Alpha Metallurgical Resources, Inc. 10-K

Item 8. Financial Statements and Supplementary Data Report of Independent Registered Public Accounting Firm To the Stockholders and the Board of Directors of Alpha Metallurgical Resources, Inc. 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 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 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 The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. 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. 77 Table of Contents 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. The Company records the asset retirement obligation liability at fair value in the period in which the legal obligation associated with the retirement of the long-lived asset is incurred. Changes to the liability at operations that are not currently being reclaimed are offset by increasing or decreasing the carrying amount of the related long-lived asset. Changes to the liability at operations that are currently being reclaimed are recorded to depreciation, depletion, and amortization. The Company annually reviews its estimated future cash flows for its asset retirement obligations. We identified the valuation of the asset retirement obligation as a critical audit matter because the estimate involves a high degree of subjectivity and auditing the significant assumptions utilized by management in estimating the amount of the liability requires judgment. In particular, the obligation is determined using a discounted cash flow technique and is based upon mining permit requirements and various assumptions including discount rates, inflation rate, estimates of disturbed acreage, timing of reclamation activities, and third-party reclamation costs. Our audit procedures related to the Company’s asset retirement obligation liability included the following, among others: – We obtained an understanding of the relevant controls related to the Company’s accounting for the asset retirement obligation liability, and tested such controls for design and operating effectiveness, including controls over management’s review of the significant assumptions and data inputs described above. – We compared significant valuation assumptions including the discount rates and inflation rate to market data and utilized a valuation specialist to assist in testing the Company’s discounted cash flow model. – We compared the estimates of disturbed acreage, timing of reclamation activities, and third-party reclamation costs to the prior year estimate, assessing consistency between timing of reclamation activities and projected mine life, evaluated the appropriateness of the estimated costs based on mine type, and compared anticipated costs to recent operating data. – We utilized an external specialist to perform observations of mine site operations, conducted interviews of engineering personnel, assessed the completeness of the mine reclamation estimate with respect to meeting mine closure and post closure plan regulatory requirements, and evaluated the reasonableness of the engineering estimates and assumptions. /s/ RSM US LLP We have served as the Company's auditor since 2020. Atlanta, Georgia March 7, 2022 78 Table of Contents ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Amounts in thousands, except share and per share data) Year Ended December 31, 2021 2020 Revenues: Coal revenues $ 2,252,597 $ 1,413,124 Other revenues 5,989 3,063 Total revenues 2,258,586 1,416,187 Costs and expenses: Cost of coal sales (exclusive of items shown separately below) 1,679,742 1,281,011 Depreciation, depletion and amortization 110,047 139,885 Accretion on asset retirement obligations 26,520 26,504 Amortization of acquired intangibles, net 13,244 9,214 Asset impairment and restructuring ( 561 ) 83,878 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 ) Other income ( 10,972 ) ( 2,223 ) Total costs and expenses 1,901,446 1,586,875 Income (loss) from operations 357,140 ( 170,688 ) Other (expense) income: Interest expense ( 69,654 ) ( 74,528 ) Interest income 334 7,027 Equity loss in affiliates ( 4,149 ) ( 3,473 ) Miscellaneous income (loss), net 6,867 ( 1,972 ) Total other expense, net ( 66,602 ) ( 72,946 ) 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: Income (loss) from discontinued operations before income taxes 1,660 ( 205,429 ) Income tax benefit from discontinued operations 201 — 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 79 Table of Contents Weighted average shares - diluted 18,871,682 18,298,362 Refer to accompanying Notes to Consolidated Financial Statements. 80 Table of Contents ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Amounts in thousands) Year Ended December 31, 2021 2020 Net income (loss) $ 288,790 $ ( 446,899 ) Other comprehensive income (loss), net of tax: Employee benefit plans: Current period actuarial gain (loss) $ 47,461 $ ( 60,647 ) Income tax — — $ 47,461 $ ( 60,647 ) Less: reclassification adjustments for amounts reclassified to earnings due to amortization of net actuarial loss and settlements 6,021 7,278 Income tax — — $ 6,021 $ 7,278 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. 81 Table of Contents ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Amounts in thousands, except share and per share data) December 31, 2021 December 31, 2020 Assets Current assets: Cash and cash equivalents $ 81,211 $ 139,227 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 Inventories, net 129,382 108,051 Prepaid expenses and other current assets 47,690 106,252 Current assets - discontinued operations 462 10,935 Total current assets 747,986 510,135 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 $ 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 $ 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 Other non-current assets 131,057 149,382 Non-current assets - discontinued operations 8,526 9,473 Total assets $ 1,857,712 $ 1,680,089 Liabilities and Stockholders’ Equity Current liabilities: Current portion of long-term debt $ 2,989 $ 28,830 Trade accounts payable 90,090 58,413 Acquisition-related obligations - current 22,405 19,099 Accrued expenses and other current liabilities 174,607 140,406 Current liabilities - discontinued operations 5,838 12,306 Total current liabilities 295,929 259,054 Long-term debt 445,562 553,697 Acquisition-related obligations - long-term 19,000 20,768 Workers’ compensation and black lung obligations 208,193 230,081 Pension obligations 159,930 218,671 Asset retirement obligations 132,013 140,074 Deferred income taxes 317 480 Other non-current liabilities 26,176 28,072 Non-current liabilities - discontinued operations 23,683 29,090 Total liabilities 1,310,803 1,479,987 Commitments and Contingencies (Note 22) Stockholders’ Equity Preferred stock - par value $ 0.01 , 5.0 million shares authorized, none issued — — Common stock - par value $ 0.01 , 50.0 million shares authorized, 20.8 million issued and 18.4 million outstanding at December 31, 2021 and 20.6 million issued and 18.3 million outstanding at December 31, 2020 208 206 Additional paid-in capital 784,743 779,424 Accumulated other comprehensive loss ( 58,503 ) ( 111,985 ) Treasury stock, at cost: 2.4 million shares at December 31, 2021 and 2.3 million shares at December 31, 2020 ( 107,800 ) ( 107,014 ) 82 Table of Contents Accumulated deficit ( 71,739 ) ( 360,529 ) Total stockholders’ equity 546,909 200,102 Total liabilities and stockholders’ equity $ 1,857,712 $ 1,680,089 Refer to accompanying Notes to Consolidated Financial Statements. 83 Table of Contents ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Amounts in thousands) Year Ended December 31, 2021 2020 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 Amortization of acquired intangibles, net 13,244 10,075 Accretion of acquisition-related obligations discount 1,258 3,342 Amortization of debt issuance costs and accretion of debt discount 12,338 14,772 Mark-to-market adjustment for acquisition-related obligations 19,525 ( 8,750 ) Loss on sale of business — 36,113 Gain on disposal of assets, net ( 9,911 ) ( 2,401 ) Accretion on asset retirement obligations 26,520 30,658 Employee benefit plans, net ( 1,751 ) 14,439 Deferred income taxes ( 163 ) 33,123 Asset impairment and restructuring ( 561 ) 256,518 Stock-based compensation 5,315 4,896 Equity loss in affiliates 4,149 3,473 Other, net ( 6,570 ) ( 5,972 ) Changes in operating assets and liabilities Trade accounts receivable, net ( 336,240 ) 91,190 Inventories, net ( 21,331 ) 48,689 Prepaid expenses and other current assets 61,581 28,152 Deposits 26,853 ( 17,926 ) Other non-current assets ( 250 ) ( 6,753 ) Trade accounts payable 25,154 ( 28,620 ) Accrued expenses and other current liabilities 15,961 15,428 Acquisition-related obligations ( 18,121 ) ( 32,560 ) Asset retirement obligations ( 16,306 ) ( 19,375 ) Other non-current liabilities ( 24,588 ) ( 43,831 ) Net cash provided by operating activities 174,943 129,236 Investing activities: Capital expenditures ( 83,300 ) ( 153,990 ) Proceeds on disposal of assets 8,224 4,023 Cash paid on sale of business — ( 52,192 ) Capital contributions to equity affiliates ( 6,677 ) ( 3,443 ) Purchases of investment securities ( 17,985 ) ( 21,129 ) Maturity of investment securities 13,265 16,685 Other, net ( 3,382 ) 77 Net cash used in investing activities ( 89,855 ) ( 209,969 ) Financing activities: 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 ) 84 Table of Contents Debt issuance costs ( 6,683 ) — Common stock repurchases and related expenses ( 786 ) ( 209 ) Net cash used in financing activities ( 147,045 ) ( 22,376 ) Net decrease in cash and cash equivalents and restricted cash ( 61,957 ) ( 103,109 ) Cash and cash equivalents and restricted cash at beginning of period 244,571 347,680 Cash and cash equivalents and restricted cash at end of period $ 182,614 $ 244,571 Supplemental cash flow information: Cash paid for interest $ 63,061 $ 49,294 Cash paid for income taxes $ 176 $ 5 Cash received for income tax refunds $ 64,498 $ 68,801 Supplemental disclosure of noncash investing and financing activities: Financing leases and capital financing - equipment $ 787 $ 4,411 Accrued capital expenditures $ 9,964 $ 7,493 The following table provides a reconciliation of cash and cash equivalents and restricted cash reported within the Consolidated Balance Sheets that sum to the total of the same such amounts shown in the Consolidated Statements of Cash Flows. As of December 31, 2021 2020 Cash and cash equivalents $ 81,211 $ 139,227 Short-term restricted cash (included in Prepaid expenses and other current assets) 11,977 9,311 Long-term restricted cash 89,426 96,033 Total cash and cash equivalents and restricted cash shown in the Consolidated Statements of Cash Flows $ 182,614 $ 244,571 Refer to accompanying Notes to Consolidated Financial Statements. 85 Table of Contents ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Amounts in thousands) 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 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 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 Refer to accompanying Notes to Consolidated Financial Statements. 86 Table of Contents ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Amounts in thousands except share and per share data) (1) Business and Basis of Presentation Business Alpha Metallurgical Resources, Inc. (“Alpha” or the “Company”), previously named Contura Energy, Inc., is a Tennessee-based mining company with operations across Virginia and West Virginia. With customers across the globe, high-quality reserves and significant port capacity, Alpha is a leading U.S. 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. bankruptcy reorganization. The Company began operations on July 26, 2016 and currently operates mines in the Central Appalachia region. A merger with ANR, Inc. and Alpha Natural Resources Holdings, Inc. (together, the "Merger Companies”) was completed on November 9, 2018 (the “Merger”) pursuant to terms of the definitive merger agreement (the “Merger Agreement”). Upon the consummation of the transactions contemplated by the Merger Agreement, the Company began trading on the New York Stock Exchange under the ticker “CTRA.” Effective February 1, 2021, the Company changed its corporate name from Contura Energy, Inc. to Alpha Metallurgical Resources, Inc. to more accurately reflect its strategic focus on the production of metallurgical coal. Following the effectiveness of its name change, the Company’s ticker symbol on the New York Stock Exchange changed from “CTRA” to “AMR” effective on February 4, 2021. Basis of Presentation 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. The accompanying Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”). 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 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. 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. 87 Table of Contents ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Amounts in thousands except share and per share data) COVID-19 Pandemic In the first quarter of 2020, the COVID-19 virus was declared a pandemic by the World Health Organization. The COVID-19 pandemic has had negative impacts on the Company’s business, results of operations, financial condition and cash flows. 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 still cannot be fully predicted. (2) Summary of Significant Accounting Policies Use of Estimates The preparation of the Company’s Consolidated Financial Statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the Consolidated Financial Statements and the reported amounts of revenues and expenses during the reporting period. Significant items subject to such estimates and assumptions include inventories; mineral reserves and resources; long-lived asset impairments; reclamation obligations; post-employment and other employee benefit obligations; useful lives, depletion and amortization; reserves for workers’ compensation and black lung claims; deferred income taxes; income taxes refundable and receivable; reserves for contingencies and litigation; fair value of financial instruments; and fair value adjustments for acquisition accounting. Estimates are based on facts and circumstances believed to be reasonable at the time; however, actual results could differ from those estimates. Cash and Cash Equivalents 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. Restricted Cash 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 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. 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. Refer to Note 22 for further information. Deposits 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 88 Table of Contents 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. The Company markets its coal primarily to domestic and international steel producers and electric utilities in the United States. Credit is extended based on an evaluation of a customer’s financial condition, including a review of third-party credit score information. Collateral is generally not required. Accounts receivable balances are monitored against approved credit limits. Credit limits are monitored and adjusted as considered necessary based on changes to a customer’s credit profile. If a customer’s credit deteriorates, the Company may reduce credit risk exposure by reducing credit limits, obtaining letters of credit, obtaining credit insurance, or requiring pre-payment for shipments. Credit losses have historically not been material. 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. Inventories Coal is reported as inventory at the point in time the coal is extracted from the mine. Raw coal represents coal stockpiles that may be sold in current condition or may be further processed prior to shipment to a customer. Saleable coal represents coal stockpiles that require no further processing prior to shipment to a customer. Coal inventories are valued at the lower of average cost or net realizable value. The cost of coal inventories is determined based on the average cost of production, which includes labor, supplies, equipment costs, operating overhead, depreciation, and other related costs. Net realizable value considers the projected future sales price of the product, less estimated preparation and selling costs. 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 In accordance with Accounting Standards Codification (“ASC”) 205-20-45, the Company treats a disposal transaction as a discontinued operation when the disposal of a component or group of components represents a strategic shift that will have a major effect on the Company’s operations and financial results. 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. 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 during the year ending December 31, 2020. 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. Advanced Mining Royalties Lease rights to coal reserves are often acquired in exchange for royalty payments. Advance mining royalties are advance payments made to lessors under terms of mineral lease agreements that are recoupable against future production royalties. These advance payments are deferred and charged to operations as the coal reserves are mined. The Company regularly reviews recoverability of advance mining royalties and establishes or adjusts the allowance for advance mining royalties as necessary using the specific identification method. 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 Costs for mine development incurred to expand capacity of operating mines or to develop new mines are capitalized and charged to operations on the units-of-production method over the estimated proven and probable reserve tons directly benefiting from the capital expenditures. Mine development costs include costs incurred for site preparation and development of the mines during the development stage less any incidental revenue generated during the development stage. 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 89 Table of Contents ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Amounts in thousands except share and per share data) 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. Refer to Note 10 for further information. Owned and Leased Mineral Rights 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 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. Leases 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. The discount rates used to determine the present value of the lease assets and liabilities are based on the Company’s incremental borrowing rate at the lease commencement date and commensurate with the remaining lease term. 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 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. 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 The Company has recognized assets for acquired above market-priced coal supply agreements and acquired mine permits and liabilities for acquired below market-priced coal supply agreements. The coal supply agreements were valued based on the present value of the difference between the expected net contractual cash flows based on the stated contract terms and the estimated net contractual cash flows derived from applying forward market prices at the Merger or acquisition date for new contracts of similar terms and conditions. The acquired mine permits were valued based on the replacement cost and lost profits method as of the Merger date. 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 Assets (1) Liabilities (2) Net Total Coal supply agreements, net $ — $ — $ — Acquired mine permits, net 74,197 — 74,197 Total $ 74,197 $ — $ 74,197 90 Table of Contents ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Amounts in thousands except share and per share data) December 31, 2020 Assets (1) Liabilities (2) Net Total Coal supply agreements, net $ — $ ( 327 ) $ ( 327 ) Acquired mine permits, net 88,196 — 88,196 Total $ 88,196 $ ( 327 ) $ 87,869 (1) Included within Other acquired intangibles, net of accumulated amortization, on the Company’s Consolidated Balance Sheets. (2) Included within Other non-current liabilities on the Company’s Consolidated Balance Sheets. 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 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. December 31, 2021 2020 Amortization of mine permits (1) $ 13,571 $ 14,887 Amortization of above-market coal supply agreements $ — $ 18 Amortization of below-market coal supply agreements ( 327 ) ( 5,691 ) Net income (1) $ ( 327 ) $ ( 5,673 ) (1) Included within amortization of acquired intangibles, net in the Consolidated Statements of Operations. Future net amortization expense related to acquired intangibles is expected to be as follows: 2022 $ 11,749 2023 8,079 2024 6,728 2025 6,723 2026 6,196 Thereafter 34,722 Total net future amortization expense $ 74,197 Asset Impairment Long-lived assets, such as property, plant, and equipment, mineral rights, and acquired intangibles subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or asset groups may not be recoverable. Recoverability of assets or asset groups to be held and used is measured by a comparison of the carrying amount of an asset or asset group to the estimated undiscounted future cash flows expected to be generated by the asset or asset group. Long-lived assets located in a close geographic area are grouped together for purposes of impairment testing when, after considering revenue and cost interdependencies, circumstances indicate the assets are used together to produce future cash flows. The Company’s asset groups generally consist of the assets and applicable liabilities of one or more mines and preparation plants and associated coal reserves for which cash flows are largely independent of cash flows of other mines, preparation plants, and associated coal reserves. If the carrying amount of an asset or asset group exceeds its estimated future cash flows, the potential impairment is equal to the amount by which the carrying amount of the asset or asset group exceeds the fair value of the asset or asset group. 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. 91 Table of Contents ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Amounts in thousands except share and per share data) 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 for further information. Asset Retirement Obligations Minimum standards for mine reclamation have been established by various regulatory agencies and dictate the reclamation requirements at the Company’s operations. The Company’s asset retirement obligations consist principally of costs to reclaim acreage disturbed at surface operations and estimated costs to reclaim support acreage, treat mine water discharge, and perform other related functions at underground mines. The Company records these reclamation obligations at fair value in the period in which the legal obligation associated with the retirement of the long-lived asset is incurred. Changes to the liability at operations that are not currently being reclaimed are offset by increasing or decreasing the carrying amount of the related long-lived asset. Changes to the liability at operations that are currently being reclaimed are recorded to depreciation, depletion, and amortization. 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 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 16 for further information. Income Taxes 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 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 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. Revenue Recognition In accordance with ASC 606 Revenue from Contracts with Customers (“ASC 606”), the Company measures revenue based on the consideration specified in a contract with a customer and recognizes revenue as a result of satisfying its promise to transfer goods or services in a contract with a customer using the following general revenue recognition five-step model: (1) identify the contract; (2) identify performance obligations; (3) determine transaction price; (4) allocate transaction price; and (5) recognize revenue. 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 information. Workers’ Compensation and Pneumoconiosis (Black Lung) Benefits Workers’ Compensation As of December 31, 2021, the Company’s subsidiaries generally utilize high-deductible insurance programs for workers’ compensation claims at its operations with the exception of certain subsidiaries in which the Company is a qualified self-insurer 92 Table of Contents ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Amounts in thousands except share and per share data) for workers’ compensation obligations. The liabilities for workers’ compensation claims are estimates of the ultimate losses incurred based on the Company’s experience and include a provision for incurred but not reported losses. 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 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 19 for further information. Black Lung Benefits The Company is required by federal and state statutes to provide benefits to employees for awards related to black lung. As of December 31, 2021, certain of the Company’s subsidiaries are insured for black lung obligations by a third-party insurance provider and certain subsidiaries are self-insured for state black lung obligations. Certain other subsidiaries are self-insured for federal black lung benefits and may fund benefit payments through a Section 501(c)(21) tax-exempt trust fund. 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 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). 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. Refer to Note 19 for further information. Pension 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 19 for information. Postretirement Life Insurance Benefits As part of the Alpha Natural Resources, Inc. bankruptcy reorganization plan and the Retiree Committee Settlement Agreement, the Company assumed the liability for life insurance benefits for certain disabled and non-union retired employees. Provisions are made for estimated benefits based on annual evaluations prepared by independent actuaries. 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 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 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 information. Stock-Based Compensation 93 Table of Contents ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Amounts in thousands except share and per share data) 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 20 for further information. Warrants 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. Pursuant to the Warrants Agreement, the warrants are exercisable for cash or on a cashless basis at any time from the Initial Issue Date until July 26, 2023, and no fractional shares shall be issued upon warrant exercises. 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, 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. Equity Method Investments Investments in unconsolidated affiliates that the Company has the ability to exercise significant influence over, but not control, are accounted for under the equity method of accounting. Under the equity method of accounting, the Company records its proportionate share of the entity’s net income or loss at each reporting period in the Consolidated Statements of Operations in other (expense) income, with a corresponding entry to increase or decrease the carrying value of the investment. The carrying value of the Company’s equity method investments was $ 20,460 and $ 18,383 as of December 31, 2021 and 2020, respectively. Recently Adopted Accounting Guidance 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 94 Table of Contents ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Amounts in thousands except share and per share data) have a material impact on the Company's Consolidated Financial Statements and related disclosures. Leases : 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. 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 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. Convertible Debt and Contracts in Entity’s Own Equity : In August 2020, the FASB issued ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40) (“ASU 2020-06”). The amendments in this update simplify the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts in an entity’s own equity, such as the Company’s outstanding Series A warrants. 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. 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. 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. 95 Table of Contents 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 operations. Former NAPP Operations 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. In accordance with terms of the UPA, the Company transferred its equity interests in certain subsidiaries (Cumberland Contura, LLC, Contura Coal Resources, LLC, Contura Pennsylvania Land, LLC, Emerald Contura, LLC, and Contura Pennsylvania Terminal, LLC) along with total consideration of $ 49,987 to Iron Senergy. Pursuant to the terms of the UPA, the Company also retained certain assets and liabilities associated with its former NAPP operations. The mining permits associated with the Cumberland mining operations were obtained by Iron Senergy at closing. 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: Year Ended December 31, 2020 Cash $ 19,987 Surety bonding collateral 30,000 Total consideration 49,987 Transaction costs 2,205 Carrying value of assets and liabilities (1) $ ( 16,079 ) Loss on sale $ 36,113 (1) Assets and liabilities were primarily comprised of property, plant and equipment, net of $ 32,872 , deferred longwall move expenses of $ 15,173 , and coal and supplies inventory of $ 5,112 and asset retirement obligations of $ 39,573 , severance of $ 17,143 , black lung obligations of $ 8,290 , and subsidence liability of $ 3,559 . In connection with the UPA, the Company entered into certain agreements with Iron Senergy under which Iron Senergy will sell to the Company all of the coal that the Company is obligated to sell to customers under Cumberland coal supply agreements (“Cumberland CSAs”) which existed as of the transaction closing date but did not transfer to Iron Senergy at closing (each, a “Cumberland Back-to-Back Coal Supply Agreement”). Each Cumberland Back-to-Back Coal Supply Agreement has economic terms identical to, but offsetting, the related Cumberland CSA. If a Cumberland customer subsequently consents to assign a Cumberland CSA to Iron Senergy after closing, the related Cumberland CSA will immediately and automatically transfer to Iron Senergy and the related Cumberland Back-to-Back Coal Supply Agreements executed by the parties shall thereupon terminate as set forth therein. 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. 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: 96 Table of Contents ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Amounts in thousands except share and per share data) Year Ended December 31, 2020 (1) Revenues: Total revenues $ 235,509 Costs and expenses: Cost of coal sales (exclusive of items shown separately below) 215,390 Depreciation, depletion and amortization 11,570 Accretion on asset retirement obligations 4,154 Asset impairment and restructuring (2) 172,640 Selling, general and administrative expenses (3) 1,623 Other income ( 926 ) Other non-major expense items, net 374 Loss on sale 36,113 Loss from discontinued operations before income taxes $ ( 205,429 ) (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 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: December 31, 2021 2020 Assets: Trade accounts receivable, net of allowance for doubtful accounts $ — $ 7,504 Prepaid expenses and other current assets $ 462 $ 3,431 Other non-current assets (1) $ 8,526 $ 9,473 Liabilities: Trade accounts payable, accrued expenses and other current liabilities $ 5,838 $ 12,306 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: Year Ended December 31, 2020 Depreciation, depletion and amortization $ 11,570 Capital expenditures $ 34,411 Other significant operating non-cash items related to discontinued operations: Accretion on asset retirement obligations $ 4,154 Asset impairment and restructuring $ 172,640 97 Table of Contents ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Amounts in thousands except share and per share data) (4) Revenue Disaggregation of Revenue from Contracts with Customers ASC 606 requires that entities disclose disaggregated revenue information in categories (such as type of good or service, geography, market, type of contract, etc.) that depict how the nature, amount, timing, and uncertainty of revenue and cash flow are affected by economic factors. ASC 606 explains that the extent to which an entity’s revenue is disaggregated depends on the facts and circumstances that pertain to the entity’s contracts with customers and that some entities may need to use more than one type of category to meet the objective for disaggregating revenue. The Company earns revenues primarily through the sale of coal produced at Company operations and coal purchased from third parties. 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. 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: Year Ended December 31, 2021 Met Coal Thermal Coal Total Export coal revenues $ 1,675,147 $ 30,879 $ 1,706,026 Domestic coal revenues 396,160 150,411 546,571 Total coal revenues $ 2,071,307 $ 181,290 $ 2,252,597 Year Ended December 31, 2020 Met Coal Thermal Coal Total Export coal revenues $ 870,121 $ 27,904 $ 898,025 Domestic coal revenues 362,654 152,445 515,099 Total coal revenues $ 1,232,775 $ 180,349 $ 1,413,124 Performance Obligations The Company considers each individual transfer of coal on a per shipment basis to the customer a performance obligation. The pricing terms of the Company’s contracts with customers include fixed pricing, variable pricing, or a combination of both fixed and variable pricing. All the Company’s revenue derived from contracts with customers is recognized at a point in time. The following table includes estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied as of December 31, 2021. 2022 2023 2024 2025 2026 Total Estimated coal revenues (1) $ 65,768 $ 14,199 $ — $ — $ — $ 79,967 (1) Amounts only include estimated coal revenues associated with contracts with customers with fixed pricing with original expected duration of more than one year. The Company has elected not to disclose the aggregate amount of the transaction price allocated to the performance obligations that are unsatisfied (or partially unsatisfied) as of the end of the reporting period for performance obligations with either of the following conditions: 1) the remaining performance obligation is part of a contract that has an original expected duration of one year or less; or 2) the remaining performance obligation has variable consideration that is allocated entirely to a wholly unsatisfied performance obligation. 98 Table of Contents 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, 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 ) Balance January 1, 2020 Other comprehensive loss before reclassifications Amounts reclassified from accumulated other comprehensive loss Balance December 31, 2020 Employee benefit costs $ ( 58,616 ) $ ( 60,647 ) $ 7,278 $ ( 111,985 ) 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: Details about accumulated other comprehensive loss components Amounts reclassified from accumulated other comprehensive loss Affected line item in the Consolidated Statements of Operations Year Ended December 31, 2021 2020 Employee benefit costs: Amortization of actuarial loss (1) $ 5,653 $ 3,929 Miscellaneous income (loss), net Settlement (1) 368 3,349 Miscellaneous income (loss), net Total before income tax $ 6,021 $ 7,278 Income tax — — Income tax (expense) benefit Total, net of income tax $ 6,021 $ 7,278 (1) These accumulated other comprehensive loss components are included in the computation of net periodic benefit costs for certain employee benefit plans. Refer to Note 19. (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 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 . 99 Table of Contents 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, 2021 2020 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 ) Basic 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 ) Diluted 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 Inventories, net consisted of the following: December 31, 2021 2020 Raw coal $ 20,347 $ 15,084 Saleable coal 81,240 69,262 Materials, supplies and other, net (1) 27,795 23,705 Total inventories, net $ 129,382 $ 108,051 (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). 100 Table of Contents ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (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: • During the second quarter of 2020, the Company announced that it would take certain strategic actions with respect to two of its thermal coal mining complexes in an effort to strengthen its financial performance and improve forecasted liquidity. The Company announced that an underground mine and preparation plant located in West Virginia would be idled during the third quarter of 2020. In addition, the Company decided not to move forward with the construction of a new refuse impoundment at its Cumberland mine in Pennsylvania and would therefore no longer spend the significant capital required in connection with the project. As a result, the Cumberland mine was expected to cease production by the end of 2022. On December 10, 2020, the Company sold its Cumberland mining operations. 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 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 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: Year Ended December 31, 2020 First Quarter Second Quarter Third Quarter Fourth Quarter Year Ended Continuing operations: Met $ 32,951 $ — $ — $ 13,366 $ 46,317 All Other 758 17,390 219 16,270 34,637 Total from continuing operations $ 33,709 $ 17,390 $ 219 $ 29,636 $ 80,954 Discontinued operations: $ — $ 144,348 $ 3,297 $ — $ 147,645 Total long-lived asset impairment: $ 33,709 $ 161,738 $ 3,516 $ 29,636 $ 228,599 101 Table of Contents ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Amounts in thousands except share and per share data) Year Ended December 31, 2020 First Quarter Second Quarter Third Quarter Fourth Quarter Year Ended Continuing operations: Mineral rights, net $ 21,825 $ 2,241 $ — $ 17,513 $ 41,579 Property, plant, and equipment, net 6,066 6,496 219 5,450 18,231 Acquired mine permits, net 5,818 8,653 — 6,673 21,144 Total from continuing operations $ 33,709 $ 17,390 $ 219 $ 29,636 $ 80,954 Discontinued operations: Mineral rights, net $ — $ 16,364 $ — $ — $ 16,364 Property, plant, and equipment, net — 127,984 3,297 — 131,281 Total from discontinued operations $ — $ 144,348 $ 3,297 $ — $ 147,645 Total long-lived asset impairment: Mineral rights, net $ 21,825 $ 18,605 $ — $ 17,513 $ 57,943 Property, plant, and equipment, net 6,066 134,480 3,516 5,450 149,512 Acquired mine permits, net 5,818 8,653 — 6,673 21,144 Total long-lived asset impairment $ 33,709 $ 161,738 $ 3,516 $ 29,636 $ 228,599 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: Year Ended December 31, 2020 Total Restructuring Continuing Operations (3) Discontinued Operations Severance and employee-related benefits (1) $ 26,037 $ 2,117 $ 23,920 Other costs (2) 1,882 807 1,075 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. 102 Table of Contents ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Amounts in thousands except share and per share data) (9) Prepaid Expenses and Other Current Assets Prepaid expenses and other current assets consisted of the following: December 31, 2021 2020 Prepaid freight $ 19,671 $ 8,515 Notes and other receivables 4,161 13,245 Short-term restricted cash 11,977 9,311 Prepaid insurance 8,525 6,510 Refundable income taxes — 64,565 Prepaid bond premium 1,649 2,576 Other prepaid expenses 1,707 1,530 Total prepaid expenses and other current assets $ 47,690 $ 106,252 (10) Property, Plant, and Equipment, net Property, plant, and equipment, net, consisted of the following: December 31, 2021 2020 Plant and mining equipment $ 642,874 $ 603,463 Mine development 115,357 96,008 Land 26,389 26,606 Office equipment, software and other 1,462 1,379 Construction in progress 19,992 18,587 Total property, equipment and mine development costs $ 806,074 $ 746,043 Less accumulated depreciation, depletion and amortization ( 443,856 ) ( 382,423 ) Total property, plant, and equipment, net $ 362,218 $ 363,620 Included in plant and mining equipment are assets under financing leases totaling $ 8,611 and $ 7,907 with accumulated depreciation of $ 5,624 and $ 3,645 as of December 31, 2021 and December 31, 2020, respectively. Depreciation and amortization expense associated with property, plant, equipment, and non-mineral asset retirement obligation assets, net, was $ 86,506 and $ 153,631 for the years ended December 31, 2021 and 2020, respectively. Depreciation expense for the years ended December 31, 2021 and 2020 includes a credit of ($ 307 ) and ($ 3,689 ), respectively, related to revisions to asset retirement obligations. 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. 103 Table of Contents ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Amounts in thousands except share and per share data) (11) Other Non-Current Assets Other non-current assets consisted of the following: December 31, 2021 2020 Advanced mining royalties $ 10,788 $ 13,132 Long-term deposits 1,371 28,200 Long-term restricted investments 28,443 23,768 Equity method investments 20,460 18,383 Workers’ compensation receivables 45,335 48,320 Other 24,660 17,579 Total other non-current assets $ 131,057 $ 149,382 (12) Leases The Company’s lease population consists primarily of vehicle and heavy equipment leases and leases for office equipment. The Company’s building and land leases relate to corporate office space and certain site offices. The Company determines whether a contract contains a lease based on whether the Company obtains the right to control the use of specifically identifiable property, plant, and equipment for a period of time in exchange for consideration. For the years ended December 31, 2021 and 2020, the Company identified no instances requiring significant judgment in determining whether any contracts entered into during the period were or were not leases. Additionally, the Company had no material sublease agreements within the scope of ASC 842 or lease agreements for which the Company was the lessor for the years ended December 31, 2021 and 2020. Renewal options in the Company’s lease population primarily relate to month-to-month extensions on vehicle leases and are immaterial both individually and in the aggregate. The Company includes renewal options that are reasonably certain to be exercised in the measurement of lease liabilities. As of December 31, 2021, the Company does not intend to exercise any termination options on existing leases. 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: December 31, 2021 December 31, 2020 Assets Balance Sheet Classification Financing lease assets Property, plant, and equipment, net $ 2,987 $ 4,262 Operating lease right-of-use assets Other non-current assets 5,003 5,671 Total lease assets $ 7,990 $ 9,933 Liabilities Balance Sheet Classification Financing lease liabilities - current Current portion of long-term debt $ 1,878 $ 2,014 Operating lease liabilities - current Accrued expenses and other current liabilities 547 595 Financing lease liabilities - long-term Long-term debt 791 1,996 Operating lease liabilities - long-term Other non-current liabilities 4,456 5,076 Total lease liabilities $ 7,672 $ 9,681 Total lease costs and other lease information for the years ended December 31, 2021 and 2020 included the following: 104 Table of Contents 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 Lease cost (1) Financing lease cost: Amortization of leased assets $ 2,061 $ 3,238 Interest on lease liabilities 245 358 Operating lease cost 1,383 2,105 Short-term lease cost 786 1,518 Total lease cost $ 4,475 $ 7,219 (1) The Company had no variable lease costs or sublease income for the years ended December 31, 2021 and 2020. Year Ended December 31, 2021 2020 Other information Cash paid for amounts included in the measurement of lease liabilities $ 4,478 $ 7,157 Operating cash flows from financing leases $ 245 $ 358 Operating cash flows from operating leases $ 2,169 $ 3,623 Financing cash flows from financing leases $ 2,064 $ 3,176 Right-of-use assets obtained in exchange for new financing lease liabilities $ 703 $ 221 Right-of-use assets obtained in exchange for new operating lease liabilities $ 275 $ ( 12 ) Lease Term and Discount Rate 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 % Weighted-average discount rate - operating leases 11.3 % 11.5 % 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 Sheets as of December 31, 2021: Financing Leases Operating Leases Lease cost 2022 $ 2,072 $ 1,100 2023 522 1,066 2024 259 955 2025 150 897 2026 3 884 Thereafter — 2,775 Total future minimum lease payments $ 3,006 $ 7,677 Imputed interest ( 337 ) ( 2,674 ) Present value of future minimum lease payments $ 2,669 $ 5,003 As of December 31, 2021, the Company had no leases with future commencement dates that will create significant rights or obligations for the Company. 105 Table of Contents ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Amounts in thousands except share and per share data) (13) Accrued Expenses and Other Current Liabilities Accrued expenses and other current liabilities consisted of the following: December 31, 2021 2020 Wages and benefits $ 52,310 $ 40,330 Workers’ compensation 10,582 10,355 Black lung 7,235 6,784 Taxes other than income taxes 30,734 21,540 Current portion of asset retirement obligations 32,159 24,990 Accrued interest and fees 14,489 15,902 Deferred revenue — 13,197 Freight accrual 15,085 2,610 Other 12,013 4,698 Total accrued expenses and other current liabilities $ 174,607 $ 140,406 (14) Long-Term Debt Long-term debt consisted of the following: December 31, 2021 2020 Term Loan Credit Facility - due June 2024 $ 449,435 $ 553,373 ABL Facility - due December 2024 — 3,350 LCC Note Payable — 27,500 LCC Water Treatment Obligation — 6,875 Other (1) 5,311 8,475 Debt discount and issuance costs ( 6,195 ) ( 17,046 ) Total long-term debt $ 448,551 $ 582,527 Less current portion ( 2,989 ) ( 28,830 ) Long-term debt, net of current portion $ 445,562 $ 553,697 (1) Includes financing leases, refer to Note 12 for additional information. Term Loan Credit Facility - due June 2024 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 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”). Each loan type bears interest at a rate per annum comprised of a base rate (as defined) plus an applicable percentage ( 6.00 % for Base Rate Loans and 7.00 % for Eurocurrency Rate Loans on or prior to the second anniversary of the Closing Date and 7.00 % or 8.00 % thereafter (the “Applicable Rate”)). The Eurocurrency base rate is subject to a 2.00 % floor. Interest accrued on each Base Rate Loan is payable in arrears on the last business day of each March, June, September and December and the maturity date. Interest accrued on each Eurocurrency Rate Loan is payable in arrears on the last day of each interest period as defined therein. 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, 2021, the carrying value of the Term Loan Credit Facility was $ 443,241 , all of which was classified as long-term within the 106 Table of Contents ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Amounts in thousands except share and per share data) 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. 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. Certain obligations under the Term Loan Facility are secured by a senior lien, subject to certain exceptions (including the ABL Priority Collateral described below), by substantially all of Alpha’s assets and the assets of Alpha’s subsidiary guarantors (“Term Loan Priority Collateral”), in each case subject to exceptions. 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 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. 107 Table of Contents 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 On November 9, 2018, the Company entered into the Amended and Restated Asset-Based Revolving Credit Agreement with Citibank N.A. as administrative agent, collateral agent, and swingline lender and the other lenders party thereto (the “Lenders”), and Citibank N.A., Barclays Bank PLC, BMO Harris Bank N.A. 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 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 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. 108 Table of Contents ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Amounts in thousands except share and per share data) 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 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: 2022 $ 2,989 2023 1,367 2024 450,245 2025 142 2026 3 Total long-term debt $ 454,746 (15) Acquisition-Related Obligations Acquisition-related obligations consisted of the following: December 31, 2021 2020 Contingent Revenue Obligation $ 35,005 $ 28,967 Environmental Settlement Obligations 6,633 10,391 UMWA Funds Settlement Liability — 2,000 Discount ( 233 ) ( 1,491 ) Total acquisition-related obligations $ 41,405 $ 39,867 Less current portion ( 22,405 ) ( 19,099 ) Acquisition-related obligations, net of current portion $ 19,000 $ 20,768 The Company entered into various settlement agreements with Alpha Natural Resources, Inc. and/or the Alpha Natural Resources, Inc. bankruptcy successor ANR, Inc. and third parties as part of the Alpha Natural Resources, Inc. bankruptcy reorganization process. The Company assumed acquisition-related obligations through those settlement agreements which became effective on July 26, 2016, the effective date of Alpha Natural Resources, Inc.’s plan of reorganization. Additionally, as a result of the Merger, the Company assumed certain acquisition-related obligations pursuant to the terms stipulated within the bankruptcy settlement previously entered into by the Merger Companies. Contingent Revenue Obligation As a result of the Merger, the Company assumed a contingent revenue payment obligation (the “Contingent Revenue Obligation”) to certain of the Merger Companies’ creditors pursuant to the terms stipulated within the bankruptcy settlement previously entered into by the Merger Companies. 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. operations. The Contingent Revenue Obligation consists of a contingent revenue payment of 109 Table of Contents 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. Environmental Settlement Obligations As a result of the Merger, the Company assumed certain environmental settlement obligations (the “Environmental Settlement Obligations”) pursuant to the terms stipulated within the bankruptcy settlement previously entered into by the Merger Companies. These obligations include payments to a third-party environmental agency and the funding of certain reclamation related projects through 2022. 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. (16) Asset Retirement Obligations The following table summarizes the changes in asset retirement obligations for the years ended December 31, 2021 and 2020: Total asset retirement obligations at December 31, 2019 $ 203,137 Accretion for the period 26,504 Sites added during the period 621 Revisions in estimated cash flows (1) ( 43,765 ) Expenditures for the period ( 21,433 ) Total asset retirement obligations at December 31, 2020 $ 165,064 Accretion for the period 26,520 Sites added during the period 2,125 Revisions in estimated cash flows (1) ( 12,744 ) Expenditures for the period ( 16,793 ) Total asset retirement obligations at December 31, 2021 $ 164,172 Less current portion (2) ( 32,159 ) Long-term portion $ 132,013 (1) The revisions in estimated cash flows resulted primarily from discount rate adjustments and changes in mine plans. (2) Included within Accrued expenses and other current liabilities on the Company’s Consolidated Balance Sheets. Refer to Note 13. (17) Fair Value of Financial Instruments and Fair Value Measurements The estimated fair values of financial instruments are determined based on relevant market information. These estimates involve uncertainty and cannot be determined with precision. 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. 110 Table of Contents 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: December 31, 2021 Carrying Amount (1) Total Fair Value Quoted Prices in Active Markets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Term Loan Credit Facility - due June 2024 $ 443,241 $ 447,561 $ — $ 447,561 $ — Total long-term debt $ 443,241 $ 447,561 $ — $ 447,561 $ — December 31, 2020 Carrying Amount (1) Total Fair Value Quoted Prices in Active Markets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) 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 LCC Water Treatment Obligation 5,636 4,281 — — 4,281 Total long-term debt $ 574,052 $ 407,280 $ — $ 379,614 $ 27,666 (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: December 31, 2021 Carrying Amount (1) Total Fair Value Quoted Prices in Active Markets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Environmental Settlement Obligations $ 6,400 $ 6,270 $ — $ — $ 6,270 Total acquisition-related obligations $ 6,400 $ 6,270 $ — $ — $ 6,270 December 31, 2020 Carrying Amount (1) 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 9,237 7,760 — — 7,760 Total acquisition-related obligations $ 10,899 $ 9,186 $ — $ — $ 9,186 (1) Net of discounts. The following table sets forth by level, within the fair value hierarchy, the Company’s financial and non-financial assets and liabilities that were accounted for at fair value on a recurring basis as of December 31, 2021 and 2020. Financial and non-financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. 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. 111 Table of Contents ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Amounts in thousands except share and per share data) December 31, 2021 Total Fair Value Quoted Prices in Active Markets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Contingent Revenue Obligation $ 35,005 $ — $ — $ 35,005 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 Contingent Revenue Obligation $ 52,427 $ ( 14,710 ) $ ( 8,750 ) $ — $ 28,967 (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. 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 Trading Securities - Includes money market funds and other cash equivalents. The fair value is based on observable market data. Level 2 Fair Value Measurements 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. treasury and agency securities. The fair values of the Company’s trading securities are obtained from a third-party pricing service provider. The fair values provided by the pricing service provider are based on observable market inputs including credit spreads and broker-dealer quotes, among other inputs. The Company classifies the prices obtained from the pricing services within Level 2 of the fair value hierarchy because the underlying inputs are directly observable from active markets. However, the pricing models used entail a certain amount of subjectivity and therefore differing judgments in how the underlying inputs are modeled could result in different estimates of fair value. Level 3 Fair Value Measurements 112 Table of Contents ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Amounts in thousands except share and per share data) 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). 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. 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 rates of approximately 13 % and 34 % as of December 31, 2021 and 2020, respectively). 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. 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, 2021 and 2020 are set forth in the following table: December 31, 2021 December 31, 2020 Forecasted future revenue $ 1.5 - $ 2.0 billion $ 0.9 - $ 1.1 billion Stated royalty rate 1.0 % - 1.5 % 1.0 % - 1.5 % Annualized volatility 18.4 % - 39.3 % ( 29.9 %) 19.4 % - 52.1 % ( 28.0 %) (18) Income Taxes Total income tax expense (benefit) provided on income (loss) before income taxes was allocated as follows: Year Ended December 31, 2021 2020 Continuing operations $ 3,609 $ ( 2,164 ) Discontinued operations ( 201 ) — Total $ 3,408 $ ( 2,164 ) Significant components of income tax expense (benefit) from continuing operations were as follows: 113 Table of Contents 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 2020 Current tax expense (benefit): Federal $ 2,586 $ ( 35,187 ) State 1,186 ( 99 ) Total current $ 3,772 $ ( 35,286 ) Deferred tax (benefit) expense: Federal $ ( 3 ) $ 33,348 State ( 160 ) ( 226 ) Total deferred $ ( 163 ) $ 33,122 Total income tax expense (benefit): Federal $ 2,583 $ ( 1,839 ) State 1,026 ( 325 ) Total $ 3,609 $ ( 2,164 ) 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, 2021 2020 Federal statutory income tax expense (benefit) $ 61,013 $ ( 51,163 ) Increase (reductions) in taxes due to: Percentage depletion allowance ( 11,864 ) ( 2,039 ) AMT sequestration refund — ( 2,123 ) State taxes, net of federal tax impact 12,998 ( 9,640 ) State apportioned tax rate change, net of federal tax impact 8,751 ( 1,235 ) Change in valuation allowances ( 78,056 ) 59,929 Capital loss expiration 10,552 — Stock-based compensation 405 1,739 Other, net ( 190 ) 2,368 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: 114 Table of Contents 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 2020 Deferred tax assets: Asset retirement obligations $ 36,252 $ 41,268 Reserves and accruals not currently deductible 9,610 12,131 Workers’ compensation benefit obligations 47,105 59,478 Pension obligations 34,956 52,598 Equity method investments 1,846 2,050 Loss carryforwards, net of Section 382 limitation 187,341 255,772 Acquisition-related obligations 9,156 10,002 Other 7,100 10,976 Gross deferred tax assets 333,366 444,275 Less valuation allowance ( 172,883 ) ( 263,387 ) Deferred tax assets $ 160,483 $ 180,888 Deferred tax liabilities: Property, plant and mineral reserves $ ( 134,075 ) $ ( 141,549 ) Acquired intangibles, net ( 16,408 ) ( 22,037 ) Prepaid expenses ( 4,955 ) ( 6,211 ) Restricted cash ( 5,362 ) ( 11,516 ) Other — ( 55 ) Total deferred tax liabilities ( 160,800 ) ( 181,368 ) Net deferred tax liabilities $ ( 317 ) $ ( 480 ) Changes in the valuation allowance were as follows: Year Ended December 31, 2021 2020 Valuation allowance beginning of period $ 263,387 $ 133,020 (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 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. The CARES Act modified the AMT Credits provision such that a corporate taxpayer’s remaining AMT Credits would be refunded in the 2019 tax year rather than the 2019 through 2021 tax years. As of December 31, 2019, the Company recorded a current federal income tax receivable of $ 33,065 and a deferred tax asset of $ 33,065 in relation to its refundable AMT Credits. During the first quarter of 2020 and following enactment of the CARES Act, the Company reclassified the $ 33,065 deferred tax asset to a current federal income tax receivable. The Company received the $ 66,130 AMT Credit refund in the fourth quarter of 2020. 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. 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. as part of the Alpha Natural Resources, Inc. bankruptcy reorganization in transactions intended to be treated as a tax-free reorganization for U.S. 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 115 Table of Contents 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. bankruptcy reorganization. Due to the change in ownership, the net operating loss and other carryforwards inherited in the Alpha Natural Resources, Inc. bankruptcy reorganization are subjected to significant limitations on their use in future years. Due to the Company’s formation through acquisition of certain core coal assets as part of the Alpha Natural Resources, Inc. bankruptcy reorganization, the Company does not have a long history of operating results. Additionally, significant ownership change limitations limit the ability of the Company to utilize its net operating loss and other carryforwards in future years. The Company currently is relying primarily on the reversal of taxable temporary differences, along with consideration of taxable income via carryback to prior years and tax planning strategies, to support the realization of deferred tax assets. The Company assesses the realizability of its deferred tax assets, including scheduling the reversal of its deferred tax 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 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 temporary differences giving rise to the deferred tax assets that will be realized. The valuation allowance recorded represents the portion of deferred tax assets for which the Company is unable to support realization through the methods described above. The Company has concluded that it is more likely than not that the remaining deferred tax assets, net of valuation allowances, are realizable. 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 $ 1,008,000 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 $ 223,000 . The capital loss carryforwards will expire between years 2022 and 2025. A full valuation allowance is recorded against the capital loss carryforwards. 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 Internal Revenue Service (“IRS”). The decrease in unrecognized tax benefits did not impact the Company’s effective tax rate for the year ended December 31, 2020. The Company’s policy is to classify interest and penalties related to uncertain tax positions as part of income tax expense. As of December 31, 2021 and 2020, the Company had no accrued interest and penalties. The following reconciliation illustrates the Company’s liability for uncertain tax positions: Year Ended December 31, 2021 2020 Unrecognized tax benefits - beginning of period $ — $ 20,788 Reductions for tax positions of prior years — ( 20,788 ) Unrecognized tax benefits - end of period $ — $ — 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 The Company provides several types of benefits for its employees, including defined benefit and defined contribution pension plans, workers’ compensation and black lung benefits, and postretirement life insurance. The Company does not participate in any multi-employer plans. The components of net periodic benefit (credit) cost other than the service cost 116 Table of Contents 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 In connection with the Merger, the Company assumed three qualified non-contributory defined benefit pension plans, which cover certain salaried and non-union hourly employees. The qualified non-contributory defined benefit pension plans are collectively referred to as the “Pension Plans.” Benefits are frozen under these plans. Participants accrued benefits either based on certain formulas, the participant’s compensation prior to retirement, or plan specified amounts for each year of service with the Company. 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 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. 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, 2021 2020 Change in benefit obligations: Accumulated benefit obligation at beginning of period: $ 723,448 $ 674,439 Interest cost 13,566 18,730 Actuarial (gain) loss (1) ( 34,922 ) 72,822 Benefits paid ( 30,222 ) ( 30,916 ) Settlement ( 3,815 ) ( 11,627 ) Accumulated benefit obligation at end of period $ 668,055 $ 723,448 Change in fair value of plan assets: Fair value of plan assets at beginning of period $ 504,777 $ 470,353 Actual return on plan assets 30,814 54,222 Employer contributions 6,571 22,745 Benefits paid ( 30,222 ) ( 30,916 ) Settlement ( 3,815 ) ( 11,627 ) Fair value of plan assets at end of period $ 508,125 $ 504,777 Funded status $ ( 159,930 ) $ ( 218,671 ) Accrued benefit cost at end of period (2) $ ( 159,930 ) $ ( 218,671 ) (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 benefit obligations recognized in accumulated other comprehensive loss consisted of the following as of December 31, 2021 and 2020: 117 Table of Contents ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Amounts in thousands except share and per share data) December 31, 2021 2020 Net actuarial loss $ 47,950 $ 88,583 The following table details the components of net periodic benefit credit: Year Ended December 31, 2021 2020 Interest cost $ 13,566 $ 18,730 Expected return on plan assets ( 28,732 ) ( 27,064 ) Amortization of net actuarial loss 3,217 2,012 Settlement 412 1,636 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, 2021 2020 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 income (loss) $ ( 40,633 ) $ 42,015 The following table presents information applicable to plans with accumulated benefit obligations in excess of plan assets: Year Ended December 31, 2021 2020 Projected benefit obligation $ 668,055 $ 723,448 Accumulated benefit obligation $ 668,055 $ 723,448 Fair value of plan assets $ 508,125 $ 504,777 The weighted-average actuarial assumption used in determining the benefit obligations as of December 31, 2021 and 2020 was as follows: December 31, 2021 2020 Discount rate 2.92 % 2.62 % 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, 2021 2020 Discount rate for benefit obligation 2.62 % 3.35 % Discount rate for interest cost 1.96 % 2.92 % 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. 118 Table of Contents 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 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 2022 (1) Percentage of Plan Assets 2021 Equity securities 60.0 % 56.0 % Fixed income funds 40.0 % 41.0 % Other — % 3.0 % 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 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. 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: 2022 $ 30,949 2023 30,944 2024 31,161 2025 31,497 2026 31,657 2027-2031 158,207 $ 314,415 The fair values of the Company’s Pension Plans’ assets as of December 31, 2021, by asset category are as follows: 119 Table of Contents 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) Equity securities: Multi-asset fund (1) $ 284,568 $ — $ 284,568 $ — Fixed income funds: Bond fund (2) 208,466 — 208,466 — Commingled short-term fund (3) 1,384 — 1,384 — Other types of investments: Guaranteed insurance contract 11,652 — — 11,652 Total $ 506,070 $ — $ 494,418 $ 11,652 Receivable (4) 876 Total assets at fair value 506,946 Private equity funds measured at net asset value practical expedient (5) 1,179 Total plan assets $ 508,125 (1) This fund contains equities (domestic and international), real estate and bonds. (2) This fund contains bonds representing a diversity of sectors and maturities. This fund also includes mortgage-backed securities and U.S. Treasuries. (3) This fund contains cash and highly liquid short-term investments in a collective investment fund. (4) Receivable for investments sold at December 31, 2021, which approximates fair value. (5) In accordance with Accounting Standards Update 2015-07, investments that are measured at fair value using the net asset value per share practical expedient have not been classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the total value of assets of the plans. Changes in Level 3 plan assets for the period ended December 31, 2021 were as follows: Fair Value Measurements Using Significant Unobservable Inputs (Level 3) Guaranteed Insurance Contract Beginning balance, December 31, 2020 $ 11,454 Actual return on plan assets: Relating to assets still held at the reporting date 528 Purchases, sales and settlements ( 330 ) Ending balance, December 31, 2021 $ 11,652 The fair values of the Company’s Pension Plans’ assets as of December 31, 2020, by asset category are as follows: 120 Table of Contents 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) Equity securities: Multi-asset fund (1) $ 236,405 $ — $ 236,405 $ — Fixed income funds: Bond fund (2) 253,218 — 253,218 — Commingled short-term fund (3) 1,405 — 1,405 — Other types of investments: Guaranteed insurance contract 11,454 — — 11,454 Total $ 502,482 $ — $ 491,028 $ 11,454 Receivable (4) 888 Total assets at fair value 503,370 Private equity funds measured at net asset value practical expedient (5) 1,407 Total plan assets $ 504,777 (1) This fund contains equities (domestic and international), real estate and bonds. (2) This fund contains bonds representing a diversity of sectors and maturities. This fund also includes mortgage-backed securities and U.S. Treasuries. (3) This fund contains cash and highly liquid short-term investments in a collective investment fund. (4) Receivable for investments sold at December 31, 2020, which approximates fair value. (5) In accordance with Accounting Standards Update 2015-07, investments that are measured at fair value using the net asset value per share practical expedient have not been classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the total value of assets of the plans. Changes in Level 3 plan assets for the period ended December 31, 2020 were as follows: Fair Value Measurements Using Significant Unobservable Inputs (Level 3) Guaranteed Insurance Contract Beginning balance, December 31, 2019 $ 11,155 Actual return on plan assets: Relating to assets still held at the reporting date 659 Purchases, sales and settlements ( 360 ) Ending balance, December 31, 2020 $ 11,454 The following is a description of the valuation methodologies used for assets measured at fair value: Level 1 Plan Assets: Assets consist of individual security positions that are easily traded on recognized market exchanges. These securities are priced and traded daily, and therefore the fund is valued daily. Level 2 Plan Assets: Funds consist of individual security positions that are mostly securities easily traded on recognized market exchanges. These securities are priced and traded daily, and therefore the fund is valued daily. Level 3 Plan Assets: Assets are valued monthly or quarterly based on the Market Value provided by managers of the underlying fund investments. The Market Value provided typically reflects the fair value of each underlying fund investment, including unrealized gains and losses. Workers’ Compensation and Pneumoconiosis (Black Lung) 121 Table of Contents 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. The Company’s subsidiaries utilize high-deductible third-party insurance for worker’s compensation and black lung obligations with the exception of certain subsidiaries in which the Company is a qualified self-insurer for workers’ compensation and/or black lung obligations. The Company’s subsidiaries that are self-insured for black lung benefits may fund benefit payments through a Section 501(c) (21) tax-exempt trust fund. Pursuant to the Merger Agreement, the Company assumed a reinsurance contract with a third party. In 2017, the Merger Companies made a lump sum payment in exchange for a reinsurance company’s agreement to administer and pay certain future workers’ compensation and state black lung obligations in the state of Kentucky. Pursuant to the Merger Agreement, the Company assumed the estimated liability for these future claims. As the liabilities are paid by the insurance company, the prepaid insurance amounts will be reduced by a corresponding amount. The Company accrues for workers’ compensation liability by recognizing costs when it is probable that a covered liability has been incurred and the cost can be reasonably estimated. The Company’s estimates of these costs are adjusted based upon actuarial studies and include a provision for incurred but not reported losses. Actual losses may differ from these estimates, which could increase or decrease the Company’s costs. Additionally, the liability for black lung benefits is estimated by an independent actuary by prorating the accrual of actuarially projected benefits over the employee’s applicable term of service. Adjustments to the probable ultimate liability for workers’ compensation and black lung are made annually based on actuarial valuations. For the Company’s subsidiaries that are insured with a high-deductible insurance plan for workers’ compensation and black lung claims, the insurance premium expense for the years ended December 31, 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: December 31, 2021 2020 Current liabilities $ 10,582 $ 10,355 Current liabilities - discontinued operations (1) 2,730 4,847 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. 122 Table of Contents ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Amounts in thousands except share and per share data) Black Lung The divestiture of the Company’s former NAPP operations during the fourth quarter of 2020 (refer to Note 3) resulted in a partial plan settlement of $ 8,290 and the accelerated recognition of a portion of the accumulated other comprehensive loss of $ 1,563 during the three months ended December 31, 2020. Refer to the disclosures below for further information on the partial plan settlement. As a result of the strategic actions impacting certain mines during the three months ended June 30, 2020 (refer to Note 8), black lung obligations were revalued for curtailment and remeasured with an updated discount rate as of May 31, 2020, which resulted in an increase in the liability for black lung obligations of approximately $ 7,400 with the offset to accumulated other comprehensive loss and a slight increase in net periodic expense to be recognized subsequent to the remeasurement date. Refer to the disclosures below for further information. The following tables set forth the accumulated black lung benefit obligations, fair value of plan assets and funded status for the years ended December 31, 2021 and 2020: Year Ended December 31, 2021 2020 Change in benefit obligation: Accumulated benefit obligation at beginning of period $ 127,506 $ 122,788 Service cost 2,972 2,361 Interest cost 2,463 3,240 Actuarial (gain) loss (1) ( 9,759 ) 14,736 Benefits paid ( 6,040 ) ( 7,166 ) Curtailment gain — ( 163 ) Settlement — ( 8,290 ) Accumulated benefit obligation at end of period $ 117,142 $ 127,506 Change in fair value of plan assets: Fair value of plan assets at beginning of period $ 2,720 $ 2,660 Actual return on plan assets ( 56 ) 60 Benefits paid ( 6,040 ) ( 7,166 ) Employer contributions 6,040 7,166 Fair value of plan assets at end of period (2) 2,664 2,720 Funded status $ ( 114,478 ) $ ( 124,786 ) Accrued benefit cost at end of period $ ( 114,478 ) $ ( 124,786 ) Summary of accrued benefit cost at end of period: Continuing operations ( 111,854 ) ( 122,961 ) Discontinued operations (3) ( 2,624 ) ( 1,825 ) Total accrued benefit cost at end of period $ ( 114,478 ) $ ( 124,786 ) (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) Assets of the plan are held in a Section 501(c)(21) tax-exempt trust fund and consist primarily of government debt securities. All assets are classified as Level 1 and valued based on quoted market prices. (3) The discontinued operations consisted of activity related to the Company’s former NAPP operations. Refer to Note 3 . The table below presents amounts recognized in the Consolidated Balance Sheets: 123 Table of Contents ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Amounts in thousands except share and per share data) December 31, 2021 2020 Current liabilities $ 7,235 $ 6,784 Current liabilities - discontinued operations 60 26 Long-term liabilities 104,619 116,177 Long-term liabilities - discontinued operations 2,564 1,799 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: December 31, 2021 2020 Net actuarial loss $ 11,940 $ 24,042 The following table details the components of the net periodic benefit cost for the black lung benefit obligations: Year Ended December 31, 2021 2020 Service cost $ 2,972 $ 2,361 Interest cost 2,463 3,240 Expected return on plan assets ( 54 ) ( 54 ) Amortization of net actuarial loss 2,453 1,942 Settlement — 1,563 Net periodic benefit cost $ 7,834 $ 9,052 Summary net periodic benefit cost: Continuing operations $ 7,418 $ 7,670 Discontinued operations (1) 416 1,382 Total net periodic benefit cost $ 7,834 $ 9,052 (1) The discontinued operations consisted of activity related to the Company’s former NAPP operations. Refer to Note 3. Other changes in the black lung plan assets and benefit obligations recognized in other comprehensive income (loss) are as follows: Year Ended December 31, 2021 2020 Actuarial (gain) loss $ ( 9,649 ) $ 14,567 Amortization of net actuarial loss ( 2,453 ) ( 1,942 ) Settlement — ( 1,563 ) 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: 124 Table of Contents ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Amounts in thousands except share and per share data) December 31, 2021 2020 Discount rate 2.96 % 2.75 % 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) — % 2.00 % (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, 2021 2020 Discount rate for benefit obligation 2.75 % 3.47 % Discount rate for service cost 3.15 % 3.56 % Discount rate for interest cost 1.96 % 2.61 % 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) — % 2.00 % Expected return on plan assets 2.00 % 2.00 % (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: 2022 $ 7,295 2023 7,208 2024 7,254 2025 7,329 2026 7,497 2027-2031 19,889 $ 56,472 Postretirement Life Insurance Benefits As part of the Alpha Natural Resources, Inc. bankruptcy reorganization process and the Retiree Committee Settlement Agreement, the Company assumed the unfunded liability for life insurance benefits for certain disabled and non-union retired employees. Provisions are made for estimated benefits and adjustments to the probable ultimate liabilities are made annually based on an actuarial study prepared by independent actuaries. As of December 31, 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 125 Table of Contents ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Amounts in thousands except share and per share data) 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 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 The Company is self-insured for health benefit coverage for all of its active employees. Estimated liabilities for health and medical claims are recorded based on the Company’s historical experience and include a component for incurred but not paid claims. During the years ended December 31, 2021 and 2020, the Company incurred total expenses of $ 63,127 and $ 52,517 , respectively, which primarily include claims processed and an estimate for claims incurred but not paid. ( 20) Stock-Based Compensation Awards The MIP is currently authorized for the issuance of awards of up to 1,201,202 shares of common stock, and as of December 31, 2021, there were 37,805 shares of common stock available for grant under the MIP. The Long-Term Incentive Plan (the “LTIP”) is currently authorized for the issuance of awards of up to 1,500,000 shares of common stock, and as of December 31, 2021, there were 870,503 shares of common stock available for grant under the LTIP. Pursuant to the Merger Agreement, the Company assumed the ANR Inc. 2017 Equity Incentive Plan (the “ANR EIP”), which had underlying ANR shares that were converted to 89,766 Contura Energy, Inc. shares. 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: time-based restricted stock units, performance-based restricted stock units, stock options, and performance-based cash awards. Stock-based compensation expense totaled $ 7,468 and $ 5,540 for the years ended December 31, 2021 and 2020, respectively. For the years ended December 31, 2021 and 2020, approximately 89 % and 83 %, respectively, of stock-based compensation expense was reported as selling, general and administrative expenses, and the remainder was recorded as cost of coal sales. The Company is authorized to repurchase common shares from employees (upon the election by the employee) to satisfy the employees’ statutory tax withholdings upon the vesting of stock grants. Shares that are repurchased to satisfy the employees’ statutory tax withholdings are recorded in treasury stock at cost. 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. 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. 2021 Awards Granted During the year ended December 31, 2021, the Company granted certain key employees and non-employee directors 223,496 time-based restricted stock units under the MIP and LTIP with a weighted average grant date fair value of $ 12.03 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 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 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, 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 126 Table of Contents ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Amounts in thousands except share and per share data) 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: Relative performance-based restricted stock units Start price (1) $ 11.81 Valuation date stock price (2) $ 11.34 Expected volatility (3) 98.54 % Risk-free interest rate (4) 0.18 % Expected dividend yield (5) — % (1) The start price for the Company represented the average closing stock price over the twenty trading days ending on December 31, 2020, 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. Additionally, the Company granted certain key employees performance-based cash incentive awards granted under the LTIP with a target award amount of $ 927 . 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 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 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, the liability for these awards totaled $ 255 . 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 51.73 % 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) $ 11.81 Valuation date stock price (2) $ 11.34 Expected volatility (3) 98.54 % Risk-free interest rate (4) 0.18 % 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, 2020, 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. 127 Table of Contents ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (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, 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. 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. 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 this award, 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 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) $ 7.59 Valuation date stock price (2) $ 6.33 Expected volatility (3) 55.27 % Risk-free interest rate (4) 1.37 % Expected dividend yield (5) — % (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. 128 Table of Contents ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Amounts in thousands except share and per share data) 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 cancelled and 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 $ 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 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 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) $ 7.59 Valuation date stock price (2) $ 6.33 Expected volatility (3) 55.27 % Risk-free interest rate (4) 1.37 % 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 Time-Based Restricted Stock Units Time-based restricted stock unit activity for the year ended December 31, 2021 is summarized in the following table: Time-based restricted stock unit activity: Number of Shares Weighted-Average Grant Date Fair Value Non-vested shares outstanding at December 31, 2020 367,553 $ 13.72 Granted 223,496 $ 12.03 Vested (1) ( 193,854 ) $ 16.05 Forfeited ( 4,920 ) $ 19.22 Non-vested shares outstanding at December 31, 2021 392,275 $ 11.54 (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. 129 Table of Contents 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, 2021 based on target achievement of the performance criteria is summarized in the following table: Relative performance-based restricted stock unit activity: Number of Shares Weighted-Average Grant Date Fair Value Non-vested shares outstanding at December 31, 2020 174,203 $ 16.01 Granted 67,035 $ 16.18 Vested — $ — Forfeited or Cancelled ( 153,016 ) $ 9.13 Non-vested shares outstanding at December 31, 2021 (1) 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. 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: Number of Shares Weighted-Average Grant Date Fair Value Non-vested shares outstanding at December 31, 2020 7,614 $ 50.60 Granted — $ — Vested — $ — Forfeited ( 541 ) $ 50.60 Non-vested shares outstanding at December 31, 2021 (1) 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, 2021 based on target achievement of the performance criteria is summarized in the following table: Operational performance-based restricted stock unit activity: Number of Shares Weighted-Average Fair Value Non-vested shares outstanding at December 31, 2020 151,398 $ 6.36 Granted 100,552 $ 12.00 Vested — $ — Cancelled ( 151,398 ) $ 6.36 Non-vested shares outstanding at December 31, 2021 100,552 $ 12.00 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. 130 Table of Contents ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Amounts in thousands except share and per share data) Stock Options 30-Day Volume-Weighted Average Price (“VWAP”) Stock Options 30-day VWAP stock option activity for the year ended December 31, 2021 is summarized in the following table: Number of Shares Weighted-Average Exercise Price Per Share Weighted-Average Remaining Contractual Term (Years) Aggregate Intrinsic Value (1) Outstanding at December 31, 2020 23,225 $ 60.20 6.12 $ ( 1,134 ) Exercisable at December 31, 2020 23,225 $ 60.20 6.12 $ ( 1,134 ) Granted — $ — Exercised — $ — $ — Forfeited or Expired — $ — Outstanding at December 31, 2021 23,225 $ 60.20 5.12 $ 20 Exercisable at December 31, 2021 23,225 $ 60.20 5.12 $ 20 (1) The aggregate intrinsic value of outstanding and exercisable options is calculated as the difference between the exercise price and the Company’s stock price at each reporting period end. 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. As of December 31, 2021, there was $ 0 of unrecognized compensation cost related to the 30-day VWAP stock options. Performance-Based Cash Incentive Awards 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: Target Dollar Value Weighted-Average Fair Value as a % of Target Dollar Value Non-vested awards outstanding at December 31, 2020 $ 2,206 94.21 % Granted 927 51.73 % Vested — — % Forfeited ( 142 ) 78.45 % Non-vested awards outstanding at December 31, 2021 $ 2,991 162.03 % 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 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; and • 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. 131 Table of Contents ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Amounts in thousands except share and per share data) (22) Commitments and Contingencies (a) General 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. (b) Commitments and Contingencies Commitments The Company leases coal mining and other equipment under long-term financing and operating leases with varying terms. Refer to Note 12 for further information on leases. In addition, the Company leases mineral interests and surface rights from landowners under various terms and royalty rates. Coal royalty expense was $ 113,685 and $ 67,992 for the years ended December 31, 2021 and 2020, respectively. Minimum royalty obligations under coal leases total $ 14,665 , $ 14,418 , $ 13,620 , $ 12,525 , $ 12,396 , and $ 56,771 for 2022, 2023, 2024, 2025, 2026, and after 2026, respectively. Other Commitments 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 Extensive regulation of the impacts of mining on the environment and of maintaining workplace safety has had, and is expected to continue to have, a significant effect on the Company’s costs of production and results of operations. Further regulations, legislation or litigation in these areas may also cause the Company’s sales or profitability to decline by increasing costs or by hindering the Company’s ability to continue mining at existing operations or to permit new operations. During the normal course of business, contract-related matters arise between the Company and its customers. 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 Back-to-Back Coal Supply Agreements. (c) Guarantees and Financial Instruments with Off-Balance Sheet Risk In the normal course of business, the Company is a party to certain guarantees and financial instruments with off-balance sheet risk, such as bank letters of credit, performance or surety bonds, and other guarantees and indemnities related to the obligations of affiliated entities which are not reflected in the Company’s Consolidated Balance Sheets. 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. 132 Table of Contents ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Amounts in thousands except share and per share data) 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. 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 $ 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. These discussions may cause the Company to shift surety bonds between providers or to alter the terms of their participation in our program. To the extent that surety bonds become unavailable or the Company’s surety bond providers require additional collateral, the Company would seek to secure its obligations with letters of credit, cash deposits or other suitable forms of collateral. The Company’s failure to maintain, or inability to acquire, surety bonds or to provide a suitable alternative would have a material adverse effect on its liquidity. These failures could result from a variety of factors including lack of availability, higher cost or unfavorable market terms of new surety bonds, and the exercise by third-party surety bond issuers of their right to refuse to renew the surety. 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 following obligations which have been written on the Company’s behalf: December 31, 2021 December 31, 2020 Workers’ compensation and black lung obligations $ 70,637 $ 69,725 Reclamation-related obligations 10,449 8,445 Financial payments and other performance obligations 8,340 17,863 Contingent Revenue Obligation escrow 11,977 9,311 Total restricted cash 101,403 105,344 Less current portion (1) ( 11,977 ) ( 9,311 ) Restricted cash, net of current portion $ 89,426 $ 96,033 (1) Included within Prepaid expenses and other current assets on the Company’s Consolidated Balance Sheets. Restricted investments consist of FDIC insured certificates of deposit, mutual funds, and U.S. treasury bills that are restricted as to withdrawal as required by certain agreements entered into by the Company and provide collateral to secure the following obligations which have been written on the Company’s behalf: December 31, 2021 December 31, 2020 Workers’ compensation obligations $ 210 $ 51 Reclamation-related obligations 26,225 22,233 Financial payments and other performance obligations 2,008 1,484 Total restricted investments (1), (2) $ 28,443 $ 23,768 (1) Included within Other non-current assets on the Company’s Consolidated Balance Sheets. (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. 133 Table of Contents ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Amounts in thousands except share and per share data) 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: December 31, 2021 December 31, 2020 Reclamation-related obligations $ 118 $ 25,633 Financial payments and other performance obligations 403 1,596 Other operating agreements 873 1,018 Total deposits (1) $ 1,394 $ 28,247 (1) Included within Prepaid expenses and other current assets and other non-current assets on the Company’s Consolidated Balance Sheets. DCMWC Reauthorization Process In July 2019, the U.S. Department of Labor (Division of Coal Mine Workers’ Compensation or “DCMWC”) began implementing a new authorization process for all self-insured coal mine operators. As requested by the DCMWC, the Company filed an application and supporting documentation for reauthorization to self-insure certain of its black lung obligations in October 2019. As a result of this application, the DCMWC notified the Company in a letter dated February 21, 2020 that the Company was reauthorized to self-insure certain of its black lung obligations for a period of one-year from February 21, 2020. The DCMWC reauthorization is contingent, however, upon the Company’s providing collateral of $ 65,700 to secure certain of its black lung obligations. This proposed collateral requirement is an increase from the approximate $ 2,600 in collateral that the Company currently provides to secure these self-insured black lung obligations. The reauthorization process provided the Company with the right to appeal the security determination in writing within 30 days of the date of the notification, which appeal period the DCMWC agreed to extend to May 22, 2020. The Company exercised this right of appeal in connection with the substantial increase in the amount of required 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. 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 additional collateral. Either of these outcomes could potentially reduce the Company’s liquidity. (d) Legal Proceedings The Company is party to legal proceedings from time to time. These proceedings, as well as governmental examinations, could involve various business units and a variety of claims including, but not limited to, contract disputes, personal injury claims, property damage claims (including those resulting from blasting, trucking and flooding), environmental and safety issues, securities-related matters and employment matters. While some legal matters may specify the damages claimed by the plaintiffs, many seek an unquantified amount of damages. Even when the amount of damages claimed against the Company or its subsidiaries is stated, (i) the claimed amount may be exaggerated or unsupported; (ii) the claim may be based on a novel legal theory or involve a large number of parties; (iii) there may be uncertainty as to the likelihood of a class being certified or the ultimate size of the class; (iv) there may be uncertainty as to the outcome of pending appeals or motions; and/or (v) there may be significant factual issues to be resolved. As a result, if such legal matters arise in the future, the Company may be unable to estimate a range of possible loss for matters that have not yet progressed sufficiently through discovery and development of important factual information and legal issues. The Company records accruals based on an estimate of the ultimate outcome of these matters, but these estimates can be difficult to determine and involve significant judgment. (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, China, and Brazil. The following table presents additional information on our total revenues and top customers: 134 Table of Contents 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 2020 Total revenue $ 2,258,586 $ 1,416,187 Top customer as % of total revenue 13 % 16 % Top 10 customers as % of total revenue 64 % 63 % Number of customers exceeding 10% of total revenue 2 2 Number of customers exceeding 10% of total trade accounts receivable, net 3 3 Domestic revenue as % of coal revenue 24 % 36 % Export revenue as % of coal revenue 76 % 64 % Countries with export revenue exceeding 10% of total revenue India, China, Brazil India, Brazil Met coal as % of coal sales volume 83 % 80 % Thermal coal as % of coal sales volume 17 % 20 % (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. 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 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 All Other Consolidated Total revenues $ 2,176,080 $ 82,506 $ 2,258,586 Depreciation, depletion, and amortization $ 99,963 $ 10,084 $ 110,047 Amortization of acquired intangibles, net $ 13,671 $ ( 427 ) $ 13,244 Adjusted EBITDA $ 567,270 $ ( 34,447 ) $ 532,823 Capital expenditures $ 79,185 $ 4,115 $ 83,300 135 Table of Contents ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Amounts in thousands except share and per share data) Segment operating results and capital expenditures from continuing operations for the year ended December 31, 2020 were as follows: Year Ended December 31, 2020 Met All Other Consolidated Total revenues $ 1,264,496 $ 151,691 $ 1,416,187 Depreciation, depletion, and amortization $ 124,060 $ 15,825 $ 139,885 Amortization of acquired intangibles, net $ 12,889 $ ( 3,675 ) $ 9,214 Adjusted EBITDA $ 120,281 $ ( 36,880 ) $ 83,401 Capital expenditures $ 111,745 $ 7,834 $ 119,579 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 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 expense — 3,609 3,609 Depreciation, depletion and amortization 99,963 10,084 110,047 Non-cash stock compensation expense 28 5,287 5,315 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 ) Amortization of acquired intangibles, net 13,671 ( 427 ) 13,244 Adjusted EBITDA $ 567,270 $ ( 34,447 ) $ 532,823 136 Table of Contents ALPHA METALLURGICAL RESOURCES, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Amounts in thousands except share and per share data) 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 All Other Consolidated Net loss from continuing operations $ ( 77,519 ) $ ( 163,951 ) $ ( 241,470 ) Interest expense ( 2,014 ) 76,542 74,528 Interest income ( 63 ) ( 6,964 ) ( 7,027 ) Income tax benefit — ( 2,164 ) ( 2,164 ) Depreciation, depletion and amortization 124,060 15,825 139,885 Non-cash stock compensation expense 289 4,607 4,896 Mark-to-market adjustment - acquisition-related obligations — ( 8,750 ) ( 8,750 ) Accretion on asset retirement obligations 14,214 12,290 26,504 Asset impairment and restructuring 46,317 37,561 83,878 Management restructuring costs (1) 501 440 941 Loss on partial settlement of benefit obligations 1,607 1,359 2,966 Amortization of acquired intangibles, net 12,889 ( 3,675 ) 9,214 Adjusted EBITDA $ 120,281 $ ( 36,880 ) $ 83,401 (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. 137 Table of Contents Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None.