ARLP - Earnings call transcript Q1 2018 | Alliance Resource Partners, L.P.

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Operator

Good morning and welcome to the Alliance Resource Partners, L.P. and Alliance Holdings GP, L.P.

First Quarter 2018 Earnings Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Mr. President Financial Vice Senior Cantrell, and Officer. Chief Brian go ahead. Please

Brian Cantrell

or and Thank for this Partners, discuss Holdings these welcome our will morning, well for and Phil or both and AHGP GP, we Resource results earnings Earlier year. now quarter the everyone. you, balance we the Alliance first released Alliance as as ARLP outlook XXXX of

we questions. prepared remarks, will our call your open Following to the

that our today beginning, subject a assumptions some that variety are include in morning's risks, to Securities are Before time-to-time also statements of of our a this and the press may that forward-looking remarks Exchange are filings reminder uncertainties with releases. Commission reflected and and contained from in

to or available or or of we by expected. or incorrect, events from do to these partnership us, forward-looking While projected materialize remarks, otherwise, revise information, statements uncertainties actual materially these neither In underlying forward-looking any if these so. providing results more to currently are whether required a assumptions risks unless those if information new result based publicly our or vary or prove any future of update may law statement, one on as obligation has

which contained we are reconciliations at Finally, measures. GAAP X-K. the the been and on to Form be of between on has non-GAAP these the measures posted and measures Definitions furnished certain end of ARLP financial also will discussing and non-GAAP differences ARLP’s comparable release SEC press the most financial website the directly

then the Chief President financial recent review Craft, Joe the with results call of and over way, operating and required I'll turn the to and start a of most Officer. With for quarter, the Executive morning out our preliminaries our this

the net from to to rose morning, this quarter. dispute, both gain $XX ARLP per $XXX.X diluted million a attributable as benefiting compared XX.X% to and the quarter. an consensus income including the ARLP results for quarter XXXX EBITDA to have XXXX XX.X% to earlier million, basic quarter approximately $XXX.X for tons attributable we and streets the settlement, coal settlement the estimates. unit systems had increased announced settlement partner been was reported contract gain limited even River of income the ARLP a XXXX the on gain from financial XXXX for delayed Results strong As million Net disruptions experienced the million which from and matched would not the planned weather-related of better from quarter the the X.X shipments XXXX excluding the $X.XX during transportation

be port will River shipped to soon as barge funds these conditions, expect and normal. as We operations return

the inventory Mettiki the mix year. fell our impacted slightly expense anticipated, coal per will want remind than sales the preferred quarter of due and Primarily doubled calculation to ARLP's the to As comparing compression related income quarter, the at gas tons the last from Improved the to July quarter on was over ARLP'S exchange unit. increase to the EBITDA financial goals quarter quarter sequential of the services our higher are the and reduced coal more XXXX our our metallurgical XXXX to sequentially oil year price gas gas we compared and for in The Basin. be results margins believe from everyone by realizations I the to again XXXX distributions adjusted in to guidance minerals were transaction prior both coal oil sales compared XXXX balance ton activities impact prior sales quarter than per equity in to quarter. continue compared year the Illinois And results the contribution due our minerals contributed to compression to the the the on the from in to to increase compared investment XXXX in investments X.X% for and price of quarter. comparable but shipped quarter. volumes the gas ARLP's of once in XXXX during realizations sequential X.X% improved and these XXXX sales Segment that mine services, EBITDA

general previously between lack of along exchange. the discussed, before million XX.X reduced ARLP net and elimination periods we've units, and allocated after transaction the significantly to allocation the ARLP'S of income issuance approximately amount the creates with of a As comparability IDRs reduces exchange of This the common the partners.

forma transaction actual presentation at included our and ARLP’s in as provide have occurred of a will detailed filing exchange and we if of ARLP’s January XX-Q end pro EPU the a upcoming forma Form the XXXX, again on with morning’s investors EPU had the this comparison pro EPU of We with earnings SEC. release, X,

also announced structure. to of an We provide want on the update previously partnership our simplification

common Consent the been Form all through AHGP mailed have has statements by this wholly-owned been in unitholders, and subsidiary solicitation simplification reminder, AHGP's outstanding common in simplification. all which of to AHGP distribution and AHGP will be units subsidiaries series units S-X of agreed the by unitholders to effective for of becoming unitholders AHGP a have held exchange a ARLP ARLP As of AHGP units. their a majority certain declared its ARLP's of support result will the on common the accomplished and the SEC. through transactions

only simplification after of We Alliance entity. quarter to ARLP the the be the which Alliance complete Partnerships during the publicly second traded will expect XXXX

ARLP's XXXX. plans and outlook let times a markets, adjusted $XX.X us me our the future on structure the to performance, quarter by providing to his strength million and capacity financial conservative remains Joe simplified balance sheet the for stable that, capital of advantage long-term over for take The debt ARLP's the of Turning EBITDA. the We ample the $XXX.X to million first on debt execute with ended sheet. our reduced balance and X.XX flexibility XX leveraged a opportunities. liquidity of our turn With and call and XXXX structure the months our total balance to perspectives quarter now with trailing and coal take Joe? at

Joe Craft

our during the I'm performance XXXX Thank you, pleased good extremely Brian, quarter. and morning with everyone.

strong ARLPs bodes increase year our of mentioned, investments. coal cash the performance as about XXXX. reap and and grow optimistic from we just Brian the I flow start balance our to growing our the well non future our ability am for equally production As to the benefits

Our sales million the financial results $XX benefited settlement the this contract from the resulting of quarter obviously gain coal from dispute.

X.X tons in customers to mining the also U.S. time Ridge the coal supply market normal Demand during with low market power this after balance for a and mines for from commitments, coal adjacent year. to opportunities XXXX of XXXX over in ARLP be than addition will international Tunnel of to for strong. To-date XXXX commitments the all footprint. the anticipate for reserves far remains X.X burn tons additional even XXXX coal million capacity tons ARLP payment the natural including I million of our through and so to evaluate reaching year-to-date, to deliver to metallurgical we conditional XX.X access Appalachian million ARLP also received we exports and to to additional coal of the stockpiles contract replenish of markets. colder exceed solid quarter, for future transloading have XXXX. settlement tons, gas with the thermal this coal In booked to due temperatures to our the prices. in continue Export commitments delivery agreements in generators provides we its XXXX cash operation acquire the the strengthened an X.X right tons Domestically, exported ARLP export quarter portfolio coal up in quarter the period, XX.X million year million booked during to continued year international

could through of the volumes respectively tons of XX million levels. million of production increase ARLP'S volume and and expectations XX.X the X.X% by total our midpoint at XXXX sales We expect ARLP commitments a by and sales specifically to in XXXX. range favorable increase led sales These our increasing million tons XX.X export year million million XX plan guidance and over or XX% an tons sales to X.X% to for approach respectively X

revenues, growth, equates strong release the distributable the this a outlined result volumes, for increased coverage of of during guidance at January unitholders. first raising the excluding supporting we XXXX the rest midpoint as build we earnings XX.X% by X% these return unitholder $XX income to expectations X%, XXXX cash are for increased X.X% invest year. our million and initial priorities our our company keeping with lead in settlement of earnings quarter EBITDA in improved full-year future our for net XXXX As morning's XXXX to flow per outlined in to which this flow call second, to coal mainly an are over expectations of capital gain ARLP's respectively will distributions guidance. in allocation in the approximately to increasing We management's cash cash and performance increase distribution anticipate and last this

demand first Gibson the to the our North production increased currently mine back bringing in priority, are On coal business into at core investing opportunities. we two units meet by international

our mine high will share markets. operation our This the domestic reserves evaluating MC international at to sulfur, both in We coal also are Mining fleet XXXX. market East new and an to allow investment our to opportunity maintain coal ARLP in in is BTU as Kentucky low coal

future. compression investments well these is our services, in date oil investments encouraged are Board and actively just growth and announced are way to our we increase evaluating returning to other is the gas and as to addition, The gas further In unitholders. non-co one cash co by cash ARLP's in and from ARLP by distribution committed to the activities, as flow opportunities minerals increase results from

evaluating management's the of are by assistance to program. call to the our concludes unitholders benefits quarter your a questions. unit buyback objective operator's of will distributions also open prepared actively per now comments in and through the XXXX, addition to X% we This cash potential increasing returning In

Operator

First from Global. Levin ahead. Instructions] Mark with question Seaport go comes Please [Operator

Mark Levin

quarter good a tough particularly circumstances on some - pretty sounds Congrats under logistically. like

kind by that or that's considering handle opportunities and XX% return see the upside the some you of quarter, anybody to trying changed return at with now for around to coal Just end there, you've versus your E&P just most there just opportunities return terms know is I discussed I'm the of in? gotten of you relative what weaker standards to the first how would curious obviously the Joe - in discussed. preference you view a yield I about if buyback. are units non-coal when have it trading some of a of also I high opportunities and really, few questions a the was kind to the that right better got and you've units get you where pretty in think which view mentioned regard

Joe Craft

are quarter first hard the in units to the of understand. really price the in decline The

increased has there other investments that now on and if and I So guess against good news for evaluation is - we've just right also. that but is got to a do compare we we you got our plate make our our urgency that those mentioned of plenty that options

probability a our to being for an to leverage capital you the as exactly in long-term or those trying process on opportunistic units. about in assets prudent think of bring are whether investment an success investment is we to maybe competing if much So in to how will we be determine versus

So opportunities to with investments got flow. guess. great of excess it’s our I a some cash problem plenty high-class We make

Mark Levin

regulator any there. last Second quarter that point? guess any something is on to serious process this the in converting around the some I - thought sense and some given structure question at picture, bigger or Has what's off the or the space of structure consideration an the MLP more noise kind of of potentially C-Corp going MLP the there over decisions is from been a board also

Joe Craft

evaluating those options to we C. think the convert I well. not full do I we're would up believe as

eight Again hybrid or they understand the when at. if times. as hard the are it the there to five think C-Corp's multiple are I and estimates value you our on why EBITDA we trading looking MLP it's analyst will is over to are X.X a little saying worth competitors C-Corp

the if when it we’re vehicle, more think the MLP to us causes So hybrid are C. really full well maybe way tax than C-Corp we so then I evaluate better advantage their that. have But partial can't the understand I tax but to at don’t so take to about much looking can we convert that that are but - the benefits structure up in that efficient have would we imagine

Mark Levin

perfect makes That sense.

Joe Craft

the that You example, normal reduction at under income got as have I then just we a mean looked rate XX XX% to make a an at doesn't got yet for tax at it units bonds X% sense. individuals our us we little are rate tax at and and interest trading trading they rates

Mark Levin

for more to that specific, you guys Last absolutely you I me question I with guess bed. tons some point. on agree XX put for

realization export driven hang some then that You change maybe a you of And the two XX price is, caused versus combination whether I’ll question that XX of XXXX changed driven then XX realization, up to thoughts XXXX? early or parts realizations your the the my any that an you. move higher Thank the - two. I in down, one increase last code guess be utility or was increase was what flat will up is or not terms

Joe Craft

market a combination that the think two driven by export was there. the I it of largely

booked to close tons But do much look when half for the sales you our our their in export forecast price. that rolls able how metallurgical those prices quarter so year, - let think think average The mix, good. we I I are let we into very sell been got do that were sales market that price. has XXX,XXX the and that to at tons

we are mines the coal because domestically and of bringing the the certain of in domestic prices market impacted export have also some getting in we not shipments been but prices. the so equal tightness And that’s better marketplace at if getting export

comparable the as same to industry supply I flow XXXX - As discipline are forward cash again we XXXX, what far unidentified be think is. go is as what and they the coal margins look going we’re as through has potential as our to we looked demand to be. back are trying think to we XXXX in in the think to think we And forward, look time at price higher will the

Operator

[Operator Riley question Instructions] from ahead. The Pipes FBR. with Please next comes go B. Lucas

Lucas Pipes

more very also of allocation questions I you of been and Obviously, the an it in but then distributions busy capital having side. programs in met investment coal. such, the a quarter both couple last side wanted and buyback to ask has terms evaluating on then potentially mentioned in interest

So what opportunities met the look at my you you. in capital the U.S. first question side on to coal continue Thank is to extent allocation

Joe Craft

looking say that. would that to We opportunities its at in at continuing the are lower the look I ranking. are of priority we

think possible on opportunities would met at this but it ranking at would is this lower year. I It's look the probably coal we our not happen moment.

investment other attractive to - to got more investments XXXX. making in that in We its will are continue it, this but we've

Lucas Pipes

So those maybe could with lead what not on to any those priorities? questions be, could describe you

Joe Craft

middle negotiations the we've We are to and the definitive not and just of some to until evaluation prefer just closer is we not we to something I got those think in address and in have where better because them of arrangement. it something

Lucas Pipes

the Would into depletion to share, a how region then you new discussion. it not wanted evaluating do in sense And potential to allocation Joe make you that? about for market competitors purchase to I mentioned due tie maybe mine in to that the think some M&A XXXX. more capital the maintain

Joe Craft

is perspective. that like at best excuse operation advantage feel a a me, think - Eastern result team the are that already we will allow take low that from cost very It the maintain us to in capital we we an low existing of is allows We Kentucky. have be and the deployed cost will management to operations looking

trying we you’re best utilize we benefits, you of is team to someone we are getting good feel always return invest don’t higher making as risk purchase option the in think a what buy the another to get the return can of think when assets. and that to and we as So you like we assets our know oppose have

Lucas Pipes

that cost development of the new mine. for sense a have you Do

Joe Craft

reserves. three be the rate MC XX would in more with or million seen and our of $XX to period. It be in and Mining this grow plus that year small minus over will probably year this It's as depletion would a was to move try amount we be the XX the

Lucas Pipes

And operation how many produce tons would per this roughly? year

Joe Craft

that, more opportunities. attractive becoming and long encouraged upon are And we in regard. that be I export opportunities would enter X.X it is be end like more the think we and but term in expanded something we depending can with about contracts could that Around market into market, users think market as this

that get So we increase if we adequately to it's could could match. volume possible contracts

Lucas Pipes

to have few questions that, may maybe my the side. I on a but allocation capital finish more questions on

You continue to and continue you want to in here for where self what's invest and business. business if gas capital the contribute your it funding? a that grow in gas, now looking oil ought oil Do and XXXX at think point out, to it's to be you goal

Joe Craft

last completely the be Well the year. this we've made - we will commitment commitments made funded

at do what not and we where got we So at continue level. point decision are the a to we make or

it the we entity previous from that that decide future So first could investments we be but the get part right investments look to the front what making at But based us of before flows the the now, be anticipate coming from cash is that that quarter. decision that’s do and the will of of off of from process our investments decision we scale, their made. end we and second our in three commitments in that and

and color not if we on going sooner. next we have do our what will So call exactly more to are

Lucas Pipes

us those out maybe sense you Joe tons enter the Illinois questions now would of longer agreements multi-year contracts. to Basin would be What that you're to look with market. in some term you export into my round prices? and the And export maybe the with Can mentioned give on this fixed the like, realizing ability net-backs

Joe Craft

lower Gibson our County question, selling your operation. Basin Mine, coming that Illinois which coal of lot a our Along the is from is sulfur first are we

not in that smart to the lower above because of you are are realizations the we So Illinois we be so get - price what Basin able have to considered sulfur. are

are largest suffering we so to sulfur So speak. not discount as

better see you So Illinois you than are you that have Basin, there are are and domestic we price getting in index the any prices better than that definitely what looking market at. on

far having higher remind I will are market, ton the the benefit tax export pay made of pay we at not the Basin, also everyone coming get into sale the excise have $X.XX Again, As to those other per Illinois when sulfur in slightly higher. two we domestics. as we that that to to a

in are to when we the So be market, the getting similar something would price margin in another what lift. domestic we get our $X.XX basically

able as more be have would tons longer differential imploding a for it the a an concept being price term both but price as would with it of the likely. As indexed to X probably than contract, and some to far API price basis may be be commitment fixed be would more

Lucas Pipes

the and sell final I think every XXXX this equal I ask times But average in kind about River utility? ask - When all contracting ton you what almost Valley, what created one you for, domestic of to know think Ohio XXXX kind question, for not think an of but I quarter. I it

Joe Craft

what I book think the think, our been better just am far indexes, - I have we to leave than pricing been I so that. has it at Again able going to

between straight so is than differential. as River rail a rail different I the BTU tons tons BTU there and think demand for we mix do just these high have our a and tons

Basin So that our when at price and our got it you sales you Illinois look to back price average curve. to

first in comparable I at Illinois XXXX versus mentioned pricing on our say XXXX as be call as XXXX. Basin will look the we So, in

Operator

[Operator next JPMorgan. with comes ahead. Please question The John from go Instructions] Bridges

John Bridges

export mines that wondering of medium but just up do demand terms have was what the off the there. in trend of some I in changes cetera, the and as there, Illinois sort et term by coming you demand big see the dynamics with pick seen masked then in we supply of pricing demand supply obviously

Joe Craft

think are gas demand the Southeast the balance, in the on are domestically I to customers got option, natural prices be have they do they in because low. side challenge gets the gas our the

same favorable we price if our of time demand inventories. challenge at though that’s is customers maybe have stocks producer - somewhat they’re the out for a pretty even kept to potential gas we’ve natural But seen got mean our even flexibility the do So the the the I price. supply much drop

in last burn So, this is our another in depending mix, the we do very time the keep little that is favorable can still that month gas able even relative just global an they’re and we're or still same their that two. as a price production why million and us for does so in primarily there markets to gets we’ve balance different the upon what market. to what export margins supply - even in the cash that balanced demand API the coal are domestically. able option what the they price X by pretty make to of if bringing to constructive nice versus volatility, want still volatility with flow Export to tons market is At up export to participating participating be in by increase that's seen year

John Bridges

or to that it respect Ridge. importance what’s have with was you close the can you pool capacity the to? access contract then of River importance then And the you accessed Tunnel - And have of the that to settlement, the buy tons

Joe Craft

pool it facility by out that and in coal go export it’s rail to Warrington basically the to their can that then market. Its to we gain allows River access up putting the barging they’ve got - some - a rail not

the that’s that advantage we were to negotiate. able So

of but there the want we that we other move to put also got the On to contracts area if Basin with buy, so Tunnel to those buy to opportunities do then Illinois that the with as that have tons to are ability on we the Ridge availability we tons well. option in tons have to suppliers

be opportunities decision tons available tons and allocated decide when the to tons at are and are those to Basin is. to be right some sell of sold we the out what depend Ridge Illinois - upon we the we what could customer could move will Tunnel an just demand the could slight what's evaluation either tons, made customer what that needs to are or be those broker our on depending again So, now

John Bridges

mentioned difficulties you you’ve experiencing bigger in greater And QX is be interest to could or related this been in rail the River the the thing? tons, that with a

Joe Craft

I think BTU. a it's just high

So it plus it higher long travels BTU, that value you think a in and so BTU distance. has terms it’s XX,XXX when of when

John Bridges

So mechanism? is that part of the export

Joe Craft

this since delivered is tons in pricing analysis because and based buyers the an to it on of improvement for [X] you the the method higher back higher per of transportation delivered product, the deliver the million looking their BTU, on you When BTU get BTU coal.

Operator

And the next with Please question ahead. Shen comes from go Lin Hite.

Lin Shen

Just is one You're distribution the quick very ARLP ARLP? GP, question, should between merge about in the for think for quarter. distribution and market Joe. great weak After the how we MLP, policy their now seems every rewarding. being But

So we about for policy your think goals? distribution how should

Joe Craft

comments, do in As X% per the grow ARLP quarter plan in I level. introductory previous the my and we mentioned the that's at - to distribution

So that will continue.

be obviously if on will give we going So run X% we XXXX, what today. that make the and occur, to the quarter as decision time the period quarter have that the right closed of but after basis expect a you that would XXXX, per for that we the only the this of Obviously moment distribution planned a would per everything assuming ARLP achieve we can as per you year. for for paying see for - quarterly includes guidance quarter of we’re rate is once a is goes I the simplification are look to remainder time continuing rest now which we’ll we is would that made the the at completed. And our for X% X% plan in Board but results simplification out still be the a by year to choice

Operator

seeing any further remarks. over question-and-answer in Cantrell to I Okay, turn Mr. questions session. Brian the would our concludes closing to this no the back for conference Instructions] [Operator queue, like

Brian Cantrell

We continued Thank morning, AHGP. ARLP support Phil. this interest time as as and appreciate you, and your everyone's in both well

our for forward quarter next earnings at look July you is Our discussing scheduled to for the and that results call second we and time. quarterly XXXX late with release

participation. everyone this call. this For morning our Thanks to concludes your for

Operator

has conference you for today's attending Thank presentation. The now concluded.

now disconnect. may You

Alliance Resource Partners (ARLP) 30 Apr 182018 Q1 Earnings call transcript