Patriot Coal Announces Results for the Quarter and Year Ended December 31, 2010
Tuesday, February 01, 2011
ST. LOUIS, Feb. 1, 2011 /PRNewswire/ --
Summary:
- Fourth quarter EBITDA of $42.8 million, up 32 percent over the prior year
- Full year EBITDA of $141.9 million, up 28 percent over the prior year
- Increasing metallurgical production to over 8 million tons in 2011, with expansion to over 11 million tons by 2013
- More than 2 million tons of new met coal sales for 2011 delivery, with 3.0 to 3.4 million tons remaining to be priced
- Nearly 1 million tons of thermal coal sold to export markets, sourced from three coal basins
Patriot Coal Corporation (NYSE: PCX) today reported its financial results for the quarter and year ended December 31, 2010. The Company reported revenues of $528.2 million, EBITDA of $42.8 million, net income of $7.3 million and net income per diluted share of
.08 for the 2010 fourth quarter. For the 2010 year, the Company reported revenues of $2.0 billion, EBITDA of $141.9 million, net loss of $48.0 million and loss per share of
.53.EBITDA for the fourth quarter and the full year of 2010 increased 32percent and 28 percent, respectively, compared with 2009.
"This past year was one of building strength at Patriot inanticipation of improving global economies and markets. We emphasizedthe re-engineering of both surface and underground mines to addressincreased regulatory oversight. At the same time, we focused onincreased met production and are now on a path to produce more than 11million tons of metallurgical coal by 2013," noted Patriot President andChief Executive Officer Richard M. Whiting."This strategic growth, coupled with significantly higher margins onthermal business following the roll-off of two legacy sales contracts inthe next two years, gives Patriot tremendous potential for earningsexpansion."
"In recent months, we have booked more than 2 million tons of new metcoal sales for 2011 delivery at prices substantially higher than thoserealized in 2010. And we have more than 3 million tons of metproduction for delivery in 2011 remaining to be priced," continuedWhiting. "We also took advantage of stronger European thermal marketsin the fourth quarter, booking nearly 1 million tons of thermal exportsales for 2011 delivery."
Commenting on the fourth quarter, Patriot Senior Vice President and Chief Financial Officer Mark N. Schroeder noted, "As a result of solid production across nearly all mining complexes, we recognized EBITDA of $42.8 million.The higher EBITDA resulted from higher average selling prices, as wellas improved operating costs per ton compared with our 2010 thirdquarter. In total, fourth quarter production across our complexes wasalmost 400,000 tons higher than the 2010 third quarter. In particular,production at our Federal mine exceeded 1.1 million tons this quarter,over 250,000 tons above the third quarter. And production at our Wellsmetallurgical complex was up more than 100,000 tons in the fourthquarter."
"Looking forward, we expect to move the Panther longwall only once in2011 ? in the second quarter ? so we anticipate steadier production atthis metallurgical coal complex," continued Schroeder. "Strongerperformance at Panther, full production at the new Black Oak mine bymid-year, and the start-up of additional metallurgical mines areexpected to result in met coal output of more than 8 million tons in2011 and 9 million tons in 2012. This compares with the 6.9 milliontons of met coal sold in 2010. These planned expansions requirerelatively low capital investment, as they will use incremental capacityat existing facilities."
Financial Overview
Revenues in the 2010 fourth quarter were $528.2 million, compared with $503.2 millionin the prior year quarter. Higher revenues in the 2010 quartercompared with the prior year largely resulted from higher averageselling prices, partially offset by lower sales volume. Revenues for2010 of $2.0 billion were comparable with 2009.
Sales in the fourth quarter totaled 7.7 million tons, including 6.0million tons of thermal and 1.7 million tons of metallurgical coal.Total sales were lower than the 8.3 million tons sold in the fourthquarter of 2009, which included 6.7 million tons of thermal and 1.6million tons of metallurgical coal. Lower sales compared with theyear-ago quarter were due to the continuing impact of higher regulatoryoversight in 2010, as well as transport constraints late in the quarter.Compared with the 2010 third quarter, sales volume was 0.2 milliontons higher in the fourth quarter, primarily a result of improvedproduction at the Federal mine, as well as a 0.1 million ton increase inmetallurgical coal sales. Full-year 2010 sales volume was 30.9 milliontons, compared with 32.8 million tons in 2009.
EBITDA in the 2010 fourth quarter was $42.8 million, compared with $32.5 millionin the same quarter of 2009. Higher EBITDA was driven by higheraverage selling prices, partially offset by lower sales volume. EBITDAfor 2010 totaling $141.9 million was $31.1 million,or 28 percent, higher than EBITDA reported in 2009. Higher EBITDA in2010 resulted primarily from higher average selling prices.
Operating cost per ton totaled $55.70 in the 2010 fourth quarter, compared with $50.86in the prior year fourth quarter. Increased cost per ton in the 2010quarter was primarily due to lower production, in part associated withincreased regulatory oversight. Compared with the 2010 third quarter,operating cost per ton improved $2.65,largely as a result of the sequential increase in volume. Higherproduction at the Federal, Rocklick and Highland complexes drove theincreased volume in the fourth quarter compared with the third quarter.For the 2010 full year, operating cost per ton was $55.49, compared with $52.92in 2009. Cost per ton increased only 5 percent year-over-year, evenwith the significant increase in regulatory oversight, variousoperational challenges and higher met coal volume in 2010.
Accretion related to shipments on below-market sales and purchase contracts obtained in the Magnum Coal acquisition in July 2008 totaled $31.5 million in the fourth quarter of 2010, compared with $66.1 millionin the prior year. Lower accretion in 2010 resulted because certaincontracts acquired with Magnum expired at the end of 2009, and theassociated accretion was fully recognized by that time. Sales contractaccretion is expected to be significantly lower in 2011, totalingapproximately $50 million, as underlying contracts continue to expire.