Alliance Resource Partners, L.P. Q1 2010 Earnings Call Transcript

Alliance Resource Partners, L.P. Q1 2010 Earnings Call Transcript
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Alliance Resource Partners, L.P.

(ARLP)

Q1 2010 Earnings Call Transcript

April 26, 2010 10:00 am ET

Executives

Brian Cantrell – SVP and CFO

Joe Craft – President and CEO

Analysts

Jim Rollyson – Raymond James

Mark Reichman – Madison Williams

Joel Havard – Hilliard Lyons

Ronald Londe – Wells Fargo Securities

David Martin – Deutsche Bank

Paul Forward – Stifel Nicolaus

Noah Lerner – Hartz Capital

Norman Kramer – Kramer Investments

Presentation

Operator

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Good day, ladies and gentlemen, and welcome to the first quarter 2010 earnings for Alliance Resource Partners, L.P. and Alliance Holdings GP. My name is Jasmine, and I’ll be your operator for today. At this time all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. (Operator instructions) I would now like to turn the call over to your host for today, Mr. Brian Cantrell, Senior Vice President and Chief Financial Officer. You may proceed, sir.

Brian Cantrell

Thank you, Jasmine and welcome everyone. We appreciate your interest in Alliance Resource Partners, which we refer to as ARLP and Alliance Holdings GP, which we refer to as AHGP. We released our 2010 first quarter earnings earlier this morning and will now discuss these results as well as our outlook for 2010. Following our prepared remarks, we will open the call to your questions.

Before we begin, let me start with a few reminders. First since AHGP’s only assets are its ownership interest in ARLP, our comments today will be directed to ARLP’s results and outlook, unless otherwise noted. In addition please be aware that some of our remarks may include statements, which are not historical in nature and may concern future expectations, plans and objectives of the Partnerships regarding their future operations. Such comments constitute forward-looking statements made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995, and are based on the beliefs of the Partnerships and those of their respective general partners and management, as well as assumptions made by and information currently available to them.

Although the Alliance Partnerships, their general partners and management, believe these forward-looking statements to be reasonable at the time made, no assurances can be given that such statements will prove to be correct. Forward-looking statements are subject to a variety of risks, uncertainties and assumptions, which are contained in our filings from time to time with the Securities and Exchange Commission, and are also reflected in today’s press releases from the partnerships. If one or more of these risks or uncertainties materialize, or if our underlying assumptions prove incorrect, actual results for the partnerships may vary materially from those we anticipated, estimated, projected or expected. In providing these remarks, neither ARLP nor AHGP has any obligations to publicly update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise.

Finally, we will also be discussing certain non-GAAP financial measures. Definitions and reconciliation’s of the differences between these non-GAAP measures and the most directly comparable GAAP financial measures are contained at the end of the ARLP press release, which has been posted on ARLP’S website and furnished to the SEC on Form 8-K.

Now that we’re through with the required preliminaries, I’ll turn the call over to Joe Craft, our President and Chief Executive Officer. Joe?

Joe

Craft

Thank you, Brian. Good morning everyone, and thank you for joining us today. Before we began, I don’t know how many of you on the phone got to see the memorial service yesterday, but all of us here at Alliance wish to express our heartfelt condolences to the families and friends, co-workers including Don [ph] and his management team affected by the recent tragedy in West Virginia, and we also appreciate that President Obama, acknowledged at yesterday’s memorial service the important contribution that coalminers make to America.

We consider all coalminers to be heroes, men and women working tirelessly to provide the energy needed to fuel the economy of this great country, and it was refreshing to hear our leaders acknowledge their contribution yesterday.

So turning now to this morning's earnings release. For the first quarter 2010 we are pleased to begin our discussion with another strong performance in both ARLP and AHGP. We again posted record quarterly operating and financial reserves. These results were driven by solid performance across all operations, including significant benefits realized during the quarter from our new River View mine, and the strength of ARLP’s long-term coal supply contracts.

Looking ahead to the rest of 2010, we expect these benefits will continue to positively impact ARLP’s results. Coal revenues for the remainder of 2010 should further benefit from ARLP’s recent commitments to deliver 1 million tons of metallurgical coal and to the export markets during the fiscal year, beginning April 2010.

In addition, development production has begun at Tunnel Ridge, and production at River View, which has exceeded expectations so far this year, should continue to increase as we bring the six continuous mining units into production at this operation next month. These opportunities combined with our first quarter performance, give me confidence that ARLP will deliver its 10th consecutive year of record performance in 2010.

With more than 97% of our expected 2010 production sold, we are increasing our guidance for this year. ARLP is now expecting 2010 coal production in a range of 29.9 million tons to 30.6 million tons, and coal sales volumes of approximately 30.8 million tons to 31.5 million tons. The increased sales volumes and improved coal sales prices are now expected to increase ARLP’s 2010 revenues to approximately $1.5 billion to $1.6 billion.

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