James River Coal Company Reports First Quarter 2012 Operating Results
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 | Tons | Avg Price | Tons | Avg Price Per | |||
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 | Tons | Avg Price | Tons | Avg Price Per | |||
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 | Tons | Avg Price | Tons | Avg Price Per | |||
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: | |
Elizabeth M. Cook | |
Director of Investor Relations | |
(804) 780-3000 |
SOURCE James River Coal Company