NTL COAL 
By National Coal Corp. (Nasdaq: NCOC):
- First quarter 2010 revenues from continuing operations totaled approximately $16.2 million, down 19.1% from $20.0 million in 2009
- Tons of coal sold during the first quarter of 2010 decreased approximately 27.5% to 201,684 tons, down from 278,081 tons sold during the year-ago period
- First quarter net loss from continuing operations totaled $5.8 million compared to a $5.7 million loss reported in the year-ago period
National Coal Corp. (Nasdaq: NCOC), a Central and Southern Appalachian coal producer, reports that for the three months ended March 31, 2010, it achieved total revenues from continuing operations of $16.2 million based primarily on the sale of 201,684 tons of coal. In the same prior-year period, National Coal generated revenues from continuing operations of $20.0 million based primarily on the sale of 278,081 tons of coal.
For the three months ended March 31, 2010, National Coal reports a net loss from continuing operations of $5.8 million or $0.17 per diluted share compared to a net loss of $5.7 million or $0.17 per diluted share for the three months ended March 31, 2009. Also for the three month period ended March 31, 2010, National Coal had an Adjusted Earnings Before Interest, Taxes, and Depreciation and Amortization (?Adjusted EBITDA?) of ($1.7) million, compared to an Adjusted EBITDA of ($1.4) million for the first quarter of 2009.
During the first quarter of 2010, the Company's liquidity was adversely affected when its largest customer exercised its rights of force majeure under a coal supply contract due to freezing weather in the Southeastern United States, which resulted in the suspension of shipments of approximately 40,000 tons of coal. While the customer is obligated under its contract with National Coal to purchase this coal within twelve months after the end of the event, the suspension of these shipments resulted in an immediate reduction in cash receipts of approximately $3.0 million during January and February 2010.
Daniel A. Roling, President and CEO at National Coal Corp. says, ?We've taken a number of steps to address the unanticipated cash shortfall resulting from the force majeure, including selling certain assets in order to help stabilize our situation. Although we continue to face a number of challenges, we are committed to positioning the Company to take advantage of any positive growth opportunities afforded throughout the year.?
National Coal currently satisfies its working capital requirements primarily through cash flows generated from operations. For the three months ended March 31, 2010, the Company had a net decrease in cash of approximately $0.2 million.
On April 20, 2010, National Coal completed the sale to Ranger Energy Investments, LLC of a preparation plant and rail loadout facility located in Devonia, Tennessee, an active underground mine, two inactive mines, and related property, plant and equipment used in and located at its New River Tract operations, coal inventories located on the properties, associated permits and a coal supply agreement, for an aggregate sales price of $11.8 million, the assumption by Ranger Energy of reclamation liabilities related to the sold operations, and the payment to the Company of an overriding royalty for each ton of coal sold by Ranger Energy pursuant to the coal supply agreement it acquired in the asset sale. As part of the sale, National Coal leased to Ranger Energy mineral rights on approximately 22,000 acres of the New River Tract, with royalties ranging from 6% to 8% of applicable revenues. Of the purchase price, $6.6 million was paid by Ranger Energy assuming accounts payable National Coal owed to an affiliate of Ranger Energy, and $4.5 million was used to repay and terminate National Coal's short-term revolving credit facility. National Coal received an additional $1.9 million in cash that was previously pledged to secure reclamation bonds and other liabilities associated with the New River Tract operation. Net cash proceeds to the Company as a result of the asset sale were $1.4 million.
Prior to the closing of the asset sale, Ranger Energy purchased from Centaurus Energy Master Fund, LP $30.3 million of National Coal's $42.0 million of 10.5% Senior Secured Notes due 2010, which indebtedness remains outstanding. Ranger Energy also purchased from Centaurus, National Coal's $5.0 million short-term revolving credit facility, of which $4.5 million was outstanding and repaid from proceeds of the asset sale.
The Company's first quarter 2010 financial statements do not include any adjustments relating to the recoverability and classification of assets and liabilities that might be necessary should the Company be unable to continue as a going concern. Its continuation as a going concern is dependent upon its ability to raise additional equity or refinance its existing debt and, ultimately, to attain profitability. There is no assurance that National Coal will be successful in raising additional funds to repay its $42 million in senior secured debt or that, if it does, that it will be able to attain profitability.
Mr. Roling says that despite challenges, the Company is moving forward with cautious optimism. ?As the economy improves, both prices and volumes for our coal should increase progressively as we advance through the year and transition into new contracts. As we continue producing in line with our plans, which include the construction and opening of our new mine 12, our costs are also anticipated to decline. We are, however, always subject to changes in the economy, and two significant challenges remain: first, to refinance our debt, and, second, to capitalize on any organic growth afforded the Company.?
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 220 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 the Company's efforts to address the deterioration in its financial position, including the results of its recent asset sale on future operations, and its intent to raise capital to repay its $42 million of senior secured debt due December 2010. 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 the risks 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, and (v) income tax benefits. 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 | ||||||||
| March 31, | ||||||||
| 2010 | 2009 | |||||||
| Net loss | $ | (5,763,869 | ) | $ | (7,890,415 | ) | ||
| Other (income) expense, net | (1,962 | ) | (65,446 | ) | ||||
| Interest income | (2,523 | ) | (82,454 | ) | ||||
| Interest expense | 1,733,531 | 1,296,544 | ||||||
| Depreciation, depletion, amortization and accretion | 1,814,648 | 2,754,677 | ||||||
| EBITDA | (2,220,175 | ) | (3,987,094 | ) | ||||
| Stock compensation expense | 557,808 | 388,343 | ||||||
| Discontinued operations, net of tax | - | 2,218,900 | ||||||
| Adjusted EBITDA | $ | (1,662,367 | ) | $ | (1,379,851 | ) | ||
| National Coal Corp. | ||||||||||
| Condensed Consolidated Balance Sheets | ||||||||||
| (Unaudited) | ||||||||||
| March 31, 2010 | December 31, 2009 | |||||||||
| Assets | ||||||||||
| Current Assets: | ||||||||||
| Cash and cash equivalents | $ | 977,564 | $ | 1,185,725 | ||||||
| Accounts receivable, net | 517,513 | 366,680 | ||||||||
| Inventory | 2,172,646 | 1,403,972 | ||||||||
| Prepaid and other current assets | 1,339,795 | 1,550,919 | ||||||||
| Assets held for sale | 13,685,114 | - | ||||||||
| Total Current Assets | 18,692,632 | 4,507,296 | ||||||||
| Property, plant, equipment and mine development, net | 24,628,642 | 40,298,450 | ||||||||
| Deferred financing costs | 789,056 | 890,048 | ||||||||
| Restricted cash | 6,163,309 | 6,211,637 | ||||||||
| Other non-current assets | 899,422 | 906,097 | ||||||||
| Total Assets | $ | 51,173,061 | $ | 52,813,528 | ||||||
| Liabilities and Stockholders' Deficit | ||||||||||
| Current Liabilities: | ||||||||||
| Accounts payable | $ | 13,627,118 | $ | 11,551,663 | ||||||
| Accrued expenses | 2,159,843 | 1,065,355 | ||||||||
| Borrowings under short-term line of credit | 4,500,000 | 3,000,000 | ||||||||
| Current maturities of long - term debt | 42,321,443 | 42,372,933 | ||||||||
| Current installments of obligations under capital leases | 772,904 | 1,237,358 | ||||||||
| Current portion of asset retirement obligations | 98,528 | 98,528 | ||||||||
| Total Current Liabilities | 63,479,836 | 59,325,837 | ||||||||
| Long - term debt, less current maturities, net of discount | 113,839 | 270,291 | ||||||||
| Obligations under capital leases, less current installments | 104,782 | 140,958 | ||||||||
| Asset retirement obligations, less current portion | 3,397,631 | 3,790,212 | ||||||||
| Deferred revenue | 1,000,000 | 1,000,000 | ||||||||
| Other non-current liabilities | 585,944 | 589,139 | ||||||||
| Total Liabilities | 68,682,032 | 65,116,437 | ||||||||
| Stockholders' Deficit: | ||||||||||
| Common Stock, $.0001 par value; 80 million shares authorized; | ||||||||||
| 34,313,889 shares issued and outstanding at March 31, 2010 | ||||||||||
| and December 31, 2009 | 3,431 | 3,431 | ||||||||
| Additional paid - in capital | 116,749,647 | 116,191,838 | ||||||||
| Accumulated deficit | (134,262,049 | ) | (128,498,178 | ) | ||||||
| Total Stockholders' Deficit | (17,508,971 | ) | (12,302,909 | ) | ||||||
| Total Liabilities and Stockholders' Deficit | $ | 51,173,061 | $ | 52,813,528 | ||||||
| The Condensed Consolidated Balance Sheet as of December 31, 2009 was derived from Audited Financial Statements | ||||||||||
| See Accompanying Notes to Condensed Consolidated Financial Statements. | ||||||||||
| National Coal Corp. | |||||||||||||||||||||||||||||||
| Condensed Consolidated Statements of Operations | |||||||||||||||||||||||||||||||
| (Unaudited) | |||||||||||||||||||||||||||||||
| For the Three Months Ended | |||||||||||||||||||||||||||||||
| March 31, | |||||||||||||||||||||||||||||||
| 2010 | 2009 | ||||||||||||||||||||||||||||||
| Revenues: | |||||||||||||||||||||||||||||||
| Coal sales | $ | 16,195,233 | $ | 19,108,015 | |||||||||||||||||||||||||||
| Other revenues | - | 918,652 | |||||||||||||||||||||||||||||
| Total revenues | 16,195,233 | 20,026,667 | |||||||||||||||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||||||||||
| Cost of coal sales (exclusive of depreciation, depletion, amortization and accretion) | 15,119,449 | 18,994,747 | |||||||||||||||||||||||||||||
| Cost of services (exclusive of depreciation, depletion, amortization and accretion) | - | 942,379 | |||||||||||||||||||||||||||||
| Depreciation, depletion, amortization and accretion | 1,814,648 | 2,754,677 | |||||||||||||||||||||||||||||
| Asset impairment | 1,186,389 | - | |||||||||||||||||||||||||||||
| General and administrative | 2,109,570 | 1,857,735 | |||||||||||||||||||||||||||||
| Total operating expenses | 20,230,056 | 24,549,538 | |||||||||||||||||||||||||||||
| Loss from continuing operations | Share
© Business Wire - 2010
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