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8-K - FORM 8-K - Alliance Holdings GP, L.P.a14-11300_18k.htm

Exhibit 99.1

 

PRESS RELEASE

 

 

 

CONTACT:

Brian L. Cantrell

Alliance Holdings GP, L.P.

1717 South Boulder Avenue, Suite 400

Tulsa, Oklahoma 74119

(918) 295-7673

 

 

FOR IMMEDIATE RELEASE

 

 

ALLIANCE HOLDINGS GP, L.P.

Reports Record Quarterly Financial Results and Increases Quarterly Distribution by 2.4% to $0.8475 Per Unit

 

TULSA, OKLAHOMA, April 28, 2014 — Alliance Holdings GP, L.P. (NASDAQ: AHGP) today reported record quarterly financial results for the quarter ended March 31, 2014 (the “2014 Quarter”).  On the strength of record results by its operating subsidiary, Alliance Resource Partners, L.P. (NASDAQ: ARLP), AHGP’s net income rose 12.4% to a record $67.4 million, or net income per basic and diluted limited partner interest of $1.13 per unit, an increase of 13.0% compared to quarter ended March 31, 2013 (the “2013 Quarter”).  (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.  For a discussion of net income presentation, please see the end of this release.)

 

AHGP also announced that the Board of Directors of its general partner (the “Board”) increased the cash distribution to unitholders for the 2014 Quarter to $0.8475 per unit, or an annualized rate of $3.39 per unit, payable on May 20, 2014 to AHGP’s unitholders of record as of the close of trading on May 13, 2014.  The declared quarterly cash distribution represents an 11.1% increase over the cash distribution of $0.7625 per unit for the 2013 Quarter and an increase of 2.4% over the fourth quarter 2013 distribution of $0.8275 per unit.

 

“AHGP continues to benefit from the strong operating and financial performance of ARLP,” said Joseph W. Craft III, President and Chief Executive Officer.  “With ARLP poised to deliver another year of record results, our leverage to growth at ARLP is expected to benefit AHGP as well.   Reflecting this expectation, the Board elected to increase quarterly unitholder distributions for the twenty-fourth consecutive quarter.”

 

AHGP’s principal sources of cash flow are its ownership of general partner interests, limited partner interests and incentive distribution rights in ARLP.  The declared distribution is based on the distribution AHGP will receive from its ownership interests in ARLP, which today announced a quarterly distribution for the 2014 Quarter of $1.2225 per unit, or $4.89 per unit on an annualized basis, payable on May 15, 2014 to all unitholders of record as of the close of trading on May 8, 2014.  (See ARLP Press Release dated April 28, 2014.)

 

Based on ARLP’s current declared distribution, AHGP expects to receive quarterly cash distributions from ARLP of $51.6 million, or $206.4 million on an annualized basis. AHGP’s primary cash requirements are for working capital, distributions to its unitholders and general and

 

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administrative expenses, including for 2014 an estimated $4.6 million in general and administrative expenses.

 

AHGP and ARLP will discuss their 2014 Quarter financial results during a joint conference call scheduled for today at 10:00 a.m. Eastern.  To participate in the conference call, dial (866) 515-2908 and provide pass code 49236626.  International callers should dial (617) 399-5122 and provide the same pass code.  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 (888) 286-8010 and provide pass code 47869959.  International callers should dial (617) 801-6888 and provide the same pass code.

 

This announcement is intended to be a qualified notice under Treasury Regulation Section 1.1446-4(b), with 100% of the partnership’s distributions to foreign investors attributable to income that is effectively connected with a United States trade or business.  Accordingly, AHGP’s distributions to foreign investors are subject to federal income tax withholding at the highest applicable tax rate.

 

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 Alliance Resource Partners, L.P. (NASDAQ: ARLP), through which it holds a 1.98% general partner interest and the incentive distribution rights in ARLP.  In addition, AHGP owns 15,544,169 common units of ARLP.  The Board of Directors of ARLP announced today that it approved a two-for-one split of ARLP’s common units.  The unit split will take place in the form of a one unit distribution on each ARLP unit outstanding, with units to be distributed on June 16, 2014 to unitholders of record as of May 30, 2014.  Following the unit split, AHGP will continue to own a 1.98% general partner interest and the incentive distribution rights in ARLP.  In addition, AHGP will receive an additional 15,544,169 ARLP common units, which will bring its total ownership to 31,088,338 ARLP common units.  The quarterly cash distribution per ARLP unit will be reduced by half and as a result, ARLP’s total distribution to AHGP will remain unchanged after the ARLP unit split is consummated.

 

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 projections 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.

 

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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, 2013, filed on February 28, 2014 with the SEC.  Except as required by applicable securities laws, AHGP does not intend to update its forward-looking statements.

 

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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
March 31,

 

 

 

2014

 

2013

 

 

 

 

 

 

 

SALES AND OPERATING REVENUES:

 

 

 

 

 

Coal sales

 

$

525,545

 

$

534,509

 

Transportation revenues

 

6,005

 

6,934

 

Other sales and operating revenues

 

10,384

 

6,527

 

Total revenues

 

541,934

 

547,970

 

 

 

 

 

 

 

EXPENSES:

 

 

 

 

 

Operating expenses (excluding depreciation, depletion and amortization)

 

322,242

 

348,575

 

Transportation expenses

 

6,005

 

6,934

 

Outside coal purchases

 

2

 

602

 

General and administrative

 

17,899

 

15,713

 

Depreciation, depletion and amortization

 

66,841

 

64,382

 

Total operating expenses

 

412,989

 

436,206

 

 

 

 

 

 

 

INCOME FROM OPERATIONS

 

128,945

 

111,764

 

Interest expense, net

 

(8,063

)

(6,618

)

Interest income

 

389

 

134

 

Equity in loss of affiliates, net

 

(6,241

)

(3,867

)

Other income

 

306

 

274

 

INCOME BEFORE INCOME TAXES

 

115,336

 

101,687

 

INCOME TAX BENEFIT

 

 

(697

)

NET INCOME

 

115,336

 

102,384

 

LESS: NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS

 

(47,889

)

(42,382

)

NET INCOME ATTRIBUTABLE TO ALLIANCE HOLDINGS GP, L.P. (NET INCOME OF AHGP)

 

$

67,447

 

$

60,002

 

 

 

 

 

 

 

BASIC AND DILUTED NET INCOME OF AHGP PER LIMITED PARTNER UNIT

 

$

1.13

 

$

1.00

 

DISTRIBUTIONS PAID PER LIMITED PARTNER UNIT

 

$

0.8275

 

$

0.74

 

 

 

 

 

 

 

WEIGHTED AVERAGE NUMBER OF UNITS OUTSTANDING - BASIC AND DILUTED

 

59,863,000

 

59,863,000

 

 

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ALLIANCE HOLDINGS GP, L.P. AND SUBSIDIARIES

 

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except unit data)

(Unaudited)

 

 

 

March 31,
2014

 

December 31,
2013

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

CURRENT ASSETS:

 

 

 

 

 

Cash and cash equivalents

 

$

19,124

 

$

98,375

 

Trade receivables

 

199,554

 

153,662

 

Other receivables

 

294

 

776

 

Due from affiliates

 

2,300

 

1,889

 

Inventories

 

68,751

 

44,214

 

Advance royalties

 

11,454

 

11,454

 

Prepaid expenses and other assets

 

9,974

 

16,264

 

Total current assets

 

311,451

 

326,634

 

 

 

 

 

 

 

PROPERTY, PLANT AND EQUIPMENT:

 

 

 

 

 

Property, plant and equipment, at cost

 

2,681,406

 

2,645,872

 

Less accumulated depreciation, depletion and amortization

 

(1,062,256

)

(1,031,493

)

Total property, plant and equipment, net

 

1,619,150

 

1,614,379

 

 

 

 

 

 

 

OTHER ASSETS:

 

 

 

 

 

Advance royalties

 

20,741

 

18,813

 

Equity investments in affiliates

 

154,029

 

130,410

 

Due from affiliate

 

11,458

 

11,560

 

Other long-term assets

 

23,738

 

24,883

 

Total other assets

 

209,966

 

185,666

 

TOTAL ASSETS

 

$

2,140,567

 

$

2,126,679

 

 

 

 

 

 

 

LIABILITIES AND PARTNERS CAPITAL

 

 

 

 

 

 

 

 

 

 

 

CURRENT LIABILITIES:

 

 

 

 

 

Accounts payable

 

$

84,213

 

$

79,772

 

Due to affiliates

 

202

 

290

 

Accrued taxes other than income taxes

 

25,091

 

19,086

 

Accrued payroll and related expenses

 

43,116

 

47,105

 

Accrued interest

 

6,302

 

996

 

Workers’ compensation and pneumoconiosis benefits

 

9,237

 

9,065

 

Current capital lease obligations

 

1,307

 

1,288

 

Other current liabilities

 

17,130

 

18,625

 

Current maturities, long-term debt

 

43,000

 

36,750

 

Total current liabilities

 

229,598

 

212,977

 

 

 

 

 

 

 

LONG-TERM LIABILITIES:

 

 

 

 

 

Long-term debt, excluding current maturities

 

790,000

 

831,250

 

Pneumoconiosis benefits

 

49,698

 

48,455

 

Accrued pension benefit

 

17,544

 

18,182

 

Workers’ compensation

 

54,857

 

54,949

 

Asset retirement obligations

 

81,324

 

80,807

 

Long-term capital lease obligations

 

16,758

 

17,135

 

Other liabilities

 

6,407

 

7,331

 

Total long-term liabilities

 

1,016,588

 

1,058,109

 

Total liabilities

 

1,246,186

 

1,271,086

 

 

 

 

 

 

 

COMMITMENTS AND CONTINGENCIES

 

 

 

 

 

 

 

 

 

 

 

PARTNERS CAPITAL:

 

 

 

 

 

Alliance Holdings GP, L.P. (“AHGP”) Partners’ Capital:

 

 

 

 

 

Limited Partners — Common Unitholders 59,863,000 units outstanding

 

517,841

 

500,070

 

Accumulated other comprehensive loss

 

(4,207

)

(4,198

)

Total AHGP Partners’ Capital

 

513,634

 

495,872

 

Noncontrolling interests

 

380,747

 

359,721

 

Total Partners’ Capital

 

894,381

 

855,593

 

TOTAL LIABILITIES AND PARTNERS CAPITAL

 

$

2,140,567

 

$

2,126,679

 

 

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ALLIANCE HOLDINGS GP, L.P. AND SUBSIDIARIES

 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2014

 

2013

 

 

 

 

 

 

 

CASH FLOWS PROVIDED BY OPERATING ACTIVITIES

 

$

139,530

 

$

199,184

 

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

Property, plant and equipment:

 

 

 

 

 

Capital expenditures

 

(69,463

)

(70,306

)

Changes in accounts payable and accrued liabilities

 

(3,745

)

(7,608

)

Proceeds from sale of property, plant and equipment

 

 

9

 

Purchases of equity investments in affiliate

 

(30,000

)

(29,700

)

Payments to affiliate for acquisition and development of coal reserves

 

(1,401

)

(12,064

)

Advances/loans to affiliate

 

 

(1,643

)

Net cash used in investing activities

 

(104,609

)

(121,312

)

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

Borrowings under revolving credit facilities

 

82,800

 

45,000

 

Payments under revolving credit facilities

 

(117,800

)

(50,000

)

Payments on capital lease obligations

 

(358

)

(284

)

Net settlement of employee withholding taxes on vesting of ARLP Long-Term Incentive Plan

 

(2,991

)

(3,015

)

Distributions paid by consolidated partnership to noncontrolling interests

 

(26,286

)

(24,154

)

Distributions paid to Partners

 

(49,537

)

(44,299

)

Net cash used in financing activities

 

(114,172

)

(76,752

)

 

 

 

 

 

 

NET CHANGE IN CASH AND CASH EQUIVALENTS

 

(79,251

)

1,120

 

 

 

 

 

 

 

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD

 

98,375

 

31,111

 

 

 

 

 

 

 

CASH AND CASH EQUIVALENTS AT END OF PERIOD

 

$

19,124

 

$

32,231

 

 

Presentation of Net Income

 

Consolidated net income includes earnings attributable to both AHGP and noncontrolling interests.  Unless otherwise noted, any reference to net income in this release represents net income attributable to AHGP.

 

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