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Signature Sponsor
November 5, 2026 - US coal producer Peabody Energy has reported adjusted earnings before interest, taxes, depreciation and amortization (Ebitda) of $97.5-million in the third quarter of this year, compared to $99.5-million in the third quarter of 2025.
The company notes that seaborne thermal coal shipments were 100 000 t higher than anticipated, while costs of $56.58/t were in line with expectations.
The segment generated adjusted Ebitda of $65.5-million in the third quarter, a 26% increase from the second quarter of this year and a 60% increase from the prior-year period.
Revenue per export ton increased to over $100, resulting in significant margin expansion compared with the second quarter and prior year period.
Additionally, the company notes that seaborne metallurgical coal sales volume of 2.2-million tons were above expectations, driven by strong production at the Metropolitan mine, in New South Wales, Australia, following the successful completion of a longwall move.
The segment returned to positive adjusted Ebitda as realised pricing improved nearly $17/t quarter-on-quarter. Costs of $162.45/t were elevated above company expectations owing to working through higher-cost faulted conditions at its Centurion mine in Australia’s Bowen basin.
Peabody notes that Centurion achieved its targeted third-quarter sales volume while working through continued geological challenges.
Late in the quarter, the company says, the longwall encountered more problematic faulting than anticipated across multiple areas of the panel, which is constraining production and equipment performance as the operation safely works through these conditions.
Increased geological complexity impacted longwall performance in October, with production of about 45 000 t for the month and the company says it expects fourth-quarter sales volumes of between 300 000 t and 500 000 t.
The company says it now has a clearer understanding of how the current longwall configuration performs in these conditions and has identified targeted engineering modifications.
These include a base-lift power increase, estimated at between $1.5-million and $2-million, to be completed during scheduled maintenance in the current panel, and a two-stage flipper, estimated at between $5-million and $10-million, to be installed during the next longwall move, which is now expected to occur in the third quarter of 2027.
"The third quarter demonstrated improving momentum across the portfolio with all segments reporting positive adjusted Ebitda while our seaborne operations benefited from higher pricing. During the quarter, we worked through higher-cost faulted conditions at Centurion, which slowed advance rates, although the mine still reached its third quarter sales targets," says president and CEO Jim Grech.
"Looking ahead to the fourth quarter, our priorities remain operating safely, clearing the faulted zone at Centurion and improving free cash flow as seaborne markets remain strong."
As at September 30, the company had $434-million in cash and liquidity of $887-million. During the third quarter, the company repurchased $38.9-million of 2028 convertible notes for cash consideration of $58.1-million, effectively repurchasing an additional 700 000 shares.
Together with the second-quarter repurchase of 2028 convertible notes, the company says it has effectively repurchased 5.7-million shares this year.
Peabody also announced the redemption of the remaining $39.9-million of 2028 convertible notes, to be completed in November, and has elected to settle any conversion obligation with cash.
"These opportunistic actions reflect our continued focus on shareholder value.
"Eliminating the remaining 2028 convertible notes with cash continues our policy of returning capital to shareholders and reduces shareholder dilution by four-million shares while preserving financial flexibility as operating performance improves,” says CFO Mark Spurbeck.
Peabody says the repurchase of convertible notes resulted in a $3.3-million charge to third-quarter earnings. The cash-settlement commitment resulted in recognition of a $20.7-million derivative liability and corresponding debt discount.
Third-quarter results included about $4.4-million of interest expense related to debt discount amortisation and a $7.2-million mark-to-market gain on the derivative liability.
The company declared a quarterly dividend of $0.075 a share on November 4, payable on December 9 to stockholders of record on November 19.
Fourth-Quarter Outlook
Peabody says seaborne thermal coal volumes are expected to be between 3.6-million and 3.8-million tons, including 2.5-million to 2.7-million export tons.
About 1.6-million tons of Newcastle product and about 800 000 t of high-ash product are unpriced. The company says costs are expected to be between $46/t and $51/t.
Seaborne metallurgical coal volumes are expected to be between 2.2-million and 2.4-million tons. Sales are anticipated to achieve about 70% of the premium hard coking coal price index. Costs are anticipated to be between $150/t and $160/t.
Volumes from the Powder River basin (PRB), in the US, are expected to be between 19.5-million and 21.5-million tons at an average price of $13.75/t and costs of between $13/t and $13.50/t. Other US thermal volumes are expected to be between 3.6-million and four-million tons at an average price of $59/t and costs of about $48/t to $52/t.
Guidance Targets
The company updated its full-year guidance to reflect stronger seaborne thermal production, including a 200 000 t increase in expected export volume. Expected seaborne metallurgical volumes have been lowered by 600 000 t and costs are expected to increase by about $15/t, primarily owing to lower Centurion production.
Sales volumes from PRB have been lowered by about 7.5-million tons, resulting in a $1/t increase in costs, while volumes from other US thermal operations have been lowered by 200 000 t, with both reductions reflecting weaker 2026 US coal burn.
Capital expenditure guidance has been reduced by $40-million, including about $30-million at Centurion, primarily from the deferral of development capital for the Northern panels. |
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