RICHMOND, Va. -- Massey Energy Co. today reported net income of $16.5 million or $0.19 per share and EBITDA of $112.1 million for the quarter ended Sept. 30, 2009. Massey also reported continuing strong cash generation as cash and restricted cash increased by $102.4 million. Produced coal revenue for the quarter was $535.5 million. These results compared to net income of $51.6 million or $0.61 per share, EBITDA of $158.7 million and produced coal revenue of $666.4 million in the third quarter of 2008.
Commenting on the company's third quarter results, Massey's Chairman and Chief Executive Officer Don Blankenship said, "We are pleased to have increased our cash balance by over $100 million during the quarter, even though it was partially offset by the deposit of a $72 million appeal bond related to the Harman litigation. We achieved the strong cash generation amid difficult conditions in the global coal markets and in spite of operating challenges resulting from a fire that destroyed a key preparation plant in August."
"We also continued to add to our dominant Central Appalachia reserve base and related competitive advantages during the quarter," Blankenship added. "We already have approximately 12 million tons of annual met coal production capacity in place and our recent acquisition of the Alloy assets from Appalachian Fuels gives us yet another opportunity to expand met coal production in the near term. In addition, our reserve exchange with Foundation Coal for the Laurel Creek property will provide longer term benefits such as expanded mining infrastructure and increased consolidation of the region's coal reserves."
The Bandmill preparation plant was destroyed by fire on August 27, 2009. This incident impacted the operations at the Logan County resource group and, to a lesser extent, the Company as a whole during the quarter. Total shipments lost during September as a result of the Bandmill fire are estimated at 0.3 million tons of coal.
The Laurel Creek reserve and asset exchange, which occurred in July 2009, resulted in a $24.9 million non-cash gain which was recognized in the third quarter and was included in other income.
Massey's third quarter operating cash margin per ton was $11.98. Though a strong result, this was down from the near-record high operating cash margin per ton of $16.10 reported in the third quarter of 2008. The decline was driven by a 4 percent decrease in average realized prices on coal shipped and an increase in cash cost per ton of approximately 3 percent as compared to the third quarter of 2008. Average realized prices were impacted most significantly by product mix as utility coal shipments comprised 70 percent of the total tons shipped in the third quarter of 2009 compared to 65 percent in the third quarter of 2008 while higher priced metallurgical coal tons comprised 22 percent of total tons in the third quarter of 2009 compared to more than 24 percent in the third quarter of 2008. The impact of the weaker mix was only partially offset by price increases of 4 percent and 5 percent for utility coal and industrial coal, respectively. The average realized price for metallurgical coal shipped in the third quarter of 2009 declined by 13 percent as compared to the same period in 2008. Average cash cost per ton for the third quarter of 2009 was $49.81 compared to $48.49 in the third quarter of 2008. The increase was largely the result of higher fixed cost absorption on lower volume shipped.
Massey Energy Company, headquartered in Richmond, Virginia, with operations in West Virginia, Kentucky and Virginia, is the largest coal company in Central Appalachia and is included the S&P 500 index.
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