EX-99.1 2 exh99-1_2013q1.htm EXHIBIT 99.1 exh99-1_2013q1

Exhibit 99.1
WESTMORELAND COAL COMPANY
9540 South Maroon Circle, Suite 200
Englewood, Colorado 80112
(855) 922-6463 Telephone
NEWS RELEASE

Westmoreland Reports First Quarter 2013 Results



Englewood, CO – April 26, 2013 - Westmoreland Coal Company (NasdaqGM:WLB) today reported its first quarter results for 2013.

Highlights:

•
Q1 2013 revenues grew 9.6% to $161.4 million compared with $147.2 million in Q1 2012

•
Adjusted EBITDA decreased 5.9% from $27.3 million to $25.7 million

•
Q1 2013 net loss applicable to common shareholders increased to $2.7 million from income of $0.5 million in Q1 2012

•
Cash and cash equivalents increased $9.3 million to $40.9 million during the first quarter of 2013

•
Net leverage ratio decreased from 3.0 to 2.91

•
2013 guidance for production volume, Adjusted EBITDA, and capital spending reiterated

“We consider the first quarter to be very good considering the fact that it included an outage at the Coyote plant, our Beulah Mine's primary customer, and an outage at our ROVA plant. The combined impact of these two events on the quarter was almost $6.0 million of EBITDA.” said Robert P. King, Westmoreland's Chief Executive Officer.

“Because the ROVA outage was planned and we were aware that Coyote's unplanned outage which occurred in November 2012 would extend into the first quarter, the impacts of both of these outages on the first quarter were anticipated and in line with our expectations. With both of these events behind us, we expect the second quarter to improve significantly and be stronger than last year. We remain pleased with the performance of our business and still expect 2013 adjusted EBITDA to fall in the range between $112 and $120 million, consistent with the guidance provided in our March 1, 2013 release.”

“In the first quarter, Westmoreland continued to have overall reportable and lost time incidence rates lower than the national average for surface mines. Two of our mines experienced incidents during the quarter that resulted in our overall reportable and lost time incident rates being high compared to previous performance. We have refocused our safety training and awareness efforts across the organization to improve our safety performance. We are pleased that four of our mines (Jewett, Rosebud, Absaloka and Savage) worked without a reportable injury for the quarter.”

Safety

Q1 2013 safety performance at Westmoreland mines was again better than national averages for surface operations, in line with our past experience.
 
 
Three Months Ended March 31, 2013
 
 
Reportable
 
Lost Time
Westmoreland
 
1.56
 
0.94
National Average
 
1.65
 
1.13
Percentage
 
94.5%
 
83.2%

 Westmoreland News Release
Page 1 of 7
April 26, 2013


Financial Results

Westmoreland's revenues in Q1 2013 increased to $161.4 million compared with $147.2 million in Q1 2012 due to the Kemmerer acquisition and increased tonnage due to stronger power demand and favorable weather conditions. First quarter revenue growth was offset by an unplanned customer outage at the Beulah Mine and a planned annual maintenance outage at the ROVA power plant, which in 2012 occurred during the second quarter.

Westmoreland's Q1 2013 Adjusted EBITDA decreased to $25.7 million from $27.3 million in Q1 2012. This decrease was driven by the timing of the planned maintenance outage at ROVA, the Beulah Mine customer shutdown, and increased royalties and timing of maintenance costs at our Kemmerer Mine.

Westmoreland's Q1 2013 net loss to common shareholders increased by $3.2 million, from $0.5 million of income ($0.04 per basic and diluted share) in Q1 2012 to $2.7 million of loss ($0.19 per basic and diluted share) in Q1 2013.

Coal Segment Operating Results

The following table summarizes Westmoreland's Q1 2013 and Q1 2012 coal segment performance:
 
Three Months Ended March 31,
 
 
 
 
 
Increase / (Decrease)
 
2013
 
2012
 
$
 
%
 
(In thousands, except per ton data)
Revenues
$
142,112

 
$
126,514

 
$
15,598

 
12.3
 %
Operating income
13,472

 
14,437

 
(965
)
 
(6.7
)%
Adjusted EBITDA
29,906

 
29,158

 
748

 
2.6
 %
Tons sold - millions of equivalent tons
6.1

 
5.5

 
0.6

 
10.9
 %

Westmoreland's first quarter 2013 coal segment revenues and Adjusted EBITDA increased primarily due to the Kemmerer acquisition and increased tonnage demand due to stronger power demand and favorable weather conditions. These increases were partially offset by an unplanned customer outage at the Beulah Mine and increased royalties and timing of maintenance costs at the Kemmerer Mine.

Power Segment Operating Results

The following table summarizes Westmoreland's Q1 2013 and Q1 2012 power segment performance:
 
Three Months Ended March 31,
 
 
 
 
 
Increase / (Decrease)
 
2013
 
2012
 
$
 
%
 
(In thousands)
Revenues
$
19,336

 
$
20,722

 
$
(1,386
)
 
(6.7
)%
Operating income
(1,003
)
 
2,789

 
(3,792
)
 
(136.0
)%
Adjusted EBITDA
1,709

 
5,467

 
(3,758
)
 
(68.7
)%
Megawatts hours
340

 
373

 
(33
)
 
(8.8
)%

Westmoreland's power revenues and Adjusted EBITDA for the first quarter of 2013 decreased due to a planned annual maintenance outage at the ROVA power plant. In 2012, this planned maintenance outage occurred during the second quarter.

Nonoperating Results

Heritage and Corporate expenses for Q1 2013 remained at levels consistent with Q1 2012.

Interest expense for Q1 2013 increased to $10.2 million from $9.9 million in Q1 2012 as a result of the Kemmerer acquisition debt issued in January 2012.


 Westmoreland News Release
Page 2 of 7
April 26, 2013

Cash Flow, Liquidity, and Leverage

Q1 2013 operating cash flows increased to $21.2 million, enabling a strong ending cash position of $40.9 million. Total debt repayment during Q1 2013 was $6.6 million.

As of March 31, 2013, Westmoreland had total liquidity of $84.0 million, including cash on hand, and $23.1 million and $20.0 million of credit availability under the WML and corporate revolving lines of credit, respectively. Both of the credit facilities had no borrowings with one outstanding letter of credit in the amount of $1.9 million on the WML line.

During Q1 2013, Westmoreland's Net Leverage Ratio decreased to 2.91.
 
 
March 31,
 
December 31,
Leverage Ratios
 
2013
 
2012
 
 
(In millions)
Gross Debt
 
356.3

 
361.0

Less:
 
 

 
 

Cash & Cash Equivalents
 
40.9

 
31.6

Debt Service Reserves
 
13.1

 
13.1

 
 


 


Net Debt
 
302.3

 
316.3

 
 
 

 
 

Adjusted EBITDA (for the twelve months ended)
 
103.8

 
105.4

 
 
 

 
 

Gross Leverage
 
3.43

 
3.43

Net Leverage
 
2.91

 
3.00


Conference Call

A conference call regarding Westmoreland Coal Company's first quarter 2013 results will be held on April 26, 2013, at 10:00 a.m. Eastern Time. Call-in numbers are:

Live Participant Dial In (Toll Free): 877-407-9210
Live Participant Dial In (International): 201-689-8049

About Westmoreland Coal Company

Westmoreland Coal Company is the oldest independent coal company in the United States. The Company's coal operations include sub-bituminous coal mining in the Powder River Basin in Montana and Wyoming, and lignite mining operations in Montana, North Dakota and Texas. Its power operations include ownership of the two-unit ROVA coal-fired power plant in North Carolina. For more information, visit www.westmoreland.com.


 Westmoreland News Release
Page 3 of 7
April 26, 2013

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. Our actual results may differ materially from those contemplated by the forward-looking statements, including that Westmoreland may not achieve the projected sales tons, adjusted EBITDA or capital expenditure targets. 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.


# # #

Contact: Kevin Paprzycki (855) 922-6463

 Westmoreland News Release
Page 4 of 7
April 26, 2013


Westmoreland Coal Company and Subsidiaries
Consolidated Statements of Operations (Unaudited)

 
Three Months Ended March 31,
 
2013
 
2012
 
(In thousands, except per share data)
Revenues
$
161,448

 
$
147,236

Cost, expenses and other:
 
 
 
Cost of sales
130,421

 
110,763

Depreciation, depletion and amortization
14,426

 
13,289

Selling and administrative
11,887

 
13,535

Heritage health benefit expenses
3,951

 
3,810

Loss on sales of assets
(234
)
 
38

Other operating income
(4,737
)
 
(3,284
)
 
155,714

 
138,151

Operating income
5,734

 
9,085

Other income (expense):
 
 
 
Interest expense
(10,160
)
 
(9,883
)
Interest income
297

 
406

Other income
70

 
177

 
(9,793
)
 
(9,300
)
Loss before income taxes
(4,059
)
 
(215
)
Income tax expense
28

 
7

Net loss
(4,087
)
 
(222
)
Less net loss attributable to noncontrolling interest
(1,702
)
 
(1,080
)
Net loss attributable to the Parent company
(2,385
)
 
858

Less preferred stock dividend requirements
340

 
340

Net income (loss) applicable to common shareholders
$
(2,725
)
 
$
518

 
 
 
 
Net income (loss) per share applicable to common shareholders:
 
 
 
Basic and diluted
$
(0.19
)
 
$
0.04

Weighted average number of common shares outstanding
 
 
 
Basic
14,282

 
13,861

Diluted
14,282

 
13,968



 Westmoreland News Release
Page 5 of 7
April 26, 2013


Westmoreland Coal Company and Subsidiaries
Summary Financial Information (Unaudited)    

 
Three Months Ended March 31,
 
2013
 
2012
 
(In thousands)
Cash Flow
 
 
 
Net cash provided by operating activities
$
21,216

 
$
12,988

Net cash used in investing activities
(5,725
)
 
(102,571
)
Net cash provided by (used in) financing activities
(6,249
)
 
108,907


 
March 31,
2013
 
December 31,
2012
 
(In thousands)
Balance Sheet Data
 
 
 
Total cash and cash equivalents
$
40,852

 
$
31,610

Total assets
943,015

 
$
936,115

Total debt
356,286

 
360,989

Working capital deficit
(2,950
)
 
(11,600
)
Total deficit
(286,530
)
 
(286,231
)
 
 
 
 
Common shares outstanding
14,365

 
14,201


The tables below show how we calculated Adjusted EBITDA, including a breakdown by segment, and reconciles Adjusted EBITDA to net loss, the most directly comparable GAAP financial measure. Concerning the Year Ended December 31, 2012 column, please refer to our Annual Report on Form 10-K for the year ended December 31, 2012. The Twelve Months Ended March 31, 2013 column is calculated from the prior three columns.
 
Three Months Ended March 31,
 
2013
 
2012
 
(In thousands)
Adjusted EBITDA by Segment
 
 
 
Coal
$
29,906

 
$
29,158

Power
1,709

 
5,467

Heritage
(4,175
)
 
(4,010
)
Corporate
(1,784
)
 
(3,286
)
Total
$
25,656

 
$
27,329



 Westmoreland News Release
Page 6 of 7
April 26, 2013

 
Three Months Ended March 31,
 
Year Ended
December 31,
 
Twelve Months
Ended
March 31,
 
2013
 
2012
 
2012
 
2013
 
(In thousands)
Reconciliation of Adjusted EBITDA to net loss
 
 
 
 
 
 
 
Net loss
$
(4,087
)
 
$
(222
)
 
$
(13,662
)
 
$
(17,527
)
 
 
 
 
 
 
 
 
Income tax expense (benefit)
28

 
7

 
90

 
111

Other loss (income)
(70
)
 
(177
)
 
(723
)
 
(616
)
Interest income
(297
)
 
(406
)
 
(1,496
)
 
(1,387
)
Loss on extinguishment of debt
—

 
—

 
1,986

 
1,986

Interest expense
10,160

 
9,883

 
42,677

 
42,954

Depreciation, depletion and amortization
14,426

 
13,289

 
57,145

 
58,282

Accretion of ARO and receivable
3,180

 
2,853

 
12,189

 
12,516

Amortization of intangible assets and liabilities
164

 
162

 
658

 
660

EBITDA
23,504

 
25,389

 
98,864

 
96,979

 
 
 
 
 
 
 
 
Loss on sale of assets
(234
)
 
38

 
528

 
256

Share-based compensation
2,386

 
1,902

 
6,040

 
6,524

Adjusted EBITDA
$
25,656

 
$
27,329

 
$
105,432

 
$
103,759


EBITDA and Adjusted EBITDA are supplemental measures of financial performance that are not required by, or presented in accordance with, GAAP. EBITDA and Adjusted EBITDA are included in this news release because they are key metrics used by management to assess Westmoreland’s operating performance and Westmoreland believes that EBITDA and Adjusted EBITDA are useful to an investor in evaluating our operating performance because these measures:

•
are used widely by investors to measure a company’s operating performance without regard to items excluded from the calculation of such terms, which can vary substantially from company to company depending upon accounting methods and book value of assets, capital structure and the method by which assets were acquired, among other factors; and
•
help investors to more meaningfully evaluate and compare the results of Westmoreland’s operations from period to period by removing the effect of our capital structure and asset base from our operating results.

Neither EBITDA nor Adjusted EBITDA is a measure calculated in accordance with GAAP. The items excluded from EBITDA and Adjusted EBITDA are significant in assessing Westmoreland’s operating results. EBITDA and Adjusted EBITDA have limitations as analytical tools, and should not be considered in isolation from, or as a substitute for, analysis of our results as reported under GAAP. For example, EBITDA and Adjusted EBITDA:

•
do not reflect our cash expenditures, or future requirements for capital and major maintenance expenditures or contractual commitments;
•
do not reflect income tax expenses or the cash requirements necessary to pay income taxes;
•
do not reflect changes in, or cash requirements for, our working capital needs; and
•
do not reflect the significant interest expense, or the cash requirements necessary to service interest or principal payments, on certain of our debt obligations.

In addition, although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and EBITDA and Adjusted EBITDA do not reflect any cash requirements for such replacements. Other companies in our industry and in other industries may calculate EBITDA and Adjusted EBITDA differently from the way that Westmoreland does, limiting their usefulness as comparative measures. Because of these limitations, EBITDA and Adjusted EBITDA should not be considered as measures of discretionary cash available to us to invest in the growth of its business. Westmoreland compensates for these limitations by relying primarily on its GAAP results and using EBITDA and Adjusted EBITDA only as supplemental data.

 Westmoreland News Release
Page 7 of 7
April 26, 2013