Good morning. My name is Denise, and I'll be your conference operator today. At this time, I would like to welcome everyone to the Contura Energy 2018 Fourth Quarter Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. [Operator Instructions] Alex Rotonen, Vice President, Investor Relations, you may begin your conference.

Thanks Denise, and good morning, everyone. Before we begin, let me remind you that during our prepared remarks and the Q&A period, our comments relating to expected business and financial performance contain forward-looking statements, and actual results may differ materially from those discussed. For more information regarding forward-looking statements, and some of the factors that affect them, please refer to the Company's fourth quarter 2018 earnings release issued on Monday, April 1 and associated SEC filings. Please also see those documents for information about our usual non-GAAP measures and their reconciliation to GAAP measures. Participating on the call today are Contura’s Chief Executive Officer, Kevin Crutchfield and our Chief Financial Officer, Andy Eidson. With that, I'll turn the call over to Kevin.

Thanks, Alex, and good morning, everyone. Before I begin my prepared remarks, I want to comment on the reason we allotted two days between the release of our financials and this earnings call. For those of you who've actually read our 10-K understand, it's a very long and complex document with many moving parts due to the merger and refinancing activity in the fourth quarter. Our preference was to give the investment community ample time to parse through the details of the document before we conducted the call. But rest assured in the future, we plan to follow a more conventional timing for conducting earnings calls. We are pleased with what we accomplished in 2018 as it was an important year for Contura. We made great strides becoming the largest domestic met coal producer with a broad offering of met qualities complimented by cost competitive thermal portfolio allowing us to better serve our customers spanning 23 countries on five continents. During 2018, we recorded full-year revenues totaling just over $2 billion and generated net income from continuing operations of $303 million, including a tax benefit of $165 million. Our adjusted EBITDA for the year was $335 million aided by strong met coal realizations of $124 per short ton. We shipped more than 11 million short tons of met coal during the year, including purchased coal sold through our Trading and Logistic segment. From basically every perspective, 2018 was an extremely successful year. We are also ahead of schedule in achieving the synergy targets that we previously announced when the Alpha merger was finalized last November. Andy will provide further color on the synergy and financial details in his prepared remarks. On our 2019 guidance call announcement in January, I covered the many accomplishments we have achieved since our formation in…

Thanks, Kevin, and thanks everyone for joining us today for the quarterly call. I will begin with our fourth quarter results and then we'll hit some color on our progress toward our synergies, and also a couple of comments on what the first quarter is looking like, and then we can jump to some questions. So before I get into the detail of our results, I want to remind everyone that our fourth quarter financials include legacy Alpha results from November 9 moving forward, and naturally that was the date the transaction closed. As announced on Monday morning, the Company reported fourth quarter net income from continuing operations of $156 million or $9.85 per share on total revenues of $572 million. The fourth quarter net income benefited from an income tax benefit of $165 million, and that consisted primarily of action around deferred tax assets, NOL carryback benefit, and finalization of our AMT credit calculations. I am also factoring into net income where severance costs totaling around $22 million for the fourth quarter related to the transaction. Adjusted EBITDA was $111 million in the fourth quarter, up from $44 million in the prior year fourth quarter. The increase was mainly driven by much stronger performance in our CAPP met and NAPP segments which increased our EBITDA contributions about $56 million and $26 million respectively. Trading and Logistic EBITDA declined by $7 million for the quarter as the legacy Alpha portion of the T&L segment became part of our CAPP met segment post-merger. Compared to the fourth quarter of 2017, the CAPP met results were bolstered by a $10 increase in average realization to $119 per ton as well as an increased volume attributable to a partial quarter of Alpha’s T&L being included in our CAPP met volume, which grew from…

[Operator Instructions] Your first question comes from Scott Schier with Clarksons. Your line is open.

Good morning, everyone, and congratulations on a very strong quarter.

Good morning. Thank you.

If I could start on capital allocation. We have you guys generating a pretty sizable level of free cash flow this year? How should we think about the priority in terms of your plans for that cash?

Good morning. Thanks. It’s a good question. I mean, I think as we've always said, the first thing we want to do is keep our mines running well and allocate the appropriate amount of sustaining capital. But I will tell you that we'll announce something much more specific concurrent with the first quarter call. I can tell you that our Board has spent a considerable amount of time evaluating the options and we’re now in a position to share what our intentions are in that regard, but not really until plan is completely formalized certain aspects could be considered preliminary and subject to change. But at a high level, we anticipate a bi-annual distribution of 50% available free cash flow, which will be paid in the second and fourth quarters and based on the prior two quarters of cash flow generation. This distribution can take the form, one to three forms, really a special dividend, share repurchases or debt repurchases or any combination thereof based on the facts available to the Board at that time. And moreover, I would add that the term available free cash flow will define that specifically in the formal communication of the plan, but it will be a typical free cash flow calculation beginning with EBITDA, and removing certain items that one would expect capital – working capital interest, regular debt amortization, legacy liability or bankruptcy settlement, payments, et cetera. So again that's at a high level, but stay tuned for a more formal announcement concurrent with our first quarter discussion coming up here in probably a month or month and a half.

That's great color, and thank you for that. And we're looking forward to hear that announcement. As a quick follow-up, can you talk a little bit about your plans for the Pinnacle reserves that you're supposedly slated to purchase?

Well, I want to say at a high level, there’s been a little bit of messy process still not to the finish line yet. But the plan there for us was – it was a simple reserve acquisition and we'll add to the reserve base of one of the mines that we picked up through the Alpha merger, adds a significant amount of reserve. It's a little better reserved and we otherwise wouldn't mind in terms of its thickness and we'll add probably circa a decade of life to that mine. So it will just be incorporated into the long-term mine plan there, Road Fork 52 assuming that we can get to plan confirmation and get the deal finalized.

Awesome. That's very helpful and thank you for taking my questions and good luck going forward.

Okay. Thank you.

Your next question comes from Mark Levin with Seaport Global. Your line is open.

Yes, great. Thanks very much. Appreciate the call. So a quick question Kevin. So obviously, Arch has announced a new 3 million ton a year mine. Warrior seems like they will be shovel already in the first quarter. I'm just curious what you're thinking now. Does this new West Virginia State Law that allows for some return of your capital investment if you produce in West Virginia, does any of that change your view in terms of what growth might look like for Contura over the next couple of years?

Honestly, Mark, I mean we're still parsing through the language of that bill. I mean there are a couple of parts there, one that involves tax benefit based on CapEx and the other is the severance tax reduction, which is phased in over I think a three-year period. On the second point, that's a modest help to us, but as we parse through the capital investment side, I mean it could change decisions, but I mean I think we've got a pretty solid plan for West Virginia as we look ahead with the projects that we've already announced a couple of more things that we're looking at that could induce us to move a little faster on them. But I think, what we'd want to do is look at projects on their own merits, and to the extent that West Virginia's plan that they've put in place aids us at certainly a benefit, but we'd like to look at them kind of on standalone basis and make those decisions accordingly. Andy is sitting here, he's kind of been looking at the West Virginia piece. He may have some additional color on it, but I think we're still kind of trying to understand it more completely.

Yes, I agree with that, Kevin. Hey Mark, by the way.

Hi, Andy.

As Kevin mentioned, it could be a driver for moving a little bit more quickly, but if you look at [indiscernible] a project that size definitely yields more benefit than the smaller projects that we would have on the table. So I don't know that it would make that much of an impact for us. But again, we're still evaluating that. I don't know that it really want to change anything in the near-term.

Got it. And then the second question, Kevin, you referenced the API 2 price, which has obviously gotten hit pretty significantly in a pretty short period of time. Maybe you guys can remind us how much export steam you exported in or how much steam you exported in 2018? What you have under contract for 2019? If you're willing to share that? And then what is a reasonable expectation based on sort of where the market is for your own export steam in 2019?

Yes, I think Mark, if my memory serves me correct, 2018 was kind of circa 1 million tons to take advantage of where the API 2 or basically the seaborne thermal markets were. We're nowhere close to that. This year, we're just a couple hundred thousand tons, probably those are a fixed price, they don't move with the API 2. We booked a little bit of business in the first quarter domestically, and they were with domestic customers. I think probably 400,000 tons plus or minus at something kind of low seven handle on it.

That's great.

With the capitulation of the API 2 market, net backs are, I don't know, probably mid-30s or some. That's just a complete non-starter at this point. So we're keeping an eye on it, obviously, I mean the worry that we would have there is that coal comes back into the U.S., trying to find homes, puts pressure on domestic markets and could even begin to put a little pressure on some of the inferior quality, metallurgical side of the business. The low grade have all these and whatnot. So it's something we'll have to take a close eye on.

Okay, the last question. So you mentioned – I hadn't heard this before about Brazil. What's your sense of – what's going on down there, Kevin? I mean just from what you're seeing and hearing, what's the dynamics is causing that sort of pricing to go into that market?

Yes. I mean I think it was just a move early in the year to try to take back some market share and pricing that I would consider kind of predatory levels frankly, so such a significant discount that we chose to pass. And I think from our standpoint, the world is a big market, and we have lots of other opportunities and we didn't see any reason to take that bait early in the year. If you need to capitulate, you can capitulate later, so we chose to pass on that. We'll let the traders take those markets and we'll hold our better quality coals out for better deals frankly.

That makes sense. Well thanks, congratulations particularly on the share return program. I think that makes a lot of sense. Thanks.

Okay. Thanks Mark.

[Operator Instructions] Your next question comes from Lucas Pipes with B. Riley FBR. Your line is open.

Hey. Good morning, everyone. This is Matt Key asking a question on behalf of Lucas. Just wanted to confirm what you said in a prior comment. Did you say in the second and fourth quarter that you’re planning to distribute around 50% of trailing free cash flow? Thank you.

Available free cash flow, yes.

Available free cash flow? Got it.

Yes.

And just one more quick one. I was wondering if you could provide any update on kind of your plans to divesture on the thermal coal operations?

I mean, it's something that we've continued to think about. I mean we believe our D&A is at its heart. We're very met oriented company and would like to continue to be thought of in that way into the extent that there was something there that could be done on the thermal side that would make sense. We'd obviously be open because we're not romanticizing with any of our assets, but it's a function. I mean, first thing I'd say to is our thermal assets are doing just fine and current price decks, I think we'll continue to do just fine, but if somebody thinks they're worth more to them than they are to us, then there are certainly conversation there to be had. So I'll just kind of leave it at that and hopefully that gives you what you need in terms of color.

Yes, that's very helpful. Appreciate your time and best of luck moving forward.

Thank you.

There are no more further questions left at this time. I’ll turn the call back over to Mr. Kevin Crutchfield.

Again, many thanks for those who participated today and we appreciate the support and we will continue to keep you posted as we roll ahead, and we'll be back online probably here with the first quarter and circa middle of May. So look forward to talking to you then if not before. Thank you again for participating today.

This concludes today's conference call. You may now disconnect.