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Walter Industries Inc. Reports Operating Results (10-Q)

May 07, 2010 | About:

Walter Industries Inc. (WLT) filed Quarterly Report for the period ended 2010-03-31.

Walter Industries Inc. has a market cap of $3.97 billion; its shares were traded at around $74.08 with a P/E ratio of 36.3 and P/S ratio of 4.2. The dividend yield of Walter Industries Inc. stocks is 0.5%. Walter Industries Inc. had an annual average earning growth of 1.7% over the past 10 years.WLT is in the portfolios of John Keeley of Keeley Fund Management, Steven Cohen of SAC Capital Advisors, George Soros of Soros Fund Management LLC, Jeremy Grantham of GMO LLC.

Highlight of Business Operations:

Our income from continuing operations for the three months ended March 31, 2010 was $42.7 million, or $0.79 per diluted share, which compares to $72.9 million, or $1.36 per diluted share, for the three months ended March 31, 2009. In the three months ended March 31, 2010, net sales and revenues increased $28.9 million and operating income decreased $30.2 million versus the same period in 2009. Net sales and revenues in the first quarter 2010 improved as compared to the first quarter 2009 primarily due to higher metallurgical coke and coking coal sales volumes, partially offset by lower realized selling prices for coking coal. Although revenues grew, our operating income for the quarter declined as a result of lower coking coal selling prices and higher production and royalty costs on a per ton basis at Underground Mining's No. 7 Mine.

During the first quarter of 2010, the surface mining operations produced 345,000 tons of steam and industrial coal and sold 375,000 tons at an average operating income of $18.41 per ton. The average selling price improved $8.41 per ton versus the first quarter of 2009. In the second quarter of 2010, we expect to sell between 350,000 and 385,000 tons at an average operating income of between $3.00 to $7.00 per ton. The second quarter operating income forecast includes the impact of planned special maintenance costs of $3.5 million or approximately $10.00 per ton. In April 2010, we announced that Walter Minerals will open its Reid School coking coal surface mine. The mine has approximately 0.6 million tons of predominantly high quality, high-vol coking coal reserves and is expected to produce 0.2 million tons of annual production over the next three years. Walter Coke

Walter Coke sold 139,081 tons of metallurgical coke at an average price of $327.37 per ton in the first quarter of 2010. In the first quarter of 2009, we sold 45,200 tons at a price of $308.26 per ton. The increase in average selling price and sales volume reflects the strengthening domestic steel capacity utilization versus the prior year period. Second quarter 2010 metallurgical coke sales are expected to be between 95,000 to 97,000 tons, a more normalized level than the 139,081 tons sold in the first quarter 2010, which reflected tons sold from production added to inventory in 2009. Continued increases in metallurgical coke prices are expected to result in a forecasted operating income per ton of $90.00 to $99.00 in the second quarter of 2010. 17

Our Board of Directors increased our quarterly dividend by 25 percent to $0.125 per common share, payable on June 4, 2010 to shareholders of record at the close of business on May 7, 2010. In the second quarter of 2010 we expect our corporate overhead costs to exceed our first quarter run rate by approximately $4.0 million due to costs incurred in the acquisitions of coal and gas assets. Excluding outlays for acquisitions of coal and gas properties, capital expenditures for 2010 are expected to total approximately $115.0 million including approximately $80.0 million of maintenance capital for all of the businesses. Summary of First Quarter Consolidated Results of Continuing Operations

Underground Mining, which includes the operations of Jim Walter Resources and Blue Creek Coal Sales, reported revenues of $240.3 million in the first quarter of 2010, a decrease of $3.9 million compared to the same period in 2009. The decrease in revenues was primarily due to a decrease in the average selling price of hard coking coal, partially offset by the effect of an increase in coking coal sales volumes, as compared to the same period in 2009.

Surface Mining, which includes the operations of TRI, Taft and Walter Minerals, reported a revenue increase of $4.7 million in the first quarter of 2010 compared to the same period last year. The increase in revenues was primarily attributable to a 14.0% increase in the volume of coal sold as well as an $8.41,

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