Questioned if the lower end of PRB guidance is safer given natural gas prices, and inquired about capital allocation plans for H2 FY26, specifically regarding buybacks.

Malcolm Roberts stated that the midpoint of PRB guidance is a reasonable assumption, given strong coal burn in the summer. Mark Spurbeck confirmed continued execution of the shareholder return program, including outright share repurchases and opportunistic buybacks of remaining convertible notes, aiming for substantial free cash flow in H2 FY26. “And probably quite rightly, you should be assuming the midpoint of the guidance range that you spoke to.”

Asked for specific dates for Centurion updates in August/September and clarification on the availability of the $350 million unlocked restricted cash.

Jim Grech confirmed an update at the Centurion site tour on August 11 (with spots still open) and at Investor Day events in September. Mark Spurbeck clarified that the $350 million is fully available and included in cash balances as of June 30. “Katja, the $350 million that was returned, it was really reclassed from restricted cash and collateral. So to your question, it is fully available. It's included in our cash balances as of June 30.”

Inquired if there are further opportunities to unlock restricted cash and if anything during Centurion's ramp-up suggests it can't meet prior cost expectations.

Mark Spurbeck stated that all significant work on restricted cash is done, and the current fix is permanent. Jim Grech expressed optimism, noting that when Centurion runs well, it performs as good or better than expected, suggesting the target cost structure is achievable once steady-state production is reached. “No, Nate, I'd say when we have been running well without an issue, I'd say it's the opposite. The rate that the shear can transit is as good or better than we thought it would be.”

BTU

Peabody (BTU) Q2 FY26 earnings call: guidance and Q&A

Earnings call· Jun 2026 (Q2 FY26)· Energy· Jul 29, 2026

Source: earnings call transcript

Executive summary

Peabody Q2 FY26 — Centurion Progress and Strategic Financial Actions Amidst Operational Challenges

Peabody navigated a challenging Q2 FY26, reporting a net loss and lower-than-expected adjusted EBITDA, primarily due to Centurion commissioning costs and soft US thermal demand. However, the company made significant strides in strengthening its capital structure, unlocking substantial liquidity, and initiating shareholder returns. Management expresses confidence in improved operational momentum and market fundamentals for the second half, particularly as Centurion ramps up production and US thermal demand normalizes.

Highlights

Seaborne thermal operations delivered 3 million tons, with export shipments of 1.9 million tons and average realized export price of $95.87, up 11.2% QoQ.
Completed strategic financial actions, including issuing $250 million convertible notes at 0.5% coupon and redeeming $241.2 million of 3.25% notes, reducing annual interest expense by $6.6 million.
Unlocked $350 million of restricted cash and collateral by enhancing the global surety program, increasing total liquidity to over $900 million.
Repurchased over 5 million shares at a weighted average price of $28.92 per share through the convertible note redemption premium.
Selected by the Department of Energy for a grant to advance rare earth element and critical mineral development in the Powder River Basin.

Concerns

Reported a net loss attributable to common stockholders of $90.6 million or $0.74 per diluted share.
Adjusted EBITDA was $24 million, significantly below the platform's capability.
Seaborne metallurgical segment reported an adjusted EBITDA loss of $17 million due to higher commissioning costs at Centurion ($155 per ton, above guidance).
U.S. thermal volumes were impacted by an extended shoulder season and heavy rainfall, with PRB shipments at 16.4 million tons, below 19 million ton expectation.
Unit costs in PRB temporarily increased to $14 per ton due to moving 11 million cubic meters of overburden.

Guidance & targets

Category	Target	Timeline	Confidence
Centurion sales volume	1.5 million to 2 million tons high materiality	H2 FY26	High
Centurion sales volume	500,000 to 700,000 tons high materiality	Q3 · FY26	High
Seaborne thermal volume	3.0 million tons medium materiality	Q3 · FY26	High
Seaborne thermal export volume	1.9 million tons medium materiality	Q3 · FY26	High
Seaborne thermal costs	$52 to $57 per ton medium materiality	Q3 · FY26	High
Seaborne metallurgical volume	1.9 million to 2.1 million tons medium materiality	Q3 · FY26	High
Seaborne metallurgical costs	$130 to $140 per ton medium materiality	Q3 · FY26	High
Powder River Basin (PRB) shipments	22 million tons medium materiality	Q3 · FY26	High
Powder River Basin (PRB) costs	$12 per ton medium materiality	Q3 · FY26	High
Other U.S. thermal shipments	3.7 million tons medium materiality	Q3 · FY26	High
Other U.S. thermal average price	$58.20 medium materiality	Q3 · FY26	High
Other U.S. thermal costs	$45 to $49 per ton medium materiality	Q3 · FY26	High

Segment performance

Segment	Revenue	YoY	QoQ	Margin
Seaborne Thermal Shipments were in line with expectations and consistent with Q1. Export price increased 11.2% QoQ and 31.6% YoY. Costs were at the low end of guidance. Shipments: 3 million tonsExport shipments: 1.9 million tonsAverage realized export price: $95.87Costs: $58 per tonAdjusted EBITDA: $52 million	—	—	—	23% adjusted EBITDA margin
Seaborne Metallurgical Shipments exceeded expectations by 200,000 tons due to higher volumes from Metropolitan and CMJV. Costs were above guidance, primarily reflecting higher commissioning costs at Centurion. Higher realized pricing (up 7% QoQ) only partially offset the costs. Shipments: 2.5 million tonsCosts: $155 per ton	—	—	—	Adjusted EBITDA loss of $17 million
U.S. Thermal - Powder River Basin (PRB) Shipments were significantly below the 19 million ton expectation due to mild weather and extended longevity maintenance at coal generation plants. Unit costs temporarily increased due to significant overburden removal, which is expected to benefit costs in H2 FY26. Shipments: 16.4 million tonsUnit cost: $14 per tonOverburden moved: 11 million cubic meters	—	—	—	—
U.S. Thermal - Other Shipments were 400,000 tons below guidance due to the extended shoulder season and heavy rainfall. Costs were kept in line, demonstrating disciplined cost control. Shipments: 3 million tonsCosts: $46 per ton	—	—	—	Adjusted EBITDA: $26.9 million

Deals & partnerships

U.S. Department of Energy Grant award for rare earth element and critical mineral development

Peabody was selected for a conditional award to demonstrate the feasibility of recovering rare earth elements from coal-related feedstocks in the Powder River Basin.

Capital programs

Rare Earth Element and Critical Mineral Development underway

Funding: DOE grant

Benefit:Demonstrate feasibility of recovering REE from coal-related feedstocks; establish domestic production of germanium and create new high-value revenue stream.

Peabody was selected by the Department of Energy for a grant to advance rare earth element and critical mineral development opportunities in the Powder River Basin. This is part of a capital-light strategy working with partners.

Risks & headwinds

Centurion commissioning and operational challenges Q2 FY26, expected to improve in H2 FY26

Seaborne metallurgical segment adjusted EBITDA loss of $17 million; costs at $155 per ton (above guidance)

Mitigation:Shield realignment completed; addressing rock faulting zone with in-seam drilling, surface drilling, geo-flexing, and rock sill; focus on accelerating production rates and improving consistency.

U.S. thermal market demand softness Q2 FY26, expected to improve in H2 FY26

PRB shipments 16.4 million tons (below 19 million ton expectation); Other U.S. thermal shipments 3 million tons (400,000 tons below guidance); natural gas prices 13% lower than H1 FY25.

Mitigation:Anticipate stronger seasonal demand in H2 FY26; coal-fired plants undertaking longevity maintenance sets up for stronger long-term thesis; focus on labor efficiency and equipment utilization.

Elevated fuel costs Q2 FY26

Some of the highest fuel costs in years

Mitigation:Strong execution in seaborne thermal operations helped manage costs despite the environment.

Chinese met coal supply constraints Q2 FY26, continued supply reductions expected throughout H2 FY26

30 million tons of production taken out of supply in Q2 FY26

Mitigation:This is a market-wide headwind that Peabody benefits from through higher prices, rather than a direct risk to Peabody's operations.

What to watch in Q3 FY26

Centurion longwall production consistency

Q3 FY26

Current Running with occasional stoppages due to faulting, 7-8 shears/day on good days, 3-4 on others

Target Steadier rate of production, out of faulting zone

Why it matters

Centurion's consistent production is key to achieving targeted volumes, normalizing costs, and driving significant free cash flow for the company.

The quicker you can move through it, the more shears per day that you can get done. And so with that, looking at the faulting, the rate that we're going forward, having to stop occasionally to address the faults in front of us, that's where we've given that projection, that 500,000 to 700,000 tons for the third quarter because there is some variability not only on the speed or the number of shares per day, Nick, but also on the yield because when we hit in the faulting area, the yield goes down, we get more rock.

Find out whether BTU delivers this. Inve re-checks your case every morning.

Q&A highlights

Seeking more color on the current state of the Centurion longwall, specifically the impact of rock faulting on advance rates and visibility for future faulting zones.

Jim Grech explained that the shield realignment issue is resolved, and the longwall is now running. Current stoppages are due to a specific faulting zone (300 meters left, between Shields #20 and #50) that is being addressed with various techniques. He expects to be out of this zone by Q4 FY26 and expressed optimism about achieving target cost structures once steady-state production is reached.

“The longwall phase has been in the best shape that it has been in since we started the mine, and we're out of the commissioning phase, and we're in the production phase now.”

asked by Nick Giles · answered by Jim Grech

3 min read 6 chapters

Detailed narrative

Centurion Mine Operational Update

The Centurion Mine is now approaching targeted production levels after resolving shield realignment issues caused by roof conditions and a longer-than-planned commissioning period. The longwall is in excellent shape, with remaining roof control issues largely limited to a rock faulting zone spanning about 20% of the longwall face, which is expected to be worked through during Q3 FY26.

Run-of-mine production, prep plant yields, and rail shipments have strengthened in recent weeks, with management targeting 1.5 million to 2 million tons of sales in H2 FY26.

Strategic Financial Actions and Capital Structure

Peabody completed several strategic financial transactions to enhance its capital structure. This included issuing $250 million of convertible notes due 2031 with a 0.5% coupon and redeeming $241.2 million of 2028 convertible notes (3.25% coupon) for $386.8 million. These actions increased the average conversion price, reduced diluted share count by 6.2 million shares, and lowered annual interest expense by $6.6 million.

The company also unlocked $350 million of restricted cash by transitioning to standard indemnification agreements and asset-backed facilities for its global surety program.

Rare Earth Elements and Critical Minerals Development

Peabody's Development Group is advancing initiatives in rare earth elements (REE) and critical minerals. The company received a conditional award from the U.S. Department of Energy to demonstrate the feasibility of recovering REE from coal-related feedstocks. Progress is also being made in the exploration and evaluation of germanium across existing operations, working with technology partners and an industrial consumer to establish domestic production and create new high-value revenue streams, all viewed through a capital-light approach.

Seaborne Metallurgical and Thermal Market Dynamics

Seaborne metallurgical coal prices reached a multi-year high, averaging $238 per ton (up 29% YoY), driven by strong steel demand and significant supply tightening due to mine accidents and safety inspections in China, estimated to have removed 30 million tons of production.

Seaborne thermal coal demand remained strong, with Newcastle 6,000 kcal product averaging $137 (up 35% YoY), supported by high LNG prices and increased coal-fired generation in Asia and Europe. Supply is expected to be constrained by Indonesian policy settings and lower output.

U.S. Thermal Market and Operational Challenges

U.S. thermal coal demand was impacted by an extended mild spring, leading to lower natural gas prices and coal-to-gas switching. PRB shipments were 16.4 million tons, below expectations, partly due to extensive 'longevity maintenance' actions by coal-fired plants. While these outages dampened springtime loadings, they set up for a stronger long-term thesis.

Other U.S. thermal shipments were also below guidance due to weather. Despite volume challenges, costs were managed, and PRB unit costs are expected to improve significantly in Q3 FY26.

Shareholder Returns and Free Cash Flow Generation

The company generated $145.3 million of available free cash flow year-to-date, including the reduction in restricted cash. This was used to pay a $145.6 million premium for convertible note repurchases, effectively buying back over 5 million shares, and $18.3 million in cash dividends.

Management reiterated its commitment to the shareholder return program, anticipating substantial free cash flow generation in H2 FY26 as Centurion ramps up and market fundamentals remain strong.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.