10-Q 1 ceix20220331_10q.htm FORM 10-Q ceix20220331_10q.htm
0001710366 CONSOL Energy Inc false --12-31 Q1 2022 508 1,164 130 144 0.01 0.01 62,500,000 62,500,000 34,814,486 34,814,486 34,480,181 34,480,181 508 130 1,164 144 0 0 0 0 0 0 0 0 0 0 0 2018 2019 2020 2021 8,263 238,590 239,277 567 687 4.96 4.61 11.00 11.00 5.75 5.75 9.00 9.00 5.00 5.25 8.01 8.01 7 3.61 150,000 2 0 During periods in which the Company incurs a net loss, diluted weighted average shares outstanding are equal to basic weighted average shares outstanding because the effect of all equity awards is anti-dilutive. Refer to “Reconciliation of Segment Information to Consolidated Amounts” for the reconciliation of Adjusted EBITDA, a non-GAAP measure, to its most directly comparable GAAP measure. 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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

__________________________________________________

 

FORM 10-Q

__________________________________________________

 

(Mark One)

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

 

For the quarterly period ended March 31, 2022

 

OR

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from                      to                     

 

Commission file number: 001-38147

__________________________________________________

CONSOL Energy Inc. 

(Exact name of registrant as specified in its charter)

 

Delaware

 

82-1954058

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

275 Technology Drive Suite 101

Canonsburg, PA 15317-9565

(724) 416-8300

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

 

__________________________________________________

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, $0.01 par value

CEIX

New York Stock Exchange

 

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes  ☒    No  ☐

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes  ☒    No   ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. 

 

Large accelerated filer  ☐    Accelerated filer  ☒    Non-accelerated filer  ☐    Smaller reporting company      Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.    ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes     No  ☒

 

CONSOL Energy Inc. had 34,814,486 shares of common stock, $0.01 par value, outstanding at April 22, 2022.

 

 

 

 

 

 

 

TABLE OF CONTENTS

 

 

 

Part I. Financial Information

Page

 

 

 

Item 1.

Financial Statements

 

 

Consolidated Statements of Income for the three months ended March 31, 2022 and 2021

4

 

Consolidated Statements of Comprehensive Income for the three months ended March 31, 2022 and 2021

5

 

Consolidated Balance Sheets at March 31, 2022 and December 31, 2021

6

 

Consolidated Statements of Stockholders' Equity for the three months ended March 31, 2022 and 2021

8

 

Consolidated Statements of Cash Flows for the three months ended March 31, 2022 and 2021

9

 

Notes to Consolidated Financial Statements

10

 

 

 

Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

27

 

 

 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

44

 

 

 

Item 4.

Controls and Procedures

45

 

 

 

 

Part II. Other Information

 

 

 

 

Item 1.

Legal Proceedings

45

 

 

 

Item 1A.

Risk Factors

45

 

 

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

46

 

 

 

Item 3. Defaults Upon Senior Securities 46
     

Item 4.

Mine Safety Disclosures

46

     
Item 5. Other Information 46

 

 

 

Item 6.

Exhibits

47

 

 

 

 

Signatures

48

 

 

  

 

 

IMPORTANT DEFINITIONS REFERENCED IN THIS QUARTERLY REPORT

Unless the context otherwise requires:

 

 

“CONSOL Energy,” “we,” “our,” “us,” “our Company” and “the Company” refer to CONSOL Energy Inc. and its subsidiaries;

 

 

“Btu” means one British Thermal unit;

 

  “CCR Merger” refers to the merger under that certain Agreement and Plan of Merger, dated as of October 22, 2020, among the Company, Transformer LP Holdings Inc. (“Holdings”), a wholly-owned subsidiary of the Company, Transformer Merger Sub LLC, a wholly-owned subsidiary of Holdings (“Merger Sub”), the Partnership and the General Partner, pursuant to which Merger Sub merged with and into the Partnership, with the Partnership surviving as an indirect, wholly-owned subsidiary of the Company, which merger closed on December 30, 2020;
     
 

“Coal Business” refers to (i) the Pennsylvania Mining Complex (PAMC) and certain other coal assets; (ii) the CONSOL Marine Terminal; (iii) development of the Itmann Mine; and (iv) the Greenfield Reserves and Resources and certain related coal assets and liabilities;

 

 

“CONSOL Marine Terminal” refers to the Company's terminal operations located at the Port of Baltimore;

 

 

“former parent” refers to CNX Resources Corporation and its consolidated subsidiaries;

 

 

“General Partner” refers to PA Mining Complex GP LLC (formerly known as CONSOL Coal Resources GP LLC), a Delaware limited liability company and the general partner of the Partnership;

 

 

“Greenfield Reserves and Resources” means those undeveloped reserves and resources owned by the Company in the Northern Appalachian, Central Appalachian and Illinois basins that are not associated with the Pennsylvania Mining Complex or the Itmann Mine project;

 

 

“Itmann Mine” refers to the ownership and development of a metallurgical coal mine and coal preparation plant located in Wyoming County, West Virginia;

 

 

“Partnership” refers to PA Mining Complex LP (formerly known as CONSOL Coal Resources LP), a Delaware limited partnership that is a wholly-owned subsidiary of the Company and holds an undivided interest in, and is the sole operator of, the Pennsylvania Mining Complex;

 

 

“Pennsylvania Mining Complex” or “PAMC” refers to the Bailey, Enlow Fork and Harvey coal mines, the Central Preparation Plant, coal reserves and related assets and operations located in southwestern Pennsylvania and northern West Virginia; and

 

 

“separation and distribution” refers to the separation of the Coal Business from our former parent’s other businesses on November 28, 2017 and the pro rata distribution of the Company's issued and outstanding shares of common stock to its former parent's stockholders on November 28, 2017, and the creation, as a result of the distribution, of an independent, publicly-traded company (the Company) to hold the assets and liabilities associated with the Coal Business after the distribution.

 

  

 

PART I : FINANCIAL INFORMATION

 

ITEM 1.    FINANCIAL STATEMENTS

 

CONSOL ENERGY INC.

CONSOLIDATED STATEMENTS OF INCOME

(Dollars in thousands, except per share data)

(unaudited)

 

   

Three Months Ended

 
   

March 31,

 

Revenue and Other Income:

 

2022

   

2021

 

Coal Revenue

  $ 476,368     $ 285,535  

Terminal Revenue

    21,397       18,212  

Freight Revenue

    38,389       27,013  

Loss on Commodity Derivatives, net

    (188,154 )      

Miscellaneous Other Income

    4,348       3,189  

Gain on Sale of Assets

    6,181       8,202  

Total Revenue and Other Income

    358,529       342,151  

Costs and Expenses:

               

Operating and Other Costs

    218,535       185,110  

Depreciation, Depletion and Amortization

    55,954       59,897  

Freight Expense

    38,389       27,013  

Selling, General and Administrative Costs

    37,149       23,964  

Loss (Gain) on Debt Extinguishment

    2,122       (683 )

Interest Expense, net

    14,352       15,261  

Total Costs and Expenses

    366,501       310,562  

(Loss) Earnings Before Income Tax

    (7,972 )     31,589  

Income Tax (Benefit) Expense

    (3,522 )     5,185  

Net (Loss) Income

  $ (4,450 )   $ 26,404  
                 

(Loss) Earnings per Share:

               

Total Basic (Loss) Earnings per Share

  $ (0.13 )   $ 0.77  

Total Dilutive (Loss) Earnings per Share

  $ (0.13 )   $ 0.75  

 

The accompanying notes are an integral part of these consolidated financial statements.

  

  

 

CONSOL ENERGY INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Dollars in thousands)

(unaudited)

 

  

Three Months Ended

 
  

March 31,

 
  

2022

  

2021

 

Net (Loss) Income

 $(4,450) $26,404 
         

Other Comprehensive Income:

        

Actuarially Determined Long-Term Liability Adjustments (Net of tax: ($508), (1,164))

  1,525   3,360 

Unrealized Gain on Cash Flow Hedges (Net of tax: ($130), ($144))

  391   414 

Other Comprehensive Income

  1,916   3,774 
         

Comprehensive (Loss) Income

 $(2,534) $30,178 

 

The accompanying notes are an integral part of these consolidated financial statements.

 

  

 

CONSOL ENERGY INC.

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)

 

   

(Unaudited)

         
   

March 31,

   

December 31,

 
   

2022

   

2021

 

ASSETS

               

Current Assets:

               

Cash and Cash Equivalents

  $ 222,901     $ 149,913  

Restricted Cash - Current

    33,854       32,605  

Accounts and Notes Receivable

               

Trade Receivables, net

    178,446       104,099  

Other Receivables, net

    11,342       11,631  

Inventories

    58,798       62,876  

Prepaid Expenses and Other Current Assets

    23,051       25,216  

Total Current Assets

    528,392       386,340  

Property, Plant and Equipment:

               

Property, Plant and Equipment

    5,293,905       5,250,805  

Less - Accumulated Depreciation, Depletion and Amortization

    3,323,580       3,272,255  

Total Property, Plant and Equipment—Net

    1,970,325       1,978,550  

Other Assets:

               

Deferred Income Taxes

    61,452       57,011  

Right of Use Asset - Operating Leases

    22,333       21,956  

Restricted Cash - Non-current

    12,253       15,688  

Salary Retirement

    44,011       38,947  

Other Noncurrent Assets, net

    76,194       75,025  

Total Other Assets

    216,243       208,627  

TOTAL ASSETS

  $ 2,714,960     $ 2,573,517  

 

The accompanying notes are an integral part of these consolidated financial statements.

 

  

CONSOL ENERGY INC.

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)

 

  

(Unaudited)

     
  

March 31,

  

December 31,

 
  

2022

  

2021

 

LIABILITIES AND EQUITY

        

Current Liabilities:

        

Accounts Payable

 $109,454  $80,343 

Current Portion of Long-Term Debt

  62,321   57,332 

Operating Lease Liability, Current Portion

  8,271   6,682 

Commodity Derivatives

  200,185   52,204 

Other Accrued Liabilities

  247,188   248,671 

Total Current Liabilities

  627,419   445,232 

Long-Term Debt:

        

Long-Term Debt

  534,902   568,052 

Finance Lease Obligations

  21,990   26,598 

Total Long-Term Debt

  556,892   594,650 

Deferred Credits and Other Liabilities:

        

Postretirement Benefits Other Than Pensions

  327,352   329,659 

Pneumoconiosis Benefits

  201,800   203,473 

Asset Retirement Obligations

  211,427   210,718 

Workers’ Compensation

  57,621   58,148 

Salary Retirement

  25,876   26,013 

Operating Lease Liability

  14,062   15,274 

Other Noncurrent Liabilities

  24,103   17,537 

Total Deferred Credits and Other Liabilities

  862,241   860,822 

TOTAL LIABILITIES

  2,046,552   1,900,704 
         

Stockholders' Equity:

        

Common Stock, $0.01 Par Value; 62,500,000 Shares Authorized, 34,814,486 Shares Issued and Outstanding at March 31, 2022; 34,480,181 Shares Issued and Outstanding at December 31, 2021

  348   345 

Capital in Excess of Par Value

  645,071   646,945 

Retained Earnings

  276,510   280,960 

Accumulated Other Comprehensive Loss

  (253,521)  (255,437)

TOTAL EQUITY

  668,408   672,813 

TOTAL LIABILITIES AND EQUITY

 $2,714,960  $2,573,517 

 

The accompanying notes are an integral part of these consolidated financial statements.

 

  

 

CONSOL ENERGY INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(Dollars in thousands)

 

 

  

Common Stock

  

Capital in Excess of Par Value

  

Retained Earnings

  

Accumulated Other Comprehensive (Loss) Income

  

Total Equity

 

December 31, 2021

 $345  $646,945  $280,960  $(255,437) $672,813 

(Unaudited)

                    

Net Loss

        (4,450)     (4,450)

Actuarially Determined Long-Term Liability Adjustments (Net of $508 Tax)

           1,525   1,525 

Interest Rate Hedge (Net of $130 Tax)

           391   391 

Comprehensive (Loss) Income

        (4,450)  1,916   (2,534)

Issuance of Common Stock

  3   (3)         

Amortization of Stock-Based Compensation Awards

     4,201         4,201 

Shares Withheld for Taxes

     (6,072)        (6,072)

March 31, 2022

 $348  $645,071  $276,510  $(253,521) $668,408 

 

  

Common Stock

  

Capital in Excess of Par Value

  

Retained Earnings

  

Accumulated Other Comprehensive (Loss) Income

  

Total Equity

 

December 31, 2020

 $340  $642,887  $246,850  $(336,558) $553,519 

(Unaudited)

                    

Net Income

        26,404      26,404 

Actuarially Determined Long-Term Liability Adjustments (Net of $1,164 Tax)

           3,360   3,360 

Interest Rate Hedge (Net of $144 Tax)

           414   414 

Comprehensive Income

        26,404   3,774   30,178 

Issuance of Common Stock

  4   (4)         

Amortization of Stock-Based Compensation Awards

     1,509         1,509 

Shares Withheld for Taxes

     (2,072)        (2,072)

CCR Merger

     (266)     197   (69)

March 31, 2021

 $344  $642,054  $273,254  $(332,587) $583,065 

 

The accompanying notes are an integral part of these consolidated financial statements.

 

  

 

CONSOL ENERGY INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands)

(unaudited)

 

  

Three Months Ended

 
  

March 31,

 
  

2022

  

2021

 

Cash Flows from Operating Activities:

        

Net (Loss) Income

 $(4,450) $26,404 

Adjustments to Reconcile Net (Loss) Income to Net Cash Provided by Operating Activities:

        

Depreciation, Depletion and Amortization

  55,954   59,897 

Gain on Sale of Assets

  (6,181)  (8,202)

Stock-Based Compensation

  4,201   1,509 

Amortization of Debt Issuance Costs

  2,020   2,140 

Loss (Gain) on Debt Extinguishment

  2,122   (683)

Unrealized Mark-to-Market Loss on Commodity Derivative Instruments

  101,902    

Deferred Income Taxes

  (5,078)  5,185 

Equity in Earnings of Affiliates

  162   206 

Changes in Operating Assets:

        

Accounts and Notes Receivable

  (74,050)  (5,764)

Inventories

  4,078   475 

Prepaid Expenses and Other Assets

  2,165   1,620 

Changes in Other Assets

  (5,582)  (1,459)

Changes in Operating Liabilities:

        

Accounts Payable

  23,456   (73)

Other Operating Liabilities

  45,196   9,242 

Changes in Other Liabilities

  2,292   (12,501)

Net Cash Provided by Operating Activities

  148,207   77,996 

Cash Flows from Investing Activities:

        

Capital Expenditures

  (36,643)  (13,800)

Proceeds from Sales of Assets

  6,478   8,488 

Other Investing Activity

  (1,329)  (182)

Net Cash Used in Investing Activities

  (31,494)  (5,494)

Cash Flows from Financing Activities:

        

Payments on Finance Lease Obligations

  (6,328)  (8,498)

Payments on Term Loan A

  (6,250)  (6,250)

Payments on Term Loan B

  (687)  (5,536)

Payments on Second Lien Notes

  (26,387)  (9,338)

Payments on Asset-Backed Financing

  (187)  (181)

Shares Withheld for Taxes

  (6,072)  (2,072)

Net Cash Used in Financing Activities

  (45,911)  (31,875)

Net Increase in Cash and Cash Equivalents and Restricted Cash

  70,802   40,627 

Cash and Cash Equivalents and Restricted Cash at Beginning of Period

  198,206   50,850 

Cash and Cash Equivalents and Restricted Cash at End of Period

 $269,008  $91,477 
         

Cash and Cash Equivalents

 $222,901  $91,174 

Restricted Cash - Current

  33,854   303 

Restricted Cash - Non-current

  12,253    

Cash and Cash Equivalents and Restricted Cash at End of Period

 $269,008  $91,477 
         

Non-Cash Investing and Financing Activities:

        

Finance Lease

 $4,166  $8,226 

 

The accompanying notes are an integral part of these consolidated financial statements.

 

  

CONSOL ENERGY INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(Dollars in thousands, except per share data)

 

NOTE 1—BASIS OF PRESENTATION:

 

Basis of Presentation

 

The accompanying Consolidated Financial Statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States (“GAAP”) for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the three months ended March 31, 2022 are not necessarily indicative of the results that may be expected for future periods.

 

The Consolidated Balance Sheet at December 31, 2021 has been derived from the Audited Consolidated Financial Statements at that date but does not include all disclosures required by GAAP. This Form 10-Q report should be read in conjunction with CONSOL Energy Inc.'s Annual Report on Form 10-K for the year ended December 31, 2021.

 

All dollar amounts discussed in these Notes to Consolidated Financial Statements are in thousands of U.S. dollars, except for per unit amounts, and unless otherwise indicated.

 

Basis of Consolidation

 

The Consolidated Financial Statements include the accounts of CONSOL Energy Inc. and its wholly-owned and majority-owned and/or controlled subsidiaries. All significant intercompany transactions and accounts have been eliminated in consolidation.

 

Recent Accounting Pronouncements

 

In  March 2022, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2022-02 - Financial Instruments—Credit Losses (Topic 326). The amendments in this update eliminate the accounting guidance for troubled debt restructurings by creditors in Subtopic 310-40, Receivables—Troubled Debt Restructurings by Creditors, while enhancing disclosure requirements for certain loan refinancings and restructurings by creditors when a borrower is experiencing financial difficulty. The amendments in this update require that an entity disclose current-period gross writeoffs by year of origination for financing receivables and net investments in leases within the scope of Subtopic 326-20, Financial Instruments—Credit Losses—Measured at Amortized Cost. The amendments in this update are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Management is currently evaluating the impact of this guidance, but does not expect this update to have a material impact on the Company's financial statements.

 

In  October 2021, the FASB issued ASU 2021-08 - Business Combinations (Topic 805). The amendments in this update apply to all entities that enter into a business combination within the scope of Subtopic 805-10, Business Combinations—Overall. The amendments in this update require that an entity (acquirer) recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606. The amendments in this update do not affect the accounting for other assets or liabilities that  may arise from revenue contracts with customers in accordance with Topic 606. The amendments in this update are effective for fiscal years beginning after  December 15, 2022, including interim periods within those fiscal years. Management is currently evaluating the impact of this guidance, but does not expect this update to have a material impact on the Company's financial statements.

 

In  May 2021, the FASB issued ASU 2021-04 - Earnings Per Share (Topic 260), Debt—Modifications and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40). The amendments in this update affect all entities that issue freestanding written call options that are classified in equity. Specifically, the amendments affect those entities when a freestanding equity-classified written call option is modified or exchanged and remains equity classified after the modification or exchange. The amendments that relate to the recognition and measurement of EPS for certain modifications or exchanges of freestanding equity-classified written call options affect entities that present EPS in accordance with the guidance in Topic 260, Earnings Per Share. The amendments in this update are effective for fiscal years beginning after  December 15, 2021, including interim periods within those fiscal years. The Company adopted this guidance in the three months ended March 31, 2022, and there was no material impact on the Company's financial statements.

 

10

 

Earnings per Share

 

Basic earnings per share are computed by dividing net (loss) income by the weighted average number of shares outstanding during the reporting period. Dilutive earnings per share are computed similarly to basic earnings per share, except that the weighted average number of shares outstanding is increased to include additional shares from restricted stock units and performance share units, if dilutive. The number of additional shares is calculated by assuming that outstanding restricted stock units and performance share units were released, and that the proceeds from such activities, as applicable, were used to acquire shares of common stock at the average market price during the reporting period. 

 

The table below sets forth the share-based awards that have been excluded from the computation of diluted earnings per share because their effect would be anti-dilutive:

 

  

Three Months Ended

 
  

March 31,

 
  

2022

  

2021

 

Anti-Dilutive Restricted Stock Units

  952,942   61,650 

Anti-Dilutive Performance Share Units

  94,904    
   1,047,846   61,650 

 

The computations for basic and dilutive (loss) earnings per share are as follows:

 

  

Three Months Ended

 

Dollars in thousands, except per share data

 

March 31,

 
  

2022

  

2021

 

Numerator:

        

Net (Loss) Income

 $(4,450) $26,404 
         

Denominator:

        

Weighted-average shares of common stock outstanding

  34,660,713   34,206,632 

Effect of dilutive shares*

     837,450 

Weighted-average diluted shares of common stock outstanding

  34,660,713   35,044,082 
         

(Loss) Earnings per Share:

        

Basic

 $(0.13) $0.77 

Dilutive

 $(0.13) $0.75 

*During periods in which the Company incurs a net loss, diluted weighted average shares outstanding are equal to basic weighted average shares outstanding because the effect of all equity awards is anti-dilutive.

 

As of March 31, 2022, CONSOL Energy has 500,000 shares of preferred stock authorized, none of which are issued or outstanding.

 

Reclassifications

 

Certain amounts in prior periods have been reclassified to conform with the report classifications of the current period, including the reclassification of the current portion of the Company's commodity derivatives liability, previously included in Other Accrued Liabilities on the Consolidated Balance Sheets. This reclassification had no effect on previously reported total assets, net income, stockholders' equity or cash flows from operating activities.

 

11

  
 

NOTE 2—REVENUE FROM CONTRACTS WITH CUSTOMERS:

 

The following tables disaggregate CONSOL Energy's revenue from contracts with customers to depict how the nature, amount, timing and uncertainty of the Company's revenues and cash flows are affected by economic factors:

 

  

Three Months Ended March 31, 2022

 
  

Domestic

  

Export

  

Total

 

Power Generation

 $223,500  $120,441  $343,941 

Industrial

  1,944   97,549   99,493 

Metallurgical

     32,934   32,934 

Total Coal Revenue

  225,444   250,924   476,368 

Terminal Revenue

          21,397 

Freight Revenue

          38,389 

Total Revenue from Contracts with Customers

         $536,154 

 

  

Three Months Ended March 31, 2021

 
  

Domestic

  

Export

  

Total

 

Power Generation

 $155,310  $33,131  $188,441 

Industrial

  2,836   80,574   83,410 

Metallurgical

  1,070   12,614   13,684 

Total Coal Revenue

  159,216   126,319   285,535 

Terminal Revenue

          18,212 

Freight Revenue

          27,013 

Total Revenue from Contracts with Customers

         $330,760 

 

Coal Revenue

 

The Company has disaggregated its coal revenue, derived from the PAMC and Itmann operations, between domestic and export revenues, as well as industrial, power generation and metallurgical markets. Domestic coal revenue tends to be derived from contracts that typically have a term of one year or longer and the pricing is typically fixed. Export coal revenue tends to be derived from spot or shorter-term contracts with pricing determined closer to the time of shipment or based on a market index; however, the Company has recently begun to secure several long-term export contracts with varying pricing arrangements. Coal revenue derived from the Itmann operations consists primarily of metallurgical coal sales, while coal revenue derived from the PAMC services all markets due to the nature of its coal quality characteristics.

 

CONSOL Energy's coal revenue is generally recognized when title passes to the customer and the price is fixed and determinable. Generally, title passes when coal is loaded at the central preparation facility, at terminal locations or other customer destinations. The Company's coal contract revenue per ton is fixed and determinable based upon either fixed forward pricing or pricing derived from established indices and adjusted for nominal quality characteristics. Some coal contracts also contain positive electric power price-related adjustments, which represent market-driven price adjustments, wherein no additional value is exchanged, in addition to a fixed base price per ton. The Company’s coal contracts generally do not allow for retroactive adjustments to pricing after title to the coal has passed and typically do not have significant financing components.

 

The estimated transaction price from each of the Company's contracts is based on the total amount of consideration to which the Company expects to be entitled under the contract. Included in the transaction price for certain coal supply contracts is the impact of variable consideration, including quality price adjustments, handling services and per ton price fluctuations based on certain coal sales price indices. The estimated transaction price for each contract is allocated to the Company's performance obligations based on relative stand-alone selling prices determined at contract inception. The Company has determined that each ton of coal represents a separate and distinct performance obligation. Some of the Company's contracts span multiple years and have annual pricing modifications, based upon market-driven or inflationary adjustments, where no additional value is exchanged. Management believes that the invoice price is the most appropriate rate at which to recognize revenue.

 

While CONSOL Energy does, from time to time, experience costs of obtaining coal customer contracts with amortization periods greater than one year, those costs are generally immaterial to the Company's net income. At March 31, 2022 and December 31, 2021, the Company did not have any capitalized costs to obtain customer contracts on its Consolidated Balance Sheets. As of and for the three months ended March 31, 2022 and 2021, the Company has not recognized any amortization of previously existing capitalized costs of obtaining customer contracts. Further, the Company has not recognized any coal revenue in the current period that is not a result of current period performance.

 

Terminal Revenue

 

Terminal revenues are attributable to the Company's CONSOL Marine Terminal and include revenues earned from providing receipt and unloading of coal from rail cars, transporting coal from the receipt point to temporary storage or stockpile facilities located at the Terminal, stockpiling, blending, weighing, sampling, redelivery, and loading of coal onto vessels. Revenues for these services are earned on a ratable basis, and performance obligations are considered fulfilled as the services are performed.

    

The CONSOL Marine Terminal does not normally experience material costs of obtaining customer contracts with amortization periods greater than one year. At March 31, 2022 and December 31, 2021, the Company did not have any capitalized costs to obtain customer contracts on its Consolidated Balance Sheets. As of and for the three months ended March 31, 2022 and 2021, the Company has not recognized any amortization of previously existing capitalized costs of obtaining Terminal customer contracts. Further, the Company has not recognized any revenue in the current period that is not a result of current period performance.

 

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Freight Revenue

 

Some of CONSOL Energy's coal contracts require that the Company sell its coal at locations other than its central preparation plant. The cost to transport the Company's coal to the ultimate sales point is passed through to the Company's customers and CONSOL Energy recognizes the freight revenue equal to the transportation costs when title of the coal passes to the customer.

 

Contract Balances

 

Contract assets are recorded separately from trade receivables in the Company's Consolidated Balance Sheets and are reclassified to trade receivables as title passes to the customer and the Company's right to consideration becomes unconditional. Payments for coal shipments are typically due within two to four weeks from the invoice date. CONSOL Energy typically does not have material contract assets that are stated separately from trade receivables since the Company's performance obligations are satisfied as control of the goods or services passes to the customer, thereby granting the Company an unconditional right to receive consideration. Contract liabilities relate to consideration received in advance of the satisfaction of the Company's performance obligations. Contract liabilities are recognized as revenue at the point in time when control of the goods passes to the customer, or over time when services are provided.

 

 

NOTE 3—MISCELLANEOUS OTHER INCOME:

 

   

Three Months Ended March 31,

 
   

2022

   

2021

 

Interest Income

  $ 1,329     $ 858  

Royalty Income - Non-Operated Coal

    1,062       1,601  

Property Easements and Option Income

    714       98  

Rental Income

    460       215  

Other

    783       417  

Miscellaneous Other Income

  $ 4,348     $ 3,189  

  

 

NOTE 4—COMPONENTS OF PENSION AND OTHER POST-EMPLOYMENT BENEFIT (OPEB) PLANS NET PERIODIC BENEFIT COSTS:

 

The components of Net Periodic Benefit (Credit) Cost are as follows:

 

   

Pension Benefits

   

Other Post-Employment Benefits

 
   

Three Months Ended

   

Three Months Ended

 
   

March 31,

   

March 31,

 
   

2022

   

2021

   

2022

   

2021

 

Service Cost

  $ 302     $ 279     $     $  

Interest Cost

    4,135       3,550       1,974       1,818  

Expected Return on Plan Assets

    (9,319 )     (10,542 )            

Amortization of Prior Service Credits

                (601 )     (601 )

Amortization of Actuarial Loss

    758       1,367       879       1,629  

Net Periodic Benefit (Credit) Cost

  $ (4,124 )   $ (5,346 )   $ 2,252     $ 2,846  

 

(Credits) expenses related to pension and other post-employment benefits are reflected in Operating and Other Costs in the Consolidated Statements of Income.

  

 

NOTE 5—COMPONENTS OF COAL WORKERS’ PNEUMOCONIOSIS (CWP) AND WORKERS’ COMPENSATION NET PERIODIC BENEFIT COSTS:

 

The components of Net Periodic Benefit Cost are as follows:

 

   

CWP

   

Workers' Compensation

 
   

Three Months Ended

   

Three Months Ended

 
   

March 31,

   

March 31,

 
   

2022

   

2021

   

2022

   

2021

 

Service Cost

  $ 726     $ 1,115     $ 1,230     $ 1,059  

Interest Cost

    1,265       1,178       342       282  

Amortization of Actuarial Loss (Gain)

    1,060       2,091       (105 )     (45 )

State Administrative Fees and Insurance Bond Premiums

                437       468  

Net Periodic Benefit Cost

  $ 3,051     $ 4,384     $ 1,904     $ 1,764  

 

Expenses related to CWP and workers’ compensation are reflected in Operating and Other Costs in the Consolidated Statements of Income.

 

13

  
 

NOTE 6—INCOME TAXES:

 

The Company recorded its provision for income taxes for the three months ended March 31, 2022 of ($3,522), or 44.2% of earnings before income taxes, based on its annual estimated income tax rate adjusted for discrete items. The effective tax rate for the three months ended March 31, 2022 differs from the U.S. federal statutory rate of 21%, primarily due to $2,295 of discrete tax benefits related to equity compensation, as well as effective tax rate impacts of excess percentage depletion and foreign derived intangible income, partially offset by compensation. 

 

The provision for income taxes for the three months ended March 31, 2021 was $5,185, or 16.4% of earnings before income taxes, based on the actual year-to-date effective rate. The income tax provision for interim periods is generally determined using an estimate of the Company's annual effective tax rate and adjusting for discrete items. However, due to operating activities in 2021 and considering the significant benefit from excess percentage depletion, estimating a reliable annual effective tax rate was difficult as small changes to forecasted results could produce significant changes to the Company's annual effective tax rate. Therefore, the Company determined the actual year-to-date effective tax rate was the best estimate for the reporting period. The effective tax rate for the three months ended March 31, 2021 differed from the U.S. federal statutory rate of 21%, primarily due to $339 of discrete tax expense related to equity compensation, as well as the effective tax rate impacts of excess percentage depletion, partially offset by compensation.

 

Due to the expectation of taxable income for the year 2022, the Company has recognized a benefit of $937 related to the release of a valuation allowance for state tax net operating losses in its annual effective tax rate for the three months ended March 31, 2022.

 

The Company is subject to taxation in the United States and its various states, as well as Canada and its various provinces. The Company is subject to examination for the tax periods 2018 through 2021 for federal and state returns.

  

 

NOTE 7—CREDIT LOSSES:

 

Trade receivables are recorded at the invoiced amount and do not bear interest. The Company markets its coal and terminal services to top-performing rail-served power plants in its core market areas. The Company also serves power generation, industrial and metallurgical consumers in international markets. Credit is extended based on an evaluation of a customer's financial condition and a customer's ability to perform its obligations. Trade receivable balances are monitored against approved credit terms. Credit terms are reviewed and adjusted as considered necessary based on changes to a customer's credit profile. If a customer's credit deteriorates, the Company may reduce credit risk exposure by reducing credit terms, obtaining letters of credit, obtaining credit insurance, or requiring pre-payment for shipments.

 

Other non-trade contractual arrangements consist primarily of overriding royalty agreements and other financial arrangements between the Company and various counterparties. The following table excludes fully reserved receivables associated with certain transactions defined as other non-trade contractual arrangements in the amount of $8,263 at March 31, 2022 and December 31, 2021, as management believes it is probable that these outstanding balances will not be collected. At March 31, 2022, the allowance for credit losses associated with other non-trade contractual arrangements was $12,436 and $3,457, included in Other Receivables, net and Other Noncurrent Assets, net, respectively, on the Consolidated Balance Sheets. At December 31, 2021, the allowance for credit losses associated with other non-trade contractual arrangements was $12,329 and $2,882, included in Other Receivables, net and Other Noncurrent Assets, net, respectively, on the Consolidated Balance Sheets.

 

The Company is exposed to credit losses primarily through sales of products and services. The Company's expected loss allowance methodology for accounts receivable is developed using historical collection experience, current and future economic and market conditions and a review of the current status of customers' trade and other accounts receivables. Due to the short-term nature of such receivables, the estimate of the amount of accounts receivable that may not be collected is based on an aging of the accounts receivable balances and the financial condition of customers. Additionally, specific allowance amounts are established to record the appropriate provision for customers that have a higher probability of default. The Company's monitoring activities include timely account reconciliations, dispute resolution, payment confirmation, consideration of customers' financial condition and macroeconomic conditions. Balances are written off when determined to be uncollectible. 

 

Management estimates the allowance balance using relevant available information, from internal and external sources, relating to past events, current conditions, and reasonable and supportable forecasts. Historical credit loss experience provides the basis for the estimation of expected credit losses. Adjustments to historical loss information are made for changes to the assessment of anticipated payment, changes in economic conditions, current industry trends in the markets the Company serves, and changes in the financial health of the Company's counterparties.

 

14

 

The following table provides a roll-forward of the allowance for credit losses that is deducted from the amortized cost basis of accounts receivable to present the net amount expected to be collected.

 

  

Trade Receivables

  

Other Non-Trade Contractual Arrangements

 
         

Beginning Balance, December 31, 2021

 $4,597  $6,948 

Provision for expected credit losses

  1,348   682 

Ending Balance, March 31, 2022

 $5,945  $7,630 

  

 

NOTE 8—INVENTORIES:

 

Inventory components consist of the following:

 

   

March 31,

   

December 31,

 
   

2022

   

2021

 

Coal

  $ 9,735     $ 12,078  

Supplies

    49,063       50,798  

Total Inventories

  $ 58,798     $ 62,876  

 

Inventories are stated at the lower of cost or net realizable value. The cost of coal inventories is determined by the first-in, first-out (“FIFO”) method. Coal inventory costs include labor, supplies, equipment costs, operating overhead, depreciation, depletion, amortization and other related costs. The cost of supplies inventory is determined by the average cost method and includes operating and maintenance supplies to be used in the Company's coal operations.

  

 

NOTE 9—ACCOUNTS RECEIVABLE SECURITIZATION:

 

CONSOL Energy and certain of its U.S. subsidiaries are parties to a trade accounts receivable securitization facility with financial institutions for the sale on a continuous basis of eligible trade accounts receivable. In March 2020, the securitization facility was amended to, among other things, extend the maturity date from August 30, 2021 to March 27, 2023.

 

Pursuant to the securitization facility, CONSOL Thermal Holdings LLC, an indirect, wholly-owned subsidiary of the Company, sells current and future trade receivables to CONSOL Pennsylvania Coal Company LLC, a wholly-owned subsidiary of the Company. CONSOL Marine Terminals LLC, a wholly-owned subsidiary of the Company, and CONSOL Pennsylvania Coal Company LLC sell and/or contribute current and future trade receivables (including receivables sold to CONSOL Pennsylvania Coal Company LLC by CONSOL Thermal Holdings LLC) to CONSOL Funding LLC, a wholly-owned subsidiary of the Company (the “SPV”). The SPV, in turn, pledges its interests in the receivables to PNC Bank, N.A., which either makes loans or issues letters of credit on behalf of the SPV. The maximum amount of advances and letters of credit outstanding under the securitization facility may not exceed $100 million.

 

Loans under the securitization facility accrue interest at a reserve-adjusted LIBOR market index rate equal to the one-month Eurodollar rate. Loans and letters of credit under the securitization facility also accrue a program fee and a letter of credit participation fee, respectively, ranging from 2.00% to 2.50% per annum depending on the total net leverage ratio of CONSOL Energy. In addition, the SPV paid certain structuring fees to PNC Capital Markets LLC and pays other customary fees to the lenders, including a fee on unused commitments equal to 0.60% per annum.

 

At March 31, 2022, the Company's eligible accounts receivable yielded $29,858 of borrowing capacity. At March 31, 2022, the facility had no outstanding borrowings and $29,681 of letters of credit outstanding, leaving available borrowing capacity of $177. At December 31, 2021, the Company's eligible accounts receivable yielded $21,649 of borrowing capacity. At December 31, 2021, the facility had no outstanding borrowings and $21,806 of letters of credit outstanding, leaving no unused capacity. CONSOL Energy posted $157 of cash collateral to secure the difference in the outstanding letters of credit and the eligible accounts receivable. Cash collateral of $157 is included in Restricted Cash - Current in the Consolidated Balance Sheets. Costs associated with the receivables facility totaled $275 and $261 for the three months ended March 31, 2022 and 2021, respectively. These costs have been recorded as financing fees which are included in Operating and Other Costs in the Consolidated Statements of Income. The Company has not derecognized any receivables due to its continued involvement in the collections efforts.

 

15

  
 

NOTE 10—PROPERTY, PLANT AND EQUIPMENT:

 

Property, plant and equipment consists of the following:

 

   

March 31,

   

December 31,

 
   

2022

   

2021

 

Plant and Equipment

  $ 3,252,874     $ 3,213,512  

Coal Properties and Surface Lands

    876,794       877,271  

Airshafts

    476,588       473,866  

Mine Development

    358,909       357,479  

Advance Mining Royalties

    328,740       328,677  

Total Property, Plant and Equipment

    5,293,905       5,250,805  

Less: Accumulated Depreciation, Depletion and Amortization

    3,323,580       3,272,255  

Total Property, Plant and Equipment, Net

  $ 1,970,325     $ 1,978,550  

 

Coal reserves are either owned in fee or controlled by lease. The duration of the leases vary; however, the lease terms are generally extended automatically to the exhaustion of economically recoverable reserves, as long as active mining continues. Coal interests held by lease provide the same rights as fee ownership for mineral extraction and are legally considered real property interests.

 

As of March 31, 2022 and December 31, 2021, property, plant and equipment includes gross assets under finance leases of $80,225 and $80,232, respectively. Accumulated amortization for finance leases was $36,056 and $34,036 at March 31, 2022 and December 31, 2021, respectively. Amortization expense for assets under finance leases approximated $6,230 and $8,619 for the three months ended March 31, 2022 and 2021, respectively, and is included in Depreciation, Depletion and Amortization in the accompanying Consolidated Statements of Income.

  

 

NOTE 11—OTHER ACCRUED LIABILITIES:

 

   

March 31,

   

December 31,

 
   

2022

   

2021

 

Subsidence Liability

  $ 95,059     $ 93,871  

Accrued Compensation and Benefits

    47,429       50,146  

Accrued Interest

    8,866       9,042  

Accrued Other Taxes

    5,168       5,556  

Other

    17,693       16,415  

Current Portion of Long-Term Liabilities:

               

Asset Retirement Obligations

    27,400       27,400  

Postretirement Benefits Other than Pensions

    23,452       23,638  

Pneumoconiosis Benefits

    12,328       12,398  

Workers' Compensation

    9,793       10,205  

Total Other Accrued Liabilities

  $ 247,188     $ 248,671  

 

16

  
 

NOTE 12—LONG-TERM DEBT:

 

  

March 31,

  

December 31,

 
  

2022

  

2021

 

Debt:

        

Term Loan B due in September 2024 (Principal of $238,590 and $239,277 less Unamortized Discount of $567 and $687, 4.96% and 4.61% Weighted Average Interest Rate, respectively)

 $238,023  $238,590 

11.00% Senior Secured Second Lien Notes due November 2025

  124,107   149,107 

MEDCO Revenue Bonds in Series due September 2025 at 5.75%

  102,865   102,865 

9.00% PEDFA Solid Waste Disposal Revenue Bonds due April 2028

  75,000   75,000 

Term Loan A due in March 2023 (5.00% and 5.25% Weighted Average Interest Rate, respectively)

  35,000   41,250 

Other Asset-Backed Financing Arrangements

  1,895   2,082 

Advance Royalty Commitments (8.01% Weighted Average Interest Rate)

  4,858   4,858 

Less: Unamortized Debt Issuance Costs

  7,751   9,111 
   573,997   604,641 

Less: Amounts Due in One Year*

  39,095   36,589 

Long-Term Debt

 $534,902  $568,052 

 

* Excludes current portion of Finance Lease Obligations of $23,226 and $20,743 at March 31, 2022 and December 31, 2021, respectively.

 

Senior Secured Credit Facilities

 

In November 2017, CONSOL Energy entered into a revolving credit facility with PNC Bank, N.A. with commitments up to $300,000 (the “Revolving Credit Facility”), a Term Loan A Facility of up to $100,000 (the “TLA Facility”) and a Term Loan B Facility of up to $400,000 (the “TLB Facility”, and together with the Revolving Credit Facility and the TLA Facility, the “Senior Secured Credit Facilities”). On March 28, 2019, the Company amended the Senior Secured Credit Facilities to increase the borrowing commitment of the Revolving Credit Facility to $400,000 and reallocate the principal amounts outstanding under the TLA Facility and the TLB Facility. On June 5, 2020, the Company amended the Senior Secured Credit Facilities (the “amendment”) to provide eight quarters of financial covenant relaxation, effect an increase in the rate at which borrowings under the Revolving Credit Facility and the TLA Facility bear interest, and add an anti-cash hoarding provision. On March 29, 2021, the Company amended the Senior Secured Credit Facilities to revise the negative covenant with respect to other indebtedness to allow the Company to incur obligations under the tax-exempt solid waste disposal revenue bonds. On April 13, 2021, the Pennsylvania Economic Development Financing Authority ("PEDFA") Solid Waste Disposal Revenue Bonds were issued. Borrowings under the Company's Senior Secured Credit Facilities bear interest at a floating rate which can be, at the Company's option, either (i) LIBOR plus an applicable margin or (ii) an alternate base rate plus an applicable margin. The applicable margin for the Revolving Credit Facility and the TLA Facility depends on the total net leverage ratio, whereas the applicable margin for the TLB Facility is fixed. The amendment increased the applicable margin by 50 basis points on both the Revolving Credit Facility and the TLA Facility. The administrative agents of our Senior Secured Credit Facilities, in consultation with CONSOL, will choose a replacement index for LIBOR and the parties will execute an amendment to the facilities. LIBOR tenors of 1-week and 2-month have been discontinued as of December 31, 2021. However, LIBOR will still be published in its current form for the overnight, 1-month, 3-month, 6-month and 12-month tenors with a planned cessation after June 30, 2023. In the event that LIBOR would no longer be a published rate index, the allowable alternative base rate and replacement index may increase the Company's interest costs associated with those facilities. The maturity date of the Revolving Credit and TLA Facilities is March 28, 2023. The TLB Facility's maturity date is September 28, 2024. Obligations under the Senior Secured Credit Facilities are guaranteed by (i) all owners of the PAMC held by the Company, (ii) any other members of the Company’s group that own any portion of the collateral securing the Revolving Credit Facility, and (iii) subject to certain customary exceptions and agreed materiality thresholds, all other existing or future direct or indirect wholly-owned restricted subsidiaries of the Company. The obligations are secured by, subject to certain exceptions (including a limitation of pledges of equity interests in certain subsidiaries and certain thresholds with respect to real property), a first-priority lien on (i) the Company’s interest in the PAMC, (ii) the equity interests in the Partnership held by the Company, (iii) the CONSOL Marine Terminal, (iv) the Itmann Mine and (v) the 1.4 billion tons of Greenfield Reserves and Resources.

 

The Senior Secured Credit Facilities contain a number of customary affirmative covenants. In addition, the Senior Secured Credit Facilities contain a number of negative covenants, including (subject to certain exceptions) limitations on (among other things): indebtedness, liens, investments, acquisitions, dispositions, restricted payments and prepayments of junior indebtedness. The amendment added additional conditions to be met for the covenants relating to investments in joint ventures, general investments, share repurchases, dividends and repurchases of Second Lien Notes (as defined below). The additional conditions require that the Company have no outstanding borrowings and no more than $200,000 of outstanding letters of credit on the Revolving Credit Facility. Further restrictions apply to investments in joint ventures, share repurchases and dividends that require the Company's total net leverage ratio shall not be greater than 2.00 to 1.00.

 

17

 

The Revolving Credit Facility and the TLA Facility also include covenants relating to (i) a maximum first lien gross leverage ratio, (ii) a maximum total net leverage ratio, and (iii) a minimum fixed charge coverage ratio. The maximum first lien gross leverage ratio is calculated as the ratio of Consolidated First Lien Debt to Consolidated EBITDA. Consolidated EBITDA, as used in the covenant calculation, excludes non-cash compensation expenses, non-recurring transaction expenses, extraordinary gains and losses, gains and losses on discontinued operations, non-cash charges related to legacy employee liabilities and gains and losses on debt extinguishment, and subtracts cash payments related to legacy employee liabilities. The maximum total net leverage ratio is calculated as the ratio of Consolidated Indebtedness, minus Cash on Hand, to Consolidated EBITDA. The minimum fixed charge coverage ratio is calculated as the ratio of Consolidated EBITDA to Consolidated Fixed Charges. Consolidated Fixed Charges, as used in the covenant calculation, include cash interest payments, cash payments for income taxes, scheduled debt repayments, dividends paid and Maintenance Capital Expenditures. The amendment revised the financial covenants applicable to the Revolving Credit Facility and the TLA Facility relating to the maximum first lien gross leverage ratio, maximum total net leverage ratio and minimum fixed charge coverage ratio, so that among other things:

 

for the fiscal quarters ending June 30, 2021 through March 31, 2022, the minimum fixed charge coverage ratio shall be 1.05 to 1.00;
for the fiscal quarters ending December 31, 2021 through March 31, 2022, the maximum first lien gross leverage ratio shall be 2.00 to 1.00 and the maximum total net leverage ratio shall be 3.25 to 1.00; and
for the fiscal quarters ending on or after June 30, 2022, the maximum first lien gross leverage ratio shall be 1.75 to 1.00, the maximum total net leverage ratio shall be 2.75 to 1.00 and the minimum fixed charge coverage ratio shall be 1.10 to 1.00.

 

The Company's first lien gross leverage ratio was 0.79 to 1.00 at March 31, 2022. The Company's total net leverage ratio was 0.99 to 1.00 at March 31, 2022. The Company's fixed charge coverage ratio was 2.09 to 1.00 at March 31, 2022. Accordingly, the Company was in compliance with all of its financial covenants under the Senior Secured Credit Facilities as of March 31, 2022

 

The TLB Facility also includes a financial covenant that requires the Company to repay a certain amount of its borrowings under the TLB Facility within ten business days after the date it files its Annual Report on Form 10-K with the Securities and Exchange Commission if the Company has excess cash flow (as defined in the credit agreement for the Senior Secured Credit Facilities) during the year covered by the applicable Annual Report on Form 10-K. As a result of achieving certain financial metrics as of December 31, 2021, the Company was not required to make an excess cash flow payment with respect to the year ended December 31, 2021. During the three months ended March 31, 2021, CONSOL Energy made the required repayment of $4,848 based on the amount of the Company's excess cash flow as of December 31, 2020. The required repayment is equal to a certain percentage of the Company’s excess cash flow for such year, ranging from 0% to 75% depending on the Company’s total net leverage ratio, less the amount of certain voluntary prepayments made by the Company, if any, under the TLB Facility during such fiscal year.

 

At March 31, 2022, the Revolving Credit Facility had no borrowings outstanding and $163,626 of letters of credit outstanding, leaving $236,374 of unused capacity. At December 31, 2021, the Revolving Credit Facility had no borrowings outstanding and $169,241 of letters of credit outstanding, leaving $230,759 of unused capacity. From time to time, CONSOL Energy is required to post financial assurances to satisfy contractual and other requirements generated in the normal course of business. Some of these assurances are posted to comply with federal, state or other government agencies' statutes and regulations. CONSOL Energy sometimes uses letters of credit to satisfy these requirements and these letters of credit reduce the Company's borrowing facility capacity.

 

18

 

Second Lien Notes

 

In November 2017, CONSOL Energy issued $300,000 in aggregate principal amount of 11.00% Senior Secured Second Lien Notes due 2025 (the “Second Lien Notes”) pursuant to an indenture (the “Indenture”) dated as of November 13, 2017, by and between the Company and UMB Bank, N.A., a national banking association, as trustee and collateral trustee (the “Trustee”). On November 28, 2017, certain subsidiaries of the Company executed a supplement to the Indenture and became party to the Indenture as a guarantor (the “Guarantors”). The Second Lien Notes are secured by second priority liens on substantially all of the assets of the Company and the Guarantors that are pledged on a first-priority basis as collateral securing the Company’s obligations under the Senior Secured Credit Facilities (described above), subject to certain exceptions under the Indenture. The Indenture contains covenants that limit the ability of the Company and the Guarantors to (i) incur, assume or guarantee additional indebtedness or issue preferred stock; (ii) create liens to secure indebtedness; (iii) declare or pay dividends on the Company’s common stock, redeem stock or make other distributions to the Company’s stockholders; (iv) make investments; (v) restrict dividends, loans or other asset transfers from the Company’s restricted subsidiaries; (vi) merge or consolidate, or sell, transfer, lease or dispose of substantially all of the Company’s assets; (vii) sell or otherwise dispose of certain assets, including equity interests in subsidiaries; (viii) enter into transactions with affiliates; and (ix) create unrestricted subsidiaries. These covenants are subject to important exceptions and qualifications. If the Second Lien Notes achieve an investment grade rating from both Standard & Poor’s Ratings Services and Moody’s Investors Service, Inc. and no default under the Indenture exists, many of the foregoing covenants will terminate and cease to apply.

 

The only non-guarantor subsidiary of the Senior Secured Credit Facilities is the SPV, which holds the assets pledged to the Accounts Receivable Securitization Facility. The SPV had total assets of $178,726 and $104,548, comprised mainly of $178,446 and $104,099 trade receivables, net, as of March 31, 2022 and December 31, 2021, respectively. Net income attributable to the SPV was $684 and $1,160 for the three months ended March 31, 2022 and 2021, respectively, which primarily reflected intercompany fees related to purchasing the receivables, which are eliminated in the Consolidated Financial Statements contained within this Quarterly Report on Form 10-Q. During the three months ended March 31, 2022 and 2021, there were no borrowings or payments under the Accounts Receivable Securitization Facility. See Note 9 - Accounts Receivable Securitization for additional information. All other subsidiaries are guarantors of the Senior Secured Credit Facilities.

 

During the three months ended March 31, 2022, the Company spent $26,387 to retire $25,000 of its outstanding Second Lien Notes. During the three months ended March 31, 2021, the Company spent $9,338 to retire $10,190 of its outstanding Second Lien Notes and made a required repayment of $4,848 on the TLB Facility (discussed previously). As a result of these transactions, a loss on debt extinguishment of $2,122 and a gain on debt extinguishment of ($683) were realized, which are included in Loss (Gain) on Debt Extinguishment on the accompanying Consolidated Statements of Income for the three months ended March 31, 2022 and 2021, respectively.

 

PEDFA Bonds

 

In April 2021, CONSOL Energy borrowed the proceeds received from the sale of tax-exempt bonds issued by PEDFA in an aggregate principal amount of $75,000 (the “PEDFA Bonds”). The PEDFA Bonds bear interest at a fixed rate of 9.00% for an initial term of seven years. The PEDFA Bonds mature on April 1, 2051 but are subject to mandatory purchase by the Company on April 13, 2028, at the expiration of the initial term rate period. The PEDFA Bonds were issued pursuant to an indenture (the “PEDFA Indenture”) dated as of April 1, 2021, by and between PEDFA and Wilmington Trust, N.A., a national banking association, as trustee (the “PEDFA Notes Trustee”). PEDFA made a loan of the proceeds of the PEDFA Bonds to the Company pursuant to a Loan Agreement (the “Loan Agreement”) dated as of April 1, 2021 between PEDFA and the Company. Under the terms of the Loan Agreement, the Company agreed to make all payments of principal, interest and other amounts at any time due on the PEDFA Bonds or under the PEDFA Indenture. PEDFA assigned its rights as lender under the Loan Agreement, excluding certain reserved rights, to the PEDFA Notes Trustee. Certain subsidiaries of the Company (the “PEDFA Notes Guarantors”) executed a Guaranty Agreement (the “Guaranty”) dated as of April 1, 2021 in favor of the PEDFA Notes Trustee, guarantying the obligations of the Company under the Loan Agreement to pay the PEDFA Bonds when and as due. The obligations of the Company under the Loan Agreement and of the PEDFA Notes Guarantors under the Guaranty are secured by second priority liens on substantially all of the assets of the Company and the PEDFA Notes Guarantors on parity with the Second Lien Notes. The Loan Agreement and Guaranty incorporate by reference covenants in the Indenture under which the Second Lien Notes were issued (discussed above).

 

The Company started a capital construction project on the PAMC coarse refuse disposal area in 2017, which is now funded, in part, by the $75,000 of PEDFA Bond proceeds loaned to the Company. The Company expects to expend these funds over approximately the next two years, as qualified work is completed. During the three months ended March 31, 2022, the Company utilized restricted cash in the amount of $3,031 for qualified expenses. Additionally, the Company had $43,107 and $46,136 in restricted cash at  March 31, 2022 and  December 31, 2021, respectively, associated with this financing that will be used to fund future spending on the coarse refuse disposal area.

 

Other Indebtedness

 

The Company is a borrower under an asset-backed financing arrangement related to certain equipment. The equipment, which had an approximate value of $1,895 and $2,082 at  March 31, 2022 and  December 31, 2021, respectively, fully collateralizes the loan. As of March 31, 2022, the total outstanding loan of $1,895 matures in September 2024. The loan had a weighted average interest rate of 3.61% at March 31, 2022 and December 31, 2021.

 

During the year ended December 31, 2019, the Company entered into interest rate swaps, which effectively converted $150,000 of the TLB Facility's floating interest rate to a fixed interest rate for the twelve months ending December 31, 2020 and 2021, and $50,000 of the TLB Facility's floating interest rate to a fixed interest rate for the twelve months ending December 31, 2022. The interest rate swaps qualify for cash flow hedge accounting treatment and as such, the change in the fair value of the interest rate swaps is recorded on the Company's Consolidated Balance Sheets as an asset or liability. The effective portion of the gains or losses is reported as a component of accumulated other comprehensive loss and the ineffective portion is reported in earnings. At March 31, 2022, the interest rate swap contracts were reflected in the Consolidated Balance Sheets at their fair value of $5, which was recorded in Prepaid Expenses and Other Current Assets. At December 31, 2021, the interest rate swap contracts were reflected in the Consolidated Balance Sheets at their fair value of $517, which was recorded in Other Accrued Liabilities. The fair value of the interest rate swaps reflected unrealized gains of $391 (net of $130 tax) and $414 (net of $144 tax) for the three months ended March 31, 2022 and 2021, respectively. These unrealized gains are included on the Consolidated Statements of Stockholders' Equity as part of accumulated other comprehensive loss, as well as on the Consolidated Statements of Comprehensive Income as unrealized gain on cash flow hedges. Some of the Company's interest rate swaps reached their effective date in the three months ended March 31, 2022 and 2021. As such, losses of $167 and $532 were recognized in interest expense in the Consolidated Statements of Income for the three months ended March 31, 2022 and 2021, respectively. During 2022, notional amounts of $50,000 will become effective. Based on the fair value of the Company's cash flow hedges at March 31, 2022, the Company expects a gain of approximately $159 to be reclassified into earnings in the remaining nine months of 2022.

 

19

  
 

NOTE 13—COMMITMENTS AND CONTINGENT LIABILITIES:

 

The Company is subject to various lawsuits and claims with respect to such matters as personal injury, wrongful death, damage to property, exposure to hazardous substances, governmental regulations including environmental remediation, employment and contract disputes and other claims and actions arising out of the normal course of business. The Company accrues the estimated loss for these lawsuits and claims when the loss is probable and reasonably estimable. The Company’s estimated accruals related to these pending claims, individually and in the aggregate, are immaterial to the financial position, results of operations or cash flows of the Company as of March 31, 2022. It is possible that the aggregate loss in the future with respect to these lawsuits and claims could ultimately be material to the Company’s financial position, results of operations or cash flows; however, such amounts cannot be reasonably estimated. The amount claimed against the Company as of March 31, 2022 is disclosed below when an amount is expressly stated in the lawsuit or claim, which is not often the case.

 

Fitzwater Litigation: Three nonunion retired coal miners have sued Fola Coal Company LLC, Consolidation Coal Company (“CCC”) and CONSOL of Kentucky Inc. (“COK”) (as well as the Company's former parent) in the U.S. District Court for the Southern District of West Virginia alleging ERISA violations in the termination of retiree health care benefits. The Plaintiffs contend they relied to their detriment on oral statements and promises of “lifetime health benefits” allegedly made by various members of management during Plaintiffs’ employment and that they were allegedly denied access to Summary Plan Documents that clearly reserved to the Company the right to modify or terminate the Retiree Health and Welfare Plan subject to Plaintiffs’ claims. Pursuant to Plaintiffs’ amended complaint filed on April 24, 2017, Plaintiffs request that retiree health benefits be reinstated and seek to represent a class of all nonunion retirees who were associated with AMVEST and COK areas of operation. On October 15, 2019, Plaintiffs’ supplemental motion for class certification was denied on all counts. On July 15, 2020, Plaintiffs filed an interlocutory appeal with the Fourth Circuit Court of Appeals on the Order denying class certification. The Fourth Circuit denied Plaintiffs' appeal on August 14, 2020. On October 1, 2020, the District Court entered a pretrial order setting the trial date, which was held in February 2021. No ruling has been issued by the judge. The Company believes it has a meritorious defense and intends to vigorously defend this suit.

 

Casey Litigation: A class action lawsuit was filed on August 23, 2017 on behalf of two nonunion retired coal miners against CCC, COK, CONSOL Buchanan Mining Co., LLC and Kurt Salvatori, the Company's Chief Administrative Officer, in the U.S. District Court for the Southern District of West Virginia alleging ERISA violations in the termination of retiree health care benefits. Filed by the same lawyers who filed the Fitzwater litigation, and raising nearly identical claims, the Plaintiffs contend they relied to their detriment on oral promises of “lifetime health benefits” allegedly made by various members of management during Plaintiffs’ employment and that they were not provided with copies of Summary Plan Documents clearly reserving to the Company the right to modify or terminate the Retiree Health and Welfare Plan. Plaintiffs request that retiree health benefits be reinstated for them and their dependents and seek to represent a class of all nonunion retirees of any subsidiary of the Company's former parent that operated or employed individuals in McDowell or Mercer Counties, West Virginia, or Buchanan or Tazewell Counties, Virginia whose retiree welfare benefits were terminated. On December 1, 2017, the trial court judge in Fitzwater signed an order to consolidate Fitzwater with Casey. The Casey complaint was amended on March 1, 2018 to add new plaintiffs, add defendant CONSOL Pennsylvania Coal Company, LLC and eliminate defendant CONSOL Buchanan Mining Co., LLC in an attempt to expand the class of retirees. On October 15, 2019, Plaintiffs’ supplemental motion for class certification was denied on all counts. On July 15, 2020, Plaintiffs filed an interlocutory appeal with the Fourth Circuit Court of Appeals on the Order denying class certification. The Fourth Circuit denied Plaintiffs' appeal on August 14, 2020. On October 1, 2020, the District Court entered a pretrial order setting the trial date, which was held in February 2021. No ruling has been issued by the judge. The Company believes it has a meritorious defense and intends to vigorously defend this suit.

 

United Mine Workers of America 1992 Benefit Plan Litigation: In 2013, Murray Energy and its subsidiaries (“Murray”) entered into a stock purchase agreement (the “Murray sale agreement”) with the Company's former parent pursuant to which Murray acquired the stock of CCC and certain subsidiaries and certain other assets and liabilities. At the time of sale, the liabilities included certain retiree medical liabilities under the Coal Industry Retiree Health Benefit Act of 1992 (“Coal Act”) and certain federal black lung liabilities under the Black Lung Benefits Act (“BLBA”). Based upon information available, the Company estimates that the annual servicing costs of these liabilities are approximately $10 million to $20 million per year for the next ten years. The annual servicing cost would decline each year since the beneficiaries of the Coal Act consist principally of miners who retired prior to 1994. Murray filed for Chapter 11 bankruptcy in October 2019. As part of the bankruptcy proceedings, Murray unilaterally entered into a settlement with the United Mine Workers of America 1992 Benefit Plan (the “1992 Benefit Plan”) to transfer retirees in the Murray Energy Section 9711 Plan to the 1992 Benefit Plan. This was approved by the bankruptcy court on April 30, 2020. On May 2, 2020, the 1992 Benefit Plan filed an action in the United States District Court for the District of Columbia asking the court to make a determination whether the Company's former parent or the Company has any continuing retiree medical liabilities under the Coal Act (the “1992 Plan Lawsuit”). The Murray sale agreement includes indemnification by Murray with respect to the Coal Act and BLBA liabilities. In addition, the Company had agreed to indemnify its former parent relative to certain pre-separation liabilities. As of September 16, 2020, the Company entered into a settlement agreement with Murray and withdrew its claims in bankruptcy. On September 11, 2020, the Defendants in the 1992 Plan Lawsuit filed a Motion to Dismiss Plaintiffs' Second Amended Complaint which was denied by the Court on March 29, 2022. The Company will continue to vigorously defend any claims that attempt to transfer any of such liabilities directly or indirectly to the Company, including raising all applicable defenses against the 1992 Benefit Plan’s suit.

 

Other Matters: On July 27, 2021, the Company's former parent informed the Company that it had received a request from the UMWA 1974 Pension Plan for information related to the facts and circumstances surrounding the former parent's 2013 sale of certain of its coal subsidiaries to Murray (the “Letter Request”). The Letter Request indicates that litigation by the UMWA 1974 Pension Plan against the Company's former parent related to potential withdrawal liabilities from the plan created by the 2019 bankruptcy of Murray is reasonably foreseeable. There has been no indication of potential claims against the Company by the UMWA 1974 Pension Plan and, at this time, no liability of the Company's former parent has been assessed.

 

Various Company subsidiaries are defendants in certain other legal proceedings arising out of the conduct of the Coal Business prior to the separation and distribution, and the Company is also a defendant in other legal proceedings following the separation and distribution. In the opinion of management, based upon an investigation of these matters and discussion with legal counsel, the ultimate outcome of such other legal proceedings, individually and in the aggregate, is not expected to have a material adverse effect on the Company’s financial position, results of operations or liquidity.

 

20

 

As part of the separation and distribution, the Company assumed various financial obligations relating to the Coal Business and agreed to reimburse its former parent for certain financial guarantees relating to the Coal Business that its former parent retained following the separation and distribution. Employee-related financial guarantees have primarily been provided to support the 1992 Benefit Plan and federal black lung and various state workers’ compensation self-insurance programs. Environmental financial guarantees have primarily been provided to support various performance bonds related to reclamation and other environmental issues. Other financial guarantees have been extended to support sales contracts, insurance policies, surety indemnity agreements, legal matters, full and timely payments of mining equipment leases, and various other items necessary in the normal course of business.

 

The following is a summary, as of March 31, 2022, of the financial guarantees, unconditional purchase obligations and letters of credit to certain third parties. These amounts represent the maximum potential of total future payments that the Company could be required to make under these instruments, or under the separation and distribution agreement to the extent retained by the Company's former parent on behalf of the Coal Business. Certain letters of credit included in the table below were issued against other commitments included in this table. These amounts have not been reduced for potential recoveries under recourse or collateralization provisions. Generally, recoveries under reclamation bonds would be limited to the extent of the work performed at the time of the default. No amounts related to these commitments are recorded as liabilities in the financial statements. The Company’s management believes that these commitments will not have a material adverse effect on the Company’s financial condition.

 

   

Amount of Commitment Expiration per Period

 
    Total Amounts Committed    

Less Than 1 Year

   

1-3 Years

   

3-5 Years

   

Beyond 5 Years

 

Letters of Credit:

                                       

Employee-Related

  $ 58,835     $ 58,835     $     $     $  

Environmental

    398       398                    

Other

    134,074       134,074                    

Total Letters of Credit

  $ 193,307     $ 193,307     $     $     $  

Surety Bonds:

                                       

Employee-Related

  $ 81,524     $ 63,989     $ 17,535     $     $  

Environmental

    535,303       501,335       33,968              

Other

    4,315       3,483       832              

Total Surety Bonds

  $ 621,142     $ 568,807     $ 52,335     $     $  

 

The Company regularly evaluates the likelihood of default for all guarantees based on an expected loss analysis and records the fair value, if any, of its guarantees as an obligation in the Consolidated Financial Statements.

 

21

  
 

NOTE 14—DERIVATIVES

 

Interest Rate Risk Management

 

During the year ended December 31, 2019, the Company entered into interest rate swaps to manage exposures to interest rate risk on long-term debt in order to achieve a mix of fixed and variable rate debt that it deems appropriate. These interest rate swaps have been designated as cash flow hedges of future variable interest payments. For additional information on these arrangements, refer to Note 12 - Long-Term Debt.

 

Coal Price Risk Management Positions

 

The Company may sell or purchase forward contracts, swaps and options in the over-the-counter coal market in order to manage its exposure to coal prices. The Company has exposure to the risk of fluctuating coal prices related to forecasted or index-priced sales of coal or to the risk of changes in the fair value of a fixed price physical sales contract. As of March 31, 2022, the Company held coal-related financial contracts to sell an aggregate notional volume of 1.3 million metric tons and to buy an aggregate notional volume of 450 thousand metric tons, which will settle in 2022.

 

Tabular Derivatives Disclosures

 

The Company has master netting agreements with all of its counterparties which allow for the settlement of contracts in an asset position with contracts in a liability position in the event of default or termination. Such netting arrangements reduce the Company's credit exposure related to these counterparties to the extent the Company has any liability to such counterparties. For classification purposes, the Company records the net fair value of all the positions with a given counterparty as a net asset or liability in the Consolidated Balance Sheets. The fair value of derivatives reflected in the accompanying Consolidated Balance Sheets are set forth in the table below.

 

   

March 31, 2022

   

December 31, 2021

 
   

Asset Derivatives

   

Liability Derivatives

   

Asset Derivatives

   

Liability Derivatives

 

Coal Swap Contracts

  $ 75,132     $ (275,317 )   $ 1,086     $ (53,290 )

Effect of Counterparty Netting

    (75,132 )     75,132       (1,086 )     1,086  

Net Derivatives as Classified in the Consolidated Balance Sheets

  $     $ (200,185 )   $     $ (52,204 )

 

The net amount of liability derivatives is included in Commodity Derivatives in the accompanying Consolidated Balance Sheets.

 

Currently, the Company does not seek cash flow hedge accounting treatment for its coal-related derivative financial instruments and therefore, changes in fair value are reflected in current earnings. During the three months ended March 31, 2022, the Company settled a portion of its coal-related derivatives at a loss of $86,252. Additionally, during the three months ended March 31, 2022, the Company recognized unrealized mark-to-market losses on its coal-related derivatives of $101,902. These settlements and unrealized mark-to-market losses are included in Loss on Commodity Derivatives, net on the accompanying Consolidated Statements of Income.

 

The Company classifies the cash effects of its derivatives within the Cash Flows from Operating Activities section of the Consolidated Statements of Cash Flows.

 

22

 
 

NOTE 15—FAIR VALUE OF FINANCIAL INSTRUMENTS:

 

CONSOL Energy determines the fair value of assets and liabilities based on the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants. The fair values are based on assumptions that market participants would use when pricing an asset or liability, including assumptions about risk and the risks inherent in valuation techniques and the inputs to valuations. The fair value hierarchy is based on whether the inputs to valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources (including LIBOR-based discount rates), while unobservable inputs reflect the Company’s own assumptions of what market participants would use.

 

The fair value hierarchy includes three levels of inputs that may be used to measure fair value as described below.

 

Level One - Quoted prices for identical instruments in active markets.

 

Level Two - The fair value of the assets and liabilities included in Level 2 are based on standard industry income approach models that use significant observable inputs, including LIBOR-based discount rates. The Company's Level 2 assets and liabilities include interest rate swaps and coal commodity contracts with fair values derived from quoted prices in over-the-counter markets.

 

Level Three - Unobservable inputs significant to the fair value measurement supported by little or no market activity. 

 

In those cases when the inputs used to measure fair value meet the definition of more than one level of the fair value hierarchy, the lowest level input that is significant to the fair value measurement in its totality determines the applicable level in the fair value hierarchy.

 

The financial instruments measured at fair value on a recurring basis are summarized below:

 

   

Fair Value Measurements at

   

Fair Value Measurements at

 
   

March 31, 2022

   

December 31, 2021

 

Description

 

Level 1

   

Level 2

   

Level 3

   

Level 1

   

Level 2

   

Level 3

 

Commodity Derivatives

  $     $ (200,185 )   $     $     $ (52,204 )   $  

Interest Rate Swaps

  $     $ 5     $     $     $ (517 )   $  

 

The following methods and assumptions were used to estimate the fair value for which the fair value option was not elected:

 

Long-term debt: The fair value of long-term debt is measured using unadjusted quoted market prices or estimated using discounted cash flow analyses. The discounted cash flow analyses are based on current market rates for instruments with similar cash flows.

 

The carrying amounts and fair values of financial instruments for which the fair value option was not elected are as follows:

 

   

March 31, 2022

   

December 31, 2021

 
   

Carrying

   

Fair

   

Carrying

   

Fair

 
   

Amount

   

Value

   

Amount

   

Value

 

Long-Term Debt

  $ 581,748     $ 599,734     $ 613,752     $ 628,431  

 

Certain of the Company’s debt is actively traded on a public market and, as a result, constitutes Level 1 fair value measurements. The portion of the Company’s debt obligations that is not actively traded is valued through reference to the applicable underlying benchmark rate and, as a result, constitutes Level 2 fair value measurements.

 

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NOTE 16—SEGMENT INFORMATION:

 

The Company reports segment information based on the “management” approach. The management approach designates the internal reporting used by management to make decisions on and assess performance of the Company’s reportable segments. CONSOL Energy presently consists of two reportable segments, the PAMC and the CONSOL Marine Terminal. The PAMC includes the Bailey Mine, the Enlow Fork Mine, the Harvey Mine and a centralized preparation plant. The PAMC segment’s principal activities include the mining, preparation and marketing of bituminous coal, sold primarily to power generators, industrial end-users and metallurgical end-users. The CONSOL Marine Terminal provides coal export terminal services through the Port of Baltimore. Selling, general and administrative costs are allocated to the Company’s segments based on a percentage of resources utilized, a percentage of total revenue and a percentage of total projected capital expenditures. CONSOL Energy’s Other segment includes revenue and expenses from various corporate and diversified business activities that are not allocated to the PAMC or the CONSOL Marine Terminal segments. The diversified business activities include the development of the Itmann Mine, the Greenfield Reserves and Resources, closed mine activities, other income, gain on asset sales related to non-core assets, and gain/loss on debt extinguishment. Additionally, interest expense and income taxes, as well as various other non-operated activities, none of which are individually significant to the Company, are also reflected in CONSOL Energy's Other segment and are not allocated to the PAMC and CONSOL Marine Terminal segments.

 

The Company evaluates the performance of its segments utilizing Adjusted EBITDA and various sales and production metrics. Adjusted EBITDA is not a measure of financial performance determined in accordance with GAAP, and items excluded from Adjusted EBITDA may be significant in understanding and assessing the Company's financial condition. Therefore, Adjusted EBITDA should not be considered in isolation, nor as an alternative to net income, income from operations, or cash flows from operations, or as a measure of the Company's profitability, liquidity, or performance under GAAP. The Company uses Adjusted EBITDA to measure the operating performance of its segments and to allocate resources to its segments. Investors should be aware that the Company's presentation of Adjusted EBITDA may not be comparable to similarly titled measures used by other companies.

 

Reportable segment results for the three months ended March 31, 2022 are:

 

   

PAMC

   

CONSOL Marine Terminal

   

Other

   

Adjustments and Eliminations

   

Consolidated

 

Coal Revenue

  $ 472,960     $     $ 3,408     $     $ 476,368  

Terminal Revenue

          21,397                   21,397  

Freight Revenue

    38,389                         38,389  

Total Revenue from Contracts with Customers

  $ 511,349     $ 21,397     $ 3,408     $     $ 536,154  

Adjusted EBITDA(a)

  $ 158,258     $ 14,477     $ (3,505 )   $     $ 169,230  

Segment Assets

  $ 1,734,316     $ 80,135     $ 900,509     $     $ 2,714,960  

Depreciation, Depletion and Amortization

  $ 50,956     $