Sign in
PE

PEABODY ENERGY CORP (BTU)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 revenue rose 14% sequentially to $1.01B and modestly beat S&P Global consensus (~$0.99B), while GAAP diluted EPS was a loss of $0.58 due to $54M of terminated acquisition costs; adjusted EBITDA was $99.5M . On an S&P-normalized basis, EPS was slightly positive versus a negative consensus, implying a beat on normalized EPS despite GAAP charges (see Estimates Context).*
  • Operations executed well: PRB adjusted EBITDA rose 20% QoQ to $51.7M on higher shipments and lower unit costs, seaborne thermal volumes recovered, and met coal costs reached multi‑year lows; cash ended at $603M with liquidity >$950M .
  • Guidance improved again: Q4 volumes/costs raised in seaborne thermal and PRB; full-year 2025 targets raised (PRB volume 84–86Mt, costs $11.25–$11.75/t; seaborne met costs lowered to $112.5–$117.5/t) .
  • Strategic catalysts: Centurion mine longwall on track for Feb 2026 and expected to lift met realizations to ~80% of benchmark in 2026 (from ~70% in 2025); Board declared $0.075 dividend .
  • Narrative for 2026+ strengthened by U.S. power demand/AI data centers, extended coal plant lives, reduced U.S. federal coal royalty rate and a 2.5% production tax credit beginning 2026; management emphasized PRB demand and pricing tailwinds and the optionality from rare earths evaluation in the PRB .

What Went Well and What Went Wrong

What Went Well

  • PRB momentum: Q3 PRB EBITDA up 20% QoQ to $51.7M; shipments +10% YoY and per‑ton margins +39%, aided by the 5.5% federal royalty reduction (net ~$0.40/t benefit) .
  • Cost discipline: Seaborne met costs fell >$10/t QoQ to $108.31/t; segment returned to $27.8M adj. EBITDA as mix included 210kt Centurion premium hard coking coal .
  • Management tone: “We have designed Peabody to produce positive EBITDA even during the toughest times,” highlighting a fortress balance sheet and free‑cash‑flow leverage as Centurion ramps .

What Went Wrong

  • GAAP EPS pressure: $(0.58) diluted EPS from a $54M charge tied to the terminated Anglo transaction; year‑to‑date related charges $75M; arbitration/legal costs expected ~$5M/year going forward .
  • Other U.S. Thermal headwinds: Bear Run dragline outage (5 weeks) lifted costs and trimmed volumes; segment EBITDA fell to $6.9M (from $13.5M in Q2) .
  • Continued seaborne pricing softness: Despite stable met benchmark, seaborne thermal revenue/ton remained pressured vs prior year, compressing segment margins vs 2024 comps .

Financial Results

Company-level performance vs prior year/quarter

MetricQ3 2024Q1 2025Q2 2025Q3 2025
Revenue ($USD Millions)$1,088.0 $937.0 $890.1 $1,012.1
GAAP Diluted EPS ($)$0.74 $0.27 $(0.23) $(0.58)
Adjusted EBITDA ($USD Millions)$224.8 $144.0 $93.3 $99.5

Segment performance (QoQ comparison)

Segment (Q)Tons Sold (M)Revenue/Ton ($)Costs/Ton ($)Adj. EBITDA ($M)Notes
Seaborne Thermal Q2’253.6 53.22 44.10 33.5 Port congestion depressed Q2 vols
Seaborne Thermal Q3’254.1 59.25 49.23 41.0 Volumes +0.5Mt QoQ as Newcastle queues normalized
Seaborne Met Q2’252.2 114.79 118.97 (9.2) Pricing soft; costs below targets
Seaborne Met Q3’252.1 121.34 108.31 27.8 +210kt Centurion; multi‑year low costs
PRB Q2’2520.0 13.82 11.66 43.0
PRB Q3’2522.6 13.36 11.07 51.7 Costs at low end; EBITDA +20% QoQ
Other U.S. Thermal Q2’252.9 54.08 49.39 13.5
Other U.S. Thermal Q3’253.7 51.77 49.90 6.9 Dragline outage costs; longwall move completed

Balance sheet and cash flow highlights:

  • Cash $603M; liquidity >$950M at 9/30/25 .
  • Operating cash flow $122M in Q3 .

Guidance Changes

Full‑year 2025 and Q4 2025 updates vs prior quarter

MetricPeriodPrevious Guidance (7/31/25)Current Guidance (10/30/25)Change
Seaborne Thermal volume (Mt)FY2514.6–15.2 15.1–15.4 Raised
Seaborne Thermal cost ($/t)FY25$45–$48 $45–$48 Maintained
Seaborne Met cost ($/t)FY25$115–$120 $112.5–$117.5 Lowered
PRB volume (Mt)FY2580–84 84–86 Raised
PRB cost ($/t)FY25$11.50–$12.00 $11.25–$11.75 Lowered
Other U.S. Thermal vol (Mt)FY2513.4–14.4 13.2–13.4 Slightly Lower
Other U.S. Thermal cost ($/t)FY25$43–$47 $45–$49 Higher
SG&A ($M)FY25$95 $95 Maintained
Capex ($M)FY25$420 (major $280; sust. $140) $420 (major $280; sust. $140) Maintained
Seaborne Thermal volume (Mt)Q4’25n/a3.2 (2.1 export; mix 40% NEWC/60% high ash), costs $45–$48/t New detail
Seaborne Met volume (Mt)Q4’25n/a2.4; costs $110–$115/t; ~70% of PHCC index New detail
PRB volume (Mt)Q4’25n/a23; price ~$13.35/t; costs $11.00–$11.50/t New detail
Other U.S. Thermal volume (Mt)Q4’25n/a3.6; costs $43–$47/t New detail
DividendQ4’25$0.075/share (declared 7/31) $0.075/share (declared 10/30) Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2 2025)Current Period (Q3 2025)Trend
U.S. power demand / AI data centersQ1 PR: strong cost performance; policy backdrop; AECI multi‑year contract; exec orders to revitalize coal “AI data center theme continues to play out… U.S. electricity demand up 2% YoY; coal burn up 11% YTD; more plant life extensions” Strengthening demand narrative
Policy/regulatoryRoyalty cut expected $15–$20M 2H’25; PTC from 1/1/26 Reiterated 5.5% royalty cut, PTC in 2026, emergency orders to extend coal plants Tailwinds reiterated
PRB supply/demandSold‑out at NARM; raising volumes; strong demand PRB shipments +10% YoY; margins +39%; need multi‑year customer commitments to expand beyond latent capacity Tightening; pricing leverage
Centurion progressLongwall start accelerated to Feb 2026; hiring ramp On track for Feb 2026; expected lowest‑cost met mine; mix uplift to ~80% of benchmark in 2026; 260 of 400 hires in place Execution on plan
Anglo transactionQ2: MAC notice and path to potential termination $54M Q3 charge; arbitration expected to take years; legal costs ~$5M/yr; expect deposit remainder back Transitioned to arbitration
Rare earths initiativeQ2: “second phase” evaluation; promising concentrations in PRB clays Early data indicate similar/better concentrations than peers; accelerated drilling; in talks with U.S. agencies and partners Expanded workstreams

Management Commentary

  • “We have designed Peabody to produce positive EBITDA even during the toughest times, while generating substantial cash flows during mid to higher parts of the cycle.” – CEO Jim Grech .
  • “Centurion… will be our lowest cost metallurgical coal mine… should boost our average met coal portfolio realizations as a % of benchmark from the 70% mark this year to roughly 80% in 2026.” – CEO Jim Grech .
  • “Shipments are up 10% year over year [in PRB], yet margins have improved by 39% resulting in a 53% increase in reported EBITDA compared to the prior year.” – CFO Mark Spurbeck .
  • “We are in the early stages in our assessment [of rare earths]… preliminary data… indicate similar or better concentration than others have reported in the PRB… actions aggressive in pacing yet disciplined in approach.” – CEO Jim Grech .

Q&A Highlights

  • PRB capacity and pricing: Additional expansion requires multi‑year customer commitments; latent capacity largely absorbed in 2025; upward pricing pressure expected if demand continues with gas >$4/MMBtu forward .
  • Centurion labor and cost trajectory: 260 of 400 hires already in place; Centurion expected to be lowest‑cost met mine over LOM; no step‑change in segment costs in 2026 guided yet .
  • Anglo arbitration: $54M Q3 charge brings YTD to $75M (bridge financing, professional fees); remainder of deposit expected back; legal costs ~ $5M/yr going forward .
  • Rare earths: Preliminary results promising; more data by year‑end reporting; active engagement with U.S. government and potential technology partners .

Estimates Context

Consensus versus reported (S&P Global methodology for EPS; company-reported revenue)

MetricQ1 2025Q2 2025Q3 2025
Revenue Consensus Mean ($M)947.1*992.5*
Revenue Actual ($M)937.0 890.1 1,012.1
Primary EPS Consensus Mean ($)(0.053)*(0.130)*
Primary EPS Actual ($)0.331*0.087*0.027*

Values marked with * retrieved from S&P Global.

  • Q3 revenue beat consensus by ~$19.6M (~2%) .*
  • On S&P’s “Primary EPS” basis, Q3 EPS was ~+$0.03 vs a ~(−$0.13) consensus, a beat; GAAP diluted EPS was $(0.58) due to $54M one‑time acquisition termination costs .*

Key Takeaways for Investors

  • Sequential operational improvement with a clean beat on normalized EPS and revenue; GAAP EPS obscured by one‑time termination costs that do not recur at similar magnitude (legal costs guided ~$5M/yr) .
  • PRB is the core earnings lever near‑term: volumes and margins improving with royalty relief; management pushing for multi‑year contracts to underpin capital for further expansion—supportive for 2026 pricing/mix .
  • Centurion is the medium‑term catalyst: Feb 2026 longwall launch increases met volumes and lifts realizations toward ~80% of benchmark, enhancing EBITDA sensitivity to any cyclical upturn .
  • Guidance momentum is positive for a second consecutive quarter (higher volumes/lower costs in key segments), pointing to a constructive Q4 setup .
  • Policy tailwinds (plant life extensions, royalty cut, 2026 PTC) and AI/data‑center driven load growth reinforce U.S. thermal demand durability .
  • Optionality from rare earths and critical minerals in PRB is early but progressing, offering a potential new value stream without material near‑term capex .
  • Near‑term trading: watch PRB contract wins and Q4 volume execution; medium term: Centurion ramp, met price cycle normalization, and any arbitration developments with Anglo .