James River Coal Company Reports First Quarter 2013 Operating Results

RICHMOND, Va., May 1, 2013 /PRNewswire/ --

  • Substantially Completed a Major Restructuring of All Mine Operations and Support Services
  • Cash Mining Costs Per Ton Fall in CAPP and Midwest Operations
  • Capital Expenditures of $7.7 Million
  • Domestic Thermal Market Improves With Higher Natural Gas Prices; Met Coal Market Impacted by Global Economic Concerns
  • Continuing to Evaluate Options to Strengthen the Balance Sheet and Improve Liquidity
  • Conference Call Slides Posted to Company Website

James River Coal Company (NASDAQ: JRCC), today announced that it had net loss of $42.1 million or $1.21 per diluted share for the first quarter of 2013.  The 2013 results are compared to net loss of $15.7 million or $.45 per diluted share for the first quarter of 2012.

Peter T. Socha, Chairman and Chief Executive Officer commented: "Our mining operations had an excellent quarter.  As previously discussed, they have substantially completed a major restructuring of all mines and support services.  We are now beginning to see the results of this process in both coal production and costs.  We are continuing to adjust our operations to changes in the markets for both thermal and met coal.  The domestic thermal coal market appears to be benefitting from higher prices in the natural gas market.  We are a little more cautious on the met coal market today due to the influence of global economic factors.  Lastly, we are continuing to evaluate a wide variety of options to improve our liquidity and strengthen our balance sheet.  We are very grateful for the large number of holders of our debt and equity securities that have contacted us to discuss their thoughts and suggestions."

FINANCIAL RESULTS

The following tables show selected operating results for the quarter ended March 31, 2013 compared to the quarter ended March 31, 2012 (in 000's except per ton amounts). 


Total Results


Three Months Ended March 31, 





2013


2012





Total


Per Ton


Total


Per Ton













Company and contractor production (tons)


2,154




2,803




Coal purchased from other sources (tons)


513




362




Total coal available to ship (tons)


2,667




3,165















Coal shipments (tons)


2,417




3,051




Coal sales revenue


$     175,933


72.79


$         279,763


91.70


Freight and handling revenue


17,372


7.19


22,222


7.28


Cost of coal sold


163,383


67.60


236,889


77.64


Freight and handling costs


17,372


7.19


22,222


7.28


Depreciation, depletion, & amortization


28,537


11.81


30,120


9.87


Gross profit (loss)


(15,987)


(6.61)


12,754


4.18


Selling, general & administrative 


13,967


5.78


15,566


5.10













Adjusted EBITDA (1)


$            581


0.24


$           29,737


9.75













(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 revolving credit facility.















 


Segment Results


Three Months Ended March 31, 





2013


2012



CAPP


Total


Per Ton



Total


Per Ton














Company and contractor production (tons)


1,566





2,244




Coal purchased from other sources (tons)


513





362




Total coal available to ship (tons)


2,079





2,606




Coal shipments (tons)











     Steam (tons)


1,096





1,764




    Metallurgical (tons)


744





728




Total Shipments (tons)


1,840





2,492




Coal sales revenue











     Steam


$       82,213


75.01



$           151,866


86.09


     Metallurgical


67,968


91.35



103,174


141.72


Total coal sales revenue


150,181


81.62



255,040


102.34


Freight and handling revenue


17,196


9.35



21,044


8.44


Cost of coal sold


$     141,591


76.95



$           213,829


85.81


Freight and handling costs


17,196


9.35



21,044


8.44





























Three Months Ended March 31, 





2013


2012



Midwest


Total


Per Ton



Total


Per Ton














Company and contractor production (tons)


588





559




Coal purchased from other sources (tons)


-





-




Total coal available to ship (tons)


588





559




Coal shipments (tons)











     Steam (tons)


577





559




    Metallurgical (tons)


-





-




Total Shipments (tons)


577





559




Coal sales revenue











     Steam


$       25,752


44.63



$             24,723


44.23


     Metallurgical


-


-



-


-


Total coal sales revenue


25,752


44.63



24,723


44.23


Freight and handling revenue


176


0.31



1,178


2.11


Cost of coal sold


$       21,792


37.77



$             23,060


41.25


Freight and handling costs


176


0.31



1,178


2.11














LIQUIDITY AND CASH FLOW

As of March 31, 2013, the Company had available liquidity of $107.2 million calculated as follows (in millions):

Unrestricted Cash

$

97.9

Availability under the Revolver


72.7

Letters of Credit Issued under the Revolver


(63.4)




Available Liquidity

$

107.2




Restricted Cash

$

36.7




Other significant items impacting liquidity in the quarter:

Capital expenditures

$

(7.7)


Seasonal increase in inventories


(21.7)


Reduction in accounts receivable


10.8


Reduction in accounts payable


(16.4)






SALES POSITION

As of April 30, 2013, we had the following agreements to ship coal at a fixed and known price (in 000's except per ton amounts):










2013 Priced



As of March 6, 2013

As of April 30, 2013

Change



Tons

Avg Price Per
Ton

Tons

Avg Price Per
Ton

Tons

Avg Price Per
Ton


CAPP (1)

5,012

$       81.39

5,870

$             81.05

858

$          79.06


Midwest (2)

2,544

$       45.04

2,544

$             45.04

-

$                 -











2014 Priced



As of March 6, 2013

As of April 30, 2013

Change



Tons

Avg Price Per
Ton

Tons

Avg Price Per
Ton

Tons

Avg Price Per
Ton


CAPP (1)

300

$       75.75

300

$             75.75

-

$                 -


Midwest (2)

900

$       47.64

900

$             47.64

-

$                 -










(1)      Priced tons in CAPP in 2013 do not include approximately 264,000 tons of met coal that have been sold but not yet priced.


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


CONFERENCE CALL, WEBCAST AND REPLAY:  The Company will hold a conference call with management to discuss the quarterly earnings May 1, 2013 at 10:00 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.

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 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; 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, including competition from alternative sources such as natural gas; 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, 2013


December 31, 2012







Assets


(unaudited)



Current assets:






Cash and cash equivalents

$

97,885


127,386


Trade receivables


79,024


89,816


Inventories:







Coal


51,254


26,598



Materials and supplies


17,033


16,699





Total inventories


68,287


43,297


Prepaid royalties


8,912


8,623


Other current assets


6,483


9,127





Total current assets


260,591


278,249

Property, plant, and equipment, net


830,474


855,217

Restricted cash and short term investments 


36,681


36,558

Other assets


32,270


34,097






Total assets

$

1,160,016


1,204,121


















Liabilities and Shareholders' Equity 





Current liabilities:






Accounts payable

$

56,511


72,861


Accrued salaries, wages, and employee benefits


12,408


10,996


Workers' compensation benefits


9,900


9,900


Black lung benefits


2,508


2,508


Accrued taxes


9,999


8,382


Other current liabilities


26,914


22,124





Total current liabilities


118,240


126,771

Long-term debt, less current maturities 


549,810


546,407

Other liabilities:






Noncurrent portion of workers' compensation benefits


67,541


66,953


Noncurrent portion of black lung benefits


63,325


62,834


Pension obligations


34,300


35,325


Asset retirement obligations


100,116


99,177


Other


11,418


12,027





Total other liabilities


276,700


276,316






Total liabilities


944,750


949,494

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







35,858,082 and 35,866,549 shares as of March 31, 2013 and December 31, 2012


359


359


Paid-in-capital


547,488


546,289


Accumulated deficit


(278,704)


(236,588)


Accumulated other comprehensive loss


(53,877)


(55,433)






Total shareholders' equity


215,266


254,627






Total liabilities and shareholders' equity 

$

1,160,016


1,204,121













































 

JAMES RIVER COAL COMPANY
AND SUBSIDIARIES
Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)









Three Months Ended









March 31,









2013


2012

Revenues










Coal sales revenue


$

175,933


279,763


Freight and handling revenue


17,372


22,222




Total revenue


193,305


301,985

Cost of sales:









Cost of coal sold



163,383


236,889


Freight and handling costs


17,372


22,222


Depreciation, depletion, and amortization


28,537


30,120




Total cost of sales


209,292


289,231




Gross profit  (loss)


(15,987)


12,754

Selling, general and administrative expenses


13,967


15,566




Total operating loss


(29,954)


(2,812)

Interest expense




12,510


13,385

Interest income





(178)


(214)

Miscellaneous income, net


(103)


(343)




Total other (income) expense, net


12,229


12,828




Net loss before income taxes


(42,183)


(15,640)

Income tax (benefit) expense 


(67)


19

Net loss





$

(42,116)


(15,659)

Earnings (loss) per common share 






Basic earnings (loss) per common share

$

(1.21)


(0.45)


Diluted earnings (loss) per common share

$

(1.21)


(0.45)












 

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,












2013


2012

Cash flows from operating activities:







Net loss


$

(42,116)


(15,659)


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








Depreciation, depletion, and amortization 


28,537


30,120




Accretion of asset retirement obligations


1,114


1,307




Amortization of debt discount and issue costs


4,048


4,277




Stock-based compensation



1,199


1,348




Gain on sale or disposal of property, plant and equipment


(11)


(126)




Changes in operating assets and liabilities:










Receivables



10,792


(1,063)






Inventories



(21,678)


(1,940)






Prepaid royalties and other current assets


2,355


4,269






Restricted cash



(123)


(69)






Other assets



1,168


(947)






Accounts payable



(16,350)


(31,558)






Accrued salaries, wages, and employee benefits


1,412


(1,970)






Accrued taxes



1,617


(416)






Other current liabilities



4,703


1,930






Workers' compensation benefits


588


1,442






Black lung benefits



1,510


1,234






Pension obligations



(488)


151






Asset retirement obligations


(88)


(218)






Other liabilities



(1)


(79)







Net cash used in operating activities


(21,812)


(7,967)

Cash flows from investing activities:







Additions to property, plant, and equipment


(7,700)


(22,885)


Proceeds from sale of property, plant and equipment


11


526







Net cash used in investing activities


(7,689)


(22,359)







Increase (decrease) in cash


(29,501)


(30,326)

Cash and cash equivalents at beginning of period


127,386


199,711

Cash and cash equivalents at end of period


$

97,885


169,385















 

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.  We believe that Adjusted EBITDA presents a useful measure of our ability to service and incur debt on an ongoing basis. 

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 and 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,









2013


2012












Net loss





$

(42,116)


(15,659)

Income tax expense (benefit)


(67)


19

Interest expense 




12,510


13,385

Interest income





(178)


(214)

Depreciation, depletion, and amortization


28,537


30,120

EBITDA (before adjustments)

$

(1,314)


27,651

Other adjustments specified 





     in our current debt agreement





     Other 






1,895


2,086

Adjusted EBITDA



$

581


29,737












 

CONTACT:

James River Coal Company


Elizabeth M. Cook 


Director of Investor Relations


(804) 780-3000

SOURCE James River Coal Company



RELATED LINKS
http://www.jamesrivercoal.com

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