This compared to a net loss of $9.07 million in the corresponding 2008 quarter. For the period ended June 30, the company reported revenues of $35.3 million, up year-on-year from $31.6 million.
The revenues were based mainly on the sale of 457,082 tons of coal in the quarter ended June 30, a 3.2% drop from the 472,216t reported last year. However, Alabama tonnage fell more than 24%.
"These results include those of NCA [National Coal of Alabama], a subsidiary that suffered a significant decline in sales and an increase in costs in the second quarter, which resulted in foreclosure in the third quarter," NCC president Daniel Roling said.
"However, as I have previously mentioned, National Coal and our other subsidiaries, which operate in Tennessee, will continue to operate independent of what has occurred in Alabama."
Roling said there has been speculation and rumor as to what impact the issues in Alabama would have on the remainder of the company.
"While we are obviously disappointed we couldn't meet the obligations of the credit facility, we can now report that the weakest part of our organization will no longer factor into our future performance," he noted.
Officials for the company outlined the details of the NCA issue since NCC purchased the operations in October 2007, when the transaction was financed with $60 million in 12% notes due in 2012.
“On July 21, 2009, NCA defaulted on this obligation [and] on August 3, 2009, the holders of the 12 per cent notes due 2012 foreclosed on the outstanding capital stock of NCA,” the company said.
“As a result, the entire debt obligation in default of $64.3 million has been classified as a current liability in the accompanying balance sheet at June 30, 2009.”
Looking solely at NCC’s pro forma stand-alone results for its business in Tennessee, revenues were up 35.2% over last year from $16.7 million to $22.6 million. Tonnage was also up marginally year-on-year.
The company also said average price per ton at its Tennessee operations jumped almost 22% to $74.81.
Roling said that improved pricing and volumes had allowed the company to generate cash from operations, particularly compared to the same period last year.
"However, our ability to continue to show improvement will be a function of our customers' ability to receive the tonnage they have contracted to take,” he noted.
“At present, we see no further deterioration from current levels."
Officials also pointed to the resulting declination it its total debt as a result of the foreclosure from $113.1 million to $47.7 million.
They reiterated that it would be business as usual for the balance of NCC’s business portfolio.
“No creditor of NCA, including the holders of the 12 per cent notes due 2012, has any recourse to National Coal or its other subsidiaries including our Tennessee operating entities for any liabilities of NCA, including liabilities arising under the credit agreement,” Roling said.
“Therefore, the operations of National Coal Corp. and its other subsidiaries will continue independently of any actions taken with respect to NCA and its assets.”
Looking ahead, National Coal highlighted its asset base, including a strategic reserve position of 65,000 continuous acres where the company owns all coal rights as well as two preparation plants, a railroad load-out and a 42-mile short line railroad.
Its overall reserve position was strong, the company said, including about 34 million recoverable tons with the possibility to increase that amount through an active drilling program.
“At present, the company is working towards obtaining additional permits for new operations,” Roling said.
“It is management's belief that National Coal is well positioned operationally to significantly increase production through organic growth over the next five years, subject to market conditions."
As NCC moves into the second half of 2009, the producer expects it will spend $1-1.5 million to maintain its Tennessee properties.
