Highlights: - EBITDA of $25.4 million for third quarter - EBITDA up
40 percent year-to-date - Revenues increased 3 percent over prior
year and 38 percent year-to-date - Segment adjusted EBITDA per ton
of $8.25, up 32 percent over second quarter - Federal and Panther
longwalls running at normalized rates by quarter-end ST. LOUIS,
Oct. 27 /PRNewswire-FirstCall/ -- Patriot Coal Corporation
(NYSE:PCX) today reported its financial results for the quarter
ended September 30, 2009. The Company reported revenues of $506.2
million, EBITDA of $25.4 million, net income of $52.8 million and
diluted earnings per share of $0.58 for the 2009 third quarter. For
the first nine months of 2009, Patriot reported revenues of $1.5
billion, EBITDA of $78.2 million, net income of $116.4 million, and
diluted earnings per share of $1.40. Accretion related to shipments
on below-market sales and purchase contracts obtained in the Magnum
Coal acquisition in July 2008 totaled $94.0 million and $232.5
million, respectively, in the third quarter and first nine months
of 2009. "We achieved solid EBITDA of more than $25 million this
quarter, validating the steps we have taken in our Management
Action Plan in 2009. We are seeing positive results from our
ongoing emphasis on cash and cost control, as well as
rationalization of higher-cost production. We are also benefiting
from our commercial initiatives, as we work closely with our
customers to restructure certain contracts," said Patriot Chief
Executive Officer Richard M. Whiting. "Productivity this quarter
improved at a number of our operations, including mines in our
Wells and Corridor G complexes. Additionally, as we further managed
our production base by closing the Samples mine, we stepped up our
brokerage activity and were opportunistic in purchasing third-party
coal." Commenting on segment adjusted EBITDA for the quarter,
Patriot Senior Vice President and Chief Financial Officer Mark N.
Schroeder noted, "Our EBITDA this quarter improved $2.00 per ton,
or 32 percent, compared to the second quarter. This improvement
occurred despite costs related to the Panther longwall move,
challenging geology at the Federal mine and miner vacations typical
in the third quarter. Revenues per ton were $4.29 higher, primarily
as a result of the rebound in metallurgical volumes. As with
revenues, operating costs per ton in the third quarter were also
influenced by higher metallurgical tons in our total mix. With the
new Panther longwall equipment in place and expected performance at
Federal, we anticipate improvement in cost per ton in the fourth
quarter." Financial Overview Tons sold in the third quarter
included 6.3 million tons of thermal and 1.5 million tons of
metallurgical coal, compared to 7.3 million and 1.0 million tons of
thermal and metallurgical coal, respectively, in the 2009 second
quarter. Metallurgical volumes were higher in the third quarter as
customers took more consistent delivery of contracted tons. "Met
coal volumes were up 50 percent compared to second quarter, and,
significantly, met costs were down by more than $5.00 per ton. With
a more normal mix of met and thermal shipments, coupled with
improved longwall performance, we expect to see a reduction in
overall cost per ton in the fourth quarter," added Schroeder. Sales
volume in the 2009 third quarter declined 300,000 tons from the
prior year, largely a result of rationalized production related to
lower demand for thermal coal. For the first nine months of 2009,
shipments of 24.6 million tons represented an increase of 5.4
million from the prior year, primarily driven by the Magnum
acquisition. Revenues in the 2009 third quarter were $506.2
million, comparable with revenues of $507.0 million in the 2009
second quarter. Slightly higher revenues in the Appalachia Mining
Operations segment were offset by slightly lower revenues in the
Illinois Basin segment. Revenues in the 2009 third quarter
increased $16.6 million over the prior year amount, as a result of
higher average selling prices, partially offset by lower tons sold.
Revenues for the first nine months of 2009 compared to 2008
increased $428.5 million, primarily due to the addition of the
Magnum results, as well as higher average selling prices. EBITDA in
the 2009 third quarter was $25.4 million, following EBITDA in the
2009 first and second quarters of $21.9 and $30.9 million,
respectively. EBITDA was negative $2.2 million in the year-ago
quarter. EBITDA for the first nine months of 2009 increased 40
percent compared to $56.0 million for the first nine months of
2008. During the quarter, the Company successfully restructured
three thermal coal contracts, resulting in compensation for
shortfalls in contracted shipments. These restructurings increased
sales contract accretion by $25.0 million in the 2009 third
quarter, as shipments in future periods were reduced. Both the
Federal and Panther longwalls operated at less than their
normalized levels during the quarter. As anticipated, in the
current panel the Federal longwall experienced a rock parting in
the coal seam. In addition, adverse roof conditions were
encountered which had not been experienced in the parting area of
previous panels. By quarter-end the longwall was operating in more
favorable geology and running near its normalized level. And, based
on production at this point in October, Federal is on pace for its
best month of production in 2009. In the next panel, which will be
the final panel of the current mining area, the Company has further
refined the mine plan to avoid this adverse geology. In mid-2010,
the Federal longwall will move to the South area of the mine, where
overall geology is expected to be more favorable. At Panther, the
longwall move during the quarter included significant upgrades to
components of the longwall mining equipment. Downtime related to
the longwall move, together with time required to fully integrate
the new equipment, caused Panther's output to be lower in the
quarter. Importantly, by quarter-end, the longwall was operating
near its normalized run-rate. During October, the longwall has
continued to perform well and has had the most consistent
performance of any month in 2009. Credit and Capital As of
September 30, 2009, Patriot had no borrowings on its revolving
credit facility, and a cash balance of $48.6 million. Letters of
credit at September 30, 2009 were $349 million, leaving unused
borrowing capacity of $174 million on its $522.5 million facility.
Including the Company's cash balance, Patriot had available
liquidity of $222 million at September 30, 2009. Capital
expenditures totaled $19.3 million in the 2009 third quarter, as
the Company continued to tightly control spending. Total debt was
$205.4 million as of September 30, 2009, consisting mainly of the
3.25 percent convertible debt due in 2013. "Patriot was
cash-neutral for the quarter, despite the longwall move and the
impact of miner vacations. Net cash provided by operating
activities was $39.5 million in the first nine months of 2009. We
expect our cash from operations to continue to fund our capital
expenditure needs," commented Schroeder. Safety and Environmental
Awards Maintaining safe operations continues to be a top priority
at Patriot. During the first nine months of 2009, Patriot achieved
a safety incidence rate of 3.63 per 200,000 hours worked. This
compares favorably to the national average industry rate for all
coal mines of 3.97 per 200,000 hours worked and to the Company's
safety incidence rate of 3.79 for the first nine months of 2008.
During the quarter, the Company was recognized with a number of
safety and reclamation awards. Patriot's mine rescue teams received
first place awards in the first aid and pre-shift categories of the
National Mine Rescue Contest, as well as third place in the
combination, or overall, category. In the Southern West Virginia
Mine Rescue Contest, Patriot teams placed first in the overall mine
rescue, first aid, and combination categories. And in the
reclamation area, Patriot received the Commissioner's Award of
Excellence in Reclamation from the Kentucky Department of Natural
Resources for work at the Patriot surface operation. Market
Overview "Looking forward, we continue to see signs of strength in
the metallurgical coal market, as domestic steel mill utilization
has improved for 25 consecutive weeks and currently stands at 62
percent. We expect this market to continue to strengthen throughout
2010," continued Patriot Chief Executive Officer Richard M.
Whiting. "At Patriot, we have the ability to essentially double our
met volume from the current run-rate of approximately 5.0 million
tons to around 9.5 million tons, as market conditions warrant. This
ramp-up could take place in a relatively short period of time with
a fairly modest capital outlay. Our decisions to increase met
production will clearly be based on the pricing and duration of new
sales commitments with our long-established customer base." "In
international markets, higher fixed asset investments in China have
led to higher steel production and increased met coal imports.
While U.S. coal producers have not historically shipped large
quantities of met coal to China, there have been a number of U.S.
exports to China in recent months," added Whiting. "In fact,
Patriot recently entered into an agreement that we believe will
represent the first meaningful shipments of U.S. high volatile met
coal to China." "We are also seeing an improvement in customer
sentiment on the thermal side, even though inventory levels remain
high. In just the last month, customers who had previously
indicated that they wanted to discuss delivery deferrals are now
indicating that these discussions are no longer necessary. We
believe this is the result of concerns over coal supply and
permitting issues, as well as higher natural gas prices," noted
Whiting. Outlook "Looking forward to 2010, customer demand has
stabilized. We have a solid base of 2010 booked business and are
comfortable with our unpriced volumes remaining in each of our
operating regions. Further, Patriot has flexibility with our
diverse operating platform to selectively increase production as
conditions warrant," concluded Schroeder. Average selling prices of
currently priced tons for the remainder of 2009 and 2010 are as
follows: (Tons in millions) 2009 2010 -------------------
------------------- Tons Price per ton Tons Price per ton ----
------------- ---- ------------- Appalachia - thermal 5.3 $56 15.9
$59 Illinois Basin - thermal 1.9 $38 7.0 $39 Appalachia - met 1.5
$97 2.2 $86 --- --- Total 8.7 25.1 === ==== Amounts above reflect
recent contract restructuring arrangements, including the blending
of lower quality metallurgical coal at lower prices to replace
higher quality tons previously contracted. Unpriced volumes for
2010 will depend on the finalization of production plans, taking
into account demand, pricing, the Company's cost structure and the
availability of mining permits. Projected sales volumes and other
guidance for 2010 are expected to be provided in conjunction with
the Company's fourth quarter earnings report. Conference Call
Management will hold a conference call to discuss the third quarter
results on October 27, 2009, at 10:00 a.m. Central Daylight Time.
The conference call can be accessed by dialing 800-553-0288, or
through the Patriot Coal website at http://www.patriotcoal.com/.
International callers can dial 612-332-0345 to access the
conference call. A replay of the conference call will be available
on the Company's website and also by telephone, at 800-475-6701 for
domestic callers or 320-365-3844 for international callers, access
code 120014. About Patriot Coal Patriot Coal Corporation is a
leading producer and marketer of coal in the eastern United States,
with 14 current mining complexes in Appalachia and the Illinois
Basin. The Company ships to domestic and international electric
utilities, industrial users and metallurgical coal customers, and
controls approximately 1.8 billion tons of proven and probable coal
reserves. The Company's common stock trades on the New York Stock
Exchange under the symbol PCX. 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: geologic, equipment and
operational risks associated with mining; changes in general
economic conditions, including coal and power market conditions;
reductions of purchases or deferral of deliveries by major
customers; customer performance and credit risks; the outcome of
commercial negotiations involving sales contracts or other
transactions; legislative and regulatory developments; risks
associated with environmental laws and compliance; developments in
greenhouse gas emission, regulation and treatment; coal mining laws
and regulations; availability and costs of credit; economic
strength and political stability of countries in which we serve
customers; 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; worldwide economic and political conditions; labor
availability and relations; the Company's ability to replace coal
reserves; the effects of mergers, acquisitions and divestitures;
our ability to respond to changing customer preferences; price
volatility and demand, particularly in higher margin products;
failure to comply with debt covenants; the outcome of pending or
future litigation; weather patterns affecting energy demand;
changes in postretirement benefit obligations; changes in
contribution requirements to multi-employer benefit funds; and the
availability and costs of competing energy resources. 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 Company's Form 10-K and Form 10-Q
reports. Condensed Consolidated Statements of Operations
(Unaudited) For the Three Months Ended September 30, 2009 and 2008
and June 30, 2009 (In thousands, except share and per share data)
Three Months Ended ------------------------------------ September
30, June 30, September 30, 2009 2009 2008 ---- ---- ---- Tons sold
7,834 8,269 8,170 ===== ===== ===== Revenues Sales $493,147
$485,049 $486,171 Other revenues 13,042 21,947 3,412 ------ ------
----- Total revenues 506,189 506,996 489,583 Costs and expenses
Operating costs and expenses 469,521 468,729 500,270 Depreciation,
depletion and amortization 50,413 50,357 42,215 Reclamation and
remediation obligation expense 9,206 7,611 5,051 Sales contract
accretion (93,988) (61,721) (137,389) Selling and administrative
expenses 11,272 11,360 7,533 Net gain on disposal or exchange of
assets (10) (4,031) (491) --- ------ ---- Operating profit 59,775
34,691 72,394 Interest expense 10,656 9,137 7,378 Interest income
(3,723) (5,836) (3,588) Income tax benefit - - (2,595) --- ---
------ Net income $52,842 $31,390 $71,199 ======= ======= =======
Weighted average shares outstanding Basic 90,277,301 79,940,308
71,681,084 Effect of dilutive securities 794,839 138,299 520,595
------- ------- ------- Diluted 91,072,140 80,078,607 72,201,679
========== ========== ========== Earnings per share, basic and
diluted Basic $0.59 $0.39 $0.99 Diluted $0.58 $0.39 $0.99 EBITDA
$25,406 $30,938 $(2,199) ======= ======= ======= This information
is intended to be reviewed in conjunction with the Company's
filings with the Securities and Exchange Commission. Condensed
Consolidated Statements of Operations (Unaudited) For the Nine
Months Ended September 30, 2009 and 2008 (In thousands, except
share and per share data) Nine Months Ended September 30,
---------------- 2009 2008 ---- ---- Tons sold 24,561 19,116 ======
====== Revenues Sales $1,501,034 $1,093,741 Other revenues 41,087
19,856 ------ ------ Total revenues 1,542,121 1,113,597 Costs and
expenses Operating costs and expenses 1,432,458 1,054,835
Depreciation, depletion and amortization 155,749 81,730 Reclamation
and remediation obligation expense 23,268 11,726 Sales contract
accretion (232,516) (137,389) Selling and administrative expenses
35,518 25,310 Net gain on disposal or exchange of assets (4,071)
(7,021) ------ ------ Operating profit 131,715 84,406 Interest
expense 28,386 15,496 Interest income (13,046) (10,458) -------
------- Net income $116,375 $79,368 ======== ======= Weighted
average shares outstanding Basic 82,753,236 59,614,902 Effect of
dilutive securities 558,338 450,362 ------- ------- Diluted
83,311,574 60,065,264 ========== ========== Earnings per share,
basic and diluted Basic $1.41 $1.33 Diluted $1.40 $1.32 EBITDA
$78,216 $56,003 ======= ======= This information is intended to be
reviewed in conjunction with the Company's filings with the
Securities and Exchange Commission. Supplemental Financial Data
(Unaudited) For the Three Months Ended September 30, 2009 and 2008
and June 30, 2009 Three Months Ended -----------------------------
September June September 30, 30, 30, 2009 2009 2008 ---- ---- ----
Tons Sold (In thousands) ------------------------ Appalachia Mining
Operations 6,124 6,498 6,365 Illinois Basin Mining Operations 1,710
1,771 1,805 ----- ----- ----- Total 7,834 8,269 8,170 ===== =====
===== Revenue Summary (Dollars in thousands)
-------------------------------------- Appalachia Mining Operations
$427,230 $415,089 $419,079 Illinois Basin Mining Operations 65,917
69,960 67,092 Appalachia Other 13,042 21,947 3,412 ------ ------
----- Total $506,189 $506,996 $489,583 ======== ======== ========
Revenues per Ton - Mining Operations
------------------------------------ Appalachia $69.76 $63.88
$65.84 Illinois Basin 38.55 39.50 37.17 Total 62.95 58.66 59.51
Operating Costs per Ton - Mining Operations (1)
----------------------------------------------- Appalachia $59.22
$56.52 $60.75 Illinois Basin 38.52 37.31 36.58 Total 54.70 52.41
55.42 Segment Adjusted EBITDA per Ton - Mining Operations
------------------------------- Appalachia $10.54 $7.36 $5.09
Illinois Basin 0.03 2.19 0.59 Total 8.25 6.25 4.09 Dollars in
thousands ---------------------- Past Mining Obligation Expense
$39,994 $34,211 $31,516 Capital Expenditures (Excludes
Acquisitions) 19,348 15,777 40,657 (1) Operating costs are the
direct costs of our mining operations, excluding costs for past
mining obligations, reclamation and remediation obligations,
depreciation, depletion and amortization and net sales contract
accretion. Net sales contract accretion represents contract
accretion excluding back-to-back coal purchase and sales contracts.
The contract accretion on the back-to-back coal purchase and sales
contracts reflects the accretion related to certain coal purchase
and sales contracts existing on July 23, 2008, whereby Magnum
purchased coal from third parties to fulfill tonnage commitments on
sales contracts. This information is intended to be reviewed in
conjunction with the Company's filings with the Securities and
Exchange Commission. Supplemental Financial Data (Unaudited) For
the Nine Months Ended September 30, 2009 and 2008 Nine Months Ended
September 30, ----------------- 2009 2008 ---- ---- Tons Sold (In
thousands) ------------------------ Appalachia Mining Operations
19,261 13,268 Illinois Basin Mining Operations 5,300 5,848 -----
----- Total 24,561 19,116 ====== ====== Revenue Summary (Dollars in
thousands) -------------------------------------- Appalachia Mining
Operations $1,295,775 $884,978 Illinois Basin Mining Operations
205,259 208,763 Appalachia Other 41,087 19,856 ------ ------ Total
$1,542,121 $1,113,597 ========== ========== Revenues per Ton -
Mining Operations ------------------------------------ Appalachia
$67.27 $66.70 Illinois Basin 38.73 35.70 Total 61.11 57.22
Operating Costs per Ton - Mining Operations (1)
----------------------------------------------- Appalachia $58.06
$57.48 Illinois Basin 37.41 34.13 Total 53.60 50.34 Segment
Adjusted EBITDA per Ton - Mining Operations
--------------------------------------------------- Appalachia
$9.21 $9.22 Illinois Basin 1.32 1.57 Total 7.51 6.88 Dollars in
thousands -------------------- Past Mining Obligation Expense
$112,005 $75,259 Capital Expenditures (Excludes Acquisitions)
54,167 74,079 (1) Operating costs are the direct costs of our
mining operations, excluding costs for past mining obligations,
reclamation and remediation obligations, depreciation, depletion
and amortization and net sales contract accretion. Net sales
contract accretion represents contract accretion excluding
back-to-back coal purchase and sales contracts. The contract
accretion on the back-to-back coal purchase and sales contracts
reflects the accretion related to certain coal purchase and sales
contracts existing on July 23, 2008, whereby Magnum purchased coal
from third parties to fulfill tonnage commitments on sales
contracts. This information is intended to be reviewed in
conjunction with the Company's filings with the Securities and
Exchange Commission. Condensed Consolidated Balance Sheets
September 30, 2009 and December 31, 2008 (Dollars in thousands)
September 30, December 31, 2009 2008 ---- ---- (Unaudited) Cash and
cash equivalents $48,636 $2,872 Receivables 186,815 163,556
Inventories 88,247 80,953 Below market purchase contracts acquired
2,319 8,543 Other current assets 19,050 12,529 ------ ------ Total
current assets 345,067 268,453 Net property, plant, equipment and
mine development 3,181,985 3,160,676 Notes receivable 113,840
131,066 Investments and other assets 53,885 62,125 ------ ------
Total assets $3,694,777 $3,622,320 ========== ========== Current
portion of debt $7,794 $28,170 Accounts payable and accrued
liabilities 439,351 413,790 Below market sales contracts acquired
186,869 324,407 ------- ------- Total current liabilities 634,014
766,367 Long-term debt, less current maturities 197,586 176,123
Below market sales contracts acquired, noncurrent 191,206 316,707
Other noncurrent liabilities 1,596,040 1,522,942 ---------
--------- Total liabilities 2,618,846 2,782,139 Common stock,
paid-in capital and retained earnings 1,168,446 952,462 Accumulated
other comprehensive loss (92,515) (112,281) ------- -------- Total
stockholders' equity 1,075,931 840,181 --------- ------- Total
liabilities and stockholders' equity $3,694,777 $3,622,320
========== ========== This information is intended to be reviewed
in conjunction with the Company's filings with the Securities and
Exchange Commission. Condensed Consolidated Statements of Cash
Flows (Unaudited) For the Nine Months Ended September 30, 2009 and
2008 (Dollars in thousands) Nine Months Ended September 30,
----------------- 2009 2008 ---- ---- Cash Flows from Operating
Activities Net Income $116,375 $79,368 Adjustments to reconcile net
income to net cash provided by operating activities: Depreciation,
depletion and amortization 155,749 81,730 Sales contract accretion
(232,516) (137,389) Net gain on disposal or exchange of assets
(4,071) (7,021) Changes in working capital and other 3,951 15,520
----- ------ Net cash provided by operating activities 39,488
32,208 ------ ------ Cash Flows from Investing Activities Additions
to property, plant, equipment and mine development (54,167)
(74,079) Additions to advance mining royalties (11,331) (6,295)
Investment in joint venture - (15,385) Proceeds from notes
receivable 3,000 - Proceeds from disposal or exchange of assets
4,768 1,789 Cash acquired in business combination - 21,015
Acquisitions - (8,965) Other 447 - --- --- Net cash used in
investing activities (57,283) (81,920) ------- ------- Cash Flows
from Financing Activities Proceeds from equity offering, net of
costs 89,077 - Short-term debt payments (23,000) - Long-term debt
payments (4,489) (927) Convertible note proceeds - 200,000
Termination of Magnum debt facility - (136,816) Deferred financing
costs - (10,040) Common stock issuance fees - (1,413) Proceeds from
employee stock purchases 1,971 1,002 ----- ----- Net cash provided
by financing activities 63,559 51,806 ------ ------ Net increase in
cash and cash equivalents 45,764 2,094 Cash and cash equivalents at
beginning of period 2,872 5,983 ----- ----- Cash and cash
equivalents at end of period $48,636 $8,077 ======= ====== This
information is intended to be reviewed in conjunction with the
Company's filings with the Securities and Exchange Commission.
Reconciliation of Net Income to EBITDA (Unaudited) For the Three
and Nine Months Ended September 30, 2009 and 2008 and the Three
Months Ended June 30, 2009 (Dollars in thousands) Three Months
Ended --------------------------------- September September 30,
June 30, 30, Reconciliation of net income to EBITDA: 2009 2009 2008
---- ---- ---- Net income $52,842 $31,390 $71,199 Depreciation,
depletion and amortization 50,413 50,357 42,215 Reclamation and
remediation obligation expense 9,206 7,611 5,051 Sales contract
accretion, net (93,988) (61,721) (121,859) Interest expense 10,656
9,137 7,378 Interest income (3,723) (5,836) (3,588) Income tax
benefit - - (2,595) --- --- ------ EBITDA $25,406 $30,938 $(2,199)
======= ======= ======= Nine Months Ended September 30,
----------------- Reconciliation of net income to EBITDA: 2009 2008
---- ---- Net income $116,375 $79,368 Depreciation, depletion and
amortization 155,749 81,730 Reclamation and remediation obligation
expense 23,268 11,726 Sales contract accretion, net (232,516)
(121,859) Interest expense 28,386 15,496 Interest income (13,046)
(10,458) ------- ------- EBITDA $78,216 $56,003 ======= =======
EBITDA is defined as net income before deducting interest income
and expense, income taxes, reclamation and remediation obligation
expense, depreciation, depletion and amortization and net sales
contract accretion. Net sales contract accretion represents
contract accretion excluding back-to-back coal purchase and sales
contracts. The contract accretion on the back-to-back coal purchase
and sales contracts reflects the accretion related to certain coal
purchase and sales contracts existing on July 23, 2008, whereby
Magnum purchased coal from third parties to fulfill tonnage
commitments on sales contracts. We have included information
concerning EBITDA because we believe that in our industry such
information is a relevant measurement of a company's operating
financial performance. Because EBITDA is not calculated identically
by all companies, our calculation may not be comparable to
similarly titled measures of other companies. The table above
reflects the Company's calculation of EBITDA. This information is
intended to be reviewed in conjunction with the Company's filings
with the Securities and Exchange Commission. DATASOURCE: Patriot
Coal Corporation CONTACT: Janine Orf of Patriot Coal Corporation,
+1-314-275-3680, Web Site: http://www.patriotcoal.com/
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