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DATE

  • Thursday, July 31, 2025, at 3 p.m. ET

CALL PARTICIPANTS

  • President and Chief Executive Officer — James C. Grech
  • Chief Operating Officer — Malcolm Roberts
  • Executive Vice President and Chief Financial Officer — Mark A. Spurbeck

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RISKS

  • Grech stated, "there is still no credible timetable on the resumption of sustainable longwall mining" at Anglo's Moranbah North mine, citing monthly lost production, rising carrying costs, expected capital for new equipment, probable de-rate of future productive capacity, and uncertainty on workforce availability.
  • The Seaborne Metallurgical segment reported an adjusted EBITDA loss of $9.2 million for Q2 2025, reflecting a 23% drop in average realized prices year over year.
  • Bear Run mine underperformed on rail logistics, and the Twenty Mile mine continued to operate in challenging mining conditions, leading to lower-than-expected volumes for part of the US thermal segment.

TAKEAWAYS

  • US Coal Generation: Grech reported that US coal fuel generation rose by 15% in the first half of 2025 compared to the prior year, driven by higher relative natural gas prices and increased electricity demand from industrial activity and data centers.
  • PRB Volumes and Royalty Savings: Full-year 2025 Powder River Basin (PRB) volume guidance was raised by 5 million tons, with $15 million to $20 million of expected royalty cost savings in 2025 from the new federal rate reduction to 7%.
  • Adjusted EBITDA: Spurbeck reported total adjusted EBITDA of $93 million for Q2 2025, with the US Thermal segment contributing $57 million and the Seaborne Thermal segment generating $33.5 million, inclusive of port congestion-related volume losses.
  • GAAP Net Loss: Peabody Energy recorded a GAAP net loss attributable to common stockholders of $27.6 million for Q2 2025, or $0.23 per diluted share (GAAP).
  • Operating Cash Flow and Liquidity: Operating cash flow totaled $23 million for Q2 2025; Cash and cash equivalents were $586 million at quarter-end, fully unrestricted and unencumbered, and total available liquidity approached $1 billion as of quarter-end.
  • Seaborne Metallurgical Results: The segment recorded an adjusted EBITDA loss of $9.2 million for Q2 2025, driven by a 23% decrease in average realized prices year over year, but segment costs remained below company targets.
  • Seaborne Thermal Costs and Guidance: Full-year 2025 seaborne thermal cost guidance was lowered by $3 per ton to $45-$48 per ton; export volumes are expected to reach 2.7 million tons in Q3 2025, with 600,000 tons priced at $82 per ton.
  • PRB Quarterly Performance: The segment produced $43 million in adjusted EBITDA in Q2 2025 with margin rising to $2.16 per ton, despite a $0.20 per ton negative pricing impact due to excess moisture.
  • Capital Expenditure Guidance: Full-year capital expenditure guidance was cut by $30 million to $420 million.
  • Centurion Project Acceleration: Longwall startup at Centurion is now targeted for February 2026; installation of longwall shields to begin in November 2025, aiming to increase workforce to 400 employees by early 2026.
  • Shoal Creek Tax Credit: A 2.5% production tax credit for domestic metallurgical coal at Shoal Creek takes effect January 1, 2026, which is expected to exceed $5 million in annual value beginning in 2026.
  • Shareholder Return Commitment: Grech reaffirmed that at least 65% of adjusted free cash flow (non-GAAP) will continue to be returned to shareholders through the capital return program.
  • Rare Earth Elements Program: Grech disclosed ongoing Phase II rare earth element testing at NARM and Rawhide complexes, indicating concentrations at or above peer-reported PRB levels, with further sampling and lab analysis underway.
  • Other US Thermal Segment: The segment reported $13.5 million in adjusted EBITDA for Q2 2025; the Twenty Mile mine to initiate longwall production in the 11 East panel at the start of the fourth quarter, anticipating improved geology and a return to historical production rates.
  • Anglo American Deal Status: Grech confirmed Peabody Energy Corporation has not reached a revised agreement on the Anglo American transaction and cited confidence a material adverse change has occurred; a further update will be provided after the August 19 MAC cure period expires.

SUMMARY

Peabody Energy(BTU 0.48%) management raised full-year guidance based on robust cost control and strong U.S. demand fundamentals, outlining tangible benefits from pro-coal legislative actions. Liquidity remains high, with no restrictions on reported cash and reduced capital expenditure plans supporting operational flexibility. Regulatory changes are set to deliver direct cost savings in the PRB and future tax credits at Shoal Creek, including a 2.5% production tax credit for met coal effective Jan. 1, 2026, while a disciplined capital return policy persists. The accelerated Centurion development timeline was highlighted, but acquisition risks in the Anglo American transaction remain unresolved, with extended production and valuation uncertainty at Moranbah North affecting strategic outlook.

  • Roberts noted, "Customer stockpiles are down some 15 million tonnes, ... an 11% reduction, ... [at] the lowest level since 2022," indicating tightening U.S. thermal fundamentals.
  • Spurbeck cited that recent US and land asset disposals contributed to quarterly resource management gains, offsetting logistics and port congestion impacts.
  • Segment-level reporting pinpointed challenges at Bear Run (rail) and Twenty Mile (geology), but expected improvement as Twenty Mile transitions into the 11 East panel.
  • Spurbeck clarified that reduced PRB royalty rates are reflected in full-year cost guidance, with net realized price adjustments returning a $0.40 per ton benefit to Peabody tons in 2025.
  • Roberts and Grech identified signs of a potential seaborne market inflection, particularly from Chinese supply discipline and Indian restocking, but described this as "early signs of an upturn" amid prevailing cyclical weakness.
  • Spurbeck detailed that $100 million in remaining Centurion capex will complete the transition to longwall output in the first quarter of 2026, with overall project cost tracking at $495 million as of Q2 2025.
  • Spurbeck stated that total cash and cash equivalents of about $586 million are unrestricted, unencumbered, and fully available as of Q2 2025, and continued reclamation work is gradually unlocking additional restricted cash.

INDUSTRY GLOSSARY

  • Longwall Mining: An underground coal extraction process that uses a rotating drum and hydraulic supports to efficiently cut and remove coal across an extended face in a single pass.
  • Material Adverse Change (MAC): A contractual clause allowing for deal termination or renegotiation if significant negative changes affect the value or operational viability of a target asset prior to transaction closing.
  • PRB (Powder River Basin): A key US coal-producing region that is a major source of low-sulfur thermal coal.
  • NARM Complex: North Antelope Rochelle Mine, Peabody Energy Corporation’s flagship PRB operation.
  • Seaborne Thermal/Metallurgical Coal: Coal products shipped by ocean freight, with "thermal" used for electricity generation and "metallurgical" (met) for steelmaking.

Full Conference Call Transcript

James C. Grech: Thanks, Vic, and good morning, everyone. Peabody Energy Corporation has had a great first half of the year. We have had record safety, solid volumes, and strong cost containment. On the basis of both our performance and our prospects, I am pleased to report that we are raising our full-year guidance. To echo my first quarter theme, the team continued to do an excellent job of controlling the controllables in the first half, with second-quarter costs coming in below our expectations. Our ability to manage costs is a key driver of success at a time of cyclical market softness in the seaborne markets.

Also of note, today, we announced an acceleration of longwall operations at our flagship premium hard coking coal mine, Centurion. We are now targeting longwall startup in February 2026. This improved timeline reflects strong execution across our operations team. By way of progress, we plan to start installing longwall shields in November. Workforce expansion remains a key focus. We already have approximately 260 employees hired. Through an active recruitment process, we aim to reach a headcount of around 400 by early 2026 to support full production. I would be remiss if I did not also speak of the strong tailwinds in the US markets.

Last quarter, the president signed executive orders to revitalize the US coal industry and expand the use of coal fuel generation. Earlier this month, the "One Big Beautiful Bill" was passed. It delivers long-overdue relief to American coal producers by reducing royalty burdens, streamlining permitting, and restoring regulatory certainty, enabling the industry to compete, invest, and power the nation with confidence. How does the bill benefit Peabody Energy Corporation? First, a reduction in federal royalty rates on mining leases from 12.5% to 7% is expected to generate substantial savings in the PRB beginning this quarter.

Based on initial analysis, Peabody Energy Corporation anticipates $15 million to $20 million in net benefits from the royalty changes in 2025, and this should also improve PRB competitiveness going forward. Also, the bill provides a 2.5% production tax credit starting January 1 for eligible domestic coal used in steelmaking, a benefit that applies to our Shoal Creek metallurgical mine in Alabama. As evidence of the need for renewed focus and common sense in US energy policy, this legislation combined with rising electricity demand marks a clear turning point for US coal. It reframes coal not as an inconvenient truth relic but as a critical cornerstone of grid reliability and energy independence. The June 2025 heat wave made this clear.

As demand surged across PJM and MISO, it was coal and natural gas that kept the grid stable while renewables were unable to scale quickly enough. To frame the new electricity landscape in the US, just one independent system operator recently forecasted a 32-gigawatt increase in power demand by 2030, and 30 gigawatts are related to data centers. To put this in context, they noted that the increase is comparable to adding 20 million new homes to the grid in the next five years. When thinking about coal in the future, I would ask you to focus on six surprising words: The world is turning towards coal.

I will remind investors that the IEA reports that the world set a record for coal demand in 2024, after doing so also in 2023, and has not yet peaked. And US coal is clearly in comeback mode, as it should be. The US has more energy in its coal reserves than any nation has in any one energy source. Malcolm, I will now turn the call over to you to give a bit more color on the markets.

Malcolm Roberts: Thanks, James. Now I will add a few details regarding US dynamics before turning to seaborne markets. In the US, we have seen a great first half of the year with coal fuel generation up a whopping 15% over 2024. That is a function of coal increasing share given high natural gas prices relative to the prior year as well as a growing electricity generation pie as industrial activity and emerging data center demand underwrites continued electricity demand growth. That terrific picture has translated into high demand more than improved pricing at this stage. We note customer stockpiles are down some 15 million tonnes versus this time last year.

That represents an 11% reduction from a year ago, the lowest level since 2022. That bodes well for tightening US thermal supply and demand fundamentals as we move forward. In addition to existing coal plants running much harder this year, we continue to see deferrals of retirements within the US coal fleet. Simply put, most utilities need all the electrons they can muster, and coal plants offer some of the best incremental generating capacity, predictable fuel costs, reliable performance, and readily storable fuel that is ready for dispatch 24 hours a day, seven days a week. Deferrals of coal plant retirements have directly translated into new coal supply agreements for Peabody Energy Corporation, a phenomenon that we expect to continue.

We have increased PRB volumes this year and are sold out at our flagship North Antelope Rochelle mine at these high levels. My final point is that recent moves in the US to increase LNG exports, including the recent US agreement for major new energy purchases by Europe, should only tighten US natural gas supplies as it moves to a greater parity with seaborne LNG. Seaborne thermal coal markets are also finding support in recent weeks. Demand has been driven by hot summer weather in Asia and really across the whole Northern Hemisphere, and that has reduced stockpiles and driven stronger bids.

We have seen greater spot demand from our premium markets such as Japan as they move to secure additional supplies as coal burn exceeds anticipated levels. China's import demand had been under pressure due to a 6% increase in domestic coal production through May. Along with stronger renewable generation, thermal power generation is down 3% year to date, limiting their appetite for imported coal. In India, high stockpiles and lower electricity demand have also been keeping import volumes subdued. Thermal supply is adjusting to softer demand and lower prices, with Indonesia and Colombia in particular reducing exports.

In seaborne metallurgical coal, we naturally avoid forecasting prices, but we are observing meaningful supply curtailments and policy adjustments that suggest we are midway through what is typically an 18 to 24-month downward portion of the price cycle, and we are beginning to see some green shoots. China remains the world's largest coal consumer given that it accounts for over 60% of global steel production, and there we are seeing some classic early signs of a market turnaround. That is true in steel, where recent production curves have been announced, which are expected to have a dampening effect on Chinese steel exports moving forward, aiding steel production from countries that rely on met coal imports to a greater degree.

It is true in coal production, where the government has just announced it is cracking down on provinces and coal mining companies exceeding production quotas, and it is true in infrastructure projects such as the Yalang Zhongbo Dam in Tibet being developed. This dam will be by far the largest in the world, will use large amounts of steel and concrete, and will cost more than 100 times the Hoover Dam in the US on a current dollar basis. These elements combine to suggest that the Chinese playbook is being executed similar to past downturns. While China remains a key influence this time around, Indian demand growth may drive the next peak of recovery.

India enters the monsoon season with just 36 days of inventory and limited restocking activity. We look for a number of new blast furnaces to accelerate seaborne coal demand by 8 to 9 million tonnes during 2025. I will remind investors that the production of a ton of steel in India uses four to five times the amount of seaborne metallurgical coal as a ton of Chinese steel, given that India does not have notable domestic quantities of met coal. This phase of the met coal cycle also reflects the supply contraction in prior times. By our estimate, over 25 million tonnes of met coal capacity remain offline globally, with substantially more volume in loss-making mode at these levels.

Bottom line, while this part of the cycle has not been pleasant, we see it playing out in a similar way to past cycles. We are seeing early signs of an upturn with the real question of not if but instead when. I will now turn the call over to Mark.

Mark A. Spurbeck: Thanks, Malcolm, and good morning, all. As James mentioned, we had another strong quarter and continue to successfully navigate a challenging seaborne price environment. Seaborne pricing continued to ebb with the broader industrial cycle, steel production, and power generation in the second quarter. But with this cyclicality comes great opportunity. Our strategy remains to manage the lower points of the cycle to capture outsized free cash flow when we return to better price points. Peabody Energy Corporation manages that volatility with a fortress balance sheet, effective capital allocation, operating cost discipline, and a diversified asset portfolio. This quarter, our US Thermal platform led the way, generating $57 million of adjusted EBITDA. Let me add some insight into the second-quarter financials.

We recorded a GAAP net loss attributable to common stockholders of $27.6 million, or $0.23 per diluted share, while generating adjusted EBITDA of $93 million. The team turned in another great quarter of cost management, with three of four segments coming in better than company targets. PRB volumes came in higher than expected. We generated $23 million in operating cash flow, using some cash from the balance sheet to continue development at Centurion, now just six months away from longwall production of premium hard coking coal. We ended the quarter with $586 million of cash and nearly $1 billion of liquidity. Let's review the quarterly segment results.

The seaborne thermal segment recorded $33.5 million of adjusted EBITDA and 17% margins, even with the loss of 400,000 tons from end-of-quarter port congestion. Regardless, the segment still beat second-quarter cost guidance. Margins remain robust in the face of a modest price environment, underscoring the strength of our position on the thermal cost curve. The seaborne metallurgical segment reported an adjusted EBITDA loss of $9.2 million on 23% lower average realized prices year over year. Costs remained well below company targets as the team continued to control the controllables, investing in the Capabella High Wall with additional overburden movement to ensure more reliable production for years to come. The US thermal mines generated $57 million of adjusted EBITDA.

This platform continues to demonstrate why we believe the US business, with its stable free cash flows and low capital requirements, is underappreciated and remains a key part of our leading diversified asset portfolio. In the Powder River Basin, sales volumes exceeded expectations even with 11 inches of rain over 60 days in Q2, or nearly their full-year average rainfall. With that rain came excess moisture, leading to a negative $0.20 per ton quality to realize sales price, making the $2.16 per ton margin even more impressive. The PRB improved margins by better than a dollar per ton year over year and generated $43 million of adjusted EBITDA. The other US thermal segment delivered $13.5 million of adjusted EBITDA.

Sales volumes were less than expected as Bear Run experienced poor rail performance and Twenty Mile continued to operate in challenging mining conditions in the 6 East panel. The Twenty Mile team is eagerly anticipating finishing that panel in the next couple of weeks. We will begin moving the longwall to a new district in mid-August and should start cutting coal in the 11 East panel at the beginning of the fourth quarter. The 11 East Panel is positioned at the edge of a coal seam with much better geology, and we expect to return to historical production rates.

Looking ahead to the third quarter, seaborne thermal volumes are expected to be 3.9 million tons, including 2.7 million export, 600,000 of which are priced on average at $82 per ton, while 1 million tons of Newcastle product and 1.1 million tons of high ash coal are unpriced. Seaborne thermal costs per ton are expected to be between $45 and $50 per ton, in line with full-year guidance. Seaborne met volumes are targeted at 2.2 million tons, consistent with the second quarter, while costs are expected to improve a bit further to $115 per ton. In the PRB, we expect a significant increase in volume to 23 million tons.

Costs are also expected to improve from the second quarter and come in lower, leading to continued robust margins. Other US thermal coal shipments are expected to increase to 3.7 million tons with better rail performance at Bear Run. Costs are also anticipated to improve to approximately $47 per ton. Rounding out the discussion with several favorable changes to full-year guidance, seaborne thermal costs are $3 per ton better at $45 to $48 per ton. Seaborne met cost targets are better by $7.50 per ton, $150 to $120 per ton. With a strong first half and recent legislation, the company is increasing PRB volumes by 5 million tons and lowering full-year costs by $0.63 to $11.5 to $12.

We are also reducing full-year CapEx by $30 million to $420 million. James, I will now turn the call back to you.

James C. Grech: Thanks, Mark. Before turning to questions, I will now give a brief update on the previously planned acquisition of assets from Anglo American. Here's where we are. It has now been four full months since the ignition incident at Anglo's Moranbah North mine, and yet there is still no credible timetable on the resumption of sustainable longwall mining.

The impact on the value of the assets includes monthly lost production and revenue, carrying costs of tens of millions of dollars per month, expected capital related to new longwall equipment needed for sustainable longwall mining, significant probable de-rate of future productive capacity at the mine, and questions around both the availability and willingness of the workforce to resume safe underground longwall mining in the current panel if regulators ever allow it. Our understanding of conditions underground, along with the continued passage of time, has further confirmed our strong belief that a material adverse change has occurred. A thorough review has led to this perspective by our underground mining team, our engineering staff, third-party experts, and executive management.

While some modest near-term activity may occur, this should not be mistaken as being equivalent to having a predictable timeline and quantifiable cost and productivity impact assessments associated with achieving sustainable mining in the current longwall panel. Four full months after the event, the exact cause of the ignition event remains unclear. And by Peabody Energy Corporation safety standards, we would not restart operations at the current longwall face. We are highly confident that sustainable longwall mining will not take place at Moranbah North until after a new longwall is fully commissioned in a new section of the mine in 2026. The priorities we identified several months ago have not changed.

Peabody Energy Corporation intends to rely on its rights under the purchase agreements, which give Peabody Energy Corporation the ability to terminate. Any revised deal would require a substantial revision in value and structure that reflects the material change in the previously agreed-upon transaction, as well as safe, sustainable longwall mining at Moranbah North at forecasted volumes and cost. We have not reached a revised agreement with the seller, and we intend to provide a further update on August 19 after the 90-day MAC cure period expires. We appreciate your patience as we conclude a process that has now been underway for nearly a year. With that, operator, we can now open up the line to questions.

Operator: Thank you. We will now begin the question and answer session. Star then one on your telephone keypad. If you are 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 it, please press star then two. At this time, we will pause momentarily to assemble our roster. And today's first question comes from George Eddy with UBS. Please proceed.

George Eddy: Yeah. Hi, team. Thanks for the time today, and hope you are keeping well. Could you maybe please help us start with more about North America? Just help us understand how you are thinking about going forward under the MAC in the scenario where you are found liable in, say, two years. This may be unlikely in your view, but I am sure it is a scenario you have considered and have put quite a bit of thought into.

So could you maybe help us understand how you think about paying for such a liability and maybe some color on how we should be thinking about it in terms of potential cash build and returns over the insurance period if you were to declare a MAC?

James C. Grech: Yeah. Hey, George. Thanks for the question. Look, we are very, very confident in our MAC position going forward. So, you know, if you look at what has been going on at the mine, as I said in my comments, it is still to be determined the exact cause of the ignition. Alright? So the impacts of future operating conditions are unknown. There is no known credible restart date for this mine. And while that is occurring, while the mine has not restarted, there are significant monthly carrying costs being incurred. And we, as I said in my comments, we consider the future scenario that the longwall panel is going to be sealed off.

And the need for a new longwall being in place in a different area of the mine would be the path to getting sustainable longwall production again at that mine, and it is probably going to be at a significant de-rate going forward because of new operating conditions and the past operating history of the mine. On top of that, you have all this monthly lost production and revenue. So, again, we are very, very confident in our MAC going forward. And if we have to pursue this in arbitration, we are ready to do so.

George Eddy: Just on that, if you do continue with the MAC, if we get two years down and on a small chance, maybe in your view, that you are found liable, like, how should we think about cash returns in the balance sheet over the next two years going into that period? Even though it might be very unlikely, it still is a chance.

James C. Grech: So, again, George, I am not sure your question exactly. We have our program in place where we return 65% of our adjusted free cash flow back to our shareholders, at least 65% of our adjusted free cash flow. So that is a program we have in place. So if you are asking about that, that is not going to change. And if you are asking about a possible arbitration ruling or something, you know, we are not taking a reserve for that because that is more likely than not view that we would face damages. So, you know, your questions for us are just purely hypothetical about damages occurring. We are 100% confident in our MAC.

And we are 100% confident if we go to arbitration that we would be proved correct in the position we are taking.

George Eddy: Okay. No. That is fair. And maybe just switching gears, but Centurion? Can you remind us maybe what the latest there is on the sell-down timing? And then given this is a restart project and we spend a lot of time talking about longwall reliability of the Goonyella theme, is there any chance or any talks of a clause in that contract with a sell-down that a buyer could potentially have the right to walk away or adjust terms if certain production hurdles have not been met? Is that something that is being considered?

James C. Grech: George, again, you are asking a hypothetical, and I am not going down that path. And if we were in negotiations, I would not comment on those negotiations. But, you know, again, as for Centurion, that is a potential. Is the sell-down of Centurion, and it is no way a commitment that we are going to do so. You know, we will make a decision on how we are going to handle Centurion based on what is best for our shareholders going forward. And it has nothing at all to do with obviously this Anglo situation. So I have no comment on any possible terms because there are not any possible terms to be discussed right now.

George Eddy: Okay. Yep. Excellent. Timing, is there any indication you can give of when it could potentially happen? Or no, there is nothing.

James C. Grech: I am not going to give any timing indication. We have had a lot of interest, and we have had some discussions at this point in time, but we feel in no hurry to make a decision at this point in time on Centurion.

Operator: And today's next question comes from Christopher LaFemina with Jefferies. Please proceed.

Christopher LaFemina: Chris, we cannot hear from you. Sorry, guys. I have my mute on. Sorry. So thanks for taking my question. I just wanted to ask a couple of follow-ups actually on the Anglo deal. So Anglo this morning talked about being constructive and flexible in their discussions with Peabody Energy Corporation. It sounds like the discussions obviously have not gone very well. And the first question I would have is whether you are in current discussions with Anglo or have you hit an impasse and now things are kind of on hold and, you know, and maybe you restart negotiations before the August 19 deadline.

But are you speaking with them now or are things kind of on the sidelines right now?

James C. Grech: Hi, Chris. Good morning. Yeah. We have had very candid and respectful conversations with Anglo at the highest levels between the two companies. But I will say the status is right now, we just have a very fundamental disagreement over the quantum of the impact. You know, we are obviously 100% certain there is a MAC, and we feel we have all of the data. It is evident to back that up. And right now, as my assumption is that Anglo is saying that there is not a MAC occurring. So we have a fundamental disagreement over the mine, the status of the mine, and the quantum of the impacts of what has occurred at the mine.

So we have had some very, you know, again, very respectful discussions. I am appreciative of the give and take that has been going back and forth. But, again, we just have a fundamental disagreement of the status of the mine now, how it has been over the past four months, how it is going to be for the rest of this year, and how it is going to be next year going forward.

Christopher LaFemina: So the dispute here is related to whether Moranbah North is a MAC event. And is there a potential solution where you meet in the middle where, you know, you kind of structured the initial deal with the Grover asset on contingent deferred payments? How about something like that related to Moranbah North? If they think it will not come back online and you do, well, you do not pay for it unless it does kind of thing.

I mean, is there some sort of, I am sorry to ask the hypothetical question, but just trying to think of where the two sides can meet in the middle where you can, you know, basically, if the mine comes online, you pay for it. If it does not, you do not.

James C. Grech: Chris, you sound like you are trying to be a mediator in a dispute. So I appreciate the efforts. But, look, I am not going to get into any negotiations on an earnings call. And, you know, August 19 date is not that far away from us. And at that time, we can just, you know, talk freely about everything that is going on.

Christopher LaFemina: Okay. And then just the last question. If you do go to arbitration, assume that were unfortunately to happen. Does the Booma transaction terminate as well? What are the consequences of going to arbitration?

James C. Grech: Yes. If we terminate the deal, then the Booma transaction, the deal we have with Booma, terminates as well. Back to back.

Christopher LaFemina: Okay. Thanks for that.

Operator: And the next question is from Nicholas Giles with B. Riley Securities. Please proceed.

Nicholas Giles: Thanks, operator. Good morning, everyone. Just a first follow-up on Anglo. I mean, the views on Moranbah North's impact, you know, continue to differ substantially. So I was just wondering if you had any additional color on what should we be looking for on August 19 when you come up with this update. I mean, should we be thinking the determination will shortly follow? Can you just remind us of the factors and potential timelines that play on the back of that update? Thanks.

James C. Grech: Yeah, Nick, again, I am not going to get into negotiations or hypotheticals or what may be occurring on August 19. I will just say that there was a 90-day period to cure the MAC, and at the end of the 90-day period, we have the right to terminate the agreement. And that is the situation, and, you know, we will wait till August 19.

Nicholas Giles: Understood, James. And apologies if I missed them all, but you did list a number of factors that underpin Peabody Energy Corporation's view that a MAC has occurred, and I could not quite compare those to the ones that you provided last quarter. So I was just wondering if you could provide us, you know, which of those factors are somewhat incremental, which have changed in your mind? A lot.

James C. Grech: Yeah, Nick. I am not sure to compare to previous statements you are asking me to. I do not have that in front of me to compare one set of statements to the other. You know, what I will say is in order to solve a problem, you have to understand what the problem is. And to date, the exact cause of the ignition has not been determined. So, again, so how do you address that is it still needs to be addressed. Alright? And then there is the status of the current longwall and is that longwall recoverable in the current panel? Will it be running again in that panel?

Which again, we do not think is a scenario that is going forward. And then you are going to have, you know, de-rates, probable de-rates of the facility going forward because of future operating conditions that are put on based on the past operating history of the mine. And then also you have all the monthly lost production and revenue, and we think this is going to go on well into, you know, not well into, I should not say that, into some point in time next year. So all of those factors are in there. And, again, I am not sure how that compares to what I said previously.

Nicholas Giles: Got it. Understood. No, James. I appreciate you walking us through what you can here. But maybe just on the operating side, you lowered your seaborne thermal cost guidance by $3 a ton at the midpoint. So unless I am mistaken, I think the full-year guide still implies that costs could be higher in the second half. So just wondering what are the ultimate drivers there. I mean, you know, we do have Wambo coming offline, you know, which I know is a lower cost. I am just trying to figure out which factors are offsetting each other. Thanks a lot.

Mark A. Spurbeck: Hey. Good morning, Nick. It is Mark. You are right. The team has done an absolutely incredible job managing costs. We talked about this last quarter, another great quarter of costs really leading us to believe that those costs are going to be lower on a full-year basis. We did lower them $3. You know, we missed 400,000 tons purely due to port congestion. We have seen a lot of that come in July. We have raised our full-year guidance by 200,000 tons in the segment. And the net result is lower cost by $3 for the full year. So really happy with all the progress we have made.

Operator: And our next question comes from Katja Jancic with BMO Capital Markets. Please proceed.

Katja Jancic: Hi. Thank you for taking my questions. Maybe going back to Centurion, given that the development is progressing ahead of schedule, can you talk a bit more about how this could impact the sales targets there?

Mark A. Spurbeck: Katja, it is Mark again. A couple of things. One, yeah, pulling that longwall production forward earlier into the first quarter of next year, really six months from now. Very exciting time. Think back, the company is self-funded by organic cash flow, $600 million to date on the development of that key asset, but $100 million to go in the South before that longwall production starts. Pulling it forward earlier will obviously start production earlier, but when you look at the timing of the production there, it probably also may have accelerated a longwall move, their first longwall move. So previously, we have 3.5 million tons out there for next year production. We are not changing that yet today.

Katja Jancic: Okay. And then maybe on the PRB cost, just to confirm, that includes now the new royalty rate?

Mark A. Spurbeck: Yes. It does. So the lower reduction from 12.5% to 7% is baked into that guidance. So increased volumes by 5 million tons in the PRB for the full year, seeing continued strong demand. We will have a benefit to our costs in the half of the year due to that lower royalty rate. As you mentioned last quarter, a portion of that does go back to certain customers. We will actually see that as a net in revenue, our average realized sales price. So, a little bit comes out there, but net-net, we are looking at about a $0.40 per ton benefit to Peabody Energy Corporation tons. That is in that $15 million to $20 million range.

Katja Jancic: And then going to next year, I think on an annual basis, it would be closer to $60 million, if I am not mistaken. Is there an opportunity to further increase the potential benefit versus what you are getting right now?

Mark A. Spurbeck: Yeah. Going forward, obviously, that benefit, as James mentioned in his remarks, will make the PRB coal just more cost-competitive. So we expect that to help overall volumes. How much of that is the Peabody Energy Corporation's 26 and maybe 50% for 27. Okay. Thank you.

Katja Jancic: You're welcome. Thanks, Katja.

Operator: As a reminder, if you do have a question, please press star then 1. And the next question comes from Nathan Martin with The Benchmark Company. Please proceed.

Nathan Martin: Thanks, operator. Good morning, everyone. I think a lot of my questions have been touched on. But you mentioned Shoal Creek will benefit from a 2.5% production tax credit for met coal. That was included in the "One Big Beautiful Bill." Could you guys put a savings estimate kind of around that, like you did for the PRB?

Mark A. Spurbeck: Yeah, Nate. Just a reminder, that does not take effect until January 1, 2026. So nothing in the full-year guidance for that. But I would put it above $5 million.

Nathan Martin: Thanks, Mark. Then maybe while I have you, I know, you know, I have talked about this on numerous occasions, but you know, once again, operating costs this quarter as well as resource management results added significantly to the 2Q adjusted EBITDA. Any specifics there to call out? I know these segments are lumpy, but can you talk about what your expectations are here for the second half? Are there any other big drivers you see there?

Mark A. Spurbeck: Yeah, Nate. You are right. We did have some unexpected performance really from some asset sales in the second quarter. We had a continuous miner sale at the Wambo underground mine, as you recall, that will be closing down in the third quarter, as well as some miscellaneous US land sales. We have a large portfolio of land, and from time to time, we optimize that portfolio and make sales of these assets. It is lumpy and unpredictable.

You know, I will say that offset, you know, the 400,000 tons we lost in the US thermal business really mostly due to that poor rail performance at the Bear Run mine, as well as the 400,000 tons we lost just simply due to port congestion, which we are making back up obviously in the second half by increasing that full-year guidance. Those two kind of really offset each other, and everything is on track.

Nathan Martin: Are there any big items you kind of see over the second half, Mark, or still uncertain?

Mark A. Spurbeck: No. As far as those other items, there is nothing to forecast there.

Nathan Martin: Okay. Got it. Helpful. And then maybe finally, just switching gears. As I am sure you guys are aware, one of your peers in the PRB is ramping up a new rare earth mine. That has been getting a lot of attention. You know, James, has Peabody Energy Corporation done any testing of its reserves at this point to see what, if any, rare earth elements are present? Just thinking about this given the favorable administration and regulatory backdrop we are seeing currently.

James C. Grech: Yeah, Nate. That is a timely question. You know, we are advancing into what I will call a second phase of our rare earth element evaluation program in the PRB. We had a study that we did with the University of Wyoming that we concluded last year, so now we are into the second phase. But the initial data from that study suggested that our roof and floor strata adjacent to the current mining seams could contain some elevated levels of these rare earth elements at both our NARM Complex and our Rawhide Complex. And these initial indications that we have seem to show that we have the same or better concentrations than others reporting in the PRB.

And I will say one thing that is important to note as we move forward with this, you know, the rare earth elements that are sitting in these clays are very accessible to us because we are already uncovering them in the coal mining process. You know, we are not going to need to develop new mines to excavate this overburden. So this quarter, we are going to do some more sampling and laboratory analysis at our sites. We are in some very early days. But we certainly have more than enough information justifying going forward. So this is not requiring any real appreciable capital for us right now. We are in the study phase. Very, very encouraging initially.

But I guess I will leave it at that. Nate, stay tuned for some more information as we advance this.

Nathan Martin: Okay. Appreciate those thoughts, guys. Thanks for the time, and best of luck in the second half.

Mark A. Spurbeck: Thanks, Nate.

Operator: And the next question is a follow-up from Nicholas Giles with B. Riley Securities. Please proceed.

Nicholas Giles: Thanks for taking my follow-up. Just one on liquidity. You ended the quarter with $586 million of cash. I was wondering if you could remind us how much of that cash is fully unencumbered and then maybe related, sorry if I missed this, but how much has been spent or how much spend remains at Centurion to ultimately bring you to commercial production? Thanks very much.

Mark A. Spurbeck: Yeah. Thanks, Nick. No concerns here. On the cash and the balance sheet, that total amount of cash and cash equivalents of about $586 million is unrestricted, unencumbered, and fully available to the company. You do see on our balance sheet a separate line item for restricted cash and collateral of about $50 million. Again, primarily relates to all the pre-funded reclamation liability across the globe. And then as far as Centurion capital for the South development, there is about another $100 million in the second half of the year that will get us to longwall production. Again, our initial target on that was $489 million.

I think if you add that $100 million, you might get to about $495 million. So, almost right on the dot.

Nicholas Giles: Great. Thanks so much for that, Mark. That is really helpful. Maybe just on the restricted cash and collateral, can you remind us, are there any relevant timelines we should be thinking about as far as unlocking some of that restricted cash? Just do not want to leave anything out there. Thanks.

Mark A. Spurbeck: Yeah. You know, there is about $520 million of that is related to the surety agreement with our reclamation provider. For future bonding providers for future reclamation. We have been able to reduce that amount over the last year, year and a half. Really that is done by continuing to do the reclamation work and getting bond releases. At the beginning of the year, we had about a $100 million reduction. So we have had some pretty good success there. Again, it is lumpy as that work gets done and as bond releases get approved. But we continue to knock that down.

Nicholas Giles: Got it. Okay. Thank you again, and continue best of luck.

Mark A. Spurbeck: Thanks, Nick.

Operator: Thanks, Nick. And this concludes today's question and answer session. I would now like to turn today's conference back over to James C. Grech for any closing remarks.

James C. Grech: Well, thank you, operator, and thanks to everyone for the time today. And I also want to make sure I give recognition to our Peabody Energy Corporation team, which, you know, amid everything else that is going on, we are again turning in record safety performance on track to beat last year's performance, which was the best in our 140-plus year history. So very appreciative of that. So we look forward to keeping all of you up to date on our progress as the year rolls on. Thank you.

Operator: The conference is now concluded. Thank you for attending today's presentation. And you may now disconnect.