코어 내추럴 리소스(CNR) 2026년 3분기 실적 발표 콘퍼런스콜: 9,000만 달러 환원, 4분기 모멘텀

핵심 요약

• 코어 내추럴 리소시스는 2026년 3분기 순이익 900만 달러(희석 주당순이익 0.18달러), 조정 EBITDA 1억 6,500만 달러를 기록했다고 발표했다. 2분기 조정 EBITDA 3억 2,400만 달러에는 리어 사우스 보험 합의금 약 1억 2,500만 달러가 포함되어 있었다.
• 회사는 9,400만 달러의 자본적 지출을 집행한 후 약 8,000만 달러의 잉여현금흐름을 창출했다. 또한 분기 잉여현금흐름의 112%에 해당하는 9,000만 달러를 주주에게 환원했다.
• 2025년 1월 출범 이후 코어는 자본 환원 프로그램을 통해 4억 5,000만 달러를 집행했다. 순발행주식수는 7개 분기 동안 510만 주(약 10%) 감소했다.
• 코어는 지속적인 인플레이션, 소모품 및 유지보수 비용 증가, 디젤 가격 상승, 채굴 변동성 등을 이유로 3개 사업 부문 전체에서 2026년 현금 원가 가이던스를 상향하거나 범위를 좁혔다.
• 경영진은 4분기 영업 실적이 개선될 것으로 예상하고 있다. 선적이 지연됐던 고가 원료탄 선박 2척이 10월 초 선적을 완료했으며, 3분기 지질학적 차질 이후 채굴 속도도 개선됐다.
• 2분기 이후 코어는 2031년까지 약 2,940만 톤 규모의 공급 계약을 체결했다. 경영진은 해상 운송 발전용 탄 및 원료탄 시장의 강세로 가격 책정 기회가 개선되고 있다고 밝혔다.

주요 재무 데이터

2분기 보험 합의금을 제외할 경우 3분기 조정 EBITDA는 2분기 대비 3,300만 달러 낮았다. 또한 이번 분기에는 회사의 401(k) 이익 공유 인센티브 비용 1,700만 달러가 포함됐다.

사업 및 영업 실적

고발열량 발전용 탄

해상 운송 발전용 탄 가격은 3분기를 거쳐 10월까지 강세를 이어갔다. 경영진은 대서양 및 태평양 벤치마크 가격 상승과 인도의 지속적인 수요를 언급했으며, 코어는 광산 인도 기준 톤당 80달러에 근접한 가격으로 2027년 상반기 물량 계약을 체결했다.

매출 믹스에서 웨스트 엘크의 비중이 커지면서 3분기 실현 가격은 전 분기 대비 하락했다. 경영진은 PAMC 물량 증가와 더 높은 가격의 계약에 힘입어 4분기 고발열량 발전용 탄의 평균 판매 가격이 톤당 약 62~63달러 수준으로 상승할 것으로 예상하고 있다.

3분기 동안 지질학적 변동성과 투입 비용 상승이 2개 장벽식 채탄면에 영향을 미쳤다. 경영진은 4분기에 접어들며 채굴 속도가 개선되었으며 예상치를 웃돌 수 있다고 밝혔다. 회사는 물류 여건에 따라 웨스트 엘크의 생산량을 늘릴 기회도 있는 것으로 보고 있다.

원료탄

3분기 동안 해상 운송 원료탄 시장은 강세를 보였다. 9월 말 발생한 북동풍 폭풍으로 선적이 지연됐던 고가 화물 선박 2척은 10월 초에 선적을 완료해 관련 매출이 4분기로 이연됐다.

2027년 공급분과 관련해 코어는 북미 고객사를 대상으로 전년 대비 톤당 약 4~5달러 높은 고정 가격에 약 240만 톤을 확보했다. 이 확정 물량에는 전년 대비 50% 증가한 고휘발분 B(High-Vol B) 물량이 포함된다.

경영진은 또한 중국이 제안된 점결탄 관세 인하 체계를 시행할 경우 발생할 잠재적 수출 기회를 강조했다. 실제 참여 여부는 중국, 인도 및 미국 동부 해안 시장 간의 상대적 넷백(순실현수익)에 따라 결정될 예정이다.

파우더 리버 분지

PRB 판매량은 2분기에서 3분기 사이 300만 톤 이상 증가했다. 경영진은 4분기 판매량도 비슷한 수준을 유지할 것으로 예상하며, 2027년 판매량에 대한 잠정 전망치로 약 4,800만~5,000만 톤을 제시했다.

회사는 현재 2027년 공급분으로 약 4,000만 톤의 PRB 계약을 체결한 상태다. 경영진은 효율적인 운영 덕분에 3분기 중 상승한 디젤 비용을 상쇄하는 데 도움이 되었다고 밝혔다.

경영진 가이던스

고발열량 발전용 탄의 원가 수정은 소모품, 유지보수, 전력, 도급업체 비용의 지속적인 인플레이션을 반영한 것이다. 원료탄 부문은 4분기 중 리어와 리어 사우스에서 예정된 장벽식 채탄면 이동 작업을 앞두고 있다. PRB 현금 원가 가이던스가 상향된 주된 원인은 높은 디젤 가격 때문이다.

경영진은 3분기 지질학적 문제가 완화됨에 따라 4분기 영업 실적이 전 분기 대비 개선될 것으로 예상하고 있다. 10월 조업은 순조로운 출발을 보인 것으로 평가되었으나, 2027년에 접어들면서 비용 통제는 여전히 최우선 과제로 남아 있다.

리스크 및 주요 관전 포인트

• 3분기 동안 PAMC의 2곳을 포함해 3개 장벽식 채탄면이 지질학적 차질의 영향을 받았다. 경영진은 파악된 조건은 채굴 계획에 반영되었으나, 예기치 않은 낙반, 사암층 및 불리한 천반 상태 등은 여전히 예측하기 어렵다고 밝혔다.
• 지속적인 인플레이션이 소모품, 유지보수, 전력, 도급업체, 텅스텐 기반 채굴 부품, 디젤 연료에 영향을 미치고 있다.
• 운임과 체선료가 여전히 높은 수준을 유지하고 있으나, 대부분의 수출 화물은 본선인도(FOB) 조건으로 판매되어 코어의 직접적인 운임 민감도는 제한적이다.
• 낮은 천연가스 가격이 미국 내 석탄 소비를 압박했다. 경영진에 따르면 미국의 연초 대비 석탄 소비량은 전년도 4,000만 톤 증가한 이후 올해 들어 약 2,000만 톤 감소했다.
• 중국의 잠재적 수요는 관세 변동과 상대적인 수출 넷백에 달려 있으며, 경영진은 해당 시장에 추가 물량을 확정 배정하지 않았다.

애널리스트 Q&A 주요 내용

• 주주 환원: 코어는 자사주 매입과 소액 배당을 통해 잉여현금흐름의 최소 75%를 주주에게 환원한다는 정책을 재확인했다. 경영진은 3분기에 그랬듯 현재 시장 상황이 해당 기준을 웃도는 자사주 매입을 뒷받침할 수 있다고 언급했다.
• 운전자본: 선박 2척의 선적이 10월로 이연되고 석탄 가격이 상승한 영향 등으로 매출채권이 약 4,000만 달러 증가했다. 경영진은 선적이 정상화됨에 따라 일부 운전자본이 회수될 수 있다고 밝혔다.
• 2027년 고발열량 석탄 판매: 2027년 예상 고발열량 석탄 물량의 약 70%가 계약 완료됐다. 경영진은 확정 계약 가격이 전년 대비 상승세를 보이고 있으며, 주로 PAMC 물량을 중심으로 25~30%의 물량이 여전히 판매 가능한 상태라고 밝혔다.
• 중국 시장 기회: 경영진은 잠재적 공급 역량을 설명하기 위해 과거 PAMC 약 400만 톤과 리어 약 100만 톤의 선적 실적을 언급했으나, 향후 물량 배정은 관세 시행 여부와 광산별 최적 넷백에 따라 결정될 것이라고 밝혔다.
• 2027년 원가: 경영진은 생산량 증대와 운영 효율화를 통해 단위당 원가를 개선할 기회가 있다고 보면서도, 인플레이션과 예측 불가능한 지질학적 조건으로 인해 개선 폭이 제한될 수 있음을 인정했다.

실적 발표 컨퍼런스콜 전문

전체 실적 발표 컨퍼런스 콜 녹취록

경영진 발표

Operator

Good morning, ladies and gentlemen, and welcome to the Core Natural Resources Incorporated Third Quarter 2026 Earnings Conference Call. [Operator Instructions]. This call is being recorded on Thursday, November 5, 2026.

I would now like to turn the conference over to Mr. Deck Slone. Please go ahead.

Deck Slone

Good morning from Canonsburg, Pennsylvania, everyone, and thanks for joining us today. Before we begin, 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 statements, by their nature, address matters that are, to different degrees, uncertain. These uncertainties, which are described in more detail in the annual and quarterly reports that we file 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.

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 corenaturalresources.com. Also participating on this morning's call will be Jimmy Brock, our Chairman and CEO; Mitesh Thakkar, our President; Nate Tucker, our CFO; and Bob Bracewite, our Chief Commercial Officer. After some formal remarks from Jimmy, Mitesh and Nate, we will be happy to take questions.

With that, I'll now turn the call over to Jimmy. Jimmy?

James Brock

Thank you, Deck, and good morning, everyone. During the third quarter of 2026, Core again demonstrated the power of our strategically diversified, world-class highly cash-generative operating portfolio. Indeed, Core has generated robust levels of free cash flow and returned substantial capital to stockholders in each quarter since the company's formation in January of 2025. In short, the expanded Core platform is delivering exactly as intended. We have delivered value to stockholders in a strong, consistent and reliable manner even while navigating the inherent variability of coal markets and the mining process itself.

Underscoring this fact, we have now deployed a total of $450 million in our capital return program since the company's inception, including a total of $90 million in the quarter just ended. As the centerpiece of this program, we have reduced a net total of 5.1 million shares or nearly 10% of shares outstanding in the 7 quarters since the program's launch. Notably, we have achieved that reduction in share count during a period of relative market weakness and during a period when the operating platform had yet to round into form. There is good news on both fronts.

First, Coal markets appear to be shifting into a higher point in the cycle. Second, and perhaps more importantly, the Core team continues to make steady progress toward its ultimate objective of delivering operational excellence on a steady and sustained basis. Both developments have the potential to drive even stronger returns to stockholders in the future. While Mitesh will discuss the Coal markets in more detail momentarily, let me stress that I am confident we are building significant operational momentum even if the normal geologic variability masked that progress somewhat in Q3. I assure you that the Core team remains sharply focused on managing every one of our controllables, tightly and intensively by operating safely, driving continuous improvement, managing consumables with rigor and taking cost out at every turn. In doing so, we are building an exceptional foundation for long-term growth, success and value creation across a wide range of market environments.

With that, I will now turn the call over to Mitesh to provide an operational and market update.

Mitesh Thakkar

Thank you, Jimmy, and good morning, everyone. As Jimmy mentioned, the market backdrop improved during Q3 but remains slightly uneven across our product portfolio. Of our 3 major business segments, we are seeing the most positive momentum in the High-CV Thermal segment, followed by the metallurgical and the Powder River Basin segments. On the High-CV Thermal side, we continue to see favorable market conditions with stronger Atlantic and Pacific export benchmarks supporting improved pricing opportunities for PAMC and West Elk. Seaborne thermal pricing strengthened meaningfully through the third quarter and into October. This represents a significant improvement from the weaker pricing environment experienced late last year and reinforces our view that high-quality thermal coal continues to play an important role in meeting global energy needs.

Given our access to the seaborne market and the quality of our products, we believe we are well positioned to capitalize on these improving market conditions. In the Metallurgical segment, seaborne markets also strengthened throughout the third quarter, driven partially by continued supply tightness in China. We also saw a potentially meaningful development following the September meeting between President Trump and President Xi where China agreed to import at least 10 million metric tons of U.S. Coal in both 2027 and 2028.

We believe this commitment could create an important additional outlook for U.S. metallurgical coal and further expand export opportunities for U.S. producers. The coal commitment is supported by a proposed tariff reduction framework that explicitly covers coking coal. We also saw positive momentum in the domestic market due to strength in the U.S. steel industry. For 2027, we secured approximately 2.4 million tons of metallurgical coal for delivery to the North American customers at fixed prices averaging above last year's commitments.

Finally, moving to the PRB and High-CV domestic power generation markets, we continue to believe the long-term outlook for U.S. power demand is compelling supported by the expansion of data centers and broader industrial activity. We believe the benefits of this demand growth will be particularly concentrated in the PJM and other Eastern U.S. markets, which is the epicenter of data center build-out.

Looking into 2027, the EIA currently projects commercial electricity demand, which includes data centers, to increase 2.8%, while industrial demand is projected to increase 2.7% in the U.S. That is a notable improvement from a decade ago when the growth rate of electricity demand was forecasted to retreat. We believe these trends reinforce the importance of reliable, dispatchable generation and create a constructive longer-term backdrop for our thermal business.

In summary, Core took advantage of the current market environment to further strengthen our sales position. Since the second quarter, we have broadened and extended our sales book, securing approximately 29.4 million tons of contracted volume through 2031 at attractive prices. This represents approximately 122% of our 3Q '26 sales volume and provides a strong foundation as we move forward.

Now let me make some quick comments on our operations. In a nutshell, our diversified portfolio of operating assets did what it was designed to do. It generated strong free cash flow and allowed us to return a substantial amount of capital to shareholders. The issues we encountered, which primarily affected the quarter-over-quarter performance in the Metallurgical and High-CV Thermal segments, were partially offset by the strong quarterly performance in the PRB segment. Our team in the PRB did an excellent job of managing costs in the face of elevated diesel prices by running efficiently and complementing the marketing team's efforts to increase volumes on a quarter-over-quarter basis.

In the Metallurgical segment, costs were less favorable than in Q2, reflecting typical mining variability. We also had 2 high-priced coal vessels delayed by the late September Nor'easter. Both vessels finished loading in early October, shifting those sales into the fourth quarter. The good news is we will benefit from those higher-priced shipments in the fourth quarter, and our mining rates have now substantially improved as well. As you can see, despite these developments, we continue to track near the midpoint of our full year cash cost guidance range for this segment.

In the High-CV Thermal segment, we also encountered some normal geologic variability and increased input costs at 2 of our longwalls that dampened our quarterly performance. However, we entered into the fourth quarter with strong momentum and are currently mining at rates that may exceed our expectations. In summary, all our operations are now running well, and we are expecting a strong performance in the fourth quarter.

Now let me turn the call over to Nate to discuss the financial update.

Nathan Tucker

Thank you, Mitesh, and good morning, everyone. This morning, we reported solid third quarter financial results. For 3Q '26, we reported net income of $9 million or $0.18 per diluted share and adjusted EBITDA of $165 million compared to net income of $126 million and adjusted EBITDA of $324 million in 2Q '26.

Let me put our third quarter results into better perspective. As a reminder, our second quarter benefited from approximately $125 million associated with the Leer South insurance settlement. When removing that effect, our 3Q '26 adjusted EBITDA was $33 million lower than 2Q '26. However, a part of that was due to a $17 million expense tied to recognizing our 401-K profit-sharing incentive due to our strong year-to-date results. We are now firmly on track to achieve certain incentive compensation free cash flow targets for the full year of 2026, which triggered booking the expense for the amount that was earned as of September 30.

When taking this into account, plus our planned annual summer shutdown in the third quarter, our results were mostly in line with 2Q. From a cash flow perspective, we spent $94 million in capital expenditures and generated approximately $80 million of free cash flow during the third quarter. This compares with $148 million of free cash flow in the second quarter, which benefited from an incremental $50 million in insurance proceeds versus the current period. As a reminder, we are currently recognizing the 45x tax credit in adjusted EBITDA for 2026. However, this should provide an additional source of free cash flow through working capital release in future periods.

From a capital allocation perspective, we had a very active third quarter. During 3Q '26, we returned $90 million or 112% of our free cash flow to our shareholders, which was significantly above the $68 million returned in 2Q '26. As Jimmy highlighted, since February 2025, we have returned 85% of our free cash flow to our shareholders via our capital return program, which includes a net reduction of approximately 10% of our shares outstanding since the program's launch and underscores the meaningful progress we've made in reducing the share count in a short period of time.

At the end of the third quarter, we had total liquidity over $1 billion, including $444 million in unrestricted cash and cash equivalents and short-term investments. This represents approximately a $30 million reduction in cash and short-term investments compared to the second quarter driven in part by our strong capital returns during the third quarter. Even with the robust shareholder returns, we maintained our balance sheet strength and net debt neutral position. Going forward, the strength and diversity of our operational footprint positions us to generate substantial free cash flow through all parts of the commodity cycle, providing significant flexibility in how we deploy capital and create long-term shareholder value.

Now let me provide an update on our expectations for the remainder of 2026. As indicated in today's earnings release, we are adjusting certain sales and cash cost guidance ranges. Starting with the High-CV Thermal segment. We have a total contracted volume of 31.4 million tons remaining near fully contracted for the year. Our average realized coal revenue on the volumes committed is approximately $59 per ton. For SEC cash cost, we are increasing and tightening our guidance to an updated range of $40 to $41 per ton from the previous range of $39 to $40.50 per ton.

The adjustment primarily reflects inflationary pressures that have proven more persistent than previously anticipated, particularly across supply and maintenance costs, power and contractors. In the Metallurgical segment, we added 600,000 tons to our sold position, bringing the segment to 9.3 million coking tons contracted for 2026, with approximately 7.6 million tons priced and an expected average realized coal revenue of approximately $123 per ton. As for SEC cash cost, we are tightening the range from $86 to $91 per ton to an updated range of $88 to $90 per ton.

In the fourth quarter, we have a planned longwall move at Leer and an accelerated longwall move at Leer South due to its strong performance this year. For the PRB segment, our contracted position now stands at approximately 48.5 million tons at an average committed price of $14.28 per ton. From an SEC cash cost perspective, we are increasing guidance to a range of $13.75 to $14 per ton, mainly due to persistently elevated diesel prices. As we close out the year, our focus remains on executing against our operating plans, controlling costs and positioning the company to take advantage of an increasingly constructive commodity environment.

Now let me pass it back to Jimmy for some closing remarks before we open the call for Q&A.

James Brock

Thanks, Nate. First, we are encouraged by the momentum we saw in the third quarter. We believe the underlying trajectory of the business remains strong, and our teams are intensely focused on execution as we close out the year. In fact, October has already set a positive tone for the fourth quarter with operations off to a strong start and the geology-related variability we experienced in the third quarter now behind us. Second, the market environment has become increasingly constructive. Our marketing team continues to take a disciplined approach to adding commitments, balancing the opportunity to lock in attractive margins today while preserving exposure to further market upside.

Third, we remain highly focused on cost containment. We see additional opportunities across the organization to improve productivity, capture efficiencies from our operating platform and further enhance margins. Cost discipline will remain a major priority as we move into the fourth quarter and into 2027. And finally, we remain committed to disciplined capital allocation. Our strong balance sheet and free cash flow generation provide considerable flexibility as we evaluate opportunities to return capital to shareholders while investing in the long-term value of the business. We believe Core is exceptionally well positioned heading into the final months of 2026 and into 2027. We have a differentiated portfolio of high-quality assets, a talented workforce, substantial market reach and a clear strategy focused on safely maximizing the long-term value of the business. Lastly, I want to thank our employees for their continued hard work and commitment and all of our partners and stakeholders for their continued support.

With that, I will hand the call back over to the operator to begin the Q&A portion of our call. Operator, can you please provide the instructions to our callers?

Operator

[Operator Instructions] So first question comes from Lucas Pipes of B. Riley FBR Capital Markets.

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Lucas Pipes

For the record, I work at Balyasny Asset Management, there must be something old in the archives. But Nate, congratulations. Lots of earnings going on this morning, but maybe just to start out, curious how the international dynamics are impacting both your seaborne thermal as well as your met coal netbacks. Obviously, TTS in Europe has been very strong, but freight rates are elevated. So if you could maybe speak to netback pricing for your Pennsylvania product in particular, and then also netbacks on the met coal side, that would be very helpful.

Robert Braithwaite

Lucas, this is Bob. In Europe, thermal coal pricing has strengthened meaningfully as we move throughout the third quarter and also into October. API 2 benchmark certainly moved higher, and that was supported again by the stronger natural gas price and power prices. And with winter approaching and continued uncertainty around energy supply, we believe that market fundamentals remain supportive for our pricing in near term, both for our PAMC coal and for West Elk. But really, India still continues to be the strong story for us. Petcoke imports are down over 50% year-on-year into India. And even most recently, we've been able to contract volumes into India for the first half of 2027, prices near $80 back to the mine.

So as we move through Q4 and into 2027, we certainly anticipate a meaningful increase in our ASP in our High-CV segment. On the coking side, a lot of similar things happening there. You have U.S. East Coast prices are up, PLV prices are up. We've been successful in placing a lot of our volume in Q4 and beyond also against PLV. So we're going to see the benefit there in Q4 and beyond as well. And then the million-dollar question is China, right? We're certainly seeing a lot of interest there over the past month, and we're certainly going to play in that market should that ABR open. When you look at where PLV CFR China prices are today and you take away freight, it's still better than what U.S. East Coast prices are. So if that continues, I think we'll certainly participate there as well.

Mitesh Thakkar

And Lucas, as you already know, I think we have a very strong operating platform with a lot of products. So we are exposed to a lot of these tailwinds. And some of our products like the PAMC product in the High-CV Thermal segment can strand multiple markets, whether it's the industrial market or metallurgical coal market, crossover market in China, as Bob mentioned, as well as the domestic power generation market. And we try to make sure that we are getting the best arbitrage for our products. So very excited about what the market has and hold for us and looking forward to '27.

Lucas Pipes

That's helpful. And then on the cost side, obviously, pressures from steel would expect some other inputs to lithium prices for or tungsten rather for the mining units. Can you speak to kind of what you see in Q3 cost as kind of inflationary raw material pressures versus the mix in terms of different mines contributing more or less to the sales.

James Brock

Lucas, you hit on some of them. I mean, tungsten for sheer bits and minor bits has certainly played a big part of it as well as diesel fuel on the cost side. But then you look at some of the like we said in the earnings script, some of the geologic variabilities that we had, we had 3 of our longwalls affected by some of those. So I think it's just primarily mining. We'll handle that side of it. We know how to do it. But some of these inflationary pressures when you start looking at the cost of diesel, the cost of minor bits, some of those things are the things that we can't control that we have to find efficiencies or some other way to offset those.

Mitesh Thakkar

And Lucas, if you look at our guidance also, we are expecting improvement at the midpoint of the guidance range on a sequential basis in Q4 versus Q3 as some of the geological issues are behind us. So I think, yes, the inflationary pressures are real, but there are some operating indicators that we are also noticing that makes us more optimistic for Q4 versus Q3.

Operator

Our next question comes from George Eadie of UBS.

George Eadie

Bob and Mitesh, just building on Lucas' first question there. What percent of the High-CV book is contracted for '27 and '28? And can you maybe help us with the sort of average price of those tons at the moment as a group considering West Elk blended in as well?

Robert Braithwaite

So George, we announced this morning, we concluded or contracted 29.4 million tons. That runs through 2031, but 2027 specifically was just around $16 million. And on the High-CV side, we added about another $6 million. So sitting here today, we're roughly about 70%, give or take contracted. And the price direction is certainly higher year-on-year. I think you heard me say that we did conclude some volume pretty close to $80 for the first half of 2027. So I would say sitting here today, you're looking at a very similar level that we're anticipating in Q4, which is that $62, $63 type level with what we have committed, and we certainly have a lot of potential upside there as we have, call it, 25% to 30% left of our volume to sell, which majority of that is PAMC tons.

George Eadie

And then just back to this China stuff as well, this 10 million tons potential. Can you talk us through the opportunity for you guys here? Like I know you're probably selling or are selling some into China. But if that tariff went, how much are we talking and also crossover PAMC tons? Like if I was to guess, say, 3 million tons or 4 million tons per annum of PAMC crossover and the same of Leer, is that reasonable as sort of a guess if that tariff goes?

Robert Braithwaite

So if you look back to 2024, CONSOL moved about 4 million tons of PAMC, Arch moved about 1 million tons of Leer. So you know that's -- I'd say the potential is there to move that -- at least that, if not more. But obviously, we're going to wait to see what this looks like once the tariff reduction, assuming it happens, and we'll place the tons where we get the best value. At PAMC, I'd sit there and tell you today, India still makes the most sense for us based on where those netbacks are. But as I just mentioned, if you look at where CFR PLV prices are into China and take away where freight is today, that market certainly looks a lot more attractive than selling on an East Coast -- U.S. East Coast basis. So when the opportunity arises, we'll take a look and see where things are and make the best decision forward for the company to maximize our revenue and realizations back to the mine.

George Eadie

Okay. Could you probably next year even push, call it, another 1 million tons out of West Elk? Could you run PAMC a little bit harder as well to feed into all these markets? Or do you still sort of view it more as a game of selling a bit less domestic and exporting the rest?

James Brock

No I think there's definitely an opportunity for us to push more West Elk coal. We have it running on a schedule now. Again, logistics is a big part of what we do out there, but we certainly will have an opportunity to move more of the West Elk coal.

Operator

Next question comes from Nick Giles of B. Riley Securities.

Nick Giles

Just wanted to touch on shareholder returns. They were obviously strong here in 3Q. And so first of all, what would working capital look like in the fourth quarter? And just how should we think about the likelihood for this level of buybacks to repeat?

Nathan Tucker

Yes. So I'll start, Jimmy. Hey this is Nate, Nick. So on the working capital, yes, we did build some trade AR in the quarter, and Mitesh kind of talked about in his prepared remarks that we had some vessels kind of slip into the fourth quarter. We also -- the other thing I'd point out is trade AR is also moving up, too, just for the fact that met coal pricing in particular, and thermal as well, but pricing is moving up. So our trade AR is moving up because of that. So I think once we get on a kind of a normal churn there, there could be some release as well. I think we built about $40 million, as I said, in the quarter. So there's a potential for that to kind of move around. Now we're always going to have shipments that can move around. Sometimes these is days at a time. So you're talking just a day at the end of the quarter it can move. But at least those shipments that happened at the end of the September into October, those will certainly release as well.

James Brock

And Nick, this is Jimmy. As we generate more free cash flow, we'll certainly have some opportunities. As we said, we've been very disciplined about that. We said we're going to return at least 75% of our free cash flow back to shareholders in the form of repurchasing shares as well as a small dividend. And we've done that. If you look at Q3 here, we're around 112% of free cash flow to that. And the market is certainly providing us some opportunities to go on the upside of buying back shares currently where we are today.

Nick Giles

Understood. And then maybe just on freight and demerge. It seems like that has been impacting producers across the board. Can you just speak to kind of the sensitivity of that if we were to see freight rates kind of moderate, how dollar for dollar for that is it in your sales realization?

Robert Braithwaite

So we do a lot of our business on FOB, Nick. So I mean, we do have some exposure. We do sell some cargoes on a CFR basis. But again, it really does move with the index, although recently, I'd say you've seen freight come off pretty significantly. I mean we're seeing freight rates in the 50s to India today. I'd say they're closer to lower 40s. So again, it's -- I'd say it's just more noise than anything. And as far as demerge is concerned, it's kind of a normal course of business. That's why we try to do everything we can to make sure that the coal is placed at the terminal in preparation for the vessel loading. So therefore, we can minimize that. But demerge rates are up. That's certainly the case. And that all started obviously with the tightness because of the straight being closed. But overall, we just view that as kind of a normal course of business.

Nick Giles

And sorry, maybe just to ask more clearly, if we were looking at freight rates and we did see them come down, say, $10 a ton. Is there a good rule of thumb that you would apply to kind of total net realization similar to the way that you provide sensitivity for movements in API 2?

Robert Braithwaite

Yes. I'd say it's not that significant because, again, majority of our cargoes that we do sell is on an FOB basis.

Operator

Next question comes from Nathan Martin of StoneX.

Nathan Martin

You mentioned in your release and your comments as well, you committed now, what, 2.4 million metallurgical tons in the domestic market at a higher year-over-year price. Can you give some more details there around that pricing and quality of those tons and then you expect an opportunity to sell any additional domestic tons for '27?

Robert Braithwaite

So Nate, I think we mentioned this morning, again, 2.4 million tons for '27. Those tons are priced roughly about $4 or $5 higher year-on-year. But I would say what's very encouraging for us is that volume includes a 50% increase in our High-Vol B tons compared to last year. So the 2.4 million gives us a solid base load of committed volume, what we would call attractive pricing as we enter 2027, while certainly leaving meaningful tonnage available to capitalize on opportunities in the export market as well.

Nathan Martin

Okay. I appreciate that, Bob. And then I also wanted to ask about High-CV Thermal realizations during the quarter. They were down $1.50 sequentially, obviously, in a market that was getting stronger. So maybe can you kind of walk us through the drivers there? And is it fair to assume that realizations improve in the fourth quarter, especially given the current pricing backdrop?

Robert Braithwaite

So the big driver there was really the mix of tons. So West Elk was probably 7% to 8% higher than what traditionally was in terms of the total mix. We believe that will kind of solve itself in Q4 as PAMC continues to ratchet up their -- or to ramp up their production. So if you look at where we -- our guidance that we gave this morning on pricing at $59 for the year, that basically implies a $62 to $63 price in Q4. That, again, is a reflection of more PAMC volume, but also being able to capitalize on some of the higher priced volumes that I mentioned earlier. And if you recall, we have about 31.4 million tons of committed volume in the High-CV segment, which isn't even to the bottom range of our guidance. So it gives us some ability to sell some additional tons. So our view is that Q4 should be meaningfully higher in terms of ASP in the High-CV Thermal segment quarter-over-quarter.

Nathan Martin

Got it. And then maybe just one more. I understand it's mining, but I think you've now had a couple of geological challenges in that ICD thermal segment this year. And Jimmy, I know you said you're continually focused on cost containment. So do you think this gives you guys an opportunity to improve cost per ton in '27 for that segment?

James Brock

It certainly does. I mean, if you look where we are, Nate, you've heard me say this many times before, what we try to do is try to stay below the inflationary pressures by picking up efficiencies or running more tons to do that. There are times when you have some of these variabilities. And it is just mining. I mean you'll have these geological conditions where you have sandstone, you have to try to mine under or you'll have some other lower seams or things like that, that cause that. But looking forward, I can tell you, we're off to a great start in Q4. I mean October has been a normal good month for us as we continue to go in Q4 and carry that momentum into 2027, I think we'll have an opportunity to improve on those cost structures in all our segments across it. Q3 has typically been a quarter for us. It's not our best quarter. But I think we're going to come out.

And if you look at our guidance, as Mitesh mentioned a minute ago, we're thinking if you look at the met side, look at the midpoint of the guidance, we should be somewhere around 86 by the midpoint. And then if you look at thermal, we'll try to do exactly the same continuing on cost. It's one of the things that we focus on every single day to look for ways to improve it and overcome some of the inflationary pressures we have.

Operator

Question comes from Chris LaFemina of Jefferies.

Christopher LaFemina

I just want to understand the geological issues that you encountered in Pennsylvania in a little more detail. And what I'm wondering, first of all, is did you know that this was going to be a potential risk in the quarter? Or do you encounter these things sometimes without having knowledge that they're coming? And the reason why I asked that question is because how do you incorporate the risk of geological issues such as these in your forward guidance? I mean I understand that you kind of came out of the tough geology at the end of the quarter and things seem to be going better today. But what gives you confidence that you're not going to enter another difficult pocket in early 2027? And what sort of visibility do you have that these sorts of things are approaching?

James Brock

Very great question, Chris. So we know like when we have a lower seam for an example, we know that because of our Core holes and things we drill. So we'll drop our tons per foot to account for that. Sometimes what we don't know when we talk about geologic variabilities is like if you have an unplanned roof fall that would shut a belt down whereas you carry that out or if you have some sort of sandstone that you typically can't mine under. Unfortunately, for us, 3 of our longwalls encountered that 2 of them were in PAMC in this quarter. We've encountered them before. We've got out of them quickly, but this time took a little longer. And what we try to do is run the remaining longwalls harder to whereas we don't see as much of this in the effect of the production.

However, I will tell you, we had 2 of our PAMC longwalls that encountered these conditions at the same time, which makes it much more difficult. And there's an increase in cost just to provide the tons to get those. So what we know we always plan for, and it is mining. I've been doing this for part of 5 decades. They are things come up that you just can't map. For an example, if we have bad roof conditions somewhere and we know it in time, yes, we can do things to supplement support and get around that. But again, if it's an unplanned fall or something that happens, we're very fortunate no one is hurt, and we just go take care of that, get that longwall back up and operating as quickly as we can and try to overcome all the costs we had associated with it.

Christopher LaFemina

So when we think about what your guidance will be for 2027 and years beyond, should we assume that the risk related to geological challenges is reflected in the guidance already? Or is that the guidance that is basically the possible but not necessarily the probable if you know what you mean? Is there downside risk in the guidance because of potentially be surprised with these sorts of geological issues? How do you think about it in the guidance?

James Brock

No, I don't think you'll see it. What you will see is if we have like all of our projections into 2027, as I said before, the areas where we have the sandstone, we have that all mapped out. Our geologists know that. We'll slow the rates down to account for that. What I can't guarantee you or I don't think anyone can is that we will have something unplanned that happens, some sort of geology that shows up that you just don't know about until you get there with the longwall here, you find it or you have adverse roof conditions that slow down mining rates that you have to go through. But I think we've done a pretty good job in the past and all the years where we've had these things that we pretty much account for what we can. But again, it is mining, and you can get surprises along the way. But in our forecast, we try to take that into account for everything we know and as much as we possibly can.

Mitesh Thakkar

And Chris, just to add to it, as Jimmy said before, too, right, like oftentimes, what ends up happening, we have had these issues in the past. But when you have issue at 1 out of 5 longwalls, the other 4 compensate for it and you don't notice it, right? We meet our numbers, we meet our guidance and move on, right? This one was a little bit unusual in the sense where we had it at multiple locations, right? So it became more prominent, and that's why we are talking about it. But it's general mining variability, right? Like this is mining, not manufacturing. So things happen, but most of the time, given our diversified platform, it doesn't come to Core.

Robert Braithwaite

And Chris, I'd add that we started the year with guidance at $88 to $94. And right now, we're guiding to $89 at the midpoint. So you can see that we expect that sort of natural variability and we build that in. Again, you can see it this year. We've actually reduced from the beginning of the year down to a midpoint of $89.

Operator

Question comes from Matthew Key of Texas Capital.

Matthew Key

A few analysts have already asked about seaborne thermal business. So maybe I'll shift gears to the domestic side. Some softer years for coal burn and natural gas prices are low. How has the demand environment kind of held up in that context? And at a high level, how should we be thinking about total shipments in the PRB as we look out to '27?

Robert Braithwaite

I'd say it's based on geography. In the PJM, I'll say, where we sell most of our PAMC sequel, it's actually been fairly consistent. In fact, I'd say, in recent weeks, we've actually seen a pickup in burn. Power prices are still pretty healthy, albeit very low natural gas prices, sub-3. But I think, again, it just goes to show the electricity demand growth that there is in the PJM.

In terms of most of our customers out West for our PRV product, I mean, you probably noticed we had a significant pickup in volume over 3 million tons quarter-on-quarter, Q2 to Q3. We expect that to remain very consistent as we move throughout Q4 as well. And we're basically looking at a very similar, I'd say, a year-on-year type of sales view for 2027 as we did for 2026. We're sitting here at a very healthy contracted position for 2027, give or take 40 million tons in the PRV today with a lot of opportunities ahead of us. So which gives us some pretty good confidence here that, again, another call it, 48 million to 50 million tons of sales for 2027 is in our future.

Nathan Tucker

Matt, I would just add, look, this is the third year in a row we've had power generation demand nearly 3%. We expect that to continue going forward. Look, so far this year because of low natural gas prices, coal burn is down around 20 million tons, but it was up 40 million tons last year. So still on balance relative to '24, we're on a good trajectory. So we're still feeling positively about that. We continue to see utilities announce investments in their existing coal plants and try to bring out additional electrons from their existing systems. So the story still feels very much intact, even though we've had a dip this year in terms of coal consumption in the U.S.

Matthew Key

Got it. That's super helpful. And I guess I'll ask a pretty broad macro question. But we had the midterms on Tuesday. Could there be any potential impact on your business, either directly or indirectly kind of from the results of that? Obviously, the current administration has been highly supportive of the industry, and they're still in office. But just due to the big shift in the Senate and the House, any kind of moving parts that you think could kind of play out as we progress through the coming months?

James Brock

I think you've heard me say this before. What we try to do is we try to build our company to as we can withstand any administration. We're smart enough to know that they're going to change from election cycle to election cycle. And then also from a political standpoint, we want to be able to withstand all the regulations that come out as well. So I think no doubt about it. We had an administration that was very favorable, and they were openly talking about the benefits of coal. But I still remain really focused on the fact that we're still going to need the power. If it does increase 3% as everyone is projecting it will or 2.5%, as we say, then they're going to have to have all the sources available to meet the power needs. So I still feel really good. Obviously, we'll see what happens here. We won't know until January. And obviously, we have President Trump in for another 2 years. But we'll stay tuned and we'll respond accordingly.

Operator

There are no further questions at this time. Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.