Peabody Energy Corporation Q3 FY2025 earnings call

• Jim Grech noted Peabody's strong performance with good safety, volumes, cost containment, and a pristine balance sheet. Centurion mine's longwall production starts next quarter, expected to expand seaborne met coal shipments and boost average met coal portfolio realizations. - Malcolm Roberts discussed seaborne markets, with met coal markets relatively unchanged and thermal coal seeing support. - Mark Spurbeck highlighted a strong financial quarter with adjusted EBITDA increase, cash position of $603 million, and liquidity over $950 million. Centurion South development is near completion.

Seaborne Thermal recorded $41 million of adjusted EBITDA with 17% margins. Sales volumes increased by 500,000 tons quarter-over-quarter. The Seaborne Metallurgical segment reported adjusted EBITDA of $28 million, with revenue per ton up 6% quarter-over-quarter due to a better product quality mix and 210,000 tons of Centurion premium hard coking coal. The U.S. thermal mines generated $59 million of adjusted EBITDA. The Powder River Basin delivered $52 million of adjusted EBITDA, a 20% increase from the prior quarter. The other U.S. Thermal segment contributed $7 million of adjusted EBITDA in the third quarter.

• Fourth quarter seaborne thermal volumes are expected to be 3.2 million tons, with costs between $45 per ton and $48 per ton. - Seaborne met volumes are targeted at 2.4 million tons, with costs $112.50 per ton better than prior full year guidance. - PRB shipments are expected at 23 million tons at a cost of $11.25 per ton. Full year guidance has been adjusted with seaborne thermal volumes 350,000 tons higher, seaborne met cost targets improved, PRB volumes 3 million tons higher, and other U.S. thermal adjusted.

• Market volatility that could impact financial performance. - Arbitration process with Anglo potentially taking years and involving uncertainties. - Uncertainties in the assessment of rare earth elements in the PRB regarding grades, volumes, costs, and timeline.

Q: Nick Giles asked about the potential of domestic thermal coal output, the capital required, and the duration.

A: Malcolm Roberts and Mark Spurbeck discussed latent capacity, customer commitments, and the need for price signals.

Q: Nick Giles followed up on Centurion and M&A.

A: Jim Grech focused on getting the Centurion mine online and leveraging organic assets.

Q: Nathan Martin inquired about PRB demand and Centurion costs.

A: Malcolm Roberts and Jim Grech discussed demand and pricing pressure, while Mark Spurbeck spoke about Centurion cost expectations.

Q: George Eadie asked about rare earths in the PRB and the Anglo arbitration.

A: Jim Grech and Mark Spurbeck discussed rare earth assessment progress and Anglo arbitration costs.

Q: Unknown Analyst asked about the impact of the U.S.-China rare earth deal on government support for domestic rare earth projects.

A: Jim Grech mentioned the government's desire for domestic rare earth supply.

Q: Matthew Key asked about M&A in seaborne met.

A: Jim Grech stated the focus on organic assets despite the arbitration process.