James River Coal Company Reports Fourth Quarter and Full Year 2010 Operating Results
RICHMOND, Va., March 6, 2011 /PRNewswire/ --
-- Earnings Per Share of $0.93 in Q-4 2010 Compared with Net Loss of
$0.12 Per Share in Q-4 2009
-- 2010 Earnings Per Share of $2.82 Compared with $1.85 in 2009
-- Net Income of $78.2 Million in 2010 Compared with $51.0 Million in
2009
-- Cash Margin in Central Appalachia (CAPP) of $27.09 Per Ton in 2010
-- Met Mines are Producing as Expected; All Future Met Production is
Currently Unpriced
-- Conference Call Slides Posted to the Company Website
James River Coal Company
, a producer of steam and industrial-grade coal, today announced that it had net income of $78.2 million or $2.82 per fully diluted share for the year ended December 31, 2010 and net income of $25.9 million or $0.93 per fully diluted share for the fourth quarter of 2010. Included in the fourth quarter 2010 is an income tax benefit related to the reversal of the deferred income tax valuation allowance of $22.1 million, or $0.79 per fully diluted share in the fourth quarter and a $0.80 per fully diluted share for the year. This is compared to net income of $51.0 million or $1.85 per fully diluted share for the year ended December 31, 2009 and net loss of $3.2 million or $0.12 per fully diluted share for the fourth quarter of 2009.Peter T. Socha, Chairman and Chief Executive Officer, commented: 'This was another very profitable year for James River Coal Company. We are particularly pleased that we have been able to generate these profits during a soft coal market and a general economic recession. We are now seeing clear signs of an improving coal market and an improving economy. We have invested in our Company during the downturn, and are looking forward to seeing the benefit of these investments during the months and years to come.'
ANNUAL RESULTS
The following tables show selected operating results for the year ended December 31, 2010 compared to the year ended December 31, 2009 (in 000's except per ton amounts).
Total Results Year Ended December 31,
------------- -----------------------
2010 2009
---- ----
Total Per Ton Total Per Ton
----- ------- ----- -------
Company and contractor
production (tons) 8,782 9,770
Coal purchased from other
sources (tons) 128 107
--- ---
Total coal available to ship
(tons) 8,910 9,877
Coal shipments (tons) 8,919 9,623
Coal sales revenue $701,116 78.61 $681,558 70.83
Cost of coal sold 514,515 57.69 508,888 52.88
Depreciation, depletion, &
amortization 64,368 7.22 62,078 6.45
Gross profit 122,233 13.70 110,592 11.49
Selling, general &
administrative 38,347 4.30 39,720 4.13
Adjusted EBITDA (1) $156,628 17.56 $146,099 15.18
(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,
--------------- -----------------------
2010 2009
---- ----
CAPP Midwest CAPP Midwest
---- ------- ---- -------
Company and Contractor
Production (tons) 5,962 2,820 6,643 3,127
Coal purchased from other
sources (tons) 128 - 107 -
--- --- --- ---
Total coal available to ship
(tons) 6,090 2,820 6,750 3,127
Coal shipments (tons) 6,109 2,810 6,525 3,098
Coal sales revenue $585,064 116,052 $579,108 102,450
Average sales price per ton 95.77 41.30 88.75 33.07
Cost of coal sold $419,564 94,951 $416,721 92,167
Cost of coal sold per ton 68.68 33.79 63.87 29.75
QUARTERLY RESULTS
The following tables show selected operating results for the quarter ended December 31, 2010 compared to the quarter ended December 31, 2009 (in 000's except per ton amounts).
Total Results Three Months Ended December 31,
------------- -------------------------------
2010 2009
---- ----
Total Per Ton Total Per Ton
----- ------- ----- -------
Company and contractor production
(tons) 2,085 2,027
Coal purchased from other sources
(tons) 74 28
--- ---
Total coal available to ship
(tons) 2,159 2,055
Coal shipments (tons) 2,069 2,146
Coal Sales Revenue $162,050 78.32 $149,468 69.65
Cost of coal sold 126,254 61.02 120,099 55.96
Depreciation, depletion, &
amortization 16,087 7.78 16,111 7.51
Gross profit 19,709 9.53 13,258 6.18
Selling, general & administrative 9,400 4.54 9,608 4.48
Adjusted EBITDA (1) $28,479 13.76 $22,700 10.58
(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,
--------------- -------------------------------
2010 2009
---- ----
CAPP Midwest CAPP Midwest
---- ------- ---- -------
Company and
Contractor
production (tons) 1,372 713 1,319 708
Coal purchased from
other sources
(tons) 74 - 28 -
--- --- --- ---
Total coal available
to ship (tons) 1,446 713 1,347 708
Coal Shipments
(tons) 1,362 707 1,433 713
Coal sales revenue $133,465 28,585 $125,249 24,219
Average sales price
per ton 97.99 40.43 87.40 33.97
Cost of coal sold $102,345 23,909 $97,339 22,760
Cost of coal sold
per ton 75.14 33.82 67.93 31.92
LIQUIDITY AND CASH FLOW
As of December 31, 2010, the Company had available liquidity of $186.6 million calculated as follows (in millions):
Unrestricted Cash $180.4
Availability under revolver 65.0
Letters of Credit Issued
under the Revolver (58.8)
-----
Available Liquidity $186.6
======
Capital Expenditures for the fourth quarter were $35.7 million and $95.4 million for twelve months ended December 31, 2010. Capital Expenditures for the fourth quarter included approximately $15.5 million for growth projects and compliance with MSHA safety mandates.
SALES POSITION
As of February 24, 2011, we had the following priced sales position:
2011 Priced
-----------
As of November 2, As of February 24,
2010 2011 Change
------------------ ------------------- ------
Avg Price Per Avg Price Per Avg Price Per
Tons Ton Tons Ton Tons Ton
---- -------------- ---- -------------- ---- --------------
CAPP 4,344 $100.15 5,117 $97.01 773 $79.36
----
Midwest (1) 2,496 $43.23 2,609 $42.84 113 $34.23
----------- ----- ------ ----- ------ --- ------
2012 Priced
-----------
As of November 2, As of February 24,
2010 2011 Change
------------------ ------------------- ------
Avg Price Per Avg Price Per Avg Price Per
Tons Ton Tons Ton Tons Ton
---- -------------- ---- -------------- ---- --------------
CAPP 350 $108.31 350 $108.31 - $-
----
Midwest (1) 1,560 $43.42 1,560 $43.42 - $-
----------- ----- ------ ----- ------ --- ---
2013 Priced
-----------
As of November 2, As of February 24,
2010 2011 Change
------------------ ------------------- ------
Avg Price Per Avg Price Per Avg Price Per
Tons Ton Tons Ton Tons Ton
---- -------------- ---- -------------- ---- --------------
CAPP - $- - $- - $-
----
Midwest (1) 990 $44.10 990 $44.10 - $-
----------- --- ------ --- ------ --- ---
(1) The prices for the Midwest are miniumum base price amounts
adjusted for projected fuel escalators.
GUIDANCE
The Company intends to issue 2011 guidance following the closing of the pending acquisition of International Resource Partners and Logan and Kanawha.
CONFERENCE CALL, WEBCAST AND REPLAY: The Company will hold a conference call with management to discuss the fourth quarter earnings on March 7, 2011 at 9:00 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 800-642-1687 for domestic callers. International callers, please dial 706-645-9291: pass code 49584534.
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. Forward looking statements include, without limitation, statements regarding future contract mine production, costs market improvements, and industry demand. 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: a change in the demand for coal by electric utility customers, as well as the perceived benefits of alternative sources of energy; 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; our dependency on one railroad for transportation of a large percentage of our products; failure to exploit additional coal reserves; the risk that reserve estimates and pension and post-retirement benefit liabilities are inaccurate; failure to diversify our operations; increased capital expenditures; encountering difficult mining conditions; inherent complexities associated with mining in Central Appalachia including special dangers and risks of underground mining; increased costs of complying with mine health and safety regulations; bottlenecks or other difficulties in transporting coal to our customers; delays in the development of new mining projects; increased costs of raw materials; the effects of litigation, regulation, permits and competition; lack of availability of financing sources; our compliance with debt covenants; the risk that we are unable to successfully integrate acquired assets into our business; 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,
2010 2009
------------- -------------
Assets
Current
assets:
Cash and cash equivalents $180,376 107,931
Trade receivables 59,970 43,289
Inventories:
Coal 23,305 22,727
Materials and supplies 13,690 10,462
------ ------
Total inventories 36,995 33,189
Prepaid royalties 6,039 6,045
Other current assets 5,991 3,552
----- -----
Total current assets 289,371 194,006
Property, plant, and equipment, at cost:
Land 7,751 7,194
Mineral rights 231,681 231,919
Buildings, machinery and equipment 423,617 362,654
Mine development costs 48,301 41,069
------ ------
Total property, plant,
and equipment 711,350 642,836
Less accumulated depreciation,
depletion, and amortization 325,698 288,748
------- -------
Property, plant and
equipment, net 385,652 354,088
Goodwill 26,492 26,492
Restricted cash and short term
investments 23,500 62,042
Other assets 59,554 32,684
------ ------
Total assets $784,569 669,312
JAMES RIVER COAL COMPANY
AND SUBSIDIARIES
Consolidated Balance Sheets
(in thousands, except share data)
December 31, December
2010 31, 2009
------------- --------
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $57,300 46,472
Accrued salaries, wages, and employee
benefits 7,744 6,982
Workers' compensation benefits 9,000 8,950
Black lung benefits 2,282 1,782
Accrued taxes 4,924 4,383
Other current liabilities 16,496 15,439
Total current liabilities 97,746 84,008
Long-term debt, less current maturities 284,022 278,268
Other liabilities:
Noncurrent portion of workers'
compensation benefits 55,944 50,385
Noncurrent portion of black lung
benefits 43,443 31,017
Pension obligations 11,968 14,827
Asset retirement obligations 43,398 39,843
Other 665 622
Total other liabilities 155,418 136,694
Total liabilities 537,186 498,970
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 27,779,351 and
27,544,878 shares
as of December 31, 2010 and 2009,
respectively 278 275
Paid-in-capital 324,705 320,079
Accumulated deficit (58,593) (136,758)
Accumulated other comprehensive loss (19,007) (13,254)
Total shareholders' equity 247,383 170,342
Total liabilities and
shareholders' equity $784,569 669,312
======== =======
JAMES RIVER COAL COMPANY
AND SUBSIDIARIES
Consolidated Statements of Operations
(in thousands, except per share data)
Year Year Year
Ended Ended Ended
December December December
31, 31, 31,
2010 2009 2008
---- ---- ----
Revenues $701,116 681,558 568,507
Cost of sales:
Cost of coal sold 514,515 508,888 527,888
Depreciation, depletion,
and amortization 64,368 62,078 70,277
------ ------ ------
Total cost of sales 578,883 570,966 598,165
------- ------- -------
Gross profit (loss) 122,233 110,592 (29,658)
Selling, general, and
administrative expenses 38,347 39,720 34,992
------ ------ ------
Total operating income
(loss) 83,886 70,872 (64,650)
------ ------ -------
Interest expense 29,943 17,057 17,746
Interest income (683) (60) (469)
Charges associated with
repayment and amendment
of debt - 1,643 15,618
Miscellaneous expense
(income), net 27 (281) (1,279)
--- ---- ------
Total other expenses,
net 29,287 18,359 31,616
------ ------ ------
Income (loss) before
income taxes 54,599 52,513 (96,266)
Income tax expense
(benefit) (23,566) 1,559 (273)
------- ----- ----
Net income (loss) $78,165 50,954 (95,993)
======= ====== =======
Income (loss) per common
share
Basic income (loss) per
common share $2.82 1.85 (3.91)
===== ==== =====
Diluted income (loss)
per common share $2.82 1.85 (3.91)
===== ==== =====
JAMES RIVER COAL COMPANY
AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(in thousands)
Year
Ended
December
31,
2010
----
Cash flows from operating activities:
Net income (loss) $78,165
Adjustments to reconcile net income
(loss) to net cash
provided by operating activities
Depreciation, depletion, and amortization
of property, plant, and equipment 64,368
Accretion of asset retirement obligations 3,334
Amortization of debt discount and issue
costs 8,066
Stock-based compensation 5,400
Deferred income tax benefit (22,236)
Loss (gain) on sale or disposal of
property, plant, and equipment 307
Write-off of deferred financing costs -
Changes in operating assets and
liabilities:
Receivables (16,681)
Inventories (3,680)
Prepaid royalties and other
current assets (2,433)
Restricted cash and short
term investments 38,542
Other assets (2,060)
Accounts payable 10,828
Accrued salaries, wages, and
employee benefits 762
Accrued taxes (303)
Other current
liabilities 1,066
Workers' compensation
benefits 5,609
Black lung benefits 3,018
Pension obligations (2,244)
Asset retirement obligations (809)
Other liabilities 43
Net cash provided by (used
in) operating activities 169,062
-------
Cash flows from investing activities:
Additions to property, plant, and
equipment (95,426)
Proceeds from sale of property, plant and
equipment 82
---
Net cash used in investing
activities (95,344)
-------
Cash flows from financing activities:
Proceeds from issuance of long-term debt -
Repayment of long-term debt -
Proceeds from Revolver -
Repayments of Revolver -
Net proceeds from issuance of common
stock -
Debt issuance costs (1,346)
Proceeds from exercise of stock options 73
---
Net cash provided by (used
in) financing activities (1,273)
------
Increase (decrease) in
cash and cash equivalents 72,445
Cash and cash equivalents at beginning of
period 107,931
Cash and cash equivalents at end of
period $180,376
========
Year
Ended
December
31,
2009
----
Cash flows from operating activities:
Net income (loss) 50,954
Adjustments to reconcile net income
(loss) to net cash
provided by operating activities
Depreciation, depletion, and amortization
of property, plant, and equipment 62,078
Accretion of asset retirement obligations 3,212
Amortization of debt discount and issue
costs 1,813
Stock-based compensation 5,967
Deferred income tax benefit 180
Loss (gain) on sale or disposal of
property, plant, and equipment (61)
Write-off of deferred financing costs -
Changes in operating assets and
liabilities:
Receivables (9,988)
Inventories (15,025)
Prepaid royalties and other
current assets (1,440)
Restricted cash and short
term investments (56,820)
Other assets (4,233)
Accounts payable (10,596)
Accrued salaries, wages, and
employee benefits 340
Accrued taxes (1,787)
Other current
liabilities (3,626)
Workers' compensation
benefits 3,558
Black lung benefits 1,657
Pension obligations 2,144
Asset retirement obligations (861)
Other liabilities 93
Net cash provided by (used
in) operating activities 27,559
------
Cash flows from investing activities:
Additions to property, plant, and
equipment (72,159)
Proceeds from sale of property, plant and
equipment 149
---
Net cash used in investing
activities (72,010)
-------
Cash flows from financing activities:
Proceeds from issuance of long-term debt 172,500
Repayment of long-term debt -
Proceeds from Revolver 12,500
Repayments of Revolver (30,500)
Net proceeds from issuance of common
stock -
Debt issuance costs (5,517)
Proceeds from exercise of stock options 75
---
Net cash provided by (used
in) financing activities 149,058
-------
Increase (decrease) in
cash and cash equivalents 104,607
Cash and cash equivalents at beginning of
period 3,324
Cash and cash equivalents at end of
period 107,931
=======
Year
Ended
December
31,
2008
----
Cash flows from operating activities:
Net income (loss) (95,993)
Adjustments to reconcile net income
(loss) to net cash
provided by operating activities
Depreciation, depletion, and amortization
of property, plant, and equipment 70,277
Accretion of asset retirement obligations 2,768
Amortization of debt discount and issue
costs 1,411
Stock-based compensation 5,130
Deferred income tax benefit 4
Loss (gain) on sale or disposal of
property, plant, and equipment (163)
Write-off of deferred financing costs 2,383
Changes in operating assets and
liabilities:
Receivables 7,745
Inventories (2,236)
Prepaid royalties and other
current assets 100
Restricted cash and short
term investments (5,222)
Other assets (4,403)
Accounts payable 9,762
Accrued salaries, wages, and
employee benefits 632
Accrued taxes (2,251)
Other current
liabilities 8,702
Workers' compensation
benefits 2,185
Black lung benefits 538
Pension obligations (1,395)
Asset retirement obligations (1,082)
Other liabilities (468)
Net cash provided by (used
in) operating activities (1,576)
------
Cash flows from investing activities:
Additions to property, plant, and
equipment (74,697)
Proceeds from sale of property, plant and
equipment 1,108
-----
Net cash used in investing
activities (73,589)
-------
Cash flows from financing activities:
Proceeds from issuance of long-term debt -
Repayment of long-term debt (38,800)
Proceeds from Revolver 26,500
Repayments of Revolver (8,500)
Net proceeds from issuance of common
stock 93,820
Debt issuance costs (486)
Proceeds from exercise of stock options 542
---
Net cash provided by (used
in) financing activities 73,076
------
Increase (decrease) in
cash and cash equivalents (2,089)
Cash and cash equivalents at beginning of
period 5,413
Cash and cash equivalents at end of
period 3,324
=====
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 the amount used in several of the covenants in our revolving credit facility. 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.
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 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 and cash margin per ton may not be comparable to other similarly titled measures of other companies. Additionally, EBITDA, Adjusted EBITDA or 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. The following table reconciles Net Income to EBITDA and Adjusted EBITDA:
Three Months Ended Twelve Months Ended
------------------ -------------------
December December December December
31 31 31 31
2010 2009 2010 2009
---- ---- ---- ----
Net income $25,870 (3,203) 78,165 50,954
Income tax expense
(benefit) (22,892) 42 (23,566) 1,559
Interest expense 7,516 5,267 29,943 17,057
Interest income (83) (5) (683) (60)
Depreciation,
depletion, and
amortization 16,087 16,111 64,368 62,078
------ ------ ------ ------
EBITDA (before
adjustments) $26,498 18,212 148,227 131,588
Other adjustments
specified
in our current debt
agreement: 1,981 4,488 8,401 14,511
----- ----- ----- ------
Adjusted EBITDA $28,479 22,700 156,628 146,099
======= ====== ======= =======
CONTACT: James River Coal Company
Elizabeth M. Cook
Director of Investor Relations
(804) 780-3000
James River Coal Company
CONTACT: James River Coal Company, Elizabeth M. Cook, Director of
Investor Relations, 1-804-780-3000
Web Site: http://www.jamesrivercoal.com/