Bookmark and Share

(JRCC) Reports Second Quarter 2013 Operating Results

RICHMOND, Va., Aug. 9, 2013 /PRNewswire/ —

  • Mine Operations Continue to Adjust to Soft Coal Market Conditions
  • Available Liquidity at June 30, 2013 of $108.8 Million Compared to $107.2 Million at March 31, 2013
  • Capital Expenditures of $11.9 Million in Q-2, 2013
  • Completed Private Exchange Transactions, Which Reduced Principal Amount of Debt by $120.1 Million
  • 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 income of $52.6 million or $1.16 per diluted share for the second quarter of 2013 and net income of $10.5 million or $0.29 per diluted share for the six months ended June 30, 2013.  Second quarter and the six months ended June 30, 2013 results include $101.2 million or $2.20 per share and $2.82 per share, respectively, of pre-tax gain related to the Private Exchange Transactions.  The 2013 results are compared to net loss of $25.8 million or $0.74 per diluted share for the second quarter of 2012 and net loss of $41.4 million or $1.19 per diluted share for the six months ended June 30, 2012.

Peter T. Socha, Chairman and Chief Executive Officer commented: “Things are still interesting in the coal industry.  We continue to be pleased with our mine operations.  They are doing an excellent job of managing their people, costs, capital, and assets during a difficult time in the coal industry.  The coal markets have continued to be soft.  The thermal markets are still weak, but we can see several factors that may lead to improvement later this year and into 2014.  The met markets have clearly weakened during the past several months.  We are a little more cautious about met than we had been earlier this year.  We have started to take definitive action to strengthen our balance sheet and improve our liquidity position during this period of soft coal markets.  We have been very encouraged by the input and support that we have received from many parties during this difficult process.”

FINANCIAL RESULTS

The following tables show selected operating results for the quarter and six months ended June 30, 2013 compared to the quarter and six months ended June 30, 2012 (in 000’s except per ton amounts).

 

 

Total Results Three Months Ended June 30,  Six Months Ended June 30,
2013 2012 2013 2012
Total Per Ton Total Per Ton Total Per Ton Total Per Ton
Company and contractor production (tons) 2,059 2,539 4,213 5,342
Coal purchased from other sources (tons) 194 434 707 797
Total coal available to ship (tons) 2,253 2,973 4,920 6,139
Coal shipments (tons) 2,159 2,910 4,576 5,961
Coal sales revenue $   150,525 69.72 $   259,628 89.22 $   326,458 71.34 $   539,391 90.49
Freight and handling revenue 9,626 4.46 17,730 6.09 26,998 5.90 39,952 6.70
Cost of coal sold 142,572 66.04 224,314 77.08 305,955 66.86 461,203 77.37
Freight and handling costs 9,626 4.46 17,730 6.09 26,998 5.90 39,952 6.70
Depreciation, depletion, & amortization 29,668 13.74 32,514 11.17 58,205 12.72 62,634 10.51
Gross profit (loss) (21,715) (10.06) 2,800 0.96 (37,702) (8.24) 15,554 2.61
Selling, general & administrative 13,690 6.34 15,266 5.25 27,657 6.04 30,832 5.17
Adjusted EBITDA  (1) $     (3,724) (1.72) $     22,345 7.68 $     (3,143) (0.69) $     52,082 8.74
(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 June 30,  Six Months Ended June 30, 
2013 2012 2013 2012
CAPP Total Per Ton Total Per Ton Total Per Ton Total Per Ton
Company and contractor production (tons) 1,461 1,932 3,027 4,177
Coal purchased from other sources (tons) 194 434 707 797
Total coal available to ship (tons) 1,655 2,366 3,734 4,974
Coal shipments (tons)
     Steam (tons) 1,052 1,412 2,148 3,176
    Metallurgical (tons) 506 897 1,250 1,625
Total Shipments (tons) 1,558 2,309 3,398 4,801
Coal sales revenue
     Steam $      75,695 71.95 $    117,229 83.02 $    157,908 73.51 $    269,095 84.73
     Metallurgical 47,446 93.77 115,581 128.85 115,414 92.33 218,755 134.62
Total coal sales revenue 123,141 79.04 232,810 100.83 273,322 80.44 487,850 101.61
Freight and handling revenue 9,424 6.05 17,426 7.55 26,620 7.83 38,470 8.01
Cost of coal sold $    120,436 77.30 $    202,476 87.69 $    262,027 77.11 $    416,305 86.71
Freight and handling costs 9,424 6.05 17,426 7.55 26,620 7.83 38,470 8.01
Three Months Ended June 30,  Six Months Ended June 30, 
2013 2012 2013 2012
Midwest Total Per Ton Total Per Ton Total Per Ton Total Per Ton
Company and contractor production (tons) 598 607 1,186 1,165
Coal purchased from other sources (tons) – – – –
Total coal available to ship (tons) 598 607 1,186 1,165
Coal shipments (tons) 601 601 1,178 1,160
Coal sales revenue $      27,384 45.56 $      26,818 44.62 $      53,136 45.11 $      51,541 44.43
Freight and handling revenue 202 0.34 304 0.51 378 0.32 1,482 1.28
Cost of coal sold $      22,136 36.83 $      21,838 36.34 $      43,928 37.29 $      44,898 38.71
Freight and handling costs 202 0.34 304 0.51 378 0.32 1,482 1.28

 

 

LIQUIDITY AND CASH FLOW

As of June 30, 2013, the Company had available liquidity of $108.8 million calculated as follows (in millions):

Unrestricted Cash $ 94.6
Availability under the Revolver 77.6
Letters of Credit Issued under the Revolver (63.4)
Available Liquidity $ 108.8
Restricted Cash $ 36.7

 

 

Other significant items impacting liquidity in the quarter:

Capital expenditures $ (11.9)
Seasonal increase in coal inventories (3.6)
Reduction in accounts receivable 40.3
Reduction in accounts payable (7.0)

 

 

 

PRIVATE EXCHANGE TRANSACTIONS

 

In May 2013, the Company issued $123.3 million principal amount of 10.0% Convertible Senior Notes due 2018 (the 10.0% Convertible Senior Notes) in exchange for $90.0 million principal amount of our 4.5% Convertible Senior Notes due 2015 and $153.4 million principal amount of our 3.125% Convertible Senior Notes due 2018 (the Private Exchange Transactions). The Private Exchange Transactions resulted in a gain of $101.2 million, which includes the write-off of $3.6 million of unamortized financing costs.  The Company recorded $4.6 million of financing costs associated with the issuance of the 10.0% Convertible Senior Notes.


SALES POSITION AND MARKET COMMENTS

 

As of August 8, 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 April 30, 2013 As of August 8, 2013 Change
Tons Avg Price PerTon Tons Avg Price PerTon Tons Avg Price PerTon
CAPP (1) 5,870 $       81.05 6,487 $             80.24 617 $         72.53
Midwest (2) 2,544 $       45.04 2,544 $             45.04 – $                 –
2014 Priced
As of April 30, 2013 As of August 8, 2013 Change
Tons Avg Price PerTon Tons Avg Price PerTon Tons Avg Price PerTon
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 second quarter earnings August 9, 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.

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 and projected fuel escalators.  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)

 
June 30, 2013 December 31, 2012
Assets (unaudited)
Current assets:
Cash and cash equivalents $ 94,579 127,386
Trade receivables 38,687 89,816
Inventories:
Coal 54,863 26,598
Materials and supplies 16,164 16,699
Total inventories 71,027 43,297
Prepaid royalties 8,829 8,623
Other current assets 5,481 9,127
Total current assets 218,603 278,249
Property, plant, and equipment, net 811,343 855,217
Restricted cash and short term investments 36,681 36,558
Other assets 32,090 34,097
Total assets $ 1,098,717 1,204,121
Liabilities and Shareholders’ Equity 
Current liabilities:
Accounts payable $ 49,514 72,861
Accrued salaries, wages, and employee benefits 11,653 10,996
Workers’ compensation benefits 9,900 9,900
Black lung benefits 2,508 2,508
Accrued taxes 10,813 8,382
Other current liabilities 19,987 22,124
Total current liabilities 104,375 126,771
Long-term debt, less current maturities 447,896 546,407
Other liabilities:
Noncurrent portion of workers’ compensation benefits 67,935 66,953
Noncurrent portion of black lung benefits 63,839 62,834
Pension obligations 32,872 35,325
Asset retirement obligations 100,772 99,177
Other 10,758 12,027
Total other liabilities 276,176 276,316
Total liabilities 828,447 949,494
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
36,056,869 and 35,866,549 shares as of June 30, 2013 and December 31, 2012 361 359
Paid-in-capital 548,305 546,289
Accumulated deficit (226,075) (236,588)
Accumulated other comprehensive loss (52,321) (55,433)
Total shareholders’ equity 270,270 254,627
Total liabilities and shareholders’ equity $ 1,098,717 1,204,121

 

 

 JAMES RIVER COAL COMPANYAND SUBSIDIARIES

Consolidated Statements of Operations

(in thousands, except per share data)

(unaudited)

 
Three Months Ended Six Months Ended
June 30, June 30,
2013 2012 2013 2012
Revenues
Coal sales revenue $ 150,525 259,628 326,458 539,391
Freight and handling revenue 9,626 17,730 26,998 39,952
Total revenue 160,151 277,358 353,456 579,343
Cost of sales:
Cost of coal sold 142,572 224,314 305,955 461,203
Freight and handling costs 9,626 17,730 26,998 39,952
Depreciation, depletion, and amortization 29,668 32,514 58,205 62,634
Total cost of sales 181,866 274,558 391,158 563,789
Gross profit  (loss) (21,715) 2,800 (37,702) 15,554
Selling, general and administrative expenses 13,690 15,266 27,657 30,832
Total operating loss (35,405) (12,466) (65,359) (15,278)
Interest expense 12,372 13,527 24,882 26,912
Interest income (107) (171) (285) (385)
Gain on debt transactions (101,210) – (101,210) –
Miscellaneous income, net (130) (90) (233) (433)
Total other (income) expense, net (89,075) 13,266 (76,846) 26,094
Net income (loss) before income taxes 53,670 (25,732) 11,487 (41,372)
Income tax expense 1,041 31 974 50
Net income (loss) $ 52,629 (25,763) 10,513 (41,422)
Earnings (loss) per common share
Basic earnings (loss) per common share $ 1.46 (0.74) 0.29 (1.19)
Diluted earnings (loss) per common share $ 1.16 (0.74) 0.29 (1.19)

 

 

 

 

JAMES RIVER COAL COMPANY AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

 
Six Months Ended June 30,
2013 2012
Cash flows from operating activities:
Net income (loss) $ 10,513 (41,422)
Adjustments to reconcile net income (loss) to net cash provided by

(used in) operating activities
Depreciation, depletion, and amortization 58,205 62,634
Accretion of asset retirement obligations 2,236 2,617
Amortization of debt discount and issue costs 7,532 8,667
Stock-based compensation 2,378 2,696
Gain on sale or disposal of property, plant and equipment (12) (122)
Gain on debt transactions (101,210) –
Changes in operating assets and liabilities:
Receivables 51,129 7,687
Inventories (23,570) (3,724)
Prepaid royalties and other current assets 3,440 1,730
Restricted cash (123) (69)
Other assets 1,731 4,417
Accounts payable (23,347) (33,024)
Accrued salaries, wages, and employee benefits 657 863
Accrued taxes 2,071 (2,170)
Other current liabilities (2,312) (4,691)
Workers’ compensation benefits 982 2,379
Black lung benefits 2,079 2,514
Pension obligations (415) (304)
Asset retirement obligations (582) (96)
Other liabilities (4) (157)
Net cash provided by (used in) operating activities (8,622) 10,425
Cash flows from investing activities:
Additions to property, plant, and equipment (19,620) (45,881)
Proceeds from sale of property, plant and equipment 19 580
Net cash used in investing activities (19,601) (45,301)
Cash flows from financing activities:
Debt issuance costs (4,584) –
Net cash used in financing activities (4,584) –
Decrease in cash and cash equivalents (32,807) (34,876)
Cash and cash equivalents at beginning of period 127,386 199,711
Cash and cash equivalents at end of period $ 94,579 164,835

 

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 Six Months Ended
June 30 June 30 June 30 June 30
2013 2012 2013 2012
Net income (loss) $ 52,629 (25,763) 10,513 (41,422)
Income tax expense 1,041 31 974 50
Interest expense 12,372 13,527 24,882 26,912
Interest income (107) (171) (285) (385)
Depreciation, depletion, and amortization 29,668 32,514 58,205 62,634
EBITDA (before adjustments) $ 95,603 20,138 94,289 47,789
Other adjustments specified
     in our current debt agreement
     Gain on debt transactions (101,210) – (101,210) –
     Other 1,883 2,207 3,778 4,293
Adjusted EBITDA $ (3,724) 22,345 (3,143) 52,082

 

 

CONTACT: James River Coal Company
Elizabeth M. Cook
Director of Investor Relations
(804) 780-3000
Friday, August 9th, 2013 Uncategorized
TraderPower Featured Companies
Top Small Cap Market News
 

Recent Comments

    Archives