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Peabody Energy (BTU) Issues Details of Q1 Earnings Results
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Peabody Energy (BTU - Free Report) is scheduled to release first-quarter 2024 earnings on May 2 and unveiled some details of the upcoming release. The company expects its first-quarter revenues to be $980 million, while the Zacks Consensus Estimate for the same is pegged at $1.01 billion. Peabody expects its income from continuing operations, net of income taxes, of $45 million and adjusted EBITDA of $160 million.
Q1 Shipment Details
Peabody mentioned that its seaborne segment shipment volumes are in line with expectations, while the U.S. thermal segments reported lower-than-expected shipments. The seaborne thermal segment shipped 4.0 million tons (including 2.5 million export tons), the seaborne met segment shipped 1.4 million tons, the PRB segment shipped 18.7 million tons, and the Other U.S. thermal segment shipped 3.2 million tons.
First-quarter export volumes were impacted by lower production at Wambo due to an extended longwall ramp-up, lower average realized prices in the seaborne metallurgical coal segment, lower U.S. thermal volumes due to unseasonably warm weather and continued low natural gas prices and higher than anticipated costs at the CMJV from an unplanned dragline outage and the acceleration of planned coal prep plant repairs.
Looking Ahead
The factors dragging the production volume lower in the first quarter of 2024 have been addressed by management. Peabody Energy’s CMJV dragline and Wambo longwall are again operating on the plan, and Shoal Creek continues to exceed production expectations in the second quarter.
Bleak Industry Prospects
The Coal industry stocks are suffering due to a decline in the use of coal in thermal power plants in the United States. In 2024, the demand for coal will be adversely impacted by the planned retirement of coal units and the utilization of more renewable sources for electricity generation. Further, softness in natural gas prices has put additional pressure on coal demand. The ongoing energy transition, with utility operators steadily phasing out coal units, may hit the coal industry.
Per the U.S. Energy Information Administration’s (“EIA”) projection, coal production in the United States is expected to drop in 2024 and 2025. The EIA projects U.S. coal production to decline 4% from the earlier projection to about 470 million short tons (MMst) in 2024 and register a much sharper decline of nearly 6.3% to 456 MMst in 2025 due to the expected reduction in coal usage in electricity production.
However, one positive development is that The World Steel Association forecasts a rebound in global steel volume production, rising 1.9% in 2024 to touch 1,849.1 Mt. Steel production requires ample high-quality coal, and nearly 70% of global steel production depends on it. Hence, coal stocks having met coal operations, like SunCoke Energy (SXC - Free Report) , Warrior Met Coal (HCC - Free Report) and Ramco Resources Inc. (METC - Free Report) , can benefit from the surge in steel production and met coal exports.
Price Performance
Over the past three months, Peabody Energy’s shares have dropped 1.3% compared with the industry’s 7.2% decline.
Image: Bigstock
Peabody Energy (BTU) Issues Details of Q1 Earnings Results
Peabody Energy (BTU - Free Report) is scheduled to release first-quarter 2024 earnings on May 2 and unveiled some details of the upcoming release. The company expects its first-quarter revenues to be $980 million, while the Zacks Consensus Estimate for the same is pegged at $1.01 billion. Peabody expects its income from continuing operations, net of income taxes, of $45 million and adjusted EBITDA of $160 million.
Q1 Shipment Details
Peabody mentioned that its seaborne segment shipment volumes are in line with expectations, while the U.S. thermal segments reported lower-than-expected shipments. The seaborne thermal segment shipped 4.0 million tons (including 2.5 million export tons), the seaborne met segment shipped 1.4 million tons, the PRB segment shipped 18.7 million tons, and the Other U.S. thermal segment shipped 3.2 million tons.
First-quarter export volumes were impacted by lower production at Wambo due to an extended longwall ramp-up, lower average realized prices in the seaborne metallurgical coal segment, lower U.S. thermal volumes due to unseasonably warm weather and continued low natural gas prices and higher than anticipated costs at the CMJV from an unplanned dragline outage and the acceleration of planned coal prep plant repairs.
Looking Ahead
The factors dragging the production volume lower in the first quarter of 2024 have been addressed by management. Peabody Energy’s CMJV dragline and Wambo longwall are again operating on the plan, and Shoal Creek continues to exceed production expectations in the second quarter.
Bleak Industry Prospects
The Coal industry stocks are suffering due to a decline in the use of coal in thermal power plants in the United States. In 2024, the demand for coal will be adversely impacted by the planned retirement of coal units and the utilization of more renewable sources for electricity generation. Further, softness in natural gas prices has put additional pressure on coal demand. The ongoing energy transition, with utility operators steadily phasing out coal units, may hit the coal industry.
Per the U.S. Energy Information Administration’s (“EIA”) projection, coal production in the United States is expected to drop in 2024 and 2025. The EIA projects U.S. coal production to decline 4% from the earlier projection to about 470 million short tons (MMst) in 2024 and register a much sharper decline of nearly 6.3% to 456 MMst in 2025 due to the expected reduction in coal usage in electricity production.
However, one positive development is that The World Steel Association forecasts a rebound in global steel volume production, rising 1.9% in 2024 to touch 1,849.1 Mt. Steel production requires ample high-quality coal, and nearly 70% of global steel production depends on it. Hence, coal stocks having met coal operations, like SunCoke Energy (SXC - Free Report) , Warrior Met Coal (HCC - Free Report) and Ramco Resources Inc. (METC - Free Report) , can benefit from the surge in steel production and met coal exports.
Price Performance
Over the past three months, Peabody Energy’s shares have dropped 1.3% compared with the industry’s 7.2% decline.
Image Source: Zacks Investment Research
Zacks Rank
Peabody Energy carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.