Alliance Resource Partners(US:ARLP)2020-05-08 16:48Financial Performance - The company reported a net loss of $144.8 million for the 2020 Quarter, a decrease of $421.2 million compared to a net income of $276.4 million for the same period in 2019[119]. - Total revenues for the 2020 Quarter were $350.8 million, down from $526.6 million in the 2019 Quarter, primarily due to lower coal sales volumes and prices[119]. - Segment Adjusted EBITDA decreased by $94.9 million, or 45.9%, to $111.7 million in the 2020 Quarter from $206.6 million in the 2019 Quarter[136]. - Consolidated Segment Adjusted EBITDA decreased to $111.7 million in Q1 2020 from $206.6 million in Q1 2019[144]. - Cash provided by operating activities was $78.7 million for Q1 2020, down from $143.7 million in Q1 2019, primarily due to decreased net income and unfavorable working capital changes[152]. Coal Sales and Production - Coal sales decreased by $161.4 million or 33.9% to $314.6 million in the 2020 Quarter, with sales volumes declining 29.7% to 7.3 million tons[121]. - Coal production declined by 3.3 million tons, or 29.2%, to 8.0 million tons in the 2020 Quarter compared to 11.3 million tons in the 2019 Quarter[125]. - Total coal sales decreased by $161.4 million, or 33.9%, to $314.6 million in the 2020 Quarter from $476.0 million in the 2019 Quarter[136]. - The average coal sales price realization fell by 5.9% to $43.39 per ton sold in the 2020 Quarter, compared to $46.12 per ton sold in the 2019 Quarter[121]. Revenue Sources - Oil and gas royalty revenues increased to $14.2 million in the 2020 Quarter from $10.4 million in the 2019 Quarter, driven by increased volumes from the Wing Acquisition[124]. - Other revenues increased to $17.1 million in the 2020 Quarter from $10.0 million in the 2019 Quarter, a rise of $7.1 million[127]. - Transportation revenues decreased by $25.5 million to $4.7 million in the 2020 Quarter from $30.2 million in the 2019 Quarter[133]. Cost Management - The company is taking initiatives to reduce costs and expenses in response to lower revenues from coal sales and depressed commodity prices in the minerals segment[116]. - Labor and benefit expenses per ton produced increased by 21.7% to $10.87 per ton in the 2020 Quarter from $8.93 per ton in the 2019 Quarter[125]. - General and administrative expenses decreased to $13.4 million in the 2020 Quarter from $17.8 million in the 2019 Quarter, a reduction of $4.4 million[128]. - Segment Adjusted EBITDA Expense decreased by $68.2 million, or 22.5%, to $234.7 million in the 2020 Quarter from $302.9 million in the 2019 Quarter[136]. Capital Expenditures and Financing - The company anticipates total capital expenditures for 2020 to be in the range of $130.0 million to $135.0 million[116]. - Capital expenditures decreased to $50.4 million in Q1 2020 from $84.0 million in Q1 2019[156]. - The company entered into a $537.75 million revolving credit facility to strengthen liquidity, which will reduce to $459.5 million on May 23, 2021[118]. - The company issued $400.0 million of senior unsecured notes due 2025 with an annual interest rate of 7.5%[163]. Market Conditions and Risks - The board of directors suspended cash distributions to unitholders for the first and second quarters of 2020 due to market conditions[117]. - The company anticipates potential impacts from the COVID-19 pandemic on operations and cash flows, reflecting a wide range of uncertainties and business risks[185]. - The company is facing a decline in the coal industry's share of electricity generation due to environmental concerns and competition from other energy sources[185]. - Changes in coal and oil & gas prices could significantly affect operating results and cash flows, with potential impacts from actions taken by Saudi Arabia and Russia[185]. - The company is exposed to risks associated with major mine-related accidents and operational interruptions due to various factors, including geological and weather-related issues[187]. Employee and Operational Challenges - Labor costs, including health insurance and taxes, are expected to increase, impacting overall operational expenses[186]. - The company is facing challenges in maintaining satisfactory relations with employees and managing labor costs[186]. - Transportation costs and risks of delays or interruptions are anticipated to increase, affecting logistics and supply chain[186]. - Evolving cybersecurity risks pose a threat to the company's operations and data security[187]. Impairments and Adjustments - Non-cash goodwill impairment charge of $132.0 million was recorded in the 2020 Quarter due to reduced expected production volumes[131]. - Equity securities income decreased by $12.9 million in the 2020 Quarter as no income was recognized due to the redemption of preferred interest in the previous year[132]. - Illinois Basin Segment Adjusted EBITDA decreased 59.2% to $50.0 million in Q1 2020 from $122.7 million in Q1 2019, primarily due to a 37.2% decrease in coal sales to $199.1 million[139]. - Appalachia Segment Adjusted EBITDA decreased 19.0% to $47.5 million in Q1 2020 from $58.7 million in Q1 2019, with coal sales down 26.6% to $115.5 million[139]. - Minerals Segment Adjusted EBITDA increased 51.6% to $13.8 million in Q1 2020 from $9.1 million in Q1 2019, driven by a 37.0% increase in oil & gas royalty revenues to $14.2 million[139].