Exhibit 99.1
WALTER INDUSTRIES ANNOUNCES FIRST QUARTER 2005 RESULTS
-- Earnings of $0.41 Per Diluted Share Reported --
-- Coal Mining Operation Continues Strong Performance --
TAMPA, Fla., April 26 /PRNewswire-FirstCall/ -- Walter Industries, Inc. (NYSE:
WLT) today reported earnings of $0.41 per diluted share for the first quarter
ended March 31, 2005, compared with a net loss of $0.11 per share in the prior
year's first quarter. Net income for the quarter totaled $18.8 million compared
with a net loss of $4.6 million in the first quarter last year.
Net income for the quarter reflected continued solid earnings, principally from
increased pricing and favorable production volume and mining costs in the
Company's Natural Resources segment. The Industrial Products segment showed
improvement in operating income, which included pre-tax income of $5.1 million
related to a favorable insurance claim settlement at U.S. Pipe. The Financing
segment also continued its consistent earnings performance during the quarter.
These favorable impacts were partially offset by a loss in the Company's
Homebuilding segment.
Diluted earnings per share of $0.41 for the quarter compares to the previously
issued range of earnings expectations of $0.25 to $0.33 per diluted share.
"Our Natural Resources segment continued to increase profitability with
excellent production performance and improved pricing, leading to another solid
quarter," said Chairman and CEO Don DeFosset. "With strong first quarter results
behind us and improving results in our U.S. Pipe business, we remain on track
for an outstanding year."
First Quarter 2005 Financial Results
Net sales and revenues for the first quarter were $345.3 million, up 5.9% versus
the year-ago period. This improvement primarily reflects a 51% year- over-year
increase at Natural Resources, as well as increases at U.S. Pipe and Sloss
Industries, which were partially offset by lower Homebuilding and Financing
revenues.
Operating income of $31.8 million for the quarter was favorable by $34.8 million
to the prior-year period, reflecting continued positive trends in pricing and
production performance at Jim Walter Resources and U.S. Pipe. The Financing
segment also generated solid performance. The Homebuilding segment reported a
loss in the quarter, although sales order trends continued to rebound.
First Quarter Results by Operating Segment
Natural Resources Segment
The Natural Resources segment reported first quarter revenue of $97.4 million,
up 51% versus the same period last year, and operating income of $24.5 million
compared to an operating loss of $2.3 million in the prior- year period,
primarily driven by significant pricing improvements and 6% lower production
costs per ton.
Jim Walter Resources sold 1.5 million tons of coal at an average price of $56.47
per ton, compared to 1.47 million tons at $35.36 per ton during the same period
last year. Several new customer contract sales that were not expected in the
first quarter and spot coal transactions during the quarter at prices averaging
$102 per ton helped drive higher average prices and increased profitability. The
natural gas operation sold 1.76 billion cubic feet of gas at an average price of
$6.75 per thousand cubic feet versus 2.01 billion cubic feet at $6.16 per
thousand cubic feet in the prior-year quarter.
Along with strong year-over-year metallurgical coal price increases, Jim Walter
Resources continued its outstanding production performance in the first quarter,
mining in excess of 1.9 million tons of coal. This production exceeded the same
period last year by more than 425,000 tons, or 28%, despite three longwall moves
during the quarter.
Industrial Products Segment
The Industrial Products segment reported $115.6 million in revenue for the first
quarter of 2005, compared to $114.1 million for the prior-year period. The
prior-year period included $5.9 million of revenue from Vestal Manufacturing,
which was sold in April 2004. Excluding Vestal's results, segment revenue
increased 7%. The higher revenue reflects a 26% increase in ductile iron pipe
prices, offset by lower pipe and fittings sales volumes due to unfavorable
weather during the quarter, which delayed deliveries.
Operating income for the segment totaled $5.5 million for the quarter, compared
to an operating loss of $1.6 million for the same period last year. Operating
income was favorably impacted by a $5.1 million insurance claim settlement.
Excluding this settlement, operating income improved $2.0 million versus last
year due to higher pricing, partially offset by lower volumes and higher scrap
metal costs.
Financing Segment
The Financing segment reported first quarter revenue of $59.1 million compared
with $61.0 million in the year-ago period. The decline in revenue was attributed
to reduced yields and a decrease in the instalment note portfolio. Prepayment
speeds increased to 10.0% in the first quarter, compared to 8.4% in the
prior-year period.
Operating income for the segment was $14.6 million in the first quarter versus
$13.8 million for the same period in 2004. Current period results include income
of $1.1 million, primarily from reductions in insurance loss and other accruals.
Excluding these items, operating income was essentially flat with the same
period in 2004. Reduced selling, general and administrative costs, lower
interest expense and a lower provision for instalment notes receivable losses on
repossessed homes for the quarter were offset by the overall decline in
portfolio earnings. Delinquencies (the percentage of amounts outstanding more
than 30 days past due) improved to 3.9% in the first quarter versus 4.5% in the
first quarter of last year.
Homebuilding Segment
The Homebuilding segment reported first quarter revenue of $48.7 million versus
$64.1 million for the same period last year. The Homebuilding group completed
650 homes during the quarter at an average net selling price of $74,800,
compared with 913 homes at an average net selling price of $70,100 for the
prior-year period.
The segment reported an operating loss for the first quarter totaling $8.5
million, compared to the prior-year period loss of $8.8 million. The current
period loss reflects the 29% decline in delivered units, partially offset by
higher sales prices and cost-reduction activities such as reduced advertising
expenses and lower overhead resulting from 26 branch closures in 2004. The
decline in unit deliveries reflects fewer sales orders in the second and third
quarters of 2004 and construction-related challenges in two of Jim Walter Homes'
six divisions.
While total new sales contracts were down slightly, recent marketing initiatives
and sales center enhancements are driving improved sales order trends in the
first quarter, with same-store sales up 16% versus the first quarter last year.
The backlog rose 9% from 2,024 units to 2,198 units versus the prior-year's
quarter.
Other Segment
Sloss Industries reported revenue for the first quarter of $30.6 million, up 24%
versus the same period last year and reported operating income of $1.8 million,
which was flat with the first quarter of 2004. Current-period results reflect
higher furnace and foundry coke pricing, offset by increases in production
costs, higher met coal raw material costs and expenses from a legal settlement.
Operating results also included an accrual reduction in the Company's land group
of $1.1 million resulting from a favorable court ruling related to a coal
mineral rights dispute.
Conference Call Webcast
Walter Industries Chairman and CEO Don DeFosset and members of the Company's
leadership team will discuss first quarter 2005 results and other general
business matters on a conference call and live Webcast to be held on Wednesday,
April 27, 2005, at 9 a.m. EDT. To listen to the event live or in archive, visit
the Company Web site at http://www.walterind.com . The call will remain
available for 30 days.
Walter Industries, Inc. is a diversified company with annual revenues of $1.5
billion. The Company is a leader in affordable homebuilding, related financing,
and water transmission products, and is a significant producer of high-quality
metallurgical coal for worldwide markets. Based in Tampa, Fla., the Company
employs approximately 5,100 people. For more information about Walter
Industries, please call Joe Troy, Senior Vice President - Financial Services at
(813) 871-4404, or visit the Company Web site at http://www.walterind.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. Forward-looking statements
involve known and unknown risks and uncertainties that may cause the Company's
actual results in future periods to differ materially from forecasted results.
Those risks include, among others, changes in customers' demand for the
Company's products, changes in raw material, labor, equipment and transportation
costs and availability, geologic and weather conditions, changes in extraction
costs and pricing in the Company's mining operations, changes in customer
orders, pricing actions by the Company's competitors, the collection of
approximately $14 million of receivables associated with a working capital
adjustment arising from the sale of a subsidiary in 2003, potential changes in
the mortgage-backed capital market, and general changes in economic conditions.
Risks associated with forward-looking statements are more fully described in the
Company's filings with the Securities and Exchange Commission. The Company
assumes no duty to update its forward-looking statements as of any future date.
WALTER INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
($ in Thousands)
Unaudited
For the three months
ended March 31,
----------------------------
2005 2004
------------ ------------
Net sales and revenues:
Net sales $ 286,730 $ 265,683
Interest income on instalment
notes 53,493 55,266
Miscellaneous 5,110 5,087
345,333 326,036
Cost and expenses:
Cost of sales (exclusive of
depreciation) 217,396 225,992
Depreciation 14,320 15,252
Selling, general and administrative 42,570 48,399
Provision for losses on instalment
notes 3,185 3,491
Postretirement benefits 3,238 2,512
Interest expense - mortgage-
backed/asset-backed notes 31,435 31,726
Interest expense - corporate debt 3,612 3,945
Amortization of other intangibles 1,063 1,485
Restructuring and impairment charges 305 155
317,124 332,957
Income (loss) from continuing
operations before income tax expense 28,209 (6,921)
Income tax (expense) benefit (9,027) 2,319
Income (loss) from continuing
operations 19,182 (4,602)
Discontinued operations, net of
income taxes (1) (417) --
Net Income (loss) $ 18,765 $ (4,602)
Basic Income (Loss) per share:
Income (loss) from continuing
operations $ 0.51 $ (0.11)
Discontinued Operations (0.01) --
Net Income (Loss) $ 0.50 $ (0.11)
Weighted average number of shares
outstanding 37,719,968 41,927,214
Diluted Income (Loss) per share:
Income (loss) from continuing
operations $ 0.41 $ (0.11)
Discontinued Operations -- --
Net Income (Loss) $ 0.41 $ (0.11)
Weighted average number of dilutive
securities (2) 48,799,982 41,927,214
(1) 2005 expenses incurred during the quarter resulted from the Company's sale
of its AIMCOR subsidiary in December 2003.
(2) Weighed average number of shares outstanding was used in the 2004
calculation, as the inclusion of potentially dilutive securities would have
had an anti-dilutive effect.
WALTER INDUSTRIES, INC. AND SUBSIDIARIES
RESULTS BY OPERATING SEGMENT
($ in Thousands)
Unaudited
For the three months
ended March 31,
----------------------------
2005 2004
------------ ------------
NET SALES AND REVENUES:
Homebuilding $ 48,679 $ 64,117
Financing 59,093 60,980
Industrial Products 115,582 114,077
Natural Resources 97,431 64,654
Other 32,700 26,822
Consolidating Eliminations (8,152) (4,614)
$ 345,333 $ 326,036
OPERATING INCOME (LOSS):
Homebuilding $ (8,549) $ (8,809)
Financing 14,586 13,847
Industrial Products 5,480 (1,550)
Natural Resources 24,542 (2,313)
Other (2,478) (3,929)
Consolidating Eliminations (1,760) (222)
Operating income (loss) 31,821 (2,976)
Corporate debt interest expense (3,612) (3,945)
Income (loss) from continuing
operations before income tax expense $ 28,209 $ (6,921)
WALTER INDUSTRIES, INC. AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
Unaudited
For the three For the three
months ended months ended
March 31, 2005 March 31, 2004
-------------- --------------
Depreciation ($ in thousands):
Homebuilding $ 1,196 $ 1,245
Financing 360 338
Industrial Products 6,552 6,853
Natural Resources 5,047 5,594
Other 1,165 1,222
$ 14,320 $ 15,252
Amortization of other intangibles
($ in thousands):
Financing $ 1,063 $ 1,485
Restructuring and impairment charges
($ in thousands):
U.S. Pipe Anniston plant shutdown
costs $-- $ 296
Mine No. 5 shutdown costs 305 (141)
$ 305 $ 155
Operating Data:
Homebuilding
New sales contracts, net of
cancellations 847 877
Unit completions 650 913
Average sale price $ 74,800 $ 70,100
Ending homes backlog 2,198 2,024
Financing
Delinquencies 3.9% 4.5%
Prepayment speeds 10.0% 8.4%
Industrial Products
Ending pipe & fittings backlog, tons 174,794 175,865
Ending pipe & fittings backlog,
dollars ($ in thousands) $ 144,114 $ 118,821
Natural Resources
Tons sold
Metallurgical coal, contracts (in
thousands) 1,027 1,058
Metallurgical coal, spot sales (in
thousands) 82 --
Steam coal (in thousands) 392 408
Average sale price per ton
Metallurgical coal, contracts $ 60.92 $ 35.49
Metallurgical coal, spot sales $ 102.20 $ --
Steam coal $ 35.27 $ 35.01
Tons of coal produced (in thousands) 1,931 1,506
Mining costs per ton: (1)
Mines No. 4 & 7 $ 30.35 $ 33.00
Mine No. 5 $ 42.38 $ 42.49
Total $ 32.75 $ 34.70
Natural gas sales, in mmcf (in
thousands) 1,756 2,013
Natural gas average sale price per
mmcf $ 6.75 $ 6.16
Sloss Industries
Tons of foundry coke sold 34,924 29,818
Tons of furnace coke sold 62,250 76,944
Foundry coke average sale price per
ton $ 238.86 $ 161.90
Furnace coke average sale price per
ton $ 206.00 $ 145.31
(1) Mining costs exclude selling, general and administrative expenses,
postretirement benefit expenses, asset retirement obligation expenses,
royalties, Black Lung excise taxes and certain other costs related to
post-mining activities.
WALTER INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
($ in Thousands)
Unaudited
March 31, December 31, March 31,
2005 2004 2004
------------ ------------ ------------
ASSETS
Cash and cash equivalents $ 8,747 $ 46,924 $ 13,860
Short-term investments, restricted 99,219 99,905 97,753
Instalment notes receivable, net of
allowance of $11,084,
$11,200 and $11,490, respectively 1,700,917 1,717,205 1,751,497
Receivables, net 173,986 170,219 170,283
Income tax receivable 14,998 14,977 14,054
Inventories 286,453 233,547 237,455
Prepaid expenses 28,738 19,590 9,925
Property, plant and equipment, net 332,440 331,959 346,236
Investments 6,111 6,165 6,215
Deferred income taxes 51,866 47,943 49,577
Unamortized debt expense 35,683 36,726 34,428
Other long-term assets, net 46,066 46,340 43,374
Goodwill and other intangibles, net 143,923 144,986 148,477
$ 2,929,147 $ 2,916,486 $ 2,923,134
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable $ 100,786 $ 90,217 $ 101,385
Accrued expenses 114,577 125,681 115,733
Debt:
Mortgage-backed/asset-backed notes 1,724,067 1,763,827 1,801,540
Senior debt 6,900 -- 125,528
Convertible senior subordinated notes 175,000 175,000 --
Accrued interest 17,279 16,813 16,322
Accumulated postretirement benefits
obligation 281,200 282,599 290,396
Other long-term liabilities 205,422 203,122 201,185
Total liabilities 2,625,231 2,657,259 2,652,089
Stockholders' equity 303,916 259,227 271,045
$ 2,929,147 $ 2,916,486 $ 2,923,134
WALTER INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 2005
($ in Thousands)
Unaudited
Accumul.
Other
Compreh.
Compreh. Accumul. Income Common Captl in Treasury
Total Income Deficit (Loss) Stock Excess Stock
---------- ---------- ---------- ---------- ---------- ---------- ----------
Balance at December 31, 2004 $ 259,227 (609,048) (51,109) 580 1,178,121 (259,317)
Compreh. income:
Net income $ 18,765 18,765 18,765
Other compreh. income, net of tax:
Net unrealized gain on hedges 741 741 741
Compreh. income $ 19,506
Stock issued upon exercise of
stock options 13,319 14 13,305
Tax benefit from the exercise of
stock options 12,995 12,995
Dividends paid,$.04 per share (1,494) (1,494)
Stock-based compensation 363 363
Balance at March 31, 2005 $ 303,916 (590,283) (50,368) 594 1,203,290 (259,317)
WALTER INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
($ in Thousands)
Unaudited
For the three months
ended March 31,
--------------------------------
2005 2004
-------------- --------------
OPERATING ACTIVITIES
Income (loss) from continuing
operations $ 19,182 $ (4,602)
Adjustments to reconcile income
(loss) to net cash used in
continuing operations:
Provision for losses on instalment
notes 3,185 3,491
Depreciation 14,320 15,252
Benefit from deferred income taxes (3,870) (2,079)
Tax benefit on the exercise of
employee stock options 12,995 --
Accumulated postretirement benefits
obligation (1,399) (1,904)
Provision for (decrease in) other
long-term liabilities 3,041 (1,638)
Amortization of other intangibles 1,063 1,485
Amortization of debt expense 1,626 1,382
Stock-based compensation expense 363 --
Decrease (increase) in assets:
Receivables (3,767) (14,786)
Income tax receivable (74) 3,217
Inventories (52,906) (12,930)
Prepaid expenses (9,148) (3,397)
Increase (decrease) in liabilities:
Accounts payable 10,569 1,496
Accrued expenses (11,104) 10,208
Accrued interest 466 (797)
Cash flows used in continuing
operations (15,458) (5,602)
Cash flows used in discontinued
operations (417) (3,611)
Cash flows used in operating
activities (15,875) (9,213)
INVESTING ACTIVITIES
Notes originated from sales and
resales of homes and purchases of
loan portfolios (93,812) (119,903)
Cash collections on accounts and
payouts in advance of maturity 106,915 114,077
Decrease in short-term investments,
restricted 686 2,562
Additions to property, plant and
equipment, net of retirements (14,801) (8,959)
Decrease (increase) in investments
and other assets, net 328 (7,139)
Cash flows used in investing
activities (684) (19,362)
FINANCING ACTIVITIES
Issuance of debt 47,400 76,500
Retirement of debt (80,260) (93,084)
Additions to unamortized debt expense (583) --
Dividends paid (1,494) (1,258)
Exercise of employee stock options 13,319 295
Cash flows used in financing
activities (21,618) (17,547)
Net decrease in cash and cash
equivalents (38,177) (46,122)
Cash and cash equivalents at
beginning of period 46,924 59,982
Cash and cash equivalents at end of
period $ 8,747 $ 13,860
SOURCE Walter Industries, Inc.
-0- 04/26/2005
/CONTACT: Joe Troy, Senior Vice President - Financial Services, Walter
Industries, +1-813-871-4404/
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