Westmoreland Reports Third Quarter 2013 Results

  Westmoreland Reports Third Quarter 2013 Results

Business Wire

ENGLEWOOD, Colo. -- October 25, 2013

Westmoreland Coal Company (NasdaqGM:WLB) today reported its third quarter
results for 2013.

Highlights:

  *Q3 2013 revenues grew 9.6% to $176.8 million compared with $161.3 million
    in Q3 2012

  *Adjusted EBITDA for the twelve months ended September 30, 2013 increased
    30.3% to $115.8 million compared with $88.8 million for the twelve months
    ended September 30, 2012
  *Q3 2013 Adjusted EBITDA was $30.1 million compared with $35.5 million for
    Q3 2012
  *Net loss applicable to common shareholders for the nine months ended
    September 30, 2013 decreased to $0.9 million compared with a loss of $4.6
    million for the nine months ended September 30, 2012
  *2013 guidance refined for Adjusted EBITDA at $115-$119 million and capital
    spending at $25-$27 million

"During the third quarter, favorable weather and low hydro generation
continued to generate high demand for power. Our customers ran their plants at
high levels and Westmoreland's mines and plants operated very well, producing
$30.1 million in Adjusted EBITDA for the quarter. We view this level of
Adjusted EBITDA as very good considering impacts from the Colstrip Unit 4
outage on Rosebud sales," said Robert P. King, Westmoreland's Chief Executive
Officer.

"Based upon our current projections we have narrowed the range of our
previously announced Adjusted EBITDA guidance to $115-$119 million. We expect
capital expenditures for the year to be $25-$27 million."

"In the area of safety, Westmoreland had a much better quarter resulting in
our year-to-date reportable incident and lost time frequency rates coming in
at levels below the national average for surface mines. We continue to work
diligently at our mines to make sure we provide the safest work environment
possible for our employees.”

Safety

Safety performance through the first nine months of 2013 at Westmoreland mines
was as follows:

                   Reportable   Lost Time
Westmoreland         1.38           0.59
National Average     1.60           0.93
Percentage           86.3   %       63.4   %

Financial Results

Westmoreland's revenues in Q3 2013 increased to $176.8 million compared with
$161.3 million in Q3 2012. Westmoreland's Q3 2013 Adjusted EBITDA decreased to
$30.1 million from $35.5 million in Q3 2012. Net income to common shareholders
decreased by $4.9 million, from $7.3 million ($0.52 per basic share and $0.50
per diluted share) in Q3 2012 to $2.4 million ($0.17 per basic share and $0.16
per diluted share) in Q3 2013.

Revenues increased primarily due to stronger power demand, favorable weather
conditions, and fewer unplanned outages at ROVA. Adjusted EBITDA decreased
mostly due to increased costs incurred at the Absaloka Mine in preparation for
higher production levels, primarily in anticipation of resumed operations at
Sherco Unit 3; coal mined at the Kemmerer Mine carried a higher royalty rate;
and a contract adjustment related to employee benefit costs.

Coal Segment Operating Results

The following table summarizes Westmoreland's Q3 2013 and Q3 2012 coal segment
performance:

                      Three Months Ended September 30,                    
                                                  Increase / (Decrease) 
                        2013           2012           $             %
                        (In thousands, except per ton data)
Revenues                $ 151,881      $ 138,798      $  13,083       9.4   %
Operating income        10,231         18,025         (7,794    )     (43.2 )%
Adjusted EBITDA         28,420         34,584         (6,164    )     (17.8 )%
Tons sold -
millions of             6.6            6.0            0.6             10.0  %
equivalent tons

Westmoreland's third quarter 2013 coal segment revenues and tons sold
increased due to stronger power demand and favorable weather conditions.
Operating income and Adjusted EBITDA decreased mostly due to increased costs
incurred at the Absaloka Mine in preparation for higher production levels,
primarily in anticipation of resumed operations at Sherco Unit 3; coal mined
at the Kemmerer Mine carried a higher royalty rate; and a contract adjustment
related to employee benefit costs.

Power Segment Operating Results

The following table summarizes Westmoreland's Q3 2013 and Q3 2012 power
segment performance:

                   Three Months Ended September 30,                  
                                             Increase / (Decrease) 
                     2013          2012          $              %
                     (In thousands)
Revenues             $ 24,911      $ 22,534      $   2,377        10.5 %
Operating income     5,087         4,023         1,064            26.4 %
Adjusted EBITDA      7,814         6,742         1,072            15.9 %
Megawatts hours      454           417           37               8.9  %

Westmoreland's power revenues, operating income and Adjusted EBITDA for the
third quarter of 2013 increased due to fewer unplanned outages at the ROVA
power plant.

Nonoperating Results

Heritage and corporate expenses for Q3 2013 remained consistent with Q3 2012.

Interest expense for Q3 2013 decreased to $9.9 million from $11.1 million in
Q3 2012 as a result of lower debt levels.

Cash Flow, Leverage, and Liquidity

Q3 2013 operating cash flows increased to $58.5 million, enabling a strong
ending cash position of $45.5 million. Total debt repayment during Q3 2013 was
$6.0 million.

During Q3 2013, Westmoreland's Net Leverage Ratio decreased to 2.46.

                                              September 30,   December 31,
Leverage Ratios                                 2013              2012
                                                (In millions)
Gross Debt                                      $   343.5         $    361.0
Less:
Cash & Cash Equivalents                         45.5              31.6
Debt Service Reserves                           13.1             13.1
                                                                  
Net Debt                                        $   284.9        $    316.3
                                                                  
Adjusted EBITDA (for the twelve months          $   115.8        $    105.4
ended)
                                                                  
Gross Leverage                                  2.97              3.43
Net Leverage                                    2.46              3.00
                                                                  

Westmoreland had the following liquidity at September30, 2013 and
December31, 2012:

                                     September 30,   December 31,
                                       2013              2012
                                       (In millions)
Cash and cash equivalents              $   45.5          $    31.6
WML revolving line of credit           23.1              23.1
Corporate revolving line of credit     20.0             20.0
Total                                  88.6             74.7
                                                         

Both of the credit facilities had no borrowings with one outstanding letter of
credit in the amount of $1.9 million on the WML line.

Conference Call

A conference call regarding Westmoreland Coal Company's third quarter 2013
results will be held on Friday, October25, 2013, at 10:00 a.m. Eastern Time.
Call-in numbers are:

Live Participant Dial In (Toll Free): 877-407-8033
Live Participant Dial In (International): 201-689-8033

About Westmoreland Coal Company

Westmoreland Coal Company is the oldest independent coal company in the United
States. The Company's coal operations include sub-bituminous coal mining in
the Powder River Basin in Montana and Wyoming, and lignite mining operations
in Montana, North Dakota and Texas. 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. Our actual results may differ materially from those
contemplated by the forward-looking statements, including Westmoreland's
projections for year-end performance. 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

Consolidated Statements of Operations (Unaudited)
                                                   
                   Three Months Ended              Nine Months Ended September
                   September 30,                   30,
                   2013          2012            2013          2012
                   (In thousands, except per share data)
Revenues           $ 176,792       $ 161,332       $ 500,739       $ 441,410
Cost, expenses
and other:
Cost of sales      138,193         117,088         399,142         339,906
Depreciation,
depletion and      17,434          15,534          47,257          42,542
amortization
Selling and        12,498          11,665          36,354          37,157
administrative
Heritage
health benefit     4,057           3,881           11,117          11,743
expenses
Loss (gain) on
sales of           (13       )     14              (321      )     291
assets
Other
operating          (3,913    )     (2,301    )     (19,055   )     (10,503   )
income
                   168,256        145,881        474,494        421,136   
Operating          8,536           15,451          26,245          20,274
income (loss)
Other income
(expense):
Interest           (9,909    )     (11,096   )     (30,145   )     (32,011   )
expense
Loss on
extinguishment     —               —               (64       )     —
of debt
Interest           301             475             878             1,371
income
Other income       89             196            287            611       
                   (9,519    )     (10,425   )     (29,044   )     (30,029   )
Income (loss)
before income      (983      )     5,026           (2,799    )     (9,755    )
taxes
Income tax
expense            30             (325      )     85             (1,239    )
(benefit)
Net income         (1,013    )     5,351           (2,884    )     (8,516    )
(loss)
Less net
income (loss)
attributable       (3,774    )     (2,271    )     (2,976    )     (4,914    )
to
noncontrolling
interest
Net loss
attributable       2,761           7,622           92              (3,602    )
to the Parent
company
Less preferred
stock dividend     340            340            1,020          1,020     
requirements
Net loss
applicable to      $ 2,421        $ 7,282        $ (928    )     $ (4,622  )
common
shareholders
                                                                   
Net loss per
share
applicable to
common
shareholders:
Basic              $ 0.17         $ 0.52         $ (0.06   )     $ (0.33   )
Diluted            $ 0.16         $ 0.50         $ (0.06   )     $ (0.33   )
Weighted
average number
of common
shares
outstanding
Basic and          14,592          14,104          14,457          13,986
diluted
Diluted            14,927          15,326          14,457          13,986
                                                                             

                                            
Westmoreland Coal Company and Subsidiaries

Summary Financial Information (Unaudited)
                                               
                                               Nine Months Ended September 30,
                                               2013             2012
                                               (In thousands)
Cash Flow
Net cash provided by operating activities      $   58,469         $  42,349
Net cash used in investing activities          (21,345     )      (116,649   )
Net cash provided by (used in) financing       (23,247     )      97,202
activities
                                                                  
                                               September 30,      December 31,
                                               2013               2012
                                               (In thousands)
Balance Sheet Data
Total cash and cash equivalents                $   45,487         $  31,610
Total assets                                   939,839            936,115
Total debt                                     343,469            360,989
Working capital surplus (deficit)              4,074              (11,600    )
Total deficit                                  (280,311    )      (286,231   )
                                                                  
Common shares outstanding                      14,592             14,201
                                                                             

The tables below show how we calculated Adjusted EBITDA, including a breakdown
by segment, and reconciles Adjusted EBITDA to net loss, the most directly
comparable GAAP financial measure. Concerning the Year Ended December31, 2012
column, please refer to our Annual Report on Form 10-K for the year ended
December31, 2012. The Twelve Months Ended September30, 2013 column is
calculated from the prior three columns.

                                               
               Three Months Ended September 30,     Nine Months Ended
                                                    September 30,
               2013              2012             2013          2012
               (In thousands)
Adjusted
EBITDA by
Segment
Coal           $  28,420           $  34,584        $  87,993       $ 84,080
Power          7,814               6,742            17,096          13,168
Heritage       (4,326     )        (4,149     )     (12,031   )     (12,687  )
Corporate      (1,788     )        (1,657     )     (5,278    )     (7,149   )
Total          $  30,120          $  35,520       $  87,780      $ 77,412 
                                                                             

                                                                                      
                                                                                               Twelve
                                                                                               Months
                   Three Months Ended            Nine Months Ended             Year Ended
                   September 30,                 September 30, 2013            December        Ended
                                                                               31,
                                                                                               September
                                                                                               30,
                   2013         2012           2013         2012           2012            2013
                   (In thousands)
Reconciliation
of Adjusted
EBITDA to net
income (loss)
Net income         $ (1,013 )     $ 5,351        $ (2,884 )     $ (8,516 )     $ (13,662 )     $ (8,030  )
(loss)
                                                                                               
Income tax
expense            30             (325     )     85             (1,239   )     90              1,414
(benefit)
Other income       (89      )     (196     )     (287     )     (611     )     (723      )     (399      )
Interest           (301     )     (475     )     (878     )     (1,371   )     (1,496    )     (1,003    )
income
Loss on
extinguishment     —              —              64             —              1,986           2,050
of debt
Interest           9,909          11,096         30,145         32,011         42,677          40,811
expense
Depreciation,
depletion and      17,434         15,534         47,257         42,542         57,145          61,860
amortization
Accretion of
ARO and            3,169          3,041          9,507          9,037          12,189          12,659
receivable
Amortization
of intangible      172           165           498           492           658            664       
assets and
liabilities
EBITDA             29,311         34,191         83,507         72,345         98,864          110,026
                                                                                               
Loss (gain) on     (13      )     14             (321     )     291            528             (84       )
sale of assets
Share-based        822           1,315         4,594         4,776         6,040          5,858     
compensation
Adjusted           $ 30,120      $ 35,520      87,780        77,412        $ 105,432      $ 115,800 
EBITDA
                                                                                                         

EBITDA and Adjusted EBITDA are supplemental measures of financial performance
that are not required by, or presented in accordance with, GAAP. EBITDA and
Adjusted EBITDA are included in this news release because they are key metrics
used by management to assess Westmoreland’s operating performance and
Westmoreland believes that EBITDA and Adjusted EBITDA are useful to an
investor in evaluating our 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; and
  *help investors to more meaningfully evaluate and compare the results of
    Westmoreland’s operations from period to period by removing the effect of
    our capital structure and asset base from our operating results.

Neither EBITDA nor Adjusted EBITDA is a measure calculated in accordance with
GAAP. The items excluded from EBITDA and Adjusted EBITDA are significant in
assessing Westmoreland’s operating results. EBITDA and Adjusted EBITDA have
limitations as analytical tools, and should not be considered in isolation
from, or as a substitute for, analysis of our results as reported under GAAP.
For example, EBITDA and Adjusted EBITDA:

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

Contact:

Westmoreland Coal Company
Kevin Paprzycki, 855-922-6463