Alliance Resource Partners, L.P. (NASDAQ: ARLP) today reported
financial and operating results for the quarter ended March 31,
2018 (the "2018 Quarter"). Net income attributable to ARLP for the
2018 Quarter increased 48.6% to $155.9 million, or $1.16 per basic
and diluted limited partner unit, compared to $104.9 million, or
$1.10 per basic and diluted limited partner unit, for the quarter
ended March 31, 2017 (the "2017 Quarter"). The results in the 2018
Quarter included an $80 million gain on settlement of litigation.
EBITDA also increased 28.7% in the 2018 Quarter to $228.7 million
compared to $177.7 million in the 2017 Quarter. Adjusted EBITDA,
which excludes the impact of the settlement gain, decreased to
$148.7 million in the 2018 Quarter compared to $177.7 million for
the 2017 Quarter. Delayed coal shipments due to weather-related
transportation disruptions in the 2018 Quarter led total revenues
lower to $457.1 million, slightly below total revenues in the 2017
Quarter. (For a definition of EBITDA, Adjusted EBITDA and related
reconciliations to comparable GAAP financial measures and actual
and pro forma earnings per basic and diluted limited partner unit
reflecting the exchange transaction announced in our July 28, 2017
press release as if it had occurred on January 1, 2017, please see
the end of this release.)
As previously announced on April 27, 2018, the Board of
Directors of ARLP’s general partner increased the cash distribution
to unitholders for the 2018 Quarter to $0.515 per unit (an
annualized rate of $2.06 per unit), payable on May 15, 2018 to all
unitholders of record as of the close of trading on May 8, 2018.
The announced distribution represents a 17.7% increase over the
cash distribution of $0.4375 per unit for the 2017 Quarter and a
1.0% increase over the cash distribution of $0.51 per unit for the
quarter ended December 31, 2017 (the "Sequential Quarter").
In addition, the Simplification Transactions announced by ARLP
and Alliance Holdings GP, L.P. ("AHGP") continue to move forward.
(See ARLP and AHGP Joint Press Release dated February 23, 2018).
ARLP filed a preliminary registration statement on Form S-4 on
March 29, 2018. On April 26, 2018, the Securities and Exchange
Commission declared the Form S-4 effective to register the
distribution of the ARLP common units currently held by AHGP and
its subsidiaries to AHGP’s unitholders and, on April 27, 2018, AHGP
mailed consent solicitation statements to its unitholders of record
as of April 25, 2018. Consummation of the simplification
transactions, which is expected to occur during the second quarter
of 2018, remains subject to the affirmative vote or consent of the
holders of a majority of the outstanding AHGP common units. Certain
AHGP unitholders, which collectively own a majority of the
outstanding AHGP common units, have agreed to deliver a written
consent approving the simplification transactions pursuant to a
support agreement.
"ARLP’s financial and operating results for the 2018 Quarter
were impacted by several factors," said Joseph W. Craft III,
President and Chief Executive Officer. "On a positive note, ARLP
settled a coal sales contract dispute resulting in an $80.0 million
gain. ARLP continued to be active in both the domestic and overseas
coal markets during the quarter, increasing its sales commitments
for 2018 to approximately 38.0 million tons, including export
commitments of 7.1 million tons. To meet these new obligations we
are planning to increase our production for the year by an
additional 1.0 million tons to 40.5 million tons at the midpoint of
our increased guidance, which would be 7.7% greater than last
year."
Mr. Craft added, "Even though weather-related transportation
disruptions caused ARLP to ship 1.4 million fewer tons than
expected this quarter, we plan to make up these sales later this
year as river conditions return to normal. Based on these factors,
as well as our favorable supply-demand outlook for the remainder of
2018, we are raising ARLP’s 2018 full year guidance. We remain
committed to continue increasing quarterly cash distributions to
our unitholders while maintaining a conservative balance sheet and
strong distribution coverage."
Consolidated Financial Results
Three Months Ended March 31, 2018 Compared to Three Months Ended
March 31, 2017
Reduced coal sales volumes and prices resulted in lower coal
sales revenues of $423.6 million in the 2018 Quarter compared to
$438.7 million for the 2017 Quarter. Lower sales volumes in the
2018 Quarter reflect weather-related transportation disruptions,
particularly at our Tunnel Ridge and Hamilton mines, partially
offset by increased coal sales at our Warrior and River View mines
compared to the 2017 Quarter. As anticipated, ARLP’s coal sales
prices were also lower in the 2018 Quarter, decreasing 1.3% to
$45.07 per ton sold, compared to $45.65 per ton sold in the 2017
Quarter. Coal production volumes increased 2.6% to 10.5 million
tons in the 2018 Quarter compared to 10.2 million tons in the 2017
Quarter.
Compared to the 2017 Quarter, operating expenses increased in
the 2018 Quarter by 5.8% to $277.2 million resulting in higher
Segment Adjusted EBITDA Expense per ton of $29.74 in the 2018
Quarter compared to $27.21 in the 2017 Quarter. These increases
were primarily the result of decreased sales volumes at our Tunnel
Ridge and Hamilton longwall operations due to the previously
mentioned transportation disruptions at these operations, as well
as reduced recoveries at several mines. (For a definition of
Segment Adjusted EBITDA Expense per ton and related reconciliation
to comparable GAAP financial measures, please see the end of this
release.)
Depreciation, depletion and amortization decreased $3.3 million
to $61.8 million in the 2018 Quarter primarily due to the
previously mentioned decrease in sales volumes at the Tunnel Ridge
mine in the 2018 Quarter.
On March 9, 2018, ARLP finalized an agreement with a customer
and certain of its affiliates to settle litigation we initiated in
2015. The 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 rights to
acquire certain 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.
Compared to the 2017 Quarter, contributions from investments in
oil and gas minerals and gas compression services increased $3.8
million to $7.5 million in the 2018 Quarter, primarily due to
distributions from ARLP’s preferred equity interest in gas
compression services, which was entered into during the third
quarter of 2017.
Regional Results and Analysis
% Change
2018 First 2017 First Quarter
/ 2017 Fourth % Change (in millions, except
per ton data) Quarter Quarter Quarter
Quarter Sequential
Illinois
Basin
Tons sold 7.008 6.665 5.1 % 7.391 (5.2 )% Coal sales price per ton
(1) $ 39.39 $ 40.05 (1.6 )% $ 39.13 0.7 % Segment Adjusted EBITDA
Expense per ton (2) $ 25.94 $ 24.22 7.1 % $ 24.93 4.1 % Segment
Adjusted EBITDA (2) $ 94.8 $ 106.3 (10.8 )% $ 105.5 (10.1 )%
Appalachia
Tons sold 2.390 2.930 (18.4 )% 2.712 (11.9 )% Coal sales price per
ton (1) $ 60.79 $ 57.26 6.2 % $ 60.12 1.1 % Segment Adjusted EBITDA
Expense per ton (2) $ 38.70 $ 32.53 19.0 % $ 40.39 (4.2 )% Segment
Adjusted EBITDA (2) $ 53.6 $ 73.2 (26.8 )% $ 54.7 (2.0 )%
Total
(3)
Tons sold 9.398 9.610 (2.2 )% 10.103 (7.0 )% Coal sales price per
ton (1) $ 45.07 $ 45.65 (1.3 )% $ 45.03 0.1 % Segment Adjusted
EBITDA Expense per ton (2) $ 29.74 $ 27.21 9.3 % $ 29.48 0.9 %
Segment Adjusted EBITDA (2) $ 165.3 $ 193.7 (14.7 )% $ 175.7 (5.9
)%
_________________
(1) Sales price per ton is defined as total coal sales
divided by total tons sold. (2) 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. (3) Total reflects consolidated results,
which include other and corporate and eliminations in addition to
the Illinois Basin and Appalachia segments highlighted above.
Weather-related transportation disruptions negatively affected
sales volumes in both the Illinois Basin and Appalachia. While tons
sold in the Illinois Basin were 5.1% higher compared to the 2017
Quarter as a result of increased sales volumes from our Warrior and
River View mines, sales volumes decreased 5.2% compared to the
Sequential Quarter primarily due to reduced shipments related to
transportation disruptions at our River View and Hamilton mines.
Coal sales volumes in Appalachia also declined 18.4% and 11.9%
compared to the 2017 and Sequential Quarters, respectively,
primarily due to transportation disruptions at our Tunnel Ridge
mine.
Transportation disruptions reduced our planned shipments in the
2018 Quarter, driving ARLP’s total coal inventory higher to 1.9
million tons, an increase of approximately 0.3 million tons and 1.1
million tons compared to the end of the 2017 and Sequential
Quarters, respectively. ARLP currently expects to deliver these
shipments to customers over the balance of 2018 as barge traffic
normalizes.
As anticipated, ARLP’s coal sales price realizations decreased
1.3% per ton sold in the 2018 Quarter compared to the 2017 Quarter,
primarily due to the expiration of higher-priced legacy contracts
in the Illinois Basin offset in part by higher prices in Appalachia
from improved price realizations at our MC Mining and Tunnel Ridge
mines.
Total Segment Adjusted EBITDA Expense per ton increased by 9.3%
compared to the 2017 Quarter as a result of higher expenses per ton
in both the Illinois Basin and Appalachian regions. In the Illinois
Basin, Segment Adjusted EBITDA Expense per ton increased 7.1%
compared to the 2017 Quarter primarily due to lower recoveries at
our Gibson South, River View and Dotiki mines and increased roof
support and contract labor costs per ton across the region. Segment
Adjusted EBITDA Expense per ton in Appalachia increased 19.0%
compared to the 2017 Quarter reflecting the previously discussed
reduction in coal sales volumes, higher selling expenses and lower
recoveries at our MC Mining and Tunnel Ridge mines, as well as an
increased sales mix of higher-cost coal production from our MC
Mining and Mettiki mines in the 2018 Quarter. Compared to the
Sequential Quarter, Segment Adjusted EBITDA Expense per ton
increased 4.1% in the Illinois Basin resulting primarily from
reduced recoveries at our Hamilton and River View mines offset in
part by a seasonal increase in unit shifts. In Appalachia, higher
production volumes, due in part to a longwall move in the
Sequential Quarter, and increased recoveries from our Tunnel Ridge
mine drove Segment Adjusted EBITDA Expense per ton lower by 4.2%
compared to the Sequential Quarter. For both segments, comparisons
to the Sequential Quarter reflect reduced sales volumes from
transportation disruptions and increased workers compensation
expense due to annual actuarial reductions benefiting the
Sequential Quarter.
Market Update and Outlook
"During the 2018 Quarter, ARLP reached agreement to deliver up
to 19.7 million tons in 2018 through 2022, including an additional
4.8 million tons for delivery this year," said Mr. Craft. "As
expected, ARLP continued to increase its participation in the
international coal markets having now booked commitments to export
6.8 million tons of thermal coal and 490,000 tons of metallurgical
coal in 2018. Fundamentals in the international markets remain
constructive for U.S. producers and should present ARLP with
additional export opportunities through 2019. Domestic utility
stockpiles in our markets are currently below five-year averages,
which we believe will lead to increased buying activity for the
balance of 2018. With these expectations supporting improved
distributable cash flow and strong distribution coverage, our
targeted distribution growth of 4.0% in 2018 remains intact. Longer
term, we believe the strength of ARLP’s market presence,
strategically-located, low-cost coal operations and increasing
contributions from investments outside of coal should allow us to
deliver strong results and value to our unitholders in the
future."
ARLP has secured volume and price commitments for approximately
38.0 million tons in 2018 and for approximately 17.5 million tons,
11.7 million tons and 4.8 million tons in 2019, 2020 and 2021,
respectively, some of which is subject to customer
requirements.
Based on results to date and expectations for the balance of the
year, ARLP is increasing its guidance for 2018 full-year results to
the following ranges: coal production of 40.0 million to 41.0
million tons, coal sales volumes of 40.3 million to 41.3 million
tons, revenues (excluding transportation revenues) of $1.87 billion
to $1.91 billion, net income of $405.0 million to $425.0 million
and EBITDA of $710.0 million to $730.0 million. These 2018
estimates for net income and EBITDA include the settlement gain
recorded in the 2018 Quarter and reflect an expected full year
contribution of approximately $25.0 million to $35.0 million
related to our investments in oil and gas minerals and gas
compression services.
ARLP is also updating per ton estimates for 2018 compared to
2017. For the full-year 2018, excluding the settlement gain
recorded in the 2018 Quarter, we currently anticipate coal sales
price per ton to be slightly higher, Segment Adjusted EBITDA
Expense per ton to be 1.0% to 2.0% higher and Segment Adjusted
EBITDA per ton to be 3.0% to 4.0% lower, each compared to our
full-year results in 2017.
ARLP is maintaining its previous 2018 guidance for capital
expenditures in a range of $220.0 million to $240.0 million and
investments related to the acquisition of oil and gas mineral
interests of approximately $30.0 million. (For a definition of
EBITDA, Segment Adjusted EBITDA Expense per ton and Segment
Adjusted EBITDA per ton and related reconciliations to the most
comparable GAAP financial measure, please see the end of this
release.)
A conference call regarding ARLP’s 2018 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 10118635.
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 eight mining complexes in Illinois,
Indiana, Kentucky, Maryland and West Virginia as well as a coal
loading terminal on the Ohio River at Mount Vernon, Indiana. ARLP
also generates income from a variety of other sources, including
investments in oil and gas mineral interests and gas compression
services.
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 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 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 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; 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 and gas prices, which could affect
our investments in oil and gas mineral interests and gas
compression services; 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 post-mine
reclamation as well as 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, 2017, filed on February 23,
2018 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, 2018 2017
Tons Sold 9,398 9,610
Tons Produced 10,482
10,218
SALES AND OPERATING REVENUES: Coal sales $
423,610 $ 438,744 Transportation revenues 19,785 9,596 Other sales
and operating revenues 13,727 12,740
Total revenues 457,122 461,080
EXPENSES: Operating expenses (excluding depreciation,
depletion and amortization) 277,238 262,027 Transportation expenses
19,785 9,596 Outside coal purchases 1,374 — General and
administrative 16,651 16,033 Depreciation, depletion and
amortization 61,848 65,127 Settlement gain (80,000 )
— Total operating expenses 296,896
352,783
INCOME FROM OPERATIONS 160,226 108,297
Interest expense, net (10,858 ) (7,516 ) Interest income 65
24 Equity method investment income 3,736 3,700 Equity securities
income 3,724 — Other (expense) income (847 ) 533
INCOME BEFORE INCOME TAXES 156,046 105,038
INCOME TAX BENEFIT (10 ) (12 )
NET
INCOME 156,056 105,050 LESS: NET INCOME ATTRIBUTABLE TO
NONCONTROLLING INTEREST (148 ) (148 )
NET
INCOME ATTRIBUTABLE TO ALLIANCE RESOURCE PARTNERS, L.P. ("NET
INCOME OF ARLP") $ 155,908 $ 104,902
GENERAL PARTNERS' INTEREST IN NET INCOME OF ARLP $ 1,560
$ 20,146
LIMITED PARTNERS' INTEREST IN NET
INCOME OF ARLP $ 154,348 $ 84,756
BASIC
AND DILUTED NET INCOME OF ARLP PER LIMITED PARTNER UNIT $ 1.16
$ 1.10
DISTRIBUTIONS PAID PER LIMITED
PARTNER UNIT $ 0.5100 $ 0.4375
WEIGHTED-AVERAGE NUMBER OF UNITS OUTSTANDING – BASIC AND
DILUTED 130,819,217 74,503,298
ALLIANCE RESOURCE PARTNERS,
L.P. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE
SHEETS (In thousands, except unit data)
(Unaudited) March 31, December 31,
2018 2017 ASSETS CURRENT ASSETS: Cash
and cash equivalents $ 28,764 $ 6,756 Trade receivables 157,798
181,671 Other receivables 229 146 Due from affiliates 669 165
Inventories, net 83,944 60,275 Advance royalties, net 2,856 4,510
Prepaid expenses and other assets 19,846
28,117 Total current assets 294,106 281,640
PROPERTY,
PLANT AND EQUIPMENT: Property, plant and equipment, at cost
2,983,666 2,934,188 Less accumulated depreciation, depletion and
amortization (1,520,732 ) (1,457,532 ) Total
property, plant and equipment, net 1,462,934 1,476,656
OTHER
ASSETS: Advance royalties, net 50,800 39,660 Equity method
investments 158,669 147,964 Equity securities 110,122 106,398
Goodwill 136,399 136,399 Other long-term assets 30,384
30,654 Total other assets 486,374
461,075
TOTAL ASSETS $ 2,243,414
$ 2,219,371
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES: Accounts payable $ 92,745 $ 96,958 Due
to affiliates — 771 Accrued taxes other than income taxes 20,270
20,336 Accrued payroll and related expenses 34,530 35,751 Accrued
interest 12,499 5,005 Workers' compensation and pneumoconiosis
benefits 10,769 10,729 Current capital lease obligations 28,948
28,613 Other current liabilities 16,732 19,071 Current maturities,
long-term debt, net 40,000 72,400 Total
current liabilities 256,493 289,634
LONG-TERM LIABILITIES:
Long-term debt, excluding current maturities, net 386,703 415,937
Pneumoconiosis benefits 72,509 71,875 Accrued pension benefit
42,906 45,317 Workers' compensation 46,861 46,694 Asset retirement
obligations 126,287 126,750 Long-term capital lease obligations
50,634 57,091 Other liabilities 20,055 14,587
Total long-term liabilities 745,955
778,251 Total liabilities 1,002,448
1,067,885
PARTNERS' CAPITAL: Alliance Resource
Partners, L.P. ("ARLP") Partners' Capital: Limited Partners -
Common Unitholders 130,903,256 and 130,704,217 units outstanding,
respectively 1,270,769 1,183,219 General Partner's interest 15,786
14,859 Accumulated other comprehensive loss (50,923 )
(51,940 ) Total ARLP Partners' Capital 1,235,632 1,146,138
Noncontrolling interest 5,334 5,348
Total Partners' Capital 1,240,966 1,151,486
TOTAL LIABILITIES AND PARTNERS' CAPITAL $ 2,243,414
$ 2,219,371
ALLIANCE RESOURCE PARTNERS, L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In
thousands) (Unaudited) Three Months Ended
March 31, 2018 2017 CASH FLOWS FROM
OPERATING ACTIVITIES $ 224,178 $ 177,011
CASH FLOWS FROM INVESTING ACTIVITIES: Property, plant and
equipment: Capital expenditures (51,525 ) (30,346 ) Increase
(decrease) in accounts payable and accrued liabilities (15 ) 2,144
Proceeds from sale of property, plant and equipment 7 453
Contributions to equity method investments (11,400 ) (9,287 )
Distributions received from investments in excess of cumulative
earnings 736 1,191 Net cash used in
investing activities (62,197 ) (35,845 )
CASH FLOWS FROM FINANCING ACTIVITIES: Borrowings under
securitization facility 37,600 — Payments under securitization
facility (70,000 ) — Borrowings under revolving credit facilities
70,000 — Payments under revolving credit facilities (100,000 )
(25,000 ) Payments on capital lease obligations (6,974 ) (6,678 )
Payment of debt issuance costs — (6,664 ) Contributions to
consolidated company from affiliate noncontrolling interest — 251
Net settlement of withholding taxes on issuance of units in
deferred compensation plans (2,081 ) (2,988 ) Cash contributions by
General Partners 41 905 Distributions paid to Partners (68,396 )
(53,224 ) Other (163 ) (190 ) Net cash used in
financing activities (139,973 ) (93,588 )
NET CHANGE IN CASH AND CASH EQUIVALENTS 22,008 47,578
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 6,756
39,782
CASH AND CASH EQUIVALENTS AT END OF
PERIOD $ 28,764 $ 87,360
Reconciliation of GAAP "net income
attributable to ARLP" and "net income" to non-GAAP "EBITDA,"
"Adjusted EBITDA" and "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 and Adjusted EBITDA is
EBITDA modified for certain items that may not reflect the trend of
future results, such as settlement 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 Months Ended Year
Ended March 31, December 31, December 31,
2018 2017 2017 2018E Midpoint
Net income attributable to ARLP $ 155,908 $ 104,902 $ 74,235 $
414,300 Net income attributable to noncontrolling interests
148 148 138 700
Net income 156,056 105,050 74,373 415,000 Depreciation, depletion
and amortization 61,848 65,127 74,872 265,000 Interest expense, net
11,058 7,573 10,666 41,200 Capitalized interest (265 ) (81 ) (197 )
(1,200 ) Income tax expense (benefit) (10 ) (12 )
213 — EBITDA 228,687 177,657 159,927
720,000 Settlement gain (80,000 ) — —
(80,000 ) Adjusted EBITDA 148,687 177,657 159,927
640,000 Interest expense, net (11,058 ) (7,573 ) (10,666 ) (41,200
) Income tax (expense) benefit 10 12 (213 ) — Estimated maintenance
capital expenditures (1) (49,475 ) (43,427 )
(39,941 ) (191,300 ) Distributable Cash Flow $ 88,164
$ 126,669 $ 109,107 $ 407,500 Distributions
paid to partners $ 68,396 $ 53,224 $ 67,528 $
277,700 Distribution Coverage Ratio 1.29
2.38 1.62 1.47
_________________
(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 2018 planning horizon, average annual
estimated maintenance capital expenditures are assumed to be $4.72
per ton produced compared to the estimated $4.25 per ton produced
in 2017. 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 per ton" and
Reconciliation of non-GAAP "Adjusted EBITDA" to "Segment Adjusted
EBITDA" and "Segment Adjusted EBITDA per ton" (in thousands, except
per ton data).
Segment Adjusted EBITDA Expense per ton includes operating
expenses, 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 and Adjusted 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.
Three Months Ended
Three Months Ended March 31, December 31,
2018 2017 2017 Operating expense (1) $
277,238 $ 262,027 $ 297,425 Outside coal purchases 1,374 — — Other
expense (income) (1) 847 (533 ) 378 Segment
Adjusted EBITDA Expense $ 279,459 $ 261,494 $ 297,803 Divided by
tons sold 9,398 9,610 10,103 Segment
Adjusted EBITDA Expense per ton $ 29.74 $ 27.21 $ 29.48
_________________
(1) Operating expenses and other expense (income) for the
2017 Quarter and the Sequential Quarter have been recast to reflect
the reclass of the non-service components of net benefit cost
previously included in operating expense now being presented within
other expense (income) in accordance with new generally accepted
accounting principles effective in the 2018 Quarter.
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,
general and administrative expenses and settlement gain divided by
tons sold. Segment Adjusted EBITDA removes the impact of general
and administrative expenses from Adjusted EBITDA (discussed above)
to allow management to focus solely on the evaluation of segment
operating performance.
Three Months Ended
Three Months Ended March 31, December 31,
2018 2017 2017 Adjusted EBITDA (See
reconciliation to GAAP above) $ 148,687 $ 177,657 $ 159,927 General
and administrative 16,651 16,033 15,778
Segment Adjusted EBITDA $ 165,338 $ 193,690 $ 175,705 Divided by
tons sold 9,398 9,610 10,103 Segment Adjusted
EBITDA per ton $ 17.59 $ 20.16 $ 17.39
Actual basic and diluted earnings per
limited partner unit and pro forma earnings per basic and diluted
limited partner unit.
Below is the actual basic and diluted earnings per limited
partner unit as well as pro forma basic and diluted earnings per
limited partner unit for the three months ended March 31, 2018 and
2017, as if the exchange transaction had occurred on January 1,
2017. For a detailed reconciliation of actual and pro forma net
income of ARLP to actual and pro forma basic and diluted earnings
per limited partner unit, please see our Form 10-Q for the quarter
ended March 31, 2018 expected to be filed on or about May 7,
2018.
Three Months Ended March
31, 2018 2017
Actual
(in thousands, except per unit data) Net income of ARLP available
to limited partners $ 151,529 $ 82,325 Weighted-average limited
partner units outstanding – basic and diluted 130,819
74,503 Basic and diluted net income of ARLP per limited partner
unit $ 1.16 $ 1.10
Pro
forma
Pro forma net income of ARLP available to limited partners $
151,529 $ 102,917 Pro forma weighted-average limited partner units
outstanding – basic and diluted 130,819 130,610 Pro
forma basic and diluted net income of ARLP per limited partner unit
$ 1.16 $ 0.79
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version on businesswire.com: https://www.businesswire.com/news/home/20180430005239/en/
Alliance Resource Partners, L.P.Brian L. Cantrell,
918-295-7673
Alliance Holdings GP, L.P. Representing Limited Partner Interests (delisted) (NASDAQ:AHGP)
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