Can you provide an update on the timing and expected dollar amount of insurance recoveries for the Leer South fire?

The Baltimore bridge claim is settled. Final claims for Leer South, indicating a limit loss, have been submitted and are under review by insurance companies. Management is optimistic that approvals will start trickling in during Q2, expecting to collect another $100 million in incremental proceeds. “In aggregate, I would expect to collect another $100 million in incremental proceeds from insurance.”

Given elevated Q1 High CV cash costs, what is the expected cadence of cost improvements, sensitivity to electricity prices, and West Elk's contribution?

Management maintained cost guidance, expecting normalization as two PAMC longwalls are out of sand rock intrusions and abnormal Q1 power pricing (due to Arctic blast) subsides. West Elk is running well, and improved rail service will allow it to run at full capacity. A $1/megawatt change in PJM West power prices could impact costs by $750,000. “And just from a sensitivity perspective, about $1 megawatt change could be around $750,000 for us, just to keep that in mind.”

Can you elaborate on West Elk's domestic shipments to the East and potential for increased West Coast exports?

West Elk is successfully moving domestic tons to Eastern power plants, with one long-term contract in place and several others in progress. The coal has been well accepted. For exports, West Elk is currently moving through Long Beach and the company is exploring additional West Coast capacity, including Oakland and potentially Canada, for both West Elk and PRB coal, prioritizing economical routes. “On the West Coast, we are moving West Elk through the West Coast out of Long Beach today. We anticipate that continuing. And then -- in terms of additional West Coast capacity or additional export capacity off the West Coast, we're certainly looking into that for some opportunity to move some of our PRB coal as well.”

CNR

Core Natural Resources (CNR) Q1 FY26 earnings call: guidance and Q&A

Earnings call· Mar 2026 (Q1 FY26)· Energy· May 7, 2026

Source: earnings call transcript

Executive summary

Core Natural Resources Q1 FY26 — Strong Operational Performance and Shareholder Returns

Core Natural Resources reported a strong start to the year, driven by robust operational performance across its mining segments and significant shareholder returns. The company is focused on cost management and capitalizing on market opportunities, while also expanding its aerospace and defense materials business. Management expressed optimism for continued improvement in cost structures and shareholder value creation as operational challenges normalize.

Highlights

Adjusted EBITDA increased by $77 million to $180 million in Q1 FY26 compared to Q4 FY25.
Metallurgical segment Adjusted EBITDA totaled $58 million, up $79 million from the previous period.
Returned $47 million to shareholders in Q1 FY26, representing 85% of free cash flow, with $42 million in share repurchases.
Secured an additional 11.5 million tons of contracted volume through 2028 at attractive prices.
Achieved over $160 million in synergy run rate, tracking towards the high end of the $165 million midpoint target.

Concerns

Free cash flow of $56 million was impacted by $52 million of negative working capital changes in Q1 FY26.
High CV Thermal segment cash costs were elevated at $42.56 per ton in Q1 FY26 due to an Arctic outbreak and tough mining conditions.
Expected continued elevated diesel prices to weigh on Powder River Basin (PRB) margins in future periods.
Global economic downturn and Middle East conflict continue to broadly weigh on metallurgical demand.

Guidance & targets

Category	Target	Timeline	Confidence
High CV Thermal segment contracted volume	29.1 million tons medium materiality	FY26	High
High CV Thermal segment average coal revenue on committed and collar tons	$57.85 per ton medium materiality	FY26	High
Metallurgical segment contracted coking tons	8.3 million tons medium materiality	FY26	High
Metallurgical segment average coal revenue for priced tons	$122.40 per ton medium materiality	FY26	High
PRB segment contracted volume	48 million tons medium materiality	FY26	High
PRB segment average coal revenue	$14.20 per ton medium materiality	FY26	High
Cash SG&A	Top end of $100 million medium materiality	FY26	High
Insurance proceeds from Leer South fire	Another $100 million medium materiality	Q2 · FY26	High

Segment performance

Segment	Revenue	YoY	QoQ	Margin
High CV Thermal Coal sales were 7.7 million tons in Q1 FY26, slightly down from 7.8 million tons in Q4 FY25. Realized coal revenue increased to $58.86 per ton from $58.11 per ton. Cash costs were elevated due to an Arctic outbreak increasing power costs at the Pennsylvania Mining Complex and tough mining conditions, which are now resolved. Coal sales: 7.7 million tonsCash costs: $42.56 per ton	$58.86 per ton	—	—	—
Metallurgical Coking coal sales were 2.1 million tons in Q1 FY26. Realized coking coal revenue improved 7% to $122.11 per ton. Cash costs significantly decreased to $92.35 per ton from $103.49 per ton, reflecting a full operating quarter at Leer South Mine. Adjusted EBITDA for the segment totaled $58 million, up $79 million from the previous period. Coking coal sales: 2.1 million tonsAverage selling price (inclusive of thermal byproduct): $112.03 per tonCash costs: $92.35 per ton	$122.11 per ton	—	7% improvement	$58 million Adjusted EBITDA
Powder River Basin (PRB) Coal sales were 11.9 million tons in Q1 FY26. Realized coal revenue was $14.39 per ton. Cash costs were $13.64 per ton, in line with the prior quarter. Elevated diesel prices are expected to weigh on future margins, though the company is working on cost optimization. Coal sales: 11.9 million tonsCash costs: $13.64 per ton	$14.39 per ton	—	—	—
Core Marine Terminal (CMT) The CMT shipped 4.8 million tons during Q1 FY26, down from 5 million tons in Q4 FY25. Adjusted EBITDA was $16 million, in line with the previous quarter. Tons shipped: 4.8 million tons	—	—	—	$16 million Adjusted EBITDA

Orderbook & backlog

Contracted volume 11.5 million tons Q1 FY26

Additional volume secured through 2028 at attractive prices.

High CV Thermal contracted volume 29.1 million tons Q1 FY26

added 5.6 million tons

Represents 94% of the midpoint of the guidance range for FY26, with an average coal revenue of $57.85 per ton.

Metallurgical contracted coking tons 8.3 million tons Q1 FY26

added 1.6 million tons

For FY26, with approximately 3.8 million tons priced at an expected average coal revenue of $122.40 per ton.

PRB contracted volume 48 million tons Q1 FY26

For FY26, at an expected average coal revenue of $14.20 per ton.

Deals & partnerships

Sawyer Composite Acquisition of a company to accelerate growth and elevate profile in the aerospace supply chain. $8 million

Acquired Sawyer Composite in Fort Worth, Texas, for $8 million during the first part of 2026.

Capital programs

Manufacturing facility expansion completed

Benefit:30% expansion

Completed a 30% expansion of the manufacturing facility in Triadelphia, West Virginia, for the Core Innovations Group.

Risks & headwinds

Elevated diesel prices future periods

Limited impact in Q1, expected to weigh on PRB margins in future periods

Mitigation:Evaluating hedging strategies, optimizing truck fleet and schedules in PRB.

Global economic downturn and Middle East conflict ongoing

Broadly weighing on demand in metallurgical markets; causing volatility in global energy markets

Mitigation:Positioning to capitalize on elevated Australian PLV benchmark prices; focusing on cost-saving measures and shifting focus to advantageous markets.

Negative working capital changes Q1 FY26

$52 million impact on free cash flow

Mitigation:Includes timing impact of 45X tax credit accrual versus cash benefit; expected to normalize.

Elevated High CV Thermal cash costs Q1 FY26

$42.56 per ton in Q1 FY26 (vs $41.42 in Q4 FY25)

Mitigation:Due to Arctic outbreak (power costs) and tough mining conditions (sand rock intrusions), both of which are now behind them; costs expected to improve in Q2 and beyond.

What to watch in Q2 FY26

High CV Thermal segment cash costs

Q2 FY26 and beyond

Current $42.56 per ton

Target Improvement relative to Q1 FY26

Why it matters

Indicates successful resolution of Q1 operational challenges (mining conditions, power prices) and overall cost management effectiveness.

I am optimistic about our cost outcomes in the High CV Thermal and metallurgical segments, with both PAMC longwalls out of the tough mining conditions we saw in Q1 of '26, power prices normalizing and Leer transitioning to the North reserves, we expect our cost to improve relative to the first quarter.

Find out whether CNR delivers this. Inve re-checks your case every morning.

Q&A highlights

What is the sensitivity of the High CV segment to API2 prices, and what percentage of 2027 volumes are contracted for each segment?

Approximately 3 million tons of the remaining Q2-Q4 volume in High CV Thermal is linked to API2, with a sensitivity of $0.07/ton for a $1 API2 price change. For 2027, the High CV segment is roughly 50% contracted, split evenly between PAMC and West Elk, with attractive pricing locked in when API2 was higher.

“So for the balance of the year, we have left to sell Q2 through Q4. It's just around 3 million tons is linked to API2. We also have a little bit, call it, 300,000 tons linked to High Vol B as well. The rest is fixed price. And right now, the sensitivity is roughly about $0.07 a ton across the segment. And that's assuming about $120 API2 price.”

asked by George Eadie · answered by Robert Braithwaite

2 min read 6 chapters

Detailed narrative

Operational Performance and Cost Improvements

Core Natural Resources reported a strong Q1 FY26, with the Leer South mine achieving strong production and cash cost performance after the fire. West Elk also improved significantly due to favorable geologic conditions and operational efficiencies. Management expects further cost improvements in High CV Thermal and Metallurgical segments as longwalls are out of tough mining conditions, power prices normalize, and Leer transitions to North reserves.

Shareholder Returns and Capital Allocation

The company returned $47 million to shareholders in Q1 FY26, representing 85% of free cash flow, with $42 million in share repurchases and $5 million in dividends. Since the program's inception in February 2025, $292 million has been deployed, including $266 million for share repurchases, reducing shares outstanding by 7%.

The capital return framework targets 75% of free cash flow, primarily via buybacks, and strong returns are expected to continue.

Market Dynamics and Contracting Success

Global energy markets remain volatile due to the Middle East conflict, impacting metallurgical and thermal coal demand. Despite this, the company secured an additional 11.5 million tons of contracted volume through 2028. High CV Thermal is 94% contracted for FY26 at an average of $57.85/ton, Metallurgical has 8.3 million coking tons contracted, and PRB has 48 million tons contracted at $14.20/ton.

Aerospace and Defense Expansion

Core Innovations Group expanded its capabilities in the aerospace and defense industries. This included a 30% expansion of its manufacturing facility in Triadelphia, West Virginia, and the $8 million acquisition of Sawyer Composite in Fort Worth, Texas. The aerospace venture now boasts 75,000 square feet of manufacturing space, 80 employees, and serves over 40 customers, including top defense primes.

Synergy Achievement and Cost Management

The company is significantly ahead on synergy achievement, tracking towards a run rate of over $160 million, exceeding original merger targets. This includes substantial reductions in cash SG&A, value uplift from blending thermal byproduct (MIBS), and financing synergies. Management is actively pursuing cost-saving measures across operations, including optimizing the PRB truck fleet and schedules, to mitigate inflationary pressures like diesel prices.

Government Support and Power Demand Outlook

Management expressed strong support for the administration's actions, particularly the extension of coal-fired power plant operations (e.g., Keystone and Conemaugh through 2032) and efforts to unwind regulations. They highlighted the growing U.S. power demand, with projections of 3.7% growth over the next five years, underscoring the continued need for coal-fired generation and the administration's focus on supporting the coal industry.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.