 re: PCX - Patriot Coal Corp (NYSE Stock)
History
Incorporated in the United States.
In Mar. 2006, Co. acquired an additional 24.9% interest in KE Ventures, LLC, for purchase consideration of $44.5 million plus assumed debt.
In Sept. 2007, Co. acquired an additional 7.6% interest in KE Ventures, LLC, for $13.6 million.
On Oct. 31, 2007, Co. and Peabody Energy Corporation ("Peabody") became separate companies through a spin-off. Distribution of Co.'s stock to Peabody's stockholders occurred at a ratio of one share of Co.'s stock for every 10 shares of Peabody stock.
On Nov. 30, 2007, Co. acquired the remaining minority interest in KE Ventures, LLC, for $33.0 million.
On July 23, 2008, Co. acquired Magnum Coal Company for approximately 11,900,000 shares of newly-issued Co.'s common stock.
About Patriot Coal
Patriot Coal Corporation is the third largest producer and marketer of coal in the eastern United States, with 15 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.
Outlook
For 2009, the Company now anticipates sales volume in the range of 34.0 to 36.0 million tons, including 25.5 to 27.5 million tons for the April to December period. Full-year cost per ton is expected to be in the range of $56.00 to $59.00 for the Appalachian segment and $35.00 to $38.00 for the Illinois Basin segment.
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 17.1 $58 15.4 $61
Illinois Basin - thermal 5.9 $38 6.5 $38
Appalachia - met 4.3 $105 0.5 $86
Total 27.3 22.4
As of March 31, substantially all of the Company's expected 2009 production was committed, including approximately 0.2 million committed international metallurgical tons not yet priced. However, certain thermal and metallurgical customers have approached the Company requesting shipment deferrals on currently committed tons. These requests are being evaluated to determine if a mutually acceptable outcome can be achieved.
Of expected 2010 volumes, up to 5.0 million tons of metallurgical coal and up to 8.0 million tons of thermal coal remained unpriced as of March 31. The Company will continue to evaluate 2010 production levels as the year progresses.
Highlights:
- EBITDA of $21.9 million, substantial improvement over last two quarters
- Production adjusted to match market conditions
- Redeployment of equipment to minimize capital expenditures
ST. LOUIS, April 30 /PRNewswire-FirstCall/ -- Patriot Coal Corporation (NYSE: PCX) today reported its financial results for the quarter ended March 31, 2009. The Company reported revenues of $528.9 million, net income of $32.1 million and diluted earnings per share of $0.41 for the 2009 first quarter. EBITDA of $21.9 million for the 2009 first quarter improved $33.6 million over the 2008 fourth quarter amount.
Operating costs and expenses in the 2009 first quarter were reduced by $76.8 million for purchase price accounting adjustments related to shipments on below-market sales and purchase contracts acquired in the Magnum Coal acquisition in July 2008.
"In January, our management team began executing a hands-on, comprehensive Action Plan to guide our way through the challenges posed by depressed coal markets. The goal is to have Patriot emerge a stronger company when economic conditions and coal markets rebound," said Patriot Chief Executive Officer Richard M. Whiting. "Numerous output reduction, capital cutback, workforce redeployment, sales contract renegotiation and regulatory cost billing activities occurred in the first quarter. We will continue to adjust output to match market conditions, while at the same time effecting cost structure improvements. As a result of our focus on costs, and as the economy improves, Patriot will be well-positioned to benefit from the increased demand for coal."
Financial Overview
Tons sold in the first quarter included 7.1 million tons of thermal and 1.4 million tons of metallurgical coal. The total of 8.5 million tons represented an increase of 3.4 million tons from the prior year, largely a result of Central Appalachia thermal coal sales from the acquired Magnum mines. Metallurgical volumes were impacted by customer deferrals in the 2009 first quarter, brought about by sustained weakness in global steel production.
Revenues in the 2009 first quarter were $528.9 million, an increase of $244.6 million over the prior year amount. Revenues in the Appalachia Mining Operations segment increased $240.7 million over the prior year amount, primarily due to the addition of the Magnum results, as well as higher average selling prices. Revenues in the Illinois Basin increased $3.0 million as a result of higher average selling prices, partially offset by lower volumes caused by winter ice storms during the quarter.
EBITDA improved to $21.9 million in the 2009 first quarter, compared to $17.1 million in the year-ago quarter. EBITDA improved $33.6 million compared to the 2008 fourth quarter. Production at the Federal mine improved significantly in the 2009 first quarter, compared to both the year-ago quarter and the prior quarter.
"Our first quarter 2009 EBITDA was significantly higher than the 2008 fourth quarter, as we realized improvements at our Federal and Panther mines. In fact, Segment Adjusted EBITDA per ton more than doubled sequentially in the 2009 first quarter," noted Patriot Senior Vice President and Chief Financial Officer Mark N. Schroeder. "The quarter also benefited from positive results of our Management Action Plan. This plan, which in today's quickly changing environment requires the engagement of our full management team, yielded excellent cash management, as well as improved operating results. We expect to see continued favorable impacts of the plan as we move through 2009."
Credit and Capital
As of March 31, 2009, Patriot had $65 million in borrowings and $343 million in letters of credit against its $500 million revolving credit facility, leaving unused borrowing capacity of $92 million.
Total debt was $246.2 million as of March 31, 2009, consisting mainly of the 3.25% convertible debt due in 2013. Capital expenditures totaled $19.0 million in the 2009 first quarter, or about half of the previously projected amount. Capital expenditures are expected to be less than $100 million for the full year, which is significantly lower than historical averages for the combined operations.
"We ended the 2009 first quarter with more than $90 million in available liquidity, near the high end of the range we projected at the end of last quarter," continued Schroeder. "A key focus during the quarter was to redeploy equipment and infrastructure from idled or scaled-back facilities, limiting capital expenditures. Our lower first quarter capital spending reflects our success in carefully managing our capital."
Safety and Environmental Awards
Maintaining safe operations continues to be a top priority at Patriot. During the quarter, four of the Company's facilities received Mountaineer Guardian Safety Awards from the West Virginia Coal Association - the Federal No. 2 mine, the Westridge surface mine, the Big Mountain preparation plant and the Harris preparation plant. Additionally, Patriot's Guyan and Colony Bay surface mines each received reclamation awards from the West Virginia Coal Association.
Market Overview
Global economic activity remained weak during the 2009 first quarter. Reduced U.S. industrial activity led to a 2.9 percent decline in electricity consumption. Lower natural gas prices caused further declines in coal demand, as some utilities chose to burn natural gas in preference to coal.
Demand for steel continued at a reduced level through the 2009 first quarter. Utilization at U.S. steel mills fluctuated from 40 to 45 percent during the first quarter, after peaking at 85 to 90 percent in 2008. Globally, blast furnace iron production decreased 17 percent in the first quarter from a year ago, but remained flat compared to the 2008 fourth quarter. As a result, domestic and global demand for metallurgical coal has stabilized, although at significantly lower levels than during the first nine months of 2008.
Because of lower coal-fueled generation, at the end of the first quarter, eastern U.S. utility coal inventories were approximately 6 million tons higher than a year ago. Due to the reduced demand and higher inventory levels, traded U.S. thermal coal prices decreased nearly 10 percent during the quarter.
Coal production has decreased in response to weak demand and lower prices. In total, the Company believes 2009 U.S. production will be reduced by 80 to 100 million tons from 2008 levels. This supply response should position the coal sector for stronger pricing as the global economy improves. Government stimulus plans should lead the recovery, particularly as infrastructure projects are initiated, thereby increasing demand for steel and industrial goods. Low-cost electricity fueled by coal remains essential to global and U.S. economies.
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PCX 
) then I would imagine we bust through that before the West Coast wakes up. 
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