Peabody Energy Corporation

Good day and welcome to the Peabody Q2 2005 earnings conference call. Today, all participants will be in a listen-only mode. Should you need assistance during today's call, please signal for 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 one on your telephone keypad. To withdraw your question, please press star then two. Please note that today's event is being recorded. I would now like to turn the conference over to Vic Speck, Vice President, Investor Relations. Please go ahead, sir.

Well, thank you, Operator, and good morning, everyone. Thanks for joining today to take part in Peabody's second quarter call. Remarks today will be from Peabody's President and CEO, Jim Grech, CFO, Mark Sperbeck, and our Chief Marketing Officer, Malcolm Roberts. Following remarks, of course, we'll open up the call to questions. Now, we do have some forward-looking observations today. You'll find our full statement on forward-looking information in the press release. We encourage you to consider the risk factors referenced there, along with our public filings with the SEC. And I'll now turn the call over to Jim. Thanks, Vic, and good morning, everyone.

Peabody has had a great first half of the year. We've had record safety. solid volumes, strong cost containment. On the basis of both our performance and our prospects, I'm pleased to report that we're raising our full year guidance. To echo my first quarter theme, the Peabody team continued to do an excellent job of controlling the controllables in the first half, with second quarter costs coming in below our expectations. Our ability to manage costs is a key driver of success, at a time of cyclical market softness in the seaborne markets. Also of note, today we announced an acceleration of longwall operations at our flagship premium hard coking coal mine Centurion. We're now targeting longwall startup in February 2026. This improved timeline reflects strong execution across our operations team. A way of progress, we plan to start installing longwall shields in November. Workforce expansion remains a key focus. We already have approximately 260 employees hired. Through an active recruitment process, we aim to reach a headcount of around 400 by early 2026 to support full production. I'd be remiss if I didn't also speak of the strong tailwinds in the U.S. markets. Last quarter, the President signed executive orders to revitalize the U.S. coal industry and expand the use of coal fuel generation. And earlier this month, the one big beautiful bill was passed. Delivers long overdue relief to American coal producers by reducing royalty burdens, streamlining permitting, and restoring regulatory certainty. Enabling the industry to compete, invest, and power the nation with confidence. How does the bill benefit Peabody? First, a reduction in federal royalty rates on mining leases from 12.5% to 7%. is expected to generate substantial savings in the PRB beginning this quarter. Based on initial analysis, Peabody anticipates $15 to $20 million in net benefits from the royalty changes in the second half of 2025, and this should also improve PRB competitiveness going forward. Also, the bill provides a 2.5% production tax credit starting January 1st for eligible domestic coal used in steelmaking. a benefit that applies to our Shoal Creek Metallurgical Mine in Alabama. As evidence of the need for renewed focus and common sense in U.S. energy policy, this legislation, combined with rising electricity demand, marks a clear turning point for U.S. coal. It reframes coal not as an inconvenient truth relic, but as a critical cornerstone of grid reliability and energy independence. The June 2025 heat wave made this clear. As demand surged across PGM and MISO, it was coal and natural gas that kept the grid stable, while renewables were unable to scale quickly enough. To frame the new electricity landscape in the U.S., just one independent system operator recently forecasted a 32 gigawatt increase in power demand by 2030, and 30 gigawatts are related to data centers. To put this in context, They noted that increase is comparable to adding 20 million new homes to the grid in the next five years. When thinking about coal in the future, I'd ask you to focus on six surprising words. The world is turning towards coal. I'll remind investors that the IEA reports that the world set a record for coal demand in 2024, after doing so also in 2023, and has not yet peaked. and U.S. coal is clearly in comeback mode, as it should be. The U.S. has more energy in its coal reserves than any nation has in any one energy source. Malcolm, I'll now turn the call over to you to give a bit more color on the markets. Thanks, Jim.