It was a busy quarter for the producer, acquiring the Onton mine and finalising work in preparation for longwall production to kick off at the Tunnel Ridge mine in late May.
Alliance, which has mining operations in the Illinois Basin and Central Appalachia, recorded coal sales revenue of $429.6 million for the quarter ended March 31, up 5.4% from the previous corresponding period.
These increases however were offset by higher operating costs and the pass through of losses related to the White Oak Resources development project, Alliance Resource Partners chief executive officer Joseph Craft III said.
This contributed to a 7.6% drop in earnings before interest, taxes, depreciation, and amortization, which tipped in at $131.5 million.
Net income was also down 13% from the previous corresponding quarter to $83 million.
Despite the mixed bag result, Craft viewed the quarter results glass half-full.
“During the 2012 quarter, our operations performed well – meeting production and cost targets,” he said.
“A mild winter and a slow economy delayed coal deliveries during the 2012 quarter as inventories at our operations grew 575,000 tons more than planned causing our earnings to be below expectations.”
The news wasn’t all disappointing, with total revenues for the quarter rising to $443.59 million, up 4.8% year-on-year.
Alliance attributed this to higher coal sales prices and volumes.
Alliance also achieved record coal production for the quarter, in part due to higher coal sales volumes at its River View and Tunnel Ridge mines.
Production for the quarter tipped in at 8.5Mt, up 3.6% from the previous quarter.
Alliance sold 7.8Mt of coal in the quarter, an increase of 3.6% over the 2011 quarter but down 4.4% on the December 2011 quarter.
Looking ahead to the remainder of 2012, Craft was optimistic.
“Relying on the strength of our sales contract position, the Onton acquisition and the longwall start up at Tunnel Ridge, ARLP remains focused on delivering another year of record operating and financial results in 2012,” he said.
“Achieving this objective will not be easy, as year-over-year electricity generation and coal demand have fallen sharply.
“As the coal markets settle, we will stay focused on managing customer relationships, controlling costs and positioning ARLP to take advantage of growth opportunities in the future.”
Alliance is predicting 2012 coal production to range between 35.2 to 36.4Mt, while coal sales volumes are predicted to hover around the same range.
The company’s balance sheet remains robust, with about $319.9 million in available liquidity.
