CEIX - Earnings call transcript Q2 2024 | Core Natural Resources, Inc.

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Operator

Good morning, ladies and gentlemen, and welcome to the CONSOL Energy CEIX Second Quarter 2024 Earnings Conference Call. [Operator Instructions]. This call is being recorded on Thursday, August 8, 2024. I would now like to turn the conference over to Nathan Tucker. Please go ahead.

Nathan Tucker

thank joining and everyone, morning, you us. for Good Quarter Conference Call. to CONSOL Earnings Second Energy's Welcome XXXX Any or we Act Securities subject SEC the to our forward-looking meaning events release of filings risks future statements press XXE forward-looking certain XXXX. comments and we of are of statements in Section Exchange which and have considered in about outlined our make within are the of events obligations of updating forward-looking or We otherwise. not future undertake any do statements any for

certain discussing reconciled which be the We financial financial measures, and website. and also will Form second is to defined are non-GAAP on our release to measures, X-K, which posted SEC on furnished GAAP comparable also quarter our XXXX press

with this the Additionally, SEC quarter filed we XX-Q XXXX, for morning. our the XX, ended June

company was morning. posted a website, regarding find which www.consolenergy.com, can includes this that information additional supplemental You deck on our slide the also

Financial year. turn in then prepared With that, it a will lay our will this closing will comments, the Executive highlight be our update, operations Scott and On me Thakkar, out for response Sales. quarter President the our following recap, financial our Jim Bob Marketing Jim. a will of prepared Brock, call In session Chief remarks our performance discuss There over XXXX and Mitesh also achievements collapse. Francis Chairman second and and to Jim provide of and with his Key let today remarks, remainder will outlook. market Miteshkumar Officer; Vice the are President Officer; Jimmy Robert Q&A and our Bridge Chief In me his which key to and our Senior participate. Braithwaite, priorities

James Brock

everyone. Nate. Good you, Thank morning,

export quarter, strong nearly collapse. due operational Energy Bridge In channel CONSOL Despite Baltimore to the of financial During the and Port Francis the Key a of second Scott sold the despite securing to port. strong while of X-month closure cost performance. cash the and ton moving alternative prudently achieved additional we an port PMC our margins production quarter, cost per transportation capacity successfully alternative the boasted managing

be was our a black agility closure on railroad demonstrated clear, alternate the customers. CONSOL impact Nonetheless, pivoted Let created to Port as this serve the quickly of to export the Norfolk we me partner, route temporary our partially and Southern, swan team which challenges. unprecedented of mitigate identify our event, of to an ability the Baltimore the

of X.X quarter, PMC were to our second result a sell X.X the into product our As approximately million agility, including we million tons during export market. tons able the of

million the the $XX a cash logistics quarter, our with customers. testament in and our and business strong is approximately free generated of flow relationships also partners which to We resiliency of model

On the our operations with safety performance. front, beginning

plant, the XXXX. second during Bailey CONSOL of and plant, recordable Our preparation quarter Edman all employee the Marine incidents X had preparation Terminal

Our coal year recordable tons Coal at quarter operations below X.X prior the million Mining rate well in million for QX to finished X.X the the incident total with national coal tons average Complex mines. production a in the period. compared at came XX in Pennsylvania underground

our back the respectable, port incremental fewer us our securing produced we that to lower the by considering operations Baltimore, capacity export temporary Although production XX% Virginia. caused of the alternative than with was of immediately year performance at throttling capacity was Port due tons our only to almost in in quarter reduced by align closure prior an

during X.X this tons million quarter. we port the to such, shipped over As

fulfill to continue production During vessels to and managed QX our reduced and 'XX, our our we maximized capacity obligations. sales trains stockpile successfully rerouted schedule,

despite later in us than of approximately the action capacity every X/X the Our canceling continued export shipment the quick for limited nearly rather quarter. our shipments demand deferring having customer for product and resulted in year until

$XX.XX ton mainly in for cash cost tonnage. Our of due average reduced leverage compared caused to sold per in the to QX by cost 'XX reduction 'XX, $XX.XX coal PMC QX fixed was

Looking the the have XXXX, year. only and we of at X production of we expect longwall for levels, normal back the half P&C balance ahead the to move remaining

to on the Hitman Moving Complex.

XXXX, to from second the impact FSK the due delays part were coal with collapse tons to supplier. delivery of including equipment the the due in shipped major complex, was quarter, tons continued 'XX. tons XXX,XXX a XXX,XXX fewer impairment being of third-party tons sales During to This bridge purchased QX compared and in

us near-full up. staffing However, ramp operate positive as we note, super on a allow X all to levels achieved we successfully to sections

We have long-term continued set success. mains our development, for which this up mine will

year, expect to the remainder are and mining of efficiency production gains employees trained received, Looking and to retreat forward see as equipment is we the begins, improvements.

demand, been has supply which coal on turnover serve pullback could side the well. recent there us help some and met chain as in employee to Additionally,

all about the received. ramp-up Although been longer delayed is the at Iman excited equipment low-vol this to the once and capacity produce section we rate has than product expected at mine, full run eager remain are

X.X with QX for CONSOL in QX of 'XX, the our fully was the highest Despite shipping Marine our nearly ever at the When export X of of was amount QX adjusting quarter to CMT volume. time of opened CMT the quarter, throughput achieved on essentially kept capability which Baltimore, months during levels tons throughput CMT. which term. we 'XX, of XX% Port million approximately 'XX the throughput pace the volume through Moving a losing we represents of

ship closure while load accelerated which in summer the During the had CMT performed their team the and the ability This scheduled work. of acceleration vessels its quarter. early occur to mines period, third railroads us the during shutdown maintenance shutdown of temporary Baltimore, maintenance, gave Port planned been to originally and normal the the

early reduce July. able inventory at to As in we a port the additional result, were

to and costs over Mitesh million call 'XX, For that, the adjusted updates. turn With CMT at million $X.X came to and the QX provide $XX.X million $XX terminal to in in marketing prior EBITDA revenues year Accordingly, me million. finished CMT $X.X at compared operating were let period. the cash financial

Mitesh Thakkar

everyone. good and Jimmy, you, Thank morning,

front an with marketing progress. the start and me our contracting on update Let

During million in $XX.XX X.X period. tonnes sold average coal tonne tons year 'XX, $XX.XX ago million we XQ of to per sold an compared at revenue at X.X PMC coal of the

During and the tonnes transportation were relationships. sold. year per impaired This we approximately to alternative average cost we that sold team's revenue prior demonstrating redirected in by X% Remarkably, our on $XX incremental quarter, the shipping core the of incremental $X Virginia. tonne our period, cost diligence, tons those fewer strong port incurred per approximately agility, in only than ton

On as able of to the early strong at which Indian capacity in began advantage securing restricted we mentioned, in were export until incremental May. alternative monsoon port, demand ability take industrial of were its late export to we By international our 'XX during XQ ahead previously June. front, season, an

crossover quarter, industrial demand the and pick Additionally, during successfully back we the we Egypt, lower resuming. China. quarter, to and up India construction exits as during retail Brazil, metallurgical tons in specifically moved due inventories expect season markets, to the third its Furthermore, into and monsoon activities

of This sales quarter contracts to highlighted international our having importance and of as flexibility as a domestic healthy quickly well mix better. the pay

budget a recently priority only accounts specifically making aggressive that order a internationally, defense India country highlighted second for spending CV XXXX. as doubled Infrastructure in Minister India's its spending spending. highest of Looking in the target ahead remain infrastructure expect industrial a continues developed announced we thermal major spending infrastructure of meet In India nation build Modi's coal, XXXX, our infrastructure its customer use build our expenditures application for remains out. Since one India's to it for high of budget, India Finance out. Prime has by to allocated nearly Minister to towards

enter steady upward where players such are our We also for as rolled expect longer-term this high-heat being a regional producers a into long-term demand create contracts view CONSOL. have phase companies trend industry co, into cement and consolidation its India product. larger going in smaller a take global with ability Simultaneously, demonstrated to to content an continue who through particularly is and

increased While XX% at the resulted June market, compared plants, we we stockpiles. very across to healthy decreased In in wave domestic markets to reduction have to in which coal the industry XXXX, EVA, country's May continues coal much specifically NAPP grow domestic the and seen recent stockpiles regional of aspirations. a the to experienced support due country, in fragmented, coal the pace at serve. to it According in remains when bond approximately by burn and power the increased heat

power we increased best believe plant on this burn reduction of as saw coal which continue approximately power XX% a PJM and weigh July, in the up the June. in month to to even low gas prices stockpiles prices, further to increase were will mix. fuel During We compared natural lead

wave scheduled many this an of Additionally, domestic customers. our led with heat in increase trains to

capacity the the plants the solve July, there more RTO risk to and are of potential settled auctions our data prices than factories, revenue them. along increase in increase These aim balance underscores critical electric that are under grid PJM capacity to generators compared In at and just broader domestically, for requirements meet appears existing forward to straining demand provide fleet. late our XXXX of latest and X demand. electric clear needs, is the centers, with coal Looking that growth long-term PJM the be an heat electrification need just grids maintaining $XXX for to a lease whenever ensure supply-demand wave, needs day, of option for power the message and the XXX% indicators year sharp tightening, to XXXX, source a a region payments the megawatt ago. recent per This ready

of a expand the source remain as auction plants in discussed to the power we investment reliance on extend and could significant As signal the energy. clear a due intelligence, well the technological increase buildout of consumption PJM. pricing energy electric of is of other increased advances centers, such, Furthermore, that a vehicles, very recent as artificial life electricity will past, coal-buyer data the in in most expected and convinced the the

the reliable, of play will communities. infrastructure role the fossil energy expands energy from order transition factors to customers amounts large and of handle fuels face could demand, grids even be its buildup will an as opposition and of to build capital and domestic support lead times, source transmission prolong Americans require it economic, in global centers of long everyday slow increased this will overall. continue and in of could and the the dispatchable and reach data CONSOL and its extend significant needed to a affected out. distribution renewables These use development its through which Our provide ability to lines growth

I the Moving production million to guidance, tailwinds of The are with with mentioned and XXXX. anticipated tonnes Consistent on followed delivered a based fixed-price book At increase domestic we since PMC, midpoint we which contract domestic our to XQ XXXX contract the completed previously near in reported. contracting for be the the recently utility increase in XX.X have XXXX on long-term fully X contracted in for have another helped contracted us front. we just that 'XX. tons contracted we the last through we demand, announced multiyear our million

Now, second reported a income adjusted tonnage. of per our we EBITDA of results and $XX continue performance to let despite $XX Furthermore, me on before at million the we QX net some our We our of quick financial of our a we diluted equipment provide XXXX flow cash in reduced headwinds Accordingly, we outlook. $XX $XXX XXXX free previously moving guidance million in CapEx $X.XX invest received operational generated cash on morning, $XX share million to This generated to and million. the despite flow the update compared strong quarter financial discussed. previously PMC. assets free million delayed as and or spent

absence wall the through we expected of Finally, the towards we $XXX outstanding be XXbX-X beginning buybacks debt moves. our reduced and deployed quarter due a a $X plan long by seasonally and of shipment the schedule second year the XXXX, to to quarter At strong million. share million strongest of

closure the second Port However, of impacted of Baltimore our quarter the significantly results. financial temporary

recovery we As on business working a such, with our interruption claim are insurance providers.

provide outlook XXXX. Now for let a quick our on update me

per our to updated of performance in increasing $X $XX.X range XQ despite an transportation front, coal to are strong costs, sold revenue increased the we by range tonne the our bottom On of the $XX.XX. average pricing end 'XX, given

million strong Additionally, the million up earlier-than-expected tonnes, performance, tonnes of updated reflecting X.X by of range we our slightly bottom XX.X resumption expectations sales PMC are XX out of to of end million Baltimore. our volume operational and exports to an moving the of guidance range

success still guidance ramp optimistic volume on we admin remain our end our XXX,XXX about XXX,XXX tonnes complex, For on the ability to deliveries of mining but are sales recent subject maintaining equipment front, range staffing up achieve year to our staying by the our to this a and given schedule. of full expected

on and million to chain million easing back our increasing of the million delivery supply based guidance range to it bottlenecks $XX CapEx of a previous we Lastly, the by the that, are to $XXX With turn million equipment range to backlogs, range $XXX $XXX front, $XXX let on million. capital of expenditures me Jimmy. from

James Brock

Thank you, Mitesh.

update our June we shares, outstanding $XX cash cash or surrounding Due through common XX, XX% restarting our Francis the share million collapse second Since was shares Key flow in provide end into shareholders have form the in we the we weighted uncertainty in Through of June, our repurchase back of float deployed Let 'XX, than XXXX, have in of an heavily XXbX-X Scott late of XXXX. me million program which 'XX, we plan X.X the quarters. strategy. generation on to the allocation quarter, shares flow public bridge buybacks. our recent toward cash now our Year-to-date, through approximately and to of half of timing repurchased retired our quarter. spent put free QX we've the return share free free the stock flow place on QX of in to in the million a repurchase $XX capital fewer

move to XXXX, returning our on of we we focused half second As remain shareholders. value the through

to disclosed As diversification growth been returning and strong since our you consistently to capital maintaining sheet opportunities. generation balance cash prudent, towards maximize flow when know, while have XXXX allocating we has and and capital a liquidity, that vision shareholders

QX, we as at temporary Port our around closure During and we uncertainties the shipment Baltimore. the of return efforts capital navigated restrictions slowed of

we Our year. towards not has vision changed look as rest the the of

we company. be areas for XXXX, believe a of few remainder our on key will we are the focused For that crucial

on consistently. operations will safely First, continue and to running we focus our

previously Port of as much claim Mitesh We the production have that plans as the includes place mitigate Baltimore of impact of This highlighted to in recovery additional incident where possible. insurance possible. financial the and

the Second, on focusing efforts constantly we identifying our of pressures. our and inflationary impact mitigate to are levels spending managing ways

Third, multiple fixed-price we similar will layer in in and for such high-quality to we already provide demand, season XXXX improving out demand indication more book look anticipate specifically auction contracts. Domestically, in we PJM as we product the market. India, to our post-monsoon strong layered results are in industrial The and in prioritizing contracting another domestic opportunities. filling of long-term long-term as our Internationally, we have beyond. leverage contracts continue to post-summer continue recent look of

focused remain value shareholders. long-term creating Finally, we on for our

strong, during navigating and Our balance extremely second despite flexibility sheet we built quarter capacity. the export is additional reduced

dedicated use our highest the rate return of most and are prioritizing of to the capital. advantageous We

the of hard finish me again, by work employees. Let acknowledging, our

ensure the successfully as export manage work market, our This cost, mitigate very for best team Port organization, asset, I our reopened. to The pleased to this Across dedication to sales of back optimized ready our up grateful extremely and effects throttle channel the produced accelerated together showcased secured that, team quarter, managed. people. effectively call Nate. how I Baltimore over we the were of some was With quarter incident am to and truly additional hand we will members' the maintenance capacity when and the as our unprecedented work we the book with possible. much to

Nathan Tucker

Thank you, Jimmy.

time, this ask to I'd operator instructions the call. We please callers. Q&A our provide the to like our will of At to move session now to our

Operator

session. Ladies Instructions]. you. Thank will now we the begin gentlemen, and question-and-answer [Operator

first from Martin Nathan of Your comes Company. Benchmark question

Nathan Martin

side. I'll unfortunate events especially results, on operator, Baltimore. Thanks, the and Maybe start on given in pricing the congrats the

second talk utilize. of this there? be was despite actually a about get more about to For the ton to Or Can above guidance it think, would we details. to lower the just the Mitesh, due full-year you $X per a you great shipment drivers impact I the Is had per price ton, alternative a what part guys is quarter in second mix-related? transportation in said denominator row, It some quarter?

Robert Braithwaite

Yes. tons, cost price export can, tons focused of our Nate. entire in second the A price domestic Right boosted much look portfolio, ultimately our outage mix-related, we our at exceeds and or during average you now, shipping quarter. lot as bridge our the was on that average domestic tons we if the of which

Nathan Martin

that met benefit, of that any Did well? as crossover Was Bob?

Robert Braithwaite

looks time the focused we moved as actually was. year-to-date, second million by on said all we're China of market the crossover well. and in like -- and the XXX,XXX going be over to quarter. China Yes. the that in It of We could shipping done. domestic it well product of We it's north as taker was a tons I'm much X certainly sorry, market as metallurgical big

Nathan Martin

Great. of of but for tonne know you take guys your I related, realizations step second-half a kind so guidance, full-year even that end And maybe low imply then increased Okay. down. the would price

driving that curious as well? there assumption? API price what of what's including So, Maybe kind X assumptions you're

Robert Braithwaite

Well, we're as you reported we near know, fully contracted. morning, this

We to this bed year. put have for tons XX close million to

of able second really we we or us. than they sell of ahead moved schedule, which secondly, into a anticipated balance lower certainly channel to say, we tons helped did X contracted open the I'd guidance reasons. our higher opened, the increase that as the market. of the were out metallurgical As were the crossover for week half, the we end then One, X And

a be of to big continues China mentioned, I As taker those.

$XXX midpoint our of pricing is APIX Our price. guidance based on

closer the to entire as know, And portfolio. sensitivity we're So, the about across is there you XXX. today, $X.XX

would from back pricing of we half of near-dollar imply the So, uplift the that for midpoint guidance. the the have year, if around additional XXX an

Nathan Martin

Okay.

a stay maybe uplift they an things if bit we could So, of little are. where see of kind

side. contracting the on update your to over shifting Maybe it. Got Okay.

guys XXXX, tons in quarter. about the between I first for only now. 'XX added 'XX you tons XX.X back second look roughly in X and think, and million X that I million matter, You added million in at tons,

So, commitments higher sitting from we're as materially well. total

So, be? Just mentioned export you to heavier think post-summer? guys kind to Are that Jimmy get changed thoughts little Or maybe where just curious you're just great there? I mix? to prioritizing a of due of behind you contracting what's there, be want is bit would this kind your too.

Robert Braithwaite

No couple of in are Number of I'd middle some we domestically. things, a Nate. negotiations the one, say

tuned I'd there. say stay So,

out. pet And you I then opportunities and near floor to before volume are think say, But we're rates, export I side, domestically. the earnings right would being freight that certainly bed contract more now, have call we'll put rates freight We had patient. highs. next are, the then further on the near some coke vessel prices to all-time

successful So, that when was there. is the at volume as more in say boost some and Mitesh lot been, export demand opening negotiations prices. kind market. reasonable, there. we of should half so And auction concluding I in think year, there's these more you we've think really to is be up that think this still the mentioned, we I'll then that demand which into this well, look I pause this, as PJM decided we'll take to of a domestically going of eyes, didn't a price But also certainly back The be

market So, to we that. do the best sell to always we're going to continue and

as a we're on of We the X-year And expect have we're mentioned, $XX, going to as too, X-year price to head an are And average did we today. see contract our And contract back continue term near idea right move our willing that's goalposts forward, to level. we in to across where we that of in and was now. we call, the close deal. the to deal that kind the as just where

James Brock

general. contracting remember in with more inherent Nate, our typical. than us export-oriented that lumpiness And there becoming also is in And

do I long-term our that contracting. compares also to think ability

lot that. opening as Bob up are that opportunities of could domestic counterbalance a mentioned Although up

Nathan Martin

buckets one one, thoughts, And kind of into? contracted Okay. that guys. sticking XX.X usual they're at. Appreciate maybe And those approximate of price those then just tons. what then us with a maybe XX, go million last give the you Could breakdown

Robert Braithwaite

Yes.

XXX,XXX I linked million million and $X.X of tons have ceilings tons power. they're to $X.X XXX,XXX about floors export. should it's fixed, would And that and be fixed. index-linked, all is So, domestic the and say, balances

you right to XX API now, you $XXX will million we're based idea, I an about forecasting that that price per is $X.XX sensitivity XX-so, in Our rate. dollar give number. change tell current on a X in tonne every APIX production

And As tons. $XXX you at price, higher at across low today. know, looking APIX the million we're XXs it's XX.X

Nathan Martin

luck Very of the guys. I Great. best the half. second helpful appreciate and time Okay. in

Operator

[Operator Instructions].

of Your comes Pipes next question Riley B. Lucas Securities. from

Lucas Pipes

wanted Thank with you to ton tons very that where Bob, everyone. to XXXX. about XX.X $XXX manage kind contracted API that of mention of that metric Way much, challenge operator. price business, I per average morning, the you million did Good in QX. X assumption? ask

Robert Braithwaite

Lucas. XXs, Low

Lucas Pipes

mentioned Low on XXs. And million XX then based tons. the sensitivity you

sensitivity be that Is there. Obviously, on on export an could I making sales? clarify assumption export additional would on, to Just higher. assume like higher sales,

I it's So, wanted just sure clear. to make

Robert Braithwaite

Yes.

$XX to will that So, dollar clear, contract, $X.XX under have volume the every be currently we movement million. on be based

we would So, I'll to to sensitivity. certainly add book, that were if the, to index-linked we that, add were if change say, to the

Lucas Pipes

Got it.

those So, call based And on the is $X.XX. exports tons, million today. tons X-plus it, of sensitive it's,

Robert Braithwaite

is That correct.

Lucas Pipes

about the of anticipate switch helpful. to free quarter, understandably, of And returns. the wanted the so on a a now, second available I kind Should Mitesh, half. managing the in you this for were strong capital second half cash year? minimum flow But buybacks? bit in catch-up How you we cash allocation situation outlook have reluctant of the side. think buyback kind do you Very been second well, the Jimmy, of to flow to

James Brock

capital allocating said we a have. Lucas, then diversification to and really compelling to want to prudent, we maintain liquidity, our and when opportunities -- strong flow Yes. maximize Well, always return And vision shareholders. that look want as we back or We my balance toward growth to capital sheet at cash our prepared We remain generation. remarks, changed. I in hasn't we want

securitization Baltimore, on market year the our revolver, We Now we'll this at buy 'XX, features impact the and our that But facility has exercising to the one looking we opportunities, upside and be second want goal several ability our return. that. bonds and capital including return at refinancing Medco to to shareholders, renewing rate back capital the vision and bit in could changed highest of in at want of in our half not the those to market. still shares to according return

Lucas Pipes

Very That's helpful for helpful. that color.

could In speak where bit terms that today? change asset environment, challenging cost the continued improvements. little of with a price you to on that And and Itmann how the more sits met might guidance coal the productivity curve any

James Brock

we we accountable side. a X the And section, to begin Yes. remarks, got Well, to we third-party to think get if there our they And delays And some and able one really bringing improved there, this, doing see better down obviously, just production we like our of it definitely we But what we're at those improving. can run increase people Iman. we're we steady of going we during that of to I'll had be the think need I we're hopeful to positive, lot our happen been these We're I still a believe drive have. And is bit of cost production to like we'll here I plant. staffed, we're we third pillar want a But you there. going miners on give the get hopeful get. the looks meeting have equipment. on get a breakdowns It to the those because don't workforce be really once the production, and we tons the were able very bridge do, hire and the remarks, can still and there them fully those we think in and going just in which have said that out guys and said is it's QX production, I in we have very know we with wrap quarter. to too, where through as we the X hold hard the sections, restricted running say with little some in we because guidance equipment suppliers. to They we'll promised

Operator

questions concludes the our I'd at There Nathan turn to like remarks. for session. Packer are no That further time. back this conference to closing question-and-answer

Nathan Tucker

CONSOL to of team, us support look we joining speaking your for On forward you. your for on and CONSOL answer morning you like behalf the this Energy. our I'd to We Thank next thank hope of to with questions, and call. you

Operator

concludes conference call. today's participation. gentlemen, and Thank for your you this Ladies

disconnect. You may now

Core Natural Resources (CNR) 8 Aug 242024 Q2 Earnings call transcript