Peabody Energy Corporation · NYSE:BTU
Peabody Energy — Investor Presentation (May 2017)
34 slides from Peabody Energy's investor presentation, May 18, 2017
Slide 1: Investor Presentation May 2017
Investor Presentation May 2017
Slide 2: Statement on Forward-Looking Information
Statement on Forward-Looking Information 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," "pla
Slide 3: Peabody: Substantial Business, Simple Thesis
Peabody: Substantial Business, Simple Thesis Our Advantage… We’re the only global pure-play coal investment, e have significant scale… high quality assets and people… and diversity in geography and products Our Approach… We’re focused on generating cash, reducing debt and returning cash to sharehold
Slide 4: Peabody: World's Largest Private-Sector Coal Company
Peabody: World’s Largest Private-Sector Coal Company Operating model includes: 23 operations Americas and AustraliaIn U.S. and Australia business units Marketing/Trading services function$4.7 billion Lean and scalable2016 Revenues corporate structure Core sectors include: 5.6 billion Powder River Ba
Slide 5: Peabody: World's Only Global Pure-Play Coal Investment
Peabody: World’s Only Global Pure-Play Coal Investment Reserves Assigned UnassignedProven and (tons in millions) Probable Powder River Basin 2,713 —2,713 Midwestern U.S. 413 1,3091,722 Western U.S. 412 84496 Australian Thermal 294 —294 Australian Met 192 226418 Total 4,024 1,6195,643 Note: Peabody o
Slide 6: Leading Coal Producer with Significant Product and Geographic Diversity
Leading Coal Producer with Significant Product and Geographic Diversity Note: Mining tons sold classified by product and production location based on publicly available information.
Slide 7: Largest net income in nearly five years; operating margins average 30% in Q1
Largest net income in nearly five years Operating margins average 30% in Q1 Australia two of three largest segments; nearly half of total segment contribution Note: EBITDA margin is equal to segment Adjusted EBITDA divided by segment revenue. Segment average unweighted across five segments. Western
Slide 8: Americas: Reserves and Enhanced Methods Drive World-Class Mining, Enhanced Margins
Americas: Reserves and Enhanced Methods Drive World-Class Mining, Enhanced Margins Peabody operates three of four most productive mines in U.S. PRB labor productivity and gross margins superior to other PRB producers Substantial reserve position, advanced mining methods drive productivity Major tech
Slide 9: Australian Unit Costs Decline 45% in Four Years
Australian Units Costs Decline 45% in Four Years, Greatly Improving Competiveness Australian capital investment declines >90% from 2012, while workforce decreases 35% Australian NOLs of A$4.76 billion Competitive strength, asset unique to Peabody’s platform/structure Q1 costs elevated from Cyclone D
Slide 10: U.S. Operations Provide Balance with Australian Access to Asia-Pacific Demand
U.S. Operations Provide Balance with Australian Access to Higher-Growth Asia-Pacific Demand Essentially all of Americas 2017 volumes already priced 52% priced for 2018, 67% contracted (on an expected 2017 volume basis) Enhances revenue visibility Australia access to high-growth Asia-Pacific demand p
Slide 11: Coal consumption rises 3% while natural gas use declines 16% in Q1
Coal consumption rises 3% while natural gas use declines 16% in Q1 Demand still lower than expected on mild winter First quarter gas prices up 55% above prior year Peabody now projects 2017 U.S. coal demand to rise 30 to 40 million tons compared to 2016 levels PRB and Illinois Basin competitive agai
Slide 12: Actions on Policy Front Favorable to Coal Mining and Use
Pro-growth, tax and regulatory initiatives at macro level Administration steps to review/reverse onerous regulations: Repeal of so-called “Stream Protection Rule” Office of Natural Resources Revenue proposes to rescind Coal Valuation Rule EPA files notice of intent to review, rescind or revise “Wate
Slide 13: Global Thermal: Asia-Pacific Drives Seaborne Demand
Seaborne Thermal Coal Demand Growth 2016 – 2021 (tonnes in millions) Source: Industry reports and Peabody Global Energy Analytics. Global Thermal: Asia-Pacific Drives Seaborne Demand; Australia Positioned to Serve Growth China Southeast Asia India Atlantic Japan S. Korea Strong demand led by sharp g
Slide 14: Global Metallurgical: Longer-Term Seaborne Met Coal Demand Growth Driven by India
Solid demand in first quarter on 6% increase in global steel production Supply disruptions due to Cyclone Debbie result in sharp rise in spot prices; Benchmark negotiations for second quarter deferred Peabody expects to export 11 to 12 million tons of met coal in 2017 On weighted-average basis acros
Slide 15: Managing all aspects of balance sheet, reducing liabilities
$686 million 2016 Adjusted EBITDAR $1.97 billion Emergence Debt $1.07 billion Unrestricted Cash at March 31 Note: Adjusted EBITDAR is a non-GAAP measure. Please refer to the appendix for information regarding our non-GAAP measures. Peabody calculates gross leverage as total debt divided by Adjusted
Slide 16: Unrestricted Cash Position Builds to $1.068 billion
Unrestricted Cash Position Builds to $1.068 billion Cash and cash equivalents of $1.068 billion at March 31, 2017 excludes: Current restricted cash: $81 million (plus $1 billion in restricted bond proceeds used at April 3, 2017 emergence) Collateral related to U.S. and Australia reclamation (and oth
Slide 17: Peabody Second Quarter Priorities
Work with customers and value-chain suppliers to quickly build met coal shipments in Queensland Resume full shipments at the Metropolitan hard coking coal mine in New South Wales following expected completion of an extended longwall move in late May Continue to export thermal coal shipments at stron
Slide 18: Key Drivers of Value Creation
Aggressive pursuit of safe, low-cost operations Drive down cost curve Protect social license to operate Excellence in land restoration Emphasis on best products, regions and customers within essential industry In U.S., best asset base in core industry In Australia, mid-tier met assets, top-tier ther
Slide 19: "The New BTU" Positioned to Create Substantial Value for Shareholders
“The New BTU” Positioned to Create Substantial Value for Shareholders Over Time Profile Operations Financial Only global pure-play coal investment Scale and diversity of geography and products Serves best demand centers in U.S. and high-growth Asia Superior U.S. assets and operations Restructured ba
Slide 20: Robust Outreach Program Underway to Introduce BTU to Investment Community
Robust Outreach Program Underway to Introduce BTU to Investment Co Disclosure Commitment to transparency Enhanced mining segment building blocks Earnings call accompanied by presentation Non-Deal Road Shows New York, Boston, Baltimore, West Coast Conferences Five conferences planned in June Sell-Sid
Slide 21: Appendix
Appendix Photo: Jimmy Bernhard, KSDK
Slide 22: 2017 Targets
2017 Targets Most Volume/Price/Cost Targets Maintained; Australia Met Coal Volumes Increased Sales Volumes (short tons) Australia Operations – Costs Per Ton (USD)3 PRB 115 – 120 million Metallurgical $85 – $95 ILB 18 – 20 million Thermal $31 – $35 Total U.S. 145 – 155 million Total Australia $51 – $
Slide 23: 2017 Targets: Metallurgical Coal
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 45%-55% of seaborne metallurgical sales may be executed on a spot basis, with the remainder priced under quarterly contracts. The compa
Slide 24: 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 25: New Board of Directors Represents Independence, Skills and Expertise
New Board of Directors Represents Independence, Skills and Expertise Nicholas Chirekos Former North America Head of Mining, J.P. Morgan Stephen Gorman President and CEO of Borden Dairy Company; Former Chief Operating Officer of Delta Air Lines Glenn Kellow President and CEO of Peabody; director and
Slide 26: Experienced International Management Team with Focus on Value
Experienced International Management Team with Focus on Value Glenn Kellow Amy Schwetz President and CEO EVP and CFO 30+ years in executive leadership, Broad financial experience in U.S. operations and finance roles in and Australia; helped guide mining, energy and steel platforms in major initiativ
Slide 27: 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 Reducing debt by $5.2 billion to $1.97 billion Uncertainty around coal mine reclamation bonding Self bonding agreements in Wyoming, New Mexico, Indiana and Illinois with c
Slide 28: Holistic View of Debt and Other Obligations
Holistic View of Debt and Other Obligations Other Liabilities Million $ 2016 Liability 2016 Expense 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 liabilities ba
Slide 29: Summary Exit Financing Terms
Summary Exit Financing Terms First Lien Sr. Secured Term Loan First Lien Sr. Secured Notes Size • $950 million • $1,000 million Tenor • 5 Years • 5 Years and 8 years Pricing • L + 4.50% (subject to 1% Libor floor) • 6.000% notes due March 2022 ($500M) • 6.375% notes due March 2025 ($500M) OID • 99.5
Slide 30: 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 commitment premi
Slide 31: U.S. Bonding Solution Secured to Best Serve Capital Structure
U.S. Bonding Solution Secured to Best Serve Capital Structure Upon Emergence Land restoration essential part of coal mining process Concurrent reclamation and sharp focus results in smaller footprint Reclaimed 1.7 acres for every acre disturbed in 2016 ~$175 million spent to restore more than 48,000
Slide 32: Peabody – Leader in Powder River Basin
Peabody – Leader in Powder River Basin Operates flagship North Antelope Rochelle Mine – World’s largest coal mine Ability to optimize equipment and resources among Peabody mines Well-positioned on joint line
Slide 33: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures Year Ended December 31, 2016 2015 2014 2013 2012 Powder River Basin Mining Operations 113.1 138.8 142.6 135.2 140.3 Midwestern U.S. Mining Operations 18.3 21.2 25.0 26.3 27.4 Western U.S. Mining Operations 13.7 17.9 23.8 23.6 24.9 Total U.S. Mining Operations 145.
Slide 34: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures Quarter Ended March 31, 2017 2016 Tons Sold (In Millions) Powder River Basin Mining Operations 31.0 24.6 Midwestern U.S. Mining Operations 4.5 4.5 Western U.S. Mining Operations 3.4 2.9 Total U.S. Mining Operations 38.9 32.0 Australian Metallurgical Mining Operati