Peabody Energy Corporation · NYSE:BTU
Peabody Energy — Q2 2019 Earnings Presentation
22 slides from Peabody Energy's earnings presentation, Jul 31, 2019
Slide 1: Quarterly Investor Update
Quarterly Investor Update Glenn Kellow – President and Chief Executive Officer Amy Schwetz – EVP and Chief Financial Officer Vic Svec – SVP Global Investor and Corporate Relations July 31, 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: Highlights: Second Quarter 2019
Highlights: Second Quarter 2019 Seaborne thermal segment earns Adjusted EBITDA margins of 34% due to strong contracting position, low-cost operations Seaborne metallurgical segment delivers 29% Adjusted EBITDA margins, excluding North Goonyella project costs Shoal Creek Mine holds position as
Slide 4: Second Quarter Results Reflect Solid Shoal Creek, Seaborne Contributions; Cost Improvement Across Operations
Second Quarter Results Reflect Solid Shoal Creek, Seaborne Contributions; Cost Improvement Across Operations Q2 2019 Adjusted EBITDA • Seaborne metallurgical segment by Mining Portfolios supported by exceptional performance from Shoal Creek – $50 per ton improvement in costs at Seaborne Coppabella M
Slide 5: Peabody Returns $436 Million in Cash to Shareholders YTD in 2019
Peabody Returns $436 Million in Cash to Shareholders YTD in 2019 • Share repurchases total $1.2 billion under current share repurchase program Total Shares Repurchased • Buyback activity resumed 34 Million following required blackout period related to PRB/ Colorado joint venture 25% – $57 million re
Slide 6: Peabody Implementing Multiple Strategies in Support of Mission to Create Superior Value for Shareholders
Peabody Implementing Multiple Strategies in Support of Mission to Create Superior Value for Shareholders 1) Continuing to reweight our investments toward greater seaborne thermal and Shoal Creek excels seaborne metallurgical coal access in first 6 months to capture higher-growth Asian demand 2) Opti
Slide 7: Seaborne Metallurgical: Shoal Creek Upgrades Portfolio; Opportunities for Development/Organic Growth Over Time
Seaborne Metallurgical: Shoal Creek Upgrades Portfolio; Opportunities for Development/Organic Growth Over Time ● Met prices show resilience HVA and HCC Index Price in second quarter; Recent easing $400 (USD per tonne) ● China imports strong $300 Avg: $174 per tonne YTD on steel growth, $200 stimulus
Slide 8: Peabody Assessing Prospective Paths, Timetables and Costs for North Goonyella to Maximize Value
Peabody Assessing Prospective Paths, Timetables and Costs for North Goonyella to Maximize Value All potential paths preserve opportunity to access more than 40 million tons of HCC in lower seam reserves over time Note: Mine map not to scale. For illustration purposes only. 8
Slide 9: Seaborne Thermal: Continues to Offer Strong Margins; Positioned to Serve Higher-Growth Asia-Pacific Demand
Seaborne Thermal: Continues to Offer Strong Margins; Positioned to Serve Higher-Growth Asia-Pacific Demand ● NEWC pricing rebounds from lows NEWC vs. API 5 Spreads (USD per tonne) experienced late in second quarter $60 $50 – API 5 spread versus NEWC compresses $40 ● Recent surge in China imports; $3
Slide 10: U.S. Thermal: Highly Synergistic JV Expected to Reduce Costs, Enable Coal to Better Compete
U.S. Thermal: Highly Synergistic JV Expected to Reduce Costs, Enable Coal to Better Compete Against Other Energy Sources ● Total electricity demand down PRB Mine Joint Loadings (Trains per Week) 2% YTD on below-normal heating and cooling degree days in heavy demand months ● Coal accounted for 24% of
Slide 11: JV Expected to Unlock Pre-Tax Synergies of ~$820 Million; Projected 10-Year Average Synergies of ~$120 Million Per Year
JV Expected to Unlock Pre-Tax Synergies of ~$820 Million; Projected 10-Year Average Synergies of ~$120 Million Per Year ● Integration projected to lead to substantial synergies, including: Progress Update – Optimization of mine planning and sequencing and accessing otherwise isolated reserves ● Adva
Slide 12: Financial Approach: Peabody Intends to Return to Shareholders Amount Greater Than Free Cash Flow in 2019
Financial Approach: Peabody Intends to Return to Shareholders Amount Greater Than Free Cash Flow in 2019 Investment Filters Cumulative Shareholder Returns ($ in millions) Strategic portfolio fit $1,506 Maintains financial strength $1,070 Generates returns above cost of capital Provides a rea
Slide 13: Second Half Activities Continue to Drive Value
Second Half Activities Continue to Drive Value • At current prices, Peabody expects second-half Adjusted EBITDA contributions to be largely in line with first half results • Anticipating progressive increases in seaborne thermal and met coal volumes; Kayenta Mine ceases production within Q3 • Examin
Slide 14: Appendix
GENERATING VALVE
Slide 15: 2019 Guidance Targets
2019 Guidance Targets Sales Volumes (Short Tons in millions) PRB 105 – 115 Quarterly SG&A Expense ~$40 million ILB 17.5 – 18.5 Full-Year Capital Expenditures $350 – $375 million Western 11 – 12 Full-Year DD&A $600 – $650 million Seaborne Metallurgical 9.4 – 10.4 Full-Year Interest Expense4 ~$150 mil
Slide 16: 2019 Guidance Targets (footnotes)
2019 Guidance Targets 1 Peabody expects to realize ~80%-90% of the premium HCC quoted index price on a weighted average across its HCC products. 2 Approximately 40% of Peabody’s seaborne metallurgical PCI sales are on a spot basis, with the remainder linked to the quarterly contract. Peabody expects
Slide 17: Historical Seaborne Pricing ($/Tonne)
Historical Seaborne Pricing ($/Tonne) Time HCC – HCC – LV PCI – LV PCI – NEWC – API 5 – Period Settlement Spot Settlement Spot Prompt Prompt Q2 2019 $208 $203 $138.50 $125 $80 $57 Q1 2019 $210 $206 $141 $126 $97 $60 Q4 2018 $212 $221 $139 $128 $105 $63 Q3 2018 $188 $189 $150 $128 $117 $69 Q2 2018 ~$
Slide 18: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures Quarter Ended Six Months Ended Jun. Jun. Jun. Jun. 2019 2018 2019 2018 Tons Sold (In Millions) Seaborne Thermal Mining Operations 4.7 5.0 9.2 8.8 Seaborne Metallurgical Mining Operations 2.1 2.9 4.4 5.9 Powder River Basin Mining Operations 25.0 26.2 50.3 58.6 Midw
Slide 19: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures Quarter Ended Six Months Ended Jun. Jun. Jun. Jun. 2019 2018 2019 2018 Total Reporting Segment Costs (1) Summary (In Millions) Seaborne Thermal Mining Operations $ 145.8 $ 159.8 $ 302.1 $ 299.6 Seaborne Metallurgical Mining Operations 233.5 259.0 472.2 558.8 Net N
Slide 20: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures Quarter Ended Six Months Ended Jun. Jun. Jun. Jun. 2019 2018 2019 2018 Reconciliation of Non-GAAP Financial Measures (In Millions) Income from Continuing Operations, Net of Income Taxes $ 42.9 $ 120.0 $ 176.2 $ 328.3 Depreciation, Depletion and Amortization 165.4
Slide 21: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures Note: Total Reporting Segment Costs, Adjusted EBITDA and Free Cash Flow are non-GAAP financial measures. Management believes that non-GAAP performance measures are used by investors to measure our operating performance and lenders to measure our ability to incur a
Slide 22: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures (4) Includes gains (losses) on certain surplus coal reserve and surface land sales, property management costs and revenues and the Q1 2018 gain of $20.6 million on the sale of certain surplus land assets in Queensland's Bowen Basin. (5) Includes trading and broker