Alliance Resource Misses Earnings & Revs - Analyst Blog
Alliance Resource Partners, L.P .'s ( ARLP ) third quarter 2013 earnings of $1.50 per unit lagged the Zacks Consensus Estimate of $1.75 by 14.3%.
Earnings were however 68.5% higher than the year-ago figure of 89 cents per unit. The year-over-year upside was primarily due to higher sales volume and a marginal decline in total operating expenses.
Total revenues at the end of the third quarter were $537.3 million versus $511.4 million in the year-ago period, which reflects an increase of 5.1%.
The year-over-year improvement in revenues was primarily due to a 6.7% increase in the volume of coal sold. This was marginally offset by a 2.6% decline in the sales price per ton of coal.
However, total revenue missed the Zacks Consensus Estimate of $550 million by 2.3%.
Highlights of the Release
Total operating expenses of the partnership during the quarter were $439.2 million, down 0.4% from $441.1 million incurred in the year-ago period. The decline in total operating expenses was primarily due to an 85.6% decline in outside coal purchases. Apart from this expense, other sales related expenses increased in the reported quarter due to the increase in sales volume.
Alliance Resource Partners registered a 7.6% year-over-year increase in production volume in the reported quarter to 9.68 million tons. The solid performance at the Gibson North, River View and Dotiki mines and increased volumes at the Tunnel Ridge longwall operation boosted production.
The partnership also hiked its quarterly cash distribution rate to $1.175 per unit, up 2% sequentially from $1.1525 per unit and up 8.3% year over year from $1.085 per unit.
Due to disruption of operation at its Onton mine, the partnership expects its coal production for 2013 to be on the lower end of the guided range of 39.3-39.6 million tons. The partnership however maintained its guidance for coal sales volume in the range of 38.6-39.6 million tons.
Alliance Resource expects total revenue for 2013 in the range of $2.165 billion to $2.225 billion, excluding transportation revenues.
EBITDA is expected to range between $675 million and $695 million and net income is expected to come in the band of $375 million to $395 million in 2013.
The partnership expects to make capital investment in the range of $370 million to $400 million in 2013. These expenses will be directed towards mine expansion, infrastructure projects and reserve acquisitions.
Other Company Releases
Peabody Energy Corp. ( BTU ) reported third quarter 2013 earnings of 5 cents per share, widely beating the Zacks Consensus Estimate of a loss of 3 cents.
SunCoke Energy, Inc. ( SXC ) released its third quarter results with earnings per share of 9 cents, beating the Zacks Consensus Estimate of 7 cents by 28.6%.
Alliance Holdings GP, L.P. ( AHGP ) reported earnings of 91 cents per unit in the third quarter, lagging the Zacks Consensus Estimate of 93 cents by 2.1%.
Alliance Resource Partners' performance in the reported quarter was lower than our expectation. However, the partnership was able to secure new coal sales commitments of nearly 3.3 million tons deliverable through 2016. This would ensure a steady revenue stream going forward.
In addition, longwall production at the White Oak mine, generation from Gibson South Mine and increase in output from Tunnel Ridge mine are expected boost total production volumes for the partnership in 2014.
Having said that, if the weakness in metallurgical global coal markets persists, it will likely have a negative impact on revenues, like the one faced by the partnership in the reported quarter.
Alliance Resource Partners currently holds a Zacks Rank #4 (Sell).
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