Financial Data and Key Metrics Changes - CONSOL Energy reported a net loss of $113.8 million or $3.30 per diluted share for Q3 2021, compared to a loss of $7.2 million or $0.28 per diluted share in Q3 2020 [36] - Adjusted EBITDA for Q3 2021 was $66.6 million, slightly down from $68.3 million in the same quarter last year [36] - Free cash flow generation was nearly $35 million in Q3 2021, bringing the year-to-date total to $162 million [29][38] - The cash balance increased by approximately $12 million during Q3 2021, totaling $162 million in unrestricted cash and cash equivalents [31] Business Line Data and Key Metrics Changes - Coal production at the Pennsylvania mining complex increased to 5.3 million tons in Q3 2021 from 4.5 million tons in Q3 2020, driven by recovering demand [14] - Average cash cost of coal sold per ton rose to $30.64 in Q3 2021 from $28.64 in Q3 2020 due to operational challenges and increased maintenance costs [15] - The CONSOL Marine terminal throughput volume increased to 2.8 million tons in Q3 2021 from 2 million tons in the prior year [16] Market Data and Key Metrics Changes - Henry Hub natural gas spot prices averaged $4.35 per million BTU in Q3 2021, a 118% increase compared to Q3 2020 [20] - API2 spot prices for seaborne thermal coal ended Q3 2021 at $151 per ton, a 193% improvement versus Q3 2020 [21] - U.S. coal demand in 2021 is expected to increase by 110 million tons, while production is projected to improve by only 59 million tons, leading to tight supply [25] Company Strategy and Development Direction - The company aims to reduce Scope 1 and 2 greenhouse gas emissions by 50% by 2026 and achieve net zero emissions by 2040, emphasizing its commitment to ESG [6][7] - Development of the 5th longwall at the Enlow Fork mine is set to recommence due to improved market conditions and demand [9] - The Itmann mine and preparation plant are progressing as planned, with commissioning targeted for the second half of 2022 [12][40] Management's Comments on Operating Environment and Future Outlook - Management highlighted a significant supply-demand imbalance in the coal market, expecting robust market conditions to continue [24] - The company is optimistic about its ability to generate free cash flow and reduce debt levels, especially with improved coal markets [43] - Management noted ongoing operational challenges but expressed confidence in overcoming geological issues and ramping up production [71] Other Important Information - The company has secured contracts for 20.2 million tons in 2022 and 5.8 million tons in 2023, reflecting strong demand and market positioning [23] - The company is focused on balancing domestic and export markets, with approximately 50% of total sales volume shipped to the export market year-to-date [46] Q&A Session Summary Question: Can you elaborate on the capital costs for the 5th longwall project? - Management indicated that the upfront investment would be in the single-digits of millions, primarily for rebuilding existing equipment [54][56] Question: What pricing for 2022-2023 have you locked in under fixed-price contracts? - The average price for the 20.2 million tons contracted for 2022 is expected to be in the low $50s, with approximately 6 million tons sold for export [60][63] Question: Can you elaborate on the logistics issues faced during the quarter? - Management acknowledged rail issues but noted improvements are expected, with hiring efforts underway to meet increased demand [66] Question: How do you see costs trending in 2022? - Management anticipates small inflationary pressures and aims to keep inflation below 5% while addressing labor market challenges [71] Question: What is the expected production from the Itmann mine in 2022? - The Itmann project is expected to ramp up to an annual run rate of approximately 900,000 tons in the latter part of 2022 [76] Question: How will you utilize free cash flow moving forward? - The company aims to reduce outstanding debt and considers various initiatives for capital allocation, including the Itmann project [101]

Part I. Financial Information [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) This section presents CONSOL Energy Inc.'s unaudited consolidated financial statements for the three and nine months ended September 30, 2021 and 2020, including statements of income, comprehensive income, balance sheets, stockholders' equity, and cash flows, along with detailed notes explaining the basis of presentation, significant transactions, revenue recognition, and other financial details [Consolidated Statements of Income](index=5&type=section&id=Consolidated%20Statements%20of%20Income) Net Loss Attributable to CONSOL Energy Inc. Stockholders | Period | 2021 (Thousands) | 2020 (Thousands) | | :----- | :--------------- | :--------------- | | 3 Months Ended Sep 30 | $(113,789) | $(7,224) | | 9 Months Ended Sep 30 | $(83,213) | $(22,840) | Total Revenue and Other Income | Period | 2021 (Thousands) | 2020 (Thousands) | | :----- | :--------------- | :--------------- | | 3 Months Ended Sep 30 | $149,012 | $243,219 | | 9 Months Ended Sep 30 | $778,322 | $697,036 | Unrealized Loss on Commodity Derivative Instruments | Period | 2021 (Thousands) | 2020 (Thousands) | | :----- | :--------------- | :--------------- | | 3 Months Ended Sep 30 | $(147,306) | $— | | 9 Months Ended Sep 30 | $(167,743) | $— | [Consolidated Statements of Comprehensive Income](index=6&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) Comprehensive Loss Attributable to CONSOL Energy Inc. Stockholders | Period | 2021 (Thousands) | 2020 (Thousands) | | :----- | :--------------- | :--------------- | | 3 Months Ended Sep 30 | $(110,040) | $(3,238) | | 9 Months Ended Sep 30 | $(71,174) | $(14,421) | [Consolidated Balance Sheets](index=7&type=section&id=Consolidated%20Balance%20Sheets) Key Balance Sheet Items | Item | Sep 30, 2021 (Thousands) | Dec 31, 2020 (Thousands) | | :-------------------------- | :----------------------- | :----------------------- | | Total Assets | $2,589,747 | $2,523,366 | | Total Liabilities | $2,105,167 | $1,969,847 | | Total Equity | $484,580 | $553,519 | | Cash and Cash Equivalents | $161,981 | $50,850 | [Consolidated Statements of Stockholders' Equity](index=9&type=section&id=Consolidated%20Statements%20of%20Stockholders'%20Equity) Total Equity | Date | Amount (Thousands) | | :--- | :----------------- | | December 31, 2020 | $553,519 | | September 30, 2021 | $484,580 | [Consolidated Statements of Cash Flows](index=11&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Cash Flow Summary (Nine Months Ended Sep 30) | Activity | 2021 (Thousands) | 2020 (Thousands) | | :-------------------------------- | :--------------- | :--------------- | | Net Cash Provided by Operating Activities | $253,143 | $62,388 | | Net Cash Used in Investing Activities | $(91,603) | $(57,405) | | Net Cash Used in Financing Activities | $(84) | $(62,992) | [Notes to Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes provide detailed explanations of the accounting policies, significant transactions, and financial instrument disclosures, covering areas such as the CCR Merger, revenue recognition, pension costs, income taxes, and long-term debt [NOTE 1—BASIS OF PRESENTATION](index=12&type=section&id=NOTE%201%E2%80%94BASIS%20OF%20PRESENTATION) - The financial statements are prepared in accordance with GAAP for interim financial information and Form 10-Q instructions, with all necessary adjustments included[44](index=44&type=chunk) - Management does not expect ASU 2021-04, effective after **December 15, 2021**, to have a material impact on the Company's financial statements[47](index=47&type=chunk) [NOTE 2—MAJOR TRANSACTIONS](index=14&type=section&id=NOTE%202%E2%80%94MAJOR%20TRANSACTIONS) - The CCR Merger was completed on **December 30, 2020**, resulting in CONSOL Energy issuing **7,967,690 common shares** to acquire outstanding CCR units for an implied consideration of **$51.71 million**[53](index=53&type=chunk) - The CCR Merger was accounted for as an equity transaction, reducing noncontrolling interest and increasing common stock and capital in excess of par value, with no gain or loss recognized in the income statement[55](index=55&type=chunk) - A settlement transaction with Murray Energy was finalized on **September 16, 2020**, resolving disputes and resulting in **$4.871 million** in Other Receivables, net, and **$19.156 million** in Other Assets, net, as of **September 30, 2021**[58](index=58&type=chunk) [NOTE 3—REVENUE](index=15&type=section&id=NOTE%203%E2%80%94REVENUE) Total Revenue from Contracts with Customers | Period | 2021 (Thousands) | 2020 (Thousands) | | :----- | :--------------- | :--------------- | | 3 Months Ended Sep 30 | $292,016 | $214,292 | | 9 Months Ended Sep 30 | $925,998 | $610,688 | - Coal revenue is disaggregated into domestic (typically fixed-price, longer-term contracts) and export (spot or shorter-term, market-index-based pricing) categories, reflecting different pricing and contract characteristics[61](index=61&type=chunk) - Freight revenue, which is fully offset by freight expense, is recognized when coal title passes to the customer, covering transportation costs to the sales point[68](index=68&type=chunk) [NOTE 4—MISCELLANEOUS OTHER INCOME](index=17&type=section&id=NOTE%204%E2%80%94MISCELLANEOUS%20OTHER%20INCOME) Miscellaneous Other Income | Item | 3 Months Sep 30, 2021 (Thousands) | 3 Months Sep 30, 2020 (Thousands) | 9 Months Sep 30, 2021 (Thousands) | 9 Months Sep 30, 2020 (Thousands) | | :----------------------------- | :-------------------------------- | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Royalty Income - Non-Operated Coal | $2,821 | $2,241 | $5,095 | $9,638 | | Interest Income | $737 | $76 | $2,406 | $442 | | Rental Income | $256 | $255 | $716 | $1,077 | | Contract Buyout | $— | $— | $— | $40,969 | | Sale of Certain Coal Lease Contracts | $— | $17,847 | $— | $17,847 | | Other | $467 | $582 | $1,287 | $1,134 | | **Total Miscellaneous Other Income** | **$4,281** | **$21,001** | **$9,504** | **$71,107** | - The decrease in miscellaneous other income for the nine months ended **September 30, 2021**, was primarily due to the non-recurrence of contract buyout income and sales of coal lease contracts that occurred in **2020**[71](index=71&type=chunk)[72](index=72&type=chunk) [NOTE 5—COMPONENTS OF PENSION AND OTHER POST-EMPLOYMENT BENEFIT (OPEB) PLANS NET PERIODIC BENEFIT COSTS](index=17&type=section&id=NOTE%205%E2%80%94COMPONENTS%20OF%20PENSION%20AND%20OTHER%20POST-EMPLOYMENT%20BENEFIT%20(OPEB)%20PLANS%20NET%20PERIODIC%20BENEFIT%20COSTS) - For the nine months ended **September 30, 2021**, lump sum payments exceeded projected service and interest costs, triggering settlement accounting and resulting in a **$22 thousand expense** and a **$1.009 million reduction** in pension liability[75](index=75&type=chunk) [NOTE 6—COMPONENTS OF COAL WORKERS' PNEUMOCONIOSIS (CWP) AND WORKERS' COMPENSATION NET PERIODIC BENEFIT COSTS](index=17&type=section&id=NOTE%206%E2%80%94COMPONENTS%20OF%20COAL%20WORKERS'%20PNEUMOCONIOSIS%20(CWP)%20AND%20WORKERS'%20COMPENSATION%20NET%20PERIODIC%20BENEFIT%20COSTS) Net Periodic Benefit Cost (Nine Months Ended Sep 30) | Benefit Type | 2021 (Thousands) | 2020 (Thousands) | | :------------- | :--------------- | :--------------- | | CWP | $13,151 | $12,310 | | Workers' Compensation | $5,245 | $7,389 | [NOTE 7—INCOME TAXES](index=19&type=section&id=NOTE%207%E2%80%94INCOME%20TAXES) Income Tax (Benefit) Expense | Period | 2021 (Thousands) | 2020 (Thousands) | | :----- | :--------------- | :--------------- | | 3 Months Ended Sep 30 | $(40,258) | $5,918 | | 9 Months Ended Sep 30 | $(43,966) | $143 | - The effective tax rate for both periods differed from the U.S. federal statutory rate of **21%** primarily due to the income tax benefit for excess percentage depletion, partially offset by tax expense related to compensation[79](index=79&type=chunk)[80](index=80&type=chunk) [NOTE 8—CREDIT LOSSES](index=19&type=section&id=NOTE%208%E2%80%94CREDIT%20LOSSES) - The Company adopted ASU 2016-013, Financial Instruments - Credit Losses (Topic 326), on **January 1, 2020**, recording a cumulative-effect adjustment to retained earnings of **$3.298 million**, net of taxes[83](index=83&type=chunk) Allowance for Credit Losses on Receivables | Item | Dec 31, 2020 (Thousands) | Sep 30, 2021 (Thousands) | | :---------------- | :----------------------- | :----------------------- | | Trade Receivables | $4,426 | $4,360 | | Other Receivables | $4,710 | $8,682 | | Other Assets | $1,661 | $2,690 | | **Total** | **$10,797** | **$15,732** | [NOTE 9—INVENTORIES](index=21&type=section&id=NOTE%209%E2%80%94INVENTORIES) Inventory Components | Item | Sep 30, 2021 (Thousands) | Dec 31, 2020 (Thousands) | | :---------- | :----------------------- | :----------------------- | | Coal | $8,521 | $7,163 | | Supplies | $47,494 | $49,037 | | **Total Inventories** | **$56,015** | **$56,200** | [NOTE 10—ACCOUNTS RECEIVABLE SECURITIZATION](index=21&type=section&id=NOTE%2010%E2%80%94ACCOUNTS%20RECEIVABLE%20SECURITIZATION) - The securitization facility, with a maximum of **$100 million**, had no outstanding borrowings and **$24.306 million** in letters of credit outstanding as of **September 30, 2021**, leaving no unused capacity[96](index=96&type=chunk) - The facility's maturity date was extended from **August 30, 2021**, to **March 27, 2023**[93](index=93&type=chunk) [NOTE 11—PROPERTY, PLANT AND EQUIPMENT](index=22&type=section&id=NOTE%2011%E2%80%94PROPERTY,%20PLANT%20AND%20EQUIPMENT) Total Property, Plant and Equipment, Net | Date | Amount (Thousands) | | :--- | :----------------- | | September 30, 2021 | $1,998,957 | | December 31, 2020 | $2,049,062 | - Amortization expense for assets under finance leases was **$6.409 million** for the three months and **$21.456 million** for the nine months ended **September 30, 2021**[99](index=99&type=chunk) [NOTE 12—OTHER ACCRUED LIABILITIES](index=22&type=section&id=NOTE%2012%E2%80%94OTHER%20ACCRUED%20LIABILITIES) Total Other Accrued Liabilities | Date | Amount (Thousands) | | :--- | :----------------- | | September 30, 2021 | $382,910 | | December 31, 2020 | $223,154 | - Commodity Derivatives liability increased significantly to **$144.094 million** at **September 30, 2021**, from **$0** at **December 31, 2020**[100](index=100&type=chunk) [NOTE 13—LONG-TERM DEBT](index=23&type=section&id=NOTE%2013%E2%80%94LONG-TERM%20DEBT) Long-Term Debt | Date | Amount (Thousands) | | :--- | :----------------- | | September 30, 2021 | $597,697 | | December 31, 2020 | $566,858 | - The Company issued **$75 million** in **9.00% PEDFA Solid Waste Disposal Revenue Bonds** in **April 2021**, maturing in **April 2051**[102](index=102&type=chunk)[113](index=113&type=chunk) - As of **September 30, 2021**, the Company was in compliance with all financial covenants under its Senior Secured Credit Facilities, with a maximum first lien gross leverage ratio of **1.12:1.00**, a maximum total net leverage ratio of **1.64:1.00**, and a minimum fixed charge coverage ratio of **1.67:1.00**[106](index=106&type=chunk) - Interest rate swaps, designated as cash flow hedges, resulted in unrealized gains of **$390 thousand** (net of tax) for the three months and **$1.195 million** (net of tax) for the nine months ended **September 30, 2021**[116](index=116&type=chunk) [NOTE 14—COMMITMENTS AND CONTINGENT LIABILITIES](index=27&type=section&id=NOTE%2014%E2%80%94COMMITMENTS%20AND%20CONTINGENT%20LIABILITIES) - The Company is involved in various legal proceedings, including the Fitzwater and Casey litigations concerning retiree health care benefits, and a dispute with the UMWA 1992 Benefit Plan regarding Coal Act liabilities[119](index=119&type=chunk)[120](index=120&type=chunk)[121](index=121&type=chunk) Financial Guarantees and Commitments (September 30, 2021) | Type | Total Amounts Committed (Thousands) | | :-------------------- | :---------------------------------- | | Total Letters of Credit | $183,990 | | Total Surety Bonds | $625,692 | | Other Guarantees | $6,889 | [NOTE 15—DERIVATIVES](index=30&type=section&id=NOTE%2015%E2%80%94DERIVATIVES) - The Company uses interest rate swaps to manage interest rate risk on long-term debt and coal-related financial contracts to manage exposure to coal prices[130](index=130&type=chunk)[131](index=131&type=chunk) Unrealized Loss on Commodity Derivative Instruments | Period | Amount (Thousands) | | :----- | :--------------- | | 3 Months Ended Sep 30, 2021 | $(147,306) | | 9 Months Ended Sep 30, 2021 | $(167,743) | - As of **September 30, 2021**, the Company held coal-related financial contracts for a notional volume of **2.0 million metric tons**, settling in **2022**[131](index=131&type=chunk) [NOTE 16—FAIR VALUE OF FINANCIAL INSTRUMENTS](index=31&type=section&id=NOTE%2016%E2%80%94FAIR%20VALUE%20OF%20FINANCIAL%20INSTRUMENTS) - The Company measures fair value using a three-level hierarchy, with Level 2 inputs (observable inputs like LIBOR-based discount rates) used for interest rate swaps and coal commodity contracts[141](index=141&type=chunk) Fair Value of Long-Term Debt | Date | Carrying Amount (Thousands) | Fair Value (Thousands) | | :--- | :-------------------------- | :--------------------- | | September 30, 2021 | $635,201 | $647,978 | | December 31, 2020 | $610,510 | $517,862 | [NOTE 17—SEGMENT INFORMATION](index=32&type=section&id=NOTE%2017%E2%80%94SEGMENT%20INFORMATION) - CONSOL Energy operates two reportable segments: the Pennsylvania Mining Complex (PAMC) and the CONSOL Marine Terminal, with an 'Other' segment for corporate and diversified activities[146](index=146&type=chunk) Adjusted EBITDA by Segment (Three Months Ended Sep 30) | Segment | 2021 (Thousands) | 2020 (Thousands) | | :-------------------- | :--------------- | :--------------- | | PAMC | $69,492 | $45,272 | | CONSOL Marine Terminal | $7,319 | $11,342 | | Other | $(10,247) | $11,684 | | **Consolidated** | **$66,564** | **$68,298** | Adjusted EBITDA by Segment (Nine Months Ended Sep 30) | Segment | 2021 (Thousands) | 2020 (Thousands) | | :-------------------- | :--------------- | :--------------- | | PAMC | $246,943 | $135,732 | | CONSOL Marine Terminal | $30,244 | $32,556 | | Other | $(19,491) | $(2,811) | | **Consolidated** | **$257,696** | **$165,477** | [NOTE 18—RELATED PARTY TRANSACTIONS](index=35&type=section&id=NOTE%2018%E2%80%94RELATED%20PARTY%20TRANSACTIONS) - Following the CCR Merger on **December 30, 2020**, CONSOL Coal Resources became an indirect wholly-owned subsidiary of CONSOL Energy[154](index=154&type=chunk) - Prior to the merger, CONSOL Energy provided services to CCR, with total charges of **$2.776 million** for the three months and **$9.142 million** for the nine months ended **September 30, 2020**[156](index=156&type=chunk) [NOTE 19—STOCK AND DEBT REPURCHASES](index=36&type=section&id=NOTE%2019%E2%80%94STOCK%20AND%20DEBT%20REPURCHASES) - The Board of Directors approved a stock and debt repurchase program with an aggregate limit of **$320 million**, extended until **December 31, 2022**[158](index=158&type=chunk) - During the nine months ended **September 30, 2021**, the Company spent **$17.092 million** to retire **$18.040 million** of its **11.00% Senior Secured Second Lien Notes**[160](index=160&type=chunk) - No shares of common stock were repurchased under this program during the nine months ended **September 30, 2021** and **2020**[160](index=160&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=37&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the Company's financial condition and operational results, highlighting the impact of the COVID-19 pandemic, business segments, key performance metrics, and a detailed comparison of financial performance for the three and nine months ended September 30, 2021, versus 2020 [COVID-19 Update](index=37&type=section&id=COVID-19%20Update) - The general business environment has improved, leading to higher demand for the Company's products as COVID-19 restrictions eased, but global supply chain imbalances and inflationary pressures persist[165](index=165&type=chunk) - The Company continues to monitor and mitigate potential risks from COVID-19, which could still impact operations, cash flows, and financial condition[165](index=165&type=chunk) [Our Business](index=37&type=section&id=Our%20Business) - CONSOL Energy is a low-cost producer of high-quality bituminous coal in the Appalachian Basin, with core assets including the Pennsylvania Mining Complex (PAMC), CONSOL Marine Terminal, and the developing Itmann Mine[167](index=167&type=chunk)[171](index=171&type=chunk) - The Itmann Mine is expected to be fully operational in the **second half of 2022**, producing approximately **900 thousand product tons** per year of high-quality, low-vol coking coal[171](index=171&type=chunk)[275](index=275&type=chunk) - The Company announced targets to achieve a **50% reduction** in direct operating greenhouse gas emissions by the end of **2026** (compared to **2019**) and aims for **net-zero Scope 1 and 2 emissions by 2040**[177](index=177&type=chunk) Key Operational Metrics (Q3 2021 vs. Q3 2020) | Metric | Q3 2021 | Q3 2020 | | :-------------------- | :------ | :------ | | Coal Shipments | 5.4M tons | 4.5M tons | | Average Revenue per Ton | $47.46 | $40.55 | | API2 Spot Prices (YoY) | +193% | N/A | - The Company is recommencing development of the fifth longwall at the PAMC, with operations expected to resume in late **Q4 2022**[177](index=177&type=chunk) - As of **November 2, 2021**, the Company is fully contracted for **2021**, with **20.2 million tons** contracted for **2022** and **5.8 million tons** for **2023**[178](index=178&type=chunk)[174](index=174&type=chunk) [How We Evaluate Our Operations](index=39&type=section&id=How%20We%20Evaluate%20Our%20Operations) - Management uses various financial and operating metrics, including non-GAAP measures like cost of coal sold, cash cost of coal sold, average cash cost of coal sold per ton, average margin per ton sold, and Adjusted EBITDA, to assess performance and allocate resources[180](index=180&type=chunk)[181](index=181&type=chunk) Average Cash Cost of Coal Sold per Ton | Period | 2021 | 2020 | | :----- | :--- | :--- | | 3 Months Ended Sep 30 | $30.64 | $28.64 | | 9 Months Ended Sep 30 | $27.45 | $29.88 | Average Cash Margin per Ton Sold | Period | 2021 | 2020 | | :----- | :--- | :--- | | 3 Months Ended Sep 30 | $16.82 | $11.91 | | 9 Months Ended Sep 30 | $16.60 | $12.47 | [Results of Operations](index=44&type=section&id=Results%20of%20Operations) The Company reported a higher net loss for both the three and nine months ended September 30, 2021, primarily due to significant unrealized losses on commodity derivative instruments, while coal production and revenue increased substantially across segments due to improved demand [Three Months Ended September 30, 2021 Compared with the Three Months Ended September 30, 2020](index=44&type=section&id=Three%20Months%20Ended%20September%2030,%202021%20Compared%20with%20the%20Three%20Months%20Ended%20September%2030,%202020) Net Loss Attributable to CONSOL Energy Inc. Stockholders | Period | 2021 (Millions) | 2020 (Millions) | | :----- | :-------------- | :-------------- | | 3 Months Ended Sep 30 | $(114) | $(7) | [PAMC Analysis](index=44&type=section&id=PAMC%20ANALYSIS%20(Three%20Months)) PAMC Coal Production (Thousands of Tons) | Mine | Q3 2021 | Q3 2020 | Variance | | :----------- | :------ | :------ | :------- | | Bailey | 2,278 | 1,808 | 470 | | Enlow Fork | 1,542 | 1,436 | 106 | | Harvey | 1,474 | 1,291 | 183 | | **Total** | **5,294** | **4,535** | **759** | - PAMC coal production increased by **759 thousand tons** due to improved demand, but was negatively impacted by acute operational and geological issues and transportation delays in **Q3 2021**[203](index=203&type=chunk) PAMC Coal Revenue and Cost per Ton (Q3) | Metric | Q3 2021 | Q3 2020 | Variance | | :------------------------------------------------ | :------ | :------ | :------- | | Total Tons Sold (millions) | 5.4 | 4.5 | 0.9 | | Average Revenue per Ton Sold | $47.46 | $40.55 | $6.91 | | Average Cost of Coal Sold per Ton | $39.71 | $38.70 | $1.01 | | Average Cash Margin per Ton Sold | $16.82 | $11.91 | $4.91 | - Coal revenue increased by **$72 million** to **$256 million**, driven by higher pricing on export contracts and power-price adjusted contracts, and increased sales volume[201](index=201&type=chunk)[206](index=206&type=chunk) - An unrealized loss of **$147 million** on commodity derivative instruments was recognized due to increased API2 coal markets[201](index=201&type=chunk)[209](index=209&type=chunk) - Selling, General, and Administrative Costs increased by **$9 million** to **$18 million**, primarily due to higher expense under incentive compensation plans and an increase in the Company's share price[201](index=201&type=chunk)[212](index=212&type=chunk) [CONSOL Marine Terminal Analysis](index=48&type=section&id=CONSOL%20MARINE%20TERMINAL%20ANALYSIS%20(Three%20Months)) CONSOL Marine Terminal Financials (Q3, Millions) | Item | Q3 2021 | Q3 2020 | Variance | | :-------------------- | :------ | :------ | :------- | | Terminal Revenue | $14 | $17 | $(3) | | Earnings Before Income Tax | $5 | $8 | $(3) | | Throughput Tons (millions) | 2.8 | 2.0 | 0.8 | - Terminal revenue decreased by **$3 million** despite increased throughput tons, due to the expiration of a take-or-pay contract that provided revenue for unused capacity in **2020**[216](index=216&type=chunk) [Other Analysis](index=48&type=section&id=Other%20Analysis%20(Three%20Months)) Other Business Activities Financials (Q3, Millions) | Item | Q3 2021 | Q3 2020 | Variance | | :-------------------------- | :------ | :------ | :------- | | Miscellaneous Other Income | $3 | $21 | $(18) | | Gain on Sale of Assets | $0 | $8 | $(8) | | Loss Before Income Tax | $(28) | $(4) | $(24) | | Employee-Related Legacy Liability Expense | $2 | $7 | $(5) | - Miscellaneous other income decreased by **$18 million**, primarily due to the non-recurrence of income from the sale of coal lease contracts in **Q3 2020**[222](index=222&type=chunk) - Employee-Related Legacy Liability Expense decreased by **$5 million** due to changes in actuarial assumptions[225](index=225&type=chunk) [Nine Months Ended September 30, 2021 Compared with the Nine Months Ended September 30, 2020](index=51&type=section&id=Nine%20Months%20Ended%20September%2030,%202021%20Compared%20with%20the%20Nine%20Months%20Ended%20September%2030,%202020) Net Loss Attributable to CONSOL Energy Inc. Stockholders | Period | 2021 (Millions) | 2020 (Millions) | | :----- | :-------------- | :-------------- | | 9 Months Ended Sep 30 | $(83) | $(23) | [PAMC Analysis](index=51&type=section&id=PAMC%20ANALYSIS%20(Nine%20Months)) PAMC Coal Production (Thousands of Tons) | Mine | 9 Months 2021 | 9 Months 2020 | Variance | | :----------- | :------------ | :------------ | :------- | | Bailey | 9,078 | 5,619 | 3,459 | | Enlow Fork | 5,133 | 4,054 | 1,079 | | Harvey | 4,015 | 3,222 | 793 | | **Total** | **18,226** | **12,895** | **5,331** | - PAMC coal production increased by **5.3 million tons** due to significantly improved demand following the lifting of COVID-19 restrictions[240](index=240&type=chunk) PAMC Coal Revenue and Cost per Ton (9 Months) | Metric | 9 Months 2021 | 9 Months 2020 | Variance | | :------------------------------------------------ | :------------ | :------------ | :------- | | Total Tons Sold (millions) | 18.1 | 12.8 | 5.3 | | Average Revenue per Ton Sold | $44.05 | $42.35 | $1.70 | | Average Cost of Coal Sold per Ton | $35.53 | $39.25 | $(3.72) | | Average Cash Margin per Ton Sold | $16.60 | $12.47 | $4.13 | - Coal revenue increased by **$257 million** to **$799 million**, driven by higher sales volume and improved market dynamics[239](index=239&type=chunk)[243](index=243&type=chunk) - Unrealized losses on commodity derivative instruments totaled **$168 million** due to increased API2 pricing[239](index=239&type=chunk)[246](index=246&type=chunk) - Other costs decreased by **$54 million**, primarily due to the non-recurrence of costs associated with temporarily idling longwalls in **2020**[239](index=239&type=chunk)[249](index=249&type=chunk) - Selling, General, and Administrative Costs increased by **$25 million** to **$56 million**, mainly due to higher incentive compensation expenses and increased share price[239](index=239&type=chunk)[250](index=250&type=chunk) [CONSOL Marine Terminal Analysis](index=54&type=section&id=CONSOL%20MARINE%20TERMINAL%20ANALYSIS%20(Nine%20Months)) CONSOL Marine Terminal Financials (9 Months, Millions) | Item | 9 Months 2021 | 9 Months 2020 | Variance | | :-------------------- | :------------ | :------------ | :------- | | Terminal Revenue | $50 | $49 | $1 | | Earnings Before Income Tax | $22 | $24 | $(2) | | Throughput Tons (millions) | 10.7 | 7.0 | 3.7 | - Terminal revenue increased by **$1 million**, driven by a **3.7 million ton** increase in throughput, but partially offset by the expiration of a take-or-pay contract from **2020**[254](index=254&type=chunk) [Other Analysis](index=54&type=section&id=Other%20Analysis%20(Nine%20Months)) Other Business Activities Financials (9 Months, Millions) | Item | 9 Months 2021 | 9 Months 2020 | Variance | | :-------------------------- | :------------ | :------------ | :------- | | Miscellaneous Other Income | $7 | $30 | $(23) | | Gain on Sale of Assets | $10 | $15 | $(5) | | Loss Before Income Tax | $(67) | $(34) | $(33) | | Employee-Related Legacy Liability Expense | $6 | $19 | $(13) | | Gain on Debt Extinguishment | $0 | $(18) | $18 | - Miscellaneous other income decreased by **$23 million**, primarily due to the non-recurrence of customer contract buyouts and sales of coal lease contracts in **2020**[260](index=260&type=chunk)[262](index=262&type=chunk) - Employee-Related Legacy Liability Expense decreased by **$13 million** due to changes in actuarial assumptions[264](index=264&type=chunk) - Interest expense, net, increased due to interest on **PEDFA tax-exempt bonds** issued in **Q2 2021**, partially offset by de-leveraging efforts[269](index=269&type=chunk) [Liquidity and Capital Resources](index=58&type=section&id=Liquidity%20and%20Capital%20Resources) - The Company's liquidity sources include operating cash flow, cash on hand, borrowings under credit facilities, and proceeds from PEDFA Bonds, expected to be sufficient for short-term and long-term needs[271](index=271&type=chunk)[274](index=274&type=chunk) Cash Flows (Nine Months Ended Sep 30, Millions) | Activity | 2021 | 2020 | Change | | :-------------------------------- | :--- | :--- | :----- | | Cash Provided by Operating Activities | $253 | $62 | $191 | | Cash Used in Investing Activities | $(92) | $(57) | $(35) | | Cash Used in Financing Activities | $0 | $(63) | $63 | - Capital expenditures increased by **$37 million** to **$103 million**, primarily due to an early buyout of longwall shields and construction of a preparation plant for the Itmann Mine[282](index=282&type=chunk)[283](index=283&type=chunk) - The Company borrowed **$75 million** from **PEDFA tax-exempt solid waste disposal revenue bonds** in **April 2021** to fund a capital construction project on the coarse refuse disposal area[272](index=272&type=chunk)[275](index=275&type=chunk) - As of **September 30, 2021**, the Revolving Credit Facility had no outstanding borrowings and **$160 million** in letters of credit, leaving **$240 million** of unused capacity[292](index=292&type=chunk) - The Company spent **$17 million** to retire **$18 million** of its **11.00% Senior Secured Second Lien Notes** during the nine months ended **September 30, 2021**[311](index=311&type=chunk) - Total equity attributable to CONSOL Energy was **$485 million** at **September 30, 2021**, down from **$554 million** at **December 31, 2020**[312](index=312&type=chunk) - Dividend payments are subject to Board discretion and credit facility covenants, which limit annual dividends to **$25 million** (or **$50 million** if total net leverage is below **1.50:1.00**), with additional conditions[313](index=313&type=chunk) [Forward-Looking Statements](index=68&type=section&id=Forward-Looking%20Statements) - This section contains forward-looking statements regarding future production, revenues, income, and capital spending, which are subject to significant business, economic, competitive, regulatory, and other risks and uncertainties[316](index=316&type=chunk) - Key risks include economic downturns, coal price volatility, COVID-19 impacts, equipment downtime, reliance on major customers, inability to acquire reserves or complete projects, changes in coal demand, transportation disruptions, and environmental regulations[316](index=316&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=70&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section details the Company's exposure to market risks, particularly commodity price risk, and its strategies for managing these risks through hedging activities [Commodity Price Risk](index=70&type=section&id=Commodity%20Price%20Risk) - CONSOL Energy is exposed to market price risk from coal sales, which include spot market sales and contracts with variable pricing based on quality, calorific value, or electric power prices[321](index=321&type=chunk) - The Company initiated a targeted commodity price hedging strategy in **Q2 2021** to mitigate pricing volatility and secure future cash flows for export sales[323](index=323&type=chunk) Unrealized Losses on Commodity Derivative Instruments | Period | Amount (Thousands) | | :----- | :--------------- | | 3 Months Ended Sep 30, 2021 | $147,306 | | 9 Months Ended Sep 30, 2021 | $168,743 | [Item 4. Controls and Procedures](index=72&type=section&id=Item%204.%20Controls%20and%20Procedures) This section confirms the effectiveness of the Company's disclosure controls and procedures as of September 30, 2021, and states that there were no material changes in internal controls over financial reporting during the quarter [Disclosure Controls and Procedures](index=72&type=section&id=Disclosure%20Controls%20and%20Procedures) - The Company's principal executive officer and principal financial officer concluded that disclosure controls and procedures were effective as of **September 30, 2021**[325](index=325&type=chunk) [Changes in Internal Controls over Financial Reporting](index=72&type=section&id=Changes%20in%20Internal%20Controls%20over%20Financial%20Reporting) - There were no changes in internal controls over financial reporting that materially affected, or are reasonably likely to materially affect, the Company's internal controls during the fiscal quarter[326](index=326&type=chunk) Part II. Other Information [Item 1. Legal Proceedings](index=72&type=section&id=Item%201.%20Legal%20Proceedings) This section states that the Company is not currently subject to any material litigation beyond what is disclosed in Note 14 to the Consolidated Financial Statements - The Company is not currently subject to any material litigation, except as disclosed in Note 14 - Commitments and Contingent Liabilities[328](index=328&type=chunk) [Item 1A. Risk Factors](index=72&type=section&id=Item%201A.%20Risk%20Factors) This section refers readers to the comprehensive list of risk factors detailed in the Company's 2020 Form 10-K, along with any updates in subsequent 10-Q filings, emphasizing that these are not exhaustive - Readers should consider the risk factors described in the Company's **2020 Form 10-K**, as updated by subsequent Form 10-Qs, as additional risks may exist[329](index=329&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=73&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section reports that there were no repurchases of the Company's equity securities during the three months ended September 30, 2021, and provides an update on the remaining authority under the stock and debt repurchase program - No repurchases of the Company's equity securities occurred during the three months ended **September 30, 2021**[332](index=332&type=chunk) - As of **November 2, 2021**, approximately **$127 million** remained available under the **$320 million** stock and debt repurchase program, which terminates on **December 31, 2022**[332](index=332&type=chunk) [Item 3. Defaults Upon Senior Securities](index=73&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This section states that there were no defaults upon senior securities during the reporting period - There were no defaults upon senior securities[334](index=334&type=chunk) [Item 4. Mine Safety Disclosures](index=73&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section indicates that information regarding mine safety violations and other regulatory matters is included in Exhibit 95 of this report - Mine safety disclosures are provided in Exhibit 95 to this Quarterly Report on Form 10-Q[335](index=335&type=chunk) [Item 5. Other Information](index=73&type=section&id=Item%205.%20Other%20Information) This section states that there is no other information to report - No other information is reported in this section[336](index=336&type=chunk) [Item 6. Exhibits](index=74&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed as part of the Form 10-Q, including certifications, mine safety data, and interactive data files Key Exhibits | Exhibit | Description | | :------ | :---------- | | 31.1 | Certification of Chief Executive Officer | | 31.2 | Certification of Chief Financial Officer | | 32.1 | Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350 | | 32.2 | Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350 | | 95 | Mine Safety and Health Administration Safety Data | | 101 | Interactive Data File (Inline XBRL) | | 104 | Cover Page Interactive Data File (Inline XBRL) | [Signatures](index=75&type=section&id=Signatures) This section contains the required signatures for the Form 10-Q report, confirming its submission on behalf of CONSOL Energy Inc - The report is duly signed on **November 2, 2021**, by **James A. Brock** and **Miteshkumar B. Thakkar** on behalf of CONSOL Energy Inc[342](index=342&type=chunk)[343](index=343&type=chunk)

CONSOL ENERGY. | --- | --- | --- | --- | --- | |-------|-------|--------|---------------------|----------------| | | | | | | | | | | | | | | | nd 2 | Quarter 2021 | | | | | | Earnings Supplement | | | | | | | August 3, 2021 | 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, proj ...

Financial Data and Key Metrics Changes - CONSOL Energy reported a net income of $4.2 million or $0.12 per diluted share for Q2 2021, compared to a loss of $18 million or $0.69 per diluted share in the same quarter of the previous year [51] - Adjusted EBITDA for Q2 2021 was $84.4 million, up from $34.2 million in Q2 2020 [51] - Free cash flow generation reached $54.4 million in Q2 2021, with unrestricted cash increasing by nearly $56 million to a total of $146 million, the highest level since Q2 2019 [53][54] Business Line Data and Key Metrics Changes - Coal production at the Pennsylvania Mining Complex (PAMC) was 5.9 million tons in Q2 2021, significantly up from 2.4 million tons in Q2 2020 [31] - The average cash cost of coal sold per ton was $28.02 in Q2 2021, compared to $25.90 in Q2 2020, but adjusted for prior year idling costs, this represents a significant improvement [32] - The CONSOL Marine Terminal achieved a throughput volume of 3.8 million tons in Q2 2021, compared to 1.6 million tons in the year-ago period [34] Market Data and Key Metrics Changes - Export sales volume reached a record 3.2 million tons in Q2 2021, representing nearly 55% of total shipments [21] - Demand for coal strengthened due to economic recovery, with Henry Hub natural gas spot prices averaging $2.95 per million Btu, a 73% increase compared to Q2 2020 [24] - API2 spot prices rose by 82% compared to Q2 2020, driven by hot weather and strong LNG pricing [27] Company Strategy and Development Direction - The company is recommencing the Itmann Metallurgical project to diversify revenue streams and reduce reliance on power generation markets [12][15] - The strategic shift towards export markets is emphasized, with a focus on increasing industrial business and reducing exposure to the declining U.S. coal market [23][62] - The company aims to maintain strong liquidity while selectively allocating capital towards strategic initiatives like the Itmann project [37][95] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about market conditions improving due to global economic recovery and a muted supply response [26][92] - The company is focused on maintaining cost control despite inflationary pressures and is committed to strengthening its balance sheet [60][61] - Management highlighted the importance of the CONSOL Marine Terminal in executing the strategic shift into the export market [62] Other Important Information - The Itmann project is expected to require an additional $65 million to $70 million in capital expenditures to complete [47] - The company has layered in commodity derivative contracts in the API2 market for calendar year 2022, ensuring strong netback core prices [44] - The company has a fully funded status on its defined benefit pension plan, with no funding requirements for the foreseeable future [45] Q&A Session Summary Question: Cost guidance and potential for outperformance - Management acknowledged the potential for costs to rise due to inflation and longwall moves but aims to keep costs tight [68][70] Question: Pricing and export market expectations - Management indicated that additional contracted volumes are likely to go to the export market due to price arbitrage [73][74] Question: Production levels in 2022 - Management expects production levels in 2022 to be similar to 2021, with potential upside depending on market conditions [76] Question: Itmann project production ramp - Management plans to ramp up production in the second half of 2022, targeting full production shortly after the completion of the Preparation Plant [78] Question: Domestic customer base and coal power plant closures - Management noted that domestic utilities are seeking long-term contracts due to low inventories and high gas prices, with minimal exposure to announced coal power plant closures [102][103] Question: International market dynamics - Management highlighted the lack of supply response in the Asian coal market and the opportunity for growth in exports, particularly to India and China [107][108] Question: Derivative book and risk management - Management confirmed that the derivative contracts are opportunistic and serve as a risk management tool in the current pricing environment [110]

Part I. Financial Information [Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) Presents CONSOL Energy Inc.'s unaudited consolidated financial statements for Q2 2021 and 2020, detailing key financial performance and position changes [Consolidated Statements of Income](index=5&type=section&id=Consolidated%20Statements%20of%20Income) Net income reached **$4.2 million** in Q2 2021, a significant turnaround from a **$21.1 million** net loss in Q2 2020, primarily due to increased coal revenue Consolidated Statements of Income Highlights (in thousands) | Metric | Three Months Ended June 30, 2021 | Three Months Ended June 30, 2020 | Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 | | :--- | :--- | :--- | :--- | :--- | | **Coal Revenue** | $259,832 | $102,313 | $545,367 | $357,765 | | **Total Revenue and Other Income** | $287,159 | $162,561 | $629,310 | $453,817 | | **Net Income (Loss)** | $4,172 | $(21,063) | $30,576 | $(18,588) | | **Net Income (Loss) Attributable to CONSOL Energy Inc. Stockholders** | $4,172 | $(17,983) | $30,576 | $(15,616) | | **Basic Earnings (Loss) per Share** | $0.12 | $(0.69) | $0.89 | $(0.60) | | **Diluted Earnings (Loss) per Share** | $0.12 | $(0.69) | $0.87 | $(0.60) | [Consolidated Statements of Comprehensive Income](index=6&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) Comprehensive income attributable to stockholders was **$8.7 million** for Q2 2021, a significant improvement from a **$14.4 million** loss in Q2 2020 Consolidated Statements of Comprehensive Income (in thousands) | Metric | Three Months Ended June 30, 2021 | Three Months Ended June 30, 2020 | Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 | | :--- | :--- | :--- | :--- | :--- | | **Net Income (Loss)** | $4,172 | $(21,063) | $30,576 | $(18,588) | | **Other Comprehensive Income** | $4,516 | $3,612 | $8,290 | $4,463 | | **Comprehensive Income (Loss)** | $8,688 | $(17,451) | $38,866 | $(14,125) | [Consolidated Balance Sheets](index=7&type=section&id=Consolidated%20Balance%20Sheets) As of June 30, 2021, total assets increased slightly to **$2.56 billion**, driven by higher cash, with stable liabilities and growing equity of **$592.7 million** Consolidated Balance Sheet Highlights (in thousands) | Metric | June 30, 2021 (Unaudited) | December 31, 2020 | | :--- | :--- | :--- | | **ASSETS** | | | | Cash and Cash Equivalents | $146,667 | $50,850 | | Total Current Assets | $371,952 | $292,941 | | Total Property, Plant and Equipment—Net | $2,002,826 | $2,049,062 | | **TOTAL ASSETS** | **$2,557,931** | **$2,523,366** | | **LIABILITIES AND EQUITY** | | | | Total Current Liabilities | $370,257 | $368,470 | | Total Long-Term Debt | $639,874 | $603,061 | | **TOTAL LIABILITIES** | **$1,965,198** | **$1,969,847** | | **TOTAL EQUITY** | **$592,733** | **$553,519** | [Consolidated Statements of Cash Flows](index=9&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operating activities significantly increased to **$172.6 million** for H1 2021, reflecting improved earnings, with financing activities shifting to a net cash inflow Consolidated Statements of Cash Flows (in thousands) | Metric | Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 | | :--- | :--- | :--- | | **Net Cash Provided by Operating Activities** | $172,605 | $46,680 | | **Net Cash Used in Investing Activities** | $(45,719) | $(45,758) | | **Net Cash Provided by (Used in) Financing Activities** | $22,467 | $(48,188) | | **Net Increase (Decrease) in Cash** | $149,353 | $(47,266) | | **Cash and Cash Equivalents at End of Period** | $200,203 | $33,027 | [Notes to Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Provides detailed explanations of accounting policies and financial figures, covering major transactions, revenue recognition, debt, and contingent liabilities [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=29&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's significant operational and financial recovery from 2020 lows, highlighting robust demand, strong PAMC performance, Itmann project progress, and disciplined capital management [COVID-19 Update](index=29&type=section&id=COVID-19%20Update) The company monitors COVID-19's impact, noting demand recovery since May 2020 but acknowledging ongoing risks from future developments to operations and financial condition - COVID-19 led to an unprecedented decline in coal demand, which bottomed out in May 2020 but has improved through Q2 2021[156](index=156&type=chunk) - Future risks from the pandemic, including potential new shutdowns and depressed demand, are still considered highly uncertain and could negatively impact results[157](index=157&type=chunk) [Our Business and Outlook](index=29&type=section&id=Our%20Business%20and%20Outlook) CONSOL Energy operates as a low-cost coal producer, diversifying into metallurgical coal with the Itmann Mine project, and provides 2021 sales and capital expenditure guidance - The company's core businesses are the Pennsylvania Mining Complex (PAMC), the CONSOL Marine Terminal, and the developing Itmann metallurgical coal mine[162](index=162&type=chunk) - The Itmann Mine is expected to be complete in H2 2022, producing over **900k tons per year** of high-quality coking coal with a remaining capex of **$65-$70 million**[170](index=170&type=chunk) 2021 Guidance and Outlook | Metric | 2021 Guidance | | :--- | :--- | | **PAMC Sales Volume** | 23.5 - 25.0 million tons | | **Average Cash Cost of Coal Sold** | $27.00 - $28.00 per ton | | **Capital Expenditures** | $160 - $180 million | [Results of Operations](index=35&type=section&id=Results%20of%20Operations) Financial results significantly improved in H1 2021, with Q2 net income of **$4 million** (vs. **$18 million** loss) driven by a **157%** increase in coal tons sold and PAMC segment profit PAMC Coal Operations (Q2 2021 vs Q2 2020) | Metric | Q2 2021 | Q2 2020 | Variance | | :--- | :--- | :--- | :--- | | **Total Tons Sold (millions)** | 5.9 | 2.3 | 3.6 | | **Average Revenue per Ton** | $44.02 | $43.82 | $0.20 | | **Average Cash Cost of Coal Sold per Ton** | $28.02 | $25.90 | $2.12 | | **Average Cash Margin per Ton** | $16.00 | $17.92 | $(1.92) | PAMC Coal Operations (Six Months 2021 vs 2020) | Metric | H1 2021 | H1 2020 | Variance | | :--- | :--- | :--- | :--- | | **Total Tons Sold (millions)** | 12.7 | 8.2 | 4.5 | | **Average Revenue per Ton** | $42.60 | $43.34 | $(0.74) | | **Average Cash Cost of Coal Sold per Ton** | $26.09 | $30.55 | $(4.46) | | **Average Cash Margin per Ton** | $16.51 | $12.79 | $3.72 | - The decrease in miscellaneous other income for Q2 and H1 2021 was primarily due to **$30 million** and **$41 million** in customer contract buyouts in the respective 2020 periods, which did not recur, and a **$20 million** mark-to-market loss on new commodity derivatives in Q2 2021[201](index=201&type=chunk)[235](index=235&type=chunk) [Liquidity and Capital Resources](index=45&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains strong liquidity through operating cash flow and available credit facilities, with no borrowings under its **$400 million** revolving credit facility and continued debt reduction Cash Flow Summary (Six Months Ended June 30, in millions) | Cash Flow Activity | 2021 | 2020 | Change | | :--- | :--- | :--- | :--- | | **Operating Activities** | $173 | $47 | $126 | | **Investing Activities** | $(46) | $(46) | $0 | | **Financing Activities** | $22 | $(48) | $70 | - As of June 30, 2021, the company had **$253 million** of unused capacity under its Revolving Credit Facility and was in compliance with all financial covenants[278](index=278&type=chunk)[273](index=273&type=chunk) - The company's stock and debt repurchase program was amended in April 2021, increasing the aggregate limit to **$320 million** and extending it to December 31, 2022, with approximately **$14 million** spent in H1 2021 to retire **$15 million** of its 11.00% Senior Secured Second Lien Notes[295](index=295&type=chunk)[297](index=297&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=53&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) There have been no material changes to the company's exposures to market risk since December 31, 2020 - There have been no material changes to the Company's exposures to market risk since December 31, 2020[307](index=307&type=chunk) [Controls and Procedures](index=54&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded the company's disclosure controls and procedures were effective as of June 30, 2021, with no material changes to internal controls during the quarter - The principal executive officer and principal financial officer concluded that the Company's disclosure controls and procedures are effective as of June 30, 2021[309](index=309&type=chunk) - No changes were made to the Company's internal controls over financial reporting during the quarter that would have a material effect[310](index=310&type=chunk) Part II. Other Information [Legal Proceedings](index=54&type=section&id=Item%201.%20Legal%20Proceedings) The company is not subject to any material litigation beyond matters disclosed in Note 14, which arise in the ordinary course of business - The company is not subject to any material litigation beyond what is disclosed in Note 14 - Commitments and Contingent Liabilities[312](index=312&type=chunk) [Risk Factors](index=54&type=section&id=Item%201A.%20Risk%20Factors) A primary risk factor is the potential failure to complete the Itmann Mine development on schedule, which could materially harm future profitability given significant capital expenditures - A primary risk factor is the potential failure to complete the development and transition of the Itmann Mine to full operation within the next 12 to 18 months, which could materially harm future profitability[314](index=314&type=chunk)[315](index=315&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=55&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No equity securities were repurchased in Q2 2021, with approximately **$130 million** remaining under the **$320 million** stock and debt repurchase program, subject to dividend limitations - No shares of the company's equity securities were repurchased in Q2 2021[317](index=317&type=chunk) - As of August 3, 2021, approximately **$130 million** remained available under the **$320 million** stock and debt repurchase program, which runs until the end of 2022[317](index=317&type=chunk) [Defaults Upon Senior Securities](index=55&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reports no defaults upon its senior securities during the period - None[319](index=319&type=chunk) [Mine Safety Disclosures](index=55&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) Mine safety disclosures required by Regulation S-K are included in Exhibit 95 of this report - Mine safety data required by Regulation S-K is included in Exhibit 95 to this report[320](index=320&type=chunk) [Other Information](index=55&type=section&id=Item%205.%20Other%20Information) The company reports no other information for this item - None[321](index=321&type=chunk) [Exhibits](index=56&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including debt agreements, officer certifications, mine safety data, and XBRL files - Exhibits filed include debt agreements related to the PEDFA bonds, officer certifications, mine safety data, and XBRL files[323](index=323&type=chunk)

CONSOL Energy Inc. (NYSE:CEIX) Q1 2021 Earnings Conference Call May 4, 2021 11:00 AM ET Company Participants Nathan Tucker - Director-Finance & Investor Relations Jimmy Brock - Chief Executive Officer Mitesh Thakkar - Chief Financial Officer Conference Call Participants Lucas Pipes - B. Riley Securities Operator Good morning, and welcome to CEIX First Quarter 2021 Earnings Call. All participants will be in a listen-only mode. [Operator Instructions] After this presentation, there will be an opportunity to a ...

@ CONSOL ENERGY. | --- | --- | --- | --- | --- | |-------|-------|--------|---------------------|-------------| | | | | | | | | | | | | | | | st 1 | Quarter 2021 | | | | | | Earnings Supplement | | | | | | | May 4, 2021 | | | | | | | 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 limitati ...

Part I. Financial Information [Financial Statements](index=5&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited Consolidated Statements of Income, Comprehensive Income, Balance Sheets, Stockholders' Equity, and Cash Flows for the three months ended March 31, 2021, and 2020, along with detailed notes covering key accounting policies and events [Consolidated Statements of Income](index=5&type=section&id=Consolidated%20Statements%20of%20Income) The company's net income attributable to shareholders significantly increased to **$26.4 million** in Q1 2021 from **$2.4 million** in Q1 2020, driven by higher total revenues and a gain on asset sales, despite an increase in operating costs. Diluted earnings per share rose to **$0.75** from **$0.09** year-over-year Consolidated Statements of Income (Q1 2021 vs. Q1 2020) | Metric | Three Months Ended March 31, 2021 (in millions) | Three Months Ended March 31, 2020 (in millions) | | :--- | :--- | :--- | | **Total Revenue and Other Income** | **$342.151** | **$291.256** | | **Total Costs and Expenses** | **$310.562** | **$286.873** | | **Net Income** | **$26.404** | **$2.475** | | **Net Income Attributable to Shareholders** | **$26.404** | **$2.367** | | **Total Basic Earnings per Share** | **$0.77** | **$0.09** | | **Total Diluted Earnings per Share** | **$0.75** | **$0.09** | [Consolidated Balance Sheets](index=7&type=section&id=Consolidated%20Balance%20Sheets) As of March 31, 2021, total assets were **$2.521 billion**, a slight decrease from **$2.523 billion** at year-end 2020. Total liabilities decreased to **$1.937 billion** from **$1.970 billion**, while total equity increased to **$583 million** from **$554 million** over the same period, primarily due to retained earnings Consolidated Balance Sheet Highlights | Metric | March 31, 2021 (in millions) | December 31, 2020 (in millions) | | :--- | :--- | :--- | | **Total Current Assets** | **$336.742** | **$292.941** | | **Total Assets** | **$2.521 billion** | **$2.523 billion** | | **Total Current Liabilities** | **$371.194** | **$368.470** | | **Total Liabilities** | **$1.937 billion** | **$1.970 billion** | | **Total Equity** | **$583.065** | **$553.519** | [Consolidated Statements of Cash Flows](index=10&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) For the first quarter of 2021, net cash provided by operating activities increased to **$78.0 million** from **$51.4 million** in the prior-year period. Net cash used in investing activities decreased significantly to **$5.5 million** from **$27.2 million**, while cash used in financing activities increased to **$31.9 million** from **$25.7 million**. The company ended the period with a higher cash and cash equivalents balance of **$91.5 million** Consolidated Cash Flow Summary (Q1 2021 vs. Q1 2020) | Metric | Three Months Ended March 31, 2021 (in millions) | Three Months Ended March 31, 2020 (in millions) | | :--- | :--- | :--- | | **Net Cash Provided by Operating Activities** | **$78.0** | **$51.4** | | **Net Cash Used in Investing Activities** | **($5.5)** | **($27.2)** | | **Net Cash Used in Financing Activities** | **($31.9)** | **($25.7)** | | **Cash and Cash Equivalents at End of Period** | **$91.5** | **$78.8** | [Notes to Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes detail the basis of accounting, major transactions including the merger with CONSOL Coal Resources LP, revenue streams, debt structure, segment performance, and subsequent events. Key disclosures include the reclassification of the CONSOL Marine Terminal as a separate reportable segment, details on the company's various credit facilities and debt repurchases, and the issuance of new revenue bonds after the quarter's end - On December 30, 2020, the company completed its merger with CONSOL Coal Resources LP (CCR), acquiring all outstanding common units not previously owned. The transaction was accounted for as an equity transaction with no gain or loss recognized[48](index=48&type=chunk)[50](index=50&type=chunk) - Effective December 31, 2020, the CONSOL Marine Terminal was reclassified as a separate reportable segment due to its increased contribution to Adjusted EBITDA and reliance on coal exports. Prior period segment information has been restated to conform to this presentation[46](index=46&type=chunk)[128](index=128&type=chunk) - Subsequent to the quarter end, on April 13, 2021, the company issued **$75 million** in tax-exempt solid waste disposal revenue bonds with a 30-year maturity and a **9.0%** interest rate for the initial 7-year term. The proceeds will finance the expansion of coal refuse disposal areas[141](index=141&type=chunk) - On April 28, 2021, the Board of Directors expanded the stock and debt repurchase program by **$50 million**, bringing the total authorization to **$320 million**, and extended its termination date to December 31, 2022[142](index=142&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=33&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the impact of COVID-19, business operations, and financial performance for Q1 2021. Key highlights include a significant improvement in coal shipments to **6.9 million tons**, net income of **$26.4 million**, and Adjusted EBITDA of **$106.7 million**. The company provides an outlook for 2021, expecting sales of **22-24 million tons**. The analysis details the performance of its two main segments, PAMC and CONSOL Marine Terminal, and discusses liquidity, capital resources, and debt management strategies [Overview and Outlook](index=33&type=section&id=Overview%20and%20Outlook) The company highlights strong Q1 2021 performance with coal shipments reaching **6.9 million tons**, the highest since Q2 2019, resulting in net income of **$26.4 million** and Adjusted EBITDA of **$106.7 million**. For the full year 2021, the company expects to sell **22-24 million tons** of coal, with **20.5 million tons** already contracted. Capital expenditures are projected to be between **$100 million** and **$125 million** - Q1 2021 coal shipments improved to **6.9 million tons**, the highest level since Q2 2019[157](index=157&type=chunk) Q1 2021 Financial Highlights | Metric | Value | | :--- | :--- | | **Net Income** | **$26.4 million** | | **Adjusted EBITDA** | **$106.7 million** | | **Debt Repayments** | **$29.8 million** | 2021 Outlook | Metric | Guidance | | :--- | :--- | | **PAMC Sales Volume** | **22 - 24 million tons** | | **Contracted Position (as of May 4, 2021)** | **20.5 million tons** | | **Average Cash Cost of Coal Sold per Ton** | **$27.00 - $29.00** | | **Capital Expenditures (ex-Itmann)** | **$100 - $125 million** | [Results of Operations](index=38&type=section&id=Results%20of%20Operations) The company's net income attributable to shareholders rose to **$26 million** in Q1 2021 from **$2 million** in Q1 2020. The Pennsylvania Mining Complex (PAMC) segment's earnings before tax surged to **$42 million** from **$11 million**, driven by a **1.0 million ton** increase in sales and a significant reduction in average cost of coal sold per ton from **$40.04** to **$31.85**. The CONSOL Marine Terminal segment's earnings remained stable at **$9 million** - PAMC coal production increased to **7.0 million tons** in Q1 2021 from **6.0 million tons** in Q1 2020, reflecting improved demand. The Bailey and Harvey mines saw increased production, while the Enlow Fork mine's output decreased as it operated only one longwall[179](index=179&type=chunk)[180](index=180&type=chunk) PAMC Segment Performance per Ton (Q1 2021 vs. Q1 2020) | Metric | Q1 2021 | Q1 2020 | | :--- | :--- | :--- | | **Total Tons Sold (millions)** | **6.9** | **5.9** | | **Average Revenue per Ton Sold** | **$41.39** | **$43.16** | | **Average Cost of Coal Sold per Ton** | **$31.85** | **$40.04** | | **Average Margin per Ton Sold** | **$9.54** | **$3.12** | - The decrease in the average cost of coal sold per ton was driven by tight cost controls, no longwall moves in Q1 2021 (compared to one in Q1 2020), and improved operating leverage from higher production volumes[187](index=187&type=chunk) [Liquidity and Capital Resources](index=45&type=section&id=Liquidity%20and%20Capital%20Resources) The company's liquidity is supported by cash from operations, which increased to **$78 million** in Q1 2021. The company made **$29.8 million** in principal debt repayments and repurchases during the quarter. As of March 31, 2021, the **$400 million** revolving credit facility had no borrowings and **$146 million** in letters of credit outstanding. Subsequent to the quarter, the company issued **$75 million** in revenue bonds to fund capital projects and expanded its stock/debt repurchase program to **$320 million** Cash Flow Summary (in millions) | Metric | Q1 2021 | Q1 2020 | | :--- | :--- | :--- | | **Cash Provided by Operating Activities** | **$78** | **$51** | | **Cash Used in Investing Activities** | **($5)** | **($27)** | | **Cash Used in Financing Activities** | **($32)** | **($26)** | - During Q1 2021, the company made principal repayments and repurchases totaling **$29.8 million** across its finance leases, Term Loan A, Term Loan B, and Second Lien Notes[157](index=157&type=chunk)[209](index=209&type=chunk) - As of March 31, 2021, the company was in compliance with all financial covenants under its Senior Secured Credit Facilities. The maximum first lien gross leverage ratio was **1.37 to 1.00**, and the maximum total net leverage ratio was **1.97 to 1.00**[95](index=95&type=chunk)[224](index=224&type=chunk) - During Q1 2021, the company spent approximately **$9 million** to retire **$10 million** of its **11.00%** Senior Secured Second Lien Notes. No common shares were repurchased[247](index=247&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=56&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section states that there have been no material changes to the company's exposures to market risk since the disclosures made in its Annual Report on Form 10-K for the year ended December 31, 2020 - There have been no material changes to the Company's exposures to market risk since December 31, 2020[257](index=257&type=chunk) [Controls and Procedures](index=57&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures and concluded they were effective as of March 31, 2021. There were no changes in internal controls over financial reporting during the quarter that materially affected, or are reasonably likely to materially affect, these controls - Based on an evaluation as of the end of the period, the principal executive officer and principal financial officer concluded that the company's disclosure controls and procedures are effective[259](index=259&type=chunk) - No changes in the company's internal controls over financial reporting occurred during the fiscal quarter that materially affected, or are reasonably likely to materially affect, the controls[260](index=260&type=chunk) Part II. Other Information [Legal Proceedings](index=57&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various legal proceedings incidental to its business. No material litigation is currently pending, except for matters disclosed in Note 14 of the financial statements, which include disputes over retiree health care benefits and potential liabilities under the Coal Act - The company is not currently subject to any material litigation, except as disclosed in Note 14 - Commitments and Contingent Liabilities[262](index=262&type=chunk) [Risk Factors](index=57&type=page&id=Item%201A.%20Risk%20Factors) This section highlights a specific risk factor concerning the dependency on key executives and the potential adverse effects of being unable to attract and retain them. It notes that factors like commodity price volatility and ESG-related pressures on the coal industry could impact retention. For a comprehensive list of risks, the report refers to the company's 2020 Form 10-K - The company's future success depends on the continued services of its key executive officers. The inability to retain senior management could be impacted by commodity price volatility and negative sentiment towards the fossil fuel industry, potentially having a material adverse effect on the business[264](index=264&type=chunk)[265](index=265&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=59&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No repurchases of the company's equity securities occurred during the three months ended March 31, 2021. The company's stock and debt repurchase program, which was expanded subsequent to the quarter, had approximately **$132 million** remaining available as of May 4, 2021 - There were no repurchases of the Company's equity securities during the three months ended March 31, 2021[268](index=268&type=chunk) - As of May 4, 2021, approximately **$132 million** remained available under the expanded **$320 million** stock and debt repurchase program, which terminates on December 31, 2022[268](index=268&type=chunk) [Mine Safety Disclosures](index=59&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) Information regarding mine safety violations and other regulatory matters as required by the Dodd-Frank Act is provided in Exhibit 95 of this quarterly report - Information concerning mine safety violations required by Section 1503(a) of the Dodd-Frank Act is included in Exhibit 95 to this Quarterly Report on Form 10-Q[271](index=271&type=chunk)

Part I [Item 1. Business](index=6&type=section&id=ITEM%201.%20Business) CONSOL Energy is a low-cost producer of high-quality bituminous coal in the Appalachian Basin with core operations in mining, marine terminal services, and metallurgical coal development [General Overview and Strategy](index=6&type=section&id=General%20Overview%20and%20Strategy) The company operates key assets including the PAMC and CONSOL Marine Terminal, focusing on low-cost production, metallurgical coal growth, and innovative coal-to-product diversification - The company's core businesses are the Pennsylvania Mining Complex (PAMC), the CONSOL Marine Terminal, and the developing Itmann Mine, expected to produce **900 thousand tons per year** of low-vol coking coal[29](index=29&type=chunk)[30](index=30&type=chunk)[31](index=31&type=chunk) - On December 30, 2020, the company **completed the acquisition of all outstanding common units of CONSOL Coal Resources**, making it an indirect wholly-owned subsidiary[34](index=34&type=chunk) - The company's long-term strategy involves diversifying its revenue stream to **reduce exposure to thermal coal** by increasing contributions from the CONSOL Marine Terminal, metallurgical coal, and other carbon products[36](index=36&type=chunk) - CONSOL is pursuing innovative uses of coal, including a **25% equity stake in CFOAM Corp** for high-performance carbon foam products and a partnership to develop a refinery for waste coal slurry[39](index=39&type=chunk) - As of February 9, 2021, the company's contracted sales position is **18.2 million tons for 2021** and **5.6 million tons for 2022**[42](index=42&type=chunk) [Competitive Strengths](index=9&type=section&id=Competitive%20Strengths) The company's competitive advantages include its high-margin operations, extensive reserve base, low-cost longwall mining, strategic logistics, and a strong, established customer base - The Pennsylvania Mining Complex (PAMC) has **657.9 million tons of high-quality recoverable coal reserves**, sufficient for over 20 years of production[46](index=46&type=chunk) - The PAMC is the most productive longwall mining complex in the Northern Appalachian Basin (NAPP), with a production rate of **7.21 tons per employee hour in 2020**, compared to the NAPP average of 4.90[48](index=48&type=chunk) - The company has a significant transportation cost advantage over Illinois Basin (ILB) producers, estimated at **$4 to $7 per ton** for coal delivered to Europe and India[50](index=50&type=chunk) - The company's top ten domestic power plant customers, accounting for **74% of its domestic shipments in 2020**, have no announced retirement plans for the next five years, and CONSOL has grown its market share at these plants from 11% in 2012 to **27% in 2020**[51](index=51&type=chunk) [Coal Operations and Reserves](index=11&type=section&id=Coal%20Operations%20and%20Reserves) As of year-end 2020, the company controlled 2.2 billion tons of recoverable coal reserves, primarily thermal coal located at the Pennsylvania Mining Complex and the developing Itmann Mine PAMC Recoverable Coal Reserves (Millions of Tons, as of 12/31/2020) | Mine/Complex | Assigned Operating | Accessible | Total | | :--- | :--- | :--- | :--- | | Bailey | 69.2 | 39.0 | 108.2 | | Enlow Fork | 67.4 | 254.3 | 321.7 | | Harvey | 37.9 | 190.1 | 228.0 | | **Total PAMC** | **174.5** | **483.4** | **657.9** | Itmann Mine Recoverable Coal Reserves (Millions of Tons, as of 12/31/2020) | Reserve Class | Proven | Probable | Total | | :--- | :--- | :--- | :--- | | Assigned Operating | 4.2 | 1.4 | 5.6 | | Accessible | 5.8 | 9.2 | 15.0 | | **Total Itmann** | **10.0** | **10.6** | **20.6** | Total Recoverable Coal Reserves by Type (Millions of Tons, as of 12/31/2020) | Type | Tons | Percent of Total | | :--- | :--- | :--- | | Metallurgical | 81.3 | 3.7% | | Thermal | 2,084.4 | 96.3% | | **Total** | **2,165.7** | **100.0%** | [Production, Marketing, and Sales](index=16&type=section&id=Production%2C%20Marketing%2C%20and%20Sales) In 2020, coal production and sales prices declined due to weakened demand, with sales concentrated among a few key customers and significant volume shipped through the CONSOL Marine Terminal Coal Production (in millions of tons) | Mine | 2020 | 2019 | 2018 | | :--- | :--- | :--- | :--- | | Bailey | 8.7 | 12.2 | 12.7 | | Enlow Fork | 5.7 | 10.0 | 9.9 | | Harvey | 4.4 | 5.0 | 5.0 | | **Total** | **18.8** | **27.3** | **27.6** | PAMC Sales Performance | Metric | 2020 | 2019 | 2018 | | :--- | :--- | :--- | :--- | | Tons Sold (millions) | 18.7 | 27.3 | 27.7 | | Avg. Sales Price/Ton | $41.31 | $47.17 | $49.28 | - In 2020, three customers each comprised over 10% of coal sales, aggregating to approximately **55% of total sales**[99](index=99&type=chunk) - The CONSOL Marine Terminal shipped **10.1 million tons of coal in 2020**, with approximately 77% of the tonnage produced by the PAMC, and has a potential maximum throughput of 15 million tons annually[107](index=107&type=chunk) [Laws and Regulations](index=19&type=section&id=Laws%20and%20Regulations) The company's operations face significant costs and potential demand reduction due to extensive environmental, health, and safety regulations, including those related to air, water, and climate change - The company's operations and its customers are heavily regulated under the **Clean Air Act (CAA)**, which governs emissions from coal combustion[122](index=122&type=chunk)[123](index=123&type=chunk) - Global climate change initiatives and regulations targeting **greenhouse gas (GHG) emissions** are expected to decrease the utilization of coal-fired power plants and reduce demand for coal[132](index=132&type=chunk) - The Surface Mining Control and Reclamation Act (SMCRA) requires the company to obtain surety bonds for long-term reclamation obligations, with **$564 million in surety bonds posted** as of December 31, 2020[152](index=152&type=chunk) - Under federal black lung benefits legislation, the company contributes to a trust fund via an excise tax on coal production, which was up to **$1.10 per ton** for deep mined coal through 2021[165](index=165&type=chunk) [Item 1A. Risk Factors](index=27&type=section&id=ITEM%201A.%20Risk%20Factors) The company faces substantial business, operational, and financial risks including volatile coal prices, pandemic impacts, customer concentration, regulatory pressures, and stock price volatility [Risks Related to Our Business](index=27&type=section&id=Risks%20Related%20to%20Our%20Business) The company's business is subject to risks from volatile coal prices, reduced demand from COVID-19, high customer concentration, and the long-term decline in coal use by power generators - The **COVID-19 pandemic caused an unprecedented decline in coal demand in 2020** due to lockdowns and reduced electricity consumption, negatively impacting performance[181](index=181&type=chunk)[183](index=183&type=chunk) - The company has significant customer concentration, with three domestic customers accounting for approximately **55% of coal sales in fiscal year 2020**[196](index=196&type=chunk) - Regulations addressing **climate change and greenhouse gas emissions** may increase operating costs, reduce asset values, and adversely impact the market for coal[219](index=219&type=chunk)[222](index=222&type=chunk) - Substantially all mining operations are conducted at the **single Pennsylvania Mining Complex**, making the company vulnerable to risks associated with operating in a single geographic area[237](index=237&type=chunk)[238](index=238&type=chunk) [Risks Related to Our Common Stock and the Securities Market](index=42&type=section&id=Risks%20Related%20to%20Our%20Common%20Stock%20and%20the%20Securities%20Market) Investors face risks including significant stock price volatility, no guarantee of future dividends, potential ownership dilution, and anti-takeover provisions that could depress the stock price - The market price of the company's common stock may **fluctuate significantly** due to factors such as earnings results, analyst estimates, and overall market conditions[307](index=307&type=chunk) - The payment of **future dividends is not guaranteed** and is subject to the discretion of the board of directors, financial conditions, and debt covenants[312](index=312&type=chunk) - The company's charter and Delaware law contain **provisions intended to deter coercive takeovers**, which could delay a change in control and potentially decrease the stock's trading price[318](index=318&type=chunk)[319](index=319&type=chunk) - The certificate of incorporation designates **Delaware state courts as the exclusive forum** for certain stockholder lawsuits, which could limit a stockholder's ability to bring a claim elsewhere[324](index=324&type=chunk)[325](index=325&type=chunk) [Item 1B. Unresolved Staff Comments](index=47&type=section&id=ITEM%201B.%20Unresolved%20Staff%20Comments) The company reports that it has no unresolved staff comments - None[327](index=327&type=chunk) [Item 2. Properties](index=47&type=section&id=ITEM%202.%20Properties) The company's material properties include its mining operations, the CONSOL Marine Terminal in Baltimore, and its principal executive offices in Canonsburg, Pennsylvania - The company's primary properties consist of its mining operations, the **CONSOL Marine Terminal** in Baltimore, and its principal executive offices in Canonsburg, PA[329](index=329&type=chunk) [Item 3. Legal Proceedings](index=47&type=section&id=ITEM%203.%20Legal%20Proceedings) The company is involved in various legal proceedings incidental to its business but reports no material litigation at this time - The company is **not currently subject to any material litigation**, with details on commitments and contingent liabilities provided in Note 22 of the financial statements[330](index=330&type=chunk) [Item 4. Mine Safety and Health Administration Safety Data](index=47&type=section&id=ITEM%204.%20Mine%20Safety%20and%20Health%20Administration%20Safety%20Data) Information regarding mine safety violations and other regulatory matters as required by the Dodd-Frank Act is included in Exhibit 95 of this annual report - Mine safety data required by Section 1503(a) of the Dodd-Frank Act is included in **Exhibit 95** to this annual report[331](index=331&type=chunk) Part II [Item 5. Market for Registrant's Common Equity and Related Stockholder Matters and Issuer Purchases of Equity Securities](index=48&type=section&id=ITEM%205.%20Market%20for%20Registrant's%20Common%20Equity%20and%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's common stock (NYSE: CEIX) performance has underperformed the S&P 500, and while a repurchase program is active, dividend payments are restricted by debt covenants - The company's common stock is listed on the New York Stock Exchange under the symbol **"CEIX"**[333](index=333&type=chunk) - The company has a stock, unit, and debt repurchase program authorized up to **$270 million** through June 30, 2022, with approximately **$91.4 million remaining available** as of February 12, 2021[339](index=339&type=chunk) - The ability to pay dividends is at the discretion of the Board of Directors and is **limited by covenants** in its debt agreements tied to the company's total net leverage ratio[340](index=340&type=chunk) [Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=50&type=section&id=ITEM%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) The COVID-19 pandemic significantly impacted 2020 financial performance, leading to a net loss of $10 million, reduced sales volumes, and lower coal prices [Results of Operations](index=50&type=section&id=Results%20of%20Operations) The company reported a net loss of $10 million in 2020, a sharp decline from a $76 million net income in 2019, driven by lower coal sales volume and prices PAMC Performance Comparison (2020 vs. 2019) | Metric | 2020 | 2019 | Variance | | :--- | :--- | :--- | :--- | | Tons Sold (millions) | 18.7 | 27.3 | (8.6) | | Avg. Revenue per Ton | $41.31 | $47.17 | ($5.86) | | Avg. Cost of Coal Sold per Ton | $38.24 | $37.37 | $0.87 | | Avg. Cash Margin per Ton | $12.19 | $16.20 | ($4.01) | - The decrease in 2020 coal revenue was driven by **lower sales volume and pricing** due to a warm winter and the COVID-19 pandemic[369](index=369&type=chunk) - The CONSOL Marine Terminal's earnings before income tax were stable year-over-year at **$33M in 2020** due to take-or-pay arrangements that mitigated reduced throughput[377](index=377&type=chunk)[378](index=378&type=chunk) - Comparing 2019 to 2018, coal revenue decreased by $75 million primarily due to a **$2.11 lower average sales price per ton**[403](index=403&type=chunk) [Liquidity and Capital Resources](index=60&type=section&id=Liquidity%20and%20Capital%20Resources) As of year-end 2020, the company maintained total liquidity of $326 million and had total long-term debt and finance lease obligations of $666 million Cash Flow Summary (in millions) | Cash Flow Activity | 2020 | 2019 | Change | | :--- | :--- | :--- | :--- | | Operating Activities | $129 | $245 | ($116) | | Investing Activities | ($76) | ($173) | $97 | | Financing Activities | ($82) | ($257) | $175 | - As of December 31, 2020, total liquidity was **$326 million**, including $51 million of cash and $274 million of unused revolver capacity[440](index=440&type=chunk)[460](index=460&type=chunk) - Total long-term debt and finance lease obligations were **$666 million** at December 31, 2020[472](index=472&type=chunk) - In June 2020, the company amended its Senior Secured Credit Facilities to provide **eight quarters of financial covenant relaxation** in response to market conditions[452](index=452&type=chunk) [Critical Accounting Policies and Estimates](index=59&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) The company's critical accounting policies involve significant management judgment, particularly for Asset Retirement Obligations, Income Taxes, and Recoverable Coal Reserves - **Asset Retirement Obligations**, estimated at approximately **$249 million** at December 31, 2020, are a critical estimate for mine closure and reclamation[427](index=427&type=chunk) - **Accounting for income taxes** is a critical policy, requiring management to assess the realizability of deferred tax assets and judge uncertain tax positions[431](index=431&type=chunk)[434](index=434&type=chunk) - **Estimating economically recoverable coal reserves** is inherently uncertain and involves numerous factors beyond the company's control[435](index=435&type=chunk) [Item 7A. Quantitative and Qualitative Disclosures About Market Risk](index=73&type=section&id=ITEM%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is exposed to market risks from coal commodity prices, interest rates on its variable-rate debt, and foreign exchange rate fluctuations - The company's primary market risks are **commodity price risk (coal), interest rate risk, and foreign exchange rate risk**[493](index=493&type=chunk) - The company's primary exposure to interest rate risk relates to its senior secured credit facilities; a hypothetical **100 basis-point increase** in the average interest rate would decrease pre-tax earnings by **$2 million**[496](index=496&type=chunk)[498](index=498&type=chunk) - Although all transactions are in U.S. dollars, **currency fluctuations can adversely affect the competitiveness** of the company's coal in international markets[499](index=499&type=chunk) [Item 8. Financial Statements and Supplementary Data](index=74&type=section&id=ITEM%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents the company's audited consolidated financial statements and supplementary data for the fiscal years ended December 31, 2020, 2019, and 2018 Consolidated Statement of Income Highlights (in thousands) | Line Item | 2020 | 2019 | 2018 | | :--- | :--- | :--- | :--- | | Total Revenue and Other Income | $1,021,643 | $1,430,903 | $1,532,015 | | Total Costs and Expenses | $1,030,885 | $1,332,806 | $1,344,402 | | Net (Loss) Income | ($13,214) | $93,558 | $178,785 | | Net (Loss) Income Attributable to CEIX | ($9,755) | $76,001 | $152,976 | Consolidated Balance Sheet Highlights (in thousands) | Line Item | Dec 31, 2020 | Dec 31, 2019 | | :--- | :--- | :--- | | Total Current Assets | $292,941 | $338,029 | | Total Assets | $2,523,366 | $2,693,802 | | Total Current Liabilities | $368,470 | $392,264 | | Total Long-Term Debt | $603,061 | $662,838 | | Total Liabilities | $1,969,847 | $2,121,407 | | Total Equity | $553,519 | $572,395 | Consolidated Statement of Cash Flows Highlights (in thousands) | Line Item | 2020 | 2019 | 2018 | | :--- | :--- | :--- | :--- | | Net Cash Provided by Operating Activities | $129,331 | $244,566 | $413,525 | | Net Cash Used in Investing Activities | ($76,334) | ($172,541) | ($153,646) | | Net Cash Used in Financing Activities | ($82,440) | ($256,667) | ($148,923) | [Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosures](index=118&type=section&id=ITEM%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosures) The company reports no changes in or disagreements with its accountants on accounting and financial disclosures - None[756](index=756&type=chunk) [Item 9A. Controls and Procedures](index=118&type=section&id=ITEM%209A.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures, as well as its internal control over financial reporting, were effective as of December 31, 2020 - Management concluded that the company's **disclosure controls and procedures were effective** as of December 31, 2020[757](index=757&type=chunk) - Management concluded that the company maintained **effective internal control over financial reporting** as of December 31, 2020, based on the COSO framework[761](index=761&type=chunk) - There were **no material changes** in the company's internal controls over financial reporting during the period[763](index=763&type=chunk) [Item 9B. Other Information](index=120&type=section&id=ITEM%209B.%20Other%20Information) The Board of Directors approved an amendment to the CEO's employment agreement, providing for two separate $1 million cash retention payments - An amendment to CEO James A. Brock's employment agreement was approved on February 3, 2021, providing for two **cash retention payments of $1,000,000 each**[773](index=773&type=chunk)[774](index=774&type=chunk) Part III [Items 10-14](index=121&type=section&id=ITEMS%2010%2C%2011%2C%2012%2C%2013%20and%2014) Required information for Items 10 through 14 is incorporated by reference from the company's 2021 Proxy Statement - Information for Items 10, 11, 12, 13, and 14 is **incorporated by reference** from the company's Proxy Statement for the 2021 Annual Meeting of Shareholders[778](index=778&type=chunk)[780](index=780&type=chunk)[781](index=781&type=chunk)[782](index=782&type=chunk)[783](index=783&type=chunk) Part IV [Item 15. Exhibits and Financial Statement Schedules](index=121&type=section&id=ITEM%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists the financial statements, schedules, and exhibits filed as part of the Form 10-K report - This section provides an **index of all financial statements, schedules, and exhibits** filed with the Form 10-K[785](index=785&type=chunk)[786](index=786&type=chunk)

CONSOL Energy Inc. (NYSE:CEIX) Q4 2020 Earnings Conference Call February 9, 2021 11:00 AM ET Company Participants Nathan Tucker - Manager, Finance & Investor Relations Jimmy Brock - Chief Executive Officer Mitesh Thakkar - Chief Financial Officer Bob Braithwaite - Vice President of Sales & Marketing Dan Connell - Senior Vice President of Strategy Conference Call Participants Lucas Pipes - B. Riley Securities Nathan Martin - The Benchmark Company Brian Kennedy - Wells Fargo Operator Good morning, and welcome ...