BIRMINGHAM, AL--(Marketwired - February 17, 2015) - Walter Energy, Inc. WLT, a leading, publicly traded "pure-play" producer of metallurgical ("met") coal for the global steel industry, today announced results for the quarter and year ended December 31, 2014.
"We remain focused on improving our operational performance while implementing cost containment measures across our Company," said Walt Scheller, Chief Executive Officer. "For the full year 2014, we aggressively reduced costs -- both in operational and administrative areas -- all while improving production efficiency at our mines; opportunistically restructured our balance sheet to enhance liquidity and provide additional financial flexibility; and ensured that our emphasis on safety remained paramount," said Scheller. "As 2015 unfolds, we will maintain our focus on improving safety, increasing productivity and reducing costs."
Full-Year 2014 Consolidated Financial Results
Walter Energy reported a net loss in 2014 of $470.6 million, or $7.10 per diluted share, compared with a net loss of $359.0 million, or $5.74 per diluted share, in 2013. Included in the Company's financial results are non-cash income tax charges and credits, restructuring and asset impairment costs, transportation take-or-pay costs, gains on the early extinguishment of debt and other items. Excluding these items, the adjusted net loss for 2014 was $449.8 million, or $6.79 per diluted share. The adjusted net loss for 2013 totaled $237.3 million, or $3.79 per diluted share.
Fourth Quarter 2014 Consolidated Financial Results
Walter Energy reported a net loss of $128.1 million, or $1.83 per diluted share, in the fourth quarter of 2014 compared with a net loss of $174.3 million, or $2.79 per diluted share, in the fourth quarter of 2013. Adjusted net loss for the fourth quarter of 2014 was $137.6 million, or $1.97 per diluted share, as compared with an adjusted net loss for the prior-year period of $63.6 million, or $1.02 per diluted share. A reconciliation of net loss to adjusted net loss is provided in the Company's "Reconciliation of Non-GAAP Financial Measures" included with this release.
Consolidated revenues totaled $285.6 million, compared with $472.0 million in the fourth quarter of 2013, reflecting a decrease in average met coal selling prices of $25.19 per metric ton ("MT") and a decline in met coal sales of 0.9 million metric tons ("MMTs"). Fourth quarter results also reflected a reduction in met coal cash cost of sales of $6.15 per ton and a 23% reduction in selling, general and administrative ("SG&A") expenses.
Cost of sales in the fourth quarter of 2014 includes costs associated with idling the Company's Canadian mining operations of $8.5 million, representing idle mine costs of $6.5 million and transportation take-or-pay charges of $2.0 million, and $7.1 million of lower of cost or market charges as a result of changes in estimates, which includes haulage and washing costs associated with inventories at our Canadian operations.
In November 2014, the Company issued 3.9 million shares of common stock and paid $5.2 million in cash in exchange for $52.0 million principal amount of 9.875% Senior Notes due 2020, resulting in a net gain of $32.8 million. This debt retirement will reduce annual interest expense by approximately $5.1 million.
Earnings before interest, taxes, depreciation and amortization ("EBITDA") for the quarter was a loss of $15.0 million, and adjusted EBITDA was a loss of $24.3 million, compared with EBITDA of $59.9 million and adjusted EBITDA of $59.2 million for the fourth quarter 2013. A reconciliation of net loss to EBITDA and adjusted EBITDA is provided in the Company's "Reconciliation of Non-GAAP Financial Measures" included with this release.
Metallurgical Coal Sales Volume and Pricing
Met coal sales volumes, including both hard coking coal ("HCC") and low-volatility ("low-vol") pulverized coal injection product ("PCI"), totaled 2.0 MMTs, compared with 2.9 MMTs in the prior-year comparable quarter. The decline in met coal sales volumes was primarily due to reduced sales of coal from the idled Canadian mining operations.
HCC sales volumes totaled 1.8 MMTs, compared with 2.4 MMTs in 2013. The average selling price for HCC was $109.92 per MT, down from $137.39 per MT in 2013.
Low-vol PCI sales volumes totaled 0.2 MMTs, down 0.4 MMTs from the prior-year comparable quarter. The selling price for low-vol PCI averaged $99.64 per MT, compared with $118.63 per MT in 2013.
Metallurgical Coal Cash Cost of Sales
Met coal cash cost of sales for the quarter averaged $101.37 per MT, an improvement of $6.15 per MT, or 5.7%, compared with 2013. Performance in the quarter was driven primarily by continued reductions in mining costs, partially offset by the impact of higher than expected costs related to long wall moves.
Full-year cash cost of sales in the Company's underground Alabama operations averaged $94.92 per MT, slightly better than the previous full-year 2014 target of $96.00 per MT.
Metallurgical Coal Production
Met coal production was 1.8 MMTs in the quarter, compared with 3.2 MMTs in the prior-year period, with the decrease primarily resulting from the idling of the Canadian mining operations. Met coal production in Canada for the prior-year quarter totaled 1.0 MMTs. Production volumes were also lower in the Company's Alabama underground operation due to the unfavorable effect of longwall moves in the current-year-period.
Met coal cash cost of production averaged $72.51 per MT, compared with $68.02 per MT in the prior-year comparable quarter, with the increase in the current-year period primarily the result of increased costs due to longwall moves.
Other Expenses
SG&A expenses totaled $15.6 million, compared with $20.3 million in the prior-year quarter reflecting our continued focus on cost reduction.
Interest expense, net totaled $77.8 million compared with $64.3 million in the prior-year period. The increase was primarily due to an increase in long-term debt and higher interest rates.
Income Taxes
The Company recognized an income tax benefit of $22.6 million in the current quarter, compared with a net tax charge of $91.0 million in the fourth quarter of 2013. The 2013 income tax expense included a $111.2 million non-cash charge for the establishment of a valuation allowance against certain of the Company's U.S. deferred tax assets that had been recorded in prior periods.
Capital Expenditures
Capital expenditures totaled $23.3 million, compared with $45.2 million in the prior-year period, which reflects the Company's continued focus on disciplined spending in light of ongoing weak market conditions. Capital expenditures for the full-year 2014 totaled $93.0 million, compared with $153.9 million for 2013.
Liquidity
Available liquidity was $481.2 million at the end of 2014, consisting of cash and cash equivalents of $468.5 million plus $12.7 million in availability under the Company's $76.9 million revolving credit facilities, net of outstanding letters of credit of $64.2 million.
Outlook
The Company expects met coal sales to total 8.5 to 9.0 MMTs in 2015. Capital expenditures in 2015 are expected to be in line with 2014, and the Company expects to further reduce SG&A expenses by 10%. Cash interest expense is expected to approximate $265 million for the year.
Use of Non-GAAP Financial Measures
In addition to the results prepared in accordance with generally accepted accounting principles in the United States ("GAAP") provided throughout this release, the Company has presented the following non-GAAP financial measures: EBITDA, Adjusted EBITDA, Adjusted net loss and Average Cash Cost of Sales per Ton. These non-GAAP financial measures are provided as supplemental information for financial measures prepared in accordance with GAAP. Management believes that these non-GAAP financial 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. These non-GAAP measures may not be comparable to other similarly titled measures used by other entities. A reconciliation of non-GAAP to GAAP financial measures is provided in the financial section of this release.
Conference Call Webcast
The Company will hold a webcast to discuss its fourth quarter and full year 2014 results today, February 17, 2015, at 10:00 a.m. ET. To listen to the live event, visit www.walterenergy.com.
About Walter Energy
Walter Energy is a leading, publicly traded "pure-play" metallurgical coal producer for the global steel industry with strategic access to steel producers in Europe, Asia and South America. The Company also produces thermal coal, anthracite, metallurgical coke and coal bed methane gas. Walter Energy employs approximately 2,700 employees, 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 Walter Energy and are subject to various risks, uncertainties and factors relating to Walter Energy's operations and business environment, all of which are difficult to predict and many of which are beyond Walter Energy's control, which could cause Walter Energy's 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 Walter Energy's forward-looking statements: unfavorable economic, financial and business conditions; a substantial or extended decline in pricing, demand, and other factors beyond Walter Energy's control; failure of Walter Energy's customers to honor or renew contracts; Walter Energy's ability to collect payments from its customers; inherent risks in coal mining that are beyond Walter Energy's control; title defects preventing Walter Energy from (or resulting in additional costs for) mining its mineral interests; concentration of Walter Energy's mining operations in a limited number of areas; a significant reduction of or loss of purchases by Walter Energy's largest customers; unavailability or uneconomical transportation for Walter Energy's coal; significant competition and foreign currency fluctuation; significant cost increases and fluctuations, and delay in the delivery of raw materials, mining equipment and purchased components; work stoppages, labor shortages and other labor relations matters; Walter Energy's ability to hire and retain a skilled labor force; risks associated with Walter Energy's reclamation and mine closure obligations; inaccuracies in Walter Energy's estimates of coal reserves; Walter Energy's ability to develop or acquire coal reserves in an economically feasible manner; challenges to Walter Energy's licenses, permits and other authorizations; failure to meet project development and expansion targets; risks associated with operating in foreign jurisdictions; risks associated with environmental, health and safety laws and regulations; risks associated with federal, state and provincial regulatory agencies' authority to order temporary or permanent closure of Walter Energy's mines; increased focus by regulatory authorities on the effects of surface coal mining on the environment; risks related to climate change concerns; risks related to Walter Energy's operations' impact on the environment; risks related to Walter Energy's indebtedness; Walter Energy's ability to generate cash for its financial obligations, to refinance its indebtedness or to obtain additional financing; Walter Energy's ability to incur additional indebtedness; restrictions in Walter Energy's existing and future debt agreements; events beyond Walter Energy's control that may result in an event of default under one or more of its debt instruments; downgrades in Walter Energy's credit ratings; failure to obtain or renew surety bonds on acceptable terms that could affect Walter Energy's ability to secure reclamation and coal lease obligations; costs associated with Walter Energy's pension and benefits, including post-retirement benefits; costs associated with Walter Energy's workers' compensation and certain medical and disability benefits; adverse rulings in current or future litigation; Walter Energy's ability to attract and retain key personnel; Walter Energy's ability to identify or integrate suitable acquisition candidates to promote growth; volatility in the price of Walter Energy's common stock; Walter Energy's ability to pay regular dividends to stockholders; Walter Energy's exposure to indemnification obligations; risks associated with terrorist attacks and threats and escalation of military activity in response to such attacks; risks associated with cyber-attacks or other security breaches; and other risks and uncertainties including those described in Walter Energy's filings with the SEC. Forward-looking statements made by Walter Energy 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 Walter Energy's most recently filed Annual Report on Form 10-K and subsequent filings with the SEC, which are available on Walter Energy's 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 Walter Energy to predict these events or how they may affect it or its anticipated results. Walter Energy has no duty to, and does 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 LOSS
($ in thousands, except per share and share amounts)
Unaudited
For the three months For the years
ended December 31, ended December 31,
------------------------ ------------------------
2014 2013 2014 2013
----------- ----------- ----------- -----------
Revenues:
Sales $ 271,669 $ 462,999 $ 1,374,422 $ 1,836,343
Miscellaneous income 13,894 8,997 32,923 24,288
----------- ----------- ----------- -----------
285,563 471,996 1,407,345 1,860,631
----------- ----------- ----------- -----------
Costs and expenses:
Cost of sales
(exclusive of
depreciation and
depletion) (1) 275,196 374,444 1,266,757 1,558,305
Depreciation and
depletion 57,872 79,018 262,525 311,514
Selling, general and
administrative 15,636 20,318 72,015 99,994
Other postretirement
benefits 13,869 14,743 55,476 58,900
Restructuring and asset
impairments (2) 28,592 1,184 57,508 2,883
----------- ----------- ----------- -----------
391,165 489,707 1,714,281 2,031,596
----------- ----------- ----------- -----------
Operating loss (105,602) (17,711) (306,936) (170,965)
Interest expense, net
(3) (77,838) (64,269) (295,903) (221,583)
Gain (loss) on
extinguishment of debt
(4) 32,771 -- 33,673 (6,875)
Other income (loss),
net -- (1,402) 646 (1,418)
----------- ----------- ----------- -----------
Loss before income tax
benefit (150,669) (83,382) (568,520) (400,841)
Income tax expense
(benefit) (5) (22,572) 90,961 (97,952) (41,838)
----------- ----------- ----------- -----------
Net loss $ (128,097) $ (174,343) $ (470,568) $ (359,003)
=========== =========== =========== ===========
Basic and diluted net
loss per share $ (1.83) $ (2.79) $ (7.10) $ (5.74)
=========== =========== =========== ===========
Weighted average number
of basic and diluted
shares outstanding (6) 70,028,113 62,577,145 66,299,837 62,563,870
=========== =========== =========== ===========
Comprehensive loss $ (187,316) $ (78,492) $ (526,358) $ (250,411)
=========== =========== =========== ===========
(1) Cost of sales for the three months and year ended December 31, 2014
includes idle mine costs of approximately $6.5 million and $19.1
million, respectively, and transportation take-or-pay charges of
approximately $2.0 million and $9.6 million, respectively, related to
the idling of the Canadian Operations.
(2) The three months and year ended December 31, 2014 primarily includes an
asset impairment charge of $28.5 million recognized upon classifying
certain assets and liabilities of the Gauley Eagle operations as assets
and liabilities held for sale. The year ended December 31, 2014 also
includes an asset impairment charge of $23.1 million related to the sale
of the Blue Creek Coal Terminal and related parcels of land and
severance charges of $5.9 million primarily incurred in connection with
the idling of the Canadian operations. The three months and year ended
December 31, 2013 include restructuring and asset impairment charges in
connection with the closure and curtailment of certain mine operations.
(3) Interest expense for the three months and year ended December 31, 2014
reflects an increase in the effective interest rates on our outstanding
debt due to amendments to our 2011 Credit Agreement and refinancing of
long-term debt through the issuance of senior notes in 2013 and 2014.
(4) Gain (loss) on extinguishment of debt for the three months ended
December 31, 2014 represents a net gain of $32.8 million recognized upon
the extinguishment of $52.0 million of 9.875% Senior Notes in exchange
for shares of common stock and cash. The gain for the year ended
December 31, 2014 also includes a net gain of $21.3 million recognized
upon the extinguishment of $60.0 million of 9.875% Senior Notes in
exchange for shares of common stock and cash substantially offset by
$20.4 million in accelerated amortization of deferred financing costs
associated with the refinancing of term loan A debt and amendments to
the 2011 Credit Agreement. The loss for the year ended December 31, 2013
includes a net loss on extinguishment of debt associated with the
refinancing of term loan A and B debt through the issuance of senior
notes in March and September of 2013. The prior period statement has
been revised to present gain (loss) on extinguishment of debt,
previously classified in interest expense and other income (loss), as a
component of the gain (loss) on extinguishment of debt.
(5) Income tax expense (benefit) for the three months and year ended
December 31, 2013 includes a non-cash charge of $111.2 million for the
recognition of a valuation allowance against certain of the Company's
deferred tax assets.
(6) In periods of net loss, the number of shares used to calculate diluted
earnings per share is the same as that used to calculate basic earnings
per share.
WALTER ENERGY, INC. AND SUBSIDIARIES
RESULTS BY OPERATING SEGMENT
($ in thousands)
Unaudited
For the three months For the years
ended December 31, ended December 31,
------------------------ ------------------------
2014 2013 2014 2013
----------- ----------- ----------- -----------
REVENUES:
U.S. Operations $ 254,521 $ 333,805 $ 1,166,226 $ 1,331,308
Canadian and U.K.
Operations 30,608 137,305 237,584 527,989
Other 434 886 3,535 1,334
----------- ----------- ----------- -----------
Revenues $ 285,563 $ 471,996 $ 1,407,345 $ 1,860,631
=========== =========== =========== ===========
OPERATING INCOME (LOSS):
U.S. Operations $ (66,633) $ 36,003 $ (118,009) $ 58,371
Canadian and U.K.
Operations (37,538) (46,574) (183,180) (209,709)
Other (1,431) (7,140) (5,747) (19,627)
----------- ----------- ----------- -----------
Operating loss $ (105,602) $ (17,711) $ (306,936) $ (170,965)
=========== =========== =========== ===========
DEPRECIATION AND
DEPLETION:
U.S. Operations $ 37,292 $ 35,946 $ 150,701 $ 167,668
Canadian and U.K.
Operations 19,997 42,461 109,368 141,696
Other 583 611 2,456 2,150
----------- ----------- ----------- -----------
Depreciation and
depletion $ 57,872 $ 79,018 $ 262,525 $ 311,514
=========== =========== =========== ===========
CAPITAL EXPENDITURES:
U.S. Operations $ 22,089 $ 42,462 $ 85,333 $ 133,407
Canadian and U.K.
Operations 656 1,919 4,387 18,331
Other 521 780 3,279 2,158
----------- ----------- ----------- -----------
Capital expenditures $ 23,266 $ 45,161 $ 92,999 $ 153,896
=========== =========== =========== ===========
WALTER ENERGY, INC. AND SUBSIDIARIES
QUARTERLY SUPPLEMENTAL FINANCIAL DATA
(Ton information in 000's metric tons and dollars in USD)
Unaudited
Three Months Ended Three Months Ended
December 31, 2014 December 31, 2013
------------------------------ ------------------------------
Canadian Canadian
U.S. and U.K. U.S. and U.K.
Operations Operations Total Operations Operations Total
---------- ---------- -------- ---------- ---------- --------
Total
Metallurgical
Sales Metric
Tons 1,785 232 2,017 1,864 1,034 2,898
Production
Metric Tons 1,777 -- 1,777 2,165 998 3,163
Average Net
Selling
Price $ 109.95 $ 102.23 $ 109.06 $ 138.67 $ 126.29 $ 134.25
Average Cash
Cost of
Sales per
Ton (1)(2) $ 97.82 $ 128.62 $ 101.37 $ 93.63 $ 132.55 $ 107.52
Average Cash
Cost of
Production
per Ton (1) $ 72.51 $ -- $ 72.51 $ 60.40 $ 84.54 $ 68.02
Low Vol Hard
Coking
Sales
Metric
Tons 1,098 -- 1,098 1,000 45 1,045
Production
Metric
Tons 1,007 -- 1,007 1,228 -- 1,228
Average Net
Selling
Price $ 111.59 $ -- $ 111.59 $ 143.76 $ 145.05 $ 143.81
Average
Cash Cost
of Sales
per Ton
(1)(2) $ 96.08 $ -- $ 96.08 $ 90.28 $ 130.10 $ 91.92
Average
Cash Cost
of
Production
per Ton
(1) $ 73.00 $ -- $ 73.00 $ 58.63 $ 139.65 $ 58.67
Mid Vol Hard
Coking
Sales
Metric
Tons 566 63 629 755 443 1,198
Production
Metric
Tons 654 -- 654 789 558 1,347
Average Net
Selling
Price $ 106.99 $ 109.10 $ 107.20 $ 133.54 $ 133.80 $ 133.64
Average
Cash Cost
of Sales
per Ton
(1)(2) $ 99.72 $ 110.14 $ 100.77 $ 98.17 $ 139.57 $ 113.47
Average
Cash Cost
of
Production
per Ton
(1) $ 68.99 $ -- $ 68.99 $ 59.60 $ 85.60 $ 70.37
High Vol
Hard Coking
Sales
Metric
Tons 121 -- 121 109 -- 109
Production
Metric
Tons 116 -- 116 148 -- 148
Average Net
Selling
Price $ 108.84 $ -- $ 108.84 $ 117.12 $ -- $ 117.12
Average
Cash Cost
of Sales
per Ton
(1)(2) $ 104.76 $ -- $ 104.76 $ 111.87 $ -- $ 111.87
Average
Cash Cost
of
Production
per Ton
(1) $ 88.10 $ -- $ 88.10 $ 79.37 $ -- $ 79.37
Low Vol PCI
Sales
Metric
Tons -- 169 169 -- 546 546
Production
Metric
Tons -- -- -- -- 440 440
Average Net
Selling
Price $ -- $ 99.64 $ 99.64 $ -- $ 118.63 $ 118.63
Average
Cash Cost
of Sales
per Ton
(1)(2) $ -- $ 131.57 $ 131.57 $ -- $ 127.07 $ 127.07
Average
Cash Cost
of
Production
per Ton
(1) $ -- $ -- $ -- $ -- $ 83.14 $ 83.14
Thermal
Sales Metric
Tons 129 10 139 494 6 500
Production
Metric Tons 164 3 167 454 16 470
Average Net
Selling
Price $ 69.84 $ 131.76 $ 74.25 $ 59.50 $ 96.38 $ 59.92
Average Cash
Cost of
Sales per
Ton (1)(2) $ 85.90 $ 449.22 $ 111.77 $ 52.32 $ 320.77 $ 55.36
Average Cash
Cost of
Production
per Ton (1) $ 45.90 $ 792.35 $ 61.22 $ 41.20 $ 121.98 $ 44.01
(1) Average Cash Cost of Sales 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, postretirement benefits, idle mine costs and transportation
take-or-pay charges. Average Cash Cost of Production per Ton is based on
period costs of mining and includes items such as manpower, fuel and
other similar production items but excludes depreciation, depletion,
postretirement benefits, idle mine costs, transportation take-or-pay
charges and actuarial adjustments. Average Cash Cost of Sales 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
Average Cash Cost of Sales per Ton is a useful 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. Average Cash Cost of Sales per Ton may not be comparable to
similarly titled measures used by other companies.
(2) Reconciliation of Cash Cost of Sales per Ton to Cost of Sales as
disclosed (in thousands USD):
Three Months Ended
December 31,
----------------------
2014 2013
---------- ----------
Cash cost of sales as calculated from above (sales
tons times average cash cost per ton) $ 219,999 $ 339,273
Canada idle mine costs 6,487 --
Canada transportation take-or-pay charges 1,956 --
Actuarial adjustments 8,777 (2,940)
Cash cost of other products 37,977 38,111
---------- ----------
Total cost of sales (exclusive of depreciation and
depletion) $ 275,196 $ 374,444
========== ==========
WALTER ENERGY, INC. AND SUBSIDIARIES
ANNUAL SUPPLEMENTAL FINANCIAL DATA
(Ton information in 000's metric tons and dollars in USD)
Unaudited
Twelve Months Ended Twelve Months Ended
December 31, 2014 December 31, 2013
------------------------------ ------------------------------
Canadian Canadian
U.S. and U.K. U.S. and U.K.
Operations Operations Total Operations Operations Total
---------- ---------- -------- ---------- ---------- --------
Total
Metallurgical
Sales Metric
Tons 7,826 1,845 9,671 7,143 3,795 10,938
Production
Metric Tons 7,723 1,564 9,287 8,041 3,600 11,641
Average Net
Selling
Price $ 115.51 $ 114.27 $ 115.27 $ 144.89 $ 135.93 $ 141.78
Average Cash
Cost of
Sales per
Ton (1)(2) $ 94.56 $ 130.14 $ 101.34 $ 102.36 $ 143.06 $ 116.48
Average Cash
Cost of
Production
per Ton (1) $ 67.75 $ 90.44 $ 71.57 $ 66.94 $ 103.00 $ 78.09
Low Vol Hard
Coking
Sales
Metric
Tons 4,883 -- 4,883 4,264 187 4,451
Production
Metric
Tons 4,741 -- 4,741 4,904 102 5,006
Average Net
Selling
Price $ 118.28 $ -- $ 118.28 $ 150.86 $ 139.99 $ 150.43
Average
Cash Cost
of Sales
per Ton
(1)(2) $ 88.98 $ -- $ 88.98 $ 96.52 $ 187.54 $ 100.17
Average
Cash Cost
of
Production
per Ton
(1) $ 62.37 $ -- $ 62.37 $ 59.83 $ 154.33 $ 61.75
Mid Vol Hard
Coking
Sales
Metric
Tons 2,347 657 3,004 2,226 1,653 3,879
Production
Metric
Tons 2,468 563 3,031 2,379 1,637 4,016
Average Net
Selling
Price $ 111.82 $ 125.19 $ 114.75 $ 141.64 $ 144.96 $ 143.05
Average
Cash Cost
of Sales
per Ton
(1)(2) $ 107.28 $ 138.41 $ 114.08 $ 115.27 $ 149.51 $ 129.86
Average
Cash Cost
of
Production
per Ton
(1) $ 75.26 $ 92.08 $ 78.38 $ 77.99 $ 113.04 $ 92.27
High Vol
Hard Coking
Sales
Metric
Tons 596 -- 596 653 -- 653
Production
Metric
Tons 514 -- 514 758 -- 758
Average Net
Selling
Price $ 107.33 $ -- $ 107.33 $ 112.20 $ -- $ 112.20
Average
Cash Cost
of Sales
per Ton
(1)(2) $ 90.17 $ -- $ 90.17 $ 110.96 $ -- $ 110.96
Average
Cash Cost
of
Production
per Ton
(1) $ 81.37 $ -- $ 81.37 $ 78.28 $ -- $ 78.28
Low Vol PCI
Sales
Metric
Tons -- 1,188 1,188 -- 1,955 1,955
Production
Metric
Tons -- 1,001 1,001 -- 1,861 1,861
Average Net
Selling
Price $ -- $ 108.22 $ 108.22 $ -- $ 127.91 $ 127.91
Average
Cash Cost
of Sales
per Ton
(1)(2) $ -- $ 123.67 $ 123.67 $ -- $ 133.34 $ 133.34
Average
Cash Cost
of
Production
per Ton
(1) $ -- $ 89.12 $ 89.12 $ -- $ 91.36 $ 91.36
Thermal
Sales Metric
Tons 887 76 963 1,722 22 1,744
Production
Metric Tons 621 27 648 1,916 70 1,986
Average Net
Selling
Price $ 68.06 $ 122.95 $ 72.37 $ 63.80 $ 90.50 $ 64.13
Average Cash
Cost of
Sales per
Ton (1)(2) $ 79.76 $ 193.71 $ 88.71 $ 68.23 $ 390.24 $ 72.27
Average Cash
Cost of
Production
per Ton (1) $ 52.91 $ 360.09 $ 65.77 $ 51.75 $ 98.34 $ 53.40
(1) Average Cash Cost of Sales 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, postretirement benefits, idle mine costs and transportation
take-or-pay charges. Average Cash Cost of Production per Ton is based on
period costs of mining and includes items such as manpower, fuel and
other similar production items but excludes depreciation, depletion,
postretirement benefits, idle mine costs, transportation take-or-pay
charges and actuarial adjustments. Average Cash Cost of Sales 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
Average Cash Cost of Sales per Ton is a useful 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. Average Cash Cost of Sales per Ton may not be comparable to
similarly titled measures used by other companies.
(2) Reconciliation of Cash Cost of Sales per Ton to Cost of Sales as
disclosed (in thousands USD):
Twelve Months Ended
December 31,
----------------------
2014 2013
---------- ----------
Cash cost of sales as calculated from above (sales
tons times average cash cost per ton) $1,065,487 $1,400,097
Canada idle mine costs 19,148 --
Canada transportation take-or-pay charges 9,586 --
Actuarial adjustments 8,777 (2,940)
Cash cost of other products 163,759 161,148
---------- ----------
Total cost of sales (exclusive of depreciation and
depletion) $1,266,757 $1,558,305
========== ==========
WALTER ENERGY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
($ in thousands)
Unaudited
December 31, December 31,
2014 2013
------------ ------------
ASSETS
Cash and cash equivalents $ 468,532 $ 260,818
Trade receivables, net 91,057 149,116
Other receivables 127,037 132,647
Inventories 201,598 312,647
Deferred income taxes 16,819 37,067
Prepaid expenses 46,190 39,022
Other current assets 19,542 18,031
------------ ------------
Total current assets 970,775 949,348
Mineral interests, net 2,836,801 2,905,002
Property, plant and equipment, net 1,466,297 1,637,552
Other long-term assets 112,256 98,958
------------ ------------
TOTAL ASSETS $ 5,386,129 $ 5,590,860
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current debt $ 12,327 $ 9,210
Accounts payable 38,980 92,712
Accrued expenses 125,318 133,870
Pension and other postretirement benefits
obligation (1) 29,032 37,125
Other current liabilities 215,952 206,984
------------ ------------
Total current liabilities 421,609 479,901
Long-term debt 3,123,643 2,769,622
Pension and other postretirement benefits
obligation (1) 641,231 572,768
Deferred income taxes 730,685 822,867
Other long-term liabilities 187,380 193,008
------------ ------------
TOTAL LIABILITIES 5,104,548 4,838,166
STOCKHOLDERS' EQUITY 281,581 752,694
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 5,386,129 $ 5,590,860
============ ============
(1) Prior periods have been revised to present current and long-term pension
benefit obligations, previously classified in other current liabilities and
other long-term liabilities, respectively, as a component of pension and
other postretirement benefit obligations.
WALTER ENERGY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CHANGES
IN STOCKHOLDERS' EQUITY
FOR THE YEAR ENDED DECEMBER 31, 2014
($ in thousands, except per share amounts)
Unaudited
Accumulated
Capital in Other
Common Excess of Accumulated Comprehensive
Total Stock Par Value Deficit Loss
-------- ------- ---------- ----------- -------------
Balance at December
31, 2013 $752,694 $ 626 $1,613,256 $ (698,930) $ (162,258)
Net loss (470,56
8) -- -- (470,568) --
Other comprehensive
income (55,790) -- -- -- (55,790)
Stock issued upon
the exercise of
stock options 108 -- 108 -- --
Dividends paid,
$0.04 per share (2,625) -- (2,625) -- --
Stock-based
compensation 8,170 -- 8,170 -- --
Issuance of common
stock in
connection with
the extinguishment
of debt 49,895 94 49,801 -- --
Other (303) -- (303) -- --
-------- ------- ---------- ----------- -------------
Balance at December
31, 2014 $281,581 $ 720 $1,668,407 $(1,169,498) $ (218,048)
======== ======= ========== =========== =============
WALTER ENERGY, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
Unaudited
RECONCILIATION OF EBITDA AND ADJUSTED EBITDA TO AMOUNTS REPORTED UNDER US
GAAP:
For the three months For the years
($ in thousands) ended December 31, ended December 31,
------------------------ ------------------------ ------------------------
2014 2013 2014 2013
----------- ----------- ----------- -----------
Net loss $ (128,097) $ (174,343) $ (470,568) $ (359,003)
Interest expense, net 77,838 64,269 295,903 221,583
Income tax expense
(benefit) (22,572) 90,961 (97,952) (41,838)
Depreciation and
depletion expense 57,872 79,018 262,525 311,514
----------- ----------- ----------- -----------
Earnings before
interest, income taxes,
and depreciation and
depletion (EBITDA) (14,959) 59,905 (10,092) 132,256
Restructuring and
asset impairments 28,592 1,184 57,508 2,883
(Gain) loss on
extinguishment of
debt (32,771) -- (33,673) 6,875
Canada transportation
take-or-pay charges 1,956 -- 9,586 --
Loss on investment -- 1,336 -- 1,336
Gain on sale of assets (5,616) -- (5,616) --
Other items, including
proxy contest
expenses and foreign
currency adjustments (1,513) (3,170) (3,736) 5,682
(Gain) loss on
interest rate swap
hedge ineffectiveness -- (51) (296) 184
----------- ----------- ----------- -----------
Adjusted EBITDA $ (24,311) $ 59,204 $ 13,681 $ 149,216
=========== =========== =========== ===========
RECONCILIATION OF ADJUSTED NET LOSS TO AMOUNTS REPORTED UNDER US GAAP:
For the three months For the years
ended December 31, ended December 31,
------------------------ ------------------------
($ in thousands) 2014 2013 2014 2013
------------------------ ----------- ----------- ----------- -----------
Net loss $ (128,097) $ (174,343) $ (470,568) $ (359,003)
Restructuring and
asset impairments 28,592 1,184 57,508 2,883
(Gain) loss on
extinguishment of
debt (32,771) -- (33,673) 6,875
Canada transportation
take-or-pay charges 1,956 -- 9,586 --
Gain on sale of assets (5,616) -- (5,616) --
Loss on investment -- 1,336 -- 1,336
Other items, including
proxy contest
expenses and foreign
currency adjustments (1,513) (3,170) (3,736) 5,682
(Gain) loss on
interest rate swap
hedge ineffectiveness -- (51) (296) 184
Estimated income tax
effect of above
adjustments (177) 185 (3,052) (6,447)
Discrete income tax
charge from valuation
allowance adjustments -- 111,210 -- 111,210
----------- ----------- ----------- -----------
Adjusted net loss $ (137,626) $ (63,649) $ (449,847) $ (237,280)
=========== =========== =========== ===========
Weighted average number
of basic and diluted
shares outstanding 70,028,113 62,577,145 66,299,837 62,563,870
Adjusted basic and
diluted loss per share $ (1.97) $ (1.02) $ (6.79) $ (3.79)
(1) EBITDA is defined as net income (loss) before interest expense, interest
income, income taxes, and depreciation and depletion expense. EBITDA is
a financial measure which is not calculated in conformity with 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 companies.
(2) Adjusted EBITDA is defined as EBITDA further adjusted to exclude
restructuring and asset impairment charges, gain (loss) on
extinguishment of debt, Canada transportation take-or-pay charges, gain
(loss) on sales of assets and investments, other items including proxy
contest expenses and foreign currency adjustments and (gain) loss on
interest rate swap hedge ineffectiveness. Adjusted EBITDA is not a
measure of financial performance in accordance with GAAP, and we believe
items excluded from Adjusted EBITDA are significant to a reader in
understanding and assessing our results of operations. Therefore,
Adjusted EBITDA should not be considered in isolation, nor as an
alternative to net income, income from operations, cash flows from
operations or as a measure of our profitability, liquidity or
performance under GAAP. We believe that Adjusted EBITDA presents a
useful measure of our ability to incur and service debt based on ongoing
operations. Furthermore, analogous measures are used by industry
analysts to evaluate our operating performance. Investors should be
aware that our presentation of Adjusted EBITDA may not be comparable to
similarly titled measures used by other companies.
(3) Adjusted net loss is defined as net loss excluding restructuring and
asset impairment charges, gain (loss) on extinguishment of debt, Canada
transportation take-or-pay charges, gain (loss) on sales of assets and
investments, other items including proxy contest expenses and foreign
currency adjustments, (gain) loss on interest rate swap hedge
ineffectiveness and certain discrete income tax charges from valuation
allowance adjustments. Adjusted net loss is not a measure of financial
performance in accordance with GAAP, and we believe items excluded from
Adjusted net loss are significant to a reader in understanding and
assessing our results of operations. Therefore, Adjusted net loss should
not be considered in isolation, nor as an alternative to net loss under
GAAP.
WALTER ENERGY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
($ in thousands)
Unaudited
For the years ended
December 31,
----------------------
2014 2013
---------- ----------
OPERATING ACTIVITIES
Net loss $ (470,568) $ (359,003)
Adjustments to reconcile net loss to net cash flows
used in operating activities:
Depreciation and depletion 262,525 311,514
Deferred income tax expense (benefit) (70,939) 16,518
Tax effect from stock-based compensation
arrangements -- 717
Amortization of debt issuance costs 15,418 18,717
(Gain) loss on extinguishment of debt (33,673) 6,875
Impairment charges 51,556 --
Other 18,751 1,151
Decrease (increase) in current assets:
Receivables 47,471 (24,918)
Inventories 92,821 3,599
Prepaid expenses and other current assets (7,269) 13,775
Increase (decrease) in current liabilities:
Accounts payable (51,229) (4,117)
Accrued interest 13,106 11,130
Accrued expenses and other current liabilities (7,674) (23,034)
---------- ----------
Cash flows used in operating activities (139,704) (27,076)
---------- ----------
INVESTING ACTIVITIES
Additions to property, plant and equipment (92,999) (153,896)
Proceeds from sale of property, plant and equipment 30,112 --
Proceeds from sale of investments -- 1,559
Other 488 1,824
---------- ----------
Cash flows used in investing activities (62,399) (150,513)
---------- ----------
FINANCING ACTIVITIES
Proceeds from issuance of debt 869,800 897,412
Retirements of debt (427,165) (515,195)
Dividends paid (2,625) (16,889)
Tax effect from stock-based compensation
arrangements -- (717)
Proceeds from stock options exercised 108 279
Debt issuance costs (27,748) (41,588)
Other (303) (293)
---------- ----------
Cash flows provided by financing activities 412,067 323,009
---------- ----------
EFFECT OF FOREIGN EXCHANGE RATES ON CASH (2,250) (1,203)
---------- ----------
Net increase in cash and cash equivalents 207,714 144,217
Cash and cash equivalents at beginning of period 260,818 116,601
---------- ----------
Cash and cash equivalents at end of period $ 468,532 $ 260,818
========== ==========
FOR FURTHER INFORMATION PLEASE CONTACT:
For investors:
Mark H. Tubb
205-745-2627
mark.tubb@walterenergy.com
or
For media:
William Stanhouse
205-745-2664
william.stanhouse@walterenergy.com
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