Walter Energy Inc

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  • Must-know: Why coal ranks differ from each other
    Consumer

    Must-know: Why coal ranks differ from each other

    Coal used for electricity purposes is often called steam or thermal coal. Coal used to make steel is called metallurgical (or met) or coking coal. Cloud Peak Energy (CLD) only produces thermal coal. Walter Energy (WLT) calls itself a pure-play met coal producer. Other producers like Arch Coal (ACI) and Alpha Natural Resources (ANR) produce met and thermal coal.

    By Mike Sonnenberg
  • Consumer

    Why stagnant electricity demand is bad for coal companies

    In 2013, electricity generation growth was mainly due to increased demand towards the end of the year. Electricity demand increased because of the severe winter.

    By Mike Sonnenberg
  • uploads///GDP
    Company & Industry Overviews

    Why economy and politics drove Walter Energy up in November

    In this year’s midterms, Republicans took control of Congress. Republicans oppose the U.S. Environmental Protection Agency’s (or EPA) new regulations requiring coal-fired power plants to reduce carbon emissions.

    By Mike Sonnenberg
  • Consumer

    Must-know: Moody’s Peabody Energy rating explained

    As noted earlier, stocks of companies with a higher share of revenues from met coal have lost more since the beginning of the year. Peabody Energy’s performance confirms this assertion.

    By Mike Sonnenberg
  • Energy & Utilities

    Challenges facing Peabody Energy’s Australian business

    China announced an import ban on high-sulfur, high-ash coal, effective 2015. Since Australian thermal coal contains high levels of sulfur, the ban is expected to hit Australian thermal coal exporters, Peabody Energy included.

    By Mike Sonnenberg
  • Basic Materials

    Why ANR’s met coal and logistics businesses face challenges

    China’s economy grew 7.3% in the third quarter—that’s the slowest pace in five years. A slowdown in China’s growth means less demand for steel. This leads to less demand for met coal.

    By Mike Sonnenberg
  • uploads///Canada
    Consumer

    Is it too late for Walter Energy to start idling mines?

    Walter Energy (WLT) made the decision to idle its Canadian operations too late—it was hoping for revival in the metallurgical coal demand and prices—the company’s Canadian and UK operations failed to breakeven even in 2Q13 when the cash costs exceeded the net selling price by over $20 a ton.

    By Mike Sonnenberg
  • Earnings Report

    Walter Energy’s 3Q14 EBITDA drops despite cost saving measures

    While Walter Energy (WLT) has been able to reduce costs, the cost savings have not been able to compensate for the drop in revenues.

    By Mike Sonnenberg
  • uploads///part
    Macroeconomic Analysis

    Which commodity producers will win the waiting game?

    Driving through an oversupply situation in commodity markets is a waiting game. The commodity producers that can wait until the others fall out will win in the long run.

    By Mike Sonnenberg
  • uploads///Reserves
    Consumer

    Must-know: An overview of the US coal industry

    With just under a billion tons produced in 2013, the U.S. ranks second in coal production. China is the largest producer with 3.7 billion tons. However, the U.S. holds much higher coal reserves at 237 billion tons—over a quarter of the world’s coal reserves. China has coal reserves at 114 billion tons. At the current consumption rate, the U.S. reserves can last for over 200 years.

    By Mike Sonnenberg
  • uploads///CLD
    Consumer

    Why Cloud Peak Energy is well positioned to survive the downturn

    Unlike its peers (KOL) like Walter Energy (WLT), Alpha Natural Resources (ANR), and Arch Coal (ACI), Cloud Peark doesn’t have any exposure to metallurgical coal.

    By Mike Sonnenberg
  • Energy & Utilities

    Why survival is for the fittest of US coal producers

    Met coal producers are the worst hit in the current energy environment. Based on our analysis so far, we can conclude that the higher the revenue share of met coal, the steeper the stock prices fell in 2014.

    By Mike Sonnenberg
  • Miscellaneous

    Understanding Arch Coal’s acquisition of International Coal Group

    International Coal Group Acquisition

    Like Alpha Natural Resources, Arch Coal couldn’t resist the urge for inorganic growth when coal prices rose.

    By Mike Sonnenberg
  • uploads///Part  KOL
    Macroeconomic Analysis

    Why should you track thermal coal industry indicators?

    Currently, the coal industry is going through heightened volatility. As a result, it makes even more sense for us to cover the short-term indicators.

    By Mike Sonnenberg
  • uploads///Energy
    Earnings Report

    Rio’s Energy segment: Weaker prices offset cost reductions

    Rio Tinto’s (RIO) Energy segment reported an underlying loss of $210 million—compared to underlying earnings of $33 million in 2013.

    By Anuradha Garg
  • Consumer

    Must-know: Will Walter Energy survive the downturn?

    The cash burn has forced the company to refinance the term loan with high cost notes—the move has simply extended the lifeline at the cost of higher interest expenses going forward—the company now has no major repayment obligation until 2018.

    By Mike Sonnenberg
  • Consumer

    China—global iron ore and met coal industry’s lifeline

    China accounts for almost half of the world’s raw steel production. In 2013, China produced 779 million tons of steel. This was a 7.5% increase over 724 million tons in 2012.

    By Mike Sonnenberg
  • Financials

    Why outlook is bleak for US coal producers

    In this series, we’ll analyze major coal producers’ debt and liquidity positions, cash burn, probability of default and credit ratings in an attempt to find out which company will be next.

    By Mike Sonnenberg
  • Consumer

    Must-know: State of the US metallurgical coal industry

    Metallurgical coal exports have grown especially since 2007, when supply constraints in the Pacific market resulted in fast-growing Asian countries, notably China, importing metallurgical coal from the U.S. U.S. exports to China grew from just 12 thousand short tons in 2007 to 10.6 million short tons in 2012.

    By Mike Sonnenberg
  • Basic Materials

    Why met coal prices are under pressure

    Most of the metallurgical coal produced in the U.S. is exported. In fact, metallurgical coal dominates overall U.S. coal exports. In 1Q14, the U.S. exported 28 million short tons of coal.

    By Anuradha Garg
  • Energy & Utilities

    Why China is important for companies like Walter Energy and Vale

    China (FXI), by far, consumes the most commodities—like coal, iron ore, and cement—in the world. With an installed capacity of over 1,260 gigawatts (or GW), China ranks first in terms of installed electricity generation capacity.

    By Mike Sonnenberg
  • uploads///Part  KOL
    Macroeconomic Analysis

    The importance of indicators for coal industry investors

    Currently, the coal industry is experiencing heightened volatility. As a result, it makes even more sense for us to cover the short-term indicators.

    By Mike Sonnenberg
  • global footprintpngautocompresscformatandixlibphp
    Energy & Utilities

    Alpha Natural Resources: The biggest American met coal producer

    The price of met coal is generally higher than steam coal. So, while met coal accounted for just 22.5% of tonnage, it produced 36.1% of revenues.

    By Mike Sonnenberg
  • Earnings Report

    What lies ahead for Walter Energy?

    While Walter Energy has tried to optimize its controllable factors, the macro environment looks bleak.

    By Mike Sonnenberg
  • Energy & Utilities

    Must-know 3Q14 balance sheet details for Peabody Energy

    The accounts payable are up by $195 million to $1.66 billion, while inventories are down by $57 million to $491 million. This boosts cash flows as the net investment in working capital falls, and cash is freed up.

    By Mike Sonnenberg
  • Energy & Utilities

    Peabody Energy’s 3Q14 cost-saving measures

    Peabody Energy Corporation (BTU) reported a 2.5% increase in U.S. operating-cost per ton, up to $15.40 in 3Q 2014 compared to $15.03 in 3Q 2013. The increase was primarily on account of fixed costs being divided among fewer tons.

    By Mike Sonnenberg
  • uploads///Part  btu debt
    Miscellaneous

    Peabody Energy Able to Withstand Short-Term Pricing Pressures

    Peabody Energy has better product mix, lower-cost mines, and most importantly, higher liquidity than others in the sector.

    By Mike Sonnenberg
  • Consumer

    Why Arch Coal’s debt profile hinges on liquidity

    If yields are more than the coupon offered, notes trade on discount. This is because the market expectations,or yield, are higher than the interest rate, or coupon, offered by the company.

    By Mike Sonnenberg
  • Consumer

    Overview: Arch Coal’s important role in the US met coal industry

    In Q1 2014, the U.S. exported 28 million short tons of coal. Of this, 17 million shorts tons (or 60%) was metallurgical coal.

    By Mike Sonnenberg
  • Energy & Utilities

    Weak metallurgical coal prices weighed on Walter Energy in 1Q14

    Price is usually the key driver of commodity companies. Over the last three years, Walter Energy’s (WLT) poor performance was largely driven by weakness in metallurgical coal prices.

    By Xun Yao Chen
  • uploads///Coal
    Basic Materials

    Vale SA coal mining operations

    Vale SA (VALE) produces metallurgical and thermal coal through its subsidiaries. Vale Mozambique, operates the Moatize mines. And Vale Australia operates coal assets in Australia through wholly owned companies and unincorporated joint ventures.

    By Anuradha Garg
  • Basic Materials

    Why met coal had record production at 3 mines

    BHP is the world’s largest supplier of seaborne metallurgical coal. Its main customers are in China, India, Japan, and Europe. Its contracts are based on annual or longer-term volumes.

    By Anuradha Garg
  • uploads///Population
    Consumer

    Must-know: The power sector in India

    With a population of over 1.25 billion, India is the second biggest market in the world. India’s power sector is also attractive to the U.S. American coal producers like Walter Energy (WLT), Arch Coal (ACI), Cloud Peak Energy (CLD), and Peabody Energy (BTU) are interested in India.

    By Mike Sonnenberg
  • Real Estate

    Why was high yield bond activity little changed last week?

    Last week, issuance in the high yield bond market was moderate, at $5.40 billion. This was 400 million less than the previous week’s issuance of $5.80 billion.

    By Sandra Nathanson
  • uploads///Part  ANR debt
    Miscellaneous

    Alpha Natural Resources: Debt and Liquidity Profile

    As of March 31, 2015, Alpha Natural Resources had total liquidity of $1.9 billion, including $821 million in available credit lines.

    By Mike Sonnenberg
  • uploads///PArt
    Earnings Report

    Is Walter Energy’s Negative 1Q15 EBITDA a Signal of the End?

    Walter Energy (WLT) reported adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) losses of $9.5 million against gains of $39.7 million in 1Q14.

    By Mike Sonnenberg
  • uploads///Part
    Earnings Report

    Met Coal Prices and Supply Glut Hamper Walter Energy in 1Q15

    Due to a continued glut in the met coal market amid the slowdown in China, met coal prices are still under pressure. Walter Energy’s operations received $106.40 per ton in 1Q15, down from $127.40 in 1Q14.

    By Mike Sonnenberg
  • uploads///part  cash cost per ton
    Earnings Report

    Lower Diesel Costs Help Cloud Peak Reduce Cost per Ton in 1Q15

    Cloud Peak Energy’s (CLD) cost per ton dropped significantly to $10.02 in 1Q15 compared to $10.63 in 1Q14.

    By Mike Sonnenberg
  • uploads///part
    Earnings Report

    Alpha Natural Resources Sees 1Q15 Debt Fall on Notes Repurchase

    Highly leveraged players such as Alpha Natural Resources (ANR) have limited ability to issue new debt if they run out of resources.

    By Mike Sonnenberg
  • uploads///part
    Earnings Report

    Alpha Natural Resources Sees Margins Slashed in 1Q15

    Alpha Natural Resources burned $59.8 million of operating cash in 1Q15 compared to $54 million in 1Q14. Eastern coal burned cash even at the operating level.

    By Mike Sonnenberg
  • uploads///Part  coal losers
    Macroeconomic Analysis

    Walter Energy Drops 17% on Possibility of Bankruptcy

    Walter Energy was the biggest casualty of the day in the coal sector, with a whopping 17% drop in share price to 38 cents.

    By Mike Sonnenberg
  • uploads///part
    Earnings Report

    Alpha Natural Resources in 1Q15: Have Cost Savings Stalled?

    Alpha Natural Resources reported an average adjusted cost of sales per ton of $37.11 in 1Q15, down from $41.25 in 1Q14. Meanwhile, the cost per ton was higher than 4Q14’s $35.73.

    By Mike Sonnenberg
  • uploads///Part  maturing debt
    Earnings Report

    Arch Coal: Liquidity Continues to Fall in 1Q15

    Arch Coal has no major maturing obligations until 2018, when $1.9 billion of debt matures, followed by $1.7 billion in 2019, $500 million in 2020, and $1.1 billion in 2021.

    By Mike Sonnenberg
  • uploads///PArt  Cash cost
    Earnings Report

    Appalachian Segment Drives Arch Coal’s 1Q15 Cost Savings

    The company showed remarkable cost performance at the Appalachian segment, and the cash costs in this segment were lowest in the last four years.

    By Mike Sonnenberg
  • uploads///Benchmark
    Company & Industry Overviews

    What Does the Future Hold for US Metallurgical Coal Producers?

    Walter Energy (WLT) is clearly the weakest link among US metallurgical coal producers in terms of operations as well as finances.

    By Mike Sonnenberg
  • uploads///Part  coal stocks
    Macroeconomic Analysis

    Coal Stocks Gain—for a Change

    Most coal stocks gained last week, except for Alpha Natural Resources (ANR), which lost 9%. Peabody Energy (BTU) gained 12%.

    By Mike Sonnenberg
  • uploads///met coal exports
    Company & Industry Overviews

    The US Metallurgical Coal Industry’s Unprecedented Consolidation

    Metallurgical coal (or met coal) is used to make coke for iron and steel as well as foundries. Most metallurgical coal produced in the US is exported.

    By Mike Sonnenberg
  • uploads///PArt  coal stocks
    Macroeconomic Analysis

    Arch Coal and Alpha Natural Resources reduced to penny stocks

    Last week, Alpha Natural Resources (ANR) and Arch Coal (ACI) were reduced to penny stock status. Alpha ended the week at $0.95 and Arch Coal at $0.88.

    By Mike Sonnenberg
  • uploads///part  profitability
    Earnings Report

    Cash flow positive, profitability down for Arch Coal in 9M2014

    Overall adjusted EBITDA for Arch Coal (ACI) came in at $279.6 million for 9M2014, down from $337.5 million for 9M2013.

    By Mike Sonnenberg
  • uploads///part  steelmaking
    Company & Industry Overviews

    SunCoke Energy’s presence in the steelmaking process

    Coke is used in the iron making process, which in turn is used in the steelmaking process. SunCoke Energy produced 4.2 million tons of coke in 2013.

    By Mike Sonnenberg
  • uploads///part  steel
    Company & Industry Overviews

    How does coke fit into the steelmaking process?

    Iron ore, steel scrap, and met coal are the main raw materials for steelmaking. SunCoke converts met coal to coke by driving out its impurities.

    By Mike Sonnenberg
  • uploads///part  operations
    Company & Industry Overviews

    A quick look at SunCoke Energy’s US operations

    SunCoke Energy (SXC) is the largest independent manufacturer of coke, which is used in steelmaking. It runs five coke making plants in the United States.

    By Mike Sonnenberg
  • uploads///part  SPY
    Company & Industry Overviews

    SunCoke Energy fares better than its peers

    It was a tough year in 2014 for American companies under the VanEck Vectors Coal ETF (KOL). SunCoke Energy (SXC) managed to limit the fall to 21%.

    By Mike Sonnenberg
  • uploads///Part  met coal
    Macroeconomic Analysis

    Greed led to a fall in met coal prices

    In 2011, floods in Australia led to a rally in met coal prices. The benchmark was as high as $330 per ton. China’s growth momentum was expected to continue for years to come.

    By Mike Sonnenberg
  • uploads///prisoners_dilemma
    Macroeconomic Analysis

    Falling commodity prices and the prisoner’s dilemma

    There’s mistrust in the global commodity markets. From crude oil to met coal and iron ore, producers haven’t cut production. They’re waiting for others to do it first.

    By Mike Sonnenberg
  • uploads///part  china growth
    Company & Industry Overviews

    How did Walter Energy lose 89% of its value in less than a year?

    Walter Energy (WLT) has been the worst performing stock of 2014. The company lost a whopping 89% since the beginning of 2014 and closed at $1.78 on December 4, down from $16.63 at the start of the year.

    By Mike Sonnenberg
  • uploads///Walter Energy mining ops
    Company & Industry Overviews

    Walter Energy: A metallurgical coal producer

    Of the 2.9 million tons of coal the company sold in 2Q14, 2.7 million tons, or 92%, was metallurgical coal.

    By Mike Sonnenberg
  • Miscellaneous

    The outcome of Peabody Energy’s McArthur Coal acquisition

    Peabody Energy in 2010 Peabody Energy (BTU) owned 3.7 billion tons of coal reserves at the end of 2010, all of them in the US. The company had another 5.4 billion tons in reserves taken on lease. Of them, 1.1 billion tons were in Australia. The company sold 245.9 million tons of coal (of which 9.8 million tons […]

    By Mike Sonnenberg
  • Miscellaneous

    Walter Energy “transformed” itself by acquiring Western Coal Corp.

    Until 2010, the Walter Energy’s operations were concentrated in the US. The company sold 8.6 million tons of met coal in 2010 for $163 per ton on average.

    By Mike Sonnenberg
  • Miscellaneous

    Understanding consolidation in the US coal industry

    Major coal industry players are still paying the price of untimely consolidation in 2010–2011, when floods in Australia left a supply-side gap.

    By Mike Sonnenberg
  • Earnings Report

    A risky bet: Is Arch Coal out of danger yet?

    Arch Coal has over 70% more debt on its books than revenues expected in 2014. That’s a lot when you consider that most coal producers aren’t making money.

    By Mike Sonnenberg
  • Earnings Report

    A quick overview of Cloud Peak Energy

    Cloud Peak Energy owns and operates three surface mines in the Powder River Basin, two in Wyoming, and one in Montana.

    By Mike Sonnenberg
  • Financials

    What Moody’s thinks about Walter Energy’s credit rating

    While all coal stocks have lost ground since the beginning of 2014, Walter Energy is by far the worst performer, with a 91% drop in stock price to $1.52 now.

    By Mike Sonnenberg
  • Consumer

    Overview of Walter Energy: The pure-play met coal producer

    Walter Energy has mining operations in the U.S., Canada, and the UK. Canadian operations include three surface mines while UK operations include a surface and an underground mine.

    By Mike Sonnenberg
  • Consumer

    Must-know: An overview of Appalachian coal

    The Appalachian coal region is the oldest coal producing region in the U.S.—geologically and commercially. The Appalachian’s coal seams are ~300 million years old. They’re the oldest coal seams in the U.S. Appalachian coal fueled most of the Industrial Revolution after the Civil War in the 19th Century.

    By Mike Sonnenberg
  • Consumer

    Wall Street’s reaction to Walter Energy’s 2Q14 earnings

    Walter Energy’s performance for the quarter disappointed Wall Street on all counts including earnings per share (or EPS) and sales—Wall Street analysts had estimated loss per share to be $1.715—the company reported loss per share of $2.33—35% off the expectation.

    By Mike Sonnenberg
  • uploads///debt
    Consumer

    Must-know: Walter Energy extended lifeline by refinancing debt

    Walter Energy issued $200 million 9.5% add-on senior secured notes and $350 million in senior secured payment-in-kind notes to replace $407 million outstanding term loan carrying interest of London Interbank Offer Rate (or LIBOR)+550bps in March, 2014.

    By Mike Sonnenberg
  • Consumer

    Why lower cash costs didn’t help Walter Energy make money

    U.S. operations accounted for two million tons and 196 thousand tons of metallurgical coal and thermal coal sales, respectively—Canadian and UK operations sold 669 tons of metallurgical coal and 26 thousand tons of thermal coal during the period.

    By Mike Sonnenberg
  • Consumer

    Must-know: An overview of Walter Energy

    Walter Energy has mining operations in the U.S., Canada, and the UK—in 2Q14, the U.S. operations fetched the company $299 million, or 79%, of $378 million in revenues—the remaining $79 million was predominantly derived from the UK and Canadian operations.

    By Mike Sonnenberg
  • Consumer

    Everything you need to know about Peabody Energy

    Self-described as the world’s largest private-sector coal company, Peabody Energy (BTU) runs coal operations in the United States and Australia that serve customers in 25 countries.

    By Jing Shun Kee
  • uploads///US Coal Mining Sites
    Consumer

    Must-know: The US coal mining areas and coal specifications

    Coal mining in the U.S. can be segregated into three main areas: Appalachia, Interior, and West.

    By Xun Yao Chen
  • uploads///Mining Cost by Region
    Consumer

    Why underground mines cost higher compared to surface coal mines

    Underground mining is more expensive because it’s more capital intensive. Coal companies have to drill more, and use more expensive and complicated machines.

    By Xun Yao Chen
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