Walter Energy Inc Earnings Q2 2014 Earnings Call $WLT

Major points from the conference call results discussion:

• Met coals sales totaled 2.7 million tons in the quarter, up 11% versus last year. Strong sales out of Alabama drove the increase, with low-vol sales up 35% and mid-vol sales increasing 19%. We also reduced met coal inventory by 400,000 tons.
• Second quarter revenues were $378 million, down $36 million compared to the first quarter with the average met coal sales price $12 per ton lower and sales volume higher by some 100,000 tons.
• SG&A was $19 million in the quarter, down 30% from last year, driven by our cost reduction program. We have taken actions to lower our run rate to approximately $70 million per year by the end of 2014.
• Interest expense for the quarter totaled $73 million, with the increase over last year reflecting the recent financings that boosted liquidity and raised the average interest rate on our debt. Respectively, given our recent financing, our cash interest expense is expected to be roughly $285 million.
• For the second quarter capital spending was $31 million; for the full year 2014 we expect capital spending of $120 million. 
• Met coal sales are expected to total between 9.5 million and 10.5 million tons, down about a million tons from our previous expectation, primarily because our principal coal transportation provider at the Brule mine in Canada ceased operations in June.

And some highlights from the Q&A part of call:

Q: Bill, I was hoping you could help walk us through the company's cash burn profile
A: we're focused on all the controllables. I don't want to get into what price it would be - we will take. I think if you take - look at the numbers for this quarter, take out an LCM off inventory, et cetera, you can see that there is significant cash generation of the Alabama mines even at this price, but not enough at this point to cover CapEx and interest expense, but we're making a lot of progress.
Q: Bill, I think you mentioned further levers earlier and I know you received a few follow-ups on that, but I wondered if this could maybe also include some kind of equity for debt swaps as you had done earlier this year?
A: I think as we mentioned on the last call if you remember, that we do believe our equity's undervalued right now. And - but at the same point we're not ruling anything out but it's not really part of - debt to equity swaps has never been a - not a program by any means, it's simply when - if a debt holder phones us we'll listen and we'll see if it makes sense. We do like the fact it lowers interest expense marginally, and that's good, but there is a cost to it, the equity component. So we're not ruling anything out but you shouldn't expect any big program.