UPDATE 3-James River Q1 results breeze past Street, shares soar

* Q1 EPS $0.84 beats est of $0.42

* Q1 rev $184.6 vs est of $166.3 mln

* Says beginning to see recovery from recession levels

* Shares up 9 percent
(Recasts; adds comments from conference call, analysts)

By Antonita Madonna Devotta

BANGALORE, April 30 (BestGrowthStock) – James River Coal Co
(JRCC.O: ) posted first-quarter results that trumped analysts’
forecasts on strong thermal coal pricing and said the
development of its new steelmaking coal mines are on schedule.

James River has joined a growing list of U.S. coal
companies, including Arch Coal Inc (ACI.N: ) and Patriot Coal
Corp (PCX.N: ), which are shifting focus to high-margin
metallurgical coal production to cash in on the rise in demand
for steel in Asia and other markets.

The company said it has not yet priced shipments from the
mines scheduled to come online by the third quarter of this
year.

“We are keeping an open contract book. We are not in any
rush to go out and price coal into a market that is clearly
strengthening, so we are leaving it where it is,” James River
Chief Executive Peter Socha said on a conference call.

Analyst Michael Dudas of Jefferies & Co said he expects
this high-grade tonnage coupled with the strength in the met
coal market to provide pricing leverage and upside to
shareholders in 2011, when most of the tons come online.

The Richmond, Virginia-based company’s shares rose 9
percent to $19.40 in early trade after paring some gains to
trade up $1.21 at $18.95 in early afternoon trade Friday on
Nasdaq.

In the latest quarter, the coal miner posted a net income
of $23.2 million, or 84 cents a share, compared with $28.2
million, or $1.03 a share, a year ago.

Revenue for the quarter dropped 4 percent to $184.6 million
on lower thermal coal shipments, as stockpiles at utilities
remain high.

“While James River surpassed our estimate on higher
pricing, it is important to highlight that cost metrics
improved by $3.71 per ton, largely led by a reversal of fixed
cost absorption,” UBS analyst Shneur Gershuni said.

The company said it saw cash margins of $29.38 per ton from
its mines in the Central Appalachian region.

“James River remains 60 percent to 65 percent unpriced for
2011, and thus we see significant upside to estimates given our
view that utility inventories in the East will normalize by the
fourth quarter,” analyst Curt Woodworth of Macquarie Capital
said.

“With regard to the coal markets, we are beginning to see
clear signs of a recovery from recession levels,” CEO Socha
said.

Investing Analysis

(Reporting by Antonita Madonna Devotta in Bangalore; Editing
by Roshni Menon)

UPDATE 3-James River Q1 results breeze past Street, shares soar