ENGLEWOOD, Colo., Aug. 03, 2017 (GLOBE NEWSWIRE) -- Westmoreland Coal Company (Nasdaq:WLB) today reported financial results for the second quarter 2017 and updated its guidance.

Second Quarter Highlights
  • Revenues of $323.0 million from 11.0 million tons sold
  • Net loss applicable to common shareholders of $50.4 million, or $2.69 per share
  • Adjusted EBITDA of $32.6 million

Six Month Highlights
  • Revenues of $662.8 million from 23.3 million tons sold
  • Net loss applicable to common shareholders of $87.2 million, or $4.68 per share
  • Adjusted EBITDA of $120.8 million, including approximately $46 million incremental from the Capital Power payment
  • Cash flow provided by operating activities of $10.2 million
  • Free cash flow of $47.5 million, which also includes the accelerated Capital Power payment

Kevin Paprzycki, Westmoreland's Chief Executive Officer, said, "This quarter, we executed across all of our strategic initiatives to drive long-term value creation.  Specifically, we have formalized an agreement to sell ROVA, our coal-fired generating station, secured multiple contract extensions which will add volume and cash flow over multiple years, and continued making progress toward optimizing our capital structure.  Our disciplined approach toward capitalizing on near-term catalysts will help further strengthen our business and enhance shareholder value."

"That said, results for the second quarter and first half came in below our expectations as unfavorable sales volume mix and higher costs at Coal Valley weighed on our performance.  We continue to expect stronger results in the back half, following last year's pattern, but we have lowered our full year guidance to reflect the first half results, pricing adjustments for contract extensions, as well as our updated demand projections for the remainder of 2017."

Safety

Westmoreland's safety metrics are below. 
    Six Months Ended June 30, 2017
    Reportable Rate   Lost Time Rate
U.S. Surface Operations   1.44   1.28
U.S. National Surface Average   1.47   1.02
Percentage   98%   125%
         
U.S. Underground Operations   1.61   1.21
U.S. National Underground Average     4.79   3.44
Percentage   34%   35%
         
Canadian Operations   0.98   0.33

Consolidated and Segment Results

During the second quarter of 2017, consolidated adjusted EBITDA declined 28.5% compared with the same period in 2016.  This decline was driven in part by declines in the Coal - Canada segment resulting from increased equipment maintenance and costs to develop the pit at the Coal Valley mine due to a delay in the sale of this facility.  Compared with the same period in 2016, second quarter 2017 revenues were also impacted by the 2016 expiration of the Jewett and Beulah coal supply contracts in the Coal - U.S. segment, which were partially offset by additional reclamation revenue at the Jewett mine.  In addition, seasonal outages at our customers' plants and the timing of weather-related demand drove lower adjusted EBITDA as we sold fewer tons to high-margin customers.  Adjusted EBITDA was favorably impacted by cost-savings initiatives across the company, particularly in the Coal - WMLP segment.

Consolidated adjusted EBITDA for the first six months of 2017 was $120.8 million, inclusive of the impact of the $52.5 million early repayment from Capital Power.  Adjusted EBITDA for the first six months was influenced by the many of the same factors as the three month period: the contract expirations at Jewett and Beulah, operational challenges at Coal Valley, weather-related demand and volume mix issues, offset by cost reductions, increased volume from San Juan, and Jewett reclamation revenue.  In addition, the first half of 2017 was impacted by increased costs associated with unexpected dragline maintenance as well as lower revenue and increased costs resulting from record precipitation at the Westmoreland Resource Partners LP's ("WMLP") Kemmerer mine, each of which occurred in the first quarter.

Cash Flow and Liquidity

Westmoreland's free cash flow through June 30, 2017 was $47.5 million.  Free cash flow is the net of cash flow provided by operations of $10.2 million, less capital expenditures of $13.1 million, plus net cash collected for the loan and lease receivables of $50.5 million.  Included in cash flow provided by operations was cash used for interest expense of $48.9 million and for asset retirement obligations of $20.8 million, plus positive working capital of $10.5 million.

At June 30, 2017, cash and cash equivalents on hand totaled $57.6 million, a $2.5 million decrease from year end.  The decrease was comprised of free cash flow generation of $47.5 million; net debt reductions, including capital lease payments, of $44.3 million; a $3.6 million reserve acquisition and other non-operating cash uses of $2.6 million.

Gross debt plus capital lease obligations at quarter end totaled $1.1 billion, of which $325.5 million resides at WMLP and $782.4 million resides at Westmoreland Coal Company.  There was $27.0 million available to draw, net of letters of credit, on Westmoreland's revolving credit facility. An additional $15.0 million was available to WMLP through its revolving credit facility, which is not available to Westmoreland Coal Company for borrowings.  No amounts had been drawn on either revolving credit facility as of June 30, 2017.

ROVA Sale

Earlier today, Westmoreland announced the sale of the Roanoke Valley Power Facility ("ROVA") for $5 million.  Westmoreland continues to anticipate the return of approximately $10 million of cash collateral this year for the related ROVA power contracts.

Full-Year Guidance

Regarding the revised outlook, Paprzycki commented, "We revised the midpoint of our adjusted EBITDA guidance by $35 million.  Nearly one-third of this is from contract extensions where we granted price concessions in exchange for extended contract length.  These extensions, including the recently announce Kemmerer contract, will increase our total cash flow and EBITDA over multiple years.  Another one third of the change to guidance stems from the weather patterns' effect on our sales volume and mix across our operations. The remainder of the change is from operational issues, in particular the dragline outage we experienced in the first half and higher costs at Coal Valley."

Westmoreland's 2017 guidance was revised as follows:
Guidance Summary               Original 2017 Guidance     Revised 2017 Guidance
Coal tons sold   40 - 50 million tons   40 - 50 million tons
Adjusted EBITDA   $280 - $310 million   $250 - $270 million
Free cash flow   $115 - $140 million   $90 - $115 million
Capital expenditures   $40 - $45 million   $40 - $45 million
Cash interest   approximately $95 million   approximately $95 million

Adjusted EBITDA and free cash flow include the $52.5 million early repayment of loan and lease receivables related to the Genesee mine, of which approximately $40 million is incremental to 2017 compared to 2016 results.

Notes

Westmoreland presents certain non-GAAP financial measures, including adjusted EBITDA and free cash flow, that management believes provide meaningful supplemental information and provide meaningful comparability to prior periods.  Reconciliations of non-GAAP to GAAP measures are presented in the accompanying tables.

Conference Call

Westmoreland Coal Company will host its earnings conference call on August 3, 2017, at 10:00 a.m. Eastern Time.

Participants may join the call using the numbers below:

Toll Free:         1-844-WCC-COAL (844-922-2625)International:   1-201-689-8584Webcast           www.westmoreland.com/investors/investor-webcasts 

A replay of the teleconference will be available until August 17, 2017 and can be accessed using the information below:

Replay:           1-877-481-4010 or 1-919-882-2331Replay ID:       15919Webcast           www.westmoreland.com/investors/investor-webcasts 

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.

Cautionary Note Regarding Forward-Looking Statements

Forward-looking statements 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 ability to consummate the sale of the ROVA and Coal Valley facilities on reasonable terms or at all;
  • 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;
  • our substantial level of indebtedness and our ability to adhere to financial covenants related to our borrowing arrangements;
  • 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;
  • our ability to manage the San Juan entities;
  • 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;
  • 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;
  • the ability or inability of our power hedging arrangements to generate cash.
  • competition within our industry and with producers of competing energy sources;
  • 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;
  • and other risks, uncertainties and assumptions described in our periodic filings with the Securities and Exchange Commission, including in "Risk Factors" in our most recent Annual Report on Form 10-K and subsequent filings.

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.

Westmoreland Coal Company and Subsidiaries
Summary Consolidated and Operating Segment Data (Unaudited)
 
    Three Months Ended June 30,
                Increase / (Decrease)
    2017   2016   $     %
    (In thousands, except tons sold data)
Westmoreland Consolidated                
Revenues   $ 323,025     $ 357,597     $ (34,572 )   (9.7 )%
Operating loss   (21,067 )   (883 )   (20,184 )   (2,285.8 )%
Adjusted EBITDA   32,566     45,556     (12,990 )   (28.5 )%
Tons sold—millions of equivalent tons   11.0     12.0     (1.0 )   (8.3 )%
                 
Coal - U.S.                
Revenues   $ 141,037     $ 152,519     $ (11,482 )   (7.5 )%
Operating (loss) income   (6,623 )   588     (7,211 )   *  
Adjusted EBITDA   23,656     20,848     2,808     13.5 %
Tons sold—millions of equivalent tons   4.0     4.7     (0.7 )   (14.9 )%
                 
Coal - Canada                
Revenues   $ 89,349     $ 109,328     $ (19,979 )   (18.3 )%
Operating (loss) income   (11,735 )   3,590     (15,325 )   *  
Adjusted EBITDA   (1,598 )   14,342     (15,940 )   *  
Tons sold—millions of equivalent tons   5.2     5.6     (0.4 )   (7.1 )%
                 
Coal - WMLP                
Revenues   $ 81,052     $ 80,468     $ 584     0.7 %
Operating income (loss)   7,588     (4,282 )   11,870     *  
Adjusted EBITDA   18,854     16,303     2,551     15.6 %
Tons sold—millions of equivalent tons   1.9     1.7     0.2     11.8 %
                 
Power                
Revenues   $ 19,880     $ 21,944     $ (2,064 )   (9.4 )%
Operating (loss) income   (383 )   6,731     (7,114 )   *  
Adjusted EBITDA   (141 )   614     (755 )   *  
                       
* Not meaningful                      

Westmoreland Coal Company and Subsidiaries
Summary Consolidated and Operating Segment Data (Unaudited)
 
    Six Months Ended June 30,
            Increase / (Decrease)
    2017     2016     $     %
    (In thousands, except tons sold data)
Westmoreland Consolidated                          
Revenues   $ 662,762     $ 713,451     $ (50,689 )   (7.1 )%
Operating (loss) income   (32,154 )   6,736     (38,890 )   *  
Adjusted EBITDA   120,784     109,206     11,578     10.6 %
Tons sold—millions of equivalent tons   23.3     25.8     (2.5 )   (9.7 )%
                 
Coal - U.S.                
Revenues   $ 278,405     $ 308,508     $ (30,103 )   (9.8 )%
Operating (loss) income   (2,287 )   8,254     (10,541 )   *  
Adjusted EBITDA   51,125     51,198     (73 )   (0.1 )%
Tons sold—millions of equivalent tons   8.8     10.7     (1.9 )   (17.8 )%
                 
Coal - Canada                
Revenues   $ 198,364     $ 203,084     $ (4,720 )   (2.3 )%
Operating (loss) income   (18,839 )   15,693     (34,532 )   *  
Adjusted EBITDA   57,637     37,666     19,971     53.0 %
Tons sold—millions of equivalent tons   11.1     11.4     (0.3 )   (2.6 )%
                 
Coal - WMLP                
Revenues   $ 155,857     $ 172,949     $ (17,092 )   (9.9 )%
Operating income (loss)   8,870     (3,473 )   12,343     *  
Adjusted EBITDA   31,723     35,583     (3,860 )   (10.8 )%
Tons sold—millions of equivalent tons   3.6     3.7     (0.1 )   (2.7 )%
                 
Power                
Revenues   $ 41,107     $ 43,940     $ (2,833 )   (6.4 )%
Operating (loss) income   (1,136 )   931     (2,067 )   *  
Adjusted EBITDA   (3,514 )   (2,734 )   (780 )   (28.5 )%
                         
* Not meaningful                        

Westmoreland Coal Company and Subsidiaries
Consolidated Statements of Operations (Unaudited)
 
  Three Months Ended June 30,   Six Months Ended June 30,
  2017   2016   2017   2016
  (In thousands)
Revenues $ 323,025     $ 357,597     $ 662,762     $ 713,451  
Cost, expenses and other:              
Cost of sales 271,909     298,181     556,513     579,307  
Depreciation, depletion and amortization 39,497     35,223     76,064     72,237  
Selling and administrative 30,166     27,613     60,592     55,012  
Heritage health benefit expenses 3,306     3,222     6,604     6,237  
Loss (gain) on sale/disposal of assets 133     (2,253 )   (34 )   (1,917 )
Derivative loss (gain) 481     (5,878 )   (1,904 )   (3,278 )
Income from equity affiliates (1,400 )   (1,287 )   (2,919 )   (2,580 )
Other operating loss     3,659         1,697  
  344,092     358,480     694,916     706,715  
Operating (loss) income (21,067 )   (883 )   (32,154 )   6,736  
Other (expense) income:              
Interest expense (30,109 )   (30,860 )   (59,371 )   (59,787 )
Interest income 1,038     2,356     1,931     4,147  
Loss on foreign exchange (1,185 )   (364 )   (1,652 )   (1,751 )
Other income 302     254     2,460     132  
  (29,954 )   (28,614 )   (56,632 )   (57,259 )
Loss before income taxes (51,021 )   (29,497 )   (88,786 )   (50,523 )
Income tax benefit (501 )   (100 )   (965 )   (48,035 )
Net loss (50,520 )   (29,397 )   (87,821 )   (2,488 )
Less net loss attributable to noncontrolling interest (138 )   (808 )   (637 )   (1,306 )
Net loss applicable to common shareholders $ (50,382 )   $ (28,589 )   $ (87,184 )   $ (1,182 )
Net loss per share applicable to common shareholders:              
Basic and diluted $ (2.69 )   $ (1.54 )   $ (4.68 )   $ (0.06 )
Weighted average number of common shares outstanding:              
Basic and diluted 18,700     18,540     18,636     18,401  

Westmoreland Coal Company and Subsidiaries
Consolidated Balance Sheets (Unaudited)
 
  June 30, 2017     December 31, 2016
  (In thousands)
Assets      
Current assets:      
Cash and cash equivalents $ 57,620     $ 60,082  
Receivables:      
Trade 132,715     140,731  
Loan and lease receivables     5,867  
Other 11,450     13,261  
Total receivables 144,165     159,859  
Inventories 120,580     125,515  
Other current assets 23,096     32,258  
Total current assets 345,461     377,714  
Land, mineral rights, property, plant and equipment 1,647,600     1,617,938  
Less accumulated depreciation, depletion and amortization 861,752     782,417  
Net land, mineral rights, property, plant and equipment 785,848     835,521  
Loan and lease receivables, less current portion     44,474  
Advanced coal royalties 19,049     18,722  
Reclamation deposits 76,131     74,362  
Restricted investments and bond collateral 146,386     144,913  
Investment in joint venture 27,363     26,951  
Other assets 59,233     62,252  
Total Assets $ 1,459,471     $ 1,584,909  
Liabilities and Shareholders' Deficit      
Current liabilities:      
Current installments of long-term debt $ 54,494     $ 86,272  
Accounts payable and accrued expenses:      
Trade and other accrued liabilities 124,474     142,233  
Interest payable 22,515     22,458  
Production taxes 44,509     44,995  
Postretirement medical benefits 14,892     14,892  
Deferred revenue 15,204     15,253  
Asset retirement obligations 41,952     32,207  
Other current liabilities 25,170     20,964  
Total current liabilities 343,210     379,274  
Long-term debt, less current installments 1,021,068     1,022,794  
Postretirement medical benefits, less current portion 309,526     308,709  
Pension and SERP obligations, less current portion 43,681     43,982  
Deferred revenue, less current portion 10,498     16,251  
Asset retirement obligations, less current portion 449,998     451,834  
Other liabilities 48,000     52,182  
Total liabilities 2,225,981     2,275,026  
Shareholders' deficit:      
Common stock of $.01 par value: Authorized 30,000,000 shares; Issued and outstanding 18,742,143 at June 30, 2017 and 18,570,642 at December 31, 2016     187     186  
Other paid-in capital 249,442     248,143  
Accumulated other comprehensive loss (168,259 )   (179,072 )
Accumulated deficit (844,886 )   (757,367 )
Total shareholders' deficit (763,516 )   (688,110 )
Noncontrolling interests in consolidated subsidiaries (2,994 )   (2,007 )
Total deficit (766,510 )   (690,117 )
Total Liabilities and Shareholders' Deficit $ 1,459,471     $ 1,584,909  

                                              
Westmoreland Coal Company and Subsidiaries
Consolidated Statements of Cash Flows (Unaudited)
 
    Six Months Ended June 30,
    2017   2016
    (In thousands)
Cash flows from operating activities:        
Net loss   $ (87,821 )   $ (2,488 )
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:        
Depreciation, depletion and amortization   76,064     72,237  
Accretion of asset retirement obligation   22,437     14,297  
Share-based compensation   2,480     4,534  
Non-cash interest expense   4,639     4,554  
Amortization of deferred financing costs   5,193     6,630  
Gain on derivative instruments   (1,904 )   (3,278 )
Loss on foreign exchange   1,652     1,751  
Income from equity affiliates   (2,919 )   (2,580 )
Distributions from equity affiliates   3,403     3,633  
Deferred income tax benefit   (965 )   (47,547 )
Other   (1,752 )   (8,017 )
Changes in operating assets and liabilities:        
Receivables   11,360     7,362  
Inventories   7,706     6,343  
Accounts payable and accrued expenses   (20,919 )   (4,044 )
Interest payable   532     (3,011 )
Deferred revenue   (5,809 )   6,948  
Other assets and liabilities   17,596     26,123  
Asset retirement obligations   (20,819 )   (41,548 )
Net cash provided by operating activities   10,154     41,899  
Cash flows from investing activities:        
Additions to property, plant and equipment   (13,104 )   (12,231 )
Change in restricted investments   (2,009 )   658  
Cash payments related to acquisitions   (3,580 )   (125,314 )
Proceeds from sales of assets   783     6,706  
Receipts from loan and lease receivables   50,488     3,268  
Payments related to loan and lease receivables       (334 )
Other   (969 )   (538 )
Net cash provided by (used in) investing activities   31,609     (127,785 )
Cash flows from financing activities:        
Borrowings from long-term debt, net of debt discount       122,250  
Repayments of long-term debt   (44,324 )   (17,991 )
Borrowings on revolving lines of credit   113,200     195,400  
Repayments on revolving lines of credit   (113,200 )   (194,370 )
Debt issuance costs and other refinancing costs       (5,709 )
Other   (364 )   (529 )
Net cash (used in) provided by financing activities   (44,688 )   99,051  
Effect of exchange rate changes on cash   463     (225 )
Net (decrease) increase in cash and cash equivalents   (2,462 )   12,940  
Cash and cash equivalents, beginning of period   60,082     22,936  
Cash and cash equivalents, end of period   $ 57,620     $ 35,876  
Supplemental disclosures of cash flow information:        
Cash paid for interest   $ 48,931     $ 47,972  

Westmoreland Coal Company and Subsidiaries Non-GAAP Reconciliations (Unaudited)

The tables below show how the Company calculates and reconciles to the most directly comparable GAAP financial measures EBITDA, Adjusted EBITDA (including a breakdown by segment), and free cash flow.

EBITDA, Adjusted EBITDA, and free cash flow are supplemental measures of financial performance that are not required by, or presented in accordance with, GAAP.  EBITDA, Adjusted EBITDA, and free cash flow are included in this news release because they are key metrics used by management to assess Westmoreland's operating performance and as a basis for strategic planning and forecasting.  Westmoreland believes that EBITDA, Adjusted EBITDA, and free cash flow are useful to an investor in evaluating the Company's 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;
  • are used by rating agencies, lenders and other parties to evaluate creditworthiness; and 
  • help investors to more meaningfully evaluate and compare the results of Westmoreland's operations from period to period by removing the effect of the Company's capital structure and asset base from the Company's operating results.

Neither EBITDA, Adjusted EBITDA, nor free cash flow are measures calculated in accordance with GAAP.  The items excluded from EBITDA, Adjusted EBITDA, and free cash flow are significant in assessing Westmoreland's operating results.  EBITDA, Adjusted EBITDA, and free cash flow have limitations as analytical tools, and should not be considered in isolation from, or as a substitute for, analysis of the Company's results as reported under GAAP.

Other companies in Westmoreland's industry and in other industries may calculate EBITDA, Adjusted EBITDA, and free cash flow differently from the way that Westmoreland does, limiting their usefulness as comparative measures.  Because of these limitations, EBITDA, Adjusted EBITDA, and free cash flow should not be considered as measures of discretionary cash available to the Company to invest in the growth of its business.  Westmoreland compensates for these limitations by relying primarily on its GAAP results and using EBITDA, Adjusted EBITDA, and free cash flow only as supplemental data.

EBITDA and Adjusted EBITDA

EBITDA (earnings before interest expense, interest income, income taxes, depreciation, depletion, amortization and accretion expense) and Adjusted EBITDA are non-GAAP measures that do not reflect the Company's cash expenditures, or future requirements for capital and major maintenance expenditures or contractual commitments; do not reflect income tax expenses or the cash requirements necessary to pay income taxes; do not reflect changes in, or cash requirements for, the Company's 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 the Company's 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.  Westmoreland considers Adjusted EBITDA to be useful because it reflects operating performance before the effects of certain non-cash items and other items that it believes are not indicative of core operations.  The Company uses Adjusted EBITDA to assess operating performance.
              Three Months Ended June 30,   Six Months Ended June 30,
              2017   2016     2017   2016
              (In thousands)
Adjusted EBITDA by Segment                            
Coal - U.S.             $ 23,656     $ 20,848     $ 51,125     $ 51,198  
Coal - Canada             (1,598 )   14,342     57,637     37,666  
Coal - WMLP             18,854     16,303     31,723     35,583  
Power             (141 )   614     (3,514 )   (2,734 )
Heritage             (3,786 )   (3,518 )   (7,456 )   (6,999 )
Corporate             (4,419 )   (3,033 )   (8,731 )   (5,508 )
Total             $ 32,566     $ 45,556     $ 120,784     $ 109,206  

Reconciliation of Net (Loss) Income to Adjusted EBITDA Three Months Ended June 30,   Six Months Ended June 30,
  2017   2016     2017   2016
  (In thousands)
Net loss $ (50,520 )   $ (29,397 )   $ (87,821 )   $ (2,488 )
Income tax benefit (501 )   (100 )   (965 )   (48,035 )
Interest income (1,038 )   (2,356 )   (1,931 )   (4,147 )
Interest expense 30,109     30,860     59,371     59,787  
Depreciation, depletion and amortization 39,497     35,223     76,064     72,237  
Accretion of asset retirement obligation 11,142     10,332     22,437     19,950  
Amortization of intangible assets and liabilities (267 )   (260 )   (534 )   (427 )
EBITDA 28,422     44,302     66,621     96,877  
               
Advisory fees (1) 925         925      
Loss on foreign exchange 1,185     364     1,652     1,751  
Acquisition-related costs     133         568  
Customer payments received under loan and lease receivables (2)             2,727     50,489     5,387  
Derivative loss (gain) 481     (5,878 )   (1,904 )   (3,278 )
Loss on sale/disposal of assets and other adjustments 420     1,954     521     3,367  
Share-based compensation 1,133     1,954     2,480     4,534  
Adjusted EBITDA $ 32,566     $ 45,556     $ 120,784     $ 109,206  

___________________ (1)       Amount represents fees paid to financial and legal advisers related to the assessment of Westmoreland's capital structure.  These advisers, together with Westmoreland's management and board of directors, are developing and evaluating options to optimize Westmoreland's overall capital structure. (2)       Represents a return of and on capital. These amounts are not included in operating income or operating cash flows as the capital outlays are treated as loan and lease receivables, but are included within Adjusted EBITDA so that the cash received is treated consistently with all other contracts that do not result in loan and lease receivable accounting. On March 24, 2017, Westmoreland received $52.5 million from its customer at the Genesee mine, representing an accelerated repayment of all outstanding loan and lease receivables. While Westmoreland will continue to provide contract mining services at the Genesee mine, all future capital expenditures at the Genesee mine will be funded by the customer. Accordingly, there will be no additional payments from the customer at the Genesee mine in the form of loan and lease repayments, but Westmoreland will earn a management fee pursuant a contract mining arrangement.

Free Cash Flow

Free cash flow represents net cash provided by (used in) operating activities less additions to property, plant and equipment ("CAPEX" or "capital expenditures") plus net customer payments received under loan and lease receivables.  Free cash flow is a non-GAAP measure and should not be considered as an alternative to cash and cash equivalents, cash flow from operations, cash flow from investing activities, cash flow from financing activities, net income (loss) or any other measure of performance presented in accordance with GAAP.  Free cash flow is intended to represent cash flow available to satisfy our debts, after giving consideration to those expenses required to maintain our assets and infrastructure.  Accordingly, although free cash flow is not a measure of performance calculated in accordance with GAAP, the Company believes free cash flow is useful to investors because it allows analysts and others in the industry to assess performance, liquidity and ability to satisfy debt requirements.
Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow               Six Months Ended June 30,
          2017   2016
          (In thousands)
Net cash provided by operating activities         $ 10,154     $ 41,899  
Less cash paid for property, plant and equipment         (13,104 )   (12,231 )
Net customer payments received under loan and lease receivables         50,488     2,934  
Free cash flow         $ 47,538     $ 32,602  

 
For further information please contact:Gary Kohn, Chief Financial Officer1-720-354-4467gkohn@westmoreland.com

Primary Logo