2018 Annual Report NYSE: BTU

Result s Delivering

Value Generating

2018 Annual Report NYSE: BTU

Result s Delivering

Value Generating

Peabody 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.

We are executing our stated financial approach to generate cash, maintain financial strength, invest wisely and return cash to shareholders.

Shown on the Cover: An employee from Peabody's new Shoal Creek Mine, a haul truck in operations and reclamation in action in the U.S. and Australia, as well as our end product demonstrated with both steel and electricity.

Key Financial Highlights

(In Millions) 2018

Successor

Year Ended Dec. 31

2017

Successor

Predecessor

April 2 through Jan. 1 through

Dec. 31

April 1

Tons Sold

186.7

145.4

46.1

Combined

191.5

Revenues

Net Income (Loss) Attributable to Common Stockholders

$ 5,581.8 $ 544.4

$4,252.6 $ 498.6

$1,326.2

$5,578.8

$(216.5)

N/A

Adjusted EBITDA

$ 1,379.3

$ 1,145.3

$ 341.3

$1,486.6

Operating Cash Flow

$ 1,489.7

$ 813.4

$(813.0)

N/A

2018 At a Glance

$1.36

Billion

Free Cash Flow

$894

Million

In cash returned to shareholders

40

Percent

Total Shareholder Return since emergence

22

Percent

Improvement in Peabody's global safety

rate since 2013

$553

Million

Reduction in total liabilities

~25

Percent

Adjusted EBITDA margins

186.7

Million

Tons of coal sold to global electric utilities and steel mills in 2018

5,344

Acres

Coal mined lands restored by Peabody

globally in 2018

The company's plan of reorganization was effective as of April 3, 2017, and upon emergence Peabody applied fresh-start reporting as of April 1, 2017. Due to the adoption of fresh-start reporting, net income (loss) attributable to common stockholders and operating cash flow are not comparable to the prioryear period.

Adjusted EBITDA, Free Cash Flow and Adjusted EBITDA margin are non-GAAP measures. 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. Refer to the accompanying Form 10-K for a reconciliation to the nearest GAAP measures. Adjusted EBITDA is 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 each of our segment's operating 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. Adjusted EBITDA margin is equal to Adjusted EBITDA divided by revenues.

Total Shareholder Return since emergence based on modified plan value of $22.03 per share, effective April 3, 2017. Trading began on the New York Stock Exchange on April 4, 2017.

2018 Annual Report 01

Glenn Kellow President and Chief Executive Officer

Dear Shareholder, Peabody's 2018 performance marked a year of considerable success amid some notable challenges. Your company drove strong company-wide Adjusted EBITDA margins, generated Free Cash Flow of more than $1.3 billion, completed a highly attractive acquisition and returned the majority of our Free Cash Flow to shareholders.

02 2018 Annual Report

As we begin 2019, we do so against a backdrop of positive seaborne conditions, a healthy balance sheet and expectations of continued strong operating cash flows.

2018 Achievements

? In 2018, Peabody earned $645.7 million in income from continuing operations, net of income taxes, on Adjusted EBITDA of $1.39 billion and revenue of $5.58 billion.

? Adjusted EBITDA margins totaled approximately 25 percent, well above the average for the U.S. S&P MidCap 400 index.

? Free Cash Flow totaled $1.36 billion for the full year, and the company reduced total liabilities by $553 million.

? Peabody initiated a quarterly dividend in 2018 and increased the per-share payout twice as the year progressed. In addition, the company expanded its share buyback program with approximately $835 million of common stock repurchased in 2018.

? Peabody completed what we believe to be a highly accretive acquisition of the Shoal Creek hard-coking coal mine.

? Peabody was added to the prestigious Fortune 500 in Spring 2018.

? The global safety incidence rate of 1.45accidents per 200,000 hours worked marked the fifth successive year below the 1.5 mark and was 22 percent better than the level of 2013.

? Peabody believes land restoration is an essential part of the mining process, and our reclamation activities resulted in 1.4 acres reclaimed for each acre disturbed in 2018.

2018 PEABODY HIGHLIGHTS

~25%

Average Adjusted EBITDA margins

$1.36B

Free Cash Flow for the full year

$553M

Reduced total liabilities

22001818AAnnnnuuaal lRReeppoorrtt 03

? As an advocate for responsible coal use, Peabody partnered with Arq, a technologyled innovation company, to advance a process to convert coal `fines' into an energy source that can be blended directly with oil products. This partnership represents an opportunity for Peabody to simultaneously improve costs and efficiencies by increasing coal recovery, reducing the company's environmental footprint and expanding the markets for coal.

? Peabody was part of the consortium that successfully advocated for the 45Q tax credit in the U.S., as pivotal legislation to support global environmental goals.

? The company was honored with a number of notable awards including the Sentinels of Safety Award from the National Mining Association for the Kayenta Mine Prep Plant in Arizona; three of four U.S. Office of Surface Mining reclamation awards for the Bear Run and Wild Boar mines in Indiana and the former Big Sky Mine in Montana; and the 2018 National Reclamation Award in the coal category from the Interstate Mining Compact Commission for the Wild Boar Mine.

? For the third consecutive year, Peabody was named most responsible global mining company by Capital Finance International for the company's excellence in environmental, social and governance (ESG) standards and performance. Peabody was also named "Employer of the Year ? Energy & Natural Resources" for 2018 by Corporate LiveWire.

Whilst we can be proud of our many accomplishments in 2018, we recognize that the fire at our North Goonyella Mine represented a major incident for Peabody. The team will work hard to resume operations as 2019 progresses, and we have also committed to sharing learnings from the event.

We also recognize that, despite our many actions to create shareholder value, total shareholder return declined 22 percent in 2018. This performance blunted a very positive total shareholder return of 40 percent, as measured from the company's relisting in April 2017 through December 2018.

While it is convenient to point to the majority of coal and other resource producers experiencing declines in 2018, we understand you have choices for your investments, and we intend to work even harder this year to deliver. We believe we are on the right path with our strategies as well as the scale and diversity of our portfolio of assets and operations.

Industry Conditions

Underlying seaborne thermal and metallurgical coal conditions remained quite positive in 2018 on continued tightness in supplydemand dynamics.

Within seaborne thermal, coal prices held at healthy levels. Despite import restrictions, Chinese thermal coal imports rose as domestic supply was outpaced by robust power consumption that reached the highest level since 2011. In addition, India seaborne thermal demand rose 18 percent despite increased domestic coal production, and Southeast

04 2018 Annual Report

"We enter 2019 prepared for the opportunities and challenges ahead of us... we are the leading global pure-play coal company...we play a vital role in an essential industry...and we have the assets, people and strategies that set us apart."

2018 Annual Report 05

Asian nations expanded imports by nearly 20 million tonnes to support ongoing urbanization.

On the supply-side, lower-quality Indonesian exports rose significantly in 2018 over the prior year, primarily in response to increased demand from China and India. Both Australian and U.S. thermal coal exports grew year over year, up 4 percent and 34 percent, respectively.

Globally, coal-fueled power plants continue to be built, with approximately 56 gigawatts of new capacity added in 2018, and some 60 gigawatts of additional capacity expected to come online in 2019. A notable consulting group advises that global coal-fueled generating capacity exceeded 2,000 gigawatts in 2018 ? for the first time ever ? representing an astounding 62 percent growth since 2000. It's noteworthy that every gigawatt of coalfueled generating capacity can use some 3 million tons of coal per year.

Turning to seaborne metallurgical coal, strong demand continued to support pricing, particularly from India and Southeast Asian nations. In fact, India is expected to

become the second largest metallurgical coal importer behind China in 2019. Even with continued strength in pricing, supply growth remains muted.

In U.S. thermal, coal plant inventories reached their lowest level since 2005, aided by increased U.S. thermal coal exports and favorable weather conditions that resulted in higher natural gas prices late in 2018. Elevated seaborne pricing levels are expected to remain in 2019 and continue to drive higher U.S. coal exports. While 2018 was a substantial year of coal plant retirements ? with some 40 million tons of demand being retired ? the pace of retirements is expected to significantly ease in 2019.

Approximately two-thirds of Peabody's U.S. shipments served plants in regions where at least 40 percent of their electricity was fueled by coal in 2018 ? and 95 percent served plants in regions where at least 30 percent of electricity was coal-fueled.

Financial Approach

For some time now, Peabody has been executing on our stated financial approach

06 2018 Annual Report

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