Peabody Energy Corporation · NYSE:BTU
Peabody Energy — Investor Presentation (September 2017)
31 slides from Peabody Energy's investor presentation, Sep 7, 2017
Slide 1: Glenn Kellow, President and Chief Executive Officer
Glenn Kellow President and Chief Executive Officer September 7, 2017 Exhibit 99.1
Slide 2: Forward-looking statements
Certain statements included in this presentation are forward-looking as defined in the Private Securities Litigation Reform Act of 1995. The Company uses words such as "anticipate," "believe," "expect," "may," "forecast," "project," "should," "estimate," "plan," "outlook," "target," "likely," "will,
Slide 3: Peabody: A Simple Yet Powerful Financial Approach
Peabody: A Simple Yet Powerful Financial Approach Generate Cash Invest Wisely Return Cash to Shareholders Reduce Debt
Slide 4: Who We Are; Where We Operate
23 operations In U.S. and Australia ~7,000 Employee-Owners Globally $4.7 billion 2016 Revenues 25+ countries Served by Peabody Operations 5.6 billion Tons of Reserves Who We Are; Where We Operate Note: Information as of the year ended Dec. 31, 2016, with the exception of headcount which is provided
Slide 5: What We Offer as a Leading Coal Producer
What We Offer as a Leading Coal Producer Note: Mining tons sold classified by product and production location based on publicly available information. Adjusted EBITDA is a non-GAAP metric. Refer to the reconciliations to the nearest GAAP measures in the appendix. YTD through June 30, 2017.
Slide 6: Transformed Peabody Opens Strong in 2017
Transformed Peabody Opens Strong in 2017 Note: Revenues and Adjusted EBITDA through June 30, 2017. Adjusted EBITDA is a non-GAAP metric. Refer to the reconciliations to the nearest GAAP measures in the appendix. Approximately $4 billion U.S. NOL position $150 million in debt repayment $500 million s
Slide 7: Operations at Peabody's North Antelope Rochelle Mine in Wyoming
Operations at Peabody’s North Antelope Rochelle Mine in Wyoming
Slide 8: Peabody Offers Top-Tier International Thermal Business with Substantial Margins
Peabody Offers Top-Tier International Thermal Business with Substantial Margins Peabody provides 13 – 14 million tons of export thermal coal Typically realizes 90 – 95% of Newcastle index price Platform rises to top performer in total mining Adjusted EBITDA and margins in 2Q Achieves record 44% marg
Slide 9: Australian Seaborne Metallurgical Portfolio Represents Marked Improvement
Australian Seaborne Metallurgical Portfolio Represents Marked Improvement; Further to Strengthing Platform Substantial steps taken to improve platform, including: Improved efficiencies, lower costs through owner-operator conversions Aligned and leaner workforce Enhanced mine planning Transition of h
Slide 10: U.S. Mining Segment Represents Significant Scale, Stable Operating Performance
U.S. Mining Segment Represents Significant Scale, Stable Operating Performance Note: Contract information as of the quarter ended June 30, 2017. Peabody leadership in PRB anchored by world’s largest coal mine – North Antelope Rochelle Mine PRB mining complex serves ~80+ domestic customers Illinois B
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 with in
Slide 12: Peabody DNA Interwoven from PRB, Midwest and Australian Heritage
Peabody “DNA” Interwoven from PRB, Midwest and Australian Heritage PRB: Large Scale, Innovative Process Technologies Australia: Continuous Improvement, Global Mining Midwest: Capital Discipline, Cost Control Trading and Shared Services: Support, Platform Optimization
Slide 13: Exceptional Operations Driven by Technology, Spirit of Continuous Improvement
Exceptional Operations Driven by Technology, Spirit of Continuous Improvement Case Study: Dozer Push Semi-autonomous technology in use at Peabody’s Wilpinjong Mine, part of the company’s constant focus on reducing costs per yard of earth moved Dozer Push Used in ILB Leads to Strong Performance Metho
Slide 14: Geographic and Product Diversity Targeted to Deliver Maximum Value
Geographic and Product Diversity Targeted to Deliver Maximum Value for Shareholders Note: Adjusted EBITDA is a non-GAAP metric. Refer to the reconciliations to the nearest GAAP measures in the appendix. U.S. provides solid revenue visibility; Australia offers substantial earnings strength during mid
Slide 15: Coal railed from Peabody's El Segundo Mine in New Mexico
Coal railed from Peabody’s El Segundo Mine in New Mexico
Slide 16: Strong Near-Term Seaborne Thermal and Metallurgical Coal Demand Led by China
Chinese thermal demand rises 13 million tonnes through July 2017; met imports increase 10 million tonnes Record China electricity generation and steel consumption in 1H 2017 Policy initiatives in place to support Chinese domestic producers Strong Near-Term Seaborne Thermal and Metallurgical Coal Dem
Slide 17: ASEAN Countries Expected to Drive Longer-Term Thermal Coal Demand Growth
ASEAN Countries Expected to Drive Longer-Term Thermal Coal Demand Growth Source: Industry data and Peabody Global Analytics. More than 50 gigawatts of new coal-fueled generation expected to be built on average each year Majority of new plants are supercritical/ultra-supercritical Expected demand gro
Slide 18: Seaborne Metallurgical Coal at Fragile Supply-Demand Balance
Seaborne Metallurgical Coal at Fragile Supply-Demand Balance at ~300 Million Tons Source: Industry data and Peabody Global Analytics. Even modest supply/demand swings can have outsized impact on pricing Supply disruptions emerge after long period of benign events Short-term pricing mechanisms bring
Slide 19: Coal Replaces Natural Gas as Top Fuel Source for U.S. Electricity Generation
Coal generation up 1% through August Total load down 2% Natural gas down 13% PRB demand up ~20 million tons through August PRB June stockpiles down 12 days from 2016 levels Mild weather in coal-heavy regions impacting demand Prompt natural gas prices ~$3.00 PRB and Illinois Basin competitive against
Slide 20: U.S. Coal Demand Likely to Modestly Decline in Coming Years
~10 GW of plant retirements expected per year Retirements to impact all coal producing regions Impact on coal demand to be largely offset by increased capacity utilization at remaining plants Policy front recognizing coal as essential part of electricity generation mix U.S. Coal Demand Likely to Mod
Slide 21: Financial Approach
FINANCIAL APPROACH Beahodly
Slide 22: Strengthening Capital Structure to Allow for Flexibility and Sustainability
Strengthening Capital Structure to Allow for Flexibility and Sustainability Through Cycles Moderate debt levels and staggered debt maturities Net debt of ~$944 million 137.3 million common shares outstanding (fully converted) 104.6 million common shares 16.7 million preferred shares Restricted Cash
Slide 23: Financial Approach: Generate Cash, Reduce Debt, Invest Wisely, Return Cash
Financial Approach: Generate Cash, Reduce Debt, Invest Wisely, Return Cash to Shareholders Liquidity Debt Deleveraging Capital Returns Targeting $800 million Current liquidity primarily in cash and cash equivalents Considering revolver over time to reduce required cash needs Committed to sustainable
Slide 24: Committed to Sustainable Mining, Energy Access and Clean Coal Technologies
Committed to Sustainable Mining, Energy Access and Clean Coal Technologies Energy Access Engagement to address major energy challenges Clean Coal Solutions Support for deployment of HELE and CCUS Operate safely Maximize resource recovery Commit to land restoration Work to achieve universal electrici
Slide 25: Substantial Recent Steps to Drive Value Creation
Substantial Recent Steps to Drive Value Creation BTU Lists on NYSE Operational Financial Industry $500 Million Share Buyback Announced; U.S. NOLs of ~$4 Billion APRIL AUGUST JULY JUNE MAY Repurchase $40 Million In Shares Repay debt; Launch Credit Facility Amendment Initiative Repay $150 Million of D
Slide 26: Appendix
APPENDIX
Slide 27: Full-Year 2017 Targets
Full-Year 2017 Targets Sales Volumes (Short Tons) Capital Expenditures $165 - $195 million PRB 117 - 120 million ILB 18 - 19 million Quarterly SG&A Expense $32 - $35 million Western 13 - 14 million Total U.S. 148 - 153 million Q3 2017 Interest Expense4 $39 - $41 million Aus. Metallurgical1 11 - 12 m
Slide 28: Full-Year 2017 Targets (Cont'd)
Full-Year 2017 Targets (Cont’d) 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 45%-55% of seaborne metallurgical sales may be executed on a spot basis, with the remainder priced under quarterly c
Slide 29: Appendix: Reconciliation of Non-GAAP Measures
Appendix: Reconciliation of Non-GAAP Measures
Slide 30: Appendix: Reconciliation of Non-GAAP Measures
Appendix: Reconciliation of Non-GAAP Measures
Slide 31: Adjusted EBITDA definition and reconciliation
(1) Adjusted EBITDA is a non-GAAP measure defined as income (loss) from continuing operations before deducting net interest expense, income taxes, asset retirement obligation expenses, depreciation, depletion and amortization and reorganization items, net. Adjusted EBITDA is also adjusted for the di
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