Alliance turns in record coal sales volumes in Q2 2014

Alliance Resource Partners LP (NASDAQ: ARLP) on July 28 said that led by record coal sales volumes, its revenues increased to a record $598.6m in the second quarter, an increase of 8.1% compared to the year-ago quarter.

The coal producer also posted records in the 2014 second quarter for net income, which climbed 32.3% to $137.7m, and EBITDA, which increased 19.4% to $213m.

“Building on its strong start to the year, ARLP continued its record-setting performance by once again posting new operating and financial benchmarks in the 2014 Quarter,” said Joseph Craft III, President and Chief Executive Officer. “Our Tunnel Ridge mine turned in its second consecutive solid quarter. Our other Appalachia mines, MC Mining and Mettiki also performed well, driving our costs per ton for this operating segment to its lowest level ever. Record coal sales volumes also contributed to our outstanding results this quarter, as coal inventories fell significantly to approximately 501,000 tons. Based on our record quarterly results and its confidence in ARLP’s future performance and growth prospects, our Board is pleased to share this success with our unitholders by increasing distributions for the twenty-fifth consecutive quarter.”

For the 2014 second quarter, increased volumes from the longwall operation at Tunnel Ridge in northern West Virginia, the start-up of coal production at the Gibson South mine in Indiana, and strong sales performance at the Dotiki, Gibson North, River View and MC Mining mines, drove coal sales volumes up 5.6% to a record 10.4 million tons.

ARLP’s total average coal sales price of $55.51 per ton sold in the 2014 second quarter was slightly higher compared to $55.17 per ton sold for the 2013 second quarter. Compared to the 2013 second quarter, coal production decreased 3.5% to 9.8 million tons in the 2014 second quarter, primarily due to the continued transition to a new mining area at the Warrior mine, the timing of mine vacation days and closure of the Pontiki mining complex in late 2013.

ARLP recorded approximately $4.2 million of revenues in the 2014 second quarter for surface facility services and coal royalties related to ARLP’s participation in development of the White Oak Mine No. 1 in Illinois, which contributed to the increase in other sales and operating revenues compared to the 2013 second quarter.

Higher coal sales volumes across ARLP’s operating regions led to a record 10.4 million total tons sold in the 2014 second quarter, an increase of 5.6% and 9.1% over the 2013 and Sequential Quarters, respectively. Coal sales volumes in the Illinois Basin increased from the 2013 second quarter primarily as a result of strong sales performance from the Dotiki, River View and Gibson North mines and the start-up of production at the Gibson South mine in April 2014.

Said Craft: “ARLP executed extremely well during the first half of 2014 and we currently anticipate performance at our operations will remain strong over the balance of the year – particularly at Tunnel Ridge, Gibson South and MC Mining. In addition, ARLP has now essentially fully priced and committed its estimated 2014 coal sales volumes as we secured during the 2014 Quarter new coal sales commitments for the delivery of approximately 8.1 million tons through 2017. As a result, we currently anticipate ARLP’s results over the next two quarters will be comparable to those delivered during the first half of the year. Our performance to date and expectations for the remainder of 2014 give us confidence that ARLP will deliver its fourteenth consecutive year of record results.”

ARLP is a diversified producer and marketer of coal to major utilities and industrial users. ARLP is currently the third largest coal producer in the eastern United States with mining operations in the Illinois Basin and Appalachian coal producing regions. ARLP operates ten mining complexes in Illinois, Indiana, Kentucky, Maryland and West Virginia. ARLP is also purchasing and funding development of reserves, operating surface facilities and making equity investments in a new mining complex under development in southern Illinois. ARLP also operates a coal loading terminal on the Ohio River at Mount Vernon, Ind.

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.