CONSOL Energy (CEIX) - 2021 Q2 - Quarterly Report

Part I. Financial Information Financial Statements 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 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 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 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 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 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 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 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] - Future risks from the pandemic, including potential new shutdowns and depressed demand, are still considered highly uncertain and could negatively impact results[157] Our Business and Outlook 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] - 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] 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 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][235] Liquidity and Capital Resources 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][273] - 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][297] Quantitative and Qualitative Disclosures About Market Risk 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] Controls and Procedures 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] - No changes were made to the Company's internal controls over financial reporting during the quarter that would have a material effect[310] Part II. Other Information Legal Proceedings 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] Risk Factors 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][315] Unregistered Sales of Equity Securities and Use of Proceeds 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] - 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] Defaults Upon Senior Securities The company reports no defaults upon its senior securities during the period - None[319] Mine Safety Disclosures 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] Other Information The company reports no other information for this item - None[321] Exhibits 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]