How to forecast thermal byproduct price, given variability, and is $55/ton the right level?

The price depends on the export market and API2 prices. For the balance of 2026, it's expected to be in the $50-$55 range. “So again, it's not a perfect number, but I think you'll -- for at least the balance of this year, I would expect it to be in that $50 to $55 range.”

How to think about met costs for H2 FY26, given 2Q was below guidance, and what drives volumes to low/high end?

Cost improvements are sustainable due to schedule changes and operational enhancements, with potential for further improvement. Volatility quarter-to-quarter is possible, but the current cost level is considered good. “It's definitely sustainable on where we are, and we're certainly looking for ways to improve that. So when you look at the nearly $7 improvement that we had on cost, that's a lot of those things that put in play.”

How should investors think about the pace of share repurchases given cash inflows and working capital build?

A heavier share buyback percentage is expected in Q3 and Q4, utilizing cash from insurance proceeds and anticipated working capital release. The company will stick to its 75% FCF return target. “So going forward in Q3 and Q4, I think you can expect us to have a heavier share buyback percentages as we use that cash going forward. And we'll stick to our plan of generating 75% of our free cash flow back to shareholders.”

CNR

Core Natural Resources (CNR) Q2 FY26 earnings call: guidance and Q&A

Earnings call· Jun 2026 (Q2 FY26)· Energy· Aug 6, 2026

Source: earnings call transcript

Executive summary

Core Natural Resources Q2 FY26 — Strong Operational Performance and Capital Returns

Core Natural Resources delivered a strong second quarter, marked by significant operational improvements in its HCV Thermal and Metallurgical segments, alongside the final settlement of the Leer South insurance claim. The company demonstrated a commitment to shareholder returns, increasing buybacks and maintaining a robust liquidity position. While facing headwinds in the PRB segment and broader metallurgical markets, management remains focused on cost discipline and capitalizing on long-term opportunities in power demand and infrastructure build-out.

Highlights

Net income increased to $126 million ($2.51 per diluted share) in Q2 FY26 from $21 million in Q1 FY26.
Adjusted EBITDA increased to $324 million in Q2 FY26 from $180 million in Q1 FY26.
Returned $68 million to shareholders in Q2 FY26, up from $47 million in Q1 FY26, with $329 million used to repurchase approximately 8% of shares since program inception.
Secured a grant from the U.S. Department of Energy for a pilot facility for rare earth elements and critical minerals extraction.
Metallurgical segment cash costs guidance lowered by $2.50 at midpoint to $86-$91 per ton, reflecting improved execution.

Concerns

Powder River Basin (PRB) coal sales decreased to 10.2 million tons in Q2 FY26 from 11.9 million tons in Q1 FY26 due to weak demand and low natural gas prices.
HCV Thermal segment cash costs guidance increased by $1 to $39-$40.50 per ton due to stickier inflationary pressures.
Metallurgical market faces near-term headwinds from macroeconomic factors and Middle East hostilities, impacting global steel production.
PRB segment cash cost guidance increased by $0.25 due to persistently higher diesel prices.

Guidance & targets

Category	Target	Timeline	Confidence
HCV Thermal segment cash costs	$39 to $40.50 per ton medium materiality	Full-year 2026 · FY26	High
Metallurgical segment cash costs	$86 to $91 per ton medium materiality	Full-year 2026 · FY26	High
PRB segment cash costs	$13.25 to $13.75 per ton medium materiality	Full-year 2026 · FY26	High
Shareholder returns	around 75% of free cash flow high materiality	Ongoing	High
Global steel growth	resumption in global steel growth medium materiality	2027 · FY27	High
Global coal-fired generation	2% increase medium materiality	2026 · FY26	High
Global electricity demand growth	3.6% a year medium materiality	Through 2030 · FY30	High
HCV Thermal 2027 contracted position	more than 50% contracted medium materiality	2027 · FY27	High
HCV Thermal India tons price	$60 range medium materiality	2027 · FY27	High
HCV Thermal West Elk tons price	upper 40s to low $50 type range medium materiality	2027 · FY27	High
Thermal byproduct price	$50 to $55 range low materiality	Balance of 2026 · FY26	Medium
Met market prices	expected to improve medium materiality	Throughout the back half of the year · FY26	Medium
New blast furnace capacity	185 million tons high materiality	By around 2030 · FY30	High

Segment performance

Segment	Revenue	YoY	QoQ	Margin
HCV Thermal Coal sales increased from 7.7 million tons in Q1 '26. Realized coal revenue was $58.11 per ton, compared to $58.86 per ton in Q1 '26. Cash costs improved significantly from $42.56 per ton in Q1 '26, benefiting from improved mining conditions, favorable sales, and normalized power costs. Adjusted EBITDA for the segment totaled $165 million, up from $126 million in Q1 '26. Coal sales: 8.4 million tonsCash costs: $38.58 per ton	$58.11 per ton	—	—	$165 million
Metallurgical Coking coal sales increased to 2.3 million tons from 2.1 million tons in Q1 '26. Realized coking coal revenue was $121.43 per ton. The segment's average selling price, including 300,000 tons of thermal byproduct sales, was $114.13 per ton. Cash costs came in at $85.65 per ton, nearly a $7 per ton reduction QoQ, reflecting ongoing improvement and execution at longwall mines. Adjusted EBITDA for the segment was $200 million, which included insurance-related proceeds of $125 million. Coking coal sales: 2.3 million tonsThermal byproduct sales: 300,000 tonsCash costs: $85.65 per ton	$121.43 per ton (coking coal); $114.13 per ton (segment average)	—	—	$200 million
Powder River Basin (PRB) Coal sales came in at 10.2 million tons, compared to 11.9 million tons in Q1 '26. This was a function of weak demand during the spring shoulder season, exacerbated by low natural gas prices. The company views this as a timing issue, with over 50 million tons committed for 2026. Pit inventory was built during the quarter to enhance operating margins in H2. Coal sales: 10.2 million tonsCash costs: $14.85 per ton	$14.28 per ton	—	—	—
Core Marine Terminal (CMT) The CMT shipped 5.2 million tons during Q2 '26, compared to 4.8 million tons in Q1 '26. Adjusted EBITDA was $18 million, an increase from $16 million in Q1 '26. Shipments: 5.2 million tons	—	—	—	$18 million

Orderbook & backlog

PRB coal committed for delivery More than 50 million tons Q2 FY26

Expected to be shipped this calendar year or value captured via blend and extend initiatives.

Contracted volume across segments Approximately 16 million tons Q2 FY26

Secured through 2030 at attractive prices.

Metallurgical coking tons contracted 8.7 million tons Q2 FY26

Added 400,000 tons

For 2026, with approximately 6 million tons priced.

PRB contracted position Approximately 50 million tons Q2 FY26

At an average committed price of $14.27 per ton.

Deals & partnerships

U.S. Department of Energy Grant to construct a pilot scale facility for the extraction of rare earth elements and critical minerals.

The facility will be located at the Pennsylvania Mining Complex, underscoring Core's progress in innovative technologies and national strategic importance.

Northrop Grumman Core Touchstone Advanced Composite Group named a key supplier of tooling and components for the Talon Blue collaborative combat aircraft.

This follows an announcement made earlier in the year, highlighting Core's role in advanced composite materials.

Capital programs

Pilot scale facility for rare earth elements and critical minerals extraction underway

Funding: Grant from the U.S. Department of Energy

Benefit:Extraction of rare earth elements and critical minerals

Selected for a grant from the U.S. Department of Energy to construct a pilot scale facility at the Pennsylvania Mining Complex, advancing national strategic importance.

Risks & headwinds

Weak demand and low natural gas prices (PRB) Q2 FY26

PRB coal sales down to 10.2 million tons in Q2 '26 from 11.9 million tons in Q1 '26.

Mitigation:Viewing as timing issue, 50 million tons committed for 2026, building pit inventory to enhance margins in H2.

Inflationary pressures (HCV Thermal) Remainder of 2026

Cash costs guidance increased by $1 to $39-$40.50 per ton.

Mitigation:Ongoing focus on cost management and operational improvements.

Persistently higher diesel prices (PRB) Remainder of 2026

Cash costs guidance increased by $0.25 to $13.25-$13.75 per ton.

Mitigation:Ongoing focus on cost management.

Macroeconomic factors and Middle East hostilities (Metallurgical) Near-term

Weighing on global steel production and coking coal demand.

Mitigation:Long-range outlook promising due to industrialization in Southeast Asia and India; expected recovery in seaborne met market.

Low natural gas prices, elevated customer stockpiles, seasonal weakness (Domestic Thermal) Q2 FY26

Domestic coal burn down approximately 10% YTD vs 2025.

Mitigation:Conditions setting up for stronger H2 FY26 with units returning from outages and hot weather driving demand; utilities evaluating plant life extensions.

Uncertainty surrounding conflict in Middle East and LNG disruptions (International Thermal) Ongoing

Driving market volatility, reduction in global LNG supply, increased price volatility across competing fuels.

Mitigation:Potential disruptions to pet coke supplies could benefit HCV thermal sales into Indian cement market.

DTA outage impact Ongoing

Too early to assess full damage, but impact on Core is "relatively small" due to 35% ownership. Some capacity constraints at the terminal.

Mitigation:DTA has insurance; Core's marketing team managed impact by moving things around to minimize disruption.

What to watch in Q3 FY26

Share Buyback Pace

Q3 and Q4 FY26

Current $68 million in Q2 FY26, $329 million total since Feb 2025 (8% of shares).

Target Heavier share buyback percentages

Why it matters

Demonstrates commitment to capital returns and free cash flow deployment, impacting shareholder value.

So going forward in Q3 and Q4, I think you can expect us to have a heavier share buyback percentages as we use that cash going forward.

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

Q&A highlights

What are the 2027 prices for HCV tons, what percentage is contracted, and is $60/ton a reasonable average?

HCV is more than 50% contracted for 2027. India tons are in the $60 range, West Elk tons in the upper $40s to low $50s. The average realization for the segment is in the upper $50s to low $60s, considering PAMC (27M tons) and West Elk (5-6M tons) volumes.

“The India tons today are in that $60 range, as you mentioned. The West Elk tons, I'd say, are more in the upper 40s to low $50 type range. But again, when you look at what the balance is, PAMC, obviously, at 27 million tons, West Elk at, call it, 5 million to 6 million tons. Your average realization is in that upper 50s to low 60 range.”

asked by George Eadie · answered by Robert Braithwaite

2 min read 6 chapters

Detailed narrative

Leer South Insurance Settlement

Core Natural Resources successfully settled the Leer South insurance claim for $155 million in aggregate, with $125 million recognized in Q2 FY26 EBITDA and $30 million in prior quarters. This settlement, which included $88 million in cash received in Q2, significantly contributed to the quarter's financial performance and allowed the company to focus on core operations.

All outstanding receivables associated with the claim were collected by the end of July.

Capital Allocation Strategy

The company maintains a capital return framework targeting approximately 75% of free cash flow to shareholders, primarily through share repurchases. Since its inception in February 2025, the program has returned over 80% or $360 million of free cash flow, repurchasing about 8% of outstanding shares.

Management expects a "heavier share buyback percentage" in Q3 and Q4 FY26 due to cash build-up from insurance proceeds and anticipated working capital release.

Core Innovations Progress

Core Innovations secured a grant from the U.S. Department of Energy to build a pilot facility for rare earth elements and critical minerals extraction at the Pennsylvania Mining Complex. This initiative, alongside the Northrop Grumman contract for Core Touchstone Advanced Composite Group as a key supplier for the Talon Blue aircraft, highlights the company's efforts to diversify and unlock value from the coal supply chain.

The aerospace and defense vertical currently generates about $20 million in revenue.

Market Dynamics and Outlook

Metallurgical markets face near-term headwinds from global steel production declines, but the long-range outlook is promising due to continued industrialization in Southeast Asia and India, with 185 million tons of new blast furnace capacity expected by 2030. Domestic thermal coal demand was weak in Q2 due to low natural gas prices and high stockpiles, but is expected to strengthen in H2 FY26 with improving demand and increased rail set availability.

International thermal markets show volatility due to Middle East conflict and LNG disruptions, but IEA projects a 2% increase in global coal-fired generation in 2026.

Power Market Fundamentals

U.S. power market fundamentals are increasingly favorable, driven by robust electricity demand from data center growth and industrial reshoring, which outpaces additions of dispatchable generation. Elevated PJM capacity auction clearing prices reflect tightening reserve margins, increasing the value of existing thermal generation assets and highlighting reliability as a strategic priority. Federal funding through the Defense Production Act also supports planned upgrades.

Cost Management and Operational Excellence

Core demonstrated exceptional cost performance in Q2 FY26, with significant reductions in HCV Thermal and Metallurgical segments. This was attributed to improved mining conditions, favorable sales, normalized power costs, and ongoing execution improvements at longwall mines, including schedule changes and moving Leer to better seams. Management believes these cost reductions are sustainable and expects further improvements, aiming for a consistent cost basis.

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