Peabody Energy Corporation · NYSE:BTU
Peabody Energy — Investor Presentation (June 2015)
28 slides from Peabody Energy's investor presentation, Jun 1, 2015
Slide 1: Peabody Energy Investor Presentation
Peabody Energy Investor Presentation June 1, 2015
Slide 2: Statement on Forward-Looking Information
Statement on Forward-Looking Information Certain statements 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,” “outl
Slide 3: Implementing Wide Range of Initiatives to Provide Sustainable Results
Peabody Implementing Wide Range of Initiatives to Provide Sustainable Results 3 Managing Through Current Cycle with Speed, Focus and Purpose ● Peabody intensely managing four cornerstone areas of business to improve platform and generate shareholder value ● Potential of $685 million improvement in a
Slide 4: Global Coal Markets
Global Coal Markets — — aef| aay ~ t
Slide 5: Slowing Global GDP, Weaker Import Demand Create Near-Term Weakness
Slowing Global GDP, Weaker Import Demand Create Near-Term Weakness 5 Lower currency benefits Australian producers; Q1 Australian dollar price for met coal increases 8% Near-term China coal import demand challenged by easing GDP growth, strong hydro, flat steel demand, domestic coal support Source: P
Slide 6: China and India Will Continue to Access High-Quality Seaborne Metallurgical Coal
China and India Will Continue to Access High-Quality Seaborne Metallurgical Coal Source: Peabody Global Analytics; McCloskey; China Customs. 6 7 34 47 45 54 75 62 70 27 27 36 35 38 40 41 50 0 20 40 60 80 100 120 China/India Metallurgical Coal Imports (Tonnes in Millions) China India ● China and Indi
Slide 7: Seaborne Metallurgical Coal Supply Expected to Decline in 2015
Seaborne Metallurgical Coal Supply Expected to Decline in 2015 Source: Peabody Global Analytics; World Steel Association. 7 ● Australian supply growth to be more than offset by curtailments from U.S. and Canada this year ● 20 million tonnes of already announced production cutbacks expected to be rea
Slide 8: Strong Supply, Reduced Chinese Imports Impact Seaborne Thermal Coal Markets
Strong Supply, Reduced Chinese Imports Impact Seaborne Thermal Coal Markets 8 ● Major producers in Australia and China announce sizeable production cuts in first quarter ● Additional global reductions are expected ● Indonesian coal exports decline nearly 10% in first quarter; Major trend reversal fr
Slide 9: Countries Add GW and New Coal Generation Units Since 2010
30 Countries Add 348 GW and 800 New Coal Generation Units Since 2010 Source: Platts World Electric Power Plant database. Plants Now Under Construction reference for 2015 and 2016. Capacity in megawatts, excluding China, India and U.S. ~80 GW Per Year of New Coal Plants Now Under Construction 9
Slide 10: U.S. Coal Demand Expected to Decline in 2015 on Lower Natural Gas Prices
U.S. Coal Demand Expected to Decline in 2015 on Lower Natural Gas Prices Source: Peabody Global Analytics and EIA. PRB coal inventories as of March 31, 2015. 10 35% 30% 20% 15% 0% 10% 20% 30% 40% ● 2015 U.S. coal use likely to decline 80 – 100 million tons ● Production curtailments accelerating ● PR
Slide 11: SPRB and ILB Share of U.S. Coal Generation Projected to Expand by 2017
SPRB and ILB Share of U.S. Coal Generation Projected to Expand by 2017 11 Coal Expected to Fuel 40% of U.S. Electricity by 2017 Source: Peabody Energy Global Analytics. Other Regions 41% SPRB / ILB 59% ● SPRB and ILB demand expected to increase 50 – 70 million tons over next three years; Other regio
Slide 12: Greater Plant Utilization Likely to Offset Near-Term Impact from MATS Ruling
Greater Plant Utilization Likely to Offset Near-Term Impact from MATS Ruling 12 MATS Ruling EPA Carbon Proposal EPA Carbon Proposal Will Face Significant Opposition Source: Peabody Global Analytics and company announcements. ● 60 GW of coal plants to be retired by 2017 ● 245 GW of coal-fueled genera
Slide 13: Coal Remains Leading Source of Global Electricity Generation
Coal Remains Leading Source of Global Electricity Generation 13 Source: Peabody Energy Analytics. Coal: ● Only a fraction of other fuels’ costs ● Provides baseload power; easily transported ● Energy dense, abundant and increasingly uses advanced technologies
Slide 14: Long-Term Coal Fundamentals Remain Intact Despite Current Downturn
Long-Term Coal Fundamentals Remain Intact Despite Current Downturn 14 Source: Wood Mackenzie. - 1,000 2,000 3,000 4,000 5,000 Renewables Natural Gas Oil Nuclear Hydro Coal 2000 2030P 2015P Source: Wood Mackenzie primary energy demand projection. BP Statistical Review of World Energy 2014; United Nat
Slide 15: Peabody Energy Update
Peabody Energy Update 15
Slide 16: World's Only Global Pure-Play Coal Investment
Peabody: World’s Only Global Pure-Play Coal Investment Peabody Operates 26 Mines Across Australia and the United States Essen Beijing Jakarta Balikpapan New Delhi Brisbane, QLD Newcastle, NSW London (From U.S.) St .Louis, MO Singapore Reported 2014 sales volumes. Reserves based on 2014 10-K filing.
Slide 17: Positioned in Low-Cost U.S. Basins, High-Growth Asian Markets
Peabody Positioned in Low-Cost U.S. Basins, High-Growth Asian Markets ● Largest producer and reserve holder in SPRB – Flagship North Antelope Rochelle Mine world’s largest and most productive coal mine ● Illinois Basin operations strategically located to serve local customer base – Benefit from sign
Slide 18: Intensely Managing Four Cornerstones Critical for Success
Peabody Intensely Managing Four Cornerstones Critical for Success 18 Operational SG&A Financial Portfolio Maintaining relentless focus on improving safety, increasing productivity and driving down operating costs Targeting a leaner corporate group with office closures, process rationalization and ov
Slide 19: $685 Million Improvement in Potential Annual Cash Outlay Within Two Years
Currency and fuel benefit based on forward rates at 3/31/2015. Estimated savings based on 2015 estimated requirements of ~$2.4 billion AUD and diesel fuel usage of ~155 million gallons. $685 Million Improvement in Potential Annual Cash Outlay Within Two Years 0 200 400 600 800 Australian Dollar Hedg
Slide 20: Fixed Obligations Projected to Significantly Improve by Early 2017
Peabody Fixed Obligations Projected to Significantly Improve by Early 2017 ● Fixed obligations temporarily elevated due to final LBA and VEBA payments ● LBA payments end in 2016 – ~$275 million in 2015; ~$250 million in 2016 – Additional LBAs not expected until after 2020 ● VEBA payments end in Janu
Slide 21: Aggressive Australian Cost Reduction Efforts Drive Significant Improvements
Aggressive Australian Cost Reduction Efforts Drive Significant Improvements ● Commissioned longwalls at North Goonyella and Metropolitan mines ● Successfully completed owner-operator conversions – More than 95% of Australian production under owner-operator model ● Evaluating options at Burton Mine;
Slide 22: Focused on Maximizing Cash and Liquidity in the Near-Term
Peabody Focused on Maximizing Cash and Liquidity in the Near-Term ● First quarter actions include: – Amended Credit Agreement – Refinanced 2016 Senior Notes and increased liquidity ● No significant maturities for more than 3 years ● Full-year capital spending targets lowered ● Longer-term, Peabody i
Slide 23: Improving Platform Strength; Positioned to Capitalize on Market Upturn
Peabody Improving Platform Strength; Positioned to Capitalize on Market Upturn 23 ● Peabody is committed to driving a sustainable, successful organization without regard to external market forces ● Team is taking substantial additional measures with emphasis on improving platform across four primary
Slide 24: PeabodyEnergy.com AdvancedEnergyForLife.com
PeabodyEnergy.com AdvancedEnergyForLife.com
Slide 25: Appendix: 2015 Guidance
Appendix: 2015 Guidance 25 Sales Volumes (in million tons) U.S. Australia Trading & Brokerage Total 180 – 190 35 – 37 20 – 28 235 – 255 U.S. Operations Revenue Per Ton (vs 2014) Costs Per Ton (vs 2014) 3% – 5% lower 3% – 5% lower Australia Operations Metallurgical Coal Sales Export Thermal Sales Cos
Slide 26: Appendix: Currency and Fuel Hedge Position
Appendix: Currency and Fuel Hedge Position Australian Dollar Hedging 2015 2016 2017 Percent Hedged 66% 42% 22% Hedge Rate $0.95 $0.92 $0.88 All-in Rate $0.89 $0.82 $0.77 Potential Lower Costs Compared to 2015 (in millions) $170 $289 Fuel Hedging 2015 2016 2017 Percent Hedged 91% 64% 44% Hedge Price
Slide 27: Appendix: Collateral Overview
Appendix: Collateral Overview Stock Pledge • 65% stock pledge of 1st-tier foreign subs, including Australia • 100% of U.S. subs, including IC Funding Corp. holds ~$5 billion IC note (excludes captive and securitization) • Book value of $3.5 billion 27 Principal Property • Real property interests loc
Slide 28: Appendix: $2.9 Billion in Additional Secured Borrowing Capacity Available
$0.0 $1.0 $2.0 $3.0 Available Secured Borrowing Capacity Appendix: $2.9 Billion in Additional Secured Borrowing Capacity Available D ol la rs in B ill io ns 28 Revolver Availability ~$1.5 $2.9 ● Peabody borrowing capacity consists of: – $1.5 billion of revolver availability – $0.4 billion first lien