James River Coal Company Reports Fourth Quarter and Full Year 2009 Operating Results
- 2009 Earnings Per Share of $1.85 Compared with ($3.91) in 2008
- Net Income of $51.0 Million in 2009 Compared with ($96.0) Million in 2008
- Fourth Quarter Results Impacted by Winter Weather and $2.5 Million of Interest and Expenses from New Financing
RICHMOND, Va., Feb. 26 /PRNewswire-FirstCall/ -- James River Coal Company (Nasdaq: JRCC), a producer of steam and industrial-grade coal, today announced that it had net income of $51.0 million or $1.85 per fully diluted share for the year ended December 31, 2009 and a net loss of $3.2 million or $0.12 per fully diluted share for the fourth quarter of 2009. This is compared to a net loss of $96.0 million or $3.91 per fully diluted share for the year ended December 31, 2008 and a net loss of $33.6 million or $1.26 per fully diluted share for the fourth quarter of 2008.
Peter T. Socha, Chairman and Chief Executive Officer, commented: "This was the most profitable year in the history of James River Coal Company. We strengthened every aspect of our company during a severe recession and a very weak coal market. While still early, we are beginning to see signs of strength in both the economy and the coal markets. We will enter this new period with improved operations assets, continued close customer relationships, and a much stronger financial profile. We are very optimistic about our future prospects."
ANNUAL RESULTS
The following tables show selected operating results for the year ended December 31, 2009 compared to the year ended December 31, 2008 (in 000's except per ton amounts).
Total Results Year Ended December 31,
------------- -----------------------
2009 2008
-------------- -------------
Total Per Ton Total Per Ton
----- ------- ----- -------
Company and contractor production (tons) 9,770 11,112
Coal purchased from other sources (tons) 107 243
----- ------
Total coal available to ship (tons) 9,877 11,355
Coal shipments (tons) 9,623 11,383
Coal sales revenue $681,558 70.83 $568,507 49.94
Cost of coal sold 508,888 52.88 527,888 46.38
Depreciation, depletion, &
amortization 62,078 6.45 70,277 6.17
Gross profit (loss) 110,592 11.49 (29,658) (2.61)
Selling, general & administrative 39,720 4.13 34,992 3.07
Adjusted EBITDA (1) $146,099 15.18 $17,571 1.54
(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 Year Ended December 31,
--------------- -----------------------
2009 2008
------------- -------------
CAPP Midwest CAPP Midwest
---- ------- ---- -------
Company and Contractor Production (tons) 6,643 3,127 8,006 3,106
Coal purchased from other sources (tons) 107 - 243 -
--- --- --- ---
Total coal available to ship (tons) 6,750 3,127 8,249 3,106
Coal shipments (tons) 6,525 3,098 8,271 3,112
Coal sales revenue $579,108 102,450 $467,609 100,898
Average sales price per ton 88.75 33.07 56.54 32.42
Cost of coal sold $416,721 92,167 $433,781 94,107
Cost of coal sold per ton 63.87 29.75 52.45 30.24
C.K. Lane, Senior Vice President and Chief Operating Officer commented: "Our mine operations had a very good year in 2009. We continued to show dramatic improvement in both safety and regulatory compliance. We also acquired several reserve areas that will be strategically important to our future. Lastly, we have made significant progress on a number of mine development projects in both Central Appalachia (CAPP) and the Midwest.
While we are very pleased with our progress for the year, we are not as pleased with our results for the fourth quarter. As previously discussed, due to the soft coal markets, we have been running all of our CAPP mines at reduced rates of production for the past six months. We realized that this strategy would lead to higher costs for a short period of time due to lower absorption of fixed costs. This quarter, we also saw lower production and higher costs due to severe winter weather and a couple of isolated issues with difficult geology.
We are pleased to report that, despite the continued severe winter weather, our mines are returning to expected levels of production and costs."
QUARTERLY RESULTS
The following tables show selected operating results for the quarter ended December 31, 2009 compared to the quarter ended December 31, 2008 (in 000's except per ton amounts).
Total Results Three Months Ended December 31,
-------------- -------------------------------
2009 2008
------------- --------------
Total Per Ton Total Per Ton
----- ------- ----- -------
Company and contractor production (tons) 2,027 2,734
Coal purchased from other sources (tons) 28 15
--- ---
Total coal available to ship (tons) 2,055 2,749
Coal shipments (tons) 2,146 2,792
Coal Sales Revenue $149,468 69.65 $140,774 50.42
Cost of coal sold 120,099 55.96 134,418 48.14
Depreciation, depletion, & amortization 16,111 7.51 18,277 6.55
Gross profit (loss) 13,258 6.18 (11,921) (4.27)
Selling, general & administrative 9,608 4.48 9,869 3.53
Adjusted EBITDA (1) $22,700 10.58 $(203) (0.07)
(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 December 31,
-------------------------------
2009 2008
---- ----
CAPP Midwest CAPP Midwest
---- ------- ---- -------
Company and Contractor
Production (tons) 1,319 708 1,944 790
Coal Purchased from
other sources (tons) 28 - 15 -
--- --- --- ---
Total coal available
to ship (tons) 1,347 708 1,959 790
Coal Shipments (tons) 1,433 713 1,981 811
Coal sales revenue $125,249 24,219 $114,221 26,553
Average sales price
per ton 87.40 33.97 57.66 32.74
Cost of coal sold $97,339 22,760 $111,232 23,186
Cost of coal sold
per ton 67.93 31.92 56.15 28.59
Cost Bridge (per ton) Q-3 2009 vs. Q-4 2009
------------ -------------------
CAPP Midwest
----- -----
Beginning cash costs (Q-3 2009) $63.11 30.83
Fixed cost absorption 4.20 0.20
Variable 0.82 (0.12)
Other (0.20) 1.01
----- -----
Ending cash costs (Q-4 2009) 67.93 31.92
===== =====
LIQUIDITY AND KEY BALANCE SHEET DATA
During the fourth quarter we issued $172.5 million of 4.5% Convertible Senior Notes due in 2015. In connection with the issuance of the Convertible Senior Notes, we terminated our letter of credit facility and used $62.0 million of our cash to collateralize the existing letters of credit. In January, 2010, we amended our Revolver resulting in an increase in availability to $65.0 million. Our intention is to use the Revolver to support our existing letters of credit. As we secure the letters of credit with our Revolver, our cash that is currently being held as security for the existing letters of credit will become unrestricted and be available to us for use. In connection with the financing we paid early termination fees of $1.6 million and recorded interest on the new notes of $1.5 million and lowered our letter of credit facility fees by $0.6 million.
The table below shows our liquidity as of December 31, 2008 and 2009 and on a proforma basis to reflect the January, 2010 amendment of our Revolver as if it had occurred on December 31, 2009.
Liquidity
---------
Proforma
--------
December 31, December 31, December 31,
----------- ----------- -----------
2008 2009 2009
---- ---- ----
Unrestricted Cash $3.3 $107.9 $107.9
Availability under
revolver - 35.0 65.0
--- ---- ----
Total Liquidity $3.3 $142.9 $172.9
==== ====== ======
Restricted Cash $5.2 $62.0 $62.0
Other Key Balance Sheet Data
----------------------------
(in 000's)
December 31, December 31,
----------- -----------
2008 2009
---- ----
Current Assets
Accounts receivable $33,561 $43,549
Inventories 16,428 33,189
Current Liabilities
Current maturities of long-
term debt 18,000 -
Accounts payable 57,068 46,472
Working Capital (Deficit) (54,961) 109,998
For the year ended and three months ended December 31, 2009 capital expenditures were $72.2 million and $23.5 million respectively.
The Company was in compliance with all covenants in its debt facilities as of December 31, 2009.
SALES POSITION
As of February 25, 2010, we had the following priced sales position:
2010 Priced
-----------
As of October 31, As of February 25,
2009 2010 Change
---------------- ----------------- --------------
Avg Price Avg Price Avg Price
Tons Per Ton Tons Per Ton Tons Per Ton
---------------- ----------------- --------------
CAPP 5,171 $98.49 5,892 $95.10 721 $70.79
Midwest (1) 2,642 $41.47 3,004 $41.13 362 $38.65
---------------- ----------------- --------------
2011 Priced
-----------
As of October 31, As of February 25,
2009 2010 Change
---------------- ----------------- --------------
Avg Price Avg Price Avg Price
Tons Per Ton Tons Per Ton Tons Per Ton
---------------- ----------------- --------------
CAPP 2,389 $121.80 2,389 $121.80 - $-
Midwest (1) 1,375 $44.66 1,422 $44.64 47 $44.05
--------------- --------------- --------------
2012 Priced
-----------
As of October 31, As of February 25,
2009 2010 Change
---------------- ----------------- --------------
Avg Price Avg Price Avg Price
Tons Per Ton Tons Per Ton Tons Per Ton
---------------- ----------------- --------------
CAPP 350 $108.31 350 $108.31 - $-
Midwest (1) 500 $45.00 500 $45.00 - $-
---------------- ----------------- --------------
(1) The prices for the Midwest are minimum base price amounts adjusted
for projected fuel escalators.
Mr. Socha continued: "The changes in our 2010 CAPP sales position were the result of approximately 300,000 carryover tons at $84.88 from 2009 and 362,000 carryover tons in the Midwest. Our carryover tons were due to extremely high utility inventories at the end of the year and severe winter weather in December. We believe that our carryover tons will be shipped during the first three quarters of 2010. As discussed in our guidance release, our sales focus for the near future will be on our specialty coals. We will be selling these coals to both the domestic and international markets. The market for these coals in currently stronger than the domestic utility market."
CONFERENCE CALL, WEBCAST AND REPLAY: The Company will hold a conference call with management to discuss the fourth quarter earnings on February 26, 2010 at 11:00 a.m. Eastern Time. The conference call can be accessed by dialing 866-564-7439, or through the James River Coal Company website at http://www.jamesrivercoal.com. International callers, please dial 719-325-2120. 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 5489698.
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 diversify 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.
JAMES RIVER COAL COMPANY
AND SUBSIDIARIES
Consolidated Balance Sheets
(in thousands, except share data)
December 31, December 31,
2009 2008
----------- -----------
Assets
Current
assets:
Cash and cash equivalents $107,931 3,324
Receivables:
Trade 43,289 33,086
Other 260 475
Total receivables 43,549 33,561
Inventories:
Coal 22,727 6,847
Materials and supplies 10,462 9,581
Total inventories 33,189 16,428
Prepaid royalties 6,045 2,803
Other current assets 3,292 5,094
Total current assets 194,006 61,210
Property, plant, and
equipment, at cost:
Land 7,194 6,693
Mineral rights 231,919 229,841
Buildings, machinery and
equipment 362,654 320,982
Mine development costs 41,069 39,596
Total property, plant,
and equipment 642,836 597,112
Less accumulated
depreciation, depletion,
and amortization 288,748 252,264
------- -------
Property, plant and
equipment, net 354,088 344,848
Goodwill 26,492 26,492
Restricted
cash 62,042 5,222
Other assets 32,684 25,774
Total assets $669,312 463,546
======= =======
JAMES RIVER COAL COMPANY
AND SUBSIDIARIES
Consolidated Balance Sheets
(in thousands, except share data)
December 31, December 31,
2009 2008
----------- -----------
Liabilities and
Shareholders' Equity
Current
liabilities:
Current maturities of
long-term debt $- 18,000
Accounts payable 46,472 57,068
Accrued salaries,
wages, and employee
benefits 6,982 6,642
Workers' compensation
benefits 8,950 9,300
Black lung benefits 1,782 1,539
Accrued taxes 4,383 4,457
Other current
liabilities 15,439 19,165
------ ------
Total current
liabilities 84,008 116,171
------ -------
Long-term debt, less
current maturities 278,268 150,000
Other
liabilities:
Noncurrent portion of
workers' compensation
benefits 50,385 46,477
Noncurrent portion of
black lung benefits 31,017 29,029
Pension obligations 14,827 19,693
Asset retirement
obligations 39,843 36,409
Other 622 529
Total other
liabilities 136,694 132,137
------- -------
Total liabilities 498,970 398,308
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
27,544,878 and
27,393,493 shares
as of December 31,
2009 and 2008,
respectively 275 274
Paid-in-
capital 320,079 272,366
Accumulated deficit (136,758) (187,712)
Accumulated other
comprehensive loss (13,254) (19,690)
------ ------
Total shareholders'
equity 170,342 65,238
------- ------
Total liabilities
and shareholders'
equity $669,312 463,546
======= =======
JAMES RIVER COAL COMPANY
AND SUBSIDIARIES
Consolidated Statements of Operations
(in thousands, except per share data)
Year Year Year
Ended Ended Ended
December 31, December 31, December 31,
2009 2008 2007
---- ---- ----
Revenues $681,558 568,507 520,560
Cost of
sales:
Cost of coal sold 508,888 527,888 473,347
Gain on curtailment of
pension plan (6,091)
Depreciation, depletion,
and amortization 62,078 70,277 71,856
------ ------ ------
Total cost of sales 570,966 598,165 539,112
Gross profit (loss) 110,592 (29,658) (18,552)
Selling, general, and
administrative expenses 39,720 34,992 32,191
------ ------ ------
Total operating income
(loss) 70,872 (64,650) (50,743)
------ ------- -------
Interest
expense 17,057 17,746 19,764
Interest
income (60) (469) (471)
Charges associated with
repayment and amendment of
debt 1,643 15,618 2,421
Miscellaneous income, net (281) (1,279) (598)
---- ------ ----
Total other expenses, net 18,359 31,616 21,116
Income (loss) before income
taxes 52,513 (96,266) (71,859)
Income tax expense
(benefit) 1,559 (273) (17,844)
----- ---- -------
Net income (loss) $50,954 (95,993) (54,015)
======= ======= =======
Income (loss) per common
share
Basic income (loss) per
common share $1.85 (3.91) (3.29)
===== ===== =====
Diluted income (loss) per
common share $1.85 (3.91) (3.29)
===== ===== =====
JAMES RIVER COAL COMPANY
AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(in thousands)
Year Year Year
Ended Ended Ended
December 31, December 31, December 31,
2009 2008 2007
---- ---- ----
Cash flows from
operating activities:
Net income (loss) $50,954 (95,993) (54,015)
Adjustments to
reconcile net loss
to net cash provided
by operating activities
Depreciation, depletion,
and amortization
of property, plant,
and equipment 62,078 70,277 71,856
Accretion of asset
retirement
obligations 3,212 2,768 2,270
Amortization of
debt discount and
issue costs 1,813 1,411 1,569
Stock-based
compensation 5,967 5,130 3,853
Deferred income
tax benefit 180 4 (18,572)
Loss on sale or
disposal of property,
plant, and equipment (61) (163) (87)
Write-off of
deferred financing
costs - 2,383 2,421
Gain on curtailment
of pension plan - - (6,091)
Changes in operating
assets and liabilities:
Receivables (9,988) 7,745 6,930
Inventories (15,025) (2,236) (1,232)
Prepaid
Royalties
and other
current
assets (1,440) 100 (58)
Restricted
cash (56,820) (5,222) -
Other
assets (4,233) (4,403) (2,929)
Accounts
payable (10,596) 9,762 4,576
Accrued
salaries,
wages, and
employee
benefits 340 632 1,277
Accrued
taxes (1,787) (2,251) (2,772)
Other current
liabilities (3,626) 8,702 (1,030)
Workers'
compensation
benefits 3,558 2,185 8
Black lung
benefits 1,657 538 1,435
Pension
Obligations 2,144 (1,395) (3,129)
Asset
retirement
obligations (861) (1,082) (1,457)
Other
liabilities 93 (468) (801)
--- --- ---
Net cash
provided
by (used in)
operating
activities 27,559 (1,576) 4,022
------ ----- -----
Cash flows from
investing activities:
Additions to property,
plant, and equipment (72,159) (74,697) (49,343)
Proceeds from sale of
property, plant and
equipment 149 1,108 142
--- ----- ---
Net cash
used in
investing
activities(72,010) (73,589) (49,201)
------ ------ ------
Cash flows from
financing activities:
Proceeds from
issuance of long-term
debt 172,500 - 40,000
Repayment of
long-term debt - (38,800) (1,200)
Proceeds from
Revolver 12,500 26,500 31,043
Repayments of
Revolver (30,500) (8,500) (48,536)
Net proceeds
from issuance
of common stock - 93,820 32,389
Principal payments
under capital lease
obligations - - (262)
Debt issuance
Costs (5,517) (486) (4,649)
Proceeds from
exercise of stock options 75 542 -
Net cash
Provided
by financing
activities 149,058 73,076 48,785
------- ------ ------
Increase
(decrease)
in cash 104,607 (2,089) 3,606
Cash and cash
equivalents at
beginning of
period 3,324 5,413 1,807
----- ----- -----
Cash and cash
equivalents at
end of period $107,931 3,324 5,413
======= ===== =====
JAMES RIVER COAL COMPANY
AND SUBSIDIARIES
Reconciliation of Non-GAAP Measures
(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 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 Year Ended
------------------ ----------
December 31, December 31, December 31, December 31,
2009 2008 2009 2008
---- ---- ---- ----
Net income
(loss) $(3,203) (33,587) 50,954 (95,993)
Income tax
expense
(benefit) 42 (273) 1,559 (273)
Interest
expense 5,267 4,046 17,057 17,746
Interest
income (5) (152) (60) (469)
Depreciation,
depletion,
and
amortization 16,111 18,277 62,078 70,277
------ ------ ------ ------
EBITDA
(before
adjustments) $18,212 (11,689) 131,588 (8,712)
------- ------ ------- -----
Other
adjustments
specified
in our
current debt
agreement:
Charges
associated
with
repayment of
debt 1,643 8,382 1,643 15,618
Other
adjustments 2,845 3,104 12,868 10,665
----- ----- ------ ------
Adjusted EBITDA $22,700 (203) 146,099 17,571
====== === ======= ======
CONTACT: | James River Coal Company | |
Elizabeth M. Cook | ||
Director of Investor Relations | ||
(804) 780-3000 | ||
SOURCE James River Coal Company
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