Peabody Energy Corporation · NYSE:BTU
Peabody Energy — Q1 2019 Earnings Presentation
20 slides from Peabody Energy's earnings presentation, May 1, 2019
Slide 1: Quarterly Investor Update
Quarterly Investor Update Glenn Kellow – President and Chief Executive Officer Amy Schwetz – EVP and Chief Financial Officer Vic Svec – SVP Global Investor and Corporate Relations May 1, 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: Strong Results; Unusual Challenges
Strong Results; Unusual Challenges ✓ Shoal Creek Mine rises to Advancing Multiple Strategies top earnings contributor to Create Value ✓ Seaborne thermal Continuing to reweight investments toward greater seaborne thermal delivers 38% Adjusted and seaborne metallurgical access EBITDA margins to captur
Slide 4: Shoal Creek Acquisition Upgrades Seaborne Met Portfolio
Shoal Creek Acquisition Upgrades Seaborne Met Portfolio; Represents Multiple Strategic and Financial Benefits ● Purchased mine, prep plant Clearly meets strict and supporting assets for investment filters $390 million in cash ✓ Strategic portfolio fit – Excludes legacy liabilities other than reclama
Slide 5: Seaborne Thermal Again Leads Segments in Total Adjusted EBITDA Contributions and Margins
Seaborne Thermal Again Leads Segments in Total Adjusted EBITDA Contributions and Adjusted EBITDA Margins • Seaborne thermal delivers 38% Q1 2019 Adjusted EBITDA by Mining Portfolios Adjusted EBITDA margins – 2.6 million short tons exported, 24% increase over prior year Seaborne – Newcastle-spec ship
Slide 6: Peabody Intends to Return to Shareholders Equal or Greater Amount of Free Cash Flow in 2019
Peabody Intends to Return to Shareholders Equal or Greater Amount of Free Cash Flow in 2019 Cumulative Shareholder Returns ($ in millions) $1,417 $1,383 $1,070 $920 $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:
Slide 7: First Quarter Marked by Unusual Near-Term Challenges to Coal Industry Logistics Chain
First Quarter Marked by Unusual Near-Term Challenges to Coal Industry Logistics Chain in Multiple Regions Seaborne Thermal Coal Seaborne Metallurgical Coal ● Pricing eases in first quarter on ● Tight supply/demand reduced LNG prices, above- driving robust pricing average stockpiles and milder ● Chin
Slide 8: Coal Will Continue to Play a Significant Role in the Global Energy Mix
Coal Will Continue to Play a Significant Role in the Global Energy Mix for the Foreseeable Future ● Global coal generation capacity passes 2,000 GW for first time ever in 2018 per WoodMac – 62% increase from 2000 to 2018 ● IHS Markit projects Southeast Asia’s coal fleet to double in size by 2030 ● ~
Slide 9: PRB Continued Customer Demand Despite Rail Outages and Delays
PRB Continued Customer Demand Despite Rail Outages and Delays Caused by Severe Flooding PRB Mine Joint Loadings ● Rail outages, delays drive 12% (Trains per Week) decline in coal production – PRB shipments down 5 – 10 million tons – Further reduces already low utility stockpiles ● Customer nominatio
Slide 10: Strong Second Half 2019 Expected to Contribute More Than Half Full-Year Adjusted EBITDA
Strong Second Half 2019 Expected to Contribute More Than Half Full-Year Adjusted EBITDA • Second half of the year results improve on higher seaborne and PRB volumes, lower met coal costs • Second quarter impacted by two longwall moves in Australia; PRB shipments in line with first quarter as rail re
Slide 11: Appendix
Appendix
Slide 12: 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 $600 –
Slide 13: 2019 Guidance Targets
2019 Guidance Targets 1 Peabody expects to realize ~80%-90% of the premium HCC quoted index price on a weighted average across all its products. 2 Approximately 40% of Peabody’s seaborne metallurgical PCI sales are on a spot basis, with the remainder linked to the quarterly contract. Peabody expects
Slide 14: Historical Seaborne Pricing ($/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 15: North Goonyella Mine: Segmenting of Multiple Zones
North Goonyella Mine: Segmenting of Multiple Zones North Goonyella Fan Installation 15
Slide 16: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures Quarter Ended Mar. Mar. 2019 2018 Tons Sold (In Millions) Seaborne Thermal Mining Operations 4.5 3.8 Seaborne Metallurgical Mining Operations 2.3 3.0 Powder River Basin Mining Operations 25.3 32.4 Midwestern U.S. Mining Operations 4.2 4.7 Western U.S. Mining Opera
Slide 17: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures Quarter Ended Mar. Mar. 2019 2018 Total Reporting Segment Costs (1) Summary (In Millions) Seaborne Thermal Mining Operations $ 156.3 $ 139.8 Seaborne Metallurgical Mining Operations 238.7 299.8 North Goonyella Costs, Less Insurance Recoveries 3.0 - Seaborne Metall
Slide 18: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures Quarter Ended Mar. Mar. 2019 2018 Reconciliation of Non-GAAP Financial Measures (In Millions) Income from Continuing Operations, Net of Income Taxes $ 133.3 $ 208.3 Depreciation, Depletion and Amortization 172.5 169.6 Asset Retirement Obligation Expenses 13.8 12.3
Slide 19: Reconciliation of Non-GAAP Measures: Definitions
Reconciliation of Non-GAAP Measures: Definitions Note: Total Reporting Segment Costs, Adjusted EBITDA and Free Cash Flow are non-GAAP financial measures. Management believes that non-GAAP performance measures are used by investors to measure our operating performance and lenders to measure our abili
Slide 20: 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