Walter Energy Announces Third Quarter 2012 Results

BIRMINGHAM, AL — (Marketwire) — 11/05/12 — Walter Energy Inc. (NYSE: WLT) (TSX: WLT)

Reports net loss of $1.1 billion including non-cash impairment charges

Reports third quarter revenues of $612 million; Adjusted EBITDA of $117 million

Earns adjusted net income of $30 million, excluding impairment charges

Produces 3.33 million metric tons of metallurgical coal, up 47% from third quarter 2011

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 third quarter ended September 30, 2012.

Revenues were $612 million in the third quarter of 2012 down from $689 million in the third quarter of 2011 due principally to lower pricing and softening world demand. In the third quarter of 2012, the Company reported a net loss of $1.1 billion or $16.97 loss per diluted share. This loss includes estimated non-cash goodwill impairment charges of $1.1 billion or $17.05 per share primarily related to the 2011 acquisition of Western Coal and a charge of $40 million associated with the abandonment of a natural gas exploration project. Adjusted net income and adjusted EBITDA excluding these non-cash charges were $29.8 million or $0.48 per share and $117 million, respectively. Results for the third quarter also included a $41 million tax benefit.

“Our operational results in the third quarter were encouraging as we improved metallurgical coal production 14% as compared to the second quarter, while lowering cash costs of production,” said Walt Scheller, Chief Executive Officer. “However, the recovery in the global economy and metallurgical coal markets is uncertain. As a result we are focusing on achieving further cost reductions, tightly managing capital spending and reducing marginal production in order to improve our results and be well positioned going into 2013.”

Third quarter of 2012 met coal sales volume including both hard coking coal (HCC) and low-volatility (low-vol) PCI was 2.62 million metric tons (MMTs), or 8% less than in the second quarter. Sales were impacted by weaker worldwide demand and excess supply. HCC sales volume was 2.18 MMTs in the third quarter of 2012 compared to 2.29 MMTs in the second quarter. PCI sales volume was 0.44 MMTs, down from 0.55 MMTs in the prior quarter.

The average third quarter 2012 selling price of HCC (primarily low-vol and mid-vol) was $198 per metric ton (MT), which was slightly lower than the second quarter–s average price of $201 per MT. The average selling price for low-vol PCI was $160 per MT as compared to $164 per MT in the second quarter.

Met coal production was 3.33 MMTs in the third quarter of 2012, comprised of 2.37 MMTs of HCC and 0.96 MMTs of low-vol PCI. Met coal production increased 47% from the 2.27 MMTs produced in the third quarter 2011 and was 14% higher than the 2.91 MMTs produced in the second quarter of 2012.

Canadian operations increased production to a quarterly record 1.61 MMTs in the third quarter of 2012, compared to 1.19 MMTs in the second quarter. Weak worldwide demand for PCI coal, however, resulted in a significant increase in the Company–s inventory levels in the third quarter. The Company plans on reducing production and inventory during the fourth quarter.

The consolidated cash cost of sales for HCC was $122 per MT in the third quarter compared to $115 per MT in the second quarter of 2012. In U.S. operations, the cash cost of sales for HCC increased to $119 per MT in the third quarter, up from $107 per MT in the second quarter. The U.S. operations sold a higher proportion of higher cost Mine No 4 production in the quarter which had a negative impact on cost per MT. In Canada, the cash costs of sales for HCC decreased 2% to $142 per MT in the third quarter of 2012, as compared with $144 per MT in the second quarter of 2012.

Cash cost of sales for low-vol PCI decreased 16% to $183 per MT in the third quarter of 2012 as compared with $218 per MT in the second quarter 2012. The Willow Creek development mine represented 21% of the low-vol PCI production and had average cash cost of sales of $290 per MT in the third quarter. As the Willow Creek mine completed the majority of its development work in the third quarter of 2012, costs at this mine are expected to decline materially going forward.

The Company–s capital expenditures were $85 million for the third quarter of 2012 and $331 million for the first nine months of 2012. For 2013, the Company currently expects capital expenditures of approximately $220 million.

At the end of the third quarter 2012, available liquidity was $297 million, consisting of cash and cash equivalents of $130 million plus $167 million of availability under the Company–s $375 million revolving credit facility.

Walter Energy–s emphasis on safety continues to show results as the majority of locations are achieving lower total reportable injury rates. On a consolidated basis Walter–s total reportable injury rate has decreased by 22% on a year-to-date basis as compared with 2011.

Walter is also pleased to report that in September 2012 the coal processing facility at Mine No. 4 in Alabama received a certificate of achievement in safety entitled Sentinels of Safety Award sponsored by the National Mining Association for its outstanding safety record. The processing facility achieved 156,217 employee hours worked without a lost workday injury.

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. These non GAAP measures may not be comparable to other similarly titled measures used by other entities. A reconciliation of non-GAAP to GAAP measures is provided in the financial section of this release.

The Company will hold a webcast to discuss third quarter 2012 results on Tuesday, November 6, 2012, at 9 a.m. ET. To listen to the live event, visit .

Walter Energy is the world–s leading, publicly traded “pure-play” metallurgical coal producer for global 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. These non-GAAP measures may not be comparable to similarly titled measures used by other entities. All data presented herein is as of the date of this release unless otherwise noted.

Contact:
Paul Blalock
Vice President, Investor Relations
205.745.2627