Walter Energy Announces First Quarter 2012 Results

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BIRMINGHAM, AL--(Marketwire -05/02/12)- Walter Energy, Inc. (WLT - News) (WLT.TO - News)

  • First Quarter Revenues Reach $632 Million; EPS of $0.65; Operating Income of $84 Million; EBITDA of $144 Million
  • Realizes All-Time Record Quarterly Metallurgical Coal Production of 3 Million Metric Tons
  • Metallurgical Coal Sales of 2.4 Million; Inventory Grows by Over 500,000 Metric Tons
  • Recent Costs Per Ton of Hard Coking Coal Continue to Improve in the U.S. and Canada

(Note: Trend comparisons with Fourth Quarter 2011 vs. First Quarter 2011 are included due to the Western Coal acquisition, effective April 1, 2011.)

Walter Energy, Inc. (WLT - News) (WLT.TO - News), the world's leading, publicly traded "pure-play" producer of metallurgical (met) coal for the global steel industry, today announced results for the first quarter ended March 31, 2012.

"Our first quarter results reflect sales of 2.4 million metric tons (MMTs) of met coal and were in line with the latest outlook we provided. However, when compared with prior periods, the first quarter reflects reduced profitability," said Walt Scheller, Chief Executive Officer. "First-quarter met coal production of 3 MMTs was better than our outlook for 2.8 to 2.9 MMTs and set a new quarterly record. I am particularly pleased that consolidated cash costs per ton of hard coking coal (HCC) have improved 12 percent when compared with the fourth quarter of 2011. Walter is on target to achieve our production targets while continuing to focus on further cost reductions."

First Quarter Financial Results

For the first quarter 2012, revenues reached $632 million, up significantly from the $409 million reported in the first quarter of 2011, reflecting the acquisition of Western Coal. As noted in the table below, operating income, net income and earnings per share were all lower in the first quarter of 2012 compared with the same period a year ago, reflecting losses from the Canadian and U.K. operations (including one-time costs at the Willow mine), higher U.S. operating costs and increased interest expense.

Operating income was $84 million in the first quarter 2012 and was comprised of $107 million from U.S. operations, partially offset by a first-quarter operating loss of $14 million in the Canadian and U.K. operations and a $9 million loss in the other segment. The operating loss in the Canadian and U.K. operations was primarily due to high operating costs. Earnings before interest, taxes, depreciation and amortization (EBITDA) was lower in the first quarter of 2012 reflecting these higher operating costs as mentioned. Lower coal sales prices also reduced all operating results compared with the fourth quarter of 2011.

                                                Q1 2012    Q1 2011* Q4 2011Revenue (millions)                             $632      $409      $700Operating income (millions)                    $84       $120      $137Net income (millions)                          $41       $82       $84EPS - Diluted                                  $0.65     $1.53     $1.34Average shares - Diluted (millions)            62.7      53.5      62.7EBITDA (millions)                              $144      $148      $207Met Coal Sales (MMTs)                          2.4       1.5       2.4Met Coal Production (MMTs)                     3.0       1.5       2.4Consolidated Product MetricsAverage Net Selling Price                HCC   $226      $214      $244                                         PCI   $188      N/A       $212Cash Cost Per Ton                        HCC   $116      $100      $132                                         PCI   $208      N/A       $165                                               $159**              $145**U.S. Product MetricsAverage Net Selling Price                HCC   $221      $214      $243Cash Cost Per Ton                        HCC   $110      $100      $119Canada and U.K. MetricsAverage Net Selling Price                HCC   $250      N/A       $249                                         PCI   $188      N/A       $212Cash Cost Per Ton                        HCC   $145      N/A       $168

*Does not include Western Coal Corporation, which was acquired April 1, 2011
**Cash cost per ton of pulverized coal injection (PCI) coal, excluding the Willow project

Cash Costs

The consolidated cash cost for HCC decreased 12 percent to $116 per metric ton (MT) compared with $132 per MT in the fourth quarter 2011. In the U.S. operations, the cash cost of HCC decreased 7 percent to $110 per MT compared with $119 per MT in the prior quarter. In the Canadian operations, the cash cost of HCC decreased 14 percent to $145 per MT compared with $168 in the prior quarter.

The improvement in cash cost for HCC was partially offset by higher cash costs per MT for PCI in the first quarter of 2012 compared with the fourth quarter 2011. At the Brule PCI mine, the cash cost per MT was $159 in the first quarter of 2012. Overall PCI cash costs per ton in the first quarter 2012 were affected by low first quarter production at the Willow mine, which resulted from the planned wash plant outage necessary to upgrade its capability to process HCC. The wash plant upgrade was successfully completed during the quarter and will allow for the processing of premium low-vol HCC from the Willow mine going forward.

Liquidity and Capital Expenditures

At the end of the first quarter 2012, available liquidity was $366 million, consisting of cash and cash equivalents of $138 million plus $228 million available under the Company's $375 million credit revolver. Capital expenditures for the first quarter were $121 million.

Metallurgical Sales Volume and Pricing

As anticipated in the Company's first-quarter outlook news release issued March 26, 2012, consolidated met coal sales volume was 2.4 MMTs in the first quarter of 2012. HCC sales volume of 1.9 MMTs was up 25 percent compared with 1.5 MMTs in the first quarter 2011, prior to the acquisition of Western Coal. PCI sales volume was 0.5 MMTs in the first quarter of 2012.

The average first-quarter 2012 selling price of HCC was $226 per MT, slightly above the $220 per MT price estimated in the Company's first-quarter outlook. However, the HCC selling price was 7 percent lower than the $244 per MT achieved last quarter, reflecting world market trends. The average first-quarter selling price for PCI was $188 per MT, again above the estimate of $180 per MT in the first-quarter outlook, but 11 percent lower than the $212 per MT achieved in the fourth quarter of 2011, reflecting world market trends.

Metallurgical Coal Production

Consolidated met coal production reached a quarterly record of 3 MMTs in the first quarter 2012, double the 1.5 MMTs produced in the first quarter of 2011 due largely to the acquisition of Western Coal. Compared with the fourth quarter, met coal production is up almost 25 percent from 2.4 MMTs produced in the fourth quarter 2011.

The Company increased its higher margin HCC production to 2.4 MMTs in the first quarter of 2012. HCC comprised 80 percent of met production in the first quarter of 2012 compared with 76 percent in the fourth quarter 2011. The remainder of met coal output in both periods was low-vol PCI coal.

2012 Production Guidance

The Company continues to forecast that full-year 2012 met coal production will be between 11.5 and 13.0 MMTs, of which an estimated 75 percent to 80 percent will be HCC and the remainder will be low-vol PCI.

Safety and Stewardship Highlights

U.S. operations reduced its total recordable injury rate by 16 percent in the first quarter of 2012 compared with first quarter 2011. Canadian and U.K. operations reduced their total reportable injury rate by 5 percent compared with the same period last year.

On April 20, the Brule mine was awarded the Edward Prior Safety Award for 2011 by the Office of the Chief Inspector of Mines from the Ministry of Natural Resource Operations in British Columbia, Canada, as recognition for dedication to safe operations in all aspects of its mining operations.

Use of Non-GAAP Measures

This release contains the use of certain U.S. non-GAAP (Generally Accepted Accounting Principles) measures. These non-GAAP measures are provided as supplemental information for financial measures prepared in accordance with GAAP. Management believes that these non-GAAP measures provide additional insights into the performance of the Company, and they reflect how management analyzes Company performance and compares that performance against other companies. A reconciliation of non-GAAP to GAAP measures is provided in the financial section of this release.

Conference Call Webcast

The Company will hold a conference call webcast to discuss first quarter 2012 results Thursday, May 3, 2012, at 8 a.m. CDT. To listen to the live event, visit www.walterenergy.com.

About Walter Energy

Walter Energy is the world's leading, publicly traded "pure-play" metallurgical coal producer for the global steel industry with strategic access to high-growth steel markets in Asia, South America and Europe. The Company also produces thermal coal, anthracite, metallurgical coke and coal bed methane gas. Walter Energy employs approximately 4,400 employees and contractors with operations in the United States, Canada and United Kingdom. For more information about Walter Energy, please visit www.walterenergy.com.

Safe Harbor Statement

Except for historical information contained herein, the statements in this release are forward-looking and made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and may involve a number of risks and uncertainties. Forward-looking statements are based on information available to management at the time, and they involve judgments and estimates. Forward-looking statements include expressions such as "believe," "anticipate," "expect," "estimate," "intend," "may," "plan," "predict," "will," and similar terms and expressions. These forward-looking statements are made based on expectations and beliefs concerning future events affecting us and are subject to various risks, uncertainties and factors relating to our operations and business environment, all of which are difficult to predict and many of which are beyond our control, that could cause our actual results to differ materially from those matters expressed in or implied by these forward-looking statements. The following factors are among those that may cause actual results to differ materially from our forward-looking statements: the market demand for coal, coke and natural gas as well as changes in pricing and costs; the availability of raw material, labor, equipment and transportation; changes in weather and geologic conditions; changes in extraction costs, pricing and assumptions and projections concerning reserves in our mining operations; changes in customer orders; pricing actions by our competitors, customers, suppliers and contractors; changes in governmental policies and laws, including with respect to safety enhancements and environmental initiatives; availability and costs of credit, surety bonds and letters of credit; and changes in general economic conditions. Forward-looking statements made by us in this release, or elsewhere, speak only as of the date on which the statements were made. See also the "Risk Factors" in our 2011 Annual Report on Form 10-K and subsequent filings with the SEC, which are currently available on our website at www.walterenergy.com. New risks and uncertainties arise from time to time, and it is impossible for us to predict these events or how they may affect us or our anticipated results. We have no duty to, and do not intend to, update or revise the forward-looking statements in this release, except as may be required by law. In light of these risks and uncertainties, readers should keep in mind that any forward-looking statement made in this press release may not occur. All data presented herein is as of the date of this release unless otherwise noted.

                     WALTER ENERGY, INC. AND SUBSIDIARIES              CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS            ($ in thousands, except per share and share amounts)                                 Unaudited                                                   For the three months                                                      ended March 31,                                               ----------------------------                                                  2012 (1)         2011                                               -------------  -------------Revenues:    Sales                                      $     627,298  $     406,575    Miscellaneous income                               4,265          2,159                                               -------------  -------------                                                     631,563        408,734                                               -------------  -------------Costs and expenses:    Cost of sales (exclusive of depreciation     and depletion)                                  431,534        218,460    Depreciation and depletion                        66,493         28,358    Selling, general and administrative (2)           36,247         31,882    Postretirement benefits                           13,213         10,267                                               -------------  -------------                                                     547,487        288,967                                               -------------  -------------Operating income                                      84,076        119,767    Interest expense                                 (28,067)        (3,556)    Interest income                                      277            156    Other loss (3)                                    (6,993)             -                                               -------------  -------------Income before income tax expense                      49,293        116,367Income tax expense (4)                                 8,677         34,554                                               -------------  -------------Net income                                     $      40,616  $      81,813                                               =============  =============Net income per share:    Basic                                      $        0.65  $        1.54                                               =============  =============    Diluted                                    $        0.65  $        1.53                                               =============  =============Weighted average number of common shares outstanding (5):    Basic                                         62,462,692     53,190,274                                               =============  =============    Diluted                                       62,739,018     53,519,062                                               =============  =============Comprehensive income                           $      45,281  $      94,470                                               =============  =============(1) Includes results of Western Coal acquired on April 1, 2011.(2) The 2011 first quarter includes $9.9 million of costs associated with    the acquisition of Western Coal.(3) The 2012 first quarter includes losses on the sale and re-measurement to    fair value of equity investments.(4) The provision for income taxes in the first quarter of 2012 at a rate of    17.6% is based on an estimated effective annual tax rate for the year as    compared to 29.7% for the first quarter of 2011. The effective tax rate    for 2012 is lower than the first quarter 2011 tax rate, primarily due to    estimated foreign income and losses and the related international    jurisdictional tax rates which were not relevant to the Company prior to    the acquisition of Western Coal.(5) The 2012 first quarter weighted average number of shares outstanding    gives effect to the issuance of 8,951,558 common shares on April 1, 2011    in connection with the acquisition of Western Coal.                    WALTER ENERGY, INC. AND SUBSIDIARIES                      RESULTS BY OPERATING SEGMENT (1)                              ($ in thousands)                                 Unaudited                                                   For the three months                                                      ended March 31,                                               ----------------------------                                                    2012           2011                                               -------------  -------------REVENUES:U.S. Operations                                $     452,150  $     407,936Canadian and U.K. Operations                         178,351              -Other                                                  1,062            798                                               -------------  -------------  Revenues                                     $     631,563  $     408,734                                               =============  =============OPERATING INCOME (LOSS):U.S. Operations                                $     106,981  $     138,973Canadian and U.K. Operations                         (13,555)             -Other (2)                                             (9,350)       (19,206)                                               -------------  -------------  Operating income                             $      84,076  $     119,767                                               =============  =============DEPRECIATION AND DEPLETION:U.S. Operations                                $      42,142  $      28,169Canadian and U.K. Operations                          24,136              -Other                                                    215            189                                               -------------  -------------  Depreciation and Depletion                   $      66,493  $      28,358                                               =============  =============CAPITAL EXPENDITURES:U.S. Operations                                $      36,112  $      44,136Canadian and U.K. Operations                          84,180              -Other                                                    553            157                                               -------------  -------------  Capital Expenditures                         $     120,845  $      44,293                                               =============  =============(1) Beginning in the second quarter of 2011 the Company reports all    operations located in the U.S. in the U.S. Operations segment which    includes Walter Energy's historical operating segments of Underground    Mining, Surface Mining and Walter Coke along with the West Virginia    mining operations acquired through the April 1, 2011 acquisition of    Western Coal. The Company reports its mining operations located in    northeast British Columbia (Canada) and South Wales (United Kingdom),    both acquired through the Western Coal acquisition, in the Canadian and    U.K. Operations segment. The Other segment primarily includes corporate    expenses. Segment information for the first quarter 2011 has been    restated to reflect the current segment reporting structure.(2) The 2011 first quarter includes $9.9 million of costs associated with    the acquisition of Western Coal.                    WALTER ENERGY, INC. AND SUBSIDIARIES    QUARTERLY STATISTICAL RESULTS BY OPERATING SEGMENT AND MAJOR PRODUCT        (Ton information in thousand metric tons and dollars in USD)Consolidated Statistical Information by Major Product                                      3 months      3 months      3 months                                        ended         ended         ended                                      March 31,     March 31,   December 31,                                        2012          2011          2011                                    ------------  ------------  ------------Total Metallurgical  Sales Metric Tons                        2,367         1,487         2,401  Production Metric Tons                   2,964         1,500         2,408  Average Net Selling Price         $     217.97  $     213.98  $     237.36  Average Cash Cost per Ton   (1)(2)(3)                        $     136.05  $      99.55  $     139.08Hard Coking  Sales Metric Tons                        1,857         1,487         1,878  Production Metric Tons                   2,378         1,500         1,840  Average Net Selling Price         $     226.21  $     213.98  $     244.34  Average Cash Cost per Ton (1)(3)  $     116.35  $      99.55  $     131.74Low Vol PCI  Sales Metric Tons                          510             -           523  Production Metric Tons                     586             -           567    Production Metric Tons - Willow     Creek                                   120             -           155    Production Metric Tons - All     other                                   466             -           412  Average Net Selling Price         $     187.97  $          -  $     212.29  Average Cash Cost per Ton   (1)(2)(3)                        $     207.76  $          -  $     165.44    Average Cash Cost per Ton -     Willow Creek (1)(2)(3)         $     448.87  $          -  $     216.14    Average Cash Cost per Ton - All     other (1)(3)                   $     159.23  $          -  $     145.49Thermal  Sales Metric Tons                          807           321         1,068  Production Metric Tons                     847           268           993  Average Net Selling Price         $      72.78  $      92.11  $      69.86  Average Cash Cost per Ton (1)(3)  $      79.87  $      76.13  $      69.40US Segment Statistical Information by Major Product                                      3 months      3 months      3 months                                        ended         ended         ended                                      March 31,     March 31,   December 31,                                        2012          2011          2011                                    ------------  ------------  ------------Hard Coking  Sales Metric Tons                        1,535         1,487         1,390  Production Metric Tons                   1,969         1,500         1,449  Average Net Selling Price         $     221.22  $     213.98  $     242.61  Average Cash Cost per Ton (1)(3)  $     110.33  $      99.55  $     118.88Thermal  Sales Metric Tons                          782           321         1,036  Production Metric Tons                     816           268           965  Average Net Selling Price         $      71.27  $      92.11  $      68.71  Average Cash Cost per Ton (1)(3)  $      78.87  $      76.13  $      66.92Canada and UK Segment Statistical Information by Major Product                                      3 months      3 months      3 months                                        ended         ended         ended                                      March 31,     March 31,   December 31,                                        2012          2011          2011                                    ------------  ------------  ------------Total Metallurgical  Sales Metric Tons                          832             -         1,011  Production Metric Tons                     994             -           959  Average Net Selling Price         $     211.95  $          -  $     230.13  Average Cash Cost per Ton   (1)(2)(3)                        $     183.52  $          -  $     166.84Hard Coking  Sales Metric Tons                          322             -           488  Production Metric Tons                     408             -           391  Average Net Selling Price         $     250.00  $          -  $     249.24  Average Cash Cost per Ton (1)(3)  $     145.07  $          -  $     168.34Low Vol PCI  Sales Metric Tons                          510             -           523  Production Metric Tons                     586             -           567    Production Metric Tons - Willow     Creek                                   120             -           155    Production Metric Tons - All     other                                   466             -           412  Average Net Selling Price         $     187.97  $          -  $     212.29  Average Cash Cost per Ton   (1)(2)(3)                        $     207.76  $          -  $     165.44    Average Cash Cost per Ton -     Willow Creek (1)(2)(3)         $     448.87  $          -  $     216.14    Average Cash Cost per Ton - All     other (1)(3)                   $     159.23  $          -  $     145.49Thermal  Sales Metric Tons                           25             -            32  Production Metric Tons                      30             -            28  Average Net Selling Price         $     120.96  $          -  $     106.94  Average Cash Cost per Ton (1)(3)  $     111.86  $          -  $     149.08(1) Average Cash Cost per Ton is based on reported Cost of Sales and    includes items such as freight, royalties, manpower, fuel and other    similar production and sales cost items but excludes depreciation,    depletion and post retirement benefits. Average Cash Cost per Ton is a    non-GAAP financial measure which is not calculated in conformity with    U.S. Generally Accepted Accounting Principles (GAAP) and should be    considered supplemental to, and not as a substitute or superior to    financial measures calculated in conformity with GAAP. We believe Cash    Cost per Ton is a useful measure as our management uses that as a    measure of performance and we believe it aids some investors and    analysts in comparing us against other companies to help analyze our    current and future potential performance.(2) Production and Average Cash Cost per Ton for our Willow Creek mining    operations are separately provided for the current quarter as the mine's    production was adversely impacted by a planned wash plant outage    necessary to upgrade its capability to process premium low-volatile hard    coking coal. The plant upgrade was completed during the quarter.(3) Reconciliation of Cash Cost per Ton to Cost of Sales as disclosed (in    thousands USD):
                                       3 months      3 months      3 months                                     ended March   ended March      ended                                      31, 2012      31, 2011    December 31,                                       Actual        Actual      2011 Actual                                    ------------  ------------  ------------Cash Costs as calculated from above (sales tons times average cash cost per ton)                      $    386,513  $    172,438  $    408,058Cash Costs of other products              45,021        46,022        42,746Purchase Accounting One-Time Effects on Cost of Sales                      -             -         4,300                                    ------------  ------------  ------------  Total Cost of Sales               $    431,534  $    218,460  $    455,104                                    ============  ============  ============                    WALTER ENERGY, INC. AND SUBSIDIARIES                    CONDENSED CONSOLIDATED BALANCE SHEETS                              ($ in thousands)                                  Unaudited                                                             As of                                                  --------------------------                                                                   Recast                                                    March 31,   December 31,                                                    2012 (1)       2011(1)                                                  ------------  ------------ASSETSCash and cash equivalents                         $    138,200  $    128,430Receivables, net                                       293,674       313,343Inventories                                            309,742       240,437Deferred income taxes                                   58,894        61,079Prepaid expenses                                        44,226        49,974Other current assets                                    39,242        45,649                                                  ------------  ------------  Total current assets                                 883,978       838,912Mineral interests, net                               3,034,630     3,056,258Property, plant and equipment, net                   1,678,957     1,631,333Deferred income taxes                                  109,868       109,300Goodwill                                             1,066,754     1,066,754Other long-term assets                                 138,081       153,951                                                  ------------  ------------TOTAL ASSETS                                      $  6,912,268  $  6,856,508                                                  ============  ============LIABILITIES AND STOCKHOLDERS' EQUITYCurrent debt                                      $     69,144  $     56,695Accounts payable                                       125,494       112,661Accrued expenses                                       194,477       229,067Accumulated postretirement benefits obligation          27,714        27,247Other current liabilities                               55,953        63,757                                                  ------------  ------------  Total current liabilities                            472,782       489,427Long-term debt                                       2,312,858     2,269,020Deferred income taxes                                1,018,333     1,029,336Accumulated postretirement benefits obligation         553,863       550,671Other long-term liabilities                            379,236       381,537                                                  ------------  ------------TOTAL LIABILITIES                                    4,737,072     4,719,991STOCKHOLDERS' EQUITY                                 2,175,196     2,136,517                                                  ------------  ------------TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY        $  6,912,268  $  6,856,508                                                  ============  ============(1) Includes accounts of Western Coal acquired on April 1, 2011. The    purchase price has been allocated to the assets acquired and liabilities    assumed based on their estimated fair values at the date of acquisition.    The acquisition was finalized during the 2012 first quarter. The    December 31, 2011 balance sheet has been recast to reflect the impacts    of finalizing the allocation of the purchase price. Retained earnings, a    component of stockholder's equity, as of December 31, 2011 was increased    by $14.4 million, primarily due to a decrease in mineral interests    depletion and income tax expense related to 2011.                    WALTER ENERGY, INC. AND SUBSIDIARIES    CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY                 FOR THE THREE MONTHS ENDED MARCH 31, 2012                 ($ in thousands, except per share amounts)                                 Unaudited                                                               Accumulated                                         Capital in               Other                                  Common  Excess of Retained  Comprehensive                         Total     Stock  Par Value Earnings  Income (Loss)                      ----------  ------ ---------- --------  -------------Balance at December 31, 2011, recast (1) $2,136,517  $  624 $1,620,430 $744,939  $    (229,476)Net income                40,616                      40,616Other comprehensive income, net of tax        4,665                                      4,665Stock issued upon the exercise of stock options                     120       1        119Dividends paid, $0.125 per share         (7,806)                     (7,806)Stock-based compensation                947                947Excess tax benefits from stock-based compensation arrangements                783                783Other                       (646)      -          -     (646)                      ----------  ------ ---------- --------  -------------Balance at March 31, 2012                 $2,175,196  $  625 $1,622,279 $777,103  $    (224,811)                      ==========  ====== ========== ========  =============(1) Retained earnings as of December 31, 2011 has been recast to reflect the    impacts of finalizing the allocation of the Western Coal purchase price.    The balance was increased by $14.4 million primarily due to a decrease    in mineral interests depletion and income tax expense related to 2011.                    WALTER ENERGY, INC. AND SUBSIDIARIES              CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS                              ($ in thousands)                                 Unaudited                                                 For the three months ended                                                          March 31,                                                 --------------------------                                                     2012          2011                                                 ------------  ------------OPERATING ACTIVITIESNet income                                       $     40,616  $     81,813Adjustments to reconcile net income to net cash flows provided by (used in) operating activities:  Depreciation and depletion                           66,493        28,358  Deferred income tax credit                          (10,894)            -  Amortization of debt issuance costs                   3,644           786  Other                                                 8,756         3,175  Decrease (increase) in current assets:    Receivables                                        16,889        (1,753)    Inventories                                       (63,192)        1,190    Prepaid expenses and other current assets           5,462         6,488  Increase (decrease) in current liabilities:    Accounts payable                                   37,604        (5,444)    Accrued expenses and other current     liabilities                                      (34,524)       33,912                                                 ------------  ------------      Cash flows provided by operating       activities                                      70,854       148,525                                                 ------------  ------------INVESTING ACTIVITIES  Additions to property, plant and equipment         (120,845)      (44,293)  Investment in Western Coal Corp.

- (293,678) Proceeds from sales of investments 12,228 - Other (85) 211 ------------ ------------ Cash flows used in investing activities (108,702) (337,760) ------------ ------------FINANCING ACTIVITIES Borrowings under revolving credit agreement 135,294 - Repayments on revolving credit agreement (70,156) - Retirements of debt (9,177) (7,199) Dividends paid (7,806) (6,642) Other (624) 2,336 ------------ ------------ Cash flows provided by (used in) financing activities 47,531 (11,505) ------------ ------------EFFECT OF FOREIGN EXCHANGE RATES ON CASH 87 - ------------ ------------Net increase (decrease) in cash and cash equivalents $ 9,770 $ (200,740) ============ ============Cash and cash equivalents at beginning of period $ 128,430 $ 293,410Add: Cash and cash equivalents of discontinued operations at beginning of period - 535Net increase (decrease) in cash and cash equivalents 9,770 (200,740) ------------ ------------Cash and cash equivalents at end of period $ 138,200 $ 93,205 ============ ============ WALTER ENERGY, INC. AND SUBSIDIARIES SUPPLEMENTAL INFORMATION UnauditedRECONCILIATION OF EBITDA TO AMOUNTS REPORTED UNDER US GAAP: For the three months ended March 31, --------------------------($ in thousands) 2012 2011 ------------ ------------Net income $ 40,616 $ 81,813 Add interest expense 28,067 3,556 Less interest income (277) (156) Add income tax expense 8,677 34,554 Add depreciation and depletion expense 66,493 28,358 ------------ ------------ Earnings before interest, income taxes, and depreciation and depletion (EBITDA) (1) $ 143,576 $ 148,125 ============ ============(1) EBITDA is defined as earnings from continuing operations before interest expense, interest income, income taxes, and depreciation and depletion expense. EBITDA is a financial measure which is not calculated in conformity with U.S. Generally Accepted Accounting Principles (GAAP) and should be considered supplemental to, and not as a substitute or superior to financial measures calculated in conformity with GAAP. We believe that EBITDA is a useful measure as some investors and analysts use EBITDA to compare us against other companies and to help analyze our ability to satisfy principal and interest obligations and capital expenditure needs. EBITDA may not be comparable to similarly titled measures used by other entities.

Contact:
Investor Relations
Paul Blalock
Vice President, Investor Relations
205.745.2627
paul.blalock@walterenergy.com

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