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James River Coal (JRCC) 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
Wednesday, May 1st, 2013 Uncategorized
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