Coronado Global Resources Inc. · ASX:CRN
Coronado Global Resources — FY2019 Earnings Presentation
50 slides from Coronado Global Resources's earnings presentation, Feb 25, 2020
Slide 1: 2019 Full Year Results Presentation
For personal use only 2019 Full Year Results Presentation GERRY SPINDLER Managing Director and CEO AYTEN SARIDAS Group Chief Financial Officer (All units in USD, unless otherwise noted) 25 February 2020
Slide 2: FY19 Safety Performance
FY19 Safety Performance Our commitment to maintain a healthy and safe workplace is our number one priority. We safeguard our employees by providing appropriate training in best practice procedures, robust monitoring systems and safe For personal use only working environments Australian Operations (T
Slide 3: FY19 Highlights
For personal use only FY19 HIGHLIGHTS GERRY SPINDLER MANAGING DIRECTOR AND CEO HY19 Results Presentation 3
Slide 4: FY19 Highlights
FY19 Highlights(1),(a) Financial performance • Reported FY19 Net Income of $305.5 million, up $190.9 million (166.6%) compared to FY18 and up For personal use only $136.6 million (80.9%) compared to proforma FY18 of $168.9 million • Adjusted EBITDAb of $634.2m, up 5.9% compared to FY18 of $598.6 mil
Slide 5: FY19 Highlights (Cont.)
FY19 Highlights (Cont.) Distributions For personal use only • Declared a final fully franked dividend of 2.5 cents per CDI (USD) • Paid $720.1 million in distribution since IPO in October 2018 FY19 Achievements • Develop an accelerated mine expansion plan for Curragh • Secure rail and port infrastru
Slide 6: Reserves & Resources (Mt)
Reserves & Resources (Mt)2 All operating assets have a minimum life greater than 20 years For personal use only Reserves and Resources (Mt) as 31 December 20192 3,000 1,200 2,497 2,500 936 1,000 2,000 800 1,500 600 493 495 1,032 1,000 400 295 240 248 171 201 176 500 145 200 85 44 0 0 Group Curragh B
Slide 7: Group Operational Performance
Group Operational Performance Increased metallurgical coal production at Curragh during FY19 For personal use only ROM Production (Mt) Export Ratio (%) 40 FY18 FY19 30.7 30.8 27.5% 24.1% 20 15.4 16.4 7.2 6.9 7.0 6.6 1.1 0.9 72.5% 75.9% 0 Curragh Buchanan Logan Greenbrier Group Export Domestic FY18 F
Slide 8: FY19 Financial Performance
For personal use only FY19 FINANCIAL PERFORMANCE AYTEN SARIDAS GROUP CHIEF FINANCIAL OFFICER
Slide 9: FY19 financial metrics
FY19 financial metrics Improved cost performance increases profitability despite weak market conditions in the second half For personal use only FY19 FY18 Variance Production 20.2Mt 20.2Mt 0.0Mt Weak demand from Europe & Brazil steel producers and the import tariffs Sales Volumes 19.9Mt 20.1Mt 0.2Mt
Slide 10: Revenue performance
Revenue performance Improved product mix with higher proportion of metallurgical coal sold underpins revenue performance For personal use only “Group sales volumes decreased 1.0% compared to FY18, as a “Revenue of $2,215.8 million was moderately in line with FY18 as result of weak demand for US meta
Slide 11: Realised pricing
Realised pricing Metallurgical coal production continues to increase as three new sources of production at Logan ramp up “Metallurgical coal mix improved as a result of new sources of “Higher metallurgical coal mix resulted in realised pricing being For personal use only production at Logan ramping
Slide 12: FY19 EBITDA
FY19 EBITDA Continued focus on cost management underpins EBITDA growth in FY19 For personal use only Sales volumes were impacted by the Cost of Coal Revenues positively FY19 Coal Price impacted by the closure of thermal coal operations at impacted improved by operational Royalties decreased primaril
Slide 13: Segment performance
Segment performance Strong performance at Curragh & Buchanan anchor Coronado’s FY19 EBITDA performance For personal use only Australian Operations US Operations 66% EBITDA 33% EBITDA Curragh Buchanan Buchanan Logan Logan Greenbrier Greenbrier 500 500 500 EBITDA (US$m): 500 421.7 379 Curragh 250 250
Slide 14: Mining cost analysis
Mining cost analysis3 8.2% decrease in Group mining cost driven by operational efficiencies at Curragh and extended holiday shutdown at Buchanan to manage inventories For personal use only FY18 Mining Costa Curve (US$/t) FY19 Mining Costa Curve (US$/t) 140 140 Group mining cost = $51.8/t 122.8 Group
Slide 15: Cash flows and Balance Sheet
Cash flows and Balance Sheet Strong operating cash flows underpin robust balance sheet and supports corporate initiatives For personal use only #1 Operating Cash Flow (US$m) #2 Use of Debt Dividend Funding #3 Sources and Uses of Funds (US$m)a 510 Proceeds (US$m) (US$m) 4.3 Repayment of Liabilities 6
Slide 16: Underlying Net Income After Tax
Underlying Net Income After Tax4 Stronger underlying net income after tax of $305.5m, up 45.9% from FY18 For personal use only FY19 FY18 FY18 Variance Statutory Pro Forma Pro Forma Net Income was positively impacted Net Income 305.5 114.6 168.9 136.6 by mining costs pet tonne sold declining by 8.2%
Slide 17: Shareholder returns
Shareholder returns Strong operating performance and balance sheet underpins shareholder returns Dividend & Capital Return Profile Investment Return7 For personal use only Distribution of $0.025 per CDI 40% • Fully franked final dividend of 2.5 cents per CDI (USD) ($25.0 million) • Total Distributio
Slide 18: Sustainability
Sustainability Steel is a fundamental pillar of economic growth and metallurgical coal is essential to steel production For personal use only 2019 Sustainability Overview Environmental • We take our environmental obligations seriously and see good environmental management as a way to improve our bus
Slide 19: Operational Update
For personal use only OPERATIONAL UPDATE GERRY SPINDLER MANAGING DIRECTOR AND CEO 19
Slide 20: Metallurgical coal market
Metallurgical coal market Spot pricing for seaborne metallurgical coal showing signs of recovery from 2019 lows of $130 per tonne Seaborne Price (US$/t)a Key Market Points For personal use only 300 The coronavirus is forecast to Steel market weakness in Europe impacted short term steel demand in and
Slide 21: Australian Operational Review
Australian Operational Review Operational improvements and increased sales underpin FY19 financial performance For personal use only Operational Highlights Metallurgical Coal Production (Mt) 10 • Improved dragline performance increased ROM coal production to 30.8 Mt, up 6.4% compared to FY18 • Incre
Slide 22: US Operational Review
US Operational Review New sources of production at Logan increase metallurgical coal product mix For personal use only Operational Highlights Total Metallurgical Coal Production (Mt) 10.0 • Buchanan received safety award “Best Large Deep Mine in the State of 8.0 7.8 Virginia” by the Department of Mi
Slide 23: Curragh Mine Accelerated Expansion Plan
For personal use only CURRAGH MINE ACCELERATED EXPANSION PLAN GERRY SPINDLER MANAGING DIRECTOR AND CEO HY19 Results Presentation 23
Slide 24: Saleable Production Uplift
Saleable Production Uplift Deliver an additional 6 Mt over the forecast period For personal use only Estimated Production Profile (Mt)a The expansion is set to deliver 16 an additional 6 Mt from over 14.9 15.0 the forecast period 14.8 14 2.0 2.1 1.9 12.8 12.5 Growth in production is a result 12 of d
Slide 25: Infrastructure Overview
Infrastructure Overview Coronado is on track to deliver the Curragh expansion For personal use only • Optimised mine plan to integrate the SRA into Curragh North. (COMPLETED) • Curragh East boxcut for K and L pits (2021) Mining • Increase truck & shovel capacity at Curragh East to increase ROM produ
Slide 26: Curragh Cost Profile
Curragh Cost Profile Potential to deliver ~10% reduction in FOB costs over the forecast period to drive higher margins For personal use only Estimated FOB Cost Profile (US$/t)a 100 Sustainable production supply $78 - $89 profiting from a unique cost 90 structure $75 - $85 $74 - $84 $81.6 $72 - $83 8
Slide 27: Capital Cost Comparison
Capital Cost Comparison Accelerated expansion plan remains highly compelling on installed capacity basis For personal use only Capital Cost per Installed Capacity (US$/t)9 200 154 153 130 100 ~50 - 55 45 0 Warrior Riversdale Arch Curragh BMA a. Source: Company reports and disclosures FY19 Results Pr
Slide 28: Marketing
For personal use only MARKETING GERRY SPINDLER MANAGING DIRECTOR AND CEO HY19 Results Presentation 28
Slide 29: Marketing Capabilities
Marketing Capabilities Coronado is strategically positioned with an extensive global network of tier one customers Coronado’s Marketing Flow Marketing Capabilities For personal use only Coronado has a dedicated global marketing team that generates direct sales for all of Coronado’s metallurgical coa
Slide 30: 2020 Marketing
2020 Marketing Increased domestic US sales in 2020 underpin operating cash flows 2020 Metallurgical Pricing Breakdown 2020 Marketing Comments For personal use only 100% 5% US Operations have entered in to a 62% US Domestic sales are expected to combination of fixed and spot pricing 77% remain consta
Slide 31: Outlook
For personal use only OUTLOOK GERRY SPINDLER MANAGING DIRECTOR AND CEO HY19 Results Presentation 31
Slide 32: Investment Proposition
Investment Proposition Coronado has delivered significant value to shareholders since listing in October 2018 Strong Foundations For personal use only Robust Balance Sheet ($m) Strong Operating Cash Flows Low Cost Producer 57 $26 FY19 Operating Cash Flow (US$m) 56 510 55 $246.3m 54 Total 490 22.7 53
Slide 33: Disciplined and Targeted Growth Strategy
Disciplined and Targeted Growth Strategy Coronado achievements in FY19 will underscore the foundations for future growth For personal use only FY19 Achievements FY20 Key Initiatives ✓ Develop an accelerated mine expansion plan for Curragh ❑ Efficiently manage the capital projects that will facilitat
Slide 34: Guidance
Guidance Coronado is positioned to deliver long term growth, despite short term external headwinds For personal use only FY2020 Guidance GUIDANCE RANGE Production (Mt) 19.7 – 20.2 Cost ($pt) 55 – 57 Capex ($m) 190 - 210 Payout Ratio (%) 60-100% (Free Cash Flow) FY19 Results Presentation 34
Slide 35: Coronado well positioned to deliver sustainable growth
Coronado well positioned to deliver sustainable growth For personal use only 1. Signs of recovering metallurgical coal pricing aided by supply constraints 2. Significant production growth within current asset portfolio 3. Strong balance sheet coupled with disciplined approach to capital allocation 4
Slide 36: Questions
For personal use only QUESTIONS HY19 Results Presentation 36
Slide 37: Footnotes
Footnotes 1. All tonnages through this presentation are expressed in metric tonnes. All amounts quoted throughout this presentation are in US$ unless otherwise stated. HY18 values are quoted For personal use only on a Pro-forma basis throughout this presentation unless otherwise stated. EBITDA throu
Slide 38: Disclaimer
Disclaimer The material contained in this presentation is intended to be general background information on Coronado Global Resources (Coronado) and its activities. For personal use only The information is supplied in summary form and is therefore not necessarily complete. It is not intended that it
Slide 39: Disclaimer: 2019 JORC Resource and Reserve Statements
Disclaimer 2019 JORC Resource and Reserve Statements In this announcement, references to ore reserves (Reserves) are compliant with the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves 2012 For personal use only (JORC Code) and are measured in accordance wit
Slide 40: Supplementary Information
For personal use only Supplementary Information
Slide 41: Reconciliation of Non-GAAP measures
Reconciliation of Non-GAAP measures This report which incorporates a discussion of results of operations includes references to and analysis of certain non-GAAP measures (as described below) which are financial measures not recognised in accordance with U.S. GAAP. Non-GAAP financial measures are use
Slide 42: Reconciliation of Non-GAAP measures
Reconciliation of Non-GAAP measures Consolidated Balance Sheet December 31, December 31, Consolidated Balance Sheet December 31, December 31, (US$ Thousands) 2019 2018 (US$ Thousands) For personal use only 2019 2018 Assets Liabilities Current assets: Current liabilities: Cash and restricted cash 26,
Slide 43: Reconciliation of Non-GAAP measures
Reconciliation of Non-GAAP measures For personal use only December 31, December 31, December 31, Consolidated Income Statement 2019 2018 2018 (US$ Thousands) Pro forma Coal revenues 1,705,442 1,500,730 1,814,224 Coal revenues from related parties 468,897 444,870 444,870 Other revenues 41,409 34,904
Slide 44: Reconciliation of Non-GAAP measures
Reconciliation of Non-GAAP measures Consolidated Statement of Cash Flows December 31, December 31, Consolidated Statement of Cash Flows December 31, December 31, (US$ Thousands) 2019 2018 (US$ Thousands) 2019 2018 For personal use only Cash Flows From Operating Activities: Cash Flows From Investing
Slide 45: Reconciliation of Non-GAAP measures
Reconciliation of Non-GAAP measures For the year ended For the year ended For the year ended For the year ended Adjusted EBITDA reconciliation December 31, December 31, Mining Costs per tonne reconciliation December 31, December 31, For personal use only 2019 2018 2019 2018 (US$ Thousands) Pro forma
Slide 46: Reconciliation of Non-GAAP measures
Reconciliation of Non-GAAP measures Realised Pricing reconciliation For personal use only Australian For the year ended December 31, 2019 Operations U.S. Operations Consolidated (US$ Thousands, except for volume data) Total Revenues 1,465,957 749,791 2,215,748 Less: Other revenues 35,669 5,740 41,40
Slide 47: Reconciliation of Non-GAAP measures
Reconciliation of Non-GAAP measures For personal use only Mining Costs per tonne reconciliation Other / For the year ended December 31, 2019 Curragh Buchanan Logan Greenbrier Corporate Total (US$ Thousands, except for volume data) Total costs and expenses 1,132,790 266,606 247,373 76,152 36,024 1,75
Slide 48: Reconciliation of Non-GAAP measures
Reconciliation of Non-GAAP measures For personal use only Mining Costs per tonne reconciliation Other / For the year ended December 31, 2018 (Pro Forma) Curragh Buchanan Logan Greenbrier Corporate Total (US$ Thousands, except for volume data) Total costs and expenses 1,165,439 341,173 229,764 86,756
Slide 49: Reconciliation of Non-GAAP measures
Reconciliation of Non-GAAP measures Operating Costs per tonne reconciliation For personal use only Other / For the year ended December 31, 2019 Curragh Buchanan Logan Greenbrier Corporate Total (US$ Thousands, except for volume data) Total costs and expenses 1,132,790 266,606 247,373 76,152 36,024 1
Slide 50: Contacts
Contacts For personal use only Investors: Investors: Media: Matt Sullivan Aidan Meka Brett Clegg P: +61 412 157 276 P: +61 428 082 954 P: +61 487 436 985 FY19 Results Presentation 50
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