James River Coal CO - FORM 8-K - EX-99.1 - PRESS RELEASE

Attached files

file	filename
8-K - CURRENT REPORT ON FORM 8-K - James River Coal CO	jrcc_8k-030611.htm

Exhibit 99.1

FOR IMMEDIATE RELEASE

CONTACT:

James River Coal Company

Elizabeth M. Cook

Director of Investor Relations

(804) 780-3000

JAMES RIVER COAL COMPANY REPORTS FOURTH QUARTER

AND FULL YEAR 2010 OPERATING RESULTS

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

RICHMOND, VA, March 6, 2011 - James River Coal Company (NASDAQ: JRCC), 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)

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, 2010				As of February 24, 2011				Change
	Tons		Avg Price Per Ton		Tons		Avg Price Per Ton		Tons		Avg Price Per 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	(Carryover Tons)

	2012 Priced
	As of November 2, 2010				As of February 24, 2011				Change
	Tons		Avg Price Per Ton		Tons		Avg Price Per Ton		Tons		Avg Price Per Ton
CAPP		350	$	108.31		350	$	108.31		-	$	-
Midwest (1)		1,560	$	43.42		1,560	$	43.42		-	$	-

	2013 Priced
	As of November 2, 2010				As of February 24, 2011				Change
	Tons		Avg Price Per Ton		Tons		Avg Price Per Ton		Tons		Avg Prce Per Ton
CAPP		-	$	-		-	$	-		-	$	-
Midwest (1)		990	$	44.10		990	$	44.10		-	$	-

(1)	The prices for the Midwest are minimum 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 800-642-1687for 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, 2010		December 31, 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, 2010			December 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 31,			December 31,			December 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			Year			Year
	Ended			Ended			Ended
	December 31,			December 31,			December 31,
	2010			2009			2008
Cash flows from operating activities:
Net income (loss)	$	78,165			50,954			(95,993	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities
Depreciation, depletion, and amortization of property, plant, and equipment		64,368			62,078			70,277
Accretion of asset retirement obligations		3,334			3,212			2,768
Amortization of debt discount and issue costs		8,066			1,813			1,411
Stock-based compensation		5,400			5,967			5,130
Deferred income tax benefit		(22,236	)		180			4
Loss (gain) on sale or disposal of property, plant, and equipment		307			(61	)		(163	)
Write-off of deferred financing costs		-			-			2,383
Changes in operating assets and liabilities:
Receivables		(16,681	)		(9,988	)		7,745
Inventories		(3,680	)		(15,025	)		(2,236	)
Prepaid royalties and other current assets		(2,433	)		(1,440	)		100
Restricted cash and short term investments		38,542			(56,820	)		(5,222	)
Other assets		(2,060	)		(4,233	)		(4,403	)
Accounts payable		10,828			(10,596	)		9,762
Accrued salaries, wages, and employee benefits		762			340			632
Accrued taxes		(303	)		(1,787	)		(2,251	)
Other current liabilities		1,066			(3,626	)		8,702
Workers' compensation benefits		5,609			3,558			2,185
Black lung benefits		3,018			1,657			538
Pension obligations		(2,244	)		2,144			(1,395	)
Asset retirement obligations		(809	)		(861	)		(1,082	)
Other liabilities		43			93			(468	)
Net cash provided by (used in) operating activities		169,062			27,559			(1,576	)
Cash flows from investing activities:
Additions to property, plant, and equipment		(95,426	)		(72,159	)		(74,697	)
Proceeds from sale of property, plant and equipment		82			149			1,108
Net cash used in investing activities		(95,344	)		(72,010	)		(73,589	)
Cash flows from financing activities:
Proceeds from issuance of long-term debt		-			172,500			-
Repayment of long-term debt		-			-			(38,800	)
Proceeds from Revolver		-			12,500			26,500
Repayments of Revolver		-			(30,500	)		(8,500	)
Net proceeds from issuance of common stock		-			-			93,820
Debt issuance costs		(1,346	)		(5,517	)		(486	)
Proceeds from exercise of stock options		73			75			542
Net cash provided by (used in) financing activities		(1,273	)		149,058			73,076
Increase (decrease) in cash and cash equivalents		72,445			104,607			(2,089	)
Cash and cash equivalents at beginning of period		107,931			3,324			5,413
Cash and cash equivalents at end of period	$	180,376			107,931			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 31			December 31			December 31			December 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

Attached files

Stock widget

Investing forum

James River Coal CO Reports

Also read