Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 | |||||||
Date of Report (Date of earliest event reported): April 23, 2015 | |||||||
PEABODY ENERGY CORPORATION | |||||||
(Exact name of registrant as specified in its charter) | |||||||
Delaware | 1-16463 | 13-4004153 | |||||
(State or other jurisdiction of incorporation or organization) | (Commission File Number) | (I.R.S. Employer Identification No.) | |||||
701 Market Street, St. Louis, Missouri | 63101-1826 | ||||||
(Address of principal executive offices) | (Zip Code) | ||||||
Registrant's telephone number, including area code: (314) 342-3400 | |||||||
N/A | |||||||
(Former name or former address, if changed since last report.) | |||||||
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: | |||||||
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |||||||
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |||||||
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |||||||
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Exhibit No. | Description of Exhibit |
99.1 | Press Release of Peabody Energy Corporation dated April 23, 2015. |
PEABODY ENERGY CORPORATION | |
April 23, 2015 | By: /s/ Michael C. Crews |
Name: Michael C. Crews | |
Title: Executive Vice President and Chief Financial Officer | |
Exhibit No. | Description |
99.1 | Press Release of Peabody Energy Corporation dated April 23, 2015. |
![]() | News Release |
CONTACT: Vic Svec (314) 342-7768 |
• | First quarter revenues of $1.54 billion lead to Adjusted EBITDA of $166 million |
• | Diluted Loss Per Share from Continuing Operations and Adjusted Diluted EPS total $(0.62), including $(0.23) related to refinancing the 2016 Senior Notes |
• | Cost reductions largely offset $100 million in lower pricing in the first quarter; Liquidity rises to $2.22 billion |
• | 2015 U.S. volume guidance reduced by 10 million tons; Lowering U.S. and Australian costs per ton and capital targets to reflect success of ongoing initiatives |
• | $685 million improvement in annual cash outlays by early 2017 related to potential currency and fuel benefits and expiration of PRB reserve and health trust payments |
Quarter Ended | |||||||||||||
(in millions) | March 2015 | March 2014 | Change | ||||||||||
Adjusted EBITDA - U.S. Mining: | |||||||||||||
U.S. Mining Operations (before hedging) | $ | 271.5 | $ | 254.6 | $ | 16.9 | |||||||
Commodity Hedging Results | (17.4 | ) | (2.0 | ) | (15.4 | ) | |||||||
Total U.S. Mining Adjusted EBITDA | $ | 254.1 | $ | 252.6 | $ | 1.5 | |||||||
Adjusted EBITDA - Australian Mining: | |||||||||||||
Australian Mining Operations (before hedging) | $ | 61.9 | $ | 21.0 | $ | 40.9 | |||||||
Foreign Currency Hedging Results | (73.6 | ) | (18.8 | ) | (54.8 | ) | |||||||
Commodity Hedging Results | (12.8 | ) | (0.4 | ) | (12.4 | ) | |||||||
Total Hedging Results | (86.4 | ) | (19.2 | ) | (67.2 | ) | |||||||
Total Australian Mining Adjusted EBITDA | $ | (24.5 | ) | $ | 1.8 | $ | (26.3 | ) |
• | The second quarter metallurgical coal benchmark for high-quality low-vol hard coking coal settled at $109.50 per tonne with benchmark low-vol PCI at $92.50 per tonne. The annual thermal benchmark commencing on April 1 for Newcastle-quality coal settled at $67.80 per tonne. Over the last year, the weaker Australian dollar has outpaced the decline in seaborne coal pricing. While the U.S. dollar price for hard coking coal and thermal coal declined 9 percent and 17 percent, respectively, the Australian dollar price increased 8 percent and declined 2 percent, respectively, in the same period, placing additional pressure on U.S. exports; |
• | Chinese coal imports remain challenged amid slower demand and efforts to support the domestic coal industry, including quality restrictions, tariffs and lower domestic taxes that have temporarily prevailed over delivered import economics. In the first two months of the year, thermal coal imports declined 51 percent, while metallurgical coal imports fell 14 percent, indicating relatively stronger underlying Chinese seaborne metallurgical coal demand. Coal imports are expected to rebase as growing economic stimulus actions take hold, excess property supply is eliminated, domestic coal production is rationalized and policy restrictions ease; and |
• | India is expected to surpass China to become the largest seaborne coal importer in 2015. India has publicly announced its commitment to long-term coal use as a |
• | Coal generation declined 14 percent through March and natural gas generation increased 14 percent on lower natural gas prices that averaged $2.82 per mmBtu compared to $4.26 per mmBtu in 2014. As a result, Peabody now projects 2015 U.S. coal demand to decline 80 to 100 million tons; |
• | U.S. coal production is expected to decline in 2015, with growing curtailments occurring in the second half of the year. U.S. exports are expected to decline 30 to 40 million tons this year, with metallurgical coal exports now expected to be 10 to 15 million tons lower than 2014; and |
• | Peabody has reduced its 2015 U.S. volume targets by 10 million tons in light of current market conditions. |
• | Operational: Maintaining a relentless focus on improving safety, increasing productivity and driving down operating costs. Peabody continues to improve productivity and has reduced its global workforce more than 20 percent over the last three years. Capital spending targets have been further reduced, and are primarily allocated to safety and sustaining capital items. The company continues its efforts across a host of cost containment initiatives, including procurement, maintenance and operations; |
• | SG&A: Building on the 17% cost improvement in the first quarter, the company is targeting a leaner structure through office closures, process rationalization and overhead reductions. The company is also implementing a global shared services center to centralize administrative functions, while pursuing other ongoing initiatives; |
• | Financial: Maximizing cash and liquidity in the near term. In the first quarter, the company amended its credit agreement, proactively refinanced its 2016 Senior Notes and increased liquidity. The company now has no significant debt maturities for more than three years. Longer term, Peabody intends to use excess proceeds from asset sales, lower fixed obligations and improving coal markets to reduce debt; and |
• | Portfolio: Initiating a heightened emphasis on portfolio optimization through asset sales and joint ventures, including sales of non-core reserves, surface lands and partial interests in active operations. As part of this initiative, the company is progressing a strategic review of its portfolio of Australian tenements and is continuing to explore interest for U.S. assets. Peabody has more than 7.5 billion tons of coal reserves, including approximately 3 billion tons not assigned to active mining operations, along with 500,000 acres of surface lands and other assets that are under evaluation. The company is also evaluating options at its highest cost operation, the Burton Mine in Australia, where the current contract-miner agreement expires in mid-2016. |
• | $275 million in lower cash payments related to Southern Powder River Basin reserve installments that end in 2016; |
• | $75 million in lower cash payments related to health benefit trust payments that expire in January 2017; and |
• | $335 million in potential lower currency rates and fuel prices as legacy hedge transactions roll off. Peabody has historically employed a rolling 36-month hedge program for diesel fuel and the Australian dollar. The hedge positions and estimated cumulative cost improvements are shown below and are based on the declining hedge positions over time and the current forward diesel fuel prices and exchange rates as of March 31, 2015. |
Australian Dollar Hedging | 2015 | 2016 | 2017 |
Percent Hedged | 66% | 42% | 22% |
Hedge Rate | $0.95 | $0.92 | $0.88 |
All-in Rate | $0.89 | $0.82 | $0.77 |
Potential Lower Costs Compared to 2015 | $170 | $289 | |
Fuel Hedging | 2015 | 2016 | 2017 |
Percent Hedged | 91% | 64% | 44% |
Hedge Price (per barrel equivalent) | $84 | $85 | $79 |
All-in Price (per barrel equivalent) | $80 | $72 | $68 |
Potential Lower Costs Compared to 2015 | $31 | $46 | |
Total Potential Lower Costs Compared to 2015 | $201 | $335 | |
Prior Guidance | ||
New 2015 Guidance | (where changed) | |
Sales Volumes (in million tons) U.S. Australia Trading & Brokerage Total | 180 - 190 35 - 37 20 - 28 235 - 255 | 190 - 200 |
U.S. Operations Revenue Per Ton (vs 2014) Costs Per Ton (vs 2014) | 3% - 5% lower 3% - 5% lower | 2% - 4% lower 2% - 4% lower |
Australia Operations Metallurgical Coal Sales Export Thermal Sales Costs Per Ton | 15 - 16 million tons 12 - 13 million tons $62 - $64 | 2% - 4% lower |
Depreciation, Depletion and Amortization | $600 - $640 million | |
Capital Expenditures | $170 - $190 million | $180 - $200 million |
Condensed Consolidated Statements of Operations (Unaudited) | ![]() | ||||||||
For the Quarters Ended Mar. 31, 2015 and 2014 | |||||||||
(In Millions, Except Per Share Data) | |||||||||
Quarter Ended | |||||||||
Mar. | Mar. | ||||||||
2015 | 2014 | ||||||||
Tons Sold | 60.6 | 61.3 | |||||||
Revenues | $ | 1,537.9 | $ | 1,626.8 | |||||
Operating Costs and Expenses (1) | 1,321.6 | 1,394.8 | |||||||
Depreciation, Depletion and Amortization | 147.5 | 157.2 | |||||||
Asset Retirement Obligation Expenses | 14.2 | 15.6 | |||||||
Selling and Administrative Expenses | 49.4 | 59.5 | |||||||
Other Operating (Income) Loss: | |||||||||
Net Gain on Disposal of Assets | (0.1 | ) | (9.8 | ) | |||||
Loss from Equity Affiliates: | |||||||||
Results of Operations | 1.4 | 5.4 | |||||||
Change in Deferred Tax Asset Valuation Allowance | 0.3 | — | |||||||
Amortization of Basis Difference | 1.4 | 1.2 | |||||||
Loss from Equity Affiliates | 3.1 | 6.6 | |||||||
Operating Profit | 2.2 | 2.9 | |||||||
Interest Income | (2.5 | ) | (3.6 | ) | |||||
Interest Expense: | |||||||||
Interest Expense | 106.6 | 103.3 | |||||||
Loss on Debt Extinguishment | 59.5 | — | |||||||
Interest Expense | 166.1 | 103.3 | |||||||
Loss from Continuing Operations Before Income Taxes | (161.4 | ) | (96.8 | ) | |||||
Income Tax Provision (Benefit): | |||||||||
Provision (Benefit) | 3.2 | (51.1 | ) | ||||||
Remeasurement Benefit Related to Foreign Income Tax Accounts | (0.2 | ) | (1.4 | ) | |||||
Income Tax Provision (Benefit) | 3.0 | (52.5 | ) | ||||||
Loss from Continuing Operations, Net of Income Taxes | (164.4 | ) | (44.3 | ) | |||||
(Loss) Income from Discontinued Operations, Net of Income Taxes | (8.9 | ) | 0.2 | ||||||
Net Loss | (173.3 | ) | (44.1 | ) | |||||
Less: Net Income Attributable to Noncontrolling Interests | 3.3 | 4.4 | |||||||
Net Loss Attributable to Common Stockholders | $ | (176.6 | ) | $ | (48.5 | ) | |||
Adjusted EBITDA | $ | 165.6 | $ | 176.9 | |||||
Diluted EPS - Loss from Continuing Operations (2)(3) | $ | (0.62 | ) | $ | (0.18 | ) | |||
Diluted EPS - Net Loss Attributable to Common Stockholders (2) | $ | (0.65 | ) | $ | (0.18 | ) | |||
Adjusted Diluted EPS (2) | $ | (0.62 | ) | $ | (0.19 | ) | |||
(1) | Excludes items shown separately. | ||||||||
(2) | Weighted average diluted shares outstanding were 270.1 million and 267.9 million for the quarters ended March 31, 2015 and 2014, respectively. | ||||||||
(3) | Reflects loss from continuing operations, net of income taxes, less 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 Ended Mar. 31, 2015 and 2014 | ||||||||||
Quarter Ended | ||||||||||
Mar. | Mar. | |||||||||
2015 | 2014 | |||||||||
Revenue Summary (In Millions) | ||||||||||
U.S. Mining Operations | $ | 965.0 | $ | 985.0 | ||||||
Australian Mining Operations | 548.2 | 611.8 | ||||||||
Trading and Brokerage Operations | 16.7 | 21.0 | ||||||||
Other | 8.0 | 9.0 | ||||||||
Total | $ | 1,537.9 | $ | 1,626.8 | ||||||
Tons Sold (In Millions) | ||||||||||
Midwestern U.S. Mining Operations | 5.9 | 6.2 | ||||||||
Western U.S. Mining Operations | 41.9 | 41.5 | ||||||||
Australian Mining Operations (1) | 8.8 | 8.2 | ||||||||
Trading and Brokerage Operations | 4.0 | 5.4 | ||||||||
Total | 60.6 | 61.3 | ||||||||
Revenues per Ton - Mining Operations | ||||||||||
Midwestern U.S. | $ | 47.05 | $ | 48.97 | ||||||
Western U.S. | 16.43 | 16.42 | ||||||||
Total - U.S. | 20.19 | 20.65 | ||||||||
Australia | 62.65 | 74.48 | ||||||||
Operating Costs per Ton (2) | ||||||||||
Midwestern U.S. (3) | $ | 34.85 | $ | 36.25 | ||||||
Western U.S. (3) | 12.08 | 12.23 | ||||||||
Total - U.S. (3) | 14.87 | 15.35 | ||||||||
Australia (3) | 65.46 | 74.26 | ||||||||
Gross Margin per Ton (2) | ||||||||||
Midwestern U.S. (3) | $ | 12.20 | $ | 12.72 | ||||||
Western U.S. (3) | 4.35 | 4.19 | ||||||||
Total - U.S. (3) | 5.32 | 5.30 | ||||||||
Australia (3) | (2.81 | ) | 0.22 | |||||||
Other Supplemental Financial Data (In Millions) | ||||||||||
Adjusted EBITDA - U.S. Mining: | ||||||||||
U.S. Mining Operations | $ | 271.5 | $ | 254.6 | ||||||
Commodity Hedging Results | (17.4 | ) | (2.0 | ) | ||||||
Total U.S. Mining | 254.1 | 252.6 | ||||||||
Adjusted EBITDA - Australian Mining: | ||||||||||
Australian Mining Operations | 61.9 | 21.0 | ||||||||
Foreign Currency Hedging Results | (73.6 | ) | (18.8 | ) | ||||||
Commodity Hedging Results | (12.8 | ) | (0.4 | ) | ||||||
Total Australian Mining | (24.5 | ) | 1.8 | |||||||
Adjusted EBITDA - Trading and Brokerage | ||||||||||
Trading and Brokerage Operations | 3.8 | 13.7 | ||||||||
Litigation Settlement | — | (15.6 | ) | |||||||
Total Trading and Brokerage | 3.8 | (1.9 | ) | |||||||
Adjusted EBITDA - Resource Management (4) | 1.2 | 9.5 | ||||||||
Selling and Administrative Expenses | (49.4 | ) | (59.5 | ) | ||||||
Other Operating Costs, Net (5) | (19.6 | ) | (25.6 | ) | ||||||
Adjusted EBITDA | 165.6 | 176.9 | ||||||||
Operating Cash Flows | 3.4 | 54.1 | ||||||||
Acquisitions of Property, Plant and Equipment | 25.1 | 24.4 | ||||||||
(1) | Metallurgical coal tons sold totaled 3.8 million and 3.2 million for the quarters ended Mar. 31, 2015 and 2014, respectively. | |||||||||
(2) | Includes revenue-based production taxes and royalties; excludes depreciation, depletion and amortization; asset retirement obligation expenses; selling and administrative expenses; and certain other costs related to post-mining activities. | |||||||||
(3) | Operating costs per ton and gross margin per ton for Midwestern U.S., Western U.S., and Total - U.S. include hedging losses of $1.29, $0.23, and $0.36, respectively, for the quarter ended Mar. 31, 2015, and $0.15, $0.03, and $0.04, respectively, for the quarter ended Mar. 31, 2014. Operating costs per ton and gross margin per ton for Australia include hedging losses of $9.82 and $2.34 for the quarters ended Mar. 31, 2015 and 2014, respectively. | |||||||||
(4) | Includes certain asset sales, property management costs and revenues, and coal royalty expense. | |||||||||
(5) | Includes loss from equity affiliates (before the impact of related changes in deferred tax asset valuation allowance and amortization of basis difference)and costs associated with 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, 2015 and Dec. 31, 2014 | ||||||||
(Dollars In Millions) | ||||||||
(Unaudited) | ||||||||
Mar. 31, 2015 | Dec. 31, 2014 | |||||||
Cash and Cash Equivalents | $ | 637.1 | $ | 298.0 | ||||
Accounts Receivable, Net | 431.4 | 563.1 | ||||||
Inventories | 369.5 | 406.5 | ||||||
Deferred Income Taxes | 83.9 | 80.0 | ||||||
Other Current Assets | 287.0 | 363.4 | ||||||
Total Current Assets | 1,808.9 | 1,711.0 | ||||||
Property, Plant, Equipment and Mine Development, Net | 10,451.8 | 10,577.3 | ||||||
Deferred Income Taxes | 1.1 | 0.7 | ||||||
Investments and Other Assets | 889.9 | 902.1 | ||||||
Total Assets | $ | 13,151.7 | $ | 13,191.1 | ||||
Current Portion of Long-Term Debt (1) | $ | 104.1 | $ | 21.2 | ||||
Accounts Payable and Accrued Expenses | 1,618.7 | 1,809.2 | ||||||
Other Current Liabilities | 38.7 | 32.7 | ||||||
Total Current Liabilities | 1,761.5 | 1,863.1 | ||||||
Long-Term Debt, Less Current Portion | 6,287.5 | 5,965.6 | ||||||
Deferred Income Taxes | 86.4 | 89.1 | ||||||
Other Noncurrent Liabilities | 2,507.2 | 2,546.8 | ||||||
Total Liabilities | 10,642.6 | 10,464.6 | ||||||
Stockholders' Equity | 2,509.1 | 2,726.5 | ||||||
Total Liabilities and Stockholders' Equity | $ | 13,151.7 | $ | 13,191.1 | ||||
(1) Current period balance includes $83.1 million aggregate principal amount of the company's 7.375% Senior Notes due November 2016 that remained outstanding as of March 31, 2015 and were redeemed with cash on hand on April 15, 2015 pursuant to the related notice of redemption. | ||||||||
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 Mar. 31, 2015 and 2014 | |||||||||
(Dollars In Millions, Except Per Share Data) | Quarter Ended | ||||||||
Mar. | Mar. | ||||||||
2015 | 2014 | ||||||||
Adjusted EBITDA | $ | 165.6 | $ | 176.9 | |||||
Depreciation, Depletion and Amortization | 147.5 | 157.2 | |||||||
Asset Retirement Obligation Expenses | 14.2 | 15.6 | |||||||
Change in Deferred Tax Asset Valuation Allowance Related to Equity Affiliates | 0.3 | — | |||||||
Amortization of Basis Difference Related to Equity Affiliates | 1.4 | 1.2 | |||||||
Interest Income | (2.5 | ) | (3.6 | ) | |||||
Interest Expense | 166.1 | 103.3 | |||||||
Income Tax Provision (Benefit) Before Remeasurement on Income Tax Accounts | 3.2 | (51.1 | ) | ||||||
Adjusted Loss from Continuing Operations (1) | (164.6 | ) | (45.7 | ) | |||||
Remeasurement Benefit Related to Foreign Income Tax Accounts | (0.2 | ) | (1.4 | ) | |||||
Loss from Continuing Operations, Net of Income Taxes | $ | (164.4 | ) | $ | (44.3 | ) | |||
Net Income Attributable to Noncontrolling Interests | $ | 3.3 | $ | 4.4 | |||||
Diluted EPS - Loss from Continuing Operations (2) | $ | (0.62 | ) | $ | (0.18 | ) | |||
Remeasurement Benefit Related to Foreign Income Tax Accounts | — | (0.01 | ) | ||||||
Adjusted Diluted EPS | $ | (0.62 | ) | $ | (0.19 | ) | |||
Targeted Results for the Quarter Ending Jun. 30, 2015 (Unaudited) | |||||||||
(Dollars In Millions, Except Per Share Data) | Quarter Ending | ||||||||
Jun. 30, 2015 | |||||||||
Targeted Results | |||||||||
Low | High | ||||||||
Adjusted EBITDA | $ | 135 | $ | 175 | |||||
Depreciation, Depletion and Amortization | 154 | 164 | |||||||
Asset Retirement Obligation Expenses | 15 | 13 | |||||||
Interest Income | (2 | ) | (4 | ) | |||||
Interest Expense | 121 | 119 | |||||||
Loss on Debt Extinguishment | 8 | 8 | |||||||
Income Tax Provision Before Remeasurement of Foreign Income Tax Accounts | — | 5 | |||||||
Adjusted Loss from Continuing Operations (1) | (161 | ) | (130 | ) | |||||
Remeasurement Expense Related to Foreign Income Tax Accounts | — | — | |||||||
Loss from Continuing Operations, Net of Income Taxes | $ | (161 | ) | $ | (130 | ) | |||
Net Income Attributable to Noncontrolling Interests | $ | — | $ | 4 | |||||
Diluted EPS - Loss from Continuing Operations (2) | $ | (0.59 | ) | $ | (0.49 | ) | |||
Remeasurement Expense Related to Foreign Income Tax Accounts | — | — | |||||||
Adjusted Diluted EPS | $ | (0.59 | ) | $ | (0.49 | ) | |||
(1) | In order to arrive at the numerator used to calculate Adjusted Diluted EPS, it is necessary to deduct net income attributable to noncontrolling interests from this amount. | ||||||||
(2) | Reflects loss from continuing operations, net of income taxes, less net income attributable to noncontrolling interests. | ||||||||
This information is intended to be reviewed in conjunction with the company's filings with the SEC. |