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Why CNX Resources Reported Higher Net Income in 1Q18

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CNX Resources’ 1Q18 adjusted net income

CNX Resources (CNX) announced its 1Q18 earnings on May 3 before the market opened. Per its earnings press release, CNX reported a better-than-expected profit of ~$50 million for 1Q18. Wall Street analysts were expecting a lower profit of ~$36 million. On a year-over-year basis, CNX’s profit increased ~32% from 1Q17’s profit of ~$38 million. Sequentially and excluding one-time items, CNX’s net income turned positive from a loss of ~$52 million in 4Q17.

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CNX Resources 1Q18 reported net income

CNX Resources’ adjusted net income excludes one-time benefits and charges totaling $478 million, the majority of which related to a gain on previously held equity holdings. Adding back these one-time items, we find that CNX’s reported net income on a GAAP (generally accepted accounting principles) basis was at $528 million, or $2.35 per share, in 1Q18. CNX’s reported net income was -$39 million, or -$0.17 per share, in 1Q17.

CNX’s higher reported net income in 1Q18 from 1Q17 could be due to higher revenues, coupled with lower total operating expenses. CNX’s revenues saw an increase of ~55% in 1Q18 compared with 1Q17. In comparison to the higher revenues, CNX’s total operating expenses saw a decrease of ~22%, which acted positively on the bottom line.

CNX’s peer ConocoPhillips (COP) reported a better-than-expected profit of ~$1.14 billion in 1Q18. Wall Street analysts were expecting a lower profit of ~$829 million. COP turned its losses last year into profits in 1Q18.

In the next part of this series, we’ll take a look at CNX’s revenues.

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