Good day, and welcome to the Peabody Energy Corporation Quarter Four 2025 Earnings Conference Call. All participants will be in listen-only mode. After today's presentation, there will be an opportunity to ask questions. To withdraw your question, please press star then 2. Please note that this event is being recorded. I would now like to turn the conference over to Kayla Finckling, Director of Investor Relations. Please go ahead.

Thanks, operator, and good morning, everyone. We appreciate you joining us for Peabody Energy Corporation's fourth quarter and full year 2025 earnings call. Joining me today are Peabody Energy Corporation's President and CEO, James C. Grech, Chief Financial Officer Mark A. Spurbeck, and Chief Commercial Officer, Malcolm Roberts. After our prepared remarks, we will open up the call for questions. Before we begin, I want to remind you that our remarks today will include forward-looking statements. Please review the full statement contained in our earnings release and consider the risk factors referenced there along with our filings with the SEC. I'll now turn the call over to Jim.

Thanks, Kayla, and good morning, everyone. I couldn't be more proud of the work of our Peabody Energy Corporation team which turned in an excellent quarter and year that was marked by a number of achievements. We are also seeing improving market fundamentals and have a full agenda of priorities for the new year. Safety always comes first at our operations. And we turned in another record safety year. With an incident rate of 0.71 per 200,000 hours worked. That's 12% better than our prior all-time record set just a year ago. It is still safer to work in a Peabody Energy Corporation coal than a grocery store or shopping mall, based on national incident rates. Peabody Energy Corporation also prides itself on environmental excellence. As witnessed in 2025, where we reclaim twice as many acres as we disturbed. This allows us to shrink our footprint and reduce our financial obligations over time. We also tied our all-time record low for environmental notices of violation. Operationally and financially, the quarter was right down the fairway in meeting or surpassing expectations across key metrics. Mark will cover these results in more detail in a few minutes. I'm pleased to announce that I was in Australia last week. Where the team was installing the very last shield and the finishing touches on the Centurion mine in advance of starting long wall mining. Well ahead of its original schedule. I have to say the culture that had been built at Centurion is outstanding, and our team is charged up and has started mining some of the best metallurgical coal in the world. Let me remind you of some of the extensive benefits Centurion has on the Peabody Energy Corporation portfolio. First, Centurion is expected to ship an average of 4.7 million tons per…

Thanks, Jim, and good morning, all. I'll start with the seaborne metallurgical coal markets with benchmark pricing has risen to a highest mark in 18 months. And increased 15% from $190 per tonne levels of the beginning of the fourth quarter. Since the beginning of the year, pricing has increased a further 15%. For several quarters now, we've been projecting the Chinese anti evolution policies would tighten up the supply and demand dynamics in the global metallurgical coal markets. That trend continues in China, We've seen a shuttering of unprofitable steel mills, increased safety checks, at coal mines, implementation of two seventy six day work limits, and other on the ground changes that have worked together to form a foundation for met coal pricing. As we moved into 2026. 2025 saw the increase of blast furnaces along the coast in India. And the gradual transition of global steel production from China to India is a trend that we expect to continue during 2026. We expect India to increase its direct purchase of coking coal as well as supportive coke imports from countries such as Indonesia that also don't have major domestic metallurgical coal supplies. China is still exporting more steel than the world needs. And in the process of suppressing steelmaking from other nations that rely on the seaborne markets for much for a much greater percentage of their coking coal needs. We've begun to see some protectionism come into play in Europe, and India that will likely support domestic steel production. During 2026. Metallurgical coal, and in particular, hard coking coal markets were tightening, and prices were improving even before the monsoon season settled into Queensland. Further constraining cement coal production and transportation. Overall, this market backdrop makes a perfect time to bring on increased shipments from the Centurion…

Thanks, Malcolm, and good morning all. Let me start with a brief overview of our financial performance. In the fourth quarter, we reported net income attributable to common stockholders of $10.4 million or $0.09 per diluted share. And adjusted EBITDA of $118 million a 19% increase from the prior quarter. Supported by higher seaborne thermal realizations and consistent focus controlling the controllables. We generated $69 million of operating cash flow from continuing operations during the quarter and $336 million for the full year. Peabody Energy Corporation ended the year with $575 million in cash and total liquidity above $900 million reflecting disciplined capital deployment through the period of intense development at Centurion and consistent cash generation despite lower than mid-cycle seaborne coal prices. We ended 2025 with another quarter of strong execution. For the full year, results met or exceeded original guidance for seven of eight volume and cost metrics. Seaborne Thermal delivered 3.3 million tons exceeding expectations. Realized export pricing averaged $81.80 per ton, up 7% from the third quarter. Costs came in below the low end of guidance and 12% lower quarter over quarter supporting a robust 31% adjusted EBITDA margin and $63.5 million of fourth quarter EBITDA. For the full year, the segment reported $222 million of adjusted EBITDA and total capital requirements were a mere $40 million Costs were down over $3 per ton year over year, driven by disciplined cost management and higher production at the Wambo open cut. Seaborne Met shipped 2.5 million tons. Up 400,000 from the third quarter and above the fourth quarter target. Realized pricing began to improve and cost at $113 per ton were consistent with expectations. The segment delivered $24.6 million of adjusted EBITDA in Q4. For the year, the segment generated $56 million of adjusted Shipments increased 1.3…

Thanks, Mark. That closes the book on a successful 2025 and let's focus for a minute on our full slate of priorities for the new year. Peabody Energy Corporation's key focus areas include driving safe, reliable, and efficient operations across the portfolio, That's essential in the mining industry and remains our clear number one priority. Achieving full operational performance at the Centurion mine, The promise of Centurion now turns to reality for our shareholders. I'll remind investors that this feeds into the increasingly short premium hard coking coal market. Continuing the strong EBITDA to CapEx margins from Peabody Energy Corporation's high cash flowing thermal coal assets, That's true for both the Seaborne and US thermal business. Preserving balance sheet strength and improving free cash flow to support shareholder returns Our first priority for the use of cash remains shareholder returns. And all other potential investments must pass a high hurdle to compete for funding. And finally, progressing work streams to best advance and monetize commercial Peabody Energy Corporation development opportunities. With that, operator, we're happy to turn the call over for questions.

We will now begin the question and answer session. If you're using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then 2. At this time, we will pause momentarily to assemble our roster. The first question comes from Katja Jancic with BMO Capital Markets. Please go ahead.

Starting on the cost guide for '26 especially for your Australian operations, what do you assume for the Australian dollar in the cost guide? And then also, what do you assume on the met size for met pricing?

Good morning, Katja. For the Australian dollar, we're looking at 70¢. Pretty much where we're at today.

And then now we're using a 225 benchmark pricing.

And then on the Centurion development, just looking ahead, can you remind us how much CapEx is potentially still left, especially to get to that Northern part?

Yeah. So we're we're obviously starting the longwall here imminently in the South so that initial $500 million has been spent. We talked about $750 million in total. There were some already allocated to the North as well as the acquisition awards well. When we move forward now into 2026, nothing's changed what I said before. It's probably about a $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.

Okay. Thank you. The next question comes from Nick Giles with B. Riley Securities. Please go ahead.

Hey. Thanks very much, operator. Good morning, guys. My first one was just on the domestic thermal side. I mean, pricing in the PRB stepped down and 2025. Volumes rose. Seems like there could be a similar setup in 2026. So my question is, how should we think about pricing in '27 and beyond? I mean, is is there a scenario where prices revert to the upside or is is there kind of limited torque because of existing contracts? Appreciate any any color there.

And Malcolm, would you like to comment on that, please?

Yeah. Sure. Look. The way we price is we layer in volumes probably on from from three to four years before the delivery period. And I'm not gonna give specific guidance in terms of how contracted we are for '27, but there's still quite a lot of contracting to be done there. And so that should be exposed to a favorable pricing environment because our view is is that this is a favorable pricing environment vis a vis the last two or three years.

Got it. Thanks for that Malcolm. And then on the volume side, mean, do you think there's demand for incremental tons beyond your current guide? I know know increasing volumes is a different story, but would there be incremental demand?

Absolutely. I think so. I mean, we started the year with with quite a lot lower inventories. We've had reasonable cold snap, and and and we're already seeing those out there in the in in the the market. You know, we're responding to those today. So I still see incremental demand. There was incremental demand last year I see something playing out fairly similar. And I guess in terms of Peabody Energy Corporation participating on that, you know, our view is is value over volume. So it'll be about where the price point is. For those incremental tons. But I think as we've said in previous calls, the latent supply and capacity in the basin is starting to become quite stretched. So I'd expect that the people were pretty careful as to as to how they'd bid into these opportunities moving into this year.

Understood. A appreciate all that color. One one more if I could. I mean, when we look at seaborne thermal costs, the midpoint's at $50 a ton. Pretty meaningful step up there year on year. So just was curious on what are the drivers there? Is it really just the lower volumes Is it mainly the drag at Wilpinjong? And you know, how how should we see see things improve over the course of the year? Thanks a lot. Yeah. Nick, for year over year cost in seaborne thermal, it's really a story of the lower production volume. So certainly an increase from lower production at Wilpinjong. There's a bit also lower production at Wamba Wilpincut, but much less so. And then know, the answer to Katja's question there about a 70¢ Aussie dollar, that's about 4¢ four cents higher than we realized last year. So that has a probably about a $34 impact as well. Got it. Very helpful. Well, guys, nice work at Centurion, and continue best of luck. Thanks, Nick.

The next question comes from Nathan Martin with the Benchmark Company. Please go ahead.

Thanks, operator. Good morning, everyone. Mark, just curious, how should we think about the cadence of shipments as the year progresses? Especially for the seaborne met and seaborne thermal segments? You know, it would seem the first quarter probably anticipated to be the weakest just given the the century and longwall will just be starting up. Obviously, you've got the sequencing. You called out. Any other operational items as well to keep in mind for the year longwall moves, etcetera, just when we think about that cadence? Thanks. Yeah. You got your finger on the right items there, Nate.

Seaborne thermal much less than ratable in the first quarter. And that's and that's Wilpin Young and Wamba OpenCut being less than rateable just simply from a mine sequencing perspective. So that that'll bounce up nice for us. In Q2 and even higher in Q3. When we think about seaborne met, we do have the two long wall moves. So both met trop and Shoal Creek are going through a longwall move so that's going to lower the production and, obviously, just getting, about two months of production from Centurion versus the full quarter. When we think about Centurion, you know, that's gonna ramp up probably about know, 700,000 tons in Q1, about a million to a million one Q2 and Q3, and then it'll fall back down in Q4 as we have a longwall move.

Very helpful, Mark. Appreciate that. And then maybe sticking with the seaborne met segments, I understand you guys now expect to realize approximately 80% of the the benchmark there with the additional centurion tons coming on. But could you maybe just give us a sense of kind of the the quality breakdown there? Like, maybe a percentage selling at at, you know, POV index versus five zero eight versus PCI, etcetera?

So not really, the only change year over year is Centurion. So think of all of those tons, 300,000,000 tons selling at benchmark, full benchmark pricing, maybe even a small premium. And then the rest of that portfolio will be selling at what is historically done in that 70% range.

Okay. Perfect. And then just maybe one to end on shareholder returns. As you guys said, spend for Centurion kinda winding down here. You know, met prices have improved here in the near term. When do you expect to be able to begin generating enough available free cash flow in order to return to to your share buyback? Thanks.

Yes. As Jim mentioned, it's our number one focus from a cap capital allocation perspective as shareholder returns. I think back on 2025 on the amount of dollars we invested to get Centurion online, $2.52 60,000,000 last year alone So we'll be down substantially at Centurion from a capital perspective probably $150,000,000 less going forward. We also had a lot of expenses related to the previously announced proposed transaction with Anglo. So we're starting the year at about $230,000,000 better. Then we look at premium hard coking coal prices being at $2.50 right now, substantially better than prior years particularly with Centurion coming online. So at today's prices, I think anyone could look at the guidance you provided and see some substantial free cash flow generation. And our policy remains the same to return that to shareholders Jim mentioned it's the number one priority with the Centurion development risk off the table. That return should be much closer to a 100% versus 65%.

Alright. Thanks, Mark. I'll pass it on. Appreciate the time, and best of luck this year.

Thanks, Nate.

Again, if you have a question, please press star then 1. The next question comes from George Eadie with UBS. Please go ahead.

Yes. Hi, team. Jim, Mark, Malcolm. So maybe first question for Malcolm. Can you just following up on the question before, can you help me what percent of prices in the PRV are cost linked? I guess, my question is if you're locking in contracts for late twenty twenty seven delivery, at just under 17 a short ton, which it looks like the futures is now at, If cost hold flat for those tons alone, can you essentially capture all that $5 as short tonne margin? Is that right? And good way to think about it?

Yeah. George, it's not difficult for me to get into specifics of each of the contracts, but but generally, we don't have a lot of rise and fall for cost within the PRB contracts. They rise and fall on the basis of government policy impositions, taxes, those types of things. So when pricing business, we gotta take a view of of of what costs are and what the market can bear out there. But we're not really a cost plus business. We look at at what we think the fair market level is out there, and and we'll pitch that in in that year's dollars effectively.

Okay. Then, like, in terms of taxes and forth, rebates, like, how how much is that sort of run out? Like, is it fair to assume, like, 20% of that price upside gets taken away and those sort of factors, or is it more about a give and take negotiation and those contracts prices aren't, like, exactly what you'll get?

Yeah. Look. I think you got it about right. I mean, if you go across our book, you you could say royalties, taxes, and the like. You know, could be could be 25%, something like that. So if you think about that, if the if prices go up, some of that gets taken away.

Yep. Okay. No. Thanks. Maybe to Jim and Mark. But just on volumes in Australia, Morbell, when does that deplete exactly which quarter And just on that, given a better 27, hopefully, for Coppabella, is sort of a million ton down year on year net for that JV sort of a right way to think about potentially?

George, first question on Moravail, I think, was the was the question We will be mining there all of this year and into 2020 Well, probably second half of the year will wind down at Moraville, and it'll it'll really transition all the capabella So looking for a little bit of decline year over year, as the combined entity. But I would say we'll be done midyear at Moorville.

Okay. Yep. Thanks for that one, Mark. And and sorry. Just on volumes as well there. Wilpinjong, can you remind us where that's at operationally and CapEx Is there anything sort of material to come back end of the decade with the sort of pit sequencing and that going on?

Yeah. So it's really sustaining capital for the next two, three years. We talked about the pit, you know, kinda eight, nine, 10 extensions. Back end of the decade, probably 2029 where we'll see a slug of capital and that'll be fleet and equipment as well. You know, maybe total of a $100,000,000 FRO

Okay. Thanks. I'll jump back in the queue. Cheers.

Thank you, George.

This concludes our question and answer session. I would like to turn the conference back over to James C. Grech for any closing remarks.

Well, thanks for your time today, both for our longstanding investors as well as the many of you have been new to the story in the recent months. I believe we have a great year ahead of us, and we're looking forward to keeping you updated as the year goes on. Thank you.

The conference has now concluded. Thank you for attending today's presentation. May now disconnect.