Peabody Energy Corporation

specialist by pressing the star key followed by zero. After today's remarks, there will be an opportunity to ask questions. To ask a question, you may press star then one on your 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 Kimray. Please go ahead.

Good morning and thanks for joining Peabody Energy Call for the first quarter of 2024. With me today are President and CEO Jim Grech, CFO Mark Spurback, and our Chief Marketing Officer Malcolm Roberts. Within the earnings release, you will find our statement on forward-looking information as well as the reconciliation of non-GAAP financial measures. We encourage you to consider the risk factors referenced there along with our public filings at the FCC. Now I'll turn the call over to Jim.

Thanks, Carla, and good morning, everyone. First quarter operational results were highlighted by a number of challenges and successes. There were unforeseen production challenges in Australia that are now behind us, while thermal coal shipments in the U.S. were impacted by unseasonably warm winter weather and low natural gas prices. Within our Seabourn Met segment, Shell Creek continued to exceed production expectations, although shipments have been hampered by the failure of the Demopolis Lock. We continue to strategically invest in our portfolio through the development of Centurion and completed the acquisition of the adjacent Wardswell coal deposit, which extends the mine life to over 25 years. Before I expand on the markets, 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 traded within a tighter range for the first quarter. The warmer winter and low natural gas prices have continued to weigh on demand for thermal coal, coupled with a steady supply from the east coast of Australia, resulting in Newcastle coal trading within a range of $120 to $135 per ton. Asian thermal coal imports are expected to remain robust, with China continuing to show increases in electricity demand, with first-quarter seaborne thermal coal imports estimated at a year-over-year increase of approximately 15%. Within the seaborne metallurgical coal market, coking coal prices declined during the quarter. Metallurgical coal demand was hampered by thin steel margins globally, except for India, where robust economic output supported steelmaking profitability. PCI prices also retreated during the quarter, however, not to the extent of higher quality coking coals. During April, we have seen improving steel margins, and seasonal restocking providing pricing support to metallurgical coal markets. In the United States, electricity generation for the first quarter of 2024 proved to be particularly challenging with a warm winter and significantly lower gas prices resulting in coal's share of electricity generation nationally declining to approximately 15% during the first quarter. With that said, coal continues to be a critical component to the country's energy generation and looked at regionally in the U.S. As an example, coal power was relied upon and accounted for over 40% of generation in the MISO and SPP regions in various instances in January 2024, again proving the importance of coal for a reliable grid. Now moving on to our operating segments. The seaborne thermal segment shipped higher volumes than anticipated, with additional Wolf & Young volumes going to the domestic market as a carryover from the train derailment on the main line in December. Average realized prices and costs per ton were lower than anticipated due to higher production at Wilpinyon, where we opportunistically mined some high-ass seams, which we do when the market supports it. The higher production at Wilpinyon was offset by an extended long-wall ramp up at Wombo. Looking forward, we expect a higher proportion of Newcastle spec coal due to increased production from the Wombo complex. The seaborne MET segment shipments were in line with expectations. Volumes were lower than ratable for the year due to an anticipated long well move at Metropolitan and mine sequencing at the CMJV. Segment costs per ton were at the high end of our range, impacted by an unplanned Coppabella dragline outage and acceleration of planned coal prep plant repairs at the CMJV, partially offset by higher production at Shoal Creek. Our sales mix was impacted due to mining some lower quality coats at CMDB due to mine sequencing. As we look forward to the full year, our sales mix should improve with additional sales from Shoal Creek through the anticipated opening of the Demopolis Lock. In the PRB, shipments were lower than expected as a result of an unseasonably warm winter and prompt natural gas prices that averaged $2.10. Segment cost per ton came in higher than expected due to lower volumes but we're somewhat offset by rationalization of discretionary cost spend. Although PRB demand for the quarter was challenged, we are contracted to 85 million tons for the year. Our full year guidance assumes a normal summer and fall with customers meeting their commitments. If our customers have different demands or needs, we will work with them to be responsive while still retaining the full value of our contracts. In other U.S. thermal, shipments were below expectations as we had a few customers reduce their shipments due to high inventories and low natural gas pricing. Segment margins were higher than anticipated due to favorable sales realization, which included some sales contract cancellation settlements. Even with the current market conditions, our exceptional sales team was able to book some new business, so our price volumes for the year did not change. Outside of our active operations, we continue to make progress at the Centurion Mine, our key metallurgical coal growth project. We've had some delays in the delivery dates of some mining equipment from the manufacturer, but expect development coal to occur in the second quarter. As previously announced, we closed an awards well transaction last month. We are currently developing an integrated mine plan, and we'll discuss it more fully in the future. The recruitment of the initial Centurion Mine development workforce is complete, even though labor remains tight in the mining industry in Australia. We continue to expect the first longwall coal in early 2026, and capital expenditures remain in line with previous guidance. We are pleased to announce that for the first time in nearly 12 years, we are mining at our Lee Ranch mine in New Mexico. In 2022, we secured a new long-term contract which extended the life of our New Mexico operation and supported the transition from El Segundo back to Lee Ranch. In summary, we have had some challenges this quarter, but as we look out to the full year, our operations and sales books have us well positioned. We completed two long-wall moves in Australia, coal quality is improving, and our production plans give us confidence in reaffirming our full-year guidance. I'll now turn it over to Mark to cover the financial details. Thanks, Jim.