Contura Energy, Inc (CTRA) Q3 2020 Earnings Call Transcript

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Contura Energy, Inc (NYSE:CTRA)
Q3 2020 Earnings Call
Nov 9, 2020, 10:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good morning, and welcome to the Contura Energy Third Quarter 2020 Earnings Call. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions]

I would now like to turn the conference over to Emily O’Quinn, SVP, Corporate Communications. Please go ahead.

Emily O’QuinnSenior Vice President, Corporate Communications

Thanks, Illy, 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.

David J. StetsonChairman and Chief Executive Officer

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 have seen Met prices dip to $105, spring back to $126, and just recently settle around $114. We’ve managed [Phonetic] 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 priced 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 said before, we choose to closely manage the business based on factors we can control, and this mindset has resulted in another solid quarter for Contura.

Before I get to the 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 who sits in the White House or which party controls Congress. I don’t say this to diminish the importance of elections in anyway, because they are critically important to our democracy. We regularly engage in dialog with elected officials at all levels to help inform them as to the importance of our products in manufacturing and the underpinning that they provide to a strong economy.

However, election outcomes will never change the core principles that anchor our daily operations. Safety, responsibility, environmental stewardship and continuous improvement will continue to drive our actions each and every day, and we remain committed to those important aspects of who we are and how we operate.

Turning now to our quarterly results, which include adjusted EBITDA of $20 million for the quarter and the best cost performance on record for Central App-Met, since the start of the Company over four years ago. Andy, will provide a more robust overview of the numbers after I finish my remarks, but I have to congratulate Jason and his team on repeatingly [Phonetic] exceeding expectations, and had just $66.49 a ton for the quarter, managed to beat our prior record setting Met cost performance. Importantly, all this progress is occurred while keeping safety at the forefront at all times. I simply can’t say enough about the job they’ve done this year.

I’ll briefly comment on our 2021 guidance and let Andy go into more detail. We are pleased with our committed Met-only position in the Central App-Met segment, with 34% of the anticipated mid-point of our shipments locked in next year. The average price for committed tons for the Met-only portion of the segment is just over $86 a ton. We expect to continue our strong cost performance with Central App cost per ton anticipated in the range of $68 to $74. As for 2021 capex, we expect to come in significantly lower than our spend in 2020, at a range of $80 million to $100 million. We project SG&A for the next year to be in the $45 million to $50 million range, which is slightly better than our 2020 expectations.

In addition to closely managing our costs, we’ve been operating with a strong focus on cash preservation, not only to help us weather the effects of the pandemic, but also help us navigate softness and recent volatility and the pricing of our products. As we predicted on our last call, the back half of 2020 has so far proven challenging, albeit with sporadic signs of optimism. We continue to believe we’re doing what we can to manage through these challenges, and the guidance we are issuing today reflects our thinking about what 2021 will hold.

I reiterate our prior statements from the second quarter call with regard to the long term, big picture strategy for Contura. We are accelerating our strategic exit from thermal coal mining, and we’ve made great strides in executing our strategic vision to become a pure play metallurgical coal company, providing critical feedstock for the steel production. As we discussed in prior quarters, our portfolio optimization efforts include bringing on some new Met properties that are currently in development or being prepared to run in the future. While de-emphasizing or removing from our portfolio, other mines that are mining out, uneconomic are no longer offering synergistic value in terms of coal qualities, market demand or cost structure.

Whenever there is a profit as idled or mined out, we look for opportunities to realign our coal processing workflows into fewer plants and to redeploy mine equipment to other locations in the Company. These efforts allow us to tighten our cost structures and make the best use of existing capital in the organization. We regularly evaluate our portfolio and have been planning for the best utilization of our newer high-quality mines. We continue to be on track or in some cases even exceeding our expectations in that regard.

For example, Black Eagle is nearly finished with the corridor to the main reserve body, where we anticipate multi-section production next year. We have accelerated our third section at Road Fork 52, with Section 3 now expected in early December, instead of first quarter of 2021. Lastly, the surface infrastructure installation is almost complete for our Lynn Branch underground mine, with intake and return shafts in place, belts installed and the finishing touch has been put on the track tunnel. We remain excited about these properties, and we’ll keep you updated on their progress.

Like our peers, Contura has closely watched the market landscape in the ebbs and flows of recent weeks. Pricing was soft throughout the better part of the quarter, then increased significantly before dropping meaningfully again in the recent weeks. Within the quarter, we received communication from customers, either lifting or ceasing their force majeure notices. And we also negotiated agreements with certain customers to defer anticipated shortfall volumes from 2020 into 2021. We have largely seen limited impact of these circumstances to our metallurgical coal sale volume and production for the third quarter.

Before I wrap up my prepared remarks, I want to congratulate our environmental and safety teams on another strong quarter of performance. Our environmental teams continued their near-perfect water quality compliance rate and a significant reduction in violations against the rolling three-year average. Our safety teams ended the quarter with all metrics favorable with the national average. Additionally, two of our Virginia subsidiaries are recently presented with the safety awards from the State Department of Mines, Minerals and Energy, reaching milestones of work hours without lost time accidents. Those are operations on the McClure Prep Plant, Long Branch-Surface and long Branch-High Wall. Congratulations to each member of these teams, and we look forward to your continued success.

I will now turn the call over to Andy for some additional details on our financials.

Andy EidsonExecutive Vice President and Chief Financial Officer

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’ve said in prior quarters. But the way we believe this is best on is by focusing on the issues we’ve mentioned many times before. Effective cost management matching our 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 that 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, I’ll 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 on 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 has pension [Phonetic] 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 to come, but the surety markets insurance markets, all these peripheral markets that we have to deal with for services become even more challenging day-by-day. So third quarter for us was certainly no exception.

We continued to see some benefit from our working capital, mainly inventory and accounts receivable, which provided a total of $30 million of cash in the third quarter, and basically covered our capex for the quarter. But going back to the ABL for just a second, we had borrowed and drill down against ABL earlier this year in March. At quarter end, that facility was down to $18.4 million in outstanding borrowings, and it had about $122 million of letters of credit outstanding as of the end of the quarter. Subsequent to the quarter end, we paid an additional $15 million [Phonetic] of the principal, and so the current outstanding borrowings on the ABL, as of today, is approximately $3.4 million. So we do have to [Phonetic] work that back down.

Next I wanted to give a quick update on a couple of tax-related items. We still anticipate that we’ll receive our $66 million AMT credit monetization refund in the coming weeks. It has suffered from a couple of processing delays, but we feel pretty good that we may actually receive it at some point this week, but certainly in the next couple of weeks. Also in connection with the CARES Act that we’ve mentioned previously, we still expect to defer approximately $14 million in payroll taxes until 2021 and 2022 with the total deferral amount distributed evenly across both years. Finally, we anticipate an additional $70 million NOL carryback-related tax refund in the back half of 2021.

Moving to our financial results for the quarter. Our EBITDA increased $3 million quarter-over-quarter from $17 million to $20 million, despite the continued decline in market prices relative to the second quarter. The strong EBITDA performance was driven by another quarter of excellent cost containment, particularly in the CAPP-Met segment, where we reported the lowest full quarter cost since the inception of Contura of $66.49. The third quarter CAPP-Met costs were approximately $3.5 lower than the second quarter cost, if you kind of adjust Q2 for a more normalized run rate, if you exclude the impact of our April furlough and other one-time type issues.

On a three-quarter moving average basis — and this is really a testament to the sustainability of some of these cost increases we’ve seen. Three-quarter moving average basis, our current average is $70.53, down more than $5 over the prior three-quarter moving average and down from a high of nearly $90 a ton. So again, David mentioned the performance of the operating team. Just when we think that Jason and the operating team have kind of hit their peak as far as cost reduction, if they’re going to drop a quarter like this on us, and we have to come up with new words to describe it. So just incredible work there.

Overall CAPP-Met generated $18 million of EBITDA during the quarter, basically flat with the prior quarter, while NAPP contributed $7 million of EBITDA. The CAPP-Thermal segment contributed more than $5 million of EBITDA in the quarter. And naturally SG&A expense aren’t allocated into the segment, so — to get the total that would have to be added back in.

On the shipments and revenue front, our CAPP-Met shipments remained strong in the third quarter with total volumes of 3.3 million tons shipped, and that’s up about 100,000 tons from second quarter. And then the trend we’ve seen over the past couple of quarters, naturally, our revenues continue to be negatively impacted by soft market in — particularly, in export market, with our CAPP-Met realizations down approximately $8 a ton to around $74 a ton in the third quarter. CAPP-Thermal volumes were essentially flat with the second quarter total shipments of around 600,000 tons and realizations improving to just under $58 a ton from $50 in the prior quarter. Prior quarter, we did have some cleanup of some lower-quality thermal coal that impacted pricing. We also had some customer mix issues, but I think third quarter realizations were more in line with Q1, as our customer mix got back to a more normal baseline.

Northern App revenue improved as a result of higher volumes with prices effectively flat at $40 a ton. Our shipments were up by about 300,000 tons to 1.6 million tons all in. SG&A, excluding non-cash stock comp and onetime items, was $13.5 million in the third quarter, compared with $10 million in the second quarter. And our third quarter capex was down $13.7 million to just under $28 million.

Looking at 2021, as David hit some of the hotspots earlier, we do expect to ship a total of between 20.4 million tons and 22.2 million tons in 2021; 12.5 million tons to 13 million tons of that will be pure Met flowing through the CAPP-Met segment, will be — approximately 1 million tons to 1.5 million tons of Thermal that will also be going through that segment is kind of tangential or incidental production. For the CAPP-Thermal segment, we’re getting to 1.3 million tons to 1.7 million tons, and 5.6 million tons to 6 million tons of Northern App. The CAPP-Thermal reduction relative to 2019 is part of our ongoing and planned strategic toward — moving toward a pure-play Met company.

Based on the midpoint of our CAPP-Met guidance, the Met-only portion of that is 34% committed and priced at $86.41, with an additional 27% committed but unpriced. The thermal portion of the CAPP-Met segment is 72% committed and priced at an average price of $52.11, and we’re essentially fully committed in pricing CAPP-Thermal and Northern App at $57.17 and $40.43, respectively.

Looking at cost for next year, we expect our CAPP-Met cost to be in the range of $68 to $74, while CAPP-Thermal should come in between $45 and $49 per ton, and NAPP is holding relatively static at $33 to $37 a ton. SG&A, excluding non-cash stock comp and onetime items, is forecast to be in the range of $45 million to $50 million. Also, as you can see from David’s earlier comment, we’re expecting our 2021 capex to be significantly lower than where we were trading in 2020. We expect it to be near a more regular maintenance level of $80 million to $100 million, as most of our growth capex was spent in the past two years, and we don’t have any large near-term projects to address.

Idle operations expenses are expected to be between $27 million and $33 million, as we continue that aforementioned shift away from thermal coal production. Cash interest to come in roughly around between $51 million and $55 million in 2021, while DD&A is expect to be down meaningfully to a range of $160 million $175 million, mostly due to previously announced impairments and writedowns in the second quarter. And finally the cash tax rate should be near zero.

Before we open up the call for Q&A, I want to briefly mention that we still don’t have any meaningful updates from the Department of Labor on our appeal regarding collateral amounts for certain black lung obligations. So really don’t have any updates to share there. However, once something conclusive is determined, we’ll obviously share that information with you.

So with that, operator, we’re ready to open the line for questions at this time.

Questions and Answers:

Operator

I will now begin the question-and-answer session. [Operator Instructions] Our first question today comes from Lucas Pipes with B. Riley Securities.

Lucas PipesB. Riley FBR — Analyst

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. And my first question is on the cost side in your release and your prepared remarks, a couple of drivers productivity, labor cost, sourcing. Can you provide a little bit of a breakdown on that — what these various buckets contributed in terms of dollars per ton vis-a-vis, maybe the third quarter 2019? Just we have a kind of good sense for where the bulk of the savings came. Thank you very much.

Andy EidsonExecutive Vice President and Chief Financial Officer

Hey, Lukas. 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, these 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 dropper is just the amount of tons flowing through the system.

And probably still in a little bit of Jason’s thunder here, if it came up in another question, but when you look at our portfolio from not teen rolling into most of 2020, we had roughly 22 mines contributing to the portfolio. That is continued to shift downward as we’re consolidating production, optimizing outputs, taking higher cost mines out of the system to the point where we get to — probably, the middle of next year, we’ll have gone from 22 mines to 12 mines. So that’s — again that’s reflective of the kind of productivity improvements that we’ve seen really since Jason came on board, just reenvisioning the entire portfolio. So it’s kind of — I’m running around the question to get to the answer, but it’s really driven by the productivity in individual buckets rather than themselves.

Lucas PipesB. Riley FBR — Analyst

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 in — to get to the question, kind of, 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 great to put it mildly, we would be able to put these tons to bed? Thank you very much for that.

Andy EidsonExecutive Vice President and Chief Financial Officer

Yeah. I’ll just hit a brief preface on that before and will let Dan dig into 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. 2020 to 2021, maybe, a slight tick up, but again we don’t have any better information than anyone else out there to go off. The futures are where they are. Everyone is optimistic about getting there, but we just don’t know necessarily a 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 the volumes in total. Naturally we can’t control the price.

But Dan, anything you’d like to add to that?

Daniel HornSenior Vice President and Head of. Metallurgical Coal Sales

Yeah. Thanks, Andy. Lucas, yeah, 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 a little more optimistic that about 2021 as far as the volumes. But where we’re moving the coal right now. We’re move it in Q4. We are 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.

Lucas PipesB. Riley FBR — Analyst

Great.

Daniel HornSenior Vice President and Head of. Metallurgical Coal Sales

So I think we like the balance that we have.

Lucas PipesB. Riley FBR — Analyst

That’s very good to hear. Thank you everyone for the color and continue. Best of luck.

Andy EidsonExecutive Vice President and Chief Financial Officer

Thanks, Lucas.

Daniel HornSenior Vice President and Head of. Metallurgical Coal Sales

Thanks, Lucas.

Operator

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

Mark LevinThe Benchmark Company — Analyst

Yeah, great. And echoing Lucas’ comments, congratulations to the team on a great cash cost performance. I remember it wasn’t that long ago where Met cash cost were in the 90s, and it’s really quite an improvement. Let me ask a couple of questions on cash. So, Andy, in the fourth quarter, I guess, you referenced some confidence you’ll get to $66 million AMT refunds. 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 be mindful off?

Andy EidsonExecutive Vice President and Chief Financial Officer

Yeah, I don’t — hey, Mark by the way. I don’t — I hate to guide to precisely, again just because we don’t know where the market price is going to fall out. It has been so inconsistent, the past couple of months in particular. But I will say the third quarter every year is our heaviest cash burn quarter just because July’s win 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 any specifics of projecting what that looks like, but I think just by virtue of not having those payments weighing upon us for Q4, we should be $30 million to $40 million better all other things being equal.

Mark LevinThe Benchmark Company — Analyst

Plus the $66 million AMT refunds, right?

Andy EidsonExecutive Vice President and Chief Financial Officer

Plus the $66 million, correct.

Mark LevinThe Benchmark Company — Analyst

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 model what those cash call collateral requirements could look like going forward? I know this morning, Peabody disclosed that they had reached a standstill agreement with their surety providers as 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?

Andy EidsonExecutive Vice President and Chief Financial Officer

Yeah. 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 pressure 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 sureties perspective themselves. So it’s kind of hard for these surety guys to go upstairs and ask for permission to even take new bonds or have to justify not requiring higher collateral levels.

So I think by and large, we’re in a pretty good position on our bonds, right now. We do continue to have conversations with our sureties, but we have a very long-standing relationship with the sureties. Most of the book have been with us for many, many years going back to legacy Alpha days. And so — they’ve been partners with us for a long time, and they have been very patient through 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 emerge our benefit.

Mark LevinThe Benchmark Company — Analyst

Is there a way Andy to quantify what do you expect or how to maybe think about it?

Andy EidsonExecutive Vice President and Chief Financial Officer

No. I mean you have to look at any given company’s total bonding exposure, and then if you…

Mark LevinThe Benchmark Company — Analyst

And what is the total bonding exposure now?

Andy EidsonExecutive Vice President and Chief Financial Officer

For us, we are — 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 — sureties probably going to be looking for north of 50% collateral on that kind of a bond. If it’s Met, you’re going to be considerably lower than that. So it’s just 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 pulling 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.

Mark LevinThe Benchmark Company — Analyst

No. That makes sense. That dovetails into something I’m sure you’re not going to — want to discuss. You know I’m going to ask anyway. You referenced ongoing progress with the NAPP asset sale. Maybe your degree of confidence, one 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 of cash neutral transaction?

Andy EidsonExecutive Vice President and Chief Financial Officer

So actually to close out the loop, Mark, it’s kind of partially answers a little bit of your question here. We do — we have roughly $350 million of bonds outstanding. That’s more than just reclamation bonds. That includes workers’ comp, and things like that. But of that $350 million, around $150 million of that is Cumberland. So that kind of feeds into your question now.

Mark LevinThe Benchmark Company — Analyst

Okay. Interesting. Yeah.

Andy EidsonExecutive Vice President and Chief Financial Officer

But the [Speech Overlap] transaction.

On a scale of one to 10, I would probably put our likelihood of getting a deal done at somewhere between one in 10.

Mark LevinThe Benchmark Company — Analyst

No. Okay.

Andy EidsonExecutive Vice President and Chief Financial Officer

So — Again…

Mark LevinThe Benchmark Company — Analyst

That terribly not helpful, Andy. But, thank you very much.

Andy EidsonExecutive Vice President and Chief Financial Officer

Yeah. Mark, it will be more than one, but less than 10.

Mark LevinThe Benchmark Company — Analyst

Excellent. That is the color — that is outstanding color.

Andy EidsonExecutive Vice President and Chief Financial Officer

I like to be really precise on my answer [Speech Overlap].

Mark LevinThe Benchmark Company — Analyst

But how about to the follow-up, which is — if you sold it, and there — buyer actually 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 cash — might transaction involve you actually having to put some cash on it?

Andy EidsonExecutive Vice President and Chief Financial Officer

Yeah. Well, Mark, I think when you look at a 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 a transaction — I mean can you envision a transaction where you could get some cash? Maybe. Can you envision when we get some cash? Maybe. So really, again, I hate to give you a non-answer answer, but there are so many pieces that you can move around to benefit the overhaul enterprise. It’s kind of hard to put a dollar tag to it without knowing all the other pieces in the mix.

Mark LevinThe Benchmark Company — Analyst

Okay. Perfect. Are that [Speech Overlap] I get it. I understand. There are a lot of moving pieces. And my last question is just really is, 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 your 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 in market recently and kind of what the book looks like there over the next three to six months or how you see that market?

Andy EidsonExecutive Vice President and Chief Financial Officer

Go ahead, Dan.

Daniel HornSenior Vice President and Head of. Metallurgical Coal Sales

Hey, Mark. Yeah, I’ll start with kind of 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 — the 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. Yeah, very important customer. They’ve 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.

Mark LevinThe Benchmark Company — Analyst

No, that’s great to hear. Super. Alright. Well, thanks very much for all of the time this morning, and congrats again on the cost performance.

Andy EidsonExecutive Vice President and Chief Financial Officer

Thanks, Mark.

Daniel HornSenior Vice President and Head of. Metallurgical Coal Sales

Thanks, Mark.

Operator

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

David J. StetsonChairman and Chief Executive Officer

Well, thank you very much. Thanks for everyone joining us this morning. Have a great end of the year, and we appreciate so much. Thank you.

Operator

[Operator Closing Remarks]

Duration: 35 minutes

Call participants:

Emily O’QuinnSenior Vice President, Corporate Communications

David J. StetsonChairman and Chief Executive Officer

Andy EidsonExecutive Vice President and Chief Financial Officer

Daniel HornSenior Vice President and Head of. Metallurgical Coal Sales

Lucas PipesB. Riley FBR — Analyst

Mark LevinThe Benchmark Company — Analyst

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