PEABODY ENERGY CORP Q4 FY2024 earnings call

• Peabody had a strong finish in 2024, including shipping first coal from the Centurion mine, agreeing to buy premium hard coking coal mines from Anglo American, and entering into an agreement with RWE for renewable energy projects. - Returned $221 million to shareholders in 2024, set a new record for lowest accident rates, reclaimed 70% more land than disturbed, and achieved the top governance rating. - Shipped first coal from the Centurion mine to a Southeast Asian steel mill, and the planned acquisition of premium hard coking coal mines in Australia from Anglo American is progressing well, targeting completion next quarter. - US coal demand is expected to catch uplift from growing domestic power demand, and geologic challenges at the Twenty Mile mine have been worked through with increased production taking hold.

In the fourth quarter, the Seaborne Thermal segment recorded $112 million of adjusted EBITDA with a 36% margin. Tons shipped were ahead of expectations due to higher production at Wambo Underground. For the full year, the Seaborne Thermal segment reported $430 million of adjusted EBITDA. Shipments increased nearly a million tons from 2023, costs decreased by about a dollar per ton, and EBITDA margins were 35%. The Seaborne Met segment had $23 million of adjusted EBITDA in the fourth quarter, with shipments up 500,000 tons compared to the third quarter. For the full year, the Seaborne Met segment reported $243 million of adjusted EBITDA, with shipments increasing 400,000 tons year over year to 7.3 million tons. The US thermal mines generated $93 million of adjusted EBITDA in the fourth quarter, with PRB mines shipping 23 million tons. Together, the US thermal mines produced $289 million of adjusted EBITDA in 2024.

• For 2025, Seaborne thermal volumes are expected to be lower than 2024 due to reduced production at Wilpin Young and the closing of the Wambo Underground mine midyear, partly offset by higher production from Llamos surface operations. Shipments are targeted to be 14.7 million tons, including 9.3 million export tons. - Seaborne metallurgical volumes are projected to increase over 1 million tons to 8.5 million, primarily due to higher volume at Shoal Creek and continued ramp-up at Centurion. - PRB shipments are forecasted between 72 and 78 million tons. - Other US thermal volumes are expected to be about 14 million tons.

• Geologic challenges at mines. - Pricing fluctuations. - US coal demand not yet catching the expected uplift. - Chinese steel consumption impact on met coal demand. - Port weather disruptions. - Trade tariffs impacting seaborne trade flows.

Q: Nick Giles asked about the preemption rights process and preference for incremental stakes in Anglo assets versus Centurion.

A: Jim Grech said the preemption process is progressing well with a deadline in mid-March, and they would look at minority sales in assets if fair value offers come.

Q: Nathan Martin asked about regulatory approvals for the Anglo acquisition and minority interest sales.

A: Jim Grech said one regulatory approval left in Australia with timing from late Feb to early Apr, and discussions on minority sales are underway.

Q: Katja Janczyk asked about the Metco cost guide and impact of Capabella on costs.

A: Mark Spurbeck said the full year guidance is $120 to $130, and the difference is due to moving additional 6 million BCMs and the weak Aussie dollar in 2024.

Q: Chris LaFemina asked about the Grosvenor mine and potential restart.

A: Jim Grech said they need to see ownership and conditions firsthand but are optimistic based on Centurion experience.

Q: Nick Giles asked about Shoal Creek realizations and asset fit.

A: Mark Spurbeck said Shoal Creek is operating well, and Malcolm Roberts said FOB returns for Shoal Creek grade product are around $120 to $130 in Asia.

Q: Matt Warder asked about PE firms' interest in base load power for data centers and CapEx for Anglo assets.

A: Jim Grech said they are getting inbounds from PE firms, and CapEx for Anglo assets in the initial years is higher for production ramp-up.