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PEABODY ENERGY CORP (BTU)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 delivered solid operational execution amid pricing/geologic headwinds: Revenue $1.12B, Diluted EPS $0.25, Adjusted EBITDA $176.7M; U.S. Thermal and Seaborne Thermal volumes were ahead of plan, offset by lower Seaborne Met realizations and a $41.4M non-cash FX remeasurement charge .
  • Company reiterated transformation to predominantly metallurgical coal via Centurion ramp and Anglo American assets; first Centurion cargo shipped in December; 2026 pro forma met production of 11.3Mt expected at $130–$140/t fully loaded costs .
  • 2025 guidance excludes Anglo; Seaborne Met volumes guided +1Mt YoY to 8.0–9.0Mt and PRB 72–78Mt at $12.00–$12.75/t costs; total capex $450M with $280M project capex primarily for Centurion .
  • Near-term catalysts: financing and regulatory approvals to close Anglo deal in Q2 2025; data-center driven U.S. power demand and policy tailwinds; potential narrative re-rating as met mix/quality improves and Centurion longwall nears 2026 start .

What Went Well and What Went Wrong

What Went Well

  • PRB volumes beat expectations with 23.0Mt shipped (highest quarterly sales of the year); costs stable at $11.50/t and 17% Adjusted EBITDA margin, generating $52.7M EBITDA .
  • Seaborne Thermal exceeded volume expectations (4.2Mt) on higher Wambo Underground production; costs stable, 36% margin, $111.8M EBITDA .
  • Strategic execution: first Centurion shipment, stronger-than-planned development, and progress on Anglo acquisition including multiple regulatory approvals and financing prep; management targets completion next quarter .

Quotes:

  • “We are highly confident that there are some $100 million a year in synergies to be captured post acquisition.”
  • “Development is running ahead of schedule and all systems are go for our planned longwall start-up early next year [March 2026].”

What Went Wrong

  • Seaborne Met average realized price fell ~15% QoQ to $123.41/t on a higher mix of Shoal Creek sales and weaker benchmarks; segment EBITDA $22.8M (8% margin) despite cost per ton improving 12% QoQ .
  • Non-cash FX remeasurement (AUD) at year-end reduced Q4 EBITDA by ~$41M; while a weaker AUD benefited operating costs intra-quarter, the period-end remeasurement was a significant negative .
  • Twentymile geological issues reduced Other U.S. Thermal volumes modestly below expectations; resolved entering Q1 2025 .

Financial Results

MetricQ4 2023Q3 2024Q4 2024
Revenue ($USD Millions)$1,235.0 $1,088.0 $1,123.1
Diluted EPS ($)$1.33 $0.74 $0.25
Adjusted EBITDA ($USD Millions)$345.1 $224.8 $176.7
Tons Sold (Millions)33.2 31.9 33.1

Segment breakdown (revenue and EBITDA):

SegmentQ4 2023 Revenue ($M)Q3 2024 Revenue ($M)Q4 2024 Revenue ($M)Q4 2023 Adj. EBITDA ($M)Q3 2024 Adj. EBITDA ($M)Q4 2024 Adj. EBITDA ($M)
Seaborne Thermal$286.3 $313.2 $309.3 $99.8 $120.0 $111.8
Seaborne Metallurgical$394.0 $242.5 $271.8 $166.2 $27.8 $22.8
Powder River Basin$320.1 $305.3 $317.5 $37.6 $51.7 $52.7
Other U.S. Thermal$210.7 $216.7 $212.3 $42.3 $28.4 $40.5
Corporate & Other$23.9 $10.3 $12.2 n/an/an/a

Operational KPIs and cost metrics:

KPIQ4 2023Q3 2024Q4 2024
Seaborne Thermal tons (Mt)3.7 4.1 4.2
Seaborne Thermal cost/ton ($)49.71 47.01 46.97
Seaborne Met tons (Mt)2.1 1.7 2.2
Seaborne Met cost/ton ($)107.89 128.04 113.05
PRB tons (Mt)23.6 22.1 23.0
PRB cost/ton ($)11.98 11.50 11.50
Other U.S. Thermal tons (Mt)3.7 4.0 3.7

Notes:

  • Q4 2024 Other Operating Costs included a $41.4M non-cash FX remeasurement charge (AUD) .
  • U.S. Thermal free cash flow for Q4: $72M; PRB EBITDA $53M; Other U.S. Thermal EBITDA $41M .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Seaborne Thermal volumes (Mt)FY2025n/a14.2–15.2; Export 8.8–9.8; Domestic 5.4 New
Seaborne Thermal cost/ton ($)FY2025n/a$47–$52 New
Seaborne Met volumes (Mt)FY2025n/a8.0–9.0 (incl. Centurion ramp) New
Seaborne Met cost/ton ($)FY2025n/a$120–$130 New
PRB volumes (Mt)FY2025n/a72–78; 71Mt priced at $13.85 New
PRB cost/ton ($)FY2025n/a$12.00–$12.75 New
Other U.S. Thermal volumes (Mt)FY2025n/a~13.4–14.4; 13.6Mt priced at $52 New
Other U.S. Thermal cost/ton ($)FY2025n/a$43–$47 New
SG&A ($M)FY2025n/a$95 New
Total Capex ($M)FY2025n/a$450; Project $280 (Centurion); Sustaining $170 New
Dividend ($/share)Q1 2025n/a$0.075 declared (payable Mar 11/12, record Feb 19/20)

Q1 2025 Outlook (operating):

  • Seaborne Thermal 4.0Mt (2.5Mt export), costs $45–$50/t .
  • Seaborne Met 2.0Mt, pricing at 70–75% of PHCC index, costs $125–$135/t (longwall move at Shoal Creek) .
  • PRB ~19Mt at ~$13.80/t price, costs $12.00–$12.75/t; Other U.S. Thermal ~3.4Mt at ~$52.50/t price, costs $43–$47/t .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 2024)Previous Mentions (Q3 2024)Current Period (Q4 2024)Trend
Data centers & U.S. load growthEIA expects coal use and inventory draw; balanced thermal markets Newcastle restocking demand; PRB momentum Utilities expect 2–3% annual load growth; PE funds exploring baseload coal plants for data centers Strengthening demand narrative
Logistics and river locks (Shoal Creek)Demopolis and Holt lock outages; mitigation costs $8–$10M included in segment costs Holt lock temporary fix; shipments to improve in Q4 Planned longwall move elevates Q1 costs; tariff headwinds may pressure Asian realizations Operationally improving but near-term cost/realization pressure
China/India met marketMixed China steel; India disruptions; PHCC avg $242/t China stimulus, improving sentiment; China clearing market for spot China steel consumption -5% YoY; India steel +8%; tight LV PCI; disruptions in HV coking coal China soft; India growth supports LV PCI
Policy/regulatory (U.S.)n/aLease/PRB optionality secured; reserves for decades New administration vocally pro-coal; 51 units’ retirements deferred; LNG exports supportive Favorable U.S. policy
RWE/R3 Renewables, sustainabilityn/an/aRWE partnership for solar/storage; record-low TRIFR/severity; $110M bond releases Execution momentum
Anglo acquisitionn/an/aMultiple approvals; preemptions/financing underway; target completion next quarter; 2026 11.3Mt at $130–$140/t; ~$100M/year synergies Advancing to close

Management Commentary

  • Strategy pivot: “On a pro forma basis, we expect 3/4 of Peabody’s EBITDA in 2026 to come from metallurgical coal… highly confident that there are some $100 million a year in synergies” .
  • U.S. demand tailwinds: “Utility experts… expecting 2% to 3% annual load growth… deferrals extended the lives of 51 coal units (26 GW)…” .
  • Centurion status: “Four continuous miners in coal… 0.5Mt development coal in 2025… longwall start early next year [March 2026]” .
  • Financing plan: Upfront $1.7B primarily with high-yield secured notes; minority sales and potentially convertibles as options; common equity last resort .
  • Market dynamics: “China’s apparent steel consumption declined ~5% in 2024… India expected +8% steel production in 2025” .

Q&A Highlights

  • Preemption rights and minority stakes: Preemption process timeline mid-March; robust inbound interest in minority stake sales across Anglo assets and Centurion; equity issuance is lowest priority but “all tools in the kit” .
  • Seaborne Met bridge: +1Mt YoY to 8.5Mt—Centurion +0.4–0.5Mt, Shoal Creek +0.6Mt; costs broadly consistent with 2024 ($123/t), with Coppabella waste movement and prior weak AUD weighing modestly .
  • Tariffs: China’s new 15% tariff on U.S. coal likely shifts trade flows; ~600kt from Shoal Creek to China in 2024; near-term Asian realizations $120–$130 FOB short ton equivalent .
  • Thermal trajectory: Seaborne Thermal down in 2025 due to Wambo Underground closure and Wilpinjong decline; PRB volumes demand-driven with ability to flex output and maintain pricing discipline .
  • Grosvenor timing: Encouraging signs, but no restart timeline until post-close and full asset assessment .

Estimates Context

  • Wall Street consensus from S&P Global for Q4 2024 revenue/EPS/EBITDA was unavailable due to SPGI rate limits at the time of retrieval; therefore, we cannot provide beat/miss vs estimates comparisons for this quarter. Company commentary noted some analysts have included Anglo contributions in 2025, while company guidance excludes them until closing .
  • Where estimates comparisons are critical, we will update once S&P Global access allows retrieval.

Key Takeaways for Investors

  • Execution over conditions: Strong PRB and Seaborne Thermal performance, plus disciplined costs, offset weaker met realizations and FX headwinds; operational momentum is intact .
  • Transformation is the thesis: Centurion ramp and Anglo acquisition increase met mix, quality and Asia proximity; 2026 met production 11.3Mt at $130–$140/t and ~$100M/year expected synergies can structurally lift cash flow and valuation multiples .
  • Near-term met volatility: Asian realizations at Shoal Creek under pressure (tariffs, freight CFR dynamics); expect temporary Q1 cost elevation (longwall move) before normalization .
  • U.S. demand catalysts: Data center load growth, deferred retirements and policy tailwinds can stabilize thermal volumes/pricing; PRB can flex up with demand while maintaining cost discipline .
  • 2025 capital plan: $450M total capex with $280M project spend mostly for Centurion; financing for Anglo upfront payment primarily via secured notes with optional project-level equity/convertibles; equity issuance is lowest-priority lever .
  • Watch closing milestones: Regulatory approvals, preemption windows and financing progress to support Q2 closing; integration planning underway .
  • Update estimates-driven positioning: Once consensus is available, reassess potential upward revisions to met volumes/pricing and any adjustments required for Seaborne Thermal declines; narrative likely shifts as Centurion longwall nears .