CONSOL Energy Inc. Common Stock

Good morning, ladies and gentlemen, and welcome to the CIEX First Quarter 2024 Earnings Conference Call. At this time, all lines are in the listen-only mode. Following the presentation, we will conduct a question and answer session. If at any time during this call, you require immediate assistance, please press star zero for the operator. This call is being recorded on Tuesday, May 7, 2024. I would now like to turn the conference over to Nathan Tucker, Director of Finance and Investor Relations.

Please go ahead. Good morning, everyone, and thank you for joining us. Welcome to Consol Energy's first quarter 2024 earnings conference call. Any forward-looking statements or comments we make about future events are subject to risks, certain of which we have outlined in our press release and in our SEC filing, and are considered forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934. We do not undertake any obligations of updating any forward-looking statements for future events or otherwise. We will also be discussing certain non-GAAP financial measures, which are defined and reconciled to comparable GAAP financial measures in our 2024 first quarter press release furnished to the SEC on Form 8K, which is also posted on our website. Additionally, we filed our 10-Q for the quarter ended March 31, 2024, with the SEC this morning. You can find additional information regarding the company on our website, www.consolenergy.com, which also includes a supplemental slide deck that was posted this morning. On the call with me today are Jimmy Brock, our Chief Executive Officer, Mitesh Dakar, our President and Chief Financial Officer, and Bob Braithwaite, our Senior Vice President of Marketing and Sales. In his prepared remarks, Jimmy will provide a recap of our first quarter achievements and a detailed discussion of our operations. Mitesh will then provide an update on our marketing and financial progress and our updated 2024 guidance. In his closing comments, Jimmy will recap our capital allocation progress and lay out our key priorities for the remainder of the year. There will be a Q&A session followed by the prepared remarks in which Bob will also participate. With that, let me turn it over to Jimmy.

Thank you, Nate. Good morning, everyone. Consol Energy finished the first quarter with a strong operational performance and produced 6.5 million tons from the Pennsylvania mining complex, which was no small feat considering each of the three mines had a long wall move in the quarter. We're very proud of the PAMC team for their efforts during these moves and for completing them safely and efficiently. We continued our export shift. and 65% of our Q1-24 total reoccurring revenues and other income was derived from sales into the export market. We also continued to execute our strategy of returning value to our shareholders through share buybacks and deployed 89% of our Q1-24 free cash flow toward retiring 440,000 shares of our common stock. Before I move to the operational update, let me address the situation at our Consol Marine Terminal where vessel access to our terminal became blocked due to the collapse of the Francis Scott Key Bridge in Baltimore in late March. We'd like to again extend our condolences to all of those affected by this tragedy. This event has limited our ability to ship coal into the export market, and per multiple agency officials, This restriction is expected to continue through the end of May. However, we have successfully developed alternative strategies to partially offset the impact. First, we've identified and worked with domestic customers to improve their shipment volumes. Second, our rail and logistic partners have stepped up and helped us quickly divert some of our export shipments to an alternative port in Virginia where we secured some incremental capacity, which has allowed us to move approximately 50% of our planned export volumes. Until the permanent 50-foot draft shipping channel is reopened in the Port of Baltimore, we expect to be operationally constrained. The good news is that we are still shipping tons into the export market, thanks to the cooperation of our rail and logistics partners. which has helped us partially mitigate the financial impact of the bridge collapse on our business. Now, let's discuss our operational performance in detail. On the safety front, our Ipman preparation plant had zero employee recordable incidents during the first quarter of 2024. Our coal operations finished the quarter with a total recordable incident rate well below the national average for underground coal mines. Coal production at the Pennsylvania mining complex came in at 6.5 million tons in Q124 compared to 7 million tons in the prior year period. Production was lower due to the previously mentioned longwall moves in Q124 compared to zero moves in Q123. As a result of these longwall moves, as well as ongoing inflationary pressures, Our PAMC average cash cost of coal sold per ton for Q124 was $40.29 compared to $33.61 in Q123. Looking ahead, we expect to have only one longwall move for the remainder of the year. Moving on to ITMAN. During the first quarter of 2024, sales from the complex improved to 193,000 tons of coal including third-party tons, compared to 159,000 tons in Q4-23. During the first quarter, all three operating sections continued to mine additional height for mains development, which requires cutting additional rock and slows mining rates. Furthermore, we continued to be impacted by equipment delivery issues with a major supplier and high employee turnover. which led to the idling of several production shifts throughout the quarter. Given the recent pullback in met coal markets, we expect that employee turnover and supply chain bottlenecks could ease if we begin to see some supply rationalization. Despite these setbacks, we expect to complete our long-term mains development during the second quarter, which will allow us to operate the mining sections at more efficient mining heights and improve production rates. Moving to the Consol Marine Terminal. Despite losing five days of potential vessel loadings, we achieved a throughput volume of 4.5 million tons during Q1-24, compared to 4.6 million tons in the prior year quarter. Terminal revenues for the quarter came in at 24.5 million, and CMT operating cash costs were 7.2 million. Accordingly, CMT adjusted EBITDA finished at $16.8 million compared to $20.6 million in the prior year period. With that, let me turn the call over to Mattesh to provide the marketing and financial updates.