TULSA, Okla.--(BUSINESS WIRE)--
Alliance Resource Partners, L.P. (NASDAQ: ARLP) today reported increased
quarterly and record year-to-date revenues, EBITDA and net income for
the three months and nine months ended September 30, 2009 (the "2009
Quarter" and "2009 Period," respectively).
Comparing the 2009 Quarter to the quarter ended September 30, 2008 (the
"2008 Quarter"), revenues increased 4.8% to $299.6 million, EBITDA rose
19.7% to $72.8 million, and net income climbed 25.1% to $36.4 million,
or $0.57 of net income per basic and diluted limited partner unit. (For
a discussion of our net income presentation and a definition of EBITDA
and related reconciliations to comparable GAAP financial measures,
please see the end of this release.)
Revenues for the 2009 Period rose 10.3% to a record $932.8 million,
compared to the nine months ended September 30, 2008 (the "2008
Period"). EBITDA and net income also reached record levels in the 2009
Period, as EBITDA increased 32.1% to $257.7 million and net income
jumped 38.0% to $150.4 million, or $2.85 of net income per basic and
diluted limited partner unit, both compared to the 2008 Period.
ARLP also announced that the Board of Directors of its managing general
partner (the "Board") increased the cash distribution to unitholders for
the 2009 Quarter to $0.76 per unit (an annualized rate of $3.04 per
unit), payable on November 13, 2009 to all unitholders of record as of
the close of trading on November 6, 2009. The announced distribution
represents an 8.6% increase over the cash distribution of $0.70 for the
2008 Quarter and a 2.0% increase over the cash distribution of $0.745
for the second quarter of this year.
"ARLP again delivered solid performance in the third quarter of 2009,
posting strong year-over-year results," said Joseph W. Craft III,
President and Chief Executive Officer. "During the quarter ARLP also
continued to build for the future. We further strengthened our contract
position through a new long-term coal sales agreement with TVA. We also
achieved a significant milestone at our River View development as
initial coal production began at this new mine. In addition,
construction progressed on schedule at our Tunnel Ridge development
project. These accomplishments are particularly impressive in light of
the significant demand destruction for coal based electricity caused by
the worst recession our country has experienced since the Great
Depression. Our employees have worked hard to successfully manage these
market difficulties as well as the heavy government regulation facing
the coal industry and have kept ARLP on pace to post its ninth
consecutive year of record financial performance."
Consolidated Financial Results
Three Months Ended September 30, 2009 Compared to Three Months Ended
September 30, 2008
Revenues increased in the 2009 Quarter on the strength of higher pricing
under ARLP's coal sales contracts, which more than offset the decline in
tons sold. Average coal sales prices increased 11.7% in the 2009 Quarter
to $45.58 per ton sold, compared to $40.79 per ton sold in the 2008
Quarter. Unplanned customer outages, contractual deferrals and weak spot
market demand continued to impact coal sales volumes in the 2009
Quarter, resulting in a 6.4% decrease in sales volumes to 6.2 million
tons. Production volumes also declined 3.9% in the 2009 Quarter to 6.3
million tons as ARLP continued to adjust production levels to
contractual obligations and market demand.
Higher labor-related and sales-related expenses and costs related to the
River View and Tunnel Ridge mine development projects pushed total
operating expenses up 2.8% to $204.8 million in the 2009 Quarter,
compared to $199.3 million in the 2008 Quarter. As a result of ARLP's
cost control initiatives, these increases were partially offset by lower
materials and supplies expenses and contract mining costs. In addition,
reflecting the previously mentioned weakness in the spot coal market,
outside coal purchases declined $6.5 million in the 2009 Quarter
compared to the 2008 Quarter.
Financial results for the 2009 Quarter also benefited from a $1.6
million increase in other sales and operating revenues, primarily as a
result of higher product sales by Matrix Design Group - an ARLP
subsidiary providing leading-edge safety technology and services to the
coal industry. Depreciation, depletion and amortization increased in the
2009 Quarter to $28.1 million, compared to $25.4 million in the 2008
Quarter, as a result of continuing capital expenditures related to
infrastructure improvements, efficiency projects and expansion of
production capacity. In addition, net interest expense increased $1.5
million to $7.6 million, primarily due to lower interest income in the
2009 Quarter compared to the 2008 Quarter. General and administrative
expenses increased in the 2009 Quarter to $10.0 million, compared to
$7.2 million in the 2008 Quarter, primarily as a result of higher
unit-based incentive compensation expenses.
Nine Months Ended September 30, 2009 Compared to Nine Months Ended
September 30, 2008
Increased revenues in the 2009 Period reflect higher average coal sales
prices, which rose 18.2% to $46.76 per ton sold in the 2009 Period, more
than offsetting lower coal sales volumes of 18.9 million tons, which
declined approximately 1.4 million tons compared to the 2008 Period. As
discussed above, comparative financial results for the 2009 Period were
negatively impacted by higher operating expenses and depreciation,
depletion and amortization. Net interest expense also increased in the
2009 Period, compared to the 2008 Period, due to ARLP's $350 million
private placement of debt in June 2008. These impacts were partially
offset by increased other sales and operating revenues and lower outside
coal purchases in the 2009 Period, compared to the 2008 Period.
Comparative results between the 2009 and 2008 Periods were also impacted
by non-recurring benefits to net income in the second quarter of 2008
totaling $9.9 million related to favorable claims settlements and sale
of non-core coal reserves.
Regional Results and Analysis
% Change 2009
(in millions, except 2009 Third 2008 Third % Change
per ton data) Quarter / Second
Quarter Quarter Sequential
Quarter Quarter
Illinois Basin
Tons sold 4.925 4.934 (0.2)% 5.062 (2.7)%
Coal sales price per $42.11 $35.08 20.0% $43.06 (2.2)%
ton (1)
Segment Adjusted
EBITDA Expense per $27.93 $25.98 7.5% $27.88 0.2%
ton (2)
Segment Adjusted $70.1 $45.1 55.4% $77.0 (9.0)%
EBITDA (2)
Central Appalachia
Tons sold 0.604 0.810 (25.4)% 0.615 (1.8)%
Coal sales price per $68.43 $61.52 11.2% $66.70 2.6%
ton (1)
Segment Adjusted
EBITDA Expense per $57.64 $47.96 20.2% $56.69 1.7%
ton (2)
Segment Adjusted $6.5 $11.0 (40.9)% $6.2 4.8%
EBITDA (2)
Northern Appalachia
Tons sold 0.650 0.859 (24.3)% 0.570 14.0%
Coal sales price per $50.58 $54.00 (6.3)% $50.25 0.7%
ton (1)
Segment Adjusted
EBITDA Expense per $47.18 $43.40 8.7% $48.63 (3.0)%
ton( 2)
Segment Adjusted $3.2 $10.3 (68.9)% $1.6 100.0%
EBITDA (2)
Total (3)
Tons sold 6.179 6.603 (6.4)% 6.247 (1.1)%
Coal sales price per $45.58 $40.79 11.7% $46.04 (1.0)%
ton (1)
Segment Adjusted
EBITDA Expense per $33.21 $31.21 6.4% $32.77 1.3%
ton (2)
Segment Adjusted $82.8 $68.0 21.8% $86.4 (4.2)%
EBITDA (2)
(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 includes other, corporate and eliminations.
Reduced customer deliveries and generally weak coal demand resulted in
lower total coal sales volumes in the 2009 Quarter compared to both the
2008 Quarter and the second quarter of 2009. Coal sales volumes in the
Illinois Basin reflect reduced deliveries due to unplanned customer
outages and deferred contractual deliveries during the 2009 Quarter.
Weak demand in the Central Appalachian region also impacted contracted
delivery schedules, resulting in lower coal sales volumes in the 2009
Quarter. In addition, lower coal sales volumes in the Northern
Appalachian region reflect reduced spot market sales in the 2009 Quarter
compared to the 2008 Quarter. Northern Appalachian coal sales volumes
improved sequentially, however, primarily as a result of increased sales
into the export market. Coal inventories increased during the 2009
Quarter to a total of approximately 1.1 million tons, an increase of
approximately 600,000 tons over the 2008 Quarter and 140,000 tons over
the sequential 2009 quarter.
Comparing the 2009 Quarter to the 2008 Quarter, ARLP continued to
benefit from improved contract pricing as total average coal sales price
increased $4.79 per ton. Sequentially, the Illinois Basin region
realized lower average coal sales prices per ton in the 2009 Quarter
primarily due to reduced sales of higher-priced spot market tons. Sales
prices improved sequentially in Central Appalachia, primarily due to the
mix of coal shipments in the 2009 Quarter compared to the second quarter
of 2009, and in Northern Appalachia, due to the higher price realized on
the previously mentioned export sales.
Production adjustments in response to reduced coal demand, coal
inventory and, as previously discussed, increased labor-related and
sales-related expenses, along with costs related to development of the
River View and Tunnel Ridge mines all contributed to higher total
Segment Adjusted EBITDA expense per ton during the 2009 Quarter.
Increased labor-related expenses included higher workers' compensation
expense (primarily due to a non-cash charge related to discount rate
fluctuations), which impacted Segment Adjusted EBITDA expense by $1.08
per ton on a consolidated basis, $0.68 per ton in the Illinois Basin,
$0.90 per ton in Northern Appalachia and $4.44 per ton in Central
Appalachia. Sequentially, increased longwall run days drove Northern
Appalachia's Segment Adjusted EBITDA Expenses lower in the 2009 Quarter.
Outlook
Commenting on ARLP's outlook for the remainder of 2009, Mr. Craft said,
"Generally weak demand for electricity continues to dampen coal demand
in the markets we serve. Although there are signals that some segments
of the U.S. economy are beginning to stabilize and recent pressure on
coal demand from fuel switching has begun to abate as natural gas prices
increase, we believe slow growth in the industrial sector is likely to
keep power generation essentially flat in the near term. Anemic power
generation, coupled with historically high customer stockpiles, is
expected to constrain utility coal demand through most of 2010 as well.
On a positive note, metallurgical coal demand and pricing for this
product are rising. Despite these current challenges, we have
strengthened our coal sales position for 2010. ARLP recently contracted
for the 2010 delivery of approximately 450,000 tons into the higher
priced metallurgical coal export market and, as previously reported,
increased our commitments to TVA by two million tons annually for seven
years starting in 2010. To satisfy these new commitments as well as the
new base load contracts previously signed to open our new River View
mine, we expect our production will need to grow around 13% to 18% in
2010, compared to 2009. Longer term, our customers continue to value
ARLP's operational flexibility, product diversity and financial
stability. ARLP's strength has allowed us to secure commitments and
pricing for substantially all of our 2009 production, 90% to 95% of our
anticipated 2010 production, and 80% to 85% of estimated 2011
production. With these commitments, ARLP is well positioned to extend
its track record of superior performance into the future, including
growth in distributions to our unitholders."
Based on performance to date and current estimates, ARLP is now
anticipating results for the 2009 full year near the lower end of its
previous guidance ranges, which were, for coal sales and production,
25.9 to 26.4 million tons; revenues, excluding transportation revenues,
$1.20 to $1.30 billion; EBITDA, $335.0 to $365.0 million; and net
income, $185.0 to $215.0 million. ARLP continues to expect total capital
expenditures for 2009 in a range of $350.0 to $400.0 million. These
estimated ranges reflect ARLP's current expectations and its best
judgments regarding the coal markets, coal sales volumes and other
factors for the balance of 2009. As reflected in the Forward-Looking
Statements Disclosure below, a number of these factors are beyond ARLP's
control and, consequently, its actual results may differ from current
expectations.
A conference call regarding ARLP's 2009 Quarter financial results is
scheduled for today at 10:00 a.m. Eastern. To participate in the
conference call, dial (866) 713-8310 and provide pass code 52016000.
International callers should dial (617) 597-5308. 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 (888) 286-8010
and provide pass code 44482289. International callers should dial (617)
801-6888.
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 only publicly
traded master limited partnership involved in the production and
marketing of coal, is currently the fifth largest coal producer in the
eastern United States with operations in all major eastern coalfields.
ARLP operates eight mining complexes in Illinois, Indiana, Kentucky,
Maryland, and West Virginia. ARLP recently initiated operations at a
newly constructed mining complex in Kentucky and is constructing a new
mining complex in West Virginia. ARLP also operates a coal loading
terminal on the Ohio River at Mt. Vernon, Indiana. ARLP mining
activities are conducted in three geographic regions commonly referred
to in the coal industry as the Illinois Basin, Central Appalachian and
Northern Appalachian regions.
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. 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: increased competition in coal markets and our ability to
respond to the competition; sustained decreases in coal prices, which
could adversely affect our operating results and cash flows; decreases
in spot market prices for coal; risks associated with the expansion of
our operations and properties; 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; the impact and duration of the
current worldwide economic downturn; liquidity constraints, including
those resulting from the cost or unavailability of financing due to
current credit market conditions; customer bankruptcies or cancellations
or breaches to existing contracts; customer delays or defaults in making
payments; fluctuations in coal demand, prices and availability due to
labor and transportation costs and disruptions, equipment availability,
governmental regulations, including those related to carbon emissions,
and other factors; legislation, regulatory and court decisions and
interpretations thereof, including issues related to climate change and
miner health and safety; our productivity levels and margins earned on
our coal sales; greater than expected increases in raw material costs;
greater than expected shortage of skilled labor; any unanticipated
increases in labor costs, adverse changes in work rules, or unexpected
cash payments associated with post-mine reclamation and workers'
compensation claims; any unanticipated increases in transportation costs
and risk of transportation delays or interruptions; greater than
expected environmental regulation, costs and liabilities; a variety of
operational, geologic, permitting, labor and weather-related 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; coal market's
share of electricity generation; prices of fuel that compete with or
impact coal usage, such as oil or natural gas; replacement of coal
reserves; a loss or reduction of benefits from certain tax credits; and
difficulty obtaining commercial property insurance, and risks associated
with our participation (excluding any applicable deductible) in the
commercial insurance property program.
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, 2008, filed on March 2, 2009 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 Nine Months Ended
September 30, September 30,
2009 2008 2009 2008
Tons Sold 6,179 6,603 18,853 20,219
Tons Produced 6,304 6,561 19,500 19,893
SALES AND
OPERATING
REVENUES:
Coal sales $ 281,628 $ 269,318 $ 881,508 $ 800,043
Transportation 11,663 11,721 35,347 33,348
revenues
Other sales
and operating 6,353 4,751 15,993 12,211
revenues
Total revenues 299,644 285,790 932,848 845,602
EXPENSES:
Operating
expenses
(excluding 204,840 199,321 605,693 583,302
depreciation,
depletion and
amortization)
Transportation 11,663 11,721 35,347 33,348
expenses
Outside coal 517 6,995 5,709 14,450
purchases
General and 9,959 7,184 29,000 28,134
administrative
Depreciation,
depletion and 28,145 25,403 83,767 74,297
amortization
Gain from sale
of coal - - - (5,159 )
reserves
Net gain from
insurance - - - (2,790 )
settlement and
other
Total
operating 255,124 250,624 759,516 725,582
expenses
INCOME FROM 44,520 35,166 173,332 120,020
OPERATIONS
Interest (7,675 ) (8,134 ) (23,464 ) (14,372 )
expense
Interest 112 2,118 1,036 2,413
income
Other income 126 231 554 698
INCOME BEFORE 37,083 29,381 151,458 108,759
INCOME TAXES
INCOME TAX
EXPENSE 586 92 811 (633 )
(BENEFIT)
NET INCOME 36,497 29,289 150,647 109,392
LESS: NET
INCOME
ATTRIBUTABLE (53 ) (153 ) (232 ) (396 )
TO
NONCONTROLLING
INTEREST
NET INCOME
ATTRIBUTABLE
TO ALLIANCE
RESOURCE $ 36,444 $ 29,136 $ 150,415 $ 108,996
PARTNERS, L.P.
("NET INCOME
OF ARLP")
GENERAL
PARTNERS'
INTEREST IN $ 15,192 $ 11,512 $ 44,813 $ 32,331
NET INCOME OF
ARLP
LIMITED
PARTNERS'
INTEREST IN $ 21,252 $ 17,624 $ 105,602 $ 76,665
NET INCOME OF
ARLP
BASIC AND
DILUTED NET
INCOME OF ARLP $ 0.57 $ 0.47 $ 2.85 $ 2.08
PER LIMITED
PARTNER UNIT
(1)
DISTRIBUTIONS
PAID PER $ 0.745 $ 0.66 $ 2.19 $ 1.83
LIMITED
PARTNER UNIT
BASIC AND
DILUTED
WEIGHTED
AVERAGE NUMBER 36,661,029 36,613,458 36,653,710 36,601,769
OF UNITS
OUTSTANDING
(1)
(1) On January 1, 2009, we adopted retrospectively the
provisions of Financial Accounting Standards Board ("FASB") Accounting
Standards Codification ("ASC") 260-10-55-102 through 55-110, Master
Limited Partnerships (Emerging Issues Task Force No. 07-4,
Application of the Two-Class Method under FASB Statement No. 128,
Earnings Per Share, to Master Limited Partnerships) which impacts
our presentation of earnings per unit in periods when our aggregate net
income exceeds the aggregate distributions because undistributed
earnings are no longer allocated to the IDR holder as previously
prescribed.
ALLIANCE RESOURCE PARTNERS, L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except unit data)
(Unaudited)
September 30, December 31,
ASSETS
2009 2008
CURRENT ASSETS:
Cash and cash equivalents $ 91,634 $ 244,875
Trade receivables 93,532 87,922
Other receivables 3,662 6,018
Due from affiliates 86 -
Marketable securities 4,952 -
Inventories 49,239 26,510
Advance royalties 3,200 3,200
Prepaid expenses and other assets 802 10,070
Total current assets 247,107 378,595
PROPERTY, PLANT AND EQUIPMENT:
Property, plant and equipment, at cost 1,317,098 1,085,214
Less accumulated depreciation, depletion and (532,741 ) (468,784 )
amortization
Total property, plant and equipment, net 784,357 616,430
OTHER ASSETS:
Advance royalties 26,628 23,828
Other long-term assets 12,346 11,787
Total other assets 38,974 35,615
TOTAL ASSETS $ 1,070,438 $ 1,030,640
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES:
Accounts payable $ 65,534 $ 63,236
Due to affiliates 487 706
Accrued taxes other than income taxes 11,837 11,195
Accrued payroll and related expenses 23,709 20,555
Accrued interest 6,703 3,454
Workers' compensation and pneumoconiosis benefits 9,254 9,377
Current capital lease obligation 331 351
Other current liabilities 12,424 11,911
Current maturities, long-term debt 18,000 18,000
Total current liabilities 148,279 138,785
LONG-TERM LIABILITIES:
Long-term debt, excluding current maturities 422,000 440,000
Pneumoconiosis benefits 33,559 31,436
Accrued pension benefit 20,881 19,952
Workers' compensation 59,663 47,828
Asset retirement obligations 57,949 56,204
Due to affiliates 867 420
Long-term capital lease obligation 543 784
Other liabilities 6,140 5,039
Total long-term liabilities 601,602 601,663
Total liabilities 749,881 740,448
COMMITMENTS AND CONTINGENCIES
PARTNERS' CAPITAL:
Alliance Resource Partners, L.P. ("ARLP")
Partners' Capital:
Limited Partners - Common Unitholders 36,661,029 631,458 604,998
and 36,613,458 units outstanding, respectively
General Partners' deficit (293,652 ) (295,834 )
Accumulated other comprehensive income (loss) (18,408 ) (19,899 )
Total ARLP Partners' Capital 319,398 289,265
Noncontrolling interest 1,159 927
Total Partners' Capital 320,557 290,192
TOTAL LIABILITIES AND PARTNERS' CAPITAL $ 1,070,438 $ 1,030,640
ALLIANCE RESOURCE PARTNERS, L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Nine Months Ended
September 30,
2009 2008
CASH FLOWS PROVIDED BY OPERATING ACTIVITIES $ 238,349 $ 192,720
CASH FLOWS FROM INVESTING ACTIVITIES:
Property, plant and equipment:
Capital expenditures (251,453 ) (122,887 )
Changes in accounts payable and accrued liabilities 5,084 11,339
Proceeds from sale of property, plant and equipment 1 2,487
Proceeds from sale of coal reserves - 7,159
Purchase of marketable securities (4,527 ) -
Payment for acquisition of coal reserves and other - (29,800 )
assets
Receipts of prior advances on Gibson rail project 1,828 1,645
Net cash used in investing activities (249,067 ) (130,057 )
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of long-term debt - 350,000
Borrowings under revolving credit facilities - 88,850
Payments under revolving credit facilities - (116,850 )
Payments on capital lease obligation (261 ) (281 )
Payment on long-term debt (18,000 ) (18,000 )
Payment of debt issuance costs - (1,721 )
Net settlement of employee withholding taxes on (791 ) -
vesting of Long-Term Incentive Plan
Cash contributions by General Partners 31 866
Distributions paid to Partners (123,689 ) (96,912 )
Net cash provided by (used in) financing activities (142,710 ) 205,952
EFFECT OF CURRENCY TRANSLATION ON CASH 187 -
NET CHANGE IN CASH AND CASH EQUIVALENTS (153,241 ) 268,615
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 244,875 1,118
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 91,634 $ 269,733
Presentation of Net Income
On January 1, 2009 we adopted the provisions of Financial Accounting
Standards Board Accounting Standards Codification ("ASC") 810-10-65
(Statement of Financial Accounting Standards No. 160, Noncontrolling
Interests in Consolidated Financial Statements), which establishes
accounting and reporting standards for noncontrolling ownership interest
in subsidiaries. Prior to adoption of ASC 810-10-65, consolidated net
income included earnings attributable to ARLP but excluded earnings
attributable to noncontrolling interests. Consolidated net income now
includes earnings attributable to both ARLP and noncontrolling
interests. Unless otherwise noted, any reference above to net income in
this release represents net income attributable to ARLP.
Reconciliation of GAAP "Cash Flows
Provided by Operating Activities" to non-GAAP "EBITDA", Reconciliation
of non-GAAP "EBITDA" to GAAP "Net Income" and "Net Income Attributable
to ARLP" (in thousands).
EBITDA is defined as net income before net interest expense, income
taxes, depreciation, depletion and amortization and net income
attributable to noncontrolling interest. 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.
EBITDA should not be considered as an alternative 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 is not intended to represent cash
flow and does not represent the measure of cash available for
distribution. Our method of computing EBITDA may not be the same method
used to compute similar measures reported by other companies, or EBITDA
may be computed differently by us in different contexts (i.e. public
reporting versus computation under financing agreements).
Three Months Ended Nine Months Ended Year Ended
December 31,
September 30, September 30,
2009E
2009 2008 2009 2008
Midpoint
Cash flows
provided by $ 74,088 $ 41,921 $ 238,349 $ 192,720 $ 320,000
operating
activities
Non-cash
compensation (926 ) (1,376 ) (2,676 ) (2,854 ) (3,600 )
expense
Asset
retirement (669 ) (714 ) (2,008 ) (2,131 ) (2,700 )
obligations
Coal inventory
adjustment to (261 ) (100 ) (891 ) (639 ) (900 )
market
Net gain on
foreign - - 187 - 750
currency
exchange
Net gain
(loss) on sale
of property, (72 ) 774 (117 ) 773 (100 )
plant and
equipment
Gain on sale
of coal - - - 5,159 -
reserves
Other (126 ) (535 ) (400 ) (315 ) -
Net effect of
working (7,392 ) 14,722 1,970 (9,024 ) 5,750
capital
changes
Interest 7,563 6,016 22,428 11,959 29,800
expense, net
Income tax
expense 586 92 811 (633 ) 1,000
(benefit)
EBITDA 72,791 60,800 257,653 195,015 350,000
Depreciation,
depletion and (28,145 ) (25,403 ) (83,767 ) (74,297 ) (118,900 )
amortization
Interest (7,563 ) (6,016 ) (22,428 ) (11,959 ) (29,800 )
expense, net
Income tax
(expense) (586 ) (92 ) (811 ) 633 (1,000 )
benefit
Net income 36,497 29,289 150,647 109,392 200,300
Net income
attributable
to (53 ) (153 ) (232 ) (396 ) (300 )
noncontrolling
interest
Net income
attributable $ 36,444 $ 29,136 $ 150,415 $ 108,996 $ 200,000
to ARLP
Reconciliation of GAAP "Operating
Expenses" to non-GAAP "Segment Adjusted EBITDA Expense per ton" and
Reconciliation of non-GAAP "EBITDA" to "Segment Adjusted EBITDA" (in
thousand, except per ton data).
Segment Adjusted EBITDA Expense per ton represents the sum of 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, 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
September 30,
2009 2008
Operating expense $ 204,840 $ 199,321
Outside coal purchases 517 6,995
Other income (126 ) (231 )
Segment Adjusted EBITDA Expense $ 205,231 $ 206,085
Divided by tons sold 6,179 6,603
Segment Adjusted EBITDA Expense per ton $ 33.21 $ 31.21
Segment Adjusted EBITDA is defined as income before net interest
expense, income taxes, depreciation, depletion and amortization, general
and administrative expenses and income attributable to noncontrolling
interest.
Three Months Ended
September 30,
2009 2008
EBITDA (See reconciliation to GAAP above) $ 72,791 $ 60,800
General and administrative 9,959 7,184
Segment Adjusted EBITDA $ 82,750 $ 67,984
Source: Alliance Resource Partners, L.P.
Contact: Alliance Resource Partners, L.P.
Brian L. Cantrell,918-295-7673