CONSOL Energy (US:CEIX)2022-05-04 02:22Financial Data and Key Metrics Changes - CONSOL Energy achieved Q1 2022 adjusted EBITDA of $169 million and generated nearly $120 million in free cash flow, reflecting strong operational performance [9][30] - The company recorded a net loss of $4.5 million in Q1 2022, primarily due to $102 million in unrealized mark-to-market losses on commodity derivatives [28][30] - Total unrestricted cash and cash equivalents increased to $223 million, with total cash balance at $269 million at the end of March 2022 [24][26] Business Line Data and Key Metrics Changes - The Pennsylvania Mining Complex (PAMC) shipped 6.5 million tons in Q1 2022, achieving the highest quarterly average coal revenue per ton sold since becoming independent [7][16] - The CONSOL Marine Terminal shipped 3.6 million tons, generating its highest ever quarterly terminal revenue of $21.4 million, up from $18.2 million in Q1 2021 [12][13] - The Itmann project is on track for startup in the second half of 2022, with 44,000 tons of low-vol metallurgical coal produced in Q1 2022 [9][15] Market Data and Key Metrics Changes - Domestic coal demand remains robust due to supply tightness, with Henry Hub natural gas spot prices averaging $4.67 per million Btu in Q1 2022 [17] - Internationally, API2 prices averaged $234 per ton during Q1 2022, influenced by the conflict between Russia and Ukraine [18] - The company is nearly fully contracted for 2022 and has 16.3 million tons contracted for 2023, with expectations for strong pricing [19][46] Company Strategy and Development Direction - The company aims to maximize free cash flow generation while managing costs and mitigating inflationary pressures [37] - Growth initiatives include completing the Itmann project and restarting the fifth longwall at PAMC, both expected to enhance revenue and diversification [39] - The company is committed to reducing total debt and enhancing liquidity, with a goal of approximately $300 million to $350 million in total debt [26][35] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the strong market backdrop and the potential for sustained demand for coal products [9][19] - The company anticipates continued volatility in commodity prices but expects to benefit from reduced hedge exposure as the year progresses [28][30] - Management is focused on maintaining operational efficiency and safety while navigating the current inflationary environment [37][39] Other Important Information - The company is committed to ESG goals, including a 50% reduction in Scope 1 and 2 greenhouse gas emissions by 2026 [41] - The 2021 corporate sustainability report will be released soon, highlighting the company's progress in ESG initiatives [41] Q&A Session Summary Question: Can you share the mix between export and domestic tons sold for 2023? - The company has about 10.8 million tons of the 16.3 million tons contracted for 2023, with a mix of 10.8 million tons domestic and 5.5 million tons export, with average pricing in the mid-60s [45][46] Question: What is the outlook for gas to coal switching given current gas prices? - Utilities are experiencing low inventories, and many are underbuying, which may limit coal burn despite high gas prices [49][50] Question: When will the company provide more concrete details on shareholder returns? - The company is nearing a point to provide concrete answers on shareholder returns, aiming for a formulaic approach based on free cash flow [51][54]