Q4 2019 Earnings Call
Ladies and gentlemen, you're currently on the whole for a few bodies fourth quarter earnings conference call at this time, where somebody into these audience and we'll be starting momentarily.
Patients please forget online.
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Following today's presentation instructions will be given for the question and answer fashion, if anyone needs assistance. It anytime during the conference. Please press star followed by zero.
During today's call is being recorded.
I would like to turn the conference over to Vic SREC head of Investor Relations and Communications. Please go ahead Sir.
Okay. Thanks drugs, that's great. Thanks, good morning, everyone. Thanks, very much for joining NBP years earnings call for the fourth quarter of the whole year.
So with US today, we have president and CEO, Glenn kilo as well as interim CFO Mark Sperbeck I also believe most of you if not all of you know director of Investor Relations truly gates.
You're welcome Mark to this key interim position.
Fiasco.
I Wonder if he has extensive experience in accounting and finance along with the mining industry.
Also be seen them on the road at upcoming conferences and road show.
As is customary during our formal remarks, we'll reference or supplemental presentation and that's available on our website Peabody energy Dot com.
Now on slide two that.
You'll find our statement on forward looking information.
Thank you to consider the risk factors that we reference here well with our public filings with the FCC.
I would also note that we use both GAAP and non-GAAP measures, we've been reported to our reconciliation of those measures in the presentation. That's all that's our earnings release.
I'll now turn the call over to glut.
Thanks, Nick and good morning, everyone.
He's already delivered strong fourth quarter operating performance driven by lower costs across multiple segments.
Included a number of negotiations that were bought complex and significant.
During the full year Peabody advanced initiatives against a difficult backdrop, but ultimately sort of deterioration, but they had an equity process.
Financially, we completed the with a strong cash and liquidity position.
Within the portfolio.
We progressed regulatory process for the proposed P. out the Colorado joint venture with watch to unlock substantial synergies for the benefit of multiple stakeholders.
How seaborne thermal business again page with attractive margins.
With a record year, while shipments it wasn't jump at good performance at a $1.10 cap on.
It's also very pleasing tonight, the mines at side regulatory approval to advance their expansion activities.
No easy while the challenging environmental oxygen.
In signaling that.
It seems drive significant reductions in holding costs at the milk you know Omar.
We now for sitting with a commercial process aimed at maximizing value Xol and cash flows in parallel with continued engagement materialize I know approach to access and develop the southern panels.
You saw in a pretty performance for many of our questions in the fourth quarter.
And it was several wiser and transition.
Encouraging progress in thing Mike on the ground.
At the old national level, we enhanced our structure and operating model to increase efficiencies and lower costs.
Finally on the Street front.
We would see prestigious recognition, we thought doesn't safety environmental excellence leadership employment and diversity.
The company was also named best put small to mid cap companies can you talk metals and mining sector, various gene metrics as well governance and 29 thing institutional investor rankings.
I'll come back even a few minutes in the 2020 out will be more detail.
But here you sound like for this year.
We are targeting improve met coal volumes and costs Wallenstein high decreased capital expenditures and shopping the GE smoking youre holding costs in 2020.
Those benefits will be made its partly offset the top all clocking we're expecting across all lockers.
Well you would total volumes and some 200 million a decrease contributions from the closing of the cancer and million lives.
Overall I believe the 2020 challenges, we met with meaningful action.
Also as an object this morning.
You know your largest shareholder have reached agreement that includes the addition of several new members to the people people.
Finale.
No there is an equity partner and submit that license portfolio manager.
As we work with for a number of years.
And yet is it 10 you'd called industry executive.
Okay, great set of pull through activity extensive mining operations experience to be jointly selected.
What do you know you've had a constructive relationship during the full cost using involvement in peabody's capital structure.
How long it out 50 to create shareholder value and we look forward to these ongoing relationship.
With that had to do you I'll now ask my succumb to the financial highlights.
Good morning, everyone I'm pleased to be here today I went back on I have about 15 years of mining industry experience beneski by in the last few years.
I'd like to thank evening from my transition and look forward to many many of you in the future.
That's correct the business starting on slide four.
Fourth quarter revenues totaled 1.12 billion down 20% in the prior year on lower seaborne metallurgical volume and pricing.
Anyway in the fourth quarter totaled 122 million versus 176 million in the prior year, you're going to closure to carry income by and large contract amortization expense and volumes.
Our income statement I think that has included $48 million associated with the formation of United Mambo opened pet joint venture.
$250 million and non cash impairment charges largely related to changes in my mind assumption in new Mexico, given lower production volumes from announced plant retirements as well come out in these areas and then invest in Colorado.
$68 million write off at north in yellow, primarily related to kind of pattern development before shadow at Q3, and $67 million Mark to market loss and post retirement healthcare liabilities given changes in discount rates.
Adjusted EBITDA for the fourth quarter totaled 205 million compared to 274 men in the prior year and was primarily due to lower seaborne pricing and volumes.
Adjusted EBITDA increased $89 million and favorable customer settlements and what was $23 million and severance charges.
Adjusted EBITDA also includes about $12 million and transaction costs those are related to the proposed joint venture with arch.
You'll see we accelerated the number of activity late in the year.
These items resulted in the loss from continuing operations that an income taxes, a few hundred 90 million diluted loss per share of $3.12.
Touching briefly on full year results revenues declined 17% from the prior year 2019 loss from continuing operations net of income taxes totaled 188 million along with adjusted EBITDA of 837.
Digging into the operating performance fourth quarter results were bolstered by solid cost improvements across four or five operating segments. In fact, seaborne met and seaborne thermal as well as the mid Western segment <unk> per ton cost by 10% versus the prior year.
Within the seaborne thermal segment fourth quarter export volumes were the highest of the year, we had 3.3 million tons shipped at an average realized price $64, maybe three cents per short ton.
Export thermal volumes of 11 in the happening.
Came in at the low end of our range with domestic customers remain strong at 8 million tons delivered last year.
Adjusted EBITDA margins are seaborne.
Totaled 33% supported by strong cost performance from the Rahmbo underground. In addition, the lumping online and record railing in 2018.
Moving to them that segment, we saw significant production improvements are both capella and markel that resulted in the highest quarterly production volumes every year.
The segment also made great strides in cost performance fourth quarter costs, excluding nothing else declined 18% compared to September year to date cost per ton.
Since we last reported we have successfully reduced north in yellow holding costs and about half compared to previous quarters for the fourth quarter spending totaled 17 million following reduction of workforce in late October.
Continuing to take steps to further reduce our quarterly run rate.
And finally, our U.S. thermal segment performed well during the quarter generating adjusted EBITDA of $194 million compared to 144 million in the prior year.
Talent PRB cost performance led to the segment margins of 23% in the quarter.
In the Midwest, you'll recall that we are structuring our portfolio around our core mines and as previously announced the closure of Cottage Grove, and Wildcat Hill winding down on Thunderx, though.
This has resulted in improved cost as we benefit from higher productivity any more favorable mix and the remaining operations.
The body also concluded negotiations with elements of the power plant previously served by the coming into buying which resulted in $69 million an income.
The company also achieved a favorable settlement with the PRB customer providing $20 million an incremental.
15 million of that when advantage and into 2016 to 20.
On slide five we ended the year, a cash and cash equivalents of 732 million and strong liquidity of 1.28 billion.
Evaluating committed to its longstanding financial approach and have an appetite maintaining financial strength.
As part of this commitment we reduced debt by nearly $50 million in the fourth quarter.
We have reduced total liability based on 1.2 billion since mid 2017.
Net leverage stands at just 0.7 times 2019, adjusted EBITDA dose language at 1.6 times.
Capex totaled 285 million 2019, that's nearly 30% lower than our guidance that we set up at the beginning of a year and as a testament to our ability to adapt to changing conditions.
With that Glenn will discuss our outlook and targets for 2020.
Thanks.
Turning now to slide six we've outlined several key activities underway the nature of that operating areas.
We didnt seaborne thermal we expect shade production from the United one by JV to begin in late 2020.
The JV is intended to optimize month planning and pre strip ratios and then quality and health has not changed to extend the loss of the surface mine multiple decades.
As we work to transition them onto the JV structure, we would expect some temporary elevation of costs, but no production in 2020 as the Glencore operations ramp up in kind of the progresses.
Wholesaling Youssef Wells I mentioned earlier, the weapons Young extension project, which extends the life of one of the Premier thermal coal bonds in Australia and offers attractive returns.
Got it projects are important components seaborne thermal strategy are expected to total combined 100 million and Capex for 2020.
In signaling that we've taken steps to improve their operating performance or juice unit costs.
Couple of dollar Mowlam lines, we're working through high ratios and focus is on moving out of those in the most cost effective manner.
We've already demonstrated the improved sort of possible. Please mines in the fourth quarter.
Now Metropolitan mine is working to mitigate shorter narrowed panels in current morning zones through a third quarter targeted completion of a project to significantly reduce the active month footprint the stream on people and product logistics.
Hello can you tell us we took taken substantial actions to lower costs.
Holding crossing that 500 about 24 million for the year over year in discussions around an additional 60 million per annum I'll take a pipe commitments.
We also now commencing a commercial process to maximize value accelerate cash flows and widgets costs.
This process comes in response to substantial expressions of interest from potential strategic partners as well as other producers.
Commercial at times range from strategic financial partner, well joint venture structure, So complete solidly asset.
The commercial process is running in tandem with that current development plans the six north pedal.
This point, we're continuing discussions with the Queens admonishes spectra.
For the ventilation and re entry inside the.
As we pledge last quarter.
Incremental project capital would be committed to design billions explore.
As with any magic project, it will need to be approved by the board.
We will determine the appropriate level, if any and talking with capital expenditures as we reach these points.
Moving to you a thermal we're anticipating decision from the FCC in the first quarter regarding the formation lifted the part is highly synergistic PRB, Colorado JV, we gosh.
Since June both companies have deployed broad cross functional teams that have worked diligently together and analyzed data quality requests and address FCC questions.
Through this extensive process can you take audio line produced more than 3.1 million pipe documents comprised six what pipe is extended full presentations to the FTC stop at participated in five investigational hearings.
With that except that was created in delivered to the FTC total more terrible lives than the in Taiwan Korea Congress.
We also currently engaged with notch intermittent integration planning for the proposed JV.
Despite this I've spent a tremendous and developed by both companies and one that we continue to believe offers extraordinary synergies.
Essentially the credit substantial value for multiple stakeholders.
Let me from the operations and portfolio, let's discuss our chief financial elements on slots.
Our strong cash balances liquidity levels.
Alpha substantial optionality as we evaluate a financial execution.
As part of that commitment to the second fill up overall financial approach by signing financial strength.
We announced focusing on debt reduction activities.
Yes, the last quarter of 20 feet on saying, we reduced debt by that 50 million.
On the also pipes and quantum is debt reduction will be contingent on not only on the industry. The company specific factors as well.
Our mantra as we entered the 2025th to live within Handlings given changes in industry conditions in our operating portfolio.
In response.
But the sharply reduced capital expenditures multiple at the portfolio.
Continuing improvement activities.
In addition, our board is my decision to suspend dividends and asking but its stake we do not intend to repurchase stock on the current conditions.
We believe these steps are essential to an idling long term value creation for the benefit of all stakeholders, including that shareholders.
Turning to slide eight I'd like to discuss a few gotten settlements for the as well as our expectations for the first quarter.
Against the backdrop with current macro industry conditions, we're targeting wallet 2020, Sci relative to 20, I think 20 Datsun.
X gene I is expected to be approximately 135 million and reflects improvements in annualized cost savings.
One of which was included in that segment guidance.
I'll remind you the 50 million was on an annualized number that half of which we've achieved already the other half will be implemented through the course of this year.
Capital expenditures for 2020, a projected to be approximately 250 million, 12% low than 20, not the actual expenditures as potentially blow regional 20 thoughts in GAAP guidance targets.
2020, Capex includes 100 million related to the seaborne thermal off extension projects I mentioned earlier.
Within our operating segments were expecting increase seaborne met coal volumes and reduced net costs net volumes are projected to be approximately 8.3 billion sons, and we'll be right into the second half at 20 Twond.
2020 us contract position either straight.
We have approximately $96 million.
I would call fully process.
We have the flexibility to produce more should demand war.
As is typical we need to any to any given the 90 plus percent costs and a place to be in a position to replicate but again this year.
In addition, following the naps closure that came to mind on other mines in the Midwest into thinking on say people, who will consolidate the full and Midwest and with some statements into other you with thermal but purposes segment reporting in Twentytwenty NPL off.
Committed volumes of 20 million tons in 2020 reflect the combine to fix sublease closures and the strength of our contract.
Overall, you at thermal costs are expected to be impacted by the federal coal excess tax.
Which will disappointingly revert to historical rights and is expected to have an approximately 13 million dollar impact on costs relative to 20 launching.
As we look at the full year, we would expect that earnings profile to be also why did to the second half of the.
I'd now like to discuss several items specific to the first pool.
Overall, we expect lower first quarter results relative to the $205 million of adjusted EBITDA in the fourth quarter of playing out saying.
The Delta is right to $89 million in nonrecurring settlement Eke out real off in the fourth quarter, approximately 20 to 30 million in pricing impacts as well as high seaborne met costs.
We are expecting first quarter mic costs to be significantly above that full year guidance of $95 to fund she'd been extended longwall moves at the metropolitan them on.
Duration for work on the complex is going to choke crude as well as the impact of mine sequencing a more bottom line.
In regard to show pretty the outages are part of an upgrade to the mods mainline compliance system.
North project has been value engineered includes 13000 feet of you built structure built and shoot work to handle increased blood capacities improve overall system reliability and better match about laws to our future production capabilities and washing capacity.
In conjunction we will have an extended several weeks outage in the first half year.
While the project required some downtime on the minimal capital will be deployed for the new infrastructure.
Which we expect to have a 12 to 15 you wash.
Before we go to questions I would like to reiterate that are expected first quarter results not indicative of that run rate capabilities. We believe the operational improvements will continue cycle throughout the year.
That's a brief summary that activity in a fast changing environment.
For further discussion I'd now like to set in the call for questions operator.
Ladies and gentlemen, if you wish to ask a question can you just simply by pressing star one on your telephone keypad keep in mind, if you're using your speaker phone and make sure that meet functions released so that seems operator equipment.
Limit yourself to one question and one follow up question.
Again that is star one for questions, we will begin with Michael business with vertical research.
Good morning, everybody and welcome Mark.
Thank you.
First question on North good Yola.
You can elaborate a little bit more learn decision.
Making them this dual track and maybe a bit more sense on given all the regulatory issues and discussions.
How quickly as is going to evolve over the next quarters or into 2021.
Thanks, Michael and.
Yes sure job one as we indicated last quarter was to reduce the holding cost so from what you've seen a significantly reduce the color in the fourth quarter, but the run rate, which we're now now down to.
Of about $2 billion in month.
The joke track approach I think.
How does the better part effect that we still continue to be in discussions.
We QM off around re ventilation and ultimate reentry of those sort of great and at that point determining.
Two.
Advance the project.
For development of the solvent panels.
Over the last three months, we've had quite a number of.
Of inquiries and active interest.
Participating in looking at.
And we thought it was best to capture that and work through a structured process around that activity.
It could range from taking on board apartment, our strategic partner entering into a joint venture.
And our.
We're modular looking yellow is the only 100% operated mod around mod within the Peabody Australia.
Portfolio.
Thank you to potential outside of the Lps it.
I would expect to be able to provide further updates.
Through the course of 2020.
Fair enough.
My follow up would be a regarding on the PRB, that's an impressive amount of or by two provided to the U.S. government.
And.
So it's encouraging that you maybe anticipate the first quarter decision.
Assuming a positive decision how it seems like you've got a lot of.
We're how quickly you guys anticipate you can kind of hit the ground running and start to see works for the show and generate some of the opportunities that you guys have been talking about.
No.
Yes, I would say that in addition to that I think the the work that we've conducted reinforces the confidence that we have.
In the synergies that we give between the combination of Utica production of assets that we have within the region.
I mentioned some of the integration planning and thinking that we were undertaking.
Between Peabody and Arash I think some of that is focused on the ability to accelerate.
The.
The closure plop activities that we would that we would indicate.
So I think we'll certainly focused on.
Continue to respond to the to the FCC.
But then we will in the event of the or by a positive decision on that the other moving to into very close quote what quickly.
We'll now move toward next question and that will come from David Gagliano with BMO capital markets.
Hi, Thanks for taking my question, obviously a lot covered.
Master leases today dominant trying to pull the coupons.
Just in terms of the Capex for 2020.
250 million, if I remember correctly sustaining capex was about 200 million and then.
Obviously your slide the seaborne extension projects that 100 million.
I think originally or the series of projects, including those.
Seaborne.
Mine life extension projects that were going to bring 2020, capex closer to 400 million.
I think since so can you just provide more detail on what's changed in terms of the spending expectations for 21.
Yes, Hey, Dan Thanks, Mark rollout, we're looking at that sustaining Capex of 150 million has about a dollar telling us that many alone as well.
Right and that way back historically, but it's kind of a testament to the company's in basins gap and changing conditions.
And then by the extension.
The expansion capital and the growth capital 100 million Thats really looking at the seaborne thermal platform in Australia $60 million reopened joint venture and then that $40 million or the.
Projects and I'd also mention overall, we do have a small portfolio without with less combined with the closing some of the nine.
I can see that number kind of in down and the company continues to manage that Capex number and then your times.
Okay, and then just switching gears.
Have a three part question there.
The.
PRB personal.
Very impressive cash costs, especially considering the volumes.
So part one is what are the main drivers behind that and what what's behind kind of approximately 6% increase in 2020 cash cost versus before Q results.
That's the first part and then.
On the other part the North Sea dollar cost for the year I, just didnt hear the comedy.
Clarify what you expect to north Daniela shutdown costs to be for the year.
And then the last part of this through part question Aliya, obviously, they've been here for a while.
Hi, everybody on the on there on the prepared remarks, you've got to Alley represented on the board now including ahead of you asked restructuring.
His comment a little more detail on your view on how those new board members will alter the strategic direction.
Thanks.
So I might start to do it as those questions, but get get Mark Mark.
Specifically on the pay I believe we mentioned the the.
Federal excise tax increases, which would expect about 25 cents.
But that probably that coverage the.
Majority of that that activity on north can you tell us.
You've guided to 2 million dollar.
Run right for holding costs.
In addition to that to.
You made a month marotta falling costs. In addition to that we've got $60 million Tyco pipe up for the year. We're in active discussions around around that number as I've indicated.
Last quarter, we'd be looking to seek to mitigate the cycle price costs around around that.
They're not within the $95 upon of course for the for the 2020.
Metrics.
Elliot Elliot and.
And.
So the Elliot.
Additions to the board, we've been working with that team really since the introduction of Elliot eating out capital structure.
As a full years ago so.
Cost quite familiar with the same public close relationship with them.
And we think they want to be great additions to the to the Peabody Board.
And now we'll take a question for Mark Levin with.
Benchmark.
Great. Thanks very much.
Pretty much Johnson.
The first.
Bridging EBITDA free cash flow in 2020.
You want to thinking about just sort of below the line items, obviously, you've laid out capex laid off cash interest expense you laid out a already spending.
Yes, it's not captured in those items that we need to be mindful of when we're trying to get to screw free cash flow number 20, John.
Yes.
Thanks to the question.
Yes, and depending on new products, and where your appetite you get your even a number but the cash memories that come off of either we have cash interest of about 110 million capex.
50 million.
Reclamation spends probably about 65 million and normal retiree healthcare will be about 45 million.
And no sorry always talk.
We always talk in terms of taxes really being.
Quite a quite an advantage for us in the sense that push or again is probably a push for high cash standpoint, yes, Thats right and then Theres really no capex expense will really have a mom will be offset from remained highly refunds. So the net zero for about 20, and we always remind investors of our substantial assets from and then how well positioned both in the us our cost structure.
Got it there how helpful and then going back to David's question the second ago.
I think your comment on maintenance Capex.
Be roughly I think you mentioned the dollar a time is that sustainable into 2021, and then when you think about finishing lumber group and John is there any additional capital that will need to be spent in 2021 was that 100 million just all in 2020, we're just down to 2021 maintenance capex levels.
We expect might airline get gift market.
Keeping on this.
Having having just going through extensive budgeting process. So it wasn't going fiction project, we wisely take it to be done in 2020, but there'll be a little bit of spillover in.
It's a 2021.
But the Walmart Jay maybe though.
We will continue to go through into entered into 2021. So that's that's really.
Why rank up that project it will be new equipment.
Associated with that joint venture so would still continued city the warm though.
I.
Extension activities incur.
Since 2020 Watt this is finding capital levels.
I wanted lumping, which fell off writers of extensively reviewed.
Obviously, we're giving updated guidance because we've just gone through that budgeting process.
And.
We've got no reason to feel as though to be different the 2021 at this point, but thats something that we work through direct you'd expect us to work through during the course of 2020.
What I missed by not how does that illustrate how.
Pertain to reassess and well we've got projects now depending on market conditions, but they hit all the highlights.
And now we'll take a question from first it's very with Deutsche Bank.
Hi, good morning, and Mark.
My question, just just to start with is around the met coal mix I noticed on slide 11, 70 thoughts ascent.
Of the hard coking coal index, if it goes I'd to Nani was the last update work for from 29 Jane.
Do you expect that is that a result, just changes in the bonds.
You get back to that 80% to 90% range as part of a time without without north gala. Thanks.
Hey, Hey, Chris It's a fair question, so actually the 80% to 90% would have just been our realizations for coking coal from the hard coking coal perspective, where is that 75% takes into account PC sales as well.
On that basis across our entire portfolio. We would expect you realized 75% of that hard coking coal price, whereas our realizations on the hard coking coal benchmark for hard coking coal sales. The bill it's similar to that age I'd like to perfect. So as we look at the overall mix about 60% of art.
2020, mat sales are PPI, and about 40% or hard coking coal.
Once you get Q2 on for all of those sales, 75% of hard coking coal benchmark price.
Okay that makes it so previously guided the realization separately for PCR and met coal and now you've pushed it tickets or is that correct.
That's exactly right, yes, just trying to simplify things and in general, it's probably worth noting that we have tried.
For the benefit of all investors and analysts to to simplify our guidance approach. This year I hope, we like that reformat to give us some feedback as time goes by in the interest of.
Taking things as.
Straightforward as possible.
Okay, Okay that makes sense.
And then just to finish up from one of the early questions. Just on the cash for bridge I think anything there wasn't mentioned was working capital just wondered if you could comment on that 2020. Thanks.
Yes, not expecting that significant movement in working capital there was an inventory no hard to see when JV.
Hello.
In 2020, but otherwise that nothing significant.
Page. So were element is probably around asset sales from thoughts on what we have been acting very on land management Opentable management.
So that might be.
Something to add to the big so think about it.
And Matthew fields with Bank of America Merrill Lynch, and then a question.
Hi, everyone.
I just have a three questions.
Your your pricing guidance on seaborne thermal is.
65 for.
Short time.
Which is kind of like right in line with where new castle is right now.
Is that just sort of assuming or we assuming sort of that's priced in kind of irrs, you regret regardless of sort of the fluctuations in Newcastle price over the year.
Yes, Matt.
I think 65, that's what our contract prices right now on down a little bit from my lifetime held that number and Thats really because we've had an impact on sales.
Five hi international upon product and also Thats, a short ton basis on a best basis that converts to call. It 73, or so which was well actually even on a new castle basis, a bit above where where we find the crowd.
Okay, all right. Thanks, and then two more questions.
Which bonds did you repurchased in the quarter and at what average price.
Yeah.
Consistent with our commitments are in good news that leverage that level, you're able to be blog you set by 50 million 41 million of that was the repurchase of Don.
Cash or many discount on that.
Right now.
Randy the 22 the nearest maturity.
Thank you bought back at that overnight.
So I'm, sorry, you spend $41 million repurchasing 2020 twos.
That's correct.
Okay.
And then lastly from me.
I appreciate the update on the FTC decision expected in first quarter 20.
I guess forgotten sort of course to the time, where you're going to have there have a plan about how to address the covenants.
The bonds to affect that JV transaction, there any updated thinking about how you plan to approach bondholders to get that consent or a refinery.
Matt you're right. We are focused one I understand given that FTD clearance and hopefully very helpful point had been decision here in the quarter.
No it's clear yet more often to accommodate the joint venture, including no. Once you mentioned potential content, but also refinancing debt reduction as a more interactions.
As you expect matter practicing comments and segment the head of commercial films.
Now moving to the next question and that will come from this pipes with B. Riley.
Hey, good morning, everybody.
Two quick ones for you or failure in cost guidance both.
Good morning, and then on the thermal side, what's the Australian dollar assumption embedded in that.
Okay.
Yes, Thats 68.
Very very helpful. Thank you and then just to circle back on our north from yellow when when would you expect ventilation oakstone beat to take place at this point.
Well I'd say, we said its.
It wouldn't take advantage so wouldn't occur until weve.
Until we have a part that level of engagement and certainty around.
Ventilation and re entry from Cleveland minds, and spectrum expected growth discussions are still won't go.
At that point.
If we work to commit the we ventilation reentry processed.
In itself would probably they've got a three month activity.
Yes, a little bit longer and and we indicated last thoughts and cost of around $12 million for that area.
Our next question that will come from Karl Blunden with Goldman Sachs.
Hi, good morning, Opex for the time.
The question as the business is getting focused on.
I was like a smaller group of assets over time could you comment on your minimum liquidity levels, the target that you'd like to have.
It's interesting you do have a lot of liquidity going into interest.
How much of that excess cash you could use to further reduce debt like you did this last quarter.
Yes, the helping to start they had an 800 million dollar liquidity target number out there and operating for some time above that level.
We continue to continue to reassess.
Noted before we have multiple multiple commercial properties underway, including a joint venture.
Selling and marketing Yellen foundry, both of which can significantly impact the company's on cash flow into the future sales and we get into year, we get them, let loose on those items will look to define humana future.
Actually but is it fair to assume that could be materially lower than the 800 that figure historically that.
I'm, sorry, I repeat the question, it's fair to assume it could be materially lower than the 800 target that you historically had.
No I wouldnt make that assumption.
Okay got you and then.
With regard to addressing covenants or refinancing bonds in the timeframe that that needs to happen you need to get the regulatory approval and then.
Look to address covenants are they're profitable cash inflows from any of the sale process that you initiated or JV process or is that something that comes further down the line and we should kind of look at what you currently have from a liquidity standpoint.
For addressing the covenants.
Yes, certainly lunch as clear on behalf.
Two.
I will allow for invent venture and get that doesn't underneath the bond indenture.
Maybe that before we close the transaction, we look to do that timing it we can.
Yeah, I think if you're looking at.
As possible.
The asset sales, we do have that as a periodic part of the business and so we have surface land holdings, we up reserves. So those those types of things.
Her on a relatively frequent basis, but they're also pretty lumpy and tough to predict the exact time frames around that.
But what's your point is.
As well taken as well, but we've got a large cash position.
Of course, a much larger liquidity position over the balance.
And looks like we'll take a follow up question for Mark Sullivan with benchmark.
The first question.
He gets.
Look with the right liquidity number number was.
And I also wanted to see if you change your kind of use about dead Im sort of what you think the appropriate leverage metrics and capital structure should look like going forward.
Yes, Mark we recognize I got levels or the lower and we're committed to reducing our debt back.
Hi, guys in the fourth quarter.
As I mentioned, one development quantum maintains the debt reduction is contingent on the industrial company specific factors.
Okay got it and then next one AMC tax rates I don't know if you guys refer to Peter mentioned early to call. It. If you did I apologize use there what's left on on the tax refund is there anything coming in on that amendment.
Were expected, yes from M&A credit perspective, the CLEC and $46 million in 2019. So there is still about 46 million left to be tracking looks like half of that hearing points like.
Okay. So 2020 3 million model about 23 million in 2020.
Okay add strength.
Okay, great. Thanks.
And now I'll move to a follow up from Chris Terry with Deutsche Bank.
Yes, thanks, guys.
Just just a couple of follow ups from from my side on one one just on North Korean yellow was that Joe truck approach do you think your potential borrow JV partner will want to see more work on the ventilation done before they'd be understood or can you just give a little bit of color on the on the potential timing on that and then just.
Secondly on on the overall market conditions, if you could just comment on what you're saying in the early parts of the year and John are and whether this thing any impact around ports et cetera. As a result of current of ours. Thanks.
Yes, Thanks, Chris.
Tackling tackling the first one.
I think what the fleet that we go up.
From multiple sources around both Kiala is.
Is essentially the quality of the hard to consult building that it's a it's a recognized benchmark.
Quality in the second is the infrastructure that we that we had.
As we talked to that we have multiple reserves as the J himself.
Say there also is the lowest thing.
That we that we talked about.
Really.
Yes, that's why we looked at it.
All of that is.
Significant value.
From from from our perspective.
With respect to the second question.
That's a died obviously this is a great deal of uncertainty.
Around the impact, but we've not seen.
Any directly impact at this stage in terms of our shipments so I loadings.
But as.
Play out incentive.
Potential for the full court restrictions really at both ends of the logistics, China, how that could impact on.
On the quality flow shipping.
I would have been too early to.
To predict I should point out that we do however, we did have an office in in China.
Folks are working for pilot at this point so the fact that so.
They're not required going to that into the office at along the transportation system. So thats been our approach to that.
Sean.
We close probably.
Yes.
No the.
Really the.
Market for us, we put to bed in the past that we've put in.
Tightening the traditional relationship pockets.
And Korea, Taiwan, but nonetheless, we recognize that John does have an important.
Yup.
Impact on on global Global trade in particular ramp coal business.
Just from a statistic standpoint, thats, just 4% of our of our revenues from a company perspective so.
Yes, it's gotten those important market.
Small much smaller presented for us to first brother.
And ladies and gentlemen, that's all the time, we have for questions I'll turn the call back over to Mr., Ben Kallo for closing remarks.
Thank you.
All tonight's participants as well as we've outlined we expected to be enact the 2020, but at operations. We have focused on the basics of dig in to deliver the financial level. We are insisted on living within our means June when his thoughts and within the portfolio. We've assumed the low cost reshaping of our business the best position us. This.
Full success, our employees of the foundation of each of these initiatives and I'd like to express my gratitude, you'll many contributions throughout business I'd also like to thank God. This is via continued interest and support in the U.S. The hit operator that concludes today's cool.
Once again that does conclude your Peabody fourth quarter 2018 earnings Conference call you may now disconnect.
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