Peabody Energy Corporation · NYSE:BTU
Peabody Energy — Cowen Energy and Natural Resources Conference December 2017
35 slides from Peabody Energy's conference presentation, Dec 5, 2017
Slide 1: Cowen Energy and Natural Resources Conference December 2017
Cowen Energy and Natural Resources Conference December 2017
Slide 2: Statement on Forward-Looking Information
Statement on Forward-Looking Information This presentation contains forward-looking statements within the meaning of the securities laws. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. They often include words or variation of
Slide 3: Peabody: World's Largest Private-Sector Coal Company
Peabody: World’s Largest Private-Sector Coal Company We’re the only Global Pure-Play Coal Investment, and we have significant scale… high-quality assets and people… and diversity in geography and products Our Financial Approach Generate Cash Reduce Debt Invest Wisely Return Cash to Shareholders 3
Slide 4: Peabody: Who We Are; Where We Operate
Peabody: Who We Are; Where We Operate 23 operations 5.6 billion $4.7 billion In U.S. and Australia Tons of Reserves 2016 Revenues ~7,000 25+ countries Employees Served by Peabody Globally Operations Note: Information as of the year ended Dec. 31, 2016, with the exception of headcount which is provid
Slide 5: What We Offer as a Leading Coal Company
What We Offer as a Leading Coal Company 2016 Mining Tons Sold (in millions) YTD 2017 Adjusted EBITDA by Mining Segment ($ in millions) U.S. Thermal U.S. Met Asia-Pacific Met Asia-Pacific Thermal 200 180 160 140 120 100 80 60 40 20 0 Peabody Arch Cloud Peak Alliance Whitehaven Foresight LP CNX Coal A
Slide 6: Transformed Peabody Delivering Powerful Results
Transformed Peabody Delivering Powerful Results 2017 YOY Improvements ($ in millions) $3,275 $4,062 $1,070 $238 2016 2017 2016 2017 Revenues Adjusted EBITDA Major Recent Progress Sharply increased revenues, margins and Adjusted EBITDA Reduced debt by $300 million Executed $100 million in share buyba
Slide 7: Mining Operations
Mining Operations Operations at Peabody’s North Antelope Rochelle Mine in Wyoming 7
Slide 8: Peabody Offers Top-Tier International Thermal Business with Substantial Margins
Peabody Offers Top-Tier International Thermal Business with Substantial Margins Peabody targets 12.5 – 13.0 million tons of export thermal coal sales – Typically realizes 90 – 95% of Newcastle index price Australian Thermal leads company in Adjusted EBITDA margins in Q2 and Q3 Anchored by premier, l
Slide 9: Australian Seaborne Metallurgical Portfolio Represents Marked Improvement
Australian Seaborne Metallurgical Portfolio Represents Marked Improvement; Further Strengthening Platform Peabody targets 11.5 to 12.0 million tons of met coal sales Substantial steps taken to improve platform, including: – Improved efficiencies, lower costs through owner-operator conversions – Alig
Slide 10: U.S. Mining Segment Represents Significant Scale, Stable Operating Performance
U.S. Mining Segment Represents Significant Scale, Stable Operating Performance Peabody position in PRB anchored by world’s largest coal mine – North Antelope Rochelle Mine – PRB mining complex serves scores of customers in nearly half of states in U.S. Illinois Basin and Western operations benefit f
Slide 11: Peabody PRB Strategy Focused on Margin Discipline
Peabody PRB Strategy Focused on Margin Discipline Operates three of four most productive mines in U.S. Produces from more than dozen pits in PRB – Ability to move people, equipment and contracts – Cost profile can vary up to $6 per ton among pits Unique “dial-a-blend” technology matches products wit
Slide 12: Peabody "DNA" Interwoven from PRB, Midwest and Australian Heritage
Peabody “DNA” Interwoven from PRB, Midwest and Australian Heritage Midwest: Capital D Cost Con Australia: Continuous Improvement, Global Mining PRB: Large Scale, Innovative Process Technologies Trading and Shared Services: Support, Platform Optimization THE PEABODY WAY 12
Slide 13: Strong Operations Driven by Technology, Spirit of Continuous Improvement
Strong Operations Driven by Technology, Spirit of Continuous Improvement Case Study: Dozer Push Dozer Push Used in ILB Leads to Strong Performance Australian Semi-Autonomous Dozer Project in Process Methodology Transferred to Large-Scale Mining in PRB Semi-autonomous technology in use at Peabody’s W
Slide 14: Geographic and Product Diversity Targeted to Deliver Maximum Value for Shareholders
Geographic and Product Diversity Targeted to Deliver Maximum Value for Shareholders Adj. EBITDA Contributions Led by 3 Different Mining Segments in Past 5 Quarters (dollars in millions) U.S. provides solid revenue visibility; Australia offers substantial earnings strength during mid-to-high parts of
Slide 15: Industry Fundamentals
Industry Fundamentals Coal railed from Peabody’s El Segundo Mine in New Mexico 15
Slide 16: Strong Near-Term Seaborne Thermal and Metallurgical Coal Demand at Play in 2017
Strong Near-Term Seaborne Thermal and Metallurgical Coal Demand at Play in 2017 Seaborne Thermal Coal Seaborne Metallurgical Coal Chinese thermal imports up 15 million tonnes through 9 months India demand down ~16 million tonnes through September – Stockpiles reach lowest levels in 2 years in August
Slide 17: ASEAN Countries Expected to Drive Longer-Term Industry Thermal Coal Demand Growth
ASEAN Countries Expected to Drive Longer-Term Industry Thermal Coal Demand Growth Some 30 countries on six continents have new coal-fueled generation coming online between 2017 and 2018 – ~65 gigawatts starting up each year – Majority of new plants are supercritical/ultra-supercritical Expected dema
Slide 18: Seaborne Metallurgical Coal at Fragile Supply-Demand Balance
Seaborne Metallurgical Coal at Fragile Supply-Demand Balance at ~300 Million Tons Industry-Wide Supply disruptions emerge after long period of benign events Short-term pricing mechanisms bring greater volatility Challenge to make long- term capital decisions with little revenue visibility India expe
Slide 19: PRB Generation Increases 8% Above 2016 Levels, While Natural Gas Declines 12%
PRB Generation Increases 8% Above 2016 Levels, While Natural Gas Declines 12% PRB demand up 18 million tons through September – PRB stockpiles down 5 days to 55 days of maximum burn Mild 2017 weather in coal-heavy regions impacts demand PRB and ILB competitive against natural gas: – SPRB: $2.50 to $
Slide 20: U.S., Australia Advance Pro-Energy Economy; Recognize Importance of Coal
U.S., Australia Advance Pro-Energy Economy; Recognize Importance of Coal in Energy Mix U.S. EPA proposes repeal of Clean Power Plan Perry study and proposed FERC grid resiliency pricing rule represent first step in examining grid complexity U.S. EPA Administrator declares: “The war against coal is o
Slide 21: Financial Approach
Financial Approach 21
Slide 22: Strengthening Capital Structure to Allow for Flexibility and Sustainability Through Cycles
Strengthening Capital Structure to Allow for Flexibility and Sustainability Through Cycles 131.4 million common shares outstanding (fully converted) 55% preferred shares converted Continuing multi-pronged initiative to further release restricted cash – ~$140 million released since emergence Over $3
Slide 23: Executing On Our Stated Financial Approach
Executing On Our Stated Financial Approach Generate Cash Maintaining cost discipline to enhance margins Capitalizing on buoyant seaborne coal conditions Targeting release of $200 – $400 million of restricted cash through 2018 Reduce Debt Completed $300 million of voluntary debt repayments Targeting
Slide 24: Peabody A Leading Voice in Advocating for Sustainable Mining, Energy Access and Clean Coal
Peabody A Leading Voice in Advocating for Sustainable Mining, Energy Access and Clean Coal Technologies Investment Principles for Best-in-Class Coal Companies designed to provide distinguishing elements to help investment community make portfolio decisions Operate safely Sustainable Maximize resourc
Slide 25: Strong Cash Flows and Smart Cash Use Continue Virtuous Cycle
Strong Cash Flows and Smart Cash Use Continue Virtuous Cycle Multiple Actions in Recent Months Reduce Term Loan Interest Rate By 1.00%; Modify Terms Generate Strongest Adjusted EBITDA Since 2012 Closed on $270M Revolving Credit Facility Secondary Offering Diversifies Ownership Debt Repayments total
Slide 26: Appendix
APPENDIX North Antelope Rochelle Mine Loadout Facility 26
Slide 27: Appendix: 2017 Targets
Appendix: 2017 Targets Sales Volumes (Short Tons) Capital Expenditures $165 – $195 million PRB 120 – 125 million ILB 18 – 19 million Quarterly SG&A Expense ~$35 million Western 13 – 14 million Total U.S. 151—158 million Quarterly Interest Expense $37 – $39 million Aus. Metallurgical1 11.5 – 12.0 mil
Slide 28: Appendix: 2017 Targets
Appendix: 2017 Targets 1 Metallurgical coal sales volumes may range from ~50%-60% PCI and ~40%-50% coking coal (including semi-hard and semi-soft coking coals). Approximately 55% of seaborne metallurgical sales may be executed on a spot basis, with the remainder priced under quarterly contracts or l
Slide 29: Q3 2017 Adjusted EBITDA Margins Average 30% Across Mining Segments
Q3 2017 Adjusted EBITDA Margins Average 30% Across Mining Segments Adjusted EBITDA Q3 2017 YTD 2017 Margins per Ton Aus. Thermal 37% 38% Aus. Met 34% 31% PRB 27% 24% Midwestern 24% 25% Western 22% 30% Total 30% 29% Australian thermal leads Adjusted EBITDA margins Met coal volumes increase 75% compar
Slide 30: Peabody Mission, Values and Strategy
Peabody Mission, Values and Strategy Our Mission To create superior value for our shareholders as the leading global supplier of coal, which enables economic prosperity and a better quality of life. Our Values Safety: We commit to safety and Customer Focus: We provide Leadership: We have the courage
Slide 31: Holistic View of Debt and Other Obligations
Holistic View of Debt and Other Obligations Sustainable capital structure – Focus on leverage and other long-term liabilities balanced with returning cash to shareholders over time Staggered debt maturities at 5 and 8 years B+ and B1 corporate ratings from S&P and Moody’s, respectively Manageable po
Slide 32: Peabody at a Glance: Pre and Post Emergence Challenges
Peabody at a Glance: Pre and Post Emergence Challenges Pre-Filing Post-Filing High debt levels Attempted multiple debt exchanges Reduced debt by $5.2 billion to $1.97 billion (as of emergence) Self bonding agreements in Wyoming, Reduced U.S. bonding requirements New Mexico, Indiana and Illinois with
Slide 33: Appendix: Reconciliation of Non-GAAP Measures
Appendix: Reconciliation of Non-GAAP Measures 2017 2016 2017 2016 Successor Predecessor Successor Predecessor Predecessor Quarter Ended April 2 through January 1 through Nine Months Ended September 30 September 30 April 1 September 30 (In Millions) Tons Sold Powder River Basin Mining Operations 33.7
Slide 34: Appendix: Reconciliation of Non-GAAP Measures
Appendix: Reconciliation of Non-GAAP Measures 2017 2016 2017 2016 Successor Predecessor Successor Predecessor Predecessor Quarter Ended April 2 through January 1 through Nine Months Ended September 30 September 30 April 1 September 30 (In Millions) Reconciliation of Non-GAAP Financial Measures Incom
Slide 35: Appendix: Reconciliation of Non-GAAP Measures
Appendix: Reconciliation of Non-GAAP Measures Predecessor Year Ended December 31, 2016 2015 2014 2013 2012 Tons Sold (In Millions) Powder River Basin Mining Operations 113.1 138.8 142.6 135.2 140.3 Midwestern U.S. Mining Operations 18.3 21.2 25.0 26.3 27.4 Western U.S. Mining Operations 13.7 17.9 23
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