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Item 7. Management’s Discussion and Analysis

2025-02-20 compared with 2024-02-23 · 275 added, 239 removed, 427 unchanged (55% of the section changed)

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For discussion and analysis of the year ended December 31, 2023 compared to the year ended December 31, 2022, please refer to Item 7 of Part II, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Peabody’s Annual Report on Form 10-K for the year ended December 31, 2023, which was filed with the SEC on February 23, 2024 and is incorporated by reference herein.

Peabody Energy Corporation 2023 Form 10-K

Non-GAAP Financial Measures

The following discussion of Peabody’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.

The following discussion of Peabody’s results of operations includes references to and analysis of Adjusted EBITDA and Total 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.

Adjusted EBITDA is used by the chief operating decision maker, defined as Peabody’s President and Chief Executive Officer, as the primary financial metric to measure each segment’s operating performance against expected results and to allocate resources, including capital investment in mining operations and potential expansions.

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

Peabody Energy Corporation 2024 Form 10-K

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

These metrics are used by management to measure each of its reporting segments’ operating performance.

These metrics are used by management to measure each reporting segment’s operating performance.

Management believes Costs per Ton and Adjusted EBITDA Margin per Ton best reflect controllable costs and operating results at the reporting segment level.

The Company considers all measures reported on a per ton basis to be operating/statistical measures;

however, the Company includes reconciliations of the related non-GAAP financial measures (Adjusted EBITDA and Total Reporting Segment Costs) in the “Reconciliation of Non-GAAP Financial Measures” section contained within this Item 7.

In its discussion of liquidity and capital resources, the Company includes references to Available Free Cash Flow (AFCF) which is also a non-GAAP financial measure.

AFCF is used by management as a measure of its ability to generate excess cash flow from its business operations.

Peabody believes non-GAAP performance measures are used by investors to measure its operating performance.

however, the Company includes reconciliations of the related non-GAAP financial measures (Adjusted EBITDA and Total Segment Costs) in the “Reconciliation of Non-GAAP Financial Measures” section contained within this Item 7.

Peabody believes non-GAAP measures are used by investors to measure its operating performance.

These measures are not intended to serve as alternatives to U.S.

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Thermal and Corporate and Other.

The business of the Company’s seaborne operating platform is primarily export focused with customers spread across several countries, with a portion of its thermal and metallurgical coal sold within Australia.

Generally, revenue from individual countries vary year by year based on electricity and steel demand, the strength of the global economy, governmental policies and several other factors, including those specific to each country.

The Company’s seaborne operating platform is primarily export focused with customers spread across several countries, with a portion of its thermal and metallurgical coal sold within Australia.

Generally, revenue from individual countries varies year by year based on electricity and steel demand, the strength of the global economy, governmental policies and several other factors, including those specific to each country.

The Company classifies its seaborne mines within the Seaborne Thermal or Seaborne Metallurgical segments based on the primary customer base and coal reserve type of each mining operation.

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Additionally, the Company may market some of its metallurgical coal products as a thermal coal product from time to time depending on market conditions.

Peabody’s Seaborne Thermal and Seaborne Metallurgical segments contributed approximately 70% of the Company’s total Adjusted EBITDA from its mining operations during the year ended December 31, 2024.

The Company’s Seaborne Thermal operations consist of mines in New South Wales, Australia.

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The metallurgical coal qualities include hard coking coal, semi-hard coking coal, semi-soft coking coal and pulverized coal injection coal.

The principal business of the Company’s thermal operating segments in the U.S.

is the mining, preparation and sale of thermal coal, sold primarily to electric utilities in the U.S.

The Company’s thermal operating segments in the U.S.

are focused on the mining, preparation and sale of thermal coal, sold primarily to electric utilities in the U.S.

under long-term contracts, with a relatively small portion sold as international exports as conditions warrant.

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Thermal operations mine both bituminous and sub-bituminous coal deposits.

Peabody’s Powder River Basin and Other U.S.

Thermal segments contributed approximately 30% of the Company’s total Adjusted EBITDA from its mining operations during the year ended December 31, 2024.

The Company’s Corporate and Other segment includes selling and administrative expenses, results from equity method investments, trading and brokerage activities, minimum charges on certain transportation-related contracts, the closure of inactive mining sites, the impact of foreign currency remeasurement and certain commercial matters.

Peabody Energy Corporation 2024 Form 10-K

The Company’s Corporate and Other segment includes selling and administrative expenses, results from equity affiliates, corporate hedging activities, trading and brokerage activities, minimum charges on certain transportation-related contracts, the closure of inactive mining sites and certain commercial matters.

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Resource Management.

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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 ongoing geopolitical events, including the Russian-Ukrainian conflict.

Furthermore, inflationary pressures and supply chain constraints contributed to rising costs during the twelve months ended December 31, 2023.

While supply chain constraints eased and inflation somewhat moderated in 2023, future periods could continue to be impacted.

As future developments related to geopolitical conflict, supply chain disruptions and rising inflation are unknown, the global coal industry data for the twelve months ended December 31, 2023 presented herein may not be indicative of their ultimate impacts.

Within the global coal industry, supply and demand for its products and the supplies used for mining continue to be impacted by the ongoing Russian-Ukrainian conflict.

As future developments related to the Russian-Ukrainian conflict and geopolitical instability in key energy producing regions are unknown, the global coal industry data for the twelve months ended December 31, 2024 presented herein may not be indicative of their ultimate impacts.

Peabody Energy Corporation 2024 Form 10-K

Within the seaborne metallurgical coal market, the volatility which characterized the first nine months of 2023 continued during the balance of the year.

Excluding China, the steel sector showed positive growth in crude steel output during the three months ended December 31, 2023, led mainly by India and its ongoing strong economic expansion.

Total crude steel output during the period, however, contracted because of a sharp decline in Chinese production where steel producers reported thin margins and slower domestic demand.

Metallurgical coal prices contracted over the three months ended December 31, 2023, however supply constraints for premium material, especially in Australia due to weather disruptions, did provide support to the price of premium hard coking coals that are usually core to steel maker’s metallurgical coal requirements.

In comparison, non-premium coals such as pulverized coal injection coal and semi soft coking coals observed more substantial price decreases.

The seaborne metallurgical coal market is expected to remain volatile in the near term, influenced by both the availability of premium quality export coals and the economic performance of China, India and elsewhere.

Within the seaborne thermal coal market, seasonal demand trends and increased rates of Australian exports contributed to global thermal coal prices becoming rangebound during the three months ended December 31, 2023.

In China, despite domestic coal production and renewable generation being strong through the twelve months ended December 31, 2023, a record quantity of imports were observed during the same period lending support to seaborne thermal market growth and price stability year-over-year.

Overall, global thermal coal markets remain turbulent amid ample supply and seasonal demand requirements, as well as volatile global markets for oil and natural gas.

In the United States, overall electricity demand decreased approximately 1% year-over-year, negatively impacted by weather.

During the year ended December 31, 2023, electricity generation from thermal coal has declined year-over-year due to low natural gas prices and stronger renewable generation despite lower overall electricity demand.

Coal’s share of electricity generation has declined to approximately 16% for the year ended December 31, 2023, while wind and solar’s combined generation share has increased to 16% and the share of natural gas generation has increased to 42%.

While coal inventories slightly recovered over the summer, this trend reversed and stock levels ended the year approximately 45% higher than the levels at the end of 2022.

During the year ended December 31, 2023, utility consumption of PRB coal declined approximately 18% compared to the prior year period.

Department of Labor Settlement

On August 8, 2023, the Company entered into a settlement agreement with the U.S.

Department of Labor to resolve a liability dispute regarding the federal black lung claims of the Company’s previously divested legacy operations of Patriot Coal Corporation and certain of its wholly-owned subsidiaries (Patriot).

In accordance with the settlement agreement, the Company paid $72.0 million to settle the Patriot federal black lung claims, with the exception of approximately $4.2 million of certain claims for attorney’s fees and additional compensation due to claimants not paid during appeal.

As a result of the settlement, the Company recognized a $3.9 million gain within “(Loss) income from discontinued operations, net of income taxes” during the year ended December 31, 2023.

Surety Agreement Amendment and Shareholder Return Program

On April 14, 2023, the Company amended its existing agreement with the providers of its surety bond portfolio, dated November 6, 2020.

Under the agreement, the Company was required to post collateral on a periodic basis.

Pursuant to the amendment, the Company and its surety bond providers agreed to (i) establish a combined maximum collateral cap, (ii) remove the restrictions on shareholder returns contained in the original agreement, subject to a minimum liquidity threshold, and (iii) extend the expiration date of the existing agreement from December 31, 2025 to December 31, 2026.

Peabody also terminated the then-existing letter of credit facility which was previously used primarily for surety collateral, further reducing interest costs and increasing financial flexibility.

On April 17, 2023, the Company announced that its Board approved a new shareholder return framework which includes a share repurchase plan, a fixed quarterly cash dividend and a variable quarterly cash dividend component.

The Board also approved a new share repurchase program authorizing repurchases up to $1.0 billion of the Company’s common stock.

Refer to the “Liquidity and Capital Resources” section contained within this Item 7 for a further discussion of the surety agreement amendment.

On March 29, 2023, the Company’s Shoal Creek Mine experienced a fire involving void fill material utilized to stabilize the roof structure of the mine.

On June 20, 2023, the Company announced that the Shoal Creek Mine, in coordination with the Mine Safety and Health Administration, had safely completed localized sealing of the affected area of the mine.

In November 2023, longwall coal production commenced in a new area of the mine.

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Within the seaborne metallurgical coal market, coking coal prices retreated from a high base during the twelve months ended December 31, 2024.

Parts of the global steel market reported tepid demand and thin profit margins during this period, restricting demand growth for metallurgical coal.

In China, weakness in the property sector contributed to lower domestic steel demand and steel production in 2024 and supported increased steel exports.

The increased availability of competitively priced Chinese imports has placed pressure on steel margins for steel producers in other countries.

Despite this, India recorded year-over-year steel production growth supported by increased domestic demand and commissioning of new steelmaking facilities.

Meanwhile, the global supply of coking coal has been generally sufficient to meet coking coal demand during the twelve months ended December 31, 2024, despite various supply disruption events such as shipping interruptions at the U.S.’s Baltimore, Maryland port.

In the PCI segment, prices traded at a wide discount to coking coal early in the year, caused in part by reduced steel making productivity targets under thin margin conditions.

PCI price relativities to coking coal have since improved.

Overall, the market for metallurgical coal remains marginally balanced and exposed to volatility, influenced by the rate of exports from Australia and economic performance in China, India and elsewhere.

Within the seaborne thermal coal market, global thermal coal prices have remained relatively stable throughout the twelve months ended December 31, 2024, driven by healthy supply meeting elevated demand in Asian markets.

In China, overall total generation demand has been elevated while domestic coal production has only grown slightly, which has driven stronger coal import demand year-over-year through the twelve months ended December 31, 2024.

In India, strong growth in coal generation has supported increased import demand, despite elevated domestic coal production.

Looking ahead, global thermal coal markets remain turbulent amid winter weather outlooks in the Northern Hemisphere, lower industrial activity, as well as volatile global natural gas markets.

In the U.S., overall electricity demand increased approximately 3% year-over-year.

Through the twelve months ended December 31, 2024, electricity generation from thermal coal has decreased year-over-year driven by continued low natural gas prices and stronger renewable generation.

Coal’s share of electricity generation has declined to approximately 15% for the twelve months ended December 31, 2024, while wind and solar’s combined generation share is at 17% and the share of natural gas generation has remained level at 43%.

coal inventories have modestly declined through December 31, 2024, with stockpiles less than 10 million tons below levels seen at the end of 2023.

During the twelve months ended December 31, 2024, utility consumption of PRB coal has declined compared to the prior year period.

Planned Acquisition

On November 25, 2024, Peabody entered into definitive agreements with Anglo, to acquire a portion of the assets and businesses associated with Anglo’s metallurgical coal portfolio in Australia, including the Moranbah North and Grosvenor mines, the Moranbah South development project, the Capcoal complex, the Roper Creek mine and the Dawson complex (comprising the Dawson Main/Central, Dawson South, Dawson South Exploration and Theodore South exploration mines, collectively, the Dawson Assets).

Following the prospective closing of the Anglo acquisition, the Company is contracted to sell the Dawson Assets to BUMA.

Peabody has secured a bridge facility commitment to finance the acquisition.

The Company intends to replace the bridge facility with permanent financing, including debt capacity, additional investment by existing joint venture partners and other financing to supplement as warranted.

The acquisition is expected to close in the second quarter of 2025, subject to regulatory approvals, completion of preemptive rights processes and satisfaction of other customary closing conditions.

“Long-term Debt” and Note 17.

“Other Events” for further information.

Centurion Mine

Peabody’s development of the Centurion Mine, an underground longwall metallurgical coal mine in Queensland, Australia, continues to advance as planned.

During the year ended December 31, 2024, four continuous miners units were put into production and the first development coal was produced, washed and sold.

The Company is targeting the commencement of longwall production in the first quarter of 2026.

Approximately $300 million of the $489 million of capital expenditures to reach longwall production had been completed as of December 31, 2024.

Wards Well Acquisition .

On April 16, 2024 the Company acquired the southern part of the Wards Well tenements (Wards Well) which are adjacent to the Company’s Centurion Mine in Queensland, Australia.

The acquisition was completed for total consideration of $153.4 million, consisting of cash consideration of $134.4 million, cash transaction costs of $9.4 million and the non-cash settlement of existing receivables with the acquiree of $9.6 million.

Peabody Energy Corporation 2024 Form 10-K

During the year ended December 31, 2023, the Company recorded a provision for loss of $28.7 million related to the fire.

The provision includes $17.8 million related to longwall development and other costs and $10.9 million for equipment deemed inoperable within the affected area of the mine.

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The agreement also includes an initial contingent royalty of up to $200 million.

The royalty will only be payable once the Company has recovered its investment and development costs of Wards Well and if the average sales price achieved exceeds certain thresholds.

No royalty is payable if the Company does not commence mining Wards Well.

Shoal Creek Insurance Recovery .

On March 29, 2023, the Company’s Shoal Creek Mine experienced a fire.

In October 2023, the Company filed an insurance claim against applicable insurance policies with combined business interruption and property loss limits of $125 million above a $50 million deductible.

On June 23, 2023, the Company’s North Antelope Rochelle Mine sustained damage from a tornado which led to a temporary suspension of operations.

The mine resumed operations on June 25, 2023.

During the year ended December 31, 2023, the Company recorded a provision for loss of $12.2 million related to the tornado damage.

The combined provision includes $4.0 million for materials and supplies inventories, $1.0 million for buildings and equipment and $7.2 million for incremental repair costs.

The Company anticipates that incremental repair costs will continue to be recorded in early 2024.

The Company entered into a definitive agreement dated October 26, 2023, with Stanmore SMC Pty Ltd (Stanmore) to acquire the southern part of Stanmore’s Wards Well tenements (Wards Well area) which are adjacent to the Company’s Centurion Mine in Queensland, Australia.

The acquisition terms include cash consideration of $136 million and a contingent royalty of up to $200 million.

The royalty will only be payable once the Company has recovered its investment and development costs of the Wards Well area and if the average sales price achieved exceeds certain thresholds.

No royalty is payable if the Company does not commence mining in the Wards Well area.

Completion of the transaction is subject to the satisfaction of certain conditions, including regulatory approvals.

During June 2024, the Company reached a settlement and recognized a $109.5 million insurance recovery, which the Company included in its results of operations during the year ended December 31, 2024.

Results of Operations

Year Ended December 31, 2024 Compared to Year Ended December 31, 2023

The decrease in income from continuing operations, net of income taxes for the year ended December 31, 2023 compared to the prior year ($501.4 million) was primarily driven by a higher income tax provision ($347.6 million);

decreased results from equity affiliates ($124.3 million);

higher operating costs and expenses ($94.3 million), which reflect increased sales price sensitive costs and inflationary pressures for commodities, materials, services, repairs and labor;

and a provision of $40.9 million related to the losses at NARM and Shoal Creek.

These unfavorable variances were partially offset by lower net interest expense ($188.0 million).

Revenue for the year ended December 31, 2023 was comparatively flat compared to the prior year.

Lower revenue from the operating segments ($262.3 million) driven by decreases in seaborne coal pricing, were offset by net unrealized mark-to-market gains on derivative contracts related to forecasted coal sales ($194.8 million) and revenue related to the Company’s assignment of rights to its excess port and rail capacity ($25.9 million).

The decrease in income from continuing operations, net of income taxes for the year ended December 31, 2024 compared to the prior year ($408.7 million) was primarily driven by lower revenue ($710.0 million) due to lower seaborne coal pricing, volume decreases in the U.S.

thermal segments and no unrealized mark-to-market gains from derivative contracts related to forecasted sales in the current year.

This unfavorable variance was partially offset by a lower income tax provision ($200.0 million) and the current year insurance recovery at the Shoal Creek Mine ($109.5 million).

Adjusted EBITDA for the year ended December 31, 2024 reflected a year-over-year decrease of $492.2 million.

The following table presents tons sold by operating segment:

(Decrease) Increase

Increase (Decrease)

Year Ended December 31, to Volumes

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Peabody Energy Corporation 2024 Form 10-K

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Supplemental Financial Data

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2024 2023 $ %

Revenue per Ton - Mining Operations (1)

Revenue per Ton (1)

Seaborne Thermal $ 73.88 $ 85.94 $ (12.06) (14.0) %

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Thermal 56.38 54.77 1.61 2.9 %

Costs per Ton - Mining Operations (1) (2)

Costs per Ton (1) (2)

Seaborne Thermal $ 47.71 $ 48.66 $ (0.95) (2.0) %

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Thermal 46.04 41.98 4.06 9.7 %

Adjusted EBITDA Margin per Ton - Mining Operations (1) (2)

Adjusted EBITDA Margin per Ton (1) (2)

Seaborne Thermal $ 26.17 $ 37.28 $ (11.11) (29.8) %

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amortization of take-or-pay contract-based intangibles;

insurance recoveries;

and certain other costs related to post-mining activities.

The following table presents revenue by reporting segment:

(Decrease) Increase

Year Ended December 31, to Revenue

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Seaborne Thermal.

The decrease in segment revenue during the year ended December 31, 2023 compared to the prior year was due to unfavorable realized prices ($273.2 million) driven by an approximately 20% decrease in export pricing, offset by favorable export volumes ($257.3 million).

The decrease in segment revenue during the year ended December 31, 2024 compared to the prior year was due to unfavorable realized prices ($228.0 million), offset by favorable volume ($112.2 million).

Seaborne Metallurgical.

Segment revenue decreased during the year ended December 31, 2023 compared to the prior year due to unfavorable realized prices ($324.8 million) and unfavorable volumes from the Shoal Creek Mine resulting from the fire in the first quarter of 2023 ($122.9 million), partially offset by favorable volumes from the Australian operations ($132.7 million).

Segment revenue decreased during the year ended December 31, 2024 compared to the prior year due to unfavorable realized prices and volume ($356.3 million) from the Australian operations.

These decreases were partially offset by favorable results from the Shoal Creek Mine ($110.0 million) due to favorable volume which offset unfavorable realized prices.

Powder River Basin.

Segment revenue increased during the year ended December 31, 2023 compared to the prior year due to favorable realized prices ($74.1 million) and favorable volumes ($58.5 million) resulting from improved rail performance.

Segment revenue decreased during the year ended December 31, 2024 compared to the prior year primarily due to unfavorable volume ($100.2 million) resulting from decreased demand driven by low natural gas pricing and mild weather.

Peabody Energy Corporation 2024 Form 10-K

The decrease in segment revenue during the year ended December 31, 2023 compared to the prior year was due to unfavorable volumes ($107.2 million) resulting from decreased demand, offset by favorable realized prices ($43.2 million).

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The decrease in segment revenue during the year ended December 31, 2024 compared to the prior year was due to unfavorable volume ($49.8 million) resulting from decreased demand driven by low natural gas pricing and mild weather and unfavorable realized prices ($34.9 million), partially offset by increased revenue from sales contract cancellation settlements ($19.1 million).

Corporate and Other.

Segment revenue increased during the year ended December 31, 2023 compared to the prior year due to net unrealized mark-to-market gains on derivative contracts related to forecasted coal sales in the current year compared to net unrealized mark-to-market losses in the prior year ($194.8 million) and revenue related to the Company’s assignment of rights to its excess port and rail capacity ($25.9 million).

Segment revenue decreased during the year ended December 31, 2024 compared to the prior year due to no unrealized mark-to-market gains from derivative contracts related to forecasted sales in the current year ($159.0 million) as all derivative contracts settled in 2023 and prior year revenue related to the Company’s assignment of rights to its excess port and rail capacity ($25.9 million).

Segment Costs

The following table presents costs by reporting segment:

Increase (Decrease)

Year Ended December 31, to Total

Segment Costs

2024 2023 $ %

(Dollars in millions)

Seaborne Thermal $ 783.9 $ 752.9 $ 31.0 4.1 %

Seaborne Metallurgical 893.9 863.8 30.1 3.5 %

Powder River Basin 960.2 1,044.4 (84.2) (8.1) %

Thermal 671.8 680.7 (8.9) (1.3) %

Corporate and Other 64.5 11.6 52.9 456.0 %

Total Segment Costs (1)

$ 3,374.3 $ 3,353.4 $ 20.9 0.6 %

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

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

Seaborne Thermal.

The increase in segment costs during the year ended December 31, 2024 compared to the prior year was primarily driven by favorable volume (0.9 million tons) which resulted in higher sales related costs ($16.9 million) and higher variable costs for labor, repairs and outside services ($12.8 million), slightly offset by favorable commodity pricing ($8.4 million).

Seaborne Metallurgical.

Segment costs increased during the year ended December 31, 2024 compared to the prior year due to increased volume from the Shoal Creek Mine ($56.1 million), higher costs at the Australian operations primarily due to production challenges ($21.3 million) and increased taxes and insurance ($11.0 million) driven by Australian carbon taxes.

The increases were offset by lower sales related costs ($66.2 million) at the Australian operations due to lower sales volumes and lower pricing.

Powder River Basin.

The decrease in segment costs during the year ended December 31, 2024 compared to the prior year was primarily driven by unfavorable volume (7.6 million tons) which resulted in lower sales price sensitive costs ($44.4 million) and lower variable costs for labor, repairs and outside services ($32.3 million) and favorable commodity pricing ($21.7 million).

These decreases were partially offset by increased lease spend ($14.3 million).

The decrease in segment costs during the year ended December 31, 2024 compared to the prior year was primarily driven by lower costs for labor, repairs and outside services due to lower sales volume (1.6 million tons).

Corporate and Other.

Segment costs increased during the year ended December 31, 2024 compared to the prior year primarily due to unfavorable foreign currency rate changes.

Peabody Energy Corporation 2024 Form 10-K

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Adjusted EBITDA

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

(Decrease) Increase to

Year Ended December 31, Adjusted EBITDA

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Seaborne Thermal.

Segment Adjusted EBITDA decreased during the year ended December 31, 2023 compared to the same period in the prior year as a result of lower realized prices net of sales sensitive costs ($248.7 million) and unfavorable operational costs ($55.7 million) resulting from higher costs for repairs, maintenance and labor.

The decreases were offset by favorable export volumes ($228.1 million).

Segment Adjusted EBITDA decreased during the year ended December 31, 2024 compared to the same period in the prior year as a result of lower realized prices net of sales price sensitive costs ($225.2 million), partially offset by favorable volume and mix variances ($58.0 million).

Seaborne Metallurgical.

Segment Adjusted EBITDA decreased during the year ended December 31, 2023 compared to the same period in the prior year due to lower realized prices net of sales sensitive costs ($285.4 million) and unfavorable operational costs ($54.0 million) resulting from higher costs for repairs, maintenance and labor at the Australian operations.

Segment Adjusted EBITDA decreased during the year ended December 31, 2024 compared to the same period in the prior year due to lower realized prices net of sales price sensitive costs ($294.5 million) and unfavorable operational costs ($106.3 million).

These decreases were offset by favorable volume ($112.0 million), despite the lock outages during 2024, driven by increased production from the Shoal Creek Mine following the fire in the first quarter of 2023, and the Shoal Creek insurance recovery ($80.8 million).

Powder River Basin.

Segment Adjusted EBITDA increased during the year ended December 31, 2023 compared to the same period in the prior year as a result of favorable commodity pricing and usage ($33.4 million);

favorable volumes ($24.7 million);

higher realized prices net of sales sensitive costs ($19.1 million);

and decreased overburden removal costs ($14.5 million).

The increases were partially offset by higher costs for materials, services, repairs and labor ($9.4 million) due in part to timing, increased repairs for an aging equipment fleet and inflationary pressures on materials and services.

Segment Adjusted EBITDA decreased during the year ended December 31, 2023 compared to the same period in the prior year due to unfavorable volumes ($76.8 million) and higher costs for labor ($14.2 million) due in part to increased headcounts.

These decreases were offset by higher realized prices net of sales sensitive costs ($32.3 million) and favorable commodity pricing ($19.4 million).

Peabody Energy Corporation 2023 Form 10-K

Segment Adjusted EBITDA decreased during the year ended December 31, 2024 compared to the same period in the prior year as a result of unfavorable volume ($50.3 million) and increased lease spend ($14.3 million).

These decreases were offset by lower costs for labor, repairs and outside services ($32.3 million) and favorable commodity pricing ($21.7 million).

Segment Adjusted EBITDA decreased during the year ended December 31, 2024 compared to the same period in the prior year due to unfavorable volume ($63.1 million) and lower realized prices net of sales price sensitive costs ($34.5 million).

These decreases were offset by increased sales contract cancellation settlements ($19.1 million) and lower costs for labor, repairs and outside services ($12.0 million).

Corporate and Other Adjusted EBITDA.

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

(Decrease) Increase

Year Ended December 31, to Income

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(2) Includes gains (losses) on certain surplus coal reserve, coal resource 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 Centurion Mine and expenses related to the Company’s other commercial activities.

Corporate and Other Adjusted EBITDA decreased during the year ended December 31, 2023 compared to the same period in the prior year due to unfavorable variances in Middlemount’s results driven by a 30% decrease in sales pricing and lower sales volumes, offset by revenue related to the Company’s assignment of rights to its excess port and rail capacity ($25.9 million).

(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, results from the Company’s equity method investment in renewable energy joint ventures, costs associated with suspended operations including the Centurion Mine, the impact of foreign currency remeasurement and expenses related to the Company’s other commercial activities.

Peabody Energy Corporation 2024 Form 10-K

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Corporate and Other Adjusted EBITDA decreased during the year ended December 31, 2024 compared to the same period in the prior year due to the unfavorable net impact of foreign currency rate changes ($28.4 million), prior year revenue related to the Company’s assignment of rights to its excess port and rail capacity ($25.9 million) and unfavorable trading results ($19.0 million).

Income From Continuing Operations, Net of Income Taxes

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Restructuring charges (4.4) (3.3) (1.1) (33.3) %

Transaction costs related to business combinations (10.3) — (10.3) n.m.

Asset impairment — (2.0) 2.0 100.0 %

Provision for NARM and Shoal Creek losses (40.9) — (40.9) n.m.

Provision for NARM and Shoal Creek losses (3.7) (40.9) 37.2 91.0 %

Shoal Creek insurance recovery - property damage 28.7 — 28.7 n.m.

Changes in amortization of basis difference related to equity affiliates 1.8 1.6 0.2 12.5 %

Interest expense (59.8) (140.3) 80.5 57.4 %

Interest expense, net of capitalized interest (46.9) (59.8) 12.9 21.6 %

Net loss on early debt extinguishment — (8.8) 8.8 100.0 %

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6.1 0.3 5.8 1,933.3 %

Unrealized gains (losses) on derivative contracts related to forecasted sales 159.0 (35.8) 194.8 544.1 %

Unrealized gains (losses) on foreign currency option contracts 7.4 (2.3) 9.7 421.7 %

Unrealized gains on derivative contracts related to forecasted sales — 159.0 (159.0) (100.0) %

Unrealized (losses) gains on foreign currency option contracts (9.0) 7.4 (16.4) (221.6) %

Take-or-pay contract-based intangible recognition 3.0 2.5 0.5 20.0 %

Income tax (provision) benefit (308.8) 38.8 (347.6) (895.9) %

Income tax provision (108.8) (308.8) 200.0 64.8 %

Income from continuing operations, net of income taxes $ 407.3 $ 816.0 $ (408.7) (50.1) %

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

Peabody Energy Corporation 2023 Form 10-K

Depreciation, Depletion and Amortization.

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

Increase (Decrease)

(Decrease) Increase

Year Ended December 31, to Income

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Total $ (343.0) $ (321.4) $ (21.6) (6.7) %

Peabody Energy Corporation 2024 Form 10-K

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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 operating segments:

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Thermal 1.63 1.23

The decreases in the weighted-average depletion rate per ton for both the Seaborne Thermal and the Seaborne Metallurgical segments during the year ended December 31, 2023 compared to the same period in the prior year reflects the impact of volume and mix variances across the segment.

Asset Impairment.

The Company recognized $2.0 million in aggregate asset impairment charges during the year ended December 31, 2023 related to an investment in equity securities.

Aggregate asset impairment charges of $11.2 million recognized during the prior year were related to the sale of certain land interests and an investment in equity securities.

Depreciation, depletion and amortization expense increased during the year ended December 31, 2024 compared to the same period in the prior year primarily due to increased depreciation resulting from asset additions and shortened mine lives.

Depletion expense increased primarily as a result of increased volume from the Shoal Creek Mine.

The increases in the weighted-average depletion rate per ton for both the Seaborne Metallurgical and the Other U.S.

Thermal segments during the year ended December 31, 2024 compared to the same period in the prior year reflect the impact of volume and mix variances across the segments.

Transaction Costs Related to Business Combinations.

The charges recorded during the current year period relate to the planned acquisition of multiple metallurgical coal mines from Anglo which was announced during the fourth quarter of 2024.

Refer to Note 17.

“Asset Impairment” to the accompanying consolidated financial statements for further information regarding the nature and composition of those charges, which information is incorporated herein by reference.

“Other Events” to the accompanying consolidated financial statements for further information regarding the planned acquisition, which information is incorporated herein by reference.

Provision for NARM and Shoal Creek Losses.

A provision of $40.9 million was recorded during the year ended December 31, 2023 for losses and ongoing incremental repair costs related to the events at NARM and the Shoal Creek Mine, as discussed in Note 17.

The provision recorded during the prior year period was for losses related to the events at the NARM and Shoal Creek Mines as discussed in Note 17.

“Other Events” to the accompanying consolidated financial statements.

Interest Expense.

The decrease in interest expense during the year ended December 31, 2023 compared to the prior year primarily reflects debt retirements completed by the Company during 2022 as further described in Note 10.

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

Incremental repair costs related to the tornado damage at NARM were recorded during the year ended December 31, 2024.

Shoal Creek Insurance Recovery - Property Damage .

During June 2024, the Company reached a settlement related to the Shoal Creek losses and recorded a $109.5 million insurance recovery, as discussed in Note 17.

“Other Events” in the accompanying consolidated financial statements.

Of this amount, Adjusted EBITDA excludes an allocated amount applicable to losses recognized at the time of the insurance recovery related to longwall development and equipment deemed inoperable within the affected area of the mine, which consisted of $28.7 million recognized during the year ended December 31, 2023.

The remaining $80.8 million, applicable to incremental costs and business interruption recoveries, is included in Adjusted EBITDA for the year ended December 31, 2024.

Interest Expense, Net of Capitalized Interest.

The decrease in interest expense during the year ended December 31, 2024 compared to the prior year was driven by lower interest and fees for financial assurance instruments and the capitalization of interest related to the development of the Centurion Mine.

Net Loss on Early Debt Extinguishment.

The net loss on early debt extinguishment recognized during the year ended December 31, 2023 was primarily related to the Company’s terminated letter of credit facility, as further discussed in Note 20.

The net loss on early debt extinguishment recognized during the prior year was primarily related to the Company’s terminated letter of credit facility, as further discussed in Note 20.

“Financial Instruments, Guarantees With Off-Balance-Sheet Risk and Other Guarantees” to the accompanying consolidated financial statements.

The net loss on early debt extinguishment recognized during the prior year was primarily related to the redemption of existing notes, as further discussed in Note 10.

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

Interest Income.

The increase in interest income during the year ended December 31, 2023 compared to the prior year was primarily due to higher cash balances, including restricted cash balances on which the Company earns interest, and higher interest rates in the current year.

Net Mark-to-Market Adjustment on Actuarially Determined Liabilities.

The gain recorded during the year ended December 31, 2024 was driven by the favorable impacts of changes for the postretirement benefit plans related to updated claims experience ($12.4 million) and increases to the discount rates for all actuarially determined liabilities ($5.7 million).

These increases were offset by negative adjustments to Peabody’s black lung and traumatic workers’ compensation liabilities resulting from increased claims ($8.8 million) and mark-to-market losses on pension plan assets ($5.4 million).

The gain recorded during the year ended December 31, 2023 was driven by the favorable impacts of changes for the postretirement benefit plans related to updated claims experience ($5.4 million) and mark-to-market gains on pension and postretirement benefit plan assets ($3.9 million).

These increases were offset by decreases to the discount rates for all actuarially determined liabilities ($6.4 million) and a negative adjustment related to Peabody’s black lung liabilities ($2.6 million).

Unrealized Gains on Derivative Contracts Related to Forecasted Sales.

The prior year unrealized gains primarily relate to mark-to-market activity on derivative contracts related to forecasted coal sales.

As further discussed in Note 6.

“Derivatives and Fair Value Measurements” to the accompanying consolidated financial statements, all derivative contracts related to forecasted coal sales settled in 2023.

Peabody Energy Corporation 2024 Form 10-K

The gain recorded during the year ended December 31, 2022 was driven by increases to the discount rates for actuarially determined liabilities ($190.1 million) and the favorable impacts of changes for the postretirement benefit plans related to updated claims experience ($28.6 million).

These increases were offset by mark-to-market losses on pension and postretirement benefit plan assets ($162.1 million);

the unfavorable impact of the premium paid for the purchase of a buy-in group annuity contract for a qualified pension plan ($17.6 million) and the unfavorable impacts of medical trend updates for the postretirement benefit plans ($15.7 million).

Unrealized Gains (Losses) on Derivative Contracts Related to Forecasted Sales.

Unrealized gains (losses) primarily relate to mark-to-market activity on derivative contracts related to forecasted coal sales.

For additional information, refer to Note 6.

“Derivatives and Fair Value Measurements” to the accompanying 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.

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Unrealized (Losses) Gains on Foreign Currency Option Contracts.

Unrealized (losses) gains 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 consolidated financial statements.

Income Tax (Provision) Benefit .

The income tax provision recorded during the year ended December 31, 2023 was primarily due to no valuation allowance offsetting earnings in Australia in the current year, whereas the prior year income tax benefit was driven by the release of the valuation allowance related to Australian NOLs.

Income Tax Provision .

The decrease in the income tax provision recorded during the year ended December 31, 2024 compared to the prior year period was primarily due to lower pretax income.

Refer to Note 8.

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The following table presents net income attributable to common stockholders:

(Decrease) Increase

Year Ended December 31, to Income

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Income from continuing operations, net of income taxes $ 407.3 $ 816.0 $ (408.7) (50.1) %

(Loss) income from discontinued operations, net of income taxes (0.4) 1.7 (2.1) (123.5) %

Loss from discontinued operations, net of income taxes (3.8) (0.4) (3.4) (850.0) %

Net income 403.5 815.6 (412.1) (50.5) %

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Net Income Attributable to Noncontrolling Interests .

The increase in net income attributable to noncontrolling interests during the year ended December 31, 2023 compared to the prior year period was primarily due to stronger financial results of Peabody’s majority-owned Wambo operations in which there is an outside non-controlling interest.

The decrease in net income attributable to noncontrolling interests during the year ended December 31, 2024 compared to the prior year period was primarily due to a decline in the financial results of Peabody’s majority-owned Wambo operations in which there is an outside non-controlling interest.

Diluted Earnings per Share (EPS)

The following table presents diluted EPS:

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Income from continuing operations $ 2.73 $ 5.00 $ (2.27) (45.4) %

Income from discontinued operations — 0.02 (0.02) (100.0) %

Loss from discontinued operations (0.03) — (0.03) n.m.

Net income attributable to common stockholders $ 2.70 $ 5.00 $ (2.30) (46.0) %

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Peabody Energy Corporation 2024 Form 10-K

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Reconciliation of Non-GAAP Financial Measures

Adjusted EBITDA is defined as income 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.

Adjusted EBITDA is also adjusted for the discrete items that management excluded in analyzing the segments’ operating performance, as displayed in the reconciliations below.

Year Ended December 31,

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Restructuring charges 4.4 3.3

Transaction costs related to business combinations 10.3 —

Asset impairment — 2.0

Provision for NARM and Shoal Creek losses 3.7 40.9

Shoal Creek insurance recovery - property damage (28.7) —

Changes in amortization of basis difference related to equity affiliates (1.8) (1.6)

Interest expense 59.8 140.3

Interest expense, net of capitalized interest 46.9 59.8

Net loss on early debt extinguishment — 8.8

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Net mark-to-market adjustment on actuarially determined liabilities

Unrealized (gains) losses on derivative contracts related to forecasted sales (159.0) 35.8

Unrealized (gains) losses on foreign currency option contracts (7.4) 2.3

Unrealized gains on derivative contracts related to forecasted sales — (159.0)

Unrealized losses (gains) on foreign currency option contracts 9.0 (7.4)

Take-or-pay contract-based intangible recognition (3.0) (2.5)

Income tax provision (benefit) 308.8 (38.8)

Income tax provision 108.8 308.8

Total Adjusted EBITDA $ 871.7 $ 1,363.9

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:

Total 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:

Year Ended December 31,

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Operating costs and expenses $ 3,420.9 $ 3,385.1

Unrealized gains (losses) on foreign currency option contracts 7.4 (2.3)

Unrealized (losses) gains on foreign currency option contracts (9.0) 7.4

Take-or-pay contract-based intangible recognition 3.0 2.5

Net periodic benefit credit, excluding service cost (40.6) (41.6)

Total Reporting Segment Costs $ 3,353.4 $ 3,242.3

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

Total Segment Costs $ 3,374.3 $ 3,353.4

The following table presents Total Segment Costs by reporting segment:

Year Ended December 31,

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Corporate and Other 64.5 11.6

Total Reporting Segment Costs $ 3,353.4 $ 3,242.3

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.

Total Segment Costs $ 3,374.3 $ 3,353.4

Peabody Energy Corporation 2024 Form 10-K

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

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Revenue per Ton and Adjusted EBITDA Margin per Ton are equal to revenue by segment and Adjusted EBITDA by segment (excluding insurance recoveries), 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, Total Segment Costs and Adjusted EBITDA by operating segment:

Year Ended December 31, 2024

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Revenue $ 1,213.9 $ 1,055.6 $ 1,098.8 $ 822.6

Total Reporting Segment Costs 752.9 863.8 1,044.4 680.7

Total Segment Costs 783.9 893.9 960.2 671.8

Adjusted EBITDA, excluding Shoal Creek insurance recovery $ 430.0 $ 161.7 $ 138.6 $ 150.8

Shoal Creek insurance recovery - business interruption — 80.8 — —

Adjusted EBITDA $ 430.0 $ 242.5 $ 138.6 $ 150.8

$ 576.8 $ 438.1 $ 153.7 $ 207.5

Revenue per Ton $ 73.88 $ 144.97 $ 13.81 $ 56.38

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Revenue $ 1,329.7 $ 1,301.9 $ 1,198.1 $ 888.2

Total Reporting Segment Costs 698.0 835.2 997.3 709.8

Total Segment Costs 752.9 863.8 1,044.4 680.7

Adjusted EBITDA

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$ 37.28 $ 63.48 $ 1.76 $ 12.79

Available Free Cash Flow is defined as operating cash flow minus investing cash flow and distributions to noncontrolling interests;

plus/minus changes to restricted cash and collateral (excluding one-time effects of the recent surety agreement amendment) and other anticipated expenditures.

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

Year Ended December 31, 2023

(Dollars in millions)

Net cash provided by operating activities $ 1,035.5

- Net cash used in investing activities (342.6)

- Distributions to noncontrolling interests (59.0)

+/- Changes to restricted cash and collateral 90.2

- Anticipated expenditures or other requirements —

Available Free Cash Flow $ 724.1

Liquidity and Capital Resources

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The Company has also used cash for early debt retirements.

Peabody Energy Corporation 2023 Form 10-K

Any future determinations to return capital to stockholders, such as dividends or share repurchases will depend on a variety of factors, including the Company’s 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.

The Company’s ability to early retire debt, declare dividends or repurchase shares in the future will depend on its future financial performance, which in turn depends on the successful implementation of its strategy and on financial, competitive, regulatory, technical and other factors, general economic conditions, demand for and selling prices of coal and other factors specific to its industry, many of which are beyond the Company’s control.

As of December 31, 2023, the Company’s cash and cash equivalents balances totaled $969.3 million, including approximately $553 million held by Australian subsidiaries, approximately $400 million held by U.S.

subsidiaries and the remainder held by other foreign subsidiaries in accounts predominantly domiciled in the U.S.

Peabody Energy Corporation 2024 Form 10-K

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As of December 31, 2024, the Company’s cash and cash equivalents balances totaled $700.4 million, including approximately $397 million held by U.S.

subsidiaries, approximately $291 million held by Australian subsidiaries and the remainder held by other foreign subsidiaries in accounts predominantly domiciled in the U.S.

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

This cash is generally used to support non-U.S.

liquidity needs, including capital and operating expenditures in Australia.

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

During the year ended December 31, 2023, the Company repatriated approximately $250 million through intercompany dividends.

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 decreased from $1,317.8 million as of December 31, 2022 to $1,059.7 million as of December 31, 2023.

liquidity needs, including capital and operating expenditures in Australia and payment of the foreign subsidiaries’ share of certain U.S.

corporate expenditures.

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

in the form of intercompany dividends.

During the year ended December 31, 2024, no profits from foreign subsidiaries were repatriated.

If 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 increased to $1,072.5 million as of December 31, 2024 from $1,059.7 million as of December 31, 2023.

Available liquidity was comprised of the following:

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Cash and cash equivalents $ 700.4 $ 969.3

Credit facility availability — 3.5

Revolving credit facility availability 233.7 —

Accounts receivable securitization program availability 138.4 90.4

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Capital Returns to Shareholders

The Company repurchased approximately 16.1 million shares of its common stock for $350.3 million and paid dividends of $30.6 million during the year ended December 31, 2023.

The Company repurchased approximately 7.7 million shares of its common stock for $180.5 million, including commission fees, and paid dividends of $37.6 million during the year ended December 31, 2024.

Surety Agreement Amendment and Collateral Requirements

In April 2023, the Company amended its existing agreement with the providers of its surety bond portfolio, dated November 6, 2020.

Under the agreement, the Company was required to post collateral on a periodic basis through December 31, 2025.

Prior to the April 2023 amendment, the Company had posted cumulative collateral of $557.8 million, primarily in the form of letters of credit.

Under the April 2023 amendment, the Company and its surety providers agreed to a maximum aggregate collateral amount of $721.8 million based upon bonding levels at the effective date of the amendment.

This maximum collateral amount represented a negotiated increase from the uncapped cumulative collateral amount prior to the amendment and will vary prospectively as bonding levels increase or decrease.

The amendment also removed restrictions on the payment of dividends and share repurchases, and extended the agreement through December 31, 2026.

In order to maintain the new maximum collateral standstill, the Company must remain compliant with a minimum liquidity test and a maximum net leverage ratio, as measured each quarter.

Under the April 2023 amendment, the Company and its surety providers agreed to a maximum aggregate collateral amount based upon bonding levels which will vary prospectively as bonding levels increase or decrease.

The amendment extended the agreement through December 31, 2026.

In order to maintain the maximum collateral agreement, the Company must remain compliant with a minimum liquidity test and a maximum net leverage ratio, as measured each quarter.

The minimum liquidity test requires the Company to maintain liquidity at the greater of $400 million or the difference between the penal sum of all surety bonds and the amount of collateral posted in favor of surety providers, which was $495.5 million at December 31, 2024.

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The Company’s ability to pay dividends and make share repurchases is also subject to the quarterly minimum liquidity test.

The Company is in compliance with such requirements, which commenced for the second quarter of 2023.

The Company granted second liens on $200.0 million of mining equipment under the original agreement, which remain in force under the April 2023 amendment.

Peabody Energy Corporation 2023 Form 10-K

To fund the maximum collateral amount, the Company deposited $566.3 million into trust accounts for the benefit of certain surety providers on March 31, 2023.

The remainder was comprised of $140.5 million of existing cash-collateralized letters of credit and $15.0 million already held on behalf of a surety provider.

The amendment became effective on April 14, 2023, when the Company terminated a then-existing credit agreement which, as amended, provided for $237.2 million of capacity for irrevocable standby letters of credit (LC Facility).

The $223.8 million of letters of credit that were outstanding under the LC Facility at March 31, 2023 were cancelled upon its termination and, in certain cases, replaced by cash-collateralized letters of credit or letters of credit issued under the Company’s accounts receivable securitization program.

At December 31, 2023 the Company had restricted cash and collateral of $957.6 million.

Collateralized Letter of Credit Agreement

The Company is in compliance with such requirements at December 31, 2024.

At December 31, 2024, the Company’s maximum aggregate collateral amount was $522.0 million, which was comprised of $394.6 million in trust accounts and letters of credit of $127.4 million held for the benefit of certain surety providers.

The amendment became effective on April 14, 2023, when the Company terminated a then-existing credit agreement.

Credit Support Facilities

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

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At December 31, 2024, letters of credit of $115.6 million were outstanding under the agreement, which were collateralized by cash of $119.1 million.

Margin Requirements

From time to time, the Company enters into hedging arrangements, including economic hedging arrangements, to manage various risks, including coal price volatility.

Most hedging arrangements require the Company to post margin with its clearing broker based on the value of the related instruments and other credit factors.

If the fair value of its exchange-cleared hedge portfolio moves significantly, the Company could be required to post additional margin, which could negatively impact its liquidity.

During the year ended December 31, 2023, the Company’s coal derivative contracts with margin requirements were settled and margin postings declined from $255.5 million at December 31, 2022 to zero at December 31, 2023.

Peabody Energy Corporation 2024 Form 10-K

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In December 2023, the Company established cash-backed bank guarantee facilities, primarily to support Australian reclamation bonding requirements.

The Company receives a variable deposit rate on the amount of cash collateral posted in support of the bank guarantee facilities, which mature at various dates between 2026 and 2029.

At December 31, 2024, the bank guarantee facilities were backed by cash of $168.5 million.

Revolving Credit Facility

On January 18, 2024, the Company established a new revolving credit facility with a maximum aggregate principal amount of $320.0 million in revolving commitments by entering into a credit agreement, dated as of January 18, 2024 (the 2024 Credit Agreement), by and among the Company, as borrower, certain subsidiaries of the Company party thereto, PNC Bank, National Association, as administrative agent, and the lenders party thereto.

The Company established a new revolving credit facility with a maximum aggregate principal amount of $320.0 million in revolving commitments by entering into a credit agreement, dated as of January 18, 2024 (the 2024 Credit Agreement), by and among the Company, as borrower, certain subsidiaries of the Company party thereto, PNC Bank, National Association, as administrative agent, and the lenders party thereto.

The revolving commitments and any related loans, if applicable (any such loans, the Revolving Loans), established by the 2024 Credit Agreement terminate or mature, as applicable, on January 18, 2028, subject to certain conditions relating to the Company’s outstanding 2028 Convertible Notes.

The Revolving Loans bear interest at a secured overnight financing rate (SOFR) plus an applicable margin ranging from 3.50% to 4.25%, depending on the Company’s total net leverage ratio (as defined under the 2024 Credit Agreement) or a base rate plus an applicable margin ranging from 2.50% to 3.25%, at the Company’s option.

Letters of credit issued under the 2024 Credit Agreement incur a combined fee equal to an applicable margin ranging from 3.50% to 4.25% plus a fronting fee equal to 0.125% per annum.

Unused capacity under the 2024 Credit Agreement bears a commitment fee of 0.50% per annum.

On November 25, 2024, the Company amended the 2024 Credit Agreement to, among other things, permit Peabody’s planned acquisition of multiple coal mines from Anglo, the related bridge loan facility and the incurrence of additional indebtedness to finance the acquisition, to the extent applicable.

As of December 31, 2024, the 2024 Credit Agreement had only been utilized for letters of credit, including $86.3 million outstanding as of December 31, 2024.

These letters of credit support the Company’s reclamation bonding requirements, lease obligations, insurance policies and various other performance guarantees as further described in Note 20.

“Financial Instruments, Guarantees With Off-Balance-Sheet Risk and Other Guarantees.” Availability under the 2024 Credit Agreement was $233.7 million at December 31, 2024.

The 2024 Credit Agreement contains customary covenants that, among other things and subject to certain exceptions (including compliance with financial ratios), may limit the Company and its subsidiaries’ ability to incur additional indebtedness, make certain restricted payments or investments, sell or otherwise dispose of assets, enter into transactions with affiliates, create or incur liens, and merge, consolidate or sell all or substantially all of their assets.

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subsidiaries, as well as a pledge of two Australian subsidiaries.

Peabody Energy Corporation 2023 Form 10-K

Capital Expenditures

For 2025, the Company is targeting total capital expenditures of approximately $450 million.

Approximately $280 million of such amount is appropriated to major projects and growth capital expenditures, including approximately $250 million for the Company’s Centurion Mine, which includes capital expenditures to reach longwall production and capital expenditures to develop Centurion North.

The Company’s total indebtedness as of December 31, 2024 and 2023 is presented in the table below.

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3.250% Convertible Senior Notes due March 2028 (2028 Convertible Notes) $ 320.0 $ 320.0

BUMA Loan Note 9.3 —

Finance lease obligations 25.1 22.3

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Long-term debt $ 332.3 $ 320.7

During 2022, the Company utilized various methods allowable or required under its then-existing debt agreements to retire all of its senior secured long-term debt, leaving only its 2028 Convertible Notes, which are further described below, and various finance lease obligations outstanding at December 31, 2022.

The Company’s remaining indebtedness requires estimated contractual principal and interest payments, assuming interest rates in effect at December 31, 2023, of approximately $25 million in 2024, $16 million in 2025, $13 million in 2026, $12 million in 2027 and $325 million in 2028.

Cash interest payments amounted to $61.9 million, $118.5 million and $174.9 million during the years ended December 31, 2023, 2022, and 2021, respectively.

3.250% Convertible Senior Notes due 2028

The Company’s indebtedness requires estimated contractual principal and interest payments, assuming interest rates in effect at December 31, 2024, of approximately $27 million in 2025, $18 million in 2026, $13 million in 2027, $326 million in 2028, less than $1 million in 2029 and $9 million thereafter.

Peabody Energy Corporation 2024 Form 10-K

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Cash paid for interest, net of capitalized interest related to the Company’s indebtedness and financial assurance instruments amounted to $37.6 million, $61.9 million and $118.5 million during the years ended December 31, 2024, 2023, and 2022, respectively.

2028 Convertible Notes

On March 1, 2022, through a private offering, the Company issued the 2028 Convertible Notes in the aggregate principal amount of $320.0 million.

The 2028 Convertible Notes are senior unsecured obligations of the Company and are governed under an indenture.

The Company used the proceeds of the offering of the 2028 Convertible Notes and available cash to redeem $62.6 million of senior secured notes maturing in 2024 and $257.4 million of senior secured notes maturing in 2025, and to pay related premiums, fees and expenses relating to the offering and redemptions.

The Company used the proceeds of the offering of the 2028 Convertible Notes and available cash to redeem its then-existing senior secured notes and to pay related premiums, fees and expenses relating to the offering and redemptions.

The 2028 Convertible Notes will mature on March 1, 2028, unless earlier converted, redeemed or repurchased in accordance with their terms.

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

During the fourth quarter of 2022, the Company’s reported common stock prices prompted the conversion feature of the 2028 Convertible Notes.

As a result, the 2028 Convertible Notes were convertible at the option of the holders during the first quarter of 2023.

However, the Company did not receive any conversion requests.

During the year ended December 31, 2023, the Company’s reported common stock prices did not prompt the conversion feature of the 2028 Convertible Notes.

As a result, the 2028 Convertible Notes were not convertible at the option of the holders during the remainder of 2023, and will not be similarly convertible during the first quarter of 2024.

The now-terminated LC Facility had an original capacity of $324.0 million and was subsequently amended at various dates to reduce its capacity and effect certain other changes, including in February 2023 to reduce capacity by $65.0 million, accelerate the expiration date to December 31, 2023 from December 31, 2024, and eliminate the prepayment premium due upon any reduction of commitments thereunder prior to July 29, 2023.

Covenant Compliance

The Company was compliant with all relevant covenants under its debt and other finance agreements at December 31, 2023.

The April 2023 termination of the Company’s then-existing credit agreement and related letter of credit facility, as described in Note 20.

“Financial Instruments, Guarantees With Off-Balance-Sheet Risk and Other Guarantees” of the accompanying consolidated financial statements, eliminated the related compliance requirements as of March 31, 2023 and prospectively.

Peabody Energy Corporation 2023 Form 10-K

During the fourth quarter ended December 31, 2024, the Company’s reported common stock prices did not prompt the conversion feature of the 2028 Convertible Notes.

As a result, the 2028 Convertible Notes will not be convertible during the first quarter of 2025.

Bridge Loan Facility

Concurrently with its entry into definitive agreements to acquire the Anglo assets, the Company entered into a bridge loan facility commitment letter (the Bridge Commitment Letter, and the senior secured 364-day bridge facility provided for therein, the Bridge Facility), pursuant to which the lenders, agreed to provide the Bridge Facility to the Company in the amount of up to $2.075 billion in order to finance the planned acquisition in part.

The Company expects to replace the Bridge Facility with permanent financing prior to the closing date, but there can be no assurance such financing will occur and any such expectation is subject to market conditions.

To the extent borrowings are made under the Bridge Facility, any loans would bear interest at a SOFR plus an applicable margin of 8.00% or a base rate plus an applicable margin of 7.00%, at the Company’s option.

Such applicable margin would increase by an additional 0.75% on the date that is 90 days following the closing date of the planned acquisition.

Any borrowings under the Bridge Facility would mature 364 days from the initial funding date, which would be on or around the closing date of the planned acquisition.

The availability of borrowings under the Bridge Facility is subject to the satisfaction of certain customary conditions for transactions of this type.

Any definitive financing documentation for the Bridge Facility will contain customary representations and warranties, covenants and events of defaults for transactions of this type.

Upon execution of any definitive financing documentation for the Bridge Facility, the Bridge Facility will be guaranteed by substantially all U.S.

subsidiaries of the Company and secured by substantially all assets of the Company, its U.S.

subsidiaries and, subject to certain conditions, certain of the Company’s Australian subsidiaries.

Accounts Receivable Securitization Program

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“Financial Instruments, Guarantees With Off-Balance-Sheet Risk and Other Guarantees” of the accompanying consolidated financial statements, the Company entered into an accounts receivable securitization program during 2017.

The securitization program was amended in February 2023 to increase the available funding capacity from $175.0 million to $225.0 million and adjust the relevant interest rate for borrowings to a SOFR.

Funding capacity is limited to the availability of eligible receivables and is accounted for as a secured borrowing.

Funding capacity under the program may also be utilized for letters of credit in support of other obligations, which has been the Company’s primary utilization.

At December 31, 2023, the Company had no outstanding borrowings and $108.1 million of letters of credit outstanding under the program, which were primarily in support of portions of the Company’s reclamation obligations.

At December 31, 2024, the Company had no outstanding borrowings and $60.4 million of letters of credit outstanding under the program.

The Company was not required to post cash collateral under the securitization program at December 31, 2024.

Capital Expenditures

For 2024, the Company is targeting total capital expenditures of approximately $375 million.

Approximately $235 million of such amount is appropriated to major projects and growth capital expenditures, including approximately $150 million for the redevelopment of the Company’s Centurion Mine.

Wards Well Acquisition

The Company anticipates closing the previously announced acquisition of the Wards Well area for approximately $136 million of cash consideration in 2024.

The accounts receivable securitization program was amended in January 2025 to extend its maturity to January 2028.

Other Requirements

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Such cash flows pertain to postretirement benefit plans, work-related injuries and illnesses, defined benefit pension plans, mine reclamation and end-of-mine closure costs and exploration obligations and are estimated to amount to approximately $100 million in 2025, $100 million in 2026, $150 million in 2027, $90 million in 2028, $140 million in 2029 and $1,275 million thereafter.

Peabody Energy Corporation 2024 Form 10-K

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The Company has various short- and long-term take-or-pay arrangements in Australia and the U.S.

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The Company’s operating lease commitments, excluding potential contingent rental amounts, will require cash payments of approximately $38 million in 2025, $34 million in 2026, $29 million in 2027, $23 million in 2028, $6 million in 2029 and $3 million thereafter.

Covenant Compliance

The Company was compliant with all relevant covenants under its debt and other finance agreements at December 31, 2024.

The following table summarizes the Company’s cash flows for the years ended December 31, 2024 and 2023, as reported in the accompanying consolidated financial statements.

Available 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.

Year Ended December 31,

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Cash, cash equivalents and restricted cash at end of period $ 1,382.6 $ 1,650.2

Available Free Cash Flow $ 724.1

Peabody Energy Corporation 2023 Form 10-K

Operating Activities .

The decrease in net cash provided by operating activities for the year ended December 31, 2023 compared to the prior year was driven by lower cash generated from mining operations, an increase in cash used for collateral requirements ($146.3 million) and cash used to settle disputed black lung claims ($72.0 million), offset by the receipt of cash in the current year and posting of cash in the prior year related to variation margin requirements associated with derivative financial instruments ($304.2 million) and the year-over-year increase in operating cash flow from working capital ($295.5 million).

The decrease in net cash provided by operating activities for the year ended December 31, 2024 compared to the prior year was driven by a year-over-year decrease in operating cash flow from working capital ($359.7 million), primarily attributable to changes in accounts payable and accrued expenses ($305.1 million) driven by income tax payments and accounts receivable ($66.5 million);

the prior year receipt of cash related to variation margin requirements associated with derivative financial instruments ($198.0 million);

and lower cash generated from mining operations.

These unfavorable variances were partially offset by the Shoal Creek insurance recovery excluding proceeds attributable to equipment losses ($98.6 million), decreases in cash used for collateral requirements ($348.7 million) and discontinued operations ($74.5 million) primarily related to the prior year use of cash to settle disputed black lung claims.

Investing Activities .

The increase in net cash used in investing activities for the year ended December 31, 2023 compared to the prior year was driven by lower cash receipts from Middlemount and other related parties ($169.2 million), higher capital expenditures and payments of capital accruals ($121.2 million) and lower cash receipts from the disposal of assets ($17.8 million).

The increase in net cash used in investing activities for the year ended December 31, 2024 compared to the prior year was driven by the acquisition of Wards Well ($143.8 million), the deposit for the planned Anglo acquisition ($75.0 million) and higher capital expenditures driven by the Centurion Mine development ($53.0 million).

These variances were partially offset by the Shoal Creek insurance recovery attributable to equipment losses ($10.9 million).

Financing Activities .

The decrease in net cash used in financing activities for the year ended December 31, 2023 compared to the prior year was driven by lower repayments of long-term-debt ($1,398.4 million) in the current year, offset by cash proceeds from common stock and debt issuances in the prior year ($222.0 million and $545.0 million, respectively) and common stock repurchases and dividends paid in the current year ($347.7 million and $30.6 million, respectively).

The decrease in net cash used in financing activities for the year ended December 31, 2024 compared to the prior year was primarily driven by decreases in common stock repurchases ($164.6 million) and distributions to noncontrolling interest ($24.2 million).

Off-Balance-Sheet Arrangements

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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 the accompanying consolidated balance sheets.

As of December 31, 2023, the Company was party to financial instruments with off-balance sheet risk in support of the following obligations:

Peabody Energy Corporation 2024 Form 10-K

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The following table summarizes the Company’s financial instruments that carry off-balance-sheet risk:

December 31, 2024

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“Financial Instruments, Guarantees With Off-Balance-Sheet Risk and Other Guarantees” of the accompanying consolidated financial statements.

Such collateral is primarily in support of the financial instruments noted above, including in relation to the Company’s surety bond portfolio, its collateralized letter of credit agreement, mandatory repurchases of credit facility capacity and amounts held directly with beneficiaries which are not supported by surety bonds.

Such collateral is primarily in support of the financial instruments noted above, including in relation to the Company’s surety bond portfolio, its collateralized letter of credit agreement, its bank guarantee facilities and amounts held directly with beneficiaries which are not supported by surety bonds.

The restricted cash and collateral balance decreased $147.8 million during the year ended December 31, 2024 due to collateral releases related to reductions in reclamation bonding requirements, replacement of cash-collateralized letters of credit with letters of credit under the new revolving credit facility and the impact of foreign currency rate changes.

At December 31, 2024, the Company had total asset retirement obligations of $723.7 million.

Bonding requirement amounts may differ significantly from the related 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.

At December 31, 2023, the reclamation bonding requirements were supported by approximately $825 million of restricted cash and other balances serving as collateral, which exceeds the financial liability for final mine reclamation as calculated in accordance with U.S.

Peabody Energy Corporation 2023 Form 10-K

As noted above, the Company’s reclamation bonding requirements decreased during the year ended December 31, 2024, primarily due to an approximate $110 million reduction in U.S.

reclamation bonding requirements.

At December 31, 2024, the Company’s reclamation bonding requirements were supported by approximately $700 million of restricted cash and other balances serving as collateral, which substantially supports the financial liability for final mine reclamation as calculated in accordance with U.S.

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

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Actual results may differ from these estimates.

Peabody Energy Corporation 2024 Form 10-K

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Asset Retirement Obligations.

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Factors that would indicate potential impairment to be present include, but are not limited to, a sustained history of operating or cash flow losses, an unfavorable change in earnings and cash flow outlook, prolonged adverse industry or economic trends and a significant adverse change in the extent or manner in which a long-lived asset is being used or in its physical condition.

The Company generally does not view short-term declines in thermal and metallurgical coal prices as a triggering event for conducting impairment tests because of historic price volatility.

However, the Company generally views a sustained trend of depressed coal pricing (for example, over periods exceeding one year) as an indicator of potential impairment.

The Company generally does not view short-term declines in thermal and metallurgical coal prices as an indicator of impairment for conducting impairment tests because of historic price volatility.

However, the Company generally views a sustained trend of depressed coal pricing (for example, over periods exceeding one year) as a potential indicator of impairment.

Because of the volatile and cyclical nature of coal prices and demand, it is reasonably possible that coal prices may decrease and/or fail to improve in the near term, which, absent sufficient mitigation such as an offsetting reduction in the Company’s operating costs, may result in the need for future adjustments to the carrying value of its long-lived mining assets and mining-related investments.

Assets are grouped at the lowest level for which there are identifiable cash flows that are largely independent of the cash flows of other groups of assets.

For its active mining operations, the Company generally groups such assets at the mine level, or the mining complex level for mines that share infrastructure, with the exception of impairment evaluations triggered by mine closures.

In those cases involving mine closures, the related assets are evaluated at the individual asset level for remaining economic life based on transferability to ongoing operating sites or for expected salvage.

For its active mining operations, the Company generally groups such assets at the mine level, or the mining complex level for mines that share infrastructure.

For its development and exploration properties and portfolio of surface land and coal reserve and resource holdings, the Company considers several factors to determine whether to evaluate those assets individually or on a grouped basis for purposes of impairment testing.

Such factors include geographic proximity to one another, the expectation of shared infrastructure upon development based on future mining plans and whether it would be most advantageous to bundle such assets in the event of a sale to a third party.

Peabody Energy Corporation 2023 Form 10-K

When indicators of impairment are present, the Company evaluates its long-lived assets for recoverability by comparing the estimated undiscounted cash flows in the LOM plan expected to be generated by those assets under various assumptions to their carrying amounts.

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The most critical assumptions underlying its projections and fair value estimates include those surrounding future tons sold, coal prices for unpriced coal, production costs (including costs for labor, commodity supplies and contractors), transportation costs, foreign currency exchange rates and a risk-adjusted, cost of capital (all of which generally constitute unobservable Level 3 inputs under the fair value hierarchy), in addition to market multiples for non-strategic coal reserves and resources, surface lands and undeveloped coal properties excluded from the Company’s long-range mine planning (which generally constitute Level 2 inputs under the fair value hierarchy).

No impairment charges related to long-lived assets of were recorded for the year ended December 31, 2023.

No impairment charges related to long-lived assets were recorded for the year ended December 31, 2024.

When necessary, the assumptions used are based on the Company’s best knowledge at the time it prepares its analysis but can vary significantly due to the volatile and cyclical nature of coal prices and demand, regulatory issues, unforeseen mining conditions, commodity prices and cost of labor.

These factors may cause the Company to be unable to recover all or a portion of the carrying value of its long-lived assets.

Peabody Energy Corporation 2024 Form 10-K

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The Company identified certain assets with an aggregate carrying value of approximately $208 million at December 31, 2024 in its Other U.S.

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Income Taxes.

Peabody accounts for income taxes in accordance with accounting guidance which requires deferred tax assets and liabilities to be recognized using enacted tax rates for the effect of temporary differences between the book and tax bases of recorded assets and liabilities.

The guidance also requires that deferred tax assets be reduced by a valuation allowance if it is “more likely than not” that some portion or all of the deferred tax asset will not be realized.

In its evaluation of the need for a valuation allowance, Peabody takes into account various factors, including taxable income in carryback years, reversals of existing taxable temporary differences, available tax planning strategies and the expected level of future taxable income.

At December 31, 2023, the Company maintained valuation allowances for income taxes totaling $1,473.5 million.

If actual results differ from the assumptions made in the annual evaluation of its valuation allowance, Peabody may record a change in valuation allowance through income tax expense in the period such determination is made.

Peabody’s liability for unrecognized tax benefits contains uncertainties because management is required to make assumptions and to apply judgment to estimate the exposures associated with its various filing positions.

Peabody recognizes the tax benefit from an uncertain tax position only if it is “more likely than not” that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position.

The tax benefits recognized in the financial statements from such a position must be measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement.

At December 31, 2023, the Company had net unrecognized tax benefits of $8.7 million included in recorded liabilities in the consolidated balance sheet.

Peabody believes that its judgments and estimates are reasonable;

however, to the extent it prevails in matters for which liabilities have been established, or are required to pay amounts in excess of its recorded liabilities, the Company’s effective tax rate in a given period could be materially affected.

The Company recognizes deferred tax assets and liabilities for the temporary difference between the consolidated financial carrying amounts of existing assets and liabilities and their respective tax bases and consideration of operating loss and tax credit carryforwards.

Deferred income taxes are measured using enacted rates in effect for the year in which temporary differences are expected to be recovered or settled.

The impact on deferred tax assets and liabilities of a change in tax rates is recognized in the period that includes the enactment date.

Valuation allowances are provided to reduce deferred tax assets to the amount that will be more likely than not realized.

The Company makes judgments and estimates regarding the amount and timing of the reversal of taxable temporary differences, the impact of tax planning strategies and expected future taxable income.

Uncertainty exists regarding tax positions taken in previously filed tax returns which remain subject to examination, along with positions expected to be taken in future returns.

The Company recognizes the tax benefit from uncertain tax positions when it is more likely than not that the tax position will be sustained upon examination by the taxing authorities based on the technical merits of the position.

Adjustments are made to the uncertain tax positions when facts and circumstances change, such as the closing of a tax audit;

change in applicable tax laws, including tax case rulings and legislative guidance;

or expiration of the applicable statute of limitations.

“Income Taxes” to the accompanying consolidated financial statements for additional information regarding valuation allowances and unrecognized tax benefits.

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In connection with such matters, the Company is required to assess the likelihood of any adverse judgments or outcomes, as well as potential ranges of probable losses.

Peabody Energy Corporation 2023 Form 10-K

A determination of the amount of reserves required for these matters is made after considerable analysis of each individual issue.

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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-K

Item 7. Management’s Discussion and Analysis