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CONSOL Energy (CEIX) - 2024 Q3 - Quarterly Report
CEIXCONSOL Energy (CEIX)2024-11-05 12:02
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Merger and Acquisition - The company entered into a merger agreement with Arch Resources, Inc. on August 20, 2024, which will result in Arch becoming a wholly-owned subsidiary of the company[122] Coal Reserves and Production Capacity - The Pennsylvania Mining Complex (PAMC) controls 583.5 million tons of high-quality Pittsburgh seam reserves, sufficient for over 20 years of full-capacity production[126] - The Itmann Mining Complex includes 28.4 million tons of recoverable coal reserves, supporting over 30 years of full-capacity production[126] - The company owns or controls approximately 1.3 billion tons of Greenfield Reserves and Resources across various basins[126] - The Itmann No. 5 Mine is expected to produce approximately 900 thousand tons per year of high-quality, low-vol coking coal once it reaches full run rate[127] - The PAMC averaged 7.50 tons of coal production per employee hour in 2022 and 2023[128] - The Central Preparation Plant can clean and process up to 9,000 raw tons of coal per hour[128] - PAMC coal production increased to 7.2 million tons in Q3 2024 from 6.1 million tons in Q3 2023, with the Bailey Mine contributing the largest increase of 836,000 tons[166] - Total tons produced at the Pennsylvania Mining Complex (PAMC) decreased to 19.3 million tons for the nine months ended September 30, 2024, from 19.5 million tons in 2023, impacted by restricted access to the CONSOL Marine Terminal[192][193] Financial Performance - The company's adjusted EBITDA for the PAMC segment was 439.73millionforthethreemonthsendedSeptember30,2024[138]−TheaveragecashmarginpertonsoldforthePAMCsegmentwas439.73 million for the three months ended September 30, 2024[138] - The average cash margin per ton sold for the PAMC segment was 28.43 for the three months ended September 30, 2024[138] - The company's total coal revenue for the PAMC segment was 1,240.36millionfortheninemonthsendedSeptember30,2024[138]−ConsolidatednetincomeforthethreemonthsendedSeptember30,2024was1,240.36 million for the nine months ended September 30, 2024[138] - Consolidated net income for the three months ended September 30, 2024 was 95.6 million, compared to 100.7millionforthesameperiodin2023[140][143]−AdjustedEBITDAforthethreemonthsendedSeptember30,2024was100.7 million for the same period in 2023[140][143] - Adjusted EBITDA for the three months ended September 30, 2024 was 179.2 million, compared to 185.5millionforthesameperiodin2023[140][143]−TotalrevenueandotherincomeforthethreemonthsendedSeptember30,2024was185.5 million for the same period in 2023[140][143] - Total revenue and other income for the three months ended September 30, 2024 was 575 million, a 5millionincreasefrom5 million increase from 570 million in the same period in 2023[146] - Coal revenue for the three months ended September 30, 2024 was 463million,consistingof463 million, consisting of 440 million from the Pennsylvania Mining Complex and 23millionfromtheItmannMiningComplex[147]−TerminalrevenueforthethreemonthsendedSeptember30,2024was23 million from the Itmann Mining Complex[147] - Terminal revenue for the three months ended September 30, 2024 was 24 million, compared to 23millionforthesameperiodin2023[148]−FreightrevenueforthethreemonthsendedSeptember30,2024was23 million for the same period in 2023[148] - Freight revenue for the three months ended September 30, 2024 was 63 million, compared to 68millionforthesameperiodin2023[149]−ConsolidatednetincomefortheninemonthsendedSeptember30,2024was68 million for the same period in 2023[149] - Consolidated net income for the nine months ended September 30, 2024 was 255.6 million, compared to 498.8millionforthesameperiodin2023[144][145]−AdjustedEBITDAfortheninemonthsendedSeptember30,2024was498.8 million for the same period in 2023[144][145] - Adjusted EBITDA for the nine months ended September 30, 2024 was 485.5 million, compared to 807.8millionforthesameperiodin2023[144][145]−CoalrevenueforthethreemonthsendedSeptember30,2024wassoldintothefollowingmarkets:807.8 million for the same period in 2023[144][145] - Coal revenue for the three months ended September 30, 2024 was sold into the following markets: 227 million into power generation, 152millionintoindustrial,and152 million into industrial, and 84 million into metallurgical[147] - Miscellaneous other income decreased to 25millioninQ32024from25 million in Q3 2024 from 28 million in Q3 2023, primarily due to lower contract assessments and other income[150] - Adjusted EBITDA for the PAMC decreased to 173.9millioninQ32024from173.9 million in Q3 2024 from 183.8 million in Q3 2023, primarily due to a 6.06decreaseinaveragecoalrevenuepertonsold[164][167]−CONSOLMarineTerminalthroughputincreasedto4.7milliontonsinQ32024from4.3milliontonsinQ32023,withAdjustedEBITDArisingto6.06 decrease in average coal revenue per ton sold[164][167] - CONSOL Marine Terminal throughput increased to 4.7 million tons in Q3 2024 from 4.3 million tons in Q3 2023, with Adjusted EBITDA rising to 15.9 million from 14.9million[164][169]−CoalrevenuefortheninemonthsendedSeptember30,2024,was14.9 million[164][169] - Coal revenue for the nine months ended September 30, 2024, was 1,320 million, down from 1,574millioninthesameperiodof2023,withasignificantdeclineinpowergenerationrevenue[172]−TerminalrevenuefortheninemonthsendedSeptember30,2024,was1,574 million in the same period of 2023, with a significant decline in power generation revenue[172] - Terminal revenue for the nine months ended September 30, 2024, was 60 million, compared to 81millioninthesameperiodof2023,reflectingloweractivityattheCONSOLMarineTerminal[173]−Freightrevenueandfreightexpensewereboth81 million in the same period of 2023, reflecting lower activity at the CONSOL Marine Terminal[173] - Freight revenue and freight expense were both 199 million for the nine months ended September 30, 2024, compared to 217millionforthesameperiodin2023[174]−Miscellaneousotherincomeincreasedto217 million for the same period in 2023[174] - Miscellaneous other income increased to 55 million for the nine months ended September 30, 2024, from 40millionin2023,drivenbyhigherroyaltyincomeandinterestincome[175]−AdjustedEBITDAforthePAMCsegmentdecreasedto40 million in 2023, driven by higher royalty income and interest income[175] - Adjusted EBITDA for the PAMC segment decreased to 481.7 million for the nine months ended September 30, 2024, from 784.8millionin2023,duetolowercoalrevenuepertonandhighercashcosts[190]−AdjustedEBITDAfortheCONSOLMarineTerminalsegmentdecreasedto784.8 million in 2023, due to lower coal revenue per ton and higher cash costs[190] - Adjusted EBITDA for the CONSOL Marine Terminal segment decreased to 37.9 million for the nine months ended September 30, 2024, from 59.3millionin2023,reflectingreducedthroughputvolumes[190]OperatingCostsandExpenses−Operatingandothercostsincreasedto59.3 million in 2023, reflecting reduced throughput volumes[190] Operating Costs and Expenses - Operating and other costs increased to 304 million in Q3 2024 from 276millioninQ32023,drivenbyhigherproductionvolumesandincreasedcostsattheItmannMiningComplex[153][154]−Operatingandothercostsincreasedto276 million in Q3 2023, driven by higher production volumes and increased costs at the Itmann Mining Complex[153][154] - Operating and other costs increased to 885 million for the nine months ended September 30, 2024, from 814millionin2023,primarilyduetoinflationarypressuresandincreasedproductionvolumes[179][184]−Depreciation,depletion,andamortizationcostsdecreasedto814 million in 2023, primarily due to inflationary pressures and increased production volumes[179][184] - Depreciation, depletion, and amortization costs decreased to 165 million for the nine months ended September 30, 2024, from 183millionin2023,duetofully−depreciatedassetsandreducedassetretirementobligations[185]−Employee−relatedlegacyliabilityexpenseincreasedby183 million in 2023, due to fully-depreciated assets and reduced asset retirement obligations[185] - Employee-related legacy liability expense increased by 3 million in Q3 2024 compared to Q3 2023, primarily due to changes in actuarial assumptions[156] - Interest expense decreased to 5millioninQ32024from5 million in Q3 2024 from 7 million in Q3 2023, as the company fully retired its Second Lien Notes in July 2023[161] - Interest expense decreased to 15millionfortheninemonthsendedSeptember30,2024,from15 million for the nine months ended September 30, 2024, from 24 million in 2023, as the company retired its Term Loan B and Second Lien Notes[187] Liquidity and Capital Structure - CONSOL Energy's total liquidity as of September 30, 2024 was 649million,including649 million, including 332 million in cash and cash equivalents, 84millioninshort−terminvestments,84 million in short-term investments, 57 million in securitization facility availability, and 355millioninrevolvingcreditfacilityavailability,less355 million in revolving credit facility availability, less 179 million in outstanding letters of credit[201] - The company generated 355millionincashflowsfromoperatingactivitiesfortheninemonthsendedSeptember30,2024,adecreaseof355 million in cash flows from operating activities for the nine months ended September 30, 2024, a decrease of 284 million compared to the same period in 2023[206] - CONSOL Energy's revolving credit facility was amended in 2023 to increase capacity to 355million,withtheabilitytoexpandto355 million, with the ability to expand to 400 million, and secured 95millioninincrementalcommitmentsfromnewandexistinglenders[200][209]−Thecompany′stotalcapitalexpendituresfortheninemonthsendedSeptember30,2024were95 million in incremental commitments from new and existing lenders[200][209] - The company's total capital expenditures for the nine months ended September 30, 2024 were 137 million, an increase of 19millioncomparedtothesameperiodin2023,primarilyduetohigherequipmentpurchasesandrebuilds[208]−CONSOLEnergy′sfirstliengrossleverageratiowas0.02to1.00,totalnetleverageratiowas(0.31)to1.00,andfixedchargecoverageratiowas2.88to1.00asofSeptember30,2024,allwithincompliancewiththerevolvingcreditfacilitycovenants[213]−Thecompany′saggregateobligationfortheUMWACombinedBenefitFundand1992BenefitPlanisestimatedtobeapproximately19 million compared to the same period in 2023, primarily due to higher equipment purchases and rebuilds[208] - CONSOL Energy's first lien gross leverage ratio was 0.02 to 1.00, total net leverage ratio was (0.31) to 1.00, and fixed charge coverage ratio was 2.88 to 1.00 as of September 30, 2024, all within compliance with the revolving credit facility covenants[213] - The company's aggregate obligation for the UMWA Combined Benefit Fund and 1992 Benefit Plan is estimated to be approximately 33 million, with contributions of 2millionfortheninemonthsendedSeptember30,2024[205]−CONSOLEnergy′ssecuritizationfacilityhasamaximumcapacityof2 million for the nine months ended September 30, 2024[205] - CONSOL Energy's securitization facility has a maximum capacity of 100 million, with loans accruing interest at a reserve-adjusted market index rate equal to the applicable term SOFR rate plus a program fee ranging from 2.00% to 2.50% per annum[218][219] - The company's cash used in financing activities decreased by 460millionfortheninemonthsendedSeptember30,2024comparedtothesameperiodin2023,primarilyduetoa460 million for the nine months ended September 30, 2024 compared to the same period in 2023, primarily due to a 206 million decrease in share repurchases and a 174milliondecreaseinnetpaymentsonindebtedness[208]−CONSOLEnergy′sinsurancerateshavestabilizedandevendecreasedoncertainlinesofcoverageasnewinsurancecarriershaveenteredthemarket,afterexperiencingrisingpremiumsandreducedcoverageinpreviousyears[203]−CONSOLEnergy′srevolvingcreditfacilityhas174 million decrease in net payments on indebtedness[208] - CONSOL Energy's insurance rates have stabilized and even decreased on certain lines of coverage as new insurance carriers have entered the market, after experiencing rising premiums and reduced coverage in previous years[203] - CONSOL Energy's revolving credit facility has 231 million of unused capacity as of September 30, 2024, with 124millionoflettersofcreditoutstanding[215]−Eligibleaccountsreceivableyielded124 million of letters of credit outstanding[215] - Eligible accounts receivable yielded 57 million of borrowing capacity at September 30, 2024, with 2millionofunusedcapacity[221]−CONSOLEnergyborrowed2 million of unused capacity[221] - CONSOL Energy borrowed 75 million from PEDFA Bonds at a fixed interest rate of 9.00%, maturing in April 2051[222] - CONSOL Energy expects to make payments of 120milliononlong−termdebtobligationsinthenext12months,including120 million on long-term debt obligations in the next 12 months, including 103 million for MEDCO revenue bonds[225] - CONSOL Energy expects to make payments of 6milliononoperatingandfinanceleaseobligationsinthenext12months[226]−CONSOLEnergyexpectstomakepaymentsof6 million on operating and finance lease obligations in the next 12 months[226] - CONSOL Energy expects to make payments of 48 million on employee-related long-term liabilities in the next 12 months[227] - Total long-term debt and finance lease obligations at September 30, 2024, were 197million,including197 million, including 103 million of industrial revenue bonds and 75millionofPEDFABonds[228][229]−CONSOLEnergyrepurchasedandretired747,351sharesofcommonstockatanaveragepriceof75 million of PEDFA Bonds[228][229] - CONSOL Energy repurchased and retired 747,351 shares of common stock at an average price of 89.49 per share during the nine months ended September 30, 2024[234] - Total equity attributable to CONSOL Energy was 1,529millionatSeptember30,2024,comparedto1,529 million at September 30, 2024, compared to 1,343 million at December 31, 2023[235] - CONSOL Energy announced a 0.25/sharedividend,totalingapproximately0.25/share dividend, totaling approximately 7 million, payable on November 26, 2024[237] - CONSOL Energy had no borrowings outstanding under the 355millionseniorsecuredRevolvingCreditFacilityand355 million senior secured Revolving Credit Facility and 100 million securitization facility at September 30, 2024[231] Terminal Operations and Throughput - The Company's Terminal revenue consists of fees charged for coal loaded at the CONSOL Marine Terminal, which provides access to international coal markets[148] - Throughput tons at the CONSOL Marine Terminal decreased to 11.5 million tons for the nine months ended September 30, 2024, from 14.2 million tons in 2023, due to the Francis Scott Key Bridge collapse[190][196] - The company utilized an alternative port and accelerated domestic shipments to mitigate the impact of the CONSOL Marine Terminal's restricted access following the bridge collapse[196] Royalty and Other Income - Royalty income increased due to additional leased coal volumes and investments in coal-to-product businesses led by CONSOL Innovations LLC[152] Internal Controls and Litigation - CONSOL Energy's disclosure controls and procedures are effective as of September 30, 2024, ensuring timely and accurate reporting under SEC rules[243] - No material changes in the company's internal controls over financial reporting during the fiscal quarter[244] - The company acknowledges that no control system can provide absolute assurance due to assumptions about future events[245] - CONSOL Energy is not currently subject to any material litigation, except as disclosed in Note 13 of the financial statements[246]