Peabody Energy (BTU) 2 May 242024 Q1 Earnings call transcript

Good day, and welcome to the Peabody First Quarter 2024 Earnings Call. [Operator Instructions] I would now like to turn the conference over to Karla Kimrey. Please go ahead.

Good morning, and thanks for joining Peabody Energy call for the First Quarter of 2024. With me today are President and CEO, Jim Grech, CFO; Mark Spurbeck, and our Chief Marketing Officer, Malcolm Roberts.

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

Jim. Now over I'll call turn the to

and good everyone. morning, Karla, Thanks,

There are operational successes. now were behind challenges results challenges production quarter by a us. unforeseen First of in number highlighted and were Australia that

deposit, Within low have our expectations, impacted coal Met by U.S. unseasonably natural shipments Demopolis failure gas extends weather to life winter XX and the although portfolio the the through by thermal Creek years. strategically development prices. over While Shoal were lock.We and Seaborne production segment, of coal invest continues been completed in in adjacent warm our which exceed continue the to the the to hampered acquisition shipments mine Centurion, of of the Well Wards

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

turning $XXX The thermal per markets to tighter steady first on continued for traded weigh the Seaborne with ton. range range coupled East low for the in within $XXX quarter. Thermal coal of to global coal supply resulting Now trading winter gas prices from Newcastle a and demand natural have of coal a the Coast coal, normal markets. to Australia, within a

show continuing increase Thermal thermal in to coal coal China year-over-year at robust, demand to estimated a XX%. of increases Asian with imports expected quarter imports are electricity with approximately first Seaborne remain

except India, treated prices profitability. was coal supported output steel during coal where the the thin robust during prices PCI Metallurgical for coal economic globally, a by Metallurgical declined quarter. were Seaborne Within margin hampered the also demand market, coking steelmaking quarter.

coals. the not higher of quality coking However, to extent

particularly XX% to gas have energy first a resulting quarter that markets. for electricity the metallurgical coal XXXX share approximately at said, improving proved generation, States, finding during the April, winter in country's warm declining to to support be the seasonal During looked when with lower significantly restocking in In quarter.With of generation a the challenging regionally the to and and steel prices coal US. coal first be critical pricing component generation margins seen United we for nationally continues electricity

shipments coal of than production to and it. the production a at complex. by segment were due longwall cost CMJV, at outage with at of the the higher dragline are by example, higher an coal an SPP on for and regions upon was coal XX% prep to higher impacted generation volumes sequencing proving partially Segment power per move in Coppabella repairs at Wambo.Looking mine Shoal our at unplanned ton proportion Wilpinjong high in again, Thermal for As segments. in instances Seaborne coal] grid.Now reliable year higher anticipated, CMJV. and January relied offset various over an a had plant than moving The ratable MISO from The importance our an and segments of anticipated XXXX in the the going of of additional Average the [spec as the at accounted train to the was The longwall prices at Seaborne we where were in than warping to anticipated Volumes expect by on ramp-up extended increased December. a the realized carryover the with which production Wambo some opportunistically for mined do we expectations. volumes due we on higher [indiscernible] per ton supports Newcastle mainline forward, end the line when were market acceleration Wilpinjong, lower costs the due market to and derailment Creek. Metropolitan at lower planned Met production operating domestic range, from offset

impacted Our lower to sales some mix coal due CMJV to at was sequencing. mine quality mining due

gas in to mix warm improve were should forward year, look sales the per lower result with quarter an came additional as million through sales for PRB the and PRB due In tons volumes, the averaged we discretionary challenged, a that of than to the year. our XX Creek Demopolis expected expected winter are prompt by anticipated unseasonably Shoal shipments was Block. natural were to higher in prices As than $X.XX. the full opening of lower cost cost spend.Although Segment but of offset somewhat contracted we demand ton for rationalization the

Our full our year and commitments. assumes guidance a meeting normal fall customers with summer

needs. demands or Our have customers different

some natural the with of responsive, favorable work sales reduce gas able were while market below full than higher anticipated will Segment cancellation customers some had Even realization, with expectations current few their a due and sales new our shipments the included retaining settlements. business. book margins other still pricing. high to contract U.S. to be we thermal, exceptional shipments were them We was inventories due value sales which to low to contracts.In team our conditions, as

we key quarter. coal active So, projects. expect progress our coal price continue development occur but of metallurgical not did volumes the for in at growth the from equipment the manufacturer, We've some of had the mining delivery make second operations, in to Centurion in change.Outside the some delays to year our dates mine, our

month. labor and We're As plan we initial Centurion mine last the transaction it an discuss Australia. currently in complete Well industry workforce we'll integrated mine tight developing the in development is announced, The an future. the previously though of even remains in recruitment more closed mining Wards fully

remain and We in continue to expect line previous the with in XXXX first expenditures longwall coal early guidance. capital

are the life turn secured longwall We extended the in us financial full years, In our El Mexico. guidance.I'll supported year, moves Segundo transition are and to XX at New our Australia, from in it and improving, nearly confidence time our out mining this now Lee a sales plans Ranch.In production our XXXX, in reaffirming summary, in Mexico Mark we Lee for is back have operation the announce we over contract long-term look coal New quality we that two to some mine of cover which We to details. Ranch to first the challenges quarter. and we our to have give full us had new completed pleased But operations as year well-positioned. the

Thanks adjusted with weaker the non-cash Jim. in was we it dollar. the remeasurement and million from operating results $XXX $XX dedicated first expenditures million. The to million In than half quarter, $X.XX cash had $XX charge recorded of of capital Included generated company of more Centurion. attributable of of income million stockholders flow Australian diluted or net and million $XXX estimated these $XX an common share to per EBITDA

accounts million existing cash, billion authorization. quarter, The funded repurchased new on million $XXX we of share have now recorded X.X $XX the adjusted to program, $XXX reclamation of credit quarter we shares of outstanding. and company share return repurchase $X During or shareholder continued Thermal the our quarter $XXX of remaining repurchase execute fully program shares million million to Under the Seaborne EBITDA. million ended and facility.Turning the first revolving the with segment results. X%

quarter production production were higher Wilpinjong anticipated Wambo. and First more than XXX,XXX at offset lower shipments tons

that line production Costs Wilpinjong per with in relative generated at of realized CMJV. resulting by thermal than The was the repair and were higher U.S. adjusted cost at [wash in lower and margins guidance mines produced pricing EBITDA $XXX lower due adjusted quarter to of expected prices plant] Average quality to prices, end XX%, anticipated coking than $XX lower the costs segment of EBITDA to For mentioned. in at shipments Metallurgical The costs. weak, the expected coal. PRB hard of came And CMJV. The lower EBITDA. million Seaborne the less unplanned due to per $XX realized than previous million Jim quarter. equipment remained the Cost PCI premium of was production generated due tons EBITDA. lower of higher coking mines ton coal shipped mining and million offset XX.X adjusted $XX.XX ton $XX at in previously million

to are as elevated [shoulder] to complete XXX,XXX coal sequencing quarter to export mine quarter lower the year relativities.With lower the tons to higher million XX% $XX.XX to to XXX,XXX the price, of quarter, be levels. Thermal are $XXX Wambo achieve line at PRB tons, Costs be temporarily ton product with export than and tons XX.X maintenance resulting product Metropolitan we expected as volumes guidance, to and shipped to and XXX,XXX priced and X.X also million $XX.XX lower will ratable, were line X.X projected of anticipated, guidance. spend of enter EBITDA costs volume.Looking tons in due be remain ton than expected ton.Seaborne including tons and second season. on quarter Costs of [spec] improves out with hard X.X to based tons anticipated average prior $XXX quarter million first complex. million ton expected million increase mix tons, to traditional shipments the to recently expected with cancellation offset higher production, to $XXX per were the now shipments consistent high other the U.S. shipments year. current less tons $XX $XX less at U.S. thermal $XX higher be are improve with at the segment be tons, sales we margins higher Other Metallurgical per contract this settlements, to expected as X.X on delivered volumes million new prior premium fourth price coking per are We generated which at million Seaborne million are ash of tons to than above with are X per to unpriced. are XX% full of ton, tons CMJV. tons for Newcastle and ahead volumes adjusted signed of ratio. repair second expected The X.X the strip contracts thermal about higher the $XX.XX the revenue quarter, Volumes Cost than increased move X.X in million million. longwall coal from X.X benefited but as EBITDA is to per

in We costs of $XX quarter. per expect $XX ton to the

we payments $XXX are Australia, remaining XXXX XXXX reaffirming year quarter, covering in Wards Well payments.With first purchase estimated in second guidance. and the of $XXX nearly second the an half we full tax million the implied cash have liability are million of of quarter, the in stronger Additionally expecting

to longwall in Strategically, minor coal on value. steps this continued generate deliver flow for I'd of cash first commence now at to second continue the April to take on-time first track to are We on-budget.Operator, like quarter acquisition Well quarter turn to to to remain capital long-term development committed returning Wards expect and and questions. shareholders. development closed and we Centurion.We operations XXXX year in the continuous call the over of expect half and in significant We the the

you. Thank

ahead. go now Lucas begin Pipes Instructions] will question-and-answer B. [Operator Securities. the We from session. comes question from Please first Riley Our

to the a on want with I few start side. Mark questions finance

You it flows And release, could any flow the market just and in speak the much. it is flow noted how million. similar working U.S. And then I Well buyback you of capital Reclamation Thank the be otherwise? you release Could when with in if just it you if here bond wondered that cash of noted kind in then to think half closing. Do QX or us QX do be around very second flow any? with cash through pause lumpiness $XXX would stronger in the acquisition Wards you walk do that staying the of of you be opportunistic? again? perspective? I'd then in cash you from flexibility you impact the other QX, anticipate something Or maybe cash implications to a have resume And kind about

and bonds hit reductions thank bond to results one, try those done; Yes, And all two, those quarter. released. average here for, reclamation On you about work questions. the good our but those with in following on them. I'll probably up also at Credit Lucas, really XX%. to team some are And collateralized the getting bonds of first for getting

cash So, returned. there was some

We around Australia. also from moved some in other bonds

there was inflow. a So, cash

was collateral a some flow use sheet. on that capital. that cash of cash cash the working though, from see restricted a there balance perspective, So, Offsetting in and reduction you

expected. is look should that.You as you QX with So operating be with net-net, a mentioned QX million there here cash $XXX in how similar. flow will performance are the of we little at lumpy turned

XXXX from cash have tax first up Well, the remarked both $XXX you payments. million. payments the of as makes for $XXX Wards We from XXXX about well liability million the remaining at know I That estimated and as half Australia purchase

cash you here us the a flow that pretty $XXX of depending front in again, well a can the an So, quarter. But of our things. at have program, second million repurchase based deck, we out some in under significant designed and flow the see through the million program, opportunity the program out million price we on we've long-term of perspective.Maybe everything is price on [repurchase] couple strip, in a significant $XX the couple $XXX buybacks going touching cash cash in One, announced forward just plus Since term second is we've durability. note value lastly, on and guidance I'll usages about just program. a from billion, for million we and positioned $X.X to $XXX half your do, including dividends return of restarted share

do, us that reclamation included have And step one premium direction the our and of you reduction.We I liability. our periods we tend completed in lower flexible? flow cash our program and be but position earnings which with off Yes, going us a dividend, liability flow out growth quarterly very or in essentially note, are I XX% the share no pre-funding to durability going cash developing asked, or very fixed increase through lastly, and coking cash above-average board.So balance to with done, puts a periods flexible free created to has to forward.So, in initiatives set we on that global I'd in of is cash get flows believe years hard to position have liquidity we our sheet look project taking in that full forward, on going share when things think free else basis flexibility think big important out coal We also on forward, basis of a great flow, our one that eliminating Centurion. opportunistic cash and be and in it program's per opportunistic and remains that leading annual on continue appropriate. an the This flexible. two in deems year, puts our ago some look market a And the as our and three we in have capital we the program big the industry table XXX% the basis going strong we in board on see back an to risk of

of So, lot of opportunity returning we of and lot in going committed front remain flexibility, capital a to us shareholders. additional forward, to

that. appreciate really Mark,

the all there. I think you points hit on

regulatory on I get want things. your thank for you Jimmy, So, that. to perspective a couple

power plan impact? Could strategic you regards think last coming EPA new comment the I domestic perspective you what First, a to you you then week there's, impact unveiled maybe a any mitigate that pay. your new And rule to rule. is over in on business? labor how Australia, And a think contractor in can think, from

comment and two maybe that in If you. those you might appreciate on thoughts be could the your on impact Thank Would developments. Australia? what

and rules our from fact the that generated do comes start approximately EPA the our out rules. and Clean on three-quarters to But one, recognize just suite and I new I do So of company and first Thermal comments Power Segment. EBITDA Met plan with the from Seaborne have of on that. the some want the the

did doesn't these if about concerned of the go going you And that effect, of business? from majority what later the one into of said, EBITDA regulations. comes But going effect we're they our mean Seaborne a So to for thing lot the it's in domestic our mean these not years. again, things is Well, platform. into

in EPA near-term coal out, we see energy mix, any renewables a to we've its longer-term at that energy this don't and company, we times regulations, any and time many that to I do security question granted as authority increased having of So, though reliability includes a suite is stated Congress and overstepped its demand. the grid that the affordability. by energy diverse impacts.So, impacts. there beating is believe still it And threatening good and and has With reliability believe of a

years is there's happening in years five electric which we're manufacturing in for has And the assess several many, different, has on trying load forecast vehicles, that now, time into potential past this load surging see in what's growth happened period to going hasn't that demand going impact to flat around the had tremendous growth projected. to years, account data these be what from what's it now centers, So our country. I from AI centers is on for relatively this been power the many is you've for regulations.One -- taken quite things next and with of centers so and Lucas a think, there's

quarters, while past plants delays So again, in the that power growth, dates. new have XX of you projected a get result US what's retirement in over markets, on coal impact load announced as

a look perspective these from out second thing this the in when US is you national of opposition very that's has that baseload in EPA past there proposed regulations. very, load different that these generation of actually there is And I EPA the enough having to that that is reliability does this the actually, from or existing growth. a is mean with and at [indiscernible] thermal So what of done is market not with support think regulation growing.The concern concern grid proposed stated Groundswell

this newspapers, see different Journal, to and court the Groundswell good very these I we plant stays news to Nothing long-term with fight leading pushback very a is overnight. doubt lines opposition which going on the we your on Mining there's US Fox have in this court enough will [indiscernible] Wall the question Association the labor to concerns electric grid I and Australia You've some haven't their with intentions effective do second are load heard new the year.So, US That's is think opposition think New all our given really in their regulations.And in PJM, and announced pay. mount proposed see to aisle power going of contractor very reliability. The other this what fact is from because and be extended the these their in until past. And stating mining what from about in as impact November we PERC, you're was put these have there going Australia. growth.The included expect already and national many opinion We've concern to piece Post, to happen you in of and had mix we over are Street time talking already. past, York the have the both utilities, the significant is some mining about of got of being and at that impact in see the of industry, our think the article working America's really very, sides job, US generation on proposed as to in question of challenges Washington rules MISO, a Times isn't regulations, first. Politicians payroll There's going regulations Over the you any National happen? [indiscernible] system. power legal is support same this generals That the in to the that state crux contractors XX attorney don't same guidance swift concerns near-term companies particularly

significant impact. is our and it's in already forecast going forward It's after not November there So, Xst. some

the side. very EPA for on that answer helpful. much very detailed Very, you Thank

workforce few a roughly labor it percentage to Australian what November But of X second contractors, I part ways then XX your guess it. of have impact. out slice guess, costs? the if I of consists starts months we On or

sense a year a what just mean to So on for year get next it for full could basis? trying

to correct in with front up it the give you I get, back When we'll right me, one don't we'll get you. we'll on that but number follow that on that. to have right you

from The comes Benchmark Martin next go ahead. from question Nathan Company. Please

far timing, in start or your looks guess off quarter concerned? the guys I as here it you To selling Centurion, still is development as targeting with those tons marketing like. plan there coal sometime What's and second

started including for coal of already we've Look, out coming development contracts the Centurion.

a our year. to quarter So, first Asian and shipment we during forward this contract agreed look blue-chip North later to making customers two-year the a

limitations point? at there a are Malcolm, And any standpoint transportation there from this

like fully have Absolutely no system be with transport set able to issues. been contracts and We've within up the ship product. to that to the Goonyella

then stick for And second. with maybe transportation a

comments some Demopolis made you outage. about Jim, think, I the lock

kind a sales Creek? is at clear, Shoal to what quarter Clearly, little impact still but Just net your there great. be just there of would up you second quarter-over-quarter, are be guidance more color seeing

think turn about in I'll Nathan comment service I'll May we've planned. I Malcolm in to a on be be the and by to the morning lock be It'll back it been know we end then and you week going so to [indiscernible] The Engineers earlier saying to the the out of more it's said sales. came May XXnd. it this expect back than actually service lock and over talk than

some that's So have us. for we that news good

about on sales Now in regards impact I'll question to that. the your on let comment Malcolm

We've port the at railing to product been McDuffie. the some to

probably today back means going lot XXnd Shoal this to really of second result. be is coming from year forward our advised year thirds do to one we're two third as for half what and However, second and a May. of the the half the weighted But we Creek volume really first the of for that annual that the half of we're

second and and guidance your X shifting know maybe typical over know I I of point? remarks think to your hit it at tons million great end kind quarter least you will And minus. on like your clearly that's in Jim of during of would shipments But you down made kind gives PRB some second Again, seasonally low increase to half thoughts maintain mean you we your first last But the the comments what to need confidence me prepare range you million at range. get year the season. to quarter full just too. guidance plus XX looks about quarter or that is be this tons target, I I shoulder this below know asked shipment by

would more around a thought you. to bit just be So, Thank that piece. great little get it

we're particularly ranges and well the at are that First off, levels in third tonnage the shipped quarter for the second and we the fourth that looking then past. within tonnage

So to coal the going in and railroads move as the are as well, item is quantity to ability it a do produce key third fourth the be and I to far as our and quarter. of it, believe able which

logistically, operationally, that. very good So we feel about

Our already is sales from is seen we an indications we It a be expecting pull our uptick stronger could it book now strong to indications again and customers to going on we're in some and those June. May. some see some the nominations right fourth third in little was and that have for that getting quarter have thought are normal we we was than tons. early We've in that

it indications from at logistically, the -- like that] to the our year. and guidance feel getting there's the reaffirming feel we're in time. Operational again, looks recovery starting for occur [the customers we we full way So, PRB this we're that

on earlier. to more. one want to I out. leave I this Lucas just maybe touched you. you then And know don't Mark

Some moving on the the pieces of the side quarter that here expected. in second are cash

the the was available end quarter? again at actually cash your flow quarter. How repurchase impact I shares second here the Your ability this free negative of to think could first in

We're forward second tax annual payments, and robust flows basis. of the the number strong an again, program You're cash our right. But QX. some coming happy cash to we here the table off in expecting cash the with and awards is minus QX of purchase there a liquidity designed on half is well and shows not the The for position see four with very year. flexible. It be our

Markets. The ahead. next Katja comes question go from from Capital Please Jancic BMO

some any a that Is the the cash staying for since strong buybacks. the sheet possibility just could buybacks? balance share use Maybe so on on there bit you it's of

mentioned have based and I an As we the flexibility. on program is look annual

I our know with of the half mentioned strong with coming flows year. in we and Nate, liquidity cash the second feel comfortable As you

appropriate do we to and to be in we we So, as flexible deem the built we anything presents. have and to designed opportunistic are haven't market that be but announced

maybe And the on then Centurion.

or I to this ship half that looking for still still you year expectation? to contribution maybe And next be? that hold? what think tons prior expect year for second that Is was from Centurion does -- then could potential XXXXXX

So about have And current XXX,XXX to as is probably we kind the knocking down development this next doors Malcolm coal. Asian mentioned blue-chip on customers range. year XXX,XXX for a of we look some already look contract production to in And the tons ship year. trying of that we I ton our year think basis to

So up strong. really set

from question ahead. next Our is Riley Please Securities. from go follow-up Lucas a Pipes B.

a Thank high where product index? taking quick what as Wilpinjong a start with you typically that for API remind quarter-to-date I'll my follow-up X? question. you very much been The ash for has one. then could against price us percentage pricing you. does And that Thank

[indiscernible] a XX% We the than got is to XXXX slightly We supply put higher ash that. X% to XX% China discount product. Index which is against index, a which the X higher API product X

to. the So discount going we're represents that

And very, in Shoal very Creek Was was QX very helpful. data strong MSHA on.

outlook operations of remainder maybe would on Shoal be assume the normalization, I the comment it kind you to you so, how operational if little of but wondered hear at about for think maybe a there's from could And here. year? the a I helpful Thank bit you. Creek of

MSHA things think new had fit has year, in had data team of miners' first have Very, have so a those I down occurring strong the [indiscernible] XXX,XXX quarter. there. move and to do a making done very, show that for what in about the QX in longwall But vacation we for the the happy on have with we later mine. which that for really there is longwall down difference. and we all very content It's a we didn't quarter purpose and tons very again

pace just it longwall So, keep be all us. following very the we see the don't have up that is the year staying things vacation in we with that the that have. with ahead in the pace I of at and to later would quarter challenging that moves miners'

our are This queue. in the There questions question-and-answer more concludes session. no

on investors, focused and continued to I'd to today. for us initiatives. and for your on Operator various joining call. thank our like also like remaining concludes you. safety that our to thank execute I'd vendors especially [indiscernible] customers employees for Thank our continuing our support.

you now presentation. today's for has thank And Conference concluded. attending