ST. LOUIS, Dec. 3, 2018 /PRNewswire/ -- Peabody (NYSE:
BTU) announced today that it has completed its purchase of the
Shoal Creek seaborne metallurgical
coal mine from private coal producer Drummond Company, Inc. for
$387 million, reflecting customary
purchase price adjustments. The acquisition includes the
well-capitalized mine, preparation plant and logistical assets and
excludes legacy liabilities other than reclamation.
"This accretive Shoal Creek
purchase represents a tremendous step in Peabody's commitment to
upgrade our seaborne metallurgical coal portfolio and target the
highly attractive seaborne demand centers," said Peabody President
and Chief Executive Officer Glenn
Kellow. "We believe the Shoal Creek acquisition clearly meets our
strict investment filters, with expected high returns and rapid
payback, a very attractive valuation, and tangible synergies.
We believe the transaction offers significant strategic and
financial benefits for Peabody in our ongoing drive to create
additional shareholder value. We applaud the Drummond team
for developing and managing this high-quality operation."
Shoal Creek is located on the
Black Warrior River in Central
Alabama and serves Asian and European steel mills.
Shoal Creek coal typically prices
at or near the high-vol A index, which historically has sold at a
modest discount to the Australian hard coking coal index.
The mine produced 2.1 million tons of metallurgical coal in 2017
and sold 2.4 million tons, generating $387.0
million in revenues, $160.8
million in net income and $161.8
million in Adjusted EBITDA. Shoal Creek has realized 54 percent gross
margins through the first nine months of 2018 on 2.0 million tons
produced and 1.9 million tons sold, with realized revenues of
$173 per ton, costs of $80 per ton1, net income of
$162.1 million and Adjusted EBITDA of
$163.3 million.
Peabody expects Shoal Creek to
integrate into Peabody's operating and SG&A platforms with
minimal friction costs. In addition, the acquisition is not
expected to increase Peabody's U.S. federal cash tax payments for
the foreseeable future due to the company's substantial net
operating loss tax position.
All regulatory requirements were met as required by the
conditions to closing, and a new collective bargaining agreement
became effective at closing. The new labor agreement provides
for a 401(k) program; the prior multiemployer pension plan is no
longer effective and related obligations are not included in the
acquisition. Prior retiree healthcare liabilities were also
retained by Drummond.
"We are very pleased to welcome the productive Shoal Creek workforce to the Peabody team,"
said Kemal Williamson, Peabody
President Americas. "Peabody looks forward to safely and
quickly integrating the mine into our portfolio and benefitting
from the experienced workforce and well-capitalized nature of the
operation."
Shoal Creek has 58 million tons
of proven and probable reserves with an initial 17 million tons
with minimal anticipated capital requirements under the current
mine plan, and additional reserves expected to be accessed with
relatively low capital requirements. Shoal Creek uses
longwall mining technology to mine both the Blue Creek and
Mary Lee coal seams. The
mining complex offers significant logistical competitive
advantages. Its location on the Black Warrior River provides
direct access to barge transportation to the McDuffie Terminal in
Mobile, Al., where Panamax and
Cape-sized vessels are loaded.
Peabody intends to update its guidance targets on key metrics
for 2019 during its fourth quarter earnings announcement.
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. 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:
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Investors
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Media
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Stephanie
Weiler
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Michelle
Constantine
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314.342.7798
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314.342.4347
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Non-GAAP
Reconciliation
(Unaudited)
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Shoal
Creek
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Year
Ended
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Nine Months
Ended
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Dec. 31,
2017
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Sept. 30,
2018
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Reconciliation of
Non-GAAP Financial Measures (In Millions)
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Net Income
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$160.8
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$162.1
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Depreciation,
Depletion and Amortization
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0.8
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1.1
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Asset Retirement
Obligation Expenses
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0.2
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0.1
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Adjusted EBITDA
(1)
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$161.8
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$163.3
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(1) Adjusted
EBITDA is defined by Peabody in this presentation as net income
before deducting depreciation, depletion and amortization and asset
retirement obligation expenses. Adjusted EBITDA is not intended to
serve as an alternative to GAAP measures of performance and may not
be comparable to similarly-titled measures presented by other
companies
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Note: The
amounts presented above for the year ended December 31, 2017 were
derived from the audited combined carve-out financial statements of
Shoal Creek (a division of Drummond Company, Inc.), and the amounts
presented above for the nine months ended September 30, 2018 were
derived from the unaudited carve-out financial statements of Shoal
Creek. These items may not be comparable to similar Peabody
line items given a difference in structure, cost basis and other
elements of the Shoal Creek carve-out financials and may not be
indicative of the results that may be expected in future
periods.
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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, 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.
1 Shoal Creek
historic costs per ton exclude post-retirement medical
expenses.
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SOURCE Peabody