BIRMINGHAM, AL
-- (MARKET WIRE)
-- 11/02/11
Walter Energy, Inc. (NYSE: WLT) (TSX: WLT)
- Produces 2.3 Million Metric Tons of Metallurgical Coal; Sales of 2.2 Million Metric Tons
- Revenue of $690.1 Million, Net Income of $76.2 Million, Diluted Earnings Per Share of $1.21, and EBITDA of $198.6 Million
- Sets Strong Fourth Quarter Targets for Production, Income, and Earnings Expectations
- Prepays $50 Million in Term Debt
Walter Energy, Inc. (NYSE: WLT) (TSX: WLT), the world's leading, publicly traded "pure play" producer of metallurgical coal for the global steel industry, today announced results for the third quarter ended Sept. 30, 2011.
During the third quarter 2011, Walter Energy produced 2.3 million metric tons of metallurgical coal, consisting of 1.7 million tons of hard coking coal and 0.6 million metric tons of low-vol PCI. In addition, the Company produced 1.4 million metric tons of thermal coal during the third quarter 2011.
Walter Energy generated operating income of $148.7 million, net income of $76.2 million and diluted earnings per share of $1.21 per share for the third quarter 2011. In the third quarter 2010, Walter Energy's results excluded the Apr. 1, 2011, impact from the acquisition of Western Coal Corp. and were $207.8 million in operating income, $136.2 million in net income, and $2.55 in diluted earnings per share.
"Walter Energy's third quarter financial results were slightly above our expectations for operating income, net income and earnings per share. Consolidated revenues were $690 million, driven by lower volumes than expected, primarily within Canada. The impact of lower volumes was partially offset by higher average pricing," said Walt Scheller, chief executive officer. "At Mine No. 7 in Alabama, production is increasing and we are now out of the area where the geological squeeze has more recently constrained our cutting rates. I am also pleased to report that we expect production from the new longwall panel at Mine No. 7 within the next few days. The early start of this new longwall will help us accomplish record fourth quarter hard coking coal production in the U.S."
Consolidated revenues for the third quarter 2011 totaled $690.1 million and consisted of $467.1 million from the U.S. segment, $222.7 million from the Canada and U.K. segment, and $0.3 million from the Corporate and Other segment. The consolidated average net selling price for hard coking coal increased to $263 per metric ton in the third quarter of 2011, up from $243 in the second quarter 2011. The U.S. segment average net selling price increased to $259 per metric ton in the third quarter, up from $237 in the second quarter 2011. In the Canadian and U.K. operations, the average net selling price for hard coking coal increased to $277 per metric ton, up from $262 in the second quarter 2011.
The consolidated average cash cost per ton was $132 per metric ton for hard coking coal, $143 per metric ton for low-vol PCI, and $64 per metric ton for thermal. On a consolidated basis, cash margins per metric ton were $131 in the third quarter for hard coking coal, $66 per metric ton for PCI, and approximately $8 per metric ton for thermal.
The consolidated operating income of $148.7 million consisted of $112.9 million from the U.S. segment, $50.2 million from the Canada and U.K. segment, and $14.4 million in operating losses from the Corporate and Other segment. Consolidated earnings before interest, taxes, depreciation and amortization (EBITDA) was $198.6 million in the third quarter of 2011 as compared with $233.7 million in the third quarter 2010.
Liquidity and Capital Expenditures
As of Sept. 30, 2011, the Company had available liquidity of approximately $489.6 million consisting of cash, cash equivalents, and marketable securities of $185.1 million, plus $ 304.5 million available under the Company's $375 million credit revolver. Capital expenditures for the quarter were $157 million. In addition, the Company prepaid $50 million in term debt on Oct. 31, 2011.
Fourth Quarter Guidance
The Company currently anticipates consolidated sales of hard coking coal to be within the range of 2.1 million and 2.3 million metric tons, and production of hard coking coal in the fourth quarter to be within the range of 2.2 million and 2.4 million metric tons. Sales of low-vol PCI are expected to be in the range of 450 thousand and 530 thousand metric tons, and production of low-vol PCI is expected to be in the range of 580 thousand and 650 thousand metric tons. In addition, fourth quarter operating income is expected to be between $190 million and $230 million, net income between $120 million and $150 million, and earnings per share between $1.91 and $2.39.
Expanded Disclosure and Use of Non-GAAP Measures
This release contains the use of certain non-GAAP (U.S. Generally Accepted Accounting Principles) measures such as "adjusted earnings per diluted share" and "adjusted net income" as well as EBITDA. These non-GAAP measures are provided as supplemental to, and not as replacement of, nor equal to, financial measures prepared in accordance with GAAP. Management feels that these non-GAAP measures provide additional insights into the performance of the Company that they believe are helpful to investors and they reflect how management analyzes Company performance and compares that performance against other companies. A reconciliation of non-GAAP to GAAP measures is provided in the financial section of this release.
Conference Call Webcast
The Company will hold a live webcast to discuss third quarter results on Thursday, Nov. 3, 2011, at 9:00 a.m. EDT. To listen to the event live or in archive, visit www.walterenergy.com.
About Walter Energy
Walter Energy is the world's leading, publicly traded "pure play" metallurgical coal producer for the global steel industry. The Company also produces thermal coal and industrial coal, anthracite, metallurgical coke and coal bed methane gas. The Company has strategic access to high-growth steel markets in Asia, South America and Europe. Walter Energy employs approximately 4,400 employees and contractors with operations in the United States, Canada and United Kingdom. For more information about Walter Energy, please visit the company website 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 and may involve a number of risks and uncertainties. Forward-looking statements are based on information available to management at the time, and they involve judgments and estimates. Forward-looking statements include expressions such as "believe," "anticipate," "expect," "estimate," "intend," "may," "plan," "predict," "will," and similar terms and expressions. These forward-looking statements are made based on expectations and beliefs concerning future events affecting us and are subject to various risks, uncertainties, and factors relating to our operations and business environment, all of which are difficult to predict and many of which are beyond our control, that could cause our actual results to differ materially from those matters expressed in or implied by these forward-looking statements. The following factors are among those that may cause actual results to differ materially from our forward-looking statements: the market demand for coal, coke, and natural gas 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 our mining operations; changes in customer orders; pricing actions by our competitors, customers, suppliers and contractors; changes in governmental policies and laws, including with respect to safety enhancements and environmental initiatives; availability and costs of credit, surety bonds and letters of credit; and changes in general economic conditions. Forward-looking statements made by us in this release, or elsewhere, speak only as of the date on which the statements were made. See also the "Risk Factors" in our 2010 Annual Report on Form 10-K and subsequent filings with the SEC which are currently available on our website at www.walterenergy.com. New risks and uncertainties arise from time to time, and it is impossible for us to predict these events or how they may affect us or our anticipated results. We have no duty to, and do not intend to, update or revise the forward-looking statements in this release, except as may be required by law. In light of these risks and uncertainties, readers should keep in mind that any forward-looking statements made in this press release may not occur. All data presented herein is as of the date of this release unless otherwise noted.
WALTER ENERGY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
($ in thousands, except per share and share amounts)
Unaudited
For the three months
ended September 30,
------------------------
2011 (1) 2010
----------- -----------
Revenues:
Sales $ 685,052 $ 460,163
Miscellaneous income 5,017 4,099
----------- -----------
690,069 464,262
----------- -----------
Costs and expenses:
Cost of sales (exclusive of depreciation and
depletion) 425,487 200,498
Depreciation and depletion 63,046 25,905
Selling, general and administrative (2) 43,122 19,703
Postretirement benefits 9,764 10,369
----------- -----------
541,419 256,475
----------- -----------
Operating income 148,650 207,787
Interest expense (27,642) (4,179)
Interest income 40 175
Other loss (3) (13,143) -
----------- -----------
Income from continuing operations before income
taxes 107,905 203,783
Income tax expense 31,684 66,811
----------- -----------
Income from continuing operations 76,221 136,972
Discontinued operations (4) - (757)
----------- -----------
Net income $ 76,221 $ 136,215
=========== ===========
Basic income per share:
Income from continuing operations $ 1.22 $ 2.59
Discontinued operations - (0.02)
----------- -----------
Net income $ 1.22 $ 2.57
=========== ===========
Weighted average number of shares outstanding (5) 62,413,694 52,919,764
=========== ===========
Diluted income per share:
Income from continuing operations $ 1.21 $ 2.57
Discontinued operations - (0.02)
----------- -----------
Net income $ 1.21 $ 2.55
=========== ===========
Weighted average number of diluted shares
outstanding (5) 62,758,658 53,392,885
=========== ===========
(1) Includes the results of Western Coal Corp. since the April 1, 2011 date
of acquisition as well as the effect of related purchase accounting as
detailed within the Supplemental Information exhibits.
(2) The 2011 third quarter includes $6.1 million of costs associated with
the acquisition of Western Coal Corp.
(3) The 2011 third quarter includes losses on the sale and remeasurement to
fair value of equity investments.
(4) Discontinued operations includes the results of our closed Homebuilding
and Kodiak operations for the third quarter 2010.
(5) The 2011 third quarter weighted average number of shares outstanding
includes the issuance of 8,951,558 common shares on April 1, 2011 in
connection with the acquisition of Western Coal Corp.
WALTER ENERGY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
($ in thousands, except per share and share amounts)
Unaudited
For the nine months
ended September 30,
------------------------
2011 (1) 2010
----------- -----------
Revenues:
Sales $ 1,858,343 $ 1,173,982
Miscellaneous income 13,460 12,951
----------- -----------
1,871,803 1,186,933
----------- -----------
Costs and expenses:
Cost of sales (exclusive of depreciation and
depletion) 1,106,008 574,095
Depreciation and depletion 180,830 71,959
Selling, general and administrative (2) 132,525 60,453
Postretirement benefits 30,374 31,099
----------- -----------
1,449,737 737,606
----------- -----------
Operating income 422,066 449,327
Interest expense (63,245) (13,120)
Interest income 356 633
Other income, net (3) 11,360 -
----------- -----------
Income from continuing operations before income
taxes 370,537 436,840
Income tax expense 105,145 141,063
----------- -----------
Income from continuing operations 265,392 295,777
Discontinued operations (4) - (1,848)
----------- -----------
Net income $ 265,392 $ 293,929
=========== ===========
Basic income per share:
Income from continuing operations $ 4.45 $ 5.56
Discontinued operations - (0.04)
----------- -----------
Net income $ 4.45 $ 5.52
=========== ===========
Weighted average number of shares outstanding (5) 59,601,241 53,224,084
=========== ===========
Diluted income per share:
Income from continuing operations $ 4.43 $ 5.50
Discontinued operations - (0.03)
----------- -----------
Net income $ 4.43 $ 5.47
=========== ===========
Weighted average number of diluted shares
outstanding (5) 59,972,442 53,771,716
=========== ===========
(1) Includes the results of Western Coal Corp since the April 1, 2011 date
of acquisition as well as the effect of related purchase accounting as
detailed within the Supplemental Information exhibits.
(2) The 2011 period includes $23.1 million of costs associated with the
acquisition of Western Coal Corp.
(3) The 2011 period includes a gain recognized on April 1, 2011 of $20.6
million as a result of remeasuring to fair value Western shares acquired
from Audley Capital in January 2011, partially offset by a net loss on
the sale and remeasurment to fair value of our other equity investments.
(4) Discontinued operations includes the results of our closed Homebuilding
and Kodiak operations for the 2010 period.
(5) The 2011 period weighted average number of shares outstanding includes
the issuance of 8,951,558 common shares on April 1, 2011 in connection
with the acquisition of Western Coal Corp.
WALTER ENERGY, INC. AND SUBSIDIARIES
RESULTS BY OPERATING SEGMENT
($ in thousands)
Unaudited
For the three months For the nine months
ended September 30, ended September 30,
------------------------ ------------------------
2011 2010 2011 2010
----------- ----------- ----------- -----------
REVENUES: (1)
U.S. Operations $ 467,130 $ 463,478 $ 1,381,918 $ 1,184,783
Canadian and U.K.
Operations 222,681 - 488,256 -
Other 258 784 1,629 2,150
----------- ----------- ----------- -----------
Revenues $ 690,069 $ 464,262 $ 1,871,803 $ 1,186,933
=========== =========== =========== ===========
OPERATING INCOME (LOSS):
(1)
U.S. Operations $ 112,867 $ 215,518 $ 420,511 $ 477,010
Canadian and U.K.
Operations 50,195 - 62,643 -
Other (2) (14,412) (7,731) (61,088) (27,683)
----------- ----------- ----------- -----------
Operating income $ 148,650 $ 207,787 $ 422,066 $ 449,327
=========== =========== =========== ===========
DEPRECIATION AND
DEPLETION: (1)
U.S. Operations $ 46,732 $ 25,733 $ 114,170 $ 71,623
Canadian and U.K.
Operations 16,124 - 66,089 -
Other 190 172 571 336
----------- ----------- ----------- -----------
Depreciation and
Depletion $ 63,046 $ 25,905 $ 180,830 $ 71,959
=========== =========== =========== ===========
CAPITAL EXPENDITURES:
(1)
U.S. Operations $ 41,435 $ 35,147 $ 126,543 $ 76,008
Canadian and U.K.
Operations 115,426 - 166,837 -
Other 99 43 (3) 4,222
----------- ----------- ----------- -----------
Capital Expenditures $ 156,960 $ 35,190 $ 293,377 $ 80,230
=========== =========== =========== ===========
(1) Beginning in the second quarter of 2011 the Company reports all
operations located in the U.S. under the U.S. Operations segment which
includes Walter Energy's historical operating segments of Underground
Mining, Surface Mining and Walter Coke along with the West Virginia
mining operations acquired through the April 1, 2011 acquisition of
Western Coal Corp. The Company reports its mining operations located in
northeast British Columbia (Canada) and South Wales (United Kingdom),
both acquired through the Western Coal Corp. acquisition, under the
Canadian and U.K. Operations segment. The Other segment primarily
includes corporate expenses.
(2) Amounts for the three and nine months ended September 30, 2011 include
$6.1 million and $23.1 million, respectively, of costs associated with
the April 1, 2011 acquisition of Western.
WALTER ENERGY, INC. AND SUBSIDIARIES
QUARTERLY STATISTICAL RESULTS AND FOURTH QUARTER GUIDANCE BY OPERATING
SEGMENT AND MAJOR PRODUCT
(Ton information in thousand metric tons and dollars in USD)
Consolidated Statistical
Information by Major
Product
3 months 3 months 3 months
ended ended ended
September September June 30, 3 months ending
30, 2011 30, 2010 2011 December 31, 2011
Actual Actual Actual Guidance
--------- --------- --------- -------------------
Hard Coking Low High
Sales Metric Tons 1,588 1,638 2,023 2,100 2,300
Production Metric Tons 1,678 1,696 1,996 2,230 2,425
Average Net Selling
Price $ 263.23 $ 228.94 $ 242.99 $ 248.00 $ 262.00
Average Cash Cost per
Ton (1)(2) $ 132.14 $ 83.13 $ 110.11 $ 107.00 $ 122.00
Low Vol PCI
Sales Metric Tons 562 - 645 450 530
Production Metric Tons 587 - 495 580 650
Average Net Selling
Price $ 209.12 - $ 207.92 $ 190.00 $ 200.00
Average Cash Cost per
Ton (1)(2) $ 143.42 - $ 142.79 $ 145.00 $ 155.00
Thermal
Sales Metric Tons 1,337 269 1,041 965 1,080
Production Metric Tons 1,359 290 914 865 980
Average Net Selling
Price $ 71.40 $ 82.39 $ 73.80 $ 65.00 $ 76.00
Average Cash Cost per
Ton (1)(2) $ 63.58 $ 68.04 $ 76.66 $ 60.00 $ 71.00
Total All
Sales Metric Tons 3,487 1,907 3,708 3,515 3,910
Production Metric Tons 3,625 1,986 3,404 3,675 4,055
Average Net Selling
Price $ 180.96 $ 208.27 $ 189.41 $ 190.00 $ 202.00
Average Cash Cost per
Ton (1)(2) $ 107.67 $ 81.00 $ 106.40 $ 99.00 $ 112.00
US Segment Statistical
Information by Major
Product
3 months 3 months 3 months
ended ended ended
September September June 30, 3 months ending
30, 2011 30, 2010 2011 December 31, 2011
Actual Actual Actual Guidance
--------- --------- --------- -------------------
Hard Coking Low High
Sales Metric Tons 1,232 1,638 1,546 1,670 1,800
Production Metric Tons 1,307 1,696 1,648 1,800 1,925
Average Net Selling
Price $ 259.38 $ 228.94 $ 237.03 $ 245.00 $ 260.00
Average Cash Cost per
Ton (1)(2) $ 126.03 $ 83.13 $ 98.06 $ 100.00 $ 115.00
Thermal
Sales Metric Tons 1,302 269 1,014 950 1,050
Production Metric Tons 1,329 290 881 850 950
Average Net Selling
Price $ 70.35 $ 82.39 $ 72.66 $ 65.00 $ 75.00
Average Cash Cost per
Ton (1)(2) $ 61.85 $ 68.04 $ 69.77 $ 60.00 $ 70.00
Total All
Sales Metric Tons 2,535 1,907 2,560 2,620 2,850
Production Metric Tons 2,637 1,986 2,529 2,650 2,875
Average Net Selling
Price $ 162.25 $ 208.27 $ 171.93 $ 180.00 $ 192.00
Average Cash Cost per
Ton (1)(2) $ 93.06 $ 81.00 $ 86.86 $ 85.00 $ 98.00
Canada and UK Segment
Statistical Information by
Major Product
3 months 3 months 3 months
ended ended ended
September September June 30, 3 months ending
30, 2011 30, 2010 2011 December 31, 2011
Actual Actual Actual Guidance
--------- --------- --------- -------------------
Hard Coking Low High
Sales Metric Tons 356 - 476 430 500
Production Metric Tons 371 - 347 430 500
Average Net Selling
Price $ 276.56 - $ 262.35 $ 260.00 $ 270.00
Average Cash Cost per
Ton (1)(2) $ 153.26 - $ 149.23 $ 135.00 $ 145.00
Low Vol PCI
Sales Metric Tons 562 - 645 450 530
Production Metric Tons 587 - 495 580 650
Average Net Selling
Price $ 209.12 - $ 207.92 $ 190.00 $ 200.00
Average Cash Cost per
Ton (1)(2) $ 143.42 - $ 142.79 $ 145.00 $ 155.00
Thermal
Sales Metric Tons 35 - 27 15 30
Production Metric Tons 30 - 33 15 30
Average Net Selling
Price $ 111.13 - $ 116.90 $ 95.00 $ 115.00
Average Cash Cost per
Ton (1)(2) $ 128.70 - $ 336.82 $ 90.00 $ 105.00
Total All
Sales Metric Tons 952 - 1,148 895 1,060
Production Metric Tons 988 - 875 1,025 1,180
Average Net Selling
Price $ 230.78 - $ 228.38 $ 222.00 $ 231.00
Average Cash Cost per
Ton (1)(2) $ 146.57 - $ 150.00 $ 139.00 $ 149.00
(1) Average Cash Cost per Ton is based on reported Cost of Sales and
includes items such as freight, royalties, manpower, fuel and other
similar production and sales cost items but excludes depreciation,
depletion and post retirement benefits. Average Cash Cost per Ton is a
non-GAAP financial measure which is not calculated in conformity with
U.S. Generally Accepted Accounting Principles (GAAP) and should be
considered supplemental to, and not as a substitute or superior to
financial measures calculated in conformity with GAAP. We believe Cash
Cost per Ton is a useful measure as our management uses that as a
measure of performance and we believe it aids some investors and
analysts in comparing us against other companies to help analyze our
current and future potential performance.
(2) Reconcilliation of Cash Cost per Ton to Cost of Sales as disclosed (in
thousands USD):
3 months 3 months 3 months
ended ended ended
September September June 30,
30, 2011 30, 2010 2011
Actual Actual Actual
--------- --------- ---------
Cash Costs as Calculated
from Above (sales tons
times average cash cost
per ton) $ 375,405 $ 154,503 $ 394,563
Cash Costs of Other
Products 45,285 45,995 44,276
Purchase Accounting One-
Time Effects on Cost of
Sales 4,797 23,222
--------- --------- ---------
Total Cost of Sales $ 425,487 $ 200,498 $ 462,061
========= ========= =========
WALTER ENERGY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
($ in thousands)
Unaudited
As of
---------------------------
September 30, December 31,
2011 (1) (2) 2010
------------- -------------
ASSETS
Cash and cash equivalents $ 185,146 $ 293,410
Receivables, net 252,482 143,238
Inventories 226,566 97,631
Deferred income taxes 42,287 62,371
Prepaid expenses 63,887 28,179
Other current assets 49,238 10,710
------------- -------------
Total current assets 819,606 635,539
Mineral interests, net 4,370,073 17,305
Property, plant and equipment, net 1,550,004 772,696
Deferred income taxes - 149,520
Goodwill 278,425 -
Other long-term assets 153,839 82,705
------------- -------------
TOTAL ASSETS $ 7,171,947 $ 1,657,765
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current debt $ 97,426 $ 13,903
Accounts payable 137,690 70,692
Accrued expenses 238,001 52,399
Accumulated postretirement benefits obligation 25,692 24,753
Other current liabilities 30,358 32,100
------------- -------------
Total current liabilities 529,167 193,847
Long-term debt 2,327,313 154,570
Deferred income taxes 1,395,199 -
Accumulated postretirement benefits obligation 464,710 451,348
Other long-term liabilities 348,236 262,934
------------- -------------
TOTAL LIABILITIES 5,064,625 1,062,699
STOCKHOLDERS' EQUITY 2,107,322 595,066
------------- -------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 7,171,947 $ 1,657,765
============= =============
(1) Includes accounts of Western Coal Corp. acquired on April 1, 2011. The
purchase price has been preliminarily allocated to the assets acquired
and liabilities assumed based on their estimated fair values at the date
of acquisition. A full and detailed valuation of the assets and
liabilities is being completed and certain information and analysis
remains pending at this time. Accordingly, the allocation is preliminary
and is expected to change as additional information becomes available
and is assessed by the Company. The impact of such changes may be
material.
(2) In January 2011, we acquired approximately 25.3 million common shares of
Western Coal Corp. from funds advised by Audley Capital for $293.7
million in cash. On April 1, 2011 we acquired the remaining common
shares of Western Coal Corp. for $3.4 billion, funded through $2.2
billion in long-term debt and the issue of approximately 9.0 million
common shares valued at $1.2 billion.
WALTER ENERGY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
AND COMPREHENSIVE INCOME
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2011
($ in thousands)
Unaudited
Capital in
Common Excess of Comprehensive
Total Stock Par Value Income
----------- ------- ----------- -------------
Balance at December 31,
2010 $ 595,066 $ 531 $ 355,540
Comprehensive income:
Net income 265,392 $ 265,392
Other comprehensive
income:
Change in pension and
postretirement benefit
plans, net of tax 9,320 9,320
Change in unrealized loss
on investments, net of
tax (1,192) (1,192)
Change in unrealized loss
on hedges, net of tax (2,147) (2,147)
Change in foreign
currency translation
adjustment (266) (266)
-------------
Comprehensive income $ 271,107
=============
Stock issued upon the
exercise of stock options 8,878 3 8,875
Dividends paid, $0.375 per
share (22,236)
Stock-based compensation 7,809 7,809
Excess tax benefit from
stock-based
compensation arrangements 8,946 8,946
Issuance of common stock
in connection with the
Western acquisition 1,224,126 90 1,224,036
Replacement stock options
and warrants issued
in connection with the
Western acquisition 18,844 - 18,844
Other (5,218) - (5,218)
----------- ------- -----------
Balance at September 30,
2011 $ 2,107,322 $ 624 $ 1,618,832
=========== ======= ===========
Accumulated
Other
Retained Comprehensive
Earnings Loss
---------- -------------
Balance at December 31,
2010 $ 411,383 $ (172,388)
Comprehensive income:
Net income 265,392
Other comprehensive
income:
Change in pension and
postretirement benefit
plans, net of tax 9,320
Change in unrealized loss
on investments, net of
tax (1,192)
Change in unrealized loss
on hedges, net of tax (2,147)
Change in foreign
currency translation
adjustment (266)
Comprehensive income
Stock issued upon the
exercise of stock options
Dividends paid, $0.375 per
share (22,236)
Stock-based compensation
Excess tax benefit from
stock-based
compensation arrangements
Issuance of common stock
in connection with the
Western acquisition
Replacement stock options
and warrants issued
in connection with the
Western acquisition
Other
---------- -------------
Balance at September 30,
2011 $ 654,539 $ (166,673)
========== =============
WALTER ENERGY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
($ in thousands)
Unaudited
For the nine months
ended September 30,
-----------------------
2011 (1) 2010
----------- -----------
OPERATING ACTIVITIES
Net income $ 265,392 $ 293,929
Loss from discontinued operations - 1,848
----------- -----------
Income from continuing operations 265,392 295,777
Adjustments to reconcile income from continuing
operations to net cash flows provided by operating
activities:
Depreciation and depletion 180,830 71,959
Deferred income taxes (19,138) 85,703
Gain on investment in Western Coal Corp. (20,553) -
Other 29,098 (12,553)
Decrease (increase) in current assets, net of
effect of business acquisitions:
Receivables 30,655 (91,783)
Inventories (1,560) 12,580
Other current assets 19,496 12,839
Increase in current liabilities, net of effect of
business acquisitions:
Accounts payable 24,645 14,966
Accrued expenses and other current liabilities 764 33,584
----------- -----------
Cash flows provided by operating activities 509,629 423,072
----------- -----------
INVESTING ACTIVITIES
Additions to property, plant and equipment (293,377) (80,230)
Acquisition of Western Coal Corp., net of cash
acquired (2,432,693) -
Acquisition of HighMount Exploration & Production
Alabama, LLC. - (209,964)
Proceeds from the sales of investments 27,325 -
Other 814 (4,105)
----------- -----------
Cash flows used in investing activities (2,697,931) (294,299)
----------- -----------
FINANCING ACTIVITIES
Proceeds from issuance of debt 2,350,000 -
Borrowings under revolving credit agreement 41,461 -
Repayments on revolving credit agreement (41,461) -
Retirements of debt (165,024) (19,711)
Dividends paid (22,236) (18,654)
Purchases of stock under stock repurchase program - (65,438)
Debt issuance costs (80,027) -
Other (1,197) 30,043
----------- -----------
Cash flows provided by (used in) financing
activities 2,081,516 (73,760)
----------- -----------
Cash flows provided by (used in) continuing
operations (106,786) 55,013
----------- -----------
CASH FLOWS FROM DISCONTINUED OPERATIONS
Cash flows used in operating activities - (6,146)
Cash flows provided by investing activities - 3,453
Cash flows provided by (used in) financing
activities - -
----------- -----------
Cash flows used in discontinued operations - (2,693)
----------- -----------
EFFECT OF FOREIGN EXCHANGE RATES ON CASH (2,013) -
----------- -----------
Net increase (decrease) in cash and cash
equivalents $ (108,799)$ 52,320
=========== ===========
Cash and cash equivalents at beginning of period $ 293,410 $ 165,279
Add: Cash and cash equivalents of discontinued
operations at beginning of period 535 1,254
Net increase (decrease) in cash and cash
equivalents (108,799) 52,320
Less: Cash and cash equivalents of discontinued
operations at end of period - 434
----------- -----------
Cash and cash equivalents at end of period $ 185,146 $ 218,419
=========== ===========
(1) Includes the results of Western Coal Corp. since the April
1, 2011 acquisition date.
WALTER ENERGY, INC. AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
Unaudited
RECONCILIATION OF EBITDA TO AMOUNTS
REPORTED UNDER US GAAP:
For the three months For the nine months
ended ended
September 30, September 30,
------------------------- -----------------------
($ in thousands) 2011 2010 2011 2010
------------ ------------ ----------- -----------
Net income $ 76,221 $ 136,215 $ 265,392 $ 293,929
Add interest expense 27,642 4,179 63,245 13,120
Less interest income (40) (175) (356) (633)
Add income tax expense 31,684 66,811 105,145 141,063
Add depreciation and
depletion expense 63,046 25,905 180,830 71,959
Add loss from
discontinued operations - 757 - 1,848
------------ ------------ ----------- -----------
Earnings from continuing
operations before
interest, income taxes,
and depreciation and
depletion (EBITDA) (1) $ 198,553 $ 233,692 $ 614,256 $ 521,286
============ ============ =========== ===========
(1) EBITDA is defined as earnings from continuing operations before interest
expense, interest income, income taxes, and depreciation and depletion
expense. EBITDA is a financial measure which is not calculated in
conformity with U.S. Generally Accepted Accounting Principles (GAAP) and
should be considered supplemental to, and not as a substitute or
superior to financial measures calculated in conformity with GAAP. We
believe that EBITDA is a useful measure as some investors and analysts
use EBITDA to compare us against other companies and to help analyze our
ability to satisfy principal and interest obligations and capital
expenditure needs. EBITDA may not be comparable to similarly titled
measures used by other entities.
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Contact:
Paul Blalock
Head - Investor Relations
1 205 745 2627
paul.blalock@walterenergy.com
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