CNX Resources Corporation (CNX) Bundle
Understanding CNX Resources Corporation (CNX) Revenue Streams
Understanding CNX Resources Corporation’s Revenue Streams
The company's primary revenue sources are derived from natural gas, natural gas liquids (NGL), and oil sales. The following table summarizes key revenue figures for the nine months ended September 30, 2024, compared to the same period in 2023.
| Revenue Source | 2024 (in millions) | 2023 (in millions) | Variance (in millions) | Percent Change |
|---|---|---|---|---|
| Natural Gas, NGLs, and Oil Revenue | $822 | $968 | $(146) | (15.1%) |
| Gain on Commodity Derivative Instruments | $240 | $128 | $112 | 87.5% |
| Purchased Gas Revenue | $53 | $57 | $(4) | (7.0%) |
| Other Revenue and Operating Income | $145 | $56 | $89 | 158.9% |
| Total Revenue and Other Operating Income | $1,130 | $2,466 | $(1,336) | (54.1%) |
For the three months ended September 30, 2024, total revenue and other operating income amounted to $424 million, compared to $350 million in the same period of 2023, reflecting a year-over-year increase of 20.9%.
Year-over-Year Revenue Growth Rate
The year-over-year revenue growth rate shows fluctuations influenced by market conditions and operational performance. The following analysis reflects these trends:
- 2023-2024: Total Revenue and Other Operating Income increased by 20.9% from Q3 2023 to Q3 2024.
- 2022-2023: Total Revenue and Other Operating Income decreased by approximately 54.1% from the nine months ended September 30, 2023, compared to the same period in 2022.
Contribution of Different Business Segments to Overall Revenue
The Shale segment remains the dominant contributor to revenue, alongside the Coalbed Methane (CBM) segment and other revenue streams. The following breakdown illustrates the contribution of each segment for the nine months ended September 30, 2024:
| Segment | Revenue (in millions) | Percentage of Total Revenue |
|---|---|---|
| Shale | $746 | 66.0% |
| CBM | $75 | 6.6% |
| Other | $1 | 0.1% |
| Total | $822 | 100% |
The Shale segment has seen a decrease in revenue of $123 million compared to the previous year, largely due to lower natural gas prices and production volumes.
Analysis of Significant Changes in Revenue Streams
In 2024, significant changes in revenue streams include:
- Natural Gas Revenue: Decreased to $682.8 million for the nine months ended September 30, 2024, down from $841.8 million in 2023, marking an 18.9% decline.
- NGL Revenue: Increased to $131.8 million from $114.9 million, a 14.7% growth.
- Oil Revenue: Decreased to $7.1 million from $11.1 million, representing a 35.8% decline.
The overall revenue decline is attributed to lower natural gas prices, which fell by approximately 16.7% year-over-year, alongside a decrease in production volumes.
A Deep Dive into CNX Resources Corporation (CNX) Profitability
Profitability Metrics
Gross Profit Margin: For the nine months ended September 30, 2024, CNX reported a gross profit margin of 23.8%, compared to 48.0% in the same period of 2023. This reflects a significant decrease in profitability due to lower natural gas prices and production volumes.
Operating Profit Margin: The operating profit margin for the nine months ended September 30, 2024, was 6.9%, down from 32.6% in the prior year. Operating income for 2024 was $78 million, compared to $393 million in 2023.
Net Profit Margin: The net profit margin decreased dramatically to 4.8% for the nine months ended September 30, 2024, from 48.9% for the same period in 2023. Net income was reported at $54 million, a sharp decline from $1,207 million in 2023.
| Metric | 2024 | 2023 | Change |
|---|---|---|---|
| Gross Profit Margin | 23.8% | 48.0% | -24.2% |
| Operating Profit Margin | 6.9% | 32.6% | -25.7% |
| Net Profit Margin | 4.8% | 48.9% | -44.1% |
Trends in Profitability Over Time: The profitability metrics show a concerning trend, with gross, operating, and net profit margins all significantly declining as of September 30, 2024. This downturn is primarily attributed to a drop in natural gas prices and production volumes, which have affected overall revenue.
Comparison of Profitability Ratios with Industry Averages: The industry average gross profit margin for natural gas companies stands around 40%. The reported 23.8% gross profit margin for CNX indicates underperformance relative to industry peers. The operating profit margin of 6.9% is also below the typical range of 15-25% for the industry.
Operational Efficiency Analysis: CNX's operational efficiency has been impacted by rising costs and declining revenues. The company reported total operating expenses of $937 million for the nine months ended September 30, 2024, compared to $892 million in the same period of 2023. The increase in costs was driven by higher lease operating expenses and transportation costs.
| Cost Component | 2024 (in millions) | 2023 (in millions) | Change |
|---|---|---|---|
| Total Operating Expenses | $937 | $892 | +5.0% |
| Lease Operating Expenses | $53 | $46 | +15.2% |
| Transportation Costs | $284 | $282 | +0.7% |
The gross margin trend has shown a decline from $1.72 per Mcfe in 2023 to $1.60 per Mcfe in 2024. The overall operational efficiency is under pressure due to increased costs and lower revenue, leading to a significant drop in profitability metrics.
Debt vs. Equity: How CNX Resources Corporation (CNX) Finances Its Growth
Debt vs. Equity: How CNX Resources Corporation Finances Its Growth
As of September 30, 2024, CNX Resources Corporation reported total debt of $2,295 million, which includes the current portion of long-term debt of $328 million.
Overview of the Company's Debt Levels
The breakdown of CNX's long-term debt is as follows:
| Debt Type | Principal Amount (in millions) | Interest Rate | Due Date |
|---|---|---|---|
| 6.00% Senior Notes | $500 | 6.00% | January 2029 |
| 7.375% Senior Notes | $500 | 7.375% | January 2031 |
| 4.75% Senior Notes (CNXM) | $400 | 4.75% | April 2030 |
| 7.25% Senior Notes | $400 | 7.25% | March 2032 |
| 2.25% Convertible Senior Notes | $331 | 2.25% | May 2026 |
| CNX Credit Facility | $153 | N/A | Varies |
Debt-to-Equity Ratio and Comparison to Industry Standards
As of September 30, 2024, CNX had total equity of $4,257 million, resulting in a debt-to-equity ratio of approximately 0.54 (calculated as total debt of $2,295 million divided by total equity of $4,257 million). This ratio is below the industry average, which typically ranges from 0.6 to 1.0 for companies in the natural gas sector.
Recent Debt Issuances, Credit Ratings, or Refinancing Activity
In February 2024, CNX completed a private offering of $400 million aggregate principal amount of 7.25% Senior Notes due March 2032, with cash proceeds of $395 million. Additionally, during the nine months ended September 30, 2024, CNX repurchased $350 million of its outstanding 7.25% Senior Notes due March 2027, resulting in a loss on debt extinguishment of $7 million.
How the Company Balances Between Debt Financing and Equity Funding
CNX utilizes a balanced approach between debt and equity financing. For instance, in the nine months ended September 30, 2024, CNX repurchased $159 million of its common stock. This strategy allows the company to manage its capital structure effectively while pursuing growth initiatives.
Overall, CNX's financial health reflects a stable debt-to-equity structure, with a significant focus on maintaining manageable debt levels while leveraging equity when necessary.
Assessing CNX Resources Corporation (CNX) Liquidity
Assessing CNX Resources Corporation's Liquidity
Current Ratio: As of September 30, 2024, the current ratio was 1.00, indicating that current assets were equal to current liabilities.
Quick Ratio: The quick ratio, which excludes inventory from current assets, was approximately 0.67 as of the same date, suggesting potential liquidity concerns.
Analysis of Working Capital Trends
Working capital, calculated as current assets minus current liabilities, was $0 as of September 30, 2024. This indicates that the company has no buffer for covering short-term liabilities.
Cash Flow Statements Overview
Cash Flows from Operating Activities:
- Net cash provided by operating activities for the nine months ended September 30, 2024, was $547 million, down from $653 million in the same period of 2023.
Cash Flows from Investing Activities:
- Cash used in investing activities was ($414 million) for the nine months ended September 30, 2024.
Cash Flows from Financing Activities:
- Cash used in financing activities was ($132 million), compared to ($256 million) in the same period of 2023.
Potential Liquidity Concerns or Strengths
As of September 30, 2024, cash and cash equivalents were $1 million, indicating limited liquidity. Accounts and notes receivable were $102 million, down from $116 million at the end of 2023. The company has a significant amount of long-term debt, totaling $1.96 billion, which may pose a challenge in managing liquidity.
| Cash Flow Category | 2024 (in millions) | 2023 (in millions) |
|---|---|---|
| Operating Activities | $547 | $653 |
| Investing Activities | ($414) | ($410) |
| Financing Activities | ($132) | ($256) |
Overall, the company’s liquidity appears constrained, with a current ratio at the minimum threshold and cash reserves notably low.
Is CNX Resources Corporation (CNX) Overvalued or Undervalued?
Valuation Analysis
The financial health of a company can often be gauged through various valuation metrics. In this section, we will analyze the valuation of the subject corporation using Price-to-Earnings (P/E), Price-to-Book (P/B), and Enterprise Value-to-EBITDA (EV/EBITDA) ratios, as well as examining stock price trends, dividend yields, and analyst consensus.
Valuation Ratios
The following table summarizes the key valuation ratios as of September 30, 2024:
| Valuation Metric | Value |
|---|---|
| Price-to-Earnings (P/E) Ratio | 7.73 |
| Price-to-Book (P/B) Ratio | 0.92 |
| Enterprise Value-to-EBITDA (EV/EBITDA) | 4.87 |
Stock Price Trends
Over the last 12 months, the stock price has exhibited the following trends:
| Date | Stock Price (USD) |
|---|---|
| September 30, 2023 | 16.79 |
| December 31, 2023 | 23.74 |
| March 31, 2024 | 22.00 |
| June 30, 2024 | 24.00 |
| September 30, 2024 | 23.74 |
Dividend Yield and Payout Ratios
As of September 30, 2024, the dividend yield and payout ratios are as follows:
| Metric | Value |
|---|---|
| Dividend Yield | 0.84% |
| Payout Ratio | 25% |
Analyst Consensus
The consensus among analysts regarding the stock's valuation is as follows:
| Analyst Rating | Number of Analysts |
|---|---|
| Buy | 5 |
| Hold | 3 |
| Sell | 1 |
Overall, the subject corporation appears to have a low P/E and P/B ratio compared to industry averages, indicating it may be undervalued. The stock price has shown some volatility over the past year but has maintained a relatively stable trend in recent months. The dividend yield is modest, and the payout ratio suggests a balanced approach to capital allocation. Analyst ratings reflect a generally positive outlook.
Key Risks Facing CNX Resources Corporation (CNX)
Key Risks Facing CNX Resources Corporation
Overview of Internal and External Risks: CNX Resources Corporation faces numerous internal and external risks that could impact its financial health. These risks include competition within the natural gas industry, regulatory changes, and fluctuating market conditions.
- Industry Competition: The natural gas sector is highly competitive, with multiple players vying for market share, which can compress margins.
- Regulatory Changes: Changes in environmental regulations or tax laws can lead to increased operational costs or limit production capabilities.
- Market Conditions: Volatility in natural gas prices significantly affects revenue; for instance, the average sales price per Mcf decreased by 20.3% from $2.37 in 2023 to $1.89 in 2024.
Operational, Financial, or Strategic Risks:
Recent earnings reports have highlighted several operational and financial risks:
- Net Income Decline: CNX reported a net income of $54 million for the nine months ended September 30, 2024, a stark contrast to $1,207 million for the same period in 2023.
- Commodity Derivative Losses: The company faced an unrealized loss on commodity derivative instruments of $149 million in 2024.
- Debt Levels: As of September 30, 2024, CNX had total debt of $2,295 million, including a current portion of long-term debt of $328 million.
Mitigation Strategies:
CNX has implemented several strategies to mitigate risks:
- Market Risk Management: The company employs various financial derivative instruments to hedge against price fluctuations in natural gas and NGLs. As of September 30, 2024, the total notional amounts of natural gas commodity swaps were 1,105.6 Bcf.
- Liquidity Management: CNX maintains a borrowing capacity that, as of September 30, 2024, was $1,203,293 of unused capacity under the CNX Credit Facility.
- Compliance with Debt Covenants: CNX was in compliance with all debt covenants as of September 30, 2024, which is crucial for maintaining financial flexibility.
| Risk Category | Description | Impact |
|---|---|---|
| Industry Competition | High competition in natural gas sector | Compressed margins |
| Regulatory Changes | Potential changes in environmental laws | Increased operational costs |
| Market Conditions | Fluctuating natural gas prices | Revenue volatility |
| Financial Performance | Decline in net income | Investor confidence |
| Debt Levels | Total debt of $2,295 million | Increased financial burden |
Future Growth Prospects for CNX Resources Corporation (CNX)
Future Growth Prospects for CNX Resources Corporation
Analysis of Key Growth Drivers
Key growth drivers for the company include:
- Product Innovations: Development and sale of environmental attributes, yielding $71 million in sales for the nine months ended September 30, 2024, compared to $23 million in the same period of 2023, reflecting a growth of 208.7%.
- Market Expansions: The company has increased purchased gas sales volumes to 27.8 Bcf in 2024 from 24.2 Bcf in 2023, a growth of 14.9%.
- Acquisitions: Continuous evaluation of potential acquisitions, historically funded by cash generated from operations.
Future Revenue Growth Projections and Earnings Estimates
Future revenue growth is expected to be driven by:
- Revenue Projections: Total revenue and other operating income for the nine months ended September 30, 2024, reported at $1,130 million, down from $2,466 million in 2023.
- Earnings Estimates: Net income for the nine months ended September 30, 2024, reported at $54 million, compared to $1,207 million in 2023.
Strategic Initiatives or Partnerships
Strategic initiatives include:
- Development of Proprietary Technologies: Focus on creating unique technologies to enhance extraction and delivery processes.
- Partnerships: Engaging in partnerships for low carbon intensity feedstocks and derivative product creation.
Competitive Advantages
Competitive advantages positioning the company for growth include:
- Strong Financial Position: Total equity as of September 30, 2024, reported at $4,257 million.
- Debt Management: Total debt of $2,295 million with a current portion of long-term debt at $328 million.
| Financial Metrics | 2024 | 2023 | Change (%) |
|---|---|---|---|
| Net Income (in millions) | $54 | $1,207 | -95.5% |
| Total Revenue and Other Operating Income (in millions) | $1,130 | $2,466 | -54.5% |
| Purchased Gas Sales Volumes (Bcf) | 27.8 | 24.2 | 14.9% |
| Sales of Environmental Attributes (in millions) | $71 | $23 | 208.7% |
| Capital Expenditures (in millions) | $435 | $571 | -23.8% |
The company expects capital expenditures for the year to be between $525 million and $550 million, with production volumes anticipated to range between 545.0 Bcfe and 555.0 Bcfe for the year ending December 31, 2024.
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Article updated on 8 Nov 2024
Resources:
- CNX Resources Corporation (CNX) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of CNX Resources Corporation (CNX)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View CNX Resources Corporation (CNX)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.