Metallurgical coal producer Walter Energy Inc.
's ( WLT ) operating
loss per share in the first quarter of 2013 was 64 cents, much
narrower than the Zacks Consensus Estimate of a loss of 88 cents.
In the year-ago quarter the company reported earnings of 78
GAAP loss during the quarter was 79 cents per share versus
earnings of 65 cents in the year-ago quarter.
The difference between operating and GAAP loss during the quarter
under review was due to a charge of 8 cents related to curtailment
of production at the Willow Creek mine and a 7 cent charge related
to proxy contest expenses.
Walter Energy's total revenue of $491.3 million in the first
quarter was down 22.2% from $631.6 million reported in the year-ago
Despite a 17% year-over-year increase in metallurgical coal sales
volume in the reported quarter, the lower sales price per metric
ton (MT) of coal hurt total revenues. Coal sales price of $154 per
MT declined 31.6% year over year.
The top-line results were 6.8% lower than the Zacks Consensus
Estimate of $527 million.
Highlights of the Quarter
During the quarter, Walter Energy's metallurgical coal production
reached 2.8 million metric tons (MMTs), increasing 12%
sequentially. The production consisted of 82% met coal and 18%
pulverized coal injection (PCI) coal.
Total cash cost of sales during the quarter was $420.9 million,
down 2.2% from the year-ago level.
The company continues to benefit from its cost-cutting measures.
Selling, general and administrative expenses were $30.7 million,
down 15.4% from $36.3 million in the year-earlier quarter.
The cost cutting initiatives of Walter Energy have started to show
its results, but the lower sales price per ton of coal offset much
of the benefit.
Interest expenses were $52.6 million versus $28.1 million in the
prior-year quarter. The increase in expenses was primarily due to
the issue of new debts.
The company continues to maintain a healthy cash balance. The
available liquidity at the end of the quarter was $560 million,
consisting of cash and cash equivalents of $236 million plus $324
million of availability under the company's revolving credit
Long-term debt as of Mar 31, 2013 was $2.59 billion versus $2.40
billion as of Dec 31, 2012.
In the first quarter, capital expenditure was $34 million compared
with $120.9 million in the year-ago quarter. The decline in capital
expenditure reflects Walter Energy's capital discipline in the face
of a worldwide decline in coal demand.
The capital expenditure target of the company for 2013 is $170
million, down $50 million from the original capital expenditure
Other Company Releases
Peabody Energy Corporation ( BTU ) reported an
operating loss of 5 cents per share in the first quarter, narrower
than the Zacks Consensus Estimate of a pro forma loss of 14 cents
Arch Coal Inc . ( ACI ) reported
first-quarter 2013 pro forma loss of 34 cents per share, marginally
wider than the Zacks Consensus Estimate of a loss of 32
CONSOL Energy Inc. ( CNX ) reported earnings
of 19 cents per share for the first quarter of 2013, a penny short
of the Zacks Consensus Estimate.
Walter Energy is predominantly a metallurgical coal producer and
the possibility of recovery in global steel demand, in 2013, could
result in higher demand for met coal.
Walter Energy expects sales price per ton for met coal to improve
sequentially in the second quarter. However, we believe that this
might not be enough for Walter Energy to report earnings in the
green in the next quarter.
Birmingham, Ala. based Walter Energy was founded in 1946. It is
one of the leading U.S. producers and exporters of premium met coal
catering to the global steel industry. With a market capitalization
of $1.10 billion, the company has 4,100 full time employees. The
company currently has a Zacks Rank #3 (Hold).ARCH COAL INC (ACI): Free Stock Analysis ReportPEABODY ENERGY (BTU): Free Stock Analysis
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