Peabody Energy Corporation · NYSE:BTU
Peabody Energy — Investor Presentation (August 2018)
36 slides from Peabody Energy's investor presentation, Aug 29, 2018
Slide 1: Investor Presentation August 2018
Exhibit 99.1 Investor Presentation August 2018 Exhibit 99.1 Investor Presentation August 2018
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 o
Slide 3: BTU Offers Compelling Investment Opportunity
BTU Offers Compelling Investment Opportunity Investment Thesis We’re the leading global pure‐play coal company, serving power and steel customers in more than 25 countries on 6 continents… We have significant scale, high‐quality assets and diversity in geography and products Financial Approach 1 2 3
Slide 4: Peabody's Significant Scale Offers Numerous Benefits
Peabody’s Significant Scale Offers Numerous Benefits ● High reserve‐to‐production ratio allows for optimized mine planning, solid cost 192 structure and expansion optionality Million tons ● Benefits customers by providing flexible of coal sales production and sourcing, improved confidence in reliabi
Slide 5: Extensive Diversity of Geography, Customers and Products
Company Offers Extensive Diversity of Geography, Customers and Products Serving more than 25 countries on 6 continents 5 Note: Highlighted countries represent customers served in at least one year between 2015 – 2017. Company Offers Extensive Diversity of Geography, Customers and Products Serving mo
Slide 6: Diversity Offers Significant Competitive Advantage
Diversity Offers Significant Competitive Advantage Percentage of Total Revenue from Customer ● Large number of Geographic Region in 2017 revenue streams Australia India South ● Multi‐regional exposure China Korea limits operating, logistics and demand risks Taiwan Other ● Increased risk‐adjusted ret
Slide 7: Industry Overview
Industry Overview ● Coal remains major part of global energy mix and essential 37% ingredient in steelmaking Share of global electricity ● 8 billion tonnes of coal fuels 37% of global electricity and 30% enables continued growth Share of U.S. in steel production electricity ● Peabody strategically p
Slide 8: Robust Seaborne Conditions Continue on Solid Demand
Robust Seaborne Conditions Continue on Solid Demand Seaborne Thermal Coal Seaborne Metallurgical Coal ● Chinese thermal imports rise ~20% ● Record global steel production, June YTD on increased thermal up 5% through June generation, industrial activity ● India imports rise 16% through June ● India s
Slide 9: U.S. Fundamentals: Secular Decline Expected to Moderate
U.S. Fundamentals: Secular Decline Expected to Moderate Over Next 5 Years ● Declines in coal use and share of ~50 electricity expected to slow as gas Million ton demand prices stabilize from last 5‐year period change between $2.80 ● Lowest‐cost basins most and $3.20/mmBtu competitive against natural
Slide 10: Industry Update: U.S. Coal Demand Challenged by Retirements
Industry Update: U.S. Coal Demand Remains Challenged by Retirements on Increased Gas and Wind Generation U.S. Utility Coal Stockpiles ● June year‐to‐date utility coal (Max Days Burn) demand declines 5% despite 4.5% increase in total electricity generation 65 – Majority of decline associated 59 58 57
Slide 11: Australian Operations: Multiple Benefits to Peabody
Australian Operations: Multiple Benefits to Peabody Australia strategically positioned to serve higher‐growth Asia‐Pacific demand centers 1 Australian segment strengthens and diversifies 2 Peabody’s portfolio Nine mines offer quality export thermal and met coal products to multiple countries 3 Tier‐
Slide 12: U.S. Operations: Multiple Benefits for Peabody
U.S. Operations: Multiple Benefits for Peabody Strategically positioned in best U.S. 1 regions serving broad customer base Operates regions as complexes, 2 sharing resources for best value PRB operations routinely deliver 3 margins above other producers Strong cash generator offering 4 meaningful re
Slide 13: Adjusted EBITDA Margins Superior To Other Coal Competitors
Adjusted EBITDA Margins Superior To Other Coal Competitors, S&P Mid‐Cap 400 Adjusted EBITDA Margin ● Diversified platform with of U.S. Producers access to higher growth (2017 – 2018 YTD Average) 27% demand centers leads to ~30% higher total 21% Adjusted EBITDA margins than other U.S. coal 14% produc
Slide 14: Peabody ESG Principles and 2017 CSR Report
Peabody ESG Principles Embodied in Holistic Approach and Highlighted in New 2017 CSR Report ● Commitment to sustainable mining practices Environmental ● Restored 1.4 acres for every acre disturbed ● Sponsor of Global Clean Coal Awards; Advocate for HELE/CCUS ● Recycled/reused about 72% of total wast
Slide 15: Generate Cash – First Component of Financial Approach
Generate Cash – First Component of Financial Approach ● Operational results paramount to strong cash generation Operational ● Non‐core asset sales provide Results incremental cash flows ● Substantial global NOL positions Non‐Core Asset Sales significantly limit future cash taxes for extended time Ca
Slide 16: Maintain Financial Strength – Long-Term Debt Target
Maintain Financial Strength – Achieves Higher End of Long‐Term Debt Target of $1.2 to $1.4 Billion Current Debt Maturity and Liquidity Sources $1,500 April 2017 Debt and Liquidity Sources $1,200 Current Debt and Liquidity Sources $900 Term loan reduced by $550 million, rate *Revolver and AR securiti
Slide 17: Invest Wisely – Default Position to Return Cash to Shareholders
Invest Wisely – Default Position to Return Cash to Shareholders ● Particular emphasis on amount and Maintain Returns timing of returns financial above cost strength of capital – Direct correlation between rate of return and shareholder value Core regions: Reasonable ● Earned 21% ROIC in 2017, PRB, I
Slide 18: Return Cash to Shareholders – Share Repurchases, Dividends
Return Cash to Shareholders – Share Repurchases, Dividends Accelerated Cash Allocation ● Total share repurchases up ($ in millions) to ~$875 million $340 – ~$200 million bought $300 back in Q2; $325 million Q3 YTD ● 22.8 million shares $213 repurchased thus far $200 $191 – 17% of shares outstanding
Slide 19: Peabody: Integrated Approach Creates Maximum Value
Peabody: Integrated Approach Creates Maximum Value · The Peabody team delivered powerful achievements since relisting, and we’re not about to stop · We are committed to outlining approach and then delivering · We have the right assets, financial strength, people and strategies to succeed · We are co
Slide 20: Appendix
DELIVERING RESULTS GENERATING VALVE Appendix
Slide 21: 2018 Guidance Targets
2018 Guidance Targets Sales Volumes (Short Tons in millions) Capital Expenditures $275 – $325 million PRB 115 – 120 ILB 18 – 19 Quarterly SG&A Expense ~$40 million 13 – 14 Western 146 – 153 $140 – $148 million Total U.S. Interest Expense 1 4 11 – 12 Aus. Metallurgical Cost Sensitivities 2 5 11.5 – 1
Slide 22: 2018 Guidance Targets
2018 Guidance Targets 1 Metallurgical coal sales volumes may range from ~55%‐65% PCI and ~35%‐45% coking coal (including semi‐hard and semi‐soft coking coals). Approximately 30% of seaborne coking sales may be priced on a spot basis, with the remainder linked to an index. Approximately 30% of seabor
Slide 23: Historical Seaborne Pricing ($/Tonne)
Historical Seaborne Pricing ($/Tonne) Time HCC – HCC – LV PCI – LV PCI – NEWC – Period Settlement Spot Settlement Spot Spot Q2 2018 ~$197 $190 $155 $140 $104 Q1 2018 $237 $228 $156.50 $149 $103 Q4 2017 $192 $205 $127 $126 $98 Q3 2017 $170 $189 $115/$127 $117 $93 Q2 2017 $194 $190 $135 $124 $80 Q1 20
Slide 24: Reconciliation of Non-GAAP Measures
Reconciliation of Non‐GAAP Measures 24Reconciliation of Non‐GAAP Measures 24
Slide 25: Reconciliation of Non-GAAP Measures
Reconciliation of Non‐GAAP Measures Note: Refer to definitions of Adjusted EBITDA, Total Reporting Segment Costs and Free Cash Flow on following 25 slide. Reconciliation of Non‐GAAP Measures Note: Refer to definitions of Adjusted EBITDA, Total Reporting Segment Costs and Free Cash Flow on following
Slide 26: Reconciliation of Non-GAAP Measures: Definitions
Reconciliation of Non‐GAAP Measures: Definitions 26Reconciliation of Non‐GAAP Measures: Definitions 26
Slide 27: Reconciliation of Non-GAAP Measures
Reconciliation of Non‐GAAP Measures Note: Refer to footnote explanations on the following slide. 27Reconciliation of Non‐GAAP Measures Note: Refer to footnote explanations on the following slide. 27
Slide 28: Reconciliation of Non-GAAP Measures: Definitions
Reconciliation of Non‐GAAP Measures: Definitions 28Reconciliation of Non‐GAAP Measures: Definitions 28
Slide 29: Third Quarter 2018 Expectations Relative to Second Quarter 2018
Third Quarter 2018 Expectations Relative to Second Quarter 2018 · North Goonyella longwall move expected to impact Q3 met coal segment Adjusted EBITDA margins by ~$15 per ton on costs and sales mix; partly offset by increased thermal export coal sales, higher U.S. volumes and positive Resource Manag
Slide 30: By the Numbers: Establishing a Holistic Capital Structure
By the Numbers: Establishing a Holistic Capital Structure ● $800 million liquidity target Debt & Liquidity June 2018 ($ in millions) Balance ● Potential to increase available Unrestricted Cash & Cash $1,452 revolver liquidity over time, Equivalents reducing required cash balance Revolver Availabilit
Slide 31: Middlemount Joint Venture Offers Economic Exposure to ~2 Million Met Tons
Middlemount Joint Venture Offers Economic Exposure to ~2 Million Met Tons Annually ● Peabody owns 50% equity interest in Middlemount ● Share of operations delivered 2.1 million tons in 2017 – Mix of semi‐hard coking coal, LV PCI – Port capacity through Abbot Point, future capacity secured at DBCT ●
Slide 32: Potential Opportunities for Metallurgical Development in Bowen Basin
Potential Opportunities for Metallurgical Development and Organic Growth in Bowen Basin Over Time 32Potential Opportunities for Metallurgical Development and Organic Growth in Bowen Basin Over Time 32
Slide 33: Spotlight: North Antelope Rochelle World's Largest Coal Mine
Spotlight: North Antelope Rochelle World’s Largest Coal Mine ● Offers reliable source of supply to over 50 customers in 21 states, powering ~4.5% of total U.S. electricity generation ● Strategically positioned on rail joint line with multiple entry/exit points for simultaneous arrivals and departure
Slide 34: Focused Engagement: Support for Highly Responsible Coal Mining and Use
Focused Engagement: Support for Highly Responsible Coal Mining and Use Strong attention to Initiatives to promote Support for greater operational excellence by expanded access to deployment of advanced committing to safe reliable, low‐cost coal technologies and workplaces, maximizing electricity thr
Slide 35: Substantial Interest in BTU from Multiple Sectors of Capital Markets
Substantial Interest in BTU from Multiple Sectors of Capital Markets ● February 2017 – Targeted $1.5 billion debt offering upsized and heavily oversubscribed ● April 2017 – $1.3 billion in third‐party U.S. bonding facilities on emergence – $250 million accounts receivable securitization program – $1
Slide 36: Peabody Outperforms S&P MidCap 400 on Multiple Investor Comps
Peabody Outperforms S&P MidCap 400 on Multiple Investor Comps Peabody S&P 400 BTU vs. S&P 400 Operating Margin 17% 9% 84% Adjusted EBITDA Margin 26% 14% 88% Profit Margin 16% 6% 175% Return on Common Equity 22% 10% 126% Focused on Earning Improved Multiple With Strong Performance, Disciplined Capita