Walter Energy, Inc. (NYSE: WLT) (TSX: WLT) today said that performance
for the first quarter 2013 has improved compared with fourth quarter
2012, driven largely by increased metallurgical coal sales volume and
pricing, increased production and lower costs.
“Improvements across our operations over the past several months reflect
the success of our ongoing initiatives,” said Walt Scheller, Chief
Executive Officer. “Along with the progress we continue to make in our
operations, we are also pleased with the recent actions taken to
increase our financial flexibility. As to the current market, we have
seen stronger demand and improved pricing, with second quarter benchmark
prices of $172 per metric ton for hard coking coal and $141 per metric
ton for low vol PCI. We believe all these factors position us well as we
look ahead to the remainder of 2013.”
Metallurgical Coal Sales
Walter Energy expects to report first quarter 2013 metallurgical coal
sales volume of approximately 2.8 million metric tons, up approximately
9% compared with fourth quarter 2012. Average realized metallurgical
coal sales prices are also expected to improve slightly compared with
fourth quarter 2012, primarily due to a higher sales volume of low vol
hard coking coal and a slight strengthening in the market. The
improvement in pricing in the quarter was tempered by approximately
700,000 metric tons of carryover sales at fourth quarter 2012 pricing.
The Company also expects to report that metallurgical coal cash cost of
sales declined by over $10 per metric ton as compared with the fourth
quarter 2012, primarily driven by the higher proportion of low vol hard
coking coal sales from our Alabama operations and a substantial
improvement in cash cost of sales for low vol PCI.
Metallurgical Coal Production
First quarter 2013 metallurgical coal production is expected to total
approximately 2.8 million metric tons, up approximately 12% compared
with fourth quarter 2012. While production volumes early in the first
quarter reflected the impacts of planned long wall moves in the
Company’s Alabama operations, production performance improved in the
latter part of the quarter. Metallurgical coal cash costs of production
is expected to improve by approximately 5% compared with the fourth
quarter.
Thermal Coal Sales
Sales of thermal coal are expected to total approximately 380 thousand
metric tons in first quarter 2013, a decline of approximately 40% from
fourth quarter 2012. As a result of the lower volume, cash cost of sales
was higher by approximately $35 per metric ton during first quarter 2013
due to mining conditions at our North River mine. The Company announced
in first quarter 2013 that it would close this mine earlier than
previously planned and expects this closure to occur before year-end.
Senior Notes Offering
On March 27, 2013, Walter Energy announced the closing of its sale of
$450 million 8.5% senior notes. Proceeds were used to repay $250 million
of indebtedness outstanding under its credit facilities. The remainder
is being used to enhance current liquidity and ultimately is expected to
be applied against outstanding term debt. The Company believes that the
proceeds from this offering provide sufficient financial flexibility and
liquidity, and that it has no need to raise additional capital.
First Quarter 2013 Earnings Release and Conference Call
The Company plans to release its first quarter 2013 results and hold its
earnings conference call on May 2, 2013. Details of the timing of its
earnings release and conference call will be announced over the coming
weeks.
About Walter Energy
Walter Energy is a leading, publicly traded “pure-play” metallurgical
coal producer for the global steel 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 4,100 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: unfavorable economic, financial and business
conditions; the global economic crisis; market conditions beyond our
control; prolonged decline in the price of coal; decline in global coal
or steel demand; prolonged or dramatic shortages or difficulties in coal
production; our customer's refusal to honor or renew contracts; our
ability to collect payments from our customers; inherent risks in coal
mining such as weather patterns and conditions affecting production,
geological conditions, equipment failure and other operational risks
associated with mining; title defects preventing us from (or resulting
in additional costs for) mining our mineral interests; concentration of
our mining operations in limited number of areas; a significant
reduction of, or loss of purchases by, our largest customers;
unavailability of cost-effective transportation for our coal;
availability, performance and costs of railroad, barge, truck and other
transportation; disruptions or delays at the port facilities we use;
risks associated with our reclamation and mine closure obligations,
including failure to obtain or renew surety bonds; significant increase
in competitive pressures and foreign currency fluctuations; significant
cost increases and delays in the delivery of raw materials, mining
equipment and purchased components; availability of adequate skilled
employees and other labor relations matters; inaccuracies in our
estimates of our coal reserves; estimates concerning economically
recoverable coal reserves; greater than anticipated costs incurred for
compliance with environmental liabilities or limitations on our
abilities to produce or sell coal; our ability to attract and retain key
personnel; future regulations that increase our costs or limit our
ability to produce coal; new laws and regulations to reduce greenhouse
gas emissions that impact the demand for our coal reserves; adverse
rulings in current or future litigation; inability to access needed
capital; events beyond our control may result in an event of default
under one or more of our debt instruments; availability of licenses,
permits, and other authorizations may be subject to challenges; risks
associated with our reclamation and mine closure obligations; failure to
meet project development and expansion targets; risks associated with
operating in foreign jurisdictions; risks related to our indebtedness
and our ability to generate cash for our financial obligations;
downgrade in our credit rating; our ability to identify suitable
acquisition candidates to promote growth; our ability to successfully
integrate acquisitions; our exposure to indemnification obligations;
volatility in the price of our common stock; our ability to pay regular
dividends to stockholders; costs related to our post-retirement benefit
obligations and workers' compensation obligations; our exposure to
litigation; and other risks and uncertainties including those described
in our filings with the SEC. Forward-looking statements made by us in
this release, or elsewhere, speak only as of the date on which the
statements were made. You are advised to read the risk factors in our
most recently filed Annual Report on Form 10-K and subsequent filings
with the SEC, which are available on our website at www.walterenergy.com
and on the SEC's website at www.sec.gov.
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.
