Peabody Energy Corporation Q2 FY2025 earnings call

• Peabody had a great first half with record safety, solid volumes, and strong cost containment, leading to raising full-year guidance. • Accelerated longwall operations at Centurion mine, targeting February 2026 start-up, with workforce expansion to around 400 by early 2026. • U.S. market tailwinds from executive orders and the One Big Beautiful Bill, including royalty rate reduction and production tax credit. • Malcolm Roberts discussed U.S. and seaborne market dynamics, noting U.S. coal fuel generation up 15% and seaborne thermal markets finding support. • Mark Spurbeck provided financial details, segment results, and updated guidance on seaborne thermal and met volumes, costs, and PRB performance.

The Seaborne Thermal segment recorded $33.5 million of adjusted EBITDA with 17% margins, even with a loss of 400,000 tons from end-of-quarter port congestion. The Seaborne Metallurgical segment reported an adjusted EBITDA loss of $9.2 million, with 23% lower average realized prices year-over-year. The U.S. thermal mines generated $57 million of adjusted EBITDA. The PRB volumes came in higher than expected, generating $23 million in operating cash flow. The other U.S. thermal segment had lower volumes due to rail and mining issues.

• Seaborne thermal volumes anticipated to be 200,000 tons higher and cost $3 per ton better at $45 to $48 per ton. • Seaborne met cost targets better by $7.50 per ton to $150 to $120 per ton. • Increased PRB volumes by 5 million tons and lowered full-year cost by $0.63 to $11.5 to $12. • Reduced full-year CapEx $30 million to $420 million.

• Uncertainty around the resumption of sustainable longwall mining at Anglo American's Moranbah North mine, including monthly lost production and revenue, carrying costs of tens of millions per month, expected capital for new longwall equipment, probable derate of future productive capacity, and questions around workforce availability and willingness.

Q: About Moranbah North and MAC, A: Jim Grech stated they are very confident in their MAC position, with unknown exact cause of ignition, no known credible restart date, significant monthly carrying costs, and expectation of a derate in future productive capacity.

Q: On Centurion sell-down timing, A: Mark Spurbeck said no commitment to sell-down, decision based on best for shareholders and not related to Anglo situation.

Q: On Anglo deal update, A: Jim Grech discussed fundamental disagreement with Anglo over quantum of impact of Moranbah North mine issues.

Q: On PRB cost and royalty rate, A: Mark Spurbeck explained PRB cost guidance includes lower royalty rate benefit, with $0.40 per ton benefit to Peabody in second half.

Q: On Centurion development impact on sales targets, A: Mark Spurbeck said longwall production pulled forward to early 2026, but production targets not changed yet.

Q: On liquidity and Centurion capital, A: Mark Spurbeck said $586 million cash is unencumbered, and about $100 million more needed for Centurion South development to longwall production.

Q: On rare earth elements in PRB reserves, A: Jim Grech said Peabody is in second phase of rare earth element evaluation program in PRB, with initial data showing elevated levels in roof and floor strata.