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James River Coal Company (JRCC)

Q1 2010 Earnings Call Transcript

April 30, 2010 12:00 pm ET

Executives

Beth Cook – Director, IR

Peter Socha – Chairman, President & CEO

CK Lane – SVP & COO

Analysts

Jim Rollyson – Raymond James

Curt Woodworth – Macquarie

Michael Lewis – Jefferies

Brian Gamble – Simmons & Company

Shneur Gershuni – UBS

Justine Fisher – Goldman Sachs

Brett Levy – Jefferies

Garrett Nelson – Davenport & Company

Jeremy Sussman – Brean Murray, Carret

Presentation

Operator

Good day, ladies and gentlemen. Welcome to the James River Coal Company first quarter earnings call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions and how to participate will be given at that time. (Operator instructions) As a reminder, today’s call is being recorded.

At this time I would now like to turn the conference over to your host, the Director of Investor Relations, Ms. Beth Cook. You may begin.

Beth Cook

Thank you, and good morning. Welcome to James River Coal Company’s first quarter earnings call.

We released our earnings today and our current release is posted on our Web site and was furnished to the SEC on a Form 8-K. And as we’ve noted in the press release, we will be using an updated slide presentation, which has been posted to the Web site and furnished to the SEC on an 8-K.

With me on the call today are Peter Socha, Chairman and Chief Executive Officer; CK Lane, Senior Vice President and Chief Operating Officer, Sam Hopkins; Vice President and Chief Accounting Officer and Jim Kitran, Vice President and General Counsel.

Before we begin this morning I need to remind you that this call will contain forward-looking statements. These forward-looking statements should be considered along with the risk factors that we note at the end of our press release as well as in our annual report on Form 10-K and other SEC filings.

Now, I will turn the call over to Peter.

Peter Socha

Thanks, Beth. It’s a bright day for James River and we’re obviously very happy with our results. It’s a sad day I think for U.S. Energy. We’ve had three accidents in the coal industry in the last couple of weeks; we had an accident last week on a drill rig down in the Gulf of Mexico.

And as we talked about before the coal industry, in particular, is a very, very close knit industry. These are small communities. These are company (inaudible) where the mine is the main source of employment for those families. And we feel for those families. We feel for everyone in the families including the drilling rig families. As many of you know I used to work on drilling rigs. So that is a culture that I understand very well.

But in the coal industry we say coal keeps lights on. And that’s a bumper sticker and its billboard, but it's true. Coal power in this country it gives us our way of life. And those families are hurting. So those are people that we would ask that you keep in your thoughts because they do allow us to do so much in this life and in this country. And I think we owe it to them to provide the safest work environment we can. We certainly spent a lot of time and a lot of resources and a lot of money to do that. That is our duty, okay. That is our obligation. And I know the other companies do as well. But we would ask that all of you please keep those families in your thoughts.

Going to Slide #1, our summary slide, we did have a very good quarter. We had an earnings per share of $0.84. I should tell there is a tax benefit in there about $0.05. That relates to utilization of the NOL. There were some changes in the law late last year. And so they gave us a benefit of about $0.05. As long as I am talking about something like that I will also mention the convert, the convert was a negative of about $0.12. Rail, we did it. I love the liquidity. But without the convert our EPS would have been $0.96. So taking those two things into account we ended up with $0.84 which is a very, very good quarter.

The mines had a good quarter. The rail road and the utilities I cannot say enough good things about both of those parties. Just the coordination, there was winter weather. We overcame that. It was winter weather that impacted both the abilities and the rail roads. The rail road, in particular, in January and February, but you will notice that in the press release and in the slides, you don’t see that mentioned anywhere, but it’s something that we’re very happy now.

The main mines are on schedule. We’re keeping it open contract book. We obviously have strong cash flow for the next several years. We’re not in any rush to go up price coal into a market that is clearly strengthening so we are leaving it where it is. We are very well-positioned where sustained profitability and I’ll talk about that in a few moments.

We got a call late last week for Beth and Sam got a call from Forbes. Sam belied it because he talked over selling the subscription, but fortunately Beth listened to it. And we were named to the list of the 100 Most Trustworthy Companies. It’s not something we applied for, but it is something we’re very proud of. As all of you know we work hard on transparency. It’s something we spent a lot of time on. This recognizes that. This also recognizes the integrity of our accounting and what we do on that side. So those are things we’re very happy about.

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