Peabody Energy (NYSE: BTU) reported Q4 EPS of ($3.12), $1.87 worse than the analyst estimate of ($1.25). Revenue for the quarter came in at $1.12 billion versus the consensus estimate of $1.04 billion.

"During the fourth quarter, Peabody made a number of operational improvements in Australia, reduced costs in four of five operating segments, opportunistically repurchased bonds to reduce debt, generated substantial cash from commercial settlements and progressed the regulatory process for the proposed PRB/Colorado joint venture," said President and Chief Executive Officer Glenn Kellow. "For 2020, we are targeting improved met coal volumes and costs, lower SG&A and reduced North Goonyella holding costs. Those benefits are expected to partly offset current lower pricing in all segments, lower U.S. thermal volumes, and the loss of some $200 million in contributions from the closing of the Kayenta and Millennium Mines."

2020 Guidance

• Macro industry conditions, including a mild Northern winter, low natural gas prices, as well as trade and import policy uncertainties, suggest a challenging backdrop to start the year. Peabody is aggressively tackling costs and focusing on the basics to improve operational performance, particularly in its seaborne metallurgical segment.
• For 2020, Peabody is guiding toward increased met coal volumes and reduced met costs, lower SG&A and lower North Goonyella holding costs. These benefits are expected to mitigate current pricing declines in all segments, lower U.S. thermal volumes, and the loss of contributions from mine closures. The company\'s 2020 earnings profile is expected to be weighted to the second half of the year.
• Peabody has a strong U.S. contracted position with 96 million tons in the PRB and 20 million tons in other U.S. thermal mines, and has the flexibility to increase volumes should demand warrant.
• Peabody is now targeting total 2020 capital expenditures of approximately $250 million, 12 percent lower than 2019 actual expenditures. 2020 expenditures include life extension project capital at the Wilpinjong and Wambo open-cut mines.
• SG&A for 2020 is expected to be approximately $135 million, compared to $145.0 million in 2019 and $158.1 million in 2018. The company\'s 2020 SG&A and segment cost guidance reflect efficiencies and cost improvements associated with its previously announced $50 million annualized cost savings target. Peabody continues to evaluate ways to further improve its cost structure.
• U.S. thermal costs are expected to be impacted by increases in the federal coal excise tax, which will revert to historical rates and is expected to have an approximately $30 million impact on costs relative to 2019.
• Relative to the fourth quarter of 2019, the first quarter of 2020 is expected to be lower based on $89 million of non-recurring settlement income, approximately $20 million to $30 million in pricing impacts as well as higher seaborne met costs. Elevated first quarter met costs (relative to full-year 2020 guidance) are expected to be driven by an extended longwall move at the Metropolitan Mine, preparation for a several-week upgrade of the main line conveyor system at the Shoal Creek Mine and impacts of mine sequencing at the Moorvale Mine.

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