Walter Industries Inc. (WLT, Financial) filed Quarterly Report for the period ended 2009-06-30.
Walter Energy based in Tampa Fla. formerly Walter Industries Inc. is a leading U.S. producer and exporter of premium metallurgical coal for the global steel industry and also produces steam coal and industrial coal metallurgical coke and coal bed methane gas. It also produces steam coal and industrial coal metallurgical coke and coal bed methane gas. The Company through its operating segments offers products and services including coal and natural gas metallurgical coke mortgage financing and home construction. Its segments include Natural Resources Sloss Financing Homebuilding and Other. The Natural Resources segment consists primarily of Jim Walter Resources Inc. Tuscaloosa Resources Inc. Taft Coal Sales & Associates and United Land Corporation. The Financing segment includes Walter Mortgage Company services non-conforming installment notes and loans that are secured by mortgages and liens. The Homebuilding segment includes Jim Walter Homes Inc. which is Walter Industries Inc. has a market cap of $2.92 billion; its shares were traded at around $55.26 with a P/E ratio of 11.3 and P/S ratio of 1.9. The dividend yield of Walter Industries Inc. stocks is 0.8%. Walter Industries Inc. had an annual average earning growth of 2.7% over the past 10 years.
Approximately 1.1 million tons of metallurgical coal were sold in the second quarter of 2009 at an average price of $116.15 per short ton. April and May were challenging months, with sales volumes well below historical levels. In June, shipments to customers increased and we now are seeing strengthening demand in the metallurgical coal market. Although worldwide demand for metallurgical coal is down, Chinese demand for metallurgical coal has increased significantly. As a result, we have recently sold our premium hard coking coal in line with, and in some cases better than, the $129.00 per metric ton Australian benchmark. The second quarter 2009 metallurgical coal average price per short ton of $116.15 does not include any of our 2008/2009 contracted $315.00 per metric ton carryover tonnage. At the end of the second quarter of 2009, approximately 1.5 metric tons of this higher-priced tonnage from the previous contract year remains undelivered. We are currently negotiating the amount and timing of deliveries of these carryover tons and expect our customers to live up to their commitments. Our sales volume expectation for the third quarter ranges from 1.4 million to 1.6 million tons and our forecasted third quarter operating income per ton ranges from $13.00 to $17.00. Third 19
Metallurgical coal production totaled 1.3 million tons in the second quarter of 2009, down approximately 10% from the second quarter of 2008. As worldwide steel demand softened, we adjusted production to meet market conditions by eliminating Saturday production. Recently, with strengthening demand, we restarted Saturday production. Production costs averaged $69.38 per ton for the quarter ended June 30, 2009 as compared to $57.41 for the second quarter of 2008 as a result of lower production volumes as well as a higher than optimal ratio of higher-cost continuous miner tons to longwall tons. Production costs are expected to decrease to approximately $60.00 to $65.00 per ton in the third quarter of 2009 due to increased volumes and a higher ratio of longwall tons to continuous miner tons. Although production costs are expected to decline in the third quarter of 2009, operating margins will be negatively impacted by the higher average cost per ton in inventory at the beginning of the third quarter. We continue to pursue development work on our future longwall panels. We plan to start up our No. 7 East Mine expansion longwall operation in January 2010. This expansion is projected to provide 2.7 million tons of additional annual capacity. We have not yet determined our production plan for 2010. Freight costs on metallurgical coal sales during the second quarter averaged approximately $14.00 per ton, in line with expectations for 2009, which are projected to average between $14.00 and $15.00 per ton. Royalties are expected to average 6.5% to 7.0% of metallurgical coal revenues, slightly lower than the normal range of 7.0% to 8.0% due to a higher mix of metallurgical coal produced on property we own versus leased property, which is subject to royalty payments. This percentage will return to the normal range once production for Mine No. 7\'s Southwest A panel is completed, which is projected for October 2009. The natural gas business sold 1.6 billion cubic feet of natural gas at an average price of $3.45 per thousand cubic feet in the second quarter of 2009 versus $8.99 per thousand cubic feet in the second quarter of 2008. We have reduced our capital spending for conventional wells in our natural gas business, a strategy we expect to maintain until pricing improves. We will continue to evaluate expansion opportunities, potential acquisitions and further investments in coal and natural gas. Surface Mining
During the second quarter of 2009, the surface mining operations produced 374,000 tons of steam and industrial coal and sold 277,000 tons at an average operating income of $14.66 per ton. In the third quarter of 2009, this business is expected to sell between 300,000 tons and 330,000 tons at an average operating income of between $12.00 to $17.00 per ton, as approximately 90 percent of expected 2009 production has been profitably priced with fixed-price contracts. We changed the name of the United Land subsidiary to Walter Minerals, Inc. in the second quarter of 2009. 20
Walter Coke sold 28,247 tons of metallurgical coke and reported an operating loss of $2.7 million in the second quarter of 2009, reflecting the continued downturn in the domestic steel industry. We expect continued weak demand and additional selling price pressure during the remainder of 2009. As a result, metallurgical coke production has been reduced to approximately 33 percent of capacity. Even with this production cut, we continue to be negatively impacted by the fixed-cost nature of this business. In the third quarter of 2009, metallurgical coke sales are expected to range between 20,000 to 28,000 tons at an average operating loss per ton of between $141.00 and $57.00. Our subsidiary\'s name was changed from Sloss Industries Corporation to Walter Coke, Inc. in the second quarter of 2009. Summary of Second Quarter Consolidated Results of Continuing Operations
Walter Coke\'s operating loss was $2.7 million for the three months ended June 30, 2009 compared to an operating profit of $15.1 million in the same period in 2008, a decrease of $17.8 million. This operating loss was primarily the result of decreased sales volumes and pricing on a relatively high fixed cost structure, partially offset by lower legal expenses.
Read the The complete ReportWLT is in the portfolios of John Keeley of Keeley Fund Management, Jean-Marie Eveillard of Arnhold & S. Bleichroeder Advisers, LLC.
Walter Energy based in Tampa Fla. formerly Walter Industries Inc. is a leading U.S. producer and exporter of premium metallurgical coal for the global steel industry and also produces steam coal and industrial coal metallurgical coke and coal bed methane gas. It also produces steam coal and industrial coal metallurgical coke and coal bed methane gas. The Company through its operating segments offers products and services including coal and natural gas metallurgical coke mortgage financing and home construction. Its segments include Natural Resources Sloss Financing Homebuilding and Other. The Natural Resources segment consists primarily of Jim Walter Resources Inc. Tuscaloosa Resources Inc. Taft Coal Sales & Associates and United Land Corporation. The Financing segment includes Walter Mortgage Company services non-conforming installment notes and loans that are secured by mortgages and liens. The Homebuilding segment includes Jim Walter Homes Inc. which is Walter Industries Inc. has a market cap of $2.92 billion; its shares were traded at around $55.26 with a P/E ratio of 11.3 and P/S ratio of 1.9. The dividend yield of Walter Industries Inc. stocks is 0.8%. Walter Industries Inc. had an annual average earning growth of 2.7% over the past 10 years.
Highlight of Business Operations:
Our income from continuing operations for the three months ended June 30, 2009 was $11.3 million, or $0.21 per diluted share, which compares to $45.6 million, or $0.86 per diluted share, for the three months ended June 30, 2008. In the three months ended June 30, 2009, net sales and revenues decreased $105.3 million and operating income decreased $50.6 million versus the same period in 2008. These decreases were primarily due to lower sales volumes of metallurgical coal and coke in the Underground Mining and Walter Coke segments.Approximately 1.1 million tons of metallurgical coal were sold in the second quarter of 2009 at an average price of $116.15 per short ton. April and May were challenging months, with sales volumes well below historical levels. In June, shipments to customers increased and we now are seeing strengthening demand in the metallurgical coal market. Although worldwide demand for metallurgical coal is down, Chinese demand for metallurgical coal has increased significantly. As a result, we have recently sold our premium hard coking coal in line with, and in some cases better than, the $129.00 per metric ton Australian benchmark. The second quarter 2009 metallurgical coal average price per short ton of $116.15 does not include any of our 2008/2009 contracted $315.00 per metric ton carryover tonnage. At the end of the second quarter of 2009, approximately 1.5 metric tons of this higher-priced tonnage from the previous contract year remains undelivered. We are currently negotiating the amount and timing of deliveries of these carryover tons and expect our customers to live up to their commitments. Our sales volume expectation for the third quarter ranges from 1.4 million to 1.6 million tons and our forecasted third quarter operating income per ton ranges from $13.00 to $17.00. Third 19
Metallurgical coal production totaled 1.3 million tons in the second quarter of 2009, down approximately 10% from the second quarter of 2008. As worldwide steel demand softened, we adjusted production to meet market conditions by eliminating Saturday production. Recently, with strengthening demand, we restarted Saturday production. Production costs averaged $69.38 per ton for the quarter ended June 30, 2009 as compared to $57.41 for the second quarter of 2008 as a result of lower production volumes as well as a higher than optimal ratio of higher-cost continuous miner tons to longwall tons. Production costs are expected to decrease to approximately $60.00 to $65.00 per ton in the third quarter of 2009 due to increased volumes and a higher ratio of longwall tons to continuous miner tons. Although production costs are expected to decline in the third quarter of 2009, operating margins will be negatively impacted by the higher average cost per ton in inventory at the beginning of the third quarter. We continue to pursue development work on our future longwall panels. We plan to start up our No. 7 East Mine expansion longwall operation in January 2010. This expansion is projected to provide 2.7 million tons of additional annual capacity. We have not yet determined our production plan for 2010. Freight costs on metallurgical coal sales during the second quarter averaged approximately $14.00 per ton, in line with expectations for 2009, which are projected to average between $14.00 and $15.00 per ton. Royalties are expected to average 6.5% to 7.0% of metallurgical coal revenues, slightly lower than the normal range of 7.0% to 8.0% due to a higher mix of metallurgical coal produced on property we own versus leased property, which is subject to royalty payments. This percentage will return to the normal range once production for Mine No. 7\'s Southwest A panel is completed, which is projected for October 2009. The natural gas business sold 1.6 billion cubic feet of natural gas at an average price of $3.45 per thousand cubic feet in the second quarter of 2009 versus $8.99 per thousand cubic feet in the second quarter of 2008. We have reduced our capital spending for conventional wells in our natural gas business, a strategy we expect to maintain until pricing improves. We will continue to evaluate expansion opportunities, potential acquisitions and further investments in coal and natural gas. Surface Mining
During the second quarter of 2009, the surface mining operations produced 374,000 tons of steam and industrial coal and sold 277,000 tons at an average operating income of $14.66 per ton. In the third quarter of 2009, this business is expected to sell between 300,000 tons and 330,000 tons at an average operating income of between $12.00 to $17.00 per ton, as approximately 90 percent of expected 2009 production has been profitably priced with fixed-price contracts. We changed the name of the United Land subsidiary to Walter Minerals, Inc. in the second quarter of 2009. 20
Walter Coke sold 28,247 tons of metallurgical coke and reported an operating loss of $2.7 million in the second quarter of 2009, reflecting the continued downturn in the domestic steel industry. We expect continued weak demand and additional selling price pressure during the remainder of 2009. As a result, metallurgical coke production has been reduced to approximately 33 percent of capacity. Even with this production cut, we continue to be negatively impacted by the fixed-cost nature of this business. In the third quarter of 2009, metallurgical coke sales are expected to range between 20,000 to 28,000 tons at an average operating loss per ton of between $141.00 and $57.00. Our subsidiary\'s name was changed from Sloss Industries Corporation to Walter Coke, Inc. in the second quarter of 2009. Summary of Second Quarter Consolidated Results of Continuing Operations
Walter Coke\'s operating loss was $2.7 million for the three months ended June 30, 2009 compared to an operating profit of $15.1 million in the same period in 2008, a decrease of $17.8 million. This operating loss was primarily the result of decreased sales volumes and pricing on a relatively high fixed cost structure, partially offset by lower legal expenses.
Read the The complete ReportWLT is in the portfolios of John Keeley of Keeley Fund Management, Jean-Marie Eveillard of Arnhold & S. Bleichroeder Advisers, LLC.
