Peabody Energy Corporation · NYSE:BTU
Peabody Energy — Investor Presentation (September 2015)
35 slides from Peabody Energy's investor presentation, Sep 10, 2015
Slide 1: 7 Things To Know About Today's BTU
7 Things To Know About Today’s BTU 09.10.15 Glenn Kellow President and Chief Executive Officer Peabody Energy
Slide 2: Forward-looking statements
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,” “outlook,” “target,” “likely,” “will,” “to be,
Slide 3: 7 Things To Know About Today's BTU
3 7 Things To Know About Today’s BTU New Management Team Unmatched Assets: Size, Scope and Market Access Operational Results Reveal Strong Underlying Business Key Value Drivers: PRB, ILB and Australia Safe, Responsible Mining Practices Long-Term Coal Demand Masked by Current Headwinds Financial Focu
Slide 4: New Management Team
New Management Team
Slide 5: Areas of Management Emphasis
Areas of Management Emphasis - New CEO, CFO and CLO join a veteran team and highly productive workforce - Current leadership team combines 150+ years of related industry experience - Spans 6 continents - Nearly 60 years of BTU experience 5 Management Combines Traditional Strengths with New Perspecti
Slide 6: Management Team Committed to Moving with Speed, Focus and Purpose
6 Management Team Committed to Moving with Speed, Focus and Purpose Glenn Kellow President & CEO Charles Meintjes Australia Kemal Williamson Americas Amy Schwetz CFO Verona Dorch CLO & Govt Affairs Andy Slentz HR & Admin Bryan Galli Marketing & Trading Chris Hagedorn Strategy & Development
Slide 7: Unmatched Assets: Size, Scope and Market Access
Unmatched Assets: Size, Scope and Market Access Kayenta Mine
Slide 8: Peabody Holds Substantial Portfolio with Strong Option Value
8 Source: Peabody Energy 2014 10-K filing. Peabody Holds Substantial Portfolio with Strong Option Value - 26 active operations in U.S. and Australia - 7.6 billion tons of coal reserves - 3 billion tons of unassigned reserves - 500,000 acres of surface property - Ownership interests in ports and gene
Slide 9: Operational Results Reveal Strong Underlying Business
Operational Results Reveal Strong Underlying Business North Antelope Rochelle Mine
Slide 10: Strong Q2 Operating Margins Reflect Cost Reductions in All Regions
10 Source: Peabody Energy Q2 2015 Earnings Release. Revenue per ton, margin per ton and gross margin calculated for YTD 2015. Cost reductions exclude approximately $620 million of higher costs related to fuel and currency hedges. Strong Q2 Operating Margins Reflect Cost Reductions in All Regions - 4
Slide 11: Targeting More Than 20% Improvement in 2015 SG&A
11 Targeting More Than 20% Improvement in 2015 SG&A Source: Peabody Energy Q2 2015 Earnings Release; Peabody Energy 2014 10-K filing. Peabody SG&A (dollars in millions) $227 $0 $50 $100 $150 $200 $250 2014 2015P Focusing Activities, Delayering Organization Through Leaner Structure - Second quarter S
Slide 12: Peabody Projects Over $300 Million Benefit as Legacy Hedges Roll Off
12 Potential lower costs based on forward prices as of June 30, 2015. Quarterly Hedge Losses ($ in millions) Peabody Projects Over $300 Million Benefit as Legacy Hedges Roll Off $- $10 $20 $30 $40 $50 $60 $70 $80 Currency Fuel - Hedging losses in second quarter totaled $106 million, primarily relate
Slide 13: Fixed Obligations of ~$1 Billion
13 Fixed obligations shown above are expected cash payments associated with 2015 capital investments, PRB reserve installments and health benefit trust (VEBA) payments for 2015. Cash debt service obligations projected to be ~$465 million in 2016. Fixed Obligations of ~$1 Billion LBA and VEBA Payment
Slide 14: Key Value Drivers: PRB, ILB and Australia
Key Value Drivers: PRB, ILB and Australia El Segundo Mine
Slide 15: Peabody Leads in Size, Productivity and Margins
15 Peabody Leads in Size, Productivity and Margins Source: Peabody Energy 2014 10-K Filing; Company data. Peabody’s PRB Position is Unsurpassed - Peabody largest producer and reserve holder in PRB - Over 140 million tons shipped to ~100 facilities in more than 25 states - 3 billion tons of reserves
Slide 16: Peabody Maintaining Industry-Leading PRB Gross Margins
Peabody PRB Gross Margins Versus Peers 26% 21% 15% 7% 0% 5% 10% 15% 20% 25% 30% BTU Peer A Peer B Peer C 16 Source: Industry reports. Gross margins calculated for six quarters from Q1 2014 through Q2 2015. - Peabody historic PRB gross margins nearly double peer average - Driven by contracting strate
Slide 17: Illinois Basin Portfolio Well Positioned
17 Source: Peabody Energy 2014 10-K Filing. Illinois Basin Portfolio Well Positioned: Anchored by Key Mines - Operations strategically located to serve local customer base - 25 million tons shipped in 2014 - Major emphasis on Indiana sub-region - Bear Run Mine largest surface mine in Eastern U.S. -
Slide 18: Peabody Australian Platform Offers Long-Term Strategic Advantage
18 Peabody Australian Platform Offers Long-Term Strategic Advantage - Competitive advantage with mines close to ports; Near high-growth regions - Platform benefits from quality, location, lower AUD and costs - Among leading producers of seaborne metallurgical coal - Peabody is largest seaborne low-v
Slide 19: Australian Thermal Coal Platform: Low Costs Heighten Competitiveness
19 Source: Peabody Energy Q2 2015 Earnings Release. Australian Thermal Coal Platform: Low Costs Heighten Competitiveness - Australian thermal costs decline 25% to less than $30 per ton in second quarter - Upper 20% margins even in low price environment - Low costs and strong margins anchored by Wilp
Slide 20: Australian Metallurgical Platform Provides Significant Upside
Peabody Australian Metallurgical Segment Costs Per Ton $106 $79 $50 $60 $70 $80 $90 $100 $110 $120 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 20 Source: Peabody Energy Q2 2015 Earnings Release. Historical Australian costs available on PeabodyEnergy.com. - Metallurgical costs per ton decline 25% in the
Slide 21: Safe, Responsible Mining Practices
Safe, Responsible Mining Practices Caballo Mine
Slide 22: Peabody Strives for Best-In-Class Model
Multiple Honors: Safety, Environmental, Corporate Excellence 22 Peabody Strives for Best-In-Class Model Caballo Mine Excellence in Sustainable Mining Practices Increased Access to Low-Cost Electricity Continued Advancement of Clean Coal Technologies
Slide 23: Peabody Improves Safety Performance; Drives Excellence in Land Restoration
23 Safety Performance Incidence rate per 200,000 hours worked. YTD global incidence rate as of June 2015. 2013 figures exclude Discontinued Operations, JVs, office employees and Americas contractors. Peabody Global Incidence Rate 1.88 1.44 1.24 Peabody Improves Safety Performance; Drives Excellence
Slide 24: Long-Term Coal Demand Masked by Current Headwinds
Long-Term Coal Demand Masked by Current Headwinds Jakarta
Slide 25: Difficult Near-Term Global Coal Markets Expected to Improve Over Time
Current Headwinds… Catalysts for Improvement… 25 Source: Peabody Energy Global Analytics. Difficult Near-Term Global Coal Markets Expected to Improve Over Time - Seaborne coal prices fall on slower global GDP - Total seaborne coal demand declines as China reductions offset growth in rest of world -
Slide 26: Global Electricity Growth to Rely on Coal More Than Any Other Fuel
26 Source: International Energy Association (IEA) World Energy Outlook 2014 (Current Policy Scenario). IEA Current Policy Scenario: Electricity Demand Increase 2012 – 2040 (Twh) 8,500 5,700 4,000 2,200 1,400 -600 -2,000 0 2,000 4,000 6,000 8,000 10,000 Coal Natural Gas Other Renewables Hydro Nuclear
Slide 27: U.S. Coal Demand Declining in 2015 Largely Due to Lower Natural Gas Prices
Expected 2015 U.S. Electricity Generation 35% 31% 21% 13% 0% 5% 10% 15% 20% 25% 30% 35% 40% 27 Peabody Global Analytics. YTD coal use and shipments based on August 2015 estimates. - 2015 U.S. coal use likely to decline 90 – 100 million tons - Production curtailments accelerating; Shipments down 8% Y
Slide 28: U.S. Projections Expected to Reflect a Tale of Two Regions
28 PRB/ILB Expected to Overcome 2015 Declines by 2017 Source: Peabody Energy Global Analytics. U.S. Coal Demand (tons in millions) U.S. Projections Expected to Reflect a Tale of Two Regions 0 100 200 300 400 500 2014 2015P 2017P S R P B / IL B O th e r R e g io n s - Demand for PRB and ILB coal expe
Slide 29: EPA Carbon Regulations Face Significant Early Opposition
- EPA overreach rejected by U.S. Supreme Court in MATS ruling - Congress, governors, legislatures, business and consumer groups advance opposition to carbon regulations - Peabody supports advanced coal technology as path to achieve environmental goals 29 MATS refers to U.S. EPA Mercury and Air Toxic
Slide 30: Financial Focus on Liquidity and Deleveraging
Financial Focus on Liquidity and Deleveraging Rawhide Mine
Slide 31: Peabody Focused on Maximizing Near-Term Liquidity and Deleveraging
31 Peabody Focused on Maximizing Near-Term Liquidity and Deleveraging - Continue to focus on liquidity needs in light of ongoing business requirements and potential collateral obligations - No significant debt maturities until 2018 - Peabody targeting deleveraging through potential avenues including
Slide 32: Building a Stronger BTU: Targeting Multiple Improvements
- Peabody’s asset base located in low-cost U.S. basins and higher-demand Australian region - Leading PRB operations with lowest cost and highest margins - Dramatic cost improvements across Australian operations - 4 of 5 segments with gross margins above 25% - BTU continues to pursue multiple avenues
Slide 33: PeabodyEnergy.com
PeabodyEnergy.com AdvancedEnergyForLife.com
Slide 34: Appendix: 2015 Guidance
34 Appendix: 2015 Guidance Sales Volumes (in million tons) U.S. Australia Trading & Brokerage Total 180 – 190 34 – 36 11 – 19 225 – 245 U.S. Operations Revenue Per Ton Costs Per Ton $19.95 – $20.40 $14.65 – $15.00 Australia Operations Metallurgical Coal Sales Export Thermal Coal Sales Domestic Therm
Slide 35: Appendix: Currency and Fuel Hedge Position
35 Appendix: Currency and Fuel Hedge Position To Be Updated Australian Dollar Hedging 2015 2016 2017 Percent Hedged - from 6/30/15 56% 42% 22% Hedge Rate $0.96 $0.92 $0.88 All-in Rate - full year $0.89 $0.83 $0.78 Potential Lower Costs Compared to 2015 $161 $277 Fuel Hedging 2015 2016 2017 Percent H
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