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Alliance Resource Partners results boosted by coal market improvement

Alliance Resource Partners LP reported fourth-quarter net income of $119.6 million, or $1.30 per unit, compared to $21.5 million, or a loss of 19 cents per unit, in the year-ago period.

Alliance reported on Jan. 30 that the improvement was led by increased coal sales volumes and significantly lower operating expenses. The S&P Capital IQ consensus normalized EPS estimate was 81 cents for the 2016 fourth quarter.

The company reported EBITDA of $208.9 million, an increase of 74.1% compared to the same quarter a year ago. The results include a $66.9 million net negative impact from noncash items occurring in fourth-quarter 2015. Excluding those items, Alliance's adjusted EBITDA still beat the 2015 quarter by 11.8%.

"Significantly lower operating expenses for the [fourth quarter] and the 2016 Year, combined with coal sales volumes in the [fourth quarter] that nearly matched our record shipments achieved in the sequential quarter, led ARLP to another strong performance for the [fourth quarter] and year," said Alliance President and CEO Joseph Craft III. "This performance solidified ARLP's industry-leading financial metrics among U.S. coal companies and reflects the remarkable resilience of our employees. Faced with dismal market conditions at the beginning of 2016, our teams successfully responded by capitalizing on opportunities to strengthen our sales contract portfolio and implementing initiatives to reduce operating expenses and minimize capital expenditures by maximizing production at our lowest-cost mines."

Craft said Alliance is poised to benefit from improving coal markets heading into 2017. He added that the partnership hopes to soon continue its prior pattern of quarterly distribution increases in the future. Alliance recently approved a cash distribution to unit holders of 0.4375 cents per unit for the fourth quarter.

Alliance reported revenues of $1.93 billion in 2016 compared to $2.27 billion in 2015 due to lower coal sales prices and planned reductions in coal sales and production volumes. The partnership reported that it produced 10.5 million tons of coal in the fourth quarter, compared to 10.0 million tons in the year-ago quarter.