February 6, 2024 - Today, CONSOL Energy Inc. (NYSE: CEIX) reported financial and operating results for the fiscal quarter and year ended December 31, 2023.
Fourth Quarter 2023 Highlights Include:
Full Year 2023 Highlights Include:
"During the fourth quarter of 2023, we delivered a strong operational performance to close out our third consecutive year of production and sales volume growth for CONSOL Energy," said Jimmy Brock, Chief Executive Officer of CONSOL Energy Inc. "More importantly, we generated over $1 billion dollars in adjusted EBITDA1 and $687 million in free cash flow1 during 2023. The majority of this free cash flow1 was deployed toward returning value to our shareholders. We repurchased more than 5 million shares of our common stock, paid out $75 million in dividends, and made debt repayments of approximately $190 million during the year, which fully retired our Term Loan B and Second Lien Notes. We executed a significant shift in our coal sales mix toward the export market, which led to record annual throughput volume and revenue at our CONSOL Marine Terminal and 70% of our total recurring revenues and other income1 came from export sales. Looking forward, we expect improving contributions from our Itmann Mining Complex as it moves beyond its mains development and we are able to grow third-party coal sales processed through our preparation plant."
"On the safety front, our Bailey Preparation Plant and CONSOL Marine Terminal each had ZERO employee recordable incidents for the full year 2023. Our 2023 total recordable incident rate across our coal mining segment was approximately 33% below the national average for underground bituminous coal mines (based on the latest available MSHA data)."
Pennsylvania Mining Complex Review and Outlook
PAMC Sales and Marketing
CEIX sold 6.8 million tons of PAMC coal during the fourth quarter of 2023, generating realized coal revenue1 of $509.0 million for the PAMC segment and an average realized coal revenue per ton sold1 of $74.64. This compares to 6.2 million tons sold, generating realized coal revenue1 of $468.5 million and an average realized coal revenue per ton sold1 of $75.92 in the year-ago period. The improvement in realized coal revenue1 was driven by the increased sales tonnage during the quarter due to the availability of the fifth longwall in 2023 versus the prior year, which provided increased productive capacity and helped to mitigate the impact of longwall moves.
On the marketing front, demand for our product in the power generation markets rebounded modestly during the fourth quarter compared to the third quarter. Domestically, Henry Hub natural gas spot prices and PJM West day-ahead power prices improved 6% and 9%, respectively, in the fourth quarter compared to 3Q23. Similarly, in the export market, API2 spot prices averaged $125/metric ton during the quarter, a 7% increase versus the third quarter of 2023. As such, 58% of our total recurring revenues and other income1 during the fourth quarter was derived from sales into non-power generation applications, a slight reduction from 64% in 3Q23. We also took advantage of ongoing met coal pricing strength to place 10% of our PAMC volume into the crossover metallurgical market during 4Q23.
Throughout 2023, we leveraged the many end-use markets into which our high-quality PAMC product is sold and pivoted more tons into the export market than at any time in our history. We finished 2023 with 15.7 million tons, or 60%, of Pennsylvania Mining Complex product moving into the export market. From a revenue standpoint, export sales in aggregate accounted for 66% of our total coal revenue during the year with 35% of total coal revenue coming from the export industrial market and 14% from export metallurgical sales. For 2023, 70% of our total recurring revenues and other income1 has been derived from sales into the export markets.
Additionally, during 4Q23, we strengthened our forward contract book at the PAMC and secured an additional 4.7 million tons for delivery through 2028. We now have 22.0 million tons contracted for 2024 and 13.0 million tons contracted for 2025.
During the fourth quarter of 2023, we produced 6.6 million tons at the Pennsylvania Mining Complex, compared to 6.1 million tons in the year-ago period in which we had only four longwalls operating versus all five currently in operation. This brought total PAMC production to 26.1 million tons in 2023 compared to 23.9 million tons in the prior year.
Total coal revenue for the PAMC segment during the fourth quarter of 2023 was $509.0 million, compared to $516.3 million in the year-ago quarter. After adjusting for the effect of settlements of commodity derivatives, PAMC total realized coal revenue1 in 4Q23 was $509.0 million, compared to $468.5 million in 4Q22. Average cash cost of coal sold per ton1 at the PAMC for the fourth quarter of 2023 was $36.28, compared to $34.89 in the year-ago quarter. The increase was due to ongoing inflationary pressures on costs for supplies, maintenance and contractor labor, partially offset by reduced power costs.
Our full-year 2023 average cash cost of coal sold per ton1 at the PAMC came in at $36.10, compared to $34.56 for full-year 2022. The increase for the year was due to persistent inflationary pressures on supply and maintenance costs and contractor labor.
CONSOL Marine Terminal Review
For the fourth quarter of 2023, throughput volume at the CMT was 4.7 million tons, compared to 3.6 million tons in the year-ago period due to the continued shift of PAMC sales volumes into the export market. Terminal revenues and CMT total costs and expenses were $25.4 million and $10.7 million, respectively, compared to $20.9 million and $10.3 million, respectively, during the year-ago period. CMT operating cash costs1 were $6.8 million in 4Q23, compared to $6.4 million in the prior-year period. CONSOL Marine Terminal net income and CONSOL Marine Terminal Adjusted EBITDA1 were $18.3 million and $21.0 million, respectively, in the fourth quarter of 2023 compared to $11.7 million and $14.4 million, respectively, in the year-ago period. The improved financial performance was directly related to the significant increase in throughput volume compared to the prior-year quarter.
For the full year of 2023, CMT achieved multiple records. Terminal revenue came in at $106.2 million, the highest in its history. Additionally, the Terminal set a new throughput tonnage record in 2023, finishing the year with 19.0 million tons. These accomplishments led to record financial results in 2023. CONSOL Marine Terminal net income and CONSOL Marine Terminal Adjusted EBITDA1 were $69.3 million and $80.3 million, respectively, compared to $41.2 million and $52.3 million, respectively, in 2022.
The Itmann Mining Complex once again increased sales on a quarter-over-quarter basis during the fourth quarter of 2023. The Complex sold 159 thousand tons of Itmann and third-party coal in 4Q23 versus 123 thousand tons in 3Q23. For the full year 2023, the Complex produced 316 thousand tons of coal and sold 515 thousand tons of Itmann and third-party coal in aggregate. During the fourth quarter, long-term mains development continued in all three mining sections which requires cutting additional height and rock and in turn slows the mining rates. We again operated two of the three continuous miner sections as true super sections during the fourth quarter as we continued to work toward fully staffing the mine. Moving forward, we expect to increase our complex sales volume this year compared to 2023, and the Itmann Mining Complex currently has 571 thousand tons contracted for 2024.
Shareholder Returns Update
During the fourth quarter of 2023, CEIX repurchased 1.1 million shares of its common stock in the open market for $111.0 million at a weighted average price of $100.84 per share. Additionally, through a 10b5-1 plan in place for the month of January, CEIX repurchased an additional 307 thousand shares of its common stock for $30.0 million at a weighted average price of $97.73 per share. Therefore, with the free cash flow1 generated during the fourth quarter of 2023, CEIX repurchased 1.4 million shares of its common stock for $141.0 million at a weighted average price of $100.16 per share. As a result, CEIX allocated approximately 85% of its quarterly free cash flow1 toward share repurchases. From the beginning of December 2022 through January 31, 2024, CEIX has repurchased 5.7 million shares of its common stock, or approximately 16% of its public float as of year-end 2022, at a weighted average price of $76.63 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.
Debt Repurchases Update
During the fourth quarter of 2023, we made repayments of $6.1 million on our equipment-financed and other debt. This brings our total debt repayments and repurchases for the year to $189.0 million (excluding the premium paid on the Second Lien Notes). Of note during 2023, we fully retired our Term Loan B and Second Lien Notes, and as of December 31, 2023, CEIX had a net cash position, including short-term investments, of $88.4 million.
2024 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 full fiscal year 2024:
To see the full results with financial figures included, click here.
Fourth Quarter Earnings Conference Call
A conference call and webcast, during which management will discuss the fourth quarter and full year 2023 financial and operational results, is scheduled for February 6, 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.
Participant dial in (toll free) 1-877-226-2859
Availability of Additional Information
Please refer to our website, www.consolenergy.com, for additional information regarding the company. 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 period ended December 31, 2023 on February 9, 2024. Investors seeking our detailed financial statements can refer to the Form 10-K once it has been filed with the SEC.
1 "Adjusted EBITDA", "Free Cash Flow", "CONSOL Marine Terminal Adjusted EBITDA", "CMT Operating Cash Costs", "Realized Coal Revenue", "Total Recurring Revenues and Other Income" and "Total Cash Cost of Coal Sold" are non-GAAP financial measures and "Average Realized Coal Revenue per Ton Sold", "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".
2 CEIX is unable to provide a reconciliation of PAMC Average Realized Coal Revenue per Ton Sold, PAMC Average Cash Cost of Coal Sold per Ton and Itmann Mining Complex Average Cash Cost of Coal Sold per Ton guidance, which are operating ratios 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 coal and metallurgical coal. It owns and operates some of the most productive longwall mining operations in the Northern Appalachian Basin. CONSOL's 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 Mine, Enlow Fork Mine, and Harvey Mine. CONSOL recently developed the Itmann Mine in the Central Appalachian Basin, which has the capacity when fully operational to produce roughly 900 thousand tons per annum of premium, low-vol metallurgical coking coal. 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 20 million tons per year. In addition to the ~584 million reserve tons associated with the Pennsylvania Mining Complex and the ~28 million reserve tons associated with the Itmann Mining Complex, the company controls approximately 1.3 billion tons of greenfield thermal and metallurgical coal reserves and resources located in the major coal-producing basins of the eastern United States. Additional information regarding CONSOL Energy may be found at www.consolenergy.com.