Half Year 2025 Whitehaven Coal Ltd Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Adam Martin - E&P - Analyst : Yeah, morning, Paul. Kevin. Just on unit costs, obviously looks pretty good result in the first half. You've maintained a guidance there for the full year. I suppose what's driving that is that conservatism? Are you worried about weather -- perhaps, just talk us through that, please. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 19, 2025 / 11:30PM, WHC.AX - Half Year 2025 Whitehaven Coal Ltd Earnings Call

Question: Paul Young - Goldman Sachs - Analyst : Good morning, Paul and Kevin. Kevin, great to see a countercyclical, buyback. Just want to dig into that a little bit. I know last time we did a buyback, I think back in '22, '23. The rationale was that the fact that your free cash flow per share was really attractive. So just want to understand how you measure the buyback and you're trading at a decent discount to NAV is it purely a valuation call? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 19, 2025 / 11:30PM, WHC.AX - Half Year 2025 Whitehaven Coal Ltd Earnings Call

Question: Paul Young - Goldman Sachs - Analyst : Yeah, I mean, it's a great decision, guys, no pushback from me. So I guess the question then is that investing in your own portfolio or buying back your stock. And I know the Queensland assets you only spent $100 million in the half and they're probably well capitalized. So now, is this what you just continue to do, just keep on buying back stock and don't invest in organic growth. That's the right decision at current share price.

Question: Paul Young - Goldman Sachs - Analyst : Yes, understood, Paul, can I ask just about the thermal market, it's really cracked right in the last sort of four weeks. China was stockpiling a lot towards the end of last year. And importing a lot, their domestic minds have been performing well. It looks like the market is well supplied, and you obviously got the impacts and, the relation with the gas price as well. But we are -- it should have been a little bit more seasonally stronger, and now we're heading into sort of shoulder season in six-weeks' time or so. So any thoughts or any views on the thermal price and what's really driving it down? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 19, 2025 / 11:30PM, WHC.AX - Half Year 2025 Whitehaven Coal Ltd Earnings Call

Question: Rob Stein - Macquarie - Analyst : Hi, Paul and team, thank you very much, for providing the updates. Just on the buyback versus M&A consideration. Completely understand the points made around the value of your own stock and how you view that. I guess the point would equally, lie to potential M&A targets at this point in the cycle. How do you think about M&A in that context, given that there's a few assets changing hands and that gives you an opportunity that you might not get at other points in the cycle.

Question: Rob Stein - Macquarie - Analyst : So then really the case going forward from a capital allocation point of view is that the leveraging play, increasing yield, and we can see that yield come back via a buyback slash dividend, depending on the relative price of the day. The buyback sort of underpins the evaluation, and then we can sort of expect it to be a yield stock in that regard. Is that fair? Not that there's anything wrong with that by the way.

Question: Lyndon Fagan - JPMorgan - Analyst : Oh, good morning, everyone. Just on the cost guidance, obviously a great result coming in below the end of the bottom end of the range. What's stopping you from changing the range or at least taking the top end down?

Question: Lyndon Fagan - JPMorgan - Analyst : Okay, great. And then similarly with the CapEx, obviously, coming in at the bottom end. Can you speak to what's driving that and whether there's potential to actually save some money this year.

Question: Lyndon Fagan - JPMorgan - Analyst : Right. And just a quick one for Kevin, just the net finance costs and the underlying adjustments. Going forward, did we just basically assume that the actual interest bill is what comes into the underlying P&L and essentially all the other items will be stripped out? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 19, 2025 / 11:30PM, WHC.AX - Half Year 2025 Whitehaven Coal Ltd Earnings Call

Question: Paul McTaggart - Citi Group - Analyst : Morning all. So Paul, I just want to, I mean, you may have seen Japan's 7th Strategic Energy Plan, which came out in mid-December. And so in prior years, it's really emphasized, reduced dependence on nuclear power as much as possible. There's quite a shift. Now they're basically saying, I guess, to meet green targets, they want to get nuclear back up and running at full capacity or near enough, and they want to, obviously increase renewables. So it takes them -- their target is to go from a thermal energy mix coal, from roughly 70% in '23 to 40% in FY30, which is not that far away. And I know they're half here, half year offtake, right, for customer base. So I just want to get a sense of, is this just a pipe dream or do you think this is a fundamental shift and are we going to start to see your key [thermal], start to take less coal through time.

Question: Jonathan Sharp - CLSA - Analyst : Just first question on the $100 million cost [that] target. Where are you seeing the biggest efficiencies there? Is there just a lot of little things, like, improving lightning procedures, improving up time, or are there any low-hanging fruits and big things that you're quite excited about that you may not be able to implement for a little bit.

Question: Jonathan Sharp - CLSA - Analyst : Okay, thanks for that. And just my second question, I found it quite interesting just to comment about the potential pre-drainage of Blackwater and Daunia. Can you just expand on that, what is the composition, the gas composition, the content of the seam and what is the potential plan there? Thanks.

Question: Jonathan Sharp - CLSA - Analyst : In the presentation but we will take that one offline drainage at Blackwater and Daunia. I'll take it offline, thanks.

Question: Chen Jiang - BofA Global Research - Analyst : Good morning, Paul and Kevin. Congratulations on a strong result. Two questions from me, please. So firstly, on your proceeds, the 30% sale of Blackwater, USD1 billion, I guess after you pay BHP, USD500 million on April 2, you will have the remaining $500 million left, which is exactly what you need to pay BHP for the second year of the deferred payment. So I guess it's not fair to say the proceeds will just be used to the deferred payment in total of USD1 billion in the next in the next 40 months. Thank you.

Question: Chen Jiang - BofA Global Research - Analyst : Sure, thanks for that, Kevin. Well, and then, another question, Kevin, just to follow up on the line net finance cost. So the first half FY25, 151 million, if I annualize that number which gave me 300 million, right? But that's 190 million below your indicative guidance of 490. So. How can I think of your net finance cost in the second half? Will that be making up the remaining of that guidance? So which means your net finance cost will be much higher than the first half for the second half. Thank you. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 19, 2025 / 11:30PM, WHC.AX - Half Year 2025 Whitehaven Coal Ltd Earnings Call

Question: Chen Jiang - BofA Global Research - Analyst : Okay, I guess that's not only for FY25 that will apply.

Question: Chen Jiang - BofA Global Research - Analyst : Yeah, thank you. I, appreciate that. And maybe last question if I can squeeze in about your share buyback or follow up because I guess the market didn't expect you to have a share buyback announced today. But looking at the if I divide that by the number of shares, it implies around $0.86 per share of which is similar to a dividend. So it looks like your capital return is kind of splitting almost evenly between your dividends and share buyback. I'm just wondering what's the thinking behind that when the Board made that decision and how should we think forward. I know you will announce capital allocation in August again, just trying to think ahead.

Question: Chen Jiang - BofA Global Research - Analyst : Okay, so it's about the number of shareholders onshore and offshore, and the franking dividend, the ranking dividend.

Question: Glynn Lawcock - Barrenjoey - Analyst : Oh, morning, gents. Lucky last hopefully for you guys. Kevin, just a question on the lease payments that are coming through now. They've stepped up obviously with the integration of the BMA assets you bought. What does that look like going forward from the $76.5 million? Cause I mean, if I double that alone, if I do my math right, it's about $6 a ton of additional costs. And I assume that's excluded from your cost guidance and any CapEx guidance as well. Thanks.

Question: Glynn Lawcock - Barrenjoey - Analyst : Okay, so I should think about it. If, bottom of your guidance is $140. I've got your capital guidance, and then I add another $6 a ton of cash outflows, and I assume those lease liabilities will run for as long as the life of mines run in Queensland.

Question: Glynn Lawcock - Barrenjoey - Analyst : Okay. I'm quite sure I understand it's cash flow out the door of $75.5 million, but yeah, maybe I'll take it offline as well. And just quickly, Paul, just the met-coal markets, I mean, they too are suffering. India doesn't feel like it's come back. There's met-coal sloshing in from Russia at discounted prices. And if Trump does what he says he'll do and gets rid of the Russia-Ukraine conflict and ends it. You know we could potentially see more Russian thermal, more Russian met in the market. How does that all play out in your mind?

Question: Daniel Roden - Jefferies - Analyst : Okay, Paul Kevin. Yeah, sorry, last one, hopefully the last one for me. I'll make it really quick, I think. So just on the coal markets, well, last -- back in January, you talked on the, I guess the price realizations going into Q3. I just wondered if you could provide a little bit of an update, after a bit of a soft Q2, how are the price realizations going for the [comms]?

Question: Daniel Roden - Jefferies - Analyst : Just the, sorry, the cold realizations in two, three to date. Coal price realizations?

Question: Daniel Roden - Jefferies - Analyst : Okay. Awesome. Thank you. And maybe one for Kevin and just a bit of a clarification on the unit cost of the 137 in the first half. I just wanted to understand if that includes, building unwinds of inventory costs. And if so I guess the implication may be in the March quarter and second half of '25, if we see a drawdown in inventory, is that going to have the, I guess the inverse effect on those unit costs.