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8-K - FORM 8-K - Patriot Coal CORP | c64228e8vk.htm |
Exhibit 99.1
NEWS RELEASE |
CONTACT:
Janine Orf
(314) 275-3680
jorf@patriotcoal.com
Janine Orf
(314) 275-3680
jorf@patriotcoal.com
FOR IMMEDIATE RELEASE
PATRIOT COAL ANNOUNCES RESULTS
FOR THE QUARTER ENDED MARCH 31, 2011
FOR THE QUARTER ENDED MARCH 31, 2011
Summary:
| Record first quarter EBITDA of $48.6 million and EBITDA per ton of $12.52 | ||
| Metallurgical production expanding according to plan | ||
| More than 3 million tons of metallurgical coal contracted for 2011 and 2012 delivery at an average selling price of $173 per ton | ||
| More than 3 million tons of thermal coal for export in 2011 and 2012 | ||
| Nearly 1 million tons of metallurgical coal for 2011 delivery remaining to be priced |
ST. LOUIS, April 21 Patriot Coal Corporation (NYSE: PCX) today reported its financial
results for the quarter ended March 31, 2011. For the 2011 first quarter, the Company reported
record revenues of $577.0 million, record EBITDA of $48.6 million, a net loss of $15.3 million and
net loss per share of $0.17. Revenues and EBITDA for the year-ago quarter were $467.3 million and
$45.2 million, respectively. The 2010 first quarter EBITDA included a net gain on an exchange of
assets of $23.8 million.
This quarter marked a very solid start for the year. We expect 2011 performance to be our
best yet as a public company, with record sales of high-margin metallurgical coal, noted Patriot
President and Chief Executive Officer Richard M. Whiting. Even more important are our strategies
for further performance improvements in 2012 and beyond. We are intensely focused on our plans to
expand metallurgical coal production to at least 11 million tons by 2013, and we have substantially
increased our participation in export thermal markets. Further, as two major legacy coal supply
agreements expire, we expect to realize increased EBITDA of around $50
1
million in 2012 and $150 million in 2013 from higher prices on these volumes. These key factors,
coupled with other operating and commercial plans, will significantly enhance Patriots financial
performance.
In recent months, we continued to lock in annual metallurgical business that will result in
excellent margins. We booked more than 3 million tons of met coal for 2011 and 2012 delivery at an
average selling price of $173 per ton. Our average selling price for met coal for the remainder of
2011 now stands at nearly $150 per ton, continued Whiting. On the thermal side, we continued to
benefit from rising prices in the global marketplace, and have now contracted more than 3 million
tons for delivery to international markets in 2011 and 2012.
Financial Overview
Commenting on the first quarter, Patriot Senior Vice President and Chief Financial Officer
Mark N. Schroeder noted, Our EBITDA and EBITDA per ton continued to expand, marking our highest
quarter since becoming a public company. This was a result of solid production across nearly all
mining complexes, coupled with higher met sales and increased met pricing. On the cost side of the
equation, our operating cost per ton in the 2011 first quarter came in as expected and was on the
low end of our 2011 guidance. And we achieved higher EBITDA this quarter even while we experienced
hard cutting and equipment issues at the Panther longwall mine.
Discussing met volume, Schroeder continued, Our planned met expansion in 2011 is progressing
well, and we increased met sales in the first quarter as a result of incremental production from
our new and expanded mines. We continue to forecast 2011 met sales between 8.0 and 8.4 million
tons.
Revenues in the 2011 first quarter were $577.0 million, compared with $467.3 million in the
prior year quarter. Higher revenues in the 2011 quarter compared with the prior year resulted
from both selling price and sales volume improvement in 2011.
Sales in the first quarter totaled 8.0 million tons, including 6.1 million tons of thermal
and 1.9 million tons of metallurgical coal. Total sales were five percent higher than the 7.6
million tons sold in the first quarter of 2010, which included 6.0 million tons of thermal and 1.6
million tons of metallurgical coal.
EBITDA in the 2011 first quarter was $48.6 million, compared with $45.2 million in the same
quarter of 2010. Higher EBITDA was driven by higher average selling prices and sales volumes.
Additionally, the year-ago quarter benefited from a $23.8 million gain from a property transaction.
2
Credit and Capital
As of March 31, 2011, the Company had available liquidity of just under $450 million, with a
cash balance of $241.3 million and no borrowings on its revolving credit facility or its
receivables securitization program.
Capital expenditures totaled $30.4 million in the 2011 first quarter. For 2011, the Company
expects capital expenditures to be in the guidance range of $150 to $175 million, as Patriot
continues its metallurgical coal expansion program.
During the quarter, the Company collected $115.7 million of outstanding notes receivable.
This receipt replaced quarterly payments scheduled over the next four years, and resulted in a $5.9
million charge.
Safety and Environmental
As a result of the Companys comprehensive safety program, in the first quarter Patriot
achieved an accident incidence rate of 2.60 per 200,000 hours worked, compared with an incidence
rate of 3.53 for the 2010 year. Additionally, the Rivers Edge metallurgical mine in the Wells
complex received the Mountaineer Guardian Safety Award for the second consecutive year, and four of
the Companys operations received Joseph A. Holmes Safety Association awards for their 2010 safety
performance, including an award for zero safety incidents in 2010 at the Rocklick preparation
plant.
As part of Patriots continued safety focus, the Company recently established the Patriot
Award. This new award is designed to recognize best-in-class safety performance and programs
throughout Patriots mining portfolio, as well as share safety ideas throughout the Company. The
Dodge Hill No. 1 underground mine won this inaugural award for its overall 2010 safety performance.
In recognition of outstanding reclamation, Patriot operations also received five awards during
the quarter, including an award granted to the Campbells Creek complex by the West Virginia Coal
Association and the West Virginia Department of Environmental Protection for exceptional
reclamation of surface areas.
Market Overview
China has long been considered the leader in growing demand for both metallurgical and
thermal coal. Over the next 20 years, Indias population is expected to surpass that of China,
with their total combined populations approaching 3 billion. Within this timeframe, an
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additional 10 percent of both Chinese and Indian populations is expected to be urbanized.
The simultaneous population growth and urban development of these two countries magnifies their
need for substantially higher levels of commodities, including metallurgical and thermal coal.
Global coal demand, coupled with constrained supply, is resulting in higher U.S. coal
exports. Total coal exports from the U.S. are on track to reach 100 million tons in 2011. This
represents a doubling of exports since 2006 and a 25 percent increase over the strong export
market in 2010. In connection with this added demand, year-to-date coal production in Central
Appalachia has increased over the prior year.
U.S. metallurgical coal exports in 2010 were the highest in almost 20 years, and met markets
remained robust during the 2011 first quarter. The Company is embarking on a multi-year expansion
of met coal production to meet growing customer demand. During the quarter, a second continuous
miner section began production at the Black Oak mine. Additionally, the Gateway Eagle mine in the
Rocklick complex and the Workman Branch mine in the Wells complex are both expected to be brought
on-line in the second quarter. Development work is also ongoing at the new Peerless mine in the
Kanawha Eagle complex, which is projected to be operational in early 2012.
Global thermal markets also continue to strengthen. During the quarter, the API2 forward
price curve allowed for contracting of Appalachian thermal coal exports to Europe for deliveries
through 2012 at prices more favorable than the domestic market. Patriot has contracted more than 2
million thermal tons for delivery to international markets in 2011. Equally important, the Company
also contracted more than 1 million tons for delivery to international markets in 2012. While
Patriots expansion has focused on met production up to this point, as the thermal market further
tightens, the Company has abundant high-quality thermal reserves to grow production at the
appropriate time.
Patriot continues to develop and implement detailed growth plans to fully participate in these
rapidly growing global coal markets. The Company expects to export 25 percent of its total 2011
shipments to meet international demand.
Outlook
For the year 2011, the Company continues to anticipate sales volume in the range of 30 to 32
million tons, including metallurgical coal sales of 8.0 to 8.4 million tons. The Company
continues to expect 2011 cost per ton in the range of $63 to $67 for the Appalachia segment and
$40 to $43 for the Illinois Basin segment.
4
Average selling prices of currently priced tons for the remainder of 2011 and for 2012 are as
follows:
2011 | 2012 | |||||||||||||||
(Tons in millions) | Tons | Price per ton | Tons | Price per ton | ||||||||||||
Appalachia thermal |
11.4 | $ | 60 | 9.5 | $ | 63 | ||||||||||
Illinois Basin thermal |
5.2 | $ | 41 | 3.6 | $ | 49 | ||||||||||
Appalachia met |
5.5 | $ | 149 | 0.8 | $ | 156 | ||||||||||
Total |
22.1 | 13.9 | ||||||||||||||
Priced thermal business for the remainder of 2011 and for 2012 includes 6.1 million tons and
4.7 million tons, respectively, related to legacy contracts priced significantly below the current
market.
The Company has 0.6 to 1.0 million tons of met coal and 1.0 to 1.3 million tons of thermal
coal remaining to be priced for 2011 delivery.
Conference Call
Management will hold a conference call to discuss the first quarter results on April 21, 2011,
at 10:00 a.m. Central Time. The conference call can be accessed by dialing 800-230-1093, or
through the Patriot Coal website at www.patriotcoal.com. International callers can dial
612-234-9959 to access the conference call. A replay of the conference call will be available on
the Companys website and also by telephone, at 800-475-6701 for domestic callers or 320-365-3844
for international callers, access code 199328.
About Patriot Coal
Patriot Coal Corporation is a leading producer and marketer of coal in the eastern United States,
with 14 active mining complexes in Appalachia and the Illinois Basin. The Company ships to
domestic and international electricity generators, industrial users and metallurgical coal
customers, and controls approximately 1.9 billion tons of proven and probable coal reserves. The
Companys common stock trades on the New York Stock Exchange under the symbol PCX.
5
Forward-Looking Statements
Certain statements in this press release are forward-looking as defined in the Private Securities
Litigation Reform Act of 1995. These statements involve certain risks and uncertainties that may
be beyond our control and may cause our actual future results to differ materially from
expectations. We do not undertake to update our forward-looking statements. Factors that could
affect our results include, but are not limited to: price volatility and demand, particularly in
higher margin products; geologic, equipment and operational risks associated with mining; changes
in general economic conditions, including coal, power and steel market conditions; coal mining laws
and regulations; the availability and costs of competing energy resources; legislative and
regulatory developments; risks associated with environmental laws and compliance, including
selenium-related matters; developments in greenhouse gas emission regulation and treatment;
negotiation of labor contracts, labor availability and relations; the outcome of pending or future
litigation; changes in the costs to provide healthcare to eligible active employees and certain
retirees under postretirement benefit obligations; increases to contribution requirements to
multi-employer retiree healthcare and pension plans; reductions of purchases or deferral of
shipments by major customers; availability and costs of credit; customer performance and credit
risks; inflationary trends; worldwide economic and political conditions; downturns in consumer and
company spending; supplier and contract miner performance and the availability and cost of key
equipment and commodities; availability and costs of transportation; the Companys ability to
replace coal reserves; the outcome of commercial negotiations involving sales contracts or other
transactions; our ability to respond to changing customer preferences; failure to comply with debt
covenants; the effects of mergers, acquisitions and divestitures; and weather patterns affecting
energy demand. The Company undertakes no obligation (and expressly disclaims any such obligation)
to publicly update or revise any forward-looking statement, whether as a result of new information,
future events or otherwise. For additional information concerning factors that could cause actual
results to materially differ from those projected herein, please refer to the Companys Form 10-K
and Form 10-Q reports.
# # # # #
6
Condensed Consolidated Statements of Operations (Unaudited)
For the Three Months Ended March 31, 2011 and 2010
For the Three Months Ended March 31, 2011 and 2010
(In thousands, except share and per share data)
Three Months Ended March 31, | ||||||||
2011 | 2010 | |||||||
Tons sold |
7,962 | 7,595 | ||||||
Revenues |
||||||||
Sales |
$ | 570,378 | $ | 464,208 | ||||
Other revenues |
6,646 | 3,049 | ||||||
Total revenues |
577,024 | 467,257 | ||||||
Costs and expenses |
||||||||
Operating costs and expenses |
515,986 | 433,491 | ||||||
Depreciation, depletion and amortization |
44,702 | 49,612 | ||||||
Reclamation and remediation obligation expense |
14,454 | 10,846 | ||||||
Sales contract accretion |
(18,610 | ) | (25,308 | ) | ||||
Selling and administrative expenses |
12,544 | 12,774 | ||||||
Net gain on disposal or exchange of assets |
(43 | ) | (23,796 | ) | ||||
Loss (income) from equity affiliates |
78 | (448 | ) | |||||
Operating profit |
7,913 | 10,086 | ||||||
Interest expense and other |
22,860 | 9,032 | ||||||
Interest income |
(46 | ) | (3,442 | ) | ||||
Income (loss) before income taxes |
(14,901 | ) | 4,496 | |||||
Income tax provision |
395 | 235 | ||||||
Net income (loss) |
$ | (15,296 | ) | $ | 4,261 | |||
Weighted average shares outstanding |
||||||||
Basic |
91,284,321 | 90,835,561 | ||||||
Effect of dilutive securities |
| 1,331,396 | ||||||
Diluted |
91,284,321 | 92,166,957 | ||||||
Earnings (loss) per share, basic and diluted |
$ | (0.17 | ) | $ | 0.05 | |||
EBITDA |
$ | 48,606 | $ | 45,236 | ||||
This information is intended to be reviewed in conjunction with the Companys filings with the Securities and Exchange Commission.
Supplemental Financial Data (Unaudited)
For the Three Months Ended March 31, 2011 and 2010
For the Three Months Ended March 31, 2011 and 2010
Three Months Ended March 31, | ||||||||
2011 | 2010 | |||||||
Tons Sold (In thousands) |
||||||||
Appalachia Mining Operations |
6,198 | 5,849 | ||||||
Illinois Basin Mining Operations |
1,764 | 1,746 | ||||||
Total |
7,962 | 7,595 | ||||||
Revenue Summary (Dollars in thousands) |
||||||||
Appalachia Mining Operations |
$ | 495,678 | $ | 390,380 | ||||
Illinois Basin Mining Operations |
74,700 | 73,828 | ||||||
Appalachia Other |
6,646 | 3,049 | ||||||
Total |
$ | 577,024 | $ | 467,257 | ||||
Revenues per Ton Mining Operations |
||||||||
Appalachia |
$ | 79.97 | $ | 66.74 | ||||
Illinois Basin |
42.35 | 42.28 | ||||||
Total |
71.64 | 61.12 | ||||||
Operating Costs per Ton Mining Operations (1) |
||||||||
Appalachia |
$ | 64.28 | $ | 54.99 | ||||
Illinois Basin |
40.98 | 38.38 | ||||||
Total |
59.12 | 51.17 | ||||||
Segment Adjusted EBITDA per Ton Mining Operations |
||||||||
Appalachia |
$ | 15.69 | $ | 11.75 | ||||
Illinois Basin |
1.37 | 3.90 | ||||||
Total |
12.52 | 9.95 |
Dollars in thousands | ||||||||
Past Mining Obligation Expense |
$ | 44,106 | $ | 43,466 | ||||
Capital Expenditures (Excludes Acquisitions) |
30,384 | 35,130 |
(1) | Operating costs are the direct costs of our mining operations, including income (loss) from equity affiliates, and excluding costs for past mining obligations, reclamation and remediation obligations, depreciation, depletion and amortization, restructuring and impairment charge and sales contract accretion. |
This information is intended to be reviewed in conjunction with the Companys filings with the Securities and Exchange Commission.
Condensed Consolidated Balance Sheets
March 31, 2011 and December 31, 2010
March 31, 2011 and December 31, 2010
(Dollars in thousands)
March 31, | December 31, | |||||||
2011 | 2010 | |||||||
(Unaudited) | ||||||||
Cash and cash equivalents |
$ | 241,338 | $ | 193,067 | ||||
Receivables |
196,371 | 207,365 | ||||||
Inventories |
100,844 | 97,973 | ||||||
Other current assets |
41,725 | 28,648 | ||||||
Total current assets |
580,278 | 527,053 | ||||||
Net property, plant, equipment and mine development |
3,148,859 | 3,160,535 | ||||||
Notes receivable |
| 69,540 | ||||||
Investments and other assets |
66,349 | 52,908 | ||||||
Total assets |
$ | 3,795,486 | $ | 3,810,036 | ||||
Accounts payable and accrued liabilities |
$ | 407,842 | $ | 409,284 | ||||
Below market sales contracts acquired |
60,681 | 70,917 | ||||||
Current portion of debt |
3,349 | 3,329 | ||||||
Total current liabilities |
471,872 | 483,530 | ||||||
Long-term debt, less current maturities |
452,214 | 451,529 | ||||||
Below market sales contracts acquired, noncurrent |
79,203 | 92,253 | ||||||
Other noncurrent liabilities |
1,948,157 | 1,939,643 | ||||||
Total liabilities |
2,951,446 | 2,966,955 | ||||||
Common stock, paid-in capital and retained earnings |
1,139,253 | 1,150,776 | ||||||
Accumulated other comprehensive loss |
(295,213 | ) | (307,695 | ) | ||||
Total stockholders equity |
844,040 | 843,081 | ||||||
Total liabilities and stockholders equity |
$ | 3,795,486 | $ | 3,810,036 | ||||
This information is intended to be reviewed in conjunction with the Companys
filings with the Securities and Exchange Commission.
Condensed Consolidated Statements of Cash Flows (Unaudited)
For the Three Months Ended March 31, 2011 and 2010
For the Three Months Ended March 31, 2011 and 2010
(Dollars in thousands)
Three Months Ended March 31, | ||||||||
2011 | 2010 | |||||||
Cash Flows from Operating Activities |
||||||||
Net Income (loss) |
$ | (15,296 | ) | $ | 4,261 | |||
Adjustments to reconcile net income (loss) to net cash |
||||||||
provided by (used in) operating activities: |
||||||||
Depreciation, depletion and amortization |
44,702 | 49,612 | ||||||
Sales contract accretion |
(18,610 | ) | (25,308 | ) | ||||
Net gain on disposal or exchange of assets |
(43 | ) | (23,796 | ) | ||||
Changes in working capital and other |
(39,052 | ) | 27,341 | |||||
Net cash provided by (used in) operating activities |
(28,299 | ) | 32,110 | |||||
Cash Flows from Investing Activities |
||||||||
Additions to property, plant, equipment and mine development |
(30,384 | ) | (35,130 | ) | ||||
Additions to advance mining royalties |
(6,753 | ) | (5,177 | ) | ||||
Proceeds from disposal or exchange of assets |
279 | 400 | ||||||
Proceeds from notes receivable |
115,679 | 9,500 | ||||||
Net cash provided by (used in) investing activities |
78,821 | (30,407 | ) | |||||
Cash Flows from Financing Activities |
||||||||
Long-term debt payments |
(1,608 | ) | (2,494 | ) | ||||
Deferred financing costs |
(1,605 | ) | (900 | ) | ||||
Proceeds from employee stock programs |
962 | 1,082 | ||||||
Net cash used in financing activities |
(2,251 | ) | (2,312 | ) | ||||
Net increase (decrease) in cash and cash equivalents |
48,271 | (609 | ) | |||||
Cash and cash equivalents at beginning of period |
193,067 | 27,098 | ||||||
Cash and cash equivalents at end of period |
$ | 241,338 | $ | 26,489 | ||||
This information is intended to be reviewed in conjunction with the
Companys filings with the Securities and Exchange Commission.
Reconciliation of Net Income (Loss) to EBITDA (Unaudited)
For the Three Months Ended March 31, 2011 and 2010
For the Three Months Ended March 31, 2011 and 2010
(Dollars in thousands)
Three Months Ended March 31, | ||||||||
Reconciliation of net income (loss) to EBITDA | 2011 | 2010 | ||||||
Net income (loss) |
$ | (15,296 | ) | $ | 4,261 | |||
Depreciation, depletion and amortization |
44,702 | 49,612 | ||||||
Reclamation and remediation obligation expense |
14,454 | 10,846 | ||||||
Sales contract accretion |
(18,610 | ) | (25,308 | ) | ||||
Restructuring and impairment charge |
147 | | ||||||
Interest expense and other |
22,860 | 9,032 | ||||||
Interest income |
(46 | ) | (3,442 | ) | ||||
Income tax provision |
395 | 235 | ||||||
EBITDA |
$ | 48,606 | $ | 45,236 | ||||
This information is intended to be reviewed in conjunction with the Companys
filings with the Securities and Exchange Commission.