Peabody Reports Earnings For Quarter Ended September 30, 2017
ST. LOUIS, Oct. 25, 2017 /PRNewswire/ -- Peabody (NYSE: BTU) today announced its third quarter 2017 operating results, including revenues of $1.48 billion, income from continuing operations net of income taxes of $233.7 million, net income attributable to common stockholders of $201.4 million, diluted earnings per share from continuing operations of $1.49 and Adjusted EBITDA(1) of $411.3 million.
"Peabody produced powerful results in the third quarter, with the entire team delivering on multiple objectives set out earlier this year," said Peabody President and Chief Executive Officer Glenn Kellow. "The company sharply increased mining results, improved metallurgical coal volumes and costs, paid down debt, bought back shares, repriced our term loan, enhanced shareholder return flexibility and took steps to monetize non-core assets. We intend to continue to execute on our stated financial approach as we generate cash, reduce debt, invest wisely and return cash to shareholders."
Third Quarter 2017 Results
Revenues for the third quarter rose 22 percent from the prior year to $1.48 billion on the strength of $251.3 million in higher Australia revenue, driven by a 60 percent increase in realized revenues per ton and a 9 percent increase in metallurgical coal volumes.
Income from continuing operations net of income taxes totaled $233.7 million reflecting robust mining contributions as well as $194.5 million of depreciation, depletion and amortization (DD&A), $40.4 million in net interest expense and a net tax benefit of $84.1 million. DD&A includes $41.5 million of expense related to the amortization of certain intangible U.S. coal supply agreements. Peabody's third quarter income tax benefit includes recognition of $98 million of cash refunds expected from carryback of approximately $500 million of its U.S. net operating loss position.
Net income attributable to common stockholders totaled $201.4 million. During the quarter, 8 percent of preferred stock was converted to common stock, bringing total conversions (as of Sept. 30, 2017) since Peabody's emergence to 47 percent and resulting in a non-cash preferred dividend of $23.5 million. (Most income statement measures are not comparable with prior-year periods due to the adoption of fresh-start reporting as of April 1, 2017.)
Highlighting the strength of the diversified platform, both the U.S. and the Australian platforms delivered substantial Adjusted EBITDA contributions, resulting in third quarter Adjusted EBITDA of $411.3 million, a $281.1 million improvement over the third quarter of 2016.
Australian Adjusted EBITDA increased $226.5 million to $240.9 million, the highest quarterly Adjusted EBITDA contribution in five years, on improved seaborne pricing. The Australian thermal segment led the company in Adjusted EBITDA margins of 37 percent, while the Australian metallurgical segment led Adjusted EBITDA contributions with $143.1 million.
Australian sales volumes totaled 8.7 million tons, including 3.5 million tons of metallurgical coal sold at an average price of $119.55 per ton and 3.3 million tons of export thermal coal sold at an average price of $69.31 per ton, with the remainder delivered under domestic contracts.
As expected, metallurgical coal shipments increased 75 percent compared to the cyclone-restricted second quarter 2017 shipments, driven by record North Goonyella volumes, and the metallurgical platform is on track to be within the company's full-year cost and volume targets. As a result of both strong operational performance and increased volumes, metallurgical costs per ton declined significantly to $78.42 per ton compared to $109.07 per ton in the second quarter of 2017.
Strong demand for quality Australian thermal and metallurgical coal resulted in thermal and metallurgical realized pricing per ton increasing 42 percent and 68 percent, respectively, compared to the third quarter of 2016. Australian thermal costs per ton increased 19 percent compared to the prior year, primarily due to geologic issues and ramp up following a longwall move at an underground thermal mine.
U.S. operations contributed solid Adjusted EBITDA of $196.7 million compared with $217.3 million in the prior year on lower realized pricing. On average, the U.S. operations generated Adjusted EBITDA margins of 25 percent, with the Powder River Basin earning 27 percent.
Liquidity at quarter end totaled $942.7 million, including $925.0 million in cash and cash equivalents and $17.7 million of accounts receivable securitization capacity. In addition, the company had $538.1 million in Restricted Cash Collateral associated with the company's coal mine restoration obligations and other activities. During the third quarter, Peabody freed up approximately $25 million in cash collateral and remains focused on further releasing restricted cash through a multi-pronged approach.
Following through on the company's capital allocation initiatives, Peabody made voluntary payments of $394 million in the quarter, including repaying $300 million in debt, executing $69 million of share repurchases and making $25 million in discretionary pension contributions to reduce future potential funding volatility. During the quarter, Peabody generated positive operating cash flow of $239.6 million and paid approximately $135 million of Chapter 11 exit fees and settlement costs.
___________________________
Note: All comparisons are to third quarter 2016 unless otherwise noted.
(1) Adjusted EBITDA, revenues per ton, costs per ton and margin per ton are non-GAAP financial measures. Please refer to the tables and related notes in this press release for a reconciliation of non-GAAP financial measures.
Progress on Financial Targets
"Peabody continues to take aggressive actions to reduce debt and advance the shareholder return initiatives we outlined in August," said Peabody Executive Vice President and Chief Financial Officer Amy Schwetz. "In addition to reaching our 2017 deleveraging targets ahead of schedule, we have executed share repurchases, repriced our term loan, lowered interest expense, amended provisions of our credit agreement to give us greater flexibility to accelerate shareholder returns and advanced steps to free up incremental restricted cash."
-- Liquidity: Peabody continues to believe the appropriate level of
liquidity is approximately $800 million. The company is evaluating
alternative sources of liquidity to release cash currently tied-up as
collateral.
-- Deleveraging: Peabody has completed $300 million in voluntary debt
repayments of its term loan that were targeted to be completed by
year-end 2017, leaving remaining debt of approximately $1.66 billion.
The company is targeting an additional $200 million of debt reduction by
December 2018 with a gross debt target of $1.2 billion to $1.4 billion
over time.
-- Return of Capital to Shareholders: In the few months since Peabody
announced its capital return initiatives, the company has already
executed $100 million of the $500 million share repurchase program
authorized by the company's board of directors, including $69 million
executed in the third quarter.(2) In addition, the board of directors
will regularly evaluate a sustainable dividend program, targeting
commencement in the first quarter of 2018.
In addition to the progress made on debt reduction and share repurchases, Peabody also advanced several non-core asset sale initiatives during the quarter. The company entered into an agreement to sell the majority of its inactive Burton Mine and related infrastructure for approximately $11 million, which will reduce Peabody's asset retirement obligation by approximately $53 million and free up an estimated $30 million in restricted cash. The transaction is conditional on a number of regulatory and other requirements and completion is expected to take place in the first half of 2018. Also, as part of the company's long-term planning for the closure of the Millennium Mine, Peabody has entered into an agreement to sell its 50 percent interest in the coal handling and preparation plant and associated rail loading facility utilized by Millennium. The sale to the remaining partner reduces associated operating costs and other obligations, while preserving throughput capacity for Peabody's remaining production.
(________________________________________
)(2) Repurchases will be subject to limitations in the company's debt documents and may be made from time to time at the company's discretion. The specific timing, price and size of purchases will depend on the share price, general market and economic conditions and other considerations. No expiration date has been set for the repurchase program, and the program may be suspended or discontinued at any time.
Industry Fundamentals
Seaborne thermal and metallurgical coal pricing remained well above prior-year levels on continued strength in China and overall supply constraints. While China only accounts for approximately 20 percent of total seaborne coal demand, changes in Chinese demand tend to have meaningful impacts on seaborne fundamentals for both thermal and metallurgical coal. China coal import demand has been high, increasing 24 million tonnes year-to-date, with monthly imports in September at the highest levels since 2014.
Seaborne thermal coal demand and pricing continue to be supported by robust Asian demand primarily in China and South Korea. Chinese thermal coal imports are up approximately 15 million tonnes through September over the prior year on strong electricity generation that exceeded domestic production growth. In addition, South Korean imports have strengthened approximately 15 million tonnes through September on strong demand as nuclear generation has been curtailed. While import demand from India has been sluggish on increased domestic coal usage, stockpiles are currently at multi-year lows, which is supportive of additional imports in the fourth quarter. For full-year 2017, Peabody now projects seaborne thermal coal demand to increase approximately 10 to 15 million tonnes from 2016 levels.
Within seaborne metallurgical coal, fundamentals remain strong as global steel production has risen approximately 5 percent led by record Chinese steel production. In addition, Chinese steel exports are down 30 percent year to date through September. Metallurgical coal imports in China rose 9 million tonnes through September on strong demand and limited domestic production. For full-year 2017, Peabody now expects global seaborne metallurgical coal demand to increase approximately 10 million tonnes compared to the prior year.
Seaborne metallurgical coal prompt prices averaged $189 per tonne in the third quarter, up over $50 per tonne from the prior year, with the index-based settlement price for hard coking coal set at approximately $170 per tonne. In addition, Peabody set third quarter low-vol PCI pricing at $115 per tonne with an additional settlement later in the quarter of $127.50 per tonne. The company also negotiated a fourth quarter low-vol PCI settlement of $127.50.
In the United States, industry fundamentals were impacted by mild weather and weaker gas pricing in the third quarter. Even as overall electricity demand weakened year over year, utility consumption of Powder River Basin coal rose approximately 8 percent above the prior year with natural gas decreasing 12 percent (on 30 percent higher average natural gas prices year over year through September). In addition, SPRB stockpiles fell 8 percent from the prior year to 55 days of maximum burn.
Cooling degree days in June, July and August were down approximately 16 percent from the prior year in coal-heavy regions. As a result, Peabody now expects U.S. coal consumption from electricity generation to be largely flat for full-year 2017 compared to 2016 levels. The company continues to project that higher capacity utilization of U.S. coal plants will offset the impact of approximately 15 million tons of lower demand as a result of coal plant retirements.
Within U.S. policy, Peabody is encouraged by the continued actions of the administration to advance a pro-energy economy and recognize coal as an essential part of the energy mix. Over a dozen policy issues have already been resolved, with an equal number currently under review. Of the more notable items, the Environmental Protection Agency recently proposed the repeal of the "Clean Power Plan." In addition, the U.S. Department of Energy proposed a rule for final action by the Federal Energy Regulatory Commission on grid reliability and resilience pricing. The proposed rule would require incentives to preserve valuable baseload generating resources with considerable onsite fuel storage, such as coal and nuclear power plants. Peabody continues to support high-efficiency, low-emissions technology and the advancement of carbon capture, use and storage technologies to reduce emissions.
Financial Target Modifications
Turning to the remainder of 2017, Peabody expects a modest easing in Powder River Basin sales volumes, partly offset by a continued high level of Australian shipments.
In line with Peabody's layering contracting strategy, Peabody has approximately 88 million tons of PRB coal priced for 2018 at an average of $12.27 per ton. For 2018, Peabody has priced approximately 3 million tons of export thermal coal at an average price of $72 per short ton.
Today's earnings call is scheduled for 10 a.m. CDT, and will be accompanied by a presentation available at PeabodyEnergy.com.
Peabody is the world's largest private-sector coal company. The company is also a leading voice in advocating for sustainable mining, energy access and clean coal technologies. Peabody serves metallurgical and thermal coal customers in more than 25 countries on five continents. For further information, visit PeabodyEnergy.com.
Contact:
Investors
Vic Svec
314.342.7768
Media
Beth Sutton
928.221.6792
Condensed Consolidated Statements of Operations (Unaudited)
For the Quarters Ended Sept. 30, 2017 and 2016
----------------------------------------------
(In Millions, Except Per Share Data)
2017 2016
---- ----
Successor Predecessor
--------- -----------
Quarter Ended September 30
Tons Sold 52.0 52.8
==== ====
Revenues $1,477.2 $1,207.1
Operating Costs and
Expenses (1) 1,044.9 1,064.8
Depreciation,
Depletion and
Amortization 194.5 117.8
Asset Retirement
Obligation Expenses 11.3 12.7
Selling and
Administrative
Expenses 33.4 32.1
Restructuring Charges 1.1 0.3
Other Operating (Income) Loss:
Net Gain on Disposal
of Assets (0.4) (1.9)
(Income) Loss from
Equity Affiliates (10.5) 2.9
----- ---
Operating Profit
(Loss) 202.9 (21.6)
Interest Expense 42.4 58.5
Loss on Early Debt
Extinguishment 12.9 -
Interest Income (2.0) (1.3)
Reorganization Items,
Net - 29.7
--- ----
Income (Loss) from
Continuing Operations
Before Income Taxes 149.6 (108.5)
Income Tax Benefit (84.1) (10.8)
----- -----
Income (Loss) from
Continuing
Operations, Net of
Income Taxes 233.7 (97.7)
Loss from Discontinued
Operations, Net of
Income Taxes (3.7) (38.1)
---- -----
Net Income (Loss) 230.0 (135.8)
Less: Series A
Convertible Preferred
Stock Dividends 23.5 -
Less: Net Income
Attributable to
Noncontrolling
Interests 5.1 1.8
Net Income (Loss)
Attributable to
Common Stockholders $201.4 $(137.6)
====== =======
Adjusted EBITDA (2) $411.3 $130.2
====== ======
Diluted EPS -Income
(Loss) from
Continuing Operations
(3)(4) $1.49 $(5.44)
===== ======
Diluted EPS -Net
Income (Loss)
Attributable to
Common Stockholders
(3) $1.47 $(7.53)
===== ======
(1) Excludes items shown
separately.
(2) Adjusted EBITDA is a
non-U.S. GAAP
measure defined as
income (loss) from
continuing operations
before deducting net
interest expense,
income taxes, asset
retirement obligation
expenses,
depreciation,
depletion and
amortization and
reorganization items,
net. Adjusted EBITDA
is also adjusted for
the discrete items
that management
excluded in analyzing
the segments'
operating performance
as displayed in the
reconciliation. A
reconciliation of
income (loss) from
continuing
operations, net of
income taxes to
Adjusted EBITDA is
included at the end
of this document.
Adjusted EBITDA is
used by management as
one of the primary
metrics to measure
our operating
performance.
Management also
believes non-U.S.
GAAP performance
measures are used by
investors to measure
our operating
performance and
lenders to measure
our ability to incur
and service debt.
Adjusted EBITDA is
not intended to serve
as an alternative to
U.S. GAAP measures of
performance and may
not be comparable to
similarly-titled
measures presented by
other companies.
(3) Diluted EPS is
calculated under the
two-class method
which treats
participating
securities as having
rights to earnings
that otherwise would
have been available
to common
stockholders and
assumes that
participating
securities are not
exercised or
converted. As such,
weighted average
diluted shares
outstanding were
103.1 million for the
Successor quarter
ended September 30,
2017 and excluded
34.2 million weighted
average shares
outstanding related
to the participating
securities. Weighted
average diluted
shares outstanding
were 18.3 million for
the Predecessor
quarter ended
September 30, 2016.
(4) Reflects income (loss)
from continuing
operations, net of
income taxes less
preferred stock
dividends and net
income attributable
to noncontrolling
interests.
This information is intended to be reviewed in conjunction with the
company's filings with the SEC.
Condensed Consolidated Statements of Operations (Unaudited)
For the Nine Months Ended Sept. 30, 2017 and 2016
-------------------------------------------------
(In Millions, Except Per Share Data)
2017 2016
----
Successor Predecessor Predecessor
--------- ----------- -----------
April 2 through January 1 through Nine Months Ended
September 30 April 1 September 30
------------ ------- ------------
Tons Sold 95.6 46.1 135.1
==== ==== =====
Revenues $2,735.5 $1,326.2 $3,274.5
Operating Costs and
Expenses (1) 1,979.7 963.7 2,981.2
Depreciation,
Depletion and
Amortization 342.8 119.9 345.5
Asset Retirement
Obligation Expenses 22.3 14.6 37.3
Selling and
Administrative
Expenses 67.8 37.2 114.6
Restructuring Charges 1.1 - 15.5
Other Operating (Income) Loss:
Net Gain on Disposal
of Assets (0.9) (22.8) (17.4)
Asset Impairment - 30.5 17.2
(Income) Loss from
Equity Affiliates (26.2) (15.0) 12.6
----- ----- ----
Operating Profit
(Loss) 348.9 198.1 (232.0)
Interest Expense 83.8 32.9 243.7
Loss on Early Debt
Extinguishment 12.9 - -
Interest Income (3.5) (2.7) (4.0)
Reorganization Items,
Net - 627.2 125.1
--- ----- -----
Income (Loss) from
Continuing Operations
Before Income Taxes 255.7 (459.3) (596.8)
Income Tax Benefit (79.4) (263.8) (108.2)
----- ------ ------
Income (Loss) from
Continuing
Operations, Net of
Income Taxes 335.1 (195.5) (488.6)
Loss from Discontinued
Operations, Net of
Income Taxes (6.4) (16.2) (44.5)
---- ----- -----
Net Income (Loss) 328.7 (211.7) (533.1)
Less: Series A
Convertible Preferred
Stock Dividends 138.6 - -
Less: Net Income
Attributable to
Noncontrolling
Interests 8.9 4.8 3.5
--- ---
Net Income (Loss)
Attributable to
Common Stockholders $181.2 $(216.5) $(536.6)
====== ======= =======
Adjusted EBITDA (2) $729.1 $341.3 $238.0
====== ====== ======
Diluted EPS -Income
(Loss) from
Continuing
Operations (3)(4) $1.37 $(10.93) $(26.91)
===== ======= =======
Diluted EPS -Net
Income (Loss)
Attributable to
Common Stockholders
(3) $1.32 $(11.81) $(29.34)
===== ======= =======
(1) Excludes items shown
separately.
(2) Adjusted EBITDA is a non-
U.S. GAAP measure
defined as income (loss)
from continuing
operations before
deducting net interest
expense, income taxes,
asset retirement
obligation expenses,
depreciation, depletion
and amortization and
reorganization items,
net. Adjusted EBITDA is
also adjusted for the
discrete items that
management excluded in
analyzing the segments'
operating performance as
displayed in the
reconciliation. A
reconciliation of income
(loss) from continuing
operations, net of
income taxes to Adjusted
EBITDA is included at
the end of this
document. Adjusted
EBITDA is used by
management as one of the
primary metrics to
measure our operating
performance. Management
also believes non-U.S.
GAAP performance
measures are used by
investors to measure our
operating performance
and lenders to measure
our ability to incur and
service debt. Adjusted
EBITDA is not intended
to serve as an
alternative to U.S. GAAP
measures of performance
and may not be
comparable to similarly-
titled measures
presented by other
companies.
(3) Diluted EPS is calculated
under the two-class
method which treats
participating securities
as having rights to
earnings that otherwise
would have been
available to common
stockholders and assumes
that participating
securities are not
exercised or converted.
As such, weighted
average diluted shares
outstanding were 100.2
million for the
Successor period April 2
through September 30,
2017 and excluded 36.7
million weighted average
shares outstanding
related to the
participating
securities. Weighted
average diluted shares
outstanding were 18.3
million for the
Predecessor periods
January 1 through April
1, 2017 and the nine
months ended September
30, 2016, respectively.
(4) Reflects income (loss)
from continuing
operations, net of
income taxes less
preferred stock
dividends and net income
attributable to
noncontrolling
interests.
This information is intended to be reviewed in conjunction with the
company's filings with the SEC.
Supplemental Financial Data (Unaudited)
For the Quarters and Nine Months Ended Sept. 30, 2017 and 2016
2017 2016 2017 2016
---- ----
Successor Predecessor Successor Predecessor Combined Predecessor
--------- ----------- --------- ----------- -------- -----------
Quarter Ended April 2 January 1 Nine Months Ended
September 30 through through April 1 September 30
September 30
------------
Revenue Summary (In Millions)
----------------------------
Powder River Basin Mining
Operations $420.9 $419.6 $786.3 $394.3 $1,180.6 $1,062.2
Midwestern U.S. Mining
Operations 207.7 211.0 402.6 193.2 595.8 599.6
Western U.S. Mining Operations 155.7 162.4 281.1 149.7 430.8 387.0
----- ----- ----- ----- -----
Total U.S. Mining Operations 784.3 793.0 1,470.0 737.2 2,207.2 2,048.8
Australian Metallurgical Mining
Operations 415.9 232.5 703.7 328.9 1,032.6 682.8
Australian Thermal Mining
Operations 265.8 197.9 505.0 224.8 729.8 561.4
----- ----- ----- ----- -----
Total Australian Mining
Operations 681.7 430.4 1,208.7 553.7 1,762.4 1,244.2
Trading and Brokerage Operations 19.4 2.7 24.6 15.0 39.6 16.5
Other (8.2) (19.0) 32.2 20.3 52.5 (35.0)
---- ---- ---- -----
Total $1,477.2 $1,207.1 $2,735.5 $1,326.2 $4,061.7 $3,274.5
======== ======== ======== ======== ======== ========
Tons Sold (In Millions)
----------------------
Powder River Basin Mining
Operations 33.7 33.0 62.2 31.0 93.2 80.0
Midwestern U.S. Mining
Operations 4.9 4.9 9.5 4.5 14.0 13.8
Western U.S. Mining Operations 4.0 4.3 7.2 3.4 10.6 10.0
--- --- --- --- ---- ----
Total U.S. Mining Operations 42.6 42.2 78.9 38.9 117.8 103.8
Australian Metallurgical Mining
Operations 3.5 3.2 5.5 2.2 7.7 10.1
Australian Thermal Mining
Operations 5.2 5.4 9.8 4.6 14.4 15.8
--- --- --- --- ---- ----
Total Australian Mining
Operations 8.7 8.6 15.3 6.8 22.1 25.9
Trading and Brokerage Operations 0.7 2.0 1.4 0.4 1.8 5.4
--- --- --- --- --- ---
Total 52.0 52.8 95.6 46.1 141.7 135.1
==== ==== ==== ==== ===== =====
Revenues per Ton - Mining Operations (1)
---------------------------------------
Powder River Basin $12.48 $12.73 $12.65 $12.70 $12.67 $13.28
Midwestern U.S. 42.52 43.02 42.57 42.96 42.69 43.45
Western U.S. 38.25 38.03 38.54 44.68 40.47 38.72
Total U.S. 18.38 18.82 18.63 18.96 18.73 19.74
Australian Metallurgical 119.55 71.34 128.89 150.22 135.03 67.39
Australian Thermal 51.78 36.53 51.65 48.65 50.69 35.60
Total Australian 79.15 49.60 79.32 81.36 79.95 48.04
Operating Costs per Ton - Mining Operations (1)(2)
--------------------------------------------------
Powder River Basin $9.13 $8.97 $9.47 $9.75 $9.57 $9.80
Midwestern U.S. 32.39 30.96 32.42 31.84 32.23 30.96
Western U.S. 29.77 30.00 27.65 29.76 28.31 30.39
Total U.S. 13.77 13.66 13.91 14.03 13.94 14.60
Australian Metallurgical 78.42 81.93 89.53 100.16 92.57 79.34
Australian Thermal 32.72 27.50 30.79 32.27 31.29 26.90
Total Australian 51.18 47.94 51.83 54.15 52.55 47.41
Gross Margin per Ton - Mining Operations (1)(2)
----------------------------------------------
Powder River Basin $3.35 $3.76 $3.18 $2.95 $3.10 $3.48
Midwestern U.S. 10.13 12.06 10.15 11.12 10.46 12.49
Western U.S. 8.48 8.03 10.89 14.92 12.16 8.33
Total U.S. 4.61 5.16 4.72 4.93 4.79 5.14
Australian Metallurgical 41.13 (10.59) 39.36 50.06 42.46 (11.95)
Australian Thermal 19.06 9.03 20.86 16.38 19.40 8.70
Total Australian 27.97 1.66 27.49 27.21 27.40 0.63
Note: See footnote explanations
on following page
Supplemental Financial Data (Unaudited)
For the Quarters and Nine Months Ended Sept. 30, 2017 and 2016
--------------------------------------------------------------
2017 2016 2017 2016
---- ---- ----
Successor Predecessor Successor Predecessor Combined Predecessor
--------- ----------- --------- ----------- -------- -----------
Quarter Ended April 2 January 1 Nine Months Ended
September 30 through through September 30
September April 1
30
---
Other Supplemental Financial Data
(In Millions)
---------------------------------
Adjusted EBITDA -
Powder River Basin
Mining Operations $112.7 $123.9 $197.5 $91.7 $289.2 $278.3
Adjusted EBITDA -
Midwestern U.S.
Mining Operations 49.5 59.1 96.0 50.0 146.0 172.4
Adjusted EBITDA -
Western U.S. Mining
Operations 34.5 34.3 79.4 50.0 129.4 83.2
---- ---- ---- ---- ----- ----
Total U.S. Mining
Operations 196.7 217.3 372.9 191.7 564.6 533.9
Adjusted EBITDA -
Australian
Metallurgical
Mining Operations 143.1 (34.5) 215.0 109.6 324.6 (121.0)
Adjusted EBITDA -
Australian Thermal
Mining Operations 97.8 48.9 203.7 75.6 279.3 137.2
---- ---- ----- ---- ----- -----
Total Australian
Mining Operations 240.9 14.4 418.7 185.2 603.9 16.2
Adjusted EBITDA -
Trading and
Brokerage 2.7 (9.4) (2.4) 8.8 6.4 (41.3)
Selling and
Administrative
Expenses (Excluding
Debt Restructuring) (33.4) (32.1) (67.8) (37.2) (105.0) (93.1)
Other Operating
Costs, Net (3) (1.8) (12.3) 1.9 20.4 22.3 (32.5)
Restructuring
Charges (1.1) (0.3) (1.1) - (1.1) (15.5)
Gain on UMWA VEBA
Settlement - - - - - 68.1
Corporate Hedging
Results 7.3 (47.4) 6.9 (27.6) (20.7) (197.8)
--- --- ----- -----
Adjusted EBITDA $411.3 $130.2 $729.1 $341.3 $1,070.4 $238.0
====== ====== ====== ====== ======== ======
(1) Revenues per Ton, Operating Costs per Ton and Gross
Margin per Ton are non-U.S. GAAP measures.
Revenues per Ton and Gross Margin per Ton are
approximately equal to Revenues by segment and
Adjusted EBITDA by segment, respectively, divided
by segment tons sold. Operating Costs per Ton is
equal to Revenues per Ton less Gross Margin per
Ton.
(2) Includes revenue-based production taxes and
royalties; excludes depreciation, depletion and
amortization; asset retirement obligation
expenses; selling and administrative expenses;
restructuring charges; asset impairment; and
certain other costs related to post-mining
activities.
(3) Includes (income) loss from equity affiliates
(before the impact of related changes in deferred
tax asset valuation allowance and amortization of
basis difference), costs associated with post-
mining activities, certain asset sales, property
management costs and revenues, coal royalty
expense, minimum charges on certain
transportation-related contracts and the Q1 2017
gain of $19.7 million recognized on the sale of
Dominion Terminal Associates.
This information is intended to be reviewed in conjunction with the company's filings with the SEC.
Condensed Consolidated Balance Sheets
As of Sept. 30, 2017, Jun. 30, 2017 and Dec. 31, 2016
-----------------------------------------------------
(Dollars In Millions)
Successor Predecessor
--------- -----------
(Unaudited)
Sept. 30, 2017 Jun. 30, 2017 Dec. 31, 2016
-------------- ------------- -------------
Cash and Cash Equivalents $925.0 $1,095.7 $872.3
Restricted Cash 7.8 - 54.3
Accounts Receivable, Net 431.0 396.5 473.0
Inventories 307.7 313.5 203.7
Assets from Coal Trading
Activities, Net 2.5 0.6 0.7
Other Current Assets 268.6 171.8 486.6
----- ----- -----
Total Current Assets 1,942.6 1,978.1 2,090.6
Property, Plant, Equipment and
Mine Development, Net 5,082.6 5,214.2 8,776.7
Restricted Cash Collateral 530.3 561.7 529.3
Investments and Other Assets 517.9 561.2 381.1
----- ----- -----
Total Assets $8,073.4 $8,315.2 $11,777.7
======== ======== =========
Current Portion of Long-Term Debt $47.1 $189.0 $20.2
Liabilities from Coal Trading
Activities, Net 1.0 1.2 1.2
Accounts Payable and Accrued
Expenses 1,065.0 1,147.0 990.4
------- ------- -----
Total Current Liabilities 1,113.1 1,337.2 1,011.8
Long-Term Debt, Less Current
Portion 1,612.0 1,768.1 -
Deferred Income Taxes 2.2 - 173.9
Asset Retirement Obligations 636.0 635.0 717.8
Accrued Postretirement Benefit
Costs 745.8 746.3 756.3
Other Noncurrent Liabilities 573.7 596.9 496.2
----- ----- -----
Total Liabilities Not Subject to
Compromise 4,682.8 5,083.5 3,156.0
Liabilities Subject to Compromise - - 8,440.2
--- --- -------
Total Liabilities 4,682.8 5,083.5 11,596.2
Predecessor Common Stock - - 0.2
Successor Series A Convertible
Preferred Stock 691.7 800.7 -
Successor Common Stock 1.0 1.0 -
Additional Paid-in Capital 2,425.9 2,286.3 2,422.0
Treasury Stock (69.2) - (371.8)
Retained Earnings (Accumulated
Deficit) 296.3 94.9 (1,399.5)
Accumulated Other Comprehensive
Income (Loss) 1.8 0.5 (477.0)
--- --- ------
Peabody Energy Corporation
Stockholders' Equity 3,347.5 3,183.4 173.9
Noncontrolling Interests 43.1 48.3 7.6
---- ---- ---
Total Stockholders' Equity 3,390.6 3,231.7 181.5
------- ------- -----
Total Liabilities and
Stockholders' Equity $8,073.4 $8,315.2 $11,777.7
======== ======== =========
This information is intended
to be reviewed in conjunction
with the company's filings
with the SEC.
Condensed Consolidated Statements of Cash Flows (Unaudited)
For the Quarters Ended Sept. 30, 2017 and 2016
----------------------------------------------
(Dollars In Millions)
2017 2016
---- ----
Successor Predecessor
--------- -----------
Quarter Ended September 30
Cash Flows From Operating
Activities
Net Cash Provided By
Continuing Operations $253.4 $169.7
Net Cash Used In Discontinued
Operations (13.8) (14.7)
-----
Net Cash Provided By Operating
Activities 239.6 155.0
----- -----
Cash Flows From Investing
Activities
Additions to Property, Plant,
Equipment and Mine
Development (22.7) (18.5)
Changes in Accrued Expenses
Related to Capital
Expenditures 0.2 1.6
Federal Coal Lease
Expenditures - (248.5)
Proceeds from Disposal of
Assets 2.7 18.7
Contributions to Joint
Ventures (113.7) (82.0)
Distributions from Joint
Ventures 112.5 73.2
Advances to Related Parties (3.2) (21.1)
Repayments of Loans from
Related Parties 8.7 11.1
Other, Net (0.9) 0.1
---- ---
Net Cash Used In Investing
Activities (16.4) (265.4)
----- ------
Cash Flows From Financing
Activities
Proceeds from Long-Term Debt - 7.8
Repayments of Long-Term Debt (308.3) (2.2)
Payment of Deferred Financing
Costs (6.1) (0.3)
Common Stock Repurchase (69.2) -
Distributions to
Noncontrolling Interests (10.3) (1.4)
Net Cash (Used In) Provided By
Financing Activities (393.9) 3.9
------ ---
Net Change in Cash and Cash
Equivalents (170.7) (106.5)
Cash and Cash Equivalents at
Beginning of Period 1,095.7 1,274.3
------- -------
Cash and Cash Equivalents at
End of Period $925.0 $1,167.8
====== ========
This information is intended
to be reviewed in conjunction
with the company's filings
with the SEC.
Condensed Consolidated Statements of Cash Flows (Unaudited)
For the Nine Months Ended Sept. 30, 2017 and 2016
-------------------------------------------------
(Dollars In Millions)
2017 2016
----
Successor Predecessor Combined Predecessor
--------- ----------- -------- -----------
April 2 January 1 Nine Months Ended
through through September 30
September 30 April 1
------------ -------
Cash Flows From Operating
Activities
Net Cash Provided By (Used In)
Continuing Operations $344.7 $222.2 $566.9 $(257.9)
Net Cash Used In Discontinued
Operations (14.4) (8.2) (22.6) (18.9)
Net Cash Provided By (Used In)
Operating Activities 330.3 214.0 544.3 (276.8)
----- ----- ----- ------
Cash Flows From Investing
Activities
Additions to Property, Plant,
Equipment and Mine
Development (68.6) (32.8) (101.4) (56.6)
Changes in Accrued Expenses
Related to Capital
Expenditures 1.8 (1.4) 0.4 (5.5)
Federal Coal Lease
Expenditures - (0.5) (0.5) (249.0)
Proceeds from Disposal of
Assets 5.2 24.3 29.5 134.7
Contributions to Joint
Ventures (210.0) (95.4) (305.4) (241.7)
Distributions from Joint
Ventures 208.0 90.5 298.5 236.7
Advances to Related Parties (4.1) (0.4) (4.5) (23.3)
Repayments of Loans from
Related Parties 35.2 31.1 66.3 13.2
Other, Net (2.4) (0.3) (2.7) (8.2)
---- ---- ----
Net Cash (Used In) Provided By
Investing Activities (34.9) 15.1 (19.8) (199.7)
----- ---- ----- ------
Cash Flows From Financing
Activities
Proceeds from Long-Term Debt - 1,000.0 1,000.0 1,429.8
Successor Notes Issuance
Proceeds into Escrow - (1,000.0) (1,000.0) -
Repayments of Long-Term Debt (332.1) (2.1) (334.2) (11.2)
Payment of Deferred Financing
Costs (6.1) (45.4) (51.5) (29.8)
Common Stock Repurchase (69.2) - (69.2) -
Distributions to
Noncontrolling Interests (16.7) (0.1) (16.8) (3.9)
Other, Net - (0.1) (0.1) (1.9)
----
Net Cash (Used In) Provided By
Financing Activities (424.1) (47.7) (471.8) 1,383.0
------ ----- ------ -------
Net Change in Cash and Cash
Equivalents (128.7) 181.4 52.7 906.5
Cash and Cash Equivalents at
Beginning of Period 1,053.7 872.3 872.3 261.3
------- -----
Cash and Cash Equivalents at
End of Period $925.0 $1,053.7 $925.0 $1,167.8
====== ======== ====== ========
This information is intended
to be reviewed in conjunction
with the company's filings
with the SEC.
Reconciliation of Non-U.S. GAAP Financial Measures (Unaudited)
For the Quarters Ended Sept. 30, 2017 and 2016
----------------------------------------------
(Dollars In Millions)
2017 2016
---- ----
Successor Predecessor
--------- -----------
Quarter Ended September 30
Income (Loss) from Continuing
Operations, Net of Income Taxes $233.7 $(97.7)
Depreciation, Depletion and
Amortization 194.5 117.8
Asset Retirement Obligation Expenses 11.3 12.7
Change in Deferred Tax Asset
Valuation Allowance Related to
Equity Affiliates (3.4) (0.6)
Interest Expense 42.4 58.5
Loss on Early Debt Extinguishment 12.9 -
Interest Income (2.0) (1.3)
Reorganization Items, Net - 29.7
Unrealized Losses on Economic Hedges 10.8 21.9
Unrealized Losses on Non-Coal
Trading Derivative Contracts 1.7 -
Take-or-Pay Contract-Based
Intangible Recognition (6.5) -
Income Tax Benefit (84.1) (10.8)
------------
Adjusted EBITDA $411.3 $130.2
====== ======
This information is intended
to be reviewed in conjunction
with the company's filings
with the SEC.
Reconciliation of Non-U.S. GAAP Financial Measures (Unaudited)
For the Nine Months Ended Sept. 30, 2017 and 2016
(Dollars In Millions)
2017 2016
----
Successor Predecessor Predecessor
--------- ----------- -----------
April 2 January 1 Nine Months Ended
through through September 30
September 30 April 1
------------ -------
Income (Loss) from Continuing
Operations, Net of Income Taxes $335.1 $(195.5) $(488.6)
Depreciation, Depletion and
Amortization 342.8 119.9 345.5
Asset Retirement Obligation Expenses 22.3 14.6 37.3
Selling and Administrative Expenses
Related to Debt Restructuring - - 21.5
Change in Deferred Tax Asset
Valuation Allowance Related to
Equity Affiliates (7.7) (5.2) (0.6)
Asset Impairment - 30.5 17.2
Interest Expense 83.8 32.9 243.7
Loss on Early Debt Extinguishment 12.9 - -
Interest Income (3.5) (2.7) (4.0)
Reorganization Items, Net - 627.2 125.1
Break Fees Related to Terminated
Asset Sales (28.0) - -
Unrealized Losses (Gains) on Economic
Hedges 1.4 (16.6) 49.1
Unrealized Gains on Non-Coal Trading
Derivative Contracts (1.5) - -
Coal Inventory Revaluation 67.3 - -
Take-or-Pay Contract-Based
Intangible Recognition (16.4) - -
Income Tax Benefit (79.4) (263.8) (108.2)
------------
Adjusted EBITDA $729.1 $341.3 $238.0
====== ====== ======
This information is intended
to be reviewed in conjunction
with the company's filings
with the SEC.
Guidance Targets
Sales Volumes (Short Tons) Capital Expenditures $165 - $195 million
PRB 120 - 125 million
ILB 18 - 19 million Quarterly SG&A Expense ~$35 million
Western 13 - 14 million
Total U.S. 151 - 158 million Quarterly Interest Expense $37 - $39 million
Aus. Metallurgical(1) 11.5 - 12.0 million Q4 2017 Cost Sensitivities4
Aus. Export Thermal(2) 12.5 - 13.0 million $0.05 Decrease in A$ FX Rate5 + ~$25 - $28 million
Aus. Domestic Thermal ~7 million $0.05 Increase in A$ FX Rate5 ~<$5 million
Total Australia 31 - 32 million Fuel (+/- $10/barrel) +/- ~$8 million
U.S. Operations - Revenues Per Ton 2017 Priced Position
PRB $12.50 - $12.75 PRB Average Price/Ton ~$12.60
ILB $42.00 - $43.00 ILB Average Price/Ton ~$42.65
Total U.S. $18.55 - $18.75 Australia Export Thermal ~11.5 million tons
Australia Export Thermal ~$68
Average Price/Short Ton
U.S. Operations - Costs Per Ton
PRB $9.50 - $9.75
ILB $32.00 - $33.00 2018 Priced Position
Total U.S. $13.85 - $14.25 PRB Average Price/Ton $12.27
ILB Average Price/Ton $42.30
Australia Export Thermal ~3 million tons
Australia Operations - Costs per Ton (USD)(3)
Metallurgical $85 - $95 Australia Export Thermal ~$72
Average Price/Short Ton
Thermal $31 - $35
Total Australia $51 - $54
Essentially all of Peabody's expected 2017 U.S. sales volume is priced as of Sept. 30, 2017;
~75% - 80% of 2018 volumes are priced (based on approximately 150 million tons);
approximately 35% of 2019 volumes are priced (based on approximately 150 million tons).
(1) Metallurgical coal sales volumes may range from ~50%-60% PCI and ~40%-50% coking coal (including semi-hard and semi-soft coking coals). Approximately 55% of seaborne metallurgical sales may be executed on a spot basis, with the remainder priced under quarterly contracts or linked to an index. The company also has exposure to approximately 2 million tons of metallurgical coal related to the Middlemount Mine, a 50/50 joint venture accounted for in (Income) Loss from Equity Affiliates.
Peabody's North Goonyella and Coppabella mines typically receive the PLV HCC index quoted price and set the PLV PCI benchmark, respectively, with the remainder of products sold at discounts to these values based on coal qualities and properties. On a weighted-average basis across all metallurgical products, Peabody typically realizes approximately 85%-90% of the PLV HCC index quoted price for its coking products, and 90%-95% of the premium LV PCI benchmark price for its PCI products.
(2) A portion of Peabody's seaborne thermal coal products sell at or above the Newcastle index, with the remainder sold at discounts relative to the Newcastle index based on coal qualities and properties. On a weighted-average basis across all seaborne thermal products, Peabody typically realizes approximately 90%-95% of the Newcastle index price.
(3) Assumes 4Q 2017 average A$ FX rate of $0.79.
(4) Sensitivities reflect approximate impacts of changes in variables on financial performance. When realized, actual impacts may differ significantly.
(5) As of Sept. 30, 2017, Peabody had purchased average rate call options in aggregate notional amount of approximately AUD $450 million to manage market price volatility associated with the Australian dollar with strike price levels of approximately $0.78 and settlement dates through December 2017. Sensitivities provided are relative to an assumed average A$ FX exchange rate of $0.79 for remainder of 2017. For 2018, Peabody purchased average rate call options in aggregate notional amount of approximately AUD $675 million with strike price levels of approximately $0.85 and settlement dates through June 2018.
Note 1: 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 segment is of a thermal grade and vice versa. Peabody may market some of its metallurgical coal products as a thermal product from time to time depending on industry conditions. Per ton metrics presented are non-GAAP measures. Due to the volatility and variability of certain items needed to reconcile these measures to their nearest GAAP measure, no reconciliation can be provided without unreasonable cost or effort.
Note 2: A sensitivity to changes in seaborne pricing should consider Peabody's estimated split of PCI and coking coal products, the ratio of PLV PCI benchmark to PLV HCC index quoted price, the weighted average discounts across all products to the applicable PLV HCC index quoted price or PLV PCI benchmark or Newcastle index prices, in addition to impacts on sales-related costs in Australia, and applicable conversions between short tons and metric tonnes as necessary.
Note 3: As of Oct. 20, 2017, Peabody would have approximately 133.7 million shares of common stock outstanding, assuming full conversion of Peabody's preferred stock (including make-whole shares issuable upon conversion of the preferred stock). The fully converted shares issued value excludes approximately 3.5 million shares underlying unvested equity awards under Peabody's long-term incentive plan. As of Oct. 20, 2017, holders of approximately 51% of preferred stock issued at emergence had converted their shares into common stock. Post the Oct. 31, 2017, PIK dividend, every 1 million preferred shares converted equals ~ $7.5 million of non-cash dividends.
Forward Looking Statement
This press release 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 words such as "expects," "anticipates," "intends," "plans," "believes," "seeks," "estimates," "projects," "forecasts," "targets," "would," "will," "should," "goal," "could" or "may" or other similar expressions. Forward-looking statements provide management's current expectations or predictions of future conditions, events or results. All statements that address operating performance, events or developments that we expect or anticipate will occur in the future are forward-looking statements. They may include estimates of revenues, income, earnings per share, cost savings, capital expenditures, dividends, share repurchases, liquidity, capital structure, market share, industry volume, or other financial items, descriptions of management's plans or objectives for future operations, or descriptions of assumptions underlying any of the above. All forward-looking statements speak only as of the date they are made and reflect the company's good faith beliefs, assumptions and expectations, but they are not guarantees of future performance or events. Furthermore, the company disclaims any obligation to publicly update or revise any forward-looking statement, except as required by law. By their nature, forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those suggested by the forward-looking statements. Factors that might cause such differences include, but are not limited to, a variety of economic, competitive and regulatory factors, many of which are beyond the company's control, that are described in our Annual Report on Form 10-K for the fiscal year ended Dec. 31, 2016, as amended on July 10, 2017 and Aug. 14, 2017, and in Exhibit 99.2 to the Company's Current Report on Form 8-K filed with the SEC on April 11, 2017, as well as additional factors we may describe from time to time in other filings with the SEC. You may get such filings for free at our website at www.peabodyenergy.com. You should understand that it is not possible to predict or identify all such factors and, consequently, you should not consider any such list to be a complete set of all potential risks or uncertainties.
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SOURCE Peabody
