CONSOL Energy Inc. CONSOL Coal Resources LP Investor Presentation June 2020
CONSOL Energy Inc.CONSOL Coal Resources LP
Investor Presentation
June 2020
Disclaimer
2
This presentation contains statements, estimates and projections which are forward-looking statements (as defined in Section 21E of theSecurities Exchange Act of 1934, as amended). Statements that are not historical are forward-looking, and include, without limitation, projectionsand estimates concerning the timing and success of specific projects and the future production, revenues, income and capital spending of CONSOLEnergy, Inc. (“CEIX”) and CONSOL Coal Resources LP (“CCR,” and together with CEIX, “we,” “us,” or “our”). When we use the words “anticipate,”“believe,” “could,” “continue,” “estimate,” “expect,” “intend,” “may,” “plan,” “predict,” “project,” “should,” “will,” or their negatives, or othersimilar expressions, the statements which include those words are usually forward-looking statements. These forward-looking statements involverisks and uncertainties that could cause actual results and outcomes to differ materially from results and outcomes expressed in or implied by ourforward-looking statements. Accordingly, investors should not place undue reliance on forward-looking statements as a prediction of future actualresults. We have based these forward-looking statements on our current expectations and assumptions about future events. While ourmanagement considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic,competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond ourcontrol. Factors that could cause future actual results to differ materially from those made or implied by the forward-looking statements includerisks, contingencies and uncertainties that are described in detail under the captions “Forward-Looking Statements” and “Risk Factors” in ourpublic filings with the Securities and Exchange Commission. The forward-looking statements in this presentation speak only as of the date of thispresentation; we disclaim any obligation to update the statements, and we caution you not to rely on them unduly.
This presentation includes unaudited “non-GAAP financial measures” as defined in Regulation G under the Securities Exchange Act of 1934,including EBITDA, Adjusted EBITDA, Bank EBITDA, EBITDA per Affiliated Company Credit Agreement, Net Leverage Ratio, CONSOL Marine TerminalAdjusted EBITDA, Modified Net Leverage Ratio, Consolidated Net Debt, Consolidated Net Debt less Non-controlling Portion of CCR Affiliate Loan,Net Debt per Affiliated Company Credit Agreement, Liquidity, Adjusted EBITDA Attributable to CONSOL Energy Shareholders, Average Cash Cost ofCoal Sold Per Ton, Average Cash Margin Per Ton Sold, Organic Free Cash Flow and Organic Free Cash Flow Net to CEIX Shareholders. Thepresentation of non-GAAP financial measures is not intended to be a substitute for, and should not be considered in isolation from, the financialmeasures reported in accordance with GAAP.
Actions Taken in Response to Current Market Conditions
3
◼ Successfully negotiated a financial covenant relief package which provides continued access to our
revolver and creates flexibility to repurchase additional outstanding debt.
◼ $45 – $50 million reduction in capex at the Pennsylvania Mining Complex.
◼ $8 – $10 million reduction in SG&A spending.
◼ $7 – $10 million in cash interest expense savings at CEIX due to debt extinguishment.
◼ $30 – $40 million cash savings due to reduced income taxes and payroll tax deferrals.
◼ Suspension of the CCR distribution saves $5.6 million on a consolidated level and $14.4 million at
the CCR level every quarter the distribution suspension stays in place.
◼ As market conditions remain challenging, we continue to work with our customers to manage each
parties’ contractual obligations.
◼ Adjusted our operations to align production with demand.
Bailey(1) 115 12,894 2.80% 11.5 12.2
Enlow Fork(1) 325 12,940 2.13% 11.5 10.0
Harvey(1) 230 12,950 2.46% 5.5 5.1
Total 669 12,936 2.36% 28.5 27.3
Illinois Basin(2) 11,288 2.90%
Other Napp(2) 12,484 3.37%
2019A
ProductionMine
Total
Recoverable
Reserves*
Average AR
Gross Heat
Content
(Btu/lb)
Average AR
Sulfur
Content
Est. Annual
Production
Capacity*(3)
Pennsylvania Mining Complex Overview
4
Source: CONSOL management, ABB Velocity Suite, EIA.
Note: Data shown on a 100% basis for PAMC.
(1) For the fiscal year period ending and as of 12/31/2019.
(2) Represent the average of power plant deliveries for the three years ending 11/30/2019 per EIA / ABB Velocity Suite; excludes waste coal.
(3) Represents illustrative general capacity for each mine; actual production on a mine by mine basis can exceed illustrative capacity in order to maximize
complex capacity of 28.5MM tons.
◼ Three highly productive, well-capitalized underground coal mines.
◼ Five longwalls and 15–17 continuous miner sections.
◼ Largest central preparation plant in the United States.
◼ ~79% of reserves are owned and require no royalty payment.
◼ Extensive logistics network served by two Class I railroads.
◼ Access to seaborne markets through CONSOL Marine Terminal.
◼ More than $2.1 billion invested in PAMC since 2009.
◼ Non-union workforce at PAMC since 1982.
◼ Continuously sealing off old mine works to reduce maintenance, improve safety
of employees and maintain current operating footprint.
2019 PA Mining Complex
Domestic Power Plant
Customers
PA Mining
Complex
CONSOL
Marine Terminal
Sealed
Reserves
Current Mining
$0
$20
$40
$60
$80
$100
$120
– 100 200 300 400 500 600 700 800 900 1,000
US
$/T
onne
Cumulative Production (Million Tonnes)
PAMC US Appalachia US Illinois Basin US Powder River US Western Bituminous
$0
$10
$20
$30
$40
$50
$60
– 10 20 30 40 50 60 70
Cumulative Production (Million Tons)
1st Quartile Cost Position in NAPP and Globally
5
Sulfur
content
$120
100
80
60
40
20
0
(Cash costs $ per ton)
Source: CONSOL management and Wood Mackenzie.
(1) Costs represent total cash costs as defined by Wood Mackenzie.
(2) Costs are BTU adjusted and include mining, preparation, transport, port and overhead costs. PAMC cash costs of coal sold are based on CONSOL management and peers based on Wood Mackenzie.
The PAMC’s 1st quartile cost position drives global
competitiveness despite changes in seaborne thermal
supply / demand fundamentals.
1st Quartile 2nd Quartile 3rd Quartile 4th Quartile
2015 20172016
Thermal Coal Exports
1st Quartile 2nd Quartile 3rd Quartile 4th Quartile
(Cash costs $ per tonne)
1st quartile cost position in NAPP (2019)(1)
1st quartile position among global thermal coal production (2019)(2)
4.3% 2.5%
River market mine Rail market mine Minemouth mine
3.3% 2.7% 4.2% 3.3% 3.1% 4.1% 3.3%
2018
CONSOL Marine Terminal Overview
6
Overview
◼ Coal export terminal strategically located in Baltimore, Maryland.
− 15.0 million tons per year throughput capacity.
− 1.1 million tons coal storage yard capacity.
− Only East Coast coal export terminal served by two railroads.
− Exports PAMC and third party coal.
◼ Achieved significant service and operating cost efficiencies since 2016.
◼ CMT achieved a record annual revenue of $67mm in 2019.
◼ Growing non-PAMC volumes: 2.7mm tons in 2015 to 3.8mm tons in 2019.
◼ Maintain flexibility to ship additional PAMC tons as needed.
◼ Low capex needs drives significant free cash flow contribution.
7
Source: S&P Global Market Intelligence and CONSOL management.
(1) Represents estimated ocean/rail rates to port terminals, exclusive of terminal throughput charges.
On-Site Key Logistics Infrastructure and Advantaged Export Access in a Growing Export Market
PAMC
Core Markets
Battleground
Markets
~$9 - $11/ton
East
Coast to EUR
~$10 - $13/ton
~$15/ton
~$14 - $17/ton
~$12 - $14/
ton Gulf Coast
to EUR
Dual-served railroad access
Eastern U.S. coal regions and points of thermal export(1)
Port of
Baltimore
8
Permitting◼ Mine permits have been issued
◼ Prep plant engineering/permitting underway
Production Capacity
◼ Estimated capacity: 900,000+ tons/year(3 CM sections)
Projected Capital Cost ◼ $65-80 million (mine + preparation plant)
Product
◼ Low-vol met coal
◼ Pocahontas 3 seam
Volatile Matter Sulfur CSR
18.5% 60
Mine Life◼ 18+ million tons life-of-mine production
◼ > 25 years of mine life at projected run rate
Projected Operating Cost ◼ $65-75/short ton cash operating cost
Location ◼ Wyoming County, WV
Logistics ◼ Access to export and domestic markets via Norfolk Southern Railroad
0.9%
Itmann Project – High Returns & Measured Pace of Investment
Current Status
◼ Capex spending slowed given competing capital priorities.
9
Maximize sales to established customer base of rail-served power plants in the Eastern U.S., with a focus on top-performing environmentally-
controlled plants
Place approximately 2.0 – 2.5 million tons per annum in the seaborne met coal market
Selectively place remaining tonnage in opportunities (export or domestic) that maximize FOB mine margins
Capitalize on innovative marketing tactics and strategies to grow opportunities and realizations in all of the Company’s market areas
Illustrative portion of annual production
Source: CONSOL Energy Inc. management
1
2
3
4
~60 – 80%
~10%
~10 – 30%
◼ Creative contract structures
◼ Technical marketing initiatives to gain market share for PAMC by displacing other basins
◼ Development of crossover met markets for PAMC
Multi-pronged PAMC Marketing Strategy
PJM Southeast MISO Industrial/Met
10
In 2019, the Company sold PAMC coal to 23 domestic power plants located in 13 states, and to thermal and
metallurgical end-users located across five continents.
Highly-Diversified Portfolio Provides Stability
41%
57%
2%
Industrial/MetCustomers
Regulated PowerPlants
Merchant(Unregulated)Power Plants
Other Asia South AmericaEurope Africa India Canada/North America
Annual coal sales
2015A 2016A 2017A 2018A 2019A
Domestic Export Thermal Export Met
27.3
22.9 24.6
26.1
27.7
2019A Export thermal 2019A Export met
2019A Domestic
(million tons)
-2.6%
-24.8%
-38.2%-19.3%
-
20
40
60
80
100
120
140
160
4Q
17
1Q
18
2Q
18
3Q
18
4Q
18
1Q
19
2Q
19
3Q
19
4Q
19
1Q
20
Ind
ex
CEIX Average Revenue Per TonDomestic NAPP Coal Average Prompt MonthAPI 2 SpotAverage PJM Western Hub Around-The-Clock
0%
20%
40%
60%
80%
Jan-
18
Feb
-18
Mar
-18
Ap
r-18
May
-18
Jun
-18
Jul-
18
Au
g-18
Sep
-18
Oct
-18
No
v-18
Dec
-18
Jan-
19
Feb
-19
Mar
-19
Ap
r-19
May
-19
Jun
-19
Jul-
19
Au
g-19
Sep
-19
Oct
-19
No
v-19
Dec
-19
PAMC Top Customer Plants Other NAPP Rail-Served Plants
11
Average capacity factor (weighted by capacity)(2)(3)
Stable Pricing Profile(1)
Source: CONSOL Energy Inc. management, EIA, ABB Velocity Suite, and FactSet.(1) Domestic NAPP is sourced from CoalDesk LLC’s forecast at 4.75lb sulfur and 13,000 mmBtu.(2) PAMC Top Customer Plants represent the twelve domestic power plant customers to which PAMC shipped >500,000 tons of coal in 2018 and the ten domestic power plant customers to
which PAMC shipped >500,000 tons of coal in 2019.(3) Other NAPP Rail-Served Plants include all other power plants that took delivery of NAPP rail coal in each corresponding month.
Limited volume at risk due to announced power plant retirements
High Performing Customers and Diversification Reduces Volatility
15%Delta% 4% 19% 8% 14% 15% 13% 11% 14% 7% 11% 8% 8% 9% 14% 15% 18% 21% 24% 27% 21% 13%
Announced Coal Retirement1%
No Announced Coal Retirement
99%
2019 domestic power plant shipments by unit retirement status
15% 13%
12% higher average capacity factor in 201817% higher average capacity factor in 2019
(100)
(50)
-
50
100
150
200
250N
ov-
17
De
c-1
7
Jan
-18
Feb
-18
Mar
-18
Ap
r-1
8
May
-18
Jun
-18
Jul-
18
Au
g-1
8
Sep
-18
Oct
-18
No
v-1
8
De
c-1
8
Jan
-19
Feb
-19
Mar
-19
Ap
r-1
9
May
-19
Jun
-19
Jul-
19
Au
g-1
9
Sep
-19
Oct
-19
No
v-1
9
De
c-1
9
Jan
-20
Feb
-20
Mar
-20
Ap
r-2
0
May
-20
Ind
ex
CEIX LNG API 2 Oil Natural Gas
10
20
30
40
50
60
70
80
90
100
Jul-
20
Au
g-2
0
Sep
-20
Oct
-20
No
v-2
0
De
c-2
0
Jan
-21
Feb
-21
Mar
-21
Ap
r-2
1
May
-21
Jun
-21
Jul-
21
Au
g-2
1
Sep
-21
Oct
-21
No
v-2
1
De
c-2
1
Jan
-22
Feb
-22
Mar
-22
Ap
r-2
2
May
-22
Jun
-22
Jul-
22
Au
g-2
2
Sep
-22
Oct
-22
No
v-2
2
De
c-2
2
Ind
ex
Current LNG Forwards Current API 2 Forwards Current Oil Forwards Current Natural Gas Forwards
Commodity Market Volatility
12
Index value is relative to the corresponding actual value on 11/28/2017 (spin date).
Historical
Futures
46.539.2
17.425.5 21.5
12.5
34.4
29.6
44.818.3
9.9
3.4
80.9
68.862.2
43.8
31.5
15.9
-
20
40
60
80
100
2014 2015 2016 2017 2018 2019
Tra
nsa
ctio
n V
alu
e ($
B)
Debt Equity
12.3
7.5
2.1
7.29.6
6.3
6.2
1.4
2.2
7.1 1.4
1.0
18.6
8.9
4.3
14.3
11.0
7.4
-
5
10
15
20
25
2014 2015 2016 2017 2018 2019
Tra
nsa
ctio
n V
alu
e ($
B)
Debt Equity
Source: S&P Global Market Intelligence
Some totals may not foot due to rounding
Shrinking Access to Capital Strengthens Existing Production
13
Capital Market Access – Coal
Capital Market Access – E&P
• $303.0 billion capital raised 2014 – 2019.
• Debt = $162.6 billion
• Equity = $140.5 billion
• $64.4 billion capital raised 2014 – 2019.
• Debt = $45.1 billion
• Equity = $19.3 billion
Coal Supply Rationalization (pre-COVID-19)
14 Source: Doyle Trading Consultants
(1) Announced or obtained through MSHA
Domestic Coal Cutbacks(1)
◼ Supply rationalization is happening in the domestic and global markets.
◼ As of June 2020, DTC estimates that domestic coal production cutbacks were approximately 25 million tons since the start of 2019, including 22 million tons of thermal/steam coal.
◼ Colombia and Indonesia have recently announced supply reductions.
Date Company Mine Region Coal Type Annual Production17-Apr-20 ArcelorMittal Virginia Point No. 1 Surface Capp met 42,9497-Apr-20 Cleveland Cliffs North Fork Napp met 363,9712-Mar-20 Foresight Energy Shay #1 ILB steam 1,950,00021-Feb-20 Paringa Poplar Grove ILB steam 490,00021-Jan-20 Hallador Energy Carlisle ILB steam 405,0007-Jan-20 Blackhawk Mining Tom's Fork Road Capp met 400,000
26-Dec-19 Murray Genesis (Kronos) ILB thermal 2,380,0005-Dec-19 Bluestone Pay Car No. 58 Capp met/thermal 143,0004-Dec-19 Bluestone Pay Car No. 57 Capp met/thermal 83,000
15-Nov-19 Alliance Gibson North ILB thermal 1,800,000
1-Nov-19ARCH, Robertson, Bunn
Red Hawk ILB thermal 77,000
1-Nov-19ARCH, Robertson, Bunn
Black Hawk ILB thermal 316,000
15-Oct-19 Peabody Wildcat Hills ILB thermal 408,0008-Oct-19 Blackhawk Mining Buffalo Deep, Washington, Muddy Bridge Capp met 1,100,0001-Oct-19 Wolverine Fuels Dugout Canyon Rocky Mtn thermal 579,000
30-Sep-19 Peabody Kayenta Rocky Mtn thermal 5,450,00019-Sep-19 Murray Maple Eagle Capp met 665,0006-Sep-19 Rhino Riveredge Mine (Pennyrile) ILB thermal 1,270,0008-Aug-19 Alliance Dotiki ILB thermal 2,480,0007-Aug-19 Peabody Somerville Central ILB thermal 1,970,00022-Jul-19 Peabody Cottage Grove Pit ILB thermal n/a8-Apr-19 White Stallion Energy Liberty ILB thermal 961,000
25-Feb-19 Murray Paradise #9 ILB thermal 1,130,00025-Feb-19 Murray Lewis Creek ILB thermal 360,000
TOTAL 24,823,920
9,840
5,998
-39%
Select E&Ps
$M
M1,422
2,263
1193
788
1,602
725 748
1,099
750
1,450
510 575
1,125
298430
860
-47%
-36%
-57%
-27%
-30%
-59% -43%
-22%
AR CHK CNX COG EQT GPOR RRC SWN
$M
M
2019 Actual 2020 Guidance
E&P Supply Rationalizations
15
E&P Capex – 2019 Actual vs. 2020 Guidance
Source: data obtained through FactSet
(1) COG based on 4Q19 earnings.
(1) (1)
US Gas Rig Count16
Source: IHS Markit and Baker Hughes
-
10
20
30
40
50
60
70
China India Indonesia Vietnam Other Asia Remaining
Pla
nt
Capaciti
es (
GW
)
Under Construction Planned Not Under Construction
-
10
20
30
40
50
60
70
80
90
2019 2020 2021 2022 2023 2024
Pla
nt
Capaciti
es (
GW
)
China India Indonesia Vietnam Other Asia Rest of World
+ 77MMt
+ 57MMt
+ 17MMt+ 16MMt+ 15MMt
- 124MMt600
700
800
900
1,000
1,100
2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
Millio
n T
onnes (
MM
t)
Rest of World India Vietnam Bangladesh Egypt Philippines
Solid Global Coal-Fired Generation Capacity Growth Continues
Thermal coal demand expected to grow driven by Asia
17
Total Global Thermal Coal Demand Growth 2018 – 2030 = 58MMt
Source: S&P Global Market Intelligence and IHS Markit – Data as of Dec 2019
Global coal power plant build outs – under construction by year
Total Global Under Construction 2019 – 2024 = 146 GW
Total Global Planned (not under construction) 2019 & Beyond = 262 GW
Global coal power plant build outs – by country
Global Coal Supply at Risk
18
◼ Wood Mackenzie estimates that, at April spot prices, approximately 36% of total seaborne coal production would have a negative cash margin.
◼ The thermal coal market accounts for 440 million tonnes of high-risk production globally, or 93% of total.
◼ The metallurgical coal market accounts for 33 million tonnes of high-risk production globally, or 7% of total.
Source: Wood Mackenzie – “Spot prices put 36% of seaborne production at risk” – April 2020
0
100
200
300
400
500
Mill
ion t
onnes
High Risk Medium Risk Low Risk
0
40
80
120
160
200
Mill
ion t
onnes
High Risk Medium Risk Low Risk
Seaborne Thermal Coal Production at Risk Seaborne Metallurgical Coal Production at Risk
◼ Continue to reduce debt through mandatory amortization and opportunistic open market repurchases.
◼ Improve free cash flow generation through spending cuts and capex deferrals.
◼ Consistent with historical trends, focused on reducing legacy costs and liabilities.
◼ Long-term incentive compensation of executives tied to free cash flow generation and debt reduction.
◼ Strong liquidity position of $398 million at March 31, 2020, including $78 million of cash and cash
equivalents less CCR cash, provides flexibility in volatile commodity markets.
◼ Recently negotiated covenant relaxation provides continued access to the revolver and creates
flexibility to repurchase additional debt outstanding.
◼ Suspended CCR distribution, reduced capex and reduced SG&A to improve free cash flow
generation.
◼ Seek additional cash flow by improving working capital utilization.
19
Financial Priorities
Maintain strong
liquidity
De-lever the
balance sheet
Disciplined use of
capital
◼ Continue to operate assets with disciplined approach to capital expenditures.
◼ Evaluate other investment opportunities in light of cost of capital, B/S deleveraging, shareholder
returns and commodity price outlook.
◼ Ability to fund opportunistic and accretive growth investments through internally generated cash flows
while continuing ongoing debt reduction program.
$12 $26 $35 $57 $65$88
$128 $144$169
$38 $24
$65$43
$110$112
$72 $56
$101
$50 $50
$100 $100
$175$200 $200 $200
$270
1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20
CEIX Repurchase Program Authorization(1)Cumulative Repurchases Remaining Availability
$26 $23
$1 $6
$117
$17 $20 $22
$48
$1 $2$8
$18$10
$23
1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20
CEIX Repayment/Purchase Update Debt Repayment CEIX Equity Purchases
• Total debt payments of $280MM since the
beginning of 2018.
• Total CEIX and CCR share/unit repurchases
of $62MM since the beginning of 2018.
• Excludes finance lease principal payments of
~$15 million in 2018, ~$19 million in 2019
and ~$5 million in 1Q20.
Note: Chart values in millions.
1Q19 is pre-refinancing transaction.
Does not include mandatory amortization Term Loan A or Term Loan B payments.
20
CCR Equity Purchases
CEIX Debt/Equity Repurchases
• Repurchase authorization increased to an
aggregate amount of $270MM.
• Current availability now sits at $101MM.
• Does not include finance lease payments of
~$15 million in 2018, ~$19 million in 2019
and ~$5 million in 1Q20.
First Quarter 2020 Results
21
(1) “Average cash cost of coal sold per ton” and “average cash margin per ton sold” are operating ratios derived from non-GAAP financial measures; each are reconciled to the most directly comparable GAAP financial measure in
the appendix.
(2) Adjusted EBITDA and CONSOL Marine Terminal Adjusted EBITDA are non-GAAP financial measures. Please see the appendix for a reconciliation of each to net income.
(3) The 2020 capital guidance figure includes the Itmann project.
(4) Organic Free Cash Flow Net to CEIX Shareholders, a non-GAAP financial measure, is defined as Net Cash Provided by Operations less Capital Expenditures, less Distributions to Noncontrolling Interest. Organic Free Cash
Flow is a non-GAAP financial measure defined as Net Cash Provided by Operations less Capital Expenditures. Please see the appendix for a reconciliation to net cash provided by operations, the most directly comparable
GAAP measure.
For the Quarter Ended Guidance
March
31, 2020
March
31, 2019 ChangePennsylvania Mining Complex
Volumes (MM Tons)
Production 6.0 6.8 (0.8)
Sales 5.9 6.7 (0.8)
Operating Metrics ($/Ton)
Average Revenue per Ton Sold $43.16 $49.38 ($6.22)
Average Cash Cost of Coal Sold per Ton(1) $32.41 $29.71 $2.70
Average Cash Margin per Ton Sold(1) $10.75 $19.67 ($8.92)
CONSOL Marine TerminalVolumes (MM Tons)
Throughput Volume 3.4 4.0 (0.6)
Financials ($MM)
Terminal Revenue 17 18 (1)
Cash Operating and Other Costs 5 6 (1)
CONSOL Marine Terminal Adjusted EBITDA(2) 11 12 (1)
CEIX Financials ($MM)
Adjusted EBITDA(2) 63 118 (55)
Capital Expenditures 27 34 (7)
Organic Free Cash Flow Net to CEIX Shareholders(3) 19 42 (23)
Dilutive Earnings per Share ($/share) $0.09 $0.52 ($0.43)
CCR Financials ($MM)
Adjusted EBITDA(2) 14 28 (14)
Capital Expenditures 5 8 (3)
Organic Free Cash Flow(3) 12 17 (5)
Earnings Results
CCR Financial Metrics ($MM except ratio) LTM 3/31/2020
Leverage
EBITDA per Affiliated Company Credit Agreement(1) $88
Net Debt per Affiliated Company Credit Agreement(3) 194
Net Leverage Ratio(1) 2.2x
Liquidity (as of 3/31/2020)Cash and Cash Equivalents
Affiliated Company Credit Agreement
Less: Amount Drawn
Total CCR Liquidity
$0
275
(181)
$95
Adjusted Method Bank Method
LTM 3/31/2020 LTM 3/31/2020Leverage
EBITDA(1)(2) $350 $280
Consolidated Net Debt(3) 609 609
Net Leverage Ratio(1) 1.7x 2.2x
Adjusted EBITDA Attributable to CONSOL Energy Inc. Shareholders (1) $317
Consolidated Net Debt less Non-controlling Portion of CCR Affiliate Loan (4) 540
Modified Net Leverage Ratio(1) 1.7x
Liquidity (as of 3/31/2020)
Cash and Cash Equivalents less CCR Cash(5)
Revolving Credit Facility
Accounts Receivable Securitization (lesser of $100MM and A/R borrowing base)
Restricted Cash - Securitization
Less: Letters of Credit Outstanding
Total CEIX Liquidity $398
CEIX Financial Metrics ($MM except ratios)
$78
400
30
(111)
1
Leverage and Liquidity Analysis
22
(1) “EBITDA”, “Adjusted EBITDA”, “Bank EBITDA”, “Adjusted EBITDA Attributable to CONSOL Energy Inc. Shareholders” and “EBITDA per Affiliated Company Credit Agreement” are non-GAAP financial
measures. “Net leverage ratio” and “modified net leverage ratio” are operating ratios derived from non-GAAP financial measures. Please see the appendix for a reconciliation to net income.
(2) Adjusted Method is based on “Adjusted EBITDA” and Bank Method is based on “Bank EBITDA”.
(3) See appendix for a reconciliation.
(4) “Consolidated net debt less non-controlling portion of CCR Affiliate Loan” is a non-GAAP measure calculated as consolidated net debt of $609 million less the 38.6% public ownership of CCR’s Affiliate
Loan of ~$181 million.
(5) Calculated as CEIX cash and equivalents of $78.2 million as of 3/31/2020 less CCR cash and equivalents of ~$0.2 million as of 3/31/2020.
Some numbers may not foot due to rounding.
◼ PA Mining Complex’s MSHA reportable incident rate was 40% lower than the industry average from 2015 - 2019.1
◼ 2019 marked 6th consecutive year with an environmental compliance record exceeding 99.9%.1
◼ Board level HSE Committee oversees procedures for identifying, assessing, monitoring, and managing ESG risks.
Our Legacy is Built on Safety, Compliance, and Continuous Improvement
Our Future is Based on Efficiency, Technology, and Innovation
Corporate Sustainability Approach
(1) CONSOL management and corporate sustainability report.
(2) B Riley FBR, Can Coal Miners Weather the ESG Storm?, Industry Update, May 13, 2019.
(3) Thomson Reuters, Transparency: The Pathway to Leadership for Carbon Intensive Businesses, February, 2019.
ESG Aspects of Greatest Stakeholder Concern and Impact to CONSOL
◼ Innovative technologies deployed at PA Mining Complex directly relate to ESG aspects of greatest impact to CONSOL.
◼ Partnerships with Komatsu Mining Corporation, Environmental Commodities Corporation, and OMNIS Bailey, LLC.
◼ Recently recognized for sector leadership in ESG disclosures, transparency, and strategic initiatives.2,3
23
ESG Priorities: Creating Shared Value
(1) U.S. Energy Information Administration, 2018
For more information, visit: www.consolenergy.com/responsibility
Environment
Society
Business
• Producing high-Btu bituminous coal; carbon intensity 5-20% below other ranks.1
• Marketing to low heat rate, environmentally controlled customers.
• Expanding methane destruction program to decrease direct emissions.
• Reducing water use intensity through focused reuse and recycling.
Sha
red
Va
lue
• Supporting the health, wellness, and professional development of our workforce.
• Developing community partnerships through the CONSOL Cares Foundation.
• Expanding global access to electricity, through participation in the export market.
• Providing a reliable, resilient, and affordable source of domestic energy.
• Integrating sound governance principals and strong operational performance.
• Incentivizing ESG performance at all levels with compensation awards.
• Maintaining transparency, disclosure, engagement, and risk management.
• Contributing more than $1B to the economy annually.
24
Risk Based Approach
Stakeholder Engagement
TransparencyContinuous
Improvement
CONSOL Committed to Become a Bettercoal Supplier
25
Bettercoal’s Values Align with CONSOL’s Management Approach and Commitment to ESG
Exemplifying Our Commitment to Continuous Improvement with Bettercoal
◼ Bettercoal is a global organization that was established by major coal buyers.(1)
◼ Seeks to advance the continuous improvement of sustainability performance in the
coal supply chain.
◼ The “Bettercoal Code” is an internationally recognized standard of operating principles.
◼ Ethical, Social, and Environmental Components
Creating
Shared
Value
(1) Bettercoal, 2019. https://bettercoal.org
Appendix
26
Organizational Structure Overview
27
100% ownership interest
CONSOL Energy Inc.
NYSE: CEIX
~26 million shares outstanding
Pennsylvania Mining Complex
CONSOL Coal Resources GP LLC
(“our general partner”)
General Partner Interest
CONSOL Coal Resources LPNYSE: CCR
100% ownership interest
1.7% general partner interest
38.6% limited partner interest
25% undivided ownership interestand management and control rights
75% undivided ownership interest(1)
59.7% limited partner
interestCONSOL Marine
Terminal
1.5 billion tons of
undeveloped
reserves(2)
Public and Private
Placement
10,878,433
Common Units
Source: CONSOL Energy Inc. filings and Management.(1) Owned through CONSOL Pennsylvania Coal Company LLC (“CPCC”) and Conrhein Coal Company (“Conrhein”).(2) Through various subsidiaries and associated entities.
Itmann Mine
(Metallurgical Coal
Project)
$1,497
$1,362
$1,267
$1,163
$1,067 $1,087 $1,081
$139 $133
$92$73 $75 $74 $74
2014 2015 2016 2017 2018 2019 LTM3/31/2020
Total Legacy Liabilities
Total Annual Legacy Liabilities Cash Servicing Cost
Legacy liabilities
($mm)
Balance Sheet
Value
Cash Servicing
Cost
LTM 3/31/2020
Long-term disability 13 2
Workers’ compensation 71 12
Coal workers’ pneumoconiosis 214 14
Other post-employment benefits 460 31
Pension obligations 46 1
Asset retirement obligations 277 14
Total legacy liabilities 1,081 74
3/31/2020
CEIX Balance Sheet Legacy Liabilities
28
2023E Payments2019A Payments
$61 $54
CEIX legacy liabilities and cash costs
($ mm)
CEIX employee-related liability projections
OPEB CWP Workers' Comp LTD NQ Pension
Significant legacy liability reductions over the past three years
◼ The OPEB liability decreased $9 million from 2018 to 2019.
◼ A result of a decreasing trend of actual claims over the past 3
years and the passing of the SECURE Act, despite the large
impact of a lower discount rate.
◼ Cash payments related to legacy liabilities are declining over time.
◼ Approximately 69% of all CEIX employee liabilities are closed classes.
− Actuarial and demographic developments continue to drive medium-
term reduction in liabilities.
− Actively managing costs down.
◼ CEIX’s Qualified Pension Plan was over 90% funded as of 3/31/2020.
− This compares favorably to 76% funded level of the S&P 1500
universe of companies.
− Plan asset returns were in the top 4% of US Corporate DB Plans for
calendar year 2019 and the top 14% over the last 10 years.
Source: Mercer
Some totals may not foot due to rounding.
Experienced Management with Enhanced Focus on Safety, Compliance and Financial Discipline
29
Jim McCaffrey
Chief Commercial Officer
◼ CCO and SVP of Coal Marketing since
2017
◼ SVP – Energy Marketing for CNX from
2013 to 2016
◼ 42 years in industry, all at CONSOL
Kurt SalvatoriChief Administrative Officer
◼ VP– Administration for CEIX since 2017
◼ Previously served as VP Shared Services
for CNX from 2016 – 2017
◼ Has held variety of HR positions at
CONSOL
◼ 27 years in industry all at CONSOL
Jimmy Brock
President and Chief Executive Officer
◼ President and CEO since 2017
◼ COO – Coal for CNX from 2010 – 2017
◼ Appointed CEO and Director of CCR in
2015
◼ 40 years in coal industry, all at CONSOL
Mitesh Thakkar
Interim Chief Financial Officer
◼ Director of Investor Relations & Finance
since 2015, held same position with CCR
◼ 13 years of experience following equities in
the metals and mining sector, including 11
years covering the coal sector
◼ 18 years of Financial and Management
experience; 5 years with CONSOL Energy
Eric Schubel
VP – Operations
◼ VP – Operations, overseeing the
Pennsylvania Mining Complex since 2017
◼ Served as General Superintendent at
various mining operations for CONSOL
◼ 34 years in industry, all at CONSOL
Martha Wiegand
General Counsel and Secretary
◼ General Counsel and Secretary of CEIX
since 2017; has held same role at CCR
since 2015
◼ Served as Associate General Counsel for
CNX from 2012 – 2015
◼ Legal career spanning 19 years
◼ 11 years of experience at CONSOL
◼ Significant expertise owning, developing, and
managing coal and associated infrastructure assets.
− Reduced operating costs per ton sold by 17%
from 2014–2019.
◼ Strong focus on safety and compliance standards.
− PAMC's Mine Safety and Health Administration
("MSHA") reportable incident rate was ~40%
lower than the industry average in 2015-2019.
− PAMC’s MSHA significant and substantial citation
rate was 59% lower than the industry average for
YE 2019.
− Executive and workforce compensation tied in
part to environmental and safety performance.
◼ Addressing environmental and legacy liabilities.
− Cash servicing costs reduced from $139mm in
2014 to $74mm in LTM 3/31/2020.
◼ Management incentivized to improve free cash flow
and continue to de-leverage balance sheet.
◼ Strong commitment to environmental responsibility.
− Environmental compliance rate of 99.9%.
− Taken action to reduce scope 1 (direct
greenhouse gas) emissions by 50% since 2011.
◼ CEIX’s management and operating teams have a long history in the coal industry.
− Proven track record of successfully building, enhancing and managing
coal assets.
− Focus on growing return on capital through strategic capital allocation grounded in
detailed commodity analysis.
◼ CEIX management has a strong focus on financial discipline.
− Demonstrated ability to improve operating performance and maintain
low cash costs.
− Primary use of organic FCF(1) will be to de-lever the balance sheet through 2021.
Source: CONSOL management.
Note: Effective November 28, 2017, the company known as CONSOL Energy Inc. (NYSE: CNX) separated its natural gas business (GasCo or RemainCo) and its coal business (CoalCo or SpinCo) into
two independent, publicly traded companies by means of a separation of CoalCo from RemainCo. CNX refers to former CONSOL Energy Inc. prior to spin. CEIX refers to current CONSOL
Energy Inc. (CoalCo). CCR refers to the CONSOL Coal Resources, MLP, formerly CNX Coal Resources. “CONSOL” refers to current and prior CONSOL Energy Inc. entities.
(1) Organic free cash flow is defined as operating cash flow less capital expenditures.
Key performance results
Experienced management team
CEIX Adjusted EBITDA & Organic Free Cash Flow Net to CEIX Shareholders Reconciliations
30
Some totals may not foot due to rounding.
Organic Free Cash Flow Net to CEIX Shareholders Reconciliation
1Q20 1Q19
Net Cash Provided by Operating Activities $51.4 $82.2
Less: Capital Expenditures (27.2) (34.2)
Organic Free Cash Flow $24.2 $48.0
Less: Distributions to Noncontrolling Interest (5.6) (5.6)
Organic Free Cash Flow Net to CEIX Shareholders $18.6 $42.4
EBITDA Reconciliation LTM
1Q20 1Q19 3/31/2020
Net Income $2.5 $20.3 $75.7
Plus:
Interest Expense, net 15.7 18.6 63.5
Interest Income (0.2) (0.9) (2.3)
Income Tax Expense (Benefit) 1.9 (0.9) 7.3
Depreciation, Depletion and Amortization 54.9 50.7 211.3
EBITDA $74.8 $87.9 $355.6
Plus:
(Gain) Loss on Debt Extinguishment (16.8) 23.1 (15.5)
Stock/Unit-Based Compensation 5.0 7.5 10.3
Total Pre-tax Adjustments (11.8) 30.6 (5.2)
Adjusted EBITDA $62.9 $118.5 $350.4
Less: Adjusted EBITDA Attributable to Noncontrolling Interest (6.0) (11.4) (33.5)
Adjusted EBITDA Attributable to CONSOL Energy Inc. Shareholders $57.0 $107.1 $316.9
Organic Free Cash Flow Reconciliation
1Q20 1Q19
Net Cash Provided by Operating Activities $16.8 $25.2
Less: Capital Expenditures (5.2) (8.1)
Organic Free Cash Flow $11.6 $17.1
CCR Adjusted EBITDA & Organic Free Cash Flow Reconciliations
31
Some totals may not foot due to rounding.
Adjusted EBITDA Reconciliation
1Q20 1Q19
Net Income $0.2 $15.2
Plus:
Interest Expense, Net 2.2 1.4
Depreciation, Depletion and Amortization 11.9 11.2
EBITDA $14.2 $27.8
Plus:
Unit-Based Compensation 0.2 0.4
Adjusted EBITDA $14.4 $28.2
CEIX Net Leverage Ratio Reconciliations Adjusted Method Bank MethodLTM 3/31/2020 LTM 3/31/2020
Net Income $76 $76
Plus:
Interest Expense, net $64 $64
Interest Income ($2) ($2)
Income Tax Expense $7 $7
EBIT $144 $144
Plus:
Depreciation, Depletion and Amortization $211 $211
EBITDA $356 $356
Plus:
Stock/Unit-Based Compensation $10 $10
Gain on Debt Extinguishment ($16) ($16)
Total Pre-tax Adjustments ($5) ($5)
Adjusted EBITDA $350 $350
Less:
CCR EBITDA per Affiliated Company Credit Agreement, Net of Distributions Received - ($58)
Employee Legacy Liability Payments, Net of Provision - ($20)
Other Adjustments - $7
Bank EBITDA - $280
Total Long-Term Debt $627 $627
Plus: Current Portion of Long-Term Debt $67 $67
Plus: Debt Issuance Costs $9 $9
Less: CCR Finance Leases and Asset-Backed Financing ($14) ($14)
Less: Advanced Mining Royalties ($2) ($2)
Less: CEIX Cash and Cash Equivalents ($78) ($78)
Consolidated Net Debt 609 609
Net Leverage Ratio 1.7x 2.2x
CEIX Net Leverage Ratio Reconciliations
32
Some totals may not foot due to rounding.
CCR Net Leverage Ratio Reconciliation
LTM 3/31/2020
Net Income $30.5
Plus:
Interest Expense, Net 7.4
Depreciation, Depletion and Amortization 46.5
Unit-Based Compensation 1.2
Non-Cash Expense, Net of Cash Payments for Legacy Employee Liabilities 1.2
Other Adjustments to Net Income 1.2
EBITDA Per Affiliated Company Credit Agreement $88.0
Borrowings under Affiliated Company Credit Agreement $180.6
Finance Leases and Asset-Backed Financing 14.0
Total Debt $194.6
Less:
Cash on Hand 0.2
Net Debt per Affiliated Company Credit Agreement $194.4
Net Leverage Ratio (Net Debt/EBITDA) 2.2x
CCR Net Leverage Ratio Reconciliation
33
Some totals may not foot due to rounding.
($MM except per ton data) 1Q20 1Q19
Total Coal Revenue $255 $333
Operating and Other Costs 212 230
Less: Other Costs (Non-Production) (21) (31)
Total Cash Cost of Coal Sold 191 199
Add: Depreciation, Depletion and Amortization 55 51
Less: Depreciation, Depletion and Amortization (Non-Production) (9) (8)
Total Cost of Coal Sold $237 $242
Average Revenue per Ton Sold $43.16 $49.38
Average Cash Cost of Coal Sold per Ton $32.41 $29.71
Depreciation, Depletion and Amortization Costs per Ton Sold $7.63 $6.21
Average Cost of Coal Sold per Ton $40.04 $35.92
Average Margin per Ton Sold $3.12 $13.46
Add: Depreciation, Depletion and Amortization Costs per Ton Sold $7.63 $6.21
Average Cash Margin per Ton Sold $10.75 $19.67
Average Cash Margin and Average Cost per Ton Sold Reconciliations
34
Some totals may not foot due to rounding.
CMT EBITDA Reconciliation
1Q20 1Q19
Net Income $7.5 $9.2
Plus:
Interest Expense, net 1.5 1.5
Depreciation, Depletion and Amortization 1.3 0.9
EBITDA $10.3 $11.7
Plus:
Stock/Unit-Based Compensation 0.2 0.4
Total Pre-tax Adjustments 0.2 0.4
Adjusted EBITDA $10.6 $12.0
CMT Adjusted EBITDA Reconciliation
35
Some totals may not foot due to rounding.