James River Coal Company Reports Second Quarter 2011 Operating Results
RICHMOND, Va., Aug. 9, 2011 /PRNewswire/ --
- Earnings Per Share of $0.31 for the Second Quarter, Before Acquisition and Recapitalization Expenses
- Adjusted EBITDA plus acquisition costs of $54.4 Million for the Second Quarter
- Conference Call Slides Posted to Company Website
James River Coal Company (NASDAQ: JRCC), today announced that it had net income of $0.8 million or $0.02 per diluted share for the second quarter of 2011 and net loss of $6.8 million or $0.22 per diluted share for the six months ended June 30, 2011. Second quarter and the six months ended June 30, 2011 results include $10.4 million or $0.29 per share and $14.4 million or $0.47 per share, respectively, of after tax charges related to the International Resource Partners LP (IRP)acquisition and refinancing of our debt. The 2011 results are compared to net income of $19.9 million or $0.71 per diluted share for the second quarter of 2010 and net income of $43.1 million or $1.56 per diluted share for the six months ended June 30, 2010.
Peter T. Socha, Chairman and Chief Executive Officer commented: "We are very pleased with our progress this quarter. We completed the acquisition of International Resource Partners LP and its subsidiary Logan & Kanawha in mid-April. The integration of these acquisitions has gone very well. We also successfully managed several positive changes to our balance sheet. The mines had a better quarter and are continuing to adjust to several regulatory changes. Lastly, we are beginning to see much more sales and contracting activity in both Central Appalachia and the Midwest."
FINANCIAL RESULTS
The following tables show selected operating results for the quarter and six months ended June 30, 2011 compared to the quarter and six months ended June 30, 2010 (in 000's except per ton amounts).
Total Results |
Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||
2011 |
2010 |
2011 |
2010 |
||||||
Total |
Total |
Total |
Total |
||||||
Company and contractor production (tons) |
2,640 |
2,256 |
4,762 |
4,561 |
|||||
Coal purchased from other sources (tons) |
566 |
11 |
612 |
30 |
|||||
Total coal available to ship (tons) |
3,206 |
2,267 |
5,374 |
4,591 |
|||||
Coal shipments (tons) |
3,261 |
2,283 |
5,334 |
4,683 |
|||||
Coal sales revenue |
$ 328,182 |
$ 182,550 |
$ 492,037 |
$ 366,569 |
|||||
Freight and handling revenue |
23,855 |
495 |
24,582 |
1,077 |
|||||
Cost of coal sold |
264,108 |
128,243 |
396,927 |
256,978 |
|||||
Freight and handling costs |
23,855 |
495 |
24,582 |
1,077 |
|||||
Depreciation, depletion, & amortization |
28,210 |
16,209 |
44,245 |
32,567 |
|||||
Gross profit |
35,864 |
38,098 |
50,865 |
77,024 |
|||||
Selling, general & administrative |
14,811 |
9,823 |
24,181 |
19,142 |
|||||
Acquisition costs |
3,859 |
- |
8,504 |
- |
|||||
Adjusted EBITDA plus acquisition costs (1) |
$ 54,449 |
$ 46,506 |
$ 78,151 |
$ 94,630 |
|||||
(1) Adjusted EBITDA plus acquisition costs 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, |
||||||||||||
2011 |
2010 |
||||||||||||
CAPP |
Midwest |
CAPP |
Midwest |
||||||||||
Total |
Per Ton |
Total |
Per Ton |
Total |
Per Ton |
Total |
Per Ton |
||||||
Company and contractor production (tons) |
2,023 |
617 |
1,568 |
688 |
|||||||||
Coal purchased from other sources (tons) |
566 |
- |
11 |
- |
|||||||||
Total coal available to ship (tons) |
2,589 |
617 |
1,579 |
688 |
|||||||||
Coal shipments (tons) |
|||||||||||||
Steam (tons) |
1,893 |
641 |
1,585 |
698 |
|||||||||
Metallurgical (tons) |
727 |
- |
- |
- |
|||||||||
Total Shipments (tons) |
2,620 |
641 |
1,585 |
698 |
|||||||||
Coal sales revenue |
|||||||||||||
Steam |
169,977 |
89.79 |
27,706 |
43.22 |
$ |
153,560 |
96.88 |
28,990 |
41.53 |
||||
Metallurgical |
130,499 |
179.50 |
- |
- |
- |
- |
- |
- |
|||||
Total coal sales revenue |
300,476 |
114.69 |
27,706 |
43.22 |
153,560 |
96.88 |
28,990 |
41.53 |
|||||
Freight and handling revenue |
23,316 |
8.90 |
539 |
0.84 |
- |
- |
495 |
0.71 |
|||||
Cost of coal sold |
240,794 |
91.91 |
23,314 |
36.37 |
104,455 |
65.90 |
23,788 |
34.08 |
|||||
Freight and handling costs |
23,316 |
8.90 |
539 |
0.84 |
- |
- |
495 |
0.71 |
|||||
Segment Results |
Six Months Ended June 30, |
||||||||||||
2011 |
2010 |
||||||||||||
CAPP |
Midwest |
CAPP |
Midwest |
||||||||||
Total |
Per Ton |
Total |
Per Ton |
Total |
Per Ton |
Total |
Per Ton |
||||||
Company and contractor production (tons) |
3,478 |
1,284 |
3,118 |
1,443 |
|||||||||
Coal purchased from other sources (tons) |
612 |
- |
30 |
- |
|||||||||
Total coal available to ship (tons) |
4,090 |
1,284 |
3,148 |
1,443 |
|||||||||
Coal shipments (tons) |
|||||||||||||
Steam (tons) |
3,274 |
1,299 |
3,247 |
1,436 |
|||||||||
Metallurgical (tons) |
761 |
- |
- |
- |
|||||||||
Total Shipments (tons) |
4,035 |
1,299 |
3,247 |
1,436 |
|||||||||
Coal sales revenue |
|||||||||||||
Steam |
303,417 |
92.67 |
53,976 |
41.55 |
$ 309,124 |
95.20 |
57,445 |
40.00 |
|||||
Metallurgical |
134,644 |
176.93 |
- |
- |
- |
- |
- |
- |
|||||
Total coal sales revenue |
438,061 |
108.57 |
53,976 |
41.55 |
309,124 |
95.20 |
57,445 |
40.00 |
|||||
Freight and handling revenue |
23,316 |
5.78 |
1,266 |
0.97 |
- |
- |
1,077 |
0.75 |
|||||
Cost of coal sold |
349,493 |
86.62 |
47,434 |
36.52 |
211,195 |
65.04 |
45,783 |
31.88 |
|||||
Freight and handling costs |
23,316 |
5.78 |
1,266 |
0.97 |
- |
- |
1,077 |
0.75 |
|||||
LIQUIDITY AND CASH FLOW
As of June 30, 2011, the Company had available liquidity of $229.7 million calculated as follows (in millions):
Unrestricted Cash |
$ |
204.7 |
|
Availability under the Revolver |
88.6 |
||
Letters of Credit Issued under the Revolver |
(63.6) |
||
Available Liquidity |
$ |
229.7 |
|
Restricted Cash |
$ |
29.5 |
|
Capital expenditures for the second quarter were $38.2 million and $58.3 million for the six months ended June 30, 2011. Additionally, a payment of $516.0 million was made for the IRP acquisition. The base purchase price of $475.0 million for the IRP acquisition was increased by working capital (as defined in the agreement) that exceeded $18.5 million. Included in the working capital of IRP were the following: $116.9 million of accounts receivable, $16.1 million inventory and $54.6 million of accounts payable. The accounts receivable balance was collected in the normal course of business.
SALES POSITION AND MARKET COMMENTS
As of August 8, 2011, we had the following agreements to ship coal at a fixed and known price (in 000's except per ton amounts):
2011 Priced |
|||||||
As of May 9, 2011 |
As of August 8, 2011 |
Change |
|||||
Tons |
Avg Price Per Ton |
Tons |
Avg Price Per Ton |
Tons |
Avg Price Per Ton |
||
CAPP (3) |
9,550 |
$ 110.75 |
10,289 |
$ 110.12 |
739 |
$ 101.98 |
|
Midwest (1) (2) |
2,609 |
$ 42.84 |
2,660 |
$ 42.76 |
51 |
$ 38.67 |
|
2012 Priced |
|||||||
As of May 9, 2011 |
As of August 8, 2011 |
Change |
|||||
Tons |
Avg Price Per Ton |
Tons |
Avg Price Per Ton |
Tons |
Avg Price Per Ton |
||
CAPP |
1,665 |
$ 92.87 |
3,993 |
$ 83.66 |
2,328 |
$ 77.07 |
|
Midwest (1) (2) |
1,560 |
$ 43.42 |
1,524 |
$ 43.49 |
(36) |
$ 40.46 |
|
2013 Priced |
|||||||
As of May 9, 2011 |
As of August 8, 2011 |
Change |
|||||
Tons |
Avg Price Per Ton |
Tons |
Avg Price Per Ton |
Tons |
Avg Price Per Ton |
||
CAPP |
- |
$ - |
1,337 |
$ 79.52 |
1,337 |
$ 79.52 |
|
Midwest (1) |
990 |
$ 44.10 |
990 |
$ 44.10 |
- |
$ - |
|
(1) The prices for the Midwest are minimum base price amounts adjusted for projected fuel escalators. |
|
(2) 36,000 tons moved from 2012 to 2011 |
|
(3) The CAPP numbers include the commitments of IRP (excluding transportation and hauling revenue) including a proforma amount in 2011 to include the period prior to acquisition |
|
2011 GUIDANCE
The guidance contained below represents forecasts, which indicate a range of possible outcomes and are provided to assist investors with the development of earnings estimates. While James River believes that these forecasts represent the best estimate of management as to future events, actual events will differ from these forecasts, and such differences could be material. These forecasts are subject to risks identified under "forward-looking statements" below.
Six Months |
Guidance |
Total 2011 |
|||||||||||||
Ended June 30, 2011 |
(July - December, 2011) |
||||||||||||||
Total JRCC Operations |
|||||||||||||||
(In 000's except tax rate) |
|||||||||||||||
Adjusted EBITDA plus acquisition cost (1) |
$ |
78,151 |
$ |
95,000 |
to |
105,000 |
$ |
173,151 |
to |
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 |
$ |
58,306 |
$ |
85,000 |
(2) |
$ |
143,306 |
||||||||
(1) Adjusted EBITDA plus acquisition cost 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. |
|||||||||||||||
(2) Includes both maintenance and growth capital expenditures. |
|||||||||||||||
2011 Guidance by Segment
(In 000's except per ton amounts)
Shipments |
||||||||
CAPP |
Midwest |
|||||||
Tonnage |
Tonnage |
|||||||
Thermal |
7,000 |
- |
7,300 |
2,600 |
- |
2,700 |
||
Metallurgical |
2,000 |
- |
2,200 |
- |
- |
- |
||
9,000 |
- |
9,500 |
2,600 |
- |
2,700 |
|||
Cash Costs (1) |
||||||||
CAPP |
Midwest |
|||||||
$ 87.00 |
- |
90.00 |
$ 36.00 |
- |
37.00 |
|||
(1) Cash Costs in CAPP include metallurgical coal purchased for blending purposes |
||||||||
CONFERENCE CALL, WEBCAST AND REPLAY: The Company will hold a conference call with management to discuss the quarterly results on August 9, 2011 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 855-859-2056 for domestic callers. International callers, please dial 404-537-3406: pass code 86763538.
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: a change in the demand for coal by electric utility and industrial 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). 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, 2011 |
December 31, 2010 |
||||||||
Assets |
(unaudited) |
||||||||
Current assets: |
|||||||||
Cash and cash equivalents |
$ |
204,683 |
180,376 |
||||||
Trade receivables |
138,032 |
59,970 |
|||||||
Inventories: |
|||||||||
Coal |
48,600 |
23,305 |
|||||||
Materials and supplies |
17,754 |
13,690 |
|||||||
Total inventories |
66,354 |
36,995 |
|||||||
Prepaid royalties |
6,387 |
6,039 |
|||||||
Other current assets |
14,313 |
5,991 |
|||||||
Total current assets |
429,769 |
289,371 |
|||||||
Property, plant, and equipment, net |
889,982 |
385,652 |
|||||||
Goodwill |
26,492 |
26,492 |
|||||||
Restricted cash and short term investments |
29,510 |
23,500 |
|||||||
Other assets |
52,370 |
59,554 |
|||||||
Total assets |
$ |
1,428,123 |
784,569 |
||||||
Liabilities and Shareholders' Equity |
|||||||||
Current liabilities: |
|||||||||
Accounts payable |
$ |
126,214 |
57,300 |
||||||
Accrued salaries, wages, and employee benefits |
13,473 |
7,744 |
|||||||
Workers' compensation benefits |
9,000 |
9,000 |
|||||||
Black lung benefits |
2,282 |
2,282 |
|||||||
Accrued taxes |
8,401 |
4,924 |
|||||||
Other current liabilities |
22,476 |
16,496 |
|||||||
Total current liabilities |
181,846 |
97,746 |
|||||||
Long-term debt, less current maturities |
575,205 |
284,022 |
|||||||
Other liabilities: |
|||||||||
Noncurrent portion of workers' compensation benefits |
57,881 |
55,944 |
|||||||
Noncurrent portion of black lung benefits |
45,040 |
43,443 |
|||||||
Pension obligations |
10,602 |
11,968 |
|||||||
Asset retirement obligations |
96,776 |
43,398 |
|||||||
Other |
7,298 |
665 |
|||||||
Total other liabilities |
217,597 |
155,418 |
|||||||
Total liabilities |
974,648 |
537,186 |
|||||||
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 |
|||||||||
35,598,065 and 27,779,351 shares as of June 30, 2011 and December 31, 2010 |
356 |
278 |
|||||||
Paid-in-capital |
537,211 |
324,705 |
|||||||
Accumulated deficit |
(65,408) |
(58,593) |
|||||||
Accumulated other comprehensive loss |
(18,684) |
(19,007) |
|||||||
Total shareholders' equity |
453,475 |
247,383 |
|||||||
Total liabilities and shareholders' equity |
$ |
1,428,123 |
784,569 |
||||||
JAMES RIVER COAL COMPANY AND SUBSIDIARIES Consolidated Statements of Operations (in thousands, except per share data) (unaudited) |
||||||
Three Months |
Three Months |
|||||
Ended |
Ended |
|||||
June 30, 2011 |
June 30, 2010 |
|||||
Revenues |
||||||
Coal sales revenue |
$ |
328,182 |
182,550 |
|||
Freight and handling revenue |
23,855 |
495 |
||||
352,037 |
183,045 |
|||||
Cost of sales: |
||||||
Cost of coal sold |
264,108 |
128,243 |
||||
Freight and handling costs |
23,855 |
495 |
||||
Depreciation, depletion and amortization |
28,210 |
16,209 |
||||
316,173 |
144,947 |
|||||
35,864 |
38,098 |
|||||
Selling, general and administrative expenses |
14,811 |
9,823 |
||||
Acquisition costs |
3,859 |
- |
||||
17,194 |
28,275 |
|||||
Interest expense |
15,607 |
7,455 |
||||
Interest income |
(128) |
(12) |
||||
Charges associated with repayment of debt |
740 |
- |
||||
Miscellaneous (income) expense, net |
(181) |
238 |
||||
16,038 |
7,681 |
|||||
1,156 |
20,594 |
|||||
Income tax expense |
367 |
744 |
||||
Net income |
$ |
789 |
19,850 |
|||
Earnings per common share |
||||||
Basic earnings per common share |
$ |
0.02 |
0.72 |
|||
Diluted earnings per common share |
$ |
0.02 |
0.71 |
|||
JAMES RIVER COAL COMPANY AND SUBSIDIARIES Consolidated Statements of Operations (in thousands, except per share data) (unaudited) |
|||||||
Six Months |
Six Months |
||||||
Ended |
Ended |
||||||
June 30, 2011 |
June 30, 2010 |
||||||
Revenues |
|||||||
Coal sales revenue |
$ |
492,037 |
366,569 |
||||
Freight and handling revenue |
24,582 |
1,077 |
|||||
Total revenue |
516,619 |
367,646 |
|||||
Cost of sales: |
|||||||
Cost of coal sold |
396,927 |
256,978 |
|||||
Freight and handling costs |
24,582 |
1,077 |
|||||
Depreciation, depletion and amortization |
44,245 |
32,567 |
|||||
Total cost of sales |
465,754 |
290,622 |
|||||
Gross profit |
50,865 |
77,024 |
|||||
Selling, general and administrative expenses |
24,181 |
19,142 |
|||||
Acquisition costs |
8,504 |
- |
|||||
Total operating income |
18,180 |
57,882 |
|||||
Interest expense |
23,458 |
14,836 |
|||||
Interest income |
(183) |
(16) |
|||||
Charges associated with repayment of debt |
740 |
- |
|||||
Miscellaneous (income) expense, net |
(302) |
196 |
|||||
Total other expense, net |
23,713 |
15,016 |
|||||
Income (loss) before income taxes |
(5,533) |
42,866 |
|||||
Income tax (benefit) expense |
1,282 |
(229) |
|||||
Net income (loss) |
$ |
(6,815) |
43,095 |
||||
Earnings (loss) per common share |
|||||||
Basic earnings (loss) per common share |
$ |
(0.22) |
1.56 |
||||
Diluted earnings (loss) per common share |
$ |
(0.22) |
1.56 |
||||
JAMES RIVER COAL COMPANY AND SUBSIDIARIES Condensed Consolidated Statements of Cash Flows (in thousands) (unaudited) |
|||||||||
Six Months |
Six Months |
||||||||
Ended |
Ended |
||||||||
June 30, |
June 30, |
||||||||
2011 |
2010 |
||||||||
Cash flows from operating activities: |
|||||||||
Net income (loss) |
$ |
(6,815) |
43,095 |
||||||
Adjustments to reconcile net income to net cash provided by operating activities |
|||||||||
Depreciation, depletion, and amortization |
44,245 |
32,567 |
|||||||
Accretion of asset retirement obligations |
1,975 |
1,642 |
|||||||
Amortization of debt discount and issue costs |
6,383 |
3,935 |
|||||||
Stock-based compensation |
2,648 |
2,870 |
|||||||
Deferred income tax expense |
2,236 |
- |
|||||||
Loss on sale or disposal of property, plant and equipment |
- |
318 |
|||||||
Write-off of deferred financing costs |
740 |
- |
|||||||
Changes in operating assets and liabilities: |
|||||||||
Receivables |
38,568 |
(15,588) |
|||||||
Inventories |
(10,156) |
4,538 |
|||||||
Prepaid royalties and other current assets |
(878) |
991 |
|||||||
Restricted cash |
(6,010) |
47,042 |
|||||||
Other assets |
(4,991) |
(830) |
|||||||
Accounts payable |
12,512 |
(7,061) |
|||||||
Accrued salaries, wages, and employee benefits |
1,369 |
3,507 |
|||||||
Accrued taxes |
(21) |
1,004 |
|||||||
Other current liabilities |
4,339 |
(1,126) |
|||||||
Workers' compensation benefits |
1,937 |
1,505 |
|||||||
Black lung benefits |
1,881 |
1,823 |
|||||||
Pension obligations |
(971) |
(1,949) |
|||||||
Asset retirement obligations |
(2,123) |
(461) |
|||||||
Other liabilities |
(70) |
11 |
|||||||
Net cash provided by operating activities |
86,798 |
117,833 |
|||||||
Cash flows from investing activities: |
|||||||||
Additions to property, plant, and equipment |
(58,306) |
(34,113) |
|||||||
Payment for acquisition, net of cash acquired |
(515,962) |
- |
|||||||
Net cash used in investing activities |
(574,268) |
(34,113) |
|||||||
Cash flows from financing activities: |
|||||||||
Proceeds from issuance of long-term debt |
505,000 |
- |
|||||||
Repayment of long-term debt |
(150,000) |
||||||||
Net proceeds from issuance of common stock |
170,545 |
- |
|||||||
Debt issuance costs |
(13,768) |
(1,346) |
|||||||
Net cash provided by (used in) financing activities |
511,777 |
(1,346) |
|||||||
Increase in cash |
24,307 |
82,374 |
|||||||
Cash and cash equivalents at beginning of period |
180,376 |
107,931 |
|||||||
Cash and cash equivalents at end of period |
$ |
204,683 |
190,305 |
||||||
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. Adjusted EBITDA plus acquisition costs further adjusts Adjusted EBITDA to add back certain non-recurring costs incurred in connection with the IRP acquisition that may not reflect the trend of future results. We believe that Adjusted EBITDA plus acquisition costs presents a useful measure of our ability to service and incur debt on an ongoing basis.
EBITDA, Adjusted EBITDA, and Adjusted EBITDA plus acquisition costs 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 Adjusted EBITDA plus acquisition costs may not be comparable to other similarly titled measures of other companies. Additionally, EBITDA, Adjusted EBITDA, and Adjusted EBITDA plus acquisition costs 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 |
|||||||||||
2011 |
2010 |
2011 |
2010 |
|||||||||||
Net income (loss) |
$ |
789 |
19,850 |
(6,815) |
43,095 |
|||||||||
Income tax expense (benefit) |
367 |
744 |
1,282 |
(229) |
||||||||||
Interest expense |
15,607 |
7,455 |
23,458 |
14,836 |
||||||||||
Interest income |
(128) |
(12) |
(183) |
(16) |
||||||||||
Depreciation, depletion, and amortization |
28,210 |
16,209 |
44,245 |
32,567 |
||||||||||
EBITDA (before adjustments) |
$ |
44,845 |
44,246 |
61,987 |
90,253 |
|||||||||
Other adjustments specified |
||||||||||||||
in our current debt agreement |
||||||||||||||
Direct acquisition costs |
3,859 |
- |
8,504 |
- |
||||||||||
Charges associated with repayment of debt |
740 |
- |
740 |
|||||||||||
Other |
2,256 |
2,260 |
4,171 |
4,377 |
||||||||||
Adjusted EBITDA |
$ |
51,700 |
46,506 |
75,402 |
94,630 |
|||||||||
Write-up of IRP inventory |
2,749 |
- |
2,749 |
- |
||||||||||
Adjusted EBITDA plus acquisition costs |
$ |
54,449 |
46,506 |
78,151 |
94,630 |
|||||||||
In addition, in this press release we have presented our earnings per share before acquisition and refinancing expenses. As we do not routinely engage in transactions of the magnitude of the IRP acquisition or the refinancing of our debt, and consequently do not regularly incur transaction-related expenses of correlative size, we believe presenting earnings per share excluding acquisition and refinancing expenses provides investors with an additional measure of our core operating performance. Charges related to the IRP acquisition and refinancing of our debt included in our results of operations are as follows:
Three months |
Six months |
||||
ended |
ended |
||||
June 30, 2011 |
June 30, 2011 |
||||
Acquisition costs |
3,859 |
8,504 |
|||
Charges associated with repayment of debt |
740 |
740 |
|||
Amortization of contracts included in depreciation, |
|||||
depletion and amortization |
2,429 |
2,429 |
|||
Write-up to Fair Market Value of IRP's inventory at acquisition |
2,749 |
2,749 |
|||
Interest on repaid Senior Notes after new financing completed |
2,344 |
2,344 |
|||
Estimated tax impact |
(1,697) |
(2,347) |
|||
Total IRP acquisition and recapitalization expenses |
$ |
10,424 |
14,419 |
||
Earnings per share impact |
$ |
0.29 |
0.47 |
||
CONTACT: James River Coal Company
Elizabeth M. Cook
Director of Investor Relations
(804) 780-3000
SOURCE James River Coal Company
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