Westmoreland Tightens 2017 Adjusted EBITDA and Free Cash Flow Guidance
March 07 2018 - 4:30PM
Commits to Running Coal Valley with
Favorable Economics Secured;
Westmoreland Coal Company (Nasdaq:WLB) today stated that it expects
2017 adjusted EBITDA to be near the high end of its previously
issued range of $250 to $270 million and for free cash flow to be
in the middle of the previously issued guidance range of $90 to
$115 million.
“Our team remained focused on operations and ensured we met our
adjusted EBITDA and free cash flow expectations for the year,” said
Michael Hutchinson, Interim Chief Executive Officer. “As we
entered 2018, we reassessed our Coal Valley strategy and seized the
opportunity to lock in favorable economics. On the strength
of Newcastle pricing, we secured positive Coal Valley EBITDA and
cash flow for 2018 through locked-in offtake commitments and
secured rail and port contracts for the large majority of our
production this year.”
Gary Kohn, Chief Financial Officer, commenting on the capital
structure activities noted, “While our efforts on both the MLP and
San Juan debt continue, we are now diligently working on the next
step in our capital structure improvement process: a holistic
solution for all of Westmoreland. Accordingly, we have
engaged advisers, Alvarez & Marsal and Centerview Partners, to
assist us in the evaluation of all options available to us to
improve our overall balance sheet health.”
About Westmoreland Coal Company
Westmoreland Coal Company is the oldest independent coal company
in the United States. Westmoreland’s coal operations include
surface coal mines in the United States and Canada, underground
coal mines in Ohio and New Mexico, a char production facility, and
a 50% interest in an activated carbon plant. Westmoreland
also owns the general partner of and a majority interest in
Westmoreland Resource Partners, LP, a publicly-traded coal master
limited partnership (NYSE:WMLP). For more information, visit
www.westmoreland.com.
Notes:
Unaudited financial data for the full year ended December 31,
2017, as presented above are preliminary, based upon good faith
estimates and subject to completion of Westmoreland’s financial
closing procedures. Westmoreland has provided ranges for its
expectations described above because its financial reporting
closing procedures are not yet complete. While the Company expects
its final financial results for full year ended December 31, 2017,
following the completion of its financial closing procedures, will
be within the ranges described above, actual results may differ
materially from these estimates as a result of the completion of
Westmoreland’s financial closing procedures as well as final
adjustments and other developments that may arise between now and
the time that its financial results for the full year are
finalized. All of the data presented above has been prepared by and
is the responsibility of management. This summary is not a
comprehensive statement of Westmoreland’s financial results.
Adjusted EBITDA and free cash flow are non-GAAP financial
measures. Adjusted EBITDA excludes from net income the
effects of income tax expense and benefit; interest income and
expense; depreciation, depletion and amortization; accretion of
asset retirement obligations; amortization of intangible assets and
liabilities; and certain other non-recurring or non-cash items
including advisory fees paid to advisors related to the Company’s
capital structure review; gains and losses on foreign exchange;
losses on impairments; acquisition-related costs; customer payments
received under loan and lease receivables; derivative gains and
losses; gains and losses on the sale or disposal of assets and
other adjustments; and share-based compensation. Free cash flow is
calculated as net cash provided by or used in operating activities
less cash paid for property, plant and equipment, plus net customer
payments received under loan and lease receivables.
Reconciliations to 2017 GAAP net income or net cash provided by
operating activities have not been provided because doing so would
require an unreasonable effort due to the nature of providing a
range of possible outcomes for such results, which inherently
involves a level of variability and complexity for the adjusting
items that would be excluded from the non-GAAP financial
measures. Further, final GAAP figures are still under audit
review and any changes arising from the audit could provide
additional variability as to the final calculations of these
items. When planning, forecasting and analyzing its business,
for periods for which final results are
unavailable, Westmoreland does so primarily on a non-GAAP
basis without preparing a GAAP analysis as that would require
estimates for reconciling items which are inherently difficult to
predict with reasonable accuracy.
For further information please contact:
Gary Kohn, Chief Financial
Officer1-720-354-4467gkohn@westmoreland.com
Cautionary Note Regarding Forward-Looking
Statements
Forward-looking statements contained in this news release 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. Actual results may
differ materially from those contemplated by the forward-looking
statements. 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.
Possible events or factors that could cause actual results or
performance to differ materially from those anticipated in our
forward-looking statements include, but are not limited to the
following:
- our substantial level of indebtedness and our ability to adhere
to financial covenants related to our borrowing arrangements;
- our ability to successfully manage the upcoming maturities of
the Revolver and the WMLP Term Loan;
- the effect of legal and administrative proceedings,
settlements, investigations and claims, including any related to
citations and orders issued by regulatory authorities, and the
availability of related insurance coverage;
- existing and future legislation and regulation affecting both
our coal mining operations and our customers’ coal usage,
governmental policies and taxes, including those aimed at reducing
emissions of elements such as mercury, sulfur dioxides, nitrogen
oxides, particulate matter or greenhouse gases;
- the effect of the Environmental Protection Agency’s and
Canadian and provincial governments’ inquiries and regulations on
the operations of the power plants to which we provide coal;
- Alberta’s Climate Leadership Plan to phase out coal-fired
electricity generation by 2030;
- changes in our post-retirement medical benefit and pension
obligations and the impact of the recently enacted healthcare
legislation on our employee health benefit costs;
- inaccuracies in our estimates of our coal reserves;
- our potential inability to expand or continue current coal
operations due to limitations in obtaining bonding capacity for new
mining permits, and/or increases in our mining costs as a result of
increased bonding expenses;
- the effect of prolonged maintenance or unplanned outages at our
operations or those of our major power generating customers;
- the inability to control costs, recognize favorable tax credits
and/or receive adequate train traffic at our open market mine
operations;
- competition within our industry and with producers of competing
energy sources;
- our relationships with, and other conditions affecting, our
customers, including how power prices affect our customers’
decision to run their plants;
- seasonal variations and inclement weather, which may cause
fluctuations in our operating results, profitability, cash flow and
working capital needs related to our operating segments;
- the availability and costs of key supplies or commodities, such
as diesel fuel, steel and explosives;
- potential title defects or loss of leasehold interests in our
properties, which could result in unanticipated costs or an
inability to mine the properties;
- other factors that are described under the heading “Risk
Factors” found in our reports filed with the Securities and
Exchange Commission, including our Annual Reports on Form 10-K and
our Quarterly Reports on Form 10-Q.
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.