Alliance Resource Partners, L.P. (NASDAQ: ARLP) today reported
financial and operating results for the quarter ended March 31,
2019 (the "2019 Quarter"). Increased coal sales volumes, improved
coal sales prices and the addition of oil & gas royalty
revenues in the 2019 Quarter drove total revenues higher by 15.2%
to $526.6 million, compared to $457.1 million for the quarter ended
March 31, 2018 (the "2018 Quarter"). Higher revenues, combined with
gains related to the AllDale transaction and the redemption of our
preferred interest in Kodiak (each described in more detail below)
led to increased net income attributable to ARLP, which rose 77.3%
to $276.4 million for the 2019 Quarter, or $2.12 per basic and
diluted limited partner unit, compared to $155.9 million, or $1.16
per basic and diluted limited partner unit, for the 2018 Quarter.
EBITDA also increased 57.0% in the 2019 Quarter to $358.8 million
compared to $228.5 million in the 2018 Quarter. Excluding the
impact of the gain related to the AllDale acquisition in the 2019
Quarter and a gain on settlement of litigation in the 2018 Quarter,
Adjusted EBITDA increased to $188.8 million in the 2019 Quarter,
compared to $148.5 million for the 2018 Quarter. (Unless otherwise
noted, all references in this release to "net income" refer to "net
income attributable to ARLP." For a definition of EBITDA, Adjusted
EBITDA and related reconciliations to comparable GAAP financial
measures, please see the end of this release.)
As previously announced on April 26, 2019, the Board of
Directors of ARLP's general partner (the "Board") increased the
cash distribution to unitholders for the 2019 Quarter to $0.535 per
unit (an annualized rate of $2.14 per unit), payable on May 15,
2019 to all unitholders of record as of the close of trading on May
8, 2019. The announced distribution represents a 3.9% increase over
the cash distribution of $0.515 per unit for the 2018 Quarter and a
0.9% increase over the cash distribution of $0.53 per unit for the
quarter ended December 31, 2018 (the "Sequential Quarter").
"ARLP opened 2019 with strong financial and operating results,
posting increased coal sales and production volumes, higher per ton
coal price realizations and lower costs per ton during the first
quarter," said Joseph W. Craft III, Chairman, President and Chief
Executive Officer. "With completion of the AllDale transaction in
early January, the increased contribution from our oil & gas
royalty platform also contributed to ARLP’s increased revenues, net
income and EBITDA for the 2019 Quarter."
Consolidated Financial Results
Three Months Ended March 31, 2019 Compared to Three Months Ended
March 31, 2018
Coal Operations –
Coal sales revenues for the 2019 Quarter
increased 12.4% to $476.0 million, compared to $423.6 million for
the 2018 Quarter, due to increased coal sales volumes and prices.
Coal sales volumes of 10.3 million tons were 9.8% higher than the
2018 Quarter, primarily reflecting strong sales performance at our
Tunnel Ridge mine, increased volumes from our River View mine due
to the addition of two production units in the second half of 2018
and the resumption of operations in the second quarter of 2018 at
our Gibson North mine. Coal sales price realizations increased 2.3%
to $46.12 per ton sold in the 2019 Quarter, compared to $45.07 per
ton sold during the 2018 Quarter. Transportation revenues and
expenses increased to $30.2 million in the 2019 Quarter from $19.8
million in the 2018 Quarter primarily due to an increased
transportation cost of coal shipped to international markets.
Compared to the 2018 Quarter, operating
expenses increased 9.2% to $302.7 million, resulting from increased
coal sales volumes. Total Segment Adjusted EBITDA Expense per ton
for our coal operations decreased 1.9% in the 2019 Quarter to
$29.17 per ton, compared to $29.74 per ton in the 2018 Quarter, due
to increased volumes from our lower cost mines. (For a definition
of Segment Adjusted EBITDA Expense and related reconciliation to
comparable GAAP financial measures, please see the end of this
release.)
Minerals –
As previously announced on January 3, 2019,
ARLP acquired all of the limited partner interests not owned by
Cavalier Minerals JV, LLC in AllDale Minerals, LP and AllDale
Minerals II, LP (collectively, "AllDale I & II") and the
general partner interests in AllDale I & II (the "Acquisition")
thereby gaining control of approximately 43,000 net royalty acres
in premier oil and gas resource plays. Following the Acquisition,
results related to the mineral interests we now control are
included in ARLP’s consolidated results while activity related to
our limited partner interest in AllDale Minerals III, L.P. continue
to be reflected as equity method investment income.
For the 2019 Quarter, oil & gas royalties
contributed $171.8 million and $179.0 million to ARLP’s net income
and EBITDA, respectively, compared to a contribution of $3.6
million to net income and EBITDA in the 2018 Quarter. The
contribution to the 2019 Quarter includes a non-cash acquisition
gain of $177.0 million, of which $7.1 million was attributable to
noncontrolling interest, to reflect the fair value of the interests
in AllDale I and II we already owned at the time of the
Acquisition. Excluding the impact of this acquisition gain,
Adjusted EBITDA related to oil & gas royalties was $9.1 million
for the 2019 Quarter.
As previously announced, on February 8, 2019, Kodiak Gas
Services, LLC redeemed our preferred equity interest for $135.0
million cash. ARLP’s equity securities income increased $9.2
million in the 2019 Quarter primarily as a result of the
redemption.
In the 2018 Quarter, ARLP finalized an agreement with a customer
and certain of its affiliates to settle litigation we initiated in
2015. The settlement agreement provided for a $93.0 million cash
payment to ARLP, future conditional coal supply commitments,
continued export trans-loading capacity for our Appalachian mines
and the acquisition of 57 million tons of additional coal reserves
near our Tunnel Ridge operation. A settlement gain of $80.0 million
was recorded in the 2018 Quarter reflecting the cash payment
received net of certain costs associated with the gain.
Depreciation, depletion and amortization increased 15.0% to
$71.1 million in the 2019 Quarter primarily due to increased coal
sales volumes mentioned above and depletion from production of our
oil & gas royalty interests in the 2019 Quarter.
Segment Results and Analysis
% Change 2019
First 2018 First Quarter / 2018 Fourth
% Change (in millions, except per ton and per BOE
data) Quarter Quarter Quarter
Quarter Sequential
Coal
Operations
Illinois
Basin
Tons sold 7.673 7.008 9.5 % 7.981 (3.9) % Coal sales price per ton
(1) $ 41.35 $ 39.39 5.0 % $ 40.26 2.7 % Segment Adjusted EBITDA
Expense per ton (2) $ 25.52 $ 25.94 (1.6) % $ 26.16 (2.4) % Segment
Adjusted EBITDA (2) $ 122.0 $ 94.8 28.6 % $ 112.9 8.1 %
Appalachia
Tons sold 2.648 2.390 10.8 % 2.483 6.6 % Coal sales price per ton
(1) $ 59.46 $ 60.79 (2.2) % $ 64.03 (7.1) % Segment Adjusted EBITDA
Expense per ton (2) $ 37.67 $ 38.70 (2.7) % $ 38.98 (3.4) % Segment
Adjusted EBITDA (2) $ 58.7 $ 53.6 9.4 % $ 62.9 (6.8) %
Total
Coal
Tons sold 10.321 9.398 9.8 % 10.464 (1.4) % Coal sales price per
ton (1) $ 46.12 $ 45.07 2.3 % $ 46.34 (0.5) % Segment Adjusted
EBITDA Expense per ton (2) $ 29.17 $ 29.74 (1.9) % $ 29.75 (1.9) %
Segment Adjusted EBITDA (2) $ 184.6 $ 157.9 16.9 % $ 184.2 0.2 %
Minerals
(3)
Volume - BOE 0.252 — n/m — n/m Volume - oil percentage of BOE 53.2
% — n/m — n/m Average sales price - BOE (4) $ 41.20 $ — n/m $ — n/m
Segment Adjusted EBITDA Expense (2) $ 1.8 $ — n/m $ — n/m Segment
Adjusted EBITDA (2), (3) $ 9.1 $ 3.6 n/m $ 7.3 24.4 %
Consolidated
Total (5)
Total revenues $ 526.6 $ 457.1 15.2 % $ 531.8 (1.0) % Segment
Adjusted EBITDA Expense (2) $ 302.9 $ 279.5 8.4 % $ 311.3 (2.7) %
Segment Adjusted EBITDA (2) $ 206.6 $ 165.2 25.1 % $ 195.6 5.6 %
______________________________
n/m - Percentage change not meaningful. (1) Coal sales price per
ton is defined as total coal sales divided by total tons sold. (2)
For definitions of Segment Adjusted EBITDA Expense and Segment
Adjusted EBITDA and related reconciliations to comparable GAAP
financial measures, please see the end of this release. Segment
Adjusted EBITDA Expense per ton is defined as Segment Adjusted
EBITDA Expense – Coal (as reflected in the reconciliation table at
the end of this release) divided by total tons sold. (3) We
restructured our reportable segments in the 2019 Quarter to include
our consolidated oil & gas mineral interests held by AllDale I
& II and our equity method investment in AllDale Minerals III,
LP (collectively with AllDale I & II, the "AllDale
Partnerships") in a new Minerals reportable segment. The 2018 and
Sequential Quarters include our equity method investment income
from the AllDale Partnerships prior to the Acquisition. (4) Average
sales price - BOE is defined as royalty revenues excluding lease
bonus revenue divided by total barrels of oil equivalent ("Boe").
Boe is calculated on a 6:1 basis (6,000 cubic feet of natural gas
to one barrel of oil). (5) Total reflects consolidated results,
which include our other and corporate category and eliminations in
addition to the Illinois Basin, Appalachia and Minerals segments
highlighted above.
The resumption of operations at our Gibson North mine in the
second quarter of 2018 and the addition of two production units at
the River View mine in the second half of 2018 drove Illinois Basin
coal sales volumes in the 2019 Quarter higher by 9.5% to 7.7
million tons compared to the 2018 Quarter. Sequentially, coal sales
tons in the Illinois Basin decreased 3.9% due to lower sales
volumes from our Gibson Complex mines, partially offset by
increases at River View. Strong sales performance at our Tunnel
Ridge longwall operation led coal sales volumes for the 2019
Quarter higher in Appalachia by 10.8% and 6.6% compared to the 2018
and Sequential Quarters, respectively.
ARLP ended the 2019 Quarter with total coal inventory of 1.6
million tons, a reduction of 0.2 million tons compared to the end
of the 2018 Quarter. Coal inventory increased 1.0 million tons
compared to the end of the Sequential Quarter, primarily due to
increased in-transit tons resulting from river transportation
disruptions in the 2019 Quarter.
Illinois Basin coal sales price per ton sold in the 2019 Quarter
increased 5.0% due to improved domestic market conditions and
higher export sales prices compared to the 2018 Quarter. In
Appalachia, coal sales price per ton decreased 7.1% compared to the
Sequential Quarter due to decreased price realizations at our MC
Mining and Tunnel Ridge mines, partially offset by an increased mix
of higher-priced metallurgical coal at our Mettiki mine.
In the Illinois Basin, Segment Adjusted EBITDA Expense per ton
decreased 1.6% compared to the 2018 Quarter primarily due to
increased sales of lower-cost production from our River View and
Gibson North mines and improved recoveries from our Hamilton mine
in the 2019 Quarter. Increased production from our lower-cost mines
in the 2019 Quarter also resulted in a 2.4% reduction of Segment
Adjusted EBITDA Expense per ton in the Illinois Basin compared to
the Sequential Quarter. In Appalachia, Segment Adjusted EBITDA
Expense per ton decreased 2.7% and 3.4% compared to the 2018 and
Sequential Quarters, respectively, due to increased volumes and
improved recoveries from our Tunnel Ridge mine in the 2019
Quarter.
Total Segment Adjusted EBITDA increased 25.1% compared to the
2018 Quarter primarily due to improved performance from our coal
operations as discussed above. In addition, Total Segment Adjusted
EBITDA compared to the 2018 and Sequential Quarters benefited from
the Acquisition in the 2019 Quarter. Segment Adjusted EBITDA from
our Royalty segment increased by $5.5 million and $1.8 million
compared to the 2018 and Sequential Quarters, respectively.
Market Update and Outlook
"Focusing on the U.S., ARLP’s teams effectively managed around
the disruptive weather conditions encountered during the 2019
Quarter," said Mr. Craft. "Unprecedented flooding and high water
levels significantly disrupted barge deliveries throughout the
river and port systems, delaying the shipment of approximately
750,000 tons of ARLP’s expected deliveries during the 2019 Quarter.
Looking ahead, once river and gulf port conditions return to
normal, we anticipate ARLP’s delayed shipments will be made up over
the next several months. We also expect lower customer inventory
levels in the eastern U.S. should support utility coal purchases in
the second half of 2019, allowing us to meet our domestic sales
target of approximately 32.5 million tons for the year — a 10% gain
over 2018 results."
Mr. Craft continued, "Internationally, transportation
congestion, falling natural gas prices in Europe, and aggressive
discounting by foreign producers have created pressure in the
seaborne thermal coal markets, driving all international thermal
indexes significantly lower. Although we continue to view long term
fundamentals for international coal favorably and expect current
market conditions to improve, the timing of this improvement over
the balance of 2019 is unclear. In response, we are lowering our
2019 target for export coal sales to approximately 11.0 million
tons and delaying our planned growth ramp for Illinois Basin coal
volumes by approximately 1.0 million tons this year. ARLP now
anticipates full year 2019 results near the lower end of guidance
ranges for total coal sales and production tons, revenues, net
income and EBITDA. Combining our coal outlook with increased
contributions from ARLP’s oil & gas royalty platform, ARLP
plans to deliver solid year-over-year growth in 2019 and generate
healthy distributable cash flow supporting our continuing goal of
increasing quarterly unitholder distributions while maintaining a
comfortable coverage ratio."
ARLP is providing the following 2019 full-year guidance for its
operating and investment activities:
2019 Full Year Guidance
Coal
Volumes (Million
Short Tons)
Illinois Basin Production 32.8 — 33.8 Appalachia Production 10.7 —
11.2 Total Coal Production 43.5 — 45.0 Illinois Basin Sales
Tons 32.9 — 33.9 Appalachia Sales Tons 10.6 — 11.1 Total Sales Tons
43.5 — 45.0 Committed & Priced Sales Tons 2019 —
Domestic 30.3 2019 — Export 8.6 2020 — Domestic 21.6 2020 — Exports
—
Per Ton
Estimates
Coal Sales Price per ton sold (1) ~ $44.75 — $45.25 Segment
Adjusted EBITDA Expense per ton sold (2) ~ $28.20 — $29.15 Segment
Adjusted EBITDA per ton sold (2) ~ $17.25 — $17.45
Minerals
Net Average Daily Production (Boe/d) 3,400 — 3,600
Percentage Oil ~ 59.0% Production and Ad Valorem Taxes (% of
Revenue) ~6.1% EBITDA (3) contribution from Minerals (4) –
excluding AllDale Gain (5) $37.0 — $47.0 million
Consolidated
Revenues (Excluding Transportation Revenues) $2.04 — $2.14 billion
EBITDA (3) Consolidated — excluding AllDale Gain (5) $720.0 —
$760.0 million Net Income Attributable to ARLP $525.5 — $565.5
million Depreciation, depletion and amortization $305.0 — $330.0
million Capital Expenditures and Investments (6) $360.0 — $400.0
million
______________________________
(1) Sales price per ton is defined as total coal sales divided by
total tons sold. (2) For definitions of Segment Adjusted EBITDA
Expense and Segment Adjusted EBITDA and related reconciliations to
comparable GAAP financial measures, please see the end of this
release. Segment Adjusted EBITDA Expense per ton excludes Minerals
and Segment Adjusted EBITDA per ton excludes Minerals and equity
securities income. (3) For a definition of EBITDA and related
reconciliations to comparable GAAP financial measures, please see
the end of this release. (4) The estimated EBITDA contribution from
Minerals is subject to a number of factors including estimated
drilling activity, oil and gas production volumes and price
realizations, each of which is subject to change. (5) In the first
quarter of 2019, ARLP recorded a non-cash gain on acquisition of
$170.0 million, net of $7.1 million allocated to noncontrolling
interest, to reflect the fair value of its previous investments in
the AllDale I and II partnerships. (6) Capital expenditures in 2019
are primarily related to maintenance capital expenditures for
ARLP’s coal operations, including $40.0 - $45.0 million for
development of the Excel Mine No. 5, and $40.0 - $ 45.0 million of
growth capital to support increased production at our River View
and Gibson South mines. Considering its current five-year planning
horizon, ARLP is estimating total average maintenance capital
expenditures for its coal operations of approximately $5.57 per ton
produced for long-term distribution planning purposes.
A conference call regarding ARLP's 2019 Quarter financial
results is scheduled for today at 10:00 a.m. Eastern. To
participate in the conference call, dial (877) 506-1589 and request
to be connected to the Alliance Resource Partners, L.P. earnings
conference call. Canadian callers should dial (855) 669-9657 and
all other international callers should dial (412) 317-5240 and
request to be connected to the same call. 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 US Toll
Free (877) 344-7529; International Toll (412) 317-0088; Canada Toll
Free (855) 669-9658 and request to be connected to replay access
code 10130398.
About Alliance Resource Partners, L.P.
ARLP is a diversified natural resource company that generates
income from coal production and oil and gas mineral interests
located in strategic producing regions across the United
States.
ARLP generates income from coal produced at eight mining
complexes it currently operates in Illinois, Indiana, Kentucky,
Maryland and West Virginia. ARLP also operates a coal loading
terminal on the Ohio River at Mount Vernon, Indiana. ARLP markets
its coal production to major domestic and international utilities
and industrial users and is currently the second largest coal
producer in the eastern United States.
ARLP generates royalty income from mineral interests it owns in
premier oil and gas producing regions in the United States,
primarily the Anadarko, Permian, Williston and Appalachian
basins.
In addition, ARLP also generates income from a variety of other
sources.
News, unit prices and additional information about ARLP,
including filings with the Securities and Exchange Commission
("SEC"), are available at http://www.arlp.com. For more
information, contact the investor relations department of ARLP 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. We have included more information below
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 domestic and international coal markets
and our ability to respond to such changes; legislation,
regulations, and court decisions and interpretations thereof, both
domestic and foreign, including those relating to the environment
and the release of greenhouse gases, 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; recent action and the possibility of future action on
trade made by United States and foreign governments; the effect of
new tariffs and other trade measures; 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;
changes in oil & gas prices, which could, among other things,
affect our investments in oil & gas mineral interests; our
productivity levels and margins earned on our coal sales; decline
in or change in 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, mine fires, mine floods or other interruptions; results
of litigation, including claims not yet asserted; foreign currency
fluctuations that could adversely affect the competitiveness of our
coal abroad; 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 post-mine reclamation as well as pension, black lung
benefits and other post-retirement benefit liabilities;
uncertainties in estimating and replacing our coal reserves;
uncertainties in estimating and replacing our oil & gas
reserves; uncertainties in the amount of oil & gas production
due to the level of drilling and completion activity by the
operators of our oil & gas properties; a loss or reduction of
benefits from certain tax deductions and credits; difficulty
obtaining commercial property insurance, and risks associated with
our participation 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 SEC, including
ARLP's Annual Report on Form 10-K for the year ended December 31,
2018, filed on February 22, 2019 with the SEC. Except as
required by applicable securities laws, ARLP does not intend to
update its forward-looking statements.
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 March 31, 2019
2018 Tons Sold 10,321 9,398
Tons
Produced 11,323 10,482
Mineral Interest Volumes (BOE)
252 —
SALES AND OPERATING REVENUES: Coal sales $
476,016 $ 423,610 Royalty revenues 10,728 — Transportation revenues
30,238 19,785 Other sales and operating revenues 9,620
13,727 Total revenues 526,602
457,122
EXPENSES: Operating expenses
(excluding depreciation, depletion and amortization) 302,728
277,238 Transportation expenses 30,238 19,785 Outside coal
purchases — 1,374 General and administrative 17,812 16,651
Depreciation, depletion and amortization 71,139 61,848 Settlement
gain — (80,000 ) Total operating expenses
421,917 296,896
INCOME FROM
OPERATIONS 104,685 160,226 Interest expense, net (11,422
) (10,858 ) Interest income 91 65 Equity method investment income
324 3,736 Equity securities income 12,906 3,724 Acquisition gain
177,043 — Other expense (129 ) (847 )
INCOME
BEFORE INCOME TAXES 283,498 156,046
INCOME TAX
BENEFIT (106 ) (10 )
NET INCOME
283,604 156,056 LESS: NET INCOME ATTRIBUTABLE TO
NONCONTROLLING INTEREST (7,176 ) (148 )
NET
INCOME ATTRIBUTABLE TO ALLIANCE RESOURCE PARTNERS, L.P. ("NET
INCOME OF ARLP") $ 276,428 $ 155,908
GENERAL PARTNERS' INTEREST IN NET INCOME OF ARLP $ —
$ 1,560
LIMITED PARTNERS' INTEREST IN NET INCOME
OF ARLP $ 276,428 $ 154,348
BASIC AND
DILUTED NET INCOME OF ARLP PER LIMITED PARTNER UNIT $ 2.12
$ 1.16
WEIGHTED-AVERAGE NUMBER OF UNITS
OUTSTANDING – BASIC AND DILUTED 128,149,791
130,819,217
ALLIANCE RESOURCE PARTNERS, L.P. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE
SHEETS
(In thousands, except unit
data)
(Unaudited)
March 31, December 31, 2019 2018
ASSETS CURRENT ASSETS: Cash and cash equivalents $
30,192 $ 244,150 Trade receivables 194,538 174,914 Other
receivables 2,108 395 Due from affiliates 16 17 Inventories, net
85,440 59,206 Advance royalties, net 1,630 1,274 Prepaid expenses
and other assets 15,811 20,730 Total
current assets 329,735 500,686
PROPERTY, PLANT AND
EQUIPMENT: Property, plant and equipment, at cost 3,474,573
2,925,808 Less accumulated depreciation, depletion and amortization
(1,579,588 ) (1,513,450 ) Total property, plant and
equipment, net 1,894,985 1,412,358
OTHER ASSETS: Advance
royalties, net 53,499 42,923 Equity method investments 28,770
161,309 Equity securities — 122,094 Goodwill 136,399 136,399
Operating lease right-of-use assets 22,508 — Other long-term assets
19,234 18,979 Total other assets
260,410 481,704
TOTAL ASSETS $
2,485,130 $ 2,394,748
LIABILITIES AND
PARTNERS' CAPITAL CURRENT LIABILITIES: Accounts payable
$ 112,684 $ 96,397 Due to affiliates 66 816 Accrued taxes other
than income taxes 18,484 16,762 Accrued payroll and related
expenses 38,896 43,113 Accrued interest 12,509 5,022 Workers'
compensation and pneumoconiosis benefits 11,268 11,137 Current
finance lease obligations 40,894 46,722 Current operating lease
obligations 6,911 — Other current liabilities 17,429 18,902 Current
maturities, long-term debt, net 90,000 92,000
Total current liabilities 349,141 330,871
LONG-TERM
LIABILITIES: Long-term debt, excluding current maturities, net
414,771 564,004 Pneumoconiosis benefits 72,922 68,828 Accrued
pension benefit 41,917 43,135 Workers' compensation 40,428 41,669
Asset retirement obligations 131,905 127,655 Long-term finance
lease obligations 9,082 10,595 Long-term operating lease
obligations 15,462 — Other liabilities 21,393
20,304 Total long-term liabilities 747,880
876,190 Total liabilities 1,097,021
1,207,061
PARTNERS' CAPITAL: Alliance
Resource Partners, L.P. ("ARLP") Partners' Capital: Limited
Partners - Common Unitholders 128,391,191 and 128,095,511 units
outstanding, respectively 1,426,360 1,229,268 Accumulated other
comprehensive loss (50,455 ) (46,871 ) Total ARLP
Partners' Capital 1,375,905 1,182,397 Noncontrolling interest
12,204 5,290 Total Partners' Capital
1,388,109 1,187,687
TOTAL
LIABILITIES AND PARTNERS' CAPITAL $ 2,485,130 $
2,394,748
ALLIANCE RESOURCE PARTNERS, L.P. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS
(In thousands)
(Unaudited)
Three Months Ended March 31, 2019
2018 CASH FLOWS FROM OPERATING ACTIVITIES $
143,706 $ 224,178
CASH FLOWS FROM INVESTING
ACTIVITIES: Property, plant and equipment: Capital expenditures
(84,043 ) (51,525 ) Increase (decrease) in accounts payable and
accrued liabilities 6,470 (15 ) Proceeds from sale of property,
plant and equipment 103 7 Contributions to equity method
investments — (11,400 ) Distributions received from investments in
excess of cumulative earnings 2,260 736 Payment for acquisition of
business, net of cash acquired (175,060 ) — Cash received from
redemption of equity securities 134,288 —
Net cash used in investing activities (115,982 )
(62,197 )
CASH FLOWS FROM FINANCING
ACTIVITIES: Borrowings under securitization facility 108,000
37,600 Payments under securitization facility (110,000 ) (70,000 )
Borrowings under revolving credit facilities — 70,000 Payments
under revolving credit facilities (150,000 ) (100,000 ) Payments on
finance lease obligations (7,341 ) (6,974 ) Payments for purchases
of units under unit repurchase program (5,251 ) — Net settlement of
withholding taxes on issuance of units in deferred compensation
plans (7,817 ) (2,081 ) Cash contribution by General Partner — 41
Distributions paid to Partners (69,011 ) (68,396 ) Other
(262 ) (163 ) Net cash used in financing activities
(241,682 ) (139,973 )
NET CHANGE IN CASH AND CASH
EQUIVALENTS (213,958 ) 22,008
CASH AND CASH
EQUIVALENTS AT BEGINNING OF PERIOD 244,150 6,756
CASH AND CASH EQUIVALENTS AT END OF PERIOD $
30,192 $ 28,764
Reconciliation of GAAP "net income
attributable to ARLP" to non-GAAP "EBITDA," "Adjusted EBITDA" and
"Distributable Cash Flow" (in thousands).
EBITDA is defined as net income attributable to ARLP before net
interest expense, income taxes and depreciation, depletion and
amortization and Adjusted EBITDA is EBITDA modified for certain
items that may not reflect the trend of future results, such as
settlement gains, asset impairments and acquisition gains.
Distributable cash flow ("DCF") is defined as Adjusted EBITDA
excluding 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, Adjusted EBITDA, DCF and DCR should not be considered as
alternatives to net income attributable to ARLP, net income, income
from operations, cash flows from operating activities or any other
measure of financial performance presented in accordance with GAAP.
EBITDA, Adjusted 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, Adjusted EBITDA, DCF
and DCR may not be the same method used to compute similar measures
reported by other companies, or EBITDA, Adjusted 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
Three MonthsEnded
Year Ended March 31, December 31, December
31, 2019 2018 2018 2019E Midpoint
Net income attributable to ARLP $ 276,428 $ 155,908 $ 50,773
$ 545,500 Depreciation, depletion and amortization 71,139 61,848
76,031 317,500 Interest expense, net 11,585 11,058 9,942 45,500
Capitalized interest (254 ) (265 ) (415 ) — Income tax expense
(benefit) (106 ) (10 ) 24 1,500
EBITDA 358,792 228,539 136,355 910,000 Settlement gain —
(80,000 ) — — Asset impairment — — 40,483 — Acquisition gain
(177,043 ) — — (170,000 ) Acquisition gain attributable to
noncontrolling interest 7,083 —
— — Adjusted EBITDA 188,832 148,539 176,838
740,000 Interest expense, net (11,585 ) (11,058 ) (9,942 ) (45,500
) Income tax (expense) benefit 106 10 (24 ) (1,500 ) Estimated
maintenance capital expenditures (1) (63,069 )
(49,475 ) (48,126 ) (246,500 ) Distributable Cash
Flow $ 114,284 $ 88,016 $ 118,746 $ 446,500
Distributions paid to partners $ 69,011 $ 68,396
$ 69,220 $ 277,700 Distribution Coverage Ratio
1.66 1.29 1.72
1.61
______________________________
(1) Our maintenance capital expenditures 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 2019 planning horizon, average annual
estimated maintenance capital expenditures are assumed to be $5.57
per ton produced compared to the estimated $4.72 per ton produced
in 2018. Our actual maintenance capital expenditures fluctuate
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 SEC.
Reconciliation of GAAP "Operating
Expenses" to non-GAAP "Segment Adjusted EBITDA Expense" and
Reconciliation of non-GAAP "Adjusted EBITDA" to "Segment Adjusted
EBITDA" and "Segment Adjusted EBITDA" (in thousands).
Segment Adjusted EBITDA Expense includes operating expenses,
coal purchases and other expense. Segment Adjusted EBITDA Expense –
Coal excludes expenses of our Minerals segment. 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 and Adjusted EBITDA in
addition to coal sales, royalty revenues 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.
Three Months Ended Three Months
Ended March 31, December 31, 2019
2018 2018 Operating expense $ 302,728 $
277,238 $ 310,870 Outside coal purchases — 1,374 24 Other expense
129 847 420 Segment Adjusted EBITDA
Expense $ 302,857 $ 279,459 $ 311,314 Minerals expenses
(1,827 ) — — Segment Adjusted EBITDA Expense - Coal $
301,030 $ 279,459 $ 311,314 Divided by tons sold 10,321
9,398 10,464 Segment Adjusted EBITDA Expense
per ton $ 29.17 $ 29.74 $ 29.75
Segment Adjusted EBITDA is defined as net income attributable to
ARLP before net interest expense, income taxes, depreciation,
depletion and amortization, general and administrative expenses,
settlement gain, asset impairment and acquisition gain. Segment
Adjusted EBITDA – Coal excludes the contribution of our Minerals
segment and equity securities income to allow management to focus
solely on the operating performance of our coal segments.
Three Months Ended Three Months
Ended March 31, December 31, 2019
2018 2018 Adjusted EBITDA (See reconciliation
to GAAP above) $ 188,832 $ 148,539 $ 176,838 General and
administrative 17,812 16,651
18,785 Segment Adjusted EBITDA $ 206,644 $ 165,190 $ 195,623
Minerals segment (9,132 ) (3,588 ) (7,340 ) Equity securities
income (12,906 ) (3,724 ) (4,129 ) Segment
Adjusted EBITDA – Coal $ 184,606 $ 157,878 $ 184,154 Divided by
tons sold 10,321 9,398 10,464
Segment Adjusted EBITDA per ton $ 17.89 $ 16.80
$ 17.60
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version on businesswire.com: https://www.businesswire.com/news/home/20190429005193/en/
Brian L. CantrellAlliance Resource Partners, L.P.(918)
295-7673
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