PEABODY ENERGY (BTU)·Q4 2025 Earnings Summary

Peabody Energy Posts In-Line Quarter as Centurion Longwall Starts Two Months Early

February 5, 2026 · by Fintool AI Agent

Peabody Energy (NYSE: BTU) reported Q4 2025 results that came in largely in-line with expectations, with the headline story being the early start of longwall mining at its flagship Centurion met coal mine. Revenue of $1.02B slightly exceeded consensus, EPS of $0.09 beat by 29%, while Adjusted EBITDA of $118M narrowly missed estimates. The company declared a $0.075 quarterly dividend and provided 2026 guidance signaling significant metallurgical coal production growth.

Did Peabody Beat Earnings?

Mixed results against consensus, but management delivered on operational guidance.

The company emphasized that full-year 2025 results met or exceeded original guidance across seven of eight segment volume and cost metrics, despite sharply lower seaborne coal prices throughout the year.

Year-over-Year Comparison:

The year-over-year decline reflects the challenging seaborne coal price environment, but operational execution remained strong with record safety results and cost discipline.

What Changed From Last Quarter?

Centurion acceleration and improving met coal realizations are the big stories.

1. Centurion Longwall Started Early: The flagship premium hard coking coal mine began cutting coal "well ahead of its original schedule." CEO Grech noted the mine accesses the coveted Goonyella Middle Seam with a 25+ year mine life and 140M ton integrated mine plan. Management updated Centurion's standalone NPV to $2.1 billion at $225/tonne benchmark pricing, up from the prior $1.6B assessment.

2. Seaborne Thermal Margins Rebounded: Q4 Adjusted EBITDA of $63.5M jumped 55% from Q3's $41M, driven by higher export prices ($81.80/ton vs $76.54/ton) and better-than-expected production.

3. Metallurgical Coal Realizations Improving: Management expects met coal realizations to improve from ~70% of benchmark in 2025 to ~80% in 2026 as Centurion's premium product enters the mix. Premium hard coking coal benchmark has risen to $250/tonne, up 15% since year-start and at its highest mark in 18 months.

4. Rare Earth Element Progress: The company received a $6.25M Wyoming Energy Authority funding recommendation for a pilot plant in Wyoming. Management highlighted encouraging concentrations of heavy rare earths (21-28% of critical mineral oxide concentrations) plus targeted concentrations of germanium and gallium.

How Did Each Segment Perform?

Key Segment Takeaways:

• Seaborne Thermal delivered 31% Adjusted EBITDA margins despite the Wambo Underground closure, with costs per ton of $43.43 beating expectations.
• Seaborne Met volumes of 2.5M tons exceeded expectations (+19% QoQ) as mine production ramped.
• PRB shipped 22.3M tons in Q4, capping a year with 84.5M tons total — up 4.9M tons YoY. Full-year PRB Adjusted EBITDA of $175.8M rose 27% from 2024.

What Did Management Guide for 2026?

Significant production growth ahead with Centurion ramping and met coal mix improving.

Guidance Assumptions (from Q&A):

• Australian dollar: $0.70
• Met coal benchmark: $225/tonne

Other 2026 Financial Guidance:

• Total Capital Expenditures: $340M (down $70M from 2025)

Centurion Production Cadence:

• Q1 2026: ~700k tons (ramp-up phase)
• Q2-Q3 2026: ~1.0-1.1M tons per quarter
• Q4 2026: Lower due to longwall move

Q1 2026 Outlook:

• Seaborne Thermal & Met: Less than ratable in Q1 due to mine sequencing and longwall moves at Metropolitan and Shoal Creek

How Did the Stock React?

BTU closed at $35.01 on February 4, 2026, down 3.3% on the day ahead of earnings. The stock has rallied significantly over the past year, up 57% from its 52-week low of $9.61 and trading near its 52-week high of $39.95.

Key Price Metrics (as of Feb 5, 2026):

• Current Price: $35.01
• 50-Day Avg: $31.43 (trading 11% above)
• 200-Day Avg: $22.32 (trading 57% above)
• Market Cap: $4.26B
• After-hours: $34.80 (-0.6%)

The muted after-hours reaction suggests the in-line results were largely expected, with investors focused on Centurion execution and met coal price trajectory.

What Did Management Say?

CEO Jim Grech struck an optimistic tone on market conditions and strategic execution:

"Peabody's continued strong operational performance in the fourth quarter capped an excellent year with record safety and environmental results, increased volumes and focused cost control. Against a new backdrop of rising seaborne metallurgical coal prices, we are pleased to announce the accelerated start of longwall operations this week at our flagship Centurion mine."

On Centurion's strategic importance:

"With a low cost structure, premium price realizations and a long mine life, Centurion immediately vaults to the top of Peabody's coal operations and establishes a multi-decade foundation for shareholder value creation."

CFO Mark Spurbeck on capital allocation and shareholder returns:

"At today's prices, I think anyone could look at the guidance we provided and see some substantial free cash flow generation. And our policy remains the same, to return that to shareholders... With the Centurion development risk off the table, that return should be much closer to 100% versus 65%."

On Centurion's remaining capex:

"When we move forward now into 2026, nothing's changed... It's probably about $100 million a year in development for the north for the next three years. On top of that, there's some sustaining capital in the south, call it $25 million a year."

Balance Sheet and Liquidity

Peabody ended 2025 with a strong financial position:

The $125M reduction in cash reflects the ~$750M cumulative investment in Centurion over recent years, now transitioning to production phase.

Q&A Highlights

On PRB pricing outlook (Malcolm Roberts, Chief Commercial Officer): Analysts asked about pricing trajectory for 2027 and beyond. Roberts noted the company layers in volumes 3-4 years ahead of delivery, with significant contracting still to be done for 2027 at what they see as a "favorable pricing environment."

On incremental PRB demand: Asked about demand for tons beyond guidance, Roberts confirmed he sees incremental demand: "We've started the year with quite a lot lower inventories. We've had a reasonable cold snap, and we're already seeing those RFPs out there in the market." He cautioned that "latent supply and capacity in the basin is starting to become quite stretched."

On seaborne thermal cost step-up: CFO Spurbeck explained the $7/ton YoY cost increase in seaborne thermal is primarily due to lower production volumes at Wilpinjong and Wambo Open Cut, plus a 4-cent higher Australian dollar ($3-4/ton impact).

On Moorvale mine depletion: Moorvale will continue mining through the first half of 2026, winding down mid-year as production fully transitions to Coppabella.

Major New Contract Announcement: Malcolm Roberts highlighted a significant new agreement: "Peabody reached agreement recently with a major Midwestern utility for more than 20 million tons of Illinois-based coal over 5 years. The contract exceeds $1 billion in total sales over time. We have sourcing flexibility from multiple mines and market reopeners."

Key Catalysts Ahead

1. Centurion Ramp-Up: Watch for production updates as the longwall hits stride. Full production of 4.7M tons annually targeted by 2028.

2. Met Coal Price Trajectory: Rising seaborne met coal prices benefit Peabody's improving product mix. Company NPV of Centurion now assessed at $2.1B at $225/tonne benchmark.

3. Rare Earth/Critical Minerals: Pilot plant development could unlock optionality in PRB assets. Heavy REEs represent 21-28% of CMOCs.

4. U.S. Energy Policy: CEO Jim Grech was appointed chair of the newly reconstituted National Coal Council, advising the Trump administration on expanding coal-fueled generation and U.S. coal exports. He emphasized: "Coal is, quite simply, America's largest energy asset. More than that, America has more energy in its coal than any nation has in any one energy source."

5. Domestic Coal Demand Surge: Coal-fueled generation was up an estimated 13% YoY in 2025 while coal production grew only 4%, driving utility stockpiles down ~15%. Management sees this as structural demand growth for reliable baseload power.

6. $1B+ Utility Contract: The new 20M+ ton, 5-year contract with a major Midwestern utility provides significant revenue visibility for the Illinois Basin operations.

7. Shareholder Returns: With Centurion development risk removed and capex declining ~$150M, management signaled returns "much closer to 100% versus 65%" of free cash flow.

The Bottom Line

Peabody delivered an in-line quarter with the real story being strategic execution — Centurion's early start and improving met coal realizations position the company for significantly higher earnings in 2026-2028. While seaborne coal prices pressured 2025 results, the company's operational discipline, record safety performance, and balance sheet strength provide a solid foundation. With met coal production growing from 8.6M tons in 2025 to potentially 11M+ tons in 2026, Peabody is successfully transforming its portfolio toward higher-margin metallurgical products.

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View the Q4 2025 earnings call transcript | Peabody company profile | Prior quarter (Q3 2025)