Earnings call transcript Q4 2022

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Operator

Welcome to the Peabody Fourth Quarter Earnings Call. [Operator Instructions]. Please note today's event is being recorded. I would now like to turn the conference over to Karla Kimrey, Vice President of Investor Relations. Please go ahead.

Karla Kimrey

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

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

the call over turn now I'll Jim. to

James Grech

everyone. morning, Karla, good Thanks, and

Karla Kimrey Before and started welcome a morning, moment Vice like as I'd the Communications Karla has Relations take her we over of to to President with Relations XX coal those get this X Investor Peabody. Investor in role new industry. years and of in of experience for

secured diverse We in cases, This to and common portfolio our produced In performance record quarter had record to U.S. remaining us return senior the in program, key debt quarter had in shareholder in expect in be to fourth did substantial record-breaking weather net our many Peabody's and we the the the results. challenges to stockholders. milestone execution cash enabled implemented XXXX, full flow of we have which both the in free attributable future. which quarter all income and anticipated We the Australia. and, that retire year was near overcome a

December Australia, and a substantially in sales for In costs. weather disrupted resulted impacted PRB. rainfall the intense In in the during cold turn the U.S., service the the in extreme production, rail quarter

working costs. inflation and feel greater anticipated all across our diligently impact control we're of to did we those the Additionally, operations, than

for strong our XXXX, and us sincerely our on entire commitment results X for we team In the I incidents. focus would hard injury like employees to we their employees into and management markets thank of our I our platform, speak allowed discussion ever, reported annual global mines today. lowest their work and had our Before of rate deliver safely. go the our as to we're X global continued announcing working and Dedication on

the a managing we advantage allowed from platform the forward, market while safely us operational standpoint look a As one diversity challenges. to our has to conditions take through of geographic of favorable product

the a production Seaborne abnormally coal prices wet by levels to shorter-term the coal markets Australia with such European an global trade being turning LNG. during of near-term Now winter, and volatile flow markets. issues, coal reduced remain season Indonesia as warm and in in driven

suppression to on energy early Market for the reopening demand of COVID-XX set industrial This is coal. focus in stringent trajectory China's now expected of the post increase suggest an is near-term, efforts. the thermal China's indications and their activities seaborne in requirements

coal January, economies is Elsewhere, supplying supply a measures ensure Australian XXXX. of for thermal has the adequate XX as where set China, to new During evidence began requirement to India, over import there thermal domestic stations coal months. power been scarce in of for seaborne minimum time first such producers taking coal,

markets remain near-term prices across fluctuates storage leading inventories. account coal and takes pricing response to coal higher And are this sound trends globe. as fundamentally warm supply and Overall, that demand market a European in remains we thermal Global seaborne levels. levels constrained continued gas anticipate winter, downward with the historical in volatility above thermal recent coal into to

market, issues prices. disruptions a geopolitical remained has weather higher resulting response tightening but Within the products are supply steel coal there these outages, output steel constrained production and from to of improved operation and Even further under the prices in market, wet to seaborne the which have due subdued, of to some in signs metallurgical increasing metallurgical led conditions, key of markets. output remains in

increases China increased demand the year-over-year, activity. import expected electricity coal growth. impacted anticipated is demand materials market in States, economic steel than United positively to production response to for In rates be economic supported weather increased metallurgical by and more steelmaking X% overall also rebound as The an raw in by

declined Yet per very per natural transportation higher U.S. thermal renewable production coal However, are MMBtu due MMBtu, declined mild issues spot $X.XX winter the Natural due levels. conservation coal gas deliveries January weather electricity come is XXXX, and lowest forecasting at by have and approximately combination of utilities, approximately or XXXX. Hub since natural coal that currently for year-over-year X price has gas impacting average generation. the inventories approximately a near prices XXXX. prices to coal $X.XX X% record gas to million generation tons. from the prompt utilities EIA level In Henry gas will off

on to quarter. the moving fourth Now

cash record ongoing weather-related in recovery generated rains and in from in despite the quarter heavy free operations PRB. Our flow disruptions rail the Australia

fourth thermal seaborne for bounce for continued sales heavy than quarter rainfall, a Wambo XX% in and Wilpinjong the its quarter. back quarter's about which Our year as segment XX-year highest the rains, which quarterly had fourth resulting volume higher the was average historical the quarterly the prior into from

higher completed at benefited Metropolitan are ramping and realized quarter longwall the XXXX back up a quarter of XXXX. met third in prices realizations. full first move from XX% over seaborne the to Our segment production We successfully

movements X the quarter late We were in of PRB the December, rail sales U.S., basin. impacted which In volumes cold significantly primarily restricted cold in negatively abnormally had the in because the snaps weather in December.

first a PRB the X one, trains operations had day or planned During only X XX. versus our the

day we cold a second snap, when train were the had XX planned. X During only

as Boar sell cost higher to Our performed Gateway new us coal ramped margins. better X Wild strong other enabling produced pits, at higher-priced albeit much mines produce but Run at some thermal U.S. and to well. opened up Bear and volumes expected.

of operations life to X-year attractive new are New Mexico We extension extend our able a terms. the with in at contract

were U.S., in disturbed say proud our including at reclamation are reclaim overall, acre very last every I'm to XXXX levels. We X.XX XXXX, for able had service acres on railroads for weather domestic effective the of including and X.X all U.S. year's our improving sold levels acres operations are company's out that and staffing essentially and focusing In operations. our to efforts. operations from Australian we the challenges,

At begun have efforts initial the XXXX. expect $XXX approximately North in million redevelopment spend Goonyella, and to we

program reentry support drilling reventilation with underway operating a hours previously sealed to to planned X and rigs called the B. day XX is a Our area Zone

continuous place the are and main X start is shuttle in that We the ventilation critical including commissioning Also, operating conveyors orders near fan and installation equipment, have for targeted electrical new future. cars, to equipment. miners, very been

at reminder, This operation As is is Goonyella XX a Australia of longwall with hard coal Queensland, the coking coking coal is meaningfully North in of long-term a grade million this over Goonyella increase to premium cornerstone metallurgical a is and approximately globally. coal coal considered be North phase. initial feedstocks of XX% in coking reserves. returns expected generate operation Peabody's grade prices tons historical to production

us implementing I local improved with shareholder proud terrific along to roll opportunities a value urge and government of deliver programs. say This to Queensland to for focus that XXXX, we in in their resulting the on is continue, strong other which companies, royalty local am sheet, stage communities. loss to the significantly setting allows extreme to another we balance We a a back return structure. business can jobs with discouraging investment year had

over I'll now cover the it turn to financial Mark to details.

Mark Spurbeck

stockholders of and per the all $XXX XX attributable cash free to December $X.X EBITDA repaying quarter, Thanks, we recorded We of after million. $XXX fourth reported net flow billion record of share morning, the diluted of income In cash at and debt. Jim, had common or and good senior million secured $X.XX $XXX adjusted million of remaining everyone.

to stockholders the net For the full billion. of Adjusted prior common than increase year, to attributable a doubled had we XXX% EBITDA $X.X billion, $X.X income record more year. over

remaining secured completing us million the $X.X debt in of allowed full all year. of billion the performance for financial repayment senior quarter, the retire strong Our the over $XXX to fourth

to arrive are all actively to remaining Further, straightforward and a restriction returns. reclamation at shareholder path surety final addressing prefund reclamation the sensible the eliminate we costs on agreement

near We optimistic will be in are the future. this completed

recorded the year as XX% increased and third seaborne In price EBITDA were more to Adjusted of to of the EBITDA tons XX% ton volumes Turning per quarter the XX% and lower $XXX resulting export full results. million. quarter The in of fourth margin an than XXXX. full million a Cost quarter, volumes over now $X.X increase million thermal than XXX,XXX adjusted per ton adjusted margins $XXX lower XX%. increase sensitive EBITDA costs. year, sales to for higher compared of doubled generated segment to due more

from Costs sensitive increased of prior the XXX,XXX move costs XX% at $XX segment Seaborne sales XX% The pricing quarter the higher and to adjusted fourth quarter, per generated by driven higher EBITDA Metropolitan. ton and tons. Metallurgical due price longwall additional up realized $XXX a in million

XX%, was and year. million the thermal over $XX.X adjusted both was comparable than EBITDA the adjusted year, the million from EBITDA full of $XXX in the delivered $XXX Xx XXXX. XXX% year, The up margin year Adjusted quarter higher full the periods. million, prior EBITDA prior that U.S. mines of for For nearly

generated higher higher, million already squeezing in fourth the lung winter impacting the story X.X were quarter. for Severe The weather challenging for excise loss tons. PRB Act, the in was resulted fourth temporarily Together from per with the year. The performance. the $XX.X and $XX.X adjusted EBITDA of mines in quarter weather further million quarter rail in taxes margins $X.XX the Inflation million black of Reduction December approximately costs ton to

year, of million an and $XXX.X of thermal nearly to U.S. prior XX% for mines other adjusted the increase The year. million the $XX.X compared EBITDA generated

During million the X guidance. beating prior quarter, we tons shipped

increased million tons to XX%. adjusted year, EBITDA by For the segment the margins X.X improved shipments and

for December XX, balance strong At hedges metric secured cash shipments repaying XXX,XXX happily XXXX. stood of the quarter the first reflecting will cash $XXX Wambo and coal Now realized settle the December debt. that in prices. margin posted turning after had billion robust to at $XXX sheet. million had $X.X the receivable Accounts we million, remaining we all fourth of remaining of senior XX, half tons of of At

cash also final reclamation our We to collateral for $XXX million. increased

million Wambo our towards outlook lower-cost ton. shifts X.X to million to including tons per XXXX Approximately for $XXX, at and Exports tons at on tons. the away compared remaining be turn XX hedges export $XX tons. increasing are average Seaborne metric tons, quality priced Wilpinjong million anticipated are which thermal to export from to as X.X tons X Let's million are XXXX. XX million volumes higher production includes

Australian of ton, domestic South X.X New a to Wambo sensitive tons, customers, tons to reflecting domestic sales are projected tons inclusive are to $XX We ship higher greater higher recent costs. Costs mix be $XX Wales price quality expecting the supply to Newcastle of requirements. export million per and

to see expected substantial increase are margin about XXXX, tons. $XX from export expansion the costs from unit additional we While will

costs are move from expected per ton due to and ratable export than tons, First volumes longwall at heavy to quarter to Related seaborne recovery the expected rains higher a in $XX temporarily less Wambo X.X also $XX million be are thermal per quarter. to be at ton.

at primarily X of Seaborne Approximately average metallurgical remain an offset to X per to are project progression nearly by lower expected the be $XXX on continued year, tons the through by South sensitive as $XXX. Creek's million price priced projected tough conditions. Costs volumes ton are continued pressures. completion over the costs X XXX,XXX increase $XXX geological are of Shoal to to sales and prior tons driven at Moorvale tons million inflationary are million

$XXX volumes tons and expected expected Creek. per heavy temporarily Shoal due to First in than be million higher lower at are metallurgical to are at to Queensland conditions rain ton. quarter seaborne be X.X Costs at ratable challenging $XXX to

are lower expected for are Costs Middlemount with up completed the the last ratable lung are realized are In tons the average quarter. $X.XX last more and projecting at Lastly, volume double volumes higher XX as year. $XX.XX. XX XXXX and from we than to about be taxes. offset ton Adjusted tons margins to per on million $XX priced expected per ratio expected to than black lower just EBITDA to PRB, year to royalties $XX.XX strip results to be higher million ton margins

U.S. tons. Other of remain to million million thermal volumes XX to levels XX at current elevated are expected

$XX to XX.X priced at tons costs expected per and ton. to are of $XX have be average We an $XX.XX, million

$XXX includes of million the rate. remaining is $XXX previously million, million $XX project million for at $XXX of end kit. which of Shoal run development The announced estimated high-return and capital the the capital sustaining are low million including Creek expenditures at our Capital of $XXX North for longwall Goonyella

opportunity resilient and to shareholders. no flow In diversified summary, with flow billion return finished our has and unmatched cash portfolio an a made the revised substantial from free company Peabody generate $X.X set agreement reclamation our financially cash debt with the with surety progress toward free foundation a to year company providers. unique the to of Together, for continued secured prudent cash

Operator? call now questions. I'd like turn to for the over

Operator

[Operator Instructions].

Securities. question B. Our of Pipes Riley Lucas from first

Lucas Pipes

Jim, the capital work. free across are like wondered given look what And where if I structure the it the cash really to all industry good announcement. thought first, almost sounds you've frameworks is paid -- sounds it out. to congratulations seen as flow And could on a you return like close some the like of we've

to and of balance stepped are do You've seen to kind XX% have as the is once others How capital up where paid XX%, sheet magnitude of the returns . payout about ratio reached. think you out XX% milestones you

James Grech

for words. kind Lucas, those and you thank

We with now the active right are negotiations in sureties.

elaborate at. but Investor to ourselves Mark, we So ahead Day want some far it's some some those, concepts were you don't the looking with do did of details, about to on want of please? -- too at comments of get And we make we

Mark Spurbeck

Sure. with to be you good Yes. this morning. Lucas,

Day, that is going flexible we're dividends. flow through going cash proportional to mentioned certainly return at be cash shareholder looking we return to As to program buybacks and and at to be Investor shareholders both free to any it's

When that dividends companies performed utilize buybacks the those best a return and time. shareholder and broad returns spectrum of have over at we companies programs, look with both most

So not on lost that's us.

improve what we've in Closer we few use a good our to to and like upon. have industry, from and home, seen templates some we

As any but share Jim not details expect near in mentioned, more the ready future. we're with more today, you to

Lucas Pipes

And X share has XXXX at enterprise you little weeks to for for have how for domestic gas if helpful, segment? bit book your question, priced And prices domestic how And first, roughly It's meaningfully. impacted are Jim wondered outlook, the domestic to in in turn possible and you second are negotiations natural thermal, going? market. you Mark. been look this Very what negotiations could as domestic XXXX very I and since the to my the How a PRB corrected going? price contract wanted other if currently the And all?

James Grech

Lucas, XXXX, so sales book, we we a have stated. solid for as

sold U.S. other are We our thermal and in both out PRB mines. completely the

we have there. So a strong really hand

far, have been there. demand been And going. so been and shipments nominations have the has The there the

their less still of target inventory. Our burning customers customers, PRB our of even are still are particularly their short inventories coal though short they're

So had also which there. year, the there's year tough challenge start and the was crew in having with the has PRB, we're demand with the a challenge is we been into this is still The rail but weather some last service PRB. continued shortages, of in

February railroads We are expecting to additional on see that turn around here in the crews coming have in months, month. both this coming

customer see So moment, that from is And year. It's we're a in from expecting improvements the that the issue, would rail we're to nothing transportation say of carryover is performance. that which last really, some I side. a more seeing Lucas, at the

U.S. locked at in pricing, discuss our our And around were pricing XXXX. operations XXXX, would And we last about consider we the would very be XXXX XX% all is guidance. to were that were -- going time. PRB a favorable. just had they what pricing that would But specific don't terms I that of last again book In sales you of XXXX year, say in question since to about year. locked of other guidance. we midpoint And midpoint forward were those in to XX% sold our around I say of The we have for strong that the sold in

Operator

Instructions]. [Operator

Nathan comes question from next Benchmark Our Company. the Martin at

Nathan Martin

at of to But Peabody? Congrats an in couple that comments opportunity made Australian bigger does China's opening debt Maybe specifically coal affect a you senior guys? on quick start. possibly of paydown. brief does present this picture on your How how reopening to question to Jim, remarks. the getting much secured looking a you

James Grech

is I like view the that side. encapsulate the could, bigger The Nate, would total saying China. are to in supply said market of significant there a still the markets, in entry in if of we've in the on in answer to barriers I'd that scope maybe international Peabody and which a total, market

these market the not does to side respond when demands increase, because high So entry. supply barriers of

just no quick and if are of right the above looking XXXX lows. where could now currently taking response, that at impact markets prices into and they we what is side supply seaborne China the are met be on that. now there that account So The start XX% potential

point million, $XXX last that's Europe So And time, signs versus January, this some floating seaborne time has solid metallurgical of Japan, sitting year. at in demand had some at any is since we and in showing because $XXX at even the and range right demand July in in now and increased. of is increasing markets in coal in India, more Korea

been So these the some markets. increasing good has demand of and is in metallurgical

you China improve Now prices occurred be Australia then those pulling weather these that you're add into market. why out have the and strength throw back the on disruptions even with current sustained with they depending for you market starts mix that China seeing quickly that's have the how the gets to into maybe coal or and of and in in potential prices

Seaborne Thermal of all. U.S. supply response, severe market, right the Seaborne due entry mainly lowest the in been winters comes metallurgical at the exist maybe maybe in more Eastern opposite there's of we're the same than in -- The market the end prices moment mild are Europe when the at year, the coal, even if to same in and no now. Nate, that fundamentals it to the since the last But at January they've barriers quick

to there's return growing to energy we think normal with the So demand. think growing be we weather, going

the be of for demand. if energy increased some signs coal would increased see metallurgical You demand

rebounding prices -- we You mix rebounding had this thermal see later China international year. thermal that prices the into and

Nathan Martin

the second. comments. Jim. And operations Aussie appreciate maybe for those helpful, a sticking with I Very

a guidance than like seaborne higher little year-over-year 'XX, think $XX this guys up mean if around a $XX, but math driving to bit or -- is in be cost bit, Wilpinjong? I it Just more you expected, something $XX great. specific what's any Is would thermal I of increase? a for to $X correct. to on color you touched my about be additional range particular at little can that Wambo

Mark Spurbeck

is Yes, as the the mine cut shift driven Again, It's mix, and produces venture as of to really really Glencore of going from Australia, joint thermal the our and quality all Wambo, production in Wilpinjong Wambo. seaborne Newcastle mine it's lowest cost the thermal well Wilpinjong. Nate. one that underground producers That's both production less. by in coal the and to produce lowest portfolio the in Wilpinjong. away at less cost with a open of

importantly, More tons. little is million as underground, tons, substantial export though, margin X.X along higher Wambo, some the as you see come also increasing with Those for structure, tons. And and tons, we're the a higher in imagine, given export Wilpinjong going need well coals those to tons. those export they the wash the cost, increase bit additional cost export additional particularly as some at cost rail port to can expansion

driving I'll really margin that's it. look price higher take gladly that sensitive at X.X another million expansion. realizations sales But costs cost as we export well. tons There's So in as for some $XX higher

Nathan Martin

have guidance Appreciate gave then other of while maybe Mark. item. on and brokerage. last know the Again, And some cost kind that's lumpy I us you, operating line that, quarter with trading good you I

or off to $XXX could few another in out, called roll look over that line looking first on next the half. of think, thoughts million hedges also quarters? hedges like item I the how Any the You

Mark Spurbeck

that's about things. the those delivering had the production just tons And per tons $XX million $XXX hedge million and quarter. the delivered of realized really quarter, if quarter. those weather-related later some in in of losses delays Yes, trade One, third portion $XXX the about was the versus in a when we $XX metric we recorded 'XX, average of in ton the first We you in coal year. price remember, third gain in the remember, a hedge first quarter of X

remainder a in delivered the tons fashion was Again, those of quarter, similar price average the fourth the we when in $XXX.

the fourth coal $XX in profits another quarter. realized trading So in million

in our trading coal program. As blending we program seeing we're our into next go and for year, opportunities --

typically see of we've as So that we well the of some done, tons some that had. delivering we fixed as as price

decent for a again. the here So coal in I'd quarter first expect quarter trade

Operator

concludes the Ladies our additional and Jim like remarks. gentlemen, to turn for conference -- session. I'd to back Mr. question-and-answer closing or any this Grech over closing

James Grech

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

Operator

This all concludes you conference We today's you. for attending Thank presentation. thank call. today's

wonderful You a your disconnect have may now day. lines, and

Peabody Energy (BTU) 14 Feb 232022 Q4 Earnings call transcript