Q3 2024 Peabody Energy Corp Earnings Call
Good day and welcome to the P-Body Energy 3rd Quarter 2021 Conference Call. All participants will be in listen only mode.
Should you need assistance, please signal a conference specialist by pressing the star key followed by zero.
After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on your telephone keypad.
Speaker Change: To withdraw your question, please press star, then too. Please note this event is being recorded. I would now like to turn the conference over to Karla Kimrey, Vice President, and Vustar Relations and Communications. Please go ahead.
Karla Kimrey: Good morning, and thanks for joining P-Bodies earnings call for the third quarter of 2024.
which we today are President and CEO Jim Grech.
CFO Mark Spurbeck, and our Chief Marketing Officer, Malcolm Roberts.
Within the earnings release, you will find our statement on forward-looking information as well as a reconciliation of non-gap financial measures. We encourage you to consider the this factor's reference there along with our public violence with the FTC. I'll now turn the call over to Jim.
Thank you, Karla and good morning, everyone.
Jim: Thank you for taking time to join us today in pre-infrastant V-body.
In the third quarter, people had any chiefs out performance across all segments. With notable results in both the Seaborne Thermal and US Thermal segments.
You can play this $100 million in Sherry Park, as is during the quarter, within our total researches for the year to $180 million.
This is a reflection of our continued commitment to returning value to our shareholders.
Earlier this month I hope you were able to participate in our Centurion presentation.
If not, I encourage you to view it on our website.
At Centurion, the continued makes significant progress towards starting a long-walled production in the first quarter of 2020-6.
Thus far we have produced first development call and commission to continue this mining unit.
The Prep Plant Watch is first colon of September and we have scheduled our first customer shipment for the fourth quarter.
As Centering continues to exceed budgeted development rates, they've had to accelerate the capex spend roughly 30 million dollars as a result of the rapid pace of development.
Now moving on to our operating segments.
Overall, our third quarter operational results aligned with our forecast and our minds continue to perform safely.
People are in thermal demand continues to grow and pricing remains stable.
We should hire the expected export volumes on strong production from open yarn.
As part of our ongoing commitment to maximizing value from our portfolio, we have re-agalluated the timeline to close you for the Wombo Underground Line.
While initially expecting to run until mid-2026.
Jim: We have determined that it makes better financial sense to bring forward the mind's closure to mid-2025. We do some challenging, geological conditions.
Jim: In 2025, the Womble Underground Mine is expected to produce approximately 800,000 tons, which is nearly 400,000 tons less than in 2024.
In our seaborn metallurgical segment, we made the opportunistic decision to uphold nearly 90,000 tons of shittments. It shall create during the period of challenging logistics and weak spot prices in the third quarter.
The whole walk on the warrior river.
Jim: which has been closed for unscheduled repairs is now operational.
Spurbeck is having proof and we expect shipments of shell creep cults to substantially improve in the fourth quarter.
The PRB expands the floor start to the new Dino Natural Gas prices, but volumes picked up in the third quarter.
Schittens exceeded expectations due to higher than anticipated customer nominations and improved rail performance.
Operation League, our PRB minds can change their effective cost management on material, repairs, and labor spend.
As a new thermal shipment in car to remind with expectations to spite low customer nominations.
At our 20 mile mine, we'll temporarily see low-reelbed and productivity as the mine has been experiencing some geological challenges. We anticipate returning to normal operating conditions in the first quarter of 2025.
Jim: Overall we have very proud of our operations performance this quarter.
Speaker Change: Now, turn it over to Malcolm Roberts, our Chief Marketing Officer, the D'Ligrin, our Outlook and the Markets today. Malcolm.
Thank you, Jim. Simple and thermal crossing remain resilient during the quarter. The month for thermal call continues to grow and this growth is a just centric.
Malcolm: In Australia, the new cast will hire energy firm or market experience strong, we're stocking demand from the age of Pacific region to support spot pricing throughout the quarter, pricing averaging $140 per metric term.
Malcolm: and Firmacol Imports in Asia increased year on year with India leading at 12% growth followed by China at 8% and North Asia at 2%.
Billy this month, the International Energy Agency published its annual World Energy Outlook. I comprehensive review of the likely parts of supply and demand of fossil fuels and renewable sources of energy.
Within this context, the agency estimate that call consumption in 2030 will now be 6% higher than their 2023 forecast.
To put this in perspective, the 2024 increase of forecast amount is comparable to the total co-consumption of Japan.
within the Seaboard method, medical, coal market, premium hard-cooking coal, fell to $180 per town in the early September. For the first time since June 2021.
Wakes Steel to Vaughn was the key driver. The global steel market presents thin profit margins as steel exports from China accelerated.
Malcolm: These elevated levels of steel export white on steel miners globally.
Mick Colt-Aman was a staff and production cancer blasts and is around the world. Redirecting two contract cargos into the spot market.
Malcolm: India was unable to absorb this extra spotball, which has meant that China has resumed this position, has been clearing Market for spotcards.
During late September, Charter announced stimulus measures in proving sentiment.
Mark had anti-supposition of improved demand and lower-quality steel exports strengthened steel processing, encouraging steel makers to ramp up production. This has had a direct impact on steel making raw materials such as metallurgical coal and as a result processing insurance and recent improvement.
Overall, but market for medical coal remains, finally balanced and exposed to volatility, influenced by the rate of exports for Australia and economic performance in China.
In the United States electricity generation continues to grow with the grid load increasing by 3% from 2023 levels on a gear today basis.
Total South Pb Coal Production Volume increased by 33% during the quarter compared to quarter 2. With a total production volume of 51.2 million tonnes.
Malcolm: [inaudible]
Generally, the current market format continues to be challenged by comparatively low gas prices.
All now turning over to Mark to cover the financial details.
Thanks, Malcolm. It's nice to be here with everyone this morning. In the third quarter, P.B.R. recorded net income, attributed to the common stockholders of 101.3 million, or 74 cents per diluted share. And adjusted the EBITDA of 224.8 million.
Operating cash flow of 360 million reflects a favorable reduction in working capital, resulting in available free cash flow of 263.2 million for the quarter.
Malcolm: During the quarter, we completed the previously announced 100 million chair buyback, repurchasing nearly 4.5 million shares at an average price of $22.55 per share.
Malcolm: At September 30, we have 773 million of cash and today declared another 7.5 cent per share dividend.
Malcolm: Turning to the segment results.
Malcolm: Seymour Thermel recorded 120 million in adjusted EBITDA, 16 million better than the prior quarter.
Both Rippon Young and Mammal Interest Production and reported lower costs, quarter-over-quarter, resulting in segment cost below guidance at $47 per ton. Together with a $7 increase in realized export prices, segment EBITDA margin increased to 38%.
Production exceeded sales by 300,000 tons, increasing previous expected fourth quarter sales volumes.
Speaker Change: The Seaboard Medical segment generated approximately 28 million in adjust to even though. As Malcolm mentioned, benchmark coal prices fell to their lowest points of 2021, and there was a particularly weak market for spot sales.
Seoul Creek shipped only 125,000 tons in the quarter as we opportunistically limited spot sales and avoided higher transportation costs due to the whole clock outage.
Metraop had an outstanding order and made up for the lower sales volumes of Soul Creek, keeping the excitement in line with previous guidance at 1.7 million tons.
But the hope lock out is resolved. We expect higher production in sales and soul-create discord as reflected in fourth quarter guidance.
Malcolm: The US thermal lines for these Indian dollars have thus been needed in the quarter, 27 million better than the second quarter.
Malcolm: US thermal operations ship 26.1 million tons in realized an average EBITDA margin of $3.7 per ton.
Malcolm: Through the first three quarters of the year, the U.S. thermal operations have generated 196 million of even though while only requiring 32.3 million of maintenance capital.
Malcolm: The PRV shift is better than anticipated 22.1 million tons. The secondary reported 51.7 million of adjusted evade of, is all three of the minds didn't outstanding job managing costs for another quarter. Even a margins were then doubled from the second quarter to two dollars and 34 cents per ton.
Malcolm: The other US thermal coal mines generated 28 million in adjusted even though shipbits and costs all relying with expectations.
Looking ahead to the remainder of the year, we are making a couple of tweaks to full-year guidance.
Malcolm: Seaborn Thermal Lines are now expected to be 200,000 tons higher and 16.2 million tons. Another US Thermal Costs are up $2.45 per ton.
Malcolm: We've added 50 million to capital for 2024, primarily to reflect accelerated development of its insuring and as well as timing of spend at Lambo.
For the fourth quarter, C1's Bermal Operations Expect another steady quarter with volumes of 4.1 million tons, including 2.5 million export tons.
Malcolm: 100,000 tons are priced at approximately 120, while 800,000 tons of new cash will product and 1.3 million tons of high-ash product remain un-priced.
Costs are projected to be between $48 and $53 per ton.
T. Barn Medical Alliance are forecasted at 2.3 million tonnes. A substantial increase from the first three quarters of the year. The lock-out is just which impacted the whole creek of the results, and we also expect our first shipment of development coal from Sinsheri.
Sightman Costor anticipated to improve $2,225 per ton.
PRB shipments are expected to be 21.2 million times and an average realized price of $13.50.
With continued focus on cost discipline, costs are forecast is at $11.00 to $12 per ton, continuing to improve on full year average costs.
Malcolm: Other U.S. thermal shipments are expected to remain steady at 3.9 million tons.
Malcolm: Average realized prices are anticipated to be $52.40 with costs at $46 per ton.
In summary, we completed the repurchase of another 4.5 million shares.
Malcolm: generated over 260 million in available free cash flow. Our setup for even stronger operational fourth quarter, and we continue to make excellent progress in developing since Shurian. Soon to be a quars stolen of metallurgical coal asset and P.B.D. is global coal or volume.
Operator, I'd not like to turn the call over for questions.
Well, now begin the question and answer session. To ask a question, you may press star, then one, on your telephone keypad. If you're using a speaker phone, please pick up your hands at before pressing the keys.
Speaker Change: If at any time your question has been addressed and you would like to withdraw your question, please for star than two. At this time we will pause momentarily to assemble our roster.
And the first question comes from Lucas Pipes with the Riley Securities. Please go ahead.
Lucas Pipes: Thank you very much operator, morning everyone. My first question is on the shorty side and I wonder if you could remind us.
What the bonding obligations are today with the surety providers under right off that obligation and how that might evolve over the next couple of years and to what extent additional capital might be unlocked there. Thank you very much for your respect.
Good morning, Lucas. It's Mark. A couple of things that are thought on the shirt. Nothing has really changed from what I've said previously.
We don't expect the bonding requirements to change significantly nor the level of collateral against it. I will remind you we did get about $110 million in bond reductions early first half of the year and also got some of that collateral back. But that's kind of our runway right now and outside of any changes in laws or changes in our footprint.
We wouldn't expect to see anything substantially different.
Speaker Change: I appreciate that. Thank you Mark. On the Metcole costs, I think, costs have been trending a little bit more towards the higher end of guidance and I wanted to what extent one of like
The Lock on the Warrior River contributed to that development. And so as we look out to 2020, five is the Q4 guidance, maybe more indicative, or other other moving pieces to.
Lucas Pipes: to keep them.
Malcolm: and the other.
Yeah, a couple of thoughts Luke is one. We're not providing 25 guidance yet just to be clear. So I won't speak to that. I do think we've been toward the higher end of our guidance for the segment as a whole.
I think in fourth quarter you'll see that Metraff's production is going to come down a little bit efforts or really incredible third quarter, sole great production is going to be going up. MetNet there's going to be some additional production and you're going to see a modest decrease in those cost quarter over quarter.
But for the full year we'll probably come in towards the, you know, toward the, you know, or come in, meet a little bit towards above the midpoint on cost guidance for the segment.
Thank you Mark. I want to quickly touch on Capitol Returns and Capitol Allocation.
A lot of your peers have taken a step back from buybacks given to softer met cold price environment today. You had a strong free cash flow quarter in Q3. You pointed to...
and the solid operational outlook for Q4. So should we anticipate continued activity on the buyback front or does this market environment?
have an impact on how you approach, couple returns. Thank you very much.
Chair Lucas, first, you're right, we completed that $100 million share we purchased in the quarter. I mentioned last quarter, opportunistically we saw an attractive price point. We could maybe accelerate that by a map based on the payroll all look for the second half.
We were able to accomplish that getting almost four and a half million shares by back at an average price of 22.55 So really please live a third quarter performance.
You know, looking out last quarter we talked about $23 million of free cash flow in the second half of the year and really had a tremendous third quarter of Jim D'Aula that.
in the third quarter. That was Health at Working Capital as I mentioned in the Prepared Reg Marks, you know, the Soul Creek Insurance Recovery Collection as well as a reduction and we see what was really really based on that.
Malcolm: Going forward, we're committed to the 65-100% of free cash flow. Nothing's changed there, we'll continue to look at it, we'll see where fourth quarter comes in with realized pricing.
You look at year to date, we're probably about $100 million ahead of you to date and it was really the celebration from the third quarter. But stay tuned and we'll take a look at it in the fourth quarter known that our program does have the flexibility to step out in front of it if we see them opportunity to do so.
Mark, I appreciate all your color to you and to team all the best of luck.
Thanks Lucas, appreciate it.
Speaker Change: The next question comes from Catcher, Jansick with BMO Capital Markets. Please go ahead.
Hi, thank you for taking my questions. Maybe starting on the Wombos shutdown next year.
Am I understanding this correctly? So the volume next year on the C-born Thermal is going to be down 400,000 tons
Speaker Change: So we, I got to the good morning by the way Jim Grech here. We, you know, we haven't given guidance for, uh...
Next year on the tidiness, but we're saying you'll be here in total for Wombo underground itself.
The typically it's running about 1.2 million tons a year and next year with the acceleration of the closure that might be at 800,000 tons.
And can you remind me, is that that's Newcastle, great, correct?
Malcolm: Yes.
So there could be a negative mix shift a bit next year as well.
Speaker Change: That's possible. Yes.
and okay, thank you and then maybe on the show quick so
Speaker Change: I think you mentioned 120,000 tons of worship in three-q and there should be a meaningful and material increase in 4q. Can you provide a little more color in how much you expected to ship in 4q?
Speaker Change: Yeah, it'll be around 6 to 700,000 tons.
Speaker Change: and in which Mark is there in targeting?
Speaker Change: Well, it's going to be a component of spot in there, and as I said it more remarks, you know, the clearing market for spotting's charter on South East Asia right now.
and it's because Bob Marker, if we look at the high wallet pricing, it hasn't really improved that much so it's so pretty subdued.
is the Stacey Valier in selling into the spot market of these prices.
Speaker Change: We'll look at him.
There's the high ball aid market, which is the FAB market. And then there is the CFR market. And like, when I go to this part of the Centurion presentation, I spoke about where all the things are now in the area. And that's where the tons need to go.
So if you have a look at September when you look at Asian processing, as I said, we're down to $180 if I've been Australia and as we see the dietary contents in 200.
But if you're selling high-volt indoor Asia, you have to sell on really on a CFR basis. So what that means is constant FOMB for spring.
and Sharfari, I can probably give you a word to example here to help you get your quite east around that at the moment. Pay your good.
is quoted as the Levittian China that's Australia, from Australia, which rate had $250 a ton.
Speaker Change: and then if you look at Ginaur Holtz
Generally look at normal alcohols, they could probably achieve somewhere between 80 and 90% of that price, delivered.
So if you do that math, you come to a number, let's call it $193.
and then you take great off that and that's the freight from the USA to John.
and that would tell you that today you get to be price for a good range of a lake hole is around $143 a ton.
Does it make sense? As I said in more remarks, that is where the demand is. So if you want to keep going, that's the level and that's where you need to go.
Okay, thank you. I'll hop back into the queue.
Next question comes from Nathan Martin with the Benchmark Company. Please go ahead.
This thing's operator tomorrow everyone congrats on the third quarter results.
We'll start on the TAPX front mark. You guys called out 50 million dollar TAPX increase with full year 24.
Looks like 10 million of that was sustaining, so maybe first what's the driver there and then the other 40 million growth is that all centering and how does that accelerated spend its centering impact the timeline going forward?
Yeah, you got your math right there, Nate 10 million is probably sustaining that mostly is component capital, so componentized items on equipment's fleet.
that really made this, but just based on the dollar value in the life we capitalized with this capital. If you had that tend to sustain, you may probably put us toward the top end of our annual range of 150, maybe a little bit below, but closer to that 150 now.
of the growth, 30 million in that is ensuring maybe some of the other ten is some of the mama will open cut and really pulling that forward from next year into this year.
Again, that's a requirement. S. and Churian, continuing the development rates continue to exceed expectations doing really well. You know, the part of that is continuing to have to end getting another minor kind of a rental or a hired continuous minor in there.
to keep those developments going up. They continue to do exceed expectations of the mention, but to early to tell or commit to any sort of accelerated timeline and bringing that long-wild into production.
Okay, perfect Mark, appreciate those thoughts. With the Wambu Open Cut, couple of being spent there, your expectation that the time from the Open Cut will all set some of the underground tonnages that's expected to fall off last two weeks.
Speaker Change: Yeah, I do think that next year we're going to see a little bit better production and more production out of the open-cut at Wombo. Again, this spend was kind of orchestrated to get that fully ramped up and in-reclosed there, but we should see you over your increases in production.
Speaker Change: and that will help us that some of the lower underground productions you mentioned.
Okay, got it off of a what kind of base this year is the expectation to be?
I'm sorry I didn't quite catch that meat.
The Wombo OpenCut Base level production expected this year. You said, next year hopefully it would increase your year. So what kind of base we're looking at for the 24th.
I don't know, we're probably 3 million tons and going up from there.
May we will see a 10% increase.
Okay, perfect, thanks Mark. And then maybe Shitton of the show, Creek, specifically on the last lock.
Speaker Change: I appreciate your comments there. What I heard was a six-in-place is probably more temporary and not long-term. Is that correct? And if so, do you guys expect any impact of future impact to show creep sales if and when more work is you've been done there?
and they did as you said the repairs are temporary.
According to the Army Corps of Engineers, we're not expecting as they do the work to make the permanent repairs to really impact the shipments.
They're going to tie the work and work with the transporters on the river to minimize or have anything that's even negligible impacts on the ship and the future. So that's our expectation that not have any negative impacts as these repairs are done in the future.
Okay, Jim, thanks for that. Let's go to here. And then maybe just finally on some sharing and congrats again on the International Coal there and then washed.
and as you said, it looks like first coal sales in here in the fourth quarter. How should we think about the sales of those development times between now and when the long one starts up as potential volumes, costs, etc.
Speaker Change: The End
Speaker Change: i
Speaker Change: So, you...
I would have said that next year we'd sell probably up around 490,000 times in 2020 part.
Speaker Change: That's not guidance, that's what I estimate and at that level that we're probably in great to say, six shipments, so maybe a ship in every two months, something like that.
and with that tonnage, you know, floated in normal P&L with that be reflected in C-Worn match-shittments.
Speaker Change: Yeah, it'll be wrecking monsters revenue to the revenue care.
Perfect. Our very helpful guys appreciate the time and best luck here in the fourth order.
Nick Nail: Nick Nail
Speaker Change: And the next question comes from Chris La Semina with Jeffries. Please go ahead. Thanks, Operator. Thanks, guys. Take a mic question. So just quickly on Wombo and I apologize if you got to this earlier, I just have to on the quote late. But what was the event that I contribution in the third quarter from Wombo?
Chris, I don't have any fun of me, the cream to two, three hundred grandmines are thermal mines.
Speaker Change: We'll just look at it, sir. Is there a ballpark now being given us an ad on or now?
Speaker Change: No.
Speaker Change: Secondly, just in terms of capitalification, I mean, you guys obviously have a very strong balance sheet, you're generating cash flow, you're going to see the buy back in the quarter.
There's also, you know, obviously some cool acid cells that are being considered in the market today and I'm wondering how you think about it
Just emanating in general, and should we look at the countryman's all-byback in the quarter as a signal that maybe you're not looking at aggressive M&A opportunities or if it kind of, you know, you want to keep those options open if something very compelling arises you would by team involved.
Yeah Chris, Jim here and as is what our past practice we don't make any comments on M&A activity so I'm just going to leave it at that thank you.
Okay, so far, thank you, thanks for having us. Good luck.
Thanks Grech.
Again, if you have a question, please press star then one. Our next question comes from again, Lucas Pipes, with Buraly Securities, please go ahead.
Thank you so much for taking my follow-up question.
Lucas Pipes: Jim, with the election next week, I wanted to ask how much of a priority it is to reopen the PRB.
Lucas Pipes: for Lisa's. I understand it's not a priority today in terms of your capital outlaced, but with stronger power demand growth.
Advancements in CCS for example, maybe one day it will make sense again. So how would you engage with the new administration on this topic? Thank you very much.
Well, Lucas, I'm going to speak from a people-day perspective, not an industry-wide perspective, but we have, you know, Lisa's in reserves in place for many decades to come, so our position there as far as Lisa holds and, and reserve holdings is very, very strong. So if the demand does increase.
and I'm going to clean up our projections. We can name it in that very easily with the reserve base that we have. There's nothing more that we need to do with that.
Lucas Pipes: i
Well, if you're talking about absinity, over watching from about absinity being to increase.
Tunnage levels, we have secured already with the leaves holding that we have a testament by optionality. We can increase the output in the PRB if the demand and the advocacy of the economics are there with the leaves holding we have for decades to come still.
Yeah, I think I'm doing it in half-tons in front of us under the wheel. So, you know, Lisa's not an issue for us for a project.
I appreciate that perspective. Thanks again and again, best of luck.
Speaker Change: and then Krech again.
This concludes our question and answer session. I would like to turn the conference back over to Jim Grech for any closing remarks.
We're imposing I'd like to thank our dedicated team for the hard work and focus on our first value safety. We've very pleased that two of our operations shall be in our subindo. We've seen the prestigious Sentinels of Safety Award from the National Mining Association for their outstanding safety performance.
Speaker Change: Additionally, I'm Mr. Pollitton and we'll continue on my as a recognized figure outstanding safety chief in the New South Wales mining, health safety and community awards.
Lucas Pipes: The British and the elected banker, Sherholder's customers vendors for their continued support.
We've removed focus on delivering value throughout operation of excellence and the successful execution of our strategic priority. So I pray to that concludes our call.
The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.
Lucas Pipes: The The