EX-99.1 2 ex991pressrelease02-11.htm EXHIBIT 99.1 Exhibit


Exhibit 99.1
consolca08.jpg
CONSOL Energy Announces Results for the Fourth Quarter and Full Year 2019


CANONSBURG, PA (February 11, 2020) - Today, CONSOL Energy Inc. (NYSE: CEIX) reported financial and operating results for the period ended December 31, 2019.

Fourth Quarter 2019 and Full Year 2019 Highlights Include:

GAAP net income of $17.4 million and $93.6 million for 4Q19 and 2019, respectively;
2019 total GAAP dilutive earnings per share of $2.81;
Adjusted net income1 of $17.4 million and $112.7 million for 4Q19 and 2019, respectively;
2019 adjusted dilutive earnings per share1 of $3.52;
Adjusted EBITDA1 of $92.1 million and $405.9 million for 4Q19 and 2019, respectively;
Coal sales volume of 27.3 million tons is the second strongest year ever for the Pennsylvania Mining Complex (PAMC);
Annual revenue record at the CONSOL Marine Terminal (CMT);
Harvey Mine achieved annual production record of 5.02 million tons;
2019 cash provided by operating activities of $244.6 million;
2019 organic free cash flow net to CEIX shareholders1 of $52.6 million, including $80.3 million adverse working capital changes;
Net payments on total debt of $25.7 and $183.9 million for 4Q19 and 2019, respectively; and
Total net leverage ratio1 of 1.9x on 12/31/2019 per bank method.

Management Comments

"2019 was quite a challenging year, as our industry dealt with weakening commodity and capital markets, which led to several bankruptcies in the coal space,” said Jimmy Brock, President and Chief Executive Officer of CONSOL Energy Inc. “Despite such a tough backdrop, I am pleased to announce that we delivered a strong set of results for the fourth quarter and full year of 2019. While U.S. coal production is estimated to have declined by 9% compared to 2018, the PAMC produced and sold 27.3 million tons in 2019, which is largely unchanged from the record production and sales levels set in 2018. These results were driven by our contracting strategy, well-capitalized asset base and consistent operational performance. On the financial front, we continued to reduce the leverage on our balance sheet by making net payments of approximately $184 million towards debt outstanding in 2019, and due to our refinancing efforts in early 2019, we've extended maturities into at least 2023 and increased liquidity."

"We also achieved significant improvements on the safety front. Our total recordable incident rate at the PAMC for 2019 improved by 44.7% and our total number of exceptions improved by 41.4%, compared to 2018. Safety remains our top core value, and we continue to strive towards zero life-altering incidents."



1



Pennsylvania Mining Complex (PAMC) Review and Outlook

PAMC Sales and Marketing

Our marketing team sold 6.7 million tons of coal during the fourth quarter of 2019 at an average revenue per ton of $45.14, compared to 7.0 million tons at an average revenue per ton of $49.81 in the year-ago period. Despite a 25% lower average PJM West day-ahead power price, a 36% lower average API 2 prompt month coal price and a 36% lower average Henry Hub natural gas spot price in the fourth quarter of 2019 versus the fourth quarter of 2018, our average revenue per ton declined only 9% across the same time period due to our strong contracted position. On the sales volume front, the 0.4 million ton decline in 2019 compared to the year-ago period was mostly a function of reduced production.

During the quarter, we were successful in securing additional coal sales contracts and are currently approximately 95% contracted for 2020 and 43% contracted for 2021, assuming the midpoint of our coal sales volume guidance range.

According to the U.S. Energy Information Administration, inventories at domestic utilities stood at approximately 124 million tons at the end of November 2019, which is approximately 18% higher compared to year-ago levels. While low natural gas and power prices have been weighing on broader coal demand, we continued to ship all the coal we produced during the fourth quarter of 2019. Despite a warmer-than-normal start to 2020, the National Oceanic and Atmospheric Administration expects below-normal temperatures for most of the northern and northeastern areas of the U.S. in February. This development could help to reduce some of the coal stockpile overhang in the domestic markets we serve.

On the export front, low-priced LNG has weighed on coal demand abroad, as a glut of new projects came online in 2019. Additionally, API 2 spot prices for thermal coal delivered to Europe remained volatile throughout 2019, declining 39%. Our 2019 revenues were largely unaffected by this volatility due to our previously disclosed export contract, which runs through December 2020.

On the supply side, low prices are starting to drive global supply rationalization. We started seeing production cuts in the U.S. and Colombia in late 2019, and we are now starting to see Indonesia do the same. Most recently, Indonesia set its coal production output target to 550 million tons in 2020, down from 610 million tons in 2019. Despite this planned production cut, Indonesia's coal consumption is expected to rise from 138 million tons in 2019 to 155 million tons in 2020, which should help to tighten the international market.

Operations Summary

The PAMC produced 6.7 million tons in the fourth quarter of 2019, which compares to 6.8 million tons in the year-ago quarter. This brings total PAMC production to 27.3 million tons in 2019, which is its second highest production year in its history. Despite a challenged commodity market, the complex ran at approximately 96% capacity utilization during 2019, highlighting the sustained desirability of our product. Additionally, our Harvey mine set an individual production record during the year of 5.02 million tons, exceeding its previous record set in 2018. This also marks its third consecutive record-setting year.

CEIX's total costs during the fourth quarter of 2019 were $320.5 million compared to $335.9 million in the year-ago quarter. Average cash cost of coal sold per ton1 for the fourth quarter was $30.38 compared to $30.54 in the year-ago quarter. The decrease was due to reduced maintenance and supply costs and contractor and purchased services costs. For 2019, CEIX's total costs were $1,332.8 million compared to $1,344.4 million in the prior year due mainly to a reduction in interest expense. Our 2019 average cash cost of coal sold per ton1 was $30.97 compared to $29.29 for 2018. The increase was primarily driven by additional equipment rebuilds and longwall overhauls due to the timing of longwall moves and panel development. Also, the Company faced atypical challenges during the current year, including a roof fall and equipment breakdowns, resulting in higher mine maintenance and project expenses. Subsidence expense also increased in the year-to-year comparison, primarily due to the timing and nature of the properties undermined.

2



 
 
Three Months Ended
 
 
December 31, 2019
 
December 31, 2018
 
 
 
 
 
Coal Production
million tons
6.7
 
6.8
Coal Sales
million tons
6.7
 
7.0
Average Revenue per Ton
per ton
$45.14
 
$49.81
Average Cash Costs of Coal Sold1
per ton
$30.38
 
$30.54
Average Cash Margin per Ton Sold1
per ton
$14.76
 
$19.27

CONSOL Marine Terminal (CMT) Review

For the fourth quarter of 2019, throughput volumes at CMT were 2.5 million tons, compared to 2.7 million tons in the year-ago period. Terminal revenues were largely in line compared to the year-ago quarter. For the fourth quarter, terminal revenues and operating cash costs were $16.5 million and $4.9 million, respectively, compared to $16.9 million and $5.2 million, respectively, during the year-ago period. CMT achieved record terminal revenue of $67.4 million, eclipsing the previous record of $64.9 million set in 2018 and marking the third consecutive year of record-setting terminal revenue. CMT net income and CMT adjusted EBITDA1 came in at $8.6 million and $11.3 million, respectively, in the fourth quarter of 2019 compared to $8.8 million and $11.3 million, respectively, in the year-ago period. CMT finished the year with net income and adjusted EBITDA1 of $33.8 million and $44.5 million, respectively compared to $30.6 million and $40.9 million, respectively, in 2018.

Itmann Project

We continue to work on optimizing our Itmann project and are pleased to announce that, once the project is fully operational, we expect an improved production profile of 900+ thousand tons per annum versus our initial guidance of 600+ thousand tons per annum. Furthermore, in order to account for changing market conditions and our capital allocation needs, we are also adjusting the timing of capital spending on the Itmann project. If market conditions warrant, we always have the option to accelerate the spend and ramp up faster. While we continue to anticipate first coal production to occur in 1Q20, the deferred capex has resulted in an extended production ramp-up. As we have mentioned in our previous press releases, we maintain a lot of flexibility on the timing of spend on our Itmann project and will respond to changing market conditions and evolving corporate-level capital priorities.

As previously announced, all permits needed for development of the mine site have been approved and issued. Mine construction, including excavation and blasting, is nearing completion.

Finally, engineering and environmental work is underway to permit a new preparation plant and refuse facility at the former Itmann plant site. We have finalized the plant layout and rail infrastructure design and are working with the appropriate parties to finalize other related agreements for the plant site.

We presently continue to maintain our previously-stated cost and capital guidance outlook for the overall project. As we progress with development mining and the preparation plant project, we will update our outlook accordingly.

Debt and Equity Repurchase Update

Consistent with our stated strategy, we continue to be very measured in our approach to repurchasing our debt and equity securities. We look to take advantage of declines in the prices of our financial securities and weigh them against one another through our strict capital allocation strategy, while also supporting our primary goal of maintaining a strong balance sheet.
During the fourth quarter of 2019, CEIX focused more heavily on delevering and spent $16.2 million to retire $17.6 million of our Second Lien debt as it traded at a significant discount to its par value. Additionally, CEIX spent $3.8 million and $0.7 million toward the reduction of our Term Loan A and Term Loan B debts, respectively. CEIX also

3



made principal payments of $4.8 million toward outstanding finance leases. In aggregate, during the fourth quarter, we reduced our absolute debt level by approximately $22 million.

For the year ended December 31, 2019, we have now repurchased $52.6 million of Second Lien notes, $32.7 million of CEIX common shares and $0.4 million of CCR units. We have also repaid $124.4 million (including the February 2019 sweep payment) and $11.3 million of principal with respect to Term Loan B and Term Loan A, respectively.

Diversification Efforts

Over the past year, CEIX has been very active in pursuing alternative and lower-emission uses of coal and has made several key investments geared toward that goal. We recently announced that we acquired a 25% ownership stake in CFOAM Corp., a newly-formed US-based holding company whose wholly-owned subsidiary, CFOAM LLC, manufactures high-performance carbon foam products from coal and focuses on meeting demand for high-grade materials in the industrial, aerospace, military and commercial product markets. We estimate the total addressable market for such products is over $15 billion annually. We are also partnering on a DOE-funded project with Ohio University and other industry partners to develop coal plastic composites that are geared toward the engineered composite decking and other building products markets with an expected $8 billion plus global addressable market by 2023. Finally, CEIX has partnered with OMNIS Bailey LLC to develop a refinery that will convert waste coal slurry into two products: a high-quality carbon product that can be used as fuel or as a feedstock for other higher-value applications, and a mineral matter product that has the potential to be used as a soil amendment in agricultural applications.

2020 Guidance and Outlook
Based on our current contracted position, estimated prices and production plans, we are providing the following financial and operating performance guidance for 2020:
Coal sales volumes (100% PAMC) - 24.5-26.5 million tons
Coal average revenue per ton sold - $43.00-$45.00
Average cash cost of coal sold per ton2 - $30.00-$31.50
CMT Adjusted EBITDA2 - $40-$45 million
Adjusted EBITDA2 (incl. 100% PAMC) - $295-$335 million
Capital expenditures (incl. 100% PAMC) - $125-$145 million

Fourth Quarter Earnings Conference Call
A joint conference call and webcast with CONSOL Coal Resources LP, during which management will discuss the fourth quarter and annual 2019 financial and operational results, is scheduled for February 11, 2020 at 11:00 AM ET. Prepared remarks by members of management will be followed by a question and answer session. Interested parties may listen via webcast on the "Events and Presentations" page of our website, www.consolenergy.com. An archive of the webcast will be available for 30 days after the event.

Participant dial in (toll free)             1-888-348-6419
Participant international dial in        1-412-902-4235


4



Availability of Additional Information

Please refer to our website, www.consolenergy.com, for additional information regarding the company. Prior to the earnings conference call, we will make available additional information in a presentation slide deck to provide investors with further insights into our financial and operating performance. This material can be accessed through the "Events and Presentations" page of our website. In addition, we may provide other information about the company from time to time on our website.

We will also file our Form 10-K with the Securities and Exchange Commission (SEC) reporting our results for the quarter ended December 31, 2019. Investors seeking our detailed financial statements can refer to the Form 10-K once it has been filed with the SEC.

Footnotes:

1"Adjusted Net Income", "Adjusted Dilutive Earnings per Share", "Adjusted EBITDA", "Organic Free Cash Flow Net to CEIX Shareholders", "CMT Adjusted EBITDA" and "Net Leverage Ratio" are non-GAAP financial measures and "Average Cash Cost of Coal Sold per Ton" and "Average Cash Margin per Ton Sold" are operating ratios derived from non-GAAP financial measures, each of which are reconciled to the most directly comparable GAAP financial measures below, under the caption “Reconciliation of Non-GAAP Financial Measures".
2CEIX is unable to provide a reconciliation of Adjusted EBITDA guidance and CMT Adjusted EBITDA guidance to net income, the most comparable financial measure calculated in accordance with GAAP, nor a reconciliation of Average Cash Cost of Coal Sold per Ton guidance, an operating ratio derived from non-GAAP financial measures, due to the unknown effect, timing and potential significance of certain income statement items.

About CONSOL Energy Inc.

CONSOL Energy Inc. (NYSE: CEIX) is a Canonsburg, Pennsylvania-based producer and exporter of high-Btu bituminous thermal and crossover metallurgical coal. It owns and operates some of the most productive longwall mining operations in the Northern Appalachian Basin. Our flagship operation is the Pennsylvania Mining Complex, which has the capacity to produce approximately 28.5 million tons of coal per year and is comprised of 3 large-scale underground mines: Bailey, Enlow Fork, and Harvey. The company also owns and operates the CONSOL Marine Terminal, which is located in the port of Baltimore and has a throughput capacity of approximately 15 million tons per year. In addition to the ~669 million reserve tons associated with the Pennsylvania Mining Complex and the ~21 million reserve tons associated with the Itmann project, the company also controls approximately 1.5 billion tons of greenfield thermal and metallurgical coal reserves located in the major coal-producing basins of the eastern United States. Additional information regarding CONSOL Energy may be found at www.consolenergy.com.

Contacts:

Investor:  
Mitesh Thakkar, (724) 416-8335
miteshthakkar@consolenergy.com

Media:
Zach Smith, (724) 416-8291
zacherysmith@consolenergy.com


5



Condensed Consolidated Statements of Income
The following table presents a condensed consolidated statement of income for the three months ended December 31, 2019 and 2018 (in thousands):
 
Three Months Ended December 31,
 
2019
 
2018
 
(Unaudited)
 
(Unaudited)
Revenues and Other Income:
 
 
 
Coal Revenue
$
303,865

 
$
347,789

Terminal Revenue
16,534

 
16,931

Freight Revenue
5,552

 
5,798

Other Income
16,684

 
11,718

Total Revenue and Other Income
342,635

 
382,236

 
 
 
 
Costs and Expenses:
 
 
 
Operating and Other Costs
229,603

 
245,672

Depreciation, Depletion and Amortization
55,852

 
45,590

Freight Expense
5,552

 
5,798

Selling, General and Administrative Costs
14,210

 
17,631

(Gain) Loss on Extinguishment of Debt
(989
)
 
773

Interest Expense, net
16,224

 
20,437

Total Costs and Expenses
320,452

 
335,901

 
 
 
 
Earnings Before Income Tax
22,183

 
46,335

Income Tax Expense
4,782

 
301

Net Income
17,401

 
46,034

Less: Net Income Attributable to Noncontrolling Interest
3,455

 
6,362

Net Income Attributable to CONSOL Energy Inc. Shareholders
$
13,946

 
$
39,672

 
 
 
 
Earnings Per Share:
 
 
 
Basic
$
0.54

 
$
1.43

Dilutive
$
0.54

 
$
1.41



6



Condensed Consolidated Balance Sheets
The following table presents a condensed consolidated balance sheet as of December 31, 2019 and 2018 (in thousands):
 
December 31,
 
2019
 
2018
 
(Unaudited)
 
(Unaudited)
ASSETS
 
 
 
Cash and Cash Equivalents
$
80,293

 
$
235,677

Trade Receivables, net of Allowance
131,688

 
87,589

Other Current Assets
126,048

 
150,689

     Total Current Assets
338,029

 
473,955

Total Property, Plant and Equipment - Net
2,092,165

 
2,106,528

Total Other Assets
263,608

 
180,244

     TOTAL ASSETS
$
2,693,802

 
$
2,760,727

 
 
 
 
LIABILITIES AND EQUITY
 
 
 
Total Current Liabilities
$
392,264

 
$
492,176

Total Long-Term Debt
662,838

 
734,226

Total Other Liabilities
1,066,305

 
982,714

Total Equity
572,395

 
551,611

     TOTAL LIABILITIES AND EQUITY
$
2,693,802

 
$
2,760,727

Condensed Consolidated Statements of Cash Flows
The following table presents a condensed consolidated statement of cash flows for the three months ended December 31, 2019 and 2018 (in thousands):
 
Three Months Ended December 31,
For the Year Ended December 31,
 
2019
 
2018
2019
 
2018
Cash Flows from Operating Activities:
(Unaudited)
 
(Unaudited)
(Unaudited)
 
(Unaudited)
Net Income
$
17,401

 
$
46,034

$
93,558

 
$
178,785

Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:
 
 
 
 
 
 
Depreciation, Depletion and Amortization
55,852

 
45,590

207,097

 
201,264

Other Non-Cash Adjustments to Net Income
(1,141
)
 
(14,204
)
24,217

 
5,968

Changes in Working Capital
(50,729
)
 
5,853

(80,306
)
 
27,508

     Net Cash Provided by Operating Activities
21,383

 
83,273

244,566

 
413,525

Cash Flows from Investing Activities:
 
 
 
 
 
 
Capital Expenditures
(38,264
)
 
(48,894
)
(169,739
)
 
(145,749
)
Proceeds from Sales of Assets
186

 
735

2,201

 
2,103

Other Investing Activity
(5,003
)
 
(10,000
)
(5,003
)
 
(10,000
)
     Net Cash Used in Investing Activities
(43,081
)
 
(58,159
)
(172,541
)
 
(153,646
)
Cash Flows from Financing Activities:
 
 
 
 
 
 
Net Payments on Long-Term Debt
(25,679
)
 
(12,438
)
(183,890
)
 
(73,916
)
Distributions to Noncontrolling Interest
(5,546
)
 
(5,502
)
(22,220
)
 
(22,265
)
Other Financing Activities
(1,633
)
 
(18,553
)
(50,557
)
 
(52,742
)
     Net Cash Used in Financing Activities
(32,858
)
 
(36,493
)
(256,667
)
 
(148,923
)
Net Decrease in Cash & Cash Equivalents & Restricted Cash
$
(54,556
)
 
$
(11,379
)
$
(184,642
)
 
$
110,956

Cash & Cash Equivalents & Restricted Cash at Beginning of Period
134,849

 
276,314

264,935

 
153,979

Cash and Cash Equivalents and Restricted Cash at End of Period
$
80,293

 
$
264,935

$
80,293

 
$
264,935


7



Reconciliation of Non-GAAP Financial Measures

We evaluate our cost of coal sold and cash cost of coal sold on an aggregate basis. We define cost of coal sold as operating and other production costs related to produced tons sold, along with changes in coal inventory, both in volumes and carrying values. The cost of coal sold includes items such as direct operating costs, royalty and production taxes, direct administration costs, and depreciation, depletion and amortization costs on production assets. Our costs exclude any indirect costs, such as selling, general and administrative costs, freight expenses, interest expenses, depreciation, depletion and amortization costs on non-production assets and other costs not directly attributable to the production of coal. The GAAP measure most directly comparable to cost of coal sold is total costs and expenses. The cash cost of coal sold includes cost of coal sold less depreciation, depletion and amortization costs on production assets. The GAAP measure most directly comparable to cash cost of coal sold is total costs and expenses.

The following table presents a reconciliation of cost of coal sold and cash cost of coal sold to total costs and expenses, the most directly comparable GAAP financial measure, on a historical basis, for each of the periods indicated (in thousands).
 
 
Three Months Ended December 31,
 
Year Ended
December 31,
 
 
2019
 
2018
 
2019
 
2018
Total Costs and Expenses
 
$
320,451

 
$
335,901

 
$
1,332,806

 
$
1,344,402

Freight Expense
 
(5,552
)
 
(5,798
)
 
(19,667
)
 
(43,572
)
Selling, General and Administrative Costs
 
(14,210
)
 
(17,631
)
 
(67,111
)
 
(65,346
)
Gain (Loss) on Debt Extinguishment
 
989

 
(773
)
 
(24,455
)
 
(3,922
)
Interest Expense, net
 
(16,224
)
 
(20,437
)
 
(66,464
)
 
(83,848
)
Other Costs (Non-Production)
 
(25,044
)
 
(31,568
)
 
(101,900
)
 
(135,081
)
Depreciation, Depletion & Amortization (Non-Production)
 
(9,277
)
 
(3,863
)
 
(32,388
)
 
(30,961
)
Cost of Coal Sold
 
$
251,133

 
$
255,831

 
$
1,020,821

 
$
981,672

Depreciation, Depletion and Amortization (Production)
 
(46,575
)
 
(41,727
)
 
(174,709
)
 
(170,303
)
Cash Cost of Coal Sold
 
$
204,558

 
$
214,104

 
$
846,112

 
$
811,369


We define average cash margin per ton sold as average coal revenue per ton, net of average cash cost of coal sold per ton. The GAAP measure most directly comparable to average cash margin per ton sold is total coal revenue.

The following table presents a reconciliation of average cash margin per ton sold to total coal revenue, the most directly comparable GAAP financial measure, on a historical basis, for each of the periods indicated (in thousands, except per ton information).


8



 
 
Three Months Ended December 31,
 
Year Ended
December 31,
 
 
2019
 
2018
 
2019
 
2018
Total Coal Revenue
 
$
303,864

 
$
347,789

 
$
1,288,529

 
$
1,364,292

   Operating and Other Costs
 
229,602

 
245,672

 
948,012

 
946,450

   Less: Other Costs (Non-Production)
 
(25,044
)
 
(31,568
)
 
(101,900
)
 
(135,081
)
Total Cash Cost of Coal Sold
 
204,558

 
214,104

 
846,112

 
811,369

   Add: Depreciation, Depletion and Amortization
 
55,852

 
45,590

 
207,097

 
201,264

   Less: Depreciation, Depletion and Amortization (Non-Production)
 
(9,277
)
 
(3,863
)
 
(32,388
)
 
(30,961
)
Total Cost of Coal Sold
 
$
251,133

 
$
255,831

 
$
1,020,821

 
$
981,672

Total Tons Sold (in millions)
 
6.7

 
7.0

 
27.3

 
27.7

Average Revenue per Ton Sold
 
$
45.14

 
$
49.81

 
$
47.17

 
$
49.28

Average Cash Cost of Coal Sold per Ton
 
30.38

 
30.54

 
30.97

 
29.29

Depreciation, Depletion and Amortization Costs per Ton Sold
 
6.93

 
6.10

 
6.40

 
6.17

Average Cost of Coal Sold per Ton
 
37.31

 
36.64

 
37.37

 
35.46

Average Margin per Ton Sold
 
7.83

 
13.17

 
9.80

 
13.82

   Add: Depreciation, Depletion and Amortization Costs per Ton Sold
 
6.93

 
6.10

 
6.40

 
6.17

Average Cash Margin per Ton Sold
 
$
14.76

 
$
19.27

 
$
16.20

 
$
19.99


9



We define adjusted EBITDA as (i) net income (loss) plus income taxes, net interest expense and depreciation, depletion and amortization, as adjusted for (ii) certain non-cash items, such as long-term incentive awards. The GAAP measure most directly comparable to adjusted EBITDA is net income (loss).

The following tables present a reconciliation of net income (loss) to adjusted EBITDA, the most directly comparable GAAP financial measure, on a historical basis, for each of the periods indicated.

        
 
 
Three Months Ended December 31, 2019
 
 
PAMC Division
 
Other Division
 
 
Dollars in thousands
 
PA Mining Complex
 
Baltimore Terminal (CMT)
 
Other
 
Total Company
Net Income (Loss)
 
$
41,082

 
$
8,614

 
$
(32,295
)
 
$
17,401

 
 
 
 
 
 
 
 
 
Add: Income Tax Expense
 

 

 
4,782

 
4,782

Add: Interest Expense, net
 

 
1,549

 
14,675

 
16,224

Less: Interest Income
 

 

 
(538
)
 
(538
)
Earnings (Loss) Before Interest & Taxes (EBIT)
 
41,082

 
10,163

 
(13,376
)
 
37,869

 
 
 
 
 
 
 
 
 
Add: Depreciation, Depletion & Amortization
 
49,492

 
1,170

 
5,190

 
55,852

 
 
 
 
 
 
 
 
 
Earnings (Loss) Before Interest, Taxes and DD&A (EBITDA)
 
$
90,574

 
$
11,333

 
$
(8,186
)
 
$
93,721

 
 
 
 
 
 
 
 
 
Adjustments:
 
 
 
 
 
 
 
 
Stock/Unit-Based Compensation
 
$
(497
)
 
$
(46
)
 
$
(46
)
 
$
(589
)
Gain on Debt Extinguishment
 

 

 
(989
)
 
(989
)
Total Pre-tax Adjustments
 
(497
)
 
(46
)
 
(1,035
)
 
(1,578
)
 
 
 
 
 
 
 
 
 
Adjusted EBITDA
 
$
90,077

 
$
11,287

 
$
(9,221
)
 
$
92,143


10



 
 
Three Months Ended December 31, 2018
 
 
PAMC Division
 
Other Division
 
 
Dollars in thousands
 
PA Mining Complex
 
Baltimore Terminal (CMT)
 
Other
 
Total Company
Net Income (Loss)
 
$
70,501

 
$
8,808

 
$
(33,275
)
 
$
46,034

 
 
 
 
 
 
 
 
 
Add: Income Tax Expense
 

 

 
301

 
301

Add: Interest Expense, net
 

 
1,513

 
18,924

 
20,437

Less: Interest Income
 

 

 
(555
)
 
(555
)
Earnings (Loss) Before Interest & Taxes (EBIT)
 
70,501

 
10,321

 
(14,605
)
 
66,217

 
 
 
 
 
 
 
 
 
Add: Depreciation, Depletion & Amortization
 
44,082

 
908

 
600

 
45,590

 
 
 
 
 
 
 
 
 
Earnings (Loss) Before Interest, Taxes and DD&A (EBITDA)
 
$
114,583

 
$
11,229

 
$
(14,005
)
 
$
111,807

 
 
 
 
 
 
 
 
 
Adjustments:
 
 
 
 
 
 
 
 
Stock/Unit-Based Compensation
 
$
2,380

 
$
108

 
$
109

 
$
2,597

Loss on Debt Extinguishment
 

 

 
773

 
773

Total Pre-tax Adjustments
 
2,380

 
108

 
882

 
3,370

 
 
 
 
 
 
 
 
 
Adjusted EBITDA
 
$
116,963

 
$
11,337

 
$
(13,123
)
 
$
115,177









11



 
 
For the Year Ended December 31, 2019
 
 
PAMC Division
 
Other Division
 
 
Dollars in thousands
 
PA Mining Complex
 
Baltimore Terminal (CMT)
 
Other
 
Total Company
Net Income (Loss)
 
$
197,112

 
$
33,758

 
$
(137,312
)
 
$
93,558

 
 
 
 
 
 
 
 
 
Add: Income Tax Expense
 

 

 
4,539

 
4,539

Add: Interest Expense, net
 

 
6,088

 
60,376

 
66,464

Less: Interest Income
 

 

 
(2,937
)
 
(2,937
)
Earnings (Loss) Before Interest & Taxes (EBIT)
 
197,112

 
39,846

 
(75,334
)
 
161,624

 
 
 
 
 
 
 
 
 
Add: Depreciation, Depletion & Amortization
 
185,616

 
4,078

 
17,403

 
207,097

 
 
 
 
 
 
 
 
 
Earnings (Loss) Before Interest, Taxes and DD&A (EBITDA)
 
$
382,728

 
$
43,924

 
$
(57,931
)
 
$
368,721

 
 
 
 
 
 
 
 
 
Adjustments:
 
 
 
 
 
 
 
 
Stock/Unit-Based Compensation
 
$
11,626

 
$
567

 
$
567

 
$
12,760

Loss on Debt Extinguishment
 

 

 
24,455

 
24,455

Total Pre-tax Adjustments
 
11,626

 
567

 
25,022

 
37,215

 
 
 
 
 
 
 
 
 
Adjusted EBITDA
 
$
394,354

 
$
44,491

 
$
(32,909
)
 
$
405,936






12



 
 
For the Year Ended December 31, 2018
 
 
PAMC Division
 
Other Division
 
 
Dollars in thousands
 
PA Mining Complex
 
Baltimore Terminal (CMT)
 
Other
 
Total Company
Net Income (Loss)
 
$
291,418

 
$
30,647

 
$
(143,280
)
 
$
178,785

 
 
 
 
 
 
 
 
 
Add: Income Tax Expense
 

 

 
8,828

 
8,828

Add: Interest Expense, net
 

 
6,052

 
77,796

 
83,848

Less: Interest Income
 

 

 
(2,146
)
 
(2,146
)
Earnings (Loss) Before Interest & Taxes (EBIT)
 
291,418

 
36,699

 
(58,802
)
 
269,315

 
 
 
 
 
 
 
 
 
Add: Depreciation, Depletion & Amortization
 
179,156

 
3,782

 
18,326

 
201,264

 
 
 
 
 
 
 
 
 
Earnings (Loss) Before Interest, Taxes and DD&A (EBITDA)
 
$
470,574

 
$
40,481

 
$
(40,476
)
 
$
470,579

 
 
 
 
 
 
 
 
 
Adjustments:
 
 
 
 
 
 
 
 
Stock/Unit-Based Compensation
 
$
9,395

 
$
420

 
$
420

 
$
10,235

Loss on Debt Extinguishment
 

 

 
3,922

 
3,922

Total Pre-tax Adjustments
 
9,395

 
420

 
4,342

 
14,157

 
 
 
 
 
 
 
 
 
Adjusted EBITDA
 
$
479,969

 
$
40,901

 
$
(36,134
)
 
$
484,736



13



We define adjusted net income as net income adjusted for certain unusual and/or infrequent transactions, such as loss on debt extinguishment resulting from the refinancing of the Company's credit facilities. We define adjusted dilutive earnings per share (EPS) as adjusted net income attributable to CONSOL Energy Inc. shareholders divided by the weighted average shares outstanding during the reporting period. The GAAP measure most directly comparable to adjusted net income and adjusted dilutive EPS is net income and dilutive earnings per share, respectively.

The following table presents a reconciliation of adjusted net income and adjusted dilutive EPS to net income and dilutive earnings per share, the most directly comparable GAAP financial measures, on a historical basis, for each of the periods indicated. 

 
 
Three Months Ended December 31,
 
For the Year Ended December 31,
 
 
2019
 
2018
 
2019
 
2018
Dollars in thousands, except per share data
 
 
 
 
 
 
 
 
Net Income
 
$
17,401

 
$
46,034

 
$
93,558

 
$
178,785

   Plus: Adjustments to Net Income
 

 

 
18,702

 

   Plus: Tax Benefit of Adjustments to Net Income
 

 

 
473

 

Adjusted Net Income
 
17,401

 
46,034

 
112,733

 
178,785

   Less: Net Income Attributable to Noncontrolling Interest
 
3,455

 
6,362

 
17,557

 
25,809

Adjusted Net Income Attributable to CONSOL Energy Inc. Shareholders
 
$
13,946

 
$
39,672

 
$
95,176

 
$
152,976

 
 
 
 
 
 
 
 
 
Weighted-Average Diluted Shares of Common Stock Outstanding
 
26,061,930

 
28,213,975

 
27,071,108

 
28,419,762

 
 
 
 
 
 
 
 
 
Earnings per Share:
 
 
 
 
 
 
 
 
Dilutive Earnings per Share
 
$
0.54

 
$
1.41

 
$
2.81

 
$
5.38

   Plus: Adjustments to Net Income Attributable to CONSOL Energy Inc. Shareholders
 

 

 
0.71

 

Adjusted Dilutive Earnings per Share
 
$
0.54

 
$
1.41

 
$
3.52

 
$
5.38
























14



We define net leverage ratio as the ratio of net debt to the last twelve months' ("LTM") earnings before interest expense and depreciation, depletion and amortization, adjusted for certain non-cash items, such as long-term incentive awards, amortization of debt issuance costs and capitalized interest.

The following table presents a reconciliation of net leverage ratio (in thousands).

 
 
Twelve Months Ended
 
Twelve Months Ended
 
 
December 31, 2019
 
December 31, 2018
Net Income
 
$
93,558

 
$
178,785

Plus:
 
 
 
 
         Interest Expense, net
 
66,464

 
83,848

         Depreciation, Depletion and Amortization
 
207,097

 
201,264

         Income Taxes
 
4,539

 
8,828

         Stock/Unit-Based Compensation
 
12,760

 
10,235

         Loss on Debt Extinguishment
 
24,455

 
3,922

         CCR Adjusted EBITDA per Credit Agreement
 
(102,189
)
 
(122,844
)
         Cash Distributions from CONSOL Coal Resources LP
 
35,398

 
35,124

         Cash Payments for Legacy Employee Liabilities, Net
            of Non-Cash Expense
 
(18,521
)
 
(16,563
)
         Other Adjustments to Net Income
 
5,225

 
2,932

Consolidated EBITDA per Credit Agreement
 
$
328,786

 
$
385,531

 
 
 
 
 
         Consolidated First Lien Debt
 
$
390,148

 
$
497,475

         Senior Secured Second Lien Notes
 
221,628

 
274,276

         MEDCO Revenue Bonds
 
102,865

 
102,865

         Advance Royalty Commitments
 
1,895

 
2,261

Consolidated Indebtedness per Credit Agreement
 
$
716,536

 
$
876,877

Less:
 
 
 
 
         Advance Royalty Commitments
 
$
1,895

 
$
2,261

         Cash on Hand
 
79,750

 
234,674

Consolidated Net Indebtedness per Credit Agreement
 
$
634,891

 
$
639,942

 
 
 
 
 
Net Leverage Ratio (Net Indebtedness/EBITDA)
 
1.9

 
1.7


Free cash flow, organic free cash flow and organic free cash flow net to CEIX shareholders are non-GAAP financial measures. Management believes that these measures are meaningful to investors because management reviews cash flows generated from operations and non-core asset sales after taking into consideration capital expenditures due to the fact that these expenditures are considered necessary to maintain and expand CONSOL’s asset base and are expected to generate future cash flows from operations. It is important to note that free cash flow, organic free cash flow and organic free cash flow net to CEIX shareholders do not represent the residual cash flow available for discretionary expenditures since other non-discretionary expenditures, such as mandatory debt service requirements, are not deducted from the measure. The following tables present a reconciliation of free cash flow, organic free cash flow and organic free cash flow net to CEIX shareholders to net cash provided by operations, the most directly comparable GAAP financial measure, on a historical basis, for each of the periods indicated.


15



 Organic Free Cash Flow
Three Months Ended December 31, 2019
 
Three Months Ended December 31, 2018
 
Year Ended December 31, 2019
 
Year Ended December 31, 2018
Net Cash Provided by Operations
$
21,383

 
$
83,273

 
$
244,566

 
$
413,525

Capital Expenditures
(38,264
)
 
(48,894
)
 
(169,739
)
 
(145,749
)
Organic Free Cash Flow
$
(16,881
)
 
$
34,379

 
$
74,827

 
$
267,776

 
 
 
 
 
 
 
 
Distributions to Noncontrolling Interest
(5,546
)
 
(5,502
)
 
(22,220
)
 
(22,265
)
Organic Free Cash Flow Net to CEIX Shareholders
$
(22,427
)
 
$
28,877

 
$
52,607

 
$
245,511

 Free Cash Flow
Three Months Ended December 31, 2019
 
Three Months Ended December 31, 2018
Net Cash Provided by Operating Activities
$
21,383

 
$
83,273

 
 
 
 
Capital Expenditures
(38,264
)
 
(48,894
)
Proceeds from Sales of Assets
186

 
735

Free Cash Flow
$
(16,695
)
 
$
35,114


Cautionary Statement Regarding Forward-Looking Statements
Certain statements in this press release are “forward-looking statements” within the meaning of the federal securities laws. With the exception of historical matters, the matters discussed in this press release are forward-looking statements (as defined in Section 21E of the Securities Exchange Act of 1934, as amended) that involve risks and uncertainties that could cause actual results to differ materially from results projected in or implied by such forward-looking statements. Accordingly, investors should not place undue reliance on forward-looking statements as a prediction of actual results. The forward-looking statements may include projections and estimates concerning the timing and success of specific projects and our future production, revenues, income and capital spending. When we use the words “anticipate,” “believe,” “could,” “continue,” “estimate,” “expect,” “intend,” “may,” “plan,” “predict,” “project,” “should,” “will,” or their negatives, or other similar expressions, the statements which include those words are usually forward-looking statements. When we describe strategy that involves risks or uncertainties, we are making forward-looking statements. We have based these forward-looking statements on our current expectations and assumptions about future events. While our management considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond our control. Specific risks, contingencies and uncertainties are discussed in more detail in our filings with the Securities and Exchange Commission. The forward-looking statements in this press release speak only as of the date of this press release and CEIX disclaims any intention or obligation to update publicly any forward-looking statements, whether in response to new information, future events, or otherwise, except as required by applicable law.


Source: CONSOL Energy Inc.


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