National Coal Corp. Reports Third Quarter 2009 Results
National Coal Corp. Reports Third Quarter 2009 Results
Nov. 5, 2009 (Business Wire) -- National Coal Corp. (Nasdaq: NCOC):
Third quarter revenues from Tennessee operations increased 19.0% to $22.1 million, up from $18.6 million during the year-ago quarter.
Tons of coal sold increased 5.9% to 286,447 tons up from 270,515 tons during the year-ago quarter.
The average price per ton increased 15.2% to $75.00 from $65.08 in the same year-ago quarter.
For the nine months ended September 30, 2009, net cash flows provided by operating activities improved and are reported at $6.6 million, versus a negative $3.6 million during the year-ago period.
National Coal Corp. (Nasdaq: NCOC), a Central and Southern Appalachian coal producer, reports that for the three months ended September 30, 2009, it achieved total revenues of $22.1 million based primarily on the sale of 286,447 tons of coal. In the same prior-year period, National Coal generated revenues of $18.6 million primarily through the sale of 270,515 tons of coal.
For the three months ended September 30, 2009, National Coal reported a net loss of $663,950 versus a net loss of $8.4 million during the year-ago quarter. The net loss of $663,950 consists of a loss from continuing operations of $4.5 million or a loss of $0.13/share, and income from discontinued operations net of tax of $3.9 million or earnings of $0.11/share, which includes a gain on disposal of discontinued operations of $23.5 million. The net loss of $8.4 million during the year ago-quarter consists of a loss from continuing operations of $4.5 million or a loss of $0.14/share, and a loss from discontinued operations net of tax of $3.8 million or a loss of $0.11/share.
“Despite a number of economic challenges our results continue to strengthen and show improvement, most dramatically in our reduced loss and our improved cash flow,” says Daniel A. Roling, President and CEO of National Coal Corp. “As we look forward to the future we are mindful that even though our anticipated tons to be sold are less than originally contracted, we have not seen any further deterioration since mid summer. We continue to see opportunities for investing in our Tennessee operations and are planning to be well positioned to benefit when the market improves.”
During the three months ended September 30, 2009, the average selling price for coal sold from the Company’s Tennessee operations increased 15.2% from $65.08 per ton sold during the 2008 period to $75.00 per ton sold during the 2009 period, while tons sold also increased 5.9% from 270,515 tons in 2008 to 286,447 tons in 2009. During 2008, the Company successfully renegotiated several of its existing coal supply agreements resulting in an increased selling price per ton helping generate additional revenues from those contracts for its Tennessee operations in 2009.
The Company also reported a positive EBITDA of $3.5 million versus a negative EBITDA of $4.8 million reported in the year-ago quarter.
At September 30, 2009, the Company had available liquidity of $10.1 million, consisting of $6.0 million available under a short-term revolving credit facility and cash and cash equivalents of approximately $4.1 million. Cash flows provided by (used in) the Tennessee operations were $2.9 million and $(6.2) million for the nine months ended September 30, 2009 and 2008, respectively. “We are currently in discussions to extend the maturity date of our revolving credit facility, which is scheduled to mature on December 15, 2009,” said Roling. “We expect to conclude these negotiations within the next several weeks.”
Roling explains the Company’s cash flow improvements, “Our ability to generate cash has been bolstered by better pricing. As I have said before, the integrity of our contracts has allowed us to move forward in this extremely challenging economic environment.”
In addition, the Company was successful during the quarter in securing a bonding program for its reclamation bonds with an insurance company permitting the release of approximately $4.4 million of restricted cash. Management continues to work towards better utilization of all its assets.
The Company produced 201,121 tons of coal during the quarter, a decrease of 24.0% versus the year ago quarter and a decrease of 14% from the prior quarter. The decline in production reflects both the weaker industry conditions and the Company’s continuing efforts to control costs, especially in the current economic environment. On a quarter-to-quarter basis, total tons decreased 14%, while total production costs declined only 4.5%, resulting in higher per ton costs. Management anticipates further improvements in its costs in the fourth quarter.
Outlook
Year-to-date the Company invested approximately $5.5 million in equipment and mine development in its Tennessee operations and for the balance of the year, management expects to incur approximately $0.6 million to maintain existing assets in Tennessee. “Due to the continued weak demand for coal and the uncertainty of the economic recovery we have lowered our anticipated capital expenditures for the balance of the year. However, looking forward significant opportunity exists to increase production at the appropriate time to meet a recovery in demand for coal,” explains Roling.
Total domestic coal consumption has declined significantly – about 11.5% – so far this year, which will make it two years in a row for lower coal demand. This lower demand is being driven by a decline in electricity generation, which has declined about 4% through late October, following a decline of 3.9% during 2008. Given that almost 93% of all coal consumed in the Untied States is used to generate electricity, this fall off in demand for electricity has had a direct impact on coal demand. Year-to-date total coal production has declined about 7.5% while Appalachian production has declined 8.2%.
Roling says his opinion of the industry’s future is bullish. ”Looking forward, I believe a recovery in economic activity will stimulate demand for both electricity and coal. Increases in consumption through 2010, even slight increases, should help reduce coal stockpile levels in the electric utility sector to more normal levels. With that said, I believe it is highly likely an improving economy will result in increased demand for energy, especially coal, among utilities, industrial customers, and steel companies resulting in a much stronger operating environment for coal producers.”
About National Coal Corp.
Headquartered in Knoxville, Tenn., National Coal Corp., through its wholly owned subsidiary, National Coal Corporation, is engaged in coal mining in East Tennessee. Currently, National Coal employs about 325 people. National Coal sells steam coal to electric utilities and industrial companies in the Southeastern United States. For more information and to sign-up for instant news alerts visit www.nationalcoal.com.
Information about Forward Looking Statements
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