Walter Energy Enhances Disclosure and Revises Operating Plans Revises Second Half 2011 Metallurgical Sales Expectations; Continues to Target Strong Metallurgical Sales Growth by End of 2013
Press Release Source: Walter Energy On Wednesday September 21, 2011, 6:00 am
BIRMINGHAM, AL--(Marketwire -09/21/11)- Walter Energy, Inc. (NYSE: WLT - News) (TSX: WLT - News), the world's leading publicly traded "pure play" producer of metallurgical coal for the global steel industry, today announced enhanced financial disclosure, revised operating plans and second half 2011 sales expectations.
"Walter Energy is making solid operational progress despite a slower than expected recovery from the 100-year record rainfall experienced in Northeast British Columbia during the second quarter as well as recovery from the difficult geology at Mine No. 7 in Alabama. These events will cause a delay in the Company's anticipated growth in production and associated improvement in costs. However we see early recovery today and expect clear improvement beginning in 2012. Longer term, Walter continues to target strong growth in metallurgical production by the end of 2013," said Walt Scheller, Walter Energy's CEO.
"In the first half of 2011, Walter Energy and Western Coal sold just under 5.2 million metric tons of metallurgical coal (including pre-acquisition sales of Western in the first quarter 2011) and, even with the delayed recovery, we still anticipate a similar level of metallurgical coal sales in the second half of the year of slightly over 5.2 million metric tons. The previous metallurgical coal sales guidance for the second half of 2011 was 5.9 million metric tons," added Mr. Scheller.
To help investors better understand Walter Energy, the Company has expanded its historical statistical disclosure and reformatted it to better describe its current business segments and to provide information by product for the second quarter forward. For the third and fourth quarters of 2011, the Company is also providing specific guidance for operating income, net income and earnings per share, on a one-time basis.
Walter Energy's consolidated operating income is expected to be between $125 million and $145 million for the third quarter of 2011 and between $255 million and $295 million for the fourth quarter. Consolidated net income is expected to be between $63 million and $73 million for the third quarter and between $165 million and $185 million for the fourth quarter of 2011. Earnings per share is expected to be between $1.00 and $1.16 in the third quarter and between $2.63 and $2.95 for the fourth quarter of 2011.
Mr. Scheller further stated, "In Alabama at Mine No. 7 we are pleased that we continue to progress through the area of difficult geology, albeit at a slower pace than first anticipated, and we have not encountered further squeeze conditions. However, our cutting rate over the last 30 days has only averaged approximately 20 feet per day, which is less than the 35 feet per day estimate we had previously assumed. We currently expect to advance through this area and return to normal cutting rates of 45-50 feet per day by mid-October. In addition, we are simultaneously installing a new set of 1,350 ton shields in the new E panel of the mine that are 50% stronger than the current shields in operation. This new E panel of the mine is now scheduled to add production beginning in November."
"In Northeast British Columbia we continue to increase production, but at a rate below our previous expectations," said Neil Winkelmann, President of Canadian and UK Operations. "The expansion of the shared wash plant facility that supports the Brule and Willow Creek mines is now scheduled to coincide with the Ridley Terminal rail-car dumping system upgrade. Therefore, we now expect slightly less production in the second half of 2011 than in our previous forecast. We have also experienced a slower than anticipated improvement in hauling rates along the now operational Falling Creek Connector Road. But, we expect to see further improvement in hauling rates over the remainder of the year."
As mentioned, the fourth quarter features two significant project milestones that impact the timing of production and sales:
- In December, the coal terminal at Ridley Island will be affected by the commissioning of the upgraded rail-car dumping system. The commissioning prevents the unloading of rail-cars for 20 days and affects the timing of some sales at year-end.
- The Willow Creek preparation plant upgrade will be completed and commissioned. This, however, requires a 4-week shutdown, delaying sales of coal from Willow Creek and some delay in sales of coal from Brule. The scheduling of this plant shutdown has been deliberately timed to coincide with the Ridley Terminal shutdown as described above.
It should be noted that raw coal production will continue through this period, unaffected by these downstream activities. Upon commissioning of the Willow Creek Plant and Ridley Rail Dumper, the stockpiled raw coal will be processed and sold in the first quarter of 2012.
The expanded statistical disclosures and reformatted historical Walter results better align with our current segments, which are different than those used preceding the acquisition of Western Coal. The Company believes that that these statistics may be helpful in illuminating the key trends within its products and segments |
