James River Coal Company Earnings: Shrinking Margins for Fifth Consecutive Quarter

Hampered by higher costs, James River Coal Company (NASDAQ:JRCC) booked a net 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: Loss widened to $15.7 million (45 cents per diluted share) from $7.6 million (loss of 28 cents per share) in the same quarter a year earlier.

Revenue: Rose 83.5% to $302 million from the year-earlier quarter.

Actual vs. Wall St. Expectations: James River Coal Company beat the mean analyst estimate of a loss of 66 cents per share. It beat the average revenue estimate of $277.5 million.

Quoting Management: Peter T. Socha, Chairman and Chief Executive Officer commented: “We are very pleased with the way that our entire organization has responded to an extremely weak coal market. Our operations team has made a number of changes to our mine portfolio to both control our cash costs and preserve capital. Our sales and trading teams have spent a great deal of time understanding the needs of our customer base and selectively adding new contract opportunities. We want to thank both our customers and our employees for their assistance in helping us during these challenging times in the world coal markets.”

Key Stats:

Last quarter was the fifth in a row that the company saw shrinking gross margins, as they fell 4.9 percentage points from the year-earlier quarter to 4.2%. In that span, margins have contracted an average of 8.5 percentage points per quarter on a year-over-year basis.

Revenue has increased for four consecutive quarters. Revenue increased more than twofold to $357.2 million in the fourth quarter of the last fiscal year. The figure rose 77.3% in the third quarter of the last fiscal year from the year earlier and climbed 92.3% in the second quarter of the last fiscal year from the year-ago quarter.

After two quarters of falling short, the company beat estimates last quarter. In the fourth quarter of the last fiscal year, it missed the mark by 9 cents, and in the third quarter of the last fiscal year, it came in under estimates by 26 cents.

Looking Forward: For the past two months, analysts have become increasingly pessimistic about the results for the company next quarter. The average estimate for the second quarter is a loss of 70 cents per share, down from a loss of 28 cents sixty days ago. The average estimate for the fiscal year has reached a loss of $2.86 per share, down from a loss of $1.19 ninety days ago.

(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

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