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30.10.2017 12:00:00
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Alliance Holdings GP, L.P. Reports Quarterly Financial Results and Increases Quarterly Distribution by 0.7% to $0.735 Per Unit
Alliance Holdings GP, L.P. (NASDAQ: AHGP) today reported financial results for the quarter ended September 30, 2017 (the "2017 Quarter"). As previously announced, the Board of Directors of its general partner (the "Board") approved a distribution to unitholders of $0.735 per unit (an annualized rate of $2.94 per unit) for the 2017 Quarter, payable on November 17, 2017 to AHGP unitholders of record as of the close of trading on November 9, 2017. The announced distribution represents a 33.6% increase over the cash distribution of $0.55 for the quarter ended September 30, 2016 and a 0.7% increase over the cash distribution of $0.73 for the quarter ended June 30, 2017.
AHGP's principal sources of cash flow are its ownership interests in Alliance Resource Partners, L.P. (NASDAQ: ARLP). The declared distribution is based on the distribution AHGP will receive from its ownership interests in ARLP, which previously announced a quarterly distribution for the 2017 Quarter of $0.505 per unit, or $2.02 per unit on an annualized basis, payable on November 14, 2017 to all unitholders of record as of the close of trading on November 7, 2017. (See ARLP Press Release dated October 27, 2017.) Based on ARLP's current declared distribution, AHGP expects to receive quarterly cash distributions from ARLP of $44.7 million, or $178.8 million on an annualized basis. AHGP's primary cash requirements are for working capital, distributions to its unitholders and, for the 2017 full year, an estimated $1.9 million in general and administrative expenses.
Operating results for AHGP reflect those of the operating subsidiaries of ARLP and, as a result, AHGP reports its financial results on a consolidated basis with the financial results of ARLP. The consolidated net income of AHGP includes earnings and losses attributable to both AHGP and noncontrolling interests.
A joint conference call regarding AHGP and ARLP’s 2017 Quarter financial results is scheduled for today at 10:00 a.m. Eastern. To participate in the conference call, dial (888) 317-6016 and request to be connected to the Alliance Resource Partners, L.P. and Alliance Holdings GP, L.P. earnings conference call. Canadian callers should dial (855) 669-9657 and all other International callers should dial (412) 317-6016 and request to be connected to the same call. Investors may also listen to the call via the "investor information" section of ARLP's website at http://www.arlp.com or AHGP's website at http://www.ahgp.com.
An audio replay of the conference call will be available for approximately one week. To access the audio replay, dial US Toll Free (877) 344-7529; International Toll (412) 317-0088; Canada Toll Free (855) 669-9658 and request to be connected to replay access code 10113071.
About Alliance Holdings GP, L.P.
AHGP is a limited partnership formed to own and control ARLP's general partner through which it holds a non-economic general partner interest and an approximate one percent general partner interest in ARLP's operating subsidiary, Alliance Resource Operating Partners, L.P. In addition, AHGP owns 87,188,338 common units of ARLP.
News, unit prices and additional information about AHGP including filings with the Securities and Exchange Commission, are available at http://www.ahgp.com. For more information, contact the investor relations department of AHGP at (918) 295-1415 or via e-mail at investorrelations@ahgp.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 statements 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 the ability of ARLP and its consolidated subsidiaries (the "ARLP Partnership”) to respond to such changes; changes in coal prices, which could affect the ARLP Partnership's operating results and cash flows; risks associated with the expansion of the ARLP Partnership's operations and properties; legislation, regulations, and court decisions and interpretations thereof, including those relating to the environment and the release of greenhouse gases, mining, miner health and safety and health care; deregulation of the electric utility industry or the effects of any adverse change in the coal industry, electric utility industry, or general economic conditions; dependence on significant customer contracts, including renewing existing contracts upon expiration; changing global economic conditions or in industries in which the ARLP Partnership's 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; continuation or worsening of depressed oil and gas prices adversely affecting the ARLP Partnership’s investments in oil and gas mineral interests and midstream services; the ARLP Partnership's productivity levels and margins earned on its coal sales; changes in raw material costs; changes in the availability of skilled labor; the ARLP Partnership's ability to maintain satisfactory relations with its 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 the ARLP Partnership's surety bonds for mine reclamation as well as workers' compensation and black lung benefits; difficulty in making accurate assumptions and projections regarding post-mine reclamation as well as pension, black lung benefits and other post-retirement benefit liabilities; 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 the ARLP Partnership's coal reserves; a loss or reduction of benefits from certain tax deductions and credits; difficulty obtaining commercial property insurance, and risks associated with the ARLP Partnership's 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 investments in companies the ARLP Partnership does not control.
Additional information concerning these and other factors can be found in AHGP's public periodic filings with the Securities and Exchange Commission ("SEC"), including AHGP's Annual Report on Form 10-K for the year ended December 31, 2016, filed on February 24, 2017 and AHGP's Quarterly Reports on Form 10-Q for the quarters ended March 31, 2017 and June 30, 2017, filed on May 8, 2017 and August 4, 2017, respectively, with the SEC. Except as required by applicable securities laws, AHGP does not intend to update its forward-looking statements.
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ALLIANCE HOLDINGS GP, L.P. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND OPERATING DATA (In thousands, except unit and per unit data) (Unaudited) |
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| Three Months Ended | Nine Months Ended | |||||||||||||||||||
| September 30, | September 30, | |||||||||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||||||
| SALES AND OPERATING REVENUES: | ||||||||||||||||||||
| Coal sales | $ | 435,162 | $ | 533,817 | $ | 1,256,168 | $ | 1,357,578 | ||||||||||||
| Transportation revenues | 8,009 | 7,692 | 24,933 | 19,732 | ||||||||||||||||
| Other sales and operating revenues | 9,916 | 10,457 | 31,610 | 26,422 | ||||||||||||||||
| Total revenues | 453,087 | 551,966 | 1,312,711 | 1,403,732 | ||||||||||||||||
| EXPENSES: | ||||||||||||||||||||
| Operating expenses (excluding depreciation, depletion and amortization) | 295,385 | 326,891 | 796,845 | 842,417 | ||||||||||||||||
| Transportation expenses | 8,009 | 7,692 | 24,933 | 19,732 | ||||||||||||||||
| Outside coal purchases | — | 1,514 | — | 1,514 | ||||||||||||||||
| General and administrative | 15,389 | 18,987 | 47,160 | 55,175 | ||||||||||||||||
| Depreciation, depletion and amortization | 69,962 | 101,432 | 194,109 | 245,736 | ||||||||||||||||
| Total operating expenses | 388,745 | 456,516 | 1,063,047 | 1,164,574 | ||||||||||||||||
| INCOME FROM OPERATIONS | 64,342 | 95,450 | 249,664 | 239,158 | ||||||||||||||||
| Interest expense, net | (10,773 | ) | (8,001 | ) | (28,904 | ) | (23,386 | ) | ||||||||||||
| Interest income | 6 | 3 | 87 | 11 | ||||||||||||||||
| Equity in income of affiliates | 3,798 | 1,105 | 10,414 | 1,041 | ||||||||||||||||
| Cost investment income | 2,800 | — | 2,800 | — | ||||||||||||||||
| Debt extinguishment loss | — | — | (8,148 | ) | — | |||||||||||||||
| Other income | 774 | 293 | 2,461 | 545 | ||||||||||||||||
| INCOME BEFORE INCOME TAXES | 60,947 | 88,850 | 228,374 | 217,369 | ||||||||||||||||
| INCOME TAX EXPENSE (BENEFIT) | 4 | 6 | (3 | ) | 4 | |||||||||||||||
| NET INCOME | 60,943 | 88,844 | 228,377 | 217,365 | ||||||||||||||||
| LESS: NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS | (21,821 | ) | (40,337 | ) | (91,661 | ) | (92,643 | ) | ||||||||||||
| NET INCOME ATTRIBUTABLE TO ALLIANCE HOLDINGS GP, L.P. ("NET INCOME OF AHGP") | $ | 39,122 | $ | 48,507 | $ | 136,716 | $ | 124,722 | ||||||||||||
| BASIC AND DILUTED NET INCOME OF AHGP PER LIMITED PARTNER UNIT | $ | 0.65 | $ | 0.81 | $ | 2.28 | $ | 2.08 | ||||||||||||
| DISTRIBUTIONS PAID PER LIMITED PARTNER UNIT | $ | 0.73 | $ | 0.55 | $ | 1.83 | $ | 2.06 | ||||||||||||
| WEIGHTED AVERAGE NUMBER OF UNITS OUTSTANDING – BASIC AND DILUTED | 59,863,000 | 59,863,000 | 59,863,000 | 59,863,000 | ||||||||||||||||
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ALLIANCE HOLDINGS GP, L.P. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, except unit data) (Unaudited) |
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| September 30, | December 31, | |||||||||
| 2017 | 2016 | |||||||||
| ASSETS | ||||||||||
| CURRENT ASSETS: | ||||||||||
| Cash and cash equivalents | $ | 22,571 | $ | 44,525 | ||||||
| Trade receivables | 129,031 | 152,032 | ||||||||
| Other receivables | 709 | 279 | ||||||||
| Due from affiliates | 27 | 37 | ||||||||
| Inventories, net | 87,667 | 61,051 | ||||||||
| Advance royalties, net | 1,207 | 1,207 | ||||||||
| Prepaid expenses and other assets | 10,488 | 22,128 | ||||||||
| Total current assets | 251,700 | 281,259 | ||||||||
| PROPERTY, PLANT AND EQUIPMENT: | ||||||||||
| Property, plant and equipment, at cost | 2,938,362 | 2,920,988 | ||||||||
| Less accumulated depreciation, depletion and amortization | (1,436,470 | ) | (1,335,145 | ) | ||||||
| Total property, plant and equipment, net | 1,501,892 | 1,585,843 | ||||||||
| OTHER ASSETS: | ||||||||||
| Advance royalties, net | 40,578 | 29,372 | ||||||||
| Equity investments in affiliates | 144,349 | 138,817 | ||||||||
| Cost Investments | 102,800 | — | ||||||||
| Goodwill | 136,399 | 136,399 | ||||||||
| Other long-term assets | 33,041 | 25,997 | ||||||||
| Total other assets | 457,167 | 330,585 | ||||||||
| TOTAL ASSETS | $ | 2,210,759 | $ | 2,197,687 | ||||||
| LIABILITIES AND PARTNERS' CAPITAL | ||||||||||
| CURRENT LIABILITIES: | ||||||||||
| Accounts payable | $ | 74,289 | $ | 64,460 | ||||||
| Due to affiliates | 759 | 906 | ||||||||
| Accrued taxes other than income taxes | 20,578 | 18,288 | ||||||||
| Accrued payroll and related expenses | 41,124 | 41,576 | ||||||||
| Accrued interest | 13,083 | 316 | ||||||||
| Workers' compensation and pneumoconiosis benefits | 9,732 | 9,897 | ||||||||
| Current capital lease obligations | 28,220 | 27,196 | ||||||||
| Other current liabilities | 16,697 | 14,778 | ||||||||
| Current maturities, long-term debt, net | 100,000 | 149,874 | ||||||||
| Total current liabilities | 304,482 | 327,291 | ||||||||
| LONG-TERM LIABILITIES: | ||||||||||
| Long-term debt, excluding current maturities, net | 385,449 | 399,446 | ||||||||
| Pneumoconiosis benefits | 64,197 | 62,822 | ||||||||
| Accrued pension benefit | 39,497 | 42,070 | ||||||||
| Workers' compensation | 52,477 | 40,400 | ||||||||
| Asset retirement obligations | 125,146 | 125,266 | ||||||||
| Long-term capital lease obligations | 64,358 | 85,540 | ||||||||
| Other liabilities | 16,248 | 17,203 | ||||||||
| Total long-term liabilities | 747,372 | 772,747 | ||||||||
| Total liabilities | 1,051,854 | 1,100,038 | ||||||||
| PARTNERS’ CAPITAL: | ||||||||||
| Alliance Holdings GP, L.P. ("AHGP") Partners' Capital: | ||||||||||
| Limited Partners – Common Unitholders 59,863,000 units outstanding | 623,614 | 598,077 | ||||||||
| Accumulated other comprehensive loss | (25,270 | ) | (16,550 | ) | ||||||
| Total AHGP Partners' Capital | 598,344 | 581,527 | ||||||||
| Noncontrolling interests | 560,561 | 516,122 | ||||||||
| Total Partners’ Capital | 1,158,905 | 1,097,649 | ||||||||
| TOTAL LIABILITIES AND PARTNERS’ CAPITAL | $ | 2,210,759 | $ | 2,197,687 | ||||||
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ALLIANCE HOLDINGS GP, L.P. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited) |
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| Nine Months Ended | ||||||||||
| September 30, | ||||||||||
| 2017 | 2016 | |||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | $ | 454,818 | $ | 491,960 | ||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||||
| Property, plant and equipment: | ||||||||||
| Capital expenditures | (105,455 | ) | (70,267 | ) | ||||||
| Increase (decrease) in accounts payable and accrued liabilities | 4,182 | (7,965 | ) | |||||||
| Proceeds from sale of property, plant and equipment | 1,488 | 756 | ||||||||
| Contributions to equity investments in affiliates | (16,487 | ) | (65,367 | ) | ||||||
| Purchase of cost investment | (100,000 | ) | — | |||||||
| Distributions received from investments in excess of cumulative earnings | 10,880 | 2,167 | ||||||||
| Payment for acquisition of business | — | (1,011 | ) | |||||||
| Payment for acquisition of customer contracts | — | (23,000 | ) | |||||||
| Net cash used in investing activities | (205,392 | ) | (164,687 | ) | ||||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||||
| Borrowings under securitization facility | 100,000 | 44,600 | ||||||||
| Payments under securitization facility | (100,000 | ) | (27,700 | ) | ||||||
| Payments on term loan | (50,000 | ) | (106,250 | ) | ||||||
| Borrowings under revolving credit facilities | 165,000 | 140,000 | ||||||||
| Payments under revolving credit facilities | (420,000 | ) | (215,000 | ) | ||||||
| Borrowings under long-term debt | 400,000 | — | ||||||||
| Payment on long-term debt | (145,000 | ) | — | |||||||
| Proceeds on capital lease transactions | — | 33,881 | ||||||||
| Payments on capital lease obligations | (20,186 | ) | (17,769 | ) | ||||||
| Payment of debt issuance costs | (16,221 | ) | — | |||||||
| Payment for debt extinguishment | (8,148 | ) | — | |||||||
| Contributions to consolidated company from affiliate noncontrolling interest | 251 | 2,557 | ||||||||
| Net settlement of employee withholding taxes on vesting of ARLP Long-Term Incentive Plan | (2,988 | ) | (1,336 | ) | ||||||
| Contribution by limited partner - affiliate | 800 | — | ||||||||
| Distributions paid by consolidated partnership to noncontrolling interests | (62,143 | ) | (69,680 | ) | ||||||
| Distributions paid to Partners | (109,548 | ) | (123,318 | ) | ||||||
| Other | (3,197 | ) | (60 | ) | ||||||
| Net cash used in financing activities | (271,380 | ) | (340,075 | ) | ||||||
| NET CHANGE IN CASH AND CASH EQUIVALENTS | (21,954 | ) | (12,802 | ) | ||||||
| CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | 44,525 | 38,678 | ||||||||
| CASH AND CASH EQUIVALENTS AT END OF PERIOD | $ | 22,571 | $ | 25,876 | ||||||
View source version on businesswire.com: http://www.businesswire.com/news/home/20171030005293/en/
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