Shares of Walter Energy (WLT) have dropped about 18% after the company cut significantly cut its divided. Walter Energy slashed its dividend to $0.01 per share, down from the $0.125 per share that the company’s shareholders had become accustomed to receiving.
According to the GuruFocus Dividend data, the company’s shareholders have received an over $0.10 quarterly cash distribution since Aug. 2008, and this marks the first decrease in dividend since 2001.
On July 23, Walter Energy released a statement reporting that the company had completed its credit facility amendment and reset its dividend. The press release stated:
In light of current metallurgical coal market conditions, the Board of Directors has approved a reduction in the Company’s regular quarterly dividend to $0.01 per share from $0.125 per share. The dividend is payable on Sept. 6, 2013 to shareholders of the record as of the close of business on Aug. 6, 2013.
The company’s historical dividend growth:
· 10-year: 20.6%
· 5-year: 13.3%
· 3-year: 5.7%
· 1-year: 0%
Prior to this drastic cut, the company offered a 4.30% dividend yield. The company now yields less than 0.3%
Walter Energy is a “pure-play” producer of metallurgical coal for the global steel industry with 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’s historical price, revenue and net income:
Walter Energy’s second quarter 2013 Earnings Release is scheduled for Aug. 1, but the company released preliminary second quarter operating results on July 23 which reported:
· Metallurgical coal production is expected to total approximately 2.9 million metric tons (MMT), up approximately 7% from the first quarter.
· Met coal cash cost of production per metric ton is expected to have declined by more than 10% from the first quarter.
· Met coal sales of approximately 2.4 MMTs, a decrease from the first quarter of approximately 0.3 MMTs. The company also expects that the coal cash cost of sales per MT to increase by approximately 2%.
"We significantly reduced costs in the second quarter led by strong performance from our Alabama premium hard coking coal mines," said Walt Scheller, chief executive officer. "I am pleased with our operational progress; however our financial results for the quarter still reflect the significant ongoing weakness in the global met coal market. While the short-term outlook for global met coal pricing remains depressed, we continue to maintain our focus on operating safely and efficiently, lowering costs and improving our financial performance."
Last month Walter Energy shares sank after the company pulled a planned $1.55 billion credit refinancing plan.
GuruFocus’ analysis on Walter Energy reports:
· The company’s revenue has been in decline over the past year.
· The company has a poor share buyback record. The stock is now traded at -83.1% below its buyback price.
· Walter has issued $2.3 billion of debt over the past three years.
· The company’s inventory is building up, which means it could be having difficulty selling its product.
· The P/E ratio is at a 3-year low.
Walter Energy has a market cap of $691.2 million. Its shares are currently trading at around $11.53 with a P/E ratio of 4.10, a P/S ratio of 0.40 and a P/B ratio of 0.80.
Steven Cohen, Chuck Royce and John Keeley all maintain positions in Walter Energy. Click here to see their holding histories.
According to the GuruFocus Dividend data, the company’s shareholders have received an over $0.10 quarterly cash distribution since Aug. 2008, and this marks the first decrease in dividend since 2001.
On July 23, Walter Energy released a statement reporting that the company had completed its credit facility amendment and reset its dividend. The press release stated:
In light of current metallurgical coal market conditions, the Board of Directors has approved a reduction in the Company’s regular quarterly dividend to $0.01 per share from $0.125 per share. The dividend is payable on Sept. 6, 2013 to shareholders of the record as of the close of business on Aug. 6, 2013.
The company’s historical dividend growth:
· 10-year: 20.6%
· 5-year: 13.3%
· 3-year: 5.7%
· 1-year: 0%
Prior to this drastic cut, the company offered a 4.30% dividend yield. The company now yields less than 0.3%
Walter Energy is a “pure-play” producer of metallurgical coal for the global steel industry with 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’s historical price, revenue and net income:
Walter Energy’s second quarter 2013 Earnings Release is scheduled for Aug. 1, but the company released preliminary second quarter operating results on July 23 which reported:
· Metallurgical coal production is expected to total approximately 2.9 million metric tons (MMT), up approximately 7% from the first quarter.
· Met coal cash cost of production per metric ton is expected to have declined by more than 10% from the first quarter.
· Met coal sales of approximately 2.4 MMTs, a decrease from the first quarter of approximately 0.3 MMTs. The company also expects that the coal cash cost of sales per MT to increase by approximately 2%.
"We significantly reduced costs in the second quarter led by strong performance from our Alabama premium hard coking coal mines," said Walt Scheller, chief executive officer. "I am pleased with our operational progress; however our financial results for the quarter still reflect the significant ongoing weakness in the global met coal market. While the short-term outlook for global met coal pricing remains depressed, we continue to maintain our focus on operating safely and efficiently, lowering costs and improving our financial performance."
Last month Walter Energy shares sank after the company pulled a planned $1.55 billion credit refinancing plan.
GuruFocus’ analysis on Walter Energy reports:
· The company’s revenue has been in decline over the past year.
· The company has a poor share buyback record. The stock is now traded at -83.1% below its buyback price.
· Walter has issued $2.3 billion of debt over the past three years.
· The company’s inventory is building up, which means it could be having difficulty selling its product.
· The P/E ratio is at a 3-year low.
Walter Energy has a market cap of $691.2 million. Its shares are currently trading at around $11.53 with a P/E ratio of 4.10, a P/S ratio of 0.40 and a P/B ratio of 0.80.
Steven Cohen, Chuck Royce and John Keeley all maintain positions in Walter Energy. Click here to see their holding histories.
