Westmoreland Coal Beats Rocky Market in 2014 with Canadian Acquisition, Expects 2015 Capex Up to $92 Million

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Researched by Industrial Info Resources (Sugar Land, Texas)--Westmoreland Coal Company (NASDAQ: WLB) (Englewood, Colorado), one of the oldest coal companies based in the U.S., survived increasingly difficult market conditions to post solid overall gains in 2014. The U.S. Coal segment benefited from sales to new customers, and a major acquisition in Canada added almost $390 million to the company's revenues. Westmoreland's income totaled $175.35 million for the year, a 50.82% increase from 2013, when excluding numerous one-time and extraordinary charges.

Without the exclusions for "adjusted EBITDA," the company recorded net losses of $173.12 million for the year, compared with losses of $6.06 million in 2013. Exclusions include income taxes and benefits; interest income and expenses; depreciation; depletion; amortization; accretions of accounts-receivable operations; restructuring charges; losses on foreign exchange and extinguishment of debt; derivative losses; asset sales; and customer payments from loan and lease receivables. Also excluded are $26.79 million in costs related to 2014 acquisitions.

As part of its North American Metals & Minerals Project Database, Industrial Info is tracking Westmoreland's $50 million, Phase II addition to a bituminous coal mine in Bienfait, Saskatchewan. The project involves building the second of four plants to house a 15,000-ton-per-year activated carbon unit, which is to be used for mercury capture. Phase I was completed in June 2010, and Phase II is set to be completed in the first quarter of 2016.

Total revenues stood at $1.12 billion for the year, compared with $674.69 million in 2014. The single biggest boost was the acquisition of the Prairie and Mountain coal mining operations in Canada, from Sherritt International Corporation (TSX:S), which added $388.66 million to revenues. These operations include seven active thermal coal mines in Alberta and Saskatchewan; a 50% interest in an activated carbon plant, with the other half held by Cabot Corporation (NYSE:CBT) (Boston, Massachusetts); and a Char production facility that sells to barbeque briquette producers.

In the U.S., where coal revenues increased almost 10% and adjusted earnings were comparable with those from last year, Westmoreland benefited from new customers at Absaloka Mine in Montana, and fewer customer outages at Absalkoa and the Beulah Mine in North Dakota. At the end of 2014, Westmoreland acquired Oxford Resources GP LLC, which is the general partner of Oxford Resource Partners LP, and Buckingham Coal Company LLC, an Ohio-based coal supplier.

Harsher-than-expected winter weather in early 2014 also proved beneficial to Westmoreland, particularly to its Roanoke Valley Energy Facility in North Carolina. Milder weather throughout the remainder of the year negatively affected revenues in the Power segment.

"Our associates in Canada embraced the Westmoreland way of doing business and performance there has consistently exceeded our expectations," said Keith Alessi, the executive chairman of Westmoreland, in a conference call. We've been just delighted with that acquisition and it's everything that we had hoped it would be at the prime related deal."

Capital expenditures in 2015 are expected to total between $74 million and $92 million, including those for both Westmoreland Resource Partners LP and general partnership Westmoreland-LG&E Partners. About $7.5 million of the total is slated for the expansion of the activated carbon plant in Canada, which is expected to be brought online in 2017. Westmoreland's coal production is expected to total between 56 million and 60 million tons.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, three offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.