Newspaper article THE JOURNAL RECORD

Alliance Units Fall after Big Drop in Net Income

Newspaper article THE JOURNAL RECORD

Alliance Units Fall after Big Drop in Net Income

Article excerpt

TULSA - The price for units of Alliance Resource Partners LP dropped 5.4 percent Tuesday after the Tulsa-based coal producer posted a 30.5-percent drop in third-quarter net income.

Alliance pinned the double-digit plunge on two non-recurring items. Without those items, Alliance's earnings fell 6.1 percent.

ARLP also touted a 67.5-cent cash distribution for the third quarter by managing general partner Alliance Holdings GP, payable Nov. 13 to unitholders of record Nov. 6. That rose 5.9 percent from the year-ago distribution.

But investors may have focused more on the cautionary words of President and CEO Joseph W. Craft III about production reductions and spending cutbacks amid continued high supplies and low commodity prices.

After dropping as low as $20.51, units of ARLP finished Tuesday's regular Nasdaq session down $1.18 to $20.57. Volume was 77 percent above ARLP's daily average.

"The company's management gave a very soft outlook for 2015," said Qian Zhang, investment manager for Tulsa's Fredric E. Russell Investment Management Co. "This softer outlook contributed to today's decline. I think it may last for a while, but I don't think coal is going away. We still rely on it."

For the three months ended Sept. 30, ARLP reported a net income of $83.4 million, or 61 cents per diluted unit, down from $120 million, or $1.13 per unit, the prior year.

Wall Street analysts polled by Thomson Financial Network had projected earnings of 88 cents per unit.

Revenues slipped 0.5 percent to $566.4 million from $569.3 million.

Those results brought ARLP's net income for the first nine months of 2015 to $284.7 million, or $2.29 per diluted unit, down 23.7 percent from prior-year results of $373.5 million, or $3.59 per unit.

Revenue rose 1.2 percent to $1.73 billion from $1.7 billion.

Alliance said it lost $17 million from affiliates related to White Oak Resources LLC before ARLP acquired the rest of that operation and took control of the White Oak Mine No. 1, known now as the Hamilton Mine No. 1.

ARLP also took a $10.7 million non-cash asset impairment from surrendering certain coal reserve leases.

Without those items, Alliance would have recorded $185. …

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