PEABODY ENERGY CORP 10-Q

Item 1A. Risk Factors. The Company operates in a rapidly changing environment that involves a number of risks. For information regarding factors that could affect the Company's results of operations, financial condition and liquidity, see the risk factors disclosed in Part I, Item 1A. “Risk Factors” in its Annual Report on Form 10-K for the year ended December 31, 2021 filed with the SEC on February 18, 2022. In addition to the other information set forth in this Quarterly Report, including the information presented in Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” you should carefully consider the risk factors disclosed in the aforementioned filing, which could materially affect the Company’s results of operations, financial condition and liquidity. Factors that could affect the Company’s results or an investment in the Company’s securities include, but are not limited to: • the Company’s profitability depends upon the prices it receives for its coal; • if a substantial number of the Company’s long-term coal supply agreements, including those with its largest customers, terminate, or if the pricing, volumes or other elements of those agreements materially adjust, its revenue and operating profits could suffer if the Company is unable to find alternate buyers willing to purchase its coal on comparable terms to those in its contracts; • risks inherent to mining could increase the cost of operating the Company’s business, and events and conditions that could occur during the course of its mining operations could have a material adverse impact on the Company; • the Company’s take-or-pay arrangements could unfavorably affect its profitability; • the Company may not recover its investments in its mining, exploration and other assets, which may require the Company to recognize impairment charges related to those assets; • the Company could be negatively affected if it fails to maintain satisfactory labor relations; • the Company could be adversely affected if it fails to appropriately provide financial assurances for its obligations; • the Company’s mining operations are extensively regulated, which imposes significant costs on it, and future regulations and developments could increase those costs or limit its ability to produce coal; • the Company’s operations may impact the environment or cause exposure to hazardous substances, and its properties may have environmental contamination, which could result in material liabilities to the Company; • the Company may be unable to obtain, renew or maintain permits necessary for its operations, or the Company may be unable to obtain, renew or maintain such permits without conditions on the manner in which it runs its operations, which would reduce its production, cash flows and profitability; 50 Table of Contents • concerns about the impacts of coal combustion on global climate are increasingly leading to conditions that have affected and could continue to affect demand for the Company’s products or its securities and its ability to produce, including increased governmental regulation of coal combustion and unfavorable investment decisions by electricity generators; • numerous activist groups are devoting substantial resources to anti-coal activities to minimize or eliminate the use of coal as a source of electricity generation, domestically and internationally, thereby further reducing the demand and pricing for coal, and potentially materially and adversely impacting the Company’s future financial results, liquidity and growth prospects; • the Company’s trading and hedging activities do not cover certain risks and may expose it to earnings volatility and other risks; • if the assumptions underlying the Company’s asset retirement obligations for reclamation and mine closures are materially inaccurate, its costs could be significantly greater than anticipated; • the Company’s future success depends upon its ability to continue acquiring and developing coal reserves and resources that are economically recoverable; • the Company faces numerous uncertainties in estimating its coal reserves and resources and inaccuracies in its estimates could result in lower than expected revenue, higher than expected costs and decreased profitability; • joint ventures, partnerships or non-managed operations may not be successful and may not comply with the Company’s operating standards; • the Company’s business, results of operations, financial condition and prospects could be materially and adversely affected by pandemic or other widespread illnesses and the related effects on public health; • the Company’s expenditures for postretirement benefit obligations could be materially higher than it has predicted if its underlying assumptions prove to be incorrect; • the Company is subject to various general operating risks which may be fully or partially outside of its control; • the Company’s financial performance could be adversely affected by its Indebtedness; • despite the Company’s Indebtedness, it may still be able to incur more debt, which could further increase the risks associated with its Indebtedness; • the terms of the indentures governing the Company’s senior secured notes and the agreements and instruments governing its other Indebtedness and surety bonding obligations impose restrictions that may limit its operating and financial flexibility; • the number and quantity of viable financing and insurance alternatives available to the Company may be significantly impacted by unfavorable lending and investment policies by financial institutions and insurance companies associated with concerns about environmental impacts of coal combustion, and negative views around its efforts with respect to environmental and social matters and related governance considerations could harm the perception of the Company by a significant number of investors or result in the exclusion of its securities from consideration by those investors; • the price of Peabody’s securities may be volatile and could fall below the minimum allowed by New York Stock Exchange listing requirements; • Peabody’s common stock is subject to dilution and may be subject to further dilution in the future; • there may be circumstances in which the interests of a significant stockholder could be in conflict with other stakeholders’ interests; • the future payment of dividends on Peabody’s stock or future repurchases of its stock is dependent on a number of factors and cannot be assured; • the Company may not be able to fully utilize its deferred tax assets; • acquisitions and divestitures are a potentially important part of the Company’s long-term strategy, subject to its investment criteria, and involve a number of risks, any of which could cause the Company not to realize the anticipated benefits; • Peabody’s certificate of incorporation and by-laws include provisions that may discourage a takeover attempt; • diversity in interpretation and application of accounting literature in the mining industry may impact the Company’s reported financial results; and • other risks and factors detailed in this report, including, but not limited to, those discussed in “Legal Proceedings,” set forth in Part II, Item 1 of this Quarterly Report on Form 10-Q. 51 Table of Contents