Peabody Energy Corporation

Good morning, ladies and gentlemen, and welcome to the Peabody Q4 2021 Earnings Call. At this time, all participants are in a listen-only mode. Following today's presentation, instructions will be given for the question and answer session. If anyone needs assistance at any time during the conference, please press the star followed by the zero. As a reminder, this conference is being recorded today, February 10, 2022. I would now like to turn the conference over to Alice Aranos, Vice President of Investor Relations and Communications. Please go ahead, ma'am.

Thank you. Good morning. Thanks for joining CBI's earnings call for the fourth quarter of 2021. With me today are President and CEO Jim Grack and CFO Mark Spurback. Within the earnings release, you'll find our statement of forward-looking information as well as a reconciliation of non-GAAP financial measures. We encourage you to consider the risk factors referenced there, along with our public filing here at the FDC. With that, I'll now turn the call over to Jim.

Thanks, Alice, and good morning, everyone. KeyBuddy recorded robust fourth quarter results, demonstrating the capability of our diverse portfolio of mines, which continues to benefit from strong global market fundamentals driven by the vital necessity for coal to produce reliable, affordable energy and steel to fuel the global economy. Overall, our operations performed well and were in line with our expectations, delivering volumes and results despite industry-wide challenges that were more substantial than we anticipated related to weather and COVID impacts. With strong market dynamics and significant forward sales commitments, we restarted long-haul production at our Shoal Creek mine, advanced development of Morvale South, and are positioning for increased production at our U.S. thermal segments to meet near-term demand for our product. Our focus remains to advance options to position the company to be resilient in all market cycles by capturing expanded margins through production and sales strategies while remaining long-term cost competitive and reducing our debt levels. I would like to thank our global employees for their continued focus on working safely and efficiently, particularly in light of meeting the challenges presented by the pandemic. In 2021, our recordable injury rate was the lowest in over a decade an example of the dedication and efforts of our talented workforce. And for the second year in a row, our rawhide and 20-mile operations had zero reportable incidents during the year. I'd also like to take the opportunity to compliment the workforces at Shoal Creek and Metropolitan for their efforts and performance during the long-haul restarts at these locations. Across the globe, all coal price indices and demand in each of our market segments continues to be strong. The near-term outlook for all our operating segments continues to be favorable with strong market indicators and increased global demand providing a persuasive story for coal and Peabody. Seaborne thermal and metallurgical coal markets are expected to remain robust in the near to medium term as supply challenges coincide with a period of elevated demand. Indonesia's January coal export ban, record rainfall in late 2021 across the east coast of Australia, COVID impacts across the globe, and Russian transportation congestion are all factors contributing to constrained supply for seaborne thermal coal. Additional demand factors included increased industrial production resulting in growing demand for coal-fired electricity generation, high LNG prices resulting in low switching, and peak winter demand in the Northern Hemisphere. These supply and demand factors are combining to create an increased price environment for seaborne thermal coal. The seaborne metallurgical coal market has experienced similar supply constraints as the seaborne thermal market. Demand is benefiting from high global steel output outside of China, incentivized by strong steel product margins. Key import market consumption is now above pre-pandemic levels. In the U.S., thermal coal market indicators continue to be favorable with increased electricity demand and higher natural gas prices compared to prior year. For 2021, electricity demand increased 3% over last year, with coal share of electricity generation increasing to approximately 22%. Total U.S. coal burn was up approximately 15%, while utility consumption of PRV coal increased approximately 22% compared to the prior year. Looking ahead, total electricity generation for 2022 is expected to grow by another 1% as the economy continues to recover from COVID impact. U.S. thermal coal prices remain elevated as supplies remain tight. Continues strong U.S. exports as a result of high seaborne thermal prices along with elevated and volatile natural gas prices reflecting uncertainty of winter weather and gas storage levels are putting pressure on market sentiment. Coal stockpiles in the U.S. have fallen by approximately 35 million tons, more than 25% since the end of 2020. All these dynamics set a compelling stage for 2022 in terms of demand and pricing for our coal products. Now, turning to the fourth quarter, our operations generated substantial cash flows, realizing expanded seaborne margins as a result of continued strong market demand. Our teams delivered on our projected volumes for the quarter, despite production challenges. In addition, We continued efforts to capture near-term returns from incremental 2022 U.S. thermal production with equipment optimizations and new hires. Within our seaborne thermal segment, the Wilton Yarn Extension and Rambo OpenCut JV projects have essentially completed development work with operations reaching full production run rates. Margins continue to expand both due to higher pricing and lower costs. Our seaborne meth segment captured margins of $105 per ton due to robust market prices. I'm happy to share that we successfully restarted longwall operations at Shoal Creek right in the quarter and delivered 70,000 tons of Hival-A product into the market at price levels substantially in line with benchmark prices. We are on track with development of Moorvale South, which will provide improved quality and extended life at our CMJD complex. We anticipate first coal and development completion in mid-2022. PRB sales volumes are negatively affected by winter weather and COVID impacts to production and rail performance. And costs for both our PRB mines and other U.S. thermal mines increase as a result of higher fuel prices and one-time costs associated with efforts to add incremental new-term production to capture market demand. We are being disciplined in adding incremental volumes. capturing short-term returns on investments for our stakeholders, and remaining focused on the long-term cost competitiveness of our operations. Favorable U.S. coal markets have allowed us to build a strong book of forward business with settlement of several long-term sales agreements at improved prices. We continue to explore sales strategies that position us to be the long-term producer of choice, providing our customers long-term supply security. In the PRV at 2021 production levels, we're essentially fully committed for 2022 and 55% committed for 2023, while the other U.S. thermal operations are essentially committed for the next two years at these levels. Outside of our operating segment reporting, our ownership share of Middlemount delivered 2 million tons of semi-hard and PCI met coal in 2021 with 400,000 tons in the fourth quarter. In the quarter, the operation posted EBITDA margins of 58%, benefiting not only from current market dynamics, but also cost and productivity improvement efforts. Our Q4 results are further validation of the value of our globally diversified asset base, which makes us distinctly unique from other coal companies. Our long-term strategy remains to reweight investments towards seaborne markets, maximize U.S. thermal asset cash generation, and enhance financial strength through debt reduction. We are progressing this strategy with multiple initiatives. In our MET platform, we are advancing development of Morville South to improve quality and extend life at our CMJV. At Shoal Creek, we are ramping up longwall production, and at Metropolitan and the CMJV, we are maintaining productivity and cost improvements. And notably, we are looking at the potential to restart North Bonilla, utilizing our existing reserves that we control. At Middlemount, we continue to ramp up production with equipment fleets added last year. At Swamble Underground, we're reviewing economics for development of additional underground panels. In the U.S., we're implementing plans to capture short-term returns on incremental volumes and to give us flexibility in our mine plans to meet customer demands with additional underground production units and development in the ILB, in addition to refurbishing and relocating equipment in the PRV. And across the platform, we are focusing on long-term resiliency by maintaining cost structure improvements that we've achieved, with continued emphasis on productivity and cost controls, and continuing to strengthen the balance sheet with debt and legacy liability reductions. I'll now turn things over to Mark to cover the financials.

Thanks, Jim, and good morning, everyone. Fourth quarter revenue was nearly $1.3 billion, an increase of more than 86% from the third quarter and 72% from the prior year, reflecting robust improvements in seaborne pricing and recognition of $149 million of unrealized market-to-market gains on financial cold hedges. We recorded net income of critical common shareholders of $513 million, or $3.93 per share. We recorded adjusted EBITDA of $444 million, a 54% increase over the $289 million recorded in the third quarter, and four times the prior year result. In the fourth quarter, we generated free cash flow of $427 million, about 25% of our market capitalizations. driven by the performance of our Seabourn platform and the return of $110 million of cash margin related to financial coal hedges. Importantly, we continue to execute on our commitment to strengthen the balance sheet. We retired an additional $200 million of senior secured debt in the quarter. For the full year, we retired approximately $420 million, more than 25% of the debt outstanding at the beginning of the year, reducing leverage from six times to 1.2 times trailing 12 months EBITDA, or just 0.2 times on a net basis. And just this morning, we announced a $106 million repurchase offer for the Wilpin Young term loan and notes, based on that line's excess cash flows from just the last six months. This offer represents more than 25% of the outstanding Wilpin Young debt. At December 31st, we had $954 million of cash and cash equivalents, an increase of $367 million from the fourth quarter, and available liquidity was approximately $1 billion. Turning now to the segment results, the Seabourn thermal segment generated EBITDA of $149 million, a 43% increase compared to the third quarter, leveraging a 12% increase in average realized prices. Costs per ton were 5% lower than the prior quarter, primarily due to lower mining ratios, resulting in an EBITDA margin of 50%. Heavy rainfall in the Hunter Valley and COVID-related staffing shortages reduced overburden removal and constrained shipments, which kept sales volumes for the quarter at levels just above the prior quarter. Wilton Young shipped 3.5 million tons in the quarter, including 1.6 million export tons. Consistent with third quarter levels, while average costs declined to $24 per ton, compared to 26 in the prior quarter. Wilkin Young realized an average sales price of $48, resulting in an EBITDA margin of approximately 50%. Wilkin Young delivered 85 million of adjusted EBITDA in the quarter, 219 million for the full year, and had over 200 million of cash at December 31. The Seabourn Met segment generated EBITDA of 170 million, a nearly 195% increase compared to the prior quarter. An average realized price of $211 per ton compares favorably to costs of $106, resulting in 50% EBITDA margins. Fourth quarter MET shipments were about 100,000 tons higher than last quarter due to sustained production improvements at Metropolitan and restarting Shoal Creek. Costs per ton were higher compared to the third quarter due to the Shoal Creek restart, persistent wet weather at the CMJV, and higher royalties. Our Seymour platforms across the board delivered 50% margins in the fourth quarter. In the U.S., our mines delivered 60.9 million of EBITDA. The PRB mines shipped 22.5 million tons in the quarter as winter weather and COVID-related impacts to production and rail performance reduced shipments by an estimated 1 million tons. Cost per ton increased 75 cents compared to the third quarter to $10 per ton with about half of that increase related to additional overburden removal and ramping up equipment to achieve higher expected production levels in 2022. Winter weather events, COVID, and higher fuel pricing also impacted costs during the quarter. The other U.S. thermal mines shipped 4.6 million tons slightly ahead of the third quarter and generated 20% EBIT of margins. Costs increased compared to the prior quarter due to higher fuel prices and one-time activities to enable higher expected production in 2022. Now let's turn to our 2022 outlook. Starting with this newborn thermal segment, we anticipate volume of 17 to 18 million tons, including about 10 million export tons. Approximately 4 million export tons are priced on average at $80. Costs are expected to increase by about 10% or a little over $3, driven by inflation, fuel prices, royalties, and higher repair spend at Wilpin Young. Based on price volume and about 6 million export tons exposed to currently higher stock prices, substantially higher margins are expected in the new year. Seaworn thermal sales in the first quarter are anticipated to be approximately 750,000 tons lower than rateable guidance due to a scheduled long wall move starting in the quarter at Longbow and lower volumes at Wilpin Young as they reestablish mine sequencing following the previously mentioned weather events. The Seabourn Met segment is expected to ship 6.5 to 7.5 million tons with substantially all tons unpriced, providing significant leverage to the spot market. We anticipate production at Shoal Creek to ramp up during the first half of the year with full year production of about 1.5 million tons. Costs of $100 to $110 per ton are projected to be in line with fourth quarter results. In the first quarter, seaboard net volumes are anticipated to be approximately 500,000 tons lower than rateable guidance due to lower volume at Shoal Creek as it ramps up along wall production and mine sequencing at the CMJV. Although we are actively managing and we have considered in our guidance, continued uncertainty regarding COVID impacts to our workforce and supply chain exists and may negatively impact our seaborne operations beyond the guidance provided today. In the PRB, even a margin per ton is expected to increase 40% in 2022. We are projecting volumes of 88 to 95 million tons and have 86 million tons priced at an average of $12.40. And any additional production will be open to currently much higher spot prices. Costs per ton are anticipated to increase about 8%, primarily due to higher sales link royalties and taxes, higher fuel, and certain costs early in the year to increase production above 2021 levels. Other US thermal volumes are planned to increase by up to 2 million tons to 18 to 19 million, and we have 18 million tons priced $3 above 2021 prices. Costs are anticipated to increase by $1.50 per ton, resulting in higher margins in 2022. Capital expenditures are anticipated to be approximately $190 million, with $80 million earmarked for major projects and growth, including Moorville self-development, final equipment delivery at the Wambo JV, and additional equipment refurbishment at our U.S. operations. In summary, higher margins across all segments are expected to generate increasingly strong cash flows, capitalizing on favorable coal markets, and in particular, our seaborne asset delivering the expected torque from higher international coal prices. Lastly, we will maintain our disciplined approach to capital allocation, further reducing debt to best position the company for continued success. I'd now like to turn the call over for questions. Madison.

Thank you. All right, ladies and gentlemen, at this time, we will now begin the question and answer session. If you have a question, please press the star followed by the number 1 on your push button phone. Your questions will be answered in the order they are received. If you are using speaker equipment, you will need to lift the handset before pressing the number. If you find your question has been answered, you may remove yourself from the queue by pressing star 2. One moment please for the first question. We'll go ahead and take our first question from David Pagliano with VMO Capital Markets.

All right, great. Thanks for taking my questions, and congratulations on the significant improvements and the strong results. There was a lot covered on those prepared remarks, so I just have a few questions for a little bit more detail. But my first one is really a bigger picture question regarding capital allocation. Obviously, balance sheet meaningfully improved, high free cash flow. You talked about a number of internal problems. you know, initiative, which I'll come back to in a second. What are your capital allocation slash capital return plans? And if you could just remind us of any constraints on returning cash to shareholders, you know, associated with the debt, the surety bonding, and also what's a reasonable timeline regarding shareholder returns?

Thanks, Dave, and good morning. Appreciate the comments. To reach Respond to your question about capital allocation. You know, we're very, very happy with the progress made in our debt reduction levels. You know, $420 million, more than 25% of the debt outstanding at the beginning of the year, still leaves us with funded debt of about $1.1 billion. Listen, we've been very clear and transparent that reduction of these debt levels need to continue. We expect to do so in the coming year. You know, from a next-step perspective, I would say that we'd look at leverage on a one-times evitive basis in a mid-cycle, you know, significantly lower than, you know, the $900 to $1 billion we might be looking at next year plus. I would think we would probably try to get that down to a mid-cycle evit of closer to $500 million. So, looking to continue the progress in debt reduction. And your last question there, I believe, was kind of restriction on shareholder returns. You are right. The credit agreement, as well as the agreement with our security providers, limits the ability to repurchase shares or pay dividends on our stock throughout the duration of those agreements, which run through the end of 2024.

Does it preclude you or just limits? I'm just curious.

It precludes us unless otherwise agreed to.

Okay. All right, thanks for clarifying. And then just on operationally, in your prepared remarks, I believe you mentioned considering restarting North Viniella. I was wondering if you could talk a little bit about that in more detail. What's the capital cost timeline, expected volumes, and presumably the sales process for North Viniella is now off the table. Is that right?

Hey, Dave, good morning. This is Jim. We're in the very early days of looking at the restarting of North Viniella. And what I mean by early days is, you know, we're looking at the permitting, we're rechecking our engineering and the geology of all that data and running economic models on that. So we started that process. And I think by the time we get to the next quarter's earnings call, we can probably have a lot better indication and data as to what we're looking at. The two things, though, to address some of the questions you had, one is, The timeline, we are looking at mining to the south with those reserves. And the reason that's important is we have complete control of those reserves going to the south. And we have many, many years of mining, long wall mining that we can do by going south. The development to go south is probably about a two-year project. So we'll have development coal with the minor sections and then eventually bringing on the long wall. So whenever we initiate that process of starting the actual development, It's a long wall, you know, starting to run. It would be about a two-year process by going to our southern reserve. So, you know, as far as capital and all of those other questions you have, again, we're very early in the process. But as we get further along, you know, we'll have that information.

Okay. That's helpful. Thank you. And then just last question for me for now. On the PRB, in the preparer remarks, I believe it was mentioned 55% is priced in 2023. Can you just give us a sense of when was that priced? And if you could just talk around averages, you know, for the volumes that are already priced, that would be really helpful. And then a somewhat related question. On the, I think it's 2 to 9 million of potential spot sales for 2022, I was wondering if you could comment a little more about is there any additional flex beyond that? And when we talk about spot, there's reference prices out there that are kind of all over the place. Can you give us a sense as to what your view is of the spot market right now?

Thanks. Dave, I'll do this chronologically and starting with 2022. Referencing the guidance targets we have, we have 86 million tons priced for 2022 with a range of 88 to 95 million of production So when we're looking at sales that could transact in the current market or this year in these pricing conditions, it's what would be above the 86 million tons up somewhere in that guidance range. That's what we'd be looking for. I think you characterized it as spot. The pricing, I would say that, you know, the way the flats indexes are out there right now, you've seen these pricing in the mid to upper 20s. is where the spot market is at the moment. Now, whether that holds for the rest of the year, that remains to be seen. But I will say that there's some interesting developments on the demand side that are occurring that will add to some pull from our domestic markets. We actually have customers coming to us from the Southeast Asia and Atlantic Basin asking for PRB coal and deliveries. And, you know, there's a transportation challenge with the rail capacity that we have out west to add even more incremental tons going down to Houston. But the netbacks on those potential deals are attractive. Now, the thing is, logistically, we can pull it off. But the point I'm trying to make is there's, you know, the type of demand that we're seeing in the PRB, we feel is strong. And if somehow or another that you know, the markets remain this strong and there's more export demand that'll only add to the pull on that market. But I will caution that there is a transportation issues to work out before we could do anything like that. For 2023, you know, when it's too early in the year to give pricing guidance, we're not going to do that. You know, we did price a lot of that coal in our negotiations in the fourth quarter of last year. As we took 2022 sales, we also took 2023 and quite honestly 2024 sales with those negotiations. And, you know, one final point I'd like to make as you're trying to run your models, you know, the pricing, our average BTU is at about $86.70 across our platform for 2022, not the $8,800 or higher BTUs. So you also got to take that into account when you're looking at the pricing for us for 2022 and beyond.

Okay, that's very helpful. Thanks for all the color. Appreciate it.

All right, we'll go ahead and take our next question from Lucas Pikes with E-Revly Securities.

Hey, good morning, everyone, and congratulations on a strong fourth quarter. I wanted to ask a little bit about the cadence of medical shipments throughout the year, so with Shoal Creek ramping up, What's a good range here in the first quarter, especially given the current price environment? Of course, it's particularly attractive. Also, with an eye towards Q1, you have, I believe, 4 million tons of seaborne thermal coal priced. Should we assume that essentially Q1 is fully priced and the 6 million tons of available tons is Q2 through Q4, or would you maybe— say that your committed tons are already going to spread out throughout the year. Thank you very much for that.

Hey, Lucas. Good to hear from you again. Jim Gregg here. And, you know, as far as the MET goes, the Shoal Creek is, Mark gave the guidance for the year, the 1.5 million tons, and that will be ramping up here in the first quarter and into the second quarter. And also with our CMJV in Australia, we're still going to have some recovery from the rains that we had at the end of last year and getting the water out of the pits. So it won't be ratable when you look at the numbers that we have on the guidance tables. And Mark can give you some color on that and also on your questions on the Seabourn Thermal. So Mark?

Yeah, no, hey, thanks. Good morning, Lucas. Starting with Matt, I know that if you look at our midpoint of guidance, 7 million tons for the year, give you about $1,750 per quarter. We mentioned in the prepared remarks it will be 500,000 tons lower in the quarter, so probably more like 1.25 million tons in that first quarter as we ramp up more to full run rates. And then on Seabourn Thermal, I think the question, we also mentioned how we'd be, you know, lower than rateable given some of the mine sequencing issues and Wilton Young getting that overburden removed. So, we're going to be down from rateable guidance there, about 750,000 tons for the quarter. And, you know, I think your last question was how much of that Seabourn Thermal is open for pricing. Given lower than rateable, we'll have, you know, less than rateable unpriced. It's not fully priced, but... it might be about a half million tons that I'd say is on price for that first quarter.

Got it. Very helpful. Thank you. On Wilping Young, I wanted to follow up a little bit on the cost guidance. I believe it's $25 to $28 per short term on the cost side, and that is that would be somewhat higher than where you're selling the domestic tons. Are you selling the domestic tons at a loss, or is there something else going on with maybe transportation and royalties?

Thanks for that question, Lucas. Let me clarify. That cost in our guidance table is a consolidated or all-ton cost. The domestic tons, you know, incur less washing, less transportation, so they're at a much lower cost. than the export tons. We do not sell the domestic tons at a loss. It is essentially a cost plus contract. So there's an incremental margin on those domestic tons, but certainly all of its use comes from the export tons.

Terrific. Very helpful. Thank you. And my last question is on the APM. In light of this really strong cash generation here in the fourth quarter, the strong outlook, for 2022, what are your expectations around that program? Thank you.

Yeah, so two things, Lucas. I think one, you saw us slow down on the sales in the fourth quarter. Lowest number of shares sold at about 7.7 million during the quarter compared, you know, since the program started in the second quarter. A lot of that was earlier in the fourth quarter. We did announce in December an extension of that program. It does give us another 7.5 million tons available to us. It is one tool in our bag, but we will use that very judiciously. And it's an option for us if it's the best option. But you did see us slow down on it. But very happy with the progress we're making with organic cash flows and the ability to continue to reduce that debt.

Terrific. Great. Well, I really appreciate all the color and continue best of luck.

Thank you. Thank you.

And we'll go ahead and take our next question from Nathan Martin with The Benchmark Company.

Hey, good morning, everyone. Congrats on the court. Thanks for taking my questions. I think the bulk of them have probably been touched on, but Maybe I'll ask around middle mount, you know, big quarter over quarter step up in EBITDA contribution, I think about $9 million to $45 million in the fourth quarter. I guess I was wondering if that $45 million number is somewhat repeatable, assuming that prices were made flat or semi-color on there. Thank you.

Hey, Nathan, Jim Gregg here. I'd like to talk about the tonnages first. You know, we've got Middle Mountain in total was up to about 4 million tons, a little over 4 million tons last year, and we project that to be the same, maybe 100,000 tons more this year. So that's at 100%, and, of course, we get our 50%. The other piece that I would say of the cash generation is what we're doing on the cost side. And over the last year to year and a half, we've had some significant changes. improvements at the mine, both in productivity and in how the structure of the mine is. We've added another fleet there of excavator and trucks, which is allowing for more of that increased output. And we've had a GM there that has come from Peabody last year, year and a half that he's been there, and rebased the mine with the added equipment. And we've also invested in the prep plant. And so we feel from the cost basis and how efficiently the mine is running with the management that we have there, that we feel pretty good about maintaining the cost side of the equation going through this year. And again, the tonnages are going to be in the 50% of a 4.1 or 4.2 million ton forecast.

Yeah, maybe I'll just add to adjust the financials, $71 million per quarter. $12.5 million of that was related to an insurance recovery from a property claim that we had going back to 2019. From our cash flow return perspective, $45 million in the quarter. I would say I think your question is repeatable and certainly with our share of 2 million tons of production that Jim mentioned and the product they have, it's kind of a 50% semi-hard coking coal and 50% PCI, so realizing you know, 80% or better of premium hardcorking coal prices, we certainly expect to continue to generate cash from that asset. It's great exposure to hard, you know, to met coal that sometimes people forget since it's not in our consolidated operating salts.

Yeah, thank you for the thoughts, Jim and Mark. I guess maybe just going back to Shoal Creek real quickly, you know, what's kind of been the reception of that coal. Obviously, your fourth quarter production, I think, came in a lot higher than most people had expected, over 400,000 tons. Jim, I think you mentioned you sold about 70,000 tons in a quarter. So maybe what's your expectation on inventories for that mine going forward? Just any more thoughts.

Thank you. First off, I'd like to say we're very, very pleased with how the mine has started back up. We did get that 70,000 tons of sale in Q4 last year. Pretty much a high of all A levels type of pricing. The startup has gone well. I will say something that I'm very keen on because it relates in the dollars and cents is the safety of the mine has been outstanding as it started back up. We're going to keep keep that ramp up going here through the first quarter up to that 1.5 million ton level for the year. So it won't be completely rattable as you look at the year. Now, as far as the pricing going forward, we're getting a lot of interest in both the Atlantic and Pacific markets, more interest than we've seen in over 10 years, that that might even have been shut down for a little while here. So I would say that the market is waiting for us to – to get these tons out there with the quality and, of course, the cost, you know, coming from the United States into these markets. So I think the market is we're getting a very strong reception, but, you know, we haven't booked any long-term sales yet as we're ramping up. We're just putting out vessels and taking advantage of the spot market at the moment.

And maybe one thing I would add, you mentioned production for Shoal Creek in the quarter. I don't think we announced that. You mentioned 400,000. It was just a little over 100,000. We sold 70,000 tons in the fourth quarter. And, you know, just to be clear, maybe add to Jim's comment about the ramp-up of production. Looking at that 1.5 million tons for the full year, it's certainly not going to be rateable. It's going to be a ramp up. If I had to predict, we'd probably come in at maybe 600,000 or so tons in the first half of the year with better production there on the back end of the year.

Got it. Okay. And just for reference, the $400,000 I mentioned was due to MSHA data, so I don't know. Maybe there's some discrepancy there, it sounds like. Okay. Yeah, I'm sorry?

Yeah, if it's MSHA, that was wrong.

Okay. Got it. Good to know then. And then maybe just finally, guys – you know, thoughts around, you know, transportation logistics. Obviously, you called out issues there, you know, labor, COVID, what are we seeing today from a logistics standpoint, both here in the U.S. and Australia? You know, maybe any thoughts on when you hope things could normalize. Thanks.

I think in both countries, the COVID impacts are there and have been affecting the and I think the weather in Australia has had more of an impact. But as we're looking at it going forward, Nathan, you know, in the United States here, we are seeing some improvement in the rail as, you know, here just recently in the last couple weeks, and we're hoping that momentum carries us through going forward. So it seems to be in a positive direction, and hopefully that trend continues In Australia, there was some issues with the rains, and as I mentioned, COVID. But not to, you know, the limiting factors for us, if there are any limiting factors, is going to be with our own production here in the first quarter, again, recovering from all that rain at the end of last year and the COVID absenteeism. And we are recovering from both. And, you know, that's all incorporated into the four-year guidance that we gave out on the tons. So I would say that in Australia, it really isn't – the transportation, we're not seeing it as a limiting factor for us here going forward.

Got it. Very helpful, Jim. Thank you. I'll leave it at that. Appreciate the time, guys. Best of luck in 22. Thank you, Dave.

All right, Mr. Gregg, it appears there are no further questions at this time.

Well, thank you all for joining us today. I'd especially like to thank our employees for remaining focused on safety and for continuing to execute on their various productivity and cost improvement initiatives. I'd also like to thank our customers, investors, insurance providers, and vendors for your continued support. Operator, that concludes our call.

This concludes the Peabody Q4 2021 earnings call. Thank you for participating.