Peabody Energy Corporation · NYSE:BTU
Peabody Energy — Investor Presentation (September 2017)
29 slides from Peabody Energy's investor presentation, Sep 29, 2017
Slide 1: October 2017 Investor Presentation
October 2017 Investor Presentation
Slide 2: Forward-looking statements
Certain statements included 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,” “outlook,” “target,” “likely,” “will,
Slide 3: Peabody: A Simple Yet Powerful Approach
3 Peabody: A Simple Yet Powerful Approach We’re the only Global Pure-Play Coal Investment, and we have significant scale… high-quality assets and people… and diversity in geography and products Generate Cash Invest Wisely Return Cash to Reduce Shareholders Debt 1 2 3 4 Our Financial Approach
Slide 4: Who We Are; Where We Operate
23 operations In U.S. and Australia ~7,000 Employee-Owners Globally $4.7 billion 2016 Revenues 25+ countries Served by Peabody Operations 5.6 billion Tons of Reserves 4 Who We Are; Where We Operate Note: Information as of the year ended Dec. 31, 2016, with the exception of headcount which is provide
Slide 5: What We Offer as a Leading Coal Producer
5 What We Offer as a Leading Coal Producer Note: Mining tons sold classified by product and production location based on publicly available information. Adjusted EBITDA is a non-GAAP metric. Refer to the reconciliations to the nearest GAAP measures in the appendix. YTD through June 30, 2017. PRB $17
Slide 6: Transformed Peabody Opens Strong in 2017
6 Transformed Peabody Opens Strong in 2017 Note: Revenues and Adjusted EBITDA through June 30, 2017. Adjusted EBITDA is a non-GAAP metric. Refer to the reconciliations to the nearest GAAP measures in the appendix. Recent progress stats as of September 18, 2017. $300 million in debt repayment Approxi
Slide 7: Mining Operations
7 Mining Operations Operations at Peabody’s North Antelope Rochelle Mine in Wyoming
Slide 8: Top-Tier International Thermal Business with Substantial Margins
26% 24% 25% 24% 26% 39% $- $10 $20 $30 $40 $50 $60 $70 $80 $90 $100 0% 5% 10% 15% 20% 25% 30% 35% 40% Peabody Offers Top-Tier International Thermal Business with Substantial Margins • Peabody provides 13 – 14 million tons of export thermal coal – Typically realizes 90 – 95% of Newcastle index price
Slide 9: Australian Seaborne Metallurgical Portfolio Represents Marked Improvement
-19% 29% -30% -20% -10% 0% 10% 20% 30% 40% Australian Seaborne Metallurgical Portfolio Represents Marked Improvement; Further Strengthening Platform • Substantial steps taken to improve platform, including: – Improved efficiencies, lower costs through owner-operator conversions – Aligned and leaner
Slide 10: U.S. Mining Segment Represents Significant Scale, Stable Operating Performance
10 U.S. Mining Segment Represents Significant Scale, Stable Operating Performance Note: Contract information as of the quarter ended June 30, 2017. • Peabody leadership in PRB anchored by world’s largest coal mine – North Antelope Rochelle Mine – PRB mining complex serves ~80+ domestic customers • I
Slide 11: Peabody PRB Strategy Focused on Margin Discipline
Peabody PRB Strategy Focused on Margin Discipline 25% 21% 16% 9% 0% 5% 10% 15% 20% 25% 30% BTU Peer A Peer B Peer C Adjusted EBITDA Margin of PRB Producers (2014 – 1H 2017) • Operates three of four most productive mines in U.S. • Produces from more than dozen pits in PRB – Ability to move people, eq
Slide 12: Peabody DNA Interwoven from PRB, Midwest and Australian Heritage
12 Peabody “DNA” Interwoven from PRB, Midwest and Australian Heritage PRB: Large Scale, Innovative Process Technologies Australia: Continuous Improvement, Global Mining The Peabody Way Midwest: Capital Discipline, Cost Control Trading and Shared Services: Support, Platform Optimization
Slide 13: Exceptional Operations Driven by Technology, Continuous Improvement
13 Exceptional Operations Driven by Technology, Spirit of Continuous Improvement Dozer Push Used in ILB Leads to Strong Performance Methodology Transferred to Large-Scale Mining in PRB Australian Semi- Autonomous Dozer Project in Process Case Study: Dozer Push Semi-autonomous technology in use at Pe
Slide 14: Geographic and Product Diversity Targeted to Deliver Maximum Value
14 Geographic and Product Diversity Targeted to Deliver Maximum Value for Shareholders Note: Adjusted EBITDA is a non-GAAP metric. Refer to the reconciliations to the nearest GAAP measures in the appendix. • U.S. provides solid revenue visibility; Australia offers substantial earnings strength durin
Slide 15: Industry Fundamentals
15 Industry Fundamentals Coal railed from Peabody’s El Segundo Mine in New Mexico
Slide 16: Strong Near-Term Seaborne Thermal and Metallurgical Coal Demand Led by China
• Chinese thermal demand rises 13 million tonnes through July 2017; met imports increase 10 million tonnes – Record China electricity generation and steel consumption in 1H 2017 • Policy initiatives in place to support Chinese domestic producers Strong Near-Term Seaborne Thermal and Metallurgical Co
Slide 17: ASEAN Countries Expected to Drive Longer-Term Thermal Coal Demand Growth
ASEAN Countries Expected to Drive Longer-Term Thermal Coal Demand Growth 17 Source: Industry data and Peabody Global Analytics. • More than 50 gigawatts of new coal-fueled generation expected to be built on average each year – Majority of new plants are supercritical/ultra-supercritical • Expected d
Slide 18: Seaborne Metallurgical Coal at Fragile Supply-Demand Balance
Seaborne Metallurgical Coal at Fragile Supply-Demand Balance at ~300 Million Tons 18 Source: Industry data and Peabody Global Analytics. • Even modest supply/demand swings can have outsized impact on pricing • Supply disruptions emerge after long period of benign events • Short-term pricing mechanis
Slide 19: Coal Replaces Natural Gas as Top Fuel Source for U.S. Electricity Generation
10% 1% -4% -13% -22% -25% -20% -15% -10% -5% 0% 5% 10% 15% • Coal generation up 1% through August – Total load down 2% – Natural gas down 13% • PRB demand up ~20 million tons through August – PRB June stockpiles down 12 days from 2016 levels • Mild weather in coal-heavy regions impacting demand – Pr
Slide 20: U.S. Coal Demand Likely to Modestly Decline in Coming Years
• ~10 GW of plant retirements expected per year – Retirements to impact all coal producing regions – Impact on coal demand to be largely offset by increased capacity utilization at remaining plants • Policy front recognizing coal as essential part of electricity generation mix U.S. Coal Demand Likel
Slide 21: Financial Approach
21 Financial Approach
Slide 22: Strengthening Capital Structure to Allow for Flexibility and Sustainability
Strengthening Capital Structure to Allow for Flexibility and Sustainability Through Cycles 22 • Moderate debt levels and staggered debt maturities – Net debt of ~$944 million • 135.0 million common shares outstanding (fully converted) – 103.6 million common shares – 16.0 million preferred shares • 4
Slide 23: Financial Approach: Generate Cash, Reduce Debt, Invest Wisely, Return Cash
23 Financial Approach: Generate Cash, Reduce Debt, Invest Wisely, Return Cash to Shareholders Liquidity Debt Deleveraging Capital Returns • Targeting $800 million • Current liquidity primarily in cash and cash equivalents • Considering revolver over time to reduce required cash needs • Committed to
Slide 24: Committed to Sustainable Mining, Energy Access and Clean Coal Technologies
Committed to Sustainable Mining, Energy Access and Clean Coal Technologies 24 Sustainable Mining Energy Access Clean Coal Solutions •Operate safely •Maximize resource recovery •Seek ongoing improvement in environmental performance •Commit to land restoration •Work to achieve universal electricity ac
Slide 25: Substantial Recent Steps to Drive Value Creation
25 Substantial Recent Steps to Drive Value Creation BTU Lists on NYSE Operational Financial Industry $500 Million Share Buyback Announced; U.S. NOLs of ~$4 Billion APRIL AUGUST JULY JUNE MAY Repurchase $40 Million In Shares Repay debt; Amended Credit Facility Repay $150 Million of Debt Substantial U
Slide 26: Appendix
26 APPENDIX
Slide 27: Appendix: Reconciliation of Non-GAAP Measures
Appendix: Reconciliation of Non-GAAP Measures 27 2016 2016 Successor Predecessor Predecessor Successor Predecessor Predecessor April 2 through June 30 April 1 Quarter Ended June 30 April 2 through June 30 January 1 through April 1 Six Months Ended June 30 Powder River Basin Mining Operations 28.5 -
Slide 28: Appendix: Reconciliation of Non-GAAP Measures
Appendix: Reconciliation of Non-GAAP Measures 28 2016 2016 Successor Predecessor Predecessor Successor Predecessor Predecessor April 2 through June 30 April 1 Quarter Ended June 30 April 2 through June 30 January 1 through April 1 Six Months Ended June 30 Income (Loss) from Continuing Operations, Ne
Slide 29: Adjusted EBITDA definition and footnotes
29 (1) Adjusted EBITDA is a non-GAAP measure defined as income (loss) from continuing operations before deducting net interest expense, income taxes, asset retirement obligation expenses, depreciation, depletion and amortization and reorganization items, net. Adjusted EBITDA is also adjusted for the
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