Third
Quarter 2019 Results
Third
quarter 2019 revenues totaled $1.11 billion compared
to $1.41 billion in the prior year
driven by a 36 percent decline in seaborne metallurgical coal sales
volumes and approximately $90 million in
lower pricing, excluding the impact of higher Kayenta revenues.
Depreciation,
depletion and amortization (DD&A) declined $28.1
million compared to the prior year primarily due to lower
contract amortization expense and final recognition of Kayenta Mine
expense. Selling, general and administrative expense (SG&A)
decreased 17 percent from the prior year to $32.2
million largely due to a reduction in personnel costs.
Transaction expenses related to the PRB/Colorado joint
venture totaled $8.2 million in
the third quarter and are included within Adjusted EBITDA. The
company also recorded a $20.0 million impairment
charge related to its Wildcat Hills Mine in the Illinois Basin,
which is expected to cease operations. The company expects this
action to be cash accretive.
Earnings from
equity affiliates totaled a loss of $20.7
million, reflecting the cumulative impact of a delay in resuming
and then ramping up production at the independently operated Middlemount
joint venture in Queensland following
a highwall failure in late June.
Combined,
these impacts resulted in a loss from continuing operations, net of income
taxes of $74.3 million compared to $83.9
million in the prior year and diluted loss per share from
continuing operations of $0.77 compared
to diluted earnings per share of $0.63 in
the prior year.
Third quarter
Adjusted EBITDA totaled $150.3 million versus $372.1
million in the prior year, reflecting previously announced
effects of pricing, shipments and lower Middlemount earnings.
T1: 2019 Guidance Targets
Sales Volumes
(Short Tons in millions)
|
PRB
|
107
– 113
|
ILB
|
~16.0
|
Western
|
11
– 12
|
Seaborne Metallurgical
|
8.5
– 9.0
|
HCC1
|
40% – 50%
|
PCI2
|
50% – 60%
|
Seaborne Export Thermal
|
11.5
– 12.0
|
NEWC:
|
60% – 70%
|
API 5:
|
30% – 40%
|
Australia Domestic Thermal
|
7.5
– 8
|
Revenues per
Ton
|
Total U.S. Thermal
|
$17.35
– $17.85
|
Costs Per Ton
(USD per Short Ton)
|
PRB
|
$9.25 –
$9.75
|
ILB
|
$32 – $35
|
Total U.S. Thermal
|
$13.95
– $14.45
|
Seaborne Thermal3
(includes Aus. Domestic Thermal)
|
$32 – $36
|
Seaborne Metallurgical (excluding North Goonyella)3
|
~$100
|
1 Peabody expects
to realize ~80%-90% of the premium HCC quoted index price on a weighted
average across its HCC products.
2 Approximately 40% of
Peabody’s seaborne metallurgical PCI sales are on a spot basis, with the
remainder linked to the quarterly contract. Peabody expects to realize
~80%-90% of the LV PCI benchmark for its PCI products.
3 Assumes 2019
average A$ FX rate of $0.70. Cost ranges include sales-related cost, which
will fluctuate based on realized prices.
Note 1: Peabody
classifies its seaborne metallurgical or thermal segments based on the
primary customer base and reserve type. A small portion of the coal
mined by the
seaborne metallurgical segment is of a thermal grade and vice versa.
Peabody may market some of its metallurgical coal products as a thermal
product from time
to time depending on industry conditions. Per ton metrics presented are
non-GAAP operating/statistical measures. Due to the volatility and
variability of
certain items needed to reconcile these measures to their nearest GAAP
measure, no reconciliation can be provided without unreasonable cost or
effort.
Note 2: A
sensitivity to changes in seaborne pricing should consider Peabody’s
estimated split of products and the weighted average discounts across all
products to the
applicable index prices, in addition to impacts on sales-related costs,
and applicable conversions between short tons and metric tonnes as
necessary.
Note 3: As of Oct.
28, 2019, Peabody had approximately 97 million shares of common stock
outstanding. Including approximately 3 million shares of unvested
equity awards,
Peabody has approximately 100 million shares of common stock on a fully
diluted basis.
T2: Tons Sold (In Millions)
Tons Sold (In
Millions)
|
Quarter Ended
|
Nine Months
Ended
|
Sept. 2019
|
Sept.2018
|
Sept.2019
|
Sept. 2018
|
Seaborne
Thermal Mining Operations
|
4.9
|
4.8
|
14.1
|
13.6
|
Seaborne
Metallurgical Mining Operations
|
1.8
|
2.8
|
6.2
|
8.7
|
Powder River
Basin Mining Operations
|
30.2
|
31.7
|
80.5
|
90.3
|
Midwestern
U.S. Mining Operations
|
4.2
|
4.9
|
12.3
|
14.3
|
Western U.S.
Mining Operations
|
3.0
|
4.0
|
10.0
|
11.2
|
Total U.S.
Thermal Mining Operations
|
37.4
|
40.6
|
102.8
|
115.8
|
Corporate and
Other
|
0.7
|
0.9
|
1.6
|
2.4
|
Total
|
44.8
|
49.1
|
124.7
|
140.5
|
Revised
Full-Year 2019 Guidance Ranges
•Expected
seaborne thermal volumes of 11.5 – 12.0 million tons
–
Reflects increase in required domestic thermal shipments
•
Anticipating met volumes of 8.5 – 9.0 million tons
–
Dec/Jan pricing arbitrage may provide economic opportunity to defer
volumes
•
Seaborne met coal costs projected at ~$100 per ton
•
Revising Midwest volume guidance to ~16.0 million tons
–
Reflects lower customer requirements, negotiated deferrals
•
Lowered overall U.S. cost guidance to $13.95 – $14.45 per ton
•
Reduced capital spending to $300 – $325 million
•
Strong U.S. contracting position heading into 2020
–
Nearly all planned Midwest volumes priced at $39 per ton
–
75% of PRB volumes committed based on mid-point of 2019 volume guidance
Link: Official Document
|