Q3 2024 CONSOL Energy Inc Earnings Call
Good morning, ladies and gentlemen, and welcome to the CIX 3rd quarter 2020 for earnings conference call.
At this time, all lines are in listen only milk.
Following the presentation, we will consult a question and answer session. If at any time during this call you're requiring me to get the assistance, please press star zero for the operator.
This call is being recorded on Tuesday, November 5, 2024. I would no like to turn the conference over to Nathan Tucker, the director of finance and investor relations, please go ahead.
Nathan Tucker: Good morning everyone and thank you for joining us. Welcome to Consolantor G3rd Quarter 2024 earnings conference call.
and he Ford looking statements are comments we make about future events or subject to risks. Certain of which we have outlined in our press release and in our SEC filings. And are considered Ford looking statements within the meaning of section 21E of the Securities Exchange Act of 1934.
We do not undertake any obligation of updating any forward-looking statements for future events or otherwise.
Nathan Tucker: We will also be discussing certain non-gap financial measures which are defined in records out to comparable gap financial measures in our 2024 third quarter press release furnished to the SEC on Form 8K which is also posted on our website.
Additionally, we filed our 10-Q for the quarter-ended September 30 of 2024 with the SEC this morning. You can find additional information regarding the company on our website www.consonerg.com, which also includes a supplemental slide deck that was posted this morning.
On the call with me today are Jimmy Brock, our Chairman and Chief Executive Officer, Mitesh Thakkar, our President and Chief Financial Officer, and Bob Raithwaite, our Senior Vice President of Marketing and Sales.
In his prepared remarks, Jimmy will highlight our third quarter achievements and strong operational results.
Mitesh will then provide an update on our coal markets, financial performance, and our most recent liability management initiative before providing an update on our 2024 outlook. In his closing comments, Jimmy will provide an update on the proposed merger with Arch Resources
Nathan Tucker: and lay out our key priorities for the remainder of the year as we prepare to head into 2025. There will be a Q&A session following our prepared remarks in which Bob will also participate. With that, let me turn it over to Jimmy.
Jimmy Brock: Thank you, Nate, and good morning, everyone.
Jimmy: I am very pleased to report that Consol Energy had a very strong financial and operational performance in the third quarter.
Jimmy: despite a planned long-law move and a planned summer maintenance shutdown.
Jimmy: As we worked to turn the page from the Francis Scott Key Bridge collapse and its effect on Arkansas Marine Terminal, the PMC achieved its highest ever third quarter sales and production tonnage level.
Jimmy: These results are a testament to the resiliency of our operations and desirability of our product.
Jimmy: On the operations front, beginning with our safety performance.
Jimmy: Our Bailey Preparation Plant and the Ipman Preparation Plant each had zero employee recordable incidents during the third quarter of 2024.
Jimmy: Our coal operations finished the quarter with a total recordable incident rate well below the national average for underground coal mines.
Jimmy: Coal production at the Pennsylvania Mining Complex came in at 7.2 million tons in Q3-24 compared to 6.1 million tons in the prior year period.
Jimmy: The mines operated well during the quarter and completed the planned longwall move very timely, safely, and efficiently, which contributed to the strong production performance compared to Q3-23.
Jimmy: Our PMC average cash cost of coal sold per ton for Q3-24 was $35.85 compared to $38.36 in Q3-23.
Jimmy: mainly due to improved production tonnage as well as reduced contractor and purchase servicing cost.
Jimmy: We finished our last planned long-law move of 2024 in the third quarter for the PMC.
Jimmy: Moving on to the Ipman Mining Complex.
Jimmy: During the third quarter of 2024, sales from the complex, including third-party tons, were 152,000 tons, compared to 164,000 tons in Q2-24.
Jimmy: This slot impairment was due to ongoing equipment delivery delays with a major supplier and adverse geological conditions, both of which limited our production in the quarter.
Jimmy: We continued to deal with abnormally long lead times on both new and rebuilt section equipment during Q3-24. However, the first of four miners was received in October, and we currently expect the remaining three to be delivered shortly.
Jimmy: possibly by the end of this year.
Jimmy: These continuous mining units are expected to increase the overall productivity of the mine.
Jimmy: While we waited for these machines, the Itman mine operated two of its three continuous miner sections as super sections during the third quarter of 2024, and despite being limited in the number of sections we could run, long-term mains development progressed.
Jimmy: Toward the end of September, the Itman Mine began retreat mining.
Jimmy: which we expect will improve our efficiency and productivity.
Jimmy: Furthermore, at the end of October, a deep cut plan was approved by MSHA for two of the three continuous minor sections.
Jimmy: which will also improve the overall efficiency of the mine.
Jimmy: moving to the Consolidated Marine Terminal.
Jimmy: Rebounding from the Francis Scott Key Bridge collapse that limited our export capacity for much of the second quarter.
Jimmy: The CMT shipped 4.7 million tons during the third quarter of 2024, compared to 4.3 million tons in the prior year quarter.
Jimmy: For Q3-24, terminal revenues came in at $23.7 million, and CMT operating cash costs were $6.9 million.
Jimmy: Accordingly, CMT-adjusted EBITDA finished at $15.9 million compared to $14.9 million in the prior year period. With that, let me turn the call over to Mitesh to provide the marketing and financial updates.
Mitesh Thakkar: Thank you, Jimmy, and good morning, everyone.
Mitesh Thakkar: Let me start with an update on the marketing front and our contracting progress.
Mitesh: During 3-24, we sold 6.8 million tons of PAMC coal at an average coal revenue per ton sold of $64.28 compared to 6.1 million tons at $70.34 in the year-ago period.
Mitesh: In the domestic market, low natural gas prices and an inventory overhang from warm winter weather have weighed on the ability of power plants to consume and procure additional coal throughout much of 2024.
Mitesh: However, more recently, PJM West's day-ahead power prices increased more than 20% in the third quarter compared to Q24.
Jimmy: According to EVA, northern Appalachian coal bond increased by approximately 30% over the same time period.
Jimmy: Looking ahead, there are signs of further optimism. Domestic power demand growth is expected to accelerate due to data center build-outs and EV growth.
Jimmy: This has led to additional potential delays in co-planned retirements.
Jimmy: Duke Energy Indiana recently announced a plan to delay the retirement of multiple units by several years to 2038. This is a positive development indicating a changing sentiment towards baseload power in the U.S.
Jimmy: In September, McKinsey and Company increased its forecast for U.S. data center energy consumption in 2030 by 50% compared to its forecast from just a year ago.
Jimmy: With this backdrop, we have been able to layer in several multi-year contracts in the domestic market during the course of this year.
Jimmy: On the international front, throughout the third quarter, which is typically the shoulder season, API 2 prices remain resilient and average approximately $115 per metric ton.
Jimmy: European coal demand has recently picked back up and buyers are securing cargoes ahead of the winter.
Jimmy: Moving to Asia, Indian demand for NAPCO has softened due to prolonged monsoon season and lower petco prices.
Jimmy: However, demand for our crossover metallurgical product has been robust this year, particularly in China and Southeast Asia, and due to the optionality of our PMC product, we elected to move more tons into this market during the third quarter.
Jimmy: We shipped a total of 1.1 million tons into the crossover MEC market during 3Q24 which was by far our highest ever quarterly level into that market.
Jimmy: Our product blends very well with high quality coking coals out of Australia and the lifting of the ban on these coals into China has helped us significantly increase sales into this market.
Jimmy: This quarter, once again, highlighted the strategic value of our high-quality product with the optionality to serve many different end-use markets and our ability to quickly pivot among them.
Jimmy: Looking ahead internationally, we continue to see an improving outlook for coal demand.
Jimmy: For instance, the International Energy Agency recently published its annual World Energy Outlook.
Jimmy: Within this report, the IEA has issued an upward revision to its projected coal consumption in 2030 by 6% compared to its report from last year.
Jimmy: Moving on to the contracting front, we remain near fully contracted in 2024 based on the midpoint of our production guidance.
Jimmy: Throughout 3Q24, we selected to take a prudent and patient approach when adding to our contracting book due to the recent weakness in petco prices and the prolonged monsoon season in India which have caused many of our industrial customers to become more short-term focused.
Jimmy: However, demand has remained strong in our industrial markets, and we expect to increase our book further as we close out the year. During 3Q24, we increased our contracted position to approximately 18 million tons in 2025.
Jimmy: Now, let me provide a quick recap of our financial results before providing an update on our insurance claim and some exciting news on continued liability management efforts.
Jimmy: This morning, we reported impressive third quarter 2024 operational and financial performances.
Jimmy: We achieved net income of $96 million, or $3.22 per dilutive share, and adjusted a bid off $179 million.
Jimmy: Accordingly, we generated $122 million of free cash flow, which was higher than the free cash flow generated in the first half of 2024.
Jimmy: During 3Q24, we made debt repayments of $2 million, spent $39 million in capital expenditures, and paid a dividend totaling $7 million to our shareholders.
Jimmy: Consistent with the capital return framework outlined in the merger agreement with Arsh Resources, we announced a $0.25 per share dividend which will be payable on November 26, 2024.
Jimmy: Due to the temporary closure of the Port of Baltimore in 2Q24, our second quarter results were significantly impacted and as such we have been hard at work with our insurance adjusters to calculate a potential business interruption claim related to the incident.
Jimmy: As of mid-October, we submitted a formal claim and we hope to reach final settlement by the end of 2024.
Jimmy: Now let's move on to our most recent
Jimmy: In early October, we finalized agreements with the Pennsylvania DEP to establish a Global Water Treatment Trust Fund.
Jimmy: As what we believe to be an industry first, in terms of scope and magnitude, the fund will provide an alternative financial assurance mechanism for all our legacy perpetual water treatment liabilities located in Pennsylvania.
Jimmy: which consists of 22 total facilities or approximately two-thirds of the legacy mining operations managed by Kansar.
Jimmy: The Water Trust establishes a long-term mechanism to pay for these liabilities over time and in turn will reduce our exposure to surety bonds and collateral requirements.
Jimmy: The PA facilities account for approximately 83% of all surety bonds tied to our legacy environmental liabilities and approximately 40% of our legacy related asset retirement obligations.
Jimmy: We have agreed to a minimum $2 million annual contribution until the fund reaches $74 million based on initial valuation, including earnings.
Jimmy: As the cash value of the fund grows over time, surety bonds will be reduced and released by the PADEP. For comparison, our PA water treatment surety bond footprint is approximately $120 million and will eventually be all released.
Jimmy: As part of the agreement, CEIX has agreed to make an initial contribution into the fund of approximately $12 million.
Jimmy: Two million of which was paid in October with the balance due within 90 days of close, subject to certain bonds being released by the PADEP.
Jimmy: This voluntary effort puts a proactive legacy liability management approach into action and underscores our commitment to environmental stewardship.
Jimmy: Now let me provide a quick update on our outlook for 2024.
Jimmy: On the pricing front, given our strong performance at the PAMC in 3Q24, we are tightening the range and increasing the midpoint of our PAMC average gold revenue per ton sold to an updated range of $64.50 to $66.
Jimmy: On the cost front, due to the improved operational performance in 3Q24, we lowered the top end of our PMC average cash cost of coal sold per tonne guidance by $1 per tonne to a range of $37.50 to $38.50.
Jimmy: Additionally, we are moving up the bottom end of our PAMC sales volume guidance range by half a million tons to an updated range of 25 to 26 million tons reflecting our strong 3Q24 operational performance.
Jimmy: For our Itman Mining Complex, we are lowering our sales volume guidance range by 100,000 tons to a range of 600,000 to 800,000 tons due to the slower than anticipated operational ramp-up at the complex.
Jimmy: We remain optimistic about our ability to achieve the full ramp-up once the remaining section equipment arrives and we are encouraged by the commencement of retreat mining and the approval of the deep cut plan for multiple sections in the mine.
Jimmy: Lastly, on the capital expenditures front, we are maintaining our previous range.
Speaker Change: With that, let me turn it back to Jimmy.
Jimmy Brock: Thank you, Mitesh. Let me now provide an update on the proposed merger with ARCH Resources.
Jimmy Brock: Both teams continue to work very hard toward achieving approval.
Speaker Change: The waiting period under the Hart-Scott-Rodino Act expired on October 11.
Jimmy: And we also obtained final clearance of the proposed merger from Brazil, Poland, and China, with the last required approval received in October.
Jimmy: satisfying all antitrust regulatory closing conditions for the transaction.
Jimmy: With respect to the SEC review, the Form S-IV was filed on October 1st.
Jimmy: and Console and ARCS resources are working toward obtaining shareholder approval for the proposed merger.
Jimmy: We still anticipate closing to occur by the end of Q1 2025.
Jimmy: For the remainder of 2024, we will be focused on a few key areas that we believe will set us up for success moving forward.
Jimmy: First and foremost, we are very excited about the proposed merger with Arts Resources and are looking forward to the potential formation of core natural resources.
Jimmy: We believe these two companies would be stronger together and could achieve more as one entity than either could stand alone.
Jimmy: Our major priorities are obtaining shareholder approval.
Jimmy: Developing a roadmap geared toward executing a timely transition and realizing full synergy values as quickly as possible.
Jimmy: There is no doubt that a lot of coordination and effort will be required on both sides, but I have full confidence that these two teams can come together seamlessly and be ready to hit the ground running on day one.
Jimmy: Second, we will continue to focus on running our operations as safely and efficiently as possible. The operations ran very smoothly during the third quarter and we are set up to run well in the fourth quarter given zero long-haul moves.
Speaker Change: Third, despite a long-haul move in the third quarter, we achieved a reduced cash cost of coal sold per ton compared to multiple prior quarters.
Jimmy: We will continue to focus our efforts on managing our spending levels and reducing the impact of the inflationary pressures we've faced over the past several years.
Jimmy: Finally, we are prioritizing filling out our sales book in 2025 and beyond.
Jimmy: We are taking a patient approach, particularly in the export industrial market, as low petco prices are contrasted against durable API2 prices.
Jimmy: However, many believe petco prices are at or near the floor.
Jimmy: The benefit of our product is that its ability to sell into many different in-use markets, which allows us to play the art.
Jimmy: This year is a great example where our product is highly desired in the crossover MET market.
Jimmy: As of October 31st, our year-to-date 2024 crossover sales have already surpassed our highest annual sales tonnage level into that market in our history.
Jimmy: As I often do, let me finish by recognizing our employees.
Jimmy: This quarter was again a testament to their hard work and dedication.
Jimmy: Despite the curveball thrown at us with the bridge collapse in the Port of Baltimore
Jimmy: The team hit the ground running in the third quarter with strong operational performances on multiple fronts.
Jimmy: The Kansal team, in tandem with the arts resource team, continues to work diligently toward a successful and timely closing of the proposed merger and developing a smooth transition plan for core natural resources.
Jimmy: I am very grateful for their hard work and extremely excited to formally combine two great teams in the coming months.
Speaker Change: With that, I will hand the call back over to Nate for final instructions.
Nate: Thank you, Jimmy. We will now move to the Q&A session of our call. At this time, I'd like to ask our operator to please provide the instructions to our callers.
Speaker Change: Thank you. I would like to remind everyone, if you would like to ask a question, please press star followed by the number 1 on your telephone keypad. If you are using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment.
Speaker Change: Again, please press star 1 to ask the question and we'll pause for just a moment to allow everyone to signal for questions.
Speaker Change: Our first question comes from the line of Lucas Pipes from Beer Wiley Securities. Please go ahead.
Lucas Pipes: Thank you very much, operator. Good morning, everyone. My first question is on the contract book for 2025, and apologies if I missed that, but could you provide a breakdown of the 18 million tons in terms of market exposure? And then also
Lucas Pipes: Kind of average price as of today with indices stand
Lucas Pipes: And then for the uncontracted tons, what markets are you targeting? And then lastly, on the commercial side, could you speak a little bit to domestic contracting? How many years out are utilities looking for coal and what sort of prices are you able to lock in on that front? Thank you very much.
Speaker Change: Sure it's Bob Lucas, good morning. You know as we mentioned we're about 18 million tons contracted for 2025.
Speaker Change: That's an improvement of about three and a half million tons since the last quarter.
Speaker Change: I will tell you that we've been successful in securing
Speaker Change: you know prices I'll tell you that are at or above what the published marks are out there today I believe those marks are you know in the low to mid 50s so we have been successful in concluding deals you know above those above those marks
Speaker Change: The balance or 2.6 million tons was into the export market
Speaker Change: I will tell you it's been a mixture of some into India, but mainly into the crossover market into China.
Speaker Change: This year, you know, China's been a bright spot for us, as Mitesh mentioned on the call. We'll probably move somewhere in the neighborhood of 2.5 to 3.5 million tons into China, all told, this year.
Speaker Change: So we expect that to continue as well into next year. So right now for the breakdown of 25, we have 2.5 million tons linked to power indices, 7.8 domestic.
Speaker Change: All those would be under a fixed price arrangement and then 7.7 are into the export market.
Speaker Change: of which 5.1 million are indexed.
Speaker Change: I will tell you they also have ceilings and floors on all 5.1 million. And sitting here today, based on a $115 API 2 price, what we're modeling in for next year, we're looking at our average price at 18 million tons, roughly in the low 60s.
Speaker Change: In terms of the additional volume for next year to close out our book...
Speaker Change: We still see potential to sell more crossover coal not only into Asia but also into Brazil.
Speaker Change: And then we're also seeing, you know, petco prices come off the floor right now. We've seen as low as $50 FOB golf prices, where I think today they're closer to $53, $54. And we're expecting those to continue to increase as, you know, Diwali festivals end, monsoon season subsides, and construction activities resume into India.
Speaker Change: The balance of the volume left to sell, I'd say most of that will go into the export market, but we're also seeing some domestic opportunities as well. And when you ask about the domestic opportunities long term, we are seeing customers go out as far as 2028. We are in negotiations today for volumes.
Speaker Change: Bob, that was a very comprehensive answer. Thank you for all that detail.
Speaker Change: My second question is on the cost side. A number of your peers are noting cost disinflation. Surely some self-sensitive drivers behind that among operational changes. But could you speak to what you're seeing on the cost side? To what extent...
Speaker Change: Might you be able to participate in some of this disinflation that we've witnessed this earning season so far?
Speaker Change: Well, I think, you know, when you look at cost, there's a lot of variables.
Speaker Change: For us, we are starting to see some deflation, actually, in some of the consumables that we use to mine with.
Speaker Change: But it's something that we keep a constant watch on and try to look for ways to improve it. Obviously for us, this quarter, a big part of our cost was the production tonnage that we mined. You know, that always helps lower. And then secondly, we continue to work on procurement powers as we can with all of our suppliers.
Speaker Change: Thank you.
Speaker Change: I really appreciate all the color. Jimmy and team, keep up the great work. Thank you.
Speaker Change: Thank you, thank you, thank you.
Speaker Change: Our next question comes from the line of Nathan Martin from Benchmark Company. Please go ahead.
Nathan Martin: Thanks Operator, good morning everyone.
Speaker Change: Good morning.
Nathan Martin: Maybe quickly to start on the insurance claim due to the Key Bridge collapse. You guys noted hoping to reach a final settlement there by the end of the year. Could we get some more thoughts on that? How much do you project the ultimate settlement could be for?
Speaker Change: So Nate, as you can imagine our team has been putting together a lot of information for our insurance companies.
Speaker Change: to present a claim. We did submit a claim of about 60 plus million dollars for the business interruption.
Speaker Change: associated with the Francis Scott Key Bridge Collapse.
Speaker Change: I don't want to speculate on...
Nate: Okay Mitesh, thank you for that.
Speaker Change: Maybe shifting over to the remainder of this year
Lucas Pipes: First of all, with the new price per ton guidance, what API 2 price does that assume now?
Mitesh Thakkar: We're assuming $115 and to be honest Nate there's the sensitivity is very low I'd say you know for every dollar you're looking at three to four cents across the entire portfolio but for Q4 we're assuming $115.
Speaker Change: Okay, Bob, appreciate that. And then, you know, maybe just looking at year-to-date production, I think...
Nate: production kind of outpaced sales by about 600,000 tons or so, if my math is correct. I'm assuming, you know, some of that is just a lag, but, you know, looking at the levels so far, notwithstanding that fourth quarter does have some vacation periods, you know, what would it take to kind of get you maybe towards the higher end of your four-year guidance ranges? Is that feasible?
Speaker Change: Yeah, I mean, the inventory bill, as you know, we don't have really inventory on-site. Most of that inventory was at the terminal or en route to the terminal. I will say that our transportation partners have been doing a really good job for us in terms of getting our product moved.
Speaker Change: to Baltimore. A lot of that inventory is already gone sitting here today, so it's simply just the timing.
Speaker Change: of when vessels come and when trains arrive.
Speaker Change: And again, if you look at what we did just in the third quarter alone, Consol moved over 4.2 million tons into the export market.
Speaker Change: We expect to do probably that, if not higher, in Q4 as well. Again, it's just a timing thing, and I would expect that inventory to really reduce here in the fourth quarter.
Speaker Change: And Nate, on the production end of it, you know, as we said on the call, we don't have any long-wall moves during the fourth quarter. However, we do have, you know, plans shut down for the holidays, Summit Thanksgiving and that week at Christmas.
Speaker Change: But you know it depends same as always it's you know how the trains move and how well we can produce at the mine But we don't see anything in our way in Q4 We'll see how that goes you could always have unexpected geology, but we run to the market and run as as best we can
Speaker Change: Appreciate those thoughts, guys.
Speaker Change: All very helpful. I think I'll just leave it there. Best of luck in the fourth quarter.
Speaker Change: Again, if you would like to ask a question, please press star, then the number 1 on your telephone keypad.
Speaker Change: Our next question comes from the line of Michael Dudis from Vertical Research, please go ahead.
Michael Dudis: Good morning, gentlemen.
Speaker Change: Good morning Mike.
Michael Dudis: A couple things. First, you know, terrific production numbers, Q3, maybe to remind us of, you know,
Michael Dudis: what the capacity of the three operations and you know you know assuming Longwell, Mulls, and Howley's etc. You know when things are running really well and the market's really good what is what can you what's the
Speaker Change: Capacity Achievement Rehability for the MAC complex as we move forward in the next couple years.
Speaker Change: Well, we use 26 million tons as our base, but when you're looking at capacity, if everything goes well as it did in Q3, 28.5 million is what we've publicly stated as capacity.
Speaker Change: for the Pennsylvania Mining Complex and Mike if you look at 2018 and 2019 we have demonstrated we can produce over 27 million tons in those two years when the market was very supportive.
Speaker Change: Excellent, I appreciate that. Secondly, maybe for Bob...
Speaker Change: I know it's a little tough to decipher but maybe looking to your customers in India or in Asia
Speaker Change: you know separating out the weather issues and and and holidays and such
Speaker Change: Do you get the sense, Lisa, people thinking about later this year into next year, pace of demand, economic activity, are you anticipating a much stronger market, assuming...
Speaker Change: micro price more normalized as you move forward, as you're looking to get that mix set up for the rest of 2025?
Speaker Change: We do Mike and I'll tell you it's it there's certainly not a lack of demand. It's just right now
Speaker Change: It's hard to...
Speaker Change: come to terms on how to price the coal. You know, when you look at what we did a couple years ago, we priced a lot of coal against API2.
Speaker Change: That mechanism doesn't work, per se, for coal into India today, so...
Speaker Change: The demand is there, and I think it's going to remain. It's just the volatility in the markets is what's causing us to kind of be patient right now in terms of...
Speaker Change: of locking in the balance of the volume. So, I feel very confident in our ability to again ship and sell our base, you know, production level of 26 million tons, it just, it might be more on a spot basis if we can't come to terms on how to price it.
Speaker Change: Understood. Do you think ATI-2 pricing just feel generally pretty stagnant or kind of flat?
Speaker Change: You know, what could make it break one way or the other?
Speaker Change: I mean, I think winter weather certainly is going to be a determining factor there. I will also tell you that we've contracted over 400,000 tons last quarter into Europe.
Speaker Change: Um, it's...
Speaker Change: We're starting to see, certainly, some desire. Inventories are low. I think there still is concern about LNG supply into Europe as well. And I think if they do experience just a normal winter, you'll see a resurgence in demand and you'll see them come back to the market for U.S. coals.
Speaker Change: Finally, maybe...
Speaker Change: It's been an exciting or at least wondrous time for electricity generation expectations in the U.S. and with the numbers that PAGM put out a few months ago in the capacity talks, etc. Maybe share how your customers are processing all this as they're moving over the next several years and such an inordinate demand for hyperscale AI.
Speaker Change: and 24-7 uninterruptible power and how that could impact your customer base that you've been dealing with for decades and such and how that may firm up maybe into the future and maybe not.
Speaker Change: Yeah, I'll start, Mike. So, I think you hit on it. I mean, it's the demand for electricity growth continues to grow and people are seeing more and how they're going to get it is what's becoming questionable.
Speaker Change: So I think you've seen a lot of these coal-fired utilities who have announced
Speaker Change: You know, delaying their retirements and some are now not even given a date. So, there is a concern of where they're going to get it. And I've seen some reports to where they think the reliability of the grid is kind of stable now. But keep in mind, most of that reliability, if you look at the graph, is coming from intermittent sources.
Speaker Change: primarily wind and solar. So, I believe people are starting to get concerned about the reliability of the grid.
Speaker Change: Hence, that's why we're seeing some of these contractual things that Bobby's been able to do extend out to, you know, year 2028. So as that demand continues to grow, and if it even grows at half the pace that everyone's expecting, then I think you'll see these coal-fired plants...
Speaker Change: run at least at a higher capacity, and may even extend their retirements even further.
Speaker Change: And Mike, just to put things in perspective, this is not just a long-term thing.
Speaker Change: Things are happening in a shorter term as well. There was an analysis by SNL, if you look at 2025 to 2027.
Speaker Change: I think the amount of coal plants that were supposed to retire when the analysis was done in late 2023 Was around 34 gigawatt and now that number stands at around 29 and change So it's about 13 percent lower just between 25 and 27 forecast
Speaker Change: I encourage you. Thanks for your thoughts gentlemen.
Speaker Change: Thanks, Mike.
Speaker Change: There are no questions at this time. Mr. Tucker, please go ahead.
Speaker Change: Thank you. We'd like to thank you all for your participation this morning and for your support of Insol Energy. We hope we answered your questions and we look forward to seeing you on our next call. Thank you. Thanks, everyone.
Speaker Change: Thank you. Bye.
Speaker Change: This concludes today's conference call. You may now disconnect. Thank you everyone.
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