Westmoreland Coal — Investor Presentation (May 2018)
50 slides from Westmoreland Coal's investor presentation, May 23, 2018
Slide 1: May 2018 Discussion Materials
May 2018 Discussion Materials Exhibit 99.1
Slide 2: Disclaimer
Disclaimer This presentation contains statements about future events and expectations, which are "forward-looking statements." Any statement in this presentation that is not a statement of historical fact, including, but not limited to earnings guidance, estimates, forecasts, projections of financia
Slide 3: Table of Contents
Table of Contents SECTION | SECTION 2 nancial Projections SECTION 3 SECTION 4 Other WESTMORELAND COAL COMPANY
Slide 4: Historical Financials Section
Historical Financials Section 1
Slide 5: Westmoreland History
Westmoreland History 1850 1970 1980 1990 2000 2010 2015 2018 1854: Westmoreland Coal Company was founded in Westmoreland County, PA. Company specialized in gas coal, supplying 22 gas companies by 1856 1957: Last year of production in Westmoreland County, PA 1964: Company is merged into the Stonega C
Slide 6: Industry Leading Safety
2014 Sentinels of Safety Award Colstrip Mine John T. Ryan Safety Award Paintearth Mine 2013 2012 2011 John T. Ryan Safety Award Genesee Mine Sentinels of Safety Award Jewett Mine U.S. National Average Westmoreland U.S. operations Safety is our #1 core value Achieved further improvements in 2017 Comp
Slide 7: Westmoreland Snapshot and Key Investment Highlights
Westmoreland is a leading North American producer of thermal coal with a focus on mine-mouth operations with margin protected customer contracts Westmoreland Snapshot Long-Standing Client Relationships … … And Exceptional Assets … … Yield Positive Unlevered Free Cash Flow Customer contracts Minimal
Slide 8: Asset Overview (Non-WMLP)
Asset Overview (Non-WMLP) Tons Sold: 42.4mm(1) Top 5 Mines sold ~70% of total coal Mine Locations Top 5 Mines by 2017 Tons Sold (mm) – Non-WMLP Coal Valley Genesee Paintearth Poplar River Estevan Beulah Savage Absaloka Buckingham San Juan Colstrip Sheerness HQ Jewett Source:Company information. Net
Slide 9: Mine Level Overview (Non-WMLP)
Mine Level Overview (Non-WMLP) International & Domestic Source:Company information. Reflects proven and probable reserves, which includes reserves that are currently not permitted. Tons sold and Adjusted EBITDA based on WLB and WMLP 2017 10-Ks and earnings releases. Certain internal management finan
Slide 10: 2017+Q1 2018 Summary Financials
2017+Q1 2018 Summary Financials Source:Company information. Note: Dollars in thousands. ROVA WMLP US Mines Canada Mines
Slide 11: 2017+Q1 2018 Summary Financials (cont'd)
2017+Q1 2018 Summary Financials (cont’d) Source:Company information. Note: Dollars in thousands. Corporate, Heritage, Other Consolidated
Slide 12: Mine-Level Historical Financials
Mine-Level Historical Financials Mine-Level Cash Flow Tons Sold Total Revenue Adjusted EBITDA Capex and Capital Leases Asset Reclamation Available for Debt Service(1) 2016A 2017A 2016A 2017A 2016A 2017A 2016A 2017A 2016A 2017A 2016A 2017A Total Canada 23.0 23.0 $459 $509 $103 $101 ($40) ($28) ($6) (
Slide 13: 2017 Corporate & Heritage Cost Breakdown
2017 Corporate & Heritage Cost (As Reported) – Breakdown Source:Company information. Note: Actual dollars.
Slide 14: 2015-2017 Capital Lease Adds and Paydowns
2015-2017 Capital Lease Adds and Paydowns Source:Company information. Note: Dollars in thousands. The longwall financing for WSJ was reported as “other debt” in the company's public filings. For this schedule, the longwall financing has been included in new leases and gross paydowns.
Slide 15: Balance Sheet as of 3/31/17
Balance Sheet as of 3/31/17 Source:Company information. Note: Dollars in thousands.
Slide 16: Balance Sheet as of 3/31/17 (cont'd)
Balance Sheet as of 3/31/17 (cont’d) Source:Company information. Note: Dollars in thousands.
Slide 17: Balance Sheet as of 6/30/17
Balance Sheet as of 6/30/17 Source:Company information. Note: Dollars in thousands.
Slide 18: Balance Sheet as of 6/30/17 (cont'd)
Balance Sheet as of 6/30/17 (cont’d) Source:Company information. Note: Dollars in thousands.
Slide 19: Balance Sheet as of 9/30/17
Balance Sheet as of 9/30/17 Source:Company information. Note: Dollars in thousands.
Slide 20: Balance Sheet as of 9/30/17 (cont'd)
Balance Sheet as of 9/30/17 (cont’d) Source:Company information. Note: Dollars in thousands.
Slide 21: Balance Sheet as of 12/31/17
Balance Sheet as of 12/31/17 Source:Company information. Note: Dollars in thousands.
Slide 22: Balance Sheet as of 12/31/17 (cont'd)
Balance Sheet as of 12/31/17 (cont’d) Source:Company information. Note: Dollars in thousands.
Slide 23: Summary of AP and Other Accrued Liabilities (12/31/2017)
Summary of AP and Other Accrued Liabilities (12/31/2017) Consolidated MLP Canada Mines WCC(1) Vendor Trade (63,415) (15,701) (27,215) (20,499) Wages & Benefits (42,882) (170) (14,246) (28,466) Royalties & Taxes (14,166) 621 (6,579) (8,208) Other (1,026) (315) (631) (80) Total AP & Accrued (121,489)
Slide 24: Gross and Net ARO Liabilities by Mine (12/31/2017)
Gross and Net ARO Liabilities by Mine (12/31/2017) Source:Company information. Note: Dollars in millions.
Slide 25: Gross and Net ARO Liabilities by Segment (12/31/2017)
Gross and Net ARO Liabilities by Segment (12/31/2017) Source:Company information. Note: Dollars in millions.
Slide 26: Legacy Liability Summary (12/31/2017)
Legacy Liability Summary (12/31/2017) Source:Company information. Note: Dollars in millions. Consolidated unfunded pension liability as per 2017 10-K.
Slide 27: Gross Assets for ABL Consideration (Excl. MLP)
Source:Company information. Note: Dollars in thousands. Existing advance rates are applied to Gross Assets less Ineligibles (not depicted above). U.S. (Excl. WSJ) equipment is not part of the ABL collateral. ABL requires equipment evaluation by 3rd party. Values determined by 3rd party (forced liqui
Slide 28: Financial Projections Section
Financial Projections Section 2
Slide 29: Summary Projected 2018 Financials
Summary Projected 2018 Financials ROVA 2018 2018 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Actual Actual Est. Est. Est. Est. Est. Est. Est. Est. Est. Est. Total Revenue - - - - - - - - - - - - - Adjusted EBITDA $17 $27 - - - - - - - - - - $44 Unlevered FCF ($3) $2 - - - - - - - - - - ($1) Sour
Slide 30: Summary Projected 2018 Financials (cont'd)
Summary Projected 2018 Financials (cont’d) US Mines 2018 2018 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Actual Actual Est. Est. Est. Est. Est. Est. Est. Est. Est. Est. Total Revenue $40,477 $37,553 $41,345 $37,030 $37,192 $40,042 $44,803 $43,988 $40,423 $41,655 $42,280 $46,283 $493,071 Adjuste
Slide 31: Summary Projected 2018 Financials (cont'd)
Summary Projected 2018 Financials (cont’d) 2018 2018 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Actual Actual Est. Est. Est. Est. Est. Est. Est. Est. Est. Est. Total Revenue ($481) ($451) ($4,642) ($4,626) ($4,642) ($4,148) ($4,148) ($4,113) ($4,524) ($4,451) ($4,464) ($4,357) ($45,047) Adjuste
Slide 32: Consolidated Tons Sold Summary – 2017 Actual to 2018E
Consolidated Tons Sold Summary – 2017 Actual to 2018E Source:Company information. Note: Tons in millions.
Slide 33: Consolidated EBITDA Summary – 2017 Actual to 2018E
Consolidated EBITDA Summary – 2017 Actual to 2018E Source:Company information. Note: Dollars in millions. Key Events in 2017 That Will Not Recur in 2018: Cap Power accelerated payment ROVA ops, & acceleration of deferred revenue One-time, non-recurring ($109.5M) Corporate KEIP/KERP
Slide 34: CapEx (Net of Capital Lease Financing & Proceeds on Sale)
CapEx (Net of Capital Lease Financing & Proceeds on Sale) Source:Company information. Note: Dollars in thousands.
Slide 35: Corporate and Heritage Costs Detail
Corporate and Heritage Costs Detail Corporate, Mine Support & Heritage Adjusted EBITDA 2017A 2018E Heritage $14.2 $14.5 Employment Costs 29.1 42.2 Consulting & Outside Services 10.1 9.1 Pension & Retiree Medical 3.4 2.6 Allocations, Management Fees, Insurance & Other (8.3) (13.2) Adjusted EBITDA (Af
Slide 36: AR and Inventory Roll-Forward Analysis
AR and Inventory Roll-Forward Analysis Source:Company information. Note: Dollars in thousands. Analysis includes WLB Parent and WSJ (excluding WMLP).
Slide 37: Key Life of Mine (LoM) Projection Assumptions
Key Life of Mine (LoM) Projection Assumptions The 5‐Year Forecast reflects a snapshot of the Company’s Life of Mine model over a 5-year period (i.e., 2019 – 2023). All information is shown before corporate SG&A and Heritage expenses. Projected mine-level financials are shown before allocations of co
Slide 38: Mine-Level Projected Financials
Mine-Level Projected Financials Tons Sold Total Revenue Adjusted EBITDA 2018E 2019E 2020E 2021E 2022E 2023E 2018E 2019E 2020E 2021E 2022E 2023E 2018E 2019E 2020E 2021E 2022E 2023E Total Canada 23.5 22.9 21.0 18.0 17.0 15.3 $519 $487 $478 $444 $424 $298 $105 $79 $92 $99 $99 $46 Total U.S. 17.6 17.1 1
Slide 39: '18-'23 Reclamation Cost & Contractual Rev. Reimbursements
‘18 - ‘23 Reclamation Cost & Contractual Rev. Reimbursements Source:Company information. Note: Dollars in thousands. Contractual revenue or reimbursements include certain reimbursements for current reclamation. Represents 2018-2023 portion of $776mm projected final reclamation cost disclosed in 2017
Slide 40: Financing Budget Section
Financing Budget Section 3 WESTMORELAND COAL COMPANY
Slide 41: Bridge Financing Model – Assumptions
Bridge Financing Model – Assumptions Bridge Financing Assumptions As of May 18, 2018 WLB Parent and WSJ (Excluding WMLP) May 18, 2018 Delayed Draw Bridge Term Loan financing date; projections reflect all U.S. and Canadian operations (ex. WMLP) Operating cash flows mirror the 2+10 forecast with the f
Slide 42: Bridge Financing Model – FY 2018
Bridge Financing Model – FY 2018 Source:Company information. Note: Dollars in millions. Depicts a hypothetical bridge term loan financing on or around May 18, 2018. Pre-Bridge Financing period includes cash principal and interest activity related to legacy debt instruments; Post-Bridge Financing per
Slide 43: EBITDA Bridge of 2+10 Budget to Bridge Financing Budget
EBITDA Bridge of 2+10 Budget to Bridge Financing Budget Source:Company information. Note: Dollars in thousands.
Slide 44: 2018E Bridge Financing Budget to LoM Adjusted EBITDA Bridge
2018E Bridge Financing Budget to LoM Adjusted EBITDA Bridge Source:Company information. Note: Dollars in millions.
Slide 45: Other Section
Other Section 4 WESTMORELAND COAL COMPANY
Slide 46: Employee Breakdown
Employee Breakdown Source:Company information. Notes: Actual dollars where applicable. (1)Target total compensation is defined as base salary plus target bonus. Bonus for 2018 is KERP paid quarterly for non-insiders and KEIP/KERP for the 6 insiders. Excludes cost/value of health and welfare benefits
Slide 47: ABL Letters of Credit (3/31/2018)
ABL Letters of Credit (3/31/2018) Source:Company information. Note: Actual dollars.
Slide 48: Retention / Incentive Program Opportunities (excl. MLP)
Retention / Incentive Program Opportunities (excl. MLP) Source:Company information. Note: Dollars in millions. Totals are exclusive of employer portion of payroll taxes, 401(k) match, etc. Payouts from these programs in 2018 are expected to be paid throughout 2018 and Q1 of 2019 Actual payouts in 20
Slide 49: San Juan Overview
Westmoreland acquired the San Juan mine for $121mm in January 2016 WSJ is the exclusive supplier of coal to adjacent San Juan Generating Station Contract through 2022 Two of four units shut down at the end of 2017 (shut down was anticipated) ~3mm tons sold per annum starting in 2018 (~6mm in 2017) P
Slide 50: Other San Juan and Canada Detail
Other San Juan and Canada Detail San Juan Explosion Update PNM has communicated that the generating station is expected to be back in operation in mid-June 2018 Adjusted EBITDA impact could be $4mm – $6mm We are pursuing a business interruption insurance claim; amount of recovery yet to be determine