Peabody Reports Earnings For Quarter And Year Ended December 31, 2017
ST. LOUIS, Feb. 7, 2018 /PRNewswire/ -- Peabody (NYSE: BTU) today announced its fourth quarter 2017 operating results, including revenues of $1.52 billion, income from continuing operations, net of income taxes of $378.0 million, net income attributable to common stockholders of $317.4 million, diluted earnings per share from continuing operations of $2.47 and Adjusted EBITDA (1) of $416.2 million, the largest result in five years.
"A highly successful fourth quarter capped a year of substantial achievement for Peabody, as the company delivered results and generated value," said Peabody President and Chief Executive Officer Glenn Kellow. "Fourth quarter results reflect strong operational performance, significant cash generation and debt repayment, meaningful release of restricted cash and continued share repurchases, and we have much more progress targeted for 2018. Much of our substantial 2017 cash flows were properly committed to debt reduction and reducing other obligations. We enter 2018 with a strong balance sheet, lower interest expense, minimal taxes, ability to liberate restricted cash, a newly initiated dividend, a simplified capital structure and strong cash flows that we intend to use to further unlock value for our shareholders."
Fourth Quarter 2017 Results
Revenues for the fourth quarter increased 5 percent over the prior year to $1.52 billion on continued robust seaborne pricing and 4 percent higher Australian export volumes, leading to Australia's largest quarterly revenue contribution in five years. Full-year 2017 revenues increased 18 percent over the prior year to $5.58 billion driven by higher Australian metallurgical and thermal coal pricing and an 11 percent increase in Powder River Basin coal shipments.
Fourth quarter income from continuing operations, net of income taxes totaled $378.0 million, reflecting $178.8 million of depreciation, depletion and amortization; $83.1 million of gains on disposals (excluded from Adjusted EBITDA); net mark-to-market gain on actuarially determined liabilities of $45.2 million; and $35.9 million of interest expense. The company's net income tax benefit of $81.6 million includes an estimated benefit resulting from newly enacted tax legislation primarily related to alternative minimum tax credits, which are expected to be refunded in 2019 and beyond.
Net income attributable to common stockholders totaled $317.4 million for the quarter and included $40.9 million of non-cash preferred stock dividends, reflecting the impact of 9 percent voluntary preferred conversions during the quarter and the semi-annual preferred dividend.
Fourth quarter Adjusted EBITDA totaled $416.2 million and included $6.5 million of restructuring charges related to future closure costs for the Millennium Mine. Adjusted EBITDA increased $122.2 million over the prior year, led by increases in Australian revenues and Adjusted EBITDA margins. For the full year, Peabody reported Adjusted EBITDA of $1.49 billion, with Australia and the U.S. operations contributing 56 percent and 44 percent, respectively, of total mining Adjusted EBITDA. Australia's full-year Adjusted EBITDA of $906.7 million marks the platform's largest operating result since 2008.
Australia's fourth quarter Adjusted EBITDA increased 64 percent to $302.8 million, reflecting robust seaborne pricing and continued cost containment. Sales volumes for the Australian platform totaled 8.8 million tons, including 4.0 million tons of metallurgical coal sold at an average price of $127.14 per ton and 3.4 million tons of export thermal coal sold at an average price of $72.89 per ton, with the remainder delivered under domestic contracts. In line with the company's full-year targets, the Australian operations shipped 11.7 million tons of metallurgical coal and 12.5 million tons of export thermal coal in 2017 at average realized prices of $132.29 per ton and $68.95 per ton, respectively.
Fourth quarter Australian thermal coal realized pricing increased 15 percent to $55.22 per ton, driven by strong seaborne demand. The Australian thermal coal segment earned robust Adjusted EBITDA margins of 38 percent, despite modestly higher costs primarily related to sales-related royalties.
Continued strength in seaborne metallurgical coal fundamentals led to fourth quarter segment revenues of $517.3 million, an increase of 27 percent over the prior year. Peabody's Australian metallurgical coal mines sustained its improved second-half cost profile, resulting in fourth quarter costs of $78.03 per ton. Combined, strong seaborne fundamentals and powerful cost performance allowed the Australian metallurgical coal platform to lead the company in total Adjusted EBITDA contributions of $199.9 million and Adjusted EBITDA margins of 39 percent.
For the full year, the Australian platform expanded Adjusted EBITDA margins to 36 percent, an increase of $23.48 per ton compared to the prior year, on strengthening seaborne pricing and a continued focus on costs with productivity improvements, led by record North Goonyella production.
The U.S. operations generated fourth quarter Adjusted EBITDA of $162.1 million and delivered 40.4 million tons of coal, in line with the prior year. Revenues per ton increased 2 percent to $18.38 per ton, primarily due to favorable mix and the benefit of a contractual settlement. U.S. costs per ton increased largely due to planned maintenance in the Midwest and higher fuel costs across operations.
For the full year, the U.S. platform delivered average Adjusted EBITDA margins of 25 percent, largely driven by the benefit of a contractual settlement and improved cost performance in the Western segment related to higher Twentymile Mine volumes and favorable ratio changes at the Kayenta Mine.
Peabody generated fourth quarter operating cash flows of $466.9 million. Total capital expenditures of $98.0 million contributed to total investing cash outflows of $58.5 million and free cash flow(2) of $408.4 million.
Note: All comparisons are to fourth quarter 2016 unless otherwise noted. Most income statement measures are not comparable with prior-year periods due to the adoption of fresh-start reporting as of April 1, 2017.
(1) Adjusted EBITDA, revenues per ton, costs per ton and Adjusted EBITDA margin per ton and percent 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.
Balance Sheet and Capital Return Initiatives
"Peabody ended 2017 strongly with great operational execution that allowed us to exceed our deleveraging and liquidity targets. We successfully put in place and upsized our new revolver, worked with insurers to create a surety bonding program in Australia, and advanced our capital allocation program," said Peabody Executive Vice President and Chief Financial Officer Amy Schwetz. "Our balance sheet is strong and our near-term earnings profile is robust, so our emphasis can now shift more fully toward greater returns of cash to shareholders."
Liquidity
-- Liquidity at quarter end totaled $1.24 billion, including $1.01 billion
in cash and cash equivalents, $193.8 million of available revolver
capacity and $38.1 million of accounts receivable securitization
capacity.
-- During the fourth quarter, Peabody made significant progress on
achieving its 2018 goal of freeing up approximately $200 million to $400
million of its nearly $540 million restricted cash balance by utilizing
its new $350 million revolving credit facility and closing on the Burton
transaction. As a result, the company's total restricted cash balance
has been reduced by one-third to $363.2 million since Sept. 30, 2017.
-- In January 2018, the company worked with insurers to successfully issue
an initial tranche of approximately $115 million of surety bonds in
Australia, and as a result, expects to reduce its restricted cash
balance by an equal amount. The company expects to put additional
bonding in place over time and ultimately through a combination of
letters of credit, bank guarantees and surety bonds, now anticipates
releasing nearly all of its remaining restricted cash in 2018.
Deleveraging
-- Peabody previously targeted a total of $500 million in voluntary debt
reduction by the end of 2018 and a total gross debt balance of $1.2
billion to $1.4 billion over time. Given the company's strong cash
generation, Peabody completed its targeted repayments a year in advance,
bringing its total debt balance to $1.46 billion as of Dec. 31, 2017.
By advancing deleveraging, Peabody was also able to access alternative
sources of liquidity and lower fixed charges.
-- As a result of the company's meaningful cash position and voluntary debt
repayments, Peabody's net debt balance has improved nearly 50 percent
since April 2017 to $448.7 million.
Shareholder Returns
-- The company executed $107 million of share repurchases in the fourth
quarter, bringing total repurchases to $176 million, as the company
continues to execute on its authorized $500 million share repurchase
program(3).
-- Today, Peabody announced the initiation of a quarterly dividend,
demonstrating the company's strong financial position, cash flow
generation profile and commitment to shareholder returns. Peabody's
board of directors has declared a quarterly cash dividend of $0.115 per
share of the company's common stock payable on March 5, 2018 to
shareholders of record on Feb. 19, 2018. The new dividend is the next
step of the company's financial approach of generating cash, maintaining
a strong balance sheet, investing wisely and returning cash to
shareholders. The board of directors will evaluate dividends on a
quarterly basis, taking into consideration the company's cash flows and
alternative means to create shareholder value.
Preferred Share Conversion
-- Peabody's capital structure also was simplified in recent days as all
remaining preferred stock was mandatorily converted into common on Jan.
31, 2018. Peabody expects to record a non-cash preferred dividend
charge of $102.5 million in the first quarter of 2018 as a result of
conversions since Dec. 31, 2017.
(2)Free cash flow is a non-GAAP measure defined as Net cash provided by operating activities less Net cash used in investing activities. A reconciliation of Net cash provided by operating activities to free cash flow is included at the end of this document.
(3) 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 elevated through year end as firm demand across the Asia-Pacific region was met with supply tightness.
2017 global seaborne thermal coal demand increased approximately 25 million tonnes over the prior year largely driven by South Korea, China and other developing Pacific countries. South Korean imports continued to show strength in the fourth quarter on new coal capacity and low nuclear availability, leading to an increase in full-year 2017 demand of 16 million tonnes over the prior year. Chinese thermal coal imports increased 5 million tonnes over 2016 on a 5 percent increase in thermal electricity generation. Demand from ASEAN countries increased 8 million tonnes on continued strong economic growth and increases in coal-fueled generation. While India imports declined 11 million tonnes overall for the year, fourth quarter imports rose 17 percent compared to the prior year largely due to depleted stockpiles.
2017 seaborne thermal coal demand outpaced supply as Australian, Colombian and Indonesian thermal coal exports declined from the prior year, despite high pricing levels.
Within seaborne metallurgical coal, 2017 demand was driven by a 5 percent increase in global steel production, with December marking the 20th consecutive month of year-over-year steel production increases. Through year end, Chinese metallurgical coal imports rose approximately 10 million tonnes, or 15 percent, even as steel exports decreased 30 percent year over year. Indian metallurgical coal imports increased approximately 6 percent over the prior year, largely driven by growth in the back half of the year to support rising steel production. Global metallurgical coal supply and demand fundamentals remained tight at year end as total Australian metallurgical exports declined more than 15 million tonnes through December due to cyclone impacts, logistical constraints and industry-wide operational challenges.
Seaborne metallurgical coal prompt prices increased to an average $205 per tonne in the fourth quarter with the index-based settlement price for premium hard coking coal set at approximately $192 per tonne. Peabody negotiated first quarter benchmark low-vol PCI pricing of $156.50 per tonne.
2018 seaborne thermal and metallurgical demand are expected to be most impacted by growth in India and ASEAN countries and potential changes in Chinese policy. Seaborne supply remains tight on continued logistic and operational constraints across the industry.
In the U.S., 2017 coal demand was impacted by mild weather in coal heavy regions, moderate natural gas prices and increased renewable demand. Utility consumption of Southern Powder River Basin coal rose approximately 5 percent in 2017 compared to the prior year, despite overall load, natural gas and total coal demand all decreasing. As a result, Southern Powder River Basin coal inventories declined approximately 9 million tons from the prior year to 54 days of maximum burn. Winter weather continues to reduce stockpile levels across the U.S. resulting in average year-end stockpiles at lows not seen since 2014. U.S. coal production increased approximately 5 percent over 2016 levels, driven by a nearly 60 percent increase in exports, along with rising domestic consumption of Southern Powder River Basin coal.
Looking ahead to 2018, changes in demand for electric power sector consumption of coal is expected to be most impacted by changes in natural gas prices and availability of renewable generation. Peabody projects plant retirements to reduce base demand by approximately 25 to 35 million tons. The 2017 price of natural gas averaged $3.02 per mmBtu, and on average every 20 cent movement in the price of natural gas from those levels equates to an approximate 25 million ton change in U.S. coal demand over the course of the year, subject to regional natural gas prices and availability of renewable generation.
2018 Priorities and Outlook
Peabody continues to deliberately pursue its stated financial approach of generating cash, maintaining financial strength, investing wisely and returning cash to shareholders. The company begins the year also focused on core priorities that include:
-- Focusing on safety, productivity and margin maximization from Peabody's
operational platforms;
-- Within the U.S., reducing our unit costs, improving coal's
competitiveness against natural gas and taking actions to preserve coal
plants from premature retirement;
-- Emphasizing production and logistical efficiencies amid robust demand
and pricing for Australian metallurgical and thermal coal;
-- Exploring means to continue to upgrade Peabody's metallurgical coal
platform, including advancing a new longwall system at North Goonyella
that has a secondary benefit of reducing downtime during longwall
transitions in 2018 and 2019, and underwriting double digit annual
metallurgical coal production for the foreseeable future;
-- Managing life extensions and a joint venture at Australian thermal coal
mines while also evaluating continued means to layer in longer-term
commitments for seaborne thermal coal sales; and
-- Finalizing steps to achieve the company's goal of releasing nearly all
of its remaining restricted cash in 2018.
First quarter results are expected to benefit from continued strong seaborne metallurgical and thermal coal pricing, offset by lower Australia volumes due to scheduled longwall moves at Metropolitan and Wambo.
In February, Peabody closed on the sale of its 50 percent interest in the coal handling and preparation plant and associated rail loading facility utilized by Millennium. The sale reduces associated operating costs, reclamation obligations and other commitments, while preserving throughput capacity for Peabody's remaining production through 2019.
Peabody is targeting 2018 seaborne metallurgical and thermal export volumes in line with the prior year even as the company is ramping down Millennium production, advancing its North Goonyella longwall move and expecting a greater mix of Wilpinjong volumes delivered under a domestic contract. In the U.S., Peabody is targeting modestly lower PRB volumes based on demand. Capital spending is expected to increase approximately $105 million (at the mid-point) driven by approximately $85 million of project spending for Australian life extension projects and the purchase of a new longwall at North Goonyella, and approximately $40 million in lease termination payments.
Today's earnings call is scheduled for 10 a.m. CST, and will be accompanied by a presentation available at PeabodyEnergy.com.
Peabody (NYSE: BTU) is the leading global pure-play coal company, serving power and steel customers in more than 25 countries on six continents. Peabody offers significant scale, high-quality assets, and diversity in geography and products. Peabody is guided by seven core values: safety, sustainability, leadership, customer focus, integrity, excellence and people. For further information, visit PeabodyEnergy.com.
Contact:
Investors
Julie Gates
314.342.4336
Media
Michelle Constantine
314.342.4347
Condensed Consolidated Statements of Operations (Unaudited)
For the Quarters Ended Dec. 31, 2017 and 2016
(In Millions, Except
Per Share Data)
2017 2016
---- ----
Successor Predecessor
--------- -----------
Quarter Ended December 31
Tons Sold 49.8 51.7
==== ====
Revenues $1,517.1 $1,440.8
Operating Costs and
Expenses (1) 1,088.2 1,126.4
Depreciation,
Depletion and
Amortization 178.8 119.9
Asset Retirement
Obligation Expenses 18.9 4.5
Selling and
Administrative
Expenses 37.6 38.8
Net Mark-to-Market
Adjustment on
Actuarially
Determined
Liabilities (45.2) -
Restructuring Charges 6.5 -
Other Operating
(Income) Loss:
Net Gain on Disposals (83.1) (5.8)
Asset Impairment - 230.7
Income from Equity
Affiliates (22.8) (28.8)
----- -----
Operating Profit
(Loss) 338.2 (44.9)
Interest Expense 35.9 54.9
Loss on Early Debt
Extinguishment 8.0 29.5
Interest Income (2.1) (1.7)
Reorganization Items,
Net - 33.9
Income (Loss) from
Continuing Operations
Before Income Taxes 296.4 (161.5)
Income Tax (Benefit)
Provision (81.6) 13.7
----- ----
Income (Loss) from
Continuing
Operations, Net of
Income Taxes 378.0 (175.2)
Loss from Discontinued
Operations, Net of
Income Taxes (13.4) (13.1)
-----
Net Income (Loss) 364.6 (188.3)
Less: Series A
Convertible Preferred
Stock Dividends 40.9 -
Less: Net Income
Attributable to
Noncontrolling
Interests 6.3 4.4
--- ---
Net Income (Loss)
Attributable to
Common Stockholders $317.4 $(192.7)
====== =======
Adjusted EBITDA (2) $416.2 $294.0
====== ======
Diluted EPS -Income
(Loss) from
Continuing Operations
(3)(4) $2.47 $(9.82)
===== ======
Diluted EPS -Net
Income (Loss)
Attributable to
Common Stockholders
(3) $2.37 $(10.53)
===== =======
(1) Excludes items
shown separately.
(2) Adjusted EBITDA is
a non-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-
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
106.5 million for
the Successor
quarter ended
December 31, 2017
and excluded 27.3
million weighted
average shares
outstanding
related to the
participating
securities.
Weighted average
diluted shares
outstanding were
18.3 million for
the Predecessor
quarter ended
December 31,
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 Years Ended Dec. 31, 2017 and 2016
------------------------------------------
(In Millions, Except Per Share Data)
2017 2016
----
Successor Predecessor Predecessor
--------- ----------- -----------
April 2 through January 1 Year Ended
December 31 through April 1 December 31
----------- --------------- -----------
Tons Sold 145.4 46.1 186.8
===== ==== =====
Revenues $4,252.6 $1,326.2 $4,715.3
Operating Costs and
Expenses (1) 3,067.9 963.7 4,107.6
Depreciation,
Depletion and
Amortization 521.6 119.9 465.4
Asset Retirement
Obligation Expenses 41.2 14.6 41.8
Selling and
Administrative
Expenses 105.4 37.2 153.4
Net Mark-to-Market
Adjustment on
Actuarially
Determined
Liabilities (45.2) - -
Restructuring Charges 7.6 - 15.5
Other Operating (Income) Loss:
Net Gain on Disposals (84.0) (22.8) (23.2)
Asset Impairment - 30.5 247.9
Income from Equity
Affiliates (49.0) (15.0) (16.2)
----- ----- -----
Operating Profit
(Loss) 687.1 198.1 (276.9)
Interest Expense 119.7 32.9 298.6
Loss on Early Debt
Extinguishment 20.9 - 29.5
Interest Income (5.6) (2.7) (5.7)
Reorganization Items,
Net - 627.2 159.0
--- ----- -----
Income (Loss) from
Continuing Operations
Before Income Taxes 552.1 (459.3) (758.3)
Income Tax Benefit (161.0) (263.8) (94.5)
------ ------ -----
Income (Loss) from
Continuing
Operations, Net of
Income Taxes 713.1 (195.5) (663.8)
Loss from Discontinued
Operations, Net of
Income Taxes (19.8) (16.2) (57.6)
----- ----- -----
Net Income (Loss) 693.3 (211.7) (721.4)
Less: Series A
Convertible Preferred
Stock Dividends 179.5 - -
Less: Net Income
Attributable to
Noncontrolling
Interests 15.2 4.8 7.9
---- --- ---
Net Income (Loss)
Attributable to
Common Stockholders $498.6 $(216.5) $(729.3)
====== ======= =======
Adjusted EBITDA (2) $1,145.3 $341.3 $532.0
======== ====== ======
Diluted EPS -Income
(Loss) from
Continuing Operations
(3)(4) $3.81 $(10.93) $(36.72)
===== ======= =======
Diluted EPS -Net
Income (Loss)
Attributable to
Common Stockholders
(3) $3.67 $(11.81) $(39.87)
===== ======= =======
(1) Excludes items shown
separately.
(2) Adjusted EBITDA is a non-
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-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 102.5
million for the
Successor period April 2
through December 31,
2017 and excluded 33.5
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 year
ended December 31, 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 Years Ended Dec. 31, 2017 and 2016
-------------------------------------------------------
2017 2016 2017 2016
---- ----
Successor Predecessor Successor Predecessor Combined Predecessor
--------- ----------- --------- ----------- -------- -----------
Quarter Ended April 2 January 1 Year Ended
through through
December 31 December 31 April 1 December 31
----------- -------
Revenue Summary (In Millions)
----------------------------
Powder River Basin Mining
Operations $392.4 $411.1 $1,178.7 $394.3 $1,573.0 $1,473.3
Midwestern U.S. Mining
Operations 189.7 192.9 592.3 193.2 785.5 792.5
Western U.S. Mining Operations 159.6 139.0 440.7 149.7 590.4 526.0
----- ----- ----- ----- ----- -----
Total U.S. Mining Operations 741.7 743.0 2,211.7 737.2 2,948.9 2,791.8
Australian Metallurgical Mining
Operations 517.3 407.6 1,221.0 328.9 1,549.9 1,090.4
Australian Thermal Mining
Operations 267.5 263.5 772.5 224.8 997.3 824.9
----- ----- ----- ----- ----- -----
Total Australian Mining
Operations 784.8 671.1 1,993.5 553.7 2,547.2 1,915.3
Trading and Brokerage Operations 9.0 12.4 33.6 15.0 48.6 28.9
Other (18.4) 14.3 13.8 20.3 34.1 (20.7)
----- ---- ---- ---- ---- -----
Total $1,517.1 $1,440.8 $4,252.6 $1,326.2 $5,578.8 $4,715.3
======== ======== ======== ======== ======== ========
Tons Sold (In Millions)
----------------------
Powder River Basin Mining
Operations 31.8 33.1 94.0 31.0 125.0 113.1
Midwestern U.S. Mining
Operations 4.5 4.5 14.0 4.5 18.5 18.3
Western U.S. Mining Operations 4.1 3.7 11.3 3.4 14.7 13.7
--- --- ---- --- ---- ----
Total U.S. Mining Operations 40.4 41.3 119.3 38.9 158.2 145.1
Australian Metallurgical Mining
Operations 4.0 3.3 9.5 2.2 11.7 13.4
Australian Thermal Mining
Operations 4.8 5.5 14.6 4.6 19.2 21.3
--- --- ---- --- ---- ----
Total Australian Mining
Operations 8.8 8.8 24.1 6.8 30.9 34.7
Trading and Brokerage Operations 0.6 1.6 2.0 0.4 2.4 7.0
--- --- --- --- --- ---
Total 49.8 51.7 145.4 46.1 191.5 186.8
==== ==== ===== ==== ===== =====
Revenues per Ton - Mining Operations (1)
---------------------------------------
Powder River Basin $12.34 $12.40 $12.54 $12.70 $12.58 $13.02
Midwestern U.S. 42.21 43.18 42.45 42.96 42.58 43.39
Western U.S. 39.12 37.18 38.75 44.68 40.10 38.30
Total U.S. 18.38 17.97 18.54 18.96 18.64 19.23
Australian Metallurgical 127.14 124.94 128.14 150.22 132.29 81.41
Australian Thermal 55.22 47.94 52.84 48.65 51.83 38.79
Total Australian 88.06 76.62 82.55 81.36 82.28 55.26
Operating Costs per Ton - Mining Operations (1)(2)
--------------------------------------------------
Powder River Basin $9.78 $9.34 $9.57 $9.75 $9.62 $9.66
Midwestern U.S. 35.89 33.12 33.53 31.84 33.13 31.49
Western U.S. 26.28 32.26 27.16 29.76 27.75 30.90
Total U.S. 14.36 13.98 14.06 14.03 14.05 14.42
Australian Metallurgical 78.03 92.84 84.60 100.16 87.52 82.63
Australian Thermal 33.98 33.32 31.87 32.27 31.97 28.56
Total Australian 54.10 55.49 52.67 54.15 52.99 49.45
Adjusted EBITDA Margin per Ton -Mining Operations
(1)(2)
-------------------------------------------------
Powder River Basin $2.56 $3.06 $2.97 $2.95 $2.96 $3.36
Midwestern U.S. 6.32 10.06 8.92 11.12 9.45 11.90
Western U.S. 12.84 4.92 11.59 14.92 12.35 7.40
Total U.S. 4.02 3.99 4.48 4.93 4.59 4.81
Australian Metallurgical 49.11 32.10 43.54 50.06 44.77 (1.22)
Australian Thermal 21.24 14.62 20.97 16.38 19.86 10.23
Total Australian 33.96 21.13 29.88 27.21 29.29 5.81
Note: See footnote explanations on following page
Supplemental Financial Data (Unaudited)
For the Quarters and Years Ended Dec. 31, 2017 and 2016
-------------------------------------------------------
2017 2016 2017 2016
---- ---- ----
Successor Predecessor Successor Predecessor Combined Predecessor
--------- ----------- --------- ----------- -------- -----------
Quarter Ended April 2 January 1 Year Ended
through through
December 31 December 31 April 1 December 31
----------- -------
Other Supplemental Financial Data (In Millions)
----------------------------------------------
Adjusted EBITDA -Powder River
Basin Mining Operations $81.3 $101.6 $278.8 $91.7 $370.5 $379.9
Adjusted EBITDA -Midwestern U.S.
Mining Operations 28.4 44.9 124.4 50.0 174.4 217.3
Adjusted EBITDA -Western U.S.
Mining Operations 52.4 18.4 131.8 50.0 181.8 101.6
---- ---- ----- ---- ----- -----
Total U.S. Mining Operations 162.1 164.9 535.0 191.7 726.7 698.8
Adjusted EBITDA -Australian
Metallurgical Mining Operations 199.9 104.7 414.9 109.6 524.5 (16.3)
Adjusted EBITDA -Australian
Thermal Mining Operations 102.9 80.4 306.6 75.6 382.2 217.6
----- ---- ----- ---- ----- -----
Total Australian Mining Operations 302.8 185.1 721.5 185.2 906.7 201.3
Adjusted EBITDA -Trading and
Brokerage (4.5) 8.9 (6.9) 8.8 1.9 (32.4)
Selling and Administrative Expenses
(Excluding Debt Restructuring) (37.6) (38.8) (105.4) (37.2) (142.6) (131.9)
Other Operating Costs, Net (3) 3.6 17.1 5.5 20.4 25.9 (15.4)
Restructuring Charges (6.5) - (7.6) - (7.6) (15.5)
Gain on UMWA VEBA Settlement - - - - - 68.1
Corporate Hedging Results (3.7) (43.2) 3.2 (27.6) (24.4) (241.0)
Adjusted EBITDA $416.2 $294.0 $1,145.3 $341.3 $1,486.6 $532.0
====== ====== ======== ====== ======== ======
(1) Revenues per
Ton,
Operating
Costs per Ton
and Adjusted
EBITDA Margin
per Ton are
non-GAAP
measures.
Revenues per
Ton and
Adjusted
EBITDA 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
Adjusted
EBITDA 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 Dec. 31, 2017, Sept. 30, 2017 and Dec. 31, 2016
-----------------------------------------------------
(Dollars In Millions)
Successor Predecessor
--------- -----------
(Unaudited)
December 31, September 30, December 31,
2017 2017 2016
---- ---- ----
Cash and Cash Equivalents $1,012.1 $925.0 $872.3
Restricted Cash 40.1 7.8 54.3
Accounts Receivable, Net 552.1 431.0 473.0
Inventories 291.3 307.7 203.7
Assets from Coal Trading
Activities, Net 2.6 2.5 0.7
Other Current Assets 291.8 268.6 486.6
----- ----- -----
Total Current Assets 2,190.0 1,942.6 2,090.6
Property, Plant, Equipment and
Mine Development, Net 5,111.9 5,082.6 8,776.7
Deferred Income Taxes 85.6 - -
Restricted Cash Collateral 323.1 530.3 529.3
Investments and Other Assets 470.6 517.9 381.1
----- ----- -----
Total Assets $8,181.2 $8,073.4 $11,777.7
======== ======== =========
Current Portion of Long-Term Debt $42.1 $47.1 $20.2
Liabilities from Coal Trading
Activities, Net 11.7 1.0 1.2
Accounts Payable and Accrued
Expenses 1,191.1 1,065.0 990.4
------- -----
Total Current Liabilities 1,244.9 1,113.1 1,011.8
Long-Term Debt, Less Current
Portion 1,418.7 1,612.0 -
Deferred Income Taxes 5.4 2.2 173.9
Asset Retirement Obligations 657.0 636.0 717.8
Accrued Postretirement Benefit
Costs 730.0 745.8 756.3
Other Noncurrent Liabilities 469.4 573.7 496.2
----- ----- -----
Total Liabilities Not Subject to
Compromise 4,525.4 4,682.8 3,156.0
Liabilities Subject to Compromise - - 8,440.2
--- --- -------
Total Liabilities 4,525.4 4,682.8 11,596.2
Predecessor Common Stock - - 0.2
Successor Series A Convertible
Preferred Stock 576.0 691.7 -
Successor Common Stock 1.0 1.0 -
Additional Paid-in Capital 2,590.3 2,425.9 2,422.0
Treasury Stock (175.9) (69.2) (371.8)
Retained Earnings (Accumulated
Deficit) 613.6 296.3 (1,399.5)
Accumulated Other Comprehensive
Income (Loss) 1.4 1.8 (477.0)
--- --- ------
Peabody Energy Corporation
Stockholders' Equity 3,606.4 3,347.5 173.9
Noncontrolling Interests 49.4 43.1 7.6
---- ---- ---
Total Stockholders' Equity 3,655.8 3,390.6 181.5
------- ------- -----
Total Liabilities and
Stockholders' Equity $8,181.2 $8,073.4 $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 Dec. 31, 2017 and 2016
---------------------------------------------
(Dollars In Millions)
2017 2016
Successor Predecessor
--------- -----------
Quarter Ended December 31
Cash Flows From Operating
Activities
Net Cash Provided by
Continuing Operations $471.3 $235.0
Net Cash Used in Discontinued
Operations (4.4) (11.0)
----
Net Cash Provided by Operating
Activities 466.9 224.0
----- -----
Cash Flows From Investing
Activities
Additions to Property, Plant,
Equipment and Mine
Development (98.0) (70.0)
Changes in Accrued Expenses
Related to Capital
Expenditures 14.4 (0.6)
Proceeds from Disposal of
Assets 12.7 9.7
Contributions to Joint
Ventures (95.8) (67.8)
Distributions from Joint
Ventures 99.0 75.7
Activity with Related Parties,
Net 17.2 10.3
Other, Net (8.0) (1.7)
---- ----
Net Cash Used in Investing
Activities (58.5) (44.4)
----- -----
Cash Flows From Financing
Activities
Proceeds from Long-Term Debt - 28.6
Repayments of Long-Term Debt (209.7) (502.5)
Payment of Deferred Financing
Costs (4.7) (1.2)
Common Stock Repurchases (106.5) -
Other, Net (0.4) -
Net Cash Used in Financing
Activities (321.3) (475.1)
------ ------
Net Change in Cash and Cash
Equivalents 87.1 (295.5)
Cash and Cash Equivalents at
Beginning of Period 925.0 1,167.8
----- -------
Cash and Cash Equivalents at
End of Period $1,012.1 $872.3
======== ======
This information is intended to be reviewed in conjunction with the company's filings with the SEC.
Condensed Consolidated Statements of Cash Flows
For the Years Ended Dec. 31, 2017 and 2016
------------------------------------------
(Dollars In Millions)
2017 2016
----
Successor Predecessor Combined Predecessor
--------- ----------- -------- -----------
(Unaudited)
April 2 January 1 Year Ended December 31
through through
December 31 April 1
----------- -------
Cash Flows From Operating
Activities
Net Cash Provided by (Used in)
Continuing Operations $816.0 $222.2 $1,038.2 $(22.9)
Net Cash Used in Discontinued
Operations (18.8) (8.2) (27.0) (29.9)
Net Cash Provided by (Used in)
Operating Activities 797.2 214.0 1,011.2 (52.8)
----- ----- ------- -----
Cash Flows From Investing
Activities
Additions to Property, Plant,
Equipment and Mine
Development (166.6) (32.8) (199.4) (126.6)
Changes in Accrued Expenses
Related to Capital
Expenditures 16.2 (1.4) 14.8 (6.1)
Federal Coal Lease
Expenditures - (0.5) (0.5) (249.0)
Proceeds from Disposal of
Assets 17.9 24.3 42.2 144.4
Contributions to Joint
Ventures (305.8) (95.4) (401.2) (309.5)
Distributions from Joint
Ventures 307.0 90.5 397.5 312.4
Activity with Related Parties,
Net 48.3 30.7 79.0 0.2
Other, Net (10.4) (0.3) (10.7) (9.9)
----- ---- ----
Net Cash (Used in) Provided by
Investing Activities (93.4) 15.1 (78.3) (244.1)
----- ---- ----- ------
Cash Flows From Financing
Activities
Proceeds from Long-Term Debt - 1,000.0 1,000.0 1,458.4
Successor Notes Issuance
Proceeds into Escrow - (1,000.0) (1,000.0) -
Repayments of Long-Term Debt (541.8) (2.1) (543.9) (513.7)
Payment of Deferred Financing
Costs (10.8) (45.4) (56.2) (31.0)
Common Stock Repurchases (175.7) - (175.7) -
Other, Net (17.1) (0.2) (17.3) (5.8)
----
Net Cash (Used in) Provided by
Financing Activities (745.4) (47.7) (793.1) 907.9
------ ----- ------ -----
Net Change in Cash and Cash
Equivalents (41.6) 181.4 139.8 611.0
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 $1,012.1 $1,053.7 $1,012.1 $872.3
======== ======== ======== ======
This information is intended to be reviewed in conjunction with the company's filings with the SEC.
Reconciliation of Non-GAAP Financial Measures (Unaudited)
For the Quarters Ended Dec. 31, 2017 and 2016
---------------------------------------------
(Dollars In Millions) 2017 2016
---- ----
Successor Predecessor
--------- -----------
Quarter Ended December 31
Income (Loss) from Continuing
Operations, Net of Income Taxes $378.0 $(175.2)
Depreciation, Depletion and
Amortization 178.8 119.9
Asset Retirement Obligation Expenses 18.9 4.5
Net Mark-to-Market Adjustment on
Actuarially Determined Liabilities (45.2) -
Asset Impairment - 230.7
Changes in Deferred Tax Asset
Valuation Allowance and Amortization
of Basis Difference Related to
Equity Affiliates (9.6) (6.9)
Interest Expense 35.9 54.9
Loss on Early Debt Extinguishment 8.0 29.5
Interest Income (2.1) (1.7)
Reorganization Items, Net - 33.9
Gain on Disposal of Reclamation
Liability (31.2) -
Gain on Disposal of Burton Mine (52.2) -
Unrealized Losses (Gains) on Economic
Hedges 21.6 (9.3)
Unrealized Losses on Non-Coal
Trading Derivative Contracts 3.0 -
Take-or-Pay Contract-Based
Intangible Recognition (6.1) -
Income Tax (Benefit) Provision (81.6) 13.7
------
Adjusted EBITDA $416.2 $294.0
====== ======
2017 2016
---- ----
Successor Predecessor
--------- -----------
Quarter Ended December 31
Net Cash Provided by Operating
Activities $466.9 $224.0
Net Cash Used in Investing
Activities (58.5) (44.4)
----- -----
Free Cash Flow (1) $408.4 $179.6
===
(1) Free cash
flow is a
non-GAAP
measure
defined as
net cash
provided by
operating
activities
less net
cash used in
investing
activities.
Free cash
flow is used
by
management
as a measure
of our
financial
performance
and our
ability to
generate
excess cash
flow from
our business
operations.
Free cash
flow 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.
This information is intended to be reviewed
in conjunction with the company's filings
with the SEC.
Reconciliation of Non-GAAP Financial Measures (Unaudited)
For the Years Ended Dec. 31, 2017 and 2016
------------------------------------------
(Dollars In Millions)
2017 2016
----
Successor Predecessor Predecessor
--------- ----------- -----------
April 2 through January 1 Year Ended
December 31 through April 1 December 31
----------- --------------- -----------
Income (Loss) from Continuing
Operations, Net of Income Taxes $713.1 $(195.5) $(663.8)
Depreciation, Depletion and
Amortization 521.6 119.9 465.4
Asset Retirement Obligation Expenses 41.2 14.6 41.8
Selling and Administrative Expenses
Related to Debt Restructuring - - 21.5
Net Mark-to-Market Adjustment on
Actuarially Determined Liabilities (45.2) - -
Asset Impairment - 30.5 247.9
Changes in Deferred Tax Asset
Valuation Allowance and Amortization
of Basis Difference Related to
Equity Affiliates (17.3) (5.2) (7.5)
Interest Expense 119.7 32.9 298.6
Loss on Early Debt Extinguishment 20.9 - 29.5
Interest Income (5.6) (2.7) (5.7)
Reorganization Items, Net - 627.2 159.0
Gain on Disposal of Reclamation
Liability (31.2) - -
Gain on Disposal of Burton Mine (52.2) - -
Break Fees Related to Terminated
Asset Sales (28.0) - -
Unrealized Losses (Gains) on Economic
Hedges 23.0 (16.6) 39.8
Unrealized Losses on Non-Coal
Trading Derivative Contracts 1.5 - -
Coal Inventory Revaluation 67.3 - -
Take-or-Pay Contract-Based
Intangible Recognition (22.5) - -
Income Tax Benefit (161.0) (263.8) (94.5)
-------
Adjusted EBITDA $1,145.3 $341.3 $532.0
======== ====== ======
2017 2016
----
Successor Predecessor Predecessor
--------- ----------- -----------
April 2 through January 1 Year Ended
December 31 through April 1 December 31
----------- --------------- -----------
Net Cash Provided by (Used in)
Operating Activities $797.2 $214.0 $(52.8)
Net Cash (Used in) Provided by
Investing Activities (93.4) 15.1 (244.1)
----- ---- ------
Free Cash Flow (1) $703.8 $229.1 $(296.9)
===
(1) Free cash
flow is a
non-GAAP
measure
defined as
net cash
provided by
operating
activities
less net
cash used in
investing
activities.
Free cash
flow is used
by
management
as a measure
of our
financial
performance
and our
ability to
generate
excess cash
flow from
our business
operations.
Free cash
flow 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.
This information is intended to be reviewed
in conjunction with the company's filings
with the SEC.
2018 Full Year Guidance Targets
Sales Volumes (Short Tons in millions) Capital Expenditures $275 - $325 million
PRB 115 - 125
ILB 18 - 19 SG&A Expense ~$150 million
Western 13 - 14
Total U.S. 146 - 158 Interest Expense $143 - $153 million
Aus. Metallurgical(1) 11.0 - 12.0 Cost Sensitivities4
Aus. Export Thermal(2) 11.5 - 12.5 $0.05 Decrease in A$ FX Rate5 + ~$100 million
Aus. Domestic Thermal 7 - 8 $0.05 Increase in A$ FX Rate5 - ~$70 million
Total Australia 29.5 - 32.5 Fuel (+/- $10/barrel) +/- ~$30 million
U.S. Operations - Revenue per Ton 2018 Priced Position (Avg. Price per Short Ton)
Total U.S. $17.50 - $18.50 PRB ~$12.00
ILB ~$42.00
U.S. Operations - Costs Per Ton Australia Export Thermal ~$74
PRB $9.25 - $9.75
ILB $31.50 - $33.50 ~90% of Peabody's 2018 U.S. volumes are priced
Total U.S. $13.50 - $14.50 ~40% of Peabody's 2019 U.S. volumes are priced
~4 million short tons of Australia export thermal
Australia Operations - Costs per Ton (USD)(3) coal are priced for 2018
Metallurgical $85 - $95
Thermal $32 - $36
Total Australia $52 - $58
(1) Metallurgical coal sales volumes
may range from approximately 55%-
65% PCI and approximately 35%-45%
coking coal (including semi-hard
and semi-soft coking coals).
Approximately 30% of seaborne coking
coal sales may be priced on a spot
basis, with the remainder linked to
an index. Approximately 30% of
seaborne PCI sales may be priced on
a spot basis, with the remainder
linked to the quarterly LV PCI
benchmark. The company also has
exposure to approximately 2 million
tons of metallurgical coal related
to the Middlemount Mine, a 50/50
joint venture accounted for in
(Income) Loss from Equity
Affiliates.
Peabody's North Goonyella Mine
typically receives the PHCC index
quoted price and the Coppabella Mine
typically sets the LV PCI benchmark,
with the remainder of products sold
at discounts to these values based
on coal qualities and properties.
On a weighted-average basis across
all metallurgical products, Peabody
typically realizes approximately 85%
-90% of the PHCC index quoted price
for its coking products, and 85%-
90% of the LV PCI benchmark price
for its PCI products.
(2) A portion of Peabody's seaborne
thermal coal products sell at or
above the Newcastle index, with the
remainder sold at discounts relative
to the Newcastle index based on coal
qualities and properties. On a
weighted-average basis across all
seaborne thermal products, Peabody
typically realizes approximately
90%-95% of the Newcastle index
price.
3 Assumes 2018 average A$ FX rate of
$0.79. Cost ranges include sales-
related cost, which will fluctuate
based on realized prices.
4 Sensitivities reflect approximate
impacts of changes in variables on
financial performance. When
realized, actual impacts may differ
significantly.
5 As of Dec. 31, 2017, Peabody had
purchased average rate call options
in aggregate notional amount of
approximately AUD $1.1 billion to
manage market price volatility
associated with the Australian
dollar with strike price levels
between $0.79 and $0.83 and
settlement dates through September
2018. Sensitivities provided are
relative to an assumed average A$ FX
exchange rate of $0.79.
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
LV PCI benchmark to PHCC index
quoted price, the weighted average
discounts across all products to the
applicable PHCC index quoted price
or LV 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 Jan. 31, 2018, on a
fully diluted basis, Peabody has
approximately 134.2 million shares
of common stock outstanding,
including approximately 3.5 million
shares underlying unvested equity
awards under Peabody's long-term
incentive plan.
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
