Print Page  Close Window

Press Release
Alliance Holdings GP, L.P. Reports Quarterly and Full Year Financial Results; Maintains Quarterly Distribution of $0.55 Per Unit

TULSA, Okla.--(BUSINESS WIRE)--Jan. 30, 2017-- Alliance Holdings GP, L.P. (NASDAQ: AHGP) today reported financial results for the quarter and year ended December 31, 2016 (the "2016 Quarter" and the "2016 Year", respectively) and, as previously announced, the Board of Directors of its general partner (the "Board") approved a distribution to unitholders of $0.55 per unit (an annualized rate of $2.20 per unit) for the 2016 Quarter, payable on February 17, 2017 to AHGP's unitholders of record as of the close of trading on February 10, 2017. The announced distribution is equal to that declared for the quarter ended September 30, 2016 (the "Sequential Quarter") and compares to the unitholder distribution of $0.96 per unit for the quarter ended December 31, 2015 (the "2015 Quarter").

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 previously announced a quarterly distribution for the 2016 Quarter of $0.4375 per unit, or $1.75 per unit on an annualized basis, payable on February 14, 2017 to all unitholders of record as of the close of trading on February 7, 2017. (See ARLP Press Release dated January 27, 2017.)

AHGP also reported net income for the 2016 Quarter of $61.2 million, or net income per basic and diluted limited partner interest of $1.02 per unit, an increase of 113.0% compared to net income for the 2015 Quarter of $28.7 million, or $0.48 per basic and diluted limited partner unit. AHGP's net income for the 2016 Quarter increased approximately 26.2% compared to net income for the Sequential Quarter of $48.5 million, or net income per basic and diluted limited partner interest of $0.81 per unit. For the year ended December 31, 2016, AHGP reported net income of $185.9 million, or $3.11 per basic and diluted limited partner unit, a decrease of 12.0% compared to $211.3 million, or $3.53 per basic and diluted limited partner unit, earned in the year ended December 31, 2015.

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. Consolidated net income includes earnings and losses attributable to both AHGP and non-controlling interests. Unless otherwise noted, any reference to net income in this release represents Net Income Attributable to AHGP.

Based on ARLP's current declared distribution, AHGP expects to receive quarterly cash distributions from ARLP of $33.4 million, or $133.6 million on an annualized basis. AHGP's primary cash requirements are for working capital, distributions to its unitholders and, for the 2017 full year, an estimated $1.6 million in general and administrative expenses.

A joint conference call regarding AHGP and ARLP’s 2016 Quarter and Year financial results and 2017 outlook is scheduled for today at 10:00 a.m. Eastern. To participate in the conference call, dial (855) 793-3259 and provide conference number 48863667. 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 48863667. International callers should dial (404) 537-3406 and provide the same conference number.

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. These statements 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, 2015, filed on February 26, 2016 and AHGP's Quarterly Reports on Form 10-Q for the quarters ended March 31, 2016, June 30, 2016 and September 30, 2016, filed on May 10, 2016, August 5, 2016 and November 8, 2016, respectively, 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 Year Ended
December 31, December 31,
  2016     2015     2016     2015  
SALES AND OPERATING REVENUES:
Coal sales $ 504,210 $ 525,513 $ 1,861,788 $ 2,158,006
Transportation revenues 10,379 9,274 30,111 33,597
Other sales and operating revenues   12,702     7,263     39,124     81,708  
Total revenues   527,291     542,050     1,931,023     2,273,311  
 
EXPENSES:
Operating expenses (excluding depreciation, depletion and amortization) 291,335 331,099 1,138,848 1,377,053
Transportation expenses 10,379 9,274 30,111 33,597
Outside coal purchases 1 1,514 327
General and administrative 19,912 15,417 75,087 69,076
Depreciation, depletion and amortization 81,869 90,983 322,509 333,713
Asset impairment       89,435         100,130  
Total operating expenses 403,495 536,209 1,568,069 1,913,896
 
INCOME FROM OPERATIONS 123,796 5,841 362,954 359,415
Interest expense, net (7,283 ) (7,527 ) (30,669 ) (31,153 )
Interest income 3 38 14 1,460
Equity in income (loss) of affiliates, net 2,502 3 3,543 (49,046 )
Acquisition gain, net 22,548 22,548
Other income   180     205     725     955  
 
INCOME BEFORE INCOME TAXES 119,198 21,108 336,567 304,179
 
INCOME TAX EXPENSE   10     3     14     21  
 
NET INCOME 119,188 21,105 336,553 304,158
LESS: NET (INCOME)/LOSS ATTRIBUTABLE TO NONCONTROLLING INTERESTS   (57,976 )   7,630     (150,619 )   (92,846 )
 
NET INCOME ATTRIBUTABLE TO ALLIANCE HOLDINGS GP, L.P. ("NET INCOME OF AHGP") $ 61,212   $ 28,735   $ 185,934   $ 211,312  
 
BASIC AND DILUTED NET INCOME OF AHGP PER LIMITED PARTNER UNIT $ 1.02   $ 0.48   $ 3.11   $ 3.53  
 
DISTRIBUTIONS PAID PER LIMITED PARTNER UNIT $ 0.55   $ 0.96   $ 2.61   $ 3.7725  
 
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)
 
 
December 31,
  2016     2015  
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 44,525 $ 38,678
Trade receivables 152,032 122,875
Other receivables 279 696
Due from affiliates 37 38
Inventories, net 61,051 121,081
Advance royalties, net 1,207 6,820
Prepaid expenses and other assets   22,128     29,890  
Total current assets 281,259 320,078
PROPERTY, PLANT AND EQUIPMENT:
Property, plant and equipment, at cost 2,920,988 3,044,260
Less accumulated depreciation, depletion and amortization   (1,335,145 )   (1,243,985 )
Total property, plant and equipment, net 1,585,843 1,800,275
OTHER ASSETS:
Advance royalties, net 29,372 21,295
Equity investments in affiliates 138,817 64,509
Goodwill 136,399 136,399
Other long-term assets   25,997     23,960  
Total other assets   330,585     246,163  
TOTAL ASSETS $ 2,197,687   $ 2,366,516  
 
LIABILITIES AND PARTNERS’ CAPITAL
CURRENT LIABILITIES:
Accounts payable $ 64,460 $ 84,058
Due to affiliates 906 129
Accrued taxes other than income taxes 18,288 15,621
Accrued payroll and related expenses 41,576 37,031
Accrued interest 316 306
Workers’ compensation and pneumoconiosis benefits 9,897 8,688
Current capital lease obligations 27,196 19,764
Other current liabilities 14,778 18,929
Current maturities, long-term debt, net   149,874     239,016  
Total current liabilities 327,291 423,542
LONG-TERM LIABILITIES:
Long-term debt, excluding current maturities, net 399,446 578,490
Pneumoconiosis benefits 62,822 60,077
Accrued pension benefit 42,070 39,031
Workers’ compensation 40,400 47,486
Asset retirement obligations 125,266 122,434
Long-term capital lease obligations 85,540 80,150
Other liabilities   17,203     21,174  
Total long-term liabilities   772,747     948,842  
Total liabilities   1,100,038     1,372,384  
 
PARTNERS CAPITAL:
Alliance Holdings GP, L.P. ("AHGP") Partners’ Capital:
Limited Partners – Common Unitholders 59,863,000 units outstanding 598,077 567,259
Accumulated other comprehensive loss   (16,550 )   (14,875 )
Total AHGP Partners’ Capital 581,527 552,384
Noncontrolling interests   516,122     441,748  
Total Partners’ Capital   1,097,649     994,132  
TOTAL LIABILITIES AND PARTNERS CAPITAL $ 2,197,687   $ 2,366,516  
   
ALLIANCE HOLDINGS GP, L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
 
 
Year Ended
December 31,
  2016     2015  
 
CASH FLOWS FROM OPERATING ACTIVITIES: $ 700,725 $ 714,408
 
CASH FLOWS FROM INVESTING ACTIVITIES:
Property, plant and equipment:
Capital expenditures (91,056 ) (212,797 )
Decrease in accounts payable and accrued liabilities (4,402 ) (3,021 )
Proceeds from sale of property, plant and equipment 1,165 2,062
Purchases of equity investments in affiliates (76,797 ) (64,540 )
Payments for acquisitions of businesses, net of cash acquired (1,011 ) (74,953 )
Payment for acquisition of customer contracts (23,000 )
Advances/loans to affiliate (7,300 )
Other   3,313     4,634  
Net cash used in investing activities   (191,788 )   (355,915 )
 
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under securitization facility 44,600 6,500
Payments under securitization facility (27,700 ) (23,400 )
Payments on term loan (156,250 ) (108,502 )
Borrowings under revolving credit facilities 140,000 543,000
Payments under revolving credit facilities (270,000 ) (308,000 )
Payment on long-term debt (205,000 )
Proceeds on capital lease transactions 33,881 100,000
Payments on capital lease obligations (24,456 ) (4,312 )
Payment of debt issuance costs (101 )
Contributions to consolidated company from affiliate noncontrolling interest 3,014 2,147
Contribution by limited partner - affiliate 1,000 1,500
Net settlement of employee withholding taxes on vesting of ARLP Long-Term Incentive Plan (1,336 ) (2,719 )
Distributions paid by consolidated partnership to noncontrolling interests (89,311 ) (117,362 )
Distributions paid to Partners (156,242 ) (225,833 )
Other   (189 )   (6,108 )
Net cash used in financing activities   (503,090 )   (348,089 )
 
NET CHANGE IN CASH AND CASH EQUIVALENTS 5,847 10,404
 
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 38,678 28,274
   
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 44,525   $ 38,678  

Source: Alliance Holdings GP, L.P.

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