James River Coal Company Reports First Quarter 2010 Operating Results

- Earnings per Share of $0.84

- Adjusted EBITDA of $48.1 Million

- Cash Margin in Central Appalachia (CAPP) of $29.38 Per Ton

- Development of New Met Mines Continue to Be on Schedule; All Expected Shipments are Currently Unpriced

- Named to Forbes 2010 List of "The 100 Most Trustworthy Companies"

- Conference Call Slides Posted to Company Website

News provided by

James River Coal Company

Apr 30, 2010, 07:00 ET

RICHMOND, Va., April 30 /PRNewswire-FirstCall/ -- James River Coal Company (Nasdaq: JRCC), a producer of steam and industrial-grade coal, today announced that it had net income of $23.2 million or $.84 per fully diluted share for the first quarter of 2010.  This is compared to net income of $28.2 million or $1.03 per fully diluted share for the first quarter of 2009.

Peter T. Socha, Chairman and Chief Executive Officer commented: "We had another strong quarter.  Our mine operations had a good quarter with production and cost metrics.  We were particularly pleased with our shipping during the quarter.  We believe that this reflects our close working relationship with the railroad and our domestic utility customers.  With regard to the coal markets, we are beginning to see clear signs of a recovery from recession levels.  We will continue to be patient with our contracting strategy.  We believe that James River Coal Company is well positioned for a sustained period of profitability."

QUARTERLY RESULTS

The following tables show selected operating results for the quarter ended March 31, 2010 compared to the quarter ended March 31, 2009 (in 000's except per ton amounts).  

Total Results

Three Months Ended March 31,




2010

2009



Total

Per Ton

Total

Per Ton










Company and contractor production (tons)

2,305


2,866

Coal purchased from other sources (tons)

19


37

Total coal available to ship (tons)

2,324


2,903











Coal shipments (tons)

2,400


2,631

Coal sales revenue

$         184,601

76.92

$      192,121

73.02

Cost of coal sold

129,317

53.88

132,707

50.44

Depreciation, depletion, & amortization

16,358

6.82

14,473

5.50

Gross profit


38,926

16.22

44,941

17.08

Selling, general & administrative


9,319

3.88

9,287

3.53

Operating Income

29,607

12.34

35,654

13.55










Adjusted EBITDA (1)

$           48,124

20.05

$        53,194

20.22










  (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,




2010

2009













CAPP

Midwest

CAPP

Midwest










Company and contractor production (tons)

1,550

755

2,041

825

Coal purchased from other sources (tons)

19

-

37

-

Total coal available to ship (tons)

1,569

755

2,078

825










Coal shipments (tons)

1,662

738

1,844

787

Coal sales revenue

$     155,564

29,037

$     167,635

24,486

Average sales price per ton

93.60

39.35

90.91

31.11










Cost of coal sold

$     106,740

22,577

$     111,484

21,223

Cost of coal sold per ton

64.22

30.59

60.46

26.97























Cost Bridge

Q-4 2009 vs. Q-1 2010






CAPP

Midwest










Beginning cash costs (Q-4 2009)

$     67.93

31.92

Fixed Cost Absorption

(4.01)

-

Variable costs (diesel, explosives, etc.)

(2.20)

(0.46)

Other

2.50

(0.87)

Ending cash costs (Q-1 2010)

$     64.22

30.59















LIQUIDITY AND FREE CASH FLOW

As of March 31, 2010, the Company had available liquidity of $189.3 million calculated as follows (in millions):

Unrestricted Cash

$

153.1

Availability under the Revolver

63.5

Letters of Credit issued under the Revolver

(27.3)



Available Liquidity

$

189.3



Restricted Cash

$

32.1






For the three months ended March 31, 2010, the Company had free cash flow of $34.1 million calculated as follows (in millions):

Adjusted EBITDA

$        48.1

Capital Expenditures

(14.0)


Free Cash Flow

$        34.1


SALES POSITION AND MARKET COMMENTS

As of April 29, 2010, we had the following agreements to ship coal at a fixed and known price (in 000's except per ton amounts):

2010 Priced (1)



As of February 25, 2010

As of April 29, 2010

Change


Tons

Avg Price Per
Ton

Tons

Avg Price Per
Ton

Tons

Avg Price Per
Ton

CAPP  

5,892

$       95.10

5,994

$       94.80

102

$       77.47

Midwest (2)

3,004

$       41.13

3,004

$       41.13

-

$             -










2011 Priced


As of February 25, 2010

As of April 29, 2010

Change


Tons

Avg Price Per
Ton

Tons

Avg Price Per
Ton

Tons

Avg Price Per
Ton

CAPP

2,389

$      121.80

2,424

$     121.21

35

$       80.94

Midwest (2)

1,422

$       44.64

1,422

$       44.64

-

$             -










2012 Priced


As of February 25, 2010

As of April 29, 2010

Change


Tons

Avg Price Per
Ton

Tons

Avg Price Per
Ton

Tons

Avg Price Per
Ton

CAPP

350

$      108.31

350

$     108.31

-

$             -

Midwest (2)

500

$       45.00

500

$       45.00

-

$             -









(1)      2010 includes all tons that have been shipped and tons with agreements for fixed prices for the remainder of the year,  including carryover tons. 

(2)      The prices for the Midwest  are minimum base price amounts adjusted for projected fuel  escalators. 

GUIDANCE

In accordance with our past practice, James River Coal Company will update guidance in the second quarter earnings release.

FORBES 100 MOST TRUSTWORTHY COMPANIES

James River Coal Company has been named to the Forbes 2010 list of "The 100 Most Trustworthy Companies."

Forbes used Audit Integrity, an independent financial analytics company in Los Angeles to identify the most transparent and trustworthy businesses that trade on American stock exchanges.  These companies have consistently demonstrated transparent and conservative accounting practices and solid corporate governance and management.  

CONFERENCE CALL, WEBCAST AND REPLAY:  The Company will hold a conference call with management to discuss the first quarter earnings on April 30, 2010 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 800-642-1687 for domestic callers.  International callers, please dial 706-645-9291: pass code 66107301.

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. 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: changes 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 one railroad for transportation of a large percentage of our productions; failure to exploit additional coal reserves; the risk that reserve estimates are inaccurate; 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 costs 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 asset 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)








March 31, 2010

December 31, 2009

Assets 
















Current assets:





Cash and cash equivalents

$

153,129

107,931

Receivables:






Trade

67,295

43,289


Other

111

260



Total receivables

67,406

43,549

Inventories:






Coal

16,172

22,727


Materials and supplies

11,103

10,462



Total inventories

27,275

33,189

Prepaid royalties

5,671

6,045

Other current assets

3,119

3,292



Total current assets

256,600

194,006

Property, plant, and equipment, at cost:





Land 

7,444

7,194

Mineral rights 

231,919

231,919

Buildings, machinery and equipment

374,847

362,654

Mine development costs

42,580

41,069



Total property, plant, and equipment

656,790

642,836

Less accumulated depreciation, depletion, and amortization

304,580

288,748



Property, plant and equipment, net

352,210

354,088

Goodwill

26,492

26,492

Restricted cash  

32,135

62,042

Other assets 

32,800

32,684



 Total assets

$

700,237

669,312

JAMES RIVER COAL COMPANY

AND SUBSIDIARIES

Consolidated Balance Sheets

(in thousands, except share data)





March 31, 2010

 December 31, 2009

Liabilities and Shareholders' Equity













Current liabilities:





Accounts payable

$

38,395

46,472

Accrued salaries, wages, and employee benefits

10,657

6,982

Workers' compensation benefits

8,950

8,950

Black lung benefits

1,782

1,782

Accrued taxes

7,321

4,383

Other current liabilities

20,217

15,439


Total current liabilities

87,322

84,008

Long-term debt

279,650

278,268

Other liabilities:





Noncurrent portion of workers' compensation benefits

51,053

50,385

Noncurrent portion of black lung benefits

41,124

31,017

Pension obligations

14,123

14,827

Asset retirement obligations

40,540

39,843

Other 

622

622


Total other liabilities 

147,462

136,694


Total liabilities 

514,434

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 27,543,278 and 27,544,878 shares 






 as of March 31, 2010 and December 31, 2009, respectively

275

275

Paid-in-capital

321,499

320,079

Accumulated deficit

(113,513)

(136,758)

Accumulated other comprehensive loss

(22,458)

(13,254)


Total shareholders' equity

185,803

170,342















Total liabilities and shareholders' equity

 $

700,237

669,312

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, 2010

March 31, 2009









Revenues

$

184,601

192,121

Cost of sales:





Cost of coal sold

129,317

132,707

Depreciation, depletion and amortization

16,358

14,473


Total cost of sales

145,675

147,180


Gross profit



38,926

44,941

Selling, general and administrative expenses

9,319

9,287


Total operating income

29,607

35,654

Interest expense



7,381

4,053

Interest income

(4)

(25)

Miscellaneous income, net

(42)

(54)


Total other expense, net

7,335

3,974


Income before income taxes

22,272

31,680

Income tax expense (benefit)

(973)

3,509

Net income


$

23,245

28,171

Earnings per common share





Basic earnings per common share

$

0.84

1.03

Diluted earnings per common share

$

0.84

1.03









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,


2010

2009

Cash flows from operating activities: 





Net income  

$

23,245

28,171

Adjustments to reconcile net income to net cash provided by operating activities 






Depreciation, depletion, and amortization  

16,358

14,473


Accretion of asset retirement obligations 

821

793


Amortization of debt discount and issue costs 

1,882

293


Stock-based compensation 

1,420

1,514


Changes in operating assets and liabilities: 







Receivables 

(23,857)

(18,014)



Inventories 

5,406

(14,883)



Prepaid royalties and other current assets 

547

933



Restricted cash 

29,907

-



Other assets 

549

2,871



Accounts payable 

(8,077)

1,921



Accrued salaries, wages, and employee benefits 

3,675

2,490



Accrued taxes 

2,938

5,079



Other current liabilities 

4,671

229



Workers' compensation benefits 

668

1,027



Black lung benefits

707

592



Pension obligations 

(508)

536



Asset retirement obligations 

(17)

(210)



Other liabilities 

-

43




Net cash provided by operating activities 

60,335

27,858

Cash flows from investing activities:





Additions to property, plant, and equipment 

(13,972)

(12,413)




Net cash used in investing activities 

(13,972)

(12,413)

Cash flows from financing activities:





Proceeds from Revolver

-

5,000

Repayments of Revolver

-

(14,000)

Debt issuance costs

(1,165)

-




Net cash used in financing activities

(1,165)

(9,000)




Increase in cash

45,198

6,445

Cash and cash equivalents at beginning of period

107,931

3,324

Cash and cash equivalents at end of period

$

153,129

9,769

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 the difference between coal revenue per ton sold and 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.

Free cash flow as shown in the press release is calculated as Adjusted EBITDA less capital expenditures.  It is not a measure of cash flow as defined by GAAP.   We use free cash flow as a measure of our ability to make investments, acquisitions and payments to our stakeholders.  Free cash flow should not be considered in isolation, nor as an alternative to cash flows generated from operations.

EBITDA, Adjusted EBITDA, cash margin per ton and free cash flow 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, cash margin per ton and free cash flow may not be comparable to other similarly titled measures of other companies.  Additionally, EBITDA, Adjusted EBITDA, cash margin per ton or free cash flow 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,








2010

2009











Net income




$

23,245

28,171

Income tax expense (benefit)

(973)

3,509

Interest expense




7,381

4,053

Interest income

(4)

(25)

Depreciation, depletion, and amortization

16,358

14,473

EBITDA (before adjustments)

$

46,007

50,181

Other adjustments specified




in our current debt agreement:

2,117

3,013

Adjusted EBITDA

$

48,124

53,194











CONTACT:

James River Coal Company

Elizabeth M. Cook

Director of Investor Relations

(804) 780-3000

SOURCE James River Coal Company

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