James River Coal Earnings: Fifth Straight Quarter of Shrinking Margins

James River Coal Company (NASDAQ:JRCC) reported its results for the second 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

Results: Reported a loss of $25.8 million (74 cents per diluted share) in the quarter. James River Coal Company had a net income of $789,000 or 2 cents per share in the year-earlier quarter.

Revenue: Fell 21.2% to $277.4 million from the year-earlier quarter.

Actual vs. Wall St. Expectations: James River Coal Company beat the mean analyst estimate of a loss of 78 cents per share. Analysts were expecting revenue of $277.5 million.

Quoting Management: Peter T. Socha, Chairman and Chief Executive Officer commented: “We are both pleased and cautious this quarter. In the operations area, we are very pleased to report that we have received five significant permits for our surface mining operations. Our operations team has put a tremendous amount of time and effort into obtaining these permits. They showed flexibility and creativity in working with state and federal regulatory authorities in finding solutions that would meet the needs of all parties. Our operations team has also continued to demonstrate their ability to quickly adapt to changing market conditions.”

Key Stats:

Last quarter marked the fifth straight quarter that the company saw shrinking gross margins, as gross margin fell 9.2 percentage points to 1% from the year-earlier quarter. In that span, margins have contracted an average of eight percentage points per quarter on a year-over-year basis.

A year-over-year revenue decrease last quarter snaps a streak of four consecutive quarters of revenue increases. The best quarter in that span was the fourth quarter of the last fiscal year, which saw revenue rise more than twofold.

The company has beaten estiamtes for two quarters in a row. In the first quarter, it topped expectations with a loss of -45 cents versus a mean estimate of a loss of 66 cents per share.

Looking Forward: Analysts seem more negative about the company’s results for the next quarter than ninety days ago. The average estimate for the third quarter has moved from a loss of 75 cents a share to a loss of 88 cents over the last ninety days. For the fiscal year, the average estimate has moved from a loss of $2.85 a share to a loss of $2.91 over the last sixty days.

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

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