ENGLEWOOD, Colo., May 15, 2017 (GLOBE NEWSWIRE) -- Westmoreland Coal Company (Nasdaq:WLB) today reported financial results for the first quarter 2017 and reiterated its 2017 guidance.
First Quarter Highlights
- Revenues of $339.7 million from 12.4 million tons sold
- Net loss applicable to common shareholders of $36.8 million, or $1.98 per share
- Adjusted EBITDA of $88.2 million, including approximately $47 million accelerated from the Capital Power payment
- Cash flow used in operating activities of $0.7 million
- Free cash flow of $42.6 million, which also includes the accelerated Capital Power payment
“We remain on track to achieve our full year guidance, despite a challenging first quarter," said Westmoreland Chief Executive Officer, Kevin Paprzycki. "Our adjusted EBITDA and cash flow were impacted during the quarter by low weather-related demand. We also performed dragline repairs and worked through some challenging parts of our mine plan. Our operators took proactive steps to minimize the impact of these headwinds, and I'm pleased that we now have these factors behind us. This quarter’s results demonstrate the resiliency of our model in that, despite an unusual set of challenges, we produced positive free cash flow.”
Safety
Westmoreland's safety metrics are below.
| Three Months Ended March 31, 2017 | ||||||
| Reportable Rate | Lost Time Rate | |||||
| U.S. Surface Operations | 1.82 | 1.51 | ||||
| U.S. National Surface Average | 1.35 | 0.82 | ||||
| Percentage | 135 | % | 184 | % | ||
| U.S. Underground Operations | 1.64 | 0.82 | ||||
| U.S. National Underground Average | 4.95 | 3.56 | ||||
| Percentage | 33 | % | 23 | % | ||
| Canadian Operations | 0.69 | 0.34 | ||||
Consolidated and Segment Results
Consolidated adjusted EBITDA for the first quarter of 2017 was $88.2 million. As expected, revenue in the Coal-US segment was lower due to the expiration of the Jewett and Beulah coal supply contracts. Unfavorable weather also impacted all operating segments, particularly Coal -WMLP, where mild weather in Ohio added to the existing softness in price and demand. Heavy snowfall, followed by heavy rain, at the Kemmerer mine, lowered first quarter deliveries and increased costs. Operational challenges, including dragline repairs in Canada and temporary mining in a lower-yield area of certain mines in both the Coal - Canada and Coal - WMLP segments, drove lower sales and increased costs. Offsetting these declines was the effect of the early repayment of loan and lease receivables by Capital Power, of which approximately $47 million represented accelerated collections in the first quarter of 2017. Adjusted EBITDA also benefited from an additional month of San Juan operations compared with the previous year.
Cash Flow and Liquidity
Westmoreland’s free cash flow through March 31, 2017, was $42.6 million, including the benefit from the early repayment of loan and lease receivables. Free cash flow is the net of cash flow used in operations of $0.7 million, less capital expenditures of $7.2 million, plus net cash collected for the loan and lease receivables of $50.5 million. Included in cash flow used in operations were cash uses for interest expense of $32.0 million, for asset retirement obligations of $10.7 million, and negative working capital of $3.2 million.
At March 31, 2017, cash and cash equivalents on hand totaled $75.4 million, a $15.4 million increase from year end. The increase was comprised of free cash flow generation of $42.6 million; net cash debt reductions including capital lease payments of $22.4 million; a $3.6 million reserve acquisition and other non-operating cash uses of $1.2 million.
Gross debt plus capital lease obligations at quarter end totaled $1.1 billion, of which $324.4 million resides at Westmoreland Resource Partners, LP and $802.7 million resides at Westmoreland Coal Company. There was $33.4 million available to draw, net of letters of credit, on Westmoreland's revolving credit facility. An additional $14.7 million was available to Westmoreland Resource Partners through its revolving credit facility, which is not available to the parent for borrowings. No amounts had been drawn on either revolving credit facility as of March 31, 2017.
Full-Year Guidance
Westmoreland reiterated its 2017 guidance, which includes the impact of the early repayment of loan and lease receivables related to the Genesee mine, as follows:
| Guidance Summary | 2017 | ||
| Coal tons sold | 40 - 50 million tons | ||
| Adjusted EBITDA | $280 - $310 million | ||
| Free cash flow | $115 - $140 million | ||
| Capital expenditures | $40 - $50 million | ||
| Cash interest | approximately $95 million |
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 May 15, 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: | 1-201-689-8584 | |
| Webcast | www.westmoreland.com/investors/investor-webcasts |
A replay of the teleconference will be available until June 5, 2017 and can be accessed using the information below:
| Replay: | 1-877-481-4010 or 1-919-882-2331 | |
| Replay ID: | 10368 | |
| Webcast | 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). Its power operations include ownership of the two-unit ROVA coal-fired power plant in North Carolina. 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. 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 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 March 31, | |||||||||||||||
| Increase / (Decrease) | |||||||||||||||
| 2017 | 2016 | $ | % | ||||||||||||
| (In thousands, except tons sold data) | |||||||||||||||
| Westmoreland Consolidated | |||||||||||||||
| Revenues | $ | 339,737 | $ | 355,854 | $ | (16,117 | ) | (4.5 | )% | ||||||
| Operating (loss) income | (11,088 | ) | 7,619 | (18,707 | ) | * | |||||||||
| Adjusted EBITDA | 88,217 | 63,651 | 24,566 | 38.6 | % | ||||||||||
| Tons sold—millions of equivalent tons | 12.4 | 13.8 | (1.4 | ) | (10.1 | )% | |||||||||
| Coal - U.S. | |||||||||||||||
| Revenues | $ | 137,368 | $ | 155,990 | $ | (18,622 | ) | (11.9 | )% | ||||||
| Operating income | 4,336 | 7,667 | (3,331 | ) | (43.4 | )% | |||||||||
| Adjusted EBITDA | 27,469 | 30,350 | (2,881 | ) | (9.5 | )% | |||||||||
| Tons sold—millions of equivalent tons | 4.7 | 6.0 | (1.3 | ) | (21.7 | )% | |||||||||
| Coal - Canada | |||||||||||||||
| Revenues | $ | 109,015 | $ | 93,756 | $ | 15,259 | 16.3 | % | |||||||
| Operating (loss) income | (7,104 | ) | 12,103 | (19,207 | ) | * | |||||||||
| Adjusted EBITDA | 59,235 | 23,325 | 35,910 | 154.0 | % | ||||||||||
| Tons sold—millions of equivalent tons | 6.0 | 5.8 | 0.2 | 3.4 | % | ||||||||||
| Coal - WMLP | |||||||||||||||
| Revenues | $ | 74,805 | $ | 92,481 | $ | (17,676 | ) | (19.1 | )% | ||||||
| Operating income | 1,282 | 809 | 473 | 58.5 | % | ||||||||||
| Adjusted EBITDA | 12,869 | 19,280 | (6,411 | ) | (33.3 | )% | |||||||||
| Tons sold—millions of equivalent tons | 1.7 | 2.0 | (0.3 | ) | (15.0 | )% | |||||||||
| Power | |||||||||||||||
| Revenues | $ | 21,227 | $ | 21,995 | $ | (768 | ) | (3.5 | )% | ||||||
| Operating loss | (753 | ) | (5,801 | ) | 5,048 | 87.0 | % | ||||||||
| Adjusted EBITDA | (3,373 | ) | (3,348 | ) | (25 | ) | (0.7 | )% | |||||||
____________________
* Not meaningful
| Westmoreland Coal Company and Subsidiaries | ||||||||
| Consolidated Statements of Operations (Unaudited) | ||||||||
| Three Months Ended March 31, | ||||||||
| 2017 | 2016 | |||||||
| (In thousands) | ||||||||
| Revenues | $ | 339,737 | $ | 355,854 | ||||
| Cost, expenses and other: | ||||||||
| Cost of sales | 284,604 | 281,125 | ||||||
| Depreciation, depletion and amortization | 36,567 | 37,015 | ||||||
| Selling and administrative | 30,426 | 27,399 | ||||||
| Heritage health benefit expenses | 3,298 | 3,015 | ||||||
| (Gain) loss on sale/disposal of assets | (166 | ) | 336 | |||||
| Derivative (gain) loss | (2,384 | ) | 2,600 | |||||
| Income from equity affiliates | (1,520 | ) | (1,293 | ) | ||||
| Other operating gain | — | (1,962 | ) | |||||
| 350,825 | 348,235 | |||||||
| Operating (loss) income | (11,088 | ) | 7,619 | |||||
| Other (expense) income: | ||||||||
| Interest expense | (29,261 | ) | (28,927 | ) | ||||
| Interest income | 893 | 1,791 | ||||||
| Loss on foreign exchange | (467 | ) | (1,387 | ) | ||||
| Other income (loss) | 2,158 | (122 | ) | |||||
| (26,677 | ) | (28,645 | ) | |||||
| Loss before income taxes | (37,765 | ) | (21,026 | ) | ||||
| Income tax benefit | (465 | ) | (47,935 | ) | ||||
| Net (loss) income | (37,300 | ) | 26,909 | |||||
| Less net loss attributable to noncontrolling interest | (499 | ) | (498 | ) | ||||
| Net (loss) income applicable to common shareholders | $ | (36,801 | ) | $ | 27,407 | |||
| Net (loss) income per share applicable to common shareholders: | ||||||||
| Basic and diluted | $ | (1.98 | ) | $ | 1.50 | |||
| Weighted average number of common shares outstanding: | ||||||||
| Basic | 18,572 | 18,262 | ||||||
| Diluted | 18,572 | 18,269 | ||||||
| Westmoreland Coal Company and Subsidiaries | ||||||||
| Consolidated Balance Sheets (Unaudited) | ||||||||
| March 31, 2017 | December 31, 2016 | |||||||
| (In thousands) | ||||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 75,438 | $ | 60,082 | ||||
| Receivables: | ||||||||
| Trade | 131,124 | 140,731 | ||||||
| Loan and lease receivables | — | 5,867 | ||||||
| Other | 11,053 | 13,261 | ||||||
| Total receivables | 142,177 | 159,859 | ||||||
| Inventories | 120,298 | 125,515 | ||||||
| Other current assets | 24,836 | 32,258 | ||||||
| Total current assets | 362,749 | 377,714 | ||||||
| Land, mineral rights, property, plant and equipment | 1,635,151 | 1,617,938 | ||||||
| Less accumulated depreciation, depletion and amortization | 818,032 | 782,417 | ||||||
| Net property, plant and equipment | 817,119 | 835,521 | ||||||
| Loan and lease receivables, less current portion | — | 44,474 | ||||||
| Advanced coal royalties | 18,837 | 18,722 | ||||||
| Reclamation deposits | 75,511 | 74,362 | ||||||
| Restricted investments and bond collateral | 145,642 | 144,913 | ||||||
| Investment in joint venture | 26,992 | 26,951 | ||||||
| Other assets | 63,966 | 62,252 | ||||||
| Total Assets | $ | 1,510,816 | $ | 1,584,909 | ||||
| Liabilities and Shareholders’ Deficit | ||||||||
| Current liabilities: | ||||||||
| Current installments of long-term debt | $ | 72,710 | $ | 86,272 | ||||
| Accounts payable and accrued expenses: | ||||||||
| Trade and other accrued liabilities | 117,280 | 142,233 | ||||||
| Interest payable | 14,679 | 22,458 | ||||||
| Production taxes | 47,081 | 44,995 | ||||||
| Postretirement medical benefits | 14,892 | 14,892 | ||||||
| Deferred revenue | 19,984 | 15,253 | ||||||
| Asset retirement obligations | 31,362 | 32,207 | ||||||
| Other current liabilities | 20,121 | 20,964 | ||||||
| Total current liabilities | 338,109 | 379,274 | ||||||
| Long-term debt, less current installments | 1,019,432 | 1,022,794 | ||||||
| Postretirement medical benefits, less current portion | 309,217 | 308,709 | ||||||
| Pension and SERP obligations, less current portion | 43,819 | 43,982 | ||||||
| Deferred revenue, less current portion | 13,524 | 16,251 | ||||||
| Asset retirement obligations, less current portion | 457,166 | 451,834 | ||||||
| Other liabilities | 52,171 | 52,182 | ||||||
| Total liabilities | 2,233,438 | 2,275,026 | ||||||
| Shareholders’ deficit: | ||||||||
| Common stock of $.01 par value: Authorized 30,000,000 shares; Issued and outstanding 18,572,233 at March 31, 2017 and 18,570,642 at December 31, 2016 | 186 | 186 | ||||||
| Other paid-in capital | 249,441 | 248,143 | ||||||
| Accumulated other comprehensive loss | (175,037 | ) | (179,072 | ) | ||||
| Accumulated deficit | (794,536 | ) | (757,367 | ) | ||||
| Total shareholders’ deficit | (719,946 | ) | (688,110 | ) | ||||
| Noncontrolling interests in consolidated subsidiaries | (2,676 | ) | (2,007 | ) | ||||
| Total deficit | (722,622 | ) | (690,117 | ) | ||||
| Total Liabilities and Shareholders' Deficit | $ | 1,510,816 | $ | 1,584,909 | ||||
| Westmoreland Coal Company and Subsidiaries | ||||||||
| Consolidated Statements of Cash Flows (Unaudited) | ||||||||
| Three Months Ended March 31, | ||||||||
| 2017 | 2016 | |||||||
| (In thousands) | ||||||||
| Cash flows from operating activities: | ||||||||
| Net (loss) income | $ | (37,300 | ) | $ | 26,909 | |||
| Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities: | ||||||||
| Depreciation, depletion and amortization | 36,567 | 37,015 | ||||||
| Accretion of asset retirement obligation | 11,295 | 7,007 | ||||||
| Share-based compensation | 1,347 | 2,580 | ||||||
| Non-cash interest expense | 2,296 | 2,269 | ||||||
| Amortization of deferred financing costs | 2,626 | 3,214 | ||||||
| (Gain) loss on derivative instruments | (2,384 | ) | 2,600 | |||||
| Loss on foreign exchange | 467 | 1,387 | ||||||
| Income from equity affiliates | (1,520 | ) | (1,293 | ) | ||||
| Distributions from equity affiliates | 1,671 | 1,451 | ||||||
| Deferred income tax benefit | (465 | ) | (47,973 | ) | ||||
| Other | (1,474 | ) | (2,926 | ) | ||||
| Changes in operating assets and liabilities: | ||||||||
| Receivables | 12,250 | (10,052 | ) | |||||
| Inventories | 5,156 | (7,323 | ) | |||||
| Accounts payable and accrued expenses | (21,905 | ) | 7,698 | |||||
| Interest payable | (7,787 | ) | (5,600 | ) | ||||
| Deferred revenue | 2,005 | 3,389 | ||||||
| Other assets and liabilities | 7,104 | (18,247 | ) | |||||
| Asset retirement obligations | (10,659 | ) | 18,449 | |||||
| Net cash (used in) provided by operating activities | (710 | ) | 20,554 | |||||
| Cash flows from investing activities: | ||||||||
| Additions to property, plant and equipment | (7,210 | ) | (5,548 | ) | ||||
| Change in restricted investments | (1,171 | ) | (3,172 | ) | ||||
| Cash payments related to acquisitions | (3,580 | ) | (126,865 | ) | ||||
| Proceeds from sales of assets | 466 | 1,626 | ||||||
| Receipts from loan and lease receivables | 50,488 | 1,620 | ||||||
| Payments related to loan and lease receivables | — | (312 | ) | |||||
| Other | (293 | ) | 79 | |||||
| Net cash provided by (used in) investing activities | 38,700 | (132,572 | ) | |||||
| Cash flows from financing activities: | ||||||||
| Borrowings from long-term debt, net of debt discount | — | 121,225 | ||||||
| Repayments of long-term debt | (22,368 | ) | (9,018 | ) | ||||
| Borrowings on revolving lines of credit | 123,200 | 77,500 | ||||||
| Repayments on revolving lines of credit | (123,200 | ) | (79,500 | ) | ||||
| Debt issuance costs and other refinancing costs | — | (2,927 | ) | |||||
| Other | (178 | ) | (262 | ) | ||||
| Net cash (used in) provided by financing activities | (22,546 | ) | 107,018 | |||||
| Effect of exchange rate changes on cash | (88 | ) | (182 | ) | ||||
| Net increase (decrease) in cash and cash equivalents | 15,356 | (5,182 | ) | |||||
| Cash and cash equivalents, beginning of period | 60,082 | 22,936 | ||||||
| Cash and cash equivalents, end of period | $ | 75,438 | $ | 17,754 | ||||
| Supplemental disclosures of cash flow information: | ||||||||
| Cash paid for interest | $ | 31,951 | $ | 30,397 | ||||
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 March 31, | ||||||||
| 2017 | 2016 | |||||||
| (In thousands) | ||||||||
| Adjusted EBITDA by Segment | ||||||||
| Coal - U.S. | $ | 27,469 | $ | 30,350 | ||||
| Coal - Canada | 59,235 | 23,325 | ||||||
| Coal - WMLP | 12,869 | 19,280 | ||||||
| Power | (3,373 | ) | (3,348 | ) | ||||
| Heritage | (3,670 | ) | (3,481 | ) | ||||
| Corporate | (4,313 | ) | (2,475 | ) | ||||
| Total | $ | 88,217 | $ | 63,651 | ||||
| Three Months Ended March 31, | ||||||||
| 2017 | 2016 | |||||||
| (In thousands) | ||||||||
| Reconciliation of Net (Loss) Income to Adjusted EBITDA | ||||||||
| Net (loss) income | $ | (37,300 | ) | $ | 26,909 | |||
| Income tax benefit | (465 | ) | (47,935 | ) | ||||
| Interest income | (893 | ) | (1,791 | ) | ||||
| Interest expense | 29,261 | 28,927 | ||||||
| Depreciation, depletion and amortization | 36,567 | 37,015 | ||||||
| Accretion of asset retirement obligation | 11,295 | 9,618 | ||||||
| Amortization of intangible assets and liabilities | (267 | ) | (167 | ) | ||||
| EBITDA | 38,198 | 52,576 | ||||||
| Loss on foreign exchange | 467 | 1,387 | ||||||
| Acquisition-related costs | — | 435 | ||||||
| Customer payments received under loan and lease receivables (1) | 50,489 | 2,660 | ||||||
| Derivative (gain) loss | (2,384 | ) | 2,600 | |||||
| Loss on sale/disposal of assets and other adjustments | 100 | 1,413 | ||||||
| Share-based compensation | 1,347 | 2,580 | ||||||
| Adjusted EBITDA | $ | 88,217 | $ | 63,651 | ||||
___________________
(1) 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 (Used in) Provided by Operating Activities to Free Cash Flow | Three Months Ended March 31, | |||||||
| 2017 | 2016 | |||||||
| (In thousands) | ||||||||
| Net cash (used in) provided by operating activities | $ | (710 | ) | $ | 20,554 | |||
| Less cash paid for property, plant and equipment | (7,210 | ) | (5,548 | ) | ||||
| Net customer payments received under loan and lease receivables | 50,488 | 1,308 | ||||||
| Free cash flow | $ | 42,568 | $ | 16,314 | ||||
Reconciliations of EBITDA and Adjusted EBITDA for Restated Periods
In the Company's Form 10-K for the year ended December 31, 2016, Westmoreland restated certain financial information, including its consolidated statements of operations for the year ended December 31, 2015, and its unaudited quarterly financial information for 2016 and 2015. Presented below are reconciliations of EBITDA and Adjusted EBITDA for each of the quarters in the years ended December 31, 2016 and 2015, as restated, and are provided for reference.
EBITDA and Adjusted EBITDA are non-GAAP measures. See "EBITDA and Adjusted EBITDA" above for further explanation of these measures.
| Three Months Ended | |||||||||||||||
| March 31, 2016 | June 30, 2016 | September 30, 2016 | December 31, 2016 | ||||||||||||
| (In thousands) | |||||||||||||||
| Adjusted EBITDA by Segment | |||||||||||||||
| Coal - U.S. | $ | 30,350 | $ | 20,848 | $ | 38,020 | $ | 37,347 | |||||||
| Coal - Canada | 23,325 | 14,342 | 18,562 | 32,181 | |||||||||||
| Coal - WMLP | 19,280 | 16,303 | 22,686 | 21,044 | |||||||||||
| Power | (3,348 | ) | 614 | 507 | 5,854 | ||||||||||
| Heritage | (3,481 | ) | (3,518 | ) | (3,326 | ) | (3,083 | ) | |||||||
| Corporate | (2,475 | ) | (3,033 | ) | (2,916 | ) | (4,228 | ) | |||||||
| Total | $ | 63,651 | $ | 45,556 | $ | 73,533 | $ | 89,115 | |||||||
| Three Months Ended | ||||||||||||||||
| March 31, 2016 | June 30, 2016 | September 30, 2016 | December 31, 2016 | |||||||||||||
| (In thousands) | ||||||||||||||||
| Reconciliation of Net Income (Loss) to Adjusted EBITDA | ||||||||||||||||
| Net income (loss) | $ | 26,909 | $ | (29,397 | ) | $ | (18,607 | ) | $ | (7,777 | ) | |||||
| Income tax expense (benefit) | (47,935 | ) | (100 | ) | (1,625 | ) | 1,601 | |||||||||
| Interest income | (1,791 | ) | (2,356 | ) | (1,374 | ) | (1,914 | ) | ||||||||
| Interest expense | 28,927 | 30,860 | 30,882 | 31,150 | ||||||||||||
| Depreciation, depletion and amortization | 37,015 | 35,223 | 40,859 | 72,170 | ||||||||||||
| Accretion of ARO | 9,618 | 10,332 | 10,280 | 10,193 | ||||||||||||
| Amortization of intangible assets and liabilities | (167 | ) | (260 | ) | (225 | ) | (158 | ) | ||||||||
| EBITDA | 52,576 | 44,302 | 60,190 | 105,265 | ||||||||||||
| (Gain) loss on foreign exchange | 1,387 | 364 | (220 | ) | (816 | ) | ||||||||||
| Acquisition-related costs | 435 | 133 | — | — | ||||||||||||
| Customer payments received under loan and lease receivables | 2,660 | 2,727 | 2,582 | 5,095 | ||||||||||||
| Derivative loss (gain) | 2,600 | (5,878 | ) | 5,442 | (26,219 | ) | ||||||||||
| Loss on sale/disposal of assets and other adjustments | 1,413 | 1,954 | 4,148 | 4,131 | ||||||||||||
| Share-based compensation | 2,580 | 1,954 | 1,391 | 1,659 | ||||||||||||
| Adjusted EBITDA | $ | 63,651 | $ | 45,556 | $ | 73,533 | $ | 89,115 | ||||||||
| Three Months Ended | ||||||||||||||||
| March 31, 2015 | June 30, 2015 | September 30, 2015 | December 31, 2015 | |||||||||||||
| (In thousands) | ||||||||||||||||
| Adjusted EBITDA by Segment | ||||||||||||||||
| Coal - U.S. | $ | 23,121 | $ | 17,208 | $ | 16,884 | $ | 19,922 | ||||||||
| Coal - Canada | 23,702 | 32,702 | 21,439 | 27,901 | ||||||||||||
| Coal - WMLP | 19,005 | 15,175 | 15,648 | 16,306 | ||||||||||||
| Power | (2,613 | ) | (614 | ) | 75 | 3,895 | ||||||||||
| Heritage | (3,348 | ) | (2,401 | ) | (2,950 | ) | (6,897 | ) | ||||||||
| Corporate | (2,202 | ) | (3,980 | ) | (3,224 | ) | (1,922 | ) | ||||||||
| Total | $ | 57,665 | $ | 58,090 | $ | 47,872 | $ | 59,205 | ||||||||
| Three Months Ended | ||||||||||||||||
| March 31, 2015 | June 30, 2015 | September 30, 2015 | December 31, 2015 | |||||||||||||
| (In thousands) | ||||||||||||||||
| Reconciliation of Net Loss to Adjusted EBITDA | ||||||||||||||||
| Net loss | $ | (16,024 | ) | $ | (39,415 | ) | $ | (52,875 | ) | $ | (110,781 | ) | ||||
| Income tax expense (benefit) | 2,040 | 7,556 | 4,362 | (33,848 | ) | |||||||||||
| Interest income | (2,140 | ) | (2,567 | ) | (1,555 | ) | (1,731 | ) | ||||||||
| Interest expense | 23,999 | 24,850 | 25,865 | 26,597 | ||||||||||||
| Depreciation, depletion and amortization | 39,908 | 36,332 | 37,240 | 26,848 | ||||||||||||
| Accretion of ARO | 9,702 | 9,748 | 9,812 | 9,630 | ||||||||||||
| Amortization of intangible assets and liabilities | (253 | ) | (253 | ) | (250 | ) | (254 | ) | ||||||||
| EBITDA | 57,232 | 36,251 | 22,599 | (83,539 | ) | |||||||||||
| Restructuring charges | 553 | 103 | — | — | ||||||||||||
| (Gain) loss on foreign exchange | (2,109 | ) | 1,313 | (1,678 | ) | (1,200 | ) | |||||||||
| Loss on extinguishment of debt | — | — | 5,385 | — | ||||||||||||
| Loss on impairment | — | — | — | 136,210 | ||||||||||||
| Acquisition-related costs | 1,400 | — | 3,070 | 1,489 | ||||||||||||
| Customer payments received under loan and lease receivables | 4,103 | 11,418 | 8,731 | 2,876 | ||||||||||||
| Derivative loss (gain) | (5,276 | ) | 6,178 | 5,815 | (1,130 | ) | ||||||||||
| Loss on sale/disposal of assets and other adjustments | 240 | 703 | 2,008 | 2,339 | ||||||||||||
| Share-based compensation | 1,522 | 2,124 | 1,942 | 2,160 | ||||||||||||
| Adjusted EBITDA | $ | 57,665 | $ | 58,090 | $ | 47,872 | $ | 59,205 | ||||||||