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James River Coal Company Reports First Quarter 2012 Operating Results

-- Adjusted EBITDA of $29.7 Million; Capital Expenditures of $22.9 Million; Cash Interest Payments of $3.6 Million
-- Withdrawing Guidance for 2012 Capital Expenditures of $125 Million
-- Maintaining a Strong Balance Sheet With Available Liquidity of $208.5 Million
-- Reached Agreements to Ship 701,000 Tons of Thermal/Industrial and Metallurgical Coal in 2012 at an Average Sales Price of $100.02
-- Total Shipments of 3.1 Million Tons With a Cash Margin of $14.05 per ton
-- Conference Call Slides Posted to the Company Website

RICHMOND, Va., May 3, 2012 /PRNewswire/ -- James River Coal Company (NASDAQ: JRCC), today announced that it had net loss of $15.7 million or $0.45 per fully diluted share for the first quarter of 2012.    This is compared to net loss of $7.6 million or $0.28 per fully diluted share for the first quarter of 2011.

Peter T. Socha, Chairman and Chief Executive Officer commented: "We are very pleased with the way that our entire organization has responded to an extremely weak coal market.  Our operations team has made a number of changes to our mine portfolio to both control our cash costs and preserve capital.  Our sales and trading teams have spent a great deal of time understanding the needs of our customer base and selectively adding new contract opportunities.  We want to thank both our customers and our employees for their assistance in helping us during these challenging times in the world coal markets."

QUARTERLY RESULTS

The following tables show selected operating results for the quarter ended March 31, 2012 compared to the quarter ended March 31, 2011 (in 000's except per ton amounts). 

Total Results


Three Months Ended March 31, 





2012


2011





Total


Per Ton


Total


Per Ton













Company and contractor production (tons)

2,803




2,123




Coal purchased from other sources (tons)

362




46




Total coal available to ship (tons)


3,165




2,169




Coal shipments (tons)


3,051




2,073




Coal sales revenue


$         279,763


91.70


$      163,855


79.04


Freight and handling revenue


22,222


7.28


727


0.35













Cost of coal sold


236,889


77.64


132,819


64.07


Freight and handling costs


22,222


7.28


727


0.35













Depreciation, depletion, & amortization


30,120


9.87


16,035


7.74


Gross profit 


12,754


4.18


15,001


7.24


Selling, general & administrative 


15,566


5.10


9,370


4.52


Acquisition costs


-


-


4,645


2.24













Adjusted EBITDA plus acquisition costs (1)

$           29,737


9.75


$        23,702


11.43













(1) Adjusted EBITDA plus acquisition costs is defined under "Reconciliation of Non-GAAP Measures" in this release. 

Adjusted EBITDA is used to determine compliance with financial covenants in our revolving credit facility.

 


Segment Results


Three Months Ended March 31, 




2012


2011


CAPP


Total


Per Ton



Total


Per Ton












Company and contractor production (tons)

2,244





1,455



Coal purchased from other sources (tons)

362





46



Total coal available to ship (tons)


2,606





1,501



Coal shipments (tons)










     Steam (tons)


1,764





1,415



    Metallurgical (tons)


728





-



Total Shipments (tons)


2,492





1,415



Coal sales revenue










     Steam


$     151,866


86.09



$     137,586


97.23

     Metallurgical


103,174


141.72



-


-

Total coal sales revenue


255,040


102.34



137,586


97.23

Freight and handling revenue


21,044


8.44



-


-

Cost of coal sold


$     213,829


85.81



$     108,699


76.82

Freight and handling costs


21,044


8.44



-


-


























Three Months Ended March 31, 




2012


2011


Midwest


Total


Per Ton



Total


Per Ton












Company and contractor production (tons)

559





668



Coal purchased from other sources (tons)

-





-



Total coal available to ship (tons)


559





668



Coal shipments (tons)










     Steam (tons)


559





658



    Metallurgical (tons)


-





-



Total Shipments (tons)


559





658



Coal sales revenue










     Steam


$       24,723


44.23



$       26,269


39.92

     Metallurgical


-


-



-


-

Total coal sales revenue


24,723


44.23



26,269


39.92

Freight and handling revenue


1,178


2.11



727


1.10

Cost of coal sold


$       23,060


41.25



$       24,120


36.66

Freight and handling costs


1,178


2.11



727


1.10

C.K. Lane, Chief Operating Officer commented: "We are working very hard at controlling our costs and conserving capital in this very volatile market.  In particular, we were pleased to have both reduced our capital expenditures below expected levels and maintained our cash costs at the CAPP thermal and met mines within historical levels."

LIQUIDITY

As of March 31, 2012, the Company had available liquidity of $208.5 million calculated as follows (in millions):

Unrestricted Cash (1)

$

169.4






Availability under the Revolver


100.0






Letters of Credit issued under the Revolver


(60.9)














Available Liquidity

$

208.5














Restricted Cash and short term investments

$

29.6














(1) Unrestricted cash does not include $19.4 million of accounts receivable that were collected in the ordinary


      course on April 2, 2012.  The collection of this receivable did not reduce the Company's availability under the revolver.

Capital Expenditures for the first quarter of 2012 were $22.9 million.


SALES POSITION AND MARKET COMMENTS

As of May 2, 2012, we had the following agreements to ship coal at a fixed and known price (in 000's except per ton amounts):


2012 Priced




As of February 29, 2012

As of May 2, 2012

Change




Tons

Avg Price Per
Ton

Tons

Avg Price
Per Ton

Tons

Avg Price Per
Ton



CAPP  (1)

7,917

$       94.37

8,618

$       94.83

701

$     100.02



Midwest (2)

2,776

$       44.16

2,776

$       44.16

-

$             -













2013 Priced




As of February 29, 2012

As of May 2, 2012

Change




Tons

Avg Price Per
Ton

Tons

Avg Price
Per Ton

Tons

Avg Price Per
Ton



CAPP

1,337

$       80.45

1,337

$       80.45

-

$             -



Midwest (2)

2,140

$       45.35

2,140

$       45.35

-

$             -













2014 Priced




As of February 29, 2012

As of May 2, 2012

Change




Tons

Avg Price Per
Ton

Tons

Avg Price
Per Ton

Tons

Avg Price Per
Ton



CAPP

300

$       75.75

300

$       75.75

-

$             -



Midwest (2)

700

$       49.00

700

$       49.00

-

$             -












(1)      Priced tons in CAPP do not include approximately 600,000 tons of met coal that has been sold but not yet priced.



(2)      The prices for the Midwest  are minimum base price amounts adjusted for projected fuel escalators.


GUIDANCE

Due to unusual volatility in the coal markets and changes to our operating structure, the Company is withdrawing guidance for 2012 Capital Expenditures of $125 million.

CONFERENCE CALL, WEBCAST AND REPLAY:  The Company will hold a conference call with management to discuss the first quarter earnings May 3, 2012 at 11:00 a.m. Eastern Time.  The conference call can be accessed by dialing 877-340-2553, or through the James River Coal Company website at http://www.jamesrivercoal.com.  International callers, please dial 678-224-7860.  A replay of the conference call will be available on the Company's website and also by telephone, at 855-859-2056 for domestic callers.  International callers, please dial 404-537-3406: pass code 72023497.

James River Coal Company is one of the leading coal producers in Central Appalachia and the Illinois Basin.  The company sells metallurgical, bituminous steam and industrial-grade coal to electric utility companies and industrial customers both domestically and internationally.  The Company's operations are managed through eight operating subsidiaries located throughout eastern Kentucky, southern West Virginia and southern Indiana.  Additional information about James River Coal can be found at its web site http://www.jamesrivercoal.com/

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. Forward looking statements include, without limitation, statements regarding future sales and contracting activity, projected fuel escalators and all guidance figures.  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: our cash flows, results of operation or financial condition; the consummation of acquisition, disposition or financing transactions and the effect thereof on our business; our ability to successfully integrate International Resource Partners LP and its related entities (IRP); governmental policies, regulatory actions and court decisions affecting the coal industry or our customers' coal usage; legal and administrative proceedings, settlements, investigations and claims; our ability to obtain and renew permits necessary for our existing and planned operation in a timely manner; environmental concerns related to coal mining and combustion and the cost and perceived benefits of alternative sources of energy; inherent risks of coal mining beyond our control, including weather and geologic conditions or catastrophic weather-related damage; our production capabilities; availability of transportation; our ability to timely obtain necessary supplies and equipment; market demand for coal, electricity and steel; competition; our relationships with, and other conditions affecting, our customers; employee workforce factors; our assumptions concerning economically recoverable coal reserve estimates; future economic or capital market conditions; our plans and objectives for future operations and expansion or consolidation; 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.

 

JAMES RIVER COAL COMPANY

AND SUBSIDIARIES

Consolidated Balance Sheets

(in thousands, except share data)













March 31, 2012


December 31, 2011


Assets


(unaudited)



Current assets:






Cash and cash equivalents

$

169,385


199,711


Trade receivables


108,620


107,557


Inventories:







Coal


57,298


52,717



Materials and supplies


18,047


17,800



Total inventories


75,345


70,517


Prepaid royalties


8,692


8,465


Other current assets


8,442


11,461



Total current assets


370,484


397,711

Property, plant, and equipment, net


900,094


909,294

Goodwill


26,492


26,492

Restricted cash and short term investments 


29,579


29,510

Other assets


41,842


41,575


Total assets

$

1,368,491


1,404,582







Liabilities and Shareholders' Equity 





Current liabilities:






Accounts payable

$

78,999


110,557


Accrued salaries, wages, and employee benefits


11,026


12,996


Workers' compensation benefits


9,200


9,200


Black lung benefits


2,512


2,512


Accrued taxes


8,624


7,563


Other current liabilities


29,860


27,861


Total current liabilities


140,221


170,689

Long-term debt, less current maturities 


585,804


582,193

Other liabilities:






Noncurrent portion of workers' compensation benefits


62,163


60,721


Noncurrent portion of black lung benefits


57,000


56,152


Pension obligations


28,436


29,121


Asset retirement obligations


97,273


94,654


Other


14,021


14,390


Total other liabilities


258,893


255,038


Total liabilities


984,918


1,007,920

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






35,982,605 and 35,671,953 shares as of March 31, 2012 and December 31, 2011


360


357


Paid-in-capital


542,707


541,362


Accumulated deficit


(113,341)


(97,682)


Accumulated other comprehensive loss


(46,153)


(47,375)


Total shareholders' equity


383,573


396,662



Total liabilities and shareholders' equity 

$

1,368,491


1,404,582

 


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, 2012


March 31, 2011

Revenues






Coal sales revenue

$

279,763


163,855


Freight and handling revenue


22,222


727


Total revenue


301,985


164,582

Cost of sales:






Cost of coal sold


236,889


132,819


Freight and handling costs


22,222


727


Depreciation, depletion and amortization


30,120


16,035


Total cost of sales


289,231


149,581


Gross profit 


12,754


15,001

Selling, general and administrative expenses


15,566


9,370

Acquisition costs


-


4,645


Total operating income (loss)


(2,812)


986

Interest expense


13,385


7,851

Interest income


(214)


(55)

Miscellaneous income, net


(343)


(121)


Total other expense, net


12,828


7,675


Loss before income taxes


(15,640)


(6,689)

Income tax expense


19


915

Net loss

$

(15,659)


(7,604)

Earnings (loss) per common share 






Basic earnings (loss) per common share

$

(0.45)


(0.28)


Diluted earnings (loss) per common share

$

(0.45)


(0.28)

 

JAMES RIVER COAL COMPANY

AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)


























Three Months


Three Months












Ended


Ended












March 31,


March 31,












2012


2011

Cash flows from operating activities:







Net loss







$

(15,659)


(7,604)


Adjustments to reconcile net loss to net cash provided by (used in) operating activities






Depreciation, depletion, and amortization 


30,120


16,035




Accretion of asset retirement obligations


1,307


801




Amortization of debt discount and issue costs


4,277


2,119




Stock-based compensation



1,348


1,178




Deferred income tax benefit



-


944




Gain on sale or disposal of property, plant and equipment


(126)


-




Changes in operating assets and liabilities:










Receivables



(1,063)


11,528






Inventories



(1,940)


(11,077)






Prepaid royalties and other current assets


4,269


244






Restricted cash



(69)


-






Other assets



(947)


1,323






Accounts payable



(31,558)


(11,118)






Accrued salaries, wages, and employee benefits


(1,970)


7






Accrued taxes



(416)


1,023






Other current liabilities



1,930


3,808






Workers' compensation benefits


1,442


1,062






Black lung benefits



1,234


1,043






Pension obligations



151


(764)






Asset retirement obligations


(218)


(460)






Other liabilities



(79)


(19)







Net cash provided by (used in) operating activities


(7,967)


10,073

Cash flows from investing activities:







Additions to property, plant, and equipment


(22,885)


(20,094)


Proceeds from sale of property, plant and equipment


526


-







Net cash used in investing activities


(22,359)


(20,094)

Cash flows from financing activities:







Proceeds from issuance of long-term debt


-


505,000


Proceeds of Senior Notes held in escrow



-


(278,860)


Net proceeds from issuance of common stock


-


170,610


Debt issuance costs





-


(13,768)







Net cash provided by financing activities


-


382,982







Increase (decrease) in cash


(30,326)


372,961

Cash and cash equivalents at beginning of period


199,711


180,376

Cash and cash equivalents at end of period


$

169,385


553,337

 


JAMES RIVER COAL COMPANY
AND SUBSIDIARIES
Reconciliation of Non GAAP Measures
(in thousands)
(unaudited)

EBITDA is 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 defined as EBITDA as further adjusted for certain cash and non-cash charges as specified in our revolving credit facility and is used in several of the covenants in that facility.  Adjusted EBITDA plus acquisition costs further adjusts Adjusted EBITDA to add back certain non-recurring costs incurred in connection with the IRP acquisition that may not reflect the trend of future results.  We believe that Adjusted EBITDA plus acquisition costs presents a useful measure of our ability to service and incur debt on an ongoing basis. 

Cash margin per ton is calculated as coal sales revenue per ton less cost of coal sold per ton.  Although cash margin per ton is not a measure of performance calculated in accordance with GAAP, management believes that it is useful to an investor because it is widely used in the coal industry as a measure to evaluate a company's profitability from tons sold.

EBITDA, Adjusted EBITDA, Adjusted EBITDA plus acquisition costs, and cash margin per ton 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, Adjusted EBITDA, Adjusted EBITDA plus acquisition, and cash margin per ton may not be comparable to other similarly titled measures of other companies.  Additionally, EBITDA, Adjusted EBITDA, Adjusted EBITDA plus acquisition costs, and cash margin per ton 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









2012


2011












Net loss





$

(15,659)


(7,604)

Income tax expense 




19


915

Interest expense 




13,385


7,851

Interest income





(214)


(55)

Depreciation, depletion, and amortization


30,120


16,035

EBITDA (before adjustments)

$

27,651


17,142

Other adjustments specified






in our current debt agreement:






Other






2,086


1,915

Adjusted EBITDA



$

29,737


19,057

Acquisition costs




-


4,645

Adjusted EBITDA plus acquisition costs

$

29,737


23,702

 

 

CONTACT:

James River Coal Company


Elizabeth M. Cook


Director of Investor Relations


(804) 780-3000

 

SOURCE James River Coal Company

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