Core Natural Resources, Inc. (NYSE:CNR) Q4 2025 Earnings Call Transcript

Core Natural Resources, Inc. (NYSE:CNR) Q4 2025 Earnings Call Transcript February 14, 2026

Operator: 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.

Deck Slone: 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?

James Brock: 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 formed 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 costs. 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 E seam, where mining conditions were suboptimal. In 2025, we began 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 a sustained 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 that the operating platform is at full strength 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 established 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 eliminated 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 central 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 Council 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.

Mitesh Thakkar: 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 idle 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 coal 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 coal-related’s 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 ash basis rare earth elements, concentrations near the coal seam 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.

James Brock: 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?

Q&A Session

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

Nick Giles: My first question, 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?

Robert Braithwaite: 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 high CV, 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 PAMC.

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.

James Brock: 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.

Nick Giles: 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?

Robert Braithwaite: 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.

Nick Giles: 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 now 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?

Mitesh Thakkar: 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.

Just 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 and $24 million was booked in fourth quarter of ’25. 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.

James Brock: 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 or 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.

Operator: The next question comes from Chris LaFemina from Jefferies.

Christopher LaFemina: 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?

Mitesh Thakkar: 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 headcount 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 page 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.

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

Mitesh Thakkar: Correct.

Christopher LaFemina: 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.

Mitesh Thakkar: 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.

James Brock: 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 that 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 PAMC as well as the PRB and the Leer complex as well on the met side.

Christopher LaFemina: 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?

Deck Slone: 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.

Robert Braithwaite: 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 at 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.

Deck Slone: 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.

Operator: The next question comes from Nathan Martin from The Benchmark Company.

Nathan Martin: 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?

Robert Braithwaite: 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.

Nathan Martin: 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?

Robert Braithwaite: 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.

Mitesh Thakkar: And just for reference, this is a business that is being developed 6 to 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 some of that growth out of West Elk.

Operator: The next question comes from George Eadie from UBS.

George Eadie: 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?

Mitesh Thakkar: 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.

George Eadie: 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?

James Brock: 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.

George Eadie: 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?

Deck Slone: So George, as we said, look, it’s running and 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.

Robert Braithwaite: 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.

Deck Slone: 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.

George Eadie: Just on [indiscernible], 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?

Deck Slone: 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.

James Brock: 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%.

George Eadie: 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?

Mitesh Thakkar: 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.

George Eadie: 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?

James Brock: 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.

Operator: Thank you. 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.