Exhibit 99.1

PRESS RELEASE

 

Picture 1

CONTACT:

Brian L. Cantrell

Alliance Resource Partners, L.P.

1717 South Boulder Avenue, Suite 400

Tulsa, Oklahoma 74119

 

FOR IMMEDIATE RELEASE

(918) 295-7673

 

ALLIANCE RESOURCE PARTNERS, L.P.

 

Reports Quarterly Financial and Operating Results; Raises Quarterly Cash Distribution to $0.54 Per Unit; and Updates Guidance

 

TULSA, OKLAHOMA, July 26, 2019 —  Alliance Resource Partners, L.P. (NASDAQ: ARLP) today reported financial and operating results for the quarter ended June 30, 2019 (the "2019 Quarter").  Total revenues increased slightly to $517.1 million in the 2019 Quarter compared to $516.1 million for the quarter ended June 30, 2018 (the "2018 Quarter").  Net income attributable to ARLP for the 2019 Quarter declined to $58.1 million, or $0.44 per basic and diluted limited partner unit, compared to $86.2 million, or $0.64 per basic and diluted limited partner unit, for the 2018 Quarter.  EBITDA in the 2019 Quarter of $145.7 million was also lower compared to $168.3 million in the 2018 Quarter. (Unless otherwise noted, all references in this release to "net income" refer to "net income attributable to ARLP."  For a definition of EBITDA and related reconciliations to comparable GAAP financial measures, please see the end of this release.)

 

ARLP also announced today that the Board of Directors of its general partner increased the cash distribution to unitholders for the 2019 Quarter to $0.54 per unit (an annualized rate of $2.16 per unit), payable on August 14, 2019 to all unitholders of record as of the close of trading on August 7, 2019.  The announced distribution represents a 3.8% increase over the cash distribution of $0.52 per unit for the 2018 Quarter and a 0.9% increase over the cash distribution of $0.535 per unit for the quarter ended March 31, 2019 (the "Sequential Quarter").

 

"Mild temperatures, swollen rivers and declining natural gas prices led to lower coal demand in the 2019 Quarter. Flooding and high water continued to delay approximately 500,000 tons of planned export shipments in the 2019 Quarter, which we expect will be shipped in the second half of the year," said Joseph W. Craft III, Chairman, President and Chief Executive Officer. "Operating cost per ton sold for the 2019 Quarter was impacted primarily by lower production due to two longwall moves, one at our Hamilton mine in the Illinois Basin and the other at our Tunnel Ridge mine in the Appalachia region, as well as our previously announced delay of ARLP’s planned growth ramp for Illinois Basin production intended for sale in the export market. An unexpected $4.8 million non-cash accrual was also booked in the 2019 Quarter as a result of a mid-year actuarial adjustment for workers’ compensation expense."

 

Mr. Craft added, "As expected, our oil and gas minerals segment delivered double digit Segment Adjusted EBITDA growth compared to both the 2018 Quarter and the Sequential Quarter. We are on track to close the previously announced $145 million Wing acquisition early next month which

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will increase our ownership position in the prolific liquids rich Midland Basin and add to our earnings in 2019 and beyond." 

 

Consolidated Financial Results

 

Three Months Ended June 30, 2019 Compared to Three Months Ended June 30, 2018

 

Coal Operations –

 

Reflecting lower coal sales volumes and prices, coal sales revenues for the 2019 Quarter decreased 3.1% to $461.3 million, compared to $475.9 million for the 2018 Quarter.  Coal sales volumes declined 2.6% to 10.2 million tons as persistent, weather-related transportation issues resulted in the delay of approximately 500,000 tons out of 750,000 tons of planned coal shipments deferred from the first quarter of 2019 while the 2018 Quarter benefited from the fulfillment of 1.4 million tons of shipments delayed in the first quarter of 2018.  Coal sales price realizations declined slightly in the 2019 Quarter to $45.16 per ton sold, compared to $45.38 per ton sold during the 2018 Quarter.  Production volumes increased 3.3% compared to the 2018 Quarter to 10.0 million tons, primarily due to increased production from the addition of two mining units at our River View mine, strong performance at our Tunnel Ridge mine and a full quarter of production from our Gibson North mine, which resumed operations in the 2018 Quarter. Transportation revenues and expenses increased to $32.6 million in the 2019 Quarter from $27.5 million in the 2018 Quarter primarily due to higher shipping costs for coal exported to international markets.

 

Total Segment Adjusted EBITDA Expense per ton increased 4.6% in the 2019 Quarter to $31.11 per ton, compared to $29.73 per ton in the 2018 Quarter, due to a longwall move at our Hamilton mine, lower recoveries at our River View mine due to adverse geological conditions, mid-year actuarial adjustments to workers' compensation expense in both regions and increased labor expenses per ton in the Illinois Basin.  Lower coal sales revenues and higher expenses in the 2019 Quarter led total Segment Adjusted EBITDA from our coal operations to decline 12.8% to $154.2 million, compared to $176.8 million for the 2018 Quarter.  (For a definition of Segment Adjusted EBITDA, Segment Adjusted EBITDA Expense and related reconciliation to comparable GAAP financial measures, please see the end of this release.) 

 

Minerals  –

 

For the 2019 Quarter, our mineral interests contributed total revenues of $12.4 million, which includes oil & gas royalty revenues and lease bonuses reflected in other revenues.  Including equity income from our AllDale III investment, ARLP’s mineral segment contributed Segment Adjusted EBITDA of $11.1 million to results for the 2019 Quarter, compared to a contribution of $4.7 million in the 2018 Quarter.  (Following the AllDale acquisition, results related to the mineral interests controlled by ARLP are included in our consolidated results while activity related to our limited partner interest in AllDale III continues to be reflected as equity method investment income.  Please see ARLP Press Release dated January 3, 2019 for a full description of the AllDale acquisition.)

 

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As a result of the redemption by Kodiak Gas Services, LLC ("Kodiak") of our preferred equity interest for $135.0 million cash in the Sequential Quarter, ARLP did not realize equity securities income in the 2019 Quarter, compared to $3.9 million in the 2018 Quarter.

 

Compared to the 2018 Quarter, depreciation, depletion and amortization increased 6.6% to $76.9 million primarily due to depletion from production of our oil & gas royalty interests in the 2019 Quarter.

 

Six Months Ended June 30, 2019 Compared to Six Months Ended June 30, 2018

 

Total revenues, excluding transportation revenues, increased 5.9% to $980.8 million for the six months ended June 30, 2019 (the “2019 Period”), compared to $925.9 million for the six months ended June 30, 2018 (the “2018 Period”), primarily due to increased coal sales volumes, higher coal sales prices and the addition of oil & gas royalty revenues in the 2019 Period.  Higher revenues, combined with the contribution of our minerals segment, including a $170.0 million non-cash net gain related to the AllDale acquisition, and the redemption of our preferred interest in Kodiak led to increased net income, which rose 38.2% to $334.5 million for the 2019 Period, or $2.57 per basic and diluted limited partner unit, compared to $242.1 million, or $1.80 per basic and diluted limited partner unit, for the 2018 Period.  EBITDA also increased 27.1% in the 2019 Period to $504.5 million compared to $396.8 million in the 2018 Period.  Excluding the 2019 Period impact of the gain related to the AllDale acquisition and an $80.0 million net gain on settlement of litigation in the 2018 Period (each described in more detail below), Adjusted EBITDA increased 5.6% to $334.6 million in the 2019 Period, compared to $316.8 million for the 2018 Period.  (For a definition of Adjusted EBITDA and related reconciliations to comparable GAAP financial measures, please see the end of this release.)

 

Coal Operations –

 

Due to increased coal sales volumes and prices, coal sales revenues for the 2019 Period increased 4.2% to $937.3 million, compared to $899.5 million for the 2018 Period.  For the 2019 Period, strong performance at our Tunnel Ridge mine, increased volumes from our River View mine due to the additional two production units previously mentioned and the resumption of operations in the 2018 Quarter at our Gibson North mine drove coal sales volumes up by 3.3% to 20.5 million tons and production volumes higher by 5.8% to 21.4 million tons, both as compared to the 2018 Period. Total coal sales volumes benefited from increased domestic shipments offset in part by a reduction in export volumes due to weather disruptions throughout the first half of 2019.  Coal sales price realizations increased 0.9% to $45.64 per ton sold in the 2019 Period, compared to $45.23 per ton sold during the 2018 Period.  Transportation revenues and expenses increased to $62.9 million in the 2019 Period from $47.3 million in the 2018 Period primarily due to increased transportation cost of coal shipped to international markets.

 

Total Segment Adjusted EBITDA Expense per ton for our coal operations increased 1.3% in the 2019 Period to $30.13 per ton, compared to $29.73 per ton in the 2018 Period, primarily due to increased workers’ compensation expense and increased labor and materials and supplies expenses per ton at certain mines in addition to a longwall move in the 2019 Period at our Hamilton mine.  Expenses per ton benefited from a higher production and sales

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mix from our lower cost per ton mines in addition to a strong production performance at Tunnel Ridge mentioned above. 

 

Increased coal sales revenues drove Segment Adjusted EBITDA from our coal operations higher to $338.8 million for the 2019 Period, compared to $334.7 million for the 2018 Period.    

 

Minerals –

 

For the 2019 Period, our mineral interests contributed total revenues of $23.2 million which includes oil & gas royalty revenues and lease bonuses reflected in other revenues.  We also recorded in the 2019 Period a non-cash acquisition gain of $177.0 million, of which $7.1 million was attributable to noncontrolling interest, to reflect the fair value of the interests in AllDale I and II we already owned at the time of the AllDale acquisition.  Inclusive of this gain, our minerals segment contributed $174.6 million to ARLP’s net income, compared to $8.2 million for the 2018 Period.  Excluding the impact of the acquisition gain, Segment Adjusted EBITDA related to oil & gas royalties increased to $20.2 million for the 2019 Period, compared to $8.2 million for the 2018 Period.

 

ARLP's equity securities income increased $5.3 million in the 2019 Period compared to the 2018 Period primarily as a result of an $11.5 million cash premium received upon the early redemption of our preferred equity interest in Kodiak in the Sequential Quarter.

 

In the 2018 Period, ARLP finalized an agreement with a customer and certain of its affiliates to settle litigation we initiated in 2015.  The settlement agreement provided for a $93.0 million cash payment to ARLP, future conditional coal supply commitments, continued export trans-loading capacity for our Appalachian mines and the acquisition of 57 million tons of additional coal reserves near our Tunnel Ridge operation.  A settlement gain of $80.0 million was recorded in the 2018 Period reflecting the cash payment received net of certain costs associated with the gain.

 

Compared to the 2018 Period, depreciation, depletion and amortization increased 10.5% to $148.1 million primarily due to increased coal sales volumes and depletion from production of our oil & gas royalty interests in the 2019 Period.

 

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Segment Results and Analysis

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

 

 

    

 

 

    

% Change

    

 

 

    

 

 

 

 

2019 Second

 

2018 Second

 

Quarter /

 

2019 First

 

% Change

(in millions, except per ton and per BOE data)

 

Quarter

 

Quarter

 

Quarter

 

Quarter

 

Sequential

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Coal Operations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Illinois Basin

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tons sold

 

 

7.567

 

 

7.820

 

(3.2)

%  

 

 

7.673

 

(1.4)

%  

Coal sales price per ton (1)

 

$

39.91

 

$

39.70

 

0.5

%  

 

$

41.35

 

(3.5)

%  

Segment Adjusted EBITDA Expense per ton (2)

 

$

27.53

 

$

25.94

 

6.1

%  

 

$

25.73

 

7.0

%  

Segment Adjusted EBITDA (2)

 

$

96.1

 

$

112.0

 

(14.2)

%  

 

$

122.7

 

(21.7)

%  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Appalachia

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tons sold

 

 

2.649

 

 

2.666

 

(0.6)

%  

 

 

2.648

 

 —

%  

Coal sales price per ton (1)

 

$

59.63

 

$

61.10

 

(2.4)

%  

 

$

59.46

 

0.3

%  

Segment Adjusted EBITDA Expense per ton (2)

 

$

39.68

 

$

38.84

 

2.2

%  

 

$

37.67

 

5.3

%  

Segment Adjusted EBITDA (2)

 

$

53.8

 

$

60.1

 

(10.5)

%  

 

$

58.7

 

(8.3)

%  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Coal

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tons sold

 

 

10.216

 

 

10.488

 

(2.6)

%  

 

 

10.321

 

(1.0)

%  

Coal sales price per ton (1)

 

$

45.16

 

$

45.38

 

(0.5)

%  

 

$

46.12

 

(2.1)

%  

Segment Adjusted EBITDA Expense per ton (2)

 

$

31.11

 

$

29.73

 

4.6

%  

 

$

29.17

 

6.7

%  

Segment Adjusted EBITDA (2)

 

$

154.2

 

$

176.8

 

(12.8)

%  

 

$

184.6

 

(16.5)

%  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Minerals (3)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Volume - BOE

 

 

0.274

 

 

 —

 

n/m

 

 

 

0.252

 

8.7

%  

Volume - oil percentage of BOE

 

 

53.7

%

 

 —

 

n/m

 

 

 

53.2

%

0.9

%  

Average sales price - BOE (4)

 

$

43.52

 

$

 —

 

n/m

 

 

$

41.20

 

5.6

%  

Segment Adjusted EBITDA Expense (2)

 

$

1.77

 

$

 —

 

n/m

 

 

$

1.83

 

(3.4)

%  

Segment Adjusted EBITDA (2), (3)

 

$

11.1

 

$

4.7

 

n/m

 

 

$

9.1

 

21.5

%  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated Total (5)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenues

 

$

517.1

 

$

516.1

 

0.2

%  

 

$

526.6

 

(1.8)

%  

Segment Adjusted EBITDA Expense (2)

 

$

319.6

 

$

311.8

 

2.5

%  

 

$

302.9

 

5.5

%  

Segment Adjusted EBITDA (2)

 

$

165.3

 

$

185.3

 

(10.8)

%  

 

$

206.6

 

(20.0)

%  


The following information was filed by Alliance Resource Partners Lp (ARLP) on Friday, July 26, 2019 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-Q Quarterly Report statement of earnings and operation as management may choose to highlight particular information in the press release.

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