Core Natural Resources, Inc.

Good morning and welcome to the Consol Energy second quarter 2023 earnings conference call. All participants will be in 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 telephone keypad. To withdraw your question, please press star then two. Please note, this event is being recorded. I would now like to turn the conference over to Nathan Tucker, Director of Finance and Investor Relations. Please go ahead.

Thank you, and good morning, everyone. Welcome to Consol Energy's second quarter 2023 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 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 release and furnished to the SEC on Form 8K, which is also posted on our website. Additionally, we filed our quarterly report on Form 10Q for the quarter ended June 30th, 2023 with the SEC this morning. You can find additional information regarding the company on our website, www.consolidate.com, which also includes the supplemental slide deck that was posted this morning. On the call with me today are Jimmy Brock, our Chief Executive Officer, Mattesh 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 second quarter 2023 achievements and a detailed discussion of our operations. Patesh will then provide an update on our marketing and financial progress and our updated 2023 outlook. In his closing comments, Jimmy will lay out our key priorities for the remainder of the year. After the prepared remarks, there will be a Q&A session in which Bob will also participate. With that, let me turn it over to Jimmy.

Thank you, Nate, and good morning, everyone. During the second quarter, Consol Energy delivered strong results on multiple fronts. We achieved the second highest quarterly adjusted EBITDA and free cash flow levels in our history. Fully retired our term loan B, achieved a net cash position for the first time in our history, added an incremental $95 million of capacity to our revolving credit facility, and using the free cash flow generated during the second quarter, repurchased roughly 2 million shares of our outstanding common stock. The PNC also achieved its second highest quarterly realized revenue per ton sold and average cash margin per ton sold during Q2 23. Last but not least, we ship more than 5 million tons through Arkansas Marine Thermal, which is also a quarterly record. In keeping with the theme of our robust capital allocation strategy since announcing our enhanced shareholder return program at the end of Q2 22, we again deployed every dollar of free cash flow that we generated in the second quarter of 2023, with the majority going toward share buybacks and most of the remainder toward retiring our outstanding debt. To further highlight this, consider the fact that we generated $625 million of free cash flow since the end of Q2 2022. Yet, our total cash position has remained largely unchanged since then. Also, as dictated by our capital allocation strategy, we've pivoted more towards shareholder returns in recent quarters as our debt neared target levels. This pivot, which is now specifically focused on share buybacks, has allowed us to retire nearly 10% of our public float through July 31st of 2023. Let's now discuss our operational performance. On the safety front, our Bailey preparation plan Itman Preparation Plant and Consol Marine Terminal each had zero employee recordable incidents during the second quarter of 2023. 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 6.3 million tons in Q2 of 23, a reduction compared to 7 million tons in Q1 of 23. However, this was expected and telegraphed on our last earnings call and was driven by multiple long-wall moves at the PAMC in the second quarter compared to none in Q1. On the cost front, our PAMC average cash cost of coal sold per ton for Q2 23 was $36.33 compared to $33.61 in Q1 23. The increase was mostly due to the reduction in production tons associated with the previously mentioned longwall moves in the quarter, which impaired our fixed cost leverage compared to the prior quarter. The good news is, on a year-to-date basis, our average cash cost of coal sold per ton has tracked slightly below the midpoint of our guidance range. Moving on to IPMA. During the second quarter of 2023, the ramp-up to full run rate production neared completion. At the end of the quarter, all three continuous minor supersections were installed underground, and long-term construction work for our One West Mains intersection was nearly complete. However, this ramp-up was much slower than originally anticipated. We encountered challenging geology, such as sandstone intrusions in multiple CM sections and water infiltration in section number three, which created difficult mining conditions during the first half of 2023 and expedited the need to transition to One West. Now, wrapping up, this construction work will enable the three supersections to produce in several different blocks of the reserve, targeting higher average production rates and balanced coal quality across the mine. Additionally, the labor markets continue to improve in Q2, which allowed us to increase staffing levels throughout the quarter. The Ipman Mining Complex produced 70,000 tons of coal during the second quarter of 2023 and sold 126,000 tons of Ipman and third-party coal in aggregate during the quarter. Year-to-date, the Ipman Mining Complex sold a combined 234,000 tons of Ipman and third-party coal. There continues to be strong interest for our Ipman product across a variety of markets, and we are actively marketing this product both domestically and abroad. Moving to the Consol Marine terminal. We achieved our second consecutive quarter throughput record with a volume of 5.4 million tons shipped during Q2 23, representing an annualized rate greater than 20 million tons. This compares to 4.6 million tons in Q123 and 3.8 million tons in the prior year quarter. On a year to date basis, we ship just shy of 10 million tons through our terminal with 82% of that total coming from our Pennsylvania mining complex. These noteworthy achievements at the terminal provide tangible evidence that our de-bottlenecking efforts have been effective. and that our increased annual throughput capacity of up to 20 million tons is achievable. This added capacity translates to an increased ability to execute our longer-term strategy of moving more PAMC tons into growing export markets. The significant success that we achieved thus far toward our strategic goal of being more export-focused is due to a combination of factors, including the dedication of our CMT team members and debottlenecking efforts materializing at the terminal today and our strong relationship with our railroad partners. Terminal revenues for the quarter came in at a record $31.4 million and CMT operating cash costs were $7 million. CMT adjusted EBITDA, also a new quarterly record, finished at $23.9 million compared to $15.1 million in the prior year period. With that, I will turn the call over to Mitesh.