James River Coal Company Earnings: Margins Shrink as Revenue Falls

James River Coal Company (NASDAQ:JRCC) swung to a loss in the first quarter. James River Coal Company mines, processes and sells bituminous, steam- and industrial-grade coal through six operating subsidiaries located throughout eastern Kentucky and one in southern Indiana.

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James River Coal Company Earnings Cheat Sheet for the First Quarter

Results: Swung to a loss of $7.6 million (28 cents/diluted share) in the quarter. The industrial metals and minerals company had net income of $23.2 million or 84 cents per share in the year earlier quarter.

Revenue: Fell 12% to $164.6 million YoY.

Actual vs. Wall St. Expectations: The mean estimate for JRCC was 30 cents/share. Estimates ranged from 17 cents per share to 56 cents per share.

Quoting Management: Peter T. Socha, Chairman and Chief Executive Officer commented: “This was an incredibly busy quarter for James River Coal Company. We substantially completed a very large acquisition, we completed three large capital markets transactions, and we continued to implement new and enhanced mining regulations. While all of these items had a short-term negative impact on our financial results during the quarter, we expect all of them to have a significant positive impact later this year and into 2012. We are heading into stronger coal markets with a larger base of operations, a broader product portfolio, and a much stronger financial profile. We believe we are very well positioned for the future.”

Key Stats:

Gross margins fell 12 percentage points to 9.1%. The contraction appeared to be driven by falling revenue, as the figure fell 10.8% from the year earlier while costs rose 2.7%.

A year-over-year revenue decrease last quarter snaps a streak of three consecutive quarters of revenue increases. Revenue rose 8.4% in the fourth quarter of the last fiscal year, 1.8%in the third quarter of the last fiscal year and 6.6% in the second quarter of the last fiscal year.

JRCC’s loss in the latest quarter follows profits in the previous three quarters. The company reported a profit of $25.9 million in the fourth quarter of the last fiscal year, a profit of $9.2 million in the third quarter of the last fiscal year and $19.9 million in the second of the last fiscal year.

Competitors to Watch: Alliance Holdings GP, L.P. (NASDAQ:AHGP), Intl. Coal Group, Inc. (NYSE:ICO), Peabody Energy Corporation (NYSE:BTU), Natural Resource Partners LP (NYSE:NRP), Arch Coal, Inc. (NYSE:ACI), Alliance Resource Partners, L.P. (NASDAQ:ARLP), Patriot Coal Corporation (NYSE:PCX), CONSOL Energy Inc. (NYSE:CNX), Colombia Clean Power & Fuels, Inc. (CCPF), and Walter Energy, Inc. (NYSE:WLT)

Stock Performance: Shares of JRCC are down 3.6% from the previous close of $23.70.

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