BTU - Earnings call transcript Q3 2019 | Peabody Energy Corporation

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Peabody's Third Quarter Earnings Call. [Operator Instructions] As a reminder, today's call is being recorded today, October 29, 2019.

I'd now like to turn the conference over to Mr. Vic Svec, Head of Investor Relations and Communications. Please go ahead sir.

Vic Svec

Okay. Paula. you, Thank everyone. morning, And good Welcome to quarter. the earnings for third BTU's CEO, are as Schwetz. And today and Glenn Amy with us CFO, President Kellow, Peabody well as

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

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

And with Glenn. to that, over I'll turn call the now

Glenn Kellow

Good achievements, and morning, with organization. quarter and had our some active portfolio several everyone. notable multiple We an challenges changes to

achievement recognize Basin to the on the low like I'd turned which front. River costs. multi-year in Powder First

we addition PRB involving to expect be advancing a Colorado Coal and are assets. In synergistic Arch our venture we with what joint highly

On restoration to the well Office ESG front, reclamation safety of Safety Surface a awards as Sentinels taking and as two Mining continue of in excel month. coveted this our operating teams land

volumes quarter highwall pricing, shipments. challenges wasn't we seaborne as last recovery we and The were Middlemount reduced by from and month a joint the failure affected of at noted venture without and deferrals

also as the payback Midwest in given You've seen reduced demand.

opportunity timing, path the Finally, everyone we I tremendous mentioned substantial North the the identified by we've create of completion believe PRB frustrated also a and to pending JV remain the We ongoing with Goonyella, a to changes value. organization. along Colorado represents protracted forward. portfolio while With

the and of costs, the closure a closed of Wildcat Midwest. Also ensure expected the operations and profitable we and mine safety, Hills the maximize work plan, to process, continue announced the value Mine We optimize Kayenta de-risk the in as likely have asset. the to stage reduce the

the but opportunities Moorvale United downdraft can we've decided question to no South value. major a improve continue generate flows, synergies shareholder with create that the to we to with opportunities permit cash extension. Glencore in those with also Wambo pressures, and also eye and Australia, approval, an and proceed quality, There's In JV unlock to evaluate asset industry has received lead

to Finally, made recent and our organization strides here significant in months. and streamline will operational our we've portfolio, performance continue work coming strengthen

will Amy that, the With cover in financials detail. more now

Amy Schwetz

Good everyone. morning,

consistency asset last year, particularly the characterize you to from led recognize that part have to would both be consistency a we came segment the work I road, challenges, expect. long and to we the in met continues segment due We and have As note of our to that acknowledged and we to a challenged middle continue upgrade. coal met to quality result, this lack to we rightly of

portfolio done. been and the addition has Creek to needs great be to a Shoal more

move through we As discuss the we actions to will underway call, issues. address these

hand what the is Peabody has On delivered. here other

U.S. Our cash flows times generate industry even CapEx, our the many with that of operations backdrop. continue to

in the higher operations export investments even we put in business, seaborne billion $X liability the and pressured last Our nearly reduction domestic And returns volumes. X.X as obligations highly shareholder thermal are years. profitable, into have

Against broader X. the let's on beginning quarter Slide that in more look detail backdrop, at

coal $X.XX volumes reduced of prior down reflecting from totaled higher excluding in year, billion, impact lower revenues XX% financial the quarter Third $XX the net pricing, and million revenues.

third from Portfolio the prior the and quarter $XX declined contract lower year As expected, amortization. million changes DD&A versus in

approximately We a by also personnel $XX in to XX% decline reduced million on costs. SG&A

the Wildcat Hills legal mine the in with related expenses note Basin. include to well associated impairment Colorado charge venture, $X million joint Illinois PRB the $XX to as in as items Other million the

a loss late of a approximately reflects after in the taxes June. operated independently resulted loss operations the share continuing and of joint Middlemount affiliates equity Earnings from highwall $X.XX. from loss in million per net to million failure $XX of at venture a These income related $XX impacts

quarter million compared million more $XXX pricing in to revenue volume. for the than in totaled related EBITDA decline to $XXX Adjusted on the prior $XXX million the lower of the largest and year, factor with

starting sales a up Seaborne closer at over term. take Thermal thermal and to per expectations short of increasing average tons line quarter Let's look an realized of million with operating In volumes with export performance our seaborne picked $XX.XX price segment. quarter X thermal at

some favorable Newcastle despite of lower totaled Wilpinjong The prompt of Mine. Margins realizations average. volumes XX EBITDA by and at underpinned a of Wambo moved pricing Underground million pricing. below quarter million both spec for the quality and cost even Higher Newcastle XX% mix the performance adjusted $XX as year segment for Thermal XX% represented $XX accounted the third strong generated Seaborne

coal lack met production impacted results, and by Within customer driven sales of deferrals were Goonyella. North from a

realizations quarter average at X.X Third shipments totaled XXXX million of tons eight per ton.

at volumes, the in Metropolitan Mine tonne XXX.XX an resulted extended North move along of ratios cost coal elevated Lower excluding North and Goonyella. higher with met longwall per Coppabella at Mine

Creek. at lower followed elevated yields downtime conveyor addition costs to In subsequent Shoal led upgrades and by

$XXX Within year in and Midwest PRB improvements line of was EBITDA volume. pricing the and the lower offset of in cost U.S. million largely as Thermal, adjusting impact prior with the

than and low. of lower and PRB X% This basin XXXX. The $X.XX, PRB first year. ton quarter, achieved XX% the that margins to best and. of again multi-year below the year per this cost during of the in be That's the Levels to half continue XX% led a prior

Kayenta.. mining increased year, segment, adjusted and customer costs prior versus from performance EBITDA million In Twentymile increased the Western at for with the strong revenues associated on $XX funding post

in sales Even margins the XXXX increased with line as previous quarter and reduction in year levels. prior volumes, over - with adjusted EBITDA the a over both delivered the Midwest XX%

cash million. cash At levels and million five. billion. liquidity Free totaled $XX million, Slide cash On equivalents $XX million $XXX cash $XXX flow with quarter driven continued $X.XX by operating totaled CapEx the at end, flows and of healthy of.

considerable sheet is a positioned well to taken and inherent financial volatility mining We for ensure industry. we've that to believe have we strength, And steps remain that committed balance the stream. to we ensuring

cash quarter second been relative third and accelerated buybacks Year-to-date, the in totaling largely has the shareholders to $XXX balanced million. to dividend. return repurchases between Share

result, As count XX% today. listing share shares since about our by million XX Peabody's has reduced been a to

committed appeal, that to as basic returns remain moderate investor modest and cash shareholder our understanding coal reduced pricing deleveraging generation. We of a tenant near-term flow our

sheet Our strong. balance is

And shareholder Our by our quarters, Liquidity is nearly matched substantial entire XX has quarter. in high. themselves last nearly past cap. increased cash level only which since total liabilities our reduction the has market in returns our

Slide X. to Turning

Starting at number now the We increase for are range updating our XX.X XX of items. the of with Seaborne and Thermal million tons on of about full domestic ranges lower end shipments. for beginning to volumes. This we a We the required XXXX year. our guidance initial gave expect year export the reflects

remains Our guidance cost unchanged.

keeping volumes coal imported and in and between rational. the million as for and recent the as and and eye pricing if X PCI are softer year coal Met are domestic close a interesting arbitrage sales on production ton. We've it's well we'll expected ton some This the between reflects pricing China defer economically dynamics spot December January full between challenges. now be million X.X to market, seen

of about As anticipate met coal per $XXX we a result, year cost ton. full

million lower volume. shipments. PRB our in volumes In tons, midpoint volume strong for and of the The October we quarter U.S., ranges reflecting Midwest have at PRB guidance our tightened third XXX remains

events of for coal remainder the the customer of represent lower the of the year shipments majority Given the request. per quality summer,

negotiated In volumes customer deferrals. now declines about requirements the million expecting production with lower XX are due on Midwest, along at we mines of to tons several

and end higher the lowered between $X,XXX U.S. guidance of cost have We expect and cost our per $X,XXX ton. now to be overall

to are XXXX We to our reducing continue also to requirements capital million refined and $XXX CapEx million. $XXX our range

quarter, as of EBITDA a the contributed than result the be the Mine, quarter. third $XX is million Fourth primarily Kayenta closure of quarter to adjusted in which lower expected the

increase in expect pricing higher and We thermal Australian impact required shipments segments, to volumes lower multiple domestic across also results. an

ahead to BTU year, for volumes XXXX. higher Current plans Looking show PRB are XXXX XX% than about increasing committed of in mine coal of XXXX. now volumes our next in

a in We continue position Midwest. contracted have to the strong

priced volumes for of of per XXXX. XX XXXX tons an million tons for about and with a level We ton, Midwest million at have $XX some XX priced average similar

reflects fully strength. competitive a basin priced see significant XXXX, export In for swings demand, volume a in during reduced This XXXX. made with we an significant book changes as already as as well this position portfolio committed

we highwall perspective, are as XXXX of now seaborne anticipating which mining extend Millennium its From at to in early multiple successful closure been months. continue quite life by is we've

And as be to JV United operations We Wilpinjong this are of Millennium. and expect also life volumes XXX,XXX sold thermal similar open-cut tons our extended from Wambo would extension and seaborne XXXX. the through the we've both we some therefore year anticipating

met on prices the beginning - at slide seen a Recently, the prices, XX% we've fundamentals industry rebounding in now of a from decline to been look have quarter following we've average that the play, at in XXXX. third a the seen rebounding X. second Let's

Chinese import met a imports remained than met of with coal coal marking record new monthly million August X strong tons. more

Chinese the and we incentivize domestic and restrictions tension coking coal imports into imports expect import pricing between Year. spread the move We create to as with New

momentum India rising steel imports needs, In is projected to met maintain growing are at to on home. which addition, India unable coal source

to recent and muted exports declined we rise. Australia, shipments. coal thermal capital investment Russia look met and use And U.S, in by ahead, as declining years has as continues metallurgical been both Growth in have Mongolia by in coal

invested through a years, billion was deployed the the only $XXX cycle. XXXX, major billion $XX than less coal In last that half by was XXXX From regions. last three representing was investment producing peak capital of capital the during deployed,

have in from to lifted prices seaborne weeks. their lows Moving thermal, September recent

imports As India imports drive Vietnam continue expected, and seaborne tons. show doubled some to September. million XX demand with to than import strength growth. year-to-date more China ASEAN rising through thermal continues have

Peabody front, to sharply U.S. in we netback unfavorable as Colombian exports to coal as in the these time declines And expect through ahead, both would imports. in response serve capacity countries ASEAN that look demand offset supply new centers. fuel pricing. It's over expect August and have for continue declined Atlantic to On we urbanization greater no it coincidence Australia and positioned Glenn? demand creates to as we growing is need

Glenn Kellow

Amy. Thanks,

Okay. to industry And slide through a walk that's like starting of now on the X. I'd and agenda backdrop business updates full

on towards creating targeted aggressive success strategies value three taking actions near-term are centered our long-term We for shareholders. and

as well these ratios as and seize combat Activities well reduced to pricing areas in of opportunities scale. overburden each rising pressures, underway are

be also the by We will actions steps the portfolio. strengthen believe organization streamline to enhanced these and

structure noted a and we organizational a volume. outside reshaping Last are are we squarely review from continuing cost to organization of operations the the of unit are transition business focused advancing quarter structure and company's the are with the the to assistance ensure safety, I Currently, on advisors.

this believe new are finance, operations will XXXX and IT, streamlining centers in the chain while increase others. on efficiencies These structure of costs beyond. basics functions and corporate supply We lower typical among the

the time. have additional In project, to cost million annualized and savings is broader we identified capture over totaling further analysis underway $XX improvements

Let’s look changes exploring portfolio We seaborne platform our on operations characterized slide Tier X. we've over offer inorganic means time. would met our Any as X mid-tier. include at actively both seaborne our to opportunities growth always upgrade are strategy organic thermal and coal now seaborne coal to and

Some examples this. of

project. Firstly extension extends we expect South with coal Peabody quality. and XXXX our also and to mine partners, increased the we've life approved Moorvale the This

a as mix next early We an profile to greater from coking of year. will transition PCI coal enhanced as

leads for future of which South to utilize million the will equivalents with for coal. project. equipment continued also allows $XX transfered Moorvale provides and Coppabella optionality about blending capital low from Millennium project our The Mine, extensions

for Next, kits Shoal both an transitioning at provides window operate time. mine to Creek longwalls new brief two to in November. is are opportunistic a planning run The which once district, we longwall at to a

result will muted levels. this in third quarter over expect We production quarter fourth increased

We year long-term several are given system methodology utilization Mine overburden elevation conveyor reliability. at mining activities also improving the include ratios. upgrading and to Other and equipment Coppabella improve the a

continues Goonyella. individual to we've stabilized preserved at ventilated A, safety progress every re-entered Our on the access the and North site. opportunities of To-date, reserves Zone mine, ensured and

taking should have evaluating assets the were delays value recognize days with from were and tasks July, we even months. weeks taken paths noted that long these In we to given

the our measures. and assessment areas attempts mediate and and unusual have North since review impacted and the access mine required most would detailed forego the completed and protracted the to to XX Panel of have that We will explore

from required highly Peabody. Overall, we a disciplined QMI the approach approach greatly has from restrictive believe

a of the identified X have we to seam We mine best such, As believe significant which of regular lower return with reserves, middle the is preferred life risk, path southern the several Panel. potential a the path, to represent path way beginning mine mining a maximizes decades. value with South and the this

underway. Peabody's for obtaining surface. holes is preferred contingent bore from process is of path would include and Zone ventilation B spending that the pre-approval QMI the on using ventilation Incremental from

Following Zone hard panels with a XX re-enter planned tons ventilation, developing southern coking conditions the quality assess panels. These high we target B intend to and of approximately of million coal. include

point, we A. have needed Zone completed this work most of in At the essential

be not clear, lower have of longer-term beneficial an of me far only all the now seam. Let taken been Development million stage. to preserve to tons coal in that but XX coking additional steps necessary, in the pre-feasibility we've thus project is access hard

During our the the surface including southern the considered options to from - a multiple mine access we seams. review, host of panels to mine

not of be cash cost box a cut, Given current to this permits the the barriers timing such path. of was as preferred and determined flows,

money than this it's At we point, control easier to time. believe far

are labor planned time length expected we significantly costs. the Given holding lowering B, ventilate and Zone requirements to of

As looking to Peabody and mines salaried potential opportunities most at reduced fill remaining of hourly are employment vacancies we such, where the offer to workforce and other practical.

reducing run to also estimates for are our XXXX approximately quarterly rate that recent We levels. of half

In prep a and plant further addition, as further loadout taken half could infrastructure, our well commitments reduce take-or-pay been costs market steps of again. quarterly as use to by our our which have

to Only period. $XX ventilate incur $XX gain we Zone over multi-month if to expect pre-approval, a we costs to then would million additional B million of

with the B, costs the in Zone or Assuming estimate are million of second to $XX the successful approximately million re-entry $XX ventilation XXXX we capital half year beginning of project development of in to this require length then rights XX production. about longwall be position on and A to months based develop XX should would development panel to typical a South. begin we X

As until to We would look and through selling B. by refine Zone outlays development we will work the we mitigate capital market. also estimates ventilated into Zone I'll progresses reiterate capital expect, we've not incremental you to continue and that cost committing B. are tons as would explored cash to

joint we the expect Within key be Planning a The received the that Commission venture is seaborne later from federal thermal coal, August. late the this a in Wales United South approval step Wambo final permit to year. New strip expected production the of the by improved begin has The beyond end is JV life Sharing quality the projected the ratios, planning to optimize and of potential XXXX. to mine of to XXXX. enhanced this is mine extend granted and

in Open-Cut through of transfered second & fourth improve from the production and volumes also late Millennium. this are year improve equipment volumes. Wambo the We quarter of at to working was Wambo to second use Wilpinjong additional to quarter Equipment Wilpinjong half production

Turning to XX. slide

to conditions Within take we optimizing actions U.S., challenging paring combination a our customer to the are plans, demand. matching to operations with and industry workforce through necessary back continuing of adjust mine

Our focus cash generation. on maximizing is

demand. business significant adjusted earlier, a by this noted outlays in cash X.X times of benefits of our Amy years, U.S. And has EBITDA demonstrating the recent even outpaced at declining time

regulatory joint First, pending With the centerpiece approval progress PRB/Colorado continuing the of to process. through venture the is The activities in certainly Arch. JV is the U.S.

to agreed anticipated timeline the during with first XXXX. include to half Arch and review a FTC of Peabody Recently with the

that is synergies a expected unlock JV with validate of the NPV pre-tax $XXX to continues million. to Assessment

the centering the to maximize Next, mines Basin, value. our around Illinois we in portfolio are coal

shifting contracts mines, to scaling We years more into contracted are back volumes and workforces productive future at extending several production mines. and

Just year-to-date break we month, of Mine a which perspective. the Wildcat on the closure essentially this even likely was Hills announced

plant final power obligations commercial we the negotiations closing Kayenta Mine. at continuing the owner with Finally, are regarding the

expect result, flows. cash we'd a As potential near term incremental

strategy I'll our to our to financial cover approach. turn back it Amy third around

Amy Schwetz

flow reduced have and billion. On $X.X in recap company briefly mid-XXXX, Our actions progress. and I of our by free liabilities XX, earliest cash slide the generated was one tremendous upon since approximately we total $X.X financial our has billion emergence approach made commitments believe to

projects billion highly PRB/Colorado returned through expenditures, a We've the reinvested Creek capital profitable $X shareholders. acquisition business Mine. Shoal life the sustaining in extension the JV advanced billion to $X.X and of and We've

at billion quarter can quite see, you in As approach in liquidity our over been $X.X have still we've and end. holistic

During $XXX robust million extended of and this its requirements from objectives. an initiative a $XXX facility successfully the to opportunistic and we set initiated capacity XXXX. to million Through the of process, third duration company of credit $XXX revolving the key million the refinancing with quarter, upsized

a time. enable to and the to outstanding We existing amendments also step notes company's JV, as the the at necessary while pending obtained leaving XXXX credit XXXX PRB/Colorado facility this

capacity, lower-end to to We million. to our the in debt of billion level a target move are our maintaining debt $X.X manner. lower while we of move billion, our $X.X planning revolver gross liquidity increased $XXX With liquidity neutral range a to can of

In the debt enables future fixed turn better further to lowers charges, in lower accommodates and - and our cash turn further addition, portfolio changes in target shareholders. returns

We leverage and taking targets XXXX. factors into as into gross to appropriate consideration continue evaluate industry-related move will company-specific we

the like call review That's a industry questions. quarter, over With of that, create I'd our to value. to steps turn for the the and Operator?

Operator

gentlemen, Instructions] begin now Thank Riley, session. will you, ma'am. and with at B. we We'll FBR. Lucas to Ladies go Pipes this the time, question-and-answer [Operator

Lucas Pipes

morning Hey, everyone. good

Amy Schwetz

Good morning, Lucas.

Glenn Kellow

morning, Good Lucas.

Lucas Pipes

little want bit North pathway more up to Goonyella. I Hi. a about the follow for

$XX I So $XX costs after quarterly if $XX understand you Then will announced. have B. the successful, South. that's X million And reductions way $XX ventilate to Zone call to ongoing to million it, million it develop million $XX million the you to

after What that. could come

bring on looking the this back some really guidance production. holistic market operation could total think for cost what is be into I the to

think you. So be to would anything have be helpful Thank if know that really there to would spent, is else I now? that

Amy Schwetz

at by will another is the in. looking costs idling that about we're labor holding in due I'll the take-or-pay to with essentially start right by reductions in I'm plant. prep associated through part reduction Australia underway and to start the guess XX% ways jump our are I to sure, Lucas, now. costs And cost that sure, that reduce in talked and I'm reducing Glenn and So half we've with,

And the incremental development we've half the you're panels. would right that of $XX year, talked into $XX those then And the in about, to million ventilate to of about back be moving B. Zone anticipate million we southern

we're large have we would is progressed affected had we further zones. end than the panel, and developed into mine The the to that a first quite panel the longer develop one the going other from of

depending so, $XX million XXXX. in on that we starts we'd between would anticipate and And $XX development million capital of spend when

we capitalization amount when will that reasons. before commented not a One, We've development. beyond for of that on over couple of depend to or the switch

of would were be if we're project. the that the of mode part some expense we in the spending So development today costs capital of

And element strategy the time. be labor that in generate from period tons these that that terms this produce the is we processes of need of is get firmed our development what other employed during on up we the labor what to the and also during of site that we'll revenue will

cash That we outflows won't the deployed the impact period it necessarily that cost through project, or development. at project from impact but the that net capital the to will as move

comment at confident lower The Goonyella is forward of become more this that one I and was the reasons confident structure the and the panels with under make that the we've of that the previously path look looked cost cost options would the that or as North of preferred mine, structure is moving the returns a range southern why robust. at at appeared south and we've in we we have one feel more at than

Glenn Kellow

the is get is and to there. prudent just I half talking cost has further part we're few by -- staged is and step Obviously the half to one things time, down, de-risked capital a commit of what then which structure increase Amy are but other to more maybe targeted. de-risked approach. additional and and And about approach indicated a which potentially in a We the increases think a going being then

but months plan be to to initial milestone which based attempting would is way intention our of unusual, initially re-entry negotiations we Amy on as certain a to And and development. XX with you on it's an require -- getting, discussions what about QMI our to XX a kilometer This The pre-approval we're panel X,XXX move and prior get committing our through, first B. that Zone is we'll initially. and and Based moving as development. undertaking then assisted the (inaudible) panel of that

you that significant development tons Now XX XX to longwall out through XX occur of but wouldn't or would process, get production months that period. until end tons months the or development

Lucas Pipes

helpful. Okay. That's

there that I to especially to XX is think additional uncertainty beyond development the seen still duration required it would be capital of helpful given ballpark, to-date. the if we've XX, and know the

On But $XXX. met full of Goonyella I'll coal I your September switch at now include production confirmed time XX does met year and targets guidance over question. to coal not cost you think and about this North that second my to XX, it's Xth,

but What alluded increase next a if put to you. two happened, could I signs unanticipated I of cost the that's increases and drivers, appreciate in it Thank you cost very to And would terms dollar - think still it? cost very you months. could significant much in

Amy Schwetz

Yeah.

So as characterize $XX indicated range be $XXX would of and - we the about two look in at high-end the this the of increase from release, really at I'd to components. in that what we have around

and The the outages our portfolio. have changes Shoal Shoal has start some from we to unplanned Creek, in had that first Creek is volumes fantastic in year a some

belt a something their our the some had anticipated which year. generate on anticipated, reasons, in half cost volatility flagged was as of of We mine the in system ranges This the yield. it and quarter costs, guidance performance downtime back two volume in at saw we that not factored the our change we and but that time-to-time for unplanned will had for bit change one from

moving talked through as piece the move of of overall year. the And two this as of really that that half back of the in of second well we’re just areas the that in impacting then performance length. I at volumes we look half spot demand for things. that year, back and as higher But the CMJV would is One, to the as overburden. about characterize We've out product the

And the talking shipments shipments about half of or we be that of of boats and you're sort five likely maybe shipments, pushing cost will see So volumes and and pushing back year to we we in that a impacting move likewise ton when is five impact say forward of deferred. those and the as some $XXX that deferrals that of level. us --

Lucas Pipes

appreciate I it. Thank you it. Got much. very

Operator

go with to we'll on, Chris Moving Bank. Deutsche Terry

Chris Terry

Yeah, I North Hi, the to just on appreciate on detail started just Goonyella, starting me. you answer, Glenn go and things all you've Amy. versus mine. on maybe A now reflecting few into that back given you're first maybe how the seeing when first from but

findings Would could meant summarize the just the well? been tact as that say has the you in you the or for driven. time approach, to the Thanks. change been majority somewhat has is review the in of you what Maybe delays where it it been change it moment would has just technical, at had and market cost you've got has to the that key it driven if

Glenn Kellow

Yeah. It's a good question, Chris.

don't envisaged the we've So expecting on that dimensions seen I'd what of operating would regulatory been I started. coal approach the described it's we lost what has were we've we protocols when as the anything versus was been we I than that we been anticipated think a what under part couple have to unusual different conditions. significant say, we as of think that and to

just although turn away a required the approach process led and an been a through well to that time. that and under protocols tackling had unprecedented in greater a Queensland, meant But has globally in different has those conditions we working significantly and were operating technical not unprecedented has highly, with it's what

and we a reach ahead, the from look being out it panels gaining of to we that terminal elements became for to approval As commercial uncertainty if at predict some QMI, of that time the just within in degree extrapolate way. impossible

on focus of which process, will enabled way turn likely to in enable greater then to re-entry us us to to gate of approval road which into chance That's a terms development us gaining regular mining give QMI of way back get in regular longwall is in the operation. of Zone B the success

the we've to the past through. cognizant really a drive necessitated the to period. are and protocols, the answer think market So said conditions in continuing have holding that, approach the Having our work and through approach which way as I costs of we long based low a regulatory is de-risked different immediate we're we described

Chris Terry

color. question for Thanks. for Okay. Amy. Thanks you the A

XXX number on this trying to give How of the up into day, but set assume against just through Just you'll achieve, CapEx about light year you're that guidance that I you the moving if the sort to we total cost XXXX XXX. the could wanted talk do of think I for savings parts? directionally

Amy Schwetz

Yeah.

afford So understanding -- and $XXX We've around capital spending. in sustaining their as $XXX being as and think for I we come say, is we we what U.S. deferrals have what good that at the talk million reduced been portion our about Open-Cut, I well. we'll of generally but returns will on some our can Wambo look and being from just both million across CapEx that talked of Australia the year, talk annually. generally of Wambo about mix Wilpinjong it has that about a

out approval about to we've guidance $XX $XX of involves talked on course next of dependent shifting then our Goonyella million year achieving that about. the amount. deferrals So of in both And North potentially reductions million talked that

Glenn Kellow

sorry the Moorvale there changing with we because I'd life of add sort project, South well. look to that mix, I'd to available significant as as XXX% and And South, as the And returns over mix Moorvale extensions. a quality in well as Yeah. had into add to greater that we that associated

the now sustaining working Amy think we're expect say, obviously indicative about capital was manage. levels, numbers talking I process budgeting I and we'd to those would through the to able

Chris Terry

Okay, thanks.

on pass on still just to-date you could one the you Thanks. update. I give said an first just half Arch comments last provided the was next from into JV, feedback to one year? you've the whether of existing will if Just framework is provide a me, you XXXX think wondering that some

Glenn Kellow

the we've into entered in by that's what FTC. half entered of to this would the outlines a in is we timeline both first occur that think completion of I for into expect an Yeah parties agreement which year, review, been the the

that the indications see to market. an believe support that think fact continues old I everything fuels it's today, the we we

renewables significantly competing subsidized cheap is coal natural and The gas. against

at unique looked of we've we've As assets feel the about we synergies the is again, together, really once everything comfortable coming synergies, but transaction this and by nature and that. has to-date reconfirmed those done

we transaction venture think process, case. lot there a that strong in the joint understand that timetable. think We've the but with process is a we we in to synergies an you of I one received continue And the through news significant agreed is can FTC. it a rigorous support we've as very have stakeholders But So we're from methodical which in is and delivering good the on outlined. the have focused

Chris Terry

Okay. Glenn. Thanks

Operator

to Next Capital go BMO Gagliano we'll Markets. with David

David Gagliano

for Thanks taking Okay. my questions.

Just term alternatives Are exploring it the again. other regarding Goonyella development of some process, North i.e. all to or besides spread of selling development longer some those any perhaps you risk?

Glenn Kellow

Yeah.

all So indicated options We we explore commercial options would the synergies. previously and David. table, are that and alternatives on

other seams. think that project have lower which I which addition I improvement about is the called visibility, a out is we do the

coal and this Goonyella decade fantastic a is hard resource reserve, mine a multi quality, should of with life mine product. which North a coking But have high

attractive. to Goonyella finding any extremely on a continue way why We on with see North in focused to the commercially the to North projects we the and And are returns way that's respect that's that have we be of online infrastructure prudent. bring a back Goonyella

to is that. do the the low which think we But which months all flagged are we on table, part in commercial approach, David, alternatives it best ago. believe three we cost, path de-risked, represents this Then

David Gagliano

I'll okay, it Right, that question. leave for okay. And that -

impacted path, from on how the reserves reserves proven/probable XX Just change? foregoing many are North that

Glenn Kellow

mining we million in say an but which little beyond might going X that, panel, tons. Yeah. They I'm adjacent have tons. been million a to X weren't It's bit

Amy Schwetz

work of one year's mining. About

Glenn Kellow

that's Yeah, right.

David Gagliano

Thank That's Okay, again. CapEx And right. question on just you. helpful. all then the

For or Goonyella. indicative an I XXXX Wilpinjong Wambo North CapEx for mentioned $XXX million and million $XXX $XX million $XX and annually commentary, was then additional then of million to for sort sustaining and you guess,

should are any numbers, those those there be And thinking all heard I are numbers... numbers about? we other

Amy Schwetz

comment is would And number number numbers, that on think - the capital caveat get through the other as is timing I scrutiny Glenn that of internally. to Moorvale the certain project a that of think XXXX speak we our that one thing for $XX to capital plans about bit yeah, particularly I So we I the are and quite and the continue on think so sustaining million working South. made is

at we'll in through of profiles we as particularly So light look that, volume work XXXX.

Operator

Moving on Fields, Matthew Bank Lynch. we'll go to America of Merrill

Matthew Fields

Hey, Glenn us… you Can and Amy. give

Amy Schwetz

Morning, Matt.

Matthew Fields

timetable JV complete and come transaction? changes to holders about Arch back the to finalization you plan need on the XXs to You give us to how of XXs the idea a hopefully. you Can you the an effect got

Amy Schwetz

Yeah.

we've Based move. So with Matt, the at next feedback, time. our developing of that in in bonds towards feedback taking and We this those in our to of indicated plans due of this currently billion. in at for got We're low-end $X.X the advisors release a that look feedback determining on debt range we're that process part that partially moving in point and September. market our feedback we're from targeted

evaluate and be XXXX to based I may look industry continue of part company-specific we'll into still consent this partial going look that we And and forward, those obviously or at on referenced those for a those we at factors. would our working details. options we're also factors those say, move through levels refinance that and the strategy as bonds We company-specific process we to have as

Matthew Fields

And... thanks. Okay,

Amy Schwetz

definitely I venture joint respect this credit-positive - to is we this just with would believe that reiterate that do a transaction. We

is And so, move it's as benefit we something bondholders think to that of the forward. we

Matthew Fields

you'd happy you're hear be? is would debt I'm If ton, to sort you a should gross that that stays Thanks. gross $XXX saying a continue number at think something the where follow-up. coal move of targets. debt those that goalpost And on that evaluate met as to

Amy Schwetz

structure take out is Certainly like comment cost we that about be respect I'll XXXX bring money to our a and at looks we to we a make us. as that structure, coal for look We'll able shake mines down. to what our actions talked want we believe corrective take met coal cost at to should with $XXX for we've that met that. that price

range. not debt coal as take view factors cost, of view gross as a on, certainly that necessarily develop are absolutely our debt our but at we our a those progress you and with look -- of we'll range cash we But with the spot met flow overall overall market

that I determine to I overall markets would think capital always, the we flexible, fully on need just that what understood meaning this comment are targets is because specific that review basis. about and don't be I our this more financial under are they fairly a continual

that don't look to we something said, not we oh, continually that clear in made up to at I something the it's but these, September think market. that's So and we need woke

cash in understand but as objective view business about make really reinvesting So financial tickets financial talk allocating we returns, and as entry when to clear our we markets strength, we that those something that's that point move the generate the we need that to to and do of maintain to sort certainly shareholder forward. and providing we being the

Matthew Fields

very That's very Thanks much. helpful.

Amy Schwetz

Matt. Thanks,

Operator

with we'll Vittorioso go Next Matt to Jefferies.

Matt Vittorioso

but the on to equities I wondering you've in and get the equity thus Matt's quarter. buying of predict plan question, executed good just buying morning. for you'll or of back way, you've of spent some Yeah, back the no you equity. about where and sort sort going I'm not cash thinking one maybe rewarded how back are not go guess capital just of can Obviously, whether the uncertainty whatnot, how or allocation on far.

three the six quarter And potentially this and $XXX been at say your at $X.XX to equity trading and XX least thus you've on buying clearly of not dollar. at looking for back far in million rewarded versus note

go holders JV. to You've consent pay and them or something those to also this along to with them get got potentially come do to back a

in buying weigh a every here equity that almost you do and while return debt addressing clearly is against how like? your not down, better better that coming the guaranteed which and return positive equity back EBITDA You your day, gets does get market

Amy Schwetz

that forward I we're to we've we indicated as gross So said a feel level about it we that lower here. because think progress moving debt we how

So on that. understand math the

sort in front us put time of how an these things in decision made the that in out was of forward. the cost terms going at We point handle that of wanted understand economic of debt we we to the September in and timeframe

to allocation our balance sheet that generating strength our So tenants those. state cash I'd the of approach. We're approach, that as are think capital the of committed we again maintaining first just and about two

As to might to referenced company-specific that factors something financial indicated want about the range. that move to we low-end maintain forward. that change moving of think moving forward, strength. we've We that debt We is targeted

include forward. are That approval that venture for factors obtain would would EBITDA that also levels, going joint necessary include it reduced to company-specific

returns, As of we've there at shareholder a last years. work we that is of over couple the look lot done

to not and our the buyback returns, of seen far Our program three has raise quarters not you've but approach first returns through you've the quite but more shareholder of seen us balanced shareholder component dividends. move also largest that and dividends been off certainly of a this between at sustaining XX-XX, the us times and year year

and terms So I allocation exhibit of think just two inflexible in dividends flexibility first returns, want second we continue at we look of of the two of buyback. share how shareholder have that steps between maintain approach, financial in but we that to I in are the reiterate to -- and terms terms pieces, will

Matt Vittorioso

it. Got

Thank Okay. you.

Operator

with to we'll go Mark Levin Seaport Global. Next

Mark Levin

first cash reasonable coal long-term time met the is be for things today's you to working prices? some assumption of thanks of the coal a Great, down Couple cost on drive mentioned morning. cost. on the you may met this do cost, met Yeah. What questions, think say help that cash let's you

Amy Schwetz

I as So over move I Mark, to that targeting the improvement and fair it's we're levels say operating XXXX we're that at think now. we into guess

And $XXX there. it's so, that below thinking something about

$XX given currency issues ton, us and pricing, on some which for We've generally generally impact per and maintained a has leeway of target $XX operating between and royalties.

plans to historical that XXXX, hard be production levels. we're And those reduce into to as working number down $XXX going more going we to look at our

Mark Levin

Okay, has but XXXX, gas say and in see market again, And great. with volumes next guys today's se, in per for to not gas And guidance evolving you question thermal looking prices. how XXXX. just then do power the let's just or U.S.

year, think have months same could of what this look you thermal When should that we in next kind environment what Peabody's reasonable volumes your XXXX? think if about the six like the is XXXX volumes or think to of you in we way do a do last about -- year

Amy Schwetz

first So the with starting PRB.

talked XX% at current of we about that's midpoint basin, that the the our in range. priced As

committed volume. were out So this we a in of what basin, position at we are pretty committed in probably year last that decent of than actually today time at better terms

guide it. that looked my as would we be And so, at

of that flow of a moves were mines Secondly, cash couple on generating we're the we and made Illinois not we highlighted in near Illinois Basin, have at the closure that potential portfolio Basin, necessarily breakeven.

go customer that be XXXX, XX have at that. So But ton, as with we production that $XX upside tons about pretty would we next beyond capacity plans year priced million going operations close into requirements at we if our think per necessitate. to certain certainly would have mining that's into going to going to

as look have comment that that for XX committed committed tons million XXXX, for we million XXXX. at tons I XX we

level committed out healthy pretty a that a is have key success. to to continue we So we of basin, which think

Mark Levin

And sorry, ahead. I'm Amy, question - from last go

Glenn Kellow

River course of a highly to are pretty natural and gas the sensitive Basin Mark, element, other of Powder lot One regions prices.

can us say XX heard prices a industry tons before, gas portion probably that. we're obviously as for the be in that move you've whole a of a and So $X.XX million

line probably out look you in As strip see the you now, roughly noted there. right where gas we as you on are with today prices that are forward

some you So indicator you from. it gives where of start

Mark Levin

we that for or me. thinking the in million that Last Is guidance. quarterly was a guys or And should XX higher something go back run to think that? what lot, came The going maybe were I what down question $X new were than less than rate SG&A you forward down we

Glenn Kellow

we had and portfolio, the volume at time our finding activity at operating processes costs. streamlining organization, focus I review looking ways on same that's underway strengthen but assets of not we've that in only our extensive the improve in that Well, can changes safety which quite the organizational and indicated a have got the adjusting we an

So of going activities. areas, it is comprehensive each in a improvement down non-operational the role a to it's exercise, range plus

see benefits of through. started you've think flow I to those some

we've talk to about on be but largely you somewhat run or impact, savings. in we'll lower to up identified a to on identified look is is can we what indicated. OpEx also areas, focused able The those that which more we've which touch we've but $XX date, assume rate, plans, would overhead costs firm As some SG&A million

own to things team do flows. the improve our generate to think we that are I And and to our add cash catalysts can that significantly looking the business

Operator

And will question come final our Michael Dudas with Research Vertical from

Michael Dudas

in. me letting for Thanks

does doing ones, addressed volumes, productivity, regard there, positive quick have two for what you're have impact beyond? Creek One, mostly and to answered. XXXX Just quality potential Shoal that and on been with any

and potentially closure get according approval second things as timeframe the the or of this before year, expectation, half question the original venture it second you to said once effect be effecting is of could from you. what's the and that is - go you've plan and what's the done this Thank completed? the get joint FTC maybe what don't is, And I by recall, to

Glenn Kellow

Yeah.

to a that great Amy as Creek upgrade. we system in with off and belt maybe conveyor has outages, the some So said, outages Shoal are we we Shoal on us working portfolio, to had but Creek, what been start through are looking

reliability would hope is would XXXX improvement good and we a flow strong believe that availability into and beyond, in mine. mine, a through right already we You're

is see that already second be been to to order - financing this we going we able in had be - But The a to regulatory the from a part, required the that actually covered. don't to execution has once we're quick we consents reasonably well proceed respect conversation approval would around perspective with believe. already

and region. I'll say within can commonality common that across completed operations of - believe got the a We period within operate be lot the XX time. day this We've of we

year, to approval think look of three that to within we to able close. I will months of the half target be first certainly, gaining So FTC,

Operator

it over I'll closing turn to for additional Mr. any And back comments. or Kellow, you

Glenn Kellow

I sustainable our shareholders, our participating questions the all today's workplace each support continued thank skills like to your bring express every day. to for Operator would commitment appreciation as Thank my and To call. you, call. to value. build today's to you in and dedication, of their and you your safety we concludes thank for work employees. They and to that

Operator

participating.+ the Thank this Thank QX Peabody concludes XXXX earnings you. And you presentation. for

Peabody Energy (BTU) 29 Oct 192019 Q3 Earnings call transcript