CRN.AX - Earnings call transcript Q1 2022 | Coronado Global Resources Inc.

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Operator

Thank you for standing by, and welcome to the Coronado Global Resources First Quarter Investor Call. [Operator Instructions] There will be a discussion of results from the CEO and CFO, followed by a question-and-answer session. [Operator Instructions] I would now like to hand the conference over to Andrew Mooney, Head of Investor Relations, Treasury and Business Development. Please go ahead.

Andrew Mooney

Thank you, operator, and thank you, everyone, for joining Coronado's first quarter investor call. information quarterly we the sales outlined well other our SEC and volumes released safety as which our in our key we report performance. ASX to the as and Today, financial to related production and

CFO, of the Managing Spindler; A on Today, and results the of I'm Ziems. earnings Director release. May Gerry with Gerhard joined financial will more our Group position our released and be CEO, and detailed to XX-Q by outline XXth market our Form

Within certain measures. notice these U.S. otherwise dollars reconciliations you quotes our SEC. our see forward-looking regarding tonnes and also stated. metric our and review ASX with I report, you Coronado non-U.S. all will remind other numbers statements and the that unless filings statements to We in of in conjunction financial with GAAP encourage everyone

to that, Gerry. hand now With I'll over

Garold Spindler

Andrew. you, Thank

XXXX The revenues, liquidity. of We for Coronado. series first quarter U.S. quarter record a safety our of marked and by record records realized in pricing operations, record was achieved a results record group

addition, with production, and quarter production saleable than higher sales completed Coronado volumes higher prior higher the the run-of-mine quarter. In first

net with of We dividend position April, declared to in the cash payment. a also company shareholders our post in remaining completed distribution the XXXX

position lower the a of month-on-month. our price net to XX return cycle. that cash continue balance operators reported first to at one to was and and in we We Coronado positive a of December impacts position coal pure-play the cash net COVID-XX build world XXXX following results, a the

promised. as are is our sheet management on plans balance and we delivering Our strong, capital

per shareholders Coronado part a annually. pleased declare per to distribute expects fixed USD biannually or of I Coronado's our Given dividend plans announce am $X.XX policy. shareholders today, to to position, to CDI X.XXX CDI and distribution strong initiate as to financial

as coal stockholder to to the initiatives the In dividend reflects capital fixed recent ratings sheet, of maintaining liquidity the well confidence upgrade. the implementation we policy and improved of dividend setting prudent pursue strengths enhanced deliver Coronado's structure. aim dividend returns modest, its as strategic a markets its to within while company's component our in our balance While policy, flexibility

at returns for of dividends announcement buybacks shareholders flow and management our this special discretion on broader Board to and be stockholder free as cash our policy flow additional each existing distribute cash the strategy. of XXX% of We available distributions through part will certainty XX% share Directors provides Free of our to year. future fits within capital to greater believe

production results. period an and I relevant first the Australia overview pleased quarter U.S. in provide both in to year compared below the continue that prior to the the to our same recordable we remain elaborate and numbers, financial on averages. rates will and our improvements of safety Before industry I reflect am advise

average XX-month recordable XX% year-on-year a and recorded compared total XX-month first a year-on-year the injury Quarterly injuries end time recordable lost lowest of the history. no operations addition, the X.XX X.XX U.S. improvement. XX% the rate In rate were the in rate March a was total of Australia, at a reflecting operations Coronado achievement. U.S. a statistics to And X.XX, quarter, the in safety substantial compared of for in to rolling the rate XXXX, In reflecting frequency XX March U.S., incident average rolling was the improvement. X.XX at laudable

among of contractor several hygiene in Coronado's felt are leadership and place; recent management operations across to Australia. management standard has Australia, in place; system health have implemented development and continue programs New In implemented revised have and commenced; a verification critical are alignment health occurred; initiatives quarterly. fatal safety, implementation of times and all to safety in control audits programs taken effectiveness Coronado be health and initiatives the the hazard

from of workforce training our training X,XXX and on occurring. hours impacts greater the articulate the Coronado's in that for greater This in for dissipating COVID-XX in-person resulting availability U.S., and culture discretionary solid focus. safety has quarter are hires and the is has allowed workforce In set new expectations helped

the also Today, at our would like workforce I to Logan congratulate complex.

War Muddy West Preparation and Holmes Specifically, -- Eagle, for Bridge, Awards excellent the Eagle safety in Association performance Safety Lower crew being for #X, awarded divisions construction excellence Plant the XXXX. Saunders Virginia for

Special has our Recognition Office the Manager Virginia to West the Safety Award. Miners' and Logan nominated of addition, Health General from receive In been Directors'

production group group tonnes, production the Turning sales run-of-mine first quarter coal coal production, X.X quarter. production the volumes and ROM X% and higher million X.X% finished The prior X.X% higher the quarter. million the with U.S. million to compared prior higher, to saleable from operations the all and the was tonnes for production. than quarter. December X.X X.X were respectively, tonnes Run-of-mine than from of Curragh of

X.X% also XX.X XX% of higher million in of increase production waste commencement the occurred quarter. the Main Saleable removal. million area the was tonnes Xth December for the at than group million higher December prior Curragh mining was The the of quarter. X.X moved than with saleable X.X cubic a on production quarter. tonnes Curragh has from X.X% priority the Curragh of meters quarter fleet on waste, the March focus

increases Buchanan quarter despite impacts tonnes higher The was the of The saleable operations from improve in capacity. U.S. availability the at COVID-XX labor as maintenance the operations mine downtime for X occurred production to to dissipate. greater of work hoisting than December production U.S. due X.X% million days X.X the planned

prior sales X.X tonnes, consistent quarter were nearly X.X prior than were on X% U.S. quarter. March million tonnes million the quarter. of Sales the higher group December volumes up tonnes, X.X% the the quarter. sales from were Curragh from And million for with X.X

continue for operational and mine focus elevated half of implementing June with to coal remainder Planned one of in of first XXXX are works and greater the weighted length Curragh to the decongest focus draglines the the the Highwall to ensuring the rates quarter scheduled is cut Curragh's the the are CHPP thereby the half quarter. June of plan, maintenance to second year availability. box mine the to to strike dragline for for the year. drive and half Production the One removal Plan waste planned for are mining activities the improve an performance Curragh's second on mine. activities and

heightened to the to coal U.S. mills conflict. meet focus optimize European strong The demand producers, the environment. Coronado geographical operations production take maintains to Compared levels for due and from to with access continue is the met to steel the its to price interest and heightened the a of competitive market, diversification to advantage given Chinese the combined advantage ability other continue Russian-Ukraine

and our I'll now market outlook. hand over to to position Gerhard to talk financial

Gerhard Ziems

on and everybody, good Gerry, the line. day, you, Thank

group in XX% Coronado in were revenues revenues compared March Group the December XX.X% million the previous $XXX delivered quarter. from generated of of quarter record all were quarter. to the revenues up per coal coal Coronado average $XXX met price The was quarter. compared December realized group up also to achieved record sales. met a met quarter. the the XX% in realized pricing tonne, coal record

to met rail to to The of FOB mixture taking of consideration. basis sold higher, and the met to dollars tonne tonne coal component average in an USD U.S. grades XX realized per U.S. you for FOB, sales basis, a approximately port into that's on quarter coal an XX seaborne majority can that of our it the USD all all reflects if realization price peers, per comparisons FOR higher, would given be coal across domestic convert also I the FOR note sold. better after

was XXX net million and the closing Coronado end we cash the maintained coal And million. At to price the of as remain cash USD million. end $XXX earlier, XXst low available Gerry return of pure-play balance March, net recent March one cash continue position was the in following of and to -- cycle, a mentioned of Coronado first liquidity for companies a so record at $XXX another to position

April, XXX the to total from year remains of Coronado of cash payment completed In cash. distribution. The dividend, returned position And a million funded million Coronado fully the shareholders. Coronado in of to XXXX. has its USD since dividend available IPO post dividend payment was shareholders XXX USD in net After paid the XXXX full

our both and and credit April, for it's Moody's, credit of rating Moody's and their March on B+ corporate from XXst raised and, from is secured Coronado's On Coronado respectively, ratings BX. senior S&P the ratings additionally, now U.S. S&P corporate notes.

capital is to expected half expenditure was to and USD compared group first The XX% and million, XXXX as the rates XXXX of than capital the be year Australia is works second for the the in from quarter up higher capital XX Full to in years XXXX, group expenditures U.S. quarter increase both production previous First undertaking of future guidance. our XXXX. per

And costs. in to relation our

Xth of per to XX% the we The tonne we Main; group tonne activities year; the higher pre-strip the attribute some pressures; a the about more inflationary commencement was than costs at primarily focus per mining for fleet maintenance First, cost have sold at $XX.X identified additional tonne. per pre-strip have Curragh on the and so the Buchanan. last here, undertaking of activities, mining

expects the to half company weighted within And highlighted. XXXX, range levels the despite increases, of all production market $XX to full tonne just $XX year per be as of the costs the guidance are to as Gerry second

index level met On And to the reaching Europe, coal the of demand average USD benchmark XX% price, continued for March benchmark mid-March. push increased with benchmark coal premium the the in strong Russia-Ukraine XXX prices in on the seaborne prior Australian conflict price over vol per highest the low quarter. back tonne markets, the the price, and conflict quarter the history

from mentioned disruptive earlier, Russian remain record demand levels Australia revenues global prices operations quarter met during coal shipments and our supply. the coal from to and reached As and elevated strong due and I U.S.

being Russia highlight about improve coal of Due quarter on coal general global met our to in XX% me here. PCI contracts of a we seaborne our expect Let June to about X-month here and owns further. global supply basis, that lag XX%

steel than fallen mills, term. has historical well ongoing users uncertainty at met coal as maintained but record mid-March to the from demand raw have to supply, along Despite tight met the to COVID-XX steel lockdowns as have lowering also steel domestic steel China of levels more led in the prices materials market averages. supply the including double coal disruptions of highs to logistics, and chain, end supply short in value -- to and

Coronado demand. high coal met in remains

Australian-sourced unique China operations, into ship our products geographical while into diversification high-quality China to and us Our allows on from products the continues. embargo coal U.S.

for Europe customers. go requests the European heightened to slides and experiencing regard of from just existing the conflict new Russia's are and on We'll as in coal met seaborne highlight market. we it contribution Additionally, in

constraints coal where XXXX, are improved and coal providing met Australia from thermal current in to benefiting a met prices costs strong demand continue continued coal Mongolia, positive both highs, expects but remain to expected supply Coronado the from be to matched moderate to by energy high prices. and to with by floor coal Russia, demand, trade and and respect supported prices, China support met

Look, maintaining X plan I four, plans Coronado, and aspects: commentary two, will and distribution three, capital past, in now growth growth our that on some is key to a number inorganic policy. organic a number involves as one, committed capital to pursuing number management management shareholders. provide balance pursuing opportunities; distribution opportunities; strong sheet; number the balanced

Given results per company CDI per our announcing ASX. plans in initiate current X.XXX by and of today fixed with year the following of dividend to equating distribute half acceptable fixed USD the full its annum. is lines Coronado Coronado's required year The position, to robust $X.XX the per biannual expects as CDI, dividend financial accordance payments release a time to

share be dividend, of dividend which be to The to variable flow take free fixed on biannual the our other may XX% dividend a based and of distributions. distribution and is today, The buybacks the distribution between fixed payment to form this component XXX% cash in announced will will Coronado's policy. policy annum. continue of as existing addition pay dividends, dividend, cash variable the per of

I'm subject highlight matters, franking until to fixed All the And including fixed dividends, company. sufficient this. are accumulated distributions, course. discretion, just of dividends, will the initially variable, either amongst credits or to, are the unfranked Board's remain going other by

to the And I'll back to operator any questions. take now hand

Operator

question from first from Young comes Your Instructions] Sachs. Goldman Paul [Operator

Paul Young

million level, for high confirm on that is step for just case, if Plan second just half that in a to that and Curragh just question is And rate? run the the is production Can Curragh First does XX the coal sales also through, is? One the what guidance And this then year still you what imply tonnes. Curragh. at

Garold Spindler

detail. Curragh the course, instituted been -- all, Thompson, in which of its by is, One The Doug has of first Plan, complicated

So I'll try to do over justice high the brush and points.

never contractors managed Curragh really that in is been through As in you the contractor contractors. of know, a -- efficiency way has a And Curragh coordination. of distinct but coordinating number and the the a has of is efforts Plan significant and done way promised organizing coordinated One benefits and before

contractors other mine communicating them. we and every arrangement. the with cleared reviewed of success in And to and which is The and with fact, communicating us to with key is this each a with plan, are, adherence contractor,

We're so far. am. be. think a very mine that know pleased with in step I breakthrough establishing the be. And this the I should Curragh results as I is, should Doug it frankly, efficient

for and over about remain coal X quarter, of little a higher same us and production give little are bring coal. significantly released the significant a won't the the third rates rest the that do -- I quarters the course, -- be significant would million this, of remain the quarters. in bring to production those in as is the higher, that yet. The to with year. tonnes the second the of but first quarters for are the amount, third fourth will XX the first And implies fourth quarter year about the quarter guidance the quarter quarter There exact

Paul Young

annum, Okay. about of tragic with with Russia mills, maybe coal course, explored of into as goes the tonnes they your the per most far They what from to million to and Europe coal XX is what's at flowing are market discussions fascinating, just of the product time actually that PCI European Russian the at you Europe. With telling same happening And and the moment? as what turning situation. steel met

Gerhard Ziems

respond. Yes, let me

of XX% of kind PCI Russia. overall and XX% about imports comes consumption XX% PCI. out Europe met of from of their coal Russia Specifically, of

And So it's Europe. Union's of European may August. performed. coming coal embargo, the on Russian That's you know, into comes as out only the embargo effect in

embargo that see really yet. don't we So

pressure -- will support. coal we'll give on met that more So deposits well, put the more

up, met speech, XX% XX%, normally, important about It PCI sits I why, owns PCI my now global said. the at is relativities sits supply other One a but performed, I at and in thermal that coal mentioned exactly increased. into highlight, little Russia benchmark. That's about reflecting coal lower XX%, that to of was volatile bit to of the what that part Europe. XX% are thing has to really prices benchmark

Paul Young

do allocation in respect with interested -- of the announced that in with net position before value-accretive again, rank above question, Last in being large at market sitting the your to balance the or potentially of From a Bowen market. you look cuts these hard you at sort lot opportunities additional run. noise, get process might a capital a you're -- of quality really at Basin of these divestments of think has a to position There's high some open inorganic opportunities inorganic sitting of to potential sheet course, the standpoint, have sort returns come Gerhard, in additional the open-cut moment shareholders. to cash where to need -- to

Gerhard Ziems

No, our look, quite already sheet I is think strong. balance

position position. not very have -- X-week cash it, net net when very, our performance and mean, in dividend, strong we a are the at a cash I So look we did

one have organic think we we look a I that's at growth. also -- inorganic But where means where do we can aspect. or can

So very things I we depends on always think It look, Paul. strong. you are the already

Paul Young

Yes. Understood. Gerry, About the -- please.

Garold Spindler

are mean hard internally to this buys kind And good organic for I be now, to the funded. right be of have market, that growth -- opportunities obviously, find. in there will

buy we've something we're on to along. not no a as chest in the bad war chest said, comes there's whole such just the hold a going And As thing or good property. case

for available So it will be distribution.

Operator

Sam next McGovern Credit Suisse. from question from Your comes

Samuel McGovern

tender part dividend first as bonds, quarter as you Just of obviously planned. have with the the guys you during your the regards to

you're quarter? the this XX% to then what year in May, expect you currently. claw that contemplating you Or quarter a up at the bonds that can below enterprise, is third coming where try an you resets like second not meaning think more at do in trade exercise where time? I Do guys Or that thing? the

Gerhard Ziems

yes, just Yes. of Sam, until November, an can the we definitely option in to need that's to over back and bonds. pass do we months XX%. the tranche of the buy And USD for redeemed bonds XX Look, million another another XX second XX% us we

Operator

Bank question Your comes from America. next of from Chen Jiang

Chen Jiang

questions from few me, a Just please.

Just for situation. Ukraine follow-up and a question Russia the

your Curragh any if from or to first wondering offsetting the Europe. operations question. opportunities U.S. Just from That's

Gerhard Ziems

general, see conflict what quite Yes. there started. before days over including across you In the us, markets, is Europe coal. demand all for even this is that's profound met increased And

received heard a of from I we I mentioned phone customers calls calls, we that customers, think before. haven't customers previous existing from number and on

from has, an the increased Europe retreated the is there demand at out of market. China as moment, So

moment. China Europe market in is China see European also is affected met a now And the China supporting away see for the very including from in a coal that's diversion relatively at CFR producers, And you from low yes, into of current you lot us. will can really quiet cost. all us. right the

Chen Jiang

question current of policy. inclusive it's flow USD by share. X.XX cash It dividend regards Second free dividend immaterial of to your policy. CDI, the per the in change seems per comparing

needle. that the per what's amount by to at the wondering flow rationale with Just the share, seems because free doing going move looking the cash not of it compared absolute

Garold Spindler

that dividend. sheet a coal we considerable a prices, have permanence the look see years, confidence an we you in of market don't even and so, the expression lightly. the And is the strength operating market, make in current with kind commitment have balance the our that foreseeable in frankly, confidence communicate sheet a and accommodate that a out durability supports structure the and It have to the the, this as for we operating in balance to you believe in X fluctuating of to permanent of we an with backwardation our want circumstance. of doing market, We dividend even we vagaries

Chen Jiang

and cost. Okay. of material March kind I'm Have wondering from labor? the we've et from speaking, Curragh, for question, just most shortage Last just just cost cetera? what that their miners raw is your generally pressure Or on you most? just the and U.S. operations, cost above for either or cost Curragh they you guidance their what cost increased any guidance. your seen of Is pressure from diesel experienced of quarter, U.S. labor Well, experienced Australia or pressure? operations, kind from

Gerhard Ziems

Yes.

than higher that Let only me expect our where XXXX. budget highlight that also here X in marginally we are costs budget quarter inflation

The is the really half second year. one production related of here that important the to is

should we USD XX range So within come tonne. USD to the expect of per costs back XX guidance to

had quarter than also inflation. consumer other some pointed anticipated, particularly We've the We issues, goods other supplies. out, higher but in X and it fuel absolutely, inflation

We the also commencement on last had more of Curragh, focused at was the year. and fleet than removal that prefunded Xth waste

X versus We And the raised tenant had to XX% at downtime example. X, improve general, X has higher. quarter as in our days hosting movement capabilities. quarter It was an Curragh in

impact are So these all costs. on

-- it's range the I So not for the say, this, we're year. given full guidance still would all of within

Operator

comes question next from Minnett. from Ord Tony Your Mitchell

Tony Mitchell

been what's know, like your prices going to forward? opinion on thermal My answered. question's I'd just But

Garold Spindler

Thermal prices...

Gerhard Ziems

Look, I mean -- yes, thermal, yes.

Garold Spindler

ahead. Go

Gerhard Ziems

we a Xx see they Look, to to if concept concept. you that I the the concept fuel I market point. getting time high year. embarked But lot a their the political fossil like, prices Europe. mean, production and that Yes. European also fair the But it's of that by -- and can of of fuel is U.K. X, higher It's would the are to see the last statistics, see. in like now. contrary right to Russia. production and on you you a fossil mean here, I driven -- what the Union is U.S., see lot mean, than renewable And this failed. can have it's prices what outsourcing all Russia improve that has And to previous outsource not without

including some time now coal more out increasing going where coal a next That's And we're of the importing reversing. I And their see you being thermal therefore, for foreseeable own Germany, can they support a fair future. not we production see for of to European and it's concept. And therefore, lot that or countries, the Australia. for we're guess, see

gas before global gas are, gas going the It's by owns also XX% And prices. Russia -- also driven in to thermal further conflict. of extremely the a we coal Russia and that prices gas. are the high And see prices That market. the the was higher be. impact global prices has it's on about higher

met looking on to But eye not we as continue coal see will for much thermal well. we as course, look, well. coal on of a we and are keep So something thermal lot of support That's, an coal. too producers we are

Operator

from Your follow-up next question a Paul Young is Goldman from Sachs.

Paul Young

evenly X more percentages, by you like U.S. the sales the thereabouts million export, weighted by actually trade coal versus usual? in year? X.X domestic quarter? million tonnes sales to quarter sell or terminals domestic the Are what domestic to was than of Or for did they

Garold Spindler

Most the in issues export, associated We thought the rail exposure about movements from we is too on much we the have the Logan, what with seen to. And as we have expected, been haven't of or haven't way really, expected been, U.S. the the which issues. from -- regular. on domestically rail from export in disruptions or the fairly CSX, reductions. And of NMW our

producers. since we most we're rail shipping it. haven't the for domestically story is movement, service But CSX the disrupted particularly export felt the the for CSX, So that on

Paul Young

back $XX right. price oil at cost That's useful. Maybe all Curragh or The We the thereabouts. and a on is costs. specifically barrel Okay. up. diesel see All on can

much price or -- to know there, a sensitivity use how you what be I as diesel curious do guidance? but I may oil is is for into the at looking got Curragh. your Just factored cost draglines you've what maybe

Gerhard Ziems

correlated would I'll to if But go unofficial is probably seen million needed. have higher next met to than number. Curragh essentially, hedged, higher consume the that I prices, look, it coal to books, higher have it's of prices, to correlated to I correlated think thermal they I and I question it's That's bet back tonnes coal leave there. a hedge. prices XXX higher too But lot but believe but all a more -- detail, on a would the the would higher diesel market prices. be gas big That's anyway. late for

So you fuel our in we natural we natural where have a have costs. got a position hedge got for -- a are

of lower, whole them former costs low, overall. So reflected it market the at inflation met benefit part been it and course, somehow. but is, from is of It keep coal would correlates in as higher then to have the moment, we the nice prices, this

Paul Young

that one, Okay. And actually, the of some million, $XXX million, for and et box still cuts, guess? the in just cuts $XX on away, housekeeping, cetera? some $XXX million some CapEx Does half I spend more Curragh capital that of do you're mean How last full box the guidance year just second below work CapEx full the the in square have on year run that rate achieve during doing just I period. to to you

Gerhard Ziems

Yes.

with But to ramp-up still We is Douglas as production clearly well. ramp-up the with are similar And Curragh. within still a here, a guidance the there's there's what doing range.

to we're that comfortable guidance. hit are the we So going

Garold Spindler

is our This a the of standard budget commitments they in up on since we of basis the cost basis on expenditures. show and phenomenon

this So lag. you would have of kind

Paul Young

That's Cool. Got it. cash.

That's me. for Okay. it

Operator

from [Operator next Instructions] David Baker Baker from question Steel. Your comes

David Baker

million. account I revenue quarter-on-quarter quarter-on-quarter. I your up about the looking, dividend. million if And when seems it, the your just And costs, about to seems at look to $XXX cash $XX up take into be be I'm is million $X

number, a your -- can't here. I'm a just notwithstanding I just higher, lost bit but that isn't I reconcile it's why cash So good

Gerhard Ziems

and earnings you a prices and high by in first quarter what to refer a just impacted combination movement, payment our think -- I is cash that's capital cash profound extremely terms. working of is the simply

that to you in. take So got

David Baker

dividend, send $X.XX, still I'm does to I not it And you're think having this message, the although giving it's sense. year. a I a just think think again, nice I'd twice accept it's That -- retrace, message. harm think I that the but weak makes convinced probably it's I basically I -- it's more $X.XXX trying

Garold Spindler

that. I can appreciate

But current we've the it's statement. structure, our constraints believe We structure. made it have statement firm our at We some leave and bond in we'll a that. bond

David Baker

annum that talking, other million being think, would is a you -- per something are saleable that I said tonnes -- And target? about Or production something one Okay. And question. you're When target? like Curragh. XX Paul be production from talking

Garold Spindler

Gerhard?

Gerhard Ziems

both. That's

which So in converts both it's a production tonnes, and part into saleable production.

Operator

There Thank remarks. would at time. hand to questions are for to this no back you. any closing Gerry like I now

Garold Spindler

And thank call everyone, you, participating today. you. for the in Thank

you have questions, reach Relations team. Investor to please out follow-up any our If

Coronado closing, efforts in In remains continue first On their you. steelmaking Coronado producer delivered these quarters. of coal thank for employees strong globally. results, executive our and quarter has results I leading in on Thank to team, and Board we'll the coming build all behalf business a ensuring independent of

Operator

today. Thank for does That participating. for you. conclude our conference you Thank

now may You disconnect.

Coronado Global Resources (CODQL) 27 Apr 222022 Q1 Earnings call transcript