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Alliance Holdings GP, L.P. Increases Quarterly Distribution by 2.5% to $0.915 Per Unit; Reports Increased Quarterly and Record Annual Financial Results as 2014 Net Income Rises 21.6%

TULSA, Okla.--(BUSINESS WIRE)--Jan. 28, 2015-- Alliance Holdings GP, L.P. (NASDAQ: AHGP) today announced that the Board of Directors of its general partner declared a quarterly cash distribution for the quarter ended December 31, 2014 (the "2014 Quarter") of $0.915 per unit, or an annualized rate of $3.66 per unit. The declared distribution will be paid on February 19, 2015 to AHGP’s unitholders of record as of the close of trading on February 12, 2015.

The announced quarterly cash distribution represents a 10.6% increase over the $0.8275 per unit distribution (an annualized rate of $3.31 per unit) for the quarter ended December 31, 2013 (the "2013 Quarter") and an increase of 2.5% over the third quarter 2014 distribution of $0.8925 per unit (an annualized rate of $3.57 per unit).

The declared distribution is based on the distribution AHGP will receive from its ownership interests in Alliance Resource Partners, L.P. (NASDAQ: ARLP). ARLP today announced a quarterly distribution for the 2014 Quarter of $0.65 per unit, or $2.60 per unit on an annualized basis, payable on February 13, 2015 to all unitholders of record as of the close of trading on February 6, 2015. (See ARLP Press Release dated January 28, 2015.)

AHGP also reported net income for the 2014 Quarter of $71.0 million, or $1.19 per basic and diluted limited partner unit, an increase of 21.0% compared to net income for the 2013 Quarter of $58.7 million, or $0.98 per basic and diluted limited partner unit. For the year ended December 31, 2014, AHGP’s net income increased 21.6% to a record $284.4 million, or $4.75 per basic and diluted limited partner unit, compared to net income for the year ended December 31, 2013 of $233.9 million, or $3.91 per basic and diluted limited partner unit. (For a discussion of net income presentation, please see the end of this release.)

AHGP currently has no other operating activities apart from those conducted by the operating subsidiaries of ARLP and reports its financial results on a consolidated basis with the financial results of ARLP. AHGP’s principal sources of cash flow are its ownership of general partner interests, limited partner interests and incentive distribution rights in ARLP. Based on ARLP’s current declared distribution, AHGP expects to receive quarterly cash distributions from ARLP of $55.7 million, or $222.8 million on an annualized basis. AHGP’s primary cash requirements are for working capital, distributions to its unitholders and general and administrative expenses, including for 2015 an estimated $3.6 million in general and administrative expenses.

AHGP and ARLP will discuss their 2014 Quarter financial results during a joint conference call scheduled for today at 10:00 a.m. Eastern. To participate in the conference call, dial (800) 295-4740 and provide pass code 28724896. International callers should dial (617) 614-3925 and provide the same pass code. Investors may also listen to the call via the "investor information" section of ARLP’s website at http://www.arlp.com or AHGP’s website at http://www.ahgp.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 73393790. International callers should dial (617) 801-6888 and provide the same pass code.

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, AHGP’s distributions to foreign investors are subject to federal income tax withholding at the highest applicable tax rate.

About Alliance Holdings GP, L.P.

AHGP is a limited partnership formed to own and control Alliance Resource Management GP, LLC, the managing general partner of Alliance Resource Partners, L.P. (NASDAQ: ARLP), through which it holds a 1.98% general partner interest and the incentive distribution rights in ARLP. In addition, AHGP owns 31,088,338 common units of ARLP.

News, unit prices and additional information about AHGP including filings with the Securities and Exchange Commission, are available at http://www.ahgp.com. For more information, contact the investor relations department of Alliance Holdings GP, L.P. at (918) 295-1415 or via e-mail at investorrelations@ahgp.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: changes in competition in coal markets and the ARLP Partnership's ability to respond to such changes; changes in coal prices, which could affect the ARLP Partnership's operating results and cash flows; risks associated with the ARLP Partnership's expansion of its operations and properties; legislation, regulations, and court decisions and interpretations thereof, including those relating to the environment, mining, miner health and safety and health care; 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; changing global economic conditions or in industries in which the ARLP Partnership’s customers operate; liquidity constraints, including those resulting from any future unavailability of financing; customer bankruptcies, cancellations or breaches to existing contracts, or other failures to perform; customer delays, failure to take coal under contracts or defaults in making payments; adjustments made in price, volume or terms to existing coal supply agreements; fluctuations in coal demand, prices and availability; the ARLP Partnership's productivity levels and margins earned on its coal sales; changes in raw material costs; changes in the availability of skilled labor; the ARLP Partnership's ability to maintain satisfactory relations with its employees; increases in labor costs, adverse changes in work rules, or cash payments or projections associated with post-mine reclamation and workers' compensation claims; increases in transportation costs and risk of transportation delays or interruptions; operational interruptions due to geologic, permitting, labor, weather-related or other factors; risks associated with major mine-related accidents, such as mine fires, or interruptions; results of litigation, including claims not yet asserted; difficulty maintaining the ARLP Partnership's surety bonds for mine reclamation as well as workers' compensation and black lung benefits; difficulty in making accurate assumptions and projections regarding pension, black lung benefits and other post-retirement benefit liabilities; the coal industry's share of electricity generation, including as a result of environmental concerns related to coal mining and combustion and the cost and perceived benefits of other sources of electricity, such as natural gas, nuclear energy and renewable fuels; uncertainties in estimating and replacing the ARLP Partnership’s coal reserves; a loss or reduction of benefits from certain tax deductions and credits; difficulty obtaining commercial property insurance, and risks associated with the ARLP Partnership's participation (excluding any applicable deductible) in the commercial insurance property program; and difficulty in making accurate assumptions and projections regarding future revenues and costs associated with equity investments in companies we do not control.

Additional information concerning these and other factors can be found in AHGP’s public periodic filings with the Securities and Exchange Commission ("SEC"), including AHGP's Annual Report on Form 10-K for the year ended December 31, 2013, filed on February 28, 2014 with the SEC. Except as required by applicable securities laws, AHGP does not intend to update its forward-looking statements.

     
 

ALLIANCE HOLDINGS GP, L.P. AND SUBSIDIARIES

 

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND OPERATING DATA

(In thousands, except unit and per unit data)

(Unaudited)

 

Three Months Ended
December 31,

Year Ended
December 31,

2014   2013 2014   2013
 
SALES AND OPERATING REVENUES:
Coal sales $ 559,518 $ 542,919 $ 2,208,611 $ 2,137,449
Transportation revenues 8,205 9,183 26,021 32,642
Other sales and operating revenues   22,973     14,513     65,692     35,108  
Total revenues   590,696     566,615     2,300,324     2,205,199  
 
EXPENSES:
Operating expenses (excluding depreciation, depletion and amortization) 359,055 356,706 1,383,360 1,398,763
Transportation expenses 8,205 9,183 26,021 32,642
Outside coal purchases 7 2 14 2,030
General and administrative 19,347 17,275 76,699 65,231
Depreciation, depletion and amortization   71,027     66,223     274,566     264,911  
Total operating expenses 457,641 449,389 1,760,660 1,763,577
 
INCOME FROM OPERATIONS 133,055 117,226 539,664 441,622
Interest expense, net (8,189 ) (8,040 ) (33,584 ) (27,044 )
Interest income 433 398 1,671 963
Equity in loss of affiliates, net (3,102 ) (8,885 ) (16,648 ) (24,441 )
Other income   388     892     1,566     1,891  
INCOME BEFORE INCOME TAXES 122,585 101,591 492,669 392,991
INCOME TAX EXPENSE   -     2,704     -     1,397  
NET INCOME 122,585 98,887 492,669 391,594
LESS: NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS   (51,577 )   (40,204 )   (208,318 )   (157,721 )
NET INCOME ATTRIBUTABLE TO ALLIANCE HOLDINGS GP, L.P. ("NET INCOME OF AHGP") $ 71,008   $ 58,683   $ 284,351   $ 233,873  
 
BASIC AND DILUTED NET INCOME OF AHGP PER LIMITED PARTNER UNIT $ 1.19   $ 0.98   $ 4.75   $ 3.91  
DISTRIBUTIONS PAID PER LIMITED PARTNER UNIT $ 0.8925   $ 0.8075   $ 3.4375   $ 3.095  
 

WEIGHTED AVERAGE NUMBER OF UNITS OUTSTANDING - BASIC AND DILUTED

 

  59,863,000     59,863,000     59,863,000     59,863,000  
   
 
ALLIANCE HOLDINGS GP, L.P. AND SUBSIDIARIES
 
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except unit data)
(Unaudited)
 
ASSETS December 31,
2014   2013
 
CURRENT ASSETS:
Cash and cash equivalents $ 28,274 $ 98,375
Trade receivables 184,187 153,662
Other receivables 1,025 776
Due from affiliates 7,107 1,889
Inventories 83,155 44,214
Advance royalties 9,416 11,454
Prepaid expenses and other assets   31,362     16,264  
Total current assets 344,526 326,634
 
PROPERTY, PLANT AND EQUIPMENT:
Property, plant and equipment, at cost 2,815,620 2,645,872
Less accumulated depreciation, depletion and amortization   (1,150,414 )   (1,031,493 )
Total property, plant and equipment, net 1,665,206 1,614,379
 
OTHER ASSETS:
Advance royalties 15,895 18,813
Due from affiliate 11,047 11,560
Equity investments in affiliates 224,611 130,410
Other long-term assets   27,470     24,883  
Total other assets   279,023     185,666  
TOTAL ASSETS $ 2,288,755   $ 2,126,679  
 
LIABILITIES AND PARTNERS' CAPITAL
 
CURRENT LIABILITIES:
Accounts payable $ 86,277 $ 79,772
Due to affiliates 370 290
Accrued taxes other than income taxes 19,461 19,086
Accrued payroll and related expenses 57,656 47,105
Accrued interest 318 996
Workers’ compensation and pneumoconiosis benefits 8,868 9,065
Current capital lease obligations 1,305 1,288
Other current liabilities 17,109 18,625
Current maturities, long-term debt   230,000     36,750  
Total current liabilities 421,364 212,977
 
LONG-TERM LIABILITIES:
Long-term debt, excluding current maturities 591,250 831,250
Pneumoconiosis benefits 55,278 48,455
Accrued pension benefit 40,105 18,182
Workers’ compensation 49,797 54,949
Asset retirement obligations 91,085 80,807
Long-term capital lease obligations 15,624 17,135
Other liabilities   5,978     7,331  
Total long-term liabilities   849,117     1,058,109  
Total liabilities   1,270,481     1,271,086  
 
COMMITMENTS AND CONTINGENCIES
 
PARTNERS' CAPITAL:
Alliance Holdings GP, L.P. ("AHGP") Partners' Capital:
Limited Partners – Common Unitholders 59,863,000 units outstanding 580,234 500,070
Accumulated other comprehensive loss   (15,456 )   (4,198 )
Total AHGP Partners' Capital 564,778 495,872
Noncontrolling interests   453,496     359,721  
Total Partners' Capital   1,018,274     855,593  
TOTAL LIABILITIES AND PARTNERS' CAPITAL $ 2,288,755   $ 2,126,679  
   
 
ALLIANCE HOLDINGS GP, L.P. AND SUBSIDIARIES
 
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
 
Year Ended
December 31,
2014   2013
 
CASH FLOWS PROVIDED BY OPERATING ACTIVITIES $ 734,830   $ 702,919  
 
CASH FLOWS FROM INVESTING ACTIVITIES:
Property, plant and equipment:
Capital expenditures (307,387 ) (329,151 )
Changes in accounts payable and accrued liabilities (2,270 ) (3,048 )
Proceeds from sale of property, plant and equipment 381 1,520
Proceeds from insurance settlement for property, plant and equipment 4,512 -
Purchases of equity investments in affiliates (111,376 ) (62,500 )
Payments to affiliate for acquisition and development of coal reserves (4,082 ) (25,272 )
Payment for acquisition of customer contracts (11,687 ) -
Advances/loans to affiliate - (7,500 )
Other   (9,313 )   -  
Net cash used in investing activities   (441,222 )   (425,951 )
 
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under securitization facility 100,000 -
Payments under term loan (18,750 ) -
Borrowings under revolving credit facilities 341,800 386,000
Payments under revolving credit facilities (451,800 ) (291,000 )
Payments on long-term debt (18,000 ) (18,000 )
Payments on capital lease obligations (1,494 ) (1,190 )
Payment of debt issuance costs (263 ) -
Contributions to consolidated company from affiliate noncontrolling interest 481 -
Contribution by limited partner - affiliate 1,500 2,200

Net settlement of employee withholding taxes on vesting of ARLP Long-Term Incentive Plan

(2,991 ) (3,015 )
Distributions paid by consolidated partnership to noncontrolling interests (108,413 ) (99,423 )
Distributions paid to Partners   (205,779 )   (185,276 )
Net cash used in financing activities   (363,709 )   (209,704 )
 
NET CHANGE IN CASH AND CASH EQUIVALENTS (70,101 ) 67,264
 
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 98,375 31,111
   
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 28,274   $ 98,375  
 

Presentation of Net Income

Consolidated net income includes earnings attributable to both AHGP and noncontrolling interests. Unless otherwise noted, any reference to net income in this release represents net income attributable to AHGP.

Source: Alliance Holdings GP, L.P.

Alliance Holdings GP, L.P.
Brian L. Cantrell, 918-295-7673