BTU - Earnings call 3 2023 | Peabody Energy Corporation

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Operator

Good day, and welcome to the Peabody's earnings call for the third quarter of 2023. [Operator Instructions] Please note, this event is being recorded.

I would now like to turn the conference over to Karla Kimrey. Please go ahead.

Karla Kimrey

Good morning, and thanks for joining Peabody's earnings call for the third quarter of 2023. President Mark Executive Marketing Spurbeck; Roberts. are Chief Jim Officer, today Officer, Financial and me and Officer, Chief Grech; Malcolm With our Chief

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

call the to over I'll now turn Jim.

Jim Grech

we the Karla. operational delivered And XXXX, good quarter Thanks, and management. strong In with cost third production everyone. better-than-expected results of morning, effective

initiatives Goonyella portfolio. advanced continue ongoing also investing at illustrate to We Shoal Creek North commitment metallurgical that in in seaborne our our

quarter, the in longwall the North operations Board initial at commencement funding Goonyella completion of During XXXX. for approved development our full of through the

reached Goonyella excited deposit announce a This to and the are agreement we portion our existing North have coal tremendous equipment. Wards to deposit a a Well infrastructure We existing mine. that acquire our an world-class large coal of extend and is leverage opportunity to to adjacent also

global on efficiently. Before our to thank safely focus for to their I continued want expand the and and quarter, commitment I employees working

overall our coupled $XXX China's coal supply to over an approximately resulting growth demand coal grow. surpass pointing year-to-date due prospects inventories the with coal global global of turning better have the thermal to to versus Seaborne remained XXXX. input coal, imports ton. far X% thermal levels. on increased participation range XXXX with coal in year-on-year has Newcastle Northern Hemisphere in seaborne but for coals markets. increase also Coast, the XX% lower-grade quarter high-energy Australia's India trading run weather as to weigh in market $XXX thermal Recent East elevated demand annual are within during for rate import led to drier imports Now a demand that during to volatile seaborne continue prior coal a and year, to the coal trends of modest in power thermal trade coal significantly on IEA Robust the improvements. report the gas with of pricing XXXX markets thermal moderating natural continued so to continues have

Queensland highly remaining metallurgical America, crude The coking weaker rates during output coal rate remained below markets. continued coal Metallurgical and the offset levels, has sought the remains ton, positive recording steel for Within the seaborne a historical increase premium and region. within steel constrained, with metallurgical Southeast from with quarter. new Europe after. the some out purchase with strong India, in to South of quarter production year-on-year below quarter combining notable Premium supply interest indices global a rates demand $XXX and outlook supply market, during historical coal by remaining XX% variable hard coals with import in hard production seaborne growth the steelmaking coking finished be remaining around crude exports coal of the Asian for Asian

from renewable thermal to end a year-on-year gas anticipated inventories. low summer. quarter, by and generator due quarter-on-quarter high prices challenged gas generation gas generation, by the for demand the during recover coal MMBtu. electricity thermal States, has higher gas $X U.S. to supported at prices Near-term Natural to with through warm per also be while natural pricing growing coal is United in the currently U.S. around In coal prices recorded was comparatively improvement continue declined burn although to

on moving to segments. our Now operating

Segment quarter expected, sensitive lower sales per stronger cost X.X than price came seaborne third costs. at As second were exports the lower production our thermal in quarter to tons. due coal and tons million

in potential coal developmental production pulled the the conditions installation XXXX forward than longwall segment this Creek, L we is be the segment costs XXXX X.X well that production of lower geological Shoal timing early XX% new were second quarter At into production due sales QX sales. significant first targeted shipments with price could of continue panel strong the met in area Total is the target make by favorable costs, tons. million sensitive quarter of ton to offset seaborne due to Our lower progress per longwall as ahead fit-for-purpose of to and underway. and resuming were towards

after to anticipated. last similar tons XX produced the year, nearly almost million and tons, in to by million XX.X X.X third expanding million of the X% since complex shipments PRB, while recovered maintenance were June. more quarter, than quarter XXXX. previous from XX%. and quarter than most costs by lower produced production mine tons, Higher margins has us in Caballo the costs the the reduce nicely NARM In better the tornado facilities damage The allowed

demand. from customer In increased other quarter tons X.X the U.S., tons thermal expected to shipments X.X the due and million were as previous above million

Our down increase customers their see July inventories September saw but did likely come and in August, inventories again.

million to million a $XX.XX at and priced we Looking tons said the about ton priced at with per in ton in comfortably U.S. PRB tons XXXX, thermal. XX other $XX.XX XX nearly

key our growth within the In addition continue to efforts redevelopment to at we metallurgical operations, North the portfolio. advance organic active Goonyella, opportunity

and the B mining achieved the has we Zone ventilation reenter no Zone B. than required with a southern occurred, in to impediments to operating when The are of Reentry are and conveyors processes. significant established, been better has received under expected conditions anticipated, approvals we blocks. installation our we milestone access As to normal longwall

from of phase, installation new a support commencement and system conveyor new to ground the system runs new include of coal This of Next result and development operations. conveyor the capacity. system, the which steps reliability in Zone support, removal in of to the improved B conveyor old surface installation will

Goonyella has redevelopment million capital redevelopment New which the late development ordered scheduled QX $XX Since and XXXX in North ventilation, commencement initial continuous equipment, miners the coal. were delivery includes approved that in in company the expenditures, and XXXX late development of are updates. for in further equipment XXXX, conveyors for of commencing infrastructure invested

the consistent predictable diversified results enabling and and our Overall, our to an us had highlighting benefits portfolio. operations outstanding of deliver unique quarter,

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

Mark Spurbeck

largely Thank you, quarter, $XXX continuing quarter increase the expected. income per to we or stockholders of the EBITDA benefit from recorded of working an working of $XX.X share operating million, capital $X.XX attributable capital third of adjusted million. and included company diluted Jim. million million second in as cash $XX net common flow generated In operations, reversing which $XXX The

for the Department settlement risk also sheet the We requirement reached $XX $XX legacy much Labor of black liabilities related to liability from balance rules. a a eliminated settlement of a the with DOL million operations. almost proposed the The new and company's lung cash collateral in discharged million discontinued larger certain

shareholders. least at cash million share for third XX% of We annual XX, our based remaining commitment million to program. $X.XXX returned available recently share cash is October currently repurchase After repurchases. free our on authorization we have to steadfast of the Through dividend additional shareholders, per to in share million reduced of available quarter X.X% our year-to-date share flow under have return count $XXX declared by results, $XXX remain and $XXX

and $XXX Despite third lower high-ash Turning at Wambo our adjusted additional production XX%. approximately of results. million low the cost Higher realizations guidance. end underground a to Wilpinjong ton margins $XX.XX below now of Seaborne lower EBITDA. recorded to price Wilpinjong reduced of thermal mix quarter were from per production, segment production adjusted EBITDA

costs. premium price coal weakness segment million price due sensitive guidance, of prices, PCI Despite The to adjusted adjusted metallurgical segment in resulted XX% were the hard and sales PCI mostly ton coal to and in EBITDA, generated the seaborne margins. the lower third reported achieved per between realizations widening from only coking relative XX% PCI in XX% below of Lower-than-anticipated gap quarter $XX the of cost coal. low price the end EBITDA the compared previous quarter. the benchmark price

of to XX.X from margins produced EBITDA PRB EBITDA, adjusted million higher and stronger mines U.S. increase generated coal. $X.XX and $X.XX million exceeding the prior X%. PRB lower to $XX mines quarter up The ton, last than per XX% an The shipments of thermal costs. more shipped over by maintenance due improved from much quarter guidance adjusted for substantially PRB tons, million benefiting of demand $XXX

thermal million tons $XX were timing adjusted were repairs, contracted of of line and costs Shipments costs. EBITDA. due X.X expectations, The million with of other services delivered fuel while in mines higher a to U.S. bit higher

peak a our at guidance couple improved in a Taking outlook. has Full of year areas.

full to XX We per cost the at million are guidance as to end volumes to seaborne expect year ton we be to the $XX range. of million lowering XX $X higher $XX ton thermal

a the Our million. continue by and expected $XX reclamation million to $XX are for final efficient, $X we cash reclamation reducing to to be range of efforts million required

on of thermal and be million are seaborne XXX,XXX to are quarter, ton. XXX,XXX per at average tons. export ton, product $XXX to and high-ash are product fourth tons $XX Newcastle for Specifically to expected ton million $XX increase to Costs the are of unpriced. priced tons expected per X.X volumes X.X

a $XXX mine metallurgical Costs ton, coal to XX% million of in XX% coal impacted out reversal hard the per continued tons to sales at third be to volumes of are quarter. that ton. and X.X premium are coming sequencing higher tons due remaining projected timing the the at price. absence $XXX per to achieve XXX,XXX and priced and $XXX move, expected the Creek XX% Seaborne unpriced are a expected longwall be volumes to of to the of development Shoal coking are

guidance anticipating realized of million tons, $XX.XX at the prices our of full we fourth expect and year range. per of high we ton. ton per PRB, average shipments are quarter, $XX.XX end In the the volumes XX in In cost resulting of

year Other of guidance the to of resulting third per of $XX tons, In $XX.XX $XX we costs with U.S. and ton. X.X the average volumes range. be fourth end quarter, line thermal at expected our quarter, in the anticipate in to are million an full price shipments approximately low

of the large a delivered requirement. we we We results, and eliminated quarter In removed do same and liability solid to legacy operating the summary, in quarter. a potentially liquidity fourth expect another

growth in attention to segment allocation operating maintain about capital discipline. We costs organic are excited will our seaborne metallurgical opportunities the rigorous and and

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

Operator

[Operator first with from Pipes B. question comes Lucas Securities. Our Instructions] Riley

Lucas Pipes

I of sure question $XXX million, then million that My What -- get I Wards And the $XXX that have contingent Well. first deposit? want really And structure some color a later And and contingent $XXX right? I is additional of what understand paid mine flows? royalty think then that of around to cash that to that on a initial is royalty it expect then $XXX which capital. of that Well, upon? does of of on would you I refer says is question the make cash million timing Does the to, appreciate that recovery on second capital and -- does exactly million. when adjacent cash the is deal, Wards It's closing? kind and

Jim Grech

Lucas, here. Jim Grech

remember see So the $XXX can here. -- paid be million me will if is questions That all your on let closing. I

expect that we start of -- $XXX royalty, cover We sometime in first full in project. next the to quarter that after investment go again, million with year. of the project the recovered And that's a up paying out we --

royalty some into to going would I'm for the this couple repeat to me? at try is a frame and and start that be the XXXX not that's had if So that other it expect of Is end you -- future, you the early decade, if we years -- of questions, into into probably them time paid. to Could not that answer. I'd being sorry,

Lucas Pipes

covered No, the part. that Yes. first

would was to part that second mine those you reserves. -- expect when The about

Jim Grech

Yes.

into So few the could now. The looking we contiguous. reserves. here. out closed reserves mine we're of we would that And then we the release property. happy They're first. on right up way Goonyella the And is is jump what the so into when looking the still literally would and timing do this They're ago, it's North what hours just a what our Well plan laid at Wards right is at we're have, Lucas, it we we optimizing mining get we're deal against

is out running to Well. Wards in us mine Or end panels then so up of to a the in Well. Goonyella, North North a few few more decade different panels take then in jump Wards right of up jump the even just And we're the towards some maybe and which scenarios Goonyella, would

us gives what cost mine with at different plans. looking best we're the So the structure

-- be after could out maybe depending longwall us to So production, depends it on cost we on out X or what the years X start gives few best it So how a years we structure. right?

systems, call optionality different very north down good mine of And reserves, same to far at which optionality whether the What's to is the development because using of we going units. elevation. it's faster. Lucas, conveyor a as we have same take the We're it's those direction having longwall, just And same about not scene. as down same go though, now. that mine, different lots a We're the south we is the the the plan scene the

again, again, still asked we starts years just So a deal. we're few out payment. that. we've we're And a about the after looking signed we to be quarter. And would the be the first which, But come that would at reserves. probably hit closure, -- you those earliest in still again, Again, that at expect longwall

Lucas Pipes

Jim. Goonyella. helpful, North second My question Very stays with

derisking are I rabbit We've your broadly environment. in capital And CapEx Goonyella? seen, material confidence capital maybe and appreciate some this this inflationary in the linger sense were how costs. terms down in guidance hole of level stage, the a You across would increases the North morning. at raised pretty obviously, industry, you for risks the far for this

Jim Grech

still in as not first just Yes. to first spent, be mining frame, start short cost the been in be the lot spent got we're been all time or The delivered said, increases here There's We've development structure, quarter. to that's ordered the to we like in Lucas, has immune or already. relatively quarter. rest on miners a more it of given the But you conveyor here capital place. industry. the order of the on but order some

this the point capitalized. also labor which of increase is in A cost, have big at been has part we

have so part the captured labor in is And big That's think we've increased, and a of capitalization, the the our that change those we in forecast. on expense.

short we still forward. a could ordered we've Labor of frame about feel think pretty the captured we we already the numbers wildcard, labor given bit then with and amount based reasons. spent, see those is or accurate good going been all that time on So and the being everything a that's but those cost

Lucas Pipes

Very helpful. one I'll in. squeeze one last

for the a a coal period side, for what XXXX, that ask the few it's North But range between good little moving on Shoal coal just guidance. is On volumes your update fully transition I Creek, for before a met ramped? know reasonable to in coal, coking pieces. Goonyella development is -- early this

Mark Spurbeck

has with be somewhere up done beginning now, for That giving back year. development XXX,XXX there some of QX year. coal They're Shoal it's a expect It's Lucas, with of change. for not point We're the did That's about Yes, Mark. we X really ramped guidance last million good next job 'XX next minor middle big the tons probably getting and probably Obviously, a year. the yet. to Creek continuous high that in tons. we're

Lucas Pipes

no And major there? changes that would operations, all you other expect the

Mark Spurbeck

That's right.

Operator

Nathan Martin Company. . next The comes from with question Benchmark

Nathan Martin

last one on just Maybe one Goonyella. North

increase so $XXX idea and CapEx us like project XXXX. the It million And costs, then But we of approved. of? any the give regulatory major the said Now or previously anything I perspective is about We've also, know looks was the is the you from approval something fully roughly reentry mentioned else regulatory spend? in between to left needed. cadence the there. there that a got that update. guys need on you mindful be release now that Can you

Jim Grech

it the Australia, Mark the question Nate, cadence which end I'll affected and but was included. then I industries you that Australia, of legislation, had. answer July, Safeguard side regulatory address the passed was In us many can the in that, of Act think

compliance along we involves so just it. what with costs and got that go of that the the And detail

our some and work changes main with other accounted there mine. one. the forecast impact that we're the rules we we So that effect legislatively on Act to That's the see for main that been but so those we've work something regulatory There's is into potentially that do the Safeguard had about impacts that the regulatory for, and late into summer. that talking in came were

Mark Spurbeck

date 'XX on in $XXX after come the of million $XX look capital and million left spent about that of begins beginning Goonyella. rest redevelopment got million. $XXX of North we've 'XX. The for million at CapEx to longwall at would at about the Nate, to Yes, I the production 'XX

Nathan Martin

that seaborne And shifting the And there, consider? question full about new factors driving on are I in per job think is, a ton some 'XX? maybe Great should guys. over segment. is what's other improvement? I appreciate by year down the cost guess kind thermal Great color this Obviously, to the costs that. then of about there. to base guidance going we forward Or there $X.

Mark Spurbeck

on on helpful thermal. That's saw A is very weak. us Aussie come also dollar certainly couple been One, seaborne costs. costs have Nate. of historically in volumes We hitting quarter-over-quarter. The down things, costs the helping

was we're do just that of next higher price, sales lower not yet. And and providing Some quarter. the that 'XX production. sensitive for We'll guidance costs

Nathan Martin

Jim, at 'XX on And U.S. of kind and other at Should out at close there. PRB business you at the side XX Okay. then we million those maybe guys house. update and think I levels? thermal tons I to your of said are thermal sold the thermal $XX.XX assume million at you price sales $XX.XX. XX appreciate

Jim Grech

I that a the we providing the we of think next within ranges tons guidance give what this ranges. these if for this look sit with time think for the about you pretty we're good different and sales guidance where for year you markets, those range at can at year

Nathan Martin

Okay.

not you're to within place Just ranges saying maybe bad is this sure, year's start. a guidance so somewhere be 'XX to for

Jim Grech

ranges. end towards maybe higher guidance the of the Yes and

Operator

no would the closing further back session. to our any for With conference like over Grech Jim remarks. turn to question-and-answer questions, this I concludes

Jim Grech

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

Operator

Thank today's has for Thank you. The conference you presentation. now attending concluded.

may all You now disconnect.

Peabody Energy (BTU) 26 Oct 232023 Q3 Earnings call transcript