Walter Energy Announces First Quarter 2013 Results

  Walter Energy Announces First Quarter 2013 Results

 Company Reports 9% Increase in Met Coal Sales Volumes Compared to the Fourth
                               Quarter of 2012

                  Adjusted EBITDA Improves to $32.0 Million

Improved Operating Performance Reflects a 12% Sequential Increase in Met Coal
Production Volumes and a 12% Reduction in Met Coal Cash Cost of Sales per Ton

     Recent Debt Offering Enhances Liquidity and Extends Debt Maturities

Business Wire

BIRMINGHAM, Ala. -- May 01, 2013

Walter Energy Inc. (NYSE:WLT) (TSX:WLT), a leading, publicly traded
“pure-play” producer of metallurgical (met) coal for the global steel
industry, today announced results for the first quarter ended March 31, 2013.

Revenues were $491 million in the first quarter of 2013, an increase of 3%
from the fourth quarter of 2012. Revenues declined from $632 million in the
first quarter of 2012, due to industry-wide lower metallurgical coal prices.
The Company reported a net loss of $49.4 million, or a $0.79 loss per diluted
share in the first quarter, compared to a net loss of $71.0 million, or a
$1.13 loss per diluted share in the fourth quarter 2012 and compared to net
income of $40.6 million, or $0.65 per diluted share in the first quarter of
2012.

The first quarter of 2013 loss includes charges of $4.9 million, net of tax,
or $0.08 per share related to curtailing production at the Willow Creek mine
and $4.4 million, net of tax, or $0.07 per share primarily related to proxy
contest expenses. Excluding these charges and adjustments described in the
Company’s “Reconciliation of Non-GAAP Financial Measures,” the first quarter
2013 adjusted net loss was $40.1 million, or a $0.64 loss per diluted share,
and Adjusted EBITDA was $32.0 million.

“In the first quarter, we made continued progress on our key strategic
initiatives, most notably on our aggressive cost reduction efforts,” said Walt
Scheller, Chief Executive Officer. “While we have seen stronger demand in
2013, met coal pricing has improved only marginally, and the recovery in the
global economy and metallurgical coal markets remains uncertain. We remain
focused on operating safely, further reducing costs, carefully managing
capital spending, improving liquidity and reducing our debt levels as we
position the Company to benefit when markets recover.”

Metallurgical Sales Volume and Pricing

First quarter of 2013 met coal sales volume, including both hard coking coal
(HCC) and low-volatility (low-vol) PCI, was 2.8 million metric tons (MMTs), an
increase of 17% and 9%, respectively, compared to first quarter of 2012 and
the fourth quarter of 2012. HCC sales volume was 2.4 MMTs in the first quarter
of 2013 compared to 1.9 MMTs and 2.0 MMTs in the first quarter of 2012 and
fourth quarter of 2012, respectively. Low-vol PCI sales volume was 0.4 MMTs
compared to 0.5 MMTs in both the prior year comparable period and the fourth
quarter of 2012. In the first quarter of 2013, met coal sales tonnage was
approximately 88% of total coal sales volume.

Overall in the first quarter, pricing strengthened. Average realized met coal
pricing improved 2% as compared to the fourth quarter 2012. The average first
quarter 2013 selling price of HCC (primarily low-vol and mid-vol) was $154 per
metric ton (MT), which was slightly higher than the fourth quarter’s average
price of $152 per MT and significantly less than first quarter 2012 average
price of $225 per MT. The average selling price for low-vol PCI was $139 per
MT as compared to $128 per MT in the prior quarter and $188 per MT in the
prior year comparable quarter.

Metallurgical Coal Production

Met coal production was 2.8 MMTs in the first quarter of 2013, comprised of
2.3 MMTs of HCC and 0.5 MMTs of low-vol PCI. Met coal production increased 12%
from the 2.5 MMTs produced in the fourth quarter of 2012.

First quarter 2013 met coal production in the Company’s U.S. Operations
segment increased to 1.7 MMTs compared to 1.5 MMTs in the fourth quarter 2012,
despite the impact of two longwall moves during the quarter. Our Canadian and
U.K. Operations segment increased met coal production to 1.0 MMTs compared to
0.9 MMTs in the fourth quarter 2012.

Metallurgical Coal Cash Cost of Sales

Consolidated cash cost of sales for HCC was $120 per MT in the first quarter
compared to $124 per MT in the fourth quarter of 2012. In the U.S. Operations
segment, the cash cost of sales for HCC decreased to $110 per MT in the first
quarter, from $118 per MT in the fourth quarter of 2012.

Cash cost of sales for low-vol PCI at the Company’s Brule mine was $122 per MT
in the first quarter of 2013, compared with $165 and $159 in the fourth
quarter 2012 and first quarter 2012, respectively. The substantial improvement
in costs primarily reflects cost reduction initiatives including the
conversion of the mine from contractor-operated to owner-operated.

The Willow Creek mine reduced its costs in the first quarter as a result of
improved productivity, lower spending and lower LCM charges. Cost of sales per
ton declined by 51% compared to the fourth quarter of 2012 and 65% compared to
the first quarter of 2012. However, the mine’s cost structure remains high,
and due to the current weak met coal pricing environment the Company has
previously announced that it would curtail production at Willow Creek. The
Company expects that the ongoing costs at the mine will not be significant.

Thermal Coal Sales and Production

Sales of thermal coal totaled approximately 0.4 MMT in the first quarter 2013,
a decline of approximately 42% from fourth quarter 2012. Thermal coal
production was also lower in the first quarter, down 20%, from the fourth
quarter, primarily due to difficult mining conditions at the Company’s North
River mine. These conditions and the related reduced production resulted in an
increase to cash cost of sales of approximately $37 per MT during first
quarter 2013 compared to the fourth quarter of 2012. As previously announced,
the Company expects to close this mine earlier than previously planned and
anticipates this closure to occur before year-end. The Company expects that
the performance of the mine will return to more normal levels for the
remainder of its life.

Other Expenses

Selling, general and administrative (SG&A) expenses totaled $30.7 million in
the first quarter 2013. Despite the inclusion of $6.8 million in pre-tax
expenses primarily related to the proxy contest, SG&A for the quarter was only
slightly higher than fourth quarter 2012 SG&A of $28.9 million and was down
15% from the first quarter of 2012.

Interest expense for the first quarter 2013 totaled $52.6 million compared to
$49.6 million in the fourth quarter of 2012. Both periods included accelerated
amortization of debt expense totaling approximately $6.0 million related to
the prepayment of term debt using the proceeds from the fourth quarter of 2012
and first quarter of 2013 debt offerings. Cash interest totaled $40 million in
the first quarter, compared to $36 million in the fourth quarter of 2012.

Restructuring charges in the first quarter totaled $7.4 million and relate to
the previously announced curtailment of operations at Willow Creek in the
Canadian and U.K. Operations segment.

Capital Expenditures

Walter Energy continues to focus on managing capital spending carefully. The
Company’s capital expenditures were $34 million for the first quarter of 2013,
a decrease of 43% and 72% from fourth quarter of 2012 and first quarter of
2012, respectively. For the full year 2013, the Company has lowered its
capital spending estimate to approximately $170 million from the original
estimate of $220 million.

Liquidity

At the end of the first quarter of 2013, available liquidity was $560 million,
consisting of cash and cash equivalents of $236 million plus $324 million of
availability under the Company’s revolving credit facility.

Safety and Stewardship Highlights

Walter Energy’s emphasis on safety continues to show results as the majority
of locations are achieving lower total reportable injury rates. The Company’s
reportable injury rate in the Canadian and U.K. Operations segment has
decreased 80% compared to the first quarter of 2012. Company-wide, the total
of all injuries (Reportable and Non-reportable) was down 27.3% in the first
quarter of 2013 versus the same period in 2012, with Reportable injuries down
34.8% for the quarter. The Total Reportable Incident Rate was down 10% in the
first quarter of 2013 compared with the first quarter of 2012.

Outlook

While the Company does not provide earnings guidance, it does provide
directional commentary and observations on key areas of the business.

Sales price per ton for met coal is expected to be slightly higher in the
second quarter compared with the first quarter, with met coal sales volumes
expected to be in line with the first quarter.

The Company expects to lower its per ton met coal cost of production and cost
of sales in the second quarter of 2013 by more than 5%.

Overall earnings, adjusted EBITDA and cash flows are expected to significantly
improve in the second quarter compared to the first quarter.

Use of Non-GAAP Measures

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.

Conference Call Webcast

The Company will hold a webcast to discuss first quarter 2013 results on
Thursday, May 2, 2013, at 9:00 a.m. ET. To listen to the live event, visit
www.walterenergy.com.

About Walter Energy

Walter Energy is a leading, publicly traded "pure-play" metallurgical coal
producer for the global steel 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 4,000 employees, with operations in the United
States, Canada and United Kingdom. For more information about Walter Energy,
please visit www.walterenergy.com.

Safe Harbor Statement

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: unfavorable economic, financial and business
conditions; the global economic crisis; market conditions beyond our control;
prolonged decline in the price of coal; decline in global coal or steel
demand; prolonged or dramatic shortages or difficulties in coal production;
our customer’s refusal to honor or renew contracts; our ability to collect
payments from our customers; inherent risks in coal mining such as weather
patterns and conditions affecting production, geological conditions, equipment
failure and other operational risks associated with mining; title defects
preventing us from (or resulting in additional costs for) mining our mineral
interests; concentration of our mining operations in limited number of areas;
a significant reduction of, or loss of purchases by, our largest customers;
unavailability of cost-effective transportation for our coal; availability,
performance and costs of railroad, barge, truck and other transportation;
disruptions or delays at the port facilities we use; risks associated with our
reclamation and mine closure obligations, including failure to obtain or renew
surety bonds; significant increase in competitive pressures and foreign
currency fluctuations; significant cost increases and delays in the delivery
of raw materials, mining equipment and purchased components; availability of
adequate skilled employees and other labor relations matters; inaccuracies in
our estimates of our coal reserves; estimates concerning economically
recoverable coal reserves; greater than anticipated costs incurred for
compliance with environmental liabilities or limitations on our abilities to
produce or sell coal; our ability to attract and retain key personnel; future
regulations that increase our costs or limit our ability to produce coal; new
laws and regulations to reduce greenhouse gas emissions that impact the demand
for our coal reserves; adverse rulings in current or future litigation;
inability to access needed capital; events beyond our control may result in an
event of default under one or more of our debt instruments; availability of
licenses, permits, and other authorizations may be subject to challenges;
risks associated with our reclamation and mine closure obligations; failure to
meet project development and expansion targets; risks associated with
operating in foreign jurisdictions; risks related to our indebtedness and our
ability to generate cash for our financial obligations; downgrade in our
credit rating; our ability to identify suitable acquisition candidates to
promote growth; our ability to successfully integrate acquisitions; our
exposure to indemnification obligations; volatility in the price of our common
stock; our ability to pay regular dividends to stockholders; costs related to
our postretirement benefit obligations and workers’ compensation obligations;
our exposure to litigation; and other risks and uncertainties including those
described in our filings with the SEC. Forward-looking statements made by us
in this release, or elsewhere, speak only as of the date on which the
statements were made. You are advised to read the risk factors in our most
recently filed Annual Report on Form 10-K and subsequent filings with the SEC,
which are available on our website at www.walterenergy.com and on the SEC’s
website at www.sec.gov. 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. All data presented herein is as of the date of this release unless
otherwise noted.

 
                                                                             
    WALTER ENERGY, INC. AND SUBSIDIARIES
    CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
    AND COMPREHENSIVE INCOME
    ($ in thousands, except per share and share amounts)
    Unaudited
                                                        
                                           For the three months
                                           ended March 31,
                                           2013               2012
    Revenues:
    Sales                                  $ 489,609          $ 627,298
    Miscellaneous income                    1,734            4,265      
                                            491,343          631,563    
                                                                             
    Costs and expenses:
    Cost of sales (exclusive of              420,934            431,534
    depreciation and depletion)
    Depreciation and depletion               81,190             66,493
    Selling, general and                     30,674             36,247
    administrative
    Postretirement benefits                  14,725             13,213
    Restructuring charges ^(1)              7,440            -          
                                            554,963          547,487    
                                                                             
    Operating income (loss)                  (63,620    )       84,076
    Interest expense ^(2)                    (52,618    )       (28,067    )
    Interest income                          650                277
    Other income (loss) ^(3)                105              (6,993     )
    Income (loss) before income tax          (115,483   )       49,293
    expense
    Income tax expense (benefit)            (66,039    )      8,677      
    Net income (loss)                        (49,444    )       40,616
                                                                             
    Net income (loss) per share:
    Basic                                  $ (0.79      )     $ 0.65       
    Diluted                                $ (0.79      )     $ 0.65       
                                                                             
    Weighted average number of              62,598,990       62,462,692 
    shares outstanding ^(4)
    Weighted average number of              62,598,990       62,739,018 
    diluted shares outstanding ^(4)
                                                                             
    Comprehensive income (loss)            $ (59,644    )     $ 45,281     

     
       Includes restructuring charges associated with the curtailment of
^(1)   operations at our Willow Creek mine in the Canadian and U.K. Operations
       segment.
       
       The three months ended March 31, 2013 includes accelerated debt
       amortization costs of $6.0 million associated with the $250 million
       prepayment of principal on term loans A and B made upon the issuance of
       the $450 million 8.5% senior notes in the current quarter. The current
^(2)   quarter interest expense also reflects an increase in interest rates on
       our outstanding debt obligations due to the Second and Third Amendments
       to the 2011 Credit Agreement as well as the increase in interest
       associated with the issuance of $500 million 9.875% senior notes issued
       in the fourth quarter of 2012.
       
^(3)   The three months ended March 31, 2012 includes losses on the sale and
       remeasurement to fair value of equity investments.
       
       In periods of net loss, the number of shares used to calculate diluted
^(4)   earnings per share is the same as that used to calculate basic earnings
       per share.


                                                                 
  WALTER ENERGY, INC. AND SUBSIDIARIES
  RESULTS BY OPERATING SEGMENT
  ($ in thousands)
  Unaudited
                                               
                                     For the three months
                                     ended March 31,
                                     2013            2012
                                                                 
  REVENUES:
  U.S. Operations                    $ 339,225       $ 452,150
  Canadian and U.K. Operations         151,444         178,351
  Other                               674           1,062   
  Revenues                           $ 491,343      $ 631,563 
                                                                 
  OPERATING INCOME (LOSS):
  U.S. Operations                    $ (6,957  )     $ 106,981
  Canadian and U.K. Operations         (48,766 )       (13,555 )
  Other                               (7,897  )      (9,350  )
  Operating income (loss)            $ (63,620 )     $ 84,076  
                                                                 
  DEPRECIATION AND DEPLETION:
  U.S. Operations                    $ 47,473        $ 42,142
  Canadian and U.K. Operations         33,232          24,136
  Other                               485           215     
  Depreciation and depletion         $ 81,190       $ 66,493  
                                                                 
  CAPITAL EXPENDITURES:
  U.S. Operations                    $ 27,401        $ 36,112
  Canadian and U.K. Operations         6,314           84,180
  Other                               312           553     
  Capital expenditures               $ 34,027       $ 120,845 

                                                                                                             
                                                                                                                                     
WALTER ENERGY, INC. AND SUBSIDIARIES
SUPPLEMENTAL FINANCIAL DATA
(Ton information in 000's metric tons and dollars in USD)
Unaudited
                                                                                                                                     
                                                                                                                                     
                  3 Months Ended March 31, 2013          3 Months Ended March 31, 2012          3 Months Ended December 31, 2012
                               Canadian                               Canadian                               Canadian
                  U.S.         and                       U.S.         and U.K.                  U.S.         and
                                            Total                                  Total                                  Total
                  Operations   U.K.                      Operations   Operations                Operations   U.K.
                               Operations                             ^(3)                                   Operations
Total
Metallurgical
Sales Metric         1,706        1,071       2,777         1,535        832         2,367         1,506        1,040        2,546
Tons
Production           1,738        1,019       2,757         1,969        1,025       2,994         1,542        924          2,466
Metric Tons
Average Net       $  157.28    $  143.96    $ 152.14     $  221.22    $  211.92    $ 217.95     $  153.64    $  141.07    $  148.51
Selling Price
Average Cash
Cost of Sales     $  109.76    $  134.91    $ 119.46     $  110.33    $  183.49    $ 136.04     $  118.05    $  160.50    $  135.39
per Ton
^(1)(2)
Average Cash
Cost of           $  78.11     $  109.67    $ 89.78      $  71.68     $  124.59    $ 89.79      $  86.62     $  107.84    $  94.57
Production
per Ton ^(1)
                                                                                                                                     
Low Vol Hard
Coking
Sales Metric         1,166        -           1,166         1,011        -           1,011         828          -            828
Tons
Production           1,074        -           1,074         1,157        -           1,157         998          -            998
Metric Tons
Average Net       $  162.97    $  -         $ 162.97     $  235.14    $  -         $ 235.14     $  162.39    $  -         $  162.39
Selling Price
Average Cash
Cost of Sales     $  104.26    $  -         $ 104.26     $  106.13    $  -         $ 106.13     $  98.86     $  -         $  98.86
per Ton
^(1)(2)
Average Cash
Cost of           $  64.69     $  -         $ 64.69      $  60.85     $  -         $ 60.85      $  70.21     $  -         $  70.21
Production
per Ton ^(1)
                                                                                                                                     
Low Vol Hard
Coking -
Willow Creek
Sales Metric         -            105         105           -            -           -             -            4            4
Tons
Production           -            99          99            -            9           9             -            50           50
Metric Tons
Average Net       $  -         $  135.63    $ 135.63     $  -         $  -         $ -          $  -         $  210.40    $  210.40
Selling Price
Average Cash
Cost of Sales     $  -         $  199.39    $ 199.39     $  -         $  -         $ -          $  -         not          not
per Ton                                                                                                      meaningful   meaningful
^(1)(2)
Average Cash
Cost of           $  -         $  155.66    $ 155.66     $  -         $  280.91    $ 280.91     $  -         $  146.93    $  146.93
Production
per Ton ^(1)
                                                                                                                                     
Mid Vol Hard
Coking
Sales Metric         390          547         937           286          322         608           467          528          995
Tons
Production           418          433         851           565          405         970           358          398          756
Metric Tons
Average Net       $  153.28    $  149.19    $ 150.89     $  223.12    $  250.02    $ 237.27     $  143.43    $  153.28    $  148.65
Selling Price
Average Cash
Cost of Sales     $  135.53    $  131.10    $ 132.94     $  137.92    $  145.09    $ 141.69     $  143.22    $  120.10    $  130.97
per Ton
^(1)(2)
Average Cash
Cost of           $  106.86    $  99.84     $ 103.29     $  79.61     $  104.98    $ 90.20      $  122.47    $  82.99     $  101.70
Production
per Ton ^(1)
                                                                                                                                     
High Vol Hard
Coking
Sales Metric         150          -           150           238          -           238           211          -            211
Tons
Production           246          -           246           247          -           247           186          -            186
Metric Tons
Average Net       $  121.31    $  -         $ 121.31     $  149.52    $  -         $ 149.52     $  130.67    $  -         $  130.67
Selling Price
Average Cash
Cost of Sales     $  109.50    $  -         $ 109.50     $  121.45    $  -         $ 121.45     $  139.10    $  -         $  139.10
per Ton
^(1)(2)
Average Cash
Cost of           $  87.80     $  -         $ 87.80      $  104.30    $  -         $ 104.30     $  105.48    $  -         $  105.48
Production
per Ton ^(1)
                                                                                                                                     
Low Vol PCI
Sales Metric         -            271         271           -            425         425           -            388          388
Tons
Production           -            332         332           -            495         495           -            284          284
Metric Tons
Average Net       $  -         $  133.82    $ 133.82     $  -         $  185.86    $ 185.86     $  -         $  127.69    $  127.69
Selling Price
Average Cash
Cost of Sales     $  -         $  122.34    $ 122.34     $  -         $  159.16    $ 159.16     $  -         $  165.36    $  165.36
per Ton
^(1)(2)
Average Cash
Cost of           $  -         $  101.68    $ 101.68     $  -         $  94.56     $ 94.56      $  -         $  111.28    $  111.28
Production
per Ton ^(1)
                                                                                                                                     
Low Vol PCI -
Willow Creek
Sales Metric         -            148         148           -            85          85            -            120          120
Tons
Production           -            155         155           -            116         116           -            192          192
Metric Tons
Average Net       $  -         $  149.10    $ 149.10     $  -         $  198.09    $ 198.09     $  -         $  128.30    $  128.30
Selling Price
Average Cash
Cost of Sales     $  -         $  126.00    $ 126.00     $  -         $  448.87    $ 448.87     $  -         $  232.95    $  232.95
per Ton
^(1)(2)
Average Cash
Cost of           $  -         $  124.95    $ 124.95     $  -         $  308.66    $ 308.66     $  -         $  144.11    $  144.11
Production
per Ton ^(1)
                                                                                                                                     
Thermal
Sales Metric         383          4           387           782          25          807           655          9            664
Tons
Production           434          12          446           816          30          846           552          7            559
Metric Tons
Average Net       $  64.23     $  32.98     $ 63.92      $  71.27     $  120.96    $ 72.78      $  64.33     $  124.44    $  65.14
Selling Price
Average Cash
Cost of Sales     $  90.34     $  341.79    $ 92.87      $  78.87     $  111.86    $ 79.87      $  55.83     $  70.31     $  56.03
per Ton
^(1)(2)
Average Cash
Cost of           $  76.16     $  102.96    $ 76.89      $  60.74     $  -         $ 58.59      $  64.99     $  -         $  64.17
Production
per Ton ^(1)

    
      Average Cash Cost of Sales per Ton is based on reported Cost of Sales
      and includes items such as freight, royalties, manpower, fuel and other
      similar production and sales cost items but excludes depreciation,
      depletion and post retirement benefits. Average Cash Cost of Production
      per Ton is based on period costs of mining and includes items such as
      manpower, fuel and other similar production items but excludes
      depreciation, depletion and post retirement benefits. Average Cash Cost
(1)   per Ton are non-GAAP financial measures which are not calculated in
      conformity with U.S. Generally Accepted Accounting Principles (GAAP) and
      should be considered supplemental to, and not as a substitute or
      superior to financial measures calculated in conformity with GAAP. We
      believe Average Cash Cost per Ton are useful measures of performance and
      we believe it aids some investors and analysts in comparing us against
      other companies to help analyze our current and future potential
      performance. Average Cash Cost of Sales per Ton may not be comparable to
      similarly titled measures used by other companies.
      
(2)   Reconciliation of Cash Costs of Sales per Ton to Cost of Sales as
      disclosed (in thousands USD):

                                                           
                                  Quarter                     Quarter
                                                Quarter
                                  Ended         Ended         Ended
                                  March         March         Dec.
                                                31, 2012
                                  31, 2013                    31, 2012
              Cash Costs
              of Sales as
              calculated
              from above
              (sales tons         $ 367,681     $ 386,462     $ 381,907
              times
              average
              cash cost
              per ton)
              Cash Costs
              of other             53,253       45,072       48,701
              products
              Total Cost          $ 420,934     $ 431,534     $ 430,608
              of Sales

    
      During the third quarter of 2012, in our Canadian and U.K. operations
      certain metrics around tons included in production were realigned to
      align with how we account for production in the U.S. operations.
      Historically, the Canadian and U.K. operations were not recording tons
      produced until they were deemed finished goods. We revised this
(3)   methodology to include all tons mined, no matter if in process or
      finished, as produced based on a clean coal tonnage equivalent. Our Form
      8-K filed on November 5, 2012, includes a reconciliation of production
      statistics previously presented as compared with the realigned
      methodology from the Western Coal acquisition date of April 1, 2011
      through June 30, 2012.

                                                                             
                                                                             
WALTER ENERGY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
($ in thousands)
Unaudited
                                                        
                                              March 31,         December 31,
                                              2013              2012
ASSETS
Cash and cash equivalents                     $ 235,791         $  116,601
Receivables, net                                315,296            256,967
Inventories                                     302,293            306,018
Deferred income taxes                           55,629             58,526
Prepaid expenses                                47,441             53,776
Other current assets                           23,285            23,928
Total current assets                            979,735            815,816
Mineral interests, net                          2,927,591          2,965,557
Property, plant and equipment, net              1,691,637          1,732,131
Deferred income taxes                           185,387            160,422
Other long-term assets                         99,092            94,494
TOTAL ASSETS                                  $ 5,883,442       $  5,768,420
                                                                             
LIABILITIES AND STOCKHOLDERS' EQUITY
Current debt                                  $ 17,398          $  18,793
Accounts payable                                133,040            114,913
Accrued expenses                                192,913            184,875
Accumulated postretirement benefits             29,637             29,200
obligation
Other current liabilities                      207,328           206,473
Total current liabilities                       580,316            554,254
Long-term debt                                  2,593,584          2,397,372
Deferred income taxes                           883,659            921,687
Accumulated postretirement benefits             636,129            633,264
obligation
Other long-term liabilities                    244,084           251,272
TOTAL LIABILITIES                               4,937,772          4,757,849
STOCKHOLDERS' EQUITY                           945,670           1,010,571
TOTAL LIABILITIES AND STOCKHOLDERS'           $ 5,883,442       $  5,768,420
EQUITY

                                                                                          
                                                                                            
WALTER ENERGY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CHANGES

IN STOCKHOLDERS' EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 2013
($ in thousands, except per share amounts)
Unaudited                                                                                 
                                                                    
                                                                            Accumulated
                                             Capital in                     Other
                                    Common   Excess of       Accumulated    Comprehensive
                   Total          Stock   Par Value      Deficit       Loss          
                                                                                            
Balance at
December 31,        $ 1,010,571     $  625   $ 1,628,244     $ (347,448 )   $  (270,850 )
2012
                                                                                            
Net loss              (49,444   )                              (49,444  )
Other
comprehensive         (10,200   )                                              (10,200  )
loss, net of
tax
Stock issued
upon the              279              1       278
exercise of
stock options
Dividends
paid, $0.125          (7,816    )              (15,630   )     7,814
per share
Stock-based           2,887                    2,887
compensation
Excess tax
deficit from
stock-based           (372      )              (372      )
compensation
arrangements
Other               (235      )    -     -            (235     )               
Balance at
March 31,          $ 945,670     $  626  $ 1,615,407   $ (389,313 )  $  (281,050 ) 
2013

                                                                             
                                                                             
WALTER ENERGY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
($ in thousands)
Unaudited
                                                       
                                        For the three months ended March 31,
                                        2013                  2012
OPERATING ACTIVITIES
Net income (loss)                       $  (49,444   )        $  40,616
                                                                             
Adjustments to reconcile net
income (loss) to net cash flows
provided by (used in) operating
activities:
                                                                             
Depreciation and depletion                 81,190                66,493
Deferred income tax benefit                (61,941   )           (10,894   )
Amortization of debt issuance              9,982                 3,644
costs
Other                                      14,922                8,756
                                                                             
Decrease (increase) in current
assets:
Receivables                                (58,494   )           16,889
Inventories                                5,428                 (63,192   )
Prepaid expenses and other                 6,502                 5,462
current assets
                                                                             
Increase (decrease) in current
liabilities:
Accounts payable                           22,534                37,604
Accrued expenses and other                9,923               (34,524   )
current liabilities
Cash flows provided by (used in)          (19,398   )          70,854    
operating activities
                                                                             
INVESTING ACTIVITIES
Additions to property, plant and           (34,027   )           (120,845  )
equipment
Proceeds from sales of                     -                     12,228
investments
Other                                     1,021               (85       )
Cash flows used in investing              (33,006   )          (108,702  )
activities
                                                                             
FINANCING ACTIVITIES
Proceeds from issuance of debt             450,000               -
Borrowings under revolving credit          320,778               135,294
agreement
Repayments on revolving credit             (320,778  )           (70,156   )
agreement
Retirements of debt                        (254,687  )           (9,177    )
Dividends paid                             (7,816    )           (7,806    )
Debt issuance costs                        (15,163   )           -
Other                                     (328      )          (624      )
Cash flows provided by financing           172,006               47,531
activities
                                                                             
EFFECT OF FOREIGN EXCHANGE RATES          (412      )          87        
ON CASH
                                                                             
Net increase in cash and cash           $  119,190           $  9,770     
equivalents
                                                                             
Cash and cash equivalents at            $  116,601            $  128,430
beginning of period
Net increase in cash and cash             119,190             9,770     
equivalents
Cash and cash equivalents at end        $  235,791           $  138,200   
of period



WALTER ENERGY, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
Unaudited
                                                             
RECONCILIATION OF EBITDA AND ADJUSTED EBITDA TO AMOUNTS REPORTED UNDER US
GAAP:
                                                                   
                                                   For the three months ended
                                                   March 31,
($ in thousands)                                   2013            2012
                                                                   
Net income (loss)                                  $ (49,444 )     $ 40,616
Add: interest expense                                52,618          28,067
Less: interest income                                (650    )       (277    )
Add: income tax expense (benefit)                    (66,039 )       8,677
Add: depreciation and depletion expense              81,190          66,493
Earnings before interest, income taxes, and                       
depreciation
and depletion (EBITDA) ^(1)                          17,675          143,576
Add: restructuring charges                           7,440           -
Add: proxy contest expenses and other               6,838         -       
Adjusted EBITDA ^ (2)                              $ 31,953       $ 143,576 
                                                                   
RECONCILIATION OF ADJUSTED NET INCOME (LOSS) TO AMOUNTS REPORTED UNDER US
GAAP:
                                                                   
                                                   For the three months ended
                                                   March 31,
($ in thousands)                                   2013            2012
                                                                   
Net income (loss)                                  $ (49,444 )     $ 40,616
Add: restructuring charges, net of tax ($2.6         4,851           -
million)
Add: proxy contest expenses and other, net
of tax
($2.4 million)                                      4,449         -       
Adjusted net income (loss) ^ (3)                   $ (40,144 )     $ 40,616  

     
       EBITDA is defined as net income (loss) before interest expense,
       interest income, income taxes, and depreciation and depletion expense.
       EBITDA is a financial measure which is not calculated in conformity
       with U.S. Generally Accepted Accounting Principles (GAAP) and should be
       considered supplemental to, and not as a substitute or superior to
^(1)   financial measures calculated in conformity with GAAP. We believe that
       EBITDA is a useful measure as some investors and analysts use EBITDA to
       compare us against other companies and to help analyze our ability to
       satisfy principal and interest obligations and capital expenditure
       needs. EBITDA may not be comparable to similarly titled measures used
       by other companies.
       Adjusted EBITDA is defined as EBITDA further adjusted to exclude
       restructuring charges, proxy contest expenses and other miscellaneous
       items. Adjusted EBITDA is not a measure of financial performance in
       accordance with GAAP, and we believe items excluded from Adjusted
       EBITDA are significant to a reader in understanding and assessing our
       financial condition. Therefore, Adjusted EBITDA should not be
       considered in isolation, nor as an alternative to net income, income
^(2)   from operations, cash flows from operations or as a measure of our
       profitability, liquidity or performance under generally accepted
       accounting principles. We believe that Adjusted EBITDA presents a
       useful measure of our ability to incur and service debt based on
       ongoing operations. Furthermore, analogous measures are used by
       industry analysts to evaluate our operating performance. Investors
       should be aware that our presentation of Adjusted EBITDA may not be
       comparable to similarly titled measures used by other companies.
       Adjusted net income (loss) is defined as net income (loss) excluding
       restructuring charges, proxy contest expenses and other miscellaneous
       items, net of tax. Adjusted net income (loss) is not a measure of
       financial performance in accordance with generally accepted accounting
^(3)   principles, and we believe items excluded from Adjusted net income
       (loss) are significant to a reader in understanding and assessing our
       results of operations. Therefore, Adjusted net income (loss) should not
       be considered in isolation, nor as an alternative to net income (loss)
       under generally accepted accounting principles.
       

Contact:

For Walter Energy Inc.
For media:
Ruth Pachman, 212-521-4891
ruth-pachman@kekst.com
or
For investors:
Mark Tubb, 205-745-2627
mark.tubb@walterenergy.com
 
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