Peabody Energy Corporation · NYSE:BTU
Peabody Energy — Credit Suisse 2014 Energy Summit
24 slides from Peabody Energy's conference presentation, Feb 12, 2014
Slide 1: Credit Suisse 2014 Energy Summit
Credit Suisse 2014 Energy Summit February 12, 2014 Vic Svec Senior Vice President Global Investor and Corporate Relations
Slide 2: Statement on Forward-Looking Information
Statement on Forward-Looking Information Certain statements in this press release 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,” “out
Slide 3: Peabody Well Positioned with Significant Upside as Markets Improve
Peabody Well Positioned with Significant Upside as Markets Improve ● Leveraging significant cost reductions, tight capital spending and operational excellence ● Leading presence in high-growth Pacific Rim region and low-cost U.S. basins ● SPRB and ILB best positioned to benefit from rising U.S. coal
Slide 4: BTU Delivers Notable 2013 Accomplishments
BTU Delivers Notable 2013 Accomplishments ● Achieved safest incidence rate in company history ● Cost containment efforts led to $340 million in savings ● Lowered capital expenditures by 67% ● Credit facility refinancing extends maturities and adds financial flexibility ● Generated $700+ million oper
Slide 5: Global Coal Markets
Global Coal Markets
Slide 6: Annual World Coal Use Expected to Grow Over Next Three Years
Annual World Coal Use Expected to Grow 700 Million Tonnes Over Next Three Years Expected Global Coal Demand ● Record global coal use (Tonnes in Millions) expected to continue on 9,000 8,535 7,835 8,055 growing electricity and 890 7,500 780 810 steel demand ● New coal-fueled 6,000 4,295 4,570 generat
Slide 7: Metallurgical Coal Fundamentals Projected to Improve in 2014
Metallurgical Coal Fundamentals Projected to Improve in 2014 Rising Global Steel Demand from Industrialization and Urbanization ● China becomes largest metallurgical coal importer; rising costs, declining domestic quality support additional imports ● Global metallurgical coal pricing constrained on
Slide 8: New Generation Expected to Drive Significant Global Thermal Coal Demand
New Generation Expected to Drive Significant Global Thermal Coal Demand Projected Seaborne Thermal ● Expected new coal- Coal Demand 1,200 (Tonnes in Millions) fueled generation 1,070 requires 750 million 985 – 995 1,000 955 +40 tonnes of annual coal India use at expected capacity 800 +40 utilization
Slide 9: China, India Account for Nearly 80% of Projected Global Coal Demand Growth
China, India Account for Nearly 80% of Projected Global Coal Demand Growth China and India Coal Imports ● Record coal imports in 2013 (Tonnes in Millions) – ~325 million tonnes in China 400 380 – ~170 million tonnes in India 345 ● China and India coal 327 imports expected to grow 300 ~100 million to
Slide 10: China Expected to Follow U.S. Path of Greater Coal Use, Decreasing Emissions
China Expected to Follow U.S. Path of Greater Coal Use, Decreasing Emissions U.S. Emissions Decline 87% Since 1970 as Coal Use Nearly Triples Coal-Based ● China coal use 150% Power Generation projected to continue + 170% to increase as 100% consumption patterns shift + 103% – Closing older plants 50
Slide 11: U.S. Markets Improving as Coal Demand Continues to Rise
U.S. Markets Improving as Coal Demand Continues to Rise in 2014 SPRB Utility Stockpiles ● SPRB stockpiles at (Days Use) 47 days use 90 ● U.S. coal demand rose 80 40 million tons in 2013 70 – Coal generation up 5% 60 and gas generation declines 11% 50 Inventories ~50% ● Winter heating degree 40 below
Slide 12: SPRB and Illinois Basin: Million Ton Demand Increase Forecasted by 2016
SPRB and Illinois Basin: 100 Million Ton Demand Increase Forecasted by 2016 Expected U.S. Generation Demand (Tons in Millions) ● SPRB and ILB best positioned against (45) +60 natural gas 600 (35) +100 ● Increased power -60 plant utilization and basin switching more 400 615 than offset expected SPRB
Slide 13: Coal: The World's Fastest Growing Major Fuel
Coal: The World’s Fastest Growing Major Fuel Expected Electricity Growth ● Coal projected to (2011 – 2035) account for largest percentage of global Nuclear electricity generation growth Hydro ● Coal grew dramatically Coal faster than all other Other major fuels in past decade ● IEA and other observe
Slide 14: Peabody Energy Outlook
Peabody Energy Outlook
Slide 15: Peabody Positioned for Success in 2014
Peabody Positioned for Success in 2014 2014 Focus Areas ● Drive strong operational performance ● Target additional cost improvements ● Manage tight capital spending ● Explore sale of non-strategic assets ● Position company for growth as markets improve ● Advance major new global advocacy initiative
Slide 16: Australian Platform Targets Growing Asia Demand
Australian Platform Targets Growing Asia Demand Targeted Australia Volumes ● 90% of production from (Tons in Millions) operations with recent 40 Domestic Thermal 35 – 37 expansion or owner-operator Seaborne Thermal 35 conversions Metallurgical ● Resetting cost base and 30 16 - 17 benefitting from lo
Slide 17: Peabody's 2013 Australian Productivity Increased 27%
Peabody’s 2013 Australian Productivity Increased 27% Australian Productivity ● 2013 Australian unit costs (Units Moved per Shift ) 4% below prior-year levels +27% on increased productivity ● Achieving success with multiple initiatives: – Streamlining workforce – Improved mining methods – Productivit
Slide 18: Realize Full Value of Owner-Operator Conversions in 2014
Realize Full Value of Owner-Operator Conversions in 2014 Owner-Operator Volumes Increasing to Over 90% in Australia ● Improved operating efficiency drives cost reduction Eliminated Robust ● 2013 unit costs reduced Contractor Mine 25% from prior-year levels Margins Planning ● Wilpinjong: One of the l
Slide 19: U.S. Platform Well Positioned in Current Market
U.S. Platform Well Positioned in Current Market ● Peabody’s position in PRB and Illinois Basin creates opportunity in improving market – Targeting 185 – 195 million tons of production in 2014 – 2014 revenue per ton expected to be 5 – 8% below 2013 levels on greater PRB mix and Midwest contract re-op
Slide 20: U.S. Cost Containment Initiatives Taking Hold
U.S. Cost Containment Initiatives Taking Hold ● Delivered significant cost and productivity improvements in 2013 – U.S. unit costs 3% below prior year levels as productivity improves 9% ● Shifting volumes to more productive operations – NARM in PRB – Gateway and Bear Run in Midwest – El Segundo in S
Slide 21: Maintaining Financial Strength Through Capital Discipline and Debt Repayment
Maintaining Financial Strength Through Capital Discipline and Debt Repayment Capital Discipline ● Capex reduced 67% in 2013; 2014 capex targeted at $275 – $325 million ● Sustaining capital trending below historical range of $1.25 – $1.75/ton ● Previous investments enable low sustaining capex for mul
Slide 22: Peabody Strategy and Operating Success Drive Value in All Market Conditions
Peabody Strategy and Operating Success Drive Value in All Market Conditions ● Uniquely positioned with leading presence in growing Asia markets and low-cost U.S. basins ● Leveraging successful cost improvements ● Well-capitalized platform ● Significant upside as coal markets improve ● Sizeable reser
Slide 23: www.PeabodyEnergy.com
p @ ah a fl www.PeabodyEnergy.com Ss ||| ENERGY EMPOWERED
Slide 24: Appendix: Reconciliation of Non-GAAP Measures
Appendix: Reconciliation of Non-GAAP Measures Reconciliation of Non-GAAP Financial Measures (Unaudited) Quarter Ended Year Ended (Dollars in millions, except per share data) Mar. 31, 2014 Dec. 31, Low (1) High (1) 2013 (2) 2012 (2) Adjusted EBITDA (3) $ 170.0 $ 230.0 $ 1,047.2 $ 1,836.5 Depreciation