Core Insights - Charlie Munger, vice chairman of Berkshire Hathaway, made a surprising investment in coal in 2023, resulting in over $50 million in paper gains [1][4]. Investment Strategy - Munger had avoided coal for six decades but decided to invest in Consol Energy and Alpha Metallurgical Resources, believing that many coal producers were undervalued, particularly those producing metallurgical coal essential for steelmaking [3][4]. - His investment in Consol Energy saw its stock double, while Alpha Metallurgical Resources also experienced significant gains by the time of Munger's death in late November 2023 [4]. Personal Context - Munger continued to engage in investment discussions with Warren Buffett, maintaining an active role despite not being involved in day-to-day operations at Berkshire Hathaway [5].

Core Insights - Charlie Munger's later years were marked by active investment decisions and new challenges rather than a quiet retirement [2][3] Investment Strategies - Munger made a significant investment in the coal industry, an area he had avoided for 60 years, resulting in over $50 million in paper gains [3][5] - He purchased shares in Consol Energy and Alpha Metallurgical Resources, both of which saw substantial stock price increases, with Consol's price doubling by the time of his passing [6][5] Real Estate Ventures - Munger collaborated with a young neighbor, Avi Mayer, to invest in real estate, leading to the establishment of Afton Properties, which now holds assets valued at approximately $3 billion [7][9] - The trio acquired nearly 10,000 low-rise apartments in Southern California, with Munger actively involved in various operational aspects [7][9] Personal Challenges and Social Engagement - Munger faced health challenges, including vision problems, but maintained a humorous outlook and engaged in social activities to combat loneliness [10] - He emphasized the importance of forming new friendships in his later years, participating in weekly breakfast meetings with business associates [10] Relationship with Warren Buffett - Munger maintained a close friendship and collaboration with Warren Buffett, communicating regularly despite challenges due to hearing issues [11][12] - Their final conversation occurred shortly before Munger's passing, highlighting the enduring bond between the two investment legends [12]

Core Insights - Charlie Munger's later years were marked by active investment decisions and new challenges, rather than a quiet retirement [2][3] - Munger made significant investments in the coal industry, an area he had avoided for 60 years, resulting in over $50 million in paper gains [5][6] - He also collaborated with a young neighbor to build a real estate empire valued at approximately $3 billion [8][9] Investment in Coal Industry - Munger's unexpected investment in coal stocks came as many investors were bearish on the sector due to declining usage [5] - He believed that global energy demand would keep coal necessary, and many producers remained profitable with undervalued stock prices [5] - In May 2023, he purchased shares of Consol Energy and later Alpha Metallurgical Resources, both of which saw significant stock price increases [6] Real Estate Ventures - Munger's real estate investment began with a mentorship of his young neighbor, Avi Mayer, who sought guidance in his career [8] - Together with Mayer and Reuven Gradon, they acquired nearly 10,000 low-rise apartments in Southern California starting around 2017 [8] - Afton Properties, the company they formed, now holds assets valued at about $3 billion, with Munger actively involved in decision-making [9] Health Challenges and Social Engagement - Munger faced significant health challenges, including vision loss, but maintained a humorous outlook and engaged socially to combat loneliness [10][11] - He adapted his lifestyle, including dietary changes, and emphasized the importance of forming new friendships in his later years [11] - Munger continued to communicate regularly with Warren Buffett, maintaining their long-standing partnership despite health issues [12][13]

Core Insights - Charlie Munger, Warren Buffett's long-time partner, made significant investments in the coal industry, an area he had previously avoided for 60 years, resulting in over $50 million in profits before his passing [2][5][6] - Munger also increased his investments in real estate, collaborating with a young neighbor to acquire nearly 10,000 garden-style apartments in Southern California, making them one of the largest low-rise apartment owners in the state [7][9] Investment in Coal Industry - Munger, who had historically overlooked coal stocks, began investing in coal companies in 2023, believing that despite a long-term decline in coal usage, the industry remains essential due to global energy demands [5][6] - He purchased shares in Consol Energy and Alpha Metallurgical Resources, with Consol's stock price doubling by the time of his death [5][6] Real Estate Investments - Munger supported a young neighbor, Avi Mayer, in real estate investments, leading to the establishment of Afton Properties, which has assets valued at approximately $3 billion [8][9] - Munger was actively involved in the business decisions of Afton Properties, emphasizing long-term financing strategies over short-term gains [8][9] Personal Insights and Legacy - Munger maintained a close relationship with Buffett, communicating regularly despite health challenges, and continued to engage in discussions about investments and life principles [5][11] - His final years were marked by a commitment to learning and sharing knowledge, providing valuable lessons for investors on aging gracefully and purposefully [11][12]

Investment in Coal Industry - Charlie Munger, known for avoiding the coal industry for 60 years, made significant investments in coal companies in 2023, resulting in over $50 million in profits [1][4] - Munger purchased shares in Consol Energy and Alpha Metallurgical Resources, with Consol's stock price doubling by the time of his passing [4][6] - Despite the general perception of a declining coal industry, Munger believed that coal remains essential due to increasing global energy demand [3][4] Real Estate Investments - Munger collaborated with a young neighbor, Avi Mayer, to invest in real estate, leading to the acquisition of nearly 10,000 garden-style apartments in Southern California [5][6] - The real estate company, Afton Properties, is now valued at approximately $3 billion, with Munger actively involved in various aspects of the business until his death [7] - Munger encouraged long-term financing strategies over short-term debt, emphasizing the importance of favorable interest rates and asset retention [6][7] Personal and Professional Legacy - Munger's final years were marked by health challenges, yet he maintained an active engagement in discussions about investments and life principles with friends and colleagues [8][10] - His approach to investing and life provided valuable lessons for investors, showcasing the importance of continuous learning and thoughtful decision-making [11]

Financial Data and Key Metrics Changes - The company reported a net income of $32 million, or $0.61 per diluted share, and adjusted EBITDA of $141 million for Q3 2025 [15] - Free cash flow generation was $39 million, with operating cash flow impacted by negative working capital changes of $52 million [15][16] - Total liquidity at the end of Q3 was $995 million, an increase of $47 million compared to Q2 [16] Business Line Data and Key Metrics Changes - High-CV thermal segment coal production was 7.6 million tons in Q3 2025, down from 8 million tons in Q2 2025, with realized coal revenue of $59.78 per ton and cash cost of $40.53 per ton [5] - Metallurgical segment coal production was 2.3 million tons, down from 2.4 million tons in Q2 2025, with realized coke and coal revenue of $112.94 per ton and cash costs of $94.18 per ton [6] - Powder River Basin (PRB) segment coal production increased to 12.9 million tons, with realized coal revenue of $14.09 per ton and cash cost of $13.04 per ton [8] Market Data and Key Metrics Changes - U.S. power demand remained robust, with coal-fired generation increasing by approximately 12% year-to-date [17] - The PJM RTO market saw a 16% increase in coal-fired generation year-to-date [17] - Internationally, cement demand in India is expected to grow approximately 50% by 2030 compared to 2024 levels [19] Company Strategy and Development Direction - The company is focusing on the recovery and repositioning of long-haul equipment at the Lyr-South mine and exploring the presence of rare earth elements and critical minerals in its operations [4][10] - A measured approach to shareholder returns is being maintained, targeting around 75% of free cash flow for share buybacks and dividends [9] - The company aims to fill out its sales book for 2026 and beyond, having layered in nearly 26 million tons of forward contracts [25] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in overcoming operational challenges and highlighted the potential for improved productivity at the West Elk mine due to transitioning to a thicker coal seam [13] - The company anticipates a performance step change in 2026 due to low-cost asset base and advanced logistics network [13] - Management remains optimistic about the long-term fundamentals of the metallurgical segment despite current pressures on global steel prices [19] Other Important Information - The company returned over 60% of Q3 2025 free cash flow to shareholders, deploying $19 million for share repurchases and $5 million for dividends [9] - The board declared a $0.10 per share dividend payable on December 15th to stockholders of record on November 28th [9] Q&A Session Summary Question: Update on West Elk mine and methane levels - Management confirmed that methane issues have been managed and production is expected to resume soon, with confidence in the future performance of the West Elk mine [29][30] Question: Breakdown of high CV coal for 2026 - The company has 17 million tons of committed high CV coal for 2026, with 14 million tons from PAMC and 3 million tons from West Elk, pricing in the upper 50s [31][32] Question: Insurance proceeds and business interruption claims - Management indicated that total costs related to fire and idling are approaching $100 million, with optimism about the overall insurance claim [37] Question: Confidence in maintaining low costs at PAMC - Management expressed confidence in maintaining low costs at PAMC and improving costs at West Elk as operations stabilize [42][44] Question: Rare earth elements and government involvement - The company is evaluating the potential for recovering rare earth elements and critical minerals, leveraging its scale and existing operations [54][56] Question: Domestic thermal market capacity factors - Management noted that domestic coal-fired generation could increase by 20-30%, driven by investments in coal fleet and data center demand [59][60]

Financial Performance - Core reported net income of $31.6 million, or $0.61 per diluted share, and adjusted EBITDA of $141.2 million in Q3 2025, which included $18.4 million of fire extinguishment and idle mine cash costs at Leer South and a $19.4 million initial recovery of insurance proceeds related to the Leer South combustion-related event[6] - The company generated net cash provided by operating activities of $87.9 million and free cash flow of $38.9 million[6] - Core increased cash and cash equivalents by $31.5 million and overall liquidity by $47.5 million[6] Capital Return Program - Core returned $24.6 million to stockholders via share repurchases and quarterly dividends in Q3 2025, increasing the year-to-date capital return total to $218.3 million[6] - Since February 20, 2025, Core has reduced shares outstanding by approximately 5.2%[19] - As of September 30, 2025, Core had $797.4 million of remaining authorization under its existing $1.0 billion share repurchase program[22] Operational Highlights - The company achieved a strong production and sales volume performance at the Pennsylvania Mining Complex[6] - Core transitioned to a more advantageous reserve area at the West Elk mine[6] - The company raised PRB volume guidance again, taking advantage of improving domestic coal generation[6] - Core signed commitments across all segments and all periods totaling nearly 26 million tons[6] - In 2024, the company's sales volume was 85 million tons and revenue was $4.6 billion[7] Market Position and Strategy - The company has a 35% interest in Dominion Terminal Associates ("DTA")[13] - The company has 27 Mtpa export capacity via ownership interests in two marine terminals[13] - The high calorific value thermal segment has a committed book of ~17 million tons and the Powder River Basin segment has a committed book of business of ~40 million tons for delivery in 2026[28]

Merger and Corporate Structure - The Company completed the Merger with Arch on January 14, 2025, with Arch becoming a wholly-owned subsidiary [140]. - Following the Merger, the Company now consists of four reportable segments: High CV Thermal, Metallurgical, Powder River Basin, and Baltimore Marine Terminal [141]. - The Merger is expected to realize meaningful operating synergies through optimized support functions and enhanced marketing opportunities [147]. - The merger expanded the company's presence in the metallurgical coal market, adding two longwall mines and two continuous miner mines in West Virginia [158]. - Consolidated revenues for the nine months ended September 30, 2025, were $1,531 million higher than the same period in 2024, largely due to the Merger [176]. Financial Performance - The Company reported consolidated revenues of $1,002.5 million for the three months ended September 30, 2025 [151]. - Consolidated revenues for the three months ended September 30, 2025, increased by $449 million compared to the same period in 2024, primarily due to the Merger, which contributed $513 million from legacy Arch operations [159]. - Consolidated revenues for the nine months ended September 30, 2025, reached $3,122.31 million, an increase from $1,590.84 million in the same period of 2024, reflecting a growth of approximately 96.3% [152]. - Segment realized coal revenue for the nine months ended September 30, 2025, was $2,602.03 million, compared to $1,319.74 million in 2024, representing a year-over-year increase of about 96.7% [152]. - The realized coal revenue per ton sold for the nine months ended September 30, 2025, was $71.63, compared to $66.39 in 2024, showing an increase of about 8.5% [152]. - Adjusted EBITDA for the three months ended September 30, 2025, was $141.182 million, compared to $179.178 million for the same period in 2024, reflecting a decrease of approximately 21.2% [155]. - Net income for the three months ended September 30, 2025, was $31.598 million, a decrease from $95.632 million in the same period in 2024 [155]. Costs and Expenses - The cash cost of coal sold for the three months ended September 30, 2025, was $672.23 million, compared to $276.65 million in the same period of 2024, reflecting a significant increase of approximately 143.5% [153]. - The cost of sales for the three months ended September 30, 2025, was $827.47 million, compared to $354.42 million in 2024, marking an increase of approximately 133.3% [153]. - General and administrative costs decreased to $34 million for the three months ended September 30, 2025, down from $36 million in the same period of 2024, primarily due to non-recurring transaction costs related to the Merger [162]. - Interest expense increased to $11 million for the three months ended September 30, 2025, compared to $5 million in 2024, primarily due to interest on WVEDA Bonds and additional equipment financing [165]. Production and Sales - Tons sold increased to 36,293 for the nine months ended September 30, 2025, up from 18,684 tons in the same period of 2024, indicating a growth of approximately 94.5% [152]. - The Metallurgical segment produced 2.3 million tons and sold 2.2 million tons, with realized coal revenue per ton sold at $101.60, down from $149.85 in 2024 [172]. - The PRB segment produced and sold 12.9 million tons and 13.0 million tons respectively, with Adjusted EBITDA of $13.6 million for the three months ended September 30, 2025 [174]. - Baltimore Marine Terminal throughput increased to 13.2 million tons, with revenue rising to $64 million, compared to $60 million in the prior year [193]. Liquidity and Capital Structure - Total liquidity as of September 30, 2025, was $995 million, consisting of cash, receivables financing, and revolving credit facility availability [197]. - The Company completed a Merger with Arch, increasing its Revolving Credit Facility from $355 million to $600 million and extending the maturity date to April 30, 2029 [196]. - The Company expects to maintain adequate liquidity through operating cash flow and existing credit facilities to meet short-term and long-term capital needs [195]. - The Company has a capital return framework allowing for share repurchases up to $1 billion, subject to certain covenants [229]. Risks and Market Conditions - The Company faces risks related to coal price volatility, economic conditions, and operational disruptions that could impact financial results [237]. - The Company emphasizes the uncertainty of future financial results and the potential impact of various risks on its operations [238]. - The Company has not experienced material changes in market risk exposures since December 31, 2024 [240].

Financial Performance - Core Natural Resources reported net income of $31.6 million, or $0.61 per diluted share, for Q3 2025, with revenues totaling $1,002.5 million[2] - The company generated net cash provided by operating activities of $87.9 million and free cash flow of $38.9 million during the quarter[5] - Core returned $24.6 million to stockholders through share buybacks and dividends, totaling $218.3 million returned since the capital return program's launch in February 2025[2] - Adjusted EBITDA for the consolidated segment was $141,182,000, with a net income of $31,598,000 for the three months ended September 30, 2025[23] - The company reported a net income tax benefit of $52,998,000, contributing to the overall net income[23] Revenue and Costs - Total revenues for the three months ended September 30, 2025, were $1,002,543,000, with a realized coal revenue of $841,489,000[21] - Realized coal revenue per ton sold was $59.78 for High CV, $101.60 for Marine, and $14.09 for PRB[21] - Cash cost of coal sold totaled $672,232,000, with a cash cost of coal sold per ton of $40.53 for High CV and $94.18 for Marine[22] - Transportation costs accounted for $152,292,000, impacting the overall revenue and cost structure[21] Segment Performance - The high calorific value thermal coal segment achieved realized coal revenue per ton sold of $59.78, with cash costs of $40.53 per ton[3] - In the Powder River Basin segment, sales volumes reached 13.0 million tons, with realized coal revenue per ton sold at $14.09 and cash costs at $13.04 per ton[3] - The metallurgical segment generated a realized coal revenue of $225,782,000, with coking coal revenue at $208,986,000 and thermal byproduct revenue at $16,796,000[21] - Tons sold for the metallurgical segment were 2,222, with a realized coal revenue per ton sold of $101.60[21] Future Outlook - Core has committed to approximately 26 million tons across all segments at prices expected to provide attractive margins[3] - The company expects to incur fire extinguishment and idle costs of $15 million to $25 million at the Leer South mine in Q4 2025[10] - 2025 guidance includes total sales volume of 83.4 million tons, with cash costs for metallurgical coal expected between $93.00 and $97.00 per ton[15] Liquidity and Investments - Core's total liquidity as of September 30, 2025, was $995.4 million, including $444.7 million in cash and cash equivalents[7] - The company is commencing an expanded drilling program to evaluate potential resources of rare earth elements and critical minerals[13] Risks - The company highlighted risks related to market volatility, operational disruptions, and regulatory changes that could affect future performance[25]

Financial Data and Key Metrics Changes - The company reported a net loss of $37 million or $0.70 per diluted share for Q2 2025, with adjusted EBITDA of $144 million [19] - Free cash flow generated during the quarter was $131 million, with capital expenditures amounting to $89 million [19] - The company returned $87 million to investors through share buybacks and dividends, totaling $194 million returned in the first two quarters of 2025 [8][20] Business Line Data and Key Metrics Changes - The high CV thermal segment achieved a significant increase in sales volumes while markedly lowering unit costs [6] - The metallurgical platform, excluding the outage at Leer South, performed well, with the Leer mine achieving a second consecutive quarterly production record [6] - The Powder River Basin segment also delivered strong performance as power generators accelerated shipments ahead of the summer season [6] Market Data and Key Metrics Changes - Domestic thermal markets are strengthening due to rising demand, while seaborne thermal demand is recovering, particularly in Asia [12] - Global coking coal markets remain soft, pressured by sluggish steel production in Europe and China [12] - Coking coal exports from primary supply regions are down 7% through May, indicating potential supply cuts [14] Company Strategy and Development Direction - The company aims to return approximately 75% of free cash flow to shareholders through share repurchases and dividends, with a quarterly dividend of $0.10 per share [8] - The company is focused on operational excellence and synergy capture to enhance performance [7] - The recent legislation is expected to lower cash costs and enhance competitiveness in the Powder River Basin and West Elk operations [17] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the recovery of the Leer South mine and its long-term potential despite current challenges [11] - The company anticipates continued demand growth in domestic power markets, driven by increasing energy requirements from AI and data centers [16] - Management highlighted the importance of maintaining existing coal plants to meet future energy demands [27] Other Important Information - The company has authorized $1 billion in share repurchases, with approximately $817 million remaining as of the end of Q2 [10] - The merger-related annual synergy target has been increased to a range of $150 million to $170 million, reflecting better-than-expected cost savings [29] Q&A Session Summary Question: Why was the buyback not larger given the good outlook? - Management noted that they have returned over 100% of free cash flow to shareholders in the first half of the year, indicating a more aggressive approach than initially guided [34][36] Question: Thoughts on the $100 million insurance recovery for Leer South? - Management indicated that these funds are available for capital return programs, as they see value in the stock [37] Question: Confidence in returning to normalized production at Leer South? - Management expressed high confidence in returning to production levels, with plans to recover longwall equipment in early fall [41][43] Question: Pricing expectations for domestic contracting in the metallurgical segment? - Management indicated constructive negotiations and a belief that significant decreases in pricing are unlikely [47] Question: Update on insurance claims and timing for recovery? - Management expects to resolve claims for Leer South and Baltimore Bridge by the end of the year, with a larger business interruption claim to be submitted later [56] Question: Working capital expectations for the second half? - Management anticipates some more working capital unwinding, particularly related to inventory reduction [58] Question: Insights on the recent Union Pacific and Norfolk Southern merger? - Management sees potential benefits in blending coal and improved access to East Coast terminals, but emphasizes the need for high service levels and reasonable rates [70][72] Question: Impact of trade tensions with India on exports? - Management hopes for resolution of trade tensions, emphasizing the flexibility of their coal products in various markets [76] Question: Pricing for high CV thermal coal in 2026? - Management provided pricing expectations linked to API two and indicated a focus on maximizing blending opportunities [64][88]