The producer and exporter of premium coal Walter Energy Inc. (WLT) provided insight relating to its financial performance for the second half of the year. The company expects third quarter earnings per share to be in the band of $1.00 to $1.16, while fourth quarter earnings are expected to range between $2.63 and $2.95 per share.
The Zacks Consensus Estimates for third-quarter 2011, fiscal year 2011 and fiscal year 2012 are currently $1.08 per share, $10.38 per share and $11.68 per share, respectively.
Walter Energy expects to retain the first half 2011 metallurgical coal sales level of 5.2 million metric tons in the second half of the year, despite difficult geological conditions that affected production from the Alabama mines and Northeast British Columbia operations. However, sales in the second half of 2011 will be lower than the initial expectation of 5.9 million metric tons.
Operating income in the third quarter is expected to be between $125 million and $145 million and net income between $63 million and $73 million. Walter Energy continues to recover from nature’s fury and expects to pick up its performance from the fourth quarter of the year. The operating income guidance for the final quarter of 2011 is in the $255–$295 million range, with a net income of $165–$185 million.
First-Half Recap
The first quarter 2011 earnings of $1.53 per share more than doubled 77 cents per share earned in the first quarter of 2010. The year-over-year gain in the quarter resulted from robust revenue growth helped by better coal pricing in the period.
The company earned $2.36 per share, in the second quarter 2011, compared with $2.16 per share in the year-ago quarter. The results in the most recent quarter were affected by weather-related challenges at both Alabama and Northeast British Columbia operations.
The coal industry on the whole is thriving on increasing demand from the steel and power generation industries. Walter Energy, a key player in the U.S. market, stands to gain from this demand surge. Although natural calamities have impeded the company’s progress, Walter Energy is back on the path of recovery and is expected to improve on its performance in the forthcoming years.
Walter Energy currently retains a Zacks #3 Rank, which translates into a short-term Hold rating. The company competes with Arch Coal Inc. (ACI) and CONSOL Energy Inc. (CNX).
Tampa, Florida-based Walter Energy is one of the leading U.S. producers and exporters of premium metallurgical coal to the global steel industry in the United States.
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