Westmoreland Coal (Nasdaq: WLB) reported on Aug. 2 that it had revenues of $356.2 million from 12 million tons sold in the second quarter of this year, with a net loss applicable to common shareholders of $25.4 million.
In the first six months of this year, the company had revenues of $711.0 million from 25.8 million tons sold, with net income applicable to common shareholders of $5.2 million, including a sizable tax benefit.
“We remain on track to meet our 2016 adjusted EBITDA and free cash flow guidance based on our first half results and the demand trends that have continued to strengthen since June. We delivered second quarter profitability and cash flow right on our plan which factored in power demand at its lowest during the spring months,” said Chief Executive Officer Kevin Paprzycki. “We are executing well on our business strategies with a focus on maximizing cash flow from our sales volume. Based on our expectation that cash flow generation will be greater in the second half, we plan to reduce our total debt later in 2016.”
Second quarter results are influenced by the normal seasonality of low springtime power demand and significant scheduled maintenance downtime at customer plants. While consolidated adjusted EBITDA was down 21% for the second quarter and 4% for the first six months compared with the same periods last year, cash flow from operations and free cash flow for the first six months exceeded last year’s levels.
Canada, where the company is the country’s largest steam coal producer, had a strong second quarter in 2015 including accelerated loan and lease payments which aided adjusted EBITDA. In comparison, Canadian demand in the second quarter of 2016 was impacted by weather, most notably above-average rainfall.
U.S. growth resulted from the San Juan acquisition closing in the first quarter of 2016.
“This year, so far, is progressing normally and as we expected. The strengthening demand, and the resulting cash flow, taken together with our first-half results provide confidence in our ability to achieve our guidance this year,” said Paprzycki.
Westmoreland’s 2016 guidance remains:
- Coal tons sold – 53-60 million tons;
- Adjusted EBITDA – $235-$275 million; and
- Capital expenditures – $59-$71 million.
Westmoreland Coal 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). Its power operations include ownership of the two-unit Roanoke Valley (ROVA) coal-fired power plant in North Carolina.