James River Coal Co. Q2 2009 Earnings Call Transcript

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2009-08-03 11:09:30.0

Tags: Midwest, Call Transcript, Ton, Earnings, James River Coal Co., Pricing, Marketing Research, Marketing, Seeking Alpha

Question-and-Answer Session

Operator

(Operator Instructions) Your first question comes from Jim Rollyson - Raymond James.

Jim Rollyson - Raymond James

I had a few questions actually, since I’ll let Shneur ask you about the carryover tons, but regarding the pricing, your year-to-date prices as you mentioned in your slides are about $32.19 for the Midwest tons and your full year kind of committed is a little over $34 bucks, which obviously would imply second half is much better. When you kind of sort out, what’s tons get shipped in the second half versus what carries over into next year? What kind of pricing are we looking on average for those tons, do you think?

Peter Socha

I don’t know, but quite honestly, remember in the Midwest we’ve got diesel adjustments and we’ve got things like that, but what gets carried over and what doesn’t. I’m going to leave that to the guys in the Midwest. Obviously, we’ll have a conversation about it. Those typically Jim, those conversations are had in late September through October. At least if last year is any guide and maybe the year before.

The real issue with the Midwest in carryover tons is we had horrible weather there last year and where we might have had an opportunity to have a conversation with the customers about those tones, we just didn’t. I mean we did, but by the time we did, it was too far past and we just didn’t. So they are carryover tons, we have had these relationships for a very long time. We’re comfortable with it, but what next year’s average price will be, I don’t know right now.

Jim Rollyson - Raymond James

Okay, maybe same question on the cost side. Your year-to-date costs in the 28s, your full year guidance 31 also implies a big step up in cost second half. What do you expect and would drive that or what are you thinking?

Peter Socha

I’ll let C.K. address it in a second, but I think that they have had outstanding production and outstanding costs this year. I think that we just really elected to keep the guidance number where it is. Thus far fortunately, the weather has been on our side and they have had a great first half of the year.

C.K. Lane

If we just our production back from the 3.5 to the 3.2 level that we’ve talked about for the year, we’ll see that in the second half, which will again just be some cost absorption going forward there.

 

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