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Alliance Resource (ARLP) Lags Q1 Earnings & Revenues

Alliance Resource Partners, L.P.'s ARLP first-quarter 2016 earnings of 36 cents per unit missed the Zacks Consensus Estimate of 41 cents by 12.2%. Reported earnings also slumped 60.9% year over year.

 

 

Total Revenue

Total revenue came in at $412.8 million, lagging the Zacks Consensus Estimate of $468 million by 11.8%. Reported revenues also plunged 26.3% primarily due to lower realized prices and a reduction in coal sales due to the challenging market condition.

Operational Update

In the quarter under review, Alliance Resource Partners registered a 15.2% year-over-year plunge in production volumes to 8.9 million tons primarily due to the idling of mines and depletion of reserves. Quarterly sales volume tumbled 21.1% to 7.5 million tons. The reduction in coal sales volumes was due to lower sales volumes from the Illinois Basin and Appalachian regions to counter soft coal demand due to a mild winter.

Alliance Resource Partners’ total operating expenses in the reported quarter were $358 million, down 18.1% year over year mainly due to lower production from higher-cost operations and reduced selling expenses.

Interest expenses totaled $7.6 million, slightly lower than the year-ago figure of $8 million.

Financial Update

Alliance Resource Partners’ cash and cash equivalents as of Mar 31, 2016 were $30 million, compared with $33.4 million as of Dec 31, 2015.

Long-term debt as of Mar 31, 2016 was $644.7 million, compared with $579.4 million as of Dec 31, 2015.

Cash provided by operating activities in the three months ending Mar 31, 2016, was $80.6 million, compared with $161.6 million in the year-ago comparable period.

For 2016, the partnership has invested $33.3 million under its capital spending program, lower than its previous projection.

Cash Distribution Update

During the quarterly earnings call, the partnership’s board of directors announced a reduction in the quarterly cash distribution to 43.75 cents per unit.

On an annualized basis, cash distribution rate will be $1.75 per unit, which will be paid on May 13, 2016 to all unitholders of record as on May 6.

Guidance

Alliance Resource Partners maintained its 2016 coal production guidance in the range of 33.70–35.70 million tons. The partnership expects coal sales volume of 34.60–38.10 million tons.

Revenues are anticipated (excluding transportation revenues) in the range of $1.82–$1.95 billion.

The partnership also expects 2016 earnings before interest, taxes, depreciation, and amortization (“EBITDA”) of $545–$615 million and net income guidance of $230–$300 million.

Under its capital expenditure program, Alliance Resource Partners plans to invest $105–$115 million in 2016, indicating a decrease of nearly $27 million from the midpoint of the prior projection.

Upcoming Peer Releases

Natural Resource Partners LP NRP is scheduled to release first-quarter results on May 5. The Zacks Consensus Estimate stands at $1.27.

Westmoreland Coal Co. WLB is scheduled to release first-quarter results on Apr 29. The Zacks Consensus Estimate stands at a loss of 97 cents.

Cloud Peak Energy Inc. CLD is scheduled to release first-quarter results on Apr 28. The Zacks Consensus Estimate stands at a loss of 15 cents.

Zacks Rank

Alliance Resource Partners currently carries a Zacks Rank #3 (Hold).

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