Annual Meeting of Stockholders May 10, 2012 Exhibit 99.1 |
1 Statement on Forward-Looking Information Some of the following information contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as amended, and is intended to come within the safe-harbor protection provided by those sections. Forward-Looking Statements Certain statements in this presentation are forward-looking as defined in the Private Securities Litigation Reform Act of 1995. These statements involve certain risks and uncertainties that may be beyond our control and may cause our actual future results to differ materially from expectations. We do not undertake to update our forward-looking statements. Factors that could affect our results include, but are not limited to: price volatility and demand, particularly in higher margin products; geologic, equipment and operational risks associated with mining; changes in general economic conditions, including coal, power and steel market conditions; the impact of the restatement for the years ended December 31, 2011 and 2010 and the related material weakness associated with the accounting treatment for the Apogee and Hobet water treatment facilities; coal mining laws and regulations; the availability and costs of competing energy resources; legislative and regulatory developments; risks associated with environmental laws and compliance, including selenium-related matters; developments in greenhouse gas emission regulation and treatment; negotiation of labor contracts, labor availability and relations; the outcome of pending or future litigation; changes in the costs to provide healthcare to eligible active employees and certain retirees under postretirement benefit obligations; increases to contribution requirements to multi-employer retiree healthcare and pension plans; reductions of purchases or deferral of shipments by major customers; availability and costs of credit; customer performance and credit risks; inflationary trends; worldwide economic and political conditions; downturns in consumer and company spending; supplier and contract miner performance and the availability and cost of key equipment and commodities; availability and costs of transportation; the Company’s ability to replace coal reserves; the outcome of commercial negotiations involving sales contracts or other transactions; our ability to respond to changing customer preferences; failure to comply with debt covenants; the effects of mergers, acquisitions and divestitures; and weather patterns affecting energy demand or disrupting coal supply. The Company undertakes no obligation (and expressly disclaims any such obligation) to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. For additional information concerning factors that could cause actual results to materially differ from those projected herein, please refer to the Company’s Form 10-K and Form 10-Q reports. |
2 Long-Term Growth in Global Coal Markets |
3 Global Population Growth The world’s urban population is expected to nearly double by 2050 29% 33% 36% 39% 43% 46% 50% 52% 54% 59% 64% 69% 0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 10,000 1950 1960 1970 1980 1990 2000 2010E 2015F 2020F 2030F 2040F 2050F Urban Rural Source: United Nations |
Strong Long-Term Global Seaborne Coal Demand Thermal Metallurgical Long-term sustainable seaborne demand, led by Asia Source: McCloskey 4 +26% Increase +68% Increase 0 100 200 300 400 500 2011 2020 0 200 400 600 800 1000 2011 2020 |
5 Overview of Patriot |
Patriot’s Strengths 6 Focused on evolving growth markets – Metallurgical coal production – Increasing exports – Modular mine portfolio to adjust to demand Leverage to the market – Met Build-Out program – Legacy thermal contract roll-off Culture – Experienced management team – Comprehensive safety program & environmental stewardship – Disciplined approach, focused on planning and execution Future growth – Organic – Strong and accessible reserve base, particularly high-quality met – M&A – Bolt-on and transformational Product & transportation flexibility to serve long-standing customers |
7 Product Diversification Diverse locations, products & mining methods Significant met & thermal coal exports APP ILB CAPP Met CAPP Thermal NAPP ILB Surface Reserves 1.9 Billion Tons Export Domestic 2011 Shipments 2011 Tons Sold 31.1 Million Tons Mining Method Underground |
8 Safety is our Top Operational Priority Record safety results in 2011 – Incidence rate of 2.73 per 200,000 hours worked – National average of 3.61 Nationally recognized mine rescue teams – Earned nine first-place awards in the 2011 National Mine Rescue Contest sponsored by the U.S. Department of Labor |
Fortifying our Team 9 Opened a second training facility in West Virginia – Training new miners – Development of supervisors and specialists New labor agreements with the United Mine Workers of America – Cover about 44 percent of our workforce – Generally extend through 2016 |
$0 $50 $100 $150 $200 2009 2010 2011 $0 $100 $200 $300 $400 $500 12/31/09 12/31/10 12/31/11 10 Financial Metrics EBITDA (in Millions) 110% increase 60% increase Steady improvement in EBITDA and liquidity Available Liquidity (in Millions) |
11 How Patriot Will Participate in Global Markets |
Met Build-Out Program +35% increase 12 Multi-year plan to increase our base of higher-margin metallurgical coal products Increase in metallurgical tons sold, with met representing a higher percentage of our total sales Modular mine portfolio allowing the versatility to dial our met production up or down in a timely manner in response to market conditions 0 2 4 6 8 2009 2010 2011 2012 |
Increasing Exports Expect double-digit exports in 2012 +195% increase 13 0 2 4 6 8 10 12 2009 2010 2011 2012 Met Thermal |
14 Current Global Coal Markets |
Metallurgical Current Market Conditions Current market weakness leading to reduced U.S. coal production 15 Thermal “Perfect Storm” in the U.S. Low natural gas prices Mild winter Increased regulation Industrial production not yet fully recovered U.S. exports to Europe expected to be sustainable U.S. production being idled Strengthening U.S. demand Weaker international demand European sovereign debt issues Chinese growth rate declining slightly U.S. exports may soften, but expected to remain at historically high levels Australian production increasing after 2011 flooding U.S. production being idled Demand Supply |
Domestic & Global Steel Mill Utilization Both domestic & global steel mill utilization rates are at 70-80% Global utilization has weakened in recent months 16 0 10 20 30 40 50 60 70 80 90 100 Global U.S. Updated: 04/28/12 80.8% 81.1% |
17 How Patriot is Responding to Current Markets |
Recent Actions to Match Production to Demand Metallurgical – Reduced production at Rocklick and Wells complexes – Idled Gateway Eagle mine and one CM unit at Black Oak mine – Idled certain contractor mines – Gateway Eagle and Black Oak on “hot idle” to quickly bring production back on-line Thermal – Idled Big Mountain complex, which produced 1.8 million tons in 2011 – Idled Campbell’s Creek No. 6 and Coalburg mines in Q1, which together produced 1.2 million tons in 2011 – Idling Freedom mine in Q2, which produced 1.2 million tons in 2011 Cost reductions Capital redeployment 18 Short-term inventory build and lower first half of 2012 shipments |
Highlights of Q1 2012 19 Q1 2012 EBITDA of $36.2 million Record Illinois Basin EBITDA per ton of $6.80 Executed underwritten commitment to provide financing for convertible debt maturity and replacement of existing credit facility Available liquidity of $338.3 million at March 31, 2012 Q1 2012 safety incidence rate of 2.86 per 200,000 hours worked, compared with national average of 3.69 $(8) $(6) $(4) $(2) $- $2 $4 $6 $8 Illinois Basin EBITDA/ton |
20 New Patriot Website www.patriotcoal.com |
Annual Meeting of Stockholders May 10, 2012 Contact: Janine Orf Vice President – Investor Relations 314.275.3680 jorf@patriotcoal.com |
22 Reconciliation of EBITDA to Net Income (Loss) ($ in Millions) $(48.0) (0.5) 12.8 (57.4) (15.2) (63.0) 121.5 (188.1) $141.9 2010 2009 2011 1Q12 EBITDA $110.7 $176.7 $36.2 Depreciation, Depletion & Amortization (205.3) (186.3) (41.4) Sales Contract Accretion 298.6 55.0 11.6 Asset Retirement Obligation Expense (35.1) (81.6) (32.0) Restructuring & Impairment Charge (20.2) (13.6) (32.8) Interest Expense & Other (38.1) (65.5) (16.2) Interest Income 16.6 0.2 0.1 Income Tax Provision - (0.4) - Net Income (Loss) $127.2 $(115.5) $(74.5) |