Coretural Resources Inc Stock

Good morning, ladies and gentlemen, and welcome to the Core Natural Resources Incorporated Third Quarter 2026 Earnings Conference Call. [Operator Instructions]. This call is being recorded on Thursday, November 5, 2026.

I would now like to turn the conference over to Mr. Deck Slone. Please go ahead.

Good morning from Canonsburg, Pennsylvania, everyone, and thanks for joining us today. Before we begin, let me remind you that certain statements made during this call, including statements relating to our expected future business and financial performance, may be considered forward-looking statements according to the Private Securities Litigation Reform Act. Forward-looking statements, by their nature, address matters that are, to different degrees, uncertain. These uncertainties, which are described in more detail in the annual and quarterly reports that we file with the SEC, may cause our actual future results to be materially different than those expressed in our forward-looking statements. We do not undertake to update our forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by law.

I'd also like to remind you that you can find a reconciliation of the non-GAAP financial measures that we plan to discuss this morning at the end of our press release, a copy of which we have posted in the Investors section of our website at corenaturalresources.com. Also participating on this morning's call will be Jimmy Brock, our Chairman and CEO; Mitesh Thakkar, our President; Nate Tucker, our CFO; and Bob Bracewite, our Chief Commercial Officer. After some formal remarks from Jimmy, Mitesh and Nate, we will be happy to take questions.

With that, I'll now turn the call over to Jimmy. Jimmy?

Thank you, Deck, and good morning, everyone. During the third quarter of 2026, Core again demonstrated the power of our strategically diversified, world-class highly cash-generative operating portfolio. Indeed, Core has generated robust levels of free cash flow and returned substantial capital to stockholders in each quarter since the company's formation in January of 2025. In short, the expanded Core platform is delivering exactly as intended. We have delivered value to stockholders in a strong, consistent and reliable manner even while navigating the inherent variability of coal markets and the mining process itself.

Underscoring this fact, we have now deployed a total of $450 million in our capital return program since the company's inception, including a total of $90 million in the quarter just ended. As the centerpiece of this program, we have reduced a net total of 5.1 million shares or nearly 10% of shares outstanding in the 7 quarters since the program's launch. Notably, we have achieved that reduction in share count during a period of relative market weakness and during a period when the operating platform had yet to round into form. There is good news on both fronts.

First, Coal markets appear to be shifting into a higher point in the cycle. Second, and perhaps more importantly, the Core team continues to make steady progress toward its ultimate objective of delivering operational excellence on a steady and sustained basis. Both developments have the potential to drive even stronger returns to stockholders in the future. While Mitesh will discuss the Coal markets in more detail momentarily, let me stress that I am confident we are building significant operational momentum even if the normal geologic variability masked that progress somewhat in Q3. I assure you that the Core team remains sharply focused on managing every one of our controllables, tightly and intensively by operating safely, driving continuous improvement, managing consumables with rigor and taking cost out at every turn. In doing so, we are building an exceptional foundation for long-term growth, success and value creation across a wide range of market environments.

With that, I will now turn the call over to Mitesh to provide an operational and market update.

Thank you, Jimmy, and good morning, everyone. As Jimmy mentioned, the market backdrop improved during Q3 but remains slightly uneven across our product portfolio. Of our 3 major business segments, we are seeing the most positive momentum in the High-CV Thermal segment, followed by the metallurgical and the Powder River Basin segments. On the High-CV Thermal side, we continue to see favorable market conditions with stronger Atlantic and Pacific export benchmarks supporting improved pricing opportunities for PAMC and West Elk. Seaborne thermal pricing strengthened meaningfully through the third quarter and into October. This represents a significant improvement from the weaker pricing environment experienced late last year and reinforces our view that high-quality thermal coal continues to play an important role in meeting global energy needs.

Given our access to the seaborne market and the quality of our products, we believe we are well positioned to capitalize on these improving market conditions. In the Metallurgical segment, seaborne markets also strengthened throughout the third quarter, driven partially by continued supply tightness in China. We also saw a potentially meaningful development following the September meeting between President Trump and President Xi where China agreed to import at least 10 million metric tons of U.S. Coal in both 2027 and 2028.

We believe this commitment could create an important additional outlook for U.S. metallurgical coal and further expand export opportunities for U.S. producers. The coal commitment is supported by a proposed tariff reduction framework that explicitly covers coking coal. We also saw positive momentum in the domestic market due to strength in the U.S. steel industry. For 2027, we secured approximately 2.4 million tons of metallurgical coal for delivery to the North American customers at fixed prices averaging above last year's commitments.

Finally, moving to the PRB and High-CV domestic power generation markets, we continue to believe the long-term outlook for U.S. power demand is compelling supported by the expansion of data centers and broader industrial activity. We believe the benefits of this demand growth will be particularly concentrated in the PJM and other Eastern U.S. markets, which is the epicenter of data center build-out.

Looking into 2027, the EIA currently projects commercial electricity demand, which includes data centers, to increase 2.8%, while industrial demand is projected to increase 2.7% in the U.S. That is a notable improvement from a decade ago when the growth rate of electricity demand was forecasted to retreat. We believe these trends reinforce the importance of reliable, dispatchable generation and create a constructive longer-term backdrop for our thermal business.

In summary, Core took advantage of the current market environment to further strengthen our sales position. Since the second quarter, we have broadened and extended our sales book, securing approximately 29.4 million tons of contracted volume through 2031 at attractive prices. This represents approximately 122% of our 3Q '26 sales volume and provides a strong foundation as we move forward.

Now let me make some quick comments on our operations. In a nutshell, our diversified portfolio of operating assets did what it was designed to do. It generated strong free cash flow and allowed us to return a substantial amount of capital to shareholders. The issues we encountered, which primarily affected the quarter-over-quarter performance in the Metallurgical and High-CV Thermal segments, were partially offset by the strong quarterly performance in the PRB segment. Our team in the PRB did an excellent job of managing costs in the face of elevated diesel prices by running efficiently and complementing the marketing team's efforts to increase volumes on a quarter-over-quarter basis.

In the Metallurgical segment, costs were less favorable than in Q2, reflecting typical mining variability. We also had 2 high-priced coal vessels delayed by the late September Nor'easter. Both vessels finished loading in early October, shifting those sales into the fourth quarter. The good news is we will benefit from those higher-priced shipments in the fourth quarter, and our mining rates have now substantially improved as well. As you can see, despite these developments, we continue to track near the midpoint of our full year cash cost guidance range for this segment.

In the High-CV Thermal segment, we also encountered some normal geologic variability and increased input costs at 2 of our longwalls that dampened our quarterly performance. However, we entered into the fourth quarter with strong momentum and are currently mining at rates that may exceed our expectations. In summary, all our operations are now running well, and we are expecting a strong performance in the fourth quarter.

Now let me turn the call over to Nate to discuss the financial update.

Thank you, Mitesh, and good morning, everyone. This morning, we reported solid third quarter financial results. For 3Q '26, we reported net income of $9 million or $0.18 per diluted share and adjusted EBITDA of $165 million compared to net income of $126 million and adjusted EBITDA of $324 million in 2Q '26.

Let me put our third quarter results into better perspective. As a reminder, our second quarter benefited from approximately $125 million associated with the Leer South insurance settlement. When removing that effect, our 3Q '26 adjusted EBITDA was $33 million lower than 2Q '26. However, a part of that was due to a $17 million expense tied to recognizing our 401-K profit-sharing incentive due to our strong year-to-date results. We are now firmly on track to achieve certain incentive compensation free cash flow targets for the full year of 2026, which triggered booking the expense for the amount that was earned as of September 30.

When taking this into account, plus our planned annual summer shutdown in the third quarter, our results were mostly in line with 2Q. From a cash flow perspective, we spent $94 million in capital expenditures and generated approximately $80 million of free cash flow during the third quarter. This compares with $148 million of free cash flow in the second quarter, which benefited from an incremental $50 million in insurance proceeds versus the current period. As a reminder, we are currently recognizing the 45x tax credit in adjusted EBITDA for 2026. However, this should provide an additional source of free cash flow through working capital release in future periods.

From a capital allocation perspective, we had a very active third quarter. During 3Q '26, we returned $90 million or 112% of our free cash flow to our shareholders, which was significantly above the $68 million returned in 2Q '26. As Jimmy highlighted, since February 2025, we have returned 85% of our free cash flow to our shareholders via our capital return program, which includes a net reduction of approximately 10% of our shares outstanding since the program's launch and underscores the meaningful progress we've made in reducing the share count in a short period of time.

At the end of the third quarter, we had total liquidity over $1 billion, including $444 million in unrestricted cash and cash equivalents and short-term investments. This represents approximately a $30 million reduction in cash and short-term investments compared to the second quarter driven in part by our strong capital returns during the third quarter. Even with the robust shareholder returns, we maintained our balance sheet strength and net debt neutral position. Going forward, the strength and diversity of our operational footprint positions us to generate substantial free cash flow through all parts of the commodity cycle, providing significant flexibility in how we deploy capital and create long-term shareholder value.

Now let me provide an update on our expectations for the remainder of 2026. As indicated in today's earnings release, we are adjusting certain sales and cash cost guidance ranges. Starting with the High-CV Thermal segment. We have a total contracted volume of 31.4 million tons remaining near fully contracted for the year. Our average realized coal revenue on the volumes committed is approximately $59 per ton. For SEC cash cost, we are increasing and tightening our guidance to an updated range of $40 to $41 per ton from the previous range of $39 to $40.50 per ton.

The adjustment primarily reflects inflationary pressures that have proven more persistent than previously anticipated, particularly across supply and maintenance costs, power and contractors. In the Metallurgical segment, we added 600,000 tons to our sold position, bringing the segment to 9.3 million coking tons contracted for 2026, with approximately 7.6 million tons priced and an expected average realized coal revenue of approximately $123 per ton. As for SEC cash cost, we are tightening the range from $86 to $91 per ton to an updated range of $88 to $90 per ton.

In the fourth quarter, we have a planned longwall move at Leer and an accelerated longwall move at Leer South due to its strong performance this year. For the PRB segment, our contracted position now stands at approximately 48.5 million tons at an average committed price of $14.28 per ton. From an SEC cash cost perspective, we are increasing guidance to a range of $13.75 to $14 per ton, mainly due to persistently elevated diesel prices. As we close out the year, our focus remains on executing against our operating plans, controlling costs and positioning the company to take advantage of an increasingly constructive commodity environment.

Now let me pass it back to Jimmy for some closing remarks before we open the call for Q&A.

Thanks, Nate. First, we are encouraged by the momentum we saw in the third quarter. We believe the underlying trajectory of the business remains strong, and our teams are intensely focused on execution as we close out the year. In fact, October has already set a positive tone for the fourth quarter with operations off to a strong start and the geology-related variability we experienced in the third quarter now behind us. Second, the market environment has become increasingly constructive. Our marketing team continues to take a disciplined approach to adding commitments, balancing the opportunity to lock in attractive margins today while preserving exposure to further market upside.

Third, we remain highly focused on cost containment. We see additional opportunities across the organization to improve productivity, capture efficiencies from our operating platform and further enhance margins. Cost discipline will remain a major priority as we move into the fourth quarter and into 2027. And finally, we remain committed to disciplined capital allocation. Our strong balance sheet and free cash flow generation provide considerable flexibility as we evaluate opportunities to return capital to shareholders while investing in the long-term value of the business. We believe Core is exceptionally well positioned heading into the final months of 2026 and into 2027. We have a differentiated portfolio of high-quality assets, a talented workforce, substantial market reach and a clear strategy focused on safely maximizing the long-term value of the business. Lastly, I want to thank our employees for their continued hard work and commitment and all of our partners and stakeholders for their continued support.

With that, I will hand the call back over to the operator to begin the Q&A portion of our call. Operator, can you please provide the instructions to our callers?

[Operator Instructions] So first question comes from Lucas Pipes of B. Riley FBR Capital Markets.

For the record, I work at Balyasny Asset Management, there must be something old in the archives. But Nate, congratulations. Lots of earnings going on this morning, but maybe just to start out, curious how the international dynamics are impacting both your seaborne thermal as well as your met coal netbacks. Obviously, TTS in Europe has been very strong, but freight rates are elevated. So if you could maybe speak to netback pricing for your Pennsylvania product in particular, and then also netbacks on the met coal side, that would be very helpful.

Lucas, this is Bob. In Europe, thermal coal pricing has strengthened meaningfully as we move throughout the third quarter and also into October. API 2 benchmark certainly moved higher, and that was supported again by the stronger natural gas price and power prices. And with winter approaching and continued uncertainty around energy supply, we believe that market fundamentals remain supportive for our pricing in near term, both for our PAMC coal and for West Elk. But really, India still continues to be the strong story for us. Petcoke imports are down over 50% year-on-year into India. And even most recently, we've been able to contract volumes into India for the first half of 2027, prices near $80 back to the mine.

So as we move through Q4 and into 2027, we certainly anticipate a meaningful increase in our ASP in our High-CV segment. On the coking side, a lot of similar things happening there. You have U.S. East Coast prices are up, PLV prices are up. We've been successful in placing a lot of our volume in Q4 and beyond also against PLV. So we're going to see the benefit there in Q4 and beyond as well. And then the million-dollar question is China, right? We're certainly seeing a lot of interest there over the past month, and we're certainly going to play in that market should that ABR open. When you look at where PLV CFR China prices are today and you take away freight, it's still better than what U.S. East Coast prices are. So if that continues, I think we'll certainly participate there as well.

And Lucas, as you already know, I think we have a very strong operating platform with a lot of products. So we are exposed to a lot of these tailwinds. And some of our products like the PAMC product in the High-CV Thermal segment can strand multiple markets, whether it's the industrial market or metallurgical coal market, crossover market in China, as Bob mentioned, as well as the domestic power generation market. And we try to make sure that we are getting the best arbitrage for our products. So very excited about what the market has and hold for us and looking forward to '27.

That's helpful. And then on the cost side, obviously, pressures from steel would expect some other inputs to lithium prices for or tungsten rather for the mining units. Can you speak to kind of what you see in Q3 cost as kind of inflationary raw material pressures versus the mix in terms of different mines contributing more or less to the sales.

Lucas, you hit on some of them. I mean, tungsten for sheer bits and minor bits has certainly played a big part of it as well as diesel fuel on the cost side. But then you look at some of the like we said in the earnings script, some of the geologic variabilities that we had, we had 3 of our longwalls affected by some of those. So I think it's just primarily mining. We'll handle that side of it. We know how to do it. But some of these inflationary pressures when you start looking at the cost of diesel, the cost of minor bits, some of those things are the things that we can't control that we have to find efficiencies or some other way to offset those.

And Lucas, if you look at our guidance also, we are expecting improvement at the midpoint of the guidance range on a sequential basis in Q4 versus Q3 as some of the geological issues are behind us. So I think, yes, the inflationary pressures are real, but there are some operating indicators that we are also noticing that makes us more optimistic for Q4 versus Q3.

Our next question comes from George Eadie of UBS.

Bob and Mitesh, just building on Lucas' first question there. What percent of the High-CV book is contracted for '27 and '28? And can you maybe help us with the sort of average price of those tons at the moment as a group considering West Elk blended in as well?

So George, we announced this morning, we concluded or contracted 29.4 million tons. That runs through 2031, but 2027 specifically was just around $16 million. And on the High-CV side, we added about another $6 million. So sitting here today, we're roughly about 70%, give or take contracted. And the price direction is certainly higher year-on-year. I think you heard me say that we did conclude some volume pretty close to $80 for the first half of 2027. So I would say sitting here today, you're looking at a very similar level that we're anticipating in Q4, which is that $62, $63 type level with what we have committed, and we certainly have a lot of potential upside there as we have, call it, 25% to 30% left of our volume to sell, which majority of that is PAMC tons.

And then just back to this China stuff as well, this 10 million tons potential. Can you talk us through the opportunity for you guys here? Like I know you're probably selling or are selling some into China. But if that tariff went, how much are we talking and also crossover PAMC tons? Like if I was to guess, say, 3 million tons or 4 million tons per annum of PAMC crossover and the same of Leer, is that reasonable as sort of a guess if that tariff goes?

So if you look back to 2024, CONSOL moved about 4 million tons of PAMC, Arch moved about 1 million tons of Leer. So you know that's -- I'd say the potential is there to move that -- at least that, if not more. But obviously, we're going to wait to see what this looks like once the tariff reduction, assuming it happens, and we'll place the tons where we get the best value. At PAMC, I'd sit there and tell you today, India still makes the most sense for us based on where those netbacks are. But as I just mentioned, if you look at where CFR PLV prices are into China and take away where freight is today, that market certainly looks a lot more attractive than selling on an East Coast -- U.S. East Coast basis. So when the opportunity arises, we'll take a look and see where things are and make the best decision forward for the company to maximize our revenue and realizations back to the mine.

Okay. Could you probably next year even push, call it, another 1 million tons out of West Elk? Could you run PAMC a little bit harder as well to feed into all these markets? Or do you still sort of view it more as a game of selling a bit less domestic and exporting the rest?

No I think there's definitely an opportunity for us to push more West Elk coal. We have it running on a schedule now. Again, logistics is a big part of what we do out there, but we certainly will have an opportunity to move more of the West Elk coal.

Next question comes from Nick Giles of B. Riley Securities.

Just wanted to touch on shareholder returns. They were obviously strong here in 3Q. And so first of all, what would working capital look like in the fourth quarter? And just how should we think about the likelihood for this level of buybacks to repeat?

Yes. So I'll start, Jimmy. Hey this is Nate, Nick. So on the working capital, yes, we did build some trade AR in the quarter, and Mitesh kind of talked about in his prepared remarks that we had some vessels kind of slip into the fourth quarter. We also -- the other thing I'd point out is trade AR is also moving up, too, just for the fact that met coal pricing in particular, and thermal as well, but pricing is moving up. So our trade AR is moving up because of that. So I think once we get on a kind of a normal churn there, there could be some release as well. I think we built about $40 million, as I said, in the quarter. So there's a potential for that to kind of move around. Now we're always going to have shipments that can move around. Sometimes these is days at a time. So you're talking just a day at the end of the quarter it can move. But at least those shipments that happened at the end of the September into October, those will certainly release as well.

And Nick, this is Jimmy. As we generate more free cash flow, we'll certainly have some opportunities. As we said, we've been very disciplined about that. We said we're going to return at least 75% of our free cash flow back to shareholders in the form of repurchasing shares as well as a small dividend. And we've done that. If you look at Q3 here, we're around 112% of free cash flow to that. And the market is certainly providing us some opportunities to go on the upside of buying back shares currently where we are today.

Understood. And then maybe just on freight and demerge. It seems like that has been impacting producers across the board. Can you just speak to kind of the sensitivity of that if we were to see freight rates kind of moderate, how dollar for dollar for that is it in your sales realization?

So we do a lot of our business on FOB, Nick. So I mean, we do have some exposure. We do sell some cargoes on a CFR basis. But again, it really does move with the index, although recently, I'd say you've seen freight come off pretty significantly. I mean we're seeing freight rates in the 50s to India today. I'd say they're closer to lower 40s. So again, it's -- I'd say it's just more noise than anything. And as far as demerge is concerned, it's kind of a normal course of business. That's why we try to do everything we can to make sure that the coal is placed at the terminal in preparation for the vessel loading. So therefore, we can minimize that. But demerge rates are up. That's certainly the case. And that all started obviously with the tightness because of the straight being closed. But overall, we just view that as kind of a normal course of business.

And sorry, maybe just to ask more clearly, if we were looking at freight rates and we did see them come down, say, $10 a ton. Is there a good rule of thumb that you would apply to kind of total net realization similar to the way that you provide sensitivity for movements in API 2?

Yes. I'd say it's not that significant because, again, majority of our cargoes that we do sell is on an FOB basis.

Next question comes from Nathan Martin of StoneX.

You mentioned in your release and your comments as well, you committed now, what, 2.4 million metallurgical tons in the domestic market at a higher year-over-year price. Can you give some more details there around that pricing and quality of those tons and then you expect an opportunity to sell any additional domestic tons for '27?

So Nate, I think we mentioned this morning, again, 2.4 million tons for '27. Those tons are priced roughly about $4 or $5 higher year-on-year. But I would say what's very encouraging for us is that volume includes a 50% increase in our High-Vol B tons compared to last year. So the 2.4 million gives us a solid base load of committed volume, what we would call attractive pricing as we enter 2027, while certainly leaving meaningful tonnage available to capitalize on opportunities in the export market as well.

Okay. I appreciate that, Bob. And then I also wanted to ask about High-CV Thermal realizations during the quarter. They were down $1.50 sequentially, obviously, in a market that was getting stronger. So maybe can you kind of walk us through the drivers there? And is it fair to assume that realizations improve in the fourth quarter, especially given the current pricing backdrop?

So the big driver there was really the mix of tons. So West Elk was probably 7% to 8% higher than what traditionally was in terms of the total mix. We believe that will kind of solve itself in Q4 as PAMC continues to ratchet up their -- or to ramp up their production. So if you look at where we -- our guidance that we gave this morning on pricing at $59 for the year, that basically implies a $62 to $63 price in Q4. That, again, is a reflection of more PAMC volume, but also being able to capitalize on some of the higher priced volumes that I mentioned earlier. And if you recall, we have about 31.4 million tons of committed volume in the High-CV segment, which isn't even to the bottom range of our guidance. So it gives us some ability to sell some additional tons. So our view is that Q4 should be meaningfully higher in terms of ASP in the High-CV Thermal segment quarter-over-quarter.

Got it. And then maybe just one more. I understand it's mining, but I think you've now had a couple of geological challenges in that ICD thermal segment this year. And Jimmy, I know you said you're continually focused on cost containment. So do you think this gives you guys an opportunity to improve cost per ton in '27 for that segment?

It certainly does. I mean, if you look where we are, Nate, you've heard me say this many times before, what we try to do is try to stay below the inflationary pressures by picking up efficiencies or running more tons to do that. There are times when you have some of these variabilities. And it is just mining. I mean you'll have these geological conditions where you have sandstone, you have to try to mine under or you'll have some other lower seams or things like that, that cause that. But looking forward, I can tell you, we're off to a great start in Q4. I mean October has been a normal good month for us as we continue to go in Q4 and carry that momentum into 2027, I think we'll have an opportunity to improve on those cost structures in all our segments across it. Q3 has typically been a quarter for us. It's not our best quarter. But I think we're going to come out.

And if you look at our guidance, as Mitesh mentioned a minute ago, we're thinking if you look at the met side, look at the midpoint of the guidance, we should be somewhere around 86 by the midpoint. And then if you look at thermal, we'll try to do exactly the same continuing on cost. It's one of the things that we focus on every single day to look for ways to improve it and overcome some of the inflationary pressures we have.

Question comes from Chris LaFemina of Jefferies.

I just want to understand the geological issues that you encountered in Pennsylvania in a little more detail. And what I'm wondering, first of all, is did you know that this was going to be a potential risk in the quarter? Or do you encounter these things sometimes without having knowledge that they're coming? And the reason why I asked that question is because how do you incorporate the risk of geological issues such as these in your forward guidance? I mean I understand that you kind of came out of the tough geology at the end of the quarter and things seem to be going better today. But what gives you confidence that you're not going to enter another difficult pocket in early 2027? And what sort of visibility do you have that these sorts of things are approaching?

Very great question, Chris. So we know like when we have a lower seam for an example, we know that because of our Core holes and things we drill. So we'll drop our tons per foot to account for that. Sometimes what we don't know when we talk about geologic variabilities is like if you have an unplanned roof fall that would shut a belt down whereas you carry that out or if you have some sort of sandstone that you typically can't mine under. Unfortunately, for us, 3 of our longwalls encountered that 2 of them were in PAMC in this quarter. We've encountered them before. We've got out of them quickly, but this time took a little longer. And what we try to do is run the remaining longwalls harder to whereas we don't see as much of this in the effect of the production.

However, I will tell you, we had 2 of our PAMC longwalls that encountered these conditions at the same time, which makes it much more difficult. And there's an increase in cost just to provide the tons to get those. So what we know we always plan for, and it is mining. I've been doing this for part of 5 decades. They are things come up that you just can't map. For an example, if we have bad roof conditions somewhere and we know it in time, yes, we can do things to supplement support and get around that. But again, if it's an unplanned fall or something that happens, we're very fortunate no one is hurt, and we just go take care of that, get that longwall back up and operating as quickly as we can and try to overcome all the costs we had associated with it.

So when we think about what your guidance will be for 2027 and years beyond, should we assume that the risk related to geological challenges is reflected in the guidance already? Or is that the guidance that is basically the possible but not necessarily the probable if you know what you mean? Is there downside risk in the guidance because of potentially be surprised with these sorts of geological issues? How do you think about it in the guidance?

No, I don't think you'll see it. What you will see is if we have like all of our projections into 2027, as I said before, the areas where we have the sandstone, we have that all mapped out. Our geologists know that. We'll slow the rates down to account for that. What I can't guarantee you or I don't think anyone can is that we will have something unplanned that happens, some sort of geology that shows up that you just don't know about until you get there with the longwall here, you find it or you have adverse roof conditions that slow down mining rates that you have to go through. But I think we've done a pretty good job in the past and all the years where we've had these things that we pretty much account for what we can. But again, it is mining, and you can get surprises along the way. But in our forecast, we try to take that into account for everything we know and as much as we possibly can.

And Chris, just to add to it, as Jimmy said before, too, right, like oftentimes, what ends up happening, we have had these issues in the past. But when you have issue at 1 out of 5 longwalls, the other 4 compensate for it and you don't notice it, right? We meet our numbers, we meet our guidance and move on, right? This one was a little bit unusual in the sense where we had it at multiple locations, right? So it became more prominent, and that's why we are talking about it. But it's general mining variability, right? Like this is mining, not manufacturing. So things happen, but most of the time, given our diversified platform, it doesn't come to Core.

And Chris, I'd add that we started the year with guidance at $88 to $94. And right now, we're guiding to $89 at the midpoint. So you can see that we expect that sort of natural variability and we build that in. Again, you can see it this year. We've actually reduced from the beginning of the year down to a midpoint of $89.

Question comes from Matthew Key of Texas Capital.

A few analysts have already asked about seaborne thermal business. So maybe I'll shift gears to the domestic side. Some softer years for coal burn and natural gas prices are low. How has the demand environment kind of held up in that context? And at a high level, how should we be thinking about total shipments in the PRB as we look out to '27?

I'd say it's based on geography. In the PJM, I'll say, where we sell most of our PAMC sequel, it's actually been fairly consistent. In fact, I'd say, in recent weeks, we've actually seen a pickup in burn. Power prices are still pretty healthy, albeit very low natural gas prices, sub-3. But I think, again, it just goes to show the electricity demand growth that there is in the PJM.

In terms of most of our customers out West for our PRV product, I mean, you probably noticed we had a significant pickup in volume over 3 million tons quarter-on-quarter, Q2 to Q3. We expect that to remain very consistent as we move throughout Q4 as well. And we're basically looking at a very similar, I'd say, a year-on-year type of sales view for 2027 as we did for 2026. We're sitting here at a very healthy contracted position for 2027, give or take 40 million tons in the PRV today with a lot of opportunities ahead of us. So which gives us some pretty good confidence here that, again, another call it, 48 million to 50 million tons of sales for 2027 is in our future.

Matt, I would just add, look, this is the third year in a row we've had power generation demand nearly 3%. We expect that to continue going forward. Look, so far this year because of low natural gas prices, coal burn is down around 20 million tons, but it was up 40 million tons last year. So still on balance relative to '24, we're on a good trajectory. So we're still feeling positively about that. We continue to see utilities announce investments in their existing coal plants and try to bring out additional electrons from their existing systems. So the story still feels very much intact, even though we've had a dip this year in terms of coal consumption in the U.S.

Got it. That's super helpful. And I guess I'll ask a pretty broad macro question. But we had the midterms on Tuesday. Could there be any potential impact on your business, either directly or indirectly kind of from the results of that? Obviously, the current administration has been highly supportive of the industry, and they're still in office. But just due to the big shift in the Senate and the House, any kind of moving parts that you think could kind of play out as we progress through the coming months?

I think you've heard me say this before. What we try to do is we try to build our company to as we can withstand any administration. We're smart enough to know that they're going to change from election cycle to election cycle. And then also from a political standpoint, we want to be able to withstand all the regulations that come out as well. So I think no doubt about it. We had an administration that was very favorable, and they were openly talking about the benefits of coal. But I still remain really focused on the fact that we're still going to need the power. If it does increase 3% as everyone is projecting it will or 2.5%, as we say, then they're going to have to have all the sources available to meet the power needs. So I still feel really good. Obviously, we'll see what happens here. We won't know until January. And obviously, we have President Trump in for another 2 years. But we'll stay tuned and we'll respond accordingly.

There are no further questions at this time. Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.

Good morning, ladies and gentlemen, and welcome to the Core Natural Resources, Inc. Second Quarter 2026 Earnings Conference Call. [Operator Instructions] This call is being recorded on Thursday, August 6, 2026. I would now like to turn the conference over to Deck Slone, Senior Vice President. Please go ahead.

Good morning from Canonsburg, Pennsylvania, everyone, and thanks for joining us today. Before we begin, let me remind you that certain statements made during this call, including statements relating to our expected future business and financial performance, may be considered forward-looking statements according to the Private Securities Litigation Reform Act. Forward-looking statements, by their nature, address matters that are, to different degrees, uncertain. These uncertainties, which are described in more detail in the annual and quarterly reports that we file with the SEC, may cause our actual future results to be materially different than those expressed in our forward-looking statements. We do not undertake to update our forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by law.

I'd also like to remind you that you can find a reconciliation of the non-GAAP financial measures that we plan to discuss this morning at the end of our press release, a copy of which we have posted in the Investors section of our website at corenaturalresources.com. Also participating on this morning's call will be Jimmy Brock, our Chairman and CEO; Mitesh Thakkar, our President and CFO; and Bob Braithwaite, our Chief Commercial Officer. After some formal remarks from Jimmy and Mitesh, we will be happy to take questions. With that, I'll now turn the call over to Jimmy. Jimmy?

Thank you, Deck, and good morning, everyone. The results of the second quarter were a testament to the continued execution of our strategy, and we are pleased to report a significant step-up in our financial performance. We worked diligently with our insurance partners to settle the Leer South insurance claim for the full limits loss, complementing our strong operational results. Across the operating portfolio, we delivered a solid performance and are beginning to demonstrate what our full operating platform is capable of. With the insurance claim now behind us, we are singularly focused on the disciplined execution of our core business.

We continue to prioritize safe, efficient operations, maintaining strong customer relationships, optimizing our cost structure and allocating capital in a way that supports long-term shareholder value creation. Now let me dive into our operational results. Coal sales within the HCV thermal segment came in at 8.4 million tons in Q2 '26 compared to 7.7 million tons in Q1 of '26. During the quarter, our HCV thermal segment reported realized coal revenue of $58.11 per ton compared to $58.86 per ton in the previous quarter. In Q2 '26, cash costs came in at $38.58 per ton compared to $42.56 per ton in Q1 '26.

Segment cash costs benefited from significant tailwinds as mining conditions improved, sales were favorable and power costs begin to normalize. Adjusted EBITDA for the segment totaled $165 million, which compares to $126 million in the first quarter of '26. In the Metallurgical segment, coking coal sales came in at 2.3 million tons in Q2 '26 versus 2.1 million tons in Q1 '26. During the quarter, our metallurgical segment reported realized coking coal revenue of $121.43 per ton. The segment as a whole, including 300,000 tons of thermal byproduct sales achieved an average selling price of $114.13 per ton.

Cash costs for the quarter came in at $85.65 per ton, nearly a $7 per ton reduction quarter-over-quarter, reflecting ongoing improvement and execution at our flagship longwall mines. Adjusted EBITDA for the segment was $200 million, which included insurance-related proceeds of $125 million. In the Powder River Basin segment, coal sales came in at 10.2 million tons in Q2 '26 compared to 11.9 million tons in the previous quarter. The lower volumes were a function of weak demand during the spring shoulder season exacerbated by low natural gas prices. Importantly, however, we view the reduced quarterly volumes principally as a timing issue.

We have more than 50 million tons of PRB coal committed for delivery in 2026 and expect to either ship those tons this calendar year or conversely to capture or even enhance the full value of those commitments via other mechanisms such as blend and extend initiatives. In addition, we continued to build pit inventory during the quarter, which should serve to enhance operating margins in the year's back half. For the second quarter, our PRB segment reported realized coal revenue of $14.28 per ton and cash cost of $14.85 per ton. Moving to the Core Marine Terminal.

The CMT shipped 5.2 million tons during the second quarter compared to 4.8 million tons in Q1 '26. CMT reported $18 million in adjusted EBITDA in Q2 '26, which was increased compared to the $16 million in the previous quarter. We had another strong quarter from a shareholder return perspective as well. As you know, our capital return framework targets the return to stockholders of around 75% of free cash flow with a significant majority of that total directed to share repurchases. During Q2 '26, we returned $68 million to shareholders, which was a substantial increase from $47 million in Q1 of '26.

Since the program's inception in February of 2025, we have returned over 80% or $360 million of our free cash flow to shareholders via our capital return program. Of that total, $329 million has been used to repurchase approximately 8% of the company's shares outstanding as of the program's launch. As indicated, we believe the stage is set for a further step-up in capital returns in coming quarters. Before handing the call over to Mitesh, let me highlight one additional positive development. This one involving Core Innovations.

Recently, the innovations team was selected for a grant from the U.S. Department of Energy to construct a pilot scale facility for the extraction of rare earth elements and critical minerals at the Pennsylvania Mining Complex. This announcement underscores Core's ongoing progress in developing innovative technologies that unlock greater value from the coal supply chain while advancing areas of national strategic importance. It follows an announcement made earlier this year in which Northrop Grumman named Core Touchstone Advanced Composite Group, a key supplier of tooling and components for the Talon Blue collaborative combat aircraft. Now let me turn the call over to Mitesh to provide the marketing and financial updates.

Thank you, Jimmy, and good morning, everyone. Let me start by providing an update on our financial performance first. This morning, we reported solid second quarter financial results. For 2Q '26, we reported net income of $126 million or $2.51 per diluted share and adjusted EBITDA of $324 million compared to net income of $21 million and adjusted EBITDA of $180 million in 1Q '26. These results were driven by strong operational performances from our HCV thermal and metallurgical segments as well as the recognition of incremental insurance proceeds related to the limits loss settlement of our Leer South insurance claim.

During the quarter, Core generated $148 million in free cash flow, which included the receipt of $88 million of cash associated with the total Leer South settlement. The Leer South insurance claim was settled for $155 million in aggregate, of which $125 million was recognized in EBITDA in Q2 and approximately $30 million was recognized in previous quarters. All outstanding receivables at the end of the second quarter associated with the Leer South claim were collected by the end of July. In addition, 2Q working capital was inflated by an increase in inventory value as well as a 45X tax credit accrual that should provide a tailwind in future periods.

At the end of second quarter, we had total liquidity of $1 billion, including $474 million in unrestricted cash and cash equivalents and short-term investments, which reflects an increase of $81 million in liquidity compared to the first quarter of 2026. Before transitioning to a discussion of our marketing efforts, I'd like to take a moment to extend my sincere thanks to our insurance partners and broker as well as the Leer South and corporate teams for their dedication and collaboration in successfully closing out our Leer South insurance claim. Our insurance partners worked efficiently and diligently throughout the process, and we greatly appreciate their responsiveness, thoroughness and commitment to finalizing this matter in a timely fashion. Their collective efforts were instrumental in achieving a successful resolution, and we are pleased to be turning the page on last year and directing our focus towards the future.

Now let me update you on the coal market dynamics and the efforts of our marketing team. On the metallurgical front, macroeconomic factors stemming in part from the ongoing hostilities in the Middle East continue to weigh on global steel production and in turn, global coking coal demand. Despite these near-term headwinds, we view the long-range outlook for metallurgical markets as promising due in large part to continued industrialization, specifically in Southeast Asia and India. That region continues to add new blast furnace capacity at a rapid pace and is expected to remain on that trajectory for the foreseeable future.

Think about it, almost everything necessary for industrialization requires steel from buildings to roads to bridges to power stations and to data centers. That's the principal reason why the World Steel Association is projecting a resumption in global steel growth in 2027 after several years of contraction. In the domestic thermal market, coal demand was impacted by low natural gas prices, elevated customer stockpiles and seasonal weakness associated with the spring shoulder season. At the end of June, domestic coal burn was down approximately 10% year-to-date versus 2025. However, with coal generating units returning from planned outages and recent hot weather driving power demand, conditions are setting up for a stronger back half of the year.

While low natural gas prices continue to weigh on incremental spot demand, volumes are anticipated to increase meaningfully, supported by improving customer demand and increased rail set availability. This is expected to provide a particular benefit to our PRB segment as reducing in-pit inventory should result in lower cash cost per ton. Longer term, utilities continue to evaluate extensions to coal plant operating lives with several utilities also revising integrated resource plans to retain coal in the generation mix. The latest PJM capacity auction reinforces the increasingly favorable fundamentals for U.S. power generators.

Elevated clearing prices reflect robust electricity demand from data center growth and industrial reshoring, which continues to outpace additions on dispatchable generation. As reserve margins tighten, the value of existing thermal generation assets increases. At the same time, federal funding through the Defense Production Act and other recent policy initiatives is providing support for planned upgrades. These dynamics highlight an increasingly supply-constrained power market where reliability has become a strategic priority.

In the international thermal market, uncertainty surrounding conflict in Middle East and the disruption of LNG shipments to the Strait of Hormuz continue to drive market volatility. The resulting reduction in global LNG supply has created significant dislocation in international energy market and increased price volatility across competing fuels. Due in part to these dynamics, the International Energy Agency's latest forecast is projecting a 2% increase in coal-fired generation globally in 2026. In addition, potential disruptions to pet coke supplies from the Persian Gulf would persist for an extended period, which could benefit our HCV thermal sales into the Indian cement market.

Longer term, global power demand is projected to grow substantially. The IEA expects global electricity demand to grow 3.6% a year through 2030, and this growth is expected to stress grid stability around the world. In addition, fundamentals in India remain strong, supported by cement demand growth as the country continues to invest in infrastructure, housing and construction. Despite the current volatility, our marketing team has made meaningful progress broadening and extending our sales book since the first quarter, securing approximately 16 million tons of contracted volume through 2030 at attractive prices. Now let me provide an update on our expectations for the remainder of 2026.

On the guidance front, we are adjusting our cash cost and sales guidance levels as indicated in the earnings release. In the HCV thermal segment, we added 2 million tons to our sold position for 2026, bringing our total contracted volume to more than 31 million tons, reflecting continued strength in the demand for our high-quality product. The HCV Thermal segment is now nearly fully contracted with average coal revenue on the committed volumes of approximately $58 per ton. As for the SEC cash costs, we are increasing guidance by $1 to a range of $39 to $40.50 per ton due to stickier than previously expected inflationary pressures driving supplies, maintenance and service costs.

In the Metallurgical segment, we added 400,000 tons to our sold position, bringing the segment to 8.7 million coking tons contracted for 2026 with approximately 6 million tons priced at an expected average coal revenue of approximately $121 per ton. As for the SEC cash cost, we are lowering our guidance by $2.50 at the midpoint to a range of $86 to $91 per ton. This decrease is a testament to our continued focus on driving best practices at our metallurgical operations as well as strong performances from our longwall operations. For the PRB segment, our contracted position now stands at approximately 50 million tons at an average committed price of $14.27 per ton.

From an SEC cash cost perspective, we are increasing guidance by $0.25 to a range of $13.25 to $13.75 per ton, mainly due to persistently higher diesel prices than previously anticipated. Now let me pass it back to Jimmy for some closing remarks before we open the call for Q&A.

Thanks, Mitesh. As we transition into the second half of the year, we remain sharply focused on driving operational excellence across the entire mining platform. While we have made good progress on this front during the past 2 quarters, we expect to continue to build on our recent momentum. Looking ahead, we remain concentrated on 3 main priorities for the remainder of the year. First, establishing Core as a world's premier global coal producer while operating in tight alignment with our core values of safety and compliance, continuous improvement and financial performance. Second, driving strong and improving capital returns in the current soft market environment while laying the foundation for truly exceptional returns as coal markets rebound.

And third, capitalizing on the compelling long-term market opportunities that lie ahead, including resurgent U.S. power demand, tightening global energy markets and an ongoing infrastructure build-out in the developing world. In short, we are preparing Core to succeed on all fronts. As always, I want to thank our employees for their hard work and efforts in helping us deliver a strong quarterly performance. With that, I will hand the call back over to the operator to begin the Q&A portion of our call. Operator, can you please provide the instructions to our callers?

[Operator Instructions] Your first question comes from George Eadie from UBS Financial.

Good result here. Mitesh, maybe just on the HCV segment, Bob too, like what price are you getting for 2027 tonnes placed today? And can you also remind me perhaps what percent of HCV is contracted next year? And I guess, as a consolidated basis, like is $60 a tonne about the right level to start thinking for next year there?

Yes. So George, just to make sure we're clear, the HCV segment has PAMC and also our West Elk product in there. So when you look at next year, we're more than 50% contracted sitting here today. We have been successful in locking in some volumes against API 2 indices when they rose most recently into Europe for our West Elk product. And then we also were able to lock in some tons with PAMC as well into India, most recently even for 2027. The India tons today are in that $60 range, as you mentioned. The West Elk tons, I'd say, are more in the upper 40s to low $50 type range. But again, when you look at what the balance is, PAMC, obviously, at 27 million tons, West Elk at, call it, 5 million to 6 million tons. Your average realization is in that upper 50s to low 60 range.

Okay. No, that's helpful. And then the thermal byproduct like there's a bit of variability there, $55 a tonne is 30% higher quarter-on-quarter. Can you maybe help us how to best forecast this? Is 55 the right level? Or is it more sort of mid-40s like prior periods?

So right now, again, it really depends on what the export market is. We're using a lot of that byproduct to blend in with our HCV mix. So as API2 prices are higher, you're going to realize a higher netback for the byproduct as well. So again, it's not a perfect number, but I think you'll -- for at least the balance of this year, I would expect it to be in that $50 to $55 range.

Okay. Great. Just last one, if okay. DTA, like what are the impacts to you guys there? And what's the latest you're hearing?

Yes. George, this is Mitesh here. So on the DTA front, I think we are 35% owner in DTA. So the impact to us is relatively small. But if you think about it, our marketing team has done a pretty good job. And if you look at our guidance ranges, we were able to move things around to manage the impact on us. There's still impact associated on the cost front with respect to the damages to the equipment and stuff. The good news is DTA does have insurance, which they are going to pursue. But generally speaking, we are managing the impact from DTA.

Next question comes from Nick Giles from B. Riley Securities.

Just wanted to really ask about kind of obviously, nice job on costs here in 2Q. And so I just wanted to ask first on the met side, kind of how to think about the cadence of costs for the back half of the year. 2Q was below the low end of the range. So should we expect cost to kind of stay towards that low end? And then similarly, on the volume side, kind of what would take us towards the low or the high end?

Nick, I think as you look at the cost structure, of course, we've worked really hard on costs, putting in different schedules and doing different things. But I think we're seeing the benefit of that. It's definitely sustainable on where we are, and we're certainly looking for ways to improve that. So when you look at the nearly $7 improvement that we had on cost, that's a lot of those things that put in play. We had some production improvements there. And then as we move forward, looking into other things that we can do, get by the longwall move, we got Leer over into the north now where we wanted them. So I expect to sustain where we are and maybe even improve on that going forward. Now there could be volatility quarter-to-quarter. But in general, I think we're in a pretty good place as where we are today on the [indiscernible].

Great. And then maybe just switching gears to capital returns. You obviously had some nice cash inflows, thanks to the insurance reimbursements, but there was a working capital build. So just how should we think about kind of the cadence of share repurchases throughout 3Q and 4Q?

Well, I think as you look at that, obviously, we got a lot of the insurance money in late in Q2. So going forward in Q3 and Q4, I think you can expect us to have a heavier share buyback percentages as we use that cash going forward. And we'll stick to our plan of generating 75% of our free cash flow back to shareholders. But you certainly can expect a higher number when you look in Q3 and Q4, just by the cash buildup we have on the balance sheet. So we're certainly going to return a portion of that back to the shareholders.

And just to add to that, on the insurance front, there's about $38 million that we are collecting in Q3 here. As of now, most of that is collected. So that should help. Plus there's also a little bit of an excess inventory at the mines, which roughly, let's call it, about $40 million. And then also, just to remind everyone, we also have 45X credit that is building as working capital. We'll get that next year. Year-to-date, we have about $25 million in 45X credit that is also inflating that working capital. So when you add all those pieces together, you're close to like $75 million to $100 million of swing that could happen on the working capital. The 45x credit will be next year, but vast majority of that we expect to flow this year.

Your next question comes from Nathan Martin from Benchmark Company.

Mitesh, just kind of sticking with the balance sheet for a second. You mentioned liquidity over $1 billion, cash close to $0.5 billion. What's kind of a comfortable target for those metrics because I'm assuming you guys are okay with that coming down a little bit, just as we think about what else might be available for shareholder returns.

Yes. So Nate, if you just think about what we have said in the past that we are -- we try to maintain a net debt-neutral balance sheet. But if you look at, for example, last quarter, we were a little bit under. I don't mind going a little bit on the leverage side. So just quarter-over-quarter, there was almost like a $70 million swing in our net cash position. So that's kind of a rough guide. Now if our share price provide us an opportunity to be more aggressive, we have a balance sheet and liquidity to support that as well.

Got it. Appreciate that. Maybe a question for Bob. Bob, when we look at the revised 31.5 million to 33 million ton guidance for the high CV thermal segment, what's the split there between PAMC and West Elk? And then can we get an updated breakdown of the $30.9 million committed price?

Yes. So when you look at the full year, you're looking at roughly 26-ish million tons of Bailey balance then would be West Elk to get to the higher end of the guidance. Obviously, we'll try to run Bailey harder to get to that 27 million ton level like we did in 2025, assuming the market is there. I feel pretty comfortable right now. We're starting to see some strong demand out of India as monsoon nears its end and inventories among the stock and sale trade certainly remain at low levels, and we're receiving inquiries on a daily basis. So it certainly puts us in a good position to try to maximize the total volume out of the PAMC complex.

But sitting here today with what we have contracted of the 30.9 million tons, 15 million in the back half of that would be PAMC and 3.3 million of that would be West Elk. And we have about 2.4 million tons still linked to API2 for the back half of the year, Nate. We're modeling in $110 price of API2 to get to that $58 number that we provided in our guidance. But the sensitivity there is about $0.08 a ton. So when you look at July, July API2 price was $1.20, so we certainly have a tailwind working for us that direction. And if it continues to stay strong, that certainly will help.

Okay. Great, Bob. And then just while I have you, shifting over to the met side, consistently weak, right, high-vol markets there. How are they impacting realizations? What efforts have you been successful using to help lessen that impact? And then what do you think improves that market?

Yes. We've certainly seen PLV come off from its highs in the last month. However, we believe a lot of that is seasonal. Again, India in its monsoon season. But we expect that -- and the forward curve even shows today that prices are expected to improve as we move throughout the back half of the year. You talked about the pricing and the spreads between PLV and HVA. Looking at the first half, I'd say most -- almost all producers were virtually running their mines at full capacity. But given the market conditions, we do believe higher cost production will begin to exit the market, which will tighten high-vol supply and provide some support for higher prices going forward.

Additionally, we believe the seaborne met market, specifically into our core markets, which would be Brazil and Europe are poised for recovery. You probably saw just last week, Arcelor did announced that they're restarting 3 blast furnaces. -- on the expectation that European steel markets -- or European steel imports will drop about 45%. So again, that's giving us some confidence. But we certainly have seen an increase in High-Vol A in the markets, but we've been successful with our premium product to get that placed not only in the Atlantic markets, but also in Pacific markets against PLV. So when you look at the back half of this year, we have about 4.3 million tons contracted for the back half, of which 2.7 is indexed, of which 30% of that is linked to PLV. So again, I think that you'll continue to see good pricing out of us for the back half of the year.

Nate, it's Jack. And I'll just add, as you noted, look, we've had some high-vol A production come back into the market or in the case of mine come into the market, about 5 million tons in the first half. But actually, for all the other mines in the U.S. system, we saw a decline of about 3 million tons. So there is a counterbalance there. We are seeing supply come off. This is a challenging market for a lot of folks. I think we've seen some guidance come down suggesting again that this is pretty tough sledding out there. I would also add that while we talked a lot about new blast furnace capacity in Southeast Asia, those numbers just keep getting bigger.

So if you look today right now in terms of new blast furnace capacity expected to be added by around 2030, it's 185 million tons. It's a huge number. And even if you haircut that, that's going to be a big drumbeat and a big sort of pull-on high-quality U.S. coal. As Bob said, the Leer brand, while that's HVA, it's getting really good traction in Asia. I think we've had no problem at all placing those tons. Obviously, we wish the volume -- we wish the pricing were a little higher.

We have seen some contraction in that spread between PLV and HVA. So I think you're seeing a little bit of that evidence that HVA is making it into that market. So there certainly are positives out there. I guess one final thing I'll say, we've had 2 years of contraction on the steel front, hot metal production front. That can't last, won't last. WSA is now projecting growth for the second half of the year and into next year. So certainly some positive indications that things could change.

[Operator Instructions] The next question comes from Matthew Key from Texas Capital.

Good job on the quarter. Most of my questions have been asked, but I wanted to ask about the outlook in the metallurgical segment next year, if I may. Just given that Leer South is running well, what could be the incremental production potential in the metallurgical segment in 2027 relative to 2026?

Well, on the production side of it, Matt, we're still working with some of the schedules we have. We want to get to where we're running very, very consistent there. So we haven't really got to a number where we can give incremental tons. As I said before, I think coming out of our Leer complex, we should expect somewhere between 8.5 million and 9 million tons.

Got it. No, that's helpful. And just one more quick one. You mentioned in a prior answer that you added a few API 2 linked tonnage for 2027. Just as I look out to 2027 in that segment, is it possible that you would be able to achieve a greater exposure to that benchmark relative to 2026? And is that something that you're aiming to do as you kind of build out that book for next year?

So we had this year, I think, nearly 4.5 million tons linked to API 2. Some of that -- some of the API2 deals we've done were actually fixed price, not necessarily index linked, but we secured those at the time that the API 2 price was on a rise. But I think to answer your question, I would expect a very similar portfolio year-on-year when it comes to what we have index-linked versus fixed.

Your next question comes from Chris LaFemina from Jefferies.

So basically, maybe it's a question for Jimmy. If we look at the sequential performance for you guys, I think EBITDA, excluding the insurance proceeds, increased by like 15% from the first quarter to the second quarter. And the improvement was really -- it was cost driven. And if we had gone back 3 months ago and went over the second quarter to believe that costs would have come down would have been something I think people would have been very skeptical about, but you delivered, I think, pretty exceptional cost performance in the second quarter despite all the inflationary pressures in the market.

And I understand part of that is a function of Leer South operating better in the quarter, but it seems like something more fundamentally is changing here within Core. And I'm wondering like what's going on operationally that you can deliver such substantial cost reductions despite this inflationary backdrop? And I mean, again, it's something that we had not expected. I think it's a pretty big surprise to the market as well. So just trying to understand what's changed at core to deliver the sort of results.

Thanks for the question, Chris. I think when you look at where we are, we mentioned early on that we wanted to put these 2 companies together and bring all the best practices together. I think when it comes to our longwalls, we're getting there. We're not 100% there yet. And some of the schedule changes that we made, of course, with a reduction in force at Leer South, changed the schedules there with the same expectations for production. When you look at Leer, Leer has moved over into the better themes there in the north. Now we'll always have some geological problems and things there.

But the expectations are to continue to work with all of the enhancements that we've done to improve the cost because at the end of the day, that's what we control. So we're trying to work as hard as we can to get a consistent cost basis there. Obviously, mining is mining. We'll have geological events here and there. But when you look at it over an annualized run, we think we're at a good cost number now and with some opportunities to even improve upon that. When you look over on the HCV thermal side, we had a first quarter that was higher than what we expected.

There were some reasons for that, but we got it back in line here in the second quarter, and we'll continue to drive on those cost initiatives to do that. In Pennsylvania mining complex on the HCV thermal with West Elk coming on and running at really good numbers now that helps that a lot, blends down. So we're not satisfied where we are on the cost side, but I think what we're doing is sustainable, and I think there is room for improvement going forward.

Our next question comes again from Nick Giles from B. Riley Securities.

A follow-up. I just wanted to clarify from earlier, just on DTA, did you quantify the kind of impact that the outage is having to realizations today? And then what's kind of your sense in terms of timing when DTA could be kind of back up and running at full steam? Or are those decisions kind of forthcoming?

So Nick, I think it's too early to assess and provide you the numbers, so to speak, on what the damage is and stuff like that. We are going through that process right now. But as I said, from a Core perspective, our marketing team did a good job, and it kind of reflects in the guidance that we provided on -- from an impact perspective that it is very manageable. I think the realization numbers that you see take into account the changes that we have to make and extra costs we had to incur to read out vessels and stuff like that.

So I think it's quite manageable. We'll provide you better numbers when we have it. Right now, it's too early to say. There are some capacity constraints. The terminal is still working and we are moving things through, but there are some capacity constraints at this point right now. Yes. And

Nick, it's really -- we don't have all the numbers yet. We're continuing to work on that to see what part, if any, we can salvage and we can put back in. But I will say the team down at DTA has done a really good job of finding ways to move some of the stranded coal that's there. But we don't know the actual full impact yet because we don't really know exactly how many of the parts we can use over or what we're going to engineer and do as we move forward.

But as Mitesh said, just stay tuned. We'll have a better handle on that. And we're not the majority owner there. We own 35% of that. So it will be driven by our partners there. But we still don't have an exact answer or timing for it. And just stay tuned on that. Once we give it, we'll certainly give an update on that.

Understood. Now that's helpful. And sorry, just to clarify again. I mean the impact is really going to be seen in realizations. It's not like there's extra costs embedded in your cash cost guide.

So when we report our realized number, they are net back at the mine. So we take that impact out of the reported numbers.

Okay. Great. One more follow-up, if I could. It hasn't gotten maybe a ton of attention on this call. Just on the Core Innovations group opportunity, Mitesh, I was wondering if you could just kind of speak to what kind of revenues does this segment generate today? And then what's ultimately the long-term opportunity here?

Yes. So if you think about Core Innovations, that platform focuses on 4 key verticals. We have talked about rare earth and critical minerals aspect of it, which Jimmy mentioned in his prepared remarks that we were selected for a grant from the U.S. DOE to construct a pilot scale facility for the extraction of rare earth elements and critical minerals. So that's ongoing. But the other verticals are aerospace and defense. So we have been doing some bolt-on acquisitions on that front that provide composite tools and carbon fiber composite parts to aerospace and defense companies.

That business does about $20 million in revenue. So it's a real business. We have a factory that produces tooling equipment, parts and is participating in some of the very high-profile projects of some of the larger defense companies. We also have the building products vertical, which deals with cold plastic composite products like decking boards and stuff. That's more in a nascent stage where we are going through testing and we are going to pilot facilities and stuff like that, but that's uses coal as a feeder stock in the CPC.

And then the last vertical is battery technology and carbon management. So we have a joint venture with a company called S-BAT, and that is focused on developing a material called Obsidia, which we think could be a good replacement for battery graphite. As you know, 90% of that is sourced from China. And we are trying to develop a domestic feedstock for it. Some of these are very early stages. So there are no revenue tied to it, but the aerospace and defense is more tangible and there is revenue and EBITDA tied to it, although EBITDA is still pretty small when you look at core as a platform. But a lot of growth potential. These are markets with multibillion-dollar total addressable markets.

Mitesh, I really appreciate that breakdown. I guess just from a capital allocation perspective, I mean, is this an area where you might be willing to make kind of more smaller bolt-on acquisitions? Or is this kind of government funding led and seeing where it goes?

Yes. No, we have been making some bolt-on acquisitions, as I mentioned. I think you can -- we did one small one, single-digit million-dollar type of an acquisition in in January of this year. So it's an ongoing process for us. But I don't want to get too much ahead of ourselves. I'm not willing to say that this is going to be a significant drain on our capital anytime soon, right? Like these are things that we feel like there are good opportunities, and we are in the process of proving it out, and we are making some good progress. Really excited about the innovations team. I think they have done some really good work over the last few years here.

There are no further questions at this time. Please proceed for the closing remarks.

Thanks, everyone, for joining us on the call today. Hopefully, we provided what you needed there, and we look forward to speaking again into our next earnings call. Thanks, everybody.

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.

Good morning, ladies and gentlemen, and welcome to the Core Natural Resources, Inc. First Quarter 2026 Earnings Conference Call. [Operator Instructions] This call is being recorded on Thursday, May 7, 2026.

I would now like to turn the conference over to Deck Slone. Please go ahead.

Good morning from Canonsburg, Pennsylvania, everyone, and thanks for joining us today. Before we begin, let me remind you that certain statements made during this call, including statements relating to our expected future business and financial performance, may be considered forward-looking statements according to the Private Securities Litigation Reform Act. Forward-looking statements, by their nature, address matters that are, to different degrees, uncertain. These uncertainties, which are described in more detail in the annual and quarterly reports that we file with the SEC, may cause our actual future results to be materially different than those expressed in our forward-looking statements.

We do not undertake to update our forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by law. I'd also like to remind you that you can find a reconciliation of the non-GAAP financial measures that we plan to discuss this morning at the end of our press release, a copy of which we have posted in the Investors section of our website at corenaturalresources.com.

Also participating on this morning's call will be Jimmy Brock, our Chairman and CEO; Mitesh Thakkar, our President and CFO; and Bob Braithwaite, our Senior Vice President of Marketing and Sales. After some formal remarks from Jimmy and Mitesh, we will be happy to take questions.

With that, I'll now turn the call over to Jimmy. Jimmy?

Thank you, Deck, and good morning, everyone. After a challenging 2025, I am excited to report a strong start to 2026. Our results for this quarter reflect the resilience of our business model and the commitment of our team members across the company. Our operating platform delivered efficient, reliable performance throughout the first quarter, underpinned by our safety-driven culture. As we turn the page from the Leer South fire, the mine set the pace, achieving strong production and cash cost performance throughout the quarter. As expected, the mining conditions have been favorable, and we are now running as a premier world-class longwall mine. In addition, West Elk shifted into high gear in BC, where geologic conditions are favorable, capturing significant operational efficiencies with an improved cost structure.

Now let me dive a little deeper into our operational results. Coal sales within the High CV Thermal segment came in at 7.7 million tons in Q1 '26 compared to 7.8 million tons in Q4 of '25. During the quarter, our High CV Thermal segment reported realized coal revenue of $58.86 per ton compared to $58.11 per ton in the previous quarter. In Q1 '26, cash costs came in at $42.56 per ton compared to $41.42 per ton in Q4 '25. Segment cash costs for the current quarter were elevated due in part to this winter's Arctic outbreak, which drastically increased power costs at the Pennsylvania Mining Complex as well as a few weeks of tough mining conditions, which are now behind us at PMC.

In the Metallurgical segment, coking coal sales came in at 2.1 million tons in Q1 '26. During the quarter, our Metallurgical segment reported realized coking coal revenue of $122.11 per ton, which represented a 7% improvement over the previous quarter. The segment as a whole, inclusive of the 300,000 tons of thermal byproduct sales achieved an average selling price of $112.03 per ton. Segment realization increased $6.58 per ton compared to the previous quarter. Cash costs for the quarter came in at $92.35 per ton compared to $103.49 per ton in the previous period, reflecting a full operating quarter at Leer South Mine. Adjusted EBITDA for the segment totaled $58 million, which was up $79 million from the previous period.

In the Powder River Basin segment, coal sales within the segment came in at 11.9 million tons in Q1 '26. During the quarter, our PRB segment reported realized coal revenue of $14.39 per ton and cash cost of $13.64 per ton, which was in line with the prior quarter's cash cost of $13.62 per ton. Due to the current conflict in the Middle East, we are seeing significant increases in diesel prices. While there was a limited impact of higher diesel prices in Q1, we expect it to weigh on our PRB margins in the future periods if these elevated prices continue.

Moving to the Core Marine Terminal. The CMT shipped 4.8 million tons during the first quarter of 2026 compared to 5 million tons in Q4 of '25. CMT reported $16 million in adjusted EBITDA in Q1 '26, which was in line with the previous quarter. As a result of our strong financial performance, we were again able to return significant value to our shareholders. As you know, our capital return framework targets the return to stockholders of around 75% of free cash flow, the majority of which will be returned via share repurchases.

During Q1 '26, we returned $47 million to our shareholders or 85% of free cash flow with $42 million invested in share repurchases and $5 million in the form of dividends. Since the program's inception in February of 2025, we have deployed $292 million via the capital return program. Of that total, $266 million has been used to repurchase approximately 7% of the company's shares outstanding as of the program's inception. Now that the operating platform is at full strength, we expect strong shareholder returns to continue.

Now let me turn the call over to Mitesh to provide the marketing and financial updates.

Thank you, Jimmy, and good morning, everyone. Let me start by providing an update on our financial performance. This morning, we reported solid first quarter financial results. For 1Q '26, we reported net income of $21 million or $0.41 per diluted share and adjusted EBITDA of $180 million compared to a net loss of $79 million and adjusted EBITDA of $103 million in 4Q '25 due to a strong contribution from our metallurgical coal platform. In the quarter, we spent $73 million on capital expenditures and generated $56 million in free cash flow, which was impacted by $52 million of negative working capital changes, including the timing impact of the 45X tax credit accrual versus cash benefit. At the end of the first quarter, we had total liquidity of $935 million, including $413 million in unrestricted cash and cash equivalents.

Now let me update you on the marketing front. Global energy markets have been quite volatile in recent months given the ongoing Middle East conflict. On the metallurgical export front, the threat of a global economic downturn caused by the conflict continues to broadly weigh on demand in these markets. Counterbalancing that fact, we are also seeing some challenges on the supply side. The closure of the Strait of Hormuz is having a significant impact on diesel supplies into Australia and could lead to fuel rationing measures potentially reducing coal supplies. Those cost pressures come on the heels of heavy rainfall-related supply disruptions in Australia earlier this year. As a result, Australian PLV benchmark prices have remained elevated, and we continue to position Core to capitalize on that fact.

In contrast, the international thermal markets are benefiting from energy supply disruptions and fuel switching tailwinds due to disrupted oil and gas flows through the Strait of Hormuz. There is a view that European natural gas prices will remain elevated this summer to incentivize gas to coal switching to allow Europe to shore up its natural gas inventories ahead of the winter. The EU is also looking into returning legacy coal-fired power plants from capacity reserves to the wholesale markets, which could act to bolster coal demand. Petcoke prices in India have also risen significantly since the start of the year, which is benefiting the demand for our PAMC coal.

In the domestic thermal market, coal consumption declined during the first quarter due to weak natural gas pricing and increased natural gas inventories. However, despite the decline in consumption, power plant coal inventories have reduced since the end of 2025. Longer term, we remain bullish on the outlook for domestic thermal coal demand given the robust planned data center build-outs. Recently, the state of Pennsylvania has taken steps to enable the Keystone and Conemaugh coal-fired power plants to continue operating through at least 2032 and potentially much longer. We strongly support this extension, which will boost the availability of affordable and reliable energy here in our backyard.

During the quarter, we continued to build momentum on the contracting front, including further expanding our West Elk coal shipments into domestic utilities in the Eastern United States. As a reminder, since the fourth quarter, we have had good success with test burning West Elk coal at a number of Eastern power plants and have entered into a term contract. We appreciate the support of our railroad partners in helping unlock this opportunity and enabling reliable delivery into these markets. Since year-end 2025, our marketing team has made meaningful progress broadening and extending our sales book, securing an additional 11.5 million tons of contracted volume through 2028 at attractive prices. Building on that long-term foundation, we have also strengthened our near-term position for 2026 across each of our mine segments.

Now let me provide an update on our outlook for 2026. On the guidance front, we are generally maintaining our guidance levels as indicated in the earnings release with the exception of our segment level sold positions. In the High CV Thermal segment, we added 5.6 million tons to our sold position, bringing our total contracted volume to 29.1 million tons. The High CV Thermal segment is now 94% contracted at the midpoint of the guidance range and average coal revenue on the committed and collar tons is projected to be $57.85 per ton.

For the Metallurgical segment, we added 1.6 million tons to our sold position, bringing the segment to 8.3 million coking tons contracted for 2026 with approximately 3.8 million tons priced at an expected average coal revenue of $122.40 per ton. For the PRB segment, our contracted position now stands at approximately 48 million tons at an expected average coal revenue of $14.20 per ton. Lastly, on the cash SG&A front, we had, as expected, some residual integration-related costs in Q1, but expect those costs to phase out as we progress through the year.

Finally, let me provide a quick update on our Core innovations group, which has been extremely busy growing our capabilities to support the aerospace and defense industries. During the first part of 2026, we completed a 30% expansion of our manufacturing facility in Triadelphia, West Virginia and spent $8 million on acquiring Sawyer Composite in Fort Worth, Texas to further accelerate our growth and elevate our profile in the aerospace supply chain. With these moves, we have built upon our coal-based C4 seam materials business to now become a full-service provider of high-performance materials, tooling, parts and assemblies to meet the growing needs of our nation's aerospace and defense sector. Between our West Virginia and Texas locations, our Aerospace venture now has 75,000 square feet of manufacturing space, 80 employees and serves more than 40 customers, including many of the top defense primes. We see a lot of opportunities for continued growth in this business.

Now let me pass it back to Jimmy for some closing remarks before we open the call for Q&A.

Thanks, Mitesh. As we head into the second quarter and beyond, there are a few key areas of focus. First, we will continue to identify best practices across our operations while sustaining our safety-driven culture. Second, I am optimistic about our cost outcomes in the High CV Thermal and metallurgical segments, with both PAMC longwalls out of the tough mining conditions we saw in Q1 of '26, power prices normalizing and Leer transitioning to the North reserves, we expect our cost to improve relative to the first quarter. Third, we are actively pursuing insurance recoveries from the Leer South fire event. We are pleased with the results of Q1 '26 as they mark the first quarter after the merger with all our assets fully operational. I believe we have just scratched the surface with our capabilities, both operationally and financially.

Going forward, we will focus on our controllables as the markets remain dynamic, given the global economic uncertainty. Our high-rank coals, however, continue to receive strong demand as we shift focus to the most advantageous market for our products. Throughout our operations, we continue to focus on cost-saving measures during this market uncertainty, and we fully anticipate carrying this positive momentum throughout the rest of the year.

Finally, let me finish by recognizing our employees. Throughout last year, they worked tirelessly to integrate and develop Core Natural Resources into what it is today, a premier world-class company. Throughout 2025, the teams believed in the vision as we push to restart the Leer South longwall and focused on identifying best practices. We are accustomed to navigating the cyclical nature of the coal markets, and we will continue to manage our costs while focusing on our core values of safety and compliance, continuous improvement and financial performance.

With that, I will hand the call back over to the operator to begin the Q&A portion of our call. Operator, can you please provide the instructions to our callers?

[Operator Instructions] Your first question comes from George Eadie with UBS.

Firstly, just on the High CV segment, can you remind me the sensitivity of that 28.5 million to the API2 price given I think there was sort of 3 million or 4 million tons pegged to the API2 benchmark?

Sure, George. This is Bob. So for the balance of the year, we have left to sell Q2 through Q4. It's just around 3 million tons is linked to API2. We also have a little bit, call it, 300,000 tons linked to High Vol B as well. The rest is fixed price. And right now, the sensitivity is roughly about $0.07 a ton across the segment. And that's assuming about $120 API2 price. Right now, API2 is around $110, $115, but we expect that to continue to be volatile, as you know, what's going on in the Middle East.

Yes. And then just on the tons contracted for 2027 for each business segment, can you just remind me what percent of the business is contracted next year, please?

Yes. So on the High CV side, we're sitting here roughly, give or take, around 50% of our volume contracted. And to be honest with you, if you look at PAMC and West Elk, it's basically 50-50 in terms of where we are against what our expected production is going to be in 2027. And the good news for us is we've certainly been able to take advantage of the situation in the Middle East over the last couple of months and lock in some volumes at some attractive pricing when API2 prices were up in that $130, $140 range. So we're not prepared to give exactly what we're looking at pricing-wise, but I can tell you the market, if you look at year-on-year, isn't getting there.

Yes. And then lastly, Mitesh, sorry if I missed this earlier, but insurance prices, can you remind us the timing and latest on dollars as well there for the rest of the year?

Yes, George, sure. So as you know, the Baltimore bridge claim is settled on the Leer South front, we have submitted our final claims, which indicate a limit loss. The insurance companies are reviewing the claims and going through their internal review and approval process, which could take different times for different insurance companies. However, we are optimistic that we'll start seeing some approvals trickle here in 2Q. In aggregate, I would expect to collect another $100 million in incremental proceeds from insurance.

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The next question comes from Nick Giles with B. Riley Securities.

I just wanted to go back to High CV cash costs, obviously elevated here in 1Q, but you've maintained the guide. Can you just help us understand kind of the cadence of those cost improvements throughout the year, kind of sensitivity to electricity prices and then how much West Elk is contributing today?

Nick, it's Jimmy. Yes, we left our guidance alone when you look on the cost side of it because we had some things in Q1 that I feel like it's going to normalize, and we'll be back on track in Q2 and for the remainder of the year. So we had 2 of our longwalls that's in the Pennsylvania mining complex that were in sand rock intrusions. We've had those before. We've been able to dive down underneath them. These were a little different. They struggled. So we don't have that. Both those longwalls are out of that now. And then we also had -- as you stated earlier, we did have abnormal power pricing that hit us in Q1 that we think will normalize and come down here as the weather changes. It was mostly due to that Arctic blast, as we said in our comments. And then, of course, when you're going through those sand rock and rolls like that, it requires more supplies to mine the coal, higher bit pricing, you use more of those, you wear those out. So we think we're going to be in a really good spot there.

Looking at West Elk, West Elk is running great. There was no far in West Elk. It's just the trains of us moving the coal away, and that has certainly improved. We've been working with our rail partners, and we improved. But what happened to West Elk, they couldn't run at 100% capacity because we didn't have the space in our inventory. So we think that's going to levelize and go away. So I really think -- I didn't want to raise the cost guidance. I believe that we're going to be back on track and be in that and even have some improved marks for the remainder of the year.

Yes. And just, Nick, following up on your question on sensitivity and just to give you some parameters around it, right? So if you think about PJM West power prices, I think in months like January, we were over $100 in power prices. Right now, we are already sub $50. And as you look at the curve, I think the curve is around that number. The summer months are a little bit higher and then fall, it comes back again. But just from a sensitivity perspective, about $1 megawatt change could be around $750,000 for us, just to keep that in mind.

Maybe along a similar vein in the PRB, you maintained the guide. I was curious on just what enables you to do that. And then if we were to assume that diesel prices were to remain elevated, any sense on how much kind of upward cost pressure that would create in the PRB?

I think when you look at PRB, there's a couple of things there. Number one, we lost a couple of weeks of production out there with the connecting link that was on the dragline boom, which obviously hurt the volumes a little bit. And then we're kind of in shoulder season out there now as well. And then we're also looking at other cost incentives out there, such as optimizing our truck fleet, looking at what we can do with the schedules that we're working. And the team out there is working really hard to bring that back within the guidance. And I think if you add those volumes back, if diesel prices do sort of normalize or reduce some, I think we'll be right back on track where our cost guidance is and even an opportunity to improve that. So it's something we continue to work on, Nick, and I have a pretty high degree of confidence that we're going to reach that.

We now have a question from Nathan Martin with The Benchmark Company.

Bob, maybe just going back to George's initial question. As we look at '26 in the High CV Thermal segment, you guys have 28.5 million, I think, million tons committed in price. Can we just get a breakdown of that between PAMC and West Elk and any sensitivities there? I think you said API2 was $0.07 off a 120 basis. I just want to make sure.

Yes, that's correct. And right now, of the 29.1 million tons in total, 23.4 million is PMC, 5.7 million is West Elk. West Elk contributed 1.1 million tons toward the sales line in Q1. So we expect, as Jimmy mentioned, as our railroad partners are certainly doing better today than they were in Q1, we expect that volume to start increasing as we move forward throughout this quarter and the balance of the year to get to that 5.7 million ton level. I will tell you, too, based on that, we're being somewhat cautious since we're only in April right now or May, I should say. But there's still certainly some opportunities out there. The domestic market certainly is remaining somewhat strong, even though gas prices are down, we're still seeing a strong level of trains coming in, and offtake.

And then in India as well, they're forecasting a strong El Nino, if that does happen, it will delay -- likely delay the monsoon season. And we're seeing, I'd say, more inquiries than we typically would this time of year. So very encouraging there, and we'll certainly look to place as much volume as we can and get as much volume out of PAMC as we can. So 5.7 million tons at West Elk, we're not sold out, but we're very close. So all the balance of the volume left to sell is at PAMC. And again, encouraging that the fact that where prices are today, I will tell you that those specific prices today are above where our guidance is. So there's a chance that we could see some improvement as we move forward. The volume that you're seeing that is not priced is linked to Newcastle. That's some of our business we have into Asia out of our West Elk mine.

And then maybe just sticking with West Elk for a second. You guys talked about it last quarter, talked about it a little bit now. You're moving some domestic tons to power plants in the East. It sounds like that was mainly just a transportation problem, and I think you just mentioned inventory space. Any additional thoughts there? One of your peers also talking about exporting some more tons out of the West Coast. Maybe any thoughts you guys have as far as that goes as well.

Yes. So for West Elk, I'm very encouraged by what we've seen from our domestic customers in the East. A lot of overlap there with our PAMC coal as well. So I could tell you to date, we have one long-term contract in place. We're working on several others. The coal has been well accepted. Traditionally, it wasn't really a core market for the legacy Arch folks. But today, I'd tell you it is as we try to ramp that mine up to 6 million tons as we move forward. On the West Coast, we are moving West Elk through the West Coast out of Long Beach today. We anticipate that continuing. And then -- in terms of additional West Coast capacity or additional export capacity off the West Coast, we're certainly looking into that for some opportunity to move some of our PRB coal as well. I know Oakland has been talked about by many. We're certainly in discussions there and then also some potential export capacity through Canada as well.

Yes. Nate, we look at -- as far as export and moving coal, we look at all the ports. And obviously, when you have to start looking at how long the vessels set there for demurrage, you look at the travel distance and everything else, we try to -- just like we run to the market, we try to do the same thing with the ports. We try to go out the ones that are most economical for us. And obviously, we prefer to go out of our own. But I mean, we certainly look at all those West Coast ports, Long Beach as well as we even look at Vancouver and some of those. Any way we can move the coal that makes economic sense, we certainly look at all of those.

Got it. Appreciate that. And then, Jimmy, maybe just one more while I have you. Any comments or thoughts on the administration's Section 303 determinations that were passed as it applies to helping the coal supply chains in baseload power gen?

Yes. I'll start out with that and then turn it over to Deck to follow up on that. But we are very happy with the administration. I mean, particularly their ability to extend the life of some of these power plants. And we think it's certainly going to be needed if you look at the power, which has been basically flat for many, many years leading up to, say, 2024. But with the increase that everybody is projecting on power gen alone, we feel pretty good about what the administration has done to this point. And I always say they can't solve the problems for us, but they certainly can give a solution to where we can work on those and they've been very, very positive as far as coal goes. I know President Trump, he brought back the National Coal Council and a lot of positive momentum coming out of the administration and Deck and team are working with them every day to make sure that we take full benefit of everything that we get out of there. And with that, I'll let Deck add some comments.

Yes. Yes, thanks for that. And look, I totally agree with Jimmy. This administration is hugely supportive. And there are a whole range of areas where they're trying to be helpful. Look, I would say with the 2O2(c) authority, which is preventing some of these retirements prematurely of coal plants. We've got 5 2O2(c) orders in place right now. In aggregate, those plants used 10 million tons of coal last year. I think really clear then that they're needed. If they were running at that level last year, that capacity is needed. And we've talked about the fact that as we look out now, suddenly, there's been an inflection in terms of the outlook for U.S. power demand. The numbers are -- there are a range of numbers, but one of the ones we've been looking at recently, grid strategies is suggesting that over the next 5 years, you could see a 3.7% growth rate in U.S. power demand.

In that scenario, this administration is getting the fact that you have to have these coal plants. So that's hugely helpful. I think also addressing just a raft of regulations really that were designed to drive some of these coal plants into closure, this administration is trying to unwind those and doing really a superb job. And the goal there is not just to keep the plants open, but to allow for reinvestment to make those plants young again because you can replace all the component parts. So that's useful.

And obviously, as you know, look, the royalty rate reduction in the PRB has been helpful to us, and I think bodes well for the outlook there for a healthy industry in the PRB, the 45X production credit. So look, couldn't be more pleased with where this administration is going, and we're going to continue to work with them. We talked about the unlocking of export. That's another area where this administration is highly focused on finding ways to liberate more tons, get more tons into the seaborne market. So a range of areas where we're getting good support.

The administration has certainly given us a lot of resources to work on our problems that we have. So very, very appreciative and very thankful and very involved, quite frankly, with the administration.

Now have a question from Matthew Key with Texas Capital.

In regards to the inflationary cost pressures, most notably diesel, while you obviously didn't raise your cost guidance. I was wondering if there's anything you could do to help manage those pressures such as hedging diesel or something like that?

Yes. Matt, good question. And there's an additional disclosure in our 10-Q that we did hedge some diesel prior to the war starting in the Gulf area. I think we were on a path to hedge a significant portion of our cost on the diesel front, but there was a sudden spike, and we pulled back a little bit because the volatility was just too much to justify hedging at that point. Things are settling down a little bit, and we'll continue to look and evaluate it. As you can imagine, the curve is in backwardation again now, which is great. And we'll continue to evaluate how we layer in those hedges to make sure that there is enough cushion between our selling price and the cost of mining.

And met coal benchmark pricing did improve at least directionally in 1Q '26, still seeing a very wide spread for High-Vol A pricing versus premium low-vol benchmark. I was wondering if you could provide just some color on what you're seeing in the met coal market, specifically as it relates to High Vol A.

Yes. I mean, again, we're in a really good position as we announced this morning, 8.3 million tons contracted for the balance for this year. And when you look at where we're at with what we have left to sell, majority of that is High Vol. There's some low vol as well. But I'd say the most encouraging thing, too, is the fact that we have over 30% of our volume this year linked to PLB prices. So Asia continues to grow for us, and that's where the growth and demand is. India certainly is growing. But we are seeing some opportunities back in Brazil and also into Europe right now, CBAM being one that is helping the European steel markets. And we're not seeing as much steel dumping into Brazil today as we did last year. So that's encouraging as well.

So I think those spreads will likely remain for a little bit of time here just for the simple fact that the High Vol is a little bit oversupplied today. But I see that as, again, we start seeing some higher cost operations continue to exit the market, specifically here in the domestic or sitting here in the United States. I think you'll start to see those spreads shrink over time. But the team has done a great job, again, linking over 30% of our index volumes to PLB.

Matt, I would maybe just to echo those views of sort of where the market is. Look, I mean, if you look last year at U.S. exports, they were down around 6 million tons. Australian exports of coking coal down around 6 million tons. So that's 12 million tons. I think there's been a lot of focus on the production that's coming back into the market, but there had been substantial rationalization and step down. So look, I do think that's important. That's an important dynamic there. And I would also say, look, there are indications that operational challenges are starting to sort of crop up elsewhere, as you would expect, right? That's typically what happens is 5% to 10% of global supply is experiencing some level of challenge. So while the market remains under pressure, I do think there are counterbalances to, I think that top line story that, oh, there's some capacity that's come back into the market after some outage.

[Operator Instructions] You have another question from Nick Giles with B. Riley Securities.

You kind of answered it there on the met side. But maybe I could just ask, as we try to model out met volumes throughout the course of the year, can you just remind us how many longwall moves you have scheduled, when those are scheduled in both just the Met segment and High CV?

Yes. If you look at Q1 that we just finished up, we had 4 longwall moves there in Q1. In Q2, we have 3. We have 1 at PMC. We have 2 at our met mines, one at Leer, one at Leer South. And then I think for the remainder of the year, our Q4 is kind of heavy, but we have 13 for the year. So that's pretty much where we are. And Nick, as I've always said, I love longwall moves because that means progress is being made.

Understood. No, I appreciate that, Jimmy. And maybe just on the synergy front, I'm not sure if you provided an update there, but I think of 2026 as one of the first full years that we can see the benefit of the synergies. So what metrics should we be paying attention to? And what should we use as the denominator as we try to measure that progress?

Yes. So Nick, again, there are a lot of ways the synergies are playing out. I will say the most obvious one for you to see is on the SG&A side. And if you look at -- I'm going back to 2024, the first full year prior to the merger for both -- the last full year prior to the merger for both the companies, I think the combined company had cash SG&A of about $153 million, excluding any merger-related expenses and stock-based comp, right? And right now, we are guiding to a top end of about $100 million. So that tells you that significant progress is being made on the synergy front when it comes to cash SG&A.

Similarly, on the marketing side, if you look at the MIBS where we -- they are disclosed as thermal byproduct in our release, given where current met coal prices are on the legacy Arch side, which is mostly their product, you would have realized high 20s kind of a realization on the MIBS. We are blending it with some of our Pennsylvania mining complex and some of our other mines, and we have value uplifting it by almost $15 a ton, right?

So when you add those pieces together, I think we are significantly ahead on the synergy achievement side. I think what is clouding it a little bit on the marketing front is also overall, met coal prices are just lower, which reduces the value of those synergies. And we are hoping as those prices normalize, I think you will see more impactful numbers on the synergy front. But even on the High CV Thermal side, as the prices improve, the value of MIBS go up just from blending activity as well.

So those are the 2 lines that you can easily see on our financials. The other lines, I would say is we already talked about the financing synergy with the 3 bonds that we did, the rate that we got versus what each of those companies had it in the past. And on the insurance side, if you look at -- put all those 2 items together, there was $20-plus million in synergy on an annualized basis on that front as well. So net-net, when you add all those up, I think you are looking at over $160 million in synergy run rate, which is -- I think the last midpoint we provided was around $165 million at the midpoint, which was higher than -- I think originally, at the merger, we said $110 million to $140 million and then raised it to a midpoint of $165 million. So we are tracking towards that high end already.

Understood. Maybe one more, if I could. I think your commitment to shareholder return seems pretty clear to me. But kind of how do things stand on the M&A front? Are you seeing any opportunities across the M&A landscape, whether from a mine perspective, anything along the supply chain or anything from a logistics perspective that's worth looking at?

Nick, it's something that we evaluate daily. I mean we look at a lot of things that come toward us. And as I've always said, my job to allocate capital is for the highest rate of return. So we do look at a lot of things that come in. I will tell you, currently today, we don't have anything to -- that we can put certainty around that we've done. But we do look at every opportunity that comes to us. We owe it to our shareholders and our employees to do that, and we'll continue to do so. And if something comes out there that makes sense, we certainly have the liquidity. We have the ability to do it, and we would do it.

There are no further questions at this time. I will now turn the call over to Jimmy Brock for closing remarks. Please continue.

Well, we'd like to thank everyone for joining us on the call today and certainly look forward to the rest of the year to come. And as I said in my opening remarks, I think the best is yet to come for Core Natural Resources. So thanks for joining.

Good morning, ladies and gentlemen, and welcome to the Core Natural Resources, Inc. Fourth Quarter 2025 Earnings Call. [Operator Instructions] This call is being recorded on Thursday, February 12, 2026.

I would now like to turn the call over to Deck Slone, please go ahead.

Good morning from Canonsburg, Pennsylvania, everyone, and thanks for joining us today.

Before we begin, let me remind you that certain statements made during this call, including statements relating to our expected future business and financial performance may be considered forward-looking statements according to the Private Securities Litigation Reform Act. Forward-looking statements, by their nature, address matters that are to different degrees, uncertain. These uncertainties, which are described in more detail in the annual and quarterly reports that we file with the SEC, may cause our actual future results to be materially different than those expressed in our forward-looking statements. We do not undertake to update our forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by law.

I'd also like to remind you that you can find a reconciliation of the non-GAAP financial measures that we plan to discuss this morning at the end of our press release, a copy of which we have posted in the Investors section of our website at corenaturalresources.com.

Also participating on this morning's call will be Jimmy Brock, our Chairman and CEO; Mitesh Thakkar, our President and CFO; and Bob Braithwaite, our Senior Vice President of Marketing and Sales. After some formal remarks from Jimmy and Mitesh, we will be happy to take questions.

With that, I'll now turn the call over to Jimmy. Jimmy?

Thank you, Deck, and good morning, everyone. 2025 was a momentous year at Core Natural Resources. On January 14, we completed the transformational merger that form Core and immediately turned our full focus on establishing a strong and fully integrated platform for long-term growth and success. Above all, we directed our attention to three priorities: capturing the tremendous value driving synergies created by the combination; laying the foundation for operational excellence across our three major operating segments; and establishing a unified safety-driven culture.

I'm pleased to report that we have made significant progress on all fronts. The integration process is nearly complete. We are operating as a single cohesive unit, and we have set the stage for a step change in our operational execution. In short, here at the outset of our second year as a combined company, I am confident that we are now ready to deliver on Core's potential.

Now let me spend a few minutes on two key developments that are pivotal to our dramatically improved 2026 operational outlook. The first of these developments is the resumption of longwall mining at Leer South. As you know, Leer South experienced a combustion event early in 2025. An event that prevented the longwall from operating for nearly the entire year and resulted in approximately $100 million in fire suppression and idling cost. I'm pleased to report that since restarting the wall in mid-December, Leer South has returned to normal operations.

During the first month of the year, the mine achieved its production target, and we are now focused on achieving even stronger execution going forward. As anticipated, mining conditions in the current district are highly favorable, and I fully expect Leer South to begin to showcase its status as a premier world-class longwall mine.

The second development of note is the completion of the transition to the B seam at West Elk. If you recall, in recent years, West Elk had been mining in the last remaining panels of the ethane, where mining conditions were suboptimal. In 2025, we begin transitioning to the B seam where conditions are significantly more advantageous and experienced a slower-than-expected startup in that new seam as we addressed elevated methane levels and an influx of water.

As of December, these issues are behind us, and West Elk has begun running at very high productivity levels. The conditions in the B seam are exactly as advertised, and we are expecting a very strong operational performance in 2026. Our focus now is expanding the customer base for this high-quality coal given the step-up in the mine's production capabilities.

Despite the just discussed operational challenges and soft market environment, Core still displayed some of the value-driving attributes that makes the company's outlook so compelling. As you will recall, in February, the Core Board deployed a capital return framework, targeting the return of approximately 75% of free cash flow with a significant majority of that return directed to share repurchases, complemented by sustaining quarterly dividend of $0.10 per share. During 2025, Core returned a total of $245 million to stockholders via this program, which constituted nearly 100% of free cash flow generation. Roughly $224 million of that total was directed to share repurchases, an effort that resulted in the buyback of around 6% of the company's shares outstanding.

Again, given the headwinds we have already discussed, that's an impressive achievement and underscores Core's great cash-generating potential even in less than ideal circumstances. Needless to say, we believe there is great upside for even more substantial returns now the operating platform is at full strenght and given the recent signs of strengthening market environment.

Now I'd like to discuss some of the many highlights on the public policy front, where the Trump administration continues to champion coal as a baseload fuel and critical mineral. The One Big Beautiful Bill Act which was signed in July, contained numerous provisions supporting coal's critical role in the U.S. energy equation and seeking to ensure the long-term health of the coal industry. Among those provisions, the new law establish a production tax credit for coal that is suitable for use in the production of steel, markedly reduced the royalty rates for federally-leased coal and eliminate some of the financial support for intermittent resources that have done little to fortify America's need for 24/7 baseload power.

In addition to the One Big Beautiful Bill, the Trump administration has employed Section 202C of the Federal Power Act to delay, perhaps indefinitely, the planned retirements of coal-fired generation units in a growing number of states, including Michigan, Colorado, Indiana and Washington.

Given the upsurge in power demand precipitated by the AI data center build-out, we view the administration's effort on this front as farsighted and prudent. The Trump administration also launched a comprehensive effort to address the slew of regulations put in place by the previous administration in an effort to force the closure of coal-fired plants. In addition, the U.S. Department of Energy is making funding available to facilitate the modernization of the U.S. coal fleet to ensure that coal plays a center stabilizing role in the U.S. power markets for a long time into the future.

We're hopeful that the current tranche of funding is the first of many. Additionally, we're also enthusiastic about the administration's effort to support the development of a domestic rare earth elements industry with some federal funding directed toward opportunities in the coal fields. We continue to monitor how such programs can apply to Core. Finally, the administration recently reinstated the National Coal Council, which provides another channel for ongoing in-depth dialogue between coal producers, including Core and policymakers. I am serving as Vice Chair of the Counsel and plan to devote significant time and attention to this important role going forward.

Now let me turn the call over to Mitesh to provide the marketing and financial updates.

Thank you, Jimmy, and good morning, everyone. Let me start by providing an update on our financial performance.

This morning, we reported our 4Q '25 and full year 2025 financial results. For 4Q '25, we reported a net loss of $79 million or $1.54 per dilutive share and adjusted EBITDA of $103 million. The reported 4Q '25 adjusted EBITDA includes $25 million of Leer South fire and idle costs and $11 million of West Elk costs, partially offset by $24 million of insurance recovery related to the FSK bridge collapse. In the quarter, we spent $81 million on capital expenditures and generated $27 million in free cash flow.

For 2025, we reported a net loss of $153 million or $2.98 per diluted share and adjusted EBITDA of $512 million. Our reported adjusted EBITDA includes the impact of $101 million related to Leer South fire and idle costs and $11 million related to West Elk idle cost partially offset by insurance recovery of $43 million.

2025 was a milestone year for Core, being the first operating year as a combined company. As Jimmy mentioned earlier, we managed through this challenging year, both on the operational and pricing front, while still being able to return capital to our shareholders. We also had several accomplishments that were masked amongst those challenges. For instance, we had tremendous success in integrating the two companies, streamlining the management teams and exceeding the synergy targets. We also leveraged a strong partnership with our financing partners to create a sustainable and robust capital structure that allows for strong capital returns and growth optionality.

Now let me update you on the marketing front. In the domestic market, the current administration has supported several Core-focused initiatives, as Jimmy mentioned. These policy shifts have laid the groundwork for a stable regulatory and demand landscape, allowing ongoing investments in coal-fired power plants and delayed retirements. In 2025, there were approximately 16 gigawatts of coal capacity announced for retirement. However, we estimate only about 4 gigawatts were actually retired. On the usage side for 2025, we estimate that total U.S. utility coal consumption was up 12% compared to 2024.

In the PJM and MISO area specifically, we estimate coal-fired generation to have risen over 19% and 15%, respectively, when compared to 2024. According to the PJM Resource Adequacy Planning Department over the next 10 years, the net energy load is projected to grow at an average rate of 5.3% per year compared to expectations of less than 1% in 2022. This forecast as well as favorable support from the administration provides an attractive backdrop for domestic coal demand for years to come.

One of the areas of growth that we have mentioned over several years is the upsurge in power demand stemming from the build-out of new data centers. By 2030, it is expected that global data centers will see a 14% compound annual growth rate, resulting in approximately 100 gigawatts of new data centers. Of this global demand, the Americas are expected to account for approximately 50% of data center capacity and to experience an expected compound annual growth rate of 17% to 2030. This data center boom is stemming in large part from AI, which is estimated to represent over half of the data center's workload.

On the international coking front, heavy rainfall disrupted the Australian metallurgical coal supply. Starting in early January and continuing into February, both production and shipments were negatively impacted by flooding, which has caused a decrease in metallurgical supply in the export market. As such, we have seen an increase in PLV benchmark prices since the beginning of December with PLV prices up by approximately 25% to around $250 per metric ton. Globally, according to the IEA, estimated global coal demand rose again in 2025 by approximately 0.5% to 8.9 billion metric tons. The uptick in global coal demand last year is now part of a multiyear pattern.

This market landscape lays the backdrop for our contracting progress. Since 3Q 25, our marketing team has further expanded our contract book for 2026. We added approximately 7 million tons each to our sold positions in the high CV thermal and PRB segments, bringing our contracted positions to 24 million tons and 47 million tons, respectively. Our metallurgical segment has nearly 7 million coking tons contracted for 2026 with approximately 2.4 million tons priced. Of our priced coking coal tons approximately 2 million tons are in the domestic market, the vast majority of which were high wall.

Now let me provide our outlook for 2026. Starting with the high CV thermal segment, we are expecting 30 million to 32 million sales tons, of which 76% are contracted at the midpoint. Of those committed and called tons, we project gold revenue to be over $57 per ton. We expect the average cash cost of coal sold for 2026 to be $38 to $39.50 per ton, an improvement versus 2025 levels.

For the metallurgical segment, we are expecting coking sales between 8.6 million and 9.4 million tons on the committed tons that are priced we are expecting average Core revenue of approximately $120 per ton. As the metallurgical market strengthens due to the reduced Australian supply, we are encouraged by our ability to take advantage of this uptick in pricing for our committed and open tons. We expect an average cash cost of coal sold of $88 to $94 per ton, reflecting normalized performance at Leer South versus 2025 levels.

Within this guidance, we layered in our expected benefits from the One Big Beautiful Bill that Jimmy discussed earlier, our cash cost guidance range for our high CV thermal and metallurgical segment includes the benefit of the 45X tax credit. It should be noted that this credit is applied in the year that the product is sold, but the cash benefit is received during the year in which the tax return is filed. As such, we anticipate recognizing the benefits of the credits in 2026 cash costs, but we will not receive the cash effect until 2027.

For the PRB segment, we are expecting sales of between 47 million and 50 million tons, with 47.4 million tons contracted at an average coal revenue of approximately $14.15 per ton. We expect an average cash cost range of $13 to $13.50 per ton.

On the capital expenditure front, for 2026, we expect a range of $325 million to $375 million. This capital expenditure range includes approximately $300 million to $350 million tied to maintenance-related spending while the balance is earmarked for various growth initiatives, including investments in critical minerals, battery technology aerospace and defense and other innovative co-related products.

Lastly, we expect cash-based SG&A to be between $85 million to $100 million. As stated at the time of the merger announcement, we anticipate a longer-term cash-based SG&A to be approximately $90 million, which aligns with the current midpoint of our guidance.

In summary, when comparing 2026 versus 2025, there are several positives to look forward to from a financial perspective. First, we do not expect to incur any idling cost across the high CV thermal and metallurgical segments, after incurring $112 million of such costs in aggregate in 2025. Second, we anticipate receiving additional insurance proceeds for Leer South during 2026, which is expected to outpace 2025 levels. Third, we expect to only incur approximately $10 million in merger-related expenses in 2026 compared to $66 million in 2025. Finally, and most importantly, we anticipate strong operational performance at Leer South and West Elk mines, which was not the case in 2025.

With that, let me provide a quick update on rare earth elements and critical materials. Since our last earnings call, our innovations group has continued to advance our efforts on the rare earth elements and critical materials front. In the PRB, we have drilled additional Core holes at strategically selected locations. Initial lab results are consistent with our previous findings showing enriched as basis rare earth elements, concentrations near the casing margins. In Northern App, we have been working with Virginia Tech and L3 Process Technologies to develop a concentration of creating an extraction strategy for the PMC and we recently entered into an exclusive option to license Virginia Tech's technology. We expect to have additional updates on our efforts in the Eastern and Western United States in the coming months.

We continue to make further progress on the coal-based battery materials front as well as on our aerospace and defense tooling and parts initiatives. Our innovations team is rapidly building a platform focused on disruptive solutions for our nation's most pressing national security needs.

Now let me pass it back to Jimmy for some quick closing remarks before we open the call for Q&A.

Thank you, Mitesh. In closing, for 2026, we will be focused on a few key areas. The first and most important priority for us in 2026 is regaining and strengthening our operating excellence and performance. We will continue to focus on running every operation safely and efficiently while reducing costs across the board as implied by our guidance. As we put the Leer South incident and the West Elk delay behind us, we will migrate our focus to finding additional areas to optimize and drive efficiency improvements across the operations.

Second, as Mitesh laid out, we expect to see strong positive momentum from an earnings perspective related to 2025, underpinned by strong operating performance as well as significant reduction in margin-related expenses and an increase in insurance recovery compared to 2025.

Third, we will continue to support the Trump administration and its efforts to preserve and upgrade the U.S. coal fleet, expand U.S. coal exports and ensure the long-term health and viability of the U.S. coal industry.

Fourth, we will continue to advance our efforts in the growth areas of rare earth and critical materials with a prudent capital allocation strategy.

Last but not least, our employees, throughout the organization in 2025, we effectively work together to mitigate the effect of the Leer South incident as much as possible. The team successfully managed cost and ensured each operation did its part and running as efficiently and safely as possible. I am grateful for our team members' dedication and pleased with how this challenging year was managed. I want to thank all our employees for their dedication and hard work, which carried us through a very turbulent 2025.

I specifically want to thank all our corporate employees who worked hard and spent countless hours streamlining policies, procedures and systems even as they grappled with the loss of their departing colleagues.

With that, I will hand the call back over to the operator to begin the Q&A portion of our call. Operator, can you please provide the instructions to our callers?

[Operator Instructions] And we now have the first question. This comes from Nick Giles from B. Riley Securities.

Just on the high CV committed and priced, $57 there. A few parts, but could you break this out just for the PAMC portion, maybe for comparison to legacy results? And then where are you seeing domestic netbacks today for PAMC coal? And how do you think about upside on the back of these positive developments?

Sure, Nick, it's Bob. Right now, we have roughly about 20.5 million of the 23.5 million tons that are committed or contracted for HCV, 2.5 million for PAMC. Right now, about 12 million of those, I'll say, are domestic 8.5 million export. About 4 million of those are linked to API2. And again, the reason why we gave a fixed price versus a range is we have less variable contracts in 2026. But of the 4 million tons that are linked to API2, we used about a $97 API2 price when we put in that guidance. So January was over $99. We're over $100 today. So there's certainly some upside there. Our sensitivity, give or take, is roughly about $0.10 a ton both on the up and down.

That leaves us, call it, 5.5 million, 6 million tons left to sell. Very excited about what we're seeing now. It's not only domestic. We are seeing some opportunities domestically as well on a spot basis due to the recent cold weather we experienced in January plus as Mitesh and Jimmy both mentioned the growth in power demand due to data centers. But I'm also encouraged by what we're seeing on the export front, specifically in India. A month ago, CFR India prices were in that $115, $120 range today, they're $125 to $130.

So we have been seeing some improvement there and been able to capture some of that upside on some of these open tons. So Nick, I would add that in addition to all those comments, look, last year, that 45 million tons increase in coal consumption really did pretty much chew up the latent capacity that was out there. So your question of where things might go. Look, it could start to get tight. If we see another year, another significant uptick in demand and coal consumption, you could start to see some upward momentum on those prices. Haven't seen it fully yet, but expect that to come.

Guys, I appreciate all that color. Maybe just as a follow-up on that. You've spoken about it before, but -- where are you seeing things in the outer years for the order book? I mean, has it really been a duration benefit? Are you seeing any upside potential in pricing in some of those outer years?

We are. If you look at our release this morning, we contracted over 38 million tons last quarter forward. And some of those contracts when it's far out is 2030. So our book is very well positioned. And I'll just tell you, in general terms, our pricing is in contango as we move out to the forward years.

Great. Great. My second question was more turning to -- Mitesh, you outlined some of the moving pieces in the financials, whether it's insurance recoveries or the 5x credit. So I was just hoping you could touch on what this all means for shareholder returns. I mean should we think about shareholder returns as being a little bit more lumpy in nature. And then I had one more on the CapEx side. There was a bit of a step-up there year-on-year. So curious what was driving that.

Yes. So let me address the CapEx front first. On the CapEx front, remember, we have Leer South fully up and running now, right? So there's maintenance CapEx tied to Leer South that's going to show up as well. And as we laid out in our press release, we are spending a little bit more, and I covered it in my prepared remarks, too, we're going to spend a little bit more on some of the rare earth and innovation-type project as well that is included in that guidance. I think about $25 million out of our total guidance on the CapEx spending front is tied to rare earth efficiency improvement and some of the critical minerals efforts, including cold products included in that number.

On the cash flow side, obviously, insurance is -- we expect insurance proceeds to be higher next year versus this year. good providing some perspective. We have two insurance claim events, the Baltimore Bridge-related claim and Leer South related claim. We settled the Baltimore Bridge claim for a net of $40 million of which $10 million was received in the first quarter of $25 million and $24 million was booked in fourth quarter of $25 million. We still have about $6 million that is going to be booked in 1Q, '26 for the Baltimore side. And on the Leer South side, we have so far booked about $19 million in 2025, and we expect another $10 million to be booked in 1Q '26 associated with the firefighting expenses. We also believe there's going to be a lost income claim of around more than $100 million. So I think that's going to play out as well.

So we feel good about how cash flow is going to look like on a year-over-year basis. including the fact that we are not going to have almost $112 million of idling costs that we had in 2025. And as we have said in the past, I think we'll continue to make sure that from a capital allocation standpoint, we continue to prioritize share buybacks.

And Nick, for the shareholder return, as you well know, we had the formula whereas we returned 75% of our free cash flow to shareholders. If you look at 2025, not the best of years for us, we still return probably 100% of our free cash flow are really close it to shareholders. So we should have an opportunity here in 2026 as we hit our targets and going forward to even provide more. And we certainly will stick with the form that we have in place today, which is 75% of our free cash flow or better.

And the next question comes from Chris LaFemina from Jefferies.

I'm just trying to understand the progression on the unit cost. So if we look at your unit cost guidance for 2026, is kind of in line with where you were in the first half of 2025. I mean obviously, Leer South was down in the second quarter, but does that really evidence of cost being significantly lower in 2026 than they were right when the merger first was completed. And you've guided to $150 million or more synergies. And in addition to that, you have 45X tax credit. I understand you're not -- that being offset by lower prices in those contracts. But I would have thought that the trend on costs would have been more downward than we're seeing.

So my first question is where are those synergies kind of showing up in the P&L here? And are they in -- is there a significant portion of synergies in 2026 guidance? Or is it that costs as the year progresses will go down, synergies will be a bigger factor each subsequent quarter.

And then the second question I have is -- well, actually, let me ask that one first, just in terms of synergies and where is that showing up in the P&L? And why are we now seeing bigger cost reductions for next year?

So Chris, I'll take the synergy side and Jimmy is going to address the cost side as well. So on the synergy side, I think if you look at what we have said in the past from a synergy perspective, what the key buckets are. So one of the key buckets on the synergy side has been head count related, which a lot of that shows up on the SG&A front. And based on our guidance for cash basis, SG&A that we have provided and what you have seen us do, you can come up with a reasonable conclusion of almost a 40% improvement on that front.

I think the other part of the synergies was on the marketing and logistics side. So that shows up in some of the byproduct credits, byproduct sales price that we have disclosed in our earnings release as well. I think it's the last wave of the earnings release, you will see a number that's $47 on byproduct credit that is related to blending. If you look at -- think about legacy Arch when they didn't have other products to blend, I think that they were selling it in the high 20s and low 30s. So there is a significant $10 plus uplift on that. So that flows into the realization bucket.

Now part of the reason you might not be seeing the full power of that marketing and blending synergies is because the overall market has been down since the merger, whether it comes to metallurgical coal or whether it comes to thermal coal pricing as well. So when they come down, the blending related synergies kind of decline a little bit.

And then the third bucket is financing and insurance related synergies that we have talked about in the past, realigning the balance sheet, improving liquidity, all sorts of things, right?

Finally, on the operations side, supply chain is one part of the synergy. The cross-current to that was some of the impact related to tariffs that was not envisioned at the time of the announcement of the merger, right? So that's a little bit of a wash there.

[indiscernible] About whether part of those synergies are being offset by inflation, which I assume would have been at, right?

Correct.

Okay. But if we're thinking about cost into 2027, I know you haven't given guidance yet, but would you expect, all else equal, unit cost to be low in the first half of 2027 than they will be in the first half of 2026. In other words, is the impact of all these benefits going to increase over time? Or should we see most of it through the first half of 2026 and kind of flat lines in there.

I think overall, just in synergy in general, I think we still have a lot of -- some of the IT systems that are not fully integrated. So I think first half versus second half, I would expect second half to be better than the first half. So there's going to be a ramp up as those systems roll off. And so I think there is that part of it, too.

And always remember in the first half, particularly in the first quarter, you always have weather impacts logistics, whether it's railroads, whether it's the terminal operations, all of those. So there is a little bit of that as well. So it could be a little bit more of a ramp-up from the first quarter.

And Chris, when you look at the cost, the unit cost, particularly with our guidance that we put out here in 2026, we've guided it certainly implies that we believe we'll have cost improvement in 2026 versus 2025. One of the things that I personally am going to do along with our Chief Operating Officer, and all of our operating folks get laser-focused on unit cost. Now that we have all of our assets up and running at full speed, we're excited about where we can get to.

Now with that being said, there were some maintenance costs associated with the longwall moves pulling forward. There were some fixed costs associated with just the assortment of less tons. But as we move into 2026, I think within the guidance that we give here, we will be focused to get those numbers and even beat those. So as we move forward, I would expect a more steady cost -- unit cost, and those should improve quarter-by-quarter as long as we stay and seen where we're mining.

Now we do have -- and as you know, it's been advertised at Leer mine was in the best yield that thickest seam they had. We're moving into a new district. We don't know exactly what that yield is going to be yet, but it's still going to be a great producing wall. We expect it to produce a much lower unit cost than we have.

So pretty excited about 2026. I know 2025 had a lot of noise, a lot of calculations for cost. But I'm really excited about where these units can get to PMC as well as the PRB and the Leer complex as well on the met side.

That's really helpful. And just one more quick one on the markets, maybe a question for Deck, actually. What are you seeing in the high-vol market now with Leer South ramping back up? I mean that market is obviously really dislocated from the premium low-vol market and what's your expectation as to how those spreads will change over time? And what are you seeing right now in the market?

Actually, Chris, maybe Bobby will start with how -- where we are at the moment, and then maybe I'll give a few thoughts on the macro.

Yes. I mean, as far -- we announced this morning, 6.7 million tons, we already have contracted. The exciting part about that is we do have some linkage to PLV, which I think you're indicating there are some wide spreads between where PLV indexes in the U.S. East Coast indexes are. We are seeing additional appetite in the Asian markets. They typically contract on a fiscal year basis, so April through March. We are in active negotiations today for some significant volumes. So I do feel good about our ability to contract those especially against PLV prices.

So when you look at we have left to sell at a midpoint, call it, 2.3 million tons. Majority of that is high vol, call it, 1.8 million, about 500,000 tons of that's low-vol. I would anticipate most of that high vol being contracted into the Asian market. And also to say if we see these U.S. utilization rates continue to climb, they've been hovering that 75% to 79%, but we have seen some recent upticks that could open up some opportunity for us domestically as well.

So I do feel good about where our book is. The spreads, I think -- we'll continue to shrink as we move forward, although right now, we're certainly doing what we can to take advantage of the spread and link more toward PLV.

Chris, maybe a point on that, on the spreads. Look, if you look historically, 2017 through mid-2024, the average spread between PLV and HVA was about $10. So it's obviously blown out in a very significant way in a way that you can't say value and use doesn't explain a $90 spread between PLV and HVA. So as Bobby said, look, we'll try to take full advantage of that by committing as many tons against PLV as we can. But there is an opportunity here. We expect that spread to shrink significantly.

Look, I think there's been some concern about additional high-vol A coming into the market or coming back into the market. which is valid, you do have some mines that are returning. And right now, everything else is running well. always the caveat, there will be mines that go out. Typically, you have 5% to 10% of the global mining fleet that is experiencing some sort of operational difficulties. So it's not like those -- that capacity comes back and everything else runs like a Swiss watch. We don't expect that.

But it's also true that if you look in 2025, you had production down 6 million tons in Australia, down 6 million tons or exports rather down 6 million tons in Australia, 6 million tons in the U.S. So that's a real counterbalance against some capacity coming back online. So Look, we feel like there is balance returning Indian imports of coking coal were up nearly 10 million tons in 2025. So look, lots of positive signs here. So we expect this market to normalize here in the not-too-distant future. But clearly, we've been under some pressure through 2025 and are only now getting sort of back towards some positive signs.

And the next question comes from Nathan Martin from The Benchmark Company.

Bob, a question for you. You mentioned earlier sensitivity to API2 price for the high CV thermal segment. Any sensitivity you could provide for PJM West power prices or even pet coke that you could share?

Yes. So for PJM, it's fairly irrelevant right now. Our new contract with that specific customer, we negotiated a fixed price. We've certainly seen a much higher, I'll call it, base than what we received on the netback. We did have some volume carry into Q1. So sensitivity there, Nate, is I don't want to say it's irrelevant, but it doesn't become very relevant as we move forward in 2026 and 2027.

In terms of -- what we're seeing on the pet coke side just as an example, recently, pet coke prices have improved to closer to -- CFR pet coke prices improved around $125, $130. That's netting back roughly a 6 handle back to the mine, where previously we were contracting in December when pet coke prices were closer to that $115, $120, we were low 50s. So we've seen at least a 10% to 15% improvement and our overall netback with the improvement in pet coke prices.

Okay. I appreciate that, Bob. Maybe one other one for you. Thinking about West Elk, can you talk a little bit about the marketing efforts for that coal, given the potential for additional production out you guys are in the B seam.

Yes. So a couple of things. We've really -- once we enter the B seam, the quality has significantly improved, especially from a heating standpoint. So the team has been doing a really good job and developing that coal into utilities mainly into the east. The coal traditionally has gone into the industrial markets out in the West and also into the export markets. We still have that business. But now that we're focusing on getting to 5-plus million tons out of West Elk, the incremental volume we're certainly looking to develop into the East. We've already been successful in securing four utility customers in the East, two that we currently have under contract, two, I would say, we're in the process of doing trials. So again, look forward to our ability to secure meaningful volumes into the utility business into the east.

And just for reference, this is a business that is being developed 12 months ago, we didn't have any utility business in the east for West Elk coal. I think with the demand growth that we are seeing everywhere in terms of data center and AI, I think there's a lot of potential to benefit from that growth in the east, and we are very optimistic that we will be able to capture that -- some of that growth out of West Elk.

And the next question comes from George Eadie from UBS.

Sorry, my line dropped out, but maybe just a quick one, sorry, if this has been asked. But the 45X tax credit, confirming all PAMC is eligible and also West Elk and maybe the timing of the $100 million insurance to come still. Is that weighted to late in the year, would you expect?

Yes. So on the 45X credit, George, I think both the metallurgical segment and high CV thermal segment are going to benefit from it. And we have modeled it in our guidance. And then on the insurance proceeds, I think what the way we'll file all our claims here in the first half. Now there is going to be a cadence we are going to start receiving, as I mentioned early on, we've started receiving some stuff in Q1, which I already mentioned.

From a modeling perspective, I would assume that it's more second to fourth quarter loaded rather than first quarter, but we are getting some stuff. It's just timing and they go through the claim process and there's some back and forth. So again, we're trying to push as hard as we can, but sometimes, as you know, the insurance company also go through their own due diligence process.

Yes. Okay. And then probably for Jimmy more so. But I mean 2025 wasn't the best year operationally with Leer South and West Elk in the more challenging sing. Like what tangible things have you guys done to give us more incremental confidence in the operational delivery for 2026? I mean volumes this year look good. There are some tailwinds helping on the cash cost front. But how do we gain conviction in delivery this year? And maybe a reminder as well, any operations in any challenging parts of the mine plan besides Leer?

No, I think that's what gives us so much excitement about 2026. As I said earlier, we have all of our assets up and running now. We've done some things that we think is going to really help our costs going forward, such as schedule change, such as looking at how we're producing on certain walls, that's what we did in prior years. And quite frankly, we're in great conditions at West Elk. We're really excited about that there. I think we can it's going to depend on the market in transportation for West Elk, but we're certainly in a position at the mine to produce at high productivity levels. We have Leer South back up and running now. I think they're going to do great things there. of course, mining and mining, you always have incidents come up here and there.

But as a whole, I feel really, really good about Core in 2026 and beyond. I think we're going to continue to work on cost structures and things will help us. Leer moving over into the North district there, we'd probably have a little better geology and maybe a little less yield coming out of that. But the team is laser-focused on doing that and getting our longwall moves and the right cadence to whereas we can move and produce to our guidance or above that, I think, is going to be what you see in 2026.

Yes, that's clear. And then -- the U.S. coal fleet capacity factor like this is getting a lot of attention and interest, but we haven't really seen it annualized much higher than 50%. We've had patches in the 70s with the weather and gas prices, bad things. But how do you guys think about this on a sustainable 6-month view? Like would we see 60% U.S. coal plate capacity. Is that a fair assumption for potential second half? Or is that still too aggressive?

So George, as we said, look, it's running -- we're running about 49% at this point. It's Deck. And look, actually, you only have to go back to the odds to the early part of the century to see when they were running at 70% to 72% capacity factors. And even then, that was with cycling down, right? So they definitely can run at much higher levels than the 49%. Quite frankly, we saw them running at 61% in January and February of 2025. So that demonstrates that they sort of proved it in winter early -- earlier this -- earlier in 2025, they demonstrated that. And again, still with a lot of cycling down.

So look, we're highly supportive of the Trump administration's efforts to induce additional investments and to try to make these plants young again in that way. But even now, we think they can operate at much higher capacity factors than they are now. We've seen that. And look, the math is pretty simple. I mean, if you go from a 49% capacity factor to a 65% capacity factor. If you increase the -- if you increase that capacity factor by 50%, the consumption can increase by 50%. That suggests another 200 million tons of coal consumption without really doing anything much to the fleet at all. So again, we're enthused about where that's leading.

Yes. And George, one last thing I'll just add. I would say it's very encouraging is talking to a lot of our utility customers investments are happening. And I think Deck mentioned that at the last point of his comments there is that these utilities are investing in their coal fleet, so they can continue to run at these higher capacity factors as this additional load comes online. So that's very encouraging.

And I'd add one final point, George. The Trump administration also really focused on not allowing additional coal-fired plants to close. They've used their 202C authority under the Federal Power Act to ensure that plants that maybe a year ago, 2 years ago, 3 years ago were viewed as an essential, non-essential are now being preserved. And I think it's going to become very clear very quickly that those plants are, in fact, needed with the power demand growth we're seeing. We talked about the overall growth. But in fact, we're going to see 3.5%, 4% power demand growth, you're going to need all that baseload capacity and more.

Just on -- you think if I put in my U.S. thermal coal model, like 60% for second half '26 or first half 2027, does that sound too aggressive to you for a half?

Probably not that fast. That's probably too fast to jump up to that level. But I think we get there. I think that's just over the next several years.

I think it's going to depend. There are several factor for that, the price of gas, what the demand is, all of those things. So I would say it will take a little longer than the second half of the year to get to 60%.

Right. Okay. Yes. But like if gas prices and energy prices sort of in the high 3s even like is U.S. power demand sort of high 400s in '27, say, a reasonable thought? Or is that again still a bit too optimistic in your view at least guys?

George, another thing I think we have to consider too is like coal production, right? Like as you probably saw from the earnings releases that have come out so far, there hasn't been a significant push to increase production. And one of the variable here is going to be how fast can the industry ramp up if the industry decides to ramp up, right? And to see that happen, you need to see strong pricing signals as well.

So I think from a cycle perspective, I think the price need to go much higher than where it is today to be able to backfill into some of that demand growth, you could run into a situation where the utilities do want to run more, but there's not enough coal, so they will have to pay up for it, so to speak, right? And that's going to happen. It's just a matter of timing. And then you come back to that question is, is the pricing signals strong enough for the coal producers to invest for capacity expansion or debottlenecking or whatever.

Okay. I'm guessing West Elk going to sort of 6 million tons, maybe slightly higher really the only labor you guys could pull in terms of that volume front?

Well, I think West Elk, as I said, it ran at a really high productivity level in January. It's going to depend on what the market is. I've always said, we will run to the market, but I think the capability of West Elk is certainly there. It's going to depend on customers and rails. But it's a great mine. It's ready to go. We have a good team there that's ready to produce, and they certainly could produce that 6 million tons if the market is there for it.

And there are no further questions that came through. And this concludes our conference call for today. Thank you all for participating. You may now disconnect.

Good morning, ladies and gentlemen, and welcome to the Core Natural Resources, Inc. Third Quarter Earnings Call. [Operator Instructions] This call is being recorded on Thursday, November 6, 2025. I would now like to turn the conference over to Deck Slone, Senior Vice President of Strategy. Please go ahead.

Good morning from Canonsburg, Pennsylvania, everyone, and thanks for joining us today. Before we begin, let me remind you that certain statements made during this call, including statements relating to our expected future business and financial performance, may be considered forward-looking statements according to the Private Securities Litigation Reform Act. Forward-looking statements, by their nature, address matters that are, to different degrees, uncertain. These uncertainties, which are described in more detail in the annual and quarterly reports that we file with the SEC, may cause our actual future results to be materially different than those expressed in our forward-looking statements.

We do not undertake to update our forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by law. I'd also like to remind you that you can find a reconciliation of the non-GAAP financial measures that we plan to discuss this morning at the end of our press release, a copy of which we have posted in the Investors section of our website at corenaturalresources.com.

Also participating on this morning's call will be Jimmy Brock, our Chairman and CEO; Miteshkumar Thakkar, our President and CFO; and Bob Braithwaite, our Senior Vice President of Marketing and Sales. After some formal remarks from Jimmy and Mitesh, we will be happy to take questions. With that, I'll now turn the call over to Jimmy. Jimmy?

Thank you, Deck, and good morning, everyone. I am pleased to report that Core Natural Resources had a solid performance in the third quarter despite some operational headwinds. During Q3 '25, we once again generated free cash flow despite weak commodity prices, deployed cash toward our share buyback program, secured 26 million tons of future business and nearly finalized plans with MSHA to recover and reposition the longwall equipment at the Leer South mine.

Furthermore, we received the first tranche of insurance recovery for the Leer South fire mitigation efforts. I am also excited to announce that we have verified the presence of noteworthy levels of rare earth elements and critical minerals at our flagship operations in both the Eastern and Western United States.

Now let me dive a little deeper into our operational results. Coal production within the High CV Thermal segment came in at 7.6 million tons in Q3 '25 compared to 8 million tons in the prior quarter. During the quarter, our High CV Thermal segment reported realized coal revenue of $59.78 per ton and cash cost of $40.53 per ton. Segment cash costs were slightly elevated compared to Q2 '25 due in part to operational challenges we faced at the West Elk mine as it transitioned to a new seam within the reserves.

We believe these initial challenges will continue partly through Q4 '25. However, the B-Seam at the West Elk mine will allow us to take advantage of a much thicker coal seam and better quality characteristics, which will ultimately drive more favorable productivity, realizations and cash costs. During the quarter, the Pennsylvania Mining Complex outperformed versus expectations, which partially offset the challenges at West Elk.

Moving forward to Q4, we expect 1 to 2 longwall moves at the Pennsylvania Mining Complex, depending on its level of outperformance relative to our guidance level for the rest of the year.

Let's move on to the metallurgical segment. Coal production within the segment came in at 2.3 million tons in Q3 '25 compared to 2.4 million tons in Q2 '25. During the quarter, our metallurgical segment reported realized coking coal revenue of $112.94 per ton and $101.60 per ton across the segment as a whole when factoring in the 372,000 tons of thermal byproduct sales. Cash costs for the quarter came in at $94.18 per ton.

Additionally, the metallurgical segment incurred $18 million of costs associated with the Leer South fire and idle-related expenses, offset by $19 million of advanced payments on the Leer South insurance claim. Although the cash margins are depressed compared to recent years, I am very proud of the Core team's ability to manage and continually work toward reducing costs through this market downturn and to continue to realize positive cash operating margins.

Now let me provide a brief update on the Leer South mine. After we temporarily resell the mine in July, we have further advanced our continuous mining sections. At the same time, we have continued to work with the federal and state agencies for reentry plans that will involve recovering, repositioning and restarting the longwall system. As we approached our entry date in October, the government shutdown resulted in the unavailability of MSHA personnel needed for the reentry efforts, and we have been in a holding pattern ever since.

Our operating team remains confident that the longwall equipment is largely unaffected and that the mine is ready for reentry into the longwall section as soon as the MSHA personnel are available to participate in the process.

Now to the Powder River Basin segment. Coal production within the segment came in at 12.9 million tons in Q3 '25 compared to 12.6 million tons in Q2 '25. During the quarter, our PRB segment reported realized coal revenue of $14.09 per ton and cash cost of $13.04 per ton. Both were lower compared to the prior quarter, mostly due to the federal royalty rate reduction in conjunction with provisions in many of Core's existing contracts requiring that cost savings associated with certain policy-related changes be passed along to the customer.

From a consolidated perspective, despite operational headwinds, uncertainty surrounding the timing of reentry at Leer South and weak benchmark prices, we still returned more than 60% of our Q3 '25 free cash flow to shareholders. We deployed $19 million towards share repurchases and an additional $5 million to dividends. In addition, we announced this morning that the Board of Directors have declared a $0.10 per share dividend payable on December 15 to stockholders of record on November 28.

From a year-to-date perspective, we have returned $218 million to our shareholders or approximately 100% of our free cash flow generation through our robust capital return program. As stated in prior quarters, Core will continue to follow a measured approach to shareholder returns by targeting around 75% of our free cash flow to be utilized primarily for share buybacks as well as a small sustaining dividend, leaving the potential to flex that percentage up depending upon market conditions.

With that, let me now turn to a topic that could provide potential future optionality for Core, rare earth elements and critical minerals. Over the last several months, we have completed exploration and sampling at our PRB mines and Eastern operations to analyze the concentrations of critical minerals within our reserves. We are intrigued by our findings across both our PRB mines and Eastern operations. The result in the PRB demonstrated elevated ash-basis concentration of certain rare earth elements and critical minerals, particularly at the top and bottom of the coal seam.

In the East, while measured ash-basis concentration were somewhat less elevated than in the PRB operations, the very large flow rates at the PAMC, Leer and Leer South operations could offer unique opportunities for further upgrading. As a result of these findings, we are engaging with several subject matter experts to explore feasibility in advance of potentially launching an RFP process.

Now let me touch on some of the early operational successes we've had in integrating our 2 legacy companies and creating a stronger Core Natural Resources. We've executed several best practices across the operations, such as implementing more standardized production schedules to optimize our run time and labor expense, sharing equipment and resources for special projects such as longwall moves and leveraging our scale with suppliers to secure discounts on equipment and services.

We continue to leverage our strong logistical network and diverse quality characteristics to create value uplift opportunities for our products through product blending. These are just a few examples of the merger-related synergies that positively impact our bottom line and why we are confident in our ability to create value across the market cycle and to capitalize in a very substantial way when the market turns.

Our focus for the fourth quarter is to execute operationally. We are prepared and ready to breach the seals at Leer South as soon as MSHA personnel are available. We have a solid plan in place and expect to have the wall up and running before year-end. However, certain aspects of the timing are out of our control. We remain in close contact with state and federal agencies.

At West Elk, we continue to work through the transitions to the B-seam and are optimistic about the operational benefits that we will realize from this thicker coal seam. We expect these efforts during the fourth quarter will set us up for a performance step change in 2026. Due to our low-cost asset base, advanced logistics network and diverse product quality, we are uniquely positioned to generate strong cash flow and shareholder value in all parts of the commodity cycle.

Now let me turn the call over to Mitesh to provide the marketing and financial updates.

Thank you, Jimmy, and good morning, everyone. Let me start by providing an update on our financial results for the quarter. This morning, we reported a strong third quarter 2025 financial performance despite operational challenges at 2 mines within our footprint. We achieved net income of $32 million or $0.61 per diluted share and adjusted EBITDA of $141 million. The reported adjusted EBITDA includes $19 million of insurance recovery advancements for Leer South, offsetting $18 million in Leer South fire and idle costs that were incurred in the quarter.

Furthermore, we generated $88 million of operating cash flow and spent $49 million in capital expenditures to generate $39 million of free cash flow. Our operating cash flow was impacted by negative working capital changes of $52 million, mostly related to increases in our accounts receivable and coal inventory balances versus the prior quarter. However, both of these are timing related.

At the end of the third quarter, we had total liquidity of $995 million, an increase of $47 million compared to the end of the second quarter. This increase was driven by higher cash balance plus the increased availability on our combined securitization facility. As a reminder, we completed a successful refinancing transaction during the third quarter, whereby we combined the legacy AR securitization programs into one facility.

This combination provides greater availability on the facility due to a broader and more diverse customer base, which in turn improves the risk profile of our overall receivables. We'd like to thank our banking partners for their continued and expanding support.

Let me update you on the marketing front. In the domestic market, recent policy shifts under the Trump administration have created more support for domestic coal by lowering production and royalty-related costs, providing a more stable regulatory environment and allocating funds to extend the life of coal-fired power plants, effectively keeping coal plants operating and reinforcing the central role of coal in the U.S. energy mix.

Through September, U.S. power demand has remained robust with coal-fired generation increasing by approximately 12% year-to-date. However, some of the specific markets we serve are up even more. For example, the PJM RTO is up approximately 16% on a year-to-date basis. Not only has energy demand continued to increase this year, but it is expected to increase for years to come.

Data center build-out has been a large part of this increased power demand. And by the end of 2025, the data centers in the U.S. will require 22% more grid power than last year. Furthermore, it is estimated that U.S. data centers will consume nearly 3x as much power by 2030 than they do today. As such, U.S. data center demand is expected to rise to almost 76 gigawatts in 2026, 108 gigawatts in 2028 and 134 gigawatts in 2030.

This data center demand boom has caused many electric utilities to look at their long-term load capacities, which has driven a significant shift in how they think about contracting future energy supply. We have seen a noticeable shift to longer-term deals for our thermal products and our low-cost operations allow us to proactively layer in term business cost competitively.

On the international thermal front, a prolonged monsoon season and weakness in the Indian rupee have dampened near-term demand. However, longer-term fundamentals remain unchanged. Cement demand in India is expected to grow approximately 50% by 2030 versus 2024 levels and our High CV Thermal product, coupled with our strategic logistical network while the ownership of our Baltimore terminal is well positioned to take advantage. In addition, in late September, India removed a special compensation cess tax, which will support demand growth.

Looking ahead internationally for coking coal, global steel prices continue to face pressure due primarily in our view to macro conditions. However, we remain highly constructive on the longer-term fundamentals given the build-out of blast furnaces across Southeast Asia to support strong projected increases in steel demand and infrastructure build-out. At the same time, momentum behind Europe's green steel transition is slowing as governments face significant cost barriers, particularly related to hydrogen supply and energy infrastructure.

On the supply side, we continue to believe that years of underinvestment as well as degradation and depletion of the global reserve base will act to constrain global metallurgical supply while exerting a foot pressure on prices. This market landscape lays the backdrop for our contracting progress. Due to the desirability of our products, our marketing team was able to expand our contract book for 2026.

On the thermal side, we increased our High CV book by approximately 4 million tons to a sold position of nearly 17 million tons in total. For the Powder River Basin, we increased our sold position by approximately 8 million tons, raising our 2026 contracted book to more than 40 million tons. Due to the nature of the metallurgical segment, long-term contracting is less prominent and pricing in the international arena is generally index-linked.

However, our current metallurgical segment has nearly 3 million tons contracted for 2026 with approximately 500,000 of those tons slated for delivery to North American customers. Furthermore, we remain in negotiations with additional North American customers for potential contract volumes and expect to provide more color on our next earnings call regarding pricing.

Now let me provide a quick update on our outlook for the remainder of 2025. For the High CV Thermal segment, we are maintaining our guidance for sales volumes while reducing our price range to $60 to $61 per ton. Additionally, we are raising our cash cost guidance by $1 to a range of $39 to $41 per ton. This increase is primarily a result of the West Elk operational challenges that Jimmy mentioned earlier.

On the metallurgical front, due to the timing of the Leer South longwall restart, we are lowering our coking coal sales volume guidance to a range of 7.4 million to 7.8 million tons. On the cash cost side, we anticipate a similar cost structure in the fourth quarter as incurred in the third quarter. Therefore, we are decreasing our cash cost guidance for the segment to a range of $93 to $97 per ton. We also anticipate spending $15 million to $25 million in idle and fire mitigation costs during the fourth quarter as we work to restart the Leer South longwall.

For the PRB segment, we are again increasing our sales volume guidance to a range of 47 million to 49 million tons, and our committed and price position has increased to 48 million tons at a realized coal revenue of approximately $14.46 per ton. We are maintaining our cash cost per ton guidance range. On the capital expenditures front, we took advantage of attractive equipment financing throughout the year and are lowering our capital expenditure guidance by $40 million to a range of $260 million to $290 million.

Now let me pass it back to Jimmy for some quick closing remarks before we open the call for Q&A.

Thank you, Mitesh. In closing, for the remainder of 2025, we will be focused on a few key areas that we believe will set us up for success moving forward. First, continue to work with MSHA and focus on the restart of the longwall at Leer South at the earliest possible date. In addition, we will drive forward with the completion of the transition at West Elk.

Second, we will continue to focus on running our operations as safely and efficiently as possible. The PAMC, Leer, PRB and continuous miner operations ran very efficiently during the third quarter. Third, we will continue to focus on managing our spending levels to maximize our cash margins throughout the cycle despite the weaker benchmark prices we are experiencing today. Fourth, we are prioritizing filling out our sales book in 2026 and beyond. We have layered in nearly 26 million tons of forward contracts, which provides significant revenue visibility as we move into 2026.

Finally, let me finish by recognizing our employees. All of our employees are working well together to ensure we develop Core Natural Resources into the premier coal company we envision it to be. Despite the government shutdown, the team has continued to focus on the controllables and stands ready to execute our longwall recovery plan. The core team is adept at navigating the cyclical nature of the coal markets. And we have successfully managed our costs while focusing on our core values of safety and compliance, continuous improvement and financial performance.

With that, I will hand the call back over to the operator to begin the Q&A portion of our call. Operator, can you please provide the instructions to our callers?

[Operator Instructions] First question is from Nathan Martin from Benchmark Company.

Maybe just start on West Elk. Obviously, you guys had the move to B-Seam. Just looking for a little more color there, some reports out that there may have been some elevated methane levels, should there be any ongoing cost or production impacts from that? And then how should we think about cost and production from that mine heading into 2026 at a full run rate?

Nate, yes, it's a good question. So West Elk, as we said earlier, we did have some methane issues there. It was not any safety concerns. We just had to keep it that way for our employees. So we -- the team went out, managed some ventilation. We made a few control changes there. And we believe that we have the methane situation put behind us. We haven't had any elevated methane reading since we did that.

And then fast forward after we were running, we ran up against what we was calling our safe zone or stop margin to whereas we had to dewater the [indiscernible]. So that was overlay and the same we were mining. The team got started on that as quickly as they could. And that's what slowed us down here [ segfort ]. The good news is, I believe by early next week, we will have West Elk back up and running, and I look forward to what we can get done there. I think it will be a low cost as we talked before. I really like the quality of the coal and excited about what we can do with that in the marketplace.

So in short, very excited about the future of West Elk. And I think we'll have most of those problems behind us for the remainder of the year. Of course, mining is mining. Some little things could come up, but those things that stopped us from mining, I think we have those under control now.

Appreciate those thoughts, Jimmy. Maybe one for Bob on the marketing side. Bob, could we get a breakdown of the now it looks like 17 million tons of committed and priced High CV for '26? And then any commentary on the pricing of those tons as well as the 40 million tons of PRB coal you guys called out?

Yes, Nate, no problem. One thing I will say is I certainly am pleased with the team and their efforts in the last quarter, as Mitesh mentioned in his prepared remarks, we had 26 million tons of new sales. And what I like about that, too, is we're looking at sales on the High CV segment alone going all the way out through 2030. So it's certainly providing us a lot of good visibility as we move forward. And the other thing that's very encouraging is these utilities are contracting out longer-term duration. So I think that they are seeing the benefits of the data center demand coming online and they're contracting forward.

But for 2026 alone, of the 17 million tons of High CV, 14 million of that is PAMC, about 10 million domestic, 4 million export. Majority of that export is index-linked. So again, we have some upside there if API2 prices continue to rise as we've seen in the coming -- or in the recent weeks and about 3 million tons of that is West Elk. From a pricing standpoint, we're looking at upper 50s right now basis of $105 API2 price. So if we see that rise in Cal '26, that certainly is going to afford us the ability to increase that price. And then on the PRB side, as we mentioned, approximately 41 million tons, and we're seeing pricing in the low to mid-14s on that.

Okay. Great, Bob. And then any comments -- I mean, I think what Mitesh mentioned roughly 0.5 million tons of fixed price domestic coal for '26. Any comments around the pricing there would be helpful as well.

Yes. We'll provide that on the next call, Nate. Again, we're still in the middle of negotiations, but I'm very encouraged of what we're seeing there. A lot of that is high-vol coal that we've put to bed domestically. But again, we'll give a better update, a clear update on the next call, but I would anticipate that number increasing as when we do report next.

Okay. Great. And then maybe just one final question before I pass it on. The first tranche of insurance proceeds received, how should we kind of think about the potential range from that insurance and business interruption recoveries from Leer South, Mitesh. I think you mentioned previously maybe around $100 million, but it would just be great to get an update there.

So I think, Nate, if you look at year-to-date, we have spent about $75 million on fire and idling cost, and we are guiding to another, let's call it, $15 million to $25 million for the fourth quarter. So if you add that up, I think just from firing and idling cost, we're approaching $100 million. And then on top of it, you have to apply the residual business interruption claim as well. So I think we are definitely in 3 digits here. So I think we'll continue to track that. And as we submit the claims, we'll keep you apprised.

I think we are not waiting for the full claim to play out. We are starting to put advanced claims in as we incur cost as a starting point. I think our next step is to go ahead with the business interruption claim as well, and you're going to start trickling that in as well. So we are very optimistic of where we will end up with the overall insurance claim.

Next question comes from Nick Giles of B. Riley Securities.

Just wanted to follow up on the High CV cost side and really gauge your level of confidence in your PAMC Longwall operations maintaining their low costs and if there's any room for improvement. I think I -- if West Elk costs were to improve around $10 a tonne, I would back into a benefit of around $2, which would keep the segment cost maybe slightly more elevated than recent years. So just appreciate any color there.

Nick, I think when you look at cost, it's something, as you well know, that we work on continuously all the time. But one thing that got the High CV segment a little bit out of line was the unfortunate production shortfall we had from the West Elk mine, which obviously would be a little higher cost. I think you're in the ballpark with the numbers. I mean, I'd like to see the Pennsylvania Mining Complex running cash costs where we ran in the past, somewhere around $37 to $39. We think we can stay there.

And then when I look at the West Elk, we got to see what that mine does when we're running it very consistently full out all the time with no delays. But I do really believe that I can get it somewhere down and somewhere we should be low 30s, somewhere in there for cost for West Elk. So obviously, that will help the overall cost structure of our operations there on the High CV side.

Nick, it's Deck. Listen, another point, I think that's interesting is, as Bob discussed, for the 17 million tons of High CV thermal, we've committed, maybe a small step down in terms of average price at this point when we look at 2025 versus 2026. But the cost reduction should be with West Elk now being sort of pulling average cost down as opposed to being sort of a force to pull those costs up, sustaining that margin, maybe even improving upon that margin in 2026 is probably entirely realistic in what we're targeting. So that contribution from the High CV thermal segment could, at a minimum, stay sideways even with a little bit of a diminution on the price and perhaps could expand a bit.

I appreciate that. I wanted to ask a similar question on the met side. As we look to 2026, when Leer South is back up and running. How should we think of costs at that mine specifically? And how does that translate to the entire segment?

Well, obviously, Leer South is really hurting us on the metallurgical side at this time. We get it back up and running. We've had a schedule change there, Nick, as well. I think the mine is going to run a lower cost than what's been there. We'll have to see how that turns out. But I would think it would be very similar to what we're running at our Leer mine and perhaps even a little better with the schedule change that we've made there. So we have to wait and see on that.

I really want to get that mine back up and running. We've got to recover the shields, get the face set up. The team there has done an outstanding job and hasn't been in the best possible environment there where they couldn't run the longwall, but they have advanced our mining sections, and they've got the new phase set up and ready. So I'm really excited what Leer South can bring to the table in 2026.

And Nick, if you think about the broader metallurgical coal portfolio, we are going to have more tonnes coming out of longwall mines compared to CM mines. So there's going to be some tailwinds tied to that as well.

Great. One last one on that, if I could. Do we have any clarification on the total number of met tonnage that will be subject to the 45x credits in '26?

So Nick, it's Deck. And listen, I would say this, that is very clearly a capabilities test when you look at sort of how the legislation is written. So certainly, all of our metallurgical coal and metallurgical segment should qualify. But when you also consider the tons being produced at PAMC, what we're sending into the metallurgical market and selling to steel producers is really a standard blend.

So across that full 26 million tons, all of those tons are suitable for use in the production of steel. So we certainly believe that those tons should qualify. Again, it's fairly clear that this is about capability, not end market. We would say this, if the coking coal market were large enough, we could sell all 26 million tons of PAMC into that market. So that's our belief that we would get -- we would qualify on that front. So we can talk further about it offline, but just an initial reaction.

Next question comes from George Eadie at UBS.

Can I firstly just ask about the rare earths. So just sort of for Core specifically and financially speaking, do you think it's more prospective in the PRB or East Coast? And maybe also remind us what are the latest on discussions with the government. Jimmy spoke about before subject matter experts, but are the government getting involved here potentially too into underwriting financing and/or prices?

Well, we've been diligently evaluating the potential to recover rare earth elements and critical minerals from our Eastern and Western mining operations, as we said in the script. That work is ongoing, but it's still in the early stages. But I will say the question is not whether rare earth elements and critical minerals exist at these operations. It's rather the question is, can we cost effectively segregate, upgrade and extract the feedstock that we have available.

I mean our studies have shown that we have them in the coal seams out of our Western operations, and it's very similar to what others have said out there. So we do have them. One of the key advantages that we bring to the table is the massive scale of our already permitted active operations that we have. We run the largest underground mining complex in the U.S. at PAMC and the second largest operations in the PRB. So these operations generate huge quantities of material every day. And the angle we're evaluating is whether we can leverage our scale and creating a business case for the rare earth elements and critical minerals.

The work is being led by our innovation group, which has a team of highly competent scientists and engineers and work a lot of strong -- and they work with a lot of strong technical partners. So stay tuned for more on that, but we will have everyone involved as we get out into more details about the rare earth elements and critical minerals.

Might we get a more material update next -- the full year earnings potentially? Or is that too soon?

I'm sorry, I didn't understand the question. What was it?

We would expect to comment to some degree on it next quarter. But in coming quarters, we'll continue to provide updates as we move forward, George, but work to do.

Yes. Okay. And then maybe moving to the U.S. domestic thermal picture, Mitesh and Bob, perhaps, could you help me understand better the upside here? Looking at those charts and a lot of people speak to this now, the U.S. coal fleet capacity factors are at 50%, which is climbing higher. But can you sort of help ballpark if that got to, say, 60%, given there isn't really much volume upside in the PRB or Northeast without material CapEx.

How do we triangulate 5% or 10% higher capacity factors to your margins and pricing in the PRB, PAMC? And then just lastly on that, is there potentially more upside in the PAMC given there's more demand growth in the Northeast for that domestic market versus the PRB?

Yes. I would sit there and tell you, George, couple of things. First, we are encouraged, as I mentioned before, that we are seeing a lot of investment now in the coal fleet. You might not hear about it so much publicly, but we are talking to our customers, and we are seeing them invest in their coal fleet in anticipation that they are going to be running at much higher capacity factors for a period of time here. And a lot of that has to do, again, as you mentioned, with the data center and AI build-out.

We think that in total, we could see domestic coal-fired generation increase by 20%, 30%. And if you look at, call it, 400 million tons of coal being burned today, your additional 60 million, 80 million tons potentially not so far in the distant future. We can continue to invest in our operations. I think we always say 26 million tons is our base case at PAMC. We do have the ability to ramp up if the market is there.

And I'll tell you that we may get there, right? As I mentioned earlier, 26 million tons of new sales last quarter all the way out through 2030. So it is encouraging. We're starting to get a lot of visibility on the fact that these domestic utilities are going to continue to run. We'll see here as more data centers are committed for build-out. There's a lot on the docket here. And if that comes to fruition, I think, yes, we will continue to invest to see if we can grow production not only at PAMC but also out in the PRB.

And George, if you look at where all these data centers are getting built out, a lot of them are in the East, and I think PAMC is sitting right on top of all those, right? So I think you're going to obviously see some competition from natural gas. But if you listen to some of the earnings call of industrial companies, they are saying like if you want a new gas turbine, you're going to have to go back in line 2029, 2030, right? So there's going to be this period where you're not going to get a lot of incremental juice out of the gas plants and coal is a natural pivot here, 24/7 consistent power dispatch, and that's what these data center and AI applications need.

So I think we are very excited about it. And PAMC as well as our Western operations are going to continue to benefit. I think we're seeing increasing interest from Eastern utilities on our West Elk coal as well. So I think that supports that trend.

And George, just to comment, I mean, we would say at this point, you're already seeing this. To your point, we're already running at 50% capacity factor, but coal consumption year-to-date of about 35 million tons could be up as much as 45 million tons depending on how weather goes for the full year. That's a big step up. So in terms of implications for pricing, we'll see. But obviously, another year or 2 of that is going to put some stress on supply without a doubt. So it could have positive implications there.

Yes. Okay. And last one, sorry, maybe Mitesh again. I think this was Nate's question before, but can you remind us potential time lines of when these insurance proceeds will come in? Should we expect all of the funds to be in sort of middle of next year potentially? And also just remind on the Baltimore bridge proceeds, too, please?

Yes. So I wish I can give you an exact time, George, but I think this is one where we are starting to submit claims as we get the receipts and everything in place as the first line of action on Leer South, which is what we have been doing. So the claim that we just received, we submitted that claim probably 3, 4 months ahead. So there's that lag. We submitted another claim in October. I hope we can get this early next year. So we'll continue to do that, and I think it's going to trickle down. I wish I can give you like an end point.

The business interruption claim tends to be a little bit longer gestation period, so to speak. It takes a while going back and forth on assumptions and stuff like that. So I think we are working through that. I think we have made a lot of progress on the Baltimore claim as well, we'll see. I hate to give you like an end date, but I think we expect most of those to be collected next year.

Next question comes from Matthew Key of Texas Capital Bank.

In 2Q, the guidance on merger-related synergies were increased to $150 million to $170 million. I was wondering what percentage of that target have you guys achieved kind of at the end of 3Q? And if there's any other kind of incremental cost savings that you see kind of as you play this out?

This is Mitesh here. I think we have made a lot of progress on that front, and that number is a little bit higher on an annualized run rate as well. And we'll continue to grind it up. There are a few other things that we are working on. But just in terms of what we have actually achieved, I think if you look at our SG&A trend Q4, Q3 versus what you saw in Q1 and Q2, it kind of reflects some of it. You're seeing that also in the byproduct sales revenue as well. I think on an aggregate, I think we are probably 50% that's probably flowing through the current year, but a lot of that is going to flow through next year.

For example, SG&A is going to have full run rate next -- starting second quarter of next year. We have some systems on the IT front that are rolling off. Some of them rolled off in September. So you haven't even seen that impact in the September numbers yet. I think you'll continue to see that and the final system roll-off happens, I think, sometime in April. So I think you will see those numbers flow through. So I think the way to think about full run rate, I would say, sometime second quarter next year, but we are making a lot of progress on that front.

Got it. Appreciate that. That's super helpful. And assuming work at Leer South, the restart there goes as planned. I was wondering if the company would incur any additional fire extinguishment idling costs that kind of bleed into 1Q '26? Or would 4Q kind of be the end of that dynamic?

I think 4Q will be the end of it, particularly if we get some help here from the government. Like I said, we're ready. The team is ready to go recover these shields. So we don't -- we think what will be left will be the idle expense that's left that will obviously carry through Q4 here. But if we get to recover our shields, -- the longwall face is already mined and set up and ready to receive the new shields.

So we'll have all that done in Q4. And there is a possibility if we were turn loose in time and we can't get all the sales that we could actually have production late in Q4 out of Leer South. So it's all based on timing now, but I do think we will have this put to bed in Q4 of this year as far as the fire-related costs.

Next question comes from Nick Giles of B. Riley Securities.

I just wanted to ask about High CV volumes as we look to the fourth quarter. I think your annual guide, the midpoint might imply a slight tick up. But can you just give us some color on what could take us to the higher low end of the range? Are there any longwall moves?

Yes. I would say that right now, contracted wise, we're in that 7 million to 7.5 million tonne range. PAMC is running very, very well right now. There's a potential we could have a longwall move hit sometime in December. A lot of -- we originally anticipated that in Q1 of next year. But based on the mine running very well, it could funnel in. The big driver there to get to the top end of the guidance will be the return of West Elk, which, as Jimmy mentioned earlier, we're anticipating next week. So all goes well, longwall runs very well, you could see us creep up toward that upper end of the guidance range.

Yes. And we do have 2 long-haul moves remaining in Q4 for PAMC.

And just a minor point, too, right? Like we provide sales guidance, not production guidance, right? So we have inventory at the end of the third quarter, which you saw probably in the working capital, too. So it depends sometimes on how many boats show up in the last couple of weeks of December and destock the inventory. So that could drive a little bit of an upside, downside as well.

Got it. Guys, just while I have you, I mean, in recent years, you've spoken about what's the maximum number of volumes that you could send into the seaborne market. But today, just with how robust the domestic market is, what would kind of be the limitations on those volumes?

I think you just -- you said it right. I mean we are now forecasting, I will tell you, for 2026, we believe our domestic volumes will increase year-on-year. Now again, then the question becomes how is the international market and if we can get more volume out of PAMC. So sitting here today, as I mentioned, 14 million tons we have contracted right now, 10 million of it is domestic. We're still in negotiations for additional business next year. So we'll see how that all plays out. But PAMC is running very well. So we continue to keep on that pace. We certainly could increase some more volumes and get them export. But I would say domestic is going to be year-on-year improved.

But it works well for us, Nick, compared to -- we've always said in the past that we run to the market. So here's another opportunity, and we run to highest arbitrage. So wherever that may be, if it's domestic or international, we certainly have the ability to get it there.

And Nick, you talked about the High CV thermal segment as a whole, but West Elk also selling more power gen coal today. And as the story comes to fruition, we could continue to direct more tons into the domestic power gen market from West Elk. And plus, oh, by the way, it's in the B-Seam, we certainly have the ability to run at much higher levels in that thicker coal seam. So additional opportunity there.

There are no further questions at this time. I'd now like to turn the call back over to Jimmy Brock for final closing comments.

Yes. Thanks, everyone, for joining our call today. We look forward to speaking with you in the future, and we're excited about where Core Natural Resources can be.

Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines. Have a great day.