CONSOL Energy Announces Results for the Third Quarter 2024
CANONSBURG, Pa., Nov. 5, 2024 /PRNewswire/ -- Today, CONSOL Energy Inc. (NYSE:CEIX) reported financial and operating results for the period ended September 30, 2024.
Third Quarter 2024 Highlights Include:
GAAP net income of $95.6 million and GAAP dilutive earnings per share of $3.22;
Quarterly adjusted EBITDA1 of $179.2 million;
Net cash provided by operating activities of $161.3 million;
Quarterly free cash flow1 of $121.8 million;
Total revenue and other income of $574.9 million;
Announced dividend of $0.25/share, payable on November 26, 2024;
Pennsylvania Mining Complex (PAMC) produced 7.2 million tons;
CONSOL Marine Terminal (CMT) shipped 4.7 million tons; and
Merger with Arch Resources continues to progress as expected with closing anticipated by the end of 1Q25.
Management Comments
"During the third quarter of 2024, the CONSOL team achieved robust financial and operational results, despite a longwall move at the PAMC and an annual planned maintenance shutdown," said Jimmy Brock, Chairman and Chief Executive Officer of CONSOL Energy Inc. "With the CONSOL Marine Terminal rebounding from the impact of the Francis Scott Key Bridge collapse, which occurred on March 26, 2024, and affected much of the second quarter, the PAMC team delivered a strong production quarter in 3Q24, mining 7.2 million tons, which was a third quarter record for the complex. As a result, we finished the quarter with approximately $179 million of adjusted EBITDA1 and $122 million of free cash flow1, and we increased our cash and cash equivalents by $116 million since June 30, 2024. The merger with Arch Resources continues to move forward and progress as expected, with closing still anticipated to occur by the end of the first quarter of 2025. Consistent with the capital return framework outlined in the merger agreement, we announced a $0.25 per share dividend, which will be payable on November 26, 2024."
"On the safety front, the Bailey Preparation Plant and Itmann Preparation Plant each had ZERO employee recordable incidents in the third quarter of 2024, and our year-to-date employee total recordable incident rate across our coal mining segment remained well below the national average for underground bituminous coal mines."
Pennsylvania Mining Complex Review
Three Months Ended
September 30, 2024
September 30, 2023
Total Coal Revenue (PAMC Segment)
thousands
$ 439,730
$ 431,090
Operating and Other Costs
thousands
$ 304,134
$ 276,323
Total Cash Cost of Coal Sold1
thousands
$ 245,252
$ 234,944
Coal Production
million tons
7.2
6.1
Total Tons Sold
million tons
6.8
6.1
Average Coal Revenue per Ton Sold
per ton
$ 64.28
$ 70.34
Average Cash Cost of Coal Sold per Ton1
per ton
$ 35.85
$ 38.36
Average Cash Margin per Ton Sold1
per ton
$ 28.43
$ 31.98
We sold 6.8 million tons of PAMC coal during the third quarter of 2024, generating coal revenue of $439.7 million for the PAMC segment at an average coal revenue per ton sold of $64.28. This compares to 6.1 million tons sold, generating coal revenue of $431.1 million and an average coal revenue per ton sold of $70.34 in the year-ago period. The coal revenue improvement was driven by a significant increase in production tons compared to the prior year period despite the decline in sales price. With the temporary pause of operations at our CMT due to the Francis Scott Key (FSK) Bridge collapse behind us, the PAMC team worked hard during the quarter to meet market demand, which partially offset some of the production impact during 2Q24.
During the third quarter of 2024, we produced 7.2 million tons at the PAMC, which was impressive considering that we had a planned longwall move and summer maintenance shutdown in the quarter. This compares to 6.1 million tons in the year-ago period. Average cash cost of coal sold per ton1 at the PAMC for the third quarter of 2024 was $35.85, compared to $38.36 in the year-ago quarter. The decrease was due to the significant improvement in sales tons compared to the prior year period.
On the marketing front, API2 and Henry Hub natural gas spot prices each saw very modest upticks in the third quarter compared to the second quarter of 2024. In the export market, API2 spot prices in the third quarter increased approximately 3% when compared to the second quarter of 2024. Domestically, average Henry Hub natural gas spot prices were up approximately 2% quarter over quarter. However, PJM West day ahead power prices increased more than 20% over the same period. Energy Ventures Analysis estimates that Northern Appalachian coal burn increased by approximately 30% in the third quarter of 2024 when compared to 2Q24. Internationally, Europe has returned to the market and is securing cargos ahead of winter. Furthermore, demand for our crossover metallurgical product has been robust this year, particularly in China. The PAMC is near fully contracted in 2024 based on the midpoint of our 2024 guidance, and we now have approximately 18 million tons contracted for 2025.
CONSOL Marine Terminal Review
During the third quarter of 2024, throughput volume at the CMT was 4.7 million tons, compared to 4.3 million tons in the year-ago period. Terminal revenues and CMT total costs and expenses were $23.7 million and $11.6 million, respectively, compared to $22.7 million and $11.7 million, respectively, during the year-ago period. CMT operating cash costs1 were $6.9 million in the third quarter of 2024, compared to $7.5 million in the prior year period. CMT net income and CMT adjusted EBITDA1 were $13.0 million and $15.9 million, respectively, in the third quarter of 2024, compared to $12.1 million and $14.9 million, respectively, in the year-ago period.
Itmann Mining Complex Update
During the third quarter of 2024, the Itmann Mining Complex (IMC) sold 152 thousand tons of Itmann Mine and third-party coal, compared to 164 thousand tons in the second quarter. The impairment was due to lingering supply chain issues and adverse geological conditions which limited our production. On the supply chain front, we continue to deal with abnormally long lead times on both new and rebuilt section equipment. During the third quarter of 2024, the Itmann Mine continued to operate two of its three continuous miner sections as super sections while we wait on multiple continuous miner deliveries. Despite being limited in the number of sections we could run, long-term mains development progressed in 3Q24, and toward the end of the quarter, the Itmann Mine began retreat mining, which we expect will improve both our efficiency and productivity. Additionally, a deep cut plan has been approved by the Mine Safety and Health Administration (MSHA) for the 1 North section of the mine, and we are working with MSHA to obtain approval for another mining section, which will improve the overall efficiency of the mine. Multiple continuous miners are expected to be delivered before year-end 2024, which should improve our production capacity.
Liability Management Update
In early October, CONSOL and the Pennsylvania Department of Environmental Protection (PADEP) finalized agreements to form a Global Water Treatment Trust Fund (WTTF). The fund will provide an alternative financial assurance mechanism for 22 of our legacy water treatment facilities in the state of Pennsylvania, and these 22 sites represent the entire footprint of our legacy, perpetual water treatment liabilities located in the state. The WTTF establishes a long-term mechanism to fund a significant portion of our perpetual water treatment obligations over time and, as such, will reduce our exposure to surety bonds and their collateral requirements. CEIX has agreed to a minimum $2 million annual contribution into the fund, while reserving the option to accelerate funding at any time and with no cap on the amount.
Insurance Claim Update
Throughout the third quarter of 2024, we worked with our insurance adjusters to calculate a potential business interruption claim related to the Francis Scott Key Bridge collapse in Baltimore, which affected operations at our CONSOL Marine Terminal. As of mid-October, we submitted a formal claim, and we hope to reach a final settlement by the end of 2024.
Merger Update
The CONSOL and Arch teams have continued the push toward achieving a timely closing and smooth transition to Core Natural Resources. On the regulatory approval front, we have obtained final clearance of the proposed merger from Brazil, Poland and China. Additionally, the waiting period under the Hart-Scott-Rodino Act in relation to the proposed merger expired on October 11, which is one of the closing conditions of the proposed merger.
Shareholder Returns Update
Consistent with the capital return framework outlined in the merger agreement for CEIX while the merger is in pending status, the board of directors has authorized a dividend of $0.25/share. The payment will amount to an aggregate of approximately $7.3 million, payable on November 26, 2024 to all shareholders of record as of November 15, 2024.
2024 Guidance and Outlook
Based on our current contracted position, estimated prices, production plans, and the effect of the FSK Bridge collapse, we are providing the following financial and operating performance guidance for full fiscal year 2024:
PAMC coal sales volume of 25.0-26.0 million tons
PAMC average coal revenue per ton sold expectation of $64.50-$66.00
PAMC average cash cost of coal sold per ton2 expectation of $37.50-$38.50
IMC coal sales volume of 600-800 thousand tons
Total capital expenditures of $165-$190 million
Third Quarter Earnings Conference Call
A conference call and webcast, during which management will discuss the third quarter 2024 financial and operational results, is scheduled for November 5, 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) 1-800-836-8184Participant international dial in 1-646-357-8785
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-Q with the Securities and Exchange Commission (SEC) reporting our results for the period ended September 30, 2024 on November 5, 2024. Investors seeking our detailed financial statements can refer to the Form 10-Q once it has been filed with the SEC.
Footnotes:
1 "Adjusted EBITDA", "Free Cash Flow", "CMT Adjusted EBITDA", "CMT Operating Cash Costs", and "Total Cash Cost of Coal Sold" 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".
2 CEIX is unable to provide a reconciliation of PAMC Average Cash Cost of Coal Sold per Ton guidance, which is 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 coal and metallurgical coal. ...
