NTL COAL 
By National Coal Corp. (NASDAQ: NCOC):
- Revenues for third quarter 2006 total approximately $21.1 million, up 16% from $18.3 million in the same period last year.
- Coal sales increase to 409,215 tons for the third quarter 2006, up 22% from 335,700 tons during the same period a year ago.
- Net loss for the third quarter of 2006 is $3.3 million versus $0.4 million for the same period a year ago and $4.9 million during the second quarter of 2006.
- Adjusted EBITDA for the third quarter of 2006 totaled $1.6 million up 63% from the $1.0 million reported for the second quarter of 2006.
National Coal Corp. (Nasdaq: NCOC) today reports third quarter 2006 revenues for the three-month period ending September 30, 2006, increased to $21.1 million from $18.3 million in the prior-year period. Tons of coal shipped during the third quarter totaled 409,215 tons, up from 335,700 tons in the year-ago period. The net realized sales price received for coal decreased $2.60 per ton from $54.09 per ton in the third quarter of 2005 to $51.49 per ton in the third quarter of 2006.
Net loss for the three months ended September 30, 2006, totaled $3.3 million versus the $0.4 million reported in the prior-year period. For the nine-month period ending September 30, 2006, net loss increased to $15.9 million in comparison to the $3.8 million loss reported in the prior-year period. A number of factors contributed to the year-to-date performance including lower selling prices, equipment problems and operational downtime, and the need to purchase coal from third parties.
Adjusted EBITDA totaled approximately $1.6 million compared to a reported $1.0 million in the second quarter of 2006, and to $3.8 million reported in the prior-year period.
Daniel Roling, CEO at National Coal, explains that the third quarter loss masks quarter-to-quarter improvement during 2006, ?We have had a number of challenges year-to-date, not the least of which is the softer coal market. However, we reduced our cost of sales per ton by $3.33 from the first quarter to the second quarter, then again by $3.59 per ton from the second quarter to the third quarter. These improvements do not yet take into account additional overall cost improvements expected from our three new mines that began operating in Tennessee during the third quarter.?
Cost of sales per ton excludes the repair of the damaged highwall miner in March 2006 and the recovery of that $1.9 million cost in September 2006.
As previously reported, National Coal entered into a credit facility that provides borrowings of up to $10 million with Guggenheim Corporate Funding, LLC, on October 12, 2006. The Company initially borrowed $5 million and has the right to borrow an additional $5 million through July 12, 2007.
During July and August 2006, the Company opened three new mining operations in Tennessee; the operations are located on reserves owned by the company on its New River Tract. Once all three of these mines achieve stable production, it is anticipated they will produce an additional 55,000 tons of salable coal per month. In addition, it has recently completed improvements at the Baldwin coal preparation facility and on the Devonia rail spur.
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 and Southeastern Kentucky. Currently, National Coal employs more than 250 people and produces coal from five mines in Tennessee and three mines in Kentucky. National Coal sells steam coal to electric utilities in the Southeastern United States. For more information 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 projected production, revenues, profitability and cash flows from new mines opened on the New River Tract. 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.
Reconciliation of Non-U.S. GAAP Measures to U.S. GAAP
National Coal Corp. has prepared Adjusted EBITDA data applicable to the three months ended September 30, 2006 and 2005 to supplement the reporting of its results determined under applicable generally accepted accounting principles (GAAP). Adjusted EBITDA is a non-GAAP financial measure that reflects net income (loss) excluding interest, depreciation, depletion, accretion and amortization expenses, non-cash compensation expenses, other non-operating income and expenses, and taxes. We present Adjusted EBITDA 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 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 an indicator of liquidity and cash flows.
The following table illustrates the adjustments to net loss to calculate Adjusted EBITDA for the applicable periods and reconciles the non-GAAP financial data to net loss determined in accordance with GAAP:
| NATIONAL COAL CORP. |
| CALCULATION OF ADJUSTED EBITDA (NON-GAAP) |
| (Unaudited) |
| Three Months Ended September 30, | Nine Months Ended September 30, | Three Months Ended June 30, | |||||||
| 2006 | 2005 | 2006 | 2005 | 2006 | |||||
| Net loss | $ (3,327,046) | $ (390,953) | $ (15,903,521) | $ (3,811,361) | $ (4,897,583) | ||||
| Other (income) expense, net (1) | 215,081 | (244,847) | (247,376) | (297,761) | (338,332) | ||||
| Interest income | (168,622) | (80,529) | (553,818) | (82,545) | (168,442) | ||||
| Interest expense | 1,673,464 | 1,054,180 | 5,401,498 | 2,801,755 | 1,859,189 | ||||
| Depreciation, depletion, amortization, and accretion | 3,812,736 | 3,208,522 | 11,726,482 | 7,166,450 | 4,081,510 | ||||
| EBITDA | $ 2,205,613 | $ 3,546,373 | $ 423,265 | $ 5,776,538 | $ 536,342 | ||||
| Stock-based compensation expense (2) | 1,308,880 | 223,362 | 2,012,820 | 672,568 | 355,092 | ||||
| Non-recurring item: Highwall miner damage and insurance recovery | (1,866,909) | -- | 50,000 | -- | 121,868 | ||||
| Adjusted EBITDA | $ 1,647,584 | $ 3,769,735 | $ 2,486,085 | $ 6,449,106 | $ 1,013,302 | ||||
| (1) Figure includes $259,158 loss related to the demolition of a preparation plant and a $44,077 net gain on asset disposal. |
| (2) Figure includes $941,961 attributable to the early vesting of options held by the former CEO, the former General Counsel and Secretary - who is also the spouse of the former CEO, and the former COO. |
NATIONAL COAL CORP. | ||||
CONDENSED CONSOLIDATED BALANCE SHEET | ||||
(unaudited) | ||||
September 30, 2006 | December 31, 2005(a) | |||
| Assets | ||||
| Current assets | ||||
| Cash and cash equivalents | $ 1,790,553 | $ 25,434,988 | ||
Accounts receivable | 3,450,955 | 2,929,735 | ||
| Inventory | 2,213,545 | 360,614 | ||
| Other current assets | 845,290 | 274,591 | ||
| Total current assets | 8,300,343 | 28,999,928 | ||
| Assets held for sale | 703,726 | -- | ||
| Property, plant, equipment and mine development, net | 57,916,106 | 50,901,681 | ||
| Deferred financing costs | 2,657,649 | 2,958,666 | ||
| Restricted cash | 17,050,915 | 7,323,023 | ||
| Other non-current assets | 460,669 | 224,120 | ||
| Total Assets | $ 87,089,408 | $ 90,407,418 | ||
| Liabilities and Stockholders' Equity | ||||
| Current liabilities | ||||
| Current maturities of long-term debt | $ 4,709,945 | $ 3,319,175 | ||
| Current installments of obligations under capital leases | 341,083 | 958,907 | ||
| Accounts payable and accrued expenses | 13,721,883 | 6,390,626 | ||
| Total current liabilities | 18,772,911 | 10,668,708 | ||
| Long-term debt, less current maturities, net of discount | 55,040,233 | 54,541,225 | ||
| Obligations under capital leases, excluding current installments | 413,058 | 1,196,143 | ||
| Asset retirement obligations | 6,924,435 | 7,228,232 | ||
| Deferred revenue | 958,409 | 150,000 | ||
| Other non-current liabilities | 124,260 | 6,776 | ||
| Total liabilities | 82,233,306 | 73,791,084 | ||
| Stockholders' equity | ||||
Series A convertible preferred stock, $.0001 par value; 5% coupon; 1,611 shares authorized; 791.21 and 1,333.22 shares issued and outstanding at September 30, 2006, and December 31, 2005 | -- | -- | ||
Common stock, $.0001 par value; 80 million shares authorized; 15,995,396 and 13,977,217 shares issued and outstanding at September 30, 2006 and December 31, 2005, respectively | 1,600 | 1,398 | ||
Additional paid-in capital | 41,311,209 | 37,168,122 | ||
| Accumulated deficit | (36,456,707 | ) | (20,553,186 | ) |
| Total stockholders' equity | 4,856,102 | 16,616,334 | ||
| Total Liabilities and Stockholders' Equity | $ 87,089,408 | $ 90,407,418 | ||
(a) Amounts at December 31, 2005 have been derived from audited financial statements. | ||||
NATIONAL COAL CORP. | ||||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||
(unaudited) | ||||||||
| Three Months Ended September 30, |
Nine Months Ended September 30, | |||||||
| 2006 | 2005 | 2006 | 2005 | |||||
| Revenues | ||||||||
| Coal sales | $ 21,068,684 | $ 18,159,270 | $ 64,448,256 | $ 46,754,319 | ||||
| Other revenues | 45,061 | 115,430 | 524,109 | 115,430 | ||||
| Total revenues | 21,113,745 | 18,274,700 | 64,972,365 | 46,869,749 | ||||
| Expenses | ||||||||
| Cost of sales | 15,735,132 | 13,031,078 | 57,218,065 | 35,898,144 | ||||
Depreciation, depletion, amortization and accretion | 3,812,736 | 3,208,522 | 11,726,482 | 7,166,450 | ||||
| General and administrative | 3,173,000 | 1,697,249 | 7,331,035 | 5,195,067 | ||||
| Total operating expenses | 22,720,868 | 17,936,849 | 76,275,582 | 48,259,661 | ||||
Operating (loss) income | (1,607,123) | 337,851 | (11,303,217) | (1,389,912) | ||||
| Other income (expense) | ||||||||
| Interest expense | (1,673,464) | (1,054,180) | (5,401,498) | (2,801,755) | ||||
| Interest income | 168,622 | 80,529 | 553,818 | 82,545 | ||||
| Other income (expense), net | (215,081) | 244,847 | 247,376 | 297,761 | ||||
| Total other income (expense) | (1,719,923) | (728,804) | (4,600,304) | (2,421,449) | ||||
| Net loss | (3,327,046) | (390,953) | (15,903,521) | (3,811,361) | ||||
| Preferred stock dividend | (377,105) | (264,020) | (739,991) | (859,785) | ||||
Net loss attributable to common shareholders | $ (3,704,151) | $ (654,973) | $ (16,643,512) | $ (4,671,146) | ||||
| Basic net loss per common share | $ (0.23) | $ (0.05) | $ (1.11) | $ (0.34) | ||||
| Diluted net loss per common share | $ (0.23) | $ (0.05) | $ (1.11) | $ (0.34) | ||||
| Weighted average common shares | 15,778,005 | 13,804,791 | 15,029,335 | 13,671,490 | ||||
NATIONAL COAL CORP. | |||||||||||||||||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||||||||||||||||||||||
(unaudited) | |||||||||||||||||||||||||||||
| Nine Months Ended September 30, | |||||||||||||||||||||||||||||
| 2006 | 2005 | ||||||||||||||||||||||||||||
| Cash Flows from Operating Activities | |||||||||||||||||||||||||||||
| Net loss | Share
© Business Wire - 2006
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