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Westmoreland Coal Company (NasdaqGM:WLB) today reported its results for 2011.
Highlights:
- Adjusted EBITDA decreased $8.5 million (10.4%) during 2011 to $73.1 million as compared to $81.6 million in 2010. The decrease was due to the prolonged hydro electric power season and subsequent flooding that affected the first three quarters of the year and approximately $4.4 million in black lung and worker’s compensation charges that were recorded in the fourth quarter, caused by changes in discount rates and medical cost projections.
- Net loss applicable to common shareholders of $34.5 million ($2.61 per basic and diluted share) for 2011 compared to 2010 net loss of $1.9 million ($0.17 per basic and diluted share). The 2011 net loss includes $17.0 million in charges related to the refinancing of debt, and a $3.2 million fair value adjustment expense on the conversion of convertible debt, associated with $150 million of senior secured notes issued by the company during the first quarter. The 2011 net loss also includes the aforementioned $4.4 million of black lung and workers’ compensation expenses. The majority of the remaining difference was due to the impact of the hydro electric power season and approximately $1.1 million in costs related to relocating the company headquarters to the Denver area.
- Westmoreland’s 2011 safety results set new performance bests for the company as it achieved lost time and reportable incident rates of 51.2% and 52.8%, respectively, of the national averages for surface operations for the year.
- During the fourth quarter of 2011, Westmoreland announced it had signed an agreement to purchase Chevron’s Kemmerer, WY coal mine. The acquisition of the Kemmerer Mine and related financing transaction were closed in January 2012.
“2011 presented numerous unexpected adversities for our customers that negatively impacted our operations” said Keith E. Alessi, Westmoreland’s President and CEO. “The year started off with unprecedented snow pack in the Cascades which led to one of the longest hydro electric generation seasons on record. This was followed by flooding across the Northern tier, which delayed and disrupted rail movements. Finally, in November, one of our customers experienced a fire at one of their units, which forced it to shut down, pending repairs. The first $2.0 million in losses, which will impact us primarily in the first quarter of 2012, is covered by our captive insurance company, and we expect remaining losses to be covered by our business interruption insurance. I am proud of the fact that we not only reacted quickly and prudently to these issues, but we were able to post very respectable results as measured by EBITDA. Our EBITDA for the year was only down 10.4% in the face of these significant adverse events, from 2010, which was a record year. This is strong testimony to the strength of our cost plus business model and the tenacity of the management team in managing costs.
We were also able to make significant progress on a number of strategic fronts during the year. We improved our liquidity with a February senior secured note offering. This set the stage for us to acquire additional coal reserves at our WRI operation and allowed us to successfully enter into an agreement with Chevron Mining Inc., late in December, to acquire the Kemmerer Mine. We seamlessly relocated the corporate headquarters to the Denver area during the year and we are extremely proud that we had a record safety performance year.
We closed on the Kemmerer acquisition and the related financing in January 2012. We are encouraged by the early results at Kemmerer and the integration is going well. We look forward to continuing to execute our strategic initiatives, and improving our overall results during 2012.”