Core Natural Resources, Inc.

Good day, ladies and gentlemen, and welcome to the CEIX and CCR first quarter 2020 earnings conference call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your touchtone phone at any time. To withdraw your question, please press star then two. Please note, today's event is being recorded. I would now like to turn the conference over to Nathan Tucker, Manager of Finance and Investor Relations. Please proceed, sir.

Thank you, Eric, and good morning, everyone. Welcome to Consol Energy and Consol Coal Resources' first quarter 2020 earnings conference call. Any forward-looking statements or comments we make about future expectations are subject to some risks, which we have outlined in our press releases or in our SEC filings. 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 press releases and furnished to the SEC on Form 8K. You can also find additional information on our website, www.consolenergy.com, and www.ccrlp.com. On the call with me today are Jimmy Brock, our Chief Executive Officer, Mitesh Dakar, our Interim Chief Financial Officer, and Jim McCaffrey, our Chief Commercial Officer. In his prepared remarks, Jimmy will provide a recap of our key achievements during the first quarter of 2020, specific insights on marketing and operations, and our response to the COVID-19 pandemic. Mitesh will then provide an update on our Liability Management Program, financial results, our cost reduction efforts, and outlook for 2020. During the prepared remarks, we will refer to certain slides that were posted on our website in advance of today's call. After the prepared remarks, there will be a Q&A session in which all three executives will participate. With that, let me turn it over to our CEO, Jimmy Brock.

Thank you, Nate, and good morning, everyone. As we all know, these are unprecedented times we are navigating through. Thus far, 2020 has been very challenging for our industry and the world. We have seen significant declines in energy demand and have faced many uncertainties. First, due to a warmer than normal winter, and most recently due to the economic slowdown brought on by the COVID-19 pandemic. The widespread government-imposed shutdown of businesses has resulted in reduced electricity demand, both domestically and abroad. which is weight on our customers' ability to burn coal. Before I go any further, let me be clear. Ensuring the safety, health, and well-being of our employees and their loved ones is paramount. The world has changed significantly in the last few months, and all of us have to adapt to this new reality. I am proud of the Consol team and the way they responded to this pandemic. We also know that being classified as an essential business comes with a lot of responsibility and pride. Our frontline employees who mine the coal that ensures an uninterrupted power supply during this time of need embrace the challenge. We have adopted enhanced sanitizing and social distancing measures at our operations and implemented staggered shifts at our mine sites. Our corporate employees continue to support our operations very effectively. while coordinating and collaborating remotely to support government efforts to restrict the spread of the disease. I am very thankful to the entire CONSOL team as they continue to excel in these challenging times. We will continue to monitor the risk posed by the COVID-19 pandemic and will take any additional steps that we deem necessary to keep our employees, their families, and the community safe. Before I dive into operation and marketing details, let me now provide a brief recap of the quarter. Despite the significant demand decline, we achieved several important goals during the first quarter. On the safety front, we delivered a very strong safety performance with our Harvey Mine, Bailey Preparation Plant, Consol Marine Terminal, and Ipman Project each having zero recordable incidents. On the operations and marketing fronts, Even while we faced several headwinds and reduced demand from our customers, our strong contracting position and operational flexibility softened the impacts of these declining market conditions. We drew upon the tremendous partnerships we have with our customers and continued to identify creative solutions to help navigate this extremely challenging situation. On the financial front, we completed a number of transactions during the quarter which reduced our outstanding debt, improved liquidity, and enhanced our financial flexibility. Mattesh will discuss these in more detail shortly. Now, let me review our first quarter operation performance. Coal production at the Pennsylvania mining complex decreased to 6 million tons in Q1 of 20 compared to 6.8 million tons in the year-ago quarter. The decline was mainly due to the aforementioned reduction in customer demand and a corresponding reduction in operating days as we sought to match production with demand. For its share of the Pennsylvania mining complex, CCR produced 1.5 million tons of coal during Q1 of 20 compared to 1.7 million tons in the year-ago quarter. On the cost front, our average cash cost of coal sold per ton was $32.41 in Q1 of 20 compared to $29.71 in Q1 of 19. The per ton increase was largely driven by the decline in the production volumes and higher subsidence-related costs at our Enloe Fork mine. The Consol Marine Terminal had a throughput volume of 3.4 million tons during the quarter, compared to 4 million tons in the year-ago period. Given the terms of our take-or-pay contract at the terminal, and despite a decline in shipments, Our terminal revenues for the quarter were only modestly impaired at $16.5 million compared to $17.8 million in the year-ago quarter. However, cash operating costs were slightly improved at $5.2 million versus $5.6 million in the year-ago period. I am pleased to announce that our Ipman project mined its first cut of coal and shipped product to a third-party processor in early April. We remain very excited about this project And even though we've slowed down the pace, we've been successful in proceeding with development mining at a controlled level of net expenditures. This gives us the flexibility to ramp up the project back up at our discretion in the future when market conditions weren't. Let me now provide an overview of the coal markets and an update on our sales performance and accomplishments. This was a challenging quarter for coal markets, to say the least. Coal demand was first impacted due to a mild winter and low natural gas prices, and then was impacted as a result of the government-imposed shutdowns of non-essential businesses. On the power price front, average PJM West day-ahead power prices were 33% lower in Q1 of 20 compared to Q1 of 19, and more than 50% below the Q1 of 18 levels, which helps to illustrate the severity of the decline. For the most part, Our pair price-linked contracts were yielded in realizations at their contractual floors. Henry Hub natural gas prices averaged $1.90 per mm BTU during the quarter, which was down 35% compared to Q1 of 19. These low natural gas prices amid a significant overall demand decline resulted in substantial coal-to-gas switching in the U.S., which in turn led to increased coal inventories for our customers. This all translated into reduced demand for our coal and led us to complete several contract buyouts in the quarter as we sought to help our customers manage their inventory levels. These contract buyouts involved the negotiations of early terminations of several customer contracts in exchange for payment of certain fees to us during the first quarter of 2020, which contributed $10.8 million to our miscellaneous other income. On the export front, international thermal coal prices have been in decline since the start of 2019 due to a pullback in global LNG prices and now due to the global COVID-19 related shutdowns. However, as a result of this unprecedented demand decline in low prices, we believe that the global supply rationalization will be forced upon the industry. As you can see on slide seven of the supplemented slide deck that we posted to our websites this morning, Wood Mackenzie estimates that at current spot prices, 36% of seaborne coal supply is at high risk of curtailment. The majority of this is thermal coal. With estimates of 440 million tons of high-risk production globally, we believe this could help to tighten the market as we move forward. From a marketing perspective, We continue to maintain 100% of our existing customer base and continue to find opportunities to selectively grow and capture market share in the export markets. We announced this morning that our customer, Exco, recently won a contract to supply 1.8 million tons of coal to the Puna Catalina Power Plant in the Dominican Republic. To fulfill that contract, Exco increased the volume of tons to be acquired under a supply contract with us. In aggregate, we are now contracted for 10-plus million export tons in 2020. While we do not like the process that we're seeing in the current market, we will generate cash margins on these new tons and will hopefully gain a long-term end-user for our coal. While we are mostly contracted for 2020, we have some more work to do for our volumes in 2021 and beyond. Despite our strong contracted position, We do face significant uncertainties given the unpredictable nature of the COVID-19 pandemic and the resulting economic slowdown. As always, we will work together with our customers to help them manage the contractual obligations that we both have. With that, I will now turn the call over to Mattas to provide the financial update.