CONSOL Energy (US:CEIX)2022-02-08 21:41Financial Data and Key Metrics Changes - CONSOL Energy reported a net income of $117.3 million for Q4 2021, translating to $3.30 per diluted share, which included a $115.5 million unrealized pre-tax mark-to-market gain related to commodity derivatives [32] - The company generated $186 million of free cash flow for the full year 2021, marking the fourth consecutive year of positive free cash flow generation since becoming an independent public company [35] - The cash cost of coal sold for the full year 2021 was $28.25 per ton, a decrease from $29.12 per ton in 2020 [14] Business Line Data and Key Metrics Changes - Coal production at the Pennsylvania mining complex was 5.6 million tons in Q4 2021, with total production for the year reaching 23.9 million tons [11][12] - The average revenue per ton for coal sold in Q4 2021 was $51.27, compared to $39.05 in the same period of the previous year [17] - The CONSOL Marine Terminal had throughput volume of 3.1 million tons in Q4 2021, with terminal revenues of $15.5 million [15] Market Data and Key Metrics Changes - The company expects robust coal demand both domestically and internationally due to strong forward pricing and tight supply [18] - CONSOL secured long-term coal supply contracts for approximately 7 million tons to be delivered through 2024, with 73% contracted directly with a large industrial customer [19] Company Strategy and Development Direction - The company is focused on completing the Itmann low-vol metallurgical project, which is expected to ramp up production in the second half of 2022 [20][42] - CONSOL aims to strengthen its balance sheet and liquidity while reducing leverage and outstanding debt [45] - The company is also committed to expanding its presence in the export market while maintaining its domestic customer base [45] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about 2022, expecting to see increased pricing and revenue growth, particularly with the Itmann project coming online [10][43] - The company acknowledged ongoing inflationary pressures affecting costs but emphasized efforts to manage these challenges [40][75] Other Important Information - The company reported a cash cost of coal sold per ton of $30.81 in Q4 2021, up from $27.49 in Q4 2020, primarily due to geological issues and increased maintenance costs [13] - The company has a fully funded status on its defined benefit pension plan and has de-risked it further by adjusting the equity to fixed income split [27] Q&A Session Summary Question: How many tons were affected by transportation delays? - Management indicated that it is difficult to quantify the exact number of tons affected but noted that they ended the year with 310,000 tons in inventory and missed production opportunities due to rail service issues [53][54] Question: What is the split between domestic and export contracts for 2022? - Management stated that they exported just over 11 million tons in 2021 and expect to export around 9 million tons in 2022, with a focus on domestic demand [56][57] Question: What is the timeline for the fifth longwall? - The fifth longwall is expected to be operational by late November to early December 2022, depending on development progress [63][79] Question: What are the priorities for free cash flow management? - Management emphasized that paying down debt remains the top priority, with plans to balance this with capital expenditures for the Itmann project [66][68]