Peabody(BTU) - 2025 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - In Q4 2025, the company recorded net income attributable to common stockholders of $10.4 million or $0.09 per diluted share, with adjusted EBITDA of $118 million, a 19% increase from the prior quarter [25] - The company generated $69 million of operating cash flow from continuing operations during the quarter and $336 million for the full year, ending the year with $575 million in cash and total liquidity above $900 million [25][26] - For the full year, results met or exceeded original guidance for seven of eight volume and cost metrics, with seaborne thermal delivering 3.3 million tons, exceeding expectations [26] Business Line Data and Key Metrics Changes - Seaborne metallurgical coal shipped 2.5 million tons, up 400,000 from the third quarter, with realized pricing improving to $113 per ton [27] - The U.S. Thermal platform contributed $63 million of adjusted EBITDA in Q4, with nearly $250 million of adjusted EBITDA for the full year [28] - PRB operations shipped 22.3 million tons in Q4 and 84.5 million tons for the full year, almost 5 million tons or 6% more than the prior year [29] Market Data and Key Metrics Changes - Benchmark pricing for seaborne metallurgical coal rose to its highest mark in 18 months, increasing 15% from $190 per ton at the beginning of Q4 [16] - Coal fuel generation in the U.S. was up an estimated 13% year-over-year in 2025, running ahead of projections [20] - Asian countries continue to add coal generation capacity, with China adding 80 gigawatts of new capacity in 2025 [19] Company Strategy and Development Direction - The Centurion Mine is expected to ship an average of 4.7 million tons per year of premium hard coking coal, with a net present value for the project of $2.1 billion at $225 benchmark pricing [5][6] - The company aims to maximize long-term shareholder value by reweighting its portfolio toward higher-margin metallurgical coal [7] - Peabody is also evaluating renewable projects in formerly mined lands and developing a gas power station at the Centurion Mine [8] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in improving market fundamentals and highlighted a full agenda of priorities for the new year [3] - The company noted that coal remains a critical energy asset in the U.S., with substantial strength in both domestic thermal and seaborne metallurgical coal markets [15][13] - Management emphasized the importance of safety and environmental excellence, achieving a record safety year with an incident rate of 0.71 per 200,000 hours worked [3][4] Other Important Information - The company has conducted a robust critical mineral testing program, uncovering promising concentrations of heavy rare earths and other critical minerals [10] - Peabody is working with government agencies to strengthen domestic critical mineral supply chains and has been recommended for a $6.25 million grant for a pilot processing plant [11] Q&A Session Summary Question: What do you assume for the Australian dollar in the cost guide? - The company is looking at $0.70 for the Australian dollar and using a $225 benchmark pricing [39] Question: How much CapEx is potentially still left for Centurion development? - Approximately $100 million a year in development for the north for the next three years, plus $25 million a year in sustaining capital in the south [40] Question: How should we think about pricing in 2027 and beyond? - The company is not providing specific guidance for 2027 but expects favorable pricing conditions due to ongoing contracting [44] Question: What are the drivers for the increase in seaborne thermal costs? - The increase is primarily due to lower production volumes, particularly at Wilpinjong, and a slightly higher Australian dollar impacting costs [49] Question: How should we think about the cadence of shipments as the year progresses? - Seaborne thermal is expected to be less ratable in Q1, with a bounce back in Q2 and Q3, while Centurion will ramp up production throughout the year [54]