Net income for the period ended March 31 was $US6.1 million, versus a record first-quarter net income of $24.6 million in 2007.
Taking into account one-time special items – including the start-up of a second longwall face at its Emerald mine – net income totalled $8.9 million, substantially lower period-over-period from last year's $25.3 million.
Royalties, labour expenses, and the timing of some of the operator's Northern Appalachian coal arbitrage transactions also played a role.
Company chairman James Roberts noted, however, that Foundation will not adjust its guidance as it feels its progress is on target.
He said Foundation’s intent in the first quarter was to position the company's operations in Northern Appalachia to capitalise on strong eastern US market conditions.
“The installation of our second longwall at the Emerald Mine was completed during the first quarter, and the rebuild of the existing longwall began on schedule early in the second quarter," Roberts said.
“Also, following the recent longwall move, the Cumberland Mine continues to produce at a 7 million ton per year pace making it one of the highest production single longwall mines in the industry.
“As a result, we have cemented our ability to produce 14 million tons annually in Northern Appalachia in 2008 and beyond, up from approximately 13 million tons in 2007."
Despite the earnings disappointment, sales were on the upswing. Year over year, Foundation's coal sales rose 4% from $394.9 million to $412.3 million, well above analyst expectations.
The company sold 18.4Mt of product, down from 18.8Mt in 2007, but its average sales price jumped to $22.06 per ton from $20.54/t.
Foundation also continues to focus on its long-term strategic plans, officials noted; it successfully submitted its lease by application bid earlier this year and increased reserves at its Eagle Butte mine in the Powder River Basin by about 255Mt, bringing its total holdings in the region to more than 800Mt and company-wide reserves to 1.8 billion tons.
“The permitting process is underway for the planned Foundation and Freeport mines in Northern Appalachia," the company added.
“Development of our land and gas resources is progressing as planned with the recent completion of our fifth producing surface horizontal directional well.
“Overall, Foundation Coal is well positioned to increase shareholder value through a combination of organic growth, margin expansion, and the opportunity for selective growth through acquisition."
Foundation also highlighted record safety performances in the quarter.
Its total reportable incident rate was 2.98, an improvement of 35% over the same period of 2007.
Three of its Central Appalachian operations, Rockspring's Camp Creek, Kingston No. 1 and Kingston No. 2, earned the 2007 Joseph Holmes Safety Award, while Kingston No. 1 also was bestowed the 2007 MSHA District 4 Pacesetter Award for outstanding performance.
