Alliance Holdings GP, L.P. Reports Quarterly Financial Results and Declares Distribution of $0.96 Per Unit

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 October 27, 2015 - 7:00 AM EDT
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Alliance Holdings GP, L.P. Reports Quarterly Financial Results and Declares Distribution of $0.96 Per Unit

Alliance Holdings GP, L.P. (NASDAQ: AHGP) today announced that the Board of Directors of its general partner (the "Board") approved a distribution to unitholders for the quarter ended September 30, 2015 (the "2015 Quarter") of $0.96 per unit, or an annualized rate of $3.84 per unit, payable on November 19, 2015 to AHGP’s unitholders of record as of the close of trading on November 12, 2015. The declared quarterly cash distribution represents a 7.6% increase over the cash distribution of $0.8925 per unit for the quarter ended September 30, 2014 (the "2014 Quarter") and is equal to the cash distribution for the quarter ended June 30, 2015.

AHGP’s principal sources of cash flow are its ownership of general partner interests, limited partner interests and incentive distribution rights in Alliance Resource Partners, L.P. (NASDAQ: ARLP). The declared distribution is based on the distribution AHGP will receive from its ownership interests in ARLP, which today announced a quarterly distribution for the 2015 Quarter of $0.675 per unit, or $2.70 per unit on an annualized basis, payable on November 13, 2015 to all unitholders of record as of the close of trading on November 6, 2015. (See ARLP Press Release dated October 27, 2015.)

AHGP also reported net income for the 2015 Quarter of $56.1 million, or net income per basic and diluted limited partner interest of $0.94 per unit, a decrease of 18.2% compared to net income for the 2014 Quarter of $68.5 million, or $1.15 per basic and diluted limited partner unit. (Operating results for AHGP reflect those of the operating subsidiaries of ARLP and, as a result, AHGP reports its financial results on a consolidated basis with the financial results of ARLP. For a discussion of net income presentation, please see the end of this release.)

Based on ARLP’s current declared distribution, AHGP expects to receive quarterly cash distributions from ARLP of $58.4 million, or $233.6 million on an annualized basis. AHGP’s primary cash requirements are for working capital, distributions to its unitholders and general and administrative expenses, including for 2015 full year an estimated $2.6 million in general and administrative expenses.

AHGP and ARLP will discuss their 2015 Quarter financial results during a joint conference call scheduled for today at 9:00 a.m. Eastern. To participate in the conference call, dial (855) 793-3259 and provide conference number 51932077. International callers should dial (631) 485-4928 and provide the same conference number. Investors may also listen to the call via the "investor information" section of ARLP’s website at http://www.arlp.com or AHGP’s website at http://www.ahgp.com.

An audio replay of the conference call will be available for approximately one week. To access the audio replay, dial (855) 859-2056 and provide conference number 51932077. International callers should dial (404) 537-3406 and provide the same pass code.

This announcement is intended to be a qualified notice under Treasury Regulation Section 1.1446-4(b), with 100% of the partnership’s distributions to foreign investors attributable to income that is effectively connected with a United States trade or business. Accordingly, AHGP’s distributions to foreign investors are subject to federal income tax withholding at the highest applicable tax rate.

About Alliance Holdings GP, L.P.

AHGP is a limited partnership formed to own and control Alliance Resource Management GP, LLC, the managing general partner of ARLP, through which it holds a 1.98% general partner interest and the incentive distribution rights in ARLP. In addition, AHGP owns 31,088,338 common units of ARLP.

News, unit prices and additional information about AHGP, including filings with the Securities and Exchange Commission, are available at http://www.ahgp.com. For more information, contact the investor relations department of AHGP at (918) 295-1415 or via e-mail at investorrelations@ahgp.com.

The statements and projections used throughout this release are based on current expectations. These statements and projections are forward-looking, and actual results may differ materially. At the end of this release, we have included more information regarding business risks that could affect our results.

FORWARD-LOOKING STATEMENTS: With the exception of historical matters, any matters discussed in this press release are forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from projected results. These risks, uncertainties and contingencies include, but are not limited to, the following: changes in competition in coal markets and the ARLP Partnership's ability to respond to such changes; changes in coal prices, which could affect the ARLP Partnership's operating results and cash flows; risks associated with the ARLP Partnership's expansion of its operations and properties; legislation, regulations, and court decisions and interpretations thereof, including those relating to the environment, mining, miner health and safety and health care; deregulation of the electric utility industry or the effects of any adverse change in the coal industry, electric utility industry, or general economic conditions; dependence on significant customer contracts, including renewing customer contracts upon expiration of existing contracts; changing global economic conditions or in industries in which the ARLP Partnership’s customers operate; liquidity constraints, including those resulting from any future unavailability of financing; customer bankruptcies, cancellations or breaches to existing contracts, or other failures to perform; customer delays, failure to take coal under contracts or defaults in making payments; adjustments made in price, volume or terms to existing coal supply agreements; fluctuations in coal demand, prices and availability; the ARLP Partnership's productivity levels and margins earned on its coal sales; changes in raw material costs; changes in the availability of skilled labor; the ARLP Partnership's ability to maintain satisfactory relations with its employees; increases in labor costs, adverse changes in work rules, or cash payments or projections associated with post-mine reclamation and workers' compensation claims; increases in transportation costs and risk of transportation delays or interruptions; operational interruptions due to geologic, permitting, labor, weather-related or other factors; risks associated with major mine-related accidents, such as mine fires, or interruptions; results of litigation, including claims not yet asserted; difficulty maintaining the ARLP Partnership's surety bonds for mine reclamation as well as workers' compensation and black lung benefits; difficulty in making accurate assumptions and projections regarding pension, black lung benefits and other post-retirement benefit liabilities; the coal industry's share of electricity generation, including as a result of environmental concerns related to coal mining and combustion and the cost and perceived benefits of other sources of electricity, such as natural gas, nuclear energy and renewable fuels; uncertainties in estimating and replacing the ARLP Partnership’s coal reserves; a loss or reduction of benefits from certain tax deductions and credits; difficulty obtaining commercial property insurance, and risks associated with the ARLP Partnership's participation (excluding any applicable deductible) in the commercial insurance property program; and difficulty in making accurate assumptions and projections regarding future revenues and costs associated with equity investments in companies we do not control.

Additional information concerning these and other factors can be found in AHGP’s public periodic filings with the Securities and Exchange Commission ("SEC"), including AHGP's Annual Report on Form 10-K for the year ended December 31, 2014, filed on February 27, 2015 and AHGP’s Quarterly Reports on Form 10-Q for the quarters ended March 31, 2015 and June 30, 2015, filed on May 8, 2015 and August 6, 2015, respectively, with the SEC. Except as required by applicable securities laws, AHGP does not intend to update its forward-looking statements.

       
 
ALLIANCE HOLDINGS GP, L.P. AND SUBSIDIARIES
 
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND OPERATING DATA
(In thousands, except unit and per unit data)
(Unaudited)
 

Three Months Ended
September 30,

Nine Months Ended
September 30,

2015   2014 2015   2014
 
SALES AND OPERATING REVENUES:
Coal sales $ 547,466 $ 548,357 $ 1,632,493 $ 1,649,093
Transportation revenues 9,395 6,001 24,323 17,816
Other sales and operating revenues   9,481     14,872     74,445     42,719  
Total revenues   566,342     569,230     1,731,261     1,709,628  
 
EXPENSES:
Operating expenses (excluding depreciation, depletion and amortization) 336,527 349,170 1,045,954 1,024,305
Transportation expenses 9,395 6,001 24,323 17,816
Outside coal purchases 2 3 326 7
General and administrative 18,356 19,185 53,659 57,352
Depreciation, depletion and amortization 84,661 69,646 242,730 203,539
Asset impairment charge   10,695     -     10,695     -  
Total operating expenses 459,636 444,005 1,377,687 1,303,019
 
INCOME FROM OPERATIONS 106,706 125,225 353,574 406,609
Interest expense, net (7,352 ) (8,584 ) (23,626 ) (25,395 )
Interest income 286 432 1,422 1,238
Equity in income (loss) of affiliates, net (17,221 ) 68 (49,049 ) (13,546 )
Other income   455     549     750     1,178  
INCOME BEFORE INCOME TAXES 82,874 117,690 283,071 370,084
INCOME TAX EXPENSE   12     -     18     -  
NET INCOME 82,862 117,690 283,053 370,084
LESS: NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS   (26,765 )   (49,141 )   (100,476 )   (156,741 )
NET INCOME ATTRIBUTABLE TO ALLIANCE HOLDINGS GP, L.P. ("NET INCOME OF AHGP") $ 56,097   $ 68,549   $ 182,577   $ 213,343  
 
BASIC AND DILUTED NET INCOME OF AHGP PER LIMITED PARTNER UNIT $ 0.94   $ 1.15   $ 3.05   $ 3.56  
DISTRIBUTIONS PAID PER LIMITED PARTNER UNIT $ 0.96   $ 0.87   $ 2.8125   $ 2.545  
 

WEIGHTED AVERAGE NUMBER OF UNITS OUTSTANDING - BASIC AND DILUTED

  59,863,000     59,863,000     59,863,000     59,863,000  
       
 
ALLIANCE HOLDINGS GP, L.P. AND SUBSIDIARIES
 
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except unit data)
(Unaudited)
 
ASSETS September 30, December 31,
2015 2014
 
CURRENT ASSETS:
Cash and cash equivalents $ 40,538 $ 28,274
Trade receivables 171,402 184,187
Other receivables 628 1,025
Due from affiliates 30 7,107
Inventories 123,608 83,155
Advance royalties 7,663 9,416
Prepaid expenses and other assets   17,875     31,362  
Total current assets 361,744 344,526
 
PROPERTY, PLANT AND EQUIPMENT:
Property, plant and equipment, at cost 3,215,566 2,815,620
Less accumulated depreciation, depletion and amortization   (1,336,176 )   (1,150,414 )
Total property, plant and equipment, net 1,879,390 1,665,206
 
OTHER ASSETS:
Advance royalties 26,887 15,895
Due from affiliate - 11,047
Equity investments in affiliates 48,034 224,611
Goodwill 161,985 -
Other long-term assets   32,009     27,470  
Total other assets   268,915     279,023  
TOTAL ASSETS $ 2,510,049   $ 2,288,755  
 
LIABILITIES AND PARTNERS' CAPITAL
 
CURRENT LIABILITIES:
Accounts payable $ 100,881 $ 86,277
Due to affiliates 170 370
Accrued taxes other than income taxes 21,073 19,461
Accrued payroll and related expenses 47,514 57,656
Accrued interest 3,330 318
Workers’ compensation and pneumoconiosis benefits 8,893 8,868
Current capital lease obligations 1,333 1,305
Other current liabilities 27,003 17,109
Current maturities, long-term debt   142,159     230,000  
Total current liabilities 352,356 421,364
 
LONG-TERM LIABILITIES:
Long-term debt, excluding current maturities 810,889 591,250
Pneumoconiosis benefits 58,858 55,278
Accrued pension benefit 38,566 40,105
Workers’ compensation 49,084 49,797
Asset retirement obligations 107,820 91,085
Long-term capital lease obligations 14,602 15,624
Other liabilities   22,453     5,978  
Total long-term liabilities   1,102,272     849,117  
Total liabilities   1,454,628     1,270,481  
 
COMMITMENTS AND CONTINGENCIES
 
PARTNERS' CAPITAL:
Alliance Holdings GP, L.P. ("AHGP") Partners' Capital:
Limited Partners – Common Unitholders 59,863,000 units outstanding 594,438 580,234
Accumulated other comprehensive loss   (14,493 )   (15,456 )
Total AHGP Partners' Capital 579,945 564,778
Noncontrolling interests   475,476     453,496  
Total Partners' Capital   1,055,421     1,018,274  
TOTAL LIABILITIES AND PARTNERS' CAPITAL $ 2,510,049   $ 2,288,755  
   
 
ALLIANCE HOLDINGS GP, L.P. AND SUBSIDIARIES
 
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
 
Nine Months Ended
September 30,
2015   2014
CASH FLOWS PROVIDED BY OPERATING ACTIVITIES $ 527,210   $ 582,900  
CASH FLOWS FROM INVESTING ACTIVITIES:
Property, plant and equipment:
Capital expenditures (159,182 ) (233,659 )
Changes in accounts payable and accrued liabilities (3,093 ) 145
Proceeds from sale of property, plant and equipment 1,519 272
Proceeds from insurance settlement for property, plant and equipment - 4,512
Purchases of equity investments in affiliates (47,624 ) (85,250 )
Payments for acquisitions of businesses, net of cash acquired (74,953 ) -
Payments to affiliate for acquisition and development of coal reserves - (1,401 )
Advances/loans to affiliate (7,300 ) -
Other   1,807     -  
Net cash used in investing activities   (288,826 )   (315,381 )
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under securitization facility 6,500 -
Payments under securitization facility (6,500 ) -
Payment on term loans (20,319 ) (12,500 )
Borrowings under revolving credit facilities 463,000 221,800
Payments under revolving credit facilities (200,000 ) (301,800 )
Payment on long-term debt (205,000 ) (18,000 )
Payments on capital lease obligations (994 ) (1,113 )
Contribution to consolidated company from affiliate noncontrolling interest 1,483 -
Net settlement of employee withholding taxes on vesting of ARLP Long-Term Incentive Plan (2,719 ) (2,991 )
Distributions paid by consolidated partnership to noncontrolling interests (87,623 ) (80,484 )
Distributions paid to Partners (168,365 ) (152,352 )
Other   (5,583 )   -  
Net cash used in financing activities   (226,120 )   (347,440 )
NET CHANGE IN CASH AND CASH EQUIVALENTS 12,264 (79,921 )
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD   28,274     98,375  
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 40,538   $ 18,454  
 

Presentation of Net Income

Consolidated net income includes earnings attributable to both AHGP and noncontrolling interests. Unless otherwise noted, any reference to net income in this release represents net income attributable to AHGP.

Alliance Holdings GP, L.P.
Brian L. Cantrell, 918-295-7673

Copyright Business Wire 2015

Source: Business Wire (October 27, 2015 - 7:00 AM EDT)

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