CONSOL Energy Inc. CONSOL Coal Resources LP Investor Presentation November 2018
Disclaimer This presentation contains statements, estimates and projections which are forward-looking statements (as defined in Section 21E of the Securities Exchange Act of 1934, as amended). Statements that are not historical are forward-looking, and include, without limitation, projections and estimates concerning the timing and success of specific projects and the future production, revenues, income and capital spending of CONSOL Energy, Inc. (“CEIX”) and CONSOL Coal Resources LP (“CCR,” and together with CEIX, “we,” “us,” or “our”) . When we use the words “anticipate,” “believe,” “could,” “continue,” “estimate,” “expect,” “intend,” “may,” “plan,” “predict,” “project,” “should,” “will,” or their negatives, or other similar expressions, the statements which include those words are usually forward-looking statements. These forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those statements, plans, estimates and projections. Accordingly, investors should not place undue reliance on forward-looking statements as a prediction of future actual results. We have based these forward-looking statements on our current expectations and assumptions about future events. While our management considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond our control. Factors that could cause future actual results to differ materially from the forward-looking statements include risks, contingencies and uncertainties that are described in detail under the captions “Cautionary Statements Regarding Forward-Looking Statements” and “Risk Factors” in our public filings with the Securities and Exchange Commission. The forward-looking statements in this presentation speak only as of the date of this presentation; we disclaim any obligation to update the statements, and we caution you not to rely on them unduly. This presentation includes unaudited “non -GAAP financial measures” as defined in Regulation G under the Securities Exchange Act of 1934, including EBIT, EBITDA, Adjusted EBITDA, Bank EBITDA, PAMC Adjusted EBITDA, leverage ratio, bank net leverage ratio, Adjusted EBITDA attributable to CONSOL Energy shareholders, average cash margin per ton sold and Free Cash Flow. The presentation of non-GAAP financial measures is not intended to be a substitute for, and should not be considered in isolation from, the financial measures reported in accordance with GAAP. See the Appendix for a reconciliation of the non-GAAP financial measures included in this presentation to their comparable GAAP financial measures. References to historical measures means historical predecessor measures, for which we have provided calculations and reconciliations in the Appendix. 1
Introduction
Investment Thesis Premier U.S. coal mining complex with a proven track record of operational excellence. • Highly competitive with natural gas and driven by a superior cost position vs. Appalachian E&P producers. Highly-experienced, proven management team with the vision and skills to optimize this world-class portfolio. Diversified sales portfolio and proven marketing strategy. • Provides volume stability and multiple paths toward growing market share. Ownership of CONSOL Marine Terminal strategically located in Baltimore. • Provides ability to capture arbitrage between domestic and international thermal and met export markets. Compelling coal industry backdrop, driven by multi-year underinvestment and rising global demand. Coal equities trading at low valuation multiples and coal companies have better balance sheets. 3
CEIX Performance Since November 2017 Spin Performance of Our Securities since the November 2017 Spin… Spin Today 13% 4% 100% 105.00 5% 115.00 14% $113 88% +1 S&P notch $102 50.00 90% 4% 110.00 12% $98 100.00 25.00 35% 80% $40.40 4% B1 / B+ 105.00 40.00 10% 70% $100 30% 95.00 3% 20.00 100.00 60% 8% 25% 3% B1 / B 30.00 50% 90.00 95.00 15.00 $21.50 20% 2% 6% 40% 90.00 20.00 15% 85.00 2% 10.00 30% 4% 85.00 10% 1% 20% 10.00 80.00 5.00 2% 80.00 1% 5% 10% - 0% 75.00 0% 75.00 0% - 0% Common Stock Term Loan B Pricing 2nd Lien Notes Pricing Corporate Ratings Moody's / S&P Global …Driven by Improvements in Our Key Financial Metrics Spin Today (0.8x) -17% 32% 600.00 35% 2.5x - 900.00 0% $766 -2% 2.1x 800.00 (0.1x) -36% 80% 0% $489 30% 500.00 -4% 2.0x 700.00 (0.2x) 70% -5% $634 25% -6% $370 56% 400.00 (0.3x) 600.00 60% -10% -8% 1.5x 20% 1.3x (0.4x) 500.00 50% -15% 300.00 -10% (0.5x) 40% 36% -20% 400.00 15% -12% 1.0x 200.00 (0.6x) 30% -25% 300.00 -14% 10% 20% -30% (0.7x) 200.00 -16% 0.5x 100.00 5% 10% -35% 100.00 (0.8x) -18% 0% -40% - 0% - -20% - (0.9x) (1) (3) (2) Net Debt / Enterprise Value LTM Adjusted EBITDA Net Debt Net Debt/Adjusted EBITDA Source: CONSOL Energy Inc. management Company filings. Note: “Today” is based on COB November 8, 2018 & “Spin” is based on November 28, 2017 unless otherwise noted. LTM Adjusted EBITDA for “Spin” is based on initial 2018 mid - point Adjusted EBITDA guidance during 4Q17 earnings release and “Today” is based on LTM 9/30/2018. (1) “Spin” is CONSOL Mining Company pro forma 6/30/2017 and “Today” is as of 9/30/2018. (2) 4 “Spin” figure is calculated as pro forma 6/30/2017 net debt of $766 million / $370 LTM adjusted EBITDA (mid -point of initial 201 8 guidance) and “Today” is as of 9/30/2018. (3)
Pure-Play Coal Company with Significant Current and Growing Export Exposure CONSOL Energy Inc. (“CEIX”) was created through the November 2017 spin-off of CNX Resources Corporation’s (“CNX”) coal business Differential Assets: Foundation of CEIX is the premier US mining complex, Pennsylvania Mining Complex (“PAMC”) 75% undivided interest in PAMC; 100% ownership of CONSOL Marine Terminal (“CMT”) ; 1.6 BTs of undeveloped coal reserves MLP Ownership: CEIX owns the GP and ~60% LP interest in CONSOL Coal Resources LP (NYSE: “CCR”) CCR is an MLP formed in 2015 with a current 25% undivided interest in PAMC CCR has consistently paid $0.5125/unit quarterly distribution to its common unitholders since its June 2015 IPO FCF Generation: PAMC is the workhorse for CEIX and CCR generating FCF (1) throughout the downturn in 2015-2016 2014-17 average of $449 million annual PAMC Adjusted EBITDA (1) and $297 million annual free cash flow (FCF) (1) Two Ways To Invest: CEIX and CCR enable investors access to participate in growing global thermal and met coal demand with a differentiated marketing strategy and control through ownership in our CONSOL Marine Terminal CCR - MLP with a consistent distribution history, currently yielding ~11% (2) CEIX - C-Corp with ability to capture share price appreciation tying to a broader set of assets PAMC Adjusted EBITDA is defined as Adjusted EBITDA attributable to the Pennsylvania Mining Complex segment. Free cash flow or “FCF” herein is defined as PAMC (1) Adjusted EBITDA less capex. These are non-GAAP measures. A reconciliation to the GAAP measures is provided in the Appendix. (2) Based on COB 11/8/2018 price of $19.27. 5
3Q18 Performance Executive Summary and 2018 Outlook CEIX posted 3Q18 Earnings per Diluted Share of $0.20 and Adjusted EBITDA (1) of $83MM. CCR announced 3Q18 Net Income per Limited Partner Unit – Diluted of $0.31 per unit and Adjusted EBITDA (1) of $22MM. PAMC posted 3Q18 revenue per ton and average cash margins per ton (1) of $47.21 and $16.33, respectively. Added several multi-year contracts for 2019-2021 capturing pricing improvement and reducing volatility. Raising 2018 CEIX and CCR Adjusted EBITDA guidance (2) 5% and 4%, respectively, since 2Q18. Raised CEIX and CCR by 26% and 10%, respectively, since the initial guidance in Jan 2018. CEIX & CCR posted net leverage ratios (3) of 1.3x and 1.4x at 9/30/18, respectively. CEIX generated Organic Free Cash Flow Net to CEIX Shareholders (1) of $217MM and $6MM, for the 9 months and 3 months-ended 9/30/18, respectively. For the nine months-ended 9/30/18, CEIX has reduced total debt by $50MM through payments on Term-Loan A (TLA) / Term-Loan B (TLB) and repurchases of outstanding CEIX second lien debt. For the nine months-ended 9/30/18, CEIX has purchased CEIX common shares of $11MM and CCR common units of more than $1MM. S&P Global ratings raised CEIX’s issuer credit rating to B+ from B. (1) A non-GAAP measure. Please see the appendix for a definition of this measure and also a reconciliation to the most directly comparable GAAP measure. (2) Based on the midpoint. (3) Please see page 23 for a definition/calculation of this ratio. 6
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