Alliance Resource Partners, L.P. (NASDAQ: ARLP) today announced
that it has acquired from White Oak Finance, Inc. and other parties
all of the equity interests in White Oak Resources LLC ("White
Oak") not currently owned by ARLP. Upon closing of the transaction,
Alliance WOR Processing, LLC, a wholly-owned subsidiary of ARLP,
assumed operating control of the White Oak Mine No. 1 ("Mine No.
1"), an underground longwall mining operation located in Hamilton
County, Illinois, which is currently producing high-sulfur coal
from the Herrin No. 6 seam at an annual rate of approximately 6
million tons. As a result of the transaction, ARLP now owns 100
percent of the equity interests in White Oak, coal reserves at Mine
No. 1 that are leased to White Oak and the preparation plant and
loading facilities at Mine No. 1.
Under the terms of the agreement, ARLP paid $50 million cash at
closing, which was funded with cash on hand and availability under
its current credit facilities. Additional contingent consideration
may be due in the future, which ARLP believes has a nominal present
value based upon current market conditions.
Reflecting the acquisition of White Oak and ARLP’s results to
date and continuing adjustments in response to market conditions,
the following full-year guidance for 2015 is provided:
Coal Production and Sales Volumes – For the full year 2015, coal
production is expected in a range of 42.8 to 43.5 million tons and
sales volumes are expected in a range of 42.7 to 43.8 million tons,
including anticipated coal production and sales volumes from Mine
No. 1 for the remainder of 2015. ARLP has secured price commitments
for approximately 42.2 million tons in 2015 and has also secured
coal sales and price commitments for approximately 31.2 million
tons, 13.0 million tons and 9.6 million tons in 2016, 2017 and
2018, respectively.
Revenue, EBITDA and Net Income Estimates – ARLP is currently
expecting 2015 revenues in a range of $2.37 to $2.41 billion,
excluding transportation revenues. Total Revenue estimates include
additional coal sales revenues from Mine No. 1, partially offset by
reduced other sales and operating revenue from the terminated coal
royalties and surface facilities services related to White Oak.
ARLP anticipates financial performance from its existing
operations will be in line with prior guidance and that gaining
operating and marketing control of Mine No. 1 should be modestly
accretive to EBITDA and net income for the remainder of 2015,
however, the year-to-date non-cash net equity in loss of affiliates
related to our preferred equity investment in White Oak was larger
than our initial expectations. As a result, ARLP is adjusting
previous estimates for full-year 2015 EBITDA and net income to a
range of $765.0 to $795.0 million and $405.0 to $435.0 million,
respectively. (For a definition of EBITDA and related
reconciliations to comparable GAAP financial measures, please see
the end of this release.)
Per Ton Estimates – ARLP anticipates its average coal sales
price per ton at the midpoint of its 2015 guidance ranges will be
approximately 4.0% lower than 2014 realizations. Based on current
cost and production estimates, including the addition of low-cost
production from White Oak, ARLP now anticipates total 2015 Segment
Adjusted EBITDA Expense per ton at the midpoint will be comparable
to 2014. (For definitions of Segment Adjusted EBITDA expense per
ton and related reconciliations to comparable GAAP financial
measures, please see the end of this release.)
Capital Expenditures and Investments – ARLP’s optimization
efforts continue to drive capital expenditures lower. Total 2015
capital expenditures, including maintenance capital expenditures,
are now estimated in a range of $265.0 to $285.0 million, a
decrease at the midpoint of approximately $40.0 million since the
beginning of the year. ARLP has also reduced its estimated average
per ton maintenance capital expenditures for the 2015 five-year
planning horizon from approximately $5.55 per ton produced to
approximately $4.96 per ton produced to reflect the integration of
the White Oak Mine No. 1, benefits resulting from the recent
acquisition of mining equipment and optimization efforts across all
operations.
In addition to these capital expenditures, ARLP now anticipates
funding in 2015 investments of approximately $95.0 to $100.0
million. Included in this estimate is approximately $38.0 million
to complete ARLP’s current commitment to acquire natural resource
minerals, the $50.0 million payment to acquire the remaining White
Oak equity interests and $10.8 million of preferred equity
contribution funded to White Oak prior to today’s closing.
A conference call to discuss updated guidance for ARLP’s
estimated 2015 financial results is scheduled for Monday, August 3,
2015 at 11:00 a.m. Eastern. To participate in the conference call,
dial (855) 793-3259 and provide conference number 96780476.
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 96780476. 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 currently operates eleven 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 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. 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.
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. Distribution coverage ratio
("DCR") is defined as DCF divided by distributions paid to
partners. DCF and DCR are used as supplemental financial measures
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 throughout 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, DCF and DCR may not be the same method
used to compute similar measures reported by other companies, or
EBITDA, DCF and DCR may be computed differently by us in different
contexts (i.e. public reporting versus computation under financing
agreements).
Three Months Ended
June 30,
Six Months Ended
June 30,
Three MonthsEndedMarch
31,
Year Ended
December 31,
2015 2014 2015
2014 2015
2015EMidpoint
Net income $ 94,857 $ 137,653 $ 201,324 $ 253,557 $ 106,467
$ 420,000 Depreciation, depletion and amortization 79,801 67,052
158,069 133,893 78,268 330,000 Interest expense, gross 7,855 8,392
15,504 16,838 7,649 30,000 Capitalized interest (154 ) (61 ) (366 )
(833 ) (212 ) - Income tax expense (benefit) 7
- 5 - (2 ) -
EBITDA 182,366 213,036 374,536 403,455 192,170 780,000
Equity in loss of affiliates, net 22,142 7,373 31,828 13,614 9,686
50,000 Interest expense, gross (7,855 ) (8,392 ) (15,504 ) (16,838
) (7,649 ) (30,000 ) Income tax (expense) benefit (7 ) - (5 ) - 2 -
Estimated maintenance capital expenditures (1) (47,214 )
(57,590 ) (99,304 ) (118,083 ) (52,090
) (214,000 ) Distributable Cash Flow $ 149,432 $
154,427 $ 291,551 $ 282,148 $ 142,119 $
586,000 Distributions paid to partners $ 86,241 $
78,394 $ 170,597 $ 154,904 $ 84,365
Distribution Coverage Ratio 1.73 1.97
1.71 1.82 1.68
(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 $4.96 per produced ton compared to
the estimated $5.90 per produced ton in 2014. Our current per ton
estimate of average annual maintenance capital expenditures
decreased from our initial estimate of $5.55 per ton as a result of
the integration of White Oak Mine No. 1 and optimization efforts
across all of our operations. Our actual maintenance capital
expenditures vary depending on various factors, including
maintenance schedules and timing of capital projects, among others.
We annually disclose our actual maintenance capital expenditures in
our Form 10-K filed with the Securities and Exchange
Commission.
Reconciliation of GAAP "Operating
Expenses" to non-GAAP "Segment Adjusted EBITDA Expense per ton" and
Reconciliation of non-GAAP "EBITDA" to "Segment Adjusted EBITDA per
ton" (in thousands, except per ton data).
Segment Adjusted EBITDA Expense per ton includes operating
expenses, outside coal purchases and other income divided by tons
sold. Transportation expenses are excluded as these expenses are
passed through to our customers and, consequently, we do not
realize any margin on transportation revenues. Segment Adjusted
EBITDA Expense is used as a supplemental financial measure by our
management to assess the operating performance of our segments.
Segment Adjusted EBITDA Expense is a key component of EBITDA in
addition to coal sales and other sales and operating revenues. The
exclusion of corporate general and administrative expenses from
Segment Adjusted EBITDA Expense allows management to focus solely
on the evaluation of segment operating performance as it primarily
relates to our operating expenses. Outside coal purchases are
included in Segment Adjusted EBITDA Expense because tons sold and
coal sales include sales from outside coal purchases.
Three Months Ended
June 30,
Three MonthsEndedMarch
31,
2015 2014 2015 Operating
expense $ 375,065 $ 352,893 $ 334,362 Outside coal purchases 2 2
322 Other income (177 ) (323 ) (118 ) Segment
Adjusted EBITDA Expense $ 374,890 $ 352,572 $ 334,566 Divided by
tons sold 10,481 10,362 9,501
Segment Adjusted EBITDA Expense per ton $ 35.77 $
34.03 $ 35.21
Segment Adjusted EBITDA per ton is defined as net income (prior
to the allocation of noncontrolling interest) before net interest
expense, income taxes, depreciation, depletion and amortization and
general and administrative expenses divided by tons sold. Segment
Adjusted EBITDA removes the impact of general and administrative
expenses from EBITDA (discussed above) to allow management to focus
solely on the evaluation of segment operating performance.
Three Months Ended
June 30,
Three MonthsEndedMarch
31,
2015 2014 2015 EBITDA
(See reconciliation to GAAP above) $ 182,366 $ 213,036 $ 192,170
General and administrative 17,542 19,771 16,846 Segment Adjusted
EBITDA $ 199,908 $ 232,807 $ 209,016 Divided by tons sold 10,481
10,362 9,501 Segment Adjusted EBITDA per ton $ 19.07 $ 22.47 $
22.00
View source
version on businesswire.com: http://www.businesswire.com/news/home/20150731005872/en/
Alliance Resource Partners, L.P.Brian L. Cantrell,
918-295-7673
Alliance Resource Partners (NASDAQ:ARLP)
Historical Stock Chart
From Mar 2024 to Apr 2024
Alliance Resource Partners (NASDAQ:ARLP)
Historical Stock Chart
From Apr 2023 to Apr 2024