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Coal Prices Help Walter Industries' Profit Nearly Triple

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By RUSSELL RAY

The Tampa Tribune

Published: July 30, 2008

TAMPA - Walter Industries, a leading coal producer, said Tuesday that earnings nearly tripled in the second quarter, driven primarily by skyrocketing coal prices.

The news lifted the company's stock price to $99.26 a share, up $12.98, or 15 percent, on the New York Stock Exchange.

The company reported net income of $50.8 million, or 94 cents a share, up from $18.1 million, or 34 cents a share, in the same quarter of 2007.

"These results have set the table for what we expect to be the most profitable year in Walter Industries' history," Chairman Michael T. Tokarz said.

Walter and other U.S. coal producers have been helped this year by a doubling of coal prices, which is pushing stock prices and earnings to new highs. Stronger-than-expected demand for steel has diminished supplies of metallurgical coal, which is used in steel production, causing prices to surge.

Although coal prices are expected to drop as producers replenish supplies, analysts say coal prices will remain high through 2009.

The Tampa-based company, a major producer of metallurgical coal, recorded $370 million in sales and revenue in the second quarter, up 24.8 percent compared with the same quarter in 2007.

The company produced 3 million tons of metallurgical coal during the first half of 2008, with a target of producing an estimated 7 million tons this year.

Last year, Walter Industries produced nearly 6 million tons of metallurgical coal. The company has spent $175 million in the past four years on the expansion of existing coal mines and the acquisition of new reserves. As a result, the company expects to increase production by 50 percent, to 9 million tons, in 2010.

Income from ongoing operations was $82.3 million, up from $33 million in the second quarter of 2007.

The company said it still plans to spin off its financing and homebuilding businesses by year's end.

In June, the company raised more than $280 million after offering 3.2 million shares of common stock. The proceeds were used to pay down debt.

Reporter Russell Ray can be reached at (813) 259-7870 or rray@tampatrib.com.

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