Group 1 - The author's interest in financial markets stems from a passion for productive companies and free market capitalism, influenced by Benjamin Graham's "The Intelligent Investor" [1] - The analysis style shifted towards the Heavy Industrial Sector, particularly steelmaking, after reading Graham's "Security Analysis" [1] - Understanding Austrian Economic theory, especially the Austrian Theory of the Business Cycle, has enhanced awareness of credit expansion and contraction effects on industrial firms [1] Group 2 - The author has engaged with various texts on steelmaking to grasp operational and technical aspects, specifically referencing "The Making Shaping and Treating of Steel" [1]

Core Viewpoint - Peabody Energy's stock price increased by 7% following the termination of a $3.8 billion acquisition deal with Anglo American due to a fire at the Ambre Energy North Mine in Australia [1] Group 1: Company Actions and Statements - Peabody Energy announced the termination of the acquisition deal due to significant adverse changes caused by the fire [1] - CEO Jim Grech stated that the two companies could not reach an amended agreement to address the impact of the fire on the acquisition [1] - The fire has resulted in a major and long-term loss for Peabody, affecting the largest mine involved in the acquisition [1] Group 2: Production and Operational Impact - The mine was originally expected to achieve a saleable production of 5.3 million tons by 2025, but Peabody has not established a timeline for resuming operations at the expected production levels [1] - Peabody indicated in May that the fire constituted a significant adverse change, justifying the termination of the deal [1] - There is currently no clear timeline for the resumption of operations, while Anglo American disputes that the mine and equipment were significantly affected [1] Group 3: Implications for Anglo American - The failure of the acquisition deal represents a significant setback for Anglo American, which had agreed to divest coal assets to streamline its operations and focus on copper and iron ore [1]

Core Viewpoint - Peabody Energy's stock price increased by 7% following the termination of a $3.8 billion acquisition deal for coking coal assets with Anglo American due to a fire at the Ambre Energy North Mine in Australia [1] Group 1: Company Actions and Statements - Peabody's CEO Jim Grech stated that the two companies could not reach an amended agreement to address the significant adverse changes caused by the fire [1] - The fire has resulted in substantial and long-term losses for Peabody, affecting the largest mine involved in the acquisition [1] - The mine was initially expected to achieve a saleable production of 5.3 million tons by 2025, but Peabody has not yet determined a timeline for resuming longwall mining at the expected production and cost levels [1] Group 2: Implications for Anglo American - The failure of the acquisition deal represents a significant blow to Anglo American, which had agreed to divest coal assets in November to streamline and focus on copper and iron ore businesses [1] - Anglo American contended that the mine and equipment were not damaged and disputed that the incident constituted a significant adverse change [1]

Core Viewpoint - Peabody Energy's stock rose by 7% after the company announced the termination of a $3.8 billion acquisition of coking coal assets from Anglo American due to a significant adverse change caused by a fire at the Ambre Energy North Mine in Australia [1] Group 1: Peabody Energy - Peabody's CEO Jim Grech stated that the two companies could not reach an amended agreement to address the significant adverse change resulting from the fire [1] - The fire at the mine was expected to impact the planned sales volume of 5.3 million tons by 2025, with no current timeline for resuming operations at the expected production and cost levels [1] - In May, Peabody indicated that the fire constituted a significant adverse change, justifying the termination of the acquisition [1] Group 2: Anglo American - The failure of the transaction will have a significant impact on Anglo American, which had agreed to sell coal assets in November to streamline its operations and focus on copper and iron ore businesses [2]

Core Viewpoint - Peabody has terminated its purchase agreements with Anglo American Plc due to a material adverse change related to Anglo's steelmaking coal assets, following an ignition event at Anglo's Moranbah North Mine, which has no clear timeline for resuming production [1][2]. Group 1: Termination of Agreements - Peabody's decision to terminate the transaction comes nearly five months after an ignition event at Anglo's Moranbah North Mine, with no definitive timeline for resuming sustainable longwall production [1]. - The two companies did not reach a revised agreement to address the material adverse change that would compensate Peabody for the impacts on the acquisition [2]. - Peabody has also terminated the agreement for the related sale of the Dawson Mine to PT Bukit Makmur Mandiri Utama [3]. Group 2: Financial Implications - Anglo estimates holding costs at Moranbah North to be $45 million per month, with the mine previously targeted to produce 5.3 million tons of saleable production in 2025 [2]. - There is currently no timetable for the resumption of longwall production at forecasted volumes and costs [2]. Group 3: Strategic Positioning - Peabody's portfolio is well positioned with growing exposure to seaborne metallurgical coal, highlighted by the new 25-year premium hard coking coal Centurion Mine [4]. - The company intends to execute a four-pronged strategy for value creation, focusing on managing safe, productive, and environmentally responsible operations [5]. - Peabody aims to return 65-100% of available free cash flow to shareholders primarily through share buybacks, while maintaining a resilient balance sheet and exercising strong capital discipline [5].

PART I — FINANCIAL INFORMATION [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) The company's financial performance declined significantly in Q2 and H1 2025 compared to the prior year [Unaudited Condensed Consolidated Statements of Operations](index=3&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Operations) The company reported a net loss in Q2 2025, a sharp reversal from the prior year's net income due to lower revenue Consolidated Statements of Operations Highlights (in millions) | Metric | Q2 2025 | Q2 2024 | YoY Change | H1 2025 | H1 2024 | YoY Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | **Revenue** | **$890.1** | **$1,042.0** | **-14.6%** | **$1,827.1** | **$2,025.6** | **-9.8%** | | Operating (Loss) Profit | ($38.4) | $233.9 | - | ($6.5) | $285.1 | - | | Net (Loss) Income | ($26.0) | $209.2 | - | $12.0 | $254.2 | -95.3% | | Net (Loss) Income Attributable to Common Stockholders | ($27.6) | $199.4 | - | $6.8 | $239.0 | -97.2% | | Diluted (Loss) Income per Share | ($0.23) | $1.42 | - | $0.06 | $1.70 | -96.5% | - Transaction costs related to business combinations were **$18.8 million in Q2 2025** and **$21.2 million in H1 2025**, with no such costs in the prior year periods[7](index=7&type=chunk) - The prior year's results were positively impacted by a **$109.5 million Shoal Creek insurance recovery**, which was not present in 2025[7](index=7&type=chunk) [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets and stockholders' equity decreased as of June 30, 2025, compared to year-end 2024 Balance Sheet Summary (in millions) | Account | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | **Total Current Assets** | **$1,627.3** | **$1,780.7** | | Cash and cash equivalents | $585.9 | $700.4 | | **Total Assets** | **$5,763.4** | **$5,953.7** | | **Total Current Liabilities** | **$737.0** | **$827.5** | | Long-term debt, less current portion | $329.2 | $332.3 | | **Total Liabilities** | **$2,089.3** | **$2,244.9** | | **Total Stockholders' Equity** | **$3,674.1** | **$3,708.8** | [Unaudited Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Operating cash flow increased, but overall cash decreased due to investing and financing activities Cash Flow Summary for Six Months Ended June 30 (in millions) | Cash Flow Category | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $143.1 | $126.8 | | Net cash used in investing activities | ($180.7) | ($316.8) | | Net cash used in financing activities | ($44.9) | ($140.5) | | **Net change in cash, cash equivalents and restricted cash** | **($82.5)** | **($330.5)** | - Investing activities in H1 2024 included a **$143.8 million cash outflow** for the Wards Well acquisition, which did not recur in 2025[15](index=15&type=chunk) - Financing activities in H1 2025 included **no common stock repurchases**, compared to **$83.1 million** in repurchases during H1 2024[15](index=15&type=chunk) [Notes to Unaudited Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) The notes provide key disclosures on revenue, debt, segment performance, and the pending Anglo American acquisition Disaggregation of Revenue - H1 2025 vs H1 2024 (in millions) | Segment | H1 2025 Revenue | H1 2024 Revenue | | :--- | :--- | :--- | | Seaborne Thermal | $460.2 | $591.4 | | Seaborne Metallurgical | $472.3 | $541.3 | | Powder River Basin | $551.3 | $476.0 | | Other U.S. Thermal | $323.8 | $393.6 | | **Total Revenue** | **$1,827.1** | **$2,025.6** | - The company holds **$320.0 million** in 3.250% Convertible Senior Notes due 2028[50](index=50&type=chunk)[51](index=51&type=chunk) - On May 5, 2025, Peabody notified Anglo American of a **Material Adverse Change (MAC)** regarding the planned acquisition due to issues at the Moranbah North Mine, which remains inactive[77](index=77&type=chunk) - In June 2024, the company recognized a **$109.5 million insurance recovery** related to the Shoal Creek Mine incident[81](index=81&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=29&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes the financial decline to lower seaborne coal pricing and a non-recurring insurance recovery - The decrease in financial results for H1 2025 was driven by lower revenue from lower seaborne coal pricing (**$198.5 million**) and the prior year's **$109.5 million** Shoal Creek insurance recovery[137](index=137&type=chunk) Adjusted EBITDA by Segment - H1 2025 vs H1 2024 (in millions) | Segment | H1 2025 Adj. EBITDA | H1 2024 Adj. EBITDA | | :--- | :--- | :--- | | Seaborne Thermal | $117.7 | $198.2 | | Seaborne Metallurgical | $4.0 | $191.9 | | Powder River Basin | $79.3 | $34.2 | | Other U.S. Thermal | $46.4 | $81.9 | | **Total Adjusted EBITDA** | **$237.3** | **$470.2** | - Total available liquidity as of June 30, 2025, was **$958.9 million**, down from **$1,072.5 million** at the end of 2024[201](index=201&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=50&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is exposed to market risks from coal pricing, foreign currency, fuel costs, and interest rates - The company has approximately **97 million tons** of U.S. thermal coal priced and committed for 2025[238](index=238&type=chunk) - A **$0.10 change in the AUD/USD exchange rate** would impact annual operating costs by approximately **$210 million to $220 million**, though this is partially mitigated by hedging instruments[240](index=240&type=chunk) - A **$10 per barrel change in crude oil prices** would impact annual diesel fuel costs by approximately **$23 million**[242](index=242&type=chunk) - A **one percentage point decrease in interest rates** would reduce annual interest income by approximately **$13 million** based on current cash balances[245](index=245&type=chunk) [Controls and Procedures](index=51&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of the quarter's end - Management concluded that as of June 30, 2025, the company's disclosure controls and procedures were **effective** at providing reasonable assurance that desired control objectives were achieved[246](index=246&type=chunk) PART II — OTHER INFORMATION [Legal Proceedings](index=52&type=section&id=Item%201.%20Legal%20Proceedings) This section refers to Note 14 of the financial statements for details on significant legal proceedings - For a description of significant legal proceedings, the report refers to **Note 14** of the financial statements[248](index=248&type=chunk) [Risk Factors](index=52&type=section&id=Item%201A.%20Risk%20Factors) The company highlights key risks including coal price dependency, operational hazards, and regulatory challenges - The company's profitability is **highly dependent on the prices** it receives for its coal[250](index=250&type=chunk) - Concerns about the impacts of coal combustion on **global climate** are leading to conditions that could affect demand for the company's products and its ability to produce[250](index=250&type=chunk) - The report lists numerous risks, including operational, regulatory, financial, and market-related factors that could **materially affect the company's business**[250](index=250&type=chunk)[252](index=252&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=53&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company has $469.6 million remaining in its share repurchase program and continues to issue dividends - As of June 30, 2025, **$469.6 million remained available** for share repurchases under the 2023 Repurchase Program[253](index=253&type=chunk) - The company declared dividends of **$0.075 per share for Q2 2025** and a total of **$0.150 per share** for the six months ended June 30, 2025[254](index=254&type=chunk) - **No shares were repurchased** under the publicly announced program during the three months ended June 30, 2025[256](index=256&type=chunk) [Mine Safety Disclosures](index=54&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) Information regarding mine safety violations and other regulatory matters is provided in Exhibit 95 - Information concerning mine safety violations and other regulatory matters is included in **Exhibit 95** to the Quarterly Report[258](index=258&type=chunk) [Other Information](index=54&type=section&id=Item%205.%20Other%20Information) No directors or officers adopted or terminated Rule 10b5-1 trading arrangements during the second quarter - **No directors or officers** adopted or terminated a Rule 10b5-1 trading arrangement during the three months ended June 30, 2025[259](index=259&type=chunk) [Exhibits](index=55&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including certifications and safety disclosures - The report includes required certifications from the CEO and CFO (Exhibits 31.1, 31.2, 32.1, 32.2) and Mine Safety Disclosures (Exhibit 95)[263](index=263&type=chunk)

Financial Data and Key Metrics Changes - The company reported a GAAP net loss attributable to common stockholders of $27.6 million or $0.23 per diluted share, while generating adjusted EBITDA of $93 million [21][22] - Operating cash flow was $23 million, with cash at the end of the quarter amounting to $586 million and nearly $1 billion in liquidity [22][28] Business Line Data and Key Metrics Changes - The Seaborne Thermal segment recorded adjusted EBITDA of $33.5 million with 17% margins, despite a loss of 400,000 tons due to port congestion [22] - The Seaborne Metallurgical segment reported an adjusted EBITDA loss of $9.2 million, with 23% lower average realized prices year over year [23] - The US thermal mines generated $57 million of adjusted EBITDA, demonstrating stable free cash flows and low capital requirements [23] Market Data and Key Metrics Changes - In the US, coal fuel generation increased by 15% compared to 2024, driven by high natural gas prices and growing electricity demand [12] - Customer stockpiles decreased by 15 million tons, an 11% reduction from the previous year, indicating tightening supply and demand fundamentals [13] - Seaborne thermal coal markets are supported by hot summer weather in Asia, leading to reduced stockpiles and stronger bids [15] Company Strategy and Development Direction - The company is accelerating longwall operations at its Centurion mine, targeting startup in February 2026, reflecting strong execution across operations [5][6] - Recent US legislation is expected to provide significant benefits, including a reduction in federal royalty rates from 12.5% to 7%, anticipated to generate $15 million to $20 million in net benefits [8][9] - The company aims to manage the cyclicality of the market to capture outsized free cash flow when prices improve [20] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the recovery of the US coal market, citing strong demand and supportive legislation [7][11] - The company noted that while the seaborne price environment remains challenging, it is well-positioned to navigate these conditions [20] - Management highlighted the importance of controlling costs and maintaining a strong balance sheet during cyclical downturns [20] Other Important Information - The company is in discussions regarding the acquisition of assets from Anglo American, with ongoing disagreements over the material adverse change (MAC) status of the Moranbah North mine [29][48] - The company is advancing its rare earth element evaluation program in the Powder River Basin, with initial studies indicating potential elevated levels of rare earth elements [81] Q&A Session Summary Question: Can you provide more details on the MAC situation with Anglo? - Management expressed confidence in their MAC position, citing significant monthly carrying costs and uncertainty regarding the mine's restart [35][36] Question: What is the status of discussions with Anglo? - Management confirmed ongoing respectful discussions but noted a fundamental disagreement over the impact of the MAC [47][48] Question: What should investors expect on August 19 regarding the MAC? - Management stated that the 90-day period to cure the MAC will conclude on that date, at which point they have the right to terminate the agreement [56] Question: Can you clarify the impact of the new royalty rate on costs? - The new royalty rate is included in the guidance, with expected benefits to costs in the second half of the year [68] Question: What is the expected benefit from the production tax credit for Shoal Creek? - The production tax credit is expected to provide savings of over $5 million annually, starting in 2026 [75] Question: How much cash is unrestricted and available to the company? - The company confirmed that the total cash of $586 million is unrestricted and fully available [89]

Financial Data and Key Metrics Changes - The company reported a GAAP net loss attributable to common stockholders of $27.6 million or $0.23 per diluted share, while generating adjusted EBITDA of $93 million [21] - Operating cash flow was $23 million, with cash at the end of the quarter amounting to $586 million and nearly $1 billion in liquidity [22] - The company raised its full-year guidance based on strong performance and cost management, with a reduction in full-year CapEx by $30 million to $420 million [27] Business Line Data and Key Metrics Changes - The Seaborne Thermal segment recorded adjusted EBITDA of $33.5 million with 17% margins, despite a loss of 400,000 tons due to port congestion [22] - The US thermal mines generated $57 million of adjusted EBITDA, demonstrating stable free cash flows and low capital requirements [23] - The seaborne metallurgical segment reported an adjusted EBITDA loss of $9.2 million, reflecting a 23% decrease in average realized prices year over year [23] Market Data and Key Metrics Changes - In the US, coal fuel generation increased by 15% compared to 2024, driven by high natural gas prices and growing electricity demand [11] - Customer stockpiles decreased by 15 million tonnes, an 11% reduction from the previous year, indicating tightening supply and demand fundamentals [12] - Seaborne thermal coal markets are supported by hot summer weather in Asia, leading to reduced stockpiles and stronger bids [14] Company Strategy and Development Direction - The company is focusing on cost management and operational efficiency to navigate the cyclical market softness in seaborne markets [20] - An acceleration of longwall operations at the Centurion mine is planned, with a target startup in February 2026 [4] - The recent US legislation is expected to provide significant benefits, including a reduction in federal royalty rates and a production tax credit for eligible domestic coal [7] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the recovery of the US coal market, citing strong demand and supportive legislation [6][9] - The company anticipates a significant increase in PRB volumes and improved cost structures due to favorable market conditions [27] - Management highlighted the importance of coal in maintaining grid reliability and energy independence amid rising electricity demand [8] Other Important Information - The company is currently in discussions regarding the acquisition of assets from Anglo American, with ongoing disagreements over the material adverse change (MAC) event at the Moranbah North mine [29][50] - The company is advancing its rare earth element evaluation program, with initial studies indicating potential elevated levels of rare earth elements in its reserves [86] Q&A Session Summary Question: Can you provide insights on the MAC situation and potential liabilities? - Management expressed confidence in their MAC position and indicated that they are prepared to pursue arbitration if necessary [36][40] Question: What is the latest on the Centurion project and potential sell-down timing? - Management stated that there is no commitment to a sell-down at this time and that discussions are ongoing without a specific timeline [41][43] Question: What is the status of discussions with Anglo regarding the Moranbah North mine? - Management confirmed that discussions are candid but highlighted a fundamental disagreement over the impact of the MAC event [50] Question: Can you provide details on liquidity and cash availability? - The company confirmed that the cash balance of $586 million is unrestricted and fully available, with additional capital required for the Centurion project [94] Question: What are the expectations for the second half of the year regarding costs and performance? - Management indicated that costs are expected to improve and that they are on track to meet full-year guidance despite some challenges [66][84]

Group 1 - Peabody Energy Corporation is a U.S. listed coal mining company with most production from U.S. operations, but the majority of earnings and cash flow typically come from international markets [1] - The company focuses on turnarounds in natural resource industries, with a typical holding period of 2-3 years [2] - The portfolio of the company has achieved a compounded annual growth rate of 29% over the last 6 years [2]

Financial Performance - Peabody Energy reported a quarterly loss of $0.06 per share, compared to the Zacks Consensus Estimate of a loss of $0.04, and a significant decline from earnings of $1.43 per share a year ago, indicating an earnings surprise of -50.00% [1] - The company posted revenues of $890.1 million for the quarter ended June 2025, missing the Zacks Consensus Estimate by 5.07%, and down from $1.04 billion in the same quarter last year [2] - Over the last four quarters, Peabody Energy has surpassed consensus EPS estimates two times and topped consensus revenue estimates two times [2] Stock Performance - Peabody Energy shares have declined approximately 26.4% since the beginning of the year, while the S&P 500 has gained 8.2% [3] - The current status of estimate revisions for Peabody Energy translates into a Zacks Rank 3 (Hold), indicating that the shares are expected to perform in line with the market in the near future [6] Future Outlook - The current consensus EPS estimate for the coming quarter is $0.04 on revenues of $942.7 million, and for the current fiscal year, it is $0.45 on revenues of $3.82 billion [7] - The outlook for the coal industry, where Peabody Energy operates, is currently in the bottom 13% of the Zacks industries, which may materially impact the stock's performance [8]