(Source: MARKETWIRE)
Walter Energy (NYSE: WLT), a leading U.S. producer and exporter of
premium hard coking coal for the global steel industry, today
reported income from continuing operations of $24.4 million, or $0.45
per diluted share, for the quarter ended Sept. 30, 2009, compared to
$71.3 million, or $1.26 per diluted share in the third quarter 2008.
Results are up significantly versus second quarter 2009, when income
from continuing operations was $11.3 million.
"Our third quarter performance illustrates the strong demand for our
high quality coking coal," said Company Chief Executive Officer Victor
P. Patrick. "We continue to see improving market conditions for our
product and we are on track to achieve sales of approximately 3.5
million tons in the second half. This performance supports our plan
to produce and sell approximately 8 million tons in 2010, with the
startup of the Mine No. 7 East longwall in early January 2010."
Third Quarter 2009 Financial & Operating Results from Continuing
Operations
Net sales and revenues for the third quarter 2009 totaled $278.3
million, compared to $308.8 million in the prior-year period.
Operating income totaled $42.4 million for the quarter, down $67.2
million versus the prior-year period. Both revenues and operating
income were lower, driven by significantly lower coke sales as well
as lower realized prices for coking coal compared to the previous
year's all-time highs.
Net sales and revenues and operating income were up $109.2 million
and $20.9 million, respectively, versus the second quarter 2009. The
sequential improvements were driven by strong customer demand
resulting in 0.8 million tons of additional coking coal sales in the
current period, facilitated by improvements in loading rates at the
Port of Mobile. In addition, volumes included approximately 79,000
tons of carryover tonnage from the prior contract year priced in
excess of $315 per metric ton.
Underground Mining
Coking coal sales volumes were 1.9 million tons in the third quarter,
a record for quarterly sales volumes, at an average selling price of
$121.66 per short ton FOB Port, versus 1.4 million tons at an average
price of $161.92 in the prior-year period. On a year-to-date basis,
coking coal sales volumes totaled 4.7 million tons, up slightly
versus the first nine months of 2008, despite declines in global
steel production.
Total coking coal production in the quarter was 1.5 million tons
versus 1.2 million tons in the prior-year period. Coking coal
production at Mine No. 4 totaled 0.7 million tons in the third
quarter, slightly lower than in the prior year. Mine No. 7 produced
0.8 million tons in the third quarter, 0.3 million tons more than in
the third quarter last year. This is the result of improved longwall
performance at the No. 7 Mine in the current-year period, as well as
lower volumes in the prior-year period due to a longwall move at that
mine.
Average mine production costs for the period were $60.60 per ton. At
No. 4, production costs were $58.27 per ton, an increase of $7.41 per
ton over the prior year, as a result of lower volumes, along with
higher labor and depreciation costs. Production costs at No. 7 were
$62.48 per ton compared to $94.82 per ton in the prior-year period, a
result of the increase in production volume, partially offset by
higher labor and depreciation costs.
The natural gas business sold 1.5 billion cubic feet of gas, slightly
less than in the prior year, at an average price of $3.29 per thousand
cubic feet in the third quarter 2009 compared to an average price of
$8.69 per thousand cubic feet in the prior-year period.
Surface Mining
The surface mining segment reported net sales and revenues of $25.2
million in the third quarter 2009, compared to $18.9 million in the
prior-year period, driven primarily by a 28.8 percent increase in
average selling prices for steam and industrial coal in the current
period. Sales volumes were also higher in the current period
primarily resulting from the acquisition of Taft Coal Sales &
Associates, Inc. ("Taft") in September 2008. Operating income in the
third quarter 2009 was $6.8 million, compared to $1.7 million in the
third quarter 2008, primarily driven by the higher average contract
prices for steam and industrial coal and higher sales volumes.
Steam and industrial coal sales were 302,000 tons during the third
quarter compared to sales of 283,000 tons in the prior-year period.
Production totaled 359,000 tons in the third quarter versus prior-year
production of 268,000 tons, primarily from the inclusion of a full
quarter of Taft's production in the current period compared to only
one month in the prior year.
Walter Coke
Walter Coke generated net sales and revenues of $23.3 million in the
third quarter 2009, compared to $53.7 million in the prior-year
period. Walter Coke returned to near break-even in the third quarter
2009 on strengthening demand for metallurgical coke.
Third quarter 2009 metallurgical coke sales were 38,478 tons at an
average price of $361.95 per ton. In the prior year, Walter Coke sold
101,077 tons at $397.20 per ton. Declines in revenue and operating
income in the current period reflect lower shipments resulting from
lower domestic steel capacity utilization versus the prior year.
Corporate and Other
Interest expense totaled $4.8 million in the quarter, down $0.7
million versus the prior-year period. Interest expense in the quarter
was lower due to the Company's repayment of its revolving credit
facility balance earlier this year and lower interest rates on
outstanding debt.
At Sept. 30, 2009, the Company had available liquidity of $322.9
million, including cash of $87.8 million and $235.1 million available
under its credit facility. Total net debt outstanding at Sept. 30,
2009 was $95.0 million compared to $147.2 million at June 30, 2009.
Business Outlook
Walter Energy's business outlook for the remainder of 2009 includes
the
following:
Coking Coal Sales(1) Q3-2009 A Q4-2009 E
------------------- --------- ---------
Tons Sold (short tons, in millions) 1.9 1.6 - 1.7
Average Operating Margin(2) Per Ton $23.91 $27 - $33
Steam & Industrial Coal Sales(3) Q3-2009 A Q4-2009 E
------------------------------- --------- ---------
Tons Sold (short tons) 302,000 300,000 - 330,000
Average Operating Margin(2) Per Ton $17.38 $12 - $17
Coke Sales Q3-2009 A Q4-2009 E
---------- --------- ---------
Tons Sold 38,478 78,000 - 86,000
Average Operating Margin (Loss)(2)
Per Ton $(5.71) $19 - $24
Quarter-to-quarter variability in timing, availability and pricing of
shipments may result in significant shifts in income between quarters.
(1) Includes the underground mining operation at Jim Walter Resources;
excludes the coal bed methane operation
(2) Operating margin is defined as operating income (Earnings Before
Interest & Taxes) from each business shown
(3) Includes the surface mining operations; excludes income from
royalties and miscellaneous land sales reported in the surface mining
segment
The Company expects to ship 126,000 tons of hard coking coal at
2008-2009 carryover pricing of approximately $315 per metric ton in
the fourth quarter 2009.
Coking coal production is expected to be between 1.4 and 1.5 million
tons in the fourth quarter, with production costs expected to average
between $65 and $70 per ton.
"We expect continued improvement in market conditions for the
remainder of 2009," said Patrick. "Moving into 2010, we are seeing
increasing demand for premium mid- and low-vol coals from our key
product destinations, as well as Asia, with port constraints in
Australia continuing to make high-quality coking coals a scarce
resource."
The Company recently finalized its long-range mining plan and expects
to produce approximately 8.0 million tons of premium hard coking coal
in 2010, highlighted by incremental production from the Company's
Mine No. 7 East expansion. The Company added that it expects to
increase coking coal production capacity to between 8.5 and 9.0
million tons in 2011 and between 9.0 and 9.5 million tons in 2012.
Walter Coke is expecting improved sales and a return to profitability
in the fourth quarter 2009, driven primarily by increased orders from
the domestic steel industry.
Capital expenditures were $14.9 million in the third quarter,
totaling $67.3 million for the year. The Company expects full-year
capital expenditures of approximately $85 million.
Conference Call Web cast
Chief Executive Officer Victor P. Patrick and members of the
Company's leadership team will discuss Walter Energy's third quarter
results, its outlook and other general business matters during a
conference call and live Web cast to be held on Wednesday, Oct. 21,
2009, at 10 a.m. Eastern Daylight Time. To listen to the event live
or in archive, visit the Company Web site at www.walterenergy.com.
About Walter Energy
Walter Energy is a leading U.S. producer and exporter of premium hard
coking coal for the global steel industry and also produces steam
coal and industrial coal, metallurgical coke and coal bed methane
gas. The Company has revenues of approximately $1.2 billion and
employs approximately 2,150 people. For more information about Walter
Energy, please visit the Company Web site at www.walterenergy.com.
Safe Harbor Statement
Except for historical information contained herein, the statements in
this release are forward-looking and made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements, including expressions such as "believe,"
"anticipate," "expect," "estimate," "intend," "may," "will," and
similar expressions involve known and unknown risks, uncertainties,
and other factors that may cause Walter Energy's actual results in
future periods to differ materially from the expectations expressed
or implied by such forward-looking statements. These factors include,
among others, the following: the market demand for the Company's
products as well as changes in pricing and costs; the availability of
raw material, labor, equipment and transportation; changes in weather
and geologic conditions; changes in extraction costs, pricing and
assumptions and projections concerning reserves in Walter Energy's
mining operations; changes in customer orders; pricing actions by the
Company's competitors, customers, suppliers and contractors; changes
in governmental policies and laws; and changes in general economic
conditions. Forward-looking statements made by Walter Energy in this
release, or elsewhere, speak only as of the date on which the
statements were made. Any forward-looking statements should be
considered in context with the various disclosures made by Walter
Energy, including the Risk Factors described in the Company's 2008
Annual Report on Form 10-K and Walter Energy's other filings with the
Securities and Exchange Commission. Walter Energy has no obligation
to update its forward-looking statements as of any future date.
- WLT -
WALTER ENERGY, INC.