CNX Resources Corporation

Good morning and welcome to the CMX Resources second quarter 2021 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 touch tone phone. To withdraw from the question queue, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Tyler Lewis, Vice President, Investor Relations. Please go ahead.

Thank you, and good morning to everybody. Welcome to CNX's second quarter conference call. We have in the room today Nick Deulius, our President and CEO, Don Rush, our Chief Financial Officer, Chad Griffith, our Chief Operating Officer, and Yemi Akinkube, our Chief Excellence Officer. Today we will be discussing our second quarter results. This morning, we posted an updated slide presentation to our website. Also, detailed second quarter earnings release data, such as quarterly E&P data, financial statements, and non-GAAP reconciliations are posted to our website in a document titled 2Q2021 Earnings Results and Supplemental Information of CNX Resources. As a reminder, any forward-looking statements we make or comments about future expectations are subject to business risks which we have laid out for you in our press release today, as well as on our previous Securities and Exchange Commission filings. We will begin our call today with prepared remarks by Nick, followed by Yemi, and then Don. We will then open up the call for Q&A, where Chad will participate as well. With that, let me turn the call over to you, Nick.

Thanks, Tyler. Good morning, everybody. I'm going to keep my remarks brief this morning, as we had another simple, clean, easy-to-understand quarter, and our investment thesis remains intact. If you look at slide two in our deck, the theme that I'd like to highlight, once again, is that of steady execution. And that's the same theme that we've been hitting upon in recent prior quarters. So, for sure, second quarter is another quarter highlighted by successful execution of the long-term plan that we laid out in April of 2020. The second quarter marks the sixth consecutive quarter of significant free cash flow generation, where we produced $117 million. We used that free cash flow to continue doing what we said we do, and we reduced net debt by $89 million and opportunistically bought back $23 million worth of shares at what we consider to be attractive prices. We currently have approximately $215 million left in our existing stock repurchase program. And as we said in the past, we're going to continue to use the future free cash flow to reduce absolute debt until we achieve a leverage ratio of around one and a half times And while we're doing that, if our stock continues to trade at a discount, we'll have the wherewithal to repurchase shares along the way while reducing debt, which is what we've been doing since the fourth quarter of 2020. And we'll utilize both our liquidity and timing flexibly and use that flexibility to adjust the free cash flow allocation between debt pay down and share repurchase weightings week by week. We'll look at that month by month, and we'll look at it quarter by quarter. What will guide us, it will be the math of the risk-adjusted returns and per share value. That's what we'll use when we decide how and when we change our weightings. Also, in the quarter, we increased our 2021 free cash flow guidance, again, by another $25 million to $4.75, or $2.18 per share. This compares to the previous guidance of $450 million, or $2.04 per share. So, looking at the Cliff Notes version of where we're at, For the second quarter, free cash flow was up. Free cash flow per share was up. Debt was reduced. Share count was reduced. And then for 2021, our free cash flow guidance was raised. Now let's hear from Yemi.