Alliance Holdings GP L.P. Reports Operating Results (10-Q)

Alliance Holdings GP L.P. (AHGP, Financial) filed Quarterly Report for the period ended 2010-06-30.

Alliance Holdings Gp L.p. has a market cap of $2.31 billion; its shares were traded at around $38.64 with a P/E ratio of 16.87 and P/S ratio of 1.88. The dividend yield of Alliance Holdings Gp L.p. stocks is 4.81%.AHGP is in the portfolios of Chuck Royce of Royce& Associates, Jim Simons of Renaissance Technologies LLC.

Highlight of Business Operations:

We reported record net income of $85.2 million for the three months ended June 30, 2010 (2010 Quarter) compared to $41.1 million for the three months ended June 30, 2009 (2009 Quarter). This increase of $44.1 million was principally due to record tons sold and improved pricing resulting in a record quarterly average coal sales price of $51.53 per ton sold, as compared to $46.04 per ton sold for the 2009 Quarter. The ARLP Partnership had record tons sold of 7.5 million tons and higher tons produced of 6.9 million tons in the 2010 Quarter, compared to 6.2 million tons sold and 6.3 million tons produced in the 2009 Quarter. This increase in produced tons primarily reflects increased production from the ARLP Partnerships new River View mine. Higher operating expenses during the 2010 Quarter resulted primarily from increased sales and production volumes, which particularly impacted materials and supplies expenses and sales-related expenses. Increased operating expenses also reflect an increase in labor and labor-related expenses as well as higher costs associated with beginning coal inventories sold in the 2010 Quarter.

General and administrative. General and administrative expenses for the 2010 Quarter increased to $11.8 million compared to $9.6 million in the 2009 Quarter. The increase of $2.2 million was primarily due to increases in incentive compensation expense.

Other sales and operating revenues. Other sales and operating revenues are principally comprised of Mt. Vernon transloading revenues, products and services provided by MAC (in the 2009 Quarter only), Matrix Design and other outside services. Other sales and operating revenues increased to $5.5 million for the 2010 Quarter from $3.4 million for the 2009 Quarter. The increase of $2.1 million was primarily attributable to increased Matrix Design product sales partially offset by decreased rock dust revenues reflecting the deconsolidation of MAC. For more information about MAC, please read Part I. Item 1. Financial Statements (Unaudited) Note 8. Mid-America Carbonates of this Quarterly Report on Form 10-Q.

Depreciation, depletion and amortization. Depreciation, depletion and amortization expense increased to $35.7 million for the 2010 Quarter from $28.3 million for the 2009 Quarter. The increase of $7.4 million was attributable to additional depreciation expense associated with continuing capital expenditures related to infrastructure improvements, efficiency projects and expansion of production capacity, particularly at the ARLP Partnerships River View mine.

Interest expense. Interest expense, net of capitalized interest, decreased to $7.4 million for the 2010 Quarter from $7.8 million for the 2009 Quarter. The decrease of $0.4 million was principally attributable to reduced interest expense resulting from the ARLP Partnerships August 2009 principal repayment of $18.0 million on its original senior notes issued in 1999, partially offset by increased interest expense for borrowings on the ARLP Partnerships $150.0 million revolving credit facility (ARLP Credit Facility) during the 2010 Quarter, each of which are discussed in more detail below under Debt Obligations.

Segment Adjusted EBITDA. Our 2010 Quarter Segment Adjusted EBITDA increased $54.1 million, or 62.8%, to $140.5 million from the 2009 Quarter Segment Adjusted EBITDA of $86.3 million. Segment Adjusted EBITDA, tons sold, coal sales, other sales and operating revenues and Segment Adjusted EBITDA Expense by segment are (in thousands):

Read the The complete Report