James River Coal Co. (JRCC), Monday reported a swing to profit in the second quarter on higher coal prices mainly from the Central Appalachia operations. Revenues for the quarter rose 24.7% from the prior year, but short of Street estimates. James River in an update to its forecast, however, reduced full year 2009 earnings outlook from its prior range, to reflect an amendment to a sales contract that moved some higher priced tons of coal to year 2011-12.
For the second quarter, net income of James River was $16.18 million or $0.59 per share, compared to a net loss of $24.01 million or $0.97 per share in the same quarter a year ago.
On average, six analysts polled by Thomson Financial expected earnings of $0.78 per share for the quarter. Analysts' estimates typically exclude one-time items.
Revenues from coal sales rose to $171.65 million from $137.70 million in the year-earlier quarter, missing Street estimates of $188.96 million.
Average sales price per ton coal sold in the Central Appalachia Operations surged to $90.48 from $52.85 in the prior-year quarter. In the midwest operations, price of coal was $33.25 per ton, compared to $32.13 per ton in the year-earlier quarter.
Total operating income was $17.45 million, compared to operating loss of $17.45 million in the prior-year quarter.
C.K. Lane, Senior Vice President and Chief Operating Officer commented, "Our mines continued to perform well even while we reduced our quarterly production by approximately 300,000 tons. This reduction was implemented in order to better manage our inventories and match our contract sales."
The company also said it is no longer required to maintain the $10.0 million minimum liquidity, effective July 1, 2009. The company was in compliance with all of the covenants in its senior secured credit facilities as of June 30, 2009.
For the six-month period, the company turned to a profit of $44.35 million or $1.61 per share from $40.69 million or $1.76 per share in the prior-year period. Revenue jumped to $363.77 million from $275.89 million in the comparable period last year.
Looking ahead to full year 2009, James River said it now expects earnings in the range of $2.25 to $2.60 per share, down from the prior range of $3.30 to 3.80 per share. The Street currently expects earnings of $3.15 per share for the year.
The company attributed the reduction in guidance to an amendment in a sales contract that moved some higher priced tons of coal from the year 2009 to 2011-12 period, while pricing new tons at a lower for 2009-10 for which shipment commenced from April 1, 2009.
In the Central Appalachia Operations, the company now expect to ship 7,000 to 7,100 tons of coal, down compared to the prior range of 7,400 to 7,600 tons. Guidance for coal shipments in the Midwest operations has also been reduced to 3,100 to 3.200 tons from the prior forecast of 3,561 tons.
Peter Socha, Chief Executive Officer said, "We have reduced our 2009 CAPP production guidance due to the soft coal market. Beyond our existing contract portfolio, at current market prices, we would lose money on every additional ton sold."
JRCC is currently trading at $18.26, down $0.31 or 1.67%, on a volume of 1.91 million shares.
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