Attached files
| file | filename |
|---|---|
| 8-K - CURRENT REPORT ON FORM 8-K - James River Coal CO | jrcc_8k-080911.htm |
| EX-99.1 - PRESS RELEASE - James River Coal CO | jrcc_ex9901.htm |
Exhibit 99.2
Shareholder Update
August 2011
2
Forward-Looking Statements
Certain statements in this Shareholder Update, 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 market activity,
synergies that may be realized from the acquisition of International Resource Partners LP (IRP), demand for and trends related to
metallurgical coal and thermal coal 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: a change in the demand for coal by electric utility
customers; 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 railroads for transportation of a large percentage of our products; failure to exploit additional
coal reserves; the risk that reserve estimates are inadequate; failure to diversify our operations; increased capital expenditures; encountering
difficult mining conditions; 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 cost of raw materials; the effects of litigation, regulation
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 the business; 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 and regulatory actions; legal and
administrative proceedings, settlements, investigations and claims; weather conditions or catastrophic weather-related damage; our
production capabilities; availability of transportation; 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; our
ability to integrate successfully operations that we have or may acquire or develop in the future, including those of IRP, or the risk that any
such integration could be more difficult, time-consuming or costly than expected; the consummation of financing transactions, acquisitions or
dispositions and the related effects on our business; uncertainty of our expected financial performance following completion of the IRP
acquisition; disruption from the IRP acquisition making it more difficult to maintain relationships with customers, employees or suppliers; and
the other risks detailed in our reports filed with the Securities and Exchange Commission (SEC). The Company’s 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. The Company undertakes no obligation to publicly update
or revise any forward-looking statement, whether as a result of future events, new information or otherwise.
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 market activity,
synergies that may be realized from the acquisition of International Resource Partners LP (IRP), demand for and trends related to
metallurgical coal and thermal coal 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: a change in the demand for coal by electric utility
customers; 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 railroads for transportation of a large percentage of our products; failure to exploit additional
coal reserves; the risk that reserve estimates are inadequate; failure to diversify our operations; increased capital expenditures; encountering
difficult mining conditions; 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 cost of raw materials; the effects of litigation, regulation
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 the business; 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 and regulatory actions; legal and
administrative proceedings, settlements, investigations and claims; weather conditions or catastrophic weather-related damage; our
production capabilities; availability of transportation; 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; our
ability to integrate successfully operations that we have or may acquire or develop in the future, including those of IRP, or the risk that any
such integration could be more difficult, time-consuming or costly than expected; the consummation of financing transactions, acquisitions or
dispositions and the related effects on our business; uncertainty of our expected financial performance following completion of the IRP
acquisition; disruption from the IRP acquisition making it more difficult to maintain relationships with customers, employees or suppliers; and
the other risks detailed in our reports filed with the Securities and Exchange Commission (SEC). The Company’s 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. The Company undertakes no obligation to publicly update
or revise any forward-looking statement, whether as a result of future events, new information or otherwise.
Agenda
● Opening Comments
● Market Review
● 2011 Guidance
● Miscellaneous
4
Opening Comments
Summary
● Earnings Per Share of $0.31, Before Acquisition and
Recapitalization Expenses
Recapitalization Expenses
● Earnings Per Share of $0.31, Before Acquisition and
Recapitalization Expenses
Recapitalization Expenses
● Acquisition and Recapitalization Expenses, After Tax, of
$10.4 million, or $0.29 Per Share
$10.4 million, or $0.29 Per Share
● Acquisition and Recapitalization Expenses, After Tax, of
$10.4 million, or $0.29 Per Share
$10.4 million, or $0.29 Per Share
● Adjusted EBITDA Plus Acquisition Costs of $54.4 Million
● Adjusted EBITDA Plus Acquisition Costs of $54.4 Million
● Completed Acquisition of IRP and Logan & Kanawha
● Completed Acquisition of IRP and Logan & Kanawha
● Integration is Substantially Complete
● Integration is Substantially Complete
● Seeing Increased Market Activity in Domestic Thermal Market
● Seeing Increased Market Activity in Domestic Thermal Market
Agenda
● Operations Review
● Opening Comments
● Market Review
● 2011 Guidance
● Miscellaneous
6
Operations Review
Safety/Regulatory
● 2nd Quarter NFDL Rate of 1.49
● 2nd Quarter NFDL Rate of 1.49
● All Tracking and Communication Systems Installed
● All Tracking and Communication Systems Installed
● Began Several Projects to “Seal Off” Underground Areas
to Reduce Size of Mines Due to New MSHA Requirements
to Reduce Size of Mines Due to New MSHA Requirements
● Began Several Projects to “Seal Off” Underground Areas
to Reduce Size of Mines Due to New MSHA Requirements
to Reduce Size of Mines Due to New MSHA Requirements
● Managing Through Surface Permit Delays
● Managing Through Surface Permit Delays
● Successfully Rescued 3 Miners that were Trapped at the
Jellico Mine (Bell County) When the Mine Flooded
Jellico Mine (Bell County) When the Mine Flooded
● Successfully Rescued 3 Miners that were Trapped at the
Jellico Mine (Bell County) When the Mine Flooded
Jellico Mine (Bell County) When the Mine Flooded
7
Operations Review
Central Appalachia
● Jellico Flood
● Jellico Flood
● Flooded by +10m Gallons of Water Due to 100 year Rainfall
● Flooded by +10m Gallons of Water Due to 100 year Rainfall
● No Citations Have Been Issued
● No Citations Have Been Issued
● One Section Began Producing Late July
● One Section Began Producing Late July
● Second Section will Re-Start Late August
● Second Section will Re-Start Late August
● Began Production at Replacement Mine at Leeco
● Began Production at Replacement Mine at Leeco
● Began the Development and Construction of Several
Replacement Mines (Underground and Surface)
Replacement Mines (Underground and Surface)
● Began the Development and Construction of Several
Replacement Mines (Underground and Surface)
Replacement Mines (Underground and Surface)
● Completed $3.5 Million Upgrade of Bledsoe BL#1 Plant
● Completed $3.5 Million Upgrade of Bledsoe BL#1 Plant
● Confident in Original Synergies Estimate of $25 Million
● Confident in Original Synergies Estimate of $25 Million
8
Operations Review
Illinois Basin
● Adjusted Operating Schedules to Match Shipments
● Adjusted Operating Schedules to Match Shipments
● Completed Production at Hurricane Surface Mine and
Moved Equipment to Log Creek Surface Mine
Moved Equipment to Log Creek Surface Mine
● Completed Production at Hurricane Surface Mine and
Moved Equipment to Log Creek Surface Mine
Moved Equipment to Log Creek Surface Mine
● Log Creek Preparation Plant Expected to Begin
Processing Coal Late in the 4th Quarter
Processing Coal Late in the 4th Quarter
● Log Creek Preparation Plant Expected to Begin
Processing Coal Late in the 4th Quarter
Processing Coal Late in the 4th Quarter
● Began Construction of the Log Creek Rail Loadout
● Began Construction of the Log Creek Rail Loadout
● Cost Pressures From Raw Materials
● Cost Pressures From Raw Materials
Agenda
● Opening Comments
● Market Review
● 2011 Guidance
● Miscellaneous
10
Market Review
10
Metallurgical Coal
● Volatile Pricing Due to Supply Shocks and Divergent
Economic Growth Around the World
Economic Growth Around the World
● Volatile Pricing Due to Supply Shocks and Divergent
Economic Growth Around the World
Economic Growth Around the World
● Some Low Quality B Met Coal May Not Stay in the
Met Market
Met Market
● Some Low Quality B Met Coal May Not Stay in the
Met Market
Met Market
● Long-Term View Continues to be Very Bullish
● Long-Term View Continues to be Very Bullish
● New Sources of Global Metallurgical Coal are Having
Development Problems
Development Problems
● New Sources of Global Metallurgical Coal are Having
Development Problems
Development Problems
Market Review
12
Market Review
12
Domestic Thermal Market
Coal Fired Generation
Down Marginally Compared with 2010
CSX Utility Shipments
Down 12% in Q-2
Eastern U.S. Production
Basically Flat Compared With 2010
CSX Export Shipments
Up 30% in Q-2
13
Market Review
13
Domestic Thermal Market
● Interest in Spot Coal Picking Up
● Interest in Spot Coal Picking Up
● More RFP’s for Long and Short-Term Contracts
● More RFP’s for Long and Short-Term Contracts
● New Log Creek Rail Loadout will Open Door to New
Markets for Triad (Indiana) Coal
Markets for Triad (Indiana) Coal
● New Log Creek Rail Loadout will Open Door to New
Markets for Triad (Indiana) Coal
Markets for Triad (Indiana) Coal
● Actively Engaged with Several Customers Regarding
Forward Contracting of Triad Production
Forward Contracting of Triad Production
● Actively Engaged with Several Customers Regarding
Forward Contracting of Triad Production
Forward Contracting of Triad Production
Agenda
● Opening Comments
● Market Review
● 2011 Guidance
● Miscellaneous
15
Total JRCC Operations
(In $’s in 000’s except tax rate)
(1) Adjusted EBITDA plus acquisition cost is used to determine compliance with financial covenants in our revolving credit facility
(2) Includes both maintenance and growth capital expenditures
2011 Guidance
|
|
Six Months
Ended June 30,
2011 |
Guidance
(July - December, 2011)
|
Total 2011
|
|
Adjusted EBITDA plus
acquisition cost (1) |
78,151
|
95,000 - 105,000
|
173,151 - 183,151
|
|
Selling, General and
Administrative |
24,181
|
28,000
|
52,181
|
|
Depreciation, Depletion and
Amortization |
44,245
|
60,000
|
104,245
|
|
Interest Expense
|
23,458
|
28,000
|
51,458
|
|
Tax Rate
|
|
15%
|
15%
|
|
Capital Expenditures(2)
|
58,306
|
85,000
|
143,306
|
2011 Guidance
16
Guidance by Segment
(in 000’s except per ton amounts)
|
|
|
Guidance
|
|
|
|
Tons Shipped
|
Cash Cost (1)
|
|
|
Central
Appalachia |
|
|
$87.00 - 90.00
|
|
Thermal
|
|
7,000 - 7,300
|
|
|
Metallurgical
|
|
2,000 - 2,200
|
|
|
Midwest
|
|
2,600 - 2,700
|
$36.00-37.00
|
1. Cash Costs in CAPP include metallurgical coal purchased for blending purposes
1. Cash Costs in CAPP include metallurgical coal purchased for blending purposes
Agenda
● Opening Comments
● Market Review
● 2011 Guidance
● Miscellaneous
Miscellaneous
|
Upcoming Investor Conferences and Meetings
(Webcast May be Accessed at www.jamesrivercoal.com)
|
||
|
September 27, 2011
|
Davenport & Co.
6th Annual Metals and Mining Conference
|
New York
|
|
October 6, 2011
|
Johnson Rice
Energy Conference
|
New Orleans
|
|
November 16-17, 2011
|
Dahlman Rose
2nd Annual
Global Metals, Mining and Materials
Conference |
New York
|
|
December 1, 2011
|
UBS
Coal Conference
|
Boston
|
|
Early November
|
3rd Quarter Earnings
|
19
Question and Answer
Session
Session
