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Signature Sponsor
May 7, 2024 - Today, CONSOL Energy Inc. (NYSE: CEIX) reported financial and operating results for the period ended March 31, 2024.
First Quarter 2024 Highlights Include:
Management Comments "During the first quarter of 2024, the CONSOL team delivered a very strong operational performance despite some timing related headwinds coming into the quarter," said Jimmy Brock, Chief Executive Officer of CONSOL Energy Inc. "The Pennsylvania Mining Complex had three planned longwall moves in the quarter, and we are pleased to report that each of these moves was completed safely, efficiently and timely. In keeping with our strategy of returning value to our shareholders, we deployed 89% of our first quarter free cash flow1 toward retiring 440 thousand shares of our common stock. Finally, as widely reported, vessel access to our CONSOL Marine Terminal became blocked due to the collapse of the Francis Scott Key Bridge in Baltimore in late March. This event has limited our ability to ship coal and per consensus of various agencies, this restriction could continue through the end of May. Since then, we have identified and developed alternative strategies to partially offset the impact, but our ability to ship coal to our customers will remain constrained until full access to the CONSOL Marine Terminal is restored." "On the safety front, our Itmann Preparation Plant had ZERO employee recordable incidents in the first quarter of 2024. Our 1Q24 employee total recordable incident rate across our coal mining segment remained well below the historical national average for underground bituminous coal mines." Pennsylvania Mining Complex Review and Outlook CEIX sold 6.1 million tons of PAMC coal during the first quarter of 2024, generating coal revenue of $416.2 million for the PAMC segment and an average coal revenue per ton sold of $68.33. This compares to 6.7 million tons sold, generating coal revenue of $563.3 million and an average coal revenue per ton sold of $84.32 in the year-ago period. The impairment in coal revenue was driven by lower sales tonnage in 1Q24 due to three longwall moves and reduced export capability caused by the Francis Scott Key Bridge collapse, as well as reduced commodity prices compared to 1Q23. On the marketing front, after a modest rebound in the fourth quarter of 2023, demand for our product in the power generation markets was muted during the first quarter due to mild winter weather, which caused lower commodity prices. Domestically, Henry Hub natural gas spot prices and PJM West day-ahead power prices declined 22% and 10%, respectively, in the first quarter compared to 4Q23. In the export market, API2 spot prices averaged $106/metric ton during the quarter, a 16% decrease versus the fourth quarter of 2023; however, this price was in line with the midpoint of our 2024 PAMC pricing guidance range. Although API2 pricing declined versus 4Q23, export demand, specifically in the industrial and crossover markets, remained strong. As such, 65% of our total recurring revenues and other income1 during the first quarter was derived from sales into the export market and 60% overall was derived from sales into non-power generation applications. On the contracted front, the PAMC has 22.9 million tons contracted for 2024 and 13.5 million tons contracted for 2025. Operations Summary During the first quarter of 2024, we produced 6.5 million tons at the Pennsylvania Mining Complex, which was impressive considering we completed three longwall moves in the quarter. This compares to 7.0 million tons in the year-ago period, where we had zero longwall moves. The three longwall moves, which consisted of one move per mine, were completed efficiently, thus helping to mitigate some of the expected production decline in 1Q24. However, due to the Francis Scott Key Bridge collapse, sales tonnage lagged behind production tonnage and caused an inventory build at the Baltimore Terminal. Total coal revenue for the PAMC segment during the first quarter of 2024 was $416.2 million, compared to $563.3 million in the year-ago quarter. Average cash cost of coal sold per ton1 at the PAMC for the first quarter of 2024 was $40.29, compared to $33.61 in the year-ago quarter. The increase was due to the effect of the three longwall moves in the quarter, which is an abnormally high amount of moves for a single quarter, as well as ongoing inflationary pressures on costs for supplies, maintenance and contractor labor. CONSOL Marine Terminal Review For the first quarter of 2024, throughput volume at the CMT was 4.5 million tons, compared to 4.6 million tons in the year-ago period. As previously mentioned, the bridge collapse blocked vessel access to our Terminal and caused inventory to build, thus limiting export shipments at the end of March. Terminal revenues and CMT total costs and expenses were $24.5 million and $11.3 million, respectively, compared to $26.7 million and $9.6 million, respectively, during the year-ago period. CMT operating cash costs1 were $7.2 million in 1Q24, compared to $5.9 million in 1Q23. CONSOL Marine Terminal net income and adjusted EBITDA1 were $13.8 million and $16.8 million, respectively, in the first quarter of 2024 compared to $17.8 million and $20.6 million, respectively, in the year-ago period. Itmann Update The Itmann Mining Complex continues to increase sales sequentially on a quarter-over-quarter basis and finished the first quarter of 2024 with sales of 193 thousand tons of Itmann and third-party coal, compared to 159 thousand tons in 4Q23. During the first quarter, long-term mains development continued; however, progress remained muted due to persistent staffing challenges caused by the tight labor market in the region. As such, we have dealt with idled shifts and were only able to operate two of the three continuous miner sections as super sections during the quarter. We are also dealing with abnormally long lead times on section equipment which has slowed our rebuild cycles. However, the Itmann team is working through these challenges and, as a result, was able to increase Itmann's production tonnage in the quarter compared to 4Q23. Shareholder Returns Update With the free cash flow1 generated during the first quarter of 2024, CEIX repurchased 440 thousand shares of its common stock for $36.9 million at a weighted average price of $83.74 per share. As a result, CEIX allocated approximately 89% of its quarterly free cash flow1 toward share repurchases. From the beginning of December 2022 through April 30, 2024, CEIX has repurchased 6.1 million shares of its common stock, or approximately 18% of its public float as of year-end 2022, at a weighted average price of $77.14 per share. Consistent with the Company's previously announced plan to return value to CEIX shareholders through repurchases of CEIX common stock rather than dividends, the Company is not declaring a quarterly dividend at this time. Baltimore Bridge Update As widely reported, vessel access to our CONSOL Marine Terminal has been blocked due to the collapse of the Francis Scott Key Bridge in late March. According to various agency officials, the permanent 700 foot wide, 50 foot draft shipping lane is estimated to be open by the end of May. However, in the meantime, we are exploring and executing additional mitigation efforts, which include accelerating domestic shipments, securing access to alternative ports and managing as much spend as possible. We continue to work closely with state and local officials to restore normal vessel access as soon as possible. Through our rigorous capital allocation process over time, we reduced our gross debt level by $725 million and increased our unrestricted cash and short-term investments by more than $100 million since year-end 2017. As such, we have significantly reduced the fixed cost in the business and improved our financial flexibility to weather this multi-month Terminal disruption. 2024 Guidance and Outlook Based on our current contracted position, estimated prices, and production plans and considering our current expectations regarding the impacts of the Francis Scott Key Bridge collapse, we are providing the following financial and operating performance guidance for full fiscal year 2024:
First Quarter Earnings Conference Call A conference call and webcast, during which management will discuss the first quarter 2024 financial and operational results, is scheduled for May 7, 2024 at 10:00 AM eastern time. 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. To see the full results with financial figures included, click here. |
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