Tuesday, after the bell, coal producer Walter Energy, Inc. (WLT) reported a decrease in profit for the third quarter, due primarily to lower coke sales and lower realized prices for coking coal, despite an increase in production.
Net income was down to $23.81 million from $55.0 million in the year-ago period. On a per share basis, net income was down to $0.44 per share from $0.97 per share in the prior year's quarter.
Income from continuing operations was down to $24.4 million or $0.45 per share from $71.3 million or $1.26 per share in the year-ago period.
On an average, 13 analysts polled by Thomson Reuters expected earnings of $0.27 for the quarter. Analysts estimates typically exclude one-time items.
Net sales and revenues decreased to $278.3 million from $308.8 million in the prior-year period. Analysts had a consensus revenue estimate of $222.80 million for the quarter.
Net sales and revenues from Underground mining declined to $233.06 million from $251.37 million last year. Surface mining segment net sales and revenues went up to $25.2 million from $18.9 million in the prior-year. Walter Coke unit generated net sales and revenues of $23.3 million, down from $53.7 million in the prior-year period.
Revenues for the quarter went down with lower coke sales and lower realized prices for coking coal compared to the previous year's all-time highs, said the company. Coking coal sales volumes were 1.9 million tons at an average selling price of $121.66 per short ton FOB Port, compared with 1.4 million tons at an average price of $161.92 in the prior-year period.
Total coking coal production in the quarter was up to 1.5 million tons from 1.2 million tons in the prior-year period.
For the fourth quarter, the company expects to sell 1.6 to 1.7 million tons of coking coal, with an average operating margin of $27 per ton to $33 per ton. It also expects to sell 300,000 - 330,000 tons of steam and industrial coal with an average operating margin of $12 - $17 per ton and sell 78,000 - 86,000 tons of coke with an average operating margin of $19 - $24 per ton.
Walter expects to ship 126,000 tons of hard coking coal at a price of $315 per metric ton in the fourth quarter. Coking coal production is expected to be between 1.4 and 1.5 million tons in the fourth quarter.
Walter Coke is expecting improved sales and a return to profitability in the fourth quarter, driven primarily by increased orders from the domestic steel industry.
The company expects to produce approximately 8.0 million tons of premium hard coking coal in 2010 and increase coking coal production capacity to 8.5-9.0 million tons in 2011 and 9.0-9.5 million tons in 2012.
Capital expenditures were $14.9 million in the third quarter, totaling $67.3 million year to date. Walter Energy expects full-year capital expenditures of approximately $85 million.
Walter Energy (WLT) stock closed Tuesday's regular trading session at $67.00, down $1.13 or 1.72%, on the NYSE.
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