Westmoreland Coal Company (NYSE Amex:WLB) reported today its first quarter 2010 financial results.
- Total revenues were $126.4 million for the quarter, 3.8% higher than revenues for the same period in the prior fiscal year.
- Operating income increased 220% to $5.3 million, compared to a loss of $4.4 million in the same period for the prior year, an improvement of $9.7 million. Reductions in heritage costs of $3.1 million and selling and administrative costs of $0.8 million were major contributors to this improvement. Also contributing to the improvement were the start of new coal supply agreements and price increases under existing agreements.
- The company recorded a charge of $4.8 million during the quarter related to the valuation of the conversion feature in its convertible debt as a result of an increase in its stock price. After this charge, net loss attributable to common shareholders was $3.2 million ($0.30 per basic and diluted share). In the prior year, the Company recorded income of $3.8 million due to this feature as its stock price experienced a decline during that same quarter. After recording this income, the company recorded a loss of $5.6 million ($0.59 per basic and diluted share). Excluding the charges and income related to the conversion feature, the Company’s profits increased by $11.0 million from the first quarter of 2009 to the first quarter of 2010.
- Westmoreland continues its strong safety performance into the first quarter of 2010 with reportable and lost time incident rates significantly below national averages.
“We are very pleased with these results,” said Keith E. Alessi, Westmoreland’s President and CEO. “Reflected in these numbers is the impact of the many cost control and efficiency initiatives that we have pursued. We expect to continue to see improvements in our 2010 results compared to 2009; however, the planned maintenance shutdowns of our ROVA facilities during May will negatively impact the second quarter.”
“Many companies took large charges during the first quarter associated with changes in tax provisions under the recently enacted national health care legislation. Since Westmoreland established full reserves against its tax loss carryforwards and other tax assets, we were not subject to such charges. However, there are numerous new provisions in the law related to black lung liabilities as well as health care. As detailed regulations become available, we will review these with our actuaries to ascertain whether they have any accounting impact on the company. It is impossible at this time to assess what impact, if any, these changes in the law will have.”
The Company’s revenues in the first quarter of 2010 increased to $126.4 million from $121.8 million in 2009. This increase was primarily due to favorable terms in coal supply agreements as discussed above.