Xinergy Ltd.

TSX : XRG


Xinergy Ltd.

March 21, 2013 19:52 ET

Xinergy Announces Results for Fourth Quarter and Full Year 2012

- Fourth quarter and full year 2012 revenue and adjusted EBITDA of $11.5 million and $81.2 million, respectively and $(7.2) million and $(22.8) million, respectively

- Divested Kentucky thermal operations ("Straight Creek") for gross proceeds of $47.2 million as Xinergy continues to focus on its strategy of building out a high-quality, metallurgical coal portfolio

- Commenced construction of South Fork infrastructure, with target date of July 1, 2013 to ramp production and shipments of premium quality, mid-vol metallurgical coal

- Idling, cost control and balance sheet initiatives implemented to position Xinergy for a market recovery

- Total liquidity at year-end of $42.1 million (excluding $49.5 million in restricted cash), pro forma for the Straight Creek divestiture

- Updated Production and Capex guidance provided for 2013

KNOXVILLE, TENNESSEE--(Marketwire - March 21, 2013) - Xinergy Ltd. (TSX:XRG), a Central Appalachian coal producer, today announced that it had a net loss of $(88.8) million, or $(1.63) per diluted share for the year ended December 31, 2012 and a net loss of $(40.4) million, or $(0.74) per diluted share, for the fourth quarter of 2012. This is compared with a net loss of $(14.1) million, or $(0.25) per diluted share for the year ended December 31, 2011 and a net loss of $(6.5) million or $(0.12) per diluted share in the fourth quarter of 2011. Fourth quarter and full year 2012 adjusted EBITDA was $(7.2) million and $(22.8) million, respectively, compared with $6.7 million and $30.6 million, respectively for the fourth quarter and full year 2011. The Company's Audited Consolidated Financial Statements for the year ended December 31, 2012, together with its Management's Discuss and Analysis ("MD&A") for the corresponding period, have been posted on SEDAR at www.sedar.com and on the Company's website at www.xinergycorp.com.

Matt Goldfarb, Xinergy's CEO, commented: "Last year proved to be an extraordinarily challenging market environment, characterized by the confluence of continued weakness in domestic thermal markets due to oversupply and an abundance of cheap natural gas, and a violent correction in the global met market occasioned by slowing Asian demand and instability in European markets. As we look into 2013, we are cautiously optimistic that both markets have bottomed and are beginning to stabilize. Firming natural gas prices, significant supply rationalization and more seasonal winter weather provide support for a potential rebound in CAPP thermal pricing. In the met market, we see the most recent hard coking coal benchmark settlement of $172/mt as reflecting not only increased demand from China, but also a supply response to the mid-2012 pricing environment that left much of the seaborne met cost curve underwater."

"The fourth quarter concluded a pivotal year for Xinergy in which we executed well against our objectives of repositioning our asset portfolio with a focus on our premium quality, mid-vol met footprint in West Virginia, while maintaining balance sheet flexibility to withstand the market downturn. The recently announced divestiture of our Kentucky thermal operations accelerates our transformation towards a greater mix of premium quality, mid-vol met coal assets while strengthening our balance sheet to position us to drive long-term shareholder value."

2012 Annual Results

The following tables show selected operating results for the three month and twelve month periods ended December 31, 2012.

As at As at As at
December 31 December 31 December 31
($'000) 2012 2011 2010
Balance Sheet
Cash$32,325 $72,983$17,029
Total current assets$50,723 $117,269$47,075
Total assets$188,772 $289,701$153,234
Total current liabilities$20,797 $40,309$28,659
Total long term liabilities$229,786 $224,803$75,449
Shareholders' (deficit) equity$(61,811)$24,589$49,126
$'000, except per share 2012 2011 2010
Statement of Operations
Coal revenues$81,159 $166,820 $108,841
Cost of coal sales$95,167 $122,092 $74,447
Gross margin$(14,008)$44,188 $34,393
Loss before taxes$(70,023)$(24,893)$(2,093)
Net loss$(88,795)$(14,107)$(2,071)
Net loss per share$(1.63)$(0.25)$(0.04)
Three months Three months Three months Three months
ended ended ended ended
$'000, except per share Dec 31, 2012 Sept 30, 2012 June 30, 2012 March 31, 2012
Statement of Operations
Coal revenues$11,547 $16,522 $23,143 $29,946
Cost of coal sales$17,239 $21,051 $26,372 $30,507
Gross margin$(5,692)$(4,529)$(3,229)$(561)
(Loss) income before taxes$(18,711)$(35,613)$(18,070)$2,372
Net (loss) income$(40,397)$(35,613)$(14,474)$1,690
Per share, basic and diluted$(0.74)$(0.65)$(0.27)$0.03
2012 2011 2010
Sales & Operating Statistics
Tons sold 1,211,166 1,990,447 1,278,585
Tons produced 983,871 2,037,002 1,332,571
Sale price/ton$67.01 $83.54$85.13
COGS/ton sold$78.58 $61.34$58.23
Gross margin/ton sold$(11.57)$22.20$26.90
Cash costs/ton produced$79.77 $59.01$54.16
Three months Three months Three months Three months
ended ended ended ended
$'000, except per share Dec 31, 2012 Sept 30, 2012 June 30, 2012 March 31, 2012
Sales & Operating Statistics
Tons sold 179,584 242,390 363,495 425,697
Tons produced 146,790 183,909 272,999 380,173
Sales price/ton$64.30 $68.16 $63.67 $70.35
COGS/ton sold$95.99 $86.85 $72.55 $71.66
Gross margin/ton sold$(31.69)$(18.69)$(8.88)$(1.31)
Cash costs/ton produced$94.55 $95.17 $79.22 $66.99
2012
Metallurgical Thermal Total
Tons sold 116,373 1,094,793 1,211,166
Ton produced 125,318 858,553 983,871
Sale price/ton $104.00 $63.08 $67.01
COGS/ton sold $168.02 $69.07 $78.57
Gross margin/ton sold $(64.02)$(5.99)$(11.57)
Total revenues $12,102,171 $69,057,040 $81,159,211
Total cost of sales $19,552,817 $75,614,451 $95,167,268
Gross margin $(7,450,646)$(6,557,411)$(14,008,057)
Cash costs:
Cost of coal sales $19,552,817 $75,614,451 $95,167,268
Inventory change $493,509 $(11,566,429)$(11,072,920)
Purchase coal $(5,616,902)$(5,616,902)
Cash cost $20,046,326 $58,431,121 $78,477,447
Tons produced 125,318 858,553 $983,871
Cash costs/ton produced $159.96 $68.06 $79.76
Three months ended December 31, 2012
Metallurgical Thermal Total
Tons sold 27,511 152,073 179,584
Ton produced 17,718 129,072 146,790
Sale price/ton $98.04 $58.20 $64.30
COGS/ton sold $189.38 $79.09 $95.99
Gross margin/ton sold $(91.34)$(20.89)$(31.69)
Total revenues $2,697,127 $8,850,355 $11,547,482
Total cost of sales $5,210,143 $12,027,591 $17,237,734
Gross margin $(2,513,016)$(3,177,236)$(5,690,252)
Cash costs:
Cost of coal sales $5,210,143 $12,027,591 $17,237,734
Inventory change $(712,594)$(1,937,507)$(2,650,101)
Purchase coal $(709,293)$(709,293)
Cash cost $4,497,549 $9,380,791 $13,878,340
Tons produced 17,718 129,072 146,790
Cash costs/ton produced $253.84 $72.68 $94.55

Liquidity and Capital Resources

As of December 31, 2012, we had total cash and cash equivalents (excluding restricted cash) of $32.3 million, compared with $73.0 million at December 31, 2011. As of December 31, 2012, after giving effect to the Straight Creek sale, the Company's liquidity profile is as follows:

Cash........................................... $ 32.3 million
Term Loan B Commitment................. $ 9.8 million
Liquidity................................... $ 42.1 million
Restricted Cash............................ $ 49.5 million

In connection with the Straight Creek sale, approximately $38 million has been placed in a "Collateral Proceeds Account" pursuant to the terms of the Indenture governing our 9.25% Senior Secured Notes. The Company anticipates funding its capital expenditures requirements over the balance of 2013 from this account.

2013 Production and Capital Expenditures Guidance

The Company does not anticipate any thermal coal production in 2013, after giving effect to the Straight Creek transaction. Previously anticipated 2013 thermal coal sales from Raven Crest/Brier Creek have been pushed into 2015 by reason of a March 2013 amendment to a supply agreement covering the sale of 360,000 tons per annum previously scheduled to cover a 2-year period beginning January 2013. The amended supply agreement provides for the delivery of 360,000 tons per annum beginning January 2014, and continuing through December 2015, at index-based pricing.

2013 metallurgical coal sales guidance remains unchanged from prior guidance at 300,000 to 400,000 tons from our South Fork operation. The Company anticipates capital expenditures of $35.0 to $40.0 million for fiscal 2013, of which approximately $8.5 million has been spent to date.

Mr. Goldfarb continued: "Construction of our preparation plant and rail loading facility at South Fork remains on track to be completed by the end of the second quarter. Notwithstanding the challenging market environment, the excitement surrounding our crown jewel asset coming online meaningfully is evident amongst the entire Xinergy family."

Conference Call, Webcast and Replay

The Company will hold its quarterly conference call to discuss fourth quarter and full year 2012 operating results on Friday, March 22, 2013 at 9:00 a.m. EDT. The conference call will be open to the public toll free at (877) 317-6789. International callers should use (412) 317-6789, and Canadian callers should use (866) 605-3852. The conference call can also be accessed via webcast on the Company's website with a replay available 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. Xinergy sells high quality thermal and metallurgical coal to electric utilities, steelmakers, energy trading firms and industrial companies. For more information, please visit www.xinergycorp.com.

Contact Information

  • Xinergy Ltd.
    Matt Goldfarb
    Chief Executive Officer

    Xinergy Ltd.
    Michael R. Castle
    Chief Financial Officer
    865-474-7000
    www.xinergycorp.com