Alliance Resource Partners, L.P. (NASDAQ: ARLP) today reported
financial and operating results for the year ended December 31,
2015 (the "2015 Year"), which included record volumes of coal
produced and sold. Revenues for the 2015 Year decreased to $2.27
billion, a decline of 1.2% compared to the year ended December 31,
2014 (the "2014 Year"), as a 3.5% decrease in coal sales prices
offset record coal sales volumes. Lower revenues and the net $77.6
million impact in the 2015 Year of non-cash items led to reduced
EBITDA of $670.0 million for the 2015 Year, a decrease of 16.7%
compared to the 2014 Year. These factors also drove ARLP’s net
income lower by 38.4% in the 2015 Year to $306.2 million, or $2.11
per basic and diluted limited partner unit. Excluding these
non-cash items discussed below in more detail, Adjusted EBITDA for
the 2015 Year was $747.2 million and Adjusted net income was $383.8
million, a decrease of 7.0% and 22.8%, respectively, compared to
the 2014 Year. (For a discussion of EBITDA, Adjusted EBITDA,
Adjusted net income and related reconciliations to comparable
financial measures under accounting principles generally accepted
in the United States ("GAAP"), please see the end of this
release.)
ARLP’s results for the quarter ended December 31, 2015 (the
"2015 Quarter") were also lower compared to the quarter ended
December 31, 2014 (the "2014 Quarter"). Total revenues declined
8.2% to $542.2 million, compared to the 2014 Quarter, as coal sales
fell due to lower coal sales prices and reduced sales tons
reflecting customer deferrals of scheduled coal shipments and, as
anticipated, the decrease of other sales and operating revenues
following ARLP’s acquisition of the remaining equity interests in
White Oak Resources LLC ("White Oak ") and the assumption of
operating control of the White Oak Mine No. 1 (now known as the
"Hamilton Mine No. 1 ") on July 31, 2015 (the "White Oak
Acquisition"). Lower revenues and the $66.9 million net impact of
non-cash items drove net income and EBITDA lower in the 2015
Quarter compared to the 2014 Quarter, as net income decreased 82.6%
to $21.5 million, or $(0.19) per basic and diluted limited partner
unit, and EBITDA decreased 40.8% to $120.0 million. Excluding these
non-cash items from the 2015 Quarter, ARLP’s Adjusted EBITDA was
$186.8 million and Adjusted net income was $88.4 million, a
decrease of 7.7% and 28.6%, respectively, compared to the 2014
Quarter.
ARLP also announced that the Board of Directors of its managing
general partner (the "Board") approved a cash distribution to
unitholders for the 2015 Quarter of $0.675 per unit (an annualized
rate of $2.70 per unit), payable on February 12, 2016 to all
unitholders of record as of the close of trading on February 5,
2016. The announced distribution represents a 3.8% increase over
the cash distribution of $0.65 per unit for the 2014 Quarter and is
equal to the amount paid in the quarter ended September 30, 2015
(the "Sequential Quarter").
"During 2015, ARLP maintained its position as a leader in the
coal industry. Our operations and marketing teams produced and sold
record volumes leading ARLP to deliver profits and solid cash flows
in what was arguably one of the most challenging years in the
history of our industry," said Joseph W. Craft III, President and
Chief Executive Officer. "Faced with weak power demand,
persistently low natural gas prices, ongoing regulatory pressures
and an oversupplied coal market, we were able to achieve these
results relying on ARLP’s long-term sales agreements and our
ability to reduce operating expenses and capital expenditures. In
response to lower demand and unsustainably low spot coal pricing,
we adjusted ARLP’s operating portfolio and shuttered certain
higher-cost operations, which led to non-cash impairments that
reduced our financial results for the 2015 Quarter and Year."
Consolidated Financial Results
Year Ended December 31, 2015 Compared to Year Ended December 31,
2014
Coal sales revenues in the 2015 Year declined as a result of
lower coal prices partially offset by increased coal sales volumes
at the Tunnel Ridge and Gibson South mines in addition to coal
sales volumes from our recent acquisition of the Hamilton Mine No.
1. ARLP set new records in the 2015 Year for both tons sold, which
increased 1.3% to 40.2 million tons, and tons produced, which rose
1.1% to 41.2 million tons, both as compared to the 2014 Year.
ARLP’s other sales and operating revenue increased $16.0 million
in the 2015 Year primarily due to White Oak’s start-up of longwall
production in late October 2014 and the resulting increase in our
surface facility services and coal royalties prior to the White Oak
Acquisition.
Operating expenses in the 2015 Year decreased slightly remaining
comparable to the 2014 Year. Decreases primarily resulted from a
production scale back at various mines, reduced selling expenses
resulting from lower coal sales prices and a favorable sales mix,
in addition to lower labor expenses. These decreases were offset by
increased operating expenses resulting from the assumption of
operations at the Hamilton Mine No. 1 and a full year of production
operations at our Gibson South mine which began production in April
2014. On a per ton basis, Segment Adjusted EBITDA Expense per ton
in the 2015 Year of $34.20 declined by 1.7% compared to the 2014
Year primarily as a result of lower operating expenses discussed
above and increased coal volumes at lower cost per ton mines. (For
a definition of Segment Adjusted EBITDA and Segment Adjusted EBITDA
Expense per ton and related reconciliations to comparable GAAP
financial measures, please see the end of this release).
General and administrative expenses decreased $5.1 million to
$67.5 million in the 2015 Year, primarily as a result of lower
incentive compensation expenses. Depreciation, depletion and
amortization increased $59.1 million to $333.7 million in the 2015
Year, compared to the 2014 Year, due to accelerated depreciation at
our Elk Creek mine reflecting the anticipated mine closing in early
2016, the impact of increased production volumes at our Gibson
South mine and the recently acquired Hamilton Mine No. 1, as well
as the amortization of coal supply contracts acquired on December
31, 2014.
Results for the 2015 Year were impacted by several items
attributable to ARLP’s investments related to White Oak and
accounting for the White Oak Acquisition. Equity in loss of
affiliates increased $32.4 million primarily due to the pass
through of losses related to our equity ownership in White Oak
prior to the White Oak Acquisition, which was partially offset by a
$22.5 million non-cash net gain related to the final business
combination accounting for the acquisition.
The 2015 Year was also impacted by $100.1 million of non-cash
impairment charges comprised of a $66.9 million impairment related
to the previously announced idling of our Onton mine, a $19.5
million impairment at the MC Mining complex, primarily due to lower
coal sales prices, and $13.7 million of impairments to leases we
elected to surrender rather than incur high holding costs.
Three Months Ended December 31, 2015 Compared to Three Months
Ended December 31, 2014
Revenues for the 2015 Quarter decreased 8.2% to $542.2 million,
compared to the 2014 Quarter, as coal sales revenues fell 6.1% due
to lower coal sales prices and volumes and, as anticipated, a
decline in other sales and operating revenues following the White
Oak Acquisition.
Lower operating expenses in the 2015 Quarter reflect the factors
benefiting full year operating expenses discussed above. These
factors along with a full quarter of lower cost production from the
Hamilton Mine No. 1 and lower coal inventory charges also drove
Segment Adjusted EBITDA Expense per ton lower in the 2015 Quarter,
to $33.19 per ton compared to $35.69 per ton in the 2014
Quarter.
As noted above, the 2015 Quarter was also impacted by non-cash
items comprised of the $89.4 million of impairments related to our
Onton mine ($66.9 million), the MC Mining mine ($19.5 million) and
surrendered leases ($3.0 million), which charges were partially
offset by the $22.5 million non-cash net gain related to final
business combination accounting for the White Oak Acquisition.
General and administrative expenses decreased $3.2 million to
$15.1 million, primarily due to lower incentive compensation
expenses. Depreciation, depletion and amortization increased $20.0
million to $91.0 million in the 2015 Quarter compared to the 2014
Quarter, primarily due to accelerated depreciation at our Elk Creek
mine, the addition of the Hamilton Mine No. 1 and the amortization
of acquired coal supply contracts.
Regional Results and Analysis
(in millions, except per ton data)
2015 FourthQuarter
2014 FourthQuarter
% ChangeQuarter /Quarter
2015ThirdQuarter
% ChangeSequential
Illinois Basin
(1)
Tons sold 7.809 7.692 1.5 % 8.134 (4.0 )% Coal sales price per ton
(2) $ 49.96 $ 52.93 (5.6 )% $ 50.50 (1.1 )% Segment Adjusted EBITDA
Expense per ton (3) $ 28.33 $ 34.30 (17.4 )% $ 30.69 (7.7 )%
Segment Adjusted EBITDA (3) $ 171.3 $ 150.9 13.5 % $ 147.5 16.1 %
Appalachia
Tons sold 2.162 2.357 (8.3 )% 2.160 0.1 % Coal sales price per ton
(2) $ 61.08 $ 64.62 (5.5 )% $ 61.61 (0.9 )% Segment Adjusted EBITDA
Expense per ton (3) $ 47.97 $ 37.86 26.7 % $ 37.23 28.8 % Segment
Adjusted EBITDA (3) $ 29.1 $ 69.6 (58.2 )% $ 53.4 (45.5 )%
Total
(4)
Tons sold 9.971 10.049 (0.8 )% 10.294 (3.1 )% Coal sales price per
ton (2) $ 52.70 $ 55.68 (5.4 )% $ 53.18 (0.9 )% Segment Adjusted
EBITDA Expense per ton (3) $ 33.19 $ 35.69 (7.0 )% $ 32.65 1.7 %
Segment Adjusted EBITDA (3) $ 202.0
$ 220.8 (8.5 )% $ 203.8
(0.9 )% (1) In the Sequential
Quarter, ARLP realigned its segment presentation. The Illinois
Basin segment now includes the consolidated Hamilton Mine No. 1
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.
Reflecting higher coal sales volumes from our Gibson South mine
and the assumption of operations at the Hamilton Mine No. 1, offset
by reduced sales volumes due to weak market conditions, ARLP’s
Illinois Basin operations sold 7.8 million tons of coal in the 2015
Quarter, an increase of 1.5% over the 2014 Quarter. Lower sales
volumes in the 2015 Quarter at our Elk Creek, River View and Onton
mines in response to current market conditions, partially offset by
increased volumes at Hamilton Mine No. 1, pushed Illinois Basin
sales volumes lower by 4.0% compared to the Sequential Quarter. In
Appalachia, coal sales volumes decreased in the 2015 Quarter
compared to the 2014 Quarter due to reduced sales from our Tunnel
Ridge mine reflecting scaled back production in response to weak
coal demand. Due to weak coal demand and customer delays of
scheduled shipments, ARLP’s coal inventory remains elevated at 2.4
million tons at the end of the 2015 Quarter, compared to 1.4
million tons at the end of the 2014 Quarter.
ARLP's total coal sales price per ton in the 2015 Quarter
decreased compared to both the 2014 and Sequential Quarters
reflecting current market conditions. Reduced coal sales prices in
the Illinois Basin also reflect lower-priced legacy contracts at
the Hamilton Mine No. 1 assumed in the White Oak Acquisition.
Total Segment Adjusted EBITDA Expense per ton in the 2015
Quarter decreased 7.0% compared to the 2014 Quarter as a result of
reduced expenses per ton in the Illinois Basin offset by increased
costs in the Appalachian region. Primarily due to higher costs in
Appalachia, total Segment Adjusted EBITDA Expense per ton in the
2015 Quarter increased 1.7% compared to the Sequential Quarter. In
the Illinois Basin, Segment Adjusted EBITDA Expense per ton
decreased compared to both the 2014 and Sequential Quarters
primarily due to lower labor expenses and coal inventory charges,
as well as increased coal production and recoveries at our Gibson
South mine and a full quarter of lower cost per ton longwall
production at the Hamilton Mine No. 1. In Appalachia, Segment
Adjusted EBITDA Expense per ton increased by 26.7% and 28.8%
compared to the 2014 and Sequential Quarters, respectively, due to
reduced production at the Tunnel Ridge mine as a result of lower
demand and the need to manage coal inventories at the mine.
Outlook
"Conditions in the U.S. thermal coal markets continued to
deteriorate during the 2015 Quarter as mild weather reduced overall
power demand," said Mr. Craft. "Utilities responded by deferring
contracted tons and adding to their already above normal coal
stockpiles. Looking forward, we believe 2016 coal demand for our
Illinois Basin and northern Appalachia markets will be 6% to 7%
below 2015, depending on the weather. We are uncertain as to
whether utilities will satisfy this demand by reducing inventories
or taking advantage of current low spot prices and purchase coal to
match their coal burn."
Mr. Craft continued, "ARLP has elected to address this
uncertainty by shifting production to our lowest-cost mines and
reducing unit shifts and production days to curtail production. We
will continue to operate below our installed capacity until ARLP’s
customers provide clarity on the need for additional tons. The
impact of our response to current market conditions is reflected in
ARLP’s 2016 guidance provided below. Fortunately, despite
expectations for lower production and sales volumes in the near
term, ARLP’s low-cost, strategically located operations and our
ongoing cost reduction and efficiency efforts should help us to
navigate these challenging times. Even with this reduced production
level and costs incurred to keep production capacity available in
the event additional demand materializes, based upon our guidance
outlined below, we expect ARLP’s 2016 distributable cash flow to
cover its current unitholder distribution by 1.1 to 1.2 times."
For 2016, ARLP is providing the following full year guidance for
its operating and investment activities:
Capital Expenditures and Investments – Total 2016 capital
expenditures for ARLP’s operating activities are currently
estimated in a range of $134.0 to $142.0 million. Capital
expenditures for 2016 are primarily related to maintenance capital
expenditures including equipment rebuilds and replacements and mine
extension and other infrastructure projects at various operations.
Based on utilization of used equipment acquired from others and
re-deployment of equipment from ARLP’s idled operations to other
mines, we are currently estimating maintenance capital expenditures
of approximately $3.98 per ton produced in 2016. Considering its
current five-year planning horizon, ARLP is estimating total
average maintenance capital expenditures of approximately $4.75 per
ton produced for long-term distribution planning purposes.
In addition to these capital expenditures, ARLP currently
anticipates funding in 2016 investments of approximately $60.0 to
$70.0 million related to its commitment to acquire oil and gas
minerals.
Coal Production and Sales Volumes – During 2016, coal production
is currently estimated in a range of 33.7 to 35.7 million tons and
sales volumes are expected in a range of 34.6 to 38.1 million tons.
ARLP has secured price commitments for approximately 34.3 million
tons in 2016 and has also secured coal sales and price commitments
for approximately 19.1 million tons, 14.5 million tons and 7.1
million tons in 2017, 2018 and 2019, respectively.
Revenue, EBITDA and Net Income Estimates – Driven primarily by
reduced coal sales volumes and prices and lower other revenues,
ARLP is currently expecting 2016 revenues in a range of $1.82 to
$1.95 billion, excluding transportation revenues, EBITDA in a range
of $545.0 to $615.0 million and net income in a range of $230.0 to
$300.0 million. (For a definition of EBITDA and related
reconciliations to comparable GAAP financial measures, please see
the end of this release.)
Per Ton Estimates – ARLP currently anticipates its average coal
sales price per ton at the midpoint of its 2016 guidance ranges
will be 3.5% to 6.0% lower than 2015 realizations, primarily due to
the deterioration in near-term coal markets. In addition, based on
current cost and production estimates, ARLP anticipates total
Segment Adjusted EBITDA Expense per ton at the 2016 midpoint will
be comparable to 2015. Based on these price and cost estimates, and
reflecting lower other revenues following the White Oak
Acquisition, total Segment Adjusted EBITDA per ton sold at the 2016
midpoint is currently expected to be approximately 11.0% to 12.0%
below the prior year.
A conference call regarding ARLP’s 2015 Quarter and Year
financial results and 2016 outlook is scheduled for today at 9:00
a.m. Eastern. To participate in the conference call, dial (855)
793-3259 and provide passcode 18774166. International callers
should dial (631) 485-4928 and provide the same passcode 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 passcode number 18774166. International
callers should dial (404) 537-3406 and provide the same passcode
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 ten 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. 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 and ARLP’s Quarterly Reports on Form 10-Q for the quarters
ended March 31, 2015, June 30, 2015 and September 30, 2015, filed
on May 8, 2015, August 6, 2015 and November 6, 2015, respectively,
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 EndedDecember
31,
Year EndedDecember 31,
2015 2014 2015
2014 Tons Sold 9,971 10,049 40,247 39,731
Tons Produced 9,707 10,516 41,178 40,749
SALES AND
OPERATING REVENUES: Coal sales $ 525,513 $ 559,518 $ 2,158,006
$ 2,208,611 Transportation revenues 9,274 8,205 33,597 26,021 Other
sales and operating revenues 7,365 23,070
82,130 66,089 Total revenues
542,152 590,793 2,273,733
2,300,721
EXPENSES: Operating expenses
(excluding depreciation, depletion and amortization) 331,099
359,055 1,377,053 1,383,360 Transportation expenses 9,274 8,205
33,597 26,021 Outside coal purchases 1 7 327 14 General and
administrative 15,148 18,351 67,484 72,552 Depreciation, depletion
and amortization 90,983 71,027 333,713 274,566 Asset impairment
charge 89,435 - 100,130
- Total operating expenses 535,940
456,645 1,912,304 1,756,513
INCOME FROM OPERATIONS 6,212 134,148 361,429
544,208 Interest expense, net (7,527 ) (8,189 ) (31,153 )
(33,584 ) Interest income 38 433 1,459 1,671 Equity in income
(loss) of affiliates, net 3 (3,102 ) (49,046 ) (16,648 )
Acquisition gain, net 22,548 - 22,548 - Other income 205
388 955 1,566
INCOME BEFORE INCOME TAXES 21,479 123,678 306,192 497,213
INCOME TAX EXPENSE 4 -
21 -
NET INCOME 21,475
123,678 306,171 497,213
LESS: NET LOSS ATTRIBUTABLE TO
NONCONTROLLING INTEREST - 16
27 16
NET INCOME ATTRIBUTABLE TO
ALLIANCE RESOURCE PARTNERS, L.P. ("NET INCOME OF ARLP") $
21,475 $ 123,694 $ 306,198 $ 497,229
GENERAL PARTNERS’ INTEREST IN NET INCOME OF ARLP $
34,603 $ 34,809 $ 146,338 $ 138,274
LIMITED PARTNERS’ INTEREST IN NET INCOME OF ARLP $
(13,128 ) $ 88,885 $ 159,860 $ 358,955
BASIC AND DILUTED NET INCOME OF ARLP PER LIMITED PARTNER
UNIT $ (0.19 ) $ 1.18 $ 2.11 $ 4.77
DISTRIBUTIONS PAID PER LIMITED PARTNER UNIT $ 0.675 $
0.6375 $ 2.6625 $ 2.4725
WEIGHTED
AVERAGE NUMBER OF UNITS OUTSTANDING – BASIC AND DILUTED
74,188,784 74,060,634 74,174,389
74,044,417
ALLIANCE RESOURCE PARTNERS, L.P. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (In
thousands, except unit data) (Unaudited)
ASSETS
December 31, 2015 2014
CURRENT ASSETS: Cash and cash equivalents $ 33,431 $ 24,601
Trade receivables 122,875 184,187 Other receivables 696 1,025 Due
from affiliates 190 7,221 Inventories 121,081 83,155 Advance
royalties 6,820 9,416 Prepaid expenses and other assets
29,812 31,283 Total current assets 314,905
340,888
PROPERTY, PLANT AND EQUIPMENT: Property,
plant and equipment, at cost 3,044,260 2,815,620 Less accumulated
depreciation, depletion and amortization (1,243,985 )
(1,150,414 ) Total property, plant and equipment, net 1,800,275
1,665,206
OTHER ASSETS: Advance royalties 21,295
15,895 Due from affiliate - 11,047 Equity investments in affiliates
64,509 224,611 Goodwill 136,399 - Other long-term assets
25,747 27,412 Total other assets
247,950 278,965
TOTAL ASSETS $
2,363,130 $ 2,285,059
LIABILITIES AND PARTNERS'
CAPITAL CURRENT LIABILITIES: Accounts payable $ 83,597 $
85,843 Due to affiliates 129 370 Accrued taxes other than income
taxes 15,621 19,426 Accrued payroll and related expenses 37,031
57,656 Accrued interest 306 318 Workers' compensation and
pneumoconiosis benefits 8,688 8,868 Current capital lease
obligations 19,764 1,305 Other current liabilities 18,929 17,109
Current maturities, long-term debt 239,350
230,000 Total current liabilities 423,415 420,895
LONG-TERM LIABILITIES: Long-term debt, excluding current
maturities 580,000 591,250 Pneumoconiosis benefits 60,077 55,278
Accrued pension benefit 39,031 40,105 Workers' compensation 47,486
49,797 Asset retirement obligations 122,434 91,085 Long-term
capital lease obligations 80,150 15,624 Other liabilities
21,174 5,978 Total long-term liabilities
950,352 849,117 Total liabilities
1,373,767 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 1,280,218 1,310,517 General
Partners' deficit (258,883 ) (260,088 ) Accumulated other
comprehensive loss (34,557 ) (35,847 ) Total ARLP
Partners' Capital 986,778 1,014,582 Noncontrolling interest
2,585 465 Total Partners' Capital
989,363 1,015,047 TOTAL LIABILITIES AND
PARTNERS' CAPITAL $ 2,363,130 $ 2,285,059
ALLIANCE RESOURCE PARTNERS, L.P. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands) (Unaudited)
Year EndedDecember 31,
2015 2014 CASH FLOWS PROVIDED
BY OPERATING ACTIVITIES $ 716,342 $ 739,201
CASH FLOWS FROM INVESTING ACTIVITIES: Property, plant
and equipment: Capital expenditures (212,797 ) (307,387 ) Changes
in accounts payable and accrued liabilities (3,021 ) (2,270 )
Proceeds from sale of property, plant and equipment 2,062 381
Proceeds from insurance settlement for property, plant and
equipment - 4,512 Purchases of equity investments in affiliates
(64,540 ) (111,376 ) Payments for acquisitions of businesses, net
of cash acquired (74,953 ) - Payments to affiliate for acquisition
and development of coal reserves - (4,082 ) Payment for acquisition
of customer contracts - (11,687 ) Advances/loans to affiliate
(7,300 ) - Other 4,634 (9,313 ) Net cash used
in investing activities (355,915 ) (441,222 )
CASH FLOWS FROM FINANCING ACTIVITIES: Borrowings under
securitization facility 6,500 100,000 Payments under securitization
facility (23,400 ) - Payments under term loans (108,502 ) (18,750 )
Borrowings under revolving credit facilities 543,000 341,800
Payments under revolving credit facilities (308,000 ) (451,800 )
Payment on long-term debt (205,000 ) (18,000 ) Proceeds on capital
lease transaction 100,000 - Payments on capital lease obligations
(4,312 ) (1,494 ) Payment of debt issuance costs - (263 )
Contributions to consolidated company from affiliate noncontrolling
interest 2,147 481 Net settlement of employee withholding taxes on
vesting of Long-Term Incentive Plan (2,719 ) (2,991 ) Cash
contributions by General Partners 1,595 1,611 Distributions paid to
Partners (346,799 ) (317,626 ) Other (6,107 ) -
Net cash used in financing activities (351,597 )
(367,032 )
NET CHANGE IN CASH AND CASH
EQUIVALENTS 8,830 (69,053 )
CASH AND CASH EQUIVALENTS
AT BEGINNING OF PERIOD 24,601 93,654
CASH AND
CASH EQUIVALENTS AT END OF PERIOD $ 33,431 $ 24,601
Reconciliation of GAAP "net income" to
non-GAAP "Adjusted net income" (in thousands).
Adjusted net income is defined as net income (prior to the
allocation of noncontrolling interest) modified for certain items
that may not reflect the trend of future results, such as non-cash
impairments and gains and losses on acquisition related
accounting.
Adjusted net income should not be considered as an alternative
to net income or any other measure of financial performance
presented in accordance with GAAP. Adjusted net income excludes
certain items that management believes affect the comparability of
our operating results. This adjusted financial measure is used by
our management and external users of our financial statements, such
as investors, commercial banks, research analysts and others, to
assess:
- our operational trends and performance
relative to other coal companies;
- the comparability of our performance to
earnings estimates provided by security analysts; and
- our performance excluding items which
are generally nonrecurring in nature or whose timing or amount
cannot be reasonably estimated.
We believe Adjusted net income is a useful measure for investors
because it further demonstrates our financial performance without
regard to items that may not reflect the trend of future
results.
Three Months EndedDecember
31,
Year EndedDecember 31,
Three
MonthsEndedSeptember 30,
2015 2014 2015
2014 2015 Net income $ 21,475 $ 123,678 $
306,171 $ 497,213 $ 83,372 Asset impairment charge 89,435 - 100,130
- 10,695 Acquisition gain, net (22,548 ) -
(22,548 ) - - Adjusted net income $ 88,362 $
123,678 $ 383,753 $ 497,213 $ 94,067
Reconciliation of GAAP "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 non-cash impairments and gains and losses
on acquisition related accounting. 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.
We believe Adjusted EBITDA is a useful measure for investors
because it further demonstrates the performance of our assets
without regard to items that may not reflect the trend of future
results.
Distributable cash flow ("DCF") is defined as Adjusted 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, Adjusted 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, 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 EndedDecember
31,
Year EndedDecember 31,
Three
MonthsEndedSeptember 30,
Year EndedDecember 31,
2015 2014 2015
2014 2015 2016E Midpoint Net income $
21,475 $ 123,678 $ 306,171 $ 497,213 $ 83,372 $ 265,500
Depreciation, depletion and amortization 90,983 71,027 333,713
274,566 84,661 281,000 Interest expense, gross 7,666 7,756 30,389
32,746 7,219 33,500 Capitalized interest (177 ) - (695 ) (833 )
(152 ) - Income tax expense 4 -
21 - 12 - EBITDA
119,951 202,461 669,599 803,692 175,112 580,000 Asset impairment
charge 89,435 - 100,130 - 10,695 - Acquisition gain, net
(22,548 ) - (22,548 ) - -
- Adjusted EBITDA 186,838 202,461 747,181
803,692 185,807 580,000 Equity in (income) loss of affiliates, net
(3 ) 3,102 49,046 16,648 17,221 2,200 Interest expense, gross
(7,666 ) (7,756 ) (30,389 ) (32,746 ) (7,219 ) (33,500 ) Income tax
expense (4 ) - (21 ) - (12 ) - Estimated maintenance capital
expenditures (1) (48,147 ) (62,044 ) (204,243
) (240,419 ) (56,792 ) (164,700 )
Distributable Cash Flow $ 131,018 $ 135,763 $ 561,574
$ 547,175 $ 139,005 $ 384,000
Distributions paid to partners (2) $ 88,102 $ 82,282
$ 346,799 $ 317,626 $ 88,100
$
350,500 Distribution Coverage Ratio 1.49
1.65 1.62 1.72
1.58
1.10
(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 were assumed to be $4.96 per produced ton compared to
the estimated $5.90 per produced ton in 2014. For the 2016 planning
horizon, average annual estimated maintenance capital expenditures
are assumed to be $4.75 per ton produced compared to the estimated
$4.96 per ton produced in 2015. Reflecting the anticipated
utilization of used equipment acquired from third parties and
redeployment of used equipment from our idled operations to other
ARLP mines, we are currently estimating actual maintenance capital
expenditures in 2016 of $3.98 per ton produced. 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.
(2) At the midpoint of current 2016 guidance ranges, estimated
distributions paid to partners reflects the current quarterly
unitholder distribution of $0.675 per unit ($2.70 per unit
annualized) and the estimated weighted-average number of limited
partner units outstanding in 2016.
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 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 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. Outside coal
purchases are included in Segment Adjusted EBITDA Expense because
tons sold and coal sales include sales from outside coal
purchases.
Three Months EndedDecember
31,
Year EndedDecember 31,
Three
MonthsEndedSeptember 30,
2015 2014 2015
2014 2015 Operating expense $ 331,099 $
359,055 $ 1,377,053 $ 1,383,360 $ 336,527 Outside coal purchases 1
7 327 14 2 Other (income) loss (205 ) (388 )
(955 ) (1,566 ) (455 ) Segment Adjusted EBITDA
Expense $ 330,895 $ 358,674 $ 1,376,425 $ 1,381,808 $ 336,074
Divided by tons sold 9,971 10,049
40,247 39,731 10,294
Segment Adjusted EBITDA Expense per ton $ 33.19 $ 35.69
$ 34.20 $ 34.78 $ 32.65
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, asset impairment charge and
acquisition gain, net 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 EndedDecember
31,
Year EndedDecember 31,
Three
MonthsEndedSeptember 30,
2015 2014 2015
2014 2015 Adjusted EBITDA (See reconciliation
to GAAP above) $ 186,838 $ 202,461 $ 747,181 $ 803,692 $ 185,807
General and administrative 15,148 18,351
67,484 72,552 17,948 Segment Adjusted EBITDA $
201,986 $ 220,812 $ 814,665 $ 876,244 $ 203,755 Divided by tons
sold 9,971 10,049 40,247 39,731
10,294 Segment Adjusted EBITDA per ton $ 20.26 $ 21.97 $ 20.24 $
22.05 $ 19.79
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version on businesswire.com: http://www.businesswire.com/news/home/20160126005452/en/
Alliance Resource Partners, L.P.Brian L. Cantrell,
918-295-7673
Alliance Resource Partners (NASDAQ:ARLP)
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