Q4 2023 CONSOL Energy Inc Earnings Call
Participants
Nathan Tucker; Director - Finance and Investor Relations; CONSOL Energy Inc
Jimmy Brock; CEO; CONSOL Energy Inc.
Mitesh Thakkar; President & CFO; CONSOL Energy Inc.
Bob Braithwaite; SVP, Marketing & Sales; CONSOL Energy Inc.
Lucas Pipes; Analyst; B. Riley Financial, Inc.
Nathan Martin; Analyst; The Benchmark Company, LLC.
Presentation
Operator
Good day, and welcome to the CONSOL fourth quarter 2023 earnings conference call. (Operator Instructions) Please note this event is being recorded. I would now like to turn the conference over to Nathan Tucker, Director of Finance and Investor Relations. Please go ahead.
Nathan Tucker
Good morning, everyone, and thank you for joining us. Welcome to CONSOL Energy's Fourth Quarter and Full Fiscal Year 2023 earnings conference call. Any forward-looking statements or comments we make about future events are subject to risk, certain of which we have outlined in our press release and in our SEC filings and are considered forward-looking statements within the meaning of Section 21 E. of the Securities Exchange Act of 1934. We did not undertake any obligations of updating any forward-looking statements for future events or otherwise.
We will also be discussing certain non-GAAP financial measures, which are defined and reconciled to comparable GAAP financial measures in our 2023 fourth quarter and full year press release furnished to the SEC on Form 8-K, which is also posted on our website.
Additionally, we expect to file our 10 K for the year ended December 31st, 2023 with the SEC this Friday, February ninth. You can find additional information regarding the Company on our website, www.catalent.com, which also includes a supplemental slide deck that was posted this morning. On the call with me today are Jimmy Brock, our Chief Executive Officer, Ted Cecala, our President and Chief Financial Officer, and Bob Braithwaite, our Senior Vice President of Marketing and Sales.
In his prepared remarks, Jimmy will provide a recap of our full year 2023 achievements and a detailed discussion of our operations. Natasha will then provide an update on our marketing and financial progress and introduce our 2024 guidance and his closing comments. Jimmy will recap our capital allocation progress and lay out our key priorities for 2024. There will be a Q&A session following our prepared remarks and which Bob will also participate.
With that, let me turn it over to Jenny.
Jimmy Brock
Thank you, Nate, and good morning, everyone. Consol Energy followed multiple record-setting achievements in 2022 by surpassing many of those same metrics and 2023.
With respect to our operations, CEIX achieved record throughput tonnage and revenue as the consol marine terminal and the Pennsylvania Mining Complex achieved record average realized coal revenue per ton sold on an annual basis.
From a full year financial perspective, CEIX achieved record net income, EPS, adjusted EBITDA, and most importantly, record free cash flow generation. We took advantage of our strong free cash flow to advance some of our key strategic initiatives in 2023, including achieving our debt reduction goals, returning meaningful capital to our shareholders and enhancing our liquidity through cash generation and upsized revolving credit facilities.
Now let's discuss our operational performance in detail. On the safety front, our Bailey preparation plant and consol marine terminal each had zero employee recordable incidents during the full year of 2023. Our coal operations finished the year with a total recordable incident rate approximately 33% below the national average for underground coal mines.
Coal production at the Pennsylvania Mining Complex came in at 6.6 million tons in Q4 '23, an improvement compared to 6.1 million tons in the prior year period. Production improved in Q4 '23 compared to Q4 '22 due to the availability of the fifth longwall in 2023 versus only four longwalls running in 2022 assets.
As such, the PAMC ended the year with an annual production of 26.1 million tons, marking its third consecutive year of production growth and its first time surpassing 26 million tons since 2019.
On the cost front, our PAMC average cash cost of coal sold per ton for Q4 '23 was $36.28 compared to $34.89 in Q4 '22, mostly due to continued inflationary pressures on supplies, maintenance and contractor labor at our operations.
However, our Q4 '23 cash cost of coal sold was more than $2 per ton lower, compared to Q3 '23, mainly due to the incremental production tons in the fourth quarter. On a sequential basis, Q4 23 also benefited from having zero longwall moves. Looking ahead, simply due to the timing of our mining, we expect three planned longwall moves to occur at the PMC in the first quarter of 2024. However, after Q1 24, we expect to have only one longwall move for the remainder of the year, which is planned for the third quarter.
Moving on to Edmond. During the fourth quarter of 2023, the complex sales performance improved to 159,000 tons of coal, including third party tons compared to 123,000 tons in Q2 of '23. This brought our full year 2023 results for Itmann to 316,000 tons of production and 515,000 tons of equipment and third-party coal sales in aggregate.
During the fourth quarter, all three operating sections continued to mine additional height for mains development, which requires cutting additional rock and slows mining rate. Furthermore, we continued to be impacted by equipment delivery issues and higher employee turnover at Edmonton in Q4 23. Once we have completed our long-term mains development this year, we will operate the mining sections and targeted blocks of coal reserves. This is expected to lead to more efficient mining heights and improved production rates. As such, we expect to increase our sales tonnage in 2024, which is reflected in our guidance for the Asian mining complex.
Moving to the console marine terminal. We achieved a throughput volume of 4.7 million tons during Q4 '23, compared to 3.6 million tons in the prior year quarter. Terminal revenues for Q4 came in at $25.4 million, and CMT operating cash costs was $6.8 million.
For 2023, the terminal will achieve multiple operational and financial records. CMT finished the year with 19 million throughput tons, surpassing the previous annual throughput record of 14.3 million tons set in 2017. Terminal revenue for 2023 surpassed $100 million for the first time, finishing at $106.2 million. CONSOL Marine terminal finished 2023 with adjusted EBITDA of $80.3 million, by far the highest level in its history. Also, keep in mind that this was all achieved without any employee recordable safety incidents during the year.
With that, let me turn the call over to Mitesh to provide the marketing and financial updates.
Mitesh Thakkar
Thank you, Jimmy, and good morning, everyone. Let me start with an update on the marketing front and our contracting progress. Demand for our products remained strong during the fourth quarter of 2023, and we finished the year with 26.6 million tons sold in aggregate between the PMC and Itmann during 2023 with a total of 16.2 million tons moving into the export market, which was the highest annual level in our history.
During 4Q '23, we sold 6.8 million tons of PAMC coal at an average realized coal revenue per ton sold of $74.54, compared to 6.2 million tons at $75.92 in the year-ago period. Nearly 60% of our PAMC volumes were sold into the export markets during the quarter. This brought total PAMC sales to 26 million tons for the year.
We achieved another important milestone in 2023 as sales into the export industrial market, our best sales into the domestic power generation market, which has been an important strategic priority for us. Overall sales into the export market for 2023 accounted for 70% of our total recurring revenues and other income. Conversely, domestic power generation sales accounted for only 26%.
Since our last earnings call, our sales team increased our forward sold position at the PMC by 4.7 million tons. The majority of these tons were sold into the domestic market under a fixed price arrangement through 2028. As such, we now have 22 million tons contracted for 2024 and 13 million tons contracted for 2025.
One of the main benefits of our PMC call is its ability to sell into many different end use markets, which gives us significant flexibility to pivot tons between markets depending on demand strength. This portfolio optimization capability has been evident over the last several years in 2022, when European demand was strong and API two prices were at historically high levels we sold more than 3 million tons into Europe, where we had significantly added to trade in the prior year.
In 2023, we initially forecasted selling approximately 11 million tons into the export market. However, due to milder weather domestically and our ability to pivot, we moved an incremental 5 million tons into the stronger international markets to finish the year with approximately 16 million tons of PMC coal sold into the export market.
More recently, we are expanding our reach in the industrial and crossover metallurgical markets. Last year, we sold approximately 10 million PMC tons into the industrial market, which was double the number of tons we shipped into this market in 2022. We believe there are incremental opportunities to expand into this market, specifically to Middle Eastern African and South Asian countries that are in structural growth mode.
On the crossover sales front, we shipped 2.6 million PAMC tons during the year, which is the highest we have ever achieved. We also shipped nearly a 0.5 million tons of coal from the mining complex into the export met market, bringing the total export met sales for the company to more than 3 million tons in 2022.
With the commissioning of our fifth longwall and then a fourth mine, which has a lower sulfur content that is desirable in the crossover met market and the ramp-up of our mining complex. We are expecting further growth in our met coal business over time.
Similar to the industrial market, we continue to work on penetrating new crossover metallurgical markets, particularly in South America and Asia.
Moving forward to 2024, we expect to follow a similar playbook by building upon our structural export market shift while maintaining a stable book of domestic fixed price business that are several tailwinds in the US coal market that gives us confidence in our ability to continue to contract future domestic business. The increasing demand for data centers due to deployment of AI technologies, growth of commercial factories and EVs is causing electricity usage to soar across the United States.
As such, utilities and grid operators are increasing their forecast for US electricity growth for the next five years, well above historical demand trends. As an example, within our operating footprint, PGM anticipates electricity demand to rise approximately 2.5% annually through the decade and increased from less than 1% growth expectations a year ago, mainly due to the electrification of the transportation segment and industrial applications.
In Virginia, one utility had to briefly pause new data center connections in Loudon County because of insufficient electricity supply in Kansas City Energy is seeing the most robust electricity demand growth in decades. This leads us to believe that we could see some slowdown in coal power plant retirements or higher utilization of surviving coal plants. Nonetheless, it provides us with confidence that we will continue to have strong demand from our core domestic customer base for many years to come.
For the mining complex, we continue to see strong demand internationally and in the domestic market for our product. In fact, we recently completed a two year deal for our Itmann product and the export market. For 2024, we now have 571,000 tons of equipment all under contract with a balanced mix of domestic and international business.
Now let me provide a quick update on our financial results before providing our 2024 guidance and outlook. This morning, we reported a solid fourth quarter 2022 financial performance, which capped off a very strong year for the company. We finished 4Q '23 with net income of $157 million. Additionally, we finished the quarter with adjusted EBITDA of $240 million and generated $165 million of free cash flow. We ended the year with a net cash position of $88 million and total liquidity of $525 million.
For the full year 2023, we reported net income of $656 million, adjusted EBITDA of $1.05 billion, and free cash flow of $687 million, all of which are annual records for our company. We generated $858 million of cash flow from operations, of which $168 million was used towards capital expenditures and $687 million was available as free cash flow. Of the $687 million, 28% was deployed towards debt repayment and 68% towards shareholder returns. These together translates to approximately $22 a share based on our year-end 2023 share count.
Now let me provide our outlook for 2024. Starting with the PAMC, we are expecting our 2024 sales volume to be consistent at the midpoint compared to our 2023 level. We view our five longwall complex as having a base production level of 26 million tons with the optionality to ramp up or pull back depending on market dynamics and other factors. We are currently 85% contracted at the midpoint of our guidance range with the expectation that the majority of unsold tons will move into export markets, most likely the crossover met market, which is more spot in nature.
On the pricing front, we expect our average realized coal revenue per ton sold to be in the 60 to 50 to 66, 50 range, assuming a $105 a ton average API2 two price at the midpoint. Relative to 2023, this range reflects lower commodity pricing, specifically for API2 prices as well as the roll-off of some higher fixed price contracts that were put in place under previous market conditions. For reference, API2 prices averaged $128 a ton in 2023.
We expect our 2020 for PMC average cash cost of coal sold to be 36 50 to 30 at 50 per ton, reflecting modest inflationary increases compared to 2023 levels. The bottom end of our cost guidance captures the potential for deflation in key commodities, including power prices as well as fixed cost leverage at the higher end of the sales volume range.
Conversely, the top end accounts for reduced tonnage or a strong commodity market which would be a net benefit to our cash margins, but a headwind to our power and supply costs for our Itmann mining complex, we are introducing annual sales tonnage and average cash cost of coal sold per ton guidance. On the sales front, we expect the range of 600,000 tons to 800,000 tons. The lower end captures our current contracted position while the upper end content-related moving beyond means development quicker and expanding our third party sales.
On the cash cost side, we expect an average cash cost of coal sold per ton range of $120 to $140. The upper end accounts for the possibility of extended means development, persistent staffing challenges and reduced tonnage while the lower end captures the possibility of reduced inflationary pressures and increased production.
Lastly, on the capital expenditures front, for 2024, we expect a range of $175 million to $200 million. This range is slightly higher than a typical CapEx guidance range for us, but reflects some planned spending from prior years moving into 2024. Keep in mind that we started 2022 with a top end CapEx expectation of nearly $200 million, but only spent $172 million in that year. We also started 2023 with an expectation of $185 million at the top end and only spent $168 million. As we highlighted throughout last year, supply chain bottlenecks have delayed equipment deliveries and extended lead times, and this has postponed certain planned expenditures.
With that, let me turn it back to Jimmy.
Jimmy Brock
Thank you, Mitesh. Let me now provide an update on our shareholder return program, which has been one of our key capital allocation priorities in 2023. We deployed approximately 85% of the free cash flow generated during the fourth quarter towards repurchasing shares of our outstanding common stock. In total, through January 2024, we deployed $141 million of our Q4 '23 free cash flow towards repurchasing 1.4 million shares of CEIX stock at a weighted average price of approximately $100 per share. Since restarting our share repurchase program in late 2022, we've retired 5.7 million shares or 16% of our public float over that time period.
As we kick off 2024, we have a few key areas of focus that we believe will further strengthen our company. First, we are excited by our progress in expanding our sales reach around the world. In 2023, we were successful in marketing our PAMC. coal to three new countries, and we are committed to further penetrating new markets while continuing to expand our sales book and grow and market. This will be made possible through our high-quality coal as well as our ownership in the Qatar marine terminals.
Second, we expect to leverage our strong contracted book and customer relationships to continue to layer on future sales in an opportunistic manner. Our contracting strategy has always been designed to smooth out the peaks and valleys of the market dynamics and our strong contracted position to date allows us to be more patient in softer markets. We believe that one of our strategic advantages is our ability to lock in contract duration, which gives us good revenue visibility and allows us to adjust the business accordingly to manage our cash flow generation. This is one of the main reasons, we've generated positive free cash flow every single year since our spin, despite the strength or weakness in the market.
Third, to further manage our free cash flow generation, laser focused on managing our cash outflows. The team has done a good job in identifying unnecessary spending while working hard to mitigate as much inflationary pressure as possible. It is no secret that inflation over the past several years has increased the cost of doing business for nearly every company regardless of industry. However, we rarely take a passive approach to problems. We will be focused on reducing spend where possible to expand our cash margins and free cash flow generation while maintaining our core values of safety and compliance.
Fourth, we are committed to scaling up the Itmann mine to full run rate production. While staffing challenges and extended Maine's development timing hampered the ramp-up in 2023, we are getting closer to moving past these issues. We expect more than a 36% increase in sales volume at the midpoint of our 2024 guidance compared to 2023 levels. And we are seeing strong interest for our Itmann product in the domestic and export markets. I remain very excited about its potential and the revenue diversification that having a low-vol met product in our portfolio will bring.
Fifth, we continue to focus on returning value to our shareholders through our capital allocation framework. We proved in 2023 that tremendous value can be created through multiple avenues of capital deployment. We will continue to analyze best use of our capital and prioritize the highest rate of return. We are very pleased with our results and execution in 2023, which was a record year for us on multiple fronts, both operationally and financially. We remain even more excited about the future as we are a much different company today due to our stronger balance sheet and export sales. Here, I want to personally thank all of our employees for their dedication and hard work, which drove these exceptional results safely and compliantly I am extremely proud of this team and their execution in 2023.
Before turning the call over, I want to highlight a major public awareness campaign that we are spearheading we were proud to introduce our not so fast campaign in the fourth quarter of 2023, which is meant to educate the public elected officials and corporate leaders about the truth involving many of the myths being spoken about coal campaign advocates for a more measured, realistic and moral approach to the energy policies of our country. We believe we are to quickly move away from proven fossil fuel-based sources of energy like coal in favor of intermittent sources like wind and solar coal is pivotal, not just for power generation, but in creating steel and concrete that will be necessary for the infrastructure needed during the transition to renewables. It is also used for activated carbon for clean water fertilizers for the food we farm and materials for many of the products we need and use every day. We encourage you to head over to w. w. w. dot Cole Hard Truths.com and help us spread the word on this campaign.
With that, I will hand the call back over to Nate.
Nathan Tucker
Thank you, Jimmy. We will now move to the Q&A session of our call at this time, I'd like to ask our operator to please provide the instructions to our callers.
Question and Answer Session
Operator
(Operator Instructions) Lucas Pipes, B. Riley Securities.
Jimmy Brock
Please go ahead.
Lucas Pipes
Thank you very much, operator, and good morning, everyone. My first question is on the 2024 outlook. And I wondered, on SG&A side, we saw a nice reduction in 2023 year on year versus 22, what's your outlook for '24 on that line item? And then how should we think about the Baltimore terminal and its contributions to EBITDA in 2024? Thank you.
Mitesh Thakkar
Thank you, Lucas. I'll take the first half. On the SG&A side, yes, of you noted it correctly. We did our SG&A did come down compared to last year, and we expect some more decline this year as some of the legacy stock-based compensation is coming down. And overall, I think that continues to be our focus going forward as well to focus on the cost side, both on the operation side and other parts of our business so that you should see some tailwinds on the SG&A side this year as well.
Lucas Pipes
On Baltimore?
Mitesh Thakkar
Sure. Up on your Baltimore question, like our starting point and the Baltimore terminal side from a throughput perspective is a little bit lower than 2023. We are modeling around 16 million tons, 17 million tons of throughput. Having said that, if you hear the prepared remarks that we've talked about, like about 4 million tons to 5 million tons moved into 2023 from domestic to export. We could expect a similar shift this year as well. And it all depends on where the pricing is. As we have said earlier, that you could potentially see us on optimizing our portfolio based on the highest R&D products available.
So the more tons that could move into the export market and the higher sales to Baltimore would be. PAMC account for 80%, 85% of throughput through Baltimore. Our third-party contracting is still strong. So but even though the starting point is around, let's call it 17 million tons. I wouldn't be surprised if we end up doing more.
Jimmy Brock
But look, it's one of the one of the really important things about the terminal is the flexibility and optionality it brings to us to penetrate these new markets. I mean, Bobby has done a really good job of moving out, you know, from our original strategy that we had that terminal is a key to us being able to move these tons into export markets to do so fairly quickly if we need to pivot.
Lucas Pipes
That's helpful. And I'll turn it over to my second question, may come back to this later on. If I heard you right in the prepared remarks at the midpoint of your pricing guide, underwrites $105 API2 price. And few questions on that. Are you are you at the floor of your committed four times it at that price or are you at the floor at today's spot price for API2? And then how should we think about kind of the sensitivity of your book to a further declines in APR2, given the floor dynamics, how should we think about sensitivity to the upside on spot on API to? Thank you. Thank you very much.
Bob Braithwaite
Look, it's about 6.5 million tons of our book for next year or this year sorry, is tied to API two prices. I tell you today about 15% of those are call it 3.2, 3.3 are at the floor at the current price level, API two price level, call it nine, you know, low to mid 90s. We hit the floor of all contracts roughly in about the mid to upper 80s. So there's not much I'd say the downside potential for us is very minimal on a go forward basis should API2 fall.
But we have extensive upside. You know, our current sensitivity on the upside for every dollar changed is about $0.18 across our entire portfolio. So if API2 prices were to come back a little bit, which again, I think there is still opportunity. I could see a pathway for that, especially with the reduced LNG coming out of US, we could certainly see some benefits there. And that certainly gets us toward our upside of or to the top end of our guidance that we provided.
Lucas Pipes
That's very helpful. Two quick follow ups. In terms of the 22 million tons that are committed for '24, can you provide kind of a breakdown of where they're going what the key drivers for the pricing on to the extent they're still sensitive to any inputs? And then also, for the crossover tons, how much of your remaining open tonnage is going into the crossover market? And how should we think about that the netbacks on that?
Bob Braithwaite
So about 13 million tons put to bed for the domestic market next year, which about [2.5] are linked to power. Tom, I will also tell you that this year we have an up a new contract that with our customer that we have a Powerlink where our base price is significantly higher. We actually do not receive any EMA now until call it, mid $40 power prices. The good news for us is we did see some EMA. in the month of January by the cold snap that we saw mid to late January certainly helped us. And as we originally modeled and basically no EMA. and RRNR. plan going forward. But we did see some in the month of January. So again, good news there.
The balance we would expect to sell export certain our 13 million tons to get to the midpoint of the guidance. On the crossover front, we expect to sell probably an additional 2million tons to 3 million tons of our open positions. So 4 million tons of open position to get to our midpoint. 2 million to 3 million would be in the crossover market. And I would say that the split between the Atlantic, i.e., South America and then the other half would be going to the Pacific market.
Today our high-vol B prices are, you know, in the end to 20 range for certainly seeing positive netbacks there, close to $80 back to the mine. And then when you look at where TSI prices are for a crossover coal into Asia. It's just slightly lower than that. But again, very healthy margins there, I'd say somewhere in the in the low to mid [70s].
Operator
Nathan Martin, Benchmark Company.
Nathan Martin
Thanks, operator. Good morning, guys. Congrats on a strong finish to the year and thanks for taking my questions. Bob, let me stick with you just for a minute. Lucas, pretty much touched on most of my 24 questions. But if we look to '25, you added the one million-plus tons there as well. It looks like you're at 13 million tons now on. Can we kind of get a breakdown of those tons as well and maybe where you see pricing average pricing on those?
Bob Braithwaite
Sure. So the 13 million tons we have now, which I believe is a increase about 2.2 million tons since our last earnings call, we have just over 8 million tons domestically, of which 2.5 of those are linked to power the balance being export of all our index linked to date and all do have ceilings and floors. We modeled that 2025, we did also model an $105 API2 price. And sitting here today, we're mid 60s across the U.S. the portfolio for the Soltab.
Nathan Martin
Okay, got it. Very helpful there. Appreciate that. Maybe shifting gears over to Itmann, and then there got some guidance there. Sales, 600,00 to 800,000 tons, cash cost per ton, $120 to $140. Let's start with the cost again higher than your peers. Obviously, you mentioned you're still ramping things up. So do you think there will be opportunities to improve on that cost range once you get up to a more of a traditional run rates on.
And then maybe as it relates to sales, that 600,000 to 800,000 ton number, does that include third party sales. Maybe you can remind us of throughput capacity at the terminal -- excuse me, at the prep plant there as well. And then any breakdown, I think you called out 571,000 contracted tons for it, but any breakdown would be helpful domestic versus export and kind of where you expect to sell the remainder of those tons?
Jimmy Brock
Okay. I'll take the first part of that, Nate, first, let's talk about the cost side. The $120 to $140 guidance that we gave, certainly a little higher number than we want. But keep in mind, I think as we continue to ramp up in our mains development down to there, we're having to cut additional rock for high for ventilation purposes for long term, which slows down the mining rates a little bit. I think the cost we've seen thus far at Edmonton is pretty much reflected for two things. One is volume, you know, volume is certainly going to help that cost number as we get more and we've seen some signs of improvement there, and we think we will begin to improve on that.
The second thing is some of these inflationary pressures that we're seeing. And for us, it's pretty much in the equipment in those equipment delays that we've had. He's not allowed us to run as efficient as we would like to. Whereas if we have the new equipment, we think we're going to get more tons per man hour to come out of that labor has been challenging down there, as we've mentioned before, but I think that's beginning to stabilize. We had a management change there at the top. And we think that as we go forward, that's going to be helpful as well, a very experienced and low sand mine and those things should help us there.
Getting back to I know the the potential of running and ramping up to full speed. I think as we were very close to being able to turn one of the three sections up into a panel that will give us, we'll be able to mount it lower higher. We'll see what those volumes are coming out of there. And I look for that to be a better number that helps our overall cost and we'll get to that sooner.
But it's going to be pretty much the first half of this year before we have all three of those sections that are running in what we call the mining out that we planned for mining and seeing, which helps the cost to the prep plant as well. The throughput volume at the plant, 600 ton an hour plant. We think we can put 3 million tons plus through there and the guys are making great improvements there.
So we're looking forward to what our yields can look like there, and we're located in a position down there to whereas we'll have opportunities with third party coal, which will have the cost of that prep plant as we knew that when we put it in, and that's why we put the upsized planning.
Bob Braithwaite
And then on the marketing side, Nate, you know, it's it's very exciting and we've got a lot of interest for the admin product. As we mentioned, we got 571,000 tons already sold for 2024. We also concluded a two year deal with an export customers. So we actually have coal already secured for 2025. It just goes to show the attractiveness of the product and the quality of the product. When you look at the breakdown, so for the 571,000, it's almost an equal split between domestic and export to date. I would tell you that the balance of the volume that we're going to sell will be in the export market. Looking at where US East Coast low-vol and TSI prices are today, I would expect that portfolio average to be somewhere in that [170 to 180] range.
Nathan Martin
And that 170, 180, Bob, is for the 571,000, that blended average.
Bob Braithwaite
That would that would be what my expectations would be on the total volume that we anticipate selling through Itmann.
Nathan Martin
So at the midpoint of that range, 700,000 tons is what was the price range you're going.
Bob Braithwaite
170 to 180 based on the current marks.
Nathan Martin
Got it. Okay. That's very helpful to us. So essentially, it sounds like the realizations there, obviously domestic is as domestic. And then on the export side of the house, it's probably a similar on based on U.S. low-vol, maybe a discount or no discount. Maybe you can get some color there. And then depending on the markets you go into?
Bob Braithwaite
Yeah, the discounts very minimal. It's certainly single digits and it's low single digits from for the product that we're selling into the Atlantic market today. And then the products that we're selling into the Pacific market, it's again, single digits, a little bit higher. I would say than than what we're seeing on the US East Coast, low vol. And then you would take the freight differentials between Australia and U.S. But again, both are providing really nice realizations as you probably remember, we talked about the domestic book that we were, but domestic tons we secured a couple of quarters ago. Those are certainly, I'll say, lower pricing than what we're seeing on the export side today.
So again, the export price today, if we can get some more third party calls with Jimmy mentioned, trying to get the plant to capacity that will only uplift that overall pricing our average pricing for the year. So again, very excited about that opportunity. We're working working daily to get more volume through that plant to help drive our cost down and drive our realization up.
Nathan Martin
Very helpful, Bob, appreciate that. And then maybe just one more. Going back to BMC's shipments, you guys mentioned in the prepared remarks, I think it was three longwall moves in the first quarter and then maybe one additional in the third quarter. Maybe you could give us an idea kind of around the cadence of shipments as we move through the year. Then typically, I think the third quarter is probably your lowest from a seasonality perspective, but it sounds like maybe 1Q volumes could be pressured a bit from the from the three longwall moves. So any color there would be great as well.
Jimmy Brock
Yes. Well, on the on the cadence of the longwall moves we do have three in the first quarter here. One is ongoing now that we just started. But those longwall moves are you know, they don't bother me. It's a sign of progress as we retreat those pounds out. We move to the next one, however, will shift around in our quarter revenues a little bit. Obviously, if you looked at the three longwall moves, values are somewhere around 20,000 tons per longwall per day.
So if you have three of those and we have three moves, let's say, our schedule PO. move days or 9 to 10 days. So you can see the map there, whereas we could be slightly short of tonnage in the first quarter compared to the rest. And typically the first quarter is our strongest quarter, particularly when it comes to production accuracy that moving out. And then the good news is we finished these three longwall moves during Q one. We only have one more planned in the third quarter. So it will give us an opportunity, you know, to run strong after we get out of this first quarter here at from a time standpoint. And then of course, the market will be the market will soon those tons to where we market.
Mitesh Thakkar
So second and fourth quarter will be our better quarters this year, Nate, compared to our history that for us is typically the strongest and same thing with the production cost goes the other way. So lower production, higher costs, higher production, lower costs so that will also flow through your model assumption.
Nathan Martin
Jimmy, you touched. I'll leave it there guys, as always, appreciate the time and information and best of luck in 24.
Operator
This concludes our question and answer session. I would like to turn the conference back over to Nathan Tucker for any closing remarks.
Nathan Tucker
We'd like to thank you all for your participation this morning and for your support, Arkansas energy. We hope we answered your questions and we look forward to speaking with you on our next earnings call. Thank you.
Operator
The conference has now concluded. Thank you for attending today's presentation. You may now correct.
