Peabody Energy Corporation · NYSE:BTU
Peabody Energy — Investor Presentation (February 2019)
33 slides from Peabody Energy's investor presentation, Feb 27, 2019
Slide 1: Analyst Lunch Presentation February 27, 2019
Analyst Lunch Presentation February 27, 2019
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 Provides Compelling Investment Opportunity as Leading Global Pure-Play Coal Company
Peabody Provides Compelling Investment Opportunity as Leading Global Pure-Play Coal Company Peabody: A unique company in an essential global industry Seaborne thermal: Serving growing demand centers, delivering leading margins Seaborne metallurgical: Providing an essential product for steelmaking; t
Slide 4: Peabody Advancing Comprehensive Strategy in Support of Mission to Create Superior Value for Shareholders
Peabody Advancing Comprehensive Strategy in Support of Mission to Create Superior Value for Shareholders Portfolio re-weighting towards greater seaborne thermal and seaborne metallurgical coal access to capture higher-growth Asian demand Optimizing lowest-cost and highest-margin U.S. thermal operati
Slide 5: Highly Accretive Shoal Creek Acquisition
Highly Accretive Shoal Creek Acquisition
Slide 6: Shoal Creek Acquisition Upgrades Seaborne Met Portfolio; Represents Multiple Strategic and Financial Benefits
Shoal Creek Acquisition Upgrades Seaborne Met Portfolio; Represents Multiple Strategic and Financial Benefits • Purchased mine, prep plant and supporting assets for $390 million in cash – Excludes legacy liabilities other than reclamation – Closed on transaction Dec. 2018 – New collective bargaining
Slide 7: Shoal Creek Strategically Located, Serving Asian, Atlantic Steel Mills
Shoal Creek Strategically Located, Serving Asian, Atlantic Steel Mills • Located on Black Warrior River in Central Alabama • Direct access to barge eliminates rail costs and performance issues – Coal transported via barge ~370 miles to McDuffie Terminal – McDuffie Terminal serves Panamax and Cape-si
Slide 8: High-Vol A Product Complements Peabody's Already Diverse Portfolio
High-Vol A Product Complements Peabody’s Already Diverse Portfolio 2018 Global Seaborne Coking Coal Demand by Product • Serves growing demand centers • High-vol A product offers attractive coking characteristics – Low-sulfur, low-ash – Medium-to-high volatility – High fluidity • High-vol A complemen
Slide 9: Shoal Creek Provides High-Quality Seaborne Met Coal
Shoal Creek Provides High-Quality Seaborne Met Coal Historical HCC & HVA Pricing ($ per tonne) • Shoal Creek provides premium High-Vol A (HVA) hard coking coal product • HVA historically prices close to Australia premium hard coking coal benchmark • On average over past 5 years, HVA priced at ~3% di
Slide 10: Well-Capitalized Mine Improves Productivity; Provides Strategic Advantage
Well-Capitalized Mine Improves Productivity; Provides Strategic Advantage • Mine includes two longwall kits, eliminating customary lag for longwall moves and improves production levels – Longwall panels average ~7,000 feet long – Longwall moves occur about once every year • Continuous miner utilized
Slide 11: Highly Competitive Cost Structure Contributes to Substantial Adjusted EBITDA to Cash Conversion
Highly Competitive Cost Structure Contributes to Substantial Adjusted EBITDA to Cash Conversion • Targeting costs in the vessel of $85 to $95 per short ton – Includes transportation, royalties • Low sustaining capex needs – 2019 capex of $20 million includes ~$10 million of project capital • Multipl
Slide 12: Shoal Creek Mine: Advanced Panel Development for Future Mining
Shoal Creek Mine: Advanced Panel Development for Future Mining Mine progression
Slide 13: Shoal Creek Drone: Virtual Trip to Shoal Creek
Shoal Creek Drone: Virtual Trip to Shoal Creek
Slide 14: Executing Multi-Phased Re-Ventilation, Re-Entry Plan at North Goonyella
Executing Multi-Phased Re-Ventilation, Re-Entry Plan at North Goonyella
Slide 15: Executing Multi-Phased Re-Ventilation and Re-Entry Plan at North Goonyella, Targeting Longwall Mining in Early 2020
Executing Multi-Phased Re-Ventilation and Re-Entry Plan at North Goonyella, Targeting Longwall Mining in Early 2020 • Stage-gate approach allows periodic re-evaluation of progress, costs and investments • Ramping up longwall production from North Goonyella in 2020 – Targeting modest sales in 2019 –
Slide 16: Re-Ventilation Plans Progressing As Planned in Advance of Phased Re-Entry at North Goonyella
Re-Ventilation Plans Progressing As Planned in Advance of Phased Re-Entry at North Goonyella • CO at normal levels in all zones of the mine • Re-ventilation and re-entry plan progressing well for Zone 1; targeting re-ventilation and re-entry in Zone 1 beginning in Q1 • Completed construction of fans
Slide 17: North Goonyella Mine: Segmenting of Multiple Zones
North Goonyella Mine: Segmenting of Multiple Zones North Goonyella Fan Installation
Slide 18: Financial Strength: Enabling Continued Commitment to Significant Shareholder Returns
Financial Strength: Enabling Continued Commitment to Significant Shareholder Returns
Slide 19: Substantial Operating Cash Flows Provide Opportunity for Shareholder Returns, Capital Investment
Substantial Operating Cash Flows Provide Opportunity for Shareholder Returns, Capital Investment • Continue to evaluate all investments using strict filters • Repurchased $1.1 billion of common stock since August 2017 • Dividend per share increases 13% since inception of program • Targeting 2019 cap
Slide 20: Supplemental Dividend Demonstrates Peabody's Ongoing Commitment to Returning Cash to Shareholders
Supplemental Dividend Demonstrates Peabody’s Ongoing Commitment to Returning Cash to Shareholders • Supplemental dividend of $1.85 per share declared – $200 million total payment – Augments Peabody’s ongoing quarterly dividend and $1.5 billion authorized share buyback program • Demonstrates confiden
Slide 21: Stronger BTU…Continuing to Drive Returns
Stronger BTU…Continuing to Drive Returns Cumulative Shareholder Returns ($ in millions) $1,359 $1,070 $920 $580 $366 $176 $69 Sept. 17 Dec. 17 March 18 June 18 Sept. 18 Dec. 18 Feb. 19 Note: Feb. 2019 cumulative cash returned to shareholders includes quarterly dividend of ~$14 million to be paid on
Slide 22: BTU Offers Significant Intrinsic Value; Generating 2018 Results Superior to Benchmarks
BTU Offers Significant Intrinsic Value; Generating 2018 Results Superior to Benchmarks SG&A % of Revenue Adjusted EBITDA Margin Return on Capital TEV/EBITDA BTU Coal & Consumable Fuels S&P 400 S&P 400 - Energy Source: CapitalIQ; Coal and Consumable Fuel group per CapitalIQ includes 199 companies. Re
Slide 23: 2019 Guidance Update
2019 Guidance Update • Expected earnings profile: – Currently expect 2019 Adjusted EBITDA largely consistent with current analyst consensus; approximately 20% to 25% of full-year EBITDA anticipated in first quarter given expected timing of met coal sales • Timing of cash flows: – Now anticipating No
Slide 24: Appendix
Appendix | | oy DELIVERING RESULTS GEN ERATING VALVE
Slide 25: 2019 Guidance Targets
2019 Guidance Targets Sales Volumes (Short Tons in millions) PRB 105 – 115 ILB 17.5 – 18.5 Western 11 – 12 Seaborne Metallurgical 9.4 – 10.4 HCC1: 40% – 50% PCI2: 50% – 60% Seaborne Export Thermal 11.5 – 12.5 NEWC: 60% – 70% API 5: 30% – 40% Australia Domestic Thermal 7 – 8 Revenues per Ton Total U.
Slide 26: 2019 Guidance Targets (Notes)
2019 Guidance Targets 1 Peabody expects to realizes ~80%-90% of the premium HCC quoted index price on a weighted average across all its products. 2 Approximately 40% of Peabody’s seaborne metallurgical PCI sales are on a spot basis, with the remainder linked to the quarterly contract. Peabody expect
Slide 27: Historical Seaborne Pricing ($/Tonne)
Historical Seaborne Pricing ($/Tonne) Time Period HCC – Settlement HCC – Spot LV PCI – Settlement LV PCI – Spot NEWC – Spot API 5 - Prompt Q4 2018 $212 $221 $139 $128 $105 $64 Q3 2018 $188 $189 $150 $128 $117 $69 Q2 2018 ~$197 $190 $155 $140 $104 $75 Q1 2018 $237 $228 $156.50 $149 $103 $82 Q4 2017 $
Slide 28: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures Predecessor Successor Successor Jan. 1 through Apr. 2 through Quarter Ended Quarter Ended Quarter Ended Quarter Ended Quarter Ended Quarter Ended Year Ended Apr. 1, 2017 Jun. 30, 2017 Sept. 30, 2017 Dec. 31, 2017 Mar. 31, 2018 Jun. 30, 2018 Sept. 30, 2018 Dec. 31,
Slide 29: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures Predecessor Successor Successor Jan. 1 through Apr. 2 through Quarter Ended Quarter Ended Quarter Ended Quarter Ended Quarter Ended Quarter Ended Year Ended Apr. 1, 2017 Jun. 30, 2017 Sept. 30, 2017 Dec. 31, 2017 Mar. 31, 2018 Jun. 30, 2018 Sept. 30, 2018 Dec. 31,
Slide 30: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures Predecessor Successor Successor Jan. 1 through Apr. 2 through Quarter Ended Quarter Ended Quarter Ended Quarter Ended Quarter Ended Quarter Ended Year Ended Apr. 1, 2017 Jun. 30, 2017 Sept. 30, 2017 Dec. 31, 2017 Mar. 31, 2018 Jun. 30, 2018 Sept. 30, 2018 Dec. 31,
Slide 31: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures Year Ended Dec. 31, 2018 Dec. 31, 2018 Revenues $ 5,581.8 Operating Costs and Expenses 4,072.6 Total Debt $ 1,367.0 Depreciation, Depletion and Amortization 679.0 Cash and Cash Equivalents 981.9 Asset Retirement Obligation Expenses 53.0 Net Debt (9) $385.1 Selling
Slide 32: Reconciliation of Non-GAAP Measures: Definitions
Reconciliation of Non-GAAP Measures: Definitions Note: Free Cash Flow; Adjusted EBITDA; Earnings Before Interest; Earnings Before Interest, Using Standard Tax Rate; Total Stockholders’ Equity and Debt; Net Debt and Total Enterprise Value are non-GAAP financial measures. Return on capital is equal to
Slide 33: Reconciliation of Non-GAAP Measures: Definitions (Continued)
Reconciliation of Non-GAAP Measures: Definitions (Continued) 5) Free Cash Flow is defined as net cash provided by operating activities less net cash used in investing activities and excludes cash outflows related to business combinations. Free Cash Flow is used by management as a measure of our fina
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