Westmoreland Resource Partners, LP (NYSE:WMLP) ("WMLP") today
reported its results for fiscal year 2014. Highlights for the year
ended December 31, 2014 include:
- Revenues totaled $322.3 million in
2014.
- Adjusted EBITDA of $36.3 million was
achieved for 2014.
- WMLP continued their strong safety
performance achieving reportable and lost time incident rates
approximately 53.0% and 32.1%, respectively, of the Appalachian
Basin averages for surface mining operations for the year ended
December 31, 2014.
- As previously announced, WMLP's
management intends to resume quarterly distributions of $0.20 per
unit beginning in April 2015, or $5.0 million annually.
“Westmoreland completed the acquisition of Oxford Resources GP,
LLC, the general partner of Oxford Resource Partners, LP, and 79%
of the limited partner interests of Oxford Resource Partners, LP,
on December 31, 2014, changing the names of the entities to
Westmoreland Resources GP, LLC and Westmoreland Resource Partners,
LP, respectively,” noted Keith E. Alessi, Chief Executive Officer.
“As such, we are reporting the fiscal year 2014 results today.”
“As we have previously discussed, the ability to acquire the
general partner and reset the limited partnership terms provided a
unique opportunity to enter the MLP space on favorable terms.
Because of this, we viewed the acquisition of the GP and LP
interests as a platform to achieve future value enhancement. The
2014 operating results reflect company performance based on a
different operating philosophy than the Westmoreland operating
model.”
Safety
During 2014, WMLP continued to maintain reportable and lost time
incident rates significantly below Appalachian Basin averages, as
indicated in the table below.
2014
ReportableRate
Lost TimeRate
WMLP Mines 1.14 0.50 Appalachian Basin Mines 2.15 1.56
Financial Results
Year Ended December 31,
Increase (Decrease) 2014 2013
$ % (in thousands, except per ton data)
Total revenues $ 322,263 $ 346,767 $ (24,504 ) (7.1
)%
Operating loss 477 5,930 (5,453 ) (92.0 )% Adjusted EBITDA1 36,296
42,107 (5,811 ) (13.8 )% Tons sold - millions of equivalent tons
5.6 6.6 (1.0 ) (15.2 )%
Adjusted EBITDA was $36.3 million for the year ended
December 31, 2014 compared to $42.1 million for the year ended
December 31, 2013. Cash coal sales revenue increased 3.1
percent to $52.50 per ton for the year ended December 31, 2014
from $50.92 per ton for the year ended December 31, 2013. For
the year ended December 31, 2014, cash cost of coal sales
increased by 4.4 percent to $45.92 per ton from $43.99 per ton for
the year ended December 31, 2013, primarily due to lower
volume and higher costs of transportation and employee
compensation. Cash margins decreased 5.1 percent to $6.58 per ton
for the year ended December 31, 2014 from $6.93 per ton for
the year ended December 31, 2013.
Adjusted Net Loss2 for the year ended December 31, 2014 was
$39.7 million, compared to $32.3 million for the year ended
December 31, 2013. The following table reconciles Net Loss to
Adjusted Net Loss for the year ended December 31, 2014 and
2013.
UNAUDITED RECONCILIATION OF NET LOSS TO ADJUSTED NET
LOSS2 Year Ended
December 31, 2014 2013 Net loss $
(28,561 ) $ (23,700 ) Adjustments: Restructuring and impairment
expenses 2,858 1,761 (Gain) loss on disposal of assets, net (218 )
(6,488 ) Change in fair value of warrants (822 ) (3,280 ) Lost
profits on coal sales proceeds (19,500 ) (2,439 ) Debt refinancing
expenses — 3,109 Recapitalization costs 5,470 — Legal settlement
proceeds — (2,100 ) Loss on extinguishment of debt 1,123 808
Adjusted net loss $ (39,650 ) $ (32,329 )
1
The definition of Adjusted EBITDA, which
is a non-GAAP financial measure, and a reconciliation thereof to
Net Loss, a comparable GAAP financial measure, are included in a
table presented near the end of this press release.
2
The definition of Adjusted Net Loss, which
is a non-GAAP financial measure, and a reconciliation thereof to
Net Loss, the most comparable GAAP financial measure, are included
in a table presented near the end of this press release.
Business Update
As a leading low-cost producer of thermal coal and the largest
producer of surface mined coal in Ohio, WMLP continues to focus on
its core Northern Appalachian operations. In December 2014,
Westmoreland Coal Company ("WCC") contributed to WMLP 30.4 million
tons of proven and probable coal reserves in Lincoln County,
Wyoming, in exchange for 4,512,500 post-reverse split common units.
In connection with this contribution, WMLP entered into a coal
mining lease with respect to these coal reserves with a subsidiary
of WCC pursuant to which WMLP will earn a per ton royalty as these
coal reserves are mined. Through the coal leasing arrangement, the
mining of the reserves are expected to generate $5.8 million in
average annual royalties over the next three years, with a minimum
royalty payment of $1 million per quarter from the start of 2015
through December 31, 2020 and $0.5 million per quarter thereafter
through December of 2025.
Management intends to recommend to the Board of Directors a
return of the proceeds from the coal royalty revenue stream back to
unitholders beginning with a $0.20 per unit quarterly distribution
for the first quarter payable in May 2015.
Conference Call
A conference call regarding Westmoreland Resource Partners, LP's
2014 results will be held on February 27, 2015, at 10:00 a.m.
Eastern Time. Call-in numbers are:
Live Participant Dial In (Toll Free):
844-WCC-COAL (844-922-2625)Participant Dial In (International):
201-689-8584
About Westmoreland Resource Partners, LP
Westmoreland Resource Partners, LP is a low-cost producer of
high-value thermal coal in Northern Appalachia. It markets its coal
primarily to large electric utilities with coal-fired, base-load
scrubbed power plants under long-term coal sales contracts.
For more information about Westmoreland Resource Partners, LP
(NYSE: WMLP), please visit www.OxfordResources.com. Financial and
other information about the Partnership is routinely posted on and
accessible at www.OxfordResources.com.
Cautionary Note Regarding Forward-Looking Statements
Forward-looking statements are based on WMLP'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 WMLP's projections for
2015 performance. WMLP 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 WMLP in this news release
speak only as of the date on which they were made. WMLP 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.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 2014 AND 2013 (in thousands)
Year Ended December 31,
2014 2013 Revenues: Coal revenues $
295,662
$
336,201
Royalty revenues 284 8 Non-coal revenues 26,317
10,558 Total Revenues 322,263 346,767 Costs and expenses:
Cost of coal revenues 258,575 290,427 Cost of non-coal revenues
1,700 1,619 Depreciation, depletion and amortization 39,315 48,081
Selling and administrative 20,510 17,297 (Gain) loss on sales of
assets (218 ) (6,488 ) Restructuring and impairment charges 2,858
1,761 Total cost and expenses 322,740
352,697 Operating (loss) income (477 ) (5,930 ) Other
(expense) income: Interest expense (27,787 ) (20,246 ) Interest
income 4 4 Loss on debt extinguishment (1,123 ) (808 ) Change in
fair value of warrants 822 3,280 Total other
expenses (28,084 ) (17,770 )
Net loss (28,561
) (23,700 ) Less net loss (income)
attributable to noncontrolling interest 1,270 (1,225
) Net loss attributable to WMLP unitholders (27,291 ) (24,925 )
Less net loss allocated to general partner (457 ) (497 ) Net
loss allocated to limited partners $ (26,834 )
$
(24,428
)
UNAUDITED STATEMENT OF CASH FLOWS SUMMARY
YEARS ENDED DECEMBER 31, 2014 AND 2013 (in thousands)
Year Ended December 31,
2014 2013 Net cash provided by
operating activities 22,565 9,716 Net cash used in investing
activities (8,253 ) (22,463 ) Net cash provided by (used in)
financing activities (11,480 ) 11,859
UNAUDITED
BALANCE SHEET SUMMARY FOR THE YEARS ENDED DECEMBER 31, 2014
AND 2013 (in thousands, except unit data)
As of December 31, 2014 2013
Cash $ 5,921 $ 3,089 Total assets 307,588 224,355 Total debt
175,035 163,276 Working capital1 19,735 9,952 Total partners
capital (deficit) 73,021 (10,998 ) Common units outstanding
5,505,087 1,740,589 1 Working capital is a supplemental
measure of financial performance that is not required by, or
presented in accordance with, GAAP. We define working capital as
current assets, plus advance royalties less current liabilities.
UNAUDITED RECONCILIATION OF NET LOSS TO ADJUSTED
EBITDA2 YEARS ENDED DECEMBER 31, 2014 AND 2013
(in thousands)
Year Ended
December 31 2014 2013
Reconciliation of Net Loss to Adjusted EBITDA Net loss $
(28,561 ) $ (23,700 ) Loss on extinguishment of debt 1,123 808
Interest expense, net of interest income 27,783 20,242
Depreciation, depletion and amortization 39,070 47,847 Accretion of
ARO and receivable 2,337 2,293 Amortization of intangible assets
and liabilities 245 174
EBITDA 41,997
47,664 Restructuring and impairment charges 2,858 1,761
Legal settlements (17,548 ) (2,100 ) Debt refinancing expenses —
3,109 Recapitalization costs 5,470 — Change in fair value of
warrants (822 ) (3,280 ) Sale of oil and gas rights (232 ) (6,116 )
(Gain)/loss on sale of assets 14 (372 ) Share-based compensation
4,559 1,441
Adjusted EBITDA $
36,296 $ 42,107
2 Reconciliation of Adjusted EBITDA to Net Loss
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 key metrics
used by us to assess our operating performance and we believe 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 our 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 our 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 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 we do,
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 our business. We compensate for these limitations by
relying primarily on our GAAP results and using EBITDA and Adjusted
EBITDA only as supplemental data.
UNAUDITED RECONCILIATION OF NET LOSS TO ADJUSTED NET
LOSS3 YEARS ENDED DECEMBER 31, 2014 AND 2013 (in
thousands)
Year Ended
December 31, 2014 2013 Net loss $
(28,561 ) $ (23,700 ) Adjustments: Restructuring and impairment
expenses 2,858 1,761 (Gain) loss on disposal of assets, net (218 )
(6,488 ) Change in fair value of warrants (822 ) (3,280 ) Lost
profits on coal sales proceeds (19,500 ) (2,439 ) Debt refinancing
expenses — 3,109 Recapitalization costs 5,470 — Legal settlement
proceeds — (2,100 ) Loss on extinguishment of debt 1,123 808
Adjusted net loss $ (39,650 ) $ (32,329 ) 3 Adjusted
Net Loss is a non-GAAP financial measure used by management to
gauge operating performance. We define Adjusted Net Loss as net
income or loss before deducting restructuring and impairment
expenses, gain or loss on disposal of assets, change in fair value
of warrants, lost profits on coal sales proceeds, debt refinancing
expenses, recapitalization costs, legal settlement proceeds and
loss on debt extinguishment. Although Adjusted Net Loss is not a
measure of financial performance calculated in accordance with
GAAP, we believe it is useful to management and others, such as
investors and lenders, in evaluating our financial performance
without regard to items which are primarily non-cash and our
restructuring efforts which are not typical operating activities.
Because not all companies calculate Adjusted Net Loss the same way,
our calculation may not be comparable to similarly titled measures
of other companies.
UNAUDITED OPERATING
STATISTICS4 YEARS ENDED DECEMBER 31, 2014 AND
2013 (in thousands, except per ton amounts)
Year Ended December 31, 2014
2013 Tons of coal sold 5,631 6,602 Coal
sales revenue per ton $ 52.50 $ 50.93 Below-market sales contract
amortization per ton — (0.01 ) Cash coal sales revenue per
ton 52.50 50.92 Cash cost of coal sales per ton (45.92 ) (43.99 )
Cash margin per ton $ 6.58 $ 6.93 4 Per ton
amounts are calculated by dividing the related amount on the
financial statements by the number of tons sold. Although per ton
amounts are not measures of performance calculated in accordance
with GAAP, we believe they are useful to management and others,
such as investors and lenders, in evaluating performance because
they are widely used in the coal industry as a measure to evaluate
a company's sales performance or control over costs. Because not
all companies calculate these measures the same way, our
calculations may not be comparable to similarly titled measures of
other companies.
Westmoreland Resource Partners, LPKevin Paprzycki,
855-922-6463