Good morning, and welcome to the Contura Energy Third Quarter 2020 Earnings Call. All participants will be in listen-only mode. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Emily O’Quinn, SVP Corporate Communications. Please go ahead. Emily O’Quinn: Thanks, Iley, and good morning, everyone. Before we get started, 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 can affect them, please refer to the Company’s third quarter 2020 earnings release and the associated SEC filings. Please also see those documents for information about our use of non-GAAP measures and their reconciliation to GAAP measures. Participating on the call today are Contura’s Chairman and Chief Executive Officer, David Stetson, and Chief Financial Officer, Andy Eidson. Also participating on the call is Jason Whitehead, our Chief Operating Officer, who is available to answer questions on operations. With that, I’ll turn the call over to David.

Thanks, Emily. Good morning to everyone on the call, and thank you for joining us today. What an interesting and challenging year 2020 has given us. Just in the last few months, we’ve seen met prices dip $105, spring back $126 and just recently settle around $114. We’ve managed through the pain and hardship of the virus, assuring our teams have been well-protected as possible, while still operating our business, dealing with economic implications and uncertainties in the domestic and international markets that we serve, and preserving our capital to strengthen our long-term sustainability. When we announced our first quarter operating results earlier this year, they were simultaneously praised and questioned as to whether our cost could be sustained at those levels. Then, we reported our second quarter results reflecting lower cost. But again, I heard that we had to prove our ability to sustain our cost performance in order to be considered one of the lowest cost producers in the metallurgical space. Well, as everyone has read this morning, I’m pleased to announce that we have another solid quarter to report on today. The Contura team continues to do a great job of being vigilant and flexible, so we can adapt as necessary. And as I said before, we choose to closely manage the business based on factors we can control in this mindset as a result of another solid quarter for Contura. Before I get into details of the third quarter and our specific results, I want to briefly comment on last week’s Presidential election. Like the majority of the business community, we pay attention to politics, we seek to understand how election results may influence or impact our business. But, our goal in the way we manage our business is for our Company to be successful, regardless…

Thanks, David. Good morning, everyone. David commented on the multitude of uncertainties facing the world and our industry. Our goal is to find ways to alleviate these risks in order to build a stronger, sustainable enterprise. Not to be redundant to what we said in prior quarters, but the way we believe this is best done is by focusing on the issues we’ve mentioned many times before, effective cost management; matching up production with demand; and most importantly, the sharp focus on cash flows and cash preservation. To that end, if we take a closer look at our balance sheet and cash flows for the quarter, we ended the quarter with approximately $162 million in unrestricted cash. Our ABL is at capacity right now due to the marketing impact -- or the market impact on our borrowing base, both through accounts receivable and inventory. So, we have no additional availability there. But, quarter-over-quarter, we did use approximately $77 million in cash. And to dig into that a little bit, give you a better picture of the usage in the quarter, we did reduce our debt by more than $30 million to $598 million during the quarter. This debt reduction included ABL payment of approximately $12 million,$17.5 million, and legacy payments related to the LCC note and a small term loan principal payment of $1.4 million. We also had $13 million in cash interest payment, and we paid an additional $30 million in other legacy payments. Those include such things as pension and some of the other legacy bankruptcy items that we’ve been clearing out. On top of those payments, we also provided roughly $19 million in additional cash collateral for surety bonding. As we discussed a couple of quarters ago, it was a little bit of a harbinger of things…

[Operator Instructions] Our first question today comes from Lucas Pipes with B. Riley Securities.

Hey. Good morning, everyone, and congrats on the outstanding cost performance, really great to see. I also want to thank you for the 2021 outlook at this point and all the encouraging updates included there. My first question is on the cost side, you mentioned in the release and your prepared remarks, a couple of drivers, productivity, labor costs, sourcing. Can you provide a little bit of a breakdown on what these various buckets contributed in terms of dollars per ton, vis-à-vis maybe the third quarter 2019, just kind of good sense for where the bulk of savings came from? Thank you very much.

Hey Lucas, it’s Andy. So, that’s a little bit of a tough one, because we’ve had so much transition going on inside the portfolio. The biggest driver -- and again, it’s this overlap in significant fashion, productivity really is the main driver here. It will obviously fall into separate buckets on your P&L. And that is where the labor and the supplies per ton improvements come from. We have seen slight reductions of each of those on an extended cost basis, but the real driver is just the amount of tons flowing through the system and still in a little bit of Jason’s thunder here. It came up in another question. But, when you look at our portfolio, from ‘19, rolling into most of 2020, we had roughly 22 mines contributing to the portfolio. That has continued to shift downward, as we’re consolidating production, optimizing outputs, taking higher cost mines out of the system, to the point where when we get to the middle of next year, we’ll have gone from 22 to 12 mines. So, again, that’s reflective of the kind of productivity and improvements that we’ve seen, really, since Jason came on board, just re envisioning the entire portfolio. So, it’s kind of a -- I’m running around the question to get the answer. But, it’s really driven by the productivity impact on those individual buckets. Now, that wasn’t in the sales.

Got it. That’s very helpful. I’ll turn over to my second question. It’s in regards to your 2021 met coal volume outlook. It’s very robust. Good to see. But, to get to the question, how do you feel about your sales book in regards to your sales outlook? And is there -- is the sales outlook, the shipment outlook for 2021 a reflection on the current forward curve on met coal or would you say look, in any reasonable price environment, even what we’ve seen more recently, which of course hasn’t been so good -- so great, to put it mildly, we would be able to put these tons to bed? Thank you very much for that.

Yes. I’ll just hit a brief preface on that and let Dan dig in some the details that he wants to share. But, I think when you look at our production, it’s kind of looking mostly flat on the met side, 2021 maybe, a slight tick up. But, again, we don’t have any better information than anyone else out there to go off of -- the futures are where they are, everyone’s optimistic about getting there. But we just don’t know necessarily the timing or what the curve looks like to get there. So, I think, by and large, we’re pretty comfortable. Dan and his team have done a fantastic job, getting a domestic book, locked into place in this kind of a challenging market. So, I think we feel pretty solid about volumes in total. Naturally, we can’t control the price. But, Dan, anything you’d like to add to that?

Yes. Thanks, Andy. Lucas, yes, I think, we’re comfortable going forward. We’re shipping at about a rate of 3 million tons a quarter this year, and through some very difficult times and challenging markets and challenging times with our customers. And I think, it’s fair to say we’re more optimistic about 2021 as far as the volumes. But, we’re moving the coal right now. We’re moving it in Q4, we’re going to move it into Q1 and Q2. And as far as the domestic book, we like our position there. We took the business that we felt like we wanted and left some business we didn’t want. So, I think, we like the balance that we have.

That’s very good to hear. Thank you everyone for the color, and continued best of luck.

Thanks, Lucas.

[Operator Instructions] Our next question comes from Mark Levin with The Benchmark Company.

Yes. Great. And echoing Lucas’s comments, congratulations to the team on a great cash cost performance. I remember it wasn’t that long ago where met cash costs were in the 90s, and it’s really, really quite an improvement. Let me ask a couple of questions on cash. So, Andy, in fourth quarter, I guess, you referenced some time you’ll get to $66 million AMT refund. So, I would assume it’s reasonable to assume that your cash would build Q3 over Q4, or are there some other factors that we should be mindful on?

Yes. I don’t -- hey, Mark, by the way, I don’t -- I hate to guide too precisely, again, just because we don’t know where market price is going to fall out. It’s been so inconsistent, the past couple of months in particular. But, I will say, the third quarter every year is our heaviest cash barn quarter, just because July is when all of our legacy payments hit. And so, I certainly would expect the fourth quarter, all things being equal, to be considerably better from a cash usage or cash generation perspective in Q3. Again, I don’t want to get into specifics or projecting what it looks like. But, I think just by virtue of not having those payments weighing upon bonus for Q4, we should be $30 million to $40 million better, all other things being equal.

Plus the $66 million AMT refund, right?

Plus the $66 million, correct.

Right. Okay, got it. And then, you referenced the $17 million cash collateral call -- or collateral call from third party surety providers. Maybe you can give us just a greater understanding of how to think about what the exposure is, how to how to model what those cash collateral requirements could look like going forward. I know, this morning, Peabody disclosed that they had reached a standstill agreement with their surety providers, their situation is obviously markedly different. But, I’m just kind of curious, how to think about what the exposure looks like, and then, what to think about it going forward?

Yes. The main exposure still is coming from thermal permits. The surety companies, by and large, aren’t terribly excited about holding thermal permits. And they’re under the same pressures as all the other third-party providers. Not only is there risk from a market perspective, and just ongoing economics, but it also has a considerable amount of ESG risk involved from the surety’s perspective themselves. So, it’s kind of hard for these surety guys to go upstairs and ask for permission, even take new bonds or have to justify not requiring higher collateral level. So, I think, by and large, we’re in a pretty good position on our bonds out now. We did continue to have conversations with our sureties, but we have a very longstanding relationship with the sureties. Most of the books have been with us for many, many years, going back to legacy Alpha days. So, they’ve been partners with us for a long time and have been very patient in challenging markets. But, I do think with what we did to shore collateral in Q3, I think we’re in pretty good position. But to the degree that we continue moving away from thermal markets, that will only inure to our benefit.

Is there a way, Andy, to quantify, what to -- or how to maybe think about it?

I mean, you have to look at any given Company’s total bonding exposure, and then…

What is it -- and what is the total bonding exposure now?

For us, we’re -- not sure I know that one off the top of my head. It’s roughly going to reflect our undiscounted reclamation costs. But, we’ll snag that number in just a second. But, the weighted average mix is what’s going to get you. Any kind of thermal permit is, a surety is probably going to be looking from north of 50% collateral on that kind of a bond. If it’s met, it is going to be considerably lower than that. So, it’s again, to the degree that we can get away from thermal permits -- because we’re currently -- across our book, we’re a little bit over 30%, in total collateral. So, on a weighted average basis, the met is helpful in that number down. So, again, I think, we’re in pretty good shape, and shouldn’t have too much incremental exposure from that perspective. But, as we move forward, as the political climate moves forward, especially regarding thermal, all bets are off.

Yes. That makes sense. That dovetails into something I’m sure you’re not going to want to discuss, I’m going to ask anyway. You referenced ongoing progress with the NAPP asset sale. Maybe your degree of confidence 1 to 10 scale that you think you can get something done and then what the timing might be? And if you did do something, would it require cash going out the door or would this be at worst cash neutral transaction?

So, actually to close out the loop, Mark, it kind of partially answers a little bit of your question here. We have roughly $350 million of bonds outstanding, and that’s more than just reclamation bonds. That includes workers’ comp, things like that. But, of that $350 million, around $150 million of that is Cumberland. So, that kind of feeds into your question of the transaction. On a scale of 1 to 10, I would probably put our likelihood of getting a deal done at somewhere between 1 and 10.

Okay. That’s terribly not helpful, Andy…

Yes. It’ll be more than 1, but less than 10.

Excellent. That is the color that -- that is outstanding color. But, heading to the follow-up, which is if you sold it and there were a buyer actually, you had to post all sorts of cash collateral. I mean, could you do a transaction or would you -- is that the bottom line that you would do a transaction that was cash neutral or might the cash transaction involve you actually having to put some cash on it?

Yes. Well, Mark, I think when you to deal like this because of the strategic benefit to the entire enterprise, you can mix and match lots of financial and non-financial benefits on something like this. So, is it possible to expect the transaction? I mean, can you envision a transaction where you could get some cash? Maybe. Can you envision when get some cash? Maybe. So really, again, I hate to give you a non-answer answer, but there are so many pieces of that you can move around to benefit the overall enterprise. It’s kind of hard to put a dollar tag to it, without knowing all the other pieces in the mix.

Okay. That’s fine. I understand. There are a lot of moving pieces. All right. My last question is just really easy; it’s more on the market and the met market in general. So, since China announced their sort of unofficial import ban, have you guys seen any -- or would you -- I mean, I don’t think you sell anything into China. But, would you consider selling anything into China? What are kind of the puts and takes, if trade flows start to change and they start to keep Australian coals out of their market for an extended period of time? And then, the second piece is India, which is such an important market to seaborne coking coal demand. Maybe you can discuss a little bit what you’re seeing out of that market recently and kind of what the book looks like there, over the next 3 to 6 months, or how you see that market?

Hey, Mark. I’ll start with the China, the trade war issue in China. We don’t sell any coal to China. We’re aware -- we’ve had a few inquiries. By and large, Mark, as you know, they shut -- a lot of the coal that goes into China from Australia is low vol coal. And that’s generally what they’re looking for. We don’t export a whole lot of low vol. We’re very balanced in our portfolio with it. So, we’re not pursuing actively at all any sales into China. We are aware of some inquiries, and maybe some of our competitors have shipped a vessel or so over there. With regard to India, yes, very important customer, been pretty steady all year. Like most customers, they had some slowdowns and some difficulties with the pandemic. But, by and large, our shipments have remained steady there. And I expect them to be steady into 2021.

That’s great to hear. Super. All right. Well, thanks very much for all of the time this morning. And congrats again on the cost performance.

Thanks, Mark.

This concludes our question-and-answer session. And I would like to turn the call back over to David Stetson for any closing remarks.

Well, thank you very much. Thanks for everyone joining us this morning. Have a great end to your year. And we appreciate it so much. Thank you.

The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.