Westmoreland Coal reports steady 3Q15 results

Westmoreland Coal Co. reports 3Q15 results and provides full year guidance updates.

"The quarter was a steady one despite very mild weather and customer outages," commented Westmoreland’s CEO, Keith E. Alessi. "Strength in our historical US coal operations offset weakness in our Ohio operations."

The company’s revenues for 3Q15 were US$349.8 million – an increase from US$337.8 million in 3Q14. It indicated that revenues increased mainly as a result of the WMLP and Buckingham acquisitions.

Adjusted EBITDA for the quarter saw an increase from US41.7 million in 3Q14 to US$48 million in 3Q15. The Adjusted EBITDA for 3Q15 included results of WMLP and the Buckingham operations, which were not present during the third quarter of 2014. The WMLP and Canadian acquisitions are reported to be the reason for an increase in Adjusted EBITDA, but this was limited somewhat by unfavourable weather conditions at the Jewett mine and customer outages that affected several operations and impacted sales.

Alessi indicated the company full year guidance updates: "As we now have greater visibility, we are updating our guidance for the year. Since issuing original guidance, we have seen numerous impacts on EBITDA and changes in capital spending. We still anticipate the free cash flow we generate for 2015 will service cash interest and additionally retire approximately US$44 million in debt, or US$2.45 per share. This falls within the range of outcomes of our previous guidance for EBITDA and capital. While our core business remains solid, we have experienced a prolonged plant outage at the largest customer of the MLP and Buckingham. The customer expected to be fully operational in the third quarter but continuing operational problems have delayed returning to full capacity until mid-November. The cumulative EBITDA impact of this outage in 2015 is US$15 million versus our original guidance. Additionally, the high level of M&A activity conducted during the third quarter resulted in approximately US$5 million in incremental professional services fees. We have adjusted our EBITDA guidance by US$20 million to reflect these two items and we narrowed the range. We have also reduced our projected capital expenditures for the year due to lower tons sold and outstanding management of capital projects.”

Net loss for the quarter saw a decrease to US$46.6 million compared to US$49.3 million in the same quarter in 2014. This decrease is reported to be mainly driven by a US$17.8 million decrease in derivative losses on the company’s ROVA power contract and a US$3.3 million decrease in restructuring charges. Westmoreland reported that these changes were offset by US$5.6 a million increase in interest expense due to its higher debt levels arising from its MLP and Buckingham acquisitions and US$5.4 million in additional losses on extinguishment of debt arising from the early repayment of amounts under the company’s term loan using the proceeds received from the Kemmerer Drop.

Alessi indicated that Westmoreland carried out diligence on many potential acquisitions, which it chose to not take further due to not being in line with the company’s criteria. He indicated the company also intends to close the San Juan transaction before the end of December 2015 (depending upon closing conditions and approvals) through using a combination of cash on hand and debt financing.

Alessi concluded: "I am extraordinarily proud of the numerous awards our mines received during the quarter, including the Sentinels of Safety award and the 2015 Railroad Commission of Texas Coal Mining Reclamation award at Jewett and the 2015 North Dakota Public Service Commission Reclamation award at Beulah."

Edited from press release by Harleigh Hobbs

Read the article online at: https://www.worldcoal.com/coal/26102015/westmoreland-coal-reports-steady-3q15-results-3062/