Peabody Losses Piled Higher, More Losses Foreseen

Peabody Energy Corp. (NYSE: BTU) reported fourth-quarter and full-year 2015 results before markets opened Thursday. The coal miner’s adjusted diluted loss per share for the quarter came to $9.27 on revenues of $1.31 billion. In the same period a year ago, Peabody reported earnings per share (EPS) of $0.75 on revenues of $1.68 billion. The consensus estimates called for a net loss per share of $8.68 on revenues of $1.36 billion.

For the full year, Peabody reported an adjusted net loss per share of $36.39 on revenues of $5.61 billion, compared with 2014 revenues of $6.79 billion and a net loss of $29.00. Analysts were calling for revenues of $5.65 billion and a net loss of $33.92.

On a GAAP basis, Peabody’s net loss from operations for the quarter totaled $29.55 and for the year came in at $102.62.

As of February 9, the company reported liquidity of $902.6 million, including $778.5 million in cash, $123 million available under the company’s accounts receivable securitization and the remainder under the revolving credit facility. Peabody also had $823.7 million in letters of credit.

Looking ahead, Peabody guided U.S. coal sales for 2016 of 150 million to 160 million tons, down 18 million to 28 million tons below 2015 sales. Total sales are forecast at 195 million to 210 million tons. Revenues per ton are forecast at $19.65 to $19.95, and costs per ton are seen at $14.70 to $15.00 per ton.
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In U.S. coal demand from all suppliers for electricity generation fell by 110 million tons, driving coal’s share of U.S. power generation from 40% in 2014 to 34%. Coal production from all miners fell by 105 million tons, and the cuts grew larger throughout the year. Peabody expects coal demand from power companies to decline by 40 million to 60 million tons in 2016.

The company did not provide earnings or revenue forecasts, but analysts expect the first quarter’s net loss of $6.89 and a full year net loss of $30.63.

Glenn Kellow, president of the company’s Energy division and CEO-elect said:

Against a brutal industry backdrop, the Peabody team delivered a strong operating performance as we improved safety, achieved over $620 million in lower costs, further reduced capital, streamlined the organization and advanced multiple work streams to address our portfolio and financial objectives. It is clear that more must be done, and we are taking further steps to confront a prolonged industry downturn by targeting additional cost reductions, advancing non-core asset sales and pursuing aggressive actions to preserve liquidity and delever our balance sheet.

Shares closed down about 0.6% on Wednesday at $3.36 in a 52-week range of $2.83 to $120.30. Prior to Thursday’s release, Thomson/Reuters had a consensus price target of $7.99 on the company’s shares.