Peabody Reports Earnings For Quarter Ended March 31, 2019
ST. LOUIS, May 1, 2019 /PRNewswire/ -- Peabody (NYSE: BTU) today announced its first quarter 2019 operating results, including revenues of $1.25 billion; income from continuing operations, net of income taxes of $133.3 million; net income attributable to common stockholders of $124.2 million; diluted earnings per share from continuing operations of $1.15; and Adjusted EBITDA(1) of $253.9 million.
"Peabody's first quarter was notable for the leading performance by our new Shoal Creek Mine, significant margins in the seaborne thermal business and recognition of maximum North Goonyella insurance recoveries, which combined, overcame an unusual set of first quarter challenges across the logistics chain," said Peabody President and Chief Executive Officer Glenn Kellow. "In light of our strong ongoing cash flow generating capabilities, Peabody also returned more than $300 million in cash to shareholders during the quarter, which included deployment of another tool in the capital allocation kit through the payment of a $1.85 per share supplemental dividend in March."
"Looking ahead, Peabody is implementing multiple strategies to create value," said Kellow. "We are continuing to reweight our investments toward greater seaborne thermal and metallurgical coal access to capture higher-growth Asian demand. We are optimizing our lowest-cost and highest-margin U.S. thermal assets in a low-capital fashion to maximize cash generation. We are executing our financial approach of generating cash, maintaining financial strength, investing wisely and returning cash to shareholders."
_________________________________
(1) Adjusted EBITDA, revenues per ton, costs per ton, Adjusted EBITDA margin per ton and percent, and Free Cash Flow are non-GAAP financial measures. Adjusted EBITDA margin is equal to segment Adjusted EBITDA divided by segment revenues. Please refer to the tables and related notes in this press release for a reconciliation of non-GAAP financial measures.
First Quarter 2019 Results
First quarter 2019 revenues totaled $1.25 billion on 40.5 million tons of coal sales, compared to $1.46 billion in revenues and 48.3 million tons of coal sales in the prior year, reflecting the impact of a challenged coal industry logistics chain. Powder River Basin coal shipments declined 22 percent from the prior year, as winter weather and flooding across the plains states heavily impacted rail performance beginning in early February. The loss of revenues and volume year over year related to the idle North Goonyella Mine was largely offset by the Shoal Creek Mine, which shipped approximately 668,000 tons in the first quarter.
Income from continuing operations, net of income taxes totaled $133.3 million, compared to $208.3 million in the prior year. Diluted earnings per share from continuing operations increased $0.32 per share to $1.15 per share due to the company's ongoing share repurchase program and the conversion of preferred stock in the prior year.
During the quarter, the company reached an agreement on the North Goonyella insurance settlement and recognized the maximum allowable North Goonyella claim of $125.0 million. Of this total, $33.9 million countered ongoing recovery costs and was recorded as a benefit to Adjusted EBITDA. The remaining $91.1 million of the insurance claim related to equipment losses from current and prior quarters was excluded from Adjusted EBITDA, given those charges also were excluded from Adjusted EBITDA when incurred. The North Goonyella charge of $24.7 million relates to additional losses identified in the first quarter and represents the best estimate of potential loss on assessments to date.
Compared to the prior year, Adjusted EBITDA declined $110.0 million to $253.9 million primarily due to lower seaborne metallurgical coal volumes, costs associated with the North Goonyella incident and lower PRB shipments, partially offset by $33.1 million of higher seaborne thermal Adjusted EBITDA driven by increased volumes and elevated pricing. PRB shipments were impacted by approximately $23 million in added expenses attributable to rail issues stemming from winter weather and flooding during the quarter.
First quarter depreciation, depletion and amortization (DD&A) increased $2.9 million over the prior year to $172.5 million primarily due to accelerated DD&A related to the Kayenta Mine closure of $12.5 million and $11.3 million associated with the Shoal Creek Mine, partially offset by lower coal sales contract amortization of $21.1 million. Peabody expects DD&A to decline as the year progresses and is targeting full-year expense of $600 million to $650 million.
Selling, general and administrative expense (SG&A) was in line with the prior year and below quarterly guidance ranges, despite an additional tranche of non-cash equity awards granted.
Segment Performance
In the first quarter, the seaborne thermal segment sold 2.6 million tons of export thermal coal at an average realized price of $80.40 per short ton, with the remainder sold under a long-term domestic contract. Export volumes increased 24 percent over the prior year largely resulting from stronger operating performance at the Wambo complex, in part due to the absence of a current-quarter longwall move at the Wambo underground mine. As expected, approximately 71 percent of Peabody's first quarter export thermal shipments were of the higher-quality Newcastle specification product, with the remainder closer to the API 5 product specification.
Once again, the seaborne thermal segment led the company in total Adjusted EBITDA contributions of $94.7 million and Adjusted EBITDA margins of 38 percent, demonstrating both the low-cost nature of Peabody's operations and the continued high demand for seaborne thermal coal. Compared to the prior year, first quarter 2019 seaborne thermal Adjusted EBITDA increased 54 percent on higher export thermal sales and $2.06 per ton in lower costs.
The seaborne metallurgical segment shipped 2.3 million tons at an average realized price of $142.33 per ton. Unit costs were temporarily burdened by expected lower-than-ratable metallurgical coal volumes as well as a planned dragline outage at the Coppabella Mine and a required Shoal Creek inventory adjustment. Temporarily higher strip ratios and the cumulative impact of dragline repairs at the Coppabella Mine resulted in an approximately $8 per ton increase to segment costs per ton over the prior year. The required fair value inventory adjustment on the remaining acquired inventory resulted in an increase to segment costs of approximately $3.50 per ton in the quarter. With the exception of Coppabella Mine's costs, all operating metallurgical mines delivered cash costs within or below the company's original annual seaborne metallurgical cost guidance range of $85 to $95 per ton.
First quarter North Goonyella results include $36.9 million in project costs that were more than offset by comparable insurance benefit of $33.9 million and $4.3 million in Adjusted EBITDA related to the sale of North Goonyella inventory.
The newly acquired Shoal Creek Mine led the company's 23 operations in Adjusted EBITDA contributions for the first quarter and its first quarter operating cash flows imply a potential payback period of less than two years.
In addition, Peabody's share of the Middlemount Mine (not included in the seaborne metallurgical coal segment results) shipped approximately 400,000 tons and contributed $3.9 million to Adjusted EBITDA, which included $7.5 million in DD&A, asset retirement obligation expense, net interest expense and income taxes.
Within the U.S. thermal operations, sales were impacted by severe cold and flooding in the Plains States that restricted rail shipments primarily from the PRB, reversing a January PRB pace that had exceeded full-year expectations. Peabody's PRB operations shipped 25.3 million tons with temporarily elevated costs of $9.91 per ton, as rail delays and closures increased costs by $1.02 per ton over the prior year.
Adjusted EBITDA from both the Midwestern and Western segments increased 7 percent and 33 percent, respectively, over the prior year. Western Adjusted EBITDA benefited from strong Twentymile Mine performance and continued acceleration of cost recovery at the Kayenta Mine. In total, the U.S. thermal operations earned Adjusted EBITDA of $112.3 million compared to $137.7 million in the prior year, despite a 7.6 million ton reduction in tons sold.
Balance Sheet and Cash Flow
First quarter operating cash flows totaled $197.6 million compared to prior year operating cash flows of $579.7 million, which included the benefit of approximately $214.0 million in returned cash collateral. Free Cash Flow totaled $161.9 million and included $35.8 million in capital expenditures.
"Peabody is well on its way to our stated plan to return to shareholders an amount equal to or greater than our Free Cash Flow in 2019," said Peabody Executive Vice President and Chief Financial Officer Amy Schwetz. "Peabody returned nearly double its first quarter Free Cash Flow to shareholders through a combination of share repurchases, our ongoing quarterly dividend and the inauguration of a supplemental dividend of $200 million."
During the quarter, Peabody repurchased $98.8 million of common stock, with an additional $34 million in April, bringing total repurchases to $1.14 billion since August 2017. Since August 2017, the company has repurchased a total of 31.2 million shares under the program, representing 23 percent of shares initially outstanding on a fully converted basis. In addition, the company declared and paid a $1.85 per share supplemental dividend, demonstrating strong confidence in Peabody's substantial cash flow generating capabilities. The supplemental dividend was in addition to the company's quarterly dividend of $0.13 per share that was paid in March. Quarter-end cash and cash equivalents totaled $798.1 million.
Industry Conditions
The first quarter of 2019 was marked by unusual near-term challenges to the coal logistics chain in multiple regions of the world. Traditional coal flows were rerouted by flooding in the heartland of the United States; port restrictions in China; wet weather and train derailments in Australia; and a cyclone in Mozambique.
Global seaborne thermal coal pricing eased during the first quarter of 2019 on reduced LNG prices, above-average stockpiles in several large coal importing nations and a milder winter in the Northern Hemisphere. The average 6000-specification Newcastle thermal coal price declined 8 percent during the quarter, while the average 5500-spec product declined 5 percent through the period. This narrowed the 2019 forward curve price ratio between the two products from approximately 61 percent at the end of the fourth quarter to approximately 70 percent at the end of March.
Peabody is finalizing sales agreements based on the annual benchmark April-to-March Japanese reference price settlement of approximately $94.75 per tonne. Including these expected commitments, the company has priced approximately 5.7 million short tons of Australian export thermal coal shipments for the last three quarters of 2019 at an average price of $83 per short ton, as well as additional volumes in 2020.
Despite widespread reports of custom clearance delays in China targeting Australian coals, total Chinese imports were in line with the prior year as higher metallurgical coal imports offset weaker thermal coal demand.
Through March, China thermal coal imports eased 8 percent, reflecting a strong January due to clearance of backlog, while February and March imports were weaker due to customs clearance delays primarily of Australian coal. India and Southeast Asian nation thermal coal imports are all running above prior-year levels.
For 2019, Peabody expects imports from Southeast Asian nations to drive thermal coal demand increases. According to Wood Mackenzie, for the first time ever in 2018, global coal-fueled generating capacity topped 2,000 gigawatts, a massive 62 percent increase since the year 2000. In addition, an estimated 50 gigawatts of new coal-fueled generation are expected to come online in 2019, primarily in Asia.
Seaborne metallurgical coal prices remained robust during the first quarter, averaging $206 per tonne. The first quarter index settlement price for premium hard coking coal was $210 per tonne, compared with $237 per tonne in the prior year. Peabody achieved low-vol PCI settlement pricing for the first quarter of $141 per tonne. The second quarter low-vol PCI settlement was recently agreed to at $138.50 per tonne.
Continued safety checks in China, strong steel production and quality limitations are leading to tight domestic supplies, which in turn, have resulted in netbacks supportive of imports. As a result, Chinese imports rose 35 percent through March.
Peabody anticipates global steel demand growth of approximately 2 percent in 2019, following 5 percent growth in 2018, with increases in India leading to an estimated 5 million to 10 million tonne increase in global metallurgical coal imports. Supply increases are largely expected to be sourced from Australia.
Customer demand for U.S. thermal coal products remained strong in the first quarter, as evidenced by requested rail shipment nominations by utilities, even as rail performance due to flooding hampered shipments. U.S. coal-fueled electricity generation declined approximately 9 percent in the first quarter on reduced total load and increased natural gas generation. Total U.S. electricity generation declined 1 percent year over year in the quarter, with wind power declining 6 percent from the prior year. U.S. coal production declined an estimated 12 percent, above Peabody's expectations as Powder River Basin shipments were impacted by approximately 5 million to 10 million tons on the basis of reduced rail cycling due to heavy flooding in the Plains States during the last half of the quarter. Reduced coal shipments have further driven down already low utility stockpiles, with Southern PRB utility stockpiles declining an estimated 4 million tons in March versus a typical build of coal stocks in the month.
For 2019, Peabody estimates domestic U.S. coal demand to be reduced by coal plant retirements and gains by natural gas generation. U.S. metallurgical exports in 2019 are expected to remain largely stable with prior-year levels, while thermal exports will be more dependent on fluctuations in seaborne thermal pricing.
2019 Expectations
Peabody anticipates a strong second half of 2019 to contribute more than half of full-year Adjusted EBITDA, driven by increased PRB, seaborne thermal and seaborne metallurgical coal volumes as well as reduced metallurgical coal costs. Second quarter performance is expected to reflect the impact of two longwall moves in Australia, with PRB shipments in line with the first quarter as rail recoveries offset the impact of typical shoulder season demand. In addition, North Goonyella project costs for the second quarter are expected to come in toward the low-end of the quarterly guidance range of $30 million to $35 million.
In the first quarter, the company completed segmenting of the mine into multiple zones to facilitate a phased reventilation and re-entry of North Goonyella. In addition, all physical activities in advance of reventilating the first segment of the mine have been completed. Peabody is currently complying with a directive concerning documentation from the Queensland Mines Inspectorate, following a thorough review, which has resulted in a multi-week delay to the initial project plan. Should the company's reventilation and re-entry plan now progress as originally contemplated, Peabody would expect to produce approximately 2 million tons from North Goonyella in 2020. If further delays occur, the company will re-evaluate its reventilation and re-entry plans, including longwall production targets, quarterly project costs and capital expenditures.
From a cash perspective, Peabody is continuing to accelerate cash collections to support reclamation and post-retirement liabilities at Kayenta Mine. In addition, Peabody is lowering its 2019 annual capital expenditure guidance range to $350 million to $375 million as project spending is deferred to subsequent periods.
Peabody remains committed to executing on its stated financial approach of generating cash, maintaining financial strength, investing wisely and returning cash to shareholders. The company has stated it plans to return to shareholders an amount equal to or greater than its Free Cash Flow in 2019.
Today's earnings call is scheduled for 10 a.m. CDT and will be accompanied by a presentation available at PeabodyEnergy.com.
Peabody (NYSE: BTU) is the leading global pure-play coal company and a member of the Fortune 500, serving power and steel customers in more than 25 countries on six continents. The company offers significant scale, high-quality assets, and diversity in geography and products. Peabody is guided by seven core values: safety, customer focus, leadership, people, excellence, integrity and sustainability. 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 Mar. 31, 2019 and 2018
---
(In Millions, Except Per Share Data)
Quarter Ended
Mar. Mar.
2019 2018
Tons Sold 40.5 48.3
Revenues $
1,250.6 $
1,462.7
Operating Costs and
Expenses (1) 948.4 1,057.2
Depreciation,
Depletion and
Amortization 172.5 169.6
Asset Retirement
Obligation Expenses 13.8 12.3
Selling and
Administrative
Expenses 36.7 37.0
Other Operating (Income) Loss:
Net Gain on Disposals (1.5) (30.6)
Provision for North
Goonyella Equipment
Loss 24.7
North Goonyella
Insurance Recoveries (125.0)
Income from Equity
Affiliates (3.5) (22.0)
Operating Profit 184.5 239.2
Interest Expense 35.8 36.3
Interest Income (8.3) (7.2)
Net Periodic Benefit
Costs, Excluding
Service Cost 4.9 4.5
Reorganization Items,
Net - (12.8)
Income from Continuing
Operations Before
Income Taxes 152.1 218.4
Income Tax Provision 18.8 10.1
Income from Continuing
Operations, Net of
Income Taxes 133.3 208.3
Loss from Discontinued
Operations, Net of
Income Taxes (3.4) (1.3)
Net Income 129.9 207.0
Less: Series A
Convertible Preferred
Stock Dividends - 102.5
Less: Net Income
(Loss) Attributable
to Noncontrolling
Interests 5.7 (2.1)
Net Income
Attributable to
Common Stockholders $
124.2 $
106.6
Adjusted EBITDA (2) $
253.9 $
363.9
Diluted EPS -Income
from Continuing
Operations (3)(4) $
1.15 $
0.83
Diluted EPS -Net
Income Attributable
to Common
Stockholders (3) $
1.12 $
0.82
(1) Excludes items
shown separately.
Adjusted EBITDA is
a non-GAAP
financial
measure. Refer to
the
"Reconciliation
of Non-GAAP
Financial
Measures" section
in this document
for definitions
and
reconciliations
to the most
comparable
measures under
(2) U.S. GAAP.
During the quarter
ended March 31,
2019, weighted
average diluted
shares
outstanding were
110.5 million.
During the
quarter ended
March 31, 2018,
diluted EPS was
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
123.2 million and
excluded weighted
average shares
outstanding
related to the
participating
securities of 8.4
million for the
quarter ended
(3) March 31, 2018.
Reflects income
from continuing
operations, net
of income taxes
less preferred
stock dividends
and net income
(loss)
attributable to
noncontrolling
(4) 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 Ended Mar. 31, 2019 and 2018
---
Quarter Ended
Mar. Mar.
2019 2018
Tons Sold (In Millions)
---
Seaborne Thermal
Mining Operations 4.5 3.8
Seaborne
Metallurgical
Mining Operations 2.3 3.0
Powder River Basin
Mining Operations 25.3 32.4
Midwestern U.S.
Mining Operations 4.2 4.7
Western U.S. Mining
Operations 3.7 3.7
Total U.S. Thermal
Mining Operations 33.2 40.8
Corporate and Other 0.5 0.7
Total 40.5 48.3
Revenue Summary (In Millions)
---
Seaborne Thermal
Mining Operations $
251.0 $
201.4
Seaborne
Metallurgical
Mining Operations 324.5 466.2
Powder River Basin
Mining Operations 287.3 389.3
Midwestern U.S.
Mining Operations 179.1 201.7
Western U.S. Mining
Operations 155.7 143.7
Total U.S. Thermal
Mining Operations 622.1 734.7
Corporate and Other 53.0 60.4
Total $
1,250.6 $
1,462.7
Total Reporting Segment Costs Summary
(In Millions)
(1)
---
Seaborne Thermal
Mining Operations $
156.3 $
139.8
Seaborne
Metallurgical
Mining Operations 238.7 299.8
North Goonyella
Costs, Less
Insurance
Recoveries 3.0
Seaborne
Metallurgical
Mining Operations,
Excluding North
Goonyella Costs,
Net 235.7 299.8
Powder River Basin
Mining Operations 250.9 314.8
Midwestern U.S.
Mining Operations 145.8 170.5
Western U.S. Mining
Operations 113.1 111.7
Total U.S. Thermal
Mining Operations 509.8 597.0
Corporate and Other 20.4 31.6
Total $
925.2 $
1,068.2
Other Supplemental Financial Data (In
Millions)
---
Adjusted EBITDA -
Seaborne Thermal
Mining Operations $
94.7 $
61.6
Adjusted EBITDA -
Seaborne
Metallurgical
Mining Operations 85.8 166.4
North Goonyella
Costs, Less
Insurance
Recoveries 3.0
Adjusted EBITDA -
Seaborne
Metallurgical
Mining Operations,
Excluding North
Goonyella Costs,
Net 88.8 166.4
Adjusted EBITDA -
Powder River Basin
Mining Operations 36.4 74.5
Adjusted EBITDA -
Midwestern U.S.
Mining Operations 33.3 31.2
Adjusted EBITDA -
Western U.S. Mining
Operations 42.6 32.0
Adjusted EBITDA -
Total U.S. Thermal
Mining Operations 112.3 137.7
Middlemount (2) 3.9 14.6
Resource Management
Results (3) 2.0 20.8
Selling and
Administrative
Expenses (36.7) (37.0)
Other Operating
Costs, Net (4) (8.1) (0.2)
Adjusted EBITDA (1) $
253.9 $
363.9
Note: See footnote explanations
on following page
Supplemental Financial Data (Unaudited)
For the Quarters Ended Mar. 31, 2019 and 2018
---
Quarter Ended
Mar. Mar.
2019 2018
Revenues per Ton -Mining Operations (5)
---
Seaborne Thermal $
56.24 $
53.42
Seaborne Metallurgical 142.33 153.04
Powder River Basin 11.35 12.02
Midwestern U.S. 42.63 42.66
Western U.S. 41.73 38.96
Total U.S. Thermal 18.71 18.01
Costs per Ton -Mining Operations (5)(6)
---
Seaborne Thermal $
35.03 $
37.09
Seaborne Metallurgical 104.69 98.44
North Goonyella Costs, Less Insurance
Recoveries 1.32
Seaborne Metallurgical, Excluding
North Goonyella Costs, Net 103.37 98.44
Powder River Basin 9.91 9.72
Midwestern U.S. 34.72 36.05
Western U.S. 30.31 30.27
Total U.S. Thermal 15.33 14.63
Adjusted EBITDA Margin per Ton -Mining Operations
(5)(6)
---
Seaborne Thermal $
21.21 $
16.33
Seaborne Metallurgical 37.64 54.60
North Goonyella Costs, Less Insurance
Recoveries 1.32
Seaborne Metallurgical, Excluding
North Goonyella Costs, Net 38.96 54.60
Powder River Basin 1.44 2.30
Midwestern U.S. 7.91 6.61
Western U.S. 11.42 8.69
Total U.S. Thermal 3.38 3.38
Total Reporting Segment Costs and Adjusted
EBITDA are non-GAAP financial measures. Refer
to the "Reconciliation of Non-GAAP Financial
Measures" section in this document for
definitions and reconciliations to the most
(1) comparable measures under U.S. GAAP.
We account for our 50% equity interest in
Middlemount Coal Pty Ltd. (Middlemount), which
owns the Middlemount Mine, under the equity
method. Middlemount's standalone results
exclude the impact of related changes in
deferred tax asset valuation allowance and
reserves and amortization of basis difference
recorded by the Company in applying the equity
method. Middlemount's standalone results
(2) include (on a 50% attributable basis):
Quarter Ended
Mar. Mar.
2019 2018
(In Millions)
Tons sold 0.4 0.5
Depreciation, depletion and
amortization and asset
retirement obligation expenses $
3.6 $
3.9
Net interest expense 2.2 3.6
Income tax provision 1.7 5.1
Includes gains (losses) on certain surplus coal
reserve and surface land sales, property
management costs and revenues and the Q1 2018
gain of $20.6 million on the sale of certain
surplus land assets in Queensland's Bowen
(3) Basin.
Includes trading and brokerage activities, costs
associated with post-mining activities,
certain coal royalty expenses, minimum charges
on certain transportation-related contracts
and the Q1 2018 gain of $7.1 million recognized
on the sale of our interest in the Red Mountain
(4) Joint Venture.
Revenues per Ton, Costs per Ton and Adjusted
EBITDA Margin per Ton are metrics used by
management to measure each of our mining
segment's operating performance. Revenues per
Ton and Adjusted EBITDA Margin per Ton are
equal to revenues by segment and Adjusted
EBITDA by segment, respectively, divided by
segment tons sold. Costs per Ton is equal to
Revenues per Ton less Adjusted EBITDA Margin
per Ton. Management believes Costs per Ton and
Adjusted EBITDA Margin per Ton best reflect
controllable costs and operating results at the
mining segment level. We consider all measures
reported on a per ton basis to be operating/
statistical measures; however, we include
reconciliations of the related non-GAAP
financial measures (Adjusted EBITDA and Total
Reporting Segment Costs) in the "Reconciliation
of Non-GAAP Financial Measures" section in
(5) this document.
Includes revenue-based production taxes and
royalties; excludes depreciation, depletion and
amortization; asset retirement obligation
expenses; selling and administrative expenses;
restructuring charges; provision for North
Goonyella equipment loss and related insurance
recoveries; amortization of fresh start
reporting adjustments related to take-or-pay
contract-based intangibles; and certain other
(6) costs related to post-mining activities.
This information is intended to be reviewed in conjunction with the company's filings with the SEC.
Condensed Consolidated Balance Sheets
As of Mar. 31, 2019 and Dec. 31, 2018
---
(Dollars In Millions)
(Unaudited)
Mar. 31, 2019 Dec. 31, 2018
Cash and Cash
Equivalents $
798.1 $
981.9
Accounts Receivable, Net 554.6 450.4
Inventories 268.5 280.2
Other Current Assets 239.5 243.1
Total Current Assets 1,860.7 1,955.6
Property, Plant,
Equipment and Mine
Development, Net 5,069.5 5,207.0
Operating Lease Right-
of-Use Assets 97.0
Investments and Other
Assets 211.8 212.6
Deferred Income Taxes 48.5 48.5
Total Assets $
7,287.5 $
7,423.7
Current Portion of Long-
Term Debt $
34.8 $
36.5
Accounts Payable and
Accrued Expenses 1,014.4 1,022.0
Total Current
Liabilities 1,049.2 1,058.5
Long-Term Debt, Less
Current Portion 1,326.9 1,330.5
Deferred Income Taxes 9.7 9.7
Asset Retirement
Obligations 691.8 686.4
Accrued Postretirement
Benefit Costs 543.7 547.7
Operating Lease
Liabilities, Less
Current Portion 58.2
Other Noncurrent
Liabilities 345.9 339.3
Total Liabilities 4,025.4 3,972.1
Common Stock 1.4 1.4
Additional Paid-in
Capital 3,322.3 3,304.7
Treasury Stock (1,125.3) (1,025.1)
Retained Earnings 978.3 1,074.5
Accumulated Other
Comprehensive Income 38.0 40.1
Peabody Energy
Corporation
Stockholders' Equity 3,214.7 3,395.6
Noncontrolling Interests 47.4 56.0
Total Stockholders'
Equity 3,262.1 3,451.6
Total Liabilities and
Stockholders' Equity $
7,287.5 $
7,423.7
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 Mar. 31, 2019 and 2018
---
(Dollars In Millions)
Quarter Ended
Mar. Mar.
2019 2018
Cash Flows From Operating Activities
Net Cash Provided By
Continuing
Operations $
200.8 $
580.7
Net Cash Used in
Discontinued
Operations (3.2) (1.0)
Net Cash Provided By
Operating Activities 197.6 579.7
Cash Flows From Investing Activities
Additions to
Property, Plant,
Equipment and Mine
Development (35.8) (53.7)
Changes in Accrued
Expenses Related to
Capital Expenditures (3.8) (4.9)
Federal Coal Lease
Expenditures - (0.5)
Proceeds from
Disposal of Assets,
Net of Receivables 11.0 23.0
Amount Attributable
to Acquisition of
Shoal Creek Mine (2.4)
Contributions to
Joint Ventures (118.4) (123.5)
Distributions from
Joint Ventures 110.9 120.7
Advances to Related
Parties (1.5) (2.0)
Cash Receipts from
Middlemount Coal Pty
Ltd 1.1 35.8
Other, Net 0.8 (1.3)
Net Cash Used In
Investing Activities (38.1) (6.4)
Cash Flows From Financing Activities
Repayments of Long-
Term Debt (8.3) (8.2)
Common Stock
Repurchases (98.8) (175.5)
Repurchase of
Employee Common
Stock Relinquished
for Tax Withholding (1.4)
Dividends Paid (214.4) (15.0)
Distributions to
Noncontrolling
Interests (14.3) (6.6)
Other, Net (0.1) 0.2
Net Cash Used In
Financing Activities (337.3) (205.1)
Net Change in Cash,
Cash Equivalents and
Restricted Cash (177.8) 368.2
Cash, Cash
Equivalents and
Restricted Cash at
Beginning of Period 1,017.4 1,070.2
Cash, Cash
Equivalents and
Restricted Cash at
End of Period $
839.6 $
1,438.4
Reconciliation of Non-GAAP Financial Measures (Unaudited)
For the Quarters Ended Mar. 31, 2019 and 2018
---
(Dollars In Millions)
Note: Management believes that non-GAAP performance measures are used by investors to measure our operating performance and
lenders to measure our ability to incur and service debt. These measures are not intended to serve as alternatives to U.S.
GAAP measures of performance and may not be comparable to similarly-titled measures presented by other companies.
Quarter Ended
Mar. Mar.
2019 2018
Income from Continuing
Operations, Net of Income Taxes $
133.3 $
208.3
Depreciation, Depletion and
Amortization 172.5 169.6
Asset Retirement Obligation Expenses 13.8 12.3
Provision for North Goonyella
Equipment Loss 24.7
North Goonyella Insurance Recoveries
-Equipment (2) (91.1)
Changes in Deferred Tax Asset
Valuation Allowance and Reserves and
Amortization of Basis Difference
Related to Equity Affiliates (7.6)
Interest Expense 35.8 36.3
Interest Income (8.3) (7.2)
Reorganization Items, Net (12.8)
Unrealized Gains on Economic Hedges (39.8) (38.6)
Unrealized (Gains) Losses on Non-
Coal Trading Derivative Contracts (0.2) 1.8
Fresh Start Take-or-Pay Contract-
Based Intangible Recognition (5.6) (8.3)
Income Tax Provision 18.8 10.1
Adjusted EBITDA (1) $
253.9 $
363.9
Operating Costs and Expenses $
948.4 $
1,057.2
Unrealized Gains (Losses) on Non-
Coal Trading Derivative Contracts 0.2 (1.8)
Fresh Start Take-or-Pay Contract-
Based Intangible Recognition 5.6 8.3
North Goonyella Insurance Recoveries
-Cost Recoveries and Business
Interruption (2) (33.9)
Net Periodic Benefit Costs, Excluding
Service Cost 4.9 4.5
Total Reporting Segment Costs (3) $
925.2 $
1,068.2
Net Cash Provided By Operating
Activities $
197.6 $
579.7
Net Cash Used In Investing
Activities (38.1) (6.4)
Add Back: Amount Attributable to
Acquisition of Shoal Creek Mine 2.4
Free Cash Flow (4) $
161.9 $
573.3
Adjusted EBITDA is
defined as income
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 each of
our segment's
operating
performance as
displayed in the
reconciliation
above. Adjusted
EBITDA is used by
management as the
primary metric to
measure each of
our segment's
operating
(1) performance.
We recorded a
$125.0 million
insurance
recovery during
the quarter ended
March 31, 2019
related to losses
incurred at our
North Goonyella
Mine. Of this
amount, Adjusted
EBITDA excludes
an allocated
amount applicable
to total
equipment losses
recognized at the
time of the
insurance
recovery
settlement, which
consisted of
$24.7 million and
$66.4 million
recognized during
the quarter ended
March 31, 2019
and the year
ended December
31, 2018,
respectively. The
remaining $33.9
million,
applicable to
incremental costs
and business
interruption
losses, is
included in
Adjusted EBITDA
for the quarter
ended March 31,
(2) 2019.
Total Reporting
Segment Costs is
defined as
operating costs
and expenses
adjusted for the
discrete items
that management
excluded in
analyzing each of
our segment's
operating
performance as
displayed in the
reconciliation
above. Total
Reporting Segment
Costs is used by
management as a
metric to measure
each of our
segment's
operating
(3) performance.
Free Cash Flow is
defined as net
cash provided by
operating
activities less
net cash used in
investing
activities and
excludes cash
outflows related
to business
combinations.
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
(4) operations.
This information is intended to be reviewed in
conjunction with the company's filings with the SEC.
2019 Full-Year Guidance Targets
Sales Volumes (Short Tons in millions)
PRB 105 - 115
Quarterly North Goonyella Costs
$30 - $35 million
ILB 17.5 - 18.5
Quarterly SG&A Expense ~$40 million
Western
11 - 12
Full-Year Capital Expenditures
$350 - $375 million
Seaborne Metallurgical 9.4 - 10.4
Full-Year DD&A
$600 - $650 million
HCC(1): 40% - 50%
Full-Year Interest Expense4 ~$150 million
PCI(2): 50% - 60%
Full-Year ARO Cash Spend ~$50 million
Seaborne Export Thermal 12.0 - 12.5
Cost Sensitivities5
NEWC: 60% - 70%
$0.05 Decrease in A$ FX Rate6 + ~$65 million
API 5: 30% - 40%
$0.05 Increase in A$ FX Rate6 -~$65 million
Australia Domestic Thermal
7 - 8
Fuel (+/- $10/barrel) +/-~$20 million
Revenues per Ton
2019 Priced Position (Avg. Price per Short Ton)
Total U.S. Thermal
$17.10 - $18.10
PRB $11.25
ILB
~$42
Costs Per Ton (USD per Short Ton)
Seaborne Export Thermal Volumes (Q2 - Q4) 7
~$83
PRB
$9.25 - $9.75
~95% of Peabody's 2019 U.S. thermal volumes are priced
based on the mid-point of 2019 volume guidance
ILB
$32 - $35
~5.7 million short tons of seaborne export thermal coal priced
(Q2 - Q4) 7
Total U.S. Thermal
$13.95 - $14.95
2020 Priced Position (Avg. Price per Short Ton)
Seaborne Thermal3
$32 - $36
~40% and ~60% of Peabody's 2020 U.S. thermal volumes are
(includes Aus. Domestic Thermal) priced and committed, respectively, based on the mid-point
of 2019 volume guidance
Seaborne Metallurgical(3)
$90 - $95
~2.1 million short tons of seaborne export
~$77
(excluding North Goonyella) thermal coal priced for 2020
1 Peabody expects to realize ~80%-90%
of the premium HCC quoted index price
on a weighted average across all its
products.
2 Approximately 40% of Peabody's
seaborne metallurgical PCI sales are
on a spot basis, with the remainder
linked to the quarterly contract.
Peabody expects to realize ~80%-90% of
the LV PCI benchmark for its PCI
products.
(3) Assumes 2019 average A$ FX rate of
$0.72. Cost ranges include sales-
related cost, which will fluctuate
based on realized prices.
4 Interest expense includes interest
on funded debt, surety bonds,
commitment fees and letters of credit
fees issued under the revolver and
accounts receivable securitization
program, and non-cash interest
related to certain contractual
arrangements and amortization of debt
issuance costs.
5 Sensitivities reflect approximate
impacts of changes in variables on
financial performance. When realized,
actual impacts may differ
significantly.
6 As of March 31, 2019, Peabody had
outstanding average rate call options
to manage market price volatility
associated with the Australian dollar
in aggregate notional amount of
approximately AUD $975 million with
strike price levels ranging from $0.76
to $0.77 with settlement dates through
Dec. 31, 2019. Sensitivities provided
are relative to an assumed average A$
FX exchange rate of ~$0.71 as of March
31, 2019.
7 Approximately 40%-50% of Peabody's
unpriced seaborne thermal export
volumes is NEWC-specification, with
the reminder closer to an API5
product. Priced position assumes
settlement of JFY tons at $94.75 per
tonne.
Note 1: Peabody classifies its seaborne
metallurgical or thermal segments
based on the primary customer base and
reserve type. A small portion of the
coal mined by the seaborne
metallurgical 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 products
and the weighted average discounts
across all products to the applicable
index prices, in addition to impacts
on sales-related costs, and
applicable conversions between short
tons and metric tonnes as necessary.
Note 3: As of April 30, 2019, Peabody
had approximately 107.1 million shares
of common stock outstanding.
Including approximately 3 million
shares of unvested equity awards,
Peabody has approximately 110 million
shares of common stock on a fully
diluted basis.
Forward-Looking Statements
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, 2018, 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
