Alliance Resource Partners (NASDAQ: ARLP) reported Q2 EPS of $0.64, in-line with the analyst estimate of $0.64. Revenue for the quarter came in at $516.14 million versus the consensus estimate of $491.55 million.

"ARLP delivered strong financial and operating results for the 2018 Quarter," said Joseph W. Craft III, President and Chief Executive Officer. "Coal sales volumes increased significantly as we shipped substantially all of the 1.4 million tons impacted by weather-related transportation disruptions during the Sequential Quarter. U.S. coal market conditions remained favorable in the 2018 Quarter allowing us to secure new commitments for approximately 8.9 million tons to be delivered to domestic customers through 2021. We also continued to strengthen our international coal sales position, booking an additional 4.6 million tons for delivery to the export markets over the next 12 to 18 months. ARLP is now essentially sold out for its planned 2018 sales volumes and has increased its anticipated export sales for this year to approximately 11.1 million tons. Our operations have also performed well, increasing production volumes compared to the 2017 Quarter to meet additional demand while continuing to control per ton costs. With solid performance through the first half of 2018 and a positive outlook for our markets over the balance of the year, ARLP is again increasing full-year 2018 guidance for revenues, net income and EBITDA."

Mr. Craft added, "ARLP also continued to execute on its strategic objectives during the 2018 Quarter. Concluding a process that began with the Exchange Transaction in July 2017, ARLP completed the simplification of its organizational structure in May, creating a single, larger publicly traded entity with increased market float and liquidity and improved investor transparency. ARLP also continued its efforts to invest in our businesses for long-term cash flow growth. In response to growing international thermal coal demand, we brought the first continuous mining unit back into operation at our Gibson North mine during the 2018 Quarter and currently anticipate the second unit will commence production by the fourth quarter of this year. ARLP also remained focused on returning cash to unitholders, first by the Board again electing to increase distributions to unitholders and, second, by executing on the unit repurchase program recently authorized by the Board."

Market Update and Outlook

"U.S. coal markets have benefitted from increased economic activity in 2018 and recent favorable weather patterns across the Midwest and Eastern part of the country," said Mr. Craft. "As a result, domestic coal demand has been better than expected and utilities in ARLP’s coal markets have experienced a significant draw on inventories. With year-over-year coal stockpiles down approximately 15.0% based on days of burn, we anticipate domestic customers will be in the market seeking to replenish stockpiles in the near term and to fill open positions for 2019 and beyond. Global coal supply/demand fundamentals in the seaborne thermal markets continue to create significant strategic opportunities for ARLP. Through the first six months of the year, ARLP has booked 10.4 million and 3.1 million tons for delivery in 2018 and 2019, respectively, into the growing international thermal coal market. The metallurgical export markets also remain attractive and we now plan to export approximately 725,000 tons of metallurgical coal in 2018. Our participation in the international coal markets has increased significantly, from approximately 4.5% of total sales volumes in 2016 to approximately 27.2% of anticipated sales at the midpoint of our current 2018 guidance. Looking ahead, global coal market dynamics remain constructive and supportive of ARLP’s long-term participation in these increasingly strategic markets. We continue to believe that ARLP’s focused strategy of growing sustainable, long-term cash flows and returning cash to unitholders while maintaining a conservative balance sheet and strong distribution coverage should allow us to create value for our unitholders in the future."

ARLP is maintaining its existing guidance ranges for 2018 coal production of 40.0 million to 41.0 million tons and coal sales of 40.3 million to 41.3 million tons, essentially all of which is priced and committed. ARLP has also secured volume and price commitments for approximately 24.7 million tons, 16.0 million tons and 6.7 million tons in 2019, 2020 and 2021, respectively, some of which is subject to customer requirements.

Based on results to date and expectations for the balance of the year, ARLP is increasing its guidance ranges for 2018 full-year revenues (excluding transportation revenues) to $1.88 billion to $1.92 billion, net income to $430.0 million to $450.0 million and EBITDA to $740.0 million to $760.0 million. These 2018 estimates for net income and EBITDA include the $80.0 million settlement gain recorded in the Sequential Quarter and reflect an increase in the expected contribution related to our investments in oil and gas minerals and gas compression services to a range of approximately $35.0 million to $40.0 million.

ARLP is also updating per ton estimates for 2018 compared to 2017. For the full-year 2018, at the midpoint of current guidance, we anticipate coal sales price per ton to be approximately 1.0% higher, Segment Adjusted EBITDA Expense per ton to be 1.5% higher and Segment Adjusted EBITDA per ton to be slightly higher, each compared to our full-year results in 2017.

For earnings history and earnings-related data on Alliance Resource Partners (ARLP) click here.