Walter Energy 2Q14 Earnings Call Notes

posted in: Notes | 0

This post is part of a series of posts called “Company Notes.” These posts contain quotes and exhibits from earnings calls, conference presentations, analyst days and SEC filings. Full transcripts can be found at Seeking Alpha

Encountered some adverse mining conditions

“Although we encountered some adverse mining conditions in the quarter, I am pleased with our overall performance and four and seven are running as expected.”

Produced 2.4m tons, sold 2.7m

“Second quarter met coal production totaled 2.4 million tons. Production was down compared to last year in large part due to idling Wolverine in April. Combined met coal production at mines four and seven was 1.8 million tons compared with 1.9 million tons last year and in the first quarter of this year…Met coal sales totaled 2.7 million tons in the quarter, up 11% versus last year. ”

646m in liquidity

“On a pro forma basis, the Company’s liquidity at June 30th was 646 million comprised of 612 million of cash and 34 million of unused capacity under the revolving credit facility. We believe we’ve taken the necessary steps to manage our liquidity and position ourselves to reduce financial risk prospectively.’

First debt maturity now 2018 vs 2015 formerly

“I think the date that matters with respect to runway if that’s what you are pointing to, is the first material debt maturity now versus even three to four months ago it used to be in 2015, now it’s April 2018 and again we will take the necessary actions to put ourselves in a position to refinance the debt at that time. So, we are focused on all the controllables”

No liquidity concerns in our company at this point

“As I mentioned on the last call, the timing of any asset sales is dependent on the recovery in met markets and there is no liquidity concerns in our company at this point. We think we have adequate liquidity and we’re not going fire sale assets.”

We do believe our equity is undervalued right now

“I think as we mentioned on the last call, if you remember that we do believe our equity is undervalued right now but at the same point we are not ruling anything out but it’s not really part of it, that debt equity swaps have never been — it’s not a program by any means”

Hard to say when capacity cuts will start to work through into pricing because people are still clearing inventories

“As I said, there has been about 20 million tons announced in terms of what’s been implemented, I think a large amount of that may have been implemented, but they are now they are working just as we are, the inventories both at the mine and then those inventories have to work the way clear through the customer. And that’s going to take some time to estimate how quickly that will happen is very-very difficult. I have seen estimates as early as we’ll start to really see the impact of that in the fourth quarter. I’ve seen folks say that they believe that will be early next year, but it’s really very hard to tell.”

I think these cuts are enough to balance the market

” given the projects that are coming online and the announced cuts, I think we might be pretty close to balance once it all works its way through.”