1st Quarter 2024 Earnings Supplement
May 7, 2024
Disclaimer
This presentation contains statements, estimates and projections which are forward-looking statements (as defined in Section 21E of the Securities Exchange Act of 1934, as amended). Statements that are not historical are forward-looking, and include, without limitation, projections and estimates concerning the timing and success of specific projects and the future production, revenues, income and capital spending of CONSOL Energy Inc. ("CEIX"). When we use the words "anticipate," "believe," "could," "continue," "estimate," "expect," "intend," "may," "plan," "predict," "project," "should," "target," "will," "would," or their negatives, or other similar expressions, the statements which include those words are usually forward-looking statements. When we describe our expectations or strategies, including with respect to the Itmann Mining Complex, that involve risks or uncertainties, we are making forward-looking statements. These forward-looking statements involve risks and uncertainties that could cause actual results and outcomes to differ materially from results and outcomes expressed in or implied by our forward-looking statements. Accordingly, investors should not place undue reliance on forward-looking statements as a prediction of future actual results. 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. Factors that could cause future actual results to differ materially from those made or implied by the forward-looking statements include risks, contingencies and uncertainties that are described in detail under the captions "Forward-Looking Statements" and "Risk Factors" in our public filings with the Securities and Exchange Commission. The forward-looking statements in this presentation speak only as of the date of this presentation; we disclaim any obligation to update the statements, whether in response to new information, future events or otherwise, except as required by law, and we caution you not to rely on them unduly.
This presentation includes unaudited "non-GAAP financial measures" as defined in Regulation G under the Securities Exchange Act of 1934, including EBITDA, Adjusted EBITDA, CONSOL Marine Terminal Adjusted EBITDA, Total CEIX Liquidity, Cost of Coal Sold, Average Cash Cost of Coal Sold Per Ton, Average Cash Margin Per Ton Sold, CMT Operating Cash Costs, and Free Cash Flow. The presentation of non-GAAP financial measures is not intended to be a substitute for, and should not be considered in isolation from, the financial measures reported in accordance with GAAP. Please see the appendix to this presentation for a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP measures.
2
Executive Summary
- CEIX recorded Adjusted EBITDA(1) of $182MM and free cash flow(1) of $41MM for 1Q24.
•
•
PAMC produced 6.5MM tons while completing three longwall moves in the quarter.
Itmann Mining Complex sold 193K tons for 1Q24, beating last quarter's sales by 34K tons.
- From the beginning of December 2022 through April 30, 2024, CEIX has repurchased 6.1MM shares of its common stock, or approximately 18% of shares outstanding over the same time period.
- Returned approximately 89% of 1Q24 free cash flow(1) to shareholders through share repurchases at a weighted average price of $83.74 per share.
- Expanded PAMC sales into export markets by leveraging product quality and logistics assets.
• 64% of our total revenue & other income was generated from export sales in 1Q24, compared to 33% in FY18. - Increased PAMC contracted position to 22.9MM tons for 2024 and 13.5MM tons for 2025.
- Increased Itmann Mining Complex contracted position to 717K tons for 2024.
- Released updated guidance to reflect the current market landscape and the expected impact of the Francis Scott Key Bridge collapse.
3 (1) A non-GAAP measure. Please see the appendix for a reconciliation to the most directly comparable GAAP measure.
Building Long-Term Value
Guiding
principles of
safety,
compliance, and
continuous
improvement Success securing long-term
contracts which
Expanded
throughput
capacity at the CMT allows for future sales book diversification
Strong
liquidity(2)(3) of
No near-term
debt maturities
reduces
dependence on capital markets
High quality | provides revenue | Ability to | |||
products serving | visibility | ||||
develop and | |||||
industrial, power | |||||
access global | |||||
generation, and | |||||
markets due to | |||||
metallurgical | |||||
advantaged | |||||
applications | |||||
logistics and | |||||
allow for | |||||
product quality | |||||
flexibility | |||||
No Major Near-Term Debt Maturities(1) | |||||
($ in mm) | |||||
$355 | |||||
$103 | $75 | ||||
2024 | 2025 | 2026 | 2027 | 2028 |
$478 million
$1
$255
Industry-leading
shareholder
return program
linked to free
cash flow(3) generation
Robust Liquidity
Total CEIX | |
$222 | Liquidity: |
$478mm(2)(3) | |
Excluding | |
restricted cash | |
of $44mm |
Undrawn RCF | MEDCO Revenue Bonds | PEDFA Bonds |
Revolver Cash and ST Investments A/R Securitization
Source: Company filings.
- Debt Maturities as of March 31, 2024.
- As of March 31, 2024, there were no borrowings on the $355mm revolver and it is only being used for providing letters of credit with $133mm issued. Excludes finance
4 (3) | leases and other debt arrangements. |
Total CEIX Liquidity and free cash flow are non-GAAP measures; see the Appendix for reconciliations to the most comparable GAAP measure. |
Diversifying Our Revenue Mix and End Use Markets
% of Total Revenue from Contracts with Customers | ||||||
YE18 | YE19 | YE20 | YE21 | YE22 | YE23 | |
60% | 58% | 47% | 41% | 29% | ||
33% | 67% | |||||
40% | 42% | 53% | 59% | |||
71% |
LTM 1Q24
30%
70%
End-User Portfolio by Sales Tonnage
YE20
14%
23% | 54% |
62%
Export | Domestic | ||
YE21 | YE22 | YE23 | LTM |
1Q24 | |||
14% | 9% | 10% | 10% | |
3% | 4% | 3% | ||
14% | 39% | 38% | ||
56% | ||||
27% | 19% | |||
44% | 46% |
Source: Company filings.
5
Significant Sales Shift Toward Export and Industrial Markets
(% of total revenue from contracts with customers)
Export Industrial | |||
Terminal | |||
Domestic Met | |||
100% | |||
90% | |||
80% | |||
70% | 61% | 64% | 58% |
60% | |||
50% | |||
40% | |||
30% | 7% | ||
8% | 5% | 10% | |
20% | |||
13% | 18% | ||
10% | |||
17% | |||
7% | 2% | ||
0% | |||
2017 | 2018 | 2019 |
Notes:
Industrial includes brick kiln and cement manufacturing
Export Power Generation
Freight
Domestic Power Generation
45%
55%
7%
5%11%
9%
22%
16%
2020 2021
Export Met
Domestic Industrial
Total Export
27%28%
40%
12%
11%
13%
14%12%
17%
29%30%
17%
2022 | 2023 | LTM 1Q24 |
Sales to Power
Generation
Market
decreased from
74% to 40% since 2017.
Sales to Export
Industrial
Market
increased from 7% to 30% since 2017.
6
Expanding Metallurgical Portfolio
Total Metallurgical Tons Sold
MM tons
5
4.5
4
3.5
3
2.5
2
1.5
1
0.5
0
Our metallurgical sales tons have significantly increased due to developing PAMC crossover sales, through the availability of the 5th longwall, and the ramp up of the Itmann Mining Complex.
2020 | 2021 | 2022 | 2023 |
Source: Company filings.
7
Record Free Cash Flow Generation Drives Debt Reduction & Pivot to Shareholder Returns
Quarterly and LTM Shareholder Return1 ($MM, except per share data)
600.00
500.00
400.00
300.00
200.00
100.00 $103 -
Quarterly Return | LTM Return | LTM Return / Share | |||||
$15.88 | |||||||
$14.27 | |||||||
$12.50 | |||||||
$8.79 | |||||||
$475 | |||||||
$389 | $419 | ||||||
$287 | |||||||
$137 | $122 | $58 | |||||
20.00 18.00 16. 14.00 12.00 10.00 8.00 6.00 4.00 2.00 -
When factoring in our 10b5-1 plan in April 2024, we returned $432MM to our shareholders over the last twelve months.
- Utilizing 1Q24 free cash flow, CEIX repurchased 440k shares of common stock at an average price of $83.74 per share.
- Approx. 18% reduction in number of shares outstanding since the beginning of December 2022.
2Q23 | 3Q23 | 4Q23 | 1Q24 |
CEIX Free Cash Flow Generation ($MM)2 | Absolute Debt Levels ($MM) | |||||||||||||||||||||||||||
$700 | FCF | % of FCF Returned | $687 | 90% | Second Lien TLB | TLA | CMT Bonds CRDA Bonds | Leases | Other | |||||||||||||||||||
$915 | ||||||||||||||||||||||||||||
$600 | 83% | 80% | $889 | |||||||||||||||||||||||||
$12 | $43 | |||||||||||||||||||||||||||
$501 | 69% | $507 | 70% | $103 | $723 | |||||||||||||||||||||||
$500 | $103 | |||||||||||||||||||||||||||
60% | $100 | $666 | $657 | |||||||||||||||||||||||||
$74 | $37 | |||||||||||||||||||||||||||
$400 | 50% | $103 | $59 | $49 | ||||||||||||||||||||||||
$89 | $103 | $75 | ||||||||||||||||||||||||||
$270 | 42% | $400 | $380 | |||||||||||||||||||||||||
$300 | 40% | $396 | $66 | $103 | ||||||||||||||||||||||||
$191 | $186 | 30% | $273 | $41 | $39 | |||||||||||||||||||||||
$200 | 20% | $270 | $239 | $75 | $193 | $190 | ||||||||||||||||||||||
$103 | $14 | $11 | ||||||||||||||||||||||||||
$77 | ||||||||||||||||||||||||||||
$100 | $53 | 14% | $300 | |||||||||||||||||||||||||
10% | 10% | $274 | $222 | $167 | $149 | $64 | $75 | $75 | ||||||||||||||||||||
$- | - | $99 | $103 | $103 | ||||||||||||||||||||||||
2017A | 2018A | 2019A | 2020A | 2021A | 2022A | 2023A | 1Q24 | |||||||||||||||||||||
2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | LTM | |||||||||||||||||||||
1Q24 |
Note: Some totals may not foot due to rounding
- Source: Public filings as of March 31, 2024
8 (2) A non-GAAP financial measure. See the Appendix for a reconciliation.
CEIX Balance Sheet Legacy Liabilities
Significant legacy liability reductions over the past three years
- Cash payments related to legacy liabilities are declining over time.
-
Approximately 55% of all CEIX employee liabilities are likely
"closed" as of 12/31/2023. - CEIX's Qualified Pension Plan was funded at 110% as of 3/31/24, compared to 107% for the average S&P 1500 DB plan.
- Plan asset returns were in the top 36% over the last 18 years, which is inclusive of historic periods of market and interest rate volatility.
- Actively managing ARO liabilities through discretionary project development and funding.
Legacy Liabilities | Balance | Cash |
Servicing | ||
($mm) | Sheet Value | |
Cost | ||
LTM | ||
3/31/2024 | 3/31/2024 | |
Long-term disability | $7 | $2 |
Workers' compensation | $48 | $10 |
Coal workers' pneumoconiosis | $169 | $15 |
Other post-employment benefits | $226 | $19 |
Pension obligations | $23 | $2 |
Asset retirement obligations | $240 | $24 |
Total legacy liabilities | $713 | $70 |
CEIX legacy liabilities | CEIX employee-related liability projections | ||
($ mm) | ($ mm) | ||
2019A Payments | 2025E Payments |
$1,497
$1,362 | $1,267 | ||||||
$1,163 | $1,067 | $1,087 | $1,027 | $61 | $46 | ||
$912 | |||||||
$748 | $716 | $713 |
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 1Q24
Source: Mercer
9 Some totals may not foot due to rounding
2024 Q1 Results and 2024 Guidance
For the Quarter Ended | |||
Earnings Results | March 31, | March 31, | Change |
2024 | 2023 | ||
Pennsylvania Mining Complex | |||
Production (MM Tons) | 6.5 | 7.0 | (0.5) |
Sales (MM Tons) | 6.1 | 6.7 | (0.6) |
Average Coal Revenue per Ton Sold | $68.33 | $84.32 | ($15.99) |
Average Cash Cost of Coal Sold per Ton(1) | $40.29 | $33.61 | $6.68 |
Average Cash Margin per Ton Sold(1) | $28.04 | $50.71 | ($22.67) |
Itmann Mining Complex | |||
Sales (MM Tons) | |||
CONSOL Marine Terminal | |||
Throughput Volume (MM Tons) | 4.5 | 4.6 | (0.1) |
Terminal Revenue ($MM) | $25 | $27 | ($2) |
CMT Operating Cash Costs(2) ($MM) | $7 | $6 | $1 |
CONSOL Marine Terminal Adjusted EBITDA(2) ($MM) | $17 | $21 | ($4) |
CEIX Financials ($MM) | |||
Adjusted EBITDA(2) | $182 | $346 | ($164) |
Capital Expenditures | $42 | $34 | $8 |
Free Cash Flow(2) | $41 | $221 | ($180) |
Dilutive Earnings per Share ($/share) | $3.39 | $6.55 | ($3.16) |
Guidance
2024(3)
24.0-26.0$62.50-$66.50$37.50-$39.50
0.7-0.9
$155-$180
- "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 are reconciled to the most directly comparable GAAP financial measure in the Appendix.
- Adjusted EBITDA, CMT Operating Cash Costs, CONSOL Marine Terminal Adjusted EBITDA, and Free Cash Flow are non-GAAP financial measures. Please see the Appendix for a reconciliation of each to the most directly comparable GAAP financial measure.
- CEIX is unable to provide a reconciliation of average 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
10 | significance of certain income statement items. |
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CONSOL Energy Inc. published this content on 07 May 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 07 May 2024 13:53:07 UTC.