattern of recognition.

For all entities, the standard is effective for fiscal years beginning after December 15, 2021, with early adoption permitted.

The Company adopted ASU 2021-04 during the second quarter of 2021.

The adoption of this ASU did not have a material impact on the Company's Consolidated Financial Statements and related disclosures.

Reference Rate Reform :

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848):

Facilitation of Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”).

The amendments in this update provide optional expedients and exceptions, if certain criteria are met, for applying U.S.

GAAP to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform.

The expedients and exceptions provided by the amendments do not apply to contract modifications made and hedging relationships entered into or evaluated after December 31, 2022, except for hedging relationships existing as of December 31, 2022, that an entity has elected certain optional expedients for and that are retained through the end of the hedging relationship.

The Company adopted ASU 2020-04, with respect to topics in Accounting Standards Codification (“ASC”) 310 Receivables , ASC 470 Debt , ASC 815 Derivatives and Hedging and ASC 842 Leases , during the first quarter of 2020.

The adoption of this ASU did not have a material impact on the Company's Consolidated Financial Statements and related disclosures.

Defined Benefit Plans :

In August 2018, the FASB issued ASU 2018-14, Compensation—Retirement Benefits—Defined

ALPHA METALLURGICAL RESOURCES, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Amounts in thousands except share and per share data)

Benefit Plans—General (Subtopic 715-20) Disclosure Framework—Changes to the Disclosure Requirements for Defined Benefit Plans (“ASU 2018-14”).

The amendments in this update modify the disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans.

For public business entities, the standard is effective for fiscal years ending after December 15, 2020.

The Company adopted ASU 2018-14 during the fourth quarter of 2020.

In January 2021, the FASB issued ASU 2021-01, Reference Rate Reform (Topic 848) (“ASU 2021-01”).

The amendments in this update clarify that certain optional expedients and exceptions in Topic 848 for contract modifications and hedge accounting apply to derivatives that are affected by the discounting transition.

For all entities, the standard is effective immediately.

The Company adopted ASU 2021-01 during the first quarter of 2021.

The adoption of this ASU did not have a material impact on the Company's Consolidated Financial Statements and related disclosures.

Recent Accounting Guidance Issued Not Yet Effective

Convertible Debt and Contracts in Entity’s Own Equity :

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For public business entities, the standard is effective for fiscal years beginning after December 15, 2021, with early adoption permitted.

The Company adopted ASU 2020-06 during the first quarter of 2021.

The adoption of this ASU did not have a material impact on the Company's Consolidated Financial Statements and related disclosures.

Credit Losses:

In June 2016, the FASB issued ASU 2016-13, Credit Losses (“ASU 2016-13”).

ASU 2016-13, along with related amendments and improvements issued in 2018 and 2019, replaces the previous incurred loss impairment methodology in U.S.

The Company adopted ASU 2016-13 during the first quarter of 2020.

Recent Accounting Guidance Issued Not Yet Effective

Government Assistance :

In November 2021, the FASB issued ASU 2021-10 , Disclosures by Business Entities about Government Assistance (“ASU 2021-10”).

This update requires business entities to make annual disclosures about transactions with a government accounted for by analogizing to a grant or contribution accounting model.

The required annual disclosures include the nature of the transaction, the related accounting policy, the financial statement line items affected and the amounts reflected in the current period financial statements, and any significant terms and conditions.

The amendments are effective for fiscal years beginning after December 15, 2021, for all entities, with early application permitted.

The adoption of this ASU is not expected to have a material impact on the Company’s Consolidated Financial Statements and related disclosures.

ALPHA METALLURGICAL RESOURCES, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Amounts in thousands except share and per share data)

(3) Discontinued Operations

Discontinued operations consisted of activity related to the Company’s former NAPP and PRB operations.

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

Former NAPP Operations

On November 11, 2020, the Company entered into an unit purchase agreement (the “UPA”) to sell its thermal coal mining operations located in Pennsylvania consisting primarily of its Cumberland mining complex and related property (“Cumberland Transaction”) to a third party purchaser Iron Senergy Holdings, LLC (“Iron Senergy”).

On November 11, 2020, the Company entered into a unit purchase agreement (the “UPA”) to sell its thermal coal mining operations located in Pennsylvania consisting primarily of its Cumberland mining complex and related property (“Cumberland Transaction”) to a third party purchaser Iron Senergy Holdings, LLC (“Iron Senergy”).

The Cumberland Transaction closed on December 10, 2020.

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The mining permits associated with the Cumberland mining operations were obtained by Iron Senergy at closing.

Due to the administrative process, the Company expects the release of the Company’s existing surety bonds and the acceptance of Iron Senergy’s replacement bonds to be completed by March 30, 2021.

During the second quarter of 2021, nearly all of the Company’s remaining surety bonds were released and Iron Senergy’s replacement bonds were accepted through the administrative process with only $ 30 remaining as of December 31, 2021, which are expected to be released in the short-term.

The following table presents the details of the Cumberland Transaction:

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As the Company does not control the purchased coal prior to customer delivery, the Company will record coal purchases and sales under the related agreements on a net basis.

ALPHA METALLURGICAL RESOURCES, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Amounts in thousands except share and per share data)

of the Cumberland Back-to-Back Coal Supply Agreements, the Company is required to purchase and sell 2,681 and 2,615 tons of coal in 2021 and 2022 totaling $ 104,051 and $ 101,990 , respectively.

For the year ended December 31, 2020, the Company purchased and sold 104 tons, totaling $ 3,997 under the Cumberland Back-to-Back Coal Supply Agreements.

Former PRB operations

On December 8, 2017, the Company closed a transaction (“PRB Transaction”) with Blackjewel L.L.C.

(“Blackjewel” or the “Buyer”) to sell its Eagle Butte and Belle Ayr mines located in Wyoming (the “Western Mines” or “Western Assets”).

On July 1, 2019, prior to the transfer of the permits, Blackjewel announced that it and certain affiliated entities had filed voluntary petitions for relief under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the Southern District of West Virginia (the “Bankruptcy Court”).

As the mine permit transfer process relating to the Company’s sale of the Western Assets to Blackjewel had not been completed prior to Blackjewel’s filing for Chapter 11 bankruptcy protection, the Company remained the permit holder in good standing for both mines and maintained surety bonding to cover related reclamation and other obligations.

The Company remeasured the asset retirement obligations based on the expectation that the mining permits would not transfer and that Blackjewel would not perform on its contractual obligation to reclaim the properties due to the bankruptcy filing.

The increase in the asset retirement obligation of $ 145,913 was expensed within depreciation, depletion, and amortization within discontinued operations in the Consolidated Statements of Operations during the year ended December 31, 2019 as the Company no longer owned the underlying mining assets.

On October 4, 2019, the Bankruptcy Court entered an order approving the sale by Blackjewel of the Western Assets to Eagle Specialty Materials (“ESM”), an affiliate of FM Coal, LLC (“FM Coal”).

The closing of the ESM acquisition occurred on October 18, 2019 (the “ESM Transaction”).

In connection with the ESM Transaction, the Company and ESM finalized an agreement which provided, among other items, for the transfer of the Western Asset permits from the Company to ESM once certain approvals for their transfer have been obtained and for the assumption by ESM of the related reclamation obligations.

Additionally, the surety bonding previously maintained by the Company for the benefit of the Wyoming Department of Environmental Quality (“DEQ”) was released and replaced with substitute surety bonds arranged for by ESM.

Lastly, ESM agreed to indemnify the Company and its affiliates against all reclamation liabilities related to the Western Assets and against claims by the federal government, the State of Wyoming, or Campbell County, Wyoming for royalties, ad valorem taxes, and other amounts relating to the Western Assets for the period beginning on December 8, 2017.

The following table presents the details of the ESM Transaction:

Year Ended December 31, 2019

Cash $ 90,000

DIP obligation (1)

Total consideration $ 93,339

ARO liabilities transferred ( 152,882 )

Gain on sale (2)

(1) The Company paid certain Blackjewel debtor-in-possession lenders $ 3,008 of principal and interest pursuant to an existing agreement between the Company and those lenders.

(2) The Company recorded a $ 59,543 gain within depreciation, depletion, and amortization within discontinued operations in the Consolidated Statements of Operations during the year ended December 31, 2019 as a result of the reduction of the reclamation obligation partially offset by the consideration paid.

Additionally, in connection with the closing of the ESM Transaction, the Company paid $ 13,500 to Campbell County, Wyoming for accrued ad valorem back taxes for 2018 and was released from all claims related thereto.

Pursuant to an agreement with ESM, the State of Wyoming Department of Revenue, and Blackjewel, the State of Wyoming Department of Revenue released the Company from any outstanding claims related to state tax obligations arising from or related to the Western Mines for any period through and including the closing date of the transaction.

On May 29, 2020, certain subsidiaries of the Company (Contura Coal West, LLC and Contura Wyoming Land, LLC), one of which held the mining permits for the Western Mines, were merged with certain subsidiaries of ESM to become wholly-owned subsidiaries of ESM and to complete the permit transfer process in connection with the ESM Transaction.

Pursuant to terms of the transaction, the Company received from ESM approximately $ 625 in consideration for assets owned by Contura

Per terms of the Cumberland Back-to-Back Coal Supply Agreements, the Company is required to purchase and sell 2,014 tons of coal in 2022 totaling $ 77,844 .

For the years ended December 31, 2021 and 2020, the Company purchased and sold 2,591 and 104 tons, respectively, totaling $ 100,338 and $ 3,997 , respectively, under the Cumberland Back-to-Back Coal Supply Agreements.

The Cumberland Back-to-Back Coal Supply Agreements are scheduled to be fully performed by December 31, 2022.

Major Financial Statement Components of Discontinued Operations

The income from discontinued operations before income taxes for the year ended December 31, 2021 was $ 1,660 .

The major components of net loss from discontinued operations before income taxes in the Consolidated Statements of Operations for the year ended December 31, 2020 are as follows:

ALPHA METALLURGICAL RESOURCES, INC.

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(Amounts in thousands except share and per share data)

Coal West, LLC but not previously conveyed.

In connection with the PRB Transaction, the Company entered into certain agreements with Blackjewel under which Blackjewel would sell to the Company all of the coal that the Company was obligated to sell to customers under Western Mines coal supply agreements (“Western Mines CSAs”) which existed as of the transaction closing date but did not transfer to Blackjewel at closing (each, a “PRB Back-to-Back Coal Supply Agreement”).

The original PRB Back-to-Back Coal Supply Agreements were not assumed in connection with the ESM Transaction.

Instead, the Company entered into new back-to-back coal supply agreements with Bluegrass Commodities LP, the sales and marketing agent for ESM, whereby the Company agreed to purchase and pay for, all coal that the Company is obligated to supply, deliver and sell under the Company’s PRB coal supply agreements that were still in effect as of the closing date of the ESM Transaction.

Each PRB Back-to-Back Coal Supply Agreement had economic terms identical to, but offsetting, the related Western Mines CSA.

As the Company did not control the purchased coal prior to customer delivery, the Company recorded coal purchases and sales under the related agreements on a net basis.

Per terms of the PRB Back-to-Back Coal Supply Agreements, the Company purchased and sold 1,149 tons of coal totaling $ 11,682 for the year ended December 31, 2020.

For the year ended December 31, 2019, the Company purchased and sold 929 tons, totaling $ 9,941 under the PRB Back-to-Back Coal Supply Agreements.

As of December 31, 2020, the PRB Back-to-Back Coal Supply Agreements were expired.

Major Financial Statement Components of Discontinued Operations

The major components of net loss from discontinued operations before income taxes in the Consolidated Statements of Operations are as follows:

Year Ended December 31, 2020 (1)

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Depreciation, depletion and amortization 11,570

11,570 99,405

Accretion on asset retirement obligations 4,154

Asset impairment and restructuring (2)

172,640 17,161

Selling, general and administrative expenses (3)

Other (income) expenses ( 926 ) 4,742

Other income ( 926 )

Other non-major expense items, net 374

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Loss from discontinued operations before income taxes $ ( 205,429 )

(1) For the year ended December 31, 2020, discontinued operations consisted entirely of activity related to the former NAPP operations.

(2) During the year ended December 31, 2019, depreciation, depletion and amortization includes $ 145,913 related to an increase in the Company’s estimate of its PRB asset retirement obligations which was partially offset by ($ 59,543 ) as a result of the ESM transaction.

Refer to the disclosures above for details.

(3) For the year ended December 31, 2019, the former PRB operations’ accretion on asset retirement obligations of $ 5,961 related to the asset retirement obligations recorded as a result of the Blackjewel bankruptcy filing.

Refer to the disclosures above for details.

(1) Includes minor residual activity related to the Company’s former PRB operations.

(2) Refer to Note 8.

(3) Represents professional and legal fees.

Refer to Note 6 for net loss per share information related to discontinued operations.

Refer to the Consolidated Statements of Operations and Note 6 for net income (loss) per share information related to discontinued operations.

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

ALPHA METALLURGICAL RESOURCES, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Amounts in thousands except share and per share data)

Trade accounts receivable, net of allowance for doubtful accounts $ — $ 7,504

Inventory, net $ — $ 11,771

Prepaid expenses and other current assets $ 462 $ 3,431

Property, plant, and equipment, net of accumulated depreciation and amortization $ — $ 146,864

Other non-current assets (1)

$ 8,526 $ 9,473

Trade accounts payable, accrued expenses and other current liabilities $ 5,838 $ 12,306

Asset retirement obligations $ — $ 21,568

Workers’ compensation and black lung obligations $ 32,672 $ 36,149

Workers’ compensation and black lung obligations, non-current $ 23,683 $ 27,799

Other non-current liabilities $ — $ 1,291

(1) Primarily comprised of workers’ compensation insurance receivable and long-term restricted investments collateralizing workers’ compensation obligations.

The major components of cash flows related to discontinued operations were as follows:

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Asset impairment and restructuring $ 172,640

ALPHA METALLURGICAL RESOURCES, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Amounts in thousands except share and per share data)

Disaggregation of Revenue from Contracts with Customers

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The Company conducts mining operations only in the United States with mines in Central Appalachia.

The Company has two reportable segments:

Met and CAPP - Thermal.

In addition to the two reportable segments, the All Other category includes general corporate overhead and corporate assets and liabilities, the elimination of certain intercompany activity, and the Company’s discontinued operations.

The Company has one reportable segment:

In addition to the one reportable segment, the All Other category includes general corporate overhead and corporate assets and liabilities, the former CAPP - Thermal operations, and the elimination of certain intercompany activity, as well as expenses associated with certain idled/closed mines.

Refer to Note 24 for further segment information.

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:

ALPHA METALLURGICAL RESOURCES, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Amounts in thousands except share and per share data)

Year Ended December 31, 2021

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or 2) the remaining performance obligation has variable consideration that is allocated entirely to a wholly unsatisfied performance obligation.

ALPHA METALLURGICAL RESOURCES, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Amounts in thousands except share and per share data)

(5) Accumulated Other Comprehensive Loss

The following tables summarize the changes to accumulated other comprehensive loss during the years ended December 31, 2021 and 2020:

Balance January 1, 2020 Other comprehensive loss before reclassifications Amounts reclassified from accumulated other comprehensive loss Balance December 31, 2020

Balance January 1, 2021 Other comprehensive income before reclassifications Amounts reclassified from accumulated other comprehensive loss Balance December 31, 2021

Employee benefit costs $ ( 111,985 ) $ 47,461 $ 6,021 $ ( 58,503 )

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The following table summarizes the amounts reclassified from accumulated other comprehensive loss and the Consolidated Statements of Operations line items affected by the reclassification during the years ended December 31, 2021 and 2020:

ALPHA METALLURGICAL RESOURCES, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Amounts in thousands except share and per share data)

Details about accumulated other comprehensive loss components Amounts reclassified from accumulated other comprehensive loss Affected line item in the Consolidated Statements of Operations

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Amortization of actuarial loss (1)

$ 3,929 $ 959 Miscellaneous loss, net

$ 5,653 $ 3,929 Miscellaneous income (loss), net

Settlement (1)

3,349 6,446 Miscellaneous loss, net

368 3,349 Miscellaneous income (loss), net

Total before income tax $ 6,021 $ 7,278

Income tax — — Income tax benefit

Income tax — — Income tax (expense) benefit

Total, net of income tax $ 6,021 $ 7,278

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Refer to Note 19.

(6) Net Loss per Share

The number of shares used to calculate basic net 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 loss per common share is based on the number of common shares used to calculate basic net 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 diluted effect of outstanding stock-based instruments is determined by application of the treasury stock method.

The warrants become dilutive for diluted net loss per common share calculations when the market price of the Company’s common stock exceeds the exercise price.

Dilutive securities are not included in the computation of diluted net loss per common share as the impact would be anti-dilutive.

Refer to the Consolidated Statements of Operations for net loss per common share for the years ended December 31, 2020 and 2019.

For the years ended December 31, 2020 and 2019, 1,317,351 and 537,918 warrants, stock options, and other stock-based instruments, respectively, were excluded from the computation of dilutive net loss per share because they would have been anti-dilutive.

(6) 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 year ended December 31, 2020 as the impact would be anti-dilutive.

For the years ended December 31, 2021 and 2020, 717,992 and 1,317,351 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 years ended December 31, 2020 and 2019, the weighted average share impact of warrants, 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 were 142,250 and 256,668 , respectively.

For the year ended December 31, 2020, 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 142,250 .

ALPHA METALLURGICAL RESOURCES, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Amounts in thousands except share and per share data)

The following table presents the net income (loss) per common share for the years ended December 31, 2021 and 2020:

Year Ended December 31,

Net income (loss)

Income (loss) from continuing operations $ 286,929 $ ( 241,470 )

Income (loss) from discontinued operations 1,861 ( 205,429 )

Net income (loss) $ 288,790 $ ( 446,899 )

Weighted average common shares outstanding - basic 18,441,175 18,298,362

Basic income (loss) per common share:

Income (loss) from continuing operations $ 15.56 $ ( 13.20 )

Income (loss) from discontinued operations 0.10 ( 11.22 )

Net income (loss) $ 15.66 $ ( 24.42 )

Weighted average common shares outstanding - basic 18,441,175 18,298,362

Diluted effect of warrants 35,574 —

Diluted effect of stock options 1,753 —

Diluted effect of other stock-based instruments 393,180 —

Weighted average common shares outstanding - diluted 18,871,682 18,298,362

Diluted income (loss) per common share:

Income (loss) from continuing operations $ 15.20 $ ( 13.20 )

Income (loss) from discontinued operations 0.10 ( 11.22 )

Net income (loss) $ 15.30 $ ( 24.42 )

(7) Inventories, net

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(1) Includes an increase in allowance for obsolete material and supplies inventory of $ 807 recorded as restructuring expense during the year ended December 31, 2020 (refer to Note 8).

(8) Asset Impairment and Restructuring

Long-lived Asset Impairment for the Year Ended December 31, 2020

ALPHA METALLURGICAL RESOURCES, INC.

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(Amounts in thousands except share and per share data)

(8) Asset Impairment and Restructuring

Long-lived Asset Impairment for the Year Ended December 31, 2021

During the year ended December 31, 2021, long-lived asset impairment of $ 60 was recorded in the All Other category to reduce the carrying value of property, plant, and equipment, net, due to capital spending during the period at previously impaired locations requiring the impairment of certain additional assets not considered recoverable.

Long-lived Asset Impairment for the Year Ended December 31, 2020

During the year ended December 31, 2020, weakening coal market conditions due in part to the impact of the global COVID-19 Pandemic, as well as the following events resulted in quarterly impairment testing:

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Refer to Note 3 for further details.

• During the fourth quarter of 2020, changes in mine plans and the determination that certain mineral reserves previously forecasted to be mined were no longer considered economic due to poor geologic conditions reduced forecasted cash flows for one Met and one CAPP - Thermal asset group to amounts below those required for full recoverability.

• During the fourth quarter of 2020, changes in mine plans and the determination that certain mineral reserves previously forecasted to be mined were no longer considered economic due to poor geologic conditions reduced forecasted cash flows for one Met and one All Other asset group to amounts below those required for full recoverability.

The Company performed long-lived asset impairment tests as of November 30, 2020, August 31, 2020, May 31, 2020, and February 29, 2020.

In total, the Company determined that indicators of impairment with respect to five long-lived asset groups within its Met reporting segment, three long-lived asset groups within its CAPP - Thermal reporting segment, and one long-lived asset group within discontinued operations existed during the year ended December 31, 2020.

In total, the Company determined that indicators of impairment with respect to five long-lived asset groups within its Met reporting segment, three long-lived asset groups within its All Other category, and one long-lived asset group within discontinued operations existed during the year ended December 31, 2020.

The following tables present the details of the long-lived asset impairments during the year ended December 31, 2020:

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$ 32,951 $ — $ — $ 13,366 $ 46,317

CAPP - Thermal

758 17,385 219 16,270 34,632

All Other 758 17,390 219 16,270 34,637

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Total long-lived asset impairment $ 33,709 $ 161,738 $ 3,516 $ 29,636 $ 228,599

Long-lived Asset Impairment for the Year Ended December 31, 2019

During the year ended December 31, 2019, the Company determined that indicators of impairment were present for three long-lived asset groups within each of its Met and CAPP - Thermal reporting segments and performed impairment testing as of December 31, 2019.

At December 31, 2019, the Company determined that the carrying amounts of the asset groups exceeded both their undiscounted cash flows and their estimated fair values.

As a result, after allocating the potential impairment to individual assets, the Company recorded a long-lived asset impairment of $ 60,169 , of which $ 9,176 was recorded within Met and $ 50,993 was recorded within CAPP - Thermal within continuing operations of the Consolidated Statements of Operations.

The long-lived asset impairment reduced the carrying values of mineral rights by $ 35,445 , property, plant, and equipment, net, by $ 17,056 , acquired mine permits, net, by $ 5,997 , and long-lived assets related to asset retirement obligations by $ 1,671 .

Additionally, during the year ended December 31, 2019, the Company recorded an asset impairment of $ 6,155 within continuing operations of the Consolidated Statements of Operations primarily related to the write-off of prepaid purchased coal as a result of Blackjewel’s Chapter 11 bankruptcy filing on July 1, 2019.

During the year ended December 31, 2019, the Company also recorded an asset impairment of $ 17,161 within discontinued operations of the Consolidated Statements of Operations which was primarily related to the write-off of tax related indemnification receivables within the former PRB operations.

The Company was considered to be the primary obligor for certain taxes that Blackjewel was contractually obligated to pay.

During the year ended December 31, 2019, the Company recorded an impairment charge for the offsetting receivable form Blackjewel as a result of the Blackjewel bankruptcy filing.

Refer to Note 3 for further information.

Restructuring

As a result of the strategic actions announced in the second quarter of 2020 and subsequent changes to severance and employee-related benefits, the Company recorded restructuring expense of ($ 621 ) in the All Other category during the year ended December 31, 2021.

As a result of the strategic actions discussed above, the Company recorded restructuring expense during the year ended December 31, 2020 as follows:

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Total restructuring expense $ 27,919 $ 2,924 $ 24,995

(1) Severance and employee-related benefits were considered probable and estimable based on provisions of contractual agreements and existing employee benefit plans.

(2) Includes accelerated amortization of deferred longwall move expenses of $ 668 , allowance for advanced mining royalties of $ 407 , and allowance for obsolete materials and supplies inventory of $ 807 .

(3) Total restructuring expense from continuing operations of $ 2,924 was recorded within the All Other category and affected Accrued expenses and other current liabilities, Other non-current liabilities, Inventories, net, and Other non-current assets.

ALPHA METALLURGICAL RESOURCES, INC.

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(Amounts in thousands except share and per share data)

(1) Severance and employee-related benefits were considered probable and estimable based on provisions of contractual agreements and existing employee benefit plans.

(2) The year ended December 31, 2020 includes accelerated amortization of deferred longwall move expenses of $ 668 , allowance for advanced mining royalties of $ 407 , and allowance for obsolete materials and supplies inventory of $ 807 .

(3) During the year ended December 31, 2020, total restructuring expenses of $ 2,087 and $ 837 were recorded within the reportable segments CAPP - Thermal and All Other, respectively.

The total restructuring expenses of $ 2,924 affected Accrued expenses and other current liabilities, Other non-current liabilities, inventories, net, and Other non-current assets.

There were no restructuring expenses recorded during the year ended December 31, 2019.

(9) Prepaid Expenses and Other Current Assets

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Short-term restricted cash 11,977 9,311

Short-term deposits 47 689

Prepaid insurance 8,525 6,510

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Refer to Note 16 for further disclosures related to asset retirement obligations.

During the years ended December 31, 2021 and 2020, the Company recorded long-lived asset impairments which reduced the carrying value of property, plant, and equipment, net, by $ 60 and $ 18,231 , respectively.

Refer to Note 8 for further information.

As of December 31, 2021, the Company had commitments to purchase approximately $ 18,497 of new equipment, expected to be acquired at various dates in 2022.

ALPHA METALLURGICAL RESOURCES, INC.

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(Amounts in thousands except share and per share data)

During the years ended December 31, 2020 and 2019, the Company recorded long-lived asset impairments which reduced the carrying value of property, plant, and equipment, net, by $ 18,231 and $ 17,056 , respectively.

Refer to Note 8 for further information.

As of December 31, 2020, the Company had commitments to purchase approximately $ 5,008 and $ 170 of new equipment, expected to be acquired at various dates in 2021 and 2023, respectively.

(11) Other Non-Current Assets

Other non-current assets consisted of the following:

Operating lease right-of-use assets $ 5,671 $ 7,298

Advanced mining royalties $ 10,788 $ 13,132

Long-term deposits 1,371 28,200

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Equity method investments 20,460 18,383

Federal income tax receivable — 64,160

Workers’ compensation receivables 45,335 48,320

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As of December 31, 2021 and 2020, the Company had the following right-of-use assets and lease liabilities within the Company’s Consolidated Balance Sheets:

ALPHA METALLURGICAL RESOURCES, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Amounts in thousands except share and per share data)

December 31, 2021 December 31, 2020

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Total lease costs and other lease information for the years ended December 31, 2021 and 2020 included the following:

ALPHA METALLURGICAL RESOURCES, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Amounts in thousands except share and per share data)

Year Ended December 31, 2021 Year Ended December 31, 2020

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(1) The Company had no variable lease costs or sublease income for the years ended December 31, 2021 and 2020.

Year Ended December 31, 2020 Year Ended December 31, 2019

Year Ended December 31,

Other information

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Lease Term and Discount Rate

Weighted-average remaining lease term in months - financing leases 23.3 33.7

Weighted-average remaining lease term in months - operating leases 101.4 105.1

Weighted-average remaining lease term in years - financing leases 1.75 1.94

Weighted-average remaining lease term in years - operating leases 7.88 8.45

Weighted-average discount rate - financing leases 9.6 % 6.1 %

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The Company has elected to show net instead of gross amounts for right-of-use assets and liabilities within its Consolidated Statements of Cash Flows.

The following table summarizes the maturity of the Company’s lease liabilities on an undiscounted cash flow basis and a reconciliation to the lease liabilities recognized in the Company’s Consolidated Balance Sheet as of December 31, 2020:

ALPHA METALLURGICAL RESOURCES, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Amounts in thousands except share and per share data)

Financing Leases Operating Leases

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2023 522 1,066

2023 269 1,101

Thereafter — 2,775

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As of December 31, 2021, the Company had no leases with future commencement dates that will create significant rights or obligations for the Company.

(13) Stock Repurchases

In May 2019, the Company’s Board of Directors adopted a capital return program that permits the Company to return to stockholders up to an aggregate amount of $ 250,000 of capital.

The capital return program does not have a fixed expiration date and returns of capital may take the form of share repurchases, dividends or a combination thereof.

Any share repurchases may be made from time to time through open market transactions, block trades, privately negotiated transactions, tender offers, or otherwise.

Any returns of capital under the program will be at the discretion of the Company’s Board of Directors and 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.

On August 29, 2019, the Company announced that its Board of Directors had approved a stock repurchase plan (the “Company Repurchase Plan”) to acquire up to $ 100,000 in the aggregate of the Company’s common stock at prices as set forth in such plan over a specified period.

Through September 30, 2019, the Company had repurchased an aggregate of 529,303 shares of common stock under the Company Repurchase Plan for an aggregate purchase price of $ 15,969 (comprised of $ 15,953 of share repurchases and $ 16 of related fees) for an average price paid per share of $ 30.17 .

As of October 1, 2019, the Company suspended the Company Repurchase Plan.

Additionally, on September 12, 2019, the Company entered into a common stock repurchase agreement with Whitebox Multi-Strategy Partners, L.P., Whitebox Asymmetric Partners, L.P., Whitebox Credit Partners, L.P.

and Whitebox Institutional Partners, L.P.

(together, “Whitebox”).

Pursuant to terms of the common stock repurchase agreement, the Company repurchased an aggregate of 500,000 shares of common stock from Whitebox at $ 32.99 per share for an aggregate purchase price of $ 16,495 .

ALPHA METALLURGICAL RESOURCES, INC.

17 unchanged sentences

Term Loan Credit Facility - due June 2024 $ 449,435 $ 553,373

ABL Facility - due April 2022 3,350 —

ABL Facility - due December 2024 — 3,350

LCC Note Payable — 27,500

7 unchanged sentences

On June 14, 2019, the Company entered into a Credit Agreement with Cantor Fitzgerald Securities, as administrative agent and collateral agent, and the other lenders party thereto (as defined therein) that provides for a senior secured term loan facility in the aggregate principal amount of $ 561,800 with a maturity date of June 14, 2024 (the “Term Loan Credit Facility”).

Principal repayments equal to approximately $ 1,405 are due each March, June, September and December (commencing with September 30, 2019) with the final principal repayment installment repaid on the maturity date and in an amount equal to the aggregate principal amount outstanding on such date.

Principal repayments equal to approximately $ 1,405 were due each March, June, September and December (commencing with September 30, 2019) with the final principal repayment installment to be paid on the maturity date and in an amount equal to the aggregate principal amount outstanding on such date.

The Term Loan Credit Facility bears an interest rate per annum based on the character of the loan (defined as either “Base Rate Loan” or “Eurocurrency Rate Loan”).

4 unchanged sentences

As of December 31, 2021, the borrowings made under the Term Loan Credit Facility were comprised of Eurocurrency Rate Loans with an interest rate of 10.00 %, calculated as the Eurocurrency rate during the period plus an applicable rate of 8.00 %.

As of December 31, 2020, the carrying value of the Term Loan Credit Facility was $ 540,643 , with $ 5,618 classified as current, within the Consolidated

As of December 31, 2021, the carrying value of the Term Loan Credit Facility was $ 443,241 , all of which was classified as long-term within the

ALPHA METALLURGICAL RESOURCES, INC.

2 unchanged sentences

(Amounts in thousands except share and per share data)

Balance Sheets.

Consolidated Balance Sheets.

As of December 31, 2020, the carrying value of the Term Loan Credit Facility was $ 540,643 , with $ 5,618 classified as current, within the Consolidated Balance Sheets.

The Term Loan Credit Facility was provided primarily by certain of the Company’s existing shareholders (related parties) as of the agreement date.

As such, the Company analyzed various factors of the transaction and concluded the Term Loan Credit Facility was issued at a reasonable market rate and therefore considered to be an arm’s length transaction.

The Company used the proceeds from the Term Loan Credit Facility to repay the outstanding principal balance of $ 543,125 under the Amended and Restated Credit Agreement dated November 9, 2018 and fees related to such refinancing.

The Company recorded a loss on modification of debt of $ 255 , primarily related to modification fees paid under the refinance, and a loss on extinguishment of debt of $ 26,204 , primarily related to the write-off of outstanding debt discounts and unamortized debt issuance costs under the Amended and Restated Credit Agreement dated November 9, 2018, which are recorded in loss on modification and extinguishment of debt within the Consolidated Statements of Operations for the year ended December 31, 2019.

During the three months ending September 30, 2021, the Company repurchased and permanently retired, through privately negotiated transactions, $ 18,724 of outstanding principal borrowings under the Term Loan Credit Facility.

These borrowings were repurchased at a discount resulting in an aggregate purchase price of $ 18,415 .

As the participating lenders were existing shareholders (related parties) of the Company as of the repurchase date, the Company analyzed various factors regarding each of the transactions and concluded such repurchases were at a reasonable market rate and reflected the terms of an arm’s length transaction per the requirements of the Term Loan Credit Facility.

Additionally, on December 31, 2021 and September 30, 2021, the Company made voluntary prepayments of $ 50,000 and $ 31,000 , respectively, of outstanding principal borrowings under the Term Loan Credit Facility.

As a result of the prepayments, no further amortization payments under the Term Loan Credit Facility are required prior to maturity.

All obligations under the Term Loan Credit Facility are guaranteed by substantially all of Alpha’s direct and indirect subsidiaries.

1 unchanged sentence

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 on the Amended and Restated Credit Agreement dated November 9, 2018.

The Term Loan Facility contains negative and affirmative covenants including certain financial covenants that are more flexible than the covenants on the Second Amended and Restated Credit Agreement dated December 6, 2021.

The Company was in compliance with all covenants under this agreement as of December 31, 2021.

Second Amended and Restated Asset-Based Revolving Credit Agreement

On December 6, 2021, the Company entered into the Second Amended and Restated Asset-Based Revolving Credit Agreement with Citibank N.A as administrative agent, collateral agent, swingline lender, and L/C issuer and the other lenders party thereto (the “Lenders”), and BMO Harris Bank N.A and Eclipse Business Capital LLC as co-collateral agents.

The Second Amended and Restated Asset-Based Revolving Credit Agreement (“New ABL Agreement”) amended and restated the Amended and Restated Asset-Based Revolving Credit Agreement dated November 9, 2018, in its entirety, and includes a senior secured asset-based revolving credit facility (“the New ABL Facility”).

Under the New ABL Facility, the Company may borrow cash from the Lenders (as defined therein) or cause the L/C Issuers (as defined therein) to issue 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 a maturity date of December 6, 2024.

The New ABL Agreement extended the maturity date of the facility from the previous maturity of April 3, 2022.

Under the terms of the New ABL Agreement, letters of credit fees will be calculated at 5.25 %, while any future borrowings will bear interest based on the character of the loan (defined as either secured overnight financing rate “SOFR” Loan (“SOFR Loan”) or “Base Rate Loan”) plus an applicable rate of 4.50 % for SOFR Loans and 3.50 % for Base Rate Loans.

Pursuant to terms of the New ABL Agreement at each notice period, the Company elects the character of the loan, the interest period, and may provide notice of continuation or conversion of the borrowed principal amount with the ability to repay the borrowed principal amount in advance of the maturity date without penalty.

As of the date of the refinance and as of December 31, 2021, no borrowings were outstanding under the New ABL Facility.

The New 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 New 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 New ABL Facility, the Company may be required to collateralize the New ABL Facility to the extent outstanding borrowings and letters of credit under the New ABL Facility exceed the Borrowing Base after considering covenant limitations.

Any letter of credit issued under the New ABL Facility will bear a commitment fee rate of 0.50 %, and a fronting fee of 0.25 % of the face amount under each letter of credit.

As of December 31, 2021, the Company had $ 121,037 letters of credit outstanding under the New ABL Facility.

ALPHA METALLURGICAL RESOURCES, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Amounts in thousands except share and per share data)

The New 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 New ABL Facility.

The New ABL Facility has a first lien on ABL priority collateral and a second lien on Term Loan Priority Collateral.

The New 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 December 31, 2021.

Amended and Restated Asset-Based Revolving Credit Agreement

2 unchanged sentences

and Credit Suisse AG as letter of credit issuers (“LC Lenders”).

The Amended and Restated Asset-Based Revolving Credit Agreement amended and restated the Asset-Based Revolving Credit Agreement dated April 3, 2017, in its entirety, and includes a senior secured asset-based revolving credit facility (the “ABL Facility”).

Under the ABL Facility, the Company may borrow cash from the Lenders (as defined therein) or cause the L/C Issuers (as defined therein) to issue letters of credit, on a revolving basis, in an aggregate amount of up to $ 225,000 , of which no more than $ 200,000 may be drawn through letters of credit.

Any borrowings under the ABL Facility will have a maturity date of April 3, 2022 and will bear interest based on the character of the loan (defined as either “Base Rate Loan” or “Eurocurrency Rate Loan”) plus an applicable rate ranging from 1.00 % to 1.50 % for Base Rate Loans and 2.00 % to 2.50 % for Eurocurrency Rate Loans, depending on the amount of credit available.

Pursuant to terms of the Amended and Restated Asset-Based Revolving Credit Agreement at each notice period, the Company elects the character of the loan, the interest period, and may provide notice of continuation or conversion of the borrowed principal amount with the ability to repay the borrowed principal amount in advance of the maturity date without penalty.

The Amended and Restated Asset-Based Revolving Credit Agreement provides that a specified percentage of billed, unbilled and approved foreign 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.

Due to fluctuations of the Borrowing Base, the Company was required to post $ 25,000 of collateral in January 2021 to remain in compliance with the terms of the ABL Facility as of December 31, 2020.

The Amended and Restated Asset-Based Revolving Credit Agreement amended and restated the Asset-Based Revolving Credit Agreement dated April 3, 2017, in its entirety, and included a senior secured asset-based revolving credit facility (the “ABL Facility”).

Under the ABL Facility, the Company could borrow cash from the Lenders (as defined therein) or cause the L/C Issuers (as defined therein) to issue letters of credit, on a revolving basis, in an aggregate amount of up to $ 225,000 , of which no more than $ 200,000 could be drawn through letters of credit.

Any borrowings under the ABL Facility had a maturity date of April 3, 2022 and incurred interest based on the character of the loan (defined as either “Base Rate Loan” or “Eurocurrency Rate Loan”) plus an applicable rate ranging from 1.00 % to 1.50 % for Base Rate Loans and 2.00 % to 2.50 % for Eurocurrency Rate Loans, depending on the amount of credit available.

Pursuant to terms of the Amended and Restated Asset-Based Revolving Credit Agreement at each notice period, the Company elected the character of the loan, the interest period, and could provide notice of continuation or conversion of the borrowed principal amount with the ability to repay the borrowed principal amount in advance of the maturity date without penalty.

On March 20, 2020, the Company borrowed $ 57,500 principal amount under the ABL Facility.

The funds were borrowed to augment the Company’s short-term operational flexibility in the face of uncertainty created by the current spread of the COVID-19 virus and its potential effects (see further discussion in Note 1).

As of December 31, 2020, the borrowings made under the ABL Facility were comprised of Eurocurrency Rate Loans with an interest rate of 2.73 %, calculated as the Eurocurrency rate during the period plus an applicable rate of 2.50 %.

The interest rate is subject to periodic adjustment and is subject to adjustment again on April 7, 2021.

As of December 31, 2020, the carrying value of the ABL Facility was $ 3,350 , all

The funds were borrowed to augment the Company’s short-term operational flexibility in the face of uncertainty created by the spread of the COVID-19 virus and its potential effects.

As of December 6, 2021, the date the Company entered into the New ABL Agreement, there were no outstanding borrowings under the ABL Facility.

As of December 31, 2020, the carrying value of the ABL Facility was $ 3,350 , all of which was classified as long-term within the Consolidated Balance Sheets, with the outstanding borrowings comprised of Eurocurrency Rate Loans with an interest rate of 2.73 %, calculated as the Eurocurrency rate during the period plus an applicable rate of 2.50 %.

The Amended and Restated Asset-Based Revolving Credit Agreement provided that a specified percentage of billed, unbilled and approved foreign receivables and raw and clean inventory meeting certain criteria were eligible to be counted for purposes of collateralizing the amount of financing available, subject to certain terms and conditions.

Availability under the ABL Facility was calculated on a monthly basis and fluctuated 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 was required to collateralize the ABL Facility to the extent outstanding borrowings and letters of credit under the ABL Facility exceeded the Borrowing Base after considering covenant limitations.

Due to fluctuations of the Borrowing Base, the Company was required to post $ 25,000 of collateral in January 2021 to remain in compliance with the terms of the ABL Facility as of December 31, 2020.

During the first quarter of 2021, a portion of the posted cash collateral was used to repay the remaining $ 3,350 in borrowings under the ABL Facility, and the remaining posted cash collateral was returned to unrestricted cash.

Any letters of credit issued under the ABL Facility incurred a commitment fee rate ranging from 0.25 % to 0.375 % depending on the amount of availability per terms of the agreement, and a fronting fee of 0.25 % of the face amount under each letter of credit, payable to the ABL Facility’s administrative agent.

As of December 31, 2020, the Company had $ 123,108 letters of credit outstanding under the ABL Facility.

LCC Note Payable

As a result of the Merger, the Company assumed a note payable to Lexington Coal Company (“LCC”) in the aggregate amount of $ 62,500 (the “LCC Note Payable”) and with a maturity date of July 26, 2022.

The LCC Note Payable had no stated interest rate and an imputed interest rate of 12.45 %.

Principal repayments of $ 17,500 were due each July during 2019, 2020 and 2021, with the final principal payment of $ 10,000 due on the maturity date.

On July 26, 2021, the Company prepaid $ 7,700 of the final principal payment.

As a result of the prepayment, $ 13,982 of surety collateral was returned.

In October 2021, the Company elected to repay in full the remaining $ 2,300 of the final principal payment.

ALPHA METALLURGICAL RESOURCES, INC.

2 unchanged sentences

(Amounts in thousands except share and per share data)

of which was classified as long-term within the Consolidated Balance Sheets.

As of December 31, 2019, the Company had no borrowings under the ABL Facility.

Any letters of credit issued under the ABL Facility will bear a commitment fee rate ranging from 0.25 % to 0.375 % depending on the amount of availability per terms of the agreement, and a fronting fee of 0.25 % of the face amount under each letter of credit, payable to the ABL Facility’s administrative agent.

As of December 31, 2020 and December 31, 2019, the Company had $ 123,108 and $ 99,876 letters of credit outstanding under the ABL Facility, respectively.

The ABL Facility is guaranteed by substantially all of Alpha’s direct and indirect subsidiaries (together with the Alpha, the “Loan Parties”) and secured by all or substantially all assets of the Loan Parties, including equity in its direct domestic subsidiaries and first-tier foreign 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 Amended and Restated Asset-Based Revolving Credit 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 December 31, 2020.

LCC Note Payable

The LCC Note Payable has no stated interest rate and an imputed interest rate of 12.45 %.

Principal repayments equal to $ 17,500 are due each July during 2019, 2020 and 2021, with the final principal payment of $ 10,000 due on the maturity date.

The carrying value of the LCC Note Payable was $ 24,423 and $ 37,695 , with $ 17,500 and $ 17,500 reported within the current portion of long-term debt as of December 31, 2020 and 2019, respectively.

There was no remaining carrying value of the LCC Note Payable as of December 31, 2021.

As of December 31, 2020, the carrying value of the LCC Note Payable was $ 24,423 , with $ 17,500 reported within the current portion of long-term debt.

LCC Water Treatment Stipulation

As a result of the Merger, the Company assumed an obligation to contribute $ 12,500 into Lexington Coal Company’s water treatment restricted cash accounts (the “LCC Water Treatment Stipulation”).

Contributions equal to $ 625 are due each January, April, July and October from 2019 through 2023.

The LCC Water Treatment Stipulation has no stated interest rate and an imputed interest rate of 13.12 %.

The carrying value of the LCC Water Treatment Stipulation was $ 5,636 and $ 7,211 , with $ 1,875 and $ 1,875 reported within the current portion of long-term debt as of December 31, 2020 and 2019, respectively.

As a result of the Merger, the Company assumed an obligation to contribute $ 12,500 into LCC’s water treatment restricted cash accounts (the “LCC Water Treatment Stipulation”).

Contributions equal to $ 625 were due each January, April, July and October from 2019 through 2023.

The LCC Water Treatment Stipulation had no stated interest rate and an imputed interest rate of 13.12 %.

In October 2021, the Company elected to repay in full the remaining $ 5,000 obligation.

There was no remaining carrying value of the LCC Water Treatment Stipulation as of December 31, 2021.

As of December 21, 2020, the carrying value of the LCC Water Treatment Stipulation was $ 5,636 , with $ 1,875 reported within the current portion of long-term debt.

Future Maturities

Future maturities of long-term debt as of December 31, 2021 are as follows:

2021 $ 28,830

Total long-term debt $ 454,746

1 unchanged sentence

Acquisition-related obligations consisted of the following:

ALPHA METALLURGICAL RESOURCES, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Amounts in thousands except share and per share data)

Contingent Revenue Obligation $ 35,005 $ 28,967

Environmental Settlement Obligations 6,633 10,391

Reclamation Funding Liability — 12,000

UMWA Funds Settlement Liability — 2,000

13 unchanged sentences

Pursuant to terms of the obligation, the annual obligation will be limited to revenues derived from legacy operations for the Merger Companies and will not include revenues related to legacy Alpha Metallurgical Resources, Inc.

The Contingent Revenue Obligation consists of a contingent revenue payment of 1.5 % of annual gross revenues of the legacy operations for the Merger Companies up to $ 500,000 and 1.0 % of annual gross revenue of the legacy operations for the Merger Companies in excess of $ 500,000 through the period ended December 31, 2022.

The Contingent Revenue Obligation consists of a contingent revenue payment of

ALPHA METALLURGICAL RESOURCES, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Amounts in thousands except share and per share data)

1.5 % of annual gross revenues of the legacy operations for the Merger Companies up to $ 500,000 and 1.0 % of annual gross revenue of the legacy operations for the Merger Companies in excess of $ 500,000 through the period ended December 31, 2022.

As of December 31, 2021 and 2020, the carrying value of the Contingent Revenue Obligation was $ 35,005 and $ 28,967 , with $ 16,005 and $ 11,393 classified as current, respectively, and classified as an acquisition-related obligation in the Consolidated Balance Sheets.

Refer to Note 17 for further disclosures related to the fair value assignment and methods used.

Refer to Note 21 for disclosures related to a Contingent Revenue Obligation repurchase transaction with a related party during the fourth quarter of 2021.

Additionally, during the second quarter of 2021, the Company paid $ 11,396 pursuant to terms of the Contingent Revenue Obligation.

During the second quarter of 2020, the Company paid $ 15,084 , including $ 374 of unclaimed unsecured claims distributions, pursuant to terms of the Contingent Revenue Obligation.

During the second quarter of 2019, the Company paid $ 9,627 pursuant to terms of the Contingent Revenue Obligation.

Environmental Settlement Obligations

2 unchanged sentences

As of December 31, 2021 and 2020, the carrying value of the Environmental Settlement Obligations was $ 6,400 and $ 9,237 , net of discounts of $ 233 and $ 1,154 , with $ 6,400 and $ 6,044 classified as current, respectively, all of which was classified as an acquisition-related obligation in the Consolidated Balance Sheets.

Reclamation Funding Agreement

Pursuant to the Reclamation Funding Agreement dated July 12, 2016, the Company paid the aggregate amount of $ 50,000 into the various Restricted Cash Reclamation Accounts as follows:

$ 8,000 immediately upon the effective date of the agreement;

$ 10,000 on the anniversary of the effective date in each of 2017, 2018, and 2019;

and $ 12,000 on the anniversary of the effective date in 2020.

As of December 31, 2020, the Company has no remaining payments for the Funding of Restricted Cash Reclamation liability.

As of December 31, 2019 the carrying value of the Funding of Restricted Cash Reclamation liability was $ 10,808 , net of discounts of $ 1,192 , all of which was classified as a current acquisition-related obligation in the Consolidated Balance Sheets.

ALPHA METALLURGICAL RESOURCES, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Amounts in thousands except share and per share data)

(16) Asset Retirement Obligations

1 unchanged sentence

Total asset retirement obligations at December 31, 2019 $ 203,137

Merger measurement-period adjustments 12,718

Accretion for the period 26,504

10 unchanged sentences

Long-term portion $ 132,013

(1) Amount does not include the accretion related to asset retirement obligations classified as liabilities held for sale.

(1) The revisions in estimated cash flows resulted primarily from discount rate adjustments and changes in mine plans.

5 unchanged sentences

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 December 31, 2021 and 2020 due to the short maturity of these instruments.

ALPHA METALLURGICAL RESOURCES, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Amounts in thousands except share and per share data)

The following tables set forth by level, within the fair value hierarchy, the Company’s long-term debt at fair value as of December 31, 2021 and 2020:

2 unchanged sentences

Term Loan Credit Facility - due June 2024 $ 443,241 $ 447,561 $ — $ 447,561 $ —

ABL Facility - due April 2022 3,350 3,057 — — 3,057

LCC Note Payable 24,423 20,328 — — 20,328

LCC Water Treatment Obligation 5,636 4,281 — — 4,281

Total long-term debt $ 443,241 $ 447,561 $ — $ 447,561 $ —

ALPHA METALLURGICAL RESOURCES, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Amounts in thousands except share and per share data)

December 31, 2020

1 unchanged sentence

Term Loan Credit Facility - due June 2024 $ 540,643 $ 379,614 $ — $ 379,614 $ —

ABL Facility - due April 2022 (2)

3,350 3,057 — — 3,057

LCC Note Payable 24,423 20,328 — — 20,328

2 unchanged sentences

(1) Net of debt discounts and debt issuance costs.

(2) On December 6, 2021, the Company entered into a New ABL Agreement.

Refer to Note 14 for additional information.

The following tables set forth by level, within the fair value hierarchy, the Company’s acquisition-related obligations at fair value as of December 31, 2021 and 2020:

1 unchanged sentence

Total Fair Value Quoted Prices in Active Markets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3)

UMWA Funds Settlement Liability $ 1,662 $ 1,426 $ — $ — $ 1,426

Environmental Settlement Obligations $ 6,400 $ 6,270 $ — $ — $ 6,270

3 unchanged sentences

UMWA Funds Settlement Liability $ 1,662 $ 1,426 $ — $ — $ 1,426

Reclamation Funding Liability 10,808 10,658 — — 10,658

Environmental Settlement Obligations 9,237 7,760 — — 7,760

4 unchanged sentences

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.

December 31, 2020

Total Fair Value Quoted Prices in Active Markets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3)

Contingent Revenue Obligation $ 28,967 $ — $ — $ 28,967

Trading securities $ 22,498 $ 20,092 $ 2,406 $ —

ALPHA METALLURGICAL RESOURCES, INC.

6 unchanged sentences

Trading securities $ 28,443 $ 27,075 $ 1,368 $ —

December 31, 2020

Total Fair Value Quoted Prices in Active Markets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3)

Contingent Revenue Obligation $ 28,967 $ — $ — $ 28,967

Trading securities $ 22,498 $ 20,092 $ 2,406 $ —

The following table is 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, 2020 Payments Loss Recognized in Earnings Transfer In (Out) of Level 3 Fair Value Hierarchy December 31, 2021

Contingent Revenue Obligation $ 28,967 $ ( 13,487 ) $ 19,525 $ — $ 35,005

(1) The loss recognized in earnings resulted primarily from an increase in forecasted future revenue as of December 31, 2021.

December 31, 2019 Payments Gain Recognized in Earnings Transfer In (Out) of Level 3 Fair Value Hierarchy December 31, 2020

1 unchanged sentence

(1) The gain recognized in earnings resulted primarily from a change in the forecasted future revenue associated with this obligation and an increase in annualized volatility as of December 31, 2020.

December 31, 2018 Payments Measurement-Period Adjustments Gain Recognized in Earnings Transfer In (Out) of Level 3 Fair Value Hierarchy December 31, 2019

Contingent Revenue Obligation $ 59,880 $ ( 9,627 ) $ 5,738 $ ( 3,564 ) $ — $ 52,427

(1) The measurement-period adjustments are related to Merger recorded during the year ended December 31, 2019.

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

Term Loan Credit Facility - due June 2024 - As of December 31, 2019, the fair value is based on observable market data.

Trading Securities - Includes money market funds and other cash equivalents.

1 unchanged sentence

Level 2 Fair Value Measurements

Term Loan Credit Facility - due June 2024 - As of December 31, 2020, 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, the Company has classified the fair value within Level 2 of the fair value hierarchy.

Due to limited trading volume in the Term Loan Credit Facility, the Company reclassified the fair value from Level 1 within the fair value hierarchy during the year ended December 31, 2020.

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 - Includes certificates of deposit, mutual funds, corporate debt securities and U.S.

5 unchanged sentences

Level 3 Fair Value Measurements

ABL Facility - due April 2022 - Observable transactions are not available to aid in determining the fair value of this item.

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 rate of approximately 9 %) as of December 31, 2020.

ALPHA METALLURGICAL RESOURCES, INC.

2 unchanged sentences

(Amounts in thousands except share and per share data)

LCC Note Payable, LCC Water Treatment Obligation, UMWA Funds Settlement Liability, Environmental Settlement Obligations and Reclamation Funding Liability - Observable transactions are not available to aid in determining the fair value of these items.

ABL Facility - due April 2022 - Observable transactions are not available to aid in determining the fair value of this item.

On December 6, 2021, the Company entered into a New ABL Agreement.

Refer to Note 14 for additional information.

LCC Note Payable, LCC Water Treatment Obligation, UMWA Funds Settlement Liability and Environmental Settlement Obligations - Observable transactions are not available to aid in determining the fair value of these items.

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.

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 December 31, 2020 and December 31, 2019, are set forth in the following table:

The range of significant unobservable inputs used to value the Contingent Revenue Obligation as of December 31, 2021 and 2020 are set forth in the following table:

December 31, 2021 December 31, 2020

6 unchanged sentences

(18) Income Taxes

Total income tax benefit provided on loss before income taxes was allocated as follows:

Total income tax expense (benefit) provided on income (loss) before income taxes was allocated as follows:

Year Ended December 31,

2 unchanged sentences

Total $ 3,408 $ ( 2,164 )

Significant components of income tax (benefit) expense from continuing operations were as follows:

Significant components of income tax expense (benefit) from continuing operations were as follows:

ALPHA METALLURGICAL RESOURCES, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Amounts in thousands except share and per share data)

Year Ended December 31,

Current tax (benefit) expense:

Current tax expense (benefit):

Federal $ 2,586 $ ( 35,187 )

5 unchanged sentences

Total deferred $ ( 163 ) $ 33,122

Total income tax benefit:

Total income tax expense (benefit):

Federal $ 2,583 $ ( 1,839 )

1 unchanged sentence

Total $ 3,609 $ ( 2,164 )

A reconciliation of statutory federal income tax benefit on loss from continuing operations to the actual income tax benefit is as follows:

ALPHA METALLURGICAL RESOURCES, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Amounts in thousands except share and per share data)

A reconciliation of statutory federal income tax expense (benefit) on income (loss) from continuing operations to the actual income tax expense (benefit) is as follows:

Year Ended December 31,

Federal statutory income tax benefit $ ( 51,163 ) $ ( 57,310 )

Federal statutory income tax expense (benefit) $ 61,013 $ ( 51,163 )

Increase (reductions) in taxes due to:

2 unchanged sentences

State taxes, net of federal tax impact 12,998 ( 9,640 )

State tax rate and NOL change, net of federal tax impact ( 1,235 ) ( 4,172 )

State apportioned tax rate change, net of federal tax impact 8,751 ( 1,235 )

Change in valuation allowances ( 78,056 ) 59,929

Net operating loss carryback — ( 14,234 )

Amended return - capital loss impact — 919

Non-deductible goodwill impairment — 26,114

Capital loss expiration 10,552 —

Stock-based compensation 405 1,739

Other, net ( 190 ) 2,368

Income tax benefit $ ( 2,164 ) $ ( 53,287 )

Income tax expense (benefit) $ 3,609 $ ( 2,164 )

Deferred income taxes result from temporary differences between the reporting of amounts for financial statement purposes and income tax purposes.

The net deferred tax assets and liabilities included in the Consolidated Balance Sheets include the following amounts:

ALPHA METALLURGICAL RESOURCES, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Amounts in thousands except share and per share data)

Year Ended December 31,

5 unchanged sentences

Equity method investments 1,846 2,050

Alternative minimum tax credit carryforwards — 33,065

Loss carryforwards, net of Section 382 limitation 187,341 255,772

11 unchanged sentences

Total deferred tax liabilities ( 160,800 ) ( 181,368 )

Net deferred tax assets $ ( 480 ) $ 32,643

Net deferred tax liabilities $ ( 317 ) $ ( 480 )

Changes in the valuation allowance were as follows:

ALPHA METALLURGICAL RESOURCES, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Amounts in thousands except share and per share data)

Year Ended December 31,

Valuation allowance beginning of period $ 263,387 $ 133,020

Increase in valuation allowance recorded to income tax benefit 117,829 29,950

Increase in valuation allowance not affecting income tax expense 12,538 8,268

(Decrease) increase in valuation allowance recorded to income tax expense (benefit) ( 78,043 ) 117,829

(Decrease) increase in valuation allowance not affecting income tax expense (benefit) ( 12,461 ) 12,538

Valuation allowance end of period $ 172,883 $ 263,387

On December 22, 2017, President Trump signed into law legislation commonly referred to as the “Tax Cuts and Jobs Act” (“TCJA”).

Among other provisions, the TCJA repealed the corporate AMT and provided a mechanism for corporations to monetize their alternative minimum tax credits (“AMT Credits”) as a refundable credit during the 2018 through 2021 tax years.

Among other provisions, the TCJA repealed the corporate alternative minimum tax (“AMT”) and provided a mechanism for corporations to monetize their alternative minimum tax credits (“AMT Credits”) as a refundable credit during the 2018 through 2021 tax years.

On March 27, 2020, President Trump signed into law legislation referred to as the CARES Act.

4 unchanged sentences

In addition, the Company received $ 2,123 related to AMT Credits claimed in prior tax years under a different Internal Revenue Code section, which were previously and erroneously subjected to the budgetary sequestration provisions.

As of December 31, 2020, the Company does not expect to receive any further benefits related to AMT Credits.

The Company does not expect to receive any further benefits related to AMT Credits.

The Company acquired the core assets of Alpha Natural Resources, Inc.

2 unchanged sentences

federal income tax purposes.

As a result of these transactions, the Company inherited the tax basis of the core assets and the net operating loss and other carryforwards of Alpha Natural Resources, Inc.

As a result of these transactions, the Company inherited the tax basis of the core assets and the net operating loss and

ALPHA METALLURGICAL RESOURCES, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Amounts in thousands except share and per share data)

other carryforwards of Alpha Natural Resources, Inc.

On December 31, 2016, the net operating loss carryforwards and other carryforwards were reduced under Internal Revenue Code Section 108 due to the cancellation of indebtedness resulting from the Alpha Natural Resources, Inc.

12 unchanged sentences

At December 31, 2021, the Company has regular tax net operating loss carryforwards for federal income tax purposes of approximately $ 1,543,000 .

This includes $ 1,011,000 that are available to offset regular federal taxable income subject to an annual Internal Revenue Code Section 382 limitation of approximately $ 1,000 , $ 56,000 that are subject to an annual Section 382 limitation of approximately $ 18,300 , and $ 324,000 that are subject to an annual Section 382 limitation of approximately $ 17,500 .

This includes $ 1,008,000 that are available to offset regular federal taxable income subject to an annual Internal Revenue Code Section 382 limitation of approximately $ 1,000 and $ 270,000 that are subject to an annual Section 382 limitation of approximately $ 17,500 .

These federal net operating loss carryforwards were generated before 2018 and will expire between years 2030 and 2037.

The Company also has $ 265,000 of federal net operating loss carryforwards with an indefinite carryforward period that can be used to offset up to 80% of taxable income.

The Company has capital loss carryforwards of approximately $ 339,000 , of which $ 65,000 are subject to an annual Section 382 limitation of approximately $ 1,000 and $ 51,000 are subject to an annual Section 382 limitation of approximately $ 17,500 .

The Company has capital loss carryforwards of approximately $ 223,000 .

The capital loss carryforwards will expire between years 2022 and 2025.

A full valuation allowance is recorded against the capital loss carryforwards.

ALPHA METALLURGICAL RESOURCES, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Amounts in thousands except share and per share data)

During the third quarter of the year ended December 31, 2020, the Company recorded a decrease in unrecognized tax benefits of approximately $ 20,788 as a result of the issuance of final regulatory guidance from the IRS.

The decrease in unrecognized tax benefits did not impact the Company’s effective tax rate for the year ended December 31, 2020.

4 unchanged sentences

Unrecognized tax benefits - beginning of period $ — $ 20,788

Additions for tax positions of prior years — 5,740

Additions for tax positions of current year — 15,048

Reductions for tax positions of prior years — ( 20,788 )

Unrecognized tax benefits - end of period $ — $ —

As of December 31, 2020, tax years 2016 - 2020, which include the impact of net operating loss and other carryforwards and tax basis acquired from Alpha Natural Resources, Inc., remain open to federal and state examination.

The IRS initiated a corporate income tax examination during the third quarter of 2020 for the Company’s 2016 tax year and related net operating loss carryback.

This examination was open and in progress as of December 31, 2020.

As of December 31, 2021, tax years 2018 – 2021 remain open to federal and state examination.

During the third quarter of 2021, the IRS concluded its audit of the Company’s 2016 federal income tax return and associated net operating loss (“NOL”) carryback claim.

The audit conclusion did not result in any material impact to the financial statements or related disclosures.

Following the conclusion of the audit, the Company received the $ 64,160 carryback claim tax refund and $ 5,425 of accrued interest.

(19) Employee Benefit Plans

1 unchanged sentence

The Company does not participate in any multi-employer plans.

The components of net periodic (benefit) expense other than the service cost component for pension, black lung, and postretirement life insurance benefits are included in the line item miscellaneous loss, net, in the Consolidated Statements of Operations.

The components of net periodic benefit (credit) cost other than the service cost

ALPHA METALLURGICAL RESOURCES, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Amounts in thousands except share and per share data)

component for black lung and postretirement life insurance benefits are included in the line item miscellaneous income (loss), net, in the Consolidated Statements of Operations.

Company Administered Defined Benefit Pension Plans

3 unchanged sentences

One of the Company’s frozen qualified non-contributory defined benefit pension plans utilizes a cash balance formula for certain of its participants.

The cash balance formula provides guaranteed rates of interest on accumulated balances of either 6 % (for balances accumulated prior to 2004) and 4 % (on balances accumulated thereafter).

Effective October 1, 2019, two of the qualified non-contributory defined benefit pension plans were amended to offer certain eligible participants the option to elect to receive lump sum benefits as of December 1, 2019, 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, 2020 and the three months ended December 31, 2019.

Refer to the disclosures below for further information on the partial plan settlements.

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 Plans are made as recommended by consulting actuaries based upon the ERISA funding standards.

Plan assets consist of equity securities, fixed income funds, commingled short-term funds, private equity funds, and a guaranteed insurance contract.

The following tables set forth the plans’ accumulated benefit obligations, fair value of plan assets and funded status for the years ended December 31, 2020 and 2019.

ALPHA METALLURGICAL RESOURCES, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Amounts in thousands except share and per share data)

Effective in 2019, two of the qualified non-contributory defined benefit pension plans were amended to offer certain eligible participants the option to elect to receive lump sum benefits, which resulted in a partial plan settlement and the accelerated recognition of a portion of the accumulated other comprehensive loss during the years ended December 31, 2021 and December 31, 2020.

Refer to the disclosures below for further information on the partial plan settlements.

The following tables set forth the Pension Plans’ accumulated benefit obligations, fair value of plan assets and funded status for the years ended December 31, 2021 and 2020.

Year Ended December 31,

3 unchanged sentences

Interest cost 13,566 18,730

Actuarial loss (1)

Actuarial (gain) loss (1)

( 34,922 ) 72,822

Benefits paid ( 30,222 ) ( 30,916 )

Acquisition — 1,910

Settlement ( 3,815 ) ( 11,627 )

10 unchanged sentences

$ ( 159,930 ) $ ( 218,671 )

(1) For the years ended December 31, 2020 and December 31, 2019, the actuarial loss was primarily attributed to the decrease in the weighted-average discount rate actuarial assumption used in determining the benefit obligations.

(1) For the years ended December 31, 2021 and 2020, the actuarial (gain) loss was primarily attributable to the change in the weighted-average discount rate actuarial assumption used in determining the benefit obligations.

(2) 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 pension obligations recognized in accumulated other comprehensive loss consisted of the following as of December 31, 2020 and 2019:

Gross amounts related to benefit obligations recognized in accumulated other comprehensive loss consisted of the following as of December 31, 2021 and 2020:

ALPHA METALLURGICAL RESOURCES, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Amounts in thousands except share and per share data)

Net actuarial loss $ 47,950 $ 88,583

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

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

Year Ended December 31,

1 unchanged sentence

Expected return on plan assets ( 28,732 ) ( 27,064 )

Amortization of net losses 2,012 797

Amortization of net actuarial loss 3,217 2,012

Settlement 412 1,636

Net periodic benefit (credit) cost $ ( 4,686 ) $ 5,543

Other changes in plan assets and benefit obligations recognized in other comprehensive loss are as follows:

Net periodic benefit credit $ ( 11,537 ) $ ( 4,686 )

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

Year Ended December 31,

Actuarial loss (1)

$ 45,663 $ 30,514

Actuarial (gain) loss $ ( 37,004 ) $ 45,663

Amortization of net actuarial loss ( 3,217 ) ( 2,012 )

Settlement ( 412 ) ( 1,636 )

Total recognized in other comprehensive loss $ 42,015 $ 23,493

ALPHA METALLURGICAL RESOURCES, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Amounts in thousands except share and per share data)

Total recognized in other comprehensive income (loss) $ ( 40,633 ) $ 42,015

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

5 unchanged sentences

Discount rate 2.92 % 2.62 %

The weighted-average actuarial assumptions used to determine net periodic benefit cost for the years ended December 31, 2020 and 2019 were as follows:

The weighted-average actuarial assumptions used to determine net periodic benefit credit for the years ended December 31, 2021 and 2020 were as follows:

Year Ended December 31,

1 unchanged sentence

Discount rate for interest cost 1.96 % 2.92 %

Expected return on plan assets 5.90 % 5.80 %

Expected long-term rate of return on plan assets 5.80 % 5.90 %

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 return on assets of the Pension Plans is established each year by the Company’s Benefits Committee in consultation with the plans’ actuaries and outside investment advisors.

ALPHA METALLURGICAL RESOURCES, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Amounts in thousands except share and per share data)

The expected long-term rate of return on assets of the Pension Plans is established each year by the Company’s Benefits Committee in consultation with the plans’ actuaries and outside investment advisors.

This rate is determined by taking into consideration the Pension Plans’ target asset allocation, expected long-term rates of return on each major asset class by reference to long-term historic ranges, inflation assumptions, and the expected additional value from active management of the Pension Plans’ assets.

For the determination of net periodic benefit cost in 2021, the Company will utilize an expected long-term return on plan assets of 5.80 %.

For the determination of net periodic benefit cost in 2022, the Company will utilize an expected long-term rate of return on plan assets of 5.80 %.

Assets of the Pension Plans 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 2022 and the actual asset allocation as reported at December 31, 2021 are as follows:

Target Allocation Percentages 2021 Percentage of Plan Assets 2020

Target Allocation Percentages 2022 (1)

Percentage of Plan Assets 2021

Equity securities 60.0 % 56.0 %

2 unchanged sentences

Total 100.0 % 100.0 %

(1) Assumes the Pension Plans have a funded status level less than 90.0 %.

The asset allocation targets have been set with the expectation that the Pension Plans’ assets will fund the expected liabilities within an appropriate level of risk.

In determining the appropriate target asset allocations, the Benefits Committee considers the demographics of the Pension Plans’ participants, the funding status of each plan, the Company’s contribution philosophy, the Company’s business and financial profile, and other associated risk factors.

The Pension Plans’ assets are periodically rebalanced among the major asset categories to maintain the asset allocation within a specified range of the target

ALPHA METALLURGICAL RESOURCES, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Amounts in thousands except share and per share data)

allocation percentage.

In determining the appropriate target asset allocations, the Benefits Committee considers the demographics of the Pension Plans’ participants, the funded status of each plan, the Company’s contribution philosophy, the Company’s business and financial profile, and other associated risk factors.

The Pension Plans’ 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 each of the Pension Plans.

The plan administrator uses a de-risking glide path whereby the fixed income funds allocation increases as the funded status improves.

At a 90.0 % funded status level, the glide path calls for a 50 / 50 equity securities and fixed income funds mix.

During the year ended December 31, 2021, one of the Pension Plans funded status levels reached 90.0 % and the related plan assets were adjusted accordingly to the new allocation.

In September 2020, the target allocation was adjusted by the Company’s Benefits Committee to transition to 60.0 % equity securities and 40.0 % fixed income funds in approximate 2.0 % increments over a 10 -month period.

The Company expects to contribute $ 25,541 to the Pension Plans in 2021.

As a result of the recent funding relief granted under the American Rescue Plan Act, estimated contributions requirements to the pension plans were reduced relative to the Company’s previous estimates.

The Company contributed $ 6,571 to the pension plans during the year ended December 31, 2021.

The Company’s minimum required contributions are estimated to be $ 4,404 to the Pension Plans in 2022.

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

2 unchanged sentences

The fair values of the Company’s Pension Plans’ assets as of December 31, 2021, by asset category are as follows:

ALPHA METALLURGICAL RESOURCES, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Amounts in thousands except share and per share data)

Asset Category Total Quoted Market Prices in Active Market for Identical Assets (Level 1) Significant Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3)

22 unchanged sentences

Changes in Level 3 plan assets for the period ended December 31, 2021 were as follows:

ALPHA METALLURGICAL RESOURCES, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Amounts in thousands except share and per share data)

Fair Value Measurements Using Significant Unobservable Inputs (Level 3)

6 unchanged sentences

The fair values of the Company’s Pension Plans’ assets as of December 31, 2020, by asset category are as follows:

ALPHA METALLURGICAL RESOURCES, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Amounts in thousands except share and per share data)

Asset Category Total Quoted Market Prices in Active Market for Identical Assets (Level 1) Significant Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3)

25 unchanged sentences

Beginning balance, December 31, 2019 $ 11,155

Acquisition —

Actual return on plan assets:

3 unchanged sentences

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

ALPHA METALLURGICAL RESOURCES, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Amounts in thousands except share and per share data)

Level 1 Plan Assets:

8 unchanged sentences

Workers’ Compensation and Pneumoconiosis (Black Lung)

ALPHA METALLURGICAL RESOURCES, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Amounts in thousands except share and per share data)

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

10 unchanged sentences

Adjustments to the probable ultimate liability for workers’ compensation and black lung are made annually based on actuarial valuations.

At December 31, 2020, the Company had $ 124,260 of workers’ compensation liability, including a current portion of $ 10,355 recorded in accrued expenses and other current liabilities, offset by $ 2,368 and $ 48,320 of expected insurance receivable recorded in prepaid expenses and other current assets and other non-current assets, respectively, in the Consolidated Balance Sheets.

At December 31, 2019, the Company had $ 136,540 of workers’ compensation liability, including a current portion of $ 11,317 recorded in accrued expenses and other current liabilities, offset by $ 2,375 and $ 52,757 of expected insurance receivable recorded in prepaid expenses and other current assets and other non-current assets, respectively, in the Consolidated Balance Sheets.

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, 2021 and 2020 was $ 8,602 and $ 7,000 , respectively.

Workers’ Compensation

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

Current liabilities $ 10,582 $ 10,355

Current liabilities - discontinued operations (1)

Long-term liabilities 103,574 113,904

Long-term liabilities - discontinued operations (1)

21,119 26,000

Total liabilities $ 138,005 $ 155,106

Less expected insurance receivable (2)

( 47,644 ) ( 50,688 )

Less long-term expected insurance receivable - discontinued operations (1)

( 6,020 ) ( 6,970 )

Workers’ compensation obligations, net of expected insurance receivables $ 84,341 $ 97,448

(1) The discontinued operations consisted of activity related to the Company’s former NAPP operations.

Refer to Note 3.

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

Workers’ compensation expense for high-deductible insurance plans for the years ended December 31, 2021 and 2020 was $ 3,750 and $ 1,275 , respectively.

13 unchanged sentences

Interest cost 2,463 3,240

Actuarial loss (1)

Actuarial (gain) loss (1)

( 9,759 ) 14,736

Benefits paid ( 6,040 ) ( 7,166 )

Acquisition — 16,829

Curtailment gain — ( 163 )

14 unchanged sentences

Total accrued benefit cost at end of period $ ( 114,478 ) $ ( 124,786 )

(2) Assets of the plan are held in a Section 501(c)(21) tax-exempt trust fund and consist primarily of government debt securities.

2 unchanged sentences

Refer to Note 3 .

The table below presents amounts recognized in the Balance Sheets:

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

ALPHA METALLURGICAL RESOURCES, INC.

6 unchanged sentences

Long-term liabilities - discontinued operations 2,564 1,799

$ 124,786 $ 120,128

Gross amounts related to the black lung obligations recognized in accumulated other comprehensive loss consisted of the following as of December 31, 2020 and 2019:

Total liabilities $ 114,478 $ 124,786

Gross amounts related to the black lung benefit obligations recognized in accumulated other comprehensive loss consisted of the following as of December 31, 2021 and 2020:

Net actuarial loss $ 11,940 $ 24,042

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

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

Year Ended December 31,

11 unchanged sentences

Refer to Note 3.

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

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

Year Ended December 31,

Actuarial loss (1)

$ 14,567 $ 11,512

Actuarial (gain) loss $ ( 9,649 ) $ 14,567

Amortization of net actuarial loss ( 2,453 ) ( 1,942 )

Settlement — ( 1,563 )

Total recognized in other comprehensive loss $ 11,062 $ 11,296

Total recognized in other comprehensive income (loss) $ ( 12,102 ) $ 11,062

The weighted-average assumptions related to black lung obligations used to determine the benefit obligation as of December 31, 2021 and 2020 were as follows:

4 unchanged sentences

Discount rate 2.96 % 2.75 %

Federal black lung benefit trend rate 2.00 % 2.00 %

Black lung medical benefit trend rate 5.00 % 5.00 %

Federal black lung income benefit trend rate 2.00 % 2.00 %

Federal black lung medical benefit trend rate 5.00 % 5.00 %

Black lung benefit expense inflation rate (1)

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

(1) Effective in 2021, the annual claim administration expenses are incorporated into the annual service cost component of the net periodic benefit cost for the black lung benefit obligations.

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

Year Ended December 31,

2 unchanged sentences

Discount rate for interest cost 1.96 % 2.61 %

Federal black lung benefit trend rate 2.50 % 2.50 %

Black lung medical benefit trend rate 5.00 % 5.00 %

Federal black lung income benefit trend rate 2.00 % 2.50 %

Federal black lung medical benefit trend rate 5.00 % 5.00 %

Black lung benefit expense inflation rate (1)

Expected return on plan assets 2.00 % 2.00 %

Estimated future cash payments related to black lung obligations for the next 10 years ending after December 31, 2020 are as follows:

(1) Effective in 2021, the annual claim administration expenses are incorporated into the annual service cost component of the net periodic benefit cost for the black lung benefit obligations.

Estimated future cash payments related to black lung benefit obligations for the next 10 years ending after December 31, 2021 are as follows:

Year ending December 31:

2 unchanged sentences

As part of the Alpha Natural Resources, Inc.

bankruptcy reorganization process and the Retiree Committee Settlement Agreement, the Company assumed the liability for life insurance benefits for certain disabled and non-union retired employees.

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.

These obligations are included in the Consolidated Balance Sheet as accrued expenses and other current liabilities and other non-current liabilities.

The following tables set forth the accumulated postretirement life insurance benefit obligations, fair value of plan assets and funded status for the years ended December 31, 2020 and 2019:

ALPHA METALLURGICAL RESOURCES, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Amounts in thousands except share and per share data)

Change in benefit obligation:

Accumulated benefit obligation at beginning of period $ 12,341 $ 11,368

Interest cost 337 426

Actuarial loss 420 1,002

Benefits paid ( 463 ) ( 455 )

Accumulated benefit obligation at end of period $ 12,635 $ 12,341

Change in fair value of plan assets:

Benefits paid (1)

( 463 ) ( 455 )

Employer contributions (1)

Fair value of plan assets at end of period $ — $ —

Funded status ( 12,635 ) ( 12,341 )

Accrued benefit cost at end of year $ ( 12,635 ) $ ( 12,341 )

Amounts recognized in the consolidated balance sheets:

Current liabilities $ 628 $ 719

Long-term liabilities 12,007 11,622

$ 12,635 $ 12,341

(1) Amount is comprised of premium payments to commercial life insurance provider.

Gross amounts related to the postretirement life insurance benefit obligations recognized in accumulated other comprehensive income consisted of the following as of December 31, 2020 and 2019:

Net actuarial gain $ ( 390 ) $ ( 872 )

The following table details the components of the net periodic benefit cost for postretirement life insurance benefit obligations:

Interest cost $ 337 $ 426

Amortization of net actuarial gain ( 48 ) ( 105 )

Settlement ( 14 ) —

Net periodic benefit cost $ 275 $ 321

Other changes in the postretirement life insurance plan assets and benefit obligations recognized in other comprehensive income are as follows:

Actuarial loss $ 420 $ 1,002

Amortization of net actuarial gain 48 105

Settlement 14 —

Total recognized in other comprehensive income $ 482 $ 1,107

As of December 31, 2021 and 2020, the postretirement life insurance benefit obligation was $ 11,610 , including a current portion $ 602 , and $ 12,635 , including a current portion $ 628 , 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

ALPHA METALLURGICAL RESOURCES, INC.

2 unchanged sentences

(Amounts in thousands except share and per share data)

The weighted-average assumptions related to postretirement life insurance benefit obligations used to determine the benefit obligation as of December 31, 2020 and 2019 was as follows:

Discount rate 2.43 % 3.22 %

The weighted-average assumptions related to postretirement life insurance benefit obligations used to determine net periodic benefit cost were as follows:

Year Ended December 31,

Discount rate for benefit obligations 3.22 % 4.21 %

Discount rate for interest cost 2.83 % 3.9 %

Estimated future cash payments related to postretirement life insurance benefit obligations for the next 10 years ending after December 31, 2020 are as follows:

Year ending December 31:

2026-2030 2,941

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.

matching and/or discretionary contributions, as defined by each plan.

The Company’s total contributions to these plans for the years ended December 31, 2021 and 2020 were $ 10,276 and $ 3,613 , respectively.

During the second quarter of 2020, the Company’s matching contributions under the Contura Energy 401(k) Retirement Savings Plan were suspended due to current market conditions.

During the second quarter of 2020, the Company’s matching contributions under the Alpha Metallurgical Resources (formerly Contura Energy) 401(k) Retirement Savings Plan (the “Plan”) were suspended due to weak market conditions at that time.

Effective in June 2021, the Company’s matching contributions under the Plan were reinstated.

Self-insured Medical Plan

7 unchanged sentences

2017 Equity Incentive Plan (the “ANR EIP”), which had underlying ANR shares that were converted to 89,766 Contura Energy, Inc.

The ANR EIP is no t authorized for additional issuance of

ALPHA METALLURGICAL RESOURCES, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Amounts in thousands except share and per share data)

awards of shares of common stock, and as of December 31, 2020, there were no shares of common stock available for grant under the ANR EIP.

The ANR EIP is no t authorized for additional issuance of awards of shares of common stock, and as of December 31, 2021, there were no shares of common stock available for grant under the ANR EIP.

As of December 31, 2021, the Company had four types of stock-based awards outstanding:

4 unchanged sentences

Shares that are repurchased to satisfy the employees’ statutory tax withholdings are recorded in treasury stock at cost.

During the year ended December 31, 2020, the Company repurchased 43,559 shares of its common stock issued pursuant to awards under the MIP, LTIP and ANR EIP for a total purchase amount of $ 209 , or $ 4.79 average price paid per share.

During the year ended December 31, 2021, the Company repurchased 50,363 shares of its common stock issued pursuant to awards under the MIP and LTIP for a total purchase amount of $ 785 , or $ 15.60 average price paid per share.

2 unchanged sentences

The awards granted to key employees will vest ratably over a three-year period from date of grant in accordance with the vesting schedule, subject to the participant’s continuous service with the Company through each applicable vesting date.

The awards granted to non-employee directors will vest on the first to occur of (i) April 30, 2021, (ii) the director’s separation from service due to the director’s death or physical or mental incapacity to perform his or her usual duties, such condition likely to remain continuously and permanently, as determined by the Company, (iii) a change in control, and (iv) the director's service as a member of the board of directors is terminated as of a date that is after October 31, 2021 but prior to May 1, 2022 for any reason other than removal for cause.

The restricted stock units granted to non-employee directors on February 10, 2021 will vest on the first to occur of (i) April 30, 2021, (ii) the director’s separation from service due to the director’s death or physical or mental incapacity to perform his or her usual duties, such condition likely to remain continuously and permanently, as determined by the Company, and (iii) a change in control.

The restricted stock units granted to non-employee directors on May 1, 2021 will vest on the first to occur of (i) April 30, 2022, (ii) the director’s service as a member of the board of directors is terminated, for any reason other than removal for cause, as of a date that is more than six months after the date of grant, and (iii) a change in control.

Upon vesting and settlement of time-based restricted stock units, the Company issues authorized and unissued shares of the Company’s common stock to the recipient.

Additionally, during the year ended December 31, 2020, the Company granted the Chief Executive Officer (“CEO”) 302,795 performance-based restricted stock units granted under the LTIP which represent the number of shares of common stock that may be issued based on the achievement of targeted performance levels related to pre-established relative total shareholder return goals and annually determined operational goals over a three year period.

This award was scheduled to cliff vest on the third anniversary of the date of the grant, subject to the participant’s continuous service with the Company through the applicable vesting date and the satisfaction of the performance criteria.

These performance-based restricted stock units had the potential to be earned from 0 % to 200 % of target depending on actual results.

Upon vesting of these awards, the Company would issue authorized and previously unissued shares of the Company’s common stock to the recipient.

The 151,398 operational performance-based restricted stock units were valued based on the Company’s closing stock price at the trading day before the date of the grant and had a weighted average grant date fair value of $ 6.36 .

For the awards with operational performance conditions, the Company reassessed at each reporting date whether achievement of each of the performance conditions was probable and adjusted the accrual of stock-based compensation expense as needed.

The 151,397 relative total shareholder return performance-based restricted stock units were valued relative to the stock price performance of a comparator

Additionally, during the year ended December 31, 2021, the Company granted certain key employees 167,587 performance-based restricted stock units granted under the LTIP which represent the number of shares of common stock that may be issued based on the achievement of targeted performance levels related to pre-established relative total shareholder

ALPHA METALLURGICAL RESOURCES, INC.

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(Amounts in thousands except share and per share data)

group and had a weighted average grant date fair value of $ 8.53 based on a Monte Carlo simulation.

return goals and annually determined operational goals over a three year period.

These awards are scheduled to cliff vest on the third anniversary of the date of the grant, subject to the participant’s continuous service with the Company through the applicable vesting date and the satisfaction of the performance criteria.

These performance-based restricted stock units have the potential to be earned from 0 % to 200 % of target depending on actual results.

Upon vesting and settlement of these awards, the Company will issue authorized and previously unissued shares of the Company’s common stock to the recipient.

The 100,552 operational performance-based restricted stock units were valued based on the Company’s closing stock price at the trading day before the date of the grant and had a weighted average grant date fair value of $ 12.00 .

For the awards with operational performance conditions, the Company reassesses at each reporting date whether achievement of each of the performance conditions was probable and adjusts the accrual of stock-based compensation expense as needed.

The 67,035 relative total shareholder return performance-based restricted stock units were valued relative to the stock price performance of a comparator group and had a weighted average grant date fair value of $ 16.18 based on a Monte Carlo simulation.

The Monte Carlo simulation incorporated the assumptions as presented in the following table:

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(5) The expected dividend yield represented the investments return to a share of the Company’s stock that is not available to the holder of the performance-based restricted stock unit.

During the first quarter of 2021, the 302,795 performance-based restricted stock units granted under the LTIP were voluntarily forfeited by the CEO in conjunction with an amendment to his employment agreement and the shares were allocated back to the LTIP for future issuance.

The amendment also included an amendment to the participant’s time-based restricted stock granted under the MIP, such that the ratable vesting initially scheduled to occur on the second and third anniversaries of the award shall instead both occur on the second anniversary of the award.

Additionally, the Company granted certain key employees performance-based cash incentive awards granted under the LTIP with a target award amount of $ 927 .

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(3) The expected volatility assumption is based on the historical volatility of the price of the Company’s stock.

(4) The annual risk-free interest rate equals the yield on the semi-annual zero coupon U.S.

Treasury rates converted to continuously compounded rates that have a term equal to the length of the remaining performance measurement period as of the valuation date.

(5) The expected dividend yield represents the investments return to a share of the Company’s stock that is not available to the holder of the performance-based restricted stock unit.

ALPHA METALLURGICAL RESOURCES, INC.

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(Amounts in thousands except share and per share data)

(4) The annual risk-free interest rate equals the yield on the semi-annual zero coupon U.S.

Treasury rates converted to continuously compounded rates that have a term equal to the length of the remaining performance measurement period as of the valuation date.

(5) The expected dividend yield represents the investments return to a share of the Company’s stock that is not available to the holder of the performance-based restricted stock unit.

2020 Awards Granted

During the year ended December 31, 2019, the Company granted certain key employees and non-employee directors 79,474 time-based restricted stock units under the LTIP with a weighted average grant date fair value of $ 49.47 based on the Company’s closing stock price at the trading day before the date of the grant.

The awards granted to key employees will either vest ratably over a three-year period or cliff vest in one year from date of grant in accordance with the vesting schedule, subject to the participant’s continuous service with the Company through each applicable vesting date.

The awards granted to non-employee directors will vest on the first to occur of (i) April 30, 2020, (ii) the director’s separation from service due to the director’s death or physical or mental incapacity to perform his or her usual duties, such condition likely to remain continuously and permanently, as determined by the Company, and (iii) a change in control.

During the year ended December 31, 2020, the Company granted certain key employees and non-employee directors 402,620 time-based restricted stock units under the MIP and LTIP with a weighted average grant date fair value of $ 6.17 based on the Company’s closing stock price at the trading day before the date of the grant.

Upon vesting and settlement of time-based restricted stock units, the Company issues authorized and unissued shares of the Company’s common stock to the recipient.

Additionally, during the year ended December 31, 2019, the Company granted certain key employees 81,065 relative total shareholder return performance-based restricted stock units under the LTIP that are valued relative to the median stock price performance of a comparator group and had a weighted average grant date fair value of $ 65.70 based on a Monte Carlo simulation, and 27,042 absolute total shareholder return performance-based restricted stock units under the LTIP that are valued based on the Company’s stock price performance with a weighted average grant date fair value of $ 50.60 based on a Monte Carlo simulation.

These awards cliff vest on the third anniversary of the date of the grant, subject to continued employment and the satisfaction of the performance criteria.

These awards have the potential to be distributed from 0 % to 400 % of target for the relative total shareholder return units, and 0 % to 200 % of target for the absolute total shareholder return units depending on actual results versus the pre-established performance criteria over the three-year period.

The Monte Carlo simulations incorporate the assumptions as presented in the following tables:

These performance-based restricted stock units had the potential to be earned from 0 % to 200 % of target depending on actual results.

Upon vesting of this award, the Company would issue authorized and previously unissued shares of the Company’s common stock to the recipient.

The 151,397 relative total shareholder return performance-based restricted stock units were valued relative to the stock price performance of a comparator group and had a weighted average grant date fair value of $ 8.53 based on a Monte Carlo simulation.

The Monte Carlo simulation incorporated the assumptions as presented in the following table:

Relative performance-based restricted stock units

Start price (1)

Dividend adjusted stock price (2)

Expected volatility (3)

Risk-free interest rate (4)

Expected dividend yield (5)

(1) The start price for the Company represents the average closing stock price over the ten trading days ending on December 31, 2018, assuming dividends distributed during this period were reinvested in additional shares of the Company’s stock on the ex-dividend date.

(2) The dividend adjusted stock price represents the closing price on the grant date assuming dividends distributed during the period since December 17, 2018, were reinvested in additional shares of the Company’s stock on the ex-dividend date.

(3) The expected volatility assumption is based on the historical volatility of the price of the Company’s stock.

(4) The annual risk-free interest rate equals the yield on zero coupon U.S.

Treasury Separate Trading of Registered Interest and Principal of Securities (“STRIPS”) that have a term equal to the length of the remaining performance measurement period as of the valuation date.

(5) The expected dividend yield represents the investments return to a share of the Company’s stock that is not available to the holder of an absolute performance-based restricted stock unit.

Absolute performance-based restricted stock units

Valuation date stock price (2)

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Expected dividend yield (5)

(1) The expected volatility assumption is based on the historical volatility of the price of the Company’s stock.

(2) The annual risk-free interest rate equals the yield on zero coupon U.S.

Treasury STRIPS that have a term equal to the length of the remaining performance measurement period as of the valuation date.

(3) The expected dividend yield represents the investments return to a share of the Company’s stock that is not available to the holder of an absolute performance-based restricted stock unit.

(1) The start price for the Company represented the average closing stock price over the twenty trading days ending on December 31, 2019, assuming dividends distributed during this period were reinvested in additional shares of the Company’s stock on the ex-dividend date.

(2) The valuation date stock price represented the closing price on the grant date.

(3) The expected volatility assumption was based on the historical volatility of the price of the Company’s stock.

(4) The annual risk-free interest rate equaled the yield on the semi-annual zero coupon U.S.

Treasury rates converted to continuously compounded rates that had a term equal to the length of the remaining performance measurement period as of the valuation date.

(5) The expected dividend yield represented the investments return to a share of the Company’s stock that is not available to the holder of the performance-based restricted stock unit.

ALPHA METALLURGICAL RESOURCES, INC.

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(Amounts in thousands except share and per share data)

Restricted Stock

Restricted stock activity for the year ended December 31, 2020 is summarized in the following table:

Restricted stock activity:

Number of Shares Weighted-Average Grant Date Fair Value

Non-vested shares outstanding at December 31, 2019 23,598 $ 65.55

Granted — $ —

Vested ( 23,598 ) $ 65.55

Forfeited or Expired — $ —

Non-vested shares outstanding at December 31, 2020 — $ —

As of December 31, 2020, there was no unrecognized compensation cost related to non-vested restricted stock units.

Additionally, the Company granted certain key employees performance-based cash incentive awards granted under the LTIP with a target award amount of $ 2,755 .

The cash to be awarded is based on the achievement of pre-established relative total shareholder return goals over a three-year period.

These awards have the potential to be distributed from 0 % to 200 % of target depending on actual performance.

Upon vesting of these awards, the Company issues cash to the recipient.

These awards are classified as a liability, and the Company reassesses at each reporting date the fair value of the award and adjusts the accruals of stock-based compensation expense as appropriate based on a Monte Carlo simulation.

As of December 31, 2021 and 2020, the liability for these awards totaled $ 2,542 and $ 643 , respectively.

The performance-based cash incentive awards were valued relative to the stock price performance of a comparator group and had a weighted average grant date fair value as a percent of target dollar value of 82.45 % based on a Monte Carlo simulation.

The Monte Carlo simulation incorporates the assumptions as presented in the following table:

Performance-based cash incentive awards

Start price (1)

Valuation date stock price (2)

Expected volatility (3)

Risk-free interest rate (4)

Expected dividend yield (5)

(1) The start price for the Company represents the average closing stock price over the twenty trading days ending on December 31, 2019, assuming dividends distributed during this period were reinvested in additional shares of the Company’s stock on the ex-dividend date.

(2) The valuation date stock price represents the closing price at each reporting date.

(3) The expected volatility assumption is based on the historical volatility of the price of the Company’s stock.

(4) The annual risk-free interest rate equals the yield on the semi-annual zero coupon U.S.

Treasury rates converted to continuously compounded rates that have a term equal to the length of the remaining performance measurement period as of the valuation date.

(5) The expected dividend yield represents the investments return to a share of the Company’s stock that is not available to the holder of the performance-based restricted stock unit.

Restricted Stock Units

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( 193,854 ) $ 16.05

Forfeited or Cancelled ( 43,320 ) $ 21.10

Forfeited ( 4,920 ) $ 19.22

Non-vested shares outstanding at December 31, 2021 392,275 $ 11.54

(1) Includes 33,508 shares with deferred settlement pursuant to the award agreement.

(1) Includes 61,646 shares with deferred settlement pursuant to the award agreements.

As of December 31, 2021, there was $ 1,167 of unrecognized compensation cost related to non-vested time-based restricted stock units which is expected to be recognized as expense over a weighted-average period of 1.33 years.

ALPHA METALLURGICAL RESOURCES, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Amounts in thousands except share and per share data)

Performance-Based Restricted Stock Units

Relative performance-based restricted stock unit activity for the year ended December 31, 2020 is summarized in the following table:

Relative performance-based restricted stock unit activity for the year ended December 31, 2021 based on target achievement of the performance criteria is summarized in the following table:

Relative performance-based restricted stock unit activity:

2 unchanged sentences

Granted 67,035 $ 16.18

( 3,864 ) $ 65.70

Forfeited ( 4,929 ) $ 65.70

Forfeited or Cancelled ( 153,016 ) $ 9.13

Non-vested shares outstanding at December 31, 2021 (1)

(1) Includes 3,042 of vested shares due to the employment criteria being satisfied during the period.

Until the performance criteria is satisfied, these shares will remain unsettled.

88,222 $ 28.07

(1) During the first quarter of 2022, 46,551 shares were cancelled and allocated back to the LTIP for future issuance as the 2019 award’s performance metric was not achieved.

As of December 31, 2021, there was $ 803 of unrecognized compensation cost related to non-vested relative performance-based restricted stock units which is expected to be recognized as expense over a weighted-average period of 1.95 years.

ALPHA METALLURGICAL RESOURCES, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Amounts in thousands except share and per share data)

Absolute performance-based restricted stock unit activity for the year ended December 31, 2020 is summarized in the following table:

Absolute performance-based restricted stock unit activity for the year ended December 31, 2021 based on target achievement of the performance criteria is summarized in the following table:

Absolute performance-based restricted stock unit activity:

2 unchanged sentences

Granted — $ —

( 1,290 ) $ 50.60

Forfeited ( 541 ) $ 50.60

Non-vested shares outstanding at December 31, 2021 (1)

(1) Includes 1,016 of vested shares due to the employment criteria being satisfied during the period.

Until the performance criteria is satisfied, these shares will remain unsettled.

7,073 $ 50.60

(1) During the first quarter of 2022, 15,532 shares were cancelled and allocated back to the LTIP for future issuance as the 2019 award’s performance metric was not achieved.

As of December 31, 2021, there was $ 13 of unrecognized compensation cost related to non-vested absolute performance-based restricted stock units which is expected to be recognized as expense over a weighted-average period of 0.11 years.

Operational performance-based restricted stock unit activity for the year ended December 31, 2020 is summarized in the following table:

Operational performance-based restricted stock unit activity for the year ended December 31, 2021 based on target achievement of the performance criteria is summarized in the following table:

Operational performance-based restricted stock unit activity:

2 unchanged sentences

Granted 100,552 $ 12.00

Forfeited — $ —

Cancelled ( 151,398 ) $ 6.36

Non-vested shares outstanding at December 31, 2021 100,552 $ 12.00

As of December 31, 2020, there was $ 260 of unrecognized compensation cost related to non-vested operational performance-based restricted stock units which is expected to be recognized as expense over a weighted-average period of 2.13 years.

As of December 31, 2021, there was $ 386 of unrecognized compensation cost related to non-vested operational performance-based restricted stock units, based on the probability of achievement as of December 31, 2021, which is expected to be recognized as expense over a weighted-average period of 2.08 years.

ALPHA METALLURGICAL RESOURCES, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Amounts in thousands except share and per share data)

Stock Options

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The aggregate intrinsic value of exercised options is calculated as the difference between the exercise price and the Company’s stock price on the exercise date.

During the year ended December 31, 2019, the aggregate intrinsic value of options exercised was $ 6,305 .

ALPHA METALLURGICAL RESOURCES, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Amounts in thousands except share and per share data)

As of December 31, 2021, there was $ 0 of unrecognized compensation cost related to the 30-day VWAP stock options.

Fixed Price Stock Options

As December 31, 2020 and 2019, there were no fixed price stock options outstanding or exercisable.

During the year ended December 31, 2019, the aggregate intrinsic value of options exercised was $ 6,879 .

As of December 31, 2020, there was no unrecognized compensation cost related to the fixed price stock options.

Performance-Based Cash Incentive Awards

Performance-based cash incentive award activity for the year ended December 31, 2020 is summarized in the following table:

Performance-based cash incentive award activity for the year ended December 31, 2021 based on target achievement of the performance criteria is summarized in the following table:

Performance-based cash incentive award activity:

2 unchanged sentences

Granted 927 51.73 %

( 42 ) 100.00 %

Forfeited ( 142 ) 78.45 %

Non-vested awards outstanding at December 31, 2021 $ 2,991 162.03 %

(1) Vested awards were paid at target dollar value due to the employment criteria being satisfied during the period.

As of December 31, 2020, there was $ 1,447 of unrecognized compensation cost related to non-vested performance-based cash incentive awards which is expected to be recognized as expense over a weighted-average period of 2.13 years.

As of December 31, 2021, there was $ 2,092 of unrecognized compensation cost related to non-vested performance-based cash incentive awards, based on the probability of achievement as of December 31, 2021, which is expected to be recognized as expense over a weighted-average period of 1.39 years.

(21) Related Party Transactions

There were no material related party transactions for the year ended December 31, 2020.

On June 14, 2019, the Company entered into a Credit Agreement which provides for the Term Loan Credit Facility as provided by a group of existing shareholders as of the agreement date.

Refer to Note 15 for additional disclosures.

On July 19, 2019, in association with the Blackjewel Chapter 11 bankruptcy filing, the U.S.

Bankruptcy Court approved debtor-in-possession (“DIP”) financing of $ 2,900 with DIP lenders, Highbridge Capital Management, LLC and Whitebox Advisors LLC, shareholders of the Company.

The Company entered into an arrangement on July 19, 2019 to purchase the obligations under the DIP financing at the request of the lenders thereunder pursuant to certain terms and conditions.

On September 12, 2019, the Company entered into a common stock repurchase agreement with Whitebox, shareholders of the Company.

Refer to Note 13 for additional disclosures.

There were no other material related party transactions for the year ended December 31, 2019.

(23) Commitments and Contingencies

Estimated losses from loss contingencies are accrued by a charge to income when information available indicates that it is probable that an asset has been impaired or a liability has been incurred and the amount of the loss can be reasonably estimated.

If a loss contingency is not probable or reasonably estimable, disclosure of the loss contingency is made in the Consolidated Financial Statements when it is at least reasonably possible that a loss may be incurred and that the loss could be material.

There were no material related party transactions for the years ended December 31, 2021 and 2020.

However, during the year ended December 31, 2021,

• the Company, through a privately negotiated transaction with an underlying Contingent Revenue Obligation creditor, repurchased 7.75 % of the outstanding rights of the Contingent Revenue Obligation at an aggregate purchase price of $ 2,091 .

The underlying Contingent Revenue Obligation creditor was an existing shareholder (related party) as of the repurchase date.

Refer to Note 15 for additional disclosures on this acquisition-related obligation;

• the Company repurchased at a discount certain outstanding principal borrowings made under the Term Loan Credit Facility from existing shareholders through privately negotiated transactions.

Refer to Note 14 for additional disclosures on long-term debt.

ALPHA METALLURGICAL RESOURCES, INC.

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(Amounts in thousands except share and per share data)

(22) Commitments and Contingencies

(b) Commitments and Contingencies

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Other Commitments

The Company has obligations under certain coal purchase agreements that contain minimum quantities to be purchased in 2021 totaling an estimated $ 44,707 .

The Company has obligations under certain coal transportation agreements that contain minimum quantities to be shipped during contract periods from 2020 through 2022 with estimated obligations based on remaining tons to be shipped totaling $ 29 and $ 338 in 2021 and 2022, respectively.

The Company also has obligations under certain equipment purchase agreements that contain minimum quantities to be purchased in 2021 and 2023 totaling $ 5,008 and $ 170 , respectively.

As of December 31, 2021, the Company has obligations under certain coal purchase agreements that contain minimum quantities to be purchased in 2022 totaling an estimated $ 37,335 .

The Company also has obligations under certain coal transportation agreements that contain minimum quantities to be shipped during contract periods in 2022 and 2023 with estimated cash settlements in 2022, 2023, and 2024 which are based on estimated remaining tons to be shipped, totaling $ 2,527 , $ 105,750 , and $ 87,825 , respectively.

The Company also has obligations under certain equipment purchase agreements that contain minimum quantities to be purchased in 2022 totaling $ 18,497 .

Additionally, the Company has diesel fuel purchase commitments totaling $ 25,490 in 2022.

Contingencies

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When a loss related to such matters is considered probable and can reasonably be estimated, the Company records a liability.

Refer to Note 3 for disclosures on the Cumberland and PRB Back-to-Back Coal Supply Agreements.

Future Federal Income Tax Refunds

As of December 31, 2020, the Company has recorded $ 64,160 of current federal income tax receivable and associated interest receivable of $ 5,213 related to a net operating loss (“NOL”) carryback claim.

Because the federal government was a creditor in the Alpha Natural Resources, Inc.

bankruptcy proceedings, it is possible that the federal government could withhold some or all of the tax refund attributable to the NOL carryback claim and assert a right to set off the tax refund and associated interest receivable against its prepetition bankruptcy claims.

Refer to Note 3 for disclosures on the Cumberland Back-to-Back Coal Supply Agreements.

1 unchanged sentence

However, the underlying liabilities that they secure, such as asset retirement obligations, workers’ compensation liabilities, and royalty obligations, are reflected in the Company’s Consolidated Balance Sheets.

The Company is required to provide financial assurance in order to perform the post-mining reclamation required by its mining permits, pay workers’ compensation claims under workers’ compensation laws in various states, pay federal black lung benefits, and perform certain other obligations.

In order to provide the required financial assurance, the Company generally uses surety bonds for post-mining reclamation and workers’ compensation obligations.

The Company can also use bank letters of credit to collateralize certain obligations.

ALPHA METALLURGICAL RESOURCES, INC.

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(Amounts in thousands except share and per share data)

As of December 31, 2020, the Company had $ 123,108 in letters of credit outstanding under the Amended and Restated Asset-Based Revolving Credit Agreement.

Additionally, as of December 31, 2020, the Company had $ 14,242 in letters of credit outstanding under the Amended and Restated Letter of Credit Agreement dated November 9, 2018 between ANR, Inc.

and Citibank, N.A.

and $ 613 in letters of credit outstanding under the Credit and Security Agreement dated June 30, 2017, and related amendments, between ANR, Inc.

In order to provide the required financial assurance, the Company generally uses surety bonds for post-mining reclamation and workers’ compensation obligations.

The Company can also use bank letters of credit to collateralize certain obligations.

As of December 31, 2021, the Company had $ 121,037 in letters of credit outstanding under the Second Amended and Restated Asset-Based Revolving Credit Agreement.

Additionally, as of December 31, 2021, the Company had $ 613 in letters of credit outstanding under the Credit and Security Agreement dated June 30, 2017, and related amendments, between ANR, Inc.

and First Tennessee Bank National Association.

On March 31, 2021, the Amended and Restated Letter of Credit Agreement dated November 9, 2018 between ANR, Inc.

and Citibank, N.A.

was terminated.

As of December 31, 2021, the Company had outstanding surety bonds with a total face amount of $ 176,119 to secure various obligations and commitments, including $ 30 attributable to discontinued operations.

To secure the Company’s reclamation-related obligations, the Company currently has $ 56,311 of collateral supporting these obligations.

To secure the Company’s reclamation-related obligations, the Company currently has $ 36,792 of collateral in the form of restricted cash, restricted investments, and deposits and $ 15,548 of letters of credit outstanding supporting these obligations as of December 31, 2021.

The Company meets frequently with its surety providers and has discussions with certain providers regarding the extent of and the terms of their participation in the program.

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(2) As of December 31, 2021 and 2020, respectively, $ 28,443 and $ 22,498 are classified as trading securities and $ 0 and $ 1,270 are classified as held-to-maturity securities.

ALPHA METALLURGICAL RESOURCES, INC.

2 unchanged sentences

(Amounts in thousands except share and per share data)

December 31, 2021 December 31, 2020

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The Company exercised this right of appeal in connection with the substantial increase in the amount of required collateral.

If the Company’s appeal is unsuccessful, the Company may be required to provide additional letters of credit to receive the self-insurance reauthorization from the DCMWC or alternatively insure these black lung obligations through a third party provider that would likely also require the Company to provide collateral.

In February 2021, the U.S.

Department of Labor (“DOL”) withdrew its Federal Register notice seeking comments on its bulletin describing its new method of calculating collateral requirements.

The Department removed the bulletin from its website in May 2021.

On February 10, 2022, a telephone conference was held with DCMWC and DOL decision makers wherein the Company presented facts and arguments in support of its appeal.

No ruling has been made on the appeal, but during the call the Company indicated that it would be willing to allocate an additional $ 10,000 in collateral.

Either of these outcomes could potentially reduce the Company’s liquidity.

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(23) Concentration of Credit Risk and Major Customers

The Company markets produced, processed, and purchased coal to customers in the United States and in international markets, primarily India, Brazil, Turkey, the Netherlands, and Italy.

The Company markets produced, processed, and purchased coal to customers in the United States and in international markets, primarily India, China, and Brazil.

The following table presents additional information on our total revenues and top customers:

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Export revenue as % of coal revenue 76 % 64 %

Countries with export revenue exceeding 10% of total revenue India, Brazil India

Countries with export revenue exceeding 10% of total revenue India, China, Brazil India, Brazil

Met coal as % of coal sales volume 83 % 80 %

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(24) Segment Information

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 conducts mining operations only in the United States with mines in Central Appalachia.

As of December 31, 2020, the Company has two reportable segments:

Met and CAPP - Thermal.

Met consists of five active mines and two preparation plants in Virginia, seventeen active mines and five preparation plants in West Virginia, as well as expenses associated with certain idled/closed mines.

CAPP - Thermal consists of one active mine and one preparation plant in West Virginia, as well as expenses associated with certain idled/closed mines.

Prior to the fourth quarter of 2020, the Company had three reportable segments:

CAPP - Met, CAPP - Thermal, and NAPP.

As a result of the divestiture of the Cumberland mining operations (refer to Note 3), the Company re-evaluated its previous conclusions with respect to its segment reporting during the period.

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 conducts mining operations only in the United States with mines in Central Appalachia.

The Company has one reportable segment:

Met, which consists of five active mines and two preparation plants in Virginia, fourteen active mines and five preparation plants in West Virginia, as well as expenses associated with certain idled/closed mines.

As of December 31, 2020, the Company had two reportable segments:

CAPP - Met and CAPP - Thermal.

As a result of the Company’s continued strategic focus on the production of metallurgical coal and the reduction of thermal mining operations, the Company re-evaluated its previous conclusions with respect to its segment reporting during the first quarter of 2021.

To conform to the current period reportable segments presentation, the prior periods have been restated to reflect the change in reportable segments.

In addition to the two reportable segments, the All Other category includes general corporate overhead and corporate assets and liabilities, idle and closed mine costs, and the elimination of certain intercompany activity.

The operating results of these reportable segments are regularly reviewed by the “CODM,” who is the Chief Executive Officer of the Company.

In addition to the one reportable segment, the All Other category includes general corporate overhead and corporate assets and liabilities, the former CAPP - Thermal operations consisting of one active mine and one preparation plant in West Virginia, and the elimination of certain intercompany activity, as well as expenses associated with certain idled/closed mines.

Reportable segment operating results are regularly reviewed by the Chief Operating Decision Maker (“CODM”), who is the Chief Executive Officer of the Company.

Segment operating results and capital expenditures from continuing operations for the year ended December 31, 2021 were as follows:

Year Ended December 31, 2021

Met CAPP - Thermal All Other Consolidated

Met All Other Consolidated

Total revenues $ 2,176,080 $ 82,506 $ 2,258,586

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Year Ended December 31, 2020

Met CAPP - Thermal All Other Consolidated

Met All Other Consolidated

Total revenues $ 1,264,496 $ 151,691 $ 1,416,187

3 unchanged sentences

Capital expenditures $ 111,745 $ 7,834 $ 119,579

The following table presents a reconciliation of net loss from continuing operations to Adjusted EBITDA for the year ended December 31, 2020:

The following table presents a reconciliation of net income (loss) from continuing operations to Adjusted EBITDA for the year ended December 31, 2021:

Year Ended December 31, 2021

Met CAPP - Thermal All Other Consolidated

Net loss from continuing operations $ ( 77,519 ) $ ( 52,520 ) $ ( 111,431 ) $ ( 241,470 )

Met All Other Consolidated

Net income (loss) from continuing operations $ 439,859 $ ( 152,930 ) $ 286,929

Interest expense 184 69,470 69,654

Interest income ( 6 ) ( 328 ) ( 334 )

Income tax benefit — — ( 2,164 ) ( 2,164 )

Income tax expense — 3,609 3,609

Depreciation, depletion and amortization 99,963 10,084 110,047

1 unchanged sentence

Mark-to-market adjustment - acquisition-related obligations — 19,525 19,525

Gain on settlement of acquisition-related obligations — ( 1,125 ) ( 1,125 )

Accretion on asset retirement obligations 13,571 12,949 26,520

Asset impairment and restructuring — ( 561 ) ( 561 )

46,317 36,719 842 83,878

Management restructuring costs (2)

501 5 435 941

Loss on partial settlement of benefit obligations 1,607 ( 328 ) 1,687 2,966

Amortization of acquired intangibles, net 13,671 ( 427 ) 13,244

Adjusted EBITDA $ 567,270 $ ( 34,447 ) $ 532,823

(1) Asset impairment and restructuring for the year ended December 31, 2020 includes long-lived asset impairments of $ 80,954 and restructuring expense of $ 2,924 .

Refer to Note 8 for further information.

(2) Management restructuring costs are related to severance expense associated with senior management changes during the three months ended March 31, 2020.

ALPHA METALLURGICAL RESOURCES, INC.

2 unchanged sentences

(Amounts in thousands except share and per share data)

The following table presents a reconciliation of net income (loss) from continuing operations to Adjusted EBITDA for the year ended December 31, 2019:

The following table presents a reconciliation of net loss from continuing operations to Adjusted EBITDA for the year ended December 31, 2020:

Year Ended December 31, 2020

Met CAPP - Thermal All Other Consolidated

Net income (loss) from continuing operations $ 7,944 $ ( 97,398 ) $ ( 130,164 ) $ ( 219,618 )

Met All Other Consolidated

Net loss from continuing operations $ ( 77,519 ) $ ( 163,951 ) $ ( 241,470 )

Interest expense ( 2,014 ) 76,542 74,528

2 unchanged sentences

Depreciation, depletion and amortization 124,060 15,825 139,885

Merger-related costs — — 1,090 1,090

Non-cash stock compensation expense 289 4,607 4,896

1 unchanged sentence

Accretion on asset retirement obligations 14,214 12,290 26,504

Loss on modification and extinguishment of debt — — 26,459 26,459

Asset impairment (1)

15,034 50,993 297 66,324

Goodwill impairment (2)

124,353 — — 124,353

Cost impact of coal inventory fair value adjustment (3)

4,751 3,458 — 8,209

Gain on assets acquired in an exchange transaction (4)

( 9,083 ) — — ( 9,083 )

Asset impairment and restructuring 46,317 37,561 83,878

Management restructuring costs (1)

— — 7,720 7,720

Loss on partial settlement of benefit obligations 1,607 1,359 2,966

1 unchanged sentence

Adjusted EBITDA $ 120,281 $ ( 36,880 ) $ 83,401

(1) Asset impairment for the year ended December 31, 2019 includes a long-lived asset impairment of $ 60,169 related to asset groups recorded within the Met and CAPP - Thermal reporting segments and an asset impairment of $ 6,155 primarily related to the write-off of prepaid purchased coal as a result of Blackjewel’s Chapter 11 bankruptcy filing on July 1, 2019.

Refer to Note 8 for further information.

(2) The goodwill impairment testing as of December 31, 2019 resulted in a goodwill impairment of $ 124,353 to write down the full carrying value of goodwill.

Refer to Note 2 for further information.

(3) The cost impact of the coal inventory fair value adjustment as a result of the Merger was completed during the three months ended June 30, 2019.

(4) During the year ended December 31, 2019, the Company entered into an exchange transaction which primarily included the release of the PRB overriding royalty interest owed to the Company in exchange for met coal reserves which resulted in a gain of $ 9,083 .

(5) Management restructuring costs are related to severance expense associated with senior management changes in the year ended December 31, 2019.

No asset information has been provided for these reportable segments as the CODM does not regularly review asset information by reportable segment.

(1) Management restructuring costs are related to severance expense associated with senior management changes during the three months ended March 31, 2020.

No asset information has been disclosed as the CODM does not regularly review asset information by reportable segment.

(25) Subsequent Events

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.

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.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data