Peabody Energy Corp (NYSE:BTU) Q2 2022 Earnings Conference Call July 28, 2022 10:00 AM ET

Company Participants

Alice Tharenos - VP, IR & Communications

James Grech - President, CEO & Director

Mark Spurbeck - EVP & CFO

Conference Call Participants

Lucas Pipes - B. Riley Securities

Nathan Martin - The Benchmark Company

David Gagliano - BMO Capital Markets

Operator

Welcome to the Peabody Second Quarter Earnings Call. [Operator Instructions]. And at this time, I would now like to turn the conference over to Alice Tharenos, Vice President of Investor Relations. Please go ahead.

Alice Tharenos

Good morning, and thank you for joining Peabody's earnings call for the second quarter of 2022. With me today are President and CEO, Jim Grech; and CFO, Mark Spurbeck. Within the earnings release, you'll find our statement on forward-looking information as well as a reconciliation of non-GAAP financial measures. We encourage you to consider the risk factors referenced there, along with our public filings with the SEC.

I'll now turn the call over to Jim.

James Grech

Thanks, Alice, and good morning, everyone. In the second quarter, our diversified assets delivered strong results, generating free cash flow of over $340 million and adjusted EBITDA of $578 million, our highest in more than a decade despite ongoing weather and logistical challenges. We continue to expect a strong second half with higher projected volumes compared to the first half of the year in all our segments and markets, although volatile supporting continued high prices. During the quarter, we delivered increased sales volumes in every segment except the PRB, capturing strong market prices, which resulted in higher margins.

With cash generated, we continue to strengthen our balance sheet by advancing our debt reduction strategy with voluntary repurchases, bringing us closer to eliminating all senior secured debt, which will allow us greater financial flexibility in the future. Before I expand on the quarter, I would like to sincerely thank our global employees for their continued focus on working safely and efficiently, which has been truly remarkable given the adverse weather and logistics challenges we have been facing. Without the dedication of our talented workforce, we would not have had the outstanding second quarter results we are reporting today.

Now turning to global coal markets; across the globe, all coal price indices remain at elevated levels, representing a dynamic demand that continues to test the ability of supply in most of our market segments. The outlook for all our operating segments continue to be favorable with the constrained base serving a market that is reallocating the scarce availability of coal. Seaborne coal markets are currently facing disruption resulting from the Russia-Ukraine conflict. Our coal supply in Australia continues to be challenged by weather and staff absenteeism primarily as a result of continued COVID impacts.