Alliance Resource Partners, L.P. (NASDAQ: ARLP) today reported
financial and operating results for the quarter ended March 31,
2015 (the "2015 Quarter"). Total revenues climbed to $560.4
million, an increase of 3.4% compared to the quarter ended March
31, 2014 (the "2014 Quarter") reflecting higher other sales and
operating revenues. Increased revenues and production contributed
to higher EBITDA, which rose $1.8 million to $192.2 million for the
2015 Quarter. Net income for the 2015 Quarter decreased 8.1% to
$106.5 million, or $0.92 per basic and diluted limited partner unit
compared to the 2014 Quarter primarily due to increased
depreciation, depletion and amortization expense. (For a definition
of EBITDA and related reconciliations to comparable GAAP financial
measures, please see the end of this release.)
ARLP also announced that the Board of Directors of its managing
general partner (the "Board") increased the cash distribution to
unitholders for the 2015 Quarter to $0.6625 per unit (an annualized
rate of $2.65 per unit), payable on May 15, 2015 to all unitholders
of record as of the close of trading on May 8, 2015. The announced
distribution represents an 8.4% increase over the cash distribution
of $0.61125 per unit for the 2014 Quarter and a 1.9% increase over
the cash distribution of $0.65 per unit for the quarter ended
December 31, 2014 (the "Sequential Quarter"). The comparative
distributions per unit, as well as net income per basic and diluted
limited partner unit, reflected for the 2014 Quarter in this press
release have been adjusted for the two-for-one unit split completed
on June 16, 2014.
"ARLP continued its strong operating and financial performance
in the first quarter of 2015, reporting increases to coal
production volumes, revenues and EBITDA," said Joseph W. Craft III,
President and Chief Executive Officer. "Contributing to these
results, our Tunnel Ridge mine continued to experience higher
productivity, performing above expectations to drive production in
our Appalachian region higher in the 2015 Quarter by almost 13%
compared to the 2014 Quarter. All operations performed well during
the 2015 Quarter and our teams posted the best safety performance
in ARLP’s history. We are also beginning to see the benefits of our
investment in White Oak as revenues and EBITDA from this project
increased by $14.7 million and $9.3 million, respectively, compared
to the 2014 Quarter."
Mr. Craft continued, "Our financial performance for the 2015
Quarter was impacted by delayed shipments on contracted tons due to
frigid February weather and high waters on the Ohio River that
disrupted barge transportation. Inventory at our mines grew by more
than 1.0 million tons during the 2015 Quarter to 2.4 million tons,
causing us to reduce our production at several operations to offset
the inventory build. We expect to ship approximately 800,000 tons
above our production in the upcoming quarter and continue to work
off the inventory over the balance of the year. Based on ARLP’s
quarterly results and confidence in our future performance, the
Board announced today an increase in unitholder distributions for
the twenty-eighth consecutive quarter."
Consolidated Financial Results
Three Months Ended March 31, 2015 Compared to Three Months Ended
March 31, 2014
For the 2015 Quarter, revenues increased to $560.4 million
compared to $542.0 million for the 2014 Quarter, primarily due to
higher surface facility services and coal royalties related to
ARLP’s participation in the White Oak Mine No. 1, which added
approximately $14.7 million of additional other sales and operating
revenues in the 2015 Quarter. This increase in revenues was
partially offset by lower coal sales revenues as a result of lower
average coal sales price which decreased slightly to $54.49 per ton
sold. Although impacted by weather-related disruptions, total coal
sales volumes in the 2015 Quarter remained consistent with the 2014
Quarter, while coal production volumes increased 2.4% to 10.5
million tons in the 2015 Quarter.
Compared to the 2014 Quarter, operating expenses increased in
the 2015 Quarter by 3.8% to $334.4 million. This increase was
primarily the result of increased coal sales and production volumes
from our Gibson South and Tunnel Ridge mines as well as higher
labor-related expenses at the Illinois Basin operations. These
increases were partially offset by lower sales at our Warrior mine
as it continues to transition to a new mining area, our Gibson
North mine due to shift reductions in response to market conditions
and an inventory build at our River View mine. Segment Adjusted
EBITDA Expense per ton increased 3.8% to $35.21 in the 2015 Quarter
compared to the 2014 Quarter primarily due to tons sold from
high-cost beginning inventory at various operations and lower
recoveries at our Warrior and Gibson North mines.
Depreciation, depletion and amortization increased $11.4 million
to $78.3 million in the 2015 Quarter compared to the 2014 Quarter,
due to the previously announced reduction of the economic mine life
at our Hopkins mine, which is expected to close in early 2016,
production at the Gibson South mine, which began in April 2014,
amortization of coal supply agreements acquired in December 2014
and capital expenditures related to infrastructure investments at
various operations.
The previously discussed increase in revenues from White Oak in
the 2015 Quarter more than offset the pass through of related net
equity in loss of affiliates, resulting in higher Segment Adjusted
EBITDA for the White Oak Segment of $5.3 million compared to a loss
of $4.1 million in the 2014 Quarter. Total net equity in loss of
affiliates increased to $9.7 million for the 2015 Quarter, compared
to a loss of $6.2 million for the 2014 Quarter, primarily due to
higher expenses reflecting White Oak’s continued ramp up of
longwall operations following the commencement of operations in
late 2014.
Regional Results and Analysis
(in millions, except per ton data) 2015 First
Quarter
2014 First
Quarter
% ChangeQuarter /Quarter
2014FourthQuarter
% ChangeSequential
Illinois
Basin
Tons sold 7.119 7.482 (4.9)% 7.692 (7.4)% Coal sales price per ton
(1) $51.73 $52.42 (1.3)% $52.93 (2.3)% Segment Adjusted EBITDA
Expense per ton (2) $31.78 $30.68 3.6% $33.94 (6.4)% Segment
Adjusted EBITDA (2) $142.7 $163.6 (12.8)% $146.7 (2.7)%
Appalachia
Tons sold 2.374 2.013 17.9% 2.357 0.7% Coal sales price per ton (1)
$61.45 $66.24 (7.2)% $64.62 (4.9)% Segment Adjusted EBITDA Expense
per ton (2) $41.20 $42.52 (3.1)% $37.86 8.8% Segment Adjusted
EBITDA (2) $55.8 $48.9 14.1% $69.6 (19.8)%
White
Oak
Tons processed 3.054 0.669 N/M(4) 1.647 85.4% Surface
facility/royalty revenues $18.4 $3.7 N/M(4) $9.8 87.8% Equity in
loss of affiliates $(9.4) $(6.3) (49.2)% $(2.8) N/M(4) Segment
Adjusted EBITDA (2) $5.3 $(4.0) N/M(4) $4.1 29.3%
Total
(3)
Tons sold 9.501 9.495 0.1% 10.049 (5.5)% Coal sales price per ton
(1) $54.49 $55.35 (1.6)% $55.68 (2.1)% Segment Adjusted EBITDA
Expense per ton (2) $35.21 $33.91 3.8% $35.69 (1.3)% Segment
Adjusted EBITDA (2) $209.0 $207.9 0.5% $220.8 (5.3)% (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 the other and corporate segment and eliminations in
addition to the Illinois Basin, Appalachia and White Oak segments
highlighted above. (4) Percentage change not meaningful.
Increased coal sales volumes from the Tunnel Ridge and Mettiki
longwall operations drove sales tons for the 2015 Quarter higher by
17.9% in Appalachia, compared to the 2014 Quarter. In the Illinois
Basin, coal sales volumes decreased in the 2015 Quarter compared to
both the 2014 and Sequential Quarters primarily due to timing of
shipments partially offset by increased sales volumes from our new
Gibson South mine.
Compared to the Sequential Quarter, weather-related
transportation disruptions negatively impacted coal shipments in
the 2015 Quarter, particularly at our Warrior, Gibson North, River
View and Tunnel Ridge mines. Delayed shipments pushed total coal
inventory to approximately 2.4 million tons during the 2015
Quarter. Coal shipments have recently improved, allowing ARLP to
begin reducing coal stockpiles at our operations. We currently
anticipate coal inventories will return to more normalized levels
by year end.
As anticipated, for the 2015 Quarter, ARLP's total coal sales
price of $54.49 per ton sold decreased compared to both the 2014
and Sequential Quarters. Decreased coal sales prices in Appalachia
primarily reflect lower average prices at our MC Mining and Tunnel
Ridge mines due to current market conditions. Coal sales prices
also declined in the Illinois Basin, primarily due to lower coal
sales prices at our Gibson North and Onton mines.
Total Segment Adjusted EBITDA Expense per ton decreased 1.3% in
the 2015 Quarter compared to the Sequential Quarter. In the
Illinois Basin, Segment Adjusted EBITDA Expense per ton improved by
6.4% in the 2015 Quarter compared to the Sequential Quarter
primarily due to additional production days reflecting seasonal
differences, higher production at the Gibson South mine and
increased productivity at the River View and Dotiki mines.
Sequentially, Segment Adjusted EBITDA Expense per ton in Appalachia
increased 8.8% primarily as a result of lower production at our
Tunnel Ridge mine due to a longwall move in the 2015 Quarter.
Compared to the 2014 Quarter, higher Total Segment Adjusted EBITDA
Expense per ton primarily reflects a 3.6% increase in the Illinois
Basin as a result of decreased production and higher inventory
costs at our Warrior, Gibson North and Onton mines as well as
increased medical expense at all mines in the region. Partially
offsetting this increase, Segment Adjusted EBITDA Expense per ton
in Appalachia declined by 3.1% compared to the 2014 Quarter
primarily due to improved productivity and lower benefits costs at
our Mettiki mine in addition to increased production at Tunnel
Ridge reflecting fewer longwall move days in the 2015 Quarter,
partially offset by increased materials and supplies and
maintenance costs at Tunnel Ridge.
As discussed above, total Segment Adjusted EBITDA compared to
the 2014 and Sequential Quarters benefited from the ramp-up of
longwall production from the White Oak mine. ARLP’s Segment
Adjusted EBITDA attributable to its investments in White Oak
increased by $9.3 million and $1.2 million compared to the 2014 and
Sequential Quarters, respectively.
Guidance Outlook
Commenting on ARLP’s current outlook for the rest of the year,
Mr. Craft said, "The coal industry outlook remains challenged as
demand for U.S. thermal coal has dropped further than expected this
year and the supply response has been slow to occur. Relying on our
sales contract position, strong balance sheet and low cost
operations, we remain confident we are well positioned to achieve
our financial goals for the year, including growing cash flow again
in 2015.
To adjust to current market conditions we have decided to reduce
our production further in 2015, which will save the Partnerships
some capital expenditures. We expect the reduced production will
have minimal impact on our cost per ton sold. We anticipate tons
sold would be reduced by a similar amount, or approximately 700,000
tons at the midpoint of the prior guidance range."
Based on results to date and current estimates, in 2015 ARLP is
now anticipating coal production in a range of 40.2 to 41.2 million
tons and sales volumes in a range of 40.75 to 42.65 million tons.
ARLP has committed and priced approximately 96% of its anticipated
coal sales in 2015 and has also secured coal sales and price
commitments for approximately 28.9 million tons, 12.8 million tons
and 9.6 million tons in 2016, 2017 and 2018, respectively.
ARLP currently anticipates 2015 revenues, excluding
transportation revenues, in a range of $2.35 to $2.41 billion.
ARLP’s 2015 per ton estimates and guidance ranges for EBITDA of
$765.0 to $825.0 million and net income of $395.0 to $455.0 million
remain unchanged from our initial outlook for the year. (For a
definition of EBITDA and related reconciliation to the most
comparable GAAP financial measure, please see the end of this
release.)
ARLP is lowering anticipated total capital expenditures during
2015 to a range of $270.0 to $300.0 million due to mine plan
changes at various operations in the Illinois Basin. In addition to
these anticipated capital expenditures, ARLP now expects to fund
approximately $20.0 to $25.0 million of its investment commitment
to purchase oil and gas mineral interests, of which $8.0 million
was funded in the 2015 Quarter. ARLP also funded $10.3 million of
its preferred equity investment commitment to White Oak in the 2015
Quarter and does not anticipate funding any further preferred
equity investments.
A conference call regarding ARLP’s 2015 Quarter financial
results is scheduled for Wednesday, April 29, 2015 at 10:00 a.m.
Eastern. To participate in the conference call, dial (855) 793-3259
and provide conference number 19590246. 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 19590246. 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 third largest
coal producer in the eastern United States with mining operations
in the Illinois Basin and Appalachian coal producing regions. ARLP
operates ten mining complexes in Illinois, Indiana, Kentucky,
Maryland and West Virginia. ARLP also has made equity investments
in, and is purchasing reserves and operating surface facilities
related to, a new mining complex in southern Illinois. In addition,
ARLP 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
competition in coal markets and our ability to respond to such
changes; changes in coal prices, which could affect our operating
results and cash flows; risks associated with the expansion of our
operations and properties; legislation, regulations, and court
decisions and interpretations thereof, including those relating to
the environment, mining, miner health and safety and health care;
deregulation of the electric utility industry or the effects of any
adverse change in the coal industry, electric utility industry, or
general economic conditions; dependence on significant customer
contracts, including renewing customer contracts upon expiration of
existing contracts; changing global economic conditions or in
industries in which 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; adjustments made in price, volume or terms to existing
coal supply agreements; fluctuations in coal demand, prices and
availability; our productivity levels and margins earned on our
coal sales; 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, 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; the coal industry’s share of electricity
generation, including as a result of environmental concerns related
to coal mining and combustion and the cost and perceived benefits
of other sources of electricity, such as natural gas, nuclear
energy and renewable fuels; uncertainties in estimating and
replacing 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, 2014, filed on February 27,
2015 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,
2015 2014 Tons Sold 9,501
9,495
Tons Produced 10,502 10,253
SALES AND
OPERATING REVENUES: Coal sales $ 517,739 $ 525,545
Transportation revenues 7,148 6,005 Other sales and operating
revenues 35,529 10,488 Total revenues
560,416 542,038
EXPENSES:
Operating expenses (excluding depreciation, depletion and
amortization) 334,362 322,242 Transportation expenses 7,148 6,005
Outside coal purchases 322 2 General and administrative 16,846
17,435 Depreciation, depletion and amortization 78,268
66,841 Total operating expenses 436,946
412,525
INCOME FROM OPERATIONS
123,470 129,513 Interest expense, net (7,968 ) (8,063 )
Interest income 531 389 Equity in loss of affiliates, net (9,686 )
(6,241 ) Other income 118 306
INCOME
BEFORE INCOME TAXES 106,465 115,904
INCOME TAX
BENEFIT (2 ) -
NET INCOME
106,467 115,904
LESS: NET LOSS ATTRIBUTABLE TO NONCONTROLLING
INTEREST 13 -
NET INCOME
ATTRIBUTABLE TO ALLIANCE RESOURCE PARTNERS, L.P. ("NET INCOME OF
ARLP") $ 106,480 $ 115,904
GENERAL
PARTNERS’ INTEREST IN NET INCOME OF ARLP $ 36,883 $
33,368
LIMITED PARTNERS’ INTEREST IN NET INCOME OF
ARLP $ 69,597 $ 82,536
BASIC AND
DILUTED NET INCOME OF ARLP PER LIMITED PARTNER UNIT $ 0.92
$ 1.10
DISTRIBUTIONS PAID PER LIMITED
PARTNER UNIT $ 0.65 $ 0.59875
WEIGHTED
AVERAGE NUMBER OF UNITS OUTSTANDING – BASIC AND DILUTED
74,130,405 73,994,866
ALLIANCE RESOURCE PARTNERS, L.P. AND
SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE
SHEETS (In thousands, except unit data)
(Unaudited)
ASSETS
March 31, December 31, 2015 2014
CURRENT ASSETS: Cash and cash equivalents $ 26,395 $ 24,601
Trade receivables 178,477 184,187 Other receivables 485 1,025 Due
from affiliates 7,649 7,221 Inventories 114,643 83,155 Advance
royalties 9,440 9,416 Prepaid expenses and other assets
20,398 31,283 Total current assets 357,487
340,888
PROPERTY, PLANT AND EQUIPMENT: Property,
plant and equipment, at cost 2,889,878 2,815,620 Less accumulated
depreciation, depletion and amortization (1,219,592 )
(1,150,414 ) Total property, plant and equipment, net 1,670,286
1,665,206
OTHER ASSETS: Advance royalties 28,257
15,895 Due from affiliate 11,020 11,047 Equity investments in
affiliates 232,049 224,611 Other long-term assets 31,827
27,412 Total other assets 303,153
278,965
TOTAL ASSETS $ 2,330,926
$ 2,285,059
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES: Accounts payable $ 95,236 $ 85,843 Due
to affiliates 239 370 Accrued taxes other than income taxes 21,289
19,426 Accrued payroll and related expenses 38,758 57,656 Accrued
interest 6,028 318 Workers’ compensation and pneumoconiosis
benefits 8,868 8,868 Current capital lease obligations 1,299 1,305
Other current liabilities 13,153 17,109 Current maturities,
long-term debt 230,000 230,000 Total
current liabilities 414,870 420,895
LONG-TERM
LIABILITIES: Long-term debt, excluding current maturities
615,000 591,250 Pneumoconiosis benefits 56,304 55,278 Accrued
pension benefit 39,772 40,105 Workers’ compensation 50,438 49,797
Asset retirement obligations 93,972 91,085 Long-term capital lease
obligations 15,287 15,624 Other liabilities 6,852
5,978 Total long-term liabilities 877,625
849,117 Total liabilities 1,292,495
1,270,012
COMMITMENTS AND
CONTINGENCIES PARTNERS' CAPITAL: Alliance
Resource Partners, L.P. (“ARLP”) Partners’ Capital:
Limited Partners - Common Unitholders
74,188,784 and 74,060,634 units outstanding, respectively
1,331,350 1,310,517 General Partners' deficit (258,586 ) (260,088 )
Accumulated other comprehensive loss (35,118 )
(35,847 ) Total ARLP Partners' Capital 1,037,646 1,014,582
Noncontrolling interest 785 465 Total
Partners' Capital 1,038,431 1,015,047
TOTAL LIABILITIES AND PARTNERS' CAPITAL $ 2,330,926 $
2,285,059
ALLIANCE RESOURCE
PARTNERS, L.P. AND SUBSIDIARIES CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands)
(Unaudited)
Three Months Ended
March 31,
2015 2014 CASH FLOWS PROVIDED
BY OPERATING ACTIVITIES $ 161,622 $ 140,099
CASH FLOWS FROM INVESTING ACTIVITIES: Property, plant
and equipment: Capital expenditures (50,330 ) (69,463 ) Changes in
accounts payable and accrued liabilities 659 (3,745 ) Proceeds from
sale of property, plant and equipment 299 ― Purchases of equity
investments in affiliates (18,804 ) (30,000 ) Payment for
acquisition of businesses, net of cash acquired (28,078 ) ―
Payments to affiliate for acquisition and development of coal
reserves ― (1,401 ) Other 1,807 ― Net cash used in
investing activities (94,447 ) (104,609 )
CASH FLOWS FROM FINANCING ACTIVITIES: Payments under term
loan (6,250 ) ― Borrowings under revolving credit facilities 95,000
82,800 Payments under revolving credit facilities (65,000 )
(117,800 ) Payments on capital lease obligations (343 ) (358 )
Contribution to consolidated company from affiliate noncontrolling
interest 333 ―
Net settlement of employee withholding
taxes on vesting of Long-Term Incentive Plan
(2,719 )
(2,991
)
Cash contributions by General Partners 95 111 Distributions paid to
Partners (84,356 ) (76,510 ) Other (2,141 ) ― Net cash used
in financing activities (65,381 ) (114,748 )
NET CHANGE IN CASH AND CASH EQUIVALENTS 1,794 (79,258 )
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
24,601 93,654
CASH AND CASH EQUIVALENTS AT END OF
PERIOD $ 26,395 $ 14,396
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. EBITDA is used as a
supplemental financial measure by our management and by external
users of our financial statements such as investors, commercial
banks, research analysts and others, to assess:
- the financial performance of our assets
without regard to financing methods, capital structure or
historical cost basis;
- the ability of our assets to generate
cash sufficient to pay interest costs and support our
indebtedness;
- our operating performance and return on
investment as compared to those of other companies in the coal
energy sector, without regard to financing or capital structures;
and
- the viability of acquisitions and
capital expenditure projects and the overall rates of return on
alternative investment opportunities.
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. DCF is used as a supplemental
financial measure by our management and by external users of our
financial statements, such as investors, commercial banks, research
analysts and others, to assess:
- the cash flows generated by our assets
(prior to the establishment of any retained cash reserves by the
general partner) to fund the cash distributions we expect to pay to
unitholders;
- our success in providing a cash return
on investment and whether or not the Partnership is generating cash
flow at a level that can sustain or support an increase in its
quarterly distribution rates;
- the yield of our units, which is a
quantitative standard used through the investment community with
respect to publicly-traded partnerships as the value of a unit is
generally determined by a unit’s yield (which in turn is based on
the amount of cash distributions the entity pays to a
unitholder).
EBITDA and DCF 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 and DCF may not be the same method used
to compute similar measures reported by other companies, or EBITDA
and DCF may be computed differently by us in different contexts
(i.e. public reporting versus computation under financing
agreements).
Three Months
Ended
March 31,
ThreeMonthsEnded
December 31,
Year Ended
December 31,
2015 2014 2014
2015EMidpoint
Net income $ 106,467 $ 115,904 $ 123,678 $ 425,000
Depreciation, depletion and amortization 78,268 66,841 71,027
344,000 Interest expense, gross 7,649 8,446 7,756 26,000
Capitalized interest (212 ) (772 ) - - Income tax benefit (2
) - - - EBITDA 192,170
190,419 202,461 795,000 Equity in loss of affiliates, net 9,686
6,241 3,102 23,500 Interest expense, gross (7,649 ) (8,446 ) (7,756
) (26,000 ) Income tax benefit 2 - - - Estimated maintenance
capital expenditures (1) (58,286 ) (60,493 )
(62,044 ) (230,000 ) Distributable Cash Flow $ 135,923
$ 127,721 $ 135,763 $ 562,500
(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
2015 planning horizon, average annual estimated maintenance capital
expenditures are assumed to be $5.55 per produced ton compared to
the estimated $5.90 per produced ton in 2014. Our actual
maintenance capital expenditures vary depending on various factors,
including maintenance schedules and timing of capital projects,
among others. We annually disclose our actual maintenance capital
expenditures in our Form 10-K filed with the Securities and
Exchange Commission.
Reconciliation of GAAP "Operating
Expenses" to non-GAAP "Segment Adjusted EBITDA Expense per ton" and
Reconciliation of non-GAAP "EBITDA" to "Segment Adjusted EBITDA per
ton" (in thousands, except per ton data).
Segment Adjusted EBITDA Expense per ton includes operating
expenses, outside coal purchases and other income divided by tons
sold. Transportation expenses are excluded as these expenses are
passed through to our customers and, consequently, we do not
realize any margin on transportation revenues. Segment Adjusted
EBITDA Expense is used as a supplemental financial measure by our
management to assess the operating performance of our segments.
Segment Adjusted EBITDA Expense is a key component of EBITDA in
addition to coal sales and other sales and operating revenues. The
exclusion of corporate general and administrative expenses from
Segment Adjusted EBITDA Expense allows management to focus solely
on the evaluation of segment operating performance as it primarily
relates to our operating expenses. Outside coal purchases are
included in Segment Adjusted EBITDA Expense because tons sold and
coal sales include sales from outside coal purchases.
Three Months Ended
March 31,
Three MonthsEndedDecember
31,
2015 2014 2014 Operating
expense $ 334,362 $ 322,242 $ 359,055 Outside coal purchases 322 2
7 Other income (118 ) (306 ) (388 ) Segment
Adjusted EBITDA Expense $ 334,566 $ 321,938 $ 358,674 Divided by
tons sold 9,501 9,495 10,049
Segment Adjusted EBITDA Expense per ton $ 35.21 $
33.91 $ 35.69
Segment Adjusted EBITDA per ton is defined as net income (prior
to the allocation of noncontrolling interest) before net interest
expense, income taxes, depreciation, depletion and amortization and
general and administrative expenses divided by tons sold. Segment
Adjusted EBITDA removes the impact of general and administrative
expenses from EBITDA (discussed above) to allow management to focus
solely on the evaluation of segment operating performance.
Three Months Ended
March 31,
Three MonthsEndedDecember
31,
2015 2014 2014 EBITDA
(See reconciliation to GAAP above) $ 192,170 $ 190,419 $ 202,461
General and administrative 16,846 17,435
18,351 Segment Adjusted EBITDA $ 209,016 $ 207,854 $ 220,812
Divided by tons sold 9,501 9,495 10,049
Segment Adjusted EBITDA per ton $ 22.00 $ 21.89 $ 21.97
Alliance Resource Partners, L.P.Brian L. Cantrell,
918-295-7673
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