Hot Stock in Focus: Alliance Resource Partners, L.P. (NASDAQ: ARLP)

On Wednesday, Shares of Alliance Resource Partners, L.P. (NASDAQ: ARLP) showed the bearish trend with a lower momentum of -0.84% and ended its trading session at $17.75. The company traded total volume of 171,209 shares as contrast to its average volume of 374.32K shares. The company has a market value of $2.29B and about 129.25M shares outstanding. During the 52-week trading session, the minimum price at which share price traded was registered at $17.48 and reached the max level of $23.45.

Alliance Resource Partners, L.P. (ARLP) recently stated financial and operating results for the quarter and year ended December 31, 2017.

Total revenues were $483.20M in the 2017 Quarter contrast to $527.40M for the quarter ended December 31, 2016, as coal sales revenues declined because of reduced coal sales volumes and prices. Lower revenues contributed to reduced net income attributable to ARLP for the 2017 Quarter, which declined to $74.20M, or $0.55 per basic and diluted limited partner unit, contrast to $119.60M, or $1.30 per basic and diluted limited partner unit, for the 2016 Quarter. EBITDA in the 2017 Quarter of $159.90M was also lower contrast to $217.80M in the 2016 Quarter.

Total revenues were $1.800B in the 2017 Year contrast to $1.930B for the year ended December 31, 2016, as the anticipated reduction in coal sales prices more than offset increased sales volumes. Although lower revenues were partially offset by reduced operating expenses, reduced depreciation, depletion and amortization and increased income from our oil and gas investments, net income attributable to ARLP for the 2017 Year declined to $303.60M, or $2.80 per basic and diluted limited partner unit, contrast to $339.40M, or $3.39 per basic and diluted limited partner unit, for the 2016 Year. Adjusted EBITDA for the 2017 Year also reduced to $620.80M contrast to $706.70M in the 2016 Year.

Consolidated Financial Results:

Three Months Ended December 31, 2017 Contrast to Three Months Ended December 31, 2016

Reduced coal sales volumes and prices led coal sales revenues lower in the 2017 Quarter to $454.90M contrast to $504.20M for the 2016 Quarter. Lower sales volumes in the 2017 Quarter reflect the closure of the Pattiki mine in the 2016 Quarter, reduced sales volumes from our River View and Tunnel Ridge mines, partially offset by strong sales performance at our Mettiki and Gibson South mines. As anticipated, ARLP’s coal sales prices were also lower in the 2017 Quarter, falling to $45.03 per ton sold, a 6.2% decrease contrast to $48.01 per ton sold in the 2016 Quarter. Total production in the 2017 Quarter was comparable to the 2016 Quarter.

Contrast to the 2016 Quarter, operating expenses increased in the 2017 Quarter by 5.6% to $298.30M resulting in higher Segment Adjusted EBITDA Expense per ton of $29.48 in the 2017 Quarter contrast to $26.87 in the 2016 Quarter. This increase in the 2017 Quarter was mainly because of reduced recoveries at our Gibson South and Tunnel Ridge mines, year-end actuarial adjustments to workers’ compensation expense and higher coal inventory charges, offset in part by a favorable production mix from ARLP’s lower-cost operations in the Illinois Basin; all as contrast to the 2016 Quarter.

Depreciation, depletion and amortization reduced $15.90M to $74.90M in the 2017 Quarter mainly because of the formerly mentioned closure of the Pattiki mine in the 2016 Quarter. General and administrative expenses fell $3.70M in the 2017 Quarter, mainly because of lower incentive compensation expenses.

Contrast to the 2016 Quarter, increased earnings from our investments in oil and gas mineral interests led equity investment income higher to $3.40M in the 2017 Quarter and distributions of additional preferred interests received from our recent investment in compression services contributed $3.60M of cost investment income to the 2017 Quarter.

Year Ended December 31, 2017 Contrast to Year Ended December 31, 2016

Increased coal sales and production volumes in the 2017 Year from the Hamilton, Gibson South, Mettiki, MC Mining and Tunnel Ridge mines drove coal sales volumes up by 3.1% to 37.80M tons and production volumes higher by 6.7% to 37.60M tons, both as contrast to the 2016 Year. Higher sales volumes reflect the benefit of strong export markets as ARLP shipped 6.30M tons into the international thermal and metallurgical coal markets during the 2017 Year, a boost of 4.70M tons contrast to the 2016 Year. Partially offsetting these increases were reduced sales and production volumes at our Dotiki and Warrior mines, the closure of the Pattiki mine in the 2016 Quarter and the depletion of reserves at our Elk Creek mine in the first quarter of 2016. Despite increased sales volumes, coal sales revenues of $1.710B for the 2017 Year reduced 8.1% contrast to the 2016 Year as a result of the expiration of higher-priced legacy contracts, which led coal sales prices lower by 10.9% to $45.24 per ton sold.

Even though coal sales and production volumes increased for the 2017 Year, operating expenses of $1.100B were 2.6% lower contrast to the 2016 Year, reflecting our programs to shift production to ARLP’s lower-cost operations. As a result of reduced operating expenses and lower selling expenses, Segment Adjusted EBITDA Expense per ton sold declined to $28.88 in the 2017 Year, an improvement of 5.9% contrast to the 2016 Year.

Depreciation, depletion and amortization reduced $67.50M to $269.00M in the 2017 Year, mainly as a result of the formerly mentioned depletion of reserves at the Elk Creek mine, closure of the Pattiki mine and volume reductions at our Dotiki and Warrior mines. The use of surplus equipment from our idled mines and ongoing capital reduction programs also contributed to lower depreciation and amortization in the 2017 Year. General and administrative expenses reduced $10.80M to $61.80M in the 2017 Period, mainly because of lower incentive compensation expenses.

Contrast to the 2016 Year, equity investment income rose $10.30M to $13.90M because of increased earnings from our investments in oil and gas mineral interests. Distributions of additional preferred interests received from our recent investment in compression services contributed $6.40M of cost investment income to the 2017 Year.

Comparative results between the 2017 and 2016 Years were also influenced by a debt extinguishment loss of $8.10M related to ARLP’s early repayment of its Series B Senior Notes in May 2017 following our high-yield bond issuance in April 2017.

The Company offered net profit margin of 15.70% while its gross profit margin was 97.70%. ROE was recorded as 22.00% while beta factor was 0.80. The stock, as of recent close, has shown the weekly downbeat performance of -0.28% which was maintained at -9.90% in this year.

Leon Constant

Reporter

I am Leon Constant and I focus on breaking news stories and ensuring we (“The Stock Gem”) offer timely reporting on some of the most recent stories released through market wires about “Basic Material Stocks”. I have formerly spent over 3 years as a trader in U.S. Stock Market and is now semi-stepped down. I work on a full time basis for thestockgem.com specializing in quicker moving active shares with a short term view on investment opportunities and trends.

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Email: leon.constant@thestockgem.com

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