Peabody Reports Results For Quarter Ended June 30, 2023

Repurchased more than 8% of Shares Outstanding

Declared $0.075 Second Quarter Dividend

ST. LOUIS, July 27, 2023 /PRNewswire/ -- Peabody (NYSE: BTU) today reported net income attributable to common stockholders of $179.2 million, or $1.15 per diluted share, for the second quarter of 2023, compared to $268.5 million, or $1.68 per diluted share in the first quarter. The second quarter results included a $33.7 million provision for losses at NARM and Shoal Creek. Peabody had Adjusted EBITDA¹ of $358.2 million in the second quarter of 2023 compared to $390.6 million in the prior quarter.

"In the second quarter of 2023, our diverse operational platform allowed us to successfully execute on our plan despite continued volatility in the markets," said Peabody President and Chief Executive Officer Jim Grech. "The strength of our seaborne portfolio is evidenced by our solid quarterly results notwithstanding a challenging pricing environment."

Highlights

• Returned $262 million through our shareholder return program through July 19, reflecting $251 million of share repurchases and dividends of $11 million
• Second quarter Adjusted EBITDA of $358 million, Operating Cash Flow of $353 million (includes $109 million working capital benefit that is largely expected to reverse next quarter) and Available Free Cash Flow¹ ("AFCF") of $375 million
• Resumed development coal production at Shoal Creek, after safely completing localized sealing of two longwall panels of the mine impacted by a fire in March
• Exceeded anticipated seaborne metallurgical volumes by 18 percent, shipping 2.0 million tons
• Ended the quarter with $1,081 million of Cash and Cash Equivalents
• Declared second quarter dividend on common stock of $0.075 per share

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¹ Adjusted EBITDA and Available Free Cash Flow are non-GAAP financial measures. Adjusted EBITDA margin is equal to segment Adjusted EBITDA divided by segment revenue. Revenue per Ton and Adjusted EBITDA Margin per Ton are equal to revenue by segment and Adjusted EBITDA by segment, respectively, divided by segment tons sold. Costs per Ton is equal to Revenue per Ton less Adjusted EBITDA Margin per Ton. Management believes Costs per Ton and Adjusted EBITDA Margin per Ton best reflect controllable costs and operating results at the reporting segment level. We consider all measures reported on a per ton basis, as well as Adjusted EBITDA margin, to be operating/statistical measures. Please refer to the tables and related notes in this press release for a reconciliation and definition of non-GAAP financial measures.

Shareholder Return Program

Through July 19, 2023, the Company returned $261.8 million to shareholders, including a fixed dividend of $10.8 million and share repurchases of $251.0 million. The Company repurchased 12.0 million shares, or 8.3% of shares outstanding at an average price of $20.91 per share.

"The sustained efforts to enhance our financial strength and return capital to shareholders has resulted in an 8.3% reduction in shares outstanding in just one quarter, while continuing to create additional value for our stockholders," said Peabody Executive Vice President and Chief Financial Officer Mark Spurbeck.

We remain committed to our shareholder return framework of returning at least 65% of annual AFCF. While the Board of Directors continues to evaluate the shareholder return program, it currently views share repurchases as value accretive and an efficient way to return capital to shareholders.

AFCF for the first six months of 2023 was $636.6 million, resulting in at least $413.8 million available for the shareholder return program, of which $261.8 million was returned through July 19, 2023. After the second quarter fixed dividend of $0.075 per share (declared July 27, 2023), at least $142.0 million remains available for additional share repurchases.

All future shareholder returns remain at the discretion of the Board of Directors.

Second Quarter Segment Performance

Seaborne Thermal

The seaborne thermal segment shipped 4.0 million tons, including 2.6 million export tons. Export shipments were 0.5 million tons higher than the prior quarter as the Wambo longwall move was completed and wet weather which impacted the first quarter was abated. The average realized export price was 6 percent lower than the prior quarter due to sales mix and a decline in average seaborne thermal benchmark prices. Total segment costs of $50.88 per ton were in-line with the first quarter as higher production was offset by the timing of equipment repair and maintenance costs. The segment reported Adjusted EBITDA margins of 49 percent and Adjusted EBITDA of $197.5 million.

Seaborne Metallurgical

The seaborne met segment shipped 2.0 million tons at an average realized price of $190.13 per ton. Tons sold were 0.7 million tons higher than the prior quarter primarily driven by higher sales from CMJV as rail and port congestion and heavy rains impacted the first quarter. Total segment costs of $137.78 per ton were 9 percent lower than the first quarter primarily due to higher production and lower sales price sensitive costs. The segment reported 28 percent Adjusted EBITDA margins and Adjusted EBITDA of $102.5 million.

Powder River Basin

The PRB segment shipped 18.9 million tons at an average realized price of $13.71 per ton. Tons sold declined by approximately 3.1 million tons compared to the first quarter, due to the impact of lower customer demand as a result of low natural gas prices, higher utility inventories and a tornado at NARM late in the second quarter which impacted train loadings. PRB costs of $12.33 per ton were largely in-line with the first quarter as the impact of lower production volumes was offset by lower fuel and equipment maintenance costs. The segment reported 10 percent Adjusted EBITDA margins and Adjusted EBITDA of $26.2 million.

Other U.S. Thermal

The other U.S. thermal segment shipped 3.8 million tons at an average realized price of $53.63 per ton. Tons sold decreased by approximately 0.7 million tons compared to the first quarter, due to lower customer demand from lower natural gas prices and higher utility inventories. Costs per ton of $39.71 per ton were 2 percent lower than the first quarter due to sales mix and lower fuel costs. The segment reported 26 percent Adjusted EBITDA margins and Adjusted EBITDA of $51.9 million.

Shoal Creek Mine and North Antelope Rochelle Mine Updates

On June 20, 2023, the Company announced that Shoal Creek, in coordination with MSHA, had safely completed localized sealing of two longwall panels in the J panel area of the mine impacted by a fire in March involving void fill material. Peabody has resumed development coal production in the new L panel area where better mining conditions are anticipated. A new longwall kit for the mine is expected to be delivered by the end of the year. As a result of the fire, the Company has written off $29 million of equipment and underground development assets.

On June 23, 2023, North Antelope Rochelle sustained damage from a tornado which led to a temporary suspension of operations. The mine resumed operations on June 25, 2023, and operations have largely returned to normal. As a result of the tornado, the Company has written off $5 million of buildings, equipment and parts inventory. The Company anticipates that incremental repair and clean-up costs will be recognized in future periods.

North Goonyella Redevelopment Update

The Company continues to advance redevelopment efforts at North Goonyella with key project milestones and critical path items on track. Activities to date have included procuring equipment, refurbishment and replacement of surface infrastructure, Zone A remediation, completion of drilling program for Zone B re-ventilation and advancing work necessary to re-enter Zone B (sealed mine workings). The next significant milestone, re-ventilation and re-entry of Zone B, is currently targeted for mid-September subject to regulatory approval.

Since commencing redevelopment in late 2022, the Company has invested $53 million of the initial approved redevelopment capital expenditures which includes further ventilation, equipment, conveyors, and infrastructure updates in anticipation of reaching development coal, subject to regulatory approvals, in the first quarter of 2024.

North Goonyella is a premium grade hard-coking coal longwall operation in Queensland Australia with over 70 million tons of reserves. The project will benefit from substantial infrastructure and equipment in place at the mine. North Goonyella is expected to reweight Peabody's long-term production and revenue toward metallurgical coal when the longwall production commences in 2026. The project is expected to generate attractive returns at historical long term metallurgical prices solely for 20 million tons of longwall production over five years, with further options to develop the remaining reserves.

Market Update

Seaborne thermal coal markets remain volatile with prices declining during the second quarter driven by high coal and natural gas inventories in the northern hemisphere following an unseasonably warm winter. We anticipate that the onset of peak summer energy demand followed by restocking in preparation for winter will contribute to a normalization of inventory levels providing support to seaborne thermal coal markets. Overall, demand for seaborne thermal coal is robust, and supply remains constrained across major supply regions.

Within the seaborne metallurgical market, global crude steel output during the quarter was variable with interruptions at European blast furnaces offset by notable year on year crude steel production growth in both China and India. Metallurgical coal supply has remained constrained primarily due to residual impacts of wet weather events in Queensland, during the first quarter of 2023. The outlook for the metallurgical coal market remains positive with stable seaborne supply combined with anticipated increases in import demand for steel-making raw materials with improving crude steel production rates in Europe and North Asia coupled with growth in Indian steel production rates.

In the United States, overall electricity demand decreased nearly 4 percent year-over-year, negatively impacted by weather. Through the six months ended June 30, 2023, electricity generation from thermal coal has declined year-over-year due to low gas prices and nearly level renewable generation. Coal inventories have increased approximately 50 percent during the six months ended June 30, 2023. Natural gas prices have recovered modestly from the lows of earlier this year with U.S natural gas prompt pricing at US$2.65/mmBtu. Overall, near-term demand for US thermal coal is anticipated to improve in the third quarter in comparison to the second quarter.

Third Quarter 2023 Outlook

Seaborne Thermal

• Volumes are expected to be 4.2 million tons, including 2.7 million export tons. 0.3 million export tons are priced at $181 per ton, and approximately 1.4 million tons of high ash product and 1.0 million tons of Newcastle product are unpriced.
• Costs are expected to be $45-$50 per ton.

Seaborne Metallurgical

• Seaborne met volumes are expected to be 1.5 million tons. 0.2 million tons are priced at $216 per ton. The remaining unpriced volumes are expected to achieve 70 to 80 percent of the premium hard coking coal price index.
• Costs are expected to be $115-$125 per ton.

U.S. Thermal

• PRB volume is expected to be approximately 21 million tons at an average price of $13.80 per ton and costs of approximately $11.75 per ton.
• Other U.S. Thermal volume is expected to be approximately 4.2 million tons at an average price of $50.50 per ton and costs of approximately $41 per ton.

Today's earnings call is scheduled for 10 a.m. CT and can be accessed via the company's website at PeabodyEnergy.com.

Peabody (NYSE: BTU) is a leading coal producer, providing essential products for the production of affordable, reliable energy and steel. Our commitment to sustainability underpins everything we do and shapes our strategy for the future. For further information, visit PeabodyEnergy.com.

Contact:

Karla Kimrey
314.342.7890

Certain forward-looking measures and metrics presented are non-GAAP financial and operating/statistical measures. Due to the volatility and variability of certain items needed to reconcile these measures to their nearest GAAP measure, no reconciliation can be provided without unreasonable cost or effort.