Alliance Holdings GP, L.P. (NASDAQ: AHGP) today reported net income for the quarter ended September 30, 2007 (the "2007 Quarter") of $20.5 million, or $0.34 per basic and diluted limited partner unit, an increase of 6.0% compared to net income of $19.4 million, or $0.32 per basic and diluted limited partner unit, for the quarter ended September 30, 2006 (the "2006 Quarter").
AHGP's net income increased to $67.4 million for the nine months ended September 30, 2007 (the “2007 Period”), compared to $62.6 million for the nine months ended September 30, 2006 (the “2006 Period”). Basic and diluted net income per limited partner unit for the 2007 Period decreased to $1.13 per unit, compared to $1.16 per basic and diluted limited partner unit for the 2006 Period. This decrease in basic and diluted net income per limited partner unit for the 2007 Period is the result of an increase in the number of common units outstanding due to the issuance of 12,500,000 common units on May 9, 2006 in conjunction with AHGP’s initial public offering.
The Board of Directors of AHGP’s general partner (the "Board") also declared a quarterly cash distribution for the 2007 Quarter of $0.265 per unit (an annualized rate of $1.06 per unit), payable on November 19, 2007, to AHGP’s unitholders of record as of November 12, 2007. Increases to AHGP’s quarterly cash distribution to unitholders are expected to be considered by the Board at its January and July meetings.
The declared distribution is based on the distribution AHGP will receive from its ownership interests in Alliance Resource Partners, L.P. (NASDAQ: ARLP). On October 29, 2007, ARLP announced a quarterly distribution for the 2007 Quarter of $0.56 per unit, or $2.24 per unit on an annualized basis, which will be paid on November 14, 2007 to all ARLP unitholders of record as of the close of trading on November 7, 2007. (See ARLP Press Release dated October 29, 2007.)
AHGP currently has no other operating activities apart from those conducted by the operating subsidiaries of ARLP and reports its financial results on a consolidated basis with the financial results of ARLP. AHGP’s principal sources of cash flow are its ownership of general partner interests, limited partner interests and incentive distribution rights in ARLP. Based on ARLP’s current declared distribution, AHGP expects to receive quarterly cash distributions from ARLP of $16.7 million, or $66.7 million, on an annualized basis. AHGP’s primary cash requirements are for general and administrative expenses, including for 2007 an estimated $2.4 million in incremental general and administrative expenses associated with being a publicly traded limited partnership, working capital requirements and distributions to its unitholders. At September 30, 2007, AHGP had no borrowings outstanding under its revolving credit facility.
A conference call regarding AHGP’s 2007 Quarter financial results is scheduled for today at 10:00 a.m. Eastern. To participate, dial 866-825-3308 and provide pass code 11584750. International callers should dial 617-213-8062. Investors may also listen to the call via the "investor information" section of AHGP's website at http://www.ahgp.com.
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 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.
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.
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: initially, our operating cash flow will be derived exclusively from cash distributions from ARLP; the risks to the business of ARLP include: increased competition in coal markets and ARLP’s ability to respond to the competition; fluctuation in coal prices, which could adversely affect ARLP’s operating results and cash flows; risks associated with the expansion of ARLP’s operations and properties; deregulation of the electric utility industry or the effects of any adverse change in the domestic coal industry, electric utility industry, or general economic conditions; dependence on significant customer contracts, including renewing customer contracts upon expiration of existing contracts; customer bankruptcies and/or cancellations or breaches of existing contracts; customer delays or defaults in making payments; fluctuations in coal demand, prices and availability due to labor and transportation costs and disruptions, equipment availability, governmental regulations and other factors; ARLP’s productivity levels and margins that it earns on its coal sales; greater than expected increases in raw material costs; greater than expected shortage of skilled labor; any unanticipated increases in labor costs, adverse changes in work rules, or unexpected cash payments associated with asset retirement obligations and workers’ compensation claims; any unanticipated increases in transportation costs and risk of transportation delays or interruptions; greater than expected environmental regulation, costs and liabilities; a variety of operational, geologic, permitting, labor and weather-related factors; risk associated with major mine-related accidents, such as mine fires or other interruptions; results of litigation, including claims not yet asserted; difficulty maintaining ARLP’s surety bonds for asset retirement obligations as well as workers’ compensation and black lung benefits; coal market's share of electricity generation; prices of fuel that compete with or impact coal usage, such as oil or natural gas; legislation, regulatory and court decisions; the impact from provisions of The Energy Policy Act of 2005; replacement of coal reserves; a loss or reduction of the direct or indirect benefit from certain state and federal tax credits, including non-conventional source fuel tax credits; difficulty obtaining commercial property insurance, and risks associated with ARLP’s increased participation (excluding any applicable deductible) in the commercial insurance property program.
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, 2006, filed on March 15, 2007 with the SEC. Except as required by applicable securities laws, AHGP does not intend to update its forward-looking statements.
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 September 30, | Nine Months Ended September 30, | |||||||||||
| 2007 | 2006 | 2007 | 2006 | |||||||||
SALES AND OPERATING REVENUES: | ||||||||||||
| Coal sales | $ 242,412 | $ 228,802 | $ 723,646 | $ 652,527 | ||||||||
| Transportation revenues | 9,138 | 10,966 | 28,423 | 29,956 | ||||||||
| Other sales and operating revenues | 8,875 | 4,847 | 28,591 | 21,691 | ||||||||
| Total revenues | 260,425 | 244,615 | 780,660 | 704,174 | ||||||||
| EXPENSES: | ||||||||||||
| Operating expenses | 176,857 | 162,209 | 521,814 | 455,096 | ||||||||
| Transportation expenses | 9,138 | 10,966 | 28,423 | 29,956 | ||||||||
| Outside purchases | 3,737 | 6,020 | 17,610 | 14,251 | ||||||||
| General and administrative | 7,716 | 7,859 | 25,063 | 22,350 | ||||||||
| Depreciation, depletion and amortization | 21,804 | 17,276 | 63,022 | 48,291 | ||||||||
| Net gain from insurance settlement | - | - | (11,491 | ) | - | |||||||
| Total operating expenses | 219,252 | 204,330 | 644,441 | 569,944 | ||||||||
| INCOME FROM OPERATIONS | 41,173 | 40,285 | 136,219 | 134,230 | ||||||||
| Interest expense | (3,039 | ) | (2,883 | ) | (8,702 | ) | (9,475 | ) | ||||
| Interest income | 280 | 716 | 1,395 | 2,532 | ||||||||
| Other income | 121 | 216 | 1,189 | 678 | ||||||||
| INCOME BEFORE INCOME TAXES, CUMULATIVE EFFECT OF ACCOUNTING CHANGE, MINORITY INTEREST AND NON-CONTROLLING INTEREST | 38,535 | 38,334 | 130,101 | 127,965 | ||||||||
| INCOME TAX EXPENSE | 550 | 352 | 1,794 | 2,228 | ||||||||
| INCOME BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGE, MINORITY INTEREST AND NON-CONTROLLING INTEREST | 37,985 | 37,982 | 128,307 | 125,737 | ||||||||
| CUMULATIVE EFFECT OF ACCOUNTING CHANGE | - | - | - | 112 | ||||||||
| MINORITY INTEREST | 63 | 53 | 230 | 96 | ||||||||
| INCOME BEFORE NON-CONTROLLING INTEREST | 38,048 | 38,035 | 128,537 | 125,945 | ||||||||
| Affiliate non-controlling interest in consolidated partnership’s net income | (7 | ) | (7 | ) | (22 | ) | (23 | ) | ||||
| Non-affiliate non-controlling interest in consolidated partnership’s net income | (17,534 | ) | (18,677 | ) | (61,116 | ) | (63,300 | ) | ||||
| NET INCOME | $ 20,507 | $ 19,351 | $ 67,399 | $ 62,622 | ||||||||
| BASIC AND DILUTED NET INCOME PER LIMITED PARTNER UNIT | $ 0.34 | $ 0.32 | $ 1.13 | $ 1.16 | ||||||||
| DISTRIBUTIONS PAID PER LIMITED PARTNER UNIT | $ 0.265 | $ 0.12285 | $ 0.765 | $ 0.12285 | ||||||||
| WEIGHTED AVERAGE NUMBER OF UNITS OUTSTANDING-BASIC AND DILUTED | 59,863,000 | 59,863,000 | 59,863,000 | 53,956,407 | ||||||||
ALLIANCE HOLDINGS GP, L.P. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, except unit data) (Unaudited) | ||||||
| ASSETS | September 30, | December 31, | ||||
| 2007 | 2006 | |||||
| CURRENT ASSETS: | ||||||
| Cash and cash equivalents | $ 19,523 | $ 37,069 | ||||
| Trade receivables, net | 89,300 | 96,558 | ||||
| Other receivables | 2,256 | 3,378 | ||||
| Due from affiliates | - | 25 | ||||
| Marketable securities | - | 260 | ||||
| Inventories | 24,998 | 20,224 | ||||
| Advance royalties | 3,316 | 4,629 | ||||
| Prepaid expenses and other assets | 1,276 | 8,419 | ||||
| Total current assets | 140,669 | 170,562 | ||||
| PROPERTY, PLANT AND EQUIPMENT: | ||||||
| Property, plant and equipment, at cost | 922,159 | 819,991 | ||||
| Less accumulated depreciation, depletion and amortization | (406,954 | ) | (383,284 | ) | ||
| Total property, plant and equipment, net | 515,205 | 436,707 | ||||
| OTHER ASSETS: | ||||||
| Advance royalties | 27,308 | 22,135 | ||||
| Other long-term assets | 14,753 | 6,091 | ||||
| Total other assets | 42,061 | 28,226 | ||||
| TOTAL ASSETS | $ 697,935 | $ 635,495 | ||||
| LIABILITIES AND PARTNERS’ CAPITAL | ||||||
| CURRENT LIABILITIES: | ||||||
| Accounts payable | $ 55,406 | $ 58,513 | ||||
| Due to affiliates | 1,064 | 1,289 | ||||
| Accrued taxes other than income taxes | 12,935 | 14,618 | ||||
| Accrued payroll and related expenses | 17,405 | 14,698 | ||||
| Accrued interest | 1,162 | 4,264 | ||||
| Workers’ compensation and pneumoconiosis benefits | 7,715 | 7,704 | ||||
| Current capital lease obligation | 375 | 339 | ||||
| Other current liabilities | 9,774 | 13,964 | ||||
| Current maturities, long-term debt | 18,000 | 18,000 | ||||
| Total current liabilities | 123,836 | 133,389 | ||||
| LONG-TERM LIABILITIES: | ||||||
| Long-term debt, excluding current maturities | 135,000 | 126,000 | ||||
| Pneumoconiosis benefits | 28,691 | 26,315 | ||||
| Accrued pension benefit | 4,053 | 6,191 | ||||
| Workers’ compensation | 51,752 | 38,488 | ||||
| Asset retirement obligations | 49,110 | 47,825 | ||||
| Long-term capital lease obligation | 1,232 | 1,512 | ||||
| Minority interest | 609 | 839 | ||||
| Other liabilities | 7,276 | 6,610 | ||||
| Total long-term liabilities | 277,723 | 253,780 | ||||
| Total liabilities | 401,559 | 387,169 | ||||
| NON-CONTROLLING INTEREST IN CONSOLIDATED PARTNERSHIP: | ||||||
| Affiliate | (303,816 | ) | (303,823 | ) | ||
| Non-Affiliates | 351,029 | 324,784 | ||||
| Total non-controlling interest | 47,213 | 20,961 | ||||
| COMMITMENTS AND CONTINGENCIES | ||||||
| PARTNERS’ CAPITAL: | ||||||
| Limited Partners – Common Unitholders 59,863,000 units outstanding | 255,925 | 234,321 | ||||
| Accumulated other comprehensive income | (6,762 | ) | (6,956 | ) | ||
| Total Partners’ Capital | 249,163 | 227,365 | ||||
| TOTAL LIABILITIES AND PARTNERS’ CAPITAL | $ 697,935 | $ 635,495 | ||||
ALLIANCE HOLDINGS GP, L.P. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited) | ||||||
| Nine Months Ended | ||||||
| September 30, | ||||||
| 2007 | 2006 | |||||
| CASH FLOWS PROVIDED BY OPERATING ACTIVITIES | $ 209,422 | $ 183,158 | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||
| Property, plant and equipment: | ||||||
| Capital expenditures | (95,017 | ) | (141,963 | ) | ||
| Changes in accounts payable and accrued liabilities | (9,297 | ) | (1,198 | ) | ||
| Proceeds from sale of property, plant and equipment | 5,859 | 599 | ||||
| Proceeds from insurance settlement for replacement assets | 2,511 | - | ||||
| Purchase of marketable securities | - | (19,188 | ) | |||
| Proceeds from marketable securities | 260 | 68,343 | ||||
| Payment for acquisition of business | - | (2,318 | ) | |||
| Payment for acquisition of coal reserves and other assets | (53,309 | ) | - | |||
| Advances on Gibson rail project | (5,912 | ) | - | |||
| Net cash used in investing activities | (154,905 | ) | (95,725 | ) | ||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||
| Payment on long-term debt | (18,000 | ) | (18,000 | ) | ||
| Borrowings under revolving credit facilities | 130,525 | 500 | ||||
| Payments under revolving credit facilities | (103,525 | ) | - | |||
| Payments on capital lease obligation | (244 | ) | - | |||
| Payment of debt issuance cost | (194 | ) | (690 | ) | ||
| Equity contribution received by Mid-America Carbonates, LLC | - | 1,000 | ||||
| Contributions to consolidated partnership from affiliate non-controlling interest | 1 | - | ||||
Distributions paid by consolidated partnership to affiliate non-controlling interest | (16 | ) | (13 | ) | ||
Distributions paid by consolidated partnership to non-affiliate non-controlling interest | (34,815 | ) | (30,201 | ) | ||
| Distributions paid to Partners | (45,795 | ) | (326,439 | ) | ||
| Net proceeds from issuance of common units in initial public offering | - | 291,300 | ||||
| Net cash used in financing activities | (72,063 | ) | (82,543 | ) | ||
| NET CHANGE IN CASH AND CASH EQUIVALENTS | (17,546 | ) | 4,890 | |||
| CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | 37,069 | 32,072 | ||||
| CASH AND CASH EQUIVALENTS AT END OF PERIOD | $ 19,523 | $ 36,962 | ||||
| SUPPLEMENTAL CASH FLOW INFORMATION: | ||||||
| CASH PAID FOR: | ||||||
| Interest | $ 12,587 | $ 13,715 | ||||
| Income taxes | $ 2,175 | $ 2,545 | ||||
| NON-CASH INVESTING ACTIVITY: | ||||||
| Purchase of property, plant and equipment | $ 2,843 | $ 8,166 | ||||
Contacts:
Brian L. Cantrell, 918-295-7673
