UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

☑

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended

March 31, ~~2022~~2023

☐

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________ to ____________

Commission File Number: 1-16463

PEABODY ENERGY CORPORATION

(Exact name of registrant as specified in its charter)


Delaware						13-4004153
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

701 Market Street,

St. Louis,

Missouri

63101-1826

(Address of principal executive offices)

(Zip Code)

(314) 342-3400

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.01 per share	BTU	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:

Large accelerated filer ☐☑ Accelerated filer ☑☐

Non-accelerated filer ☐ Smaller reporting company ☐

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ☑No ☐

There were ~~143.8~~144.7 million shares of the registrant’s common stock (par value of $0.01 per share) outstanding at April ~~29, 2022.~~28, 2023.

TABLE OF CONTENTS


			Page
PART I — FINANCIAL INFORMATION
Item 1. Financial Statements			1
Unaudited Condensed Consolidated Statements of Operations			1
Unaudited Condensed Consolidated Statements of Comprehensive Income			2
Condensed Consolidated Balance Sheets			3
Unaudited Condensed Consolidated Statements of Cash Flows			4
Unaudited Condensed Consolidated Statements of Changes in Stockholders’ Equity			6
Notes to Unaudited Condensed Consolidated Financial Statements			7
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations			2824
Item 3. Quantitative and Qualitative Disclosures About Market Risk			4943
Item 4. Controls and Procedures			5043
PART II — OTHER INFORMATION
Item 1. Legal Proceedings			5044
Item 1A. Risk Factors			5044
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			5246
Item 4. Mine Safety Disclosures			5348

Item 6. Exhibits			5348
EXHIBIT INDEX			5449
SIGNATURE			5550

Table of Contents

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

PEABODY ENERGY CORPORATION

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Three Months Ended March 31,
2022 2021
(Dollars in millions, except per share data)
Revenue $ 691.4 $ 651.3
Costs and expenses
Operating costs and expenses (exclusive of items shown separately below) 699.0 582.6
Depreciation, depletion and amortization 72.9 68.3
Asset retirement obligation expenses 15.0 15.9
Selling and administrative expenses 23.1 21.7
Restructuring charges 1.6 2.1
Other operating (income) loss:
Net (gain) loss on disposals (4.9) 0.6
(Income) loss from equity affiliates (44.7) 0.9
Operating loss (70.6) (40.8)
Interest expense 39.4 52.4
Net loss (gain) on early debt extinguishment 23.5 (3.5)
Interest income (0.5) (1.5)
Net periodic benefit credit, excluding service cost (12.2) (8.7)
Loss from continuing operations before income taxes (120.8) (79.5)
Income tax benefit (1.0) (1.8)
Loss from continuing operations, net of income taxes (119.8) (77.7)
Loss from discontinued operations, net of income taxes (0.8) (2.0)
Net loss (120.6) (79.7)
Less: Net (loss) income attributable to noncontrolling interests (1.1) 0.4
Net loss attributable to common stockholders $ (119.5) $ (80.1)
Loss from continuing operations:
Basic loss per share $ (0.87) $ (0.79)
Diluted loss per share $ (0.87) $ (0.79)
Net loss attributable to common stockholders:
Basic loss per share $ (0.88) $ (0.81)
Diluted loss per share $ (0.88) $ (0.81)


	Three Months Ended March 31,
		2023		2022
		(Dollars in millions, except per share data)
Revenue		$	1,364.0	$	691.4
Costs and expenses
Operating costs and expenses (exclusive of items shown separately below)		846.6		699.0
Depreciation, depletion and amortization		76.3		72.9
Asset retirement obligation expenses		15.4		15.0
Selling and administrative expenses		22.8		23.1
Restructuring charges		0.1		1.6

Other operating income:
Net gain on disposals		(1.9)		(4.9)
Asset impairment		2.0		—


Income from equity affiliates		(1.8)		(44.7)
Operating profit (loss)		404.5		(70.6)
Interest expense		18.4		39.4
Net loss on early debt extinguishment		6.8		23.5
Interest income		(13.1)		(0.5)
Net periodic benefit credit, excluding service cost		(9.7)		(12.2)


Income (loss) from continuing operations before income taxes		402.1		(120.8)
Income tax provision (benefit)		118.0		(1.0)
Income (loss) from continuing operations, net of income taxes		284.1		(119.8)
Loss from discontinued operations, net of income taxes		(1.3)		(0.8)
Net income (loss)		282.8		(120.6)

Less: Net income (loss) attributable to noncontrolling interests		14.3		(1.1)
Net income (loss) attributable to common stockholders		$	268.5	$	(119.5)

Income (loss) from continuing operations:
Basic income (loss) per share		$	1.87	$	(0.87)
Diluted income (loss) per share		$	1.69	$	(0.87)
Net income (loss) attributable to common stockholders:
Basic income (loss) per share		$	1.86	$	(0.88)
Diluted income (loss) per share		$	1.68	$	(0.88)

See accompanying notes to unaudited condensed consolidated financial statements.

Table of Contents

PEABODY ENERGY CORPORATION

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Three Months Ended March 31,
2022 2021
(Dollars in millions)
Net loss $ (120.6) $ (79.7)
Postretirement plans (net of $0.0 tax provisions in each period) (13.4) (11.0)
Foreign currency translation adjustment 1.9 (0.2)
Other comprehensive loss, net of income taxes (11.5) (11.2)
Comprehensive loss (132.1) (90.9)
Less: Net (loss) income attributable to noncontrolling interests (1.1) 0.4
Comprehensive loss attributable to common stockholders $ (131.0) $ (91.3)


	Three Months Ended March 31,
		2023		2022
		(Dollars in millions)
Net income (loss)		$	282.8	$	(120.6)










Postretirement plans (net of $0.0 tax provisions in each period)		(13.4)		(13.4)




Foreign currency translation adjustment		(0.2)		1.9
Other comprehensive loss, net of income taxes		(13.6)		(11.5)
Comprehensive income (loss)		269.2		(132.1)

Less: Net income (loss) attributable to noncontrolling interests		14.3		(1.1)
Comprehensive income (loss) attributable to common stockholders		$	254.9	$	(131.0)

See accompanying notes to unaudited condensed consolidated financial statements.

Table of Contents

PEABODY ENERGY CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS


		(Unaudited)					(Unaudited)
		March 31, 2022		December 31, 2021			March 31, 2023		December 31, 2022
		(Amounts in millions, except per share data)					(Amounts in millions, except per share data)
ASSETS	ASSETS					ASSETS
Current assets	Current assets					Current assets
Cash and cash equivalents	Cash and cash equivalents	$	823.3	$	954.3	Cash and cash equivalents	$	892.2	$	1,307.3
Restricted cash		24.7		—
Accounts receivable, net of allowance for credit losses of $0.0 at March 31, 2022 and December 31, 2021		357.4		350.5

Accounts receivable, net of allowance for credit losses of $0.0 at March 31, 2023 and December 31, 2022						Accounts receivable, net of allowance for credit losses of $0.0 at March 31, 2023 and December 31, 2022	394.7		465.5
Inventories, net	Inventories, net	269.1		226.7		Inventories, net	331.5		296.1

Other current assets	Other current assets	331.8		270.2		Other current assets	260.1		303.6
Total current assets	Total current assets	1,806.3		1,801.7		Total current assets	1,878.5		2,372.5
Property, plant, equipment and mine development, net	Property, plant, equipment and mine development, net	2,903.3		2,950.6		Property, plant, equipment and mine development, net	2,847.9		2,865.0

Operating lease right-of-use assets	Operating lease right-of-use assets	33.0		35.5		Operating lease right-of-use assets	22.7		26.9
Restricted cash and collateral						Restricted cash and collateral	936.7		187.4
Investments and other assets	Investments and other assets	201.2		162.0		Investments and other assets	85.6		84.3

Deferred income taxes						Deferred income taxes	28.5		74.7
Total assets	Total assets	$	4,943.8	$	4,949.8	Total assets	$	5,799.9	$	5,610.8
LIABILITIES AND STOCKHOLDERS’ EQUITY	LIABILITIES AND STOCKHOLDERS’ EQUITY					LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities	Current liabilities					Current liabilities
Current portion of long-term debt	Current portion of long-term debt	$	19.1	$	59.6	Current portion of long-term debt	$	13.2	$	13.2

Accounts payable and accrued expenses	Accounts payable and accrued expenses	798.2		872.1		Accounts payable and accrued expenses	853.2		905.5
Total current liabilities	Total current liabilities	817.3		931.7		Total current liabilities	866.4		918.7
Long-term debt, less current portion	Long-term debt, less current portion	1,079.0		1,078.2		Long-term debt, less current portion	322.4		320.6
Deferred income taxes	Deferred income taxes	20.9		27.3		Deferred income taxes	20.2		20.4
Asset retirement obligations	Asset retirement obligations	659.5		654.8		Asset retirement obligations	668.3		665.8
Accrued postretirement benefit costs	Accrued postretirement benefit costs	209.6		212.1		Accrued postretirement benefit costs	155.6		156.5
Operating lease liabilities, less current portion	Operating lease liabilities, less current portion	24.6		27.2		Operating lease liabilities, less current portion	6.9		11.0
Other noncurrent liabilities	Other noncurrent liabilities	236.0		197.7		Other noncurrent liabilities	230.4		223.0
Total liabilities	Total liabilities	3,046.9		3,129.0		Total liabilities	2,270.2		2,316.0
Stockholders’ equity	Stockholders’ equity					Stockholders’ equity

Preferred Stock — $0.01 per share par value; 100.0 shares authorized, no shares issued or outstanding as of March 31, 2022 and December 31, 2021		—		—
Series Common Stock — $0.01 per share par value; 50.0 shares authorized, no shares issued or outstanding as of March 31, 2022 and December 31, 2021		—		—
Common Stock — $0.01 per share par value; 450.0 shares authorized, 187.0 shares issued and 143.8 shares outstanding as of March 31, 2022 and 176.3 shares issued and 133.3 shares outstanding as of December 31, 2021		1.9		1.8
Preferred Stock — $0.01 per share par value; 100.0 shares authorized, no shares issued or outstanding as of March 31, 2023 and December 31, 2022						Preferred Stock — $0.01 per share par value; 100.0 shares authorized, no shares issued or outstanding as of March 31, 2023 and December 31, 2022	—		—
Series Common Stock — $0.01 per share par value; 50.0 shares authorized, no shares issued or outstanding as of March 31, 2023 and December 31, 2022						Series Common Stock — $0.01 per share par value; 50.0 shares authorized, no shares issued or outstanding as of March 31, 2023 and December 31, 2022	—		—
Common Stock — $0.01 per share par value; 450.0 shares authorized, 188.4 shares issued and 144.7 shares outstanding as of March 31, 2023 and 187.1 shares issued and 143.9 shares outstanding as of December 31, 2022						Common Stock — $0.01 per share par value; 450.0 shares authorized, 188.4 shares issued and 144.7 shares outstanding as of March 31, 2023 and 187.1 shares issued and 143.9 shares outstanding as of December 31, 2022	1.9		1.9
Additional paid-in capital	Additional paid-in capital	3,969.5		3,745.6		Additional paid-in capital	3,977.6		3,975.9
Treasury stock, at cost — 43.2 and 43.0 common shares as of March 31, 2022 and December 31, 2021		(1,372.3)		(1,370.3)
Accumulated deficit		(1,032.7)		(913.2)
Treasury stock, at cost — 43.7 and 43.2 common shares as of March 31, 2023 and December 31, 2022						Treasury stock, at cost — 43.7 and 43.2 common shares as of March 31, 2023 and December 31, 2022	(1,386.1)		(1,372.9)
Retained earnings						Retained earnings	652.4		383.9
Accumulated other comprehensive income	Accumulated other comprehensive income	286.4		297.9		Accumulated other comprehensive income	228.9		242.5
Peabody Energy Corporation stockholders’ equity	Peabody Energy Corporation stockholders’ equity	1,852.8		1,761.8		Peabody Energy Corporation stockholders’ equity	3,474.7		3,231.3
Noncontrolling interests	Noncontrolling interests	44.1		59.0		Noncontrolling interests	55.0		63.5
Total stockholders’ equity	Total stockholders’ equity	1,896.9		1,820.8		Total stockholders’ equity	3,529.7		3,294.8
Total liabilities and stockholders’ equity	Total liabilities and stockholders’ equity	$	4,943.8	$	4,949.8	Total liabilities and stockholders’ equity	$	5,799.9	$	5,610.8

See accompanying notes to unaudited condensed consolidated financial statements.

Table of Contents


PEABODY ENERGY CORPORATION	PEABODY ENERGY CORPORATION					PEABODY ENERGY CORPORATION
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS	UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS					UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

		Three Months Ended March 31,					Three Months Ended March 31,
		2022		2021			2023		2022
		(Dollars in millions)					(Dollars in millions)
Cash Flows From Operating Activities	Cash Flows From Operating Activities					Cash Flows From Operating Activities
Net loss		$	(120.6)	$	(79.7)
Net income (loss)						Net income (loss)	$	282.8	$	(120.6)
Loss from discontinued operations, net of income taxes	Loss from discontinued operations, net of income taxes	0.8		2.0		Loss from discontinued operations, net of income taxes	1.3		0.8
Loss from continuing operations, net of income taxes		(119.8)		(77.7)
Adjustments to reconcile loss from continuing operations, net of income taxes to net cash (used in) provided by operating activities:
Income (loss) from continuing operations, net of income taxes						Income (loss) from continuing operations, net of income taxes	284.1		(119.8)
Adjustments to reconcile income (loss) from continuing operations, net of income taxes to net cash provided by (used in) operating activities:						Adjustments to reconcile income (loss) from continuing operations, net of income taxes to net cash provided by (used in) operating activities:
Depreciation, depletion and amortization	Depreciation, depletion and amortization	72.9		68.3		Depreciation, depletion and amortization	76.3		72.9
Noncash interest expense, net	Noncash interest expense, net	3.8		4.9		Noncash interest expense, net	1.6		3.8

Deferred income taxes	Deferred income taxes	(6.4)		(0.4)		Deferred income taxes	46.0		(6.4)
Noncash share-based compensation	Noncash share-based compensation	2.0		1.8		Noncash share-based compensation	1.7		2.0

Net (gain) loss on disposals		(4.9)		0.6
Net loss (gain) on early debt extinguishment		23.5		(3.5)
(Income) loss from equity affiliates		(44.7)		0.9
Asset impairment						Asset impairment	2.0		—
Net gain on disposals						Net gain on disposals	(1.9)		(4.9)
Noncash income from port and rail capacity assignment						Noncash income from port and rail capacity assignment	(9.2)		—
Net loss on early debt extinguishment						Net loss on early debt extinguishment	6.8		23.5
Income from equity affiliates						Income from equity affiliates	(1.8)		(44.7)

Foreign currency option contracts	Foreign currency option contracts	(3.3)		2.9		Foreign currency option contracts	2.2		(3.3)
Changes in current assets and liabilities:	Changes in current assets and liabilities:					Changes in current assets and liabilities:
Accounts receivable	Accounts receivable	(6.9)		77.0		Accounts receivable	70.8		(6.9)
Inventories	Inventories	(42.4)		20.3		Inventories	(35.4)		(42.4)
Other current assets	Other current assets	(80.0)		1.6		Other current assets	43.5		(80.0)
Accounts payable and accrued expenses	Accounts payable and accrued expenses	(28.4)		(15.4)		Accounts payable and accrued expenses	(39.6)		(28.4)
Collateral arrangements	Collateral arrangements	(28.7)		(5.3)		Collateral arrangements	(45.9)		(28.7)
Asset retirement obligations	Asset retirement obligations	4.7		8.1		Asset retirement obligations	2.5		4.7
Workers’ compensation obligations	Workers’ compensation obligations	(0.6)		0.6		Workers’ compensation obligations	(0.9)		(0.6)
Postretirement benefit obligations	Postretirement benefit obligations	(15.9)		(13.4)		Postretirement benefit obligations	(14.4)		(15.9)
Pension obligations	Pension obligations	(0.6)		2.8		Pension obligations	0.4		(0.6)
Other, net	Other, net	3.2		—		Other, net	0.6		3.2
Net cash (used in) provided by continuing operations		(272.5)		74.1
Net cash provided by (used in) continuing operations						Net cash provided by (used in) continuing operations	389.4		(272.5)
Net cash used in discontinued operations	Net cash used in discontinued operations	(1.2)		(3.1)		Net cash used in discontinued operations	(3.1)		(1.2)
Net cash (used in) provided by operating activities		(273.7)		71.0
Net cash provided by (used in) operating activities						Net cash provided by (used in) operating activities	386.3		(273.7)

Table of Contents


PEABODY ENERGY CORPORATION	PEABODY ENERGY CORPORATION					PEABODY ENERGY CORPORATION
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - (Continued)	UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - (Continued)					UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - (Continued)

		Three Months Ended March 31,					Three Months Ended March 31,
		2022		2021			2023		2022
		(Dollars in millions)					(Dollars in millions)
Cash Flows From Investing Activities	Cash Flows From Investing Activities					Cash Flows From Investing Activities
Additions to property, plant, equipment and mine development	Additions to property, plant, equipment and mine development	(29.7)		(50.3)		Additions to property, plant, equipment and mine development	(55.7)		(29.7)
Changes in accrued expenses related to capital expenditures	Changes in accrued expenses related to capital expenditures	(7.0)		(11.4)		Changes in accrued expenses related to capital expenditures	(1.6)		(7.0)

Proceeds from disposal of assets, net of receivables	Proceeds from disposal of assets, net of receivables	3.6		0.9		Proceeds from disposal of assets, net of receivables	2.9		3.6

Contributions to joint ventures	Contributions to joint ventures	(126.6)		(136.1)		Contributions to joint ventures	(206.2)		(126.6)
Distributions from joint ventures	Distributions from joint ventures	148.2		102.4		Distributions from joint ventures	202.0		148.2

Cash receipts from Middlemount Coal Pty Ltd and other related parties	Cash receipts from Middlemount Coal Pty Ltd and other related parties	47.2		2.3		Cash receipts from Middlemount Coal Pty Ltd and other related parties	—		47.2

Other, net	Other, net	(0.5)		(1.0)		Other, net	0.1		(0.5)
Net cash provided by (used in) investing activities		35.2		(93.2)
Net cash (used in) provided by investing activities						Net cash (used in) provided by investing activities	(58.5)		35.2
Cash Flows From Financing Activities	Cash Flows From Financing Activities					Cash Flows From Financing Activities
Proceeds from long-term debt	Proceeds from long-term debt	545.0		—		Proceeds from long-term debt	—		545.0
Repayments of long-term debt	Repayments of long-term debt	(599.9)		(40.2)		Repayments of long-term debt	(2.7)		(599.9)
Payment of debt issuance and other deferred financing costs	Payment of debt issuance and other deferred financing costs	(19.2)		(22.5)		Payment of debt issuance and other deferred financing costs	(0.3)		(19.2)
Proceeds from common stock issuances, net of costs	Proceeds from common stock issuances, net of costs	222.0		—		Proceeds from common stock issuances, net of costs	—		222.0
Repurchase of employee common stock relinquished for tax withholding	Repurchase of employee common stock relinquished for tax withholding	(2.0)		(0.6)		Repurchase of employee common stock relinquished for tax withholding	(13.2)		(2.0)

Distributions to noncontrolling interests	Distributions to noncontrolling interests	(13.8)		(0.1)		Distributions to noncontrolling interests	(22.8)		(13.8)
Other, net	Other, net	0.1		0.1		Other, net	—		0.1
Net cash provided by (used in) financing activities		132.2		(63.3)
Net cash (used in) provided by financing activities						Net cash (used in) provided by financing activities	(39.0)		132.2
Net change in cash, cash equivalents and restricted cash	Net change in cash, cash equivalents and restricted cash	(106.3)		(85.5)		Net change in cash, cash equivalents and restricted cash	288.8		(106.3)
Cash, cash equivalents and restricted cash at beginning of period(1)	Cash, cash equivalents and restricted cash at beginning of period(1)	954.3		709.2		Cash, cash equivalents and restricted cash at beginning of period(1)	1,417.6		954.3
Cash, cash equivalents and restricted cash at end of period(2)	Cash, cash equivalents and restricted cash at end of period(2)	$	848.0	$	623.7	Cash, cash equivalents and restricted cash at end of period(2)	$	1,706.4	$	848.0

(1) The following table provides a reconciliation of “Cash, cash equivalents and restricted cash at beginning of period”:						(1) The following table provides a reconciliation of “Cash, cash equivalents and restricted cash at beginning of period”:
Cash and cash equivalents						Cash and cash equivalents	$	1,307.3
Restricted cash included in “Restricted cash and collateral”						Restricted cash included in “Restricted cash and collateral”	110.3
Cash, cash equivalents and restricted cash at beginning of period						Cash, cash equivalents and restricted cash at beginning of period	$	1,417.6

(2) The following table provides a reconciliation of “Cash, cash equivalents and restricted cash at end of period”:						(2) The following table provides a reconciliation of “Cash, cash equivalents and restricted cash at end of period”:
Cash and cash equivalents						Cash and cash equivalents	$	892.2
Restricted cash included in “Restricted cash and collateral”						Restricted cash included in “Restricted cash and collateral”	814.2
Cash, cash equivalents and restricted cash at end of period						Cash, cash equivalents and restricted cash at end of period	$	1,706.4

See accompanying notes to unaudited condensed consolidated financial statements.

Table of Contents

PEABODY ENERGY CORPORATION

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY


		Three Months Ended March 31,						Three Months Ended March 31,
			2022		2021				2023		2022
			(Dollars in millions)						(Dollars in millions)

Common Stock	Common Stock						Common Stock
Balance, beginning of period	Balance, beginning of period		$	1.8	$	1.4	Balance, beginning of period		$	1.9	$	1.8

Common stock issuances, net of costs	Common stock issuances, net of costs		0.1		—		Common stock issuances, net of costs		—		0.1
Balance, end of period	Balance, end of period		1.9		1.4		Balance, end of period		1.9		1.9
Additional paid-in capital	Additional paid-in capital						Additional paid-in capital
Balance, beginning of period	Balance, beginning of period		3,745.6		3,364.6		Balance, beginning of period		3,975.9		3,745.6

Share-based compensation for equity-classified awards	Share-based compensation for equity-classified awards		2.0		1.8		Share-based compensation for equity-classified awards		1.7		2.0

Common stock issuances, net of costs	Common stock issuances, net of costs		221.9		—		Common stock issuances, net of costs		—		221.9

Balance, end of period	Balance, end of period		3,969.5		3,366.4		Balance, end of period		3,977.6		3,969.5
Treasury stock	Treasury stock						Treasury stock
Balance, beginning of period	Balance, beginning of period		(1,370.3)		(1,368.9)		Balance, beginning of period		(1,372.9)		(1,370.3)

Repurchase of employee common stock relinquished for tax withholding	Repurchase of employee common stock relinquished for tax withholding		(2.0)		(0.6)		Repurchase of employee common stock relinquished for tax withholding		(13.2)		(2.0)
Balance, end of period	Balance, end of period		(1,372.3)		(1,369.5)		Balance, end of period		(1,386.1)		(1,372.3)
Accumulated deficit
Retained earnings (Accumulated deficit)							Retained earnings (Accumulated deficit)
Balance, beginning of period	Balance, beginning of period		(913.2)		(1,273.3)		Balance, beginning of period		383.9		(913.2)
Net loss attributable to common stockholders			(119.5)		(80.1)
Net income (loss) attributable to common stockholders							Net income (loss) attributable to common stockholders		268.5		(119.5)

Balance, end of period	Balance, end of period		(1,032.7)		(1,353.4)		Balance, end of period		652.4		(1,032.7)
Accumulated other comprehensive income	Accumulated other comprehensive income						Accumulated other comprehensive income
Balance, beginning of period	Balance, beginning of period		297.9		205.8		Balance, beginning of period		242.5		297.9

Postretirement plans (net of $0.0 tax provisions in each period)	Postretirement plans (net of $0.0 tax provisions in each period)		(13.4)		(11.0)		Postretirement plans (net of $0.0 tax provisions in each period)		(13.4)		(13.4)
Foreign currency translation adjustment	Foreign currency translation adjustment		1.9		(0.2)		Foreign currency translation adjustment		(0.2)		1.9
Balance, end of period	Balance, end of period		286.4		194.6		Balance, end of period		228.9		286.4
Noncontrolling interests	Noncontrolling interests						Noncontrolling interests
Balance, beginning of period	Balance, beginning of period		59.0		51.7		Balance, beginning of period		63.5		59.0
Net (loss) income attributable to noncontrolling interests			(1.1)		0.4
Net income (loss) attributable to noncontrolling interests							Net income (loss) attributable to noncontrolling interests		14.3		(1.1)
Distributions to noncontrolling interests	Distributions to noncontrolling interests		(13.8)		(0.1)		Distributions to noncontrolling interests		(22.8)		(13.8)
Balance, end of period	Balance, end of period		44.1		52.0		Balance, end of period		55.0		44.1
Total stockholders’ equity	Total stockholders’ equity		$	1,896.9	$	891.5	Total stockholders’ equity		$	3,529.7	$	1,896.9

See accompanying notes to unaudited condensed consolidated financial statements.

Table of Contents

PEABODY ENERGY CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(1) Basis of Presentation

The condensed consolidated financial statements include the accounts of Peabody Energy Corporation (PEC) and its consolidated subsidiaries and affiliates (along with PEC, the Company or Peabody). Interests in subsidiaries controlled by the Company are consolidated with any outside stockholder interests reflected as noncontrolling interests, except when the Company has an undivided interest in a joint venture. In those cases, the Company includes its proportionate share in the assets, liabilities, revenue and expenses of the jointly controlled entities within each applicable line item of the unaudited condensed consolidated financial statements. All intercompany transactions, profits and balances have been eliminated in consolidation.

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (U.S. GAAP) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements and should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2021.~~2022. In the opinion of management, these financial statements reflect all normal, recurring adjustments necessary for a fair presentation. Balance sheet information presented herein as of December 31, ~~2021~~2022 has been derived from the Company’s audited consolidated balance sheet at that date. The Company’s results of operations for the three months ended March 31, ~~2022~~2023 are not necessarily indicative of the results that may be expected for future quarters or for the year ending December 31, ~~2022.~~2023.

~~(2) Newly Adopted Accounting Standards and Accounting Standards Not Yet Implemented~~

~~Newly Adopted Accounting Standards~~

~~Convertible Debt.~~ ~~In August 2020,~~Although there are new accounting pronouncements issued by the Financial Accounting Standards Board ~~issued Accounting Standards Update (“ASU”) 2020-06, which simplifies~~that the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity’s own equity. Among other changes, ASU 2020-06 removes from U.S. GAAPCompany will adopt, as applicable, the liability and equity separation model for convertible instruments with a cash conversion feature, and as a result, after adoption, entities will no longer separately present in equity an embedded conversion feature for such debt. Similarly, the embedded conversion feature will no longer be amortized into income as interest expense over the life of the instrument. Instead, entities will account for a convertible debt instrument wholly as debt unless (1) a convertible instrument contains features that require bifurcation as a derivative under Accounting Standards Codification Topic 815, Derivatives and Hedging, or (2) a convertible debt instrument was issued at a substantial premium. Additionally, ASU 2020-06 requires the application of the if-converted method to calculate the impact of convertible instruments on diluted earnings per share. ASU 2020-06 is effective for fiscal years beginning after December 15, 2021, and can be adopted on either a fully retrospective or modified retrospective basis. The Company adopted ASU 2020-06, effective January 1, 2022. In the Company’s accompanying condensed consolidated balance sheets, the adoption of the new standard impacted the accounting for the Company’s $320.0 million of convertible debt issued in March 2022, as further described in Note 11. “Long-term Debt.” In particular, because the related senior notes have cash conversion features, bifurcation of the principal balance between debt and equity is no longer applicable. Additionally, this guidance will require the application of the “if-converted” method to calculate the impact of convertible instruments on diluted earnings per share, which may increase their dilutive impact compared to the prior accounting model.

~~Accounting Standards Not Yet Implemented~~

~~Reference Rate Reform.~~ In March 2020, ASU 2020-04 was issued, which provides temporary optional expedients to applying the reference rate reform guidance to contracts that reference London Interbank Offered Rate (LIBOR) or another reference rate expected to be discontinued. Under this update, contract modifications resulting in a new reference rate may be accounted for as a continuation of the existing contract. This guidance is effective upon issuance of the update and applies to contract modifications made through December 31, 2022. The Company has certain debt which utilizes a U.S. Dollar one-month LIBOR rate, which is expected to be published until June 2023. The LIBOR rate is likely to be replaced by a similar secured or unsecured overnight financing rate. The Company cannot estimate the impact of such variable rates on its consolidated financial statements.

~~Table of Contents~~

~~PEABODY ENERGY CORPORATION~~

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~Government Assistance.~~ In November 2021, ASU 2021-10 was issued, which aims to provide increased transparency by requiring business entities to disclose information about certain types of government assistance they receive in the notes to the financial statements. The guidance is effective for annual periods beginning after December 15, 2021, with early application permitted. The Company did not early adopt the guidance in ASU 2021-10 and does not ~~expect the guidance to~~believe any of these accounting pronouncements will have a material impact on its unaudited condensed consolidated financial statements or disclosures.

~~(3)~~(2) Revenue Recognition

Refer to Note 1. “Summary of Significant Accounting Policies” in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2021,~~2022, for the Company’s policies regarding “Revenue” and “Accounts receivable, net.”

Disaggregation of Revenue

Revenue by product type and market is set forth in the following tables. With respect to its seaborne ~~mining~~reporting segments, the Company classifies as “Export” certain revenue from domestically-delivered coal under contracts in which the price is derived on a basis similar to export contracts.

Three Months Ended March 31, 2022
Seaborne Thermal Mining Seaborne Metallurgical Mining Powder River Basin Mining Other U.S. Thermal Mining
Corporate and Other (1)
Consolidated
(Dollars in millions)
Thermal coal
Domestic $ 40.4 $ — $ 251.5 $ 199.9 $ — $ 491.8
Export 210.5 — — — — 210.5
Total thermal 250.9 — 251.5 199.9 — 702.3
Metallurgical coal
Export — 318.0 — — — 318.0
Total metallurgical — 318.0 — — — 318.0
Other (2)
0.3 3.3 (0.3) 3.2 (335.4) (328.9)
Revenue $ 251.2 $ 321.3 $ 251.2 $ 203.1 $ (335.4) $ 691.4

Three Months Ended March 31, 2021
Seaborne Thermal Mining Seaborne Metallurgical Mining Powder River Basin Mining Other U.S. Thermal Mining
Corporate and Other (1)
Consolidated
(Dollars in millions)
Thermal coal
Domestic $ 44.1 $ — $ 228.4 $ 146.8 $ — $ 419.3
Export 131.9 — — — — 131.9
Total thermal 176.0 — 228.4 146.8 — 551.2
Metallurgical coal
Export — 86.6 — — — 86.6
Total metallurgical — 86.6 — — — 86.6
Other (2)
0.4 0.9 — 2.5 9.7 13.5
Revenue $ 176.4 $ 87.5 $ 228.4 $ 149.3 $ 9.7 $ 651.3

~~(1)~~ Corporate and Other revenue includes net losses related to unrealized mark-to-market adjustments on derivatives related to forecasted sales and other financial trading activity of $290.2 million and $4.9 million during the three months ended March 31, 2022 and 2021, respectively. Refer to Note 7. “Derivatives and Fair Value Measurements” for additional information. Also included in Corporate and Other revenue is revenue with customers of $19.0 million and $17.9 million during the three months ended March 31, 2022 and 2021, respectively.

~~(2)~~ Other includes revenue from arrangements such as customer contract-related payments associated with volume shortfalls, royalties related to coal lease agreements, sales agency commissions, farm income and property and facility rentals.


	Three Months Ended March 31, 2023
	Seaborne Thermal Mining		Seaborne Metallurgical Mining		Powder River Basin Mining		Other U.S. Thermal Mining		Corporate and Other (1)		Consolidated
	(Dollars in millions)
Thermal coal
Domestic	$	37.5	$	—	$	305.0	$	247.9	$	—	$	590.4
Export	308.8		—		—		—		—		308.8
Total thermal	346.3		—		305.0		247.9		—		899.2
Metallurgical coal

Export	—		287.2		—		—		—		287.2
Total metallurgical	—		287.2		—		—		—		287.2
Other (2)	0.2		1.2		0.3		1.5		174.4		177.6
Revenue	$	346.5	$	288.4	$	305.3	$	249.4	$	174.4	$	1,364.0

Table of Contents

PEABODY ENERGY CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

~~The Company recorded~~


	Three Months Ended March 31, 2022
	Seaborne Thermal Mining		Seaborne Metallurgical Mining		Powder River Basin Mining		Other U.S. Thermal Mining		Corporate and Other (1)		Consolidated
	(Dollars in millions)
Thermal coal
Domestic	$	40.4	$	—	$	251.5	$	199.9	$	—	$	491.8
Export	210.5		—		—		—		—		210.5
Total thermal	250.9		—		251.5		199.9		—		702.3
Metallurgical coal

Export	—		318.0		—		—		—		318.0
Total metallurgical	—		318.0		—		—		—		318.0
Other (2)	0.3		3.3		(0.3)		3.2		(335.4)		(328.9)
Revenue	$	251.2	$	321.3	$	251.2	$	203.1	$	(335.4)	$	691.4

(1) Corporate and Other includes the following:


	Three Months Ended March 31,
		2023		2022
		(Dollars in millions)
Unrealized gains (losses) on derivative contracts related to forecasted sales		$	118.7	$	(301.0)
Realized losses on derivative contracts related to forecasted sales		(50.6)		(68.0)
Revenue from physical sale of coal (3)		84.5		19.1
Trading revenue		—		10.1
Other (2)		21.8		4.4
Total Corporate and Other		$	174.4	$	(335.4)

(2) Includes revenue from arrangements such as customer contract-related payments associated with volume shortfalls; royalties related to coal lease agreements; sales agency commissions; farm income; property and facility rentals; and revenue related to ~~delivered~~the Company’s assignment of rights to its excess port and rail capacity.

(3) Includes revenue recognized upon the physical sale of coal purchased from the Company’s operating segments and sold to customers through the Company’s coal trading business as part of ~~approximately $1,039 million and $656 million during~~settling certain derivative contracts. Primarily represents the three months ended March 31, 2022 and 2021, respectively. Such amounts exclude unrealized and realized gains and losses on derivative contracts related to forecasted sales and certain other revenue unrelated to delivered coal.

~~Committed Revenue from Contracts~~difference between the price contracted with ~~Customers~~

The Company expects to recognize revenue subsequent to March 31, 2022 of approximately $5.1 billion related to contracts with customers in which volumes and prices per ton were fixed or reasonably estimable at March 31, 2022. Approximately 48% of such amount is expected to be recognized over the ~~next twelve months~~customer and the ~~remainder thereafter. Actual revenue related~~price allocated to such contracts may differ materially for various reasons, including price adjustment features for coal quality and cost escalations, volume optionality provisions and potential force majeure events. This estimate of future revenue does not include any revenue related to contracts with variable prices per ton that cannot be reasonably estimated, such as the ~~majority of seaborne metallurgical and seaborne thermal coal contracts where pricing is negotiated or settled quarterly or annually.~~operating segment.

Accounts Receivable

“Accounts receivable, net” at March 31, ~~2022~~2023 and December 31, ~~2021~~2022 consisted of the following:


		March 31, 2022		December 31, 2021			March 31, 2023		December 31, 2022
		(Dollars in millions)					(Dollars in millions)
Trade receivables, net	Trade receivables, net	$	323.4	$	307.0	Trade receivables, net	$	353.2	$	416.3
Miscellaneous receivables, net	Miscellaneous receivables, net	34.0		43.5		Miscellaneous receivables, net	41.5		49.2
Accounts receivable, net	Accounts receivable, net	$	357.4	$	350.5	Accounts receivable, net	$	394.7	$	465.5

~~NaN~~None of the above receivables included allowances for credit losses at March 31, ~~2022~~2023 or December 31, ~~2021. NaN~~2022. No charges for credit losses were recognized during the three months ended March 31, ~~2022~~2023 or ~~2021.~~

~~(4) Discontinued Operations~~

Historically, discontinued operations included certain former Seaborne Thermal Mining and Other U.S. Thermal Mining segment assets that have ceased production and other previously divested legacy operations, including Patriot Coal Corporation and certain of its wholly-owned subsidiaries (Patriot). In the third quarter of 2021, the Company executed the sale of the closed Wilkie Creek Mine, which reduced its closed mine reclamation liabilities and associated costs.

~~Summarized Results of Discontinued Operations~~

~~Results from discontinued operations were as follows during the periods presented below:~~

Three Months Ended March 31,
2022 2021
(Dollars in millions)
Loss from discontinued operations, net of income taxes $ (0.8) $ (2.0)

~~Liabilities of Discontinued Operations~~

~~Liabilities classified as discontinued operations included in the Company’s condensed consolidated balance sheets were as follows:~~

March 31, 2022 December 31, 2021
(Dollars in millions)
Liabilities:
Accounts payable and accrued expenses $ 45.0 $ 45.0
Other noncurrent liabilities 58.7 59.0
Total liabilities classified as discontinued operations $ 103.7 $ 104.0
2022.

Table of Contents

PEABODY ENERGY CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

~~Patriot-Related Matters~~

A significant portion of the liabilities in the table above relate to Patriot. In 2012, Patriot filed voluntary petitions for relief under Chapter 11 of Title 11 of the U.S. Code (the Bankruptcy Code). In 2013, the Company entered into a definitive settlement agreement (2013 Agreement) with Patriot and the United Mine Workers of America (UMWA), on behalf of itself, its represented Patriot employees and its represented Patriot retirees, to resolve all then-disputed issues related to Patriot’s bankruptcy. In May 2015, Patriot again filed voluntary petitions for relief under the Bankruptcy Code in the U.S. District Court for the Eastern District of Virginia and subsequently initiated a process to sell substantially all of its assets to qualified bidders. On October 9, 2015, Patriot’s bankruptcy court entered an order confirming Patriot’s plan of reorganization, which provided, among other things, for the sale of substantially all of Patriot’s assets to 2 different buyers.

~~Black Lung Occupational Disease Liabilities.~~ Patriot had federal and state black lung occupational disease liabilities related to workers employed in periods prior to Patriot’s spin-off from the Company in 2007. Upon spin-off, Patriot indemnified the Company against any claim relating to these liabilities, which amounted to approximately $150 million at that time. The indemnification included any claim made by the U.S. Department of Labor (DOL) against the Company with respect to these obligations as a potentially liable operator under the Federal Coal Mine Health and Safety Act of 1969. The 2013 Agreement included Patriot’s affirmance of indemnities provided in the spin-off agreements, including the indemnity relating to such black lung liabilities; however, Patriot rejected this indemnity in its May 2015 bankruptcy.

By statute, the Company had secondary liability for the black lung liabilities related to Patriot’s workers employed by former subsidiaries of the Company. The Company’s accounting for the black lung liabilities related to Patriot is based on an interpretation of applicable statutes. Management believes that inconsistencies exist among the applicable statutes, regulations promulgated under those statutes and the DOL’s interpretative guidance. The Company has sought clarification from the DOL regarding these inconsistencies. The amount of these liabilities could be reduced in the future. Whether the Company will ultimately be required to fund certain of those obligations in the future as a result of Patriot’s May 2015 bankruptcy remains uncertain. The amount of the liability, which was determined on an actuarial basis based on the best information available to the Company, was $87.1 million and $87.2 million at March 31, 2022 and December 31, 2021, respectively. While the Company has recorded a liability, it intends to review each claim on a case-by-case basis and contest liability estimates as appropriate. The amount of the Company’s recorded liability reflects only Patriot workers employed by former subsidiaries of the Company that are presently retired, disabled or otherwise not actively employed. The Company cannot reliably estimate the potential liabilities for Patriot’s workers employed by former subsidiaries of the Company that are presently active in the workforce because of the potential for such workers to continue to work for another coal operator that is a going concern.

~~(5)~~(3) Inventories

“Inventories, net” as of March 31, ~~2022~~2023 and December 31, ~~2021~~2022 consisted of the following:


		March 31, 2022		December 31, 2021			March 31, 2023		December 31, 2022
		(Dollars in millions)					(Dollars in millions)
Materials and supplies, net	Materials and supplies, net	$	112.8	$	102.1	Materials and supplies, net	$	145.5	$	130.8
Raw coal	Raw coal	46.9		54.6		Raw coal	83.5		98.3
Saleable coal	Saleable coal	109.4		70.0		Saleable coal	102.5		67.0
Inventories, net	Inventories, net	$	269.1	$	226.7	Inventories, net	$	331.5	$	296.1

Materials and supplies inventories, net presented above have been shown net of reserves of ~~$9.0~~$9.4 million and $9.5 million as of ~~both~~ March 31, ~~2022~~2023 and December 31, ~~2021.~~2022.

~~(6)~~(4) Equity Method Investments

The ~~Company had total~~Company’s equity method investments include its joint venture interest in Middlemount Coal Pty Ltd (Middlemount), R3 Renewables LLC (R3) and ~~financing receivables~~certain other equity method investments.

The table below summarizes the book value of ~~$62.9 million and $62.2 million reflected~~those investments, which are reported in “Investments and other assets” in the condensed consolidated balance sheets, ~~as of March 31, 2022~~ and ~~December 31, 2021, respectively,~~the related ~~to Middlemount Coal Pty Ltd (Middlemount). Included in “(Income) loss~~“Income from equity affiliates” ~~in the unaudited condensed consolidated statements of operations were gains related to~~:


					(Income) Loss from Equity Affiliates
	Book Value at				Three Months Ended March 31,
	March 31, 2023		December 31, 2022		2023		2022
	(Dollars in millions)
Equity method investment related to Middlemount	$	29.4	$	27.1	$	(2.6)	$	(45.7)
Equity method investment related to R3	8.2		7.0		0.8		1.0

Total equity method investments	$	37.6	$	34.1	$	(1.8)	$	(44.7)

The Company received no cash payments from Middlemount ~~of $45.1 million~~ during the three months ended March 31, ~~2022, and losses~~2023. Payments of ~~$0.9~~$47.0 million were received from Middlemount during the three months ended March 31, ~~2021.~~2022.

~~The Company received cash payments from Middlemount of $47.0 million and $2.3 million during the three months ended March 31, 2022 and 2021, respectively.~~

~~Table of Contents~~

~~PEABODY ENERGY CORPORATION~~

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

One of the Company’s Australian subsidiaries ~~and the other shareholder of Middlemount are parties~~is party to an agreement ~~as amended from time to time,~~ to provide a revolving loan ~~(Revolving Loans)~~ to Middlemount. The Company’s participation in the ~~Revolving Loans~~revolving loan will not, at any time, exceed its 50% equity interest of the revolving loan limit, which was ~~$50~~$50 million Australian ~~dolla~~rsdollars at March 31, ~~2022.~~ 2023. The ~~Revolving Loans bear~~revolving loan bears interest at 10% per annum and ~~expire~~expires on December 31, 2023. T~~he Revolving Loans were not drawn upon by Middlemount as of either~~ There was no outstanding revolving loan at March 31, ~~2022~~2023 or December 31, ~~2021.~~2022.

AsIn March 2022, the Company entered into a joint venture with unrelated partners to form R3. R3 was formed with the intent of developing various sites, including certain reclaimed mining land held by the Company in the U.S., for utility-scale photovoltaic solar generation and battery storage. The Company contributed $2.0 million to R3 during both the three months ended March 31, ~~2022~~2023 and ~~December 31, 2021, the financing receivables and Revolving Loans are~~ ~~accounted for as in-substance common stock due to the limited fair value attributed to Middlemount’s equity.~~2022.

~~(7)~~(5) Derivatives and Fair Value Measurements

Derivatives

From time to time, the Company may utilize various types of derivative instruments to manage its exposure to risks in the normal course of business, including (1) foreign currency exchange rate risk and the variability of cash flows associated with forecasted Australian dollar expenditures made in its Australian mining platform, (2) price risk of fluctuating coal prices related to forecasted sales or purchases of coal, or changes in the fair value of a fixed price physical sales contract, (3) price risk and the variability of cash flows related to forecasted diesel fuel purchased for use in its operations and (4) interest rate risk on long-term debt. These risk management activities are actively monitored for compliance with the Company’s risk management policies.

On a limited basis, the Company engages in the direct and brokered trading of coal and freight-related contracts. Except those contracts for which the Company has elected to apply a normal purchases and normal sales exception, all derivative coal trading contracts are accounted for at fair value. The Company had 0no diesel fuel or interest rate derivatives in place as of March 31, ~~2022.~~2023.

Table of Contents

PEABODY ENERGY CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Foreign Currency Option Contracts

The Company has historically utilized currency forwards and options to hedge currency risk associated with anticipated Australian dollar expenditures. As of March 31, ~~2022,~~2023, the Company ~~had currency~~held average rate options ~~outstanding~~ with an aggregate notional amount of ~~$705.0~~$632.0 million Australian dollars to hedge currency risk associated with anticipated Australian dollar expenditures over the nine-month period ending December 31, ~~2022.~~2023. The instruments ~~are quarterly average rate options which~~ entitle the Company to receive payment on the notional amount should the quarterly average Australian dollar-to-U.S. dollar exchange rate exceed amounts ranging from ~~$0.76~~$0.70 to ~~$0.80~~$0.75 over the nine-month period ending December 31, ~~2022.~~2023. As of March 31, 2023, the Company also held purchased collars with an aggregate notional amount of $350.0 million Australian dollars related to anticipated Australian dollar expenditures during the third and fourth quarters of 2023. The purchased collars have a floor and ceiling of approximately $0.63 and $0.73, respectively, whereby the Company will incur a loss on the instruments for rates below the floor and a gain for rates above the ceiling.

Derivative Contracts Related to Forecasted Sales

As of March 31, ~~2022,~~2023, the Company held coal derivative contracts related to a portion of its forecasted sales with an aggregate notional volume of ~~1.6~~0.3 million tonnes. Such financial contracts may include futures, forwards and options. ~~Included in this total are 1.3 million tonnes~~The notional volume is related predominantly to financial derivatives entered to support the profitability of the Wambo Underground Mine as part of a strategy to extend the ~~mine life through mid-2023. Of this total, 0.6 million~~mine’s life. All such tonnes will settle in 2022 and 0.7 million tonnes will settle in 2023 at expected average pricing of approximately $84 per tonne (Newcastle index). The remaining 0.3 million tonnes aggregate notional volume related to other coal financial contracts will settle in 2022.2023. Additionally, the Company classifies certain physical forward sales contracts as derivatives for which the normal purchase, normal sales exception does not apply.

During the three months ended March 31, 2023, the Company recorded a net unrealized mark-to-market gain of $118.7 million on financial coal derivative contracts, and no unrealized mark-to-market gains or losses on physical forward sales contracts. During the three months ended March 31, 2022, the Company recorded ana net unrealized mark-to-market loss of $301.0 million on these coal derivative contracts, which ~~includes~~included approximately $237 million of unrealized mark-to-market losses on financial derivatives and approximately $64 million of unrealized mark-to-market losses on physical forward sales contracts.

Financial Trading Contracts

On a limited basis, the Company may enter coal or freight derivative contracts for trading purposes. Such financial contracts may include futures, forwards and options. The Company held nominal financial trading contracts as of March 31, ~~2022.~~

~~Table of Contents~~

~~PEABODY ENERGY CORPORATION~~

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

2023.

Tabular Derivatives Disclosures

The Company has master netting agreements with certain of its counterparties which allow for the settlement of contracts in an asset position with contracts in a liability position in the event of default or termination. Such netting arrangements reduce the Company’s credit exposure related to these counterparties. For classification purposes, the Company records the net fair value of all the positions with a given counterparty as a net asset or liability in the condensed consolidated balance sheets. The fair value of derivatives reflected in the accompanying condensed consolidated balance sheets are set forth in the table below.


		March 31, 2022				December 31, 2021					March 31, 2023				December 31, 2022
		Asset Derivative		Liability Derivative		Asset Derivative		Liability Derivative			Asset Derivative		Liability Derivative		Asset Derivative		Liability Derivative
		(Dollars in millions)									(Dollars in millions)
Foreign currency option contracts	Foreign currency option contracts	$	6.3	$	—	$	1.4	$	—	Foreign currency option contracts	$	—	$	—	$	3.0	$	—
Derivative contracts related to forecasted sales	Derivative contracts related to forecasted sales	133.2		(558.1)		59.5		(184.2)		Derivative contracts related to forecasted sales	31.1		(79.8)		100.6		(310.3)
Financial trading contracts	Financial trading contracts	13.5		—		3.4		—		Financial trading contracts	—		(0.1)		11.7		—
Total derivatives	Total derivatives	153.0		(558.1)		64.3		(184.2)		Total derivatives	31.1		(79.9)		115.3		(310.3)
Effect of counterparty netting	Effect of counterparty netting	(133.2)		133.2		(59.5)		59.5		Effect of counterparty netting	(31.1)		31.1		(100.6)		100.6
Variation margin (received) posted		(13.5)		360.6		(3.4)		95.2
Variation margin posted (received)										Variation margin posted (received)	—		48.8		(11.7)		209.7
Net derivatives and variation margin as classified in the balance sheets	Net derivatives and variation margin as classified in the balance sheets	$	6.3	$	(64.3)	$	1.4	$	(29.5)	Net derivatives and variation margin as classified in the balance sheets	$	—	$	—	$	3.0	$	—

Table of Contents

PEABODY ENERGY CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The Company generally posts or receives variation margin cash with its clearing broker on the majority of its financial derivatives as market values of the financial derivatives fluctuate. As of March 31, ~~2022,~~2023, the Company had posted ~~$481.7~~$59.8 million aggregate margin cash, consisting of ~~$347.1~~$48.8 million variation margin cash and ~~$134.6~~$11.0 million initial margin. As of December 31, ~~2021,~~2022, the Company had posted ~~$130.1~~$255.5 million aggregate margin cash, consisting of ~~$91.8~~$198.0 million variation margin cash and ~~$38.3~~$57.5 million initial margin.

To reduce exposure to additional margin requirements, subsequent to March 31, 2022, the Company converted 0.8 million metric tons of financial hedges into fixed price physical sales over the next 12 months, eliminating further margin requirements on these tons. With these transactions, 1.4 million metric tons remain outstanding with 0.9 million metric tons projected to settle over the remainder of 2022.

The net amount of asset derivatives, net of variation margin, is included in “Other current assets” and the net amount of liability derivatives, net of variation margin, is included in “Accounts payable and accrued expenses” in the accompanying condensed consolidated balance sheets. The amounts of initial margin are not included with the derivatives presented in the tabular disclosures above and are included in “Other current assets” in the accompanying condensed consolidated balance sheets.

~~Table of Contents~~

~~PEABODY ENERGY CORPORATION~~

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

Currently, the Company does not seek cash flow hedge accounting treatment for its derivative financial instruments and thus changes in fair value are reflected in current earnings. The tables below show the amounts of ~~pre-tax~~pretax gains and losses related to the Company’s derivatives and their classification within the accompanying unaudited condensed consolidated statements of operations.

Three Months Ended March 31, 2022
Total gain (loss) recognized in income Loss realized in income on derivatives Unrealized gain (loss) recognized in income on derivatives
Derivative Instrument Classification
(Dollars in millions)
Foreign currency option contracts Operating costs and expenses $ 2.3 $ (1.0) $ 3.3
Derivative contracts related to forecasted sales Revenue (369.0) (68.0) (301.0)
Financial trading contracts Revenue 10.1 (0.7) 10.8
Total $ (356.6) $ (69.7) $ (286.9)
Three Months Ended March 31, 2021 (1)
Total loss recognized in income Gain (loss) realized in income on derivatives Unrealized loss recognized in income on derivatives
Derivative Instrument Classification
(Dollars in millions)
Foreign currency option contracts Operating costs and expenses $ (2.9) $ 4.7 $ (7.6)
Derivative contracts related to forecasted sales Revenue (9.7) (7.9) (1.8)
Financial trading contracts Revenue (0.7) 2.4 (3.1)
Total $ (13.3) $ (0.8) $ (12.5)

~~(1)~~ ‘Results realized in income on derivatives’ has been revised to exclude revenue arising from coal deliveries earned by the Company’s trading and brokerage function of $17.9 million for the three months ended March 31, 2021, to be comparable to the presentation of the 2022 amounts.


		Three Months Ended March 31, 2023
		Total (loss) gain recognized in income		(Loss) gain realized in income on derivatives		Unrealized (loss) gain recognized in income on derivatives
Derivative Instrument	Classification
		(Dollars in millions)
Foreign currency option contracts	Operating costs and expenses	$	(5.0)	$	(2.8)	$	(2.2)
Derivative contracts related to forecasted sales	Revenue	68.1		(50.6)		118.7
Financial trading contracts	Revenue	—		17.3		(17.3)
Total		$	63.1	$	(36.1)	$	99.2

		Three Months Ended March 31, 2022
		Total gain (loss) recognized in income		Loss realized in income on derivatives		Unrealized gain (loss) recognized in income on derivatives
Derivative Instrument	Classification
		(Dollars in millions)
Foreign currency option contracts	Operating costs and expenses	$	2.3	$	(1.0)	$	3.3
Derivative contracts related to forecasted sales	Revenue	(369.0)		(68.0)		(301.0)
Financial trading contracts	Revenue	10.1		(0.7)		10.8
Total		$	(356.6)	$	(69.7)	$	(286.9)

The Company classifies the cash effects of its derivatives within the “Cash Flows From Operating Activities” section of the unaudited condensed consolidated statements of cash flows.

Fair Value Measurements

The Company uses a three-level fair value hierarchy that categorizes assets and liabilities measured at fair value based on the observability of the inputs utilized in the valuation. These levels include: Level 1 - inputs are quoted prices in active markets for the identical assets or liabilities; Level 2 - inputs are other than quoted prices included in Level 1 that are directly or indirectly observable through market-corroborated inputs; and Level 3 - inputs are unobservable, or observable but cannot be market-corroborated, requiring the Company to make assumptions about pricing by market participants.

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PEABODY ENERGY CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The following tables set forth the hierarchy of the Company’s net (liability) asset positions for which fair value is measured on a recurring basis. Variation margin cash associated with the derivative balances is excluded from this table.


											March 31, 2023
											Level 1		Level 2		Level 3		Total
											(Dollars in millions)
Foreign currency option contracts										Foreign currency option contracts	$	—	$	—	$	—	$	—
Derivative contracts related to forecasted sales										Derivative contracts related to forecasted sales	—		(48.7)		—		(48.7)
Financial trading contracts										Financial trading contracts	—		(0.1)		—		(0.1)
Equity securities										Equity securities	0.3		—		—		0.3
Total net assets (liabilities)										Total net assets (liabilities)	$	0.3	$	(48.8)	$	—	$	(48.5)

		March 31, 2022									December 31, 2022
		Level 1		Level 2		Level 3		Total			Level 1		Level 2		Level 3		Total
		(Dollars in millions)									(Dollars in millions)
Foreign currency option contracts	Foreign currency option contracts	$	—	$	6.3	$	—	$	6.3	Foreign currency option contracts	$	—	$	3.0	$	—	$	3.0
Derivative contracts related to forecasted sales	Derivative contracts related to forecasted sales	—		(424.9)		—		(424.9)		Derivative contracts related to forecasted sales	—		(209.7)		—		(209.7)
Financial trading contracts	Financial trading contracts	—		13.5		—		13.5		Financial trading contracts	—		11.7		—		11.7
Equity securities	Equity securities	—		—		4.0		4.0		Equity securities	—		—		2.5		2.5
Total net (liabilities) assets	Total net (liabilities) assets	$	—	$	(405.1)	$	4.0	$	(401.1)	Total net (liabilities) assets	$	—	$	(195.0)	$	2.5	$	(192.5)

		December 31, 2021
		Level 1		Level 2		Level 3		Total
		(Dollars in millions)
Foreign currency option contracts		$	—	$	1.4	$	—	$	1.4
Derivative contracts related to forecasted sales		—		(124.7)		—		(124.7)
Financial trading contracts		—		3.4		—		3.4
Equity securities		—		—		4.0		4.0
Total net (liabilities) assets		$	—	$	(119.9)	$	4.0	$	(115.9)

For Level 1 and 2 financial assets and liabilities, the Company utilizes both direct and indirect observable price quotes, including interest rate yield curves, exchange indices, broker/dealer quotes, published indices, issuer spreads, benchmark securities and other market quotes. In the case of certain debt securities, fair value is provided by a third-party pricing service. Below is a summary of the Company’s valuation techniques for Level 1 and 2 financial assets and liabilities:

•Foreign currency option contracts are valued utilizing inputs obtained in quoted public markets (Level 2) except when credit and non-performance risk is considered to be a significant input, then the Company classifies such contracts as Level 3.

•Derivative contracts related to forecasted sales and financial trading contracts are generally valued based on unadjusted quoted prices in active markets (Level 1) or a valuation that is corroborated by the use of market-based pricing (Level 2) except when credit and non-performance risk is considered to be a significant input (greater than 10% of fair value), then the Company classifies as Level 3.

•Investments in equity securities are currently based on ~~observed~~unadjusted quoted prices in ~~an inactive market~~active markets (Level 3)1).

Other Financial Instruments. The following methods and assumptions were used by the Company in estimating fair values for other financial instruments as of March 31, ~~2022~~2023 and December 31, ~~2021:~~2022:

•Cash and cash equivalents, restricted cash, accounts receivable, including those within the Company’s accounts receivable securitization program, margining cash, notes receivable and accounts payable have carrying values which approximate fair value due to the short maturity or the liquid nature of these instruments.

•Long-term debt fair value estimates are based on observed prices for securities when available (Level 2), and otherwise on estimated borrowing rates to discount the cash flows to their present value (Level 3).

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PEABODY ENERGY CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Market risk associated with the Company’s fixed- and variable-rate long-term debt relates to the potential reduction in the fair value and negative impact to future earnings, respectively, from an increase in interest rates. The fair value of debt, shown below, is principally based on reported market values and estimates based on interest rates, maturities, credit risk, underlying collateral and completed market transactions.


		March 31, 2022		December 31, 2021			March 31, 2023		December 31, 2022
		(Dollars in millions)					(Dollars in millions)
Total debt at par value	Total debt at par value	$	1,129.9	$	1,173.2	Total debt at par value	$	345.0	$	343.6
Less: Unamortized debt issuance costs and original issue discount		(31.8)		(35.4)
Less: Unamortized debt issuance costs						Less: Unamortized debt issuance costs	(9.4)		(9.8)
Net carrying amount	Net carrying amount	$	1,098.1	$	1,137.8	Net carrying amount	$	335.6	$	333.8

Estimated fair value	Estimated fair value	$	1,277.3	$	1,136.5	Estimated fair value	$	511.3	$	560.0

Generally, the Company’s Level 3 instruments or contracts are valued using bid/ask price quotations and other market assessments obtained from multiple, independent third-party brokers or other transactional data incorporated into internally-generated discounted cash flow models. Decreases in the number of third-party brokers or market liquidity could erode the quality of market information and therefore the valuation of the Company’s market positions. The Company’s valuation techniques include basis adjustments to the foregoing price inputs for quality, such as sulfur and ash content, location differentials, expressed as port and freight costs, and credit risk. The Company’s risk management function, ~~independently validates~~which is independent of the Company’s coal trading function, is responsible for valuation ~~inputs, including unobservable inputs,~~policies and procedures, with ~~third-party information~~oversight from executive management. The fair value of the Company’s coal derivative assets and ~~settlement prices from other sources where available. A daily process~~liabilities reflects adjustments for credit risk. The Company’s exposure to credit risk is ~~performed to analyze market price changes~~substantially with electric utilities, energy marketers, steel producers and changes to the portfolio. Further periodic validation occurs at the time contracts are settled with the counterparty. These valuation techniques have been consistently applied in all periods presented, and the Company believes it has obtained the most accurate information available for the types of derivative contracts held.nonfinancial trading houses.

Significant increases or decreases in the inputs in isolation could result in a significantly higher or lower fair value measurement. The unobservable inputs do not have a direct interrelationship; therefore, a change in one unobservable input would not necessarily correspond with a change in another unobservable input.

During the three months ended March 31, 2023, the entity in which the Company held a Level 3 investment in equity securities completed a merger transaction and its shares were exchanged for the shares of the newly-combined entity, which are publicly traded. The Company recorded an impairment loss of $2.0 million upon the exchange of shares, and will mark the investment to market as a Level 1 asset prospectively.

The Company had no transfers between Levels 1, 2 and 3 during the three months ended March 31, ~~2022~~2023 and ~~2021.~~2022. The Company’s policy is to value all transfers between levels using the beginning of period valuation.

~~(8)~~(6) Property, Plant, Equipment and Mine Development

The composition of property, plant, equipment and mine development, net, as of March 31, ~~2022~~2023 and December 31, ~~2021~~2022 is set forth in the table below:

March 31, 2022 December 31, 2021
(Dollars in millions)
Land and coal interests $ 2,494.1 $ 2,494.1
Buildings and improvements 590.2 550.8
Machinery and equipment 1,370.9 1,386.2
Less: Accumulated depreciation, depletion and amortization (1,551.9) (1,480.5)
Property, plant, equipment and mine development, net $ 2,903.3 $ 2,950.6

~~Asset Impairment and Other At-Risk Assets~~

The Company has identified certain assets with an aggregate carrying value of approximately $0.5 billion at March 31, 2022 in its Other U.S. Thermal Mining and Corporate and Other segments whose recoverability is most sensitive to customer demand, customer concentration risk and future economic viability. The Company conducted a review of those assets as of March 31, 2022 and determined that no impairment charges were necessary as of that date.


	March 31, 2023		December 31, 2022
	(Dollars in millions)
Land and coal interests	$	2,514.8	$	2,514.7
Buildings and improvements	617.3		594.2
Machinery and equipment	1,578.5		1,543.1
Less: Accumulated depreciation, depletion and amortization	(1,862.7)		(1,787.0)
Property, plant, equipment and mine development, net	$	2,847.9	$	2,865.0

~~(9) Leases~~

The Company has operating and finance leases for mining and non-mining equipment, office space and certain other facilities under various non-cancellable agreements. Historically, the majority of the Company’s leases have been accounted for as operating leases. Refer to Note 1. “Summary of Significant Accounting Policies” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, for the Company’s policies regarding “Leases.”

~~Table of Contents~~

~~PEABODY ENERGY CORPORATION~~

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

The Company and certain of its subsidiaries have guaranteed other subsidiaries’ performance under various lease obligations. Certain lease agreements are subject to the restrictive covenants of the Company’s credit facilities and include cross-acceleration provisions, under which the lessor could require remedies including, but not limited to, immediate recovery of the present value of any remaining lease payments. The Company typically agrees to indemnify lessors for the value of the property or equipment leased, should the property be damaged or lost during the course of the Company’s operations. The Company expects that losses with respect to leased property, if any, may be covered by insurance (subject to deductibles). Aside from indemnification of the lessor for the value of the property leased, the Company’s maximum potential obligations under its leases are equal to the respective future minimum lease payments, and the Company assumes that no amounts could be recovered from third parties.

~~The components of lease expense during the three months ended March 31, 2022 and 2021 were as follows:~~

Three Months Ended March 31,
2022 2021
(Dollars in millions)
Operating lease cost:
Operating lease cost $ 4.7 $ 6.0
Short-term lease cost 6.3 3.4
Variable lease cost 1.6 0.5
Sublease income (0.4) (0.5)
Total operating lease cost $ 12.2 $ 9.4
Finance lease cost:
Amortization of right-of-use assets $ 1.5 $ 0.6
Interest on lease liabilities 0.6 0.5
Total finance lease cost $ 2.1 $ 1.1

~~Table of Contents~~

~~PEABODY ENERGY CORPORATION~~

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~Supplemental balance sheet information related to leases at March 31, 2022 and December 31, 2021 was as follows:~~

March 31, 2022 December 31, 2021
(Dollars in millions)
Operating leases:
Operating lease right-of-use assets $ 33.0 $ 35.5
Accounts payable and accrued expenses $ 16.1 $ 16.4
Operating lease liabilities, less current portion 24.6 27.2
Total operating lease liabilities $ 40.7 $ 43.6
Finance leases:
Property, plant, equipment and mine development $ 32.4 $ 32.2
Accumulated depreciation (9.0) (7.4)
Property, plant, equipment and mine development, net $ 23.4 $ 24.8
Current portion of long-term debt $ 15.0 $ 15.3
Long-term debt, less current portion 12.6 14.0
Total finance lease liabilities $ 27.6 $ 29.3
Weighted average remaining lease term (years)
Operating leases 2.9
Finance leases 6.7
Weighted average discount rate
Operating leases 7.0 %
Finance leases 8.2 %

~~Supplemental cash flow information related to leases during the three months ended March 31, 2022 and 2021 was as follows:~~

Three Months Ended March 31,
2022 2021
(Dollars in millions)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases $ 5.9 $ 8.3
Operating cash flows for finance leases 0.6 0.7
Financing cash flows for finance leases 2.2 1.3
Right-of-use assets obtained in exchange for lease obligations:
Operating leases 1.6 3.1
Finance leases — 3.6

~~Table of Contents~~

~~PEABODY ENERGY CORPORATION~~

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

The Company's leases have remaining lease terms ranging from less than 1 year to 19.8 years, and may include options to extend the terms, as applicable. The contractual maturities of lease liabilities were as follows:

Period Ending December 31, Operating Leases Finance Leases
(Dollars in millions)
2022 $ 13.7 $ 8.7
2023 17.6 6.0
2024 6.3 5.1
2025 3.6 4.9
2026 3.6 2.5
2027 and thereafter 0.8 7.2
Total lease payments 45.6 34.4
Less imputed interest (4.9) (6.8)
Total lease liabilities $ 40.7 $ 27.6

~~(10)~~(7) Income Taxes

The Company's effective tax rate before remeasurement for the three months ended March 31, ~~2022~~2023 is based on the Company’s estimated full year effective tax rate, comprised of expected statutory tax provision, offset by foreign rate differential and changes in valuation allowance. The Company’s income tax provision of $118.0 million and income tax benefit of $1.0 ~~million and $1.8~~ million for the three months ended March 31, ~~2022~~2023 and ~~2021,~~2022, respectively, included a tax ~~provision~~provisions of ~~$1.6~~$0.4 million and ~~a tax benefit of $0.2~~$1.6 million, respectively, related to the remeasurement of foreign income tax accounts.

~~(11) Long-term Debt~~

The Company’s ~~total funded indebtedness (Indebtedness) as of March 31, 2022 and December 31, 2021 consisted of the following:~~

Debt Instrument (defined below, as applicable) March 31, 2022 December 31, 2021
(Dollars in millions)
6.000% Senior Secured Notes due March 2022 (2022 Notes) $ — $ 23.1
8.500% Senior Secured Notes due December 2024 (2024 Peabody Notes) — 62.6
10.000% Senior Secured Notes due December 2024 (2024 Co-Issuer Notes) 193.6 193.9
Senior Secured Term Loan due 2024 (Co-Issuer Term Loans) 188.8 206.0
6.375% Senior Secured Notes due March 2025 (2025 Notes) 77.5 334.9
Senior Secured Term Loan due 2025, net of original issue discount (Senior Secured Term Loan) 321.8 322.8
3.250% Convertible Senior Notes due March 2028 (2028 Convertible Notes) 320.0 —
Finance lease obligations 27.6 29.3
Less: Debt issuance costs (31.2) (34.8)
1,098.1 1,137.8
Less: Current portion of long-term debt 19.1 59.6
Long-term debt $ 1,079.0 $ 1,078.2

~~2021 Financing Activity~~

~~During the first quarter of 2021, the Company completed a series of transactions~~estimated full year pretax income is expected to among other things, provide the Company with maturity extensions and covenant relief, while allowing it to maintain near-term operating liquidity and financial flexibility. These transactions included a senior notes exchange and related consent solicitation, a revolving credit facility exchange, various amendments to the Company’s existing debt agreements, and completion of a related surety transaction support agreement with the Company’s surety bond providers.be primarily generated in Australia.

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PEABODY ENERGY CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

~~Subsequent to these transactions in the first quarter~~(8) Long-term Debt

The Company’s total indebtedness as of 2021, the Company completed additional financing transactions during 2021 intended to improve its capital structure. Such transactions included the implementation of an at-the-market equity offering program pursuant to which the Company sold approximately 24.8 million shares of common stock for net cash proceeds of $269.8 million, the retirement of $270.9 million principal amount of existing debt through various open market purchases at an aggregate cost of $232.4 million,March 31, 2023 and the issuance of an aggregate 10.0 million shares of common stock in exchange for an additional $106.1 million principal amount of existing debt through multiple bilateral transactions with debt holders.

~~In the event of allowable open market purchases of its debt, the terms~~December 31, 2022 consisted of the 2024 Peabody Notes and the letter of credit facility entered into by the Company in connection with the 2021 financing activity (Company LC Agreement) require the Company to make a mandatory repurchase offer to those debt and lien holders. In general, the repurchase offers equate to 25% of the principal amount of priority lien debt repurchased in the preceding quarter at a price equal to the weighted average repurchase price paid over that quarter. The open market debt repurchases completed during the three months ended December 31, 2021 necessitated a mandatory repurchase offer of up to $38.6 million of 2024 Peabody Notes, at 94.940% of their aggregate accreted value, plus accrued and unpaid interest, and a concurrent repurchase offer of priority lien obligations under the Company LC Agreement. The offer resulted in the valid tender and purchase of $0.1 million aggregate accreted value of 2024 Peabody Notes and $30.0 million aggregate principal and commitment amounts under the Company LC Agreement during the three months ended March 31, 2022. The Company’s purchase of the principal and commitment amounts under the Company LC Agreement was effected by the posting of $28.5 million of collateral with the administrative agent and did not reduce the availability under the facility. following:


Debt Instrument (defined below, as applicable)	March 31, 2023		December 31, 2022
	(Dollars in millions)






3.250% Convertible Senior Notes due March 2028 (2028 Convertible Notes)	$	320.0	$	320.0


Finance lease obligations	25.0		23.6
Less: Debt issuance costs	(9.4)		(9.8)
	335.6		333.8
Less: Current portion of long-term debt	13.2		13.2
Long-term debt	$	322.4	$	320.6

During ~~the three months ended March 31,~~ 2022, the Company ~~made no other open market purchases~~utilized various methods allowable or required under its then-existing debt agreements to retire all of its ~~debt.~~

The 2024 Co-Issuer Notes and the Co-Issuer Term Loans are also subject to mandatory prepayment offers at the end of each six-month period, beginning with June 30, 2021, whereby the Excess Cash Flow (as defined in the 2024 Co-Issuer Notes indenture) generated by the Wilpinjong Mine during each such period will be applied to the principal of such notes and loans on a pro rata basis, provided that the liquidity attributable to the Wilpinjong Mine would not fall below $60.0 million. Such prepayments may be accepted or declined at the option of thesenior secured long-term debt, holders. Based upon the Wilpinjong Mine’s results for the six-month period ended December 31, 2021, a required offer to prepay $105.6 million of total principal resulted in the prepayment of $17.2 million of Co-Issuer Term Loans principal, $0.3 million of 2024 Co-Issuer Notes principal, and a related loss on early debt extinguishment of $0.5 million during the three months ended March 31, 2022.

The 2021 financing activity and related agreements are more fully described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, as filed with the U.S. Securities and Exchange Commission on February 18, 2022.

leaving only its unsecured 3.250% Convertible Senior Notes due 2028 (the 2028 Convertible Notes), which are further described below, and various finance lease obligations outstanding at December 31, 2022.

2028 Convertible Notes

On March 1, 2022, through a private offering, the Company issued ~~$320.0 million~~the 2028 Convertible Notes in the aggregate principal amount of ~~3.250% Convertible Senior Notes due 2028 (the 2028 Convertible Notes).~~$320.0 million. The 2028 Convertible Notes are senior unsecured obligations of the Company and are governed under an indenture.

The Company used the proceeds of the offering of the 2028 Convertible Notes and available cash to redeem ~~the remaining~~ $62.6 million of ~~its outstanding~~senior secured notes maturing in 2024 ~~Peabody Notes~~ and ~~together with available cash, approximately~~ $257.4 million of ~~its outstanding~~senior secured notes maturing in 2025, ~~Notes,~~ and to pay related premiums, fees and expenses relating to the offering ~~of the 2028 Convertible Notes~~ and ~~the~~ redemptions. ~~The redemption of existing notes was deemed a debt extinguishment for accounting purposes.~~ The Company capitalized $11.2 million of debt issuance costs related to the offering and recognized a loss on early debt extinguishment of $23.0 million during the three months ended March 31, 2022.

The 2028 Convertible Notes will mature on March 1, 2028, unless earlier converted, redeemed or repurchased in accordance with their terms. The 2028 Convertible Notes will bear interest from March 1, 2022 at a rate of 3.250% per year payable semi-annually in arrears on March 1 and September 1 of each year, beginning on September 1, 2022.

During the ~~three months ended~~first quarter of 2023, the Company’s reported common stock prices did not prompt the conversion feature of the 2028 Convertible Notes. As a result, the 2028 Convertible Notes are not convertible at the option of the holders during the second quarter of 2023.

As of March 31, ~~2022,~~2023, the ~~Company incurred~~if-converted value of the 2028 Convertible Notes exceeded the principal amount by $92.6 million.

Interest Charges

The following table presents the components of the Company’s interest expense related to its indebtedness and financial assurance instruments such as surety bonds and letters of ~~$1.0 million~~credit. Additionally, the table sets forth the amount of cash paid for interest and the amount of non-cash interest expense primarily related to the ~~2028 Convertible Notes.~~amortization of debt issuance costs.


	Three Months Ended March 31,
		2023		2022
		(Dollars in millions)
Indebtedness		$	6.4	$	25.9
Financial assurance instruments		12.0		13.5
Interest expense		$	18.4	$	39.4

Cash paid for interest		$	19.1	$	37.2
Non-cash interest expense		$	1.6	$	3.8

1914

Table of Contents

PEABODY ENERGY CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The 2028 Convertible Notes will be convertible at the option of the holders only in the following circumstances: (1) during any calendar quarter commencing after the calendar quarter ending on June 30, 2022, if the last reported sale price per share of the Company’s common stock exceeds 130% of the conversion price for each of at least 20 trading days during the 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter; (2) during the five consecutive business days immediately after any five consecutive trading day period (such five consecutive trading day period, the Measurement Period) in which the trading price per $1,000 principal amount of 2028 Convertible Notes for each trading day of the Measurement Period was less than 98% of the product of the last reported sale price per share of the Company’s common stock on such trading day and the conversion rate on such trading day; (3) upon the occurrence of certain corporate events or distributions on the Company’s common stock; (4) if the Company calls any 2028 Convertible Notes for redemption; and (5) at any time from, and including, September 1, 2027 until the close of business on the second scheduled trading day immediately before the maturity date.

Upon conversion, the Company may satisfy its conversion obligation by paying or delivering, as applicable, cash, shares of the Company’s common stock or a combination of cash and shares of the Company’s common stock, at the Company’s election, in the manner and subject to the terms and conditions provided in the indenture. The initial conversion rate for the 2028 Convertible Notes will be 50.3816 shares of the Company’s common stock per $1,000 principal amount of 2028 Convertible Notes, which represents an initial conversion price of approximately $19.85 per share of the Company’s common stock. The initial conversion price represents a premium of approximately 32.5% to the $14.98 per share closing price of the Company’s common stock on February 24, 2022. The conversion rate is subject to adjustment under certain circumstances in accordance with the terms of the indenture. If certain corporate events described in the indenture occur prior to the maturity date, or the Company delivers a notice of redemption (as described below), the conversion rate will be increased for a holder who elects to convert its 2028 Convertible Notes in connection with such corporate event or notice of redemption, as the case may be, in certain circumstances.

The Company may not redeem the 2028 Convertible Notes prior to March 1, 2025. The Company may redeem for cash all or any portion of the 2028 Convertible Notes, at its option, on or after March 1, 2025 and on or before the 40th scheduled trading day immediately before the maturity date, at a cash redemption price equal to 100% of the principal amount of the 2028 Convertible Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date, but only if the last reported sale price per share of the Company’s common stock exceeds 130% of the conversion price on (1) each of at least 20 trading days, whether or not consecutive, during the 30 consecutive trading days ending on, and including, the trading day immediately before the date the Company sends the related redemption notice; and (2) the trading day immediately before the date the Company sends such notice. However, the Company may not redeem less than all of the outstanding 2028 Convertible Notes unless at least $75 million aggregate principal amount of 2028 Convertible Notes are outstanding and not called for redemption as of the time the Company sends the related redemption notice. No sinking fund is provided for the 2028 Convertible Notes.

If the Company undergoes a fundamental change (as defined in the indenture), noteholders may require the Company to repurchase their 2028 Convertible Notes at a cash repurchase price equal to 100% of the principal amount of the 2028 Convertible Notes to be repurchased, plus accrued and unpaid interest, if any, to, but excluding, the fundamental change repurchase date.

~~Margin Financing Arrangement~~

On March 7, 2022, the Company entered into a credit agreement, by and among the Company, as borrower, Goldman Sachs Lending Partners LLC, as administrative agent, and the lenders party thereto (the Credit Agreement). The Credit Agreement provides for a $150 million unsecured revolving credit facility (the Revolving Facility), which will mature on April 1, 2025 and bears interest at a rate of 10.0% per annum on drawn amounts.

The Revolving Facility is intended to support the Company’s near-term liquidity requirements, particularly with respect to the cash margin requirements associated with the Company’s coal derivative contracts, which fluctuate depending upon underlying market coal prices.

Concurrently with the Credit Agreement, the Company entered into an agreement with Goldman Sachs & Company LLC to act as sales agent for at-the-market equity offerings of up to $225.0 million of the Company’s common stock.

During the three months ended March 31, 2022, the Company borrowed and repaid $225.0 million under the Revolving Facility using net proceeds of $222.0 million from at-the-market issuances of 10.1 million shares of common stock and available cash. The equity offering agreement limit was reached as a result of these issuances and may not be further utilized without amendment and approval by the sales agent. The Company had no outstanding borrowings and no availability under the Revolving Facility at March 31, 2022.

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~~PEABODY ENERGY CORPORATION~~

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

The Credit Agreement contains customary covenants that, among other things, limit the Company’s and its subsidiaries’ ability to incur additional indebtedness, pay dividends on or make distributions in respect of capital stock or make certain other restricted payments or investments, enter into agreements that restrict distributions from subsidiaries, sell or otherwise dispose of assets, enter into transactions with affiliates, create or incur liens, and merge, consolidate or sell all or substantially all of their assets.

Borrowings under the Revolving Facility are unconditionally guaranteed, jointly and severally, on a senior unsecured basis by substantially all of the Company’s material domestic subsidiaries (excluding any unrestricted subsidiaries).

~~Retirement of 2022 Notes~~

~~On March 31, 2022, the Company retired the remaining principal balance of 2022 Notes upon maturity for $23.1 million.~~

~~Interest Charges~~

The Company incurred total interest expense of $39.4 million and $52.4 million during the three months ended March 31, 2022 and 2021, respectively. These amounts included $13.5 million and $10.9 million, respectively, related to financial assurance instruments such as surety bonds and letters of credit, with the remainder primarily related to the Company’s funded debt.

Of total interest expense incurred during the three months ended March 31, 2022 and 2021, $3.8 million and $4.9 million, respectively, was comprised of non-cash charges primarily related to the amortization of debt issuance costs.

~~Cash payments for interest amounted to $37.2 million and $56.3 million during the three months ended March 31, 2022 and 2021, respectively.~~

~~The Senior Secured Term Loan is the Company’s only outstanding variable rate debt, which bore interest at LIBOR plus 2.75% per annum at March 31, 2022.~~

Covenant Compliance

The Company was compliant with all relevant covenants under its debt and other finance agreements at March 31, ~~2022, including the minimum aggregate liquidity requirement under the Company LC Agreement which requires~~2023. The April 2023 termination of the Company’s ~~restricted subsidiaries to maintain minimum aggregate liquidity~~credit agreement and related letter of ~~$125.0 million at~~credit facility, as described in Note 11. “Financial Instruments and Other Guarantees,” eliminated the ~~end~~related compliance requirements as of ~~each quarter through December~~March 31, ~~2024.~~

~~Finance Lease Obligations~~

~~Refer to Note 9. “Leases” for additional information associated with the Company’s finance leases, which pertain to the financing of mining equipment used in operations.~~2023 and prospectively.

~~(12)~~(9) Pension and Postretirement Benefit Costs

The components of net periodic pension and postretirement benefit costs, excluding the service cost for benefits earned, are included in “Net periodic benefit credit, excluding service cost” in the unaudited condensed consolidated statements of operations.

Net periodic pension ~~credit~~cost (credit) included the following components:

Three Months Ended March 31,
2022 2021
(Dollars in millions)
Interest cost on projected benefit obligation $ 5.3 $ 5.1
Expected return on plan assets (5.9) (5.7)
Net periodic pension credit $ (0.6) $ (0.6)

~~Table of Contents~~

~~PEABODY ENERGY CORPORATION~~

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~


	Three Months Ended March 31,
		2023		2022
		(Dollars in millions)

Interest cost on projected benefit obligation		$	7.4	$	5.3
Expected return on plan assets		(6.6)		(5.9)

Net periodic pension cost (credit)		$	0.8	$	(0.6)

Annual contributions to the qualified plans are made in accordance with minimum funding standards and the Company’s agreement with the Pension Benefit Guaranty Corporation. Funding decisions also consider certain funded status thresholds defined by the Pension Protection Act of 2006 (generally 80%). As of March 31, ~~2022,~~2023, the Company’s qualified plans were expected to be at or above the Pension Protection Act thresholds. The Company is not required to make any contributions to its qualified pension plans in ~~2022~~2023 based on minimum funding requirements and does not expect to make any discretionary contributions in ~~2022~~2023 at this time.

In March 2022, Peabody Investments Corp. (PIC), a ~~wholly owned~~wholly-owned subsidiary of ~~the Company,~~PEC, entered into a commitment agreement relating to the Peabody Investments Corp. Retirement Plan (the Peabody Plan) with The Prudential Insurance Company of America (Prudential) and Fiduciary Counselors Inc., as independent fiduciary to the Peabody Plan. Under the commitment agreement, the Peabody Plan purchased a buy-in group annuity contract ~~(Group Annuity Contract)~~(GAC) from Prudential for approximately $500 million and Prudential will reimburse the Peabody Plan for ~~future~~ benefit payments to be made to the Peabody Plan’s participants. ~~Under~~The benefit obligation was not transferred to Prudential and the ~~terms of this transaction, the~~Peabody Plan ~~will continue~~continues to administer and pay the retirement benefits of Peabody Plan participants ~~but will be~~and is reimbursed by Prudential for the payment of all benefits covered by the ~~Group Annuity Contract.~~GAC. The purchase of the ~~Group Annuity Contract~~GAC was funded directly by the Peabody Plan’s assets. There ~~will be~~was no impact on the monthly retirement benefits paid to Peabody Plan ~~participants. In addition, there will be~~participants and no material impact on ~~discretionary~~ contributions for the Peabody Plan in 2022 or ~~on the Company’s earnings in 2022~~2023 as a result of this transaction.

In May 2022, the Board of Directors of PIC approved the termination of the Peabody Plan effective July 31, 2022. In June 2022, the Peabody Plan’s participants were notified of the Peabody Plan termination and the Peabody Plan filed an application with the Internal Revenue Service to request a determination as to the qualified status under §401(a) of the Internal Revenue Code of 1986 with respect to the amendment and termination of the Peabody Plan.

In February 2023, as part of the Peabody Plan termination process, the Company announced a program to offer a voluntary lump-sum pension payout to certain active and deferred participants of the Peabody Plan which would fully settle the Peabody Plan’s obligation to them. The program provided participants with a limited-time opportunity to elect to receive a lump-sum settlement of their pension benefit or begin to receive their benefit in the form of a monthly annuity in May 2023. Participants not electing the lump-sum settlement or annuity options will have their pension benefit transferred to a highly qualified insurance company. Through May 1, 2023, the Company settled $21.5 million of its pension obligations for active and deferred participants in the Peabody Plan with an equal amount paid from plan assets.

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PEABODY ENERGY CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Net periodic postretirement benefit credit included the following components:

Three Months Ended March 31,
2022 2021
(Dollars in millions)
Service cost for benefits earned $ 0.2 $ 0.2
Interest cost on accumulated postretirement benefit obligation 1.7 2.9
Expected return on plan assets (0.2) (0.2)
Amortization of prior service credit (13.4) (11.0)
Net periodic postretirement benefit credit $ (11.7) $ (8.1)

In October 2021, the Company announced changes to its postretirement health care benefit plan for certain represented retirees which reduced its accumulated postretirement benefit obligation, as further described in Note 14. “Postretirement Health Care and Life Insurance Benefits” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021. The reduction in liability was recorded with an offsetting balance in “Accumulated other comprehensive income” and is being amortized to earnings.


	Three Months Ended March 31,
		2023		2022
		(Dollars in millions)
Service cost for benefits earned		$	0.1	$	0.2
Interest cost on accumulated postretirement benefit obligation		2.5		1.7
Expected return on plan assets		(0.1)		(0.2)
Amortization of prior service credit		(13.4)		(13.4)

Net periodic postretirement benefit credit		$	(10.9)	$	(11.7)

The Company has established a Voluntary ~~Employees~~Employees’ Beneficiary Association (VEBA) trust to pre-fund a portion of benefits for non-represented retirees. The Company does not expect to make any discretionary contributions to the VEBA trust in ~~2022~~2023 and plans to utilize a portion of VEBA assets to make certain benefit payments.

~~(13) Accumulated Other Comprehensive Income~~

~~The following table sets forth the after-tax components of accumulated other comprehensive income and changes thereto recorded during the three months ended March 31, 2022:~~

Foreign Currency Translation
Adjustment Prior Service
Credit Associated
with
Postretirement
Plans Total Accumulated Other Comprehensive Income
(Dollars in millions)
December 31, 2021 $ 0.8 $ 297.1 $ 297.9
Reclassification from other comprehensive income to earnings — (13.4) (13.4)
Current period change 1.9 — 1.9
March 31, 2022 $ 2.7 $ 283.7 $ 286.4

~~Postretirement health care and life insurance benefits reclassified from other comprehensive income to earnings of $13.4 million and $11.0 million du~~ring the three months ended March 31, 2022 and 2021, respectively, are included in “Net periodic benefit credit, excluding service cost” in the unaudited condensed consolidated statements of operations.

~~Table of Contents~~

~~PEABODY ENERGY CORPORATION~~

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(14)~~(10) Earnings per Share (EPS)

Basic EPS is computed based on the weighted average number of shares of common stock outstanding during the period. Diluted EPS is computed based on the weighted average number of shares of common stock plus the effect of dilutive potential common shares outstanding. As such, the Company includes the 2028 Convertible Notes and share-based compensation awards in its potentially dilutive securities. ~~Dilutive~~Generally, dilutive securities are not included in the computation of loss per share when a company reports a net loss from continuing operations as the impact would be anti-dilutive.

For all but performance units, the potentially dilutive impact of the Company’s share-based compensation awards is determined using the treasury stock method. Under the treasury stock method, awards are treated as if they had been exercised with any proceeds used to repurchase common stock at the average market price during the period. Any incremental difference between the assumed number of shares issued and purchased is included in the diluted share computation. For performance units, their contingent features result in an assessment for any potentially dilutive common stock by using the end of the reporting period as if it were the end of the contingency period for all units granted.

A conversion of the 2028 Convertible Notes may result in payment in the Company’s common stock. For diluted EPS purposes, the potentially dilutive common stock is assumed to have been converted at the beginning of the period (or at the time of issuance, if later). Since the 2028 Convertible Notes were issued on March 1, 2022, there were approximately 5.5 million shares of potentially dilutive common stock for the three months ended March 31, 2022. These potentially dilutive shares were excluded from the computation of diluted EPS for the three months ended March 31, 2022, because to do so would have been anti-dilutive as the Company reported a net loss from continuing operations during the period. In periods where the potentially dilutive common stock is included in the computation of diluted EPS, the numerator will be adjusted to add back tax adjusted interest expense related to the convertible debt.

The computation of diluted EPS excluded aggregate share-based compensation awards of ~~approximately 1.2~~less than 0.1 million and ~~1.3~~approximately 1.2 million for the three months ended March 31, ~~2022~~2023 and ~~2021,~~2022, respectively, because to do so would have been anti-dilutive for those periods. Because the potential dilutive impact of such share-based compensation awards is calculated under the treasury stock method, anti-dilution generally occurs when the exercise prices or unrecognized compensation cost per share of such awards are higher than the Company’s average stock price during the applicable period. Anti-dilution also occurs when a company reports a net loss from continuing operations, and the dilutive impact of all share-based compensation awards are excluded accordingly.

~~The following illustrates the earnings allocation method utilized in the calculation of basic and diluted EPS.~~

Three Months Ended March 31,
2022 2021
(In millions, except per share data)
EPS numerator:
Loss from continuing operations, net of income taxes $ (119.8) $ (77.7)
Less: Net (loss) income attributable to noncontrolling interests (1.1) 0.4
Loss from continuing operations attributable to common stockholders (118.7) (78.1)
Loss from discontinued operations, net of income taxes (0.8) (2.0)
Net loss attributable to common stockholders $ (119.5) $ (80.1)
EPS denominator:
Weighted average shares outstanding — basic and diluted 136.2 98.4
Basic and diluted EPS attributable to common stockholders:
Loss from continuing operations $ (0.87) $ (0.79)
Loss from discontinued operations (0.01) (0.02)
Net loss attributable to common stockholders $ (0.88) $ (0.81)

2316

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PEABODY ENERGY CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

~~(15)~~The following illustrates the earnings allocation method utilized in the calculation of basic and diluted EPS.


	Three Months Ended March 31,
		2023		2022
		(In millions, except per share data)
Basic EPS numerator:
Income (loss) from continuing operations, net of income taxes		$	284.1	$	(119.8)
Less: Net income (loss) attributable to noncontrolling interests		14.3		(1.1)
Income (loss) from continuing operations attributable to common stockholders		269.8		(118.7)


Loss from discontinued operations, net of income taxes		(1.3)		(0.8)


Net income (loss) attributable to common stockholders		$	268.5	$	(119.5)

Diluted EPS numerator:
Income (loss) from continuing operations, net of income taxes		$	284.1	$	(119.8)
Add: Tax adjusted interest expense related to 2028 Convertible Notes		2.6		—
Less: Net income (loss) attributable to noncontrolling interests		14.3		(1.1)
Income (loss) from continuing operations attributable to common stockholders		272.4		(118.7)
Loss from discontinued operations, net of income taxes		(1.3)		(0.8)
Net income (loss) attributable to common stockholders		$	271.1	$	(119.5)

EPS denominator:
Weighted average shares outstanding — basic		144.6		136.2
Dilutive impact of share-based compensation awards		0.7		—
Dilutive impact of 2028 Convertible Notes		16.1		—
Weighted average shares outstanding — diluted		161.4		136.2

Basic EPS attributable to common stockholders:
Income (loss) from continuing operations		$	1.87	$	(0.87)
Loss from discontinued operations		(0.01)		(0.01)
Net income (loss) attributable to common stockholders		$	1.86	$	(0.88)

Diluted EPS attributable to common stockholders:
Income (loss) from continuing operations		$	1.69	$	(0.87)
Loss from discontinued operations		(0.01)		(0.01)
Net income (loss) attributable to common stockholders		$	1.68	$	(0.88)

(11) Financial Instruments and Other Guarantees

~~The~~In the normal course of business, the Company is a party to various guarantees and financial instruments that carry off-balance-sheet risk and are not reflected in the accompanying condensed consolidated balance sheets. ~~At March 31, 2022, such instruments~~ ~~included $1,484.9 million of surety bonds and $469.1 million of letters of credit.~~ Such financial instruments provide support for the Company’s reclamation bonding requirements, lease obligations, insurance policies and various other performance guarantees. The Company periodically evaluates the instruments for ~~on-balance sheet~~on-balance-sheet treatment based on the amount of exposure under the instrument and the likelihood of required performance. The Company does not expect any material losses to result from these guarantees or off-balance-sheet instruments in excess of liabilities provided for in the accompanying condensed consolidated balance sheets.

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PEABODY ENERGY CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The following table summarizes the Company’s financial instruments that carry off-balance-sheet risk.


	March 31, 2023						December 31, 2022
	Reclamation Support		Other Support (1)		Total		Reclamation Support		Other Support (1)		Total
	(Dollars in millions)
Surety bonds	$	1,236.4	$	152.1	$	1,388.5	$	1,250.1	$	126.7	$	1,376.8
Letters of credit (2)	22.4		67.0		89.4		437.8		131.8		569.6
	1,258.8		219.1		1,477.9		1,687.9		258.5		1,946.4
Less: Letters of credit in support of surety bonds (3)	(22.4)		(5.4)		(27.8)		(431.7)		(37.2)		(468.9)
Obligations supported, net	$	1,236.4	$	213.7	$	1,450.1	$	1,256.2	$	221.3	$	1,477.5

(1) Instruments support obligations related to pension and health care plans, workers’ compensation, property and casualty insurance, customer and vendor contracts, and certain restoration ancillary to prior mining activities.

(2) March 31, 2023 balances exclude $223.8 million of letters of credit outstanding under the LC Facility and $101.3 million of letters of credit outstanding under the Company’s accounts receivable securitization program that were cancelled by April 14, 2023. The collateral obligations related to such letters of credit were met by the March 31, 2023 funding of collateral trust accounts in connection with the surety agreement amendment described below. Amounts do not include cash collateralized letters of credit.

(3) Certain letters of credit serve as collateral for surety bonds at the request of surety bond providers.

Surety Agreement Amendment and Collateral Requirements

In ~~November 2020,~~April 2023, the Company ~~entered into a surety~~amended its existing agreement with the providers of its surety bond portfolio, ~~to resolve previous collateral demands. In accordance with~~dated November 6, 2020. Under the ~~surety~~ agreement, the Company ~~initially provided $75.0~~was required to post collateral on a periodic basis through December 31, 2025. Prior to the April 2023 amendment, the Company had posted cumulative collateral of $557.8 million, ~~of collateral,~~primarily in the form of letters of credit.

Under the April 2023 amendment, the Company and surety providers agreed to a maximum aggregate collateral amount of $721.8 million based upon bonding levels at the effective date of the amendment. This maximum collateral amount represents a negotiated increase from the uncapped cumulative collateral amount prior to the amendment and may vary prospectively as future bonding levels increase or decrease. The amendment also removes restrictions on the payment of dividends and share repurchases, and extends the agreement through December 31, 2026. In order to maintain the new maximum collateral standstill, the Company must remain compliant with a minimum liquidity test and a maximum net leverage ratio, as measured each quarter. The minimum liquidity test requires the Company to maintain liquidity at the greater of $400 million or the difference between the penal sum of all surety bonds and the amount of collateral posted in favor of surety providers. The Company ~~subsequently~~must also maintain a maximum net leverage ratio of 1.5 to 1.0, where the numerator consists of its funded debt, net of cash, and the denominator consists of its Adjusted EBITDA for the trailing twelve months. For purposes of calculating the ratio, only 50% of the outstanding principal amount of the Company’s 2028 Convertible Notes is deemed to be funded debt. The Company’s ability to pay dividends and make share repurchases is also subject to the quarterly minimum liquidity test. Such compliance requirements will commence for the second quarter of 2023. The Company granted second liens on $200.0 million of ~~certain~~ mining equipment ~~and is further required to post an additional $25.0~~under the original agreement, which remain in force under the April 2023 amendment.

To fund the maximum collateral amount, the Company deposited $566.3 million ~~of collateral per year from 2021 through 2024~~into trust accounts for the benefit of ~~the~~certain surety ~~providers.~~providers on March 31, 2023. The ~~collateral postings further increase to the extent~~remainder was comprised of $140.5 million of existing cash-collateralized letters of credit and $15.0 million already held on behalf of a surety provider. The amendment became effective on April 14, 2023, when the Company ~~generates more than $100.0~~terminated a credit agreement which, as amended, provided for $237.2 million of ~~free cash flow (as defined in the surety agreement) in any twelve-month period or has cumulative asset sales in excess~~capacity for irrevocable standby letters of ~~$10.0~~credit (LC Facility). The $223.8 million as of the last quarter end during the term of the agreement. Based upon the Company’s free cash flow for the year ended December 31, 2021, additional collateral of $13.0 million was posted in January 2022 in the form of letters of ~~credit. No such additional collateral was required for~~credit that were outstanding under the ~~period ended~~LC Facility at March 31, ~~2022.~~

~~Reclamation Bonding~~

~~The Company is required to provide various forms~~2023 were subsequently cancelled and, in certain cases, replaced by cash-collateralized letters of ~~financial assurance in support of its mining reclamation obligations in the jurisdictions in which it operates. Such requirements are typically established by statute~~credit or ~~under mining permits.~~

~~At March 31, 2022, the Company’s asset retirement obligations of $724.5 million were supported by surety bonds of $1,312.1 million, as well as~~ letters of credit issued under the Company’s ~~receivables~~accounts receivable securitization ~~program~~program.

LC Facility

The now-terminated LC Facility had an original capacity of $324.0 million and was subsequently amended at various dates to reduce its capacity and effect certain other changes, including in February 2023 to reduce capacity by $65.0 million, accelerate the expiration date to December 31, 2023 from December 31, 2024, and eliminate the prepayment premium due upon any reduction of commitments thereunder prior to July 29, 2023. The Company ~~LC Agreement. Letters~~recorded early debt extinguishment losses of $6.8 million during the three months ended March 31, 2023, primarily as a result of the February 2023 amendment.

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PEABODY ENERGY CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Prior to its termination, undrawn letters of credit ~~issued~~under the LC Facility bore interest at ~~March 31, 2022 which served as collateral for surety bonds in support of asset retirement obligations amounted~~6.00% per annum and unused commitments were subject to ~~$340.0 million.~~a 0.50% per annum commitment fee.

Accounts Receivable Securitization

~~The~~In 2017, the Company entered into the Sixth Amended and Restated Receivables Purchase Agreement, as amended ~~dated as of April 3, 2017~~from time to time (the Receivables Purchase ~~Agreement) to extend the Company’s receivables securitization facility previously in place and expand that facility to include certain receivables from the Company’s Australian operations.~~Agreement.) The receivables securitization program authorized under the agreement (Securitization Program) is subject to customary events of ~~default set forth in the Receivables Purchase Agreement.~~default. The Receivables Purchase Agreement was amended in ~~January 2022~~February 2023 to ~~extend the Securitization Program to January 2025, reduce~~increase the available funding capacity from ~~$250.0~~$175.0 million to ~~$175.0~~$225.0 million and ~~amend~~adjust the relevant ~~borrowing~~interest rate ~~from~~for borrowings to a ~~LIBOR-based~~secured overnight financing rate ~~to one based on Bloomberg’s Short-Term Bank Yield Index (BSBY)~~(SOFR). Such funding is accounted for as a secured borrowing, limited to the availability of eligible receivables, and may be secured by a combination of collateral and the trade receivables underlying the ~~program, from time to time.~~program. Funding capacity under the Securitization Program may also be utilized for letters of credit in support of other ~~obligations.~~obligations, which has been the Company’s primary utilization.

Borrowings under the Securitization Program bear interest at ~~BSBY~~SOFR plus 2.1% per annum and remain outstanding throughout the term of the agreement, subject to the Company maintaining sufficient eligible receivables.

At March 31, ~~2022,~~2023, the Company had no outstanding borrowings and ~~$161.8~~$190.7 million of letters of credit ~~issued~~outstanding under the Securitization ~~Program. The letters of credit were~~Program, primarily in support of reclamation obligations. Availability under the Securitization Program, which is adjusted for certain ineligible receivables, was ~~$1.6~~$15.3 million at March 31, ~~2022.~~2023. The Company was not required to post cash collateral under the Securitization Program ~~of $24.7 million~~ at March 31, ~~2022~~2023. By April 14, 2023, $101.3 million of letters of credit outstanding under the Securitization Program were cancelled in connection with the surety agreement amendment and ~~none at December 31, 2021.~~related trust accounts described above.

The Company incurred interest and fees associated with the Securitization Program of ~~$0.9~~$1.0 million and ~~$0.7~~$0.9 million during the three months ended March 31, ~~2022~~2023 and ~~2021,~~2022, respectively, which have been recorded as “Interest expense” in the accompanying unaudited condensed consolidated statements of operations.

~~Table of Contents~~

~~PEABODY ENERGY CORPORATION~~

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

Collateralized Letter of Credit Agreement

In February 2022, the Company entered into ~~a new~~an agreement which provides up to $250.0 million of capacity for irrevocable standby letters of credit, inprimarily to support of reclamation ~~bonding.~~bonding requirements. The agreement requires the Company to provide cash collateral at a level of 103% of the aggregate amount of letters of credit outstanding under the arrangement (limited to $5.0 million total excess collateralization.) Outstanding letters of credit bear a fixed fee in the amount of 0.75% per annum. The Company receives a variable deposit rate ~~of 0.35% per annum~~ on the amount of cash collateral posted in support of letters of ~~credit, with the rate subject to increases over time.~~credit. The agreement has an initial expiration date of December 31, 2025. At March 31, 2023, letters of credit of $245.3 million were outstanding under the agreement, which were collateralized by cash of approximately $250.0 million.

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PEABODY ENERGY CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Restricted Cash and Collateral

The following table summarizes the Company’s “Restricted cash and collateral” in the accompanying condensed consolidated balance sheets. Restricted cash balances are held in controlled accounts with minimum balance requirements; withdrawals are subject to the approval of account beneficiaries, such as the Company’s surety providers, who have perfected security interests in the funds. The Company’s other collateral generally includes deposits held by regulatory authorities or financial institutions over which the Company has no control or ability to access.


	March 31, 2023		December 31, 2022
	(Dollars in millions)
Restricted cash (1)
Surety trust accounts (2)	$	566.3	$	—
Collateralized letters of credit funding (2)	247.9		110.3
	814.2		110.3
Other collateral (1)
Deposits with regulatory authorities for reclamation and other obligations	78.4		33.6
LC Facility (3)	29.1		28.5
Deposit held on behalf of surety	15.0		15.0
	122.5		77.1
Restricted cash and collateral	$	936.7	$	187.4

(1) Restricted cash balances are combined with unrestricted cash and cash equivalents in the accompanying unaudited condensed consolidated statements of cash flows; changes in restricted cash balances are thus not reflected in the operating, investing or financing activities therein. Changes in other collateral balances are reflected as operating activities therein.

(2) Surety trust accounts and the funding for collateralized letters of credit are comprised of highly liquid investments with original maturities of three months or less; interest and other earnings on such funds accrue to the Company.

(3) Balance relates to the Company’s mandatory repurchase of $30.0 million priority lien obligations under the LC Facility during 2022 at approximately 95%. The Company ~~did not utilize~~received $30.0 million upon termination of the ~~collateralized letter of credit facility until subsequent to March 31, 2022.~~LC Facility on April 14, 2023.

~~(16)~~(12) Commitments and Contingencies

Commitments

Unconditional Purchase Obligations

As of March 31, ~~2022,~~2023, purchase commitments for capital expenditures were ~~$43.9~~$105.4 million, all of which is obligated within the next ~~three~~two years, with ~~$35.6~~$97.4 million obligated within the next 12 months.

There were no other material changes to the Company’s commitments from the information provided in Note ~~23.~~21. “Commitments and Contingencies” to the consolidated financial statements in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2021.~~2022.

Contingencies

From time to time, the Company or its subsidiaries are involved in legal proceedings arising in the ordinary course of business or related to indemnities or historical operations. The Company believes it has recorded adequate reserves for these liabilities. The Company discusses its significant legal proceedings below, including ongoing proceedings and those that impacted the Company’s consolidated results of operations for the periods presented.

~~Litigation Relating to Continuing Operations~~

~~Securities Class Action.~~ ~~On September 28, 2020, the Oklahoma Firefighters Pension and Retirement System brought a lawsuit, styled~~ ~~In Re Peabody Energy Corporation Securities Litigation~~ ~~No. 1:20-cv-08024 (PKC), against the Company and certain of its officers in the~~ ~~U.S. District Court for the Southern District of New York~~ (the Court) on behalf of a putative class of shareholders (Plaintiffs) who held Company stock between April 3, 2017 and October 28, 2019, for alleged violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder (Securities Class Action). Plaintiffs allege that the defendants made false or misleading statements and/or failed to disclose certain adverse facts pertaining to safety practices at the Company’s North Goonyella Mine and the events leading up to a fire at the mine, and that, after a September 28, 2018 fire at the mine, made false or misleading statements and/or failed to disclose certain adverse facts pertaining to the feasibility of the Company’s plan to restart the mine after the fire. On January 12, 2021, the Court appointed the Oregon Public Employees Retirement Fund as lead plaintiff. On January 25, 2021, the Court entered a scheduling order for this matter. Plaintiffs filed their amended complaint on March 19, 2021. The defendants filed a pre-motion letter on April 30, 2021 while the Plaintiffs’ response letter was filed on May 6, 2021. The defendants filed their motion to dismiss on June 7, 2021. The Plaintiffs’ opposition brief to the motion to dismiss was filed on July 22, 2021. The defendants filed their reply to Plaintiff’s opposition on August 23, 2021, completing briefing at this phase of the litigation. On March 7, 2022, the Court granted in part and denied in part the defendants’ motion to dismiss. As a result of this decision, only Plaintiffs’ allegations relating to the Company’s September 25, 2018 statements remain in the case. The Company believes the lawsuit lacks merit and intends to vigorously defend against the allegations.

~~Derivative Actions.~~ ~~On December 22, 2020, a plaintiff (Phelps), putatively on behalf of the Company, brought a shareholder derivative lawsuit, styled~~ ~~Phelps v. Samantha Algaze, et al., Case No. 1:20-cv-01747-UNA (D. Del. filed Dec. 22, 2020), in the~~ ~~U.S. District Court for the District of Delaware~~ against certain directors and former officers of the Company, as defendants. The Company was also named as a nominal defendant. The plaintiff did not make a demand on the Company’s board before instituting the lawsuit and alleges such demand would have been futile. In the complaint, the plaintiff alleges that the defendants failed to disclose adverse facts relating to the safety practices at the Company’s North Goonyella Mine, thereby leading to a September 28, 2018 fire, and allegedly failed to disclose adverse facts pertaining to the feasibility of reopening the mine. The derivative complaint alleges (i) contribution against certain current and former officers for securities fraud based on the Securities Class Action, and against all defendants, (ii) breach of fiduciary duties, (iii) waste of corporate assets for causing the Company to incur legal liability and (iv) unjust enrichment.

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PEABODY ENERGY CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Litigation and Matters Relating to Continuing Operations

Metropolitan Mine Stormwater Discharge. Over the past few years, there has been significantly high rainfall in New South Wales, including unprecedented rain totals at the Metropolitan Mine site. While stormwater collected at the mine site is managed through two sedimentation dams, at times the heavy rainfall has presented challenges with managing the significant volumes of stormwater, as the surface water management infrastructure has not had sufficient capacity. As a result, on multiple occasions throughout 2021 and 2022 stormwater has been discharged from the mine site. Metropolitan Collieries Pty Ltd (MCPL), a wholly-owned subsidiary of PEC, removed accumulated material from the sedimentation dams to restore full site stormwater capacity by December 31, 2022 and has identified and is implementing additional controls for the management of sediment moving forward. Despite the measures undertaken by MCPL to manage and improve the situation, the Environment Protection Authority is currently undertaking an investigation in relation to the discharges of sediment laden water from the mine site and a review process of the Metropolitan Mine’s environmental protection license is ongoing. The Environment Protection Authority is investigating potential offenses against the environmental protection legislation arising from the stormwater discharges from the site.

Puerto Rico Climate Change Lawsuit. On ~~February 10, 2021,~~November 22, 2022, the Municipalities of Puerto Rico filed a ~~second plaintiff (Di Fusco), putatively~~class action complaint for damages against several major energy fuel producers, including Peabody Energy. This lawsuit represents the latest in a series of lawsuits that have been brought in both state and federal court around the United States, generally seeking to impose liability on the energy fuel producers for the effects allegedly caused by climate change. Many of these lawsuits have been brought on behalf of governmental entities (counties, cities, and towns) by plaintiff law firms on a contingent fee arrangement. The causes of action in the Puerto Rico lawsuit include public and private nuisance, liability for failure to warn, consumer fraud, antitrust and claims under the Racketeer Influenced and Corrupt Organizations Act. On April 21, 2023, the plaintiffs filed a Notice of Voluntary Dismissal dismissing all claims against the Company ~~filed a similar shareholder derivative lawsuit, styled~~ ~~Di Fusco v. Glenn Kellow, et al., Case No. 1:21-cv-00183-UNA (D. Del. filed Feb. 10, 2021), in the~~ ~~U.S. District Court for the District of Delaware~~ ~~against the directors and current and former officers of the Company, as defendants. The Company was named as a nominal defendant. This suit makes claims similar to those made in the~~ ~~Phelps~~ matter, but asserts a claim for alleged misstatements in a proxy statement under Section 14(a) of the Securities and Exchange Act of 1934. In late March 2021, the parties filed a stipulation agreeing to consolidate and stay both derivative actions for judicial efficiency and cost until the Court rules on the motion to dismiss in the Securities Class Action. In light of the March 7, 2022 decision on the motion to dismiss in the Securities Class Action, the parties are discussing how to proceed with the derivative actions, which currently remained stayed. The Company also believes that the derivative actions lack merit and intends to vigorously defend against the allegations.without prejudice.

Other

At times, the Company becomes a party to other disputes, including those related to contract miner performance, claims, lawsuits, arbitration proceedings, regulatory investigations and administrative procedures in the ordinary course of business in the U.S., Australia and other countries where the Company does business. Based on current information, the Company believes that such other pending or threatened proceedings are likely to be resolved without a material adverse effect on its consolidated financial condition, results of operations or cash flows. The Company reassesses the probability and estimability of contingent losses as new information becomes available.

Claims, Litigation and Settlements Relating to Indemnities or Historical Operations

~~(17)~~Patriot-Related Matters. Included in the Company’s discontinued operations are the previously divested legacy operations of Patriot Coal Corporation and certain of its wholly-owned subsidiaries (Patriot). In 2012, Patriot filed voluntary petitions for relief under Chapter 11 of Title 11 of the U.S. Code (the Bankruptcy Code). In 2013, the Company entered into a definitive settlement agreement (2013 Agreement) with Patriot and the United Mine Workers of America, on behalf of itself, its represented Patriot employees and its represented Patriot retirees, to resolve all then-disputed issues related to Patriot’s bankruptcy. In May 2015, Patriot again filed voluntary petitions for relief under the Bankruptcy Code in the U.S. District Court for the Eastern District of Virginia and subsequently initiated a process to sell substantially all of its assets to qualified bidders. On October 9, 2015, Patriot’s bankruptcy court entered an order confirming Patriot’s plan of reorganization, which provided, among other things, for the sale of substantially all of Patriot’s assets to two different buyers.

Patriot had federal and state black lung occupational disease liabilities related to workers employed in periods prior to Patriot’s spin-off from the Company in 2007. Upon spin-off, Patriot indemnified the Company against any claim relating to these liabilities, which amounted to approximately $150 million at that time. The indemnification included any claim made by the U.S. Department of Labor (DOL) against the Company with respect to these obligations as a potentially liable operator under the Federal Coal Mine Health and Safety Act of 1969. The 2013 Agreement included Patriot’s affirmance of indemnities provided in the spin-off agreements, including the indemnity relating to such black lung liabilities; however, Patriot rejected this indemnity in its May 2015 bankruptcy.

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PEABODY ENERGY CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

By statute, the Company had secondary liability for the black lung liabilities related to Patriot’s workers employed by former subsidiaries of the Company. The Company’s accounting for the black lung liabilities related to Patriot is based on an interpretation of applicable statutes. Management believes that inconsistencies exist among the applicable statutes, regulations promulgated under those statutes and the DOL’s interpretative guidance. The Company has sought clarification from the DOL regarding these inconsistencies. The amount of these liabilities could be reduced in the future. Whether the Company will ultimately be required to fund certain of those obligations in the future as a result of Patriot’s May 2015 bankruptcy remains uncertain. The amount of the liability, which was determined on an actuarial basis based on the best information available to the Company, was $80.7 million and $82.3 million at March 31, 2023 and December 31, 2022, respectively. The liability, which is classified as discontinued operations, is included in the Company’s condensed consolidated balance sheets within “Accounts payable and accrued expenses” and “Other noncurrent liabilities.” While the Company has recorded a liability, it intends to review each claim on a case-by-case basis and contest liability estimates as appropriate. The amount of the Company’s recorded liability reflects only Patriot workers employed by former subsidiaries of the Company that are presently retired, disabled or otherwise not actively employed. The Company cannot reliably estimate the potential liabilities for Patriot’s workers employed by former subsidiaries of the Company that are presently active in the workforce because of the potential for such workers to continue to work for another coal operator that is a going concern.

(13) Segment Information

The Company reports its results of operations primarily through the following reportable segments: Seaborne Thermal Mining, Seaborne Metallurgical Mining, Powder River Basin Mining, Other U.S. Thermal Mining and Corporate and Other. The Company’s chief operating decision maker, defined as ~~our~~its Chief Executive Officer, uses Adjusted EBITDA as the primary metric to measure the segments’ operating performance and allocate resources.

Adjusted EBITDA is a non-GAAP financial measure defined as ~~loss~~income (loss) from continuing operations before deducting net interest expense, income taxes, asset retirement obligation expenses and depreciation, depletion and amortization. Adjusted EBITDA is also adjusted for the discrete items that management excluded in analyzing the segments’ operating performance, as displayed in the reconciliation below. Management believes non-GAAP performance measures are used by investors to measure the Company’s operating ~~performance and lenders to measure the Company’s ability to incur and service debt.~~performance. Adjusted EBITDA is not intended to serve as an alternative to U.S. GAAP measures of performance and may not be comparable to similarly-titled measures presented by other companies.

Reportable segment results were as follows:


		Three Months Ended March 31,						Three Months Ended March 31,
			2022		2021				2023		2022
			(Dollars in millions)						(Dollars in millions)
Revenue:	Revenue:						Revenue:
Seaborne Thermal Mining	Seaborne Thermal Mining		$	251.2	$	176.4	Seaborne Thermal Mining		$	346.5	$	251.2
Seaborne Metallurgical Mining	Seaborne Metallurgical Mining		321.3		87.5		Seaborne Metallurgical Mining		288.4		321.3
Powder River Basin Mining	Powder River Basin Mining		251.2		228.4		Powder River Basin Mining		305.3		251.2
Other U.S. Thermal Mining	Other U.S. Thermal Mining		203.1		149.3		Other U.S. Thermal Mining		249.4		203.1
Corporate and Other	Corporate and Other		(335.4)		9.7		Corporate and Other		174.4		(335.4)
Total	Total		$	691.4	$	651.3	Total		$	1,364.0	$	691.4

Adjusted EBITDA:	Adjusted EBITDA:						Adjusted EBITDA:
Seaborne Thermal Mining	Seaborne Thermal Mining		$	90.5	$	28.5	Seaborne Thermal Mining		$	164.0	$	90.5
Seaborne Metallurgical Mining	Seaborne Metallurgical Mining		181.0		(22.4)		Seaborne Metallurgical Mining		90.8		181.0
Powder River Basin Mining	Powder River Basin Mining		7.6		30.1		Powder River Basin Mining		35.8		7.6
Other U.S. Thermal Mining	Other U.S. Thermal Mining		50.0		36.2		Other U.S. Thermal Mining		64.2		50.0
Corporate and Other	Corporate and Other		(1.6)		(11.3)		Corporate and Other		35.8		(1.6)
Total	Total		$	327.5	$	61.1	Total		$	390.6	$	327.5

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PEABODY ENERGY CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

A reconciliation of consolidated ~~loss~~income (loss) from continuing operations, net of income taxes to Adjusted EBITDA follows:


		Three Months Ended March 31,						Three Months Ended March 31,
			2022		2021				2023		2022
			(Dollars in millions)						(Dollars in millions)
Loss from continuing operations, net of income taxes			$	(119.8)	$	(77.7)
Income (loss) from continuing operations, net of income taxes							Income (loss) from continuing operations, net of income taxes		$	284.1	$	(119.8)
Depreciation, depletion and amortization	Depreciation, depletion and amortization		72.9		68.3		Depreciation, depletion and amortization		76.3		72.9
Asset retirement obligation expenses	Asset retirement obligation expenses		15.0		15.9		Asset retirement obligation expenses		15.4		15.0
Restructuring charges	Restructuring charges		1.6		2.1		Restructuring charges		0.1		1.6

Asset impairment							Asset impairment		2.0		—

Changes in deferred tax asset valuation allowance and reserves and amortization of basis difference related to equity affiliates			(0.6)		(1.5)
Changes in amortization of basis difference related to equity affiliates							Changes in amortization of basis difference related to equity affiliates		(0.3)		(0.6)
Interest expense	Interest expense		39.4		52.4		Interest expense		18.4		39.4
Net loss (gain) on early debt extinguishment			23.5		(3.5)
Net loss on early debt extinguishment							Net loss on early debt extinguishment		6.8		23.5
Interest income	Interest income		(0.5)		(1.5)		Interest income		(13.1)		(0.5)

Unrealized losses on derivative contracts related to forecasted sales			301.0		1.9
Unrealized (gains) losses on foreign currency option contracts			(3.3)		7.6
Unrealized (gains) losses on derivative contracts related to forecasted sales							Unrealized (gains) losses on derivative contracts related to forecasted sales		(118.7)		301.0
Unrealized losses (gains) on foreign currency option contracts							Unrealized losses (gains) on foreign currency option contracts		2.2		(3.3)

Take-or-pay contract-based intangible recognition	Take-or-pay contract-based intangible recognition		(0.7)		(1.1)		Take-or-pay contract-based intangible recognition		(0.6)		(0.7)
Income tax benefit			(1.0)		(1.8)
Income tax provision (benefit)							Income tax provision (benefit)		118.0		(1.0)
Adjusted EBITDA	Adjusted EBITDA		$	327.5	$	61.1	Adjusted EBITDA		$	390.6	$	327.5

(14) Other Events

Shoal Creek Incident

On March 29, 2023, the Company’s Shoal Creek Mine experienced a fire involving void fill material utilized to stabilize the roof structure of the mine. All mine personnel were safely evacuated from the mine. The Mine Safety and Health Administration (MSHA) has allowed mine rescue-equipped personnel into the mine at various times to assess the situation. On April 26, 2023, MSHA approved a temporary sealing program which was completed on April 28, 2023, and the Company continues to monitor air quality in the affected underground area.

Port and Rail Capacity Assignment

During the three months ended March 31, 2023, the Company entered into an agreement to assign the right to its excess port and rail capacity related to its North Goonyella Mine to an unrelated party in exchange for $30.0 million Australian dollars. Half of such amount was received by the Company upon entry into the agreement, and half is payable in June 2024, subject to certain conditions. The Company recorded revenue of $19.2 million and a discounted long-term receivable of $9.2 million in connection with the transaction during the three months ended March 31, 2023.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

As used in this report, the terms “Peabody” or “the Company” refer to Peabody Energy Corporation or its applicable subsidiary or subsidiaries. Unless otherwise noted herein, disclosures in this Quarterly Report on Form 10-Q relate only to the Company’s continuing operations.

When used in this filing, the term “ton” refers to short or net tons, equal to 2,000 pounds (907.18 kilograms), while “tonne” refers to metric tons, equal to 2,204.62 pounds (1,000 kilograms).

Cautionary Notice Regarding Forward-Looking Statements

This report includes statements of Peabody’s expectations, intentions, plans and beliefs that constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the Securities Act), and Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange Act), and are intended to come within the safe harbor protection provided by those sections. These statements relate to future events or Peabody’s future financial performance. The Company uses words such as “anticipate,” “believe,” “expect,” “may,” “forecast,” “project,” “should,” “estimate,” “plan,” “outlook,” “target,” “likely,” “will,” “to be” or other similar words to identify forward-looking statements.

Without limiting the foregoing, all statements relating to Peabody’s future operating results, anticipated capital expenditures, future cash flows and borrowings, and sources of funding are forward-looking statements and speak only as of the date of this report. These forward-looking statements are based on numerous assumptions that Peabody believes are reasonable, but are subject to a wide range of uncertainties and business risks, and actual results may differ materially from those discussed in these statements. These factors are difficult to accurately predict and may be beyond the Company’s control.

When considering these forward-looking statements, you should keep in mind the cautionary statements in this document and in the Company’s other Securities and Exchange Commission (SEC) filings, including, but not limited to, the more detailed discussion of these factors and other factors that could affect its results contained in Item 1A. “Risk Factors” of Part II of this Quarterly Report on Form 10-Q, and Item 1A. “Risk Factors” and Item 3. “Legal Proceedings” of Part I of its Annual Report on Form 10-K for the year ended December 31, ~~2021~~2022 filed with the SEC on February ~~18, 2022.~~24, 2023. These forward-looking statements speak only as of the date on which such statements were made, and the Company undertakes no obligation to update these statements except as required by federal securities laws.

Non-GAAP Financial Measures

The following discussion of the Company’s results of operations includes references to and analysis of Adjusted EBITDA and Total Reporting Segment Costs, which ~~is a~~are financial ~~measure~~measures not recognized in accordance with U.S. generally accepted accounting principles (U.S. GAAP). Adjusted EBITDA is used by management as the primary metric to measure each of its segments’ operating performance and allocate resources. Total Reporting Segment Costs is also used by management as a component of a metric to measure each of its segments’ operating performance.

Also included in the following discussion of the Company’s results of operations are references to Revenue per Ton, Costs per Ton and Adjusted EBITDA Margin per Ton for each ~~mining~~reporting segment. These metrics are used by management to measure each of its ~~mining~~reporting segments’ operating performance. Management believes Costs per Ton and Adjusted EBITDA Margin per Ton best reflect controllable costs and operating results at the ~~mining~~reporting segment level. The Company considers all measures reported on a per ton basis to be operating/statistical measures; however, the Company includes reconciliations of the related non-GAAP financial measures (Adjusted EBITDA and Total Reporting Segment Costs) in the “Reconciliation of Non-GAAP Financial Measures” section contained within this Item 2.

In its discussion of liquidity and capital resources, the Company includes references to Free Cash Flow which is also a non-GAAP measure. Free Cash Flow is used by management as a measure of its financial performance and its ability to generate excess cash flow from its business operations.

The Company believes non-GAAP performance measures are used by investors to measure its operating ~~performance and lenders to measure its ability to incur and service debt.~~performance. These measures are not intended to serve as alternatives to U.S. GAAP measures of performance and may not be comparable to similarly-titled measures presented by other companies. Refer to the “Reconciliation of Non-GAAP Financial Measures” section contained within this Item 2 for definitions and reconciliations to the most comparable measures under U.S. GAAP.

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Overview

Peabody is a leading producer of metallurgical and thermal coal. In ~~2021,~~2022, the Company produced and sold ~~126.9~~122.9 million and ~~130.1~~123.7 million tons of coal, respectively, from continuing operations. At March 31, ~~2022,~~2023, the Company owned interests in 17 active coal mining operations located in the United States (U.S.) and Australia. Included in that count is Peabody’s 50% equity interest in Middlemount Coal Pty ~~Ltd.~~Ltd (Middlemount), which owns the Middlemount Mine in Queensland, Australia. In addition to its mining operations, the Company markets and brokers coal from other coal ~~producers, both as principal and agent, and~~producers; trades coal and freight-related ~~contracts.~~contracts; and during 2022, partnered in a joint venture with the intent of developing various sites, including certain reclaimed mining land held by the Company in the U.S., for utility-scale photovoltaic solar generation and battery storage.

The Company reports its results of operations primarily through the following reportable segments: Seaborne Thermal Mining, Seaborne Metallurgical Mining, Powder River Basin Mining, Other U.S. Thermal Mining and Corporate and Other. Refer to Note ~~17.~~13. “Segment Information” to the accompanying unaudited condensed consolidated financial statements for further information regarding those segments and the components of its Corporate and Other segment.

Spot pricing for premium low-vol hard coking coal (Premium HCC), premium low-vol pulverized coal injection (Premium PCI) coal, Newcastle index thermal coal and API 5 index thermal coal, and prompt month pricing for PRB 8,880 Btu/Lb coal and Illinois Basin 11,500 Btu/Lb coal during the three months ended March 31, ~~2022~~2023 is set forth in the table below.

The seaborne pricing included in the table below is not necessarily indicative of the pricing the Company realized during the three months ended March 31, ~~2022~~2023 due to quality differentials and ~~the majority~~a portion of its seaborne sales being executed through annual and multi-year international coal supply agreements that contain provisions requiring both parties to renegotiate pricing ~~periodically.~~periodically, with spot, index and quarterly sales arrangements also utilized. The Company’s typical practice is to negotiate pricing for seaborne metallurgical coal contracts on a ~~bi-annual,~~ quarterly, spot or index basis and seaborne thermal coal contracts on an annual, spot or index basis.

In the U.S., the pricing included in the table below is also not necessarily indicative of the pricing the Company realized during the three months ended March 31, ~~2022~~2023 since the Company generally sells coal under long-term contracts where pricing is determined based on various factors. Such long-term contracts in the U.S. may vary significantly in many respects, including price adjustment features, price reopener terms, coal quality requirements, quantity parameters, permitted sources of supply, treatment of environmental constraints, extension options, force majeure and termination and assignment provisions. Competition from alternative fuels such as natural gas and other fuel sources may also impact the Company’s realized pricing.


		High		Low		Average		March 31, 2022		April 29, 2022			High		Low		Average		March 31, 2023		April 28, 2023
Premium HCC (1)	Premium HCC (1)	$	670.50	$	357.75	$	487.80	$	515.00	$	518.00	Premium HCC (1)	$	390.00	$	294.50	$	343.91	$	301.00	$	231.50
Premium PCI coal (1)	Premium PCI coal (1)	655.00		244.50		393.47		475.50		460.00		Premium PCI coal (1)	344.00		263.50		313.01		263.50		201.00
Newcastle index thermal coal (1)	Newcastle index thermal coal (1)	395.59		201.54		263.75		271.06		356.03		Newcastle index thermal coal (1)	397.30		170.80		242.37		178.53		186.31
API 5 thermal coal (1)		284.20		109.66		172.41		190.00		196.62
API 5 index thermal coal (1)												API 5 index thermal coal (1)	135.29		117.72		125.12		120.68		116.66
PRB 8,800 Btu/Lb coal (2)	PRB 8,800 Btu/Lb coal (2)	27.50		17.50		21.67		17.50		15.78		PRB 8,800 Btu/Lb coal (2)	15.50		14.60		14.96		14.60		14.55
Illinois Basin 11,500 Btu/Lb coal (2)	Illinois Basin 11,500 Btu/Lb coal (2)	155.00		88.00		104.06		126.00		131.00		Illinois Basin 11,500 Btu/Lb coal (2)	133.00		73.00		92.08		73.00		65.00

(1) Prices expressed per metric tonne.

(2) Prices expressed per short ton.

Within the global coal industry, supply and demand for its products and the supplies used for mining have been impacted by the ~~recent~~ongoing Russian-Ukrainian ~~conflict and the coronavirus (COVID-19) pandemic.~~conflict. Furthermore, inflationary pressures and supply chain constraints have contributed to rising ~~costs.~~costs and may continue to impact future periods. As future developments related to the Russian-Ukrainian conflict ~~the COVID-19 pandemic~~ and rising inflation are unknown, the global coal industry data for the three months ended March 31, ~~2022~~2023 presented herein may not be indicative of their ultimate impacts.

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Within the seaborne metallurgical coal market, the three months ended March 31, ~~2022~~2023 were characterized by ~~significant~~ongoing volatility ~~primarily driven by sanctions~~as global macroeconomic turbulence counteracted improving demand and ~~trade redistribution efforts following~~further weather-induced supply disruptions in Australia. Several steelmakers announced blast furnace capacity restarts in the ~~onset~~three months ended March 31, 2023, as growth in forward orders drives improvements to steel prices and margins. This is supportive for seaborne metallurgical coal demand in the coming period. Furthermore, China has ended its unofficial ban of ~~the Russian-Ukrainian conflict. Buyers in Atlantic markets are seeking to mitigate exposure to~~Australian coal imports providing increased market depth for Australian products, especially for Premium HCC. Russian coal ~~imports, causing an upswell~~remains banned in demand for supply from other regions such as Australia, the U.S. and Canada. Market prices rose approximately $300 per metric tonne from January to mid-March, far exceeding prior records, before falling a similar quantum through the end of March and start of April amid scant market liquidity. Prices have once more begun increasing in April, following the European Union, Japan and ~~Japan firming their stance~~elsewhere, disrupting natural trade flows and ~~announcing total bans on~~resulting in low priced Russian ~~coal imports. This will have a particular impact on the~~products being made available to countries, such as China and India, which can continue procurement. The PCI market remained exceedingly tight during the three months ended March 31, 2023, especially in Europe, where Russia accounts for approximately 35% of global traded volumes. China’s unofficial ban on Australian coal remains in place and continues to disrupt traditional trade flows. Global supply remains tight and this dynamic is only intensifying with the sanctions imposed on Russian imports.traditionally held dominant market share. The Company believes energy shortages ~~in some markets~~and the global inflationary environment present a risk to industrial activity in some markets, but the underlying market fundamentals remain ~~constructive.~~constructive with continuing themes of supply tightness, resilient demand and further economic stimulus in China and elsewhere.

Within the seaborne thermal coal market, ~~the Russian-Ukrainian conflict and the subsequent ban of Russian coal by European countries has driven~~ global thermal coal prices ~~to record levels~~stabilized in March and ~~high volatility during the three months~~recently showed improvement amid supply distributions in Colombia and Australia and ongoing robust demand from India and China. China has ended ~~March 31, 2022. Prior to the Russian-Ukrainian conflict,~~its unofficial ban of Australian coal imports, providing additional demand for Australian thermal coal supply was already tight due to an export ban in Indonesia in January as well as heavy rains and COVID-19 restrictions in Australia. During the three months ended March 31, 2022, Newcastle thermal coal pricing hit record levels due to concerns over a severe supply shock following the onset of the Russian-Ukrainian conflict, but pricing subsided slightly to end the quarter in the $200 per metric tonne range.coal. In China, domestic coal production ~~has~~and renewable generation have been strong ~~during the three months ended March 31, 2022, which has lowered import demand~~ to start the ~~year.~~year, however, import demand has been higher year-over-year, as overall coal demand has been strong. In India, strong growth in coal ~~production~~generation has ~~been~~supported increased import demand, despite elevated ~~as well, allowing~~domestic coal ~~buyers to wait for lower thermal seaborne prices and limit imports; however stockpile levels have fallen recently.~~production. Overall, global thermal coal markets remain turbulent as supply ~~remains tight~~has been disrupted due to logistics and ~~European coal importers look to replace Russian coal.~~weather issues and lower global natural gas prices.

In the United States, overall electricity demand ~~increased more than 3%~~decreased nearly 4% year-over-year, ~~positively~~negatively impacted by weather. Through the three months ended March 31, ~~2022,~~2023, electricity generation from thermal coal has declined year-over-year due to ~~strong year-over-year comparatives in February 2021, as well as record~~low gas prices, and stronger gas and renewable ~~generation.~~generation despite lower overall electricity demand. Coal’s share of electricity generation has declined ~~slightly~~ to approximately ~~22%~~15% for the three months ended March 31, ~~2022,~~2023, while wind ~~generation’s~~and solar’s combined generation share has increased to ~~11%~~17% and the share of gas generation has increased to 39%. Coal inventories have ~~continued to decline since December 2021,~~increased during the three months ended March 31, 2023, with ~~a decline~~an increase of approximately 5%25% or 522 million tons. During the three months ended March 31, ~~2022,~~2023, utility consumption of PRB coal ~~rose~~declined approximately 1%25% compared to the prior year period.

~~Financing~~Surety Agreement Amendment

On April 14, 2023, the Company amended its existing agreement with the providers of its surety bond portfolio, dated November 6, 2020. Under the agreement, the Company was required to post collateral on a periodic basis. Pursuant to the amendment, the Company and ~~Liquidity Transactions~~

~~During~~its surety bond providers agreed to (i) establish a combined maximum collateral cap, (ii) remove the ~~first quarter of 2022, Peabody issued convertible senior unsecured notes~~restrictions on shareholder returns contained in the original agreement, subject to a minimum liquidity threshold, and ~~used~~(iii) extend the ~~proceeds~~expiration date of the ~~offering~~existing agreement from December 31, 2025 to ~~retire nearer term higher cost senior secured debt. This both lowered~~December 31, 2026. Peabody also terminated the ~~Company’s borrowing rates and extended debt maturities to 2028.~~

High demand and tight supply for coal globally has resulted in a substantial rise in seaborne thermal coal prices, which has been amplified by the Russian-Ukrainian conflict, resulting in unprecedented upward volatility in Newcastle coal pricing since late February. As a result, Peabody posted additional cash marginletter of ~~$351.6 million during the three months ended March 31, 2022 to satisfy the margin requirements for its derivative contracts.~~

During the quarter, the Company put in place a revolving financing facility to support near-term liquidity requirements, particularly with respect to these cash margin requirements which fluctuate depending upon the underlying market coal prices. The Company received proceeds under the revolving financingcredit facility which ~~were repaid in full with proceeds from the sale of shares under the at-the-market offering program.~~was previously used primarily for surety collateral, further reducing interest costs and increasing financial flexibility.

Refer to the “Liquidity and Capital Resources” section contained within this Item 2 for a further discussion of ~~these financing and liquidity transactions.~~the surety agreement amendment.

Other

InOn March ~~2022,~~29, 2023, the Company’s Shoal Creek Mine experienced a fire involving void fill material utilized to stabilize the roof structure of the mine. All mine personnel were safely evacuated from the mine. The Mine Safety and Health Administration (MSHA) has allowed mine rescue-equipped personnel into the mine at various times to assess the situation. On April 26, 2023, MSHA approved a temporary sealing program which was completed on April 28, 2023, and the Company ~~entered into a joint venture with unrelated partners~~continues to ~~form R3 Renewables LLC (R3). R3 was formed with the intent of developing various sites, including certain non-mining land held by the Company~~monitor air quality in the ~~U.S.,~~affected underground area.

Results of Operations

Three Months Ended March 31,2023 Compared to the Three Months Ended March 31,2022

Summary

The increase in results from continuing operations, net of income taxes for utility-scale photovoltaic solar generation and battery storage. The Company’s interest in R3 is accounted for as an equity method investment. The Company contributed $2.0 million to R3 and recorded an equity loss of $1.0 million from its operations during the three months ended March 31, ~~2022.~~2023 compared to the same period in the prior year ($403.9 million), was primarily driven by higher revenue ($672.6 million) due to higher realized prices and volumes. This favorable variance was partially offset by higher operating costs and expenses ($147.6 million), which reflect increased sales price sensitive costs and inflationary pressures for commodities, materials, services, repairs and labor; and a higher income tax provision ($119.0 million).

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In March 2022, Peabody Investments Corp., a wholly owned subsidiary of the Company, entered into a commitment agreement relating to one of its qualified pension plans (the Plan) with an insurer. Under the commitment agreement, the Plan purchased a group annuity contract for approximately $500 million and the insurer will reimburse the Plan for future benefit payments to be made to the Plan’s participants. Under the terms of this transaction, the Plan will continue to administer and pay the retirement benefits of Plan participants but will be reimbursed by the insurer for the payment of all benefits covered by the group annuity contract. Refer to Note 12. “Pension and Postretirement Benefit Costs” to the accompanying unaudited condensed consolidated financial statements for a further discussion of this transaction.

~~Results of Operations~~

~~Three Months Ended March 31,2022 Compared to the Three Months Ended March 31,2021~~

~~Summary~~

The Company’s revenue for the three months ended March 31, 2022 increased compared to the same period in 2021 ($40.1 million) primarily due to the impacts of higher pricing, offset by net unrealized mark-to-market losses on derivative contracts related to forecasted sales and other financial trading activity ($290.2 million).

Results from continuing operations, net of income taxes for the three months ended March 31, 2022 decreased compared to the same period in the prior year ($42.1 million), primarily due to higher operating costs and expenses ($116.4 million) which reflected inflationary pressures and increased costs for materials, services, repairs and labor related to the Company’s efforts to ramp up the operations to meet current and anticipated volumes. The results were further impacted by net losses on early debt extinguishments in the current year ($27.0 million). These unfavorable variances were offset by improved results from equity affiliates ($45.6 million), a favorable revenue variance due to higher pricing exceeding the net unrealized mark-to-market losses as described above ($40.1 million); and decreased interest expense ($13.0 million).

Adjusted EBITDA for the three months ended March 31, ~~2022~~2023 reflected a year-over-year increase of ~~$266.4~~$63.1 million.

As of March 31, 2022, the Company’s available liquidity was approximately $842 million. Refer to the “Liquidity and Capital Resources” section contained within this Item 2 for a further discussion of factors affecting the Company’s available liquidity.

Tons Sold

The following table presents tons sold by operating segment:

Three Months Ended March 31, (Decrease ) Increase
to Volumes
2022 2021 Tons %
(Tons in millions)
Seaborne Thermal Mining 3.8 4.1 (0.3) (7) %
Seaborne Metallurgical Mining 1.2 1.0 0.2 20 %
Powder River Basin Mining 20.6 20.7 (0.1) — %
Other U.S. Thermal Mining 4.2 3.9 0.3 8 %
Total tons sold from mining segments 29.8 29.7 0.1 — %
Corporate and Other 0.1 0.5 (0.4) (80) %
Total tons sold 29.9 30.2 (0.3) (1) %

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	Three Months Ended March 31,		(Decrease) Increase to Volumes
	2023	2022	Tons	%
	(Tons in millions)
Seaborne Thermal Mining	3.6	3.8	(0.2)	(5)	%
Seaborne Metallurgical Mining	1.3	1.2	0.1	8	%
Powder River Basin Mining	22.0	20.6	1.4	7	%
Other U.S. Thermal Mining	4.5	4.2	0.3	7	%
Total tons sold from operating segments	31.4	29.8	1.6	5	%
Corporate and Other	0.1	0.1	—	—	%
Total tons sold	31.5	29.9	1.6	5	%

Supplemental Financial Data

The following table presents supplemental financial data by operating segment:


		Three Months Ended March 31,		Increase (Decrease)				Three Months Ended March 31,						Increase (Decrease)
				2022		2021			$		%			2023		2022		$		%
Revenue per Ton - Mining Operations (1)	Revenue per Ton - Mining Operations (1)		Revenue per Ton - Mining Operations (1)
Seaborne Thermal	Seaborne Thermal			$	66.86	$	43.36		$	23.50	54	%	Seaborne Thermal	$	96.82	$	66.86	$	29.96	45	%
Seaborne Metallurgical	Seaborne Metallurgical			258.43		87.47			170.96		195	%	Seaborne Metallurgical	220.60		258.43		(37.83)		(15)	%
Powder River Basin	Powder River Basin			12.18		11.01			1.17		11	%	Powder River Basin	13.89		12.18		1.71		14	%
Other U.S. Thermal	Other U.S. Thermal			48.46		38.76			9.70		25	%	Other U.S. Thermal	54.73		48.46		6.27		13	%
Costs per Ton - Mining Operations (1)(2)	Costs per Ton - Mining Operations (1)(2)		Costs per Ton - Mining Operations (1)(2)
Seaborne Thermal	Seaborne Thermal			$	42.77	$	36.36		$	6.41	18	%	Seaborne Thermal	$	51.01	$	42.77	$	8.24	19	%
Seaborne Metallurgical	Seaborne Metallurgical			112.87		109.89			2.98		3	%	Seaborne Metallurgical	151.13		112.87		38.26		34	%
Powder River Basin	Powder River Basin			11.81		9.56			2.25		24	%	Powder River Basin	12.26		11.81		0.45		4	%
Other U.S. Thermal	Other U.S. Thermal			36.54		29.37			7.17		24	%	Other U.S. Thermal	40.65		36.54		4.11		11	%
Adjusted EBITDA Margin per Ton - Mining Operations (1)(2)	Adjusted EBITDA Margin per Ton - Mining Operations (1)(2)		Adjusted EBITDA Margin per Ton - Mining Operations (1)(2)
Seaborne Thermal	Seaborne Thermal			$	24.09	$	7.00		$	17.09	244	%	Seaborne Thermal	$	45.81	$	24.09	$	21.72	90	%
Seaborne Metallurgical	Seaborne Metallurgical			145.56		(22.42)			167.98		749	%	Seaborne Metallurgical	69.47		145.56		(76.09)		(52)	%
Powder River Basin	Powder River Basin			0.37		1.45			(1.08)		(74)	%	Powder River Basin	1.63		0.37		1.26		341	%
Other U.S. Thermal	Other U.S. Thermal			11.92		9.39			2.53		27	%	Other U.S. Thermal	14.08		11.92		2.16		18	%

(1)This is an operating/statistical measure not recognized in accordance with U.S. GAAP. Refer to the “Reconciliation of Non-GAAP Financial Measures” section below for definitions and reconciliations to the most comparable measures under U.S. GAAP.

(2)Includes revenue-based production taxes and royalties; excludes depreciation, depletion and amortization; asset retirement obligation expenses; selling and administrative expenses; restructuring charges; asset impairment; amortization of take-or-pay contract-based intangibles; and certain other costs related to post-mining activities.

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Revenue

The following table presents revenue by reporting segment:


		Three Months Ended March 31,	Increase (Decrease) to Revenue									Three Months Ended March 31,	Increase (Decrease) to Revenue
			2022		2021		$		%					2023		2022		$		%
		(Dollars in millions)										(Dollars in millions)
Seaborne Thermal Mining	Seaborne Thermal Mining		$	251.2	$	176.4	$	74.8	42	%	Seaborne Thermal Mining			$	346.5	$	251.2	$	95.3	38	%
Seaborne Metallurgical Mining	Seaborne Metallurgical Mining		321.3		87.5		233.8		267	%	Seaborne Metallurgical Mining			288.4		321.3		(32.9)		(10)	%
Powder River Basin Mining	Powder River Basin Mining		251.2		228.4		22.8		10	%	Powder River Basin Mining			305.3		251.2		54.1		22	%
Other U.S. Thermal Mining	Other U.S. Thermal Mining		203.1		149.3		53.8		36	%	Other U.S. Thermal Mining			249.4		203.1		46.3		23	%
Corporate and Other	Corporate and Other		(335.4)		9.7		(345.1)		(3,558)	%	Corporate and Other			174.4		(335.4)		509.8		152	%
Revenue	Revenue		$	691.4	$	651.3	$	40.1	6	%	Revenue			$	1,364.0	$	691.4	$	672.6	97	%

Seaborne Thermal Mining. Segment revenue increased during the three months ended March 31, 2022 compared to the same period in the prior year primarily due to favorable realized coal pricing ($110.9 million), offset by unfavorable volumes ($36.1 million) which were impacted by a longwall move at the Wambo Underground Mine, wet weather and COVID-19-related staffing shortages.

~~Seaborne Metallurgical Mining.~~ ~~Segment revenue increased during the three months ended March 31, 2022~~2023 compared to the same period in the prior year due to favorable realized ~~coal pricing~~prices ($~~190.2~~68.7 million) and favorable ~~volume and~~ mix variances ($~~43.6~~26.6 million) which offset unfavorable volumes.

Seaborne Metallurgical Mining. Segment revenue decreased during the three months ended March 31, 2023 compared to the same period in the prior year due to unfavorable realized prices ($39.8 million), partially offset by favorable volumes ($6.9 million).

Powder River Basin Mining. Segment revenue increased during the three months ended March 31, ~~2022~~2023 compared to the same period in the prior year ~~primarily~~ due to favorable realized ~~coal pricing~~prices ($~~27.2~~33.3 million)~~, partially offset by unfavorable~~ and favorable volumes ($~~4.4~~20.8 million). resulting from improved rail performance.

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Other U.S. Thermal Mining. Segment revenue increased during the three months ended March 31, ~~2022~~2023 compared to the same period in the prior year due to favorable realized ~~pricing~~prices ($~~40.0~~28.4 million) and favorable volumes ($~~13.8~~17.9 million).

Corporate and Other. Segment revenue ~~decreased~~increased during the three months ended March 31, ~~2022~~2023 compared to the same period in the prior year ~~primarily~~ due to net unrealized mark-to-market gains on derivative contracts related to forecasted coal sales in the current year compared to net unrealized mark-to-market losses in the prior year ($419.7 million); higher results from trading activities ($72.7 million) due to higher margins recognized on the physical sale of coal and lower net realized losses on derivative contracts related to forecasted coal ~~sales~~sales; and ~~other~~revenue related to the Company’s assignment of rights to its excess port and rail capacity ($19.2 million) as discussed in Note 14. “Other Events” to the accompanying unaudited condensed consolidated financial ~~trading activity ($285.3 million) and lower results from trading activities ($61.8 million).~~statements.

Adjusted EBITDA

The following table presents Adjusted EBITDA for each of the Company’s reporting segments:


		Three Months Ended March 31,	Increase (Decrease) to Segment Adjusted EBITDA									Three Months Ended March 31,	Increase (Decrease) to Segment Adjusted EBITDA
			2022		2021		$		%					2023		2022		$		%
		(Dollars in millions)										(Dollars in millions)
Seaborne Thermal Mining	Seaborne Thermal Mining		$	90.5	$	28.5	$	62.0	218	%	Seaborne Thermal Mining			$	164.0	$	90.5	$	73.5	81	%
Seaborne Metallurgical Mining	Seaborne Metallurgical Mining		181.0		(22.4)		203.4		908	%	Seaborne Metallurgical Mining			90.8		181.0		(90.2)		(50)	%
Powder River Basin Mining	Powder River Basin Mining		7.6		30.1		(22.5)		(75)	%	Powder River Basin Mining			35.8		7.6		28.2		371	%
Other U.S. Thermal Mining	Other U.S. Thermal Mining		50.0		36.2		13.8		38	%	Other U.S. Thermal Mining			64.2		50.0		14.2		28	%
Corporate and Other	Corporate and Other		(1.6)		(11.3)		9.7		86	%	Corporate and Other			35.8		(1.6)		37.4		2,338	%
Adjusted EBITDA (1)	Adjusted EBITDA (1)		$	327.5	$	61.1	$	266.4	436	%	Adjusted EBITDA (1)			$	390.6	$	327.5	$	63.1	19	%

(1)This is a financial measure not recognized in accordance with U.S. GAAP. Refer to the “Reconciliation of Non-GAAP Financial Measures” section below for definitions and reconciliations to the most comparable measures under U.S. GAAP.

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Seaborne Thermal Mining. Segment Adjusted EBITDA increased during the three months ended March 31, ~~2022~~2023 compared to the same period in the prior year as a result of higher realized prices net ~~coal pricing~~of sales sensitive costs ($~~102.3~~64.1 million) and favorable mix variances ($26.6 million), partially offset by ~~unfavorable operational~~higher commodity pricing ($8.9 million) and higher port and demurrage costs ($~~40.5~~7.1 million) ~~resulting from the longwall move at the Wambo Underground Mine, the impacts of wet weather, COVID-19-related staffing shortages and inflationary pressures.~~.

Seaborne Metallurgical Mining. Segment Adjusted EBITDA decreased during the three months ended March 31, 2023 compared to the same period in the prior year due to unfavorable operational costs ($50.4 million) resulting from wet weather impacts at the Coppabella and Moorvale Mines and geological conditions at the Shoal Creek Mine and lower realized prices net of sales sensitive costs ($43.8million).

Powder River Basin Mining.Segment Adjusted EBITDA increased during the three months ended March 31, ~~2022~~2023 compared to the same period in the prior year due to higher realized prices net ~~coal pricing~~of sales sensitive costs ($~~176.3~~22.1 million); decreased overburden removal costs ($11.0 million); and ~~cost improvements at certain mines~~favorable volumes ($~~23.4~~7.3 million).

~~Powder River Basin Mining.~~ ~~Segment Adjusted EBITDA decreased during the three months ended March 31, 2022 compared to the same period in the prior year due to~~ resulting from improved rail performance. The increases were partially offset by higher costs for materials, services, repairs and labor ($~~29.5~~9.7 million) ~~related~~due in part to ~~efforts to ramp up the operations to meet current~~timing, increased repairs for an aging equipment fleet and ~~anticipated volumes~~inflationary pressures on materials and the unfavorable impacts of higher commodity pricing ($14.7 million), both of which were also impacted by inflationary pressures. These decreases were partially offset by higher realized net coal pricing ($27.3 million).services.

Other U.S. Thermal Mining. Segment Adjusted EBITDA increased during the three months ended March 31, ~~2022~~2023 compared to the same period in the prior year due to higher realized prices net ~~coal pricing~~of sales sensitive costs ($~~41.6~~24.6 million) and favorable volumes ($~~6.7~~11.0 million). These increases were offset by higher costs for materials, services, repairs and labor ($~~24.4~~16.9 million) ~~related~~due in part to ~~efforts to ramp up the operations to meet current~~increased equipment repairs and ~~anticipated volumes~~headcount resulting from increasing volume demands and ~~the unfavorable impacts of higher commodity pricing ($10.0 million), both of which were also impacted by~~ inflationary ~~pressures.~~pressures on materials and services.

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Corporate and Other Adjusted EBITDA. The following table presents a summary of the components of Corporate and Other Adjusted EBITDA:


		Three Months Ended March 31,	Increase (Decrease) to Adjusted EBITDA				Three Months Ended March 31,						(Decrease) Increase to Adjusted EBITDA
			2022		2021			$		%			2023		2022		$		%
		(Dollars in millions)					(Dollars in millions)
Middlemount (1)	Middlemount (1)		$	45.1	$	(2.3)		$	47.4	2,061	%	Middlemount (1)	$	2.3	$	45.1	$	(42.8)	(95)	%
Resource management activities (2)	Resource management activities (2)		3.5		0.4			3.1		775	%	Resource management activities (2)	2.3		3.5		(1.2)		(34)	%
Selling and administrative expenses	Selling and administrative expenses		(23.1)		(21.7)			(1.4)		(6)	%	Selling and administrative expenses	(22.8)		(23.1)		0.3		1	%
Other items, net (3)	Other items, net (3)		(27.1)		12.3			(39.4)		(320)	%	Other items, net (3)	54.0		(27.1)		81.1		299	%
Corporate and Other Adjusted EBITDA	Corporate and Other Adjusted EBITDA		$	(1.6)	$	(11.3)		$	9.7	86	%	Corporate and Other Adjusted EBITDA	$	35.8	$	(1.6)	$	37.4	2,338	%

(1)Middlemount’s results are before the impact of related changes in ~~deferred tax asset valuation allowance and reserves and~~ amortization of basis difference. Middlemount’s standalone results included (on a 50% attributable basis) aggregate amounts of depreciation, depletion and amortization, asset retirement obligation expenses, net interest expense and income taxes of ~~$45.0~~$2.6 million and ~~$11.7~~$20.2 million during the three months ended March 31, ~~2022~~2023 and ~~2021,~~2022, respectively.

(2)Includes gains (losses) on certain surplus coal reserve, resource and surface land sales and property management costs and revenue.

(3)Includes trading and brokerage activities, costs associated with post-mining activities, gains (losses) on certain asset disposals, minimum charges on certain transportation-related contracts, costs associated with suspended operations including the North Goonyella Mine and expenses related to the Company’s other commercial activities.

Corporate and Other Adjusted EBITDA benefited during the three months ended March 31, ~~2022~~2023 compared to the same period in the prior year from a favorable ~~variance~~trading results ($69.7 million) and revenue related to the Company’s assignment of rights to its excess port and rail capacity ($19.2 million) as discussed in Note 14. “Other Events” to the accompanying unaudited condensed consolidated financial statements. This benefit was offset by unfavorable variances in Middlemount’s results ~~($47.4 million)~~ due to ~~the impact~~lower sales pricing and sales volumes.

Table of ~~higher sales pricing. This benefit was largely offset by unfavorable trading results ($41.9 million).~~Contents

~~Loss~~

Income (Loss) From Continuing Operations, Net of Income Taxes

The following table presents ~~loss~~income (loss) from continuing operations, net of income taxes:


		Three Months Ended March 31,	Increase (Decrease) to Income				Three Months Ended March 31,						Increase (Decrease) to Income
			2022		2021			$		%			2023		2022		$		%
		(Dollars in millions)					(Dollars in millions)
Adjusted EBITDA (1)	Adjusted EBITDA (1)		$	327.5	$	61.1		$	266.4	436	%	Adjusted EBITDA (1)	$	390.6	$	327.5	$	63.1	19	%
Depreciation, depletion and amortization	Depreciation, depletion and amortization		(72.9)		(68.3)			(4.6)		(7)	%	Depreciation, depletion and amortization	(76.3)		(72.9)		(3.4)		(5)	%
Asset retirement obligation expenses	Asset retirement obligation expenses		(15.0)		(15.9)			0.9		6	%	Asset retirement obligation expenses	(15.4)		(15.0)		(0.4)		(3)	%
Restructuring charges	Restructuring charges		(1.6)		(2.1)			0.5		24	%	Restructuring charges	(0.1)		(1.6)		1.5		94	%

Asset impairment												Asset impairment	(2.0)		—		(2.0)		n.m.

Changes in deferred tax asset valuation allowance and reserves and amortization of basis difference related to equity affiliates			0.6		1.5			(0.9)		(60)	%
Changes in amortization of basis difference related to equity affiliates												Changes in amortization of basis difference related to equity affiliates	0.3		0.6		(0.3)		(50)	%
Interest expense	Interest expense		(39.4)		(52.4)			13.0		25	%	Interest expense	(18.4)		(39.4)		21.0		53	%
Net (loss) gain on early debt extinguishment			(23.5)		3.5			(27.0)		(771)	%
Net loss on early debt extinguishment												Net loss on early debt extinguishment	(6.8)		(23.5)		16.7		71	%
Interest income	Interest income		0.5		1.5			(1.0)		(67)	%	Interest income	13.1		0.5		12.6		2,520	%

Unrealized losses on derivative contracts related to forecasted sales			(301.0)		(1.9)			(299.1)		(15,742)	%
Unrealized gains (losses) on foreign currency option contracts			3.3		(7.6)			10.9		143	%
Unrealized gains (losses) on derivative contracts related to forecasted sales												Unrealized gains (losses) on derivative contracts related to forecasted sales	118.7		(301.0)		419.7		139	%
Unrealized (losses) gains on foreign currency option contracts												Unrealized (losses) gains on foreign currency option contracts	(2.2)		3.3		(5.5)		(167)	%
Take-or-pay contract-based intangible recognition	Take-or-pay contract-based intangible recognition		0.7		1.1			(0.4)		(36)	%	Take-or-pay contract-based intangible recognition	0.6		0.7		(0.1)		(14)	%
Income tax benefit			1.0		1.8			(0.8)		(44)	%
Loss from continuing operations, net of income taxes			$	(119.8)	$	(77.7)		$	(42.1)	(54)	%
Income tax (provision) benefit												Income tax (provision) benefit	(118.0)		1.0		(119.0)		(11,900)	%
Income (loss) from continuing operations, net of income taxes												Income (loss) from continuing operations, net of income taxes	$	284.1	$	(119.8)	$	403.9	337	%

~~Table of Contents~~

Depreciation, Depletion and Amortization. The following table presents a summary of depreciation, depletion and amortization expense by reporting segment:


		Three Months Ended March 31,	(Decrease) Increase to Income				Three Months Ended March 31,						Increase (Decrease) to Income
			2022		2021			$		%			2023		2022		$		%
		(Dollars in millions)					(Dollars in millions)
Seaborne Thermal Mining	Seaborne Thermal Mining		$	(24.0)	$	(21.1)		$	(2.9)	(14)	%	Seaborne Thermal Mining	$	(23.8)	$	(24.0)	$	0.2	1	%
Seaborne Metallurgical Mining	Seaborne Metallurgical Mining		(19.9)		(16.5)			(3.4)		(21)	%	Seaborne Metallurgical Mining	(21.1)		(19.9)		(1.2)		(6)	%
Powder River Basin Mining	Powder River Basin Mining		(10.5)		(9.6)			(0.9)		(9)	%	Powder River Basin Mining	(11.7)		(10.5)		(1.2)		(11)	%
Other U.S. Thermal Mining	Other U.S. Thermal Mining		(15.7)		(17.2)			1.5		9	%	Other U.S. Thermal Mining	(17.7)		(15.7)		(2.0)		(13)	%
Corporate and Other	Corporate and Other		(2.8)		(3.9)			1.1		28	%	Corporate and Other	(2.0)		(2.8)		0.8		29	%
Total	Total		$	(72.9)	$	(68.3)		$	(4.6)	(7)	%	Total	$	(76.3)	$	(72.9)	$	(3.4)	(5)	%

Additionally, the following table presents a summary of the Company’s weighted-average depletion rate per ton for active mines in each of its ~~mining~~operating segments:


		Three Months Ended March 31,			Three Months Ended March 31,
			2022			2021			2023		2022
Seaborne Thermal Mining	Seaborne Thermal Mining		$	2.48		$	1.87	Seaborne Thermal Mining	$	2.17	$	2.48
Seaborne Metallurgical Mining	Seaborne Metallurgical Mining		2.12			1.00		Seaborne Metallurgical Mining	2.16		2.12
Powder River Basin Mining	Powder River Basin Mining		0.33			0.23		Powder River Basin Mining	0.31		0.33
Other U.S. Thermal Mining	Other U.S. Thermal Mining		1.17			1.12		Other U.S. Thermal Mining	1.21		1.17

~~Depreciation, depletion and amortization expense increased during the three months ended March 31, 2022 compared to the same period in the prior year primarily due to increased depletion.~~ The ~~increase~~decrease in the weighted-average depletion rate per ton for the Seaborne Thermal Mining segment during the three months ended March 31, ~~2022~~2023 compared to the same period in the prior year reflects the impact of the transition to the United Wambo Joint Venture. The increase in the weighted-average depletion rate per ton for the Seaborne Metallurgical Mining segment during the three months ended March 31, 2022 compared to the same period in the prior year reflects the volume and mix variances ~~which impacted~~across the ~~Company’s revenue as described above.~~segment.

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Interest Expense. The decrease in interest expense during the three months ended March 31, ~~2022 was~~2023 primarily ~~driven by prior year fees related to a series~~reflects the impacts of ~~refinancing transactions~~debt retirements completed by the Company ~~($10.6 million)~~during 2022 as further described in Note ~~11.~~8. “Long-term Debt” to the accompanying unaudited condensed consolidated financial statements and Note 10. “Long-term Debt” to the Annual Report on Form 10-K for the year ended December 31, ~~2021.~~2022.

Net ~~(Loss) Gain~~Loss on Early Debt Extinguishment. The ~~loss~~losses recognized during the three months ended March 31, ~~2022 was~~2023 were primarily related to the amendment of the Company’s now-terminated letter of credit facility as further discussed in Note 11. “Financial Instruments and Other Guarantees” to the accompanying unaudited condensed consolidated financial statements. The losses recognized during the prior year period were primarily related to the redemption of existing notes during the period as further ~~discussed~~described in Note ~~11.~~8. “Long-term Debt” to the accompanying unaudited condensed consolidated financial ~~statements.~~statements and Note 10. “Long-term Debt” to the Annual Report on Form 10-K for the year ended December 31, 2022.

Interest Income. The increase in interest income during the three months ended March 31, 2023 was primarily due to higher cash balances, including restricted cash balances on which the Company earns interest, and higher interest rates in the current year. Based upon projected cash balances and interest rates, the Company anticipates significantly higher interest income throughout 2023 as compared to the prior year.

Unrealized ~~Losses~~Gains (Losses) on Derivative Contracts Related to Forecasted Sales. Unrealized ~~losses~~gains (losses) primarily relate to mark-to-market activity on ~~derivatives~~derivative contracts related to forecasted coal sales. For additional information, refer to Note 7.5. “Derivatives and Fair Value Measurements” to the accompanying unaudited condensed consolidated financial statements.

Unrealized (Losses) Gains ~~(Losses)~~ on Foreign Currency Option Contracts. Unrealized (losses) gains ~~(losses)~~ primarily relate to mark-to-market activity on foreign currency option contracts. For additional information, refer to Note 7.5. “Derivatives and Fair Value Measurements” to the accompanying unaudited condensed consolidated financial statements.

Income Tax (Provision) Benefit. The increase in the income tax provision during the three months ended March 31, 2023 compared to the same period in the prior year was primarily due to an increase in pretax income and the release of valuation allowance related to Australian net operating losses during the fourth quarter of 2022. Refer to Note 7. “Income Taxes” to the accompanying unaudited condensed consolidated financial statements for additional information.

Net Income (Loss) Attributable to Common Stockholders

The following table presents net income (loss) attributable to common stockholders:


	Three Months Ended March 31,				Increase (Decrease) to Income
	2023		2022		$		%
	(Dollars in millions)
Income (loss) from continuing operations, net of income taxes	$	284.1	$	(119.8)	$	403.9	337	%
Loss from discontinued operations, net of income taxes	(1.3)		(0.8)		(0.5)		(63)	%
Net income (loss)	282.8		(120.6)		403.4		334	%
Less: Net income (loss) attributable to noncontrolling interests	14.3		(1.1)		15.4		1,400	%
Net income (loss) attributable to common stockholders	$	268.5	$	(119.5)	$	388.0	325	%

Net Income (Loss) Attributable to Noncontrolling Interests. The increase in the results attributable to noncontrolling interests during the three months ended March 31, 2023 compared to the same period in the prior year was primarily due to stronger financial results of Peabody’s majority-owned Wambo operations in which there is an outside non-controlling interest.

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~~Net Loss Attributable to Common Stockholders~~

~~The following table presents net loss attributable to common stockholders:~~

Three Months Ended March 31, (Decrease) Increase
to Income
2022 2021 $ %
(Dollars in millions)
Loss from continuing operations, net of income taxes $ (119.8) $ (77.7) $ (42.1) (54) %
Loss from discontinued operations, net of income taxes (0.8) (2.0) 1.2 60 %
Net loss (120.6) (79.7) (40.9) (51) %
Less: Net (loss) income attributable to noncontrolling interests (1.1) 0.4 (1.5) (375) %
Net loss attributable to common stockholders $ (119.5) $ (80.1) $ (39.4) (49) %

Diluted Earnings per Share (EPS)

The following table presents diluted EPS:


		Three Months Ended March 31,	(Decrease) Increase to EPS				Three Months Ended March 31,						Increase to EPS
			2022		2021			$		%			2023		2022		$		%
Diluted EPS attributable to common stockholders:	Diluted EPS attributable to common stockholders:											Diluted EPS attributable to common stockholders:
Loss from continuing operations			$	(0.87)	$	(0.79)		$	(0.08)	(10)	%
Income (loss) from continuing operations												Income (loss) from continuing operations	$	1.69	$	(0.87)	$	2.56	294	%
Loss from discontinued operations	Loss from discontinued operations		(0.01)		(0.02)			0.01		50	%	Loss from discontinued operations	(0.01)		(0.01)		—		—	%
Net loss attributable to common stockholders			$	(0.88)	$	(0.81)		$	(0.07)	(9)	%
Net income (loss) attributable to common stockholders												Net income (loss) attributable to common stockholders	$	1.68	$	(0.88)	$	2.56	291	%

Diluted EPS is commensurate with the changes in results from continuing operations and discontinued operations during that period. Diluted EPS reflects weighted average diluted common shares outstanding of ~~136.2~~161.4 million and ~~98.4~~136.2 million for the three months ended March 31, ~~2022~~2023 and ~~2021,~~2022, respectively.

Reconciliation of Non-GAAP Financial Measures

Adjusted EBITDA is defined as ~~loss~~income (loss) from continuing operations before deducting net interest expense, income taxes, asset retirement obligation expenses and depreciation, depletion and amortization. Adjusted EBITDA is also adjusted for the discrete items that management excluded in analyzing each of its segment’s operating performance, as displayed in the reconciliations below.


		Three Months Ended March 31,			Three Months Ended March 31,
			2022			2021			2023		2022
			(Dollars in millions)						(Dollars in millions)
Loss from continuing operations, net of income taxes			$	(119.8)		$	(77.7)
Income (loss) from continuing operations, net of income taxes								Income (loss) from continuing operations, net of income taxes	$	284.1	$	(119.8)
Depreciation, depletion and amortization	Depreciation, depletion and amortization		72.9			68.3		Depreciation, depletion and amortization	76.3		72.9
Asset retirement obligation expenses	Asset retirement obligation expenses		15.0			15.9		Asset retirement obligation expenses	15.4		15.0
Restructuring charges	Restructuring charges		1.6			2.1		Restructuring charges	0.1		1.6

Asset impairment								Asset impairment	2.0		—

Changes in deferred tax asset valuation allowance and reserves and amortization of basis difference related to equity affiliates			(0.6)			(1.5)
Changes in amortization of basis difference related to equity affiliates								Changes in amortization of basis difference related to equity affiliates	(0.3)		(0.6)
Interest expense	Interest expense		39.4			52.4		Interest expense	18.4		39.4
Net loss (gain) on early debt extinguishment			23.5			(3.5)
Net loss on early debt extinguishment								Net loss on early debt extinguishment	6.8		23.5
Interest income	Interest income		(0.5)			(1.5)		Interest income	(13.1)		(0.5)

Unrealized losses on derivative contracts related to forecasted sales			301.0			1.9
Unrealized (gains) losses on foreign currency option contracts			(3.3)			7.6
Unrealized (gains) losses on derivative contracts related to forecasted sales								Unrealized (gains) losses on derivative contracts related to forecasted sales	(118.7)		301.0
Unrealized losses (gains) on foreign currency option contracts								Unrealized losses (gains) on foreign currency option contracts	2.2		(3.3)
Take-or-pay contract-based intangible recognition	Take-or-pay contract-based intangible recognition		(0.7)			(1.1)		Take-or-pay contract-based intangible recognition	(0.6)		(0.7)
Income tax benefit			(1.0)			(1.8)
Income tax provision (benefit)								Income tax provision (benefit)	118.0		(1.0)
Total Adjusted EBITDA	Total Adjusted EBITDA		$	327.5		$	61.1	Total Adjusted EBITDA	$	390.6	$	327.5

Total Reporting Segment Costs is defined as operating costs and expenses adjusted for the discrete items that management excluded in analyzing each of its segments’ operating performance, as displayed in the reconciliations below.


	Three Months Ended March 31,
	2023		2022
	(Dollars in millions)
Operating costs and expenses	$	846.6	$	699.0
Unrealized (losses) gains on foreign currency option contracts	(2.2)		3.3
Take-or-pay contract-based intangible recognition	0.6		0.7

Net periodic benefit credit, excluding service cost	(9.7)		(12.2)
Total Reporting Segment Costs	$	835.3	$	690.8

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The following table presents Total Reporting Segment Costs by reporting segment:


	Three Months Ended March 31,
	2023		2022
	(Dollars in millions)
Seaborne Thermal Mining	$	182.5	$	160.7
Seaborne Metallurgical Mining	197.6		140.3
Powder River Basin Mining	269.5		243.6
Other U.S. Thermal Mining	185.2		153.1
Corporate and Other	0.5		(6.9)
Total Reporting Segment Costs	$	835.3	$	690.8

Revenue per Ton and Adjusted EBITDA Margin per Ton are equal to revenue by segment and Adjusted EBITDA by segment, respectively, divided by segment tons sold. Costs per Ton is equal to Revenue per Ton less Adjusted EBITDA Margin per ~~Ton, and are reconciled to operating costs and expenses as follows:~~

Three Months Ended March 31,
2022 2021
(Dollars in millions)
Operating costs and expenses $ 699.0 $ 582.6
Unrealized gains (losses) on foreign currency option contracts 3.3 (7.6)
Take-or-pay contract-based intangible recognition 0.7 1.1
Net periodic benefit credit, excluding service cost (12.2) (8.7)
Total Reporting Segment Costs $ 690.8 $ 567.4

~~The following table presents Reporting Segment Costs by reporting segment:~~

Three Months Ended March 31,
2022 2021
(Dollars in millions)
Seaborne Thermal Mining $ 160.7 $ 147.9
Seaborne Metallurgical Mining 140.3 109.9
Powder River Basin Mining 243.6 198.3
Other U.S. Thermal Mining 153.1 113.1
Corporate and Other (6.9) (1.8)
Total Reporting Segment Costs $ 690.8 $ 567.4
Ton.

The following tables present tons sold, revenue, Total Reporting Segment Costs and Adjusted EBITDA by ~~mining~~operating segment:


		Three Months Ended March 31, 2022									Three Months Ended March 31, 2023
		Seaborne Thermal Mining		Seaborne Metallurgical Mining		Powder River Basin Mining		Other U.S. Thermal Mining			Seaborne Thermal Mining		Seaborne Metallurgical Mining		Powder River Basin Mining		Other U.S. Thermal Mining
		(Amounts in millions, except per ton data)									(Amounts in millions, except per ton data)
Tons sold	Tons sold	3.8		1.2		20.6		4.2		Tons sold	3.6		1.3		22.0		4.5

Revenue	Revenue	$	251.2	$	321.3	$	251.2	$	203.1	Revenue	$	346.5	$	288.4	$	305.3	$	249.4
Reporting Segment Costs		160.7		140.3		243.6		153.1
Total Reporting Segment Costs										Total Reporting Segment Costs	182.5		197.6		269.5		185.2
Adjusted EBITDA	Adjusted EBITDA	$	90.5	$	181.0	$	7.6	$	50.0	Adjusted EBITDA	$	164.0	$	90.8	$	35.8	$	64.2

Revenue per Ton	Revenue per Ton	$	66.86	$	258.43	$	12.18	$	48.46	Revenue per Ton	$	96.82	$	220.60	$	13.89	$	54.73
Costs per Ton	Costs per Ton	42.77		112.87		11.81		36.54		Costs per Ton	51.01		151.13		12.26		40.65
Adjusted EBITDA Margin per Ton	Adjusted EBITDA Margin per Ton	$	24.09	$	145.56	$	0.37	$	11.92	Adjusted EBITDA Margin per Ton	$	45.81	$	69.47	$	1.63	$	14.08

~~Table of Contents~~

Three Months Ended March 31, 2021
Seaborne Thermal Mining Seaborne Metallurgical Mining Powder River Basin Mining Other U.S. Thermal Mining
(Amounts in millions, except per ton data)
Tons sold 4.1 1.0 20.7 3.9
Revenue $ 176.4 $ 87.5 $ 228.4 $ 149.3
Reporting Segment Costs 147.9 109.9 198.3 113.1
Adjusted EBITDA $ 28.5 $ (22.4) $ 30.1 $ 36.2
Revenue per Ton $ 43.36 $ 87.47 $ 11.01 $ 38.76
Costs per Ton 36.36 109.89 9.56 29.37
Adjusted EBITDA Margin per Ton $ 7.00 $ (22.42) $ 1.45 $ 9.39

Free Cash Flow is defined as net cash (used in) provided by operating activities less net cash provided by (used in) investing activities and excludes cash outflows related to business combinations. See the table below for a reconciliation of Free Cash Flow to its most comparable measure under U.S. GAAP.


	Three Months Ended March 31, 2022
	Seaborne Thermal Mining		Seaborne Metallurgical Mining		Powder River Basin Mining		Other U.S. Thermal Mining
	(Amounts in millions, except per ton data)
Tons sold	3.8		1.2		20.6		4.2

Revenue	$	251.2	$	321.3	$	251.2	$	203.1
Total Reporting Segment Costs	160.7		140.3		243.6		153.1
Adjusted EBITDA	$	90.5	$	181.0	$	7.6	$	50.0

Revenue per Ton	$	66.86	$	258.43	$	12.18	$	48.46
Costs per Ton	42.77		112.87		11.81		36.54
Adjusted EBITDA Margin per Ton	$	24.09	$	145.56	$	0.37	$	11.92

Regulatory Update

Other than as described in the following section, there were no significant changes to the Company’s regulatory matters subsequent to December 31, ~~2021.~~2022. Information regarding the Company’s regulatory matters is outlined in Part I, Item 1. “Business” in its Annual Report on Form 10-K for the year ended December 31, ~~2021.~~2022.

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Regulatory Matters - U.S.

National Ambient Air Quality Standards (NAAQS).. The Clean Air Act (CAA) requires the United States Environmental Protection Agency (EPA) to review national ambient air quality standards every five years to determine whether revision to current standards are appropriate. As part of this recurring review process, the EPA in 2020 proposed to retain the ozone ~~standards~~NAAQS promulgated in 2015, including ~~current~~both the primary (public health) and secondary ~~standards, and~~(public welfare) standards. The EPA subsequently promulgated final standards to this effect. ~~Fifteen~~In 2021, fifteen states and other petitioners ~~have~~ filed a petition for review of the rule in the United States Court of Appeals for the D.C. Circuit (D.C. Circuit). The litigation is currently in abeyance following a motion filed by the EPA to allow for review of the standards.

The EPA also proposed in 2020 to retain the particulate matter (PM) ~~standards~~NAAQS last revised in 2012. On December 18, 2020, the EPA issued a final rule to retain both the primary annual and 24-hour PM standards for fine particulate matter (PM2.5) and the primary 24-hour standard for coarse particulate matter (PM10) and secondary PM10 standards. This rule has also been challenged in the D.C. Circuit by several states and environmental organizations. The case is currently in abeyance following a motion filed by the EPA to allow for review of the standards.

On ~~March 11, 2022,~~January 6, 2023, the EPA ~~announced their Clean Air Act ‘good neighbor’~~ proposed ~~rule. The~~to lower the level of the annual PM2.5 NAAQS from 12.0 ug/m3 to within the range of 9.0 to 10.0 ug/m3. If enacted as proposed, this rule would ~~double the number of covered states, set first-time limits on certain industrial source plant boilers and~~ require ~~daily limits on emissions from large coal-fired power plants. The EPA estimates that by 2026 the compliance cost will be $1.1 billion.~~

~~More stringent PM or ozone standards would require new state implementation plans~~fossil fuel generating units to ~~be developed and filed with the EPA and may trigger~~install additional ~~control technology for mining equipment or result in additional challenges to permitting and expansion efforts. This could also be the case with respect to other NAAQS for~~ nitrogen ~~dioxide~~oxide (NO2x) ~~and sulfur dioxide (SO~~2~~), although these standards are not subject to a statutorily-required review until 2023 for NO~~2 ~~and 2024 for SO~~2.

~~Table~~reducing technologies ultimately increasing the cost of ~~Contents~~fossil fuel generated energy or causing potential unit retirements.

Cross State Air Pollution Rule (CSAPR) and CSAPR Update Rule. In 2011, the EPA finalized the CSAPR, which requires the District of Columbia and 27 states from Texas eastward (not including the New England states or Delaware) to reduce power plant emissions that cross state lines and significantly contribute to ozone and/or fine particle pollution in other states. In 2016, the EPA published the final CSAPR Update Rule which imposed additional reductions in ~~nitrogen oxides (NO~~NOx) beginning in 2017 in 22 states subject to CSAPR. This rule was subsequently remanded back to the EPA. Wisconsin v. EPA, 938 F.3d 303.

In April 2021, the EPA published a final rule in the Federal Register to address the D.C. Circuit remand. This rule imposed further reductions of NOx emissions in 12 states that were subject to the original 2016 rule, which was based on the 2008 ozone ~~standard.~~NAAQS.

In the same rule, the EPA determined that 9 states did not significantly contribute to downwind nonattainment and/or maintenance issues and therefore did not require additional emission reductions. The EPA subsequently issued Federal Implementation Plans ~~(FIPs)~~ to lower state ozone season NOx budgets in 2021 to 2024 in the affected states. A petition for review challenging the 2021 rule ~~has been~~was filed in the D.C. ~~Circuit~~Circuit. Briefing is completed and ~~briefing in this litigation has been completed,~~oral arguments were held September 28, 2022, but this does not stay the effectiveness of the rule.

~~In addition, on February 28, 2022,~~On March 15, 2023, the EPA ~~released~~Administrator signed a ~~proposed~~final rule ~~for additional FIPs~~ to address ~~interstate air pollution from fossil-fuel~~regional ozone transport for the 2015 ozone NAAQS by imposing new federal ozone season emission budgets for NOx in 23 states, including California, Nevada, Oklahoma and Texas, as well as some areas in Indian country. The rule includes emission limits for NOx for fossil fuel-fired power plants ~~in 25 states~~ and a “backstop daily emissions rate” for large coal-fired power plants if they exceed specified limits. The rule also sets first-time limits on certain industrial sources that will apply starting with the 2026 ozone season in 2320 states. ~~This rule is based~~The EPA estimates that annual compliance costs (for 2023 through 2042) will be $770 million to $910 million, depending on the discount rate applied. These emission limitations would apply in addition to requirements contained in State Implementation Plans to control ozone precursors in affected states, although states have the option to replace these limits with equally strict or more stringent ~~2015 ozone NAAQS and would, if finalized, affect~~limitations. When implemented, this rule could influence the closure of some ~~of the states covered by previous rules, but also include several new states, including states in the western United States.~~coal generating units that haven’t installed selective catalytic reduction technologies.

Mercury and Air Toxic Standards (MATS). The EPA published the final MATS rule in the Federal Register in 2012. The MATS rule revised the ~~new source performance standards (NSPS)~~New Source Performance Standards for NOx, SO2sulfur dioxide and PM for new and modified coal-fueled electricity generating plants, and imposed maximum achievable control technology (MACT) emission limits on hazardous air pollutants (HAPs) from new and existing coal-fueled and oil-fueled electric generating plants. MACT standards limit emissions of mercury, acid gas HAPs, non-mercury HAP metals and organic HAPs.

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In 2020, the EPA issued a final rule reversing a prior finding and determined that it is not “appropriate and necessary” under the CAA to regulate HAP emissions from coal- and oil-fired power plants. This rule also finalized residual risk and technology review standards for the coal- and oil-fired electricity utility generating units source category. Both actions were challenged in the D.C. Circuit but this litigation was placed in abeyance. On February 9, 2022 the EPA proposed a rule to revoke the 2020 finding and to reaffirm the agency’s 2016 finding that it ~~remains~~remained “appropriate and necessary” to regulate HAP emissions from coal- and oil-fired ~~powerplants~~power plants under ~~Clean Air Act section 112.~~Section 112 of the CAA. In the same proposal, the EPA ~~is also soliciting~~solicited comments on the performance and cost of new or improved technologies to control HAPs from these ~~powerplants~~power plants as part of the agency’s review of related residual risk and technology review standards. The EPA finalized the 2022 proposed rule on March 6, 2023, revoking the 2020 finding and concluding that it is appropriate and necessary to regulate coal- and oil-fired electric steam generating units under CAA Section 112. If enacted, this rule could influence closure of additional coal generating units.

~~Clean Water Act (CWA).~~Effluent Limitations Guidelines for the Steam Electric Power Generating Industry. On September 30, 2015, the EPA published a final rule setting new or additional requirements for various wastewater discharges from steam electric power plants. The ~~CWA of 1972 directly impacts U.S. coal mining operations by requiring effluent limitations~~rule set zero discharge requirements for some waste streams, as well as new, more stringent limits for arsenic, mercury, selenium and ~~treatment standards for wastewater discharge from mines through~~nitrogen applicable to certain other waste streams. On October 13, 2020, the National Pollutant Discharge Elimination System (NPDES). Regular monitoring, reporting and performance standards are requirements of NPDES permits that govern the discharge of water from mine-related point sources into receiving waters.

The U.S. Army Corps of Engineers (Corps) regulates certain activities affecting navigable waters and waters of the U.S., including wetlands. Section 404 of the CWA requires mining companies to obtain permits from the Corps to place material in or mine through jurisdictional waters of the U.S.

States are empowered to develop and apply water quality standards. These standards are subject to change and must be approved by the EPA. Discharges must either meet state water quality standards or be authorized through available regulatory processes such as alternate standards or variances. Standards vary from state to state. Additionally, through the CWA Section 401 certification program, state and tribal regulators have approval authority over federal permits or licenses that might result in a discharge to their waters. State and tribal regulators consider whether the activity will comply with their water quality standards and other applicable requirements in deciding whether or not to certify the activity. The EPA issued a final rule ~~in 2020 that could limit state~~revising the technology-based effluent limitations guidelines and ~~tribal regulators’ authority by allowing~~standards for the steam electric power generating point source category applicable to flue gas desulfurization wastewater and bottom ash transport water. However, on March 8, 2023, the EPA released the pre-publication versions of two actions to ~~certify projects over state or tribal regulator objections~~further revise certain discharge limits applicable to steam electric power plants. The first action is a proposed rule that would establish more stringent standards for flue gas desulfurization wastewater, bottom ash transport water and combustion residual leachate. If the proposed rule is finalized in ~~some circumstances. That~~substantially the same form, the revised effluent limitations guidelines would significantly increase costs for many coal-fired steam electric power plants. The second action is a direct final rule that extends the deadline for steam electric power plants to opt in to the 2028 early retirement provision that was ~~temporarily vacated by a district court, but a Supreme Court order on April 7, 2022, effectively reinstated~~part of the 2020 rule. The ~~EPA, however, plans to issue another proposal in 2022 that would supersede~~direct final rule could influence fuel switching or additional coal generating unit retirements by the ~~2020 rule.~~end of 2028.

Regulatory Matters - Australia

New South Wales Coal Directions. The ~~outcome~~State of ~~Australia’s~~New South Wales (NSW) enacted the Energy and Utilities Administration Amendment Act 2022 granting the State Premier and Minister for Energy the ability to issue directions in the event of a coal market price emergency (among other powers). On December 22, 2022, the State Premier declared a coal market price emergency on the basis that the declaration was necessary to reduce the risk that increases in coal prices could contribute to an increase in electricity prices. On December 23, 2022, directions were issued to Peabody Energy Australia Pty Ltd and a number of other coal producers with operations in NSW. Those directions were amended on January 31, 2023 and February 16, 2023. The most recent directions require Peabody Energy Australia Pty Ltd to reserve a portion of coal produced by Wambo Coal Pty Ltd and by Wilpinjong Coal Pty Ltd for sale to NSW power generators at a capped price until June 30, 2024 and impose additional reporting obligations to demonstrate compliance with the directions. While these directions are currently not anticipated to significantly impact the Wambo Mines or the Wilpinjong Mine, the nature and extent of those obligations and associated reporting requirements may continue to evolve if further directions are issued.

National Greenhouse and Energy Reporting Act 2007 (NGER Act). The NGER Act imposes requirements for corporations meeting a certain threshold to register and report greenhouse gas emissions and abatement actions, as well as energy production and consumption as part of a single, national reporting system. The Clean Energy Regulator administers the NGER Act. The federal ~~election~~Department of Environment and Energy is responsible for NGER Act-related policy developments and review.

On July 1, 2016, amendments to the NGER Act implemented the Emissions Reduction Fund Safeguard Mechanism. From that date, large designated facilities such as coal mines were issued with a baseline for their covered emissions and must take steps to keep their emissions at or below the baseline or face penalties.

The National Greenhouse and Energy Reporting (Safeguard Mechanism) Rule 2015 outlines key elements of a responsible emitter’s duty to avoid an excess emissions situation and provides detail on ~~May 21, 2022 has~~how it can meet that requirement. The rule was amended between 2019 and 2021 to transition responsible emitters to new baseline setting arrangements. From the ~~potential~~start of the 2020-21 compliance year, baselines must use prescribed production variables (an example being run of mine coal) and default emissions intensity values (being values set by the government to ~~impact federal environmental, taxation, labor market and other legislation governing Australian mining operations.~~represent the industry average emissions intensity of production over five years) unless specific exemptions apply (such as a facility having site-specific values set).

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On January 10, 2023, the Australian federal government released its Safeguard Mechanism Reforms Position Paper setting out the proposed changes to the emissions reduction regime. The reforms will commence on July 1, 2023 utilizing site specific baseline emissions as benchmarks for year-on-year improvement (proposed to be 4.9% each year to 2030) before transitioning to industry average emissions benchmarks by 2030. Proponents will earn tradeable credits (Safeguard Mechanism Credits) when emissions are below their baselines or can purchase credits to offset emissions. Access to existing Australian Carbon Credit Units will continue unchanged albeit with a price ceiling of $75 Australian dollars per tonne of carbon dioxide (CO2) in 2023-24, increasing with the Consumer Price Index plus 2% each year. On March ~~15, 2022,~~27, 2023, the ~~Full Court~~Australian Federal Government announced a number of additional measures in the ~~Federal Court~~Safeguard Mechanism (Crediting) Amendments Bill 2023 which was introduced and passed both Houses of ~~Australia overturned~~Parliament on March 30, 2023. The legislation introduces a cap on overall net emissions from facilities covered by the ~~decision in Sharma v~~scheme through to 2030. The legislation also sets a cap of net zero tonnes CO2-e for any financial year beginning after June 30, 2049. In addition, if the Minister for ~~the~~ Environment [2021] FCA 560 (Sharma), a case which found in 2021 that the Federal Minister for the Environment had a duty to avoid causing personal injury or death to children in Australia as a result of carbon emissions when decidingand Water grants an ~~application to approve a coal mine expansion. In light of this decision, the Minister no longer must consider the effects of carbon emissions when assessing referrals~~approval under the Environment Protection and Biodiversity Conservation Act ~~1999. However,~~1999 (Cth) (EPBC Act) to a new or expanded facility covered by the scheme, the Minister will be required to give an ~~application by Sharma for special leave to appeal~~estimate of the facility's Scope 1 emissions to the ~~High Court of Australia remains probable,~~Minister for Climate Change, the Climate Change Secretary and the ~~duty could be reinstated.~~

~~As part~~Climate Change Authority for assessment against scheme targets. The legislation is now awaiting assent and is expected to commence on July 1, 2023. The potential impact of ~~the Queensland Government’s 2019-20 Budget, it committed~~these reforms to ~~freeze royalty rates on coal and minerals for three years provided companies voluntarily contribute to the Resources Community Infrastructure Fund. The royalty freeze~~Peabody’s Australian operations is ~~due to end in June 2022 and the Queensland Government has not established a replacement rate.~~

The New South Wales Mining and Geoscience Department will be undertaking consultation with respect to the manner for calculating mining royalties in New South Wales between April and June 2022 as part of a proposed redraft of the Mining Royalties (COAL) – Ministerial Determination under ~~Section 283(5) of the Mining Act 1992.~~review.

Risks Related to Global Climate Change

Peabody recognizes that climate change is occurring and that human activity, including the use of fossil fuels, contributes to greenhouse gas (GHG) emissions. The Company’s largest contribution to GHG emissions occurs indirectly, through the coal used by its customers in the generation of electricity and the production of steel (Scope 3). To a lesser extent, the Company directly and indirectly contributes to GHG emissions from various aspects of its mining operations, including from the use of electrical power and combustible fuels, as well as from the fugitive methane emissions associated with coal mines and stockpiles (Scopes 1 and 2).

Peabody’s board of directors and management believe that coal is essential to affordable, reliable energy and will continue to play a significant role in the global energy mix for the foreseeable future. Peabody views technology as vital to advancing global climate change solutions, and the ~~company~~Company supports advanced coal technologies to drive continuous improvement toward the ultimate goal of net-zero emissions from coal.

The board of directors has ultimate oversight for climate-related risk and opportunity assessments, and has delegated certain aspects of these assessments to subject matter committees of the board. In addition, the board and its committees are provided regular updates on major risks and changes, including climate-related matters. The senior management team champions the strategic objectives set forth by the board of directors and Peabody’s global workforce turns those objectives into meaningful actions.

Management believes that the Company’s external communications, including environmental regulatory filings and public notices, ~~SEC~~U.S. Securities and Exchange Commission filings, its annual Environmental, Social and Governance (ESG) Report, its website and various other stakeholder-focused publications provide a comprehensive picture of the Company’s material risks and progress. All such communications are subject to oversight and review protocols established by Peabody’s board of directors and executive leadership team.

The Company faces risks from both the global transition to a net-zero emissions economy and the potential physical impacts of climate change. Such risks may involve financial, policy, legal, technological, reputational and other impacts as the Company meets various mitigation and adaptation requirements.

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The transition to a net-zero emissions economy is driven by many factors, including, but not limited to, legislative and regulatory rulemaking processes, campaigns undertaken by non-governmental organizations to minimize or eliminate the use of coal as a source of electricity generation, and the ESG-related policies of financial institutions and other private companies. The Company has experienced, or may in the future experience, negative effects on its results of operations due to the following specific risks as a result of such factors:

•Reduced utilization or closure of existing coal-fired electricity generating plants;

•Electricity generators switching from coal to alternative fuels, when feasible;

•Increased costs associated with regulatory compliance;

•Unfavorable impact of regulatory compliance on supply and demand fundamentals, such as limitations on financing or construction of new coal-fueled power stations;

•Uncertainty and inconsistency in rulemaking processes related to periodic governmental administrative and policy changes;

•Unfavorable costs of capital and access to financial markets and products due to the policies of financial institutions;

•Disruption to operations or markets due to anti-coal activism and litigation; and

•Reputational damage associated with involvement in GHG emissions.

With respect to the potential or actual physical impacts of climate change, the Company has identified the following specific risks:

•Disruption to water supplies vital to mining operations;

•Disruption to transportation and other supply chain activities;

•Damage to the Company’s, customers’ or suppliers’ plant and equipment, or third-party infrastructure, resulting from weather events or changes in environmental trends and conditions; and

•Electrical grid failures and power outages.

While the Company faces numerous risks associated with the transition to a net-zero emissions economy and the physical impacts of climate change, certain opportunities may also emerge, such as:

•Heightened emphasis among multiple stakeholders to develop high-efficiency, low-emissions (HELE) technologies and carbon capture, use and storage (CCUS) technologies;

•Increased steel demand related to construction and other infrastructure projects related to climate change concerns; and

•The relative expense and reliability of renewable energy sources compared to coal may encourage support for balanced-source energy policies and regulations.

Global climate issues continue to attract public and scientific attention. Numerous reports, such as the Fourth and the Fifth Assessment Report of the Intergovernmental Panel on Climate Change, have also engendered concern about the impacts of human activity, especially fossil fuel combustion, on global climate issues. In turn, increasing government attention is being paid to global climate issues and to GHG emissions, including emissions of carbon dioxide from coal combustion by power plants. There have been significant developments in federal and state legislation and regulation and international accords regarding climate change. Such developments are described within Part I, Item 1. “Business” in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2021.~~2022.

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The enactment of future laws or the passage of regulations regarding emissions from the use of coal by the U.S., some of its states or other countries, or other actions to limit such emissions, could result in electricity generators switching from coal to other fuel sources. Further, policies limiting available financing for the development of new coal-fueled power stations could adversely impact the global demand for coal in the future. The potential financial impact on Peabody of such future laws, regulations or other policies will depend upon the degree to which any such laws or regulations force electricity generators to diminish their reliance on coal as a fuel source. That, in turn, will depend on a number of factors, including the specific requirements imposed by any such laws, regulations or other policies, the time periods over which those laws, regulations or other policies would be phased in, the state of development and deployment of CCUS technologies as well as acceptance of CCUS technologies to meet regulations and the alternative uses for coal. Higher-efficiency coal-fired power plants may also be an option for meeting laws or regulations related to emissions from coal use. Several countries, including major coal users such as China, India and Japan, included using higher-efficiency coal-fueled power plants in their plans under the Paris Agreement. The Company believes HELE and CCUS technologies should be part of the solution to achieve substantial reductions in GHG emissions and should be broadly supported and encouraged, including through eligibility for public funding from national and international sources. In addition, CCUS merits targeted deployment incentives, like those provided to other low-emission sources of energy.

From time to time, the Company’s board of directors and management attempt to analyze the potential impact on the Company of as-yet-unadopted, potential laws, regulations and policies. Such analyses require significant assumptions as to the specific provisions of such potential laws, regulations and policies which sometimes show that if implemented in the manner assumed by the analyses, the potential laws, regulations and policies could result in material adverse impacts on the Company’s operations, financial condition or cash flows. Such analyses cannot be relied upon to reasonably predict the quantitative impact that future laws, regulations or other policies may have on the Company’s results of operations, financial condition or cash flows.

On March 21, 2022, the SEC proposed rules that would require public companies to disclose extensive climate-related information in certain SEC filings. Specifically, the proposed rules would add new Subpart 1500 to Regulation S-K and new Article 14 to Regulation S-X to require disclosure of climate-related risks that are reasonably likely to have a material impact on a public company’s business, results of operations, or financial condition; GHG emissions associated with a public company that includes, in many cases, an attestation report by a GHG emissions attestation provider; and climate-related financial metrics to be included in a company’s audited financial statements. The Company is currently assessing the potential impact of the proposed rules. The proposal is open for public comment through at least May 21, 2022.

Liquidity and Capital Resources

Overview

The Company’s primary source of cash is proceeds from the sale of its coal production to customers. The Company has also generated cash from the sale of non-strategic assets, including coal reserves and surface lands, and, from time to time, borrowings under its credit facilities and the issuance of securities. The Company’s primary uses of cash include the cash costs of coal production, capital expenditures, coal reserve lease and royalty payments, debt service costs, capital and operating lease payments, postretirement plans, take-or-pay obligations, post-mining reclamation obligations, collateral and margining requirements, and selling and administrative expenses. The Company has also used cash for ~~dividends, share repurchases and~~ early debt ~~retirements.~~retirements, dividends, and share repurchases.

As described below, the Company recently amended its existing agreement with the providers of its surety bond portfolio, which included lifting the previous restrictions on capital returns to shareholders. In connection with the amendment, the Company announced a new shareholder return plan, as discussed in Part II, Item 2. “Unregistered Sales of Equity Securities and Use of Proceeds.” Any future determinations to return capital to stockholders, such as dividends or share repurchases will depend on a variety of factors, including ~~the restrictions set forth under the Company’s debt and surety agreements,~~ its net income or other sources of cash, liquidity position and potential alternative uses of cash, such as internal development projects or acquisitions, as well as economic conditions and expected future financial results. The Company’s ability to early retire debt, declare dividends or repurchase shares in the future will depend on its future financial performance, which in turn depends on the successful implementation of its strategy and on financial, competitive, regulatory, technical and other factors, general economic conditions, demand for and selling prices of coal and other factors specific to its industry, many of which are beyond the Company’s control. ~~The Company has presently suspended the payment of dividends and share repurchases, as discussed in Part II, Item 2. “Unregistered Sales of Equity Securities and Use of Proceeds.”~~

~~Table of Contents~~

Liquidity

As of March 31, ~~2022,~~2023, the Company’s cash balances totaled ~~$823.3~~$892.2 million, including approximately ~~$331~~$563.6 million held by ~~U.S.~~Australian subsidiaries, ~~$473~~$301.8 million held by ~~Australian~~U.S. subsidiaries, and the remainder held by other foreign subsidiaries in accounts predominantly domiciled in the U.S. ~~The Australian subsidiaries that conduct the operations of the Wilpinjong Mine held cash of approximately $213 million at March 31, 2022.~~ A significant majority of the cash held by the Company’s foreign subsidiaries is denominated in U.S. dollars. This cash is generally used to support non-U.S. liquidity needs, including capital and operating expenditures in Australia. From time to time, the Company may repatriate excess cash from its foreign subsidiaries to the U.S. During the ~~first quarter of 2022,~~three months ended March 31, 2023, the Company repatriated approximately ~~$200 million.~~$100 million through intercompany dividends. If additional foreign-held cash is repatriated in the future, the Company does not expect restrictions or potential taxes will have a material effect to its near-term liquidity.

Table of Contents

The Company’s available liquidity ~~declined~~decreased from ~~$995.9~~$1,317.8 million as of December 31, ~~2021~~2022 to ~~$841.5~~$907.5 million as of March 31, ~~2022.~~2023. Available liquidity was comprised of the following:


		March 31, 2022		December 31, 2021			March 31, 2023		December 31, 2022
		(Dollars in millions)					(Dollars in millions)
Cash and cash equivalents	Cash and cash equivalents	$	823.3	$	954.3	Cash and cash equivalents	$	892.2	$	1,307.3
Credit facility availability	Credit facility availability	16.6		15.3		Credit facility availability	—		3.5
Accounts receivable securitization program availability	Accounts receivable securitization program availability	1.6		26.3		Accounts receivable securitization program availability	15.3		7.0
Total liquidity	Total liquidity	$	841.5	$	995.9	Total liquidity	$	907.5	$	1,317.8

~~Subsequent~~Surety Agreement Amendment and Collateral Requirements

In April 2023, the Company amended its existing agreement with the providers of its surety bond portfolio, dated November 6, 2020. Under the agreement, the Company was required to post collateral on a periodic basis through December 31, 2025. Prior to the April 2023 amendment, the Company had posted cumulative collateral of $557.8 million, primarily in the form of letters of credit.

Under the April 2023 amendment, the Company and surety providers agreed to a maximum aggregate collateral amount of $721.8 million based upon bonding levels at the effective date of the amendment. This maximum collateral amount represents a negotiated increase from the uncapped cumulative collateral amount prior to the amendment and may vary prospectively as future bonding levels increase or decrease. The amendment also removes restrictions on the payment of dividends and share repurchases, and extends the agreement through December 31, 2026. In order to maintain the new maximum collateral standstill, the Company must remain compliant with a minimum liquidity test and a maximum net leverage ratio, as measured each quarter. The minimum liquidity test requires the Company to maintain liquidity at the greater of $400 million or the difference between the penal sum of all surety bonds and the amount of collateral posted in favor of surety providers. The Company must also maintain a maximum net leverage ratio of 1.5 to 1.0, where the numerator consists of its funded debt, net of cash, and the denominator consists of its Adjusted EBITDA for the trailing twelve months. For purposes of calculating the ratio, only 50% of the outstanding principal amount of the Company’s 2028 Convertible Notes is deemed to be funded debt. The Company’s ability to pay dividends and make share repurchases is also subject to the quarterly minimum liquidity test. Such compliance requirements will commence for the second quarter of 2023. The Company granted second liens on $200.0 million of mining equipment under the original agreement, which remain in force under the April 2023 amendment.

To fund the maximum collateral amount, the Company deposited $566.3 million into trust accounts for the benefit of certain surety providers on March 31, 2023. The remainder was comprised of $140.5 million of existing cash-collateralized letters of credit and $15.0 million already held on behalf of a surety provider. The amendment became effective on April 14, 2023, when the Company terminated a credit agreement which, as amended, provided for $237.2 million of capacity for irrevocable standby letters of credit (LC Facility). The $223.8 million of letters of credit that were outstanding under the LC Facility at March 31, 2023 were subsequently cancelled and, in certain cases, replaced by cash-collateralized letters of credit or letters of credit issued under the Company’s accounts receivable securitization program.

Collateralized Letter of Credit Agreement

In February 2022, the Company ~~executed~~entered into an ~~amendment~~agreement which provides up to ~~its~~$250.0 million of capacity for irrevocable standby letters of credit, ~~facility~~primarily to ~~reduce its capacity by approximately $17 million and~~support reclamation bonding requirements. The agreement requires the Company to ~~make allowable certain previously restricted payments for joint venture investments. The amendment creates an investment basket which allows payments~~provide cash collateral at a level of ~~$30.0 million per year specifically limited to investment in renewable energy-related projects. Unused portions~~103% of the ~~basket carryover from year-to-year, and the total~~aggregate amount of ~~investment will further reduce~~letters of credit outstanding under the arrangement (limited to $5.0 million total excess collateralization.) Outstanding letters of credit ~~facility capacity by~~bear a ~~like~~fixed fee in the amount ~~or a minimum~~ of ~~$10.0 million~~0.75% per ~~year, through the maturity of the credit facility.~~annum. The Company receives a variable deposit rate on the amount of cash collateral posted in support of letters of credit. The agreement has ~~no contractual commitment for such joint venture investment.~~an initial expiration date of December 31, 2025. At March 31, 2023, letters of credit of $245.3 million were outstanding under the agreement, which were collateralized by cash of approximately $250 million.

Margin Requirements

From time to time, the Company enters into hedging arrangements, including economic hedging arrangements, to manage various risks, including coal price volatility. Most hedging arrangements require the Company to post margin with its clearing broker based on the value of the related instruments and other credit factors. If the fair value of its exchange-cleared hedge portfolio moves significantly, the Company could be required to post additional margin, which could negatively impact its liquidity.

At March 4, 2022, the Company held coal derivative contracts in aggregate of 2.3 million metric tons. The majority of these contracts were entered into in the first half of 2021 and related to 1.9 million metric tons of production at the Wambo Underground Mine in the Company’s Seaborne Thermal Mining segment, which were expected to be mined and settled at a rate of 1.2 million metric tons in 2022 and 0.7 million metric tons in 2023. These hedge contracts were put in place to support the profitability of the mine, securing anticipated average prices of $84 per metric ton through mid-2023. The remaining hedges relate to brokered coal transactions and other blending and optimization activities, which will settle throughout 2022.

High demand and tight supply for coal globally has resulted in a substantial rise in seaborne thermal coal prices, which has been amplified by the Russian-Ukrainian conflict resulting in unprecedented upward volatility in Newcastle coal pricing since late February. The Newcastle financial price for March closed at $419.50 per metric ton on March 4, 2022, which was 148% above the closing index price of $169.17 per metric ton on December 31, 2021. As a result, the Company’s total initial and variation margin requirements reached approximately $750 million during March 2022, and were $481.7 million at March 31, 2022. Margin is returned to the Company upon reductions in the underlying market coal price or, absent such reductions, cash is recovered as the Company delivers coal into the market at spot prices.

Of the Company's total expected 2022 export sales from its Seaborne Thermal Mining segment, approximately 6% is hedged and approximately 53% is unpriced. The unpriced volume will benefit if the current pricing environment persists.

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OnAt March ~~7, 2022,~~31, 2023, the Company ~~entered into a credit agreement, by and among the Company, as borrower, Goldman Sachs Lending Partners LLC, as administrative agent, and the lenders~~was party thereto (the Credit Agreement). The Credit Agreement provides for a $150 million unsecured revolving credit facility (the Revolving Facility), which will mature on April 1, 2025 and bears interest at a rate of 10.0% per annum on drawn amounts. The Revolving Facility is intended to ~~support the Company’s near-term liquidity requirements, particularly with respect to the cash margin requirements associated with the Company’s~~ coal derivative ~~contracts.~~contracts related to 0.3 million metric tons of production, all of which are expected to settle during the second quarter of 2023.

~~During the three months ended~~At March 31, 2023 and December 31, 2022, the Company ~~borrowed~~had margin posted of $59.8 million and ~~repaid $225.0~~$255.5 million, under the Revolving Facility using net proceeds of $222.0 million from at-the-market issuances of 10.1 million shares of common stock and available cash. The equity offering agreement limit was reached as a result of these issuances and may not be further utilized without amendment and approval by the sales agent. The Company had no outstanding borrowings and no availability under the Revolving Facility at March 31, 2022.

~~To reduce exposure~~respectively, related to additional margin requirements, subsequent to March 31, 2022, the Company converted 0.8 million metric tons of financial hedges into fixed price physical sales over the next 12 months. With these transactions, 1.4 million metric tons remain outstanding with 0.9 million metric tons projected to settle over the remainder of 2022. On April 29, 2022, the Company had $535.9 million of margin posted.its coal derivative contracts. For additional information regarding the Company’s coal derivative contracts, ~~and related margin requirements,~~ refer to Part I, Item 3. “Quantitative and Qualitative Disclosures About Market Risk” of this Quarterly Report.

Indebtedness

The Company’s total ~~funded~~ indebtedness ~~(Indebtedness)~~ as of March 31, ~~2022~~2023 and December 31, ~~2021~~2022 is presented in the table below.


Debt Instrument (defined below, as applicable)	Debt Instrument (defined below, as applicable)	March 31, 2022		December 31, 2021		Debt Instrument (defined below, as applicable)	March 31, 2023		December 31, 2022
		(Dollars in millions)					(Dollars in millions)
6.000% Senior Secured Notes due March 2022 (2022 Notes)		$	—	$	23.1
8.500% Senior Secured Notes due December 2024 (2024 Peabody Notes)		—		62.6
10.000% Senior Secured Notes due December 2024 (2024 Co-Issuer Notes)		193.6		193.9
Senior Secured Term Loan due 2024 (Co-Issuer Term Loans)		188.8		206.0
6.375% Senior Secured Notes due March 2025 (2025 Notes)		77.5		334.9
Senior Secured Term Loan due 2025, net of original issue discount (Senior Secured Term Loan)		321.8		322.8

3.250% Convertible Senior Notes due March 2028 (2028 Convertible Notes)	3.250% Convertible Senior Notes due March 2028 (2028 Convertible Notes)	320.0		—		3.250% Convertible Senior Notes due March 2028 (2028 Convertible Notes)	$	320.0	$	320.0

Finance lease obligations	Finance lease obligations	27.6		29.3		Finance lease obligations	25.0		23.6
Less: Debt issuance costs	Less: Debt issuance costs	(31.2)		(34.8)		Less: Debt issuance costs	(9.4)		(9.8)
		1,098.1		1,137.8			335.6		333.8
Less: Current portion of long-term debt	Less: Current portion of long-term debt	19.1		59.6		Less: Current portion of long-term debt	13.2		13.2
Long-term debt	Long-term debt	$	1,079.0	$	1,078.2	Long-term debt	$	322.4	$	320.6

During 2022, the Company utilized various methods allowable or required under its then-existing debt agreements to retire all of its senior secured long-term debt, leaving only the 3.250% Convertible Senior Notes due 2028 (the 2028 Convertible Notes), which are further described below, and various finance lease obligations outstanding at December 31, 2022.

The Company’s ~~Indebtedness will require~~remaining indebtedness requires estimated contractual principal and interest payments, assuming interest rates in effect at March 31, ~~2022,~~2023, of approximately ~~$60 million during the nine months ending December 31, 2022, and approximately $70~~$12 million in 2023, ~~$455~~$23 million in 2024, ~~$405~~$16 million in 2025, $13 million in 2026, $12 million in 2027 and ~~$355~~$322 million thereafter.

Cash payments for interest related to the Company’s ~~Indebtedness~~indebtedness and financial assurance instruments amounted to ~~$37.2~~$19.1 million and ~~$56.3~~$37.2 million during the three months ended March 31, ~~2022~~2023 and ~~2021,~~2022, respectively.

~~2021 Financing Activity~~

During the first quarter of 2021, the Company completed a series of transactions to, among other things, provide the Company with maturity extensions and covenant relief, while allowing it to maintain near-term operating liquidity and financial flexibility. These transactions included a senior notes exchange and related consent solicitation, a revolving credit facility exchange, various amendments to the Company’s existing debt agreements, and completion of a related surety transaction support agreement with the Company’s surety bond providers.

~~Table of Contents~~

Subsequent to these transactions in the first quarter of 2021, the Company completed additional financing transactions during 2021 intended to improve its capital structure. Such transactions included the implementation of an at-the-market equity offering program pursuant to which the Company sold approximately 24.8 million shares of common stock for net cash proceeds of $269.8 million, the retirement of $270.9 million principal amount of existing debt through various open market purchases at an aggregate cost of $232.4 million, and the issuance of an aggregate 10.0 million shares of common stock in exchange for an additional $106.1 million principal amount of existing debt through multiple bilateral transactions with debt holders.

~~In the event of allowable open market purchases of its debt, the terms of the 2024 Peabody~~2028 Convertible Notes and the letter of credit facility entered into by the Company in connection with the 2021 financing activity (Company LC Agreement) require the Company to make a mandatory repurchase offer to those debt and lien holders. In general, the repurchase offers equate to 25% of the principal amount of priority lien debt repurchased in the preceding quarter at a price equal to the weighted average repurchase price paid over that quarter. The open market debt repurchases completed during the three months ended December 31, 2021 necessitated a mandatory repurchase offer of up to $38.6 million of 2024 Peabody Notes, at 94.940% of their aggregate accreted value, plus accrued and unpaid interest, and a concurrent repurchase offer of priority lien obligations under the Company LC Agreement. The offer resulted in the valid tender and purchase of $0.1 million aggregate accreted value of 2024 Peabody Notes and $30.0 million aggregate principal and commitment amounts under the Company LC Agreement during the three months ended March 31, 2022. The Company’s purchase of the principal and commitment amounts under the Company LC Agreement was effected by the posting of $28.5 million of collateral with the administrative agent and did not reduce the availability under the facility. During the three months ended March 31, 2022, the Company made no other open market purchases of its debt.

The 2024 Co-Issuer Notes and the Co-Issuer Term Loans are also subject to mandatory prepayment offers at the end of each six-month period, beginning with June 30, 2021, whereby the Excess Cash Flow (as defined in the 2024 Co-Issuer Notes indenture) generated by the Wilpinjong Mine during each such period will be applied to the principal of such notes and loans on a pro rata basis, provided that the liquidity attributable to the Wilpinjong Mine would not fall below $60.0 million. Such prepayments may be accepted or declined at the option of the debt holders. Based upon the Wilpinjong Mine’s results for the six-month period ended December 31, 2021, a required offer to prepay $105.6 million of total principal resulted in the prepayment of $17.2 million of Co-Issuer Term Loans principal, $0.3 million of 2024 Co-Issuer Notes principal, and a related loss on early debt extinguishment of $0.5 million during the three months ended March 31, 2022.

~~Retirement of 2022 Notes~~

~~On March 31, 2022, the Company retired the remaining principal balance of 2022 Notes upon maturity for $23.1 million.~~

~~3.250% Convertible Senior Notes due 2028~~

The Company used the proceeds of the offering of the 2028 Convertible Notes and available cash to redeem ~~the remaining~~ $62.6 million of ~~its outstanding~~senior secured notes maturing in 2024 ~~Peabody Notes~~ and ~~together with available cash, approximately~~ $257.4 million of ~~its outstanding~~senior secured notes maturing in 2025, ~~Notes,~~ and to pay related premiums, fees and expenses relating to the offering ~~of the 2028 Convertible Notes~~ and ~~the~~ redemptions. The redemption of existing notes was deemed a debt extinguishment for accounting purposes. The Company capitalized $11.2 million of debt issuance costs related to the offering and recognized a loss on early debt extinguishment of $23.0 million during the three months ended March 31, 2022.

During the ~~three months ended March 31, 2022,~~first quarter of 2023, the ~~Company incurred interest expense~~Company’s reported common stock prices did not prompt the conversion feature of ~~$1.0 million related to~~ the 2028 Convertible Notes. As a result, the 2028 Convertible Notes are not convertible at the option of the holders during the second quarter of 2023.

LC Facility

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~~Covenant Compliance~~

The Company was compliant with all relevant covenants under its debt agreements at March 31, 2022, including the minimum aggregate liquidity requirement under the Company LC Agreement which requires the Company’s restricted subsidiaries to maintain minimum aggregate liquidity of $125.0 million at the end of each quarter through December 31, 2024. The Company’s restricted subsidiaries’ relevant liquidity amounted to $610.0 million at March 31, 2022.

Accounts Receivable Securitization Program

As described in Note ~~15.~~11. “Financial Instruments and Other Guarantees” of the accompanying unaudited condensed consolidated financial statements, the Company entered into an accounts receivable securitization program during 2017. The securitization program was amended in ~~January 2022~~February 2023 to ~~extend its maturity to January 2025 and reduce~~increase the available funding capacity from ~~$250.0~~$175.0 million to ~~$175.0~~$225.0 million ~~which better aligns with~~and adjust the ~~current average borrowing base.~~relevant interest rate for borrowings to a secured overnight financing rate (SOFR). Funding capacity is limited to the availability of eligible receivables and is accounted for as a secured borrowing. Funding capacity under the program may also be utilized for letters of credit in support of other ~~obligations.~~obligations, which has been the Company’s primary utilization. At March 31, ~~2022,~~2023, the Company had no outstanding borrowings and ~~$161.8~~$190.7 million of letters of credit ~~issued~~outstanding under the program, which were primarily in support of portions of the Company’s reclamation obligations. The Company was not required to post ~~$24.7 million of~~ cash collateral under the ~~Securitization Program~~securitization program at March 31, ~~2022.~~

2023. By
April 14, 2023, $101.3 million of letters of credit outstanding under the securitization program were cancelled in connection with the surety agreement amendment and related trust accounts described above.

46Covenant Compliance

The Company was compliant with all relevant covenants under its debt and other finance agreements at March 31, 2023. The April 2023 termination of the Company’s credit agreement and related letter of credit facility eliminated the related compliance requirements as of March 31, 2023 and prospectively.

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Cash Flows ~~and Free Cash Flow~~

The following table summarizes the Company’s cash flows for the three months ended March 31, ~~2022~~2023 and ~~2021,~~2022, as reported in the accompanying unaudited condensed consolidated financial statements. Free Cash Flow is a financial measure not recognized in accordance with U.S. GAAP. Refer to the “Reconciliation of Non-GAAP Financial Measures” section above for definitions and reconciliations to the most comparable measures under U.S. GAAP.

Three Months Ended March 31,
2022 2021
(Dollars in millions)
Net cash (used in) provided by operating activities $ (273.7) $ 71.0
Net cash provided by (used in) investing activities 35.2 (93.2)
Net cash provided by (used in) financing activities 132.2 (63.3)
Net change in cash, cash equivalents and restricted cash (106.3) (85.5)
Cash, cash equivalents and restricted cash at beginning of period 954.3 709.2
Cash, cash equivalents and restricted cash at end of period $ 848.0 $ 623.7
Net cash (used in) provided by operating activities $ (273.7) $ 71.0
Net cash provided by (used in) investing activities 35.2 (93.2)
Free Cash Flow $ (238.5) $ (22.2)


	Three Months Ended March 31,
	2023		2022
	(Dollars in millions)
Net cash provided by (used in) operating activities	$	386.3	$	(273.7)
Net cash (used in) provided by investing activities	(58.5)		35.2
Net cash (used in) provided by financing activities	(39.0)		132.2
Net change in cash, cash equivalents and restricted cash	288.8		(106.3)
Cash, cash equivalents and restricted cash at beginning of period	1,417.6		954.3
Cash, cash equivalents and restricted cash at end of period	$	1,706.4	$	848.0

Operating Activities. The increase in net cash ~~used in~~provided by operating activities for the three months ended March 31, ~~2022~~2023 compared to the same period in the prior year was driven by ~~a year-over-year increase in~~lower cash ~~utilized~~utilization with respect to ~~satisfy~~ the margin requirements associated with derivative financial instruments ($~~351.6~~547.4 million) and the year-over-year increase in operating cash flow from Company’s mining operations ($112.6 million).

Investing Activities. The increase in net cash ~~provided by~~used in investing activities for the three months ended March 31, ~~2022~~2023 compared to the same period in the prior year was driven by ~~higher distributions from related parties and joint ventures, on a net basis ($55.2 million), higher~~lower cash receipts from ~~the Company’s equity method investments~~Middlemount ($~~44.9~~47.2 million), higher net contributions to joint ventures and related parties ($25.7 million), and ~~lower~~higher capital expenditures and ~~payments~~the payment of capital accruals ($~~25.0~~20.6 million).

Financing Activities. The ~~increase~~decrease in net cash provided by financing activities for the three months ended March 31, ~~2022~~2023 compared to the same period in the prior year was driven by the cash proceeds from ~~long-term debt and~~ common stock and debt issuances in the prior year ($~~545.0~~222.0 million and ~~$222.0~~$545.0 million, respectively), partially offset by ~~higher~~lower repayments of long-term debt ~~principal~~ ($~~559.7~~597.2 million) ~~and higher distributions to non-controlling interests ($13.7 million).~~in the current year.

Off-Balance-Sheet Arrangements

In the normal course of business, the Company is a party to various guarantees and financial instruments that carry ~~off-balance-sheet~~off-balance-sheet risk and are not reflected in the accompanying condensed consolidated balance sheets. ~~At March 31, 2022, such instruments included $1,484.9 million of surety bonds and $469.1 million of letters of credit.~~ Such financial instruments provide support for ~~its~~the Company’s reclamation bonding requirements, lease obligations, ~~insurance~~insurance policies and various other performance guarantees. The Company periodically evaluates the instruments for on-balance-sheet treatment based on the amount of exposure under the instrument and the likelihood of required performance. The Company does not expect any material losses to result from these guarantees or off-balance-sheet instruments in excess of liabilities provided for in ~~its~~the accompanying condensed consolidated balance sheets.

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~~As of March 31, 2022,~~The following table summarizes the ~~Company was party to~~Company’s financial instruments ~~with~~that carry off-balance-sheet ~~risk in support of the following obligations:~~risk.

Reclamation
Health and welfare (1)
Contract performance (2)
Leased property and equipment
Other (3)
Total
(Dollars in millions)
Surety bonds and bank guarantees $ 1,312.1 $ 42.1 $ 81.6 $ 30.9 $ 18.2 $ 1,484.9
Letters of credit outstanding under letter of credit facility 206.0 89.2 7.1 5.0 — 307.3
Letters of credit outstanding under accounts receivable securitization program 134.0 17.7 10.1 — — 161.8
1,652.1 149.0 98.8 35.9 18.2 1,954.0
Less: Letters of credit in support of surety bonds (4)
(332.6) (30.2) (2.4) (1.2) — (366.4)
Less: Cash collateral in support of surety bonds (4)
(15.0) — — — — (15.0)
Obligations supported, net $ 1,304.5 $ 118.8 $ 96.4 $ 34.7 $ 18.2 $ 1,572.6


	March 31, 2023						December 31, 2022
	Reclamation Support		Other Support (1)		Total		Reclamation Support		Other Support (1)		Total
	(Dollars in millions)
Surety bonds	$	1,236.4	$	152.1	$	1,388.5	$	1,250.1	$	126.7	$	1,376.8
Letters of credit (2)	22.4		67.0		89.4		437.8		131.8		569.6
	1,258.8		219.1		1,477.9		1,687.9		258.5		1,946.4
Less: Letters of credit in support of surety bonds (3)	(22.4)		(5.4)		(27.8)		(431.7)		(37.2)		(468.9)
Obligations supported, net	$	1,236.4	$	213.7	$	1,450.1	$	1,256.2	$	221.3	$	1,477.5

(1) ~~Obligations include~~Instruments support obligations related to pension and health care plans, workers’ compensation, ~~and~~ property and casualty insurance,

~~(2)~~ ~~Obligations pertain to~~ customer and vendor contracts and certain restoration ancillary to prior mining activities.

~~(3)~~(2) ~~Obligations primarily pertain~~March 31, 2023 balances exclude $223.8 million of letters of credit outstanding under the LC Facility and $101.3 million of letters of credit outstanding under the Company’s accounts receivable securitization program that were cancelled by April 14, 2023. The collateral obligations related to such letters of credit were met by the ~~disturbance or alteration~~March 31, 2023 funding of ~~public roadways~~collateral trust accounts in connection with the ~~Company’s mining activities that is subject to future restoration~~surety agreement amendment described above. Amounts do not include cash collateralized letters of credit.

~~(4)~~(3) ~~Serve~~Certain letters of credit serve as collateral for ~~certain~~ surety bonds at the request of surety bond providers. ~~The Company has also posted $9.1 million in incremental collateral directly with the beneficiary that is not supported by a surety bond.~~

Financial assurances associated with new reclamation bonding requirements, surety bonds or other obligations may require additional collateral in the form of cash or letters of credit causing a decline in the Company’s liquidity.

As described in Note 15. “Financial Instruments and Other Guarantees” in the accompanying unaudited condensed consolidated financial statements, the Company is required to provide various forms of financial assurance in support of its mining reclamation obligations in the jurisdictions in which it operates. Such requirements are typically established by statute or under mining permits. Historically, such assurances have taken the form of third-party instruments such as surety bonds, bank guarantees and letters of credit, as well as self-bonding arrangements in the U.S. Self-bonding in the U.S. has become increasingly restricted in recent years, leading to the Company’s increased usage of surety bonds and similar third-party instruments. This change in practice has had an unfavorable impact on its liquidity due to increased collateral requirements and surety and related fees.

At March 31, ~~2022,~~2023, the Company had total asset retirement obligations of ~~$724.5 million which were backed by a combination of surety bonds, bank guarantees and letters of credit.~~

$752.5 million. Bonding requirement amounts may differ significantly from the related asset retirement obligation because such requirements are calculated under the assumption that reclamation begins currently, whereas the Company’s accounting liabilities are discounted from the end of a mine’s economic life (when final reclamation work would begin) to the balance sheet date.

~~Guarantees~~Not presented in the above table is approximately $936.7 million of restricted cash and ~~Other Financial Instruments with Off-Balance-Sheet Risk.~~ ~~See~~other balances serving as collateral which are included in the accompanying condensed consolidated balance sheets at March 31, 2023, as described in Note ~~15.~~11. “Financial Instruments and Other Guarantees” inof the ~~Company’s~~accompanying unaudited condensed consolidated financial ~~statements for a discussion~~statements. Such collateral is primarily in support of ~~its accounts receivable securitization program and guarantees and other~~the financial instruments noted above, including in relation to the Company’s surety bond portfolio, its collateralized letter of credit agreement, mandatory repurchases of credit facility capacity, and amounts held directly with ~~off-balance-sheet risk.~~beneficiaries which are not supported by surety bonds.

Critical Accounting Policies and Estimates

The Company’s discussion and analysis of its financial condition, results of operations, liquidity and capital resources is based upon its financial statements, which have been prepared in accordance with U.S. GAAP. The Company is also required under U.S. GAAP to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses and related disclosure of contingent assets and liabilities. On an ongoing basis, the Company evaluates its estimates. The Company bases its estimates on historical experience and on various other assumptions that it believes are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

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At March 31, 2022, the Company identified certain assets with an aggregate carrying value of approximately $0.5 billion in its Other U.S. Thermal Mining and Corporate and Other segments whose recoverability is most sensitive to customer demand, customer concentration risk and future economic viability. The Company conducted a review of those assets as of March 31, 2022 and determined that no impairment charges were necessary as of that date.

The Company’s critical accounting policies and estimates are discussed in Part II, Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in its Annual Report on Form 10-K for the year ended December 31, ~~2021.~~2022. The Company’s critical accounting policies remain unchanged at March 31, ~~2022,~~2023, and there have been no material changes in the Company’s critical accounting estimates.

Newly Adopted Accounting Standards and Accounting Standards Not Yet Implemented

~~See Note 2. “Newly Adopted~~Although there are new accounting pronouncements issued by the Financial Accounting Standards ~~and Accounting Standards Not Yet Implemented” to~~Board that the ~~Company’s~~Company will adopt, as applicable, the Company does not believe any of these accounting pronouncements will have a material impact on its unaudited condensed consolidated financial statements ~~for a discussion~~or disclosures.

Table of ~~newly adopted accounting standards and accounting standards not yet implemented.~~Contents

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Coal Pricing Risk

The Company predominantly manages its commodity price risk for its non-trading, long-term coal contract portfolio through the use of long-term coal supply agreements (those with terms longer than one year) to the extent possible, rather than through the use of derivative instruments. As of March 31, ~~2022,~~2023, the Company had approximately 109 million tons of U.S. thermal coal priced and committed for 2023. This includes approximately 91 million tons of PRB coal and 18 million tons of other U.S. thermal coal. The Company has the flexibility to increase volumes should demand warrant. Peabody is estimating full year 2023 thermal coal sales volumes from its Seaborne Thermal Mining segment of 14.5 million to 15.5 million tons comprised of thermal export volume of 9.0 million to 10.0 million tons and domestic volume of 5.5 million tons. Peabody is estimating full year 2023 metallurgical coal sales from its Seaborne Metallurgical Mining segment of 7.0 million to 8.0 million tons. Sales commitments in the metallurgical coal market are typically not long-term in nature, and the Company is therefore subject to fluctuations in market pricing. The Company’s sensitivity to market pricing in thermal coal markets is dependent on the duration of contracts.

As of March 31, 2023, the Company held coal derivative contracts related to a portion of its forecasted sales with an aggregate notional volume of ~~1.6~~0.3 million tonnes. Such financial contracts may include futures, forwards and options. ~~Included in this total are 1.3 million tonnes~~The notional volume is related predominately to financial derivatives entered to support the profitability of the Wambo Underground Mine as part of a strategy to extend the ~~mine life through mid-2023. Of this total, 0.6 million~~mine’s life. All such tonnes will settle ~~during the nine months ending December 31, 2022 and 0.7 million tonnes will settle during 2023 at expected average pricing of approximately $84 per tonne (Newcastle index).~~in 2023. The Newcastle thermal coal index was ~~$271.06~~$178.53 per tonne on March 31, ~~2022,~~2023, and the Company had posted ~~$332.0~~$48.8 million of variation margin for the related derivative contracts at such date. A change in the Newcastle forward curve of $100 per tonne would increase or decrease the Company’s variation margin requirement by approximately ~~$134~~$26 million and result in comparable unrealized gains or losses.

To reduce exposure to additional margin requirements, the Company converted 0.8 million metric tons of financial hedges into fixed price physical sales over the next 12 months. With these transactions, 1.4 million metric tons remain outstanding with 0.9 million metric tons projected to settle over the remainder of 2022.

Foreign Currency Risk

The Company has historically utilized currency forwards and options to hedge currency risk associated with anticipated Australian dollar expenditures. The accounting for these derivatives is discussed in Note 7.5. “Derivatives and Fair Value Measurements” to the accompanying unaudited condensed consolidated financial statements. As of March 31, ~~2022,~~2023, the Company had currency options outstanding with an aggregate notional amount of ~~$705.0~~$632.0 million Australian dollars to hedge currency risk associated with anticipated Australian dollar expenditures over the nine-month period ending December 31, ~~2022.~~2023. As of March 31, 2023, the Company also had purchased collars with an aggregate notional amount of $350.0 million Australian dollars related to the third and fourth quarters of 2023. Assuming the Company had no foreign currency hedging instruments in place, its exposure in operating costs and expenses due to a $0.10 change in the Australian dollar/U.S. dollar exchange rate is approximately ~~$160~~$205 million for the next twelve months. Based upon the Australian dollar/U.S. dollar exchange rate at March 31, ~~2022,~~2023, the currency option contracts outstanding at that date would limit the Company’s ~~net~~ exposure to approximately $167 million with respect to a $0.10 ~~unfavorable change~~increase in the exchange rate and approximately $184 million with respect to ~~approximately $105 million~~a $0.10 decrease in the exchange rate for the next twelve months.

Diesel Fuel Price Risk

~~Previously, the Company managed price risk of the diesel fuel used in its mining activities through the use of derivatives, primarily swaps.~~As of March 31, 2022, the Company did not have any diesel fuel derivative instruments in place. The Company also manages the price risk of diesel fuel through the use of cost pass-through contacts with certain customers.

The Company expects to consume 95100 to ~~105~~110 million gallons of diesel fuel during the next twelve months. A $10 per barrel change in the price of crude oil (the primary component of a refined diesel fuel product) would increase or decrease its annual diesel fuel costs by approximately ~~$24~~$25 million based on its expected usage.

As of March 31, 2023, the Company did not have any diesel fuel derivative instruments in place. The Company partially manages the price risk of diesel fuel through the use of cost pass-through contacts with certain customers.

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Item 4. Controls and Procedures.

The Company’s disclosure controls and procedures are designed to, among other things, provide reasonable assurance that material information, both financial and non-financial, and other information required under the securities laws to be disclosed is accumulated and communicated to senior management, including its principal executive and financial officers, on a timely basis. The Company’s Chief Executive Officer and Chief Financial Officer have evaluated its disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) as of March 31, ~~2022,~~2023, and concluded that such controls and procedures were effective to provide reasonable assurance that the desired control objectives were achieved. Additionally, there have been no changes to the Company’s internal control over financial reporting during the most recent fiscal quarter that materially affected, or are reasonably likely to materially affect, its internal control over financial reporting.

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PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

The Company is subject to various legal and regulatory proceedings. For a description of its significant legal proceedings refer to Note ~~4. “Discontinued Operations” and Note 16.~~12. “Commitments and Contingencies” to the unaudited condensed consolidated financial statements included in Part I, Item 1. “Financial Statements” of this Quarterly Report, which information is incorporated by reference herein.

Item 1A. Risk Factors.

The Company operates in a rapidly changing environment that involves a number of risks. The risk factor set forth below updates the corresponding risk factor previously disclosed in Part I, Item 1A. “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 filed with the SEC on February 24, 2023.

Risks inherent to mining could increase the cost of operating the Company’s business, and events and conditions that could occur during the course of its mining operations could have a material adverse impact on the Company.

The Company’s mining operations are subject to conditions that can impact the safety of its workforce, delay coal deliveries or increase the cost of mining at particular mines for varying lengths of time. These conditions include:

•elevated gas levels;

•fires and explosions, including from methane gas or coal dust;

•accidental mine water discharges;

•weather, flooding and natural disasters;

•hazardous events such as roof falls and high wall or tailings dam failures;

•seismic activities, ground failures, rock bursts or structural cave-ins or slides;

•key equipment failures;

•supply chain constraints or unavailability of equipment or parts;

•variations in coal seam thickness, coal quality, the amount of rock and soil overlying coal deposits and geologic conditions impacting mine sequencing;

•delays in moving its longwall equipment;

•unexpected maintenance problems; and

•unforeseen delays in implementation of mining technologies that are new to its operations.

In this regard, on March 29, 2023, the Company’s Shoal Creek Mine in Alabama experienced a fire involving void fill material utilized to stabilize the roof structure of the mine. Mining operations were suspended in March 2023 and it is uncertain when or if mining operations will restart. If after exploring all reasonable mine-planning steps focused on resuming mining activities at the Shoal Creek Mine the Company determines that it is unable to extract coal from all or a significant portion of the mine, the Company’s results of operations, financial condition and cash flows could be materially and adversely impacted. In addition, the costs that may be incurred to address the impacts of the fire and to return the mine to active operations (if the mine returns to active operations) are uncertain and could be significant. The Company maintains insurance policies that provide limited coverage for losses associated with the events at the Shoal Creek Mine, as well as some of the other risks referenced above, which may lessen the impact associated with these events and risks. However, there can be no assurance as to the amount or timing of recovery under its insurance policies in connection with losses associated with these events and risks.

For information regarding other factors that could affect the Company's results of operations, financial condition and liquidity, see the risk factors disclosed in Part I, Item 1A. “Risk Factors” in its Annual Report on Form 10-K for the year ended December 31, ~~2021~~2022 filed with the SEC on February ~~18, 2022.~~24, 2023. In addition to the other information set forth in this Quarterly Report, including the information presented in Part I, Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” you should carefully consider the risk factors disclosed in the aforementioned filing, which could materially affect the Company’s results of operations, financial condition and liquidity.

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Factors that could affect the Company’s results or an investment in the Company’s securities include, but are not limited to:

•the Company’s profitability depends upon the prices it receives for its coal;

•if a substantial number of the Company’s long-term coal supply agreements, including those with its largest customers, terminate, or if the pricing, volumes or other elements of those agreements materially adjust, its revenue and operating profits could suffer if the Company is unable to find alternate buyers willing to purchase its coal on comparable terms to those in its contracts;

•risks inherent to mining could increase the cost of operating the Company’s business, and events and conditions that could occur during the course of its mining operations could have a material adverse impact on the Company;

•the Company’s take-or-pay arrangements could unfavorably affect its profitability;

•the Company may not recover its investments in its mining, exploration and other assets, which may require the Company to recognize impairment charges related to those assets;

•the Company’s ability to operate effectively could be impaired if it loses key personnel or fails to attract qualified personnel;

•the Company could be negatively affected if it fails to maintain satisfactory labor relations;

•the Company could be adversely affected if it fails to appropriately provide financial assurances for its obligations;

•the Company’s mining operations are extensively regulated, which imposes significant costs on it, and future regulations and developments could increase those costs or limit its ability to produce coal;

•the Company’s operations may impact the environment or cause exposure to hazardous substances, and its properties may have environmental contamination, which could result in material liabilities to the Company;

•the Company may be unable to obtain, renew or maintain permits necessary for its operations, or the Company may be unable to obtain, renew or maintain such permits without conditions on the manner in which it runs its operations, which would reduce its production, cash flows and profitability;

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•concerns about the impacts of coal combustion on global climate are increasingly leading to conditions that have affected and could continue to affect demand for the Company’s products or its securities and its ability to produce, including increased governmental regulation of coal combustion and unfavorable investment decisions by electricity generators;

•numerous activist groups are devoting substantial resources to anti-coal activities to minimize or eliminate the use of coal as a source of electricity generation, domestically and internationally, thereby further reducing the demand and pricing for coal, and potentially materially and adversely impacting the Company’s future financial results, liquidity and growth prospects;

•the Company’s trading and hedging activities do not cover certain risks and may expose it to earnings volatility and other risks;

•if the assumptions underlying the Company’s asset retirement obligations for reclamation and mine closures are materially inaccurate, its costs could be significantly greater than anticipated;

•the Company’s future success depends upon its ability to continue acquiring and developing coal reserves and resources that are economically recoverable;

•the Company faces numerous uncertainties in estimating its coal reserves and resources and inaccuracies in its estimates could result in lower than expected revenue, higher than expected costs and decreased profitability;

•joint ventures, partnerships or non-managed operations may not be successful and may not comply with the Company’s operating standards;

•the Company’s expenditures for postretirement benefit obligations could be materially higher than it has predicted if its underlying assumptions prove to be incorrect;

•inflation could result in higher costs and decreased profitability;

•the Company’s business, results of operations, financial condition and prospects could be materially and adversely affected by pandemic or other widespread illnesses and the related effects on public health;

•Peabody is exposed to risks associated with political or international conflicts such as the ~~Company’s expenditures for postretirement benefit obligations~~ongoing conflict between Russia and Ukraine;

•Peabody could be ~~materially higher than~~exposed to significant liability, reputational harm, loss of revenue, increased costs or other risks if it ~~has predicted if~~sustains cyber attacks or other security breaches that disrupt its ~~underlying assumptions prove to be incorrect;~~operations or result in the dissemination of proprietary or confidential information about the Company, its customers or other third-parties;

•the Company is subject to various general operating risks which may be fully or partially outside of its control;

•

~~the Company’s financial performance could be adversely affected by its Indebtedness;~~

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•
~~despite the Company’s Indebtedness, it may still be able to incur more debt, which could further increase the risks associated with its Indebtedness;~~

•the terms of the ~~indentures governing the Company’s senior secured notes and the~~ agreements and instruments governing ~~its other Indebtedness~~the Company’s debt and surety bonding obligations impose restrictions that may limit its operating and financial flexibility;

•the number and quantity of viable financing and insurance alternatives available to the Company may be significantly impacted by unfavorable lending and investment policies by financial institutions and insurance companies associated with concerns about environmental impacts of coal combustion, and negative views around its efforts with respect to environmental and social matters and related governance considerations could harm the perception of the Company by a significant number of investors or result in the exclusion of its securities from consideration by those investors;

•the price of Peabody’s securities may be ~~volatile and could fall below the minimum allowed by New York Stock Exchange listing requirements;~~volatile;

•Peabody’s common stock is subject to dilution and may be subject to further dilution in the future;

•there may be circumstances in which the interests of a significant stockholder could be in conflict with other stakeholders’ interests;

•the future payment of dividends on Peabody’s stock or future repurchases of its stock is dependent on a number of factors and cannot be assured;

•the Company may not be able to fully utilize its deferred tax assets;

•acquisitions and divestitures are a potentially important part of the Company’s long-term strategy, subject to its investment criteria, and involve a number of risks, any of which could cause the Company not to realize the anticipated benefits;

•Peabody’s certificate of incorporation and by-laws include provisions that may discourage a takeover attempt;

•diversity in interpretation and application of accounting literature in the mining industry may impact the Company’s reported financial results; and

•other risks and factors detailed in this report, including, but not limited to, those discussed in “Legal Proceedings,” set forth in Part II, Item 1 of this Quarterly Report on Form 10-Q.

~~Table of Contents~~

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

Dividends

~~The Company suspended dividends in 2020.~~ During the fourth quarter of 2020, the Company entered into a transaction support agreement with its surety bond providers which ~~prohibits~~prohibited the payment of dividends through the earlier of December 31, 2025, or the maturity of the ~~Credit Agreement (currently March 31, 2025)~~credit agreement unless otherwise agreed to by the parties to the agreement. Additionally, restrictive covenants in ~~its~~the Company’s credit facility ~~and in the indentures governing its senior secured notes~~ also ~~limit~~limited the Company’s ability to pay cash dividends. On April 14, 2023, the Company amended the existing transaction support agreement with the surety bond providers to remove the restrictions on shareholder returns, subject to a minimum liquidity threshold, and terminated the credit facility.

The declaration and payment of dividends and the amount of dividends will depend on the Company’s annual Available Free Cash Flow (AFCF). AFCF is defined as quarterly operating cash flow minus investing cash flow; distributions to noncontrolling interests; plus/minus changes to restricted cash and collateral (excluding one-time effects of the recent surety agreement amendment) and other anticipated expenditures. Peabody anticipates a regular quarterly cash dividend of $0.075 per share, but all shareholder returns remain at the Board of Director's discretion.

On April 27, 2023, the Company declared a dividend per share of $0.075 to be paid on May 31, 2023 to shareholders of record as of May 11, 2023.

Share Relinquishments

The Company routinely allows employees to relinquish common stock to pay estimated taxes upon the vesting of restricted stock units and the payout of performance units that are settled in common stock under its equity incentive plans. The value of common stock tendered by employees is determined based on the closing price of the Company’s common stock on the dates of the respective relinquishments.

Share Repurchase Program

Similar to the payment of dividends as described above, the same agreement with the Company’s surety bond providers prohibited share repurchases through the earlier of December 31, 2025, or the maturity of the credit agreement unless otherwise agreed to by the parties to the agreement. Additionally, restrictive covenants in its credit facility also limited the Company’s ability to repurchase shares. The April 14, 2023 amendment and termination of the credit facility as described above, allow share repurchases subject to the Company’s annual AFCF.

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On August 1, 2017, the Company announced that its Board of Directors authorized a share repurchase program to allow repurchases of up to $500 million of the then outstanding shares of its common stock and/or preferred stock ~~(Repurchase~~(2017 Repurchase Program), which was eventually expanded to $1.5 billion during 2018. ~~The Repurchase Program does not have an expiration date and may be discontinued at any time.~~ Through March 31, ~~2022,~~2023, the Company ~~has~~had repurchased 41.5 million shares of its common stock under the 2017 Repurchase Program for ~~$1,340.3~~$1,340.3 million,, which included commissions paid of ~~$0.8 million, leaving~~ ~~$160.5 million~~ ~~available for~~$0.8 million. On April 17, 2023, the Company announced that its Board of Directors authorized a new share repurchase ~~under the~~program (2023 Repurchase ~~Program.~~

Program) authorizing repurchases of up to $1.0 billion of its common stock. The ~~Company suspended share repurchases in 2019,~~2017 Repurchase Program was superseded and similar to the payment of dividends as described above, the same agreement with its surety bond providers prohibits share repurchases through the earlier of December 31, 2025, or the maturity of the Credit Agreement (currently March 31, 2025) unless otherwise agreed toreplaced by the ~~parties~~2023 Repurchase Program.

Under the 2023 Repurchase Program, the Company may purchase shares of common stock from time to the agreement. Additionally, restrictive covenants in its credit facility and in the indentures governing its senior secured notes also limit the Company’s ability to repurchase shares. Prior to the suspension, repurchases were madetime at the ~~Company’s discretion.~~discretion of management through open market purchases, privately negotiated transactions, block trades, accelerated or other structured share repurchase programs, or other means. The ~~specific~~manner, timing, ~~price~~pricing, and ~~size~~amount of ~~purchases depended upon~~any share repurchase transactions will be based on a variety of factors, including market conditions, applicable legal requirements, and alternative opportunities that the ~~share price, general market and economic conditions and other considerations, including compliance with various debt agreements in effect at~~Company may have for the ~~time the repurchases were made.~~use or investment of capital.

Issuances of Equity Securities

In June 2021, the Company announced an at-the-market equity offering program pursuant to which the Company could offer and sell up to 12.5 million shares of its common stock. The at-the-market equity offering program was further expanded to 32.5 million shares during 2021. The shares are offered and sold pursuant to the Company’s Registration Statement on Form S-3, which was declared effective by the Securities and Exchange Commission on April 23, 2021, as supplemented by prospectus supplements dated June 4, 2021, September 17, 2021, and December 17, 2021 relating to the offer and sale of the shares. Through March 31, ~~2022,~~2023, the Company has sold approximately 24.8 million shares for net cash proceeds of $269.8 million. No sales were made under this at-the-market equity offering program during the three months ended March 31, ~~2022,~~2023, leaving approximately 7.7 ~~millions~~million shares available for sale.

On March 7, 2022, the Company entered into an at-the-market equity offering program pursuant to which the Company could offer and sell shares of its common stock having an aggregate gross sales price of up of $225 million. The shares are offered and sold pursuant to the Company’s Registration Statement on Form S-3, which was declared effective by the Securities and Exchange Commission on April 23, 2021, as supplemented by a prospectus supplement dated March 7, 2022 relating to the offer and sale of the shares. During the three months ended March 31, 2022, the Company sold approximately 10.1 million shares for net proceeds of $222.0 million, thereby concluding this at-the-market equity offering program.

~~Table of Contents~~

Through March 31, 2022, the Company completed multiple bilateral transactions with holders of the 2022 Notes, the 2025 Notes and the 2024 Peabody Notes in which the Company issued an aggregate 10.0 million shares of its common stock in exchange for $37.3 million aggregate principal amount of the 2022 Notes, $47.2 million aggregate principal amount of the 2025 Notes and $21.6 million aggregate principal amount of the 2024 Peabody Notes. No bilateral transactions were completed during the three months ended March 31, 2022. The issuance of shares of common stock in exchange for the 2022 Notes, the 2025 Notes and the 2024 Peabody Notes was made in reliance on the exemption from registration provided in Section 3(a)(9) under the Securities Act of 1933, based in part on representations of holders of the 2022 Notes, the 2025 Notes and the 2024 Peabody Notes, and on the basis that the exchange was completed with existing holders of the Company's securities and no commission or other remuneration was paid or given for soliciting the exchange.

Purchases of Equity Securities

The following table summarizes all share purchases for the three months ended March 31, ~~2022:~~2023:

Period
Total
Number of
Shares
Purchased (1)
Average
Price Paid per
Share Total Number of
Shares Purchased
as Part of Publicly
Announced
Program Maximum Dollar
Value that May
Yet Be Used to
Repurchase Shares
Under the Publicly
Announced Program
(In millions)
January 1 through January 31, 2022 153,389 $ 10.44 — $ 160.5
February 1 through February 28, 2022 20,521 17.43 — 160.5
March 1 through March 31, 2022 — — — 160.5
Total 173,910 11.27 —


Period	Total Number of Shares Purchased (1)	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Program	Maximum Dollar Value that May Yet Be Used to Repurchase Shares Under the Publicly Announced Program (2) (In millions)
January 1 through January 31, 2023	138,407	$	26.03	—	$	160.5
February 1 through February 28, 2023	365,946	26.19		—	160.5
March 1 through March 31, 2023	—	—		—	160.5
Total	504,353	26.15		—

(1)Shares withheld to cover the withholding taxes upon the vesting of equity awards, which are not part of the ~~Repurchase Program.~~publicly announced repurchase programs.

(2)The 2017 Repurchase Program was in effect until the announcement of the 2023 Repurchase Program on April 17, 2023. The maximum dollar value available for repurchase reflects the amount available as of the month-end date for each period shown.

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Item 4. Mine Safety Disclosures.

Peabody’s “Safety and Sustainability Management System” has been designed to set clear and consistent expectations for safety, health and environmental stewardship across the Company’s business. It aligns to the National Mining Association’s CORESafety® framework and encompasses three fundamental areas: leadership and organization, risk management and assurance. Peabody also partners with other companies and certain governmental agencies to pursue new technologies that have the potential to improve its safety performance and provide better safety protection for employees.

Peabody continually monitors its safety performance and regulatory compliance. The information concerning mine safety violations or other regulatory matters required by SEC regulations is included in Exhibit 95 to this Quarterly Report on Form 10-Q.

Item 6. Exhibits.

See Exhibit Index on following pages.

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EXHIBIT INDEX

The exhibits below are numbered in accordance with the Exhibit Table of Item 601 of Regulation S-K.


Exhibit No.						Description of Exhibit

~~4.1~~10.1						~~Indenture,~~Amendment to Surety Transaction Support Agreement and Surety Term Sheet , dated as of ~~March 1, 2022, between~~ April 14, 2023, by and among Peabody Energy Corporation, certain subsidiaries of Peabody Energy Corporation party thereto and ~~Wilmington Trust, National Association, as trustee~~the providers of its surety program (Incorporated by reference to Exhibit ~~4.1 to~~10.1 of the Registrant’s Current Report on Form 8-K filed ~~on March~~April 1 ~~2022).~~

~~4.2~~						~~Form of 3.250% Convertible Senior Notes due 2028 (included in Exhibit 4.1).~~7

~~10.1~~						Eighth Amendment to the Sixth Amended and Restated Receivables Purchase Agreement, dated as of January 28, 2022, by and among P&L Receivables Company, LLC, Peabody Energy Corporation, all Committed Purchasers listed on the signature pages thereto, all Purchaser Agents listed on the signature pages thereto, all LC Participants listed on the signature pages thereto, PNC Bank, National Association, as Administrator and as LC Bank and PNC Capital Markets LLC, as Structuring Agent (Incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on January 31, 2022).

~~10.2~~						Agreement for Irrevocable Standby Letters of Credit, dated as of February 17, 2022, between Peabody and Goldman Sachs Bank USA (Incorporated by reference to Exhibit 10.89 to the Registrant’s Annual Report on Form 10-K filed on February 18, 2022).

~~10.3~~						Credit Agreement, dated March 7, 2022, by and among Peabody Energy Corporation, as borrower, Goldman Sachs Lending Partners LLC, as administrative agent, and the lenders party thereto (Incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on March 7, 2022).

~~10.4†++~~						~~Commitment Agreement, dated March 23, 2022, by and among Peabody Investments Corp.~~, ~~The Prudential Insurance Company of America and Fiduciary Counselors Inc.~~2023).

31.1†						Certification of periodic financial report by the Registrant’s Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2†						Certification of periodic financial report by the Registrant’s Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1†						Certification of periodic financial report pursuant to 18 U.S.C. Section 1350, adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, by the Registrant’s Chief Executive Officer.

32.2†						Certification of periodic financial report pursuant to 18 U.S.C. Section 1350, adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, by the Registrant’s Chief Financial Officer.

95†						Mine Safety Disclosure required by Item 104 of Regulation S-K.

101.INS						Inline XBRL Instance Document - the instance document does not appear in the interactive data file because XBRL tags are embedded within the Inline XBRL document

101.SCH						Inline XBRL Taxonomy Extension Schema Document

101.CAL						Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF						Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB						Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE						Inline XBRL Taxonomy Extension Presentation Linkbase Document

104						Cover Page Interactive Data File (embedded within the Inline XBRL document).

†						Filed herewith.
++						~~Portions of this exhibit (indicated therein by asterisk) have been omitted for confidential treatment.~~

Pursuant to the Instructions to Exhibits, certain instruments defining the rights of holders of long-term debt securities of the Company and its consolidated subsidiaries are not filed because the total amount of securities authorized under any such instrument does not exceed 10% of the total assets of the Company and its subsidiaries on a consolidated basis. A copy of such instrument will be furnished to the Securities and Exchange Commission upon request.

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

PEABODY ENERGY CORPORATION

Date:

May ~~5, 2022~~4, 2023

By:

/s/ MARK A. SPURBECK

Mark A. Spurbeck

Executive Vice President and Chief Financial Officer
(On behalf of the registrant and as Principal Financial Officer)

5550


	Three Months Ended March 31, 2021
	Seaborne Thermal Mining		Seaborne Metallurgical Mining		Powder River Basin Mining		Other U.S. Thermal Mining		Corporate and Other (1)		Consolidated
	(Dollars in millions)
Thermal coal
Domestic	$	44.1	$	—	$	228.4	$	146.8	$	—	$	419.3
Export	131.9		—		—		—		—		131.9
Total thermal	176.0		—		228.4		146.8		—		551.2
Metallurgical coal

Export	—		86.6		—		—		—		86.6
Total metallurgical	—		86.6		—		—		—		86.6
Other (2)	0.4		0.9		—		2.5		9.7		13.5
Revenue	$	176.4	$	87.5	$	228.4	$	149.3	$	9.7	$	651.3


Period Ending December 31,	Operating Leases		Finance Leases
	(Dollars in millions)
2022	$	13.7	$	8.7
2023	17.6		6.0
2024	6.3		5.1
2025	3.6		4.9
2026	3.6		2.5
2027 and thereafter	0.8		7.2
Total lease payments	45.6		34.4
Less imputed interest	(4.9)		(6.8)
Total lease liabilities	$	40.7	$	27.6


	Foreign Currency Translation Adjustment		Prior Service Credit Associated with Postretirement Plans		Total Accumulated Other Comprehensive Income
	(Dollars in millions)
December 31, 2021	$	0.8	$	297.1	$	297.9

Reclassification from other comprehensive income to earnings	—		(13.4)		(13.4)
Current period change	1.9		—		1.9
March 31, 2022	$	2.7	$	283.7	$	286.4


	Three Months Ended March 31,	(Decrease ) Increase to Volumes
		2022	2021	Tons	%
	(Tons in millions)
Seaborne Thermal Mining		3.8	4.1	(0.3)	(7)	%
Seaborne Metallurgical Mining		1.2	1.0	0.2	20	%
Powder River Basin Mining		20.6	20.7	(0.1)	—	%
Other U.S. Thermal Mining		4.2	3.9	0.3	8	%
Total tons sold from mining segments		29.8	29.7	0.1	—	%
Corporate and Other		0.1	0.5	(0.4)	(80)	%
Total tons sold		29.9	30.2	(0.3)	(1)	%


	Three Months Ended March 31,	(Decrease) Increase to Income
		2022		2021		$		%
	(Dollars in millions)
Loss from continuing operations, net of income taxes		$	(119.8)	$	(77.7)	$	(42.1)	(54)	%
Loss from discontinued operations, net of income taxes		(0.8)		(2.0)		1.2		60	%
Net loss		(120.6)		(79.7)		(40.9)		(51)	%
Less: Net (loss) income attributable to noncontrolling interests		(1.1)		0.4		(1.5)		(375)	%
Net loss attributable to common stockholders		$	(119.5)	$	(80.1)	$	(39.4)	(49)	%


	Reclamation		Health and welfare (1)		Contract performance (2)		Leased property and equipment		Other (3)		Total
	(Dollars in millions)
Surety bonds and bank guarantees	$	1,312.1	$	42.1	$	81.6	$	30.9	$	18.2	$	1,484.9
Letters of credit outstanding under letter of credit facility	206.0		89.2		7.1		5.0		—		307.3
Letters of credit outstanding under accounts receivable securitization program	134.0		17.7		10.1		—		—		161.8

	1,652.1		149.0		98.8		35.9		18.2		1,954.0
Less: Letters of credit in support of surety bonds (4)	(332.6)		(30.2)		(2.4)		(1.2)		—		(366.4)
Less: Cash collateral in support of surety bonds (4)	(15.0)		—		—		—		—		(15.0)

Obligations supported, net	$	1,304.5	$	118.8	$	96.4	$	34.7	$	18.2	$	1,572.6