 | | | Published : November 17th, 2008 | (Nasdaq:NCOC) Reports Third Quarter Results |
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To download a PDF of the entire release including tables Click Here
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NATIONAL COAL CORP. REPORTS THIRD QUARTER 2008 RESULTS
- Third quarter revenues increased 61% to $33.5 million from $20.9 million during the
year-ago quarter.
- Tons of coal sold increased 21% to 492,410 tons, up from 405,685 tons during the
year-ago quarter.
- In Tennessee the Company brought back into production an underground mine, began processing and loading coal through its Baldwin preparation plant facility, and started shipping coal over its short-line railroad during the third quarter.
- National Coal of Alabama�s new Davis Creek and Crescent Valley surface mines began production and the dragline came back into production on the newly expanded Poplar Springs mine during the third quarter.
- The Company will host a conference call on November 19, 2008 at 2:30 pm Eastern to discuss third quarter results. More information about the call is available on the Company�s website at www.nationalcoal.com/investors.php
Knoxville, Tenn. � (November 17, 2008) � National Coal Corp. (Nasdaq: NCOC), a Central and Southern Appalachian coal producer, reports that for the period ended September 30, 2008, it achieved total revenues of $33.5 million based primarily on the sale of 492,410 tons of coal. In the same prior-year period, National Coal generated revenues of $20.9 million primarily through the sale of 405,685 tons of coal. For the three months ended September 30, 2008, National Coal reported a net loss of $7.9 million and a positive Adjusted EBITDA of $0.7 million, versus a net loss of $7.1 million and a negative Adjusted EBITDA of $1.0 million reported in the year-ago quarter.
Daniel A. Roling, President and CEO of National Coal, said, �Our results have improved in-line with our expectations; however, like many other companies we are susceptible to the weakened economy. In light of this, the demand for coal continues to be better than last year, but its effects on our income have been diminished by the rising cost of diesel fuel as well as numerous other production costs, which have gone up considerably. Additionally, like many other coal producers, the continued acute shortage of skilled labor, along with regulatory requirements, prevented us from executing some production enhancements on schedule. As stated last quarter, production, and therefore costs, continue to be impacted by the ongoing and increased level of regulatory oversight. We were however able to get our most profitable production facilities shored up during the quarter.�
During the third quarter both the Baldwin preparation plant and loading facility and our 42-mile rail line adjacent to the plant became fully operational in Tennessee. In addition, the new Davis Creek mine in Alabama began shipping coal; it is anticipated that both metallurgical and steam quality coals will be shipped during the fourth quarter from this property.
Since the closing on March 31, 2008, of our sale of the Straight Creek assets in Kentucky, the Company has received approximately $7.0 million of cash previously pledged to secure reclamation bonds, of which $3.0 million was received during the third quarter.
�In addition to our progress on the operational side of the Company, we have reached a number of new sales agreements with our customers this year, which has resulted in an increase in our average selling price per ton and a reduction in tons committed,� explained Roling. �These new and revised sales agreements help position the Company for future profitability and growth.�
We invested approximately $17.6 million in equipment, mine development, land, and mineral rights during the nine months ended September 30, 2008. Included in the capital expenditures were equipment purchases for $7.1 million, including $4.6 million purchased through equipment financing arrangements. In addition, $500,000 was used to acquire a 524-acre mineral lease in eastern Tennessee that includes approximately 1.4 million tons of recoverable high quality coal. Additionally, the Company acquired a 1,000-acre mineral and surface tract in eastern Tennessee that includes approximately 2.3 million tons of recoverable high quality coal. The purchase price was $7.0 million, of which $2.0 million was paid in cash and $5.0 million in the issuance of 756,430 shares of our common stock. Mine development totaled approximately $3.0 million for the nine months ended September 30, 2008. We intend to invest up to $2.6 million of additional capital expenditures during the remainder of 2008 to maintain planned production goals and approximately $450,000 to maintain existing assets. We also received approximately $3.0 million of cash previously pledged to secure reclamation bonds from the March 31, 2008 sale of our Straight Creek operations during the quarter ended September 30, 2008.
Outlook
Given the significant deterioration in the domestic and global economy, the continued extremely tight market for skilled workers, and the ongoing impact of the current regulatory environment, management is in the process of revising its future production goals. In addition, electricity consumption year-to-date has been basically flat, leading to minimal growth in demand during 2008 versus 2007. Accordingly, our outlook for coal demand remains healthy, but tempered for the next year. However, our view on supply remains unchanged. We continue to believe that the outlook for domestic supply remains tight, with exports remaining healthy and the constraint on production, both new and existing, increasing.
Accordingly, we are revising our production goals for 2008 to 1.9 million tons, for 2009 to 2.4 million tons, and for 2010 a range of 2.4 million tons to 2.7 million tons. This significant reduction in our production goals for 2009 and 2010 is a direct reflection on our current outlook for the domestic coal market. Depending on the strength of the domestic coal market, we believe that National Coal is well positioned to gear up production to our previous goals, subject to the key constraints of labor, regulatory and permitting issues, and impositions due to environmental lawsuits.
During the quarter, management made progress on future coal sales, including the signing of a new coal supply agreement. Also during 2008, the Company renegotiated a number of existing coal supply agreements resulting in better pricing and terms. As a result, committed sales for 2008 are 2.1 million tons at an average contracted selling price of $65.74, for 2009, 2.0 million tons at an average contracted selling price of $70.40, and for 2010, 0.7 million tons at an average contracted selling price of $77.35. As for 2011 and 2012, we have no committed sales at this time, but we do have an option agreement with a customer for 480,000 and 360,000 tons, respectively at $72.90 per ton.
Looking forward, management remains optimistic about the future of coal and the Company. Clearly the strength of the domestic coal market as well as a dramatic shortage of skilled labor is the largest hurdle facing the Company in meeting its future production goals. However, management is aggressively working towards resolution of this issue through an aggressive hiring and training program and by recruiting contractors. In addition, management is putting in place a plan to strengthen production, without incurring considerable expense, in order to meet increases in future demand.
Conference Call
National Coal will host a conference call on November 19, 2008 at 2:30 pm Eastern to discuss third quarter results. Participants in the U.S. may dial toll-free: 1-800-434-1335 and conference code 37756558#. Outside the U.S., participants can direct-dial 1-404-920-6442 and conference code 37756558#. More information about the call is available on the Company�s website at www.nationalcoal.com/investors.php.
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, and through its wholly owned subsidiary, National Coal of Alabama, is engaged in coal mining in Alabama. Currently, National Coal employs about 350 people. National Coal sells steam and metallurgical coal to electric utilities and industrial companies in the Southeastern United States. For more information and to sign-up for instant news alerts visit http://www.nationalcoal.com/.
Information about Forward Looking Statements
This release contains �forward-looking statements� that include information relating to future events and future financial and operating performance. Examples of forward looking-statements include anticipated benefits of capital improvements and new mines and an anticipated strengthening coal market in the future. Forward-looking statements should not be read as a guarantee of future performance or results, and will not necessarily be accurate indications of the times at, or by which, that performance or those results will be achieved. Forward-looking statements are based on information available at the time they are made and/or management�s good faith belief as of that time with respect to future events, and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements. Important factors that could cause these differences include, but are not limited to: (i) the worldwide demand for coal; (ii) the price of coal; (iii) the price of alternative fuel sources; (iv) the supply of coal and other competitive factors; (v) the costs to mine and transport coal; (vi) the ability to obtain new mining permits; (vii) the costs of reclamation of previously mined properties; (viii) the risks of expanding coal production; (ix) the ability to bring new mining properties on-line on schedule; (x) industry competition; (xi) our ability to continue to execute our growth strategies; and (xii) general economic conditions. These and other risks are more fully described in the Company�s filings with the Securities and Exchange Commission including the Company�s most recently filed Annual Report on Form 10-K and Quarterly Reports on Form 10-Q, which should be read in conjunction herewith for a further discussion of important factors that could cause actual results to differ materially from those in the forward-looking statements. Forward-looking statements speak only as of the date they are made. You should not put undue reliance on any forward-looking statements. We assume no obligation to update forward-looking statements to reflect actual results, changes in assumptions or changes in other factors affecting forward-looking information, except to the extent required by applicable securities laws. If we do update one or more forward-looking statements, no inference should be drawn that we will make additional updates with respect to those or other forward-looking statements.
To download a PDF of the entire release including tables Click Here
or visit the Company's website at www.nationalcoal.com
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