Peabody Energy Corporation · NYSE:BTU
Peabody Energy — Investor Presentation (October 2017)
35 slides from Peabody Energy's investor presentation, Oct 27, 2017
Slide 1: Investor Presentation October 2017
Investor Presentation October 2017 1
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 variations o
Slide 3: Peabody: World's Largest Private-Sector Coal Company
Peabody: World’s Largest Private?Sector Coal Company 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 Our Financial Approach Return Cash to Invest Shareholders Reduce Wisely Generate Debt Cash 1 2
Slide 4: Peabody: Who We Are; Where We Operate
Peabody: Who We Are; Where We Operate 23 operations In U.S. and Australia ~7,000 Employees Globally 5.6 billion Tons of Reserves $4.7 billion 2016 Revenues 25+ countries Served by Peabody Operations Note: Information as of the year ended Dec. 31, 2016, with the exception of headcount which is provid
Slide 5: What We Offer as a Leading Coal Company
What We Offer as a Leading Coal Company 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 Sept. 30, 2017. PRB $289.
Slide 6: Transformed Peabody Delivering Powerful Results
$238 Transformed Peabody Delivering Powerful Results Note: Revenues and Adjusted EBITDA for nine months ending Sept. 30, 2017. Adjusted EBITDA is a non?GAAP metric. Refer to the reconciliations to the nearest GAAP measures in the appendix. Share repurchases as of Oct. 20, 2017. Sharply increased rev
Slide 7: Mining Operations
Mining Operations Operations at Peabody’s North Antelope Rochelle Mine in Wyoming 7
Slide 8: Top-Tier International Thermal Business with Substantial Margins
26% 24% 25% 24% 26% 38% $- $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 targets 12.5 – 13.0 million tons of export thermal coal – Typically realizes 90 – 95% of Newcastle index pri
Slide 9: Australian Seaborne Metallurgical Portfolio Represents Marked Improvement
-18% 31% 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 workf
Slide 10: U.S. Mining Segment Represents Significant Scale, Stable Operating Performance
U.S. Mining Segment Represents Significant Scale, Stable Operating Performance Note: Contract information as of the quarter ended Sept. 30, 2017. 2018 priced volumes based on approximately 150 million tons. Peabody position in PRB anchored by world’s largest coal mine – North Antelope Rochelle Mine
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 Avg.) Operates three of four most productive mines in U.S. Produces from more than dozen pits in PRB – Ability to move people, e
Slide 12: Peabody DNA Interwoven from PRB, Midwest and Australian Heritage
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 12
Slide 13: Strong Operations Driven by Technology, Continuous Improvement
Strong 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 Peabody’s
Slide 14: Geographic and Product Diversity Targeted to Deliver Maximum Value
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 during m
Slide 15: Industry Fundamentals
Industry Fundamentals Coal railed from Peabody’s El Segundo Mine in New Mexico 15
Slide 16: Strong Near-Term Seaborne Thermal and Metallurgical Coal Demand
Seaborne Thermal Coal • Chinese thermal imports up 15 million tonnes through 9 months • India demand down ~16 million tonnes through September – Stockpiles reach lowest levels in 2 years in August; supportive of additional imports • South Korea imports up 23%, or 15 million tonnes, through September
Slide 17: ASEAN Countries Expected to Drive Longer-Term Thermal Coal Demand Growth
ASEAN Countries Expected to Drive Longer-Term Industry Thermal Coal Demand Growth Source: Industry data and Peabody Global Analytics. • Some 30 countries on six continents have new coal?fueled generation coming online between 2017 and 2018 – ~65 gigawatts starting up each year – Majority of new plan
Slide 18: Seaborne Metallurgical Coal at Fragile Supply-Demand Balance
Seaborne Metallurgical Coal at Fragile Supply?Demand Balance at ~300 Million Tons Industry?Wide Source: Industry data and Peabody Global Analytics. • Supply disruptions emerge after long period of benign events • Short?term pricing mechanisms bring greater volatility • Challenge to make longterm cap
Slide 19: PRB Generation Increases 8% Above 2016 Levels
8% 1% 5% 12% 20% 20% 15% 10% 5% 0% 5% 10% • PRB demand up 18 million tons through September – PRB stockpiles down 5 days to 55 days of maximum burn • Mild 2017 weather in coal-heavy regions impacts demand • PRB and ILB competitive against natural gas: – SPRB: $2.50 to $2.75/mmBtu – ILB: $3.00 to $3.
Slide 20: U.S., Australia Advance Pro-Energy Economy
U.S., Australia Advance Pro-Energy Economy; Recognize Importance of Coal in Energy Mix • U.S. EPA proposes repeal of Clean Power Plan • Perry study and proposed FERC grid resiliency pricing rule represent first step in examining grid complexity • U.S. EPA Administrator declares: “The war against coa
Slide 21: Financial Approach
Financial Approach 21
Slide 22: Strengthening Capital Structure to Allow for Flexibility and Sustainability
Strengthening Capital Structure to Allow for Flexibility and Sustainability Through Cycles • 133.7 million common shares outstanding (fully converted) – 104.7 million common shares – 14.8 million preferred shares • 51% preferred shares converted • Continuing multi-pronged initiative to further relea
Slide 23: Executing On Our Stated Financial Approach
• Entered into agreements to sell noncore assets in Australia • Continuing to evaluate opportunities to improve portfolio based on strict criteria Executing On Our Stated Financial Approach Generate Cash Invest Wisely Return Cash to Shareholders Reduce Debt • Maintaining cost discipline to enhance m
Slide 24: A Leading Voice in Advocating for Sustainable Mining, Energy Access and Clean Coal
Peabody A Leading Voice in Advocating for Sustainable Mining, Energy Access and Clean Coal Technologies Sustainable Mining Energy Access Clean Coal Technologies • Operate safely • Maximize resource recovery • Seek ongoing improvement in environmental performance • Commit to land restoration • Work t
Slide 25: Strong Cash Flows and Smart Cash Use Continue Virtuous Cycle
Strong Cash Flows and Smart Cash Use Continue Virtuous Cycle August September October Outline Capital Allocation Initiatives Repurchase $40M in Shares Repay $150M of Debt Repay Additional $150M of Debt; Launch Credit Facility Amendment Initiative Reduce Term Loan Interest Rate By 1.00%; Modify Terms
Slide 26: Appendix
APPENDIX 26
Slide 27: Appendix: 2017 Targets
Appendix: 2017 Targets Sales Volumes (Short Tons) Capital Expenditures $165 – $195 million PRB 120 – 125 million ILB 18 – 19 million Quarterly SG&A Expense ~$35 million Western 13 – 14 million Total U.S. 151 - 158 million Quarterly Interest Expense $37 – $39 million Aus. Metallurgical1 11.5 – 12.0 m
Slide 28: Appendix: 2017 Targets
Appendix: 2017 Targets 1 Metallurgical coal sales volumes may range from ~50%?60% PCI and ~40%?50% coking coal (including semi?hard and semi?soft coking coals). Approximately 55% of seaborne metallurgical sales may be executed on a spot basis, with the remainder priced under quarterly contracts or l
Slide 29: Appendix: Reconciliation of Non-GAAP Measures
Appendix: Reconciliation of Non?GAAP Measures 2017 2016 2016 Successor Predecessor Successor Predecessor Predecessor April 2 through January 1 through Nine Months Ended September 30 April 1 September 30 Powder River Basin Mining Operations 33.7 33.0 62.2 31.0 80.0 Midwestern U.S. Mining Operations 4
Slide 30: Appendix: Reconciliation of Non-GAAP Measures
Appendix: Reconciliation of Non-GAAP Measures 2017 2016 2016 Successor Predecessor Successor Predecessor Predecessor April 2 through January 1 through Nine Months Ended September 30 April 1 September 30 Income (Loss) from Continuing Operations, Net of Income Taxes $ 233.7 $ (97.7) $ 335.1 $ (195.5)
Slide 31: Adjusted EBITDA definition and notes
(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 di
Slide 32: Peabody Mission, Values and Strategy
Peabody Mission, Values and Strategy Our Mission To create superior value as the leading global supplier of coal, which enables economic prosperity and a better quality of life. Safety: We commit to safety and health as a way of life. People: We offer an inclusive work environment and engage, recogn
Slide 33: Holistic View of Debt and Other Obligations
Holistic View of Debt and Other Obligations Other Liabilities Million $ YE 2016 Liability FY 2016 Expense FY 2016 Cash Postretirement Health Care $812.1 $56.1 $48.4 Pension $186.3 $23.7 $1.1 Consolidated ARO $758.8 $41.8 $28.7 Sustainable capital structure – Focus on leverage and other long-term lia
Slide 34: Peabody at a Glance: Pre and Post Emergence Challenges
Peabody at a Glance: Pre and Post Emergence Challenges Pre-Filing Post?Filing High debt levels • Attempted multiple debt exchanges • Reduced debt by $5.2 billion to $1.97 billion as of emergence Uncertainty around coal mine reclamation bonding • Self bonding agreements in Wyoming, New Mexico, Indian
Slide 35: Mandatorily Convertible Preferred Equity Summary Terms
Mandatorily Convertible Preferred Equity Summary Terms Mandatorily Convertible Preferred Equity (Private Placement) Issuer • Peabody Energy Corporation The Preferred Equity • Mandatorily convertible preferred equity Amount • $750 million Maturity • None Private Placement Premiums • An initial commit
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