James River Coal Company Reports First Quarter 2013 Operating Results

May 01, 2013, 06:55 ET from James River Coal Company

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