ARLP Coal Sales Increased To $476 Million In Q1

TULSA, OK - Alliance Resource Partners, L.P. (ARLP) reported coal sales revenues for the 2019 Quarter increased 12.4% to $476.0 million, compared to $423.6 million for the 2018 Quarter, due to increased coal sales volumes and prices. Coal sales volumes of 10.3 million tons were 9.8% higher than the 2018 Quarter, primarily reflecting strong sales performance at our Tunnel Ridge mine, increased volumes from our River View mine due to the addition of two production units in the second half of 2018 and the resumption of operations in the second quarter of 2018 at our Gibson North mine. Coal sales price realizations increased 2.3% to $46.12 per ton sold in the 2019 Quarter, compared to $45.07 per ton sold during the 2018 Quarter. Transportation revenues and expenses increased to $30.2 million in the 2019 Quarter from $19.8 million in the 2018 Quarter primarily due to an increased transportation cost of coal shipped to international markets.

Compared to the 2018 Quarter, operating expenses increased 9.2% to $302.7 million, resulting from increased coal sales volumes. Total Segment Adjusted EBITDA Expense per ton for our coal operations decreased 1.9% in the 2019 Quarter to $29.17 per ton, compared to $29.74 per ton in the 2018 Quarter, due to increased volumes from our lower cost mines.

"ARLP opened 2019 with strong financial and operating results, posting increased coal sales and production volumes, higher per ton coal price realizations and lower costs per ton during the first quarter," said Joseph W. Craft III, Chairman, President and Chief Executive Officer. "With completion of the AllDale transaction in early January, the increased contribution from our oil & gas royalty platform also contributed to ARLP’s increased revenues, net income and EBITDA for the 2019 Quarter."

Financial and operating results for the quarter ended March 31, 2019 (the "2019 Quarter"). Increased coal sales volumes, improved coal sales prices and the addition of oil & gas royalty revenues in the 2019 Quarter drove total revenues higher by 15.2% to $526.6 million, compared to $457.1 million for the quarter ended March 31, 2018 (the "2018 Quarter"). Higher revenues, combined with gains related to the AllDale transaction and the redemption of our preferred interest in Kodiak (each described in more detail below) led to increased net income attributable to ARLP, which rose 77.3% to $276.4 million for the 2019 Quarter, or $2.12 per basic and diluted limited partner unit, compared to $155.9 million, or $1.16 per basic and diluted limited partner unit, for the 2018 Quarter. EBITDA also increased 57.0% in the 2019 Quarter to $358.8 million compared to $228.5 million in the 2018 Quarter. Excluding the impact of the gain related to the AllDale acquisition in the 2019 Quarter and a gain on settlement of litigation in the 2018 Quarter, Adjusted EBITDA increased to $188.8 million in the 2019 Quarter, compared to $148.5 million for the 2018 Quarter. 

The resumption of operations at our Gibson North mine in the second quarter of 2018 and the addition of two production units at the River View mine in the second half of 2018 drove Illinois Basin coal sales volumes in the 2019 Quarter higher by 9.5% to 7.7 million tons compared to the 2018 Quarter. Sequentially, coal sales tons in the Illinois Basin decreased 3.9% due to lower sales volumes from our Gibson Complex mines, partially offset by increases at River View. Strong sales performance at our Tunnel Ridge longwall operation led coal sales volumes for the 2019 Quarter higher in Appalachia by 10.8% and 6.6% compared to the 2018 and Sequential Quarters, respectively.

ARLP ended the 2019 Quarter with total coal inventory of 1.6 million tons, a reduction of 0.2 million tons compared to the end of the 2018 Quarter. Coal inventory increased 1.0 million tons compared to the end of the Sequential Quarter, primarily due to increased in-transit tons resulting from river transportation disruptions in the 2019 Quarter.

Illinois Basin coal sales price per ton sold in the 2019 Quarter increased 5.0% due to improved domestic market conditions and higher export sales prices compared to the 2018 Quarter. In Appalachia, coal sales price per ton decreased 7.1% compared to the Sequential Quarter due to decreased price realizations at our MC Mining and Tunnel Ridge mines, partially offset by an increased mix of higher-priced metallurgical coal at our Mettiki mine.

In the Illinois Basin, Segment Adjusted EBITDA Expense per ton decreased 1.6% compared to the 2018 Quarter primarily due to increased sales of lower-cost production from our River View and Gibson North mines and improved recoveries from our Hamilton mine in the 2019 Quarter. Increased production from our lower-cost mines in the 2019 Quarter also resulted in a 2.4% reduction of Segment Adjusted EBITDA Expense per ton in the Illinois Basin compared to the Sequential Quarter. In Appalachia, Segment Adjusted EBITDA Expense per ton decreased 2.7% and 3.4% compared to the 2018 and Sequential Quarters, respectively, due to increased volumes and improved recoveries from our Tunnel Ridge mine in the 2019 Quarter.

Total Segment Adjusted EBITDA increased 25.1% compared to the 2018 Quarter primarily due to improved performance from our coal operations as discussed above. In addition, Total Segment Adjusted EBITDA compared to the 2018 and Sequential Quarters benefited from the Acquisition in the 2019 Quarter. Segment Adjusted EBITDA from our Royalty segment increased by $5.5 million and $1.8 million compared to the 2018 and Sequential Quarters, respectively.

"Focusing on the U.S., ARLP’s teams effectively managed around the disruptive weather conditions encountered during the 2019 Quarter," said Craft. "Unprecedented flooding and high water levels significantly disrupted barge deliveries throughout the river and port systems, delaying the shipment of approximately 750,000 tons of ARLP’s expected deliveries during the 2019 Quarter. Looking ahead, once river and gulf port conditions return to normal, we anticipate ARLP’s delayed shipments will be made up over the next several months. We also expect lower customer inventory levels in the eastern U.S. should support utility coal purchases in the second half of 2019, allowing us to meet our domestic sales target of approximately 32.5 million tons for the year — a 10% gain over 2018 results."

The company’s address is 1717 South Boulder Ave., Suite 400, Tulsa, OK 74119, (918) 295-7600, www.arlp.com.