Q1 2024 Peabody Energy Corp Earnings Call
Good day and welcome to the Peabody first quarter 'twenty 'twenty four earnings call.
Operator: Good day, and welcome to the Peabody First Quarter 2024 earnings call. All participants will be in listen-only mode.
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Operator: To withdraw your question, please press star, then two. Please note this event is being recorded. I would now like to turn the conference over to Karla. Good morning, and thanks for joining Peabody Energy's call for the first quarter of 2024. With me today are President and CEO Jim Grech, CFO Mark Spurbeck, and our Chief Marketing Officer, Malcolm Roberts. In the earnings release, you will find our statement on forward-looking information as well as a reconciliation of non-GAAP financial measures. We encourage you to consider the risk factors referenced there along with our public filings at the FCC. Now, I'll turn the call over to Jim. Thanks, Karla, and good morning, everyone.
Operator: Please note this event is being recorded.
Operator: Now I'd like to turn the conference over to Karla Kimrey. Please go ahead.
Jim: Good morning, and thanks for joining Peabody energy coal for the first quarter of 2024.
James C. Grech: First quarter operational results were highlighted by a number of challenges and successes. There were unforeseen production challenges in Australia that are now behind us, while thermal coal shipments in the U.S. were impacted by unseasonably warm winter weather and low natural gas prices. Within our Seaborne MET segment, Shoal Creek continued to exceed production expectations, although shipments have been hampered by the failure of the Demophilus lock. We continue to strategically invest in our portfolio through the development of Centurion and completed the acquisition of the adjacent Wardswell Coal Deposit, which extends the mine life to over 25 years. Before I expand on the markets,
Speaker Change: With me today are president and CEO, Jim Grech CFO Mark Sberbank.
James C. Grech: Our Chief Marketing Officer, Malcolm Roberts within the earnings release, you will find our statement on forward looking information as well as a reconciliation of non-GAAP financial measures.
James C. Grech: Encourage you to consider the risk factors referenced there along with our public filings with the SEC.
James C. Grech: I'll turn the call over to Tim.
Speaker Change: Thanks, Carlos and good morning, everyone.
James C. Grech: First quarter operational results were highlighted by a number of challenges and successes.
James C. Grech: There are unforeseen production challenges in Australia that are now behind us.
James C. Grech: Thermal coal shipments in the lesser impacted by unseasonably warm winter weather and low natural gas prices.
James C. Grech: It's been our seaborne met segment, so great continue to exceed production expectations, although shipments had been hampered by the failure of the Demopoulos block.
James C. Grech: We continued to strategically invest in our portfolio.
James C. Grech: Development of Centurion.
James C. Grech: We completed the acquisition of the adjacent worthwhile cold deposit, which extends the mine life to over 25 years.
James C. Grech: Before I expand on the markets.
James C. Grech: I want to thank our global employees for their continued focus and commitment to working safely and efficiently. Now, turning to the global coal market. T-Borne thermal coal markets traded within a tighter range for the first quarter. The warmer winter and low natural gas prices continued to weigh on demand for thermal coal, coupled with a steady supply from the east coast of Australia, resulting in Newcastle coal trading within a range of $120 to $135 per ton.
James C. Grech: Want to thank our global employees for their continued focus and commitment to working safely and efficiently.
James C. Grech: Now turning to the global coal markets.
James C. Grech: Asian thermal coal imports are expected to remain robust, with China continuing to show increases in electricity demand, with first-quarter seaborne thermal coal imports estimated at a year-over-year increase of approximately 15 percent. In the Seabourne Metallurgical Coal Market, coking coal prices declined during the quarter. Metallurgical coal demand was hampered by thin steel margins globally, except for India, where robust economic output supported steelmaking profitability. PTI prices also retreated during the quarter, but not to the extent of higher-quality coke and cream.
James C. Grech: Seaborne thermal coal markets traded within a tighter range for the first quarter.
James C. Grech: The warm winter and low natural gas prices have continued to weigh on demand for thermal coal.
James C. Grech: Coupled with a steady supply from the east coast of Australia, resulting in Newcastle coal trading within a range of 120 to $135 per ton.
James C. Grech: Asian thermal coal imports are expected to remain robust with China continuing to show increases in electricity demand with first quarter seaborne thermal coal imports are estimated at a year over year increase of approximately 15%.
James C. Grech: Within the seaborne metallurgical coal market cooking.
James C. Grech: Coking coal prices declined during the quarter.
James C. Grech: Metallurgical coal demand was hampered by finished steel margins globally, except for India.
James C. Grech: Our robust economic output supported steelmaking profitability.
James C. Grech: PCI prices also retreated during the quarter, however, not to the extent of higher quality coking coals.
James C. Grech: During April we have seen improving steel margins and seasonal restocking, providing pricing support to metallurgical coal markets.
James C. Grech: During April, we saw improving steel margins and seasonal restocking, providing pricing support to metallurgical coal markets. In the United States, electricity generation for the first quarter of 2024 proved to be particularly challenging, with a warm winter and significantly lower gas prices, resulting in coal's share of electricity generation nationally declining to approximately 15 percent during the first quarter. With that said, coal continues to be a critical component to the country's energy generation. When looked at regionally in the U.S., for example, coal-power was relied upon and accounted for over 40% of generation in the MISO and SPP regions in various instances in January 2024.
James C. Grech: In the United States electricity generation for the first quarter of 2024.
James C. Grech: Proved to be particularly challenging with a warm winter and significant significantly lower gas prices.
James C. Grech: All thing and culture of electricity generation nationally declining to approximately 15% during the first quarter.
James C. Grech: With that said coal continues to be a critical critical component to the country's energy generation when looked at regionally in the U S.
James C. Grech: As an example.
James C. Grech: Oh power was a light upon and accounted for over 40% of generation and the MISO and SPP region.
James C. Grech: In January 2024.
James C. Grech: Again, proving the importance of coal for a reliable grid. Now, I'm moving on to our operating segment. The Seabourn Thermal segment shipped higher volumes than anticipated, with additional Wolf & Young volumes going to the domestic market as a carryover from the train derailment on the mainline in December. Average realized prices and costs per ton were lower than anticipated due to higher production out of Wolf and Yon, where we opportunistically mined some high-ass seams, which we do when the market supports it. The higher production of open Looking forward, we expect a higher proportion of Newcastle spec coal due to increased production from the Womble complex. The Seabourn MET segment shipments were in line with expectations.
James C. Grech: Again, proving the importance of coal for a reliable grid.
James C. Grech: I'm moving on to our operating segments.
James C. Grech: The seaborne thermal segment ship higher volumes than anticipated with additional walking on volumes going to the domestic market as a carryover from the train derailment on the mainline in December.
James C. Grech: Average realized prices and costs per ton were lower than anticipated.
James C. Grech: The higher per tire production are well beyond where we opportunistically mind some high seams.
James C. Grech: We do them when the market supports it.
James C. Grech: The higher production I won't but not without set by an extended longwall ramp up that womble.
James C. Grech: Looking forward, we expect a higher proportion of Newcastle spec cold due to increased production from the womble complex.
James C. Grech: Yeah.
James C. Grech: The seaborne met segment shipments were in line with expectations.
James C. Grech: Volumes are lower than ratable for the year due to an anticipated long-wall move at Metropolitan and mine sequencing at the CMJD. Segment costs per ton were at the high end of our range, impacted by an unplanned Copabella dragline outage and the acceleration of planned coal prep plant repairs at the CMJB, partially offset by higher production at Chill Creek. Our sales mix was impacted due to mining some low-quality coal for CMDB due to mine sequencing.
James C. Grech: Volumes were lower than ratable for the argued and anticipate a longwall move at Metropolitan and mine sequencing at the C and D D.
James C. Grech: Segment costs per ton were at the high end of our rain impacted by an unplanned copper bell a dragline outage and the acceleration of planned coal prep plant repairs at the M D.
James C. Grech: Partially offset by higher production at Shoal Creek.
James C. Grech: Our sales mix was impacted due to mining some ore body called the C. M D.
James C. Grech: Mine sequencing.
James C. Grech: As we look forward to the full year.
James C. Grech: As we look forward to the full year, our sales mix should improve with additional sales from Scholl Creek through the anticipated opening of the Demopolis Y. In the PRB, shipments were lower than expected as a result of an unseasonably warm winter and prompt natural gas prices that averaged $2.10.
James C. Grech: Sales mix should improve with additional sales and Shoal Creek.
James C. Grech: Cause he anticipated opening of the Demopoulos block.
James C. Grech: And the <unk> shipments were lower than expected as a result of an unseasonably warm winter and prompt natural gas prices averaged $2.10.
James C. Grech: Segment cost per ton came in higher than expected due to lower volumes, but were somewhat offset by rationalization of discretionary cost spend.
James C. Grech: Segment costs per ton came in higher than expected due to lower volumes but were somewhat offset by rationalization of discretionary costs. Although PRB demand for the corridor was challenged, we are contracted to deliver 85 million tons for the year. Our full-year guidance assumes a normal summer and fall with customers meeting their commitment. Our customers have different demands or needs, and we will work with them to be responsive while still retaining the full value of our contract. Other U.S. thermal shipments were below expectations as we had a few customers reduce their shipments through the high inventories and low natural gas. Segment margins were higher than anticipated due to favorable sales realizations, which included some sales contract cancellation settlements.
James C. Grech: Although appear to be demand for the quarter was challenge we are contracted to 85 million tons for the year.
James C. Grech: Our full year guidance assumes a normal summer and fall as customers meeting their commitments.
James C. Grech: Our customers have different demands or needs, we will work with them to be responsive, while still retaining the full value of our contracts.
James C. Grech: In other U S thermal shipments were below our expectations as we had a few customers reduced their shipments due to high inventories and low natural gas pricing.
James C. Grech: Segment margins were higher than anticipated due to favorable sales realizations, which included some sales contract cancellation settlements.
James C. Grech: Even with the current market conditions, our exceptional sales team was able to book some new business, so our price volumes for the year did not change. Outside of our active operations, we continue to make progress at the Centurion Mine, our key metallurgical coal growth project. We've had some delays in the delivery dates of some mining equipment from the manufacturer, but expect development call to occur in the second quarter. As previously announced, we closed an awards roll transaction last month.
James C. Grech: Even with the current market conditions, our exceptional sales team was able to book some new business sorry.
James C. Grech: So our price volumes for the year did not change.
James C. Grech: Outside of our active operations, we continue to make progress at the Centurion mind, our key metallurgical coal growth projects.
James C. Grech: We've had some delays in the delivery dates of some mining equipment from the manufacturer.
James C. Grech: But expect development call to occur in the second quarter.
James C. Grech: As previously announced we closed on a worthwhile transaction last month.
James C. Grech: We are currently developing an integrated mine plan, and we'll discuss it more fully in the future. The recruitment of the initial Centurion Mine Development Workforce is complete, even though labor remains tight in the mining industry in Australia. We continue to expect the first longwall coal in early 2026, and Capital Expenditures remain in line with previous guidance. We are pleased to announce that, for the first time in nearly 12 years, we are mining at our Lee Ranch Mine in New Mexico.
James C. Grech: We're currently developing an integrated mine plan and we'll discuss that more fully in the future.
James C. Grech: Yeah.
James C. Grech: The recruitment of the initial Centurion mine development work forces complete.
James C. Grech: Even though labor remains tight in the mining industry in Australia.
James C. Grech: We continue to expect the first longwall coal in early 2026.
James C. Grech: And capital expenditures remain in line with previous guidance.
James C. Grech: We are pleased to announce that for the first time in nearly 12 years you know.
James C. Grech: Mining at our Lee Ranch mine in New Mexico.
James C. Grech: In 2022, we secured a new long term contract, which extended the life of our new Mexico operations.
James C. Grech: And it's supported the transition from El Segundo back to Lee Ranch.
James C. Grech: In summary.
Mark A. Spurbeck: In 2022, we secured a new long-term contract, which extended the life of our New Mexico operation and supported the transition from El Segundo back to Lee Ranch. In summary... We have had some challenges this quarter. But as we look out to the full year, our operations and sales have us well positioned. We have completed two longwall moves in Australia, coal quality is improving, and our production plans give us confidence in reaffirming our full year guidance. I'll now turn it over to Mark to cover the financial details. Thanks, Jim.
James C. Grech: We have had some challenges this quarter.
Mark: But as we look out to the full year, our operations and sales, but have us well positioned.
Mark: We completed two longwall moves in Australia.
Mark: Quality is improving and our production plans give us confidence.
Mark: Affirming our full year guidance.
Mark A. Spurbeck: I'll now turn it over to Mark to cover the financial details.
Mark: Thanks, Jim in the first quarter, we recorded net income attributable to common stockholders of 49 or 29 cents per diluted share and adjusted EBITDA of 161 thing.
Mark A. Spurbeck: In the first quarter, we recorded net income attributed to common stockholders of $40 million, or $0.29 per diluted share, and adjusted EBITDA of $161 million. Included in these results was an estimated $18 million non-cash remeasurement charge from the weaker Australian dollar. The company generated $120 million of operating cash flow and had $61 million of capital expenditures, with more than half of it dedicated to Centurion. During the quarter, we continued to execute on our shareholder return program and repurchased 3.2 million shares, or 3% of the shares outstanding.
Mark A. Spurbeck: And these results with an S with an estimated $18 million noncash remeasurement charge from the weaker Australian dollar.
Mark A. Spurbeck: The company generated $120 million of operating cash flow and had 61 million of capital expenditures with more than half of that dedicated to children.
Mark A. Spurbeck: During the quarter, we continued to execute on our shareholder return program and repurchased three 2 million shares or 3% of shares outstanding.
Mark A. Spurbeck: Under the existing $1 billion share repurchase program, we have $570 million of remaining share repurchase authorization. The company ended the quarter with $856 million in cash, fully funded reclamation accounts, and a new $320 million revolving credit facility. Turning now to the first quarter segment, Seaborne Thermal recorded 94 million ingested EVs.
Mark A. Spurbeck: Under the existing $1 billion share repurchase program, we have 570 million of remaining share repurchase authorization.
Mark A. Spurbeck: The company ended the quarter with 856 million in cash.
Mark A. Spurbeck: Fully funded reclamation accounts, and the new $320 million revolving credit facility.
Mark A. Spurbeck: Turning now to the first quarter segment results.
Mark A. Spurbeck: Seaborne thermal recorded $94 million of adjusted EBITDA first quarter shipments were 100000 tons more than anticipated as higher wilken yarn production offset lower production at mopani.
Mark A. Spurbeck: First quarter shipments were 100,000 tons more than anticipated. Entire whip and yarn production offset lower production at the month. The lower-cost Wilpignon production was offset by lower realized prices, resulting in EBITDA margins of 33 percent, in line with the previous quarter.
Mark A. Spurbeck: Lower costs will be on production was offset by lower realized prices, resulting EBIT and EBITDA margins of 33% in line with the previous quarter.
Mark A. Spurbeck: Seaborne metallurgical segment generated 48 million of adjusted EBITDA average realized pricing was less than anticipated due to mining lower quality coals into the C and D D.
Mark A. Spurbeck: The Seabourn Metallurgical segment generated $48 million. Average realized pricing was less than anticipated due to mining lower quality coal fields at the CMJB and PCI coal prices remaining weak relative to premium hard coking. Costs of $139 per ton were at the higher end of guidance due to unplanned equipment and wash plant repair costs at the CMZ. The U.S.
Mark A. Spurbeck: PCI coal prices remain weak relative to premium hard coking coal.
Mark A. Spurbeck: Cost of $139 per ton were at the higher end of guidance due to unplanned equipment and wash plant repair costs at CMT.
Mark A. Spurbeck: The PRV mines shipped 18.7 million tons and generated $16 million of adjusted EBITDA in a quarter on lower-than-expected shipments than Jim previously mentioned. The PRV mines shipped 18.7 million tons and generated $16 million of adjusted cost came in at $12.74 per ton, higher than expected due to lower production volumes. The other U.S. thermal segment generated just an EBITDA of $47 million.
Mark A. Spurbeck: The U S thermal mines produced 63 million of adjusted EBITDA in the quarter and lower than expected shipments and Jim previously mentioned.
Mark A. Spurbeck: P. R. D mine shipped $18 7 million tons and generated 16 million of adjusted EBITDA.
Mark A. Spurbeck: Costs came in at $12 74 per ton higher than expected due to lower production volumes.
Mark A. Spurbeck: The other U S thermal segment generated adjusted EBITDA of 47 million.
Mark A. Spurbeck: We shipped 3.2 million tons, about 400,000 tons less than anticipated, but also benefited from the contract cancellation settlement, which increased revenue and EBITDA margins above the fourth-quarter level. Costs of $45.25 per ton are in line with guidance as lower maintenance and repair spend offset less volume. Looking ahead to the second quarter. Seaborne thermal volumes are expected to increase to 4.1 million, including 2.7 million higher volumes out of the WAMBO complex. 400,000 export tons are priced on average at $146 per ton, with 1.3 million tons of high ash product and 1 million tons of Newcastle spec product unpriced. However, costs are expected to remain consistent with the prior quarter at $45 to $50 per ton.
Mark A. Spurbeck: $3 2 million tonnes above 400000 tons less than anticipated, but also benefit from contract cancellation settlements, which increased revenue and EBITDA margins above fourth quarter levels.
Mark A. Spurbeck: Cost of $45 25 per ton were inline with guidance as lower maintenance and repair spending offset that's fine.
Mark A. Spurbeck: Looking ahead to the second quarter seaborne thermal volumes are expected to increase to $4 1 million tonnes, including $2 7 million export tons with higher volumes out of the windup complex.
Mark A. Spurbeck: 100000 export tons are priced on average and $146 per ton.
Mark A. Spurbeck: With $1 3 million tons of highest product and 1 million tons of Newcastle spec product unpriced.
Mark A. Spurbeck: Costs are expected to remain consistent with the prior quarter and 45 to $50 per ton.
Mark A. Spurbeck: Seaborne metallurgical volumes are expected to be $1 9 million tonnes 500000 tons higher than the first quarter at the Metropolitan Longwall move is now complete and mine sequencing crews at the C. M D D volumes.
Mark A. Spurbeck: The Warren Metallurgical volumes are expected to be $1.9 million, 500,000 times higher than the first quarter, as the metropolitan long-wall move is now complete and mine sequencing improves at the CMJV. Vines are expected to achieve 65 to 70 percent of the premium hard coking gold price, based on their projected sales mix and current price relativity. With higher production, costs are anticipated to improve to $110 or $120 per ton in line with full year guidance.
Mark A. Spurbeck: Volumes are expected to achieve 65% to 70% of the premium hard coking coal price.
Mark A. Spurbeck: Based on the projected sales mix and current price relativity.
Mark A. Spurbeck: With higher production costs are anticipated to improve to 110 to $120 per ton in line with full year guidance.
Mark A. Spurbeck: TRB shipments are expected to be 15.5 million tons, lower than rateable as we enter the traditional second quarter shoulder, and costs will be temporarily elevated at $1,275 to $1,375 per ton due to lower shipments and resulting higher strip ratios. Other U.S. thermal coal shipments of 3.8 million tons are expected to be higher than the prior quarter as we recently signed new contracts for 1.8 million tons to be delivered this year. We expect costs of $44 to $48 per ton in the quarter.
Mark A. Spurbeck: <unk> shipments are expected to be 15, and a half million tons lower than ratable as we enter the traditional second quarter shoulder season.
Mark A. Spurbeck: Cost will be temporarily elevated at 12 75 to 13 75 per ton.
Mark A. Spurbeck: Lower shipments, resulting higher strip ratio.
Mark A. Spurbeck: Other U S thermal coal shipments of $3 8 million tonnes are expected to be higher than the prior quarter. As we recently signed new contracts for 1.8 million tons to be delivered this year.
Mark A. Spurbeck: We expect cost of 44 to $48 per ton in the corner.
Mark A. Spurbeck: Additionally, in the second quarter, we have the $134 million cash purchase awards, well and are expecting tax payments of nearly 120 million in Australia, covering the remaining 2023 liability in the first half of 'twenty 'twenty four estimated payments.
Mark A. Spurbeck: Additionally, in the second quarter, we have the $134 million cash purchase of Wardswell and are expecting tax payments of nearly $120 million in Australia, covering the remaining 2023 liability and the first half of 2024 estimated paychecks. With an implied stronger second quarter, we are reaffirming full-year guidance. We expect to generate significant cash flow in the second half of the year, and we remain committed to returning capital to shareholders. Strategically, we continue to take steps to deliver long-term value. We closed the Wardswell acquisition in April and continued development at Century.
Mark A. Spurbeck: With an invited stronger second quarter, we are reaffirming full year guidance.
Mark A. Spurbeck: We expect to generate significant cash flow in the second half of the year and remain committed to returning capital to shareholders.
Mark A. Spurbeck: Strategically we continue to take steps to deliver long term value we.
Mark A. Spurbeck: We closed the war dwell acquisition in April and continued development at Centuri, We expect first continuous minor development coal this quarter and are on track to commence longwall operations in the first quarter of 2026 on time and on budget.
Operator: We expect the first continuous minor development coal this quarter and are on track to commence long wall operations in the first quarter of 2026, on time and on budget. Operator, I'd now like to turn the call over to questions. Thank you. And press star then 1 on your touch tone phone.
Speaker Change: Operator, I'd now like to turn the call over for questions.
Speaker Change: Thank you we will now begin the question and answer session.
Operator: That's a question you May press Star then one on your Touchtone phone.
Lucas Nathaniel Pipes: If you are using a speaker phone, please pick up your handset before pressing the keys to withdraw your, first question... Thank you very much, operator. Good morning, everyone.
Operator: If youre using a speakerphone please pick up your handset before pressing the keys to withdraw your question. Please press Star then two.
Speaker Change: This time, we'll pause momentarily to assemble our roster.
Lucas Nathaniel Pipes: Our first question comes from Lucas pipes from B Riley Securities. Please go ahead.
Speaker Change: Thank you very much operator, good morning, everyone.
Speaker Change: Mm Hmm, alright, Mark I.
Mark A. Spurbeck: Mark, I want to start with a few questions on the finance side. You noted the U.S. reclamation bond release of $105 million, and I wondered if you could maybe walk us through the cash flow implications of that release, if any. And then, more broadly, there has been some lumpiness around cash flows in Q1. I'd anticipate something similar in Q2 with the Wartswell acquisition closing. Could you speak to any other kind of cash flow impact in Q2, be it working capital or otherwise?
Mark A. Spurbeck: Mark I want to.
Mark A. Spurbeck: Start to start with a few questions on the on the on the finance side.
Mark A. Spurbeck: You noted the U S reclamation bond release of $105 million and I Wonder if you could maybe walk us through the cash flow.
Mark A. Spurbeck: Patients of that release, if if if any.
Mark A. Spurbeck: And then more broadly are there has been some lumpiness around cash flows in Q1, I I would anticipate something similar in Q2 with the word swell acquisition closing.
Mark A. Spurbeck: Could you speak to any any other kind of cash flow impact in in in Q2 be it working capital or or otherwise and then just with that Lumpiness. How do you think about staying.
Mark A. Spurbeck: And then, just with that lumpiness, how do you think about staying in the market from a buyback perspective? Do you have the flexibility to be opportunistic, or do you kind of pause it here and then resume it in the second half when you know that cash flow would be stronger again? Yeah, Lucas, thank you for those questions.
Mark A. Spurbeck: Staying in the market from a buyback perspective D. Do you have that flexibility to be opportunistic or do you kind of parse it here and then resume it in the second half as well.
Speaker Change: Note that our cash flow would be stronger again, thank you very much.
Speaker Change: Yeah Lucas. Thank you for those questions I'll try to hit on all of them.
Mark A. Spurbeck: I'll try to hit on all of them, a really good result with some bond reductions in the first quarter, credit to our team here for one, getting the reclamation work done, but two, also following up and getting those bonds released. On average, you know, those bonds are probably collateralized at about 55%, so there was some cash returned. We also moved around some other bonds in Australia. So there was a cash inflow, so you see a reduction in that restricted cash and cash collateral on the balance sheet.
Mark A. Spurbeck: And really good resolved with combined reductions in the first quarter credit to credit to our team here for one getting the reclamation work done but you also know beginning those bonds are bonds released a on average you know those bonds are probably collateralized at about 55%. So there wasn't cash returned.
Mark A. Spurbeck: Also moved around from some other bonds in Australia. So there was a cash inflow. So you see a reduction in that restricted cash and cash collateral.
Mark A. Spurbeck:
Mark A. Spurbeck: Our balance sheet.
Mark A. Spurbeck: Offsetting that from a cash flow perspective, though what semi used in working capital. So net net that $120 million of operating cash flow is how are you should look at that.
Mark A. Spurbeck: Offsetting that from a cash flow perspective, though, was some use of working capital. So net-net, that $120 million of operating cash flow is how I used to look at it. You mentioned it was a little lumpy here with Q1 with the performance we turned in. As expected, Q2 will be similar. We have the $134 million cash purchased awards well, and I noted in remarks the tax payments in Australia of about $120 million.
Mark A. Spurbeck:
Mark A. Spurbeck: You mentioned, a little lumpy here with Q1 with our with the performance we turned in a as expected Q2 will be similar we have the $134 million cash purchase awards, well and I know these remarks.
Mark A. Spurbeck: Tax payments in Australia are about $120 million that makes up both the remaining liability from our 2023.
Mark A. Spurbeck: That makes up both the remaining liability from 2023 as well as the first half of 2024 estimated payments. So a couple of significant cash usages here in the second quarter. But again, going out, looking at the second half, well position, you know, based on guidance in the Forward Price Strip, you can see some pretty significant cash flow depending on your price deck. But $300 million to $400 million is an opportunity we have out in front of us from a cash flow perspective. Maybe lastly, just touching on the program, you know; I'll note a couple of things.
Mark A. Spurbeck: The first half of 'twenty 'twenty four estimated payments so a couple of significant cash usage in tier.
Mark A. Spurbeck: The second quarter, but again going out looking at the second half are well positioned based on guidance and the forward price strip, but you can see some pretty significant cash flow depending on your price deck, but that $3 million to $400 million, there's an opportunity we have out in front of us.
Mark A. Spurbeck: From a cash flow perspective, maybe lastly, just touching on the program you know I'll note a couple of things.
Mark A. Spurbeck: One, you know, everything we do, including our short-term program, is designed for long-term value and durability. Since we restarted the program, we've announced a return of just under a half a billion dollars, $50 million in dividends, and about $430 million in share buybacks. Through the repurchase program, we have essentially created 15% growth in earnings and free cash flow on a per-share basis with that share reduction
Mark A. Spurbeck: One you know everything we do including our children term program designed for long term value and durability.
Mark A. Spurbeck: Since we restarted the program we've announced the return of just under a half a billion dollars a $50 million in dividends and about $430 million in share buybacks.
Mark A. Spurbeck: Through the repurchase program, we have essentially created 15% growth in earnings and free cash flow.
Mark A. Spurbeck: Per share basis with that share reduction.
Mark A. Spurbeck:
Mark A. Spurbeck: We have completed the balance sheet initiatives we set out two or three years ago to do, which included one very important step that no one else has done, and that is pre-funding 100 percent of our global reclamation liability. This puts us in a leading position in the industry going forward, taking that big liability off the table and eliminating a big liquidity and capital risk going forward. So we believe that it puts us in a great position to continue developing our premier hard-coking coal project in Centurion.
Mark A. Spurbeck: We have completed the balance sheet initiatives, we set out two or three years ago to do which included one very important step and no. One else has done and that is pre funding 100% of our global reclamation liability.
Mark A. Spurbeck: This puts us in a leading position in the industry going forward.
Mark A. Spurbeck: Taking that big liability off the table and eliminating a big liquidity and capital risk.
Mark A. Spurbeck: Going forward.
Mark A. Spurbeck: So we believe that puts us.
Mark A. Spurbeck: In a great position to continue developing their premium hard coking coal project in Centurion.
Mark A. Spurbeck: And with our quarterly fixed cash dividend the program's durability remains through through periods of.
Mark A. Spurbeck: And with our quarterly fixed cash dividend, the program's durability remains through periods of lower cash flow but also very flexible to increasing periods of above-average free cash flow at the direction of our board. So, lastly, I'd note, and I think you asked, are we going to be opportunistic or flexible? Yeah, I think our program is bent to be flexible.
Mark A. Spurbeck: Lower cash flow, but also very flexible to increasing periods of above average free cash flow.
Mark A. Spurbeck: Direction of our.
Mark A. Spurbeck: Org.
Mark A. Spurbeck: So lastly, I'd note and I think you asked are we going to be opportunistic or flexible.
Mark A. Spurbeck: Yeah, I think our program has been to be flexible and as we look out in the full year.
Mark A. Spurbeck: And as we look out for the full year, we see some strong cash flows going forward, and we have the flexibility in our program to look at things on an annual basis and get back in the market on an opportunistic basis when our board deems it appropriate. So, we have a lot of flexibility and a lot of opportunity in front of us going forward, and we remain committed to returning additional capital to shareholders. Mark, I really appreciate that.
Mark A. Spurbeck: We see some strong cash flows going forward and we have the flexibility in their program to what kind of things on an annual basis and I get back in the market on an opportunistic basis.
Mark A. Spurbeck: When when when our board deems it appropriate so a lot of flexibility.
Mark A. Spurbeck: <unk> a lot of opportunity in front of us going forward and we remain committed to returning additional capital to shareholders.
Speaker Change: Mark really appreciate that I think you hit on all the all the points. There. So felt so so so think thank you for that.
Mark A. Spurbeck: Jimmy I wanted to get your perspective on on a on a couple of regulatory thanks.
Lucas Nathaniel Pipes: I think you hit on all the points there, so thank you for that. Jimmy, I want to get your perspective on a couple regulatory things. First, EPA last week unveiled a new power plan rule. Could you maybe comment on what you think the impact is on your domestic business? how you think from a strategic perspective you can mitigate any impact. And then, over in Australia, there's I think a new labor rule coming in regards to contractor pay. If you could maybe comment on that and what the impact might be in Australia, I would appreciate your thoughts on those two. Okay, yeah, Lucas.
Lucas Nathaniel Pipes: First the EPA last week unveiled a new power plant rule could shoot could you maybe comment on what you think the impact is to your domestic business and.
Lucas Nathaniel Pipes: How how do you think from a strategic perspective, you could do you can mitigate any impact and then over in Australia. There's a I think a new labour rule coming that.
Lucas Nathaniel Pipes: In regards to a contractor pay.
Lucas Nathaniel Pipes: Could maybe comment on that and what the impact might be in.
Lucas Nathaniel Pipes: In Australia, what would appreciate your thoughts on those two developments. Thank you.
Jimmy: Yeah, Okay, Yeah, Lucas so on the first one with the EPA and the new suite of rules in the clean power.
James C. Grech: So, on the first one, with the EPA and the new suite of rules and the Clean Power Plan rules, I do have some comments on that, but I do want to start out and just recognize the fact that, you know, approximately three-quarters of the EBITDA generated from our company comes from our seaborne thermal emitting segments. So, that doesn't mean we're not concerned about these regulations. Again, the majority of EBITDA comes from our seaborne platform.
James C. Grech: Playing rules.
James C. Grech: I do have some comments on that but I do want to start out and just recognize the fact that approximately three quarters of the EBITDA generated from our company comes from our seaborne thermal and met segment. So that doesn't mean, we're not concerned about these regulations.
James C. Grech: Again, the majority of the EBITDA comes from our seaborne platform.
James C. Grech: And, you know, one of the things you said, what's it going to mean for our domestic business? Well, you know, a lot of these things will go into effect if they do go into effect in later years.
James C. Grech: And you know one of the things you said what is it going to mean for our domestic business well you know there's a lot of these things go into effect. If they did go into effect in the later years. So I don't see any near term impacts and the <unk>.
James C. Grech: So I don't see any near-term impact. And the question is still out: is there going to be any longer-term impact? So, you know, we've stated many times that, as a company, we believe in a diverse energy mix that includes coal and renewables to have, you know, grid reliability, energy security, and affordability. With this suite of regulations, we do believe, though, that the EPA has overstepped its authority, granted to it by Congress, and it's threatening grid reliability at a time of increased energy demand.
James C. Grech: They're still out is there any be any longer term impacts.
James C. Grech: We've stated many times that as a company.
James C. Grech: Believe in a diverse energy mix and that includes coal and renewables to have you know grid reliability and energy security and affordability.
James C. Grech: With the suite of regulations, we do believe though that the EPA has overstepped its authority.
James C. Grech: Granted to it by Congress.
James C. Grech: And it's threatening grid reliability at a time of increased energy demand. So you know what's what's different I think this time around from you know when this has happened in past years.
James C. Grech: So, you know, what's different this time around from when this happened in previous years is several things, Lucas, that have to be taken into account when trying to assess what potential impact that we're going to see from these regulations. One is what's going on now, which hasn't been happening for many, many years, is a surge in power demand forecast for the next five years. And we've had relatively flat load growth for quite some time in our country.
James C. Grech: It's several things Lukas that have to be taken into account when you're trying to assess what potential impact that we're going to see from these regulation. One is what's going on now it just hasn't been happening for many many years is surging power demand forecast for the next five years and you've had relatively.
James C. Grech: Flat load growth for quite a quite a period in our country and now with the manufacturing senators, but your vehicles data centers AI centers and so on.
James C. Grech: And now, with manufacturing centers, electric vehicles, data centers, AI centers, and so on, there's tremendous, tremendous load growth projected. So, again, you get what the impact on the U.S. coal markets is. Well, as a result of that load growth, projected load growth, you know, in past quarters. So actually, you look at that, and the U.S. thermal market, from that perspective, is actually growing. The second thing that's out there that I think is very, very different from when the EPA did this in the past with these proposed regulations is the national reply of concern for grid reliability and not having enough existing, even existing base load generation to support this load growth.
James C. Grech: There's tremendous tremendous load growth projected so again, you get what's the impact on the U S. Coal markets was a result of that load growth projected load growth.
James C. Grech: In past quarters over 20 power plants.
James C. Grech: Announced delays in retirement dates.
James C. Grech: So actually you look at that in the U S thermal market from that perspective is actually growing.
James C. Grech: The second thing that's out there that I think is very very different from when the EPA has done this in the past with these proposed regulation is the national look why are the concern of grid reliability and not having enough existing even existing baseload generation.
James C. Grech: To support this load growth so what what does that mean is there was a groundswell of opposition or stated concern.
James C. Grech: So what that means is there is a groundswell of opposition, or stated concern, about these proposed EPA regulations. And you've got FERC, NERC, PJM, MISO, electric utilities, which we haven't heard from in the past. Politicians from both sides of the aisle are talking about their concerns with these proposed regulations. You've got the leading national newspapers, the Wall Street Journal, Washington Post, New York Times.
James C. Grech: With these proposed EPA regulations, and you've got <unk>, Newark, PJM MISO, our electric utilities, which we haven't heard from them in the past politicians from both sides of the aisle.
James C. Grech: Are talking about their concerns with these proposed regulations you gotta make a leading national newspapers. The Wall Street Journal, Washington Post New York Times overnight, there's a very good article and Fox News.
James C. Grech: Overnight, there was a very good article in Fox News, an opinion piece, stating their concerns over this grid reliability. So it's very, very different from the past, this groundswell of opposition and concern over these regulations. And what I think is going to happen is you're going to see a very swift and significant pushback in the U.S. court system. Over 20 state attorney generals have already announced their intentions to fight the proposed regulations.
James C. Grech: Our opinion, stating their concerns.
James C. Grech: This grid reliability, so very very different in the past this groundswell of opposition and concern over these regulations.
James C. Grech: And what I think is going to happen is you're going to see a very swift and significant pushback in the U S Court system overstated over 20 state attorney generals have already announced their intentions to provide the proposed regulations.
James C. Grech: We're working with the National Mining Association America's power to to Mount The U S mining industry support legal challenges.
James C. Grech: We're working with the National Mining Association and America's Power to mount U.S. mining industry support legal challenges, and we expect to see court stage on this at some time this year. So the crux of your question is, what do we think is going to happen? Nothing in the near term, and I think there's enough opposition in the long term to really put in doubt the impact that this will have on the US generation, particularly given the fact that power plant lights are being extended because of low growth.
James C. Grech: And we expect to see court stayed on this at sometime this year so.
James C. Grech: The crux of your question is what do we think is going to happen nothing in the near term and I think there's enough opposition in the long term to really put in doubt the impact of these will have on the U S generation mix, particularly given the fact that power plant why are they being extended because of the load growth.
James C. Grech: The second question you had was about the new labor rules and Australia's contractors saying job, same pay, and we've included all of that in our guidance already. That's really been effective until November 1st. And any impact we see is going to be in there. And we don't have as many contractors on our payroll as other mining companies in Australia. So there is some impact, but it's not significant.
James C. Grech: The second question you had was about the new labor rules in Australia contractors, saying John St pay and we've included all of that in our guidance already that's really been effective until November one.
James C. Grech: And any impact we see is going to be in there and you know we don't have as many contractors on our payroll or other other mining companies.
James C. Grech: He is in Australia. So.
James C. Grech: There is some impact it's not significant and it's already in our forecast going forward after November 1st.
James C. Grech: Jim. Thank you. Thank you very much for that detailed answer on the E. P. A site.
James C. Grech: Very helpful on on the on the on the second part what roughly what percentage of your Australian workforce is.
James C. Grech: The subcontractors.
James C. Grech: Or or labor costs.
James C. Grech: Yes, it would be a few ways to slice it but gets if it starts November then we have two out of 12 months impacted so just trying to get a sense for what it could mean for for next year on a full year basis.
Speaker Change: Yeah, because I don't have that right in front of me, but we will get it right back to when we'll get we'll follow up with you on that when we get to the correct number on that.
Speaker Change: Sounds good I really appreciate the color I'll turn it over for now and in the meantime best of luck.
Speaker Change: Thank you Lucas.
James C. Grech: The next question comes from Nathan Martin from Benchmark Company. Please go ahead.
Speaker Change: Thanks, operator, good morning, everyone.
James C. Grech: And it's already in our forecast going forward after November 1st. Jim, thank you very much for that detailed answer on the EPA side; very, very helpful. On the second part, roughly what percentage of the Australian workforce consists of contractors? or labor costs. I guess there'd be a few ways to slice it.
James C. Grech: But I guess if it starts November, then we have two out of 12 months impact. So just trying to get a sense for what it could mean for next year. Yeah, Lucas, I don't have that right in front of me, but we'll get it right back to you. We'll follow up with you on that one to get you the correct number on it. Sounds good.
James C. Grech: Okay.
Lucas Nathaniel Pipes: I really appreciate the call. I'll turn it over for now, and in the meantime, best of luck. Thank you, Lucas. The next question... Thanks, operator. Good morning, everyone.
Operator: Let's start off with Centurion. You guys are still targeting development coal there sometime in the second quarter, it looks like. What's your plan and timing, I guess, as far as selling or marketing those tons is concerned? I'll let Malcolm Roberts comment on that. Yeah, good morning, Nathan.
Speaker Change: Let's start off with a with Centurion are you guys still targeting development Colbert sometime here in the second quarter it looks like.
Operator: What's your plan on timing or just as far as selling are marching those tons is concerned.
Operator: The Oh, Malcolm Robert to comment on that.
Malcolm Roberts: Yeah. Good morning, 19, we've we've already started including contracts for the development coal coming out of some periods during the quarter.
Malcolm Roberts: Look, we've already started concluding contracts for the development coal coming out of Centurion. So, during the quarter, several Blue Chip North Asian customers agreed a two-year contract, and we look forward to making our first shipment later this year. Malcolm, are there any limitations from a transportation standpoint at this point? Absolutely no transport issues; we've fully set up within the Ganiella system with contracts and the like to be able to ship that product. Okay, perfect, great, I appreciate that. And then maybe we can stick with transportation for a second.
Malcolm Roberts: Our blue chip, North Asian customers or greater to your contract.
Malcolm Roberts: We look forward to making up the shoe later this year.
Malcolm Roberts: Oh Malcolm are there any limitations there from a transportation standpoint at this point.
Malcolm Roberts: Absolutely no transport issues, we fully set up within the <unk> system with contracts and and belonged to be able to book to ship that product.
Malcolm Roberts: Okay perfect great I appreciate that.
Malcolm Roberts: And then maybe sticking with transportation for a second I think Jim you made some comments about the marpol is locked outage.
James C. Grech: I think Jim, you made some comments about the Demopolis Lock Outage. Just to be clear, what kind of impact are you still seeing there at Shoal Creek? Clearly, your second quarter met sales guidance up quarter for quarter, but just a little more color there would be great. Yeah, I'll comment on the lock, and then I'll turn it over to Malcolm to talk about the, you know, the sales and the lock. We've been saying we expect it to be back in service by the end of May, and the Corps of Engineers came out this morning and actually said, I think it's going to be May 22nd.
Malcolm Roberts: Yeah, just just to be clear what kind of impact are you still seeing there are you know what.
Speaker Change: So Creek clearly your your second quarter net sales guidance is up quarter over quarter, but.
Malcolm Roberts: Just a little more color there would be great.
Malcolm Roberts: Yeah, I'll comment on the lock and then I'll turn it over to milk them to talk about the sales.
James C. Grech: It'll be back in service, so, more than a week earlier than planned. So that's some good news that we have for us. Now, in regards to your question about the impact on sales, I'll let Malcolm comment. Yeah, sure.
Malcolm Roberts: The the like we've been saying, we expect it to be back Nathan in service by the end of May and the Carb Corps of Engineers came out this morning, and actually said I think it can be made twenty-second it'll be back in service. So.
Malcolm Roberts: Oh more than a week earlier than planned. So that's that's some good news that we have for it now in regards to your question about the impact on sales I'll, let mark comment on that.
Malcolm Roberts: Yeah sure. Thanks, Jim.
James C. Grech: <unk>.
Malcolm Roberts: Thanks, Jim, railing some product to the port at Macduffie. However, you know, what this really means is that for the second half of the year, we're going to be weighted probably two-thirds of our annual volume from Shoal Creek for the second half of the year, and one-third for the first half as a result. But we really do look forward to that lot coming back, and we're advised today, 22 Okay, guys, I appreciate that info as well.
Malcolm Roberts: Some product to the.
Malcolm Roberts: Due to the port at Mcduffy.
Malcolm Roberts: But you know what this really means is that for the second half of the year, we're gonna be waited probably too soon.
Malcolm Roberts: Volume from Shoal Creek to the second half of the year and one for the first half as a result, but we really do look forward to that won't coming back and we're in Boston 20 seconds of mine.
Malcolm Roberts: Yeah.
Speaker Change: Okay, guys. Appreciate appreciate that info as well.
James C. Grech: It may be shifting over, and I know I asked about this last quarter, and I think, Jim, you clearly made some comments in your prepared remarks too, but the PRV shipments below your first quarter target, and second quarter guidance down three million tons, plus or minus, again, we know seasonally that's typical during the shoulder season. But it would be great to kind of get your thoughts on what gives you confidence to maintain your full year guidance range at this point.
Speaker Change: And then maybe shifting over and I know I asked about this last quarter and I think Jim you clearly made some comments in your prepared remarks, too, but purely shipments below your first quarter targets second quarter guidance down 3 million tons, plus or minus again seasonally that's that's typical during the shoulder season, but would be great. You know kind of get your thoughts on what gives you.
James C. Grech: Confidence to maintain your full year guidance range at this point I mean, it looks to me like you will need to increase second half shipments by at least 12 million tons just to kind of hit the low end of that range. So it would be great to just get a little bit more around that.
James C. Grech: I mean, it looks to me like you will need to increase second half shipments by at least 12 million tons just to kind of hit the low end of that range. So it would be great to just get a little bit more thought around that piece. Thank you.
James C. Grech: First off, you know, the tonnage levels that we're looking at for the second and, particularly, the third and fourth quarter are well within the tonnage ranges that we've shipped in the past. So, you know, as far as the quantity of coal and our ability to produce it, and I do believe the railroads are going to be able to move it as well, which is a key item in the third and fourth quarters.
James C. Grech: The first stop.
James C. Grech: The tonnage levels that we're looking at for the second and then, particularly the third and fourth quarter.
James C. Grech: Ah well within tonnage ranges that we shipped in the past. So you know as far as the quantity of coal and our ability to produce it and I do go to great degree the railroads are going to be able to move it as well, which is a key item in the <unk>.
James C. Grech: So, logistically, operationally, we feel very good about that. Our sales book is strong, and the indications we have from our customers is that right now, we are expecting to have some normal pull on those tons in the third and fourth quarters. We've already seen an uptick in some nominations for May.
James C. Grech: In the third and fourth quarter. So logistically operationally, we feel very good about that the our sales book is strong and the indications we have from our customers is that Oh, we right now we are expecting to have some more normal pull in that third and fourth quarter on those tons, we've already seen an uptick in some nominations for.
James C. Grech: For me a little stronger than we thought it was going to be and we are getting some early indications we could see that again in June. So it looks like there is a recovery starting to occur in the P. R. B.
James C. Grech: It was a little stronger than we thought it was going to be, and we're getting some early indications that we could see that again in June. So, it looks like there is recovery starting to occur in the PRB, and the indications we're getting from our customers at this time, operationally, and logistically, we feel, again, that's why we're reaffirming that guidance for the full year. Great. Thanks, Jim. And then maybe just one more, Mark, to you. I don't want to leave you out.
Mark: And the indications we're getting from our customers at this time operationally well.
Mark: Stickley, we feel again, we feel that that's why we're reaffirming our guidance for the full year.
Mark: Great. Thanks, Jim and then maybe just one more mark to you don't want to leave you out I know Lucas touched on this earlier some of the moving pieces on the cash side here in the second quarter that are expected.
Mark A. Spurbeck: I know Lucas touched on this earlier, some of the moving pieces on the cash side here in the second quarter that are expected. You know, your available free cash flow, I think, was actually negative at the end of the first quarter. How could this, you know, impact your ability to repurchase shares, you know, again, here in the second quarter? Yeah, no, you're right.
Mark A. Spurbeck: And are you available free cash flow I think was actually negative at the end of the first quarter.
Mark A. Spurbeck: How could this impact your ability to repurchase shares yeah again here in the second quarter.
Speaker Change: Yeah, no you're right the tables show the the minus four there are off of Q1.
Mark A. Spurbeck: The table shows the minus 4 off of Q1 and the cash purchase awards well, and the cash tax payments. You know, not expecting a robust number for Q2. But again, our program is designed to be flexible. It is on an annual basis.
Mark A. Spurbeck: Cash a purchase awards well in the cash tax payment.
Mark A. Spurbeck: Not expecting a robust number for Q2, but again our programs designed to be flexible and is on a annual basis, we're very happy with our liquidity position and we see some strong cashless coming forward.
Mark A. Spurbeck: We're very happy with our liquidity position, and we see some strong cash flows coming forward in the second half of the year. All right, team. Very helpful, appreciate the time, and best of luck. Thanks, Nate. The next question comes from Katja Jancic. Hi, thank you for taking my questions. Maybe just staying a bit on the share buybacks; is there any possibility that you could use some of the cash on the balance sheet since it's so strong for buybacks? Yeah, Katja, it's Mark.
Katja Jancic: Here in the second half of the year.
Katja Jancic: Our team very helpful. I appreciate the time best of luck.
Mark: Thanks Nate.
Katja Jancic: The next question comes from catcher Janssen from BMO capital markets. Please go ahead.
Katja Jancic: Hi, Thank you for taking my question, maybe just staying a bit on the share buyback is there any possibility that you could use some of the cash on the balance sheet since it's so strong for buybacks.
Mark A. Spurbeck: Yeah Gotcha, it's it's Mark got as I mentioned, you know the program is based on an annual look and we have flexibility as I mentioned with me.
Mark A. Spurbeck: As I mentioned, the program is based on an annual cycle, and we have flexibility, as I mentioned, with Nate. We feel comfortable with our liquidity and strong cash flows coming in the second half of the year, so we are designed to be flexible, and we haven't announced anything, but we have that built in to do what we deem appropriate and to be opportunistic as the market. Okay, and maybe then on the Centurion, I think for this year, in the second half, you expect to ship 150,000 tons, or was that a prior expectation?
Mark A. Spurbeck: Do you feel comfortable with our liquidity and.
Mark A. Spurbeck: Strong cash flows coming in the second half of the year. So we are designed to be flexible and we haven't announced anything but that.
Mark A. Spurbeck: We have that built in to do what we deem appropriate and not have to be opportunistic as the market presents.
Mark A. Spurbeck: Okay, and maybe then on the Centurion I think for this year for second half you expect to ship 150000 tonnes of ore that was prior expectation.
Mark A. Spurbeck: Is that still, does that still hold, and then maybe looking to next year, what could the potential contribution from Centurion be? Katja, yeah, so this year we look to ship about 100,000 tons for the current year. I think production next year, on a development basis, is probably in the 400,000 ton range. And, as Malcolm mentioned, we already have blue-chip Asian customers kind of knocking on our doors trying to contract some of that coal. So really set up strong.
Mark A. Spurbeck: Is that still does that still hold and then maybe looking to next year, what could potential contribution from Centurion D.
Speaker Change: I Gotcha, yeah. So this year, we look to we went to ship Oh about 100000 tonnes for the current year and I think production next year on a on a development basis is probably in the 400000 ton range.
Katja: It's milk I mentioned to you already have you know blue chip Asian customers kind of knocking down their doors trying to contract some of that coal. So are really set up strong.
Speaker Change: Okay. Thank you.
Mark A. Spurbeck: Okay, thank you. Thank you, Katja. Again, if you have a question, please press star. Questions or follow-up? Thank you very much for taking my follow-up question. I'll start with a quick one. For the HiAsh product, could you remind us what pricing has been quoted to date for that API 5? And then where does Wilpignon typically price as a percentage against that index?
Speaker Change: Okay. Thank you Sachin.
Mark A. Spurbeck: And if you have a question. Please press Star then one.
Mark A. Spurbeck: Our next question is a follow up from Lucas pipes from B Riley Securities. Please go ahead.
Speaker Change: Thank you very much for taking my follow up question I'll start with a quick one the high ash product could you remind us what pricing has been quarter to date for that API five and then what.
Mark A. Spurbeck: Where does a whopping all typically price as a percentage against that that index. Thank you.
Katja: Yeah sure it's about when people, we we got you.
Katja Jancic: Thank you. Yeah, sure. It's Malcolm here. Look, we got a 5-20% discount against the API5 index, which is the China Index, which is a 5500 kcal, 22% ash product. We supply high ash products slightly higher than that, so that represents the discount that we got.
Katja Jancic: A thought to 20% discount against the IPO on five index.
Katja Jancic: Yeah.
Malcolm Roberts: To index, which is a 50 bought 100 K cow on 22% Ash product, we were used to pull out <unk> slightly higher than that so that represents a discount.
Malcolm Roberts: We go into.
Katja Jancic: Yeah.
Malcolm Roberts: All right, that's, that's, that's helpful. Um, and I'm sure Creek and Q1, the MSHA data was very helpful, was, was, was, very, very strong. And so I wondered if you could maybe comment on kind of the operational outlook from here. I assume there's maybe a little bit of a normalization, but it would be helpful to hear what you think about operations at Chill Creek for the remainder of the year. Lucas, I mentioned data had about 600,000 tons in Q1, which again is a very, very strong quarter for the mine.
Speaker Change: Alright, that's that's that's helpful and and I'm Sure Creek in Q Q1 that the MK data was very helpful. I was very very strong.
Malcolm Roberts: And so I wonder if you could maybe comment it on on kind of the operational outlook from from here I would assume there's maybe a little bit of a normalization, but would be helpful to hear you think about operations at Shoal Creek for the remainder of the year. Thank you.
Malcolm Roberts: Okay.
Malcolm Roberts: Very, very happy with what FEMA has done down there and shown that the new fit for purpose longwall that we had down there is really making a difference. But, you know, we do have longwall moves later in the year, we have miners' vacations, and so on for to contend with later. And we didn't have all of those things occurring in the first quarter; it would be very challenging later in the year with all of the things that we have. I just don't see it staying at that pace in the following quarter with the long-haul moves and the minor vacations that we have ahead of us.
Malcolm Roberts: They just had around 600000 tonnes in Q1, which again is a very very strong quarter for the mine are very very happy with what the team has done down there and it shows that new fit for purpose longwall that we had down there.
Malcolm Roberts: It's really making a difference, but we do have a longwall move later in the year, we have miners vacation.
Malcolm Roberts: And so on for to contend with Lady and we didn't have all of those things occurring in the first quarter, so to keep that pace up.
Malcolm Roberts: We'd be very challenging.
Malcolm Roberts: Later in year with with all of the things that we have I just don't see it.
Malcolm Roberts: Staying at that pace in the following quarter with the longwall moves in the miners' vacation that we haven't heard of us.
Speaker Change: I appreciate the color. Thank you very much and again best of best of luck.
Lucas Nathaniel Pipes: I appreciate the call. Thank you very much, and again, best of luck. Thank you. Thank you, Lucas. There are no more questions in the queue. This concludes our question and answer session. Thank you all for joining us today. I'd especially like to thank our employees for remaining focused on safety and for continuing to implement our various initiatives. I'd also like to thank our investors, customers, and vendors for your continued support. Operator, that concludes our call. Thank you.
Lucas Nathaniel Pipes: Thank you thank you Lucas.
Lucas Nathaniel Pipes: There are no more questions in the queue. This concludes our question and answer session I would like to turn the conference back over to Jim Grech for any closing remarks.
Lucas Nathaniel Pipes: Thank you all for joining us today, I'd, especially like to thank our employees for remaining focused on safety.
Lucas Nathaniel Pipes: We're continuing to execute on our various initiatives.
Lucas Nathaniel Pipes: I'd also like to thank our investors customers and vendors for your continued support.
Lucas Nathaniel Pipes: Operator that concludes our call. Thank you.
Speaker Change: The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
Lucas Nathaniel Pipes: Okay.
Lucas Nathaniel Pipes: [music].