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
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,
the anticipated reduction in future periods of costs associated
with lower production in the current period, the Company’s
negotiation of an extension of the maturity date of its revolving
credit facility, 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.
NATIONAL COAL CORP. CALCULATION OF EBITDA
(Unaudited)
EBITDA is defined as net loss plus
(i) other (income) expense, net, (ii) interest expense, (iii)
depreciation, depletion, accretion and amortization minus (iv)
interest income, (v) income tax benefits, and (vi) income from
joint ventures. We present Adjusted EBITDA, including stock
compensation expense and discontinued operations, net of tax, to
enhance understanding of our operating performance. We use Adjusted
EBITDA as a criterion for evaluating our performance relative to
that of our peers, including measuring our cost effectiveness and
return on capital, assessing our allocations of resources and
production efficiencies and making compensation decisions. We
believe that Adjusted EBITDA is an operating performance measure
that provides investors and analysts with a measure of our
operating performance and permits them to evaluate our cost
effectiveness and production efficiencies relative to competitors.
In addition, our management uses Adjusted EBITDA to monitor and
evaluate our business operations. However, Adjusted EBITDA is not a
measurement of financial performance under accounting principles
generally accepted in the United States of America (“GAAP”) and may
not be comparable to other similarly titled measures of other
companies. Adjusted EBITDA should not be considered as an
alternative to cash flows from operating activities, determined in
accordance with GAAP, as indicators of cash flows. The following
reconciles our net loss to Adjusted EBITDA:
Three Months Ended Nine
Months Ended September 30, September 30,
2009 2008 2009
2008 Net loss $ (663,950 ) $ (8,389,873 ) $ (14,899,936 ) $
(27,562,983 ) Other (income) expense, net (39,324 ) (23,653 )
(63,944 ) 1,831,526 Interest income (65,175 ) (180,143 ) (222,281 )
(572,460 ) Interest expense 1,910,496 1,616,725 5,037,908 5,626,763
Depreciation, depletion, amortization and accretion 2,392,606
2,141,220 7,528,951
7,035,844 EBITDA 3,534,653 (4,835,724 ) (2,619,302 )
(13,641,310 ) Stock compensation expense 421,661 535,353 1,126,961
980,654 Discontinued operations, net of tax (3,872,741 )
3,841,312 1,485,157 8,153,317
Adjusted EBITDA $ 83,573 $ (459,059 ) $ (7,184
) $ (4,507,339 )
National Coal
Corp. Condensed Consolidated Balance Sheets
(Unaudited) September 30, 2009 December 31,
2008 Assets Current Assets: Cash and cash
equivalents $ 4,060,409 $ 3,908,469 Restricted cash 1,374,643 -
Accounts receivable, net 1,227,488 474,351 Inventory 3,722,220
2,957,654 Prepaid and other current assets 1,312,315 1,282,777
Current assets of discontinued operations - 9,751,877
Total Current Assets 11,697,075 18,375,128 Property, plant,
equipment and mine development, net 42,389,955 43,674,758 Deferred
financing costs 859,974 1,238,267 Restricted cash 7,543,608
11,338,137 Other non-current assets 1,469,247 1,562,901 Long-term
assets of discontinued operations - 71,620,026 Total
Assets $ 63,959,859 $ 147,809,217
Liabilities and Stockholders' (Deficit) Equity Current
Liabilities: Accounts payable $ 13,280,165 $ 6,188,085 Accrued
expenses 2,654,284 880,632 Borrowings under short-term line of
credit 4,000,000 - Current maturities of long - term debt 1,586,361
2,336,191 Current installments of obligations under capital leases
1,676,217 1,886,251 Current portion of asset retirement obligations
145,282 145,282 Deferred revenue - 1,241,840 Current liabilities of
discontinued operations - 11,735,695 Total Current
Liabilities 23,342,309 24,413,976 Long - term debt, less
current maturities, net of discount 41,538,006 41,892,645
Obligations under capital leases, less current installments 175,549
1,314,188 Asset retirement obligations, less current portion
4,087,145 3,763,720 Deferred revenue 1,116,042 1,303,655 Other
non-current liabilities 1,942,037 2,138,235 Long-term liabilities
of discontinued operations - 67,492,063 Total
Liabilities 72,201,088 142,318,482
Stockholders' (Deficit) Equity: Common Stock, $.0001 par value; 80
million shares authorized; 34,379,889 and 34,184,824 shares issued
and outstanding at September 30, 2009 and December 31, 2008,
respectively 3,437 3,418 Additional paid - in capital 115,938,899
114,770,946 Accumulated deficit (124,183,565 ) (109,283,629 ) Total
Stockholders' (Deficit) Equity (8,241,229 ) 5,490,735 Total
Liabilities and Stockholders' (Deficit) Equity $ 63,959,859
$ 147,809,217 The Condensed Consolidated Balance
Sheet as of December 31, 2008 was derived from Audited Financials.
See Accompanying Notes to Condensed Consolidated Financial
Statements.
National Coal Corp. Condensed
Consolidated Statements of Operations (Unaudited)
For the Three Months Ended
For the Nine Months Ended September 30, September
30, 2009 2008 2009
2008 Revenues: Coal sales $ 21,483,618 $ 17,604,657 $
62,325,476 $ 49,084,206 Other revenues 637,181
976,683 2,400,759 2,340,838 Total
revenues 22,120,799 18,581,340 64,726,235
51,425,044 Operating expenses: Cost of
coal sales (exclusive of depreciation, depletion, amortization and
accretion) 20,028,882 16,457,270 58,295,500 48,735,619 Cost of
services (exclusive of depreciation, depletion, amortization and
accretion) 608,274 840,599 2,316,948 1,985,087 Depreciation,
depletion, amortization and accretion 2,392,606 2,141,220 7,528,951
7,035,844 General and administrative 1,821,731
2,277,883 5,247,932 6,192,331 Total
operating expenses 24,851,493 21,716,972
73,389,331 63,948,881 Loss from
continuing operations (2,730,694 ) (3,135,632 ) (8,663,096 )
(12,523,837 ) Other income (expense): Interest
expense (1,910,496 ) (1,616,725 ) (5,037,908 ) (5,626,763 )
Interest income 65,175 180,143 222,281 572,460 Other 39,324
23,653 63,944 (1,831,526 ) Other income
(expense), net (1,805,997 ) (1,412,929 ) (4,751,683 ) (6,885,829 )
Loss from continuing
operations before income taxes (4,536,691 ) (4,548,561 )
(13,414,779 ) (19,409,666 ) Income tax benefit -
- - - Loss from
continuing operations (4,536,691 ) (4,548,561 ) (13,414,779 )
(19,409,666 ) Income (loss) from discontinued operations,
net of taxes 3,872,741 (3,841,312 ) (1,485,157 )
(8,153,317 ) Net loss (663,950 ) (8,389,873 )
(14,899,936 ) (27,562,983 ) Preferred stock dividend -
(40,328 ) - (120,106 ) Net loss
attributable to common shareholders $ (663,950 ) $
(8,430,201 ) $ (14,899,936 ) $ (27,683,089 ) Earnings
(loss) per common share from continuing operations - basic and
diluted $ (0.13 ) $ (0.14 ) $ (0.40 ) $ (0.64 )
Earnings (loss) per common share from discontinued
operations - basic and diluted $ 0.11 $ (0.11 ) $
(0.04 ) $ (0.26 ) Earnings (loss) per common share -
basic and diluted $ (0.02 ) $ (0.25 ) $ (0.44 ) $
(0.90 ) Weighted average common shares outstanding
34,009,439 33,139,355 33,987,742
30,688,851 See Accompanying Notes to Condensed
Consolidated Financial Statements.
National Coal
Corp. Condensed Consolidated Statements of Cash Flows
(Unaudited) For the Nine Months
Ended September 30, 2009 2008
Operating Activities Net loss $ (14,899,936 ) $ (27,562,983
) Adjustments to reconcile net loss to net cash provided by (used
in) operating activities: Loss from discontinued operations, net of
tax 1,485,157 8,153,317 Depreciation, depletion, amortization and
accretion 7,528,951 7,035,844 Amortization of deferred financing
costs 688,438 381,246 Amortization of debt discount 500,323 523,942
Gain on disposal of assets (74,789 ) (632 ) Loss on sale of
Straight Creek properties - 413,843 Loss on extinguishment of debt
- 1,676,840 Settlement of asset retirement obligations (41,469 )
(70,925 ) Stock option expense 1,126,961 980,654 Changes in
operating assets and liabilities: Accounts receivable (753,137 )
647,650 Inventory (940,665 ) (348,851 ) Prepaid and other current
assets 678,192 (44,206 ) Other non - current assets 158,155 825,000
Accounts payable and accrued expenses 8,865,730 1,251,687 Deferred
revenue (1,241,840 ) (187,614 ) Other non - current liabilities
(196,198 ) 115,219 Net cash flows provided by (used in)
operating activities from continuing operations 2,883,873
(6,209,969 ) Net cash flows provided by operating activities from
discontinued operations 3,676,903 2,608,789 Net cash
flows provided by (used in) operating activities 6,560,776
(3,601,180 )
Investing Activities Capital
expenditures (5,445,127 ) (5,967,415 ) Proceeds from sale of
Straight Creek properties - 10,711,399 Decrease in restricted cash
2,419,886 5,034,465 Additions to prepaid royalties (64,500 )
(470,319 ) Net cash (used in) provided by investing activities from
continuing operations (3,089,741 ) 9,308,130 Net cash used in
investing activities from discontinued operations (2,153,052 )
(1,815,251 ) Net cash (used in) provided by investing activities
(5,242,793 ) 7,492,879
Financing Activities Proceeds
from issuance of common and preferred stock - 10,863,256 Proceeds
from stock option exercises - 1,037,125 Proceeds under short-term
line of credit 5,000,000 - Repayments of short-term line of credit
(1,000,000 ) - Repayments of long-term debt (2,347,374 )
(12,540,290 ) Repayments of obligations under capital leases
(1,555,560 ) (342,351 ) Payments for deferred financing costs
(439,258 ) (13,040 ) Payment of deferred dividends -
(114,216 ) Net cash flows used in financing activities from
continuing operations (342,192 ) (1,109,516 ) Net cash flows used
in financing activities from discontinued operations (823,851 )
(1,400,960 ) Net cash flows used in financing activities (1,166,043
) (2,510,476 ) Net increase in cash and cash equivalents 151,940
1,381,223 Cash and cash equivalents at beginning of period
3,908,469 9,854,351 Cash and cash equivalents at end
of period $ 4,060,409 $ 11,235,574
Supplemental Cash Flow Information Cash paid during the year for
interest from continuing operations $ 2,810,643 $ 4,094,437 Cash
paid during the year for interest from discontinued operations
555,806 8,346,143 Non-cash investing and financing activities from
continued operations: Series A cumulative convertible preferred
stock converted to common stock $ - $ 3,346,650 Preferred stock
effective dividends - 131,712 Preferred stock dividends converted
to common stock - 120,107 10.5% Senior Secured Notes exchanged for
common stock - 12,735,848 Financed equipment acquisitions 34,852
1,579,938 Equipment acquired through obligations under capital
leases 336,000 952,131 Asset retirement obligations incurred,
acquired or recosted - 158,300 Common stock issued for mineral
rights - 5,000,000 Non-cash investing and financing activities from
discontinued operations: Financed equipment acquisitions $ 42,848 $
1,866,386 Asset retirement obligations incurred, acquired or
recosted 324,332 1,820,917 Interest and fees paid in-kind or
financed 2,100,000 - Equipment acquired through obligations under
capital leases - 181,050 See Accompanying Notes to Condensed
Consolidated Financial Statements.
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