The Columbus, Ohio-based company is putting a more positive spin on 2012.
Oxford lost $5.1 million, or $0.24/share, in the final three months of 2011. That was more than three times its loss of $1.6 million, or $0.05/share, in the year-ago period. For all of last year, Oxford lost $13.1 million, or $0.62/share, compared to a loss of $7.4 million, or $0.45/share in 2010.
Total revenues increased to $96.3 million and $400.4 million in the fourth quarter and 2011, respectively, from $89.2 million and $356.5 million, respectively, in the preceding year quarter and 2010. Coal sales fell slightly to 8.1 million tons in 2011 versus 8.4 million tons in 2010.
In addition to re-pricing existing coal contracts at higher prices this year, “We have taken advantage of the existing coal market to purchase coal on more favorable terms instead of producing our own coal” at some locations, Chuck Ungurean, Oxford president and CEO, told analysts during a February 29 conference call. “This allowed us to idle one of our mines and shut down a wash plant.”
The affected mine was the so-called 431 surface mine in Muhlenberg County, Ky. Although the prep plant in question was not identified, Ungurean said its closing allows Oxford “to supply all of our Illinois Basin coal to customers on a raw basis, resulting in cost savings in 2013.
“Going into 2012, with our fully contracted sales book at higher prices we expect improvement in our 2011 financial results as compared to 2011,” he said. “We do, however, find ourselves facing a general softening of the coal markets. As a result, we have had to accommodate the changing supply profile of some customers and have done so to date without adversely impacting profitability.”
According to Jeffrey Gutman, Oxford senior vice president, CFO and treasurer, the company is “fully sold out” for this year but has reached an agreement with an undisclosed customer “to be paid our margin for any contracted coal for the year that this customer decides not to take.” That arrangement, he said, “allows us to reduce work hours at some of our mines.”
Gutman said Oxford expects to sell 8.2 million tons in 2012, but warned first quarter results may be lower than the remainder of the year because the first three months of this year still include “final deliveries under legacy contracts” with lower prices that have now expired. Thanks to repricing, Oxford expects to realize a $2/ton increase on those contracts for the rest of this year.
“The low-priced legacy contracts will be behind us after the first quarter this year,” Gutman said. “The second, third and fourth quarters should represent the earnings potential of the company going forward on a market-based contract portfolio.”