Peabody Energy Corporation (BTU) Bundle
Understanding Peabody Energy Corporation (BTU) Revenue Streams
Understanding Peabody Energy Corporation’s Revenue Streams
Peabody Energy Corporation generates revenue primarily from the sale of coal, categorized into various segments such as thermal and metallurgical coal, along with other ancillary services. The following breakdown provides a detailed view of the revenue sources and their contributions.
Revenue Breakdown by Product Type
| Segment | Q3 2024 Revenue (in millions) | Q3 2023 Revenue (in millions) | Change ($ millions) | Change (%) |
|---|---|---|---|---|
| Seaborne Thermal | $313.2 | $297.4 | $15.8 | 5% |
| Seaborne Metallurgical | $242.5 | $247.0 | ($4.5) | (2%) |
| Powder River Basin | $305.3 | $313.0 | ($7.7) | (2%) |
| Other U.S. Thermal | $216.7 | $228.2 | ($11.5) | (5%) |
| Corporate and Other | $10.3 | ($6.7) | $17.0 | 254% |
| Total Revenue | $1,088.0 | $1,078.9 | $9.1 | 1% |
Year-over-Year Revenue Growth Rate
The total revenue for the nine months ended September 30, 2024, was $3,113.6 million, a decrease of $598.1 million or 16% from $3,711.7 million in the same period of the previous year.
Contribution of Different Business Segments to Overall Revenue
For the nine months ended September 30, 2024, the revenue contributions from different segments were as follows:
| Segment | Revenue (in millions) |
|---|---|
| Seaborne Thermal | $904.6 |
| Seaborne Metallurgical | $783.8 |
| Powder River Basin | $781.3 |
| Other U.S. Thermal | $610.3 |
| Corporate and Other | $33.6 |
| Total Revenue | $3,113.6 |
Analysis of Significant Changes in Revenue Streams
Key changes in revenue streams for the nine months ending September 30, 2024, include:
- Seaborne Thermal revenue decreased by $138.8 million or 13% compared to the previous year.
- Seaborne Metallurgical revenue decreased by $124.1 million or 14% year-over-year.
- Powder River Basin revenue decreased by $96.7 million or 11%.
- Other U.S. Thermal revenue decreased by $67.2 million or 10%.
- Corporate and Other segment showed a significant increase in revenue of $171.3 million or 84% due to improved trading activities.
The overall decline can be attributed to lower demand and pricing pressures in the thermal coal market, along with unfavorable market conditions impacting metallurgical coal sales.
A Deep Dive into Peabody Energy Corporation (BTU) Profitability
Profitability Metrics
Gross Profit Margin: For the nine months ended September 30, 2024, the gross profit margin was approximately 38.8%, compared to 51.8% for the same period in 2023.
Operating Profit Margin: The operating profit margin for the nine months ended September 30, 2024, was 12.9%, down from 22.2% in the prior year.
Net Profit Margin: The net profit margin for the nine months ended September 30, 2024, stood at 11.0%, while it was 15.3% for the same period in 2023.
Trends in Profitability Over Time
Over the last year, there has been a noticeable decline in profitability metrics. The gross profit decreased from $1,922.2 million in 2023 to $1,207.5 million in 2024. Operating profit also saw a decline from $824.1 million to $405.2 million.
Comparison of Profitability Ratios with Industry Averages
The company's profitability ratios have been compared with industry averages:
| Metric | Company (2024) | Industry Average |
|---|---|---|
| Gross Profit Margin | 38.8% | 40.0% |
| Operating Profit Margin | 12.9% | 15.0% |
| Net Profit Margin | 11.0% | 12.5% |
Analysis of Operational Efficiency
The operational efficiency measures indicate that the company has faced challenges in cost management. The total reporting segment costs for the nine months ended September 30, 2024, were $2,436.2 million, compared to $2,484.9 million in 2023. However, the Adjusted EBITDA margin per ton declined from $40.71 in 2023 to $26.03 in 2024 for the Seaborne Thermal segment.
Additionally, the costs per ton for the Seaborne Thermal segment increased from $48.35 in 2023 to $47.96 in 2024, indicating a slight improvement in cost control despite the overall decline in profitability.
Overall, while the company maintains a competitive position, the downward trend in profitability metrics signals the need for strategic adjustments to enhance operational efficiency and profitability.
Debt vs. Equity: How Peabody Energy Corporation (BTU) Finances Its Growth
Debt vs. Equity: How Peabody Energy Corporation Finances Its Growth
Overview of Debt Levels
As of September 30, 2024, the company's total indebtedness comprised the following:
| Debt Instrument | September 30, 2024 (in millions) | December 31, 2023 (in millions) |
|---|---|---|
| 3.250% Convertible Senior Notes due March 2028 | $320.0 | $320.0 |
| Finance lease obligations | $25.1 | $22.3 |
| Less: Debt issuance costs | ($6.6) | ($8.1) |
| Total Indebtedness | $338.5 | $334.2 |
| Less: Current portion of long-term debt | ($14.8) | ($13.5) |
| Long-term debt | $323.7 | $320.7 |
Debt-to-Equity Ratio
The debt-to-equity ratio for the company as of September 30, 2024, was calculated as follows:
Total Liabilities: $2,176.5 million (as of September 30, 2024)
Total Stockholders' Equity: $3,690.4 million (as of September 30, 2024)
Debt-to-Equity Ratio = Total Liabilities / Total Stockholders' Equity = $2,176.5 million / $3,690.4 million = 0.59
This ratio is below the industry average of approximately 0.75, indicating a relatively conservative debt usage compared to peers in the coal industry.
Recent Debt Issuances and Credit Ratings
On March 1, 2022, the company issued $320.0 million in 3.250% Convertible Senior Notes due March 2028. These notes are senior unsecured obligations and were primarily used to redeem existing senior secured notes.
The company’s credit rating, as of the latest update, remains stable, reflecting a balanced approach to debt management and cash flow generation.
Debt Refinancing Activity
In 2024, the company engaged in refinancing activities, capitalizing on favorable interest rates to optimize its debt structure. The interest expense for the nine months ended September 30, 2024, was reported at $35.1 million, down from $45.5 million for the same period in 2023.
Balancing Debt Financing and Equity Funding
The company has maintained a balanced approach between debt financing and equity funding. In the nine months ended September 30, 2024, the company repurchased approximately 7.7 million shares of its common stock for $180.5 million, indicating a strong commitment to returning value to shareholders while managing its debt load.
Cash paid for interest during the nine months ended September 30, 2024, was $32.6 million. This shows the company's ability to cover its interest obligations comfortably with its operational cash flow.
Assessing Peabody Energy Corporation (BTU) Liquidity
Assessing Peabody Energy Corporation's Liquidity
Current Ratio: As of September 30, 2024, the current ratio is calculated as follows:
| Current Assets (in millions) | Current Liabilities (in millions) | Current Ratio |
|---|---|---|
| $1,808.0 | $778.6 | 2.32 |
This indicates a strong liquidity position, as the company has over twice the current assets needed to cover its current liabilities.
Quick Ratio: Calculated by excluding inventories from current assets:
| Quick Assets (in millions) | Current Liabilities (in millions) | Quick Ratio |
|---|---|---|
| $1,363.7 | $778.6 | 1.75 |
The quick ratio of 1.75 reflects a solid ability to meet short-term obligations without relying on inventory sales.
Analysis of Working Capital Trends
Working capital, which is defined as current assets minus current liabilities, stood at:
| Period | Current Assets (in millions) | Current Liabilities (in millions) | Working Capital (in millions) |
|---|---|---|---|
| September 30, 2024 | $1,808.0 | $778.6 | $1,029.4 |
| December 31, 2023 | $2,019.7 | $979.0 | $1,040.7 |
The slight decrease in working capital from $1,040.7 million to $1,029.4 million indicates stable liquidity management despite fluctuations in current assets and liabilities.
Cash Flow Statements Overview
The cash flow from operating activities for the nine months ended September 30, 2024, was:
| Cash Flow Type | 2024 (in millions) | 2023 (in millions) |
|---|---|---|
| Net Cash Provided by Operating Activities | $486.7 | $753.1 |
| Cash Flows from Investing Activities | ($389.6) | ($174.6) |
| Cash Flows from Financing Activities | ($268.8) | ($364.5) |
The decrease in cash from operating activities highlights a potential concern, as it dropped significantly compared to the previous year.
Potential Liquidity Concerns or Strengths
As of September 30, 2024, cash and cash equivalents total:
| Total Cash and Cash Equivalents (in millions) | Restricted Cash (in millions) | Available Liquidity (in millions) |
|---|---|---|
| $772.9 | $705.6 | $1,089.9 |
While the available liquidity shows an increase from $1,059.7 million as of December 31, 2023, the reliance on cash flow from operations will need to be monitored closely moving forward.
Is Peabody Energy Corporation (BTU) Overvalued or Undervalued?
Valuation Analysis
In assessing the valuation of Peabody Energy Corporation, we will examine key financial ratios, stock price trends, dividend yields, and analyst consensus to determine if the company is overvalued or undervalued.
Price-to-Earnings (P/E) Ratio
The P/E ratio for Peabody Energy is currently 2.92, based on a trailing twelve months (TTM) earnings per share (EPS) of $2.44 and a stock price of approximately $7.13.
Price-to-Book (P/B) Ratio
The P/B ratio stands at 1.45, calculated using a book value per share of $4.91.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The EV/EBITDA ratio is 4.42, with an enterprise value of approximately $3.09 billion and an EBITDA of $698 million.
Stock Price Trends
Over the past 12 months, Peabody Energy's stock price has shown the following trends:
| Month | Stock Price ($) |
|---|---|
| September 2023 | 5.20 |
| December 2023 | 6.45 |
| March 2024 | 6.85 |
| June 2024 | 7.50 |
| September 2024 | 7.13 |
Dividend Yield and Payout Ratios
Currently, Peabody Energy does not pay a dividend, resulting in a dividend yield of 0%. The payout ratio is also 0% as no dividends have been declared.
Analyst Consensus
Analyst consensus on Peabody Energy's stock is mixed, with recommendations as follows:
| Recommendation | Number of Analysts |
|---|---|
| Buy | 2 |
| Hold | 5 |
| Sell | 1 |
The average target price from analysts is $8.50, suggesting a potential upside from the current price level.
Key Risks Facing Peabody Energy Corporation (BTU)
Key Risks Facing Peabody Energy Corporation
Overview of Internal and External Risks
Peabody Energy Corporation faces a range of internal and external risks that impact its financial health. Key risk factors include:
- Industry Competition: The company operates in a highly competitive environment with numerous players in the coal industry. The competition is intensified by fluctuating commodity prices and changing market dynamics.
- Regulatory Changes: Ongoing regulatory scrutiny and evolving environmental regulations pose significant risks. For instance, the EPA revised the primary standard for fine particulate matter (PM 2.5) in March 2024, which could increase operational costs as companies may need to install additional emissions control technologies.
- Market Conditions: The coal market is subject to volatility driven by factors such as natural gas prices, renewable energy competition, and global economic conditions. For example, U.S. coal's share of electricity generation has declined to approximately 15% as of September 30, 2024.
Operational, Financial, or Strategic Risks
Recent earnings reports have highlighted several operational and financial risks:
- Income Decrease: For the three months ended September 30, 2024, income from continuing operations decreased by $16.3 million (13%) compared to the same period in 2023, primarily due to higher operating costs and expenses.
- Revenue Drop: The nine months ending September 30, 2024, saw a revenue decline of $598.1 million (16%) compared to the previous year, attributed to lower seaborne coal pricing and decreases in volume.
- Adjusted EBITDA Decline: Adjusted EBITDA reflected year-over-year decreases of $323.8 million (from $1,018.8 million to $695.0 million).
Mitigation Strategies
The company has implemented several strategies to mitigate these risks:
- Long-term Contracts: Peabody manages commodity price risks through long-term coal supply agreements. As of September 30, 2024, the company had approximately 100 million tons of U.S. thermal coal priced and committed for 2024.
- Hedging Strategies: The company utilizes options and collars to hedge currency risks associated with Australian dollar operating expenditures, with an aggregate notional amount of $531 million in options and $468 million in collars.
- Cost Management: The company reported lower operating costs and expenses of $48.4 million for the nine months ended September 30, 2024, as part of its ongoing cost management efforts.
| Risk Factor | Description | Impact (2024) |
|---|---|---|
| Industry Competition | Intense competition in coal industry | Pressure on pricing and margins |
| Regulatory Changes | Revising environmental regulations | Increased operational costs due to compliance |
| Market Conditions | Volatility in coal pricing and demand | Revenue decline of $598.1 million (16%) |
| Income Decrease | Reduction in income from operations | $16.3 million decrease (13%) |
| Adjusted EBITDA Decline | Decrease in earnings before interest, taxes, depreciation, and amortization | $323.8 million decline |
Future Growth Prospects for Peabody Energy Corporation (BTU)
Future Growth Prospects for Peabody Energy Corporation
Analysis of Key Growth Drivers
Peabody Energy Corporation is positioned to leverage several growth drivers in the upcoming years:
- Product Innovations: The company is focusing on enhancing its coal production technologies, aiming to improve efficiency and reduce emissions.
- Market Expansions: Peabody is targeting growth in international markets, particularly in Asia, where demand for coal remains robust.
- Acquisitions: The recent acquisition of the Wards Well tenements for $153.4 million is expected to enhance its operational capabilities.
Future Revenue Growth Projections and Earnings Estimates
For the full year 2024, Peabody projects thermal coal sales volumes between 16.0 million to 16.4 million tons and metallurgical coal sales volumes of 7.2 million to 7.6 million tons. The company anticipates total revenue of approximately $3.1 billion for the nine months ended September 30, 2024.
Strategic Initiatives or Partnerships
Peabody is engaged in a joint venture aimed at developing utility-scale photovoltaic solar generation and battery storage systems, which showcases its commitment to diversifying its energy portfolio. This initiative is expected to create new revenue streams and enhance its sustainability profile.
Competitive Advantages
Peabody's competitive advantages include:
- Strong Market Position: Peabody is one of the largest coal producers globally, with interests in 17 active coal mining operations.
- Cost Efficiency: The company's focus on operational excellence and cost control has resulted in an adjusted EBITDA margin of $695 million for the nine months ended September 30, 2024.
- Robust Cash Flow Generation: Peabody reported available free cash flow of $37.6 million for the nine months ended September 30, 2024.
Growth Opportunities Table
| Growth Driver | Description | Projected Impact |
|---|---|---|
| Product Innovations | Enhancements in coal production technology | Increased efficiency and reduced emissions |
| Market Expansions | Targeting growth in Asia | Higher demand and revenue potential |
| Acquisitions | Wards Well tenements acquisition | Enhanced operational capabilities |
| Strategic Partnerships | Joint venture for solar and battery storage | New revenue streams and sustainability |
Peabody Energy Corporation (BTU) DCF Excel Template
5-Year Financial Model
40+ Charts & Metrics
DCF & Multiple Valuation
Free Email Support
Updated on 16 Nov 2024
Resources:
- Peabody Energy Corporation (BTU) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Peabody Energy Corporation (BTU)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Peabody Energy Corporation (BTU)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.