Core Natural Resources, Inc. annual report, FY2021

Filing identity and reporting period

The supplied filing is CONSOL Energy Inc. (NYSE: CEIX)’s Form 10-K for the fiscal year ended December 31, 2021, filed February 11, 2022—not a filing identified as Core Natural Resources, Inc. The text provides annual results; standalone 2021 fourth-quarter figures are not clearly provided.

Business context and key financial metrics

CONSOL produces Appalachian bituminous coal, principally from the Pennsylvania Mining Complex (PAMC), and operates the CONSOL Marine Terminal in Baltimore. It was developing the Itmann metallurgical coal mine.

Total liquidity at year-end comprised $149.9 million cash and $230.8 million of unused revolving-credit capacity. Restricted cash was $48.3 million. Total debt and finance lease obligations were approximately $661 million, including $57.3 million current debt. The company reported $63.3 million of net interest expense.

PAMC sold 23.7 million tons, up from 18.7 million in 2020. Its average revenue per ton was $45.75; average cash cost was $28.25 and average cash margin was $17.50. These are non-GAAP measures. PAMC coal revenue was $1,085.1 million, versus $771.4 million.

Material changes versus the prior comparable period

• Coal demand, shipments and pricing recovered from the COVID-19-related 2020 downturn. PAMC average revenue per ton rose from $41.31 to $45.75, while average cash cost per ton fell from $29.12 to $28.25.
• Adjusted EBITDA, a non-GAAP measure, increased to $378.2 million from $261.5 million. Reported net income improved from a shareholder-attributable loss of $9.8 million to income of $34.1 million.
• Exports reached a record 11.0 million tons; exports accounted for 46% of coal sales, compared with 35% in 2020. Three customers together represented about 40% of 2021 sales, down from 55%.
• Operating cash flow increased by $176.2 million. Investing cash use rose to $127.4 million, principally reflecting higher capital spending; financing cash use was $30.9 million.
• The company paid down debt and repurchased $18.0 million principal of its 11% second-lien notes for $17.1 million. It also issued $75 million of 9% PEDFA bonds to help fund refuse-disposal-area construction.

Outlook, risks and unusual items

For 2022, management expected PAMC sales of 23–25 million tons, average revenue per ton of $55–$57, and average cash cost per ton of $29–$31. Planned 2022 capital expenditures were $162–$195 million, including $42–$47 million for Itmann development. The Itmann preparation plant was planned for completion in the second half of 2022; expected eventual mine output is about 900,000 product tons annually. These are management expectations, not guarantees.

• Commodity hedging produced a $52.2 million unrealized loss in 2021. The company said changes in API2 prices affecting 2022 earnings would be substantially offset by revenue from related physical contracts.
• Major risks include coal-price and demand volatility, customer concentration, dependence on rail and export logistics, COVID-19 and supply-chain disruption, mine safety and operational hazards, environmental and climate regulation, and the ability to obtain permits, insurance and surety bonds.
• Year-end asset retirement obligations were approximately $238 million. The filing also reports substantial employee benefit liabilities and surety-bond and letter-of-credit commitments.
• Potential legacy retiree medical and black-lung liabilities connected to the Murray Energy bankruptcy remain disputed. The company estimated servicing costs of $10–$20 million annually for the next ten years, while stating it would defend against claims.
• The company disclosed climate-related lawsuits and extensive regulatory uncertainty. It also announced goals to reduce direct operating greenhouse-gas emissions 50% by the end of 2026 from 2019 levels and to reach net zero by 2040 or sooner.
• The company reported compliance with its financial covenants at year-end. Its independent auditor gave an unqualified opinion on the financial statements and internal controls; management also concluded internal controls were effective.

Important facts for investors to verify

• Confirm the issuer: the provided filing is for CONSOL Energy Inc. (CEIX), not Core Natural Resources, Inc.
• Review 2022 contracted volumes, realized pricing, the remaining hedge position and how hedge settlements compare with physical sales.
• Track Itmann plant completion, project spending and progress toward commercial production.
• Assess debt maturities, interest costs, covenant headroom, restricted cash and the availability of revolving capacity after letters of credit.
• Review customer concentration, export-market exposure, legacy benefit claims, environmental litigation and bonding requirements.