Peabody posts Q2 profit; Australian mines drive revenue growth
NYSE-listed coal major Peabody Energy, which mines metallurgical and thermal coal in the US and Australia, on Tuesday reported a return to second-quarter profit, with net income attributable to common stockholders increasing to $113.7-million, or $0.90 a share, in the three months ended June.
This compares with a loss of $20.2-million, or $0.21 a share, for the June 2017 quarter, when noncash preferred stock dividends had a $115.1-million impact.
The improved performance, however, fell short of analysts’ forecast of income of $1.03 a share for the June quarter.
Adjusted earnings before interest, taxes, depreciation and amortisation (Ebitda) amounted to $369.6-million, compared with $317.8-million in the June 2017 quarter.
Peabody achieved revenue of $1.31-billion, a 4% year-on-year improvement, and compared with analyst estimates of $1.36-billion for the quarter.
The revenue growth was driven by a 20% increase in Australian metallurgical and thermal sales volumes, offsetting the impact of lower US volumes and $48.1-million on unrealised long-dated Newcastle hedge losses as the forward price of seaborne thermal coal sharply increased as of the end of the quarter.
"Peabody's diversified portfolio continues to generate substantial returns, led by 39% margins from the company's Australian platform, as we capitalise on continued strength in seaborne metallurgical and thermal coal fundamentals," commented Peabody president and CEO Glenn Kellow in a media statement.
Peabody's Australian platform continued to produce substantial results, with total adjusted Ebitda of $266.1-million contributed in the quarter. Australian adjusted Ebitda increased by $88.3-million over the prior year as a result of 45% higher metallurgical volumes and further strengthening in seaborne thermal and low-vol PCI pricing.
Australian sales volumes totaled 7.9-million tons, including 2.9-million tons of metallurgical coal sold at an average price of $143.98/t and 2.9-million tons of export thermal coal sold at an average price of $78.6/t, with the remainder delivered under a long-term domestic contract.
The group’s Americas adjusted Ebitda totalled $137.9-million, compared with $176.2-million in the prior year.
Peabody generated second-quarter operating cash flow of $335.7-million, while free cash flow totalled $324.1-million, including the release of $109.1-million of all remaining cash collateral requirements.
In addition, Peabody received $34.9-million in Middlemount cash contributions and $29.6-million in proceeds from a land sale completed in the first quarter.
The company invested $71.9-million in capital expenditure during the quarter.
SHAREHOLDER RETURN
Peabody reported that, as part of ongoing shareholder return initiatives, the group had repurchased nearly $200-million of common stock in the quarter, and an additional $25-million since June 30, 2018, bringing total share repurchases to $575-million under a $1-billion repurchase programme that started in August 2017.
The company has repurchased a total of 15.6-million shares under the programme to date, including 5.4-million since March 31, representing 11% of shares initially outstanding on a fully converted basis.
In addition, the company paid a quarterly common stock cash dividend of $0.115 a share, totalling about $14-million in the second quarter. The board recently declared a quarterly dividend of $0.125 a share to be payable on August 23.
Peabody emerged from bankruptcy protection in April 2017, with $5-billion in reduced debt. It has been pinning its strategy on increasingly accessing emerging Asian economies to offset falling North American demand for coal.
The company's NYSE shares traded at $42.90 a share on Tuesday morning, down 1% on the previous day's price.
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