Walter Energy Announces First Quarter 2012 Results

BIRMINGHAM, AL — (Marketwire) — 05/02/12 — Walter Energy, Inc. (NYSE: WLT) (TSX: WLT)

Walter Energy, Inc. (NYSE: WLT) (TSX: WLT), 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.”

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.

*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

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.

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.

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.

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.

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.

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.

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.

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 .

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 .

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 . 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.

Paul Blalock
Vice President, Investor Relations
205.745.2627