Core Insights - The article discusses the investment position of Gate City Capital Management, highlighting a beneficial long position in BTU shares, indicating a positive outlook on the company's performance [1]. Group 1 - Gate City Capital Management is a registered investment adviser, providing educational information without making specific offers or solicitations for securities [2]. - The report includes forward-looking statements and projections that may not be accurate due to factors beyond the company's control [2]. - The company emphasizes the importance of consulting with qualified financial advisers before making investment decisions [2]. Group 2 - Seeking Alpha clarifies that past performance does not guarantee future results and that no specific investment recommendations are provided [3]. - The views expressed in the article may not represent the opinions of Seeking Alpha as a whole, indicating a diversity of perspectives among analysts [3]. - The analysts contributing to the platform may not be licensed or certified, which could affect the reliability of the information presented [3].

Core Viewpoint - Peabody Energy anticipates a potential increase in U.S. coal consumption by up to 57% due to rising electricity demand and supportive government policies, marking a significant turning point for the struggling coal industry [1][2]. Group 1: Electricity Demand and Coal Consumption - The U.S. is expected to see a 25% increase in electricity demand by 2030, driven by increased factory electricity needs, higher household electrification, and the surge in power demand from AI data centers [5]. - Peabody estimates that if underutilized coal-fired power plants can operate at historical capacity levels, U.S. coal demand could increase by over 250 million tons in the coming years [1][5]. - Current coal consumption in the U.S. is projected at 439 million tons for this year, a 6.7% increase from last year, but still significantly lower than the peak of 1.13 billion tons in 2007 [1]. Group 2: Coal Plant Utilization and Challenges - The overall utilization rate of U.S. coal-fired power plants was only 42% last year, compared to 72% in 2008, indicating significant underutilization [5]. - Analysts caution that achieving the projected increase in coal demand is theoretical and contingent on all coal plants reaching pre-financial crisis operational levels, which is unlikely [5].

Group 1 - Peabody Energy predicts a potential increase in U.S. coal consumption by up to 57% due to rising electricity demand [1] - The company estimates that if underutilized coal plants can reach historical capacity levels, U.S. coal demand could increase by over 250 million tons in the coming years [1][2] - The U.S. coal consumption is projected to be 439 million tons this year, reflecting a 6.7% increase from last year, but still far below the peak of 1.13 billion tons in 2007 [2] Group 2 - The anticipated 25% growth in U.S. electricity demand by 2030 is driven by increased factory electricity needs, rising household electrification, and significant power requirements from AI data centers [2] - Current coal plant utilization in the U.S. is only 42%, compared to 72% in 2008, indicating significant untapped potential for increased production [2] - Analysts caution that achieving the projected 250 million ton increase in demand is highly theoretical and unlikely to be realized under current conditions [3]

Swelling US demand for electricity has the potential to boost coal consumption as much as 57%, according to mining giant Peabody Energy Corp., in what would be a major shift for an industry that’s been waning for years https://t.co/dfrXduh9ef ...

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)