BTU - Earnings call transcript Q2 2021 | Peabody Energy Corporation

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Operator

Good day, ladies and gentlemen, and welcome to Peabody Energy's Second Quarter 2021 Earnings Conference Call. [Operator Instructions].

As a reminder, this conference is being recorded today, August -- today, July 29, 2021. I would now like to turn the conference over to Alice Tharenos. Please go ahead.

Alice Tharenos

you. Thank thanks XXXX. Earnings and Second for joining of Quarter for morning Call Peabody's the Good today President me Spurbeck. With are CFO, Grech; Mark and and CEO, Jim

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

James Grech

encouraging global good quarter to economic and Thanks, demand to morning, the continue are performance, had an recover with economies our everyone. continuing pandemic. as Alice, deliver and Peabody assets we're coal strong operational solid as from seeing indicators robust market

begin and are to market progressing for second before Higher of global of to from our on the I've for improvements well-positioned volumes to I'm I'd the the recovery. achieved on but efforts been markets are and time of I by efficiently. have quarter, we date. will at margins dedication confident a actions cover thanking to impressed and we projected their levels highlights XXXX and to workforce continued robust team, and are safely our build half our like by working benefit We debt expand reduce our focus continue for the and

CMJV time PRB thermal volumes Wilpinjong expect the Open-Cut second a the have demand Basin, are As planned, projects. at we're the improvements of at productivity from Wambo at the the expect we expect half seen year seaborne new the equipment extension and in continue our to our development all elevated and thermal Mines Indiana deliver expecting deliver second enhancement U.S. our pit JV we strong in from we we volumes our as the from Illinois in customer to the volumes. of efforts higher advancement And we finally, every platform, quarter, mines, Within And pace and platform, segment, planned Longwall to benefit Metropolitan due higher production reaching from met the our to assets our demand. are positioned increased we from in production. at and the development Within expected of projects.

the to quarter. turning Now

quarter improvements segment as as costs result prior favorably our in Second improvement EBITDA company. lower show compared with to of results to operating are market as the every efforts assets demand year across increased responding a

Our extension development to of half to the XX%. Seaborne margins XXXX. Thermal higher on the projects benefited to year, first Wilpinjong year-to-date deliver of as compared happy the resulting are prices volumes in over and compared the with $XX I'm JV target half of second both Wambo segment the from in invested million increased prior to say capital

in million. deliver nearly quarter, the volumes. productivity XX% Seaborne decrease restarted. Metropolitan prior CMJV. In XX% recognized a by segment At Longwall increase was mines cost quarter, Our $XX U.S. solid led year, of we the low-cost EBITDA with delivered in the improvements thermal from Met operations improvements benefiting versus generating production at our continued to than market a year-over-year recovery while another The more

agreement mid-QX target customers on project are will the agreement, a in to product labor upgrade the QX. Shoal productive customer robust with to as is we for see expired complete regarding term Creek, plant and market. demand with the there with We the a long-term And union that continue we we we at confident review near options completed our Creek in Shoal are be discussions continue the within domestic and

issuance focus detail Mark We cash within in levels also and will on of shares. our the steps to raise took more enhancing approach debt operating have to We with his a market the quarter cycles to and this platform in reduce on to cost our by comments. through cost common be in a volumes. our improvements all committed resilient disciplined structures remain optimal

our debt progress. opportunistically bolster year-to-date to our liquidity with is intent levels Our as and reduce demonstrated we have our

to objectives markets, our maximizing to evaluate financial of strengthen achieve portfolio towards Looking asset and our seaborne strength. strategic investments forward, we reweighting U.S. generation, to cash continue alternatives maintaining thermal

coal a near our market in broader recognize of for as gain extend We will seaborne result the mine are to in outlook of supply of invest between current to transactions from oversight and and reduced Longwall PCI to And elevated life which panel the progressing result, mix a development economics, response thermal half, and of expected market QX, greater we'll also as The somewhere our coal of XXXX. mines, our to to Creek plans a small near-term increased which From consideration. we million in Also, cash perspective, Wilkie segments medium-term and the favorable, exploring Underground with receive Moorvale on we transition begin liabilities. to to are seaborne production into to In XX administrative semi-hard reduction is we markets are growth muted. a metallurgical sell demand. coal the closed to opportunities to second a of Wambo to the the South, tight coking remain $XX mine. develop net strong global indicators the mine our Millennium and of the platform. expect and quarter, extend subsequent all demand Based million in remains life the closed $XX will

weak a and gas not over weather electricity capital demand year, increased XX% of fallen to share years. for levels electricity XXXX, high million New comparatives generation X% prior first by approximately and with seen is COVID. indicators and thermal Overall, XX electricity Coal's due increased by at approximately the of impacted result, coal last year in over have In U.S., thermal to prices. increased inventories positively half coal market coal natural favorable the tons. pricing demand XX are as

any prior market conditions strength unique year, months makes of the other approximately compared showing this of from X year. first to rose global utility U.S. coal of asset our PRB the coal which base, company. These consumption us are globally diversified During the distinctly XX%

QX results value to asset best cover the in our funds the Our from to turn mix strengthen positions for now our can Mark the those while markets value we a assets and great that our in debt generate we financials. investing our the production example reduce then levels, I'll things over of products. use get to where are

Mark Spurbeck

Thanks, Jim, everyone. morning, and good

of to demonstrate quarter-over-quarter. costs year, focus the segments and to ton lower Second the operating compared reported segments thermal cost management prior improvement. and compared by per Three our out first quarter importantly, more Most the notably, reduced operating on continue to results lower XX% maybe costs four of performance our quarter. operations reported seaborne four three cost

revenue economic strength thermal and quarter reported on reported improvement $XX of pricing higher compared a We $XXX XX% operations this demonstrating hedges. million, losses Loss prior the quarter continuing of million, $XX for increased adjusted in year of Second volumes seaborne the average year million, from of from EBITDA to $XXX thermal on $XX to our including net higher and million the million nearly at our results taxes, second doubled first unrealized diversified in realized assets. prior year, quarter our export $XXX the seaborne met $XX and million operations, U.S. products. totaled income of million

the of first We we market raised our June XX, took at-the-market work debt under completed program. XX. enhance activities of further million equity action money net as by financing previously the At $XX that financial X.X of open raised and issued in the issuing and an had nearly completion of put June the following to we much Subsequent multiple quarter. XX, retire $XX We cash in of These approximately $XX additional million the of million retired the June reached million million retiring announced extinguishment strength X.X which resulted stock net million million $XX.X June immediate Importantly, million proceeds in shares completed million to repurchases to million we from additional additional equity senior common debt shares. to debt stock. of quarter. agreements exchange third after a a we'll million We $XX the $XX of bilateral common that X.X to exchanges, XX, early debt in of is shares expected an of in in of quarter. result net settle $XX.X gain of $XX.X further secured second notes transactions for gain senior secured of debt XXXX for and

will For we the year, June including by amounts that million. we'll have reduced settle combined $XXX a after XX, debt

a Open-Cut increase Wambo million prior $XXX from had levels. was tons revenue at of shipped and the rates, fuel held and realized Joint from to segment tons costs to of the royalty prior unfavorable results. the timing transition in Seaborne average ton volume, lower compared XXX,XXX year nearly price Thermal and The $XX than higher the were Wilpinjong. benefited flat thermal to United and Seaborne volumes year due now Venture despite increase exchange Turning Wilpinjong to X.X shipments costs. segment including by cash EBITDA per higher ton, of at at approximately margin for in receivable cost realized X.X the lower $XX in quarter, and million XX. flow export cash EBITDA Wilpinjong in average Wilpinjong Operating XX%. quarter $XX the an of million million of of resulting average adjusted an Wilpinjong of ton. impacted second inventory the June $XX per $XX recorded accounts tons and million per

fleet demand higher XXX,XXX our tons well over Seaborne quarter. last more of demand than products from late segment for to ramp-up a in responded Coppabella approximately than due Longwall Moorvale by improved mine from the to our were optimization shipments per met Met U.S., In and the sequencing PCI to costs quarter improvement year, and ton at Metropolitan compared mines. to prior due to the primarily CMJV higher improving the year the for the mines the conditions. Total efforts due XX% despite Second $XX restart costs

in the XX.X XX% in levels shipped Our mines significant from the million tons a increase increase XX.X just and tons XXXX quarter. PRB from also a million first quarter,

Additionally, compared costs. to prior costs the we despite further periods over fuel per and ton higher year prior $X to just quarter lowered

higher compared The restricted primarily accounts by flow equivalents, XX, year impacted costs had negatively the operating from we At and activities $XXX from other an capital, and U.S. margins. quarter, June of in cash receivable XX% by cash, generated increase thermal reduced and timing payments. million approximately mines In cash X% million was prior $XXX of also EBITDA working of to cash.

Looking strong, higher of with expected demand, increase volumes CMJV will volumes are disciplined, remain ship export to expected are of X nudge met to to million Shoal X Seaborne finished to Metropolitan XX million anticipate million tons. mix second to the between X XXX,XXX a tons, to with controlling are tons approach X unpriced. X tons measured and higher and ahead taking costs the the Wambo Creek. approximately up and the year-to-date the and Metropolitan X million ship we at and volumes half In second improvements higher of sheet. upon balance to X.X second and to royalties. X greater the Costs year, are CMJV. we volumes which thermal a million million Underground strong. continue half anticipate maintaining tons to remain due million in to is million expect anticipate tons costs, tons taking a higher be Wilpinjong seaborne the restart to remainder of contingent tons Longwall to increased advantage expected half, expected and lower cost to expected production at We over year export

for half million priced. the full half Other half, for PRB the shipments to Costs have in XX to planned increase in slightly higher to XX expected expected planning are tons all to year. are to are mix. first due thermal maintaining be We tons million to the for essentially second U.S. segments second volumes the be both and compared higher

additional for an We are realize million continue we as to decrease $X $XX savings SG&A from million targeting now of overheads. the lower year,

$XXX Australian-based significant also We our seaborne we capital guidance our And projects expense of interest reinvestment for expenditure are now platforms. million expect for the major to million reducing for lastly, in $XXX year, reduction million of earlier. spoke a $XX questions. over the a retirements prior I result million, turn to guidance as $XXX call now debt early like for be the from to year I'd the Operator? of including

Operator

to Lucas Riley first [Operator go Instructions]. B. Securities. with Pipes We'll

Lucas Pipes

and great hear your to strong on Jim, quarter. voice, a congratulations

James Grech

voice to Thank It's hear good well. your as Lucas. you,

Lucas Pipes

question. with start higher-level to Maybe a

demand. really, Your a background globally, and a commercial pricing your touch also, really the on the opportunities there's is domestic is across but appears portfolio? from perspective in market strong on a as you see it this you you side, look resurgence Can where

James Grech

the on or demand is Well, Lucas, internationally, whether global it's increase. coal domestically

going is to to supply are But is with to over to Now, the that. some the demands permitting, going it's historically. a the the coal reason have demand the markets just And response volatility elasticity secular is price And I'm we be. talk that's capital in workers, upside. my available increasing. in about is the side response U.S. But saying view globally, just not I'll like to the total, lead to long-term decline. there increased been increased not to of used that these The to space, supply-demand difficulty like the supply it of the getting trouble what lack the see

keeping internationally, overall, domestically, now. pace increase upside so, And the I seeing we're is And forward demand right increasing just we with now; I going volatility to see globally seeing to not we're that that with right go because, it. as supply think the

Lucas Pipes

on what so to a of think that. you you I your considering markets could opportunities? that? are share, in any you appreciate you point, across your look Very, appreciate Any coal question really could seaborne Peabody thoughts very When would as footprint in thoughts about thermal -- can when M&A the think quick and And well, space, would follow-up -- reducing that. their peers, helpful. the feasible about Is financing a number you role how play here

James Grech

have Lucas, extension them. the are that showing say we're there extending on panel, the on XX Wambo we activities, ongoing But another that at Underground would the if don't to making Wilpinjong the with right M&A going I commitment we seaborne our here, with comment now. markets panel thermal investments there's we

assets a to their be these in as expansion capital are into and have them we we we for good because putting in. So are and see the that life their thermal hand, continued market market seaborne

Lucas Pipes

in to them what you. the are should XXXX, When then going for them to topics. I now liability model guidance Really some of share Thank look a different that. you three appreciate million tail liabilities, how were costs, last across buckets, at is And on forward? can legacy your switch or one roughly for one-off $XX perspective we those

Mark Spurbeck

it's Lucas, Mark.

I think $XX guidance in our the referring million you're for final a release couple of that table. in reclamation. to and things

pretty future million is do that over thing reduce use for future, And But will million last the it completed that's and a good that That as last think plan. time. foreseeable to list, and the pretty the to of that foreseeable million July. $XX there the million rate the pension few rate $XX settlement the in continue I actually that actually multi-employer payment the series the That to years we we I'd is reclaim run here for next thing the probably payments. related retiree health $XX $XX care, as of It run of also that care. settlement. We million There's lands. That retiree has years. health to for is on for few then a number. -- there's been a next $XX had year good right well was for make have that this in

Operator

Nathan next Benchmark Martin We'll from with The question Company. take our

Nathan Martin

and congrats on the Welcome, Jim, quarter.

James Grech

Thank you, Nathan.

Nathan Martin

guidance appreciate on I the want the discounts, of the all what And release. earnings an seaborne of is looking year the give Could indices? PCI you guidance? the you products those met some to I you guys then maybe split side. start between hard in to are provided I questions, volume if kind us like seaborne for with your idea relative and guess, what met quality seeing coking within this coal any, guys

Mark Spurbeck

looking the near stab That's price million for Nathan, premium benchmark tons $XXX priced that coke CMJV currently given at soft a on the about CMJV to and XX% second certainly at a the There over ton half a X upside conditions. CMJV There's that. X produces a on in about benchmark hard really semi-soft a of the for tons is current coal about some -- PCI take pricing a coking of this. tons up on $XXX a portfolio the produces blend, from at Metrop today. the it's Yes, hard tons and prices Metrop, is year, from remainder XXX,XXX I'll XXX,XXX a little million product. of here perspective Again, a probably the in about coal realized ton. -- coking there's the blend. a generally probably priced. PCI We Mark. With bit

Operator

Thank our I'd you. conclude the time, like call... That will question-and-answer At session. to this turn

Mark Spurbeck

Operator, second. a I can think follow-on a we him there from give Nathan if was

Operator

[Operator Instructions].

Nathan Martin

Mark, year see met I idea $XX, a Shoal think or the seaborne reported the were Shoal I reported that I about Yes. Goonyella Is was well full color. cost first any guys, give a on to for you costs just the basis Just the of an at in thought Creek. Maybe that can at I over mute. half it I good $XXX us guidance maybe business, on apologize of side the look should there. that, even a the come Creek excluding in appreciate guys as obviously, If ongoing ton. down? now or costs because North a still way for that

Mark Spurbeck

couple X million when thoughts. costs is $XX that Metrop year. we forward held presents. completely month I'd move cost also there, Shoal there about had so is the for full North the There to been a on the of current last probably costs quarter, Obviously, to Goonyella there's up, costs $X looking quarter holding about costs, million asset, stable there. some so have holding The out; that One, ramping ramp-up. in A Creek far. opportunity In say a is a a of holding months here the we're out. reinvesting

$X or a on go-forward the million included that basis. wouldn't million in $X of Metrop quarter were there So costs that there's be probably at

Nathan Martin

out, guess if expect second, Mark. a to with Thank then to in a Shoal guys remarks? negotiations finished assume immediately, sticking labor there customer whether for be you ramping we Creek Got worked related, you I plant here I any the And if his in that's limitations it I for think, XQ, pointed guess, are prepared the back prep as out Jim up geology is it, contract just mine that. ongoing. still sometime or

Mark Spurbeck

to with production. gradual for to Well, ramp-up sat having be going while, a Nathan, full back there's mine the a

facility. not of X, And money other production. put on prep come So it we back would the into at into the day plant full parts

starting some few there So of a after production commissioning hit be point we months start-up. at period would full some could before mine the up

Nathan Martin

you production like Can point, million us what tons full remind million, X this look there? might at something X around

Mark Spurbeck

produce X million, a X.X can It tons year, million about that in range.

Nathan Martin

is And again, that, product? of more low-vol A high-vol or like a a

James Grech

a A of more That's high-vol product.

Nathan Martin

then assuming. lowered to this for about guidance $XXX about projects obviously which million you those, nice I'm one $XX And final Perfect. guys. million $XXX year, thermal question include Thinking to for see does just me, obviously, CapEx, here million the

If you down like point couple absolute ahead, major a Jim, maintenance-like look at projects. look dollar basis? on When mentioned up? the an you might spending levels guys and what to more of you you does think what can that move other spending project wrap can

Mark Spurbeck

in said Yes. million additional Nathan, a further couple resulted guidance, some of say, million the capital sustaining still right project of $XXX things. that We I'd really There before, million a to that $XXX is number. lowered $XX is on number. million We $XX it year. basis this out that

the extension most project and Joint into this reduction, million year. but got likely Venture, Open-Cut those we the that $XX about Wambo substantially Wilpinjong $XX 'XX, fall Maybe that at look you If projects so. does complete million,

maybe this So $XX year to that a 'XX $XXX in a falling from much we sustaining million reduction should next million with year. be closer -- at

Nathan Martin

XX Jim thoughts, or the South as at early the mentioned, projects Longwall Any Wambo? panel Moorvale on Mark, these

Mark Spurbeck

earlier on panel today's The in great company. we and of Longwall will announced obviously Moorvale year, are be for current South, this Wambo prices Both Yes. at the the economics, this half second year. And and had we looks promising. quite projects that done we then that the XX,

be certainly to now, attractive to at similar quite Looking and looks XX very XX.

Operator

Matthew from with next our Fields question take of Bank We'll America.

Matthew Fields

Jim. Welcome,

James Grech

Thank you, Matthew.

Matthew Fields

way more price the oil question of the is, Australian of on the strong domestic can new lag contract. so realizations that of export gas, is Australia? about maybe the Obviously, price first on kind a of do in there you shift are you to What while prices side. there, as with as due and My kind it What strong? a thermal is escalator domestic more in a do you're market there thermal tonnage seeing to can side to into help the is kind

Mark Spurbeck

is the needs really the pretty Yes, the year. That's domestic customer coal the say. mine, and based really ratable Matt, tonnage over out first Wilpinjong gives from there on I'll of

about million tons X.X unpriced $XX at about in X.X tons half, Looking at remainder are the of exporting ton. a priced the million second with those

in prices on certainly at export some higher second looking So volumes and particular. in half the higher side, the

don't Wilpinjong at reminder, discount a with a API X product. ash a currently which $XX, benchmark a high a that to is index, above discount the confuse As sold product, but -- Newcastle's

Matthew Fields

after Sure. side, the you to Can the settled your said you. what you balance million debt $XX $XX end. then Thank us release entails? detail be give of million quarter had sheet just some that on tranches that And another retirements on

Mark Spurbeck

settlement the the Most that quarter. expected in at $XX substantial a term you repurchase is those. gain as to loan. discount, Yes. It's delayed from in saw the of just reached of We've agreements a million those

a the million about that additional of mentioned. debt loans was XXXX that of timing, us exchanges term Just well. Most matter we've getting I There's of notes equity for settled. done for $X those

the Some ones quarter. that the in closed we are

Matthew Fields

notes to cash of in us then, are? give half you. of just you the what to kind the an is amount And target loan? in structure, your or it back a decent priorities Thank Okay. capital that Can idea flow Where BTU generation, it you of do you're corporate term the in poised is your generate Australia, cash in here. intend

Mark Spurbeck

flow opportunity priority these before, price the liquidity, is which prevail, in that volumes talking current that's is excess the operating #X flow the there, generation embedded to about cash everyone, changed. hasn't said an and there we Certainly, the sweep those I'll free notes. we Wilpinjong flow, as pricing just got prices and maintain done with cash Matt, environment, cash much Yes. higher remind

swept generated to And excess flow anything ways then continue we'll look loan term to and reduce to Wilpinjong, remaining at notes and the cash to flows to the deleverage opportunistically there be provide debt continue reduce debt that at So at will Wilpinjong, Wilpinjong. XXX% both if find at of cash opportunities the the opportunity.

Operator

go Riley Pipes to with next B. We'll Securities. Lucas

Lucas Pipes

Thank portfolio in driving moment strength you from want strength, very Australia, thoughts right, market And future? return in be is follow-up prices and how might here. Chinese take here to to a appreciate a despite you're selling higher talked to right? strength on also for what anything think If for your coal. the in relates to is as remarkable you on to I not the much and what's my And China taking your positive China the just that what opinion? when your so I that? prices is position with maybe CFR of driving is And on we that. the Jim, ban outlook. Australian thoughts Would able in Would question. you earlier, to comment mentioned that the directly it advantage then about your the market your really appreciate Australian occurring And the unique of you're

James Grech

example, for historically, in about into off, first our XXXX, X% of like China. coal sold was Lucas, only

Australian much to out China the going its finding in though, American or There's of event demand way -- right? total, isn't into Australian And is going finding is the example rebalance the with the the didn't markets. has with coal rebounced, market there of that then And other in portfolio coal, its China. So so we have coal China. coal to much general our the way very to to an

think and ban see prices, I coal, rising the Atlantic that's Australian having demand now the the as on So there well. impact to an you're metallurgical is certainly starting -- strong prices with out the Chinese

coal China. has again, to of market So we lot into a not found balance us, way been historically itself. a a our seller of have the for But

Lucas Pipes

As look would restart how that could be you Creek, accessible market Shoal the to -- Chinese product? for

James Grech

would the are historically, that But it's for of from we customer that market inquiries, that coal that the mine, getting some in China. when Well, Shoal not Creek, had customers market. we -- restarted in are certainly are

loyalty So customers well. have commitments our and have existing a our to customers we we to as existing

if some So market. sure in needs. also, place But we have coal not the meeting we're that opportunity, make we'll in certainly that China their are the market. we'll They

Operator

today. That this our additional Jim or over back I'd for remarks. Grech like any turn session question-and-answer At will conclude to call to time, the closing

James Grech

for joining Well, for execute and thank like to initiatives. cost productivity you to for and our remaining investors, for our continuing insurance our today. Operator, I'd providers, especially vendors concludes thank focused safety, employees I'd thank on also on all to like continued various us your and our support. improvement customers, that our call.

Operator

We call. you. appreciate will today's participation. conclude That Thank your

Peabody Energy (BTU) 29 Jul 212021 Q2 Earnings call transcript