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RICHMOND, Va., Aug 05, 2008 /PRNewswire-FirstCall via COMTEX News Network/ -- James River Coal Company (Nasdaq: JRCC), a producer of steam and industrial-grade coal, today announced that it had a net loss of $24.0 million or $0.97 per fully diluted share for the second quarter of 2008 and a net loss of $40.7 million or $1.76 per fully diluted share for the six months ended June 30, 2008. This is compared to a net loss of $18.6 million or $1.17 per fully diluted share for the second quarter of 2007 and a net loss of $25.9 million or $1.62 per fully diluted share for the six months ended June 30, 2007.
Peter T. Socha, Chairman and Chief Executive Officer commented: "Overall, we are pleased with our progress this quarter. The mines have performed well despite some headwinds from bad weather, raw material cost inflation, and the increasingly competitive market for skilled labor. We have also completed the acquisition of reserves and permits from Cheyenne Resources. We began mining on the acquired properties in July. Most importantly, the market has finally begun to turn in a positive direction. The single biggest issue that we have faced during the past several years has been pressure on profit margins. This pressure has been due to extremely low coal prices and rapidly rising costs, particularly in underground mining, due to changes in the safety and regulatory environment. During the past several months, tight markets around the world have led to rising prices in the U.S. market. While we have seen very little benefit from these prices thus far in 2008 due to lower priced contracts that were signed in 2006 and 2007, we believe that our shareholders will begin to see the benefits during the remaining months of 2008 and a much greater benefit beginning in early 2009."
FINANCIAL RESULTS
The following tables show selected operating results for the three and six month periods ended June 30, 2008 compared to the corresponding periods ended June 30, 2007 (in 000's except per ton amounts).
Total Results Three Months Ended Six Months Ended
June 30, June 30,
2008 2007 2008 2007
Total Total Total Total
Company and Contractor
production (tons) 2,845 2,737 5,647 5,698
Coal purchased from
other sources (tons) 65 285 198 476
Total coal available
to ship (tons) 2,910 3,022 5,845 6,174
Coal Shipments (tons) 2,892 3,066 5,814 6,096
Revenues
Coal Sales $137,703 130,428 275,891 260,502
Synfuel Handling - 1,508 - 3,869
Cost of Coal Sold 128,867 122,456 254,597 236,044
Depreciation,
Depletion, &
Amortization 17,552 17,930 34,842 37,263
Gross Profit (Loss) (8,716) (8,450) (13,548) (8,936)
Selling, General &
Administrative 8,732 7,688 16,066 15,163
Adjusted EBITDA (1) $3,020 3,972 $10,675 17,740
(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 June 30,
2008 2007
CAPP Midwest CAPP Midwest
Coal Shipments (tons) 2,161 731 2,270 796
Tons Produced 2,148 762 2,203 779
Coal Sales Revenue $114,218 23,485 107,554 22,874
Average Sales Price
per ton 52.85 32.13 47.38 28.74
Cost of Coal Sold $105,252 23,615 103,465 18,991
Cost of Coal Sold
per ton 48.71 32.31 45.58 23.86
Six Months Ended June 30,
2008 2007
CAPP Midwest CAPP Midwest
Coal Shipments (tons) 4,358 1,456 4,551 1,545
Tons Produced 4,368 1,477 4,611 1,562
Coal Sales Revenue $229,697 46,194 216,036 44,466
Average Sales Price
per ton 52.71 31.73 47.47 28.78
Cost of Coal Sold $209,362 45,235 199,822 36,222
Cost of Coal Sold
per ton 48.04 31.07 43.91 23.44
Mr. Socha continued, "Under very difficult circumstances, the mines performed relatively well this quarter. Our operations in CAPP continue to be impacted by challenges in three areas: (1) the new regulatory environment; (2) a tight labor market; and (3) raw material inflation. Our mine operations team has been working diligently to address the effect of these issues. Our operations in the Illinois Basin continued to be impacted by bad weather. While the number of storms passing through the Midwest went down from the first quarter, the severity of the storms in the second quarter had a much broader effect on the mines, the transportation infrastructure, and the utility plants. Things have improved dramatically so far in the third quarter."
LIQUIDITY
As of June 30, 2008, the Company had available liquidity of $42.6 million calculated as follows (in millions):
Cash and Cash Equivalents $9.5
Availability under the Revolver 33.1
Available Liquidity $42.6
The Company drew down $15.0 million from the Revolver in July 2008 to complete the purchase of reserves and permits from Cheyenne Resources, Inc. As part of the decision to use the Revolver, the Company sold 200,000 tons of available utility steam coal from our other CAPP operations to be shipped during the 3rd quarter at a price of more than $140 per ton, which is reflected in the 2008 Sales Commitments chart below.
GUIDANCE
The Company has previously issued forecasts of certain operating measures for 2008. These forecasts are revised as indicated below. They represent a range of possible outcomes and are provided to assist investors with the development of annual earnings estimates. While the Company believes that these forecasts represent the best current estimate of management as to future events, actual events will differ from these forecasts and such differences could be material. These forecasts are subject to the risks identified under Forward-Looking Statements below.
2008
Old YTD Remaining
CAPP Operations
Shipments (000 tons) 9,500 to 9,700 4,358 4,300 to 4,500
Cash Cost (per ton) $44 to $45 $48.04 $48 to $50
Midwest Operations
Shipments (000 tons) 3,260 to 3,400 1,456 1,700
Cash Cost (per ton) $25 to $26 $31.07 $29 to $31
Total JRCC Operations
(in millions)
Depreciation, depletion
and amortization $65 to $69 $35 $34 to $36
Capital expenditures
(excludes Cheyenne) $48 to $52 $23 $25 to $29
SALES COMMITMENTS AND MARKET COMMENTS
As of July 31, 2008, we had the following contractual commitments to ship coal at a fixed and known price (in 000's except per ton amounts):
2008 Priced ( c )
As of May 5, 2008 As of July 31, 2008 Change
Avg Price Avg Price Avg Price
Tons Per Ton Tons Per Ton Tons Per Ton
CAPP (a) 8,299 $53.26 8,576 $56.08 277 $140.57
Midwest (b) 3,361 $30.25 3,436 $30.23 75 $29.33
2009 Priced
As of May 5, 2008 As of July 31, 2008 Change
Avg Price Avg Price Avg Price
Tons Per Ton Tons Per Ton Tons Per Ton
CAPP (a) 3,665 $73.82 5,941 $96.19 2,276 $132.21
Midwest (b) 2,806 $30.63 3,019 $30.56 213 $29.64
2010 Priced
As of May 5, 2008 As of July 31, 2008 Change
Avg Price Avg Price Avg Price
Tons Per Ton Tons Per Ton Tons Per Ton
CAPP 1,000 $82.00 3,800 $108.42 2,800 $117.86
Midwest (b) 450 $29.99 483 $29.98 33 $29.84
2011 Priced
As of May 5, 2008 As of July 31, 2008 Change
Avg Price Avg Price Avg Price
Tons Per Ton Tons Per Ton Tons Per Ton
CAPP - $- 2,000 $125.00 2,000 $125.00
Midwest (b) - $- - $- - $-
(a) During the period May 5 through July 31, the Company sold
approximately 42,000 tons of CAPP stoker coal for delivery in 2008
and 60,000 tons of CAPP stoker for delivery in 2009.
(b) New Midwest sales are customer option tons for 2008, 2009 and 2010.
There are no additional option tons. The prices for the Midwest in
years 2008 to 2010 are minimum base price amounts adjusted for
projected fuel escalators.
( c ) 2008 includes all tons that have been shipped and tons with
agreements for fixed prices for the remainder of the year.
Mr. Socha continued: "We have made a great deal of progress in the sales and contracting area during the past several months. Our objective has been to reach a balance between locking in cash margins for our shareholders and maintaining leverage to the tightening coal markets. We believe that we have achieved this balance. We will continue to monitor market developments and layer in additional new contracts in the future."
CONFERENCE CALL, WEBCAST AND REPLAY: The Company will hold a conference call with management to discuss the first quarter earnings on August 5, 2008 at 11:00 a.m. Eastern Time. The Company will be using slides during the opening portion of the conference call. The slides have been posted to the Company website. The conference call can be accessed by dialing 877-419-6597, or through the James River Coal Company website at http://www.jamesrivercoal.com. International callers, please dial 719-325-4895. 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 5930405.
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)
June 30, December 31,
2008 2007
Assets (unaudited)
Current assets:
Cash and cash equivalents $ 9,474 5,413
Receivables:
Trade 40,768 40,544
Other 686 762
Total receivables 41,454 41,306
Inventories:
Coal 7,774 5,915
Materials and supplies 10,419 8,277
Total inventories 18,193 14,192
Prepaid royalties 4,875 3,817
Other current assets 2,837 4,180
Total current assets 76,833 68,908
Property, plant, and equipment, at cost:
Land 6,625 6,220
Mineral rights 193,649 191,586
Buildings, machinery and equipment 294,587 285,009
Mine development costs 38,382 31,923
Total property, plant, and equipment 533,243 514,738
Less accumulated depreciation, depletion,
and amortization 222,797 195,534
Property, plant and equipment, net 310,446 319,204
Goodwill 26,492 26,492
Other assets 23,085 24,683
Total assets $ 436,856 439,287
JAMES RIVER COAL COMPANY
AND SUBSIDIARIES
Consolidated Balance Sheets
(in thousands, except share data)
June 30, December 31,
2008 2007
Liabilities and Shareholders' Equity (unaudited)
Current liabilities:
Current maturities of long-term debt $713 1,600
Accounts payable 50,117 46,641
Accrued salaries, wages, and employee benefits 7,075 6,010
Workers' compensation benefits 9,450 9,450
Black lung benefits 2,050 2,050
Accrued taxes 5,479 4,234
Other current liabilities 8,286 7,394
Total current liabilities 83,170 77,379
Long-term debt, less current maturities 166,240 187,200
Other liabilities:
Noncurrent portion of workers'
compensation benefits 45,272 44,142
Noncurrent portion of black lung benefits 23,053 22,084
Pension obligations 4,384 5,423
Asset retirement obligations 34,456 32,288
Other 1,094 997
Total other liabilities 108,259 104,934
Total liabilities 357,669 369,513
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 25,505,320 and 21,906,265
shares as of June 30, 2008 and
December 31, 2007, respectively 255 219
Paid-in-capital 209,755 159,403
Accumulated deficit (132,413) (91,719)
Accumulated other comprehensive income 1,590 1,871
Total shareholders' equity 79,187 69,774
Total liabilities and shareholders' equity $436,856 439,287
JAMES RIVER COAL COMPANY
AND SUBSIDIARIES
Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)
Three Months Three Months
Ended Ended
June 30, 2008 June 30, 2007
Revenues $137,703 131,936
Cost of sales:
Cost of coal sold 128,867 122,456
Depreciation, depletion and amortization 17,552 17,930
Total cost of sales 146,419 140,386
Gross profit (loss) (8,716) (8,450)
Selling, general and administrative expenses 8,732 7,688
Total operating income (loss) (17,448) (16,138)
Interest expense 4,186 5,164
Interest income (174) (202)
Charges associated with repayment and
amendment of debt 3,013 -
Miscellaneous income, net (467) (73)
Total other expense, net 6,558 4,889
Loss before income taxes (24,006) (21,027)
Income tax benefit - (2,414)
Net loss $(24,006) (18,613)
Loss per common share
Basic loss per common share $(0.97) (1.17)
Shares used to calculate basic loss
per share 24,698 15,974
Diluted loss per common share $(0.97) (1.17)
Shares used to calculate diluted loss
per share 24,698 15,974
JAMES RIVER COAL COMPANY
AND SUBSIDIARIES
Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)
Six Months Six Months
Ended Ended
June 30, 2008 June 30, 2007
Revenues $275,891 264,371
Cost of sales:
Cost of coal sold 254,597 236,044
Depreciation, depletion and amortization 34,842 37,263
Total cost of sales 289,439 273,307
Gross profit (loss) (13,548) (8,936)
Selling, general and administrative expenses 16,066 15,163
Total operating loss (29,614) (24,099)
Interest expense 9,075 9,660
Interest income (262) (322)
Charges associated with repayment and
amendment of debt 3,013 2,421
Miscellaneous income, net (746) (287)
Total other expense, net 11,080 11,472
Loss before income taxes (40,694) (35,571)
Income tax benefit - (9,703)
Net loss $(40,694) (25,868)
Loss per common share
Basic loss per common share $(1.76) (1.62)
Shares used to calculate basic loss
per share 23,095 15,964
Diluted loss per common share $(1.76) (1.62)
Shares used to calculate diluted loss
per share 23,095 15,964
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 our current debt covenants. 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 US GAAP and are not an alternative to net income, operating income or any other performance measures derived in accordance with US 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 Six Months Ended
June 30, June 30, June 30, June 30,
2008 2007 2008 2007
Net loss $(24,006) (18,613) (40,694) (25,868)
Income tax benefit - (2,414) - (9,703)
Interest expense 4,186 5,164 9,075 9,660
Interest income (174) (202) (262) (322)
Depreciation, depletion,
and amortization 17,552 17,930 34,842 37,263
EBITDA $(2,442) 1,865 2,961 11,030
Other adjustments
specified in our current
debt agreement:
Charges associated with
repayment of debt 3,013 - 3,013 2,421
Other adjustments 2,449 2,107 4,701 4,289
Adjusted EBITDA $3,020 3,972 10,675 17,740
SOURCE James River Coal Company
http://www.jamesrivercoal.com
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