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8-K - FORM 8-K - WESTMORELAND COAL Co | c17051e8vk.htm |
EX-99.1 - EXHIBIT 99.1 - WESTMORELAND COAL Co | c17051exv99w1.htm |
EXHIBIT 99.2
Transcript of
Westmoreland Coal (WLB)
Investor Conference Call
May 9, 2011
Westmoreland Coal (WLB)
Investor Conference Call
May 9, 2011
Participants
Keith E. Alessi, President and Chief Executive Officer
Kevin A. Paprzycki, Chief Financial Officer
Douglas P. Kathol, Executive Vice President
Keith E. Alessi, President and Chief Executive Officer
Kevin A. Paprzycki, Chief Financial Officer
Douglas P. Kathol, Executive Vice President
Presentation
Operator
Good morning ladies and gentlemen and welcome to the Westmoreland Coal Companys Investor
conference call. At this time, all telephone participants are in a listen only mode. Following
the formal presentation, instructions will be given for the question and answer session which will
be conducted by telephone. Web participants wishing to ask a question will need to dial in by
telephone to the audio portion of the call. If anyone needs operator assistance at any time during
the conference, please press the * followed by the zero on your telephone keypad. As a reminder,
this conference is being recorded today and the replay will be made available as soon as practical
on the investor portion of the Westmoreland website through May 23rd, 2011.
Managements remarks today may contain forward-looking statements based on the companys 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. The companys
actual results may differ materially from the results discussed in any such forward-looking
statements. For a summary of risk factors and other information regarding forward-looking
statements, please refer to the companys form 10-K for fiscal year 2010, as well as the companys
form 10-Q for the first quarter filed with the Securities and Exchange Commission on May
9th, 2011. Any forward-looking statements represent the companys views only as of
today and should not be relied upon as representing its views as of any subsequent date. While the
company may elect to update forward-looking statements, at some point in the future, it
specifically disclaims any obligation to do so, even if its estimates change and therefore you
should not rely on these forward-looking statements as representing the companys views as of any
date subsequent to today. Mr. Keith E. Alessi, President and Chief Executive Officer of
Westmoreland Coal Company will be delivering todays remarks. Thank you, Mr. Alessi. Please
begin.
Keith Alessi Westmoreland Coal Company President & CEO
Thank you and good morning to everybody for joining the first quarter call. I am certain you have
all seen the press release that went out this morning describing the results of operation for the
first quarter. When we chatted at year end, or when the year-end numbers were released with our
10-K, most of the information that is in there related to the bond offering was disclosed so there
is really no new news in here. This quarter, was very much in line with our expectations in terms
of both operating income and
EBITDA. We were pleased with the quarter. I have very brief remarks to make as a result because
you know our business really doesnt change much from a quarter-to-quarter basis. I think one of
the comments that I have made in the press release and I would reiterate here is that we have gone
through a period of time where quarter-to-quarter we have been able to improve our results over the
prior and that its been six straight quarters we have been able to do that. Much of that is a
function of the turnaround efforts and the improvement of the operations that we have seen over
that period of time.
We knew when we sat down looking at 2011, that the second quarter would probably be the quarter
that that streak would break simply because one of our larger customers had a regularly scheduled
maintenance outage during the quarter, coming up in the second quarter here in 2011 where they were
online during 2010. So, we expect the second quarter to be in line with our expectations but I am
not certain it will be as strong as Q2 last year. The other thing thats affecting Q2 right now
and its something that every year we take a good look at is the high grow season out west. This
has been an extraordinarily heavy snow pack in the mountains. That impacts our Colstrip customers
particularly. Again, they saw this coming and had projected it. With their large unit out for
maintenance, its kind of a moot point while its out for maintenance. The question is when will
it come back up. We do not expect it to be a long period of time but clearly that will impact Q2
also. But we are optimistic. The year is still coming along as we pretty much had seen it laying
out when we sat down at the beginning of the year. We continue to make progress on a number of
fronts. Our WRI operation is one that we have spent a lot of time and energy focusing on and we
are seeing some signs of improvement in some of the issues we dealt with historically there. So we
feel pretty good about life and pretty good about the quarter.
I did point out at the end of the release and it is something we continue to be very proud of is
our safety record and also we were able to pick up a very nice reclamation award down at our Texas
mine, which was a real tribute to the folks down there and my understanding is that we have quite a
few people from across the country coming down to take a look at what we did with the Wilkerson
Springs Creek relocation and were proud of that too. So with that Ill just open it up for
questions and Kevin Paprzycki is with us this morning and so is Doug Kathol if theres questions
you have for them.
Operator
Thank you. We will now be conducting a question and answer session. If you would like to ask a
question, please press *1 on your telephone keypad. A confirmation tone will indicate your line is
in the question queue. You may press *2 if you would like to remove your question from the queue.
For participants using speaker equipment, it may be necessary to pick up your handset before
pressing the * keys. Callers in the queue are requested to limit their number of questions to one
primary question and one follow-up question. If you desire to ask additional questions, please
re-enter the queue. One moment please while we poll for questions. Thank you. Our first question
comes from Brian Taddeo of Gleacher & Company. Please state your question.
<Q>: Hi. Good morning everybody.
Keith Alessi Westmoreland Coal Company President & CEO
Morning.
<Q>: A couple of question. First, can you just give us an update on what the rail situation
is looking like, WRI now? I think there might have been a couple of issues late last year, early
this year in moving coal. I just wanted to see what the situation was like now.
Keith Alessi Westmoreland Coal Company President & CEO
Yeah, its improved. Doug, you can give more specific detail.
Doug Kathol Westmoreland Coal Company Executive Vice President
Right. We have seen significant improvement over the last six weeks. We have been working
diligently with the customer and also we have been working extensively with the BN Railroad. We
have had meetings with them and we are seeing an improved service as a result.
<Q>: Have there been any missed deliveries?
Doug Kathol Westmoreland Coal Company Executive Vice President
There were earlier in the year. Most recently, this last two months weve seen again a much
improved, and we have not missed any deliveries but they have missed a few loads, yes.
Keith Alessi Westmoreland Coal Company President & CEO
I think thats an important point to point out. We can only do, you know whats within our control
and over the last 60 days, none of the misses have a result of us. Its been either the customer
was unable to take it because of issues at their end or there werent crews for the railroad.
<Q>: Got you. Okay, one other question I had, actually a couple more. The distributions
from WML up to the parent, were there any in the quarter or can you comment quarter and year to
date?
Keith Alessi Westmoreland Coal Company President & CEO
Kevin can comment on what was available for distribution. We can take them up whenever we decide
to take them up and just to manage our lines of credit and what not, in order not to have drawn a
line of credit downstairs and send money upstairs. We sometimes park money in different places
but, Kevin, you can talk about what the available amount would have been.
Kevin Paprzycki Westmoreland Coal Company CFO
Hi Brian, we had about $5 million that was available to come up to the parent in the quarter.
<Q>: Sorry, thats as of quarter end or?
Kevin Paprzycki Westmoreland Coal Company CFO
Sorry that was in the second quarter that was from the first quarter performance.
<Q>: Got you, okay. And actually whats the current cash balance or liquidity balance of
the company right now?
Keith Alessi Westmoreland Coal Company President & CEO
Total company its in the $40 million, mid 40s, 45-ish.
<Q>: $45 million in cash.
Keith Alessi Westmoreland Coal Company President & CEO
Right.
<Q>: And then still the whole revolver down at WML?
Keith Alessi Westmoreland Coal Company President & CEO
The revolver at WML is undrawn largely and then we never did put in place a revolver up at the
parent.
<Q>: Great. Okay. Thank you very much.
Keith Alessi Westmoreland Coal Company President & CEO |
Mm hmm.
Operator
Thank you. As a reminder, if you would like to ask a question, please press *1 on your telephone
keypad. Callers in the queue are requested to limit their number of questions to one primary and
one followup question. One moment please while we poll for questions. Thank you. Our next
question is from Bob Clutterbuck of Clutterbuck funds. Please state your question.
<Q>: Hi Keith, how are you?
Keith Alessi Westmoreland Coal Company President & CEO
Good Bob.
<Q>: And sorry I missed the very beginning of the call so if youve already answered this
dont answer it again but could you give any insight or commentary on where we stand on potentially
increasing reserves?
Keith Alessi Westmoreland Coal Company President & CEO
No, I did not comment on it but I am glad you did ask the question. We made it a priority for 2011
to in fact increase reserves. I think sometime here during the second quarter we will probably be
in a position to announce some specifics around that but virtually all of our operations, we have
been diligently moving towards adding on to the reserve base as we have. As you know, what we tend
to do is match reserve acquisition with underlying contracts but there are also other opportunistic
situations that we try to exploit but as soon as we have more specifics we will disclose those and
I would suspect there in Q2 sometime or at least by this time next, or it will be third quarter of
course when we announce Q2 results so I would suspect by the next quarterly call we will have some
more detail around that. Something I did not mention that of course has been covered with an 8-K
and a press release was the move to NASDAQ here a couple of weeks back and that we consider that to
be an extremely positive thing for our shareholders when that occurred.
<Q>: Okay, terrific. Thanks Keith.
Keith Alessi Westmoreland Coal Company President & CEO
Yep, thanks Bob.
Operator
As a reminder ladies and gentlemen, if you would like to ask a question, you may press *1 on your telephone keypad. Callers in queue are asked to limit their number of questions to one primary and one followup question. One moment please while we poll for questions. Our next question is coming from the line of Charles Fisher of LF Partners. Please state your question.
As a reminder ladies and gentlemen, if you would like to ask a question, you may press *1 on your telephone keypad. Callers in queue are asked to limit their number of questions to one primary and one followup question. One moment please while we poll for questions. Our next question is coming from the line of Charles Fisher of LF Partners. Please state your question.
<Q>: Good morning Keith. I was wondering if you can give us some color on the outlook for
additional coal sales either at Absaloka or some of the other mines?
Keith Alessi Westmoreland Coal Company President & CEO
Yeah, certainly at Colstrip, Beulah and Jewett, those are driven primarily and almost exclusively
by the demand of the associated power plant. So you know we make our projections at the beginning
of the
year as I indicated. You know, you dont know what hydro season might look like this year, its
running a little longer at Colstrip and of course the next thing you turn the corner and you wonder
what the summer is going to look like. Depending on the summer, you could see a little bit extra
volume. I think our people have budgeted pretty conservatively for the summer, so if we had a
pretty hot summer, we might see more than what we have projected. The real opportunity for
additional coal sales is as you indicated up at Absaloka. I think weve talked about it over the
last two quarters that we are hoping to get the Western Y put in some time this year and do some
test shipments to some potential customers to the west but theres nothing imminent there. We
continue as I am sure all other coal companies do, get enquiries from international markets. That
activity has heated up, particularly after the situation in Japan with the nuclear plants. Doug
and his folks field calls on almost a daily basis. We sort through those leads. We try to figure
out who is real and who is not. We are working with one party as we speak about trying to get some
tonnage over to them to do some test burning but those again are long-term situations dependent
upon port capacity and things like that. So over the back half of this year, I dont look for any
major additions, but I hope to make some progress in terms of identifying some customers for 2012
and 2013. One thing that we are actively doing is looking over the landscape and determining
whether we think there are other mines that look like the mines we operate today that would make
nice additions to our portfolio of assets. During the last 90 days we in fact looked at one that
on the surface looked like it might be a fit for us, but at the end of the day, for a variety of
reasons, including valuation issues, we chose not to pursue. But we will continue to be active
looking at potential there. I think thats more likely to be where substantial growth would come
from. Any growth we would get at Absaloka would be in the million ton range. It wouldnt be
substantial in the short term.
<Q>: Thanks Keith.
Operator
Thank you. There are no further questions at this time. I would like to turn the floor back over
to Mr. Alessi for further comments.
Keith Alessi Westmoreland Coal Company President & CEO
Thanks. I suspected that we wouldnt get a lot of questions this quarter because our business
model is pretty predictable and pretty steady at this point so we appreciate everybody joining us
this morning. We will be talking in about 90 days.
Operator
This concludes todays investor conference call. If you would like to access this call for digital
replay, you may dial 877-660-6853 using account number 286 and conference ID number 371616. Thank
you.