Xinergy Ltd. Announces Fourth Quarter and Full Year 2011 Financial Results
(firmenpresse) - KNOXVILLE, TENNESSEE -- (Marketwire) -- 03/08/12 -- Xinergy Ltd. (TSX: XRG) ("Xinergy" or the "Company"), a Central Appalachian coal producer, today announced the release of its Audited Consolidated Financial Statements for the year ended December 31, 2011, together with its Management's Discussion and Analysis ("MD&A") for the corresponding period. These documents are posted on SEDAR at and on the Company's website at .
The Company reports fiscal 2011 coal sales revenue of $166.3 million, and adjusted EBITDA of $30.6 million. These are increases of 53% and 13%, respectively, year over year. EBITDA is adjusted for an $11 million non-recurring gain on the sale of the Company's Elk Horn investment. Coal sale revenues increased in 2011 principally due to incremental production from the addition of Raven Crest operations in West Virginia commencing in April 2010, the True Energy acquisition in July 2011 as well as increases in sales from our Straight Creek property in Kentucky. Full year 2011 coal production was 2.0 million tons, up 53% year over year from 1.3 million tons produced in 2010.
In 2011 the Company reported a net loss of $14.1 million or $0.25 on a per share basis (basic and diluted) as compared to $2.1 million for 2010. The increase in the net loss for 2011 was primarily a result of an increase in finance and related costs associated with the issuance of the $200 million senior secured notes that were issued in May 2011 and due May 2019.
In the fourth quarter of 2011 the Company reported coal revenues of $33.9 million and adjusted EBITDA of $6.7 million. Coal revenues were $38.1 million the same quarter last year, and adjusted EBITDA was $12.2 million. The decreases in the fourth quarter are principally due to customers deferred shipments. In the fourth quarter 2011, the Company had a net loss of $6.5 million as compared to $2.5 million the same quarter last year.
The Company remains in a strong cash position with $73.0 million in cash and cash equivalents at December 31, 2011. Management will maintain its target working capital levels for 2012 without requiring additional working capital debt facilities. Current debt service requirements will be met using cash flow from operations. For 2012, the Company has a total of 900,000 tons in committed thermal sales, at an average sales price of $70.00 per ton. This cash flow will be supplemented by sales from metallurgical mining operations and reductions in inventory levels as well as negotiated contract settlements that were concluded in March 2012.
Jon E. Nix, Xinergy's Chairman and CEO commented: "The Company achieved record revenues, adjusted EBITDA and increased production volumes in 2011. This past year Xinergy made important acquisitions to grow its portfolio of assets with the goal of ensuring sustainable growth in the future, adding high quality mid- and high-volatility metallurgical surface mines to the production profile. We originally controlled approximately 89.5 million tons of proven and probable reserves, we expect that to grow to well over 100 million by year end including our recent land acquisitions, of which one third are now metallurgical, demonstrating significant upside exposure to this revenue stream. The True Energy and South Fork metallurgical acquisitions provide a high margin area of growth for Xinergy in the near term and position the Company well in the current challenging environment for thermal coal prices. In addition, we continue to focus on margin expansion and cost efficiency across all mines. Gross margins on a per ton basis stand at $22.20, moderately lower from the year prior at $26.90, yet we remain a highly competitive producer on a cash cost basis. In 2011 we achieved cash costs of $59.01 per ton, affirming our position as one of the lowest cost producers in Central Appalachia. With our temporary mine closures now in place and our metallurgical coal assets coming on line in 2012 we expect to see further margin improvement in 2012."
Mr. Nix added: "Due to the contraction of CAPP thermal prices the Company's operations and production forecasts have been adjusted accordingly. We view current prices as being stabilized, yet not robust enough to warrant sales into the spot market. We have worked intensively to adapt to the changing market conditions by redeploying capital and equipment to the higher margin True Energy and South Fork metallurgical mines and adjusting sales volumes to account for the softer thermal coal market. Subsequent to year end results, the Company negotiated an early termination of a thermal coal supply agreement resulting in a cash payment of $9.9 million, and a partial buyout of a second thermal coal agreement resulting in a cash payment of $9.0 million and the return of $12.0 million restricted cash. These contract adjustments provide an improved liquidity position for 2012, and importantly preserve valuable permitted reserves."
Highlights for the Quarter Ended December 31, 2011 and subsequent events
Financial Overview
Outlook
Since our last guidance update, the Company has made significant progress in improving our goals of expanding our metallurgical mines while continuing to add to our low cost thermal coal reserves yet also make noteworthy strides to preserve these resources for a better margin environment. We are also making huge strides in increasing our liquidity by implementing major reductions in previously expected capital expenditures at all operations, especially our expanding metallurgical mines, and by re-deploying equipment from our thermal operations. Likewise, we continue to seek opportunities for assets that will require substantially less capital outlay that will allow us to maximize our margins. In addition, we were able to negotiate the receipt substantial cash payments that approximated the net present value of the expected margin realizable over the term on two thermal coal supply agreements and we retained the inventory and reserves.
Market conditions have changed rapidly over the last few months and as a result, in February 2012, we idled two surface mines and one high wall miner job at our Straight Creek operations in Kentucky. This decision, which affected many employees, was not made lightly. A wide mixture of market conditions, including very low prices for natural gas, increased inventory levels at several utility customers, very mild winter weather and general weak demand for thermal coal all led to our conclusions. This changing market environment required us to focus on adjusting our thermal production levels in order to better match committed sales going forward while continuing to maintain our ability to be a low cost producer. These decisions not only allow us to sustain our valuable, permitted thermal reserves, but will allow us to quickly get these mines back into production when market conditions improve.
While we have made very difficult decisions to reduce our workforce and idle mines at our thermal operations, we are re-deploying equipment and manpower to our higher margin, True Energy and South Fork metallurgical mines. By moving mining equipment, accordingly, we expect to reduce previously anticipated capital expenditures in 2012 by approximately $40.0 to $60.0 million. Not only will this allow us to significantly strengthen our liquidity by substantially increasing our free cash flow, it allows us to utilize already owned equipment and avoid possibly lengthy delivery periods for equipment that would otherwise need to be ordered from manufacturers. Therefore, we anticipate being able to increase production from these operations in a more opportune manner.
For 2012, we expect to produce at levels necessary to service sales commitments at our thermal mining operations while taking efforts to substantially reduce our existing inventories at these operations as well.
In 2012, we expect to produce and sell approximately 560,000 to 730,000 million tons from our metallurgical mining operations as follows:
Conference Call
The Company will hold a conference call to discuss fourth quarter and full year 2011 results on Friday, March 9, 2012 at 10:00 a.m. ET. Interested parties are invited to participate in the conference call, during which prepared remarks from the Company's management team will be followed by a question and answer session. The conference call will be webcast live on the Internet for those who want to listen only with a replay available on the Company's website shortly after the event.
About Xinergy Ltd.
Headquartered in Knoxville, Tennessee, Xinergy Ltd., through its wholly owned subsidiary Xinergy Corp. and its subsidiaries, is engaged in coal mining in eastern Kentucky, West Virginia and Virginia. Currently, Xinergy sells high quality thermal coal to electric utilities and industrial companies throughout the south-eastern United States as well as metallurgical coal. For more information, please visit .
Contacts:
Xinergy Ltd.
Chris Halouma
Director, Investor Relations
865-474-7000
Xinergy Ltd.
Michael R. Castle
Chief Financial Officer
865-474-7000
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Datum: 09.03.2012 - 03:17 Uhr
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News-ID 123198
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