- Published: 01 May 2009
- Written by Editor
James River Coal Company Reports First Quarter 2009 Operating Results
- Earnings per Share of $1.03 Compared with Loss per Share of ($0.78) in Q-1 2008 - Adjusted EBITDA of $53.2 Million Compared with $7.7 Million in Q-1 2008 - As a Result of New Contracts Signed in 2008, CAPP Average Sales Price of $90.91 per ton Compared with $52.56 per ton in Q-1 2008
- Amended Existing CAPP Utility Contract and Priced an Additional 1,500,000 Tons of CAPP Utility Coal at $70.00 per ton - Continuing to Adjust Coal Production to Soft Market Conditions
- Conference Call Slides Posted to Company Website
James River Coal Company (Nasdaq: JRCC), a producer of steam and industrial-grade coal, today announced that it had net income of $28.2 million or $1.03 per fully diluted share for the first quarter of 2009. This is compared to a net loss of $16.7 million or $.78 per fully diluted share for the first quarter of 2008.
Peter T. Socha, Chairman and Chief Executive Officer commented: "This was an excellent quarter for James River Coal Company. We have begun shipping on the new sales contracts that we signed in 2008. In the operations area, the mines had a very good quarter in both CAPP and the Illinois Basin. In the contracting area, we worked with one of our long-time utility customers to amend an existing contract to address important needs of both parties. In the transportation area, we were very pleased with our train service this quarter. We had a great start to 2009."
QUARTERLY RESULTS
The following tables show selected operating results for the quarter ended March 31, 2009 compared to the quarter ended March 31, 2008 (in 000's except per ton amounts).
Total Results Three Months Ended March 31,
2009 2008
Total Per Ton Total Per Ton
Company and contractor
production (tons) 2,866 2,802
Coal purchased from
other sources (tons) 37 133
Total coal available
to ship (tons) 2,902 2,935
Coal shipments (tons) 2,631 2,922
Coal sales revenue $192,121 73.02 $138,188 47.29
Cost of coal sold 132,707 50.44 125,730 43.03
Depreciation, depletion,
& amortization 14,473 5.50 17,290 5.92
Gross profit (loss) 44,941 17.08 (4,832) (1.65)
Selling, general &
administrative 9,287 3.53 7,334 2.51
Adjusted EBITDA (1) $53,194 20.22 $7,655 2.62
(1) Adjusted EBITDA is defined under "Reconciliation of Non-GAAP
Measures" in this release. Adjusted EBITDA is used to determine
compliance with financial covenants in our senior secured credit
facilities.
Segment Results Three Months Ended March 31,
2009 2008
CAPP Midwest CAPP Midwest
Company and contractor
production (tons) 2,041 825 2,087 715
Coal purchased from other
sources (tons) 37 - 133 -
Total coal available
to ship (tons) 2,077 825 2,220 715
Coal shipments (tons) 1,844 787 2,197 725
Coal sales revenue $167,635 24,486 $115,479 22,709
Average sales price
per ton 90.91 31.11 52.56 31.32
Cost of coal sold $111,484 21,223 $104,110 21,620
Cost of coal sold
per ton 60.46 26.97 47.39 29.82
Cost Bridge Q-4 2008 vs. Q-1 2009
CAPP Midwest
Beginning cash costs (Q-4 2008) $56.15 28.59
Royalties and sales related costs 4.23 -
Variable costs (diesel, explosives, etc.) - (1.07)
Other 0.08 (0.55)
Ending cash costs (Q-1 2009) $60.46 26.97
C.K. Lane, Senior Vice President and Chief Operating Officer commented: "Both our CAPP and Midwest operations had an excellent quarter. The first quarter safety results continue to be very positive. The tight labor market continues to improve. We are seeing both an increase in experienced applicants and reduced turnover. I am very pleased with both our CAPP and Midwest cash costs."
Mr. Lane continued: "In response to the weak coal markets, we are continuing to adjust our production through small changes to our work schedules for the remainder of 2009. Our strong contract position for the next several years and flexible mine operations give us the option to decline low-priced offers and wait for the market to properly reflect our costs and the value of our coal."
LIQUIDITY
As of March 31, 2009, the Company had available liquidity of $25.8 million calculated as follows (in millions):
Cash and Cash Equivalents $9.8
Availability under the Revolver 35.0
Drawn under the Revolver (9.0)
Minimum Liquidity Reserve (1) (10.0)
Available Liquidity $25.8
(1) In accordance with our Loan Facilities the Minimum Liquidity Reserve
of $10.0 million will no longer apply when the Company's Adjusted
EBITDA exceeds $75.0 million for any twelve month period ended on
the last day of the quarter.
As of March 31, 2009 the Company's actual twelve month Adjusted EBITDA was $63.1 million compared to the covenant requirement of $54.1 million. The Company was in compliance with all of the covenants in its senior secured credit facilities as of March 31, 2009.
SALES POSITION AND MARKET COMMENTS
As of April 30, 2009, we had the following agreements to ship coal at a fixed and known price (in 000's except per ton amounts):
2009 Priced (1)
As of February 26, 2009 As of April 30, 2009 Change
Avg Price Avg Price Avg Price
Tons Per Ton Tons Per Ton Tons Per Ton
CAPP (3) 6,630 $93.45 6,655 $89.34 (700) $108.31
700 $70.00
25 $70.26
Midwest (2) 3,561 $34.27 3,561 $34.27
2010 Priced
As of February 26, 2009 As of April 30, 2009 Change
Avg Price Avg Price Avg Price
Tons Per Ton Tons Per Ton Tons Per Ton
CAPP (3) 3,800 $108.42 4,600 $101.74 800 $70.00
Midwest (2) 813 $43.61 813 $43.61
2011 Priced
As of February 26, 2009 As of April 30, 2009 Change
Avg Price Avg Price Avg Price
Tons Per Ton Tons Per Ton Tons Per Ton
CAPP(3) 2,000 $125.00 2,350 $122.51 350 $108.31
2012 Priced
As of February 26, 2009 As of April 30, 2009 Change
Avg Price Avg Price Avg Price
Tons Per Ton Tons Per Ton Tons Per Ton
CAPP (3) 350 $108.31 350 $108.31
(1) 2009 includes all tons that have been shipped and tons with
agreements for fixed prices for the remainder of the year, including
carryover tons.
(2) The prices for the Midwest in years 2009 and 2010 are minimum base
price amounts adjusted for projected fuel
(3) Change due to contract amendment
Mr. Socha continued: "We had very limited activity in our sales and contracting area this quarter. Both utilities and coal companies have continued to struggle with dramatic changes in the world economy and energy markets. We expect these struggles to continue for the remainder of 2009 and well into 2010.
As previously discussed, we completed a contract amendment with a long-time domestic utility customer. We are both very satisfied with the result of these discussions and the strength of our continued relationship."
GUIDANCE
In accordance with our past practice, James River Coal Company will update guidance in the second quarter earnings release.
CONFERENCE CALL, WEBCAST AND REPLAY: The Company will hold a conference call with management to discuss the first quarter earnings on May 1, 2009 at 11:00 a.m. Eastern Time. The conference call can be accessed by dialing 877-741-4253, or through the James River Coal Company website at http://www.jamesrivercoal.com. International callers, please dial 719-325-4842. A replay of the conference call will be available on the Company's website and also by telephone, at 888-203-1112 for domestic callers. International callers, please dial 719-457-0820: pass code 5840159.
James River Coal Company mines, processes and sells bituminous steam and industrial-grade coal primarily to electric utility companies and industrial customers. The Company's mining operations are managed through six operating subsidiaries located throughout eastern Kentucky and in southern Indiana.
FORWARD-LOOKING STATEMENTS: Certain statements in this press release, and other written or oral statements made by or on behalf of us are "forward-looking statements" within the meaning of the federal securities laws. Statements regarding future events and developments and our future performance, as well as management's expectations, beliefs, plans, estimates or projections relating to the future, are forward-looking statements within the meaning of these laws. These forward-looking statements are subject to a number of risks and uncertainties. These risks and uncertainties include, but are not limited to, the following: changes in the demand for coal by electric utility customers; the loss of one or more of our largest customers; inability to secure new coal supply agreements or to extend existing coal supply agreements at market prices; failure to diversity our operations; failure to exploit additional coal reserves; the risk that reserve estimates are inaccurate; increased capital expenditures; encountering difficult mining conditions; increased costs of complying with mine health and safety regulations; our dependency on one railroad for transportation of a large percentage of our products; bottlenecks or other difficulties in transporting coal to our customers; delays in the development of new mining projects; increased costs of raw materials; lack of availability of financing sources; our compliance with debt covenants; the effects of litigation, regulation and competition; and the other risks detailed in our reports filed with the Securities and Exchange Commission (SEC). Management believes that these forward-looking statements are reasonable; however, you should not place undue reliance on such statements. These statements are based on current expectations and speak only as of the date of such statements. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of future events, new information or otherwise.
CONTACT: James River Coal Company
Elizabeth M. Cook
Director of Investor Relations
(804) 780-3000
JAMES RIVER COAL COMPANY
AND SUBSIDIARIES
Consolidated Balance Sheets
(in thousands, except share data)
March 31, December 31,
2009 2008
Assets (unaudited)
Current assets:
Cash and cash equivalents $9,769 3,324
Receivables:
Trade 51,368 33,086
Other 207 475
Total receivables 51,575 33,561
Inventories:
Coal 22,607 6,847
Materials and supplies 10,392 9,581
Total inventories 32,999 16,428
Prepaid royalties 4,318 2,803
Other current assets 2,646 5,094
Total current assets 101,307 61,210
Property, plant, and equipment, at cost:
Land 7,114 6,693
Mineral rights 230,686 229,841
Buildings, machinery and equipment 330,278 320,982
Mine development costs 41,579 39,596
Total property, plant, and equipment 609,657 597,112
Less accumulated depreciation, depletion,
and amortization 268,516 252,264
Property, plant and equipment, net 341,141 344,848
Goodwill 26,492 26,492
Other assets 27,832 30,996
Total assets $496,772 463,546
JAMES RIVER COAL COMPANY
AND SUBSIDIARIES
Consolidated Balance Sheets
(in thousands, except share data)
March 31, December 31,
2009 2008
Liabilities and Shareholders' Equity (unaudited)
Current liabilities:
Current maturities of long-term debt $9,000 18,000
Accounts payable 58,989 57,068
Accrued salaries, wages, and employee benefits 9,132 6,642
Workers' compensation benefits 9,300 9,300
Black lung benefits 1,539 1,539
Accrued taxes 9,536 4,457
Other current liabilities 19,511 19,165
Total current liabilities 117,007 116,171
Long-term debt, less current maturities 150,000 150,000
Other liabilities:
Noncurrent portion of workers' compensation
benefits 47,504 46,477
Noncurrent portion of black lung benefits 29,621 29,029
Pension obligations 19,827 19,693
Asset retirement obligations 36,916 36,409
Other 572 529
Total other liabilities 134,440 132,137
Total liabilities 401,447 398,308
Commitments and contingencies
Shareholders' equity:
Preferred stock, $1.00 par value.
Authorized 10,000,000 shares - -
Common stock, $.01 par value.
Authorized 100,000,000 shares;
issued and outstanding 27,393,493 and
27,393,493 shares as of March 31, 2009
and December 31, 2008, respectively 274 274
Paid-in-capital 273,880 272,366
Accumulated deficit (159,541) (187,712)
Accumulated other comprehensive loss (19,288) (19,690)
Total shareholders' equity 95,325 65,238
Total liabilities and shareholders' equity $496,772 463,546
JAMES RIVER COAL COMPANY
AND SUBSIDIARIES
Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)
Three Months Three Months
Ended Ended
March 31, March 31,
2009 2008
Revenues $192,121 138,188
Cost of sales:
Cost of coal sold 132,707 125,730
Depreciation, depletion and amortization 14,473 17,290
Total cost of sales 147,180 143,020
Gross profit (loss) 44,941 (4,832)
Selling, general and administrative expenses 9,287 7,334
Total operating income (loss) 35,654 (12,166)
Interest expense 4,053 4,889
Interest income (25) (88)
Miscellaneous income, net (54) (279)
Total other expense, net 3,974 4,522
Income (loss) before income taxes 31,680 (16,688)
Income tax expense 3,509 -
Net Income (loss) $28,171 (16,688)
Earnings (loss) per common share
Basic earnings (loss) per common share $1.03 (0.78)
Diluted earnings (loss) per common share $1.03 (0.78)
JAMES RIVER COAL COMPANY
AND SUBSIDIARIES
Reconciliation of EBITDA
(in thousands)
(unaudited)
EBITDA is a measure used by management to measure operating performance.
We define EBITDA as net income or loss plus interest expense (net), income
tax expense (benefit) and depreciation, depletion and amortization
(EBITDA), to better measure our operating performance. We regularly use
EBITDA to evaluate our performance as compared to other companies in our
industry that have different financing and capital structures and/or tax
rates. In addition, we use EBITDA in evaluating acquisition targets.
Adjusted EBITDA is the amount used in several of the covenants in our
senior secured credit facilities. Adjusted EBITDA is defined as EBITDA
further adjusted for certain cash and non-cash charges. Adjusted EBITDA
is used to determine compliance with financial covenants and our ability
to engage in certain activities such as incurring additional debt and
making certain payments.
EBITDA and Adjusted EBITDA are not recognized terms under GAAP and are
not an alternative to net income, operating income or any other
performance measures derived in accordance with GAAP or an alternative to
cash flow from operating activities as a measure of operating liquidity.
Because not all companies use identical calculations, this presentation of
EBITDA and Adjusted EBITDA may not be comparable to other similarly titled
measures of other companies. Additionally, EBITDA or Adjusted EBITDA are
not intended to be a measure of free cash flow for management's
discretionary use, as they do not reflect certain cash requirements such
as tax payments, interest payments and other contractual obligations.
Three Months Ended
March 31, March 31,
2009 2008
Net income (loss) $28,171 (16,688)
Income tax expense 3,509 -
Interest expense 4,053 4,889
Interest income (25) (88)
Depreciation, depletion, and amortization 14,473 17,290
EBITDA (before adjustments) $50,181 5,403
Other adjustments specified in our current
debt agreement:
Other adjustments 3,013 2,252
Adjusted EBITDA $53,194 7,655
