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8-K - FORM 8-K - Alliance Holdings GP, L.P.a16-2874_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 Quarterly and Full Year Financial Results; Maintains Quarterly Distribution of $0.96 Per Unit

 

TULSA, OKLAHOMA, January 26, 2016 – Alliance Holdings GP, L.P. (NASDAQ: AHGP) today announced that the Board of Directors of its general partner (the “Board”) approved a distribution to unitholders for the quarter ended December 31, 2015 (the “2015 Quarter”) of $0.96 per unit, or an annualized rate of $3.84 per unit, payable on February 19, 2016 to AHGP’s unitholders of record as of the close of trading on February 12, 2016.  The declared quarterly cash distribution represents a 4.9% increase over the cash distribution of $0.915 per unit for the quarter ended December 31, 2014 (the “2014 Quarter”) and is equal to the cash distribution for the quarter ended September 30, 2015.

 

AHGP’s principal sources of cash flow are its ownership of general partner interests, limited partner interests and incentive distribution rights in Alliance Resource Partners, L.P. (NASDAQ: 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 2015 Quarter of $0.675 per unit, or $2.70 per unit on an annualized basis, payable on February 12, 2016 to all unitholders of record as of the close of trading on February 5, 2016.  (See ARLP Press Release dated January 26, 2016, the “ARLP Release”).

 

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. Consolidated net income includes earnings and losses attributable to both AHGP and non-controlling interests.  Unless otherwise noted, any reference to net income in this release represents Net Income Attributable to AHGP.

 

AHGP reported net income for the 2015 Quarter of $28.7 million, or net income per basic and diluted limited partner interest of $0.48 per unit, a decrease of 59.6% compared to net income for the 2014 Quarter of $71.0 million, or $1.19 per basic and diluted limited partner unit.   For the year ended December 31, 2015, AHGP reported net income of $211.3 million, or $3.53 per basic and diluted limited partner unit, a decrease of 25.7% compared to $284.4 million, or $4.75 per basic and diluted limited partner unit, earned in the year ended December 31, 2014.

 

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As noted in the ARLP Release, results for the 2015 Quarter and Year were impacted by a number of non-cash items, including asset impairment charges of $89.4 million and $100.1 million in 2015 Quarter and Year, respectively, and net gains of $22.5 million related to ARLP’s accounting for the White Oak Acquisition resulting from the final business combination accounting for the transaction.  Excluding these non-cash items, net of the amounts attributable to noncontrolling interests, adjusted Net Income Attributable to AHGP for the 2015 Quarter was $57.5 million, a decrease of 19.0% compared to the 2014 Quarter, and adjusted Net Income Attributable to AHGP for the 2015 Year of $244.7 million, a decrease of 13.9% compared to the 2014 Year.  (For a discussion of Adjusted Net Income Attributable to AHGP and a related reconciliation to the comparable financial measure under accounting principles generally accepted in the United States (“GAAP”), please see the end of this release.)

 

Based on ARLP’s current declared distribution, AHGP expects to receive quarterly cash distributions from ARLP of $58.4 million, or $233.6 million on an annualized basis. AHGP’s primary cash requirements are for working capital, distributions to its unitholders and general and administrative expenses, including for 2016 an estimated $2.1 million in general and administrative expenses.

 

AHGP and ARLP will discuss their 2015 Quarter financial results during a joint conference call scheduled for today at 9:00 a.m. Eastern.  To participate in the conference call, dial (855) 793-3259 and provide passcode 18774166.  International callers should dial (631) 485-4928 and provide the same passcode number. 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 (855) 859-2056 and provide passcode number 18774166.  International callers should dial (404) 537-3406 and provide the same passcode number.

 

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 31,088,338 common units of ARLP.

 

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 Alliance Holdings GP, L.P. 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 Partnerships ability to respond to such changes; changes in coal prices, which could affect the ARLP Partnerships operating results and cash flows; risks associated with the ARLP Partnerships 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 Partnerships productivity levels and margins earned on its coal sales; changes in raw material costs; changes in the availability of skilled labor; the ARLP Partnerships 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 Partnerships 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 industrys 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 Partnerships 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, 2014, filed on February 27, 2015 and AHGP’s Quarterly Reports on Form 10-Q for the quarters ended March 31, 2015, June 30, 2015 and September 30, 2015, filed on May 8, 2015, August 6, 2015 and November 6, 2015, respectively, 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
December 31,

 

Year Ended
December 31,

 

 

 

2015

 

2014

 

2015

 

2014

 

 

 

 

 

 

 

 

 

 

 

SALES AND OPERATING REVENUES:

 

 

 

 

 

 

 

 

 

Coal sales

 

 $

 525,513

 

 $

 559,518

 

 $

 2,158,006

 

 $

 2,208,611

 

Transportation revenues

 

9,274

 

8,205

 

33,597

 

26,021

 

Other sales and operating revenues

 

7,263

 

22,973

 

81,708

 

65,692

 

Total revenues

 

542,050

 

590,696

 

2,273,311

 

2,300,324

 

 

 

 

 

 

 

 

 

 

 

EXPENSES:

 

 

 

 

 

 

 

 

 

Operating expenses (excluding depreciation, depletion and amortization)

 

331,099

 

359,055

 

1,377,053

 

1,383,360

 

Transportation expenses

 

9,274

 

8,205

 

33,597

 

26,021

 

Outside coal purchases

 

1

 

7

 

327

 

14

 

General and administrative

 

15,417

 

19,347

 

69,076

 

76,699

 

Depreciation, depletion and amortization

 

90,983

 

71,027

 

333,713

 

274,566

 

Asset impairment charge

 

89,435

 

-

 

100,130

 

-

 

Total operating expenses

 

536,209

 

457,641

 

1,913,896

 

1,760,660

 

 

 

 

 

 

 

 

 

 

 

INCOME FROM OPERATIONS

 

5,841

 

133,055

 

359,415

 

539,664

 

Interest expense, net

 

(7,527)

 

(8,189)

 

(31,153)

 

(33,584)

 

Interest income

 

38

 

433

 

1,460

 

1,671

 

Equity in income (loss) of affiliates, net

 

3

 

(3,102)

 

(49,046)

 

(16,648)

 

Acquisition gain, net

 

22,548

 

-

 

22,548

 

-

 

Other income

 

205

 

388

 

955

 

1,566

 

INCOME BEFORE INCOME TAXES

 

21,108

 

122,585

 

304,179

 

492,669

 

INCOME TAX EXPENSE

 

3

 

-

 

21

 

-

 

NET INCOME

 

21,105

 

122,585

 

304,158

 

492,669

 

LESS: NET (INCOME)/LOSS ATTRIBUTABLE TO NONCONTROLLING INTERESTS

 

7,630

 

(51,577)

 

(92,846)

 

(208,318)

 

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

 

 $

 28,735

 

 $

 71,008

 

 $

 211,312

 

 $

 284,351

 

 

 

 

 

 

 

 

 

 

 

BASIC AND DILUTED NET INCOME OF AHGP PER LIMITED PARTNER UNIT

 

 $

 0.48

 

 $

 1.19

 

 $

 3.53

 

 $

 4.75

 

DISTRIBUTIONS PAID PER LIMITED PARTNER UNIT

 

 $

 0.96

 

 $

 0.8925

 

 $

 3.7725

 

 $

 3.4375

 

 

 

 

 

 

 

 

 

 

 

WEIGHTED AVERAGE NUMBER OF UNITS OUTSTANDING - BASIC AND DILUTED

 

59,863,000

 

59,863,000

 

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)

 

 

 

December 31,

 

ASSETS

 

2015

 

2014

 

 

 

 

 

 

 

CURRENT ASSETS:

 

 

 

 

 

Cash and cash equivalents

 

 $

 38,678

 

 $

 28,274

 

Trade receivables

 

122,875

 

184,187

 

Other receivables

 

696

 

1,025

 

Due from affiliates

 

38

 

7,107

 

Inventories

 

121,081

 

83,155

 

Advance royalties

 

6,820

 

9,416

 

Prepaid expenses and other assets

 

29,890

 

31,362

 

Total current assets

 

320,078

 

344,526

 

 

 

 

 

 

 

PROPERTY, PLANT AND EQUIPMENT:

 

 

 

 

 

Property, plant and equipment, at cost

 

3,044,260

 

2,815,620

 

Less accumulated depreciation, depletion and amortization

 

(1,243,985)

 

(1,150,414)

 

Total property, plant and equipment, net

 

1,800,275

 

1,665,206

 

 

 

 

 

 

 

OTHER ASSETS:

 

 

 

 

 

Advance royalties

 

21,295

 

15,895

 

Due from affiliate

 

-

 

11,047

 

Equity investments in affiliates

 

64,509

 

224,611

 

Goodwill

 

136,399

 

-

 

Other long-term assets

 

25,804

 

27,470

 

Total other assets

 

248,007

 

279,023

 

TOTAL ASSETS

 

 $

 2,368,360

 

 $

 2,288,755

 

 

 

 

 

 

 

LIABILITIES AND PARTNERS CAPITAL

 

 

 

 

 

 

 

 

 

 

 

CURRENT LIABILITIES:

 

 

 

 

 

Accounts payable

 

 $

 84,058

 

 $

 86,277

 

Due to affiliates

 

129

 

370

 

Accrued taxes other than income taxes

 

15,621

 

19,461

 

Accrued payroll and related expenses

 

37,031

 

57,656

 

Accrued interest

 

306

 

318

 

Workers’ compensation and pneumoconiosis benefits

 

8,688

 

8,868

 

Current capital lease obligations

 

19,764

 

1,305

 

Other current liabilities

 

18,929

 

17,109

 

Current maturities, long-term debt

 

239,350

 

230,000

 

Total current liabilities

 

423,876

 

421,364

 

 

 

 

 

 

 

LONG-TERM LIABILITIES:

 

 

 

 

 

Long-term debt, excluding current maturities

 

580,000

 

591,250

 

Pneumoconiosis benefits

 

60,077

 

55,278

 

Accrued pension benefit

 

39,031

 

40,105

 

Workers’ compensation

 

47,486

 

49,797

 

Asset retirement obligations

 

122,434

 

91,085

 

Long-term capital lease obligations

 

80,150

 

15,624

 

Other liabilities

 

21,174

 

5,978

 

Total long-term liabilities

 

950,352

 

849,117

 

Total liabilities

 

1,374,228

 

1,270,481

 

 

 

 

 

 

 

COMMITMENTS AND CONTINGENCIES

 

 

 

 

 

 

 

 

 

 

 

PARTNERS CAPITAL:

 

 

 

 

 

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

 

 

 

 

 

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

 

567,259

 

580,234

 

Accumulated other comprehensive loss

 

(14,875)

 

(15,456)

 

Total AHGP Partners’ Capital

 

552,384

 

564,778

 

Noncontrolling interests

 

441,748

 

453,496

 

Total Partners’ Capital

 

994,132

 

1,018,274

 

TOTAL LIABILITIES AND PARTNERS CAPITAL

 

 $

 2,368,360

 

 $

 2,288,755

 

 

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ALLIANCE HOLDINGS GP, L.P. AND SUBSIDIARIES

 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

 

 

Year Ended

 

 

 

December 31,

 

 

 

2015

 

2014

 

 

 

 

 

 

 

CASH FLOWS PROVIDED BY OPERATING ACTIVITIES

 

$

714,408

 

$

734,830

 

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

Property, plant and equipment:

 

 

 

 

 

Capital expenditures

 

(212,797)

 

(307,387)

 

Changes in accounts payable and accrued liabilities

 

(3,021)

 

(2,270)

 

Proceeds from sale of property, plant and equipment

 

2,062

 

381

 

Proceeds from insurance settlement for property, plant and equipment

 

-

 

4,512

 

Purchases of equity investments in affiliates

 

(64,540)

 

(111,376)

 

Payments to affiliate for acquisition and development of coal reserves

 

-

 

(4,082)

 

Payments for acquisitions of businesses, net of cash acquired

 

(74,953)

 

-

 

Payment for acquisition of customer contracts

 

-

 

(11,687)

 

Advances/loans to affiliate

 

(7,300)

 

-

 

Other

 

4,634

 

(9,313)

 

Net cash used in investing activities

 

(355,915)

 

(441,222)

 

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

Borrowings under securitization facility

 

6,500

 

100,000

 

Payments under securitization facility

 

(23,400)

 

-

 

Payments under term loan

 

(108,502)

 

(18,750)

 

Borrowings under revolving credit facilities

 

543,000

 

341,800

 

Payments under revolving credit facilities

 

(308,000)

 

(451,800)

 

Payments on long-term debt

 

(205,000)

 

(18,000)

 

Proceeds from capital lease transaction

 

100,000

 

-

 

Payments on capital lease obligations

 

(4,312)

 

(1,494)

 

Payment of debt issuance costs

 

-

 

(263)

 

Contributions to consolidated company from affiliate noncontrolling interest

 

2,147

 

481

 

Contribution by limited partner - affiliate

 

1,500

 

1,500

 

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

 

(2,719)

 

(2,991)

 

Distributions paid by consolidated partnership to noncontrolling interests

 

(117,363)

 

(108,413)

 

Distributions paid to Partners

 

(225,833)

 

(205,779)

 

Other

 

(6,107)

 

-

 

Net cash used in financing activities

 

(348,089)

 

(363,709)

 

 

 

 

 

 

 

NET CHANGE IN CASH AND CASH EQUIVALENTS

 

10,404

 

(70,101)

 

 

 

 

 

 

 

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD

 

28,274

 

98,375

 

 

 

 

 

 

 

CASH AND CASH EQUIVALENTS AT END OF PERIOD

 

$

38,678

 

$

28,274

 

 

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Reconciliation of GAAP “Net Income Attributable to AHGP” to non-GAAP “Adjusted Net Income Attributable to AHGP”

 

Adjusted Net income Attributable to AHGP is defined as Net Income Attributable to AHGP modified for certain items that may not reflect the trend of future results, such as non-cash impairments and gains and losses on acquisition related accounting.

 

Adjusted Net Income Attributable to AHGP should not be considered as an alternative to Net Income Attributable to AHGP or any other measure of financial performance presented in accordance with GAAP.  Adjusted Net Income Attributable to AHGP excludes certain items that management believes affect the comparability of our operating results.  This adjusted financial measure is used by our management and external users of our financial statements, such as investors, commercial banks, research analysts and others, to assess:

·                 our operational trends and performance relative to other coal companies;

·                 the comparability of our performance to earnings estimates provided by security analysts; and

·                 our performance excluding items which are generally nonrecurring in nature or whose timing or amount cannot be reasonably estimated.

 

We believe Adjusted Net Income Attributable to AHGP is a useful measure for investors because it further demonstrates our financial performance without regard to items that may not reflect the trend of future results.

.

 

 

 

Three Months Ended
December 31,

 

Year Ended
December 31,

 

 

2015

 

2014

 

2015

 

2014

 

 

 

 

 

 

 

 

 

Net Income Attributable to AHGP

 

$

28,735

 

$

71,008

 

$

211,312

 

$

284,351

Asset impairment charge

 

89,435

 

-

 

100,130

 

-

Acquisition gain, net

 

(22,548)

 

-

 

(22,548)

 

-

Less: amounts attributable to noncontrolling interest

 

(38,095)

 

-

 

(44,186)

 

-

Adjusted Net Income Attributable to AHGP

 

$

57,527

 

$

71,008

 

$

244,708

 

$

284,351

 

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