Lower coal demand leads to lower net income for Tulsa coal company

Coal volumes were down along with prices as Tulsa-based Alliance Resource Partners, L.P. reported a slight increase in total revenues for the second quarter 2019 but a drop in net income.

The company reported total revenues increased from $516.1 million to $517.1 million in the 2019 quarter ending June 30. Net income attributable to the company for the 2019 quarter dropped to $58.1 million or 44 cents a basic and diluted limited partner unit compared to $86.2 million and 64 cents a unit a year ago.

Adjusted EBITDA in the 2019 quarter totaled $145.7 million compared to the $168.3 million reported a year earlier.release.)

ARLP also announced that the Board of Directors of its general partner increased the cash distribution to unitholders for the 2019 Quarter to $0.54 per unit (an annualized rate of $2.16 per unit), payable on August 14, 2019 to all unitholders of record as of the close of trading on August 7, 2019.

The announced distribution represents a 3.8% increase over the cash distribution of $0.52 per unit for the 2018 Quarter and a 0.9% increase over the cash distribution of $0.535 per unit for the quarter ended March 31, 2019 (the “Sequential Quarter”).

“Mild temperatures, swollen rivers and declining natural gas prices led to lower coal demand in the 2019 Quarter. Flooding and high water continued to delay approximately 500,000 tons of planned export shipments in the 2019 Quarter, which we expect will be shipped in the second half of the year,” said Joseph W. Craft III, Chairman, President and Chief Executive Officer. “Operating cost per ton sold for the 2019 Quarter was impacted primarily by lower production due to two longwall moves, one at our Hamilton mine in the Illinois Basin and the other at our Tunnel Ridge mine in the Appalachia region, as well as our previously announced delay of ARLP’s planned growth ramp for Illinois Basin production intended for sale in the export market. An unexpected $4.8 million non-cash accrual was also booked in the 2019 Quarter as a result of a mid-year actuarial adjustment for workers’ compensation expense.”

Mr. Craft added, “As expected, our oil and gas minerals segment delivered double digit Segment Adjusted EBITDA growth compared to both the 2018 Quarter and the Sequential Quarter. We are on track to close the previously announced $145 million Wing acquisition early next month which will increase our ownership position in the prolific liquids rich Midland Basin and add to our earnings in 2019 and beyond.”

 

Reflecting lower coal sales volumes and prices, coal sales revenues for the 2019 Quarter decreased 3.1% to $461.3 million, compared to $475.9 million for the 2018 Quarter. Coal sales volumes declined 2.6% to 10.2 million tons as persistent, weather-related transportation issues resulted in the delay of approximately 500,000 tons out of 750,000 tons of planned coal shipments deferred from the first quarter of 2019 while the 2018 Quarter benefited from the fulfillment of 1.4 million tons of shipments delayed in the first quarter of 2018.