Peabody Energy Corporation (NYSE: BTU ) is a U.S.-listed coal mining company, with quite a lot of domestic coal production and sales. However, most of its adjusted EBITDA has over the last few years come from the two seaborneIf you like this article and are interested in more frequent analysis of my holding companies, real-time notifications on portfolio changes, together with macro and industry analysis. I would encourage you to have a look at my marketplace service, Off The Beaten Path.I primarily invest ...

In an era dominated by the rush toward renewable energy, coal might seem like some relic of the past. Yet, for people willing to look beyond the headlines, the coal industry holds hidden gems. Peabody Energy BTU, the largest coal producer in the United States, stands out as a compelling opportunity. Trading at a steep discount to its intrinsic value, with robust financials and a global footprint, Peabody offers a rare blend of stability and growth potential. This coal titan is a standout choice, poised to r ...

Group 1 - Peabody is strategically shifting its portfolio towards higher-margin metallurgical coal production [1] - The company is in the process of acquiring coal mines from Anglo American in Australia [1] - Despite these strategic moves, the energy sector is facing market challenges, with companies being punished [1]

Production and Sales - Peabody produced and sold 118.1 million and 118.0 million tons of coal, respectively, from continuing operations in 2024[115] - Total tons sold increased by 1.5 million tons, or 5%, from 27.4 million tons in Q1 2024 to 28.9 million tons in Q1 2025[131] - Seaborne Metallurgical tons sold increased by 0.4 million tons, or 29%, from 1.4 million tons in Q1 2024 to 1.8 million tons in Q1 2025[131] - The Centurion Mine is expected to begin producing continuous miner coal early in Q3 2025, targeting combined production of 500 thousand tons for 2025[124] - The company has approximately 91 million tons of U.S. thermal coal priced and committed for 2025, including 77 million tons of PRB coal and 14 million tons of other U.S. thermal coal[214] - Estimated full year 2025 thermal coal sales volumes from the Seaborne Thermal segment are projected to be between 14.2 million to 15.2 million tons[214] - Estimated full year 2025 metallurgical coal sales from the Seaborne Metallurgical segment are projected to be between 8.0 million to 9.0 million tons[214] Financial Performance - Adjusted EBITDA for the three months ended March 31, 2025, reflected a year-over-year decrease of $16.5 million[130] - Total revenue for the three months ended March 31, 2025, was $983.6 million, a decrease of $46.6 million or 5% compared to the same period in 2024[133] - Seaborne Thermal segment revenue decreased by $18.8 million or 7% to $265.1 million, primarily due to unfavorable realized prices[133] - Seaborne Metallurgical segment revenue decreased by $26.9 million or 11% to $220.1 million, also due to unfavorable realized prices[134] - Powder River Basin segment revenue increased by $21.5 million or 8% to $275.6 million, driven by favorable volume and realized prices[134] - Adjusted EBITDA for the company decreased by $16.5 million or 10% to $144.0 million for the three months ended March 31, 2025[140] - Income from continuing operations, net of income taxes, was $38.3 million in Q1 2025, down 16% from $45.7 million in Q1 2024[150] - Net income attributable to common stockholders decreased by 13% to $34.4 million in Q1 2025 from $39.6 million in Q1 2024[150] - Diluted EPS attributable to common stockholders for Q1 2025 was $0.27, a decrease of 10% from $0.30 in Q1 2024[151] Costs and Expenses - Total segment costs for the three months ended March 31, 2025, were $799.1 million, a decrease of $31.8 million or 4% compared to the prior year[136] - Seaborne Thermal segment costs decreased by $9.2 million or 5% to $190.1 million, attributed to lower labor and operational costs[136] - Total Segment Costs for Q1 2025 were $767.3 million, down from $799.1 million in Q1 2024, reflecting a decrease of 4%[154] - Revenue per ton for Seaborne Thermal in Q1 2025 was $60.64, down from $71.24 in Q1 2024, a decrease of 15%[155] Cash Flow and Liquidity - As of March 31, 2025, the company's cash and cash equivalents totaled $696.5 million, with approximately $389 million held by U.S. subsidiaries and $296 million by Australian subsidiaries[176] - The company's available liquidity increased to $1,087.0 million as of March 31, 2025, up from $1,072.5 million as of December 31, 2024[177] - Net cash provided by operating activities for the three months ended March 31, 2025, was $119.9 million, comparable to $119.0 million in the same period of 2024[201] - The Company had $270.7 million of availability under the 2024 Credit Agreement as of March 31, 2025[185] - The Company entered into a bridge loan facility of up to $2.075 billion to finance the planned acquisition of multiple coal mines[194] - Cash paid for interest related to the Company's indebtedness was $9.9 million for the three months ended March 31, 2025[189] - The Company was compliant with all relevant covenants under its debt and finance agreements at March 31, 2025[199] Regulatory and Legal Matters - The company is subject to regulatory changes that could impact its operations, including updates to self-insurance requirements for black lung liabilities[157] - The company continues to monitor changes in environmental regulations that may affect the coal mining industry[159] - The company is involved in ongoing legal matters related to stormwater discharge violations, resulting in a total fine of $0.1 million and additional costs of $0.2 million[171] Other Financial Metrics - Interest expense, net of capitalized interest, decreased by 22% to $11.5 million in Q1 2025 from $14.7 million in Q1 2024[146] - The income tax provision decreased by 76% to $4.9 million in Q1 2025 from $20.1 million in Q1 2024, primarily due to lower expected pretax income[149] - The restricted cash and collateral balance increased by $5.5 million during the three months ended March 31, 2025, totaling $815.3 million[207] - As of March 31, 2025, the Company had total asset retirement obligations of $725.4 million[208] - The Company's reclamation bonding requirements were supported by approximately $710 million of restricted cash and other balances[209] - The accounts receivable securitization program provides up to $225.0 million of funding capacity, with $60.4 million of letters of credit outstanding under the program as of March 31, 2025[197] Market and Economic Factors - The company reported a 3% year-over-year increase in overall electricity demand in the U.S. for Q1 2025[123] - Coal's share of electricity generation in the U.S. increased to approximately 17% for the three months ended March 31, 2025[123] - A $10 per barrel change in the price of crude oil would increase or decrease the Company's annual diesel fuel costs by approximately $23 million[218] - A one percentage point decrease in interest rates would result in a decrease of approximately $14 million to interest income for the next twelve months[221]

Peabody Energy (BTU) Q1 2025 Earnings Call May 06, 2025 11:00 AM ET Company Participants Vic Svec - SVP, Global Investor and Corporate RelationsJames Grech - President & CEOMalcolm Roberts - Chief Marketing OfficerMark Spurbeck - EVP & CFO Conference Call Participants Nick Giles - Senior Research AnalystChris LaFemina - AnalystKatja Jancic - AnalystNathan Martin - Equity Research Analyst Operator Good day, and welcome to Peabody Q1 twenty twenty five Earnings Conference Call. All participants will be in lis ...

Financial Data and Key Metrics Changes - In Q1 2025, the company recorded net income attributable to common stockholders of $34 million or $0.27 per diluted share, with adjusted EBITDA of $144 million [27] - The company generated $30 million in free cash flow, net of $47 million of continued development at Centurion [27] - As of March 31, the company held nearly $700 million in cash and had over $1 billion in liquidity, maintaining a cash positive net debt position [28] Business Line Data and Key Metrics Changes - The seaborne thermal segment achieved $84 million in adjusted EBITDA with 32% margins, exceeding production forecasts by exporting an additional 400,000 tons [28] - The seaborne metallurgical segment reported $13 million in adjusted EBITDA, with sales modestly below company targets due to lagging market conditions [29] - The US thermal mines generated $69 million in adjusted EBITDA, with the PRB mines exceeding expectations by shipping 19.6 million tons [30] Market Data and Key Metrics Changes - US generator inventories have declined by more than 25% on a days burn basis since the beginning of the year, indicating strong demand for coal [20] - Coal generation in the US is projected to increase by 5% for the full year, while US coal production is expected to decline by 6% [21] - Thermal coal prices reached four-year lows in March, but demand remains intact with 600 GW of coal generation under construction or in various stages of development, primarily in Asia [22] Company Strategy and Development Direction - The company is focused on cost control and managing its diversified global portfolio to navigate cyclical market softness [5] - The Centurion mine is on budget and ahead of schedule, projected to have a low cost structure and high margins in the steelmaking coal universe [6] - The company supports the US administration's efforts to revitalize the coal industry and expand coal-fired generation, aligning with rising electricity demand [7][10] Management's Comments on Operating Environment and Future Outlook - Management noted that coal fuel generation in the US is up 20% over the prior year, indicating a shift in market share from higher-priced natural gas [10] - The company anticipates increasing demand throughout 2025, with a strong start to the year and expectations for a stronger second half [34] - Management expressed confidence in the long-term demand for coal, citing substantial US coal demand for many years into the future [13] Other Important Information - The company notified Anglo American of a material adverse change (MAC) related to the Moranbah North mine, which remains inactive following a gas ignition event [16] - The acquisition of premium steelmaking coal mines in Australia is under scrutiny due to uncertainties surrounding the Moranbah North mine [17] - The company is exploring a potential partial sale of the Centurion line, independent of the Anglo acquisition process [63] Q&A Session Summary Question: What is the process following the MAC notification regarding Moranbah North? - Management indicated a ten-day period for Anglo to respond, followed by a potential ninety-day cure period to resolve the MAC [40] Question: What constitutes a sustainable resolution for the MAC? - Management stated that a sustainable longwall production must be established for the agreement to proceed, but specifics were not disclosed [45] Question: How does the MAC impact financing processes? - Financing discussions are currently on hold due to uncertainties surrounding the Moranbah North mine [48] Question: What differentiates the current event at Moranbah North from past incidents? - Management emphasized the significant potential impacts of the current situation, which they believe constitutes a MAC [53] Question: How will the executive orders supporting US coal production impact the business? - Management noted that the orders aim to prevent further coal plant closures and encourage long-term contracts, which could benefit the company [87]

Company Performance - Peabody Energy reported quarterly earnings of $0.27 per share, exceeding the Zacks Consensus Estimate of $0.07 per share, but down from $0.30 per share a year ago, representing an earnings surprise of 285.71% [1] - The company posted revenues of $937 million for the quarter ended March 2025, missing the Zacks Consensus Estimate by 1.13%, compared to year-ago revenues of $983.6 million [2] - Over the last four quarters, Peabody Energy has surpassed consensus EPS estimates three times and topped consensus revenue estimates three times [2] Stock Performance - Peabody Energy shares have declined approximately 35.4% since the beginning of the year, while the S&P 500 has decreased by 3.9% [3] - The current consensus EPS estimate for the upcoming quarter is -$0.01 on revenues of $932.6 million, and for the current fiscal year, it is $1.27 on revenues of $4.77 billion [7] Industry Outlook - The coal industry, to which Peabody Energy belongs, is currently ranked in the bottom 9% of over 250 Zacks industries, indicating a challenging environment [8] - The performance of Peabody Energy's stock may be influenced by the overall outlook for the coal industry, as research shows that the top 50% of Zacks-ranked industries outperform the bottom 50% by more than 2 to 1 [8]

Financial Performance - Peabody reported net income of $34.4 million, or $0.27 per diluted share, for Q1 2025, down from $39.6 million, or $0.29 per diluted share, in Q1 2024[1]. - Adjusted EBITDA for Q1 2025 was $144 million, compared to $160.5 million in the prior year quarter[1]. - Revenue for Q1 2025 was $937.0 million, a decrease of 16.5% from $1,123.1 million in Q4 2024 and a decrease of 4.7% from $983.6 million in Q1 2024[21]. - Adjusted EBITDA for Q1 2025 was $144.0 million, a decrease of 18.5% from $176.7 million in Q4 2024 and a decrease of 10.2% from $160.5 million in Q1 2024[30]. - Operating profit for Q1 2025 was $31.9 million, down 20.5% from $40.1 million in Q4 2024 and down 37.7% from $51.2 million in Q1 2024[21]. - Total segment costs for Q1 2025 were $767.3 million, down 18.2% from $938.1 million in Q4 2024[30]. Sales and Volume - Tons sold in Q1 2025 were 28.9 million, down 12.7% from 33.1 million in Q4 2024 and up 5.5% from 27.4 million in Q1 2024[21]. - Seaborne Thermal Adjusted EBITDA totaled $84.2 million with an Adjusted EBITDA margin of 32%, despite an 18% reduction in realized prices from Q4 2024[5]. - Powder River Basin Adjusted EBITDA reached $36.3 million, with tons sold at 19.6 million and an Adjusted EBITDA margin of 13%[7]. - Other U.S. Thermal Adjusted EBITDA was $32.9 million, with tons sold at 3.1 million and an Adjusted EBITDA margin of 20%[8]. - The company anticipates Q2 2025 U.S. Thermal volume of 19 million tons at an average price of $13.80 per ton[13]. Revenue Breakdown - Seaborne Thermal revenue decreased to $265.1 million in Q1 2025 from $309.3 million in Q4 2024, representing a decline of 14.2%[30]. - Total U.S. Thermal revenue was $444.3 million in Q1 2025, down 16.1% from $529.8 million in Q4 2024[30]. - Seaborne Metallurgical revenue fell to $220.1 million in Q1 2025 from $271.8 million in Q4 2024, a decrease of 19.0%[30]. - Adjusted EBITDA for Seaborne Thermal was $84.2 million in Q1 2025, a decrease of 24.8% from $111.8 million in Q4 2024[30]. Balance Sheet and Liquidity - Peabody's balance sheet remains strong with a cash positive net-debt position and over $1 billion in liquidity[9]. - Total current assets decreased to $1,672.4 million as of March 31, 2025, from $1,780.7 million as of December 31, 2024[24]. - Total assets decreased to $5,783.7 million as of March 31, 2025, from $5,953.7 million as of December 31, 2024[24]. - Total liabilities decreased to $2,068.6 million as of March 31, 2025, from $2,244.9 million as of December 31, 2024[24]. - Cash and cash equivalents at the end of Q1 2025 were $1,383.8 million, a slight increase from $1,382.6 million at the end of Q4 2024[25]. - Net cash provided by operating activities in Q1 2025 was $119.9 million, compared to $119.8 million in Q4 2024[25]. Strategic Outlook - The company anticipates continued market challenges and has outlined a cautious outlook for the upcoming quarters[35]. - Future strategic investments and potential acquisitions are being considered to enhance operational efficiency and market position[35]. - Peabody signed a seven-year contract to supply 7 to 8 million tons of coal annually to Associated Electric Cooperative, Inc.[4]. - The Centurion Mine is ahead of its target with 500,000 tons of sales expected in 2025, progressing towards longwall production in Q1 2026[9].

Core Insights - Peabody reported a net income of $34.4 million for Q1 2025, a decrease from $39.6 million in the same quarter of the previous year, with diluted earnings per share at $0.27 compared to $0.29 [1][19] - Adjusted EBITDA for Q1 2025 was $144 million, down from $160.5 million year-over-year, indicating a focus on cost management amid low seaborne coal prices [1][19] - The company signed a multi-year contract to supply coal to Midwestern generating stations, reinforcing its market position [1][6] Financial Performance - Total tons sold in Q1 2025 reached 28.9 million, compared to 27.4 million in Q1 2024 [19] - Revenue for Q1 2025 was $937 million, down from $983.6 million in the same quarter of 2024 [19] - Operating cash flow for the quarter was $120 million, demonstrating strong cash generation capabilities [10] Segment Performance - Seaborne Thermal segment sold 4.4 million tons, with an Adjusted EBITDA of $84.2 million and a margin of 32% despite an 18% reduction in realized prices from Q4 2024 [4][6] - Seaborne Metallurgical segment reported 1.8 million tons sold, with Adjusted EBITDA of $13.2 million, reflecting a 9% reduction in benchmark pricing [7][8] - Powder River Basin segment achieved 19.6 million tons sold, with Adjusted EBITDA of $36.3 million, benefiting from strong U.S. coal demand [8][10] Operational Updates - The Centurion Mine is progressing ahead of schedule, with a target of 500,000 tons of sales in 2025 and expected longwall production starting in Q1 2026 [10][11] - Peabody's balance sheet remains strong, with over $1 billion in liquidity and a cash-positive net-debt position [10][11] Market Outlook - The company anticipates a light demand in Q2 2025 due to seasonal effects but is sold out for planned production in the Powder River Basin [13] - Metallurgical coal prices have rebounded from lows in March, indicating potential for improved revenue in upcoming quarters [13] Strategic Developments - Peabody notified Anglo American of a Material Adverse Change affecting its planned acquisition of steelmaking coal assets, related to issues at the Moranbah North Mine [11] - The company continues to focus on cost management and operational efficiency across all segments to navigate challenging market conditions [2][6]

Core Points - Peabody has notified Anglo American Plc of a Material Adverse Change (MAC) affecting its planned acquisition of steelmaking coal assets due to issues at the Moranbah North Mine, which has been inactive since a gas ignition event on March 31, 2025 [1][2] - The uncertainty surrounding the Moranbah North Mine has raised concerns about the acquisition's value, as a significant portion of it was tied to this mine, and there is currently no known timetable for resuming production [2] - If the MAC is not resolved satisfactorily within the specified timeframe, Peabody may choose to terminate the acquisition agreements [2] Company Overview - Peabody is a leading coal producer that provides essential products for affordable and reliable energy and steel production [3] - The company's commitment to sustainability is a core aspect of its strategy and operations [3]