CONSOL Energy Announces Results for the Second Quarter 2021
CONSOL Energy reported Q2 2021 financial results with a GAAP net income of $4.2 million, including $20.4 million in unrealized losses from commodity derivatives. Adjusted EBITDA was $84.4 million, with operating cash flow at $94.6 million. The company achieved coal shipments of 5.9 million tons, with 55% for export. The Itmann metallurgical coal project is set to recommence, aiding diversification. However, total costs rose to $291.9 million, reflecting a challenging operational environment.
- Generated $54.4 million in free cash flow.
- Increased unrestricted cash by over $50 million.
- Coal shipments rose by 3.5 million tons year-over-year.
- Successful repurchases of debt totaling $18.1 million.
- Resumed the Itmann metallurgical coal project to diversify product mix.
- Total costs increased to $291.9 million from $191.3 million year-over-year.
- GAAP net income impacted by unrealized losses from derivatives.
CANONSBURG, Pa., Aug. 3, 2021 /PRNewswire/ -- Today, CONSOL Energy Inc. (NYSE: CEIX) reported financial and operating results for the period ended June 30, 2021.
Second Quarter 2021 Highlights Include:
- GAAP net income of
$4.2 million including$20.4 million of unrealized mark-to-market losses related to commodity derivatives; - Quarterly adjusted EBITDA1 of
$84.4 million; - Net cash provided by operating activities of
$94.6 million ; - Quarterly free cash flow1 of
$54.4 million ; - Coal shipments of 5.9 million tons, of which
55% went into the export market and47% into non-power generation applications; - CONSOL Marine Terminal net income and adjusted EBITDA1 of
$8.2 million and$11.0 million , respectively; - Cash and cash equivalents of
$146.7 million plus$53.5 million in restricted cash as of June 30, 2021; - Net leverage ratio1 of 1.70x as of June 30, 2021;
- Recommencing the Itmann metallurgical coal project with expanded scope to accelerate our diversification strategy;
- Issued
$75.0 million in tax-exempt bonds to fund the solid waste disposal project at the Pennsylvania Mining Complex (PAMC); and - Spent
$18.4 million for an early buyout of an existing operating lease for a set of longwall shields reducing monthly cash cost by$0.9 million .
Management Comments
"In the second quarter of 2021, we had another strong performance generating significant free cash flow, increasing our unrestricted cash position by more than
"On the safety front, our Bailey Preparation Plant, CONSOL Marine Terminal (CMT) and Itmann project each had ZERO recordable incidents during the second quarter of 2021. Our year-to-date total recordable incident rate at the PAMC continues to track significantly and consistently below the national average for underground bituminous coal mines."
Pennsylvania Mining Complex Review and Outlook
PAMC Sales and Marketing
Our marketing team sold 5.9 million tons of coal during the second quarter of 2021 at an average revenue per ton of
In the domestic market, we continued to see further improvement in the commodity pricing environment during the second quarter of 2021. The average PJM West day-ahead power price and average Henry Hub natural gas spot price ended 2Q21 improved by
On the export front, seaborne thermal coal markets have remained very strong throughout 2021 thus far. API2 spot prices continued to rise in the second quarter of 2021 and ended 2Q21 improved by
Operations Summary
During the second quarter of 2021, we consistently ran four longwalls, but as previously announced, multiple longwall moves in the quarter weighed on our production. Nonetheless, the PAMC produced 5.9 million tons in 2Q21, a significant improvement compared to 2.4 million tons in the year-ago quarter. This improvement compared to the prior year was due to the increased demand for our product, as the COVID-related demand decline for our product hit its lowest point in 2Q20.
CEIX's total costs and expenses during the second quarter of 2021 were
Three Months Ended | Six Months Ended | ||||||||||||||||
June 30, | June 30, | June 30, | June 30, | ||||||||||||||
Total Revenue | thousands | $ | 287,159 | $ | 162,561 | $ | 629,310 | $ | 453,817 | ||||||||
Total Costs and Expenses | thousands | $ | 291,880 | $ | 191,307 | $ | 602,442 | $ | 478,180 | ||||||||
Total Coal Revenue | thousands | $ | 259,832 | $ | 102,313 | $ | 545,367 | $ | 357,765 | ||||||||
Total Cash Cost of Coal Sold1 | thousands | $ | 164,196 | $ | 59,575 | $ | 331,062 | $ | 250,968 | ||||||||
Coal Production | million tons | 5.9 | 2.4 | 12.9 | 8.4 | ||||||||||||
Coal Sales | million tons | 5.9 | 2.3 | 12.7 | 8.2 | ||||||||||||
Average Revenue per Ton Sold | per ton | $ | 44.02 | $ | 43.82 | $ | 42.60 | $ | 43.34 | ||||||||
Average Cash Cost of Coal Sold per Ton1 | per ton | $ | 28.02 | $ | 25.90 | $ | 26.09 | $ | 30.55 | ||||||||
Average Cash Margin per Ton Sold1 | per ton | $ | 16.00 | $ | 17.92 | $ | 16.51 | $ | 12.79 | ||||||||
CONSOL Marine Terminal Review
For the second quarter of 2021, throughput volumes at the CMT were 3.8 million tons, compared to 1.6 million tons in the year-ago period. Terminal revenues and CMT total costs and expenses were
Debt Repurchases Update and Other Liability Reductions
During the second quarter of 2021, CEIX made mandatory repayments of
Itmann Update
In early 2019, we announced the commencement of development of our Itmann Mine project, a low-vol metallurgical coal mining operation in Wyoming County, West Virginia. However, due to the unprecedented decline in both the demand for our product and our earnings because of the COVID-19 pandemic in 2020, we made the capital allocation decision to pull back spending on this project in order to focus our discretionary capital towards repurchasing our open market second lien notes, which were trading well below par value at that time. We are pleased to announce that we are fully dedicated to moving forward with this project and have committed to relocating a state-of-the-art preparation plant to the Itmann project site. This decision allows us to essentially double the capacity of the preparation plant versus the initial project plan in order to create additional growth opportunity and higher revenue potential by adding additional third-party annual processing capacity of 750 thousand to 1 million product tons, which will add a slight increase to the overall project cost. It also reduces procurement risk by insulating the project from long equipment lead times and recent increases in prices for steel and other materials. We view the Itmann Mine as the next phase of our strategy, which focuses on targeted growth and diversification as an additional avenue to increase value for our shareholders. This project is strategically important as it will diversify our portfolio by adding a new metallurgical coal product stream to the mix, and it aligns well with our current operations by being low cost, high margin and high quality.
The following are our current expectations relating to the Itmann Mine:
- 900+ thousand tons per year of high-quality, low-vol coking coal production from the Itmann Mine at full run rate.
- Anticipated mine life of 20+ years.
- Annual cash cost of coal sold per ton2 of
$65 -$70 , once steady-state production is achieved. - Full production is expected in 12-18 months, upon the completion of the new preparation plant.
- Remaining capital expenditures (including loss on development) of
$65 -$70 million to complete the project (in addition to the$24.0 million spent inception-to-date).
Hedging Update
Given the ongoing strength in export coal pricing, we initiated a targeted commodity price hedging strategy during the second quarter of 2021. Since then, we have layered in 2.0 million metric tons of commodity derivative contracts in the API2 market for calendar year 2022 at a weighted average API2 price of
Tax-Exempt Solid Waste Disposal Revenue Bonds
At the start of the second quarter of 2021, CEIX successfully closed its
2021 Guidance and Outlook
Based on our current contracted position, estimated prices and production plans, we are providing the following updated financial and operating performance guidance for 2021:
- 2021 targeted coal sales volume of 23.5-25.0 million tons
- 24.6 million tons contracted at an average revenue per ton of
$44.02 /ton, assuming PJM West power forwards of$34.75 /MWh (priced as of July 1, 2021 for 2H21) - Average cash cost of coal sold per ton2 expectation of
$27.00 -$28.00 /ton - Capital expenditures of
$160 -$180 million including the Itmann project
Second Quarter Earnings Conference Call
A conference call and webcast, during which management will discuss the second quarter 2021 financial and operational results, is scheduled for August 3, 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-Q with the Securities and Exchange Commission (SEC) reporting our results for the quarter ended June 30, 2021 on August 3, 2021. 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", "Net Leverage Ratio", "CONSOL Marine Terminal Adjusted EBITDA", "CMT Operating Cash Costs", "Total Cash Cost of Coal Sold" and "average unit cost per ton" 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 Cash Cost of Coal Sold per Ton guidance for the Itmann Project and 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 Cash Flows
The following table presents the condensed consolidated statements of cash flows for the three months ended June 30, 2021 and 2020 (in thousands):
Three Months Ended June 30, | ||||||||
2021 | 2020 | |||||||
Cash Flows from Operating Activities: | (Unaudited) | (Unaudited) | ||||||
Net Income (Loss) | $ | 4,172 | $ | (21,063) | ||||
Adjustments to Reconcile Net Income (Loss) to Net Cash Provided by (Used in) Operating Activities: | ||||||||
Depreciation, Depletion and Amortization | 52,199 | 46,155 | ||||||
Other Non-Cash Adjustments to Net Income | 12,605 | (10,803) | ||||||
Changes in Working Capital | 25,633 | (19,009) | ||||||
Net Cash Provided by (Used in) Operating Activities | 94,609 | (4,720) | ||||||
Cash Flows from Investing Activities: | ||||||||
Capital Expenditures | (43,655) | (19,269) | ||||||
Proceeds from Sales of Assets | 3,430 | 689 | ||||||
Net Cash Used in Investing Activities | (40,225) | (18,580) | ||||||
Cash Flows from Financing Activities: | ||||||||
Net Payments on Long-Term Debt, Including Fees | (20,428) | (14,141) | ||||||
Proceeds from Long-Term Debt | 75,000 | — | ||||||
Other Financing Activities | (230) | (8,359) | ||||||
Net Cash Provided by (Used in) Financing Activities | 54,342 | (22,500) | ||||||
Net Increase (Decrease) in Cash and Cash Equivalents and Restricted Cash | 108,726 | (45,800) | ||||||
Cash and Cash Equivalents and Restricted Cash at Beginning of Period | 91,477 | 78,827 | ||||||
Cash and Cash Equivalents and Restricted Cash at End of Period | $ | 200,203 | $ | 33,027 | ||||
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. Cost of coal sold excludes 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, cash cost of coal sold and average cash cost of coal sold per ton to total costs and expenses, 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 June 30, | Six Months Ended June 30, | |||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||
Total Costs and Expenses | $ | 291,880 | $ | 191,307 | $ | 602,442 | $ | 478,180 | ||||||||
Less: Freight Expense | (26,010) | (3,085) | (53,023) | (6,232) | ||||||||||||
Less: Selling, General and Administrative Costs | (22,542) | (10,939) | (46,506) | (28,609) | ||||||||||||
Less: Gain on Debt Extinguishment | 106 | — | 789 | 16,833 | ||||||||||||
Less: Interest Expense, net | (16,187) | (14,722) | (31,448) | (30,393) | ||||||||||||
Less: Other Costs (Non-Production) | (10,852) | (56,831) | (29,096) | (77,713) | ||||||||||||
Less: Depreciation, Depletion and Amortization (Non-Production) | (5,034) | (16,521) | (12,918) | (25,884) | ||||||||||||
Cost of Coal Sold | $ | 211,361 | $ | 89,209 | $ | 430,240 | $ | 326,182 | ||||||||
Less: Depreciation, Depletion and Amortization (Production) | (47,165) | (29,634) | (99,178) | (75,214) | ||||||||||||
Cash Cost of Coal Sold | $ | 164,196 | $ | 59,575 | $ | 331,062 | $ | 250,968 | ||||||||
Total Tons Sold (in millions) | 5.9 | 2.3 | 12.7 | 8.2 | ||||||||||||
Average Cost of Coal Sold per Ton | $ | 36.00 | $ | 38.32 | $ | 33.76 | $ | 39.55 | ||||||||
Less: Depreciation, Depletion and Amortization Costs per Ton Sold | 7.98 | 12.42 | 7.67 | 9.00 | ||||||||||||
Average Cash Cost of Coal Sold per Ton | $ | 28.02 | $ | 25.90 | $ | 26.09 | $ | 30.55 | ||||||||
We evaluate our average margin per ton sold and average cash margin per ton sold on a per-ton basis. 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 June 30, | Six Months Ended June 30, | |||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||
Total Coal Revenue (PAMC Segment) | $ | 258,482 | $ | 102,026 | $ | 542,948 | $ | 357,478 | ||||||||
Operating and Other Costs | 175,048 | 116,406 | 360,158 | 328,681 | ||||||||||||
Less: Other Costs (Non-Production) | (10,852) | (56,831) | (29,096) | (77,713) | ||||||||||||
Total Cash Cost of Coal Sold | 164,196 | 59,575 | 331,062 | 250,968 | ||||||||||||
Add: Depreciation, Depletion and Amortization | 52,199 | 46,155 | 112,096 | 101,098 | ||||||||||||
Less: Depreciation, Depletion and Amortization (Non-Production) | (5,034) | (16,521) | (12,918) | (25,884) | ||||||||||||
Total Cost of Coal Sold | $ | 211,361 | $ | 89,209 | $ | 430,240 | $ | 326,182 | ||||||||
Total Tons Sold (in millions) | 5.9 | 2.3 | 12.7 | 8.2 | ||||||||||||
Average Revenue per Ton Sold | $ | 44.02 | $ | 43.82 | $ | 42.60 | $ | 43.34 | ||||||||
Average Cash Cost of Coal Sold per Ton | 28.02 | 25.90 | 26.09 | 30.55 | ||||||||||||
Depreciation, Depletion and Amortization Costs per Ton Sold | 7.98 | 12.42 | 7.67 | 9.00 | ||||||||||||
Average Cost of Coal Sold per Ton | 36.00 | 38.32 | 33.76 | 39.55 | ||||||||||||
Average Margin per Ton Sold | 8.02 | 5.50 | 8.84 | 3.79 | ||||||||||||
Add: Depreciation, Depletion and Amortization Costs per Ton Sold | 7.98 | 12.42 | 7.67 | 9.00 | ||||||||||||
Average Cash Margin per Ton Sold | $ | 16.00 | $ | 17.92 | $ | 16.51 | $ | 12.79 | ||||||||
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 June 30, | ||||||||
2021 | 2020 | |||||||
Total Costs and Expenses | $ | 291,880 | $ | 191,307 | ||||
Less: Freight Expense | (26,010) | (3,085) | ||||||
Less: Selling, General and Administrative Costs | (22,542) | (10,939) | ||||||
Less: Gain on Debt Extinguishment | 106 | — | ||||||
Less: Interest Expense, net | (16,187) | (14,722) | ||||||
Less: Other Costs (Non-Throughput) | (169,781) | (112,602) | ||||||
Less: Depreciation, Depletion and Amortization (Non-Throughput) | (50,999) | (44,895) | ||||||
CMT Operating Costs | $ | 6,467 | $ | 5,064 | ||||
Less: Depreciation, Depletion and Amortization (Throughput) | (1,200) | (1,260) | ||||||
CMT Operating Cash Costs | $ | 5,267 | $ | 3,804 | ||||
We define average unit cost per ton as the cash cost of coal sold including idle mine costs incurred associated with the COVID-19 pandemic less depreciation, depletion and amortization costs related to the Pennsylvania Mining Operation assets divided by the total tons of coal sold from the Pennsylvania Mining Operation assets. These costs exclude any indirect costs, such as selling, general and administrative costs, freight expenses, interest expenses, depreciation, depletion and amortization on non-production assets and other costs not directly attributable to the production of coal.
The following table presents a reconciliation of average unit cost per ton to total costs and expenses, the most directly comparable GAAP financial measure, on a historical basis, for each of the periods presented (in thousands, except per ton information).
Three Months Ended June 30, | ||||||||
2021 | 2020 | |||||||
Total Costs and Expenses | $ | 291,880 | $ | 191,307 | ||||
Less: Freight Expense | (26,010) | (3,085) | ||||||
Less: Selling, General and Administrative Costs | (22,542) | (10,939) | ||||||
Less: Gain on Debt Extinguishment | 106 | — | ||||||
Less: Interest Expense, net | (16,187) | (14,722) | ||||||
Less: Other Costs (Non-Production) | (10,852) | (56,831) | ||||||
Less: Depreciation, Depletion and Amortization (Non-Production) | (5,034) | (16,521) | ||||||
Cost of Coal Sold | $ | 211,361 | $ | 89,209 | ||||
Less: Depreciation, Depletion and Amortization (Production) | (47,165) | (29,634) | ||||||
Cash Cost of Coal Sold | $ | 164,196 | $ | 59,575 | ||||
Add: Idle Mine Costs | — | 31,847 | ||||||
Total Unit Costs | $ | 164,196 | $ | 91,422 | ||||
Total Tons Sold (in millions) | 5.9 | 2.3 | ||||||
Average Cost of Coal Sold per Ton | $ | 36.00 | $ | 38.32 | ||||
Less: Depreciation, Depletion and Amortization Costs per Ton Sold | 7.98 | 12.42 | ||||||
Average Cash Cost of Coal Sold per Ton | $ | 28.02 | $ | 25.90 | ||||
Add: Idle Mine Costs per Ton | — | 13.68 | ||||||
Average Unit Cost per Ton | $ | 28.02 | $ | 39.58 | ||||
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 stock-based compensation and unrealized loss on commodity derivative instruments. 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 June 30, 2021 | ||||||||||||||||
PA Mining | CONSOL | Other | Total | |||||||||||||
Net Income (Loss) | $ | 6,166 | $ | 8,181 | $ | (10,175) | $ | 4,172 | ||||||||
Add: Income Tax Benefit | — | — | (8,893) | (8,893) | ||||||||||||
Add: Interest Expense, net | 478 | 1,536 | 14,173 | 16,187 | ||||||||||||
Less: Interest Income | (36) | — | (775) | (811) | ||||||||||||
Earnings (Loss) Before Interest & Taxes (EBIT) | 6,608 | 9,717 | (5,670) | 10,655 | ||||||||||||
Add: Depreciation, Depletion & Amortization | 50,169 | 1,200 | 830 | 52,199 | ||||||||||||
Earnings (Loss) Before Interest, Taxes and DD&A (EBITDA) | $ | 56,777 | $ | 10,917 | $ | (4,840) | $ | 62,854 | ||||||||
Adjustments: | ||||||||||||||||
Stock-Based Compensation | $ | 1,053 | $ | 48 | $ | 109 | $ | 1,210 | ||||||||
Gain on Debt Extinguishment | — | — | (106) | (106) | ||||||||||||
Pension Settlement | — | — | 22 | 22 | ||||||||||||
Unrealized Loss on Commodity Derivative Instruments | 20,437 | — | — | 20,437 | ||||||||||||
Total Pre-tax Adjustments | 21,490 | 48 | 25 | 21,563 | ||||||||||||
Adjusted EBITDA | $ | 78,267 | $ | 10,965 | $ | (4,815) | $ | 84,417 | ||||||||
Three Months Ended June 30, 2020 | ||||||||||||||||
PA Mining | CONSOL | Other | Total | |||||||||||||
Net (Loss) Income | $ | (22,350) | $ | 7,750 | $ | (6,463) | $ | (21,063) | ||||||||
Add: Income Tax Benefit | — | — | (7,683) | (7,683) | ||||||||||||
Add: Interest Expense, net | 527 | 1,542 | 12,653 | 14,722 | ||||||||||||
Less: Interest Income | — | — | (122) | (122) | ||||||||||||
(Loss) Earnings Before Interest & Taxes (EBIT) | (21,823) | 9,292 | (1,615) | (14,146) | ||||||||||||
Add: Depreciation, Depletion & Amortization | 46,793 | 1,260 | (1,898) | 46,155 | ||||||||||||
Earnings (Loss) Before Interest, Taxes and DD&A (EBITDA) | $ | 24,970 | $ | 10,552 | $ | (3,513) | $ | 32,009 | ||||||||
Adjustments: | ||||||||||||||||
Stock/Unit-Based Compensation | $ | 1,912 | $ | 108 | $ | 216 | $ | 2,236 | ||||||||
Total Pre-tax Adjustments | 1,912 | 108 | 216 | 2,236 | ||||||||||||
Adjusted EBITDA | $ | 26,882 | $ | 10,660 | $ | (3,297) | $ | 34,245 | ||||||||
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 stock-based compensation, unrealized loss on commodity derivative instruments, amortization of debt issuance costs and capitalized interest.
The following table presents a reconciliation of net leverage ratio (in thousands).
Twelve Months | Twelve Months | |||||||
June 30, 2021 | June 30, 2020 | |||||||
Net Income | $ | 35,950 | $ | 5,837 | ||||
Plus: | ||||||||
Interest Expense, net | 62,241 | 62,215 | ||||||
Depreciation, Depletion and Amortization | 221,758 | 211,320 | ||||||
Income Taxes | 6,039 | 1,422 | ||||||
Stock/Unit-Based Compensation | 7,048 | 9,635 | ||||||
Gain on Debt Extinguishment | (5,308) | (17,021) | ||||||
Unrealized Loss on Commodity Derivative Instruments | 20,437 | — | ||||||
CCR Adjusted EBITDA per Credit Agreement | — | (66,169) | ||||||
Cash Distributions from CONSOL Coal Resources LP | — | 8,254 | ||||||
Cash Payments for Legacy Employee Liabilities, Net of Non-Cash Expense | (26,107) | (18,609) | ||||||
Other Adjustments to Net Income | 2,118 | 6,333 | ||||||
Consolidated EBITDA per Credit Agreement | $ | 324,176 | $ | 203,217 | ||||
Consolidated First Lien Debt | $ | 369,367 | $ | 399,662 | ||||
Senior Secured Second Lien Notes | 151,957 | 178,452 | ||||||
MEDCO Revenue Bonds | 102,865 | 102,865 | ||||||
PEDFA Bonds | 75,000 | — | ||||||
Advance Royalty Commitments | 2,185 | 1,895 | ||||||
Consolidated Indebtedness per Credit Agreement | 701,374 | 682,874 | ||||||
Less: | ||||||||
Advance Royalty Commitments | 2,185 | 1,895 | ||||||
Cash on Hand | 146,667 | 32,925 | ||||||
Consolidated Net Indebtedness per Credit Agreement | $ | 552,522 | $ | 648,054 | ||||
Net Leverage Ratio (Net Indebtedness/EBITDA) | 1.70 | 3.19 | ||||||
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 (used in) operations, the most directly comparable GAAP financial measure, on a historical basis, for each of the periods indicated (in thousands).
Three Months Ended | ||||||||
Organic Free Cash Flow | June 30, 2021 | June 30, 2020 | ||||||
Net Cash Provided by (Used in) Operations | $ | 94,609 | $ | (4,720) | ||||
Capital Expenditures | (43,655) | (19,269) | ||||||
Organic Free Cash Flow | $ | 50,954 | $ | (23,989) | ||||
Distributions to Noncontrolling Interest | — | — | ||||||
Organic Free Cash Flow Net to CEIX Shareholders | $ | 50,954 | $ | (23,989) | ||||
Three Months | Three Months | |||||||
Free Cash Flow | June 30, 2021 | June 30, 2020 | ||||||
Net Cash Provided by (Used in) Operations | $ | 94,609 | $ | (4,720) | ||||
Capital Expenditures | (43,655) | (19,269) | ||||||
Proceeds from Sales of Assets | 3,430 | 689 | ||||||
Free Cash Flow | $ | 54,384 | $ | (23,300) | ||||
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 our expectations with respect to the Itmann Mine or any other 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.
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