What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-08-04 compared with 2022-05-05 · 293 added, 186 removed, 511 unchanged (48% of the section changed)

15 unchanged sentences

Non-GAAP Financial Measures

The following discussion of the Company’s results of operations includes references to and analysis of Adjusted EBITDA, which is a financial measure not recognized in accordance with U.S.

The following discussion of the Company’s results of operations includes references to and analysis of Adjusted EBITDA and Total Reporting Segment Costs, which are financial measures not recognized in accordance with U.S.

generally accepted accounting principles (U.S.

Adjusted EBITDA is used by management as the primary metric to measure each of its segments’ operating performance and allocate resources.

Total Reporting Segment Costs is also used by management as a component of a metric to measure each of its segments’ operating performance.

Also included in the following discussion of the Company’s results of operations are references to Revenue per Ton, Costs per Ton and Adjusted EBITDA Margin per Ton for each mining segment.

11 unchanged sentences

In 2021, the Company produced and sold 126.9 million and 130.1 million tons of coal, respectively, from continuing operations.

At March 31, 2022, the Company owned interests in 17 active coal mining operations located in the United States (U.S.) and Australia.

At June 30, 2022, the Company owned interests in 17 active coal mining operations located in the United States (U.S.) and Australia.

Included in that count is Peabody’s 50% equity interest in Middlemount Coal Pty Ltd.

6 unchanged sentences

“Segment Information” to the accompanying unaudited condensed consolidated financial statements for further information regarding those segments and the components of its Corporate and Other segment.

Spot pricing for premium low-vol hard coking coal (Premium HCC), premium low-vol pulverized coal injection (Premium PCI) coal, Newcastle index thermal coal and API 5 thermal coal, and prompt month pricing for PRB 8,880 Btu/Lb coal and Illinois Basin 11,500 Btu/Lb coal during the three months ended March 31, 2022 is set forth in the table below.

The seaborne pricing included in the table below is not necessarily indicative of the pricing the Company realized during the three months ended March 31, 2022 due to quality differentials and the majority of its seaborne sales being executed through annual and multi-year international coal supply agreements that contain provisions requiring both parties to renegotiate pricing periodically.

Spot pricing for premium low-vol hard coking coal (Premium HCC), premium low-vol pulverized coal injection (Premium PCI) coal, Newcastle index thermal coal and API 5 index thermal coal, and prompt month pricing for PRB 8,880 Btu/Lb coal and Illinois Basin 11,500 Btu/Lb coal during the three months ended June 30, 2022 is set forth in the table below.

The seaborne pricing included in the table below is not necessarily indicative of the pricing the Company realized during the three months ended June 30, 2022 due to quality differentials and a portion of its seaborne sales being executed through annual and multi-year international coal supply agreements that contain provisions requiring both parties to renegotiate pricing periodically, with spot, index and quarterly sales arrangements also utilized.

The Company’s typical practice is to negotiate pricing for seaborne metallurgical coal contracts on a bi-annual, quarterly, spot or index basis and seaborne thermal coal contracts on an annual, spot or index basis.

In the U.S., the pricing included in the table below is also not necessarily indicative of the pricing the Company realized during the three months ended March 31, 2022 since the Company generally sells coal under long-term contracts where pricing is determined based on various factors.

In the U.S., the pricing included in the table below is also not necessarily indicative of the pricing the Company realized during the three months ended June 30, 2022 since the Company generally sells coal under long-term contracts where pricing is determined based on various factors.

Such long-term contracts in the U.S.

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Competition from alternative fuels such as natural gas and other fuel sources may also impact the Company’s realized pricing.

High Low Average March 31, 2022 April 29, 2022

High Low Average June 30, 2022 July 29, 2022

Premium HCC (1)

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436.07 271.05 372.90 390.68 420.88

API 5 thermal coal (1)

API 5 index thermal coal (1)

204.38 181.93 194.74 190.00 214.12

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(2) Prices expressed per short ton.

Within the global coal industry, supply and demand for its products and the supplies used for mining have been impacted by the recent Russian-Ukrainian conflict and the coronavirus (COVID-19) pandemic.

Furthermore, inflationary pressures have contributed to rising costs.

As future developments related to the Russian-Ukrainian conflict, the COVID-19 pandemic and rising inflation are unknown, the global coal industry data for the three months ended March 31, 2022 presented herein may not be indicative of their ultimate impacts.

Within the seaborne metallurgical coal market, the three months ended March 31, 2022 were characterized by significant volatility, primarily driven by sanctions and trade redistribution efforts following the onset of the Russian-Ukrainian conflict.

Buyers in Atlantic markets are seeking to mitigate exposure to Russian coal imports, causing an upswell in demand for supply from other regions such as Australia, the U.S.

Market prices rose approximately $300 per metric tonne from January to mid-March, far exceeding prior records, before falling a similar quantum through the end of March and start of April amid scant market liquidity.

Prices have once more begun increasing in April, following the European Union and Japan firming their stance and announcing total bans on Russian coal imports.

This will have a particular impact on the PCI market, where Russia accounts for approximately 35% of global traded volumes.

Within the global coal industry, supply and demand for its products and the supplies used for mining have been impacted by the ongoing Russian-Ukrainian conflict and the coronavirus (COVID-19) pandemic.

Furthermore, inflationary pressures have contributed to rising costs and may continue to rise in future periods.

As future developments related to the Russian-Ukrainian conflict, the COVID-19 pandemic and rising inflation are unknown, the global coal industry data for the six months ended June 30, 2022 presented herein may not be indicative of their ultimate impacts.

Within the seaborne metallurgical coal market, the three months ended June 30, 2022 were characterized by significant volatility, primarily driven by a weakening global macroeconomic environment and trade disruptions following sanctions imposed on Russian coal imports.

Steel prices weakened in the three months ended June 30, 2022, causing some steelmakers to consider output cuts in the coming period.

This is influencing short-term incremental metallurgical coal demand;

however, it is being counteracted by steelmakers in Atlantic markets seeking to mitigate exposure to Russian coal imports, causing increased demand for supply from other regions such as Australia, the U.S.

This is particularly so for PCI, where Russia accounts for approximately 35% of global traded volumes.

China’s unofficial ban on Australian coal remains in place and continues to disrupt traditional trade flows.

Global supply remains tight and this dynamic is only intensifying with the sanctions imposed on Russian imports.

The Company believes energy shortages in some markets present a risk to industrial activity, but the underlying market fundamentals remain constructive.

Within the seaborne thermal coal market, the Russian-Ukrainian conflict and the subsequent ban of Russian coal by European countries has driven global thermal coal prices to record levels and high volatility during the three months ended March 31, 2022.

Prior to the Russian-Ukrainian conflict, thermal coal supply was already tight due to an export ban in Indonesia in January as well as heavy rains and COVID-19 restrictions in Australia.

During the three months ended March 31, 2022, Newcastle thermal coal pricing hit record levels due to concerns over a severe supply shock following the onset of the Russian-Ukrainian conflict, but pricing subsided slightly to end the quarter in the $200 per metric tonne range.

In China, domestic coal production has been strong during the three months ended March 31, 2022, which has lowered import demand to start the year.

In India, coal production has been elevated as well, allowing coal buyers to wait for lower thermal seaborne prices and limit imports;

however stockpile levels have fallen recently.

Within the seaborne thermal coal market, global thermal coal prices continue to remain at near-record levels, fueled by broader energy supply security concerns.

These concerns have been driven by the Russian-Ukrainian conflict and the subsequent ban of Russian coal by European countries, as well as weather and COVID impacts limiting supply response out of Australia.

In China, domestic coal production and renewable generation growth have been strong during the six months ended June 30, 2022, which has lowered import demand to start the year.

In India, elevated domestic coal production has limited import demand, allowing coal buyers to wait for lower thermal seaborne prices.

Overall, global thermal coal markets remain turbulent as supply remains tight and European coal importers look to replace Russian coal.

In the United States, overall electricity demand increased more than 3% year-over-year, positively impacted by weather.

Through the three months ended March 31, 2022, electricity generation from thermal coal has declined year-over-year due to strong year-over-year comparatives in February 2021, as well as record renewable generation.

Coal’s share of electricity generation has declined slightly to approximately 22% for the three months ended March 31, 2022, while wind generation’s share has increased to 11%.

In the United States, overall electricity demand increased more than 4% year-over-year, positively impacted by weather and economic activity.

Through the six months ended June 30, 2022, electricity generation from thermal coal has declined year-over-year due to coal conservation by utilities to build coal stocks ahead of summer, strong year-over-year comparatives in February 2021 and record renewable generation.

Coal’s share of electricity generation has declined slightly to approximately 20% for the six months ended June 30, 2022, while wind generation’s share has increased to 11%.

Coal inventories have continued to decline since December 2021, with a decline of approximately 7% or 7 million tons.

During the three months ended March 31, 2022, utility consumption of PRB coal rose approximately 1% compared to the prior year period.

Financing and Liquidity Transactions

During the six months ended June 30, 2022, utility consumption of PRB coal declined approximately 2% compared to the prior year period.

Financing Transactions

During the first quarter of 2022, Peabody issued convertible senior unsecured notes and used the proceeds of the offering to retire nearer term higher cost senior secured debt.

This both lowered the Company’s borrowing rates and extended debt maturities to 2028.

High demand and tight supply for coal globally has resulted in a substantial rise in seaborne thermal coal prices, which has been amplified by the Russian-Ukrainian conflict, resulting in unprecedented upward volatility in Newcastle coal pricing since late February.

As a result, Peabody posted additional cash margin of $351.6 million during the three months ended March 31, 2022 to satisfy the margin requirements for its derivative contracts.

During the quarter, the Company put in place a revolving financing facility to support near-term liquidity requirements, particularly with respect to these cash margin requirements which fluctuate depending upon the underlying market coal prices.

The Company received proceeds under the revolving financing facility which were repaid in full with proceeds from the sale of shares under the at-the-market offering program.

During the second quarter of 2022, Peabody continued to reduce it outstanding debt, with additional retirements pending settlement after the balance sheet date.

High demand and tight supply for coal globally has resulted in a substantial rise in seaborne thermal coal prices in the first half of 2022, which has been amplified by the Russian-Ukrainian conflict, resulting in unprecedented upward volatility in Newcastle coal pricing since late February.

As a result, Peabody posted additional cash margin of $414.1 million during the six months ended June 30, 2022 to satisfy the margin requirements for its derivative contracts.

Refer to the “Liquidity and Capital Resources” section contained within this Item 2 for a further discussion of these financing and liquidity transactions.

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R3 was formed with the intent of developing various sites, including certain non-mining land held by the Company in the U.S., for utility-scale photovoltaic solar generation and battery storage.

During the second quarter of 2022, R3 advanced efforts with potential customers, finalized its management team and commenced site evaluations with project developer Treaty Oak Clean Energy, LLC.

The Company’s interest in R3 is accounted for as an equity method investment.

The Company contributed $2.0 million to R3 and recorded an equity loss of $1.0 million from its operations during the three months ended March 31, 2022.

The Company contributed $2.5 million to R3 and recorded an equity loss of $1.8 million from its operations during the six months ended June 30, 2022.

In March 2022, Peabody Investments Corp., a wholly owned subsidiary of the Company, entered into a commitment agreement relating to one of its qualified pension plans (the Plan) with an insurer.

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Under the terms of this transaction, the Plan will continue to administer and pay the retirement benefits of Plan participants but will be reimbursed by the insurer for the payment of all benefits covered by the group annuity contract.

In May 2022, the board of directors of Peabody Investments Corp.

approved commencing a standard Employee Retirement Income Security Act plan termination with an effective date of plan termination of July 31, 2022.

Refer to Note 10.

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Results of Operations

Three Months Ended March 31, 2022 Compared to the Three Months Ended March 31, 2021

The Company’s revenue for the three months ended March 31, 2022 increased compared to the same period in 2021 ($40.1 million) primarily due to the impacts of higher pricing, offset by net unrealized mark-to-market losses on derivative contracts related to forecasted sales and other financial trading activity ($ 290.2 million).

Results from continuing operations, net of income taxes for the three months ended March 31, 2022 decreased compared to the same period in the prior year ($42.1 million), primarily due to higher operating costs and expenses ($116.4 million) which reflected inflationary pressures and increased costs for materials, services, repairs and labor related to the Company’s efforts to ramp up the operations to meet current and anticipated volumes.

The results were further impacted by net losses on early debt extinguishments in the current year ($27.0 million).

These unfavorable variances were offset by improved results from equity affiliates ($45.6 million), a favorable revenue variance due to higher pricing exceeding the net unrealized mark-to-market losses as described above ($40.1 million);

and decreased interest expense ($13.0 million).

Adjusted EBITDA for the three months ended March 31, 2022 reflected a year-over-year increase of $266.4 million.

As of March 31, 2022, the Company’s available liquidity was approximately $842 million.

Refer to the “Liquidity and Capital Resources” section contained within this Item 2 for a further discussion of factors affecting the Company’s available liquidity.

Three and Six Months Ended June 30, 2022 Compared to the Three and Six Months Ended June 30, 2021

The increases in results from continuing operations, net of income taxes for the three and six months ended June 30, 2022 compared to the same periods in the prior year ($434.3 million and $392.2 million, respectively), were primarily driven by higher revenue ($598.5 million and $638.6 million, respectively) due to higher realized prices;

improved results from equity affiliates ($52.2 million and $97.8 million, respectively);

and lower interest expense ($7.8 million and $20.8 million, respectively).

These favorable variances were partially offset by higher operating costs and expenses ($214.2 million and $330.6 million, respectively), which reflect increased sales sensitive costs, inflationary pressures for materials, services, repairs and labor;

and net losses on early debt extinguishments in the current year ($14.1 million and $41.1 million, respectively).

Adjusted EBITDA for the three and six months ended June 30, 2022 reflected year-over-year increases of $455.7 million and $722.1 million, respectively.

The following table presents tons sold by operating segment:

Three Months Ended March 31, (Decrease ) Increase

2022 2021 Tons %

(Tons in millions)

Three Months Ended June 30, (Decrease) Increase

to Volumes Six Months Ended June 30, (Decrease) Increase

2022 2021 Tons % 2022 2021 Tons %

(Tons in millions) (Tons in millions)

Seaborne Thermal Mining 4.0 4.1 (0.1) (2) % 7.8 8.2 (0.4) (5) %

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The following table presents supplemental financial data by operating segment:

Three Months Ended March 31, Increase

Three Months Ended June 30, Increase

(Decrease) Six Months Ended June 30, Increase

2022 2021 $ % 2022 2021 $ %

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The following table presents revenue by reporting segment:

Three Months Ended March 31, Increase (Decrease) to Revenue

Three Months Ended June 30, Increase (Decrease) to Revenue Six Months Ended June 30, Increase (Decrease) to Revenue

2022 2021 $ % 2022 2021 $ %

(Dollars in millions)

(Dollars in millions) (Dollars in millions)

Seaborne Thermal Mining $ 354.9 $ 194.1 $ 160.8 83 % $ 606.1 $ 370.5 $ 235.6 64 %

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Seaborne Thermal Mining.

Segment revenue increased during the three months ended March 31, 2022 compared to the same period in the prior year primarily due to favorable realized coal pricing ($110.9 million), offset by unfavorable volumes ($36.1 million) which were impacted by a longwall move at the Wambo Underground Mine, wet weather and COVID-19-related staffing shortages.

Segment revenue increased during the three months ended June 30, 2022 compared to the same period in the prior year due to favorable realized prices ($156.8 million) and favorable mix variances ($4.0 million) resulting from higher export volumes.

Segment revenue increased during the six months ended June 30, 2022 compared to the same period in the prior year primarily due to favorable realized prices ($271.9 million), offset by unfavorable volumes ($36.3 million) which were impacted by a longwall move at the Wambo Underground Mine, wet weather and COVID-19-related staffing shortages.

Seaborne Metallurgical Mining.

Segment revenue increased during the three months ended March 31, 2022 compared to the same period in the prior year due to favorable realized coal pricing ($190.2 million) and favorable volume and mix variances ($43.6 million).

Segment revenue increased during the three and six months ended June 30, 2022 compared to the same periods in the prior year due to favorable realized prices ($279.8 million and $470.0 million, respectively) and favorable volume and mix variances ($133.0 million and $176.6 million, respectively).

Powder River Basin Mining.

Segment revenue increased during the three months ended March 31, 2022 compared to the same period in the prior year primarily due to favorable realized coal pricing ($27.2 million), partially offset by unfavorable volumes ($4.4 million).

Segment revenue decreased during the three months ended June 30, 2022 compared to the same period in the prior year due to unfavorable volumes ($43.2 million) resulting from rail performance issues, partially offset by favorable realized prices ($24.3 million).

Segment revenue increased during the six months ended June 30, 2022 compared to the same period in the prior year due to favorable realized coal pricing ($51.3 million), offset by unfavorable volumes ($47.4 million).

Thermal Mining.

Segment revenue increased during the three months ended March 31, 2022 compared to the same period in the prior year due to favorable realized pricing ($40.0 million) and favorable volumes ($13.8 million).

Segment revenue increased during the three and six months ended June 30, 2022 compared to the same periods in the prior year due to favorable realized prices ($48.6 million and $88.6 million, respectively) and favorable volumes ($14.2 million and $28.0 million, respectively).

Corporate and Other.

Segment revenue decreased during the three months ended March 31, 2022 compared to the same period in the prior year primarily due to net unrealized mark-to-market losses on derivative contracts related to forecasted coal sales and other financial trading activity ($285.3 million) and lower results from trading activities ($61.8 million).

Segment revenue decreased during the three months ended June 30, 2022 compared to the same period in the prior year primarily due to lower results from trading activities ($22.5 million).

Segment revenue decreased during the six months ended June 30, 2022 compared to the same period in the prior year due to increased net unrealized mark-to-market losses on derivative contracts related to forecasted coal sales ($299.9 million) and lower results from trading activities ($70.6 million).

Adjusted EBITDA

The following table presents Adjusted EBITDA for each of the Company’s reporting segments:

Three Months Ended March 31, Increase (Decrease) to Segment Adjusted EBITDA

Three Months Ended June 30, Increase (Decrease) to Segment Adjusted EBITDA Six Months Ended June 30, Increase (Decrease) to Segment Adjusted EBITDA

2022 2021 $ % 2022 2021 $ %

(Dollars in millions)

(Dollars in millions) (Dollars in millions)

Seaborne Thermal Mining

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Seaborne Thermal Mining.

Segment Adjusted EBITDA increased during the three months ended March 31, 2022 compared to the same period in the prior year as a result of higher realized net coal pricing ($102.3 million), partially offset by unfavorable operational costs ($40.5 million) resulting from the longwall move at the Wambo Underground Mine, the impacts of wet weather, COVID-19-related staffing shortages and inflationary pressures.

Segment Adjusted EBITDA increased during the three and six months ended June 30, 2022 compared to the same periods in the prior year as a result of higher realized prices net of sales sensitive costs ($143.8 million and $249.7 million, respectively), partially offset by unfavorable operational costs ($48.5 million and $87.5 million, respectively) resulting from the impacts of wet weather, COVID-19-related staffing shortages, the longwall move at the Wambo Underground Mine and inflationary pressures.

Seaborne Metallurgical Mining.

Segment Adjusted EBITDA increased during the three months ended March 31, 2022 compared to the same period in the prior year due to higher realized net coal pricing ($176.3 million) and cost improvements at certain mines ($23.4 million).

Segment Adjusted EBITDA increased during the three and six months ended June 30, 2022 compared to the same periods in the prior year due to higher realized prices net of sales sensitive costs ($241.8 million and $408.2 million, respectively) and favorable volumes, offset by higher costs resulting from longwall panel transitions at the Shoal Creek Mine and inflationary pressures across the segment.

Powder River Basin Mining.

Segment Adjusted EBITDA decreased during the three months ended March 31, 2022 compared to the same period in the prior year due to higher costs for materials, services, repairs and labor ($29.5 million) related to efforts to ramp up the operations to meet current and anticipated volumes and the unfavorable impacts of higher commodity pricing ($14.7 million), both of which were also impacted by inflationary pressures.

These decreases were partially offset by higher realized net coal pricing ($27.3 million).

Segment Adjusted EBITDA decreased during the three and six months ended June 30, 2022 compared to the same periods in the prior year due to lower volumes ($23.4 million in both periods) resulting from rail performance issues;

the unfavorable impacts of higher commodity pricing ($19.0 million and $33.6 million, respectively) and higher costs for materials, services, repairs and labor ($18.7 million and $42.8 million, respectively), both of which were impacted by inflationary pressures;

and elevated overburden removal costs.

These decreases were partially offset by higher prices net of sales sensitive costs ($24.8 million and $51.9 million, respectively).

Thermal Mining.

Segment Adjusted EBITDA increased during the three months ended March 31, 2022 compared to the same period in the prior year due to higher realized net coal pricing ($41.6 million) and favorable volumes ($6.7 million).

These increases were offset by higher costs for materials, services, repairs and labor ($24.4 million) related to efforts to ramp up the operations to meet current and anticipated volumes and the unfavorable impacts of higher commodity pricing ($10.0 million), both of which were also impacted by inflationary pressures.

Segment Adjusted EBITDA increased during the three and six months ended June 30, 2022 compared to the same periods in the prior year due to higher realized prices net of sales sensitive costs ($50.1 million and $91.5 million, respectively) and favorable volumes ($6.2 million and $13.0 million, respectively).

These increases were offset by higher costs for materials, services, repairs and labor ($23.5 million and $49.4 million, respectively) and the unfavorable impacts of higher commodity pricing ($14.5 million and $24.4 million, respectively), both of which were impacted by inflationary pressures.

Corporate and Other Adjusted EBITDA.

The following table presents a summary of the components of Corporate and Other Adjusted EBITDA:

Three Months Ended March 31, Increase (Decrease) to Adjusted EBITDA

Three Months Ended June 30, Increase (Decrease) to Adjusted EBITDA Six Months Ended June 30, Increase (Decrease) to Adjusted EBITDA

2022 2021 $ % 2022 2021 $ %

(Dollars in millions)

(Dollars in millions) (Dollars in millions)

Middlemount (1)

$ 48.9 $ (4.1) $ 53.0 1,293 % $ 94.0 $ (6.4) $ 100.4 1,569 %

Resource management activities (2)

Resource management

activities (2)

13.8 3.9 9.9 254 % 17.3 4.3 13.0 302 %

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(1) Middlemount’s results are before the impact of related changes in deferred tax asset valuation allowance and reserves and amortization of basis difference.

Middlemount’s standalone results included (on a 50% attributable basis) aggregate amounts of depreciation, depletion and amortization, asset retirement obligation expenses, net interest expense and income taxes of $45.0 million and $11.7 million during the three months ended March 31, 2022 and 2021, respectively.

Middlemount’s standalone results included (on a 50% attributable basis) aggregate amounts of depreciation, depletion and amortization, asset retirement obligation expenses, net interest expense and income taxes of $23.3 million and $3.7 million during the three months ended June 30, 2022 and 2021, respectively, and $43.5 million and $7.9 million during the six months ended June 30, 2022 and 2021, respectively.

(2) Includes gains (losses) on certain surplus coal reserve and surface land sales and property management costs and revenue.

(3) Includes trading and brokerage activities, costs associated with post-mining activities, gains (losses) on certain asset disposals, minimum charges on certain transportation-related contracts, costs associated with suspended operations including the North Goonyella Mine and expenses related to the Company’s other commercial activities.

Corporate and Other Adjusted EBITDA benefited during the three months ended March 31, 2022 compared to the same period in the prior year from a favorable variance in Middlemount’s results ($47.4 million) due to the impact of higher sales pricing.

This benefit was largely offset by unfavorable trading results ($41.9 million).

Loss From Continuing Operations, Net of Income Taxes

The following table presents loss from continuing operations, net of income taxes:

Three Months Ended March 31, Increase (Decrease) to Income

Corporate and Other Adjusted EBITDA benefited during the three and six months ended June 30, 2022 compared to the same period in the prior year from favorable variances in Middlemount’s results due to the impact of higher sales pricing ($53.0 million and $100.4 million, respectively) and gains on various land sales in both the U.S.

and Australia ($11.5 million and $12.6 million, respectively).

This benefit was largely offset by unfavorable trading results ($12.1 million and $54.0 million, respectively).

Income (Loss) From Continuing Operations, Net of Income Taxes

The following table presents income (loss) from continuing operations, net of income taxes:

Three Months Ended June 30, Increase (Decrease) to Income Six Months Ended June 30, Increase (Decrease) to Income

2022 2021 $ % 2022 2021 $ %

(Dollars in millions)

(Dollars in millions) (Dollars in millions)

Adjusted EBITDA (1)

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(24.5) (23.7) (0.8) (3) % (325.5) (25.6) (299.9) (1,171) %

Unrealized gains (losses) on foreign currency option contracts 3.3 (7.6) 10.9 143 %

Unrealized losses on foreign currency option contracts (6.3) (1.2) (5.1) (425) % (3.0) (8.8) 5.8 66 %

Take-or-pay contract-based intangible recognition 0.7 1.1 (0.4) (36) % 1.4 2.2 (0.8) (36) %

Income tax benefit 1.0 1.8 (0.8) (44) %

Loss from continuing operations, net of income taxes $ (119.8) $ (77.7) $ (42.1) (54) %

Income tax (provision) benefit (11.3) 4.8 (16.1) (335) % (10.3) 6.6 (16.9) (256) %

Income (loss) from continuing operations, net of income taxes $ 411.3 $ (23.0) $ 434.3 1,888 % $ 291.5 $ (100.7) $ 392.2 389 %

(1) This is a financial measure not recognized in accordance with U.S.

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The following table presents a summary of depreciation, depletion and amortization expense by segment:

Three Months Ended March 31, (Decrease) Increase to Income

Three Months Ended June 30, Increase (Decrease) to Income Six Months Ended June 30, (Decrease) Increase to Income

2022 2021 $ % 2022 2021 $ %

(Dollars in millions)

(Dollars in millions) (Dollars in millions)

Seaborne Thermal Mining

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Additionally, the following table presents a summary of the Company’s weighted-average depletion rate per ton for active mines in each of its mining segments:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2022 2021 2022 2021

Seaborne Thermal Mining $ 2.46 $ 2.47 $ 2.47 $ 2.17

Seaborne Metallurgical Mining

3.42 1.03 2.85 1.02

Powder River Basin Mining 0.32 0.24 0.32 0.24

Thermal Mining

Depreciation, depletion and amortization expense increased during the three months ended March 31, 2022 compared to the same period in the prior year primarily due to increased depletion.

The increase in the weighted-average depletion rate per ton for the Seaborne Thermal Mining segment during the three months ended March 31, 2022 compared to the same period in the prior year reflects the impact of the transition to the United Wambo Joint Venture.

The increase in the weighted-average depletion rate per ton for the Seaborne Metallurgical Mining segment during the three months ended March 31, 2022 compared to the same period in the prior year reflects the volume and mix variances which impacted the Company’s revenue as described above.

1.24 1.17 1.21 1.15

The increase in the weighted-average depletion rate per ton for the Seaborne Metallurgical Mining segment during the three and six months ended June 30, 2022 compared to the same period in the prior year reflects the impact of the resumption of sales at the Shoal Creek Mine.

Interest Expense.

The decrease in interest expense during the three months ended March 31, 2022 was primarily driven by prior year fees related to a series of refinancing transactions completed by the Company ($10.6 million) as further described in Note 11.

The decrease in interest expense during the three and six months ended June 30, 2022 primarily reflects the impacts of debt retirements completed by the Company during 2022 and 2021 and prior year fees related to a series of refinancing transactions completed by the Company (six months, $10.6 million) as further described in Note 9.

“Long-term Debt” to the accompanying unaudited condensed consolidated financial statements and Note 11.

“Long-term Debt” to the Annual Report on Form 10-K for the year ended December 31, 2021.

Net (Loss) Gain on Early Debt Extinguishment.

The loss recognized during the three months ended March 31, 2022 was primarily related to the redemption of existing notes during the period as further discussed in Note 11.

The losses recognized during the three and six months ended June 30, 2022 were primarily related to the redemption of existing notes during the periods as further discussed in Note 9.

“Long-term Debt” to the accompanying unaudited condensed consolidated financial statements.

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“Derivatives and Fair Value Measurements” to the accompanying unaudited condensed consolidated financial statements.

Unrealized Gains (Losses) on Foreign Currency Option Contracts.

Unrealized gains (losses) primarily relate to mark-to-market activity on foreign currency option contracts.

Unrealized Losses on Foreign Currency Option Contracts.

Unrealized losses primarily relate to mark-to-market activity on foreign currency option contracts.

For additional information, refer to Note 6.

“Derivatives and Fair Value Measurements” to the accompanying unaudited condensed consolidated financial statements.

Net Loss Attributable to Common Stockholders

The following table presents net loss attributable to common stockholders:

Three Months Ended March 31, (Decrease) Increase

Income Tax (Provision) Benefit.

The increase in the income tax provision during the three and six months ended June 30, 2022 compared to the same periods in the prior year was primarily due to changes in forecasted taxable income, partially offset by an increase in the benefit related to the remeasurement of foreign income tax accounts.

The Company expects to utilize substantial net operating losses in Australia and the U.S.

in 2022 based on estimated pretax income.

Refer to Note 8.

“Income Taxes” to the accompanying unaudited condensed consolidated financial statements for additional information.

Net Income (Loss) Attributable to Common Stockholders

The following table presents net income (loss) attributable to common stockholders:

Three Months Ended June 30, Increase (Decrease)

to Income Six Months Ended June 30, Increase (Decrease)

2022 2021 $ % 2022 2021 $ %

(Dollars in millions)

Loss from continuing operations, net of income taxes $ (119.8) $ (77.7) $ (42.1) (54) %

(Dollars in millions) (Dollars in millions)

Income (loss) from continuing operations, net of income taxes $ 411.3 $ (23.0) $ 434.3 1,888 % $ 291.5 $ (100.7) $ 392.2 389 %

Loss from discontinued operations, net of income taxes (0.7) (2.3) 1.6 70 % (1.5) (4.3) 2.8 65 %

Net loss (120.6) (79.7) (40.9) (51) %

Net (loss) income attributable to noncontrolling interests (1.1) 0.4 (1.5) (375) %

Net loss attributable to common stockholders $ (119.5) $ (80.1) $ (39.4) (49) %

Net income (loss) 410.6 (25.3) 435.9 1,723 % 290.0 (105.0) 395.0 376 %

Net income attributable to noncontrolling interests 1.1 3.3 (2.2) (67) % — 3.7 (3.7) (100) %

Net income (loss) attributable to common stockholders $ 409.5 $ (28.6) $ 438.1 1,532 % $ 290.0 $ (108.7) $ 398.7 367 %

Diluted Earnings per Share (EPS)

The following table presents diluted EPS:

Three Months Ended March 31, (Decrease) Increase

Three Months Ended June 30, Increase

to EPS Six Months Ended June 30, Increase

2022 2021 $ % 2022 2021 $ %

Diluted EPS attributable to common stockholders:

Loss from continuing operations $ (0.87) $ (0.79) $ (0.08) (10) %

Income (loss) from continuing operations $ 2.55 $ (0.26) $ 2.81 1,081 % $ 1.93 $ (1.05) $ 2.98 284 %

Loss from discontinued operations (0.01) (0.02) 0.01 50 % — (0.04) 0.04 100 %

Net loss attributable to common stockholders $ (0.88) $ (0.81) $ (0.07) (9) %

Net income (loss) attributable to common stockholders $ 2.54 $ (0.28) $ 2.82 1,007 % $ 1.93 $ (1.09) $ 3.02 277 %

Diluted EPS is commensurate with the changes in results from continuing operations and discontinued operations during that period.

Diluted EPS reflects weighted average diluted common shares outstanding of 136.2 million and 98.4 million for the three months ended March 31, 2022 and 2021, respectively.

Diluted EPS reflects weighted average diluted common shares outstanding of 161.9 million and 101.2 million for the three months ended June 30, 2022 and 2021, respectively, and 152.5 million and 99.8 million for the six months ended June 30, 2022 and 2021, respectively.

Reconciliation of Non-GAAP Financial Measures

Adjusted EBITDA is defined as loss from continuing operations before deducting net interest expense, income taxes, asset retirement obligation expenses and depreciation, depletion and amortization.

Adjusted EBITDA is defined as income (loss) from continuing operations before deducting net interest expense, income taxes, asset retirement obligation expenses and depreciation, depletion and amortization.

Adjusted EBITDA is also adjusted for the discrete items that management excluded in analyzing each of its segment’s operating performance, as displayed in the reconciliations below.

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2022 2021 2022 2021

(Dollars in millions)

Loss from continuing operations, net of income taxes $ (119.8) $ (77.7)

Income (loss) from continuing operations, net of income taxes $ 411.3 $ (23.0) $ 291.5 $ (100.7)

Depreciation, depletion and amortization

73.8 77.1 146.7 145.4

Asset retirement obligation expenses

12.7 15.1 27.7 31.0

Restructuring charges

0.2 2.1 1.8 4.2

Changes in deferred tax asset valuation allowance and reserves and amortization of basis difference related to equity affiliates

(0.6) (0.5) (1.2) (2.0)

Interest expense

37.6 45.4 77.0 97.8

Net loss (gain) on early debt extinguishment 2.3 (11.8) 25.8 (15.3)

Interest income

(0.9) (1.3) (1.4) (2.8)

Unrealized losses on derivative contracts related to forecasted sales 24.5 23.7 325.5 25.6

Unrealized (gains) losses on foreign currency option contracts (3.3) 7.6

Unrealized losses on foreign currency option contracts 6.3 1.2 3.0 8.8

Take-or-pay contract-based intangible recognition

Income tax benefit (1.0) (1.8)

(0.7) (1.1) (1.4) (2.2)

Income tax provision (benefit) 11.3 (4.8) 10.3 (6.6)

Total Adjusted EBITDA

$ 577.8 $ 122.1 $ 905.3 $ 183.2

Revenue per Ton and Adjusted EBITDA Margin per Ton are equal to revenue by segment and Adjusted EBITDA by segment, respectively, divided by segment tons sold.

Costs per Ton is equal to Revenue per Ton less Adjusted EBITDA Margin per Ton, and are reconciled to operating costs and expenses as follows:

Three Months Ended March 31,

Total Reporting Segment Costs is defined as operating costs and expenses adjusted for the discrete items that management excluded in analyzing each of its segments’ operating performance, as displayed in the reconciliations below.

Three Months Ended June 30, Six Months Ended June 30,

2022 2021 2022 2021

(Dollars in millions)

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$ 825.6 $ 611.4 $ 1,524.6 $ 1,194.0

Unrealized gains (losses) on foreign currency option contracts 3.3 (7.6)

Unrealized losses on foreign currency option contracts (6.3) (1.2) (3.0) (8.8)

Take-or-pay contract-based intangible recognition

0.7 1.1 1.4 2.2

Net periodic benefit credit, excluding service cost (12.3) (8.7) (24.5) (17.4)

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$ 807.7 $ 602.6 $ 1,498.5 $ 1,170.0

The following table presents Reporting Segment Costs by reporting segment:

Three Months Ended March 31,

The following table presents Total Reporting Segment Costs by reporting segment:

Three Months Ended June 30, Six Months Ended June 30,

2022 2021 2022 2021

(Dollars in millions)

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Total Reporting Segment Costs $ 807.7 $ 602.6 $ 1,498.5 $ 1,170.0

Revenue per Ton and Adjusted EBITDA Margin per Ton are equal to revenue by segment and Adjusted EBITDA by segment, respectively, divided by segment tons sold.

Costs per Ton is equal to Revenue per Ton less Adjusted EBITDA Margin per Ton.

The following tables present tons sold, revenue, Reporting Segment Costs and Adjusted EBITDA by mining segment:

Three Months Ended March 31, 2022

Three Months Ended June 30, 2022

Seaborne Thermal Mining Seaborne Metallurgical Mining Powder River Basin Mining Other U.S.

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Adjusted EBITDA Margin per Ton $ 43.52 $ 185.65 $ (0.11) $ 14.15

Three Months Ended March 31, 2021

Three Months Ended June 30, 2021

Seaborne Thermal Mining Seaborne Metallurgical Mining Powder River Basin Mining Other U.S.

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Adjusted EBITDA Margin per Ton $ 17.31 $ (18.76) $ 2.02 $ 11.13

Free Cash Flow is defined as net cash (used in) provided by operating activities less net cash provided by (used in) investing activities and excludes cash outflows related to business combinations.

Six Months Ended June 30, 2022

Seaborne Thermal Mining Seaborne Metallurgical Mining Powder River Basin Mining Other U.S.

Thermal Mining

(Amounts in millions, except per ton data)

Tons sold 7.8 2.8 39.1 8.6

Revenue $ 606.1 $ 855.1 $ 480.9 $ 428.0

Reporting Segment Costs 338.8 374.4 475.3 316.1

Adjusted EBITDA $ 267.3 $ 480.7 $ 5.6 $ 111.9

Revenue per Ton $ 77.52 $ 299.82 $ 12.30 $ 49.96

Costs per Ton 43.33 131.26 12.16 36.90

Adjusted EBITDA Margin per Ton $ 34.19 $ 168.56 $ 0.14 $ 13.06

Six Months Ended June 30, 2021

Seaborne Thermal Mining Seaborne Metallurgical Mining Powder River Basin Mining Other U.S.

Thermal Mining

(Amounts in millions, except per ton data)

Tons sold 8.2 2.4 43.2 7.8

Revenue $ 370.5 $ 208.5 $ 477.0 $ 311.4

Reporting Segment Costs 270.6 257.3 401.4 230.9

Adjusted EBITDA $ 99.9 $ (48.8) $ 75.6 $ 80.5

Revenue per Ton $ 45.15 $ 86.31 $ 11.04 $ 39.75

Costs per Ton 32.97 106.51 9.29 29.47

Adjusted EBITDA Margin per Ton $ 12.18 $ (20.20) $ 1.75 $ 10.28

Free Cash Flow is defined as net cash provided by (used in) operating activities plus net cash provided by (used in) investing activities and excludes cash outflows related to business combinations.

See the table below for a reconciliation of Free Cash Flow to its most comparable measure under U.S.

Three Months Ended March 31,

Six Months Ended June 30,

(Dollars in millions)

Net cash (used in) provided by operating activities $ (273.7) $ 71.0

Net cash provided by (used in) operating activities $ 9.4 $ (22.8)

Net cash provided by (used in) investing activities 94.5 (82.6)

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Regulatory Matters - U.S.

EPA Regulation of Greenhouse Gas Emissions from Existing Fossil Fuel-Fired EGUs .

On October 23, 2015, the United States Environmental Protection Agency (EPA) published a final rule in the Federal Register regulating greenhouse gas emissions from existing fossil fuel-fired electric generation units (EGUs) under Section 111(d) of the Clean Air Act (CAA) (80 Fed.

The rule (known as the Clean Power Plan or CPP) established emission guidelines for states to follow in developing plans to reduce greenhouse gas emissions (GHGs) from existing fossil fuel-fired EGUs.

The CPP required that the states individually or collectively create systems that would reduce carbon emissions from any EGU located within their borders by 28% in 2025 and 32% in 2030 (compared with a 2005 baseline).

The EPA subsequently proposed to repeal the CPP and in August 2018 issued a proposed rule to replace the CPP with the Affordable Clean Energy (ACE) Rule.

In June 2019, the EPA issued a combined package that finalized the CPP repeal rule as well as the replacement rule, ACE.

The ACE rule set emissions guidelines for greenhouse gas emissions from existing EGUs based on a determination that efficiency heat rate improvements constitute the Best System of Emission Reduction (BSER).

Numerous petitions for review challenging the ACE Rule were filed in the United States Court of Appeals for the D.C.

Circuit (D.C.

Circuit) and subsequently consolidated.

In January 2021, a 3-judge panel of the D.C.

Circuit vacated and remanded the ACE Rule to the EPA, including its repeal of the CPP and amendments to the implementing regulations that extended the compliance timeline.

On October 29, 2021, the Supreme Court of the United States (Supreme Court) granted certiorari in four consolidated matters seeking review of the D.C.

Circuit’s opinion vacating the ACE rule and invalidating the repeal of the CPP.

On June 30, 2022, the Supreme Court issued its opinion in West Virginia v.

20-1530 ( West Virginia ).

The Supreme Court ruled that the EPA does not have Congressional authority under section 111(d) of the CAA to limit emissions at existing power plants through generation shifting to other fuels and/or renewable energy, but still can regulate emissions at plants by emissions reductions technologies as the EPA has done in the past.

Circuit’s opinion was reversed and remanded, leaving neither the CPP or the ACE Rule in effect.

Thus, it will be necessary for the EPA to initiate new rulemaking in order to control GHGs from EGUs using section 111(d) of the CAA.

The EPA tentatively plans to propose emission guidelines for EGUs in the spring of 2023.

The Company will continue to monitor EPA rulemaking in this regard.

National Ambient Air Quality Standards (NAAQS) .

The Clean Air Act (CAA) requires the United States Environmental Protection Agency (EPA) to review national ambient air quality standards every five years to determine whether revision to current standards are appropriate.

The CAA requires the EPA to review national ambient air quality standards every five years to determine whether revision to current standards are appropriate.

As part of this recurring review process, the EPA in 2020 proposed to retain the ozone standards promulgated in 2015, including current secondary standards, and subsequently promulgated final standards to this effect.

Fifteen states and other petitioners have filed a petition for review of the rule in the United States Court of Appeals for the D.C.

Circuit (D.C.

Fifteen states and other petitioners have filed a petition for review of the rule in the D.C.

The litigation is currently in abeyance following a motion filed by the EPA to allow for review of the standards.

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The case is currently in abeyance following a motion filed by the EPA to allow for review of the standards.

On March 11, 2022, the EPA announced their Clean Air Act ‘good neighbor’ proposed rule.

The rule would double the number of covered states, set first-time limits on certain industrial source plant boilers and require daily limits on emissions from large coal-fired power plants.

The EPA estimates that by 2026 the compliance cost will be $1.1 billion.

More stringent PM or ozone standards would require new state implementation plans to be developed and filed with the EPA and may trigger additional control technology for mining equipment or result in additional challenges to permitting and expansion efforts.

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Circuit remand.

This rule imposed further reductions of NO x emissions in 12 states that were subject to the original 2016 rule, which was based on the 2008 ozone standard.

This rule imposed further reductions of NO x emissions in 12 states that were subject to the original 2016 rule, which was based on the 2008 ozone NAAQS.

In the same rule, the EPA determined that 9 states did not significantly contribute to downwind nonattainment and/or maintenance issues and therefore did not require additional emission reductions.

The EPA subsequently issued Federal Implementation Plans (FIPs) to lower state ozone season NO x budgets in 2021 to 2024 in the affected states.

A petition for review challenging the 2021 rule has been filed in the D.C.

Circuit and briefing in this litigation has been completed, but this does not stay the effectiveness of the rule.

In addition, on February 28, 2022, the EPA released a proposed rule for additional FIPs to address interstate air pollution from fossil-fuel power plants in 25 states and certain industrial sources in 23 states.

This rule is based on the more stringent 2015 ozone NAAQS and would, if finalized, affect some of the states covered by previous rules, but also include several new states, including states in the western United States.

A petition for review challenging the 2021 rule was filed in the D.C.

Briefing is completed and oral arguments have been scheduled for September 28, 2022, but this does not stay the effectiveness of the rule.

On April 6, 2022, the EPA proposed FIPs to address regional ozone transport for the 2015 ozone NAAQS.

The proposed rule would result in new ozone season emission budgets for NO x in 25 states, including four Western states, and the proposed rule additionally contains provisions that would require daily “backstop” emission limits for coal-fired power plants over 100 megawatts.

The proposed rule would also set first-time limits on certain industrial sources.

The EPA estimates that by 2026 the compliance cost will be $1.1 billion.

These emission limitations would apply in addition to requirements contained in State Implementation Plans to control ozone precursors in affected states, although states have the option to replace these limits with equally strict or more stringent limitations.

Mercury and Air Toxic Standards (MATS) .

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Circuit but this litigation was placed in abeyance.

On February 9, 2022 the EPA proposed a rule to revoke the 2020 finding and to reaffirm the agency’s 2016 finding that it remains “appropriate and necessary” to regulate HAP emissions from coal- and oil-fired powerplants under Clean Air Act section 112.

In the same proposal, the EPA is also soliciting comments on the performance and cost of new or improved technologies to control HAPs from these powerplants as part of the agency’s review of related residual risk and technology review standards.

In the same proposal, the EPA solicited comments on the performance and cost of new or improved technologies to control HAPs from these power plants as part of the agency’s review of related residual risk and technology review standards.

Clean Water Act (CWA) .

12 unchanged sentences

That rule was temporarily vacated by a district court, but a Supreme Court order on April 7, 2022, effectively reinstated the rule.

The EPA, however, plans to issue another proposal in 2022 that would supersede the 2020 rule.

The EPA issued another proposal in June 2022 that would supersede the 2020 rule and expand state and tribal regulators’ authority to review activities that require federal permits or licenses and to impose conditions they believe are necessary to ensure compliance with water quality requirements.

National Environmental Policy Act (NEPA) .

NEPA, signed into law in 1970, requires federal agencies to review the environmental impacts of their decisions and issue either an environmental assessment or an environmental impact statement.

Peabody must provide information to agencies when it proposes actions that will be under the authority of the federal government.

The NEPA process involves public participation and can involve lengthy timeframes.

The White House Council on Environmental Quality (CEQ) issued a final rule comprehensively updating and modernizing its longstanding NEPA regulations on July 16, 2020.

That final rule sought to reduce unnecessary paperwork, burdens and delays, promote better coordination among agency decision makers, and clarify scope of NEPA reviews, among other things.

States and environmental groups have filed several lawsuits challenging the final rule.

On April 20, 2022, however, the CEQ published the final Phase 1 rule that partially amended the 2020 rule by restoring key provisions of the pre-2020 NEPA regulations.

The CEQ plans to propose a Phase 2 rule in August 2022 that makes broader changes to the 2020 rule.

Regulatory Matters - Australia

The outcome of Australia’s federal election on May 21, 2022 has the potential to impact federal environmental, taxation, labor market and other legislation governing Australian mining operations.

Australia’s federal election on May 21, 2022 resulted in the Labor Party replacing the former Coalition administration.

The new Labor government plans several reforms to federal environmental and industrial relations laws that have the potential to negatively impact Australian mining operations;

however, the majority of reforms are unlikely to be legislated until 2023.

Proposed labor market reforms include legislation that would require contracted or labor hire workers undertaking the same roles as direct employees to be paid equal wages;

reduced flexibility of employment;

and changes to enterprise bargaining legislation that may increase the difficulty of reaching enterprise agreements.

The new Australian federal government has announced plans to legislate for a 43% reduction in Australia’s greenhouse gas emissions by 2030 and to introduce changes by mid-2023 that will require heavy emitting companies producing more than 100,000 tonnes of carbon emissions annually to accelerate their emissions reduction activities.

The Australian federal government has also committed to provide an official response to an independent review of Australia’s overarching environmental law, the Environment Protection and Biodiversity Conservation (EPBC) Act, by the end of 2022, with the aim of developing strengthened environmental legislation in 2023.

On March 15, 2022, the Full Court of the Federal Court of Australia overturned the decision in Sharma v Minister for the Environment [2021] FCA 560 (Sharma), a case which found in 2021 that the Federal Minister for the Environment had a duty to avoid causing personal injury or death to children in Australia as a result of carbon emissions when deciding an application to approve a coal mine expansion.

1 unchanged sentence

However, an application by Sharma for special leave to appeal to the High Court of Australia remains probable, and the duty could be reinstated.

As part of the Queensland Government’s 2019-20 Budget, it committed to freeze royalty rates on coal and minerals for three years provided companies voluntarily contribute to the Resources Community Infrastructure Fund.

The royalty freeze is due to end in June 2022 and the Queensland Government has not established a replacement rate.

The New South Wales Mining and Geoscience Department will be undertaking consultation with respect to the manner for calculating mining royalties in New South Wales between April and June 2022 as part of a proposed redraft of the Mining Royalties (COAL) – Ministerial Determination under Section 283(5) of the Mining Act 1992.

On and from July 1, 2022, the Queensland Government introduced three new royalty tiers for coal produced and sold from the state.

The new tier rates are 20% for the portion of prices above $175 Australian dollars per tonne;

30% for prices above $225 Australian dollars per tonne;

and a 40% tier for when prices exceed $300 Australian dollars per tonne.

Previously, the maximum royalty rate was 15% of the value of the coal sold above $150 Australian dollars per tonne.

The change follows a three-year freeze on royalty rates for coal in the state.

The Company is working with other coal producers to consider challenges to the implementation of the new royalty tiers.

Risks Related to Global Climate Change

52 unchanged sentences

The Company is currently assessing the potential impact of the proposed rules.

The proposal is open for public comment through at least May 21, 2022.

Liquidity and Capital Resources

2 unchanged sentences

The Company’s primary uses of cash include the cash costs of coal production, capital expenditures, coal reserve lease and royalty payments, debt service costs, capital and operating lease payments, postretirement plans, take-or-pay obligations, post-mining reclamation obligations, collateral and margining requirements, and selling and administrative expenses.

The Company has also used cash for dividends, share repurchases and early debt retirements.

The Company has also used cash for early debt retirements, dividends, and share repurchases

Any future determinations to return capital to stockholders, such as dividends or share repurchases will depend on a variety of factors, including the restrictions set forth under the Company’s debt and surety agreements, its net income or other sources of cash, liquidity position and potential alternative uses of cash, such as internal development projects or acquisitions, as well as economic conditions and expected future financial results.

2 unchanged sentences

“Unregistered Sales of Equity Securities and Use of Proceeds.”

As of March 31, 2022, the Company’s cash balances totaled $823.3 million, including approximately $331 million held by U.S.

As of June 30, 2022, the Company’s cash balances totaled $1,120.7 million, including approximately $386 million held by U.S.

subsidiaries, $701 million held by Australian subsidiaries, and the remainder held by other foreign subsidiaries in accounts predominantly domiciled in the U.S.

The Australian subsidiaries that conduct the operations of the Wilpinjong Mine held cash of approximately $213 million at March 31, 2022.

The Australian subsidiaries that conduct the operations of the Wilpinjong Mine held cash of approximately $202 million at June 30, 2022.

A significant majority of the cash held by the Company’s foreign subsidiaries is denominated in U.S.

2 unchanged sentences

From time to time, the Company may repatriate excess cash from its foreign subsidiaries to the U.S.

During the first quarter of 2022, the Company repatriated approximately $200 million.

During the first half of 2022, the Company repatriated approximately $200 million.

If additional foreign-held cash is repatriated in the future, the Company does not expect restrictions or potential taxes will have a material effect to its near-term liquidity.

The Company’s available liquidity declined from $995.9 million as of December 31, 2021 to $841.5 million as of March 31, 2022.

The Company’s available liquidity increased from $995.9 million as of December 31, 2021 to $1,134.2 million as of June 30, 2022.

Available liquidity was comprised of the following:

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021

(Dollars in millions)

3 unchanged sentences

Total liquidity $ 1,134.2 $ 995.9

Subsequent to March 31, 2022, the Company executed an amendment to its credit facility to reduce its capacity by approximately $17 million and to make allowable certain previously restricted payments for joint venture investments.

During the three months ended June 30, 2022, the Company executed an amendment to its credit facility to reduce its capacity by approximately $17 million and to make allowable certain previously restricted payments for joint venture investments.

The amendment creates an investment basket which allows payments of $30.0 million per year specifically limited to investment in renewable energy-related projects.

Unused portions of the basket carryover from year-to-year, and the total amount of investment will further reduce the credit facility capacity by a like amount, or a minimum of $10.0 million per year, through the maturity of the credit facility.

The Company has no contractual commitment for such joint venture investment.

The Company expects to utilize its collateralized letter of credit agreement, described below, to offset future required credit facility capacity reductions.

The Company has no contractual commitment for renewable energy-related project investment.

Margin Requirements

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At March 4, 2022, the Company held coal derivative contracts in aggregate of 2.3 million metric tons.

The majority of these contracts were entered into in the first half of 2021 and related to 1.9 million metric tons of production at the Wambo Underground Mine in the Company’s Seaborne Thermal Mining segment, which were expected to be mined and settled at a rate of 1.2 million metric tons in 2022 and 0.7 million metric tons in 2023.

These hedge contracts were put in place to support the profitability of the mine, securing anticipated average prices of $84 per metric ton through mid-2023.

2 unchanged sentences

The Newcastle financial price for March closed at $419.50 per metric ton on March 4, 2022, which was 148% above the closing index price of $169.17 per metric ton on December 31, 2021.

As a result, the Company’s total initial and variation margin requirements reached approximately $750 million during March 2022, and were $481.7 million at March 31, 2022.

As a result, the Company’s total initial and variation margin requirements reached approximately $750 million during March 2022, and were $544.2 million at June 30, 2022.

Margin is returned to the Company upon reductions in the underlying market coal price or, absent such reductions, cash is recovered as the Company delivers coal into the market at spot prices.

Of the Company's total expected 2022 export sales from its Seaborne Thermal Mining segment, approximately 6% is hedged and approximately 53% is unpriced.

The unpriced volume will benefit if the current pricing environment persists.

On March 7, 2022, the Company entered into a credit agreement, by and among the Company, as borrower, Goldman Sachs Lending Partners LLC, as administrative agent, and the lenders party thereto (the Credit Agreement).

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During the three months ended March 31, 2022, the Company borrowed and repaid $225.0 million under the Revolving Facility using net proceeds of $222.0 million from at-the-market issuances of 10.1 million shares of common stock and available cash.

The equity offering agreement limit was reached as a result of these issuances and may not be further utilized without amendment and approval by the sales agent.

The Company had no outstanding borrowings and no availability under the Revolving Facility at March 31, 2022.

To reduce exposure to additional margin requirements, subsequent to March 31, 2022, the Company converted 0.8 million metric tons of financial hedges into fixed price physical sales over the next 12 months.

With these transactions, 1.4 million metric tons remain outstanding with 0.9 million metric tons projected to settle over the remainder of 2022.

On April 29, 2022, the Company had $535.9 million of margin posted.

For additional information regarding the Company’s coal derivative contracts and related margin requirements, refer to Part I, Item 3.

The Company had no outstanding borrowings and no availability under the Revolving Facility at June 30, 2022.

The Company issued a notice to terminate the facility on August 1, 2022 with an effective date of August 4, 2022.

To reduce exposure to additional margin requirements, during the six months ended June 30, 2022, the Company converted 0.8 million metric tons of financial hedges into fixed price physical sales over the next 12 months.

As of June 30, 2022, 0.9 million metric tons remain outstanding with 0.4 million metric tons projected to settle over the remainder of 2022.

On July 29, 2022, the Company had $529.2 million of margin posted.

For additional information regarding the Company’s coal derivative contracts, refer to Part I, Item 3.

“Quantitative and Qualitative Disclosures About Market Risk” of this Quarterly Report.

The Company’s total funded indebtedness (Indebtedness) as of March 31, 2022 and December 31, 2021 is presented in the table below.

Debt Instrument (defined below, as applicable) March 31, 2022 December 31, 2021

Collateral Requirements

In November 2020, the Company entered into an agreement with the providers of its surety bond portfolio to resolve previous collateral demands.

In accordance with the agreement, the Company initially provided $75.0 million of collateral, in the form of letters of credit.

The Company subsequently granted second liens on $200.0 million of certain mining equipment and is further required to post an additional $25.0 million of collateral per year from 2021 through 2024 for the benefit of the surety providers.

The collateral postings further increase to the extent the Company generates more than $100.0 million of free cash flow (as defined in the surety agreement) in any twelve-month period or has cumulative asset sales in excess of $10.0 million, as of the last quarter end during the term of the agreement.

Based upon the Company’s free cash flow through June 30, 2022, additional collateral of $13.0 million was posted during the three months ended March 31, 2022 and $25.7 million was posted subsequent to June 30, 2022, in the form of cash-collateralized letters of credit.

The Company is unable to accurately estimate future additional collateral postings due to the sensitivity of free cash flow to external market factors such as coal pricing.

Collateralized Letter of Credit Agreement

In February 2022, the Company entered into a new agreement, which provides up to $250.0 million of capacity for irrevocable standby letters of credit, expected to primarily support reclamation bonding requirements.

The agreement requires the Company to provide cash collateral at a level of 103% of the aggregate amount of letters of credit outstanding under the arrangement (limited to $5.0 million total excess collateralization.) Outstanding letters of credit bear a fixed fee in the amount of 0.75% per annum.

The Company receives a deposit rate of 0.35% per annum on the amount of cash collateral posted in support of letters of credit, with the rate subject to variation over time.

The agreement has an initial expiration date of December 31, 2025.

At June 30, 2022, collateralized letters of credit of $12.3 million were outstanding under the agreement.

The Company’s total indebtedness as of June 30, 2022 and December 31, 2021 is presented in the table below.

Debt Instrument (defined below, as applicable) June 30, 2022 December 31, 2021

(Dollars in millions)

11 unchanged sentences

Long-term debt $ 869.2 $ 1,078.2

The Company’s Indebtedness will require estimated principal and interest payments, assuming interest rates in effect at March 31, 2022, of approximately $60 million during the nine months ending December 31, 2022, and approximately $70 million in 2023, $455 million in 2024, $405 million in 2025, and $355 million thereafter.

Cash payments for interest related to the Company’s Indebtedness and financial assurance instruments amounted to $37.2 million and $56.3 million during the three months ended March 31, 2022 and 2021, respectively.

2021 Financing Activity

During the first quarter of 2021, the Company completed a series of transactions to, among other things, provide the Company with maturity extensions and covenant relief, while allowing it to maintain near-term operating liquidity and financial flexibility.

These transactions included a senior notes exchange and related consent solicitation, a revolving credit facility exchange, various amendments to the Company’s existing debt agreements, and completion of a related surety transaction support agreement with the Company’s surety bond providers.

Subsequent to these transactions in the first quarter of 2021, the Company completed additional financing transactions during 2021 intended to improve its capital structure.

Such transactions included the implementation of an at-the-market equity offering program pursuant to which the Company sold approximately 24.8 million shares of common stock for net cash proceeds of $269.8 million, the retirement of $270.9 million principal amount of existing debt through various open market purchases at an aggregate cost of $232.4 million, and the issuance of an aggregate 10.0 million shares of common stock in exchange for an additional $106.1 million principal amount of existing debt through multiple bilateral transactions with debt holders.

In the event of allowable open market purchases of its debt, the terms of the 2024 Peabody Notes and the letter of credit facility entered into by the Company in connection with the 2021 financing activity (Company LC Agreement) require the Company to make a mandatory repurchase offer to those debt and lien holders.

The Company’s indebtedness requires estimated contractual principal and interest payments, assuming interest rates in effect at June 30, 2022, of approximately $40 million during the six months ending December 31, 2022, and approximately $70 million in 2023, $400 million in 2024, $405 million in 2025, and $355 million thereafter.

However, as further described below, certain pending transactions to repurchase debt principal could alter the timing and amount of principal and interest payments.

Cash payments for interest related to the Company’s indebtedness and financial assurance instruments amounted to $40.6 million and $48.0 million during the three months ended June 30, 2022 and 2021, respectively, and $77.8 million and $104.3 million during the six months ended June 30, 2022 and 2021, respectively.

2021 Financing Activity and Subsequent Repurchases

During the first quarter of 2021, the Company completed a series of transactions to provide the Company with maturity extensions and covenant relief, while allowing it to maintain near-term operating liquidity.

These transactions included a senior notes exchange, a revolving credit facility exchange, various amendments to the Company’s existing debt agreements, and a support agreement with the Company’s surety bond providers.

Subsequent to these transactions, the Company completed additional financing transactions which included the implementation of an at-the-market equity offering program pursuant to which the Company sold approximately 24.8 million shares of common stock for net cash proceeds of $269.8 million, the retirement of $270.9 million principal amount of existing debt through various open market purchases at an aggregate cost of $232.4 million, and the issuance of an aggregate 10.0 million shares of common stock in exchange for an additional $106.1 million principal amount of existing debt through multiple bilateral transactions with debt holders.

In the event of open market purchases of its debt, the terms of the 2024 Peabody Notes - now redeemed as described below - required, and the letter of credit facility entered into by the Company in connection with the 2021 financing activity (Company LC Agreement) requires the Company to make repurchase offers to those debt and lien holders.

In general, the repurchase offers equate to 25% of the principal amount of priority lien debt repurchased in the preceding quarter at a price equal to the weighted average repurchase price paid over that quarter.

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The Company’s purchase of the principal and commitment amounts under the Company LC Agreement was effected by the posting of $28.5 million of collateral with the administrative agent and did not reduce the availability under the facility.

During the three months ended March 31, 2022, the Company made no other open market purchases of its debt.

The 2024 Co-Issuer Notes and the Co-Issuer Term Loans are also subject to mandatory prepayment offers at the end of each six-month period, beginning with June 30, 2021, whereby the Excess Cash Flow (as defined in the 2024 Co-Issuer Notes indenture) generated by the Wilpinjong Mine during each such period will be applied to the principal of such notes and loans on a pro rata basis, provided that the liquidity attributable to the Wilpinjong Mine would not fall below $60.0 million.

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Based upon the Wilpinjong Mine’s results for the six-month period ended December 31, 2021, a required offer to prepay $105.6 million of total principal resulted in the prepayment of $17.2 million of Co-Issuer Term Loans principal, $0.3 million of 2024 Co-Issuer Notes principal, and a related loss on early debt extinguishment of $0.5 million during the three months ended March 31, 2022.

The 2021 financing activity and related agreements are more fully described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, as filed with the U.S.

Securities and Exchange Commission on February 18, 2022.

Based upon the Wilpinjong Mine’s results for the six-month period ended June 30, 2022, the Company was required to offer to prepay $65.1 million of total principal subsequent to June 30, 2022.

The holders of the Co-Issuer Term Loans unanimously declined their $37.9 million pro rata portion of the offer and the $27.2 million pro rata portion of the offer to the holders of the 2024 Co-Issuer Notes will expire on August 29, 2022.

Voluntary repurchases of Co-Issuer Term Loans are permissible through a modified Dutch auction process.

During the three months ended June 30, 2022, the Company solicited bids under such process from all holders of Co-Issuer Term Loans for the repurchase of up to $50.0 million principal amount at prices acceptable to the Company.

The auction process resulted in the repurchase of $50.0 million principal amount at a weighted average price of 103.91%, or $52.0 million.

Additionally, the indenture which governs the 2024 Co-Issuer Notes requires that, within 30 business days following a repurchase of the Co-Issuer Term Loans such as that undertaken through the auction process described above, the Company must also offer to repurchase an equivalent principal amount of the 2024 Co-Issuer Notes at the equivalent purchase price.

As such, the required offer for $50.0 million aggregate principal amount was made by the Company on May 26, 2022 and subsequently increased to $93.9 million, at the Company’s discretion, subsequent to June 30, 2022.

Prior to expiration of the offer, an excess aggregate principal amount of 2024 Co-Issuer Notes had been validly tendered, but the terms of the offer limited the repurchase to $93.9 million.

The Company completed the repurchase on July 25, 2022 for $97.5 million.

The credit agreement which governs the Co-Issuer Term Loans requires parity between the holders of Co-Issuer Term Loans and holders of the 2024 Co-Issuer Notes with respect to repurchase offers.

Accordingly, the discretionary increase to the 2024 Co-Issuer Notes repurchase offer compelled the Company to offer to repurchase an additional $43.9 million of aggregate principal amount of Co-Issuer Term Loans at 103.91% subsequent to June 30, 2022.

The offer will expire on August 22, 2022.

Prior to June 30, 2022, the Company reached agreements to repurchase $22.6 million aggregate principal amount of its Senior Secured Term Loan for $21.3 million in open market transactions.

The repurchases settled subsequent to June 30, 2022.

As a result of these repurchases, the Company will offer to repurchase $5.7 million of priority lien obligations under the Company LC Agreement at approximately 94% during the three months ending December 31, 2022.

Retirement of 2022 Notes

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The Company used the proceeds of the offering of the 2028 Convertible Notes to redeem the remaining $62.6 million of its outstanding 2024 Peabody Notes and, together with available cash, approximately $257.4 million of its outstanding 2025 Notes, and to pay related premiums, fees and expenses relating to the offering of the 2028 Convertible Notes and the redemptions.

The redemption of existing notes was deemed a debt extinguishment for accounting purposes.

The Company capitalized $11.2 million of debt issuance costs related to the offering and recognized a loss on early debt extinguishment of $23.0 million during the three months ended March 31, 2022.

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The 2028 Convertible Notes will bear interest from March 1, 2022 at a rate of 3.250% per year payable semi-annually in arrears on March 1 and September 1 of each year, beginning on September 1, 2022.

During the three months ended March 31, 2022, the Company incurred interest expense of $1.0 million related to the 2028 Convertible Notes.

The 2028 Convertible Notes will be convertible at the option of the holders only in the following circumstances:

(1) during any calendar quarter commencing after the calendar quarter ending on June 30, 2022, if the last reported sale price per share of the Company’s common stock exceeds 130% of the conversion price for each of at least 20 trading days during the 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter;

(1) during any calendar quarter commencing after the calendar quarter ended on June 30, 2022, if the last reported sale price per share of the Company’s common stock exceeds 130% of the conversion price for each of at least 20 trading days during the 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter;

(2) during the five consecutive business days immediately after any five consecutive trading day period (such five consecutive trading day period, the Measurement Period) in which the trading price per $1,000 principal amount of 2028 Convertible Notes for each trading day of the Measurement Period was less than 98% of the product of the last reported sale price per share of the Company’s common stock on such trading day and the conversion rate on such trading day;

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Covenant Compliance

The Company was compliant with all relevant covenants under its debt agreements at March 31, 2022, including the minimum aggregate liquidity requirement under the Company LC Agreement which requires the Company’s restricted subsidiaries to maintain minimum aggregate liquidity of $125.0 million at the end of each quarter through December 31, 2024.

The Company’s restricted subsidiaries’ relevant liquidity amounted to $610.0 million at March 31, 2022.

The Company was compliant with all relevant covenants under its debt agreements at June 30, 2022, including the minimum aggregate liquidity requirement under the Company LC Agreement which requires the Company’s restricted subsidiaries to maintain minimum aggregate liquidity of $125.0 million at the end of each quarter through December 31, 2024.

The Company’s restricted subsidiaries’ relevant liquidity amounted to $930.7 million at June 30, 2022.

Accounts Receivable Securitization Program

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Funding capacity under the program may also be utilized for letters of credit in support of other obligations.

At March 31, 2022, the Company had no outstanding borrowings and $161.8 million of letters of credit issued under the program, which were primarily in support of portions of the Company’s reclamation obligations.

The Company was required to post $24.7 million of cash collateral under the Securitization Program at March 31, 2022.

At June 30, 2022, the Company had no outstanding borrowings and $161.5 million of letters of credit outstanding under the program, which were primarily in support of portions of the Company’s reclamation obligations.

The Company was not required to post cash collateral under the securitization program at June 30, 2022.

Cash Flows and Free Cash Flow

The following table summarizes the Company’s cash flows for the three months ended March 31, 2022 and 2021, as reported in the accompanying unaudited condensed consolidated financial statements.

The following table summarizes the Company’s cash flows for the six months ended June 30, 2022 and 2021, as reported in the accompanying unaudited condensed consolidated financial statements.

Free Cash Flow is a financial measure not recognized in accordance with U.S.

Refer to the “Reconciliation of Non-GAAP Financial Measures” section above for definitions and reconciliations to the most comparable measures under U.S.

Three Months Ended March 31,

Six Months Ended June 30,

(Dollars in millions)

Net cash (used in) provided by operating activities $ (273.7) $ 71.0

Net cash provided by (used in) operating activities $ 9.4 $ (22.8)

Net cash provided by (used in) investing activities 94.5 (82.6)

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Cash, cash equivalents and restricted cash at end of period $ 1,133.3 $ 561.9

Net cash (used in) provided by operating activities $ (273.7) $ 71.0

Net cash provided by (used in) operating activities $ 9.4 $ (22.8)

Net cash provided by (used in) investing activities 94.5 (82.6)

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Operating Activities.

The increase in net cash used in operating activities for the three months ended March 31, 2022 compared to the same period in the prior year was driven by a year-over-year increase in cash utilized to satisfy the margin requirements associated with derivative financial instruments ($351.6 million).

The increase in net cash provided by operating activities for the six months ended June 30, 2022 compared to the same period in the prior year was driven by a year-over-year increase in operating cash flow, primarily from Company’s mining operations ($446.3 million), partially offset by cash utilized to satisfy the margin requirements associated with derivative financial instruments ($414.1 million).

Investing Activities.

The increase in net cash provided by investing activities for the three months ended March 31, 2022 compared to the same period in the prior year was driven by higher distributions from related parties and joint ventures, on a net basis ($55.2 million), higher cash receipts from the Company’s equity method investments ($44.9 million), and lower capital expenditures and payments of capital accruals ($25.0 million).

The increase in net cash provided by investing activities for the six months ended June 30, 2022 compared to the same period in the prior year was driven by higher cash receipts from Middlemount ($140.9 million) and lower capital expenditures and payments of capital accruals ($25.2 million).

Financing Activities.

The increase in net cash provided by financing activities for the three months ended March 31, 2022 compared to the same period in the prior year was driven by cash proceeds from long-term debt and common stock issuances ($545.0 million and $222.0 million, respectively), partially offset by higher repayments of debt principal ($559.7 million) and higher distributions to non-controlling interests ($13.7 million).

The increase in net cash provided by financing activities for the six months ended June 30, 2022 compared to the same period in the prior year was driven by higher cash proceeds from long-term debt and common stock issuances ($545.0 million and $156.9 million, respectively), partially offset by higher repayments of debt principal ($571.7 million) and higher distributions to non-controlling interests ($13.7 million).

Off-Balance-Sheet Arrangements

In the normal course of business, the Company is a party to various guarantees and financial instruments that carry off-balance-sheet risk and are not reflected in the accompanying condensed consolidated balance sheets.

At March 31, 2022, such instruments inc lude d $1,484.9 million of surety bonds and $469.1 million o f letters of credit.

At June 30, 2022, such instruments inc lude d $1,453.5 million of surety bonds and $475.1 million o f letters of credit.

Such financial instruments provide support for its reclamation bonding requirements, lease obligations, insu rance policies and various other performance guarantees.

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The Company does not expect any material losses to result from these guarantees or off-balance-sheet instruments in excess of liabilities provided for in its condensed consolidated balance sheets.

As of March 31, 2022, the Company was party to financial instruments with off-balance-sheet risk in support of the following obligations:

As of June 30, 2022, the Company was party to financial instruments with off-balance-sheet risk in support of the following obligations:

Reclamation Health and welfare (1)

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Surety bonds and bank guarantees $ 1,276.9 $ 40.5 $ 84.2 $ 35.0 $ 16.9 $ 1,453.5

Letters of credit outstanding under letter of credit facility 206.0 89.2 7.1 5.0 — 307.3

Letters of credit outstanding under letter of credit facilities 212.5 89.3 6.8 5.0 — 313.6

Letters of credit outstanding under accounts receivable securitization program 133.9 17.6 10.0 — — 161.5

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(4) Serve as collateral for certain surety bonds at the request of surety bond providers.

The Company has also posted $9.1 million in incremental collateral directly with the beneficiary that is not supported by a surety bond.

The Company has also posted $9.1 million in incremental cash collateral directly with the beneficiary that is not supported by a surety bond.

Financial assurances associated with new reclamation bonding requirements, surety bonds or other obligations may require additional collateral in the form of cash or letters of credit causing a decline in the Company’s liquidity.

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This change in practice has had an unfavorable impact on its liquidity due to increased collateral requirements and surety and related fees.

At March 31, 2022, the Company had total asset retirement obligations of $724.5 million which were backed by a combination of surety bonds, bank guarantees and letters of credit.

At June 30, 2022, the Company had total asset retirement obligations of $725.1 million which were backed by a combination of surety bonds, bank guarantees and letters of credit.

Bonding requirement amounts may differ significantly from the re lated asset retirement obligation because such requirements are calculated under the assumption that reclamation begins currently, whereas the Company’s accounting liabilities are discounted from the end of a mine’s economic life (when final reclamation work would begin) to the balance sheet date.

Guarantees and Other Financial Instruments with Off-Balance-Sheet Risk.

“Financial Instruments and Other Guarantees” in the Company’s unaudited condensed consolidated financial statements for a discussion of its accounts receivable securitization program and guarantees and other financial instruments with off-balance-sheet risk.

Critical Accounting Policies and Estimates

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Actual results may differ from these estimates.

At March 31, 2022, the Company identified certain assets with an aggregate carrying value of approximately $0.5 billion in its Other U.S.

Thermal Mining and Corporate and Other segments whose recoverability is most sensitive to customer demand, customer concentration risk and future economic viability.

The Company conducted a review of those assets as of March 31, 2022 and determined that no impairment charges were necessary as of that date.

The Company’s critical accounting policies and estimates are discussed in Item 7.

“Management’s Discussion and Analysis of Financial Condition and Results of Operations” in its Annual Report on Form 10-K for the year ended December 31, 2021.

The Company’s critical accounting policies remain unchanged at March 31, 2022, and there have been no material changes in the Company’s critical accounting estimates.

The Company’s critical accounting policies remain unchanged at June 30, 2022, and there have been no material changes in the Company’s critical accounting estimates.

Newly Adopted Accounting Standards and Accounting Standards Not Yet Implemented

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis