CANONSBURG, Pa., Feb. 7, 2019 /PRNewswire/ -- Today, CONSOL
Energy Inc. (NYSE: CEIX) reported financial and operating results
for the period ended December 31, 2018.
Fourth Quarter 2018 Highlights
Highlights of the CEIX fourth quarter 20181 results
include:
- Net income and cash provided by operating activities of
$46.0 million and $83.3 million, respectively;
- Total dilutive earnings per share of $1.41;
- Adjusted EBITDA2 of $115.2
million;
- Organic free cash flow net to CEIX shareholders2
of $28.9 million;
- Repurchased approximately 1.5% of average outstanding CEIX
shares;
- Expect to make a required pre-payment of approximately
$110 million towards Term Loan B in
February 2019;
- Total net leverage ratio2 reduced to 1.7x at
December 31, 2018 compared to 2.4x at
the end of 2017;
- Annual production and sales volume records at the
Pennsylvania Mining Complex (PAMC);
- Annual revenue record at the CONSOL Marine
Terminal.
Management Comments
"I am extremely proud to announce our results for the fourth
quarter of 2018, as it was another strong quarter and capped off a
year of many achievements" said Jimmy
Brock, Chief Executive Officer of CONSOL Energy Inc. "The
quarter marked a milestone for CEIX, as we completed our first
calendar year as an independent publicly-traded coal company. In
2018, we also produced and sold more coal than in any other year
throughout the PAMC's 35-year history. I am also pleased to
announce that we have made significant improvement during 2018 on
the safety front as well. Our total recordable incident rate at the
PAMC for full year 2018 has improved by 13.5% and our total number
of exceptions improved by 12.1% compared to the same period last
year. We continue to remain laser-focused on having zero
life-altering injuries."
"At the time of becoming an independent publicly traded company
in November 2017, we targeted some
very specific near-term goals and priorities. We set out to
de-lever our balance sheet, improve liquidity and initiate returns
to our shareholders while safely and compliantly delivering
earnings growth. I am pleased to announce that we delivered on all
those goals during 2018. Operationally, we have set new annual
production and sales records at the PAMC, marking three consecutive
years of production growth. Financially, we have reduced the
leverage on our balance sheet by 0.7x since year-end 2017 and
opportunistically returned $28.9
million of capital to our shareholders through CEIX share
repurchases and investment in CCR units. We also retired
approximately $56.0 million of our
term loans and second lien notes. For 2019, we expect to continue
to focus on further de-levering our balance sheet and increasing
shareholder returns. We are also now turning our focus towards
strategically growing our business, which will diversify our
revenue streams and increase our value per share."
Pennsylvania Mining Complex (PAMC) Review and Outlook
PAMC Sales and Marketing
Our marketing team sold 7.0 million tons of coal during the
fourth quarter of 2018 at an average revenue per ton of
$49.81, compared to 6.2 million tons
at an average revenue per ton of $46.36 in the year-ago period. This brings our
full-year (FY) 2018 PAMC sales volume to 27.7 million tons, which
exceeds the high-end of our guidance range. It also represents a
record sales volume year for the PAMC, and its third consecutive
year of sales volume growth. This growth was achieved due to
improved demand for our products, as well as our ability to ramp up
production and capture that demand improvement. The average revenue
per ton for the fourth quarter benefited from stronger pricing on
our export sales and domestic netback contracts compared to the
year-ago period.
During the quarter, our domestic customers demonstrated a strong
demand for coal, driven by higher natural gas prices and depleted
coal inventories following stronger than forecasted burn throughout
the year. According to the U.S. Energy Information Administration
(EIA), total coal inventories at domestic power plants stood at
approximately 104 million tons at the end of November 2018, down by approximately 27% from the
same period a year ago, and the lowest end-of-November total
inventory tonnage level since 1997. Furthermore, we believe that
inventories at several of our key customers' Northern Appalachian
rail-served power plants are below normal, and absent any
meaningful weather-related demand decline, we expect to ship all we
can produce during 2019 as our customers will continue to seek
additional coal to replenish their depleted stockpiles. Taking
advantage of this sustained demand, we have contracted greater than
95% in 2019, 53% in 2020 and 28% in 2021, assuming a base annual
production rate of 27 million tons. This contracted position
includes a mix of sales to our top domestic customers and to the
export thermal and export metallurgical markets, maintaining our
diversified market exposure. With our solid 2019 contracted
position, our primary focus is now on maximizing margins for any
remaining 2019 sales and continuing to build on our contract
portfolio.
Internationally, coal price volatility increased significantly
during the quarter with API 2 prompt month prices fluctuating
between $86 per ton and $102 per ton. Overall, API 2 prompt-month prices
declined by approximately 13% during the fourth quarter of 2018,
driven by rising global trade tensions and a general decline in
energy-related commodities. However, we have not seen and do not
expect to see any slowdown in near-term export demand for our
product. Furthermore, we are currently shipping our coal under a
previously disclosed and priced contract which insulates us from
the ongoing volatility in export pricing as well. There continues
to be a significant arbitrage opportunity between coal, natural
gas, and oil prices on a delivered mmBtu basis in many key global
markets. We believe that with limited coal supply growth throughout
the world, we will continue to have an increasing role in the coal
export markets.
Operations Summary
On the operations front, the PAMC achieved record production of
27.6 million tons in 2018, eclipsing the previous record of 26.1
million tons set in 2017 and marking the third consecutive year of
production growth. During 2018, the complex ran at approximately
97% capacity utilization, highlighting the desirability of our
product. Additionally, our Bailey and Harvey mines each set
individual production records during the year. Bailey's 12.7
million tons surpasses its previous record set in 2014, while
Harvey's 5.0 million tons exceeds its previous record set in 2017.
PAMC production for the full year benefited from strong demand for
our products in the domestic and export markets, improving
productivity, initial benefits from automation projects, and
improving geological conditions at Enlow Fork mine.
The PAMC shipped 7.0 million tons of coal during the fourth
quarter of 2018, compared to 6.2 million tons in the year-ago
quarter. The improvement in coal sales volume was driven by strong
production and continued robust demand from our customers. Total
coal revenue for the fourth quarter was $347.8 million, which was improved from
$288.3 million in the year-ago
quarter, primarily driven by a $3.45
higher average sales price per ton sold. Our average revenue per
ton increased to $49.81 from
$46.36 in the year-ago quarter, due
to stronger pricing on our export sales and domestic netback
contracts.
CEIX's total costs during the fourth quarter were $335.9 million compared to $312.5 million in the year-ago quarter. Average
cash cost of coal sold per ton2 for the fourth quarter
was $30.54 compared to $27.30 in the year-ago quarter. The increase was
due to reduced subsidence expense and lower mine maintenance
spending in the prior period. For FY 2018, CEIX's total costs were
$1,344.4 million compared to
$1,242.1 million in the prior year.
Our FY 2018 average cash cost of coal sold per ton2 was
$29.29 compared to $29.02 for FY 2017, an increase of less than 1%.
Average cash margin per ton sold2 for the fourth quarter
of 2018 expanded by $0.21, to
$19.27 per ton compared to the
year-ago period, driven by higher average revenue per ton, offset
by higher average cash cost of coal sold per ton.
|
|
Three Months
Ended
|
|
|
December 31,
2018
|
|
December 31,
2017
|
|
|
|
|
|
Coal
Production
|
million
tons
|
6.8
|
|
6.2
|
Coal Sales
|
million
tons
|
7.0
|
|
6.2
|
Average Revenue Per
Ton
|
per ton
|
$49.81
|
|
$46.36
|
Average Cash Costs of
Coal Sold
|
per ton
|
$30.54
|
|
$27.30
|
Average Cash Margin
Per Ton Sold
|
per ton
|
$19.27
|
|
$19.06
|
CONSOL Marine Terminal Review
For the fourth quarter of 2018, terminal revenues and operating
cash costs were $16.9 million and
$5.2 million, respectively, compared
to $17.3 million and $5.5 million, respectively, during the year-ago
period. Given the effect on terminal revenues of the take-or-pay
contract that has been in place at our terminal since mid-2018, we
are changing our guidance methodology for CONSOL Marine Terminal to
be based on EBITDA instead of throughput volume for the 2019
period.
Equity and Debt Repurchase Update
During the fourth quarter, we accelerated our rate of
repurchasing CEIX shares, as the declines in our share price and in
the broader equity markets created opportunities for us, while
continuing to remain disciplined in our capital allocation process.
During the quarter, we repurchased approximately $16.1 million of CEIX common shares, $5.2 million of second lien notes and
$1.9 million of CCR common units. For
the year-ended December 31, 2018, we
have now repurchased approximately $25.8
million of CEIX common shares, $25.7
million of second lien notes and $3.1
million of CCR common units. We have also repaid
$26.3 million and $4.0 million of principal with respect to Term
Loan A and Term Loan B, respectively.
2019 Liability Management
During the first quarter of 2019, we are required to reduce our
outstanding Term Loan B principal by approximately $110 million based on the 2018 excess free cash
flow sweep calculated in accordance with our credit agreement. We
are also continuing to opportunistically take advantage of market
volatility to repurchase our second lien notes. In 2019, we
repurchased $7 million of our second
lien notes. We expect to remain active on our liability management
program in 2019 to reduce our overall cost of indebtedness.
2019 Guidance and Outlook
Based on our current contracted position, estimated prices and
production plans, we are providing the following financial and
operating performance guidance for 2019:
- Coal sales volumes (100% PAMC) - 26.8-27.8 million tons
- Average revenue per ton sold - $47.70-$49.70
- Cash cost of coal sold per ton3 - $30.40-$31.40
- CONSOL Marine Terminal EBITDA3 - $40-$45
million
- Adjusted EBITDA3 (incl. 100% PAMC) - $380-$440
million
- Effective tax rate - 8-12%
- Capital expenditures (incl. 100% PAMC) - $135-$155
million
Fourth Quarter Earnings Conference Call
A conference call and webcast, during which management will
discuss the fourth quarter of 2018 financial and operational
results, is scheduled for February 7, 2019 at 11:00 AM
EDT. Prepared remarks by members of management will be followed by
a question and answer session. Interested parties may listen via
webcast on the Events page of our
website, www.consolenergy.com. An archive of the webcast will
be available for 30 days after the event.
Participant dial in (toll
free) 1-877-870-4263
Participant international dial
in 1-412-317-0790
Availability of Additional Information
In conjunction with this earnings release, we have made
available additional information on a presentation slide deck to
provide investors with further insights into our financial and
operating performance. This material can be accessed through the
"Events and Presentations" page of our website,
www.consolenergy.com.
1The results reflect predecessor performance prior to
November 29, 2017, and CONSOL Energy
Inc. performance after that date.
2"Adjusted EBITDA" is a non-GAAP financial measure and
"Average cash cost of coal sold per ton", "Average cash margin per
ton sold", "total net leverage ratio", and "organic free cash flow
net to CEIX shareholders" are operating ratios derived from
non-GAAP financial measures, each of which are reconciled to GAAP
financial measures below, under the caption "Reconciliation of
Non-GAAP Financial Measures."
3CEIX is unable to provide a reconciliation of Adjusted
EBITDA guidance or CONSOL Marine Terminal EBITDA guidance to net
income, the most comparable financial measure calculated in
accordance with GAAP, nor a reconciliation of cash cost of coal
sold per ton guidance, an operating ratio derived from non-GAAP
financial measures, due to the unknown effect, timing and potential
significance of certain income statement items.
About CONSOL Energy Inc.
CONSOL Energy Inc. (NYSE: CEIX) is a Canonsburg-based
producer and exporter of high-Btu bituminous thermal and crossover
metallurgical coal. It owns and operates some of the most
productive longwall mining operations in the Northern Appalachian
Basin. Our flagship operation is the Pennsylvania Mining Complex,
which has the capacity to produce approximately 28.5 million tons
of coal per year and is comprised of 3 large-scale underground
mines: Bailey, Enlow Fork, and Harvey. The company also owns
and operates the CONSOL Marine Terminal, which is located in the
port of Baltimore and has a
throughput capacity of approximately 15 million tons per year. In
addition to the ~698 million reserve tons associated with the
Pennsylvania Mining Complex, the company also controls
approximately 1.6 billion tons of greenfield thermal and
metallurgical coal reserves located in the major coal-producing
basins of the eastern United
States. Additional information regarding CONSOL Energy may
be found at www.consolenergy.com.
Condensed Consolidated Statement of Cash Flows
The following table presents a condensed consolidated statement
of cash flows for the three months ended December 31, 2018 and 2017 (in thousands):
|
Three Months
Ended
December 31,
|
|
2018
|
|
2017
|
Cash Flows from
Operating Activities:
|
(Unaudited)
|
|
(Unaudited)
|
Net Income
(Loss)
|
$
|
46,034
|
|
|
$
|
(24,640)
|
|
Adjustments to
Reconcile Net Income to Net Cash Provided by Operating
Activities:
|
|
|
|
Depreciation,
Depletion and Amortization
|
45,590
|
|
|
47,088
|
|
Other Non-Cash
Adjustments to Net Income
|
(3,886)
|
|
|
35,754
|
|
Changes in Working
Capital
|
(4,465)
|
|
|
18,258
|
|
Net Cash Provided by
Operating Activities
|
83,273
|
|
|
76,460
|
|
Cash Flows from
Investing Activities:
|
|
|
|
Capital
Expenditures
|
(48,894)
|
|
|
(30,403)
|
|
Proceeds from Sales
of Assets
|
735
|
|
|
6,661
|
|
Other Investing
Activity
|
(10,000)
|
|
|
—
|
|
Net Cash Used in
Investing Activities
|
(58,159)
|
|
|
(23,742)
|
|
Cash Flows from
Financing Activities:
|
|
|
|
Net (Payments on)
Proceeds from Long-Term Debt
|
(12,438)
|
|
|
570,859
|
|
Distributions to
Noncontrolling Interest
|
(5,502)
|
|
|
(5,489)
|
|
Spin Distribution to
CNX Resources
|
—
|
|
|
(425,000)
|
|
Other Financing
Activities
|
(18,553)
|
|
|
(42,806)
|
|
Net Cash (Used in)
Provided by Financing Activities
|
(36,493)
|
|
|
97,564
|
|
Net (Decrease)
Increase in Cash and Cash Equivalents and Restricted
Cash
|
$
|
(11,379)
|
|
|
$
|
150,282
|
|
Cash and Cash
Equivalents and Restricted Cash at Beginning of Period
|
276,314
|
|
|
3,697
|
|
Cash and Cash
Equivalents and Restricted Cash at End of Period
|
$
|
264,935
|
|
|
$
|
153,979
|
|
Reconciliation of Non-GAAP Financial Measures
We evaluate our cost of coal sold and cash cost of coal sold on
a cost per ton basis. Our cost of coal sold per ton represents our
costs of coal sold divided by the tons of coal we sell. We define
cost of coal sold as operating and other production costs related
to produced tons sold, along with changes in coal inventory, both
in volumes and carrying values. The cost of coal sold per ton
includes items such as direct operating costs, royalty and
production taxes, direct administration costs, and depreciation,
depletion and amortization costs on production assets. Our costs
exclude any indirect costs, such as selling, general and
administrative costs, freight expenses, interest expenses,
depreciation, depletion and amortization costs on non-production
assets and other costs not directly attributable to the production
of coal. The GAAP measure most directly comparable to cost of coal
sold is total costs. The cash cost of coal sold includes cost of
coal sold less depreciation, depletion and amortization cost on
production assets. The GAAP measure most directly comparable to
cash cost of coal sold is total costs.
The following table presents a reconciliation of cost of coal
sold and cash cost of coal sold to total costs, the most directly
comparable GAAP financial measure, on a historical basis for each
of the periods indicated (in thousands).
|
|
Three Months
Ended
December 31,
|
|
Year
Ended
December
31,
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
Total Costs and
Expenses
|
|
$
|
335,901
|
|
|
$
|
312,517
|
|
|
$
|
1,344,402
|
|
|
$
|
1,242,106
|
|
Freight
Expense
|
|
(5,798)
|
|
|
(21,845)
|
|
|
(43,572)
|
|
|
(73,692)
|
|
Selling, General and
Administrative Costs
|
|
(17,631)
|
|
|
(25,008)
|
|
|
(65,346)
|
|
|
(83,605)
|
|
Loss on Debt
Extinguishment
|
|
(773)
|
|
|
—
|
|
|
(3,922)
|
|
|
—
|
|
Interest Expense,
net
|
|
(20,437)
|
|
|
(14,270)
|
|
|
(83,848)
|
|
|
(26,098)
|
|
Other Costs
(Non-Production)
|
|
(31,567)
|
|
|
(34,750)
|
|
|
(135,081)
|
|
|
(129,620)
|
|
Depreciation,
Depletion and Amortization (Non-Production)
|
|
(3,864)
|
|
|
(8,111)
|
|
|
(30,961)
|
|
|
(15,001)
|
|
Cost of Coal
Sold
|
|
$
|
255,831
|
|
|
$
|
208,533
|
|
|
$
|
981,672
|
|
|
$
|
914,090
|
|
Depreciation,
Depletion and Amortization (Production)
|
|
(41,726)
|
|
|
(38,977)
|
|
|
(170,303)
|
|
|
(157,001)
|
|
Cash Cost of Coal
Sold
|
|
$
|
214,105
|
|
|
$
|
169,556
|
|
|
$
|
811,369
|
|
|
$
|
757,089
|
|
We define average cash margin per ton as average coal revenue
per ton, net of average cash cost of coal sold per ton. The GAAP
measure most directly comparable to average cash margin per ton is
total coal revenue.
The following table presents a reconciliation of average cash
cost of coal sold per ton and average cash margin per ton to total
coal revenue, the most directly comparable GAAP financial measure,
on a historical basis for each of the periods indicated (in
thousands, except per ton information).
|
|
Three Months
Ended
December 31,
|
|
Year
Ended
December
31,
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
Total Coal
Revenue
|
|
$
|
347,789
|
|
|
$
|
288,254
|
|
|
$
|
1,364,292
|
|
|
$
|
1,187,654
|
|
Operating and Other Costs
|
|
245,672
|
|
|
204,306
|
|
|
946,450
|
|
|
886,709
|
|
Less: Other Costs (Non-Production)
|
|
(31,567)
|
|
|
(34,750)
|
|
|
(135,081)
|
|
|
(129,620)
|
|
Cash Cost of Coal
Sold
|
|
214,105
|
|
|
169,556
|
|
|
811,369
|
|
|
757,089
|
|
Add: Depreciation, Depletion and Amortization
|
|
45,590
|
|
|
47,088
|
|
|
201,264
|
|
|
172,002
|
|
Less: Depreciation, Depletion and Amortization
(Non-Production)
|
|
(3,864)
|
|
|
(8,111)
|
|
|
(30,961)
|
|
|
(15,001)
|
|
Cost of Coal
Sold
|
|
$
|
255,831
|
|
|
$
|
208,533
|
|
|
$
|
981,672
|
|
|
$
|
914,090
|
|
Total Tons Sold (in
millions)
|
|
7.0
|
|
|
6.2
|
|
|
27.7
|
|
|
26.1
|
|
Average Revenue per
Ton Sold
|
|
$
|
49.81
|
|
|
$
|
46.36
|
|
|
$
|
49.28
|
|
|
$
|
45.52
|
|
Average Cash Cost
per Ton Sold
|
|
30.54
|
|
|
27.30
|
|
|
29.29
|
|
|
29.02
|
|
Depreciation,
Depletion and Amortization Costs per Ton Sold
|
|
6.10
|
|
|
6.24
|
|
|
6.17
|
|
|
6.01
|
|
Average Cost per Ton
Sold
|
|
36.64
|
|
|
33.54
|
|
|
35.46
|
|
|
35.03
|
|
Average Margin per
Ton Sold
|
|
13.17
|
|
|
12.82
|
|
|
13.82
|
|
|
10.49
|
|
Add: Depreciation, Depletion and Amortization Costs per Ton
Sold
|
|
6.10
|
|
|
6.24
|
|
|
6.17
|
|
|
6.01
|
|
Average Cash
Margin per Ton Sold
|
|
$
|
19.27
|
|
|
$
|
19.06
|
|
|
$
|
19.99
|
|
|
$
|
16.50
|
|
We define adjusted EBITDA as (i) net income (loss) plus income
taxes, net interest expense and depreciation, depletion and
amortization, as adjusted for (ii) certain non-cash items, such as
long-term incentive awards. The GAAP measure most directly
comparable to adjusted EBITDA is net income (loss).
The following table presents a reconciliation of net income
(loss) to adjusted EBITDA, the most directly comparable GAAP
financial measure, on a historical basis for each of the periods
indicated.
|
|
Three Months Ended
December 31,
|
|
|
2018
|
|
2018
|
|
2018
|
|
2017
|
Dollars in
thousands
|
|
PA Mining
Complex
|
|
Other
|
|
Total
Company
|
|
Total
Company
|
Net Income
(Loss)
|
|
$
|
70,501
|
|
|
$
|
(24,467)
|
|
|
$
|
46,034
|
|
|
$
|
(24,640)
|
|
|
|
|
|
|
|
|
|
|
Add: Income Tax
Expense
|
|
—
|
|
|
301
|
|
|
301
|
|
|
64,441
|
|
Add: Interest
Expense, net
|
|
—
|
|
|
20,437
|
|
|
20,437
|
|
|
14,270
|
|
Add: Loss on
Debt Extinguishment
|
|
—
|
|
|
773
|
|
|
773
|
|
|
—
|
|
Less: Interest
Income
|
|
—
|
|
|
(555)
|
|
|
(555)
|
|
|
(1,124)
|
|
Earnings (Loss)
Before Interest & Taxes (EBIT)
|
|
70,501
|
|
|
(3,511)
|
|
|
66,990
|
|
|
52,947
|
|
|
|
|
|
|
|
|
|
|
Add:
Depreciation, Depletion & Amortization
|
|
44,082
|
|
|
1,508
|
|
|
45,590
|
|
|
47,088
|
|
|
|
|
|
|
|
|
|
|
Earnings (Loss)
Before Interest, Taxes and DD&A (EBITDA)
|
|
$
|
114,583
|
|
|
$
|
(2,003)
|
|
|
$
|
112,580
|
|
|
$
|
100,035
|
|
|
|
|
|
|
|
|
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
Pension
Settlement
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
10,153
|
|
Stock/Unit-Based
Compensation
|
|
2,380
|
|
|
217
|
|
|
2,597
|
|
|
7,011
|
|
Transaction
Fees
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,757
|
|
Total Pre-tax
Adjustments
|
|
2,380
|
|
|
217
|
|
|
2,597
|
|
|
18,921
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
|
$
|
116,963
|
|
|
$
|
(1,786)
|
|
|
$
|
115,177
|
|
|
$
|
118,956
|
|
|
|
|
|
|
|
|
|
|
Less: Adjusted EBITDA
Attributable to Noncontrolling Interest
|
|
11,325
|
|
|
—
|
|
|
11,325
|
|
|
10,557
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
Attributable to CONSOL Energy Shareholders
|
|
$
|
105,638
|
|
|
$
|
(1,786)
|
|
|
$
|
103,852
|
|
|
$
|
108,399
|
|
The following table presents a reconciliation of net leverage
ratio (in thousands).
|
|
Twelve Months
Ended
|
|
Twelve Months
Ended
|
|
|
December 31,
2018
|
|
December 31,
2017
|
Net
Income
|
|
$
|
178,785
|
|
|
$
|
82,569
|
|
Plus:
|
|
|
|
|
Interest Expense, net
|
|
83,848
|
|
|
26,098
|
|
Depreciation, Depletion and Amortization
|
|
201,264
|
|
|
172,002
|
|
Income Taxes
|
|
8,828
|
|
|
87,228
|
|
Stock/Unit-Based Compensation
|
|
10,235
|
|
|
22,085
|
|
CCR
Adjusted EBITDA per Credit Agreement
|
|
(122,844)
|
|
|
(100,805)
|
|
Cash
Distributions from CONSOL Coal Resources LP
|
|
35,124
|
|
|
34,509
|
|
Cash
Payments for Legacy Employee Liabilities, Net
of Non-Cash Expense
|
|
(16,563)
|
|
|
407
|
|
Other Adjustments to Net Income
|
|
6,854
|
|
|
(5,216)
|
|
Consolidated EBITDA
per Credit Agreement
|
|
$
|
385,531
|
|
|
$
|
318,877
|
|
|
|
|
|
|
Consolidated First Lien Debt
|
|
$
|
497,475
|
|
|
$
|
503,949
|
|
Senior Secured Second Lien Notes
|
|
274,276
|
|
|
300,000
|
|
MEDCO Revenue Bonds
|
|
102,865
|
|
|
102,865
|
|
Advance Royalty Commitments
|
|
2,261
|
|
|
2,085
|
|
Consolidated
Indebtedness per Credit Agreement
|
|
$
|
876,877
|
|
|
$
|
908,899
|
|
Less:
|
|
|
|
|
Advance Royalty Commitments
|
|
$
|
2,261
|
|
|
$
|
2,085
|
|
Cash
on Hand
|
|
234,674
|
|
|
152,446
|
|
Consolidated Net
Indebtedness per Credit Agreement
|
|
$
|
639,942
|
|
|
$
|
754,368
|
|
|
|
|
|
|
Net Leverage Ratio
(Net Indebtedness/EBITDA)
|
|
1.7
|
|
|
2.4
|
|
Free cash flow and organic free cash flow are non-GAAP financial
measures. Management believes that these measures are meaningful to
investors because management reviews cash flows generated from
operations and non-core asset sales after taking into consideration
capital expenditures due to the fact that these expenditures are
considered necessary to maintain and expand CONSOL's asset base and
are expected to generate future cash flows from operations. It is
important to note that free cash flow and organic free cash flow do
not represent the residual cash flow available for discretionary
expenditures since other non-discretionary expenditures, such as
mandatory debt service requirements, are not deducted from the
measure. The following table presents a reconciliation of organic
free cash flow, organic free cash flow net to CEIX shareholders and
free cash flow to net cash provided by operations, the most
directly comparable GAAP financial measure, on a historical basis
for each of the periods indicated.
Organic Free
Cash Flow
|
Three Months Ended
December 31, 2018
|
|
Three Months Ended
December 31, 2017
|
Net Cash Provided
by Operations
|
$
|
83,273
|
|
|
$
|
76,460
|
|
Capital
Expenditures
|
(48,894)
|
|
|
(30,403)
|
|
Organic Free Cash
Flow
|
$
|
34,379
|
|
|
$
|
46,057
|
|
|
|
|
|
Distributions to
Noncontrolling Interest
|
(5,502)
|
|
|
(5,489)
|
|
Organic Free Cash
Flow Net to CEIX Shareholders
|
$
|
28,877
|
|
|
$
|
40,568
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Free Cash
Flow
|
Three Months Ended
December 31, 2018
|
|
Three Months Ended
December 31, 2017
|
Net Cash Provided
by Operating Activities
|
$
|
83,273
|
|
|
$
|
76,460
|
|
|
|
|
|
Capital
Expenditures
|
(48,894)
|
|
|
(30,403)
|
|
Proceeds from Sales
of Assets
|
735
|
|
|
6,661
|
|
Free Cash
Flow
|
$
|
35,114
|
|
|
$
|
52,718
|
|
Cautionary Statement Regarding Forward-Looking
Statements
Certain statements in this press release are "forward-looking
statements" within the meaning of the federal securities laws. With
the exception of historical matters, the matters discussed in this
press release are forward-looking statements (as defined in Section
21E of the Securities Exchange Act of 1934, as amended) that
involve risks and uncertainties that could cause actual results to
differ materially from projected results. Accordingly, investors
should not place undue reliance on forward-looking statements as a
prediction of actual results. The forward-looking statements may
include projections and estimates concerning the timing and success
of specific projects and our future production, revenues, income
and capital spending. When we use the words "anticipate,"
"believe," "could," "continue," "estimate," "expect," "intend,"
"may," "plan," "predict," "project," "should," "will," or their
negatives, or other similar expressions, the statements which
include those words are usually forward-looking statements. When we
describe strategy that involves risks or uncertainties, we are
making forward-looking statements. We have based these
forward-looking statements on our current expectations and
assumptions about future events. While our management considers
these expectations and assumptions to be reasonable, they are
inherently subject to significant business, economic, competitive,
regulatory and other risks, contingencies and uncertainties, most
of which are difficult to predict and many of which are beyond our
control. These risks, contingencies and uncertainties relate to,
among other matters, the following: whether the long-term
operational, strategic and other benefits of the separation can be
achieved; whether the costs and expenses of the separation can be
controlled within expectations; deterioration in economic
conditions in any of the industries in which our customers operate
may decrease demand for our products, impair our ability to collect
customer receivables and impair our ability to access capital;
volatility and wide fluctuation in coal prices based upon a number
of factors beyond our control including oversupply relative to the
demand available for our products, weather and the price and
availability of alternative fuels; an extended decline in the
prices we receive for our coal affecting our operating results and
cash flows; the risk of our debt agreements, our debt and changes
in interest rates affecting our operating results and cash flows;
the effect of our affiliated company credit agreement on our cash
flows; foreign currency fluctuations that could adversely affect
the competitiveness of our coal abroad; our customers extending
existing contracts or entering into new long-term contracts for
coal on favorable terms; our reliance on major customers; decreases
in demand and changes in coal consumption patterns of U.S. electric
power generators; our inability to acquire additional coal reserves
that are economically recoverable; our inability to collect
payments from customers if their creditworthiness declines or if
they fail to honor their contracts; our inability to acquire
additional coal reserves and other assets; the availability and
reliability of transportation facilities and other systems,
disruption of rail, barge, gathering, processing and transportation
facilities and other systems that deliver our coal to market and
fluctuations in transportation costs; a loss of our competitive
position because of the competitive nature of coal industries, or a
loss of our competitive position because of overcapacity in these
industries impairing our profitability; coal users switching to
other fuels in order to comply with various environmental standards
related to coal combustion emissions; the impact of potential, as
well as any adopted regulations to address climate change,
including any relating to greenhouse gas emissions on our operating
costs as well as on the market for coal; the effects of litigation
seeking to hold energy companies accountable for the effects of
climate change; the risks inherent in coal operations, including
our reliance upon third party contractors, being subject to
unexpected disruptions, including geological conditions, equipment
failure, delays in moving out longwall equipment, railroad
derailments, security breaches or terroristic acts and other
hazards, timing of completion of significant construction or repair
of equipment, fires, explosions, seismic activities, accidents and
weather conditions which could impact financial results; decreases
in the availability of, or increases in, the price of commodities
or capital equipment used in our coal mining operations; obtaining,
maintaining and renewing governmental permits and approvals for our
coal operations; the effects of government regulation on the
discharge into the water or air, and the disposal and clean-up of,
hazardous substances and wastes generated during our coal
operations; the effects of stringent federal and state employee
health and safety regulations, including the ability of regulators
to shut down our operations; the potential for liabilities arising
from environmental contamination or alleged environmental
contamination in connection with our past or current coal
operations; the effects of mine closing, reclamation and certain
other liabilities; defects in our chain of title for our
undeveloped reserves or failure to acquire additional property to
perfect our title to coal rights; uncertainties in estimating our
economically recoverable coal reserves; the outcomes of various
legal proceedings, including those which are more fully described
herein; exposure to employee-related long-term liabilities; failure
by one or more third parties to satisfy certain liabilities they
acquired from CNX Resources Corporation ("ParentCo"), or failure to
perform its obligations under various arrangements, which ParentCo
guaranteed and for which we have indemnification obligations to
ParentCo; information theft, data corruption, operational
disruption and/or financial loss resulting from a terrorist attack
or cyber incident; operating in a single geographic area; the
effects of coordinating our operations with oil and natural gas
drillers and distributors operating on our land; certain provisions
in our multi-year coal sales contracts may provide limited
protection during adverse economic conditions, and may result in
economic penalties or permit the customer to terminate the
contract; the majority of our common units in CONSOL Coal Resources
LP are subordinated, and we may not receive distributions from such
partnership; the potential failure to retain and attract skilled
personnel of CEIX; unfavorable terms in our separation from
ParentCo, related agreements and other transactions; any failure of
CEIX's customers, prospective customers, suppliers or other
companies with whom CEIX conducts business to be satisfied with
CEIX's financial stability, or CEIX's failure to obtain any
consents that may be required under existing contracts and other
arrangements with third parties; a determination by the IRS that
the distribution or certain related transactions should be treated
as a taxable transaction; CEIX's ability to engage in desirable
strategic or capital-raising transactions after the separation;
exposure to potential liabilities arising out of state and federal
fraudulent conveyance laws and legal dividend requirements as a
result of the separation and related transactions; uncertainty with
respect to CEIX's common stock, potential stock price volatility
and future dilution; the existence of certain anti-takeover
provisions in our governance documents, which could prevent or
delay an acquisition of CEIX and negatively impact the trading
price of CEIX's common stock;adverse effects of cybersecurity
threats; recent action and the possibility of future action on
trade made by U.S. and foreign governments; our inability to obtain
financing for capital expenditures on satisfactory terms; the
effect of new tariffs and other trade measures; our inability to
find suitable acquisition targets or integrating the operations of
future acquisitions into our operations; the effects of hedging
transactions on our cash flow; failure to achieve and maintain
effective internal controls over financial reporting; the failure
to receive the benefits of certain contracts assigned to us in the
separation but for which consent by our counterparty to such
assignment was not given; certain indemnification obligations to
ParentCo we may have as a result of the separation and the failure
of ParentCo to indemnify us for certain indemnity obligations they
owe us as a result of the separation; uncertainty regarding the
timing of any dividends we may declare; uncertainty as to whether
we will repurchase shares of our common stock or outstanding debt
securities; restrictions on the ability to acquire us in our
certificate of incorporation, bylaws and Delaware law and the resulting effects on the
trading price of our common stock; inability of stockholders to
bring legal action against us in any forum other than the state
courts of Delaware; and other
unforeseen factors.
The above list of factors is not exhaustive or necessarily in
order of importance. Additional information concerning factors that
could cause actual results to differ materially from those in
forward-looking statements include those discussed under "Risk
Factors" in our filings with the Securities and Exchange
Commission. The forward-looking statements in this press release
speak only as of the date of this press release and CEIX disclaims
any intention or obligation to update publicly any forward-looking
statements, whether in response to new information, future events,
or otherwise, except as required by applicable law.
Contacts:
Investor:
Mitesh Thakkar, at (724) 416-8335,
miteshthakkar@consolenergy.com
Media:
Zach Smith, at (724) 416-8291,
zacherysmith@consolenergy.com
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SOURCE CONSOL Energy Inc.