Alliance Resource Partners, L.P. Reports Record First Quarter Financial Results, Declares Quarterly Cash Distribution of $0.75 Per Unit, and Increases Guidance.TULSA Tulsa (tŭl`sə), city (1990 pop. 367,302), seat of Tulsa co., NE Okla., on the Arkansas River east of its junction with the Cimarron; inc. 1898. , Okla. -- Alliance Resource Partners, L.P. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on : ARLP ARLP Acoustic Reference Level Plan ): --ALLIANCE RESOURCE PARTNERS, L.P. Reports Record First Quarter Financial Results Including 114% Increase to Net Income and 106% Increase to Net Income Per Basic Limited Partner Unit; Declares Quarterly Cash Distribution of $0.75 Per Unit; and Increases Guidance Alliance Resource Partners, L.P. (NASDAQ: ARLP) (the "Partnership") today reported record net income for the first quarter ended March 31, 2005 of $39.1 million, an increase of approximately 114% over 2004 first quarter net income of $18.2 million. Net income per basic limited partner unit increased to $2.06 in the 2005 first quarter, as compared to $1.00 per basic limited partner unit in the 2004 first quarter. The Partnership also reported record EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become (income before net interest expense, income taxes, depreciation, depletion depletion n. when a natural resource (particularly oil) is being used up. The annual amount of depletion may, ironically, provide a tax deduction for the company exploiting the resource because if the resource they are exploiting runs out, they will no longer be able , and amortization) of $56.9 million in the 2005 first quarter which reflects a 60% increase over 2004 first quarter EBITDA of $35.6 million. For a reconciliation of EBITDA to net income please see the last page of this release. The Partnership also announced that the Board of Directors of its managing general partner (the "Board") declared a quarterly cash distribution of $0.75 per unit for the first quarter ended March 31, 2005 (an annualized annualized Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. rate of $3.00 per unit), payable on May 13, 2005, to all unitholders of record as of May 6, 2005. Increases to the quarterly cash distribution are generally considered by the Board at its January January: see month. and July July: see month. meetings. "Led by increased coal production and sales volumes and higher coal prices, Alliance Resource Partners achieved record tons produced and sold, revenues, EBITDA and net income for the first quarter," said Joseph W. Craft III, President and Chief Executive Officer. "We were able to continue our record-setting pace as three of our operations, Warrior Warrior, river, Ala.: see Black Warrior. , Gibson County Gibson County is the name of several counties in the United States:
Revenues for the 2005 first quarter were $195.6 million, an increase of approximately 24% over revenues of $157.8 million for the comparable period last year. Revenues for the first quarter of 2005 were positively impacted by a 10% increase in tons of coal sold as compared to the 2004 first quarter. In addition, 2005 first quarter revenues benefited significantly from higher average coal sales prices which rose to $31.76 per ton sold, an increase of $3.48 per ton sold over 2004 first quarter average coal sales prices. Production increased approximately 12% to 5.7 million tons for the first quarter of 2005, as compared to 5.1 million tons for the same period in 2004. With the exception of its East Kentucky Kentucky, state, United States Kentucky (kəntŭk`ē, kĭn–), one of the so-called border states of the S central United States. It is bordered by West Virginia and Virginia (E); Tennessee (S); the Mississippi R. operations, all of the Partnership's mining operations contributed to the increased year-over-year production volume. Record results for the 2005 first quarter were achieved despite lost production, continuing fixed expenses and other expenses incurred as a result of the mine fire that occurred at the Excel A full-featured spreadsheet for Windows and the Macintosh from Microsoft. It can link many spreadsheets for consolidation and provides a wide variety of business graphics and charts for creating presentation materials. No. 3 mine, operated by the Partnership's MC Mining, LLC (Logical Link Control) See "LANs" under data link protocol. LLC - Logical Link Control subsidiary. (See ARLP Press Releases, dated December December: see month. 27, 2004, January 7, 2005, January 14, 2005, January 27, 2005, February February: see month. 21, 2005, and March 3, 2005.) For the 2005 first quarter, the Partnership reduced operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. by recording a $9.2 million receivable reflecting the current estimate of actual fire-related expenses incurred to-date that are considered probable of recovery under the Partnership's insurance policies, net of self-retention, various deductibles and 10% co-insurance co-insurance Managed care A cost-sharing requirement in many health insurance policies or health plans, in which the insured and insurer share payment of an approved charge/fee for covered services in a specified ratio, after an annual deductible is paid, up to a . The Partnership continues to analyze the full extent of expenses and losses pertaining per·tain intr.v. per·tained, per·tain·ing, per·tains 1. To have reference; relate: evidence that pertains to the accident. 2. to the Excel No. 3 mine fire and potential recoveries under its commercial property (including business interruption INTERRUPTION. The effect of some act or circumstance which stops the course of a prescription or act of limitation's. 2. Interruption of the use of a thing is natural or civil. ) insurance policies. Pending the completion of this analysis, however, the Partnership is unable to quantify Quantify - A performance analysis tool from Pure Software. the total impact of the mine fire on its financial results or provide assurance as to the eventual timing or amount of recovery of proceeds under its insurance policies. Total operating expenses increased to $119.4 million for the 2005 first quarter as compared to $104.3 million for the 2004 first quarter. The increase was primarily due to higher costs resulting from increased production, coal sales volumes, and sales related expenses. Operating expenses for the 2005 first quarter also increased as a result of higher employee medical costs, maintenance expense, and materials and supply costs (particularly steel, power and fuel). General and administrative expense decreased in the 2005 first quarter by $4.6 million to $5.7 million as compared to $10.3 million during the same period last year. The decreased general and administrative expense was primarily a result of lower incentive compensation expense, which was principally attributable to a decrease in the market value of the Partnership's common units during the 2005 first quarter and a reduction in the number of restricted units outstanding because of the vesting Vesting The process by which employees accrue non-forfeitable rights over employer contributions that are made to the employee's qualified retirement plan account. Notes: in November November: see month. 2004 of the Long-Term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. Incentive Plan units for grant years 2000 to 2002. The closing price for the Partnership's common units was $64.28 on March 31, 2005. Looking ahead, Mr. Craft said, "Development of our Elk Creek Elk Creek may refer to the following: California:
Based on its current projections, the Partnership is increasing estimated revenues, excluding transportation revenues, for 2005 to a range of $770 - $790 million. In addition, excluding the impact of any additional expenses, losses, or insurance recoveries attributable to the Excel No. 3 mine fire, the Partnership is increasing guidance for EBITDA to a range of $200 - $220 million and net income to a range of $120 - $140 million. For a reconciliation of estimated annual 2005 net income to estimated annual 2005 EBITDA, please see the last page of this release. 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. Alliance Resource Partners is the nation's only publicly traded master limited partnership involved in the production and marketing of coal. Alliance Resource Partners currently operates eight mining complexes in Illinois Illinois, river, United States Illinois, river, 273 mi (439 km) long, formed by the confluence of the Des Plaines and Kankakee rivers, NE Ill., and flowing SW to the Mississippi at Grafton, Ill. It is an important commercial and recreational waterway. , Indiana Indiana, state, United States Indiana, midwestern state in the N central United States. It is bordered by Lake Michigan and the state of Michigan (N), Ohio (E), Kentucky, across the Ohio R. (S), and Illinois (W). , Kentucky and Maryland Maryland (mâr`ələnd), one of the Middle Atlantic states of the United States. It is bounded by Delaware and the Atlantic Ocean (E), the District of Columbia (S), Virginia and West Virginia (S, W), and Pennsylvania (N). . FORWARD-LOOKING STATEMENTS forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. : 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 Contingencies (ISSN 1048-9851) is the bimonthly magazine of the American Academy of Actuaries, providing a large and diverse readership with general interest and technical articles on a wide range of issues related to the actuarial profession. include, but are not limited to, the following: competition in coal markets and our ability to respond to the competition; fluctuation Fluctuation A price or interest rate change. in coal prices, which could adversely affect our operating results and cash flows; deregulation Deregulation The reduction or elimination of government power in a particular industry, usually enacted to create more competition within the industry. Notes: Traditional areas that have been deregulated are the telephone and airline industries. of the electric utility industry or the effects of any adverse change in the domestic coal industry, electric utility industry, or general economic conditions; dependence on significant customer contracts, including renewing customer contracts upon expiration EXPIRATION. Cessation; end. As, the expiration of, a lease, of a contract, or statute. 2. In general, the expiration of a contract puts an end to all the engagements of the parties, except to those which arise from the non- fulfillment of obligations created of existing contracts; customer bankruptcies and/or cancellations of, 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 and other factors; our productivity levels and margins that we earn on our coal sales; any unanticipated increases in labor costs, adverse changes in work rules, or unexpected cash payments associated with post-mine reclamation Reclamation A claim for the right to return or the right to demand the return of a security that has been previously accepted as a result of bad delivery or other irregularities in the delivery and settlement process. and workers' compensation workers' compensation, payment by employers for some part of the cost of injuries, or in some cases of occupational diseases, received by employees in the course of their work. 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 ge·ol·o·gy n. pl. ge·ol·o·gies 1. The scientific study of the origin, history, and structure of the earth. 2. The structure of a specific region of the earth's crust. 3. A book on geology. , permitting, labor and weather-related factors; risks of major mine-related accidents or interruptions; results of litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. ; difficulty maintaining our surety bonds surety bond An insurance fee required before a duplicate security is issued to replace one that has been lost. The fee is approximately 4% of the market value of the security to be replaced. for mine reclamation Mine reclamation is the process of creating useful landscapes that meet a variety of goals, typically creating productive ecosystems (or sometimes industrial or municipal land) from mined land. as well as workers' compensation and black lung black lung: see pneumoconiosis. benefits; difficulty obtaining commercial property insurance; and risks associated with our 10.0% participation (excluding any applicable deductible That which may be taken away or subtracted. In taxation, an item that may be subtracted from gross income or adjusted gross income in determining taxable income (e.g., interest expenses, charitable contributions, certain taxes). ) in the commercial insurance property program. Additional information concerning these and other factors can be found in the Partnership's public periodic filings with the Securities and Exchange Commission ("SEC"), including the Partnership's Annual Report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the year ended December 31, 2004 filed on March 15, 2005 with the SEC. Except as required by applicable securities laws, the Partnership 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
March 31,
-----------------------
2005 2004
----------- -----------
Tons sold 5,631 5,110
Tons produced 5,729 5,112
SALES AND OPERATING REVENUES:
Coal sales $178,846 $144,539
Transportation revenues 9,623 6,838
Other sales and operating revenues 7,158 6,447
----------- -----------
Total revenues 195,627 157,824
----------- -----------
EXPENSES:
Operating expenses 119,393 104,328
Transportation expenses 9,623 6,838
Outside purchases 4,117 1,065
General and administrative 5,708 10,329
Depreciation, depletion and amortization 13,628 12,771
Interest expense 3,474 3,843
----------- -----------
Total operating expenses 155,943 139,174
----------- -----------
INCOME FROM OPERATIONS 39,684 18,650
OTHER INCOME 105 314
----------- -----------
INCOME BEFORE INCOME TAXES 39,789 18,964
INCOME TAX EXPENSE 710 739
----------- -----------
NET INCOME $39,079 $18,225
=========== ===========
GENERAL PARTNERS' INTEREST IN NET INCOME $1,685 $365
=========== ===========
LIMITED PARTNERS' INTEREST IN NET INCOME $37,394 $17,860
=========== ===========
BASIC NET INCOME PER LIMITED PARTNER UNIT $2.06 $1.00
=========== ===========
DILUTED NET INCOME PER LIMITED PARTNER UNIT $2.02 $0.97
=========== ===========
DISTRIBUTIONS PAID PER COMMON AND SUBORDINATED
UNIT $0.75 $0.5625
=========== ===========
WEIGHTED AVERAGE NUMBER OF UNITS
OUTSTANDING-BASIC 18,130,440 17,903,793
=========== ===========
WEIGHTED AVERAGE NUMBER OF UNITS
OUTSTANDING-DILUTED 18,496,414 18,439,099
=========== ===========
ALLIANCE RESOURCE PARTNERS, L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except unit data)
ASSETS
March 31, December 31,
2005 2004
----------- ------------
(Unaudited)
CURRENT ASSETS:
Cash and cash equivalents $28,157 $31,177
Trade receivables, net 75,577 56,967
Other receivables 11,659 1,637
Marketable securities 49,312 49,397
Inventories 18,645 13,839
Advance royalties 3,117 3,117
Prepaid expenses and other assets 3,180 4,345
----------- ------------
Total current assets 189,647 160,479
PROPERTY, PLANT AND EQUIPMENT:
Property, plant and equipment at cost 538,275 526,468
Less accumulated depreciation, depletion and
amortization (300,622) (292,900)
----------- ------------
Total property, plant and equipment 237,653 233,568
OTHER ASSETS:
Advance royalties 14,040 11,737
Coal supply agreements, net 2,042 2,723
Other long-term assets 4,017 4,277
----------- ------------
Total other assets 20,099 18,737
----------- ------------
TOTAL ASSETS $447,399 $412,784
=========== ============
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES:
Accounts payable $40,790 $30,961
Due to affiliates 9,386 10,338
Accrued taxes other than income taxes 12,605 10,742
Accrued payroll and related expenses 14,353 11,730
Accrued interest 1,662 5,402
Workers' compensation and pneumoconiosis
benefits 7,085 7,081
Other current liabilities 9,949 12,051
Current maturities, long-term debt 18,000 18,000
----------- ------------
Total current liabilities 113,830 106,305
LONG-TERM LIABILITIES:
Long-term debt, excluding current
maturities 162,000 162,000
Accrued pneumoconiosis benefits 20,657 19,833
Workers' compensation 27,121 25,994
Reclamation and mine closing 33,680 32,838
Due to affiliates 7,505 7,457
Other liabilities 3,228 3,170
----------- ------------
Total long-term liabilities 254,191 251,292
----------- ------------
Total liabilities 368,021 357,597
----------- ------------
COMMITMENTS AND CONTINGENCIES
PARTNERS' CAPITAL:
Common Unitholders 18,130,440 units
outstanding 387,454 363,658
General Partners' (302,809) (303,295)
Unrealized loss on marketable securities (145) (54)
Minimum pension liability (5,122) (5,122)
----------- ------------
Total Partners' capital 79,378 55,187
----------- ------------
TOTAL LIABILITIES AND PARTNERS' CAPITAL $447,399 $412,784
=========== ============
ALLIANCE RESOURCE PARTNERS, L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Three Months Ended
March 31,
-------------------
2005 2004
-------- --------
CASH FLOWS PROVIDED BY OPERATING ACTIVITIES $ 28,504 $ 34,533
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, plant and equipment (16,914) (13,427)
Proceeds from sale of property, plant and
equipment 193 254
Purchase of marketable securities (9,727) -
Proceeds from marketable securities 9,721 3,615
-------- --------
Net cash used in investing activities (16,727) (9,558)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions to Partners (14,797) (10,312)
-------- --------
Net cash used in financing activities (14,797) (10,312)
-------- --------
NET CHANGE IN CASH AND CASH EQUIVALENTS (3,020) 14,663
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 31,177 10,156
-------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 28,157 $ 24,819
======== ========
CASH PAID FOR:
Interest $ 7,546 $ 7,546
======== ========
Income taxes to taxing authorities $ 250 $ -
======== ========
Reconciliation of GAAP "Net Income" to non-GAAP "EBITDA" (in
thousands).
Three Months Year Ended
Ended December
March 31, 31,
----------------- -----------
2005E
2005 2004 Midpoint
-------- -------- -----------
Net income $39,079 $18,225 $130,000
Depreciation, depletion and amortization 13,628 12,771 63,000
Interest expense 3,474 3,843 13,500
Income taxes 710 739 3,500
-------- -------- -----------
EBITDA $56,891 $35,578 $210,000
======== ======== ===========
EBITDA is defined as net income before net interest expense, income taxes and depreciation, depletion and amortization. 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 INDEBTEDNESS. The state, of being in debt, without regard to the ability or inability of the party to pay the same. See 1 Story, Eq. 343; 2 Hill. Ab. 421. 2. ; --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 Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting . EBITDA is not intended to represent cash flow and does not represent the measure of cash available for distribution. Our method of computing computing - computer EBITDA may not be the same method used to compute To perform mathematical operations or general computer processing. For an explanation of "The 3 C's," or how the computer processes data, see computer. similar measures reported by other companies, or EBITDA may be computed differently by us in different contexts (i.e. public reporting versus computation Computation is a general term for any type of information processing that can be represented mathematically. This includes phenomena ranging from simple calculations to human thinking. under financing agreements Financing Agreements In the context of project financing, the documents which provide the project financing and sponsor support for the project as defined in the project contracts. ). |
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