“Alliance again delivered solid results this quarter,” said Joseph W. Craft III, president and chief executive officer.
“We continue to benefit from the robust coal markets and remain committed to maximizing our operating efficiency in the face of cost pressures resulting from higher fuel, power and steel prices.”
Several items significantly impacted the third quarter 2004 results. The final settlement with the partnership’s insurance underwriters for claims relating to the Dotiki mine fire earlier this year increased net income in the 2004 third quarter by $18 million.
The buyout of several coal sales contracts, which will allow the Partnership to take advantage of anticipated higher spot coal prices in 2005, also reduced net income in the 2004 third quarter by $3.2 million.
Revenues and tons sold for the quarter were $158.3 million and 5.1 million tons, respectively, compared to $141.8 million and 5.2 million tons in the third quarter of 2003. The increase in revenues was primarily attributable to higher coal sales prices, which increased approximately 11.6% during the 2004 third quarter as compared to the same period in 2003.
Total coal production for the third quarter of 2004 increased approximately 3.3% to 4.9 million tons, compared to 4.7 million tons in the comparable period last year. Increased production at the Partnership’s Illinois Basin and MC Mining operations is primarily attributable to the continuing benefits realized from equipment and infrastructure investments made over the last few years.
“Reflecting positive industry fundamentals for the coal industry this year, the Partnership has delivered exceptional results through the first nine months of 2004,” Craft said.
“During this period, we have achieved record levels of revenues, net income, tons sold and tons produced. Our continuous efforts to optimize operating capacity and improve efficiencies at existing operations have allowed us to take advantage of the opportunities presented by the current coal markets. Recent investments at our Gibson County, Pattiki and Mettiki mines also have allowed Alliance to rapidly respond to current market demand.”
Looking ahead, Craft added, “Continued growth in the U.S. economy, increasing demand for electricity, low coal stockpiles, high prices and supply constraints for competing fuels, and global market dynamics all point to sustainability of the current strong coal market fundamentals. Our Elk Creek and Tunnel Ridge projects announced yesterday should further strengthen the Partnership’s ability to capture the future benefits of this improved environment and achieve our goal of sustaining growth in earnings and cash flow.”
Based on anticipated shipments of 5.8 million tons of coal, the Partnership is estimating net income for the 2004 fourth quarter of between $17 and $21 million.
