Q4 2024 Peabody Energy Corp Earnings Call
Good day and welcome to the Peabody Q4, 'twenty 'twenty four earnings call all participants will be in listen only mode.
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Vic Svec: I would now like to turn the conference over to Vic Svec. Please go ahead.
Vic Svec: Well, thank you operator, and good morning, everyone. Thank you all for joining today to take part in Peabody's fourth quarter Conference call.
Remarks today will be from Peabody's, President and CEO, Jim Grech, CFO, Mark Sperbeck, and our Chief Marketing Officer Malcolm Roberts following their remarks of course, we'll open up the call to questions now.
Vic Svec: Now we do have some forward looking statements information todays and you'll find our statement on forward looking info in the release, we do encourage you to consider the risk factors that we reference here along with our public filings with the SEC.
Richard: And I'll now turn the call over to Richard.
Richard: Thanks, Vic and good morning, everyone.
Richard: Peabody had a strong finish to 2024, mark by a highly productive quarter that sets the foundation for multiple years of substantial growth and value creation.
Richard: Consider that in the past three months, we turned in a solid fourth quarter results, even in the face of some geologic and pricing challenges.
Chip the first called the market from the Centurion mine.
Richard: Agreed to buy multiple premium hard coking coal mines from Anglo American.
Richard: Yeah.
Richard: We entered into an agreement with clean energy leader R. W. E to develop renewable energy projects and reclaimed mine lands.
Richard: Completed a year in which we returned $221 million to shareholders, while continuing to reinvest in the business.
Richard: But a new 140, plus you're a company record for lowest accident rates.
Richard: Reclaimed 70% more land than we disturb while freeing up more than $100 million in reclamation bonding obligations and <unk>.
Richard: Again achieved the top rating for governance by ratings firm I S. S.
Richard: We know of no other coal company that can cite that record of recent positive momentum.
Richard: And while it is an impressive list by no means can we say that we're hitting on all cylinders yet.
Richard: Case in point.
Richard: Seaborne met coal prices are off 45% in the past year as we moved through the low after the cycle with expectations of improvement later in the year.
Richard: U S coal demand hasn't yet caught the uplift there can be expected from growing domestic power demand, which we believe will occur over time.
Richard: And we've worked through geologic challenges that our 20 mile mine with increased production just now taking hold.
Richard: I'll spend a moment updating you on our major actions to transform Peabody into a company focused on serving growing met coal demands at Asian Steel Mills.
Richard: Late in the quarter Peabody shipped its first cold from the Centurion mine to be Southeast Asian Steel mill.
Richard: Now I have for continuous miners in coal and Centurion Southern district.
Richard: Spec to continuous miners to enter cold in the northern district in the third quarter.
Richard: For 2025 were looking at half a million tons of development call from Centurion.
Richard: Out of a projected $3 5 million tons in 2026.
When longwall production in the Southern District begins.
Richard: I'm also pleased to report that Peabody is planned acquisition of premium hard coking coal mines in Australia from Anglo American is progressing well.
Richard: Since signing the agreement we've been active on a number of fronts.
Richard: We've received regulatory approvals from several jurisdictions.
Richard: Advanced the contractual preemption process.
Richard: Started the permanent financing process.
Richard: And have begun in depth integration planning.
Richard: We're now targeting completion of the acquisition next quarter.
Richard: Obviously subject to cleaning the closing conditions.
Richard: I'll remind investors that the many strategic and financial aspects that make this transaction so appealing.
Richard: First of all this positions Peabody as a leading seaborne met coal supplier.
Richard: On a pro forma basis, we expect three fourths of peabody's EBITDA in 2020 six to come from metallurgical coal.
This was also an acquisition that we believe is accretive to cash flows across all periods.
Richard: The transaction boosts, both coking coal quality, improving realizations and mine lives with averages of more than 20 years.
Geographically, we will have the logistics advantage of having most of our met coal production and sales in the Pacific rim.
Richard: As global steel production continues to shift to Asia.
Richard: We are highly confident that there are some $100 million a year in synergies to be captured post acquisition.
Richard: Finally, we believe that the strong cash flows of the acquired assets will accommodate continued shareholder returns and lead to a favorable re rating of the stock.
Richard: From the acquired mines, we're projecting 11.3 million tonnes of saleable production, our first full year of ownership in 2026.
Richard: Since our November announcement, our confidence in those numbers has only grown.
Richard: For example, a number of operational improvements are being implemented by Anglo.
Richard: And as we speak the new longwall at more than by North is being ordered.
Richard: Yeah.
Speaker Change: In a moment I'll turn the call over to Malcolm Roberts, our Chief marketing officer to talk through the global coal markets.
Speaker Change: As a lead in I would note that the U S is experiencing the strongest confluence of policy and commercial tailwind that we've seen in more than two decades.
Speaker Change: Consider these facts.
Speaker Change: First of all.
Speaker Change: After some 15 years of flat electricity load growth in U S utility experts and industry observers are now expecting 2% to 3% annual load growth in coming years due to data centers and increased electrification.
Second <unk>.
Speaker Change: Following multiple years of premature retirements and coal fuel generation, we've now seen deferrals in retirement plans extending the lives of 51 coal units in 17 states constituting 26 gigawatts of power.
Speaker Change: To power 20 million homes.
Speaker Change: Third we have a new administration that has vocally protocol and is already taking steps to facilitate common sense policies to assist our utility customers. While also encouraging greater exports of LNG to Europe.
Speaker Change: Fourth we are seeing a favorable environment to increase utilization of existing coal plants.
Speaker Change: Which ran at 72% of capacity on average early last decade.
But most recently, we're only averaging 42% utilization.
Speaker Change: And finally, we have new entrants into merchant power generation I'll look to change up the dynamics of recent years.
Speaker Change: Payback Peabody itself has been approached by household named private equity funds, but are looking for creative means to match up reliable low cost coal plants with growing data center needs.
Speaker Change: Our backfill generation to feed a capacity hungry grid.
Speaker Change: Having covered U S markets Malcolm I'll ask you to complete the discussion with seaborne supply demand dynamics.
Speaker Change: Thanks, Jim you've given a good eyes, if you view as policy and market trends those trends along with the strong winter weather have drawn Dan stockpiles into March ended up customers.
Speaker Change: U S thermal coal production is largely spoken for during the first half of the year and we expect to see our customer base come to market for additional volumes as the progressions in our discussions with customers that anecdotally confirming that the narrative of data centers driving electricity demand growth is real now I'll turn to.
Speaker Change: What we're seeing in global seaborne market, starting with met coal need to seaborne markets remained well supplied as the Chinese may sneak economy remained soft shown as apparent steel consumption declined by approximately 4% in 2024 to just under 900 million tons.
Speaker Change: Leading to net steel exports to increase by 30% to the horse level since 2015.
Speaker Change: Another way of viewing steel from my perspective is it's fallen metallurgical coal so China strong steel exports translated into otherwise weekend met coal demand elsewhere steel production outside of China.
Speaker Change: Has remained largely steady as a result of growth in India. How are the margins have become challenged.
Speaker Change: Like most observers, we don't view, China as the growth engine for met coal demand growth over time.
Speaker Change: That role was likely to be plagued by India and in 2025, we expected an 8% increase in Indian steel production underwritten by several new blast furnaces coming online.
Speaker Change: From a supply perspective, we're seeing some tightness in the premium low volt PCR segment.
Speaker Change: In the coking coal segment there notable disruptions in high vol, coking coal production, including Bon pause and bankruptcies.
Speaker Change: That is partially offsetting some of the easing of demand from Atlantic Baas.
Longer term, we anticipate the demand and supply fundamentals to drive increasing price spreads between premium hard coking coals and lesser grades which of course is the thesis underpinning the development Hope this is Julian.
Speaker Change: And to our premium hard coking coal acquisition.
Speaker Change: Turning to seaborne thermal markets to wrap up 2020 full China increased total coal imports to 543 million metric tons of 14, 4% increase from 'twenty to 'twenty three.
Speaker Change: <unk> imports of Australia coal increased by then.
Speaker Change: 50% during the same period.
Speaker Change: The increase in Chinese imports was the key contributor to global seaborne demand growth during 2024.
Speaker Change: Within the global seaborne thermal market, we've seen a mix in the northern hemisphere of cold weather in the Atlantic and warmer winter weather in Asia.
Speaker Change: Recent demand imports have been mixed with stockpiles in jurisdictions, such as China and India Hot.
Speaker Change: Caught the.
Speaker Change: Our attention is now turning to industrial activity following lunar new year brakes in China, and Asia more generally in coming weeks.
Speaker Change: As the year progresses, we'll see how Europe restocking of natural gas my influence LNG pricing and the relative competitiveness of Australia and high energy coal. We will also observe how recently announced trade tariffs influenced seaborne trade plays as relative cost competitiveness competitiveness of U S coal.
Speaker Change: Exports to China are likely impacted that's.
Speaker Change: That's a brief review a review of the coal market dynamics, a leap leave it there for now and welcome the opportunity to provide further details in Q&A.
Speaker Change: And now I'll turn the call over to Mark.
Mark: Thank you Malcolm and good morning, Jim noted, our strong finish to the year and I'll provide some additional color.
Mark: In the fourth quarter, we recorded net income attributable to common stockholders of $31 million or 25 cents per diluted share and adjusted EBITDA of $177 million.
Mark: The company generated $121 million of operating cash flow from continuing operations.
Mark: This contributed to a full year net income attributable to common stockholders of $371 million and adjusted EBITDA of $872 million.
Mark: The company generated 613 million of operating cash flow from continuing operations.
Mark: In 2024, we returned $221 million to shareholders through share repurchases and dividends and advanced Centurion through its first coal shipment in the fourth quarter.
Mark: I would note since restarting our shareholder return program, we've returned 600 million to shareholders and invested 500 million in the development and expansion of a sincere Ian.
Mark: At December 31st Peabody had 700 million of cash and available liquidity of $1 1 billion.
Mark: And our reclamation obligations remain fully funded.
Mark: We believe this financial strength and balanced capital allocation, where best reward our shareholders over time.
Mark: They also position Peabody for Anglo acquisition, marking a deliberate progression in peabody's financial and strategic transformation.
Mark: Looking ahead peabody's capital allocation will be heavily shaped by our pending acquisition.
Mark: As a reminder, we have structured the transaction with a combination of upfront deferred and contingent payments.
Mark: This is all designed to enable the anticipated cash flows from the acquired assets to self fund the transaction.
Mark: Set up a higher baseline for sustainable shareholder returns.
Mark: Let's now review the segment results.
Mark: In the fourth quarter.
Mark: Seaborne thermal recorded a $112 million of adjusted EBITDA and margins of 36%.
Mark: Tons shipped were ahead of expectations and that was primarily due to higher than anticipated production at one of the underground.
Mark: Seaborne thermal cost per tonne remained stable with the third quarter, beating expectations.
Mark: For the full year, the seaborne thermal segment reported 430 million of adjusted EBITDA shipments increased nearly a million tons from 2023 and costs were down about a dollar per ton, resulting in EBITDA margins of 35%.
Mark: The segment generated over $350 million of free cash flow.
Mark: The seaborne met segment reported 23 million of adjusted EBITDA in the fourth quarter.
Mark: Shipments increased 500000 tons compared to the third quarter inline with expectations.
Mark: Cost per ton improved by a better than expected, 12% due to higher than anticipated production at Shoal Creek as well as a weaker Australian dollar.
Mark: This was partly offset by lower production of copper Bella.
Mark: The average realized price was down about $21 per ton compared to last quarter due to a higher mix of Shoal Creek sales.
Mark: We also saw a benchmark prices for PCI in high vol, a coals each down about $15 a ton quarter over quarter.
Mark: For the full year, the seaborne met segment reported $243 million of adjusted EBITDA.
Mark: Shipments increased 400000 tons year over year to $7 3 million.
Mark: The segment achieved EBITDA margins of 15% a favorable result, considering that market prices pushed realizations down at $44 per ton in the year.
Mark: Switching to U S thermal mines generated $93 million of adjusted EBITDA in the fourth quarter and that resulted in $72 million of free cash flow.
Mark: <unk> mine shipped 23 million tonnes, well ahead of expectations.
Mark: Continued operational discipline kept costs at 11 50 per ton the same as last quarter and that let us maintain the same 17% margins in the fourth quarter and generated 53 million of adjusted EBITDA.
Mark: The other U S thermal mines delivered $41 million of adjusted EBITDA.
Mark: In the Midwest, we reached contractual agreements with certain customers to offset lower 2024 shipments.
Mark: Production was 200000 tons less than expected as the previously disclosed geological conditions at 20 mile required us to step the longwall around Iraq lens.
Mark: We've turned the corner on that issue and longwall production recently resumed with the mindset for a strong 2025.
Mark: Together the U S. Thermal mines produced 289 million of adjusted EBITDA in 2024, and required just 54 million of capital, resulting in $235 million of free cash flow.
Mark: The last comment I'll make on Q4 results relates to other operating costs, we recorded a $41 million noncash charge for the Remeasurement of our Australian balance sheet at year end due to a lower eight dollar exchange rate and.
Mark: The weaker Australian dollar benefited operating costs throughout the quarter, providing a bit of a built in natural hedge to earnings.
But as the eight dollar weakened throughout the quarter. The period end Remeasurement resulted in a significant net negative impact to Q4 EBITDA.
Mark: Looking ahead to 2025, I will briefly review guidance for the full year.
Mark: We see that some analysts are including the Anglo acquisition and their 2025 estimates for Peabody, but our guidance excludes contributions until the transaction is complete.
Mark: This year seaborne thermal volumes are expected to be lower than 2024 due to reduced production at Wilton young and the closing of the Huambo underground mine mid year, which will be partly offset by higher production from Ramos surface operations.
Mark: Additionally, domestic cost plus sales requirements are down another 400000 tons in 2025, allowing us to achieve export pricing on that volume.
Mark: Shipments are targeted to be $14 7 million tons, including $9 3 million export tons.
Mark: Costs are projected to be consistent with 2024 levels at 47 to $52 per ton.
Mark: Yeah.
Mark: Seaborne metallurgical volumes are projected to increase over 1 million tonnes to eight and a half million dollars, primarily due to higher volume and Shoal Creek and the continued ramp up at century.
Mark: This occurs even as we work through the high wall stability challenges that copper Bella as we reconfigure the mine for an optimal long term solutions.
Mark: Segment costs are targeted at 120 to $130 per ton in line with last year.
Mark: And the P. R. B we are forecasting.
Mark: Casting shipments between 72, and 78 million tons and currently have 71 million tons priced at $13 85.
Mark: Costs are expected to remain mostly flat with 2024 levels at 12 to $12.75 per ton.
Mark: Other U S. Thermal volumes are expected to be about 14 million tons, we have $13 6 million tons priced at $52 and expect costs in the range of 43 to $47 per ton consistent with last year.
Mark: Total capital expenditures for 2025, our estimated at $450 million, including $280 million and project capital primarily for the continued development of since you're in.
Mark: In summary, we delivered on our 2024 goals.
Mark: We remain committed to financial discipline and growing free cash flow per share.
Mark: 2025 promises to be a busy year, they will be shaped by the Anglo acquisition advancing Centurion in U S policy.
Jim: For more on that I'll turn the call back to Jim.
Jim: Thanks, Mark I'll turn briefly to Peabody's main focus areas for the new year.
Jim: It's fair to say that we begin 2025 with an ambitious agenda.
Jim: Our first focus is an every year item the relentless pursuit of safe productive and environmentally sound operations.
Jim: Our second focus this year is to continue to ramp up the flagship Centurion mine on time and on budget.
Jim: I am pleased to report that development is running ahead of schedule and all systems are go for our planned longwall start up early next year.
Jim: Our third priority is to complete our premium hard coking coal acquisition.
Jim: Which together with Centurion will transform peabody's product and financial profile.
Jim: Priority number four is to serve growing Asian thermal coal demand through our low cost Australian export platform with longer term mine extensions teed up.
Jim: It's no surprise that the international Energy Agency recently reported that last year the world used a record amount of coal.
Jim: 877 billion metric tons.
Jim: Presenting more than one time for every man women and child on Earth.
Jim: I also projected global coal use will continue to grow for the next several years.
Jim: Our fifth priority is to leverage our low cost U S coal production to capitalize on emerging favorable policy and commercial themes.
Jim: And that dynamic continues to unfold as we speak.
Jim: And finally, we work everyday to enhance long term cash flow per share creation.
Jim: While the actions we are undertaking today.
Jim: Our enhancing our shareholder value proposition in three areas.
Jim: Earnings growth.
Jim: Sustainable shareholder returns and multiples expansion over time.
Jim: And it's fair to say that our share prices, reflecting none of the potential uplift in valuation from our recent actions.
Jim: I've never been more optimistic about the prospects for Peabody.
Jim: Look forward to seeing those positive actions translate into tangible share price appreciation as we continue to execute.
Jim: Operator, we're now ready to take questions.
Speaker Change: We will now begin the question and answer session to ask a question you May Press Star then one on your telephone keypad, if youre using a speakerphone. Please pick up your handset before pressing the keys if at any time. Your question its been addressed and you would like to withdraw your question. Please press Star then two.
Jim: At this time, we will pause momentarily to assemble our roster.
Speaker Change: Okay.
Speaker Change: The first question comes from Nick Dials with B Riley Securities. Please go ahead.
Speaker Change: Thank you operator, good morning, everyone.
Speaker Change: My first question is around the preemption rights process.
Speaker Change: I was wondering if you could.
Speaker Change: Add any color around what those conversations have looked like and I had the same question for any potential stake sale is there a preference for incremental stakes in the Anglo assets versus.
Speaker Change: He stake at Centurion, Thank you very much.
Greg: Hey, Nick Good morning, Jim Greg here you.
Greg: You know and the unnamed preemption question that as part of any <unk>.
Greg: Sales process, it's a typical contract term when you have joint venture partners.
Greg: Progressing well the timeline for the deadlines on that at some time in mid March.
Greg: Expect that to that deadline to come in past and we will move forward with the closing of the.
Greg: Of the transaction.
Greg: Hmm.
Greg: On the asset sales could you again ask that question again, so I'm sure we respond to it correctly.
Speaker Change: Yeah. Thanks, Jim that's that's very helpful and just on the asset sales I was wondering if there would be a preference for additional stakes at the Anglo assets versus one at Centurion.
Greg:
Greg: Nick we would if anybody if the discussions lead to fair value full value offers on the asset sales. We look at some minority sales are in those assets, whether it's with the the Anglo assets or Centurion. So we are anticipating that to be part of the financing process that we have here.
Greg: For for the acquisition and some of those steps have been undertaken already and but it's too early to call what if any would be the results of that.
Greg: Okay.
Jim: Got it Jim that's very helpful shifting gears.
Speaker Change: Met guidance of $8 5 million tons at the midpoint I I assume around half a million tons could come from Centurion, but how should we think about bridging from the 2024 level to 2025 guidance.
Jim: And then similarly on the cost side.
Speaker Change: Costs are up at the midpoint.
Speaker Change: 2024, so how should we how should we at bridge does as well. Thank you very much.
Speaker Change: Good morning, Nick and welcome to the calls I read your note. This morning, and you look like you're model was perfect. So congratulations I think youre doing a better job that Lucas already in your first call.
Speaker Change: And I say that tongue in cheek I'm sure Lucas is listening in so.
Speaker Change: The answer to your question on seaborne met you're right. We're up we're up over a million tons and about four four to 500000 more year over year as that's in Chilean Shoal Creek is also up about 600000 tons. So that's the delta there as far as costs go we are forecasting mm 120 to 130.
Speaker Change: Our full year 2004 was 123, so pretty consistent I would say, there's two things that are mainly to be a bit higher and that is one as I mentioned in my remarks, we're resetting comp abella from optimal long term solution.
Speaker Change: We're gonna be moving more wastes about 6 million bank cubic meters more year over year I don't forget we had a pretty weak Aussie dollar as well.
Speaker Change: 24.
Speaker Change: Yeah.
Speaker Change: Mark I appreciate all the color.
Speaker Change: Okay.
Speaker Change: Are you and the team continued best of luck.
Speaker Change: Thank you.
Speaker Change: The next question comes from Nathan Martin with the Benchmark Company. Please go ahead.
Nathan Martin: Thanks, operator, good morning, everyone.
Vic Svec: Good morning Nate.
Vic Svec: Maybe just the just one more question on Angola.
Speaker Change: NGO acquisition.
Speaker Change: You guys mentioned several regulatory approvals have come already.
Speaker Change: What's left.
Speaker Change: They're often standpoint that could hold you guys up beyond that targeted two to close them.
Nathan Martin: Yeah, Nate a week.
Speaker Change: We have some men and the rest are in process and the various international ones and I think we have one left in Australia.
Speaker Change: The initial indications as is everything is going just fine with them and the timing of those regulatory approvals is anywhere from a later in February to May be end of March 1st week of April so spans that timeframe. So just like with the preemption as you know we just got to work through the process. There is a timeframe involved we're stepping through it and.
Speaker Change: Right now everything looks looks good to us Nate.
Nate: Okay sounds good Jim and then maybe.
Nate: Coming back to the preemption or really just the minority interest sale is your preference changed at all or how should we think about the balance between minority interest sales and debt for the transaction.
Nate: Well I'll just have a comment on the on the sales process and then I'll, let mark get to some of the details but.
Nate: No as I said, we started the beginning of looking at potential minority sale positions in the Anglo assets and Centurion and we've had some very robust interest in <unk> and the assets are coming from many different different sectors in the U S Australia and international so.
Nate: Again, I'm not going to sit here and predict what's going to happen because everything's in negotiation, but I will say that its been very robust interest Ah at the beginning here of this process.
Nate: Need a not a lot has changed from when we announced the transaction and our plans for the permanent financing.
Nate: The $1 7 billion upfront payment and we expect to be funded.
Nate: Primarily with debt you know the lion's share being high yield secured notes.
Nate: You know we've talked about the project level equity with the minority stake sales.
Nate: As being another key option there.
As Jim mentioned those discussions are underway.
Nate: Timing as well as magnitude of those sell downs become back this year.
Nate: And then lastly would you know potentially round out with with convertible notes or other financing so not a lot's changed I will say that that process is underway.
Nate: Going well in the early stages through strong inbound interest.
Nate: We continue to test market capacity and we're highly confident we'll arrange the financing along the lines, we originally announced.
Nate: And mark any commentary around potentially need to issue common equity I know that's a question investors are focused on.
Nate: Yeah, you know I'd, probably you know.
Nate: Echo Jim's comments, there you know reflect our belief in a lot of the value and Peabody and the pending acquisition are not currently reflected in our share price.
Nate: Unfortunately, we don't get to pick the time when these types of assets become available and we recognize you know spot coal prices are down.
Nate: But we didn't buy these multi decade assets for short term changes in spot prices, which are which can influence the KOL equities.
Nate: Our number one goal remains to enhance shareholder value and you do that by increasing free cash flow per share.
Nate: We stimulate free cash flow.
Nate: Out of the acquisition you know our P 50 case without Grosvenor.
Nate: And.
Nate: And over $800 million of free cash flow in the initial five years after all of the deferred and price contingent consideration.
Nate: Effectively paying one half of that initial consideration off leaving us with a very manageable permanent debt slice.
Nate: Of the capital stack.
Nate: And a significantly higher free cash flow base to provide sustainable shareholder returns. So we recognize the need to to to appreciate the volatility in seaborne coal prices and remain prudent to ensure financial resiliency.
Nate: Throughout the price cycle, so we can execute the strategy.
Nate: You know coal equities have all traded down since the announcement and.
Nate: We're going to take a good hard look at it it's a it's the last on our priority list, but we have all the tools in the kit and we continue to assess what the market will provide.
Speaker Change: Great I appreciate those thoughts guys and then maybe just one final below even Malcolm out I know you touched on this briefly in the prepared remarks, but.
Speaker Change: Coming back to China's new 15% tariff on U S coal imports, obviously, the bulk of peabody's export sales come from Australia, but how you see that tariff potentially impacting your business as well as the seaborne markets in general.
Speaker Change: Okay.
Speaker Change: Yeah look you know one thing with the market sees is there a little bit like a balloon if you push something in one spot it comes out somewhere else and so U S. Exports are getting pushed in terms of the Prost competitiveness into Asia and for us.
Speaker Change: Well, we've got about 600000 tons of product that went to China last year and that would mean that if we did nothing and continued supplying to China, we'd have a 15% la crosse.
Speaker Change: And it really doesn't help win win that's the clearing level and that's your alternative because other customers now when you look to show to them in Asia will be looking at what that alternative vs.
Speaker Change: It's positive for Australia in the sense that Australia becomes more and more competitive in Asia, which is the gross base.
Speaker Change: For met coal demand, but for us it each probably not such a big issue over the block not to have seen this happen, but look the market readjust might be there.
Speaker Change: It might be more product go to use product go to India.
Speaker Change: And at more strident product go to chew on it to balance that out or more U S product to Europe, and and let's just try and product to Europe.
Speaker Change: Market will work that out, but just to deal with that we need some price signals and the processing goes to Mike that readjustment could be a little bit painful in terms of S. Shoal Creek returns over up over the next quarter aside, but look lets wait and see how it all plays out but hopefully that's given you more perspective on them.
Speaker Change: Okay, that's great and just to clarify I'm not from the 600000 post the China was that from Shoal Creek Youre, referring to specifically.
Speaker Change: Yes sure.
Speaker Change: Okay got it appreciate the time guys and best of luck in 'twenty five.
Speaker Change: Thanks Nate.
Speaker Change: The next question comes from catcher Jan check with BMO capital markets. Please go ahead.
Jan Check: Hi, Thank you for taking my question, maybe going back to the met coal cost guide can you talk a bit more about how much keep a bell Ah is negatively impacting costs, because I would assume with production higher in general and met coal prices lower.
Jan Check: Caution there'll be trending more positively or lower.
Katja two things one.
Jan Check: <unk>.
Jan Check: For.
Jan Check: Q1.
Jan Check: We're guiding a little bit higher than the full year on a renewable basis.
Jan Check: Q4, we turned in a much better than you expected and anticipated that only 113, but.
We think that Q1 will be impacted by a longwall move at Shoal Creek, so a little bit higher than ratable in Q1 for the full year, we've put our guidance at 120 to 132024 came in at $1 23.
Jan Check: But as I.
Jan Check: And before it it's really just moving those additional 6 million bcm.
Jan Check: And the really weak eight dollar throughout 2024, particularly in the back half of the year.
Jan Check: That's driving the difference otherwise, we see them, we see them pretty consistent.
Jan Check: And it really really we don't see any significant inflation or other issues. So that's really the story.
Jan Check: Does that help.
Speaker Change: No no. That's helpful. Thank you and then maybe there was some reports that the Dol Ron Paul Port was impacted by weather are you seeing any impact from that.
Jan Check: Quarter to date and is.
Jan Check: Are there any issues with production given the weather currently in Australia.
Malcolm Roberts: Alright, ketchup Malcolm here Luke this is pretty normal monsoon.
Malcolm Roberts: Trough has come out of acquaintance, probably 10 days ago and moved from the normal equation too to the south and so over the past week.
Malcolm Roberts: <unk> received.
Malcolm Roberts: 400 millimeters of rain in most of the rain has remained coastal what that means is that the ability to stack coal reclaimed coal when it's very wet with Ryan.
Malcolm Roberts: He is very limited so there has been the outages at the port and there has been locked.
Malcolm Roberts: Let's call it a seven day interruption, but all view that as very short term in terms of our mines, where we've had a little bit of seasonal Ryan there.
Malcolm Roberts: But nothing new.
Malcolm Roberts: Nothing discredit remarkable interruption at this stage.
Malcolm Roberts: Okay. Thank you.
Malcolm Roberts: Again, if you have a question. Please press Star then one.
Chris: Our next question comes from Chris <unk> with Jefferies. Please go ahead.
Chris: Thanks, Operator, Hey, guys. Thanks for taking my question. So I wanted to ask about the thermal coal segments. If we look at the.
Chris: 2025 guidance, it's basically lower volumes in probably lower margins I mean costs are.
Chris: Flattish and prices are going to be I'm gonna be databank caution appear to be actually expect it to be up.
Chris: But I wanted to kind of understand where were the thermal segments will be heading after 2025. So it's helpful that we have and they've.
Chris: Given us met coal guidance for 2026 on costs and we've got obviously on volumes as well, but with thermal coal heading because its seaborne thermal volumes had been heading lower pier B, obviously heading lower and it's.
Chris: Hard to offset the negative impact of fixed cost leverage when you have declining volumes. So we're looking at thermal coal business. That's gonna have a flat to rising cost base and declining volumes and then the.
Chris: The EBITDA upside really just depends on higher prices or is there anything else going on there that could lead to margin expansion and.
And EBITDA growth without prices going up.
Speaker Change: Yeah, Chris I'll comment on the U S platform and then Marc maybe Malcolm can give you some some comments on your Australian platform.
Speaker Change: In the U S platform, the <unk> tonnage as we have the ability to move those tons up and down and.
Speaker Change: Some of the forecast that you see maybe.
Speaker Change: Maybe were pre all of the momentum we're getting currently here within the last few months in the U S market with the Trump administration.
Speaker Change: Australia, and the strong push for reliability and keeping in coal plants open the load growth.
Speaker Change: So in the U S.
Speaker Change: Market demands are there, which we think those tailwind there certainly getting much much stronger we can certainly respond with the with the tonnages in the pier B of course, we will also maintain some pricing discipline on that as well.
Speaker Change: To do that so.
Speaker Change: The U S. I would say the tonnages that you see any decreases may vary based on market assumptions and that's not the physical asset base.
Speaker Change: With that I'll, let the other guys talk about the Australian platform to them.
Speaker Change: Yeah good.
Speaker Change: Good morning, Chris just you know.
Speaker Change: Briefly on the seaborne thermal were down.
Speaker Change: This year year over year.
Speaker Change: And we kind of talked a bit about this last quarter, but just to reemphasize, we pulled about 200000 tons forward. The mambo undergone in the fourth quarter and really you know really beat and seaborne thermal in the fourth quarter.
Speaker Change: We've already announced that that underground will cease the operations mid year.
Speaker Change: So we're going to be down about 800000 tons year over year at the Mambo underground for comparison purposes.
Speaker Change: And we will opinion is declining as well about a million million four tonnes, partially offset by the bumble open cut which we expect to be up 10%, maybe another 300000 tons. There. So that's really the delta year over year and going forward, we haven't provided any guidance beyond 2025 and <unk>.
Speaker Change: For what we anticipate from the acquisition just to put a marker out there. So we haven't given any peabody guidance.
Speaker Change: You know we've talked about this in the past the Wilton young production.
Speaker Change: <unk> continues to decline until we open up pit nine and 10 and extension.
Speaker Change: A few years out, but along with that as a continued decline in the domestic ton requirements. So.
Speaker Change: So I think this year.
Speaker Change: Probably looking at a net a little over 5 million tons of export out of Wilton Young and I think over the next five years youre going to see something pretty close to that.
Speaker Change: Four eight to five on average so I really see that being pretty consistent and then as Jim mentioned the U S piece is really just demand driven.
Speaker Change: Okay. Thanks for that and then just secondly on Grosvenor I think Anglo had some comments this morning about having put some cameras down on the mining.
Speaker Change: Limited damage, which is pretty encouraging actually and I think it seems like there is potential for that to maybe come online a bit sooner than people had expected based on what's been discovered so far just could you comment on.
Speaker Change: Now your understanding of what's happening there and what your thought is about a potential restart for that asset in terms of timing et cetera. Thank you.
Speaker Change: Yes, Chris we are what's encouraging news to hear that you just mentioned about the with the Anglo NGO stated.
Speaker Change: We're really not in a good position to start putting out estimates of one will open that mine back up and the cost to do that until we get ownership of it you can really see the see the conditions firsthand.
Speaker Change: I will say that you know we do have optimism that we will be able to do that based on what we've been able to do with the Centurion mine. The experience we have and the work we have with the regulators. We certainly are well positioned to bring that mine back online, but we're not in a point, where we're going to start giving out estimates on timeline or cost or anything it's just a little too early for us because we.
Speaker Change: Just don't have enough information to do that yet.
Speaker Change: Understood. Thank you and good luck.
Speaker Change: Yeah.
Speaker Change: Thank you.
Speaker Change: The next question is a follow up from Nick Guiles. Please go ahead.
Speaker Change: Thank you very much operator.
Nick Guiles: Mark maybe in response to your earlier comments you outperformed my model pretty meaningfully in the PRP. So I'm sure Lucas took notice of that but wanted to come back to show Creek are it seems like production was stronger there, but I wanted to get your take on kind of where where realizations are today and maybe bigger picture where.
Nick Guiles: Does this asset fit in your portfolio longer term and could could a sale of the asset <unk> be an additional lever you could pull in the case of permanent financing.
Malcolm Roberts: I'll start and then maybe Malcolm can talk about realizations a bit more but yeah. Shoal Creek is really operating extremely well you know did a great great year, we expect even better things in 2025 as I noted earlier, so operationally, it's hitting on all cylinders doing absolutely.
Nick Guiles: Everything that we anticipated they would do with that with the new longwall kit.
Malcolm Roberts: Realization has been a bit of a challenge, but maybe Malcolm you want to add a little color to that.
Malcolm Roberts: Yes look sure lost.
Last call I did give a sort of a breakdown as to where those Asian realizations.
Malcolm Roberts: And obviously.
Malcolm Roberts: With Europe noted strong first at the moment a lot of our returns are coming from Asia and at the moment.
Malcolm Roberts: To be honest, you're talking and if a better return on a short term basis of somewhere between 120 to $130 for that great product that some but that's where the where the price point is if you're selling into Asia.
Malcolm Roberts: Yeah.
Speaker Change: I appreciate the color best of luck.
Malcolm Roberts: Thank you.
Speaker Change: The next question is from Matt water with the cold trigger Dot Com. Please go ahead.
Speaker Change: Hey, guys hope all is well over there I actually had a follow up question to Nick who basically stole most of my Thunder there.
Speaker Change: The realizations for Shoal Creek is that is that basically just getting whacked due to the freight differential over to Asia is that the culprit there.
Speaker Change: Yeah, Matt look there's there's two things.
Speaker Change: If you look at it at the top so you saw call Hossein stockholders were talking about those being at ground.
Speaker Change: $90.
Speaker Change: If a billion Australia and now when we talk about closer to 60. So you saw top goals with Shoal Creek East.
Speaker Change: Their returns are about $150. If they matrix then you have to take a price differential it back and converted to short tons. So that's how I get to buy a 120 to 130.
Speaker Change: Okay. That's that's all good.
Also with regard to the guidance how are you guys looking at semi soft and PCI realizations in 2025 this year.
Speaker Change: Any color on that would be really helpful.
Yeah, so within the existing anti body, hopefully, we don't really so into the semi soft market, but what I can and I wouldn't want to talk about the semisoft market because.
Speaker Change: That market is quite long at the moment, particularly out of Newcastle. So you know there's been a swing to coin from SEBI source and so that's part of what's happening with your cost of returns. So there's a lot of that what used to be that low ash semi soft product now coming back into thermal so when you think about Newcastle something less than that.
The challenge there so yes semi soft quite challenged in Europe has been.
Speaker Change: And Paul on there's been a couple of outages.
Speaker Change: We've seen some semi soft demand come out of it but really semi soft quite weak, but when it comes to place yoy. There's two types of PCR. These logo PCR Hawk quality places you are coming from on such as.
Speaker Change: Copper pillar mobile and then it's bought product piece yours, which tend to be hard volatile about it. So when you come to that premium low vol category, we see that as really caught short and challenged in.
Speaker Change: The lock in.
Speaker Change: We probably see the relative price points.
Speaker Change: And 80% for that call it combined with growth.
Speaker Change: From local hot coking coal.
Speaker Change: Got you that's that's pretty helpful.
Speaker Change: If I can switch gears for a second I think it was Jim had a.
Jim: A comment about receiving inbounds from PE firms about.
Speaker Change: Basically the power for data centers.
Speaker Change: Or is that something you guys are pursuing at all at this point and then it was kind of.
Speaker Change: Discussion point with the with telling us for a while there is that the just wondering how you guys are thinking about that at this point in time.
Speaker Change: Well, Matt first off welcome to our earnings call. We appreciate the interest and the questions and from me. So thank you for that secondly, the you know we are getting inbounds.
Speaker Change: From the.
Speaker Change: Companies that are trying to figure out how to serve this growing.
Speaker Change: Growing our electrical load demands it and do it reliably and so people are looking at coal plants and then if theyre looking at coal plants. They want to know that that has long term supply to those coal plants.
Speaker Change: With the long life and low cost reserves, we arent people naturally come to us and ask us if there's a you know.
Speaker Change: So anything that we can work together things that we would do but we supply that would be participate in that so we are getting those inbounds. It certainly picked up with the Trump administration and their favorable our stance towards coal.
Speaker Change: Don't say, there's anything imminent or breaking on that but you know from a few months ago, where we had none of that type of of interest coming in or almost none of it's been noticeably increased here in the recent month or two.
Speaker Change: Oh, that's interesting I mean, I think thats something that the whole industry can take advantage of.
Speaker Change: Going forward I did have one last sort of question, which pertains to the Anglo asset specifically their capex.
Speaker Change: If I recall correctly from the from the presentation. I think you were targeting a couple of hundred million dollars per year in Capex for the first two or three years and then it goes to a maintenance capex.
Speaker Change: Level with like 150 like $13 per per clean ton am I thinking about that right and if so what's the elevated level in the first couple of years, what was what was that being put to work.
Speaker Change: Matt you've got that exactly right those are the numbers, we've we've used.
Speaker Change: Really the initial couple of years being higher is really due to some of the objectives, we have to to get that production levels up to what we have forecasted theres, a new longwall, obviously I am more than by North which is it was a big part in 26, we've also talked about some some fleet enhancements.
Speaker Change: I kept cones and et cetera. So there's there's a handful of things getting both the north and South district go into more about north a walk and walk off capabilities that kind of stuff and there's there's so those types of things and then we do see that leveling out to about $1 50 on a.
Speaker Change: On an average basis going forward for I think we looked at it in the model probably for the next 10 years on a sustainable basis.
Speaker Change: Okay, that's great.
Speaker Change: I think that's all I have here right now, but I'll turn it back over thanks. Thanks, a lot for the color guys I appreciate it.
Speaker Change: You bet, Matt Thank you.
Speaker Change: This concludes our question and answer session.
Speaker Change: I'd like to turn the conference back over to Jim Greg for any closing remarks.
Speaker Change: Thank you operator, and thank you all for the time today.
Speaker Change: I also like to express my gratitude to the Peabody team for the many excellent accomplishments we had in 2024 and we're planning a highly productive next several months. So we look forward to keeping everyone apprised on our progress. Thank you.
Speaker Change: The conference has now concluded. Thank you for attending today's presentation you may now disconnect.