Peabody Energy (BTU) Misses Q4 EPS by 79c

Peabody Energy (NYSE: BTU) reported Q4 EPS of ($1.32), $0.79 worse than the analyst estimate of ($0.53). Revenue for the quarter came in at $737.2 million versus the consensus estimate of $706.45 million.

Outlook:

Based on current market conditions, Peabody anticipates the following results in 2021:

U.S. Thermal Operations: U.S. thermal coal deliveries are largely dependent on general economic conditions, weather, natural gas prices and utility inventory levels. Peabody is planning for PRB volumes to largely be in line with 2020 shipments, with about 80 percent of 2021 tons currently priced at an average price of $10.82 per ton. Other U.S. thermal shipments are planned to decline modestly from 2020 levels, with approximately 16 million tons priced at an average price of approximately $37.50 per ton.

Based on expected production levels, Peabody anticipates PRB and other U.S. thermal costs per ton to be largely in line with 2020 levels.

Seaborne Thermal: In December 2020, the United Wambo JV began joint production from the open-cut mine, enabling continued production of a high-quality seaborne thermal product. 2021 volumes are expected to be approximately 2 million tons in 2021 following this transition. However, Peabody will benefit from lower strip ratios and access to otherwise stratified reserves. Wilpinjong export volumes are expected to be largely in line with 2020 levels, while Wambo underground improves modestly.

Peabody anticipates a slight increase in seaborne thermal costs from 2020 given lower volumes and higher expected royalties.

Seaborne Met: Prior 2021 seaborne met projections assumed Shoal Creek resumed production in early 2021 and that Metropolitan was fully operational in 2021. Peabody continues to evaluate market conditions as well as ongoing discussions with key stakeholders at both mines. 2021 seaborne met shipments are expected to be modestly lower than 2020 volumes due to the timing of restarts, partly offset by slightly higher CMJV shipments.

Corporate and Other: In conjunction with Peabody's commitment to lowering costs and streamlining activities, SG&A expense is expected to be further reduced to $90 million. Capital expenditures are expected to be $225 million, including approximately $135 million on major project capital primarily for the seaborne thermal segment. 2021 interest expense is expected to be approximately $200 million, including $50 million of non-cash expense. Peabody also anticipates the following cash impacts in 2021:

• $60 million related to final reclamation activities
• $45 million related to the refinancing transaction
• $30 million related to postretirement benefits in excess of expense
• $15 million related to final multi-employer pension plan (MEPP) payment

First quarter 2021 results are expected to be lower compared to the fourth quarter of 2020 given reduced volumes across all segments. Lower customer demand, in part due to customers taking higher volumes in the fourth quarter to meet calendar based contractual commitments, is expected to result in lower U.S. thermal shipments. Seaborne thermal shipments are expected to decline based on lower production volumes from the United Wambo JV. Seaborne met shipments are also expected to be impacted by the actions undertaken at Shoal Creek and Metropolitan. Fourth quarter 2020 shipments from Shoal Creek and Metropolitan totaled approximately 600,000 tons.

For earnings history and earnings-related data on Peabody Energy (BTU) click here.

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