Westmoreland Coal — Debt Investor Presentation (October 2018)
31 slides from Westmoreland Coal's debt investor presentation, Oct 9, 2018
Slide 1: October 2018 Discussion Materials
October 2018 Discussion Materials Exhibit 99.2
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 Important Note: Holders and potential holders of the Company’s indebtedness have the ability to access more detailed financial projections and performance optimization information in a virtual data room. Such information will specifically be designated “Non-Cleansing Information” a
Slide 4: Financial Projections
Section 1 Financial Projections
Slide 5: Approach and Key Assumptions
Approach and Key Assumptions Life of Mine (“LoM”) Business Plan Process and Approach: Westmoreland LoM business plan forecast incorporates the following: 2018 is a monthly, site by site forecast based on the Company’s 4+8 2018 forecast 2019-2065 forecasts are based on the annual LoM forecasts disclo
Slide 6: Approach and Key Assumptions (cont'd)
Approach and Key Assumptions (cont’d) General Assumptions: WMLP financials are excluded from consolidated forecasts for purposes of presentation Forecast converts Canadian financials to USD at 1.30 CAD/USD exchange rate; assumes no FX hedging or cash impact from changes in the CAD/USD exchange rate
Slide 7: Consolidated Financial Summary (Excl. WMLP)
Consolidated Financial Summary (Excl. WMLP) Source:Company information. Note: Dollars and tons in millions. Figures exclude WMLP management fee from 2019 onwards. Includes costs to perform reclamation, bond collateral postings and other current reclamation. Includes bond collateral releases, release
Slide 8: U.S. Mine-Level Financial Summary (Excl. WMLP)
U.S. Mine-Level Financial Summary (Excl. WMLP) Source:Company information. Note: Dollars and tons in millions. Includes costs to perform reclamation, bond collateral postings and other current reclamation. Includes bond collateral releases, releases of restricted cash and receipts from customers.
Slide 9: Canadian Mine-Level Financial Summary
Canadian Mine-Level Financial Summary Source:Company information. Note: Dollars and tons in millions. Figures exclude WMLP management fee from 2019 onwards. Includes costs to perform reclamation, bond collateral postings and other current reclamation. Includes bond collateral releases, releases of r
Slide 10: Corporate Financial Summary
Corporate Financial Summary Source:Company information. Note: Dollars and tons in millions. Figures exclude WMLP management fee from 2019 onwards. Includes costs to perform reclamation, bond collateral postings and other current reclamation. Includes bond collateral releases, releases of restricted
Slide 11: Heritage Financial Summary
Heritage Financial Summary Source:Company information. Note: Dollars and tons in millions. Includes costs to perform reclamation, bond collateral postings and other current reclamation. Includes bond collateral releases, releases of restricted cash and receipts from customers.
Slide 12: 2018E Adjusted EBITDA Bridge
2018E Adjusted EBITDA Bridge Source:Company information. Note: Dollars in millions.
Slide 13: Summary Projected 2018 Financials (Reflects 4+8 Forecast)
Summary Projected 2018 Financials (Reflects 4+8 Forecast) Source:Company information. Note: Dollars in millions. Consolidated Excl. WMLP U.S. Mines Excl. WMLP Canadian Mines
Slide 14: Summary Projected 2018 Financials (Reflects 4+8 Forecast) (Cont'd)
Summary Projected 2018 Financials (Reflects 4+8 Forecast) (Cont’d) Corporate & Other Heritage Source:Company information. Note: Dollars in millions.
Slide 15: Mine-by-Mine Net Reclamation Cash Flow Summary (Excl. WMLP)
Mine-by-Mine Net Reclamation Cash Flow Summary (Excl. WMLP) Source:Company information. Note: Dollars in millions. Total Gross Reclamation Outflows includes costs to perform reclamation, bond collateral postings and other current reclamation. Total Gross Reclamation Inflows includes bond collateral
Slide 16: Heritage Cost Detail
Heritage Cost Detail Source:Company information. Note: Dollars in millions. Projected cash costs related to Heritage liabilities are forecasted as follows: Postretirement Medical: Postretirement medical benefits to retired employees and their dependents, a portion of which is mandated by the Coal In
Slide 17: OPEB-Related Liabilities and Cash Flows
OPEB-Related Liabilities and Cash Flows (1) Source:Company information. Liabilities as of December 31, 2017. Note: Dollars in millions.
Slide 18: Preliminary Findings of Performance Optimization Analysis
Section 2 Preliminary Findings of Performance Optimization Analysis
Slide 19: Executive Summary
Executive Summary Management has set a goal to achieve full run-rate savings of $85M by the end of FY2020: Mine Operations: $55M Commercial: $15M SG&A: $15M Several “Quick wins” have been prioritized to rapidly deliver $9-13M in recurring benefits and $5-10M in one-time capex savings by March 2019 A
Slide 20: Spend Baseline Jul '17 – Jun '18
Spend Baseline Jul ’17 – Jun ’18 Exclusions1 $ $ In Scope Baseline $ SG&A Cost of Sales $ $ $ $ 2 24% of the total spend baseline has been excluded and is comprised of WMLP mine and SG&A costs, restructuring fees and certain non-cash accounting entries Labor includes all salaried and non-salaried em
Slide 21: Management Has Aligned On An Overall Goal For The Transformation Of $85M In Recurring Value By 2020
Management Has Aligned On An Overall Goal For The Transformation Of $85M In Recurring Value By 2020 Mine Operations Commercial SG&A Total Baseline $603 $980 $87 Target Opportunity $32 $15 $15 $85 $143 $23 Cost Production Revenue/ EBITDA Cost % of Baseline 5 16 2 17 Goals do not include $5-10M of one
Slide 22: Preliminary Estimates Suggest Full Run-Rate Achievable Through FY2020
Annual in-year realized impact Run Rate 50% 100% $ $ $ $ $ $ The ramp up of potential saving through 2019 will deliver 50% of the identified opportunity Annual impact excludes any one-time cash benefits Preliminary Estimates Suggest Full Run-Rate Would Be Achievable Through FY2020 With ~$42M Of Impa
Slide 23: Cons. Cash Flow Avail. for Debt Service (Excl. WMLP) Incl. Potent. Savings
Cons. Cash Flow Avail. for Debt Service (Excl. WMLP) Incl. Potent. Savings Source:Company information. Note: Dollars in millions. Figures exclude WMLP management fee from 2019 onwards. Cash Flow Available for Debt Service Total Adjusted Cash Flow from Savings Preliminary and illustrative analysis su
Slide 24: 13-Week Cash Flow Projections
Section 3 13-Week Cash Flow Projections
Slide 25: Westmoreland 13-Week Cash Flow Projections (Excl. WMLP)
Westmoreland 13-Week Cash Flow Projections (Excl. WMLP) Source:Company information. Note: Dollars in thousands.
Slide 26: Other
Other Section 4 WESTMORELAND COAL COMPANY
Slide 27: Recent Coal Valley Developments
Recent Coal Valley Developments Newcastle markets remain strong Westmoreland secured attractive pricing for nearly 2M short tons in 2019 Increased production levels are being evaluated and mine plans are being optimized for 2019 Strong pricing supported the acquisition of a new shovel at Coal Valley
Slide 28: CBA and Legacy Liability Considerations
CBA and Legacy Liability Considerations Westmoreland is evaluating opportunities to modify certain CBAs and explore paths to address certain legacy liabilities As part of this process, the Company has been in dialogue with certain unions Savings from the potential modification of the above mentioned
Slide 29: Westmoreland Surety Bond Detail (Excl. WMLP)
Westmoreland Surety Bond Detail (Excl. WMLP) Source:Company information. Note: Dollars in millions. Surety bond data as of 10/1/18.
Slide 30: Appendix Supplemental Materials
Appendix Supplemental Materials
Slide 31: SG&A / Corporate Overhead – Key Assumptions
SG&A / Corporate Overhead – Key Assumptions Process and Key Assumptions: SG&A costs are broken into 3 components: Corporate SG&A relating to offices in Denver, Edmonton and Billings Mine Level costs Legacy liabilities For Corporate SG&A, 2018 is based on the 4+8 and remaining years are based on rate
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