Q2 2026 Peabody Energy Corp Earnings Call

July 29, 2026

Speaker #1: And listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by 0. After today's presentation, there will be an opportunity to ask questions.

Operator: Good day, welcome to the Peabody Q2 2026 earnings 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 a touch-tone phone. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Karla Kimrey. Please go ahead.

Speaker #1: day and welcome to the PEABODY Q2, 2026 earnings 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.

Speaker #1: To ask a question, you may press star, then 1 on a touchtone phone. To withdraw your question, please press star, then 2. Please note this event is being recorded.

Speaker #1: I would now like to turn the conference over to Kayla Finkling. Please go ahead.

Speaker #1: After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then 1 on a touchtone phone.

Speaker #2: Thanks, Operator, and good morning, everyone. We appreciate you joining us for PEABODY's second quarter 2026 earnings call. Joining me today are PEABODY's President and CEO, Jim Grech, Chief Financial Officer, Mark Spurbeck, and Chief Commercial Officer, Malcolm Roberts.

Speaker #1: To withdraw your question, please press star then 2. Please note, this event is being recorded. I would now like to turn the conference over to Kayla Finkling.

Speaker #1: Please go ahead.

Speaker #2: After our prepared remarks, we will open up the call for questions. Before we begin, I want to remind you that a remarks today will include forward-looking statements.

Speaker #2: Thanks, operator, and good morning, everyone. We appreciate you joining us for Peabody's second quarter 2026 earnings call. Joining me today are Peabody's President and CEO, Jim Grech; Chief Financial Officer, Mark Spurbeck; and Chief Commercial Officer, Malcolm Roberts.

Karla Kimrey: Thanks, operator, good morning, everyone. We appreciate you joining us for Peabody's Q2 2026 earnings call. Joining me today are Peabody's President and CEO, Jim Grech, Chief Financial Officer, Mark Spurbeck, and Chief Commercial Officer, Malcolm Roberts. After our prepared remarks, we will open up the call for questions. Before we begin, I want to remind you that our remarks today will include forward-looking statements. Please review the full statement contained in our earnings release and consider the risk factors referenced there, along with our filings with the SEC. I'll now turn the call over to Jim.

Kala Finklang: Thanks, operator, good morning, everyone. We appreciate you joining us for Peabody's Q2 2026 earnings call. Joining me today are Peabody's President and CEO, Jim Grech, Chief Financial Officer, Mark Spurbeck, and Chief Commercial Officer, Malcolm Roberts. After our prepared remarks, we will open up the call for questions. Before we begin, I want to remind you that our remarks today will include forward-looking statements. Please review the full statement contained in our earnings release and consider the risk factors referenced there, along with our filings with the SEC. I'll now turn the call over to Jim.

Speaker #2: Please review the full statement contained in our earnings release and consider the risk factors referenced there, along with our filings with the SEC. I'll now turn the call over to Jim.

Speaker #2: After our prepared remarks, we will open up the call for questions. Before we begin, I want to remind you that our remarks today will include forward-looking statements.

Speaker #3: Thanks, Kayla, and good morning, everyone. PEABODY delivered on a number of important accomplishments during the second quarter. While continuing to manage through some near-term operating and cost challenges, most importantly, we maintained our focus on safety across the portfolio which remains the foundation of everything we do.

Jim Grech: Thanks, Kayla, and good morning, everyone. Peabody delivered on a number of important accomplishments during Q2 while continuing to manage through some near-term operating and cost challenges. Most importantly, we maintained our focus on safety across the portfolio, which remains the foundation of everything we do. During the quarter, we also made meaningful progress on a number of key priorities. At the Centurion Mine, we are now approaching targeted production levels. I will provide Centurion in a moment. Our seaborne thermal operations delivered on volumes and costs, supported by strong execution despite the higher fuel cost environment. We completed multiple strategic financial actions that further strengthened our capital structure, lowered our interest expense, freed up restricted cash, and effectively returned cash to shareholders. Mark will provide more detail on these actions shortly, but I will steal part of his thunder and note that we have effectively repurchased 5 million shares.

Speaker #3: During the quarter, we also made meaningful progress on a number of key priorities. At the Centurion Mine, we are now approaching targeted production levels, providing in a moment.

Speaker #3: Our seaborne thermal operations delivered on volumes and costs, supported by strong execution despite the higher fuel cost environment. We completed multiple strategic financial actions that further strengthened our capital structure, lowered our interest expense, freed up restricted cash, and effectively returned cash to shareholders.

Speaker #3: During the quarter, we also made meaningful progress on a number of key priorities. At the Centurion Mine, we are now approaching targeted production levels.

Speaker #3: A provider. Centurion in a moment. Our Seabourn Thermal Operations delivered on volumes and costs. Supported by strong execution despite the higher fuel cost environment.

Speaker #3: Mark will provide more detail on these actions shortly, but I'll steal part of his thunder and note that we have effectively repurchased $5 million shares.

Speaker #3: We completed multiple strategic financial actions that further strengthened our capital structure, lowered our interest expense, freed up restricted cash, and effectively returned cash to shareholders.

Speaker #3: In addition, PEABODY was selected by the Department of Energy for a grant to advance rare earth element and critical mineral development opportunities in the Potter River Basin.

Speaker #3: This recognition reinforces the strategic value of our existing asset base and the opportunities to unlock value beyond our core coal mining business. At the same time, the quarter included several challenges.

Speaker #3: Mark will provide more detail on these actions shortly, but I'll steal part of his thunder and note that we have effectively repurchased 5 million shares.

Speaker #3: In addition, Peabody was selected by the Department of Energy for a grant to advance rare earth element and critical mineral development opportunities in the Powder River Basin.

Jim Grech: Peabody was selected by the Department of Energy for a grant to advance rare earth elements and critical mineral development opportunities in the Powder River Basin. This recognition reinforces the strategic value of our existing asset base and the opportunities to unlock value beyond our core coal mining business. At the same time, the quarter included several challenges. In US thermal, volumes were impacted by the extended shoulder season in the Powder River Basin and heavy rainfall across the Midwest. In seaborne metallurgical, costs were temporarily elevated by commissioning-related spend at Centurion. As expected, we faced some of the highest fuel costs in years. Bottom line, $24 million of adjusted EBITDA is nowhere near the type of quarter that this platform is capable of or that we expect going forward.

Speaker #3: In U.S. thermal, volumes were impacted by the extended shoulder season in the Potter River Basin, and heavy rainfall across the Midwest. In seaborne metallurgical, costs were temporarily elevated by commissioning-related spend at Centurion.

Speaker #3: And as expected, we faced some of the highest fuel costs in years. Bottom line: $24 million of adjusted EBITDA is nowhere near the type of quarter that this platform is capable of or that we expect going forward.

Speaker #3: In US thermal, volumes were impacted by the extended shoulder season in the Potter River Basin, and heavy rainfall across the Midwest. In Seabourn Metallurgical, costs were temporarily elevated by commissioning-related spend at Centurion.

Speaker #3: And overall, we exited the quarter with improving operational momentum, a stronger financial foundation, and continued confidence in the long-term value of our diversified portfolio.

Speaker #3: With that, let me provide a more detailed update on Centurion. The primary challenge that we addressed was realignment of shields that had been impacted by the roof conditions we encountered.

Speaker #3: And overall, we exited the quarter with improving operational momentum, a stronger financial foundation, and continued confidence in the long-term value of our diversified portfolio.

Jim Grech: Overall, we exited the quarter with improving operational momentum, a stronger financial foundation, and continued confidence in the long-term value of our diversified portfolio. With that, let me provide a more detailed update on Centurion. The primary challenge that we addressed was realignment of shields that had been impacted by the roof conditions we encountered due to the longer-than-planned commissioning period. This shield alignment process was laborious, time-consuming, and more expensive than we expected. But it is now behind us. The longwall is in excellent shape, and remaining roof control issues are largely limited to a rock faulting zone spanning about 20% of the longwall face that we will continue to work through during Q3. I will also note that run-of-mine production, prep plant yields, and rail shipments have all strengthened in recent weeks.

Speaker #3: Due to the longer-than-planned commissioning period, the shield alignment process was laborious and time-consuming, and more expensive than we expected. But it is now behind us.

Speaker #3: The long wall is in excellent shape, and remaining roof control issues are largely limited to a rock faulting zone spanning about 20% of the long wall face.

Speaker #3: Due to the longer-than-planned commissioning period, the shield alignment process was laborious and time-consuming, and more expensive than we expected. But it is now behind us.

Speaker #3: That we will continue to work through during the third quarter. I'll also note that run-of-mine production prep plant yields and rail shipments have all strengthened in recent weeks.

Speaker #3: The longwall is in excellent shape, and remaining roof control issues are largely limited to a rock faulting zone spanning about 20% of the longwall face.

Speaker #3: Given where we are against plan, we are targeting 1.5 to 2 million tons of sales in the second half, with 500 to 700 thousand tons expected this quarter.

Speaker #3: That we will continue to work through during the third quarter. I'll also note that run-of-mine production prep plant yields and rail shipments have all strengthened in recent weeks.

Speaker #3: Factoring in anticipated shipping schedules, our focus now is on safely accelerating production rates and improving consistency. As this occurs, we expect the elevated costs of the first half to begin to trend more in line with long-range projections, as we move through the second half of the year.

Speaker #3: Given where we are against plan, we are targeting 1.5 to 2 million tons of sales in the second half, with 500 to 700 thousand tons expected this quarter.

Jim Grech: Given where we are against plan, we are targeting one and a half to 2 million tons of sales in H2, with 500,000 to 700,000 tons expected this Q3, factoring in anticipated shipping schedules. Our focus now is on safely accelerating production rates and improving consistency. As this occurs, we expect the elevated cost of H1 to begin to trend more in line with long-range projections as we move through H2 of the year. It is worth recounting the extraordinary potential represented by Centurion. It is the highest quality coking coal product in the world. Its projected long-term cost structure is first quartile for this type of coal, further expanding margins. It has a 25-year mine life that further solidifies Centurion's role as Peabody's cornerstone asset in Australia. That is a summary of Centurion's progress.

Speaker #3: Factoring in anticipated shipping schedules. Our focus now is on safely accelerating production rates and improving consistency. As this occurs, we expect the elevated costs of the first half to begin to trend more in line with long-range projections, as we move through the second half of the year.

Speaker #3: It's worth recounting the extraordinary potential represented by Centurion. It's the highest quality, cooking coal product in the world. It's projected long-term cost structure this first quartile for this type of coal, further expanding margins.

Speaker #3: It has a 25-year mine life that further solidified Centurion's role as PEABODY's cornerstone asset in Australia. That's a summy of Centurion's progress. Given the importance of the mine to the portfolio, we'll look to provide updates to the markets in both August and September, ahead of the next earnings review.

Speaker #3: It's worth recounting the extraordinary potential represented by Centurion. It's the highest quality, cooking coal product in the world. Its projected long-term cost structure is first quartile for this type of coal, further expanding margins.

Speaker #3: It has a 25-year mine life that further solidified Centurion's role as Peabody's cornerstone asset in Australia. That's a summary of Centurion's progress. Given the importance of the mine to the portfolio, we'll look to provide updates to the markets in both August and September, ahead of the next earnings review.

Speaker #3: Beyond our core business, our PEABODY development group continues to advance multiple initiatives and opportunities we have to develop rare earth elements and critical minerals from our extensive asset base.

Jim Grech: Given the importance of the mine to the portfolio, we'll look to provide updates to the market in both August and September ahead of the next earnings review. Beyond our core business, our Peabody development group continues to advance multiple initiatives and opportunities we have to develop rare earth elements and critical minerals from our extensive asset base. We were honored to receive a conditional award from the US Department of Energy to demonstrate the feasibility of recovering rare earth elements from coal-related feedstocks. Our work on rare earth elements extends across multiple mining operations and includes several initiatives beyond the project supported by the DOE award. In critical minerals, we continue to make encouraging progress in our expanded exploration and evaluation of germanium across our existing operations.

Speaker #3: We were honored to receive a conditional award from the U.S. Department of Energy to demonstrate the feasibility of recovering rare earth elements from coal-related feedstocks.

Speaker #3: Our work on rare earth elements extends across multiple mining operations and includes several initiatives beyond the projects supported by the DOE Award. In critical minerals, we continue to make encouraging progress and are expanded exploration and evaluation of germanium across our existing operations.

Speaker #3: We were honored to receive a conditional award from the US Department of Energy to demonstrate the feasibility of recovering rare earth elements from coal-related feedstocks.

Speaker #3: We're working with leading process technology partners and an industrial consumer of germanium to demonstrate technical and commercial feasibility. With the objective of establishing domestic production and creating a new high-value revenue stream for PEABODY.

Speaker #3: Each of these opportunities is viewed through a capital light prism aiming to work with partners to create new pathways for PEABODY growth and further monetize our resource base.

Speaker #3: We're working with leading process technology partners and an industrial consumer of germanium to demonstrate technical and commercial feasibility, with the objective of establishing domestic production and creating a new high-value revenue stream for Peabody.

Jim Grech: We're working with leading process technology partners and an industrial consumer of germanium to demonstrate technical and commercial feasibility with the objective of establishing domestic production and creating a new high-value revenue stream for Peabody. Each of these opportunities is viewed through a capital-light prism aiming to work with partners, create new pathways for Peabody growth, and further monetize our resource base. While we are highly focused on near-term execution, I'd also like to take a step back for a minute and note that we have spent the last several years building a platform from which to generate meaningful shareholder returns for many years to come.

Speaker #3: While we are highly focused on near-term execution, I'd also like to take a step back for a minute and note that we have spent the last several years building a platform from which to generate meaningful shareholder returns from many years to come.

Speaker #3: Each of these opportunities is viewed through a capital light prism aiming to work with partners to create new pathways for PEABODY growth and further monetize our resource base.

Speaker #3: This platform includes flagship operations in our seaborne MET, seaborne thermal, and U.S. thermal businesses. Sustainable operations with a number of capital light extension projects progressing in Australia.

Speaker #3: A fortress balance sheet with a capital structure built for the long haul. A portfolio position to benefit from mid-cycle seaborne thermal and metallurgical pricing.

Speaker #3: This platform includes flagship operations in our Seaborne MET, Seaborne Thermal, and U.S. Thermal businesses. Sustainable operations with a number of capital-light extension projects progressing in Australia.

Jim Grech: This platform includes flagship operations in our seaborne met, seaborne thermal, and US thermal businesses; sustainable operations with a number of capital-light extension projects progressing in Australia; a fortress balance sheet with a capital structure built for the long haul; a portfolio position to benefit from mid-cycle seaborne thermal and metallurgical pricing. Several early-stage initiatives within Peabody Development that add important growth optionality. We look forward to delivering the earnings and cash flow generation capabilities of our platform in the future. With that, I'll turn it over to Malcolm for a discussion of US and global market fundamentals.

Speaker #3: And several early-stage initiatives within PEABODY development that add important growth optionality. We look forward to delivering the earnings and capital generation capabilities of our platform in the future.

Speaker #3: A fortress balance sheet with a capital structure built for the long haul. A portfolio position to benefit from mid-cycle Seabourn Thermal and Metallurgical pricing.

Speaker #3: With that, I'll turn it over to Malcolm for a discussion of U.S. and global market fundamentals.

Speaker #2: Thanks, Jim. The second quarter so continued strength in both seaborne metallurgical and thermal coal markets amid some softness in U.S. thermal coal. Starting with seaborne metallurgical coal, prices reached a several-year high in the second quarter, with premium hard cooking coal averaging $238 a ton.

Speaker #3: With that, I'll turn it over to Malcolm for a discussion of US and global market fundamentals.

Speaker #2: Thanks, Jim. The second quarter so continued strength in both Seabourn Metallurgical and Thermal Coal markets amid some softness in US Thermal Coal. Starting with Seabourn Metallurgical Coal, prices reached a several-year high in the second quarter, with premium hard cooking coal averaging $238 a ton.

Malcolm Roberts: Thanks, Jim. The Q2 saw continued strength in both seaborne metallurgical and thermal coal markets amid some softness in US thermal coal. Starting with seaborne metallurgical coal, prices reached a several-year high in the Q2, with premium hard coking coal averaging $238 a ton, a 29% improvement over year-ago levels. Driving that was steel demand that was good but not great, and a met coal supply picture that saw sharp tightening due to a tragic mine accident in China's Shanxi province. That accident has led to widespread safety inspections and curtailed production in Shanxi, along with several other Chinese provinces that experienced a similar dynamic from less widely reported safety incidents.

Speaker #2: A 29% improvement over a year ago levels. Driving that was steel demand that was good but not great. And a MET coal supply picture that saw sharp tightening due to a tragic mine accident in China's Shanxi province.

Speaker #2: That accident has led to widespread safety inspections and curtailed production in Shanxi. Along with several other Chinese provinces that experienced a similar dynamic from less widely reported safety incidents.

Speaker #2: The actions of one province in China may not appear to be significant in the world market, but Shanxi produces more MET coal than the entire seaborne MET market, and in fact, twice as much coal in total as the entire United States.

Speaker #2: The effects of production constraints have been stark. We estimate that 30 million tons of production were already taken out of supply in the second quarter, compared with the seaborne market that only totals 85 million tons a quarter.

Speaker #2: The actions of one province in China may not appear to be significant in the world market, but Shanxi produces more met coal than the entire Seaborne met coal market, and in fact, twice as much coal in total as the entire United States.

Malcolm Roberts: Shanxi produces more met coal than the entire seaborne met market, and in fact, twice as much coal in total as the entire United States. The effects of production constraints have been stark. We estimate that 30 million tonnes of production were already taken out of supply in Q2, compared with the seaborne market that only totals 85 million tonnes a quarter. Continued supply reductions are expected throughout H2 of the year. Switching to seaborne thermal coal markets, demand remained strong throughout Q2 due to strong coal fuel generation across multiple countries in Asia. Liquefied natural gas, the key competitor to seaborne thermal coal, saw prices move higher because of ongoing conflict in the Middle East.

Speaker #2: Continued supply reductions are expected throughout the second half of the year. Switching to seaborne thermal coal markets, demand remained strong throughout the second quarter due to strong coal-fueled generation across multiple countries in Asia.

Speaker #2: The effects of production constraints have been stark. We estimate that 30 million tons of production were already taken out of supply in the second quarter.

Speaker #2: Compared with the seaborne market, that only totals 85 million tons a quarter. Continued supply reductions are expected throughout the second half of the year.

Speaker #2: Liquefied natural gas, the key competitor to seaborne thermal coal, saw prices move higher because of ongoing conflict in the Middle East. Japan and Korea marker LNG prices started the year in the 10 to 11 dollars per MMBTU range.

Speaker #2: Switching to seaborne thermal coal markets, demand remained strong throughout the second quarter due to solid coal-fueled generation across multiple countries in Asia. Liquefied natural gas, the key competitor to seaborne thermal coal, saw prices move higher because of ongoing conflict in the Middle East.

Speaker #2: This soared to $24 to $25 per MMBTU, and even now remains just below that mark. As we've seen so often, major events remind numerous countries why coal-fueled generation is so reliable and affordable.

Speaker #2: Japan and Korea marker LNG prices started the year in the $10 to $11 per MMBTU range. This soared to $24 to $25 per MMBTU, and even now remain just below that mark.

Malcolm Roberts: Japan/Korea market LNG prices started the year in the $10 to $11 per MMBtu range. This soared to $24 to $25 per MMBtu and even now remain just below that mark. As we've seen so often, major events remind numerous countries why coal fuel generation is so reliable and affordable. The Iran conflict is no different. Seaborne thermal prices have responded to strong coal fuel generation. Newcastle 6,000-cal coal product averaged $137 in Q2, more than 35% above prior year levels. We've also seen the lower heat API 5 product respond in a similar fashion. While seaborne thermal demand looks to remain strong as we move through the summer in the Northern Hemisphere, supply is likely to be constrained by Indonesian policy settings. Indonesia continues to tweak its policies relating to coal production, exports, and Domestic Market Obligation.

Speaker #2: The Iran conflict is no different. Seaborne strong coal-fueled generation. Newcastle, 6,000 K coal product, averaged $137 in the second quarter, more than 35% above prior-year levels.

Speaker #2: As we've seen so often, major events remind numerous countries why coal-fueled generation is so reliable and affordable. The Iran conflict is no different. Seaborne thermal prices have responded to strong coal-fueled generation.

Speaker #2: We've also seen the lower heat API-5 product respond in a similar fashion. While seaborne thermal demand looks to remain strong as we move through the summer in the Northern Hemisphere, suppliers likely to be constrained by Indonesian policy settings.

Speaker #2: Newcastle 6,000 K coal product averaged $137 in the second quarter, more than 35% above prior-year levels. We've also seen the lower heat API 5 product respond in a similar fashion.

Speaker #2: Indonesia continues to tweak its policies relating to coal production, exports, and domestic market obligations. Indonesia is the largest seaborne thermal coal exporter, yet we're hearing a rolling blackouts in Indonesia as coal-fueled generators run short of coal.

Speaker #2: While seaborne thermal demand looks to remain strong as we move through the summer in the Northern Hemisphere, suppliers are likely to be constrained by Indonesian policy settings.

Speaker #2: Indonesia's 2026 coal output is expected to be meaningfully lower than prior-year levels. Shifting to U.S. thermal coal markets, the demand picture was impacted by what seemed to be a fortified month spring in many parts of the country, heating degree days were off sharply in the first quarter, with a second quarter that was also mild.

Speaker #2: Indonesia continues to tweak its policies relating to coal production, exports, and domestic market obligations. Indonesia is the largest seaborne thermal coal exporter. Yet, we're hearing about rolling blackouts in Indonesia as coal-fueled generators run short of coal.

Malcolm Roberts: Indonesia is the largest seaborne thermal coal exporter, we are hearing of rolling blackouts in Indonesia as coal fuel generators run short of coal. Indonesia's 2026 coal output is expected to be meaningfully lower than prior year levels. Shifting to US thermal coal markets, the demand picture was impacted by what seemed to be a four to five-month spring in many parts of the country. Heating degree days were off sharply in Q1, with a Q2 that was also mild. That led to natural gas prices that averaged 13% lower than the strong H1 of 2025, driving some coal to gas switching. I will also note, though, that we've seen a return to what I would call longevity maintenance actions by a number of coal-fueled plants in the US. In prior years, maintenance outages were more modest given expected retirements.

Speaker #2: Indonesia's 2026 coal output is expected to be meaningfully lower than prior-year levels. Shifting to US Thermal Coal markets, the demand picture was impacted by what seemed to be a fortified month spring in many parts of the country, heating degree days were off sharply in the first quarter, with a second quarter that was also mild.

Speaker #2: That led to natural gas prices that averaged 30% lower than the strong first half of 2025, driving some coal to gas switching. I will also note, though, that we've seen a return to what I would call longevity maintenance actions by a number of coal-fueled plants in the US, in prior years maintenance outages were more modest given expected retirements, while maintain a plant that's going out of service.

Speaker #2: In prior years, maintenance outages were more modest given expected retirements, while maintain a plant that's going out of service. Now, though, we've seen a trend of plants taking longer seasonal outages to enable more comprehensive repairs and maintenance.

Speaker #2: Customers recognize that these plants may be operating for longer than originally expected, while those longer outages dampened the springtime coal loadings. They also set up for a stronger long-term thesis.

Malcolm Roberts: Why maintain a plant that's going out of service? Now, though, we've seen a trend of plants taking longer seasonal outages to enable more comprehensive repairs and maintenance. Customers recognize that these plants may be operating for longer than originally expected. While those longer outages dampened the springtime coal loadings, they also set up for a stronger long-term thesis. Summer, of course, has now settled in across the US, and grid statistics are showing the important role of coal-fired generation in meeting grid demand loads. We've begun to see an increased level of offtake in line with the established trend of recent years when July to December is the period where coal burn is at its strongest. That's a quick review of the markets. Over to Mark for a discussion of the financials.

Speaker #2: Now, though, we've seen a trend of plants taking longer seasonal outages to enable more comprehensive repairs and maintenance. Customers recognize that these plants may be operating for longer than originally expected, while those longer outages dampened the springtime coal loadings.

Speaker #2: Summer, of course, has now settled in across the U.S., and grid statistics are showing the important role of coal-fired generation in meeting grid demand loads.

Speaker #2: We've begun to see an increase level of offtake in line with the established trend of recent years, when July to December is the period where coal burn is at its strongest.

Speaker #2: They also set up for a stronger long-term thesis. Summer, of course, has now settled in across the U.S., and grid statistics are showing the important role of coal-fired generation in meeting grid demand loads.

Speaker #2: That's a quick review of the markets. Now over to Mark, for a discussion of the financials.

Speaker #3: Thanks, Malcolm. And good morning to all. For the second quarter, we reported a net loss attributed to common stockholders of $90.6 million, or $74 cents per diluted share.

Speaker #2: We've begun to see an increased level of offtake in line with the established trend of recent years, when July to December is the period where coal burn is at its strongest.

Speaker #3: An adjusted EBITDA of $24 million. The quarter reflected significant progress at Centurion, strong seaborne thermal results, and lower U.S. thermal volumes. We also completed several strategic financial transactions to unlock shareholder value, which I will discuss in more detail after walking through the segment results.

Speaker #2: That's a quick review of the markets. Now over to Mark, for a discussion of the financials.

Speaker #3: Thanks, Malcolm. And good morning to all. For the second quarter, we reported a net loss attributed to common stockholders of $90.6 million, or $74 cents per diluted share.

Mark Spurbeck: Thanks, Malcolm, and good morning to all. For Q2, we reported a net loss attributable to common stockholders of $90.6 million, or $0.74 per diluted share, and adjusted EBITDA of $24 million. The quarter reflected significant progress at Centurion, strong seaborne thermal results, and lower US thermal volumes. We also completed several strategic financial transactions to unlock shareholder value, which I will discuss in more detail after walking through the segment results. The seaborne thermal platform shipped 3 million tons, in line with expectations and consistent with Q1. Export shipments totaled 1.9 million tons, and the average realized export price of $95.87 increased 11.2% quarter-over-quarter and 31.6% compared to the prior year period. Segment costs of $58 per ton were at the low end of guidance, resulting in a 23% adjusted EBITDA margin and over $52 million of adjusted EBITDA.

Speaker #3: And adjusted EBITDA of $24 million. The quarter reflected significant progress at Centurion, strong Seabourn Thermal results, and lower US thermal volumes. We also completed several strategic financial transactions to unlock shareholder value, which I will discuss in more detail after walking through the segment results.

Speaker #3: The seaborne thermal platform shipped $3 million tons, in line with expectations and consistent with the first quarter. Export shipments totaled $1.9 million tons, and the average realized export price of $95.87 increased 11.2% quarter over quarter and 31.6% compared to the prior-year period.

Speaker #3: The Seabourn Thermal platform shipped $3 million tons, in line with expectations and consistent with the first quarter. Export shipments totaled $1.9 million tons, and the average realized export price of $95.87 increased 11.2% quarter over quarter and 31.6% compared to the prior-year period.

Speaker #3: Segment costs of $58 per ton, were at the low end of guidance, resulting in a 23 percent adjusted EBITDA margin and over $52 million of adjusted EBITDA.

Speaker #3: Seaborne metallurgical shipments totaled $2.5 million tons, exceeding expectations by 200,000 tons, due to higher volumes from metropolitan and the CMJV. Costs were above guidance at $155 per ton, primarily reflecting higher commissioning costs at Centurion.

Speaker #3: Segment cost of $58 per ton were at the low end of guidance, resulting in a 23% adjusted EBITDA margin and over $52 million of adjusted EBITDA.

Speaker #3: The segment reported an adjusted EBITDA loss of $17 million, is higher Centurion costs, or only partially offset by a 7% quarter over quarter improvement in realized pricing.

Speaker #3: Seabourn Metallurgical shipments totaled $2.5 million tons, exceeding expectations by higher volumes from metropolitan and the CMJV. Costs were above guidance at $155 per ton, primarily reflecting higher commissioning costs at Centurion.

Mark Spurbeck: Seaborne metallurgical shipments totaled two and a half million tons, exceeding expectations by 200,000 tons due to higher volumes from Metropolitan and the CM JV. Costs were above guidance at $155 per ton, primarily reflecting higher commissioning costs at Centurion. The segment reported an adjusted EBITDA loss of $17 million as higher Centurion costs were only partially offset by a 7% quarter-over-quarter improvement in realized pricing. Our US thermal business reported $19.8 million of adjusted EBITDA in Q2, marked by the extended shoulder season, which resulted in lower volumes across the platform. In the Powder River Basin, shipments totaled 16.4 million tons, significantly below our 19-million-ton expectation as mild weather extended into June and coal generation plants undertook the extensive longevity maintenance that Malcolm noted. We kept a keen eye on labor efficiency and equipment utilization, moving an additional 11 million cubic meters of overburden, uncovering additional coal.

Speaker #3: Our U.S. thermal business reported $19.8 million of adjusted EBITDA in the second quarter. Marked by the extended shoulder season, which resulted in lower volumes across the platform.

Speaker #3: The segment reported an adjusted EBITDA loss of $17 million, is higher Centurion costs, or only partially offset by a 7% quarter over quarter improvement in realized pricing.

Speaker #3: In the Powder River Basin, shipments totaled $16.4 million tons, significantly below our $19 million ton expectation. As mild weather extended into June, and coal generation plants undertook the extensive longevity maintenance that Malcolm noted.

Speaker #3: Our US thermal business reported $19.8 million of adjusted EBITDA in the second quarter. Marked by the extended shoulder season, which resulted in lower volumes across the platform.

Speaker #3: We kept a keen eye on labor efficiency and equipment utilization, moving an additional $11 million cubic meters of overburden uncovering additional coal. The related costs naturally ran through second quarter results and temporarily increased unit cost to $14 per ton, but they will provide a significant benefit to costs for the rest of the year.

Speaker #3: In the Powder River Basin, shipments totaled 16.4 million tons, significantly below our 19 million-ton expectation. As mild weather extended into June, coal generation plants undertook the extensive longevity maintenance that Malcolm noted.

Speaker #3: We kept a keen eye on labor efficiency and equipment utilization, moving an additional $11 million cubic meters of overburden, uncovering additional coal. The related costs naturally ran through second quarter results and temporarily increased unit cost to $14 per ton.

Speaker #3: In fact, we expect costs to be $2 lower, or about $12 per ton, in the third quarter. Other U.S. thermals shipped $3 million tons, $400,000 tons below guidance, reflecting the extended shoulder season and heavy rainfall across the Midwest, late in the quarter, that delayed shipments.

Mark Spurbeck: The related costs naturally ran through Q2 results and temporarily increased unit cost to $14 per ton. They will provide a significant benefit to costs for the rest of the year. In fact, we expect costs to be $2 lower, or about $12 per ton, in Q3. Other US thermal shipped 3 million tons, 400,000 tons below guidance, reflecting the extended shoulder season and heavy rainfall across the Midwest late in the quarter that delayed shipments. Despite lower volumes, costs were kept in line at $46 per ton, demonstrating focused, disciplined cost control. The segment contributed $26.9 million of adjusted EBITDA in the quarter. Turning to the balance sheet and capital structure. At 30 June, the company had over $500 million cash and total liquidity over $900 million.

Speaker #3: But they will provide a significant benefit to costs for the rest of the year. In fact, we expect costs to be $2 lower, or about $12 per ton, in the third quarter.

Speaker #3: Despite lower volumes, costs were kept in line at $46 per ton, demonstrating focused disciplined cost control. The segment contributed $26.9 million of adjusted EBITDA in the quarter.

Speaker #3: Other US thermals shipped $3 million tons, $400,000 tons below guidance, reflecting the extended shoulder season and heavy rainfall across the Midwest, late in the quarter, that delayed shipments.

Speaker #3: Turning to the balance sheet and capital structure. At June 30, the company had over $500 million cash and total liquidity over $900 million. In the second quarter, we completed several strategic financial transactions that unlocked shareholder value, jump-start shareholder returns, lower borrowing costs, and increased financial flexibility.

Speaker #3: Despite lower volumes, costs were kept in line at $46 per ton, demonstrating focused, disciplined cost control. The segment contributed $26.9 million of adjusted EBITDA in the quarter.

Speaker #3: First, we issued $250 million of convertible notes due 2031, with a 0.5% coupon, and together with the related capped coal transaction, established a conversion price of $50.61 per share.

Mark Spurbeck: In Q2, we completed several strategic financial transactions that unlock shareholder value, jumpstart shareholder returns, lower borrowing costs, and increase financial flexibility. First, we issued $250 million of convertible notes due 2031 with a 0.5% coupon, and together with the related capped call transaction, established a conversion price of $50.61 per share. Second, we utilized the net proceeds together with cash from the balance sheet to redeem $241.2 million of the 2028 convertible notes with a 3.25% coupon for cash consideration of $386.8 million. The $145.6 million premium paid with cash represents a share repurchase of more than 5 million shares, using a weighted average price of $28.92 per share. The convertible note transactions increased the average conversion price on the convertible notes from $18.99 to $38.31 per share, reduced the diluted share count by 6.2 million shares, and lower annual interest expense by $6.6 million.

Speaker #3: Second, we utilized the net proceeds together with cash from the balance sheet to redeem $241.2 million of the 2028 convertible notes with a 3.25% coupon, for cash consideration of $386.8 million.

Speaker #3: First, we issued $250 million of convertible notes due 2031, with a $0.5% coupon, and together with the related capped coal transaction, established a conversion price of $50.61 per share.

Speaker #3: The $145.6 million premium paid with cash represents a share repurchase of more than $5 million shares, using a weighted average price of $28.92 per share.

Speaker #3: The convertible note transactions increased the average conversion price on the convertible notes from $18.99 to $38.31 per share, reduced the diluted share count by 6.2 million shares, and lower annual interest expense by 6.6 million.

Speaker #3: The $145.6 million premium paid with cash represents a share repurchase of more than $5 million shares, using a weighted average price of $28.92 per share.

Speaker #3: Third, we significantly enhanced our global surety program. The financial profile built over the last several years provided for a transition to standard indemnification agreements, lower collateral requirements, and the replacement of cash collateral with asset-backed facilities.

Speaker #3: These changes unlocked $350 million of restricted cash and collateral, while maintaining one of the best well-collateralized reclamation bonding programs in the industry. Lastly, we increased our revolving credit facility to $400 million, extended the maturity to June 2030, and lowered borrowing costs by 25 BIPS.

Mark Spurbeck: Third, we significantly enhanced our global surety program. The financial profile built over the last several years provided for a transition to standard indemnification agreements, lower collateral requirements, and the replacement of cash collateral with asset-backed facilities. These changes unlocked $350 million of restricted cash and collateral while maintaining one of the best well-collateralized reclamation bonding programs in the industry. Lastly, we increased our revolving credit facility to $400 million, extended the maturity to June 2030, and lowered borrowing costs by 25 basis points. Year-to-date, we've generated $145.3 million of available free cash flow, including the reduction in restricted cash and collateral. We used $145.6 million for the convertible note repurchase premium and have also paid cash dividends of $18.3 million, bringing our payout ratio to greater than 100% through the H1 of the year. Now for a quick look at the Q3.

Speaker #3: Year to date, we've generated $145.3 million of available free cash flow, including the reduction in restricted cash and collateral. We used $145.6 million for the convertible note repurchase premium, and have also paid cash dividends of 18.3 million, bringing our payout ratio to greater than 100% through the first half of the year.

Speaker #3: Now for a quick look at the third quarter. We expect seaborne thermal volume of $3.0 million tons, including $1.9 million tons of export coal, with a product mix of $1.1 million tons of Newcastle benchmark coal, and $800,000 tons of higher ash coal that we sell at about a 10% discount to API-5.

Speaker #3: Now for a quick look at the third quarter. We expect Seabourn Thermal volume of $3.0 million tons, including $1.9 million tons of export coal, with a product mix of $1.1 million tons.

Speaker #3: We expect costs of $52 to $57 per ton, a nice improvement quarter over quarter. For seaborne metallurgical, we expect volume of $1.9 to $2.1 million tons, as metropolitan has a long-haul move and a scheduled lockout will reduce sales at Shoal Creek.

Mark Spurbeck: We expect seaborne thermal volume of 3.0 million tons, including 1.9 million tons of export coal, with a product mix of 1.1 million tons of

Speaker #3: Costs are expected to improve to $130 to $140 per ton, a $20 improvement compared to the second quarter, as Centurion volumes increase. In the PRB, we anticipate shipments of $22 million tons at cost of $12, substantially improving margins and free cash flow from the expected to increase to $3.7 million tons, and the average price of $58.20 with cost at $45 to $49 per ton, in line with full-year expectations.

Speaker #3: In closing, PEABODY exits the quarter with an even stronger financial foundation and tighter capital structure. Poised to generate significant free cash flow, as Centurion advances to expected production rates.

Speaker #3: Anticipation for a better second half and strong market fundamentals points to further support for our shareholder return program. With that, I'll turn the call back over to you, Jim.

Speaker #1: Thanks, Mark. As we move into the second half of the year, our focus is on execution. Centurion reaching targeted long-haul production rates. U.S. thermal positioned for stronger seasonal demand.

Speaker #1: And our seaborne platform well placed amid constructive global markets. With improving operational momentum and a strong financial foundation, we believe our PEABODY platform is well positioned to deliver improved results and create long-term value for shareholders.

Speaker #1: With that, Operator, we are pleased to open up the call to questions.

Speaker #2: We will now begin the question-and-answer session. To ask a question, you may press star, then 1 on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys.

Speaker #2: If at any time your question has been addressed and you would like to withdraw the question, please press star, then 2. At this time, we will pause momentarily to assemble our roster.

Speaker #2: Our first question comes from Nick Giles, with B. Reilly Securities. Please go ahead.

Speaker #4: Yeah, thanks, Operator. Good morning, guys. Maybe just starting with Centurion, was just hoping for more color to what extent the long-hauls running today. I mean, how much stoppage is this rock faulting causing, or how are advance rates ultimately impacted here?

Speaker #4: Thanks.

Speaker #1: Hey, Nick, good morning. Jim here. Yeah, so, you know, first I'll give you a little background on the long-haul and where it's at, and then how it's running today.

Speaker #1: So, you know, the issue that we had that we talked about was the shields being out of alignment or sometimes it's called racking. And we have that issue behind us now.

Speaker #1: The long-haul, the shields are straight and they're square to the face. And so it's in good shape. And, you know, it took a little longer than we thought it was going to be to address this issue.

Speaker #1: And just to give you maybe a little explanation of what it is, a picture of what it is, is the shields themselves, you can look at it as like a row of dominoes, and then some of those dominoes got knocked over on top of each other.

Speaker #1: Not all of them, but some of them. But each one of those dominoes weighs 53 tons. And so to straighten them out and do it safely, which is a hard thing to do with the weight of those shields underground, it took a little bit longer than we thought and through the months of June.

Speaker #1: So now that's done. The long-haul square and it's running. So we're running right now when running it's running back and forth this year. And at times we have stoppages to address the faulting.

Speaker #1: That we have. Now to address the faulting, we've taken a four different actions to address the faulting ahead of us. So we either do underground in-seam drilling to ahead of the fault and inserting grout that way.

Speaker #1: We have drilling from the surface further away from the long-haul face, addressing the faulting that way. And then right at the face, if it's needed, there's a localized faulting at the face we can do some geoflexing right at the face or some rock sill right above the shield.

Speaker #1: So the first two things that we do for the faulting are more in advance of the long-haul, and the other two with the geoflex and rock sill are sort of like active we're in the active mining zone with the long-haul.

Speaker #1: So with that, you know, over the last two weeks, we've really picked up the pace on the long-haul. We have some days where we've run 7, 8 shares a day and some days where we're running 3 or 4 shares a day because we have that faulting to address.

Speaker #1: And that's where that consistency is that we're looking for to go forward is running at a steadier rate and as we keep advancing through this faulted zone and running at a steadier rate, it really solves itself.

Speaker #1: The quicker you can move through it, the more shares per day that you can get done. And so with that, looking at the faulting, the rate that we're going forward, having a stop occasionally to address the faults in front of us, that's where we've given that projection that 5 to 700,000 tons for the third quarter because there is some variability.

Speaker #1: Not only on the speed or the number of shares per day Nick, but also on the yield because when we hit in the faulting area, the yield goes down, we get more rock.

Speaker #1: So there's variability in both of those. And so we take that all into account and that's how we came up with that projection. But again, the long-haul faces has been in the best shape that has been in since we started the mine.

Speaker #1: And, you know, we're out of the commissioning phase and we're in the production phase now.

Speaker #4: Jim, I really appreciate all that color. Apologies for my ignorance, but just to clarify, so the racking issue was that ultimately caused by the faulting that you're running into and then my second question was just, I think you answered it already, but how much visibility do you have, you know, quarters down the line that you won't run into this faulting zone again?

Speaker #4: Thanks.

Speaker #1: Yeah, so your first question is it was a continuation of the long commissioning, the slow startup process. You know, we started out with the electrical issues that were as we started the long-haul, we had a series of electrical issues that had to shut down.

Speaker #1: It took us a while to address that. Then the long-haul started running, we ran into a series of mechanical issues. With belts and conveyors and transfer points, all of that delay in the startup and the long-haul stopping and starting, Nick, is not good, especially in a new long-haul mine and a new panel like we were.

Speaker #1: That led to making the situation degrade where the faulting is. If we would have just started up and ran, and not had the delays, at the startup and had the normal advance rate, we wouldn't have had the conditions leading to needing this shield realignment.

Speaker #1: And so now going forward, the conditions that we have are really specific to this panel. And how we're looking at it, we have about 300 meters left in front of us of this faulted area.

Speaker #1: And it's in a very specific area between our shields number 20 to shield number 50. So we can see an end of sight to this faulting it'll be during the third quarter.

Speaker #1: And so we don't expect this in the fourth quarter. We have, you know, good geologic, good control and we'll be out of this come the fourth quarter.

Speaker #1: Now because of that variability, Nick, in advance rates and yield, because of the faulting, is why we've said that we will also give out updates in August and September of how we're doing, right?

Speaker #1: To make it more accurate and to tighten those ranges up as we go forward.

Speaker #4: Got it. Well, yeah, great. No, I just want to say thanks again for all the background. I'll turn it over.

Speaker #1: Thanks, Nick.

Speaker #2: Our next question comes from Matthew Key with Texas Capital Securities. Please go ahead.

Speaker #5: Good morning. And thanks for taking my questions. I had a question just kind of on PEARB volume guidance. Based on where coal volume was in the first half of '26 and the guidance review, it seems to, you know, achieve the midpoint of that range.

Speaker #5: It would imply a pretty impressive 4Q shipping quarter. Just given where natural gas prices are trading, is it safer to assume the lower end of that guidance or are you pretty confident kind of going into that 4Q will be a strong quarter?

Speaker #1: Yeah, good morning, Matthew. Malcolm here. Look, as I said in my remarks, the second half of the year and what we're looking at here doesn't seem that different to prior years.

Speaker #1: Obviously, gas price is a little lower, but if you look at the grid at the moment, coal has been called upon very heavily. So what we're looking to do in the second half of the year probably is not much different if you overlay the patent from '23 through '25.

Speaker #1: And, you know, probably quite rightly, you should be assuming the midpoint of the guidance range that you spoke to. That would be my response to that question.

Speaker #5: Got it. No, that's helpful. And I was wondering, and you mentioned this a little bit in the prepared remarks, but I just wanted to talk about kind of capital allocation plans or the common quarters.

Speaker #5: Do you think buybacks make sense kind of on the back of this pullback or what are the major priorities for you in the second half of '26?

Speaker #1: Yeah, Matt, as I mentioned in the prepared remarks, continue to execute against our existing shareholder return program, pay out over 100% year to date.

Speaker #1: Look to generate some substantial free cash flow in the second half of the year as centurion achieves its targeted production rates. And we'll look to continue to execute against that shareholder return program.

Speaker #1: We'll look at outright share repurchases and we'll also look at the remaining stub of the convertible notes depending on where they trade. We were able to buy those at $241 million back at a very small premium, less than 4 points, I believe.

Speaker #1: And was pretty opportunistic in the sense that they had traded down significantly. So I think going forward, we'll execute against the program and we'll look at both of those avenues.

Speaker #5: Got it. Well, I appreciate the time and best of luck.

Speaker #1: Thank you.

Speaker #2: Our next question comes from Katja Jancic with BMO Capital Markets. Please go ahead.

Speaker #6: Hi, thank you for taking my questions. Maybe just quickly back to Centurion. Jim, you mentioned that you're going to provide updates in August and September.

Speaker #6: Can you maybe talk about when specifically we should be expecting those updates?

Speaker #1: Well, in August, for certain, we have a site tour out at Centurion on August 11th. And there will be an update given at that site tour, which again, of course, would be filed and made public information.

Speaker #1: Which, by the way, we still have six spots left open on that site tour of Centurion. We've had a very good response. So a little bit of, you gave me a chance, Katja, to push that out there.

Speaker #1: So at that site tour, we'll give an update. And then we have some investor days. I'm not sure the specific dates off the top of my head in September.

Speaker #1: And we'll also give updates then.

Speaker #6: And maybe staying on the site visit I guess you're going to take investors and analysts to actually see the long wall?

Speaker #1: Yes. Yep. It's a great tour. You can, the site will show the long wall, will show the surface facilities. You'll see every piece of the mine operating piece of the mine that we have there.

Speaker #6: And maybe shifting gears to the $350 million of restricted cash that was unlocked. Is that fully available or right now or are there any still restrictions to that, to using that?

Speaker #1: Katja, the $350 million of clutter that was returned, it was really reclassed from restricted cash and collateral. So to your question, it is fully available.

Speaker #1: It's included in our cash balances at June 30.

Speaker #6: Okay, perfect. Thank you.

Speaker #1: Look forward to seeing you at the Centurion visit, Katja.

Speaker #2: Our next question comes from Nathan Martin with the Benchmark Company. Please go ahead.

Speaker #7: Thanks, operator. Good morning, everyone. You know, sticking with the restricted cash piece, Mark, question for you. I mean, are there any more opportunities to unlock restricted cash rather than be surely related or otherwise?

Speaker #7: Looks like there's still about 460 million or so left there on the balance sheet. Thanks.

Speaker #1: Yeah, Nate, we've pretty much done all the work we can there. We reduced the collateral significantly. Went to an asset-backed facility in Australia. And then reduced the collateral to about 40% in the US.

Speaker #1: So I'm not looking for any more step changes there. I think we should probably look at this as kind of a permanent fix.

Speaker #7: Okay. Perfect. Helpful, Mark. And then going back to Centurion, I guess, have you guys noticed anything during the ramp-up stage, now heading into the production stage at Centurion, that makes you feel like you can't operate the mine at a cost per ton within your prior expectation?

Speaker #7: Jim, you talked about this a little bit in your comments, but just hoping to get a little bit more detail. Thanks.

Speaker #1: No, Nate, I'd say, you know, when we have been running well without an issue, I'd say it's the opposite. The rate at the shear can transit is as good or better than we thought it would be.

Speaker #1: So I'll say we have some optimism that once we get to steady state running of the mine, that we will be at that cost structure or possibly better.

Speaker #1: It's just getting from this commissioning phase now into this is a production and getting to steady state production to actually see the results of that.

Speaker #1: But when we are running well, we run very well.

Speaker #7: Very helpful, Jim. Appreciate that. And maybe just kind of one higher-level market question for Malcolm. Malcolm, maybe just get your thoughts on how you believe El Niño conditions or Super El Niño could impact Peabody in the broader coal markets.

Speaker #7: Thanks.

Speaker #1: Thanks for the question. Nate, I'll probably bifurcate the answer here for Seaborne and then US domestic. Talking about Seaborne, the biggest thing is drought.

Speaker #1: Particularly in Asia. And China. So we've seen very strong coal burn in China. There's a lot of noise around how much coal China actually is consuming, but they're consuming it a hell of a lot of coal.

Speaker #1: And production at the moment isn't keeping up domestic production. So the main thing we've seen here with this weather pattern is that hydro production from the Great River system in China is down.

Speaker #1: So that's having an influence. And then we're looking to Europe and we're looking at a very warm summer in Europe and we're seeing even increased coal generation in countries such as Germany.

Speaker #1: And then pretty much across North Asia. So you're talking Taiwan, Korea, and Japan. We're also seeing strong coal burn. As air conditioners are being turned on and we expect them to stay on for some time.

Speaker #1: And then in the US here and enjoying the warmth and looking at the grid, pretty much across Myso, and the like, we're seeing very strong coal loads and expect that to continue.

Speaker #1: So a good hot summer is really going to contribute to coal burn in the US and that's why. I reiterated that I think the midpoint for PIB guidance is where people should be looking at it.

Speaker #1: Hopefully that gives you some color, Nate. Thanks for the question.

Speaker #7: Yeah, it does, Malcolm. Appreciate it. I'll pass it on there. Appreciate the time, everyone. And best of luck in the second half.

Speaker #1: Thanks, Nate.

Speaker #2: Our next question comes from George Eadie with UBS. Please go ahead.

Speaker #8: Hi, James. Thanks for the call today. Perhaps for Jim, the 4.7 million tons life mine average target and 105 cash costs, is that number still stale?

Speaker #8: I guess more on the cost front, you call out in this update, supply and material pressures. How confident are you in this estimate still?

Speaker #8: Or do you think it's still achievable when the tons come there? And maybe just a reminder as well, with Centurion, there's five panels in the south before you go north.

Speaker #8: So given this delay, is it still 2029 when you get to the north?

Speaker #1: Yeah, hey, George. Yeah. So yeah, we still feel there's a couple of things you asked about there. The 4.7 million tons when we get to the steady state production, yes, we still feel that's a good number.

Speaker #1: And the 105 was a 2024 dollar number, so it does need to be escalated. And again, when we get to the steady state production, we assume a normalization on not that diesel prices are that big an impact there.

Speaker #1: With that, some of those things that are we think are not standard impacts on the cost of supplies, yeah, we still feel good about both those numbers once we get to our steady state production.

Speaker #1: And the delays you're talking about here are not significant over the four or five years that we have. In the south here. So yeah, to the extent that we're not going to the mine, the initial tons that we thought this year, that does tack on some time till we transfer to the northern reserves.

Speaker #1: I mean, you're looking at months here, though you're not talking years.

Speaker #8: Yeah, okay. Not with some of them, maybe just one more and Mark, I guess. The buyback, why not go early? Like at spot and guidance, you're available free cash.

Speaker #8: Should get to at least 50 million a quarter. Clearly, that's what investors are chasing and wanting here. And sort of rereading the tech report, like this appears to be the only really known concerning faulting zone.

Speaker #8: The outlook looks clearly better. Why not go early before the stock potentially gets more expensive and buy into this pullback given the balance sheet's in a pretty good state?

Speaker #1: Yeah, George. We're going to continue to execute against the plan. We wouldn't foreshadow what we're going to do, of course, ahead of market conditions.

Speaker #1: We like where we're at today. We like how our execution on the converts really opportunistic. And bought those back at 140 million dollar discount to where they had previously traded.

Speaker #1: We'll continue to take opportunistic looks at this and we'll continue to execute throughout the second half.

Speaker #8: All right. Thanks, James.

Speaker #1: Thanks, George.

Speaker #2: Our next question comes from Nick Giles with B. Reilly Securities. Please go ahead.

Speaker #9: Great. Yeah, thanks for taking my follow-up. Just wanted to clarify the 600,000 tons of Centurion output in 3Q. How much of that is CM coal versus long wall coal?

Speaker #9: I assume there's a little bit of long wall coal at the end of the quarter, but wanted to make sure we have that straight.

Speaker #1: Yeah, there is some CM coal in there. It's probably in the range of 100, 50,000 tons, give or take.

Speaker #9: Got it. Okay. And then as we look up to 2027, there was the long wall move that had been pushed out from the fourth quarter.

Speaker #9: So should we expect that move to occur in Q1? And what would be the kind of duration of that move?

Speaker #1: Yeah, we haven't given that specific guidance yet for '27 yet, Nick. And we're the timing of that long wall move. And we're also working on some ways to shorten the duration of that move based on what we've learned so far with the mine and accelerate it.

Speaker #1: So that move will occur in '27, but again, we're working on the timing of when that is. And also the duration of, again, have some optimism that we can accelerate from what we thought before would be the length of the outage.

Speaker #9: Understood. And maybe one more, if I could. Just on the rare earths piece, you mentioned capital light approach, bringing in some partners. Where do those potential partnerships stand?

Speaker #9: Do you have any that are kind of of a non-binding nature or when should we expect more of an update on that front?

Speaker #1: Yeah, I don't want to get too far into it because it's some proprietary information because we're in discussions. So when we have something that's solid with some detail behind it to answer the questions you're asking, we'll make those announcements.

Speaker #9: Understood. Okay. Thanks again, guys. Best of luck.

Speaker #2: This concludes our question and answer session. I would like to turn the conference back over to Jim Greck for any closing remarks.

Speaker #1: Yes, I'd like to remind everybody again that the August 11th tour at Centurion are some spots open and maybe some of these questions that are being asked today, we can have we should have more detail on.

Speaker #1: And if you're interested in going over to Australia or going out to our mine, you can contact our IR group and get on the list to go out there.

Speaker #1: So with that, thanks to everyone for your time today, as well as your longstanding support. And we look forward to keeping you apprised of our progress at the investor events as a quarter proceeds.

Speaker #1: Thank you.

Q2 2026 Peabody Energy Corp Earnings Call

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