Peabody Energy Corporation · NYSE:BTU
Peabody Energy — Barclays CEO Energy-Power Conference 2013
30 slides from Peabody Energy's conference presentation, Sep 11, 2013
Slide 1: Life Empowered: Barclays CEO Energy-Power Conference
Life Empowered Barclays CEO Energy-Power Conference September 12, 2013 Gregory H. Boyce Chairman and Chief Executive Officer Peabody Energy
Slide 2: Forward-looking statements
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 the Securities Act of 1933 and Section 21E of the Secur
Slide 3: Peabody Well Positioned with Significant Upside to Improving Markets
Peabody Well Positioned with Significant Upside to Improving Markets Peabody Energy Successfully implementing cost improvements Well-capitalized platform with low sustaining capital needs Large asset base and long-term project profile Portfolio diversity enables success in multiple markets Coal mark
Slide 4: Global Coal Markets
Global Coal Markets
Slide 5: Near Perfect Correlation Between Coal Use and GDP Growth
Near Perfect Correlation Between Coal Use and GDP Growth Peabody Energy Electricity from Coal (TWh) 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 1970 1980 1990 2000 2010 2020 2030 World GDP (Trillions of 2005 $) 10 20 30 40 50 60 70 80 90 $100 Global Electricity from Coal World GDP Source: De
Slide 6: Annual World Coal Demand to Grow 1.2 Billion Tonnes in Five Years
Annual World Coal Demand to Grow 1.2 Billion Tonnes in Five Years Peabody Energy Expected Global Coal Demand (Tonnes in Millions) 0 1,000 2,000 3,000 4,000 5,000 India ROW China 2012 726 2,886 4,069 2017P 920 3,065 4,890 New coal-fueled generation of ~425 GW by 2017 Steel production growth requires
Slide 7: Improving Near-Term Macroeconomic Indicators Support Coal Demand Growth
Improving Near-Term Macroeconomic Indicators Support Coal Demand Growth Peabody Energy Global Economic Activity Accelerates Sharply Global PMI Euro-Zone PMI Japan PMI April 2013 July 2013 51.9 54.1 46.9 51.7 51.1 52.2 Global PMI highest level in 2.5 years Expansion driven by developed markets and Ch
Slide 8: China Economic Activity Rebounds; Drives Increased Coal Imports
China Economic Activity Rebounds; Drives Increased Coal Imports Peabody Energy Steal Production Up 12.8% Composite PMI 51.8 Fixed Asset Investment Up 21.4% Industrial Production Up 10.4% Electricity Generation Up 13.4% China Coal Imports Up 18% Source: HSBC, World Steel Association, China Customs, C
Slide 9: Metallurgical Coal Fundamentals Improving; Strong Long-Term Demand
Metallurgical Coal Fundamentals Improving; Strong Long-Term Demand Peabody Energy Industrialization and Urbanization Drive Coal Growth Spot met prices up >15% from recent lows Near-term markets improving on strong Asian demand and declining U.S. exports High-cost met coal supplies declining Global i
Slide 10: New Generation Drives Significant Global Thermal Coal Demand
New Generation Drives Significant Global Thermal Coal Demand Peabody Energy Global Seaborne Thermal Coal Demand (Tonnes in Millions) 2012 Atlantic Other Pacific India China 2017P 0 200 400 600 800 1,000 1,200 910 -20 +75 +80 +75 1,120 New coal fueled generation requires 210 million tonnes per year o
Slide 11: China, India to Account for 85% of Global Coal Demand Growth
China, India to Account for 85% of Global Coal Demand Growth Peabody Energy China and India Coal Imports (Tonnes in Millions) India China 0 100 200 300 400 500 2012 2013P 2017P 135 160 235 290 325 410 China and India coal imports expected to grow 220 million tonnes by 2017 Significant new coal gener
Slide 12: Production Cutbacks Expected to Improve Supply-Demand Balance
Production Cutbacks Expected to Improve Supply-Demand Balance Peabody Energy 151 U.S. coal mines idled in the first half of 2013. Illinois Illinois Basin Missouri St. Louis Indiana Indianapolis Kentucky Tennessee Nashville Knoxville Ohio Cincinnati Cleveland West Virginia Charleston Central Appalach
Slide 13: China Likely to Follow U.S. Path for Greater Coal Use, Decreasing Emissions
China Likely to Follow U.S. Path for Greater Coal Use, Decreasing Emissions Peabody Energy U.S. Emissions Decline 87% Since 1970 as Coal Use Nearly Triples Pittsburgh 1950s Pittsburgh Today 1970 1980 1990 2000 2011 -100% -50% 0% 50% 100% 150% Coal-Based Power Generation +170% GDP per Capita +103% Re
Slide 14: U.S. Markets: Fundamentals Improving as U.S. Coal Demand Rebounds in 2013
U.S. Markets: Fundamentals Improving as U.S. Coal Demand Rebounds in 2013 Peabody Energy Natural Gas Prices Average 2013 Pricing Up 50% YTD Natural Gas Generation Down 15% YTD Coal Generation Up 8% YTD Coal Shipments Down 4% YTD SPRB Inventories ~30% Below Prior Year Peak Levels Source: Peabody Glob
Slide 15: SPRB and Illinois Basin: Million Ton Increase Through 2017
SPRB and Illinois Basin: 135 Million Ton Increase Through 2017 Peabody Energy Expected U.S. Generation Demand (Tons in Millions) 0 200 400 600 485 -35 +10 +160 620 SPRB and ILB +135 0 200 400 340 -45 +5 +35 335 Other Basins -5 2012 Retirements New Generation Utilization/Switching 2017P 65 - 75 GW of
Slide 16: U.S. Markets: Stockpile Levels Improving on Gas-to-Coal Switching
U.S. Markets: Stockpile Levels Improving on Significant Gas-to-Coal Switching Peabody Energy SPRB Utility Stockpiles (Tons in Millions) May 2012 Aug. 2012 Nov. 2012 Feb. 2013 May 2013 60 70 80 90 100 U.S. coal demand expected to rebound 45 - 55 million tons in 2013 PRB and ILB competitive at $2.50 -
Slide 17: Coal to Account for More Than 40% of Global Electricity Generation Growth
Coal to Account for More Than 40% of Global Electricity Generation Growth Peabody Energy Expected Electricity Generation Growth (2010 - 2035) Coal Nat. Gas Nuclear Hydro Other Coal: The World's Fastest Growing Major Fuel Coal grew twice as fast as average of other major fuels in past decade Coal exp
Slide 18: Peabody Energy Outlook
Peabody Energy Outlook
Slide 19: Well Capitalized Platform and Strong Cost Containment Drive Superior Margins
Well Capitalized Platform and Strong Cost Containment Drive Superior Margins Peabody Energy 3-Year Average Gross Margins Peabody 31% U.S. Peer Average 24% Peabody's average gross margins 30% above U.S. peers over past three years Margins driven by successful cost containment programs Leading presenc
Slide 20: Peabody Has Significant Upside to Rising Coal Prices
Peabody Has Significant Upside to Rising Coal Prices Peabody Energy Modest Price Increase Drives Significant Revenue Growth Metallurgical Coal Seaborne Thermal Coal Illinois Basin Thermal PRB Thermal 2013 Production Potential Revenue Impact 15 - 16 million tons $10 $150 - $160 million in 2014 11 - 1
Slide 21: Australian Platform Targets Growing Asia Markets
Australian Platform Targets Growing Asia Markets Peabody Energy Targeted Australia Volumes (Tons in Millions) 0 10 20 30 40 2005 8 Seaborne Thermal 2 Metallurgical 6 2011 25 Domestic Thermal 6 Seaborne Thermal10 Metallurgical 9 2012 33 Domestic Thermal 7 Seaborne Thermal 12 Metallurgical 14 2013P 33
Slide 22: Peabody's Australia Costs Decline 8%, Productivity up 10%
Peabody's Australia Costs Decline 8%, Productivity up 10% Peabody Energy Australia Costs Per Ton Q1 2012 Q2 Q3 Q4 Q1 2013 Q2 $65 $75 $85 2013 costs expected in mid-$70s per ton range Achieving success with multiple initiatives: Streamlining workforce, shifting volumes and improved mining methods Add
Slide 23: Early Success from Second Quarter 2013 Owner-Operator Conversions
Early Success from Second Quarter 2013 Owner-Operator Conversions Peabody Energy Owner-Operator Volumes Increase from ~35% to ~85% Eliminated Contractor Margins Robust Mine Planning Better Workforce Alignment Right-Sized Equipment Improved operating efficiency and productivity drive cost reduction C
Slide 24: PCI Mines Cost Base Reset After Significant Remediation Work
PCI Mines Cost Base Reset After Significant Remediation Work Peabody Energy PCI Productivity (Million Units) October 2011 June 2013 0 20 40 60 80 100 +40% Successfully completed remediation efforts at acquired PCI mines Increased productivity nearly 40% since acquisition Record dragline performance
Slide 25: U.S. Platform Well Positioned in Current Market
U.S. Platform Well Positioned in Current Market Peabody Energy Improving cost profile and long-term contracting strategies contribute more than half of Peabody's global earnings Targeting 180 - 190 million tons of production in 2013 Fully priced for 2013; 70% - 80% priced for 2014 Maximizing margins
Slide 26: U.S. Cost Containment Initiatives Taking Hold
U.S. Cost Containment Initiatives Taking Hold Peabody Energy Delivered significant cost and productivity improvements U.S. costs per ton down 2% U.S. productivity up 8% Shifting volumes to more productive operations Benefiting from recent investments NARM most productive mine Bear Run largest easter
Slide 27: Maintaining Financial Strength Through Capital Discipline and Debt Repayment
Maintaining Financial Strength Through Capital Discipline and Debt Repayment Peabody Energy Capital Discipline Capex down 62% YTD Targeting 2013 capex of $350 - $450 million Deferring growth projects Sustaining capital trending below historical range of $1.25 - $1.75/ton Previous investments enable
Slide 28: Peabody Strategy and Operating Success Drive Value in All Market Conditions
Peabody Strategy and Operating Success Drive Value in All Market Conditions Peabody Energy Leading presence in growing markets Superior margins vs. peers Significant upside to improving coal markets Well-capitalized platform Successful cost improvements Large asset base for future development 28
Slide 29: Peabody Energy www.PeabodyEnergy.com
Peabody Energy www.PeabodyEnergy.com Life Empowered
Slide 30: 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 Year Ended (Dollars in millions, except per share data) Mar. 31, Jun. 30, Sept. 30, 2013 Dec. 31, 2013
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