Peabody Energy Corporation · NYSE:BTU
Peabody Energy — Q4 2018 Earnings Presentation
23 slides from Peabody Energy's earnings presentation, Feb 6, 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 February 6, 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: 2018 Marked by Considerable Successes Even in Face of Some Notable Challenges
2018 Marked by Considerable Successes Even in Face of Some Notable Challenges ✓ Delivers full-year company-wide Adjusted EBITDA margins of ~25% ✓ Acquires Shoal Creek Mine at attractive valuation ✓ Generates over $1.3 billion in free cash flow ✓ Repurchases ~$835 million of stock in 2018, additional
Slide 4: 2018 Financials in Review
2018 Financials in Review Net Income Income From Cont. Diluted EPS, Attributable to Revenues Ops, Net of Income Income from Cont. Common Taxes Ops Stockholders Q4: $1,397.1 Q4: $233.5 Q4: $252.6 Q4: $1.97 FY: $5,581.8 FY: $645.7 FY: $544.4 FY: $4.28 Operating Cash Adjusted EBITDA Free Cash Flow Flow
Slide 5: Seaborne Thermal Segment Drives Company Adjusted EBITDA Margins, Contributions
Seaborne Thermal Segment Drives Company Adjusted EBITDA Margins, Contributions Q4 2018 Adjusted EBITDA • Seaborne thermal segment by Mining Portfolios delivers 42% Adjusted EBITDA margins in Q4 Seaborne – 3.7 million short tons exported, Thermal Seaborne Met 6% increase over prior year $137.5M $25.8
Slide 6: Vast Majority of Investments Directed Towards High-Demand, Higher-Margin Seaborne Portfolios
Vast Majority of Investments Directed Towards High-Demand, Higher-Margin Seaborne Portfolios • Substantial operating 2018 Allocation of Capex & Acquisitions cash flows provide Seaborne opportunity for share Met $88M repurchases, capital Seaborne investments Thermal $67M • Well-capitalized Shoal Cree
Slide 7: Seaborne Supply/Demand Tightness Continues, Underpins Favorable Pricing Environment
Seaborne Supply/Demand Tightness Continues, Underpins Favorable Pricing Environment Seaborne Thermal Coal Seaborne Metallurgical Coal ● Chinese imports up 16 million ● Continued growth in India tonnes even with year-end expected to drive demand import restrictions – 2018 imports up 5% ● India import
Slide 8: U.S. Utility Coal Stockpiles At Lowest Levels Since 2005
U.S. Utility Coal Stockpiles At Lowest Levels Since 2005 U.S. Utility Coal Stockpiles ● 2018 coal demand declines 4% (Max Days Burn) on substantial year of plant retirements, despite 4% 69 increase in total electricity generation – 2019 retirements expected to be less than half that of 2018 39 ● Sto
Slide 9: Advancing Attractive Seaborne Thermal Life Extension Projects
Advancing Attractive Seaborne Thermal Life Extension Projects To Maintain Export Thermal Coal Volumes • Pursuing life extension projects at Wilpinjong and Wambo • Unincorporated joint venture with Glencore gives access to stratified reserves and extends life of Wambo open cut mine – Expected to comm
Slide 10: Shoal Creek Acquisition Upgrades Seaborne Met Portfolio
Shoal Creek Acquisition Upgrades Seaborne Met Portfolio; Represents Multiple Strategic and Financial Benefits • Targeting ~2.5 million tons of high-quality seaborne met coal • Anticipating costs in the vessels of $85 - $95 per short ton • Earned ~50% Adjusted EBITDA margins YTD Sept. 2018 • Serves A
Slide 11: Commencing North Goonyella Re-ventilation and Re-Entry Project
Commencing North Goonyella Re-ventilation and Re-Entry Project, Targeting Higher 2020 Met Coal Volumes • Base case targets ~2 million tons of longwall production in 2020 – Limited 2019 continuous miner volumes • Executing multi-phased project to advance re-ventilation and re-entry plan – Completed s
Slide 12: Continued Emphasis on Value Over Volume Across U.S. Thermal Operations
Continued Emphasis on Value Over Volume Across U.S. Thermal Operations • Targeting 2019 PRB volumes of 105 – 115 million tons – Reducing planned production of higher-quality, higher-cost coal at NARM by 10 million tons at midpoint – Entering 2019 with 90% to 95% of PRB volumes priced • Easing produc
Slide 13: Peabody Continues to Execute on Stated Financial Approach
Peabody Continues to Execute on Stated Financial Approach • Generated over $1.3 billion in free cash flow in 2018 Generate Cash • Expect to continue to generate strong operating cash flows • 2018 reduction of ~$550 million of liabilities Maintain Financial • Maintaining previously stated debt and li
Slide 14: Appendix
Appendix
Slide 15: 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 $375 – $425 million Interest Expense4 ~$150 million Seaborne Metallurgical 9
Slide 16: 2019 Guidance Targets (Footnotes)
2019 Guidance Targets 1 Peabody expects to realizes ~80%-90% of the premium HCC quoted index price on a weighted average across all its products. 2 Approximately 40% of Peabody’s seaborne metallurgical PCI sales are on a spot basis, with the remainder linked to the quarterly contract. Peabody expect
Slide 17: North Goonyella Coal Mine: Segmenting of Multiple Zones
North Goonyella Coal Mine: Segmenting of Multiple Zones 17
Slide 18: Historical Seaborne Pricing ($/Tonne)
Historical Seaborne Pricing ($/Tonne) Time Period HCC – HCC – Spot LV PCI – LV PCI – Spot NEWC – API 5 - Settlement Settlement Spot Prompt 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 $228 $156.50 $149 $103 $82 Q4 2017 $
Slide 19: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures Successor Successor Predecessor Combined Quarter Ended Quarter Ended Year Ended Apr. 2 through Jan. 1 through Year Ended Dec. 31, 2018 Dec. 31, 2017 Dec. 31, 2018 Dec. 31, 2017 Apr. 1, 2017 Dec. 31, 2017 Tons Sold (In Millions) Powder River Basin Mining Operations
Slide 20: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures Quarter Ended Quarter Ended Year Ended Apr. 2 through Jan. 1 through Year Ended Dec. 31, 2018 Dec. 31, 2017 Dec. 31, 2018 Dec. 31, 2017 Apr. 1, 2017 Dec. 31, 2017 Total Reporting Segment Costs (1) Summary (In Millions) Powder River Basin Mining Operations $ 280.5
Slide 21: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures Successor Successor Predecessor Combined Quarter Ended Quarter Ended Year Ended Apr. 2 through Jan. 1 through Year Ended Dec. 31, 2018 Dec. 31, 2017 Dec. 31, 2018 Dec. 31, 2017 Apr. 1, 2017 Dec. 31, 2017 Reconciliation of Non-GAAP Financial Measures (In Millions)
Slide 22: Reconciliation of Non-GAAP Measures: Shoal Creek
Reconciliation of Non-GAAP Measures: Shoal Creek Nine Months Ended Sept. 30, 2018 Revenue Summary (In Millions) Shoal Creek Mining Operations $ 333.2 Reconcilation of Non-GAAP Financial Measures - Shoal Creek (In Millions) Net Income $ 162.1 Depreciation, Depletion and Amortization 1.1 Asset Retirem
Slide 23: 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