Alliance Resource Partners, L.P. Reports Solid Quarterly Financial and Operating Results; Maintains Quarterly Cash Distribution of $0.4375 Per Unit; Updates Guidance
Alliance Resource Partners, L.P. (NASDAQ: ARLP) today reported financial
and operating results for the quarter ended June 30, 2016 (the "2016
Quarter"). Net income in the 2016 Quarter was $82.7 million, or $0.82
per basic and diluted limited partner unit ("EPU"), compared to $94.9
million, or $0.76 per basic and diluted limited partner unit, for the
quarter ended June 30, 2015 (the "2015 Quarter"). Total revenues were
$439.2 million in the 2016 Quarter compared to $604.7 million in the
2015 Quarter, as coal sales revenues declined due to lower coal sales
prices and planned reductions in coal sales and production volumes.
Other sales and operating revenues were also lower following our
acquisition of the remaining equity interests in White Oak Resources LLC
("White Oak") in July 2015 (the "White Oak Acquisition"). Lower revenues
were offset in part by reduced operating expenses and equity in loss of
affiliates related to White Oak, which led to EBITDA of $169.6 million
for the 2016 Quarter, compared to $182.4 million for the 2015 Quarter.
Compared to the 2015 Quarter, EPU for the 2016 Quarter benefited from
reduced incentive distribution rights allocated to our managing general
partner partially offset by lower net income. (For a definition of
EBITDA and related reconciliations to comparable GAAP financial
measures, please see the end of this release.)
ARLP’s performance for the 2016 Quarter improved significantly compared
to the quarter ended March 31, 2016 (the "Sequential Quarter"). Led by
increased coal sales volumes, ARLP’s revenues rose 6.4% compared to the
Sequential Quarter. Increased revenues combined with lower operating
expenses helped drive net income higher by 74.8% and EBITDA up by 24.9%,
both compared to the Sequential Quarter.
ARLP also announced that the Board of Directors of its managing general
partner (the "Board") approved a cash distribution to unitholders for
the 2016 Quarter of $0.4375 per unit (an annualized rate of $1.75 per
unit), payable on August 12, 2016 to all unitholders of record as of the
close of trading on August 5, 2016. The announced distribution is equal
to the distribution declared for the Sequential Quarter and compares to
the quarterly unitholder distribution of $0.675 per unit for the 2015
Quarter.
"ARLP once again delivered solid results in the 2016 Quarter," said
Joseph W. Craft III, President and Chief Executive Officer. "Our teams
continued to perform well, overcoming continuing challenges facing our
industry to deliver strong sequential increases to ARLP’s key operating
and financial metrics. Our marketing group successfully drove increased
coal sales volumes in the 2016 Quarter and secured additional coal sales
agreements to further strengthen our contract portfolio. Operationally,
ongoing efficiency initiatives continued to result in lower operating
expenses and capital expenditures. Our finance group also made progress
in its efforts to enhance ARLP’s liquidity by completing a new $33.9
million capital lease transaction."
Mr. Craft continued, "ARLP’s distributable cash flow for the 2016
Quarter also increased 42.3% compared to the Sequential Quarter while
our coverage improved to 2.3x and we continue to anticipate coverage of
at least 2.0x for the remainder of the year. Based on ARLP’s solid
year-to-date performance and strong coverage ratio, the Board today
elected to maintain our current quarterly unitholder distribution of
$0.4375 per unit."
Consolidated Financial Results
Three Months Ended June 30, 2016 Compared to Three Months Ended June
30, 2015
Coal sales revenues in the 2016 Quarter were $422.5 million as compared
to $567.3 million for the 2015 Quarter primarily as a result of lower
sales and production volumes due to idling our Onton and Gibson North
mines in the 2015 fourth quarter, the planned depletion of reserves at
our Elk Creek mine in the Sequential Quarter and reduced production at
our River View and MC Mining operations in response to market
conditions. Compared to the 2015 Quarter, these reductions were
partially offset by volumes from the Hamilton mine acquired as part of
the White Oak Acquisition discussed above. ARLP’s coal sales revenue was
also negatively impacted by lower total average coal sales price
realizations in the 2016 Quarter, which decreased 2.0% to $53.05 per ton
sold compared to $54.13 per ton sold in the 2015 Quarter.
Other sales and operating revenues were $11.2 million in the 2016
Quarter compared to $29.7 million for the 2015 Quarter due to the
absence of coal royalty and surface facilities revenues from White Oak
as discussed above, partially offset by the receipt in the 2016 Quarter
of customer payments in lieu of shipments in connection with certain
Illinois Basin coal sales contracts.
Operating expenses in the 2016 Quarter decreased 34.3% to $246.5 million
primarily as a result of the previously discussed reduction of coal
production volumes, a favorable production cost mix due to ARLP’s
initiatives to shift production to lower-cost operations, reduced
selling expenses and a build in coal inventory at various mines. The
lower-cost production mix and higher productivity from our Tunnel Ridge
and Gibson South mines contributed to drive Segment Adjusted EBITDA
Expense per ton down by 13.5% to $30.93 in the 2016 Quarter compared to
$35.77 in the 2015 Quarter.
Equity in loss of affiliates decreased $22.1 million primarily due to
the elimination of losses related to our prior position as a
non-controlling equity owner in White Oak following the White Oak
Acquisition in July 2015.
Six Months Ended June 30, 2016 Compared to Six Months Ended June 30,
2015
Total revenues decreased 26.9% to $852.0 million for the six months
ended June 30, 2016 (the "2016 Period") compared to the six months ended
June 30, 2015 (the "2015 Period") due to the previously discussed
reduction of coal sales and production volumes at our Onton, Gibson
North, Elk Creek and River View mines and the absence of coal royalty
and surface facilities revenues from White Oak, offset in part by the
addition of coal sales and production volumes from the Hamilton mine
following the White Oak Acquisition.
Operating expenses decreased 29.5% to $499.8 million compared to the
2015 Period, due to the previously discussed reductions to coal
production volumes and favorable production cost mix. Equity in loss of
affiliates decreased $31.8 million due to the absence of equity in loss
of affiliates from White Oak in the 2016 Period.
The factors discussed above contributed to lower net income for the 2016
Period of $130.0 million, or EPU of $1.18, compared to $201.3 million or
EPU of $1.68 in the 2015 Period, and drove EBITDA lower in the 2016
Period to $305.4 million, compared to $374.5 million in the 2015 Period.
Regional Results and Analysis
(in millions, except per ton data)
|
|
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2016 Second Quarter
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2015 Second Quarter
|
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% Change Quarter / Quarter
|
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|
|
2016 First Quarter
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|
|
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% Change Sequential
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Illinois Basin (1)
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|
|
|
|
|
|
|
|
|
|
|
|
|
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|
Tons sold
|
|
|
|
5.509
|
|
|
|
7.739
|
|
|
(28.8
|
)%
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|
|
|
|
5.530
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|
|
|
(0.4
|
)%
|
Coal sales price per ton (2)
|
|
|
$
|
51.78
|
|
|
$
|
51.91
|
|
|
(0.3
|
)%
|
|
|
|
$
|
51.12
|
|
|
|
1.3
|
%
|
Segment Adjusted EBITDA Expense per ton (3)
|
|
|
$
|
27.99
|
|
|
$
|
32.12
|
|
|
(12.9
|
)%
|
|
|
|
$
|
30.94
|
|
|
|
(9.5
|
)%
|
Segment Adjusted EBITDA (3)
|
|
|
$
|
137.7
|
|
|
$
|
150.3
|
|
|
(8.4
|
)%
|
|
|
|
$
|
112.3
|
|
|
|
22.6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
Appalachia
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
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|
Tons sold
|
|
|
|
2.455
|
|
|
|
2.742
|
|
|
(10.5
|
)%
|
|
|
|
|
1.926
|
|
|
|
27.5
|
%
|
Coal sales price per ton (2)
|
|
|
$
|
55.24
|
|
|
$
|
59.22
|
|
|
(6.7
|
)%
|
|
|
|
$
|
59.89
|
|
|
|
(7.8
|
)%
|
Segment Adjusted EBITDA Expense per ton (3)
|
|
|
$
|
36.43
|
|
|
$
|
43.31
|
|
|
(15.9
|
)%
|
|
|
|
$
|
39.99
|
|
|
|
(8.9
|
)%
|
Segment Adjusted EBITDA (3)
|
|
|
$
|
47.1
|
|
|
$
|
45.5
|
|
|
3.5
|
%
|
|
|
|
$
|
39.4
|
|
|
|
19.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
Total (4)
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|
Tons sold
|
|
|
|
7.964
|
|
|
|
10.481
|
|
|
(24.0
|
)%
|
|
|
|
|
7.456
|
|
|
|
6.8
|
%
|
Coal sales price per ton (2)
|
|
|
$
|
53.05
|
|
|
$
|
54.13
|
|
|
(2.0
|
)%
|
|
|
|
$
|
53.82
|
|
|
|
(1.4
|
)%
|
Segment Adjusted EBITDA Expense per ton (3)
|
|
|
$
|
30.93
|
|
|
$
|
35.77
|
|
|
(13.5
|
)%
|
|
|
|
$
|
33.96
|
|
|
|
(8.9
|
)%
|
Segment Adjusted EBITDA (3)
|
|
|
$
|
187.3
|
|
|
$
|
199.9
|
|
|
(6.3
|
)%
|
|
|
|
$
|
153.0
|
|
|
|
22.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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(1)
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|
In the third quarter of 2015, ARLP realigned its segment
presentation. The Illinois Basin segment now includes the
consolidated Hamilton mine previously owned by White Oak. Prior
periods have been conformed to include our activities with White Oak
in the Illinois Basin segment.
|
(2)
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|
Sales price per ton is defined as total coal sales divided by total
tons sold.
|
(3)
|
|
For definitions of Segment Adjusted EBITDA Expense per ton and
Segment Adjusted EBITDA and related reconciliations to comparable
GAAP financial measures, please see the end of this release.
|
(4)
|
|
Total reflects consolidated results which include the other and
corporate segment and eliminations in addition to the Illinois Basin
and Appalachia segments highlighted above.
|
|
|
|
Total tons sold in the 2016 Quarter decreased 24.0% compared to the 2015
Quarter as a result of planned reductions of production volumes in both
the Illinois Basin and Appalachian regions. In the Illinois Basin, coal
sales volumes decreased 28.8% compared to the 2015 Quarter reflecting
the idling of our Onton and Gibson North mines in the fourth quarter of
2015, the planned depletion of reserves at our Elk Creek mine in the
Sequential Quarter and reduced unit shifts at our River View mine,
partially offset by additional volumes from the Hamilton mine, which we
acquired in July 2015. In Appalachia, coal sales volumes were 10.5%
lower compared to the 2015 Quarter due to the scale back of production
at our MC Mining and Mettiki mines and an inventory build at our Tunnel
Ridge mine. Compared to the Sequential Quarter, increased coal sales
volumes from the Tunnel Ridge longwall operation drove sales tons for
the 2016 Quarter higher by 27.5% in Appalachia. Due to weak coal demand
and excessive customer stockpiles, ARLP’s coal inventory remains
elevated at 4.2 million tons at the end of the 2016 Quarter, compared to
3.8 million tons at the end of the Sequential Quarter.
ARLP's total coal sales price per ton in the 2016 Quarter decreased
compared to both the 2015 and Sequential Quarters reflecting challenging
market conditions. Compared to the 2015 Quarter, reduced Illinois Basin
coal sales prices also reflect lower-priced legacy contracts at the
Hamilton mine assumed in the White Oak Acquisition. Sequentially, total
coal sales prices per ton declined modestly in the 2016 quarter as lower
coal sales price realizations in Appalachia were partially offset by
higher prices in the Illinois Basin.
Total Segment Adjusted EBITDA Expense per ton in the 2016 Quarter
decreased 13.5% and 8.9% compared to the 2015 and Sequential Quarters,
respectively, as a result of reduced expenses per ton in both the
Illinois Basin and Appalachian regions. In the Illinois Basin, Segment
Adjusted EBITDA Expense per ton decreased 12.9% compared to the 2015
Quarter due to improved productivity and recoveries at our Gibson South
mine, increased recoveries at our Warrior mine, the previously discussed
favorable production mix and the addition of lower-cost longwall
production from the Hamilton mine. Compared to the Sequential Quarter,
Segment Adjusted EBITDA Expense per ton decreased 9.5% in the Illinois
Basin primarily as a result of lower inventory charges at all Illinois
Basin mines and improved recoveries at our Gibson South mine. In
Appalachia, Segment Adjusted EBITDA Expense per ton decreased compared
to both the 2015 and Sequential Quarters primarily due to increased
production and sales volumes at our Tunnel Ridge mine resulting from
improved recoveries and fewer longwall move days, offset in part by
lower recoveries at our MC Mining operation.
Outlook
"Assessing the remainder of 2016, we are beginning to see some positive
signs in the domestic thermal coal markets," said Mr. Craft. "Rising
natural gas prices and hot summer weather have recently resulted in
increased coal burn and inventory reductions at many power plants.
Through the end of the year, forecasted weather patterns appear
favorable, the forward price curve for natural gas remains positive and
additional coal supply reductions are anticipated. We expect these
factors will support coal demand in our Illinois Basin and northern
Appalachian markets and increases our confidence in ARLP’s near term
outlook. Looking forward to 2017 and beyond, we expect the coal markets
to return to more balanced supply/demand fundamentals, leading to
improved pricing for producers. With our strategically-located, low-cost
operations, conservative balance sheet and consistently strong
performance, ARLP continues to distinguish itself from its competitors.
We remain focused on achieving best-in-class results for our industry
and committed to delivering long-term value to our unitholders."
Based on results to date and expectations for the balance of 2016, ARLP
is adjusting its 2016 full-year estimates for coal production to a range
of 33.5 to 34.5 million tons and coal sales volumes to a range of 35.0
to 36.0 million tons. ARLP currently anticipates its 2016 average coal
sales price per ton will be 2.5% to 4.5% lower at the midpoint compared
to 2015 realizations, a slight improvement over initial 2016 guidance.
Reflecting current sales volume and pricing estimates, ARLP now
anticipates 2016 revenues, excluding transportation revenues, in a range
of $1.82 to $1.91 billion.
As a result of its ongoing efforts to reduce operating expenses and
shift production to lower-cost operations, ARLP is reducing its
estimates for total Segment Adjusted EBITDA Expense per ton, which at
the 2016 midpoint is currently anticipated to be 3.5% to 6.0% below 2015
levels. Based on year-to-date performance as well as updated volume,
price and cost expectations, ARLP is increasing its 2016 estimates for
net income to a range of $270.0 to $310.0 million and EBITDA to a range
of $605.0 to $645.0 million. (For definitions of Segment Adjusted EBITDA
Expense per ton and EBITDA and related reconciliations to the most
comparable GAAP financial measures, please see the end of this release.)
ARLP is now essentially fully priced and committed for its estimated
2016 volumes and has also secured coal sales and price commitments for
approximately 24.3 million tons, 15.0 million tons and 7.9 million tons
in 2017, 2018 and 2019, respectively.
Capital expenditures of $16.9 million during the 2016 Quarter continued
to be below our expectations. As a result, we are again reducing
anticipated 2016 total capital expenditures to a range of $100.0 to
$110.0 million. In addition to these capital expenditures, ARLP
currently anticipates its current commitment to acquire oil and gas
mineral interests will be completed by the end of the year and, as a
result, is increasing 2016 estimated investments for this activity to a
range of $80.0 to $85.0 million.
A conference call regarding ARLP’s 2016 Quarter financial results is
scheduled for today at 10:00 a.m. Eastern. To participate in the
conference call, dial (855) 793-3259 and provide conference number
42634095. 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.
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 42634095. International callers should
dial (404) 537-3406 and provide the same conference number.
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, ARLP’s distributions to foreign investors are subject to
federal income tax withholding at the highest applicable tax rate.
About Alliance Resource Partners, L.P.
ARLP is a diversified producer and marketer of coal to major United
States utilities and industrial users. ARLP, the nation’s first publicly
traded master limited partnership involved in the production and
marketing of coal, is currently the second largest coal producer in the
eastern United States with mining operations in the Illinois Basin and
Appalachian coal producing regions.
ARLP currently operates nine mining complexes in Illinois, Indiana,
Kentucky, Maryland and West Virginia. ARLP also operates a coal loading
terminal on the Ohio River at Mount Vernon, Indiana.
News, unit prices and additional information about ARLP, including
filings with the Securities and Exchange Commission, are available at http://www.arlp.com.
For more information, contact the investor relations department of
Alliance Resource Partners, L.P. at (918) 295-7674 or via e-mail at investorrelations@arlp.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. These
projections do not include the potential impact of any mergers,
acquisitions or other business combinations that may occur after the
date of this release. 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 coal prices, which could affect our operating
results and cash flows; changes in competition in coal markets and our
ability to respond to such changes; legislation, regulations, and court
decisions and interpretations thereof, including those relating to the
environment and the release of greenhouse gasses, 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; risks
associated with the expansion of our operations and properties;
dependence on significant customer contracts, including renewing
existing contracts upon expiration; adjustments made in price, volume or
terms to existing coal supply agreements; changing global economic
conditions or in industries in which our 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; fluctuations
in coal demand, prices and availability; we have made investments in oil
and gas mineral interests through Cavalier Minerals JV, LLC and the
value of those investments and related cash flows may be materially
adversely affected by a continuation or worsening of depressed oil and
gas prices; our productivity levels and margins earned on our coal
sales; 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; changes in raw
material costs; changes in the availability of skilled labor; our
ability to maintain satisfactory relations with our employees; increases
in labor costs including costs of health insurance and taxes resulting
from the Affordable Care Act, 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 our 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; uncertainties in
estimating and replacing our coal reserves; a loss or reduction of
benefits from certain tax deductions and credits; difficulty obtaining
commercial property insurance, and risks associated with our
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 ARLP’s public periodic filings with the Securities and Exchange
Commission ("SEC"), including ARLP’s Annual Report on Form 10-K for the
year ended December 31, 2015, filed on February 26, 2016 and ARLP’s
Quarterly Report on Form 10-Q for the quarter ended March 31, 2016,
filed on May 10, 2016 with the SEC. Except as required by
applicable securities laws, ARLP does not intend to update its
forward-looking statements.
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ALLIANCE RESOURCE PARTNERS, L.P. AND SUBSIDIARIES
|
|
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND OPERATING DATA
|
(In thousands, except unit and per unit data)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
|
|
Six Months Ended June 30,
|
|
|
|
2016
|
|
|
2015
|
|
|
|
2016
|
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tons Sold
|
|
|
|
7,964
|
|
|
|
|
10,481
|
|
|
|
|
|
15,420
|
|
|
|
|
19,982
|
|
Tons Produced
|
|
|
|
8,363
|
|
|
|
|
9,519
|
|
|
|
|
|
17,247
|
|
|
|
|
20,021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SALES AND OPERATING REVENUES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Coal sales
|
|
|
$
|
422,469
|
|
|
|
$
|
567,288
|
|
|
|
|
$
|
823,761
|
|
|
|
$
|
1,085,027
|
|
Transportation revenues
|
|
|
|
5,482
|
|
|
|
|
7,780
|
|
|
|
|
|
12,040
|
|
|
|
|
14,928
|
|
Other sales and operating revenues
|
|
|
|
11,199
|
|
|
|
|
29,652
|
|
|
|
|
|
16,178
|
|
|
|
|
65,181
|
|
Total revenues
|
|
|
|
439,150
|
|
|
|
|
604,720
|
|
|
|
|
|
851,979
|
|
|
|
|
1,165,136
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EXPENSES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses (excluding depreciation, depletion and
amortization)
|
|
|
|
246,499
|
|
|
|
|
375,065
|
|
|
|
|
|
499,802
|
|
|
|
|
709,427
|
|
Transportation expenses
|
|
|
|
5,482
|
|
|
|
|
7,780
|
|
|
|
|
|
12,040
|
|
|
|
|
14,928
|
|
Outside coal purchases
|
|
|
|
-
|
|
|
|
|
2
|
|
|
|
|
|
-
|
|
|
|
|
324
|
|
General and administrative
|
|
|
|
17,663
|
|
|
|
|
17,542
|
|
|
|
|
|
34,901
|
|
|
|
|
34,388
|
|
Depreciation, depletion and amortization
|
|
|
|
79,145
|
|
|
|
|
79,801
|
|
|
|
|
|
160,028
|
|
|
|
|
158,069
|
|
Total operating expenses
|
|
|
|
348,789
|
|
|
|
|
480,190
|
|
|
|
|
|
706,771
|
|
|
|
|
917,136
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME FROM OPERATIONS
|
|
|
|
90,361
|
|
|
|
|
124,530
|
|
|
|
|
|
145,208
|
|
|
|
|
248,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense, net
|
|
|
|
(7,770
|
)
|
|
|
|
(8,306
|
)
|
|
|
|
|
(15,385
|
)
|
|
|
|
(16,274
|
)
|
Interest income
|
|
|
|
2
|
|
|
|
|
605
|
|
|
|
|
|
5
|
|
|
|
|
1,136
|
|
Equity in loss of affiliates, net
|
|
|
|
(37
|
)
|
|
|
|
(22,142
|
)
|
|
|
|
|
(64
|
)
|
|
|
|
(31,828
|
)
|
Other income
|
|
|
|
161
|
|
|
|
|
177
|
|
|
|
|
|
252
|
|
|
|
|
295
|
|
INCOME BEFORE INCOME TAXES
|
|
|
|
82,717
|
|
|
|
|
94,864
|
|
|
|
|
|
130,016
|
|
|
|
|
201,329
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME TAX EXPENSE (BENEFIT)
|
|
|
|
6
|
|
|
|
|
7
|
|
|
|
|
|
(3
|
)
|
|
|
|
5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCOME
|
|
|
|
82,711
|
|
|
|
|
94,857
|
|
|
|
|
|
130,019
|
|
|
|
|
201,324
|
|
LESS: NET LOSS ATTRIBUTABLE TO NONCONTROLLING INTEREST
|
|
|
|
2
|
|
|
|
|
7
|
|
|
|
|
|
4
|
|
|
|
|
20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCOME ATTRIBUTABLE TO ALLIANCE RESOURCE PARTNERS, L.P. ("NET
INCOME OF ARLP")
|
|
|
$
|
82,713
|
|
|
|
$
|
94,864
|
|
|
|
|
$
|
130,023
|
|
|
|
$
|
201,344
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GENERAL PARTNERS’ INTEREST IN NET INCOME OF ARLP
|
|
|
$
|
20,430
|
|
|
|
$
|
37,541
|
|
|
|
|
$
|
40,152
|
|
|
|
$
|
74,424
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIMITED PARTNERS’ INTEREST IN NET INCOME OF ARLP
|
|
|
$
|
62,283
|
|
|
|
$
|
57,323
|
|
|
|
|
$
|
89,871
|
|
|
|
$
|
126,920
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BASIC AND DILUTED NET INCOME OF ARLP PER LIMITED PARTNER UNIT
|
|
|
$
|
0.82
|
|
|
|
$
|
0.76
|
|
|
|
|
$
|
1.18
|
|
|
|
$
|
1.68
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DISTRIBUTIONS PAID PER LIMITED PARTNER UNIT
|
|
|
$
|
0.4375
|
|
|
|
$
|
0.6625
|
|
|
|
|
$
|
1.1125
|
|
|
|
$
|
1.3125
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WEIGHTED AVERAGE NUMBER OF UNITS OUTSTANDING – BASIC AND DILUTED
|
|
|
|
74,375,025
|
|
|
|
|
74,188,784
|
|
|
|
|
|
74,333,070
|
|
|
|
|
74,159,756
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ALLIANCE RESOURCE PARTNERS, L.P. AND SUBSIDIARIES
|
|
CONDENSED CONSOLIDATED BALANCE SHEETS
|
(In thousands, except unit data)
|
(Unaudited)
|
|
|
|
|
|
|
|
ASSETS
|
|
|
June 30,
|
|
|
December 31,
|
|
|
2016
|
|
|
2015
|
CURRENT ASSETS:
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
$
|
50,372
|
|
|
|
$
|
33,431
|
|
Trade receivables
|
|
|
|
151,824
|
|
|
|
|
122,875
|
|
Other receivables
|
|
|
|
776
|
|
|
|
|
696
|
|
Due from affiliates
|
|
|
|
438
|
|
|
|
|
190
|
|
Inventories, net
|
|
|
|
159,868
|
|
|
|
|
121,081
|
|
Advance royalties, net
|
|
|
|
4,719
|
|
|
|
|
6,820
|
|
Prepaid expenses and other assets
|
|
|
|
16,762
|
|
|
|
|
29,812
|
|
Total current assets
|
|
|
|
384,759
|
|
|
|
|
314,905
|
|
|
|
|
|
|
|
|
PROPERTY, PLANT AND EQUIPMENT:
|
|
|
|
|
|
|
Property, plant and equipment, at cost
|
|
|
|
3,001,665
|
|
|
|
|
3,044,260
|
|
Less accumulated depreciation, depletion and amortization
|
|
|
|
(1,306,825
|
)
|
|
|
|
(1,243,985
|
)
|
Total property, plant and equipment, net
|
|
|
|
1,694,840
|
|
|
|
|
1,800,275
|
|
|
|
|
|
|
|
|
OTHER ASSETS:
|
|
|
|
|
|
|
Advance royalties, net
|
|
|
|
32,257
|
|
|
|
|
21,295
|
|
Equity investments in affiliate
|
|
|
|
96,670
|
|
|
|
|
64,509
|
|
Goodwill
|
|
|
|
136,399
|
|
|
|
|
136,399
|
|
Other long-term assets
|
|
|
|
22,931
|
|
|
|
|
23,903
|
|
Total other assets
|
|
|
|
288,257
|
|
|
|
|
246,106
|
|
TOTAL ASSETS
|
|
|
$
|
2,367,856
|
|
|
|
$
|
2,361,286
|
|
LIABILITIES AND PARTNERS' CAPITAL
|
|
|
|
|
|
|
CURRENT LIABILITIES:
|
|
|
|
|
|
|
Accounts payable
|
|
|
$
|
58,471
|
|
|
|
$
|
83,597
|
|
Due to affiliates
|
|
|
|
15
|
|
|
|
|
129
|
|
Accrued taxes other than income taxes
|
|
|
|
20,447
|
|
|
|
|
15,621
|
|
Accrued payroll and related expenses
|
|
|
|
34,608
|
|
|
|
|
37,031
|
|
Accrued interest
|
|
|
|
282
|
|
|
|
|
306
|
|
Workers' compensation and pneumoconiosis benefits
|
|
|
|
8,702
|
|
|
|
|
8,688
|
|
Current capital lease obligations
|
|
|
|
27,741
|
|
|
|
|
19,764
|
|
Other current liabilities
|
|
|
|
14,613
|
|
|
|
|
18,929
|
|
Current maturities, long-term debt, net
|
|
|
|
686,356
|
|
|
|
|
238,086
|
|
Total current liabilities
|
|
|
|
851,235
|
|
|
|
|
422,151
|
|
LONG-TERM LIABILITIES:
|
|
|
|
|
|
|
Long-term debt, excluding current maturities, net
|
|
|
|
144,932
|
|
|
|
|
579,420
|
|
Pneumoconiosis benefits
|
|
|
|
61,960
|
|
|
|
|
60,077
|
|
Accrued pension benefit
|
|
|
|
38,615
|
|
|
|
|
39,031
|
|
Workers' compensation
|
|
|
|
49,317
|
|
|
|
|
47,486
|
|
Asset retirement obligations
|
|
|
|
124,136
|
|
|
|
|
122,434
|
|
Long-term capital lease obligations
|
|
|
|
98,586
|
|
|
|
|
80,150
|
|
Other liabilities
|
|
|
|
14,855
|
|
|
|
|
21,174
|
|
Total long-term liabilities
|
|
|
|
532,401
|
|
|
|
|
949,772
|
|
Total liabilities
|
|
|
|
1,383,636
|
|
|
|
|
1,371,923
|
|
|
|
|
|
|
|
|
COMMITMENTS AND CONTINGENCIES
|
|
|
|
|
|
|
PARTNERS' CAPITAL:
|
|
|
|
|
|
|
Alliance Resource Partners, L.P. (“ARLP”) Partners’ Capital:
|
|
|
|
|
|
|
Limited Partners - Common Unitholders 74,375,025 and 74,188,784
units outstanding, respectively
|
|
|
|
1,290,542
|
|
|
|
|
1,280,218
|
|
General Partners' deficit
|
|
|
|
(275,902
|
)
|
|
|
|
(258,883
|
)
|
Accumulated other comprehensive loss
|
|
|
|
(34,301
|
)
|
|
|
|
(34,557
|
)
|
Total ARLP Partners' Capital
|
|
|
|
980,339
|
|
|
|
|
986,778
|
|
Noncontrolling interest
|
|
|
|
3,881
|
|
|
|
|
2,585
|
|
Total Partners' Capital
|
|
|
|
984,220
|
|
|
|
|
989,363
|
|
TOTAL LIABILITIES AND PARTNERS' CAPITAL
|
|
|
$
|
2,367,856
|
|
|
|
$
|
2,361,286
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ALLIANCE RESOURCE PARTNERS, L.P. AND SUBSIDIARIES
|
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(In thousands)
|
(Unaudited)
|
|
|
|
|
|
|
|
Six Months Ended June 30,
|
|
|
|
2016
|
|
|
2015
|
|
|
|
|
|
|
|
CASH FLOWS PROVIDED BY OPERATING ACTIVITIES
|
|
|
$
|
212,342
|
|
|
|
$
|
338,880
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
|
Property, plant and equipment:
|
|
|
|
|
|
|
Capital expenditures
|
|
|
|
(48,602
|
)
|
|
|
|
(107,758
|
)
|
Changes in accounts payable and accrued liabilities
|
|
|
|
(10,894
|
)
|
|
|
|
(5,797
|
)
|
Proceeds from sale of property, plant and equipment
|
|
|
|
749
|
|
|
|
|
243
|
|
Purchases of equity investments in affiliates
|
|
|
|
(33,185
|
)
|
|
|
|
(30,757
|
)
|
Payments for acquisitions of businesses, net of cash acquired
|
|
|
|
-
|
|
|
|
|
(28,078
|
)
|
Advances/loans to affiliate
|
|
|
|
-
|
|
|
|
|
(7,300
|
)
|
Other
|
|
|
|
960
|
|
|
|
|
1,807
|
|
Net cash used in investing activities
|
|
|
|
(90,972
|
)
|
|
|
|
(177,640
|
)
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
Borrowings under securitization facility
|
|
|
|
32,100
|
|
|
|
|
-
|
|
Payments under securitization facility
|
|
|
|
(27,700
|
)
|
|
|
|
-
|
|
Payments on term loan
|
|
|
|
(56,250
|
)
|
|
|
|
(12,500
|
)
|
Borrowings under revolving credit facilities
|
|
|
|
140,000
|
|
|
|
|
363,000
|
|
Payments under revolving credit facilities
|
|
|
|
(75,000
|
)
|
|
|
|
(110,000
|
)
|
Payment on long-term debt
|
|
|
|
-
|
|
|
|
|
(205,000
|
)
|
Proceeds on capital lease transactions
|
|
|
|
33,881
|
|
|
|
|
-
|
|
Payments on capital lease obligations
|
|
|
|
(9,660
|
)
|
|
|
|
(667
|
)
|
Contributions to consolidated company from affiliate noncontrolling
interest
|
|
|
|
1,300
|
|
|
|
|
1,147
|
|
Net settlement of employee withholding taxes on vesting of Long-Term
Incentive Plan
|
|
|
|
(1,336
|
)
|
|
|
|
(2,719
|
)
|
Cash contributions by General Partners
|
|
|
|
47
|
|
|
|
|
95
|
|
Distributions paid to Partners
|
|
|
|
(141,811
|
)
|
|
|
|
(170,597
|
)
|
Other
|
|
|
|
-
|
|
|
|
|
(5,321
|
)
|
Net cash used in financing activities
|
|
|
|
(104,429
|
)
|
|
|
|
(142,562
|
)
|
|
|
|
|
|
|
|
NET CHANGE IN CASH AND CASH EQUIVALENTS
|
|
|
|
16,941
|
|
|
|
|
18,678
|
|
|
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
|
|
|
|
33,431
|
|
|
|
|
24,601
|
|
|
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS AT END OF PERIOD
|
|
|
$
|
50,372
|
|
|
|
$
|
43,279
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of GAAP "net income" to non-GAAP
"EBITDA" and non-GAAP "Distributable Cash Flow" (in thousands).
EBITDA is defined as net income (prior to the allocation of
noncontrolling interest) before net interest expense, income taxes and
depreciation, depletion and amortization. Distributable cash flow
("DCF") is defined as EBITDA excluding equity in income or loss of
affiliates, interest expense (before capitalized interest), interest
income, income taxes and estimated maintenance capital expenditures.
Distribution coverage ratio ("DCR") is defined as DCF divided by
distributions paid to partners.
Management believes that the presentation of such additional financial
measures provides useful information to investors regarding our
performance and results of operations because these measures, when used
in conjunction with related GAAP financial measures, (i) provide
additional information about our core operating performance and ability
to generate and distribute cash flow, (ii) provide investors with the
financial analytical framework upon which management bases financial,
operational, compensation and planning decisions and (iii) present
measurements that investors, rating agencies and debt holders have
indicated are useful in assessing us and our results of operations.
EBITDA, DCF and DCR should not be considered as alternatives to net
income, income from operations, cash flows from operating activities or
any other measure of financial performance presented in accordance with
generally accepted accounting principles. EBITDA and DCF are not
intended to represent cash flow and do not represent the measure of cash
available for distribution. Our method of computing EBITDA, DCF and DCR
may not be the same method used to compute similar measures reported by
other companies, or EBITDA, DCF and DCR may be computed differently by
us in different contexts (i.e. public reporting versus computation under
financing agreements).
|
|
|
Three Months Ended June 30,
|
|
|
|
Six Months Ended June 30,
|
|
|
|
Three Months Ended March 31,
|
|
|
|
Year Ended December 31,
|
|
|
|
2016
|
|
|
2015
|
|
|
|
2016
|
|
|
2015
|
|
|
|
2016
|
|
|
|
2016E Midpoint
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
$
|
82,711
|
|
|
|
$
|
94,857
|
|
|
|
|
$
|
130,019
|
|
|
|
$
|
201,324
|
|
|
|
|
$
|
47,308
|
|
|
|
|
$
|
290,000
|
|
Depreciation, depletion and amortization
|
|
|
|
79,145
|
|
|
|
|
79,801
|
|
|
|
|
|
160,028
|
|
|
|
|
158,069
|
|
|
|
|
|
80,883
|
|
|
|
|
|
305,500
|
|
Interest expense, net
|
|
|
|
7,814
|
|
|
|
|
7,855
|
|
|
|
|
|
15,653
|
|
|
|
|
15,504
|
|
|
|
|
|
7,839
|
|
|
|
|
|
29,500
|
|
Capitalized interest
|
|
|
|
(46
|
)
|
|
|
|
(154
|
)
|
|
|
|
|
(273
|
)
|
|
|
|
(366
|
)
|
|
|
|
|
(227
|
)
|
|
|
|
|
-
|
|
Income tax expense (benefit)
|
|
|
|
6
|
|
|
|
|
7
|
|
|
|
|
|
(3
|
)
|
|
|
|
5
|
|
|
|
|
|
(9
|
)
|
|
|
|
|
-
|
|
EBITDA
|
|
|
|
169,630
|
|
|
|
|
182,366
|
|
|
|
|
|
305,424
|
|
|
|
|
374,536
|
|
|
|
|
|
135,794
|
|
|
|
|
|
625,000
|
|
Equity in loss of affiliates, net
|
|
|
|
37
|
|
|
|
|
22,142
|
|
|
|
|
|
64
|
|
|
|
|
31,828
|
|
|
|
|
|
27
|
|
|
|
|
|
1,600
|
|
Interest expense, net
|
|
|
|
(7,814
|
)
|
|
|
|
(7,855
|
)
|
|
|
|
|
(15,653
|
)
|
|
|
|
(15,504
|
)
|
|
|
|
|
(7,839
|
)
|
|
|
|
|
(29,500
|
)
|
Income tax (expense) benefit
|
|
|
|
(6
|
)
|
|
|
|
(7
|
)
|
|
|
|
|
3
|
|
|
|
|
(5
|
)
|
|
|
|
|
9
|
|
|
|
|
|
-
|
|
Estimated maintenance capital expenditures (1)
|
|
|
|
(39,724
|
)
|
|
|
|
(47,214
|
)
|
|
|
|
|
(81,923
|
)
|
|
|
|
(99,304
|
)
|
|
|
|
|
(42,199
|
)
|
|
|
|
|
(163,994
|
)
|
Distributable Cash Flow
|
|
|
$
|
122,123
|
|
|
|
$
|
149,432
|
|
|
|
|
$
|
207,915
|
|
|
|
$
|
291,551
|
|
|
|
|
$
|
85,792
|
|
|
|
|
$
|
433,106
|
|
Distributions paid to partners
|
|
|
$
|
53,062
|
|
|
|
$
|
86,241
|
|
|
|
|
$
|
141,811
|
|
|
|
$
|
170,597
|
|
|
|
|
$
|
88,749
|
|
|
|
|
$
|
244,600
|
|
Distribution Coverage Ratio
|
|
|
|
2.30
|
|
|
|
|
1.73
|
|
|
|
|
|
1.47
|
|
|
|
|
1.71
|
|
|
|
|
|
0.97
|
|
|
|
|
|
1.77
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Our maintenance capital expenditures, as defined under
the terms of our partnership agreement, are those capital expenditures
required to maintain, over the long-term, the operating capacity of our
capital assets. We estimate maintenance capital expenditures on an
annual basis based upon a five-year planning horizon. For the 2016
planning horizon, average annual estimated maintenance capital
expenditures are assumed to be $4.75 per produced ton compared to the
estimated $4.96 per produced ton in 2015. Our actual maintenance capital
expenditures vary depending on various factors, including maintenance
schedules and timing of capital projects, among others. We annually
disclose our actual maintenance capital expenditures in our Form 10-K
filed with the Securities and Exchange Commission.
Reconciliation of GAAP "Operating Expenses" to
non-GAAP "Segment Adjusted EBITDA Expense per ton" and Reconciliation of
non-GAAP "EBITDA" to "Segment Adjusted EBITDA per ton" (in thousands,
except per ton data).
Segment Adjusted EBITDA Expense per ton includes operating expenses,
outside coal purchases and other income divided by tons sold.
Transportation expenses are excluded as these expenses are passed
through to our customers and, consequently, we do not realize any margin
on transportation revenues. Segment Adjusted EBITDA Expense is used as a
supplemental financial measure by our management to assess the operating
performance of our segments. Segment Adjusted EBITDA Expense is a key
component of EBITDA in addition to coal sales and other sales and
operating revenues. The exclusion of corporate general and
administrative expenses from Segment Adjusted EBITDA Expense allows
management to focus solely on the evaluation of segment operating
performance as it primarily relates to our operating expenses. Outside
coal purchases are included in Segment Adjusted EBITDA Expense because
tons sold and coal sales include sales from outside coal purchases.
|
|
|
Three Months Ended June 30,
|
|
|
|
Three Months Ended March 31,
|
|
|
2016
|
|
|
2015
|
|
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
Operating expense
|
|
|
$
|
246,499
|
|
|
|
$
|
375,065
|
|
|
|
|
$
|
253,303
|
|
Outside coal purchases
|
|
|
|
-
|
|
|
|
|
2
|
|
|
|
|
|
-
|
|
Other income
|
|
|
|
(161
|
)
|
|
|
|
(177
|
)
|
|
|
|
|
(91
|
)
|
Segment Adjusted EBITDA Expense
|
|
|
$
|
246,338
|
|
|
|
$
|
374,890
|
|
|
|
|
$
|
253,212
|
|
Divided by tons sold
|
|
|
|
7,964
|
|
|
|
|
10,481
|
|
|
|
|
|
7,456
|
|
Segment Adjusted EBITDA Expense per ton
|
|
|
$
|
30.93
|
|
|
|
$
|
35.77
|
|
|
|
|
$
|
33.96
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment Adjusted EBITDA per ton is defined as net income (prior to the
allocation of noncontrolling interest) before net interest expense,
income taxes, depreciation, depletion and amortization and general and
administrative expenses divided by tons sold. Segment Adjusted EBITDA
removes the impact of general and administrative expenses from EBITDA
(discussed above) to allow management to focus solely on the evaluation
of segment operating performance.
|
|
|
Three Months Ended June 30,
|
|
|
|
Three Months Ended March 31,
|
|
|
2016
|
|
|
2015
|
|
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA (See reconciliation to GAAP above)
|
|
|
$
|
169,630
|
|
|
$
|
182,366
|
|
|
|
$
|
135,794
|
General and administrative
|
|
|
|
17,663
|
|
|
|
17,542
|
|
|
|
|
17,238
|
Segment Adjusted EBITDA
|
|
|
$
|
187,293
|
|
|
$
|
199,908
|
|
|
|
$
|
153,032
|
Divided by tons sold
|
|
|
|
7,964
|
|
|
|
10,481
|
|
|
|
|
7,456
|
Segment Adjusted EBITDA per ton
|
|
|
$
|
23.52
|
|
|
$
|
19.07
|
|
|
|
$
|
20.52
|
View source version on businesswire.com: http://www.businesswire.com/news/home/20160726005323/en/ Copyright Business Wire 2016
Source: Business Wire
(July 26, 2016 - 7:00 AM EDT)
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