CONSOL Energy Announces Results for the Fourth Quarter and Full Year 2020

CANONSBURG, Pa., Feb. 9, 2021 /PRNewswire/ -- 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 ratio(1) of 2.5x as of December 31, 2020;
    --  Net cash provided by operating activities of $66.9 million; and
    --  Adjusted EBITDA(1) of $95.5 million and free cash flow(1) 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 EBITDA(1) of $261.5 million and free cash flow(1) 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,
                                                                       2020                   2019






     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 Sold(1)  
     per ton                         $
     27.49               $
     30.38



     Average Cash Margin per Ton Sold(1) 
     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 costs(1) 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 EBITDA(1) 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 EBITDA(1) 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 ton(2) 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
                                          December 31,                              December 31,



                                                                 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
                                                       December 31,                                                  December 31,



                                                     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,
                                               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,
                                                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,
                                             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
                                        Complex                                  Marine                                                           Company
                                                                              Terminal



                   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
                                        Complex                                  Marine                                                           Company
                                                                              Terminal



                   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
                                        Complex                                  Marine                                                           Company
                                                                              Terminal



                   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
                                        Complex                                  Marine                                                           Company
                                                                              Terminal



                   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
                                                                             Ended                              Ended


                                                                                   December 31,                       December 31,
                                                                                            2020                                2019




     
                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
                                           Months                           Months                             December               December
                                            Ended                           Ended                                         31, 2020               31, 2019
                                          December                        December
                                                   31, 2020                        31, 2019

    ---

                     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
                                           Months                           Months                             December               December
                                            Ended                           Ended                                         31, 2020               31, 2019
                                          December                        December
                                                   31, 2020                        31, 2019

    ---

                     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.