Core Natural Resources, Inc. (CNR) Q2 2026 Earnings Call Transcript

good morning ladies and gentlemen and welcome to the core natural resources incorporated second quarter 2026 earnings call conference call at this time all lines are in this and only mode following the presentation we will conduct a question and answer session if at any time during this call you require immediate assistance please press star zero for the operator this call has been recorded on thursday august 6 2026. I would now like to turn the conference over to Dex Sloan, Senior Vice President. Please, go ahead.

Good morning from Canonsburg, Pennsylvania, everyone, and thanks for joining us today. Before we begin, let me remind you that certain statements made during this call, including statements relating to our expected future business and financial performance, may be considered forward-looking statements according to the Private Securities Litigation Reform Act. Forward-looking statements, by their nature, address matters that are, to different degrees, uncertain. These uncertainties, which are described in more detail in the annual and quarterly reports that we file with the SEC, may cause our actual future results to be materially different than those expressed in our forward-looking statements. We do not undertake to update our forward-looking statements, whether as a result of new information, future events, or otherwise, except as may be required by law I'd also like to remind you that you can find a reconciliation of the non-GAAP financial measures that we plan to discuss this morning at the end of our press release a copy of which we have posted in the investor section of our website at core natural resources calm also participating on this morning's call will be Jimmy Brock our chairman and CEO Mitesh Takar, our President and CFO, and Bob Braithwaite, our Chief Commercial Officer. After some formal remarks from Jimmy and Mitesh, we will be happy to take questions. With that, I'll now turn the call over to Jimmy.

Thank you, Dick, and good morning, everyone. The results of the second quarter were a testament to the continued execution of our strategy, and we are pleased to report a significant step up in our financial performance. We work diligently with our insurance partners to settle the LearSouth insurance claim for the full limits loss, complementing our strong operational results. Across the operating portfolio, we deliver a solid performance and are beginning to demonstrate what our full operating platform is capable of. With the insurance claim now behind us, We are singularly focused on the discipline execution of our core business. We continue to prioritize safe, efficient operations, maintaining strong customer relationships, optimizing our cost structure, and allocating capital in a way that supports long-term shareholder value creation. Now let me dive into our operational results. Coal sales within the high-CV thermal segment came in at 8.4 million times in Q2-26, compared to 7.7 million times in Q1-26. During the quarter, our high-CV thermal segment reported realized coal revenue of $58.11 per ton, compared to $58.86 per ton in the previous quarter. In Q-226, cash costs came in at $38.50. The segment cash costs benefited from significant tailwinds. As mining conditions improved, sales were favored. Adjusted EBITDA for the segment totaled $165 million, which compares to $126 million in the first quarter of 26. In the metallurgical segment, coke and coal sales came in at 2.3 million tons in Q2-26 versus 2.1 million tons in Q1-26. During the quarter, our metallurgical segment reported realized coke and coal revenue of $121.43 per ton. The segment as a whole, including 300,000 tons of thermal byproduct sales, achieved an average selling price of $114.13 per ton. Cash costs for the quarter came in at $85.65 per ton, nearly a $7 per ton reduction quarter over quarter, reflecting ongoing improvement in execution at our flagship Longwall Mines. Adjusted EBITDA for the segment was $200 million, which included insurance-related proceeds of $125 million. In the Powder River Basin segment, coal sales came in at 10.2 million tons in Q2-26, compared to 11.9 million tons in the previous quarter. The lower volumes were a function of weak demand during the spring shoulder season, exacerbated by low natural gas prices. Importantly, however, we view the reduced quarterly volumes principally as a timing issue. We have more than 50 million tons of PRB coal committed for delivery in 2026 and expect to either ship those tons this calendar year or, conversely, to capture or even enhance the full value of those commitments via other mechanisms during the quarter, which should serve to enhance operating margins in the years back. In the second quarter, our PRB segment reported realized coal revenue of $14.28 per ton and cash cost of $14.85. Moving to the core marine terminal, the CMT shipped 5.2 million times during the second quarter compared to 4.8 million times in Q-126. CMT reported $18 million in adjusted EBITDA in Q-226, which is a 16 million. Another strong quarter from a shareholder return perspective as well. As you know, our capital return framework targets the return to stockholders of around 75% of free cash flow, with a significant majority of that total directed to share repurchases. During Q2-26, we returned $68 million to shareholders, which was a substantial increase from $47 million in Q1 of 26. Since the program's inception in February of 2025, we have returned over 80% or $360 million of our free cash flow to shareholders via our capital return program. Of that total, $329 million has been used to repurchase approximately 8% of the company's shares outstanding as of the program's launch. As indicated, we believe the stage is set for a further step-up in capital returns in coming quarters. Before handing the call over to Matesh, let me highlight one additional positive development, this one involving core innovations. Recently, the innovations team was selected for a grant from the U.S. Department of Energy to construct a pilot-scale facility for the extraction of rare earth elements and critical minerals at the Pennsylvania Mining Complex. This announcement underscores CORE's ongoing progress in developing innovative technologies that unlock greater value from the coal supply chain while advancing areas of national strategic importance. It follows an announcement made earlier this year in which Northrop Grumman named CORE the supplier of tools. Now let me turn the call over to Mattes to provide the marketing financial updates.

Thank you, Jimmy. and good morning everyone let me start by providing an update on our financial performance first this morning we reported solid second quarter financial results for 2Q26 we reported net income of hundred and twenty six million dollars or two dollars and fifty one cents per diluted share and adjusted EBITDA of three hundred and twenty four million dollars compared to net income of twenty million dollars and adjusted EBITDA of one hundred and eighty million dollars in one to 26 these results were driven by strong operational performances from our high CV thermal and metallurgical segments as well as the recognition of incremental insurance proceeds related to the limits law settlement of our LearSouth insurance claim during the quarter core generated one hundred and forty eight million dollars in free cash flow which included the receipt of eighty million dollars of cash associated with the total LearSouth settlement the LearSouth insurance claim was settled for 155 million dollars in aggregate of which 125 million was recognized in EBITDA in Q2 and approximately 30 million dollars was recognized in previous quarters all outstanding receivables at the end of the second quarter associated with the LearSouth claim were collected by the end of July in addition 2Q working capital was inflated by an increase in inventory value as well as a 45x tax credit accrual that should provide a tailwind in future periods at the end of second quarter we had total liquidity of 1 billion dollars including 474 million dollars in unrestricted cash and cash equivalents and short-term investments which reflects an increase of 81 million dollars in liquidity compared to the first quarter of 2026. Before transitioning to a discussion of our marketing efforts I'd like to take a moment to extend my sincere thanks to our insurance partners and broker as well as the LearSouth and corporate teams for their dedication and collaboration in successfully closing out our LearSouth insurance claim. Our insurance partners worked efficiently and diligently throughout the process, and we greatly appreciate their responsiveness, thoroughness, and commitment to finalizing this matter in a timely fashion. Their collective efforts were instrumental in achieving a successful resolution, and we are pleased to be turning the page on last year and directing our focus towards the future. Now let me update you on the cold market dynamics and the efforts of our marketing team. On the metallurgical front, macroeconomic factors stemming in part from the ongoing hostilities in the Middle East continue to weigh on global steel production and in turn global coking coal demand. Despite these near-term headwinds, we view the long-range outlook for metallurgical markets as promising due in large part to continued industrialization, specifically in Southeast Asia and India. That region continues to add new glass furnace capacity at a rapid pace and is expected to remain on that trajectory for the foreseeable future. Think about it. Almost everything necessary for industrialization requires steel, from buildings to roads to bridges to power stations and to data centers. That's the principal reason why the World Steel Association is projecting a resumption in global steel growth in 2027 after several years of contraction. In the domestic thermal market, coal demand was impacted by low natural gas prices, elevated customer stockpiles, and seasonal weakness associated with the spring's shoulder season. At the end of June, domestic coal burn was down approximately 10% year-to-date versus 2025. However, with coal-generating units returning from planned outages and recent hot weather driving power demand, conditions are setting up for a stronger back half of the year. While low natural gas prices continue to weigh on incremental spot demand, volumes are anticipated to increase meaningfully, supported by improving customer demand and increased real-set availability. This is expected to provide a particular benefit to our PRB segment, as reducing input inventory should result in lower cash cost per ton. Longer term, utilities continue to evaluate extensions to coal plant operating lives, with several utilities also revising integrated resource plants to retain coal in the generation The latest PGM capacity option reinforces the increasingly favorable fundamentals for U.S. power generators elevated clearing prices reflect robust electricity demand from data center growth and industrial reshoring which continues to outpace additions on dispatchable generation as reserve margins tighten the value of existing thermal generation assets increases at the same time federal funding to the Defense Production Act and other recent policy initiatives is providing support for plant upgrades these dynamics highlight an increasingly supply-constrained power market where reliability has become a strategic priority in the international thermal market uncertainty surrounding conflict in Middle East and the disruption of LNG shipments to the Strait of Hormuz continue to drive market volatility the resulting reduction in global LNG supply has created significant dislocation in international energy market and increased price volatility across competing fuels due in part to these dynamics the International Energy Agency's latest forecast is projecting a 2% increase in coal-fired generation globally in 2026 in addition potential disruptions to petco supplies from the Persian Gulf to persist for an extended period which would benefit our high CV thermal sales into the Indian cement market longer term global power demand is projected to grow substantially the The IEA expects global electricity demand to grow 3.6% a year through 2030, and this growth is expected to stress grid stability around the world. In addition, fundamentals in India remain strong, supported by cement demand growth as the country continues to invest in infrastructure, housing, and construction. Despite the current volatility, our marketing team has made meaningful progress broadening and extending our sales book since the first quarter securing approximately 16 million tons of contracted volume through 2030 at attractive prices now let me provide an update on our expectations for the remainder of 2026 on the guidance front we are adjusting our cash costs and sales guidance levels as indicated in the earnings release in the high CV thermal segment we added 2 million tons to our sold position for 2026 bringing up total contracted volume to more than 31 million tons, reflecting continued strength in the demand for our high-quality product. The high-CV thermal segment is now nearly fully contracted, with average coal revenue on the committed volumes of approximately $58 per ton. As for the SEC cash costs, we are increasing guidance by $1 to a range of $39 to $40.50 per ton due to stickier-than-previously-expected inflationary pressures driving supplies to maintenance and service costs in the metallurgical segment we added 400,000 tons to our sole position bringing the segment to 8.7 million cooking tons contracted for 2026 with approximately 6 million tons priced at an expected average cold revenue of approximately $121 per ton as for the SEC cash cost we are lowering our guidance by $2.50 at the midpoint to a range of $86 to $91 per ton. This decrease is a testament to our continued focus on driving best practices at our metallurgical operations as well as strong performances from our long-haul operations. For the PRB segment, our contracted position now stands at approximately 50 million tons at an average committed price of $14.27 per ton. From an SEC cash cost perspective, we are increasing guidance by $0.25 to a range of $13.25 to $13.75 per ton, mainly due to persistently higher diesel prices than previously anticipated. Now let me pass it back to Jimmy for some closing remarks before we open the call for Q&A.

Thanks, Mitesh. As we transition into the second half of the year, we remain sharply focused on driving and operational excellence across the entire mining platform. While we have made good progress on this front in the past two quarters, we expect to continue to build on our recent momentum. Looking ahead, we remain concentrated on three main priorities for the remainder of the year. First, establishing core as a world's premier global coal producer while operating in tight alignment with our core values of safety and compliance, continuous improvement, and financial performance. Second, driving strong and improving capital returns in the current soft market environment while laying the foundation for truly exceptional returns as coal markets rebound. And third, capitalizing on the compelling long-term market opportunities that lie ahead, including resurgent U.S. power demand, tightening global energy markets, and an ongoing infrastructure build out in the developing world. In short, we are preparing CORE to succeed on all fronts. As always, I want to thank our employees for their hard work and efforts in helping us deliver a strong CORE call back over to the operator to begin the Q&A portion of our call. Operator, can you please provide the instructions to our callers?

Ladies and gentlemen, we'll now begin the question and answer session. Should you have a question, please press the star followed by the one on your touchstone phone. you will hear a prompt that your hand has been raised should you wish to decline from the polling process please press the star followed by the two if you are using a speakerphone please lift the handset before pressing any keys one more please for the first question your first question comes from George from UBS Financial. Please, go ahead.

Yeah, hi team. Good result here. Thanks for that. Mitesh, maybe just on the high CV segment of Bob too, what price are you getting for 2027 tonnes placed today? And can you also remind me perhaps what percent of high CVs contracted next year? And I guess as a consolidated basis, like is $60 a tonne about the right level to start thinking for next year there?

Yeah, so, George, you know, just to make sure we're clear, you know, the high TV segment has PAMC and also our West Elk product in there. So, when you look at next year, you know, we're more than 50% contracted sitting here We have been successful in locking in some volumes against API2 indices when they rose most recently into Europe for our West Elk product. You know, and then we also were able to lock in some tons with PAMC as well into India most recently, even for 2027. The India tons today are in that $60 range, as you mentioned. The West Delk tons, I'd say, are more in the upper 40s to low 50 type range. But again, you know, when you look at what the balance is, you know, PAMC obviously at 27 million tons, West Delk call it 5 to 6 million tons. You know, your average realizations in that upper 50s to low 60 range.

Helpful. And then variability there, 55 a ton is 30% higher quarter and quarter. Can you maybe help us how to best forecast this? Is 55 the right level or is it more sort of mid-40s like prior periods?

So right now, again, it really depends on what the export market is. We're using all of that byproduct to blend in with our high CV mix. So, as API2 prices are higher, you're going to realize a higher netback for the byproducts So, again, it's not a perfect number, but I think you'll release the balance of this I would expect it to be in that $50 to $55 range.

Thanks, guys. Just a last one. DTA, what are the impacts to you guys there, and what's the latest you're hearing?

Josh, this is in the past year. So, on the DTA front, I think we are 35% owner in DTA, so the impact to us is relatively small, but if you think about it, our marketing team has done a pretty good job, and if you look at our guidance ranges, we were able to move things around to manage the impact on us. There's still impact associated on the cost front with respect to the damages to the equipment and stuff. the good news is DTA does have insurance which they are going to pursue but generally speaking we are managing the impact impact from DTA thank you thank you for that next question comes from Nick deals from be Riley securities please go ahead yeah thanks operator good morning guys I wanted to really ask

about kind of obviously nice job on costs here in 2Q and so just wanted to ask first on the MET side kind of how to think about the cadence of costs for the back half of the year you know 2Q was below the low end of the range so should we expect cost to kind of stay towards that low end and then similarly on the volume side kind of what would take us towards the low or the high end thanks Nick I think as you as you look at the cost structure of course we've worked really hard on costs you know putting in different schedules and doing different things but I think we're seeing the benefit of that it's definitely sustainable of 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 it went on cost that's a lot of those things that put in play you know we had some production improvements there and then as we move forward looking into other things that we can do you know get by the long wall move we got Lear over into the north now where we wanted them so I expect to sustain where we are and maybe even improve on that going forward now there could be volatility quarter to quarter but in general I think we're in a pretty good place that's where we are today on the MESA great no thanks for that Jimmy and then maybe just switching gears to

capital returns you know you obviously had some nice cash inflows thanks to the insurance reimbursements but there was a working capital build so just how should we think about kind of the cadence of share repurchases throughout 3Q and 4Q thanks well I think as you look at that obviously we got a lot of the insurance money in late in Q2 so going forward in Q3 and Q4 I think you can expect us to have heavier share buyback percentages as we use that cash going forward.

And, you know, we'll stick to our plan of the generating 75% of our free cash flow back to shareholders, but you certainly can expect a higher number when you look in Q3 and Q4, just the cash bill that we have on the balance sheet. So we're certainly going to return a portion of that back to the shareholders.

And just to add to that, on the insurance fund, there's about $38 million dollars that we are collecting in Q3 here. As of now, most of that is collected, so that should help. Plus, there's also, so when you add all those pieces together, you're close to like $75 to $100 million of swing that could happen in the working capital. The 45X credit will be next year, but the vast majority of that we expect to flow this Great.

Okay. Well, I'll jump back in the queue, but nice work, guys.

Thank you.

Thank you. Your next question comes from Nathan Martin from Benchmark Company.

Please, go ahead. Thanks, Operator. Good morning, everyone. Good morning. Matesh, just kind of sticking with the balance sheet for a second, you mentioned liquidity over a billion cash, close to half a billion. What's kind of a comfortable target for those metrics? Because I'm assuming you guys are okay with that coming down a little bit. just as we think about what else might be available for shareholder returns.

Yeah, so, Nate, if you just think about what we have said in the past, that we try to maintain a net debt neutral balance sheet, but if you look at, for example, last quarter, we were a little bit under. I don't mind going a little bit on the leverage side.

So just quarter over quarter, there was almost like a $70 million swing in our net net cash position so that's kind of a rough guide now if our share price provide us an opportunity to be more aggressive we have a balance sheet and liquidity to support that as well I'd appreciate that maybe a question for Bob Bob we look at the the revised thirty one and a half million to thirty three million ton guidance for the high speedy thermal segment what's the split there between PAMC and West Elk and then can we get an updated breakdown of the 30.9 million committed price funds?

Yeah so you look at the full year you know you're looking at roughly 26 ish million tons of Bailey bounce then would be West Elk to get to the to the higher end of the guidance obviously we'll try to run Bailey harder to get to that 27 million ton level like we did in 2025 assuming the markets there I feel pretty comfortable right now you know we're We're starting to see some strong demand out of India as monsoon nears its end, and inventories among the stock and sale trade certainly remain at low levels, and we're receiving inquiries on a daily basis, so it certainly puts us in a good position to try to maximize the total volume out of the PAMC complex. But sitting here today with what we have contracted, of the 30.9 million tons, 15 on the back half of that would be PAMC and 3.3 of that would be West Elk. And we have about 2.4 million tons still linked to API2 for the back half of the year, Nate. We're modeling in $110 price of API2 to get to that $58 number that we provide in our guidance. But the sensitivity there is about 8 cents a ton. So when you look at July, July API2 price was $120, so we certainly have a tailwind working for us that direction, and if it continues to stay strong, that certainly will help.

Okay, great, Bob. And then just while I have you, shifting over to the Met side, consistently weak, right, highball markets there. How are they impacting realizations? What efforts have you been successful using to help less than that impact? And then what do you think improves that market?

Yeah, you know, we've certainly seen PLV come off from its highs in the last month. cover. We believe a lot of that is seasonal. Again, India in its monsoon season. But we expect that, and the forward curve even shows today that prices are expected to improve as we move throughout the back half of the year. You talk about, you know, the pricing and the spreads between PLV and HVA. You know, looking at the first half, I'd say most, almost all producers were virtually, you know, running their mines at full capacity. But But given the market conditions, we do believe higher cost production will begin to exit the market, which will tighten high-volts supply and provide some support for higher prices going forward. You know, additionally, you know, we believe the Seaboard Met Market, specifically into our core markets, which would be Brazil and Europe, are poised for recovery. You probably saw just last week, Arcelor had announced that they're restarting three blast furnaces on the expectation that European steel markets – or European steel imports will drop about 45 percent so again you know that's giving us some confidence but you know we we certainly have seen an increase in high vol a in the markets but we've been successful with our with our premium product to get that place not only in the Atlantic markets but also in Pacific markets against PLV so when you look at the back half of this year we have about 4.3 million tons contracted for the back half, of which 2.7 is indexed, of which 30% of that is linked to PLV. So, again, I think that you'll continue to see, you know, good pricing out of us for the back half of the year.

Nate, this is Dak, and I'll just add, you know, as you noted, look, we've had some high vol-A production come back into the market, or, you know, in the case of one mine, come into the market about 5 million times in the first half. But actually, for all the other mines in the U.S. system, we saw a decline of about 3 million tons. So there is a counterbalance there. We are seeing supply come off. This is a challenging market for a lot of folks. I think we've seen some guidance come down suggesting, again, that this is pretty tough sledding out there. We'd also add that, you know, while, you know, we talked a lot about nuclear aspirin capacity in Southeast Asia, those numbers just keep getting bigger. So, if you look today right now in terms of new blast front capacity expected to be added by around 2030, it's 185 million tons. It's a huge number. And, you know, even if you haircut that, that's going to be a big drumbeat and a big sort of pull, you know, on high-quality U.S. coal. As Bob said, you know, the Lear brand, while that's HVA, it's getting really good traction in Asia. I think we've had no problem at all placing those tons. Obviously, we wish the volume, we wish the pricing were a little higher. We have seen some contraction in that spread between PLV and HVA, so I think you're seeing a little bit of, you know, the evidence that HVA is making it into that market. So, there certainly are positives out there. I guess one final thing I'll say, we've had two years of contraction, you know, on the steel front, hot metal production front. That can't last, won't last. WSA is now projecting growth for the second half of the year and in the next year. So certainly some positive indications that things could change.

Very helpful, guys. Appreciate the time. I'll pass it on.

Thank you for that. As a reminder, if you wish to ask a question, please press star one. The next question comes from Matthew Key from Texas Capital. Please go ahead.

Morning, everyone, and good job on the quarter. Most of my questions have been asked, but I wanted to ask about the outlook in the metallurgical segment next year, if I may. Just given that Lear South is running well, what could be the incremental production potential in the metallurgical segment in 2027 relative to 2026?

Well, on the production side of it, Matt, we're still working, you know, with some of the schedules we have. We want to get to where we're running very, very consistent there. So we haven't really got to a number where we can give incremental tons. As I said before, I think coming out of our Lear complex, we should expect somewhere between 8.5 million and 9 million tons.

No, that's helpful. And just one more quick one. You mentioned in a prior answer that you added a few API2 linked tonnage for 2027. And just as I look out to 2027 in that segment, is it possible that you would be able to, you know, achieve a greater exposure to that benchmark relative to 2026? And is that something that you're aiming to do as you kind of build out that book for next year?

So we had this year, I think, nearly four and a half million tons linked to API2. Some of that, some of the API2 deals we've done were actually fixed price, not necessarily index linked, but we secured those at the time that the API 2 price was on the rise. But I think to answer your question, I would expect a very similar portfolio year-on-year when it comes to what we have indexed link versus fixed.

Appreciate the time and best of luck going forward. Thank you.

Your next question comes from Chris Lapamina from Jeffries.

Hey, thanks, guys. Thanks for taking my question. So basically, maybe it's a question for Jimmy. If we look at the financial performance for you guys, I think EBITDA, excluding the insurance proceeds, increased by, like, 15% from the first quarter to the second quarter. And the improvement was really – it was cost-driven. And, you know, we had gone back three months ago and no one went over the second quarter. To believe that cost would have come down would have been something I think they would have been very skeptical about. But you delivered, I think, pretty exceptional cost performance in the second quarter, despite all the inflationary pressures in the market. And, you know, I understand part of that is a function of leaders' house operating better in the quarter, but it seems like something more fundamentally is changing here within CORE. And I'm wondering, like, what's going on operationally that you can deliver such substantial cost reductions despite this inflationary backdrop? And, I mean, again, it's something that we had not expected. I think it's a pretty big surprise to the market as well. So just trying to understand what's changed at CORE to deliver this sort of result.

Thanks for the question, Chris. But I think when you look at where we are, we mentioned early on that we wanted to, you know, put these two companies together and bring all the best practices together. I think when it comes to our long laws, we're getting there. We're not 100% there yet. And some of the schedule changes that we made, of course, with a reduction in force at Lear South, changed the schedules there with the same expectations for production. When you look at Lear, Lear's moved over into the better themes there in the north. Now, we'll always have some geological problems and things like that, but the expectations are to continue to work with all of the enhancement that we've done to improve the cost because at the end of the day, that's what we control. So we're trying to work as hard as we can to get a consistent cost basis there. You know, obviously, mining is mining. We'll have geological events here and there, but when you look at it over an annualized run we think we're at a good cost number now and with some opportunities to even improve upon that when you look over on the high CV thermal side you know we had a first quarter that was higher than what we expected there were some reasons for that but we got it back in line here in the second quarter and we'll continue to drive on those cost initiatives to do that you know Pennsylvania mining complex on the high CV thermal with West Elk coming on and running at really good numbers now that helps that a lot blends down so we're not satisfied where we are on the cost side but I think what we're doing is sustainable and I think there is room for improvement going forward that's

great to hear thank you thank you thank you for that our next question comes again from the fields from BYU Lee Securities please go ahead a follow-up I just wanted to clarify from earlier just on DTA did you quantify the kind of impact that the outage is having to realizations today and then what's kind of your sense in terms of timing when DTA can be kind of back up and running at full steam or are those decisions kind of forthcoming so Nick I think it's too

early to assess and provide you the numbers so to speak on water damages and stuff like that we are going through that process right now but as I said from a core perspective a marketing team did a good job and it kind of reflects in the guidance that we provided on from an impact perspective that it is very manageable I think the realization numbers that you see take into account the changes that we have to make an extra cost we have to incur to read out vessels and stuff like that so I think it's quite manageable we'll provide you better numbers when we have it right now it's too early to say there's

capacity constraints the terminal is still working and we're moving things through but there are some capacity constraints at this point right now and Nick it's really you know we don't have all the numbers yet they're continuing to work on that to see what part the training we can savage and we can put back in but it will say the team down at DTA has done a really good job of you know finding ways to move some of the stranded coal that's there but we don't know the actual full impact yet because we don't we don't really know exactly how many of the parts we can use over or what we're going to engineer and do do as we move forward but as Mitesh said just stay tuned we'll have a better handle on that you know and we're not the majority owner there we own 35% of

that so you know it'd be driven by our partners there but we still don't have an exact answer timing for it and just stay tuned on that once we give it we'll certainly give an update on that understood no that's helpful and sorry just to clarify again I mean the impact is really going to be seen in realizations it's not like there's extra costs embedded in your cash cost guide no so when we report out a realized number they're net back at the mine so we take that impact out of the reported numbers one more follow-up if I could it you know hasn't gotten maybe a ton of attention on this call just on the core innovations group opportunity Mitesh I was wondering if you could just kind of speak to you know what kind of revenues does this segment generate today and then what's ultimately the long-term opportunity here thanks yeah so if you think about core innovations, that platform focuses on four key verticals.

We have talked about rare earth and critical minerals aspect of it, which Jimmy mentioned in his prepared remark that we were selected for a grant from the USTOE to construct a pilot-scale facility for the extraction of rare earth elements and critical minerals. So that's ongoing. but the other verticals are aerospace and defense so we have been doing some bolt-on acquisitions on that front that provide composite tools and carbon fiber composite parts to aerospace and defense companies that business does about the real business we have we have faculty that produces tooling equipment parts and you know it's participating in some of the very high profile projects of some of the larger defense companies we also have the building products vertical which deals with coal plastic composite products like decking boards and stuff that's more in a nascent stage where we are going through testing and we're going through pilot facilities and stuff like that but that's used as coal as a feeler stock in the CPC and then the last vertical is battery technology and carbon management terms we have a joint venture with a company called see that and that is focused on developing a material called Syria which we think could be a good replacement for battery graphite as you know 90% of that is source from China and and we are trying to develop a domestic feedstock for it some of these are very early stages so there no revenue tied to it but the aerospace and defense is more tangible in those revenue and EBITDA to it, although EBITDA is still pretty small when you look at core as a platform. But a lot of growth potential, these are markets with multi-billion dollar total addressable markets.

I really appreciate that breakdown. I guess just from a capital allocation perspective, I mean, is this an area where you might be willing to make kind of more smaller bolt-on acquisitions or is this kind of, you know, government funding led and seeing where it goes?

Yeah, no, we have been making some bolt-on acquisitions, as I mentioned. I think you can, we did one small one, single-digit million-dollar type of an acquisition in January of this year. So, it's an ongoing process for us, but I don't want to get too much ahead of ourselves. I'm not willing to say that this is going to be a significant drain on our capital anytime soon, right? Like, these are things that we feel like they're good opportunities and we are in the process of proving it out and we are making some good progress really excited about the innovations team I think they have done some really good work over last a few years here well thanks again guys best of luck thank you thank you there are no further questions at this time please proceed for the closing remark thanks everyone for joining us on the call today hopefully we provided what you needed there and we look forward to speaking again and to our next

earnings talk thanks everybody ladies and gentlemen this concludes today's conference call thank you for your participation give me now disconnect