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James River Coal Company (JRCC)
Q3 2010 Earnings Conference Call
November 3, 2010 11:00 AM ET
Beth Cook – Director, IR
Peter Socha – Chairman, President and CEO
CK Lane – SVP and COO
Sam Hopkins – VP and Chief Accounting Officer
Michael Dudas – Jefferies & Company
Jeremy Sussman – Brean Murray
Brian Gamble – Simmons & Company
Curt Woodworth – Macquarie
David Olkavetsky – Jefferies & Company
Previous Statements by JRCC
» James River Coal Company Q2 2010 Earnings Call Transcript
» James River Coal Company Q1 2010 Earnings Call Transcript
» James River Coal Company Q4 2009 Earnings Call Transcript
» James River Coal Company Q3 2009 Earnings Call Transcript
As a reminder, this conference call is being recorded.
I would now like to turn the call over to your host, Beth Cook, Director of Investor Relations. Please go ahead.
Thank you and good morning. Welcome to James River Coal Company’s third quarter earnings call. We released our earnings today and our current release and presentation are posted on our website and were 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 Ketron, 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.
I’ll now turn the call over to Peter Socha.
Thank you, Beth, and good morning, everyone. You’ll see that we brought back slides, so we got enough questions from the last call about the lack of slides, so we brought some back, and hopefully they will help you and they’ll certainly help us.
So, the third quarter I’m kind of in two minds on the third quarter. It certainly could not have been as good as – it was not as good as it could have been, but on the other hand it was not a bad quarter. We did get things with an increased inspector days, increased inspector interpretations and things like that, but these are things that we have to go through.
They are a phase, the way I described it to the CK and the guys that reminds me very much of 2005, in that you go through a phase and you make all the changes that they want, and then after that it becomes part of your operating plan going forward. But the problem is when you’re correcting things in areas of the mine that were mined five and seven years ago, that takes time, that takes money, and in many cases they are – we don’t view them as being in any type of a problems, but the inspectors come in and have a different view, and so we do what they ask us to do. So that was the kind of the story of this quarter, and hopefully that phase will end sometime soon.
We did have our EBITDA – as we put in the slide, our EBITDA actually was higher for the three months period and the nine months period in 2010 compared to the same periods in 2009, despite lower tonnage and lower production, so we’re fairly happy with that. We are strengthening the balance sheet, we’re continuing to focus on that, and then lastly we’ve maintained an open book. We felt starting in the spring, we talked about a little bit on the last call, and we certainly talked about it during some conferences over the summer that we felt as though the market had gone into a little bit of a lull, especially the met market over the summer, and that we did not feel under any pressure to go out and price or anything, so we didn’t.
We felt like it would bottom out in May, June and would probably perk back up again in September, October, and by in large that’s what we’re seeing. We have not priced any met coal at all and you’ll see that we did run into some minor issues out there, and I just hope CK and the guys to take easy, take a breath, there’s no time pressure on us right now, the market is just okay, and I would rather the market come back up, and I would rather they do things right. So that’s the story of the met business for us.
We do have a lot of stoker left and then we also have some steam. And with that I will turn it over to CK.
Okay, thanks Peter. First thing I’ll do is touch on safety just a little bit. We’re very proud of our Bledsoe Old House Branch Mine, they received the Sentinels of Safety Award for the large underground mines; this is a national award. Our Blue Diamond Mine 77 was second in the category and Mine 77 has won this award before.
For the State of Kentucky, they issue the Safest Mine in the District award based on 2009 Bledsoe Old House Branch won that for the Barbourville district, and McCoy, our Mine 23 won it in the Pikeville district. So it’s a very good performance in that sense with winning the awards and very pleased with the Old House Branch Sentinels of Safety Award.