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Englewood, CO – May 15, 2017 – Westmoreland Coal Company (Nasdaq:WLB) today reported financial results for the first quarter 2017 and reiterated its 2017 guidance.
First Quarter Highlights
• Revenues of $339.7 million from 12.4 million tons sold
• Net loss applicable to common shareholders of $36.8 million, or $1.98 per share
• Adjusted EBITDA of $88.2 million, including approximately $47 million accelerated from the Capital Power payment
• Cash flow used in operating activities of $0.7 million
• Free cash flow of $42.6 million, which also includes the accelerated Capital Power payment
“We remain on track to achieve our full year guidance, despite a challenging first quarter,” said Westmoreland Chief Executive Officer, Kevin Paprzycki. “Our adjusted EBITDA and cash flow were impacted during the quarter by low weather-related demand. We also performed dragline repairs and worked through some challenging parts of our mine plan. Our operators took proactive steps to minimize the impact of these headwinds, and I’m pleased that we now have these factors behind us. This quarter’s results demonstrate the resiliency of our model in that, despite an unusual set of challenges, we produced positive free cash flow.”
Safety
Westmoreland’s safety metrics are below.
| Three Months Ended March 31, 2017 | ||
| Reportable Rate |
Lost Time Rate |
|
| U.S. Surface Operations | 1.82 | 1.51 |
| U.S National Surface Average | 1.35 | 0.82 |
| Percentage | 135% | 184% |
| U.S. Underground Operations | 1.64 | 0.82 |
| U.S. National Underground Average | 4.95 | 3.56 |
| Percentage | 33% | 23% |
| Canadian Operations | 0.69 | 0.34 |
Consolidated and Segment Results
Consolidated adjusted EBITDA for the first quarter of 2017 was $88.2 million. As expected, revenue in the Coal-US segment was lower due to the expiration of the Jewett and Beulah coal supply contracts. Unfavorable weather also impacted all operating segments, particularly Coal -WMLP, where mild weather in Ohio added to the existing softness in price and demand. Heavy snowfall, followed by heavy rain, at the Kemmerer mine, lowered first quarter deliveries and increased costs. Operational challenges, including dragline repairs in Canada and temporary mining in a lower-yield area of certain mines in both the Coal – Canada and Coal – WMLP segments, drove lower sales and increased costs. Offsetting these declines was the effect of the early repayment of loan and lease receivables by Capital Power, of which approximately $47 million represented accelerated collections in the first quarter of 2017. Adjusted EBITDA also benefited from an additional month of San Juan operations compared with the previous year.
Cash Flow and Liquidity
Westmoreland’s free cash flow through March 31, 2017, was $42.6 million, including the benefit from the early repayment of loan and lease receivables. Free cash flow is the net of cash flow used in operations of $0.7 million, less capital expenditures of $7.2 million, plus net cash collected for the loan and lease receivables of $50.5 million. Included in cash flow used in operations were cash uses for interest expense of $32.0 million, for asset retirement obligations of $10.7 million, and negative working capital of $3.2 million.
At March 31, 2017, cash and cash equivalents on hand totaled $75.4 million, a $15.4 million increase from year end. The increase was comprised of free cash flow generation of $42.6 million; net cash debt reductions including capital lease payments of $22.4 million; a $3.6 million reserve acquisition and other non-operating cash uses of $1.2 million.
Gross debt plus capital lease obligations at quarter end totaled $1.1 billion, of which $324.4 million resides at Westmoreland Resource Partners, LP and $802.7 million resides at Westmoreland Coal Company. There was $33.4 million available to draw, net of letters of credit, on Westmoreland’s revolving credit facility. An additional $14.7 million was available to Westmoreland Resource Partners through its revolving credit facility, which is not available to the parent for borrowings. No amounts had been drawn on either revolving credit facility as of March 31, 2017.
Full-Year Guidance
Westmoreland reiterated its 2017 guidance, which includes the impact of the early repayment of loan and lease receivables related to the Genesee mine, as follows:
| Guidance Summary | 2017 | |
| Coal tons sold | 40 – 50 million tons | |
| Adjusted EBITDA | $280 – $310 million | |
| Free cash flow | $115 – $140 million | |
| Capital expenditures | $40 – $50 million | |
| Cash interest | approximately $95 million |
Notes
Westmoreland presents certain non-GAAP financial measures, including adjusted EBITDA and free cash flow, that management believes provide meaningful supplemental information and provide meaningful comparability to prior periods. Reconciliations of non-GAAP to GAAP measures are presented in the accompanying tables.
Conference Call
Westmoreland Coal Company will host its earnings conference call on May 15, 2017, at 10:00 a.m. Eastern Time.
Participants may join the call using the numbers below:
- Toll Free: 1-844-WCC-COAL (844-922-2625)
- International: 1-201-689-8584
- Webcast: www.westmoreland.com/investors/investor-webcasts
A replay of the teleconference will be available until June 5, 2017 and can be accessed using the information below:
- Replay: 1-877-481-4010 or 1-919-882-2331
- Replay ID: 10368
- Webcast: www.westmoreland.com/investors/investor-webcasts
About Westmoreland Coal Company
Westmoreland Coal Company is the oldest independent coal company in the United States. Westmoreland’s coal operations include surface coal mines in the United States and Canada, underground coal mines in Ohio and New Mexico, a char production facility, and a 50% interest in an activated carbon plant. Westmoreland also owns the general partner of and a majority interest in Westmoreland Resource Partners, LP, a publicly-traded coal master limited partnership (NYSE:WMLP). Its power operations include ownership of the two-unit ROVA coal-fired power plant in North Carolina. For more information, visit www.westmoreland.com.
For further information please contact:
Gary Kohn, Chief Financial Officer
1-720-354-4467
gkohn@westmoreland.com
Cautionary Note Regarding Forward-Looking Statements
Forward-looking statements are based on Westmoreland’s current expectations and assumptions regarding its business, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. Actual results may differ materially from those contemplated by the forward-looking statements. Westmoreland cautions you against relying on any of these forward-looking statements. They are statements neither of historical fact nor guarantees or assurances of future performance. Important factors that could cause actual results to differ materially from those in the forward-looking statements include political, economic, business, competitive, market, weather and regulatory conditions.
Any forward-looking statements made by Westmoreland in this news release speak only as of the date on which it was made. Westmoreland undertakes no obligation to publicly update any forward-looking statements, whether as a result of new information, future developments or otherwise, except as may be required by law.