Q4 2021 Peabody Energy Corp Earnings Call
Speaker 1: Good morning ladies and gentlemen and welcome to the Peabody Q4 2021 earnings call.
Good morning, ladies and gentlemen, and welcome to the Peabody Q4, 2021 earnings call.
Speaker 1: At this time, all participants are in a listen-only mode. Following today's presentation, instructions will be given for the question and answer session.
At this time all participants are in a listen only mode. Following today's presentation instructions will be given for the question and answer session.
Speaker 1: If anyone needs assistance at any time during the conference, please press the star followed by the zero. As a reminder, this conference is being recorded today, February 10, 2020.
Anyone needs assistance at any time during the conference. Please press the star followed by zero.
As a reminder, this conference is being recorded today February 10, 2022, I would now like to turn the conference over to Alistair enough Vice President of Investor Relations and Communications. Please go ahead ma'am.
Speaker 1: I would now like to turn the conference over to Alice Cernos, Vice President of Investor Relations and Communications. Please go ahead, ma'am.
Thank you good morning, and thanks for joining Peabody's earnings call for the fourth quarter of 2021.
Speaker 2: Thank you. Good morning and thanks for joining P by Ernie's call for the fourth quarter of 2021. With me today, our president and CEO , Jim Graf and CFO , Mark Sperbeck.
With me today are president and CEO , Jim Groch, our CFO Marc Urbach.
Speaker 2: Within the earnings release, you'll find our statement of forward-looking information, as well as a reconciliation of non-GAAP financial methods.
The earnings release, you'll find our statement on forward looking information as well as a reconciliation of non-GAAP financial measures.
Encourage you to consider the risk factors referenced there along with our public filings with the SEC with that I'll now turn the call over to Jim.
Speaker 2: We encourage you to consider the risk factors referenced there, along with our public filings with the SEC. With that, I'll now turn the call over to Jim. Thanks, Alice, and good morning, everyone.
Thanks, Alex and good morning, everyone.
Speaker 3: Keybiting recorded robust fourth quarter results, demonstrating the capability of our diverse portfolio of mines, which continues to benefit from strong global market fundamentals driven by the vital necessity for coal to produce reliable, affordable energy and steel to fuel the global economy.
Hey, Buddy recorded robust fourth quarter results demonstrating the capability of our diverse portfolio of mine, which continues to benefit from strong global market fundamentals driven by the vital necessity for coal to produce reliable affordable energy and steel to fuel the global economy.
Overall, our operations performed well and were in line with our expectations delivering volumes and results. Despite industry wide challenges that were more substantial than we anticipated related to weather and COVID-19 impacts.
Speaker 3: Overall, our operations performed well and were in line with our expectations, delivering volumes and results despite industry-wide challenges that were more substantial than we anticipated related to weather and COVID impacts.
Speaker 3: with strong market dynamics and significant forward sales commitment.
With strong market dynamics and significant forward sales commitments.
Speaker 3: We restarted longwall production at our Shoal Creek Mine, advanced development of Morville South, and are positioning for increased production at our US thermal segments to meet near-term demand for our products.
We restarted longwall production at our Shoal Creek mine advanced development of more Bell South and.
And our positioning for increased production at our U S thermal segments to meet near term demand for our products.
Speaker 3: Our focus remains to advance options to position the company to be resilient in all markets like
Our focus remains to advanced options to position the company to be resilient in all market cycles.
By capturing expanded margins through production and sales strategies, well remaining long term cost competitive and reducing our debt levels.
Speaker 3: by capturing expanded margins through production and sales strategies while remaining long-term, cost-competitive, and reducing our debt levels.
Speaker 3: I would like to thank our global employees for their continued focus on working safely and efficiently.
I would like to thank our global employees for their continued focus on working safely and efficiently, particularly in light of meeting the challenges presented by the pandemic.
Speaker 3: particularly in light of meeting the challenges presented by the pandemic.
In 2021, our recordable injury rate was the lowest in over a decade, and example of the dedication and efforts of our talented workforce.
Speaker 3: In 2021, our recordable injury rate was the lowest in over a decade. An example of the dedication and efforts of our talented work.
Speaker 3: And for the second year in a row, our rawhide and 20-mile operations had zero reportable incidents during the year.
And for the second year in a row, a rawhide and 20 mile operations had zero reportable incidents during the year.
Speaker 3: I'd also like to take the opportunity to complement the workforces at Shoal Creek and Metropolitan.
I'd also like to take the opportunity to complement the Workforces at Shoal Creek in Metropolitan.
For their efforts and performance during the longwall restarts at these locations.
Speaker 3: for their efforts and performance during the long-haul restart at these locations.
Across the globe, all coal price indices and demand in each of our market segments continues to be strong.
Speaker 3: Across the globe, all coal price indices and demand in each of our market segments continues to be strong.
The near term outlook for all our operating segments continues to be favorable with strong market indicators and increased global demand, providing a persuasive story for coal antibody.
Speaker 3: The near-term outlook for all our operating segments continues to be favorable with strong market indicators and increased global demand providing a persuasive story for coal and peabody.
Seaborne thermal and metallurgical coal markets are expected to remain robust in the near to medium term the supply challenges coincide with a period of elevated demand.
Speaker 3: Tea-borne thermal and metallurgical coal markets are expected to remain robust in the near to medium term as supply challenges coincide with a period of elevated demand.
Indonesia January coal export ban record rainfall in late 2021 across the east coast of Australia.
Speaker 3: Indonesia's January coal export ban, record rainfall in late 2021 across the east coast of Australia, Covid impacts across the globe and Russian transportation congestion are all factors contributing to constrained supply for seaborne thermal coal.
Covid impacts across the globe and Russian transportation congestion are all factors contributing to constrained supply for seaborne thermal coal.
Additional demand factors included increased industrial production, resulting in growing demand for coal fired electricity generation.
Speaker 3: Additional demand factors included increased industrial production resulting in growing demand for coal-fired electricity generation
High LNG prices, resulting in low switching and peak winter demand in the northern hemisphere.
Speaker 3: high LNG prices resulting in load switching, and peak winter demand in the northern hemisphere.
These supply and demand factors are combining to create an increased price environment for seaborne thermal coal.
Speaker 3: These supply and demand factors are combining to create an increased price environment for seaborne thermal coal.
The seaborne metallurgical coal market has experienced similar supply constraints as the seaborne thermal market.
Speaker 3: the seaborne metallurgical coal market has experienced similar supply constraints as the seaborne thermal market.
Demand is benefiting from higher global steel output outside of China incentivized by strong steel product margins.
Speaker 3: Demand is benefiting from high global steel output outside of China, incentivized by strong steel product margins.
Speaker 3: key import market consumption is now above pre-pandemic levels.
Key import markets consumption is now above pre pandemic levels.
In the U S.
Speaker 3: Thermal coal market indicators continue to be favorable with increased electricity demand and higher natural gas prices compared to prior year.
Thermal coal market indicators continue to be favorable with increased electricity demand and higher natural gas prices compared to prior year.
For 2021 electricity demand increased 3% over last year.
Speaker 3: For 2021, electricity demand increased 3% over last year, with coal share of electricity generation increasing to approximately 22%.
Coal share of electricity generation, increasing to approximately 22%.
Speaker 3: Total US coal burn was up approximately 15% while utility consumption of PRV coal increased approximately 22% compared to the prior year.
Total U S coal burn was up approximately 15%.
While utility consumption of PRP call increased approximately 22% compared to the prior year.
Looking ahead.
Speaker 3: Total electricity generation for 2022 is expected to grow by another 1% as the economy continues to recover from COVID impacts.
Total electricity generation for 2022 is expected to grow by another 1%.
As the economy continues to recover from Covid impacts.
Speaker 3: US thermal coal prices remain elevated as supplies remain tight.
U S thermal coal prices remain elevated as supply has remained tight.
Continued strong U S exports as a result of high seaborne thermal prices.
Speaker 3: Continued strong U.S. exports as a result of high seaborne thermal prices, along with elevated and volatile natural gas prices, reflecting the uncertainty of winter weather and gas storage levels, are putting pressure on market sentiment.
Long with elevated and volatile natural gas prices, reflecting the uncertainty of winter weather and gas storage levels are putting pressure on market sentiment.
Coal stockpiles and U S have fallen by approximately 35 million tons more than 25% since the end of 2020.
Speaker 3: Whole stockpiles in US have fallen by approximately 35 million tons, more than 25% since the end of 2020.
All of these dynamics set of compelling stage for 2022 in terms of demand and pricing for our coal products.
Speaker 3: All these dynamics set a compelling stage for 2022 in terms of demand and pricing for our coal products.
Now turning to the fourth quarter.
Speaker 3: Our operations generated substantial cash flows, realizing expanded steeple and margins as a result of continued strong market demand.
Our operations generated substantial cash flows realizing expanded seaborne margins as a result of continued strong market demand.
Our teams delivered on our projected volumes for the quarter despite production challenges.
Speaker 3: Our teams delivered on our projected volumes for the quarter despite production challenge.
Speaker 3: In addition, we continued efforts to capture near-term returns from incremental 2022 U.S. thermal production with equipment optimizations and new hires.
In addition, we continued efforts to capture near term returns from incremental 2022 U S thermal production with equipment optimizations and new hires.
Within our seaborne thermal segment the Wilton Yonge extension in Limbo open cut JV projects have essentially completed development work with operations, reaching full production run rates.
Speaker 3: Within our seaborne thermal segment, the Wilpen Young Extension and Lambeau Open Cut JV projects have essentially completed development work with operations reaching full production run rates.
Margins continue to expand both due to higher pricing and lower costs.
Speaker 3: margins continue to expand both due to higher pricing and lower cost.
Our seaborne met segment captured margins up $105 per ton due to robust market prices.
Speaker 3: Our Seaborne Met segment captured margins of $105 per ton due to robust market price.
Speaker 3: I'm happy to share that we successfully restarted longwall operations at Shoal Creek Lake in a quarter and delivered 70,000 tons of high vol a product into the market at price level substantially in line with benchmark price.
I'm happy to share that we successfully restarted longwall operations at Shoal Creek late in the quarter.
And delivered 70000 tons of high vol, a product into the market at price levels substantially in line with benchmark prices.
We are on track with development of more Bell, South, which will provide improved quality and extended life at our cm JV complex.
Speaker 3: We are on track with development of Morville South, which will provide improved quality and extended life at our CMJV complex.
We anticipate first coal and development completion in mid 2022.
Speaker 3: We anticipate first call and development completion in mid 2022.
CRB sales volumes were negatively negatively affected by winter weather and COVID-19 impacts to production and rail performance.
Speaker 3: CRB sales volumes are negatively affected by winter weather and COVID impacts to production and rail performance.
Speaker 3: and costs for both our PRD mines and other US thermal mines increase as a result of higher fuel prices and one-time costs associated with efforts to add incremental new-term production to capture market demand.
And costs for both our <unk> and other U S. Thermal mines increased as a result of higher fuel prices and onetime costs associated with efforts to add incremental near term production to capture market demand.
We are being disciplined and adding incremental volumes capturing short term returns on investments for our stakeholders and remaining focused on the long term cost competitiveness of our operations.
Speaker 3: We are being disciplined in adding incremental volume, capturing short-term returns on investments for our stakeholders, and remaining focused on the long-term cost competitiveness of our operations.
Favorable U S coal markets have allowed us to build a strong book of forward business will settlement settlement of several long term sales agreements at improved prices.
Speaker 3: Favorable US coal markets have allowed us to build a strong book of Ford business. We'll settlement settlement of several long term sales agreements at improved price.
We continue to explore sales strategies that position us to be the long term producer of choice providing.
Speaker 3: We continue to explore sales strategies that position us to be the long term producer of choice, providing our customers long term.
Providing our customers long term supply security.
And the <unk> at 2021 production levels.
Speaker 3: in the PRB at 2021 production levels. We're essentially fully committed for 2022 and 55% committed for 2023.
We're essentially fully committed for 2022 and 55% committed for 2023.
While the other U S. Thermal operations are essentially committed for the next two years at these levels.
Speaker 3: while the other US thermal operations are essentially committed for the next two years at these levels.
Outside of our operating segment reporting our ownership share of Middle Mt delivered 2 million tons of semi hard in PCI and met coal in 2021 with 400000 tons in the fourth quarter.
Speaker 3: Outside of our operating segment reporting, our ownership share of Middlemount delivered two million tons of semi-hard and PCI-met coal in 2021, with 400,000 tons in the fourth quarter.
In the quarter, the operation posted EBITDA margins of 58%.
Speaker 3: In the quarter, the operation posted EBITDA margins of 58%.
Speaker 3: benefiting not only from current market dynamics, but also cost and productivity improvements.
Benefiting not only from current market dynamics, but also cost and productivity improvement efforts.
Our Q4 results are further validation of the value of our globally diversified asset base, which makes us distinctly unique from other coal companies.
Speaker 3: Our Q4 results are further validation of the value of our globally diversified asset base, which makes us distinctly unique.
Our long term strategy remains to related investments towards seaborne markets.
Speaker 3: Our long-term strategy remains to reweight investments towards seaborne markets.
<unk> U S thermal asset cash generation in.
Speaker 3: maximize US thermal asset cash generation, and enhance financial strength to debt reduction. We are progressing this strategy.
And enhance financial strength to debt reduction.
We are progressing our strategy with multiple initiatives.
And our med platform, we are advancing development of more bell south to improve quality and extend life at our cm JV.
Speaker 3: In our Med platform, we are advancing development of Morville South to improve quality and extend life at our CMJV.
Speaker 3: At Shoal Creek, we are ramping up longwall production. And at Metropolitan and the CMJV, we are maintaining productivity and cost improvements.
At Shoal Creek, we are ramping up longwall production at metropolitan in the Cm JV, we're maintaining productivity and cost improvements.
Speaker 3: And notably, we are looking at the potential to restart North Grignella utilizing our existing reserves that we control.
And notably.
We are looking at the potential to restart north Daniela utilizing our existing reserves that we control.
Speaker 3: At Middlemount, we continue to ramp up production with equipment fleets added last year.
At Middle mile. We continue to ramp up production with equipment fleets added last year.
Speaker 3: That's Womble Underground. We're reviewing economics for development of additional underground panels.
Womble underground, we're reviewing economics for development of additional underground panels.
In the U S. We are implementing plans to capture short term returns on incremental volumes and to give us flexibility in our mine plans to meet customer demand with additional underground production units and development in the ILB.
Speaker 3: In the U.S., we are implementing plans to capture short-term returns on incremental volumes and to give us flexibility in our mining plans to meet customer demand with additional underground production units and development in the ILB in addition to refurbishing and relocating equipment in the PRB.
In addition to refurbishing and relocating equipment and the PRP.
And across.
Speaker 3: And across the platform, we are focusing on long-term resiliency by maintaining cost structure improvements that we've achieved with continued emphasis on productivity and cost control.
The platform, we are focusing on long term resiliency by maintaining cost structure improvements that we've achieved.
With continued emphasis on productivity and cost controls.
Speaker 3: and continue to strengthen the balance sheet with debt and legacy liability reductions. I'll now turn to the next speaker.
And continuing to strengthen the balance sheet with debt and legacy liability reductions.
I'll now turn things over to Mark to cover the financials.
Speaker 4: Thanks, Jim, and good morning, everyone. Fourth quarter revenue was nearly $1.3 billion, an increase of more than 86% from the third quarter and 72% from the prior year, reflecting robust improvements in seaborn pricing and recognition of $149 million of unrealized market market gains and financial coal head.
Thanks, Jim and good morning, everyone fourth quarter revenue was nearly $1 3 billion, an increase of more than 86% from the third quarter and 72% from the prior year, reflecting robust improvements in seaborne pricing and recognition of a 149 million of unrealized mark to market gains.
And financial coal hedges.
Speaker 4: We recorded net income attributable common shareholders of $513 million or $3.93 per share.
We recorded net income attributable common shareholders of $513 million or $3 93 per share.
Speaker 4: We reported adjusted EBITDA of 444 million, a 54% increase over the 289 million reported in the third quarter and four times the prior year results.
We reported adjusted EBITDA of 444 million, a 54% increase over the 289 million reported in the third quarter and four times the prior year results.
In the fourth quarter, we generated free cash flow of $427 million.
Speaker 4: In the fourth quarter, we generated free cash flow of $427 million, about 25% of our market capitalization, driven by the performance of
25% of our market capitalization driven.
Driven by the performance of our seaborne platform.
Speaker 4: and the return of $110 million of cash margin related to financial coal.
And the return of $110 million of cash margin related to financial hedges.
Importantly, we continued to execute on our commitment to strengthen the balance sheet. We retired an additional $200 million of senior secured debt in the quarter for the full year, we retired approximately $420 million more than 25% of the debt outstanding at the beginning of the year, reducing leverage from <unk>.
Speaker 4: Importantly, we continue to execute on our commitment to strengthen the balance.
Speaker 4: We retired an additional $200 million of senior secured debt in the quarter. For the full year, we retired approximately $420 million, more than 25% of the debt outstanding at the beginning of the year, reducing leverage from 6x to 1.2x trailing 12 months EBITDA, or just 0.2x on a net basis.
Six times to one two times trailing 12 months EBITDA or just 0.2 times on a net basis.
And just this morning, we announced a $106 million repurchase offer for the Wilson young term loan and notes based on that mines excess cash flows from just the last six months.
Speaker 4: And just this morning, we announced a $106 million repurchased offer for the Wilpen Young term loan and notes based on that mine's excess cash flows from just the last six months.
Speaker 4: This offer represents more than 25% of the outstanding Wilpen Young.
This offer represents more than 25% of the outstanding well beyond that.
At December 31, we had $954 million of cash and cash equivalents, an increase of $367 million from the fourth quarter and available liquidity was approximately $1 billion.
Speaker 4: At December 31st, we had $954 million of cash and cash equivalents, an increase of $367 million from the fourth quarter, and available liquidity was approximately $1 billion.
Yeah.
Speaker 4: Turning now to the segment results. The Seaborn thermal segment generated EBITDA of $149 million, a 43% increase compared to the third quarter, leveraging a 12% increase in average realized price.
Turning now to the segment results.
Seaborne thermal segment generated EBITDA of $149 million, a 43% increase compared to the third quarter, leveraging a 12% increase in average realized prices.
Speaker 4: Costs per ton were 5% lower than the prior quarter, primarily due to lower mining ratio, resulting in the EBITDA margin of 50%.
Cost per ton were 5% lower than the prior quarter, primarily due to lower mining ratio, resulting in the EBITDA margin of 50%.
Speaker 4: Heavy rainfall in the Hunter Valley and COVID-related staffing shortages reduced overburden removal and constrained shipments, which kept sales volumes for the quarter at levels just above the prior quarter.
Heavy rainfall in the Hunter Valley, and Covid related staffing shortages reduced overburden removal and constrained shipments, which kept sales volumes for the quarter at levels just above the prior quarter.
Wilson young ships, three and a half million tons in the quarter, including $1 6 million export tons consistent with third quarter levels, while average cost declined to $24 per ton compared to 26 in the prior quarter.
Speaker 4: Wilpen Young shipped 3.5 million tons in the quarter, including 1.6 million exports.
Speaker 4: consistent with third quarter levels, while average cost declined to $24 per ton compared to $26 in the prior.
Wilson young realized an average sales price of $48, resulting in an EBITDA margin of approximately 50%.
Speaker 4: Willpin Young realized an average sales price of $48, resulting in an EBITDA margin of approximately 50%.
Wilson young delivered $85 million of adjusted EBITDA in the quarter $219 million for the full year and had over $200 million of cash at December 31.
Speaker 4: Wilpen Young delivered 85 million of adjusted EBITDA in the quarter, 219 million for the full year, and had over 200 million of cash at December 31.
The seaborne met segment generated EBITDA of 170 million, a nearly 195% increase compared to the prior quarter.
Speaker 4: The Seaborne MET segment generated IBITA of 170 more, a nearly 195% increase compared to the prior quarter.
Speaker 4: An average realized price of $211 per ton compares favorably to cost of 106, resulting in 50% EBITDA margin.
And average realized price of $211 per ton compares favorably to cost of 106, resulting in 50% EBITDA margins fourth quarter met shipments were about 100000 tons higher than last quarter due to sustained production improvements at metropolitan and restarting Shoal Creek.
Speaker 4: Fourth quarter met shipments were about 100,000 tons higher than last quarter due to sustained production improvements at Metropolitan and restarting Soul Creek.
Speaker 4: Cost per tonne were higher compared to the third quarter due to the Shoal Creek restart, persistent wet weather at the CMJV, and higher royalties.
Cost per ton were higher to the compared to the third quarter due to the Shoal Creek restart persistent wet weather at the CMV and higher royalties.
Speaker 4: Our C-more platforms across the board delivered 50% margins in the fourth quarter.
Our <unk> platforms across the board delivered 50% margins in the fourth quarter.
In the U S. Our minds delivered $60 9 million of EBITDA.
Speaker 4: In the US, our minds delivered 60.9 million of EBITDA.
Speaker 4: The PRB mines ship 22.5 million tons in the quarter as winter weather and COVID-related impacts to production and rail performance reduce shipments by an estimated 1 million tons.
<unk> shipped 22, and a half million tons in the quarter as winter weather and COVID-19 related impacts to production and rail performance reduced shipments by an estimated 1 million tonnes.
Speaker 4: Cost per ton increased $0.75 compared to the third quarter to $10 per ton, with about half of that increase related to additional overburdened removal and ramping up equipment to achieve higher expected production levels in 2022.
Cost per ton increased 75 cents compared to the third quarter to $10 per ton with about half of that increase related to additional overburden removal and ramping up equipment to achieve higher expected production levels in 2022.
Speaker 4: Winter weather events, COVID, and higher fuel pricing also impacted costs during the quarter. The other US thermal mines.
Winter weather events Covid higher fuel pricing also impacted costs during the quarter.
The other U S thermal mines shipped $4 6 million tonnes slightly ahead of the third quarter and generated 20% EBITDA margins costs increased compared to the prior quarter due to higher fuel prices and one time activities to enable higher expected production in 2022.
Speaker 4: slightly ahead of the third quarter and generated 20% EBITDA margins. Cost increase compared to the prior quarter due to higher fuel prices and one time activities to enable higher expected production in 2020.
Okay.
Now, let's turn to our 2022 outlook starting with the seaborne thermal segment, we anticipate volume of 17 to 18 million tons, including about 10 million export tons.
Speaker 4: Now let's turn to our 2022 outlook, starting with the Seabourn thermal segment. We anticipate volume of 17 to 18 million tons, including about 10 million exports. You may check out Seabourn's video on Seabourn really quickly.
Speaker 4: Approximately 4 million export tons are priced on average at $80.
Proximately 4 million export tons are priced on average at $80.
Costs are expected to increase by about 10% or a little over $3 driven by inflation fuel prices royalties and higher repair spend at Wilton.
Speaker 4: Costs are expected to increase by about 10% or a little over $3, driven by inflation, fuel prices, royalties, and higher repair spend at Wilfrid.
Speaker 4: Based on price volume and about 6 million export tons exposed to currently higher spot prices, substantially higher margins are expected.
Based on price volume and about 6 million export tons exposed are currently higher spot prices substantially higher margins are expected in the new year.
Seaborne thermal sales in the first quarter are anticipated to be approximately 750000 tons lower than ratable guidance due to a scheduled longwall move starting in the quarter at one <unk> and <unk>.
Speaker 4: Seaborn thermal sails in the first quarter are anticipated to be approximately 750,000 tons lower than rateable guidance due to a scheduled longwall move starting in the quarter at Wambo and lower volumes at Wilpinion as they re-establish mine sequencing following the previously mentioned weather event.
<unk> volumes it will opinion as they reestablish mine sequencing following the previously mentioned weather events.
Speaker 4: The Seymour net segment is expected to ship 6.5 to 7.5 million tons, with substantially all tons unpriced, providing significant leverage to the spot market.
The seaborne met segment is expected to ship six five to $7 5 million tonnes with substantially all times unpriced, providing significant leverage to the spot market.
Speaker 4: We anticipate production at Shoal Creek to ramp up during the first half of the year with full year production of about one and a half million.
We anticipate production at Shoal Creek to ramp up during the first half of the year with full year production of about $1 5 billion tonnes.
Speaker 4: costs of 100 to $110 per ton are projected to be in line with fourth quarter results.
Cost of 100 to $110 per 10 $110 per ton are projected to be in line with fourth quarter results.
Speaker 4: In the first quarter, seaboard net volumes are anticipated to be approximately 500,000 tons lower than rateable guidance due to lower volume at Shoal Creek as it ramps up long wall production and mine sequencing at the CMJV.
In the first quarter seaborne met volumes are anticipated to be approximately 500000 tons lower than ratable guidance due to lower volume at Shoal Creek as it ramps up longwall production and mine sequencing at the <unk>.
Yes.
Although we are actively managing and we have considered in our guidance continued.
Speaker 4: Although we are actively managing and we have considered in our guidance.
Speaker 4: Continued uncertainty regarding COVID impacts to our workforce and supply chain exists and may negatively impact our seaborne operations beyond the guidance provided today.
Uncertainty regarding COVID-19 impacts to our workforce and supply chain exists.
<unk> really impact our seaborne operations beyond the guidance provided today.
And the EBIT margin per ton is expected to increase 40% in 2022, we are projecting volumes of 88% to 95 million tons and have 86 million tons priced at an average of $12 40.
Speaker 4: In the PRB, even a margin per ton is expected to increase 40% in 2022. We are projecting volumes of 88 to 95 million tons and have 86 million tons priced at an average of $12.40.
Speaker 4: and any additional production will be open to currently much higher spot prices.
And any additional production will be open to currently much higher spot prices.
Speaker 4: Costs per ton are anticipated to increase about 8%, primarily due to higher sales linked royalties and taxes, higher fuel, and certain costs early in the year to increase production above 2021 levels.
Cost per ton are anticipated to increase about 8%, primarily due to higher sales linked royalties and taxes higher fuel and certain costs early in the year to increase production above 2021 levels.
Other U S. Thermal volumes are planned to increase by up to 2 million tonnes to $18 million to $19 million and we have 18 million tons priced $3 above 2021 prices.
Speaker 4: Other US thermal volumes are planned to increase by up to 2 million tons to 18 to 19 million, and we have 18 million tons priced $3 above 2021 price.
Speaker 4: Costs are anticipated to increase by $1.50 per ton, resulting in higher margins in 2022.
Costs are anticipated to increase by $1 50 per ton, resulting in higher margins in 2022.
Capital expenditures are anticipated to be approximately $190 million with $80 million earmarked for major projects and growth, including more Vale South development finally equipment delivery at the <unk> JV and additional equipment refurbishment at our U S operations.
Speaker 4: Capital expenditures are anticipated to be approximately $190 million, with $80 million earmarked for major projects and growth, including Mooreville self-development, final equipment delivery at the Wambo JV, and additional equipment refurbishment at our US operation.
Speaker 4: In summary, higher margins across all segments are expected to generate increasingly strong cash flows, capitalizing on favorable coal markets, and in particular, our seaborne assets delivering the expected torque from higher international coal prices.
In summary, higher margins across all segments are expected to generate increasingly strong cash flows capitalizing on favorable coal markets and in particular, our seaborne asset delivering the expected torque from higher international coal prices.
Speaker 4: Lastly, we will maintain our disciplined approach to capital allocation.
Lastly, we will maintain our disciplined approach to capital allocation.
Speaker 4: further reducing debt to best position the company for continued success.
Further reducing debt to best position the company for continued success.
Speaker 4: I'd now like to turn the call over for questions. Madison?
I'd now like to turn the call over for questions Madison.
Thank you alright, ladies and gentlemen at this time, we will now begin the question and answer session. If you have a question. Please press the star followed by the number one on your push button found your questions will be answered in the order they are received.
Speaker 1: Thank you. All right, ladies and gentlemen, at this time we will now begin the question and answer session. If you have a question, please press the star followed by the number one on your push button phone. Your questions will be answered in the order they are received.
If you are using a speaker.
Speaker 1: If you are using speaker equipment, you will need to lift the handset before pressing the numbers. If you find your question has been answered, you may remove yourself from the queue by pressing star 2. One moment please for the first question.
Speaker equipment, you will need to lift the handset before pressing the numbers.
Do you find your question has been answered you may remove yourself from the queue by pressing star Q1 moment. Please for the first question.
We'll go ahead and take our first question from David Gagliano with BMO capital markets.
Speaker 1: We'll go ahead and take our first question from David Gagliano with VMO Capital Market.
Speaker 5: All right, great. Thanks for taking my questions and congratulations on the significant improvements and the strong results. There was a lot covered on those prepared remarks. I just have a few questions for a little bit more detail. But my first one is really a bigger picture question regarding capital allocation. Obviously, balance sheet meaningfully improved, high free cash flow. You talked about a number of internal.
Alright, great. Thanks for taking my questions and congratulations on the.
Significant improvements and the strong results.
There was a lot covered on those prepared remarks, so I just have a few few questions.
For a little bit more detail, but my first one is it really a bigger picture question regarding capital allocation, obviously bal.
Balance sheet meaningfully improve high free cash flow you talked about a number of internal.
Speaker 5: initiatives, which I'll come back to in a second. What are your capital allocations slash capital return plans? And if you could just remind us of any constraints on returning cash to shareholders associated with the debt, the share rebonding, and also what the reasonable timeline regarding shareholder return.
Initiative, which I'll come back to in a second well what are your capital allocation slashed capital return plans and if you could just remind us of any constraints on returning cash to shareholders as you know associated with that the surety bonding.
And also whats a reasonable timeline regarding shareholder returns.
Thanks, Dave and good morning, I appreciate the comments.
Speaker 4: Thanks, Dave. Good morning. Appreciate the comments. For respond to your question about capital allocation, you know, we're very, very happy with the progress made on our debt reduction levels. You know, 420 million more than 25% of the debt outstanding at the beginning of the year, still leaves us with funded debt of about 1.1 billion.
To respond to your question about capital allocation, we're very very happy with the progress made on our debt reduction levels.
$420 million more than 25% of the debt outstanding at the beginning of the year still leaves us with funded debt of about $1 1 billion.
Speaker 4: Listen, we've been very clear and transparent that reduction of these debt levels need to continue. We expect to do so in the coming year. You know, from a next step perspective, I would say that we'd look at leverage on a one-times even basis in a mid-cycle, you know, significantly lower than, you know, the $900 to $1 billion might be looking at next year plus. I would think we would probably try to get that down to a mid-cycle even closer to $500 million..
Listen we've been very clear and transparent that reduction of these debt levels need to continue we expect to do so in the coming year.
From a next step perspective, I would say that we look at leverage on a one times EBIT basis and in a mid cycle.
Typically lower than the 900 to a $1 billion, maybe looking at next year plus.
I would think we would probably try to get that down to a mid cycle EBITDA closer to $500 million. So look into continue the progress on debt reduction and your last question. There I believe was kind of restriction on shareholder returns.
Speaker 4: So looking to continue the progress in debt reduction. And your last question there, I believe, was kind of restriction on shareholder returns. You are right, the credit agreement, as well as the agreement with our surety providers, limits the ability to repurchase shares or pay dividends on our stock throughout the extent of those, duration of those agreements, which run through the end of 2024.
You are right the credit agreement as well as the agreement with our surety providers limits.
The ability to repurchase shares or pay dividends on our stock.
Throughout the extended those duration of those agreements, which run through the end of 2024.
That.
Speaker 5: Does it preclude you or just limits that side?
Does it preclude you were just limits.
Just curious.
Speaker 4: It, it precludes us unless otherwise agreed to.
It includes us unless otherwise agreed to.
Okay, alright, thanks for clarifying that and then just on operationally.
Speaker 5: All right, thanks for clarifying and then just on operationally, in your prepared remarks, I believe you mentioned considering restarting North Guignella. I was wondering if you could talk a little bit about that in more detail. What's the capital cost timeline, expected volumes, and presumably the sales process for North Guignella is now off the table?
In your prepared remarks, I believe you mentioned, considering restarting north green yellow I.
I was wondering if you talk a little bit about that in more detail, what's the capital cost timeline and expected volumes and presumably the sales process for northern Y'all is now off the table.
Right.
Hey, Dave Good morning, this is Jim.
Speaker 3: Hey, Dave, good morning. This is Jim.
Yes, we're in the very early days of looking at the restarting of north of in yellow.
Speaker 3: Yeah, we're in the very early days of looking at the restarting of North Piniella. And what I mean by early days is, you know, we're looking at the permitting, we're rechecking our engineering and the geology of all that data and running economic models on that. So we started that process.
And what I mean by early days as we're looking at the the permitting were checking our engineering.
And the geology.
All of that data and running economic models on that so we started that process yet.
Speaker 3: And I think by the time we get to the next quarter's earnings call, we can probably have a lot better indication and data as to what we're looking at. The two things, though, to address some of the questions you had, one is the timeline. And we are looking at mining to the south with those reserves. And the reason that's important is we have complete control of those reserves going to the south, and we have many, many years of mining, the long-wall mining that we can do by going south.
I think by the time, we get to the next quarter's earnings call. We can probably have a better indication and data as to what we're looking at the two things though to address some of the questions. You had one is the.
The timeline, we are looking at mining to the south with those reserves and the reason that's important is we have complete control of those reserves going to the south.
And we have many many years of mining longwall mining that we can do by going south.
Speaker 3: The development to go south is probably about a two-year project. So, you know, we'll have development coal with the minor sections and then eventually bringing on the long wall. So whenever we initiate that process of starting actual development, the long wall, you know, starting to run, it would be about a two-year process by going to our southern reserve. So, you know, as far as capital and all of those other questions you have, again, we're very early in the process, but as we get further along, we'll have that information.
The development to go South is probably about a two year project. So.
Development coal with the minor sections and then eventually bringing on the longwall. So whenever we initiate that process of starting the actual development.
Longwall, starting to run as it would be about a two year process by going to our southern reserves, so as far as capital and all of those other questions you have.
Again, we're very early in the process, but as we get further along.
That information.
Speaker 5: Okay, that's helpful. Thank you. And then just last question for me for now. On the PRB, in the prepared remarks, I believe it was mentioned 55 percent is priced in 2023. Can you just give us a sense of when was that priced and if you can just talk around averages, you know, for the volumes that are already priced?
Okay. That's helpful. Thank you and then just last question for me for now on the the PRP.
In the prepared remarks, I believe it was mentioned 55% as price in 2023 can you just give us a sense of when when was that priced in and if you can just talk around averages.
You know for the volumes that are already priced.
Speaker 5: That would be really helpful. And then a somewhat related question. On the, I think it's two to nine million of potential Spot sales for 2022. I was wondering if you could comment a little more about, is there any additional flex beyond that? And when we talk about Spot, there's reference prices out there that are kind of all over the place. Can you give us a sense as to what?
That'd be really helpful. And then and then somewhat related question on the.
I think it's $2 million to $9 million of potential spot sales for 2022 .
I was wondering if you can comment a little more about.
Is there any additional flex beyond that and when we talk about spot. We've you know theres reference prices out there that are kind of all over the place can you give us a sense as to what.
You know your view is of the spot market right now.
Speaker 5: your view is of the spot market right now. Bye bye.
Dave I'll do this chronologically and starting with 2022.
Speaker 3: They've all do this chronologically and starting with 2022. You know, referencing the the guidance target targets we have, we have 86 million tons priced for 2022 with a range of 88 to 95 million of production.
References the the guidance documents targets, we have we have 86 million tons priced for 2022 with a range of $88 million to $95 million of production.
Speaker 3: So when we're looking at sales that could transact in the current market or this year in these pricing conditions, we're looking at sales that could transact in the current
So when we're looking at sales that could transact in the in the current market or this year in this in these pricing conditions.
Speaker 3: It's what would be above the 86 million tons up somewhere in that guidance range as to what we'd be looking for. I think he characterized it as spot.
What would be above the 86 million tons.
We're in that guidance range as to what we'd be looking for I think you characterize it as spot.
Speaker 3: The pricing, I would say that, you know, the way the Platts indexes are out there right now, you're seeing these pricing in the mid to upper 20s is where the spot market is at the moment. Now, whether that holds for the rest of the year, that remains to be seen. But I will say that there's some interesting developments on the demand side that are occurring that will add to some pull from our domestic markets. We actually have a lot of
The pricing I would say that the way the Platts index is are out there right now.
<unk> seen these pricing in the in the mid to upper twenties.
Where the spot market is at the moment now whether that holds for the rest of the year that remains to be seen but I will say that there are some interesting developments on the demand side that are occurring.
That will add to some pull from our domestic markets.
I actually have.
Speaker 3: customers coming to us from the Southeast Asia and Atlantic Basin asking for PRB coal and deliveries.
Customers coming to us from the Southeast Asia, and Atlantic Basin asking for PRA.
<unk> coal and <unk>.
Deliveries in.
Speaker 3: And the transportation challenge with the rail capacity that we have out West.
And the <unk>.
Transportation challenge with the you know the rail capacity that we have out west to add even more incremental tons are going down to Houston, but the.
Speaker 3: to add even more incremental tons going down to Houston.
Speaker 3: But the netbacks on those potential deals are attractive. Now the thing is logistically we can pull it off.
Net backs on those those potential deals are attractive now the thing is logistically, we can pull out can we pull it off but the point I'm trying to make is there is.
Speaker 3: But the point I'm trying to make is there's the type of demand that we're seeing in the PRB, we feel is strong.
The type of demand that we're seeing in the PRP.
We feel as strong.
Speaker 3: And if somehow or another that, you know, the markets remain as strong and there's more export demand, that'll only add to the pool on that.
If somehow or another that you know the markets remain strong and there's more export demand that will only add to the pull on that market.
Speaker 3: But I will caution that there is a transportation issues to work out before we could do anything like that.
I will caution that there is a transportation issues to work out before we could do anything like that for.
Speaker 3: For 2023, you know, when it's too early in the year to give pricing guidance, we're not going to do that. You know, we did price a lot of that coal in our negotiations in the fourth quarter of last year as we took 2022 sales. We also took 2023 and quite honestly, 2024 sales.
For 2023.
It's too early in the year to give pricing guidance, we're not going to do that.
We did price a lot of that coal in our negotiations in the fourth quarter of last year. As we took a 2022 sales. We also took 2023 and quite honestly 2024 sales.
Speaker 3: with those negotiations.
With with with those negotiations.
Speaker 3: And one final point I'd like to make as you're trying to run your models, you know, the pricing, our average BTU is at about 8670 across our platform for 2022, not 8800 or higher BTUs. So you also got to take that into account when you're looking at the pricing for us for 2022 and beyond.
And one final point I would like to make is we are trying to run your models you know the pricing. Our average Btu is at about 80 670 across our platform for 2022, not 800 or higher Btu. So you also got to take that into account when you're looking at the pricing.
For us for 2022 and beyond.
Okay. That's very helpful. Thanks for all the color I appreciate it.
Speaker 5: Okay, that's very helpful. Thanks for all the color. Appreciate it.
All right. We'll go ahead and take our next question from Lucas pipes with B Riley Securities.
Speaker 1: All right, we'll go ahead and take our next question from Lucas Pipes with B Riley Securities. Hey, good morning, everyone, and congratulations on a...............
Hey, good morning, everyone and congratulations on a strong a strong fourth quarter.
Speaker 6: I wanted to ask a little bit about the cadence of Med-Col shipments throughout the year. So with Shoal Creek ramping up,
I I wanted to ask a little bit about the cadence of met coal shipments throughout the year, So with Shoal Creek ramping up.
Speaker 6: What's a good range here in the first quarter especially given the current price environment? Of course, it's particularly attractive. And also with an eye towards Q1.
What is it what's a good range here in the first quarter, especially given the current price environment of course, it's particularly attractive in and also with an eye towards Q1.
Speaker 6: You have I believe 4 million tons of seaborne thermal coal price.
You have I believe 4 million tons of seaborne thermal coal price should we assume that essentially Q1 is a fully priced in the 6 million tonnes of available.
Speaker 6: Should we assume that essentially Q1 is fully priced and the 6 million tons is available?
Speaker 6: Tons is Q2 through Q4 or would you maybe...
Tons is Q2 through Q4 or what would you maybe.
Say that Youre committed tons are already kind of spread out throughout the year. Thank you very much for that.
Speaker 6: say that your committed tons are already spread out throughout the year. Thank you very much for that.
Hey, Lucas.
Yeah.
Speaker 3: Good to hear from you again, Jim Greic here. And as far as the met goes, the Shoal Creek is, Mark gave the guidance for the year, the 1 and 1.5 million tons. And that will be ramping up here in the first quarter and into the second quarter. And also with our CMJV in Australia, we're still going to have some recovery.
Good to hear from you again, Jim Greg here and as.
As far as the met goes into the Shoal Creek is.
Art gave the guidance for the year, the $1 5 million tons and that will be ramping up here in the in the first quarter and into the second quarter and also with our cm JV.
In Australia, we're still going to have some recovery from the range that we had at the end of last year in getting that getting the water out of the pits. So it won't be ratable. When you look at the numbers that we have.
Speaker 3: from the rains that we had at the end of last year and getting the water out of the pit.
Speaker 3: So it won't be ratable when you look at the numbers that we have on the guidance tables. And Mark can give you some color on that and also on your questions on the seaborne thermal. So Mark.
On the guidance tables, and Mark can give you give you some color on that.
And also on your questions on the seaborne thermal so mark Yeah, Hey, Thanks, Good morning Lucas.
Speaker 4: Yeah, no, hey, thanks. Good morning, Lucas. Starting with MET, I know that if you look at our, you know, midpoint of guidance, 7 million tons for the year give you about, you know, 1750 per quarter, you know, we mentioned in the in compared remarks will be 500,000 tons lower in the quarter. So probably more like one and a quarter million tons in that first quarter, as we ramp up more to the full run rate.
With Matt I know that if you look at our midpoint of guidance 7 million tons for the year give you about $17 50 per quarter.
Mentioned in prepared remarks, there will be 500000 tons lower in the quarter, So probably more like one and a quarter million tonnes in that first quarter as we ramp up more to full run rates.
Speaker 4: And then on seaborne thermal, I think the question, we also mentioned how we'd be lower than readable.
And then on seaborne thermal I think the question. We also mentioned how we'd be lower than ratable.
Speaker 4: given some of the mine sequencing issues and Wilton Young getting that overburden removed. So we're going to be down from ratable guidance there, about 750,000 tons for the quarter.
Given some of the the mine sequencing issues and we will send you on getting that overburden removed. So we're going to be down from ratable guidance, there about 750000 tons for the quarter.
Speaker 4: And I think your last question was how much of that seaborne thermal is open for pricing. Given lower than rateable, we'll have less than rateable unpriced. It's not fully priced, but there might be about a half million tons that I'd say is unpriced for that first quarter.
I think your last question was how much of that seaborne thermal is opened for pricing given lower than ratable will have less in ratable unpriced, it's not fully priced but.
There might be about a half million tons that I'd say is is on price for that first quarter.
Yes.
Got it very helpful. Thank you and.
Speaker 6: Got it. Very helpful. Thank you. And on Will Pinyong, I wanted to...
On an envelope and young I I wanted to.
Speaker 6: follow up a little bit on the cost guidance. I believe it's 35 to...
Follow up a little bit on on the.
Cost guidance I believe it's 35 two.
Speaker 6: So it's $25 to $28 per short ton on the cost side. And that would be somewhat higher than where you're selling the domestic tons. Are you selling the domestic tons at a loss or is there something else going on with maybe transportation?
So it's it's you know.
It's it's it's 225% to $28 per short ton on the on the cost side and that is that would be somewhat higher than.
Where are you selling the domestic tons is it are.
Are you selling domestic comes at a loss or is there something else going on with maybe transportation and royalties.
Speaker 4: Thanks for that question, Lucas. Let me clarify that cost in our guidance table is a consolidated or all-ton cost. The domestic tons incur less washing, less transportation, so they're at a much lower cost than the export tons.
Thanks for that question Lucas, let let me clarify that that cost.
In our guidance table as a consolidated or all time cost the domestic tons.
Incurred less less washing less transportation. So they are at a much lower cost.
Then the and then the export tons.
Speaker 4: We do not sell the domestic tons at a loss. It is essentially a cost plus contract. So there's a incremental margin on those domestic tons. But certainly all of the juice comes from the export tons.
That's all the domestic tonnes at a loss it is essentially a cost plus contracts. So there's a there's a there's a incremental margin on those domestic tons, but certainly all of the juice comes from the export tons.
Speaker 6: Very helpful. Thank you. My last question is on the ATM.
Terrific very helpful. Thank you then my last question is is on the ATM.
Speaker 6: What's in light of this really strong cash generation here in the fourth quarter and the strong outlook for 2022? What are your expectations around that?
What's and in light of this really strong cash generation here in the fourth quarter and the strong outlook for.
For 2022, what what are your expectations around around that debt.
Program.
Thank you.
Speaker 4: Yeah, so two things, Lucas. I think one, you saw us slow down on the sales in the fourth quarter. Lowest number of shares sold at about 7.7 million during the quarter, compared, you know, since the program started in the second quarter. A lot of that was earlier in the fourth quarter. We did announce in December , you know, an extension of that program. It does give us another seven and a half million tons available to us. It is one tool in our bag, but we will...
Yeah, So so two things.
Lucas I think one you saw a slowdown in the sales in the fourth quarter.
The lowest the lowest number of share sold at about $7 $7 million during the quarter.
Since the program started in the second quarter.
A lot of that was earlier in the fourth quarter. We did announce in December you know an extension of that program. It does give us another seven 5 million tons available to us. It is one tool in our bag, but we will.
Speaker 4: used that very judiciously and it's an option for us if it's the best option. But you did see a slow down on it. But very happy with the progress we're making with organic cash flows and the ability to continue to reduce that debt.
Use that very judiciously and it's.
It's an option for us.
If it's if it's the best option, but you did see a slowdown on it.
But very happy with the progress, we're making with that with organic cash flows and ability to continue to reduce that debt.
Terrific, great well I really appreciate all the color and continued best of luck.
Speaker 6: I really appreciate all the color and continue best of luck.
Thank you thank you Luiz.
And we'll go ahead and take our next question from Nathan <unk> with benchmark company.
Speaker 1: We'll go ahead and take our next question from Nathan Martin with the benchmark.
Speaker 6: Hey, good morning, everyone. Congrats on the quarter. Thanks for taking my questions. I think the bulk of them have probably been touched on, but maybe I'll ask around the middle amount. Big quarter over quarter step up in EBITDA contribution, I think about 9 million times, should be $9 million to $45 million in the fourth quarter. I guess I was wondering, is that $45 million number somewhat repeatable, assuming that prices remain flat, or is there any color on there? Thank you.
Hey, good morning, everyone. Congrats on the quarter. Thanks for taking my questions I think the bulk of them are probably been touched on but maybe maybe I'll ask around the middle of them out.
Big quarter over quarter step up in EBITDA contribution I think about 9 million car should be $90 million to $45 million for the fourth quarter. I guess I was wondering is that 45 million dollar number somewhat repeatable assuming that prices remain flat or see any color on there.
Hey, Nathan Jim Craig here.
I'd like to talk about the tonnage is first we've got.
Speaker 3: I'd like to talk about the tonnages first, you know, we've got middle mount in total was up to about 4 million tons, little over 4 million tons last year, and we project that to be the same, maybe 100,000 tons more this year. So that's at 100%. And of course we get
Mount in total was up to about 4 million tons, a little over 4 million tonnes last year, and we project that to be.
The same maybe 100000 tons more of this year. So that's at a 100% in Paris, we get.
Speaker 3: are 50%. The other piece that I would say of the of the cash generation is what we're doing on the cost side. And over the last year to year and a half, we've had some significant improvements at the mine, both in productivity and then how that the structure of the mine is.
Our 50%.
The other piece that I would say of the of the cash generation is what we're doing on the cost side and over the last year to year and a half we've had some significant.
The improvements at the mine, both the net and productivity and then how the structure of the mine is.
Speaker 3: We've added another fleet there of excavator and trucks, which allowing for more of that increased output. And we've had a GM there that has come from P buddy. Last year, year and a half that he's been there and rebase the mine with the added equipment and we've also invested in the prep plant.
We've added another fleet there of excavator and trucks, which are allowing for more of that increased output.
And we've had a.
GM there that has come from Peabody.
The last year year, and a half that he has been there in the Rebase the mine with the added equipment and we've also invested in the prep plant.
So we feel from the cost basis, and how efficiently. The mine is running with the management that we have there that we feel pretty good about maintaining the cost side of the equation going through this year.
Speaker 3: And so we feel from the cost basis and how efficiently the mine is running with the management that we have there, that we feel pretty good about maintaining the cost side of the equation going through this year.
Speaker 3: And then again, the tonnages are going to be in that 50% of a 4.1 or 4.2 million ton forecast.
And then again, the tonnages are going to be in that.
50% of a four one or $4 2 million ton.
Forecast.
Yes, I mean, maybe maybe I'll just add to adjust the financials $71 million for the quarter $12 5 million of that was related to an insurance recovery.
Speaker 4: Yeah, maybe maybe I'll just add to adjust the financials $71 million for a quarter, 12 and a half million of that was related to an insurance recovery from from a property claim that we had going back to 2019.
From a property claim that we had going back to 2018.
Speaker 4: From a cashflow return perspective, 45 million in the quarter. You know, I would say, you know, I think your question is repeatable. And certainly with the, you know, our share of 2 million tons production that Jim mentioned.
From a cash flow return perspective $45 million in the quarter.
I would say.
I think your question is repeatable and certainly with the you know.
Sure 2 million tons production that Jim mentioned.
Speaker 4: And the product they have, it's kind of a 50% semi-hard-coating coal and 50% PCI. So realizing, you know, 80% or better of premium hard-coating coal prices, we certainly expect to continue to generate cash from that asset. It's great exposure to hard, you know, to met coal that sometimes people forget because it's not in our consolidated operating system.
And the product they have kind of a 50% semi hard coking coal and 50% PCI, so realizing 80% or better a premium hard coking coal prices.
Certainly expect to continue to generate cash from that asset.
Its great exposure.
You know to met coal.
That sometimes people forget doesn't is not in our consolidated operating results.
Yeah. Thank you for the thoughts Jim.
Speaker 6: Thank you for the thoughts, Jim and Mark. I guess maybe just going back to Shoal Creek real quickly, what's kind of been the reception of that coal? Obviously, your fourth quarter production, I think, came in a lot higher than most people had expected, over 400,000 tons. Jim, I think you mentioned you sold about 70,000 tons in a quarter. Maybe what's your expectation on inventories for that line going forward?
And Mark.
I guess, maybe just going back to Shoal Creek real quickly.
What's what's kind of been the reception of that coal obviously your fourth quarter production of it came in a lot higher than most people had expected over 400000 tonnes. Jim I think you mentioned you sold about 70000 tons in the quarter. So maybe whats your.
Dictation on inventories for that line going forward just any more thoughts. Thank you.
Speaker 3: And Nathan, the first off, I'd like to say we're very, very pleased with how the mine has started back up. And yeah, we did we did get that 70,000 tons of sale in Q4 last year.
Nathan.
First off I'd like to say, we're very very pleased with how the mine has started back up and we did we did get that 70000 tons of sale in Q4 last year.
Speaker 3: you know, pretty much a high volume level type of pricing.
Pretty much a high vol a levels.
Type of pricing.
Speaker 3: The startup has gone well. I will say, you know, something that I'm very, very keen on because it relays in the dollars and cents is the safety at the mine has been outstanding as it started.
The startup has gone well I will say.
Something that I'm very very keen on because it related in the dollars and cents as the safety at the mine has been outstanding as it started started back up so.
Speaker 3: started back up. So you know, we're going to keep keep that ramp up going here through the fourth quarter, I mean through the first quarter up to that one and a half million ton level.
We're going to keep it keeps that ramp up going here through the fourth quarter I mean through the first quarter, that's about one 5 million ton level for.
Speaker 3: for the year, so it won't be completely ratable as you look at the year. Now, as far as the pricing going forward, you know, we're getting a lot of interest in both the Atlantic and the Atlantic.
For the year, so it won't be completely ratable.
As you look at the year now as far as the pricing going forward.
We're getting a lot of interest in both the Atlantic and Pacific markets more interest than we've seen in over 10 years that that might even though it's been shut down for a little while here.
Speaker 3: and Pacific markets more interested than we've seen in over 10 years that that might even though it's been shut down for a little while here.
Speaker 3: So I would say that the market is waiting for us to get these tons out there with the quality and of course the
So I would say that the market is waiting for us to take.
These tons out there with the quality and of course the.
Speaker 3: the cost coming from the United States into these markets. So I think the market is, we're getting a very strong reception, but we haven't booked any long term sales yet as we're ramping up. We're just putting out the holes and taking advantage of the spot market at the moment.
The cost you know coming from the United States into these markets. So I think the market is we're getting a very strong reception, but we haven't booked any long term sales. It is ramping up we're just putting out vessels in.
And taken advantage of the spot market at the moment.
And maybe maybe one thing I would add you had mentioned production for Shoal Creek in the quarter I don't think we announced that you've mentioned 400000. It was it was just over a little over 100000, he sold 70000 tons in the fourth quarter.
Speaker 4: And maybe maybe one thing I would add, you mentioned production for Shoal Creek in the quarter. I don't think we announced that. You've mentioned 400,000. It was, it was just over a little over a hundred thousand. We sold 70,000 tons in the fourth quarter.
Speaker 4: And, you know, just to be clear, or maybe add to Jim's comment about the ramp up of production, looking at that one and a half million tons for the for the full year, it's certainly not going to be readable. It's going to be a ramp up. I, you know, if I had to predict, you know, we probably
And.
Just to be clear, maybe add to Jim's comment about the ramp up production looking at that one and a half million tons for the for the full year, it's certainly not going to be ratable.
It's going to be a ramp up you know if I had to predict will probably come in at.
Speaker 4: come in at maybe 600,000 or so tons in the first half of the year, with better production there on the back end of the year.
Maybe 600000.
Or so tons in the first half of the year.
With better production there in the back end of the year.
Got it Okay and just just for reference a 400000 I mentioned was due to extra data. So I don't know maybe theres some discrepancy there it sounds like.
Speaker 6: Got it. Okay. Just for reference, the 400,000 I mentioned was due to MSHA data, so I don't know. Maybe there's some discrepancy there, it sounds like. Okay. Yeah, that was Ron. I'm sorry?
Okay.
Lou.
I'm sorry.
Yeah.
If it's I'm sure that was that was wrong.
Speaker 6: Okay, got it. Good to know then. And then maybe just finally guys.
Got it.
Nothing.
And then maybe just finally does.
Speaker 6: Thoughts around transportation logistics, obviously you called out issues there, labor, COVID, La Nina. What are we seeing today from a logistics standpoint, both here in the US and Australia? Maybe any thoughts on when you hope things could normalize.
Thoughts around transportation and logistics, obviously, you called out issues there are labor Covid, yes.
What are we seeing today from a logistics standpoint, both here in the U S and Australia.
Are there any thoughts on when you hope things could normalize thanks.
I think in in both countries the COVID-19 impacts.
Speaker 3: But I think in both countries, the COVID impacts are there and have been affecting the logistics. And I think the weather in Australia has had more of an impact. But as we're looking at it going forward, Nathan, in the United States here, we are seeing some improvement in the rail, as here just recently in the last couple of weeks. And we're hoping that momentum.
Are there and are have been affecting the logistics and I think the weather in Australia has had more of an impact but as we're looking at it going forward Nathan.
The United States here.
We are seeing some improvement in the rail.
As you know here just recently in the last couple of weeks and we're hoping that momentum.
Speaker 3: carries us through going forward. So that seems to be in a positive direction, and hopefully that trend continues.
Carries us through are going forward. So it seems to be in a positive direction and hopefully that trend continues.
Speaker 3: In Australia, there was some issues with the rains, and as I mentioned, COVID. But not to, you know, the limiting factors for us, if there are any limiting factors, is going to be with our own production here in the first quarter, again, recovering from all that rain at the end of last year and the COVID absenteeism. And we are recovering from both. And, you know, that's all incorporated into the four-year guidance that we gave out on the tons. So I would say that in Australia, it really isn't.
In Australia, there was some issues with the range and as I mentioned Covid.
But not to the.
The limiting factors for us if there are any limiting factors is going to be with our own production here in the first quarter again recovering from all of that rain at the end of last year and the Covid absenteeism and we are recovering from both.
And that's all incorporated into the full year guidance that we gave out on the tonnes.
So I would say that in Australia, it really isn't.
Speaker 3: transportation, we're not seeing it as a limiting factor for us here going forward.
The transportation, we're not seeing it as a limiting factor for us here going forward.
Speaker 6: Got it. Very helpful, Jim. Thank you. I'll leave it at that. Appreciate the time, guys. Best of luck in 22. Thank you, Nate. Thank you.
Got it very helpful. Thank you.
I appreciate the time guys best of luck in 'twenty two.
Thank you.
Mr. Greg. It appears there are no further questions at this time.
Okay, well, thank you all for joining us today.
Speaker 3: Well, thank you all for joining us today. I'd especially like to thank our employees for remaining focused on safety and for continuing to execute on their various productivity and cost improvement initiatives.
Especially like to thank our employees for remaining focused on safety and for continuing to execute on our various productivity and cost improvement initiatives.
I'd also like to thank our customers investors insurance providers and vendors for your continued support.
Speaker 3: I'd also like to thank our customers, investors, insurance providers, and vendors for your continued support. Operator, that's all for now. Thank you for your time.
Operator that concludes our call.
Speaker 1: This concludes the Peabody Q4 2021 earnings call. Thank you for participating.
This concludes the Peabody Q4, 2021 earnings call. Thank you for participating.
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Speaker 7: ARening Wood Take
Yes.
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