CONSOL Energy Announces Results for the Fourth Quarter and Full Year 2020
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CANONSBURG, Feb. 9, 2021 - Today, CONSOL Energy Inc. (NYSE: CEIX) reported financial and operating results for the fourth quarter and fiscal year ended December 31, 2020.
Fourth Quarter 2020 Highlights Include:
- Consummated the CCR merger transaction with strong shareholder support;
- Net Income and Net Income Attributable to CONSOL Energy Inc. Shareholders of $14.7 million and $13.1 million, respectively;
- Cash and cash equivalents of $50.9 million as of December 31, 2020;
- Gross payments on total debt of $26.0 million during the quarter;
- Coal shipments recover to 5.9 million tons compared to 4.5 million tons in 3Q20 and 2.3 million tons in 2Q20;
- Net leverage ratio1 of 2.5x as of December 31, 2020;
- Net cash provided by operating activities of $66.9 million; and
- Adjusted EBITDA1 of $95.5 million and free cash flow1 of $48.0 million.
Full Year 2020 Highlights Include:
- Net Loss and Net Loss Attributable to CONSOL Energy Inc. Shareholders of ($13.2) million and ($9.8) million, respectively;
- Net cash provided by operating activities of $129.3 million;
- Adjusted EBITDA1 of $261.5 million and free cash flow1 of $53.2 million;
- Total consolidated indebtedness reduced by $56.2 million - reduced TLA, TLB and 2nd lien debt outstanding by $22.5 million, $2.8 million and $54.5 million, respectively; and
- Continued to take advantage of a strong equipment financing market by raising $60 million of new capital during 2020 at a weighted average interest rate of 6%.
Management Comments
"2020 was an extremely challenging year, as our industry dealt with weakened commodity markets due to the unprecedented drop in global energy demand brought on by the COVID-19 pandemic," said Jimmy Brock, President and Chief Executive Officer of CONSOL Energy Inc. "However, despite this difficult backdrop, I am pleased with our execution of not only managing through this pandemic but also setting ourselves up for potential success as we head into 2021 and beyond. We moved early in 2020 to amend our credit agreement and secure covenant relaxation with our banks, implemented multiple cost and capex reduction targets, executed several transactional opportunities to bolster our liquidity and capped off the year by completing the CCR merger with overwhelming shareholder support. Additionally, we secured more than 10 million tons of future business under term and spot contracts during 2020 for deliveries in 2021 and beyond in the most challenging market of my 40+ year career. Furthermore, despite the reduced earnings versus 2019, we made payments of $86 million on our outstanding debt in 2020. We believe these actions have prepared us to hit the ground running in 2021."
"On the safety front, our Bailey Preparation Plant, CONSOL Marine Terminal (CMT) and Itmann project each had ZERO recordable incidents during the fourth quarter and full year of 2020. Our total recordable incident rate at the PAMC continues to track significantly below the national average for underground bituminous coal mines."
Pennsylvania Mining Complex (PAMC) Review and Outlook
PAMC Sales and Marketing
Our marketing team sold 5.9 million tons of coal during the fourth quarter of 2020 at an average revenue per ton of $39.05, compared to 6.7 million tons at an average revenue per ton of $45.14 in the year-ago period. Following the significant COVID-19 demand trough in the second quarter of 2020, demand for our product has steadily improved and we have increased our productive capacity for the second consecutive quarter. On the sales volume front, the 0.8 million ton decline in 4Q20 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 for 2021 and 2022, bringing our contracted position to 18.2 million and 5.6 million tons, respectively. Despite an extremely challenging commodity and economic climate in 2020, we were successful in securing an additional 10.8 million tons scheduled for delivery in 2021 and beyond.
On the domestic front, the fourth quarter of 2020 ended the year on a strong note from a demand perspective. According to the U.S. Energy Information Administration, coal's share in the electric generation mix ended the year at ~20%, which is improved from its low of 15% in April and indicates a strong second half of 2020. Furthermore, Doyle Trading Consultants estimates that total domestic coal demand will increase by 10% in 2021 versus 2020, while supply will increase by only 5%. This development could help to further reduce domestic coal stockpiles and continue to tighten the domestic market. We continue to see tightness in the supply of NAPP coal, and the majority of our domestic customer stockpiles are at or below normal for this time of year. Finally, many weather forecasts predict a significant polar vortex event beginning late-January to early-February, which could bring weeks of frigid temperatures to much of the U.S.
On the export front, we have seen several very encouraging trends as the seaborne thermal coal markets have steadily improved since the end of the third quarter of 2020. Thermal coal prices in China have continued to increase due to China's strong electricity production, ban on Australian coal imports and regional coal shortages due to new COVID-19-related trucking restrictions. We are seeing continued high pet coke prices resulting from reduced oil production propping up demand and pricing for NAPP coal in high-CV markets, particularly India. Global LNG prices have continued to surge with the Asian spot market benchmark price (JKM) hitting an all-time high in early January. API2 spot prices have also rallied and crossed the $70/ton mark in early-January for the first time since March 2019, driven by recent cold weather trends and increased LNG prices. As such, Europe has again become a viable option for U.S. coal exports.
Operations Summary
During the fourth quarter of 2020, we consistently ran four of our five longwalls and for the second consecutive quarter have steadily increased our productive capacity, operating at more than 80% capacity utilization. The PAMC produced 5.9 million tons in the fourth quarter of 2020, which compares to 6.7 million tons in the year-ago quarter. This brings total PAMC production to 18.8 million tons in 2020. During the quarter, we faced significant production bottlenecks due to transportation delays as our supply chain partners continued to struggle with crew availability due to the ongoing COVID-19 pandemic.
CEIX's total costs during the fourth quarter of 2020 were $306.0 million compared to $320.5 million in the year-ago quarter, and CEIX's total revenue during the fourth quarter was $324.6 million compared to $342.6 million in the year-ago period. Average cash cost of coal sold per ton1 for the fourth quarter was $27.49 compared to $30.38 in the year-ago quarter. The significant reduction was due to continued tight control on maintenance and supply costs, contractor and purchased services costs and project expense. For 2020, CEIX's total costs were $1,030.9 million compared to $1,332.8 million in the prior year mainly due to reduced operating and other costs largely from reduced production in 2020 versus 2019, and CEIX's total revenue during 2020 was $1,021.6 million compared to $1,430.9 million in the prior year. Despite the significant decline in production in 2020 versus 2019 brought on by the COVID-19 demand destruction, the PAMC was very successful in limiting its cash expenditures during the year. As a result, our 2020 average cash cost of coal sold per ton1 was $29.12 compared to $30.97 for 2019. The decrease was primarily driven by reduced maintenance and supply costs, contractor and purchased services costs and project expense.
Three Months Ended | |||||||||
December 31, | December 31, | ||||||||
Coal Production | million tons | 5.9 | 6.7 | ||||||
Coal Sales | million tons | 5.9 | 6.7 | ||||||
Average Revenue per Ton | per ton | $ | 39.05 | $ | 45.14 | ||||
Average Cash Costs of Coal Sold1 | per ton | $ | 27.49 | $ | 30.38 | ||||
Average Cash Margin per Ton Sold1 | per ton | $ | 11.56 | $ | 14.76 |
CONSOL Marine Terminal (CMT) Review
For the fourth quarter of 2020, throughput volumes at the CMT were 3.1 million tons, compared to 2.5 million tons in the year-ago period. Terminal revenues and operating cash costs were $17.4 million and $4.6 million, respectively, compared to $16.5 million and $4.9 million, respectively, during the year-ago period. CMT achieved terminal revenue of $66.8 million in 2020, just shy of the record terminal revenue set in 2019. CMT also achieved operating cash costs1 of $18.4 million in 2020, compared to $21.7 million in 2019, as the CMT employees continued to maintain tight control over expenditures in the year. CMT net income and CMT adjusted EBITDA1 came in at $8.9 million and $11.8 million, respectively, in the fourth quarter of 2020 compared to $8.6 million and $11.3 million, respectively, in the year-ago period. CMT finished the year with net income and adjusted EBITDA1 of $32.5 million and $44.4 million, respectively, compared to $33.8 million and $44.5 million, respectively, in 2019.
Debt and Equity Repurchase Update
During the fourth quarter of 2020, CEIX made mandatory repayments of $9.7 million, $6.3 million and $0.7 million on our finance leases and asset-backed financing arrangements, Term Loan A and Term Loan B, respectively. Additionally, CEIX spent $5.7 million to retire $9.3 million of its Second lien notes, as these continued to trade at a significant discount to par. This brings our total debt reduction in the quarter to $26.0 million.
As of the year ended December 31, 2020, we repurchased $54.5 million of Second lien notes at an average discount to par value of 41% and repaid $29.0 million, $22.5 million and $2.8 million of principal with respect to our finance leases and asset-backed financing arrangements, Term Loan A and Term Loan B, respectively.
In aggregate, as of December 31, 2020, our total liquidity was approximately $326 million, including $51 million of cash and cash equivalents and approximately $1 million of availability under our Accounts Receivable Securitization, and our $400 million revolving credit facility had no borrowings and is currently only used for providing letters of credit with $126 million issued.
Transactional Opportunities
Since July 1, 2020, CEIX has executed multiple transactions resulting in approximately $68 million in pre-tax income. These transactions primarily consist of sales of land and mineral assets, gas wells, and various mining rights. In aggregate, in the fourth quarter of 2020, we recorded $42 million in pre-tax income related to these items in addition to the $26 million recorded in the third quarter of 2020.
2021 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 2021:
- 2021 targeted coal sales volume of 22-24 million tons
- 18.2 million tons contracted at an average revenue per ton of $41.56/ton assuming a PJM West power price of $24.79/MWh
- Average cash cost of coal sold per ton2 expectation of $27.00-$29.00/ton
- Capital expenditures of $100-$125 million excluding any spending on the Itmann project
Fourth Quarter Earnings Conference Call
A conference call and webcast, during which management will discuss the fourth quarter and annual 2020 financial and operational results, is scheduled for February 9, 2021 at 11:00 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 |
Participant international dial in | 1-412-542-4134 |
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 year ended December 31, 2020 on February 12, 2021. Investors seeking our detailed financial statements can refer to the Form 10-K once it has been filed with the SEC.
Footnotes:
1 "Adjusted EBITDA", "Free Cash Flow", "Net Leverage Ratio" and "CMT Adjusted EBITDA" are non-GAAP financial measures and "Average Cash Cost of Coal Sold per Ton", "Average Cash Margin per Ton Sold" and "CMT Operating Cash Costs" 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 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 coal and metallurgical coal. It owns and operates some of the most productive longwall mining operations in the Northern Appalachian Basin and is developing a new metallurgical coal mine (the Itmann project) in the Central 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, 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 ~658 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:
Nathan Tucker, (724) 416-8336
nathantucker@consolenergy.com
Media:
Zach Smith, (724) 416-8291
zacherysmith@consolenergy.com
Condensed Consolidated Statements of Income
The following table presents a condensed consolidated statement of income for the three months ended December 31, 2020 and 2019 (in thousands):
Three Months Ended | For the Year Ended | ||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||
(Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | ||||||||||||
Revenue and Other Income: | |||||||||||||||
Coal Revenue | $ | 230,522 | $ | 303,865 | $ | 772,662 | $ | 1,288,529 | |||||||
Terminal Revenue | 17,403 | 16,534 | 66,810 | 67,363 | |||||||||||
Freight Revenue | 20,849 | 5,552 | 39,990 | 19,667 | |||||||||||
Other Income | 55,833 | 16,684 | 142,181 | 55,344 | |||||||||||
Total Revenue and Other Income | 324,607 | 342,635 | 1,021,643 | 1,430,903 | |||||||||||
Costs and Expenses: | |||||||||||||||
Operating and Other Costs | 185,883 | 229,603 | 667,595 | 948,012 | |||||||||||
Depreciation, Depletion and Amortization | 54,703 | 55,852 | 210,760 | 207,097 | |||||||||||
Freight Expense | 20,849 | 5,552 | 39,990 | 19,667 | |||||||||||
Selling, General and Administrative Costs | 32,980 | 14,210 | 72,706 | 67,111 | |||||||||||
(Gain) Loss on Debt Extinguishment | (3,441) | (989) | (21,352) | 24,455 | |||||||||||
Interest Expense, net | 15,070 | 16,224 | 61,186 | 66,464 | |||||||||||
Total Costs and Expenses | 306,044 | 320,452 | 1,030,885 | 1,332,806 | |||||||||||
Earnings (Loss) Before Income Tax | 18,563 | 22,183 | (9,242) | 98,097 | |||||||||||
Income Tax Expense | 3,829 | 4,782 | 3,972 | 4,539 | |||||||||||
Net Income (Loss) | 14,734 | 17,401 | (13,214) | 93,558 | |||||||||||
Less: Net Income (Loss) Attributable to Noncontrolling Interest | 1,649 | 3,455 | (3,459) | 17,557 | |||||||||||
Net Income (Loss) Attributable to CONSOL Energy Inc. Shareholders | $ | 13,085 | $ | 13,946 | $ | (9,755) | $ | 76,001 | |||||||
Earnings (Loss) Per Share: | |||||||||||||||
Basic | $ | 0.50 | $ | 0.54 | $ | (0.37) | $ | 2.82 | |||||||
Dilutive | $ | 0.49 | $ | 0.54 | $ | (0.37) | $ | 2.81 |
Condensed Consolidated Balance Sheets
The following table presents a condensed consolidated balance sheet as of December 31, 2020 and 2019 (in thousands):
December 31, | ||||||||
2020 | 2019 | |||||||
(Unaudited) | (Unaudited) | |||||||
ASSETS | ||||||||
Cash and Cash Equivalents | $ | 50,850 | $ | 80,293 | ||||
Trade Receivables, net | 118,289 | 131,688 | ||||||
Other Current Assets | 123,802 | 126,048 | ||||||
Total Current Assets | 292,941 | 338,029 | ||||||
Total Property, Plant and Equipment - Net | 2,049,062 | 2,092,165 | ||||||
Total Other Assets | 181,363 | 263,608 | ||||||
TOTAL ASSETS | $ | 2,523,366 | $ | 2,693,802 | ||||
LIABILITIES AND EQUITY | ||||||||
Total Current Liabilities | $ | 368,470 | $ | 392,264 | ||||
Total Long-Term Debt | 603,061 | 662,838 | ||||||
Total Other Liabilities | 998,316 | 1,066,305 | ||||||
Total Equity | 553,519 | 572,395 | ||||||
TOTAL LIABILITIES AND EQUITY | $ | 2,523,366 | $ | 2,693,802 |
Condensed Consolidated Statements of Cash Flows
The following table presents a condensed consolidated statement of cash flows for the three months and years ended December 31, 2020 and 2019 (in thousands):
Three Months Ended | For the Year Ended | ||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||
Cash Flows from Operating Activities: | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||||
Net Income (Loss) | $ | 14,734 | $ | 17,401 | $ | (13,214) | $ | 93,558 | |||||||
Adjustments to Reconcile Net Income (Loss) to Net Cash Provided by Operating Activities: | |||||||||||||||
Depreciation, Depletion and Amortization | 54,703 | 55,852 | 210,760 | 207,097 | |||||||||||
Other Non-Cash Adjustments to Net Income (Loss) | 12,414 | (1,141) | (4,685) | 24,217 | |||||||||||
Changes in Working Capital | (14,908) | (50,729) | (63,530) | (80,306) | |||||||||||
Net Cash Provided by Operating Activities | 66,943 | 21,383 | 129,331 | 244,566 | |||||||||||
Cash Flows from Investing Activities: | |||||||||||||||
Capital Expenditures | (20,049) | (38,264) | (86,004) | (169,739) | |||||||||||
Proceeds from Sales of Assets | 1,120 | 186 | 9,899 | 2,201 | |||||||||||
Other Investing Activity | - | (5,003) | (229) | (5,003) | |||||||||||
Net Cash Used in Investing Activities | (18,929) | (43,081) | (76,334) | (172,541) | |||||||||||
Cash Flows from Financing Activities: | |||||||||||||||
Net Payments on Long-Term Debt | (19,357) | (25,679) | (67,000) | (183,890) | |||||||||||
Distributions to Noncontrolling Interest | - | (5,546) | (5,575) | (22,220) | |||||||||||
Other Financing Activities | (91) | (1,633) | (9,865) | (50,557) | |||||||||||
Net Cash Used in Financing Activities | (19,448) | (32,858) | (82,440) | (256,667) | |||||||||||
Net Increase (Decrease) in Cash & Cash Equivalents & Restricted Cash | $ | 28,566 | $ | (54,556) | $ | (29,443) | $ | (184,642) | |||||||
Cash & Cash Equivalents & Restricted Cash at Beginning of Period | 22,284 | 134,849 | 80,293 | 264,935 | |||||||||||
Cash and Cash Equivalents and Restricted Cash at End of Period | $ | 50,850 | $ | 80,293 | $ | 50,850 | $ | 80,293 |
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 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 cost of coal sold and 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 | Year Ended December 31, | ||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||
Total Costs and Expenses | $ | 306,044 | $ | 320,452 | $ | 1,030,885 | $ | 1,332,806 | |||||||
Freight Expense | (20,849) | (5,552) | (39,990) | (19,667) | |||||||||||
Selling, General and Administrative Costs | (32,980) | (14,210) | (72,706) | (67,111) | |||||||||||
Gain (Loss) on Debt Extinguishment | 3,441 | 989 | 21,352 | (24,455) | |||||||||||
Interest Expense, net | (15,070) | (16,224) | (61,186) | (66,464) | |||||||||||
Other Costs (Non-Production) | (24,031) | (25,045) | (124,739) | (101,900) | |||||||||||
Depreciation, Depletion and Amortization (Non-Production) | (4,457) | (9,277) | (39,668) | (32,388) | |||||||||||
Cost of Coal Sold | $ | 212,098 | $ | 251,133 | $ | 713,948 | $ | 1,020,821 | |||||||
Depreciation, Depletion and Amortization (Production) | (50,246) | (46,575) | (171,092) | (174,709) | |||||||||||
Cash Cost of Coal Sold | $ | 161,852 | $ | 204,558 | $ | 542,856 | $ | 846,112 |
We define average margin per ton sold as average revenue per ton sold, net of average cost of coal sold per ton. We define average cash margin per ton sold as average revenue per ton sold, net of average cash cost of coal sold per ton. The GAAP measure most directly comparable to average margin per ton sold and average cash margin per ton sold is total coal revenue.
The following table presents a reconciliation of average margin per ton sold and 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).
Three Months Ended | Year Ended December 31, | ||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||
Total Coal Revenue (PAMC Segment) | $ | 229,819 | $ | 303,865 | $ | 771,363 | $ | 1,288,529 | |||||||
Operating and Other Costs | 185,883 | 229,603 | 667,595 | 948,012 | |||||||||||
Less: Other Costs (Non-Production) | (24,031) | (25,045) | (124,739) | (101,900) | |||||||||||
Total Cash Cost of Coal Sold | 161,852 | 204,558 | 542,856 | 846,112 | |||||||||||
Add: Depreciation, Depletion and Amortization | 54,703 | 55,852 | 210,760 | 207,097 | |||||||||||
Less: Depreciation, Depletion and Amortization (Non-Production) | (4,457) | (9,277) | (39,668) | (32,388) | |||||||||||
Total Cost of Coal Sold | $ | 212,098 | $ | 251,133 | $ | 713,948 | $ | 1,020,821 | |||||||
Total Tons Sold (in millions) | 5.9 | 6.7 | 18.7 | 27.3 | |||||||||||
Average Revenue per Ton Sold | $ | 39.05 | $ | 45.14 | $ | 41.31 | $ | 47.17 | |||||||
Average Cash Cost of Coal Sold per Ton | 27.49 | 30.38 | 29.12 | 30.97 | |||||||||||
Depreciation, Depletion and Amortization Costs per Ton Sold | 8.55 | 6.93 | 9.12 | 6.40 | |||||||||||
Average Cost of Coal Sold per Ton | 36.04 | 37.31 | 38.24 | 37.37 | |||||||||||
Average Margin per Ton Sold | 3.01 | 7.83 | 3.07 | 9.80 | |||||||||||
Add: Depreciation, Depletion and Amortization Costs per Ton Sold | 8.55 | 6.93 | 9.12 | 6.40 | |||||||||||
Average Cash Margin per Ton Sold | $ | 11.56 | $ | 14.76 | $ | 12.19 | $ | 16.20 |
We define CMT operating costs as operating and other costs related to throughput tons. CMT operating costs exclude any indirect costs, such as selling, general and administrative costs, direct administration costs, interest expenses, and other costs not directly attributable to throughput tons. CMT operating cash costs include CMT operating costs, less depreciation, depletion and amortization costs. The GAAP measure most directly comparable to CMT operating costs and CMT operating cash costs is total costs and expenses.
The following table presents a reconciliation of CMT operating costs and CMT operating cash costs 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 | Year Ended December 31, | ||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||
Total Costs and Expenses | $ | 306,044 | $ | 320,452 | $ | 1,030,885 | $ | 1,332,806 | |||||||
Freight Expense | (20,849) | (5,552) | (39,990) | (19,667) | |||||||||||
Selling, General and Administrative Costs | (32,980) | (14,210) | (72,706) | (67,111) | |||||||||||
Gain (Loss) on Debt Extinguishment | 3,441 | 989 | 21,352 | (24,455) | |||||||||||
Interest Expense, net | (15,070) | (16,224) | (61,186) | (66,464) | |||||||||||
Other Costs (Non-Throughput) | (181,254) | (224,717) | (649,207) | (926,283) | |||||||||||
Depreciation, Depletion and Amortization (Non-Throughput) | (53,408) | (54,682) | (205,665) | (203,019) | |||||||||||
CMT Operating Costs | $ | 5,924 | $ | 6,056 | $ | 23,483 | $ | 25,807 | |||||||
Depreciation, Depletion and Amortization (Throughput) | (1,295) | (1,170) | (5,095) | (4,078) | |||||||||||
CMT Operating Cash Costs | $ | 4,629 | $ | 4,886 | $ | 18,388 | $ | 21,729 |
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 (in thousands).
Three Months Ended December 31, 2020 | |||||||||||||||
PA Mining | CONSOL | Other | Total | ||||||||||||
Net Income (Loss) | $ | 34,590 | $ | 8,866 | $ | (28,722) | $ | 14,734 | |||||||
Add: Income Tax Expense | - | - | 3,829 | 3,829 | |||||||||||
Add: Interest Expense, net | 342 | 1,539 | 13,189 | 15,070 | |||||||||||
Less: Interest Income | (10) | - | (778) | (788) | |||||||||||
Earnings (Loss) Before Interest & Taxes (EBIT) | 34,922 | 10,405 | (12,482) | 32,845 | |||||||||||
Add: Depreciation, Depletion & Amortization | 53,118 | 1,295 | 290 | 54,703 | |||||||||||
Earnings (Loss) Before Interest, Taxes and DD&A (EBITDA) | $ | 88,040 | $ | 11,700 | $ | (12,192) | $ | 87,548 | |||||||
Adjustments: | |||||||||||||||
Stock/Unit-Based Compensation | $ | 1,815 | $ | 100 | $ | 202 | $ | 2,117 | |||||||
CCR Merger Fees | 2,123 | - | 7,199 | 9,322 | |||||||||||
Gain on Debt Extinguishment | - | - | (3,441) | (3,441) | |||||||||||
Total Pre-tax Adjustments | 3,938 | 100 | 3,960 | 7,998 | |||||||||||
Adjusted EBITDA | $ | 91,978 | $ | 11,800 | $ | (8,232) | $ | 95,546 | |||||||
Three Months Ended December 31, 2019 | |||||||||||||||
PA Mining | CONSOL | Other | Total | ||||||||||||
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 | |||||||
For the Year Ended December 31, 2020 | |||||||||||||||
PA Mining | CONSOL | Other | Total | ||||||||||||
Net Income (Loss) | $ | 16,185 | $ | 32,537 | $ | (61,936) | $ | (13,214) | |||||||
Add: Income Tax Expense | - | - | 3,972 | 3,972 | |||||||||||
Add: Interest Expense, net | 1,236 | 6,166 | 53,784 | 61,186 | |||||||||||
Less: Interest Income | (10) | - | (1,220) | (1,230) | |||||||||||
Earnings (Loss) Before Interest & Taxes (EBIT) | 17,411 | 38,703 | (5,400) | 50,714 | |||||||||||
Add: Depreciation, Depletion & Amortization | 198,272 | 5,095 | 7,393 | 210,760 | |||||||||||
Earnings Before Interest, Taxes and DD&A (EBITDA) | $ | 215,683 | $ | 43,798 | $ | 1,993 | $ | 261,474 | |||||||
Adjustments: | |||||||||||||||
Stock/Unit-Based Compensation | $ | 9,905 | $ | 558 | $ | 1,116 | $ | 11,579 | |||||||
CCR Merger Fees | 2,623 | - | 7,199 | 9,822 | |||||||||||
Gain on Debt Extinguishment | - | - | (21,352) | (21,352) | |||||||||||
Total Pre-tax Adjustments | 12,528 | 558 | (13,037) | 49 | |||||||||||
Adjusted EBITDA | $ | 228,211 | $ | 44,356 | $ | (11,044) | $ | 261,523 | |||||||
For the Year Ended December 31, 2019 | |||||||||||||||
PA Mining | CONSOL | Other | Total | ||||||||||||
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 |
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 | Twelve Months | ||||||
December 31, | December 31, | ||||||
Net (Loss) Income | $ | (13,214) | $ | 93,558 | |||
Plus: | |||||||
Interest Expense, net | 61,186 | 66,464 | |||||
Depreciation, Depletion and Amortization | 210,760 | 207,097 | |||||
Income Taxes | 3,972 | 4,539 | |||||
Stock/Unit-Based Compensation | 11,579 | 12,760 | |||||
(Gain) Loss on Debt Extinguishment | (21,352) | 24,455 | |||||
CCR Adjusted EBITDA per Credit Agreement | - | (102,189) | |||||
Cash Distributions from CONSOL Coal Resources LP | - | 35,398 | |||||
Cash Payments for Legacy Employee Liabilities, Net of Non-Cash Expense | (17,401) | (18,521) | |||||
Other Adjustments to Net Income | 5,725 | 5,225 | |||||
Consolidated EBITDA per Credit Agreement | $ | 241,255 | $ | 328,786 | |||
Consolidated First Lien Debt | $ | 394,631 | $ | 390,148 | |||
Senior Secured Second Lien Notes | 167,147 | 221,628 | |||||
MEDCO Revenue Bonds | 102,865 | 102,865 | |||||
Advance Royalty Commitments | 2,185 | 1,895 | |||||
Consolidated Indebtedness per Credit Agreement | $ | 666,828 | $ | 716,536 | |||
Less: | |||||||
Advance Royalty Commitments | $ | 2,185 | $ | 1,895 | |||
Cash on Hand | 50,850 | 79,750 | |||||
Consolidated Net Indebtedness per Credit Agreement | $ | 613,793 | $ | 634,891 | |||
Net Leverage Ratio (Net Indebtedness/EBITDA) | 2.5 | 1.9 |
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 operating activities, the most directly comparable GAAP financial measure, on a historical basis, for each of the periods indicated (in thousands).
Organic Free Cash Flow | Three | Three | Year Ended | Year Ended | ||||||||||||
Net Cash Provided by Operating Activities | $ | 66,943 | $ | 21,383 | $ | 129,331 | $ | 244,566 | ||||||||
Capital Expenditures | (20,049) | (38,264) | (86,004) | (169,739) | ||||||||||||
Organic Free Cash Flow | $ | 46,894 | $ | (16,881) | $ | 43,327 | $ | 74,827 | ||||||||
Distributions to Noncontrolling Interest | - | (5,546) | (5,575) | (22,220) | ||||||||||||
Organic Free Cash Flow Net to CEIX Shareholders | $ | 46,894 | $ | (22,427) | $ | 37,752 | $ | 52,607 | ||||||||
Free Cash Flow | Three | Three | Year Ended | Year Ended | ||||||||||||
Net Cash Provided by Operating Activities | $ | 66,943 | $ | 21,383 | $ | 129,331 | $ | 244,566 | ||||||||
Capital Expenditures | (20,049) | (38,264) | (86,004) | (169,739) | ||||||||||||
Proceeds from Sales of Assets | 1,120 | 186 | 9,899 | 2,201 | ||||||||||||
Free Cash Flow | $ | 48,014 | $ | (16,695) | $ | 53,226 | $ | 77,028 |
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.
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SOURCE CONSOL Energy Inc.