BIRMINGHAM, AL -- (Marketwire) -- 08/01/12 -- Walter Energy Inc. (NYSE: WLT) (TSX: WLT)
- Revenues of $678 Million; EPS of $0.51
- Operating Income of $68 Million; EBITDA of $145 Million
- EPS of $0.43 from Continuing Operations; EBITDA of $137 Million from Continuing Operations
- Metallurgical Coal Production of 2.91 Million Metric Tons
- Metallurgical Coal Sales of 2.84 Million Metric Tons
Walter Energy Inc. (NYSE: WLT) (TSX: WLT), the world's leading, publicly traded "pure-play" producer of metallurgical (met) coal for the global steel industry, today announced results for the second quarter ended June 30, 2012.
For the second quarter 2012, revenues were $678 million as compared with $632 million in the first quarter and $771 million in the second quarter of 2011. Operating income in the second quarter was $68 million as compared with $84 million in the first quarter and $164 million in the second quarter of 2011. Net income for the quarter was $32 million or $0.51 per diluted share, $27 million or $0.43 per diluted share from continuing operations, compared with $41 million or $0.65 per diluted share in the first quarter, and $114 million or $1.83 per diluted share in the second quarter of 2011. The second quarter included a $5.2 million gain net of tax from the sale of a discontinued operation.
"Our metallurgical coal products continued to provide solid results," said Walt Scheller, Chief Executive Officer. "Metallurgical coal production of 2.91 million metric tons was in-line with our expectations and was achieved while further improving our safety record. Our overall costs were flat when compared with the first quarter, as improvements in the cost performance of hard coking coal production were mitigated by higher costs in producing low-vol PCI. We remain cautious for the outlook of the global economy and are focusing on cost reductions, restraining discretionary capital spending and stringently managing cash flow."
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Q2 2012 Q1 2012 Q2 2011
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Revenues (millions) $678 $632 $771
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Operating Income (millions) $68 $84 $164
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Net Income (millions) $32 $41 $114
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Reported EPS - Diluted $0.51 $0.65 $1.83
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Average Shares - Diluted (millions) 62.8 62.7 62.7
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EBITDA (millions) $145* $144 $261
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Met Coal Sales (MMTs)** 2.84 2.37 2.67
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Met Coal Production (MMTs) 2.91 2.96 2.49
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* EBITDA from continuing operations of $137 million, excluding a $8.3 million gain on the sale of a discontinued operation
** Million metric tons
Metallurgical Sales Volume and Pricing
Second quarter 2012 met coal sales volume, including both hard coking coal (HCC) and low-volatility (vol) PCI, was a record 2.84 MMTs, an increase of 20 percent over first quarter sales volume of 2.37 MMTs. HCC sales volume was 2.29 MMTs, an increase of 23 percent compared with 1.86 MMTs in the first quarter 2012. PCI sales volume was 0.55 MMTs, up from 0.51 MMTs in the prior quarter.
The average second quarter 2012 selling price of low-vol and mid-vol HCC was $201 per MT, 11 percent lower than the first quarter. The average second quarter selling price for low-vol PCI was $164 per MT, a decrease of 13 percent from the first quarter.
Metallurgical Coal Production
Consolidated met coal production was 2.91 MMTs in the second quarter of 2012, comprised of 2.19 MMTs of hard coking coal or 75% of met production, and 720 thousand MTs of low-vol PCI coal or 25% of met production.
Cash Costs
The consolidated cash cost for HCC was $115 per MT in the second quarter, as compared with $116 per MT in the first quarter 2012. In the U.S. operations, the cash cost of HCC decreased to $107 per MT compared with $110 per MT the prior quarter. In the Canadian and U.K. operations, the cash cost of HCC was $144 per MT in the second quarter of 2012, down from $145 per MT in the first quarter 2012.
The cash cost for low-vol PCI was $218 per MT in the second quarter compared with $208 per MT in the first quarter as a result of higher mining waste removal volumes at the Brule PCI mine. The cash cost at the Willow Creek mine decreased to $259 per MT in the second quarter from $449 in the first quarter, and Willow Creek production increased from 120 thousand MTs in the first quarter to 154 thousand MTs in the second quarter.
Capital Expenditures
The Company's capital expenditures for the second quarter were $125 million and were $246 million for the first six months of 2012. The Company has reduced its planned 2012 capital spending to approximately $400 million from our initial plan of nearly $500 million.
2012 Production Guidance
The Company continues to forecast full-year 2012 met coal production between 11.5 and 13.0 MMTs, of which an estimated 75 percent to 80 percent will be HCC and the remainder will be low-vol PCI.
Liquidity
At the end of the second quarter 2012, available liquidity was $396 million, consisting of cash and cash equivalents of $129 million plus $267 million of availability under the Company's $375 million revolving credit facility. The Company repaid $100 million in aggregate of its term loan A and B obligations in the second quarter.
Safety and Stewardship Highlights
Walter Energy's U.S. operations reduced its total recordable injury rate by 34 percent in the second quarter of 2012 compared with the same period last year. Canadian and U.K. operations reduced their total reportable injury rate by 26 percent compared with the same period last year.
The Company is also pleased to announce that it received a Vision Award from the League of American Communications Professionals (LACP) in July for its 2011 Annual Report. In the annual report competition, Walter Energy rated Gold in a tie for second place in the energy sector for firms in the $1 billion to $10 billion revenue category.
Use of Non-GAAP Measures
This release contains the use of certain U.S. non-GAAP (Generally Accepted Accounting Principles) measures. These non-GAAP measures are provided as supplemental information for financial measures prepared in accordance with GAAP. Management believes that these non-GAAP measures provide additional insights into the performance of the Company, 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 webcast to discuss second quarter 2012 results on Thursday, August 2, 2012, at 9 a.m. ET. To listen to the live event, visit www.walterenergy.com.
About Walter Energy
Walter Energy is the world's leading, publicly traded "pure-play" metallurgical coal producer for global industry with strategic access to high-growth steel markets in Asia, South America and Europe. The Company also produces thermal coal, anthracite, metallurgical coke and coal bed methane gas. 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 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 2011 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 statement 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
AND COMPREHENSIVE INCOME
($ in thousands, except per share and share amounts)
Unaudited
For the three months
ended June 30,
------------------------
Recast
2012 2011(1)
----------- -----------
Revenues:
Sales $ 668,605 $ 764,587
Miscellaneous income 8,969 6,284
----------- -----------
677,574 770,871
----------- -----------
Costs and expenses:
Cost of sales (exclusive of depreciation and
depletion) 486,084 466,074
Depreciation and depletion 74,459 72,470
Selling, general and administrative (2) 35,845 57,521
Postretirement benefits 13,213 10,343
----------- -----------
609,601 606,408
----------- -----------
Operating income 67,973 164,463
Interest expense (31,104) (32,047)
Interest income 341 160
Other income (loss) (3) (5,919) 24,503
----------- -----------
Income from continuing operations before income
tax expense 31,291 157,079
Income tax expense (4) 4,535 42,626
----------- -----------
Income from continuing operations 26,756 114,453
Income from discontinued operations (5) 5,180 -
----------- -----------
Net Income $ 31,936 $ 114,453
=========== ===========
Basic income per share:
Income from continuing operations $ 0.43 $ 1.84
Income from discontinued operations 0.08 -
----------- -----------
Net Income $ 0.51 $ 1.84
=========== ===========
Weighted average number of shares outstanding 62,537,177 62,312,691
=========== ===========
Diluted income per share:
Income from continuing operations $ 0.43 $ 1.83
Income from discontinued operations 0.08 -
----------- -----------
Net Income $ 0.51 $ 1.83
=========== ===========
Weighted average number of diluted shares
outstanding 62,780,225 62,706,063
=========== ===========
Comprehensive income $ 30,637 $ 101,722
=========== ===========
(1) Certain previously reported three months ended June 30, 2011 balances
have been recast to reflect the effects of finalizing the allocation of
the Western Coal purchase price during the 2012 first quarter. Previously
reported net income increased by $7.1 million and diluted earnings per
share increased by $0.12 per share.
(2) The 2011 second quarter includes $7.2 million of costs associated with
the acquisition of Western Coal.
(3) The 2012 second quarter includes losses on the remeasurement to fair
value of equity investments. The 2011 second quarter includes a gain
recognized on April 1, 2011 of $20.6 million as a result of remeasuring to
fair value Western Coal shares acquired from Audley Capital in January
2011.
(4) The provision for income taxes in the second quarter of 2012 at a rate
of 14.5% is based on an estimated effective annual tax rate for the year
as compared to 27.1% for the second quarter of 2011. The effective tax
rate for the second quarter of 2012 is lower than the second quarter 2011
tax rate, primarily due to a larger favorable impact of percentage
depletion and the change in the geographical mix of foreign income and
losses.
(5) Discontinued operations includes the gain on the sale of our closed
Kodiak operations, net of tax.
WALTER ENERGY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE INCOME
($ in thousands, except per share and share amounts)
Unaudited
For the six months
ended June 30,
------------------------
Recast
2012 2011(1)
----------- -----------
Revenues:
Sales $ 1,295,903 $ 1,171,162
Miscellaneous income 13,234 8,443
----------- -----------
1,309,137 1,179,605
----------- -----------
Costs and expenses:
Cost of sales (exclusive of depreciation and
depletion) 917,618 684,534
Depreciation and depletion 140,952 100,828
Selling, general and administrative (2) 72,092 89,403
Postretirement benefits 26,426 20,610
----------- -----------
1,157,088 895,375
----------- -----------
Operating income 152,049 284,230
Interest expense (59,171) (35,603)
Interest income 618 316
Other income (loss) (3) (12,912) 24,503
----------- -----------
Income from continuing operations before income
tax expense 80,584 273,446
Income tax expense (4) 13,212 77,180
----------- -----------
Income from continuing operations 67,372 196,266
Income from discontinued operations (5) 5,180 -
----------- -----------
Net Income $ 72,552 $ 196,266
=========== ===========
Basic income per share:
Income from continuing operations $ 1.08 $ 3.36
Income from discontinued operations 0.08 -
----------- -----------
Net Income $ 1.16 $ 3.36
=========== ===========
Weighted average number of shares outstanding (6) 62,502,508 58,389,805
=========== ===========
Diluted income per share:
Income from continuing operations $ 1.08 $ 3.34
Income from discontinued operations 0.08 -
----------- -----------
Net Income $ 1.16 $ 3.34
=========== ===========
Weighted average number of diluted shares
outstanding (6) 62,758,532 58,759,784
=========== ===========
Comprehensive income $ 75,918 $ 196,192
=========== ===========
(1) Includes the results of Western Coal since the April 1, 2011 date of
acquisition. Certain previously reported six months ended June 30, 2011
balances have been recast to reflect the effects of finalizing the
allocation of the Western Coal purchase price during the 2012 first
quarter. Previously reported net income increased by $7.1 million and
diluted earnings per share increased by $0.12 per share.
(2) The 2011 period includes $17.1 million of costs associated with the
acquisition of Western Coal.
(3) The 2012 period includes losses on the sale and remeasurement to fair
value of equity investments. The 2011 period includes a gain recognized on
April 1, 2011 of $20.6 million as a result of remeasuring to fair value
Western Coal shares acquired from Audley Capital in January 2011.
(4) The provision for income taxes for the 2012 period at a rate of 16.4%
is based on an estimated effective annual tax rate for the year as
compared to 28.2% for the 2011 period. The effective tax rate for 2012 is
lower than the 2011 tax rate, primarily due to a larger favorable impact
of percentage depletion and the change in the geographical mix of foreign
income and losses.
(5) Discontinued operations includes the gain on the sale of our closed
Kodiak operations, net of tax.
(6) The 2011 period weighted average number of shares outstanding includes
the issuance of 8,951,558 common shares on April 1, 2011 in connection
with the acquisition of Western Coal.
WALTER ENERGY, INC. AND SUBSIDIARIES
RESULTS BY OPERATING SEGMENT
($ in thousands)
Unaudited
For the three months For the six months
ended June 30, ended June 30,
---------------------- ----------------------
Recast Recast
2012 2011(1) 2012 2011(1)
---------- ---------- ---------- ----------
REVENUES:
U.S. Operations $ 466,761 $ 511,080 $ 918,911 $ 919,016
Canadian and U.K. Operations 209,645 259,218 387,996 259,218
Other 1,168 573 2,230 1,371
---------- ---------- ---------- ----------
Revenues $ 677,574 $ 770,871 $1,309,137 $1,179,605
========== ========== ========== ==========
OPERATING INCOME (LOSS):
U.S. Operations $ 107,245 $ 173,133 $ 214,226 $ 312,106
Canadian and U.K. Operations (24,679) 18,800 (38,234) 18,800
Other (2) (14,593) (27,470) (23,943) (46,676)
---------- ---------- ---------- ----------
Operating income $ 67,973 $ 164,463 $ 152,049 $ 284,230
========== ========== ========== ==========
DEPRECIATION AND DEPLETION:
U.S. Operations $ 43,704 $ 39,035 $ 85,846 $ 67,204
Canadian and U.K. Operations 30,535 33,243 54,671 33,243
Other 220 192 435 381
---------- ---------- ---------- ----------
Depreciation and Depletion $ 74,459 $ 72,470 $ 140,952 $ 100,828
========== ========== ========== ==========
CAPITAL EXPENDITURES:
U.S. Operations $ 43,851 $ 40,972 $ 79,963 $ 85,108
Canadian and U.K. Operations 78,177 51,411 162,357 51,411
Other 3,183 (259) 3,736 (102)
---------- ---------- ---------- ----------
Capital Expenditures $ 125,211 $ 92,124 $ 246,056 $ 136,417
========== ========== ========== ==========
(1) Includes the results of Western Coal since the April 1, 2011 date of
acquisition. Certain previously reported three and six months ended June
30, 2011 balances have been recast to reflect the effects of finalizing
the allocation of the Western Coal purchase price during the 2012 first
quarter.
(2) Amounts for the three and six months ended June 30, 2011 include $7.2
million and $17.1 million, respectively, of costs associated with the
April 1, 2011 acquisition of Western Coal.
WALTER ENERGY, INC. AND SUBSIDIARIES
QUARTERLY STATISTICAL RESULTS 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 ended June 3 months
ended June 30, 2011, ended March
30, 2012 Recast (1) 31, 2012
----------- ----------- -----------
Total Metallurgical
Sales Metric Tons 2,842 2,667 2,367
Production Metric Tons 2,910 2,491 2,964
Average Net Selling Price $ 193.31 $ 233.28 $ 217.95
Average Cash Cost per Ton (2)(3) $ 135.15 $ 118.01 $ 136.04
Hard Coking
Sales Metric Tons 2,290 2,023 1,857
Production Metric Tons 2,190 1,996 2,378
Average Net Selling Price $ 200.50 $ 241.82 $ 226.21
Average Cash Cost per Ton (2)(3) $ 115.29 $ 110.11 $ 116.35
Low Vol PCI
Sales Metric Tons 552 645 510
Production Metric Tons 720 495 586
Production Metric Tons - Willow
Creek (4) 154 178 120
Production Metric Tons - All other 566 317 466
Average Net Selling Price $ 163.51 $ 206.48 $ 187.91
Average Cash Cost per Ton (2)(3) $ 217.50 $ 142.79 $ 207.70
Average Cash Cost per Ton - Willow
Creek (2)(3)(4) $ 258.86 $ 142.57 $ 448.87
Average Cash Cost per Ton - All
other (2)(3) $ 203.32 $ 142.94 $ 159.16
Thermal
Sales Metric Tons 891 1,041 807
Production Metric Tons 925 914 847
Average Net Selling Price $ 69.40 $ 74.93 $ 72.78
Average Cash Cost per Ton (2)(3) $ 66.17 $ 76.66 $ 79.87
US Segment Statistical Information by
Major Product
3 months
3 months ended June 3 months
ended June 30, 2011, ended March
30, 2012 Recast (1) 31, 2012
----------- ----------- -----------
Hard Coking
Sales Metric Tons 1,784 1,546 1,535
Production Metric Tons 1,724 1,648 1,969
Average Net Selling Price $ 194.10 $ 239.02 $ 221.22
Average Cash Cost per Ton (2)(3) $ 107.15 $ 98.06 $ 110.33
Thermal
Sales Metric Tons 871 1,014 782
Production Metric Tons 908 881 816
Average Net Selling Price $ 68.11 $ 73.80 $ 71.27
Average Cash Cost per Ton (2)(3) $ 65.33 $ 69.77 $ 78.87
Canada and UK Segment Statistical Information by Major Product
3 months
3 months ended June 3 months
ended June 30, 2011, ended March
30, 2012 Recast (1) 31, 2012
----------- ----------- -----------
Total Metallurgical
Sales Metric Tons 1,058 1,121 832
Production Metric Tons 1,187 842 994
Average Net Selling Price $ 191.99 $ 225.36 $ 211.92
Average Cash Cost per Ton (2)(3) $ 182.34 $ 145.53 $ 183.49
Hard Coking
Sales Metric Tons 506 476 322
Production Metric Tons 466 347 408
Average Net Selling Price $ 223.06 $ 250.92 $ 250.02
Average Cash Cost per Ton (2)(3) $ 143.98 $ 149.23 $ 145.09
Low Vol PCI
Sales Metric Tons 552 645 510
Production Metric Tons 720 495 586
Production Metric Tons - Willow
Creek (4) 154 178 120
Production Metric Tons - All other 566 317 466
Average Net Selling Price $ 163.51 $ 206.48 $ 187.91
Average Cash Cost per Ton (2)(3) $ 217.50 $ 142.79 $ 207.70
Average Cash Cost per Ton - Willow
Creek (2)(3)(4) $ 258.86 $ 142.57 $ 448.87
Average Cash Cost per Ton - All
other (2)(3) $ 203.32 $ 142.94 $ 159.16
Thermal
Sales Metric Tons 20 27 25
Production Metric Tons 17 33 30
Average Net Selling Price $ 126.61 $ 117.45 $ 120.96
Average Cash Cost per Ton (2)(3) $ 103.40 $ 337.01 $ 111.86
(1) Certain previously reported three months ended June 30, 2011 statistical
information have been recast to reflect the effects of finalizing the
allocation of the Western Coal purchase price during the 2012 first
quarter.
(2) 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.
(3) Reconciliation of Cash Cost per Ton to Cost of Sales as disclosed (in
thousands USD):
3 months
3 months ended June 3 months
ended June 30, 2011 ended March
30, 2012 Actual, 31, 2012
Actual Recast (1) Actual
----------- ----------- -----------
Cash Costs as calculated from above
(sales tons times average cash cost per
ton) $ 443,023 $ 394,563 $ 386,493
Cash Costs of other products 43,061 44,276 45,041
Purchase Accounting One-Time Effects on
Cost of Sales - 27,235 -
----------- ----------- -----------
Total Cost of Sales $ 486,084 $ 466,074 $ 431,534
=========== =========== ===========
(4) Production and Average Cash Cost per Ton for our Willow Creek mining
operations are separately provided for the current quarter as the Willow
Creek mine is in the development stage and is experiencing higher average
cash cost per ton than the other Canada mines.
WALTER ENERGY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
($ in thousands)
Unaudited
As of
---------------------------
Recast
June 30, December 31,
2012 (1) 2011(1)
------------- -------------
ASSETS
Cash and cash equivalents $ 128,680 $ 128,430
Receivables, net 194,217 313,343
Inventories 316,505 240,437
Deferred income taxes 56,645 61,079
Prepaid expenses 63,733 49,974
Other current assets 36,928 45,649
------------- -------------
Total current assets 796,708 838,912
Mineral interests, net 3,010,448 3,056,258
Property, plant and equipment, net 1,739,506 1,631,333
Deferred income taxes 106,848 109,300
Goodwill 1,066,754 1,066,754
Other long-term assets 134,891 153,951
------------- -------------
TOTAL ASSETS $ 6,855,155 $ 6,856,508
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current debt $ 49,890 $ 56,695
Accounts payable 155,524 112,661
Accrued expenses 233,749 229,067
Accumulated postretirement benefits obligation 28,181 27,247
Other current liabilities 45,885 63,757
------------- -------------
Total current liabilities 513,229 489,427
Long-term debt 2,206,866 2,269,020
Deferred income taxes 1,007,065 1,029,336
Accumulated postretirement benefits obligation 556,758 550,671
Other long-term liabilities 370,908 381,537
------------- -------------
TOTAL LIABILITIES 4,654,826 4,719,991
STOCKHOLDERS' EQUITY 2,200,329 2,136,517
------------- -------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 6,855,155 $ 6,856,508
============= =============
(1) The December 31, 2011 balance sheet has been recast to reflect the
effects of finalizing the allocation of the Western Coal purchase price
during the 2012 first quarter. Retained earnings, a component of
stockholders' equity, was increased by $14.4 million, primarily due to a
decrease in mineral interests depletion net of income tax expense related
to 2011.
WALTER ENERGY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE SIX MONTHS ENDED JUNE 30, 2012
($ in thousands, except per share amounts)
Unaudited
Accumulated
Capital in Other
Common Excess of Retained Comprehensive
Total Stock Par Value Earnings Income (Loss)
---------- ------- ---------- --------- -------------
Balance at December
31, 2011, recast
(1) $2,136,517 $ 624 $1,620,430 $ 744,939 $ (229,476)
Net income 72,552 72,552
Other comprehensive
income, net of tax 3,366 3,366
Stock issued upon
the exercise of
stock options 122 1 121
Dividends paid,
$0.25 per share (15,618) (15,618)
Stock-based
compensation 3,224 3,224
Excess tax benefits
from stock-based
compensation
arrangements 877 877
Other (711) - - (711)
---------- ------- ---------- --------- -------------
Balance at June 30,
2012 $2,200,329 $ 625 $1,624,652 $ 801,162 $ (226,110)
========== ======= ========== ========= =============
(1) Retained earnings as of December 31, 2011 has been recast to reflect
the effects of finalizing the allocation of the Western Coal purchase
price. The balance was increased by $14.4 million primarily due to a
decrease in mineral interests depletion net of income tax expense related
to 2011.
WALTER ENERGY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
($ in thousands)
Unaudited
For the six months ended
June 30,
------------------------
Recast
2012 2011(1)
----------- -----------
OPERATING ACTIVITIES
Net income $ 72,552 $ 196,266
Less income from discontinued operations (5,180) -
----------- -----------
Income from continuing operations 67,372 196,266
Adjustments to reconcile net income to net cash
flows provided by (used in) operating activities:
Depreciation and depletion 140,952 100,828
Deferred income tax credit (18,894) (11,121)
Gain on investment in Western Coal Corp. - (20,553)
Other 18,360 10,247
Decrease (increase) in current assets, net of
effect of business acquisitions:
Receivables 113,203 (41,571)
Inventories (66,213) 38,076
Prepaid expenses and other current assets (22,095) 30
Increase (decrease) in current liabilities, net
of effect of business acquisitions:
Accounts payable 81,684 (29,612)
Accrued expenses and other current liabilities (5,807) 36,769
----------- -----------
Cash flows provided by operating activities 308,562 279,359
----------- -----------
INVESTING ACTIVITIES
Additions to property, plant and equipment (246,056) (136,417)
Acquisition of Western Coal Corp., net of cash
acquired - (2,432,693)
Proceeds from sales of investments 12,228 -
Other 582 5,286
----------- -----------
Cash flows used in investing activities (233,246) (2,563,824)
----------- -----------
FINANCING ACTIVITIES
Proceeds from issuance of debt - 2,350,000
Borrowings under revolving credit agreement 112,350 41,461
Repayments on revolving credit agreement (63,341) (20,725)
Retirements of debt (118,003) (153,310)
Dividends paid (15,618) (14,434)
Debt issuance costs - (80,027)
Other 288 1,766
----------- -----------
Cash flows provided by (used in) financing
activities (84,324) 2,124,731
----------- -----------
Cash flows used in continuing operations (9,008) (159,734)
----------- -----------
CASH FLOWS FROM DISCONTINUED OPERATIONS
Cash flows provided by investing activities 9,500 -
----------- -----------
EFFECT OF FOREIGN EXCHANGE RATES ON CASH (242) -
----------- -----------
Net increase (decrease) in cash and cash
equivalents $ 250 $ (159,734)
=========== ===========
Cash and cash equivalents at beginning of period $ 128,430 $ 293,410
Add: Cash and cash equivalents of discontinued
operations at beginning of period - 535
Net increase (decrease) in cash and cash
equivalents 250 (159,734)
----------- -----------
Cash and cash equivalents at end of period $ 128,680 $ 134,211
=========== ===========
(1) Includes the results of Western Coal since the April 1, 2011 date of
acquisition. Certain previously reported six months ended June 30, 2011
balances have been recast to reflect the effects of finalizing the
allocation of the Western Coal purchase price during the 2012 first
quarter.
WALTER ENERGY, INC. AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
Unaudited
RECONCILIATION OF EBITDA TO AMOUNTS REPORTED UNDER US GAAP:
For the three months ended For the six months ended
June 30, June 30,
-------------------------- ------------------------
Recast Recast
($ in thousands) 2012 2011(1) 2012 2011(1)
------------ ------------ ----------- -----------
Income from continuing
operations $ 26,756 $ 114,453 $ 67,372 $ 196,266
Add interest expense 31,104 32,047 59,171 35,603
Less interest income (341) (160) (618) (316)
Add income tax
expense 4,535 42,626 13,212 77,180
Add depreciation and
depletion expense 74,459 72,470 140,952 100,828
------------ ------------ ----------- -----------
Earnings from
continuing operations
before interest,
income taxes, and
depreciation and
depletion (EBITDA
from continuing
operations) (2) 136,513 261,436 280,089 409,561
Add gain from
discontinued
operations, gross of
tax ($3.1 million) 8,282 - 8,282 -
------------ ------------ ----------- -----------
Earnings before
interest, income
taxes, and
depreciation and
depletion (EBITDA)
(3) $ 144,795 $ 261,436 $ 288,371 $ 409,561
============ ============ =========== ===========
(1) Includes the results of Western Coal since the April 1, 2011 date of
acquisition. Certain previously reported three and six months ended June
30, 2011 balances have been recast to reflect the effects of finalizing
the allocation of the Western Coal purchase price during the 2012 first
quarter.
(2) EBITDA from continuing operations is defined as earnings excluding
discontinued operations before interest expense, interest income, income
taxes, and depreciation and depletion expense.
(3) EBITDA is defined as earnings 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
Vice President - Investor Relations
205.745.2627
paul.blalock@walterenergy.com
