CANONSBURG, Pa., Aug. 4, 2022
/PRNewswire/ -- Today, CONSOL Energy Inc. (NYSE: CEIX) reported
financial and operating results for the period ended June 30, 2022.
Second Quarter 2022 Highlights
Include:
- GAAP net income of $126.3
million;
- Quarterly adjusted EBITDA1 of $216.3 million;
- Initiates enhanced shareholder return program to become
effective in 3Q22, initially targeting approximately 35% of free
cash flow while continuing to reduce debt at an accelerated
pace;
- Announces a special dividend of $1.00/share, based on strong 2Q22 results,
payable on August 24,
2022;
- Itmann low-vol metallurgical coal project start-up now
expected in 3Q22;
- Net cash provided by operating activities of $198.4 million;
- Quarterly free cash flow1 of $159.9 million;
- Coal shipments improve to 6.2 million tons;
- Total coal revenue of $532.7
million;
- Average realized coal revenue per ton sold1 of
$72.18 at the Pennsylvania Mining
Complex (PAMC);
- 2023 contracted position improved to 19.6 million
tons;
- Cash and cash equivalents of $261.6
million plus $51.1 million in
restricted cash as of June 30,
2022;
- Debt repayments of $115.9
million during 2Q22, including $75.0
million of Term Loan B and $35.0
million to retire Term Loan A; and
- Net leverage ratio1 drops to 0.5x as of
June 30, 2022.
Management Comments
"CEIX achieved a very strong performance during the second
quarter of 2022, on multiple fronts. We shipped 6.2 million tons
from the Pennsylvania Mining Complex at a net realization above
$72/ton, generated $160 million in free cash flow1 and
made debt repayments of $116 million.
Despite the significant debt reduction, we increased our
unrestricted cash position by nearly $40
million in the quarter. Additionally, we completed the
refinancing of our revolving credit facility and accounts
receivable securitization facility in July. We successfully secured
revolver commitments of $260 million,
65% of the current $400 million
capacity, with a July 2026 maturity.
In the meantime, we will still have full access to the $400 million revolver through March 2023. We continued to take advantage of the
ongoing strength in the coal markets and layered in additional
contract tons for 2023 and beyond. Our Itmann preparation plant
made significant strides during the second quarter, and we now
expect start-up to occur during 3Q22. Finally, we are
pleased to announce our enhanced shareholder return program,
which will become effective in the third quarter of 2022, and
initially return approximately 35% of free cash flow
generation to our shareholders via dividends and/or share
repurchases, while we continue to retire our outstanding debt. To
jump start the program, we announced this morning that we will pay
a $1.00/share special dividend on
August 24, 2022."
"On the safety front, our Itmann Project, Bailey Preparation
Plant and CONSOL Marine Terminal each had ZERO employee recordable
incidents during the second quarter of 2022. Our 2Q22 total
recordable incident rate at the PAMC continued to track
significantly below the national average for underground bituminous
coal mines."
Pennsylvania Mining
Complex Review and Outlook
PAMC Sales and Marketing
Our sales team sold 6.2 million tons of PAMC coal during the
second quarter of 2022, generating coal revenue of
$518.9 million for the PAMC segment.
After adjusting for the effect of settlements on commodity risk
derivative instruments, the PAMC generated an average realized
coal revenue per ton sold1 of $72.18. This compares to 5.9 million tons sold at
an average realized coal revenue per ton sold1 of
$44.02 in the year-ago period. The
significant improvement in the average realized coal revenue per
ton sold1 was due to continued strong demand for our
product and substantial improvements in the coal, natural gas, and
electric power markets compared to the prior-year quarter.
On the domestic front, the commodity markets continued a
strong upward trend during the second quarter of 2022 compared to
the prior year. Henry Hub natural gas spot prices averaged
$7.50/mmBtu in 2Q22, a 154% increase
compared to the prior-year period. PJM West day-ahead power prices
averaged $77.27/MWh in the quarter,
an improvement of 170% compared to 2Q21. Despite the ongoing
strength in domestic demand and commodity pricing, supply tightness
has remained a consistent theme. The U.S. Energy Information
Administration (EIA) highlights in its latest Short-Term Energy
Outlook that increased economic activity post-COVID-19 shutdowns,
coupled with higher natural gas prices, led to increased demand for
coal-fired power generation in 2021 compared with 2020. However,
despite even higher natural gas prices in 2022, coal production
constraints and transportation issues due to railroad labor
shortages have led to coal generators conserving coal stockpiles in
order to meet peak electricity demand this summer. Even with such
conservation efforts, the EIA estimates that coal stockpiles at
domestic power plants will decline to 77 million tons, 18% lower
than year-end 2021. The majority of our domestic customer
stockpiles remain below target levels for this time of year.
Additionally, due to grid reliability concerns and delayed
renewable build-outs, domestic coal-fired electricity
generation unit retirements are being postponed. IHS McCloskey
estimates that approximately 12 GW of coal-fired
generation has announced retirement delays.
On the export front, seaborne thermal coal markets remained
volatile but robust in the second quarter of 2022, as API2 prices
continued to rise, averaging $338/ton
in 2Q22 compared to $234/ton in 1Q22
and $90/ton in 2Q21. In a similar
trend, global LNG prices remained elevated with the Asian
prompt-month spot market benchmark price (JKM) averaging
$27.31/mmBtu in 2Q22, a 184% increase
compared to the prior-year period. Despite the ongoing strength in
the energy markets, the lack of coal supply response continues to
be a major contributor to the continued tightness in the coal
markets. IHS McCloskey estimates that Europe will import 103.5 million metric tonnes
of thermal coal in 2022, an 18 million metric tonne increase from
its estimate in February of this year before the Russia-Ukraine conflict began. Additionally,
IHS McCloskey expects 2023 European thermal coal imports to
increase further to 114 million metric tonnes, which would be the
most coal going to Europe since
2018. Further adding to the tightness in the coal markets,
Europe, Australia and Japan are all bringing back coal-fired
electricity generating units due to grid reliability concerns in
the face of a potential loss of Russian gas. However, with the
recent downsizing and lack of investment in coal supply and
transportation, there are doubts about the industry's ability to
ramp up production.
During 2Q22, we strengthened our forward contract book at the
PAMC, securing an additional 7.6 million tons through 2025. As
such, we remain near fully-contracted for 2022 and have
increased our 2023 sold position to 19.6 million tons.
Operations Summary
During the second quarter of 2022, we had a strong
operating performance at the PAMC despite multiple longwall moves
and intermittent railroad delays. However, our transportation
partners are continuing to work through these issues and improve
their staffing levels. The PAMC produced 6.2 million tons in 2Q22,
compared to 5.9 million tons in the year-ago quarter.
CEIX's total costs and expenses during the second quarter of
2022 were $395.1 million,
compared to $291.9 million in the
year-ago quarter, and CEIX's total coal revenue during the second
quarter of 2022 was $532.7 million, compared to $259.8 million in the year-ago quarter.
Including the effects of settlements of commodity derivative
instruments at a loss of $73.9
million, total realized coal revenue1 in 2Q22 was
$458.8 million. The significant
improvement in total realized coal revenue1 was mainly
driven by a $28.16 improvement in
average realized coal revenue per ton sold1 at the
Pennsylvania Mining Complex, as coal prices were stronger during
the quarter compared to the prior-year period. Average cash cost of
coal sold per ton1 at the PAMC for the second
quarter of 2022 was $34.81, compared
to $28.02 in the year-ago quarter.
The significant increase was due to ongoing inflationary pressures,
the premature termination of a fixed power contract as a result of
a supplier bankruptcy and some unplanned repair and maintenance
costs. Additionally, our cost was also impacted by the ongoing
development work associated with the fifth longwall at the PAMC,
which we expect to be operational in late 2022.
|
|
|
Three Months
Ended
|
|
|
Six Months
Ended
|
|
|
|
|
June 30,
2022
|
|
|
June 30,
2021
|
|
|
June 30,
2022
|
|
|
June 30,
2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Coal
Revenue
|
thousands
|
|
$
|
532,692
|
|
|
$
|
259,832
|
|
|
$
|
1,009,060
|
|
|
$
|
545,367
|
|
Settlements of
Commodity Derivatives
|
thousands
|
|
$
|
(73,923)
|
|
|
$
|
—
|
|
|
$
|
(160,175)
|
|
|
$
|
—
|
|
Total Realized Coal
Revenue1
|
thousands
|
|
$
|
458,769
|
|
|
$
|
259,832
|
|
|
$
|
848,885
|
|
|
$
|
545,367
|
|
Total Costs and
Expenses
|
thousands
|
|
$
|
395,105
|
|
|
$
|
291,880
|
|
|
$
|
761,606
|
|
|
$
|
602,442
|
|
Total Cash Cost of Coal
Sold1
|
thousands
|
|
$
|
214,151
|
|
|
$
|
164,196
|
|
|
$
|
409,253
|
|
|
$
|
331,062
|
|
Coal
Production
|
million tons
|
|
|
6.2
|
|
|
|
5.9
|
|
|
|
12.6
|
|
|
|
12.9
|
|
Coal Sales
|
million tons
|
|
|
6.2
|
|
|
|
5.9
|
|
|
|
12.7
|
|
|
|
12.7
|
|
Average Realized Coal
Revenue per Ton Sold1
|
per ton
|
|
$
|
72.18
|
|
|
$
|
44.02
|
|
|
$
|
65.73
|
|
|
$
|
42.60
|
|
Average Cash Cost of
Coal Sold per Ton1
|
per ton
|
|
$
|
34.81
|
|
|
$
|
28.02
|
|
|
$
|
32.30
|
|
|
$
|
26.09
|
|
Average Cash Margin per
Ton Sold1
|
per ton
|
|
$
|
37.37
|
|
|
$
|
16.00
|
|
|
$
|
33.43
|
|
|
$
|
16.51
|
|
CONSOL Marine Terminal
Review
For the second quarter of 2022, throughput volumes at the CMT
were 3.8 million tons, consistent with the year-ago period.
Terminal revenues and CMT total costs and expenses were
$21.8 million and $10.3 million, respectively, compared to
$17.4 million and $9.5 million, respectively, during the year-ago
period. Terminal revenue was significantly improved in 2Q22
compared to 2Q21 due to a substantially higher throughput rate per
ton driven by increased export demand and commodity pricing
strength. For the second consecutive quarter, CMT achieved the
highest terminal revenue in its history. CMT operating cash
costs1 were $5.7
million in 2Q22, compared to $5.3
million in 2Q21. CONSOL Marine Terminal net income and
CONSOL Marine Terminal Adjusted EBITDA1 were
$12.4 million and $15.1 million, respectively, in the second
quarter of 2022 compared to $8.2
million and $11.0 million,
respectively, in the year-ago period.
Itmann Update
Our Itmann project made significant strides in its final stages
of development during the second quarter of 2022. As such, we are
excited to report that both the preparation plant start-up and
production scale-up are on schedule and expected to be achieved in
the third quarter of 2022.
- As of June 30, 2022, relocation
and construction of the Itmann preparation plant was approximately
80% complete and is on schedule for completion in 3Q22.
- The main Itmann plant structure has been fully erected, and the
majority of the plant equipment was installed during 2Q22.
- The new unit train rail siding and mainline rail construction
activities are nearly complete, and the conversion of the new
mainline track is expected to occur in early August.
- The mine produced 34,632 tons of low-vol metallurgical coal and
sold 51,235 tons in 2Q22, primarily into the export market through
CMT.
- We continue to grow staffing levels consistent with our
production ramp-up plan for 2022 and anticipate being staffed for
full production by the end of 3Q22, in conjunction with the
start-up of the preparation plant.
Shareholder Returns and Increasing
Repurchase Authorization
Today, CEIX announced a special dividend of $1.00/share based on the strong free cash flow
generated in the second quarter of 2022, for an aggregate amount of
approximately $35.0 million, payable on August 24, 2022 to all shareholders of
record as of August 16,
2022. Moving forward, CEIX announced an enhanced shareholder
return program, which will become effective in the third quarter of
2022, that will, subject to the discretion of the board of
directors, return approximately 35% of quarterly free cash
flow in the form of dividends and/or share repurchases.
CEIX expects to continue to aggressively reduce its outstanding
gross debt by allocating the majority of its remaining free cash
flow toward debt repayment with the goal of achieving a targeted
gross debt level of approximately $300
million. Once this goal is achieved, CEIX expects to further
increase the free cash flow allocation to its shareholder return
program.
In conjunction with the enhanced shareholder return program,
CEIX's Board of Directors has increased its previously authorized
repurchase program to an aggregate amount of up to $600 million from $320
million, while extending the duration of the program by two
years to December 31, 2024. With this
approval, CEIX now has approximately $381
million of availability to repurchase its Senior Secured
Second Lien Notes and shares of CEIX common stock.
Refinancing Update
During July 2022,
CEIX amended and extended its revolving credit facility and
accounts receivable securitization facility, extending the
maturities by 4 years and 3 years, respectively. With respect to
the revolver, CEIX was successful in securing new commitments in
the amount of $260 million, which
includes more than $100 million of
new lenders to the facility and nearly $40
million of increased commitments from extending
lenders. In conjunction with the non-extending lenders, CEIX will
maintain full access to its current $400
million revolving credit facility until its maturity at the
end of 1Q23. At that point, the facility will drop to $260 million and continue until July
2026. The accounts receivable securitization facility
maintains a capacity of $100 million
and is extended until July 2025. CEIX
was also successful in making some modifications to the borrowing
base calculations to achieve higher utilization of the
facility.
Debt Repurchases Update
During the second quarter of 2022, we continued to execute on
our stated goal of reducing our total debt levels and made
repayments of $75.0 million,
$35.0 million, and $5.9 million on our Term Loan B, Term Loan A and
equipment financed debt, respectively. In conjunction with the
revolver refinancing, the Term Loan A payment of $35.0 million fully retired the loan
approximately nine months ahead of its maturity. This brings our
total debt repayments and repurchases in the quarter to
$115.9 million. Year-to-date through
June 30, 2022, we have made total
debt repayments and repurchases of $154.4
million (excluding the premium paid on the second lien
notes).
2022 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 full fiscal year 2022:
- 2022 targeted PAMC coal sales volume of 24.0-25.0 million
tons
- PAMC average realized coal revenue per ton sold2
expectation of $64.00-$67.00
- PAMC average cash cost of coal sold per ton2
expectation of $32.00-$34.00
- Capital expenditures (including Itmann development):
$160-$185
million
- Expect to produce between 0.3 and 0.5 million tons of coal
at the Itmann Mine
Second Quarter
Earnings Conference Call
A conference call and webcast, during which management will
discuss the second quarter 2022 financial and
operational results, is scheduled for August
4, 2022 at 11:00 AM eastern time. Prepared remarks
by members of management will be followed by a question and answer
session. Interested parties may listen via webcast on the "Events
and Presentations" 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)
|
1-877-226-2859
|
Participant
international dial in
|
1-412-542-4134
|
Availability of Additional
Information
Please refer to our website, www.consolenergy.com, for
additional information regarding the company. In addition, we
may provide other information about the company from time to time
on our website.
We will also file our Form 10-Q with the Securities and Exchange
Commission (SEC) reporting our results for the period
ended June 30, 2022 on August 4,
2022. Investors seeking our detailed financial statements
can refer to the Form 10-Q once it has been filed with the SEC.
Footnotes:
1 "Adjusted EBITDA", "Free Cash Flow", "Net Leverage Ratio",
"CONSOL Marine Terminal Adjusted EBITDA", "CMT Operating Cash
Costs", "Total Realized Coal Revenue", "Total Cash Cost of
Coal Sold" and "Net Income Adjusted for the Effect of Unrealized
Mark-to-Market Losses on Commodity Derivative Instruments" are
non-GAAP financial measures and "Average Realized Coal Revenue per
Ton Sold", "Average Cash Cost of Coal Sold per Ton" and "Average
Cash Margin per Ton Sold" are operating ratios derived from
non-GAAP financial measures, each of which are reconciled to the
most directly comparable GAAP financial measures below, under the
caption "Reconciliation of Non-GAAP Financial Measures".
2 CEIX is unable to provide a reconciliation of Average
Realized Coal Revenue per Ton Sold and Average Cash Cost of Coal
Sold per Ton guidance, operating ratios 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, Pennsylvania-based producer and
exporter of high-Btu bituminous thermal coal and metallurgical
coal. It owns and operates some of the most productive longwall
mining operations in the Northern Appalachian Basin and is
developing a new metallurgical coal mine (the Itmann project) in
the Central Appalachian Basin. CONSOL's 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 ~612
million reserve tons associated with the Pennsylvania Mining
Complex and the ~21 million reserve tons associated with the Itmann
project, the company also controls approximately 1.4 billion tons
of greenfield thermal and metallurgical coal reserves and resources
located in the major coal-producing basins of the eastern
United States. Additional
information regarding CONSOL Energy may be found at
www.consolenergy.com.
Contacts:
Investor:
Nathan Tucker, (724)
416-8336
nathantucker@consolenergy.com
Media:
Erica Fisher, (724)
416-8292
ericafisher@consolenergy.com
Condensed Consolidated Statements of Cash Flows
The following table presents the condensed consolidated
statements of cash flows for the three months ended June 30,
2022 and 2021 (in thousands):
|
|
Three Months Ended
June 30,
|
|
|
|
2022
|
|
|
2021
|
|
Cash Flows from
Operating Activities:
|
|
(Unaudited)
|
|
|
(Unaudited)
|
|
Net Income
|
|
$
|
126,291
|
|
|
$
|
4,172
|
|
Adjustments to
Reconcile Net Income to Net Cash Provided by Operating
Activities:
|
|
|
|
|
|
|
|
|
Depreciation,
Depletion and Amortization
|
|
|
57,880
|
|
|
|
52,199
|
|
Other Non-Cash
Adjustments to Net Income
|
|
|
(3,697)
|
|
|
|
12,605
|
|
Changes in Working
Capital
|
|
|
17,877
|
|
|
|
25,633
|
|
Net Cash Provided
by Operating Activities
|
|
|
198,351
|
|
|
|
94,609
|
|
Cash Flows from
Investing Activities:
|
|
|
|
|
|
|
|
|
Capital
Expenditures
|
|
|
(39,418)
|
|
|
|
(43,655)
|
|
Proceeds from Sales of
Assets
|
|
|
940
|
|
|
|
3,430
|
|
Other Investing
Activity
|
|
|
(154)
|
|
|
|
—
|
|
Net Cash Used in
Investing Activities
|
|
|
(38,632)
|
|
|
|
(40,225)
|
|
Cash Flows from
Financing Activities:
|
|
|
|
|
|
|
|
|
Net Payments on
Long-Term Debt, Including Fees
|
|
|
(115,946)
|
|
|
|
(20,428)
|
|
Proceeds from
Long-Term Debt
|
|
|
—
|
|
|
|
75,000
|
|
Other Financing
Activities
|
|
|
(122)
|
|
|
|
(230)
|
|
Net Cash (Used in)
Provided by Financing Activities
|
|
|
(116,068)
|
|
|
|
54,342
|
|
Net Increase in Cash
and Cash Equivalents and Restricted Cash
|
|
|
43,651
|
|
|
|
108,726
|
|
Cash and Cash
Equivalents and Restricted Cash at Beginning of Period
|
|
|
269,008
|
|
|
|
91,477
|
|
Cash and Cash
Equivalents and Restricted Cash at End of Period
|
|
$
|
312,659
|
|
|
$
|
200,203
|
|
Reconciliation of Non-GAAP
Financial Measures
We evaluate our cost of coal sold and cash cost of coal sold on
an aggregate basis. 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 includes items such as direct operating costs,
royalty and production taxes, direct administration costs, and
depreciation, depletion and amortization costs on production
assets. Cost of coal sold excludes any indirect costs, such as
general and administrative costs, freight expenses, (loss) gain on
debt extinguishment, interest expenses, depreciation, depletion and
amortization costs on non-production assets and other costs not
directly attributable to the production of coal. The cash cost of
coal sold includes cost of coal sold less depreciation, depletion
and amortization costs on production assets. We define average cash
cost of coal sold per ton as cash cost of coal sold divided by
tons sold. The GAAP measure most directly comparable to cost of
coal sold, cash cost of coal sold and average cash cost of coal
sold per ton is total costs and expenses.
The following table presents a reconciliation for the PAMC
segment of cost of coal sold, cash cost of coal sold and
average cash cost of coal sold per ton to total costs and
expenses, 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
June 30,
|
|
|
Six Months Ended
June 30,
|
|
|
|
2022
|
|
|
2021
|
|
|
2022
|
|
|
2021
|
|
Total Costs and
Expenses
|
|
$
|
395,105
|
|
|
$
|
291,880
|
|
|
$
|
761,606
|
|
|
$
|
602,442
|
|
Less: Freight
Expense
|
|
|
(50,411)
|
|
|
|
(26,010)
|
|
|
|
(88,800)
|
|
|
|
(53,023)
|
|
Less: General and
Administrative Costs
|
|
|
(27,364)
|
|
|
|
(22,486)
|
|
|
|
(64,513)
|
|
|
|
(46,026)
|
|
Less: (Loss) Gain on
Debt Extinguishment
|
|
|
(1,565)
|
|
|
|
106
|
|
|
|
(3,687)
|
|
|
|
789
|
|
Less: Interest
Expense, net
|
|
|
(13,121)
|
|
|
|
(16,187)
|
|
|
|
(27,473)
|
|
|
|
(31,448)
|
|
Less: Other Costs
(Non-Production and non-PAMC)
|
|
|
(30,613)
|
|
|
|
(10,908)
|
|
|
|
(54,046)
|
|
|
|
(29,576)
|
|
Less: Depreciation,
Depletion and Amortization (Non-Production and non-PAMC)
|
|
|
(11,310)
|
|
|
|
(5,034)
|
|
|
|
(19,178)
|
|
|
|
(12,918)
|
|
Cost of Coal
Sold
|
|
$
|
260,721
|
|
|
$
|
211,361
|
|
|
$
|
503,909
|
|
|
$
|
430,240
|
|
Less: Depreciation,
Depletion and Amortization (Production)
|
|
|
(46,570)
|
|
|
|
(47,165)
|
|
|
|
(94,656)
|
|
|
|
(99,178)
|
|
Cash Cost of Coal
Sold
|
|
$
|
214,151
|
|
|
$
|
164,196
|
|
|
$
|
409,253
|
|
|
$
|
331,062
|
|
Total Tons Sold (in
millions)
|
|
|
6.2
|
|
|
|
5.9
|
|
|
|
12.7
|
|
|
|
12.7
|
|
Average Cost of Coal
Sold per Ton
|
|
$
|
42.29
|
|
|
$
|
36.00
|
|
|
$
|
39.82
|
|
|
$
|
33.76
|
|
Less: Depreciation,
Depletion and Amortization Costs per Ton Sold
|
|
|
7.48
|
|
|
|
7.98
|
|
|
|
7.52
|
|
|
|
7.67
|
|
Average Cash Cost of
Coal Sold per Ton
|
|
$
|
34.81
|
|
|
$
|
28.02
|
|
|
$
|
32.30
|
|
|
$
|
26.09
|
|
We evaluate our average realized coal revenue per ton sold,
average margin per ton sold and average cash margin per ton
sold on a per-ton basis. We define average realized coal
revenue per ton sold as total coal revenue, net of settlements
of commodity derivatives divided by tons sold. We define
average margin per ton sold as average realized coal revenue per
ton sold, net of average cost of coal sold per ton. We define
average cash margin per ton sold as average realized coal revenue
per ton sold, net of average cash cost of coal sold per ton. The
GAAP measure most directly comparable to average realized coal
revenue per ton sold, average margin per ton sold and average
cash margin per ton sold is total coal revenue.
The following table presents a reconciliation for the PAMC
segment of average realized coal revenue per ton sold, average
margin per ton sold and average cash margin per ton sold 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
June 30,
|
|
|
Six Months Ended
June 30,
|
|
|
|
2022
|
|
|
2021
|
|
|
2022
|
|
|
2021
|
|
Total Coal Revenue
(PAMC Segment)
|
|
$
|
518,942
|
|
|
$
|
258,482
|
|
|
$
|
991,903
|
|
|
$
|
542,948
|
|
Add: Settlements of
Commodity Derivatives
|
|
|
(73,923)
|
|
|
|
—
|
|
|
|
(160,175)
|
|
|
|
—
|
|
Total Realized Coal
Revenue
|
|
$
|
445,019
|
|
|
$
|
258,482
|
|
|
$
|
831,728
|
|
|
$
|
542,948
|
|
Operating and Other
Costs
|
|
|
244,764
|
|
|
|
175,104
|
|
|
|
463,299
|
|
|
|
360,638
|
|
Less: Other Costs
(Non-Production and non-PAMC)
|
|
|
(30,613)
|
|
|
|
(10,908)
|
|
|
|
(54,046)
|
|
|
|
(29,576)
|
|
Total Cash Cost of
Coal Sold
|
|
|
214,151
|
|
|
|
164,196
|
|
|
|
409,253
|
|
|
|
331,062
|
|
Add: Depreciation,
Depletion and Amortization
|
|
|
57,880
|
|
|
|
52,199
|
|
|
|
113,834
|
|
|
|
112,096
|
|
Less: Depreciation,
Depletion and Amortization (Non-Production and non-PAMC)
|
|
|
(11,310)
|
|
|
|
(5,034)
|
|
|
|
(19,178)
|
|
|
|
(12,918)
|
|
Total Cost of Coal
Sold
|
|
$
|
260,721
|
|
|
$
|
211,361
|
|
|
$
|
503,909
|
|
|
$
|
430,240
|
|
Total Tons Sold (in
millions)
|
|
|
6.2
|
|
|
|
5.9
|
|
|
|
12.7
|
|
|
|
12.7
|
|
Average Realized
Coal Revenue per Ton Sold
|
|
$
|
72.18
|
|
|
$
|
44.02
|
|
|
$
|
65.73
|
|
|
$
|
42.60
|
|
Average Cash Cost of
Coal Sold per Ton
|
|
|
34.81
|
|
|
|
28.02
|
|
|
|
32.30
|
|
|
|
26.09
|
|
Depreciation, Depletion
and Amortization Costs per Ton Sold
|
|
|
7.48
|
|
|
|
7.98
|
|
|
|
7.52
|
|
|
|
7.67
|
|
Average Cost of Coal
Sold per Ton
|
|
|
42.29
|
|
|
|
36.00
|
|
|
|
39.82
|
|
|
|
33.76
|
|
Average Margin per
Ton Sold
|
|
|
29.89
|
|
|
|
8.02
|
|
|
|
25.91
|
|
|
|
8.84
|
|
Add: Depreciation,
Depletion and Amortization Costs per Ton Sold
|
|
|
7.48
|
|
|
|
7.98
|
|
|
|
7.52
|
|
|
|
7.67
|
|
Average Cash Margin
per Ton Sold
|
|
$
|
37.37
|
|
|
$
|
16.00
|
|
|
$
|
33.43
|
|
|
$
|
16.51
|
|
We define CMT operating costs as operating and other costs
related to throughput tons. CMT operating costs exclude any
indirect costs, such as freight expense, general and
administrative costs, (loss) gain on debt extinguishment,
depreciation, depletion and amortization of non-throughput assets,
direct administration costs, interest expenses, and other costs not
directly attributable to throughput tons. CMT operating cash costs
include CMT operating costs, less depreciation, depletion and
amortization costs on throughput assets. The GAAP measure most
directly comparable to CMT operating costs and CMT operating cash
costs is total costs and expenses.
The following table presents a reconciliation of CMT operating
costs and CMT operating cash costs to total costs and expenses,
the most directly comparable GAAP financial measure, on a
historical basis, for each of the periods indicated (in
thousands).
|
|
Three Months Ended
June 30,
|
|
|
|
2022
|
|
|
2021
|
|
Total Costs and
Expenses
|
|
$
|
395,105
|
|
|
$
|
291,880
|
|
Less: Freight
Expense
|
|
|
(50,411)
|
|
|
|
(26,010)
|
|
Less: General and
Administrative Costs
|
|
|
(27,364)
|
|
|
|
(22,486)
|
|
Less: (Loss) Gain on
Debt Extinguishment
|
|
|
(1,565)
|
|
|
|
106
|
|
Less: Interest
Expense, net
|
|
|
(13,121)
|
|
|
|
(16,187)
|
|
Less: Other Costs
(Non-Throughput)
|
|
|
(239,070)
|
|
|
|
(169,837)
|
|
Less: Depreciation,
Depletion and Amortization (Non-Throughput)
|
|
|
(56,818)
|
|
|
|
(50,999)
|
|
CMT Operating
Costs
|
|
$
|
6,756
|
|
|
$
|
6,467
|
|
Less: Depreciation,
Depletion and Amortization (Throughput)
|
|
|
(1,062)
|
|
|
|
(1,200)
|
|
CMT Operating Cash
Costs
|
|
$
|
5,694
|
|
|
$
|
5,267
|
|
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
stock-based compensation and unrealized mark-to-market gains or
losses on commodity derivative instruments. The GAAP measure most
directly comparable to adjusted EBITDA is net income (loss).
The following tables present a reconciliation of adjusted EBITDA
to net income (loss), the most directly comparable GAAP financial
measure, on a historical basis, for each of the periods indicated
(in thousands).
|
|
Three Months Ended
June 30, 2022
|
|
|
|
PAMC
|
|
|
CONSOL
Marine
Terminal
|
|
|
Other
|
|
|
Total
Company
|
|
Net Income
(Loss)
|
|
$
|
159,404
|
|
|
$
|
12,354
|
|
|
$
|
(45,467)
|
|
|
$
|
126,291
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Add: Income Tax
Expense
|
|
|
—
|
|
|
|
—
|
|
|
|
23,223
|
|
|
|
23,223
|
|
Add: Interest Expense,
net
|
|
|
68
|
|
|
|
1,530
|
|
|
|
11,523
|
|
|
|
13,121
|
|
Less: Interest
Income
|
|
|
(452)
|
|
|
|
—
|
|
|
|
(987)
|
|
|
|
(1,439)
|
|
Earnings (Loss) Before
Interest & Taxes (EBIT)
|
|
|
159,020
|
|
|
|
13,884
|
|
|
|
(11,708)
|
|
|
|
161,196
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Add: Depreciation,
Depletion & Amortization
|
|
|
49,465
|
|
|
|
1,142
|
|
|
|
7,273
|
|
|
|
57,880
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (Loss) Before
Interest, Taxes and DD&A (EBITDA)
|
|
$
|
208,485
|
|
|
$
|
15,026
|
|
|
$
|
(4,435)
|
|
|
$
|
219,076
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-Based
Compensation
|
|
$
|
1,066
|
|
|
$
|
51
|
|
|
$
|
152
|
|
|
$
|
1,269
|
|
Loss on Debt
Extinguishment
|
|
|
—
|
|
|
|
—
|
|
|
|
1,565
|
|
|
|
1,565
|
|
Unrealized
Mark-to-Market Gain on Commodity Derivative Instruments
|
|
|
(5,571)
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(5,571)
|
|
Total Pre-tax
Adjustments
|
|
|
(4,505)
|
|
|
|
51
|
|
|
|
1,717
|
|
|
|
(2,737)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
|
$
|
203,980
|
|
|
$
|
15,077
|
|
|
$
|
(2,718)
|
|
|
$
|
216,339
|
|
|
|
Three Months Ended
June 30, 2021
|
|
|
|
PAMC
|
|
|
CONSOL
Marine
Terminal
|
|
|
Other
|
|
|
Total
Company
|
|
Net Income
(Loss)
|
|
$
|
6,166
|
|
|
$
|
8,181
|
|
|
$
|
(10,175)
|
|
|
$
|
4,172
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Income Tax
Benefit
|
|
|
—
|
|
|
|
—
|
|
|
|
(8,893)
|
|
|
|
(8,893)
|
|
Add: Interest Expense,
net
|
|
|
478
|
|
|
|
1,536
|
|
|
|
14,173
|
|
|
|
16,187
|
|
Less: Interest
Income
|
|
|
(36)
|
|
|
|
—
|
|
|
|
(775)
|
|
|
|
(811)
|
|
Earnings (Loss) Before
Interest & Taxes (EBIT)
|
|
|
6,608
|
|
|
|
9,717
|
|
|
|
(5,670)
|
|
|
|
10,655
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Add: Depreciation,
Depletion & Amortization
|
|
|
50,169
|
|
|
|
1,200
|
|
|
|
830
|
|
|
|
52,199
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (Loss) Before
Interest, Taxes and DD&A (EBITDA)
|
|
$
|
56,777
|
|
|
$
|
10,917
|
|
|
$
|
(4,840)
|
|
|
$
|
62,854
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-Based
Compensation
|
|
$
|
1,053
|
|
|
$
|
48
|
|
|
$
|
109
|
|
|
$
|
1,210
|
|
Gain on Debt
Extinguishment
|
|
|
—
|
|
|
|
—
|
|
|
|
(106)
|
|
|
|
(106)
|
|
Pension
Settlement
|
|
|
—
|
|
|
|
—
|
|
|
|
22
|
|
|
|
22
|
|
Unrealized
Mark-to-Market Loss on Commodity Derivative Instruments
|
|
|
20,437
|
|
|
|
—
|
|
|
|
—
|
|
|
|
20,437
|
|
Total Pre-tax
Adjustments
|
|
|
21,490
|
|
|
|
48
|
|
|
|
25
|
|
|
|
21,563
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
|
$
|
78,267
|
|
|
$
|
10,965
|
|
|
$
|
(4,815)
|
|
|
$
|
84,417
|
|
We define net income after adjusting for the impact of
unrealized mark-to-market gains/losses on commodity derivative
instruments as net income adjusted for the impact of current
period unrealized mark-to-market gains or losses related to
commodity derivatives. The GAAP measure most directly comparable to
net income after adjusting for the impact of unrealized
mark-to-market gains/losses on commodity derivative instruments is
net income.
The following table presents a reconciliation of net income
after adjusting for the impact of unrealized
mark-to-market gains/losses on commodity derivative instruments to
net income, the most directly comparable GAAP financial
measure, on a historical basis, for each of the periods indicated
(in thousands).
|
|
Three Months Ended
June 30,
|
|
|
Six Months Ended
June 30,
|
|
|
|
2022
|
|
|
2021
|
|
|
2022
|
|
|
2021
|
|
Net Income
|
|
$
|
126,291
|
|
|
$
|
4,172
|
|
|
$
|
121,841
|
|
|
$
|
30,576
|
|
Unrealized
Mark-to-Market (Gain) Loss on Commodity Derivative
Instruments
|
|
|
(5,571)
|
|
|
|
20,437
|
|
|
|
96,331
|
|
|
|
20,437
|
|
Effect of Income
Taxes
|
|
|
1,392
|
|
|
|
(5,107)
|
|
|
|
(24,073)
|
|
|
|
(5,107)
|
|
Net Income After
Adjusting for the Impact of Unrealized Mark-to-Market Gains/Losses
on Commodity Derivative Instruments
|
|
$
|
122,112
|
|
|
$
|
19,502
|
|
|
$
|
194,099
|
|
|
$
|
45,906
|
|
We define net leverage ratio as the ratio of net debt to the
last twelve months' ("LTM") earnings before interest expense and
depreciation, depletion and amortization, adjusted for certain
non-cash items, such as stock-based compensation, unrealized
mark-to-market loss on commodity derivative instruments,
amortization of debt issuance costs and capitalized interest.
The following table presents a reconciliation of net leverage
ratio (in thousands).
|
|
Twelve Months
Ended
|
|
|
Twelve Months
Ended
|
|
|
|
June 30,
2022
|
|
|
June 30,
2021
|
|
Net
Income
|
|
$
|
125,375
|
|
|
$
|
35,950
|
|
Plus:
|
|
|
|
|
|
|
|
|
Interest Expense,
net
|
|
|
59,367
|
|
|
|
62,241
|
|
Depreciation,
Depletion and Amortization
|
|
|
226,321
|
|
|
|
221,758
|
|
Income
Taxes
|
|
|
24,706
|
|
|
|
6,039
|
|
Stock-Based
Compensation
|
|
|
9,383
|
|
|
|
7,048
|
|
Loss (Gain) on Debt
Extinguishment
|
|
|
3,819
|
|
|
|
(5,308)
|
|
Unrealized
Mark-to-Market Loss on Commodity Derivative Instruments
|
|
|
128,098
|
|
|
|
20,437
|
|
Cash Payments for
Legacy Employee Liabilities, Net of Non-Cash Expense
|
|
|
(36,498)
|
|
|
|
(26,107)
|
|
Other Adjustments to
Net Income
|
|
|
(3,405)
|
|
|
|
2,118
|
|
Consolidated EBITDA per
Credit Agreement
|
|
$
|
537,166
|
|
|
$
|
324,176
|
|
|
|
|
|
|
|
|
|
|
Consolidated First
Lien Debt
|
|
$
|
204,454
|
|
|
$
|
369,367
|
|
Senior Secured Second
Lien Notes
|
|
|
124,107
|
|
|
|
151,957
|
|
MEDCO Revenue
Bonds
|
|
|
102,865
|
|
|
|
102,865
|
|
PEDFA Bonds
|
|
|
75,000
|
|
|
|
75,000
|
|
Advance Royalty
Commitments
|
|
|
4,858
|
|
|
|
2,185
|
|
Consolidated
Indebtedness per Credit Agreement
|
|
|
511,284
|
|
|
|
701,374
|
|
Less:
|
|
|
|
|
|
|
|
|
Advance Royalty
Commitments
|
|
|
4,858
|
|
|
|
2,185
|
|
Cash on
Hand
|
|
|
261,569
|
|
|
|
146,667
|
|
Consolidated Net
Indebtedness per Credit Agreement
|
|
$
|
244,857
|
|
|
$
|
552,522
|
|
|
|
|
|
|
|
|
|
|
Net Leverage Ratio
(Net Indebtedness/EBITDA)
|
|
|
0.46
|
|
|
|
1.70
|
|
Free cash flow is a non-GAAP financial measure. Management
believes that this measure is 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 does 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 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 (in thousands).
|
|
Three Months
Ended
|
|
|
Three Months
Ended
|
|
|
Six Months
Ended
|
|
|
Six Months
Ended
|
|
|
|
June 30,
2022
|
|
|
June 30,
2021
|
|
|
June 30,
2022
|
|
|
June 30,
2021
|
|
Net Cash Provided by
Operations
|
|
$
|
198,351
|
|
|
$
|
94,609
|
|
|
$
|
346,558
|
|
|
$
|
172,605
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital
Expenditures
|
|
|
(39,418)
|
|
|
|
(43,655)
|
|
|
|
(76,061)
|
|
|
|
(57,455)
|
|
Proceeds from Sales of
Assets
|
|
|
940
|
|
|
|
3,430
|
|
|
|
7,418
|
|
|
|
11,918
|
|
Free Cash
Flow
|
|
$
|
159,873
|
|
|
$
|
54,384
|
|
|
$
|
277,915
|
|
|
$
|
127,068
|
|
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 results projected in or implied by such
forward-looking statements. 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 our
expectations with respect to the Itmann Mine or any other 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. Specific risks, contingencies and
uncertainties are discussed in more detail 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.
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SOURCE CONSOL Energy Inc.