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Alliance Holdings GP, L.P. Reports Quarterly Financial Results and Increases Quarterly Distribution by 2.4% to $0.96 Per Unit

TULSA, Okla.--(BUSINESS WIRE)--Jul. 28, 2015-- Alliance Holdings GP, L.P. (NASDAQ: AHGP) today announced that the Board of Directors of its general partner (the "Board") increased the cash distribution to unitholders for the quarter ended June 30, 2015 (the "2015 Quarter ") to $0.96 per unit, or an annualized rate of $3.84 per unit, payable on August 19, 2015 to AHGP’s unitholders of record as of the close of trading on August 12, 2015. The declared quarterly cash distribution represents a 10.3% increase over the cash distribution of $0.87 per unit for the quarter ended June 30, 2014 (the "2014 Quarter") and an increase of 2.4% over the first quarter 2015 distribution of $0.9375 per unit.

AHGP’s principal sources of cash flow are its ownership of general partner interests, limited partner interests and incentive distribution rights in Alliance Resource Partners, L.P. (NASDAQ: ARLP). The declared distribution is based on the distribution AHGP will receive from its ownership interests in ARLP, which today announced a quarterly distribution for the 2015 Quarter of $0.675 per unit, or $2.70 per unit on an annualized basis, payable on August 14, 2015 to all unitholders of record as of the close of trading on August 7, 2015. (See ARLP Press Release dated July 28, 2015.)

AHGP also reported net income for the 2015 Quarter of $61.0 million, or net income per basic and diluted limited partner interest of $1.02 per unit, a decrease of 21.1% compared to net income for the 2014 Quarter of $77.3 million, or $1.29 per basic and diluted limited partner unit. (Operating results for AHGP reflect those of the operating subsidiaries of ARLP and, as a result, AHGP reports its financial results on a consolidated basis with the financial results of ARLP. For a discussion of net income presentation, please see the end of this release.)

Based on ARLP’s current declared distribution, AHGP expects to receive quarterly cash distributions from ARLP of $58.4 million, or $233.6 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 full year an estimated $3.3 million in general and administrative expenses.

AHGP and ARLP will discuss their 2015 Quarter financial results during a joint conference call scheduled for today at 9:00 a.m. Eastern. To participate in the conference call, dial (855) 793-3259 and provide conference number 85117094. International callers should dial (631) 485-4928 and provide the same conference number. 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 (855) 859-2056 and provide conference number 85117094. International callers should dial (404) 537-3406 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 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 AHGP 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. 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, 2014, filed on February 27, 2015 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

June 30,

Six Months Ended

June 30,

  2015       2014     2015       2014  
 
SALES AND OPERATING REVENUES:
Coal sales $ 567,288 $ 575,191 $ 1,085,027 $ 1,100,736
Transportation revenues 7,780 5,810 14,928 11,815
Other sales and operating revenues   29,551     17,463     64,964     27,847  
Total revenues   604,619     598,464     1,164,919     1,140,398  
 
EXPENSES:
Operating expenses (excluding depreciation, depletion and amortization) 375,065 352,893 709,427 675,135
Transportation expenses 7,780 5,810 14,928 11,815
Outside coal purchases 2 2 324 4
General and administrative 18,040 20,268 35,303 38,167
Depreciation, depletion and amortization   79,801     67,052     158,069     133,893  
Total operating expenses 480,688 446,025 918,051 859,014
 
INCOME FROM OPERATIONS 123,931 152,439 246,868 281,384
Interest expense, net (8,306 ) (8,748 ) (16,274 ) (16,811 )
Interest income 605 417 1,136 806
Equity in loss of affiliates, net (22,142 ) (7,373 ) (31,828 ) (13,614 )
Other income   177     323     295     629  
INCOME BEFORE INCOME TAXES 94,265 137,058 200,197 252,394
INCOME TAX EXPENSE   8     -     6     -  
NET INCOME 94,257 137,058 200,191 252,394
LESS: NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS   (33,307 )   (59,711 )   (73,711 )   (107,600 )
NET INCOME ATTRIBUTABLE TO ALLIANCE HOLDINGS GP, L.P. ("NET INCOME OF AHGP") $ 60,950   $ 77,347   $ 126,480   $ 144,794  
 
BASIC AND DILUTED NET INCOME OF AHGP PER LIMITED PARTNER UNIT $ 1.02   $ 1.29   $ 2.11   $ 2.42  
DISTRIBUTIONS PAID PER LIMITED PARTNER UNIT $ 0.9375   $ 0.8475   $ 1.8525   $ 1.675  
 

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 June 30, December 31,
  2015     2014  
 
CURRENT ASSETS:
Cash and cash equivalents $ 47,522 $ 28,274
Trade receivables 191,505 184,187
Other receivables 635 1,025
Due from affiliates 22,850 7,107
Inventories 88,272 83,155
Advance royalties 9,440 9,416
Prepaid expenses and other assets   21,968     31,362  
Total current assets 382,192 344,526
 
PROPERTY, PLANT AND EQUIPMENT:
Property, plant and equipment, at cost 2,927,115 2,815,620
Less accumulated depreciation, depletion and amortization   (1,270,593 )   (1,150,414 )
Total property, plant and equipment, net 1,656,522 1,665,206
 
OTHER ASSETS:
Advance royalties 24,901 15,895
Due from affiliate 11,166 11,047
Equity investments in affiliates 221,768 224,611
Other long-term assets   37,490     27,470  
Total other assets   295,325     279,023  
TOTAL ASSETS $ 2,334,039   $ 2,288,755  
 
LIABILITIES AND PARTNERS' CAPITAL
 
CURRENT LIABILITIES:
Accounts payable $ 72,877 $ 86,277
Due to affiliates 381 370
Accrued taxes other than income taxes 23,130 19,461
Accrued payroll and related expenses 38,207 57,656
Accrued interest 317 318
Workers’ compensation and pneumoconiosis benefits 8,873 8,868
Current capital lease obligations 1,316 1,305
Other current liabilities 15,437 17,109
Current maturities, long-term debt   68,750     230,000  
Total current liabilities 229,288 421,364
 
LONG-TERM LIABILITIES:
Long-term debt, excluding current maturities 788,000 591,250
Pneumoconiosis benefits 57,235 55,278
Accrued pension benefit 39,377 40,105
Workers’ compensation 47,906 49,797
Asset retirement obligations 94,605 91,085
Long-term capital lease obligations 14,946 15,624
Other liabilities   7,173     5,978  
Total long-term liabilities   1,049,242     849,117  
Total liabilities   1,278,530     1,270,481  
 
COMMITMENTS AND CONTINGENCIES
 
PARTNERS' CAPITAL:
Alliance Holdings GP, L.P. ("AHGP") Partners' Capital:
Limited Partners – Common Unitholders 59,863,000 units outstanding 595,753 580,234
Accumulated other comprehensive loss   (14,806 )   (15,456 )
Total AHGP Partners' Capital 580,947 564,778
Noncontrolling interests   474,562     453,496  
Total Partners' Capital   1,055,509     1,018,274  
TOTAL LIABILITIES AND PARTNERS' CAPITAL $ 2,334,039   $ 2,288,755  
 
ALLIANCE HOLDINGS GP, L.P. AND SUBSIDIARIES
 
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
 
Six Months Ended
June 30,
  2015       2014  
 
CASH FLOWS PROVIDED BY OPERATING ACTIVITIES $ 337,728   $ 378,416  
 
CASH FLOWS FROM INVESTING ACTIVITIES:
Property, plant and equipment:
Capital expenditures (107,758 ) (154,578 )
Changes in accounts payable and accrued liabilities (5,797 ) 2,608
Proceeds from sale of property, plant and equipment 243 19
Proceeds from insurance settlement for property, plant and equipment - 4,512
Purchases of equity investments in affiliates (30,757 ) (60,000 )
Payment for acquisition of businesses, net of cash acquired (28,078 ) -
Payments to affiliate for acquisition and development of coal reserves - (1,401 )
Advances/loans to affiliate (7,300 ) -
Other   1,807     -  
Net cash used in investing activities   (177,640 )   (208,840 )
 
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments under term loan (12,500 ) (6,250 )
Borrowings under revolving credit facilities 363,000 142,800
Payments under revolving credit facilities (110,000 ) (222,800 )
Payment on long-term debt (205,000 ) -
Payments on capital lease obligations (667 ) (734 )
Contribution to consolidated company from affiliate noncontrolling interest 1,147 -
Net settlement of employee withholding taxes on vesting of ARLP Long-Term Incentive Plan (2,719 ) (2,991 )
Distributions paid by consolidated partnership to noncontrolling interests (57,883 ) (53,085 )
Distributions paid to Partners (110,897 ) (100,271 )
Other   (5,321 )   -  
Net cash used in financing activities   (140,840 )   (243,331 )
 
NET CHANGE IN CASH AND CASH EQUIVALENTS 19,248 (73,755 )
 
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 28,274 98,375
   
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 47,522   $ 24,620  
 

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