The company reported a net loss of $US75.3 million for the period ended March 30, versus a $15.9 million loss during the same time last year.
Revenues were $502.6 million, compared with $577 million in the prior year due to a reduction in tons sold, though that was partially offset by higher revenue per ton.Â
On a positive note, year-on-year revenue per ton increased 8% to $5.73 on higher selling prices across all operating basins.Â
Patriot’s first quarter sales were 6.3 million tons, 4.9Mt of which was thermal and 1.4Mt of which was metallurgical.Â
In 2011’s comparable quarter, the miner had 6.1Mt of thermal and 1.9Mt met coal sold. Officials cited lower demand and deferred shipments for the drop.
The company took a hit on its retirement obligation expenses in the first quarter, which included a $17.5 million adjustment following the closure of the Big Mountain complex in February. The idling also left it with a first quarter restructuring and impairment charge.
“Since the beginning of 2012, in response to new challenges facing our business, the Patriot management team has taken numerous swift and decisive actions to put the company on a more stable footing going forward,” chief executive Richard Whiting said.
“We have reduced thermal coal production by over four million annual tons, delayed expansions under our Met Build-Out program, implemented major cost reduction initiatives, and worked with our customers to better meet their changing requirements.”
He also echoed the concern of many other US operators suffering from a “major structural change” in operating portfolios amid lower natural gas prices and increasingly-challenging environmental regulations.Â
“This, in turn, is resulting in a period of transition for coal mining companies, as production across the industry is reduced to match less overall US utility demand.Â At the same time, a strong global thermal market is driving higher US exports, partially offsetting the weaker domestic demand.”
Patriot had maintained some of its met properties in a “hot idle” state while waiting for stronger markets, Whiting said, and current projections for the company reflected its plans to bring some operating sections back into production through the year.
“Our ability to scale our production to match the market is a distinct advantage of our modular met coal production portfolio,” he said.
Senior vice-president and chief financial officer Mark Schroeder estimated that it had shaved about 1000 from its payroll since the start of 2012, and at the same time the company had worked to tighten control by assuming full operation of several of its mines and facilities.
“Lower sales volume during the quarter led to higher coal inventories and use of cash during the quarter,” he said.
“The increase in inventories was mitigated, to some degree, by our actions to idle production. We expect our coal inventories to decline in each of the next two quarters.”Â
Looking ahead, Patriot has projected 2012 sales volumes of between 25 and 27Mt, including met coal sales of 7 to 7.4Mt.
While about 1Mt of met coal has been sold for 2012 delivery since its last earnings report, about 1Mt remains unpriced.
“During the quarter, we successfully restructured a legacy customer contract that included deliveries through 2017; the contract was previously priced not only below market, but also below cost, so we are pleased with this successful outcome that will benefit our earnings for the next six years,” Schroeder said.
“As a result of the negotiation, this contract volume of approximately 1.6Mt annual will not be sold at a loss, but will instead be available for sale in the future at market prices.”