Q4 2024 Core Natural Resources Inc Earnings Call
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Good morning, and thank you very much for your patience today, we've had a few technical difficulties with the dial in phone number for today's event.
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Dick Slone: I would now like to turn the conference over to deck Slone Senior Vice President strategy. Please proceed.
Dick Slone: Good morning from Canonsburg, Pennsylvania, everyone and thanks for joining us today before we begin let me read let me remind you that certain statements made during this call including statements relating to our expected future business and financial performance may be considered forward looking statements. According to the private Securities Litigation Reform Act forward looking.
Dick Slone: By their nature address matters that are to different degrees uncertain.
Dick Slone: These uncertainties, which are described in more detail in the annual and quarterly reports that we filed with the SEC may cause our actual future results to be materially different than those expressed in our forward looking statements. We do not undertake to update our forward looking statements whether as a result of new information future events or otherwise, except as may be required by law.
Dick Slone: I'd also like to remind you that you can find a reconciliation of the non-GAAP financial measures that we plan to discuss this morning at the end of our press release, a copy of which we have posted in the investors section of our website at core natural resources Dot com.
Speaker Change: Also participating on this morning's call will be Paul Lang, our CEO attached to car, our president and CFO and Bob Braithwaite, Our senior Vice President of marketing and sales. After some formal remarks from Paul in potash. The four of US will be happy to take questions with that I'll now turn the call over to Paul Paul.
Paul: Thanks deck and good morning, everyone welcome to the inaugural earnings call for core natural resources.
Paul: This is an exciting time for the team and we are happy you could join US. This morning I'm pleased to report that core is off to an exceptionally strong start across a wide range of key operating and financial priorities.
Paul: And the five weeks since the completion of the merger.
Our team has made tremendous progress in integrating the combined operating marketing and logistics portfolio into a cohesive high performing unit a unit I might add that we view is unmatched in the global coal landscape adopted a robust capital return framework heavily weighted towards share repurchases.
Paul: <unk>.
Paul: Announced board authorization for $1 billion in share repurchases in support of that framework.
Paul: Taken steps just in the first few weeks to lock in approximately one third of indicated synergies at the midpoint of guidance and resume development work with continuous miners at Leer, South nearly two months earlier than originally indicated.
Paul: Now, let's delve a little further into the capital return framework, which is designed to reward shareholders for their strong ongoing support and which the board views of central tenant the company's long term value proposition.
Paul: The centerpiece of this framework is to target to return 75% of free cash flow to shareholders with the vast majority of that cash directed towards share repurchases.
Paul: Complimented by a small sustaining quarterly dividend of <unk> 10 per share, we expect such purchases to be highly value, creating at current valuations.
Paul: As far as the small dividend. The board believes this component will ensure that the widest range of potential investors can participate in the core story, including those who require a dividend.
Paul: And a strong show of confidence the board has authorized a total of $1 billion in share repurchases in support of this new framework.
Paul: I'd now like to spend a few moments on the core team strong progress right out of the gate in the area of synergy capture as you might imagine delivering on the synergy potential of the merger ranks among our highest priorities in the early stages of the integration process.
Paul: Just a few weeks' time the team has already executed strategies. They are expected to yield synergy driven value creation of more than $40 million. As a reminder, we're projecting to capture between $110 million to $140 million per year in total savings.
Paul: Potential spend more time on the composition of these early wins, but let me assure you that we plan to remain sharply focused on delivering the previously advertise value in the most expeditious manner possible.
Paul: At the same time, let me reiterate that we believe there is more synergistic value to be created beyond the initially advertised numbers via the sharing of best practices. That's just one example.
Paul: And the teams plan to pursue such incremental opportunities.
Paul: With an equivalent level of intensity as we move forward.
Paul: Now, let's turn to the status of Leer, South as Youre aware, the Leer South mine experienced combustion event right around the time of the merger completion, although disappointing.
Paul: Most important aspect of this event was the fact that the Leer south team in close collaboration with federal and state regulatory officials prioritize the safety of the workforce and ever step. They took on behalf of the board and the entire senior management team I commend everyone involved for their actions.
Paul: Once employee safety.
Paul: Sure the Leer South team moved quickly to the next objective protecting the long term viability of the mine here to the team did a tremendous job.
Paul: And steps to ensure that the issue remained isolated to a small previously mined area that was 300 to 500 feet behind the longwall face.
Paul: The success of the operations team's efforts is evidenced in the currently projected timeline for the resumption of mining activities.
Paul: Monday for Leer, South team again in close collaboration with federal and state regulators safely reenter the mine there resumed development work with continuous miners.
Paul: As you will recall, we had indicated this step could take as long as three months. So accomplishing this milestone in just over a month was clearly a significant step forward in this journey.
Paul: As for the timing of resuming longwall production. It is standard industry protocol to keep the area, where the combustion occurred sealed and alert for a period of time.
Paul: Even with this waiting period, however, and given the team's successful efforts to seal the affected area, we still fully expect to resume longwall mining by the by mid year.
Paul: It's also important to note that the team has assessed via the deployment of infrared cameras and other remote monitoring activities. That's a mine longwall equipment was largely unaffected by the event.
Paul: Before handing the call to potash I'd like to now spend a few moments on global coal market dynamics as indicated pricing is currently soft in each of our main market segments, which is to say global metallurgical and high caliber.
potash: Thermal coals in fact, both API too and high vol, a pricing or near three year lows importantly, however that softness in the high Vols I C V. Thermal market is counterbalanced by Core's already strong committed and priced position, which potash will discuss in more detail shortly.
potash: Moreover, the U S domestic thermal market a key secondary outlet for core has tightened somewhat in recent weeks in wake of extremely cold temperatures.
potash: We estimate the generator stockpiles in the east are approaching target levels and in select instances have fallen into the critical zone, particularly at some merchant plants.
potash: This recent drawdown is creating opportunities for spot market sales and should translate into a stronger contract markets contract season as the year progresses.
potash: Even in the Midwest, which is the primary market for our powder River Basin segment, and where stockpiles have perhaps been the most bloated generators are cycling train sets more rapidly which has led to a healthier shipment levels early in the year.
potash: As for coking coal markets, we believe that despite the current weakness the long term market dynamics remain compelling.
potash: New blast furnace capacity continues to come online in southeast Asia.
potash: Indian imports of seaborne coking coal were up an estimated 5% in 2024 and Chinese imports of seaborne coking coal increased 17 million tons in 2024, which acted to counterbalance the higher Chinese steel exports.
potash: The most significant reason for optimism however continues to be in the supply side of the equation.
potash: Aggregate production in three primary supply countries for high quality seaborne coking coal, Australia, the United States and Canada remains around 40 million tons lower in 2024, then at peak levels in a decade ago. Despite historically strong pricing across most of that time frame.
potash: We expect such supply constraints, which are the function of both underinvestment in degradation in depletion of global reserve base to support the increasingly positive supply demand balance over time.
potash: Moreover, currently depressed pricing levels are beginning to take a toll on smaller and higher cost metallurgical producers, which should also precipitate a more constructive market environment.
potash: Down the road.
potash: Looking ahead, we're more confident than ever at.
potash: Of course, two world class complementary operating segments metallurgical coal and high calorific thermal coal create a unique and compelling opportunity for value creation and cash generation in the decades ahead with its skilled workforce strategic asset base low cost mining operations.
potash: <unk> expansive logistics network tremendous synergy potential and industry, leading sustainability practices cores exceptionally well equipped to capitalize on what we view as highly constructive and durable market environment for our products.
Attest: With that I'll now turn the call over to attest for some additional detail on our financial outlook ongoing progress on synergies and continued efforts to optimize the value of our high quality products attached. Thank you Paul and good morning, everyone.
Speaker Change: Let me begin by providing an update on our sales book and some of our key marketing priorities, followed by a financial and synergy progress.
Attest: With the macro backdrop that Paul provided it is very clear.
Speaker Change: Different market today.
Speaker Change: We have been throughout the past several years.
We believe the diversity and scale of core natural resources allow us to better manage these markets.
Speaker Change: Throughout the prepared remarks, you will hear me reference all future reporting segments. The metallurgical segment, which consists of the leer south correctly, Martin lore and Edmond locations.
The ICB Thermo segment, which includes our Pennsylvania mining complex and the West Elk mine and.
Speaker Change: Our powder River Basin segment, which consists of a black Thunder coal Creek mines.
Speaker Change: We have made strong contracting progress across all segments for 2025.
Speaker Change: Our goal at core is to create a solid base of revenue to our total contracted book, while maintaining the potential to capture the upside pricing volatility in the Mac market.
Speaker Change: This was one of the main strategic rationale of the merger as it allows us to opportunistically deploy capital in both challenging and robust markets.
Speaker Change: As we look forward, we have identified three focus areas for the combined product portfolio.
Speaker Change: First we expect to further expand the reach of our products.
Speaker Change: The article about the PMC alere have been well received by their respective customer basis, and now we have an opportunity to cross sell these products by targeting the specific needs of each customer.
Speaker Change: <unk> product portfolio for instance, Bailey crossover metallurgical coal has already generated interest amongst currently their customers. Similarly, we were recently able to sell some of the <unk> product to a legacy consol customer.
Speaker Change: Second we expect to generate revenue uplift by blending different qualities of coal.
Now successfully sold a blend of thermal byproduct from our metallurgical segment without hiseq with BMC thermal product and expanded the margins by double digits for the Domo byproduct.
Speaker Change: Sure.
Speaker Change: Plan to optimize the utilization of our logistics assets. This.
Speaker Change: This includes operational improvements as well as read out enough different coal qualities, which will allow us to operate more efficiently and when advantageous at high capacity utilization.
Speaker Change: We still have a lot of work ahead of us, but we are very pleased with the progress made so far and we're looking forward to creating more opportunities for the core product portfolio.
Speaker Change: Let's now segue to a brief update on the early progress we have made on the synergy front.
Speaker Change: At the merger announcement, we got it to an average annual run rate of $110 million to $140 million of synergies within six to 18 months following close.
Speaker Change: As Paul mentioned, we got off to a solid start.
Speaker Change: Since the close of the merger about five weeks ago, we have already started to reduce duplicative public company costs locked in favorable financing rates.
Speaker Change: Working with our business partners on the procurement side and.
Speaker Change: And Kickstarting several synergy focused work streams on the marketing side.
Speaker Change: We have already executed strategies that I expect it to you or just over $40 million in synergies on an annualized run rate basis.
Speaker Change: <unk>, 40% of this is expected to come from marketing blending and transportation the majority of which have been achieved by the blending of different products in our portfolio. An example, like Colorado Anita.
Speaker Change: Approximately one third of the synergy run rate comes from eliminating some overlapping positions at the corporate office.
This number is expected to grow as we transition radio systems and processes and build out the infrastructure to support the company.
Speaker Change: The remaining synergy run rate.
Speaker Change: Split between procurement and financing costs.
Are you starting to see cost efficiencies as we work with our suppliers to create a mutually beneficial outcome.
Speaker Change: We are still in the early innings here, but we are looking forward to continuing to identify and execute on opportunities that create value for our shareholders.
Speaker Change: Sure.
Speaker Change: Now let me provide a quick update on our financial results before providing our 2025 guidance and outlook.
Speaker Change: This morning, we reported of course 2024 financial performance, which essentially are the results of the legacy Consol energy on a standalone basis for the full year 2024, we reported net income of $286 million or $9 61 per dilutive share adjusted EBITDA of $655 million and free cash flow of $301 million.
Speaker Change: Net income was impacted by certain one time items, such as pretax result of $68 million related to the indemnification of 974 pension plan litigation.
Speaker Change: In conjunction with the merger closing earlier. This year, we took advantage of the increased size and scale of C&I and Upsized, our revolving credit facility from $355 million to $600 million.
Speaker Change: Extended the maturity into 2029 and reduced the interest rate by 75 basis points across the grid.
Speaker Change: We received overwhelming support from our existing banks and been able to add nine banks to the facility.
Speaker Change: Through this amendment, we have already demonstrated enhanced capital market access as a result of the merger.
Speaker Change: I would like to thank our banking partners for their continued support.
Speaker Change: Moving forward, we intend to maintain our financial flexibility through a combination of strong liquidity and manageable debt levels.
Speaker Change: At the close of the merger CNR at $590 million in cash and cash equivalents and short term investments plus approximately $100 million that was applied towards the purchase of <unk>.
Speaker Change: <unk> Best Virginia municipal bonds.
Speaker Change: Prior to the close of the merger Consol off debt to repurchase these bonds resolve their tax exempt status. This gives score the ability to remarket these bonds.
Speaker Change: Actually the muni market subject to market conditions.
Speaker Change: We're also considering.
Speaker Change: Our remarketing of other tax exempt muni bonds to potentially improve the collateral package and benefit from the scale and diversity of core.
Speaker Change: Once completed we expect to have approximately $300 million of debt on the balance sheet associated with these bonds.
Speaker Change: Now, let me provide our outlook for 2025.
Speaker Change: Starting with the Hiseq with thermal segment, we are expecting.
29 to 31 million sales tons.
Speaker Change: Approximately 80% contracted at the midpoint of our guidance range.
Speaker Change: <unk> of Colette Colette tons at a projected price.
Speaker Change: Between $61 $63 per ton.
Given the state of the met market and ongoing issues with tariffs. We expect the majority of the open tons go into the industrial Gregg and domestic power Gen markets.
Speaker Change: We expect our 2025 IC with.
Speaker Change: Average cash cost of coal sold.
Speaker Change: To be 38 to $40 per ton the bottom end of our cost guidance captures the potential for deflation in key commodities as well as fixed cost leverage at the higher end of the sales volume range.
Speaker Change: Obviously, the top end accounts for reduced tonnage.
Speaker Change: Stronger commodity market, which would be a net benefit to our cash margins, but a potential headwind to our power and supply costs.
Speaker Change: While our metallurgical segment, we are introducing annual coking sales tonnage of seven five to 8 million tons.
Speaker Change: Which excludes approximately $1 5 million tonnes of thermo byproduct and the metallurgical coal segment.
Speaker Change: On the committed tons.
Speaker Change: We are expecting $135 82, and average revenue per tonne sold.
Speaker Change: On the metallurgical cash cost side, we expect an average cash cost of coal sold of 96 to $100 per ton.
Speaker Change: Our metallurgical segment sales tonnage and cost guidance is highly dependent on the timing of normalized production at Leer South longwall.
Speaker Change: In the second half of the year after the projected restart of Leer South.
Speaker Change: We expect cash cost for the metallurgical segment to be in the low $90 per ton range.
For our <unk> segment on the sales front, we have approximately 37 million tons contracted and priced at an average core revenue of approximately $14 78 per ton on the cash cost side.
Speaker Change: Expect an average cash cost of coal sold per ton range of $13 75 to $14 25.
Speaker Change: For 2025.
Speaker Change: Cash based SG&A to be between $110 million to $125 million.
Speaker Change: Longer term.
Speaker Change: Cash based SG&A to decrease to about $90 million and system integration is complete and merger synergies are fully realized.
Speaker Change: Additionally for 2025, we expect merger related cash outflow of approximately $100 million.
Speaker Change: Expenses incurred before and after the closing of the merger and includes fees for legal and financial advisors severance costs and other nonrecurring costs.
Speaker Change: Lastly on the capital expenditure front for 2025, we expect a range of $300 million to $330 million.
Speaker Change: In closing I want to reiterate our commitment to our capital allocation framework, which continues to emphasize ensuring financial strength and flexibility through a combination of modest debt levels and strong liquidity, while creating long term value for our shareholders.
Another key priority for us is ensuring appropriate levels of capital to ensure safe compliant and efficient operations of all our key assets.
Speaker Change: Given the progress that we have already made on these two priorities we.
Speaker Change: We have better wherewithal to allocate our discretionary cash flow to shareholder returns, which Paul described in his opening remarks.
Speaker Change: Although our near term cash flow is embed.
Speaker Change: But EMEA south outage, we have built some excess cash throughout the merger process and we expect to deploy some of that cash towards our capital return program.
Speaker Change: Capital allocation is underpinned by our ability to generate robust free cash flow.
Speaker Change: 195, shaping up to be a challenging year with the weak commodity price backdrop and the combustion event at Leer, South our priority for 2025.
Speaker Change: Again, these impacts by safely and compliant and conducting our operations at the lowest possible cost while.
Speaker Change: While delivering on the synergy and revenue expansion potential that the core platform offers.
Speaker Change: Operator, we're now ready to begin the Q&A session for our call.
Speaker Change: Would you please provide the instruction to our callers.
Speaker Change: We will now begin our Q&A session to ask a question you May Press Star then one on your Touchtone phone to withdraw your question. Please press Star then two and at this time, we will pause momentarily to assemble our roster.
Speaker Change: And the first question will be from Nathan Martin from the benchmark. Please go ahead.
Nathan Martin: Thanks, operator, good morning, everyone and congratulations on completing the merger.
Speaker Change: Hey, Thanks, good morning.
Speaker Change: So starting within the coking coal segment.
Speaker Change: Guidance sales of seven five to 8 million tons could you guys give us any approximation of quality mix today. After the combined companies or is there a capture rate maybe versus the ELC benchmark price that you guys are targeting.
Speaker Change: So on the on the mix Nate we have about 2 million tonnes I'll call them <unk>.
Speaker Change: Vault product, which is which as beckley and Edmond.
Speaker Change: About 1 million tons of high Vol. B and then the balance will be.
Speaker Change: Our alere or Alere.
Speaker Change: Hi, Vale product so of the $6 6 million tons, we have sold.
Speaker Change: About $1 million or half of that is staying domestic five one is export.
Speaker Change: And what we have sold today is $1 2 million tons of low vol, $4 4 million tons of high vol. A and about 1 million tons of high vol. B. So that gives us call. It 1 million tons left to sell this year.
Speaker Change: $1 1 million or half I'll say in about 800000 of that is low vol and the balance of that would be high vol.
Speaker Change: Alright very helpful. Bob I appreciate that.
Speaker Change: Maybe while I have you too could we get a breakdown.
Speaker Change: The committed and priced high CV thermal tons between export domestic et cetera, yes.
Speaker Change: Yes, so of the $24 six about 'twenty, one six of it as PMC coal.
Speaker Change: And as you noticed we gave a range and what we have.
Speaker Change: In terms of pricing I will tell you that in that 'twenty $164 2 million tons is linked to API too.
Speaker Change: And then we have about $2 5 million tons linked to power our power netback contracts.
Speaker Change: And then the balance are 3 million tonnes is our west Elk product about 2% to $4 million is fixed price and the balance is about 600000 tons. That's what shown.
Speaker Change: As <unk>.
Speaker Change: Unpriced and that is all.
Speaker Change: Priced against the Newcastle Index.
Speaker Change: And then the breakdown in total I would say is $13 million is domestic and 11 six is export.
Speaker Change: Okay, a lot of numbers touching quickly, but I appreciate it.
Speaker Change: Yes.
Speaker Change: No no. We're it's very helpful.
Speaker Change: I guess, taking.
Speaker Change: Taking a step back guys.
Speaker Change: Really no policy you made direct comments on this in your prepared remarks or not if I did I apologize, but it'd be great to get your thoughts on how this current Chinese tariffs on U S. Coal imports is impacting your business or how it could potentially impact your business.
Speaker Change: Many times the combined company sell into China in 2024 and then.
Speaker Change: Are you assuming.
Speaker Change: And in your current guidance.
Speaker Change: So at the time that the tariff was announced.
Speaker Change: <unk> had about eight vessels on the water.
Speaker Change: One which was <unk> and the balance were PMC I can tell you that the customer that we sold the alere cargo too.
Speaker Change: Continue to take that cargo to China, and then of the PMC cargoes. We do know one I think know too that are being taken to China still the balance have been diverted.
Speaker Change: Some have been devoted to India, we had one divert to Egypt wanted to Vietnam.
Speaker Change: But I'll tell you we only have cargoes booked through the end of the first quarter.
Speaker Change: <unk> nothing balance of the year for Alere right now in China has always been an opportunistic market for us for both core for both legacy arch and legacy Consol now of course, so even though we moved 3 million tons of Bally into China. In 2024 that was very opportunistic I will tell you that we're paying.
Speaker Change: Coke prices are today.
Speaker Change: They are significantly higher than what they were last year. So India is now.
Speaker Change: Opened up to us again and prices were yielding back for cargoes to India are pretty lucrative to us I will tell you, though that domestic market is where the bright spot is.
Speaker Change: January power prices came in at over $66, we're seeing some high power prices here in February inventories as Paul mentioned.
Speaker Change: In some cases.
Speaker Change: Ben into critical type levels and the team continues to receive calls almost on a daily basis.
Speaker Change: For some additional loadings for Q1 and for the back half of the year for that matter. So although the tariff situations certainly.
Speaker Change: The trade around I will tell you that.
Speaker Change: Certainly enough demand out there today to cover the volumes that we were moving to China last year.
Okay.
Speaker Change: I would say.
Speaker Change: This reminds me of two or three years ago.
Speaker Change: Chinese.
Speaker Change: Argo on the Australian coals.
Speaker Change: Yes, it's disruptive it's massive.
For a short period of time, but things tend to realign themselves fairly quickly and I think thats, what youre seeing here.
Speaker Change: Obviously, we would rather not have the uncertainty.
Speaker Change: That's where we're at.
Speaker Change: I suspect will happen is pretty much what Bob said, it'll it'll rejigger itself.
Speaker Change: The demand is still out there the demand is strong the destinations are going to get mixed and nature of the data I was just going to say something something similar exactly right when GE locked out sort of the Australian coking coal you had a period of six months of Messiness, where trade flows got realigned.
Speaker Change: But within a very short period of time, not only hit markets sort of been restored, but they actually went to sort of all time high so not suggesting that's going to be the case here, but it is a bit potentially in the game of musical chairs and so look we think we're really well equipped to redirect volumes.
Speaker Change: The markets are.
Speaker Change: Means that other country.
Speaker Change: China is taking more volume from other countries and then we're filling the gaps there.
Speaker Change: Good that all works, but.
Speaker Change: We don't view this as as more than a short term disruption in all likelihood.
Speaker Change: I appreciate that team and then just one final one coming back to the highest CD thermal segment.
Speaker Change: Your price per ton in your committed 24 million tonnes to 61 to $63.
Speaker Change: Two price does that assume and is there any sensitivity we should keep in mind, yes.
Speaker Change: Yes, I think two things one we're assuming right around $110 API two price.
Speaker Change: The sensitivity is about $13 per ton across the entire segment, but I also mentioned to you that we have our power net backs modeled at the floor. So in January alone.
Speaker Change: About $8 million uplift there in February it looks like we will receive EMEA again, so when we put the pieces together, we kind of looked at okay. Whats kind of like a worst case best case and Thats why we came up with the range of 61 to 63.
Speaker Change: So importantly that we think.
Speaker Change: Again lots of moving parts and I and Bob just lay that out the 61% to 63 feels comfortable in almost any scenario. We can envision for those committed volumes. So we can be higher than that range lower in that range, but we feel pretty good about that.
Speaker Change: So we're going to land somewhere there regardless of those moving parts.
Speaker Change: To add a lot a lot of numbers and Bob's master of them, but I think as everyone else sort of thinks about it we're trying to give that sort of tight range.
Speaker Change: That's where we're likely to lap.
Speaker Change: Okay, Great and Bob just any way to think about PJM west power prices for us as we look at that business.
Speaker Change: So when you start seeing power prices I'll say get above $40 to $42. That's typically when we start seeing EMEA. So again I mentioned, we are like 66 and change for the month of January.
Speaker Change: February is off to a good start as well so anything over $40, we start to see EMEA.
Speaker Change: Alright, great guys really appreciate the time and helped us to lock in 'twenty five.
Speaker Change: Thanks, Ed.
Speaker Change: And again as a reminder, if you would like to ask a question. Please press Star then one.
Speaker Change: The next question is from Nick Giles from B Riley Securities. Please go ahead.
Nick Giles: Thanks, operator, good morning, everyone.
Speaker Change: Good morning, Nick.
Nick Giles: I wanted to start on the met cost side targeting low ninety's as you resume longwall mining in the second half should we think about this is that.
Nick Giles: Normalized target level going forward or could there be some additional improvement whether from a synergy perspective, we're just returning to steady state.
Nick Giles: Sure.
Nick Giles: I'll start off and then let the others join in.
Speaker Change: Look I think the low ninety's.
Speaker Change: Back half of the year is a number that we felt pretty comfortable with.
Speaker Change: I'll tell you the last couple of weeks as we've gone through this.
Speaker Change: As we've gone through combining the teams I think as I mentioned in my earlier comments.
Speaker Change: I think there are some additional synergies that we haven't picked up on that.
Speaker Change: Things that we're learning from each other particularly on long haul. So I think we will apply to both the legacy company's operation.
Speaker Change: I feel fairly confident about where these things are going in.
Speaker Change: Off to a good start.
Speaker Change: I'll also add Nick from a procurement standpoint, as you can imagine prior to the margin of the two companies. There is limited amount of information that we can.
Speaker Change: Sure so with that out of the way now I think.
That bucket or the synergy is just starting to pick up so as we go through that I think.
Speaker Change: 26 run rate would be interesting to see.
Speaker Change: But back half of 2025 is a good starting point and hopefully we can do better from there.
Speaker Change: One of the things we've tried to highlight here is like that $110 million to $140 million of guidance on the synergies that we provided initially were numbers that are small group on one side and a small group on the other side, we are able to collaborate on and sort of identify but now sort of.
Speaker Change: Alicia the power of the full teams, we're getting really encouraged by what we're seeing on best practices across a whole range. So obviously continuous improvement in delivering on these synergies and then on the synergies on the other side of the ones that are identified as is clearly the focus and we believe we'll be able to do that that low $90.
Speaker Change: The range, obviously puts us in the first quartile in the U S. It's a strong number.
Speaker Change: The guidance is the guidance, but do we believe we provide a number that we're confident in and can we do.
Speaker Change: Guys I appreciate all that color.
Speaker Change: Maybe next one.
Speaker Change: Nice to see a successful reentry at Leer, South and you've maintained your guidance of resuming long haul mining by mid year and I was curious to what extent this might be an added level of conservatism or maybe said differently, what would a resumption, but mid year be more reflective at the midpoint or the low end of guidance.
Speaker Change: Thanks very much.
Speaker Change: Yes.
Speaker Change: I guess I want to start off with really complementing the team from the actions they took as well as the assistance we received from the state and federal officials.
Speaker Change: They did a great job not only protecting the people, but they also did an amazing job it looks like keeping the mine intact.
Speaker Change: When we first gave our guidance on January 14th 15th about what's going to be ticked.
Speaker Change: Typically it's about three months to get in.
Speaker Change: Six months get the longwall, where startup that was based on not only our own experiences over the years on these things.
Speaker Change: We've seen others do in the last couple of years.
Speaker Change: The team did an amazing job getting first part of the stone, which was sealed small area behind the longwall.
Speaker Change: <unk>.
Speaker Change: Combustion event occurred.
Speaker Change: Because of that we got to see how quickly.
Speaker Change: It appears we have minimized any damage to a large extent.
Speaker Change: We were able to get the <unk> started back up Monday, which was an amazing accomplishment.
As we look forward what I wanted to do was cheap our guidance mid year simply because.
Speaker Change: These things take the life of their own and they have.
Speaker Change: These arent straight line pass right now things are lining up well I feel good about where the mine is.
Speaker Change: There is no sense.
Speaker Change: Yes.
Speaker Change: Okay, we're ready to go a lot faster than we will be we need to be methodical and get this done and we need to be prepared when we start back up.
Speaker Change: The things that we're going to do to try and prevent anything like this in the future.
Speaker Change: And Nick It's obviously, it's it's a collaboration with federal and state officials, that's going exceptionally well they have been tremendously supportive and it's been a great.
Speaker Change: Great piece of team worked against where we are but because of that it's we don't want to be any more specific. It is it is a collaboration but we feel really good about where we are today and obviously being.
Speaker Change: Where we are after just a month and we've provided guidance as you know it could take up to three months.
Speaker Change: Does it mean that things are moving along quite nicely.
Speaker Change: Thanks for that and nice to hear one more if I could in the release you noted an expectation for excess cash available for shareholder returns and I was wondering if you could speak to potential magnitude or appetite to take advantage of the weakness here and maybe related how should we think about amendment balanced.
Speaker Change: Given the larger platform.
Speaker Change: Yes.
Speaker Change: On the cash front, we target to keep net cash on hand, given the hour digitally weak commodity price backdrop with approximately $200 million of debt on our balance sheet and <unk>.
Speaker Change: Any additional cash beyond our debt and reserved for short term working capital events such as <unk>.
It will be available for deployment.
Speaker Change: And we recognize that our shareholders have been patient through the merger process. So we'll take this pullback in our equity to put that cash to work.
Speaker Change: We'll fine tune this part as we see improvement and progress on Leer South in commodity prices. The good news is that our thermal assets are generating free cash flow right now, which is one of the key strategic rationale for this merger.
Speaker Change: Solid base of revenue.
Speaker Change: Our total contracted book, so while maintaining the potential to have the upside pricing volatility on the met market. So I think.
Speaker Change: Will be methodical about it but we will put some of that cash to work.
Speaker Change: That's great to hear.
Speaker Change: Got it really appreciate all the color and continued best of luck.
Okay. Thank you. Thank you thanks, so much.
Speaker Change: And ladies and gentlemen. This concludes today's question and answer session I would like to turn the call back to Paul Lang for any closing remarks.
Speaker Change: Okay.
Speaker Change: This is an exciting time for core we believe we've created a truly special company with.
Speaker Change: With tremendous potential and value creation.
I couldn't be more pleased with the way the teams are working together and more encouraged.
Speaker Change: Originally the urgency that everyone is approaching the synergies.
Speaker Change: I look forward to reporting to everybody in the coming months onto our progress and thank you for your interest.
Speaker Change: Hi, everyone.
Speaker Change: Thank you Sir the conference has now concluded. Thank you for attending today's presentation you may now disconnect.
Speaker Change: Okay.
Speaker Change: [music].
Yeah.
Speaker Change: [music].
Speaker Change: Yes.
Speaker Change: Yes.
Speaker Change: [music].