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Peabody reports 3Q21 results

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World Coal,


Peabody has announced its 3Q21 operating results, including revenues of US$679 million, net of US$238 million of unrealised mark-to-market losses related to forward pricing hedges; net loss attributable to common stockholders of US$44.2 million; diluted loss per share from continuing operations of US$0.60; and adjusted EBITDA of US$289.1 million. During the quarter, the company retired an additional US$93 million of senior secured debt and retired an additional US$30 million after 30 September 2021, resulting in approximately US$250 million of debt retirements year to date, more than 16% of debt outstanding at the start of the year.

“We are capturing opportunities provided by current robust coal market dynamics with strong operational performance which is resulting in expanded margins across our portfolio. And we have reached labour agreements at both our Metropolitan and Shoal Creek mines which paves the way for higher met coal production next year,” said Peabody President and CEO, Jim Grech. “While we are optimistic regarding the markets, we continue to focus on the long term with a disciplined approach to cost control, pricing strategies and additional reduction of debt to position the company to be resilient in all market cycles.”

3Q21 financial results

Revenues totalled US$679 million, net of US$238 million of unrealised mark-to-market losses related to forward pricing hedges, compared to US$671 million in the prior year primarily due to the impact of higher seaborne metallurgical volumes and improved seaborne thermal and met pricing.

Selling, general and administrative expenses decreased 22% from the prior year to US$21.1 million as a result of the company's ongoing cost reduction efforts.

Interest expense of US$45.5 million increased US$10.6 million over the prior year due to higher borrowing costs and amortisation of debt issuance costs.

Net loss attributable to common stockholders was impacted by unrealised losses of US$238.4 million, primarily related to hedges contracted in 1H21 on 2.1 million r of expected production at the company's Wambo Underground mine with settlements of 1.4 million t in 2022 and 0.7 million r in 2023. The hedge contracts support the profitability of the mine by securing average prices of US$84/t through mid-2023 as part of a strategy to extend the expected life of the mine. In addition, the company recorded a US$25 million non-cash gain on sale of previously discontinued operations.

Adjusted EBITDA totalled US$289.1 million compared to US$95.4 million in the prior year primarily due to higher seaborne margins and a US$26 million largely non-cash gain on the sale of the company's Millennium mine.

Segment performance

During 3Q21, the seaborne thermal segment shipped 4.5 million t including 2.6 million export t at an average realised price of US$86/t and 1.9 million t sold under domestic contracts. 3Q21 seaborne thermal segment costs of US$35.09/t increased 27% compared to the prior year, primarily due to ongoing transition to the Wambo JV and Wilpinjong extension project, higher royalties, unfavourable exchange rates and higher fuel prices. The segment's adjusted EBITDA margins nearly doubled to 40% from 22% in the prior year and reported adjusted EBITDA of US$104.4 million.

In 3Q21, Wilpinjong shipped 3.5 million t at an average realised price of US$42/t, which included 1.6 million t of export sales at an average realised price of US$65/t and 1.9 million t of domestic sales at an average price of US$22/t. Average Wilpinjong costs of US$25.62/t were 31% higher than the prior year due to higher equipment maintenance, fuel and royalty costs, unfavourable exchange rates and completion of Wilpinjong extension boxcut development. Wilpinjong contributed approximately US$56.5 million of adjusted EBITDA, completed US$5 million of capital expenditures and had US$145.5 million of cash and cash equivalents at 30 September 2021.

The seaborne metallurgical segment shipped 1.5 million t at an average realised price of US$120/t in 3Q21. Total segment costs of US$81.61/t decreased 16% compared to the prior year primarily due to elevated costs at Shoal Creek in 2020 prior to idling the mine and higher production at Metropolitan and the CMJV, partially offset by higher royalties, unfavourable exchange rates and higher fuel prices. Seaborne metallurgical costs excluding Shoal Creek idle costs were approximately US$75/t. The segment reported 32% adjusted EBITDA margins and adjusted EBITDA of US$57.4 million.

The PRB segment shipped 22.7 million t at an average realised price of US$10.88/t. PRB costs per tonne increased by 17% to US$9.25/t, primarily due to higher equipment maintenance and fuel cost in addition to increased overburden removal. The segment reported 15% adjusted EBITDA margins and adjusted EBITDA of US$37 million.

The other US thermal segment shipped 4.5 million t at an average realised price of US$41/t. Cost per tonne increased 17% from the prior year to US$30.99 due to higher equipment maintenance costs and higher fuel prices. The segment reported 24% adjusted EBITDA margins and adjusted EBITDA of US$45.1 million.

Outlook

Peabody notes the following for the remainder of 2021:

US thermal operations

  • Coal deliveries will remain largely dependent on general economic conditions, weather, natural gas prices, utility inventory levels, availability of labour and rail performance.
  • 2021 projected volumes are fully priced and committed.

Seaborne thermal operations

  • Higher export thermal volumes expected in 4Q21 compared to previous quarters.
  • Wilpinjong 4Q21 volumes are anticipated to include approximately 2 million t of export shipments and 2 million t of domestic shipments.

Seaborne metallurgical operations

  • The CMJV and Metropolitan are expected to continue recognising cost and productivity improvements.
  • Shoal Creek is anticipated to begin production in the second half of 4Q21, with ramp up through 1Q22.

Read the article online at: https://www.worldcoal.com/coal/04112021/peabody-reports-3q21-results/

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