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Date

May 5, 2026

Call participants

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

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Takeaways

  • Cash Position -- $603 million at quarter-end with total liquidity exceeding $950 million, providing financial flexibility for volatility and favorable price opportunities.
  • GAAP Net Loss -- $70.1 million, or $0.58 per diluted share, included $54 million of acquisition termination costs primarily from financing arrangements, transition services, and legal fees.
  • Adjusted EBITDA -- Just under $100 million, supported by higher Powder River Basin shipments, seaborne thermal coal volume, and the lowest metallurgical coal cost in several years.
  • Operating Cash Flow -- $122 million generated during the quarter.
  • Seaborne Thermal Segment -- $41 million in adjusted EBITDA, 17% margins, volumes up 500,000 tons sequentially, and margins expanded by 10% from the prior quarter.
  • Seaborne Metallurgical Segment -- $28 million in adjusted EBITDA, revenue per ton rose 6% sequentially, aided by Centurion premium hard coking coal, and costs improved at all five operations.
  • U.S. Thermal Mines -- $59 million in adjusted EBITDA on improved domestic demand, delivering nearly $150 million in year-to-date cash flow; EBITDA outpaced capital spend by nearly five times.
  • Powder River Basin (PRB) -- $52 million in adjusted EBITDA, up 20% sequentially, with a 6% improvement in margin per ton, and reported costs at the low end of guidance; volumes up 10% year over year, margins up 39%, EBITDA up 53%.
  • Other U.S. Thermal Segment -- $7 million in adjusted EBITDA; production impacted by a five-week dragline outage at Bear Run causing a 400,000-ton loss, mostly offset by inventory drawdown; $2.5 million in repairs increased costs temporarily.
  • Corporate and Other Segment Charges -- One-time $5.5 million charge for settlement of claims related to overtime calculation disputes at U.S. operations.
  • Q4 Seaborne Thermal Guidance -- Volumes projected at 3.2 million tons (2.1 million export, 200,000 priced at $100 per ton), with costs between $45 and $48 per ton, improving on prior guidance.
  • Q4 PRB Guidance -- Shipments of 23 million tons at $11.25 per ton, both below previous cost guidance.
  • Full-Year Guidance Updates -- Seaborne Thermal volumes increased by 350,000 tons to 15.1–15.4 million; Seaborne Met costs target improved by $2.50 to $115 per ton at midpoint; PRB volumes up by 3 million to 84–86 million tons, with costs down by $0.25 to $11.25–$11.75 per ton; Other U.S. Thermal volumes at or just below previous low-end guidance (13.2–13.4 million tons), full-year costs up by $2 per ton to $45–$49 per ton.
  • Seaborne Met Market Benchmark Price -- Averaged $184 per metric ton over the quarter, unchanged sequentially; benchmark spot prices now around $195 per metric ton, with next year's curve at $215.
  • Seaborne Thermal Benchmark Price -- Rose 8%; Newcastle forward pricing is in contango at 9% above current levels for next year.
  • U.S. Electricity Demand -- Up 2% year-to-date; AI-driven data center buildouts and manufacturing support expansion.
  • U.S. Coal Generation -- Coal burn up 11%, five times greater than total electricity generation growth; gas generation down 3% with average natural gas price at $3.45 per MMBtu and next year's curve at $4.
  • U.S. Coal Shipments -- Up 7% year-to-date; generated inventories down 14% from a year ago.
  • Life Extensions of U.S. Coal-Fueled Plants -- 58 units and 46 gigawatts have been extended, representing over a quarter of the installed base.
  • Centurion South Progress -- Development nearly complete; three months from starting longwall operation; 160 out of 400 employees hired with expectation to reach full complement for ramp-up.
  • Anglo Transaction Termination -- $54 million charge in the quarter, $75 million year-to-date related to financing and legal costs; $29 million deposit returned, additional $46 million expected.
  • Rare Earth Element (REE) Assessment -- Preliminary data from PRB sampling indicates "similar or better concentration than others have reported"; full preliminary analysis with element types and concentrations expected with year-end results.
  • Operational Safety -- Safety performance remains near all-time record levels established in 2024.

Summary

Peabody Energy Corporation (BTU 5.73%) directly reported a GAAP net loss, largely driven by costs from the Anglo acquisition termination, but saw rising adjusted EBITDA led by Powder River Basin and seaborne segments. Operational momentum reflected higher U.S. coal shipments, declining inventories, and increased utilization driven by favorable power market dynamics, with management projecting further upside as AI and manufacturing trends persist. Rare earth element exploration in the Powder River Basin is accelerating, with preliminary results to be reported at year-end and government engagement highlighted as ongoing. Strategic clarity was provided through updated segment guidance, explicit confidence in running at maximum Powder River Basin capacity, and a focus on organic asset growth over external M&A as Centurion ramps up. The company expects improved cash flows and intends to maintain a strong balance sheet to capitalize on market opportunities and shareholder return potential.

  • Management stated that coal plant life extensions now total 46 gigawatts and 58 units, which they said is "more than a quarter of the total installed base."
  • Peabody Energy Corporation acknowledged that "there is no additional latent capacity to speak of" in their largest mine after adding 10 million tons of PRB volumes year-to-date, confirming constraints on rapid supply response without further investment.
  • Mark A. Spurbeck stated that with the $54 million charge, "That is really a catch-up to where we are at, and that is obviously stopped now. I would not expect anything significant like you have seen," suggesting minimal ongoing cost impact outside annual legal defense for arbitration, estimated at $5 million per year.
  • Malcolm Roberts stated that the company is "definitely" confident about sustaining maximum PRB production over the next two years, reinforced by observed customer contracting activity.
  • Preliminary rare earth element assessment results in the PRB are to be disclosed with year-end reporting, but management emphasized proprietary logistics and scale advantages: "We are not trying to get shovel-ready; we are already shoveling in the PRB."

Industry glossary

  • PRB (Powder River Basin): A major coal-producing region in the western United States, known for its large-scale sub-bituminous thermal coal output and significant role in Peabody Energy Corporation's operational profile.
  • Centurion: Peabody Energy Corporation's new metallurgical coal mine project, with development nearly complete and a longwall start-up expected within three months; expected to increase the company's premium coking coal capacity.
  • Longwall: A high-efficiency underground mining technique using a rotating drum or shearer to extract coal across an extended face, enhancing production rates for mines like Centurion and Twentymile.
  • Seaborne Met/Metallurgical Coal: Coal grades used primarily in steelmaking and sold via international maritime trade; key Peabody Energy Corporation segment.
  • Newcastle Pricing: Benchmark thermal coal price index for high-energy coal shipped from Newcastle, Australia, used for global coal trading and contract settlement.
  • REE (Rare Earth Elements): Strategically important minerals critical to advanced technologies, subject to growing U.S. policy focus in power, defense, and electronics supply chains.

Full Conference Call Transcript

James C. Grech: One of the world's largest hedge funds recently commented to us that Peabody Energy Corporation was at the intersection of some of the most significant themes going on in America, and I could not agree more. Consider a few of these. The AI data center theme continues to play out, with new investments being announced weekly. When coupled with plans for increased U.S. manufacturing, this means power generation will struggle to keep up with demand for the foreseeable future. U.S. coal plants’ reliability and affordability also continue to be emphasized. During the coldest days of last winter, for instance, fossil fuels provided more than 90% of the additional U.S. generation needed versus just 4% for wind and solar.

The often quoted national average of 16% of electricity from coal also does not do justice to the workload, reliability, and economics that coal power generation provides in certain states. For example, our home state of Missouri gets approximately 60% of its electricity from coal, while California has virtually no coal-fueled power. As a result, Missouri's average cost of electricity was just $0.11 per kilowatt-hour last year, but California power averaged $0.27, nearly two and a half times that of Missouri. The third quarter continued to see two 202 executive orders to keep coal-fueled generating plants open and utilities announcing additional extensions.

The count of life extensions for U.S. coal-fueled generation now totals 58 units and 46 gigawatts of generation, more than a quarter of the total installed base. This comes as the Trump administration continues to implement common sense policies. In the third quarter alone, we saw federal funding and an emergency order to extend the lives of coal plants, a 5.5% reduction in the federal coal royalty rate, and an upcoming 2.5% production tax credit from the one big beautiful bill. We also saw a growing national focus on securing rare earth elements and critical minerals. We have long said that our leading U.S. thermal coal platform, and particularly our Powder River Basin position, represents a free option for investors.

To extend that analogy, today, that option is nicely in the money. With that brief overview, Malcolm, I will now turn the call over to you to give more color on the markets.

Malcolm Roberts: Thanks, Jim, and good morning, everyone. I will begin with a look at the seaborne markets, where the notable change in metallurgical coal this past quarter has been how unchanged those markets have been. Consider this: the normally volatile premium hard coking coal benchmark price averaged $184 per metric ton in the third quarter, which is the same as the price it averaged in Q2 and just a dollar per ton lower than Q1. The global steel story has continued to center around China's anti-involution policies, which appear to be firming as the country looks to trim unprofitable supply. China's crude steel production is down roughly 3% year to date.

Unfortunately, domestic steel demand has also been sluggish, so Chinese steel exports are still running at elevated levels. Lower crude steel production in traditional markets outside China has tempered the benefit of new blast furnaces in India and the incremental coal imports they represent. I will remind listeners that while China imports less than 20% of its metallurgical coal demand, India imports 90% of its steelmaking coal needs. We note that in recent days, China has been aggressively pursuing imports of premium seaborne coking coals as domestic pricing in China has risen to a level that makes imports attractive. Seaborne met coal supply continued to see challenges this past quarter, with some producers struggling at these sustained low pricing levels.

We estimate that 45 million tonnes of seaborne met coal production, or 15% of seaborne supply, is earning an unsustainable level of revenue at current price levels. Benchmark prices today stand at approximately $195 per metric ton. Next year's spot curve is in the $215 range. This coming quarter, we will be looking at the pace of Chinese policies and the strength of the restocking cycle in both India and China. Seaborne thermal coal saw some support in the third quarter, with the average benchmark price up 8%. Positives for demand include developed Asian markets in Korea and Taiwan favoring Australian imports over Russian coals, while Chinese coastal plant stockpiles stand at a twelve-month low.

Anti-involution policies are touching all of China's coal mines, where there are 276-day work limits, safety checks, and production quotas that invariably have an impact on most. Enforcement has been observed but has been sporadic. On the supply side, seaborne thermal production is adjusting, with large exporting nations such as Indonesia and Colombia curtailing unprofitable production. An improving market balance is reflected in the forward seaborne thermal benchmark price contango, with next year's Newcastle pricing up 9% above current levels. During Q4, we will see if the recent rebound in Chinese imports accelerates. Within U.S. markets, I will reinforce Jim's initial remarks. The favorable trends we have discussed all year are well intact.

Through nine months, total U.S. electricity demand is up 2% over the prior year. That relates mostly to the early-stage buildout of data centers and increased load growth from AI. Electricity demand growth only looks to expand, with ICF International, for instance, forecasting 25% growth within five years and 78% growth within 25 years. Peabody Energy Corporation has been saying that increasing utilization of existing coal plants represents the best form of incremental power in the U.S., and that is exactly what has occurred year to date. Percentage growth in U.S. coal generation has been five times greater than overall electricity generation growth.

The 11% increase in U.S. coal burn this year has been driven by good fundamentals, including natural gas prices that have averaged $3.45 per MMBtu, leading to gas generation being down 3%. And those trends may well be repeated next year with a forward curve for natural gas averaging an even stronger $4. Our view is spare generation capacity could provide substantial growth in coal consumption while filling the electron gap. First, consider the landscape in the U.S. Renewables continue to be built out but do not solve the massive 24/7 reliability needs when the wind does not blow and the sun does not shine. Renewable saturation is a real concept.

Gas plants are being built; however, new turbines ordered today may be five years away from being delivered, given backlogs. Additional nuclear generation is fine, but at least a decade or fifteen years away from reality. For those keeping score on coal plant longevity, add three coal-fueled plants in North Carolina to the list of those being extended. And these plants are not just being kept in service; they are generating more electrons: 42% of capacity in 2024. The fleet can never run at 100%, of course, but optimal levels could look a lot like 2008. Coal plants ran at 72% utilization.

Closing that gap could add 10% of generation to the U.S. electrical grid without needing to add any new plants, and that increase could translate to some 250 million tons or more per year of additional thermal coal demand. Now, that is not a projection; it is just simple math. However, it does provide a compelling case for coal's rebound in the U.S. and one that has already begun to play out this year. From a supply standpoint, providing those additional tonnes to meet growing U.S. generation can come somewhat from running mines harder and utilizing latent capacity. You have seen that from Peabody Energy Corporation, with U.S. shipments up 7% year to date.

With higher coal burn, we also estimate that U.S. generated inventories are down 14% from this time last year. Market fundamentals continue to tighten. We have begun to see price indices increase while natural gas prices have risen across the curve. Coal continues to present attractive economics. That is a brief review of the coal market dynamics. I will now pass the call over to Mark.

Mark A. Spurbeck: Thanks, Malcolm, and good morning all. I will start with a quick overview. We delivered another strong financial quarter, with adjusted EBITDA increasing from Q2, driven by higher Powder River Basin shipments, better than expected seaborne thermal coal volume, and the lowest metallurgical coal cost we have seen in several years, despite burdensome Queensland royalties. At September 30, our cash position was $603 million and total liquidity exceeded $950 million, ensuring we have the financial flexibility to manage short-term market volatility while fully capturing upside from more favorable price. Together with the increased operating leverage from Centurion, we expect to be positioned to generate free cash flow and deliver outsized returns to shareholders.

Let us take a closer look at our financial performance for the third quarter. We recorded a GAAP net loss attributable to common stockholders of $70.1 million, or $0.58 per diluted share, which included $54 million of acquisition termination costs, primarily related to financing arrangements, transition services, and legal fees. We reported adjusted EBITDA of just under $100 million, generated $122 million in operating cash flow, and continued completing development at Centurion South, now just three months away from starting the longwall. Turning to operating segment performance, Seaborne Thermal recorded $41 million of adjusted EBITDA and 17% margins.

Sales volumes exceeded company expectations, with an increase of 500,000 tons quarter over quarter as the company recovered the delayed tons from long Newcastle shipping queues in Q2 and then some. The segment expanded margins by 10% from Q2, demonstrating the continued strength of our low-cost Australian thermal platform. The Seaborne Metallurgical segment reported adjusted EBITDA of $28 million. Revenue per ton rose 6% quarter over quarter due to a higher product quality mix, enhanced by 210,000 tons of Centurion premium hard coking coal. Costs were significantly better than company targets, with cost improvements achieved at all five met coal operations. The U.S.

Thermal mines generated $59 million of adjusted EBITDA on the improved domestic demand that Jim and Malcolm discussed. On a year-to-date basis, our U.S. Thermal platform has delivered nearly $150 million of cash flow, and EBITDA has outpaced capital by an almost five-to-one margin. The Powder River Basin delivered $52 million of adjusted EBITDA, a 20% increase from the prior quarter. Margin per ton improved 6% driven by higher volume and reported costs at the low end of guidance. The new lower federal royalty rate improved costs by $0.70 per ton, but reduced revenue by $0.30 as certain contracts require law changes to be passed on to customers.

To get a better sense of the momentum building in the PRB, shipments are up 10% year over year, yet margins have improved by 39%, resulting in a 53% increase in reported EBITDA compared to the prior year. The Other U.S. Thermal segment contributed a modest $7 million of adjusted EBITDA in the third quarter. Sales volumes met company expectations despite an unplanned five-week dragline outage at Bear Run, which led to a production loss of 400,000 tons. That was mostly offset by a drawdown of inventory, resulting in a net sales reduction of 100,000 tons. Related repair costs totaled $2.5 million, temporarily increasing costs above expected levels.

The dragline resumed operating on September 18, and we do not anticipate any impact on fourth quarter production. Also, the Twentymile team completed the longwall move to the 11 East panel in October. We expect to return to normal production rates going forward, though we anticipate less-than-ratable sales in the fourth quarter as we rebuild inventory. Lastly, we recorded a one-time $5.5 million charge in the Corporate and Other segment for the settlement of claims related to a dispute over the calculation of overtime at our U.S. operations.

Looking ahead to the fourth quarter, Seaborne Thermal volumes are expected to be 3.2 million tons, including 2.1 million tons of export coal, 200,000 tons of which are priced on average at $100 per ton. 800,000 tons of Newcastle product and 1.1 million tons of high-ash coal remain unpriced. Seaborne Thermal costs are expected to be between $45 and $48 per ton, an improvement over prior implied fourth quarter guidance. As a reminder, Wambo Underground came offline in the third quarter. Going forward, we anticipate a Seaborne Thermal quality mix of 40% Newcastle and 60% higher-ash product.

Seaborne Met volumes are targeted at 2.4 million tons, up 300,000 from the third quarter, while costs are expected to be $112.50 per ton, better than prior full-year guidance. In the PRB, we expect shipments of 23 million tons at costs of $11.25 per ton, both better than prior implied fourth quarter guidance. Other U.S. Thermal coal shipments are expected to be just slightly below the third quarter at 3.6 million tons, as we rebuild inventory and production ramps up at Twentymile following the longwall move. Costs are anticipated to be approximately $45 per ton, a $5 improvement from the prior quarter.

With Wambo Underground closing as planned, we anticipate certain non-reclamation costs to be reported in the Corporate and Other segment. These costs are very much front-end loaded and estimated at $9 million in the fourth quarter. After third quarter's results, we are making favorable changes to full-year guidance for the second quarter in a row. Seaborne Thermal volumes are anticipated to be 350,000 tons higher at 15.1 to 15.4 million. Seaborne Met cost targets have improved by an additional $2.50 to $115 per ton at the midpoint. PRB volumes are anticipated to be 3 million tons higher at 84 to 86 million, while costs are being lowered another $0.25 to $11.25 to $11.75 per ton.

With the recent challenges at Bear Run and Twentymile behind us, we are adjusting Other U.S. Thermal full-year volume to be at or slightly below the previous low end of guidance at 13.2 to 13.4 million tons, and full-year costs $2 per ton higher at $45 to $49 per ton. In summary, we delivered another straightforward quarter, underscoring the continued discipline of our operations team. This Centurion South investment is nearly complete; we are well positioned to significantly expand margins. We expect another consistent quarter to end the year. We remain confident in our ability to bring Centurion online early next year and deliver stronger cash flow.

Our robust balance sheet provides flexibility to navigate near-term seaborne weakness, capitalize on accelerating cash flows as conditions improve, and create significant value for our shareholders. Thank you. I will now turn the call back over to Jim.

James C. Grech: Thanks, Mark. I would like to briefly review our core priorities, which play into Peabody Energy Corporation's compelling investment themes. First, we are highly focused on safe, productive, and environmentally sound operations. That is our key to everything else we do. Second, we are on our final approach to Centurion’s longwall start-up. Centurion joins our multiproduct met coal platform that will see a volume increase of approximately 25% in 2026. Third, we believe our low-cost thermal coal platform will continue to deliver EBITDA well ahead of its modest CapEx needs. Fourth, our leading U.S. Thermal position will continue to benefit from the rising domestic generation trends.

And fifth, we will maintain a fortress balance sheet with a focus on maximizing shareholder returns. Our sixth priority is also our newest, which is to leverage our number one U.S. coal production position to assess our potential to meet growing U.S. needs for rare earth elements and critical minerals. We told you last quarter that we saw rare earth and critical mineral potential from preliminary studies performed in conjunction with the University of Wyoming, and the new sampling and laboratory analysis program was beginning in the third quarter. Preliminary data from our targeted zones indicate that we have similar or better concentration than others have reported in the PRB.

We acknowledge that we are in the early stages in our assessment of our potential to produce critical minerals and rare earth elements with sustainable processes that could potentially generate attractive returns for our shareholders. In continuation of this assessment, we have multiple activities currently underway. We have accelerated our drilling program as we continue our assessment of both types and concentrations of rare earth elements in conjunction with several third-party labs. We are in discussion with multiple departments in the Trump administration regarding rare earth and critical mineral priorities and potential for funding. We also have been in early discussions with a number of potential technology partners regarding processing platforms.

I would describe our actions as aggressive in pacing, yet disciplined in approach. By our year-end reporting early next year, we will look to provide a greater sense of mineral types and concentrations while also discussing next-stage plans. With that, operator, we can now open up the line to questions.

Operator: Thank you. We will now open the call for questions. To ask a question, you may press star then 1 on your touchtone phone. 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 your question, please press star then 2. At this time, we will pause momentarily to assemble our roster. First question comes from the line of Nick Childs with B. Riley Securities. Please go ahead.

Analyst: Yes, thank you, operator. Good morning, everyone. My first question, obviously some key tailwinds for domestic thermal this year, and Malcolm, you mentioned optimal coal-fired utilizations could be in the 70s. That would imply 250 million tons of demand. In this blue-sky scenario, how should we think about Peabody Energy Corporation’s response? What is the maximum level of output we could see Peabody Energy Corporation producing in the PRB, how much capital would be required, and how long would it take to ultimately achieve this level?

Malcolm Roberts: I will talk about the market, and then capital I will hand over to Jim or Mark, depending on who wants to take it. When we look at this market, there was quite a bit of latent capacity available over the last couple of years that we are seeing fill up very quickly. It is a great question because the expansion is going to come from two things. One is going to be customer commitments. Adding on capacity is not something you do for one year, so it is going to need customer commitments.

And then we will be looking for the price signals, and we will see what the market does in terms of pricing those to bring those additional tons on. I think that is the best way to look at it, but I would say we see ourselves approaching absorbing the latent capacity that we have had over the last couple of years.

Mark A. Spurbeck: Good morning, Nick. I think Malcolm has it exactly right. You look at what we have done, particularly in the PRB, increasing our volumes by 10 million tons from the beginning of the year, so that latent capacity is really being taken up in the market. We have seen our peers do something similar. There is going to be additional demand if any of these projections for load growth continue to bear out like we have seen so far this year. The amount of capital it is going to take remains to be seen, but certainly we are going to need to see the economics and prices in coal to justify the additional investment.

There are two things when I think about additional production: one is the capital, mainly the equipment fleet; but two is also the labor and getting a workforce assembled to produce this additional tonnage. Latent capacity is being taken up, and additional volumes are going to come at higher costs.

Analyst: This is really helpful. Just as a follow-up here, you mentioned price signals and customer commitments. What would you need to see from a duration perspective? Would you need to see 2030-type commitments at this point to deploy incremental capital? And any volume figure—could we see 10 million more tons, 20 million more tons? Appreciate any clarity there.

Mark A. Spurbeck: With that 10 million ton increase this year, that is pretty much running at our full-out run rate, so there is no additional latent capacity to speak of, particularly at our NARM mine, which is the largest mine. With regard to the type of commitments, we are seeing multiyear commitments from customers already and a lot of inquiries. It would look the same as any other investment: we have to see a return. How much can we do on an as-needed basis, on a leasing basis versus outright investment and purchase? That is to be determined. But we fully expect, with latent capacity being taken up this year, to see upward pricing pressure.

We are seeing it already, and I expect that could continue next year, particularly if that forward curve on gas above $4 is right next year.

Analyst: Got it. Thanks for that. Switching gears, obviously you have Centurion coming on here shortly and that will reweight you towards the benchmark. But with the termination of the Anglo deal, how are you thinking about M&A opportunities in met going forward? Do you still have a desire to further reweight your met portfolio to higher quality grades beyond what we will see at Centurion?

James C. Grech: Hi, Nick. Good morning. Our focus has been on growing the seaborne metallurgical coal, and with the position we are in right now, our entire focus is on getting the Centurion mine up and running and getting it to the maximum capacity possible, and we are in good shape to do that. One of the things that we are addressing, which is going well, as Mark said, is labor. We have 160 of the 400 employees hired that we need to get to full capacity, and we anticipate being able to get up to full labor complement as the longwall is coming online.

Our focus really is on getting the Centurion mine up and running, maximizing the output from that mine, and then really taking advantage of the U.S. tailwinds that we have—following up on your questions—getting as many tons out as economically as we can from our U.S. platform. That is where our focus is, and if the market unfolds as we think it has the potential next year to do so, with the upward pricing pressures domestically and internationally, our focus on our organic assets positions us for very robust cash flow potential. Of course, that can work back to share buybacks and so on for our shareholders. That is really where the focus of our company is going forward.

Analyst: That is clear, Jim. I appreciate the update, and best of luck.

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

Analyst: Thanks, operator. Good morning, everyone. Just back to the PRB for one second. You said the operation, I think, is basically running at the max at this point. If we look out to the next two years, 2026–2027, are you seeing enough demand to continue running at that max? And roughly how contracted are you and at what price at that level?

Malcolm Roberts: Malcolm here. I think there are two questions. Are we confident about running at max capacity for the next couple of years? The answer is definitely yes in the PRB. The second question was what we think price levels will be. I cannot comment on that, except we are encouraged by where we have seen index price movements and where we are doing business today.

Analyst: And, Malcolm, can you just clarify—go ahead. Sorry.

James C. Grech: I am sorry, Nate. Jim. If there is something to take from what Malcolm and Mark have been saying, it is that we are seeing an environment in the market where demand certainty is increasing, and the ability for U.S. producers to quickly add production is going to be the challenge, and that should result in upward pricing pressure. There is going to be value to the first movers on the customer side who step out and enter into these multiyear agreements, securing the reliability that they are looking for, and we have been seeing some of that.

This inflection point has real potential to hit the market: demand increasing quickly, coal plant utilization wanting to increase to go along with it, and how quickly the production side can respond. For the production side to respond, we need to see more long-term agreements put in place where we can justify the investment, as Mark was talking about. It could make for a pretty volatile pricing environment going forward if these demand projections hold as we are seeing many consultants forecast.

Analyst: Got it. Appreciate those comments. Shifting to the met segment, clearly a nice quarter-over-quarter improvement in cost per ton there. As you look ahead to 2026 and the start of the Centurion longwall, should we expect that to drive another incremental improvement? I believe you said that was going to be the lowest cost operation in the segment. How should we think about how met segment costs could compare to 2025 guidance? Some puts and takes would be helpful. Thanks.

Mark A. Spurbeck: Yes, Nate. We are not sharing guidance for 2026 yet. We will do that on our next call. Over the 25-year life, Centurion will be the lowest-cost producer in the portfolio. We talked about the South having some shorter panels and lower production—a run rate of about 3.5 million tons or so next year versus a life-of-mine of 4.7 million. So there will be some give or take there. I would not look for any step change next year.

Analyst: That is fair. One final one: thoughts on potential scenarios for how you see the arbitration process with Anglo playing out? And specifically, are there any further adjustments to your results—like the $54 million charge we saw this quarter—expected going forward?

James C. Grech: Nate, I will talk about the process, and then I will let Mark comment about any other adjustments. Our analysis of the MAC, which was a prospective analysis, we feel has been confirmed by events and the passage of time and, of course, the enormous loss of value that we see. We have hired two prominent law firms, Jones Day and Quinn Emanuel, and they have done their analysis and they join us in a high level of confidence in our position. An arbitration process probably takes years, and we are on the front end of that process. I cannot predict how long it is going to take, but it will take a while to get to any resolution.

As each day passes, we get more and more firm in our conviction of our position. Now as far as any other expenses looking forward, I will give that to Mark.

Mark A. Spurbeck: On the $54 million charge for the quarter, that brings the year-to-date charge to $75 million. That is a lot of cost that would have been capitalized had we been able to complete the transaction, primarily related to the bridge financing arrangements. That was significantly most of it—about $45 million of the year-to-date charge. There is also about $15 million of professional fees and transition services. That is really a catch-up to where we are at, and that is obviously stopped now. I would not expect anything significant like you have seen. There will be some legal defense costs going forward. We estimate that at about $5 million a year.

Analyst: Very helpful. I appreciate the time, and best of luck in the fourth quarter.

Operator: The next question comes from the line of George Eddy with UBS. Please go ahead.

Analyst: Good day, Jim, Mark, Malcolm, and Vic. Hope you are all well. Can I ask more about rare earths in the PRB? In terms of details we will get by year end, should we expect to see grades, volumes, costs, and potential timeline to get to market—all of those by year end?

James C. Grech: George, what we said is we are in the very early stages of our assessment, which is ongoing. We are getting some preliminary data in; it is being analyzed. We are getting more data in and more analysis is needed. We have accelerated our drilling program with that as well. What we are planning to give at our year-end results in February is a preliminary analysis of indicative element types and concentrations. That is what we will be giving at that point in time.

Analyst: Okay. You had called out earlier similar or better grades than peers. Is it reasonable for me to assume that it is similar to other pits—heavy in scandium and gallium where the value is? And lastly on that, can you help elaborate on discussions on partnerships with the current administration? You are a leading player in both coal and critical minerals—two clear top priorities. How are they approaching this in your discussions?

James C. Grech: There are a few things there. First off, I am not going to get speculative on the types and concentrations. We will have that in just a few months. We want to make sure that we are very thorough in how we approach this. We take a disciplined, systematic approach. We will get all the sampling done and the data in, and when we give our year-end report in February, we will give the information we have at that time. We are not going to get speculative right now on concentrations and types. We have been very active with the Trump administration, meeting with various departments in Washington and we even have more upcoming meetings in the near future.

We are working closely with them. As you said, with the volumes we do in coal and the potential rare earth elements, we have a unique position, and we have that both in the U.S. and Australia. With the Trump administration and the recent agreement with Australia, we are also looking at the potential for rare earth elements along with our coal mines in Australia. One other thing I would like to point out where we are very unique when it comes to the potential for rare earth elements is the massive scale we have in the PRB, which cannot be duplicated. We have the workforce, the equipment, and the logistics.

We are currently mining 80 million tons of coal a year and moving over 400 million cubic yards of earth a year. No one else can duplicate that. We are not trying to get shovel-ready; we are already shoveling in the PRB. It is a unique position we have, and as we get data and can solidify our analysis, we will bring that out.

Analyst: One last one for Mark on the Anglo termination. There was a $29 million deposit return. Is there another $46 million to come still—the $75 million total? And can you remind me what the $54 million that has gone through in Q3 represents and if there is anything more in terms of cost beyond that legal $5 million a year you flagged?

Mark A. Spurbeck: You are right. The remaining deposit—we expect that to be returned to us. We have asked for that in short order; it is not clear why only a portion of the deposit was returned to us. On the $54 million of costs, about $35 million of that was related to the bridge financing, which has now been terminated, as we announced previously. The additional amount was almost entirely related to professional fees and transition services, which have completely been halted at this point, so they will not be going forward. The only thing we will have going forward is the arbitration legal fees, and we anticipate that to be about $5 million per year.

Operator: The next question comes from Matthew Key with Texas Capital. Please go ahead.

Analyst: Good morning, everyone, and thank you for taking my questions. I have a macro one on the rare earth side. We saw this morning that the U.S. and China reached a tentative deal to pause some of those export controls on rare earth elements for about a year. What impact, if any, do you think this will have on government support for domestic rare earth projects?

James C. Grech: Matthew, I am not really sure I have a specific answer. What I will comment on is that I know there is a strong desire to have a domestic supply of rare earth elements here by our government. There could be an international supply, maybe things with China, and I am not sure how that will play out. But I do know there is a very strong desire for conventional or unconventional supply right here native in the United States. I would expect that would continue, but I do not want to speak for the administration on it. That is just my expectation.

Analyst: Got it. That is helpful. And just a follow-up on M&A on the seaborne met side. Given that you are in arbitration with Anglo and that could take some time, would you not be considering any additional M&A in seaborne met until that arbitration process is completed?

James C. Grech: First off, I will say that our belief that the arbitration process will be successful for us is not going to be a hindrance to anything we do in the future. We have 100% confidence in that process, and we are not going to stop anything strategic with our company because of that process. As you are asking about M&A, again, our focus right now is on our organic assets—getting Centurion online, getting the full value of that for our shareholders, and leaning into this market upside that we see happening both in the U.S. and internationally next year.

We are making sure our platform is capitalized, we have the maintenance in order, and we have the staffing in order to take full advantage of the upside we see coming in the market and generate some very robust cash flows. That is where our focus is right now.

James C. Grech: Okay. Thank you, operator, and thanks to everyone for the time today. I will thank our Peabody Energy Corporation team, which amid everything else turned in safety performance that remains near our all-time record performance of 2024. We look forward to keeping all of you up to date on our progress as we finish up in 2025. Thank you.

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