Alpha Metallurgical Resources, Inc. · NYSE:AMR
Alpha Metallurgical Resources — Contura Energy — Merger or Acquisition (April 2018)
22 slides from Alpha Metallurgical Resources's merger presentation, Apr 30, 2018
Slide 1: Contura + Alpha: Transformative Combination
Contura + Alpha: Transformative Combination April 2018 1
Slide 2: Disclaimer
2 Disclaimer This presentation is being made in respect of the proposed transaction involving Contura Energy, Inc . (“ Contura ”), Alpha Natural Resources Holdings, Inc . (“Holdings”) and ANR, Inc . (“ANR” and together with Holdings, “Alpha”) . This presentation does not constitute an offer to sell
Slide 3: Transaction Highlights
3 Transaction Highlights Consideration ▪ 100% stock transaction ▪ Alpha Shareholders to receive 0.4071 shares of Contura common stock for each Class C - 1 share of ANR, Inc. and each share of Alpha Natural Resources Holdings, Inc. Pro Forma Ownership ▪ Contura Shareholders: 53.5% ▪ Alpha Shareholder
Slide 4: Transformative Combination with Undeniable Strategic Rationale
4 1) Transaction Follows Significant Portfolio and Balance Sheet Optimizations by both Companies 2) Creates the Largest U.S. Met Coal Producer 3) Diversifies Operating Footprint Across Complementary Portfolio of High Quality Assets 4) Enhances Product Portfolio to Promote Cash Flow Generation 5) Str
Slide 5: Contura / Alpha Timeline
5 Contura / Alpha Timeline 2018 Footprint Map 2015 Footprint Map (1) See page 6 for transaction details. ANR Files Chapter 11 (August ‘15) Contura formed; acquisition of select assets completed (July ‘16) ANR emerges (July ‘16) Contura acquires majority stake in DTA (March ‘17) ANR divests majority
Slide 6: Transaction Follows Significant Portfolio and Balance Sheet Optimizations by both Companies
6 Transaction Follows Significant Portfolio and Balance Sheet Optimizations by both Companies Alpha’s Asset Sale to LCC Contura’s Sale of PRB Reduction of ARO Liabilities (1) $204 $59 $279 $68 At Launch/Emergence (7/26/2016) Current (12/31/2017) Contura ANR ▪ Contura and Alpha have right - sized the
Slide 7: Creates a Premier U.S. Met Coal-Focused Company
7 Creates a Premier U.S. Met Coal - Focused Company 2017A Met Coal Sales By U.S. Suppliers ( million tons) 12.6 8.5 8.2 7.9 6.9 6.5 4.7 3.3 2.7 1.5 0.6 PF Contura Coronado Blackhawk Alpha Arch Warrior Contura Mission Coal United Coal Corsa Ramaco Source: Company Filings, Company Websites, SNL. (1) A
Slide 8: Diversifies Operating Footprint Across Complementary Portfolio of High Quality Assets
8 Diversifies Operating Footprint Across Complementary Portfolio of High Quality Assets Toms Creek McClure Nicholas Cumberland DTA Pennsylvania Virginia West Virginia Delaware Contura Complex Export Terminal Alpha Complex ▪ Merger substantially expands Contura’s scale adding 4 mining complexes in We
Slide 9: Enhances Product Portfolio to Promote Cash Flow Generation
22% 12% 8% 4% 27% 28% 12.4 6.2 4.8 2018 2019 2020 9 Enhances Product Portfolio to Promote Cash Flow Generation Pro Forma Product Portfolio (2018E, tons sold) (1) ▪ Full suite of high - quality metallurgical product offerings ▪ Improves met coal blending capabilities ▪ Provides flexibility to respond
Slide 10: Strengthens Long-Term Competitiveness of Export Platform
10 Strengthens Long - Term Competitiveness of Export Platform ▪ Contura is among largest exporters of metallurgical coal in the U.S. ▪ Increased export capacity through incremental stake in DTA terminal acquired in March 2017; currently own 65.0% interest in DTA ▪ Capability to blend captive and 3rd
Slide 11: Scalable Organic Growth and Bolt-On Acquisition Opportunities
Estimated Annual Production (mm tons) Coal Quality Contura Freeport 2.5 – 3.5 Metallurgical Deep Mine #42 1.0 – 1.5 Metallurgical Alpha Black Eagle 0.3 – 0.5 Metallurgical Panther Eagle 0.3 – 0.5 Metallurgical Road Fork 52 0.6 – 0.8 Metallurgical Deep Mine #42 Freeport Pennsylvania Virginia West Vir
Slide 12: Significant Value Creation and Attractive Pro Forma Financial Position
Significant Value Creation and Attractive Pro Forma Financial Position ▪ Increases size and scale with additional metallurgical coal exposure ▪ Strategic alignment of export metallurgical sales ▪ Balance sheet positioned to provide flexibility around additional value creation opportunities through o
Slide 13: contura MA spires
Ss contura MA spires energy
Slide 14: Outlook for Metallurgical Coal Continues to be Strong
Outlook for Metallurgical Coal Continues to be Strong Source: Bloomberg, AME Group. ($US / tons) HCC Benchmark Quarterly Contract Pricing 14 $81 $84 $92 $200 $285 $194 $170 $192 $235 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 Seaborne Metallurgical Coal Demand ▪ Met supply declined during the indu
Slide 15: Outlook for Steam Coal Improving
$40 $45 $50 $55 $60 Jan-16 May-16 Oct-16 Feb-17 Jul-17 Nov-17 Mar-18 Outlook for Steam Coal Improving Source: SNL, Bloomberg, EIA. (1) CAPP steam coal pricing based on NYMEX Big Sandy 12,000 1.67 Barge. (2) NAPP steam coal pricing based on Pittsburgh Seam 13,000 3.00 Rail. 15 Henry Hub Natural Gas P
Slide 16: contura MA spires
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Slide 17: Combination Offers Significant Synergy Potential
$30 - $50 Million Estimated / Year (1) 17 Combination Offers Significant Synergy Potential Operational Footprint Optimization Sourcing Improvements SG&A Rationalization Coal Blending and Marketing Optimization (1) Synergies are based on management’s estimates and there can be no assurance that they
Slide 18: Combined Financial Snapshot
18 Combined Financial Snapshot (US$ millions) Contura Energy (1) Alpha T&L Eliminations (2) Synergies Combined Company (3) Met Tons Sold (mm) 8.9 7.9 (4.2) 12.6 Total Tons Sold (mm) 15.7 14.9 (4.2) 26.4 Revenue (US$ millions) $1,650 $1,236 ($478) $2,408 Adjusted EBITDA (US$ millions) $258 $223 $30 -
Slide 19: Combined Financial Outlook
19 Combined Financial Outlook (millions tons, unless noted) Low High Shipments CAPP – Metallurgical (Mt) 10.5 11.9 CAPP – Steam (Mt) 6.2 6.8 NAPP (Mt) 7.1 7.7 Total Captive 23.8 26.4 T+L – Metallurgical 0.5 1.5 Total Shipments 24.3 27.9 Cost per ton CAPP $63.70 $67.53 NAPP $29.00 $33.00 Margin per t
Slide 20: Sustainable, Well Capitalized Balance Sheet
20 Sustainable, Well Capitalized Balance Sheet Improved Capital Structure, Strong Liquidity and Free Cash Flow (US$ millions) Contura Energy Alpha Synergies Combined Company (1) 2017A Adjusted EBITDA $258 (2) $223 $30 - $50 (3) $521 (4) Total Debt (5) $391 $241 $632 Net Debt (5) $249 $195 $444 Total
Slide 21: contura MA spires
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Slide 22: Net Income to Adjusted EBITDA Reconciliation
22 Net Income to Adjusted EBITDA Reconciliation In addition to U.S. GAAP financials, this presentation includes certain non - GAAP financial measures. These non - GAAP measures are in addition to, not a substitute for or superior to, measures of financial performance prepared in accordance with U.S.