Peabody Energy Corporation · NYSE:BTU
Peabody Energy — Investor Presentation (March 2017)
35 slides from Peabody Energy's investor presentation, Mar 22, 2017
Slide 1: Investor Presentation March 2017
Investor Presentation March 2017
Slide 2: Statement on Forward-Looking Information
Statement on Forward-Looking Information Certain statements included in this release 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," "
Slide 3: Regarding Peabody's Plan of Reorganization
Regarding Peabody’s Plan of Reorganization Under the terms of the confirmed plan of reorganization, all shares of Peabody common stock trading under OTC: BTUUQ will be cancelled for no value on the effective date of the plan. Following emergence, the company expects new Peabody shares of common stoc
Slide 4: The New BTU Positioned to Create Substantial Value for Shareholders Over Time
4 “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
Slide 5: Peabody: World's Largest Private-Sector Coal Company
23 operations In U.S. and Australia ~6,700 Skilled Employees Globally $4.7 billion 2016 Revenues 25+ countries Served by Peabody Operating model includes: Americas and Australia business units Marketing/Trading services function Lean and scalable corporate structure Core sectors include: Powder Rive
Slide 6: U.S. Industry: Coal Expected to Remain Major Component of U.S. Generation Mix
PRB and ILB projected to supply nearly 55% of U.S. coal by 2021 2017 utility coal consumption expected to respond to higher natural gas prices Utility demand projected to decline 5 to 15 million tons from 2016 to 2021 ~50 GW of plant retirements expected by 2021, largely offset by higher plant opera
Slide 7: Global Thermal: Asia-Pacific Drives Seaborne Demand; Australia Positioned to Serve Growth
Seaborne thermal demand projected to increase 25 to 35 million tonnes from 2016 – 2021 Over 50 GW of new coal- fueled capacity expected to be added on average each year through 2021 Transition towards lower carbon-emitting coal fleet Majority of new capacity expected to be ultra or supercritical boi
Slide 8: Global Metallurgical: Longer-Term Seaborne Met Coal Demand Growth Driven by India
Major tightening in supply and demand balance in 2016 prices Sharply higher prices result from 12 million tonnes import increase in China Seaborne met coal demand expected to increase 10 to 15% from 2016 to 2021 Growth led by India, which is expected to become largest importer of seaborne metallurgi
Slide 9: Peabody: World's Only Global Pure-Play Coal Investment
Peabody: World’s Only Global Pure-Play Coal Investment Note: Peabody agreed to the sale of Metropolitan Mine in Q4 2016 and the transaction is currently under review by the Australian Competition and Consumer Commission. Peabody owns a 50% equity interest in the Middlemount Mine and accounts for the
Slide 10: 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 11: Operating Margins Reflect Cost Reductions Over Time
Productivity, cost reductions drive average 25% gross margins across 4 of 5 mining segments Australian met coal margins reflect HCC benchmark pricing of $114 per tonne Met coal margins reach 26% in Q4 2016 Aggregating large supply centers/complexes Leveraging best practices and technology-driven sol
Slide 12: 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 peers Substantial reserve position, advanced mining methods drive productivity Major technology focus i
Slide 13: Australian Unit Costs Decline 45% in Four Years, Greatly Improving Competitiveness
Australian Units Costs Decline 45% in Four Years, Greatly Improving Competiveness Cost reductions aided by: Currency and fuel Owner-operator conversions Major process improvements Australian capital investment declines more than 90% from 2012, while workforce decreases 35% from peak Australian NOLs
Slide 14: U.S. Operations Provide Balance with Australian Access to Higher-Growth Asia-Pacific Demand
U.S. Operations Provide Balance with Australian Access to Higher-Growth Asia-Pacific Demand 95% of Americas 2017 volumes already priced 43% priced for 2018 Provides revenue visibility Stable 2013 to 2016 margins ranging from 24% to 28% Australia access to high-growth Asia-Pacific demand provides sub
Slide 15: Managing all aspects of balance sheet, reducing liabilities, maximizing return on investment
$686 million 2016 Adjusted EBITDAR $1.97 billion Emergence Debt $3.1 billion Emergence Plan Equity Note: Adjusted EBITDAR is a non-GAAP measure. Please refer to the appendix for information regarding our non-GAAP measures. Emergence plan equity as presented in the Second Amended Disclosure Statement
Slide 16: 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 17: Experienced International Management Team with Focus on Value
Combining 150+ years of related industry experience Experienced International Management Team with Focus on Value Note: Reflects management team post-emergence. Verona Dorch EVP and Chief Legal Officer Glenn Kellow President and CEO Kemal Williamson President – Americas Operations 30+ years in execu
Slide 18: New Board of Directors Represents Independence, Skills and Expertise
New Board of Directors Represents Independence, Skills and Expertise 8 of 9 Independent Directors Glenn Kellow – President and CEO of Peabody; director and executive committee member of the World Coal Association, U.S. National Mining Association and the International Energy Agency Coal Industry Adv
Slide 19: 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 20: Appendix
Appendix Photo: Jimmy Bernhard, KSDK
Slide 21: 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 22: 2017 Targets
2017 Targets Notes: 2017 Guidance assumes sale of Metropolitan Mine completed in early 2Q 2017. Peabody classifies its Australian Metallurgical or Thermal Mining segments based on the primary customer base and reserve type. A small portion of the coal mined by the Australian Metallurgical Mining seg
Slide 23: 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 24: 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 25: 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 26: Executing U.S. Bonding Solution Best Serving Capital Structure Upon Emergence
Executing U.S. Bonding Solution Best Serving 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 48,00
Slide 27: Changing U.S. Political Landscape: Implications for Energy Supply/Demand
Changes expected from new administration, Congress At macro level, we believe pro-growth, tax and regulatory changes will be positive Favorable expectations on coal mining regulations while continuing to protect environment (Stream Protection Rule Repeal) Coal recognized as important part of energy
Slide 28: SG&A Best Among Public Peers Despite More Complex Global Nature
SG&A Best Among Public Peers Despite More Complex Global Nature Lowest SG&A ratio of public peers at 2.8% of revenue Actions include: Eliminated ~50% of corporate positions Closed 10 international and regional U.S. offices Streamlined reporting relationships and increasing manager span of control Im
Slide 29: 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 30: North Antelope Rochelle Mine Rail Loop and Train Loading
North Antelope Rochelle Mine Rail Loop and Train Loading Extensive rail infrastructure that is optimized by a unique train staging and loading operation. Accommodates up to ten trains on site, allows trains to run directly through to mine and complies with onsite staging targets NARM rail infrastruc
Slide 31: Expanding Margins Through Productivity and Cost Approach, Contracting Strategies
Expanding Margins Through Productivity and Cost Approach, Contracting Strategies A 400-ton haul truck is accompanied by a supervisor’s SUV at Peabody’s North Antelope Rochelle Mine, which sourced approximately 15% of total U.S. coal shipments in 2016.
Slide 32: Peabody Operations – North Antelope Rochelle Mine
Peabody Operations – North Antelope Rochelle Mine
Slide 33: Metallurgical Coal: Coking Coal and PCI Used in Steel Making Process
Metallurgical Coal: Coking Coal and PCI Used in Steel Making Process Coking Coal: Includes qualities that when heated to a high temperature in a coke oven produces coke Coke provides heat, chemical reduction and physical support to iron-ore as it is converted to pig-iron in the blast furnace Pulveri
Slide 34: Longwall at North Goonyella Mine
Longwall at North Goonyella Mine
Slide 35: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures (1) Adjusted EBITDA is defined as (loss) income from continuing operations before deducting net interest expense, income taxes, asset retirement obligation expense, depreciation, depletion and amortization and reorganization items, net. Adjusted EBITDA is also adj