Peabody Energy (BTU) 27 Jul 232023 Q2 Earnings call transcript

Welcome to the Peabody Second Quarter Earnings Call. All participants will be in a listen-only mode. [Operator Instructions]. After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please also note that this event is being recorded.

I Karla like Investor Kimrey, time, conference turn Relations. this to over Vice at would to now the And President of Please go ahead.

for Marketing and CEO thank Peabody’s Grech, CFO XXXX. And for and Jim Roberts. me the our Spurbeck call Chief With President morning. of Malcolm second our Good today, Mark quarter Officer you earnings joining

to factors non-GAAP statement well as as there the Within financial We our with forward-looking measures. on public earnings risk release, the you'll information consider encourage with along SEC. you reconciliation referenced find of the our filings a

Jim. I'll now turn the call over to

Thanks, the initiated fixed plan our annual to with our buyback our XXXX, meaningful Karla. market operating share morning, And shareholder program allowed return last dividend execute successfully good volatile everyone. while the second quarter us We in a quarter. we In portfolio returned million diversified In a plan. shareholder return in of the our against a unique $XXX through and quarter, program environment.

the For for working efficiently. markets, global safely and focus employees thank their continued our on address want to I

global northern markets, unseasonably winter to coal coals. the a to quarter, for have energy natural on environment high high remain in during the coal prices thermal an turning seaborne second comparatively markets thermal and inventories demand leading gas volatile, hemisphere Now following with the coal declining weighed warm weaker pricing

first thermal XXXX coal, too coal year, of increase it XXX annual power of XX% thermal point approximately shown representing levels. in an China's of to during with economic imports XXXX demand activity India a coal with seaborne coal increases over approximately year-to-date per elevated the imports. improved rate signs import half significant thermal tons increased and million and of has run consumption

summer constrained contribute markets. winter restocking followed to Overall, normalization regions. major to the demand of supply anticipate inventory seaborne preparation onset coal thermal remains support supply for across levels, will thermal in hemisphere coal by is We demand a at of energy providing and the in peak robust for northern a seaborne

market, variable with interruptions steel seaborne crude during production India. and notable the furnaces, crude China year-on-year the metallurgical steel output both Within global growth that blast by in offset European quarter was

at primarily of events coal during XXXX. materials residual demand the production with The seaborne quarter supply with remains a and due premium coal and first wet of to along market raw subdued Europe, historical metallurgical combined Queensland $XXX pricing remains North the improving weather for constrained quarter elevated for supply steelmaking in crude with import India. the remains Asia impacts rates remained outlook in has rate Queensland exports increases ton. coking positive in from hard steel The Metallurgical coal finishing anticipated below of rates

Through impacted weather. natural U.S. the from with In gas due the low States year-over-year decreased renewable inventories months prompt June demand XXXX, overall of June coal XX% the gas United recovered generation per generation. negatively nearly electricity modestly approximately nearly and Natural at by XX, X% ended have mmBtu. declined XXXX. XX, pricing from $X.XX lows this to year-over-year level gas earlier prices during six prices the thermal Coal months increased have six year ended electricity has

the per half coal second thermal $X.XX per mmBtu EIA of the in average from demand forecasting comparison of U.S. gas to for currently is to second improve anticipated the to first third near-term The natural quarter Overall, is the prices quarter. half up year. U.S. $X.XX the in XXXX mmBtu in in the

on moving segments. to operating Now our

production wet the a As by weather was Segment was thermal was equipment prior first expected with abated. as were the cost came completed at the the in exports higher impacted as costs. ton move maintenance per higher Wambo and repair timing aligned our X.X which coal quarter seaborne tons and offset than million Longwall of first quarter quarter

strong due with the coal tons our met Shoal of stronger Creek, X as operations recovered sales at a complex. second quarter success were seaborne we expected million than Our shipments the first fire. out from we good the CMJV quarter, to had In

During be the the longwall anticipate mining the the panel longwall and L kit area able mine J to expected the development We area in panels the year. second the we're off the end of new new for of quarter, A conditions. delivered panel seal better by with is production to mine. resumed two were coal

PRB, inventory gas than demand natural due Shipments anticipated. and impacted customer high costs low June shipments event lower at the were the In NARM. coal levels pricing, -- low to are by tornado low

some addition an caused which of basin our a amount had to at slowdown operations. rainfall, abnormal In of

in The corridors. also basin, second transportation is which the typically impacts wettest quarter the the

In other lower inventories. high and utility are natural impacted U.S. shipments demand of customer a result by thermal prices gas as low

Looking coal has solely The increase prices unfavorable weather given gas and in first natural at our the sold of second consumption PRB position down half. been volume conditions here in half. the low should generally the

the while with contracts. working are value their responsive be to We our our retaining in to customers needs

Our the current forward assessment market into guidance taking reflects our U.S. account conditions. adjusted current of going sales

B surface and addition our Zone advancing operations, on track. of refurbishment targeted equipment, of program to currently for Goonyella critical today have cold key North completion to September reentry Zone B In advance procuring with to efforts project necessary and regulatory The active redevelopment subject continues milestone re-ventilation of significant Zone A re-ventilation Activity path Zone company for the mid approval. replacement infrastructure drilling is at to B. and remediation, included to next work milestones items reenter

commencing invested subject updates approved coal the further conveyors equipment, initial XXXX. quarter expenditures, capital has ventilation, $XX in redevelopment Since in company and in XXXX, which the of the Goonyella of reaching of approvals infrastructure includes to late development in regulatory first million anticipation redevelopment North production

Rochelle I Mine to have the that tornado. by Antelope like people North and address one go to temporarily impacted Mark, but struck critically would my was EF-X tornado Six XX, PRB to injured. over it to June hospital On was the fortunately, no turn that Before our a NARM. I an event

damage have the mind We efforts full full considerable While all we are to the buildings. shipments, employees to we returning operations. our in back did surface to appreciate

I'll to details. the to Mark financial cover it now over turn

Jim. common In $XXX million quarter, stockholders of second Thanks, net diluted attributable million. of recorded income $X.XX $XXX and the EBITA to per or we share adjusted

of property largely enhanced from quarter by which The next reverse portfolio at included $XXX charge leading Shoal and of tornado a $XXX results related second company's The at the quarter. generated million working $XX write-off for the NARM. million diversified operations cash and Creek underground to will equipment flow mines development benefit, losses of million capital certain

for the shareholder least remain We repurchases. recently dividend at annual a We sheet by $XXX returns share and quarter, dividend X of in second flow available million million billion just to quarter. prices to XX% to we volatility the X.X% built to for share balance returns repurchases we program. our withstand million cash pleased of of at available share quarter With $X.XXX and saw million the of on remaining $XX share financial shareholders, one million. in XXX including keeping were declared lower $XXX of count cash used committed repurchase additional share per This performance. right free currently $XXX least our operating the to based cash After be returning return under have reduced expected remains second and authorization sized

approximately low second results. $XXX the Higher the of previous X the drove tons quarter, Thermal than metallurgical significant adjusted CMJV EBITDA to and the now per they from prior due the rates margins EBITDA $XX costs $XXX million in expectations recorded our over range XX% Turning higher segment were XX% from The seaborne quarter shipments price. average EBITA of to a million resulted higher the to segments rains. quarter quarter Newcastle recovered as guidance generated higher production end and of Seaborne export adjusted in first shipments ton. million despite than adjusted higher decline of benchmark sales exceeded of

than lower The approximately the to million gas produce low higher price sensitive of impacted were million million $XX the inventories. higher thermal to NARM lost customer contracts end sold were $XX adjusted and ton natural mine generated EBITDA by and lower fewer tons prices to struck PRB U.S. than EBITDA. primarily that Costs sales per mines lower two and volume costs. due mines quarter. X.X shipments The production tornado of adjusted tons of prior $XX utility Tons due their for expected. million at We tons the quarter requirements the X million lower X.X on due

decreased EBITDA million adjusted to costs a of XX%. on U.S. Tons to sold less of ton approximately compared adjusted delivered EBITDA. quarter, maintaining but The the XXX,XXX thermal down per operations drove prior margins focus laser tons by like $XX $XX than other mines

to to the remainder for metallurgical to increased anticipated updated at the expected production be than Seaborne volume at tons due XX at the first due is half previously Seaborne volume XXX,XXX million million tons higher the complete, to and With X.X million less CMJV thermal million XXX,XXX expected has X.X Creek. to production to our outlook tons Shoal Wilpinjong. tons lower we've of year. XX

to to to-date utility natural mild the gas impacts low have inventories shipments PRB million prices, and of XX been in revised regions. coal weather million generation major downward XX reflecting tons

we natural thermal U.S. reasons continued to expect in customers should XX.X and request guidance committed sales limited volumes We to to million rail reduced have other note that price For gas volume the thermal deferral year. limitations, our similar next exceed into XX.X low tons. been million situations volumes of given

we entertain commitments. such preserve the of will value economic if only existing requests We full

approximately are $XX per of priced tons expected product product lower X.X the at ton. Costs export quarter-over-quarter $XX for thermal to third volumes million Specifically quarter, of tons at unpriced. a expected tons X.X tons are are are ash and million on XXX,XXX increase ton be to and average to Newcastle million per to seaborne high $XXX

remaining coking quarter XX% volumes are to longwall at tons to to at $XXX the to second million metallurgical metropolitan. expected tons are at XXX,XXX a than the move achieve Seaborne X.X be unpriced projected priced volumes PCI XX% Lower widening in and are due lower price sensitive to coal more lowering prices and per costs coking $XXX result of a favorable coals anticipated are expected ton. to to premium index. hard price costs, to coal $XXX the premium hard gap

shipments In $XX.XX are at of price Other and U.S. million X.X we XX per to expected average approximately ton million from of to tons ton. shipments of the $XX to cost per the an per thermal $XX.XX and an average to anticipating second ton. tons approximately of approximately increase cost quarter price PRB, $XX.XX per increase ton are

unique we summary, in assets the markets. a have In diversified succeed to necessary all and financial flexibility of portfolio

annual allocation flow cash will maintain of We discipline and rigorous at return to to expect least to free available capital XX% shareholders.

questions. to for Operator, the over turn call I'd now like

ahead. we [Operator Lucas from this Thank will Pipes At question you with first go Instructions] our Riley. B time, take Please

And everyone. capital allocation quarter. to morning, Good operator. much, great see very during you the Thank to shareholders those

Lucas. Thanks,

to available. And I first the that start that $XXX you know on point question my wanted returns, that of remain shareholder million

as next we being So buybacks those for months. of three used over think the kind of

it's you from results QX get XX% you the and results So that results $XXX kind of kind to those of and flow of cash the going cash when then QX whatever it million now buybacks cadence you during essentially then QX free report between available free deploy free now time flow announced, forward? with the reup cash

busy Lucas. Yes. And us. very, what very hanging Good call And in day. earnings is I thanks morning, for a know

on the up questions. flow to an Certainly we to at returning release you'll correct. remain see regard least sums quarter, basis. to calculation did that. the shareholder the XX% And appreciate committed you the in We With above last return annual of XX%. free that earnings available program, are cash the So

it. Got it. Got

three buybacks, like QX of than next that would in and Okay, forward be not of more that's the three it'd you terms $XXX determine months reconvene look pace? at million in -- the it's would but months kind results over

each share XX% bit in don't But you XX% I'll XX% last year-to-date quarter least didn't last that more will basis. Again, to it It's fair refer [indiscernible] specific quarter. the do details. way any going of at a annual return and Lucas, quarter a than on but to think we up we're to it show and, the we we where

the That's That's clear. wondered it. for you maybe guidance then And I for increase could operations, year. the good to elaborate one bit we Got see you turning a going Creek, that. your color little for of that. on mine the for think key Shoal as then forward? a drivers And that mine Thanks should longwall on on clear. Thank that. if the to in thermal

And talk I'll hi, So first. Good Creek your voice about to Lucas, Grech, Jim Shoal again. hear here.

Same here. Thank you, Jim.

Yes.

-- we coming the the So already has have longwall started. in new delivery

until two have delivered the it prior the to fire this to and second that saw the was the of we it? here the sealed Can we year And wait end that we And that operating to start to see XXXX. expecting we with area. to at very so into permission get behind in mine. and the have we intention Lucas into operating have we it's what by The have the enter the longwall? to area can status back have of So equipment we're longwalls the to operating longwall, Do mine early panel? extract again, do

So I question. the timing and say certainty second one would in the the of is

first on to track The new installed. one is be the certainly longwall

say would we're year, end the I by longwall certainly this So mine. one of a

at is really a longwall know mine we're those till sure for don't months the Next one but couple year, get two back away. behind which with we seals, we best for potential

on the the up A higher a Wilpinjong tons venture joint Open-Cut More Wambo the thermal. well. ash terms. extremely follow I'll things maybe additional seaborne couple in doing are for of at And

are there. So volumes up

also good sales and again, You Wilpinjong And better well lower costs. quarter. tons cost some sensitive for I doing costs price pretty as the in note next it's reduction there. some going production additional up Open-Cut And the as also Wambo think

just even have the in one our And, on seams the I if it's panels we make started another we're good for coal look coal there. where at conditions was, point looking Creek Very wanted good. right to mining Lucas us Shoal development the very and longwall, L though

some our be had from mining with before past, seeing the mine longwall very that about we've no levels we're has very, going so So, be we've in, there's the conditions of confident expectations one again, and mine the from we're good the given what I'm drop-off talked production in conditions far. -- the in going to L we're mining from output the to the panel we've

statement that. then only and does cash color at quarter JV expect is up cash quick were perspective on contributions from that to in to the would both the a your the for helpful you that for -- Very is that that's distributions fronts. follow and on point. flow JV looked And I Thank and equal Middlemount roughly JV. that maybe the Wambo side we it additional include clarification And to or if appreciate come Middlemount, and on also from

Middlemount only Yes, Lucas, it there. is

second to similar Middlemount not of a expect lot certainly the year cash year. saw currently, half as of from the of not So what we well, I'd kind flow last results be in the

queue. All I'll questions, right. Well, very Thank I have more you but jump back in the much.

Thank you.

will The come Our ahead. Instruction] here Please with Company. [Operator question from Nathan Benchmark next go Martin

Hey, good taking morning, questions. everyone. Thanks my for

Nathan. morning, Good

Maybe release, guys in I when you a Appreciate refresher spending project spending of in and and regulatory what get you we Goonyella. I'll as on the update XXXX? production the North the on are anticipated expected expect? the of maybe timing the start could hurdles move longwall then some there towards And just that on

discussed we're two that tranches this is it year. early got the is regulatory should or -- area. say major of B I reenter Zone overcome is the seeing and to the we get sealed we've first this spending first the which of of in a in $XXX spending permission one past, which to that is and lot area next have what year the the to And approval million, Nathan, the Yes, the year as we've we're hurdle overcome

ventilation we get combination major expect of able hurdle to And that area through. September. is reenter area. Zone B degassing regulatory at in the That sometime have to and be we of to that in that the And the

the our assessment and would go board we back million it's $XXX production into longwall situation B of and So us approval to approximately get million. get XXXX. remaining have Then spend the there. that in with get there Zone a we after to good And the early of $XXX to we can reenter full then

B for again, in I reenter to major looking year. the hurdle the to just of through that we're to sometime to permission like September have reiterate is get Zone So, this come we regulatory that and

the just the appreciate refresher side to there. domestic house. of that then Jim, Great, thermal over shifting And maybe gears

your there. update obviously did You guidance

bit incorporates and guys this conversations customers. are a about least talk of with at point you believe that You little guidance potential still thermal domestic having at the you're utility you fully or negotiations? deferrals Do conversations having that some ongoing

all deferrals Nate, we potential believe in we've that fully the the there. shown of encompasses guidance that

got Hey guys there for you idea what of as great it you have been us of the actually of us committed well? PRB and and be would given committed helpful are base past there, tons can in XXXX Jim. what updates well, And maybe kind are an then as you thermal give in what any where also percentage other you've

and it's Yes, purpose pretty it's market. a I'd fact market, at given over been midpoint about was quarter. the on specific hasn't been guidance, a XX% That declining done change specifically committed say the there that slow price

see next to look here in we'll up. So quarter market the coming picks as more the through

next So probably the in Illinois about the XX% PRB again year. for Basin and XX% on

maybe Perfect. I one their for up Appreciate assets question specific to then to wrap maybe bigger that -- you'd met up up. sale. coal question just opportunities make a there know can't Jim like few we picture for out you bigger Thanks. of And mark. Australia how rank or some in There's kind thermal M&A Peabody you if us purchases M&A. kind maybe making your reopening guys Goonyella? North you potential remind of But net you're on comments about assets the seaborne two compare and of regarding you kind progress how of and would think and assets those

many number increase efficiencies, best if North of I bring Then what's organic the in it we saying focus investing thermal. in is assets, markets number that potential -- see always -- metallurgical have both more those equipment M&A investing own markets leases, into always the our our in and on a And focus priority, orders costs, is say extending one would but not certainly times, the returns growth exhibited on metallurgical are future. we shareholders, changed, Nate, have in more do the Goonyella. the hasn't both we and stated for seaborne what for we of down -- growth aren't we've one prioritization secondly, to at our and get that's markets, our look emphasis or in those we markets, markets much by would in seaboard as we demand and seaborne growth

guys. half. I luck Great. Best second the in helpful. Very appreciate the of time,

much. so Thanks

Thank Nate. you,

Next question.

Our with from Please your will come next follow question ahead Lucas on Riley. Pipes B up. go

Thank you question. follow It's one. quick very up much for taking my a

terms a In see the have morning. of release But hedges it. coal on disclosure side, press missed thermal may in the didn't I I this

quarter I us end. those past think we're I there so roll-off. collateral the could And coming cash Could requirement from that hedges remind in be And there. here side the back and to wondered outstanding close third what's discussion just appreciate was if in as you would I know there cash the

it have Thank in good would everything I So program as model sure concludes? my to you. make that be just

Yes, XX. June unwounded been Lucas, has the fully program

was I by margin all taken think all initial about the prices And returned, a was So realized results. second returned margin EBITDA was in variation into $XX our higher quarter. the and million the

got we're So longer hedges programs fully unwound for coal and no sales.

hear. from you now. to team. That's and of good to it to the I appreciate color. And very best luck That's

Lucas. Thanks,

no there are that, questions. with And further

Jim back turn remarks. the over additional to any for conference Grech So to Mr. I'd like closing

at concludes community to to also I'd [Gillette] providers especially today. safety And the continuing us insurance thank I'd and for Operator, NARM. to I'd Thanks. that finally, their support. various all everyone on and focused execute our call. thank initiatives. continued responded vendors our customers, for our to investors, thank during for who Thank tornado remaining you like the employees like our in joining like for on

today's is attending The you concluded. conference very now presentation. Thank much for

You may lines. a have And your now disconnect wonderful day.