Peabody Energy Corporation · NYSE:BTU
Peabody Energy — Investor Presentation (February 2019)
41 slides from Peabody Energy's investor presentation, Feb 25, 2019
Slide 1: Investor Presentation February 2019
Investor Presentation February 2019
Slide 2: 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 words such as “expects,” “anticipates,”
Slide 3: Peabody: A unique company in an essential global industry
Peabody: A unique company in an essential global industry Peabody Provides Compelling Investment Opportunity as Leading Global Pure-Play Coal Company 2 3 4 5 Seaborne thermal: Serving growing demand centers, delivering leading margins Seaborne metallurgical: Providing an essential product for steelm
Slide 4: ONE: Peabody: A Unique Company in an Essential Global Industry
North Antelope Rochelle Mine ONE: Peabody: A Unique Company in an Essential Global Industry North Antelope Rochelle Mine
Slide 5: 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 Operational Excellence Financial Strength Portfolio Management Focused Engagement Best People Continuing financial approach of generating cash, maintaining financial strength, investing wisely an
Slide 6: Peabody: Significant Scale Offers Numerous Benefits
Note: Coal sales as of Dec. 31, 2018. Proven and probable reserves as of Dec. 31, 2018. Free Cash Flow is a non-GAAP metric. Refer to the reconciliation to the nearest GAAP measures in the appendix. Peabody: Significant Scale Offers Numerous Benefits Strong financial position Optimized mine planning
Slide 7: Peabody: Diversity Offers Significant Competitive Advantage
Wide distribution of revenue, Adjusted EBITDA contributions Multi-regional exposure limits demand, logistics and seasonal operational risks Increased risk-adjusted returns; non-correlative demand drivers No single exposure to currency and economic fundamentals Regulatory, political diversification N
Slide 8: Global Coal-Fueled Generating Capacity Projected to Rise Dramatically in Coming Years
IHS Markit projects 125 GW of coal-plant retirements through 2030, more than offset by 439 GW of planned new coal capacity in Asia-Pacific 300 GW of new coal-fueled generating plants currently under construction in Asia –Each GW can use 3 million tons per year Global coal generation capacity passes
Slide 9: Metallurgical Coal a Primary Component for 70% of World's Steel Production
Metallurgical Coal a Primary Component for 70% of World’s Steel Production Met Coal Pricing Above $140 Per Tonne 6 of Last 8 Years Source: World Coal Association Q1 2018 Presentation, industry reports and Peabody Global Analytics. Total 2018 seaborne met coal demand totals 315 MTPY Supply tight with
Slide 10: Vast Majority of Seaborne Metallurgical Coal Demand from Asia-Pacific
India ASEAN Japan China Europe Brazil Other 0 5 10 15 20 25 30 35 Vast Majority of Seaborne Metallurgical Coal Demand from Asia-Pacific Expected Seaborne Metallurgical Coal Demand Growth 2018 -2023(tonnes in millions) 80% of total seaborne demand growth from Asia-Pacific Source: World Coal Associati
Slide 11: Regional Strength, Reliability and Resilience of Coal Mitigates Secular Decline of U.S. Thermal Coal
Regional Strength, Reliability and Resilience of Coal Mitigates Secular Decline of U.S. Thermal Coal Demand Coal is, and expected to remain key contributor to U.S. power demand –Major source of electricity in 8 out 12 regions –Fuels 27% of U.S. power PRB, ILB expected to fuel nearly two-thirds of U.
Slide 12: Coal Maintains Leading Fuel Position in Numerous U.S. Regions
Coal Maintains Leading Fuel Position in Numerous U.S. Regions Source: www.pjm.com; www.iiso-ne.com; www.misenergy.org; www.ercot.com; www.spp.org/; SNL, FERC Note: FY 2018 data not available yet for all regions; Peabody tons sold based on 2018 volumtes NW Power Pool Gas Coal: 36% BTU: 1 mt Desert SW
Slide 13: TWO: Seaborne Thermal: Serving Growing Demand Centers, Delivering Leading Margins
TWO: Seaborne Thermal: Serving Growing Demand Centers, Delivering Leading Margins WilpinjongMine
Slide 14: Seaborne Thermal Coal Platform Represents Tier One Assets with Strong Margins
14 Seaborne Thermal Coal Platform Represents Tier One Assets with Strong Margins; Positioned to Serve Asia-Pacific Demand 34% 44% 37% 38% 31% 40% 48% 42% $82 $80 $93 $98 $103 $104 $117 $105 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 Q4 18 Seaborne Thermal Coa
Slide 15: Advancing Attractive Seaborne Thermal Life Extension Projects
Advancing Attractive Seaborne Thermal Life Extension Projects to Maintain Export Thermal Coal Volumes Unincorporated joint venture with Glencore gives access to stratified reserves and extends life of Wambo open cut mine –Scheduled to begin production in early 2020 Wilpinjong extension project ensur
Slide 16: THREE: Seaborne Met: Providing Essential Product for Steel
THREE: Seaborne Met: Providing Essential Product for Steel; Targeting Expanded Quality/Quantity in 2020 Shoal Creek Mine
Slide 17: Targeting Progressive Increase in Peabody's Quality and Quantity of Met Coal Production
17 Targeting Progressive Increase in Peabody’s Quality and Quantity of Met Coal Production 2019 2020 PCI HCC 9.4 –10.4 million tons PCI HCC +1.5milliontons North Goonyella base case -expected to produce 2 million tons of HCC in 2020 Equity-accounted JV, Middlemount, adds additional 2 million tons of
Slide 18: Shoal Creek Acquisition Upgrades Seaborne Met Portfolio
18 Targeting 2.5 million tons of high-quality seaborne met coal shipments in 2019 Anticipating costs in the vessels of $85 –$95 per short ton Serves Asian and Atlantic steel customers Strategically positioned with direct access to transportation Well-capitalized longwall operation and 55 million ton
Slide 19: Executing Multi-Phased Re-Ventilation and Re-Entry Plan at North Goonyella
Executing Multi-Phased Re-Ventilation and Re-Entry Plan at North Goonyella, Targeting Longwall Mining in Early 2020 Stage-gate approach allows periodic re-evaluation of progress, costs and investments Ramping up longwall production from North Goonyella in 2020 –Targeting modest sales in 2019 –Base c
Slide 20: FOUR: U.S. Thermal: Emphasizing Lowest-Cost, Highest-Margin Operations
Rawhide Mine FOUR: U.S. Thermal: Emphasizing Lowest-Cost, Highest-Margin Operations to Maximize Cash Generation
Slide 21: U.S. Thermal Operations Well Positioned to Deliver Results
U.S. Thermal Operations Well Positioned to Deliver Results Location matters… Peabody is well positioned in the best, lowest-cost U.S. basins of the PRB and Illinois Basin Returns matter… Peabody focused on generating meaningful returns across the operations to maximize cash generation –Maximizing re
Slide 22: Continued Emphasis on Value Over Volume Across U.S. Thermal Operations
Continued Emphasis on Value Over Volume Across U.S. Thermal Operations Focused on larger-scale mines and complexes to extract value –Ability to move contracts, people, equipment between complexes to maximize margins Optimizing PRB mix to deliver highest-margin tons in response to lower demand –Enter
Slide 23: FIVE: Financial Strength: Enabling Continued Commitment to Significant Shareholder Returns
FIVE: Financial Strength: Enabling Continued Commitment to Significant Shareholder Returns
Slide 24: Maintaining Financial Strength Through Optimal Liquidity, Debt Targets and Liability Management
Maintaining Financial Strength Through Optimal Liquidity, Debt Targets and Continued Liability Management Debt & Liquidity Dec. 2017 Dec. 2018 ($ in millions) Balance Balance Unrestricted Cash & Cash $1,012 $982 Equivalents Revolver Availability $194 $244 ARS Availability $38 $94 Total Liquidity $1,
Slide 25: Substantial Operating Cash Flows Provide Opportunity for Shareholder Returns
Substantial Operating Cash Flows Provide Opportunity for Shareholder Returns, Focused Capital Investment Continue to evaluate all investments using strict filters Repurchased $1.1 billion of common stock since August 2017 Dividend per share increases 13% since inception of program Targeting 2019 cap
Slide 26: Stronger BTU...Continuing to Drive Returns
26 Stronger BTU…Continuing to Drive Returns Sept. 17 Dec. 17 March 18 June 18 Sept. 18 Dec. 18 Feb. 19 Cumulative Shareholder Returns($ in millions) Share Repurchases Quarterly Dividend $69 $176 $366 $580 $920 $1,070 $1,159 Note: Feb. 2019 cumulative cash returned to shareholders includes quarterly
Slide 27: BTU Offers Significant Intrinsic Value; Generating 2018 Results Superior to Benchmarks
27 BTU Offers Significant Intrinsic Value; Generating 2018 Results Superior to Benchmarks Source: Capital IQ; Coal and Consumable Fuel group per Capital IQ includes 199 companies. Return on capital using a standard tax rate of 37.5% for all companies. TEV/EBITDA represents market capitalization as o
Slide 28: SIX: Sustainable Business: Supported by ESG, "Coal Done Right"
North Antelope Rochelle Mine SIX: Sustainable Business: Supported by ESG,” Coal Done Right” North Antelope Rochelle Mine
Slide 29: Peabody's Emphasis on ESG Complements Financial Approach
Peabody’s Emphasis on ESG Complements Financial Approach to Create Long-Term Value for Shareholders Note: Restored acres for 2018 calendar year. Recycled/reused waste and direct/indirect economic benefits for 2017 calendar year. Peabody’s 2017 Corporate and Social Responsibility Report is available
Slide 30: Appendix
Appendix DELIVERING RESULTS GENERATING VALUE
Slide 31: 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% 7 – 8 Australia Domestic Thermal Revenues per Ton Total U.
Slide 32: 2019 Guidance Targets (footnotes)
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 expects
Slide 33: North Goonyella Mine: Segmenting of Multiple Zones
North Goonyella Mine: Segmenting of Multiple Zones North Goonyella Fan Installation 33
Slide 34: 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 2018 –Mix of semi-hard coking coal, LV PCI –Port capacity through Abbot Point, future capacity secured at DBCT Earned 2018 Adjusted EBITDA of $50 million, reflecting Peabody’s share of Middlemount’s net
Slide 35: Historical Seaborne Pricing ($/Tonne)
Historical Seaborne Pricing ($/Tonne) Time Period HCC – HCC – Spot LV PCI – LV PCI – Spot NEWC – API 5 -Settlement Settlement Spot 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 $19
Slide 36: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures Predecessor Successor Successor Jan. 1 through Apr. 2 through Quarter Ended Quarter Ended Quarter Ended Quarter Ended Quarter Ended Quarter Ended Year Ended Apr. 1, 2017 Jun. 30, 2017 Sept. 30, 2017 Dec. 31, 2017 Mar. 31, 2018 Jun. 30, 2018 Sept. 30, 2018 Dec. 31,
Slide 37: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures Predecessor Successor Successor Jan. 1 through Apr. 2 through Quarter Ended Quarter Ended Quarter Ended Quarter Ended Quarter Ended Quarter Ended Year Ended Apr. 1, 2017 Jun. 30, 2017 Sept. 30, 2017 Dec. 31, 2017 Mar. 31, 2018 Jun. 30, 2018 Sept. 30, 2018 Dec. 31,
Slide 38: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures Predecessor Successor Successor Jan. 1 through Apr. 2 through Quarter Ended Quarter Ended Quarter Ended Quarter Ended Quarter Ended Quarter Ended Year Ended Apr. 1, 2017 Jun. 30, 2017 Sept. 30, 2017 Dec. 31, 2017 Mar. 31, 2018 Jun. 30, 2018 Sept. 30, 2018 Dec. 31,
Slide 39: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures Note: Refer to definitions and footnotes on last slide of the deck. Year Ended Dec. 31, 2018Dec. 31, 2018Revenues5,581.8$ Operating Costs and Expenses4,072.6 Total Debt1,367.0$ Depreciation, Depletion and Amortization679.0 Cash and Cash Equivalents981.9 Asset Reti
Slide 40: 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 41: 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 finan
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