James River Coal Company (JRCC) Q2 2010 Earnings Call Transcript August 6, 2010 11:00 am ET Executives Beth Cook – Director, IR Peter Socha – Chairman, President and CEO CK Lane – SVP and COO Analysts Brett Levy – Jefferies & Company Jim Rollyson – Raymond James Jeremy Sussman – Brean Murray Michael Dudas – Jefferies & Company Justine Fisher – Goldman Sachs Brian Gamble – Simmons & Company Jeff Kramer – UBS Shneur Gershuni – Union Bank of Switzerland J.D. Kritser – Steelhead Partners Brian Finkelstein – Catapult Presentation Operator
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I will now turn the call over to Peter Socha.Peter Socha Good morning, everyone. Thank you, Beth. And welcome to our call. We are going to have very, very short comments this morning, which is one reason why we didn’t do slides and we’ve already gotten lot of emails and calls about that. We are going to try to do the opening comments in about five minutes or so. Just a couple of things from me. Three points really. Liquidity, two years ago, we had no liquidity. A year ago, we had $36 million of liquidity. And right now, we have over $200 million of liquidity. That is something that we are very happy about. We are very pleased with. It has given us an opportunity to strengthen the balance sheet and strengthen the company. The second point in my opening comments would be profit margin. We did have a profit margin in Central App of almost $31 this quarter. That is from steam coal and stoker coal only. For those of you not familiar with James River Coal, until recently we really haven’t had any met coal at all. We will have met coal going forward. But our margins of $31 were for steam and stoker only. And we did sell a little bit of coal for next year. I guess the most important point there is we are about two-thirds sold in Central App for next year at a price of 101.28. And of what’s left, of the third that’s left, about half of that would be stoker, the other half would be steam coal. With the market tightening as it is, people sometimes – they look at me with funny eyes when I say next year could be better than this year, and in fact, I think it will be. And I think 12 million probably better than 11 million. So that’s something I’m sure we will get into during the Q&A. The mines had a good quarter. Sales had a good quarter. So overall, I think we had a very good quarter. We are pleased with where we are and we’re pleased with where we are going.
And with that, I will turn it to CK.CK Lane Okay. Thanks, Peter. Welcome, everyone. For safety, we had another strong quarter in our safety performance. Our NFDL rate continues to track below the national average. All of this, though, was overshadowed by the fatal accident that we had at mine 68. Bobby Smith, a well regarded continuous miner operator was killed on June 24. He had been with our company approximately six years. He (inaudible) by his wife Amanda and three children. This was the first fatal accident at the mine since it opened in 1989 and then the tragic out for everyone there and his family. So this one on – we've been thinking about that a lot. For the operations, in cap, production was at our expected level. We completed mining at one underground mine and moved the man and equipment to our new mine, which is called Old House [ph] branch. We also completed mining at one of our surface mines and moved to a new surface mine called Harmons Branch. We had a couple mines that had some pretest geological issues in the quarter, but we were able to work through those and didn’t impact production or cost a whole lot. As in our press release, we did start the two new mines in the second quarter. They are operated with contract miners. There wasn’t any real significant startup issues. We had begun construction on the third met mine that will begin later this year, and we were able to start our preparation plant and get that up and running that will process the met coal. Read the rest of this transcript for free on seekingalpha.com