Peabody Energy Corporation Q4 FY2025 earnings call

Management Statement and Operational Highlights

• Safety: Record safety year with an incident rate of 0.71 per 200,000 hours worked, 12% better than prior all-time record.
• Environmental: Reclaimed twice as many acres as disturbed in 2025, tied all-time low for environmental notices of violation.
• Centurion Mine: Completed installation of last shield ahead of schedule, expected to ship 4.7 million tons/year of premium hard coking coal, NPV at $2.1 billion at $225 benchmark pricing.
• Asset Optimization: Work on renewables, gas power station at Centurion, rare earth/critical mineral testing, power plant siting, and efforts to increase US coal exports from the West Coast.
• National Coal Council: Chair appointed to advise on expanding coal use, generation, and export.

Segment Performance

• Seaborne Thermal: Fourth quarter adjusted EBITDA was $63.5 million, full year $222 million. 2026 guidance: volumes expected at 12.5 million tons, costs projected at $50 per ton.
• Seaborne Met: Fourth quarter adjusted EBITDA $24.6 million, full year $56 million. 2026 guidance: volumes projected to increase to 10.8 million tons, costs targeted at $113 per ton, with segment-wide average price realizations expected to increase to 80% of the premium hard coking coal index.
• US Thermal: Fourth quarter adjusted EBITDA $63 million, full year nearly $250 million. 2026 guidance: PRB expected to ship 82 million tons, other US thermal 13.7 million tons.

Guidance

• Seaborne Thermal: 2026 volumes expected at 12.5 million tons (including 8 million export tons), costs projected at $50 per ton.
• Seaborne Met: 2026 volumes projected to increase to 10.8 million tons, costs targeted at $113 per ton, realizations expected at 80% of the premium hard coking coal index.
• US Thermal: 2026 similar to 2025, PRB expected to ship 82 million tons, other US thermal 13.7 million tons.
• Capital Expenditures: Estimated at $340 million, $70 million lower than 2025 as Centurion begins longwall production.

Risks

• Market volatility in coal prices.
• Policy changes affecting coal production and exports.
• Uncertainty in renewable and critical mineral project outcomes.

Question and Answer

Q: Starting on the cost guide for '26 especially for your Australian operations, what do you assume for the Australian dollar in the cost guide? And then also, what do you assume on the met size for met pricing?

A: For the Australian dollar, we're looking at 70¢. Pretty much where we're at today. And then now we're using a 225 benchmark pricing.

Q: And then on the Centurion development, just looking ahead, can you remind us how much CapEx is potentially still left, especially to get to that Northern part?

A: So we're obviously starting the longwall here imminently in the South so that initial $500 million has been spent. We talked about $750 million in total. There were some already allocated to the North as well as the acquisition awards well. When we move forward now into 2026, nothing's changed what I said before. It's probably about a $100 million a year in development for the North for the next three years. On top of that, there's some sustaining capital in the South, call it $25 million a year.

Q: My first one was just on the domestic thermal side. I mean, pricing in the PRB stepped down and 2025. Volumes rose. Seems like there could be a similar setup in 2026. So my question is, how should we think about pricing in '27 and beyond? I mean, is is there a scenario where prices revert to the upside or is is there kind of limited torque because of existing contracts?

A: The way we price is we layer in volumes probably on from from three to four years before the delivery period. And I'm not gonna give specific guidance in terms of how contracted we are for '27, but there's still quite a lot of contracting to be done there. And so that should be exposed to a favorable pricing environment because our view is is that this is a favorable pricing environment vis a vis the last two or three years.

Q: Just curious, how should we think about the cadence of shipments as the year progresses? Especially for the seaborne met and seaborne thermal segments?

A: Seaborne thermal much less than ratable in the first quarter and that's and that's Wilpin Young and Wamba OpenCut being less than rateable just simply from a mine sequencing perspective. So that that'll bounce up nice for us. In Q2 and even higher in Q3. When we think about seaborne met, we do have the two long wall moves. So both met trop and Shoal Creek are going through a longwall move so that's going to lower the production and, obviously, just getting, about two months of production from Centurion versus the full quarter. When we think about Centurion, you know, that's gonna ramp up probably about know, 700,000 tons in Q1, about a million to a million one Q2 and Q3, and then it'll fall back down in Q4 as we have a longwall move.

Q: Maybe first question for Malcolm. Can you just following up on the question before, can you help me what percent of prices in the PRV are cost linked? I guess, my question is if you're locking in contracts for late twenty twenty seven delivery, at just under 17 a short ton, which it looks like the futures is now at, If cost hold flat for those tons alone, can you essentially capture all that $5 as short tonne margin? Is that right? And good way to think about it?

A: George, it's not difficult for me to get into specifics of each of the contracts, but but generally, we don't have a lot of rise and fall for cost within the PRB contracts. They rise and fall on the basis of government policy impositions, taxes, those types of things. So when pricing business, we gotta take a view of of of what costs are and what the market can bear out there. But we're not really a cost plus business. We look at at what we think the fair market level is out there, and and we'll pitch that in in that year's dollars effectively.

Q: But just on volumes in Australia, Morbell, when does that deplete exactly which quarter And just on that, given a better 27, hopefully, for Coppabella, is sort of a million ton down year on year net for that JV sort of a right way to think about potentially?

A: George, first question on Moravail, I think, was the was the question We will be mining there all of this year and into 2020 Well, probably second half of the year will wind down at Moraville, and it'll it'll really transition all the capabella So looking for a little bit of decline year over year, as the combined entity. But I would say we'll be done midyear at Moorville.