Westmoreland Reports First Quarter 2014 Results; Updates Timing and Provides Guidance for Acquisition of Sherritt Coal Assets

  Westmoreland Reports First Quarter 2014 Results; Updates Timing and Provides
  Guidance for Acquisition of Sherritt Coal Assets

Business Wire

ENGLEWOOD, Colo. -- April 25, 2014

Westmoreland Coal Company (NasdaqGM:WLB) today reported its first quarter
results for 2014.

Highlights:

  *Q1 2014 revenues grew 11.6% to $180.2 million compared with $161.4 million
    in Q1 2013.
  *Q1 2014 Adjusted EBITDA increased 12.5% to $28.9 million compared with
    $25.7 million in Q1 2013.

  *Q1 2014 operating income increased 42.1% to $8.1 million compared with
    $5.7 million in Q1 2013.
  *Net loss applicable to common shareholders for the three months ended
    March31, 2014 increased to $19.3 million compared with a loss of $2.7
    million for the three months ended March31, 2013. The loss for Q1 2014
    includes approximately $18.1 million of additional interest, currency
    losses, and transaction fees related to the Sherritt acquisition.
  *Q1 2014 operating cash flows increased to $29.6 million. Westmoreland's
    cash position remained flat at $61.9 million, despite $16.9 million being
    placed into escrow related to the Sherritt acquisition financing.
  *The company expects to close on the Sherritt coal assets within a week.
    Guidance for Adjusted EBITDA and capital expenditures is described below.

"The first quarter’s results were in line with our expectations," said Keith
E. Alessi, Westmoreland’s CEO. "The 2014 first quarter reflects the newly
restructured ROVA power agreement and does not include any benefit of the
Indian Coal Tax Credit. The tax credit expired on December 31, 2013 and has
not yet been renewed, although it has been included in pending legislation."

"Our quarterly results are often materially impacted by the timing of customer
maintenance outages. The first quarter of 2014 benefited in comparison to the
prior year from the fact that there were two outages during the 2013 quarter.
The second quarter of 2014 is expected to have two scheduled outages versus
none in 2013. The 2014 pattern is consistent with our historical experience,
with 2014 second quarter results expected to be lower than 2013 and quarters
three and four to be higher, leaving us within our previously announced U.S.
business guidance range."

"We expect to close on the Sherritt coal asset acquisition within a week. We
have received all required regulatory approvals and received final court
approval on April 23rd."

"Sherritt’s operations are heavily skewed to cold weather months, with as much
as 75% of EBITDA historically falling in the first and fourth quarters. We
expect these assets to generate between $52 million and $62 million in
adjusted EBITDA from close until December 31, 2014. Given historical trends,
planned customer outages, and internal projections, it is likely that 29%, 22%
and 49% of the projected 2014 adjusted EBITDA will occur in quarters two,
three and four, respectively. We further expect capital expenditures from
close through December31, 2014 will be between $25 million and $30 million."

"We are excited to welcome Sherritt’s employees, customers and joint venture
partners into the Westmoreland team and look forward to introducing our
business model to the Canadian business," Alessi concluded.

Robert P. King, Westmoreland’s President of U.S. Operations added, "During the
first 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 power plant operated very well. However, sales
and shipments from our Absaloka Mine were negatively impacted throughout the
quarter by railroad disruptions. Railroad service has improved in April and
shipments from Absaloka have increased to normal levels."

"Westmoreland’s operations continued to deliver very good safety performance
with reportable incident and lost time frequency rates significantly below the
national averages for surface mines and power plants. Four of our six mines
and the ROVA plant operated with zero reportable incidents in the first
quarter."

Safety

Safety performance through the first three months of 2014 at Westmoreland
mines was as follows:

                  Reportable  Lost Time
Westmoreland       0.82         0.82
National Average   1.67         1.15
Percentage         49.1%        71.3%
                                

Financial Results

Westmoreland's revenues in Q1 2014 increased to $180.2 million compared with
$161.4 million in Q1 2013. Westmoreland's Q1 2014 Adjusted EBITDA increased to
$28.9 million from $25.7 million in Q1 2013. Net loss applicable to common
shareholders increased by $16.6 million, from $2.7 million ($0.19 per basic
share) in Q1 2013 to $19.3 million ($1.30 per basic share) in Q1 2014.

Revenues increased primarily due to new customer sales and fewer customer and
ROVA outages. Net loss increased due to approximately $18.1 million of
additional interest, currency losses and transaction fees related to the
Sherritt acquisition.

Coal Segment Operating Results

The following table summarizes Westmoreland's Q1 2014 and Q1 2013 coal segment
performance:

                                  Three Months Ended March 31,
                                                       Increase / (Decrease)
                                   2014       2013       $           %
                                   (In thousands, except per ton data)
Revenues                           $158,190   $142,112   $16,078      11.3  %
Operating income                   13,447     13,472     (25      )   (0.2 ) %
Adjusted EBITDA                    30,567     29,906     661          2.2   %
Tons sold - millions of            6.8        6.1        0.7          11.5  %
equivalent tons
                                                                             

Westmoreland's first quarter 2014 coal segment revenues and tons sold
increased due to new customer sales and fewer customer outages affecting our
Absaloka and Beulah Mines. Operating income was negatively impacted by rail
service issues from our Absaloka Mine.

Power Segment Operating Results

The following table summarizes Westmoreland's Q1 2014 and Q1 2013 power
segment performance:

                         Three Months Ended March 31,
                                                Increase / (Decrease)
                          2014       2013         $           %
                          (In thousands)
Revenues                  $ 22,012   $ 19,336     $  2,676     13.8   %
Operating income (loss)     1,744      (1,003 )      2,747     273.9  %
Adjusted EBITDA             4,833      1,709         3,124     182.8  %
Megawatts hours             404        340           64        18.8   %
                                                                      

Westmoreland's first quarter 2014 power segment revenues, operating income and
megawatt hours increased due to fewer planned and unplanned outages at our
ROVA power plant.

Nonoperating Results

Heritage and corporate expenses for Q1 2014 remained consistent with Q1 2013.

Interest expense for Q1 2014 increased to $20.8 million from $10.2 million in
Q1 2013 primarily due to higher debt levels and transaction fees related to
the Sherritt acquisition.

Cash Flow, Leverage, and Liquidity

Q1 2014 operating cash flows increased to $29.6 million, enabling a strong
ending cash position of $61.9 million. Westmoreland's cash position remained
flat, despite $16.9 million of cash being placed into escrow related to the
Sherritt acquisition financing.

Westmoreland had the following liquidity at March31, 2014 and December31,
2013:

                                    March 31,  December 31,
                                     2014        2013
                                     (In millions)
Cash and cash equivalents            $  61.9     $    61.1
WML revolving line of credit            23.1          23.1
Corporate revolving line of credit     20.0         20.0
Total                                  105.0        104.2
                                                      

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 first quarter 2014
results will be held on Friday, April25, 2014, at 10:00 a.m. Eastern Time.
Call-in numbers are:

Live Participant Dial In (Toll Free): 844-WCC-COAL (844-922-2625)
Live Participant Dial In (International): 201-689-8584

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 and projections for the performance of
the Sherritt assets upon integration. 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 March 31,
                                         2014                  2013
                                         (In thousands, except per share data)
Revenues                                 $    180,202           $  161,448
Cost, expenses and other:
Cost of sales                                 138,630              130,421
Depreciation, depletion and                   16,059               14,426
amortization
Selling and administrative                    13,331               11,887
Heritage health benefit expenses              3,544                3,951
Loss (gain) on sales of assets                38                   (234     )
Restructuring charges                         397                  —
Other operating loss (income)                150                (4,737   )
                                             172,149            155,714  
Operating income                              8,053                5,734
Other income (expense):
Interest expense                              (20,798    )         (10,160  )
Interest income                               302                  297
Loss on foreign exchange                      (6,790     )         —
Other income                                 93                 70       
                                             (27,193    )        (9,793   )
Loss before income taxes                      (19,140    )         (4,059   )
Income tax expense (benefit)                 (110       )        28       
Net loss                                      (19,030    )         (4,087   )
Less net loss attributable to                —                  (1,702   )
noncontrolling interest
Net loss attributable to the Parent           (19,030    )         (2,385   )
company
Less preferred stock dividend                261                340      
requirements
Net loss applicable to common            $    (19,291    )      $  (2,725   )
shareholders
                                                                            
Net loss per share applicable to
common shareholders:
Basic and diluted                        $    (1.30      )      $  (0.19    )
Weighted average number of common
shares outstanding
Basic and diluted                             14,787               14,282
                                                                            


Westmoreland Coal Company and Subsidiaries
Summary Financial Information (Unaudited)

                         
                              Three Months Ended March 31,
                              2014                       2013
                              (In thousands)
Cash Flow
Net cash provided by          $    29,648                 $    21,216
operating activities
Net cash used in                   (468,664     )              (5,725      )
investing activities
Net cash provided by
(used in) financing                439,806                     (6,249      )
activities
                                                          
                                                          
                              March 31,                   December 31,
                              2014                        2013
                              (In thousands)
Balance Sheet Data
Total cash and cash           $    61,900                 $    61,110
equivalents
Total assets                       1,407,147                   946,685
Total debt:
Existing debt                      346,954                     339,837
Sherritt acquisition              453,277                   —           
debt
Total debt                         800,231                     339,837
Working capital deficit            (30,493      )              (7,989      )
Total shareholder's                (206,216     )              (187,879    )
deficit
Common shares                      14,863                      14,592
outstanding
                                                                           
                                                                           
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.
                                                                           
                                                                           
                             Three Months Ended March 31,
                              2014                        2013
                              (In thousands)
Adjusted EBITDA by
Segment
Coal                          $    30,567                 $    29,906
Power                              4,833                       1,709
Heritage                           (3,830       )              (4,175      )
Corporate                         (2,663       )             (1,784      )
Total                         $    28,907                $    25,656      
                              
                              
                              Three Months Ended March 31,
                              2014                        2013
                              (In thousands)
Reconciliation of
Adjusted EBITDA to net
income (loss)
Net loss                      $    (19,030      )         $    (4,087      )
                                                                           
Income tax expense                 (110         )              28
(benefit)
Other income                       (93          )              (70         )
Interest income                    (302         )              (297        )
Loss on foreign exchange           6,790                       —
Interest expense                   20,798                      10,160
Depreciation, depletion            16,059                      14,426
and amortization
Accretion of ARO and               3,479                       3,180
receivable
Amortization of
intangible assets and             153                       164         
liabilities
EBITDA                             27,744                      23,504
                                                                           
Restructuring charges              397                         —
(Gain)/loss on sale of             38                          (234        )
assets
Share-based compensation          728                       2,386       
Adjusted EBITDA               $    28,907                $    25,656      
                                                                           

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
 
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