Westmoreland Coal (NasdaqGM:WLB) on Feb. 27 reported full-year results for 2014 that include the western Canadian coal mines that it acquired in April 2014 from Sherritt International.
These results exclude results from Westmoreland Resource Partners LP (WMLP) and the Buckingham Mine in Ohio, except for WMLP one-time charges.
Revenues in 2014 grew 65.4% to a record $1,116.0 million versus $674.7 million in 2013. Adjusted EBITDA for 2014 grew 50.8% to a record $175.4 million, which is in the middle of the $166 to $184 million range that we announced upon the Canadian acquisition. Adjusted EBITDA for 2013 was $116.3 million.
Net loss applicable to common shareholders for 2014 was $173.1 million and included charges of $142.1 million, consisting of debt extinguishment losses, derivative based and foreign exchange losses, acquisition costs and cost of sales related to inventory written up to fair value in the Canadian acquisition, duplicative and incremental interest incurred before the close of the Canadian transaction, and restructuring charges.
Westmoreland currently holds 4,512,500 common units of Westmoreland Resource Partners, whose unit price on Feb. 26 was $10.70.
“2014 was a year of extraordinary activity at Westmoreland Coal Company,” said Keith E. Alessi, Chief Executive Officer. “In 2014, we successfully financed, closed and integrated the Canadian acquisition; improved our balance sheet through an equity offering, monetized our contract at Westshore Terminal and refinanced our outstanding debt facility; received a credit upgrade from both Moody’s and S&P; signed significant contract extensions with both customers and labor unions; and finished the year with the successful acquisition of Oxford Resources GP, LLC, the general partner of Oxford Resource Partners, LP, as a platform for entry into the MLP space. We are gratified that adjusted EBITDA fell in the midpoint of our projected range, particularly in light of the weaker Canadian dollar and mild weather throughout the year that impacted our power operations.”
For 2015, Alessi said that the base business will continue to operate at historical levels, despite the current exchange rates and power and export prices that are built into the guidance range.
The company sold in the U.S. in 2014 28.3 million tons of coal, up from 24.9 million tons in 2013. Westmoreland’s 2014 coal segment revenues and tons sold increased primarily due to new customer sales at the Absaloka Mine in Monana and fewer customer outages affecting the Absaloka and Beulah mines. Operating income and Adjusted EBITDA were negatively impacted by weather impacts, rail service issues at the Absaloka Mine, acquisition costs and increased maintenance expenses.
In Canada in 2014, where it is that country’s largest steam coal producer, Westmoreland sold 16.6 million tons. That represents results from the Canadian acquisition date of April 28, 2014, to Dec. 31, 2014. Operating income was negatively impacted by $14.2 million of cost of sales related to the sale of inventory written up to fair value in the acquisition and $9.6 million of restructuring charges.
The 2014 WMLP coal segment operating loss was $2.8 million due to expenses related to severance charges that occurred on Dec. 31, 2014. These operations were acquired on Dec. 31, 2014; therefore, information for the year ended Dec. 31, 2014 includes minimal operating activity.
Westmoreland Coal is the oldest independent coal company in the United States. Westmoreland’s coal operations include sub-bituminous and lignite surface coal mining in the Western United States and Canada, an underground bituminous coal mine in Ohio, 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, formerly Oxford Resource Partners, LP, a publicly-traded coal master limited partnership. Its power operations include ownership of the two-unit ROVA coal-fired plant in North Carolina.