CONSOL Energy Announces Results for the Third Quarter 2022 and Announces Dividend of $1.05/Share
CONSOL Energy reported a GAAP net income of $152.1 million for Q3 2022 and adjusted EBITDA of $180.9 million. The company declared a dividend of $1.05/share, payable on November 23, 2022. It also achieved a free cash flow of $107.1 million and made significant debt repayments totaling $56.3 million. Coal revenue reached $472.6 million, with a notable increase in average realized coal revenue per ton sold at $72.83. The Itmann preparation plant began operations in October, enhancing production capacity.
- GAAP net income of $152.1 million in Q3 2022.
- Declared a dividend of $1.05/share, amounting to approximately $37 million.
- Free cash flow generation of $107.1 million despite operational challenges.
- Total coal revenue increased to $472.6 million, reflecting strong market demand.
- Average realized coal revenue per ton sold improved to $72.83, up from $47.46 year-over-year.
- Successful commissioning of Itmann preparation plant, enhancing future production.
- Maintained zero employee recordable incidents at multiple facilities, indicating strong safety performance.
- Operational issues limited coal production, affecting output targets.
- Total costs increased to $370.1 million, driven by inflation and maintenance challenges.
- Average cash cost of coal sold per ton rose to $39.77 due to multiple factors, indicating increased expenses.
CANONSBURG, Pa., Nov. 1, 2022 /PRNewswire/ -- Today, CONSOL Energy Inc. (NYSE: CEIX) reported financial and operating results for the period ended September 30, 2022.
Third Quarter 2022 Highlights Include:
- GAAP net income of
$152.1 million ; - Quarterly adjusted EBITDA1 of
$180.9 million ; - Announces dividend of
$1.05 /share, based on 3Q22 results, payable on November 23, 2022; - Itmann preparation plant commissioned in late September, with first train shipped on October 12th;
- Net cash provided by operating activities of
$153.1 million ; - Quarterly free cash flow1 of
$107.1 million ; - 2023 and 2024 contracted position improved to 21.8 million tons and 8.8 million tons, respectively; and
- Debt repayments of
$56.3 million during 3Q22, including$50.0 million of Term Loan B.
Management Comments
"During the third quarter of 2022, we generated
"On the safety front, our Enlow Fork Mine, Harvey Mine, Bailey Preparation Plant and CONSOL Marine Terminal (CMT) each had ZERO employee recordable incidents during the third quarter of 2022. The Bailey Preparation Plant and CMT have maintained ZERO employee recordable incidents thus far in 2022, while the Enlow Fork Mine recently completed its second consecutive quarter at that mark. Our 3Q22 total recordable incident rate of 0.99 at the Pennsylvania Mining Complex continued to track significantly below the national average for underground bituminous coal mines."
Pennsylvania Mining Complex (PAMC) Review and Outlook
PAMC Sales and Marketing
Our sales team sold 5.3 million tons of PAMC coal during the third quarter of 2022, generating coal revenue of
In the domestic market, the pricing environment remained strong during the third quarter of 2022. Henry Hub natural gas spot prices averaged
On the export front, seaborne thermal coal markets remained robust in the third quarter of 2022. API2 spot prices continued their upward push, averaging
During 3Q22, we strengthened our forward contract book at the PAMC, opportunistically securing an additional 6.0 million tons for delivery through 2026. As such, we have increased our 2023 and 2024 sold positions to 21.8 million tons and 8.8 million tons, respectively.
Operations Summary
During the third quarter of 2022, operational issues such as roof falls and equipment breakdowns, along with a planned maintenance shutdown and longwall move, limited our production. The PAMC produced 5.3 million tons in 3Q22, compared to 5.3 million tons in the year-ago quarter, which also saw the PAMC deal with multiple operational and geological challenges. However, these issues are behind us, and we expect to produce at a more normalized run rate in the fourth quarter. The fifth longwall development remains on track, and we expect it to be operational in December 2022.
CEIX's total costs and expenses during the third quarter of 2022 were
Three Months Ended | Nine Months Ended | ||||||||||||||||
September | September | September | September | ||||||||||||||
Total Coal Revenue | thousands | $ | 472,608 | $ | 258,560 | $ | 1,481,668 | $ | 803,927 | ||||||||
Settlements of Commodity Derivatives | thousands | $ | (81,311) | $ | — | $ | (241,486) | $ | — | ||||||||
Total Realized Coal Revenue1 | thousands | $ | 391,297 | $ | 258,560 | $ | 1,240,182 | $ | 803,927 | ||||||||
Total Costs and Expenses | thousands | $ | 370,103 | $ | 303,059 | $ | 1,131,709 | $ | 905,501 | ||||||||
Total Cash Cost of Coal Sold1 | thousands | $ | 209,988 | $ | 166,471 | $ | 618,415 | $ | 497,533 | ||||||||
Coal Production | million tons | 5.3 | 5.3 | 17.9 | 18.2 | ||||||||||||
Coal Sales | million tons | 5.3 | 5.4 | 17.9 | 18.1 | ||||||||||||
Average Realized Coal Revenue per Ton Sold1 | per ton | $ | 72.83 | $ | 47.46 | $ | 67.81 | $ | 44.05 | ||||||||
Average Cash Cost of Coal Sold per Ton1 | per ton | $ | 39.77 | $ | 30.64 | $ | 34.46 | $ | 27.45 | ||||||||
Average Cash Margin per Ton Sold1 | per ton | $ | 33.06 | $ | 16.82 | $ | 33.35 | $ | 16.60 | ||||||||
CONSOL Marine Terminal Review
For the third quarter of 2022, throughput volumes at the CMT were 2.7 million tons, compared to 2.8 million tons in the year-ago period. Terminal revenues and CMT total costs and expenses were
Itmann Update
Our Itmann project achieved a major milestone during the third quarter of 2022 with the commissioning of the Itmann preparation plant and completion of rail infrastructure construction. As such, the prep plant began processing coal in late September, and the first train of Itmann coal was loaded and shipped on October 12th. Due to supply chain bottlenecks that have delayed delivery of certain equipment for the third continuous miner section, we now expect to ramp up the third and final production section during the fourth quarter and be prepared for full-capacity operation throughout 2023. We have adjusted our production guidance in 2022 accordingly to account for these equipment deliveries delays, coupled with the preparation plant starting later in the quarter than internally expected. We now expect to produce 200-300 thousand tons for the year of 2022, which mostly represents development mining. We continue to grow staffing levels in conjunction with our production ramp-up plan. On the marketing front, to date our product has been well received. Over the next two quarters, we will continue to focus on securing new business with several strategic customers in the domestic and export markets.
Shareholder Returns Update
Today, at the discretion of the board of directors, CEIX announced a dividend of
Debt Repurchases Update
In the near term, we remain committed to allocating the majority of our free cash flow toward debt repayment with the goal of aggressively reducing our outstanding gross debt. During the third quarter of 2022, we made repayments of
2022 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 2022:
- 2022 targeted PAMC coal sales volume of 23.75-24.50 million tons
- PAMC average realized coal revenue per ton sold2 expectation of
$67.00 -$69.00 - PAMC average cash cost of coal sold per ton2 expectation of
$33.00 -$35.00 - Capital expenditures (including Itmann development):
$160 -$185 million
Third Quarter Earnings Conference Call
A conference call and webcast, during which management will discuss the third quarter 2022 financial and operational results, is scheduled for November 1, 2022 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 period ended September 30, 2022 on November 1, 2022. 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", "CONSOL Marine Terminal Adjusted EBITDA", "CMT Operating Cash Costs", "Total Realized Coal Revenue" 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 Average Realized Coal Revenue per Ton Sold and Average Cash Cost of Coal Sold per Ton guidance, 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 and developed a new metallurgical coal mine, the Itmann Mine, 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 ~612 million reserve tons associated with the Pennsylvania Mining Complex and the ~21 million reserve tons associated with the Itmann Mine, the company also controls approximately 1.4 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.
Contacts:
Investor:
Nathan Tucker, (724) 416-8336
nathantucker@consolenergy.com
Media:
Erica Fisher, (724) 416-8292
ericafisher@consolenergy.com
Condensed Consolidated Statements of Cash Flows
The following table presents the condensed consolidated statements of cash flows for the three and nine months ended September 30, 2022 and 2021 (in thousands):
Three Months Ended September | ||||||||
2022 | 2021 | |||||||
Cash Flows from Operating Activities: | (Unaudited) | (Unaudited) | ||||||
Net Income (Loss) | $ | 152,121 | $ | (113,789) | ||||
Adjustments to Reconcile Net Income (Loss) to Net Cash Provided by Operating | ||||||||
Depreciation, Depletion and Amortization | 54,773 | 55,977 | ||||||
Other Non-Cash Adjustments to Net Income | 2,498 | (35,923) | ||||||
Changes in Working Capital | (56,264) | 174,273 | ||||||
Net Cash Provided by Operating Activities | 153,128 | 80,538 | ||||||
Cash Flows from Investing Activities: | ||||||||
Capital Expenditures | (58,395) | (45,863) | ||||||
Proceeds from Sales of Assets | 12,356 | 135 | ||||||
Other Investing Activity | (150) | (156) | ||||||
Net Cash Used in Investing Activities | (46,189) | (45,884) | ||||||
Cash Flows from Financing Activities: | ||||||||
Net Payments on Long-Term Debt, Including Fees | (56,320) | (22,550) | ||||||
Dividends | (34,871) | — | ||||||
Other Financing Activities | (7,759) | (1) | ||||||
Net Cash Used in Financing Activities | (98,950) | (22,551) | ||||||
Net Increase in Cash and Cash Equivalents and Restricted Cash | 7,989 | 12,103 | ||||||
Cash and Cash Equivalents and Restricted Cash at Beginning of Period | 312,659 | 200,203 | ||||||
Cash and Cash Equivalents and Restricted Cash at End of Period | $ | 320,648 | $ | 212,306 | ||||
Reconciliation of Non-GAAP Financial Measures
We evaluate our cost of coal sold and cash cost of coal sold on an aggregate basis by segment, and our average cash cost of coal sold per ton on a per-ton 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 general and administrative costs, freight expenses, (loss) gain on debt extinguishment, 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. We define average cash cost of coal sold per ton as cash cost of coal sold divided by tons sold. The GAAP measure most directly comparable to cost of coal sold, cash cost of coal sold and average cash cost of coal sold per ton is total costs and expenses.
The following table presents a reconciliation for the PAMC segment 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 | Nine Months Ended | |||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||
Total Costs and Expenses | $ | 370,103 | $ | 303,059 | $ | 1,131,709 | $ | 905,501 | ||||
Less: Freight Expense | (42,619) | (19,348) | (131,419) | (72,371) | ||||||||
Less: General and Administrative Costs | (30,406) | (22,606) | (94,919) | (68,631) | ||||||||
Less: (Loss) Gain on Debt Extinguishment | (674) | (132) | (4,361) | 657 | ||||||||
Less: Interest Expense, net | (11,962) | (16,045) | (39,435) | (47,493) | ||||||||
Less: Other Costs (Non-Production and non-PAMC) | (19,681) | (22,480) | (74,553) | (52,057) | ||||||||
Less: Depreciation, Depletion and Amortization (Non-Production and | (9,501) | (7,976) | (27,854) | (20,894) | ||||||||
Cost of Coal Sold | $ | 255,260 | $ | 214,472 | $ | 759,168 | $ | 644,712 | ||||
Less: Depreciation, Depletion and Amortization (Production) | (45,272) | (48,001) | (140,753) | (147,179) | ||||||||
Cash Cost of Coal Sold | $ | 209,988 | $ | 166,471 | $ | 618,415 | $ | 497,533 | ||||
Total Tons Sold (in millions) | 5.3 | 5.4 | 17.9 | 18.1 | ||||||||
Average Cost of Coal Sold per Ton | $ | 48.37 | $ | 39.71 | $ | 42.34 | $ | 35.53 | ||||
Less: Depreciation, Depletion and Amortization Costs per Ton Sold | 8.60 | 9.07 | 7.88 | 8.08 | ||||||||
Average Cash Cost of Coal Sold per Ton | $ | 39.77 | $ | 30.64 | $ | 34.46 | $ | 27.45 | ||||
We evaluate our average realized coal revenue per ton sold, average margin per ton sold and average cash margin per ton sold on a per-ton basis. We define average realized coal revenue per ton sold as total coal revenue, net of settlements of commodity derivatives divided by tons sold. We define average margin per ton sold as average realized coal revenue per ton sold, net of average cost of coal sold per ton. We define average cash margin per ton sold as average realized coal revenue per ton sold, net of average cash cost of coal sold per ton. The GAAP measure most directly comparable to average realized coal revenue per ton sold, average margin per ton sold and average cash margin per ton sold is total coal revenue.
The following table presents a reconciliation for the PAMC segment of average realized coal revenue per ton sold, 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 | Nine Months Ended | |||||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||
Total Coal Revenue (PAMC Segment) | $ | 465,693 | $ | 256,326 | $ | 1,457,595 | $ | 799,274 | ||||||||
Add: Settlements of Commodity Derivatives | (81,311) | — | (241,486) | — | ||||||||||||
Total Realized Coal Revenue | $ | 384,382 | $ | 256,326 | $ | 1,216,109 | $ | 799,274 | ||||||||
Operating and Other Costs | 229,669 | 188,951 | 692,968 | 549,590 | ||||||||||||
Less: Other Costs (Non-Production and non-PAMC) | (19,681) | (22,480) | (74,553) | (52,057) | ||||||||||||
Total Cash Cost of Coal Sold | 209,988 | 166,471 | 618,415 | 497,533 | ||||||||||||
Add: Depreciation, Depletion and Amortization | 54,773 | 55,977 | 168,607 | 168,073 | ||||||||||||
Less: Depreciation, Depletion and Amortization (Non-Production | (9,501) | (7,976) | (27,854) | (20,894) | ||||||||||||
Total Cost of Coal Sold | $ | 255,260 | $ | 214,472 | $ | 759,168 | $ | 644,712 | ||||||||
Total Tons Sold (in millions) | 5.3 | 5.4 | 17.9 | 18.1 | ||||||||||||
Average Realized Coal Revenue per Ton Sold | $ | 72.83 | $ | 47.46 | $ | 67.81 | $ | 44.05 | ||||||||
Average Cash Cost of Coal Sold per Ton | 39.77 | 30.64 | 34.46 | 27.45 | ||||||||||||
Depreciation, Depletion and Amortization Costs per Ton Sold | 8.60 | 9.07 | 7.88 | 8.08 | ||||||||||||
Average Cost of Coal Sold per Ton | 48.37 | 39.71 | 42.34 | 35.53 | ||||||||||||
Average Margin per Ton Sold | 24.46 | 7.75 | 25.47 | 8.52 | ||||||||||||
Add: Depreciation, Depletion and Amortization Costs per Ton Sold | 8.60 | 9.07 | 7.88 | 8.08 | ||||||||||||
Average Cash Margin per Ton Sold | $ | 33.06 | $ | 16.82 | $ | 33.35 | $ | 16.60 | ||||||||
We define CMT operating costs as operating and other costs related to throughput tons. CMT operating costs exclude any indirect costs, such as freight expense, general and administrative costs, loss on debt extinguishment, depreciation, depletion and amortization of non-throughput assets, 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 on throughput assets. 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 September | ||||||||
2022 | 2021 | |||||||
Total Costs and Expenses | $ | 370,103 | $ | 303,059 | ||||
Less: Freight Expense | (42,619) | (19,348) | ||||||
Less: General and Administrative Costs | (30,406) | (22,606) | ||||||
Less: Loss on Debt Extinguishment | (674) | (132) | ||||||
Less: Interest Expense, net | (11,962) | (16,045) | ||||||
Less: Other Costs (Non-Throughput) | (222,941) | (183,106) | ||||||
Less: Depreciation, Depletion and Amortization (Non-Throughput) | (53,749) | (54,775) | ||||||
CMT Operating Costs | $ | 7,752 | $ | 7,047 | ||||
Less: Depreciation, Depletion and Amortization (Throughput) | (1,024) | (1,202) | ||||||
CMT Operating Cash Costs | $ | 6,728 | $ | 5,845 | ||||
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 fair value adjustments of commodity derivative instruments. The GAAP measure most directly comparable to adjusted EBITDA is net income (loss).
The following tables present a reconciliation of adjusted EBITDA to net income (loss), the most directly comparable GAAP financial measure, on a historical basis, for each of the periods indicated (in thousands).
Three Months Ended September 30, 2022 | ||||||||||||||||
PAMC | CONSOL | Other | Total Company | |||||||||||||
Net Income (Loss) | $ | 210,907 | $ | 5,602 | $ | (64,388) | $ | 152,121 | ||||||||
Add: Income Tax Expense | — | — | 39,414 | 39,414 | ||||||||||||
Add: Interest Expense, net | (52) | 1,528 | 10,486 | 11,962 | ||||||||||||
Less: Interest Income | (437) | — | (1,104) | (1,541) | ||||||||||||
Earnings (Loss) Before Interest & Taxes (EBIT) | 210,418 | 7,130 | (15,592) | 201,956 | ||||||||||||
Add: Depreciation, Depletion & Amortization | 49,316 | 1,149 | 4,308 | 54,773 | ||||||||||||
Earnings (Loss) Before Interest, Taxes and DD&A (EBITDA) | $ | 259,734 | $ | 8,279 | $ | (11,284) | $ | 256,729 | ||||||||
Adjustments: | ||||||||||||||||
Add: Stock-Based Compensation | $ | 1,028 | $ | 49 | $ | 147 | $ | 1,224 | ||||||||
Add: Loss on Debt Extinguishment | — | — | 674 | 674 | ||||||||||||
Add: Equity Affiliate Adjustments | — | — | 3,500 | 3,500 | ||||||||||||
Less: Fair Value Adjustment of Commodity Derivative Instruments | (81,246) | — | — | (81,246) | ||||||||||||
Total Pre-tax Adjustments | (80,218) | 49 | 4,321 | (75,848) | ||||||||||||
Adjusted EBITDA | $ | 179,516 | $ | 8,328 | $ | (6,963) | $ | 180,881 | ||||||||
Three Months Ended September 30, 2021 | ||||||||||||||||
PAMC | CONSOL | Other | Total | |||||||||||||
Net (Loss) Income | $ | (130,599) | $ | 4,506 | $ | 12,304 | $ | (113,789) | ||||||||
Less: Income Tax Benefit | — | — | (40,258) | (40,258) | ||||||||||||
Add: Interest Expense, net | 305 | 1,535 | 14,205 | 16,045 | ||||||||||||
Less: Interest Income | — | — | (737) | (737) | ||||||||||||
(Loss) Earnings Before Interest & Taxes (EBIT) | (130,294) | 6,041 | (14,486) | (138,739) | ||||||||||||
Add: Depreciation, Depletion & Amortization | 50,837 | 1,202 | 3,938 | 55,977 | ||||||||||||
(Loss) Earnings Before Interest, Taxes and DD&A (EBITDA) | $ | (79,457) | $ | 7,243 | $ | (10,548) | $ | (82,762) | ||||||||
Adjustments: | ||||||||||||||||
Add: Stock-Based Compensation | $ | 1,643 | $ | 76 | $ | 169 | $ | 1,888 | ||||||||
Add: Loss on Debt Extinguishment | — | — | 132 | 132 | ||||||||||||
Add: Fair Value Adjustment of Commodity Derivative Instruments | 147,306 | — | — | 147,306 | ||||||||||||
Total Pre-tax Adjustments | 148,949 | 76 | 301 | 149,326 | ||||||||||||
Adjusted EBITDA | $ | 69,492 | $ | 7,319 | $ | (10,247) | $ | 66,564 | ||||||||
We define net income (loss) after adjusting for the impact of fair value adjustments of commodity derivative instruments as net income (loss) adjusted for the impact of current period fair value adjustments related to commodity derivatives. The GAAP measure most directly comparable to net income (loss) after adjusting for the impact of fair value adjustments of commodity derivative instruments is net income (loss).
The following table presents a reconciliation of net income (loss) after adjusting for the impact of fair value adjustments of commodity derivative instruments to net income (loss), the most directly comparable GAAP financial measure, on a historical basis, for each of the periods indicated (in thousands).
Three Months Ended | Nine Months Ended | |||||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||
Net Income (Loss) | $ | 152,121 | $ | (113,789) | $ | 273,962 | $ | (83,213) | ||||||||
Fair Value Adjustment of Commodity Derivative Instruments | (81,246) | 147,306 | 15,085 | 167,743 | ||||||||||||
Effect of Income Taxes | 20,303 | (36,812) | (3,770) | (41,919) | ||||||||||||
Net Income (Loss) After Adjusting for the Impact of the Fair Value | $ | 91,178 | $ | (3,295) | $ | 285,277 | $ | 42,611 | ||||||||
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, fair value adjustments of 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 | |||||||
September 30, | September 30, | |||||||
Net Income (Loss) | $ | 391,285 | $ | (68,479) | ||||
Plus: | ||||||||
Interest Expense, net | 55,284 | 62,563 | ||||||
Depreciation, Depletion and Amortization | 225,117 | 222,776 | ||||||
Income Taxes | 104,378 | (40,137) | ||||||
Stock-Based Compensation | 8,719 | 6,724 | ||||||
Loss (Gain) on Debt Extinguishment | 4,361 | (4,098) | ||||||
Fair Value Adjustment of Commodity Derivative Instruments | (100,454) | 167,743 | ||||||
Cash Payments for Legacy Employee Liabilities, Net of Non-Cash Expense | (37,007) | (31,481) | ||||||
Other Adjustments to Net Income (Loss) | 235 | 245 | ||||||
Consolidated EBITDA per Credit Agreement | $ | 651,918 | $ | 315,856 | ||||
Consolidated First Lien Debt | $ | 150,485 | $ | 354,005 | ||||
Senior Secured Second Lien Notes | 124,107 | 149,107 | ||||||
MEDCO Revenue Bonds | 102,865 | 102,865 | ||||||
PEDFA Bonds | 75,000 | 75,000 | ||||||
Other Debt Arrangements | 1,136 | — | ||||||
Advance Royalty Commitments | 4,858 | 2,185 | ||||||
Consolidated Indebtedness per Credit Agreement | 458,451 | 683,162 | ||||||
Less: | ||||||||
Advance Royalty Commitments | 4,858 | 2,185 | ||||||
Cash on Hand | 268,853 | 161,981 | ||||||
Consolidated Net Indebtedness per Credit Agreement | $ | 184,740 | $ | 518,996 | ||||
Net Leverage Ratio (Net Indebtedness/EBITDA) | 0.28 | 1.64 | ||||||
Free cash flow is a non-GAAP financial measure. Management believes that this measure is 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 does 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 table presents a reconciliation of free cash flow to net cash provided by operations, the most directly comparable GAAP financial measure, on a historical basis, for each of the periods indicated (in thousands).
Three | Three | Nine | Nine | |||||||||||||
September | September | September | September | |||||||||||||
Net Cash Provided by Operations | $ | 153,128 | $ | 80,538 | $ | 499,686 | $ | 253,143 | ||||||||
Capital Expenditures | (58,395) | (45,863) | (134,456) | (103,318) | ||||||||||||
Proceeds from Sales of Assets | 12,356 | 135 | 19,774 | 12,053 | ||||||||||||
Free Cash Flow | $ | 107,089 | $ | 34,810 | $ | 385,004 | $ | 161,878 | ||||||||
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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