Peabody Energy Corporation · NYSE:BTU
Peabody Energy — Non-Deal Roadshow (August 2012)
35 slides from Peabody Energy's roadshow presentation, Aug 20, 2012
Slide 1: Energizing The World One BTU At A Time - West Coast Roadshow
Energizing The World One BTU At A Time West Coast Roadshow Investor Presentation August 2012 Peabody Energy
Slide 2: Statement on Forward-Looking Information
Statement on Forward-Looking Information Peabody Energy Some of the following information contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as amended, and is intended to come within the safe-ha
Slide 3: Global Market Fundamentals Mixed
Global Market Fundamentals Mixed Metallurgical Coal Higher third quarter settlements Easing in thinly traded spot markets Short-term macroeconomic concerns; long-term structural undersupply Thermal Coal Seaborne market demand strong Indonesia exports surge in early 2012; production down in recent mo
Slide 4: U.S. Markets Working Through Challenges
U.S. Markets Working Through Challenges Peabody Energy Natural Gas Rebounded >50% off May 2012 lows; record heat, lower rig count Gas-to-coal switching in PRB Coal Fundamentals Annualized Q2 output down 104 million tons; June/July stockpile draws ~50% above average Expect 2012 down 100 - 120 million
Slide 5: Peabody Reports Solid Results
Peabody Reports Solid Results Peabody Energy Second Quarter 2012 Highlights Revenues of $2.0 billion Adjusted EBITDA of $453 million Adjusted Diluted EPS of $0.73 (includes net tax benefit of $0.22) Outlook Reduced 2012 planned capex to $1.0 - $1.2 billion 100% priced in U.S. for 2012; 70% - 75% pri
Slide 6: Positioning Diversified Global Operations for Long-Term Success
Positioning Diversified Global Operations for Long-Term Success Peabody Energy Australia Transitioning to new Burton area in Q3 Converting to owner operator at 2 mines Represents 40% of 2012 Australia production Advancing corrective actions at PCI mines Ramping up Middlemount, Wilpinjong and Millenn
Slide 7: Strong Financial Position from Diversified Operations
Strong Financial Position from Diversified Operations Peabody Energy Improving Balance Sheet Repurchased $242 million in bonds in Q2 Debt repayment a top priority Target return to historic debt-to-capital ratio No significant near-term maturities Best coal company credit rating Strong Cash Flow Gene
Slide 8: Global Coal Markets
Global Coal Markets
Slide 9: Annual World Coal Demand Expected to Grow ~1.3 Billion Tonnes in Five Years
Annual World Coal Demand Expected to Grow ~1.3 Billion Tonnes in Five Years Peabody Energy Expected Global Coal Demand (Million Tonnes) 0 2,000 4,000 6,000 8,000 10,000 2011 7,600 ROW 3,175 China 3,845 India 600 2012P 7,900 ROW 3,140 China 4,090 India 640 2016P 8,900 ROW 3,290 China 4,795 India 840
Slide 10: Global Met Coal Use Likely to Increase 25% by 2016
Global Met Coal Use Likely to Increase 25% by 2016 to Track Steel Growth Peabody Energy Global Steel Production Expected to Grow 25% by 2016 Steel growth would require 250 MTPY of metallurgical coal by 2016 China NDRC treating coking coal as “special and scarce” resource to be managed by government
Slide 11: Global Seaborne Demand Growth Expected by 2016
Global Seaborne Demand: 450 - 500 MTPA Growth Expected by 2016; 8% CAGR Peabody Energy Pacific Demand Growth 85+% of Total Demand Increase Million Tonnes 0 200 400 600 800 1000 1200 1400 1600 2011 1,050 Met Thermal 2016P 1,500 - 1,600 Existing Growth 2011 - 2016 Growth Estimated Growth in Seaborne I
Slide 12: China Coal Imports Expected to Double by 2016
China Coal Imports Expected to Double by 2016 Peabody Energy Raising 2016 Projected Coal Imports to 400 - 450 Million Tonnes 2011 coal imports rise 20% to record 223 million tonnes Net coal imports up 78% YTD 2012 Met coal imports up 62% YTD Imports expected to be 400 - 450 million tonnes per year b
Slide 13: India's New Generation Built for Coal Imports
India's New Generation Built for Coal Imports Peabody Energy ~120 GW Current Coal Capacity Coal Port Coal Plants Under Construction Capacity Unit: GW >10 GW 5-10 GW 1-5GW <1 GW Majority of 70 GW of new coal plants built along coastal regions Recent blackouts highlight need for more coal and generati
Slide 14: India Likely to be World's Fastest Growing Coal Importer
India Likely to be World's Fastest Growing Coal Importer Peabody Energy June YTD 2012 coal-fueled generation up 11%; Thermal imports +13% Thermal demand expected to outpace production by >150 MTPY within five years 70 GW of new coal generation expected to start over five years; Requires additional ~
Slide 15: U.S. Coal: PRB and Illinois Basin to Gain from Rising Gas Prices, Exports
U.S. Coal: PRB and Illinois Basin to Gain from Rising Gas Prices, Exports Peabody Energy Near Term: Expected use down 100 - 120 million tons in 2012 June/July stockpile declines ~50% higher than average Q2 shipments down an annualized 104 million tons versus 2011 Coal use rebounding as gas prices ri
Slide 16: Rising Gas Prices to Benefit PRB First
Rising Gas Prices to Benefit PRB First Peabody Energy Natural Gas Prices Favorable for PRB and ILB U.S. Natural Gas Prices ($/mmBtu) $1 $2 $3 $4 $5 2011 2012 2013 2014 2015 2016 Futures ILB Competitive PRB Competitive PRB to benefit as gas prices move above $2.50 - $2.75/mmBtu ILB more competitive a
Slide 17: U.S. Coal Plant Retirements Largely Offset by New Plants, Capacity Utilization
U.S. Coal Plant Retirements Largely Offset by New Plants, Capacity Utilization Peabody Energy GW of Coal Capacity Retired & Million Tons Consumed by Plants Retiring 2011 - 2016 1 GW 3 MT 2 GW 3 MT 3 GW 8 MT 2 GW 5 MT 5 GW 9 MT 10 GW 11 MT 5 GW 5 MT 11 GW 13 MT 1 GW 1 MT Cumulative Generation Changes
Slide 18: Significant Demand Shift Towards PRB and Illinois Basin
Significant Demand Shift Towards PRB and Illinois Basin Peabody Energy PRB advantage Low end of cost curve Primary source for new plants Benefits from basin switching Asian export potential Illinois Basin Advantage Major source for new plants Benefits from new scrubbers and basin switching Transport
Slide 19: Coal: the World's Fastest Growing Major Fuel
Coal: the World's Fastest Growing Major Fuel Peabody Energy Growth 2001 - 2011 0% 10% 20% 30% 40% 50% 60% Coal 56% Hydro 35% Natural Gas 31% Oil 13% Nuclear 0% Largest Share of Global Energy Since 1969 Growth to 2035 Million Tonnes of Oil Equivalent 0 1,000 2,000 3,000 4,000 5,000 Coal 2009 2020 203
Slide 20: Peabody's Global Platform: Driving Results
Peabody's Global Platform: Driving Results
Slide 21: Peabody Continues Global Expansion to Serve High-Growth Regions
Peabody Continues Global Expansion to Serve High-Growth Regions Peabody Energy World's Only Global Pure-Play Coal Investment London Essen New Delhi Urumqi Ulaanbaatar Beijing Singapore Jakarta Balikpapan NCIG St. Louis DTA International Offices Brisbane Newcastle London Ulaanbaatar Essen New Delhi B
Slide 22: Peabody Consistently Delivers Superior Margins
Peabody Consistently Delivers Superior Margins Peabody Energy Peabody's Gross Margins Average Nearly 30% Above NYSE Peers Gross Margins 2010 33% 25% 2011 32% 25% YTD 2012 29% 23% Peabody Mining Operations U.S. Peer Average Peabody's U.S. and Australia margins surpass NYSE coal peers Leading producer
Slide 23: Americas and Australia Units Each Contribute Half of Earnings Base
Americas and Australia Units Each Contribute Half of Earnings Base Peabody Energy Adjusted EBITDA: Five-Fold Increase in Eight Years 2003 Americas >99% 2011 Americas 50% Australia 50% Adjusted EBITDA: $422 Million $2,129 Million Percentages represent share of Mining Adjusted EBITDA. 23
Slide 24: Strong U.S. Operating Results
Strong U.S. Operating Results Peabody Energy U.S. Adjusted EBITDA up 17% to $591 million YTD 2012 U.S. shipments target: 185 - 195 million tons Current-year position fully priced since late 2011 Reducing production by ~ 10 - 20 million tons versus 2011 through customer negotiations, preserving contr
Slide 25: Peabody U.S. Export Opportunities
Peabody U.S. Export Opportunities Peabody Energy Peabody exporting PRB, Illinois basin and Colorado coals through Canada, Gulf and East coasts Recently secured a long-term agreement with Kinder Morgan for coal exports through the Gulf coast Increases Peabody's Gulf Coast export capacity to ~ 5 -7 mi
Slide 26: Australia Platform Expanding Through Acquisition and Organic Growth
Australia Platform Expanding Through Acquisition and Organic Growth Peabody Energy PEA Met PEA Thermal Port PCI Mine Queensland Burton North Goonyella Eaglefield Coppabella Moorvale Millennium Middlemount Abbot Point Dalrymple Bay Gladstone Brisbane New South Wales Wambo Underground Wilpinjong Wambo
Slide 27: Australia Organic Pipeline To Deliver Growth in 2012 and Beyond
Australia Organic Pipeline To Deliver Growth in 2012 and Beyond Peabody Energy Wilpinjong expansion complete Millennium expansion near completion Burton extension Moving to new mining area Middlemount ramping up Permit approval obtained in July Metropolitan expansion Rescheduled for 2014 - 2015 at h
Slide 28: Acquisition Significantly Strengthens Bowen Basin Position
Acquisition Significantly Strengthens Bowen Basin Position Peabody Energy Peabody Energy Australia Bowen Basin Positioning Before Acquisition Existing Mines: North Goonyella Eaglefield Burton Millennium North Goonyella Mine Eaglefield Mine Denham Burton Mine Coppabella Nebo Millenium Mine Saraji Nor
Slide 29: Acquisition Significantly Strengthens Bowen Basin Position
Acquisition Significantly Strengthens Bowen Basin Position Peabody Energy New Bowen Basin Portfolio New Mines: Coppabella Moorvale Middlemount Resources: Addition of significant metallurgical and LV PCI potential in high-demand Bowen Basin Cautionary Note to U.S. Investors - The United States Securi
Slide 30: Acquisition Enables Significant Long-Term Growth Potential for Platform
Acquisition Enables Significant Long-Term Growth Potential for Platform Peabody Energy Peabody's Targeted Production Profile PCI New PEA New PCI Active PEA Active 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Expansions of both met and thermal quality coal Acquisition offers long-term growth pot
Slide 31: Australia: Conversion to Owner Operator on Target at Millennium and Wilpinjong
Australia: Conversion to Owner Operator on Target at Millennium and Wilpinjong Peabody Energy Moving ~40% of Australia Production to Owner-Operator 15% - 20% cost improvement by avoiding contractor margins and using 'right-sized' equipment, mitigating other pressures Increased control over all aspec
Slide 32: Peabody Focused on Strengthening Balance Sheet
Peabody Focused on Strengthening Balance Sheet Peabody Energy Debt-to-capital at 52% Repurchased $242 of debt in second quarter No significant debt maturities until 2015 Ability to increase cash flows by reducing capex Maintenance capex $1.25 - $1.75 per ton Best coal company credit rating Total Deb
Slide 33: Peabody: Outstanding Position for Value Creation
Peabody: Outstanding Position for Value Creation Peabody Energy Why Coal? Rapidly rising seaborne demand Major global buildout of steel and generation High global gas and oil prices Why Peabody? Increasing Australian exports Leader in U.S. regions at low end of cost curve Strong financial position W
Slide 34: Energizing The World One BTU At A Time - West Coast Roadshow
Energizing The World One BTU At A Time West Coast Roadshow Investor Presentation August 2012 Peabody Energy
Slide 35: Appendix: Reconciliation of Non-GAAP Measures
Appendix: Reconciliation of Non-GAAP Measures Peabody Energy Reconciliation of Adjusted EBITDA to Income from Continuing Operations, Net of Income Taxes (Unaudited) Quarter Ended June 30, 2012 Year ended December 31, 2011 2010 2009 2008 2007 (Dollars in Millions) Adjusted EBITDA $453.4 $2,128.7 $1,8