Peabody Energy Corporation · NYSE:BTU
Peabody Energy — BAML Global Metals, Mining and Steel Conference 2019
35 slides from Peabody Energy's conference presentation, May 14, 2019
Slide 1: BAML Global Metals, Mining and Steel Conference
BAML Global Metals, Mining and Steel Conference Glenn Kellow President and CEO May 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: Peabody: Leading Global Pure-Play Coal Producer
Peabody: Leading Global Pure-Play Coal Producer Note: Adjusted EBITDA and Free Cash Flow are non-GAAP metrics. Refer to the reconciliation to the nearest GAAP measures in the appendix. All metrics for calendar-year 2018, with the exception of awards received , which 3 cover the past decade.
Slide 4: Peabody Implementing Multiple Strategies in Support of Mission to Create Superior Value
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 seaborne metallurgical coal access to capture higher-growth Asian demand 2) Optimizing our lowest-cost and highest-ma
Slide 5: Peabody Taking Aggressive Steps to Return Cash to Shareholders
Peabody Taking Aggressive Steps to Return Cash to Shareholders Highly active share repurchase program Target to return amount greater than 2019 free cash flow Third increase to quarterly dividend per share since initiation Periodic review of supplemental dividends Actions move Peabody closer to liqu
Slide 6: Scale and Diversity Offer Significant Competitive Advantage
Scale and Diversity Offer Significant Competitive Advantage Percentage of Total Revenue from Customer • Wide distribution Geographic Region in 2018 of revenue, Adjusted China South EBITDA contributions India Korea • Multi-regional exposure limits demand, logistics and Other Austr seasonal operationa
Slide 7: Among Top Global Producers with Diverse Production Portfolio
Among Top Global Producers with Diverse Production Portfolio; Well-Positioned to Serve Long-Term Coal Demand Seaborne Thermal Coal Q1 2019 Adjusted EBITDA Producers by Volume 130 by Mining Portfolios (million tons) Global Producers U.S. Producers Seaborne 35 BTU Met 32 32 $88.8M 19 15 11 8 5 3 Metal
Slide 8: Coal to Continue to Play a Significant Role in the Global Energy Mix
Coal to Continue to Play a Significant Role in the Global Energy Mix for the Foreseeable Future • Global coal generation capacity Global Coal Generation Capacity surpasses 2,000 GW for first time ~2,015 GW ever in 2018 per WoodMac • ~50 gigawatts of new coal-fueled 62% increase from generation expec
Slide 9: Advanced Technologies Offer Path for Significant Reduction in Emissions
Advanced Technologies Offer Path for Significant Reduction in Emissions from Coal-Fueled Generation CO2 Reduction Potential of Advanced Coal Technologies Subcritical CO2 Reduction 30% 1,116g CO2/kWh Supercritical ISOGO Power Station, Japan 21% kWh 38% 33% 881g CO2/kWh 40% Gas OCGT per 45% 743g CO /k
Slide 10: Metallurgical Coal Serves as Primary Component for ~70% of World's Steel Production
Metallurgical Coal Serves as Primary Component for ~70% of World’s Steel Production • Total 2018 seaborne HVA and HCC Index Price met coal demand $400 (USD per tonne) totals ~315 MTPY $350 • Supply tight with $300 new sources largely $250 offsetting natural $200 Avg: $174 per tonne declines, disrupt
Slide 11: Coal: Leading Position in Numerous U.S. Regions
Coal: Leading Position in Numerous U.S. Regions; PRB, ILB Projected to Supply Majority of Long-Term Demand NYISO NW Power Coal: 1% Pool Gas BTU: 0 mt Coal: 33% Rockies SPP BTU: 1 mt MISO Coal: 51% Coal: 43% PJM Coal: 47% BTU: 3 mt BTU: 30 mt Coal: 28% BTU: 68 mt BTU: 13 mt ISO-NE Coal: 1% BTU: 0 mt
Slide 12: Seaborne Thermal Coal Platform Represents Tier-One Assets with Strong Margins
Seaborne Thermal Coal Platform Represents Tier-One Assets with Strong Margins; Positioned to Serve Asia-Pacific Demand Seaborne Thermal Coal Adjusted EBITDA Margins 50% Margin % Average NEWC Price 48% 45% 44% 42% 40% $117 40% 38% 38% 37% $103 $104 $105 35% $98 $93 31% $97 30% $80 25% 20% 15% 10% 5%
Slide 13: Advancing Attractive Seaborne Thermal Life Extension Projects
Advancing Attractive Seaborne Thermal Life Extension Projects to Maintain Export Thermal Coal Volumes • Peabody raises 2019 target 2019 Target for thermal export coal volumes 12.0 million to 12.5 million to 12.0 to 12.5 million tons tons of export thermal coal – Priced export volumes locked in above
Slide 14: Shoal Creek Acquisition Upgrades Seaborne Met Portfolio
Shoal Creek Acquisition Upgrades Seaborne Met Portfolio; Represents Multiple Strategic and Financial Benefits • Q1 cash flows imply payback Clearly meets strict period of less than 2 years investment filters • Targeting ~2.5 million tons of high-quality HVA seaborne ? Strategic portfolio fit met coa
Slide 15: Targeting Progressive Increase in Peabody's Quality and Quantity of Met Coal Production
Targeting Progressive Increase in Peabody’s Quality and Quantity of Met Coal Production Over Time • Completed all physical activities 2019 Target in advance of reventilating Zone 1 of North Goonyella Mine 9.4 million to 10.4 million tons of seaborne met coal – Mine expected to produce ~2 million ton
Slide 16: U.S. Thermal Operations Focused on Generating Meaningful Returns
U.S. Thermal Operations Focused on Generating Meaningful Returns to Maximize Cash Generation • Emphasizing lowest-cost, highest 2019 Targets margin mines; Operating adjacent mines as complexes PRB: 105 to 115 million tons – Ability to move contracts, people ILB: 17.5 to 18.5 million tons and equipme
Slide 17: BTU Offers Significant Intrinsic Value; Results Superior to Benchmarks
BTU Offers Significant Intrinsic Value; Generating 2018 Results Superior to Benchmarks SG&A as a Adjusted EBITDA Return on TEV/EBITDA % of Revenue Margin Equity Coal BTU & Consumable Fuels S&P 400 S&P 400—Energy -8% Source: CapitalIQ; Coal and Consumable Fuel group per CapitalIQ includes 199 compani
Slide 18: Proven Access to Capital Markets Strengthens Financial Position
Proven Access to Capital Markets Strengthens Financial Position; Allows for Significant Cash Returns to Shareholders $500 million Second increase Third share Quarterly to quarterly increase repurchase dividend per dividend to quarterly program Quarterly Upsized share increased per share dividend aut
Slide 19: Peabody Intends to Return to Shareholders Amount Greater Than Free Cash Flow in 2019
Peabody Intends to Return to Shareholders Amount Greater Than Free Cash Flow in 2019 Cumulative Shareholder Returns $1,417 $1,383 $580 $366 $176 $69 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 April 19 Share Repurchases Quarterly Dividend Supplemental Dividend Note: Free Cash Flow is a non-GAAP metric
Slide 20: Commitment to Shareholder Returns Brings Liquidity Closer to Targeted Levels
Commitment to Shareholder Returns Brings Liquidity Closer to Targeted Liquidity Levels; Operating at High End of Debt Range Debt & Liquidity June March • Reduced total liabilities since Change ($ in millions) 2017 2019 mid-2017 by ~$1.06 billion Unrestricted Cash – $550 million voluntary $1,096 $798
Slide 21: Peabody's Emphasis on ESG Complements Financial Approach
Peabody’s Emphasis on ESG Complements Financial Approach to Create Long-Term Value for Shareholders Environmental Social Governance • Restored 1.4 acres • Outperforms • Separation of CEO for every acre industry averages and Chairman disturbed in 2018 for safety • Independent and • Recycled/reused •
Slide 22: Appendix
Appendix
Slide 23: 2019 Guidance Targets
2019 Guidance Targets Sales Volumes (Short Tons in millions) PRB 105 – 115 Quarterly North Goonyella Costs $30 – $35 million ILB 17.5 – 18.5 Quarterly SG&A Expense ~$40 million Western 11 – 12 Full-Year Capital Expenditures $350 – $375 million Seaborne Metallurgical 9.4 – 10.4 Full-Year DD&A $600 –
Slide 24: 2019 Guidance Targets (footnotes)
2019 Guidance Targets 1 Peabody expects to realize ~80%-90% of the premium HCC quoted index price on a weighted average across all its products. 2 Approximately 40% of Peabody’s seaborne metallurgical PCI sales are on a spot basis, with the remainder linked to the quarterly contract. Peabody expects
Slide 25: Historical Seaborne Pricing ($/Tonne)
Historical Seaborne Pricing ($/Tonne) Time Period HCC – HCC – Spot LV PCI – LV PCI – Spot NEWC – API 5 -Settlement Settlement Spot Prompt 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 ~$197 $190 $155 $140 $104 $75 Q1 2018 $237 $
Slide 26: Peabody Executive Leadership Team
Peabody Executive Leadership Team Glenn Kellow President and CEO A. Verona Dorch EVP, CLO, Government Affairs and Corporate Secretary Charles Meintjes EVP – Corporate Services and COO Paul Richard SVP and Chief Human Resources Officer George J. Schuller Jr. President – Australia Amy Schwetz EVP and
Slide 27: Peabody Board of Directors Represents Diversity of Skills, Knowledge and Experience
Peabody Board of Directors Represents Diversity of Skills, Knowledge and Experience Andrea Bertone – Teresa Madden –Former Director, Duke Former EVP and CFO Energy International of Xcel Energy, Inc. Bob Malone – Executive Nicholas Chirekos – Chairman, President and CEO Former North America First Son
Slide 28: Diversity of Geography, Customers and Products
Peabody Serves Power and Steel Customers in More Than 25 Countries on 6 Continents Diversity of Geography, Customers and Products Note: Highlighted countries represent customers served in at least one year between 2016 – 2018. 28
Slide 29: North Goonyella Mine: Segmenting of Multiple Zones
North Goonyella Mine: Segmenting of Multiple Zones North Goonyella Fan Installation 29
Slide 30: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures Apr. 2 through Quarter Ended Quarter Ended Quarter Ended Quarter Ended Quarter Ended Quarter Ended Year Ended Quarter Ended Jun. 30, 2017 Sept. 30, 2017 Dec. 31, 2017 Mar. 31, 2018 Jun. 30, 2018 Sept. 30, 2018 Dec. 31, 2018 Dec. 31, 2018 Mar. 31, 2019 Tons Sold (I
Slide 31: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures Apr. 2 through Quarter Ended Quarter Ended Quarter Ended Quarter Ended Quarter Ended Quarter Ended Year Ended Quarter Ended Jun. 30, 2017 Sept. 30, 2017 Dec. 31, 2017 Mar. 31, 2018 Jun. 30, 2018 Sept. 30, 2018 Dec. 31, 2018 Dec. 31, 2018 Mar. 31, 2019 Total Report
Slide 32: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures Apr. 2 through Quarter Ended Quarter Ended Quarter Ended Quarter Ended Quarter Ended Quarter Ended Year Ended Quarter Ended Jun. 30, 2017 Sept. 30, 2017 Dec. 31, 2017 Mar. 31, 2018 Jun. 30, 2018 Sept. 30, 2018 Dec. 31, 2018 Dec. 31, 2018 Mar. 31, 2019 Reconciliati
Slide 33: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures Reconciliation of Non-GAAP Financial Measures (In Millions) Dec. 31, 2017 Dec. 31, 2018 Average Total Stockholders’ Equity $ 3,655.8 $ 3,451.6 $ 3,553.7 Jun. 30, 2017 Dec. 31, 2018 Mar. 31, 2019 Total Debt $ 1,957.1 $ 1,367.0 $ 1,361.7 Cash and Cash Equivalents 1,
Slide 34: Reconciliation of Non-GAAP Measures: Definitions
Reconciliation of Non-GAAP Measures: Definitions Note: Total Reporting Segment Costs; Adjusted EBITDA; Free Cash Flow; Net Debt; Return on Equity and Total Enterprise Value are non-GAAP financial measures. Return on Equity is equal to income from continuing operations, net of income taxes divided by
Slide 35: Reconciliation of Non-GAAP Measures: Definitions
Reconciliation of Non-GAAP Measures: Definitions 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
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