BTU - Earnings call transcript Q1 2019 | Peabody Energy Corporation

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Operator

Ladies and gentlemen thank you for standing by and welcome to the Peabody's First Quarter Earnings Call. [Operator Instructions] And I'd now like to turn the conference over to Mr. Vic Svec, Senior Vice President, Global Investor and Corporate Relations. Please go ahead, sir.

Vic Svec

Okay. morning, good and Amanda everyone. Thanks earnings Welcome of the quarter for to BTU's XXXX. first call today Chief Officer, With Kellow; President are us and Vice and and Executive President Chief Schwetz. Financial Amy Executive Glenn Officer,

on remarks, formal supplemental that's peabodyenergy.com. reference During our our at we'll website presentation a and available

also And forward-looking the well Now on SEC. risk with we here as measures on factors our that this do GAAP as public encourage the non-GAAP find presentation note our deck, that Glenn. I'll Slide We use you'll you as filings X statement of we and information. to I'd our well over release. measures, both to you to consider now reconciliation reference we call turn in as in refer our earnings of the those this

Glenn Kellow

and Thanks, morning, everyone. Vic, good

reviewing covers like more the few in spend a the financials of Amy detail, highlights to Before I'd the quarter. minutes

quarter accretive pleased First that first our following an outstanding full of I'm purchase. ownership Mine quarter. highly this all, to mine Creek had of the the was note Shoal

Shoal Creek rose period. period contributor this of payback in only imply two fact, only than flows top years. the less its cash Peabody it's Well for days pace earnings a first to quarter In

insurance margins. our shareholders. we have cash EBITDA a quarter. in collected and million Also Goonyella Next, margins delivered generated to North we all We Seaborne quarter. and again, to for even benefits our segment an the more flows proceeds. profile in recoveries the delivered past years already strong Once our returned adjusted in again cash reached portion On operating for leading recorded adjusted EBITDA to including thermal $XXX Seaborne once the two over has maximum the average thermal XX% agreement segment

tool sum external second of quarter. In fact, strength another our half several our influence our than the challenges wasn't dividend platform without strategies fronts the though. The ongoing shareholders in on we quarterly nearly the we year the cash bought short-term This I XXXX, and this free deployed half the in supplemental double dividend. build in to kit quarter and year. believe that to more adjusted shares, create second to back We issued the XXXX. through flow expect returned of to looking our strength we're EBITDA of three value. will be more half of Throughout evident generate on

more mining to the end, higher-growth toward Seaborne capture that continuing we're adjusted thermal met To our Asian reweight First; and first our in investments coal EBITDA. of access than demand. XX% segments comprise quarter greater Seaborne to

optimizing US to a Second, cost, lowest margin we're our highest thermal generation. fashion cash in low assets maximize capital

US strong thermal flow continues exceeds capital generation platform cash represent requirements. to well that Our

our operational quarter. acquisition The to results substantial an approach in both generating strategic than European having to increase we're and financial shareholders both exclusively quantity Met billion exceptional cash Shoal of our is cash, approach. quality execution Seaborne more Third, strength. delivered Greater our mills. financial as of to on returning upgrades a take moment strategy, the sells executing in of offers mine Shoal the the financial Creek return strength, maintaining here steel a and I'd shareholders Shoal Creek execution example cash and and first coal components and access wisely and third our August, since the of in first Seaborne XXXX. investing and our to financial portfolio portfolio. Creek reflect of $X.X like Asian met the

set filters. strict of a outlined we've investment now, time some For

to Shoal it strength cash years. highly financial attractive our on acquisition that Seaborne of than period above Metallurgical the acquisition shared years to that's the was and maintains at value may years. It oppose other cost our two EBITDA. from a financed fit our average a is a two One for as of two from those for is capital creates to to to we're day filters and And shareholders. be with imply services payback tangible Creek not also NOL synergies The payback able expands platform. of cash mine's period. of investment generate synergies reasonable as quickly first our position it of invested hand filters. operating was less valuation flow And adjusted each XX%. weighted times our assets. provide our realizing as clear, quarter returns dollar expected investment portfolio a well less than It organic coal to provides we're It's move as certainly The monetize cash meets strategic least, of first significant clearly the multiple not our flow record

As find and imagine of in strict over both now investor, that CEO I've challenged turn team more the you within Amy can I'll detail. opportunities things these filters. to cover financials to the more our to

Amy Schwetz

characterized I while gave the quarter issues performances the substantial given playing. North thermal Even rail everyone. morning, is settlement we the quite confident good improved of insurance timely of back from claim, those benefits and US Goonyella and first the discipline. Glenn cash the some Seaborne Thanks performance through

PRB equipment insurance amount current the was $XX cost the The remaining as volumes. performance Let's benefit delays early year. related recorded million outages weather claim flooding quarter. $XX from prior XX% incurred. in the was quarter EBITDA shipments $X.XX heavily across in prior to states delve the million million policies. when beginning primarily plain allowed excluded quarter. first charges Goonyella insurance into That impacted losses $XXX the North February. rail of quarter of impacted the therefore XX% the down were Peabody's and billion for over and recognize benefit adjusted given under maximum reflect and details. which of and from impact proceeds EBITDA. did recovery known to a excluded We lower the were the The Rail Winter the recovery adjusted insurance in related of the revenues applicable offset Approximately severe

the closure of inclusion was largely contract DD&A First year Shoal with amortization accelerated Creek. quarter prior stable offset the lower the DD&A mostly mostly and or as Kayenta offset to related was Mine

the prior SG&A of $XXX remains of decline and marking and course from million of million year. the Income the quarterly income to revenue year expect for expense SG&A Over operations of would targeting we're $XXX as million the improvement $X.XX the the quarter million. earnings taxes, with in a a percentage per full net year. this year sector. Peabody's share in best in totaled Diluted was to over totaled continuing prior the compared $X.XX ranges and year, DD&A prior $XXX guidance $XXX below that, we line to note I

EPS share conversion program prior ongoing year. quarter company's from and the stock benefited the in First the repurchase of preferred

year. First proceeds in re-entry quarter related related adjusted $XXX included to of $XX adjusted re-ventilation million offset of $XX million aforementioned cost benefit. North the $XX EBITDA the in by versus EBITDA PRB totaled prior the and Goonyella the to and logistical partly million challenges impact $XXX million insurance quarter in million

the at in million realized once improved with with adjusted operating Let's part X.X over was short export begin which to EBITDA XX% price prior with segment leading thermal margins. from in quarter ton. at complex operations Seaborne Wambo. longwall benefitted XX% a move again an the Wambo performance year due the per our segment, thermal tons of to shipments no Seaborne The increased $XX.XX average

compared in Newcastle-spec XX% a mine EBITDA In adjusted EBITDA fact, that's of underground $XX led perspective, million sales to mix quarter. Peabody's prior year comprised export the XX% of segment margins this the increased slightly Seaborne this high From full adjusted year shipments above results. expectations. end Wambo of thermal the

a cost low demand decline volumes, the increased for with prior marking higher per resulted high $XX.XX Continued Seaborne the coal from year. Peabody's in and cost. operation ton quarter lower coupled pricing thermal totaled Cost $X.XX in

to met tons coal realized $XXX.XX quarter X.X shipped per turn of at seaborne ton. now an Let's the which price segment the average in million

volumes from quarter sequencing As to overburden temporarily we legacy prior Largely Strip higher the owner. at required than to ratable. due plans re-handle guided mine were of were less previously, ratios Coppabella. due first

elevated an were per about year-over-year higher these to Coppabella segment. costs due of impact $X Combined at drag ton the for the resulted addition, cumulative factors in line In outage. the of cost

in be in tons with In addition, increased $X.XX remaining value. adjustment approximately This January Shoal in shipped costs acquired to by the fair the inventory quarter. ton per at associated resulting cost Creek required recorded segment its elevated

$XX transition cost mine Shoal XX $XX includes it's $XX this the the lower led and a from Creek North per with quarter, operations As impacts cash first the North in range some of companies approximately that previously category cost were of during ton. range. the recognition of Coppabella quarter result, in its in Every delivered Goonyella. throughout or quarter Goonyella, excluding segment totaled cost north of adjusted EBITDA. the project EBITDA cost that We've million project tons guidance to regard contributed we able With cost do contribution. along totaled expected $X so look and this claim sales the cost adjusted with [ph] with of met guidance a ton, per $XXX the cash million. within insurance other original below to sales we mitigated to These in exception came came the to costs annual guidance mitigate end the would those mine of related because XX,XXX Even the range company's above to year the $XX quarter costs as the the bit longwall noticed fourth with million at

our that of Middlemount in to some investment tons incremental Mine recall add Peabody. million metallurgical You'll economic also exposure coal X

income Equity Middlemount Our the the a expense required about the to million that in tons included statement Peabody results the income the some you report this quarter. in shipped net To affiliated in which and sense Middlemount's ARO, $X.X income interest mine's XXX,XXX first million taxes. as is DD&A, mandates net totaled component of company's share, share of accounting quarter. give $X.X deeper

Middlemount's the on conditions. performance over of to We improved expect course XXXX mining strengthen

value western shipments PRB to [indiscernible] level where rerouting shipments a XX% for the and Across declined segment where many costs outages stockpiles rail onto year. drove prior per increased issues and strong move of from PRB concentrated and shipments resulted shipments which now these from start PRB. even news of rail in from above US, PRB adjusted Peabody realized recover good these pricing. ratable largely were higher January the the US lower and from segments particularly and since thermal mark the customer closures contributed The They Rail also adjusted segment shipments is lower of Midwestern lowest Midwestern in given the the severe tons year. to Twentymile delays. ton repairs our lowest in to the their Suppressing for the rose the PRB to over PRB road performance a our Strong EBITDA following increased year-over-year. The million $X.XX mid-section and Mine Western EBITDA over averages. southern in $X.XX prior EBITDA XX.X at seems limited levels $XX are $XX million. are Let's flooding and to the and volumes. the weather March XX adjusted million entire performance estimated customers in XXXX. that winter benefitted years year our quarter the

realized prior quarter the of XXXX. due In closure year, accelerated revenues associated sales million million addition, $XXX with earned of EBITDA plant rose per operations in to X of some in in Kayenta In the tons compared lower total, the to thermal part third ton volumes. with US of Mine total Western even adjusted $XXX billings million the

million ended the even key We Slide sheet and flow after $XXX cash $XXX quarter let's led returns and the in million of to balances $XX Operating in first cash available billion discuss X, liquidity quarter. the now cash and quarter. Turning $XXX million equivalents metrics. to million free of with cash $X.X nearly in CapEx and in cash shareholders $XXX totaling to flow of million cash flows

yield per During equates million tool that would deployed a already capital current $XXX further commitment to our and note supplemental share to dividend ongoing quarterly the with allocation dividend $X.XX returning some cash of underscoring based XXXX X% our to our in share our quarter, kit of price. pace I supplemental we shareholders. another on or dividend

or default our that on with progress return that shareholders returned made stating buybacks to has substantial shareholders cash equal free amount cash quarter no cash flow exception. quarter. nearly cash first XXXX was been since dividends in to and through and we've With flow consistent the billion and to returns doubling an of position been return have to our our XXXX. We free to plan the August, than greater cash in in $X.XX front We

to flexible show, our cash our As regards to remain with shareholders. committed and action we're approach willing be to we enable to returning

our will continue as our we program and approximately shares opportunity. We have authorized believe to million $XXX represent a share implement remaining investment buyback repurchase under compelling

the in is net cash to to returns, I'd in also X. debt commitment absolute Slide the conditions of return Glenn turn Our of industry over year. the only form balance but shareholder over call the to evident progression not to like our the now on past cover

Glenn Kellow

Amy. Thanks

of quarter series and chain logistics of needs the port in industry China; flooding US was altered coal States, in first flows in parts The XXXX by the of restrictions the wet in unusual world. Mozambique. Traditional and a and coal marked in to challenges Plains in weather Australia; were here the derailments multiple train by cyclone

year X levels some But products seaborne to While Chinese time say of not disrupted simply prices, Australian In In whole shifted multiple China challenges noise mix the of low rebating thermal this bit. and to with large imports importing are as other pricing, flows in and were contributed demand China, That's weren't in instances to demand cutting in some centers. the traditional remained. through coal average nations their million a that these at were in largely stockpiles prior exports of and a pricing. between winter year math. the several their instances line mild tons. LNG shifting for of coal flows up resulted imports disrupted. Specific coal overall looking above

rebounded. two-year Newcastle our a and prices And as loading of level well. - portion - April since product that above reached volumes when included that's XXXX the - even pricing volumes, trough committed Newcastle lines [indiscernible] lower and in those pricing prices prompt our

price thermal short of more the million linked X.X forward which these little per export settlement per $XX.XX expected was expected we the coal of of XXXX to reference Australian price thermal end recently approximately price now the last ton. three X $XX a XX% XX% volumes in a seen the settled March was short seaborne than to quarters price of it product include quarter tons XXXX X. XXXX million at tons have ago. spread curve as priced commitments, we've at Our between some and for Japanese ratio of API as Newcastle-spec And average ton. converging an The closer versus the just Including

driver on news to by thermal recent being indicates of with prove a actually China imports China through of growing India to the for April, in seaborne to coals are estimates mines with XXXX are from ASEAN strong a demand into thermal centers. projected seaborne up the global specifics, the during stems Pacific positioned clearing Australia that will Getting coal goal in imports some quarter. from Our continues be be demand given domestic well, demand delays well internal industrial meet while the imports Chinese higher-CV quarter. Chinese levels. Asia imports region XX% cannot seaborne XX% supplied to March the even coal XXXX thermal year-to-date. with par of the XX% demand be customs X% Over our have clearance thermal as these up imports down year-on-year producers.

growth We demand to XXXX the the trend continue coal seaborne leading in expect demand. thermal this on without

to now prices ton. taking Tight seaborne and coal. supply continues met the quarter quarter averaged per in the locked to per Spot met robust at ton Moving coal support fundamentals seaborne with higher $XXX prices. first coal settlement in $XXX demand

turn in Continued supported supplies on production to safety leading the limitations steel and strong of quality resulted domestic which are supply tight back net checks domestic in China, in imports.

rose imports through XX% coal met result, a As March.

to expected year the demand estimating demand. over million to often imports we that year. me X% conditions Looking industry are ahead, industry from XXXX sourced Global coal increase XXXX this to growth tons in steel we some rose X% and particularly wide, relation Australia. additional expecting for largely leading coal with last appears were Supply India to met of X to in coal the It be seaborne were [indiscernible] increases growth demand. XX

coal, sustainable reliable is taking X. good worth too what choice abundant one moment emissions. pursued begun versus of a content reduced Slide would energy goods it's on supply the evil, some but case emphasized So surprisingly offer a and to to at We've call to I not where

global coal fuel gigawatts capacity fuel X,XXX XXXX in ever For the coal year generating time a some since generation and top XX% gigawatts that's first XX the increase new massive XXXX, of come Coal alone. per and used each about steel capital tons per is the some the X all gigawatts to an essential source. create this million coal put making expected online of are perspective, world's original also [indiscernible] about other tons Life of in And To that for the and plants foreseeable in billion coal year any the electricity attainment year. by needed energy put expectancy, XX% electricity X which is with coal of educational year. and coal of fueled to consumes Simply than each used world more future. correlate coal provides income the ingredient [indiscernible].

for serve sometime Our of XXX is recently and coal some this challenges world [indiscernible] seaborne Creek. well paradoxically portfolio need reserves financial growing to into coal of make positioned more A said, strength demand [indiscernible]. enabled than to - who many ever. use more Shoal and companies take decades those between position future, also That coal industry million sustainable greater Australia the tons for

the the the review to now on thermal heavy though outages by strong heartland. due demand across rail Slide even flooding Custom space remain shipments and Let's delayed first in impacted were quarter X. the US across

low already XX% In PRB rail fact, actual further some to were with than down XX outages on Reduced utility outpaced shipments million coal impacts. Production of internal X tons given million driven demand their shipments weather implied March. higher customer in loaded of way stockpiles. delays. and coal XX% by trends estimates down rail some nominations have were the declines

compared generation coal build of declined X million declined first the X in PRB tons quarter. In the tons X% month. March fact, to utility fuel average in in US which million an seven stockpiles

increased load weigh with and natural sources by with gas gas year-to-date. total to on was grow As declined Natural wind to rose the while expect In down, other XX% all retirements excess gas some gains weak coal gas capacity and continue prices. fuel an generation, X% down continued natural XXXX, generation we demand. generation

the outlet would to back US I the things seaborne to quarter. for upcoming Amy now On strong for like expectations thermal an turn other hand, to pricing discuss provides exports.

Amy Schwetz

met strong than and adjusted We're throughout will year. the are that volumes contribute anticipating year thermal back second seaborne EBITDA. a half more the Glenn. our of seaborne of Thanks half PRB, to half expected of escalate XXXX full

costs met elevated coal decline are expected addition, from In level. to QX

quarter moves be longwall as by shipments Second performance shoulder in be expected season line to two is PRB targeted impacted are typical recoveries rail Australia. in And first with the demand. to offset quarter

We range full and tons by this the guidance our are at seaborne thermal expecting line shipments with midpoint. year strong in increasing are XXX,XXX

met in a we're tightening multiple into mine in elevated ton. quarter met cost coal $XX first to the Goonyella, per the to to quarter to the Given zones phased our re-entry. of and segmenting completed we re-ventilation Related North first cost $XX guidance facilitate

initial quarterly delays physical out segment re-evaluate currently spending will progress produce we're acceptable in longwall expenditures. perspective JV following activities are project delay the plans, Goonyella a completed. the re-entry North first of now levels production approximately capital the From we capital originally into re-ventilation the related a This advance further our as Wambo with and million costs and from XXXX. the have in at project In and If occur, expect contemplated, pushed complying XXXX. Should review. our of X a re-ventilating primarily documentation Inspectorate, plan Queensland in we to tons from mine targets, resulted has some addition, we cash Mines would to including been ratings plan. Gas multi-week directives thorough all project to concerning the

done And lowered continuing million value to that million. collections of generating result to reclamation we've Kayenta. a We we're job XXXX remained retirement results delivering As and CapEx this to guidance $XXX a accelerate liabilities good cash quarter. post we at on and support focused believe to our we've $XXX and

average guidance Goonyella expectations the amount North As our flag lower seaborne lowered the first quarterly this we SG&A financial claims. discussed investing delivered and we've we $XXX rails our financial below not volume and recognized the we rate. severity And of at into approach cash rail on committed ratable Have guidance thermal maximum than account raised would capital EBITDA take remain of allowable adjusted strength, quarter while insurance our PRB of fashion our volumes Furthermore, quarter. in generating We've issues. and have to maintaining million performed lively normal we cash, to generated our over shareholders. returning the executing did

On our acquisition Shoal the highly to value substantial to opportunities shareholders. Creek pursue create our heels we're of for accretive continuing

For investment as now, filters of discussed strict we've investment internal we time these both filters and to some will external decision. and continue set our we evaluate employee

cash in returning turn greater to committed we've equal Operator? flow over to amount and call I'd questions. like with addition, an our or the In our that, for shareholders XXXX to than free

Operator

Pipes Riley [Operator FBR. Instructions] our Lucas B. we'll first take question with from

Lucas Pipes

of to million wanted said the I range. if X.X the first of at sold seaborne thermal coal ask you kind midpoint question you believe guidance I I tons side. start the on sold,

would think X.X that X remainder year us about over are perspective million tons wondered I the give of if leave sort to then million what I that some you the And would unpriced. you also in expect might can tons you looking as volumes and is, about much. between be do price then of very we when a sort quarterly in just basis Thank you quality [ph]? terms and yearend at and what how sell of now this many cadence, of

Amy Schwetz

do lower spec. position. seaborne Newcastle-spec about said year that's at that bit, so of anticipate unpriced a Wambo quarter year, look that our to while ramp the will If the mix. in half be component into QX, and is a our But price we XX% year. API longwall about that XX% more suppress to weighted that feel the quality beginning so of our about export move X volumes In tons the our short volumes of balance so the will a volumes at of comprising QX half second the that the half we of would once of of tons but ton, Sure, so tons see a tonnage. our than throughout $XX year year, remainder back per for XXXX include towards our we this that with X.X of got some starting for that we of we thermal the million have remainder does again the price, EBITDA

Lucas Pipes

the That's the the just it. so, was I was over kind out or Amy. of over switching Thank for helpful. year weather shortfall year? And Got impact remainder lost roughly course expect very EBITDA? wanted then to the all or So I to $XX much a side to with come QX of Do you to very was of issues you up just domestic obviously and that this impacted that the QX think that the spread put the it it directly. million should make back

Glenn Kellow

we it Yes, to expect well EBITDA. no don't be lost

to so to offset X, As about rail flat reduction so would a we be just the improved due started We're outlined we've the to to shoulder recovery that expect you the traditional QX been seeing. much saw period. performance rail probably that the now expecting with already we on chart - that the see that the typically through to

the to take it tonnes to the all So the look will but quarter. recover we than more through most of would balance not if expect of those second year,

Amy Schwetz

pit but result of the And note of out because this. impact in It that we've Lucas about as we the the you coal a in the these done that, think everything quarter take would is I instances. if first saw

into second of So as mild more going we rail weather about in see pits we're PRB would the There's we and anticipating May the move quarter ready standby out, to to we're this and and we out off the - mine flat sort and shipments the saw year, generally of pointed fall got we the coals as improving. Glenn April ready with quarter-on-quarter. be for when load

Glenn Kellow

unusual its the appears your as was, saw and what by the as in But deliveries was on through where location how worked at probably customer people the of looking years. What about in were incredibly way was the was that off predominantly that that month customer and a month was based unusual in what being nearly others, clearly well biggest than [indiscernible] in important out played impact we It better unfortunately some being impacted flooding. XX through may though occurring particular. way our PRB

Lucas Pipes

the luck. it. best helpful. Got I of appreciate Very all and detail

Operator

our next Global. from question Levin take Mark Seaport with We'll

Mark Levin

couple it quick questions, relates the QX. cadence as of one particularly So about a EBITDA to

think I flat longwall and of couple two you mentioned PRB Australia, items. moves other in a shipments

would the the when there's just So you you QX But QX perspective. EBITDA there. an million recovery and you insurance base from expect were how realized - benefit million million if $XX to or in versus if look what use QX would $XXX you use directionally $XXX base, would to

Amy Schwetz

North what but shipments, in Australia. more of cost at than PRB then as and going so we the that flat pricing those anticipating has the longwall ratable as to off at cadence a no in saw noted the second have second two Goonyella be those we're we're the is a so Thermal QX PRB improve insurance will come that should we parts do if our A a Sure, with into the more obviously a bit in we to low QX, come factor go you that noted quarter, the first number of release moving quarter. range. flat shipments from and we anticipating be positives the cost Mark from and couple quarter in go end our starting in the it's lastly, for will PRB proceeds in quarter move

Mark Levin

the that, more does flat about put you or Got down that all just look of kind that think how it or together and quarter? when you relative would to

Amy Schwetz

in going point that I difficult dependent to rail think we is the and significant to from so June. to this see to that will it need handicap is be at see of that that time much also may be look how we on it pricing May we recovery as

Mark Levin

Got it.

if months and to. then the But the us don't flagged some way but weeks be the in and and is maybe things your in press and that we maybe case North you sounds looks you the us like? like bottleneck do don't to Goonyella should release to if about how what walk we It issues happens want that for say case maybe explain a like way them what or in the worse this, maybe that we through what is a situation go the maybe. and you're second which administrative now, hope things or for they of the Can go frame great Okay comments. thinking the mine whatever is bottleneck

Glenn Kellow

through Sure, I'll go that Mark.

activities we'd of indicated engineering our indicated, re-ventilate essentially do levels of all to done the that as would gas Amy support we've first segment [indiscernible] that. all the As ability

our terms how could through the will to and So working It bit go been take who ready continued put us site, and details a quantify, sort to Queensland be would Inspectorate review working us a thought weeks that difficult be of that. we done plans of documents perspective. with have where little eminent. of That place. long asked we be and longer that. on has It to we've we to have some it's as behind The could developed progressed the the and in are number of from activities

the working on will is so their a Our everything to to mine to enable through point switch part able that to then ready and focus and timing responding overall the is to the information that we to into and and the that we're being reiterate I flick assessment. project the of is re-examine better final At able working look to just point us that we're just and plant. But said go, through process. have ready what the to re-ventilate process at be this monitor and sequencing re-enter for request then as

Mark Levin

to And it's the been that be rejection at just there's the way to hold no put clear, that of best is plan point? this an up, administrative

Glenn Kellow

no with re-entry feedback the we no have a first be The that's robust that to of the assist to focus anything protocols full around of and re-ventilation the dotting It's right on from crossing an I's to that perspective support complete feedback that are out protocols additional and the site. is and supporting plan, T's is and had phase. procedures respect set or engineering required. risk that had we as documentation not appears to this and We've assessment ensure technical

Mark Levin

to de just as last that QX. that And it CapEx and there's the it QX looks like even one know trajectory will the QX? the to bottom to how it that's QX very relates returns effect spend you CapEx of get spent I Amy, of of to a CapEx. so your quarter helpful. a you, range to Got this question meaning amount cash then minimis end big

Amy Schwetz

the as based flow more though course do Well year the including the have what cash we move Mark basing we're over year the of is CapEx. We of course on free to over the I installed year bit the does payments at probably over makes the spending that see in some it larger of fee of anticipating even think a Goonyella the back is, some EBITDA we'll North term on year. course our the be the of half contributions ratable longwall

thing has balances Open-Cut XXXX of see positive shareholder XXXX over delay we a year. over CapEx as I think for the into us the an opportunity of bring increasing our of provided cash of which course and course to in down the terms the returns the

Operator

from take Terry Deutsche Bank. with We'll next question our you. Chris Thank

Unidentified Analyst

have your guys about volumes, million tons Regarding level thermal at XXXX, this you last year. contracted the out had seaborne for you that's that point about X half

lower clients more your towards for on customers actually rate. future guys market in looking or based you spot prices of this get to a So and find the

Amy Schwetz

than generally contract more a years. we out in two year So

JFY. would be priced that first under the tons The are

this that we that will from year. into $XX be over next carried or QX of tons some settlement So saw are there

that's use also the reflection of one in on book indication to-date hedge lock and calendar not have and We our where so impacts stands And from book a that to time-to-time of large basis where well, year this necessarily in stands demand that. an do a JFY customer market. as we which of is more tonnages those

Unidentified Analyst

Off in delay that year, much year guys this returned that was versus or the so XXXX would generated kind cash All how out be so any $XXX generation to to how trying you XXXX of just figure far much free that to switching versus paybacks right, up in, flow. have million of this shareholders?

Amy Schwetz

I'm I'm not I you sure sorry, repeat that follow. could question.

Unidentified Analyst

was between to shareholders much [indiscernible] you're returning to and trying XQ, that in actual how in that million generation just $XXX out XXXX The generated of figure payback?

Amy Schwetz

Sure.

So I would has reduced net say QX and what we've debt fairly substantially. actually our done in our cash increased position balances

million generated over to of the period. cash over returned free quarter flow we we So first in $XXX shareholders cash that $XXX about and million same of

Unidentified Analyst

million generated was shareholders off XQ that was $XXX but returned Right, any that the yet? off to in

Amy Schwetz

cash would days pay working both there shipments, working and or be movements that are a collect mix the mix. that coal in movements there yes movements - I is the guess into spongeable so positive certainly capital will generally, XX of that go will within be so we view mix in I capital that capital working

Unidentified Analyst

luck. All right, thank you. Good

Operator

Scott next our Clarksons. take We'll Shair [ph] with from question

Unidentified Analyst

bit thermal the the I with hoping demand any more your it worry domestic in competing pricing, in more market, tons the result thermal recent that was fall could market? you is little talk domestic in a could about expectations and there especially international

Glenn Kellow

API Certainly through the where something you've their unexpected nicely and quarter thermal primarily entirely fact in and Australia a we've came swim quality actually a in primarily low Newcastle even and it did pretty swing seen was the US therefore waters viewed of have retraced some that primary bit our then which in those come coming down compression products has have the supplier the from almost easing as that's X ago not would is in US area and Asia some been don't destination, coal was those with down always been contemplated. and shipments imports we we're we see that off Pacific

out point running Now what that five and a I a will there. Newcastle in years liquid pretty is out market four product [indiscernible] probably slight is to

seems to decent it. and having it come legs So some that floor hit to back have

Vic Svec

going clearly we I PRB take as shipments probably and then Maybe US think on at place. extent pay question have that's Basin be that thermal hedged to which have the on look question because I'd was maybe to the a that too jump shipments in chain the taken may the it commitments on and degree around those probably Illinois and wouldn't logistics to impact producers

we've So XX into Illinois basin to position. actually more of significant back would competition domestic XXXX at basin or probably is position end competition. market within Indiana potentially potentially. issue focuses more move it which as to often an on But that activity, it versus customers towards out within of the when more export and look our that It's sub that we referred

Amy Schwetz

And to Illinois very $XX the in just and position the maybe Scott the it feel about average of to that year triple so into specifically relates bound XXXX. these for moving it continue at an relates about at XXXX dynamics as price Basin to as for ton, fully on we'll We're but good Peabody. watch beyond, we API committed our X

Unidentified Analyst

there turn talk that's look out color. focus closed to for gears, guys that that. excellent recently as obviously any you kind but your M&A you portfolio. other stage Great you are assets Switching for Thank attractive Shoal this about could seaborne you at your of potential there any more Creek

Glenn Kellow

ticked do, repeatedly the looking and Creek we in they if investment clear to Shoal also Creek's in as filters the out but I and reinvestment full think been been into significant another time said there's we would we'd life is said necessarily way position I high default our think don't go capital, been about articulated. the extension and we've interested on cash back also boxes any our return we've growth I and we're that also Creek I be represented good as But than be position things shareholders shareholders sorts return sustainable disciplined be is doing of cash space. that all demonstrated capital that at example, we'd along it clear that be back we've But we've capital, business we've that the quite a to deployment the what Shoal prepared to more to and think Shoal think field or those front. come we've of on of asset execution but prepared M&A. of all then to and in think

Unidentified Analyst

for Great, my forward. going thank and taking questions and you for thank luck that you good

Operator

We'll take with our next John question JPMorgan. from Bridges

John Bridges

as you if wondered direction sort term of sort items. over sense. coming to some coming DD&A, us next just mentioned recall could those I indication down give just amortization I was makes the you few longer I of wondered down guidance the which DD&A any years. non-contract of

Amy Schwetz

established being coming the Creek impact depletion are We'll that depreciation is around are and and start then see sales be partially in amount, movements our that overtime. also component seeing in being XXXX but Kayenta that their significant in closing of amortizing chunk not we entirety. that big the cut The we period. that contracts see sales most will those Shoal partially in that's that large just that contracts of by do of and off but in were roll being the a have that truly XXXX we're offset by third mines we millennium largest year offset off move itself the two over about inclusion down as XXXX so fresh Sure come overtime into a number are by

John Bridges

cyclone and a terms seeing about helpful in there introduction company exports cyclone spoke then not very the comment lot you that's from your Okay you seeing but I'm especially of there, what of from [indiscernible] in given now. Mozambique. hitting are

Glenn Kellow

relatively the of been certainly and our side. cyclone the the the of the color have those from who last sign demand which conditions one there Yes pretty curve was benign thoughts which example they're coming those obviously of it in face zero, exacerbated or out met except supply been to year with affected just are from they've the probably off up supply of no more obviously on couple a two period of near years snug over disruptions typically are a but remain last additional

John Bridges

choice. that. Good I like Snug,

Operator

with We'll Dudas take question Michael our from Vertical next Research.

Michael Dudas

that you there. management us assets structure and many for as seems as And to customer Shoal through have you box, or are Can shipments they're about trends very the from of you. there's changes also the base being provided productivity out Creek a just through we're little Drummond in available. contracts transitioning of so in again that [indiscernible] asset major remind been in Peabody type bit look just like how share a and good as

Glenn Kellow

have of off a but you've and had production indicated quarter the best safety had well and didn't out probably quarter has as to-date. from across love one changes strong good of hard and amongst Japan. the there Peabody use are productivity and the pretty highlight gains pleased or that number Europe as which from they've been embrace in we've team followed Customers to and well integration contracts our they've and is and perspective, a the I also processes that. with management work So systems really strong has as seen perspective the my we're two and

the of same cover term that there's around In fact be to well customers some Australia and a period. overlap out tend longer we through as natural of that they type so contracts

Michael Dudas

that's shift as all when North what at trying generation again and do played how today how question operations quarter. on what and about you portfolio accelerate would you M&A maximize Glenn you XX follow-up - mentioned say and and over to your future at how had results value could this are given looking year opportunities and Goonyella in day after ago creation. or the how those contributing look going the mining immediate XX maybe Peabody, how relative - my operations of to investor and the previous maybe out were look that being a plans that value to XX their what so you etc. was returns looking and the in there your you Appreciate said to be, half but had what's you to some and

Glenn Kellow

consistently see place. as but met was at outlined the movement at design we not - ago three of also against tons The quality one nearly wasn't to I looking seen Shoal Creek and two re-wake have ago seaborne that you those potential and only the were think that met. million seaborne seaborne X we've executing has would of we've taken been coal. point was in continued to upgrading that, towards think they're investments years it and a Well years the It thermal I

cash, its be well. center extension Goonyella notwithstanding can ensure with Wambo that [indiscernible] with where seen getting mine at successful through and So We've back at returns executing and it average to and on higher you've that project and now US focused in has [indiscernible] understand a that I at why continue is portfolio those to hard we're you its to it life in to those feet. think strategy continued generating we're work at go that been it are process committed and we execution is XX% attracted the that make the extremely to in sound seem on competitiveness North

year you ago which think out last for If we plant and transitioning and probably the would versus there's mine [ph] a - that two foreseen looking compelling we're acknowledge have strongly. their would case, now desired Unfortunately look foresee up at is year very, move portfolio this have or of into performance the that and reclamation. years Kayenta, at actually which at held expense weather adjust very the we They've the would that didn't impacts. we

benefits walk but many team today. of to see the it's think articulated lane in two terms and I question strategy a that we ago think the to against I example those executing of good down years an it's memory continuing So having consistently be of we're

Amy Schwetz

to upgrade our portfolio. portfolio have but opportunities we portfolio. was This our increase as plot both see the opportunity moves also opportunistically to that met in, of strength to coal desire what so to the lot that in we've a is - managers And clearly recognizing of for on a we a example and part know of but we've row be is Shoal that an been this Creek quarters of we've our set hit number portfolio making a overtime to continue we an job

Michael Dudas

Appreciate your thoughts there Amy. Thank much. you very

Operator

Lucas take with question from last We'll B. Riley our Pipes FBR.

Lucas Pipes

more that back for were sort capital way example? circle and to of buying of Amy, looking at Thank dividend the supplemental kind wanted versus you. back stock for you metrics returning I what on

Amy Schwetz

special capital quarter the our that periodic as large recognized scale not of we our given dividend on dividend specifically takes that to be basis. We like careful In current given them deploy I a was were would it's supplemental it a at time. in share market I We frankly think first price. the point to although levels Sure, we very difficult about dividend Directors it in liquidity look Board we buybacks our going comment that something the to as favor tool. just think a so call and deploying at that a and in

we a flexibility opportunity So wanted and to how show we and returns thought acknowledge not this careful that we of necessarily be capital that this was terms deploy some I we supplemental to a think was an special. in

Lucas Pipes

depending be could circumstances. there Meaning dividends supplemental more on

Amy Schwetz

may say this levels we've we point amount short-term strides recognized projections frankly make above that targeted deploy about quarters buybacks we the and not deploy manner be closer operate What although million. want targets several time at may capital possible liquidity to in tried we talked I share the liquidity of and change that to being favor it over operated to around so would that $XXX We've to that one, we've level. of those last is, or cash in to flow

Lucas Pipes

it. That's of thank very and you helpful Got luck. best

Operator

over At the like and our any conference to closing for to back time, remarks. turn this additional I'd presenters

Glenn Kellow

value look that consistent operator operational for of support want To and BTU in every in and all one each call employees future investors in listening and our to participating your Thank I thank of you create our your and concludes for operator and your for and all We questions appreciate you today's and interest forward you. continuing thank dedication safety improvements and continued you current today's of today we everyone. call. to to

Operator

your for you participation. Thank

may now disconnect. You

Peabody Energy (BTU) 1 May 192019 Q1 Earnings call transcript