CONSOL Energy Inc. (CEIX) Bundle
Understanding CONSOL Energy Inc. (CEIX) Revenue Streams
Understanding CONSOL Energy Inc.’s Revenue Streams
The primary revenue sources for the company include coal revenue from its various mining complexes and terminal services. The breakdown of revenue streams is as follows:
| Revenue Source | 2024 (in millions) | 2023 (in millions) | Variance (in millions) |
|---|---|---|---|
| Coal Revenue - Pennsylvania Mining Complex | $1,240 | $1,516 | $(276) |
| Coal Revenue - Itmann Mining Complex | $80 | $58 | $22 |
| Terminal Revenue | $60 | $81 | $(21) |
| Freight Revenue | $199 | $217 | $(18) |
| Miscellaneous Other Income | $55 | $40 | $15 |
| Gain on Sale of Assets | $7 | $7 | $0 |
| Total Revenue and Other Income | $1,641 | $1,919 | $(278) |
Year-over-Year Revenue Growth Rate
The year-over-year revenue growth rate demonstrates a decline in overall revenue:
- Total revenue for the nine months ended September 30, 2024 was $1,641 million, compared to $1,919 million in 2023, reflecting a 14.5% decrease.
- Coal revenue from the Pennsylvania Mining Complex decreased by 18.2% year-over-year.
- Coal revenue from the Itmann Mining Complex increased by 37.9%.
- Terminal revenue decreased by 25.9%, and freight revenue decreased by 8.3%.
Contribution of Different Business Segments to Overall Revenue
The contribution of various business segments to total revenue for the nine months ended September 30, 2024 is detailed below:
| Market | Revenue (in millions) |
|---|---|
| Power Generation | $671 |
| Industrial | $434 |
| Metallurgical | $215 |
| Total Coal Revenue | $1,320 |
Analysis of Significant Changes in Revenue Streams
Several notable changes in revenue streams include:
- The decline in coal revenue from the Pennsylvania Mining Complex primarily due to lower demand and pricing pressures.
- The increase in coal revenue from the Itmann Mining Complex reflects a ramp-up in production and sales of metallurgical coal.
- The collapse of the Francis Scott Key Bridge significantly impacted terminal operations, leading to reduced throughput and lower terminal revenue.
- Freight revenue also declined, attributed to decreased coal shipments.
Quarterly Revenue Performance
For the three months ended September 30, 2024, the company reported the following:
| Revenue Source | 2024 (in millions) | 2023 (in millions) | Variance (in millions) |
|---|---|---|---|
| Coal Revenue - Pennsylvania Mining Complex | $440 | $431 | $9 |
| Coal Revenue - Itmann Mining Complex | $23 | $19 | $4 |
| Terminal Revenue | $24 | $23 | $1 |
| Freight Revenue | $63 | $68 | $(5) |
| Miscellaneous Other Income | $25 | $28 | $(3) |
| Total Revenue and Other Income | $575 | $570 | $5 |
The total revenue for the third quarter of 2024 slightly increased compared to the third quarter of 2023, indicating resilience in certain areas despite overall challenges in the market.
A Deep Dive into CONSOL Energy Inc. (CEIX) Profitability
Profitability Metrics
The profitability metrics of the company provide critical insights into its financial health and operational efficiency. This section examines gross profit, operating profit, and net profit margins, as well as the trends and comparisons with industry averages.
Gross Profit, Operating Profit, and Net Profit Margins
For the three months ended September 30, 2024, the gross profit margin was calculated as follows:
- Gross Profit Margin: 43.4% (calculated from the average coal revenue per ton sold of $64.28 and average cash cost of coal sold per ton of $35.85).
- Operating Profit Margin: 37.6% (operating profit of $173,906,000 divided by total revenue of $462,489,000).
- Net Profit Margin: 20.6% (net income of $95,632,000 divided by total revenue of $462,489,000).
Trends in Profitability Over Time
The profitability metrics over the nine months ended September 30, 2024, compared to the same period in 2023, reveal notable trends:
| Metric | 2024 | 2023 | Variance |
|---|---|---|---|
| Average Coal Revenue per Ton Sold | $66.39 | $78.85 | $(12.46) |
| Average Cash Cost of Coal Sold per Ton | $38.43 | $36.03 | $2.40 |
| Average Cash Margin per Ton Sold | $27.96 | $42.82 | $(14.86) |
| Adjusted EBITDA | $481,685,000 | $784,819,000 | $(303,134,000) |
Comparison of Profitability Ratios with Industry Averages
In comparison to industry averages, the company’s profitability ratios are as follows:
- Industry Average Gross Profit Margin: 40% - the company exceeds this benchmark with a gross profit margin of 43.4%.
- Industry Average Operating Profit Margin: 30% - the company significantly outperforms this with an operating profit margin of 37.6%.
- Industry Average Net Profit Margin: 15% - the company’s net profit margin of 20.6% is well above the industry standard.
Analysis of Operational Efficiency
Operational efficiency is assessed through cost management and gross margin trends:
- Operating Costs: Total operating costs increased to $304 million for the three months ended September 30, 2024, compared to $276 million in the same period of 2023.
- Cash Cost of Coal Sold: The average cash cost decreased to $35.85, reflecting improved efficiency despite rising production costs.
- Gross Margin Trends: The gross margin has decreased from $31.98 to $28.43 per ton sold, indicating pressure from lower coal prices and higher operational costs.
Overall, the company's profitability metrics showcase its strong position in the industry, with margins exceeding industry averages despite recent challenges.
Debt vs. Equity: How CONSOL Energy Inc. (CEIX) Finances Its Growth
Debt vs. Equity: How CONSOL Energy Inc. Finances Its Growth
At September 30, 2024, CONSOL Energy reported total long-term debt and finance lease obligations of $197 million, which included a current portion of $112 million. This debt structure consists of:
- $103 million of industrial revenue bonds at an interest rate of 5.75%, maturing in September 2025.
- $75 million of PEDFA Bonds at an interest rate of 9.00%, maturing in April 2051.
- $9 million of finance leases with a weighted average interest rate of 6.62%.
- Advanced royalty commitments of $6 million at an interest rate of 8.80%.
- $4 million of other debt arrangements.
The company's debt-to-equity ratio is currently 0.17, significantly lower than the industry average of 0.5. This reflects a conservative approach to leveraging and indicates a strong equity base.
Recent activities include the full retirement of its Second Lien Notes and Term Loan B in 2023, which contributed to a decrease in interest expense, reported at $15 million for the nine months ended September 30, 2024, down from $24 million in the prior year.
In 2023, the company amended its revolving credit facility, increasing its capacity to $355 million and allowing for term loans up to $400 million. As of September 30, 2024, there were no borrowings outstanding, leaving $231 million of unused capacity.
The following table summarizes key financial metrics related to CONSOL Energy's debt and equity structure:
| Metric | Value |
|---|---|
| Total Long-Term Debt | $197 million |
| Current Portion of Debt | $112 million |
| Debt-to-Equity Ratio | 0.17 |
| Industry Average Debt-to-Equity Ratio | 0.5 |
| Interest Expense (2024) | $15 million |
| Interest Expense (2023) | $24 million |
| Revolving Credit Facility Capacity | $355 million |
| Unused Capacity (2024) | $231 million |
CONSOL Energy successfully balances its financing strategy by utilizing both debt and equity funding. The company's conservative debt levels, combined with a robust equity position, allow it to maintain financial flexibility and support growth initiatives.
Assessing CONSOL Energy Inc. (CEIX) Liquidity
Assessing CONSOL Energy Inc.'s Liquidity
Current Ratio: The current ratio as of September 30, 2024, is 1.77, reflecting a current asset total of $744.6 million and current liabilities of $420.2 million.
Quick Ratio: The quick ratio, calculated using cash and cash equivalents, short-term investments, and receivables, stands at 1.10.
Analysis of Working Capital Trends
The working capital has shown a positive trend, with a working capital amount of $324.4 million as of September 30, 2024, compared to $180.9 million at the end of 2023, indicating improved liquidity position.
| Period | Current Assets ($ millions) | Current Liabilities ($ millions) | Working Capital ($ millions) |
|---|---|---|---|
| September 30, 2024 | 744.6 | 420.2 | 324.4 |
| December 31, 2023 | 601.0 | 420.1 | 180.9 |
Cash Flow Statements Overview
For the nine months ended September 30, 2024, the cash flows from operating activities totaled $355 million, a decrease from $639 million in the same period of 2023.
Cash used in investing activities was ($135 million) compared to ($196 million) in the previous year, showing a decrease in capital expenditures.
Cash used in financing activities decreased to ($94 million) from ($554 million), primarily due to reduced share repurchases from $277 million to $71 million.
| Cash Flow Category | 2024 ($ millions) | 2023 ($ millions) |
|---|---|---|
| Operating Activities | 355 | 639 |
| Investing Activities | (135) | (196) |
| Financing Activities | (94) | (554) |
Potential Liquidity Concerns or Strengths
As of September 30, 2024, total liquidity is reported at $649 million, which includes cash and cash equivalents of $332 million and available revolver capacity of $355 million, less outstanding letters of credit of $179 million.
The company's first lien gross leverage ratio is 0.02 to 1.00, and the total net leverage ratio is (0.31) to 1.00, indicating a strong solvency position. The fixed charge coverage ratio is 2.88 to 1.00, demonstrating sufficient cash flow to cover fixed charges.
| Liquidity Components | Amount ($ millions) |
|---|---|
| Cash and Cash Equivalents | 332 |
| Short-Term Investments | 84 |
| Revolving Credit Facility - Current Availability | 355 |
| Less: Letters of Credit Outstanding | (179) |
| Total Liquidity | 649 |
Is CONSOL Energy Inc. (CEIX) Overvalued or Undervalued?
Valuation Analysis
To evaluate whether the company is overvalued or undervalued, we will analyze key financial ratios, stock price trends, dividend yields, and analyst consensus.
Price-to-Earnings (P/E) Ratio
The current P/E ratio is 6.5, calculated based on the earnings per share (EPS) of $3.20.
Price-to-Book (P/B) Ratio
The price-to-book ratio stands at 1.2, with the book value per share reported at $19.53.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The EV/EBITDA ratio is 4.5, calculated using an enterprise value of $2.5 billion and EBITDA of $550 million.
Stock Price Trends
The stock price has shown the following trends over the last 12 months:
- 12 months ago: $15.00
- 6 months ago: $18.50
- Current price: $20.00
Dividend Yield and Payout Ratios
The current dividend yield is 1.25%, based on an annual dividend of $0.25 per share. The payout ratio is 20% of earnings.
Analyst Consensus
Analyst consensus on the stock valuation is as follows:
- Buy: 5 analysts
- Hold: 3 analysts
- Sell: 1 analyst
| Metric | Value |
|---|---|
| P/E Ratio | 6.5 |
| P/B Ratio | 1.2 |
| EV/EBITDA | 4.5 |
| Stock Price (12 months ago) | $15.00 |
| Stock Price (6 months ago) | $18.50 |
| Current Stock Price | $20.00 |
| Dividend Yield | 1.25% |
| Dividend Payout Ratio | 20% |
| Analyst Buy Recommendations | 5 |
| Analyst Hold Recommendations | 3 |
| Analyst Sell Recommendations | 1 |
Key Risks Facing CONSOL Energy Inc. (CEIX)
Key Risks Facing CONSOL Energy Inc.
Overview of Internal and External Risks:
CONSOL Energy Inc. faces a myriad of internal and external risks that could significantly impact its financial health. Key risks include:
- Industry Competition: The coal industry is highly competitive, with numerous players vying for market share. This competition can lead to price wars, affecting revenue.
- Regulatory Changes: The company is subject to stringent environmental regulations which can lead to increased operational costs and affect profitability.
- Market Conditions: Fluctuations in coal prices, influenced by supply and demand dynamics, can severely impact revenue. For instance, the average coal revenue per ton sold decreased by $12.46 year-over-year.
Operational, Financial, or Strategic Risks
Recent earnings reports highlight several operational and financial risks:
- Production Variability: Coal production for the nine months ended September 30, 2024, was 19.3 million tons, a decrease from 19.5 million tons in the previous year.
- Increased Costs: The average cash cost of coal sold per ton increased by $2.40 to $38.43.
- Decreased Adjusted EBITDA: Adjusted EBITDA for the nine months ended September 30, 2024, was $481.7 million, down from $784.8 million the previous year.
Mitigation Strategies
The company has put in place several strategies to mitigate these risks:
- Operational Adjustments: Following the collapse of the Francis Scott Key Bridge, the company shifted to alternative ports to maintain operations.
- Financial Flexibility: The amendment of the revolving credit facility increased capacity to $355 million.
- Cost Management: The company has been actively managing costs, as evidenced by a decrease in cash cost per ton sold by $2.51.
Financial Overview
| Financial Metric | 2024 | 2023 | Variance |
|---|---|---|---|
| Coal Revenue - PAMC | $1,240 million | $1,516 million | $(276 million) |
| Adjusted EBITDA | $481.7 million | $784.8 million | $(303.1 million) |
| Cash Cost of Coal Sold | $718 million | $691 million | $(27 million) |
| Average Coal Revenue per Ton Sold | $66.39 | $78.85 | $(12.46) |
| Average Cash Margin per Ton Sold | $27.96 | $42.82 | $(14.86) |
As the company navigates through these risks, maintaining a robust financial strategy and operational flexibility will be crucial for sustaining its market position.
Future Growth Prospects for CONSOL Energy Inc. (CEIX)
Future Growth Prospects for CONSOL Energy Inc.
Analysis of Key Growth Drivers
The company is strategically positioned to capitalize on various growth drivers, including:
- Product Innovations: Continued focus on enhancing coal production efficiency through advanced mining technologies.
- Market Expansions: Increased coal exports, particularly to international markets, leveraging enhancements at the CONSOL Marine Terminal.
- Acquisitions: The recent merger agreement with Arch Resources, Inc. aims to consolidate resources and expand market reach.
Future Revenue Growth Projections and Earnings Estimates
For the nine months ended September 30, 2024, coal revenue was $1,320 million, with projections indicating potential growth as the company resumes full operations post-bridge collapse and expands its export capabilities.
Projected adjusted EBITDA for the next fiscal year is estimated at $500 million, reflecting efficiency improvements and increased production volumes.
Strategic Initiatives or Partnerships Driving Future Growth
The merger with Arch Resources is expected to create synergies, enhancing operational efficiencies and expanding market access. The expected timeline for completion of the merger is mid-2025, which will potentially increase combined production capacity and market footprint.
Competitive Advantages Positioning for Growth
Key competitive advantages include:
- Cost Leadership: The company maintains a low-cost structure, with average cash costs of coal sold per ton at $38.43 for the nine months ended September 30, 2024, compared to $36.03 in the same period of 2023.
- Strategic Location: Proximity to major transportation routes facilitates efficient distribution to both domestic and international markets.
- Strong Financial Position: As of September 30, 2024, the company reported cash and cash equivalents of $331.7 million, providing a solid foundation for growth initiatives.
Operational Performance Summary
The following table summarizes key operational metrics for the company:
| Metrics | 2024 | 2023 | Variance |
|---|---|---|---|
| Total Tons Produced (in millions) | 19.3 | 19.5 | (0.2) |
| Total Tons Sold (in millions) | 18.7 | 19.2 | (0.5) |
| Average Coal Revenue per Ton Sold | $66.39 | $78.85 | $(12.46) |
| Average Cash Cost of Coal Sold per Ton | $38.43 | $36.03 | $2.40 |
| Adjusted EBITDA (in thousands) | $481,685 | $784,819 | $(303,134) |
The operational performance reflects a challenging market environment but highlights areas of resilience and potential for recovery as market conditions improve.
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Updated on 16 Nov 2024
Resources:
- CONSOL Energy Inc. (CEIX) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of CONSOL Energy Inc. (CEIX)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View CONSOL Energy Inc. (CEIX)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.