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PEABODY ENERGY CORP (BTU)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 results were mixed: revenue fell to $890.1M and GAAP diluted EPS was −$0.23; Adjusted EBITDA was $93.3M as Seaborne prices softened, but cost discipline in Seaborne Thermal and PRB partially offset the pressure .
  • Versus S&P Global consensus, revenue missed ($890.1M vs $947.1M*) while Adjusted EBITDA marginally exceeded the consensus proxy; EPS comparisons are complicated by differing definitions (GAAP diluted EPS −$0.23 vs S&P Primary EPS estimate −$0.05*) .
  • Guidance improved: full‑year volumes were raised for PRB (to 80–84Mt) and Seaborne Thermal, and full‑year cost targets were lowered across three segments; total 2025 CapEx was cut to $420M from $450M .
  • Catalysts: (1) July passage of federal legislation cutting federal royalties (12.5%→7%) supports PRB margins and volumes in 2H25; management estimates $15–$20M 2H benefit . (2) Centurion longwall start accelerated to Feb 2026 . (3) Post‑quarter, Peabody terminated the planned Anglo acquisition due to a MAC at Moranbah North, removing deal uncertainty and refocusing capital allocation on organic assets .

What Went Well and What Went Wrong

What Went Well

  • PRB outperformed: shipments exceeded expectations; costs well below targets; Adjusted EBITDA rose to $43.0M and margin improved >$1/ton YoY as demand strengthened .
  • Seaborne Thermal “controlled the controllables”: costs below company targets despite weather‑related port disruption; segment delivered $33.5M Adjusted EBITDA and 17% margins; full‑year volume guidance raised and cost guidance reduced .
  • Management execution and strategic progress: “strong execution and a resilient performance” with cost management enabling operations through lower pricing; longwall at Centurion pulled forward to Feb 2026, reflecting development meters ahead of schedule .
    • “Our ability to manage costs is a key driver of success at a time of cyclical market softness” – CEO Jim Grech .
    • “We ended the quarter with $586M of cash and nearly $1B of liquidity” – CFO Mark Spurbeck .

What Went Wrong

  • Seaborne Metallurgical faced pricing headwinds: realized revenue/ton fell; Adjusted EBITDA loss of $9.2M; management cited challenging price environment despite costs below target .
  • Operational disruptions: weather‑driven port congestion reduced Seaborne Thermal shipments by ~400k tons at quarter end; Bear Run rail issues and Twentymile geology lowered Other U.S. Thermal volumes and EBITDA to $13.5M .
  • GAAP results under pressure: operating loss of $(38.4)M and net loss attributable to common stockholders of $(27.6)M, driven by lower pricing and transaction costs related to business combinations ($18.8M) .

Financial Results

Consolidated metrics vs prior quarters

MetricQ4 2024Q1 2025Q2 2025
Revenue ($USD Millions)$1,123.1 $937.0 $890.1
Net Income Attributable to Common ($USD Millions)$30.6 $34.4 $(27.6)
Diluted EPS – Net Income Attributable$0.25 $0.27 $(0.23)
Adjusted EBITDA ($USD Millions)$176.7 $144.0 $93.3
Tons Sold (Millions)33.1 28.9 28.7

Consensus vs Actual (Q2 2025)

MetricConsensus (S&P Global)Actual
Revenue ($USD Millions)$947.1*$890.1
Adjusted EBITDA ($USD Millions)$91.7*$93.3
EPS (Primary, S&P definition) ($)−$0.053*(GAAP diluted EPS) −$0.23

Values retrieved from S&P Global*.

Note: S&P “Primary EPS” may differ from GAAP diluted EPS reported by the company; we anchor actual EPS to GAAP diluted EPS from the 8‑K .

Segment revenue and Adjusted EBITDA

SegmentQ4 2024 Revenue ($M)Q1 2025 Revenue ($M)Q2 2025 Revenue ($M)Q4 2024 Adj. EBITDA ($M)Q1 2025 Adj. EBITDA ($M)Q2 2025 Adj. EBITDA ($M)
Seaborne Thermal$309.3 $265.1 $195.1 $111.8 $84.2 $33.5
Seaborne Metallurgical$271.8 $220.1 $252.2 $22.8 $13.2 $(9.2)
Powder River Basin$317.5 $275.6 $275.7 $52.7 $36.3 $43.0
Other U.S. Thermal$212.3 $168.7 $155.1 $40.5 $32.9 $13.5

KPIs and Balance Sheet

KPIQ4 2024Q1 2025Q2 2025
Cash & Cash Equivalents ($M)$700.4 $696.5 $585.9
Restricted Cash & Collateral ($M)$809.8 $815.3 $847.1
Long‑Term Debt (less current) ($M)$332.3 $331.2 $329.2
Total Liquidity (approx.)——“approaching $1 billion”

Guidance Changes

Full‑Year 2025 guidance: previous (May 6) vs current (July 31)

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Seaborne Thermal Total Volume (Mt)FY 202514.2–15.2 14.6–15.2 Raised
Seaborne Thermal Avg. Cost ($/ton)FY 2025$47–$52 $45–$48 Lowered
Seaborne Met Avg. Cost ($/ton)FY 2025$120–$130 $115–$120 Lowered
PRB Volume (Mt)FY 202576–78 80–84 Raised
PRB Avg. Cost ($/ton)FY 2025$12.00–$12.75 $11.50–$12.00 Lowered
Other U.S. Thermal Volume (Mt)FY 202513.4–14.4 13.4–14.4 Maintained
Other U.S. Thermal Avg. Cost ($/ton)FY 2025$43–$47 $43–$47 Maintained
SG&A ($M)FY 2025$95 $95 Maintained
Total CapEx ($M)FY 2025$450 $420 Lowered
Major Project CapEx ($M)FY 2025$280 $280 Maintained
Sustaining CapEx ($M)FY 2025$170 $140 Lowered
Dividend per shareCurrent$0.075 declared (May 6) $0.075 declared (Jul 31) Reaffirmed

Q3 2025 segment guidance (point‑in‑time)

SegmentVolumePrice/IndexCost
Seaborne Thermal3.9Mt (2.7Mt export; 0.6Mt priced ~$82) 1.0Mt NEWC & 1.1Mt high‑ash unpriced $45–$50/ton
Seaborne Metallurgical2.2Mt 70–75% of premium HCC index $110–$120/ton
PRB23Mt; avg price $13.45/ton —~$11.00–$11.50/ton
Other U.S. Thermal3.7Mt; avg price $51.10/ton —~$45–$49/ton

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024 and Q1 2025)Current Period (Q2 2025)Trend
PRB demand & policy tailwindsSold out 2025 PRB volumes; strong Q4 PRB volumes; positive policy backdrop Federal royalties cut; PRB volumes raised; $15–$20M 2H benefit; ~$0.40/ton net benefit Improving demand/margins
Centurion developmentFirst shipments in Q4; longwall start guided for Q1/Q3 2026; 3.5Mt 2026 plan Longwall start accelerated to Feb 2026; shields install in Nov; ~$100M remaining spend to start LW Ahead of schedule
Anglo acquisition (Moranbah North MAC)MAC notice issued in Q1; risk flagged No credible restart; Peabody highly confident in MAC; update promised Aug 19 Resolution imminent (terminated Aug 19)
Seaborne marketsQ4/Q1 noted cyclicality and price pressure Thermal supported by hot weather; met cycle mid‑downturn but green shoots; supply curtailments Stabilizing thermal; met bottoming signs
Operations/supply chainTwentymile geology; port/rail constraints noted in prior periods Port congestion cut 400k tons; Bear Run rail issues; longwall move to improve Twentymile Transient disruptions; improving
Rare earth elements (PRB)Not highlightedPhase 2 REE evaluation in PRB; initial data encouraging; accessible in mining overburden Optionality developing

Management Commentary

  • “Peabody closed out the first half of the year with strong execution and a resilient performance… Effective cost management in the seaborne platforms allowed us to work through a period of lower pricing, while robust PRB demand demonstrated the benefit of our leading U.S. thermal coal business.” – CEO Jim Grech .
  • “We ended the quarter with $586M of cash and nearly $1B of liquidity… Our U.S. thermal platform led the way, generating $57M of adjusted EBITDA.” – CFO Mark Spurbeck .
  • “We are pleased to increase our full-year volume guidance for Powder River Basin and Seaborne Thermal coal while reducing our full-year cost targets for three of the four segments.” – CEO Jim Grech .
  • “We are highly confident that sustainable longwall mining won’t take place at Moranbah North until after a new longwall is fully commissioned… Any revised deal would require a substantial revision in value and structure.” – CEO Jim Grech .

Q&A Highlights

  • Anglo MAC and deal status: Management reiterated high confidence in the MAC; no credible restart at Moranbah North; termination right after the 90‑day cure period; any BUMA (Dawson) transaction would also terminate if the main deal is terminated .
  • Centurion sell‑down: No commitment or timing provided; decision will be based on shareholder value; development remains ahead of schedule .
  • Royalty reduction mechanics: Net ~$0.40/ton benefit to Peabody after customer give‑backs; expected $15–$20M benefit in 2H25, annualized potential closer to ~$60M depending on contracts .
  • Operational offsets: Asset sales and resource management results offset lost tons due to port congestion and Bear Run rail issues; lumpy and not forecastable .
  • Liquidity and capex: $586M cash unencumbered; ~$100M remaining in 2H to reach Centurion longwall production; initial target ~$489M, now ~$495M .

Estimates Context

  • Q2 revenue missed consensus ($890.1M vs $947.1M*) amid lower Seaborne pricing and port disruptions; Adjusted EBITDA was near/slightly above consensus proxy as cost control mitigated pricing pressure .
  • EPS comparison is definition‑dependent: GAAP diluted EPS was −$0.23 vs S&P Primary EPS consensus −$0.05*, reflecting metric differences; investors should anchor on GAAP for reported results .
  • Target Price Consensus Mean: $34.47*; coverage light (Q2 revenue estimates: 5; EPS: 3), suggesting limited sell‑side visibility and higher dispersion risk*.
    Values retrieved from S&P Global*.

Key Takeaways for Investors

  • PRB is the earnings anchor near term: stronger demand, lower royalty rates, raised volumes and lower costs support margin expansion into 2H25 .
  • Seaborne Thermal cost execution remains a differentiator; despite pricing pressure, segment margins and lowered cost guidance de‑risk 2H targets .
  • Seaborne Met likely remains choppy until cycle recovery; cost guidance lowered but pricing headwinds persist; watch India restocking and Chinese production quotas for inflection .
  • Centurion schedule pull‑forward is strategically positive; expect incremental de‑risking as shields install in November and workforce ramps; ~$100M remaining spend to longwall start .
  • Capital allocation flexibility enhanced post‑Anglo termination; management reiterated the framework to return 65–100% of available FCF (buybacks prioritized), with balance sheet resilience intact .
  • Near‑term trading: headline catalysts include ongoing PRB strength, Q3 shipment catch‑up from Q2 port disruptions, and legislative royalty benefits flowing into reported margins .
  • Medium‑term thesis: diversified asset base with U.S. thermal cash flow, improving Seaborne cost curve, and Centurion growth optionality supports counter‑cyclical free cash flow generation and shareholder returns .
Note: Shoal Creek insurance recovery in prior-year comparables inflates YoY metrics (Q2 2024 had $80.8M BI insurance); Q2 2025 excludes such items, and includes $18.8M transaction costs related to business combinations **[1064728_0001064728-25-000111_btu8k20250731ex991.htm:1]** **[1064728_0001064728-25-000111_btu8k20250731ex991.htm:5]** **[1064728_0001064728-25-000111_btu8k20250731ex991.htm:10]**.