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How Did Alliance Resource Partners’ 4Q16 Earnings Stack Up?

PART:
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Part 3
How Did Alliance Resource Partners’ 4Q16 Earnings Stack Up? PART 3 OF 6

Alliance Resource Partners Beats Analysts’ 4Q16 Revenue Estimate

Coal pricing

Alliance Resource Partners (ARLP) saw a nearly 9% fall in its average coal sales price per ton in 4Q16 compared to its reported sales price in 4Q15.

Alliance Resource Partners Beats Analysts’ 4Q16 Revenue Estimate

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The YoY (year-over-year) fall was primarily due to a steep fall in the Appalachian segment’s coal prices. Coal (KOL) sales prices in the Appalachian segment came in at $52.80 per ton, compared to $61.08 per ton in 4Q15 and $53.22 per ton in 3Q16.

Coal sales prices in the Illinois Basin segment fell from $49.96 per ton in 4Q15 to $45.56 per ton in 4Q16. In percentage terms, Appalachian coal prices fell more than Illinois Basin coal prices YoY.

Revenue from operating segments

Alliance Resource Partners derives most of its revenue from its coal mining operations in the Illinois Basin and the Appalachian region. In 4Q16, ARLP’s revenue from coal sales came in at ~$504 million, compared to $525 million in 4Q15.

ARLP’s revenue from the Transportation segment came in at ~$10.4 million in 4Q16, compared to $9.3 million in 4Q15. ARLP also reported ~$12.8 million in other sales and operating revenue in the quarter, compared to $7.4 million in 4Q15.

Alliance Resource Partners’ overall revenue

For 4Q16, ARLP reported consolidated revenue of $527 million, compared to $542 million in 4Q15. However, the partnership’s reported revenue was higher than analysts’ consensus revenue estimate of $511 million for 4Q16.

The deviation from analysts’ expectations was primarily due to a 5% rise in Alliance’s coal sales on a YoY basis. Higher other sales and operating revenues helped ARLP to report 4Q16 revenue that was marginally higher than analysts’ estimate.

However, weak market conditions impacted ARLP’s average price realizations in both the Appalachian region and the Illinois Basin. This could also have a negative impact on the price realizations of its peers such as Westmoreland Coal (WLB), Peabody Energy (BTUUQ), and Arch Coal (ARCH).

In the next part of this series, we’ll look at ARLP’s operating performance.

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