CEIX - Earnings call transcript Q2 2019 | Core Natural Resources, Inc.

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Operator

Good morning and welcome to the CEIX and CCR Second Quarter 2019 Earnings Conference Call. All participants will be in listen-only mode. [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

Ben. you, Thank everyone. morning, And good Welcome to XXXX Resources quarter Consol Energy conference call. and earnings Coal second Consol

Any or have or subject filings. updating to press Forward-Looking any expectations or We some future Statements releases for any risk, comments do we forward-looking not which obligations our statements otherwise. we in outlined undertake our about in SEC make of are events future

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

websites, also and can find You additional information on our consolenergy.com ccrlp.com.

With key our CEO; David Chief achievements of XXXX during today, a update remarks, Khani McCaffrey, In Jimmy Officer. provide Jim prepared second our his quarter and me initiatives. Brock, an major growth Commercial Jimmy and are our our on of our will CFO; recap

strategy our for then discuss XQ David, and capital our XXXX performance will the guidance. XXXX allocation detailed financial and

have slides remarks, prepared the we the we will call. all today's advance prepared During our participate to remarks, After Q&A three will certain websites the session. of executives in that posted in refer on

let that, Brock. me CEO, over turn our With to Jimmy it

Jimmy Brock

reported Mitesh decline for morning, good you. Today strong significant everyone. performance Thank and operational in financial QX we the and despite prices. XXXX, a recent commodity

generate to powered by strategy. our cash continue robust We flow operating free differentiated marketing and

were spot our prices to Our while per ton lower. revenue innovative commodity to us compared year-ago contract improve strategy Even and the period. allowed materially

toward our most per return growth capital and buying and believe value. toward undervalued we equity rather On debt the we the rate any other share remains most deployed back financial front, of our of avenues as to than driven initiatives, those continued our of securities

marketing into recognize dive I safety performance Before our to and of I team. our want operating the strong details,

strong we on momentum XQ performance and of quarter XXXX in build delivered to continue We first safety the another during generated the XXXX.

incident-free quarter. strong continued preparation an performances CONSOL Marine safety and with the Our Terminal plant those central

Pennsylvania better improved the measured was industry Mining three times the was At safety XX% of the by also year-ago incidents. as employee reportable by to national performance the but than compared Complex, number our average, levels,

me operational in performance XQ review let Now, detail. our XXXX

First, I record I’m XXXX. Mine Marine X.X quarterly XQ will production the to and Terminal. Harvey proud complex our million PA achieved tons then announce that the high cover mining a of during

At the the second produce during million mining Pennsylvania complex, we quarter. tons X.X

followed covered While additional of mostly ton this was impact normal decline same more to a area the and driven mine. XXX,XXX we a compared longwall five the an period year-ago, times as the than which of the the by move, to slower recovery the move was a new decrease progressed distance

of compared front, cost average overhauls in due coal to transitional quarter. the the the sold $XX.XX timing cash our was in equipment, was and primarily driven year-ago ton sold to longwall On by additional panel cost development. per increase moves cost and of cash This $XX.XX rebuilds the coal of longer

of up increase We in longwall move. after slower and a cost the a result slight as a also saw start supply maintenance

second half our cost announced keep a previously within Despite us XXXX, our expect year-ago range. period, improve the comparison to to we difficult and guidance

were continued of its X.X tons operating million. quarter the For million The tons. year-ago in X.X in XQ at tons X.X compared XXXX strong with of Marine to CONSOL with throughput CCR coal $XX.X performance line during share, XQ produced Terminals XXXX. report million million to Revenues a

XXX,XXX. by production costs While were improved approximately

our key revenue $XX a steady, CMT market As contract This of has drivers differentiated but through one in us, and strategy. important yields very is previously XXXX. that quarterly pay strategically million or announced, business take the a of approximately for

more than and successfully maintenance a infrastructure critical had rotary its operation replace years. which dumper, major completed annual a piece XX the for our to of During shutdown, is terminals been project in

forward. investment markets us the the sales for new let now serve helps coal positioned update on growing export in going well terminal and markets that, an and to our our performance of reliably an accomplishments. ensure Our coal overview the that With to is dumper me provide

markets respectively. since under been a API The to prices Prompt lot West witnessed QX have XX%, Henry to trend and and the commodity that prices of year of Month gas XXXX. prices, beginning pressure declines coal PJM thermal X of power Compared XXXX, XX% average XQ XX% continued and natural this Hub

is walking position our based that an This Having and production XQ morning bought contracted This for strategy while the and attractive have derisk we testament profiles XQ on compared said our XXXX to business. our this trend. contracting per to prudent returns improved X.X% that, our reported is our a revenue XXXX. own ton that revenue

That top a risk adjusted on mean bottom not that choose be could business prices, provides able to we but more a model. or perfectly may sustainable commodity the of in aggregate, the this basis,

our in XX% XX% Fixed to XX% exposure a XX%. for base. at at customer by well domestic to account playbook customer diversified We of customers to XX% domestic to net customers XX% with followed prices price continue power maintain exports by getting flexibility and our to base, back

worked very good portfolio. out us us. has to well This a for balance Providing our

XQ performing the during on decline declined Reflect XXXX. in has contracts. versus instance, prices. XXXX, back XX% in XQ contracts For power those net Pricing West power XXXX to the top PJM on were contracts

the We declines price several a Despite are ongoing thermal export hand, to you domestic markets, compared XXXX commodity result. prices about as XXXX concerned are the we are coal other our price as higher strategy. XQ doing our as On markets. that in seeing contracts we continue execute very well of and under XQ in swings innovate the recognize contracts fixed well and and we our

ton, trends XXXX, contract disclose extension X.X per $XX.XX completed not tons with some pricing million provide was floor price volumes, for do want export average We to per previously additional which here. we QX contracts, added disclosed but Usually, for XXXX ton. a an revenue of that a in above XXXX major we perspective

for contract has chip for XXXX Blue Coal a published Northern when App XXXX Difficulty]. tons added the utility [Technical were domestic a These favorably compared recently through and markets priced period. with new significant to We multi-year

moves, smaller other us a rate. assuming wins, customer million XXXX, a contracted production XX% These XX for position puts run comfortable with ton in very along

we our We but compares into one six look If position we best our today Slide you the happy some revenue have have presentation, to I'm the fall contracted with in we there. contracting of which at to heading other work visibilities producers, out believe very season. what set do, still

front, we continue export share. the On gain to market

markets, expect of million when to digit ship are XX% XXXX, into are crossover as For percentages. X.X to to tons the which coal met our we gone and shipments double XX% Compared crossover we shipped to planning we nine the in grow XXXX expecting each Indian around India. into has of tons international we our markets, by million international levels

should Mining a the and for Pennsylvania growth future. coal the Both into to of be for path business these Complex XXXX continue

India growth coal Specifically and on seaborne the seaborne where demand, that thermal are thermal believe we focusing is coal would front, to drive efforts. we in that continue our

provide now initiatives. update me Let growth our an on

XXXX XXXX is Itmann industry. to for global a On demand to metallurgical Mackenzie, in expected be coal coal increase to to coal According levels. XX% continues The level, metallurgical compared seaborne by a Wood the growth for area project. macro

premium will at Itmann is believe and coke plant shortage of happening coals. our production coal. & we low-vol Furthermore, a if is really coal low-vol of smaller Wood top-line Mackenzie other & project for growth look serve you tier Most These need. which projects. nine, is semi-soft in number bodes Slide the forecasting, There of coke lower that a coal well

companies coal Furthermore, And we filed seeing bankruptcy. met are coal now several to have prices for climb.

industry and without in timing cost. up favor. most the talented have people of going being While to will It project labor best through our us Itmann allows channels, the to is the our play

especially call. We XX-years for since are attractive very last designed announced to important an capital about withstand we which multiple mine, the also are have last spend. earnings lower buy planned a cheaper announce pleased building project This opportunities that an to several to to when is infrastructure Itmann equipment achieved cycles. is you will commodity our finding that our at prices, milestones on we and I’m is

necessary preparation we our quarter development, all third during XXXX. for which mine the forward received the us move of permits to activities for the construction is mine allows and First, which

the Second, CM began of for development preparing we equipment the first sections. also

project Finally, the eventually we to hired an the experienced operations. record implementations general manager complete and with strong a safety lead

mindset though with room a resource specific have deep mine complex operations. in within an us Even select existing our we bench managers expertise to We mines. of mining smaller brings pillar and who senior external decided

We new with improvement core the continuous both worlds. practices best CONSOL's safety of values and to will GMs combine get of best the

CM and as Itmann scalability. the it reserve tap One Central interesting, significant want scale we avenues well, Itmann Appalachian we though a can to several its growth and forgotten project of further. often other base of which aspect if a there little are for it holds is mine into opportunistically around

encouraged we made project. the the I'm on with so progress far have

me you with which Let coal on OMNIS our Complex. developing recovery facility update Pennsylvania at brief the a finance involves provide project, a now Mining

Central the we foundation second and construction XXXX. first XXXX. of progress Startup first partner, half OMNIS the began quarter, of mining secured through to LLC refinery of Preparation financing the ton the XX first scale commercial at of module Bailey the in farms and June anticipated complex, per expect Site module During in work the our project is Pennsylvania coal a for Plant. preparation hour part

Successful CONSOL's this the with technology footprint coal to which see revenue seeks potential will completion to us on environmental source the quality I’m take and space. of benefits. reduction changes while shape reduce of OMNIS the ultimately construct modules, eight high CapEx project, narrative how very providing help such excited additional and

let Dave financial me hand over the update. that, now, for it With

David Khani

through morning. was our At on an and sheet delever first allocation I Thanks, mission flow results immediate cash spin, and our and will derisk and our provide the second Jimmy, profile. balance update quarter time then of go our the guidance. process the good to capital

and our initial reduction We business and fine achieved contracting tune debt year steps taking grow increase aggressive began to and both we mission shareholder Earlier efforts. focused our through this returns.

program. Itmann now we share Accordingly, our are our repurchase project announced and accelerating

rate creating Our what capital be driven by of spending risk on to we adjusted broad capital will a set and return. of allocation opportunities then continues the be deployment best believe process

of stands includes leverage now adjusted adjusted million X.X cash at million, at stands $XXX on approximately liquidity which $XXX hand. and ratio times our Our net EBITDA

down of While continue surplus cash debt return. to improve to quarter, our corporate deploy are we further every pay will to planning we rate

is First, the it impacts project as into rates term with of for us entry long return. investors, timing of as just a our important a

coal prices and lowers returns decline as the lowers of aspects in the noted, the certain project. to Itmann period. costs we have payback the Jimmy improve on This As lock savings even many opportunity break

The go through and will commodity project has we an approximate cycles. XX-year life multiple

in our spend. Dialing market to based measured conditions very As upon achieve. be mentioned approach Itmann's the Jimmy or down to we scale can and it up capital want we

XXXX. the $XX.X we in shares of repurchase CEIX Second, spent second through million common quarter

time Our immediately is than lower since the today spent. share much at price any after

As will we from cost program owning a basis we our and accelerate of our also lower shareholders repurchase will larger benefit company. portion share share the the repurchases, under

Slide net that last since the since Finally, our debt spend four, also XX%, debt referred by adjusted EBITDA our XX%, of our which adjusting takeaway decreased has securities. EBITDA and financial The spend value by has times. our our the months performance is highlights the XX X.X key has to to increased net and decreased here

in points. average were Therefore, advantage basis took by the our spin. of stronger lowered financially, and position much weighted debt than opportunity of we time at market the cost We XX are the we of

recently share with reflects which price our our fundamentals. dipped However, below price, spin disconnect the has significant a

flow during disconnect to generated XXX% cash second lien CEIX our only undervalued team not also deployed management free from this the shareholders of debt net shares. some balance common sheet the cash and and The quarter, recognized the but repurchase organic

our from capitalization. repurchase me $XXX quarter more let our XXXX the CIEX million now previous With give currently authorized update than increased an board second million. now, XX% We this which our million $XXX the guidance. authorization, equity that have has authorization and on $XXX available market is recap under of to

first, of million $X.XX cash $XX.X CCR. adjusted reported to net EBITDA will million. diluted organic shareholders $XX.X $XXX.X per free then attributable also of of CIEX flow We CIEX million CIEX review income reported share. or and CIEX

the EBITDA of organic cash income result metrics respectively CIEX the million in million; $XXX.X is of This compares to lower mostly in lower million year-ago flow adjusted to The decline $XX.X an quarter. PJM shareholders net year-ago attributable and to volume. power $XXX.X period free earnings compared and prices West of sales of the

Our in export price performed fixed and domestic well the contracts quarter.

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

CCR. let on Now, you me update

respectively distributable million. compares adjusted reported to flow EBITDA income of morning, $XX.X the $XX.X million $XX.X million million, and year-ago million, $XX.X of cash million, of $XX.X and in net This CCR This $XX.X quarter.

of The accounting CCR $X.X cash $XX.X operating in million million for million in XXXX. in payments, million second flow $XX the $XX.X net distribution from with in activities, quarter intercompany expenditures, loan borrowed we generated capital CEIX. after

quarter, working in on capital intercompany change of net During resulted the with X.X borrowings in the X.X had CCR ratio coverage leverage finished a negative which million, distribution CCR ratio loan. cash liquidity, a $XXX million of times. a Nonetheless, the times and quarter $X.X

and believe sheet by position year-to-date our subordinate long leverage one We balance the one unit basis regarding term of provide of our also previously low comfort CEIX August common XXXX. the convert on We have distribution. holders for added units to should sustainability CCR coverage, units our current owned distribution will a announced the contracted on that on all XX, to

an provide XXXX. Now, let me you for outlook with

is As reminder to guidance continues protects situations. against ranges, guidance our capture which in XXXX of unforeseen a us state outcomes measure this. multitude before a our of philosophy and risk

midpoint significant Earlier end stressed range. affect that the our the even in the prices decline power lower of baked of to our netback further help To then we this set year, and contracts. it our a guidance ranges in guide

set deeper down As same original Power ranges. suggested compared Prices decline before of June, average many year-to-date than aware, PJM in when the guidance the we West the through XXXX, a you power are much period to XX%

a As instead EBITDA a ton ton. price from new adjusting hour to $XX.XX power the $XX $XXX time, in we million from per to previous we guidance adjusted reflect $XX to $XX $XX.XX $XX XX.XX megawatt megawatt to guidance million narrowing $XX.XX reflects range The our result, per PJM range. million revenue CCRs to are range for West of this per To are guidance range a million. revenue $XXX used to power, new

CONSOL is Terminal CIEX, of For the the toward end range. Marine higher the tracking guidance

its royalty EBITDA improving up $XXX CIEX million better million helps is guidance. range million. to overall million So $XXX EBITDA $XX million than $XX $XX million are to $XXX also income, from CIEX all EBITDA Summing are to we we which guidance to from seeing to to the million million. tightening $XX CIEXs expected $XXX it

our and and to constantly costs plan We EBITDA internal rangers. improve working base on are projects our fight to upside revenue,

and recognize As since XXXX thermal and beginning export more Jimmy earlier, domestic spot pricing. coal about under and questions have several contracted prices been this has noted significant the pressure of our position We raise XXXX. importantly, this

provide this. me perspective some around Let

million pricing the Approximately and ton or a approximately the the markets assuming are XXXX million of contracted export ton. run contract tons rate, $XX.XX XX% XX earmarked have are First, XX.X tons. floor we per above for for XX%

prices. the back of contracted power XX% net to Another tons our linked are

in remainder if the market pricing power coal prices contracted have stable. relatively an We that Given next are The the realizations close contracts of those XXXX in prices on is year. our price. price uplift normalize those domestic see been fixed floor to on could where are tons

release. guidance, a Putting when revenues to more typically the to we of not it all Consistent with do rest fourth ranges our expect XXXX. ton per earnings our material a decline XXXX in per XXXX ton XXXX together, provide we we compared our in revenue granular quarter past will provide strategy see with

the that Now to us tailwinds cost several XXXX. second, positive on seeing in trends for are expect create we front, we

pressures inflationary we purchased. on raw beating First, materials are

travel portal commissioned which recently Mine areas. reduce a their our working Fork to the of assigned time Enlow miners will new Second

lowered result of will reserve new and area, XXXX forward. the a will enter costs going in Enlow which second half development Fork Third,

front, capital significant the to as with finally, the on Itmann. we such pace of Now, projects growth spend, have particularly control optionality spending regard our

to With make that, let final me turn it Jimmy back to comments. some

Jimmy Brock

Dave. you, Thank

Before some move Q&A strategy. thoughts on we let our quarter to session, the provide execution me and summarize the final to

significant fundamental last has been business there that six-months. of in believe strength not the the in do we a First, our change

been different. deliver no execute is shareholders. our to of for Challenges mining and plan coal continue the our business, and a have We results part always

fluctuated in contract mitigated our had modest has Commodity have performance, and strategy the our of have the prices prices. commodity significantly impact XXXX but and decline operating on and impact a

Our stability. and top-tier marketing by our best is financial of security and flows reliability stable operations quality provided the tool and the cash

and risk Domestic customers the that managers base security.

that the On our quality front head our deliver. ESCO and operating tonnages to the export of the export will our knowledge consistency terminal with enabled confidently significant team

mentioned. as Dave Second,

very good lost the independent from risk is a debt balance single Company. industry balance position quarter, contracted to in sheet and the flow, capital free reduces We the repurchasing that Every a and are cash best compared We sheet. we among an in we and the de-risking cost balance believe the shape of as sheet. when are our significantly generating of perspective, our

we in a CEIX, million our the we $XXX that and shares million or be recognize our nearly of our cash both visibility The aggressive in Accordingly, and liquidity team year. board on at back sheet. more undervalued bump the Finally, balance management half set are cap shares XX% have as the second will significantly revenue the market nearly of given equity $XXX the of we have. which

that, Q&A. on for final With to it instructions over me hand back Mitesh let

Mitesh Thakkar

Jimmy. you, Thank

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

Operator

Research. comes sure Our ahead. [Operator I Dudas go with from can. Vertical Instructions] Michael first Please question

Michael Dudas

Two gentlemen. questions. morning, Good

First on observations maybe coal further the market. thermal

some in we put long see internationally? dynamics supplemental very out this turn had think to slides before good have a have morning. demand you you start supply How know, that You you

at bankruptcies but and also recent I internal undervalued secondly, to the difficult relative price how of given that as coalfields do will more disconnect? significantly much is your, the share how relative production, your agree, look you to the that some And growth be

Jim McCaffrey

is, Well, Mike guess Jim.

discussed think comments I that in already. Jimmy that his

XX% there. negotiations First business we that, our to in But when our portfolio. all, on Chip that put was we XX% recent our of to is coal how domestic the And - know, you at added Blue front, going of to some priced. be look chip blue take portfolio some business

It was rags. in the may priced read any favorably compared to you what of

SNL IHS. Desk or Coal So or

it say with because with ongoing too. and I'm we we some players, not were pleased relatively that other to ended that stability discussed where while specifically negotiations have Dave prepared So up

a a tough know, by API of but we On driven the in been the the reversal in complete the export saw X X, API curve side, you year for certainly June end in it's Europe weather at somewhat summertime.

there Now, issues. is some still inventory

that get especially rival due weather API into ARA stabilize The navigable some to it if a [indiscernible] lack past over the clear and we as think we as the summertime. that and extreme to heat relatively of been get largely as early due then we expect weather, the being we will up But the to quickly. see had in in winter, we fall the the X rain

floor was with color what XXXX, represented going are price color by the to Jimmy you in in we floor be his covered $XX.XX. have of export pretty know, color put the have X.X we business that that we floor and of of So, of where, and tons the in was just protected well remarks, million to our bed Jimmy the the export clear, be of it to because terms portfolio is but said our market that the - has is

at tons terminal above or at million in goes floor. is X.X comments take an XXXX. that at the Jimmy a that that or and through that that Along have ongoing will also priced also hedged said with level deal his pay So, we be

kind on back two Then last net our thing price. hand-in-hand. is of the terminal pricing those So deals go finally, power

they these in have talked Now, times past. we market. time and about although have discovered there been them Since times I below when we above the been like and power several XXXX, contracts, represent have times been in the that this are have market over they year, they market, when been have involved

This power and were year those prices our look a just at opposite. those entire we $X price about across XXXX, prices, When prices, contributed portfolio. contracts those the power power ton in power

ton a as to forecasted. We compared are down about what had we $X

at we with prices. year. far their companies is as The living running But pulling cash in this with But markets, back look listen expectation within the about our we earnings, they is on correlation talking very been low weather as are flow. gas gas so to production, everybody and the have gas as released many power their their prices

improve So on year, are we in expect to which we see prices. increase the the gas price some from net will next back where think we power at

us. that the So for is market thermal

Michael Dudas

Dave. months procurement Jim. bit maybe relative you you significant ago follow expect it, a analysis long interest XX-months can you ago kind to through on rates? seeing excellent impact as that scale that to, something or Excellent, as a where governor rates savings get doing through on and able spending cost already elaborate of for little was I maybe are of you might is Maybe and term more in those And on labor quick the review, the real dynamics that up, you How as what announced just and and being you the return. three are of move some

Jimmy Brock

take Yes, the will it's Jimmy, Mark first part of I that.

ability. so And said, are are we I the that we pleased do with have far, we it. when As

can to are in the of in We it's tensions time going we a we excited make there. we our go because know, about in that some looked M&A cost can capital man, other opportunities it, that of other diversify think the investments lower at. have in You we some at - going of portfolio than

we that the of the us new I from of brand look some operators is, and some that personnel, there our are savings pick cost that we it mining our and, the purchasing because shape. saves equipment availability maintenance in challenges good at to very are used issue, we mean, up seeing have able in sent some equipment. mining is already to So of course,

there. savings we a are seeing cost So

the our out activities sure cost the reserve mine thing is possible. we about laid been we make enter are have lowest mining plan to that methodical to other very where and The

then So not wait looking when if to expenditures, we to as as and the we all get point, up start as well that on we working capital permitting about scaling then and site far to and we are start, or now done face certain you there preparation at excited a allow down preparation the us a area before up, then and is up refuge there. can plant began to to our start of we market's

So, their scaling a those for, to located exciting year. have talked a variability, reserves when up, very have reserve are big But base times. do that We we better there we tons are that that we are start around about operate with, familiar us. to is with a enough XX-years, XXX,XXX that

monitor good we to So, go pretty every through that. again, continue we capital process. allocation dollar spend about will Itmann, capital But we our feel will

highest return So of rate get those dollars. therefore, will the capital

David Khani

in have better know, give come to creates we as those say our down, commodities those to for market projections, beat projections. this And environment opportunity, this, projections, it's just, you just I you intent opportunity come obviously try and beat in to us

So, I we would now. you not guidance, updated are just going right give to any say

in just put basic project the early, too the when where better together that, stuff. capital than from about we way it's think are I feel we the Itmann economics position now say even we and I all a

tuned. So, I say stay just

Michael Dudas

work. good And keep Okay. the Thank up gentlemen. you

Operator

next Clarksons. Our comes with Scott Please from go ahead. question Daniel

Daniel Scott

a is against of space. for players the Good differentiator nice the thanks. you And contracted morning, Clearly, some job the guys. Hey, in book other quarter. your on

bit. that little just draw into to I want a So

as exports side look next the you to year. On

about, that talking How over XX% are think million What I be to or XX% that? tons total you thinking the Is at is crossover And India? increase? nine this mix of going and you doing do similar year. that year? you for look level is about next it are

David Khani

Daniel, hedged know, year. the you now. tons for that million right Well, we X.X have are

So, from [indiscernible] we often and away come will back. I exports still, the I will go times, and

contracts, know, have some we contracts domestic contracts get we we you stuff the Our very us that and will open based that expect and upon his we those covered some remarks. important tons, that for key are Jimmy feel still in of

will get over close we . will we we XX% be probably to once well, look So, those contracts XX% or and

to That successful. are recently them we us export. that if take So, always arbitrage last has will been XX%

know, to that to a again, more now Enlow becoming into it couple If go that were mine Fork quality have of and as area past is appears we their export one new talked that than have you the better moved more calls and in over thing we been will where is they the the clear be about past. the are considerably

last have crossed met and X.XX do the few million X.X we over Over only been tons year tonnes, million market. a able a years, to

expect increase X.X range. We to to be that able X.X million that in to million to

where the to expect close XXXX. So that piece is our we for of GAAP on portfolio the final

Daniel Scott

price, going helpful. you these then contracts do fixed the is forward? that Okay, And on power price side, tied toward domestic you less versus or think that will more skew

Jimmy Brock

general, we be - have them going are where, discussed are some other people. with we about in we think I to

contract was We back to that have have elected XXXX. we a negotiated one of go them the year. on They contract to price customer net - with that through where this is fixed

little a that the And in to we our and ton anticipate are to XXXX don't in our area. million have bit better customers. six So looking always that. million ton plenty how ideas to do our down both that I that range. for anything But, us for total contracts we on innovate do X.X benefit ways took to will of

stay So tuned.

David Khani

from tell want with his I annualized internally Mike. debt what Those the percentage favorable That one an debate prices. basis, past. a we ourselves will associated on we the as you, they power do been that have of And outperformed among things is force lot a very normally domestic Yes, market. in the

to somewhere them Jimmy both earlier, the mentioned plants get But be we higher a as get are main there will where those those, goal want is sides. win-win them a close. to factor And burning. we capacity I for want

Daniel Scott

kind great, And you kind last in to to API price holding huge call, versus, talk Can that in it fears it then the how about pound is be one price environment, great. about X to falling Okay, per of your a X there out little outperforming, BTU stickier which of market? question. API helping is specs. weakness. some Maybe premium of help coal is How a up the

David Khani

this Well, as second year, in quite we And of XX have had tonnes the good so India first - bit countries Daniel. the to million to half India. a a we strong we to because again, different expect India far to And to half X.X shift year.

strong for you that the because I draft Mississippi coal, transportation mentioned load-out basin in so delta really is as struggled them this in higher real look then, know year. the a the conditions mean for been killer export year you Btu lower Illinois example just the of they you have when out for the not competitive with then it's good this fact

So are are main to that they differences work are remarks the hedges have in competitive about thing in say customers - going we confidence before. x-cop and to do and quality really is as mean to been they to we But that what really as gives the the are you know his enabled I market with going of know portfolio not just do they these our today. what one we that that our us secure how gave our operations, Jimmy in reliable they said that that

Daniel Scott

for you about there so and exports Yes, besides to India well. assessment a other more that a fixated just was it me lot X you API Is places of exposure? as that I point for one fair think follow on alliance X on their of sorry how API blend given a be to let think your is guys call well when don't Europe up Northern going talked there coals

Jimmy Brock

compared you India Yes, API at are more the when really than [indiscernible] X. you to look are to price the you

Operator

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

Mark Levin

A quick couple Great, thanks. ones. just really

On updated which pricing will about a pricing to NAPP is crossover or wind think the like think way met thermal it XX% looks that? more XX% XXXX be XXXX. Still in correct or above that about a to there tail maybe to

Jimmy Brock

than XX%, little so will a I in have still thermal. … NAPP X% I perhaps better to stick Mark, do above with said think the - that, know I XX% will we you past, bit

Mark Levin

expect And is I some talking IMO XXXX. a XXXX NAPP Okay ability and that there IMO into with into early going fair, NAPP I regard out of about enough. surplus know the XXXX articles a know to concern India then IMO some to effect is XXXX? ability to India fuel sell Do in on have as any export impact you to consequence coal, to your oil. coal your there

Jimmy Brock

any place expect of is IMO hopeful. I as that lot it take out on is Mark. out that don't due I'm you a I'm works past all difference, will work on know about There market how this XXXX. sure it depending confusion what the I

anticipate times, So a I on customer. think there pass don't big effect be a the I our there could to but through export

Mark Levin

Itmann? stuff David, the the of then above maybe EBITDA, goes when revenues, talk cash maintenance. and translate some beyond it on, that flow, about that capital you maybe about and about into maybe in and free beyond project beyond? Got OMNIS particular, could Thinking in you talk Can XXXX how

David Khani

capital this is we they project it are seven. the be next and commercial to us capital first mentioned, going about for of another some the up build are up once and basically OMNIS would is to year Jimmy and go be than year. spending putting going running XX% more So, probably as

it, Putting thermal tons some tons lower logistics creates metal past will they in about either we if the a into that with properly higher million a run coal and in and place, market eight of running how shipping that incremental sulfur which infrastructure or see we those the BX talked is X.X as about of one. with will all

with the capitol split lot we front. some of of a that and was OMNIS putting So

about in create nice, at really our So been revenue kick running. XXXX start some and in, would up up you put wrap you for long a others, could us think as point will get then very on to stream - the and that other the it plans its

Jimmy Brock

cost that of to those worth Dave about of stream actually project it us The which the allow will, a Mark, have in comes some that several going it’s big it will is recover thing if is is we high do about Yes, believe to now is talents coming we OMNIS because One, forward, it specs, going to Fichtner. we be see things. revenue fruition the talking a out

us slurry in use save would that a and of reclaim cost there get to - pond, now it may another of a have one we slurry lot and in would this would the sellable would cost put turning we to secondly, alternate out that actually we build if into another working be we future pond, and product we slurry year build normally That then not the dispose ever after.

environmental we looking it be it piece drastically environmental forward. exciting will huge and footprint win other our would The a force reduce about is,

that when and is be that project, capital they of are, of about thrown muscle get have we excited will are by about as approved much running. they tons a most as It away. could our are eight they them, up we get we were XXX to X,XXX obviously, got products the spent where tons So up, hours of capital excited them be one OMNIS will the they per then and typically time whereas day

Mark Levin

Got That it. ahead. is go sorry, very I'm helpful.

David Khani

to just on I'm add Mark.

to a We defined but about the talk going as strategy, exact we are to move well. our not product strategy have very

for tuned stay So that.

Mark Levin

it. then, And quick for for it. David, ones. really second. second. it. Got Back to you a said, Got you two back a I to Got

I you mentioned think, expect revenue So material ton. I'm quoting a just, you per on right, don't in and XXXX decline I'm

Is revenue where or XXXX? that maybe the a of you for the of is the would terms immaterial. By event beginning do tell of material. wait means point that something you ton, at you kind then until next Any can And is you be you frame XXXX. expect think what range way that in what would of market per with what will quarter

David Khani

So X% we define will less. material or as

Mark Levin

Okay.

David Khani

materiality. Right. we the you think as of could repeat That second sorry, And to the I'm used question? about threshold

Mark Levin

provide be, you then determined? XXXX with issue you in just specific that and to be that when until Would Yes, Or range. you quarter January? guidance maybe would would or next wait the

David Khani

everything that is and will budgeting pretty blocked our likely have, and release team said it of when going board I a had on fourth to and I think. report prepared up guidance, Colt quarter like if my are will our is much in we have have said will the we that. remarks through most we we Yes, What McCaffrey when when we - Jim the get

proper as we So and I stuff. we up think that put full have for of bits pieces everything us fourth a is might in might, release. budget will the But time put and have quarter more the We be I information, probably to out. think to

Mark Levin

you of you cadence That might the the year. minor provide color of remainder about some terms for is issues? those of is, last of might maintenance, when relative terms QX final relative Maybe or the of walls, QX long fantastic. in can to look QX question look And EBITDA types in think vacations, how to QX

David Khani

our vacation. quarter third of are quarter generally, lowest Just is minor because generally

So higher. I quarter would will lower be quarter say fourth will and third be

Mark Levin

So and than quarter the third quarter third? fourth lower than higher the quarter second

David Khani

Correct.

Operator

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

Lucas Pipes

the assume front Good me, Mark's so much. to believe very XXXX. don't morning, levels Would the second but as I kind question. prices of kind is does XXXX. tons would this improve you for wanted contracts that transcript currently status not was last I assume this follow back in up stands? normalized everyone. in materially David, have the that to of different contracting on quo - that to contractor the again net to Thank at it regards the power more of for

David Khani

in Yes, we curve. do not expect the material the forward improvement

it. creates to that optionality think raise I

shows next above our that second to that net back there our our be get net prices rallied us I gas think piece have and year. will $XX.XX very floor we back One things set contract the export somewhat deal and I then our weather the see where So if is think - excited is up, two about we upside contract…

so say material next our we baking and dividend. are it's for Yes, that be not year I when into not again right forecast near the floor

Lucas Pipes

So curves with prices? assumed or the the forward forecast current

David Khani

the it's about forward Right. curve. Basically

Lucas Pipes

Got very congratulations to on that. dry is thank And the Would the having how it. first on share over you intend utilize you Do program? evergreen very and than then David, that the more appreciate on then Perfect the use powder for expect of much environment it the of that cadence current in program year what you a on up that. repurchase remainder you. the Thank use much to opportunistically. this perspective is your lot maybe

Jimmy Brock

well Yes is said aggressive levels free balance in we than at of our if so more second think spend going first we sitting have I think availability more are the have but cash the we about be fairly that will repurchase One balance sheet. have half on as cash and in half to you think we repurchases got debt flow in continue on our be now and as the that shape I good our sheet why? smaller share a and now

get for think buy, particular don't we to I very say, just much going So to are in authorization are we going up how but a we reason. the

and owners down Our bunch step very to materially is buy the here great in now opportunity a and that stock is really come us of we a for stock. this as see

Jim McCaffrey

Alright.

David Khani

Yes.

mean believe that used the have prices I our XXXX ever way that think I process share we in we trading now where today, Board right at as we capital undervalued. well is look when our late as allocation you since out spun

to harder So return is capital it repurchases the would than share be on probably hard to be find now. going

we look the we everything in that you have Now, more half as that the at aggressive with dry repurchase will to said, out powder, second to there share with be of we remain expect much the on left but is say, in, year. our

Lucas Pipes

appreciate central competition Good there good. met lot will assume a one I did you that have Obviously, coal may et from we would and some wise? the levels you very your in research much cost structure, of appellation out out producers. XX do side. of sneak slowdown output there the cost you see perspective. Very, as terms is to what market cetera. any very the I percentile US I you, in you think for project a curious, hear. was last where Thank is in, kind of then growth Thank as if to to your competitors for alright. of of some the I on perspective

David Khani

our about project you on talking are on our overall… Met talking you think about or I

Lucas Pipes

overall. Yes, Yes,

US cost on met side? the you where see curve looking market color, the coal So I'm for

David Khani

think than more the of half you will are I the on say we better - we on that. think within global a better even we than done think tell that I fit it are And in we And we U.S. in cost that, that. the top Yes, have basis. I structure. I materially the in will think I

Lucas Pipes

you is environment? today's the - say say - would of cost the you in where And would percentile US is XX where curve the coal

David Khani

know You me. right that of don't I what? have front in

will answer question So back and let that offline. will we we come

Lucas Pipes

Perfect.

I continue. Okay. really and appreciate Best your luck. color of

Jimmy Brock

Thanks Lucas.

Operator

comes Bank Lynch. Please Matthew from ahead. Fields, Merrill of question America next go Our

Matthew Fields

everyone. Hi,

know Lucas's might lower? percentile In in the $XX on you be XXth finalized in two would get that point. $XX that years. think, Appalachian, Just data if was million project, one and of offline. the people do you right I we still too, I love might I can over guidance range million cheaper to don't you got a given think availability budgets that But of sort Is follow-up mentioned question, everything. that and that that the equipment you be, CapEx or last coming that of have

David Khani

but would the we on reductions have, are the end. stay front with Yes, some seeing range in we a point this at we project,

but our the guidance it's would us, now. guidance, the expand those in will an things to we stick lower early that type and with the indicate so we we that range that equipment have For of tell may example come toward part

Matthew Fields

XXXX? of have that between and you a rough amount And split XXXX

Jimmy Brock

$XX-ish think XXXX said I we Yes, in we the spent will last this spend are I be in year think next around year. to time, million remainder going and

David Khani

Next year.

Jimmy Brock

Excuse year. me. Next

Matthew Fields

tons for CONSOL XXX,XXX the destined market through that And of that then the export Is met? is terminal? all

Jimmy Brock

of specific goes, CONSOL market domestic terminal export it point as Not necessarily, And than goods export well. likely leverage if quality for think opportunity the in will there that we rather be the just… is

Jim McCaffrey

Closer.

Jimmy Brock

It's closer rate. favor better, better

Matthew Fields

to million I the of to kind It’s think constraints right there more running you capacity, capacity about? at terminal. tons you sort terminal? Okay. against your for Are above Great. And might up then the create way to read through And got have need date of yourself? is you the nameplate X.X that

Jim McCaffrey

No, we don't think.

is we mean, that what that running against maxim the through I know the that it. we through that with that. through the max can there, put up than been go are XX don't say year go obviously, we midway have We indicate million X.X a is. higher to tons We really

this Exxon partner are coals we think and are XX our be tons moving through is moving So there will own till there we year. going to north we million and our that of

Matthew Fields

on is through years. of Okay, that Is is for is, of because seems great. I have And you'd terminal. and like it is coal think export that coal half an potentially, party revenue math opportunity own doing the that tons similar X right third more that of is million which today, X.X think last to that about that? sort XX% way The your to XX% about of

David Khani

XX% to I XX%. think

Matthew Fields

Do share price. continuing down, to as the that you then I get secondly, notes stock half high lastly, to toward allocate you the given second think you buybacks costs? Great. And well, their to in on aggressive capital pay given more want will appreciate Okay. continue

Jimmy Brock

will be Yes, But we we debt. would you, just opportunistic. continue I will back I think buy tell

all will We at look different instruments.

cost the not good and to and really will half of highest were are leans. so just second going It continue aggressive - but debt. We the very in we look so to get just a happened they our yes, capital at year last sheet were in shape. buyback We balance

back our contracted more our buy is feel very down, the are position, stock. allocate capital to stock more to we piece as come time we that has an a now allocation feel increasing opportune now And this good about of

So buyback XX-months - to now we in will will little the very now for we did last of we pick will the stock And reason. a think just I both. beginning start do just up pace. do we

Jim McCaffrey

But be to a they mix. will continue

Matthew Fields

of of target? that updated position you on leverage feeling a is comfortable? And front, are kind dollar Great. or or more that XXXX there That absolute is value an contract your with

Jimmy Brock

not No, really.

Jim McCaffrey

to that we we - a will will lot philosophy. time to pay within stress and level scenarios different to I look maximum look our that follow have, and we to protect our covenants at debt have. comments make Well, We at we our that sure continue What and stay of the need cash I have give we we think us is run different just want flexibility. we we balance sheet. free down suites do, tell we flow tests But you through. do to - But, over do from our and

that make contracting, be shape allocation that some make to a and And our rate end of sheet day return at and keep be capital we very do debt, of cost intensity of that will to take paying be that our sure to of so, combination flexibility structure, on need as balance driving capital our very, we on down we will working sure that advantage to do the that able we higher. keep process well that working the able good to

Operator

Our next Please question go comes ahead. [indiscernible]. from

Unidentified Analyst

morning contract Hey, and the XXXX thanks for good position. call. for taking your Very quickly,

You also contracted, there? profile have XX% I production or to sales wall? export pricing of are have of these kind what know, all would domestic And any you like

David Khani

sales. A portion that of domestic price the is largely is XXXX power tons. back net

a the going you wouldn't of really we majority that offer have about It's and see those we price where power cuts. I talked So, can't prices just, reflect already the today.

Operator

like now would I session. conference closing back question-and-answer remarks. to over our concludes turn That Thakkar Mitesh to the any for

Mitesh Thakkar

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

Jimmy Brock

Thanks, everyone.

Operator

The conference for you concluded. today’s has attending now Thank presentation.

disconnect. now may You

Core Natural Resources (CNR) 6 Aug 192019 Q2 Earnings call transcript