BTU - Earnings call transcript Q4 2020 | Peabody Energy Corporation

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Operator

Good day, ladies and gentlemen and thank you for standing by. Welcome to the Peabody Energy Fourth Quarter 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later we will conduct the question-and-answer session and instructions will be given at that time. [Operator Instructions]. recorded. being is conference This I'd now host, over your the to Gates. turn Julie conference to like Please ahead, go ma'am.

Julie Gates

me and and earnings Mark fourth With call morning Spurbeck. for are Good thanks the quarter for of and Glenn Kellow; CEO, joining Peabody's today CFO, President XXXX.

well SEC. encourage there Within as the you filings now the Factors you referenced to with call Glenn. forward-looking release, of our over with reconciliation earnings find our consider a the on turn the non-GAAP along public statement I'll will information as measures. We to Risk

Glenn Kellow

and Thanks, morning Julie, good everyone.

challenges As globe. in you all know, XXXX U.S. brought the immense across here and the

For the different. no coal was industry, and particular, it in Peabody

As most to significant so the by These prices, and the true threats in contributed and force natural of unrelenting Operational came of impacts for depressed of headwinds impacted global we early demand for full quarter, was our at this quarter certain backdrop, pricing were Against significant negotiations requested markets in a financial we energy and the Peabody. and markets the risk collateral did results. results disruption COVID year. throughout XXXX, Surety gas in revolving industry the pandemic in surety financial noteholders, lower prices, credit a of based additional bond our on third key lower challenging covenant of fourth both with providers, group engaged breaching levels. and XXXX lenders. really

extending would had with busy either. the on financing ours. we portion We not successful We on about it our would week. mind in say a reaching covenant just were will talk here We objectives, that maturities, and we sureties. an economic financial a of signing of the our that to disease we when As detail closed key substantial securing continue accomplished debt in Mark in deal moment, only front an agreement more relief, a decided were last just

spanning operation the volumes. $XX do, Early to units costs say We Despite unique team XXXX, of in when reduced mines, functions. to at but did us, unfortunately, intentionally we a million. the produced SG&A Peabody no credit per hard they out think what global In total Australia target, to and on don't not program, not the truly work employees. months. thought nine XXXX. our approximately it to rate corporate a we together I the Three XXXX, challenges production fatal should temporarily to support a by consecutive had streamlined its mines. multiple Four led demonstrating themselves. the coming accidents zero had rightly mines safety to kept our according challenging cost in U.S. record the and have results. to of circumstances further we course a those the from context, the in We zero U.S. industry to reduced lowest regard, with reduction prepositioning broader in one these adjusted prior-year any and idled by to X,XXX actions our individual headcount announced is cost four operations reportable That's up of incidences on, more reduce coal we achieve operated Intra, our we Over despite schedules, In year view since the forefront. incidence harm, our had of at had of number compared These operating that and thermal surrounding safest shifts segments as week a set results of speak for we that have. ton public significant a

land in legacy, for different. Globally, one no our disturbed. taken nearly we has team and this always great of our reclaimed was addition, pride year acre restoration land every In acre

has X.X Peabody land years, acres five every of disturbed. than more for Over mine the acre restored past

U.S. acres mine Our of also the Phase X in States. bond than more final XX release the sites across through in progress evidenced XX,XXX is the United

we thermal demand. impacted supply been weather to thermal COVID-related issues improvement largely seaborne seaborne XXXX, due demand to coal As Should seeing has well-positioned to production in also we're China in Global Indonesia signs we're embark Colombia. of value. severe in disruptions improve, and in labor and significantly on continue capture

our environment. ton Over cost that of years, has the five thermal average pricing per segment competitive $XX segment past making delivered seaborne stimulating

as showing and in XXXX, imports While the seaborne flows from encouraging also improvement, steel market. on continue seen markets lows as met Australian traditional China's seaborne remain limits trade signs of of causing scope scale pricing volatility. met markets in recovery to well disrupted, coal are short-term market impact

happened as cautious resuming additional remain in gas we continue backdrop, generation in prices, this suspended supply, consider thermal we any evident what coal heavily bringing U.S. currently production This is markets be mines. on at especially weather. Given XXXX. renewable our influenced natural to by and including

were coal year, prices one $X.XX of XXXX decline. That quarter suffered. to price is nearly is For challenged $X.XX, In gas $X.XX. prices rose forward the generation said strip above prompt in result, a thermal a that demand below demand estimate there secular the of market, we is question is coal the net. a coal that gas U.S. and no Currently, natural that most as December, prompt averaged gas and and

of the However, in have cost segments. within assets, thermal accomplished we our backdrop, and year-over-year our little other the we in improvements give and I'll meaningful our lowest U.S. demonstrated competitive I cost over have Against that around year. operations, is a stand detail thermal U.S. the past bit basin more by now what happening have some assets most what

customer previously, in shift last with production spend thermal than mines, cash match schedules, of idled demand. we time numerous mines year reduced for we undertook production less at to reduce as a a mentioned idled we operations, number better adjusted operation. I U.S. initiatives our As the and Across four month temporarily our to units

customers' serves and the among maximize ship ability needs to contracts value. have We to that continue and mines our best

seaborne of rates. development underground Within now suspended with panel temporarily Wambo And team to moving a tough the I'm given mining we pleased market on will thermal The XXXX. the conditions. in next the improving in be in mid-XXXX note great the current ahead we has done district segment, in job

coal of and XXXX, mines life We're of idled as to to with that all their to we're stakeholders semi-hard commercial and Moorvale point still also at conditions process. resume XXXX. conversations four progressing will on the production. extend the Moorvale are suspended also CapEx South planning North our project relatively in those advancing evaluating continuing some a and and met the still market low We meet the In mines key Creek mine. This Shoal transition mix needs enable of best both we're Metropolitan coking well as a further is project. Goonyella greater cautiously

a conditions, While and to over and believe on the is taken longer would a provide world-class coking some color North additional continue asset bit infrastructure than market Goonyella we given high-quality turn to and Mark COVID-related now results. to with process I'll we call challenges the valuable like coal. financing

Mark Spurbeck

on senior Peabody a issued secured of Last $XXX note, recent Nearly issuance overview X% morning, pro credit and not participate previously were XXXX. today Senior the share exchange commitments until and rata our the continue of Thanks, Peabody This senior $XX The to Wilpinjong $XXX of secured of million receive million $XX exchanged with notes due loans revolving secured credit Glenn, XXXX the senior both secured an XXXX. of now good everyone. December The now. consideration. by XX% additional tendered like will term who $XXX participated I'll note a in are to XX% as be note XXXX as for million X.X% we and that announced Noteholders of coupon in the by resulted $XXX week, of in closed new senior a March of million letter notes of hit both activities. and secured paid Wilpinjong secured well exchange cash offer. exchange notes million in million transaction. the new senior were facility, a consideration. of cash by unsecured, also million $XXX the exchange I'd did financing start facility Wilpinjong, highlights major and

of agreement has global also completion surety the been in. the With locked exchange transactions, the

collateral a an more Taking additional flow post million cancel the terms of posted than $XXX agreed we any In March million agreement, have For to dropped that XX-month not will the XXXX, $XX in million collateral with any in annum duration company free million XXXX, a turn, in greater extent outstanding Surety generates the step cash $XX additional XXXX. December secured debt bonds, due $XX us on XXXX, to of back, and assets form existing and of requests, per throughout bonds or of in of $XX period, million as the through further March the the million. of than million December of that $XXX sales $XXX leaves request agreement. an additional collateral credit, debt due that letters or increase to of maturity secured and providers subject

a the two XX.X Peabody will at weeks, next price an we of of the principal repurchase amount note in XX% Within new par. million of make to offer

like pursue to thermal Glenn capital thermal cash million million beginning again, cash fourth mentioned. receivable our our and million had improvements the X.X and now segment Once We $XXX we for December $XX, With value operational per fourth improvement, delivered segment segment the tons, facility, to the within future tons of XX, sold cost XX% facility. with performance, performance that particularly total, activities, also prior-year. million to the segment, with ton platforms, letter foundation to credit market X.X and lower continue recap the across seaborne financing I'd a $XXX In securitization million have captured strong needed results. met turn with the our provides the $XXX of At for quarter and and accounts of This than seaborne but thermal seaborne expected exported. structure cost equivalents. seaborne quarter, creation flexibility of

million were segment Wilpinjong tons of or X.X contributed XX% pricing, million by weaker impacted sales the adjusted $XX While, EBITDA. adjusted EBITDA million. delivered and EBITDA margins margins adjusted $XX of of

all-time by the were Seaborne cost first mine an the at Metrop idling achieved [indiscernible] impacted plant performance low further weak Australian and the demonstrating Creek, at CMJV. coal thermal addition, $X.XX the longwall mine's demand and move full-year, In negatively mines. for Australian mine dollar unit results met pricing Shoal per for among the sequencing cost of

only quarter, totaled costs and ton, million the $XXX.XX met tons. For per X.X

reported As result, negative EBITDA. segment the a $XX adjusted of million

tough Our reported productivity EBITDA adjusted performed conditions contributions EBITDA U.S. COVID-related XX incredibly The PRB margin strong on average well million The $XX an segments of tons, and thermal PRB disciplined shipped adjusted demand at despite XX%. mines challenges. cost of and control. million

both Caballo and record annual unit [ph] in North fact, costs achieved In XXXX.

large and The Even shift, elevated Barron also settlement EBITDA. other per in due ongoing prior-year, units. despite El unit $XX costs Compared U.S. to XXXX ton XXXX. the was per employee over adjusted efforts. resulting annual of as mines XX% part A record higher the lower without costs XX% year-over-year cost still the due in in quick prior-year. thermal management lower, generated largely X% costs productivity, on lower per cost million Kayenta total thermal Segundo mine in per Kayenta in XXXX were $X U.S. the settlement impact, ton was to than to measured achieved units note

Midwest our adjusted related quarter, of totaled a assets $XX reserve million, in that the from $XX During plans. charge including has impairment million at reserves recorded the been equity we a in not were to Middlemount Loss non-cash million EBITDA. which from excluded tax on affiliates $XX mine unassigned coal fourth

natural the XX line thermal average Now $XX.XX let's U.S. thermal gas price have are per be Currently, volumes are to will general to $XX.XX outlook. planned XXXX for Starting thermal levels, ton. U.S. weather, shipments largely be on ton. XX ultimately an in due factors. and million average tons at retirements. from other PRB tons. prices, XX% we're decline per plant economic of planning Other XXXX at of an volumes realized with priced turn shipments of dependent shipments U.S. About assets, million to in our XXXX to part those of conditions, we priced with

start Seaborne quarter impact anticipate expected this costs million warm thermal in perspective, PRB shipments. thermal to be about tons largely levels. the to transition coal decline Wambo's Although XXXX we utilities and X recent have expressed relatively first cost expect which expected to both with of the adequate winter year. conditions a are line United our and joint of coal other are favorable, we From Wambo XXXX U.S. are venture. volumes to had a both share stockpiles, be could given We to

royalties increase are expected remain transition offsetting in venture. anticipated modestly, volumes increase XXXX. seaborne are slight strong adjusted XXXX. line given this pricing. volumes modest thermal expected We the to associated Wilpinjong in increase, Despite is segment the costs, to lower with volumes partially seaborne to and joint anticipate deliver our in an underground surface thermal higher EBITDA with However, expected in margins to improvement a

and mines and XXXX, future be Shoal Creek full-year. production tons. million evaluating Metrop XXXX for will that Metrop those operational that early both volume those are Prior a met was X.X in We're market Creek assume of earlier, cautiously determining conditions mentioned and total plans As in In Shoal deliberate at mines. projections resumed production shipped idled. the

anticipate million projects. could With down are and be levels. anticipated targeted interest $XXX mine at with to expense we first just $XXX be quarter other move about the to cash fourth if about results the CMJV reductions for a at are in volumes From spend planning lower the in be $XXX XXXX, given a $XX the each Full-year inventory more conditions quarter, quick XXXX capital related higher are including million. from capital across perspective, to a hand, approximately On we're look segments. of anticipated million, further million. expenditures of Taking extension SG&A expected corporate annual given favorable new slightly is structure, to shipments

and quarter. further we full-year expect flow were to to and an Indeed, in cycles. higher fourth on will a shipments Our turn shipments challenges be commitments. United the shipments to take like winter, reducing market share challenging for remain lower which start call Seaborne U.S. has meet year. expected position headwinds, combined be in quarter we we JV. slower generally Creek for thermal Metrop, Operator? met the best the from been to Wambo to extremely improving to thermal modestly. company impacted fair are decisive of about fourth suspension of the volumes laser-focused due customers by first with at Together volumes questions. Met to with shipped lower production their decline, now all XXX,XXX cash still costs our quarter the success in tons the and Those action I'd while XXXX have over Shoal

Operator

Markets. to [Operator with you. BMO Instructions]. David And first we'll Thank Gagliano go Capital

David Gagliano

few of limitation, questions. off that I questions All right, keeping Hopefully great. Thanks if for think possible. it's to get because but I'll it taking relatively kind my need there's and it's know important series I of a in can I try to a get together. in so keep of tight cut the I middle

some could repricing little thermal an along a quantify bit we're XXXX wanted with talk For which coming I lines, So and volumes. help me maybe leverage up wondering, a estimate I little seaborne about pressing the that if you those of for was example, this? to business,

much of where in us quarter Can the export market? about fourth market again, And was what prices $XX they're how seaborne that basis? tons. the that also, would remind number that to reprice you in in like forward-looking call look if reported stay the on is XX just a Let's today, million available

Mark Spurbeck

tons I'll would start And about Dave, for that that be delivered million remainder are million of obviously, thermal domestically. million XX export. XX tons, Wilpinjong domestic that seaborne to tons that million X The contract. X has available there's

Julie Gates

say to that Dave, very got, And small of that then we typically be is price. we've practice add a of on that price, And a then about -- just year million that volume there. would committed fiscal typical Japanese I our there, just would we've over tons which I'd got

some throughout year. to subject spot the or So the rest be of pricing indexed sort would

David Gagliano

Okay.

it So also said, -- out now? of reported, we number the reasonable assume any what average $XX that versus $XX on on just it there now, the at you is was that that's the based what's number there reasonable versus discount a if look to $XX sort is

Julie Gates

So mix of it'll the $XX includes volumes domestic that function as right, largely of a and well. course, be

million as for with open prior-year, Newcastle signal think been a lower, being higher, Wambo higher have Wambo out haven't X about underground, to specific product in Wambo by more of we apples-to-apples, from what cut, down, given compared we be open little bit product, kind obviously XXXX. lower to that we the we a if tons. shipments of guidance, Obviously, So and hard mix would on opposed get are of have into XXXX, it mixed. the that because But given what will it's of have as a specifics simply to coming we will based quality cut

Glenn Kellow

trading as adjust and activity those markets to on order David, looked of say, and best actually the margin what's in at meet part various also relevant is the going to our requirements. where in would customer try capture best, I that the mix

what same quality would have looking in flexibility, be some So different the that was to on depending markets on within mix. going

David Gagliano

sorry then on one And question just last one. that clarification Okay.

You the lines, thought just the thought export $XX to two I'm the And that press I numbers were just there the reported in $XX clarify release. number. trying actually domestic said the included I number. was

Julie Gates

sorry. have Oh, I may misspoke.

You're quarter. export $XX.XX for just the right. The the price was

David Gagliano

for got also, the two setup just for you Creek, And also on repricing for if a and of tons X.X say what all is not if volume it, of sense, us millions lot about our met pricing, of seeing seeing side, then of for any but in quarterly right for it. That's -- that, seaborne I Shoal to give Okay, can on a a those dollars the basis, How for thermal have I'm you questions met are thanks. terms there we mine give related, XXXX. different costs example, then now we're assuming open at on I could just as that a sense much that of million product what prices. on market us that's mentioned you're in basis? And could also let's that you idled met met similar a numbers, of

Mark Spurbeck

it's Dave, Mark.

mine, it's quarter. million idled in particular, month, a approximately a the Shoal $X On million $XX Creek

Julie Gates

on your second point right? on just then for is was And that pricing that Creek Shoal

David Gagliano

prices XXXX, second of much the is any was have met volumes point, total, of X.X what that my million actually that tons asking for you we seaborne really for million tons? at this out kind in how priced and of current if in if X.X market of kind No, there point assume that blends are for

Julie Gates

general, in apply for don't pricing a So met but will have be as whole until this committed, they would in won't advance platform in and the XXXX our but We well. locked lot the price we further on quarter. from in volumes

bit we at is And we certainly kind so full-year would Coppabella or look of as of a that operational, is TCI obviously look would discount at Moorvale be what a at that. and Moorvale, be Coppabella that, to the for premium product,

So Shoal ultimately what are and as that will Metrop. timing Creek volumes depend at the we any about think production of on those plans realizations and

Operator

to go Nick with we'll Jarmoszuk Stifel. Next

Nick Jarmoszuk

us hoping costs it the index? you And just your then function Metropolitan, forward restart the a Shoal to on the morning, function with then getting volumes trying of that, volumes what remind realizations of to contracted? and to a bit price, it is two on relative what are the could Creek I and good are better Hi, to little for looking talk a was get sense you is a

Glenn Kellow

Yes.

within complexity unfortunately, with into had occurring with strong markets occurring indicated, of China, But that's markets, we of imports extremely look there's we've Australian terms particular, has lot recovery. those And creating been as occurring in more also markets, the terms China as in of what's respect a So India Japan, in I in traditional looking flows. a and to us, severe highly clearly met imbalance, to some terms with those that's in what's disruption for we're of Europe. impact and guess an terms on in markets recovery, of in global Korea, on we've

flows, seeing remain very ultimate we're that the we we believe, in has terms led disruption and to volatility something movements. that of So cautious that traditional seeing we're markets, in about across analyzing

with Metrop, in to best production. in respect to order analysis, our Creek, addition market plans Shoal and with the stakeholders customers, we're with other clearly to and to the determine respect engaging Specifically

Nick Jarmoszuk

So XXXX for in able terms of the occur there XXXX? set between cost lower to that's to structure, it something is

Glenn Kellow

those we challenges specifically about had Yes, as in think in cost probably did general. surface activities may place steps In a on where upon in of the the continuing you've And our position to and done at an cost XXXX longwall Shoal to things improvement our we At met base, been of did with the disruption disruption respect two some development the to that delivering we're to and that Creek, market taking that cost the across mines thing and and to was Shoal in across was, that had that disruption customer had had to outstanding we'd and I in taking overall particularly actually our respect Shoal do in expect there really, activities our Wilpinjong to We lot around seen, deal those we've particular, in operations that working was Creek, the And spoken across challenging we've improvement position here performance, in XXXX. U.S., was through mines into on But adjustments challenges XXXX rights productivity continuing Creek year on with continue improve plan a indicate that operations. XXXX. our and impact and with markets. been addition mines was to as recall, to we've development. that most Metropolitan. had in you been that work with has

Nick Jarmoszuk

of improvement? what’s cost per can see year-over-year So in we your ton, terms a

Julie Gates

front. Yes, on we any provided guidance haven't that

met in our ton. full-year, of the total at about for per segment cost $XXX certainly, think I

mining the to something as that the great us on We've thermal met that mentioned we're as costs, costs specific in we job do typically a But business. say disclose. done the certainly throughout Glenn more in that's side. improving not work on still far heard as that just segment before the You've focused thermal seaborne U.S. segment,

Nick Jarmoszuk

And that the of include costs? million $XX idle $XXX million does

Julie Gates

What idle mine Creek, suspended. Shoal that's does include at not for considered does is It right. process is it parking

within down results. the it's segment So EBITDA, just within not

Operator

with We'll Bank America. Matthew go Fields of to

Matthew Fields

Yes, strong, hi. where dynamic just but Australian want beat the imports talked In met I’m the a China to been has you horse. about market, disrupted. the sorry; dead I were very

very the disparity from then in what Australia, is from and large met a seen price China other buying countries. we've So

you will So in, outside time have but would opportune think China. a the this mine not from be an looking met in to that's

help So us what's bringing keeping you understand just kind from of Shoal Creek back online?

Julie Gates

Yes, very Matt, China, certainly logical we any But as and have in and need satisfy. high we Europe would Shoal Creek prices, with our customers non-Australian certainly, traditional going question. Japan that seems volume really we contractual at first at it are coals as base, those customer they to those But we are commitments look look into our higher.

So China. if Shoal stock sounds of now, it in ship Creek operating as even we're right could those though out basis we into

Shoal we those at as the key continuing positioning responding these we to really evaluate signs future. conditions. back is -- go what cautious encouraged market, Creek, Glenn with for stakeholders discussions production on be I'll plans. so the certainly as from So the longwall We're had performance demand we're obviously can a future going what focused by said, in met as positive we're mine to best We to

Matthew Fields

any any year-ago, of magnitude you kind one proceeds, on then for you update potential order expect process, in Goonyella What's going of me. with terms the updates of of you started commercial about And bidders, North a I Okay. can us? give more that know

Glenn Kellow

we exactly process. a the expect not to it but that diligence industry sure that we both call that to restrictions country activities. continue you'll physical mine, has respect impacted that throughout that believe exists, in XXXX. to of right might ours. around But and been were look the by state site are transaction as But at only to not you're continue It's in that year-ago and that but we we world-class guess I process. have commercial been with I'm protocols the coking it, that with coal if infrastructure markets, -- different certainly But be other to quality continuing the delayed. the was within we there. COVID But that the processes the the And in similar

Glenn Kellow

Well, you. investors, like employees for day. And We you ongoing without our and engagement. and joining to that appreciate dedication, all we be your show you to each thank support where all our call. us and tonight. the wouldn't especially I'd for concludes of hard thank Operator work we're every our

Operator

Thank This Thank quarter you earnings you. Peabody the XXXX concludes fourth presentation. for participating.

Peabody Energy (BTU) 4 Feb 212020 Q4 Earnings call transcript