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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.

Good morning, ladies and gentlemen. Welcome to the Core Natural Resources, Inc. Second Quarter Earnings Call. [Operator Instructions] This call is being recorded on Tuesday, August 5, 2025.

I would now like to turn the conference over to Deck Slone, Senior Vice President, 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 Paul Lang, our CEO; Mitesh Thakkar, our President and CFO; and Bob Braithwaite, our Senior Vice President of Marketing and Sales. After some formal remarks from Paul and Mitesh, we will be happy to take questions.

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

Thanks, Deck, and good morning, everyone. We're glad you could join us on the call today. I'm pleased to report that in the quarter just ended, Core again demonstrated its significant cash-generating capabilities even while navigating a softer market environment as well as with the current outage in our Leer South mine.

During Q2, the team generated adjusted EBITDA of $144 million and free cash flow of $131 million, increased our merger-related annual synergy target to a range of $150 million to $170 million, which is roughly 30% higher at the midpoint than the original guidance. Returned $87 million to investors through share buybacks and a quarterly dividend, increased cash and cash equivalents by $25 million and overall liquidity by $90 million. And finally, advanced our plan for resuming longwall production at Leer South during Q4.

On the operations front, the high CV thermal segment again set the pace achieving a significant step-up in sales volumes while lowering unit costs markedly. Exclusive of the outage at Leer South, the metallurgical platform also executed well, led by the segment's flagship Leer mine which achieved a second straight quarterly production record.

Finally, the Powder River Basin segment delivered another strong performance as power generators sought to accelerate shipments in advance of the summer season. We remain focused on pursuing operational excellence across the entire operating portfolio and expect ongoing synergy capture to lift our performance further as the year progresses.

Now let's shift our attention to the capital return program. As you will recall, we announced a new capital return framework in February, shortly after the merger's completion, which was designed to reward shareholders for their ongoing support and which we consider a central tenet of Core's long-term value proposition. The centerpiece of this framework is the targeted return to shareholders of around 75% of free cash flow through share repurchases and a sustaining quarterly dividend of $0.10 per share. We kicked off that program in a strong fashion in Q1 with a return to shareholders of $107 million and maintained our momentum in Q2 with a return of an additional $87 million. In total, we've now returned $194 million to shareholders in just the first 2 quarters of the combined company despite generally weak market conditions during that period.

As a central component of this effort, we've repurchased 2.6 million shares or 5% of the total shares outstanding as of the program's launch. Supplementing that buyback effort, we've now returned approximately $11 million to stockholders via small sustaining quarterly dividend. In short, we're putting our excess cash to work opportunistically in today's depressed equity market environment. And let me stress, we expect the share repurchases to be highly value creating at current valuations.

Indeed, that is another key strength of the combined platform, our ability to generate cash across a wide range of market cycles, given our diversified portfolio and strong mix of contract and market exposed volumes. As previously indicated, the Board has authorized a total of $1 billion in share repurchases in support of the capital return framework. And as of the end of Q2, we have roughly $817 million remaining on that authorization. That authorization level, quite obviously, underscores the Board's confidence in our near, mid- and long-term outlook.

Turning now to the status of Leer South. As you know, in mid-January, the operations team sealed the active longwall panel at that operation to establish an isolated combustion event occurring in the mined-out area behind the longwall. On June 10, Core personnel and regulatory officials reentered the sealed area of the mine and conducted an evaluation of the equipment and infrastructure. As expected, the major components and systems appeared in good condition from our visual inspection, and we were able to repressurize the longwall shields.

Then on June 26, more than 2 weeks after reentering the impacted zone, the team found it necessary to seal a smaller affected area due to an increase in carbon monoxide levels. Since that time, we've been collaborating with federal and state officials to develop a plan to recover the longwall equipment and move it to a new area in the same panel that was unaffected by the incident. Given that the area where the fire was located is small and will be relatively easy to keep isolated, we remain confident in Leer South's ability to deliver on its strong potential over the long term.

Now I'd like to spend a few minutes on the global market dynamics, which continue to be highly variable. First, domestic thermal markets appear to be strengthening in the face of rising demand outlook and the advent of summer temperatures. Second, seaborne thermal demand has shown signs of recovery, particularly in Asia, where coal-fired power remains a critical part of the energy mix. Conversely, global coking coal markets remained soft, pressured by sluggish steel production in key regions such as Europe and China and ongoing destocking by mills. Despite these headwinds, we believe we are well positioned to navigate market troughs.

Our low-cost, high-quality operations, flexible logistics enable us to shift between domestic and export markets as conditions evolve preserving margin. Mitesh will discuss how we're seeking to optimize value and build our contract book in this market environment. But let me spend a few minutes on the broader market dynamics as well as on the corrective forces we believe are already at work on several fronts.

Starting with the metallurgical markets. Tariff-related uncertainties continue to weigh on market demand. However, several recent developments including the recent trade agreements with Japan and the EU as well as ongoing discussions with other major trading partners suggest that such uncertainties could begin to abate in the not-too-distant future, even as potential secondary tariffs remain at risk.

In addition, we believe that major coking coal indices are at levels well below the marginal cost of production. Moreover, we continue to see signs at these pricing levels are beginning to take a toll on supply as high cost production has started to exit the market.

As evidence of that fact, coking coal exports from the three primary high-quality supply regions, Australia, the United States and Canada are down 7% in aggregate through May with more cuts likely. In addition, we expect demand for metallurgical coal to continue at steady upward climb over time as the young economies in Southeast Asia, particularly India, continue to add new blast furnace capacity in support of their ongoing infrastructure build-out.

In the thermal arena, domestic power markets are experiencing a second straight year of demand growth after several decades of sideways movement. Underscoring this tightness, the PJM PAMC market auction conducted just 2 weeks ago, cleared at a record price for the second straight year. We expect this power demand growth to continue in the quarters ahead, buoyed by increasing energy requirements of AI and data centers.

As for the high CV seaborne thermal markets, both API2 and Newcastle prices have rebounded from their lows and we continue to believe that certain strategic elements of that market, such as the Indian cement demand are poised for further recovery, particularly in the post monsoon season. Specifically, we expect cement demand in India to continue to grow at robust rates throughout the balance of the decade and beyond and believe Core with our energy dense high CV thermal product site should be a prime beneficiary.

Let me take a moment to express our appreciation to the President and the U.S. Congress for the steps they've taken in recent months to protect and support the U.S. coal industry. In April, the President issued a series of executive orders aimed at reducing the regulatory burden on America's coal-fired power plants and preserving the U.S. coal generating fleet. During the White House ceremony, the President's recognition and inclusion of many of our hourly employees was a poignant example of the past and future contribution of coal miners in meeting the country's energy and industrial needs, a recognition that's been ignored in recent years.

In addition to the executive orders on July 4, the President signed into law the One Big Beautiful Bill, which included several provisions designed to strengthen the U.S. coal industry and enhance the competitiveness of our products overseas. Of note, the new legislation designates U.S.-produced metallurgical coal as a critical material under Section 45X through which the company will be eligible for a 2.5% monetizable tax credit on production-related costs over the next 4 years.

Significantly, the new legislation also lowers the royalty rate on tons produced on federal lands, which in turn will reduce the cash cost and enhance the competitiveness of our Powder River Basin and West Elk operations in future periods.

Again, we applaud the President and Congress for their leadership and foresight in taking these historic steps. Steps that will help ensure that U.S. coal remains a key element of America's future energy supply as well as a stabilizing force in both domestic and global energy markets.

Let me close by again recognizing the Core team for tremendous progress it has made in integrating the combined operating, marketing and logistics portfolio into a cohesive, high-performing unit while at the same time, unlocking the synergistic value created by the merger. With our world-class mines, logistical network, strong balance sheet, significant cash-generating capabilities and talented workforce, we believe we're equipped to create shareholder value in a wide range of market environments.

With that, I'll now turn the call over to Mitesh for greater detail on our Q2 financial results as well as our outlook for the balance of the year. Mitesh?

Thank you, Paul, and good morning, everyone. First, let me review our second quarter financial results and then provide an update on the outlook and synergy fronts. This morning, we reported a net loss of $37 million or $0.70 per diluted share and adjusted EBITDA of $144 million for 2Q '25.

We spent $89 million on capital expenditures and generated $131 million of free cash flow. Additionally, during 2Q '25, we spent $21 million related to Leer South combustion event and idling costs, which is included in our reported adjusted EBITDA.

As Paul indicated, during the quarter, we repurchased 1.2 million shares for approximately $82 million at a weighted average price of $69.64 and paid dividends totaling approximately $5 million. In addition, we announced this morning that the Board of Directors has declared $0.10 per share dividend payable on September 15 to stockholders of record on August 29. We have now repurchased 2.6 million shares or 5% of our total shares outstanding since the launch of our capital return program in February. When coupled with dividends, we have returned $194 million to shareholders in aggregate during the first half of 2025.

Year-to-date, we have returned over 100% of free cash flow to shareholders through our share buybacks and dividends demonstrating our ability and willingness to return capital and repurchase shares in a countercyclical manner while maintaining strong liquidity and a leverage neutral balance sheet.

At the end of the second quarter, we had total liquidity of $948 million, an increase of $90 million compared to the end of the first quarter, driven by an increase in our cash balance and higher availability on our revolver and securitization facilities. In July, we combined two legacy A/R securitization facilities further firming up our liquidity position. The combined facility has a borrowing base of up to $250 million and an extended maturity to 2028.

Consolidating these facilities marks the final step for us in constructing the desired post-merger capital structure, which also includes an upsized revolving credit facility of $600 million and multistate tax-exempt bond financings totaling $307 million. In aggregate, we have now completed approximately $1.2 billion in advantageous financing transactions in a depressed commodity environment and an uncertain macroeconomic backdrop.

Let me now provide a quick update on the marketing progress we made during the second quarter and outline how we are positioning the business for future success. The second quarter presented a mixed market environment. Export markets, particularly in the metallurgical segment remained challenged due to ongoing headwinds affecting global trade. These pressures continue to weigh on customer demand and contributed to a subdued spot and term export market.

In contrast, domestic market conditions continue to strengthen with a notable increase in utility-driven demand and customers seeking thermal coal in both spot and term contracts. In response, we capitalized on the domestic strength during the quarter, and increased our 2025 contracted positions for high CV thermal coal to 30 million tons, coking coal to 7.5 million tons and PRB coal to 47.8 million tons. This places us near fully contracted for the remainder of 2025.

Furthermore, we have continued to build momentum into 2026 by layering in additional committed tonnage for the high CV thermal and PRB segments. Encouragingly, in the thermal coal space, we are starting to see term business conclude above the current published markets, reflecting rising power generation demand and significant contango in natural gas markets. We now have approximately 13 million tons in the high CV thermal segment and 33 million tons in the PRB segment committed in 2026.

Now let me provide a quick update on our outlook for 2025. On the metallurgical front, we are maintaining sales volume guidance and slightly increasing our cash cost guidance due to the delayed restart of the longwall at Leer South and reduced production at the Itmann mine. At Itmann, we issued a WARN notice in June and are now planning to operate only one section. While this was a difficult decision, we found it necessary to reduce ongoing cash loss while protecting the long-term economic potential of the operation. We continue to evaluate all operations on an ongoing basis guided by market dynamics. This market-driven approach will also inform our strategy as we participate in the domestic metallurgical RFP cycle. We remain prepared to further reduce production where the market does not support value-accretive outcomes.

As in the past, our guidance for coking coal sales will continue to be driven by our operational capabilities and constantly evolving market realities. For the high CV thermal segment, we are lowering our projected pricing range on committed tons by $1 to a range of $60 to $62 per ton. This adjustment is primarily the result of contracting the previously uncommitted volumes at current spot prices, partially offset by higher power prices. We are maintaining our guidance for both sales volume and cash costs in this segment.

For the PRB segment, we are increasing our sales volume guidance to a range of 45 million to 48 million tons and our committed and price position has increased by approximately 6 million tons to 47.8 million tons at a realized coal revenue of approximately $14.40 per ton. We are also lowering our cash cost guidance by approximately $1 a ton to $12.75 to $13.25. These updates reflect the impact of legislation that Paul discussed in his prepared remarks and an improved sales volume outlook benefiting the fixed cost per ton produced.

Let me now provide our thoughts on the current market landscape. In the high CV thermal segment, macro uncertainties continue to weigh on the export market, while we have seen an increase in base demand in the domestic power generation markets. As noted earlier, on July 22, the PJM capacity auction concluded with capacity prices increasing to $329 per megawatt day for the 2026, 2027 delivery period. A second straight record high. This compares to last year's auction, bringing prices of $270 per megawatt day. This, along with the support from the Trump administration represents an incentive for power plant operators to invest in existing generation.

As we have discussed in the past, capacity utilization for the U.S. coal fleet was approximately 43% in 2024. Historically, the U.S. coal fleet ran at capacity factors as high as around 70%, which provides a lot of room for coal demand growth domestically. PJM recently acknowledged that in 2026, the data center boom will drive power demand to all-time highs. It also indicated that summer peak power consumption may climb by 70 gigawatts over the next 15 years or 30% higher than the all-time high, reached in 2006. This will [indiscernible] margins. We believe some portion of this playing out in several RTOs, which highlights the need to keep existing coal plants running.

For the PRB segment, the [indiscernible] continue to drive and enhance outlook. There are multiple examples of utilities revising their IRPs as they extend the operational life of existing units to meet capacity needs. Tight capacity conditions in MISO and SPP are likely to support increased demand for PRB coal in 2026 and 2027 as well.

Let me now provide an update on the progress we have made on the synergy front. As a reminder, at the merger announcement, we guided to an average annual run rate of $110 million to $140 million of synergies 18 months following close. Then during our 1Q '25 earnings call, we updated the range to $125 million to $150 million. We are pleased to report that we are again increasing our projected annualized synergies range to approximately $150 million to $170 million. The key drivers of this increase are the additional benefits we identified in the areas of admin costs, purchasing and best practices sharing. Admin costs such as lower insurance premiums and benefits costs are now well delineated and account for the majority of the increase. Best practice sharing and head count optimization are expected to make up the difference.

While depressed export metallurgical and thermal prices have reduced the value of the expected uplift from the thermal byproduct planning, we still expect to achieve our overall marketing synergy targets by finding offsets. Furthermore, when the market recovers, the value of the uplift will drive the blending synergy higher.

In closing, we continue to demonstrate the strategic benefits of the merger as we identify additional synergies while navigating a mixed coal market and dynamic macro landscape. While our results have improved quarter-over-quarter, we believe they do not fully reflect the long-term potential of this company. As commodity prices begin to more accurately reflect global cost structures, particularly on the metallurgical side and certain broader macroeconomic uncertainties begin to dissipate, we expect the Core platform to deliver the full earnings power of our assets and the value of the captured synergies and to fully reflect the efforts of our miners and corporate employees.

The post-merger integration has progressed exceptionally well in a very short period of time, and I'm very grateful for our team members' dedication and hard work throughout the year.

With that, I'll hand the call back to the operator who will provide further instructions and begin the Q&A session.

[Operator Instructions] With that, our first question comes from the line of Chris LaFemina with Jefferies.

So just quickly on the buyback. I mean you generated good cash flow in the quarter, but the buyback on total capital return was below the 75% target. And I was wondering, in light of the fact that your share price have been weak and there's pretty good outlook for most of your segments. I would think that now would be a very good time to accelerate the buyback. I'm just wondering why it wasn't an impressive scale to buy back, I'm just wondering why it wasn't even bigger in light of where your share price is and how good the outlook is?

Chris, this is Mitesh here, and thank you for that question. I think generally, our guidance on the buybacks have been that we'll return approximately 75% of our free cash flow back to the shareholders. I think if you look at first half of the year, we have done just over 100% of shareholder returns. So I would say we have been a little bit more aggressive than what we have guided to.

Having said that, I think we continue to monitor the markets and everything around it with all the uncertainties on the macro side. We generate free cash flow from our business, and we'll continue to deploy cash. I think to the extent we have cash flow generation coming in from our operating segments, which we do and working capital improvements that a big portion of that is going back to shareholder returns. So I would say every quarter is going to be different. Some quarters are going to be higher than what we generate in terms of free cash flow, some might be lower. But I think that's how I would think about it from a -- as a guidance perspective in the coming quarters.

Okay. That's fair. And secondly, on the $100 million insurance recovery you're expecting to get for Leer South. How should we think about that in the context of the capital returns?

Yes. Like I said, similar to working capital, I think those funds are available for all corporate purposes. Right now, we see that the biggest value for our shareholders and the stock and our view of the value of the stock hasn't changed. So from that perspective, I think you should consider that as part of our capital return program as well.

And your next question comes from the line of Nick Giles with B. Riley Securities.

Congrats on a strong quarter here. First, I wanted to ask about your overall level of confidence at Leer South and ultimately returning to normalized levels of production. Should we think about that return as occurring over a number of months? Or maybe said differently, could we see Leer South run below normalized levels until market fundamentals improve?

Nick, this is Paul. Look, I think first and foremost, I think the mine overall is not at risk, and I have a real high confidence in the ability to get back up and running. I think what we were able to do in June, even though we got pushed out, we saw that -- we got our eyes on the longwall. We were actually able to repressurize the seal. So while there's some minor damage, as you would expect, the longwall is in good shape. So with the plan we have before, which is to go back in here when reading is stabilized and try and recover the longwall equipment sometime in early fall.

I feel pretty good that so long as the atmosphere cooperates, we'll be able to do it. The plan then will be to move the longwall equipment to the new phase, which is about 500 feet from the existing phase and seal the area behind us. My expectation is that while we'll have to do some repairs on the longwall, I'm not expecting anything major, and this could, in fact, just look like a very extended longwall move of a couple of weeks. So at this point in time, I'm still fairly confident about the ability to get up and running relatively quick, particularly heading to Q1.

And Nick, this is Bob. To answer your question from a marketing standpoint. I mean, we do see opportunities even today, most of them being in the Pacific market. But again, with our cost structure, it certainly allows us to participate. So as soon as we get that longwall back up and running, we'll have opportunities to put that coal into those markets.

Bob, I appreciate that. And maybe just as a follow-up. I mean, I believe we are coming up on domestic contracting season on the met side. So wondering if you had any early indication of how pricing could move beyond year. I mean what's your general appetite to participate in that market this year?

So as you mentioned, there are several that are out today. We think there's a couple more forthcoming. But for those that we participated in thus far, we are having constructive negotiations. It's about all I can say. I do think that based on where cost structures are I think it's going to be hard to see a significant decrease, especially on the low vol side year-on-year. But again, we are in those negotiations today. And I think you'll see us participate more in the domestic market on a go-forward basis.

Maybe one last one, if I could. I mean, PRB margins appear very solid. You've now raised your full year guide and with lower costs. So -- just was wondering if you could provide some additional color on how contracting is looking specifically in the outer years?

Yes, I think, certainly, demand is up. We raised our guidance midpoint 6 million tons this year. And then as Mitesh mentioned, we have 33 million tons contracted for next year. I can tell you the average price of those tons are in the mid-14s today, and we're certainly seeing some appetite of prices even higher than that. So we are seeing a lot of appetite for future contracting, not only in the PRB, but also in the high CV segment as well. So again, all good news there on the thermal side.

And your next question comes from the line of George Eadie with UBS.

Nice update here. Can I start by asking, have you run any studies on rare earth potential at any of your mines like some peers in the sector?

Yes. We have -- we've talked a few times in the past drilling and continue to look at the various potential. As you know, the Powder River Basin geology is fairly same mine to mine to mine. And so like many of the peers of the basin, we're all looking at the same thing. And look, I think it's worth pursuing the analysis where it will lead, I'm not sure, but look, it's time to continue to look at it. And obviously, others have had good success with it. So we're interested, like everybody else.

Okay. And maybe switching tunes a bit. But on the insurance claims, can I just get a little bit more color here. You called out in the release, $100 million for Leer South, but there's also the Baltimore bridge one too. So if I think about them combined, let's say, $100 million to $150 million, is that about right? And in terms of timing, is it some in Q4 this year may be the bridge and then say, 2/3 or the majority falls in early 2026?

Yes. So I think, George, I think generally speaking, as we have guided before, I think you're in the ballpark in terms of the cadence. I think, we have submitted an initial claim on some of the expenses that we have incurred with respect to firefighting and idling costs to the insurance adjusters for Leer South claim. So I think we are hopeful that we'll get some of that in the remainder of the year.

Similarly, on the Baltimore claim, I think the claim has already been submitted. And we are going through the adjustment process. We are hopeful both of those two get resolved here towards the end of this year.

On the Leer South claim, just to clarify the expenses reimbursement claim is a smaller one. I think the business interruption claim would be a bigger one that we haven't submitted yet. As we get our estimates and everything in [ row ] I think there's going to be a claim submitted for business interruption side as well. So when you put the business interruption and the expenses side, that's the 100-plus number that we are talking about, and that's going to be more of a 2026 recovery.

Yes. Okay. And then just one more for you. Working capital, like it was a pretty big outflow in Q1, nearly half of that unwound this quarter. How should we think about working capital in the second half? Is that potentially say, $50 million more unwind? I know it's early, you're not going to know timing, but a bit more to come potentially there?

Yes, George. So we are expecting some more working capital here, but just recognize that the vast majority of that has been reversed in Q2 with respect to the receivables. I think in Q3 and Q4, I think there's some work being done on inventory reduction. We have said earlier that, we have some metallurgical coal inventory due to strong performance at some of our mines that is going to flow through as well. So I think there is some reversal coming. It's not going to be of the same magnitude as you saw in Q2.

Yes. Okay. No, that's great. And then just one more for you Mitesh. If I look at the corporate, other and eliminations line in revenue it jumped $10 million quarter-on-quarter. Can you maybe help me understand what's happening there, the net loss for this segment is up quite a bit all things considered Q-on-Q?

For corporate, other and eliminations, is that what you're referring to?

Yes.

Yes. So what is going through corporate, others and eliminations, some of the spending that we have with respect to items such as gain on sale of assets, litigation, corporate loss accrual. We have some fire cleanup costs also going through it. So those are the kind of things that's flowing through. I think over time, you will see that stabilize a little bit. Does that answer your question?

Yes. No, that's handy. I can follow up, just to clarify a few things there.

And your next question comes from the line of Nathan Martin with The Benchmark Company.

Maybe just to start, Bob, you just mentioned that the 2026 PRB tons priced, I think, in the mid-$14 range. Any thoughts on the pricing for the 13 million tons or so of the high CV thermal coal you guys have for '26?

Yes. So the 13 million, Nick, is broken down really 6.5 domestic, 6.5 export and about 4 million is linked to different API2, call it, 2.5 fixed on the export side, balance obviously to be domestic. I will tell you, we're using a $110 API2 price and we're looking at low 60s.

Okay. Perfect, Bob. That's helpful. And maybe looking at the met segment, $21 million of Leer South idling cost this quarter, calling out another, I think it's $20 million to $30 million for the fourth -- for the third quarter. Obviously, those expenses don't run through the met segment cost per ton line item, but I'm just hoping to get some thoughts on how you see that trending as we enter the second half. It looks like based on your updated full year guidance, met segment cost per ton is going to need to increase to an average of over $96 a ton, which is higher than it was in the second quarter. So just any way you can walk us through kind of the drivers of the forecasted increase, especially if you still foresee a lower cost of Leer South mine coming back online, hopefully, in the fourth quarter?

I think -- this is Mitesh here. I think in Q3 and Q4, I think the cost is going to be a little bit elevated because we are going to have some CM mining costs. If you recall, we explained this on the last call, that -- when the CMs are mining at Leer South, you have a little bit of an elevated cost structure. What ended up in Q2 is in the month of June when we pull the CMs out. And when we pull the CMs out as we reached the seals, for the rest of that month, I think all that cost moved down to idle costs instead of the per-ton costs. So I think it's at a different location that cost was incurred, but it's at a different location because there were no tons being produced. I think as we go to Q3 and Q4, that cost is elevated because of the CM tons will have production associated with it, which will impact the per tons.

But longer term, I think once CM is up and running, we do expect our costs to drift down to that low 90s level.

Okay. Mitesh, I appreciate that. Maybe one for Paul. Can we get your thoughts on the recently announced Union Pacific and Norfolk Southern merger. Core is still a customer of both rails. So I was just curious to hear, how you think a potential combination could impact your business?

I mean it's an interesting question. I think we're all a little surprised by the potential merger. While we obviously have some concerns, I get the desire for both railroads to want to create a more efficient and cost-effective platform. If you stand back and think about it, some of the positives for us could be our ability to blend some of our western coal with PAMC. It would also probably give us better access to our East Coast terminals for our western coal. Think about it, we could load larger vessels and have less sailing time to Europe than we do out of the Gulf of America, and transit time should be a little bit better with fewer handoffs.

Having said all that though, I think what we're going to want to understand as a shipper on both of these railroads is -- first and foremost is that they're going to drive a great deal of savings out of this and that we're assuming some of this is going to come back to us as a shipper. And secondly, we're going to have some protections on that, the service levels stays high. I mean the bottom line is we are critically dependent on rail service and rail cost. And for us to be competitive, both domestically and globally, the railroads have to perform and they have to perform at a reasonable rate. So look, we have great relationships with both railroads, and we're open to a balanced discussion, and we'll see where this goes.

Appreciate that, Paul. And then maybe it would also be good to get your thoughts around some of the recent increase in trade tensions with India, especially given Core's, it's important export market for Core, I should say.

Yes, I'll start off and let the others jump in. I mean I -- the following of the tariffs and the reciprocal tariffs is becoming morning obsession, I think, with a lot of us to try and understand where it's going. I think the -- one thing I take some solace in is that most of these have been resolved, although it's been a little messy. But Japan and the EU getting resolved, it would sure nice to be have -- for us to have India resolved because India remains a huge trading partner of Core. Any other thoughts from the group?

I would just add one thing. I think PAMC in particular, the quality of that coal makes it a very flexible product. As you know, it goes into the crossover met market, it goes into the domestic power generation markets and of course, the industrial market overseas. I think, as Bob mentioned, we'd hope that India, U.S. trade tensions abate. And it's not an issue, but the product itself is flexible for us to be able to move. I think if you look at China is a great example, right? Like last year, we shipped a lot of crossover product into China. This year, we are not doing much at all because of the tariffs, but we are moving more to Indonesia.

So I think -- what I'm trying to say is our marketing team is doing a very good job of managing through this. And I feel like the product quality and the logistics strength that we have with different terminals and the blending potential, I think we'll have to continue to look for new homes.

And we do have a follow-up question coming from the line of Nick Giles of B. Riley Securities.

Apologies if this is somewhat repetitive, but I believe in your prepared remarks, you mentioned that met volumes will be market driven. And just so when we start to think about what 2026 met volumes could look like with the recovered Leer South, should we be thinking that you could hold back some tons? Or anything you'd call out from a mix perspective? I appreciate any color there.

Yes. My view is that when we get back Leer South running, and hopefully, that's early in Q1 at full speed. We will see volumes very much akin to what people were used to. As Mitesh noted in his earlier comments, the decision at Itmann was a difficult one, but one I think we took because I think there was a belief that the balance sheets of some of the coal companies would go ahead and support losses in some of these mines for some period of time. And we took the fact of we're not going to do that. And that will follow through into next year. Look, as long as we can generate a margin and feel comfortable in the outlook, we'll keep running operations. But we'll remain market-driven, and do what we have to do to adjust our operations.

And your next question comes from George Eadie with UBS.

Just one more as well. On the met coal segment, realized price for the thermal byproduct was up nearly 40% Q-on-Q. But that seems very good given the pricing, soft environment at the moment. Like how much higher can that get with blending and so forward and maybe a bit more color, like should we assume that higher price from this quarter is a more reasonable assumption going forward?

Yes. So George, this is Bob. So as you mentioned, I think in Q1, we were mid-30s; Q2, mid-40s on the thermal byproduct from a pricing perspective. And what we've done since the merger is took -- we've been able to take advantage of that product and blending it in with PAMC. And I will tell you that on a go-forward basis, we're looking to continue to maximize doing so.

So when you look at Q3, Q4, I'd say it's going to be a lot similar to Q2. It's also market-driven because it depends on what the realization you're getting back on the international market is as well. So as the international market continues to improve, then you'll see the mids pricing improve. But for sake of where we stand today, I'd say you're closer to Q2 realization than you are Q1 on the mids product.

Yes. Okay. Great. And then just checking, I've got it right before, when you were talking about '26 pricing, was that $110 metric a ton for API2 and then for the 4 million ton. And then when you said low 60, was that talking as a whole? Or what's priced in so far for domestic?

Yes. So we use the $110 as the assumption that's baked into the 4 million tons that are linked to API2. And that would net back all in what's for the 13 million tons would be in the low 60s back to the segment.

And we have no further questions at this time. I would like to turn it back to Paul Lang for closing remarks.

Thank you again for your interest in Core. Let me close again by recognizing the Core team for tremendous progress they've made and the work they've put in, in bringing the two companies together. The markets that we're currently going through just simply refortify the reasons why we did the merger and the ability to generate cash through a wide range of market environments. .

With that, operator, I want to thank you, and we'll talk to you in October.

Thank you, presenters. And ladies and gentlemen, this concludes today's conference call. Thank you all for joining. You may now disconnect.