# CNX Resources Corporation (CNX) — Financial Analysis

**Exchange:** NYSE  
**Coverage as of:** 2026-Q2  
**Updated:** 2026-05-28  
**Tier:** Free primer (step 2 of 19)  
**Sibling pages:** /stocks/CNX/thesis · /stocks/CNX/memo

## Financial Snapshot

---
type: research_step
step: 04
title: Financial Quality + Adversarial Sweep
ticker: CNX
source: coverage-next-full
created: 2026-05-28
---

### Step 04 — Financial Snapshot (Quality + Adversarial Sweep)

#### 1. Statement Quality Adjustments (Fact + Judgment)

##### Adjustment 1: Hedge mark-to-market normalization
GAAP "Revenues" and "Net Income" lines are dominated by derivative MTM swings ($1.6B unrealized loss FY23, $2.7B unrealized loss FY24, $1.9B unrealized gain FY25) [S1]. These swings have **no current-period cash impact** — the cash impact accrues only as hedges settle. For analytical purposes:
- Use **cash OCF** (much cleaner cycle visibility: $815M → $1,235M range vs revenue $757M → $3.43B)
- Compute "cash-realized revenue" = production × realized post-hedge price
- Treat GAAP EBITDA only on a multi-year average (≥3 years) basis

##### Adjustment 2: Depletion (DD&A) tied to reserves carrying value
DD&A flows from unit-of-production method against capitalized reserves base. After Apex acquisition (Jan 2025), capitalized base stepped up ~$500M, which raises DD&A per Mcfe going forward. This is a non-cash GAAP drag — does not affect FCF.

##### Adjustment 3: Apex deal accounting
Apex closed Jan 27, 2025 for $518M cash. Reported as acquisition of "natural gas upstream and associated midstream business." Goodwill / fair-value step-up not material per disclosure; deal was largely asset-purchase economics. Integration costs (~$10-15M est.) flow through G&A but are recurring-cost-like rather than restructuring [S2].

##### Adjustment 4: Apex deferred Utica-rights deal
Late-2025 agreement for ~$50M paid ratably over 3 years to acquire Utica rights below Apex acreage. $16M first payment in 2026 capex. Treat as deferred capex / acquisition payment — not a cash drag for valuation purposes; it's growth investment [S3].

##### Adjustment 5: Stock-based compensation
SBC = $20.2M FY25 (~1.3% of OCF). This is a moderate but non-trivial drag on per-share metrics. Buyback program nets out >25x the dilution, so net per-share impact is positive. Not adjusting separately — already in diluted share count.

##### Adjustment 6: Equity / share count timing
Diluted weighted-avg shares 192.0M FY25 vs basic shares EoP 148.9M. The 28% gap is unusual and reflects:
- Issued convertible notes that count in diluted denominator
- Buyback cadence not fully reflected in WAS for the year
Use **EoP basic share count (148.9M FY25, 141.5M post-Q1'26)** for forward FCF/share calculations; use WAS-diluted only for historical GAAP comparisons.

##### Adjustment 7: Asset retirement obligation
ARO disclosed in 10-K; CNX ARO not material relative to other E&Ps because Appalachian well plugging is well-understood and reserves disclosure includes future development costs.

#### 2. Returns and Cash Conversion (Fact)

| Metric (TTM, post-Q1'26) | Value | Interpretation |
|---------------------------|-------|----------------|
| ROIC (stockanalysis.com) | 17.8% | Inflated by hedge reversal; cycle-normalized ~8-12% |
| ROE | 28.1% | Same inflation; cycle-normalized ~6-10% |
| ROA | 11.0% | Same inflation; cycle-normalized ~4-7% |
| OCF/Revenue (FY25) | 46% | Cash conversion clean despite hedge volatility |
| FCF/OCF (FY25) | 52% | $534M FCF on $1.03B OCF; rest is capex |
| FCF/Share (TTM) | $3.94 | Most-tracked per-share figure |
| FCF Yield (at $33.70) | 11.7% | Headline cheap-stock signal |

#### 3. Adversarial Research Sweep (Mandatory)

##### A. Short reports / activist campaigns
- **Searched for**: Hindenburg, Muddy Waters, Citron, Bonitas, Spruce Point, Kerrisdale targeting CNX or "CNX Resources."
- **Found**: No active short reports or activist campaigns published against CNX as of May 2026. The peer-broad criticism of E&P transparency around hedge accounting is general industry-level, not CNX-specific [S4].

##### B. Material litigation
- Standard E&P litigation: royalty owner disputes (industry standard); environmental impact-related cases (manageable); no material outcome pending.
- No SEC enforcement action against CNX as of May 2026.
- No class-action securities litigation pending.

##### C. Restatements / accounting issues
- No 10-K/A or 10-Q/A restatements in the FY20–FY25 window.
- Auditor: Ernst & Young (long-tenured). Going-concern opinion: clean.

##### D. Regulatory investigations
- No DOJ / EPA enforcement action pending material to financials.
- Routine FERC / state DEP / EPA compliance actions standard for the basin; no extraordinary action.

##### E. Insider sales pattern check
- 2026-02-23 DeIuliis Form 4: 23,831 sh at $37.36 — code F (tax-withholding on vesting), **not open-market sale**.
- 2026-05-11 burst of 7 Form 4 filings — consistent with annual award grants / vesting cycle, not open-market selling.
- **No pattern of insider open-market selling** observed [S5].

##### F. CEO transition mechanics
- DeIuliis retired Dec 31, 2025 effective; transition pre-announced Sep 18, 2025 with continuity bridge (DeIuliis stays on Board; non-executive employee through Feb 2, 2026).
- Shepard internal-promote (CFO since 2022, President since June 2025) — minimizes succession discontinuity risk.
- Not a forced-departure or crisis-driven transition.

##### G. Hedge accounting opacity
- CNX's hedge mark-to-market disclosure (note 8 in 10-K) is detailed but complex. The mechanism is standard ASC 815 cash-flow-hedge or fair-value-hedge accounting — not unusual or aggressive.
- The $2.7B unrealized FY24 loss / $1.9B FY25 gain swing is **mathematically consistent** with the disclosed hedge notional and the change in NYMEX forward curve over the period.
- No red flag.

##### H. Debt covenant / refinance risk
- Major maturity: 2.25% convertible notes due 2026 (~$330M); 7.25% sr nts due 2027 (~$500M); 7.375% sr nts due 2031 (~$500M); revolver $2.4B capacity.
- Refi 2027 at current high-yield rates (6-8%) is a moderate concern but manageable. Net interest impact ~$10-15M annual — not thesis-altering.

##### I. ESG / methane regulatory exposure
- CNX has been **forward-leaning** on methane mitigation (Sustainable Business Model framework; CMM / waste-mine-methane capture). EPA Subpart W / OOOOb/c compliance is in their narrative, not against it.
- Not a stranded-asset story relative to peers — Appalachian gas is the longest-lived strand of US fossil fuel production in most decarbonization scenarios.

##### Aggregate adversarial verdict
**No material red flag identified.** The hedge-accounting complexity is real but mathematically clean. The CEO transition is well-managed. No active short campaigns. No restatements. The principal risks are external (commodity cycle, regulation) rather than firm-specific.

#### 4. Quality Verdict (Judgment)
- Earnings quality: **MEDIUM** — high cash conversion, but GAAP earnings highly noisy due to hedge MTM
- Balance-sheet quality: **MEDIUM-HIGH** — moderate leverage (1.7x net debt / EBITDA cycle-avg ~$1.0B = 2.5x); no near-term refinance distress
- Cash-flow quality: **HIGH** — 24+ consecutive quarters of positive FCF; clean OCF-to-FCF conversion
- Governance: **HIGH** — long-tenured directors, clean transitions, codified per-share intrinsic-value framework
- Audit risk: **LOW** — long-tenured auditor, no restatements

#### Source Index
- [S1] `CNX_financials/xbrl/xbrl_summary.md` hedge G/L table
- [S2] CNX FY2025 10-K + Apex acquisition note; naturalgasintel.com Apex coverage
- [S3] worldoil.com Apex closing coverage; stocktitan.net 10-K writeup
- [S4] WebSearch for short reports / litigation / SEC actions: no active material findings as of 2026-05
- [S5] `CNX_financials/proxy/insider_transactions.md` Form 4 review

## Deeper Financial Analysis

The fundamental tier ($1.00) adds 8 dimensions not included here:

- Revenue Breakdown — segment revenue, geographic mix, product-line margins
- Financial Trends — QoQ momentum, leading indicators, inflection points
- Balance Sheet — debt structure, dilution risk, working capital dynamics
- Capital Allocation — ROIC, buyback cadence, reinvestment efficiency
- Earnings Analysis — beats/misses, guidance vs actuals, transcript highlights
- Competitive Positioning — market share, pricing power, peer benchmarks
- Industry Context — TAM, sector tailwinds/headwinds, regulatory backdrop

**API endpoint:** GET /api/v1/research/CNX/fundamental

## Navigation

- Overview: /stocks/CNX
- Financials (this page): /stocks/CNX/financials
- Thesis: /stocks/CNX/thesis
- Investment Memo: /stocks/CNX/memo
- Coverage universe: /stocks