Peabody Energy stock moved higher after the company announced the repurchase of up to $1 billion of its common stock as part of a newly approved shareholder return framework that also includes a fixed quarterly cash dividend and variable cash dividend component.
The coal producer said it plans to return at least 65% of its annual available free cash flow to shareholders, retroactive to January 1, 2023.
The company’s remaining cash will be used for various enhancing growth projects, the repurchase of potentially dilutive securities, additional shareholder returns, and capital preservation.
"With the achievement of our target to eliminate all senior secured debt and fully pre-fund estimated final reclamation costs, strong execution of operating plans and favorable market conditions for our products, we are pleased to announce our program to return value to shareholders," Peabody CEO Jim Grech said in a statement.
"These actions allow us to return a designated portion of our cash flow to shareholders while reinvesting in our long-term future and maintaining a strong balance sheet, underpinning Peabody's objective to be the coal producer of choice with an unmatched opportunity to return free cash flow to shareholders."
The shareholder return program is set to launch in the second quarter of 2023 after the company posts its first quarter earnings, Peabody said.
The program is expected to include a regular quarterly cash dividend of $0.075 per share. In the first half of 2023, the company said it expects its returns to include the regulatory quarterly cash dividend with the remaining 65% of its available free cash flow to be returned to investors exclusively through share repurchases.
The company’s shares had added 5.7% at US$26.76 late morning on Monday.
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