This summary is based on the second quarter fiscal 2008 earnings call conducted by Massey Energy Company (MEE: chart) on August 1, 2008.
Management:
President, Chairman and CEO: Don L. Blankenship
VP and CFO: Eric B. Tolbert
EVP and Chief Administrative Officer: Baxter F. Phillips Jr.
Director of IR: Roger Hendriksen
Key Investor Issues:
- Q2 produced coal revenue was $710.3 million versus $516.2 million in Q2 of 2007.
- Quarterly produced tons sold reached 10.8 million compared with 10 million in the year ago quarter.
- Full year 2009 produced coal shipments are forecast to be between 46 million and 48 million.
Half Year Financial Highlights:
- The company generated produced coal revenue of $1.25 billion and recorded a net loss of $51.4 million or 64 cents per share.
- Net income exclusive of the WP litigation charge was $134.1 million or $1.68 per share.
- This compares with $1.04 billion in produced coal revenue and $67.5 million in net income or 84 cents per share in the first half of 2007.
- EBITDA excluding the WP litigation charge was $328.3 million versus $238 million in the year ago period.
Second-Quarter Financial Highlights:
The higher volume and increased produced coal revenue were driven by an 83% increase in export shipments.
- Fuelling the increase was also a 36% increase in metallurgical coal sales.
- This combination resulted in average produced coal revenue per of $65.78, an increase of 28% versus the second quarter of 2007.
In the quarter, the company booked a pre-tax charge of $245.3 million.
- The charge was related to the ongoing litigation with Wheeling-Pittsburgh Steel Company.
- The charge offset the strong operating results for the quarter.
- Including the WP litigation charge, the company reported a net loss of $93.3 million or $1.16 per share.
- EBITDA was a negative $46.3 million for the quarter and positive $83 million for the first six months of 2008.
- EBITDA excluding the WP litigation charge was $199 million for the quarter.
- This is an increase of 65% compared with EBITDA of $120.3 million realized in the second quarter of 2007.
The second quarter operating cash margin per ton of $15.94 represented an increase of 83%.
- This compares with operating cash margin per ton of $8.72 reported in Q2 of 2007.
- The higher cash margin was aided by a 28% rise in average realized prices on coal shipped in Q2 of $65.78 per ton versus $51.40 per ton in Q2 of 2007.
- Average realized prices were driven by a 36% increase in metallurgical coal shipments and increased average coal prices per ton in all coal categories.
- The average cash costs per ton were $49.84 during the quarter compared with $42.68 in the second quarter last year.
- The increase was a result of increases in sales related costs on the higher realized prices.
The other income totaled $26.9 million in the quarter and excluded a pre-tax gain of $15.3 million from a coal reserves exchange transaction completed in the quarter.
- This compares with other income of $32.8 million in the second quarter of 2007, which included a $10.3 million pre-tax gain on a coal reserve trade.
[The company ended the month of June 2008 with available liquidity of $445.6 million.
- This compares with $489.6 million at March 31, 2008.
- The company’s available liquidity at June 30, 2008 included $93.7 million available on its asset-based revolving credit facility and $351.9 million in cash.
- The total debt as at June 30, 2008 was $1,104 million compared with $1,104.6 million as at December 31, 2007.
