Peabody Energy Corporation

Good day and welcome to the Peabody's earnings call for the third quarter of 2023. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on a touchtone phone. To withdraw your question, please press star, then two. Please note this event is being recorded. I would now like to turn the conference over to Carla Kimrey. Please go ahead.

Good morning, and thanks for joining Peabody's earnings call for the third quarter of 2023. With me today are President and Chief Executive Officer Jim Grech, Chief Financial Officer Mark Spurbeck, and our Chief Marketing Officer Malcolm Roberts. Within the earnings release, You'll find our statement on 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 filings with the Securities and Exchange Commission. I'll now turn the call over to Jim.

Thanks, Carla, and good morning, everyone. In the third quarter of 2023, we delivered strong operational results with better-than-expected production and effective cost management. We also advanced initiatives at Shoal Creek and North Gunyella that illustrate our ongoing commitment to continue investing in our seaborne metallurgical portfolio. During the quarter, our board approved full funding at North Gunyella for the completion of initial development through the commencement of longwall operations in 2026. We are also excited to announce that we have reached an agreement to acquire a large portion of the Wardswell coal deposit adjacent to our existing North Ginella mine. This is a tremendous opportunity to extend our world-class coal deposit and leverage our existing infrastructure and equipment. Before I expand on the quarter, I want to thank our global employees for their continued focus and commitment to working safely and efficiently. Now, turning to the global coal markets. Seaborne thermal coal markets remain volatile during the quarter with modest pricing improvements. Robust but moderating coal and natural gas inventories in the northern hemisphere have continued to weigh on demand for high-energy thermal coal, coupled with better supply prospects due to drier weather on Australia's east coast, resulting in Newcastle coal trading within a range of $130 to $160 a ton. China's year-to-date imports of lower-grade thermal coals continue to significantly surpass the prior year, with an increase in the annual thermal coal input run rate of approximately 93% over 2022 levels. India has also increased seaborne market participation as our power demand continues to grow. Recent import trends have led the IEA to report that elevated global demand for thermal coal imports so far during 2023 are pointing to 6% year-on-year growth in overall seaborne coal trade versus 2022. Within the seaborne metallurgical market, global crude steel output during the quarter continued to be variable, with weaker production rates in Europe and South America, offset by notable year-on-year crude steel production growth in some Asian markets. Metallurgical coal supply has remained constrained, with the rate of exports from Queensland remaining below historical rates and premium hard coking coal remaining highly sought after. Premium hard coking coal indices finished the quarter around $330 a ton, recording a 42% increase during the quarter. The outlook for metallurgical coal remains positive, with seaborne supply remaining below historical levels, combining with strong purchase interest out of India and new import demand for steelmaking coals within the Southeast Asian region. In the United States, electricity generation from thermal coal has declined year on year due to low gas prices. and growing renewable generation, although quarter-on-quarter improvement in coal burn was recorded through a warm end to the summer. Natural gas prices continued to recover during the quarter, with U.S. natural gas pricing currently at around $3 per MMBTU. Near-term demand for U.S. thermal coal is anticipated to be supported by higher gas prices, while also challenged by comparatively high generator inventories. Now, moving on to our operating segments. As expected, our Seabourn thermal third quarter coal exports came in at 2.7 million tons. Segment cost per tons were lower than the second quarter due to stronger production and lower sales price sensitive costs. Our Seabourn METS segment shipments were 1.5 million tons. Total segment cost per ton were 20% lower than the second quarter due to strong production and lower sales price sensitive costs offset by timing of sales. At Shoal Creek, we continue to make significant progress towards resuming targeted longwall production early in the first quarter of 2024 with a potential that this could be pulled forward into Q4 2023 as developmental coal production is ahead of target due to favorable geological conditions in the L panel area and installation of the new fit for purpose longwall is well underway. In the PRB, shipments of 22.7 million tons were better than anticipated. Caballo produced 4.2 million tons, the most in a quarter since 2012. The NARM complex produced almost 16 million tons, similar to the third quarter last year, and the mine has recovered nicely after tornado damage facilities in June. Higher production and lower maintenance costs allowed us to reduce costs by nearly 8% from the previous quarter, while expanding margins by more than 70%. Another US thermal shipments were 4.2 million tons, as expected, and above the 3.8 million tons from the previous quarter due to increased customer demand. Our customers did see their inventories come down in July and August, but September likely saw inventories increase again. Looking to 2024, We sit comfortably with about 80 million tons priced at $13.77 a ton in the PRB and nearly 15 million tons priced at $51.18 per ton in other U.S. thermal. In addition to our active operations, we continue to advance redevelopment efforts at North Gunyala, the key organic growth metallurgical opportunity within the portfolio. As anticipated, we achieved a significant milestone when we received the required approvals to reenter Zone B. Reentry has occurred, ventilation has been established, and we are operating under normal mining processes. The conditions in Zone B are better than expected, with no impediments to the installation of conveyors and access to our southern longwall blocks. Next steps in Zone B include the installation of new ground support, removal of the old conveyor system and installation of a new conveyor system to support commencement of development operations. This new conveyor system, which runs from the surface to the coal phase, will result in improved reliability and capacity. New continuous miners and development equipment that were ordered in late 2022 are scheduled for delivery in Q1 2024 for the commencement of development coal. Since commencing redevelopment in North Kenyella in late 2022, the company has invested $75 million of the initial approved redevelopment capital expenditures, which includes further ventilation, equipment, conveyors, and infrastructure updates. Overall, our operations had an outstanding quarter, enabling us to deliver consistent and predictable results and highlighting the benefits of our unique diversified portfolio. I'll now turn it over to Mark to cover the financial details.