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)
2016 SecondQuarter
2015 SecondQuarter
% ChangeQuarter /Quarter
2016 FirstQuarter
% ChangeSequential
Illinois Basin
(1)
Tons sold 5.509 7.739 (28.8 )% 5.530 (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 %
Appalachia
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 %
Total
(4)
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 %
(1) 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) 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.
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 EndedJune
30,
Six Months EndedJune 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 EndedJune 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 EndedJune
30,
Six Months EndedJune 30,
Three MonthsEndedMarch
31,
Year EndedDecember 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 EndedJune
30,
Three MonthsEndedMarch
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 EndedJune
30,
Three MonthsEndedMarch
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
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version on businesswire.com: http://www.businesswire.com/news/home/20160726005323/en/
Alliance Resource Partners, L.P.Brian L. Cantrell,
918-295-7673
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