Peabody Energy Corporation · NYSE:BTU
Peabody Energy — Credit Suisse 2013 Energy Summit
27 slides from Peabody Energy's conference presentation, Feb 6, 2013
Slide 1: Energizing The World One BTU At A Time
Energizing The World One BTU At A Time Credit Suisse 2013 Energy Summit Vic Svec Senior Vice President Investor Relations and Corporate Communications February 6, 2013 Peabody Energy
Slide 2: Statement on Forward-Looking Information
Statement on Forward-Looking Information Peabody Energy The use of the words “Peabody,” “the company,” “our” and “we” relate to Peabody Energy Corporation, its subsidiaries and majority-owned affiliates. Certain statements in this presentation are forward-looking within the meaning of Section 27A of
Slide 3: Peabody Well Positioned in face of Mixed Market Conditions
Peabody Well Positioned in face of Mixed Market Conditions Peabody Energy Peabody delivered record 2012 safety results, revenues, Adjusted U.S. EBITDA and Australia sales volume 2013 coal markets show early signs of rebound Emerging markets to drive significant near-and long-term met and thermal coa
Slide 4: 2012 Accomplishments
2012 Accomplishments
Slide 5: BTU Delivers Notable 2012 Accomplishments
BTU Delivers Notable 2012 Accomplishments Peabody Energy Achieved safest incident rate in company history Set record U.S. Adjusted EBITDA of $1.26 billion Reached record Australian sales as volumes rose 30% to 33 million tons Strong cost control limits per-ton increase to 4% in 2012 Delivered total
Slide 6: Diverse Revenues and Strong Cost Containment Drive Superior Margins
Diverse Revenues and Strong Cost Containment Drive Superior Margins Peabody Energy 2012 Revenue by Product Western U.S. Thermal Australian Met Australian Thermal Trading & Brokerage Midwest U.S. Thermal Global platform provides diverse contributions Gross margins ~30% above U.S. peer group over past
Slide 7: Global Coal Markets
Global Coal Markets
Slide 8: 2012 Review: Challenging Year Ends With Signs of Stabilizing Markets
2012 Review: Challenging Year Ends With Signs of Stabilizing Markets Peabody Energy 2012 international markets impacted by: Tepid economic growth Flat steel demand Rising coal supplies Strong global coal demand drove record imports Seaborne thermal demand grew 90 million tones China, India record im
Slide 9: 2013 Markets: Early Indications of Demand Rebound
2013 Markets: Early Indications of Demand Rebound Peabody Energy Signs of accelerating Chinese growth Expect global steel production growth of ~3% driving increased need for metallurgical coal 75W of coal generation expected to come on line, requiring 250 MTPY of coal at full capacity Seaborne therm
Slide 10: China's Economic Growth Accelerating
China's Economic Growth Accelerating Peabody Energy Q4 GDP increased 7.9% January PMI index at two-year high Strong December data: Record coal imports of 35 MT Steel production up 8% Utility stockpiles down to 18 days 2012 Coal imports of 289 MT Expect coal generation demand to increase 7% in 2013 C
Slide 11: 2013 Markets: Global Supply Constraints Again Beginning to Emerge
2013 Markets: Global Supply Constraints Again Beginning to Emerge Peabody Energy Weather impacting production in Indonesia and Australia Strikes threaten mine production in multiple countries U.S. exports likely to decrease for both met and thermal coal Mozambique and Mongolia shipments below target
Slide 12: Met Coal Spot Pricing Beginning to Rise After 2012 Declines
Met Coal Spot Pricing Beginning to Rise After 2012 Declines Peabody Energy HQHCC Spot Prices Above Q1 Contracts, LVPCI Spread Tightening Metallurgical Spot FOB Price per Tonne $80 $120 $160 $200 $240 January 2012 April July October January 2013 HQ Hard Coking Coal Low Vol PCI Low-Vol PCI Closes Gap;
Slide 13: Annual World Coal Demand Expected to Grow ~1.4 Billion Tonnes in Five Years
Annual World Coal Demand Expected to Grow ~1.4 Billion Tonnes in Five Years Peabody Energy Expected Global Coal Demand (Tonnes in Millions) 0 2,000 4,000 6,000 8,000 10,000 2012E 7,665 ROW 2,975 China 4,000 India 690 2013P 7,950 ROW 2,990 China 4,240 India 720 2017P 9,050 ROW 3,175 China 5,000 India
Slide 14: China, India Coal Imports Expected to Grow 8% - 10% in 2013
China, India Coal Imports Expected to Grow8% - 10% in 2013 Peabody Energy China ~250 GW of new generation 2017 Steel and generation build-out along coast allows for greater imports China NDRC implements new regulation for “special and scarce” met coals Rising costs and currency impact domestic produ
Slide 15: U.S. Coal: 2012 Marked Sharp Decline in Demand
U.S. Coal: 2012 Marked Sharp Decline in Demand Peabody Energy U.S. coal demand declined 105 million tons in 2012 Significant coal-to-gas switching early in year Coal generation down 13% after 20% decline in first half Exports reached new record of 123 million tons Production down 70 million tons Sto
Slide 16: 2013 Outlook: U.S. Coal Generation Rebounds
2013 Outlook: U.S. Coal Generation Rebounds Peabody Energy U.S. coal demand expected to rebound 40 - 60 million tons Gas-to-coal switching in play PRB and ILB competitive at $2.50 - $2.75 and $3.25 - $3.50 gas price, respectively CAPP requires $4.50 or higher gas price to be competitive Additional p
Slide 17: PRB and Illinois Basin to Benefit from Higher U.S. Plant Utilization
PRB and Illinois Basin to Benefit from Higher U.S. Plant Utilization Peabody Energy Cumulative Generation Changes: 2012 - 2017 (Tons in Millions) CAPP/Other - Retirements (35) New Generation +5 Utilization/Switching +15 Total Demand Change (15) PRB/ILB - Retirements (20) New generation +15 Utilizati
Slide 18: Coal Expected to Overtake Oil as World's Largest Energy Source in 2013
Coal Expected to Overtake Oil as World's Largest Energy Source in 2013 Peabody Energy Total World Primary Energy Demand by Fuel Million Tonne of Oil Equivalent 2000 2005 2010 2013 2015 2020 2025 2030 Coal Oil Natural Gas Nuclear Hydro Renewables Source: Wood Mackenzie Energy Service 18
Slide 19: Peabody Focus Areas in 2013
Peabody Focus Areas in 2013
Slide 20: Peabody Positioned for Success in 2013
Peabody Positioned for Success in 2013 Peabody Energy 2013 Focus Areas Achieve operational excellence in safety, productivity and production Reduce costs and capital at all levels of the organization Maximize cash flow to pursue debt reduction Position Peabody to benefit when markets recover 20
Slide 21: U.S. Platform Well Positioned in Current Market
U.S. Platform Well Positioned in Current Market Peabody Energy Maintaining highly priced 2013 position given market conditions Targeting 180 - 190 million tons of production in 2013 90% - 95% priced for 2013; 50% - 60% priced for 2014 Revenues per ton expected to be 5% - 10% below 2012 levels Intens
Slide 22: Australia Platform Targets Higher Volumes and Productivity Gains
Australia Platform Targets Higher Volumes and Productivity Gains Peabody Energy Higher volumes targeted from completing late-stage development projects Target 33 - 36 million tons of sales in 2013 2013 Projects include owner operator conversion and top coal caving implementation Conversion on track
Slide 23: Significant Australian Assets Provide Platform for Future Growth
Significant Australian Assets Provide Platform for Future Growth Peabody Energy Successfully integrated Australian acquisition Significant productivity improvements PEA-PCI productivity improved more than 30% since acquisition Synergies of $750 million to $1 billion NPV on track Significant resource
Slide 24: 2013 Outlook: Expected Increases in Earnings Following First Quarter
2013 Outlook: Expected Increases in Earnings Following First Quarter Peabody Energy Q1 2013 Adjusted EBITDA target: $200 - $270 million Adjusted Diluted Loss Per Share of ($0.26) - ($0.04) Reflects timing of additional overburden removal and transition costs to owner operator Target 2013 capital spe
Slide 25: Peabody Positioned to Meet Needs of Changing Markets
Peabody Positioned to Meet Needs of Changing Markets Peabody Energy Rising metallurgical and thermal coal exports from Australia Leading position in low-cost PRB and Illinois Basin Managing through near-term headwinds and tempering growth projects Aggressive focus on cost control across platform Sol
Slide 26: Energizing The World One BTU At A Time
Energizing The World One BTU At A Time Credit Suisse 2013 Energy Summit Vic Svec Senior Vice President Investor Relations and Corporate Communications February 6, 2013 Peabody Energy
Slide 27: Appendix: Reconciliation of Non-GAAP Measures
Appendix: Reconciliation of Non-GAAP Measures Peabody Energy Reconciliation of Adjusted EBITDA, Adjusted (Loss) Income from Continuing Operations and Adjusted Diluted EPS (Unaudited) Quarter Ended March 31, 2013 (1) Year Ended December 31, (2) Low High 2012 2011 2010 2009 2008 Adjusted EBITDA (3) $2