Financial Data and Key Metrics Changes - The company recorded a net income of approximately $6 million or $0.11 per diluted share for Q2 2025, a significant decrease from $71 million or $1.35 per diluted share in the same quarter of 2024, primarily due to a 30% drop in average net selling prices [23][24] - Adjusted EBITDA for Q2 2025 was $54 million, down from $116 million in the same quarter last year, with an adjusted EBITDA margin of 18% compared to 29% in the prior year [23][24] - Total revenues decreased to $298 million in Q2 2025 from $397 million in Q2 2024, driven by lower average gross selling prices [24][30] Business Line Data and Key Metrics Changes - Sales volume increased by 6% to 2.2 million short tons in Q2 2025, compared to 2.1 million short tons in the same quarter last year [15] - The company achieved first commercial sales of 239,000 tons of steelmaking coal from the Blue Creek mine, which was ahead of schedule [15][19] - Production volume also rose by 6% to 2.3 million short tons in Q2 2025, compared to 2.2 million short tons in the same quarter of the previous year [16] Market Data and Key Metrics Changes - Average premium low-vol steelmaking coal index prices declined by 24% year-over-year in Q2 2025, with the primary index averaging $167 per short ton [10] - The relative price of the LVHCC index compared to the PLD index averaged 78%, significantly lower than the historical average of 88% [11] - Global pig iron production decreased by 1.3% in the first half of 2025, with China experiencing a 0.8% decline [13] Company Strategy and Development Direction - The company is accelerating the Blue Creek longwall startup to early Q1 2026, reflecting a strong focus on cost control and operational efficiency [7][19] - The company plans to maintain a flexible cost structure and high production volumes to navigate challenging market conditions [22][31] - The recent "One Big Beautifully Bill Act" is expected to provide tax benefits, including a permanent deduction on foreign-derived income and classification of metallurgical coal as a critical mineral [32][33] Management's Comments on Operating Environment and Future Outlook - Management noted ongoing market weakness due to excess Chinese steel exports and lackluster global steel demand, with expectations of continued challenges in customer markets [8][34] - The company remains optimistic about potential trade agreements but acknowledges the uncertainty surrounding global trade and tariffs [34] - Management emphasized confidence in the company's asset base and cost structure to navigate through the current environment [34] Other Important Information - Cash cost of sales in Q2 2025 was $225 million, representing 78% of mining revenues, with a cash cost of sales per short ton of approximately $101 [25][26] - Free cash flow was negative $57 million for Q2 2025, influenced by capital expenditures for Blue Creek, but the underlying business generated approximately $40 million of free cash flow excluding these investments [29][30] Q&A Session Summary Question: Cost guidance and expectations for the second half of the year - Management acknowledged strong performance but indicated planning for potential cost increases due to maintenance and repairs [36][39] Question: Impact of Brazilian tariffs and market diversion - Management noted that Brazilian steelmakers are still willing to take coal, but the market dynamics have shifted with more high-vol A tons moving into Asia [40][43] Question: Blue Creek project costs and production expectations - Management indicated that costs for Blue Creek are expected to be higher than previous guidance due to current market conditions, with production potentially reaching around 4 million tons next year [48][60] Question: Pricing and gross realization targets - Management confirmed risks to the gross realization target due to widening price spreads and increased sales of high-vol A coal [55] Question: Impact of the Union Pacific and Norfolk Southern merger - Management expressed confidence that the merger would not significantly impact their shipping operations due to the dedicated nature of their rail routes [74]

Financial Data and Key Metrics Changes - The company reported a net income of $1.1 million or $0.02 per diluted share for Q4 2024, a significant decrease from $129 million or $2.47 per diluted share in Q4 2023 [24] - Adjusted EBITDA for Q4 2024 was $53 million, down from $164 million in the same quarter last year, with an adjusted EBITDA margin of 18% compared to 45% in Q4 2023 [25][27] - Total revenues decreased to $297 million in Q4 2024 from $364 million in Q4 2023, primarily due to a 34% drop in average net selling prices [27] Business Line Data and Key Metrics Changes - Sales volume in Q4 2024 was 1.9 million short tons, up from 1.5 million short tons in Q4 2023, driven by better production volumes [12][14] - Production volume increased to 2.1 million short tons in Q4 2024 from 2 million short tons in the same quarter of 2023, with Mine 4 achieving record production of 2.8 million short tons for the year [14][24] - The company achieved a gross price realization of 86% for Q4 2024 and 89% for the full year, influenced by product mix and geography [10] Market Data and Key Metrics Changes - The PLV FOB Australia index ended Q4 2024 at $178 per short ton, down $7 from Q3, while the PLBCFR China index ended at $180 per short ton [10] - Global pig iron production decreased by 1.8% in 2024, with China's production falling by 2.3% [11] - Sales into Asia increased from 25% of the geographic mix in Q4 2023 to 38% in Q4 2024, while sales into Europe decreased from 56% to 36% [13] Company Strategy and Development Direction - The company is focused on the Blue Creek growth project, with total project investment reaching $717 million, funded entirely from internally generated cash flows [18][20] - The company anticipates incremental annualized production of at least 4.8 million short tons after the startup of the longwall, enhancing its cost curve positioning [21] - The company plans to maintain tight capital spending discipline while preparing for the longwall production expected to start by Q2 2026 [20][21] Management's Comments on Operating Environment and Future Outlook - Management noted that weak market conditions are expected to persist, impacting steelmaking coal prices due to excess supply and low demand [9][31] - The company remains confident in its operational performance outlook for 2025, expecting higher sales and production volumes despite market challenges [31] - Management emphasized the importance of maintaining liquidity to complete the Blue Creek project and prepare for future market improvements [20][35] Other Important Information - The company generated cash from operations of over $367 million in 2024, returning over $43 million to stockholders via dividends [7] - Free cash flow for Q4 2024 was negative $88 million, primarily due to capital expenditures related to Blue Creek [30] - The company ended 2024 with total available liquidity of $655 million [30] Q&A Session Summary Question: Contribution from Blue Creek versus Mine 4 and Mine 7 - The company projects about 1 million tons from Blue Creek and over 2 million tons from Mine 4 for the year [40] Question: Cash cost guidance reductions - The lower cash cost guidance is primarily attributed to lower met coal prices affecting transportation and royalties [41][42] Question: Sales by geography and potential shifts - Tons that would have gone to China are expected to flow into other Asian markets without significant transportation cost differentials [43] Question: Shipment timing for Blue Creek - The majority of Blue Creek's shipments are expected in the second half of the year [48] Question: Price realizations for high vol A coal - The company maintains a price realization expectation of 85% to 90% for now, with potential changes as volumes increase [49] Question: Inventory targets for year-end 2025 - The company aims to normalize inventory levels to a couple of hundred thousand tons per mine by year-end 2025 [55] Question: New labor contract negotiations - Ongoing negotiations with the United Mine Workers are still in progress, with uncertain outcomes [64] Question: Future cash balance considerations - The company plans to maintain a higher minimum cash balance as it scales up operations with Blue Creek [66]