Westmoreland Resource Partners, LP (NYSE:WMLP) ("WMLP") today
reported its results for the three months ended March 31, 2015
which include:
- An increase of $0.3 million in Adjusted
EBITDA for the three months ended March 31, 2015 to $9.6
million compared to Adjusted EBITDA of $9.2 million for the three
months ended March 31, 2014.
- Westmoreland Resources GP, LLC, general
partner of WMLP, declared a cash distribution for all unitholders
and warrant unitholders of $0.20 per unit for its first quarter
ended March 31, 2015. The distribution will be paid on May 15, 2015
to all unitholders and warrant unitholders of record as of the
close of business on May 8, 2015.
- WMLP continued their strong safety
performance achieving a zero reportable and lost time incident
rates for surface mining operations for the three months ended
March 31, 2015.
"In this, our first quarter of ownership of WMLP, we began
transitioning the business on to Westmoreland's systems," noted
Keith Alessi, Chief Executive Officer. "We are operating the
business with an emphasis on Distributable Cash Flow and it
performed in line with our expectations."
Safety
During the three months ended March 31, 2015, WMLP
continued to maintain reportable and lost time incident rates
significantly below Appalachian Basin averages, as indicated in the
table below.
Three Months EndedMarch 31,
2015
ReportableRate
Lost Time Rate WMLP Mines —
—
National Surface Coal Average 1.72
1.19
Financial Results
Three Months Ended March 31,
2015 2014 Increase (Decrease) (in
thousands)
$ % (Successor)
(Predecessor) Total Revenues $ 67,567 $ 78,004 $ (10,437 )
(13.4 )% Net loss (10,305 ) (10,567 ) 262 2.5 % Adjusted EBITDA1
9,553 9,241 312 3.4 % Distributable Cash Flow2 3,195 1,850 1,345
72.7 % Tons sold - millions of equivalent tons 1.1 1.4 (0.3 ) (21.4
)%
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.
2Distributable cash flow is not defined in GAAP. Distributable
cash flow is presented because it is helpful to management,
industry analysts, investors, lenders and rating agencies in
assessing our financial performance. A reconciliation thereof to
Net Loss, a comparable GAAP financial measure, are included in a
table presented near the end of this press release.
We reported total revenues of $67.6 million for the three months
ended March 31, 2015 compared to $78.0 million for the three
months ended March 31, 2014. The decrease of $10.4 million was
principally due to decreased sales and production volumes, which
declined to 1.1 million tons sold and produced in the three months
ended March 31, 2015 compared to 1.4 million tons sold and
produced in the three months ended March 31, 2014. The
decrease in tons sold and produced resulted from a decrease in
market demand. We reported net loss of $10.3 million for the three
months ended March 31, 2015 compared to $10.6 million for the
three months ended March 31, 2014. Additionally we reported
Adjusted EBITDA of $9.6 million for the three months ended
March 31, 2015, an increase of $0.3 million from $9.2 million
for the three months ended March 31, 2014. Both the net loss
and Adjusted EBITDA were also favorably impacted by a $0.66
increase in average coal sales price per ton sold to $54.02 per ton
sold in the three months ended March 31, 2015 compared to
$53.36 per ton sold in the three months ended March 31,
2014.
For the three months ended March 31, 2015 and 2014, our
consolidated results include items that affect comparability of our
results. The expense components of these items were as follows:
Three Months Ended March 31,
2015 2014 (in thousands)
(Successor)
(Predecessor) Restructuring expense $ 553 $ 75 Acquisition
related costs3 1,400 — Impact $ 1,953 $ 75
3Includes acquisition and transition costs included in cost of
coal revenue related to the sale of inventory written up to fair
value.
Business Update
Cash Distribution
Westmoreland Resources GP, LLC, general partner of WMLP,
declared a cash distribution for all of our unitholders and warrant
unitholders of $0.20 per unit for its first quarter ended March 31,
2015. The distribution will be paid on May 15, 2015 to all
unitholders and warrant unitholders of record as of the close of
business on May 8, 2015.
This press release is intended to be a qualified notice under
Treasury Regulation Section 1.1446-4(b). Brokers and nominees
should treat one hundred percent (100.0%) of WMLP's distributions
to non-U.S. investors as being attributable to income that is
effectively connected with a United States trade or business.
Accordingly, WMLP's distributions to non-U.S. investors are subject
to federal income tax withholding at the highest applicable
effective tax rate.
Conference Call
A conference call regarding Westmoreland Resource Partners, LP's
2014 results will be held on April 24, 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.westmorelandmlp.com. Financial and
other information about the Partnership is routinely posted on and
accessible at www.westmorelandmlp.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 it was 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
FOR THE THREE MONTHS ENDED MARCH 31, 2015 AND 2014 (in
thousands)
Three Months Ended March
31, 2015 2014 (Successor)
(Predecessor) Revenues: Coal revenues $ 61,750 $ 76,770
Royalty revenues 1,870 99 Non-coal revenues 3,947 1,135
Total Revenues 67,567 78,004 Costs and expenses: Cost of
coal revenues (excluding depreciation, depletion and amortization)
54,651 65,726 Cost of non-coal revenues 3,155 402 Depreciation,
depletion and amortization 10,180 11,224 Selling and administrative
2,548 3,656 Loss on sale/disposal of assets 1,034 204 Restructuring
and impairment charges 553 75 Total cost and expenses
72,121 81,287 Operating loss (4,554 ) (3,283 ) Other
(expense) income: Interest expense (5,780 ) (6,870 ) Interest
income — 1 Change in fair value of warrants 29 (415 ) Total
other expenses (5,751 ) (7,284 )
Net loss (10,305
) (10,567 ) Less net loss attributable to
noncontrolling interest — 381 Net loss attributable
to WMLP unitholders (10,305 ) (10,186 ) Less net loss allocated to
general partner (63 ) (202 ) Net loss allocated to limited partners
$ (10,242 ) $ (9,984 )
UNAUDITED STATEMENT OF CASH FLOWS
SUMMARY FOR THE THREE MONTHS ENDED MARCH 31, 2015 AND
2014 (in thousands)
Three Months Ended
March 31, 2015 2014 (Successor)
(Predecessor) Net cash (used in) provided by operating
activities $ (380 ) $ 817 Net cash used in investing activities
(3,736 ) (1,779 ) Net cash (used in) provided by financing
activities (20 ) 2,509 Net increase (decrease) in cash and
cash equivalent $ (4,136 ) $ 1,547
UNAUDITED BALANCE SHEET SUMMARY AS OF MARCH 31, 2015 AND
DECEMBER 31, 2014 (in thousands, except unit data)
March 31, December 31,
2015 2014 (Successor) (Successor) Cash
$ 1,785 $ 5,921 Total assets 296,057 307,588 Total debt 176,360
175,035 Working capital1 20,152 19,735 Total partners’ capital
62,737 73,021 Common units outstanding 5,711,630 5,505,087
1Working capital is a supplemental measures 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
AND DISTRIBUTABLE CASH
FLOW3
FOR THE THREE MONTHS ENDED MARCH 31, 2015 AND 2014 (in
thousands)
Three Months Ended March
31, 2015 2014 (Successor)
(Predecessor) Reconciliation of Net Loss to Adjusted
EBITDA Net loss $ (10,305 ) $ (10,567 ) Interest expense, net
of interest income 5,780 6,869 Depreciation, depletion and
amortization 10,180 11,224 Accretion of ARO 804 565
EBITDA 6,459 8,091 Restructuring and
impairment charges 553 75 Change in fair value of warrants (29 )
415 Acquisition related costs4 1,400 — Loss on sale/disposal of
assets 1,034 204 Unit-based compensation 21 456 Other non-recurring
costs 115 —
Adjusted EBITDA2
9,553 9,241 Minority interest's Adjusted EBITDA — (94
) Cash interest expense, net of interest income (4,047 ) (4,060 )
Other maintenance capital expenditures (1,353 ) (2,622 )
Reclamation and mine closure costs (958 ) (615 )
Distributable
Cash Flow3 $ 3,195 $
1,850
2 Adjusted EBITDA
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.
3 Distributable Cash Flow
Distributable Cash Flow represents Adjusted EBITDA less cash
interest expense (net of interest income), reserve replacement
expenditures, maintenance capital expenditures, cash reclamation
expenditures, and noncontrolling interest. Cash interest expense
represents the portion of our interest expense accrued and paid in
cash during the reporting periods presented or that we will pay in
cash in future periods as the obligations become due. Other
maintenance capital expenditures represent expenditures for coal
reserve replacement, expenditures for plant, equipment and mine
development. Cash reclamation expenditures represent the reduction
to our reclamation and mine closure costs resulting from cash
payments. Earnings attributable to the noncontrolling interest are
not available for distribution to our unitholders and accordingly
are deducted.
Distributable Cash Flow should not be considered as an
alternative to net income (loss) attributable to our unitholders,
income from operations, cash flows from operating activities or any
other measure of performance presented in accordance with GAAP.
Although Distributable Cash Flow is not a measure of performance
calculated in accordance with GAAP, we believe Distributable Cash
Flow is useful to investors because this measurement is used by
many analysts and others in the industry as a performance
measurement tool to evaluate our operating and financial
performance, facilitating comparison with the performance of other
publicly traded limited partnerships.
4 Includes acquisition and transition costs included in cost of
coal revenue related to the sale of inventory written up to fair
value.
UNAUDITED OPERATING STATISTICS5 FOR THE THREE
MONTHS ENDED MARCH 31, 2015 AND 2014 (in thousands, except per
ton amounts)
Three Months Ended
March 31, 2015 2014 (Successor)
(Predecessor) Tons of coal sold 1,143 1,439 Cash coal
sales revenue per ton $ 54.02 $ 53.36 Cash cost of coal sales per
ton (47.81 ) (45.68 ) Cash margin per ton $ 6.21 $ 7.68
5 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