Peabody Energy Corporation Q1 FY2026 earnings call

• Centurion: Had temporary mechanical and electrical issues during commissioning, but implemented response plan with safety as priority. Remediation steps in place, expecting performance in back half of 2026 to return to full long-wall production rates.
• Peabody development initiatives: Received $6.25 million grant from Wyoming Energy Authority, advancing plans for pilot plant to process rare earth elements using PRB coal as feedstock. Also advancing other rare earths and critical minerals opportunities.
• West Coast thermal coal exports: Initial test shipment of PRB coal to Mexico's port of Guaymas, demonstrating potential of West Coast export route.
• US policy actions: Executive order directing U.S. defense facilities to purchase power from coal-fueled generation, affirming value of reliable coal supply chains and basel generation capacity.

Seaborne thermal platform delivered 3 million tons, with realized export prices averaging $86.25 per ton, costs at $50.26 per ton, and adjusted EBITDA of $48.5 million. Seaborne metallurgical shipments totaled 2 million tons, with costs at $142 per ton and an adjusted EBITDA loss of $7 million. U.S. thermal business: PRB shipped 21.2 million tons with adjusted EBITDA of $23.7 million; other U.S. thermals shipped 3.3 million tons with adjusted EBITDA of $37.8 million, and total U.S. thermal adjusted EBITDA was $61.5 million.

Second quarter Seabourn thermal volume expected to be 3 million tons, including 1.9 million tons of export coal with some priced and others unpriced, costs between $57 and $62 per ton. Seaborne metallurgical volume expected to be 2.3 million tons. PRB shipments anticipated at 19 million tons with costs of $13.25 per ton. Other U.S. thermal coal shipments expected to increase to 3.4 million tons with costs in line with full-year guidance. Full-year Centurion sales outlook revised to 2.5 million tons from original 3.5 million tons, with met segment volumes adjusted and costs in range of $123 to $133 per ton.

• Mechanical and electrical issues at Centurion caused slower ramp-up initially.
• Freight rates increased roughly 50% from pre-conflict levels, affecting delivered cost of products.
• Middle East conflict impact on oil prices, with Peabody adjusting expected full-year PRB costs and seaborne thermal cost guidance due to oil price changes.

Q: On TRB cost guidance, how to get to lower full-year costs?

A: Forward strip of diesel prices declines and second quarter shoulder season lower volume.

Q: On restricted cash balance, movement in collateralization of obligations with no change in liabilities.

Q: On PRB contracts and diesel hedging, majority contracts fixed price, no diesel hedging.

Q: On West Coast PRB exports near term, potential in coal quality and port opportunities.

Q: On Centurion timing, confident of completing commissioning and production in second quarter, optimizing long-wall automation by end of May.

Q: On rare earths project timeline, pilot plant development expected to take about 18 months with further ramping up.

Q: On Centurion electrical/mechanical issues and shield alignment, initial commissioning issues with electrical and mechanical, now focusing on aligning shields.

Q: On PRB margins, electricity demand increase and higher cost base expected to reflect in pricing.

Q: On seaborne met cost revisions and non-Centurion operations, met cost revisions due to Centurion volume, non-Centurion operations with smaller diesel impact.

Q: On Centurion commercial process, strong demand for product, commercially sensitive on contracted amounts.

Q: On share price and cash flow, potential to buy back shares and address dilution.

Q: On PRB West Coast opportunity details, cargo in May, customer feedback awaited, other port opportunities.