Delaware | 001-11155 | 23-1128670 | ||
(State or other jurisdiction of incorporation) |
(Commission File Number) | (IRS Employer Identification No.) |
2 North Cascade Avenue, 2nd Floor, Colorado Springs, CO |
80903 |
|
(Address of principal executive offices) | (Zip Code) |
o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |
o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |
o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |
o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02. | Results of Operations and Financial Condition |
Item 9.01. | Financial Statements and Exhibits |
Exhibit No. | Description | |||
99.1 | Press Release dated November 8, 2011 |
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99.2 | Transcript of Investor Conference Call |
WESTMORELAND COAL COMPANY |
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Date: November 10, 2011 | By: | /s/ Russell H. Werner | ||
Russell H. Werner | ||||
Controller and Principal Accounting Officer (a duly authorized officer) |
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Exhibit No. | Description | |||
99.1 | Press Release dated November 8, 2011 |
|||
99.2 | Transcript of Investor Conference Call |
Westmoreland Coal Company | 2 N. Cascade Ave., 2nd Floor | |
(719) 442-2600 Telephone | Colorado Springs, CO 80903 |
| Operating income increased $0.8 million from $7.8 million in Q3 2010 to $8.6 million in Q3 2011. Year to date 2011 operating income was $15.0 million compared to 2010 year to date operating income of $14.5 million. |
| Adjusted EBITDA increased $1.4 million during Q3 2011 to $24.2 million as compared to $22.8 million in Q3 2010. Year to date 2011 Adjusted EBITDA was $61.7 million compared to year to date 2010 Adjusted EBITDA of $60.4 million. |
| Net income applicable to common shareholders of $2.4 million ($0.18 per basic and diluted share) for Q3 2011 compared to Q3 2010 net income of $2.5 million ($0.23 per basic and diluted share). Year to date net loss for 2011 was $23.3 million compared to a year to date 2010 net income of $0.2 million. The 2011 net loss includes $17.0 million in charges related to the refinancing of debt in February 2011 and $3.2 million of expense on the conversion features fair value adjustment. |
| Westmoreland again continued its strong safety performance achieving reportable and lost time incident rates 55.5% and 52.5%, respectively, of the national averages for surface operations for the third quarter of 2011. |
| During the third quarter of 2011, Westmorelands Western Energy Mine received an Excellence in Surface Coal Mining Award from the Office of Surface Mining for its reclamation efforts at the Companys mine in Colstrip, Montana. |
Three Months Ended September 30, | ||||||||||||||||
Increase / (Decrease) | ||||||||||||||||
2011 | 2010 | $ | % | |||||||||||||
Revenues (in thousands) |
$ | 108,823 | $ | 100,482 | $ | 8,341 | 8.3 | % | ||||||||
Operating income (in thousands) |
9,679 | 8,869 | 810 | 9.1 | % | |||||||||||
Adjusted EBITDA (in thousands) |
22,070 | 20,839 | 1,231 | 5.9 | % | |||||||||||
Tons sold millions of equivalent tons |
6.0 | 6.5 | (0.5 | ) | (7.7 | )% | ||||||||||
Operating income per ton sold |
$ | 1.61 | $ | 1.36 | $ | 0.25 | 18.2 | % |
Three Months Ended September 30, | ||||||||||||||||
Increase / (Decrease) | ||||||||||||||||
2011 | 2010 | $ | % | |||||||||||||
(In thousands) | ||||||||||||||||
Revenues |
$ | 23,626 | $ | 23,598 | $ | 28 | 0.1 | % | ||||||||
Operating income |
4,694 | 5,059 | (365 | ) | (7.2 | )% | ||||||||||
Adjusted EBITDA |
7,441 | 7,761 | (320 | ) | (4.1 | )% | ||||||||||
Megawatts hours |
445 | 439 | 6 | 1.4 | % |
Reportable | Lost Time | |||||||
Westmoreland Coal |
1.01 | 0.63 | ||||||
National Surface Mine Average |
1.82 | 1.20 |
| changes in the Companys postretirement medical benefit and pension obligations and the impact of recently enacted healthcare legislation; |
| changes in the Companys black lung obligations, changes in the Companys experience related to black lung claims, and impact of the recently enacted healthcare legislation; |
| the Companys potential inability to expand or continue current coal operations due to limitations in obtaining bonding capacity for new mining permits; |
| the Companys potential inability to maintain compliance with debt covenant requirements; |
| the potential inability of the Companys subsidiaries to pay dividends to them due to restrictions in the Companys debt arrangements, reductions in planned coal deliveries or other business factors; |
| the Companys potential inability to enter into new coal supply agreements with existing customers due to the unfavorable result of competitive bid processes or the shutdown of a power facility due to new environmental legislation or regulations; |
| risks associated with the structure of ROVAs contracts with its lenders, coal suppliers and power purchaser, which could dramatically affect the overall profitability of ROVA; |
| the effect of Environmental Protection Agency inquiries and regulations on the operations of ROVA; |
| the effect of prolonged maintenance or unplanned outages at the Companys operations or those of its major power generating customers, including unplanned outages at its customers due to the impact of weather-related variances; |
| future legislation and changes in regulations, governmental policies and taxes, including those aimed at reducing emissions of elements such as mercury, sulfur dioxides, nitrogen oxides, particulate matter or greenhouse gases; and |
| the other factors that are described in Risk Factors in the Companys Form 10-K for fiscal year 2010 and in subsequent Quarterly Reports on 10-Q. |
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
(In thousands, except per share data) | ||||||||||||||||
Revenues |
$ | 132,449 | $ | 124,080 | $ | 372,353 | $ | 378,152 | ||||||||
Cost, expenses and other: |
||||||||||||||||
Cost of sales |
100,164 | 94,208 | 288,964 | 296,366 | ||||||||||||
Depreciation, depletion and amortization |
11,612 | 10,964 | 33,861 | 33,435 | ||||||||||||
Selling and administrative |
9,884 | 8,930 | 28,224 | 28,578 | ||||||||||||
Heritage health benefit expenses |
3,896 | 4,241 | 11,115 | 11,550 | ||||||||||||
Loss on sales of assets |
91 | 165 | 415 | 256 | ||||||||||||
Other operating income |
(1,769 | ) | (2,267 | ) | (5,236 | ) | (6,519 | ) | ||||||||
123,878 | 116,241 | 357,343 | 363,666 | |||||||||||||
Operating income (loss) |
8,571 | 7,839 | 15,010 | 14,486 | ||||||||||||
Other income (expense): |
||||||||||||||||
Interest expense |
(7,650 | ) | (5,756 | ) | (22,262 | ) | (17,245 | ) | ||||||||
Loss on extinguishment of debt |
| | (17,030 | ) | | |||||||||||
Interest income |
423 | 603 | 1,134 | 1,380 | ||||||||||||
Other income (loss) |
147 | 17 | (2,630 | ) | 907 | |||||||||||
(7,080 | ) | (5,136 | ) | (40,788 | ) | (14,958 | ) | |||||||||
Income (loss) before income taxes |
1,491 | 2,703 | (25,778 | ) | (472 | ) | ||||||||||
Income tax expense (benefit)from operations |
(84 | ) | 285 | (706 | ) | 149 | ||||||||||
Net income (loss) |
1,575 | 2,418 | (25,072 | ) | (621 | ) | ||||||||||
Less net loss attributable to noncontrolling interest |
(1,154 | ) | (435 | ) | (2,783 | ) | (1,878 | ) | ||||||||
Net income (loss) attributable to the Parent company |
2,729 | 2,853 | (22,289 | ) | 1,257 | |||||||||||
Less preferred stock dividend requirements |
340 | 340 | 1,020 | 1,020 | ||||||||||||
Net income (loss) applicable to common shareholders |
$ | 2,389 | $ | 2,513 | $ | (23,309 | ) | $ | 237 | |||||||
Net income (loss) per share applicable to common
shareholders: |
||||||||||||||||
Basic |
$ | 0.18 | $ | 0.23 | $ | (1.79 | ) | $ | 0.02 | |||||||
Diluted |
0.18 | 0.23 | (1.79 | ) | 0.02 | |||||||||||
Weighted average number of common shares outstanding: |
||||||||||||||||
Basic |
13,384 | 10,849 | 12,990 | 10,676 | ||||||||||||
Diluted |
13,442 | 10,911 | 12,990 | 10,758 | ||||||||||||
Net income (loss) (from above) |
$ | 1,575 | $ | 2,418 | $ | (25,072 | ) | $ | (621 | ) | ||||||
Other comprehensive income (loss): |
||||||||||||||||
Amortization of accumulated actuarial gains or
losses, pension |
442 | 332 | 1,212 | 996 | ||||||||||||
Amortization of accumulated actuarial gains or
losses, transition obligations and prior service
costs, postretirement medical benefits |
(72 | ) | (68 | ) | (216 | ) | (206 | ) | ||||||||
Tax effect of other comprehensive income gains |
(141 | ) | | (308 | ) | | ||||||||||
Unrealized and realized gains and losses on
available-for-sale securities |
(12 | ) | 262 | (203 | ) | (345 | ) | |||||||||
Comprehensive income (loss) |
$ | 1,792 | $ | 2,944 | $ | (24,587 | ) | $ | (176 | ) | ||||||
Nine Months Ended September 30, | ||||||||
2011 | 2010 | |||||||
(In thousands) | ||||||||
Cash Flow |
||||||||
Net cash provided by operating activities |
$ | 34,028 | $ | 37,584 | ||||
Net cash used in investing activities |
(15,495 | ) | (16,950 | ) | ||||
Net cash provided by (used in) financing activities |
18,921 | (15,083 | ) |
September 30, | December 31, | |||||||
2011 | 2010 | |||||||
(In thousands) | ||||||||
Balance Sheet Data (Unaudited) |
||||||||
Total assets |
$ | 768,967 | $ | 750,306 | ||||
Total debt |
$ | 286,460 | $ | 242,104 | ||||
Working capital deficit |
$ | (5,906 | ) | $ | (35,793 | ) | ||
Total deficit |
$ | (174,368 | ) | $ | (162,355 | ) | ||
Common shares outstanding |
13,762 | 11,161 |
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
(In thousands) | ||||||||||||||||
Adjusted EBITDA by Segment |
||||||||||||||||
Coal |
$ | 22,070 | $ | 20,839 | $ | 57,262 | $ | 58,753 | ||||||||
Power |
7,441 | 7,761 | 20,152 | 18,644 | ||||||||||||
Heritage |
(4,076 | ) | (4,729 | ) | (12,062 | ) | (12,745 | ) | ||||||||
Corporate |
(1,278 | ) | (1,067 | ) | (3,663 | ) | (4,234 | ) | ||||||||
Total |
$ | 24,157 | $ | 22,804 | $ | 61,689 | $ | 60,418 | ||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
(In thousands) | ||||||||||||||||
Reconciliation of Adjusted EBITDA to net
income (loss) |
||||||||||||||||
Net income (loss) |
$ | 1,575 | $ | 2,418 | $ | (25,072 | ) | $ | (621 | ) | ||||||
Income tax expense (benefit) from
continuing operations |
(84 | ) | 285 | (705 | ) | 149 | ||||||||||
Other loss (income) |
(147 | ) | (17 | ) | 2,630 | (908 | ) | |||||||||
Interest income |
(423 | ) | (603 | ) | (1,134 | ) | (1,380 | ) | ||||||||
Loss on extinguishment of debt |
| | 17,030 | | ||||||||||||
Interest expense |
7,650 | 5,756 | 22,262 | 17,246 | ||||||||||||
Depreciation, depletion and amortization |
11,612 | 10,964 | 33,861 | 33,435 | ||||||||||||
Accretion of ARO and receivable |
2,700 | 2,847 | 8,100 | 8,687 | ||||||||||||
Amortization of intangible assets and
liabilities |
167 | 112 | 494 | 348 | ||||||||||||
EBITDA |
23,050 | 21,762 | 57,466 | 56,956 | ||||||||||||
Loss on sale of assets |
91 | 165 | 415 | 256 | ||||||||||||
Share-based compensation |
1,016 | 877 | 3,808 | 3,206 | ||||||||||||
Adjusted EBITDA |
$ | 24,157 | $ | 22,804 | $ | 61,689 | $ | 60,418 | ||||||||
| are used widely by investors to measure a companys 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 the Companys operations from period to period by removing the effect of the Companys capital structure and asset base from its operating results. |
| do not reflect the Companys 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, the Companys 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 the Companys debt obligations. |
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