WESTMORELAND COAL Co - FORM 8-K - EX-99.1 - EXHIBIT 99.1 - August 2, 2016

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 News Release
 
 
Westmoreland Reports Second Quarter 2016 Results; Reiterates Full-Year Guidance

Englewood, CO – August 2, 2016 - Westmoreland Coal Company (NasdaqGM:WLB) today reported financial results for the second quarter and reaffirmed its full-year 2016 guidance.

Second Quarter Highlights

•
Revenues of $356.2 million from 12.0 million tons sold
•
Net loss applicable to common shareholders of $25.4 million, or $1.37 per diluted share
•
Adjusted EBITDA of $43.6 million

Six Month Highlights

•
Revenues of $711.0 million from 25.8 million tons sold
•
Net income applicable to common shareholders of $5.2 million, or $0.28 per diluted share, including a sizable tax benefit
•
Adjusted EBITDA of $106.5 million
•
Cash flow provided by operating activities of $37.4 million
•
Free cash flow of $28.1 million

“We remain on track to meet our 2016 adjusted EBITDA and free cash flow guidance based on our first half results and the demand trends that have continued to strengthen since June. We delivered second quarter profitability and cash flow right on our plan which factored in power demand at its lowest during the spring months," said Chief Executive Officer Kevin Paprzycki.

“We are executing well on our business strategies with a focus on maximizing cash flow from our sales volume. Based on our expectation that cash flow generation will be greater in the second half, we plan to reduce our total debt later in 2016.”

Safety

Westmoreland’s commitment to safety in all aspects of its operations is again reflected in the safety metrics.
 
Six Months Ended June 30, 2016
 
Reportable
 
Lost Time
U.S. Operations
1.95
 
1.06
U.S. National Average
3.22
 
2.41
Percentage
61%
 
44%
 
 
 
 
Canadian Operations
3.68
 
1.12

Consolidated and Segment Results

Second quarter results are influenced by the normal seasonality of low springtime power demand and significant scheduled maintenance downtime at customer plants. While consolidated adjusted EBITDA was down 21% for the second quarter and 4% for the first six months compared with the same periods last year, cash flow from operations and free cash flow for the first six months exceeded last year’s levels. Coal - Canada had a strong second quarter in 2015 including accelerated loan and lease payments which aided adjusted EBITDA. In comparison, Canadian demand in the second quarter of 2016 was impacted by weather, most notably above-average rainfall. Coal - U.S. and Coal - WMLP segments grew adjusted EBITDA for the quarter and six months compared to the same periods last year. The Coal - U.S. growth resulted from the San Juan acquisition closing in the first quarter of 2016 and the Coal - WMLP growth was from improved operations.


1

Cash Flow and Liquidity

Westmoreland improved free cash flow generation during the first half of 2016 from the same period last year driven in part by recovery of cash from working capital. Free cash flow through June 30, 2016, was $28.1 million comprised of cash flow provided by operations of $37.4 million, less capital expenditures of $12.2 million, plus net cash collected under certain contracts for loan and lease receivables of $2.9 million. In the first six months, cash flow benefited from a positive working capital change of $6.6 million while asset retirement obligations were a use of $16.4 million.

Cash and cash equivalents on hand at June 30, 2016 were $35.9 million, a $12.9 million increase from year end. Contributing to the increase in cash on hand were the free cash flow generation of $28.1 million; proceeds from asset sales of $6.7 million; net cash debt reductions, mostly capital lease pay downs, of $17.0 million; cash used, net of loan proceeds received, to purchase San Juan of $3.1 million; and cash required for bonding of $0.7 million.

Gross debt plus capital lease obligations at quarter end totaled $1,181.0 million. The increase from year end is attributable to the San Juan financing. Gross debt includes $3.0 million drawn on the revolving credit facility at June 30, 2016. There was $43.3 million available to draw, net of letters of credit.

Full-Year Guidance

“This year, so far, is progressing normally and as we expected. The strengthening demand, and the resulting cash flow, taken together with our first-half results provide confidence in our ability to achieve our guidance this year,” said Paprzycki.

Westmoreland’s 2016 guidance remains:
 
 
Coal tons sold
53 - 60 million tons
Adjusted EBITDA
$235 - $275 million
Free cash flow
$60 - $80 million
Capital expenditures
$59 - $71 million
Cash interest
approximately $90 million

Notes

Westmoreland presents certain non-GAAP financial measures including Adjusted EBITDA and free cash flow that management believes provide meaningful supplemental information and provide meaningful comparability to prior periods. Reconciliations of non-GAAP to GAAP measures are presented in the accompanying tables.

Conference Call

Westmoreland Coal Company will conduct a joint earnings conference call with Westmoreland Resource Partners, LP (NYSE:WMLP), on August 2, 2016, at 10:00 a.m. Eastern Time. Participants may join the call using the numbers below:

Toll Free:     1-844-WCC-COAL (844-922-2625)
International:     1-201-689-8584
Webcast        www.westmoreland.com/investors/investor-webcasts

Replay:         1-877-660-6853 or 1-201-612-7415
Replay ID:     13641125
Webcast        www.westmoreland.com/investors/investor-webcasts

About Westmoreland Coal Company

Westmoreland Coal Company is the oldest independent coal company in the United States. Westmoreland’s coal operations include surface coal mines in the United States and Canada, underground coal mines in Ohio and New Mexico, a char production facility, and a 50% interest in an activated carbon plant. Westmoreland also owns the general partner of and a majority interest in Westmoreland Resource Partners, LP, a publicly-traded coal master limited partnership

2

(NYSE:WMLP). Its power operations include ownership of the two-unit ROVA coal-fired power plant in North Carolina. For more information, visit www.westmoreland.com.

For further information please contact

Gary Kohn, Vice President Investor Relations
1-720-354-4467
gkohn@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. Actual results may differ materially from those contemplated by the forward-looking statements. 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.




3

Westmoreland Coal Company and Subsidiaries
Summary Consolidated and Operating Segment Data (Unaudited)

 
Three Months Ended June 30,
 
 
 
 
 
Increase / (Decrease)
 
2016
 
2015
 
$
 
%
 
(In thousands, except tons sold data)
Westmoreland Consolidated
 
 
 
 
 
 
 
Revenues
$
356,247

 
$
348,959

 
7,288

 
2.1
 %
Operating income (loss)
2,989

 
(6,866
)
 
9,855

 
*

Adjusted EBITDA
43,558

 
55,281

 
(11,723
)
 
(21.2
)%
Tons sold—millions of equivalent tons
12.0

 
13.3

 
(1.3
)
 
(9.8
)%
 
 
 
 
 
 
 
 
Coal - U.S.
 
 
 
 
 
 
 
Revenues
$
151,433

 
$
132,620

 
$
18,813

 
14.2
 %
Operating income
3,850

 
801

 
3,049

 
380.6
 %
Adjusted EBITDA
19,761

 
14,186

 
5,575

 
39.3
 %
Tons sold—millions of equivalent tons
4.7

 
5.3

 
(0.6
)
 
(11.3
)%
 
 
 
 
 
 
 
 
Coal - Canada
 
 
 
 
 
 
 
Revenues
$
109,064

 
$
106,162

 
$
2,902

 
2.7
 %
Operating income
4,200

 
9,524

 
(5,324
)
 
(55.9
)%
Adjusted EBITDA
13,431

 
32,915

 
(19,484
)
 
(59.2
)%
Tons sold—millions of equivalent tons
5.6

 
5.9

 
(0.3
)
 
(5.1
)%
 
 
 
 
 
 
 
 
Coal - WMLP
 
 
 
 
 
 
 
Revenues
$
80,468

 
$
97,033

 
$
(16,565
)
 
(17.1
)%
Operating loss
(4,282
)
 
(936
)
 
(3,346
)
 
(357.5
)%
Adjusted EBITDA
16,303

 
15,175

 
1,128

 
7.4
 %
Tons sold—millions of equivalent tons
1.7

 
2.1

 
(0.4
)
 
(19.0
)%
 
 
 
 
 
 
 
 
Power
 
 
 
 
 
 
 
Revenues
$
21,944

 
$
21,334

 
$
610

 
2.9
 %
Operating income (loss)
6,731

 
(9,035
)
 
15,766

 
*

Adjusted EBITDA
614

 
(614
)
 
1,228

 
*


* Not meaningful



4

 
Six Months Ended June 30,
 
 
 
 
 
Increase / (Decrease)
 
2016
 
2015
 
$
 
%
 
(In thousands, except tons sold data)
Westmoreland Consolidated
 
 
 
 
 
 
 
Revenues
$
710,968

 
$
720,444

 
$
(9,476
)
 
(1.3
)%
Operating income
14,527

 
1,591

 
12,936

 
*

Adjusted EBITDA
106,513

 
111,309

 
(4,796
)
 
(4.3
)%
Tons sold—millions of equivalent tons
25.8

 
26.7

 
(0.9
)
 
(3.4
)%
 
 
 
 
 
 
 
 
Coal - U.S.
 
 
 
 
 
 
 
Revenues
$
306,611

 
$
287,487

 
$
19,124

 
6.7
 %
Operating income
15,129

 
7,919

 
7,210

 
91.0
 %
Adjusted EBITDA
49,299

 
34,452

 
14,847

 
43.1
 %
Tons sold—millions of equivalent tons
10.7

 
11.1

 
(0.4
)
 
(3.6
)%
 
 
 
 
 
 
 
 
Coal - Canada
 
 
 
 
 
 
 
Revenues
$
202,498

 
$
209,405

 
$
(6,907
)
 
(3.3
)%
Operating income
16,609

 
19,388

 
(2,779
)
 
(14.3
)%
Adjusted EBITDA
36,874

 
57,838

 
(20,964
)
 
(36.2
)%
Tons sold—millions of equivalent tons
11.4

 
11.2

 
0.2

 
1.8
 %
 
 
 
 
 
 
 
 
Coal - WMLP
 
 
 
 
 
 
 
Revenues
$
172,949

 
$
206,123

 
$
(33,174
)
 
(16.1
)%
Operating loss
(3,473
)
 
(1,306
)
 
(2,167
)
 
(165.9
)%
Adjusted EBITDA
35,580

 
34,177

 
1,403

 
4.1
 %
Tons sold—millions of equivalent tons
3.7

 
4.4

 
(0.7
)
 
(15.9
)%
 
 
 
 
 
 
 
 
Power
 
 
 
 
 
 
 
Revenues
$
43,940

 
$
41,984

 
$
1,956

 
4.7
 %
Operating income (loss)
931

 
(8,618
)
 
9,549

 
*

Adjusted EBITDA
(2,733
)
 
(3,227
)
 
494

 
15.3
 %

* Not meaningful


5

Westmoreland Coal Company and Subsidiaries
Consolidated Statements of Operations (Unaudited)

 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2016
 
2015
 
2016
 
2015
 
(In thousands, except per share data)
Revenues
$
356,247

 
$
348,959

 
$
710,968

 
$
720,444

Cost, expenses and other:
 
 
 
 
 
 
 
Cost of sales
290,113

 
285,480

 
563,915

 
587,189

Depreciation, depletion and amortization
33,663

 
34,263

 
68,676

 
72,322

Selling and administrative
32,019

 
28,508

 
63,691

 
55,228

Heritage health benefit expenses
3,222

 
2,162

 
6,237

 
5,221

Loss (gain) on sale/disposal of assets
(2,253
)
 
784

 
(1,917
)
 
1,013

Restructuring charges
—

 
103

 
—

 
656

Derivative loss (gain)
(5,878
)
 
6,178

 
(3,278
)
 
902

Income from equity affiliates
(1,287
)
 
(1,653
)
 
(2,580
)
 
(3,678
)
Other operating loss
3,659

 
—

 
1,697

 
—

 
353,258

 
355,825

 
696,441

 
718,853

Operating income (loss)
2,989

 
(6,866
)
 
14,527

 
1,591

Other income (expense):
 
 
 
 
 
 
 
Interest expense
(31,510
)
 
(25,304
)
 
(61,179
)
 
(50,039
)
Interest income
2,356

 
2,567

 
4,147

 
4,707

Gain (loss) on foreign exchange
(364
)
 
(1,313
)
 
(1,751
)
 
795

Other income
254

 
534

 
132

 
726

 
(29,264
)
 
(23,516
)
 
(58,651
)
 
(43,811
)
Loss before income taxes
(26,275
)
 
(30,382
)
 
(44,124
)
 
(42,220
)
Income tax expense (benefit)
(100
)
 
7,469

 
(48,035
)
 
9,509

Net income (loss)
(26,175
)
 
(37,851
)
 
3,911

 
(51,729
)
Less net loss attributable to noncontrolling interest
(808
)
 
(1,246
)
 
(1,306
)
 
(3,392
)
Net income (loss) applicable to common shareholders
$
(25,367
)
 
$
(36,605
)
 
$
5,217

 
$
(48,337
)
Net income (loss) per share applicable to common shareholders:
 
 
 
 
 
 
 
Basic and diluted
$
(1.37
)
 
$
(2.04
)
 
$
0.28

 
$
(2.72
)
Weighted average number of common shares outstanding:
 
 
 
 
 
 
 
Basic
18,540

 
17,926

 
18,401

 
17,775

Diluted
18,540

 
17,926

 
18,418

 
17,775



6


Westmoreland Coal Company and Subsidiaries
Consolidated Balance Sheets (Unaudited)    
 
June 30,
2016
 
December 31,
2015
 
(In thousands)
Assets
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
35,876

 
$
22,936

Receivables:
 
 
 
Trade
142,587

 
134,141

Loan and lease receivables
5,851

 
6,157

Contractual third-party reclamation receivables
12,781

 
8,020

Other
18,937

 
11,598

 
180,156

 
159,916

Inventories
129,881

 
121,858

Other current assets
19,823

 
16,103

Total current assets
365,736

 
320,813

Property, plant and equipment:
 
 
 
Land and mineral rights
597,450

 
476,447

Plant and equipment
875,122

 
790,677

 
1,472,572

 
1,267,124

Less accumulated depreciation, depletion and amortization
613,745

 
554,008

Net property, plant and equipment
858,827

 
713,116

Loan and lease receivables
50,161

 
49,313

Advanced coal royalties
17,206

 
19,781

Reclamation deposits
73,434

 
77,364

Restricted investments and bond collateral
144,061

 
140,807

Contractual third-party reclamation receivables, less current portion
154,926

 
86,915

Investment in joint venture
28,045

 
27,374

Intangible assets, net of accumulated amortization of $3.4 million and $15.9 million at June 30, 2016 and December 31, 2015, respectively
28,050

 
29,190

Other assets
22,767

 
11,904

Total Assets
$
1,743,213

 
$
1,476,577


7

Westmoreland Coal Company and Subsidiaries
Consolidated Balance Sheets (Continued) (Unaudited)    
 
June 30,
2016
 
December 31,
2015
 
(In thousands)
Liabilities and Shareholders’ Deficit
 
 
 
Current liabilities:
 
 
 
Current installments of long-term debt
$
87,754

 
$
38,852

Revolving lines of credit
3,000

 
1,970

Accounts payable and accrued expenses:
 
 
 
Trade and other accrued liabilities
134,429

 
109,850

Interest payable
20,386

 
15,527

Production taxes
46,797

 
46,895

Postretirement medical benefits
13,855

 
13,855

SERP
368

 
368

Deferred revenue
19,834

 
10,715

Asset retirement obligations
50,944

 
43,950

Other current liabilities
29,888

 
30,688

Total current liabilities
407,255

 
312,670

Long-term debt, less current installments
1,047,244

 
979,073

Workers’ compensation, less current portion
4,992

 
5,068

Excess of black lung benefit obligation over trust assets
17,594

 
17,220

Postretirement medical benefits, less current portion
286,739

 
285,518

Pension and SERP obligations, less current portion
43,702

 
44,808

Deferred revenue, less current portion
22,441

 
24,613

Asset retirement obligations, less current portion
449,857

 
375,813

Intangible liabilities, net of accumulated amortization of $10.3 million and $9.8 million at June 30, 2016 and December 31, 2015, respectively
2,936

 
3,470

Other liabilities
33,566

 
30,208

Total liabilities
2,316,326

 
2,078,461

Shareholders’ deficit:
 
 
 
Common stock of $0.01 par value
 
 
 
Authorized 30,000,000 shares; issued and outstanding 18,569,845 shares at June 30, 2016 and 18,162,148 shares at December 31, 2015
186

 
182

Other paid-in capital
245,050

 
240,721

Accumulated other comprehensive loss
(150,259
)
 
(171,300
)
Accumulated deficit
(667,002
)
 
(672,219
)
Total Westmoreland Coal Company shareholders’ deficit
(572,025
)
 
(602,616
)
Noncontrolling interest
(1,088
)
 
732

Total deficit
(573,113
)
 
(601,884
)
Total Liabilities and Deficit
$
1,743,213

 
$
1,476,577



8


Westmoreland Coal Company and Subsidiaries
Consolidated Statements of Cash Flows (Unaudited)    

 
Six Months Ended June 30,
 
2016
 
2015
 
(In thousands)
Cash flows from operating activities:
 
 
 
Net income (loss)
$
3,911

 
$
(51,729
)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
 
 
 
Depreciation, depletion and amortization
68,676

 
72,322

Accretion of asset retirement obligation and receivable
14,297

 
14,112

Share-based compensation
4,534

 
3,646

Non-cash interest expense
4,554

 
2,664

Amortization of deferred financing costs
6,630

 
4,997

Loss (gain) on derivative instruments
(3,278
)
 
902

Loss (gain) on foreign exchange
1,751

 
(795
)
Income from equity affiliates
(2,580
)
 
(3,678
)
Deferred income tax expense (benefit)
(47,547
)

10,265

Other
(3,696
)
 
1,832

Changes in operating assets and liabilities:
 
 
 
Receivables
(2,008
)
 
1,283

Inventories
6,677

 
(8,789
)
Accounts payable and accrued expenses
(8,045
)
 
(1,560
)
Deferred revenue
6,948

 
(6,141
)
Other assets and liabilities
2,995

 
(16,367
)
Asset retirement obligations
(16,415
)
 
(10,914
)
Net cash provided by operating activities
37,404

 
12,050

Cash flows from investing activities:
 
 
 
Additions to property, plant and equipment
(12,231
)
 
(38,554
)
Change in restricted investments
658

 
(10,598
)
Cash received from restricted deposits
—

 
34,000

Cash payments related to acquisitions and other
(125,314
)
 
(35,887
)
Cash acquired related to acquisition, net
—

 
2,782

Net proceeds from sales of assets
6,706

 
12,396

Receipts from loan and lease receivables
3,268

 
12,606

Payments related to loan and lease receivables
(334
)
 
(2,466
)
Other
3,095

 
1,193

Net cash used in investing activities
(124,152
)
 
(24,528
)
Cash flows from financing activities:
 
 
 
Borrowings from long-term debt, net of debt discount
122,250

 
79,359

Repayments of long-term debt
(17,991
)
 
(33,724
)
Borrowings on revolving lines of credit
195,400

 
35,175

Repayments on revolving lines of credit
(194,370
)
 
(42,251
)
Debt issuance costs and other refinancing costs
(5,709
)
 
(4,252
)
Other
(529
)
 
1,660

Net cash provided by financing activities
99,051

 
35,967

Effect of exchange rate changes on cash
637

 
(1,871
)
Net increase in cash and cash equivalents
12,940

 
21,618

Cash and cash equivalents, beginning of period
22,936

 
14,258

Cash and cash equivalents, end of period
$
35,876

 
$
35,876

 
 
 
 
Supplemental disclosures of cash flow information:
 
 
 
Cash paid for interest
$
47,972

 
$
29,444



9

Westmoreland Coal Company and Subsidiaries
Non-GAAP Reconciliations (Unaudited)

The tables below show how the Company calculates and reconciles to the most directly comparable GAAP financial measure EBITDA; Adjusted EBITDA, including a breakdown by segment; and free cash flow.

EBITDA, Adjusted EBITDA and free cash flow are supplemental measures of financial performance that are not required by, or presented in accordance with, GAAP. EBITDA, Adjusted EBITDA and free cash flow are included in this news release because they are key metrics used by management to assess Westmoreland’s operating performance and as a basis for strategic planning and forecasting. Westmoreland believes that EBITDA, Adjusted EBITDA, and free cash flow are useful to an investor in evaluating the Company’s 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;
•
are used by rating agencies, lenders and other parties to evaluate creditworthiness; and
•
help investors to more meaningfully evaluate and compare the results of Westmoreland’s operations from period to period by removing the effect of the Company’s capital structure and asset base from the Company’s operating results.

Neither EBITDA, Adjusted EBITDA nor free cash flow are measures calculated in accordance with GAAP. The items excluded from EBITDA, Adjusted EBITDA and free cash flow are significant in assessing Westmoreland’s operating results. EBITDA, Adjusted EBITDA, and free cash flow have limitations as analytical tools, and should not be considered in isolation from, or as a substitute for, analysis of the Company’s results as reported under GAAP.
Other companies in Westmoreland’s industry and in other industries may calculate EBITDA, Adjusted EBITDA and free cash flow differently from the way that Westmoreland does, limiting their usefulness as comparative measures. Because of these limitations, EBITDA, Adjusted EBITDA and free cash flow should not be considered as measures of discretionary cash available to the Company to invest in the growth of its business. Westmoreland compensates for these limitations by relying primarily on its GAAP results and using EBITDA, Adjusted EBITDA and free cash flow only as supplemental data.

EBITDA and Adjusted EBITDA

EBITDA (earnings before interest expense, interest income, income taxes, depreciation, depletion, amortization and accretion expense) and Adjusted EBITDA are non-GAAP measures that do not reflect the Company’s 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, the Company’s 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 the Company’s 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. Westmoreland considers Adjusted EBITDA to be useful because it reflects operating performance before the effects of certain non-cash items and other items that it believes are not indicative of core operations. The Company uses Adjusted EBITDA to assess operating performance.


10

 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2016
 
2015
 
2016
 
2015
 
(In thousands)
Adjusted EBITDA by Segment
 
 
 
 
 
 
 
Coal - U.S.
$
19,761

 
$
14,186

 
$
49,299

 
$
34,452

Coal - Canada
13,431

 
32,915

 
36,874

 
57,838

Coal - WMLP
16,303

 
15,175

 
35,580

 
34,177

Power
614

 
(614
)
 
(2,733
)
 
(3,227
)
Heritage
(3,518
)
 
(2,401
)
 
(6,999
)
 
(5,749
)
Corporate
(3,033
)
 
(3,980
)
 
(5,508
)
 
(6,182
)
Total
$
43,558

 
$
55,281

 
$
106,513

 
$
111,309

 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2016
 
2015
 
2016
 
2015
 
(In thousands)
Reconciliation of Net Income (Loss) to Adjusted EBITDA
 
 
 
 
 
 
 
Net income (loss)
$
(26,175
)
 
$
(37,851
)
 
$
3,911

 
$
(51,729
)
 
 
 
 
 
 
 
 
Income tax expense (benefit)
(100
)
 
7,469

 
(48,035
)
 
9,509

Interest income
(2,356
)
 
(2,567
)
 
(4,147
)
 
(4,707
)
Interest expense
31,510

 
25,304

 
61,179

 
50,039

Depreciation, depletion and amortization
33,663

 
34,263

 
68,676

 
72,322

Accretion of ARO and receivable
7,290

 
7,077

 
14,297

 
14,108

Amortization of intangible assets and liabilities
(260
)
 
(253
)
 
(427
)
 
(506
)
EBITDA
43,572

 
33,442

 
95,454

 
89,036

 
 
 
 
 
 
 
 
Restructuring charges
—

 
103

 
—

 
656

Loss (gain) on foreign exchange
364

 
1,313

 
1,751

 
(795
)
Acquisition related costs (1)
133

 
—

 
568

 
1,400

Customer payments received under loan and lease receivables (2)
2,727

 
11,418

 
5,387

 
15,521

Derivative loss (gain)
(5,878
)
 
6,178

 
(3,278
)
 
902

Loss (gain) on sale/disposal of assets and other adjustments
684

 
703

 
2,097

 
943

Share-based compensation
1,956

 
2,124

 
4,534

 
3,646

Adjusted EBITDA
$
43,558

 
$
55,281

 
$
106,513

 
$
111,309

___________________
(1) 
Includes the impact of cost of sales related to the sale of inventory written up to fair value in the acquisition of Westmoreland Resources GP, LLC, the general partner of WMLP.
(2) 
Represents a return of and on capital. These amounts are not included in operating income or operating cash flows, as the capital outlays are treated as loan and lease receivables but are included within Adjusted EBITDA so that the cash received by the Company is treated consistently with all other contracts within the Company that do not result in loan and lease receivable accounting.

Free Cash Flow

Free cash flow represents net cash provided (used) by operating activities less additions to property, plant and equipment (“CAPEX” or “capital expenditures”) plus net customer payments received under loan and lease receivable. Free cash flow is a non-GAAP measure and should not be considered as an alternative to cash and cash equivalents, cash flow from operations, cash flow from investing activities, cash flow from financing activities, net income (loss) or any other measure

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of performance presented in accordance with GAAP. Free cash flow is intended to represent cash flow available to satisfy our debts, after giving consideration to those expenses required to maintain our assets and infrastructure. Accordingly, although free cash flow is not a measure of performance calculated in accordance with GAAP, the Company believes free cash flow is useful to investors because it allows analysts and others in the industry to assess performance, liquidity and ability to satisfy debt requirements.
Reconciliation Net Cash Provided by Operating Activities to Free Cash Flow
Six Months Ended June 30,
 
2016
 
2015
 
(In thousands)
Net cash provided by operating activities
$
37,404

 
$
12,050

Less cash paid for property, plant and equipment
(12,231
)
 
(38,554
)
Net customer payments received under loan and lease receivables
2,934

 
10,140

Free cash flow
$
28,107

 
$
(16,364
)


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