CONSOL Energy (US:CEIX)2024-02-06 18:03Financial Data and Key Metrics Changes - CONSOL Energy achieved record net income of $656 million, adjusted EBITDA of $1.05 billion, and free cash flow of $687 million for the full year 2023, all of which are annual records for the company [59] - The company finished Q4 2023 with net income of $157 million and adjusted EBITDA of $240 million, generating $165 million of free cash flow [28][59] - The average cash cost of coal sold per ton for Q4 2023 was $36.28, compared to $34.89 in Q4 2022, primarily due to inflationary pressures [47] Business Line Data and Key Metrics Changes - The Pennsylvania Mining Complex (PAMC) produced 6.6 million tons in Q4 2023, an increase from 6.1 million tons in the prior year period, with total PAMC sales reaching 26 million tons for the year [16][20] - Itmann Mining Complex sales improved to 159,000 tons in Q4 2023, up from 123,000 tons in Q3 2023, with full year production at 316,000 tons [7] - The CONSOL Marine Terminal achieved a throughput volume of 4.7 million tons in Q4 2023, compared to 3.6 million tons in the prior year quarter, with terminal revenues for Q4 at $25.4 million [8][49] Market Data and Key Metrics Changes - Approximately 60% of PAMC volumes were sold into export markets during Q4 2023, with total export sales for the year reaching 16.2 million tons, the highest annual level in company history [20][50] - The company expects electricity demand in the PJM region to rise approximately 2.5% annually through the decade, driven by electrification trends [26][56] - The company has contracted 22 million tons for 2024 and 13 million tons for 2025, with a significant portion linked to fixed price arrangements [52] Company Strategy and Development Direction - The company aims to expand its sales reach globally while maintaining a stable domestic fixed price business, focusing on structural export market shifts [25][36] - There is a commitment to scaling up the Itmann Mine to full production, with expectations of overcoming staffing challenges and improving operational efficiency [69] - The company is focused on managing cash outflows and reducing unnecessary spending to enhance free cash flow generation [68] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to contract future domestic business due to tailwinds in the US coal market [25] - The company anticipates a more than 36% increase in sales volume at the midpoint of its 2024 guidance compared to 2023 levels [39] - Management highlighted the importance of coal in the energy transition and its role in infrastructure development [71] Other Important Information - The CONSOL Marine Terminal finished 2023 with adjusted EBITDA of $80.3 million, the highest level in its history, achieved without any employee recordable safety incidents [49][144] - The company has successfully marketed PAMC coal to three new countries in 2023 and plans to continue penetrating new markets [36] Q&A Session Summary Question: What is the outlook for SG&A in 2024? - Management expects further decline in SG&A as legacy stock-based compensation decreases [43] Question: Can you provide a breakdown of the 22 million tons committed for 2024? - The majority of the contracted tons are expected to be sold into the export market, with a balanced mix of domestic and international business [80][126] Question: What are the expected cash costs for Itmann in 2024? - The guidance for Itmann's cash cost per ton is set at $120 to $140, with expectations of improvement as production ramps up [88][111] Question: How does the company view the pricing sensitivity related to API2? - Management indicated that about 6.5 million tons are tied to API2 prices, with a minimal downside potential and significant upside sensitivity [106] Question: What is the expected throughput for the Baltimore Terminal in 2024? - The starting point for throughput is modeled around 16 to 17 million tons, with potential for optimization based on market conditions [75][102]