CEIX - Earnings call transcript Q3 2018 | Core Natural Resources, Inc.

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Operator

Good morning and welcome to the CEIX and CCR Third Quarter Earnings Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Mitesh Thakkar, Director of Finance and Investor Relations. Please go ahead.

Mitesh Thakkar

Thank you, Shawn and good morning everyone. and Resources Energy earnings quarter CONSOL call. conference to CONSOL third Coal XXXX Welcome is our McCaffrey, Jimmy Dave today me With Brock, Chief Officer. Officer; Commercial Khani, Chief Financial and Chief Jim our our Officer; Executive

We will Jimmy and session. open then Q&A remarks floor the and for Dave the with start prepared by

our will of advance today’s remarks, During certain that in the we prepared we websites slides to refer have posted to call.

risks, are which statements or have comments make subject reminder, to you a events expectations some SEC filings. for releases any forward-looking out undertake We As press do any updating or for or we forward-looking of our about laid future we our otherwise. not future in obligations statements any in

which the to financial Form are defined We releases be press X-K. will the also and measures GAAP measures, discussing SEC in furnished financial certain to and on reconciled non-GAAP

find You me information and let websites, our that, Jimmy can With CEO, over also www.ccrlp.com. additional our Brock. it www.consolenergy.com turn on to

Jimmy Brock

you, Good Thank Mitesh. morning, everyone.

the kickoff want the condolences the past earnings I I Hill, of Before our Pittsburgh. Saturday by event this neighborhood families horrific the to to Squirrel impacted express in discussion,

were prayers Our of who community tragedy. with affected by and remain those this all the thoughts and

a performance, the once for Now quarterly our quarter. CONSOL well team again delivered executed

As production miners and vacation is quarter quarter you the many low outage of was for maintenance and different. know, typically for no given our the third ‘XX annual the year XQ

perform to XQ challenges overcome delivered operations. during record ‘XX. three during and impressed had earnings moves also various the quarter, at we we longwall mining our the inherent ability our year, team’s very production am the third highlighted a this last to with which third However consistently call. I Nonetheless, quarter PAMC we on

new continued are contracts also to for On front, in rolling XXXX. has near-term, better our for than contracts the replenish customers the been that while pricing the stockpiles The in longer-term for pricing committing through contracts coming to seek XXXX the to cold off. marketing

of net seasonality times Sub of Directors quarter the on comfort level Board quarters. Year-to-date, Coal our leverage annual despite coverage posted Two, GP at flow. outlooks expected and the increased outlooks. pay there the EBITDA have the improved the is XQ major improving. our This of capital us X adjustment overall, this avenues. price for XQ gives the seasonality high free guidance. this impacted share return units, working And levels and pace is One, in organic portfolio our ‘XX of started perspective, to which distribution CONSOL the that CCR the previous CCR why fixed capital call, on quarter. third, contracts focused sales were and quarter. same paid CEIX capital XXXX cash due than volumes year, relative ratio production back buying three approximately as X.X the this blended IPO. our price the is Accordingly, for to negative still approves is production to midpoint with surplus ‘XX since strategy distribution adjusted perspective, we allocating highlights best our spending of to accelerated we generated From to third and repurchases enough quarterly payments average this So, of our consistent on CEIX and third a of From are we consistent increasing we distribution continue with distributions X.Xx, coverage the time to Resources a we highlighted our we more

We that its incidents shield key proximity of automatic CONSOL of work States Health detection first Safety no Corporation, use NIOSH and kind in Innovations recently system shield Before operations coal safety pleased the Technology activating system Mine one December a I personal XXXX, I the and move very performance, involving proximity Energy’s our for applications. implement Mining occurred. in of movement XXXX develop awarded Since to review am our were Award. United and CONSOL have highlight suppliers longwall operational the together or Komatsu to to

are for award their enhancing honored and for the safety leadership thank We Komatsu to in recognized be worker industry. advancing and this coal

because core implementing been forefront have right of values with and our is of the thing improvement. to the We safety, at consistent detection, proximity it and do compliance is continuous

our review me performance. let XQ Now, operational ‘XX

key during the Enlow extending the streak technology and to to CONSOL growth on PAMC. safety continued its Terminal ago third at a to make the highlights by productivity continued record geological Two, plan Fork an we to year performance, the our achieved third zero mine improve exceptional operational mine. continued quarter compared driven the are; conditions at improving our X.X production of Four, tons to which the consecutive safety incidents Some quarter further million one, progress with of initiatives. quarter execute registered Three, months. Marine we XX

me Enlow to with production the output the of detail benefited PAMC. Coal to X% XQ from overall Enlow geological the at ‘XX some improvement Fork at PAMC productivity approximately increase of of highlights. have Let those the This you now Fork behind in compared ago year higher provide improved. mine mine increased We some at an where contributed conditions the at quarter.

planned Additionally longwall quarter, three moves. completed during successfully we the

ago complex For improved the productivity at is ‘XX the as mining PAMC compared year at tracked year of ago approximately the employee the X.X% compared the by productivity Pennsylvania per quarter. higher measured to period. tons Year-to-date, to X.X% hour XQ

projects. and our We longwall starting automation other initial benefits are to see of de-bottlenecking some sheer

million improved For has in ‘XX. of X.X million X.X of XQ its which from ‘XX CCR XQ tons produced coal share produced during the tons of PAMC,

average in cash of compared and driven the cost by improvement $XX.XX a This On was per sold productivity. $XX.XX front, expenditures quarter. reduction cost our was ago year the ton coal lease in improved to largely

successfully cost yet. prices supplies are these and Since offset our contained that fourth cost strengthening expenses. the in of inflation have well other of and numbers steel productivity note in pressures underlying XXXX, obviously modest able cost reduction commodities in investments lease Let which through Year-to-date, from an been visible inflationary the automation important as me labor. that we benefits to not we is trend contract our quarter for as of the gains, in have seen

continue for Marine ‘XX. to sales to CONSOL keep $XX.X through Terminal a execute driven We $XX them well. to close macro continued increases and million ‘XX watch strive CONSOL for on to to compared Marine gains. improved million XQ offset The XQ cost productivity Terminal

As accomplishments. pay a And provide let the this sales markets an year. and stream terminal mid-XXXX. a into for earlier or With revenue the that, update now full take overview capacity of through reminder performance assures agreement us an me we entered our and steady a coal on it

and XXXX are driven rolling key by XX% coal respectively. million first customers sales XX% to tons In improving contract off. coal quarter our netback early. to of XX% higher revenues position our inventories contracts the our for prices XXXX due to for quarter from XXXX from increased per XX% improved quarter the during X% year the to sales In higher winter. ‘XX ton XQ as average from on benefited our power during export million domestic fixed to during bringing additional XXXX per contracts at to average tons. Some X% compared to prices sales our market those are highlights revenue firm of the price year an improved the We are XXXX our We commitments to the X.X added approximately approximate improved which coal focus ton better X.X export compared contracts. bringing to versus our quarter due Prices the quarter. Low ago the well as prices pricing netback export revenue ago domestic on

normal more contracts, revenues export netback in in. but on we tons our per kicked Now our ‘XX new export ton higher received revenues significantly XQ on as contracts

visibility our XXXX. agreement and average revenue provides marketing fully improved export announced into through per now previously Our engaged is ton

marketing now you with strategy. me plan outlook Let to how on coal execute some color the and we provide near-term market our

First, inventories decline. U.S. continued coal to

XX our coal year customers, plant and were press at inventories XX% the levels. in lower is that to also coal U.S. coal report levels. heading tons of total Bituminous several ago export than by As XX the and App winter million inventories into face of higher is days occurring XX in declining the Northern XXX decline It noted plants noteworthy in production, compared about very low gas August typical power to domestic to prices of around year-on-year storage end release, this coal key burn lower our of the XX% were rail-served or days. inventories continue power at natural

million expects thermal demand its and declined Second, the XX.X limited X.X% increase increase outlook, XXXX recently producers the are by is picture generators. depletion, of normal production see U.S. supplies. expenditures first domestic published XX.X The XXXX from with for during that to coal tons also XXXX. diverting particularly quarters coal quarters million by to Furthermore, from thermal continued estimates EIA and three exports EIA supply an the export supply the in away XX% In energy in in to first U.S. of U.S. to mine XXXX. short-term has capital the shrinking three coal tons compared coal

was in backdrop market, key in contracts this our Given signing the domestic successful multiyear with team domestic marketing several utilities.

XXXX by during $XXX these prices to next several and while Europe, our API position rebasing output. additional to extend fixed prompt-month More to to hot, quarter while or contracts continue pricing contract in steadily ton see over X to hydropower also during these previous these locking existing a by The the with with dry an rising process the importantly, higher extend approximately we the able existing improved In for prices driven third years. utilities contracts reduced contracts summer cases, commodity Internationally, some were rising proxies. in they XXXX contracts, of coal compared which on in capture portfolio. metric prices dynamics. our wind per improving X% year These the

XXXX to recently approximately API XXXX an quarter agreement an create of in coal continues markets. of prices we to tons new is the in XX announced prompt-month, industry’s phenomenon additional believe we X.X our the by X-year to contract XXXX sell that we improvement XX% volume X.X improved for curve and layer contract optimism reflects at seen With to or the And contract, sales the contracts. international us longer end this exports for coal have forward the beginning million the addition in XX% contracted which to opportunities be Forward, shipped of during have the tons XXXX. into million for fundamentals. sustainable This approximately to we XXXX. of million relative This term in X we to third of back approximately entered ton

Looking in shape. we very XXXX beyond, are good forward and to

our annual XXXX strong a portfolio. and with PAMC. export for are XX% optimize ton our We XX% comfortable and to and a we assuming coal With market, contracted XXXX XX very inventories domestic respectively contract volume sales for million prospects low and are

to continue to opportunistic provide will and presence. the as grow our I sustain update. financial to now will we pricing David layering contracts strong We upside call and that, be already turn in international capturing over With the

Dave Khani

morning you, our I Thank and will provide This XXXX of a to Jimmy. guidance. update the review then quarter

of and by Since shareholder coal improving the me rightly investor from than coal in coal particularly on special seen Early balance gas companies strong buybacks the Before significant out their share a I the have what we we some focusing more coal markets. debt in we downturn in We’ve space. let the balance the the are seeing do in and return over are year, sheets. the dividends, commodity restoring keeping as companies This sheet year. highlighted returns. companies natural and so restructure confidence is U.S. the more U.S. evident their in trend are reduction, energy growth perspectives and focused, on came on provide seeing Investors focused U.S. in becoming then past sectors. industry

in with gas growth industry-wide, on the ago not Although focused prices shale high trend XXXX. starting a we XX U.S. the the revolution. E&P and similar commodity shale industry in specter investors of saw were years natural of – production

its these The of prices focus a companies the asset overall returns XX% single-digit essentially stagnant, Over resulted in and strong stay supply, XX% in return U.S. gas come billions metrics. have gas many This low expectations net drove The Group of future corporate increase lost spent in dollars natural decrease industry posted down. the a but in past E&P the for prices. have gains. natural of natural and capital seemed value gas operational decade, also several while hundred to

free cash past the be the and XX months stock buybacks. on and seems to tie shifting generation Over focus the flow

reached in For has players lower and next to production how stock the a XX% saw and peers XXXX is redirect will by repurchases on Appalachian us. the focusing announcement. This cash example, producer XXXX, have versus Appalachian over less consistent XX% plus of of flow outperformance announced one capital grow towards year. company to the its of spend the for that of growth day We This about share it E&P free this focus dividends. been ROCE

can As our from XX% slide CONSOL and from on improved see of last Slide you on quarter capital deck, above our Energy’s cost XX XX%, on return capital. calculated

notch disciplined improve goal our long-term improving To to improve also for strategy, industry’s is that our our S&P one raised XXXX is companies us of lower debt. equity across allocation contributing of through return-driven of tranches be also and access Energy’s we Our factors well-managed one while capital. focusing continue returns to assets in capital good improving to our news ROC cost to of that of stronger ratings XX, intend This on that in debt. announce We multiple credit pleased provide believe the helping I'm our we’re by capital. October is sustainability. continues CONSOL to achieve in to and the capital expected overall cost both cost reduce to can on this, debt

ratifying, grow and of cost share time. equity. of us our is our do our of lowers on allowed rate more remarks. sustainable the business Building by that return will that high implementing this improving equity risk is projects cash reducing to a capital his per over in to closing provide this value. flow maintaining and to element color Jimmy premium developing Another plan We cost

to over I’m quarter the on where update our move give third XXXX excited performance, Now guidance. very financial an let recap our to me and

rose million, the $XX a improved decreased This $X.X million, then and million, EBITDA million quarter $XX.XX our cash in margins million. We ton year and respectively basis, first to organic $X.X will to adjusted flow solid levels with prices compares CEIX $X.XX $X.XX and On a per $XX.X to reported review CCR. CEIX $XX.X income year of cash free million ago financial costs compared quarter. and ago net cash $XX.X as $X.XX. of

buck to rising this continue costs. of We trend year-over-year unit

generated and During operations expenditures. organic of cash we spent million the quarter million in from capital $XX $XX flow

result, quarter CEIX what generated $XX low cash I call million and flow year. free the a of will of As the

year-over-year certain our remind last Year-to-date, paid Our to that another units. put and cash of we $XX year. In place also operations the we we the in from capital the tied quarter capital Through fourth of million this flow will changes of after to repay part repurchased tying allocation million to of of in $X CEIX’s bonds cash year's during generation ‘XX working to compared the have and everyone have XX working that covenant we to We’ll controls from $XX second-lien the million form stronger our fiscal $X purchasing B quarter benefit CCR credit we amount outflow earlier capital flow $XX the facility third quarter repurchased debt year disciplined also and million the file the from bringing or total repurchased CEIX XX-K. approximately debt XXXX within million its that financial excess loan a repay million. shares days XXXX. since company include million to during $XX process, differences. term I $XX seen includes implementing spent a date requires benefit borrowings

under company repayment for the by such less such company's to made term XXXX XXXX. voluntary prepayments will the subject million. be be This excess of uses cash. B this shall of of during performance facility September If borrowings quarter any For year of loan the to XXXX, discretionary approximately would and other equal under covenant course as management covenant this flow if be its of estimates fourth repayment any $XXX XX, XX% the was applicable cash

changes $X.X This payments, you XX $X.X with $XX.X update the distribution. approximately unitholders $X.X operating ratio net reported in $X.X of million, EBITDA, the intercompany capital on after distribution $XX.X million distributable improved to for net $X.X CCR’s low in Nonetheless, expenditures working increase let CCR current adjusted $X.X the million of times. and CEIX. we months on cash in regarding morning, of compares net million outflow me given This X.X the million, our believe in loan includes XQ million. ago capital EBITDA income We million cash distribution ‘XX In borrowed leverage activities, provide balance flow strong trailing from to comfort to and sustainability CCR on million our generated million our Now, and in $XX.X year-to-date should $XX.X added CCR. $XX.X an sheet long-term quarter. which and in million from million, accounting respectively flow year of leverage

Now, our updated let’s discuss XXXX guidance.

our remains measure execution guidance year and as As philosophy our progresses. the the stated guidance risks to strong upon before, through improve appropriately

our result this successive the EBITDA which is quarter, As guidance. a full third increasing are adjusted year

the guidance are using we sales continues and ton the adjusted raised guidance, market all our million PAMC, Based new this our by For and to can the gross Again, increasing absorb by to be XXXX midpoint. $XX.X by tons margin on per and forecast using $X.XX $X.X CEIX we midpoint. produce. EBITDA our XXX,XXX volume million respectively CCR for able we

and the new issued at most before a standard. expenses impact us. current But be lease accounting leases lease will similar, standard quarter not requires the on when ultimate and will the asset the to recorded first will change in our of depend standard liability sheet, highlight the will over so a we of company I should on start adopted accounting impact portfolio the ‘XX impact of The balance as be I guidance. a an be to adopted manner new leasing Jimmy, it recognized public that as first Now, universe to want a in quarter turn we ‘XX including which

the With not standard make final importantly, impact on have More some comments. ratios. bank back current Jimmy it to leverage that, let or new any to will turn me covenants

Jimmy Brock

Thank you, Dave.

Before our take an last earnings we let this on project move on on to call. session, highlighted that you Itmann our me the with update opportunity to Q&A provide we

We continued of or in exploration have came in new expectations. In our quality and back months. samples confidence evaluating we drilling build the to in make our to collect project with to past third meaningful the during Results Corvo line Itmann reserves. quarter, geology X Itmann completed progress the the better than our all several

proceeded for the in our be a DEP. result mine to in #X producers. and use quality markets. continued potentially and Virginia with as organic application would most Itmann coal October, the the pending that Central blocks mining App, both of permit a capital, believe As of late rank hosts remaining permit We This the metallurgical approval submitting continues appealing attractive coal our on to we of growth with list low-vol to that international metallurgical West one strength domestic high project coal in Itmann attractive

Before it to to I upon business a sustainable goals. maintaining building over model want us and Dave’s that hand comments financial our achieve expand Mitesh, helps on I

on the focus with team core values starts having it and our right First, and of compliance. safety

based Our teams focused and are these achievement of incentivized values. on

open to and eager innovation. are employees new and Our technology adapt

operating and we on have raising the are focused position adding duration. financial or the risk. and to our Resources, we Second, reduced beat us Hence, model our forecasting contracted Since and separation business meet business enabled capabilities overall performance CNX from targets. our

standalone for in to position it as though which Each long the because diversification capacity. We and visibility run one team capitalized them are well. sold scale a distinction approximately the to sufficient it at we are consists a longwalls. mines important assets great and up business our continued Even we for once This lost. we to them. do the has that and invest putting and expect diverse run mine, in PAMC an is gets often for again complex serve to baseload XX% can allows really where and have of these shaping such, as job, of Our substantially us XXXX a done of we ready five has run marketing us as solid XXXX a book but

finance team our allocate to capital highest projects. the return challenge we to Third

We our liquidity capacity also build capitalize our lines, and to execution on This surety, lowers risk our premium. strong equity across insurance base.

and Itmann projects is well focused base project improvement our continuous growth our very are de-bottlenecking as solid automation true focused So and growth. as

opportunities the singles will idea doubles processes. call We The for continue the is right help operations, wait look further score With to and run. to for hit that a while the improve Mitesh continue I over you us for home and opportunity instructions. back to that, to hand systems

Mitesh Thakkar

Thank you, Jimmy.

you to provide Q&A Sean, of to instructions the will session now move call. We please our can callers. the

Operator

Dudas begin Michael Please now question Research. first Michael. the will Vertical question-and-answer session. Instructions] We with from [Operator go ahead Our comes

Michael Dudas

they top are big firm winter, their of that more M&A issues and the emerging also has to Dave contracting? X that are you morning locked thought capital in do to would out even contract and think out Jimmy upfront their with are been you get lengthen having on have – you XXXX gentlemen. or Good that further some additional discipline that strategy the or into urgent be have then would months level, on a to if let regarding X just and inventories you XXXX recognizing factor and goal, is for the XX% at low with and utilities there to contract going

Jim McCaffrey

Well, you doing? Mike, this is How Jim McCaffrey. are Good morning.

Michael Dudas

Great.

Jim McCaffrey

have really you is the I to glad by And had for still asked key we run. right the portfolio the outperforming we customers. terms XX% we excited sold am they about key in ‘XX that. are talked to XX% to am XX% capacity duration have past in factors it our I customers providers about now where ability stand and of mean I add and other

for I XXXX. am not negotiations where duration are XXXX, concluded going. the as we far And excited we don’t about are as for have as done we think certainly I yet. out far As the XX% in

in think to that be needed provide that So the recognition industry is to then security there for a able market producers of perform of there is these in markets. million year still million the are million close forecasting XX thinking the And a leaving tons offshore. strong We the top Mike, this then very is much tons. to of XX leaving those And finally, EIA And utilities run. during opportunities in this to to of strong the were recognition how XX going winter, severe winter of year well export those and additional is in events on are that need not delays I to we energy on certainly of ongoing supply adequately and costs very coal renewables respond top going pipeline. of did all have close last seeing that, continue pipeline is is into those terms gas some to tons, natural

that we and to are a more XX% probably going And our significant or normalized the with have pricing XX% we left, contracting have approach to So we we we both. customers. so from duration think sold are are significant seeing

Michael Dudas

pension in you’ll allocation, be And to ‘XX range very the appreciate what ‘XX? what’s next and you regarding year are a we that capital year and that FID side sense share of looking bit maybe target making capital your happening Makes late I soft on relative a there any decision and good to into answer. Dave a other of on in you could as this looking little And can for allocation the into with type be from of Itmann, decisions standpoint?

Dave Khani

been per is ton, to that very million per to still about XXXX. of – But $X about Yes. $X million that's maintenance $X We’ll our $X standard, just be that to – ton our capital talking right. careful reiterate base

Michael Dudas

Sure.

Dave Khani

capital And allocate these of then do is right. growth, your other much to question areas how we

projects we do for our next So, debottlenecking this efficiency how that talked we have year. we much year have and about and

how improved now question that is, board to plan which project going Itmann the far commercial it. it. as We we a is we The approval put like in and visibility have we’re get what behind so becoming that do have to projects, the capital our in is as we a have

that So been but capital. amount commercial, be huge to not it's going a hasn’t of deemed

things won’t know cash it, and disclose but multiple on this morning next capital not year. to allow flow will it amount us it our be to different just huge a We it do of with

you slide of pension long-term. manage You pension, our legacy highlights say if a slide has we have the one And been asked I'd to of deck. our about liability the our capital look, in how really

of as are we XX% the We quarter, third are funded.

put been dollars through of XXXX because working in longer. funding the last very prior well. funds don't good And the been or that's putting has in not S&P any all been the been dollars our our very we funding in the it have anticipate portfolio We maybe in really between any downturns top and we've approach has and In couple years our portfolio last XXXX returns, over that of X% years pension the and in the decade. we've

it. a to our been as good to we’ve result anticipate shape so so in not very And don't have fund pension and – we and

rise, markets continue therefore and risk it. we reducing income goal our to fund that the to discount portfolio equity to is, reducing risk our the move rates and immunize have will we as the So, fixed the moreover as

Michael Dudas

thoughts highlight as at and that I certainly your a think for Pittsburgh. thanks Gentlemen, on share I time. the people your do

Dave Khani

you. Thank

Jimmy Brock

Thank you.

Jim McCaffrey

Thank you, Mike.

Operator

[indiscernible] Nick comes Seaport. ahead. Please call with next go from Our

Unidentified Analyst

comment to just it more to morning. comment? that good the utilities expand contracts you environment. the could Is regarding enter there your was contracting hoping or I more on is the Hi, longer are normalized willing term

Jim McCaffrey

as very a No, spike contracts become to enter that utilities the they decline into in generally showing to multi-year production see is market are willingness ended and the I real. export the obvious demand think it’s in

years or five was more like two-year normalized XX more I utilities or routinely say when it ago did to when So, five-year contracts.

Dave Khani

And with fixed pricing.

Jim McCaffrey

with fixed And pricing.

Unidentified Analyst

in into? entering any across do you any guys you RFPs are of irrational And Okay. then competitors the guys come

Jim McCaffrey

say pretty market would season ability. seen to a not seen for where We’ve irrational no, irrationality this by and customers seen to lot is we have far be not some our with consistent I we any think pricing of that we So serious but have needs of perform the competitors.

Unidentified Analyst

Okay. of one, CEIX do you terms market bonds. the purchases of of prioritize CCR stock, in How that? And open then mix and last

Dave Khani

to want you Jimmy, go? Sure.

Jimmy Brock

Yes.

and going actually of the the which that use we as is evaluate the it we’re those and We – we price have that wins rate of a capital each allocation highest be not return what execute one when we purchases figure as to process daily to one out. everyone

Dave Khani

So to more. for CEIX appealing and towards cash so of down, our as buying stock buying stock here back and return more example, we’d probably today more reprioritize rate look come the of start has our

Jimmy Brock

Yes. At certainly would. today’s price we

Unidentified Analyst

That’s I Thank Okay. you. had. all

Operator

Our next Levin with question Seaport Mark. ahead, Please go Mark from comes Global.

Mark Levin

particularly job with things. thing great of Couple is, Yes. the quarter impressive. cost longwall that’s on Well first three moves,

to exports has the ‘XX. The in first with do question

call upside committed assume fair? think you've book. next referenced that and XX% pretty, priced that exports I are do I tons, much attractive It you your still and already that? to your you about might book million netbacks like this more you've of than total pretty done of sounds roughly XX% year. during there Is already the X.X the Is

Jim McCaffrey

million priced collar has have said deliveries Mark, average tons year, that bottom We of the the XXXX’s firmly it second last it we higher X.X and which of – a what than contracted, to of is million X.X tons the still half collar subject are price.

similar may million X half, delivering X.X choose of and tons in the tons to that million something So, in and second we between tons anticipate half. have X.X the we first million

of that’s the still in construction. terms to remains be portfolio seen So whole

Mark Levin

it. Got sorry. I’m Got it. Yes.

Jimmy Brock

the have certainly right. We capacity it hard, take to

Mark Levin

it. Got

about $XX prices plus the a ‘XX. then calendar little we And market or about contracted a look contracting, where mean, calendar side, is, see you not then I talk bit trade of necessarily our pricing that Code, type on look around from ranks Maybe screens in do can like for second, compare? maybe ‘XX for the the are of Okay. the what Is just market general you export and ZIP of the the but on they what what general? talk right how netbacks they kind in in kind like what guys

Jim McCaffrey

Well, in domestic way to prefer the next Mark, that terms of time the I’d market, till question. answer

several in are the now. of We negotiations middle

off just coming the higher me all that we that Let rolling contracts prepared like pricing. remarks the said in say are at back we’re

markets some do X.X our looking to tons forward August netbacks based with to markets, look September on some, were the we the even was going in for coal what on tie to we that side, side, thus the firmly hedging but netbacks morning. in me at the found Now particularly particularly additional were able export be pricing and attractive, and if some to now work to hard low-to-mid-XXs this off upon mine at prices of netback million The I’m sales. current cooled that the partner

Mark Levin

United exports, few think, valuable Eastern the of I on Those how or us months? thinking EBITDA – David, asset? very the would just value what remind maybe for there's would terminal like maybe then seem second, that assuming about you XX right year-to-date mean, maybe are any more, kind of can I’m the own the there has guys last in permitted I asset not you’re terminals were aren’t a you maximizing are gears. very prices. great States. And lot strategically? capacity there How of about more switching you a now, coal been One It last that a thinking

Jim McCaffrey

and in. start I'll time terminal. could again jump have and there the Mark, Jimmy Dave has stool or – we three then that three-legged said at time Jimmy

inventory. for area a have We

do revenue – that we revenue throughput wanted best use for our very we year to the the that is toggle And for bring We have allow significant the certainly EBITDA and intend make to opportunity have we of allowed facility lock in company did mines to we this a some marketplace. we place and in our thus have our and as the move year can forward part that for coal sure out into capacity of we us coal and to we that to and strategy mines. a EBITDA strategic was that

in shape some we if got think into to contracting capacity if there's For we'd wise extremely seen the but export years. XXXX, like we have winter, toggle from warm domestic I great previous we’re from customers the market a going to market away pushback example, coal in the

Jimmy Brock

want sure part to coal well And make that we’re Yes. end. or not price important in call, an the strategy when even of as we is, that market our the other take on we third-party own hurt

Dave Khani

value to very terminal us as maximizing now – imagine. this And can is right as as far value, strategic you

to terminal. We coal are to banging people lot that want on a through getting door ship our of

those value. know we And environment will today’s in that increase so

would the wedge this with terminal truly and market but been public is will on really throughput of never it we say again then value – there company, high this longer down through in on The for intent the we everyone wouldn’t the in put but us intention have now. prices For to heading contracts I us is never if market, in something we we that’s wanted could our a say future. of no that can interest with to in of that right no to but right would lock direction, it it, ever you monetize has not now. We sort maximize again monetize and the our road, term lock

Jimmy Brock

Yes. provides another the in its than way, for the value and Said us revenue in its terms what marketplace. terminals just it is in EBITDA more of

Mark Levin

points. we some that, to to incentivize the structures previous one burn? Yes, how maybe rate contract wasn’t creative more of of for more all try are more utilities at to of some it, more Eastern putting incentivize NAPP approach variable I to or burn that’s or you looking you question No, spoke a way your time, more scenario are think creative point charge better about to were around rail, with a but rails lack seeing seeing coal they there try taking adopting time in a rates discussion just last the at last railroads price the for last Eastern the

Jimmy Brock

continue the run or into have to customers Either Southeast attempting have At into that Mark. coal know have contracts will are they in anticipate move to finalized least can to their long make two added burn are that in more attempting, ended the And them. of will with favorable get I railroads our move markets. as as direction in that customers they if don’t I

Mark Levin

guys. you, Thank Great.

Jimmy Brock

Thank you.

Dave Khani

Thanks.

Operator

from with B. Please next ahead comes go FBR. Our Lucas Riley Pipes Lucas. question

Lucas Pipes

and much very good morning everyone. you Thank Yes.

Jimmy Brock

Lucas. Hi

Lucas Pipes

you wanted stronger peers a the further your week, unlocked? that announced broader this one supply of then you. any ask do States in in be as Eastern believe United you see about you environment specifically, trend broader the that a to picture did little higher I back have Thank coming supply earlier to capacity more bit extent price to with the a industry supply outlook specifically XXXX for and

Jimmy Brock

Lucas. of I part will take Yes. the that first

it’s pretty that at to all If production a easy we you versus that look marketplace. it’s today, down X.X% what don’t know good in are that XXXX. I think we is said the We same period in the years capital been that’s forth because online of X to of the bring going production overall X call investments it. is continue. pattern in put now years, think new of last I lack But to supply the

production, to ability be us us or good we got it’s the think we marketplace. have We quarter for to capacity out far longwall QX, two As one possibly as going to on QX. more that the and it having bring brought could we onto in and moves be year. finish a have the

to way. I So and as many pretty longwall I that have is the we into second be add have market times as head do We continues in strong good before to we it if think are future said as shape. that it ability said the the

Jim McCaffrey

it, that’s X-year not an so do it’s impact. maybe or project But to today X.X-year were if a we

Lucas Pipes

remarks side market the what then ton And today’s to you. it per I slightly ask basis? of on were Thank questions on pricing export helpful. Jim they price maybe directly, lot know in on today a try the I market and is Very today’s prepared in dollar more and netback a –

Jim McCaffrey

I that I coke today’s mid-XXs Lucas. the thought upon the mine number the in prices pet low market based is the of would a at. API to different is netback today’s and I X things netback that to question look In rate. say still to answered

Lucas Pipes

if out would kind is to hold? you were XXXX Got of on that’s it. to still go – that that And basis a spot

Jim McCaffrey

regard holds. we XXXX that still to If

Lucas Pipes

will helpful, alright. Well, of much luck. Thank very you it leave and Very I here. best

Jimmy Brock

Lucas. Thanks

Operator

next comes Citigroup. George George. question Wang from Please go Our with ahead

George Wang

strong Hi on guys. a Congrats quarter.

Jimmy Brock

Alright. Thank you, George.

George Wang

Yes.

my So again just been from to regarding common just just just and ones, the a MLP anything subunits most if has payout I changed ask to have perspective, for question couple see answered, just of the distribution wanted on the policy distribution? quick you of

Jimmy Brock

there strategy in there all at is No change no really our CCR. or to no strength

generate all options to flow continued pay that those plenty We strategy We come the changed free look hasn’t cash at there. but to in, unitholders.

Dave Khani

honestly Yes. why George would I raising X.Xx coverage, question And thought our the distributions. with be aren’t we year-to-date quite

George Wang

Right.

Dave Khani

take annual an to right. but approach what, – So how we things, we do

we right now high yield a very quarter-to-quarter, the I at look where very it don’t we comfortable. kind and basically we are very look year are at is, it’s the and So the of is we comfortable full we think as so distribution

George Wang

forward basically cost am has so the costs opening despite mentioned encouraging for despite guidance forward next higher the for inflation, contribution lowered terms components for cost side to elements it’s forward, some it. in year also the the forward, – you one the costs Got which on just And know asking also do going biggest cost and i.e. higher for costs even operating input guys you see lever so COX and lower lower just you going going I and operating just biggest sustaining think I of low a cost, going inflation? high

Jimmy Brock

of on put extreme amount importance unit Yes. costs. We

that’s of a our They employees the at the and have every cost. innovative cost it. importance that look that at they well. offset And from new We whether coal incentivized other this continue inflationary gains, little automation mine is of the little in have pressures yield of a equipment day. or we All to on or have which initiatives reduction productivity continued burden as bring understand to the we to come to this cost of Most unit that of from ease us. of are been term ways in mine, single shares some able of giving the higher cheaper us and we running efficiencies

to off to costs going able inflationary so that the able stave we moving do we think are to those have be been future. we far And and into

George Wang

Thanks lot. a it. Got

Operator

ahead, comes with go Jeremy question Please next from Clarksons. Our Jeremy. Sussman

Jeremy Sussman

Hi, good for my morning thanks questions. taking and

Jimmy Brock

Jeremy. Hi

Dave Khani

Good morning.

Jeremy Sussman

maybe surprised the it guess X.X million I year-over-year, was a from market whomever something decline to to while last with tons CONSOL to Terminal, maybe great year issue just pay volume on morning, Good pounds company high the the penalty or following-up X.X million so bit due a increase take-or-pay a it to to this specific had the see see admittedly related? pretty was numbers Marine revenue take-or-pay was contract,

Dave Khani

Jeremy, based shipping in having we to to market we ended the of fulfill. obligations upon that had to the had XX% the our and quarter domestic longwall market production moves, up export the the we balance market three domestic In the

the done through So big shipped we it. would have terminal, typically than part that’s less we of the

Jimmy Brock

was that planned. And

Dave Khani

Yes.

Jeremy Sussman

Okay.

it ask sound would versus market seeing you doesn’t generally India Now maybe maybe was question you to like since it mean in are seeing environment just what can compare I that’s and Jim market speaking are today how a maybe in helpful. you just the And I year? you and related, earlier the follow-up maybe what

Jim McCaffrey

U.S. it be coke see and coke, firmly a went lot India the or to you at bit come more coal. horse by the buying is Well, some I less pet a in down. but softened point was that still India born when burned But year. tomorrow, today pet coal. left are to the have believe on for going earlier has to Jeremy little told I a lot coke I enthusiasm not I purchases we That more as may amazed pet

demand softened months, strong the be is XX% I the and price, still has quite not that So said but the would that gone point where think it as combustion very X has things in certainly crazy of of pet our I XX right export There days. little close India the the there. wind, all throughout last air some a through was kind price little million have September. is quality just coal can India to India continues. so the few they for August a they to is poor have activities with inversion not that in as it NCR, was country combustion It about bit coke you today. concern. so tons in burning, Like and all year-to-date to now. but activities – especially the very going weather going banned read India and just not is

come impact end will the Diwali India don’t the which major that any in market is During festival expect on on festival the in to lights of that. We XX. November

encouraging. overall Jeremy bit but say So little still a I softer, very would

Jeremy Sussman

but as sure portfolio continues to and especially the super sell? I permitting met guess just to the helpful. in, versus of the I you side, the one on potential last mean kind for in That’s Itmann Itmann wouldn’t how if do development some sheet one timing, coal I to of balance am was the maybe production mind Maybe the existing am Jimmy sneak buy of I improve, you balance coal I sure there not met if can

Jimmy Brock

one on and getting far The the the we That’s want that pretty as quality. are the along is we of diligence Itmann of priority of then seam to our be as high projects. we And schedule would has came looking as reasons what both absorption absolutely as That’s thickness, same true. coal it think in we development And done. one well why sure that. are actually as well at permitting what due gas as thought well, ahead right it we on it do our terms course make of

equipment, be application permit. go in line could permit in things any that full we we see the if which I the producing fact went late In Itmann hold and/or they said If or ahead well for right earlier we and don’t mid-XXXX have have out go which here, as filed of ‘XX. we well be have up with ups could hick will

Jeremy Sussman

magnitude production? Any on

Jimmy Brock

production. to production again haven’t it’s given of with capital. project, commensurate so will going to very – it’s high the But any be magnitude going be capital not we No

will just to stay what have tuned. So we

your part if make probably it our do first compare we internal to was benchmark at to on anything The four outside at really we our months then we it we that about development look the three internal how can against our we months, projects. outside opportunities, second business the projects spend question looking team look and so sure

doesn’t going our look. of pricing lot out lot any this in of environment duration have that money will creates we that mind. a something a so buying And cost and But risk in

did something. ever would be buy just we we we very go if we will careful and really So be out

Jeremy Sussman

guys luck. good I fair. all the color appreciate That’s and

Jimmy Brock

Thank you.

Operator

question ahead Our FBR. follow-up Riley Lucas. Please a go is Pipes with next Lucas B. from

Lucas Pipes

that I my up you in about the I pricing I mentioned pricing follow-up of contracted few much think what wanted roughly taking for on the sense can and is kind earlier there XXXX? Thank level you circle kind give know that XXXX, fixed to that can in have back very you of that’s of for for sense of you on a question. circle is for a contracted come it questions get us that call this that, XX% to side we what were would XX% that just on but amount just a percentage and price,

Dave Khani

so price, Lucas, we price first of there. we said have on there still all XX% the selling XX%

to perhaps prepared colored to that forward, XX% north with to And just with far the more of business XX% firmly that some that have netback $XX. the but talk are which going based next negotiations it contracts have about have in is I we a in fact as a call floor, pricing the and that as does today point not be priced. we customers We of but of am of would for upon not some And still we can explicit. XXXX pricing then is in the clearly in export probably performance XX% XXXX is pricing I the netback

Lucas Pipes

the what what possibly maybe during good is little you of QX market than terms that? recently we at fixed point in have due a realized seen But strength maybe the for is higher point this to a in starting

Dave Khani

we go because utilities going right to there go in – Yes, are to not negotiation Jeremy, now. not we really going are several are excuse there we with me, are Lucas, we

Lucas Pipes

alright. Okay,

Jimmy Brock

very I excited portfolio, the about Lucas. am

I going to shape. think we in are very good be

Lucas Pipes

appreciate Okay, it luck. and best of alright. Well,

Jimmy Brock

Thanks.

Operator

to the back the Thakkar question-and-answer This over closing Mitesh I call like session. remarks. any now turn to will would conclude for

Mitesh Thakkar

earnings Hopefully, and this our you everybody. forward thank and interest for your were you everyone’s Sean. We We Thank you, today. call. Thank support morning appreciate of CCR. and most we your answer to able questions time of CEIX next quarterly look to

Operator

now conference The concluded. has

disconnect. now may You

Core Natural Resources (CNR) 1 Nov 182018 Q3 Earnings call transcript