Peabody Energy (BTU) 31 Oct 242024 Q3 Earnings call transcript

Good day, and welcome to the Peabody Energy Third Quarter 2024 Conference Call. [Operator Instructions] Please note, this event is being recorded.

I would now like to turn the conference over to Karla Kimrey, Vice President, Investor Relations and Communications. Please go ahead.

Good morning, and thanks for joining Peabody's earnings call for the third quarter of 2024. President Chief Jim Marketing are Spurbeck; CFO, today our and Officer, me and Grech; CEO, Mark With Malcolm Roberts.

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

call over to the Jim. turn now I'll

in the Peabody. and morning, for everyone. time taking to good for and join Karla, Thanks, your you interest today us Thank

In Peabody in all the million to continued our thermal is quarter, for during the with seaborne segments, returning year our to repurchases completed shareholders. commitment total repurchases We the U.S. This across a third the to performance reflection solid achieved our million. value quarter, and notable of $XXX both results share segments. leaving in thermal $XXX

hope we to If it this were the Centurion, At not, Earlier make longwall starting production encourage in the in our presentation. on September, you I produced you we I to XXXX. prep washed view have significant continuous in progress far, continue our website. Centurion towards month, able to our participate first we mining coal customer first plant the development for fourth quarter of quarter. coal commissioned first units. and scheduled Thus The have shipment first its X and

the accelerate to As of rates, of spend pace CapEx the to $XX budgeted roughly Centurion as had exceed result rapid continues we've development. million a development

continues and third remains forecast, operational our perform and safely. thermal moving to our Now Overall, to pricing aligned results mines on to grow, our with segments. demand quarter stable. operating continue our Seaborne

strong on We shipped volumes higher-than-expected production from export Wilpinjong.

line our underground value to commitment the have ongoing the Wambo mine. our of for closure reevaluated maximizing portfolio, from to we part As time

to it financial to due makes While we initially to determined the forward closure to mid-XXXX, sense mid-XXXX challenging better mine's geological some bring run that have until expecting conditions.

XXX,XXX tonnes XXX,XXX produce XXXX. less underground nearly which is than expected tonnes, Wambo is the XXXX, to in mine approximately In

seaborne at metallurgical and we prices third the quarter. side, the of -- opportunistic of withhold weak made Creek shipments decision the Shoal period our period to tonnes logistics in a; In during challenging spot nearly XX,XXX during

is The been prices shipments Black improve coal quarter. and to Spot unscheduled improved, have of repairs, Warrior River, in expect operational. the we Shoal closed now for has Creek which substantially fourth

management but a experienced and up continued PRB in due labor Operationally, mines The exceeded start repairs third spend. and performance. rail cost PRB due low volumes nominations quarter. the prices, material, to to higher-than-anticipated gas our natural on slow expectations customer Shipments improved effective their picked

conditions were operating in yield Other we normal U.S. operations quarter lower of the but temporarily our shipments thermal mine the are performance anticipate returning see and has been experiencing mine, At as customer of low Overall, our quarter. some and XXXX. despite challenges, we geological costs productivity proud will to first we line expectations, Twentymile this with nominations. in very

the it to who turn Officer, be Roberts, Marketing Chief today. delivering our I'll Now Malcolm? our on outlook Malcolm over markets will

to grow, the thermal this is resilient thermal continues and centric. Demand Jim. processing Seaborne you, during for Thank growth coal remained Asia quarter.

China at experienced averaging pricing Newcastle imports at at the throughout And Asia thermal Asia $XXX pricing North leading per from X%. the tonne. region high-energy and growth, coal strong support XX% year-on-year, market followed spot Pacific X% Australia, increased the In Asia thermal quarter, India with restocking metric to demand in by

into To consumption on higher to forecast than is will the fossil XXXX and XXXX their International total estimates demand annual that parts this coal put Agency for comparable demand of the -- now Outlook, increase Earlier estimate published in fuels the supply perspective, this X% forecast. coal XXXX sources World comprehensive Energy the the of energy. Energy agency renewable this and of review Within month, a consumption context, of be likely its Japan.

Within the global China the driver. June in for as steel time to fell accelerated. exports early seaborne thin presents XXXX. per since from tonne coal steel metallurgical market margins premium September key coking was first The the $XXX profit hard Weak market, coal steel demand

on was elevated around These of as makers world, market that meant Met has at steel for this contract which resumed has cuts spot by cargoes. term absorb its the the position redirecting was clearing levels spot to spot into stifled globally. demand blast steel market. export weighed production furnaces volume, extra coal the cargoes China India unable

During up encouraging sentiment. steel pricing, exports announced late This anticipation Chinese steelmaking metallurgical And has to coal. demand lower had recent stimulus direct as measures impact a improving China as has shown raw result, September, on ramp improvement. production. steelmakers and steel materials, strengthened pricing Market some of a improved such

Overall, economic metallurgical rate coal balanced in for the exposed the exports remains Australia and performance volatility, finely market from by to and of influenced China.

X% In States, on from XXXX the levels load by generation with basis. a to United grid electricity year-to-date increasing the continues grow,

coal quarter gas increased challenged PRB XX% current during XX% compared volume Total dynamic total natural Peabody's by for same Generally, the PRB prices. XX% XX.X gas volume to South last South of total share in to market comparatively million compared production year. the a quarter with X, continues to was tonnes. production the be -- low quarter of by production QX

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

to be morning. nice here with It's everyone this Malcolm. Thanks,

$XXX.X adjusted recorded flow or net third $XXX.X million. flow million the the cash per in $XXX income favorable of reflects million and million share Peabody Operating $X.XX attributable quarter, reduction in for to free resulting common stockholders EBITDA $XXX.X working of capital, a quarter. cash diluted In of of available

X.X completed previously had declared shares buyback, we September and price $XX.XX million announced quarter, an of average million of XX, share another nearly dividend. the per cash share. per million $XXX At repurchasing the at $XXX $X.XXX share During today we

quarter-over-quarter, guidance per reported Turning in results. $XXX $XX the $XX production adjusted resulting costs Wilpinjong to the cost increased recorded better thermal lower than below Both segment prior in Wambo tonne. EBITDA, million million Seaborne segment quarter. and and at

realized EBITDA to Production segment $X quarter sales increasing a XX%. increased previously margin prices, XXX,XXX fourth sales with exceeded expected by export tonnes, increase volumes. Together in

million adjusted EBITDA. $XX metallurgical in seaborne segment generated The approximately

fell to mentioned, benchmark and their a for particularly Malcolm was coal weak As since market point there XXXX, spot lowest sales. prices

only the in Creek due higher transportation opportunistically whole outage. tonnes spot avoided quarter XXX,XXX and cost we as to Shoal Black limited sales shipped

Metro outstanding Creek, tonnes. had an previous for quarter at the million line in Shoal up keeping with X.X and sales lower volumes made segment guidance at the

Shoal Black we Creek outage higher sales With in resolved, quarter the quarter this production guidance. whole fourth in reflected as from expect

realized million margin tonne. of better thermal tonnes U.S. The U.S. average $X.XX $XX million of thermal adjusted the lines operations an second EBITDA in per than quarter. XX.X quarter, million and $XX produced the EBITDA shipped

maintenance first the of $XXX EBITDA, U.S. the generated Through $XX.X the capital. million quarters of requiring X year, have thermal only million of while operations

better-than-anticipated for margins job XX.X an doubled $XX.X the another segment a EBITDA, EBITDA managing shipped reported PRB from of of million The quarter quarter. adjusted outstanding million as costs per all tonnes. more The mines did the second X than tonne. $X.XX to

coal mines adjusted thermal costs, U.S. and with million $XX Shipments all expectations. line other EBITDA. in in generated The

per thermal XXX,XXX tweaks to ahead Seaborne making costs are of volumes are million $XX tonnes other $X Looking U.S. full to of remainder and expected XX.X the now thermal the higher tonne. are up to at to tonnes be we a guidance. year year, couple

to into at $XX of spend at capital Wambo. added development accelerated primarily well timing for XXXX, Centurion million We've reflect as as

tonnes another the average million X.X tonnes, tonne, expected seaborne quarter year forecasted realized For price resolved, steady at XX.X of tonne. Seaborne to to we with volumes $XX X.X priced including per tonne. PRB between on metallurgical quarter, Newcastle of Shoal volumes development million focus on high improve to $XXX tonnes. at are $XX also X are while $XXX expect and continuing per outage, XXX,XXX thermal first expect Creek of forecasted from costs. the million approximately the have shipments tonnes at Costs $XX increase are to year. which our Segment tonnes, XXX,XXX of coal to of projected an operations of product and from shipment unpriced. and We've be continued ash Costs export costs to X.X The are cost $XXX, improve $XX.XX. average quarters X.X per tonnes $XX.XX fourth to are been million product Black substantial impacted million tonnes discipline. remain are Centurion. full anticipated at be a first

million $XX per we cornerstone metallurgical million in at up to shipments progress shares, coal to repurchase thermal flow, steady expected U.S. cash prices costs generated portfolio. remain fourth stronger Centurion, to the an summary, coal global million of completed are set realized Average and continue asset quarter, excellent make in even are with and X.X we tonnes. soon over a at free Peabody's be available Other developing tonne. In operational be for $XX.XX to are X.X $XXX another anticipated

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

And from with Riley [Operator B. Pipes Securities. Instructions] first question comes the Lucas

side. remind obligations surety you question off be that extent I might the us additional first My there. with that the providers surety are and today And next capital over underwrite the might wondered is couple how if obligation what and years of evolve to bonding what on the could unlocked

the or on to the significantly sureties. previously. from bonding level expect We the really it. Lucas, it's requirements don't thoughts nor Mark. Couple collateral of has changed change what things said Nothing of against I've

of run back. did year of half any in changes you, about anything now. in But got different. some laws see in substantially and changes we the And $XXX reductions bond I also right will rate we kind get our to outside collateral of expect that wouldn't first our early remind million or of footprint, that's

Got it. I appreciate that.

And to more like to what cost have coal on the towards bit costs lock a met little extent -- things development. the guidance. contributed wonder River end Warrior been I side, one-offs the that higher On the of trending

are so mind? pieces more QX moving there keep guidance in we XXXX, indicative? Or look the to out And maybe other is to as

higher not A Lucas. just of guidance of as for so segment we're be speak One, toward clear, a the won't that. guidance do thoughts, been we've to providing our Yes. think 'XX I end whole. to the couple yet, I

down it's to I going bit a going really be costs up. incredible going quarter-over-quarter. see be to think see to you're production some and a additional production, you'll modest quarter. Metrop's after in in going that there's is little come is those to Creek production Shoal decrease going Net-net, third quarter, a fourth

the come cost for full a the the for bit segment. probably maybe towards the in we'll toward on guidance -- midpoint the above year, little But --

quickly to want touch coal from capital the A of met buybacks your step a lot have allocation. peers environment capital and price taken today. softer returns back given I on

in You a quarter flow free strong had cash QX.

pointed QX. for You a operational to solid outlook

environment So should approach impact this on does buyback market we anticipate a an have on returns? the continued front? how capital activity you Or

Sure, Lucas.

for the an attractive the saw second that right. we we if outlook buyback share $XXX completed maybe on First, opportunistically million quarter. you're price repurchase We I accelerate half. in that the last point, quarter, based mentioned favorable could

to We accomplish million of almost able were at bought X.X an average price back $XX.XX. shares that, getting

really So performance. pleased with third quarter the

million the That in the last working insurance we achieved the Shoal Looking that in flow cash $XXX half all about really the third and in capital, as well million, helped prepared in out quarter. collection mentioned the year had the boosted remarks. $XXX a of I quarter, as talked as The third quarter, that. tremendous of reduction second free of receivables with was really recovery the Creek

committed forward, Going with cash see to look We'll pricing. comes there. quarter free Nothing the changed XXX% we're to has in flow. XX% where at We'll fourth realized to it. continue of

quarter. If and that really an about year-to-date, ahead probably you we're year-to-date, third from $XXX acceleration at was million the look

it and front in step knowing flexibility tuned, at we fourth we'll to of do look see so. in our stay if that out have an it to take opportunity But the the does a program quarter,

Katja question BMO Jancic from The comes Capital Markets. with next

So down year. thermal correctly? Maybe next this starting Am to on I XXX,XXX shutdown next tonnes. year going the the the be on Wambo understanding seaborne volume is

So Grech Katja, we Jim here. --

year-over-year Wambo XXX,XXX given next it's X.X year. for next be tonnes. year the itself, typically, -- the underground will million closure, saying year, on that but haven't at the We we're mine And of a tonnes for running with tonnages, the about guidance total in acceleration

-- correct? remind you can grade, me, is Newcastle that And that's

Correct, yes.

a well. shift mix there year next be could So negative as bit a

yes. possible, That's

Okay. Creek. the And then maybe on Shoal

little mentioned in shipped on there a were expected ship in -- So tonnes color in a be you XQ. more increase XXX,XXX and to you provide XQ? much should Can meaningful a how think material I XQ, you

XXX,XXX around be to will It tonnes. Yes. XXX,XXX

-- are which markets you or And targeting? in which

is China in there's I in the market Asia Well, spot said right my of there. component to clearing And be spot Southeast going remarks, as for a or now.

market, because really if And it's the much. -- we high-vol it look A improved at spot hasn't that pricing,

spot see So it's subdued. into do still these in the selling prices? -- you pretty market Is still at value

market, A the is Centurion need is I all where high-vol gave of that's to the look, about part there in I presentation, the which there's And go. look, the CFR then FOB and is spoke the Well, the where tonnes market. when And Asia, market. the growth

at I here if pricing, $XXX. today, said, September, look to we sit FOB So $XXX we're Asian as you have a you it as down look to Australia. recovers when at And

if you're high-vol on But on sell Asia, have basis. you really, a CFR selling into to --

means cost is freight. So what that FOB, and plus

could sort example of to so a give that. you work probably you I ideas And get here your help around

between At from $XXX then XX% look at a and PLV they somewhere Australia coals, China. XX% that the you of at as tonne. in normal is That's if high-vol quoted -- price moment, And with could at delivered -- freight achieve look Australia probably delivered. generally

then you and And you freight the that $XXX from would tonne. a around let's math, today, that U.S.A. come to FOB $XXX. the it, that's tell that freight high-vol for call So price to a if China. A midrange that, a And you is take coal you off number, do

Does demand it is. make said sense? where my in As remarks, the that I is

want that's to need you if you and that's go. to where keep the So level, going,

next Benchmark with Martin question Company. The from Nathan the comes

going Congrats I'm Mark. front, start third the CapEx the results. to on quarter on

CapEx You guys increase 'XX. of million that full sustaining. $XX like million $XX called out It looks was year for

forward? there? first, spend the what's How line is the And impact Centurion driver the at maybe does million that maybe other $XX time that So Centurion? all then growth, accelerated going

is probably component there, Yes, you $XX mostly capital. sustaining. is Nate. got That right your The million math

and capital. on equipment items the as based really, fleet life dollar that, capitalize but at it's value just on maintenance, the the componentized we So

our If put you closer of $XXX that that bit $XXX of add now. will million sustaining, top a range us that maybe $XX million to below, little annual probably end million, to towards the but

is some year. cut -- $XX Of the is next other Centurion. $XX into this really of of the from Wambo for year that's of the that equipment. million pulling forward some Maybe million open and growth, that Again,

as At -- that to expectations, development into tell to I going continuing development Centurion, miner rates well. kind a is doing commit They to up. to but continue and another rental of and keep Part getting continue higher or a those any exceed time mentioned, rates the in or really continuous that line production. bringing accelerated there early continuing sort exceed longwall to or too of that mine of expectations,

Appreciate Mark. those Okay. Perfect, thoughts.

an excuse With some expected capital expectation the spent being last to the fall open Wambo next will open-cut is tonnage that there the cut there, from -- year? of offset me, that's underground tonnage off

mentioned. the see that this think Yes. a get better production more in was bit orchestrated going Wambo. I Jim do there. open help and should Again, of little cut ramped next out as increases of that the production And and production. year, to fully close we're up, some But spend at will we're kind of offset we underground that to year-over-year productions, lower see

what to expectation of is be? to Off it. the kind year Got Okay. base this

Nate. I sorry, quite that, didn't catch I'm

of cut this production base it said would hopefully, level you're you next expecting Wambo year, year-over-year. year, The increase open

So kind at of are we what for base looking 'XX?

million We're going probably I from Maybe increase. up don't a and there. X we'll see XX% know. tonnes

long Okay. term. Perfect. I your over Shoal temporary in heard probably fix there. more shifting specifically place whole and And maybe Creek, on the then What was to not comments is lock. I the appreciate

impact do to correct? work that be and Is expect or any Shoal more there? And if done needs guys when impact you if so, sales to future Creek

the Army to coordinating We're do -- they Engineers. but permanent to is the make expecting said, not work we're repairs repairs transporters impacts the work of you anything as even with are minimize with the the there have to Corps Nate, temporary, impact shipments. going that's shipments to in time really the future. the river or negligible the on work They're on and the the as

any have repairs So future. that's our are done as expectation in not these impacts the to negative

and initial good on then finally Jim. getting to again on That's coal Okay, just And there Congrats hear. Centurion. maybe washed.

you quarter. fourth first here As coal looks like it the sales in said,

the think cetera? should et those of about up the now in volumes, tonnes costs, between as we potential How longwall and development sale starts when

we'd that said equate that's like have would And every something X say to maybe would That's that next at XXX,XXX I'd what estimate. guidance, X XXXX. shipment that. so probably I shipments, probably up not level, tonnes in around So year, sell months, that

normal tonnage Would Okay, through Malcolm. And would that the that met P&L? flow reflected in seaborne be shipments?

Yes, it'll to -- be recognized revenue revenue as the account.

the question with LaFemina next And comes from Chris Jefferies.

hopped you just from Wambo? just on But call got the I earlier, and to late. third -- So I the Wambo, what contribution apologize the I if was quarter quickly EBITDA on in this

underground the in mines between I mines. or X X have me Chris, don't and of it front thermal

at... look Just

a can no? Or that? on us there give Is number ballpark you

No.

Okay.

Secondly, strong balance guys allocation, obviously just sheet. you terms in have of capital a very

flow. And in asset being to cash see buyback you the generating considered obviously Good some I'm There's M&A coal think the how general. in also sales the that in quarter. are just about You're today. market wondering

at should And if a involved? want those quarter at is kind in opportunities? million maybe as get signal you're buyback it would to the that options very aggressive look -- keep something M&A not like we looking $XXX to the Or open arises, compelling you you of

comments here. Jim Chris, with as make we our activity. practice, is don't Yes. on any M&A past And

that. just I'm leave to you. it Thank So going at

question Securities. from B. next Lucas again with Pipes Our Instructions] comes [Operator Riley

terms day to CCS, with reopen I the ask with growth, make election is how stronger of priority again. PRB sense capital demand your power but Jim, I a it the maybe it's one not next in in will a leases. much for example, for it priority understand outlays, week, wanted of to today advancements

So topic? on the you with engage would administration how this new

but a decades many and industry-wide from to reserves leases in speak Peabody we to perspective, not Well, for have come. perspective, Lucas, I'm place going an

reserve holdings very holdings as strong. very, there far position our as is So and lease

we our do into to increase above the demand So that. have. with we nothing the is easily significantly we can with does projections, that if that There base very reserve lean more that need

of long-term optionality. terms In

talking have, optionality if if that's Well, have levels, you're the being that we we what about the that lease already with by term secured optionality about long you to increase over tonnage meant optionality. holdings

holdings the still. the for the the to with and, there We can if obviously, PRB the have are lease decades come demand output economics increase in we

X.X Yes. us of lease. got, billion think, I under tonnes Lucas, in we front

is lease us So an not for decades. issue for

Jim the to conference like our question-and-answer turn Grech session. to concludes This over remarks. closing I for back any would

in and focus Association for dedicated pleased to first for from our performance. very closing, work Segundo on team safety. of the Mining prestigious their National like X I'd Creek safety thank operations, the hard that and Safety our received outstanding . Award Well, Sentinels of value their We're Shoal our

and their Additionally, recognized at our South Wales Health, for Metropolitan achievements safety Community Wilpinjong Mining outstanding mines Safety and awards. were New the

to excellence of shareholders, focused thank like continued We I'd on the customers, vendors strategic operational delivering successful and value Additionally, priorities. our their for through remain support. execution our

So our that call. concludes operator,

now conference you concluded. attending The has for Thank presentation. today's

disconnect. now may You