Core Natural Resources Reports First Quarter 2025 Results

 

May 8, 2025 - Core Natural Resources, Inc. (NYSE: CNR) ("Core" or the "company") has  reported a net loss of $69.3 million, or $1.38 per diluted share, in the first quarter of 2025, which included merger-related expenses of $49.2 million and a loss of $11.7 million associated with the extinguishment of debt. Core reported adjusted EBITDA1 of $123.5 million and revenues of $1,017.4 million for the first quarter of 2025.

"Since completing the merger on January 14, Core has made exceptional progress in integrating the operating portfolio and beginning to unlock the tremendous potential of the new company," said Paul A. Lang, Core's chief executive officer. "To date, the Core team has launched and executed upon a powerful capital return program; put in place strategies expected to deliver the previously identified synergies while increasing the targeted range by 10 percent; and further tightened the alignment between its two core lines of business – global metallurgical and high calorific value thermal coals."  

"Importantly, the Core team is already executing at a high level operationally, driven by a strong performance by the high c.v. thermal segment," Lang said. "Even with the uncertain global trade environment, the high c.v. thermal segment leveraged its strong book of contracted business, strengthening U.S. power markets, and solid pricing in the international marketplace to generate substantial free cash flow1. Meanwhile, the metallurgical segment performed as expected, with a solid cost performance across most of the operating portfolio – led by record quarterly production at the Leer mine – serving to limit the impact of the longwall outage at Leer South."

As indicated, Core also made excellent progress on its recently adopted capital return program, returning a total of $101.3 million to stockholders via the repurchase of 1.4 million shares, or around 3 percent of Core's total shares outstanding as of the program's launch on February 20, 2025. The company also paid a quarterly dividend of $0.10 per share. "At a time when most of the global resource sector is focused on cash preservation, our low-cost mining operations, advantageous contract position, substantial cash balance, and strong balance sheet are enabling Core to act opportunistically in today's depressed equity market environment," Lang said.

Leer South Update

In mid-January 2025, Core announced that it was temporarily sealing Leer South's active longwall panel to extinguish isolated combustion-related activity. Since that time, the Leer South team – in close collaboration with federal and state regulators – has safely sealed the affected area, extinguished all combustion-related activity, resumed development work with continuous miner units, and completed a remote assessment of the mine's longwall system, which solidified the company's belief that the longwall equipment was largely unaffected by the event.

"On behalf of the board and the entire senior management team, I want to again commend the operations team as well as federal and state regulators for their exceptional, ongoing work in managing this situation in a safe and efficient manner," Lang said. "We continue to make substantial progress on all fronts and remain on track to resume longwall production by mid-year, in keeping with our originally indicated timeline. Notably, development work at the mine – which resumed in February with the restart of continuous miner units – is progressing at a strong pace and acting to greatly increase the development lead time for future longwall production. We expect that increase to translate into higher longwall productivity once longwall operations resume."

Synergy Update

As indicated, Core has increased its targeted range for synergy creation by 10 percent at the midpoint to $125 to $150 million per year, having already executed strategies expected to deliver the midpoint of the initially provided guidance. Moreover, the team continues to press forward with its intensive efforts to identify and pursue further opportunities.

"In the first four months since the merger's completion, the Core team has made tremendous progress in integrating the operating portfolio and unlocking the value of the already identified synergies, while setting its sights on additional value creation via further streamlining, cost reduction, efficiency improvement, and product optimization efforts," Lang said. "On top of the announced increase in our targeted range, we expect additional uplift in the synergy arena as coal markets normalize, which is expected to act to further increase incremental value in areas such as marketing and product blending."

Operational Update

During the first quarter of 2025, Core's high c.v. thermal coal segment had sales volumes of 7.1 million tons despite the fact that three of the PAMC's five scheduled longwall moves for 2025 occurred in Q1 2025. Moreover, it achieved realized coal revenue per ton sold1 of $63.18, benefiting from a strong existing contracted position, solid pricing on incremental tons, and a substantial energy market adjustment on its power price linked domestic tons stemming from high PJM West power prices related to colder-than-normal winter weather. The segment had a cash cost of coal sold per ton1 of $42.78, which was higher than ratable due to the three longwall moves at the PAMC.

The metallurgical segment turned in a solid performance in Q1 in light of the longwall outage at Leer South, with total Q1 sales volumes of 2.3 million tons. The segment had coking coal sales of 1.9 million tons and thermal byproduct sales of 0.4 million tons, achieving realized coal revenue per ton sold1 for coking coal of $113.70 and realized coal revenue per ton sold1 for the metallurgical segment as a whole – inclusive of thermal byproduct sales – of $98.26. The metallurgical segment reported a cash cost of coal sold per ton1 of $91.00, which excluded costs associated with extinguishing the combustion and with the 30-day period during which the Leer South mine was idled entirely.

As indicated, the Leer South longwall was idle during the first quarter of 2025 due to the previously announced combustion-related event, but the mine remains on track to resume longwall operations mid-year. This should act to boost the segment's sales volumes and lower its unit costs markedly in the second half of 2025. Core is guiding to a cash cost of coal sold per ton2 for the metallurgical segment in the low $90 range during the year's second half.

Financial and Liquidity Update

At March 31, 2025, Core had total liquidity of $858.3 million, including $388.5 million in cash and cash equivalents.

In February 2025, Core announced a new capital return framework targeting the return to stockholders of around 75 percent of free cash flow1, with the significant majority of that return directed to share repurchases complemented by a sustaining quarterly dividend of $0.10 per share. Core moved quickly to act upon the program, investing $101.3 million to repurchase 1.4 million shares, or roughly 3 percent of total shares outstanding as of the program's launch, at an average price of $73.52 per share.

In addition, and in keeping with the recently announced structure of its capital return program, Core's board of directors has declared a $0.10 per share quarterly dividend payable on June 13, 2025, to stockholders of record on May 30, 2025.

"During the quarter, we executed on several capital market transactions that not only helped establish our target capital structure but also bolstered our liquidity, extended maturities, and added significant financial flexibility to execute our capital return program," said Mitesh Thakkar, Core's president and chief financial officer. "While the commodity markets are volatile, we are in an excellent position to opportunistically deploy our significant cash balances towards the capital return program given our expectations of strong free cash flow1 generation from our contracted book of business and low-cost asset base."

As of March 31, 2025, Core had $898.7 million of remaining authorization under its existing $1.0 billion share repurchase program.

As previously announced, in connection with the closing of the merger, Core extended its revolving credit facility, upsizing the facility commitments to $600 million, extending the maturity, reducing the annual interest rate by 75 basis points, and further enhancing financial flexibility. Then, at the end of March 2025, Core announced that it had refinanced the tax-exempt bonds previously held by the legacy companies. As part of this refinancing effort, Core increased the total bond amount by more than 10 percent to $306.8 million; established an initial 10-year term for the now unsecured bonds; improved flexibility relative to the prior bonds; and reduced the weighted average interest rate to 5.3 percent.

"These successful refinancing efforts serve to underscore the strength of Core's operating portfolio; the value of its greatly enhanced diversification and scale; and the power of its substantial cash-generating capabilities across a wide range of market environments," Thakkar said. "With the refinancing of the tax-exempt bonds, which represent the vast majority of Core's debt, we believe we have built a smart and strategic capital structure that furnishes tremendous financial flexibility while supporting the company's long-term growth prospects."

Market Dynamics

Core's two principal lines of business – metallurgical coal and high calorific value thermal coal – continue to navigate softer market conditions in the international arena, where trade-related uncertainties continue to weigh on markets.  

In the high calorific value thermal segment, Core's substantial contracted position – at relatively advantageous pricing – is acting to counterbalance current export market softness, as is continued stability in key industrial market segments and strong domestic demand. At present, the high c.v. thermal segment has a committed and priced position – inclusive of select collared volumes – of approximately 26 million tons at a projected price of between $61 and $63 per ton for the year. Meanwhile, the domestic thermal market in the PAMC's core market area has improved markedly in the wake of colder-than-normal temperatures in January and February. 

Despite currently weak pricing levels, long-term market dynamics for Core's metallurgical segment remain highly promising. New blast furnace capacity continues to come online across Southeast Asia, and Indian imports of seaborne coking coal continue to march higher, climbing an estimated 3 percent in 2024. In another positive trend for the overall global marketplace, Chinese imports of seaborne coking coal increased by around 20 million tons in 2024, a trend that is acting to counterbalance higher Chinese steel exports. On the supply side, aggregate production in the primary supply countries for high-quality seaborne coking coal – Australia, the United States, and Canada – remains under pressure, and current pricing levels appear to be inducing supply rationalization among high-cost producers, which should act to support a healthier supply-demand balance over time.

Outlook

"The Core team is off to an excellent start in integrating the combined operating, marketing and logistics portfolio into a cohesive, high-performing unit; capturing the substantial – and growing – synergies created by this transformational merger; and laying the foundation for long-term value creation via the tight alignment of its global metallurgical and high calorific value thermal segments," Lang said. "We believe we are building a company that is uniquely equipped to capitalize on compelling global coal market dynamics – with our world-class mines, highly strategic logistical network, strong balance sheet, tremendous cash-generating capabilities, and – most importantly – exceptionally talented workforce that embraces our core values of safety, compliance, and continuous improvement. As we look ahead, we expect to continue to generate substantial levels of free cash flow1 – particularly in the year's second half – and to continue to return significant amounts of cash to stockholders via our compelling capital return program."

To see the full results with financial figures included, click here.