ARLP - Earnings call transcript Q2 2019 | Alliance Resource Partners, L.P.

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day, and welcome to the Alliance Resource Partners, L.P.

Second Quarter 2019 Earnings Conference Call and webcast. All participants will be in a listen-only mode. [Operator Instructions]. After today's presentation, there will be an opportunity to ask questions. Instructions]. [Operator event this being is note recorded. Please

time conference over this and Financial ahead, I Senior would the turn Chief sir. go Please to like Officer. to President now Vice At Mr. Cantrell, Brian

Brian Cantrell

everyone. welcome second of through the the its earnings these and Ian and XXXX you Earlier morning, our Partners quarter now Alliance will we remainder discuss year. this and results released Resource walk for Thank outlook

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

today reminder risks, Exchange that time-to-time Forward-Looking some contained Before may we in remarks to of include Securities Commission that our variety in start reflected also uncertainties this subject are and a are with the from Statements press of morning's assumptions and our a filings and release.

And or has or result on information, expected. the one us, otherwise, to future available from or vary based information as law do those events assumptions any these unless of our so. risks may projected statement revise publicly a While currently or materialize of new to incorrect, these or if or partnership whether if prove obligation materially we no by forward-looking uncertainties underlying required statements to more providing these results remarks, forward-looking actual are update

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

XXXX. Craft, Chairman, and on his and our Officer Executive over with of President a of With call and ARLPs the will perspective of our I Chief Joe the turn out start remainder for markets the preliminaries to then outlook the results the way, for review

Coming this this in XXXX times quarter factors for earnings make deferred from year. with most release this XXX,XXX to impacted first from will we quarter, coal which our We the results quarter our numerous XXXX the as into at expected a the noted morning. our up look morning the were begin operations of of by

further Unfortunately, XXXX weather-related last tones. quarter first million quarter persisted, X.X tons approximately transportation shipment XXX,XXX during issues delayed In delays year. the contrast, of of benefited causing the of from the

With down coal XXXX quarter to revenues declined down revenues compared quarter. and coal million for the compared the sales XXXX sequential sales coal $XXX.X drove volume sales prices quarter. to coal was X.X%, X.X% million Lower the for also to also $XXX.X volumes by sales

which also the increased times XXXX in sales Lower contributed X.X% higher per ton to cost quarter. $XX.XX a

long-haul and per addition, ton and non-cash impacted Riverview, due In primarily higher at Ridge, were geology a labor by cost Tunnel discount workers to expenses compensation expense increased moves adverse to lower actuarial at rates. Hamilton encountered

cost also seasonal as X.X% to in quarter per XXXX segment on minors well per the the factors, adjusted as vacation led quarter. of These higher EBITDA by compared sequential expensed impact the ton ton

the operations XXXX a to sales quarters, Lower total million XX.X% higher drove and adjusted in quarter XXXX sequential the EBITDA the coal and $XXX.X XX.X% and of from coal our decrease expenses revenues down segment respectively. compared

period. X.X% operations Compared XXXX. year. coal half first months and of to strong the and to during six metrics posted during ARLPs XXXX the volumes respectively start financial the all the coal production Reflecting operating and of X.X% to increased performance first major increases sales XXXX

million. by the $XXX.X from increased for coal volumes sales revenues higher million XXXX sales adjusted to $XXX.X led prices X.X% period to operations EBITDA while segment coal Increased also and coal

the $X.X limited XXXX income quarter, EBITDA segment ARLPs AllDale million $XX.X adjusted compares quarter. including mineral the the from segment, gas in Turning delivered royalties the III to partnership contributed contribute bonuses and our million $XX.X oil the million during for and lease total mineral of of equity investment now revenues segment XXXX quarter, which XXXX

to X.X% as acreage compared EBITDA XX.X%, production continue and volumes to from respectively, and segment increased We adjusted our drilling and on activity the completion benefit sequential quarter.

$XX.X During the mineral to half million, AllDale segment gain while of the million to contributed XXXX. of year $X.X months the segment acquisition first to related adjusted during first million total EBITDA excluding revenues our XXXX increased earlier of our this compared six $XX.X

debt I remains sheet. of XX liquidity and the will the conservative adjusted EBITDA. the months ARLPs quick close balance million at look quarter ended my X.XX comments at leverage $XXX with with a approximately We times XXXX total trailing

our evaluating anticipation a debt to of and acquisition investments potentially revolving month of interests and finance oil Resources, to the turn credit gas completing extend properties. current facility recently announced and markets ARLPs In this options are early mineral access Wing we year next from capital

In options ARLP several strong balance believe consider. attractive with sheet to opportunities evaluating these our we provides

We continue advantage take plans our and financial capacity our strategic a future is flexibility to ARLP opportunities. with believe strength execute to providing and of advantage

With call over I now the that will to Joe. turn

Joseph Craft

coal coal States stockpiles moderate morning fallen thermal both good export shipments of domestic export temperatures and in natural in than combination disrupted United our earnings and prices was from an further The April Brian markets anticipated. call springtime demand low Since gas with transportation competition challenges we LNG the and everyone. Thank you, have had the prices. Europe, persistent pressured and excessive

and sales reduce our for to production the coal results Illinois and need volumes we net call, for for end to income guidance plans XXXX, export and EBITDA. basin initial reported growth production full-year target in revenues ranges the April the and sales lower On expectations a of

as under XXXX earnings evaluation. release creating of the are its conditions currently options entire full-year this and throughout range industry. of and guidance market is lowering Today morning to fluid reflect our this uncertainty ARLP in light In the volatile, outlined coal current uncertainty,

production also ranges for widening total and sales volumes. are We

and is expectations lowered a levels XXXX ARLP, year volumes with its guidance Even XXth revised our the midpoint as publically for at traded be will a record which of celebrating coal production partnerships. sales

has of has risen second during Since our is rebounded, has beginning low half been two is months at June. pricing II month the QX of XXXX calendar API a the the last the II XX%, X%. XX% and API rollercoaster over at getting July,

year, of million last basin than lower tons adjusted Illinois been guidance Production nine for this the were delay uncertainty tons quarter. has targeting export we to reflects same Due the two what by land. market we amount our our million sales less as revised

Looking curve offshore, demand believe future for contracting as to ARLP improvement continues and recover. year coal markets fundamentals the this international the favorable continued price these where additional possibility expect we are forward markets in creating

producers wave heat and and U.S. and supply anticipate an options in begun to determine their assess also increase internationally this coal the month. environment. as path Domestically are reductions in appropriate this some is the U.S. recent both additional in see We burn eastern forward response continue likely

fill contracts We cost step off-line. as producers will comes anticipate potentially opportunities supply customer pressure on creating to to high full in ARLP for

from As than of ARLP myriad benefit most at evaluate to by operations markets. better front uncertainty we these in of options us, the low-cost volatile positioned our created are we that the fortunate

Anticipating actionable the opportunities difficult. may may when become timing of when improve market is conditions or

the market be guidance will our reaction are quick current that and will We hopeful be conservative.

progresses, matching lowest market timeframe an In for with year demand we ARLP. continue levels ARLP operations in as our and our XXXX, appropriate did towards so, eye evaluate situation focused will production XXXX unfolds. conditions the As on doing be maximizing to to cost the we production as monitor market will the

mineral and oil our to segment. gas Looking

this with continue part of We pleased the from ARLPs performance be business. to

completion total our intact. full-year drilling growth activity these acreage the remain this mentioned ARLPs from assets expectations platform As and Brian ongoing on XXXX is earlier performance and existing contribution in results our consistent from driving to financial for

oil ARLPs attractive building to and business continue growth. committed are and to see We gas, long-term for minerals opportunities

month announcement part of Permian of this an the ARLPs acquisition the our by As net royalty Enhancing strong position already for of acres Permian. the attractive additional XXXX evidenced last Midland the in in portion basin.

ARLP’s oil transaction results EBITDA We this and will month this track and to production expect are net early guidance existing by XX% on of to gas, contribution transaction minerals XX% the close acreage increase approximately expenses. next XXXX to on from

assets growth we completion flow in for for the the business existing unit beyond drilling, on and holders. ARLP our and cash for new platform this on will for our long-term horizon significant With actively permitting value and meaningful deliver and and Wing underway anticipate XXXX acreage,

challenges are today. While there a ARLP confronting number of

on develop. difficulties, the advantages to industry opportunities, successfully facing opportunities co and alliances we We focused taking current both that see also managing of the positioning are

We to our flow our will holders. increase the that generate term, returning unit quarterly deliver we ARLP investing XXXX and objective to growth of confident sustainable distributable unit announced maintaining to distribution cash are support cash a remain to to on while in flow ratio. create holding in Longer cash our business ARLP’s committed coverage comfortable

This comments and the with operators concludes our now prepared assistance.

the to your open call will We question.

Operator

proceed. please first Mark Global. and will answer We Levin from of being question comes session. Our Seaport Mark, now question Instructions] the [Operator

Mark Levin

and very Thanks Alright. much Joe Brian.

Just question a distribution. it as the quick to relates

way might yielding better the So imply a conditions thinking some the market along be which this are is morning would the won't distribution and at that be or there could units cut. get XX%, about point

but into about how conditions the distribution improve. XXXX raised go into decided early Thanks. us view Maybe guys got If distribution. one which to give distribution XXXX back this cent thoughts you this you market year half it at about some about then some you if and the maybe looks the that was coverage time to can like obviously and give morning, to around you you the by point later have thoughts us the don't you cut can

Joseph Craft

Yes.

essentially sustainable that the decision is increase with Board when it the some belief time. So period makes they over to so distribution a the do of

are like So sustainable distribution that as our our distribution we look as years, for results, the is as over year's current say we again with five what next we a coverage. feel well rate at projecting

are of act today from conditions seeing world and in would view appropriately. where If we in our Board fact does outlook reverse the the the then market

are we that would Based just they to stabilize at, take environment possibly distributions. what is sustainable. we on looking it So today action and our believe

to anything what talk I than see lower current don’t is. a about So rate need

Brian Cantrell

Brian. This is

distribution given by were to clarify that We took sustainable, time, market around driven wanted our the the point bankruptcies for that and of were that believed see our the but environment we skittish bank sure didn’t bankers. markets time. the our to at make were really to the and bank policy we the occurring taking were large and in that control were Just the very at that distributions always more actions XXXX distribution had we

So there influenced of variety that factors our several years decisions were a ago.

Mark Levin

a right? it’s for you to distribution times you one point a would if That guys, you that that are fair trying so sudden, but a of statement went below is that point, all fair say is not like - not the trigger - is is a let's No. necessarily

Joseph Craft

belief place. in and is distribution our It’s the really looking in that of the forward sustainability

Mark Levin

then and the it, a on just Got question markets. export

what to to Is so how think could So where you what that contract is guys prices XXXX you still mentioned fact if think get good or what would about it there has in from baseline way you. are today at see so I or we kind to what the tons. in XXXX go their difficult nine exports a mass you maybe II will worse can is or tons the that very be point for API think million we a to it's and in have flat been get about you or contribution do XXXX

Joseph Craft

I we believe we over seen market, in what shoot. was the think No, an

June that fact I this into levels to out, have rise were been we points. market because and with in seen that went since that of think prices July bottomed that was the evidence obviously has selling price nobody June

So seen improvement. we have that

cost and that that are market. The the basins to we has continue think different this still into reasonable world still be how transportation we in the determined or what back year tons of the market. producers hard will happen, levels fast there just committed levels this again half will We lot it’s profit based selling respond that a on fact for around curve will to this disruption into some of what that to produce

back to So think demand XX we any where worldwide, level investments we increase able supply were million we plants is power going still be the a could that longer to being do market. we that to tone to to to continue coming but participate term pricing that. in have quarter fired should ago don't reflect we the major the that get where see on and to built We do see yet coal see

today the effects So about the given of volume. backs opportunities, market, we curve bullish that's longer-term but is the to continue reality our we of main other the feel reason where are to why international cutting and price relative that

domestic really to an We we could and this and can points year money, be to open transact production. we producers not selling to have of to where think compared of in we or coal be it’s rationalizing consider either are to some coming we tonnage on price been make the sell it's an we certain attractive producers today to where points AFV still with contracts, not it their may some will today, we that where market, effect talking price put their

Mark Levin

Now were might the sense last at about mentioned then you XXXX conditions like margin down. be make market and per you quarter given that where that Joe ton the time talk

think you and mentioned days or XX view down versus XXXX a kind export in when you and dollar sort so. fast I about wondering has was I that also dollar and quarter, a pricing quarter, forward changed XXXX very of was week, of you the

Joseph Craft

production could of of production. our cost some really, wise we so reduce pricing some increase cost is at the are things some Not our looking lower little production and of our higher bit, but down

be to last at a the range, early we with seconds year, may are level be that have see same prices get the call. that dropped at since same planning do view this able even we to to for that So but XX next little we a

Mark Levin

else I guys. Thanks it. much hop very let Great, will Got someone on.

Brian Cantrell

Mark. Thanks

Operator

next comes Clarkson. Daniel of Scott Daniel proceed. from question Our please

Daniel Scott

the the of on I'm there you a looking asset of distressed at the the domestic of options versus a policy But Where your of so Hey mentioned market return thanks. are in is diversification right cell companies in would rank you and apologies. versus phone, number capital myriad for a sector potential obviously and in minerals. today out basins. Joe both now coal you acquisitions

Joseph Craft

the I first. one will last take

to last several the We over lot and a side on think I opportunities we of what acquire pleased oil are and particular able have with in gas years very the been see to in we at. on we several so in that that we if evaluate you be looking market, believe is packages things be will are will continuing we so are there that, will coming to space, those XXXX.

probably On side, a the I my have the it's today in business strategic going than long I have seen discussions more career. say I would in this that coal and in been on industry time

a advantage challenge. how of So a to take trying opportunities lot I’m of that determine to that opportunity. creates is

the I and that evaluate to in But lot are really the a I versus a transaction that coal the bit dynamics we some on actually time Steam joint focusing guys arch just Met seeing with think that and coal I'm of major coal is think time changed things and Peabody going that actual business. first arrangement those venture

oil see business, and see talking. people You new much coal don’t lot gas space, in got it that a you so

is there. opportunity there of a lot So

the predict at So but that, hard evaluating now. got if have we anything lot looking that it’s at of and come that, to are on right there teams options table will

Daniel Scott

would you operating that are your to believe case? in such be in already I said that basins you the past in. market still the focus Is limited

Joseph Craft

metallurgical coal We some we that strictly could area an are so as include value the see see some where reason would be to same have and we in and exposure growth though, Mississippi, so that markets today. still are we the Yes, would operating that well. Met ourselves, be where could focused of in we the East venue

Daniel Scott

you great on are year are me for or a that that. half committed your you Okay next running about lighting, cadence is running if little right for over and tonnage the of typical or now pay lastly for

Joseph Craft

are were We where believe are something this today ago, a like time than X.X actually were that. last tons so ahead less we at year million I year, of time where we this we

Brian Cantrell

for have point XXXX, and currently XX in this at committed priced Yes. million we time. Dan almost tons

Daniel Scott

year ago. is And it where above was a that

Brian Cantrell

Yes.

Daniel Scott

Okay.

that could to year a With nine last going and was my one while today margins kind not kind the markets would kind about roughly that business export head. week tons thing a tonnage export the pops you domestically all said I mine would in how that just you million stays reabsorb So you money it If the domestically. ago of little could look say the of this expect and you did possibly on is place at make there change, of that plan distressed side get of being environment? would and or concern

Joseph Craft

then if cost distressed market that is stays going I Again higher producers. pressure to on that think put

and open transactions arrangement. today us some up competitors serviced do to need that opportunities up an without that would think I contracts they Our of allow will that bringing will would they type be will where production, that to

next or curve, export XX price right is is our a as a at we see say feel volume let’s least this it API price seconds, today. II where So there whether flat again is at even II markets, curve flat today year, API and

that not as Now is year, we curve we I on said if that this believe to first our be be up API II to maintain price were are export, of go the where curve. that going back price but dependent able so growing we hopeful we the to will will earlier, at half

the producers there As will we balance place supply right others other this bring in tons far if will believe grow be maintain produce unknown that not - the at other But are by what it. as be and I the we demand where do now. level action year can will

Daniel Scott

Alright, thanks. Thanks helpful. Brian. Very

Brian Cantrell

Thanks.

Operator

next Bank of of Matthew from Matthew Instructions] please Fields proceed. Lynch. [Operator Merrill America comes Our question

Matthew Fields

everyone. Hey

South the better than East opportunities - you contracts to what you win PRB especially advantage see domestic some about your - over these that still because maintain Just are kind suffering wanted down that of from yourself Do maybe exporting. sales contracts - winning opportunity basins distressed just share to enormous follow-up sales. exports that see increased are domestic have an on primarily in to guess being I from into take of and question like producers are or last the of able do but you producers cost things

Joseph Craft

I by they producers that. be think and cost supply that that there share cutting they market if will will could be high be do rationalization up that giving back

suggesting supply of business seeing form I’m because for being I’m low-cost we suggesting will that be take high we cost and will which of producers bid be free market by would yes, will that we got some are domestic when gas, share lower able we to one of advantage will operations with that not market, them either that low of up there So compete a the response those that we growing that. cost or and the

Matthew Fields

that Blackhawk, Black bankruptcies distress You opposite cetera et of effect. worry that financial and the irrationally Jewel through right going now companies pricing are because the their actually are having

Joseph Craft

Well to they trying is with and Blackhawk the is are not about us business. competing really coal Jewel or decide are think the going of talking in space, focused on where they thermal I Met side the XX are to more they seven Black

So really they outlook influence I don’t just net that mentioned.

think the -. be it’s to I going other

Matthew Fields

right? be Its is could opportunity can’t big, There lot. a big

Joseph Craft

would much But reduction how that to don't utilities the to impacting there I the happening, PRB PRB your be they question production in appears And constant. of have guess happen that really significant about I decided going the have markets to was in East, have year. see seen you East and happened I this if the the PRB it are buy in Mississippi it pretty mean going

PRB than the the PRB it side East We markets. other do more so hear the eastern in coming see buying into talking about more Easter buyers production, we some

Matthew Fields

the cost and should Georgia penetration. where I mean could you get like especially Florida a have maybe advantage some huge transportation more you in with cost

Joseph Craft

are the current API be sell what attractive that not market markets us and and counting stays on would and We market than counting the I’m absorb again the on not you if II for earlier. is counting just was into that that, I’m saying domestic coal selling to could, not no opportunities were or domestic can growing price the curve I’m I’m think market mix or flat, more there export domestically export there you changing we know I asking on

us, their for at by decide high where the or prices can coal or other where then that could would that deal, cost its these their we to we did they put but on A, guys to lower know still either get be we ruin they decide bidding, and and Now work either contracts. decided a to below want may just cost you point hold out take profitable but compete,

Matthew Fields

color. is That Okay. the I helpful appreciate

Wing right? royalty in On mineral guys is EBITDA the to from that you increase acquisitions XX% wing said XX%

Brian Cantrell

Net-net correct. of transaction cost,

Matthew Fields

EBITDA right that on so to about is XX think EBITDA $X is of way that million to XX about to of it. million the Okay $X this is

Brian Cantrell

That fair. Yes.

Joseph Craft

XX. for is That Yes.

Brian Cantrell

as to heading that That We is site the then we the see on on today for XX track into see the of Wing both months. assets. is XX occurring and volume next assets drilling as well our the development and existing growth line to XX

Matthew Fields

multiple take is on imagine Okay. that about I that. forward on you EBITDA, XX when lower XX was to say projection a like that it multiple weeks the

Brian Cantrell

There and is also cost it didn’t that transaction it. have

those a dynamic. exclude If different you it’s

Matthew Fields

And heard alright just because I Okay, great. financing, think then wanted I just I again, you this hear it to mentioned correct.

quarter for going are the loan way third You in a acquisition with the closing. term finance

Brian Cantrell

No, that on of to allow existing as look we transaction capacity have close we revolver our us forward. plenty the will available

done However, we some existing activity our capital gas evaluating and have credit out options markets are the to this potentially bank the term and year. extend and the oil we facility of debt and

Matthew Fields

like that Okay, leverage to strategic or then alright gas more acquire you and are understand a And to coal your opportunities goals. potential oil comfortable order total achieve ratio that come up clarification. in in lastly levering leverage for and terms net properties you these way. push of balance What thank the sheet to the

Brian Cantrell

think don’t in us would at the be lever would where franchise we I view our point you risk. putting our to see

at have less. We been generally or operating one-time

see deal. and go one willing back it be one to were period chase significantly down reasonable had to a to path you up quarter a may comfortable time. as to up that a go strategic over long to For us we of a a we larger that would lever in as above times transactions, But we bring

Matthew Fields

in or there a it’s significant are you back above and it that? where lever to get cutting gas you comfortable was and opportunity would if coal and temporary whether up would distribution oil and great Okay

Brian Cantrell

are rephrase levels so it above me back if to we that would we comfortable. are within down I past, of above been operating, traditionally up a a bring may that view up we reasonably our had We lever quick that, Let only where or do time. would we historical that we not within could lever but period

Matthew Fields

Okay, from great. Thank guys much. That it you very is me.

Brian Cantrell

You bet. Thank you.

Operator

next from of question comes Our Jarmoszuk please Nick proceed. Nick, Stifel.

Nick Jarmoszuk

good question. thanks Hi for the morning, taking

the domestic year-over-year give On pricing us up that you book down can XXXX indicatively, its a replacing. sense for or the is tons to that relative

Joseph Craft

It earlier Mark will had down be or about talked little as bit mentioned Difficulty]. we [Technical

Nick Jarmoszuk

sorry. I’m

Joseph Craft

in About export more a our to year, bit compared quarter maybe dollar But a this and to it’s wider little call factors than and -. that going domestic. since last but be and year-over-year, a both down

Nick Jarmoszuk

about are are that the seeing long-term you markets that long-term opportunities, talk contracting what you back you into, export can net economics about fundamental opportunities positive they in And opportunities? prepared are you those demand comment seeing remarks think going markets for that and you of contracting how

Joseph Craft

sell XX XX% countries, Europe, fairly I are go we is into and predominantly Africa XX% of I into India total going the different remaining and mean We to spread. our volumes think

Brian Cantrell

Yes.

Africa. opportunities Europe, in contracting opportunities are there are Eastern Northern in there India, Latin contracting are there America, So contracting opportunities in

to us for in some So there are opportunities volume. lock

set some are those different there Sometimes the pricing ways contracts. off to is index, quarterly structure

possibility selling was how is maybe we mentioning looking and in the rebound prices be XXXX. was was Yes, specifically trying only I just the fast a volume that to so more, could there at is even ones depending I make. the point that on that There is

Nick Jarmoszuk

India, of years. several over of the a how the years couple basically and So you to for exposure stable is Are us and over or you with volumes of the going major Africa has past trended export forward? give mix Africa, markets past mix can more sense the the getting India Europe,

Brian Cantrell

from countries away There from been exposure more has to Europe, away Western Europe. those

Nick Jarmoszuk

some know last parts Okay. price, do of price, sort on And then back a discounts API are what and range of be there the rates, of need moving you terms basis? you sulfur of what freight range in to II net one breakeven

Joseph Craft

That varies by operation.

to in even. API don't II. trying closure would IV API the products export We like we are So really to be, market price at break our look to to relative where

in XXs range year, So than We and at we that were could XX. potentially we we into. the transact are with earlier opportunities low to the mid-XXs in we closer the that would like numbers looking to at mid-XX in the be the sell it could

Brian Cantrell

Yes, I the of we but range, mean margin could lower otherwise at at be not would profitable we that that like. end

Joseph Craft

Yes.

Nick Jarmoszuk

Okay. Thank had. you. Alright all that is I

Brian Cantrell

Thank you.

Operator

Our proceed. next please Partners. George from George Corre comes of Stien question

George Stien

consolidation follow-up on guys guys, Hey I wanted to the comments you made.

think conversely some I targeting potential kind think opportunities guys or as the are NAAP of having I in is biggest just instead? probably largest check about Or guys opportunities. that would to of issues. are be you at producer, have antitrust second you particular guys the clearly that guys consolidation basin least issues wanted kind about you how think Illinois the you of understand any you kind

Joseph Craft

issues. how and hard its we is there a understanding in really time market cost have gas I priced the the large part. have with today In any could natural the markets way setting be

of customers plenty our have thermal is there alternatives. competition think particular to for I where in coal

I think to the do make very, concerned in So be we is and how every very competition industry. buy government the that day, the define everything would markets coal you that impact back be to them would it consolidation with argument hard think I about markets the get for feel true to

impacts and Government see have and will solid yes step by opinion my the competitive know deal, reaction can Peabody I they - very case make we just is that don’t you but But there with that how in see that is consolidation. how

they unlikely when is to that the be on there Trump really with trying industry. hard think case the Democrats make if more constrains would could a a see for change are I it's put how coal Administration to and me the

So but think not with they step - I I and to the consolidation would would the to to opposed want in trying eco this welcome to -. continue efforts interfere them that as

George Stien

that. appreciate you. Got I

is M&A diversification, there of Illinois NAPP the a of of you terms in just in between kind basin evaluate as opportunities the landscape. Secondarily kind bias

Joseph Craft

bias. not is there No

George Stien

Okay. me it That is for thanks.

Brian Cantrell

you. Thank

Operator

comes from please Our next Lin, question Lin of proceed. HITE. Shen

Lin Shen

morning. I the to just acquisitions. for Hey want taking good for clarify the Thanks Wing call.

So what based are - your expectation XXXX for current on EBITDA price. that

Brian Cantrell

guidance We XXXX provided for haven't Lin.

Lin Shen

four annual is way five that right. is So million to run XXXX the for million

Brian Cantrell

rate. didn’t is X, no on not transaction that run it occur The a - No. obviously so January full-year

Lin Shen

Okay.

So low. thought that the the is And sense. it was you XXXX mentioned gas only deal closed for make natural also for pricing

price, basin can to about think the $XX $XXish sorry. like equivalent are prosperity we if in if a or $XX when buy even Illinois natural coal want gas for - $X coal their I’m price now they gas current seeing So price they to alike is you to what

Joseph Craft

people plants Well basis. I are not coal think versus power making are coal that a Lin, consuming Illinois daily for on they decision the gas basin that today, fire coal have

order does it So in but it's the for within influence generation mix, them further their basin. it, away Illinois particular from

dispatch the they strictly for coal more has with plants, reduction go those be it’s it being impact, still you that need but have large demand a gas percentage does a to coal an gas. utilities on have this but day-to-day have it’s on influence, based of generation two-third as if have call in transportation we committed year some gas, of Further and going and not for to fired, seen some their that

So broadly than speaking is it’s growth. my impact, market of it more a

plants, opportunities share coal plus are to be I in over to that to today XXX thought might than be has close that the it Southeast, further more utilities forever in in exit you we at seeing, where mid-XX% the new their that because plans like and these some to markets that be markets that it see capacity change higher still build some of really market think away region So in but the yes the of that gas would if these of to - but in in mix be markets. based some we and XX% in provides gas would are on XX% XXX could

Lin Shen

I you. Okay. got it. it. Thank appreciate

Operator

comes next Mark Seaport please from Global. Our question of Levin proceed. Mark

Mark Levin

Yes.

and if gas, idea earlier. you is When about carve EBITDA your to think the there XXXX EBITDA? follow-up from an overall is get guidance business way how oil any coal much two contributing export Just to and questions you were coal quick out to for your for maybe

Brian Cantrell

if markets bit that be sold have for tons million we XXX domestic curve, the is. the or lower prices reflective price are than of do price a are anticipated the quite and the We guidance guidance you at those the in million are got they For look that a export what so at to XXXX. QX roughly

the bears to We we export some looking potentially will these to going whether sale can or whether sell other determine we will our into what be XXXX. people's were other are is do can come the people's we markets want that see for to that we of the improvement If midpoint of can sell other that's guidance would in on EBITDA you contract. transactions contract and some

Mark Levin

well are bad whatever about kind Got XXX of of XXX after and I of okay low way was is XXs, took a number it out what is, it. $.XXX the oil around mineral you back million you took let's contribution? thinking expected and was guess I the of if export you it of domestic that the said in in is just EBITDA, that contribution midpoint you of terms you of mix and sixth it call and the XX

Brian Cantrell

the out where think are there side export if $XX changes. I downside market. million curve on going don’t have year, to if not you in the we of And $XX sell left, what could the market If we more rest midpoint answer in the up export elect to the than to price influence your is to it million be, there look we sell focused that as helps be from what the Really if if question. we potentially the could is up here

Mark Levin

was after is there generate severely there that your so the be Got going it. so any ability that it, definitely think because going I business I are just the constrains. that in XXXX people export terrible terminal EBITDA be market is export to to from out fear to

I’m least at coal just EBITDA. process So least. domestic looks like the was I trying what at That EBITDA sorry. export versus frame just to Anyway was thought

Brian Cantrell

export high domestic have going be of I back earnings and in that not hold then the to market will out gas say tried to back earlier in have export in market I clear. If put tie market that high-cost some they the uplift. market sell the you I we push we does to it cost that that are is gas, in opportunity pressure didn’t have improve their and an would what mean be persist- will domestic if and respect. provide or and does gives get on like and I together think make production the to us will not balance I Or domestic whether That stable, pick volume that the go the year-over-year we business. a mean market, we we very persistent where able to to up market maybe feel

Joseph Craft

in -. market Neither a operates vacuum

Mark Levin

Of course.

Joseph Craft

get we product it looking opportunities can realize as value assess best we where highest get and as Lever we our are the always and one compare the other for on side on our at alternatives. pulled can pushed we those

Mark Levin

Absolutely.

Brian Cantrell

internationally what think demand is understand growing. I needs everyone is Again to the

growing increase supply. stay assumption. are that very, are of or demand that in prices assumption back just we very, believe will seeing internationally. June So, a very, are the very they where where conservative - No in they to export seeing is going We

what coal, that sell coal want I can and price look would at hedges the think that it produce and growing encourage they way, its of is fact I not the have just understand that are want to if producers stable, the there that and going demand a customers those may but pay them and a people the incents to to coming off are to into market. internationally

Joseph Craft

structural look we been markets not question as and will these those. absolutely structural that expect but we fundamentals challenged, circumstances favorable supply has are recent advantage view is able and we cyclical the forward and take demand the There as to we be of

Mark Levin

ask Any say of tons exported way has I’m probably another far want much you your so don't it will to EBITDA come ask and answer, from the going I way year? half to maybe how but anyway. it to Brian in the first

Brian Cantrell

honest it export I’m we but Mark, be assessing calculate to I’m could -. on sure that not

Mark Levin

type market are me was trying that pricing. inter just is That just completely understand go of for frame I was Last basin it. is to I I question basis, curious about the related. On I because Illinois again no just it. fair.

kind So to be we while, realize doing weather hadn’t out been the cooperative in into price were today can where contracting the moment, in if go XXXX XXXX calendar maybe at gas go wanted for around but characterize would isn't you range you to if you the Illinois you market terrific the of what the terribly at basin.

Joseph Craft

Since market in we answer to that pretty to competitive that give for are hard it’s question you an reason.

Mark Levin

Okay, much. fair guys. Alright very enough. Thanks

Brian Cantrell

Mark. you Thank

Mark Levin

Okay.

Operator

Chief to Senior question-and-answer our like conference over Vice and remarks. Cantrell, Mr. I any for to would Officer This turn Brian back concludes closing session. Financial the President

Brian Cantrell

Thank this and Alliance. time morning as you well everyone's We Ian. appreciate your interest support in as continued

participation. quarterly earnings quarter and scheduled discussing to at will for XXXX you thank and October late our your third time. everyone call next our Our release to with you again call we look This and for forward results be that concludes

Operator

for Thank attending now today’s conference presentation. The concluded. you is

disconnect. now You may

Alliance Resource Partners (ARLP) 26 Jul 192019 Q2 Earnings call transcript